Contract vs Agreement

A contract is legally binding between two or more parties that are in agreement. A contract is a safe way in which all the parties promise that certain rights and obligations will be fulfilled by each member who signed the contractual agreement. To put it more easily, a contract is based on a promise that each singing member agrees to satisfy.

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For a contract to be enforceable, it needs to fulfill certain criteria and include essential elements such as the following:

• Acceptance – Mutual consent, also known as mutual agreement between all the parties involved. 
• Offer – It mentions the offer that has been agreed by the parties involved
• Awareness – The acceptance of the offer. This needs to be done in writing or orally. 
• Consideration – Include the contractual consideration clause. With this clause, you will be sure that the signing parties respect and deliver respecting the agreed conditions.
• Capacity – Make sure that all the parties understand the terms and conditions of the contract. You need to see if the parties that are signing the contract understand and have the legal capacity to fulfill the terms and conditions of the contract. 
• Legality – Make sure the contract is legal. For a contract to be enforceable, it needs to have jurisdiction in the area in which you are located or take legal action. 

An agreement can be defined as a promise between two or more parties to respect and do or not do what they agreed upon. An agreement is most of the time informal but can also be found in writing. An agreement may be as informal as two friends arranging to exchange a sweater or as formal as the Terms and Conditions we agree upon when you install an app or make an update on your phone. However, you must remember that agreements can’t be enforced in court, as they are not legally binding. 

The same as an agreement, a contract is an agreement between two or more parties. They look forward to creating an environment where the members are in agreement about doing or not doing something. However, there are some differences between the two of them:

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• A contract is a legally binding agreement that needs to be signed, whereas an agreement is often a more informal understanding between parties – a less formal form of acknowledgment. 
• A contract has specific terms and conditions that outline the rights and responsibilities of each party, which have been agreed upon. An agreement might have the same considerations, but the parties are not legally bound to respect the terms laid out the same way they would be in a contract – parties mostly rely on goodwill. 
• The terms of a contract are legally enforceable and in the case of breach of contract, there will be legal consequences. Agreements can’t be resolved through legal means. 
• A contract needs specific formalities, such as offer, acceptance, consideration, legal capacity, and to be legally enforceable. An agreement can be as simple as talking to a friend.