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Contract: Definition, Example and Related Terms

What is a Contract ?

A contract is a legally binding agreement between two or more parties that is enforceable by law. Contracts are a key part of commercial transactions and can cover an extensive range of matters, including the sale of goods or services, the terms of employment or the leasing of property. Characteristics of a contract To be legaly enforceable, a contract needs to have the following elements..

Element Description
Offer and Acceptance One party needs to offer something. The other needs to accept.
Consideration There must be something of value exchanged.
Intention to Create Legal Relations Parties must intend for the agreement to be legally binding.
Capacity Parties must have legal capacity to enter into a contract, meaning they are of sound mind, not a minor, and not under duress.
Legality of Purpose The contract must be for a lawful purpose.


  • Here are some examples of the most common types of contracts across industries. See related terms below for more detail on them.

    Industry Common Contract Types
    Software & Technology Software Licensing Agreement, Subscription Agreement, Software Development Agreement, Maintenance and Support Agreement, End User License Agreement (EULA), Non-Disclosure Agreement (NDA), Source Code Escrow Agreement
    Manufacturing Supply Agreement, Manufacturing Agreement, Distribution Agreement, Purchase Order, Quality Agreement
    Healthcare & Pharmaceuticals Service Level Agreements (SLA), Clinical Trial Agreements, Research and Development Agreements, Non-Disclosure Agreements, Supply Agreements
    Construction & Engineering Construction Contracts, Service Agreements, Subcontractor Agreements, Indemnity Agreements, Performance Bonds
    Retail & Consumer Goods Purchase Order, Vendor Agreement, Distribution Agreement, Merchandising Agreement, Reseller Agreement
    Real Estate Lease Agreements, Property Management Agreements, Sale and Purchase Agreements, Construction Contracts
    Energy & Utilities Power Purchase Agreements, Service Agreements, Joint Venture Agreements, Indemnity Agreements
    Telecommunications Service Level Agreements, Licensing Agreements, Tower Space Rental Agreements, Infrastructure Sharing Agreements
    Banking & Finance Loan Agreements, Non-Disclosure Agreements, Service Agreements, Underwriting Agreements
    Transportation & Logistics Carrier Agreements, Freight Agreements, Warehousing Agreements, Service Level Agreements
    Media & Entertainment Licensing Agreements, Talent Agreements, Production Agreements, Distribution Agreements, Non-Disclosure Agreements
    Hospitality & Travel Management Agreements, Franchise Agreements, Vendor Agreements, Event Agreements
    Professional Services Service Agreements, Consulting Agreements, Master Service Agreements (MSA), Non-Compete Agreements
    Agriculture & Food Production Supply Agreements, Distribution Agreements, Farming Contracts, Food Safety Agreements
    Education & Training Service Agreements, Licensing Agreements, Non-Disclosure Agreements, Collaboration Agreements