Basic Contract Agreement Definition

A contract agreement is a legally binding agreement between two or more parties. This agreement can be made in writing, orally, or through conduct. The terms of the contract agreement must be clear and unambiguous in order for it to be enforceable. Consideration, which is something of value given by each party to the other, is also necessary for a contract agreement to be formed. Each party to the contract must receive something of value (known as consideration) in exchange for their promise to do (or not do) something. For example, if Party A agrees to sell Party B a car for $1,000, Party B has received consideration (the car) in exchange for their promise to pay Party A $1,000.