Proposal, Acceptance, Promise, Agreement and Contract

Proposal, Acceptance, Promise, Agreement and Contract

Proposal:

Section 2(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.

The word Proposal is synonymous of the English law term Offer.

Acceptance:

Section 2(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.

Promise:

Section 2(c) When a proposal is accepted it becomes a promise.

The person making the proposal is called the Promisor and the person to whom the promise is made is called the Promisee.

Agreement:

Section 2(e) Every promises and every set of promises forming the consideration for each other is an agreement.

Contract:

Section 2(h) An agreement enforceable by law is a contract.

A contract is an agreement, object of whose is to create an obligation. Thus when a man compels other person to do something or not to do something is contract.

Distinguishes between Contract and Agreement:

 AgreementContract  
a.Agreement is discussed in section 2(e) of the Contract Act, 1872  Contract is discussed in section 2(h) of the Contract Act, 1872  
b.Every promises and every set of promises forming the consideration for each other is an agreement.       [ 2(e) ]An agreement enforceable by law is a contract. [ 2(h) ]
c.Agreement is the previous stage of contract.  Contract is the next stage of agreement.
d.All agreements are not contract.All contracts are agreement.  
e.Agreement always may not create a legal obligationContract always creates a legal obligation.  
f.Agreement always may not enforceable by law.  Contract always enforceable by law.

“All contracts are agreements, but all agreements are not contracts.” – Discuss

Agreement:

Section 2(e) Every promises and every set of promises forming the consideration for each other is an agreement.

Contract:

Section 2(h) An agreement enforceable by law is a contract.

Elements of AgreementElements of Contract  
  Two or more parties Offer Acceptance Consideration    Two or more parties Offer Acceptance Consideration Enforceable by law  

There are four elements of an agreement, but five elements of a contract. All the four elements of an agreement are present in a contract. The element ‘enforceable by law’ is extra for the contract to agreement. Agreement is the previous stage of contract and a contract is the next stage of agreement. So, Agreement is genus and contract is species.

For this it is said, ‘All contracts are agreements, but all agreements are not contracts’.

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