contract and agreement

The post is related with contract law and before study commercial law I think all of us should know about what is contract, the differences between contract and agreement and the legal obligation of formation of contract, also the liability of breach of contract.

First it necessary to know that the definition of contract and differences of contract and agreement. Contract is legally enforceable agreement which represent a vehicle for planned exchange. For the formation of contract there must be mutual obligation between the parties, some terms and standard condition, exchange of goods and the most important there must have a clear intention to create a legal relationship. Once a contract is made each party can enforce it. After making the contract if one party breach the contract another party can sue and claim damages. A contract actually concluded when there is a actual intention to create a legal relationship. In Smith v Hughes it was stated that a contract is formed if a reasonable man believes that there is a clear intention to create a legal relationship. This case originated an objective test.

On the other hand although all contracts are related with agreement but agreement is different thing. Generally agreement means consists of reciprocal promises. Agreement is one type of undertaking given by both party. Not all undertaking is completely voluntary in that the law imposes certain obligation on those who enter particular types of agreement. Thus the fact of entering the agreement may be voluntary. Actually agreement is formed by the meeting of mind the both parties. So that all contracts are agreement but all agreement is not contract.

For breach of contract on party can claim remedies. There are two kinds of remedies and they are recession or damages and another party bound to give remedies. The party is liable for breach of contract.

So at the end of the discussion it can be said that contract and the agreement is not the same thing.

For more information: 1.Jill Poole, Text book on contract Law, published by oxford university press: edn 9^th page no 1-5

2. Ewan Mckendrick, contract law: published by Palgrave Macmillan edn 7^th page no 21-23