contracts are Agreements but all Agreements are not Contracts

All contracts are agreements but all agreements cannot contract. To run our daily life we need to make several agreements. It’s not clear that all agreements bear legal status. But all the contracts hold legal status. Moreover, there is a difference in the definition of agreement and contract.

In regards to the contract, an individual has a legally binding agreement to do or not to do things whereas in the agreement there is no legally binding promise. On the other hand contract is legally executed whereas an agreement is not. There are its own measures.

In fact, an agreement should meet legal measures to be the contract. If it holds those legal measures, it becomes a contract. Otherwise, it remains solely an agreement. The following measures ought to be met by agreement to be the contract.

contracts are Agreements but Agreements are not Contracts

1. There shall be a matching between the offer and acceptance of the contracting parties.
2. Parties shall have the intention to retain legal relations.
3. Contracting parties shall have free consent.
4. Contracting parties must be competent.
5. There shall be a consideration in the contract
6. There shall be lawful objectives in the contract.
7. The agreement shall explicitly not be declared void.
8. The terms and references of the contract shall have certain meanings, not ambiguity.
9. A contract shall have the possibility to perform
10. To be contract shall have followed necessary legal formalities.

Apparently, these measures show the difference in the meaning of agreement and contract. If these measures are involved with an agreement, it turns out to be a contract and holds statutory status. Otherwise, it turns out to be merely an agreement.

Indeed, the aforementioned elements are the basis to be the lawful contract which are the foundation pillars of contracts. There is vast dissimilarity between agreement and contract. Naturally, the scope of the agreement is broader than the contract but it has narrower legal position in comparison with the contract.

There is no legal remedy in case of agreement breach by any party in the court of law whereas this provision is certain and lawful with the contract.

Largely agreements are made to address domestic, social business, and industrial objectives whereas a contract is solely signed to perform industrial and business objectives. The legal liability primarily differentiates them well which is the demarcation line between them.

Read – Needs and Importance of Contracts

The agreement, it does not create legal liability to be performed whereas the contract does. A contract shall be oral and written in a form that shall be officially ratified and registered whereas their lawful formalities are not there in agreement.

Contracts have a general and specific nature which helps to run domestic and international trade. Though agreement and contract hold important positions, truly speaking contract holds a higher position than agreement.

Agreement can be made for legal, illegal, or criminal acts or domestic chores whereas a contract is considerably made for performing legal objectives. For performing illegal objectives, a contract can’t be made. Therefore all the contracts are agreements but all agreements are not contracts.

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