People tend to use the terms 'agreement' and 'contract' interchangeably. But in fact, while all contracts are agreements, not all agreements are contracts. I have described this below:
What is a contract?
A contract is a voluntary arrangement between two or more parties that is enforceable by law as a binding legal agreement. A contract is a branch of the law of obligations in jurisdictions of the civil law tradition. The term ‘Contract’ is defined in Section 504(1) of the Civil (Code) Act, 2074, as follows: “Contract means an agreement enforceable by law concluded between two or more parties for performing or not performing any work.”
What is an agreement?
An agreement is a promise or arrangement between two or more parties to do, or not do, something. It’s usually informal and sometimes unwritten (but not always). Agreements like these are based on trust and aren’t legally enforceable in court or with arbitration.
Why all contracts are agreements?
All Contracts are agreements and for the formation of a contract, an agreement is always necessary. There cannot be a contract where there is no agreement. Without an agreement, a contract cannot be formed. Therefore, all contracts are agreements.
Why all agreements are not contracts?
The agreement is a broader term than the contract. Only those agreements become contracts that give rise to a legal obligation. If no legal duty is enforceable by an agreement, it can never be a contract. Therefore, not all agreements need to be contract.
In Conclusion
From the above explanation, it is clear that all contracts are agreements but all agreements are not contracts.