commercial contracts are documents that cover a combination of legal and commercial factors. a commercial contract is a legally binding document that puts one party into a binding position either to do something or not to engage in the stated activity. also stated in the contract are the terms of the arrangement that cover all important factors. in the event one party fails to meet their side of the agreement, a breach of contract happens. commercial contracts can be verbal or written, but it’s preferable to have a written contract as it’s more difficult to enforce a verbal contract in court due to lack of documentation. it’s possible to execute a contract to establish terms regarding any business activity as long as the components listed below are in the contract: a commercial contract has two parties with one party requesting the otherâ party to perform a specified job or activity.