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Agreement and Contract are often considered as same as they are used simultaneously. In real these both terms are totally different and possess their particular meanings. An agreement is an arrangement, collaboration or pact between two parties or individuals that are informal in nature and is not at all enforced by law. On the other hand, a contract is the formal written form of agreement or pact between two parties, organizations or individuals which are enforced by the law. The parties or individuals having a contract are bounded by the law whereas in agreement there are no such restrictions and one cannot be taken to court for abiding agreement.
What is Agreement?
The agreement is the term that refers to the informal and verbal commitment or arrangement between two parties or individuals which are not enforced by the law. The agreement can be between two mates, two colleagues, two friends, two business alliance, two parties, etc. The agreement is a kind of informal commitment and is based on the relation and level of trust of the parties or individuals on each other. If any of the people abides anything regarding the agreement than they are not enforced by the law as there is no written proof and consideration concerning law. An agreement is an informal commitment because neither it is in the written form nor it follows any of the consideration or witnesses. For example, two classmates in a college made an agreement to help each other in doing their class projects, and they will submit their projects when the project of both students will be completed. They do not write it down and just make a commitment to a level of trust and affiliation with each other. One of the students abide the agreement and submit his or her project before the other student after completing first. He or she broke the agreement, but he or she would not be enforced by any law or cannot be taken to court for this as it was a completely informal arrangement and commitment with no legal status at all.
What is Contract?
A contract is a term that is used for the formal and written form of agreement, pact or commitment between two organizations, parties or individuals that are enforced by the law. A contract is always in the written form and contains witnesses and considerations. A contract is a formal agreement between two parties, who after signing the contract are bounded by the law to follow it. The contract must be followed, and all terms mentioned inside a contract has to be fulfilled. If any of the individual or party in the contract breaks the contract or any term mentioned inside the contract than he or she can be taken to court regarding violating the the contract. The contract is usually made between the organizations and people at the business or professional level. A contract is always in the written form and must have considerations. The contract can be of various nature depending on the kind of issue and circumstances under which a contract has been made. The validity of the contract only depends upon the time mentioned on the written contract form. In the case of a contract not any verbal term is entertained unless it is properly mentioned in the written form of the contract. A person or party breaking a contract can be sued by the other party and can be taken to court for compensation or breaking the contract.
Agreement vs. Contract
- The agreement is the informal commitment or arrangement between two parties or individuals that are not in the written form.
- A contract is a formal commitment between two parties or organizations that are present in the written form.
- The law does not enforce the agreement.
- The law enforces the contract, and the people in the contract are bounded of its terms according to the law.
- The agreement does not require any consideration.
- The contract must have considerations in it.
- A party or individual breaking a contract can be taken to court for trial.
- The law does not bound parties in a verbal agreement.