What is the primary purpose of a contract?

The primary purpose of a contract is to serve as a binding agreement between competent parties. A contract outlines the rights and obligations of all parties involved, ensuring that each party understands what is expected and what they are agreeing to. This legally enforceable document provides clarity and security, helping to prevent disputes by establishing clear terms and conditions.

Though agreements can be made verbally or informally, such as through a handshake or mere understanding, these forms lack the legal weight and detailed specifications that a written contract provides. A written contract typically includes essential elements such as consideration, mutual consent, and a lawful object, which are crucial for enforceability. In contrast, records of verbal agreements or informal understandings do not offer the same level of protection and clarity, making them less reliable in legal contexts.