8 Difference Between Agreement and Contract

Agreement and contract is used when two or more people and things agree on an offer. Agreement is when someone offers something to another person and he accepts. All promises which for any consideration are terms as agreement. While a contract is also an agreement but it is enforced with the law between two parties.

These days agreements and contracts are everywhere. All the little and big deals are completed by the agreement and contract. But nobody understands the concept of agreement and contract. In this era of competition, it’s very important to understand the concepts of agreement and contract. In this article we will discuss about the agreement and contract. We will discuss difference between agreement and contract in detail. There are many other aspects which are related with the agreement and contract. Here we will discuss all the related aspects.

Agreement vs contract

Sr. No.	Agreement	Contract
1	When a person offers something with some consideration to the other person. When a concerned person accepts the offer with all consideration is terms as agreement.	Agreement with the enforcement of law is terms as a contract.
2	Defined in the section 2e of the Indian act 1872	Defined in the section 2h of Indian act 1872.
3	Major aspects are offer, acceptance and considerations	Main aspect is enforceable of the law
4	All agreements are not contract.	Every contract is an agreement
5	No need for written formalities	Proper procedure of legal formalities for a contract.
6	Both the parties are free from legal bound for performance	Parties are bound for the performance.
7	Risk factors	Low risk
8	Wider scope	Narrow scope

Agreement

When two parties or two persons agree upon a matter or thing this is termed as agreement. When someone offers anything or a proposal to the other person. And when the concerned person accepts the proposal and things with all the consideration is termed as the agreement.

In other words any contract without law enforcement is also known as agreement.

Types of agreement

1. Voidable agreement.
2. Void agreement.
3. Wagering agreement.
4. Implied agreement.
5. Illegal agreement.
6. Conditional agreement
7. Express agreement

For example

Ravi offers to sell his car to Yash for 200000. In case if yash accepts the offers this becomes an agreement.

Contract

When an agreement is enforced with the law in which two or more parties in both the parties have some rights against the contract. Any agreement enforced with the law is terms as a contract. In the contract persons are obligated by the law. Contract is much safer and secure from the agreement.

Contract is defined in the section 2h of Indian contract act 1872.

Contact is = Agreement + enforceable by law.

Types of the contract

1. Voidable contract.
2. Void contract.
3. Bilateral contract.
4. Tacit contract.
5. Implied contract.
6. Executory contract.
7. Quasi contract.

Features of the contract

Agreement – acceptance of offer by the concerned person is terms as agreement.

Enforceable by law – legal terms which are used in contract.

Example

Ravi buys a flat in a building which is still under construction. Builder makes a contract with Ravi that they will give him a flat on a specific date. In this case the builder is obliged to give a flat on a defined date. If its builder does not provide him the flat in this case Ravi can take legal action against the builder.

Main differencee between agreement and contract

1. When a person offers something with some consideration to the other person. When a concerned person accepts the offer with all consideration is terms as agreement. And any agreement with the enforcement of law is terms as a contract.
2. Agreement is defined in the section 2e of the Indian act 1872. While agreement is defined in the section 2h of Indian act 1872.
3. Major aspects of agreement are offer, acceptance and considerations. While the main aspect of the contract is enforceable of the law.
4. Every contract is an agreement. But all agreements are not contracts.
5. No need for written formalities in agreement. But there is a proper procedure of legal formalities for a contract.
6. In agreement both the parties are free from legal bound for performance. While in contract parties are bound for the performance.
7. High risk factors in agreement due to the absence of law. Low risk in the contract.
8. An agreement has a wider scope. Contract has a narrow scope.

Conclusion.

Agreement and contract are very different from each other in many manners. Agreements are just promising, consideration and acceptance without law criteria. On the other hand, a contract is a completely legal process. In these parties are bounded with the law. Risk factor is very low in the case of contract due to the involvement of the law.

This is all about the difference between agreement and contract. We hope this article will be helpful for you. For any doubt please feel free to comment on us. For more interesting topics like this please go through our website.