Classification of Contract Lecture 2

8/8/2019 Classification of Contract Lecture 2

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CLASSIFICATION OF CONTRACT

1. ENFORCEABILITY

2. METHOD OF FORMATION

3. EXTENT OF FORMATION

4. OBLIGATION TO PERFORMANCE



5. ILLEGAL

4.

UNENFORCE

ABLE

3.VOID

2. VOIDABLE

1. VALID

ENFORCEABILITY



1. Classification Of The Contracts In The

Terms Of Validity/Enforceability

1. Valid Contract: A contract which fulfills all

the requirements prescribed by Sec 10 of

the Act is a Valid Contract.

2. Void Contract: A contract which ceases to

be enforceable by law becomes void when it

ceases to be enforceable.

Sec 2(g): ³ An agreement not enforceable by

law is said to be void.´



3.Void able Contracts: Sec 2(i)´ An agreement which is

enforceable by law at the option of one or more of the parties there

to, but not at the option of the other or others, is a void ablecontract.´

A contract is void able when one of the parties to the

contract has not exercised his free consent.

All the void able contracts are those which are

induced by:

a.Coercion

b.Undue Influence

c.Fraud

d.Misrepresentation



4.Unenforceable Contracts:

This Contract is neither Void nor Void able, it cannot beenforced in the court because it lacks some item of evidencesuch as:

1.Writing

2.Registration3.Stamping

4.Where the remedy has been barred by lapse of time

Thus an unenforceable contract is a valid contract in law, butdue to the fact that it is incapable of proof, or because of some technical defect therefore it cannot be enforced in thecourt of Law.



5.Illegal Contracts:

It is Contrary to the Law and hence ab initio.

Every illegal agreement is void, but every void

agreement may not amount to illegalagreement.



Classification In Terms Of The Method Of

Formation

FORMAL SIMPLE

EXPRESSQUASI STANDARDFORMIMPLIED



Formal Contracts

A formal contract is one to which the law givesspecial effect because of the formalities or the

special language used in creating it.

Example: Negotiable Instruments: These have

legal characteristics that differ from those of

ordinary contracts.



Simple or Informal Contracts

Simple Contracts are those for which the law

does not require a particular set of formalities

or special language. The party may use anylanguage or style they please as long as the

usual requirements for the contract (mutual

assent, consideration, etc.) are met



Types Of Simple Contracts

Express Contracts: Contracts which are madeorally or in writing are called express contracts.

There is an express promise in such cases. Thus

the parties offer and accept the way of words

spoken or written.

Implied Contracts: A contract is said to be

implied or tacit when it can be inferred from the

conduct of the parties. There is an implied offer or

implied acceptance which results in an implied

promise and thus an implied contract.



Quasi Contracts:

These are agreements which are ascribed the nature of contract by the law. Where no express or implied

contracts exists between the parties, the law creates and

enforces legal rights and obligations under certain

circumstances. These agreements are known as QuasiContracts. The obligations in a quasi contract are not the

result of an agreement; they only resemble the

obligations that arise from contracts.

Example: Necessities supplied to a minor

Finder of lost goods

Any amount of money paid or goods delivered to a person by

mistake or under coercion are to be returned or repaid.



Standard Form Contracts:

Standard form contracts have printed forms of standardized contracts containing a number of termsand conditions. The individuals entering into suchcontracts can hardly negotiate and they have to acceptthe terms and conditions already mentioned.

Example:

life Insurance Corporations

RailwaysUnit Trust Of India etc.

Where similar nature of contracts are agreed with somany people.



3. Extent Of Formation

Executed Contract: An executed contract is a contract

that is completely performed and nothing remains to be

done by either party to the contract.

Executory Contract: An executory contract is one in

which both the parties may agree to do some thing in thefuture or one of the parties have performed his part of

the contract and the other party has yet to perform his

[part of the promise. Thus some thing remains to be

done in furtherance of the contract.

EXECUTED

CONTRACT

EXECUTORY

CONTRACT



4. Obligation To Performance

Unilateral Contracts: A unilateral contract is a contractwhere the obligation to perform remains only one party

to the contract, the other party already having performedhis part of the contract.

Bilateral Contracts: In a bilateral contract obligationrests on both the parties to the contract to perform their promise. The promise may be to do or refrain from doingsome act. In these contracts both can sue the other for breach of contract. This category comprises of executed

and executory contracts.

UNILATERAL

CONTRACTS

BILATERAL

CONTRACTS

Documents

Classification of Contract Lecture 2