All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
B Com Exam  >  B Com Questions  >  all contracts are agreements but all agreemen... Start Learning for Free
SaveJoin the Discussion on the App
all contracts are agreements but all agreements are not contracts explain
?
Clear all your B Com doubts with EduRev
Verified Answer
all contracts are agreements but all agreements are not contracts expl...
Meaning of Contract : Section 2 (h) of the Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. In other words, an agreement which can be enforced in a court of law is contract. Rajeev defines a contract as an agreement creating and defining obligations between the parties. According to Pollock “Every agreement and promise enforceable at a court of law is a contract.” Hence, a contract is an agreement between two or more persons which is intended to have legal consequences.

There are two elements of a contract
Agreement : According to Section 2 (e) every promise and set of promises (two or more promises) forming the consideration for each other is an agreement. Promise is defined in Section 2 (b) in these words. 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. Therefore, every agreement is composed of a proposal from one side and its acceptance from the other.

The agreement must give rise to legal obligation, i.e:, it should be enforceable by law : Agreements creating social, religious or moral obligations are not contracts.All contracts are agreements but all agreements are not contracts. All agreements are not contracts. An agreement may or may not create a legal obligation. If no legal binding is intended, a contract does not arise. Agreements of moral, religious or social nature are not contracts because parties never intend to create legal obligation. In such cases, no one can sue the other party in case of default. On the other hand, all contracts are agreements because for making a contract, there must be an agreement enforceable by law.

Essential Elements of a Valid Contract are:

-   Offer and Acceptance : In order to create a valid contract, there must be an  agreement between the two parties. An offer from one party to do or abstain from doing a particular act and its acceptance by the other party are two basic elements of an agreement. Both offer and acceptance should be lawful. The offer must be certain and must be communicated to the offerer. Similarly, acceptance must be absolute and unconditional, it must be given in the mode prescribed and should be communicated.
-  Intention to create Legal Relationship : There should be an intention on the part of the parties to the agreement to create a legal relationship.
Lawful consideration : The agreement must be supported by a lawful consideration on both sides.
-  Parties competent to contract : The parties to a contract must be capable of entering into a valid contract. According to Section 11, every person is competent to contract if he (i) is of the age of majority, (ii) is of sound mind, and (iii) is not disqualified from contracting by any law to which he is subject.
-  Free consent : The contract must have been ,made with the free consent of the parties. Consent is said to be free if it is not induced by coercion, undue influence, fraud, misrepresentation or mistake.
-  Lawful object : The object of the agreement should be lawful and not the one which the law disapproves.
-  Not expressly declared void : The agreement must not have been expressly declared to be void. There are certain agreements which have been expressly declared void by the Indian Contract Act, like, agreements in restraint of marriage, agreements in restraint of trade or agreements in restraint of legal proceedings, agreements with uncertain meaning etc.
-  Certainty of meaning : The meaning of the agreement must be certain, otherwise the agreement will not be enforceable by law. For example, if X agrees to sell to Y 500 liters of oil @ 50 per liter, the agreement is not enforceable as there is nothing to show the type of oil being sold.
-  Possibility of performance : The act contemplated in the agreement should be capable of performance. An agreement to do an act impossible in itself cannot be enforced.
-  Necessary legal formalities : The prescribed legal formalities of writing, registration etc., must be observed, wherever required.
This question is part of UPSC exam. View all B Com courses
Most Upvoted Answer
all contracts are agreements but all agreements are not contracts expl...
All contracts are agreements but all agreements are not contracts


Definition of Agreement:

An agreement is a mutual understanding or arrangement between two or more parties about their rights and obligations in relation to a particular matter. It can be oral, written, or implied by the conduct of the parties involved. An agreement does not necessarily have legal enforceability.


Definition of Contract:

A contract is a legally binding agreement between two or more parties that creates an obligation to do or not to do something. It must have all the essential elements required by law, such as offer, acceptance, consideration, intention to create legal relations, and certainty of terms.


Explanation:

All contracts are agreements, but not all agreements are contracts. The main difference between the two lies in their legal enforceability. Here's a detailed explanation:


1. Agreement:

An agreement is a broader term that encompasses both enforceable and non-enforceable arrangements. It can be a social or domestic arrangement, which may not have any legal consequences. For example, if two friends agree to meet for dinner, it is an agreement, but it does not create any legal obligation. Agreements can be informal or formal, and they may or may not be supported by consideration.


2. Contract:

A contract, on the other hand, is a legally binding agreement that is enforceable by law. It requires the presence of certain essential elements to make it valid and enforceable. These elements include:



  • Offer: One party must make a clear and definite proposal to another party.

  • Acceptance: The other party must unconditionally accept the offer.

  • Consideration: There must be a valuable consideration exchanged between the parties.

  • Intention to create legal relations: The parties must intend to be legally bound by the agreement.

  • Certainty of terms: The terms of the contract must be clear and unambiguous.



If all these elements are present, the agreement becomes a contract, and the parties involved can seek legal remedies in case of a breach. Contracts can be written, oral, or implied by conduct, but certain types of contracts must be in writing to be enforceable, as per the Law of Contract.


Conclusion:

All contracts are agreements, but not all agreements meet the legal requirements to be considered contracts. Contracts have legal enforceability and require the presence of essential elements, while agreements may or may not have legal consequences.
Explore Courses for B Com exam
all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law?
Question Description
all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law?.
Solutions for all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? in English & in Hindi are available as part of our courses for B Com. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free.
Here you can find the meaning of all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? defined & explained in the simplest way possible. Besides giving the explanation of all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law?, a detailed solution for all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? has been provided alongside types of all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? theory, EduRev gives you an ample number of questions to practice all contracts are agreements but all agreements are not contracts explain Related: Law of Contract, Nature, Offer, Acceptance - Business Law? tests, examples and also practice B Com tests.
Explore Courses for B Com exam

Suggested Free Tests

Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Follow Us
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup