A contract is a legally enforceable agreement between two or more persons, involving mutual promises to do or not do something. The law of contracts governs where law and business most often meet. The function of law in this area is to protect people in their business dealings against those who fail to honor their agreements.
Contracts can be either written or oral. A great deal of business is conducted through oral contracts, which create legally binding obligations that courts will enforce. However, some contracts (such as those for the sale of real estate and premarital agreements) must be in writing in order to be enforceable. In addition, not all written contracts are enforceable, either because they are illegal, against public policy, or because a party is not legally competent to make a contract.
Contracts can be either express or implied. Your verbal agreement to hire someone at a stated price is a binding express contract. An implied contract would be one in which obligations are undertaken without ever mentioning the words contract or agreement, but are implied by the actions of the parties.
Written contracts are generally preferable to oral ones. This is because it is difficult to prove the terms of an oral contract if a dispute arises.
If you have questions about the formation or interpretation of a contract, you should seek legal advice. This is often money well spent, as future problems resulting from a poorly drafted contract are not worth the risk.