How does iContract create agreements?

iContract offers fixed agreement templates that use the facts you provide and do not require AI. For specialty agreements without a fixed template, iContract can offer clearly labeled optional AI-assisted drafting.

Does iContract guarantee that an agreement is enforceable?

No. iContract is software, not a law firm, and it does not provide legal advice or guarantee that any agreement is valid or enforceable in a particular jurisdiction. Consider qualified legal review for high-stakes or jurisdiction-specific matters.

How much does a contract generator cost?

iContract offers a free tier for basic contract generation. Premium plans start at affordable rates for unlimited contracts, e-signatures, and advanced features like risk scanning and compliance monitoring.

What is a Contract? The Complete Plain-English Guide

Everything you need to know about contracts: what they are, what makes them valid, and the 50+ common types.

Published 2026-04-14 · 12 min

Definition

A contract is a legally binding agreement between two or more parties that creates obligations enforceable by law. Contracts can be written, verbal, or implied — but written contracts are dramatically easier to enforce.

The 4 Essential Elements

Every valid contract requires:

Common Types of Contracts

There are dozens of contract types, but the most common include: Service Agreements (consulting, freelance), Employment Contracts (W-2 employees), Independent Contractor Agreements (1099 contractors), NDAs (confidentiality), Lease Agreements (rentals), Sales Agreements (buying/selling goods), Loan Agreements (lending money), Partnership Agreements (business co-ownership), License Agreements (using IP), and Settlement Agreements (resolving disputes).

Written vs Verbal Contracts

Most contracts are valid even if verbal. BUT some MUST be in writing under the Statute of Frauds: real estate, marriage agreements, sales of goods over $500, and contracts that can't be performed within one year. Even when verbal contracts are technically valid, they're nearly impossible to enforce — always get it in writing.

How to Write a Contract

Modern contracts include: parties (full names/addresses), scope (what's being exchanged), payment terms (amount, schedule, method), timeline (start, milestones, end), obligations of each party, termination conditions, dispute resolution, governing law, and signatures. You can DIY for simple contracts, use AI for fast custom contracts (iContract: 2 minutes), or hire a lawyer for complex deals ($500-3,000).

Are E-Signatures Legal?

Yes. Under the ESIGN Act (US, 2000) and eIDAS (EU), electronic signatures are equally binding as handwritten signatures for nearly all contracts. Some exceptions: wills, divorce decrees, and certain real estate deeds in some states still require wet ink.

FAQ

Is a verbal contract legally binding?

Yes for most everyday agreements, but nearly impossible to enforce. Some contracts MUST be in writing (real estate, marriage agreements, sales over $500). Always put it in writing.

What if I sign a contract I don't understand?

You're still legally bound. Signing something means you agree to it. If you don't understand it, don't sign — get clarification or have a lawyer review (or use iContract's AI legal term explainer for free).

Can I cancel a contract after signing?

Generally no, unless the contract has a termination clause or you can prove fraud, duress, or misrepresentation. Some consumer contracts (door-to-door sales, certain real estate) have a federal 3-day cooling-off period.

Create your agreement

Start with a guided template or optional specialty drafting flow, then review the result before signing. Start free →