How to start a food packaging business?

How to start a food packaging business?

You must be familiar with many food delivery platforms. But, are you familiar with the fact that packaging these foods is in itself an entire industry.

A practical roadmap and planning are essential to the success of any business. We discuss how to start a food packaging business in this write-up.

How do I start a Food Packaging Business?

  1. Planning

The market that one intends to target must be chosen during the planning stage. Packaging is a flexible industry. One must therefore concentrate on a particular market.  In your packaging business plan, do some research and review the data of what is setting and trending. For this, one needs to create a strong business plan that will enable the enterprise to succeed.

Second, one must consider the available resources and the capital requirements of the packaging industry. Understanding how much packaging the organisation needs is crucial for managing costs successfully. Saving for unpredictable circumstances is also a crucial at the same time. Last but not least, a successful balance between supply and demand is necessary to maintain the business.

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        2. Execution

The company is given a specific name at this point. The ideal business name is succinct, noticeable, and representative of what it provides. The business entity must register under the Food Safety and Standards Act of 2006 (FSSAI) at this step by selecting the proper company structure for its operations. LLPs, companies, sole proprietorships, and partnerships are some of the most popular business structures. This registration grants the company the necessary license to conduct business.

A packaging company should also think about going online through one of the many consumer-friendly e-commerce platforms available for it to succeed.

At this stage, the following things should be made available:

  • Trademark registration
  • Seller's Permit/Vendor's License
  • Non-disclosure Agreement
  • Employee Contracts and offer letters
  • Business Plan
  • Website Terms of Use Agreement

These documents should ideally be drafted by professionals equipped with the requisite skills.

  3. Promotion and Launch

A strong marketing plan is necessary to ensure that the company that sells food packaging reaches the target market. Ideally, promotion should be carried out both online and offline. At this phase, test marketing should be done frequently.


The food packaging market is expanding quickly. The rising globalisation of trade in goods & services and the emergence of new trade forms like organised retailing & e-commerce have all contributed to the Indian packaging industry's rapid expansion, even in the pre-Covid period.

The Indian packaging sector anticipated expansion at a CAGR of 18% from 2016 to 21. Covid-19 may have considerably hindered this growth, but other industries, such as packaged food and drinks, pharmaceuticals, functional foods, and hygiene products, were mainly unaffected. These industries have experienced optimal growth in demand and production, which has increased packaging demand.

People are more prone to wanting quick fixes for anything, including food, especially those from urban regions. As a result, the demand for packaged food or so-called "ready-to-eat food." As a result, the food packaging business is now being pushed to speed up the process.

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The Food Safety and Standards Act, 2006[1] has laid down the following requirements

  1. Packaged foods must be put in utensils or containers, which is safe.
  2. For dairy products, the packaging/wrapping should be mechanically sealed, and it should not be reused. It should only be kept in the storage rooms that have been designated after proper packaging.
  3. For packaging edible oils and fats, tin plates used in tin containers should meet the requirements for prime grade quality outlined in the Bureau of Indian Standards (BIS).
  4. For fruits and vegetables: Any fruit product shall be packaged in a container that is so tightly sealed that it cannot be opened without erasing the manufacturer's specific identifying mark, which should be visible on the top or neck of the bottle following the standards set by BIS. 
  5. To prevent possible adulteration or contamination of the water, drinking water should be packaged in sterile glass bottles, food-grade polycarbonate, or clean, hygienic bottles/containers made of polyethene (PE) (conforming to IS:10146), polyvinyl chloride (PVC), polyalkylene terephthalate (PET and PBT), conforming to IS: 12252, polypropylene (conforming to IS: 10910).


Wrappers are used for individual goods; wrappers shield food from contamination from hands and the surroundings.

A tray is a flat, thick paperboard object with raised edges to hold the product firmly in place while minimising movement.

Boxes are the simplest type of packaging, allowing for simple transportation of the food item. Boxes are frequently built of wood, corrugated fiberboard, or metal, which increases their resistance and reduces their susceptibility to damage.

