Proposal Vs. Contracts


Proposals and contracts are two types of business documentation. They are both similar and different. A proposal is a professional suggestion or offer concerning how a project, a good, or a service can be accomplished by the proposer. A contract is the legally binding agreement when parties mutually accept the proposal, which must be fulfilled by the contracting parties. Proposals might be written or oral in form. Contracts must have certain elements to be properly created or valid. They must have an offer, a consideration, an acceptance, and an agreement. Proposals must have an offer of something desired or needed by the offeree, such as a product or service. Binding contracts must have consideration, which could be something of value to the offeror. This could be money, or other material items, or service of some kind. Contracts must be mutually accepted to be legally enforceable. Contracts must be completely agreed upon by both parties. If a contract is not fully agreed upon, then a counteroffer can be made. The counteroffer also must be completely agreed upon.


The similarities between proposals and contracts are that both say what the project is and describe it in some detail. Both will state important items such as time, materials, and costs. Both proposals and contracts demand respective capabilities on their parts.

Desired State

Proposals and contracts are similar by having the same project or desire stated. This must match to be a legally binding agreement. If there are discrepancies in the contents, then there is not actual consent. This can give rise to legal disputes.


The items or requirements, such as time and materials, of both the proposal and the contract are negotiable and can be modified. If one party is not satisfied with a stipulation or the price, then a change can be suggested. The revised proposal or contract is then presented again to the other party for consideration.


Both the contract and the proposal are similar because they must be capable of performing what they intend to do in their respective parts. Both parties must be competent to contract.


The differences between proposals and contracts are that a proposal is not a promise like a contract. A contract is a legally binding agreement, but a proposal is only an offer to meet the need or product requested in exchange for some form of payment. In most cases, the contract will be the evidence rather than the proposal in a legal dispute.

Price And Payment

A proposal suggests an offer of providing a good or service in exchange for some consideration. A contract then promises to deliver that good or service as described in the proposal in exchange for the stated consideration.

Work Outline And Work Owed

A proposal outlines various items of goods or services that can be made by the vendor seeking new work. A contract is a legal promise or commitment to deliver those items according to the described requirements and the deadlines of their deliveries.

Legally Free And Legally Binding

The contract is a legally enforceable document, but the proposal is not. However, if the vendor agrees to the proposal in its entirety, then it can be legally binding.


The honorable covenant resulting from the interplay between proposals and then drafted contracts are foundational to good business. Business is sound because the contract ensures competent and faithful vendors performing according to the promised deliverables. Compliance between proposals and contracts are the security of business dealings.

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