What is meant by 'contractual agreement'?

A contractual agreement refers to a mutual understanding between parties regarding their rights and obligations. It establishes the framework and expectations for the relationship between the parties involved. This understanding can encompass various aspects, such as the exchange of goods, services, or promises, and it is typically characterized by the intention of the parties to create a binding obligation.

The other options provide perspectives that do not encompass the full definition of a contractual agreement. While a legal document may outline the specifics of the financial obligations and may be part of a contractual agreement, it is not the entirety of what a contractual agreement entails. An informal handshake, while it may indicate some form of agreement, lacks the necessary legal enforceability and clarity found in a well-defined contractual agreement. Finally, not all agreements require enforcement through a court; a significant number of contracts are fulfilled without disputes or the need for legal action. Thus, option B captures the essence of a contractual agreement, focusing on the mutual understanding and obligations that are established between the parties.