What defines a "contract" in legal terms?

A contract is defined in legal terms as a legally binding agreement between two or more parties. This definition emphasizes the importance of mutual consent, where the parties involved agree on specific terms that create obligations enforceable by law. A key aspect of a contract is that it necessitates consideration, which is something of value exchanged between the parties, further solidifying the agreement's binding nature.

Unlike a mere suggestion made during negotiations, which does not carry legal weight, or a verbal agreement that lacks enforceability due to not meeting specific requirements, a legally binding agreement must fulfill certain criteria established by law. This includes clarity in the terms, consideration, legal capacity of the parties, and a lawful purpose. Thus, the characterization of a contract hinges on its binding nature and the parties’ intent to create enforceable obligations.