One of the key issues in the legal field is the distinction between the concepts of contracts and agreements. These two concepts are extremely interrelated in legal terms, but at the same time have a serious distinction based on the legal distinction. According to various books and studies on the topic, the main difference between the two above-mentioned types of documents lies in the nature of the obligations that the defendant undertakes. Thus, it is necessary to analyze contracts and agreements, to clearly define their distinction with credible evidence.
First of all, it is necessary to analyze the concept of contracts and what they represent in the legal field. Contract law is a ‘common law’ area of law, which implies that most of its rules and concepts are formed from case law and the application of prior law. However, statutory laws are affecting a growing number of domains, particularly regulations in consumer contracts. All contracts are governed by the norms that make up contract law, except for those governed by legislation. The formation criteria, for example, apply equally to a contract to buy some vegetables in a shop as they do to a large arrangement between two global firms for the delivery of products and services. Consequently, one may conclude that the contract law enforces certain relationship between both sides of the deal on all levels.
On the other hand, the analysis of such a phenomenon as agreements has a different legal nature. An agreement is a declaration of two or more people’s consent to each other. It is a meeting of minds to aim for a common goal, achieved through offer and acceptance. Words, actions, and, in rare circumstances, silence can all be used to demonstrate agreement. Contracts are frequently connected with agreements; nevertheless, “agreement” has a broader definition than “contract,” “deal,” or “promise”. A contract is a type of agreement that includes different aspects like consideration. Different jurisdictions define “agreement” differently when referring to a legally binding contract. As a result, the agreement is defined by consideration rather than enforcing any kind of juridical obligations.
After defining the concepts of contract and agreement, one may observe the main difference between these two concepts. Although the phrases “agreement” and “contract” are sometimes used interchangeably, they are not synonymous. A contract is a written and signed agreement having enforceable terms and conditions that may be enforced in court. An agreement might fall short of establishing a legally binding contract. An unwritten agreement between two parties, for example, may not be enforceable if the terms are ambiguous. Parties, particularly businesses, may occasionally refer to their binding, written contracts as “agreements.” Considerable aspect is that the contract or agreement contains all of the necessary components to be enforceable. Thus, it is the legal enshrining of the agreement on paper and the obligations of both parties to bear legal consequences and responsibilities that distinguish an agreement from a contract.
In conclusion, having analyzed both legal concepts, the result was determining their main difference in the face of legal obligations. Moreover, various studies and legal excerpts have made it possible to determine the nature of this distinction. “All contracts and agreements but not all agreements are contracts” is the phrase that defines this difference. Moreover, it refers to a legal system that prevents all possible precedents, such as copyright problems, cases of fraud, and non-payment of debts, loans, and mortgages.
References
- Francesco Bottoni, ‘Partial Agreement and Contract Formation’ [2020] 31(2) European Business Law Review, 337-344.
- Nancy Kim, ‘Resisting Contract Law’s Paradigm Slip through Shared Meaning’ [2018] 1(7) HeinOnline, 1-23.
- Knapp Charles and others, Problems in Contract Law: Cases and Materials (Aspen Publishers 2019), 10-43.
- Roy Kreitner, Speculations of Contract, or How Contract Law Stopped Worrying and Learned To Love Risk, in Federico Della (ed), Governing Risks (Taylor & Francis Group 2021) 5-40.
- Jan M. Snits, Contract Law: A Comparative Introduction, Second Edition (2nd edn, Edward Elgar Publishing Limited 2017) 26-30.
- Richards Stone, The Modern Law of Contract (12th edn, Routledge 2017) 57-62.