Contract types refer to the various categories of agreements that define the terms and conditions between parties. Common types include fixed-price contracts, where a set price is agreed upon, and cost-reimbursable contracts, which cover actual costs plus a fee. Each type serves different purposes and risk levels, depending on the project's nature. Another important category is time and materials contracts, which pay for the time spent and materials used. Understanding these contract types helps parties choose the best option for their specific needs, ensuring clarity and reducing potential disputes throughout the project lifecycle.