DIFFERENCE BETWEEN CONTRACT AND AGREEMENT

What is contract?

Any agreement or declaration between two or more parties and the agreement must be enforceable by law is called contract. In valid contract, both parties who involve in the contract are legally bound to fulfill his obligations or promises which are within the contract.

                           Contract = Agreement + Enforceability

Example: Mr. Peter promises to sell his car to Mr. Harry for $20,000. Mr. Harry agrees to buy. It is a valid contract.

What is agreement?

Every promise, mutual decision or arrangement are an agreement if it forms a consideration for both parties.

                             Agreement = Offer and Acceptance

Example: The decision between two friends to share the rent in an apartment.

DIFFERENCE BETWEEN CONTRACT AND AGREEMENT

	Agreement	Contract
1. Definition	Every promise, mutual decision  or arrangement are an  agreement if it forms a  consideration for both parties.	Any agreement or declaration  between two or more parties  and the agreement must be  enforceable by law is called  contract.
2. Formation	An offer and its acceptance  make an agreement.	An agreement and its  enforceability make a contract.
3. Legal Obligations	It may or may not create legal  obligations.	It necessarily creates legal  obligation.
4. Scope	All agreements are not contract.	All Contracts are contract.
5. Binding	All agreements are not legally  binding.	All valid contracts are legally  binding.
6. In Writing	Not necessarily.	Contracts are usually in writing  and registered.
7. Similarities	Proposal, consideration, offer  and acceptance.	Proposal, consideration, offer and acceptance.