What are the two essential components of forming a contract?

The formation of a contract primarily hinges on two critical components: offer and acceptance. An offer is a clear proposal made by one party to another, indicating the willingness to enter into a contract under specific terms. For a contract to be valid, this offer must be accepted unambiguously by the other party. Acceptance signifies that the second party agrees to the terms laid out in the offer, creating a mutual understanding and agreement.

This concept forms the foundation of contract law, as the essence of any valid contract is the mutual consent of the parties involved. Without a clearly defined offer and a corresponding acceptance, there can be no enforceable contract in a legal sense.

Other options denote activities that do not serve as the fundamental building blocks of a contractual relationship. For instance, negotiation and delivery may play roles in the contract process, but they are not core conditions for its formation. Signing and witnessing are often related to formalizing a contract, particularly in certain legal contexts, but they are not requisite elements for a contract's existence. Similarly, compulsion and agreement do not accurately reflect the voluntary nature inherent in contract law; contracts should be entered into freely by both parties. Thus, the focus on offer and acceptance captures the essential mechanics of how contracts are formed.