What Are the Types of Contract Under the Indian Contract Act 1872?

Contracts are agreements that create a legal obligation upon the parties. According to the Indian Contract Act 1872, a Contract is an agreement that is enforceable by law.

There are mainly two parties in a contract: the one who proposes is called the promisor and the one who accepts the proposal is called the promisee. There should be a proposal or offer made by the promisor to which there should be acceptance of the proposal by the promisee,this gives rise to an agreement.

When the agreement contains all essentials and is enforceable by law it becomes a contract. Section 10 of the Indian contract act defines the essentials needed for an agreement to form a contract. There are various types of contract they can be bifurcated based on formation, performance, and validity of the contract.

Contracts on basis of formation Contracts on basis of performance Contracts on the basis of validity 
1)Express    2)Implied 1)Executed  2)Executory 3)Unilateral  4)Bilateral1)Valid contract 2)Void Contract 3)Voidable Contract 4)Void Agreement  5)Voidable Agreement 6)Unenforceable Contract 5)Illegal Contract

Contracts on basis of formation are classified into-

1)Express Contracts

The contracts are made by the use of words or are written. Express contracts include written and oral contracts. Forming of conditions is done by either of these methods while making a contract.

A offers B to sell his house for 70,000 and B agrees to buy and make a written contract then it will be a type of express contract

2)Implied Contracts

Contracts made by the use of gestures or actions are known as implied contracts. A contract need not be formal or expressed all the time. Eg of implied contracts is bid at auctions, Consuming edibles at a restaurant as they create implied promises to pay for the benefits enjoyed. 

Contracts based on performance

Extend to which the contracts have been performed they can be classified into

1)Executed Contract-

Executed means the contracts which have already been performed or done. An executed contract is one in which both parties A and B to the contract have performed their respective obligation.

Example-A agrees to paint a portrait of B for rupees 200. A painted the portrait and B paid the price. The contract is hence set to be executed

2)Executory Contract-

An executory contract is a contract that is yet to be performed. In an executory contract, both parties obligations to perform are not completed

Example-When A has not painted the picture and b has not painted the time yet then it is an executory contract as both parties have to yet execute the contract.

3)Unilateral Contract-

A unilateral contract is a one-sided contract. It is a contract in which only one party has to fulfill his obligations at the time of formation of the contract.

4)Bilateral Contract-

A bilateral contract is one in which the obligation on the part of both the parties to a contract is outstanding. Thus it is similar to an executory contract. Both parties are involved in a bilateral contract who promise to implement certain things.

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Contracts on basis of validity-

1)Valid Contract-

A valid contract is a contract in which all essential elements are present. Sec10 of the Indian Contract Act defines the essentials that are needed for a valid contract. A valid contract consists of lawful consideration, Free consent, lawful object, It should be enforceable by law, etc.

2)Voidable Contract-

According to sec 2(1)of the Indian contract act 1872-” An agreement which is enforceable by law at the option of one or more parties but not at the option of others is a voidable contract. A contract becomes voidable when an essential element to a contract that is free consent in a contract is missing. When consent of the party is said to be obtained by coercion, Undue Influence, Misrepresentation, Fraud the contract is voidable at the option of the party whose consent is not free.

Example -A promises to sell a plot to B for rupees 5000. His consent is caused by coercion; such a contract is then said to be voidable and can be avoided or accept the contract.

3)Void Agreement-

A contract that is void and unenforceable ab initio is called a void contract. According to 2(g)of the Indian Contract Act, An agreement that is not enforceable by law is said to be void. A void contract does not create any legal obligation.

Example-A minor’s agreement is void ab initio so it is void. This was held in the case of Mohini Bibi vs Dharmodar Ghose.

4)Void Contract

When a contract ceases to be enforceable by law becomes void when it ceases to be enforceable.

Void Contracts are contracts which when originally made were valid and binding on parties but eventually become void due to some circumstance.

Example-A Contract to import goods from a foreign country is valid but war breaks out between the exporting and importing country after the contract is made the contract becomes void.

5)Illegal Agreements-

An Agreement against the public policy or violates rules against public policies is called an illegal agreement. Thus agreements that are criminal or are immoral are illegal. All illegal agreements are void but not all void agreements necessarily are illegal.

Example-An agreement to sell drugs, and Agreement to kill someone, etc.

6)Unenforceable Contract-

An unenforceable contract is a contract that cannot be enforced in a court of law because of some technical defect. The defect may be in the form of absence of writing, registration, or barred by lapse of time.

Article by Apurva Surve – Intern

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