Catholics and Protestants both have sacraments.  In Protestant Christianity, we have two: baptism and communion.  Catholicism adds five more.  In Protestantism, the sacraments are outward symbols of obedience and commitment, and are generally not considered necessary for salvation.  Catholic tradition maintains that salvation can only be obtained through the practice of the sacraments.  Remember the Catholic definition of "grace".  In Catholic doctrine, the sacraments imbue the Catholic with grace. 

The Council of Trent declared: "If anyone say that the sacraments of the New Law do not contain the grace which they signify, or that they do not confer grace on those who place no obstacle to the same, let him be anathema [cursed]" (Sess. viii, can.vi). "If anyone say that grace is not conferred by the sacraments ex opere operato but that faith in God's promises is alone sufficient for obtaining grace, let him be anathema" (ibid., can. viii; cf. can.iv, v, vii).

The information above was obtained from the Catholic Encyclopedia.  As you can see, the Catholics view participation in the sacraments as necessary.  They go on to say that anyone who disagrees (singling out Protestants, except for Episcopalians and Anglicans) is anathema, meaning "cursed."  Let's explore the seven Catholic sacraments:

1 - Baptism cleanses from original sin, removes other sin and its punishment, provides spiritual rebirth or regeneration, begins the process of justification, and is necessary for salvation.

2 - Confirmation bestows the Holy Spirit on the Catholic, leading to an increasing of sanctifying grace and the gifts of the Holy Spirit as well as other spiritual power and a sealing to the Catholic Church.

3 - Penance removes the penalty of sins committed after baptism and confirmation.  Thus, mortal (deadly) sins are remitted and the justification lost by such sins is restored as a continuing process.

4 - Holy Eucharist is where Christ is resacrificed and the benefits of Calvary are continually applied anew to the believer. 

5 - Marriage is where grace is given to remain in the bonds of matrimony in dictates with the requirements of the Catholic Church.

6 - Anointing the sick (formerly extreme unction) bestows grace on those who are sick, old, or near death and helps in forgiveness of sins and sometimes the physical healing of the body.

7 - Holy orders confers special grace and spiritual power upon bishops, priests, and deacons for leadership in the Church as representatives of Christ for all eternity.

The Catholics maintain that these sacraments are necessary, but not all are necessary for each person.  For example, Holy orders would only be necessary for those in Church leadership.  The Catholic Encyclopedia goes on to say this about the sacraments:

(3) Division and Comparison of the Sacraments

(a) All sacraments were instituted for the spiritual good of the recipients; but five, viz. Baptism, Confirmation, Penance, the Eucharist, and Extreme Unction, primarily benefit the individual in his private character, whilst the other two, Orders and Matrimony, primarily affect man as a social being, and sanctify him in the fulfillment of his duties towards the Church and society. By Baptism we are born again, Confirmation makes us strong, perfect Christians and soldiers. The Eucharist furnishes our daily spiritual food. Penance heals the soul wounded by sin. Extreme Unction removes the last remnant of human frailty, and prepares the soul for eternal life, Orders supplies ministers to the Church of God. Matrimony gives the graces necessary for those who are to rear children in the love and fear of God, members of the Church militant, future citizens of heaven. This is St. Thomas's explanation of the fitness of the number seven (III:55:1)....

(b) Baptism and Penance are called "sacraments of the dead", because they give life, through sanctifying grace then called "first grace", to those who are spiritually dead by reason of original or actual sin. The other five are "sacraments of the living", because their reception presupposes, at least ordinarily, that the recipient is in the state of grace, and they give "second grace", i.e. increase of sanctifying grace (q.v.). Nevertheless, since the sacraments always give some grace when there is no obstacle in the recipient, it may happen in cases explained by theologians that "second grace" is conferred by a sacrament of the dead, e.g. when one has only venial sins to confess receives absolution and that "first grace" is conferred by a sacrament of the living (see ST III:72:7 ad 2; III:79:3). Concerning Extreme Unction St. James explicitly states that through it the recipient may be freed from his sins: "If he be in sins, they shall be forgiven him" (James, v.15).

And what, if anything, is said of the Protestant view of the sacraments?  Read on:

(2) Errors of Protestants

Protestants generally hold that the sacraments are signs of something sacred (grace and faith), but deny that they really cause Divine grace. Episcopalians, however, and Anglicans, especially the Ritualists, hold with Catholics that the sacraments are "effectual signs" of grace. In article XXV of the Westminster Confession we read:

Sacraments ordained of God be not only badges or tokens of Christian men's profession, but rather they be certain sure witnesses and effectual signs of grace and God's good will towards us by which He doth work invisibly in us, and doth not only quicken but strengthen and confirm our faith in Him (cf. art. XXVII).

"The Zwinglian theory", writes Morgan Dix (op.cit., p.73), "that sacraments are nothing but memorials of Christ and badges of Christian profession, is one that can by no possible jugglery with the English tongue be reconciled with the formularies of our church." Mortimer adopts and explains the Catholic formula "ex opere operato" (loc. cit., p. 122). Luther and his early followers rejected this conception of the sacraments. They do not cause grace, but are merely "signs and testimonies of God's good will towards us" (Augsburg Confessions); they excite faith, and faith (fiduciary) causes justification. Calvinists and Presbyterians hold substantially the same doctrine. Zwinglius lowered still further the dignity of the sacraments, making them signs not of God's fidelity but of our fidelity. By receiving the sacraments we manifest faith in Christ: they are merely the badges of our profession and the pledges of our fidelity. Fundamentally all these errors arise from Luther's newly-invented theory of righteousness, i.e. the doctrine of justification by faith alone (see GRACE). If man is to be sanctified not by an interior renovation through grace which will blot out his sins, but by an extrinsic imputation through the merits of Christ, which will cover his soul as a cloak, there is no place for signs that cause grace, and those used can have no other purpose than to excite faith in the Saviour. Luther's convenient doctrine on justification was not adopted by all his followers and it is not baldly and boldly proclaimed by all Protestants today;...[highlights added by Contender Ministries]

What the Council of Trent points out as Protestant "errors", I would refer to as Biblical truth!  The New Testament makes it very clear that we are justified by grace through faith.  That is not "Luther's newly-invented theory", that comes straight from the Bible.  Look at the following passages:

"This righteousness from God comes through faith in Jesus Christ to all who believe.  There is no difference, for all have sinned and fall short of the glory of God, and are justified freely by his grace through the redemption that came by Christ Jesus."  Romans 3:22-24, NIV

"Where, then, is the boasting?  It is excluded.  On what principle?  On that of observing the law?  No, but on that of faith.  For we maintain that a man is justified by faith apart from observing the law."  Romans 3:27-28, NIV

The justification of the necessity of the seven sacraments is defined by Catholic theologians.  The doctrine of salvation by grace through faith in Jesus Christ is defined in the Bible itself.  The Council of Trent was nothing more than a group of men attempting to reshape God in the image of man, and their conclusions cannot be considered accurate, as they are unbiblical.

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