A contract is a promise or an agreement between two or more persons or organizations to do or to refrain from doing a particular thing in exchange for something of value.
The breach of this agreement, promise or contract is recognized by law and provision for remedies of such breach exists in law. The contract can be written in formal or informal words or it can be even oral depending on the nature and subject matter of the contract.
The terms of the contract – who, what, where, when, and how of the agreement – define the binding promises of each party to the contract.
A contract normally is completed in there steps- the first being the offer of the contract, which means offering some one to do something in exchange of money or anything of value. The second step is other party’s acceptance of the contract, i.e. undersigning of the agreement by the other party/parties after understanding of each terms and acceptance. The last and final step is the performance of the contract that is to deliver the actual product/service in exchange of something of value.
Words, gestures, or actions can signal an offer to enter into a contract and an acceptance. If you are forced to make an offer (“your money or life”) it is not a valid offer. Similarly if you are tricked into accepting, it will not be deemed acceptance of the terms offered. To have a binding obligation on both sides, both sides must approve and accept the terms and conditions of the offer. Offers remain open until: (1) accepted, (2) rejected, (3) retracted prior to acceptance, (4) countered, or (5) expired by their own terms.
In case of rejection of an offer a new contract can be put on the table (called a “counter-offer”). A counter-offer is a new set of terms and conditions given in response to the original offer. A counter offer may vary from the original offer in just one word, clause or multiple provision of the entire contract.
You can take back or change the contract before the other party has agreed and undersigned the contract. This is termed as retraction. On the other hand, changing your mind after you have signed or agreed precludes retraction. Absent compelling reasons for not holding up to your end of the bargain, you will be a party to a contract.