BC31 The boards' definition of contract is based on common legal definitions of a contract in the United States and is similar to the definition of a contract used in IAS 32 Financial Instruments: Presentation. The IASB decided not to adopt a single definition of a contract for both IAS 32 and IFRS 15, because the IAS 32 definition implies that contracts can include agreements that are not enforceable by law. Including such agreements would have been inconsistent with the boards' decision that a contract with a customer must be enforceable by law for an entity to recognise the rights and obligations arising from that contract. The IASB also noted that amending the IAS 32 definition would have posed the risk of unintended consequences in accounting for financial instruments.
BC32 The definition of a contract emphasises that a contract exists when an agreement between two or more parties creates enforceable rights and obligations between those parties. The boards noted that th
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