The document discusses the key differences between agreements and contracts under Indian law. It states that an agreement is a promise or set of promises forming consideration, while a contract is an agreement that is legally enforceable. For an agreement to qualify as a contract and be valid, it must satisfy the requirements of Section 10 such as offer and acceptance, lawful consideration, capacity and consent of parties, a lawful object, and certainty. The document provides examples to illustrate social agreements, contracts, and elements that determine an agreement's enforceability.

1. Made By:-
Dhrumil Shah
FYBBA Div 1
Roll No. 47
BUSINESS REGULATORY
FRAMEWORK: AGREEMENT,
CONTRACT AND SECTION 10

2. AGREEMENT
 According to Section 2(e), an agreement is
defined as “every promise and every set of
promises, forming consideration for each other.”
 Agreements can be social agreements or legal
agreements. If A invites B to a dinner and B
accepts the invitation, it is a social agreement.
Thus from the above example, a social
agreement does not give rise to contractual
obligations and is not enforceable in a court of
law. If A gives 1 milk bag to B for a consideration
of Rs. 22, then it is a legal agreement.
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3. AGREEMENT
Some examples for agreements are:
 A invites his friend B to come and stay with him
for a week. B accepts the invitation but when he
comes to A, A cannot accommodate him as his
wife had died the day before. B cannot claim any
compensation from A as the agreement is a social
one.
 A father promises to pay his son Rs. 100 every
month as pocket allowances. Later he refuses to
pay. The son cannot recover as it is a domestic
agreement and there is no intention on the part of
the parties to create legal relations.Business Regulatory Framework

4. CONTRACT
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 Section 2 (h) defines contract as “an agreement
enforceable by law.”
 In layman’s language a contract is an agreement
made between two or more parties which is
enforced by law.
 Contracts can be Void Contracts, Voidable
Contracts or Void Ab Initio.
 Example: A agrees to hire B as an employee in
his firm for 3 years after signing an agreement. A
cannot refuse to keep him after the contract has
been signed.

5. CONTRACT
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Some examples of contract are:
 A agrees to sell his car to B for Rs. 5,00,000 and
both them have a written agreement for the
same, then this is a contract.
 If A announces that he wants to sell his cell phone
for Rs. 20,000 to a particular class and if B(of the
same class) comes and agrees to purchase it for
the same, then it is a contract.
 If A gives an advertisement in a daily to sell his
plot of land for Rs. 10,00,000 and if B comes and
says that he wants to purchase the land for Rs.
10,00,000, then it is a contract.

6. Consensus ad idem
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 Consensus ad idem means that the parties to the
agreement must have agreed about the subject-
matter of the agreement in the same sense and
at the same time.
 Unless there is consensus ad idem, there can be
no contract.
 Example:
A, who owns two cell phones named iPhone and
Blackberry, is selling Blackberry to B. B thinks he
is purchasing iPhone. There is no consensus ad
idem and consequently no contract.

7. Obligation
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 Obligation is defined as a legal tie which imposes
upon a definite person or persons the necessity
of doing or abstaining from doing a definite act or
acts.
 An agreement which gives rise to a social
obligation is not a contract. It must give rise to a
legal obligation in order to become a contract.
 Example:
A agrees to sell his T.V. to B for Rs. 25,000. The
agreement gives rise to an obligation on the part
of A to deliver the T.V. to B and on the part of B to
pay Rs. 25,000 to A. Thus it is a contract.

8. Provisions of Section 10
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 According to Sec. 10, all agreements are
contracts if they are made by the free consent of
parties competent to contract, for a lawful
consideration and with a lawful object and are not
expressly declared to be void.
 The essential elements of a valid contract are as
follows:
1. Offer and Acceptance: There must be two
parties to an agreement, i.e. one making the offer
and other accepting it. The terms must be definite
and the acceptance must be absolute and
unconditional.

9. Provisions of Section 10
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2. Intention to create legal relationship: When the
two parties enter into an agreement, their
intention must be to create legal relationship
between them.
3. Lawful consideration: The agreement is legally
enforceable only when both the parties give
something and get something in return.
4. Capacity of parties-competency: Every person is
competent to contract if he (a) is of the age of
majority, (b) is of sound mind and (c) is not
disqualified from contracting by any law to which
he is subject.

10. Provisions of Section 10
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5. Free and genuine consent: The consent of the parties
is said to be free when they are of the same mind on
all the material terms of the contract.
6. Lawful object: The object of the agreement must not
be (a) illegal, (b) immoral or (c) opposed to public
policy.
7. Agreement not declared void: The agreement must
not have been expressly declared void by law in force
in the country.
8. Certainty and possibility of performance: The
agreement must be certain and not vague. Agreement
to do an act impossible in itself cannot be enforced.
9. Legal formalities: Where there is a statutory
requirement that a contract should be made in writing