The Differences between Agreements and Most Important Contracts

The Agreements and contracts Are similar, but do not mean the same thing. The term covenant has a far greater scope than that of contract.

This is because the agreement, also includes agreements that are not subject to the law, in addition to those that are legal.

A person signing a contract.  The signature is one of the differences between agreement and contract.

This fact is evident in the phrase"contracts are covenants, but not all covenants are contracts", an irrefutable truth, but have you ever stopped to think about the reason for this statement?

In order to better distinguish between what an agreement and a contract entails, it is necessary to know what each one of them means and what elements each agreement includes.

Concepts of agreement and contract


Covenants are made unconsciously every day. There is an agreement or agreement when a person or party makes a proposal to another person or part, and the latter accepts voluntarily.

In this sense, agreement means a consensus established between two or more parties, an agreement of wills.

The agreements do not create legal commitments since they are not subject to any law, rather, they depend on the capacity of commitment of the parties involved. Conventions are often oral, resulting from a non-legal commitment.


Contracts are a type of agreement that is subject to the law. Therefore, all contracts are agreements, but not all agreements are contracts.

Like the agreements, the contracts require the offer by one of the parties and the acceptance by the other. However, there are other aspects that must be taken into account, such as consideration.

Unlike conventions, contracts are usually written and recorded. This is because they represent a legal commitment

Elements of contracts

There are certain aspects that every good contract must have regardless of whether it is a contract of sale or if you want to establish an association, to avoid disputes between the parties and reduce the possibilities of legal problems.

Competent Parties

For a contract to be carried out, the parties involved must be capable in legal terms. This means that they must be of legal age and have sufficient mental capacity to understand the meaning of the contract.

Subject or theme

The purpose of the contract must be legal for it to be valid. If the matter covered by the contract goes against public policies (such as contracts to commit a crime or fraud) or is immoral (violates the law), the contract loses its validity.


An offer is a proposal made by the bidder seeking to generate acceptance in the offered party. Offers do not have a specific form. However, they must present certain aspects in order to be valid:

  • They must be communicated.
  • They must express the will to enter into a commitment.
  • They must define the parties involved.
  • They must delimit the product, service or association that constitutes the purpose of the contract.
  • They must indicate the date of entry into force of the contract and, in the case of purchase - sale, date of delivery of the product or service.
  • They must include the means by which the product will be delivered and cost of delivery, in the case of a purchase.


The power to accept or not an offer rests with the party offered. Acceptance must be made in the manner in which the offer indicates it. Any change that the offer made in the offer cancels this and generates a counter offer.


Consideration refers to valuables, tangible or intangible, that the parties offer to each other. Generally, consideration comes in the form of money, labor or goods, although it can also be presented as a promise to fulfill or not with some activity.

In addition, a contract should be concise, easy to understand, and flexible enough to allow changes to be made in the event of expected situations varying.

Types of contracts

The contracts can be:

  • Explicit: when the terms are set out in detail.
  • Implicit: when the terms of the contract are inferred thanks to the circumstances or the conduct of the parties.
  • Bilateral: if the two parties (bidder and offered) make mutual promises, generating obligations in both.
  • Unilateral: if it generates obligations to only one of the parties.

Contexts in which agreements and contracts are developed

Conventions and contracts depend to a large extent on the context in which they are developed. If an agreement is reached within a family or social context, it is presumed that there is no intention of having legal consequences, so it would be talking about a convention.

This conjecture is based on the relationships of the parties involved in the agreement. For example, agreements between spouses or friends are indicators of lack of legal intent.

However, there are cases in which contracts can be established in the family group, such as premarital.

On the other hand, if an agreement is made within a commercial context, it can be assumed that there is a legal intention behind it, so I would be talking about a contract.

Differences between conventions and treaties


As for the meaning, there is an agreement when a proposal is accepted by the person to whom it is presented. Instead, there is a contract when an agreement is subject to the law by a set of legal terms.


In the agreement, the elements are the offer and acceptance of it. In the contract, these are the agreement and legal support.


The agreement is considered valid when there is mutual acceptance by the parties involved. In the contract, in addition to mutual acceptance, legality is necessary.


Generally, the agreements of agreement are oral while the contracts are written and registered.

Legal Commitments

The agreement, given that it is not subject to the law, does not create legal commitments. In contrast, the contract itself is subject to legislation and therefore binding.


The agreement is usually given in social and family contexts, while contracts are more common in business contexts.


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