Difference between Agreement Contract

Difference between …. . Agreement & Contract…. …. . Classification of Contract…. . pooja sharma 1

Difference between Agreement and Contract • Definition : Every promise and every set of promises forming consideration for each other is an agreement. An agreement which is enforceable by law is a contract. • Creation : - An agreement is created by acceptance of an offer. On the other side for contract we need that agreement which is enforceable by law. • Legal rights and obligations: An agreement may not create any legal right and obligations of the parties. But always a contract creates legal rights and obligations between the parties. pooja sharma 2

• Necessity: No contract is required to make an agreement. But for a contract we always need a legal agreement. • Legally binding: An agreement is not a legally binding on parties to contract. But a contract is always legally binding on the parties. • Concept: - Agreement is a wider concept and it includes contracts. On the other side contract is narrow concept and it is only a kind or sort of agreement. pooja sharma 3

Classification of Contracts • Basis of classification of contracts: 1. On the basis of creation 2. On the basis of execution 3. On the basis of enforceability pooja sharma 4

On the basis of Creation • EXPRESS CONTRACT- It is that which is made by words spoken or written. Example: S says to Y “Will you buy my cast for Rs 1, 000? Y says to X “I am ready to buy Car for Rs 1, 000 “. It is an express contract made orally. Example – X writes a letter to Y, “I offer to sell my car for Rs 1, 000 to you. ” Y sends a letter to X, “I am ready to buy your car for Rs 1, 000. ” It is an express contract made in writing. pooja sharma 5

• IMPLIED CONTRACT: Am implied contract is one which is made otherwise than by words spoken or written. It is inferred from the conduct of a person or the circumstances of the particular case. Example: A transport company runs buses on different routes to carry passengers. This is an implied offer by Transport Company. S boards a bus. This is an implied acceptance by X. Now there is an implied contract and X is bound to pay the prescribed fare. pooja sharma 6

Contract on the basis of Execution EXECUTED CONTRACT: - • It is a contract where both the parties to the contract have fulfilled their respective obligations under the contract. Example: - X offers to sell his car to Y for Rs 1, 000. Y accepts X’s offer. X delivers the car to Y and pays Rs one lakh to X. It is an executed contract. pooja sharma 7

EXECUTORY CONTRACT: - It is a contract where both the parties to the contract have still to perform their respective obligations. Example: - X offers to sell his car to Y for Rs 1, 000. Y accepts X’s offer. If the car has not yet been delivered by X and the price has not yet been paid by Y, it is an executory contract. PARTLY EXECUTED AND PARTLY EXECUTORY CONTRACT: It is a contract where one of the parties to the contract has fulfilled his obligations and the other party has still to perform his obligations. Example: - X offers to sell his car to Y for Rs 1, 000 on a credit of one month. Y accepts X’s offer. X delivers the car to Y. Here, the contract is executed as to X and executory as to Y. pooja sharma 8

Contract on the basis on Enforceability VALID CONTRACT: A contract which satisfies all the conditions which are prescribed by law is a valid condition. Example: - X offers to marry Y. Y accepts X’s offer. This is a valid contract. VOID CONTRACT: - A void contract is a contract which was valid when entered into but which subsequently became void due to impossibility of performance, or change of law, or due to some other reasons. Example: - X offers to marry Y. Y accepts X’s offer. Later on Y dies. This contract was valid at the time of its creation or formations but now became void due to the death of Y. pooja sharma 9

VOID AGREEMENT: An agreement which is not enforceable by law is said to be void. Such agreements are Void- ab -initio, which means that they are unenforceable right from the time they are made. Example: - An agreement with a minor or a person of unsound mind is void-ab-initio, because a minor or a person of unsound mind is incompetent to contract. VOIDABLE CONTRACT: - According to Indian law of contract, An agreement which is enforceable by law at the option of one or more parties to the contract, but not on the option of the others, it is kind of voidable contract. In other words “A voidable contract is one which can be set aside or avoided at the option of the aggrieved party”. Example- a contract is treated as voidable at the option of the party whose consent has been obtained by Coercion, or undue influence or fraud, or miss presentation. pooja sharma 10

ILLEGAL AGREEMENT: An illegal agreement is one the object of which is unlawful. Such an agreement cannot be enforced by law. Thus illegal agreements are always void from the very beginning. Example: -X agrees to pay Y Rs 1, 000 if Y kills Z. Y actually kills Z and claims Rs 1, 00, 000. Now Y cannot recover this figure from X because the agreement between X and Y is illegal as its object is unlawful. UNENFORCEABLE CONTRACT: It is a contract which is actually valid but cannot be enforced because of some technical defect (Such as not in writing, under stamped). Such contracts can be enforced if the technical defects involved are removed. Example- An oral agreement for arbitration is enforceable because the law requires that an arbitration agreement must be in writing. If the oral agreement for arbitration is reduced to writing, it will become enforceable. pooja sharma 11

Difference between Void agreement and Illegal agreement Definition – An agreement which is not enforceable by law is said void. On the other side an agreement which is expressly or impliedly prohibited by law, is illegal. Scope – All void agreements need not be illegal agreements, but all illegal agreement are purely void. Effects collateral agreement – The agreement collateral to void agreement is not necessarily void. On the other side the agreement collateral to an illegal agreement is always void. Restoration of benefits received – If a contract becomes void subsequently, the benefit received must be restored to the other party. The money advanced or thing given cannot be claimed back. pooja sharma 12