---
title: What Is a Contract? Definition and Key Elements | Aavenir
url: https://aavenir.com/glossary/contract/
description: A contract is a legally binding agreement that sets out the rights and duties of the parties, usually an exchange of goods, services, money or promises.
updated: 2026-11-07
---

[Home](https://aavenir.com/) / [Resources](https://aavenir.com/resources/) / [Glossary](https://aavenir.com/glossary/) / Contract Glossary

# What is a contract?

A contract is a legally binding agreement that sets out the rights and duties of the parties, usually an exchange of goods, services, money or promises.

## What makes a contract binding

A contract can be enforced because it meets the requirements of law. Those vary by country, but most legal systems look for an offer, acceptance of that offer, something of value exchanged by each side, the capacity of the parties to agree and a lawful purpose. Many contracts are written, though some can be oral.

## What a business contract usually contains

- The parties and the date.

- What each party will deliver, and when.

- Price and payment terms.

- Warranties, liability and indemnities.

- Term, renewal and termination.

- How disputes will be resolved.

## When a contract is broken

If a party fails to do what the contract requires, that is a breach of contract. The injured party can seek remedies such as damages or cancellation of the contract, depending on the terms and the law that applies.

## How Aavenir handles it

[Contractflow](https://aavenir.com/solutions/enterprise-contract-management-software/) runs contracts from request through drafting, approval and signature to renewal. Aavenir AI reads each contract and pulls out its dates, obligations and key terms, and a person approves every AI action.

## Keep reading

[Breach of contract A breach of contract is a failure by one party to do what the contract requires, without a lawful excuse. Read more](https://aavenir.com/glossary/breach-of-contract/)[Contract lifecycle management Contract lifecycle management is the process and software for running contracts from request to renewal. Read more](https://aavenir.com/glossary/contract-lifecycle-management/)[Contract obligations Contract obligations are the duties each party agrees to perform under a contract, such as paying on time or meeting service levels. Read more](https://aavenir.com/glossary/contract-obligations/)

Frequently asked questions (FAQ)

## Common questions

###

### What are the essential elements of a contract?

Generally an offer, acceptance, consideration, which means something of value exchanged by each side, capacity of the parties and a lawful purpose. The exact rules depend on the law that governs the contract. [Read about contract types](https://aavenir.com/glossary/contract-type/).

###

### Does a contract have to be in writing?

Not always. Many contracts can be oral, but some, such as certain property or long term agreements, must be written in many jurisdictions. Business contracts should be written so the terms can be proved. [Read about electronic signatures](https://aavenir.com/glossary/e-signature/).

###

### What happens if a contract is breached?

The injured party may claim damages, ask the other party to perform or end the contract, depending on how serious the breach is and what the contract says. [Read about breach of contract](https://aavenir.com/glossary/breach-of-contract/).

Have a question we have not answered? [Ask the Expert](https://aavenir.com/contact/)

Schedule a demo

## See your contracts run on one record.

- **1****A 30 minute walkthrough**Built around your team, whether that is procurement, legal, IT or finance.

- **2****Your contracts, not ours**Bring a few sample agreements and watch Aavenir AI extract and review them.

- **3****ServiceNow or standalone**We show the deployment that fits the systems you already run.

Prefer to talk first? [Contact the team](https://aavenir.com/contact/).

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