A contract is an agreement which is enforceable by law. An agreement consists of reciprocal promises between the two parties. In the case of a contract, each party is legally bound by his promises.
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| Contract Creation |
- It is the most common way.
- Two parties may agree to something through mutual negotiation.
- One party makes an offer (Proposal) & another party accepts the same. There arises an enforceable agreement.
By Standard form of Contract: -
- These are contracts used by institutions such as insurance companies, banks, manufacturers, and railways to enter into contracts with many people.
- Contract with pre-drafted matters which is prepared by one party and the other must agree.
- It is as much valid as those who entered through due negotiations.
By Promissory Estoppel: -
- There may be no agreement and contract in the strict sense of terms.
- The equitable Doctrine of Estoppel can make a person liable for a promise, even if there is no formal agreement or contract in place. When someone makes a promise and another person relies on it to their detriment, the person who made it may be legally obligated to fulfil it.
For example, if a company promises to pay an employee a certain salary and the employee quits their previous job based on that promise, the company could be held liable for the salary even if they later change their mind.