Agreement vs. Contract: Know the Difference
By Shumaila Saeed || Updated on December 25, 2023
An agreement is a mutual understanding between parties, while a contract is a legally binding agreement enforceable by law.
Key Differences
An agreement is generally any understanding or arrangement reached between two or more parties. A contract, on the other hand, is a specific type of agreement that is legally enforceable.
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Dec 13, 2023
Agreements don’t necessarily involve a legal commitment, but contracts do. A contract is an agreement that legally binds the parties involved to fulfill their obligations as stipulated.
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Dec 13, 2023
For an agreement to become a contract, it must have certain elements like offer and acceptance, consideration, capacity, and legality. In contrast, an agreement can be informal and doesn’t require these legal elements.
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Dec 13, 2023
A contract is enforceable in a court of law, which means legal remedies are available if one party fails to meet their obligations. Agreements, unless they fulfill the criteria of a contract, generally do not have this level of enforceability.
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Dec 13, 2023
Contracts often have a narrower scope, focusing on specific duties and rights of the parties involved. Agreements can be broader and more informal, encompassing a wide range of understandings, from social arrangements to complex business negotiations.
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Dec 13, 2023
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Comparison Chart
Elements Required
No specific legal requirements
Must include elements like offer, acceptance, and consideration
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Purpose
Can be for any arrangement or understanding
Specifically for creating obligations enforceable by law
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Dec 13, 2023
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Agreement and Contract Definitions
Agreement
Harmony or accordance in opinion or feeling.
There was an agreement among team members about the project's direction.
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Dec 08, 2023
Agreement
A mutual understanding between parties.
They reached an agreement to share the costs of the trip.
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Dec 08, 2023
Contract
A written or spoken agreement, especially one concerning employment, sales, or tenancy.
The actor agreed to a two-movie contract.
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Dec 08, 2023
Agreement
An arrangement about a course of action.
The committee came to an agreement on the event date.
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Dec 08, 2023
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Contract
A document detailing the terms of a legal agreement.
He carefully reviewed the contract before signing.
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Dec 08, 2023
Agreement
A negotiated and typically legally binding arrangement.
The two companies signed a trade agreement.
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Dec 08, 2023
Contract
An agreement between two or more parties, especially one that is written and enforceable by law.
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Dec 08, 2023
Agreement
Harmony of opinion; accord
Since we are all in agreement, let's proceed.
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Dec 08, 2023
Agreement
An arrangement between parties, usually resulting from a discussion, regarding a course of action.
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Agreement
(Grammar) Correspondence in gender, number, case, or person between words.
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Agreement
(countable) An understanding between entities to follow a specific course of conduct.
To enter an agreement;
The UK and US negotiators nearing agreement;
He nodded his agreement.
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Dec 08, 2023
Contract
A paid assignment to murder someone
Put out a contract on the mobster's life.
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Dec 08, 2023
Agreement
(uncountable) A state whereby several parties share a view or opinion; the state of not contradicting one another.
The results of my experiment are in agreement with those of Michelson and with the law of General Relativity.
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Dec 08, 2023
Contract
To enter into by contract; establish or settle by formal agreement
Contract a marriage.
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Dec 08, 2023
Contract
To acquire or incur
Contract obligations.
Contract a serious illness.
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Agreement
Rules that exist in many languages that force some parts of a sentence to be used or inflected differently depending on certain attributes of other parts.
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Dec 08, 2023
Agreement
State of agreeing; harmony of opinion, statement, action, or character; concurrence; concord; conformity; as, a good agreement subsists among the members of the council.
What agreement hath the temple of God with idols ?
Expansion and duration have this further agreement.
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Dec 08, 2023
Contract
(Grammar) To shorten (a word or words) by omitting or combining some of the letters or sounds, as do not to don't.
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Dec 08, 2023
Agreement
Concord or correspondence of one word with another in gender, number, case, or person.
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Contract
To enter into or make an agreement
Contract for garbage collection.
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Agreement
A concurrence in an engagement that something shall be done or omitted; an exchange of promises; mutual understanding, arrangement, or stipulation; a contract.
