NOTES


CA-Foundation > Business Laws > The Indian Contract Act, 1872 - Nature and type of contracts (Old & New)

“All contracts are agreements, but all agreements are not contracts”. Comment.



Ans.
Agreement is the genus of which contract is the species. An agreement is a wider term than a contract. It may be a legal agreement (i.e. enforceable by law) or a social agreement (i.e. not enforceable bylaw). Agreements relating to social matters like an agreement to go to movie together or a visit to a hotel do not create legal obligations between the parties and hence are not contracts. Only those agreements grow into contracts, which create legal obligations.

DISTINCTION BETWEEN AGREEMENT AND CONTRACT

Sr. No.

AGREEMENT

CONTRACT

1.

Agreement is a promise. Offer and acceptance together constitute an agreement.

Contract is an agreement enforceable by law.

2.

Agreement is a wider term. It is a genus. It includes legal as well as social agreement.

Contract is a specie of an agreement. It is a narrower term.

3.

Agreement may not create any legal obligation.

A contract necessarily creates a legal obligation.

4.

All agreements are not contracts.

All contracts are agreements.

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Notes of The Indian Contract Act, 1872 - Nature and type of contracts (Old & New)



  1. Explain in brief the rules relating to ‘acceptance’ of an offer under the provisions of the Indian Contract Act, 1872
    see in detail

  2. What are the essential elements of a valid contract? State in brief.
    see in detail

  3. “All contracts are agreements, but all agreements are not contracts”. Comment.
    see in detail

  4. Father promised to pay his son a sum of ₹ one lakh if the son passed C.A. examination in the first attempt. The son passed the examination in the first attempt, but father failed to pay the amount as promised. Son files a suit for recovery of the amount. State along with reasons whether son can recover the amount under the Indian Contract Act, 1872. Whether promise by a father to pay ₹ 1 Lakh if the son passes CA Exams in first attempt is a valid contract?
    see in detail

  5. State the points of differences between illegal agreements and void agreements.
    see in detail


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