Contract

Introduction:
A contract is an agreement made between two or more
parties which the law will enforce.
Relevant Provision:
Section 2(h) of Contract Act .
Meaning:
Enter into a formal and legally binding agreement.
Definition:
According to Sec 2(h) a Contract is define as an
agreement enforceable by law.
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 KINDS OF CONTRACT
The Contract can be classified into three categories:
i. Enforceability
ii. Formation
iii. Performance

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 CLASSIFICATION BASED ON
ENFORCEABILITY
1. Void Contract
• A Contract which ceases to be enforceable by law
becomes void, when it ceases to be enforceable.
Example:
• A promises to sell his books to B for Rs. 2,000. But his
consent is obtained by use of force.
• The contract is voidable at the option of A. He may avoid
the contract or may choose to bound by it.
2. Valid Contract
• A Contract which contains all the essentials of a valid
contract is enforceable by law. 3
Example:
• A agrees to sell a car to B. If it fulfills all the
essentials of a contract it is a valid contract.
• If A fails to deliver the car, B can sue him and if B
fails to pay, A can sue him.

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3. Voidable Contract

A contract become voidable under the following

circumstances:
 When the consent of one or more of the parties to
contract is obtained by coercion, undue influence,
fraud or misrepresentation.
 When the promise prevents the promisor for
performing his promise.
 When the promisor fails to perform his promise
within the specific time, if time is essence of the
contract.

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4. Unenforceable Contract
An unenforceable contract is one which can not be
enforced in a court of law because of some technical
defects. i.e. absence of writing, or registration or
requisite stamps etc.
5. Void agreement
 An agreement not enforced by law is said to be void.
 Such agreement does not create legal obligations among
the parties and is void from beginning.
Example:
A promises to buy a dog from B for Rs. 10.000 . The dog
was dead at the time of formation of the contract . The
agreement is void.
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6. Illegal Agreement
• An agreement is illegal when its performance is
forbidden by law . Such an agreement can never
become a contract.
Example:
A gives money to B , a smuggler , to buy
smuggled goods. Such agreement is illegal and
the money can not be recovered.
CLASSIFICATION BASED ON FORMATION
1. Express Contract
• A contract in which offer and acceptance is
given in words spoken or written , is called
express contract. 7
Example:
• A tells on telephone to B that he wants to sell his car
and B informs A that he agrees to buy car , there is an
express contract.
2. Implied Contract:
• In implied contract offer and acceptance is made
otherwise then by words e.g. by the acts conduct of
the parties.
Example:
A went into a restaurant and took a cup of tea. It is an
implied contract and A will have to pay the cup of
tea.

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3.Quasi Contract:
• A contract in which no formal offer and acceptance is
made.
• Under some specific circumstances contractual
relationship are created between the parties .Such
relationships known as quasi contracts.
Example:
A finds lost goods of B . A is bound to return
the goods to B .

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 CLASSIFICATION BASED ON
PERFORMANCE
1. Executed contract
Both parties have performed their respective
obligations.
Example:
A agrees to paint a picture for B for Rs. 1000.
When A paints the picture and B pays the price,
i.e., when both the parties have performed their
obligations, the contract is said to be executed.

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2. Executory contract-
Both the parties are yet to perform their
obligations.
Example:
If A has not yet painted the picture and B has
not yet paid the price, the contract is executory.

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