How does FAR define the term "contract"?

The definition of "contract" as a legally binding agreement between parties aligns with the fundamental principles of contract law and the intent expressed in the Federal Acquisition Regulation (FAR). A contract encompasses not just the obligations of the parties involved but also the terms, conditions, and considerations required to enforce these obligations. This definition is crucial because it establishes that both parties have clear intentions, rights, and duties that can be legally upheld in a court of law if necessary.

The other options do not accurately capture the essence of what constitutes a contract. For instance, defining a contract solely as a government procurement tool overlooks the broader application of contracts in various contexts beyond government procurements. Furthermore, suggesting that it is merely a framework for negotiating costs excludes critical components such as performance, delivery timelines, or quality standards, which are inherent in a comprehensive contract. Lastly, referring to a contract as an informal agreement among stakeholders diminishes its legal significance and enforceability, which are key features that define a contract. Thus, the definition provided in the correct answer effectively encompasses the comprehensive nature of contracts as intended in FAR.