The primary difference between an agreement and a contract has to do with legal enforceability. An agreement is used to describe a mutual arrangement or understanding between parties — which can be either formal or informal. Agreements can take the form of documents, but they can also be made via email or in-person meetings.
By contrast, a contract is a more formal and legally binding document that is enforceable in court. It typically requires elements like clear clauses and terms, written records, and the establishment of a relationship between parties. While agreements may not carry the same weight in the legal system, they can still be useful in business partnerships. When choosing between an agreement and a contract, the nature of the arrangement will help you determine which one to use.