B) With Contract
An off-contract iPhone comes ready-to-go for use with any sim card. For this, you need to purchase it at the full cost.
If you purchase an iPhone with contract. It comes with a bonding of your operator for 12-24 months. Your iPhone is locked in this period. You can not use any other Sim card. For you to use any other sim card, you at least need to wait for the contract to finish and then request original carrier to unlock your iPhone to use it in other countries or with other carriers.
Consumer usually tend to buy an iPhone with contract iPhone because it costs very cheap and then you need to pay it in monthly instalments which includes the call charges.