Phrase
A Phrase is a group of words that is used as a single part of speech and that does not contain a subject and a predicate.
A Prepositional Phrase, always used as either an adjective or an adverbial modifier, consists of a preposition with its object and the modifiers of the object; as, He lives in Pittsburgh, Mr. Smith of this place is the manager of the mill, The letter is in the nearest desk.
There are also Verb-phrases. A Verb-phrase is a phrase that serves as a verb; as, I am coming, He shall be told, He ought to have been told.
Clause
A Clause is a group of words containing a subject and a predicate; as, The man that I saw was tall. The clause, that I saw, contains both a subject, I, and a predicate, saw. This clause, since it merely states something of minor importance in the sentence, is called the Subordinate Clause. The Principal Clause, the one making the most important assertion, is, The man was tall. Clauses may be used as adjectives, as adverbs, and as nouns. A clause used as a noun is called a Substantive Clause. Examine the following examples:
Adjective Clause: The book that I want is a history.
Adverbial Clause: He came when he had finished with the work.
Noun Clause as subject: That I am here is true.
Noun Clause as object: He said that I was mistaken.