Question

Explain the statement “All Contracts are Agreement but all Agreements are not Contract”
and provide two (2) examples demonstrating this statement

Answer 1

Answer:

All contracts are agreement but all agreements are not contract.

Explanation:

As per Indian Contract Act, 1872, Agreement which is enforced by law is called Contract.

So, Without law the agreement can't be described as Contract. Lets see two examples.

Ex 1 -

Your friend gave you a proposal to go with him on a vacation and you accepted it.

In the above example there's no legal obligation so it can be said it is just a social agreement but not a contract.

Ex 2-

Your friend agreed to sell his car to you for ₹1,00,000. Now as per law if you pay him the amount then your friend must sell his car to you.

In the above example there's a legal obligation to complete the deal/agreement from both side so it is called Legal agreement and it is also a contract.

Therefore agreement is must to make a contract but every agreement is not a contract. There should be a legal enforcement or obligation to make a agreement into a contact.

Hence every contract is an agreement but all contract aren't agreement.

Answer 2

All contracts are agreement but all agreements are not contract

Explanation:

The above  statement is  correct in the view of "The Indian Contract Act 1872". In accordance to  2(h) for contract 2 elements are essential.

1.  An agreement    [section - 2(e)]
2.  Enforceable by law  [section - 10]

As the definition given under Section 2 clause (h) of the Contract Act, there will be no contract without agreement; agreement takes the place of contract. This definition clears that all contracts are agreements. According to Section 2 (e) every promise and set of promises forming the consideration for each other is an agreement.

This definition gives two points.      

1. "Every promise" is an "agreement.
2. And "every set" of "promises" is also an agreement

And "promises" are "consideration" to each other.

• It implies that, when a "promise" is made, agreement is called if promises are on either side (set of promises). Whether "consideration" is "past, present or future" depends on the "facts & circumstances".There is only "one promise" if consideration is "past or present". There are two promises if consideration is to be given to the future. If the promisor takes account as a promise, such as the price of "payment in the future" , of any work, then 2 promises for performance exist: Proposal which become promise;  Acceptor gives consideration as promise.
• This is set of promises and is agreement. We must understand the promise to know agreement. The word "promise when accepted" is defined in Section 2(b). It implies that proposal becomes promise, that is, a promise that has become a promise. That's when all the promises are agreed. We therefore see that if accepted, the proposal becomes a "promise" and a "promise", and the "contract is an agreement" which can be enforced by law.

Agreement may be divided into two categories:  "Enforceable by law" [ known as Contract}; Not "enforceable by law" [ known as void ]. Therefore,  only those agreements are contracts that  are enforceable by law.

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The indian contract act, 1872 is not a complete code dealing with all ...

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