The legal difference between a contract and an agreement can be confusing for many people, even though they are both common terms used in business and legal settings. Both contracts and agreements are legally binding documents that reflect an agreement between two or more parties. However, there are distinct differences that set them apart.

A contract is a written or oral agreement between two or more parties that creates a legally binding obligation. It involves an exchange of promises, with each party agreeing to do something in exchange for something else. Contracts can be simple or complex and can cover a wide range of topics, including employment, real estate, sales of goods or services, and intellectual property.

In order for a contract to be legally binding, it must meet certain requirements known as the four «corners» of a contract. These include offer, acceptance, consideration, and mutual agreement. Offer refers to one party making an offer to another party, while acceptance is the other party agreeing to the offer. Consideration is something of value that is exchanged between the parties, such as money, goods, or services. Finally, mutual agreement is when both parties have fully understood and agreed to the terms of the contract.

On the other hand, an agreement is a broader term that refers to any arrangement or understanding between two or more parties. Unlike a contract, an agreement does not necessarily need to meet the four corners requirement to be considered binding. In fact, some agreements may not be legally enforceable, such as an agreement to do something that is illegal, or an informal agreement made between friends.

An agreement can be written or verbal, and it may be as informal as a handshake or as formal as a written contract. For example, a letter of intent or memorandum of understanding may be considered an agreement, even if it does not meet the requirements of a contract.

In conclusion, the legal difference between a contract and an agreement lies in their level of formality and the legal requirements that must be met for them to be binding. A contract is a formal, legally binding agreement that must meet the four corners requirements, while an agreement is a broader term that can refer to any arrangement or understanding between parties, regardless of whether it is legally binding or not. As such, it is important to understand the differences between the two and consult with a legal professional before entering into any type of agreement or contract.