Informal contracts are agreements between parties that do not require a formal written document to be legally binding. These contracts can be verbal or implied through actions, and they often arise in everyday situations, such as a handshake agreement between friends or a verbal promise to complete a task. While they may lack the structure of formal contracts, they can still be enforceable in court if certain conditions are met. However, informal contracts can lead to misunderstandings since they often lack clear terms and conditions. It is essential for parties involved to communicate openly and ensure that both sides understand their obligations. Examples of informal contracts include service agreements made over the phone or sales transactions conducted without written receipts.