In our daily life, we enter into a series of contracts, even without realising it For example, when we enter into

a public transport, a restaurant, etc., we enter into a contract Contract is an agreement, enforceable by law [Section 2(h)] But, every promise and every set of promises, forming consideration for each other is NOT an agreement [Section 2(e)]

Nature and Classification of Contracts

When the person, to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. [Section 2(b)]. But, only such agreements constitute contracts, which are: (i) Enforceable in law, and are also (ii) Intended to be so. For example, Following types of agreements are not contracts: (a) Social agreements, like inviting some friend for dinner, as these are not intended to be enforceable in law, and (b) Contracts, specifically declared as void, ab initio.

Contracts, specifically declared as void, ab initio:

(i) (ii) An agreement in restraint of trade [Section 27] An agreement to bet, or wagering contract [Section 30]

(iii) An agreement to do an impossible act, like shifting Taj Mahal from Agra to Delhi [Section 56] (iv) An agreement to do any unlawful, immoral, illegal, or impossible act is void ab initio

All agreements are contracts if they are made with:

(i) Free consent of the parties, (ii) Competent to contract, (iii) For a lawful consideration and with a lawful object, and (iv) Not expressly declared to be void. [Section 10]

Ten essential elements involved in a valid contract:

1. Agreement, includes (i) Offer and Acceptance (ii) Offeror and Offeree, and (iii)Consensus-ad-idem 2. 3. Intention to create legal relationship Free and genuine consent; i.e. Without (i) Misrepresentation (ii) Fraud (iii)Undue Influence (iv)Coercion (v) Mistake (of Fact, or of Law)

Ten essential elements involved in a valid contract

(continued):

4. Parties should be competent to contract i.e. They should be: (i) Major (ii) Of sound mind, and (iii) Not disqualified from contracting by any law, to which they are subject. 5. Lawful consideration [i.e. the consideration (price), taken and given, by the two parties, must not be for any unlawful purpose]. 6. Lawful Object

Ten essential elements involved in a valid contract

(continued):

7.

Agreements not declared void or illegal

8. Certainty of Meaning; with No Ambiguity 9. Possibility of performance

10. Necessary legal formalities must be completed [i.e. to be in writing, duly stamped, and/or registered, if so required by law]

Classification of Contracts in terms of their validity or enforceability in law

(i) Valid agreements or contracts, i.e. Not being voidable, void, illegal or unenforceable in law Voidable agreements or contracts, i.e. Which could be repudiated, but at the option and will, only of aggrieved party [Section 2(i)] Void agreements or contracts, i.e. Which are invalid, ab initio; and so is unenforceable in law [Section 2(i)] Remember: A contract with a minor is void ab initio [Section 11]

(ii)

(iii)

Classification of Contracts in terms of their validity or enforceability in law (continued):

(iv) Illegal agreements or contract; i.e. Wherein the consideration and / or object is: (a) (b) (c) (d) (e) Forbidden by law, or Defeats the provisions of any law, or It is fraudulent, or It involves or implies injury to the person or property of another person, or The court regards it as immoral or opposed to public policy

Classification of Contracts in terms of their validity or enforceability in law (continued):

(v) Unenf i. . ( ) ( ) ( ) eable agreement r ntract ;

it i ti t l t tr i t r ,

riti ,

, r / r rl

Classification of Contracts in terms of their validity or enforceability in law (continued):

(a) Express Contracts, which are stated in words (written or verbal), and Implied Contracts, which are not stated in words (written or verbal), but are inferred from the conduct of the parties involved, or else from the circumstances of the particular case [Section 9]

(b)

Classification of Contracts in terms of their performance

(a) (i) Executed contract, which is fully completed by both parties; nothing further remaining to be done, and (ii) Executory contract, where either all or some of the terms of the contract, still remain to be completed by both or any one of the parties (b) (i) Unilateral contract, where, while one of the parties has already performed his obligation, the other party remains to fulfil his obligation, and (ii) Bilateral contract, where both the parties remain to perform their obligations