Contract Basic Definition

A contract is a legally binding agreement between two or more parties. A contract can be written, oral, or implied by the actions of the parties involved. The purpose of a contract is to establish the terms of the agreement and to protect the rights of the parties involved. Contracts can be used for a variety of purposes, including the sale of goods or services, the lease of property, or the performance of work.

When two or more people agree to exchange something of value, they have entered into a contract. For example, when you buy a car, you and the seller are entering into a contract. The car is what is known as ‘consideration,’ which is exchanged for money. In order for a contract to be legally binding, there must be an offer and an acceptance of that offer. There must also be consideration, which is something of value that is exchanged for something else. Lastly, there must be an intention to create a legal relationship between the parties involved.