It seems to me that there are a few different options.

1. The Naturalist View

Under this view, when two people make an agreement which meets certain conditions, a magical contract comes into being spontaneously. Magic itself recognises the agreement as binding and there are rules of magic which dictate the consequences for breach.

All of this is essentially out of wizards' hands: the rules of binding agreements would be a naturally-occurring part of magic, like Gamp's Law.

The Unbreakable Vow would appear to be magic of this type. There are no elaborated terms in the agreement, and the people agreeing never state that death will be the consequence of breach. They simply make a promise under binding circumstances, and magic itself deals out death to anyone who breaks it.

2. The Legal View

Under this view, just as in the Muggle world, there would be a body of wizard-developed contract law which details what contracts are, what happens when they are breached, etc. What is enforced is therefore not what magic dictates, but rather what wizards have collectively agreed are the rules.

This is the view suggested by the Goblet of Fire:

Contrary to common fanon, the Goblet of Fire is simply the method nominated in the Triwizard rules for the selection of champions. The goblet itself does not bind the champions; rather, they are bound to compete by the rules.

By entering a name into the Goblet, you are making a contractual agreement to be bound by the Triwizard rules, much like you can agree in a contract to be bound by e.g. the rules of a sport. And those rules state that if your name comes out of the goblet, you are bound to compete.

So Harry has to compete in the tournament because to do otherwise would be unlawful, not because he will suffer some consequence meted out by magic if he refuses. The phrase "magical contract" simply means a contract which exists by virtue of magical (in the sense of wizard-made) rather than Muggle law. The word "binding" simply describes the nature of all contracts - Muggle contracts are binding too, just under Muggle rather than magical law.

For what it is worth, this is also the view explicitly stated in the movies, where Dumbledore chooses to allow Harry to compete when he could have put a stop to it, if he had wished.

3. The Spell-Based View

Under this view, a magical contract is simply an enchanted object which binds individuals who interact with it (possibly in a consensual fashion, but potentially without consent) to a certain consequence in certain circumstances.

This is the view suggested by the DA sign-up sheet:

As we later find out, Hermione placed a jinx on the parchment, such that anyone who breaks the confidentiality agreement suffers the effects of the jinx. It's not clear if the jinx was applied before or after the members signed:

From the wording I would guess the jinx was already on the parchment at the time of signing, but it's not clear.

Under this view, you can imagine lots of very clever combinations of agreements with spells with different effects woven into them. It's probably the view that gives you the most scope for creativity in fanfiction.

The traditional fanon view of the Goblet of Fire falls into this view, and would evidence that consent is not required. However, given what I said above about this view being mistaken, I would suggest that if the Spell-Based view is correct, then consent is required. Otherwise you could jinx a parchment, sign Voldemort's name on it, and jinx him from afar.

Conclusion

In many ways, the question in the thread is purely semantic. The Unbreakable Vow, the legally binding Triwizard rules, and Hermione's jinxed parchment are all canonical; therefore all three of the above views exist in one form or another.

The question remains as to which of the 3 it is that wizards refer to when they use the words "binding magical contract". My view is that they use this phrase to refer to the second view (legal view) because this is exactly how Moody refers to it in GoF.

Of course, if you have a magical contract, you can still put jinxes on it, and thereby have a combination of 2 and 3.

 

My view is that magical contracts are simply self-enforcing contracts, and are basically conditional spells that activate when terms are met or broken. The same rules apply as with everything else in magic. I.e., you don't need to fix every loophole and have perfect understanding of what you are doing for it to work pretty much as you wish it should.

An interesting corollary is that such contracts would seem to be just the kind of thing curse breakers would work with. Which would also explain why they aren't more common; with enough skill (or money to hire someone with that skill) it should be relatively easy to break a magical contract. And the fact you can force a "contract" on someone would likely make them illegal or at least frowned upon, too.

 

Its like a ward bound to ones magical core, but instead of detecting things to protect the caster from, it analyses their behaviour based on specfic instruction and should they ever be deemed to have broken the contract it has the ward turn against the wizard and draws upon their magical energy to affect them with a spell or even worse deny them further access to their magical core.

 

What's that quote from I think book 6 where Ron talks about almost making an Unbreakable Vow when he was little because the twins tricked him into it? I feel like that heavily implies 1. And like Sesc, I definitely think 1 has the most potential for good storytelling. Although it does leave a ton of room open for cliches.

 

@Newcomb

 

From Bill and Fleurs Wedding. Marriage also appears to be a magical contract of some kind. It would be a little of all three.

 

Or marriage is just a legal contract and the stars are a showy spell to end a wedding ceremony with.

 

This is obviously the famous Veela bond.

 

I think it's the legal view when the canon talks about magical contracts, but instead of a Court granting specific performance or damages for breach, the magic invoked to form the contract either compels performance or punishes the breach. The ingredients of a magical contract are - parties capable of forming intent, object and consideration, consent express or implied (not necessarily free) and provision for performance or damages.

Goblet of fire, unbreakable vows and the jinx are terrible specimens of standard form contracts.

 

Perhaps, but I think it is more likely than not a magical contract. Compare and contract that scene with this.

Obviously here we know this to be the Unbreakable Vow, but from external appearences it is very similar to the wedding. In fact if magical contracts are used for gambling I would consider it outright unusual for them not to be used for weddings.


EDIT: woops. Pretend I said DA rather than gambling.

 

I must have missed something sorry, where is the mention of a magical bond and gambling?

 

Apologies, my brain dribbling out of me ears. I had recollections of there being some kinf of contract between Bagman and the Twins, but I think that must have been fanfiction. Do we really only have the three incidents of confirmed Magical Contracts (DA Parchment, Goblet of Fire, Unbreakable Vow)?

 

There is also the Blood Pact between Dumbledore and Grindelwald. But thats about it, unless the marriage thing counts.

 

Magical contract? I believe the more often used term is "Prenuptial Agreement."