Agreement vs. Contract

Both agreement and contract is the type of arrangement between two or more parties.

Agreement is the arrangement between the parties which is not enforceable by law. It is usually less formal. An agreement does not contain all necessary elements which would have legal effect like: offer and acceptance, intention to create legal relations, consideration, legal capacity, consent or illegal and void contracts. Thus, an agreement outlines the obligations and other terms of relations between the parties in rather informal and quite flexible way.

The contract is the type of agreement which is legally binding. The terms of the relationship between contract parties are clearly outlined, rigid and formally specified.

A contract must contain and offer and acceptance of all parties, it means, that a contract cannot come into existence until an offer has been made by one party and accepted (in a clear way) by another party.

The payment for an offer (which may take a form of, for example, money, physical objects, services, promised actions, or abstinence from a future action) needs to be adequate and unconditional. The contract needs to contain Free Consent, which means that the topic, terms and purpose of the contract must be understood for all parties in the same way.

The object of the contract must be legal and do not violate public policy. The contract must be characterized with certainty, which means that all conditions are set up in the contract, not postpone on later time. The intentions of creating legal obligations must be clearly declared. The contract cannot be deemed to be "void", which means that in law it was never formed.

So, in summary:

All contracts are agreements, but not all agreements are contracts. If the agreement does not contain one or more obligatory component of a contract, then it is not legally binding.