Agreements vs. Contracts - What is the difference? - Illinois Mathematics and Science Academy

Agreements vs. Contracts – What is the difference?

 

Agreements vs. Contracts – What is the difference?

An ‘Agreement’ is a written document outlining some contractual relationship, an exchange of promises, a performance of some action or grants some right signed by and between one or more parties. In essence, an Agreement is less formal than a contract. There is no dollar threshold necessary associated with an Agreement. The dollar value of an agreement may be zero dollars but rather the Agreement outlines the services or responsibilities between the parties. The Agreement is a binding document and can be used to hold each entity accountable to adhere to the outline of the Agreement. Agreements typically require a two party signature but in some instances only one signature of the liable party is requested.

A ‘Contract’ is a more rigid formal written document outlining the terms of a purchase or relationship similar to the ‘Agreement’ that is formed between two parties placing an obligation on either one of the parties to provide consideration to the other party. For the purpose of State of Illinois, a Contract is established when a purchase for goods or services equal $20,000 or greater. A two party signed document is required by the State. All Contracts must have the signature of the President of IMSA (Dr. Jose Torres) or his designee (Bud Bergie or Kimberly Corrao), when absent, and the Agency Procurement Officer (Terry Michels) in addition to the vendor’s signature. Contracts are legally binding documents.

Because both the Agreement and Contract commit IMSA to a binding responsibility, each of these documents need to be sent to Procurement for review prior to signature of execution. The document review will ensure that there is no conflict with the provisions required by the State of Illinois; that any potential liability to IMSA is minimized; that the contract/ agreement is not auto renewing and that the rates/requirements are satisfactory for performance of the goods/services outlined in document. Even if the Agreement or Contract has a zero ($0.00) dollar value a review of the document must still occur.

Once the review has taken place and the document requires a signature procurement will forward the document to the appropriate individual for signature. Departments are welcome to keep a copy of the Agreement/Contract for their reference but in all instances a copy of the document should be shared with Procurement for their recordkeeping. I recognize this is a new process but the intent is to ensure compliance and to keep a central repository in Procurement of all documents that IMSA is bound by allowing for a single point of contact when questions/discrepancies arise.