What term describes the mutual agreement between two persons regarding performance or compensation?

The term that best describes the mutual agreement between two persons regarding performance or compensation is a "Contract." A contract is a legally binding agreement that outlines the responsibilities and expectations of both parties involved. It typically includes specific details about the terms and conditions under which services will be performed, or compensation will be provided. This formal structure ensures that both parties have clear obligations and can seek legal recourse if the terms are not met.

An "Agreement," while similar, does not necessarily imply a binding legal obligation unless it meets certain legal criteria to form a contract, such as consideration and intent to create legal relations. The term "Proposal" refers to an offer made by one party that is subject to acceptance by another and does not encompass the mutual understanding of terms. "Understanding" may imply a more informal and non-binding recognition of intentions or discussions between parties without the formalities of a contract.