Difference Between Contract and Agreement

Contract vs Agreement

The words contract and agreement are often used to mean the same thing, yet there are unmistakable differences between the two.  A contract is a written or verbal agreement between two or more parties that is enforceable by law.  An agreement is a written or verbal contract between two or more parties that is not enforceable by law.  The proper way to make an official contract is through legal means, whereas an agreement can be done without legal involvement. Agreements are generally made over small things, and are usually held by taking someone’s word.  A contract is made legal when it involves important issues where a promise cannot suffice.  Contracts and agreements are used for the same purpose, however a contract is a professional agreement.

There are many types of contracts which can be developed.  One is the financing contract which is created between a debtor and a lender.  There are project management contracts created between workers and the person who is paying them to complete a certain project.  Other contracts include building contracts, service contracts, and some consider marriage to be a contract as well.  Agreements are different as they are created on a personal understanding; a trust that a person will complete their half of the agreement. Agreements can also be made for the aforementioned things, however there is no legal guarantee for reimbursement should the other person not complete their job.  Agreements are more commonly made between family members or close friends and are similar to promises.  Like promises, agreements can be broken; when this occurs there are no legal repercussions.

In order for a contract to become binding, there are certain elements it must possess.  It must demonstrate universal acceptance; all parties are in agreement with the limitations set forth by the contract.  It must be plausible and possible, meaning that is should be believably obtainable to commit to by all parties involved.  When an agreement is made, there is only a verbal acceptance by the parties involved.  It can be made even if the stipulations are impossible, and the parties are able to alter an agreement as they see fit and when they desire.

Contracts and agreements are created with the same purpose of creating a formal agreement between parties.  The difference lies in the formality of the contract and the personalization of an agreement.

Summary

1. A contract is a written or verbal agreement that is enforceable by law.  An agreement is the same, however it is typically not enforced by the law.
2. A contract is a formal agreement which is legally binding, usually created for business purposes, or to ensure the safety of one’s assets.  Agreements are informally made with family and friends, they are similar to promises.
3. Contracts involve a universal acceptance of the terms and the stipulations are deemed possible to attain by all parties.  Agreements have universal acceptance, however there is no guarantee of attainment by parties and it can be changed at any time by either participant.