We often make the mistake of using the two-term interchangeably, however, there is a difference between the two. A Contract is a Legal and written Agreement between two or more parties for the implementation of a promise made. While the agreement is the informal promise made between two parties, it can be in the written or oral form, may or may not have legal backing for their implementation. The breach of which might not cause the initiation of legal action. So, all the formal activities of a business take the form of a Contract.