A smart contract is an agreement between two people or entities in the form of computer code programmed to execute automatically.
In simple terms, they are agreements built from programs, stored on a blockchain, that run when predetermined conditions are met. If all conditions are met, according to the terms of the contract, they will be automated to execute the agreement. This allows for all participants to be immediately certain of the outcome.
This means a contract can be embedded into an agreement, in such a way that the execution of the contract is from A to B, and from B to A. No 3rd party red-tape, no cumbersome and expensive operational costs, nor commissions required. It also allows for immediate results, which offers an expressway of data that would be impossible in any other medium of transfer.