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Dec 08, 2023
Contract
To become reduced in size by or as if by being drawn together
The pupils of the patient's eyes contracted.
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Dec 08, 2023
Agreement
The statement (oral or written) of an exchange of promises;
They had an agreement that they would not interfere in each other's business
There was an understanding between management and the workers
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Contract
An agreement between two or more parties, to perform a specific job or work order, often temporary or of fixed duration and usually governed by a written agreement.
Marriage is a contract.
Sign a contract
Write up a contract
Read a contract
Countersign a contract
Legally-binding contract
Unwritten contract
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Dec 08, 2023
Agreement
Compatibility of observations;
There was no agreement between theory and measurement
The results of two tests were in correspondence
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Contract
(legal) An agreement which the law will enforce in some way. A legally binding contract must contain at least one promise, i.e., a commitment or offer, by an offeror to and accepted by an offeree to do something in the future. A contract is thus executory rather than executed.
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Dec 08, 2023
Agreement
Harmony of people's opinions or actions or characters;
The two parties were in agreement
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Dec 08, 2023
Agreement
The thing arranged or agreed to;
They made arrangements to meet in Chicago
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Dec 08, 2023
Contract
(legal) A part of legal studies dealing with laws and jurisdiction related to contracts.
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Agreement
The determination of grammatical inflection on the basis of word relations
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Dec 08, 2023
Contract
(informal) An order, usually given to a hired assassin, to kill someone.
The mafia boss put a contract out on the man who betrayed him.
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Dec 08, 2023
Contract
(bridge) The declarer's undertaking to win the number of tricks bid with a stated suit as trump.
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Dec 08, 2023
Agreement
The absence of incompatibility between two things; compatibility.
The agreement between the experiment's results and theory was reassuring.
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Dec 08, 2023
Contract
(ambitransitive) To draw together or nearer; to shorten, narrow, or lessen.
The snail’s body contracted into its shell.
To contract one’s sphere of action
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Dec 08, 2023
Contract
(grammar) To shorten by omitting a letter or letters or by reducing two or more vowels or syllables to one.
The word “cannot” is often contracted into “can’t”.
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Contract
(transitive) To enter into, with mutual obligations; to make a bargain or covenant for.
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Dec 08, 2023
Contract
(intransitive) To make an agreement or contract; to covenant; to agree; to bargain.
To contract for carrying the mail
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Contract
(transitive) To bring on; to incur; to acquire.
She contracted the habit of smoking in her teens.
To contract a debt
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Dec 08, 2023
Contract
To draw together or nearer; to reduce to a less compass; to shorten, narrow, or lessen; as, to contract one's sphere of action.
In all things desuetude doth contract and narrow our faculties.
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Dec 08, 2023
Contract
To draw together so as to wrinkle; to knit.
Thou didst contract and purse thy brow.
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Dec 08, 2023
Contract
To bring on; to incur; to acquire; as, to contract a habit; to contract a debt; to contract a disease.
Each from each contract new strength and light.
Such behavior we contract by having much conversed with persons of high station.
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Dec 08, 2023
Contract
To enter into, with mutual obligations; to make a bargain or covenant for.
We have contracted an inviolable amity, peace, and lague with the aforesaid queen.
Many persons . . . had contracted marriage within the degrees of consanguinity . . . prohibited by law.
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Dec 08, 2023
Contract
To betroth; to affiance.
The truth is, she and I, long since contracted,Are now so sure, that nothing can dissolve us.
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Dec 08, 2023
Contract
To shorten by omitting a letter or letters or by reducing two or more vowels or syllables to one.
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Dec 08, 2023
Contract
To be drawn together so as to be diminished in size or extent; to shrink; to be reduced in compass or in duration; as, iron contracts in cooling; a rope contracts when wet.
Years contracting to a moment.
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Dec 08, 2023
Contract
To make an agreement; to covenant; to agree; to bargain; as, to contract for carrying the mail.
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Dec 08, 2023
Contract
The agreement of two or more persons, upon a sufficient consideration or cause, to do, or to abstain from doing, some act; an agreement in which a party undertakes to do, or not to do, a particular thing; a formal bargain; a compact; an interchange of legal rights.
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Dec 08, 2023
Contract
A formal writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation.
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Dec 08, 2023
Contract
The act of formally betrothing a man and woman.
This is the the night of the contract.
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Dec 08, 2023
Contract
A binding agreement between two or more persons that is enforceable by law
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Dec 08, 2023
Contract
(contract bridge) the highest bid becomes the contract setting the number of tricks that the bidder must make
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Dec 08, 2023
Contract
A variety of bridge in which the bidder receives points toward game only for the number of tricks he bid
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Dec 08, 2023
Contract
Engage by written agreement;
They signed two new pitchers for the next season
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Dec 08, 2023
Contract
Squeeze or press together;
She compressed her lips
The spasm contracted the muscle
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Dec 08, 2023
Contract
Become smaller or draw together;
The fabric shrank
The balloon shrank
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Dec 08, 2023
Contract
Be stricken by an illness, fall victim to an illness;
He got AIDS
She came down with pneumonia
She took a chill
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Dec 08, 2023
Contract
Compress or concentrate;
Congress condensed the three-year plan into a six-month plan
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Contract
Make or become more narrow or restricted;
The selection was narrowed
The road narrowed
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Contract
Reduce in scope while retaining essential elements;
The manuscript must be shortened
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Contract
An agreement with specific terms between two or more persons or entities.
The contract stipulated a delivery date within 30 days.
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Dec 08, 2023
Contract
The act of entering into a formal and legally binding agreement.
The artist contracted with the gallery for an exhibition.
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Dec 08, 2023
Repeatedly Asked Queries
Must a contract be in writing?
While verbal contracts can be valid, most contracts are in writing for clarity and legal enforceability.
Shumaila Saeed
Dec 13, 2023
What is an agreement?
An understanding or arrangement between two or more parties.
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Dec 13, 2023
Can a contract be broken?
Yes, but breaking a contract usually has legal consequences.
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Dec 13, 2023
What happens if an agreement is not followed?
If it’s not a contract, legal enforceability is limited. However, it may affect the relationship or trust between parties.
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Dec 13, 2023
Are all agreements contracts?
No, not all agreements are contracts; a contract is a specific type of agreement with legal obligations.
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Dec 13, 2023
Do all contracts need to be detailed?
It's advisable, as details provide clarity and help in legal enforcement.
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Dec 13, 2023
Can agreements be informal?
Yes, agreements can be informal and don’t require legal formalities.
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Dec 13, 2023
What are the consequences of breaking a contract?
Consequences can include legal action, financial penalties, or specific performance requirements.
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Dec 13, 2023
Is a written agreement the same as a contract?
Not always; a written agreement becomes a contract when it has all the legal elements of a contract.
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Dec 13, 2023
Are oral contracts enforceable?
Yes, but they are harder to prove and enforce than written contracts.
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Dec 13, 2023
What makes a contract legally binding?
Elements like offer, acceptance, consideration, capacity, and legality make a contract legally binding.
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Dec 13, 2023
What is ‘consideration’ in a contract?
Consideration is something of value exchanged between the parties, an essential element for a contract.
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Dec 13, 2023
What is the importance of a contract in business?
Contracts provide legal protection, define obligations, and ensure clarity in business transactions.
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Dec 13, 2023
Are handshake agreements legally binding?
They can be, but proving the terms and existence of such agreements can be difficult.
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Dec 13, 2023
Can a minor enter into a contract?
Generally, contracts with minors are not enforceable, as they lack the legal capacity.
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Dec 13, 2023
What is considered a breach of contract?
Failure to fulfill any term of a contract without a legitimate legal excuse.
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Dec 13, 2023
Can I withdraw from an agreement?
Yes, but it depends on the terms of the agreement and whether it’s a legally binding contract.
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Dec 13, 2023
What is an example of an agreement that is not a contract?
A plan between friends to meet for lunch.
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Dec 13, 2023
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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