Agreement – Section 2(e) of the Act defines it as : Every promise and every set of promises forming the consideration for each other is an agreement.
- Example : If Anil promises to sell his scooter to Krishan for Rs 5000 and Krishan promises to pay Anil the said amount, both promises together constitute an agreement.
Contract – Section 2(h) defines a contract as ” an agreement enforceable by law.”
Difference Between Agreement And Contract
|1||Section||Is defined in Section 2 (e)||Is defined in Section 2(h)|
|2||Definition||Every promise or every set of promises forming the consideration for each other is an agreement.||An agreement enforceable by law is a contract.|
|3||Scope||Has a very wide scope because each contract is first an agreement.||The scope is limited because all agreements are not contracts.|
|4||Nature||Covers legal and extra-legal affairs.||Covers only legal affairs.|
|5||Base||Is based on proposal and acceptance of proposal.||Is based on agreement.|
|6||Legality||Parties have no legal obligation.||Parties have legal obligations that are defined in the contract.|
|7||Effect||Is not enforceable by law||Is enforceable by law.|
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