# Formal contract

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A **formal contract** is a [contract](/source/Contract) where the parties have signed under [seal](/source/Seal_(emblem)), while an informal contract[1] is one not under seal. A seal can be any impression made upon the document by the parties to the contract. This was traditionally done in [wax](/source/Wax) stating the intentions of the parties to be bound by the contract. Only parties to a [sealed document](/source/Sealed_documents) are the people who have rights under it, thus only people party to the contract can be found liable. According to Harvey Boller, J.D. Professor of Law at [Loyola University](/source/Loyola_University_Chicago), roughly 100 percent of contracts today are informal contracts.[citation needed]

The legitimacy of a contract, however, does not rely upon whether a contract is formal or informal.[2] Both are considered binding, given all other elements of a contract exist. In which both parties agree to each comply with each other's wishes to a certain limit. Usually, the contract is formed by a greater authority, such as a government, or corporation.

The Twelfth Edition of *Business Law: Text Cases* (Clarkson, Miller & Cross), says that formal contracts are, "contracts that require a special form or method of creation to be enforceable." It uses negotiable instruments as an example of formal contracts, such as: checks, drafts, [promissory notes](/source/Promissory_note), and [certificates of deposit](/source/Certificate_of_deposit). These examples are all required to have special formation under the [Uniform Commercial Code](/source/Uniform_Commercial_Code).[3]

## References

1. ["What is informal contract? definition and meaning"](https://web.archive.org/web/20200918085253/http://www.businessdictionary.com/definition/informal-contract.html). Archived from [the original](http://www.businessdictionary.com/definition/informal-contract.html) on 2020-09-18. Retrieved 2020-08-29.

1. ["Informal vs. Formal Contracts: Examples, Differences & Definitions"](https://study.com/academy/lesson/informal-vs-formal-contracts-examples-differences-definitions.html). Retrieved 2020-08-28.

1. Miller, and Cross. "Chapter 11: Contract Law." Business Law: Text and Cases. By Clarkson. 12th ed. Mason: Cengage Learning, 2012. Page 210. Print.

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