When it comes to the legal terms agreement and contract, many people use them interchangeably. However, there is a significant difference between the two. Understanding the difference between them is essential in legal matters as it can affect the enforceability and validity of the document. In this article, we will discuss the key differences between an agreement and a contract.
An agreement is a mutual understanding between two or more parties concerning a specific subject matter. It can be a written or verbal agreement that outlines terms and conditions that the parties involved agree to follow. Agreements are not legally enforceable, which means that one party cannot take the other party to court for not fulfilling the terms of the agreement. For example, if two people agree to meet at a particular location at a specific time, it is an agreement, but it is not legally binding.
On the other hand, a contract is a written or oral agreement that is legally enforceable. It is a formal agreement between two or more parties that outlines the terms and conditions of the arrangement. Contracts are enforceable by law, and if any party does not fulfill the terms of the contract, the other party can take legal action against them. For instance, a rental agreement between a landlord and tenant is a contract that is enforceable by law.
The primary difference between an agreement and a contract lies in their enforceability. A contract is a legally binding document that is enforceable by law, while an agreement is not. All contracts are agreements, but not all agreements are contracts.
In conclusion, agreements and contracts are two terms that people often use interchangeably. An agreement is a mutual understanding between two or more parties concerning a specific matter, but it is not necessarily legally binding. A contract, on the other hand, is a formal agreement between two or more parties that is legally enforceable. Understanding the difference between an agreement and a contract is crucial in legal matters to ensure that all parties involved are clear on the enforceability and validity of the document.
