The methods used to assign grades to students have long been of concern to teachers. Traditional approaches to solving the difficulties have centered on norm-referenced and criterion-referenced evaluations. A promising alternative arises when criterion-referenced evaluation is linked with contract grading. A student may contract with a teacher to do the work required for any passing grade from "A" to "D." The process may be handled in one of several ways: the teacher may create and assign the contract; the teacher may create several contracts and allow the student to choose the preferred one; the student may create the contract with the teacher's agreement and assistance; or the student may create the contract with the teacher allowing classroom time to pursue the endeavor and providing needed assistance. Contract grading relieves anxiety over grades, helps the student see the required work as a whole unit, and sustains motivation. (TJ)