What are 5 differences between contract and agreement?

An Agreement enforceable by law is called Contract.

Therefore All contracts are Agreements, but not all agreements are contract. 

 

Agreement may be anything legal or illegal or unlawful between the parties, but contract cannot be unlawful or illegal.

 

for example, A and B entered into an agreement that A deliver a thing which is prohibitted of use according to the national laws to B is an agreement, but it cannot enforce as it is illegal and unlawful act therefore cannot be contract.

 

Having coercion parties may enter into the agreement, but that cannot be contract as contract is suppose to be free from coercion and it is out of free will and consensus of the parties.

 

My 2 cents. Thanks.

 

 

“All contracts are an agreement, but all agreements are not contracts” this is an old statement but why it is so? Why is an agreement not equal to a contract?

 

Without recognizing it, we daily enter into the hundreds of agreement which do not bound us legally. But, those agreements which have a legal binding is a contract. Therefore, the Indian Contract Act, 1872 came into force. The act was enacted by the British Government because at that time they were ruling on India. The act gives a base to all the agreements and contracts. This act was applicable in all over the country except in the state of Jammu & Kashmir.

Now let’s understand the basic and special differences between Agreement and Contract concerning the Indian Contract Act, 1872.

Content: Contract Vs Agreement

Comparison Chart

BASIS FOR COMPARISONAGREEMENTCONTRACTMeaning When a proposal is accepted by the person to whom it is made, with requisite consideration, it is an agreement. When an agreement is enforceable by law, it becomes a contract. Elements Offer and Acceptance Agreement and Enforceability Defined in Section 2 (e) Section 2 (h) In writing No May or may not be. Legally Binding No Yes Scope Commercial Purposes Social as well as commercial purposes.  

Definition of Agreement

When a person (promisor) offers something to someone else (promisee), and the concerned person accepts the proposal with equivalent consideration, this commitment is known as the agreement. When two or more than two persons agree upon the same thing in the same sense (i.e. Consensus ad idem), this identity of minds is agreement. The following are the types of agreement are as under:

• Wagering Agreement
• Void Agreement
• Voidable Agreement
• Implied Agreement
• Express Agreement
• Conditional Agreement
• Illegal Agreement.

It can also be defined as the contract which lacks enforceability by law is known as the agreement.

Definition of Contract

To be precise, a legally enforceable agreement for doing or not doing an act is known as a contract. A contract must contain these elements: Offer and Acceptance, Adequate and Unconditional Consideration, Free Consent, Capacity, Lawful object, Certainty, Intention of creating legal obligations, and the Agreement should not be declared void.

The contract may be oral or written. The major types of contract are as under:

• Void Contract
• Voidable Contract
• Valid Contract
• Unilateral Contract
• Bilateral Contract
• Express Contract
• Tacit Contract
• Contingent Contract
• Implied Contract
• Executed Contract
• Executory Contract
• Quasi Contract etc.

Key Differences Between Agreement and Contract

The following are the major differences between agreement and contract:

1. Promises and commitments forming consideration for the parties to the same consent is known as an agreement. The agreement, which is legally enforceable is known as a contract.
2. The agreement is defined in section 2 (e) while a Contract is defined in section 2 (h) of the Indian Contract Act.
3. A Contract includes an agreement. Conversely, an agreement does not include a contract.
4. An agreement needs not to be given in writing, but the contracts are normally written and registered.
5. The agreement does not legally bound any party for the performance. In the Contract, the people are legally bound to perform their part.

Similarities

• Proposal
• Acceptance
• Consideration

Examples

1. Mohan and Rishabh decided to go for lunch on Sunday. Mohan did not come for lunch, and this resulted in the waste of Rishabh’s time. Now Rishabh cannot compel Mohan for the damages as the decision to go for the lunch is not a contract but a domestic agreement.
2. Varun promises his younger brother Anuj to pay his debts, and the agreement was in writing as well as registered. This is a valid agreement and can be enforceable.

Conclusion

At the beginning of this article a question is asked whose answer is here, i.e. only the legally enforceable agreements are contract means they must have a consideration, a lawful object, the parties makes their consent freely, they are competent to contract, and the agreement is not declared void. If any one of the above conditions does not satisfy, the agreement will cease to become a contract. Therefore, it can be said that all agreements are not contracts.