Definition - What does Contract mean?

A contract is a legally binding agreement between two or more parties in which one party agrees to provide goods or a service in exchange for other goods, services, or a monetary payment. A contract is established and becomes legally enforceable only when it has all of the requisite elements present. There are four elements to make a legally binding contract:

  • Offer and acceptance;
  • Capacity;
  • Consideration; and
  • Legality.

Justipedia explains Contract

When two or more parties have an understanding or agree on something, it's called an agreement. An agreement can be written or oral, but it's generally considered to be informal (although in many jurisdictions it can still be legally enforced by a court of law).

A contract is a legally enforceable agreement that is entered into by two or more parties with an intention of creating one or more legal obligations between the individuals. Offer and acceptance, capacity, consideration, and legality (legal obligation) are the elements are required to make a contract. Barring a few contracts that are required to be in writing, contracts can be oral, too.

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