All contracts are an agreement between two parties to perform some action; these stipulations are the terms of the contract. If a contract to which you have agrees states that you must perform some action, that action is a contractual obligation. Say you have just obtained a new credit card and purchased a cartful of awesome stuff at the electronics store. The bank issuing the credit card has just performed their contractual obligation by approving all of your new consumer debt. In the next few weeks you will have to fulfill your contractual obligation by making at least the minimum monthly payment to that credit card. Whenever either contracted party does not fulfill a contractual obligation, they are considered to be in "breach of contract", and they can expect legal remedy to be pursued by the other party-in plain English: if you don’t pay your bills, you’ll be hearing from an attorney.