Pallets – Pallets are typically used when food is transported in bulk.

Bags – Plastic bags are typically used to transport food.

Cans  Steel/metal cans are also used to transport food. These help preserve the food better.

Flexible packaging is a type of non-rigid, flexible packaging that may conform to any shape, size, or structure, as the name implies. This kind of packaging, which resembles bags a lot, shields food products from environmental factors while significantly prolonging their shelf life.

Aseptic processing is used to pack sterile food products to ensure they retain their sterility. This packaging combines paper, polyethylene, and metal and has a thick polyethylene layer.

Boxes and cartons can frequently be used interchangeably. Cartons are built from corrugated cardboard, just like boxes, and might have paraffin or plastic coating to make them more durable against moisture and other coercive agents. 

Egg cartons are moulds that are patterned like eggs and are used to transport eggs securely.

Gable-top cartons are a common choice for milk and juice since they have gables at the top that may be opened by pinching and pulling.

Folding cartons are created as flat cardboard components that the food producer can put together.

Aseptic cartons are used for processed foods that must be kept fresh for a long time.


[1] The Food Safety and Standards Act, 2006.

How Can You Form A Company In USA From India?

How Can You Form A Company In USA From India?

Globalization, The New World Order

Globalization has become the new universal order. Businesspersons who wish to attain grand success have to employ strategies that promote their global growth as well. The new world order -- with more porous borders and lesser international restrictions and more positive policies that encourage business in different countries – has expanded the potential scope of the market for numerous businesspersons across the globe.  

Also, read The Unique Identity Of A Company Director As Per The Company Law

Business Expansion Into Foreign Countries

Thus, there are many Indian businesspersons who want to set up a company in foreign countries. And the most preferred country where many of them wish to expand is the United States. Well, if you are one of them and you wish to set up a company in the US or someone close to you wishes to do the same, we here present you the legal provisions that you can use towards that goal

We are here to tell you about the various steps and protocols. These will help you set up companies in the USA from India.

USA As The Market For Business Expansion

Well, the USA market is arguably the most developed market in the global expanse. If an Indian businessperson accesses and tries to explore the American market, he/she is likely to find a plethora of opportunities for expansion and growth. Well, if someone from India wishes to set up a company in the USA, he/she will need to follow the following protocols:

The Methods In Which An Indian Company Can Set Up Its Business In The USA:

  • This company can do all its operations from India, but it would set up in America.
  • All the functions and activities by this company will be done in India, except the brand building and marketing work, which would by done in the USA, by this company set up in the US.
  • This company in the USA will be a subsidiary of its Indian parent company. But it will do all its activities and various works in the USA.

You may also read What are the legal compliances required for a Start-up?

The Two Ways In Which You Can Enter The US Market

If you want to do business in India, you can do it in the following two ways:


Suppose you want to set up a company by procuring funding from venture capitalists, angel investors and so on, then you can go for C-corporation. Investors, bankers, supplies consider them more professional


It is a combination of partnership firms and corporation. Well, you are protected against a lawsuit by limited liability provision. The process here is quite similar to the process that takes place in the formation of LLP.

Herein, its compulsory to provide information about the agents of state formation. It is also required to give the various details of the companies and individuals who are working with the business. Deciding the name of the company is also mandatory.

Formation Of The Company

After carrying out the process, you will be ready to establish your business. You may have to choose your geopolity. There are various states in the US. There are states where the laws are more business-friendly and taxation is also low, like Delaware, Nevada, Wyoming, and so on. Sometime after you set up your business in one of these states, you can also expand to other regions of the USA>

Steps Involved In The USA Company Formation

You should first decide what type of company you wish to form. In the USA, this is all the more important. Then you can undertake the following steps towards the formation of the company in the USA:

Decide the company’s name

The name should be unique. Besides, that name should be available in the state where you are going to set up your company.

