A contract creates what between two or more parties?

A contract establishes a legally binding agreement between two or more parties that creates specific obligations that each party must fulfill. This means that when parties enter into a contract, they agree to perform certain duties or provide specific services, thus instituting an obligation towards one another. Failure to meet these obligations can lead to legal repercussions, making the nature of contracts foundational for the enforcement of agreements in commercial and personal dealings.

The creation of obligations is crucial because it ensures that each party is accountable for their contributions towards the terms outlined in the contract, fostering trust and reliability in transactions. This obligation also provides legal recourse if one party fails to uphold their end of the agreement, ensuring that the rights of the parties involved are protected under the law.