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Want to know what is the difference between agreement and receipt? Don’t worry! You have landed at the right place! I’m going to elaborate all what occurs in agreement vs receipt.
Let’s deep dive!
Summary
A receipt is merely acknowledging the payment or anything and could not be given status of agreement to sell.
Receipt and agreement both are two different things , a receipt is an acknowledgement of some articles,amount or anything else while an agreement to sell is done for performance of some future obligation against some consideration in presence of witnesses, A receipt to acknowledge the payment of amount could not be given the status of an agreement to sell , therefore the decree of specific performance could not be granted merely on the basis of the receipt of the acknowledgment of the amount.
What is an agreement?
General definition of agreement: An agreement is the promise or the set of promises forming consideration for each other.
What is a receipt?
General definition of receipt : A receipt is an acknowledgement for receiving some payment,articles etc. it does not create any future obligation.
Agreement vs receipt
| Differences | Agreement | Receipt | |
| 1 | Relevant Sections | Relevant section : section 2 subsection(e) Contract Act 1872 | Relevant section : section 2 subsection (23) of Stamp Act, 1899. |
| 2 | Legal definition | 2(e) Contract Act 1872 ‘Every promise and every set of promises, forming the consideration for each other, is an agreement’ | Receipt” includes any note, memorandum or writing— (a) Whereby any money, or any bill of exchange. Cheque or promissory note is acknowledged to have been received, or (b) Whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or (c) Whereby any debt or demand, or any part of a debt or demand is acknowledged to have been satisfied or discharged, or (d) Which signifies or imports any such acknowledgement, and whether the same is or is nor signed with the name of any person. |
| 3 | Future Promise | An agreement to sell contains a future promise. | A receipt did not contain a future promise. |
| 4 | Basic Purpose | The basic purpose of an agreement to sell to secure the future rights and obligations of the parties of the agreement. | The basic purpose of a receipt is the acknowledgement of money, bill of exchange, cheque or movable property etc. having been received. |
| 5 | Components | An agreement to sell should contain four components, these are as under:- i) Identification of seller and purchaser ii) Sale consideration amount, iii) Identification of property to be sold, iv) Parties to agreement to sell property at consensus ad idem. | Receipt is only an acknowledgement of receiving some articles, amount etc. it has also some components i) Name of the vendorii) transaction dateiii) amount or thing whatever is being acknowledged by the vendoriv) if the amount is acknowledged by the vendor, there must be written the source or the nature of payment through which it has been received (cash,cheque, bill of exchange etc.) |
| 7 | Number of Parties Required | An agreement to sell must contain a) promises of both the parties to the agreement i.e. vendee and vendor, b) description of property c) consideration to be paid against said property. | Receipts may be signed and executed by a person having acknowledged that some money, articles, etc. have been received. |
| 9 | Number of parties | It cannot be drawn by only one person. | It can be drawn by one person only. |
| 10 | Signature | There must be signatures and identification of the vender,vendee, identifier,witnesses | A receipt does not require the signatures of any person, only an acknowledgment of money or articles etc. amounts to the receipt. |
Agreement vs receipt at a glance of High court (case law)
MUHAMMAD AFZAL and 6 others—Appellants Versus ALLAH DITTA and 4 others—Respondents
- Citation: 2016 YLR Note 131
- Court: Lahore High Court (Multan Bench)
- Date of Decision: 24.6.2015
- Judge(s):M. Sohail Iqbal Bhatti, J
- `Agreement and Receipt`
Receipt is only an acknowledgement of receiving some articles while Agreement to sell comprises some promise to sell some property against some consideration. Receipt may be signed and executed by a person having acknowledged that some articles have been received but an Agreement to sell must contain promises of both the parties to the Agreement i.e. vendee and vendor, description of property and consideration to be paid against said property.
Case law/Judgement
MUHAMMAD AFZAL and 6 others—Appellants Versus ALLAH DITTA and 4 others—Respondents
- Citation: 2016 YLR Note 131
- Court: Lahore High Court (Multan Bench)
- Date of Decision: 24.6.2015
- Judge(s):M. Sohail Iqbal Bhatti, J
- judgement
M. SOHAIL IQBAL BHATTI, J.—Through this second appeal, the appellants/Muhammad Afzal and others (legal heirs of Muhammad Akbar) have challenged the impugned judgement and decree dated 02.11.2002 passed by learned Additional District Judge, Burewala through which the learned first appellate court accepted the appeal filed by the respondents Nos.1 to 4/plaintiffs against the judgement and decree dated 14.10.2000 passed by learned Civil Judge, Burewala who dismissed the suit filed by the respondents Nos.1 to 4/plaintiffs.
