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Classification of Contracts

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Srinivas Vissapragada
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6 views20 pages

Classification of Contracts

Uploaded by

Srinivas Vissapragada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CLASSIFICATION OF CONTRACTS

• Contracts may be classified in terms of their


(1) validity or enforceability, (2) mode of
formation, or (3) performance.
1. Classification according to validity or
enforceability Contracts may be classified
according to their validity as
(i) valid,
(ii) voidable
(iii) void contracts or agreements,
(iv) illegal, or
(v) unenforceable.
• A contract to constitute a valid contract must
have all the essential elements discussed
earlier is called a valid contract.
• If one or more of these elements is/are
missing, the contract is voidable, void, illegal
or unenforceable
• As per Section 2 (i) a voidable contract is one which
may be repudiated at the will of one of the parties,
but until it is so repudiated it remains valid and
binding.
• It is affected by a flaw (e.g., simple
misrepresentation, fraud, coercion, undue
influence), and the presence of anyone of these
defects enables the party aggrieved to take steps to
repudiate the contract. It shows that the consent of
the party who has the discretion to repudiate it was
not free
• Example A, a man enfeebled by disease or
age, is induced by B’s influence over him as his
medical attendant to agree to pay B an
unreasonable sum for his professional
services. B employs undue influence. A’s
consent is not free; he can take steps to set
the contract aside.
• Void contract : An agreement which is not
enforceable by either of the parties to it is
void [Section 2(i)]. Such an agreement is
without any legal effect void ab initio (from
the very beginning). Under the law, an
agreement with a minor is void (Section 11).
• A contract which ceases to be enforceable by
law becomes void when it ceases to be
enforceable [Section 2(i)].
• Examples : A and B contract to marry each
other. Before the marriage, A goes mad. The
contract becomes void.
• An illegal agreement is one the consideration
or object of which (1) is forbidden by law; or
(2) defeats the provisions of any law; or (3) is
fraudulent; or (4) involves or implies injury to
the person or property of another; or (5) the
court regards it as immoral, or opposed to
public policy
• Eg: A promised to obtain for B an employment
in the public service, and B promised to pay
Rs. 1,00,000 to A. The agreement is illegal.
2. Classification according to mode of
formation
• 1. Express contracts and Implied contracts:
• There are different modes of formation of a
contract. The terms of a contract may be
stated in words (written or spoken). This is an
express contract. Also the terms of a contract
may be inferred from the conduct of the
parties or from the circumstances of the case.
This is an implied contract (Section 9).
• Example If A enters into a bus for going to his
destination and takes a seat, the law will imply
a contract from the very nature of the
circumstances, and the commuter will be
obliged to pay for the journey.
• 2. Quasi contracts : We know that the essence
of a valid contract is that it is based on
agreement of the parties. Sometimes,
however, obligations are created by law
(regardless of agreement) whereby an
obligation is imposed on a party and an action
is allowed to be brought by another party.
• These obligations are known as quasi-
contracts. The Indian Contract Act, 1872
(Chapter V Sections 68–72) describes them as
“certain relations resembling those created by
contract”
• Eg: A, a tradesman, leaves goods at B’s house
by mistake. B treats the goods as his own. B is
bound to pay A for them
3. Classification according to performance

• Another method of classifying contracts is in


terms of the extent to which they have been
performed. Accordingly, contracts are: (1)
executed, and (2) executory or (a) unilateral,
and (b) bilateral.
• An executed contract is one wholly
performed. Nothing remains to be done in
terms of the contract.
• Example: A contracts to buy a bicycle from B
for cash. A paid cash. B delivered the bicycle.
• 2. An executory contract is one which is wholly
unperformed, or in which there remains
something further to be done.
• A Unilateral Contract is one wherein at the
time the contract is concluded there is an
obligation to perform on the part of one party
only.
• Example A makes payment for bus fare for his
journey from Bombay to Pune. He has
performed his promise. It is now for the
transport company to perform the promise
• A Bilateral Contract is one wherein there is an
obligation on the part of both to do or to
refrain from doing a particular thing. In this
sense, Bilateral contracts are similar to
executory contracts.

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