What Agreements Are Contract?

In simple language, an agreement is a meeting of the minds between two or more parties, where they come to a mutual understanding and promise to do something or refrain from doing something in exchange for something else. An agreement can be oral or written, and it can be express or implied.

What does the Term Agreement Exactly Describe?

The term "agreement" is defined in Section 2(e) of the Indian Contract Act, 1872, which is a law that governs contracts in India. According to this section, an agreement is defined as "every promise and every set of promises, forming the consideration for each other."

Types of an Agreement

Following are the major types of an agreement −

  • An Express Agreement is one that is explicitly stated and agreed upon by the parties, either verbally or in writing. For example, if two parties agree to buy and sell a car for a certain price, and they both sign a written contract that sets out the terms of the sale, this would be an express agreement.

  • An Implied Agreement is one that is inferred from the conduct of the parties or the circumstances surrounding the transaction. For example, if someone goes to a restaurant and orders food, an implied agreement is formed between the restaurant and the customer that the restaurant will provide the food and the customer will pay for it.

Essential Elements of Contract

In order for an agreement to be legally enforceable as a contract, it must also meet certain requirements under the Indian Contract Act, such as −

  • Free consent − The parties must have entered into the agreement voluntarily and without any coercion, undue influence, fraud, misrepresentation or mistake.

  • Lawful consideration − There must be some form of consideration, which is something of value that is given in exchange for the promises made in the agreement.

  • Capacity to contract − The parties must be legally capable of entering into a contract, which means they must be of legal age, sound mind, and not disqualified by law from entering into a contract.

  • Legal object − The object of the agreement must be lawful and not opposed to public policy.

In summary, an agreement in the context of the Indian Contract Act refers to a promise or set of promises between two or more parties that are made in exchange for something of value, and which meet certain legal requirements in order to be enforceable as a contract

Agreements that meet certain legal requirements can be considered contracts. These legal requirements include

  • Mutual assent − All parties involved in the agreement must have a clear understanding of what is being offered and what is expected in return. This means that there must be a meeting of the minds between the parties.

  • Consideration − Each party must give something of value in exchange for the promises made by the other party. This can be in the form of money, goods, services, or anything else that has value.

  • Legality − The contract must not violate any laws or public policy. For example, a contract that requires one party to engage in illegal activities would not be legally binding.

  • Capacity − All parties involved in the agreement must have the legal capacity to enter into a contract. This means that they must be of legal age, not under duress or undue influence, and not mentally incapacitated.


If an agreement meets these legal requirements, it can be considered a contract. Contracts can be written or oral, but it is generally recommended to have a written contract to ensure that the terms are clearly defined and agreed upon by all parties. Some common examples of contracts include employment agreements, lease agreements, purchase agreements, and service contracts.

Frequently Asked Questions (FAQs)

Q1. What is the difference between an agreement and a contract?

Ans. An agreement is a general term that refers to any understanding or arrangement between two or more parties. A contract, on the other hand, is a specific type of agreement that is legally binding and enforceable in court.

Q2. Can an agreement be legally binding without being a contract?

Ans. Yes, an agreement can be legally binding even if it is not a formal contract. However, in order to be legally binding, an agreement must meet certain legal requirements, such as having a lawful object and consideration.

Q3. Do all contracts have to be in writing?

Ans. Not at all contracts have to be in writing. In some cases, an oral agreement can be legally binding. However, some contracts, such as real estate contracts and contracts for the sale of goods over a certain amount, must be in writing to be enforceable.

Q4. What happens if one party breaches a contract?

Ans. If one party breaches a contract, the other party may be entitled to damages or other remedies, such as specific performance, which requires the breaching party to fulfil their contractual obligations.

Q5. Can a contract be voided?

Ans. Yes, a contract can be voided if it is found to be illegal or against public policy, or if one party lacked the capacity to enter into the contract. In some cases, a contract may also be voidable if one party was coerced or misled into entering into the agreement.

Q6. Can a contract be modified after it has been signed?

Ans. Yes, a contract can be modified after it has been signed, but both parties must agree to the modification and the modification must be supported by new consideration.

Q7. What is the statute of limitations for enforcing a contract?

Ans. The statute of limitations for enforcing a contract varies depending on the jurisdiction and the type of contract. In India, the Limitation Act, 1963 sets out the time limits for filing a suit to enforce a contract, which can range from 1 year to 3 years depending on the nature of the contract.

Updated on: 14-Apr-2023


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