2. Facts of the case are that the respondents Nos.1 to 4/plaintiffs instituted a suit for declaration on the basis of a receipt dated 03.01.1976. The plaint was amended from time to time and lastly the suit for declaration was converted vide order dated 20.10.1997 into suit for specific performance on the basis of receipt dated 03.01.1976 (Ex. P-1).
3. The appellants/defendants appeared and filed contesting written statements to the suit for declaration which was converted afterwards into suit for specific performance.
4. Out of divergent pleadings of the parties, the following issues were framed:-
1. Whether the defendant No.1 contracted to sell the suit property to the plaintiffs in consideration of Rs.50,000/- and received the said amount? OPP
2. Whether the disputed contract is liable to be specifically performed? OPP
3. Whether the alienation of the suit property in favour of Akbar Khan deceased is void and ineffective? OPP
4. Whether the plaintiffs have no cause of action and locus-standi to file the suit? OPD
5. Whether the suit is time barred? OPD
6. Whether the plaintiffs are stopped by their words and conduct to file the suit? OPD
7. Whether the suit is not maintainable in its present form? OPD
8. Whether the disputed contract is violation of section 19, Colonization of Govt. Lands (Punjab) Act 1912. If so, its effect? OPD
9. Whether the admission of defendant No.1 through his written notice of disputed contract, if so, its effect? OPD
10. Whether Muhammad Akbar deceased was bona fide purchaser without notice of disputed contract, if so, its effect? OPD
11. Whether the defendants are entitled to compensatory costs under section 35-A, C.P.C., if so, its effect? OPD
12. Relief.
5. After recording of oral as well as documentary evidence, learned trial court dismissed the suit filed by the respondents Nos.1 to 4/plaintiffs vide its judgement and decree, dated 14.10.2000 to the extent of specific performance and decreed the suit for recovery of Rs.50,000/- against Muhammad Saddique/Defendant No.1. Appeal filed by the respondents Nos.1 to 4 against the said judgement and decree was allowed vide impugned judgement and decree dated 02.11.2002 passed by learned Additional District Judge, Burewala. Hence, this appeal.
6. Learned counsel for the appellants argued that the learned first appellate court failed to give proper reasons while reversing the findings of learned trial court on issues Nos.1, 2 and 3; injunctive order dated 10.04.1978 passed by this Court was granted to the extent of possession only and this order did not affect any sale transaction in favour of predecessor in interest of the appellants; impugned judgement and decree dated 02.11.2002 passed by learned first appellate court was a result of misreading and non-reading of evidence and also mis-application of settled proposition of law. Learned counsel further argued that receipt dated 03.01.1976 (Ex. P-1) could hardly be considered as agreement to sell; even otherwise agreement to sell do not confer any title; suit filed by respondents Nos.1 to 4 was also hit by section 19 of Colonization of Government Lands (Punjab) Act, 1912; learned trial court committed grave and substantial error while allowing the plaintiff to change the form of suit from suit for declaration into suit for specific performance which act of the learned trial court completely changed the nature of the suit and relief claimed, thus learned trial court committed a material procedural irregularity.
7. Conversely, learned counsel for the respondents Nos.1 to 4 argued that most of the facts were admitted by Muhammad Saddique/Defendant No.1; defendant No.1 being owner of the land received full consideration through receipt dated 03.01.1976 (Ex.P-1); receipt (Ex. P-1) was proved bearing thumb impression of Muhammad Saddique through report of fingerprint expert who appeared as CW-1; sale deed in favour of Muhammad Akbar/predecessor in interest of the appellants was executed after passing of restraint order dated 10.04.1978 passed by this Court in C.R. No.62 of 1977, thus Muhammad Akbar could not be termed as bona fide purchaser. Learned counsel for the respondents Nos.1 to 4 further argued that learned trial court has wrongly decided issues Nos.1 and 2 by giving precedence to the agreement (Ex. D-1) between Zulfiqar and Muhammad Saddique for the reasons that (Ex. D-1) was not signed by vendees and did not fall within the definition of agreement; respondents Nos.1 to 4/plaintiffs were in continuous possession of the suit land, thus provisions of Section 19 of Colonization of Government Lands (Punjab) Act, 1912 were not violated. Learned counsel further argued that second appeal under section 100, C.P.C. does not lie on a question of fact rather only some error of law committed by courts below.
