Note 307 — Chapter XVI · TITLES.

The use of the terms agreement and contract is curiously unsettled.

a. Agreement and contract are often used as synonyms, to mean a bilateral act in the law directed to the creation of an obligation, that is to say a right in personam. The objection to this usage is that we cannot afford so to waste one of these terms.

b. Contract is sometimes used to mean an agreement (in the preceding sense) enforceable by law. Pollock, Principles of Contract, p. 8. Indian Contract Act, sect. 2 (h). This, also, seems the sacrifice of a useful term to an inadequate purpose. Moreover the distinction does not conform to established usage. We habitually and conveniently speak of void, invalid, or illegal contracts.

c. Contract is sometimes used in the wide sense of any bilateral act in the law. Holland, pp. 225, 226. This, however, is very unusual, and it is certainly better to use agreement in this sense. Contract, being derived from contrahere, involves the idea of binding two persons together by the vinculum juris of an obligation. An assignment is not a contract, and a release is the very reverse of a contract.

d. There remains the usage suggested and adopted in the text. An agreement is a bilateral act in the law. Est pactio duorum pluriumve in idem placitum et consensus. D. 2. 14. 1. 2. A contract, on the other hand, is that particular kind of agreement which is intended to create a right in personam between the parties. This is the distinction adopted by Sir W. Anson in his work on Contracts, p. 2: “Contract is that form of agreement which directly contemplates and creates an obligation.” So Pothier, Traité des Obligations, sect. 3; L’espèce de convention qui a pour objet de former quelque engagement est celle qu’on appelle contrat. Cf. French Civil Code, Art. 1101. The Germans use Vertrag as equivalent to agreement in this sense; while a contract is obligatorischer Vertrag, or Vertrag in a narrower sense. Savigny, System, sect. 141. Puchta, sect. 271. Dernburg, Pandekten, I. sect. 92.