Agreement vs. Contract — What's the Difference?
By Tayyaba Rehman — Updated on October 3, 2023
Agreement is a consensus or understanding often informal, between two or more parties. Contract is legally binding agreement between two or more parties with specific obligations.
Difference Between Agreement and Contract
Table of Contents
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Key Differences
Agreement typically signifies a mutual understanding between parties about their relative rights and responsibilities. Contract, however, often denotes a formal and legally binding agreement, enforceable by law, with specified obligations and potential penalties for breach.
Agreement may not necessarily be legally binding and might be an informal understanding between parties. In contrast, a contract is generally an official arrangement, having definite terms and conditions, and recognized by law, providing a legal solution in case of a breach.
Agreement doesn’t necessarily require consideration, which is something of value exchanged between parties. Contract, on the other hand, generally involves consideration, making sure that each party provides something of value to the other, enhancing its legal solidity.
Agreement may be utilized casually to indicate consensus between individuals. Contract is often utilized in a business context, referring to a formal arrangement, duly signed, which might include payment terms, delivery dates, and other legal stipulations.
Agreement may not always have legal consequences and can be based on goodwill or trust. Contract, typically carries legal implications, where failure to adhere to its terms can result in legal action, remediation, or penalties agreed upon within the contract itself.
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Comparison Chart
Legal Binding
Not necessarily legally binding
Legally binding and enforceable
Formality
Can be informal
Typically formal and structured
Involvement of Consideration
May not involve consideration
Involves consideration
Enforceability
May not be enforceable in court
Is enforceable in court
Consequences of Breach
May not have legal consequences
Has legal consequences for breach
Compare with Definitions
Agreement
A harmony of opinion or feeling; concurrence.
The team came to an agreement about the project’s direction.
Contract
A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.
The contractor violated the terms of the contract.
Agreement
An arrangement or understanding that is accepted by all parties to a transaction.
After discussing the terms, the two companies reached an agreement.
Contract
A binding agreement made by two or more persons or parties.
The parties entered into a contract whereby one would sell and the other would buy the car.
Agreement
A situation where the parties decide to agree upon certain terms and conditions.
The tenants came to an agreement to share all common expenses.
Contract
To enter into an agreement with stipulations.
The government contracted with the builder for new roads.
Agreement
Harmony or accordance in opinion or feeling
The governments failed to reach agreement
The two officers nodded in agreement
Contract
A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it meets the requirements and approval of the law.
Agreement
The act of agreeing
When did the agreement take place?.
Contract
An agreement between two or more parties, especially one that is written and enforceable by law.
Agreement
Harmony of opinion; accord
Since we are all in agreement, let's proceed.
Contract
The writing or document containing such an agreement.
Agreement
An arrangement between parties, usually resulting from a discussion, regarding a course of action.
Contract
The branch of law dealing with formal agreements between parties.
Agreement
A properly executed and legally binding contract.
Contract
Marriage as a formal agreement; betrothal.
Agreement
The writing or document embodying this contract.
Contract
The last and highest bid of a suit in one hand in bridge.
Agreement
(Grammar) Correspondence in gender, number, case, or person between words.
Contract
The number of tricks thus bid.
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.
Contract
Contract bridge.
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.
Contract
A paid assignment to murder someone
Put out a contract on the mobster's life.
Agreement
A legally binding contract enforceable in a court of law.
Contract
To enter into by contract; establish or settle by formal agreement
Contract a marriage.
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.
Contract
To acquire or incur
Contract obligations.
Contract a serious illness.
Agreement
An agreeable quality.
Contract
To reduce in size by drawing together; shrink.
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.
Contract
To pull together; wrinkle.
Agreement
Concord or correspondence of one word with another in gender, number, case, or person.
Contract
(Grammar) To shorten (a word or words) by omitting or combining some of the letters or sounds, as do not to don't.
Agreement
A concurrence in an engagement that something shall be done or omitted; an exchange of promises; mutual understanding, arrangement, or stipulation; a contract.
Contract
To enter into or make an agreement
Contract for garbage collection.
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
Contract
To become reduced in size by or as if by being drawn together
The pupils of the patient's eyes contracted.
Agreement
Compatibility of observations;
There was no agreement between theory and measurement
The results of two tests were in correspondence
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
Agreement
Harmony of people's opinions or actions or characters;
The two parties were in agreement
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.
Agreement
The thing arranged or agreed to;
They made arrangements to meet in Chicago
Contract
(legal) The document containing such an agreement.
Agreement
The determination of grammatical inflection on the basis of word relations
Contract
(legal) A part of legal studies dealing with laws and jurisdiction related to contracts.
