All contracts are agreements but all agreements are not contracts.
A
contract plays a very important role in modern world, especially in Business
World. In order to become a full fledged contract it needs to pass through
several stages. The journey of a contract starts from an offer; an offer when
gets accepted becomes promise, promise needs to back by consideration in order
to become an agreement, now at last if an agreement is enforceable by law then
it becomes Contract. From this one can have a fair idea why every contract is
an agreement. Similarly, if an agreement is not enforceable by law then it
won’t become contract. Hence all agreements are not contract.
Section 2(h) of the Indian Contract Act, 1872
says, “An agreement enforceable by law is a contract.” Briefly, Contract is a
pack of promises which give rise to several obligations and those obligations
are recognized by the law. All contracts are agreements but all agreements are not contracts. It means a legal remedy is available in case of non
performance. It is to be noted that all agreements cannot become contract i.e.
only agreements which satisfy all the essentials mentioned in Section 10 of
Indian Contract act, 1872 becomes contract. These essentials are discussed in
later part of this article.
Section 2(e) of the Indian Contract Act, 1872
says, “Every promise and every set of promises forming the consideration for
each other is an agreement.” Here, promise flows from the sides. Promise has
been defined in Section 2(b) of the Indian Contract Act, “When the person to
whom proposal is made signifies his assent thereto, the proposal is said to be
accepted. A proposal when accepted becomes promise.”
In simple words, when a proposal is accepted it
becomes promise and promise from the two parties to one another is known as an
agreement.
Section 23 of Indian Contract Act, 1872 says that
every agreement which has unlawful consideration or Object is void. All contracts are agreements but all agreements are not contracts. This
section also provides with circumstances when object or consideration of an
agreement is not unlawful. According to this section, Object and Consideration
should not be forbidden by law; or is of such nature that it would defeat the
provisions of law; or is fraudulent; or involves or implies injury to the
person or property of another; or the court regards it as immoral, or opposed
to public policy.
In law, a contract is a legally binding agreement
between two or more parties which, if it contains the elements of a valid legal
agreement, is enforceable by law [3]or by binding arbitration. A legally
enforceable All contracts are agreements but all agreements are not contracts. contract is an exchange of promises with specific legal remedies
for breach. These can include compensatory remedy, whereby the defaulting party
is required to pay monies that would otherwise have been exchanged were the
contract honored, or an Equitable remedy such as Specific Performance, in which
the person who entered into the contract is required to carry out the specific
action they have reneged upon.
As long as the good or service provided is legal,
any oral agreement between two parties can constitute a binding legal contract.
All contracts are agreements but all agreements are not contracts. The practical limitation to this, All contracts are agreements but all agreements are not contracts. however, is that generally only parties to a
written agreement have material evidence (the written contract itself) to prove
the actual terms uttered at the time the agreement was struck. In daily life,
most contracts can be and are made orally, such as purchasing a book or a
sandwich. Sometimes written contracts are required by either the parties, or by
statutory law within various jurisdictions for certain types of agreement, for
example when buying a house[6] or land.
This article mainly concerns contract law in
common law jurisdictions (approximately coincident with the English-speaking
world and anywhere the British Empire once held sway). Common-law jurisdictions
usually offer proceedings in the All contracts are agreements but all agreements are not contracts. English language, which has become to an
extent a lingua franca of international business.[8] The common law retains a
high degree of freedom of contract, with parties largely free to set their own
terms, whereas civil-law systems typically apply certain over-arching
principles to disputes arising out of contract (see, for example the French
Civil Code). It is very common for businesses not located in common-law
jurisdictions to opt in to the common law through a Choice of law clause.
For a Contract to be there an agreement is
essential; without an agreement, there can be no contract. As the saying goes,
“where there is smoke, there is fire; for without fire, there can be no smoke”.
It could will be said, “where there is contract, All contracts are agreements but all agreements are not contracts. there is agreement without an
agreement there can be no contract”. Just as a fire gives birth to smoke, in
the same way, an agreement gives birth to a contract.
As stated above, an agreement to become a contract
must give rise to a legal obligation. 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.