How is an agreement different from a contract?

An agreement is fundamentally different from a contract primarily in terms of its legal implications and enforceability. Specifically, an agreement is not always legally binding; it can include informal arrangements where the parties involved have mutual understanding but without the formalities required for a contract. To be classified as a contract, an agreement must meet certain legal criteria, including intention to create legal relations, offer and acceptance, and consideration.

In this context, while some agreements can lead to contracts if they fulfill the legal requirements, not all agreements possess this binding nature. For instance, casual promises made between friends typically do not result in enforceable contracts, as the parties likely do not intend for their arrangements to be legally binding.

In contrast, other options suggest characteristics that do not accurately distinguish agreements from contracts. Legal enforceability is a primary feature of contracts, meaning that agreements are generally not enforceable by law unless they qualify as contracts. Furthermore, written documentation is not a prerequisite for all contracts; many contracts can be valid even if made orally, barring certain exceptions (like real estate transactions, which often require written forms). Lastly, the presence of witnesses is not a requirement for all contracts or agreements, further emphasizing the fact that many informal agreements do not need such formalities to exist