Difference between
…..Agreement & Contract….
…..Classification of Contract…..
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Difference between Agreement and Contract
• Definition : Every promise and every set of promises forming consideration
for each other is an agreement.
An agreement which is enforceable by law is a contract.
• Creation : An agreement is created by acceptance of an offer. On the
other side for contract we need that agreement which is
enforceable by law.
• Legal rights and obligations: An agreement may not create any legal right and obligations of
the parties. But always a contract creates legal rights and
obligations between the parties.
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• Necessity: No contract is required to make an agreement.
But for a contract we always need a legal agreement.
• Legally binding: An agreement is not a legally binding on parties to contract.
But a contract is always legally binding on the parties.
• Concept: Agreement is a wider concept and it includes contracts.
On the other side contract is narrow concept and it is only a
kind or sort of agreement.
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Classification of Contracts
• Basis of classification of contracts: 1. On the basis of creation
2. On the basis of execution
3. On the basis of enforceability
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On the basis of Creation
• EXPRESS CONTRACTIt is that which is made by words spoken or written.
Example: S says to Y “Will you buy my cast for Rs 1, 00,000? Y says to X “I
am ready to buy Car for Rs 1, 00,000 “.
It is an express contract made orally.
Example –
X writes a letter to Y, “I offer to sell my car for Rs 1, 00,000 to
you.” Y sends a letter to X, “I am ready to buy your car for
Rs 1, 00,000.” It is an express contract made in writing.
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• IMPLIED CONTRACT: Am implied contract is one which is made otherwise than
by words spoken or written.
It is inferred from the conduct of a person or the
circumstances of the particular case.
Example: A transport company runs buses on different routes to
carry passengers. This is an implied offer by Transport
Company.
S boards a bus. This is an implied acceptance by X. Now
there is an implied contract and X is bound to pay the
prescribed fare.
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Contract on the basis of Execution
EXECUTED CONTRACT: • It is a contract where both the parties to the contract
have fulfilled their respective obligations under the
contract.
Example: X offers to sell his car to Y for Rs 1, 00,000. Y accepts
X’s offer. X delivers the car to Y and pays Rs one lakh
to X. It is an executed contract.
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EXECUTORY CONTRACT: It is a contract where both the parties to the contract have still
to perform their respective obligations.
Example: - X offers to sell his car to Y for Rs 1, 00,000. Y
accepts X’s offer. If the car has not yet been delivered by X and
the price has not yet been paid by Y, it is an executory
contract.
PARTLY EXECUTED AND PARTLY EXECUTORY CONTRACT: It is a contract where one of the parties to the contract has
fulfilled his obligations and the other party has still to perform
his obligations.
Example: - X offers to sell his car to Y for Rs 1, 00,000 on a
credit of one month. Y accepts X’s offer. X delivers the car to Y.
Here, the contract is executed as to X and executory as to Y.
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Contract on the basis on Enforceability
VALID CONTRACT: A contract which satisfies all the conditions which are
prescribed by law is a valid condition.
Example: - X offers to marry Y. Y accepts X’s offer. This is a valid
contract.
VOID CONTRACT:A void contract is a contract which was valid when entered into
but which subsequently became void due to impossibility of
performance, or change of law, or due to some other reasons.
Example: - X offers to marry Y. Y accepts X’s offer. Later on Y
dies. This contract was valid at the time of its creation or
formations but now became void due to the death of Y.
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VOID AGREEMENT: An agreement which is not enforceable by law is said to be void.
Such agreements are Void- ab -initio, which means that they are
unenforceable right from the time they are made.
Example: - An agreement with a minor or a person of unsound mind is
void-ab-initio, because a minor or a person of unsound mind is
incompetent to contract.
VOIDABLE CONTRACT: According to Indian law of contract, An agreement which is
enforceable by law at the option of one or more parties to the
contract, but not on the option of the others, it is kind of voidable
contract.
In other words “A voidable contract is one which can be set aside or
avoided at the option of the aggrieved party”.
Example- a contract is treated as voidable at the option of the party
whose consent has been obtained by Coercion, or undue influence or
fraud, or miss presentation.
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ILLEGAL AGREEMENT: An illegal agreement is one the object of which is unlawful. Such an
agreement cannot be enforced by law. Thus illegal agreements are always
void from the very beginning.
Example: -X agrees to pay Y Rs 1, 00,000 if Y kills Z. Y actually kills Z and
claims Rs 1, 00,000. Now Y cannot recover this figure from X because the
agreement between X and Y is illegal as its object is unlawful.
UNENFORCEABLE CONTRACT: It is a contract which is actually valid but cannot be enforced because of
some technical defect (Such as not in writing, under stamped). Such
contracts can be enforced if the technical defects involved are removed.
Example- An oral agreement for arbitration is enforceable because the law
requires that an arbitration agreement must be in writing. If the oral
agreement for arbitration is reduced to writing, it will become enforceable.
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Difference between Void agreement and Illegal agreement
Definition –
An agreement which is not enforceable by law is said void. On the other
side an agreement which is expressly or impliedly prohibited by law, is
illegal.
Scope –
All void agreements need not be illegal agreements, but all illegal
agreement are purely void.
Effects collateral agreement –
The agreement collateral to void agreement is not necessarily void. On the
other side the agreement collateral to an illegal agreement is always void.
Restoration of benefits received –
If a contract becomes void subsequently, the benefit received must be
restored to the other party. The money advanced or thing given cannot be
claimed back.
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