A Contract is any agreement based on a promise or an exchange of promises.
Step-by-step explanation:
In other words, it is described as when at least two persons agree to enter into mutual agreement in exchange of some consideration (something of value).
A contract once entered is a legally bounding to parties who made the promises. This agreement shall consist of names of the parties, their nature of commitment, goods or services they exchange and time frame.
Contract is of two types, namely, “Unilateral Contract” and “Bilateral Contract”, otherwise called as “Reciprocal Contract”.
In Unilateral Contract, the obligation for which promise is made extends one way only, i.e., only one party promises to offer value without reciprocating immediately, which indicates that the reciprocal from other party may happen in future. An example of Unilateral Contract is when David promises to offer a prize value of
, if Stephen finds David’s missing pet Dog.
Reciprocal or Bilateral Contract refers to the mutual agreement between two parties and thus making one’s obligation is attached to other party’s fulfillment of promise or obligation. In other words, it is a promise made in an exchange for other promise. Reciprocal obligation occurs in our day to day life as well as in formal legally abiding contract agreement. A simple example of Reciprocal promise would be if Martin obliges to pay
everyday in return of receiving Milk pocket from Tony.