You will need to give a registered agent. That registered agent should have a physical address in the state where you are setting up the company. The agent should be there to sign the legal documents in the business hours and in the time required.

Federal Employer Identification Number –

This step is not compulsory. But it will be easier for you if you go for this step as well. You will need to apply for a Federal Employer Identification Number and Certificate of Authentication. Suppose you want to open an account in any bank of USA, then you should have these things, only then your account can be opened.

The Certificate of Authentication – This too is optional. Suppose you wish to open a bank account in India or say produce proof that you have a company in the USA (either a US corporation or LLC), then you will need to present a certificate of authentication or Apostille.

All of these are some simple steps, which will facilitate you form a company in the USA. You need to ensure that you follow them well. Also, you can also seek help from a professional firm that can help you set up a company in the USA.

Also, read Know All About The Service Agreement.




Procedure, Document Checklist And Costs For Incorporation Of A Private Limited Company

Procedure, Document Checklist And Costs For Incorporation Of A Private Limited Company


A Private Limited Company is one that has been established under the Indian Companies Act, 2013 or any prior Companies Act. The prefix "Limited" in the name suggests that the members', or owners', liability is limited to a particular amount. There are however some restrictions in place, in addition to the benefits provided.

In the Indian market, the most common and dominant type is the private limited company. This sort of company is designed specifically for small businesses. The members of a Private Limited Company have a fixed financial commitment, which is entirely dependent on the number of shares they each own.

Also read Partnership firm v. LLP in India

The process of SPICe (Simplified Proforma for Incorporating Company Electronically) Private Limited Company Incorporation Filing Process is required to be done. SPICe is a single form that integrates the applications for Reservation of Company Name, Allotment of DIN for Directors and Incorporation of a New Company along with allotment of Permanent Account Number (PAN) and Tax Collection and Deduction Account Number (TAN) to the New Company.

Procedure followed

The essential paperwork needs to be filed on the official MCA website (, which ensures a quick and uncomplicated process. With the "Make in India" initiative, the Indian government currently supports the incorporation of businesses in India. It is only after following the procedures outlined in the Act that the company can be formed and started. The steps that are followed to register a private limited company are as below. It takes around 15 to 18 days to complete the entire procedure.

  1. The very first step to register a private limited company is to obtain the DSC (Digital Signature Certificate) of the Directors and Subscribers to Memorandum of Association. An e-form is filed with the Ministry after attaching the DSC of the Authorized Signatory for incorporation of the Company. Also, it is required for the application of DIN of the directors. Further, DSC of the subscriber is needed to file Memorandum of Association and Articles of Association.
  2. The next step is to obtain the Director Identification Number (DIN). Under this registration step, the Ministry allots the DIN to the Individual for acting as Director in a company. It is basically a unique number such as PAN Card allotted to any person and which is applied and allotted once in the lifetime.
  3. The next stage in the company registration process is to submit an application for the proposed firm's name reservation. The application must be submitted on Form INC-1, which allows for a maximum of six names to be submitted in order of preference. It is important to note that the names chosen are not identical to or substantially equivalent to any existing Company, LLP, or Registered Trademark. Once the name is approved, it is reserved for the applicant for a period of 60 days, during which time the applicant must apply for company incorporation; failure to do so will result in the name being revoked by the Ministry.
  4. Once the prospective company's name has been reserved, fill out the Application for Certificate of Incorporation in SPICe form and attach the SPICe MOA and SPICe AOA. The application is submitted by paying the required Stamp Duty on the portal, as applicable in the concerned state. Once the application is filed, an online form for the company's PAN and TAN is generated, which must be completed and sent along with the DSC and MCA. The concerned Registrar of Companies may give the Certificate of Incorporation after thorough examination of the application and supporting papers (COI). It is a conclusive confirmation of the company's existence, containing the date of incorporation, Company Identification Number (CIN), and Permanent Account Number (PAN), as well as the Registrar's signature and seal. As soon as the Certificate of Incorporation is issued, the firm can begin operating as soon as the Incorporation procedure is completed.

