The main advantage of an agreement that does not meet the criteria of a treaty is that it is informal in nature. If the parties have a long-standing relationship and share a significant degree of trust, the use of an agreement without a contract can save time and allow for greater flexibility in the execution of agreed commitments. Agreements that do not contain all the necessary elements of a contract may also be more practicable in situations where the preparation of a contract would prove prohibitive for the parties concerned. For example, you propose that your friends stay in your house while they are in town. This is an agreement because there is no counterparty exchange for the use of your home and there are no conditions for them. Your friends can`t sue you if you change your mind and are charged for a hotel. Agreements and contracts are similar, but it`s certainly not the same thing. Both have their advantages and disadvantages and are useful in different situations. If you know what works best for everyone, you can decide when it`s time to use a contract and when it`s normal to rely on an agreement.
This is how the Indian Contract Act came into force, which was passed by the British government because it ruled India at the time. The law provides a basis for all agreements and contracts. This law applied throughout the country, except in the state of Jammu-Kashmir. To be precise, a legally enforceable agreement to act or not to act is called a contract. A contract must contain these elements: offer and acceptance, reasonable and unconditional consideration, free consent, capacity, legitimate purpose, security, intention to create legal obligations, and the contract should not be cancelled. An agreement is usually an informal, often un written, agreement between two or more parties. The parties simply agree to do something or not to do anything. Nothing requires the parties to respect the terms of the agreement, apart from the honour system. The two words agreement versus contract are often used for the same purpose, but there are a number of differences between the two.
A contract can be defined as an oral or written agreement between two or more parties and is fully enforced by law….