8. I have heard the arguments advanced by learned counsel for the parties and minutely examined the record.
9. Right to file second appeal is governed by section 100 of C.P.C. and it is specifically provided in section 101 of C.P.C. that no second appeal shall lie except on the grounds mentioned in section 100, C.P.C., therefore it would be useful to reproduce the section 100 of C.P.C. as follows:-
“100. Second Appeal.—Save where otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to a High Court on any of the following grounds, namely:-
(a) the decision being contrary to law or usage having the force of law;
(b) the decision having failed to determine some material issue of law or usage having the force of law;
(c) a substantial error or defect in the procedure provided by this Code or by any other law/for the time being in force, which may possibly have produced error or defect in the decision of the case upon the merits”.
From bare perusal of above quoted provision of law, it becomes explicit that second appeal could only be filed in the following circumstances;
i) A decision challenged in second appeal being contrary to law or usage having the force of law;
ii) Where the decision challenged in second appeal having failed to determine some material issue of law;
iii) Some substantial error or defect in procedure provided by this Code or by any other law/for the time being in force, which may affect the merits of the case.
10. Therefore, I would only confine myself to the extent of above said grounds of second appeal and findings of facts would not be discussed.
11. First of all, I have to examine the legal effect of execution of a document/receipt dated 03.01.1976 (Ex. P-1). This document (Ex.P-1) was executed by Muhammad Saddique in presence of witnesses in favour of respondents Nos.1 to 4 but respondents No.1 to 4 have not signed the same document (Ex. P-1). To determine the legal value of the document as to whether the document (Ex. P-1) is a receipt or can be considered as an agreement, it would be useful to reproduce the definition of “agreement” which is provided in section 2(e), of Contract Act, 1872:-
“Agreement. Every promise and every set of promises forming the consideration for each other, is an agreement”.
This definition referred to a term “consideration for each other” which requires that both the parties of agreement have to make a promise for some lawful act against some lawful consideration. According to the dictum laid down in a judgement reported as Syed Adnan Ashraf v. Syed Azhar-ud-Din through Attorney (2014 MLD 342) an agreement to sell should contain four components, these are as under:-
i) Identification of seller and purchaser,
ii) Sale consideration amount,
iii) Identification of property to be sold,
iv) Parties to agreement to sell property at consensus ad idem.
While definition of receipt is provided in section 2 subsection (23) of Stamp Act, 1899.
“Receipt”.—“Receipt” includes any note, memorandum or writing—
(a) Whereby any money, or any bill of exchange. Cheque or promissory note is acknowledged to have been received, or
(b) Whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or
(c) Whereby any debt or demand, or any part of a debt or demand is acknowledged to have been satisfied or discharged, or
(d) Which signifies or imports any such acknowledgement, and whether the same is or is nor signed with the name of any person.
The term receipt has further been defined in Haji Hamzo Panhwar v. Muhammad Ibrahim and another (PLD 1963 (W.P) Karachi 962) that basic purpose of a receipt is the acknowledgement of money, bill of exchange, cheque or movable property etc. having been received. Essence of a receipt is the acknowledgement of receiving the articles in question.
The comparison of both the above referred terms manifests that both these terms are different in their characteristics. Receipt is only an acknowledgement of receiving some articles while agreement to sell comprises of some promise to sell some property against some consideration. Receipt may be signed and executed by a person having acknowledged that some articles have been received but an agreement to sell must contain promises of both the parties to the agreement i.e. vendee and vendor, description of property and consideration to be paid against said property.
I have observed that in the present case that (Ex.P-1) contained the signature of Muhammad Saddique only which could not be given weight more than receipt for receiving Rs.50,000/-. This document (Ex.P-1) was not signed by vendees/respondents Nos.1 to 4; therefore, this document has been misread by both the courts below.
12. Upon this proposition, learned counsel for the respondents Nos.1 to 4 himself mentioned in his written arguments that non-signing of vendees is an important factor because by not signing the agreement, the vendee kept themselves immune from any future claim of vendor and in support of this argument, learned counsel for the respondents Nos.1 to 4 also relied upon judgements of Honourable Supreme Court cited as Mst. Gulshan Hamid v. Kh. Abdul Rehman and others (2010 SCMR 334) and Mst. Barkat Bibi and others v. Muhammad Rafique and others (1990 SCMR 28).
On the strength of this argument as well as above said definitions of agreement to sell and receipt, the Ex.P-1 could not be considered as agreement to sell and could not be given weight more than a receipt of payment of Rs.50,000/-.
