the easiest way to understand a contract is as a legal agreement between two parties. at least two parties are required for a contract to be formed, as there must be both an offeror and an offeree.â  another important factor in forming a contract is a meeting of the minds. if there is a dispute between the two parties, such as a breach of contract lawsuit, courts will examine multiple elements to determine if the agreement was valid, including the: making an offer is the first step in the formation of contract. with an offer, one party proposes to another that they will enter a legal contract with defined terms. an offer can also be understood as the inclination to enter into a legally binding contract as soon as the offeree accepts. offers can be made to individuals and even the world at large, meaning the scope of an offer can vary widely. â when an offer is made, it should include language that indicates the offeror is willing to enter into a contract without any additional negotiations taking place upon acceptance.â  auctions are the perfect example of how offers work.