CBBA 503

Classification of Contract

1 On the basis of Enforceability /Legality/ validity

2 On the basis of mode of Formation

3 On the basis of Execution /Performance
1. On the basis of Enforceability /Legality/ validity
1) Valid agreement / contract
2) Void agreement
3) Void contract
4) Voidable contract
5) Illegal agreement
6) Unenforceable contract
2. On the basis of mode of Formation
1) Express contract
2) Implied contract
3) Quasi contract
3. On the basis of Execution /Performance
1) Executed contract
2) Executory contract

On the basis of execution , the contracts can be classified as below

1)Unilateral contract
2)Bilateral contract
 Classification according to Enforceability/legality
1) Valid agreement i.e. agreement
A valid agreement is a contract and “A contract is an agreement
enforceable by law”.
It creates legal obligations of all parties to it. Such an agreement
possesses all essentials of a contract laid down by section10.
2) Void agreement
“An agreement is not enforceable by law is said to be void”.
Such an agreement lacks essentials of a valid agreements.
Consequently it does not create legal obligations of parties. It cannot be
enforced by the law and is,therefore,a nullity. It cannot be made
binding even if the parties ratify .
Example: A lends Rs. I lakh to B , a minor for the mortgage of his
house. The mortgage agreement is void ab initio due to minority of B
 Classification according to enforceability/legality
3) Void contract
According to section 2 (J) “A contract which ceases to be enforceable by law
becomes void when it ceases to be enforceable”.

A} Dr. A agrees with a publisher to write a book. After a few days, Dr.A dies due to a
heart attack. The contract has become void due to the impossibility of performance
arose from the death of Dr. A

B} A , a singer contracts with B ,a theatre manager , to sing at his theatre for twenty
nights in month of april and B agrees to pay her 1000 for each night’s performance .
On sixth night, a wilfully absents herself from the theatre,and B in consequence
rescinds the contract. B is liable to pay A for the five nights on which she had given
performance .
Classification according to enforceability/legality
4} voidable contract
According to section 2{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 the other or others, is avoidable contract. A voidable
contract is an agreement which is voidable at the option of the
aggrieved party.
Voidable contracts may be of two types
1) Voidable from the very beginning
2) voidable subsequently
Classification according to enforceability/legality
A) A under-threat i.e. coercion agrees to sell his house to B for
Rs.50,000. The contract is voidable at the aggrieved party A. he
may either avoid the contract or choose to be bound by it.
B) Person A agrees to pay a sum of Rs. 10,0000 to a person B for an
antique chair. This contract would be valid, the only problem is that
person B is a minor and can’t legally enter a contract.
So this contract is a valid contract from the point of view of A and a
“voidable” contract from the point of view of B. As and when B
becomes a major, he may or may not agree to the terms. Thus this is a
voidable contract.
• Description :A voidable contract is a Valid Contract. In a voidable
contract, at least one of the parties has to be bound to the terms of
the contract. For example, person A in the above example.
• The other party is not bound and may choose to repudiate or accept
the terms of the contract. If they so choose to repudiate the contract,
the contract becomes void. Otherwise, a voidable contract is a valid
contract.
Illegal Contract
• An agreement that leads to one or all the parties breaking a law or
not conforming to the norms of the society is deemed to be illegal by
the court. A contract opposed to public policy is also illegal.
• Agreements whose object or consideration is forbidden by law are
called illegal contracts.
Both the void contracts and illegal contracts can’t be enforceable by
law. Illegal contracts are actually void ab initio (from the start or the
beginning).
• Example: 1 .Contracts for selling or distributing controlled drugs,
• 2 Contracts for employing underage workers
Unenforceable contracts
• Unenforceable contracts are rendered unenforceable by law due to
some technical. The contract can’t be enforced in bw any of the two
parties.
• example, A agrees to sell to B 100kgs of rice for 10,000/-. But there
was a huge flood in the states and all the rice crops were destroyed.
Now, this contract is unenforceable and can not be enforced against
either party.
• Description These defect may be the absence of writing, registration,
time-barred by the law of limitation, some other conditions.
II Based on Formation Express contract
• A contract is said to be an express contract, if the terms of a contract
are expressly agreed upon between the parties (either by words
spoken or written) at the time of formation of the contract.
• An express promise results in express contract.
• A promise is said to be an express promise, when the offer or
acceptance of any promise is made in words.

• Example A person A sends a text from his phone to person B,

proposing to sell his bike for a cost of Rs. 10,000/-. The person B calls
the first person and agrees to the terms of the promise.
• Description This is an Express Contract as the terms have been stated
clearly in oral as well as written form. Note that the communications
could be entirely oral or written.

• Implied contract
• example, A board a rickshaw.
• the driver starts to drive. X tell the driver the address where he has to
drop X. The driver stops and X pay him.
• this is a contract ,in this X and the driver express any of the terms in
written and oral form?
• No, the intent was implied by the X conduct and thus there was an
implied contract.
Implied contract

An implied contract is one for which the proposal or acceptance is made

otherwise than in words.
Where the proposal or acceptance of any promise is made otherwise than
in words, the promise is known as implied promise.
Implied contracts are inferred from the circumstances of the case and
conduct of the parties.

example, when A takes a cup of milk in a hotel, there is an implied

contract.
Classification of Contract According to Extent of Execution

1) Executed contract- A contract in which all the parties to the contract have
performed their respected obligations, is known as executed contract.
This is a completely performed contract.
Example A} A sells his car to B for Rs. 1 lakh .A delivered the car and B paid the
price . It is an executed contract

2) Executory contract- An executory contract is one in which all or

something still remains to be performed by the parties.
A} If A is still to deliver the car and B is yet to pay the price
it is an Executory plan.
Classification of Contract According to Extent of Execution

On the basis of execution contracts can also be classified as-

1) Bilateral contract
2) Unilateral contract

BILATERAL CONTRACT- A bilateral contract is one in which both the parties exchange a
promise to each other. In such a contract, one party promises to perform something in
the future in exchange of other party’s promise to do something.
Consequently, obligations on the part of both the parties are outstanding at the time of
formation of the contract.
Thus ,it is similar to an executory contract. It is also known as contract with executory
consideration
Classification of Contract According to Extent of Execution

A} Bilateral contract
A promises to sell his car to B for Rs. 1 lakh and agrees to deliver the car on receipt
of payment by the end of the week.
The contract is bilateral as both the parties have exchanged a promise to each
other to be performed within a stipulated time.
 2) Unilateral Contract- A unilateral contract is one in which offeror promises to do
something only when the offeree has done his desired task or act. Thus, in such a
contract, offeror binds himself to perform his promise but offeree does not do so.
Offeree binds the offeror as soon as he does his desired act. Thus, the only way to
accept the offer by doing the desired task or act. A mere promise by offeree to do
the desired task or act does not create a contract.

A) A promises by an advertisement to pay Rs.100 to any one who searches his lost
dog. Anyone can search his dog and unilaterally bind A for the payment of
Rs.100 , but no one is bound by the promise of A to search his dog, there is
unilateral contract between A and B . However, if B only makes a promise to
search the dog, the promise does not create any contract .

It should be noted in unilateral contract the offeror is not liable for his promise
until his desired act or task is performed. The offeror also has a right to
withdraw his offer at any time prior to the performance.