The vendor and vendee in respect of two properties entered into a gentlemen’s agreement that the vendee…

Such an arrangement is a valid contract as it yields legal obligations. In S.V.R. Mudaliar v. Rajabu F. Buhari ((1995) 4 SCC 15), the Supreme Court held that where a vendor and vendee execute a commercial understanding for the reconveyance of immovable properties sold if the purchase money along with a stipulated solatium is repaid within three years, merely styling the document a “gentlemen’s agreement” or “gentlemen’s understanding” does not negate the intention to create legal relations when the terms are definite and contain no clause excluding legal enforceability. Because commercial transactions carry a strong presumption of intention to create legal obligations, the agreement is neither a void agreement lacking legal effect nor a purely social or moral arrangement.