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.

One of the primary reasons why unwritten agreements may be unenforceable is because what the parties actually agreed upon tends to be difficult to prove. With a written contract, the parties can always look at the wording of the contract 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 the originally agreed-upon terms.

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.

Jotform Sign makes creating and circulating written contracts easy. Signatures you collect with Jotform Sign fulfill the requirements of the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce (E-Sign) Act. 

You can automate signature workflows, track the status of documents, set a signing order, and schedule follow-up emails. Jotform also has hundreds of ready-made templates to make creating contracts simple.

FAQs 

What is required for an agreement to be binding?

An agreement may be binding and enforceable it includes the following elements: 

• An offer: a statement as to what each party is promising to do (or not do)
• Consideration: an indication as to the benefit(s) each party will receive in exchange for their performance or provision of goods or services
• Acceptance: an indication that all parties involved are willing to abide by the deal being made
• Competency and capacity: all parties must have a full understanding of the agreement they are entering into; generally, this means they must be over the age of 21 and of sound mind 
• Mutuality of obligation: both parties must be obligated to perform
• Legality: the contract must not involve something that violates federal, state, or local laws

Can a contract be changed after it is signed?

Contracts are typically modified by submitting changes in writing that are then initialed by all parties to indicate acceptance.

Can a verbal agreement be canceled in the same way as a written contract?

Many contracts include termination clauses that spell out specific circumstances under which the contract may be ended. They can also be terminated (ended before the terms have been fulfilled) if both parties mutually agree to it. 

AS ALWAYS, CONSULT AN ATTORNEY BEFORE RELYING ON ANY FORM CONTRACT OR  CONTRACT TEMPLATE. THE CONTENT ABOVE IS FOR INFORMATIONAL PURPOSES ONLY.