What Is The Difference Between A Contract And An Agreement?
Embry Riddle MGMT 390
3.4 Review Questions
What is the difference between a contract and an agreement?
The major difference between a contract and an agreement is that a contract is legally binding where an agreement is just a meeting of views. A contract is essentially a legally binding agreement. A breach of agreement or contract are also very different because of one being legally binding. This makes a breach of contract much more severe than a breach of agreement. If an agreement is not binding legally than it cannot be enforced by law enforcement. The real major difference between the two of these is that with a contract you are legally obligated to uphold your end of the deal that you signed your name …show more content…
Provide a business contract example that meets the four valid elements of a contract. There are usually 5 requirements for a valid contract. They are consideration, capacity, specifics, legality and form. Consideration is receiving something in return for something you are giving of value. An example of this is buying a boat. You promise to give money in exchange for the boat. Capacity is making sure that neither party is mentally ill, intoxicated, under age or being forced to enter into the contract against their will. Specifics are the details in which the contract operates within. As an example, if you are a large company purchasing a smaller company the contract must have all the little details as to what you are buying to include assets, trademarks, copyrights and patents. Legality Basically is just that everything in the contract is legal for both parties. Last is Form, this is that the contract and written in an easy to read fashion and that it is in the right format for the contract you are using. An example of a business contract that includes these would be a contract between an employee and employer. The contract is physically written and gives specifics such as pay rate vacation time etc. the contract is also stating that for 40 hours of work each week will result in the employer giving a paycheck and associated benefits. Making sure that both parties have the capacity to sign and the contract is legal both …show more content…
A breach of one of these Terms would result in a breach of contract. One example of a common contract clause is a statute of limitations. This clause gives anyone who has a breach of contract up to year to file legal actions against the other party. Any legal action after that year will be null due to the statute of limitations. Another type of contract clause is Time of performance clause. This clause is usually used in time sensitive contracts like doing your floors or building a house. It usually states that the acts agreed upon in the contract will be done at a specific