Difference Between Agreement and Contract
By Andrew Parker - February 1, 2023

Although the two tend to be used in similar situations and can even be wrongly interchanged, the terms’ Contract’ and ‘Agreement’ mean wholly different things.

Chart Summary
  1. An agreement is not legally binding on the parties
A contract is a legally binding agreement between two or more parties
  1. An agreement usually has very little to no documentation 
A contract is typically well-documented for future referencing
  1. The steps of an agreement include an offer and acceptance
Asides from offer and acceptance, a contract must consist of an element of enforceability 
  1. The scope of an agreement is broad, and terms can be changed arbitrarily
The range of a contract is relatively narrow and duly documented, so terms can not be changed easily.
Female and male shake hands over a closed deal signed by a pen on a paper below.

Getty images/Moment/ SimpleImages


An agreement is formed when a person (promisor) proposes something to another person (promisee), and the concerned person accepts the proposal with equal consideration. When two or more people agree on the same item in the same meaning (i.e., Consensus ad idem), this identity of minds is referred to as agreement. Some examples of agreements are Wagering, Void Agreement, Conditional Agreement, and Implied Agreement.

A contract is a legally binding agreement for doing or not doing something. A contract must include the following elements: offer and acceptance, adequate and unqualified consideration, free consent, capacity, lawful object, certainty, and intent to create legal duties and the agreement should not be ruled void. A contract can be either oral or written. Void Contracts, Voidable Contracts, Valid Contracts, Unilateral Contracts, Bilateral Contracts, and Express Contracts are the most common forms of contracts.

Agreement vs. Contract

All contracts are agreements, but not all agreements are contracts. Contracts are those that legally bind us, whereas agreements are those that do not. This means that an agreement is distinct from a contract.