LAW OF CONTRACTS

BBA, LL.B. First Semester- October 2021

Research Paper
Topic: COMPARATIVE STUDY
BETWEEN AGREEMENT
AND CONTRACT

Submitted By: SPARSH SHARMA

Roll no. 02
BBA, LL. B
Submitted to:
Prof, Madhura Bhangle
KPM School of Law, NMIMS (Deemed to be University)

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LAW OF CONTRACTS

SL NO. TOPIC PG NO.

1. INTRODUCTION 3
2. RESEARCH METHODOLOGY, QUESTION, OBJECTIVES 4

3. LIMITATIONS, ROL 5-6

4. FINDINGS 7-9
5. COMPARISON, CASE ANALYSIS 10-11
6. CONCLUSION, REFERENCES 12-13

INDEX

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LAW OF CONTRACTS

INTRODUCTION

Although the phrases "agreement" and "contract" are sometimes used interchangeably, they
are not synonymous. A contract is a written and signed agreement having enforceable terms
and conditions that may be enforced in court. An agreement could fall short of establishing a
legally binding contract1. An unwritten agreement between two parties, for example, may not
be enforceable if the terms are ambiguous. Parties, particularly businesses, may refer to their
enforceable, written contracts as "agreements" at times. What matters is that the contract or
agreement contains all of the necessary elements to be enforceable.One of the main reasons
why unwritten agreements are rarely enforced is that the parties can differ on what they
agreed to. With a written contract, the parties can always check the contract's wording to see
what it says and what was agreed to, but disagreements over what was agreed to in an
unwritten agreement frequently devolve into a "he said – he said" argument, with neither
party being able to prove what was agreed to.2"All contracts are agreements, but all
agreements are not contracts," says an old adage, implying that an agreement is distinct from
a contract. We engage into hundreds of agreements every day without even realising it, which
may or may not bind us legally. Contracts are those that legally bind us, whereas agreements
are those that do not.The Indian Contract Act, which was enacted by the British government
because they ruled India at the time, came into effect in this fashion. The legislation serves as
the foundation for all agreements and contracts. Except for the state of Jammu and Kashmir,
this act was applicable throughout the country.When it comes to the law, knowing the
difference between an agreement and a contract is crucial. An agreement can be more
informal, although a contract is always legally enforceable provided it has specific

1
S., S. K. D. (2018, November 27). AGREEMENT AND CONTRACT, THEIR

DIFFERENCES. The Lawyers & Jurists.

https://www.lawyersnjurists.com/article/agreement-and-contracttheir-differences/

2
S, S. (2018, July 26). Difference Between Agreement and Contract (with Examples,

Similarities and Comparison Chart). Key Differences.

https://keydifferences.com/difference-between-agreement-and-contract.html

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LAW OF CONTRACTS

obligations. An agreement can be turned into an enforceable contract by adding specified

requirements.

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 LAW OF CONTRACTS

RESEARCH METHODOLOGY

This paper utilizes the “Doctrinal methodology of Research” and researcher has made use of
secondary resources. Sources like books, journals, articles, case laws, news articles and
commentaries were pursued for the purpose of study. All sources were mainly collected
through internet and research databases.

RESEARCH QUESTIONS

1. What's a legally binding contract?

2. Why would you have an agreement instead of a contract?(VICE VERSA)

3. What makes an agreement a contract?

RESEARCH OBJECTIVES

1. To highlight the elements of contract.

2. To highlight regarding clm software and modern contract.

3. Agreement and contract in 21st century.

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LIMITATIONS

1. There were not many research studies on this particular study.

2. Secondary method of research has been used. The usefulness of the secondary data is

limited as it lacks relevance and accuracy.

3. There is the future scope for discussion in this particular field as the researcher is not

as the depth and scope of your discussions can be compromised at different levels

compared to scholars with a lot of expertise.

REVIEW OF LITERATURE

1. Solan, L. M. (2007). Contract as Agreement. Notre Dame L. Rev., 83, 353.

Author cites out that a contract is an obligation attached by the mere force of law to certain

acts of the parties, usually words, which ordinarily accompany and represent a known intent.

If, however, it were proved by twenty bishops that either party, when he used the words,

intended something else than the usual meaning which the law imposes upon them, he would

still be held, unless there were some mutual mistake, or something else of the sort.

2. Mouzas, S., & Furmston, M. (2008). From contract to agreement. The Cambridge law

journal, 67(1), 37-50.

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LAW OF CONTRACTS

In this article the author points out that In a nutshell, the main difference between a contract

and an agreement is that a contract is legally binding while an agreement isn’t. A contract

includes specific terms and regulations which can be enforced by law, while the only

requirement for an agreement is that all parties understand their rights and responsibilities.

3. De Moor, A. (1986). Contract and agreement in English and French Law. Oxford J. Legal

Stud., 6, 275.

