Agreement vs contract: The difference between them

The terms “agreement” and “contract” are often used interchangeably, but they aren’t necessarily the same thing. A contract is a specific agreement – usually in writing and signed – with terms and conditions that are enforceable in court. An agreement may fall short of being an enforceable contract. For example, an unwritten agreement between two parties where the terms are vague may not be enforceable. Sometimes, parties, especially companies, refer to their enforceable, written contracts as “agreements”. The important thing is that the contract or agreement contain all the required elements for it to be enforceable.

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One of the primary reasons why unwritten agreements aren’t usually enforceable is because the parties can disagree about what was agreed upon. With a written contract, the parties can always look at the wording of the contract to see what it says, to see what was agreed to, but disputes over what was agreed to in an unwritten agreement often turn into a “he said – he said” argument, with neither party able to prove what was agreed to.

For these reasons, and as discussed in our other posts on the elements of contracts and when they are enforceable, we always recommend using a written contract.

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This article is originally published on Dec 11, 2019, and updated on Nov 16, 2022.

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