Financial contracts are legally binding agreements between parties that outline the terms of a financial transaction. These contracts can involve various instruments, such as loans, leases, or derivatives, and specify the rights and obligations of each party. They are essential for ensuring clarity and reducing risks in financial dealings. Common types of financial contracts include mortgages, bonds, and insurance policies. Each type serves a specific purpose, such as borrowing money, investing, or protecting against losses. Understanding these contracts is crucial for individuals and businesses to manage their finances effectively and make informed decisions.