Agreement and valid essential of agreement

AGREEMENT

            According to Section 2(e) “Every promise and every set of promise forming the consideration for each other, is an agreement.”

            An agreement, therefore, comes into existence only when one party make a proposal or offer to the other and that other signifies his assent (i.e. gives his acceptance).

From the above definitions it is clear that for an agreement there must be:

(a) Atleast Two Persons

            There must be two or more persons to make an agreement because one person cannot enter into an agreement with himself.

(b) Consensus ad idem

            It means that both the parties to an agreement must agree about the subject matter of the agreement in the same sense and the same time. The term consensus means identity of minds.

EXAMPLE:

            A own two cycles Sohrab and Eagle. A is selling Sohrab cycle to B. B. thinks he is buying Eagle cycle. There is no consensus ad idem and consequently no contract.

2)  Enforceability

            Enforceability is the second requirement of contract. An agreement is said to be enforceable if it is recognized by courts. In order to be enforceable by law, the agreement must create legal obligations between the parties. If an agreement does not create legal obligations, it is not contract. ‘All contracts are agreements but all agreements are not contracts. Agreements are of two types:

(a)                Social agreements

(b)               Legal agreements

Social agreements are social in nature and do no enjoy the benefits of law. In such agreements the parties do not intend to create legal relations.

Legal agreements are contracts because they create legal obligations between the parties. In business agreements it is presumed that the parties intend to create legal relations so all business agreements are in other words contracts.

EXAMPLE:

(a)        A invites B to a dinner. B accepts the invitation but does not attend it A cannot sue B for damages. It is a social agreement because it does not create legal obligation. It is not a contract.

(b)        a promise to sell his car to B for Rs.2 lac. It is a legal agreement because it creates legal obligations between the parties. This agreement is also a contract