An illegal contractor is someone who makes a contract with a chain by drinking said chain's blood; it is usually done without Pandora's aproval. A clockwise seal appears on their chests and once their contract expires they along with their chains are dragged into the depths of the Abyss.
A legal contractor is a person who makes a contract with a chain using a "Carcere", a method devised by Pandora. Contractors using this method will not have a clockwise seal on their chests which in turns negates the risk of them being dragged into the Abyss due to their contracts expiring. It does however have some side affects such as causing certain contractors such as Xerxes Break or Sharon Rainsworth to physically stop aging. This type of contract also limits the power that contractors and their chains can use.