MEANING OF AGREEMENT AND TYPES OF AGREEMENT IN INDIA

Definition of an agreement?

As per the Indian Contract Act, 1872, an agreement is defined under section 2(e) of the Act. This section said that “Every promise and every set of promises forming the consideration for each other is an agreement”.

Essentials of an agreement

Parties: To form an agreement, there should be two or more parties.

Section 2(a): As per the Indian Contract Act, 1872, defines offer/proposal meaning when a person manifests other’s willingness of doing something or excluding something for acquiring others approval.

Section2(b): According toIndian Contract Act, 1872, section 2(b) defines acceptance.

Promise: When a person accepts the proposal, it becomes a promise. This is also defined under section 2(b) of the Act.

Section 2(d):As per the section 2(d) of Indian Contract Act, 1872, defines consideration, consideration meaning the price for the promise.

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WHAT IS LEGAL AGREEMENT?

Legal Agreements are those written document that associates the party’s roles and responsibilities of the agreement. This means that if any of the parties is not performing his duties, it becomes a breach of contract.

TYPES OF AN AGREEMENT

There are two types of agreement that is enforceable by Law.

Valid agreement:

As per the Indian Contract Act, 1872, section 2(h) defines valid agreement are those agreement which is enforceable by Law in the eye of Law. 

Void agreement:

An agreement which is not enforceable by Law in the eye of Law is known as a void agreement. Section (g) of the Act defines void agreement.

Wagering agreement:

Wager means a bet. Its means the expectation of losing or winning is uncertain. The basic need of a wagering contract is that neither of the parties shall have aninterest in the agreement other than the sum, which he will win or lose. Parties to a wagering contract mainly work for the profit or loss they earn. There is no insurable interest in the case of a wagering agreement. Wagering agreements are in nature of void agreement. These agreements are conditional agreements. The object of these agreements is to speculate for money.

Express agreement: The parties could indicate a written agreement relieving the defendant from any commitment for the benefits of the plaintiff and liability for the repercussion of conduct that would constitute negligence. A public policy doesn’t protect from contracting to the plaintiff responsible for the maintenance of personal security.

Partnership Agreement:

Partnership agreements are written documents that is a definite ingredient of the relationship between the business partners and their individual commitment and offering to the partnership. Partnership agreements shall protect all possible business positions that could arise during the partnership’s life, the documents are combination in nature; legal guidance in drafting and scrutinize the ended contract is generally endorsed. If a partnership does not have a written partnership agreement at the time dissolving of the partnership, the instruction of the Uniform Partnership Act and several state laws will determine how the assets and debts of the partnership are dispersed.

Indemnity agreement: As we all know, indemnity means prevention or protection against a financial liability. It is in the nature of a contractual agreement between parties in which one party agrees to compensate for damages suffered by the other party. In corporate Law, an indemnity agreement distributes to detain Board Directors and company administrative free from personal liability if the company suffers damages.

Non- disclosure of agreement: A non-disclosure agreement is a legal document which retains the cork on such delicate information. These agreements might be alternatively as confidentiality agreements (CA), confidentiality statements, or confidentiality clauses inside a wade-ranging legal document.

Security agreement: A security agreement are defines as security interest of a lender in a specific asset or property that is functions as collateral for a loan. In case the debtor defaults on the loan, the lender has the right to foreclose and repossess the property or asset. One of the more common examples would be using real estate as collateral.

Independent contractor Agreement: An independent contractor agreement are those agreement which are easy to make, and it indicates clear opportunities for work, payment schedules and deadline expectations. These agreements are basically used by freelancers for providing a contract to their clients. In these agreements, there are many clauses and agreements which is easy for documents reviews by the lawyers.

Non- compete for agreement: A non-compete agreement is made between employee and employer to not enter into a competition with the employment after the employment period is over. These agreement signing by the employees agrees to not compete in the future within a geographical area and a specified period of time.

Bilateral agreement: A bilateral agreement is a sign between parties or states with an aim to keep trade deficits to a minimum. The scope of agreement varies from country to country. Bilateral agreements are not hurdled by the rules set by the World Trade Organisation and do not focus on trade-related issues. The agreement generally targets individual policy areas, aiming to increase cooperation and facilitate trade between countries in certain areas.

Unilateral agreement: Unilateral trade agreement is a commerce treaty which a nations imposes without regards of others. It serves only one nation at a time. These agreements are not open for negotiation. This agreement is a free type trade agreement. One more type of this agreement is a bilateral trade agreement meaning an agreement between both countries. And this type is multilateral trade agreements which are more powerful and take a long time to negotiate.

Promissory Note: If someone borrowed money, then both parties make an agreement which is commonly known as a promissory note. It’s a written agreement to pay the money back, and it must contain the terms of an agreement to do so. Anyone can issue a promissory note like a bank, an individual, or a company.

Stock purchase agreement: Stock Purchase Agreement (SPA) is the final agreement that completes all terms & conditions related to a purchase and sale of shares of any company. It is different from an Asset Purchase Agreement, where the assets of a company are being bought/sold.

Transfer agreement: The transfer Agreement is defined as a set of the terms and conditions upon which the “Transferor”, being a Company properly registered under the laws of the state with a registered number and having its registered address, will transfer certain shares held by him to the “Transferee”, being a Company correctly registered under the laws of the state with registered number and having its registered address together, the “Parties”.

Joint venture agreement: A Joint Venture Agreement is a legal document where two or more entities work together to do a business for an economic activity together. The parties either concur to configuration an agreement without federation of new entity but with the common purpose of running a business to create a new entity by subscribing equity and share the revenues, expenses and regulate of the enterprise in quantity of their capital subscription.

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IMPORTANCE OF AN AGREEMENT

It is obligatory to have your agreements in writing to prevent your interests and enforce your rights. Both parties will recognize clear terms what is anticipated of and majorly what is concurred to and what is not. It will also set out the outcome, procedure, and possible alternative if a party does not consummate any of its consent upon duties or if you want to end the agreement for any ground. Verbal agreements are always a risk. You may perceive assertive that the person you are entering into an agreement with is trustworthy and the relationship can withstand any hurdle, but people change. If you try to enforce a verbal agreement in court, there will in any case, be two categories of the story with one person’s word in opposition to the others. It will be arduous to convince a judge which description is right if you have no written confirmation to manifest for it, and you might occupy years litigating on a he-said, she-said basis.

The cost intimation of this are remarkable. By agreeing to all the terms and conditions of the agreement, the parties will connect and eliminate any problem that begins in the negotiation procedure. If you have a verbal agreement, this might be only come to light when it’s too late because you have to get involved into the relationship with aptitude and no outcome. It shall keep in mind that a written agreement should not just be a one-pager with limited terms. Occasionally, that one-pager, it is in writing, aiming more confusion and trouble than not having an agreement in place at all. Various agreements will be more circumstantial than others as they require to restrain determined terms that the simple person on the street may not know to incorporate. It is significant to communicate that precise contracts must, in line with Law, be in writing, like if you buy or sell immovable property.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.