In general, any mutual understanding or arrangement between two or more parties is referred to as an agreement. It is not required to be enforceable by law.

 A contract, on the other hand, is a specific type of agreement that is legally enforceable and typically involves an exchange of promises or obligations between parties. Essentially, not every agreement is a contract, but every contract is an agreement. Contracts require certain elements, such as offer, acceptance, consideration, and intention, to create legal relations that are enforceable.

An agreement becomes a contract only when all necessary legal requirements are satisfied.  According to section 10 of the Contract Act of 1872,

"Any agreements that are made with the free consent of parties who are legally able to enter into contracts, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void, are considered contracts."