What is the definition of a contract?

A contract is fundamentally defined as a legally binding agreement between two or more parties. This definition emphasizes the importance of the legal recognition that a contract entails, ensuring that the parties involved have rights and obligations that can be enforced by law. The presence of mutual consent, consideration (something of value exchanged), and a lawful purpose are integral components of a contract, which collectively establish a framework that creates enforceable obligations.

This definition is significant because it underscores that contracts can be created through various forms, whether written or verbal, provided there is an intention to create legal relations. It also clarifies that informal arrangements or mere promises without the intention of creating legal relations do not constitute contracts, as they lack the necessary legal enforceability. Thus, option B accurately reflects the formalities and significance of contractual agreements in the realm of law.