What is the difference between an agreement and a contract?

A contract is a mutual agreement between the parties, built on a relationship of trust in the performance of the obligations undertaken. A contract is a written agreement between two or more parties that entails mutual obligations and is enforceable.
That is, each agreement becomes binding (and only then is it called a contract) if the following conditions are met:
The existence of an offer to enter into a contract voluntarily;
explicit acceptance of the contract;
presence of mutual satisfaction (consideration).

Contract means a legally enforceable agreement. All agreements are contracts if they are made by parties who are equally unmistakable in the terms of the agreement. The CLM System | AXDRAFT Contract Lifecycle Management Software service I use helps me streamline my routine processes. Prioritize your requirements and understand your pain points

An agreement is a mutual understanding or a meeting of the minds between two or more parties on a particular matter. It may or may not involve legal obligations or consequences. On the other hand, a contract is a legally binding agreement between two or more parties that creates enforceable obligations.


A loan contract, for example, is a type of contract that outlines the terms and conditions of a loan agreement between a lender and a borrower. It sets out the loan amount, the interest rate, the repayment schedule, and any other relevant terms and conditions. When the parties sign the loan contract, they are legally bound to follow its terms and conditions.


In essence, an agreement may be an informal understanding or arrangement that does not necessarily have legal consequences, while a contract is a formal agreement that creates legally binding obligations. A loan contract is a specific type of contract that governs the terms and conditions of a loan agreement.