Agreement
1. Introduction
An agreement is a mutual
understanding between two or more parties regarding their rights and
obligations. It is the foundation of a contract and is formed when one party
makes an offer and the other accepts it.
📌 Definition: According to Section
2(e) of the Indian Contract Act, 1872, an agreement is “every promise and
every set of promises forming the consideration for each other.”
📌 Abbreviation & Meaning:
- Agreement (Agrmt.): A negotiated and legally recognized
understanding between parties.
- Contract vs. Agreement: Every contract is an agreement, but not
all agreements are contracts. A contract becomes legally enforceable,
whereas an agreement may or may not have legal binding.
2. Explanation
For an agreement to be valid, it must
include:
✅ Offer and Acceptance – One party must
make an offer, and the other must accept it.
✅
Consideration – Something of value must be exchanged.
✅
Mutual Consent – Both parties must agree on the same terms.
✅
Legal Purpose – The agreement must not be illegal or against public
policy.
💡 Example:
A agrees to sell his bike to B for ₹50,000. B accepts this offer. This is an agreement,
but it becomes a contract only when it meets all legal conditions.
3. Significance
in Real Life
- Business Transactions – Companies enter into agreements for
partnerships, sales, and services.
- Employment Contracts – Employees and employers sign
agreements outlining job roles and benefits.
- Property Deals – Agreements are used in rental
agreements, lease deeds, and property sales.
- Personal Agreements – Loan agreements, service agreements
(e.g., a tuition teacher agreeing to teach for ₹10,000/month).
Without agreements, daily
transactions and legal relationships would be chaotic and unenforceable.
4. Case Example
Case: Trimex
International FZE Ltd. v. Vedanta Aluminium Ltd. (2010)
📌 Parties Involved:
- Plaintiff: Trimex International FZE Ltd.
- Defendant: Vedanta Aluminium Ltd.
📌 Issue & Dispute:
Trimex International offered to sell bauxite to Vedanta via email. Vedanta
accepted but later refused to honor the agreement, arguing that a formal
written contract was never signed.
📌 Scenario Explanation:
- The offer and acceptance were made
via email.
- Trimex argued that email agreements
are legally valid under Indian contract law if the terms are clear and
accepted by both parties.
- Vedanta argued that no formal contract
was signed, so it wasn’t binding.
📌 Verdict:
- The Supreme Court of India ruled
that even without a physical contract, an email exchange containing clear
terms and acceptance constituted a valid agreement.
- Decision: Vedanta had to honor the agreement or
pay damages.
📌 Analysis:
- This case highlights that an agreement
does not always need to be written; electronic communications can be
legally binding.
- Lesson Learned: Always carefully draft and review
emails when making business deals.
5. Conclusion
- Agreement is the first step toward a
contract.
- It requires mutual consent, offer,
acceptance, and consideration.
- Modern agreements include digital and
electronic contracts, making verbal or informal agreements potentially
enforceable.
- Indian courts have upheld the validity
of electronic agreements, proving their legal importance in today’s
world.
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