contract

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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 ?
A full-commitment contract between the contractor and the contractee is defined by the contract obligations, which include (1) a description of what each of the two agents has to perform (handling tasks, contributing goods, lending resources, and so on) and (2) a contract price that the contractor has to pay to the contractee.
The government "player" can anticipate what the optimal strategy in each period of the game will be for the other player (the contractee) and then, by backward induction, identify the government's optimal strategy in each period.
La dette qui atteint pres de 445 millions de dollars, avec les interets, avait ete contractee par le regime pro-americain du general Lon Nol, auteur d'un coup d'Etat en 1970.
Labor-only contracting is also when workers recruited and supplied to a contractee perform tasks and activities that are listed by the industry to be directly related to the core business of the contractee, or the contractee has direct control and supervision of the workers supplied by the contractor.
Villanueva said that in cases of labor-only contracting, the job contractor shall be considered merely an agent, and the contractee shall be responsible to the workers as if the workers were directly employed by the contractee.
Mais l'autre surprise releve du lateral droit du club voisin, le Raja, Adil Karrouchy, qui sera bien de la partie malgre sa blessure contractee lors du derby contre le WAC.
(a) The Lessee Or Contractee Shall Assume Sole Responsibility For Or Incur Liability For Any Injury To
there was a financial risk involved for the contractee - it was not covered by EU public procurement legislation.
Kirk Douglas, also a Wallis contractee, proves a less unsympathetic character in Jurow's gallery, being portrayed as a hard-driving egotist.
READ:Business groups urge veto of Security of Tenure bill Under the SOT bill transmitted to the Office of the President, labor-only contracting exists when the job contractor merely supplies, recruits, and places workers to a contractee, workers supplied to a contractee perform tasks that are listed by the industry to be directly related to the core business of the contractee, and the contractee has direct control and supervision of the workers supplied by the contractor.
Under the bill, labor-only contracting is in place if the job contractor merely supplies, recruits, and places workers to a contractee; the workers supplied to a contractee perform tasks and activities that are listed by the industry to be directly related to the core business of the contractee; or the contractee has direct control and supervision of the workers supplied by the contractor.
Cette seance s'est deroulee en presence notamment du gardien Rami Jeridi qui s'etait absente pour blessure lors de la demi-finale aller, mais en l'absence de l'international libyen Hamdi El Houni, oblige d'observer un repos de trois semaines a la suite de la blessure qu'il a contractee, face au TP Mazembe.