All contracts are agreement but all agreements are not contract explain?
11/September/2025 10:43
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— this is a classic concept from the Indian Contract Act, 1872, and examiners love it. Let’s break it down clearly.
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All Contracts are Agreements, but All Agreements are Not Contracts
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Step 1: Agreement
Section 2(e): “Every promise and every set of promises forming the consideration for each other is an agreement.”
? So, when one party makes an offer and the other accepts, an agreement is formed.
Example:
A agrees to sell his pen to B for ₹100. (Agreement formed)
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Step 2: Contract
Section 2(h): “An agreement enforceable by law is a contract.”
? This means that only those agreements which fulfill the essentials of a valid contract (offer, acceptance, consideration, lawful object, capacity, free consent, etc.) become contracts.
Example:
A (adult) agrees to sell his car to B for ₹3,00,000. (Valid agreement + legally enforceable = Contract)
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Step 3: Why all agreements are not contracts
Some agreements, though valid between parties, cannot be enforced by law. These remain mere agreements, not contracts.
Examples of Agreements which are NOT Contracts
1. Social agreements –
A promises to take his friend B to a movie.
No legal intention → not a contract.
2. Agreements with minors –
A 16-year-old boy borrows ₹500 from B.
Not enforceable → not a contract.
3. Agreements without consideration –
A promises to gift his watch to B, without consideration.
Not enforceable → not a contract.
4. Agreements with unlawful object –
A agrees to pay B ₹50,000 to steal documents.
Illegal → not a contract.
5. Uncertain or impossible agreements –
A promises to make B the king of India.
Not possible → not a contract.
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Diagram (Easy Memory Aid)
Agreement = Offer + Acceptance
Contract = Agreement + Legal enforceability
✅ Every Contract is an Agreement (since it begins as an agreement).
❌ But every Agreement is not a Contract (only those enforceable by law are contracts).
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Conclusion
Agreement is the starting point.
Contract is the legal stage of an agreement.
Therefore, all contracts are agreements, but all agreements are not contracts.
