1- There should be an agreement between two parties. An agreement is reached when one party makes a proposal or is present and the other party accepts the offer. 2- Contracting parties should be able to enter into contracts. 3- There should be legal consultation and a legitimate purpose in relation to the agreement. 4- There should be the free consent of the parties when they agree. 5- The agreement must not be one that has been cancelled. According to the above definitions, we find that a contract consists essentially of two elements: « All contracts are agreements, but not all agreements are contracts. » This statement can be understood from the Venn diagram above. The agreements, which are enforceable under the law of the country, become contracts designated by the inner circle. The outer circle refers to agreements that are not contracts.
The shady part includes agreements that are not enforceable by law and are referred to as non-legal agreements. A contract is a legally applicable agreement. An agreement is the first step in the contract. If the agreement is legally applicable or if the agreement is recognized by law, it becomes another contract. It is essentially based on British law, because the Contract Act 1872 of the British Indian Govt. was adopted. A mutual understanding between two or more legally competent persons or entities, that they will later enter into a contract, although the exact terms of the contract have not yet been established; without obligation. ENFORCEABLE BY LAW:- in Indian Contract Act 2 (h) it says the agreement is enforceable by law. If an agreement is legally applicable, then it is CONTRACT, if not just an agreement. In the event that both parties to an agreement find themselves in an error of fact that is essential to the agreement [section 20]; Under the Indian Contract Act, the following agreements are voided – In accordance with Section 2, any commitment and combination of promises that make the counterpart to each other is an agreement.
The definition clearly shows that an agreement is promising. Section 2 defines the promise to mean that when a person is made with the proposal, he or she agrees, which means that the proposal will be adopted. A proposal, if passed, becomes a promise. We can say that an agreement is a proposal adopted. The definition process shows that a treaty is an agreement, an agreement is a promise and a promise is an accepted proposal. An agreement is therefore only reached if one party makes a proposal or an offer to the other and the other agrees. In short, any agreement is the result of a proposal on the one hand and its acceptance on the other. Salmond: « The contract is an agreement that creates and defines obligations between the parties. » Section 25 of the deed states that an agreement is cancelled without consideration.