1. All agreements are not contracts but all contracts are agreements.

” Discuss the
statement explaining the essential elements of a valid contract

A contract is a legally binding agreement or relationship that exists between two or

more parties to do or abstain from performing certain acts. There must be offer and
acceptance for a contract to be formed. An offer must backed by acceptance of which there
must be consideration. Both parties involved must intend to create legal relation on a lawful
matter which must be entered into freely and should be possible to perform.
 
DEFINITION OF CONTRACT
According to section 2(h) of the Contract Act 1872:
 ” An agreement enforceable by law is a contract.”
A contract, therefore, is an agreement the which creates a legal obligation, i.e., a duty
enforceable by law.
From the above definition, we find that a contract essentially consists of two elements:
(1) An agreement and (2) Legal obligation i.e., a duty enforceable by law.
EXAMPLE;

A promises to sell a horse to B for Rs.100,000, and B promises to buy horse at that price.

All Contracts Are Agreements:

 For a Contract to be there an agreement is essential; without an agreement, there can be no
contract. As the saying goes, “where there is smoke, there is fire; for without fire, there can
be no smoke”. It could will be said, “where there is contract, there is agreement without an
agreement there can be no contract”. Just as a fire gives birth to smoke, in the same way, an
agreement gives birth to a contract.

An agreement is a form of cross reference between different parties, which may be

written, oral and lies upon the honor of the parties for its fulfillment rather than being
in any way enforceable.

As per section 2 (e) of Contract At 1872:

 ” Every promise and every set of promises, forming the consideration for each other, is an
agreement.” Thus it is clear from this definition that a ‘promise’ is an agreement.
An agreement is said to be reached when an offer capable of immediate acceptance is met
with a “mirror image” acceptance (i.e., an unqualified acceptance).[4] The parties must have
the necessary capacity to contract and the contract must not be trifling, indeterminate,
impossible, or illegal. Contract law is based on the principle expressed in the Latin
phrase pacta sunt servanda (usually translated AGREEMENTS TO BE KEPT but more
literally “pacts must be kept”).[5] Breach of contract is recognized by the law and remedies
can be provided.

All Agreements Are Not Contracts

As stated above, an agreement to become a contract must give rise to a legal obligation. If an
agreement is incapable of creating a duty enforceable by law. It is not a contract. Thus an
agreement is a wider term than a contract.
 Agreements of moral, religious or social nature e.g., a promise to lunch together at a friend’s
house or to take a walk together are not contracts because they are not likely to create a duty
enforceable by law for the simple reason that the parties never intended that they should be
attended by legal consequences
 On the other hand, legal agreements are contracts because they create legal relations between
the parties.
Example: a- A invites B to dinner. B accepts this invitation but does not attend the dinner. A
can not sue B for damages. It is social agreement because it does not create legal obligation.
So it is not a contract.

b- A promises to sell his car to B for one million. It is legal agreement because it creates legal
obligations between the parties. So it is a contract

Differences between contract and agreement:

Contract- According to section 2 (h) of the Indian contract act” an agreement enforceable by
law is a contract”.

Hence every agreement and promise enforceable by law is a contract.

Agreement- According to section 2(e) of the Indian contract act ” Every promise and every
set of promise forming the consideration for each other is an agreement”.
When there is a proposal from one side and the acceptance of that proposal by other side. It
results in a promise. This promise from the two parties to one another is known as an
”agreement”.

As noted above, an agreement enforceable by law is a contract.

All such agreement which satisfy the conditioned mentioned in sec 10 of Indian contract Act
is contracts. Section 10 is as under–”10. all agreements are contract if they are made by the
free consent of parties competent to contract for a lawful consideration and with a lawful
object , and are not hereby expressly declared to be void”.

1. Offers and Acceptance

For an agreement there must be a lawful offer by one and lawful acceptance of that offer
from the other party. The term lawful means that the offer and acceptance must satisfy the
requirements of Contract Act. The offer must be made with the intention of creating legal
relations otherwise, there will be no agreement.

2. Legal Relationship
The parties to an agreement must create legal relationship. It arises when parties know that if
one for the failure of a contract. Agreements of a social or domestic nature do not create legal
relations and as such cannot give rise to a contract. It is presumed in commercial agreements
that parties intend to create legal relations.

3. Lawful Consideration 
The third essential of a valid contract is the presence of consideration. Consideration is
“something in return.” It may be some benefit to the party. Consideration has been defined as
the price paid by one party for the promise of the other. An agreement is enforceable only
when both the parties get something and give something. The something given or obtained is
the price of the promise and is called consideration.
4. Capacity of Parties:
An agreement is enforceable only if it is entered into by parties who possess contractual
capacity. It means that the parities to an agreement must be competent to contract. According
to Section 11, in order to be competent to contract the parties must be of the age of majority
and of sound mind and must not be disqualified from contracting by any law to which they
are subject. A contract by a person of unsound mind is void  ab-initio (from the beginning).

