Difference Between Contract and an Agreement

Mostly, people take an agreement and contract as the same thing but there is a slight difference between them. No matter, you are a lawyer, HR manager or just an ordinary person, it is really important to understand that difference to avoid any trouble.

A contract is an agreement that has been protected by the law whereas a simple agreement has nothing to do with law. Usually, the part that breaches the contract is bound to pay the remedies but there is no such obligation in an agreement.

To make changes in the contract, the consent of both parties is necessary whereas agreement can be changed anytime by anyone.


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    A Contract is the written form of an agreement in which both parties have found some common grounds and they are ready to handle the consequences in case of any breach. Most common examples of a contract are lease, rental deals and work related bonds. By signing a contract, both parties become responsible to do or not to do specific things.

    Contracts are divided into two categories, express and implied. If both parties have openly and clearly discussed all the terms and they have mentioned everything in the agreement then it becomes an express contract. On the other hand, an implied contract is where one party assign some task to the other party and they decide that the former will pay the latter as much as the labour is worth.

    There are many types of contracts such as financial contracts, project management contracts, building contracts, service contracts etc. Some also consider marriage a social contract. Financing contracts are mostly between lender and debtor whereas management contracts rope in employer and employee.

    Offer and acceptance is the most basic rule of contract law which means someone should make an offer to someone and the other party should accept that offer. Moreover, a contract must include the responsibilities, duration or validity and the remedies in case of any violation.

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    An agreement is an informal understanding between two parties. Mostly the agreements are verbal and they do not include any terms and conditions. It has been called “meeting of the minds, without any legal obligations.” In result, no one has to pay the price in case of any breach. Mostly, daily life promises, petty business deals and pledges in family matters fall into this category as both parties show trust to each other and do not go for formal paperwork.

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