A contract is a written or oral document which is a legally-binding deal between the two or more parties laying out the terms and conditions agreed upon by the parties mentioned in the agreement. Before a contract comes into effect, the concerned parties need to accept the terms of the contract by signing it in written form and nowadays, even through electronic signature.
The basic features of a contract are as follows:
- Names: At the very beginning, it must be clearly mentioned who are the parties between whom the contract is made.
- Term: A contract has a definite period within which it is effective, the commencement and end date of the contract must be clearly mentioned.
- Terms and conditions: Both parties agree to certain terms and they must be clearly laid out to avoid confusion.
There can be many types of contracts. They are as follows:
- Lease contract: A lease contract is signed between the owner of a property, car, services, equipment etc and a person who leases them for his use in return for a sum of money for a particular time period.
- Sales contract: A sales contract is made between a seller and a customer where a person or a company agrees to sell its products, property or services, and in order to get the rights to the goods and services, the customer pays for it.
- Purchasing Contract: A purchasing contract is entered between someone who is looking to buy something from another — it can be a product, a house, services and so on – and in return the buyer is obligated to pay for it.
- Partnership contract: This is the most basic form of contract where one formally lays down the terms and conditions of a partnership between two companies where either party is referred to as the partner.