If one of the parties to the agreement suffers from minority, madness, drunkenness etc., the
agreement is not enforceable at law, except in some cases.

5. Free Consent:
It is another essential of a valid contract. Consent means that the parties must have agreed
upon the same thing in the same sense. For a valid contract it is necessary that the consent of
parties to the contact must be free.

6. Lawful Objects:
It is also necessary that agreement should be made for a lawful object. The object for which
the agreement has been entered into must not be fraudulent, illegal, immoral, or opposed to
public policy or must not imply injury to the person or property of another. Every agreement
of which the object or consideration is unlawful is illegal and the therefore void.

7. Writing and Registration:

According to Contract Act, a contract may be oral or in writing. Although in practice, it is
always in the interest of the parties that the contract should be made in writing so that it may
be convenient to prove in the court. However, a verbal contract if proved in the court will not
be considered invalid merely on the ground that it not in writing. It is essential for the validity
of a contact that it must be in writing signed and attested by witness and registered if so
required by the law.
8. Certainity:
According to Section 29 of the Contract Act, “Agreements the meaning of which are not
certain or capable of being made certain are void.” In order to give rise to a valid contract the
terms of the agreement, must not be vague or uncertain. For a valid contract, the terms and
conditions of an agreement must be clear and certain.
9. Possibilty of Performance:
The valid contract must be capable of performance section 56 lays down that. “An agreement
to do an act impossible in itself is void.” If the act is legally or physically impossible to
perform, the agreement cannot be enforced at law.
10. Not Expressly Declared Void:
An agreement must not be one of those, which have been expressly declared to be void by the
Act. Section 24-30 explains certain types of agreement, which have been expressly declared
to be void. An agreement in restraint of trade and an agreement by way of wager have been
expressly declared void.
Conclusion:

AContract is an agreement between two or more person creating rights and duties between
them and which is enforceable by law. Pollock defines a contract as every agreement and
promise enforceable at law is contract.

A contract is an agreement creating and stating responsibility between the parties. According
to section2b of the contract act, an agreement enforceable by law is contract. So it is clear the
contract consist of two elements:

• An agreement
• The agreement should be enforceable by law.

In a nutshell, an agreement is the basis of a contract and contract is the structure constructed
on this basis. An agreement starts from an offer and ends on consideration while a contract
has to achieve another milestone that is enforceability

2. Attempt The Following Problems, Giving Reasons:-

2.A.)Over a cup of coffee in a restaurant, A invites B to a dinner at his house on a

Sunday.B hires   a taxi and reaches A’s house at the appointed time, but A fails to
perform his promise.Can B recover any damages from A?

No, B Cannot recover the damages from A as both the parties share a social
relationship and there is no intention to create a legal relationship.
So, it was just an agreement which is not enforceable at law.

2.BM mows L’s lawn without being asked by L to do so. L watches M do the work
but does not attempt to stop him. Is L bound to pay any charges to M?

As there is no contract i.e. No legal agreement between parties L & M, hence

L is not liable To pay M for This services. However if M has mown The lawn not out
of gratitude or without expectation of any compensation but rather with an intention
To get compensation in return , Then M can still claimcompensation under Sec.70 of
Indian Contract Act.

According To Sec.70, The act in question would be called a ‘Non - Gratuitous

AcT’.IT states That, If a person lawfully does or delivers anything To another person
not intending To do so freely (gratuitously), Then such other person who enjoys such
benefit is bound To compensate The former. His kind of contract between Two or
more parties is called a “Quasi Contract”.
In This case, L didn’t ask M To mow his lawn but when he/she observed M doing The
act, L didn’t stop him, which means L wanted To enjoy The benefit coming out of
M’s act ofmowing The lawn. Hence, The conditions of The ‘Quasi Contract’ are met
and hence M is entitled to a reasonable remuneration.
 2.C P applied for the principal’s post  of a local college, and the Governing Body
passed a resolution appointing him.After the meeting, a member of the Governing
Body privately informed him of the resolution.The resolution was subsequently
rescinded. P claims damages. Will he succeed?

For contract, there should be clear offer and acceptance between two parties .But in
this case this factor is absent. P cannot claim damages as there was no formal
communication and since it was a private meeting.
A per The High Court issued in the case denoted below that the candidate's
appointment was not valid as the Syndicate had not given its approval and he had
been allowed to join the post of Principal without such approval; that the decision of
the Governing Body to advertise for the post of Principal was

 Neither a case of punishment nor termination of service nor was it a demotion of the
appellant, therefore it did not fall under Arts. 7, 8 and 9 of the Statutes.

 It also held that there was no protest from the candidate against the passing of the
new resolution or decision and

 As he submitted himself for selection, he could not now complain if some body else
was selected.

 It was held therefore that the candidate could not challenge any new appointment
because