Posted by Chester Morton / Thursday, 22 March 2018 / No comments
The differences between Contract, Agreement and Promise
The differences between Contract Agreement and Promise
Promise
While every contract contains some form of a promise, it is often difficult to
say that a promise is the same as a contract. A promise however may be the
first step to in entering into a contract.
A promise can be described as an offer
which is an important element in forming a contract but a promise alone may not
be binding on both parties. This is so because an offer alone does not oblige
the parties to respect any terms. Furthermore, a promise can lapse with the
passage of time. Or it can also be rejected by the one to whom the promise is
made. It is in this sense only a commitment by one party to
another to carry out or refrain from carrying a specified act or acts. A promise can be binding or not but difficult
to enforceable in law.
Agreement
An offer contained in a promise must be
accepted. This acceptance suggests that both parties understand the
considerations (benefits) which will be derived by both. In fact, it is this
offer and the acceptance of the offer which constitute the "meeting of
minds in the same intention” between the two parties often called an
"agreement' which is another important aspect of a contract.
While some people would like to equate an
agreement to a contract, any businessman must understand that a contract is a
little different from an agreement. A contract can be described as an agreement
made with the intention to make it a legally obligatory. Two parties in a
contract therefore are legally bound to perform what is specified in a
contract.
A good definition for an agreement is
"a concord of understanding and intention between two parties with
respect to their relative rights and duties" (Black's Law
dictionary 2014). This means that in formulating a contract it is important
that the two parties reach some agreement and until there has been this
agreement by one party accepting an offer proposed by the other party
suggesting that the parties are in agreement on all aspects of the business
transaction, there can be no contract.
A contract
A contract is a legally binding agreement
between two or more parties. It could be written, verbal or implied.
Key Points
· A
promise is a mere proposition of an offer. It may be binding on both parties
but nearly impossible to be enforced by law.
· An
agreement involves an offer and an acceptance of the offer. It has a weaker
legal backing and can only be enforced under some limited circumstances.
· A
contract is an agreement which is legally binding and can be enforced by law at
all times.
