Agreement and contract – these two terms are often used interchangeably, but they denote different things. While both are legally binding, they have different legal implications and are used in different contexts.
An agreement is a promise or understanding between two or more parties. It can be oral or in writing and can be either formal or informal. An agreement is not always legally binding. It is enforceable only if it meets certain legal criteria. For an agreement to be legally binding, it must have the following elements:
1. Offer – One party makes an offer to another party.
2. Acceptance – The other party accepts the offer.
3. Consideration – Both parties benefit from the agreement.
4. Legal capacity – Both parties are legally able to enter into an agreement.
5. Free consent – Both parties agree to the terms of the agreement without coercion, undue influence, or misrepresentation.
A contract, on the other hand, is a legally binding agreement between two or more parties that creates an obligation to do or not do something. A contract can be written or oral, but it is advisable to have it in writing to avoid disputes. For a contract to be legally binding, it must have the following elements:
1. Offer – One party makes an offer to another party.
2. Acceptance – The other party accepts the offer.
3. Consideration – Both parties benefit from the contract.
4. Legal capacity – Both parties are legally able to enter into a contract.
5. Free consent – Both parties agree to the terms of the contract without coercion, undue influence, or misrepresentation.
6. Certainty – The terms of the contract must be clear and definite.
7. Intention to create legal relations – Both parties must intend to create legally enforceable obligations.
8. Legality – The object of the contract must be lawful.
Contracts are used in various contexts, such as business, employment, real estate, and consumer transactions. They are enforceable by law and can be used in court to resolve disputes. Agreements, on the other hand, may not always be legally binding and may not have the same level of enforceability as contracts.
In conclusion, while agreements and contracts are similar in that they create a legal obligation between parties, they differ in their legal implications and contexts in which they are used. It is important to understand the differences between the two to ensure that the legal document you are creating is appropriate for your situation.