Agreement is the Genus while Contract is the Species: Understanding the Difference

When it comes to legal documents, there are two terms that are often used interchangeably: agreement and contract. However, these terms have distinct differences that are important to understand, especially for businesses entering into agreements or contracts.

First, let`s define the terms. An agreement is a general term that refers to a meeting of the minds between two or more parties on a particular subject. This can be a verbal or written agreement, and it doesn`t necessarily have to be legally binding. For example, two friends may agree to split the cost of a vacation but never sign a formal agreement.

On the other hand, a contract is a legally binding agreement between two or more parties. It lays out the terms and conditions of the agreement and can be enforced by law. Contracts are typically in writing, but they can also be verbal in certain situations.

So, what distinguishes a contract from an agreement? The answer lies in the specificity of the terms and the level of enforceability.

Agreements are typically less formal than contracts and may include general terms or broad objectives. They can be valuable in establishing a framework for a business relationship or setting expectations between parties. However, agreements aren`t always enforceable in court, and they may not hold up in the absence of a written contract.

Contracts, on the other hand, are much more specific and detailed. They include precise terms and conditions that outline the obligations and responsibilities of each party involved. Because they are legally binding, contracts provide greater protection for businesses and individuals in the event of a dispute.

In summary, agreement is the genus while contract is the species, meaning that a contract is a specific type of agreement that is legally enforceable. While agreements can be valuable in establishing a framework for a business relationship, contracts provide greater protection and clarity in legal matters.

It`s important for businesses to understand the difference between agreements and contracts and to ensure that they have appropriate legal documentation in place to protect themselves and their interests. Working with an experienced legal professional can help ensure that your agreements and contracts are legally binding and enforceable.