An agreement gives birth to a contract. An agreement comes into existence when one party makes a proposal or offer to the other party and that other party signifies his assent thereto. A proposal, when accepted, becomes a promise. In a nutshell, an agreement is the sum total of offer and acceptance. Hence, every contract is an agreement however, that cannot be said vice versa. There are certain agreements that do not fall within the scope of a valid contract.
Agreements which are not Contracts:
Agreements in which the idea of bargain is absent and there is no intention to create legal relations are not contracts. These are:
- Agreements relating to social matters: An agreement between two persons to go together to the cinema, or for a walk, does not create a legal obligation on their part to abide by it.
- Domestic arrangements between husband and wife: In Balfour v. Balfour, (1919) 2 KB 571 a husband agreeing in writing to pay a housekeeping allowance to his wife living in England was held to be a mere domestic arrangement with no intention to create legally binding relations. Therefore, there was no contract.