Business, Differences, Law

DIFFERENCE BETWEEN CONTRACT AND AGREEMENT

Difference Between Contract & Agreement

What is contract?

Any agreement or declaration between two or more parties and the agreement must be enforceable by law is called contract. In valid contract, both parties who involve in the contract are legally bound to fulfill his obligations or promises which are within the contract.

                           Contract = Agreement + Enforceability

Example: Mr. Peter promises to sell his car to Mr. Harry for $20,000. Mr. Harry agrees to buy. It is a valid contract.

What is agreement?

Every promise, mutual decision or arrangement are an agreement if it forms a consideration for both parties.

                             Agreement = Offer and Acceptance

Example: The decision between two friends to share the rent in an apartment.

DIFFERENCE BETWEEN CONTRACT AND AGREEMENT

  Agreement   Contract
1. Definition Every promise, mutual decision
or arrangement are an
agreement if it forms a
consideration for both parties.
Any agreement or declaration
between two or more parties
and the agreement must be
enforceable by law is called
contract.
2. Formation An offer and its acceptance
make an agreement.
An agreement and its
enforceability make a contract.
3. Legal Obligations It may or may not create legal
obligations.
It necessarily creates legal
obligation.
4. Scope All agreements are not contract. All Contracts are contract.
5. Binding All agreements are not legally
binding.
All valid contracts are legally
binding.
6. In Writing Not necessarily. Contracts are usually in writing
and registered.
7. Similarities Proposal, consideration, offer
and acceptance.
Proposal, consideration, offer
and acceptance.
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