Introduction:

According to section 2(h) of The Indian Contract Act 1872 “An agreement
enforceable by law is a contract”. It means those agreements are enforceable
by law they are contracts others not. For example, an agreement to sell a bike
may be a contract, but an agreement to go to the movie may be a mere
agreement not enforceable by law. To go to a movie is a social agreement and
social agreements are not enforceable by law.

What is an agreement?

According to section 2(e) of The Indian Contract Act 1872 “Every promise and
every set of promises, forming the consideration for each other, is an
agreement”. We can understand this definition by an example, A promises to
deliver his book to B, and in return, B promises to pay 1,000 to A. There is said
to be an agreement between A and B.

“All contracts are agreement”

• We know that when an agreement enforceable by law is a contract. A contract
  is an agreement that is enforceable by law. It is an agreement or set of
  promises giving rise to obligations that can be enforced or are recognized by
  law. In order to become an agreement into a contract, it has to satisfy all the
  essentials of a valid contract as mentioned in section 10 of the Indian Contract
  Act 1872.
  

• Section 10 of this act says, “All agreements are contracts 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”.

The essentials of a valid contract:

1. There must be two parties.
2. The agreement should be between the parties who are competent to
   contract.
3. There should be a lawful consideration.
4. The object of the agreement must be lawful.
5. There should be free consent between the parties.
6. The agreement must not be one that has been expressly declared to
   be void.

“All agreements are not contracts”

• An agreement is a set of promises. Section 2(e) of The Indian Contract Act
  1872 says, “Every promise and every set of promises, forming the
  consideration for each other, is an agreement”. In an agreement, there is a
  promise between both parties. For example, A promises to deliver his book
  to B, and in return of B promises to pay Rs. 1,000 to A. there is said to be an
  agreement between A and B. After acceptance of the offer/proposal it
  becomes a promise, promise is the result of offer acceptance.
  
• Thus, when there is a proposal/offer from the proposer and the acceptance of
  that proposal by the propose it results in a promise. Promise and reciprocal
  promise from promisor and promisee form an agreement.
  
• Hence, we can conclude only commercial agreements where parties are
  intending to shoulder responsibility upon each other and when they are
  entering into an agreement keeping in mind that in case of breach of
  agreement terms by one of the parties, the aggrieved party may go to court
  against the party who breaches the terms and compel him by the process of
  law to pay compensation as decided.

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