What is an Agreement ?

An agreement is a promise or arrangement between two or more parties to do, or omit to do, something. It’s usually informal and maybe written or oral.

Agreement is considered to be made when two or more persons having common intention make an offer while the others provide acceptance to such offer. An agreement can be shown from words, conduct, gesture or even silence.

An agreement requires few ingredients:

Parties: There need to be two or more parties to form an agreement.
Offer/ Proposal: When a person signifies to another his willingness of doing or omitting to do something with a view to obtain other’s assent.
Acceptance: When the person to whom the proposal is made signifies his assent for the same thing in the same sense as proposed by the offeror.
Promise: When a proposal is accepted, it becomes a promise.
Consideration: It is the price for the promise.

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What is the difference between an agreement and a contract ?

A contract is a legally enforceable agreement. In other words, an agreement enforceable by law is a contract. A contract is a formal arrangement between two or more parties having common intention to do, or omit to do, something.

Agreement + Enforceable by Law = Contract

For an agreement to become a contract it must give rise to a legal obligation and if it is incapable of doing so, it is not a contract.

In the case of Balfour v Balfour [1919], Mr. Balfour promised to pay his wife £30/month as she stayed in England for medical reasons. When he failed to pay, Mrs. Balfour sued him. Her action failed because there was no intention to create a legally binding agreement between Mr. and Mrs. Balfour. A contract cannot be made without proper indication about the legal rights and obligations of the parties to the contract. So, if this were to be a contract then the wife would have had a right to receive payment and the husband would have had the obligation to pay his wife.

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