What defines a contract?

A contract is defined as a legally enforceable agreement that creates obligations between two or more parties, leading to predictable legal consequences in the event of a breach. The key element is that the promises made within a contract are enforceable by law, meaning that if one party fails to fulfill their obligations, the other party has the right to seek a legal remedy.

This characteristic allows all parties involved to have a clear understanding of their rights, responsibilities, and the potential legal implications of their promises, thus ensuring that there are predictable consequences for performance failures. The enforceability distinguishes contracts from mere promises or informal agreements, which may lack legal backing and the same degree of formalism.

In contrast, options that refer to unenforceable promises, oral agreements only, or informal agreements between friends do not encapsulate the legal essence of a contract, as they do not imply the same level of enforceability or predictability in terms of legal recourse.