You may also like to read MSME Registration in India

Documents Required

Ensuring proper documentation is an integral aspect of the registration process of the Private Limited Company. The documents thus required for the registration of a private limited company are as follows:

  • Directors and Shareholders’ Identity Proofs such as PAN card, Aadhaar Card / Passport / Driving License / Voter Identity Card; Address Proofs such as Telephone Bill / Mobile Bill / Electricity Bill / Water Bill; Bank Statement; Passport size Photographs. All the Copies of documents being self-attested by the applicant.
  • Documents are to be signed by the Directors include the Consent to Act as Director: Form DIR-2, Details for DIN, Declaration of DIN.
  • Documents to be signed by Shareholders include the Application for Digital Signature Certificate; Declaration by Subscribers & Director: INC-9 4. A no-objection letter from the Owner of Address to use the address of the registered office of the Company.


Costs incurred

India has a diverse range of business types, businesses, and services. Regardless of the sort of business, all of them require some form of government registration. For example, GST registration, VAT registration, IEC registration if you are in the import export business, Professional Tax registration, EPF registration if you are in some type of profession, MSME registration if you are a small and medium firm, and so on. Professional fees, as well as government fees, are associated with several types of registration. Registration fees might range from INR 1500 to INR 15000, depending on the complexity of the activities, state taxes, and other factors. The fees for forming a Private Limited Company vary depending on a variety of parameters such as the amount of capital, the number of shareholders, and the number of directors, among others. The cost of forming a Private Limited Company in India (Pvt Ltd Company Registration) ranges from INR 6,000 to INR 30,000, depending on the number of directors, members, authorised share capital, and professional expenses. The cost of a professional may be determined by the task's complexity. A minimum paid-up capital of Rs. 1 lakh is required for a private limited company. It could go even higher, as MCA may prescribe from time to time.

Also read Which Is Better For A Small Sized Company: LLP Or Partnership?


What is DSC? Know Everything about Digital Signature Certificate

What is DSC? Know Everything about Digital Signature Certificate

What is a Digital Signature Certificate?

The Digital Signature Certificate is essential to ensure security of the documents. It is affixed by the authorized individual to documents provided in electronic form. This helps in determining that the documents thus verified are secure and authentic. It is a mandate that the documents submitted with the Ministry of Corporate Affairs electronically shall have attached with them a Digital Signature Certificate. The Certificate is being used to validate the online transactions of businesses. The main authority in this regard is the Controller of Certification Agencies. The Controller is responsible under the provisions of Information Technology Act, 2000 to appoint certification agencies. In this regard the Controller of Certification Agencies has appointed a total of eight Certification Agencies which are authorized to issue Digital Signature Certificates. While getting these certificates, the individual has the option to choose as to which class of certificates need to be received with respect to the purpose. Different types of the digital signature certificates are as follows:

  • Class 1: This is not something that companies can utilize. This class only verifies the names and email addresses of the individual.
  • Class 2: This is required by companies and other organisations. This class of certificate can be used to fill out tax forms. A Class 2 digital signature certificate checks a person's identity against a trustworthy database that has been pre-verified. However, with the recent notice of the Controller of Certifying Authority this class of certificates has been outdated and replaced with the Class 3 of certificates.
  • Class 3: Individuals or companies who want to participate in online auctions or tenders will need this. It is the most advanced and secure type of digital signature certificate available.

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The Information Technology Act of 2000 includes provisions for the use of digital signatures on documents submitted in electronic form to assure the security and authenticity of those documents. This is a safe and secure method of submitting a document electronically. As a result, all filings made by companies/LLPs must be signed using Digital Signatures by the person whose signature is requested.

Only the valid Digital Signatures issued to them can be used. It is against the law to use Digital Signatures that belong to someone other than the person to whom they were issued.

Procedure to obtain and costs of obtaining a DSC?

