Difference between Agreement and Contract

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Difference between Agreement and Contract

What is an Agreement?

An Agreement, in general terms, means agreeing or coming in harmony with regard to the terms and conditions. It can also be termed as a closing point of discussion for a course of action.

What are the different types of Agreement?

There are various types of Agreements which are present. Some of them are discussed below:

  1. Non- Disclosure Agreement

As per this Agreement the parties who are in the Agreement decide, mutually, not to disclose any information which is confidential. This can include trade secrets or intellectual properties or anything which the parties deem to be ‘Confidential.’

  1. Memorandum of Understanding

A Memorandum of Agreement is a kind of Agreement where two parties mutually agree to venture into something new. That could be in the aspect of research or technological development or anything else. It is basically an Agreement to come together and work in harmony.

  1. Collaborative Research Agreement

This is an Agreement through which the signing parties agree to research on a new area. For example – two pharmaceutical companies can come together to research upon the cure of cancer and how can that drug be made.

  1. Material Transfer Agreement

That is an Agreement through which the parties agree to transfer their resources, which can be in the form of documents or researches or data or technology or anything which the party holds in utmost esteem and value.

  1. Sponsored Research Agreement

This is a kind of Agreement where one party agrees to sponsor all the researches and developments which the other party will be making. Here, one party is the financial provider and the other is the intellectual provider.

What is an Agreement as per the Indian Contracts Act, 1872?

An Agreement is defined in Section 2 (e) of the Indian Contract Act as each and every promise which makes up the consideration for each other is termed as an Agreement.[1]

 What is a Contract?

It an agreement which is generally with regard to someone’s employment or sales of a good or tenancy. But a contract is always enforceable by law.

What are the different types of Contracts?

There are various types of Contracts. Some of them are discussed below:

  1. Contract of Employment

A Contract entered into by an employer and an employee for a certain duration of the former’s employment. For any breach of this type of Contract there has to be a monetary compensation to be paid to the suffering party.

  1. Contract of Tenancy

A Contract entered into by a landlord and a tenant with regard to he latter’s stay in the former’s property.

What is a Contract as per the Indian Contracts Act, 1872?

Section 2 (h) of the Indian Contract Act, 1872 defines Contract as a legally enforceable Agreement.[2]

The aforementioned differences are given in the tabular manner for a quick review:

S. No. AGREEMENT  CONTRACT
 1.  DEFINITION An Agreement is each and every promise which is made. A Contract is an Agreement which is legally enforceable.
2. SECTION(S) Section 2 (e) of the Indian Contract Act, 1872. Section 2 (h) of the Indian Contracts Act, 1872.
3.  BASIC

DIFFERENCE

Every Agreement is not a Contract. Every Contract is an Agreement.
4. FIGURE
5. ENFORCEA-

BILITY

An Agreement is not enforceable by Law. A contract is enforceable by Law.
 

6.

 

INGREDIENTS

 

Agreement is itself an ingredient of a Contract and has no ingredients of its own as such.

A Contract has seven ingredients.
1.      Agreement
2.      Legal Purpose
3.      Lawful Consideration
4.      Capacity to Contract
5.      Consent to Contract
6.      Lawful Object
7.      Not expressly declared void;
etc.[3]
7.  FORMALITY  An Agreement is an informal document. A Contract is a formal document.
 8.  TYPE(S) An Agreement could be verbal or written. A Contract has to be in written.

 

[References]

[1]Indian Contracts Act, 1872. Section 2 (e).

[2]Indian Contracts Act, 1872. Section 2 (h).

[3]Indian Contracts Act. Section 10.

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