contract

Voluntary, deliberate, and legally enforceable (binding) agreement between two or more competent parties. A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void (see void contract) or voidable (see voidable Contract). Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it. Some contracts, (such as for sale of real property, hire purchase agreements, insurance policies) must be in writing to be legally binding and enforceable. Other contracts (see implied in fact contract and implied in law contract) are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.

One useful but fairly uncommon type of contract stipulation is a most-favored-customer clause. Under such an arrangement, no one gets a better price than this customer, or if someone else does then this customer's price drops to that level. This affects future negotiations (it makes things tougher on that customer's competition, and it gives the vendor an excuse not to negotiate with them, if that's what the vendor wants, since its hands are tied.) But it's then easier for that vendors rivals to target its customers, and harder for it to do the reverse. Sometimes this raises the price the vendor can charge, because each customer doesn't negotiate as much, assuming future customers will.

• Some Rules Were Made to be Broken
• The Price of Competition