One needs to understand the procedure to obtain the Digital Signature Certificate in order to receive it. When applying for a Digital Signature Certificate, one needs to complete the Application form which is available online and personal information then needs to be verified with photo ID proof and address proofs.

The following are the steps to receive a DSC:

  1. Visit the Certifying Authority’s online page. Select the Digital Certificate Services section post which the type of entity needs to be chosen for which the Digital Signature Certificate is sought for: whether a person or an organization.
  2. After finding the appropriate form, the required information needs to be filled in the form such as the class required, the period of validity of the certificate, name of the applicant and his contact details, business GSTIN, payment details.

After filling out all of the required information, a recent photograph needs to be attached and the statement needs to be signed. An attesting officer must certify the supporting document presented as confirmation of identity and address. It must be ensured that the attesting officer's signature and seal are clearly visible on the accompanying proof documents.

  • A demand draft or cheque in the name of the Local Registration Authority where you will submit your application for verification must be obtained for payment of the DSC application.
  • Put the following items in an envelope:
  • Filled-up Registration Form including the documents for Proof of Identity and Proof of Address attested by the authorized officer
  • Payment made via demand draught or cheque.'

Also read The Unique Identity Of A Company Director As Per The Company Law

The cost of obtaining the DSC includes the cost of the medium (a UBS token, which is a one-time payment), the cost of DSC issuance, and the cost of renewal once the validity term has expired. DSCs can be obtained from any of the recognised Certification Agencies listed on the MCA portal by corporate representatives and professionals who need them. The issuing costs for each Agency vary and are determined by the market.

DSC Renewal

The Certifying Authorities are entitled to issue a certificate with a validity of one or two years. The validity of the certificate needs to be known to the applicant well in advance. After the expiry of the validity period, the digital signature certificate can be renewed within seven days’ time. However it needs to be checked that the renewal is being made in the previos name only. And if the name is changed then the whole application procedure shall be considered as a new one. It is permitted to change the postal address and contact information. Also after the expiry of the Certificate if the renewal process is not completed within seven days’ time as stated above then the individual shall be required to apply from the start afresh.

 What is a DSC token?

USB Token for DSC or Digital Signature Certificate for Digital Signing have risen to prominence in recent years owing to its charcateristic of providing significant measures of protection. The Controller of Certifying Authority requires users to have a USB token in addition to their Digital Signature Certificates, users can use these Plug and Play tokens to download and install DSCs on them. People can now complete their signing operations from remote places owing to the two-factor authentication method for validation and secure local and remote desktop login. The best part about utilising USB tokens to sign desired documents and files is that they are easy to carry and can be placed on any device. Furthermore, the signed documents can never be changed and cannot be changed without the consent of the signer. The usage of password-protected tokens provides the token users or signers with a high level of protection. Proxkey, mToken, ePass 2003 are few of the types of USB tokens To utilise a digital signature, you must first get a Digital Signature Certificate by submitting an application to one of the registered Certifying Authorities. When the DSC and USB Token are received, it is simple to use them to sign any PDF document online. The most secure way to digitally sign a document is with a USB Token containing your DSC.

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Know About Cost of Various Company Registrations
Registration & Licenses

Know About Cost of Various Company Registrations

Cost for GST Registration

All entities, subject to a minimum monetary threshold need to register for GST. While one can register for GST on their own, the complex jargon and regulatory procedure often deter people from doing so. As a first step, you need to check if you are eligible for GST registration. You can get yourself registered even though your business does not cross the requisite monetary threshold, but this means added compliance burden.

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Apart from knowing about the eligibility, one also needs to know about the various types of GST registrations. For instance, GST filings for small taxpayers are different from those mandated for big companies.

Hence, it is always better to engage a professional to register GST and obtain the GSTIN for you. The process does not stop here, as a GST-registered business, you will have to do certain form filings and you would require professional assistance for this as well.

One can register for GST free of cost if done on their own. Online GST registration is available at the online GST portal. If you wish to obtain professional assistance, there are various websites that provide GST registration at a fixed cost. The prices may range from INR 1500-3000 one-time fee.

Cost of Registering TAN & PAN

All persons in charge of deducting or collecting taxes must get a TAN. The TAN must be quoted on all TDS statements as required by Section 203A of the Income Tax Act, 1961.

One can obtain TAN by submitting Form 49B to any TIN Facilitation Centre. TAN applications can be submitted online through the NSDL-TIN website.

The current fee for filing a TAN application is INR 55/- plus applicable GST (the application fees may change from time to time).

PAN is to be obtained by every person carrying on any business or profession whose total sale, turnover, or gross receipts is likely to exceed five lakh rupees in any previous year.

Indian citizens can obtain a PAN by submitting Form 49A. PAN applications can be submitted online through the NSDL website or at any of the NSDL TIN-Facilitation Centres.

The application for allotment of a TAN or PAN must be made in Form No. SPICe-INC-32 if the applicant is a company that has not been registered under the Companies Act, 2013.

Per PAN application, the applicant must pay a cost of INR 93 plus applicable GST. The fee for processing the PAN application is INR 864 (INR 93 application fees and INR 771 dispatch charges)/- if the PAN card is to be delivered outside India. (Plus, GST as applicable)​​.

Also, read How Can We Check Whether A Company Is Registered Or Not?

DIN and its Cost

The Central Government issues a DIN to anyone who wishes to become or is already a director of a company. It is valid for a lifetime. One can apply for DIN by filling out the relevant forms, such as the SPICe Form, DIR-3 Form, and DIR-6 Form, along with supporting documentation.

The forms are submitted electronically. It must be digitally signed before being uploaded to the MCA21 website.

If a DIN application is filed at the time of incorporation, no separate fees have to be submitted to obtain DIN. In the case of an existing company, INR 500 fee is to be paid online.

There are various websites that file DIN applications on one’s behalf at a fixed cost. The prices may range from INR 600-1500 one-time fee.

Franking Charges

Franking is another mechanism that involves the stamping of a document by an authorized franking agent. A franking machine is used to stamp documents, indicating to the payor that the taxes have been duly paid to the government.

Franking fees are usually a small percentage of stamp duty fees, and they are often adjusted only in the stamp duty fees.  The franking procedure in each state has a set minimum amount. Franking charges might range around 0.1 percent of the overall purchase price.

LUT Bond & Its charges

To make exports without paying IGST, all registered taxpayers who export goods or services must submit a Letter of Undertaking (LUT) in the GST RFD-11 form on the GST portal. Before exporting goods or services, a LUT must be filed online. For each new financial year, a new LUT should be filed. GST registered person can only submit a LUT if they have not been prosecuted for tax evasion of more than INR 2.5 crore, or for any other offense under the CGST Act, the IGST Act 2017, or any other law.

Login to the GST Portal and select LUT from the services tab. Choose the financial year for which the LUT is needed. Fill in the details, then save, sign, and file the form. A message of confirmation appears. The GST Portal sends this ARN to the Taxpayer's registered email and mobile phone.  Now one can download the acknowledgment, by clicking the download button.

There are various websites that provide LUT related services at a fixed cost. The prices may range from INR 1500-3000 one-time fee.

What is Notary? & Its charges

A Notary, also known as Notary Public, is a person who is authorized to perform certain legal formalities. This includes the drafting, and validation of contracts, deeds, and other legal documents. A Notary Public's primary role is to serve as an impartial witness while carrying out fraud-prevention activities involving legal documents. This is usually referred to as notarization.

Rule 10 of the Notaries Rules, 1956, mandates the following fee:

  1. Notarization of instruments
    • You need to pay INR 35/- if the value of the instrument does not exceed INR 10,000/-
    • You need to pay INR 75/- if the value ranges between INR 10,000/- and INR 25,000/-
    • You need to pay INR 110/- if the value ranges between between INR 25,000/- and INR 50,000/-
    • INR 150/- if the amount exceeds INR 50,000/-
  2. INR 15/- for verifying, certifying, and attesting the execution of any instrument
  3. INR 15/- for administering/witnessing oaths or to take affidavits from deponents
  4. INR 150/- towards the preparation of documents or instruments to be used outside the country
  5. INR 10/- per page for attesting a document as a true copy

How much does CA charge for company registration?

