Difference between Agreement and Contract
An agreement is any understanding or arrangement reached between two or more parties. When a proposal is accepted by the person to whom it is made, with requisite consideration, it is an agreement. A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law. When an agreement is enforceable by law, it becomes a contract.
Agreement –
- Definition – An arrangement (usually informal) between two or more parties that is not enforceable by law.
- Validity based on mutual acceptance by both (or all) parties involved.
- Does not need to be in writing.
- No Consideration required.
- Legal effect – An agreement that lacks any of the required elements of a contract has no legal effect.
- Legal obligation – Does not create a legal obligation
Contract –
- Definition – 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.
- Does not need to be in writing, but, except for some specific kinds of contracts, such as those involving land or which cannot be completed within one year.
- Consideration is required.
- Legal effect – A contract is legally binding and its terms may be enforceable in a court of law.
- Legal obligation – Creates legal obligation.
The following are the types of agreement are as under: Wagering Agreement, Void Agreement, Voidable Agreement, Implied Agreement, Express Agreement, Conditional Agreement, Illegal Agreement etc.
The major types of contract are as under: Void Contract, Voidable Contract, Valid Contract, Unilateral Contract, Bilateral Contract, Express Contract, Tacit Contract, Contingent Contract, Implied Contract, Executed Contract, Executory Contract, Quasi-Contract etc.
