Distinguish between Agreement and Contract

September 10, 2019

An agreement is any understanding or arrangement reached between two or more parties. A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law.
Difference
Similarities
Agreement
Contract
Definition
An arrangement (usually informal) between two or more parties that is not enforceable by law.
A formal arrangement between two or more party that, by its terms and elements, is enforceable by law.
Validity based on
Mutual acceptance by both (or all) parties involved.
Mutual acceptance by both (or all) parties involved.
Does it need to be in writing?
No
No, except for some specific kinds of contracts, such as those involving land or which cannot be completed within one year.
Consideration required
No
Yes
Legal effect
An agreement that lacks any of the required elements of a contract has no legal effect.
A contract is legally binding and its terms may be enforceable in a court of law.




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