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
|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
|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 |
|It necessarily creates legal |
|4. Scope||All agreements are not contract.||All Contracts are contract.|
|5. Binding||All agreements are not legally |
|All valid contracts are legally |
|6. In Writing||Not necessarily.||Contracts are usually in writing |
|7. Similarities||Proposal, consideration, offer |
|Proposal, consideration, offer|