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Contract — in plain language

a legally binding agreement between two or more people or businesses where each side promises to do (or not do) something of value — if someone breaks their promise, the other side can take them to court

From a fixed, curated glossary of 7,257 legal terms. Not legal advice. How it's made: plainlanguage.us/trust

Plain language

a legally binding agreement between two or more people or businesses where each side promises to do (or not do) something of value — if someone breaks their promise, the other side can take them to court

  • legally binding agreement
  • binding promise between parties
  • enforceable agreement
  • deal that courts will uphold

What to watch for

  • Non-lawyers think any agreement is a contract, but legally it must have consideration (something of value exchanged), mutual assent, and intent to create legal relations. A plain-language translation should clarify what makes an agreement legally enforceable.
  • The word 'contract' appears in phrases like 'breach of contract' where removing it changes the legal meaning. 'Breach of agreement' is not the same thing legally.
  • Verbal agreements can be legally binding contracts, but people assume only written documents count. The translation should not imply that only written agreements are contracts.
  • In legal usage, 'contract' is often paired with qualifiers like 'service contract' or 'employment contract' — the plain-language version should preserve the type of agreement being described.

What Makes an Agreement a Legal Contract. Not every agreement is a legally enforceable contract. For a contract to exist, there must be: (1) an offer, (2) acceptance of that offer, (3) consideration (something of value exchanged by both sides), and (4) an intention to create legal relations. A plain-language translation should make clear when these elements are present.

Written vs. Verbal Contracts. Many people assume only written agreements are real contracts, but verbal agreements can be legally binding too. The key question is whether the essential elements exist, not whether it's written down. However, some types of contracts (like real estate sales) must be in writing to be enforceable.

Common Misunderstandings by Non-Lawyers.

  • "A contract is just a written document." (No — verbal agreements can be contracts too, though some must be written.)
  • "If I sign something, it's automatically a contract." (Not always — there must be consideration and mutual assent.)
  • "I can get out of any contract if I change my mind." (No — breaking a contract usually has legal consequences.)

A legally binding agreement between two or more people or businesses where each side makes promises to do (or not do) something of value. When all the required elements are present — including something of value exchanged by both sides — the agreement becomes enforceable by law. If one party breaks their promise, the other party can take them to court to get compensation or force them to fulfill their obligations.

Examples

Legal: This indemnification contract or agreement shall be governed by the laws of the State of New York.

Plain: This agreement to protect each other from certain losses is governed by New York law.

Legal: SUCH DAMAGES ARE BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE.

Plain: These damages happen because someone broke their legally binding agreement, was careless, or did something else wrong.

Legal: If you resign or your 4 year contract expires, the vesting of your options will be affected.

Plain: If you quit your job or finish your four-year employment agreement, it will change when you get to keep your stock options.

Where you'll see it

  • employment agreements
  • lease agreements
  • sales contracts
  • service agreements
  • loan agreements
  • partnership agreements
  • consideration
  • breach
  • offer
  • acceptance
  • mutual assent
  • agreement
  • covenant

Word details

Pronunciation
KON-trakt
Part of speech
noun
Origin
Latin — from 'contractus' — drawn together, agreement
Domains
contract law, corporate law, employment law, real property, commercial law, consumer law
Frequency
very common
Formality
moderate

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