Question

Statement-1 : Every contract is an agreement
Statement-2 : Every agreement is a contract

• A. Both the Statements are true
• B. Both the Statements are false
• C. Statement-1 is true but Statement-2 is false
• D. Statement-1 is false but Statement-2 is true

Hint:

Remember the classic legal maxim: "All contracts are agreements, but all agreements are not contracts."
An agreement only becomes a contract when it is backed by legal enforceability under Section 10 of the Contract Act.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
We need to evaluate the truth of two statements: Statement-1 ("Every contract is an agreement") and Statement-2 ("Every agreement is a contract").
This requires comparing the definitions and elements of both concepts under the Indian Contract Act.


Step 2: Detailed Explanation:

• Under Section 2(e) of the Indian Contract Act, 1872, an "agreement" is defined as: "Every promise and every set of promises, forming the consideration for each other, is an agreement."

• Under Section 2(h) of the Act, a "contract" is defined as: "An agreement enforceable by law is a contract."

• From this, it is clear that for a contract to exist, there must first be an agreement.

• Without an underlying agreement, a contract cannot be formed. Therefore, Statement-1 ("Every contract is an agreement") is true.

• However, not all agreements are enforceable by law.

• For instance, social, religious, or domestic agreements (like a promise to go to dinner) are not intended to create legal relations and are not enforceable.

• Similarly, agreements that lack lawful consideration, involve minor parties (void ab initio), or have unlawful objects are not enforceable by law.

• Because these agreements do not have legal enforceability, they do not become contracts.

• Therefore, Statement-2 ("Every agreement is a contract") is false.

• This makes Option (C) the correct choice.



Step 3: Final Answer:
Statement-1 is true but Statement-2 is false, which corresponds to Option (C).