What is Agreement
Under the Indian Contract Act, 1872, the term "Agreement" is a fundamental concept that serves as the foundation for all contracts. Let me explain it in full detail:
Definition of 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.
So, in simple terms:
Agreement = Offer + Acceptance
When one person makes a proposal (offer) to another, and that other person accepts it, the two together form a promise.
When consideration (something in return) is involved, it becomes an agreement.
Key Elements of an Agreement
1. Offer/Proposal (Section 2(a))
One party must make a clear offer to another party.
2. Acceptance (Section 2(b))
The offer must be accepted unconditionally by the other party.
3. Consideration (Section 2(d))
Something of value must be exchanged between the parties.
4. Mutual Consent
Both parties must agree to the same thing in the same sense (also known as consensus ad idem)
5. Capacity to Contract
The parties must be competent to contract (i.e., not minors, of sound mind, etc.).
6. Lawful Object
The object or purpose of the agreement must be legal.
7. Free Consent
Consent should be free from coercion, undue influence, fraud, misrepresentation, or mistake.
Types of Agreements
1. Valid Agreement
Fulfills all the essential elements of a contract.
2. Void Agreement (Section 2(g))
An agreement not enforceable by law (e.g., agreement with a minor).
3. Voidable Agreement
An agreement that is enforceable at the option of one party only (e.g., obtained by coercion).
4. Illegal Agreement
Against the law or public policy; cannot be enforced.
5. Unenforceable Agreement
Valid in essence, but cannot be enforced due to technical issues (e.g., not in writing, not stamped)
Conclusion
In essence, an agreement under the Indian Contract Act is the starting point of a contract. Not all agreements are contracts, but all contracts are agreements. For an
agreement to become a contract, it must fulfill the legal requirements laid down in Section 10 of the Act.