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
| Sr. No. | Basis | Agreement | 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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