Valid contract. According to section 2(i), it is "an agreement enforceable by law”, an agreement becomes enforceable by law when all the essential elements of a valid contract aswere enumerated in the last lesson are present.

If one or more of these elements is/are missing the contract is either void, voidable, illegal or unenforceable.

Consequences of rescission of voidable contract. Section 64 lays down the rights and obligations of the parties to a voidable contract after it is rescinded. The section states that when a person at whose option a contract has become has received any benefit from another party to such contract, he must restore such benefit.

If an amount has been received as a security for the due performance of the contract, such earnest money deposit is not to be returned if the contract becomes voidable under section 55 on account of the promisor’s failure to complete the contract at the time agreed and has been rescinded by the promisee because it is not a benefit received under the contract.

Literally the word ‘void’ means ‘not binding in law’. Accordingly the term. ‘void contract’ implies a useless contract which has no legal effect at all. Such a contract is a nullity, as for there has been no contract at all.

Section 2(j) defines: A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable.” It follows form the definition that a void contract is not void from its inception and that it is valid and binding on the parties when originally entered but subsequent to its formation it becomes invalid and destitute of legal effect because of certain reasons.

The reasons which transform a valid contract into a void contract, as given in the contract Act. Are as follows. Supervening impossibility (sec. 56) A contract becomes void by impossibility of performance after the formation of the of contract .

A and B contract to sell his horse to him. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. In this case the agreement is discovered to be void and B must repay to A Rs. 1,000. It should, however, be noted that agreements which are known to be void or illegal, when they are entered into, are excluded from the purview of this section.

If L pays Rs. 10,000 to M to murder Z, the money cannot be recovered. Similarly, nothing can be recovered in the case of expressly declared void agreements, of course, subject to certain exceptions.

When a contract becomes void, restitution is also allowed in the case of a void contract.

For example, A agrees to sell B after one month 10 quintals of wheat at Rs. 625 per quintal and receives Rs. 500 as advance. Soon after the contract, private sales of wheat becomes void but A must return the sum of Rs. 500 to B.

Similarly, where after accepting Rs. 1,000 as advance for singing at a concert for B, A is too ill to sing. A is not bound to make compensation to B for the loss of the profits which B would have made if A would have been able to sing, but A must refund to B the 1,000 rupees paid in advance.

An unenforceable contract is one which is valid in itself, but is not capable of being enforced in a court of law because of some technical defect such as absence of writing, registration, requisite stamp, etc., or time barred by the law of limitation.

For example, an oral arbitration agreement is unenforceable because the law requires an arbitration agreement to be in writing.

Similarly, a bill of exchange or promissory note, though valid in itself, becomes unenforceable after three years from the date the bill or note falls due, being time barred under the limitation act.

The word ‘illegal’ means ‘contrary to law’ and the term ‘contract’ means ‘an agreement enforceable by law’. As such to speak of an ‘illegal contract’ involves a contradiction in terms, because it means something like this an agreement enforceable by law and contrary to law.

There is apparent contradiction in terms. Moreover, being of unlawful nature, such an agreement can never attain the status of a contract. Thus, it will be proper if we use the term ‘illegal agreement’ in place of ‘illegal contract’ an illegal agreement is void ab-initio.

Express Contract: Where both the offer and acceptance constituting an agreement enforceable at law are made in words spoken or written, it is an express contract.

For example. A tells B on telephone that he offers to sell his car for Rs. 2,00,000 and B in reply informs A that he accepts the offer, there is an express contract

Implied Contract. Where both the offer and acceptance constituting an agreement enforceable at law are made otherwise than in words i.e., by acts and conduct of the parties, it is an implied contract.

Thus, where A, a coolie in uniform takes up the luggage of B to be carried out of the railway station without being asked by B, and B, allows him to do so, then the law implies that B agrees to pay for the services of A, and there comes into existence an implied contract and B is under obligation to pay to A.

Where out of the two components of an agreement, namely, offer and acceptance, one is expressed in words and the other is implied from acts and circumstances. Such contracts may be called as contracts of mixed character.

For example, A offers to buy B’s E-71 for Rs. 14,000 and B accepts the offer by sending the mobile itself. Here A’s offer is expressed in words and B’s acceptance is implied form his conduct. It is a contract of mixed character.

A quasi contract is based upon the equitable principle that a person shall not be allowed to retain unjust benefit at the expense of another. Sections 68-72 of the contract act describe the cases which are to be deemed ‘quasi contracts’

Such a contract does not arise by virtue of any agreement, express or implied between the parties but the law infers or recognizes a contract under certain special circumstances.

For example, obligation to finder of lost goods to return them to the true owner or liability or person to whom money is paid under mistake to repay it back cannot be said to arise out of a consent, but these are very much conversed under quasi contracts as per sections 71 and 72 respectively.

A invites B to a dinner. B accepts the invitation. A made elaborate arrangement but B failed to turn up. Can A sue B for the loss he has suffered?

M agrees to pay N Rs. 100 and in consideration N agrees in write for him 100 pages within five minutes. Is it a valid contract?

X agrees to pay Y Rs 1,00,000 if Y kills Z. To pay Y, Xborrows Rs 1,00,000 from W who is also aware of thepurpose of the loan. Y kills Z but X refuses to pay. X also refuses to repay the loan to W. Advise Y and W.

Executed Contract: ‘Executed’ means that which is done .An executed contract is one n which both the parties have performed their respective obligations.

Executory Contract : ‘Executory’ means that which remains to be carried into effect. An executory contract is one in which both the parties have yet to perform their obligations.

Example:A agrees to engage B as his servant from the next month ,the contract is executory.