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Informal contract is a contract other than one under seal, a recognizance, or a negotiable instrument. An informal contract derives its force not from the observance of formalities but due to the presence in the transaction of certain elements that are present when people make promises with binding intent, such as mutual assent and consideration (or a device other than consideration). An informal contract may be made with or without writing. This is also termed as bargain or simple contract.
Generally, there are five essential elements to the formation of an informal contract. These are: mutual assent; consideration or some other validation device; two or more contracting parties; parties having legal capacity to contract; the absence of any statute or common-law rule declaring the particular transaction to be void.