No entirely satisfactory definition of the term “contract” has ever been devised. Every contract involves at least one promise which has legal consequences. The promissory element present in every contract is stressed in a widely quoted definition: “A contract is a promise, or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”
Another common definition of a contract is that it is a legally enforceable agreement. While this definition has the advantage of emphasizing that “agreement” is at the core of the law of contracts, the troublesome fact is that there are certain kinds of contracts that may be formed without an agreement. Also, like other definitions of the term “contract,” it is unenlightening, and of little help in determining whether a given complex of words and acts are legally enforceable. In sum, knowledge of much of the law of contracts is a prerequisite to an understanding of what a contract is.
A recent definition of contract is “the relations among parties to process of projecting exchange into the future.” One of the merits of this definition is that it stresses that a contract establishes an interrelationship among the contracting parties that is broader than their promises and agreement. This definition also underscores that the economic core of contract is an exchange between at least two parties and that contract is an instrument for planning future action.
The term “contract” is also used by laymen and lawyers alike to refer to a document in which the terms of a contract are written. Use of the word in this sense is by no means improper so long as it is clearly understood that rules of law utilizing the concept “contract” rarely refer to the writing itself. Usually, the reference is to the agreement; the writing being merely a memorial of the agreement.
This article is for informational purposes and should not be relied upon as legal advice.