informal contract

any non-formal contract. The term, informal contract, may fool the legal novice who, at first glance, could equate the term, informal, to the term, casual, as in the manner of one's dress. Informal, however, indicates that the contract does not follow a set form prescribed by law. There are in actuality only a few formal contracts such as letters of credit and negotiable instruments. An informal contract refers to any other type of contractual agreement, written or oral. In fact, the overwhelming majority of contracts created yearly are informal contracts.