The word contract sounds rather official. Rock bands have made it when they have a contract. New consultants celebrate their first contract and hang on to them as the strting point of their careers. The word, however, is much less special than most think as contracts are everywhere.

Deal, handshake, agreement, bargain, purchase, memorandum of understanding, guarantee, ticket, licence, lease, marriage, employment, transaction are all types of contracts. Some lack key aspects that make us consider them contracts. Memorandums of understanding are not enforceable due to a statement set out within them that the parties agree not to be subject to enforcement measures if they fail to honour the intent. Marriages are still contracts but enforcement of many of the terms of marriage have been barred by law: bringing a court action for breach of the promise to marry, for example, was barred in most Canadian provinces in the first part of the 1900's. They are still contracts in so far as they go.

Some things similar to contracts are not contracts - etiquette, a simple gift or a promise. The unilateral nature of these relationships make them insufficient to trigger the binding aspect of contract. There may be cultural, social or moral reasons which make these relationships binding but this does not make them a contract. Other things like statutory obligation are binding but are not contracts because they are imposed by the state.

This is the critical point: the parties define the rules of the deal. Sometimes this is called private law. It is not private in the sense that it is usually enforcable only by the courts - though private commercial courts and arbitrators do exist. It is private in that the content of the deal is almost exclusively up to the parties. The public court and the legislature will intervene where the deal is unconscionable or illegal. Otherwise, it is up to the parties to define how they will be bound.

So what is a contract? A relationship of exchange between two or more which legally binds based on rules largely set by the two.