MEANING OF

CONTRACT
By: Ms. Manan Dardi
Email id: manan.dardi@vips.edu
 Introduction
• Proposal i.e. Offer and Acceptance

• Promise: According to Section 2(b), a proposal when accepted become a promise.

• Consideration is the return benefit the parties to the contract get.

• Agreement: According to Sec 2(e), every promise and every set of promises forming consideration for

each other.

• AGREEMENT = OFFER+ACCEPTANCE

• CONTRACT = AGREEMENT + ENFORCEABLE BY LAW

• Contract: According to Sec 2(h), a contract is defined as an agreement enforceable by law.

Cont…

• An Agreement simply needs to be agreed upon by two or more parties

once they have a mutual understanding between them. The only
requirement is the “meeting of minds”.

• A Contract, however, must have the following elements for it to be

legally binding in the court of law.
Elements for a contract to be legally
binding in the court of law.
Requirements

• Agreement

• Intention to Create Legal Relations

• Lawful Object

• Lawful Consideration

• Competent Parties

• Free Consent
Cont…
• Hence, all contracts are agreements

• But all agreements are not contracts

Example of an agreement

• Meehika and Rahul mutually decided to go for dinner on Friday Night.

However, when the day came, Rahul had to work overtime and could
not meet Meehika. As a result, Meehika lost valuable time.

• Here Meehika cannot sue Rahul for damages as the decision to go for
Dinner is not a contract but merely a domestic agreement.
 Example of a Contract
• Preeti takes a loan of Rs. 1 Lakh from a Lender. Her brother Pradeep promises in writing to the
lender that he would pay off his sister’s loan if she were to default on the monthly installments.

• Preeti repaid the initial few installments of the loan after which she went bankrupt. The lender
reaches out to her brother Pradeep and asks him to pay on his sister’s behalf. Pradeep refuses
to pay.

• Now, the lender has every right to sue Pradeep for damages as well as recover the balance part
of the loan since the agreement to stand in as surety was in writing and registered and is
enforceable in the court of law.
Difference between Contract and Agreement

BASIS AGREEMENT CONTRACT

An agreement is made when a proposal
A contract is made when an agreement
Meaning by one party is accepted by another
becomes enforceable by law.
lawful consideration.
Elements Offer and Acceptance Agreement and Enforceability under law
Defined in Section 2(e) Section 2(h)
In writing Not necessarily Usually written and registered
Once the agreement becomes a contract,
There is no legal obligation as long as it
Legal obligation there is a legal obligation by parties
is a mere agreement.
involved.
Scope Wide Narrow
THANK YOU