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Types of Contracts

There are several types of contracts that can be categorized based on validity, formation, and performance. Contracts can be valid, void, or voidable depending on whether they meet legal requirements. They can also be express, implied, tacit, quasi, or unilateral depending on how the terms are agreed upon. Finally, contracts can be executed, executory, or bilateral depending on whether obligations have been performed or remain outstanding.

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80 views2 pages

Types of Contracts

There are several types of contracts that can be categorized based on validity, formation, and performance. Contracts can be valid, void, or voidable depending on whether they meet legal requirements. They can also be express, implied, tacit, quasi, or unilateral depending on how the terms are agreed upon. Finally, contracts can be executed, executory, or bilateral depending on whether obligations have been performed or remain outstanding.

Uploaded by

Rahul Thakur
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Types of Contracts

On the basis of Validity:

1. Valid contract: An agreement which has all the essential elements of a contract is called a valid contract. A valid

contract can be enforced by law.

2. Void contract[Section 2(j)]: A void contract is a contract which ceases to be enforceable by law. A contract when

originally entered into may be valid and binding on the parties. It may subsequently become void. -- There are many

judgments which have stated that where any crime has been converted into a "Source of Profit" or if any act to be

done under any contract is opposed to "Public Policy" under any contract -- than that contract itself cannot be

enforced under the law-Newar Marble Industries Pvt. Ltd. Vs. Rajasthan State Electricity Board, Jaipur, 1993

Cr. L.J. [Criminal Law Journal] Year-1191 at Page No. 1197, 1198 [Raj.][Rajasthan High Court]- Agreement of

which object or consideration was opposed to public policy, unlawful and void- -- What better and what more can be

an admission of the fact that the consideration or object of the compounding agreement was abstention by the board

from criminally prosecuting the petitioner-Company from offence under Section 39 of the act and that the Board has

converted the crime into a source of profit or benefit to itself. This consideration or object is clearly opposed to public

policy and hence the compounding agreement is unlawful and void under Section 23 of the Act. It is unenforceable as

against the Petitioner-Company

3. Voidable contract[Section 2(i)]: An agreement which is enforceable by law at the option of one or more of the

parties thereto, but not at the option of other or others, is a voidable contract. If the essential element of free consent

is missing in a contract, the law confers right on the aggrieved party either to reject the contract or to accept it.

However, the contract continues to be good and enforceable unless it is repudiated by the aggrieved party.

4. Illegal contract: A contract is illegal if it is forbidden by law; or is of such nature that, if permitted, would defeat the

provisions of any law or is fraudulent; or involves or implies injury to a person or property of another, or court regards

it as immoral or opposed to public policy. These agreements are punishable by law. These are void-ab-initio.

“All illegal agreements are void agreements but all void agreements are not illegal.”

5. Unenforceable contract: Where a contract is good in substance but because of some technical defect cannot be

enforced by law is called unenforceable contract. These contracts are neither void nor voidable.

On the basis of Formation:

1. Express contract: Where the terms of the contract are expressly agreed upon in words (written or spoken) at the

time of formation, the contract is said to be express contract.

2. Implied contract: An implied contract is one which is inferred from the acts or conduct of the parties or from the

circumstances of the cases. Where a proposal or acceptance is made otherwise than in words, promise is said to be

implied.
3. Tacit contract-Tacit contracts are IMPlIED contract in itself. e.g.-Taking ticket in the bus,during journey..

4. Quasi contract: A quasi contract is created by law. Thus, quasi contracts are strictly not contracts as there is no

intention of parties to enter into a contract. It is legal obligation which is imposed on a party who is required to perform

it. A quasi contract is based on the principle that a person shall not be allowed to enrich himself at the expense of

another.

On the basis of Performance:

1. Executed contract: An executed contract is one in which both the parties have performed their respective

obligation.

2. Executory contract: An executory contract is one where one or both the parties to the contract have still to perform

their obligations in future. Thus, a contract which is partially performed or wholly unperformed is termed as executory

contract.

3. Unilateral contract: A unilateral contract is one in which only one party has to perform his obligation at the time of

the formation of the contract, the other party having fulfilled his obligation at the time of the contract or before the

contract comes into existence.

4. Bilateral contract: A bilateral contract is one in which the obligation on both the parties to the contract is

outstanding at the time of the formation of the contract. Bilateral contracts are also known as contracts with executory

consideration.

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