The ICAI has revised the minimum fees paid for professional assignments completed by CA in Practice. A CA charges INR 35,000/- for incorporation of a Private Limited Company and INR 65,000/- for incorporation of a Public Limited Company in Class A cities such as Delhi, Mumbai, Kolkata, Chennai, etc.

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Service Agreement Vs Contract -  How They Compare & Differ?

Service Agreement Vs Contract - How They Compare & Differ?

The Fundamental Difference

Its true that all the contracts are agreements, but the converse is not true. That is, not all the agreements are contracts. The points that distinguish a contract and a service agreement are small and not major. A contract, unlike an agreement, follows a more formal outline. Any understanding between numerous parties regarding what they commit to do for each other might be considered an agreement. These informal arrangements, known as "gentlemen's agreements," rely on all parties upholding the agreement rather than being enforced by a third party or the threat of legal repercussions.

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More Differences Between Contract & Agreement

On the other hand, a contract is legally binding. In fact, the courts can enforce the contracts and the provisions of the contract if they aren't followed. An agreement is less formal and rigid. Any party to a contract can take it to court if there is a disagreement between the parties. Most contracts, on the other hand, do not end up in court. In reality, unless there is a specific purpose for the contract to be written, most contracts can be made verbally. Also, a contract which is written will protect whosoever is involved in case something goes wrong.

If one party believes the other has broken the contract or failed to keep their end of the bargain, they can file a lawsuit and take the other party to court. During the course of the case, the court will determine whether there was a breach of contract or whether additional factors rendered the breach void. It's vital to remember that only legally binding contracts can be challenged in court.

Also read Company Name Reservation Process – Reserve Unique Name – Requirements & Process

The Points On Which They Differ:

Offer and Acceptance: The contract must include an offer from one party and the other party's acceptance of that precise offer. Any contract revisions must be agreed to by all parties, and no one can be forced to accept the conditions. The terms imply that all parties want for the contract to be legally binding. A contract cannot be made if one of the parties is not serious.

Mutual Consent: Both parties must agree to the offer and acceptance without pressure or force. Everyone must agree to the agreements in their entirety.

Consideration: For a transaction to be legal, something of value must be transferred between the parties. Money is the most common kind of consideration, but commodities or services can also be used. Both parties must exchange something of value, such as money for a service. The agreement is a gift rather than a contract if only one party gives consideration.

Competence: Neither party can be a minor or someone who is unable to comprehend what they are signing. The contract's terms must be understood by all parties. The contract is declared void if any party is found incapable.

Legal Purpose: A legally enforceable contract cannot contain any illegal actions, and both parties must be able to get it plausibly. If the agreement is based on an implausible premise, either party has the right to change the terms as they see proper.

The Issue Of Legality – How Do Agreements & Contracts Differ

A contract that fits these criteria is considered enforceable by law, which means that one party can sue the other in court if the provisions of the contract are not followed.

Some Examples Which Depict The Differences Between Agreement & Contract

Example 1:

The difference between an agreement and a contract can be seen in the following examples. Suppose two people agree to meet for lunch and one of them doesn’t turn up, the other person can not do anything to claim the damages for the wasted time because it was an agreement to do something and not really a contract.  

Example 2:

There is another example, there is a parent. He/she agrees to

pay his/her child’s debt. In this case, it is a written agreement that is acknowledged by the child and the parent. This makes it an enforceable contract.

You may also read Master Service Agreement (MSA): The Ways And Means To Use It

One More Difference

Not all contracts need to be written. In many instances, an oral agreement creates a valid contract as long as it meets the criteria listed above.