A contract is an agreement which rises to such a level of formality that is it enforceable in a court of law. All agreements are not enforceable in a court of law. Any agreement which is important, should be made the subject of a contract. Some contracts may be oral/verbal and still be enforceable. Some contracts, for instance, involving an interest in real estate, must be in writing. All contracts should be in writing. When an oral contract is in dispute, typically the parties are in dispute as to its terms. You can see how a court would have trouble deciding who is right. Finally, consider that a contract may never become the subject of a lawsuit. Instead, it may simply serve to avoid any misunderstanding. This may be the most valuable role which a contract can play. Each and every choice of words in the process of preparing a contract may be determinative. A contract should be drawn by an attorney.