Agreement – Meaning and Definition

Dear Readers

In the first post we discussed the meaning and definition of key term called Contract. Please click on below link to read it again

http://www.rkstrainings.com/what-is-a-contract-should-it-be-in-writing/

We have observed that the definition of Contract revolves around the term Agreement. Therefore, in order to have in-depth understanding of the term Contract, it is important to know what is Agreement. The purpose of this blog is to discuss the meaning and definition of the term Agreement

What do we mean by the term Agreement

As per Section 2(e) of Indian Contract Act, an agreement is defined as every promise and every set of promises forming consideration for each other

There is an Agreement between parties when one party give the proposal and other party accept it. The only pre-requisite is that the acceptance by other party is unconditional. If the other party provides conditional acceptance, it is called a counter offer rather than acceptance. As long as both parties keep on giving/receiving offers and counter offers, there is no agreement. All such negotiations only reduced to an Agreement when all parties meet at a common point and mutually accept the same

Agreement = [offer by one party] + [acceptance by other]

Which agreements among the followings are contracts

Based on above definitions of contract and agreement, please tick which of the following agreements is contracts and why:

  1. You visit a restaurant to have dinner. Restaurant Manager gave you the menu with description of food items with price tag. Staff served food with decent services and charged bill as per price list
  2. Rakesh intends to hire a taxi to go to airport next day to catch a flight. Taxi Company quoted to charge @Rs 20/Km, which you agreed. Taxi driver came on time, dropped Rakesh at airport and collected fare as agreed
  3. You purchased a Samsung Handset Model of your choice as per product description, specifications and terms of sale. You made payment as agreed between you and shopkeeper
  4. A need to go to another city for interview. So, he approached his friend B and requested his car for one day, which B agreed. Later B refused as he needs his car due to some family urgency. Accordingly, A missed the interview and he held B responsible for breaching the agreement
  5. When Mohan lost his job due to economic slowdown, his friend Raj agreed that he will give INR 10,000/-per month to Mohan for meeting necessary expenses until Mohan find another job. After, one year, when Mohan was still unemployed, Raj discontinued the support. Mohan, who was already disturbed, refused to accept Raj’s refusal and asked him to continue the support as per agreement between them

We will discuss the answers of above question in next blogThis will help you could cross check which question your answered correctly

Whether all agreements are contracts or vice versa

Agreements which are not enforceable by law are not contracts. Such agreement does not bind the parties legally

In our day to day life we make certain promises to our family, neighbors, friends or society at large. Such social/personal agreements are purely intended to do a favor or to support others. People provide such helps as goodwill gesture or for human values or moral duty and without seeking anything in return. These agreements are not intended to legally bind each other and take the other party to court for not fulfilling the promise made

Hence the above agreements of social or moral nature are not contracts

However, all commercial agreements, where both parties strive to seek certain benefits and decide to enter into an agreement for the purpose of business, trade or industry are contracts. This is because here parties are willing to take other party to court if it failed to fulfil its promises as per the agreement

However, all commercial agreements, where both parties strive to seek certain benefits and decide to enter into an agreement for the purpose of business, trade or industry are contracts. This is because here parties are willing to take other party to court if it failed to fulfil its promises as per the agreement. So, all agreements are not contracts, however, all contracts are agreements

Therefore, all agreements are not contracts, however, all contracts are agreements

Next Post – Meaning of Consideration

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