What must a contract always be?

A contract must always be an agreement between two or more parties that creates binding obligations. This means that the parties involved have a mutual understanding regarding the terms and conditions they agree to. While a contract often includes elements like mutual understanding, signed documents, and proposals, what fundamentally defines a contract is the existence of an agreement.

The essence of a contract lies in the consent of parties who are willing to enter into a legally enforceable arrangement. This agreement must involve an offer by one party and acceptance by another, along with the intent to create legal relations and typically consideration—something of value exchanged. Emphasizing this point, even informal agreements can be considered contracts if they meet the legal requirements, although they are often more difficult to enforce.

While a signed document can serve as evidence of a contract, it is not a necessary requirement for all types of contracts, especially oral agreements in certain contexts. Similarly, mutual understanding and formal proposals can be part of the contracting process but do not alone establish a contract without an agreement being in place. This highlights why the defining characteristic of a contract is that it must be an agreement.