contract

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Related to Contractual obligations: consideration, Contractual agreement, Binding Agreements

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 ?
By ensuring compliance with contractual obligations, a contract administrator helps keep disputes to a minimum.
If the contractual obligation of the debtor is to abstain from doing something and the debtor breached this obligation;
Speaking to journalists, Naftogaz Deputy CEO Igor Didenko said his company will fulfil its contractual obligations. Nonetheless, payment could continue with difficulties or more smoothly, if a Ukrainian request for a loan of US$4.2 billion were met.
Deemas was commenting on an employer who asked the ministry to enforce a ban on one of his previous employees because he broke the non competition clause but the ministry refused as the employer did not meet his contractual obligations according to a court ruling.
Officials said they would issue a writ over alleged shortfalls in payments, failure by SRU to comply with contractual obligations, and breach of warranty, which would run "well into seven figures."
The Service argued that once Amoco advanced the funds to the taxpayer, it could keep them as long as it honored its contractual obligations. In other words, the IRS believed that Erickson did not have a current obligation to repay the advanced funds.
With TractManager, rural healthcare organizations can immediately locate contracts; send e-mail reminders about expirations and prompt automatic renewals; prepare for audits and accreditations while controlling contractual obligations; reduce payments on expired contracts to minimize risk of non-compliance, and eliminate the risk of missing warranty expirations and service requirements.
IN reply to the reader who claimed that bands were ripping people off by releasing "Best Of" albums, I'd like to point out, in the case of Oasis, the band didn't want to do one but, due to contractual obligations, their record company were going to release one regardless.
The well-negotiated hospice care contract will provide this interdisciplinary care daily, with no disconnect between hospice care services and general resident care services, no disconnect between regulatory requirements and hospice care contractual obligations and, most importantly, no disconnect between the level and quality of care given to all residents, regardless of their source of payment for services.
A movie of their lives proves to be one manipulation too many, but their contractual obligations are iron clad and Bargain Bonanza proves to be an Orwellian "big brother." It takes some creative planning and Oscarworthy acting on the part of the family to be released, legally and physically, from their lives in the spotlight.
They're both good aircraft and this will allow us to meet our contractual obligations with CO." Republic also will operate 20 ERJ-145s coming out of US Airways for CO.
Additionally, underwriting restrictions, rate adequacy, loss mitigation and land use regulations are public sector responses that affect an insurer's ability to meet contractual obligations to its customers.