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In this video, the speaker explains the difference between void and voidable contracts. A contract is defined as a legally enforceable oral or written agreement between two parties, creating mutual obligations. It outlines the rights and duties of the parties involved, along with the terms and conditions of the agreement. The video clarifies that an agreement forms when one party makes an offer and the other party accepts it. Essentially, an agreement arises from the combination of an offer and acceptance, where the offer specifies what will be provided, and acceptance signifies consent to that offer.