Distinction between Agreement and Contract

By Asok Nadhani

 Distinction between Agreement and Contract

i.      All Contracts are Agreements because an Agreement is a pre requisite of Contract. But all Agreements are not Contracts. For example, normally agreements incorporating Social, religious & moral obligations are not contracts as there is no intention of creating a legal relationship.

ii.    Agreements not enforceable by law are not Contracts. The following are the salient distinction between Agreement & Contract:

1.     Any promise with a valid consideration is an agreement, but is not a contract unless enforceable by law.

2.     Agreement is a wider term than contract and covers a larger space.

3.     Agreement may or may not satisfy all the essential elements of contract.

4.     Agreements may or may not be enforceable by law but contracts are enforceable by law.

5.     An Agreement does not give legal rights and obligations to the parties but Contracts give rights to the parties.

iii.   So, it can be said that law of contracts is not about whole of agreements nor it is about whole of obligations.

For More details refer to Mercantile Laws by Asok Nadhani, BPB Publications, www.bpbonline.com bpbpublications@gmail.com