Classifications/Types of Contract
A. On the Basis of Legality or Enforceability
1) Valid Contract: A contract which satisfies all the essentials of a valid contract is known as a valid contract. If one or more essential elements are absent, the contract becomes void, or voidable or illegal.
Example: X offers Y to supply 10 bags of rice for Rs 50,000. Y agreed for it, it is a contract.
2) Void Contract [Section 2(j)]: “A void contract is a contract which ceases to be enforceable by law”. A contract which was valid at the time of formation and binding on the parties however subsequently became void due to impossibility of performance, change of law or some other reasons.
Example: X a famous singer agrees to sing an album for a musical company. Unfortunately suffered from throat cancer and not allowed to sing by doctor. Here the contract becomes void contract.
Note: When a contract is Void, it is not a contract at all but for the purpose of identifying it, it has been called a Void Contract.
3) Voidable Contract: A voidable contract is that contract in which free consent of one of the parties to it is not secured. For example, contracts caused by Frauds, Coercion, Undue Influence, and Misrepresentation. Such contracts are valid till it is avoided by the injured party.
Example: A Threatens B to murder if he does not sell his land for ` 100000/- B agreed for it due to threat. It is a voidable contract which can be rejected by B.
Example: X threatens to kill Y, if he does not sell his house for ` 1 lakh to X. Y sells his house to X and receives payment. Here, Y consent has been obtained by coercion and hence this contract is voidable at the option of Y lakh which he had received from X. If Y does not exercise his option to repudiate the contract within a reasonable time and in the meantime Z purchases that house from X for 1 lakh in good faith. Y cannot repudiate the contract.
Difference between Void Contract and Voidable Contract
4) Unenforceable Contract: An unenforceable contract is that contract that cannot be enforced in courts due to some technical defect, such as the absence of writing, payment of inadequate stamp duty etc.
5) Illegal Agreement: An illegal agreement is one the object of which is unlawful. Such an agreement cannot be enforced by law. Thus, illegal agreements are always void-ab-initio (i.e. void from the very beginning).
Example: X agrees to Y ` 1 lakh Y kills Z. Y kill and claims ` 1 lakh. Y cannot recover from X because the agreement between X and Y is illegal and also its object is unlawful.
The illegal and Void Agreements are different. All illegal agreements are void but all void agreements are not necessarily illegal.
Void Agreement: According to Section 2(g), an agreement not enforceable by law is said to be void. Such agreements are void-ab-initio which means that they are unenforceable right from the time they are made.
Example, in agreement with a minor or a person of unsound mind is void-ab-initio because a minor or a person of unsound mind is incompetent to contract.
B. On the Basis of Formation
1) Express Contract: In express contracts, the terms are stated in words (written or spoken) expressly, at the time of formation.
Example: X says to Y, will you buy a car for ` 100000? Y says to X, I am ready to buy your car for ` 100000. It is an express contract.
Example: X writes a letter to Y, I offer to sell my car for ` 100000 to you. Y send a letter to Y, I am ready to buy your car for ` 100000. It is an express contract made in writing
2) Implied Contract: An implied contract is one which is the result of the conduct of the parties.
Example: when a person boards a public bus or drinks a cup of tea in a restaurant there is an implied contract and he has to pay the charges for it.
Example: X, a coolie in uniform picks up the bag of Y to carry it from the railway platform to the without being used by Y to do so and Y allows it. In this case, there is an implied offer by the coolie and an implied acceptance by the passenger. Now, there is an implied contract between the coolie and the passenger is bound to pay for the services of the coolie
3) Quasi contracts: A quasi-contract is created by law on the basis of principle of equity. There, is no intention of parties to enter into a contract. It is a legal obligation which is imposed on a party and is required to perform it. A quasi-contract is based on the principle on equity which states that a person shall not be allowed to enrich himself at the cost of another. In such contracts rights and obligations arise not by any agreement between the practice but by operation of law.
Example: Where certain books are delivered to a wrong address the addresses is under an obligation to either pay for them or return them.
4) e-commerce contracts: When a contract is entered into by two or more parties using electronic means, such as e-mails is known as e-commerce contracts.
C. On the basis of Performance:
1) Executed Contract: An executed contract is that contract in which both the parties to the contract have performed their respective promises.
Example: X offers to sell his car to Y for ` 1 lakh, Y accepts X offer. X delivers the car to y and Y pays ` 1 lakh to X. It is an executed contract.
2) Executory Contract: An executory contract is one where one or both the parties to the contract have to perform their obligations in the future. Thus, a contract which is partially performed or wholly unperformed is termed as an executory contract
i) Unilateral Contract: A unilateral contract is that contract in which only one party is required to perform his obligation and the other party has fulfilled his obligation at the time of the contract or before the contract comes into existence
ii) Bilateral Contract: A bilateral contract is one in which both parties are required to perform their obligations.
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