What defines a contract?

A contract is fundamentally defined as a binding agreement between two parties to do or not do something. This definition ensures that both parties have a clear understanding of their obligations and the terms of the agreement. Contracts typically involve a mutual consent where the parties agree to certain conditions, which may include delivering services, transferring property, or refraining from specific actions.

The elements of a contract include mutual consent, consideration (something of value exchanged), legal capacity, and a lawful object, which all reinforce the idea of a mutual agreement to abide by certain terms. The binding nature of a contract provides legal enforceability, meaning that if one party fails to uphold their part of the agreement, the other party can seek legal remedies.

In contrast, some of the other options focus on specific aspects of agreements that may not encompass the whole definition of a contract. For example, simply exchanging money does not necessarily constitute a contract if the terms are not defined. A loan application process is typically not seen as a contract until all terms are agreed upon and signed. Additionally, while many contracts can indeed be in writing, not all contracts are required to be written to be valid; many oral contracts can also be enforceable, depending on the circumstances and the nature of the agreement. Thus,