Difference between Contract and Agreement

Difference between Contract and Agreement  

“All contracts are an agreement, but all agreements are not contracts” is an old statement which means that agreement is different from a contract. We may come across hundreds of agreement daily without knowing the fact that it may or may not bound us legally. Agreements which bind us legally are known as a contract. 

An agreement can be made without legal involvement whereas a contract needs to be legalized. Agreements are generally made are usually held by taking someone’s word and for small things. When there is an involvement of important issues where a promise cannot suffice then a contract is made. Even though contracts and agreements are used for the same purpose, a contract is said to be a professional agreement. 

There are different types of contracts which can be developed. Financing contract is one which created between a debtor and a lender. Contracts created between workers and the person who is paying them to complete a certain project is known as project management contract. Other types of contracts are building contracts, service contracts, and even marriage can be also considered marriage as contract. Agreements are differ from contract in that they are made on a personal understanding with a trust that a person will complete their half of the agreement. Agreements can also be made for the forgoing things; however it does not provide legal guarantee that other person should fulfill the agreement. Agreements are generally made between friends or family members and are similar to promises. Agreements can be broken as there are no legal repercussions. 

For a contract to become binding, there are certain essential elements that it must possess. It must demonstrate universal acceptance and also plausible. Whereas when an agreement is made, only a verbal acceptance by the parties involved is needed. Agreement can also be made if the stipulations are impossible. The parties are able to modify an agreement as they see fit and when they want. 

Agreements and contract are created with the same purpose. The difference lies in the formality of the contract and the personalization of an agreement. https://play.google.com/store/apps/details?id=com.advok8