Classification of Contracts

Indian Contract Act, 1872

1. CLASSIFICATION OF CONTRACTS BUSINESS LAW S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

2. ESSENTIAL ELEMENTS OF A VALID CONTRACT S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

3. CLASSIFICATION OF CONTRACTS S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

4. 1. ON THE BASIS OF ENFORCEABILITY / VALIDITY a) Valid Contract Agreement is binding and enforceable Contains all the essential elements of a valid contract b) Void Contract When a contract suddenly ceases to be enforceable by law Due to subsequent impossibility or subsequent illegality Void Contract has no Value S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

5. 1. ON THE BASIS OF ENFORCEABILITY / VALIDITY c) Voidable Contract Enforceable by law at the option of one of the parties. For example, if in case a contract has been signed initially by using coercion (threatening) or undue influence (positional influencing), misrepresentation (miscommunication) or fraud (deceiving), the aggrieved party (victim) may come forward to rescind (cancel) the contract later, after which the contract becomes void. d) Unenforceable Contract A contract becomes unenforceable due to some technical defect For example, a bill of exchange becomes unenforceable after 3 years period. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

6. 2. ON THE BASIS OF CREATION / FORMATION a) Express Contract Both offer and acceptance are made by words (spoken / written) b) Implied Contract Evidence of the agreement by the acts and conduct of the parties Example : a person getting into a public bus, a person taking a cup of coffee in a hotel S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

7. 2. ON THE BASIS OF CREATION / FORMATION c) Quasi Contract It is a principle that a person shall not be allowed to enrich himself unjustly at the expense of another person. Basically it’s a liability of a person. Not a direct contract. Example : a finder of lost goods is under a legal obligation to return them to their true owner. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

8. 3. ON THE BASIS OF EXECUTION / PERFORMANCE a) Executed Contract Both the parties have already performed their legal obligations. For example : a person goes to a grocery to buy 1 kg onions. He pays Rs.30 and bought the onions. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

9. 3. ON THE BASIS OF EXECUTION / PERFORMANCE b) Executory Contract The legal obligations have not been performed yet . i ) Unilateral Contract One party has performed and another party is yet to perform the legal obligations. For example : Prepaid mode ii) Bilateral Contract Both legal obligations are outstanding. For example : Cash on Delivery (COD) mode S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

10. CLASSIFICATION OF CONTRACTS S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

11. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM