A contract is a formal agreement between two or more parties that outlines their rights and responsibilities. It can be written or verbal, but written contracts are usually preferred because they provide clear evidence of the terms agreed upon. Common examples of contracts include employment agreements, rental leases, and sales contracts. Contracts are important because they help prevent misunderstandings and protect the interests of everyone involved. If one party fails to meet their obligations, the other party can seek legal remedies. This ensures that all parties are held accountable and that the agreement is honored.