Q.Define 'Contract'. Distinguish between an agreement and a contract.
Section 2(h) of the Indian Contract Act, 1872 defines a contract as "an agreement enforceable by law." An agreement [Section 2(e)] is every promise and set of promises forming the consideration for each other; a promise [Section 2(b)] is an accepted proposal.
Agreement vs Contract:
| Basis | Agreement | Contract |
|---|---|---|
| Definition | Every promise/set of promises forming consideration for each other | An agreement enforceable by law |
| Legal enforceability | Not necessarily enforceable | Always enforceable |
| Scope | Wider — includes social/moral agreements | Narrower — only legally enforceable agreements |
| Legal obligation | May or may not create one | Always creates a legal obligation |
All contracts are agreements, but all agreements are not contracts — an agreement to have dinner with a friend is an agreement in the ordinary sense but is never intended to be legally enforceable, so it is not a contract.
A contract is an agreement enforceable by law (Section 2(h)). Every contract is necessarily an agreement, but an agreement becomes a contract only if the parties intend legal consequences and the agreement is one the law will enforce — otherwise it remains a mere (non-contractual) agreement.
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