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Contract

A term of reference describing a unit of trading for a financial or commodity future. Also, the actual bilateral agreement between the buyer and seller of a transaction as defined by an exchange.

Contract

1. A legal agreement between two parties in which each agrees to do, make, buy, or sell a good or service, or in which one party grants a right or undertakes an obligation, often in exchange for a fee. A contract is less commonly called a binding agreement. See also: Option contract, Futures contract.

2. Informal for a unit of trade in options and futures.

contract

1. In futures trading, an agreement between two parties to make and take delivery of a specified commodity on a given date at a predetermined location.
2. In options trading, an agreement by the writer either to buy (if a put) or to sell (if a call) a given asset at a predetermined price until a certain date. The holder of the option is under no obligation to act.

contract

a legally enforceable agreement between two or more parties generally relating to a TRANSACTION for the purchase or sale of inputs, goods and services. A contract involves obligations on the part of the contractors which may be expressed verbally or in writing. Formation of a contract involves one party making an offer to the other party which must then be accepted by the latter party. For example, one firm may offer to supply a product to another company at a given future date and on specified terms. In return, the latter company would agree to pay a specified sum of money as consideration for the product to be supplied. Both parties would then be legally bound to honour their agreement to sell and to buy the product. In the event of either party failing to comply with the terms of the contract the other party could seek damages for breach of contract through the courts.

A complete contract stipulates each party's responsibilities and rights for every contingency that could conceivably arise during the transaction. Such a complete contract would bind the parties to particular courses of action as the transaction unfolds, with neither party having any freedom to exploit weaknesses in the other's position. It is difficult to develop complete contracts since parties to the contract must be able to specify every possible contingency and the required responsibilities by the contracting parties; stipulate what constitutes satisfactory performance; make the contract enforceable; and have access to complete information about circumstances surrounding the contract.

In practice, most contracts are incomplete contracts in which precise terms of the contract cannot be fully specified. In such situations, one or other parties to the agreement may be tempted to take advantage of the open-endedness or ambiguity of the contract at the expense of the other party. See ASYMMETRICAL INFORMATION, MORAL HAZARD.

In addition to contractual relationships between a firm and its external suppliers/ customers, organizational theorists have paid particular attention to the role of contracts in the internal relationship between the employees (‘agents’) and owners (‘principals’) of a company in running the business. See PRINCIPAL-AGENT THEORY entry for details. See also CONTRACT OF EMPLOYMENT.

contract

a legally enforceable agreement between two or more people or firms generally relating to a TRANSACTION for the purchase or sale of goods and services. Contracts may take a standardized form, with the same conditions of exchange being applied to every one of a large number of contracts, for example, airline ticket contracts. Alternatively, contracts may be lengthy and complicated because they are carefully tailored to a specific transaction such as the contract to build an office block for a client.

A complete contract stipulates each party's responsibilities and rights for every contingency that could conceivably arise during the transaction. Such a complete contract would bind the parties to particular courses of action as the transaction unfolds, with neither party having any freedom to exploit weaknesses in the other's position. It is difficult to develop complete contracts since parties to the contract must be able to specify every possible contingency and the required responses by the contracting parties, to stipulate what constitutes satisfactory performance, to measure performance, to make the contract enforceable and to have access to complete information about circumstances surrounding the contract.

In practice, most contracts are incomplete contracts in which the precise terms of the contract relating to product specifications, supply or delivery terms cannot be fully specified. In such situations, one or other parties to the agreement may be tempted to take advantage of the open-endedness or ambiguity of the contract at the expense of the other party. See ADVERSE SELECTION, MORAL HAZARD,ASYMMETRY OF INFORMATION, ASSET SPECIFICITY.

contract

A legally enforceable agreement. Its requirements are

• Competent parties
• Subject matter
• Legal consideration
• Mutuality of agreement (also called “meeting of the minds”)
• Mutuality of obligation

As a general rule, oral contracts are enforceable unless they relate to real estate or are incapable of performance within one year, guarantee the debts of another, or are evidenced by some writing signed by the person sought to be charged (“This is to confirm our agreement…”) There are other exceptions, but they are not relevant here. It is often difficult to enforce oral contracts because the parties usually have differing recollections of the exact terms of the agreement.

References in periodicals archive ?
making the same rule contractible with regard to another subset of
Table 3 reports the MRSP for contractible aspects of GPs and pharmacies and reports how the various channeling incentives and practice characteristics influence the choice probabilities for GPs and pharmacies.
Thus, this profit value does not depend on anything that is not contractible or controlled by the bank.
c] and [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] are locally contractible and [H.
People are just still terrified of the disease and still have the misconception that it's very easily contractible.
The manufacturer's effort to ensure high quality along such dimensions is typically difficult to verify and make contractible.
She responded in the affirmative when asked if the number of kittens put down was substantial, adding that most common reasons for euthanising them were injuries, poisoning, starvation and feline Aids, known as Feline Infectious Virus, which, like human Aids, is not contractible by touch.
Segerfeldt reminds the reader that water delivery, like any public service, is contractible.
Their theorem makes only one assumption about the targets: that the region from which a given target is visible is always a contractible shape, meaning that it could shrink to a single point without tearing or otherwise changing the shape's topology.
Specific topics include phase-parameter relation and sharp statistical properties for general families of unimodal maps, Hamiltonian operators in a noncommutative world, the deformation of space as a complete affine structure on the 2-torus smooth, parabolic foliations, the H-principle and pseudoconcave CF manifolds, wild knots as limit sets of Kleinian groups, an extension of the Burau representation to a mapping class group associated to Thompson's group T, Paonleve's Theorems I and II, and the growth rate of contractible closed geodesics on reducible manifolds.
Objective, verifiable accounting information facilitates shareholder monitoring and the effective exercise of shareholder rights under existing securities laws; enables directors to enhance shareholder value by advising, ratifying, and policing managerial decisions and activities; and supplies a rich array of contractible variables for determining the financial rewards from incentive plans designed to align executives' and investors' financial interests.
Fixed annealing develops contractible forces, which may cause further molecular packing and stretching.