Contracts can be defined as:

A contract is mutually binding legal relationships obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the acquirer to an expenditure of appropriate funds and that, except otherwise authorized, are in writing. In addition to bilateral agreements, contracts include, but are not limited to, awards and notices of awards; job orders or task letter issued under purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral modifications.
Common Law dictionary definition

Logisticians, especially self-employed consultants, must become familiar with the different types of contacting vehicles used.

Cost Plus Fixed Fee contracts allow the contractor to recover costs, plus receive a negotiated fee. It carries little risk to the contractor.

Firm Fixed Price contracts provide the greatest risk to the contractor because costs are a major risk. Incentive contracts will help reduce the costs and maximize profits.

Of the two major contract types, Firm Fixed Price and Cost Reimbursement, the following shows the advantages and disadvantages of both: