CLASSIFICATION OF

CONTRACT

Name of the Paper : COMMERCIAL AND INDUSTRIAL LAW

Semester : VI
Department : B.COM CORPORATE SECRETARYSHIP
Name of the Faculty : S.GAYATHRI
Designation : ASSISTANT PROFESSOR
 CONTRACT ACT

The legal provisions governing

Contracts are contained in the Indian Contract
Act of 1872.

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 INTRODUCTION

The term ‘contract’ is derived from the Latin

“Contractum” which means drawn together .
It is an agreement to do or not to do an act. It
comes into existence from the action of the
parties. It creates legal rights and obligations. It
is enforceable by law.
DEFINE CONTRACT

According to
Sec. 2(h),
“ a contract is
an agreement
enforceable by
law”
 AGREEMENT

AGREEMENT – Section 2(e) • Agreement is a

promise or set of promise. In General Terms: 
Contract = Agreement + Enforceability by law 
Agreement = Offer + Acceptance + Consideration
 PROMISE

According to sec2(b) “ a proposal when accepted

becomes a promise”

Consensus Ad Idem

“Consensus ad idem” means identify of minds or

meeting of minds. The parties to an agreement must
agree on the subject matter in the same sense and at the
same time. Without consensus ad idem there is no
contract.
 CLASSIFICATION OF CONTRACT

ACCORDING TO ACCORDING TO A ACCORDING TO

ENFORCEABILITY FORMATION PERFORMANCE
• VALID • EXPRESS • EXECUTED
CONTRACT CONTRACT CONTRACT
• VOID CONTRACT • IMPLIED • EXECUTORY
• VOIDABLE CONTRACT CONTRACT
CONTRACT • QUASI • UNILATERAL
• UNLAWFUL CONTRACT CONTRACT
AGREEMENT • BILATERAL
• ILLEGAL CONTRACT
AGREEMENT
• UNENFOREABLE
CONTRACT
 According to Enforceability

Valid Contact:-
Valid contract is that contract which satisfies all the
essentials of section 10 of Indian Contact Act like:-
Lawful offer & Acceptance, Free consent, etc.

For example:- A ask B if he wants to buy his bike for

Rs.10,000. B agrees to buy the bike. It is an
agreement which is enforceable by law. Hence, it is a
contract. –
Void Contract Sec2(j):-
Void contract is one which was a valid contract
when it was made but subsequently it becomes void
due to change of circumstances.

For example:- X agrees to sell his horse to Y for Rs.

5,000 but the horse died in an accident. It becomes
impossible to perform the contract due to destruction of
the subject. Thus, a valid contract changes into void
contract because of impossibility of performance.
Voidable Contract Sec2(i):-
An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at
the option of other or others is voidable contract. A
contract is a voidable contract when the concern or
willingness of one party has been obtained by the other
by such unfair means as coercion, undue influence,
fraud etc.
For example:- X promise to sell his scooter to Y for Rs.
50000. However, the consent X has been procured by
Y at a gun point. X is an aggrieved party & the contract
is voidable at his option.
Illegal Agreement:-
An agreement which is prohibited by law or against the
policy of law is known as illegal agreement.

For example:- X agrees to kill Y if Z pays him

Rs.10,000. it is an unlawful as well as void agreement.

Unenforceable Contract:-
A contract which is valid in all respects but because of
non – fulfillment of some technical formality, it cannot
be treated as enforceable.
 ACCORDING TO FORMATION

Express Contract:-
The contract is said to be an express contract when terms
of contract have been agreed upon between the parties
expressly i.e. oral or written, at the time of formation.

Implied Contract:-
An implied contract is one which come into existence by
the acts, the conduct of the parties. For example:- Order
placed for a cup of coffee in a restaurant.
Quasi Contract:-
In quasi contract, there is no intention of the parties to
form a contract but created by law.

For example:- X, a trader, leaves certain goods at house

of Y by mistake. This imposes an obligation on “Y”
either to return the goods to X or to make the payment if
he treats the goods as his own.
Executed Contract:-
A contract is said to be executed contract where
both the parties or at least one party to a contract
have performed their respective obligations.
For example:- All the transactions of cash sales are
executed contract.

Executory Contract:-
An executory contract is one where both the parties
are yet to perform their respective obligations.
Bilateral Contract:-
A bilateral contract is one in which both the
parties are required to perform their
obligations at the time of formation of
contract.
For example:- A promises to sell his car to B
after 20 days and B promises to pay the price
on the delivery of the car the contract is
Bilateral as obligations of both the parties are
out-standing at the time of the formation of
the contract.
Unilateral Contract:- A contract is said to be
unilateral where one party has performed his
obligation and the performance of obligation is
outstanding on the part of other party.

For example:- X buys a railway ticket for journey

from Chennai to Delhi. X has performed his
obligation under the contract by paying the fare. But,
the railways are yet to perform their duty i.e. carrying
‘X’ from Chennai to Delhi
PRESCRIBED BOOKS:  

1. Mercantile law- N.D Kapoor – Sultan Chand.  

2. Mercantile law-P.C.Tulsian – Tata McGrawHill.  
3. Commercial & Industrial Law – Dr.M.R.Sreenivasan – Margam
Publications
REFERENCE BOOKS:  
1. Mercantile Law –M.C.Shukla – Sultan Chand.  
2. Principles of Mercantile law – Avtal Singh – Eastern Book
Company.  
3. Industrial Law - N.D Kapoor – Sultan Chand