JPMorgan Chase and the Financial Crisis

(Upton, 2003).
             A contract is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. At common law, the elements of a contract are offer, acceptance, intention to create legal relations, and consideration. The most important feature of a contract is that one party makes an offer for an arrangement that another accepts. Consideration is something of value given by a promisor to a promisee in exchange for something of value given by a promisee to a promisor. The purpose of consideration is to ensure that there is a present bargain, that the promises of the parties are reciprocally induced. The classic theory of consideration required that a promise be of detriment to the promisor or benefit to the promisee. There is a presumption for commercial agreements that parties intend to be legally bound. On the other hand, many kinds of domestic and social agreements are unenforceable on the basis of public policy, for instance between children and parents. This is considered the intention to create legal relations.(Upton, 2003).
             In every contract there is an implied covenant of good faith and fair dealing by each party not to do anything which will deprive the other parties of the benefits of the contract, and a breach of this covenant by failure to deal fairly or in good faith gives rise to an action for damages. The covenant imposes on each party to the contract the duty to refrain from doing anything which would render performance of the contract impossible by any act of his own, and also the duty to do everything that the contract presupposes that each party will do to accomplish its purpose.
             The duty of good faith requires a party to refrain from acting in a way which jeopardizes another party's contractual rights. Comment a to Section 205 of the Restatement (Second) Contracts states that a party performs in good faith if it acts with a "faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.