Agreement
The verbal act of agreeing
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.
Agreement
A resolution between disputing parties about a course of action.
The spouses made an agreement to divide the property equally.
Contract
(bridge) The declarer's undertaking to win the number of tricks bid with a stated suit as trump.
Agreement
The absence of opposition; freedom from disagreement or quarrels.
There was an agreement among classmates about where to host the reunion.
Contract
(obsolete) Contracted; affianced; betrothed.
Contract
(obsolete) Not abstract; concrete.
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
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”.
Contract
(transitive) To enter into a contract with. en
Contract
(transitive) To enter into, with mutual obligations; to make a bargain or covenant for.
Contract
(intransitive) To make an agreement or contract; to covenant; to agree; to bargain.
To contract for carrying the mail
Contract
(transitive) To bring on; to incur; to acquire.
She contracted the habit of smoking in her teens.
To contract a debt
Contract
(transitive) To gain or acquire (an illness).
Contract
To draw together so as to wrinkle; to knit.
Contract
To betroth; to affiance.
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.
Contract
To draw together so as to wrinkle; to knit.
Thou didst contract and purse thy brow.
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.
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.
Contract
To betroth; to affiance.
The truth is, she and I, long since contracted,Are now so sure, that nothing can dissolve us.
Contract
To shorten by omitting a letter or letters or by reducing two or more vowels or syllables to one.
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.
Contract
To make an agreement; to covenant; to agree; to bargain; as, to contract for carrying the mail.
Contract
Contracted; as, a contract verb.
Contract
Contracted; affianced; betrothed.
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.
Contract
A formal writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation.
Contract
The act of formally betrothing a man and woman.
This is the the night of the contract.
Contract
A binding agreement between two or more persons that is enforceable by law
Contract
(contract bridge) the highest bid becomes the contract setting the number of tricks that the bidder must make
Contract
A variety of bridge in which the bidder receives points toward game only for the number of tricks he bid
Contract
Enter into a contractual arrangement
Contract
Engage by written agreement;
They signed two new pitchers for the next season
Contract
Squeeze or press together;
She compressed her lips
The spasm contracted the muscle
Contract
Become smaller or draw together;
The fabric shrank
The balloon shrank
Contract
Be stricken by an illness, fall victim to an illness;
He got AIDS
She came down with pneumonia
She took a chill
Contract
Make smaller;
The heat contracted the woollen garment
Contract
Compress or concentrate;
Congress condensed the three-year plan into a six-month plan
Contract
Make or become more narrow or restricted;
The selection was narrowed
The road narrowed
Contract
Reduce in scope while retaining essential elements;
The manuscript must be shortened
Contract
A legal entity in which a proposition is accepted and agreed on.
The worker signed a contract for his new position.
Contract
An arrangement for someone to be killed by a hired assassin.
The mafia boss put out a contract on the informant.
Common Curiosities
Is a Contract always legal in nature?
Yes, a contract is legal in nature as it has specific terms and conditions that are legally enforceable.
What is an Agreement?
An agreement is a mutual understanding or arrangement that may or may not be legally binding, between two or more parties.
What distinguishes a Contract?
A contract is a legally binding agreement with specific terms and conditions that are enforceable by law.
Does an Agreement need to be formal?
No, an agreement can be informal and might consist of oral or written understanding between parties.
Can an Agreement be converted into a Contract?
Yes, an agreement can be converted into a contract if it fulfills legal stipulations like consideration, lawful object, and mutual consent.
Does every Agreement involve money?
No, agreements need not necessarily involve money and might be based on a mere promise or understanding.
Can an Agreement be without consideration?
Yes, an agreement can exist without consideration and might simply be based on goodwill or trust between parties.
Is consideration essential in a Contract?
Yes, in general, contracts must involve consideration (something of value) to be legally enforceable.
Can Agreements be voided?
Yes, agreements can be voided if they are found to involve unlawful or unethical activities.
Can a Contract be verbal?
Yes, contracts can be verbal unless the law requires them to be in writing (like real estate transactions), but written contracts are easier to enforce.
Under what circumstances can a Contract be breached?
A contract can be breached when one or more parties do not fulfill the agreed-upon terms and conditions.
Are Contracts involving minors valid?
Contracts involving minors are typically voidable at the discretion of the minor, unless they pertain to necessities.
What makes a Contract valid?
A valid contract requires offer and acceptance, lawful purpose, competent parties, consideration, and mutual assent.
Can a minor enter into an Agreement?
Minors can enter into an agreement, but such agreements are often not legally enforceable.
Are all Agreements contracts?
Not all agreements are contracts, but all contracts are agreements with legal enforceability.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
