Business Legislation

Explanation of 'All contracts are agreements but all agreements are not contracts.'

Introduction

The statement 'All contracts are agreements but all agreements are not contracts' differentiates

between the broader category of agreements and the narrower category of contracts. To understand

this, we need to delve into the definitions and essential elements of agreements and contracts.

Agreements

An agreement, as defined in Section 2(e) of the Indian Contract Act, 1872, is 'every promise and

every set of promises, forming the consideration for each other.' In simpler terms, an agreement is a

mutual understanding between two or more parties about their relative rights and duties.

Contracts

A contract, as defined in Section 2(h) of the Indian Contract Act, 1872, is 'an agreement enforceable

by law.' This means that a contract is a subset of agreements that meets certain criteria making it

legally binding and enforceable in a court of law.

Essential Elements of a Contract

For an agreement to become a contract, it must satisfy the following essential elements:

- Offer and Acceptance: There must be a lawful offer by one party and a lawful acceptance of the

offer by the other party.

- Intention to Create Legal Relations: The parties must intend to enter into a legally binding

agreement.

- Lawful Consideration: There must be something of value exchanged between the parties.

- Capacity to Contract: The parties must have the legal capacity to enter into a contract (e.g., they

must be of legal age, of sound mind, etc.).

- Free Consent: The consent of the parties must be free and not obtained through coercion, undue

influence, fraud, misrepresentation, or mistake.

- Lawful Object: The object of the agreement must be lawful and not against public policy.

- Certainty and Possibility of Performance: The terms of the agreement must be certain and it must

be possible to perform the contract.

Distinction Between Agreements and Contracts

Agreements: All contracts are agreements since a contract requires a mutual agreement between

parties. However, agreements include both enforceable and non-enforceable agreements.

Contracts: Only those agreements that meet all the legal requirements outlined above are

considered contracts. Hence, all agreements are not contracts, as not all agreements are

enforceable by law.

Examples

- Agreement but not a Contract: An agreement to go for a walk together is an agreement but not a

contract, as it lacks the intention to create legal relations and lawful consideration.

- Contract: An agreement to buy a car for a specified price where both parties have the intention to

create legal relations, the buyer has the capacity to contract, and the object is lawful, would be a

contract.
 Object and Scope of the Industrial Disputes Act, 1947

Introduction

The Industrial Disputes Act, 1947, was enacted to make provisions for the investigation and

settlement of industrial disputes and for providing certain safeguards to workers. The act aims to

ensure industrial peace and harmony by providing mechanisms for the resolution of conflicts

between employers and employees.

Objectives

- Promotion of Industrial Peace: The primary objective of the Act is to promote industrial peace and

prevent industrial disputes.

- Improvement in Industrial Relations: It aims to improve relations between employers and

employees, ensuring a smoother functioning industrial environment.

- Regulation of Industrial Disputes: The Act provides mechanisms for the investigation and

settlement of industrial disputes through conciliation, arbitration, and adjudication.

- Protection of Workers' Rights: It safeguards the rights of workers in matters of layoffs,

retrenchment, and closure of industrial establishments.

- Ensuring Fair Wages and Working Conditions: It aims to secure fair wages and better working

conditions for workers.

Scope

The Act applies to all industrial establishments employing 50 or more workers and covers a wide

range of issues related to industrial disputes.

Key Provisions

- Definitions: The Act defines key terms such as 'industrial dispute,' 'workman,' and 'employer.'

- Authorities under the Act: The Act establishes various authorities to address industrial disputes,
including works committees, conciliation officers, boards of conciliation, courts of inquiry, labor

courts, and industrial tribunals.

- Procedure for Settlement: The Act outlines procedures for the settlement of disputes through

voluntary arbitration or compulsory adjudication.

- Strikes and Lockouts: It provides guidelines on the legality of strikes and lockouts, including notice

periods and conditions under which they can be declared illegal.

- Layoffs and Retrenchment: It regulates layoffs and retrenchment, providing for compensation and

notice requirements.

- Unfair Labor Practices: The Act prohibits certain unfair labor practices by employers and workers,

ensuring fair treatment in industrial relations.

Conclusion

The Industrial Disputes Act, 1947, plays a crucial role in maintaining industrial harmony and

protecting the rights of workers. By providing a structured mechanism for the resolution of disputes,

it helps prevent conflicts and ensures a conducive environment for industrial growth and

development.