CA Foundation Paper-II Business Law
Normally in our day to day life, we use both word agreement and contract in the same sense. But under the eye of the law, both words have a separate meaning. So let’s understand the difference between Agreement and Contract (CA Foundation Business Law) under The Indian Contract Act 1872.
Differences between Agreement and Contract
|Section||Given in Section 2(e)||Given in Section 2(h)|
|Definition||Every promise and every set of promises, forming the consideration for each other.||Contract means an agreement enforceable by law.|
|Enforceability||Agreements are not legally enforceable.||Contracts are enforceable in the eye of law.|
|Intention to create Legal Obligation||An agreement may or may not have intentions to create legal obligations.||The contract must have the intention of the parties to create legal obligations.|
|Scope||It has wide scope than the contract.||It has a narrow scope.|
|Exclusion||The word agreement has a wider scope than contract, it also includes social as well as domestic agreements.||Contracts doesn’t includes social agreements and domestic agreements.|
|Components||Agreement = Offer + Acceptance||Contract = Agreement + Enforceability|
|Relation||Every agreement is not a contract.||Every contract is an agreement.|
So after the reading above differences, it is clear that term agreement and contract are very much different in their meaning and Nature. Where agreement gives a foundation stone to contract, contracts give the agreement to an end destination.
Difference between Agreement & Contract – CA Foundation Business Law