3. Explain the differences between a contract and an agreement.

A contract is a form of arrangement that satisfies certain criteria in order to impose legally
binding commitments between parties that are enforceable in a court of law: in the word of
Section 2(h) of the Contracts Act – ‘an agreement enforceable by law’. Agreement in another
hand, means an informal agreement between two or more parties that is not legally enforceable.
An agreement is the foundation of all contracts; that is to say, all contracts must be based on an
agreement, though not all agreements are inherently contracts. Some agreements do not qualify
as contracts because they lack such basic elements. In order to reach an agreement, parties must
simply negotiate on their respective rights and obligations, a process known as a "meeting of the
minds."

Contract formation conditions are more precise and comparatively stricter. A contract shall
have the following essential elements: proposal and acceptance, consideration, intention to create
legal relations, certainty, legal capacity, free consent, legality of the objects and required
formalities. Section 10 (1), for instance, lays down several of the above elements when it states
that an agreement must be made ‘by the free consent of parties competent to contract for a lawful
consideration and with a lawful object’ (Beatrix & Wu, 2000). If one or more elements are not
included, the agreement it not a contract which it automatically will not be enforced.

A contract and an agreement are not necessarily need to be in writing form, which it also can
be in oral form. In fact, certain cases, an oral agreement containing any of the above elements
would represent a true and enforceable contract. However, in some cases, a contract must be in
writing to be enforceable. For an instance, those containing property or that cannot be concluded
within a year.

An agreement does not require consideration, meanwhile contract does require consideration.
An arrangement may be as simple as one party rejecting another party's bid. This case is not a
deal because it does not require consideration. Gentlemen's deals and unlicensed betting pools
are two more prominent examples of agreements that are not contracts. The central feature of
these non-contract deals is that they are not legally binding. Section 26 of the Contract Act states
that ‘an agreement made without consideration is void’.
References

1. Beatrix Vohrah & Wu Min Aun. 2000. The Commercial Law of Malaysia. Selangor. Pearson
Malaysia Sdn. Bhd.

2. n. a.. Agreement v. Contract. https://www.diffen.com/difference/Agreement_vs_Contract