An agreement is reached when two or more parties agree to do something together under certain conditions and terms. In the corporate world, agreements are ubiquitous. Companies of all sizes make agreements with each other all the time. While an agreement can be verbal and still be law-abiding, most agreements are written down on paper or done in an electronic format.
There are many types of agreements: service agreement, partnership agreement, Non-Disclosure Agreement(NDA), Service Level Agreement(SLA),indemnity agreement, bill of sales,and so on. A contract is just a special form of agreement in which two or more parties consent to act under the terms and conditions stipulated in the contract. What’s noting is that an agreement that does not contain the elements of a contract does not have legal effect, whereas a contract is almost always legally biding. Under a contract, the concerned parties could face law suits if they fail to fulfill their duly obligations and duties stipulated in the contract. Normally, contracts are more common in commodity trading and agreements are more often drafted in the service industry. Take the I.T industry for example; a service level agreement is usually signed between a service provider and the other party.
If an agreement is not forced by law, then it requires the parties involved to act in good faith. It is not recommended to enter into such agreements, since they do not hold each other accountable by law except to rely on their reputation and conduct of behavior. Simply put, the stakes are high!