The scope of the agreement is wider than a contract because it covers all types of agreement as
well as contract. On the contrary, the scope of a contract is relatively narrower than an
agreement because it covers only that agreement which have legal enforceability.

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LAW OF CONTRACTS

RESEARCH FINDINGS

Agreements vs. contracts: The same, but different

A contract is preceded by an agreement. An essential aspect of both an agreement and a

contract is the "meeting of minds"3 that defines both. A mutual misunderstanding is one of
the valid reasons to end a contract. This can happen when one or both parties are wrong on a
fact or clause, while both believing they agree on it.

Both an agreement and a contract need that the parties agree on who is doing what, who is
getting what in exchange, and when any essential acts will occur. Both agreements and
contracts are understood to be agreements between two or more parties to carry out specific
tasks.

Contracts, on the other hand, are acknowledged as legally enforceable pledges to perform.
Some agreements, such as clickwrap agreements, have been found to be legally enforceable,
but they must include specific legal terms indicating the parties' willingness to engage into a
binding agreement.

‌Making an agreement into a contract

Taking an agreement or a basic contract and upgrading it into a digital contract is not as easy as
A-B-C4, but it doesn’t have to be too difficult. Modern contract lifecycle management (CLM)

3
Review: Contract and Agreement in English and French Law on JSTOR. (2015).

Juris. https://www.jstor.org/stable/764207

4
J. (2014). Agreement vs contract: The difference between them. The Jotform Blog.

https://www.jotform.com/blog/

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LAW OF CONTRACTS

takes basic agreements and contractual details and melds them into a workable contract for the
end-user.

A CLM-managed5 modern contract consists of multiple smaller legal agreements that must be
integrated into a single contract. For example, the overall contract may include a T&C
agreement for a specific app that both parties will use. That T&C must be incorporated into
the contract, but it is also a separate agreement that the app developer uses.

Another type of agreement that is included or linked to a contract is a nondisclosure

agreement (NDA). NDAs are not contracts since there is frequently no consideration—one
party receives no agreed-upon benefit—but they are legally enforceable if properly
structured. NDAs will be appended to a contract by CLM software when needed for the
signers.

Other things that may need to be added to an agreement to make it a contract include:

 Boilerplate clauses. Everyone has seen standard contracts that appear to be identical
to all other contracts. This is due to the fact that most contracts must adhere to state
contract statutes and guidelines. Every contract must have this language, and it is
easier for attorneys to utilise an uniform style that includes all of the applicable
statutes.

 Remedies for breach. Even the most experienced of businesses may not know what
their options are if the other party fails to carry out the contract—known as breach of
contract. Penalties—known as remedies under the law—are actually prescribed by law,
and some types of penalties are prohibited.

 Jurisdiction for enforcement. If a contract is signed between parties from different

states, as is typical in today's internet world, the contract must specify which state or
jurisdiction will be utilised for disputes, as well as if arbitration will be used instead of a
jury trial. Again, these are things that even seasoned businesspeople might overlook.

5
Iyer, K. (2021, June 15). Agreement vs. Contract: Explanations And Examples.

Legodesk. https://legodesk.com/legopedia/agreement-vs-contract-explanations-

examples/

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LAW OF CONTRACTS

CLM software and the modern contract

CLM 6software is vital to the preparation of a contract because current contracts are
frequently electronic, may service several firms in remote locations, and may require
multiple reviews and signatures before the final document.

Digital contracting allows today's workforce to cooperate and coordinate documents without
fear of losing modifications or essential changes, even if they are separated by thousands of
miles and various time zones.

The distinction between an agreement between two departments to have something happen
by a specific date and a legally binding contract, as previously stated, is in the document's
wording. Any changes to that document are critical, and CLM software makes sure that all of
them are logged and dated.

Agreement vs. contract for the 21st century

When it comes to drafting a contract in the current era, not much has changed. Before they
write anything down on paper, the parties must come to an agreement that embodies their
joint understanding of the arrangement.

After that, the contract must still meet the legal standards for an enforceable document: the
offer, acceptance, and consideration must all be properly stated within the contract's body
before it can be recognised legitimate by the courts.

6
Haeuber, C. (2021, September 22). Agreement vs. Contract: What’s the Difference?

Ironclad. https://ironcladapp.com/journal/contracts/agreement-vs-contract/

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LAW OF CONTRACTS

Most importantly, the parties must have a mutual understanding so that there is no confusion
throughout the contract's future execution. CLM software has become critical to this part of
the arrangement in today's remote online business community.

