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That: Should be used restrictively to narrow a category or identify a particular item being talked about.
Example: -This is the house that Jack built.
-There are a lot of grammar mistakes that make you look bad.
Which: Should be used non-restrictively. Not to narrow a class or identify a particular item but to add something about an item already identified. Almost always preceded by a comma, a parenthesis, or a dash.
Example: -This is the house that Jack built, which he later sold.
-Jill received a good grade on her paper, which she desperately needed to pass the class.
Exception: “Which” should be used restrictively only when it is preceded by a
Example: -The room in which he ate his dinner.