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Agreement Definition

If we go by the Oxford Dictionary defines the word Agreement as " harmony of opinion or feelings; a state of being accord." But the term Agreement is understood in the legal sense, and the term Agreement has particular importance in the Indian Contract Act.

Agreement Definition

The list of adjectives that can be attached to the word agreement will throw up different meanings, are specific Agreement, constructive Agreement, fair Agreement, Binding Agreement, legal Agreement, enforceable Agreement, mutual Agreement, final Agreement, consensual Agreement, bilateral Agreement, verbal Agreement, equitable Agreement, Beneficial Agreement, amicable Agreement, negotiated Agreement, etc.

Some of the words are self-explanatory and do not require different explanations. The words are the final Agreement, verbal Agreement, etc.

Legal Definition

The term Agreement in the legal sphere is used to express: according to section 2 (e) of the Indian Contract Act, "every promise, and every set of promises, forming consideration for each other is an agreement." The Agreement is enforceable by law. A legally bound contract creates obligations and rights for each party involved. Various types of agreements exist, such as written, implied, and verbal. Some subjects covered in the Agreement are service agreements, sales contracts, employment agreements, etc.

For any disobligations from the Agreement, the aggrieved party may approach the court and seek legal remedy from the law.

Constructive Agreement

It is an agreement framed to construct or reform a relationship among the parties instead of settling disputes or conflicts. An agreement bets on developing a positive outcome for all parties involved and often includes collaboration and compromise.

The objective of the Agreement is for the well-being of everyone. It does not advocate that welfare should be at the cost of others. It is frequently applied where there is a chance for future conflict or disagreements, such as business and trade union disputes. By adopting the approach, parties may come up with innovative solutions that would meet the need of everyone and shed away from the long, exhausting, and expensive legal battles or other undesirable outcomes.

The Constructive Agreement can be summarised in that it advocates for collaboration, smooth open communications, and zeal to work together to benefit everyone.

Enforceable Agreement

Agreement Definition

An enforceable agreement is an agreement that can be enforced by the law and is legally binding. In the enforceable Agreement, all parties, by their choice, have agreed to observe some terms and conditions, making it legally binding.

The Agreement becomes enforceable by law when it meets some of these requirements, and they are:

  • Mutual Assent: All parties part of the Agreement should have a clear, unambiguous understanding of the terms and conditions. There should be no doubt or misconception in their minds.
  • Consideration: It requires worthful consideration that has been exchanged among the parties. It can include goods, services, and money.
  • Capacity: The parties must have the legal capacity to agree. Legal capacity includes basic requirements like mental fit, legal age, and free form of undue influence or not undue stress.
  • Legality: The subject covered should be legal and should not violate other laws that are present.

If the following conditions are fulfilled, the law enforces the Agreement. If a participant could not perform his obligation, the aggrieved might seek legal remedies such as monetary damages or special performance.

In conclusion, an enforceable Agreement plays a significant role in a business circle, instilling a sense of security and trust among the parties.

Bilateral Agreement

It is another form of Agreement that happens between two nations or parties in which both parties make commitments that are beneficial to each other. The bilateral Agreement is binding and legal, and it lays out both parties' responsibilities, rights, and obligations.

Bilateral agreements cover various subjects like investment, cultural exchange, trade, defense, technology transfer, etc. For example, two states have bilaterally agreed to open their markets to each other at minimum tax rates. It is helpful for both parties because it helps to foster partnerships, promote investment and trade and strengthen their relationships.

Some significant examples of the bilateral Agreement are China- ASEAN Free Trade Agreement, Economic Cooperation Framework Agreement, etc.

Equitable Agreement

It is another form of Agreement that the members involved treat as fair and just. The members who participated in the equitable Agreement aimed to balance the needs and interests of all the members involved in the treaty. It does not endorse that one party is getting all the benefits at the cost of others. In conclusion, we can say that an Equitable agreement fosters fairness, cooperation, and balance among the parties.

Binding Agreement

A legal contract creates an obligation among the parties involved to perform a specific action. The Agreement is signed by the parties involved, and it becomes enforceable. Failure to comply with the terms and conditions would invite legal ramifications.

The conditions required to become a binding agreement are similar to an enforceable agreement.

Difference Between an Enforceable Agreement and Binding Agreement

Enforceable Agreement Binding Agreement
Definition A binding agreement that fulfills all the legal necessities for enforceability An agreement that offers a legal framework obligation for the parties to meet the necessary obligations
Components Apart from meeting all the elements of the binding Agreement, it should fulfill all the legal requirements, such as
  • It should be in writing
  • All should sign it
Offer, acceptance, and consideration.
Legally binding Yes Yes
Enforceable Enforceable in the court of law May or May not. It largely depends that it is meeting all legal conditions.
Examples Lease Agreement or Purchase agreement A verbal agreement between two parties.

Significance of Agreement

  • Offers Accountability: It offers a crystal and clear framework for calculating progress and maintaining parties responsible for their conduct made under the Agreement.
  • Devoid Confusion: An agreement does not provide scope for confusion as the roles and responsibilities are clearly defined under the Agreement. It lowers the chances of miscommunication or misunderstanding.
  • Legal Shield: If an agreement is in writing and signed by all parties, it can be enforced in court. The aggrieved party may knock on the court's doors if the parties do not honor their commitments.
  • Risk Management: It aids in managing risk by clearly laying out the liabilities and responsibilities of each party involved. Therefore it reduces the possibility of litigation or disputes.
  • Fosters Cooperation: Agreement involves negotiation and compromise that can encourage participants to work together in much collaborative way to benefit each other mutually.
  • Trust Building: Signing an agreement is often regarded as good faith and a desire to cooperate in a cooperative environment. It can help to construct trust among the parties and set the tone for positive relationships.

Limitations of an Agreement

Agreement Definition

The Agreement becomes expensive due to drafting and negotiating if legal professionals are involved.

  • Time-Taking Exercise: It is a time-taking exercise as it involves multiple parties and has to cover a large complex subject that requires legal knowledge in depth.
  • Possibilities of Conflict: The legal contract is meant to reduce conflict. However, it offers the chance for conflict if the interpretation of the Agreement differs among the parties or if the party assumes that he has been treated unfairly in the Agreement.
  • False Notions of Security: It is assumed that by signing an agreement, all parties believed that parties would abide by the Agreement. It will create complacency and will fail to monitor the Agreement's compliance.
  • Difficult to Enforce: It may be legally binding, but it is generally difficult to enforce the conditions of the Agreement if someone does not honor them.
  • Limitation: Agreements are dynamic. Suppose the Government proposes a new law that links to your Agreement. Then, the Agreement must also be modified to meet the conditions of the late law passed by the Legislative bodies.


The word encompasses from the legal to language. The terms agreement has wide application and is interpreted in different forms by the people. This term cannot be a singular definition due to its usage in a different field. But, the Agreement is widely used in the legal sense.

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