A contract is generally a written or spoken agreement between persons or entities that includes obligations for each party (mutual obligations or mutuality) and enough specific information to be enforceable by either party (specificity).

The elements of forming an enforceable contract are generally (1) an offer made; (2) acceptance of the offer; and (3) consideration given by each party for the other party’s performance of the agreement—such as money in exchange for products or services, or mutual promises exchanged—which is often referred to as the bargained-for exchange.

The word "agreement" is often used interchangeably with the word "contract," and a document labeled as an agreement (with the necessary legal elements included) is as enforceable as a document labeled as a contract.

In Iowa, as in most states, a contract is recognized as a legally binding agreement when it contains the essential elements of (1) an offer, (2) acceptance of that offer, and (3) consideration, which is something of value exchanged between the parties. This consideration must represent a bargained-for exchange, such as money for goods or services, or mutual promises. The contract must also be sufficiently specific, detailing the obligations of each party so that the agreement can be enforced in a court of law. While the terms 'agreement' and 'contract' can be used interchangeably, the enforceability of the document hinges on the presence of these legal elements, not the label of the document. In Iowa, contracts can be written or oral, but certain types of contracts, such as those for the sale of real estate or agreements that cannot be performed within one year, must be in writing to be enforceable under the Statute of Frauds.