How is a "contract" defined in legal terms?

A contract is defined as a legally enforceable agreement between two or more parties. This definition encompasses the essential elements that make a contract valid in the eyes of the law, which include mutual assent (an agreement to the terms), consideration (something of value exchanged), and the capacity of the parties to enter into the agreement. The enforceability aspect is critical; it means that if one party does not fulfill their obligations, the other party has the legal right to seek remedies through the court system.

Other options reflect misunderstandings of what constitutes a contract. An informal understanding between individuals lacks the necessary legal elements and does not provide a framework for enforcement. A written document that is not legally binding does not meet the requirements of a contract and cannot be enforced in court. Similarly, a verbal agreement recorded by witnesses may not always satisfy the legal requirements for a valid contract, especially if it lacks the necessary elements like consideration or capacity. Thus, the essence of a contract lies in its ability to be legally enforced, distinguishing it from informal agreements and unverifiable understandings.