A verbal contraction was a shortened form of a word such as "can't" for "can not" or "isn't" for "is not". In slang, it was common to use improper contractions such as "ain't" instead of "isn't". (TNG: "A Fistful of Datas")
Lore was adept at using contractions, which he pointed out to Data in 2364, who did not have this ability. (TNG: "Datalore")
Created in 2366, Lal's neural nets were based on Data's, but as she developed, she gained the ability to use verbal contractions. (TNG: "The Offspring")
By 2367, Data still could not use contractions, which (among other things) made William T. Riker realize he was not in the year 2383, but instead in a simulation created by Barash. Later, Data would make two contractions ("I'm" and "can't"), but when Riker asks what he said, Data retracts by saying "cannot." However, Riker states that Data said "can't" and therefore used a contraction. (TNG: "Future Imperfect")