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  • Proposal [Sec. 2(a)]: When one person signifies to another, his willingness to do or to abstain from doing anything, with a view to obtain the assent of that other to such act or abstinence, he is said to make a proposal.
Example: Amar offers to sell his cycle to Akbar for ₹ 1,500. Here, Amar proposes his willingness to sell the cycle at ₹ 1,500 with a view to obtain the assent of Akbar.
  • Promise [Sec. 2(b)]: When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
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Example: In the above example, when Akbar signifies to Amar, his assent to buy the cycle for ₹ 1,500, Akbar is said to make a promise.
  • Agreement [Sec. 2(e)]: Every promise and set of promises forming the consideration for each other is an agreement.
Example: In the above example of Amar and Akbar, after acceptance of Amar’s offer to sell the cycle for ₹ 1,500, the offer becomes a promise and is treated as an agreement between Amar and Akbar.


Note: Consideration means something in return. In the above example, the consideration for Amar is ₹ 1,500 and for Akbar is the cycle.

  • Contract [Sec. 2(h)]: An agreement enforceable by law is a contract. According to Pollock, ‘Every agreement and promise enforceable by law is a contract.’
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