13. Even otherwise, specific performance of an agreement is a discretionary relief as provided in section 12 of Specific Relief Act. In order to claim specific performance according to dictum laid down in Abdul Karim v. Muhammad Shafi and another (1973 SCMR 225), following conditions must exist;
i. There should be a contract enforcement of which is not barred in the Act,
ii. The act is to be done in respect of trust,
iii. There is no standard for ascertaining the actual damages caused,
iv. Pecuniary compensation is not adequate relief,
v. The court deems it fit to exercise its discretion in favour of plaintiff.
Section 22 of Specific Relief Act, 1877 provides that jurisdiction to decree specific performance is only discretionary and the court is not bound to grant such relief merely because it is lawful to do so.
14. This discretionary relief though is to be granted in a just and reasonable manner guided by judicial principle and in illustrations, it is quite clear that if a performance of a contract would involve some hardship to the defendant, specific performance may be refused.
15. This Court in a judgement reported in City Education Board (Registered) Sialkot through Director v. Mst. Maqbool Nasreen (PLD 2008 Lahore 51) has already held that the court is not legally bound to grant such a decree even if the same is lawful. In cases where agreement is proved, such decree can be refused on equitable grounds. In the present case, the learned trial court discussed the rights accrued in favour of defendant Muhammad Akbar. It is worth mentioning that Muhammad Akbar purchased the suit land against consideration paid to vendor Muhammad Saddique through a registered sale deed which was sought to be set aside upon the basis of a receipt (Ex.P-1). As a receipt (Ex.P-1) did not contain a future promise; therefore, it cannot be given preference over the registered sale deed in favour of Muhammad Akbar (predecessor-in-interest of the appellants).
16. Another important aspect of the case which requires determination is as to whether an amendment in pleadings can be allowed after a considerable period of time which may not only change the nature of relief claimed but also change the entire complexion of the suit. Order VI, Rule 17 of C.P.C. provides that Court may at any stage of proceedings allow either party to alter or amend his pleading in such manner and on such terms, and all such amendments shall be made for determining the real questions in controversy between the parties. However, it is a legal requirement that a party should not take up a new plea to be introduced in its pleadings. In judgement reported as Munawar Mehmood and another v. Nadeem Siddiqui and others (2011 CLC 130), it is held by this Court that a party should not be permitted to achieve indirectly which cannot be achieved directly. It is settled principle of law that amendment should be allowed liberally which amendment does not affect the cause of action or nature of the suit. In the present case, the respondents Nos.1 to 4/plaintiffs amended the plaint more than once but did not make a prayer for claiming relief of specific performance. Interim order dated 20.10.1997 clearly reflects that the learned trial court did not bother to invite the parties for advancing their arguments upon the conversion of nature of the suit and relief claimed. Further the interim order, dated 20.10.1997 was not a speaking order and did not provide the reasons and grounds mentioned in Order VI, Rule 17 of C.P.C., thus learned trial court had committed a serious procedural error during the trial of the case.
17. For what has been discussed above, I am of the view that document (Ex.P-1) is merely a receipt acknowledging the payment of Rs.50,000/- and could not be given status of agreement to sell, therefore, a decree for specific performance which is otherwise a discretionary relief could not be granted in favour of respondents Nos.1 to 4/plaintiffs.
18. However, as this Court has not adverted to the factual controversy involved and therefore, while accepting the receipt (Ex.P-1) at its face value, respondents Nos.1 to 4/plaintiffs are entitled to recover an amount of Rs.50,000/- from respondent No.5/defendant No.1 granted by learned trial court in favour of the respondents Nos.1 to 4/plaintiffs.
19. In view of the above discussion, it is declared that the judgement and decree of the first appellate court failed to determine the material issue of law and the same being contrary to law is set aside. Resultantly, this appeal is allowed and the judgement and decree passed by the learned trial court is restored. No order as to costs.
Summary of the Judgement
Receipt and agreement both are two different things , a receipt is an acknowledgement of some articles,amount or anything else while an agreement to sell is done for performance of some future obligation against some consideration in presence of witnesses, A receipt to acknowledge the payment of amount could not be given the status of an agreement to sell , therefore the decree of specific performance could not be granted merely on the basis of the receipt of the acknowledgment of the amount.
Order: vendor cannot demand for specific performance on the base of a receipt therefore the court ordered to receive only the amount of 50,000/- which they have given to the vendees.
