Essentially, a business contract is an agreement that can be legally enforced between two or more entities; a contract may specify actions that must or must not be taken by either entity or all entities involved, if there are more than two. An entity in this context could refer to either a person, company or a corporation.
Typically, contracts are enforceable according to the laws of the state in which the contract was drafted. To that end, there are two types of state law, which are often referred to as common law and the state's version of the Uniform Commercial Code. Determining which type of state law is applicable to a specific contract depends on the nature of the contract.