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Thursday, April 20, 2017

Short Notes on Agreement vs Contract/ Differences between Agreement and Contract

An agreement is any understanding or arrangement reached between two or more parties. On the other hand a contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law. 

 







There are some basic differences between them. The main differences are-
Agreement
Point of Differences
Contract
An arrangement (usually informal) between two or more parties that is not enforceable by law.
Definition
A formal arrangement between two or more party that, by its terms and elements, is enforceable by law.
Mutual acceptance by both (or all) parties involved.
Validity based on
Mutual acceptance by both (or all) parties involved.
No.
Need to be in writing?
No, except for some specific kinds of contracts, such as those involving land or which cannot be completed within one year.
No
Consideration required
Yes
An agreement that lacks any of the required elements of a contract has no legal effect.
Legal effect
A contract is legally binding and its terms may be enforceable in a court of law.
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