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.

Contracts between governmental entities and contracts between private citizens or entities and governmental entities often have unique considerations such as the contracting or bidding process for government contracts and the governmental entity's legal liability for failing to meet its obligations under the terms of a contract (see the subtopic on sovereign immunity).

In New Jersey, 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 'bargained-for exchange' is crucial for the contract's enforceability. Contracts can be in writing or oral, although certain types of contracts must be in writing to be enforceable under the Statute of Frauds, such as contracts for the sale of real estate or agreements that cannot be performed within one year. The terms 'agreement' and 'contract' are often used interchangeably, and the enforceability of the document does not depend on its label, but rather on the presence of the necessary legal elements. When it comes to contracts involving governmental entities, there are additional considerations. These may include specific bidding and contracting processes for government contracts and issues related to sovereign immunity, which can limit or affect the government's legal liability for breach of contract. It is important to note that while sovereign immunity can protect government entities from certain legal actions, it does not render them completely immune from contractual obligations.