Distinguish Contract from Agreement

When it comes to legal terms, it`s important to understand the differences between different types of agreements. Two such agreements that are often used interchangeably are contracts and agreements. While they may seem similar, there are important distinctions between the two. In this article, we`ll delve deeper into the differences between contracts and agreements.

Definition of a Contract

A contract is a written or oral agreement between two or more parties that creates a legally binding obligation to fulfill certain terms or conditions. Contracts are typically used in business, employment, and real estate transactions. They can be as simple as an agreement between two people to exchange goods or services or as complex as a multi-party agreement between businesses and their stakeholders.

A contract contains several key elements, including an offer, acceptance, consideration, and mutual intent to create a legal obligation. The offer is a proposal to do something, such as provide a service, sell a product, or perform a task. Acceptance is the agreement to the offer and creates a binding contract. Consideration is the exchange of something of value, such as money or services, between the parties. Finally, mutual intent means that both parties understand and agree to the terms of the contract.

Definition of an Agreement

An agreement is a broader term that refers to any arrangement between two or more parties that creates a mutual understanding. Agreements can be formal or informal and can take many forms, including verbal, written, or implied. Agreements are not usually legally binding, although they can be if certain elements are present, such as consideration and mutual intent.

An agreement can be as simple as a verbal agreement between two friends to meet for lunch or as complex as a memorandum of understanding between two businesses outlining the terms of a joint venture. In both cases, the parties involved have agreed to certain terms, but those terms may not necessarily be legally binding.

Distinguishing Between Contracts and Agreements

The key difference between contracts and agreements lies in their enforceability. A contract creates a legally binding obligation that can be enforced in court if necessary. An agreement, on the other hand, is not always legally binding and is often based on trust and mutual understanding.

For an agreement to be legally binding, it must meet certain criteria, including an offer, acceptance, consideration, and mutual intent. If any of these elements are missing, the agreement may not be enforceable.

In contrast, a contract is enforceable as long as all of the required elements are present. Even if the parties involved later regret the terms of the contract, they are still obligated to fulfill their end of the bargain.


In summary, while contracts and agreements may seem similar, they are different in terms of their enforceability. A contract is a legally binding agreement between two or more parties, while an agreement is a mutual understanding that may or may not be legally binding. As a professional, it`s important to understand these distinctions and use the correct terminology. By doing so, you can help ensure that your content is accurate and informative.