Contract

Contract, an agreement between competent persons upon a legal consideration to do or to abstain from doing some act. The term is usually employed to designate only simple or parol obligations, which comprehend not only verbal and unwritten contracts, but all contracts not of record or under seal. Contracts are divided into three classes. 1. Contracts of record, such as judgments, recognisances, and statutes staple. 2. Specialities which are under seal, such as deeds and bonds. 3. Simple contracts, or contracts of parol. Every contract is founded upon the mutual agreement of the parties. When the agreement is formal, and stated either verbally or in writing, it is called an express contract; when the agreement is matter of inference and deduction, it is called an implied contract. In its widest sense agreement is not a technical term, and all agreements are not legal agreements. People may agree about many things without intending thereby to create any legal obligation; for instance, persons may agree to take a journey together, or to form a party of pleasure. Those agreements which are intended to produce legal obligations, and are adapted to produce such obligations, are contracts. All contracts are agreements, but all agreements are not contracts. A contract always effects a legal obligation either on one side or on both, but obligations may arise in other ways than by contract.