What is a contract?

What is a contract?

• A. An informal handshake agreement.
• B. A legally binding agreement between two or more parties that creates an obligation to do or not do a particular thing.
• C. A government permit.
• D. A consumer credit agreement.

Answer: (B)

A contract is a legally binding agreement between two or more parties that creates an obligation to do or not do a particular thing. It usually includes an offer, acceptance, consideration (something of value exchanged), and the intention to be bound, with the parties having the capacity to contract and the terms being lawful. A contract can be written or verbal, though some arrangements require writing to be enforceable. A handshake or informal promise can amount to a contract if these elements are clearly present, but a government permit is not a contract, while a consumer credit agreement is a common type of contract rather than the general definition.

A contract is a legally binding agreement between two or more parties that creates an obligation to do or not do a particular thing. It usually includes an offer, acceptance, consideration (something of value exchanged), and the intention to be bound, with the parties having the capacity to contract and the terms being lawful. A contract can be written or verbal, though some arrangements require writing to be enforceable. A handshake or informal promise can amount to a contract if these elements are clearly present, but a government permit is not a contract, while a consumer credit agreement is a common type of contract rather than the general definition.