John and Bill are adults who can sign a contract. Bill is looking for a new car, but he works within a budget. Therefore, he searches the classified ads and discovers that John is selling his old Chevrolet for $1,000. Bill contacts John and offers $800 instead. John accepts his offer and they decide to close the deal. After that, Bill gives $800 and John gives him the keys to the vehicle. This is a legally binding agreement. There are certain contractual legal concepts that must be taken into account when drawing up or revising an agreement. These concepts, although already covered in the Indian Contract Act of 1872, are presented here in a capsule. Like any other document, an agreement is composed of different parts. Each of these parties must be included in an agreement to ensure the security of understanding that the parties wish to document through an agreement.