Understanding the Distinction: Between Agreements and Contracts in Tanzania.

Understanding the Distinction: All Contracts Are Agreements, but Not All Agreements Are Contracts in Tanzania.

Introduction:

In the realm of legal terms and concepts, there are several words that are often used interchangeably, leading to confusion and misunderstanding. However Youe going to know the difference between the two in five seconds below:-

These two pair of words  “agreement” and “contract.” they share a close relationship, it is important to understand that, in the context of Tanzanian jurisdiction, all contracts are agreements, but not all agreements are contracts. 

This article aims to shed light on this crucial distinction within the Tanzanian legal framework.

Let first to understand the word Agreements:

An agreement, in its simplest form, refers to a mutual understanding or meeting of minds between two or more parties, where they have reached a consensus on a particular matter.

 The Law of Contracts Act, undersection 2(e)[1] defined agreement as “every promise abd every set of promjse forming consideration if each other is agreement”

It involves an offer by one party and its acceptance by the other party, creating a common intention to be bound by the agreed-upon terms. For example Y Agreed to use C Book and C agree, Thats is agreement.

In Tanzania, agreements can be oral or written, and they are an essential aspect of day-to-day transactions.

What is  Contract?

While an agreement is a broader concept, a contract is a legally enforceable agreement. In Tanzania, a contract is formed when an agreement meets specific legal requirements outlined in The Law of Contracts Act, [Cap 345, Re 2019]. According to the Act, Contract per section 2 (h)[2] defined as “an agreement enforceable by law is contract. for an agreement to be transformed into a contract, it must satisfy the following elements:

  1. Offer and Acceptance: There must be a valid offer made by one party, which is subsequently accepted by the other party without any condition or variation.
  • Consideration: There should be a mutual exchange of something of value (money, goods, services, etc.) between the parties. Consideration is an essential element that distinguishes a contract from a mere gift or donation. As per section 25(1)[3] Provides an agreement without consideration is void.
  • Intention to Create Legal Relations: The parties involved must demonstrate an intention to be legally bound by the terms of the agreement. Social or domestic agreements, where parties do not intend legal consequences, usually do not qualify as contracts.
  • Capacity: The parties entering into the contract must have the legal capacity to do so. For example, minors and persons of unsound mind may lack the capacity to form a legally binding contract. As per section 10 elaborate capacity to age, sound mind and not Declares bankrupt by any other law in Tanzania. 

Section 11 defined competence to mean age of majority that os 18 years old and unsound mind. This is the person who have capacity to form contract, agreement can be formed even if is minor.

  • Free Consent: The agreement must be free from coercion, undue influence, misrepresentation, or fraud. Consent obtained through any form of duress or deception renders the contract voidable. This provided under several sections from section 13,14,&19[4] of the law of contracts Act. Agreement may be taken by force are not contracts.
  • Legality of Object: The purpose of the contract must be lawful and not against public policy or any specific legal provisions. As per section 23[5] of the same Act provides what is lawful objects and what are not lawful.
  • Writing and Registration. This is not mandatory in other But its important in issue of evidence when one breaches. Contract may be oral or written unless there is law which provide it mandatory as law governing conveyance in Tanzania provide mandatory of contracts be in written form and be registered.
  • Certainty. As per section 29 provides that “agreements, the meaning of which is not certain or capable of being made certain, are void. As elaborated by court of appeal of Tanzania in the case of ALFI E.A LTD VS THEMI INDUSTRIES AND DISTRIBUTORS AGENCY LTD[6]  Parties concluded agreements to sale machines without specifying Price. Court held, since price is a fundamental term in a sale agreement if its not mentioned the agreement become uncertain and renders agreement void.

Distinctive Factors:

The differentiation between agreements and contracts becomes particularly significant in situations where a dispute arises and the parties seek legal remedies. 

While an agreement may not be enforceable by a court of law, a contract provides a legal framework for the resolution of disputes. It enables parties to seek remedies for any breach or violation of the agreed-upon terms, As provided by section 73(1) &(3)

FAQ, (FREQUENT ASKED QUESTIONS)

Is it true that all agreements are contract? 

The answer is Yes. All agreements are contract since creates offer and acceptable between the parties as elaborated above.

What is agreement but not contract? 

All agreement which lacks the following characteristics:- certainty, Capacity, lawful objects, Consideration, Free consent and intention to create legal relations. 

What makes agreement contracts?

Agreement may be contract if parties entered into agreement which with lawful objects, the terms are clear, Consideration, and have Capacity as well as free consent. This element make agreement to be contract.

Conclusion:

In Tanzania, as in many other jurisdictions, the terms “agreement” and “contract” have distinct meanings.

While all contracts are agreements, not all agreements qualify as legally binding contracts. Understanding this distinction is crucial for individuals and businesses engaging in transactions in Tanzania, as it helps them navigate the legal landscape and protect their rights. Parties should be mindful of the legal requirements for forming contracts and seek legal advice when necessary to ensure their agreements have the desired legal enforceability within the Tanzanian jurisdiction.


[1] [Cap 345, Re 2019].

[2] [Cap 345, Re 2019].

[3] [Cap 345, Re 2019].

[4] [Cap 345, Re 2019].

[5] ibid

[6] C.A.T. DSM Civil Appeal 28 of 1984)