Contract
Contract
AGREEMENT :-
Agreement is defined in the following words :
" Every promise or every set of promises forming the consideration for each other" Contract act and its
kind is an agreement.
There are two conditions for agreement :
1. Promise.
2. Consideration of both the parties.
In other words we can say that proposal which is offered by one party, it becomes an agreement.
Agreement = proposal + acceptance.
Example :- Mr. Sam invites Miss Sarah to a marriage party at his house. Miss Sarah does not go to the
party, Mr. Sam cannot claim any compensation because this agreement is not enforceable at law.
CONTRACT :-
It is defined in the following words "A contract is an agreement enforceable by law".
Salmond defines the contract in the following words "An agreement creating and defining obligations
between the parties". So there are two conditions for the contract.
1. An Agreement.
2. Enforceable by law.
Any agreement which enables a man to compel another to do something or not do something, it is called
contract. Agreement becomes a contract when it is enforceable by law.
Example :- Suppose there is an agreement between Mr. Khan and Miss. Lucy that Mr. Khan will bring
the car from Washington for Miss. Lucy and Miss Lucy will pay Rs. 10 lac to Mr. Khan. Now this
agreement is a contract because it enables Mr. Khan to compel Miss. Lucy for purchase of car. It also
compels to Mr. Khan for the sale of car. So agreement is a contract because it is at law.
Explanation :-
Promise = Proposal + Acceptance.
Agreement = Promise + Consideration of both the parties
Contract = Agreement enforceable at law.
Important Note :- All agreements are not contract but all contract are agreement. Because agreement is
not enforceable by law. It may exist without any legal obligation.
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1. Proposal :-
For the valid contract proposal is necessary. There are two parties in the proposal.
Example :- Mr. Ali offers for marriage to Miss. Zaiba for her willingness to do the marriage. In this
example Mr. Ali is a promisor Miss Zaiba is a promisee.
2. Acceptance :-
When the promisee signifies the assent then proposal is said to be accepted. Acceptance must be
according the contract act rules.
3. Agreement :-
After the acceptance of proposal it will be only promise. For the valid contract there must be an
agreement enforceable by law.
Example :- "A" verbally promises to sell his college to "B". It is not a valid contract because the contract
of movable property must be in writing.
5. Lawful Agreement :-
Lawful agreement is essential for the valid contract. Because unlawful agreement can not be enforceable
at law.
6. Legal Relationship :-
The agreement must create legal relationship between the parties of the contract. Each party should know
the legal rights and duties.
Example :- If "A" offers to sell his cow to "B" for Rs. 10,000 and "B" agree to buy it. It is contract which
creates legal relationship between them.
7. Lawful Object :-
If the object of the contract is not lawful then it is invalid contract. Illegal and immoral object makes the
contract invalid.
Example :- Mr. Arun promises to pay one lac to Mr. Adit. if he kills Mr. Shan. The agreement is illegal
because the object is not lawful.
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3. Who are not disqualified to enter into any contract.
9. Consideration :-
It is also essential for a valid contract. When at the wish of the promisor the promisee does or abstain
from doing such act or promise is called consideration for the promise. It may be past or present.
Example :- Mr. Anderson compels Miss. Reena to enter into a marriage contract on the gun point. It is
not a valid contract because consent is not free.
Example :- "A" promised to sell a car to "B" it is not clear. So the agreement is void.