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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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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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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Contract
An agreement between two or more parties, especially one that is written and enforceable by law.
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Agreement
Harmony of opinion; accord
Since we are all in agreement, let's proceed.
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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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Contract
To enter into by contract; establish or settle by formal agreement
Contract a marriage.
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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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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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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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Agreement
Harmony of people's opinions or actions or characters;
The two parties were in agreement
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Agreement
The thing arranged or agreed to;
They made arrangements to meet in Chicago
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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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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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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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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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Contract
To draw together so as to wrinkle; to knit.
Thou didst contract and purse thy brow.
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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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Contract
Become smaller or draw together;
The fabric shrank
The balloon shrank
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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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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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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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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.
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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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