A contract is an agreement between two or more parties to do, not do, or promise something. Contracts can come in many forms — they can be oral or written, implied or express, and legally enforceable or not. The strongest contract, in terms of enforceability, has an offer, acceptance, consideration for the exchange, clearly sets out the terms of the agreement without ambiguity, and is signed by the involved parties with proper capacity to enter into the contract. Weaker contracts include verbal agreements or contracts drawn up by parties in direct violation of state or federal laws. There are numerous aspects related to valid contracts; in fact, an entire course in law school is often devoted to contract law.

While we tend to think of written contracts when we talk about contracts, the most common type of contract is actually an oral contract. In fact, we pretty much enter into at least one oral contract every day. For example, a parent might tell his or her child that they will get a reward if they behave properly at a certain event. If the child agrees, then you have a type of oral contract — albeit one that isn't legally binding!

Contracts can be implied or express. That is, the entire contract, or one or more of its terms, can be implied or express. Typically, when we think of contracts we think of express contracts. For example, in a contract for a monetary loan, you will likely promise to pay a certain monthly rate at a certain interest rate until the loan is paid off. In addition, you probably will agree to late payment fees as well. These terms are explicitly laid out in an express, written contract.

Sometimes, however, a contract term or the entire contract itself is implied. For example, when you order food at a restaurant you are entering into a implied, oral contract. You and the server do not explicitly state the offer and acceptance for the steak you ordered with a list price of 32 US Dollars (USD) but that agreement is implied. The basic elements of a contract, namely an offer, acceptance of the offer, and consideration for the exchange, are all implied.

Offer and acceptance, sometimes also called “meeting of the minds” is a fundamental part to a contract. Without it, we might bind parties to contracts who did not want or intend to be party to the contract. Consideration, on the other hand, ensures that something is being exchanged. In some cases, the law requires that consideration be adequate, that is, a relatively reasonable price, or nominal, where just a dollar will do. Other times, the requirement of consideration may be waived in the interest of preventing injustice.

Contracts may be enforceable by law or they may not. The example of the agreement between the parent and child would not be enforceable by law whereas the agreement for a loan likely would be enforceable by law. Whether a contract is enforceable by law depends on numerous factors, the primary factor being whether the parties to contract intended the contract to be legally binding or legally enforceable.

A contract may not be legally enforceable for a variety of factors. Problems on the face of the contract can make it void. If one of the parties to the contract has diminished capacity whether it be due to age or mental condition the contract will most likely be unenforceable. Fraud or misrepresentation by a party to a contract can void the contract as can contract terms that violate controlling laws.