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LAW OF CONTRACTS

COMPARISON7

7
Agreement vs Contract. (2018). Diffen.

https://www.diffen.com/difference/Agreement_vs_Contract

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LAW OF CONTRACTS

CASE ANALYSIS

Satyabrata Ghose v/s Mugneeram Bangur8

Facts:
The Respondent's company owned a large tract of land in Calcutta. It started a scheme for the
development of the land for residential purposes and divided land into different plots. The
company entered into agreements with purchasers for the sale of the different plots and
accepted a small amount of earnest money at the time of sale of land. The company
undertook the job of constructing roads and drains, necessary for the residential purposes.
The plots would be given after the construction and payment of balance amount by the
buyers.

Bejoy Krishna Roy entered into the agreement with the company and paid the earnest money
deposit of Rs. 101 on 5th August, 1941. On 30th November 1941, the appellant was made the
nominee of the above land. It so happened that subsequently the land was requisitioned by
the Collector, 24 - Paragnas under Defence of India rules for military purposes. As a
consequence, in November 1943, the company decided to treat the agreement cancelled but
gave the appellant the option of either taking the earnest money back or paying the balance
money and the company would continue its work after the termination of war.

Issues:

1. Did the plaintiff have a locus standi for instituting the suit?
2. Did the contract become frustrated under the Section 56 of ICA?
3. Does English law of frustration apply in India?

8
Case Analysis: Satyabrata Ghose v/s Mugneeram Bangur. (2014). India Kanoon.

https://www.legalserviceindia.com/legal/article-2234-case-analysis-satyabrata-ghose-

v-s-mugneeram-bangur.html

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LAW OF CONTRACTS

Judgment:
The Supreme Court stated that English principles of Frustration of Contract on basis of
which the judgement of the High Court was passed is not applicable in the statutory
provisions of Indian Contract Act. It also said that the performance of the contract has not
become impossible. The Court pointed out, the company had not commenced its work
when the land was requisitioned, therefore, there was no interruption of work. Secondly,
there was no time limit implied in the contract for the completion of construction of the
roads and drains.

It was laid by the trial court as well as the lower appellate court that the appellant was a
real assignee of Bejoy Krishna Roy on the issue of latter's rights on filing the suit.
Appeal allowed.

OPINION

The doctrine of frustration was first dealt in modern times in Taylor v. Caldwell . A
music hall was burnt down in which concerts were supposed to be performed by the
plaintiff on certain specific days. The court held that the defendant (the music hall co.)
was excused as its performance became impossible. 

Over the time, English law has pronounced many theories and principles relating to the
law of frustration. However, it was made clear by this case that in India we have statutory
provisions to be followed under Section 56 of Indian Contract Act.

CONCLUSION

Only legally enforceable agreements are contracted, which means they must have a
consideration, a lawful object, the parties freely consent, they are competent to contract,
and the agreement is not ruled void, as stated at the beginning of this article. If any of the
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LAW OF CONTRACTS

aforementioned conditions are not met, the agreement will no longer be considered a
contract. As a result, it is possible to conclude that all agreements are not contracts.

REFERENCES
1) S, S. (2018, July 26). Difference Between Agreement and Contract (with Examples,

Similarities and Comparison Chart). Key Differences.

https://keydifferences.com/difference-between-agreement-and-contract.html

2) S., S. K. D. (2018, November 27). AGREEMENT AND CONTRACT, THEIR

DIFFERENCES. The Lawyers & Jurists.

https://www.lawyersnjurists.com/article/agreement-and-contracttheir-differences/

3) Agreement vs Contract: What’s the Difference? (2019). JD Supra.

https://www.jdsupra.com/legalnews/agreement-vs-contract-what-s-the-9387283/

4) J. (2014). Agreement vs contract: The difference between them. The Jotform Blog.

https://www.jotform.com/blog/agreement-vs-contract/#:%7E:text=The%20terms

%20%E2%80%9Cagreement%E2%80%9D%20and%20%E2%80%9C,of%20being

%20an%20enforceable%20contract

5) Agreement vs Contract. (2018). Diffen.

https://www.diffen.com/difference/Agreement_vs_Contract

6) Haeuber, C. (2021, September 22). Agreement vs. Contract: What’s the Difference?

Ironclad. https://ironcladapp.com/journal/contracts/agreement-vs-contract/

7) Review: Contract and Agreement in English and French Law on JSTOR. (2015). Juris.

https://www.jstor.org/stable/764207

8) Button, K. (2014). Agreement vs. Contract: What’s the Difference? ContractSafe.

https://www.contractsafe.com/blog/agreement-vs.-contract-whats-the-difference

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LAW OF CONTRACTS

9) Iyer, K. (2021, June 15). Agreement vs. Contract: Explanations And Examples. Legodesk.

https://legodesk.com/legopedia/agreement-vs-contract-explanations-examples/

10) Agreement vs Contract: What’s the Difference? (2014). JD Supra.

https://www.jdsupra.com/legalnews/agreement-vs-contract-what-s-the-9387283/

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