Agreement VS Receipt —- A Detail Guide
Types of Agreement
Every promise and every set of promises forming the consideration for each other, is an agreement. Basically there are two types of agreement, Social agreement and Legal agreement:
a) Social agreement
Social agreements are not enforceable because they do not create any legal obligation between the parties. In such agreements, the parties do not intend to create any legal relations.
b) Legal agreement
Legal agreements are enforceable because they create legal obligations between the parties. In such agreements the parties intend to create legal relations.Moreover all business agreements are contracts as there is an intention to create legal obligations.
Examples
A invites B to dinner. B accepted the invitation but did not attend. A cannot sue B for damages. It is a social agreement.
A promises to sell his car to B for Rs.2 Lac. It is a legal agreement because it creates a legal obligations. This agreement is a contract.
Types of legal agreement
- Valid agreement
- Void agreement
- Voidable agreement
Valid agreement
An agreement enforceable by law. An agreement enforceable by law when all the essentials of a valid contract are present.
Void agreement
An agreement which is void ab-initio is known as void agreement.an agreement which is void, unenforceable from its beginning is a void agreement.
Examples: an agreement with minor is a void agreement which cannot be enforceable.
An agreement without consideration is also a void agreement .
Voidable agreement
An agreement which is enforceable by law at the option of the one or more of the parties thereto but not at the option of the other or others is a voidable agreement.
When an agreement is voidable?
An agreement is voidable when consent of one or more of the parties is not free. It is a valid agreement until it is avoided by the party having the right to avoid it. If the party decided to confirm it, it remains valid
An agreement becomes voidable when consent of one or more of the parties to the agreement is obtained by coercion, undue influence, misrepresentation or fraud.
Example: A compels B to sell his car at gunpoint. The agreement is made by coercion and is avoidable at the option of B.
legal receipt of payment
When legal receipts are available, no other proof of payment is required to enforce it .
A legal receipt is only an acknowledgement of receiving some articles, amount etc. it has also some components i) Name of the vendor ii) transaction date iii) amount or thing whatever is being acknowledged by the vendor iv) if the amount is acknowledged by the vendor, there must be written the source or the nature of payment through which it has been received (cash,cheque, bill of exchange etc.)
Is a handwritten receipt legal?
Yes, a handwritten receipt is a completely legal receipt which can be enforced through the authorities as it has a great value in the eye of law.
Types of Receipt
i) handwritten receipt
ii) electronic receipt
A handwritten receipt is a receipt which is written on a simple blank paper and an electronic receipt is drawn by the automated generated process. Both the receipts have the same value in the eye of law and can be claimed or enforced through courts and authorities..
What is the Difference Between an Invoice and a Receipt
An invoice is raised to get payment from the customer while a receipt is issued after receiving the payment from the customer.
Conclusion
I’ve explained to you all about the differences between agreement and receipt and I hope now you can well differentiate between each other. Even then, if you feel some confusion in future I recommend you to read this article again. And if you need to solve any of your problems regarding law, feel free to scroll ActiveLawSssocites.com pages, you may find your solution here!
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FAQS
What is an agreement receipt?
An agreement receipt is an acknowledgment of something and moreover an agreement for future purpose for the parties but does not have the meaning of an agreement to sell.
Is a contract the same as a receipt?
No, a contract and the receipt both are two different things and have different legal effects.
What is a receipt in the law?
A receipt is only an acknowledgement of receiving some payment, articles etc .
What is a signed receipt?
A signed receipt is the acknowledgement by the receiver of the payment, articles etc which is also signed by the receiver.
Is a receipt legal proof of payment?
Yes, a receipt is a legal proof of receiving of the payment and other things etc it has a great value in the eye of law.
Is invoice an agreement?
No, invoice and agreement both are two different things, an invoice is raised to get payment from the customer, on the other hand an agreement is a promise or the set of promises against the decided consideration to perform some obligation.
Is a signed receipt a contract?
No, a signed receipt is only an acknowledgement of the payment or articles which does not amount to an agreement by any means.
Is a receipt a legal requirement?
Yes,it is a proof against the payment or delivery of the articles etc.one cannot claim any right against the person without the proof as receipt.
What are the elements of a receipt?
A receipt is any document that contains the following elements:
Receipt is only an acknowledgement of receiving some articles, amount etc. it has also some elements/components
i) Name of the vendor
ii) transaction date
iii) amount or thing whatever is being acknowledged by the vendor
iv) if the amount is acknowledged by the vendor, there must be written the source or the nature of payment through which it has been received (cash,cheque, bill of exchange etc.)