A contract is a legally binding agreement or relationship that exists between two or more parties to do or abstain from performing certain acts. A contract can also be defined as a legally binding exchange of promises between two or more parties that the law will enforce. For a contract to be formed an offer made must backed acceptance of which there must be consideration. Both parties involved must intend to create legal relation on a lawful matter which must be entered into freely and should be possible to perform.An agreement is a form of cross reference between different parties, which may be written, oral and lies upon the honor of the parties for its fulfillment rather than being in any way enforceable.
All contracts are agreement because there must be mutual understanding between two parties for a contract to be formed. All parties should agree and adhere to the terms and conditions of an offer. The following cases illustrate ways in which all contracts are agreements; In the case of invitation to treat, where an invitation to treat is merely an invitation to make an offer.When a firm’s offer is accepted it results into a contract provided other elements of contracts are accepted. Considering person A buying a radio on hire purchase from person B who deals with electronics and its appliances. Both parties must come to an agreement on payment of monthly installment within specified period of time. Such an agreement result to specialty contract which a contract under seal. All contracts are agreement until avoided for example, avoidable contract where one of the parties can withdraw from it if s/he wishes.
This occurs due to minor agreement and misrepresentation or undue influence.Considering a case where person A make contract with person B but during the contract period B realizes that he was engaged to perform an agreement under undue influence. Definition of contract : According to section 2(h) of the Indian Contract Act: “An agreement enforceable by law is a contract.
” A contract therefore, is an agreement the object of which is to create a legal obligation i. e. , a duty enforceable by law.
From the above definition, we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i. e. , a duty enforceable by law. We shall now examine these elements detail. .
Agreement. As per section 2 (e): “Every promise and every set of promises, forming the consideration for each other, is an agreement. ” Thus it is clear from this definition that a ‘promise’ is an agreement. What is a ‘promise’? The answer to this question is contained in section 2 (b) which defines the term.” When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted. A proposal, when accepted, becomes a promise. ” An agreement, therefore, comes into existence only when one party makes a proposal or offer to the other party and that other party signifies his assent (i. .
, gives his acceptance) thereto. In short, an agreement is the sum total of ‘offer’ and ‘acceptance’. On analyzing the above definition the following characteristics of an agreement become evident: i. At least two persons. There must be two or more persons to make an agreement because one person cannot inter into an agreement with himself. ii.
Consensus-ad-idem. Both the parties to an agreement must agree about the subject matter of the agreement in the same sense and at the same time. 2. Legal obligation.
As stated above, an agreement to become a contract must give rise to a legal obligation i. . , a duty enforceable by law. If an agreement is incapable of creating a duty enforceable by law. It is not a contract. Thus an agreement is a wider term than a contract.
“All contracts are agreements but all agreements are not contracts,” Agreements of moral, religious or social nature e. g. , a promise to lunch together at a friend’s house or to take a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple reason that the parties never intended that they should be attended by legal consequences