Types of Contracts

1. Types of Contracts
I. On the basis of validity
a. Valid contract
 An agreement which is binding and enforceable is a valid contract. It contains all
the essential elements of a contract.
 Ex: A asks B if he wants to buy his bike for Rs. 10,000. B agrees to buy bike. It is
an which is enforceable to law. Hence, it is a valid contract.

b. Void contract
 A contract ceases by law becomes void when it ceases to be enforceable. Thus,
a void contract is one which is not enforceable by court of law.
 Ex: Mr. X agrees to write a book with a publisher. Such contract is valid. But after
few days X dies in an accident. Here, the contract becomes void due to the
impossibility of performance of the contract. Thus, a valid contract when cannot
be performed because of some uncalled happening becomes void.

c. Voidable contract
 An agreement which is enforceable by law at the option of one or more party
thereto but not the option of the other or others is a voidable contract.
 Ex: X promises to sell his scooter to Y for Rs. 1 lakh. However, the consent to X
was procured by Y at a gun point. X is an aggrieved party, and the contract is
voidable at his option, but not at the option of Y. It means that if X accepts the
contract, the contract becomes a valid contract and Y has no option of rescinding
the contract.
d. Illegal contract
 It is the contract which the law forbids to be made. The court will not enforce
such a contract but also the connected contracts.
 Ex: Contract that is immoral or opposed to the public policy are illegal in nature. If
R agrees with X to purchase brown sugar, it is an illegal agreement. Hence,
illegal contract.

e. Unenforceable contract
 Where a contract is good in substance but because of some technical defect that
is, absence in writing, barred by limitation, etc. one or both the parties cannot sue
upon it. It is described as an unenforceable contract.
 Ex: A bought goods from B in 2015 but, no payment was made in 2019. B cannot
sue A for the payment in 2019 as it has crossed 3 years and barred by limitation
act. A good debt becomes unenforceable after the period of 3 years as barred by
limitation act.

II. On the basis of formation of contract
a. Express contract
 A contract would be an express contract if the terms are expressed by words or
in writing. Section 9 of the act provides that if a proposal or acceptance of any
promise is made in words, the promise is said to be expressed.
 Ex: A tells B on telephone that he offers to sell his house for Rs. 2 lakhs and B in
response informs A that he accepts the offer, this is an express contract.

b. Implied contract
 The contract comes into existence through implication. Most often, the
implication is through the conduct of the parties. Section 9 of the act
contemplates such implied contracts when it lays down that in so far in such
proposal or acceptances made otherwise than in words, the proposal is said to
be implied.
 Ex: Where a coolie in uniform picks up the luggage of A to be carried out of the
railway station without being asked by A and A allows him to do so, it is an
implied contract and A must pay for the services of the coolie.

c. Quasi contract
 A quasi contract is not an actual contract, but it resembles a contract. It is
created by law under certain circumstances. The law creates an enforces legal
rights and obligations when no real contract exists. Such obligations are known
as Quasi contracts. It is a contract in which there is no intention on part of each
party to make a contract but law imposes a contract between the parties.
 Ex: Obligation of finder of law of goods to return them to the true owner.

d. E-Contracts/ Electronic contracts
 When a contract is entered into by 2 or more parties using electronic means such
as emails, it is known as e-commerce contracts. These are known as EDI
(electronic data interchange), a cyber contracts or mouse click contracts.

III. On the basis of performance of the contract

a. Executed contract
 The consideration in a given contract should be an act or forbearance. When the
act is done or executed or the forbearance is brought on record, then the act is
an executed contract.
 Ex: When a grosser sells sugar on cash payment. It is an executed contract
because both the parties have done what they were to do.

b. Executory contract
 Such consideration is to be performed in future only and therefore these
contracts are known as executory contracts.
 Ex: When G agrees to take tuition of H, from the next month and H in
consideration promises to pay G, Rs. 1000 per month, the contract is executory
because it is yet to be carried out.
 Unilateral and Bilateral are kinds of executory contracts.

i. Unilateral contract
 Is a one sided contract in which one party has performed its duty or obligation
and the other party's obligation is outstanding.

ii. Bilateral contract
 Is one where, the obligation or promise is outstanding on the part of both the
parties.

Types of Contracts

Uploaded by

Copyright:

Available Formats

Types of Contracts

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Types of Contracts

Uploaded by

Copyright:

Available Formats

III. On the basis of performance of the contract

 Unilateral and Bilateral are kinds of executory contracts.

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.