Often people wonder about the difference between a contract and an agreement. Infact most people consider a contract and an agreement to be one and the same thing and do not realise the difference between the two. Both terms hold almost the same meaning and are confused to be the same by majority of people. This mistake is common and is hence ignored, but it is important for every person to know the actual difference in the meanings of both the terms so that the lack of this knowledge does not cause any serious effect or problem.
An agreement is a proposal which is proposed by one party or person and is accepted by the other party or person. An agreement is a mutual promise or an act which show that two or more than two persons or parties agree to something. An agreement is not necessarily enforceable by law and does not lead to any legal implications in the case when one of the parties fails to abide by it. A contract on the other hand is an agreement which is enforceable by law and has legally binding terms and conditions, which if violated by one of the parties, can lead to serious legal implications.
This thin line of difference between an agreement and a contract can lead to many confusions and there are times when a person can misuse this lack of knowledge against you. A contract can be presented in the court of law and justice can be demanded by showing it as a proof of an arrangement made between two parties whereas an agreement cannot be used as a proof document because it is not a legally enforceable document. This is the major difference between the two important documents or arrangements and it must be understood clearly by every person.