A binding contract is a legally enforceable agreement between two or more parties that outlines the terms and conditions under which they will perform their respective obligations. It creates a legal duty on each party to fulfill its promises, and any breach of this duty can result in legal consequences such as fines or compensatory damages. The key characteristic of a binding contract is that it creates an enforceable right for the aggrieved party to seek redress through the courts if one of the parties fails to honor their commitments.