Definition and types of contract
- 1. Definition and Types of Contract Nagaraju v Assistant professor, GFGC,Molakalmuru.
- 2. The Indian Contract Act came into force on the first of September 1872. prior to this there was the English common Law which was applied to Indians indiscriminately. This led to many inconveniences. To obviate this Contract Act was formed. Definition of Contract . According to sec2(h) of the Act, Contract is an agreement enforceable at law. This definition has two important components they are : 1) The existence of an agreement and 2) Its enforceability at law.
- 3. – An agreement is defined as every promise and every set of promises, forming consideration for each other. Sec2(e). – Agreement = offer+ Acceptance. – Enforceability means virtue of the obligation that one party can compel the other to do something or to refrain from doing something. – Example: X agrees to sell his motorcycle to y for ₹ 25000. the agreement gives rise to legal obligation. Failure of X to deliver the vehicle or Y to make the payments entitles the aggrieved to sue against the offender.
- 4. Classification of Contract On the basis of Formation Express Contract Implied Contract Quasi Contract OnthebasisofValidityValid contract Void contact Void agreement Voidable agreement Illegal contract Unenforceable contract On the basis of Performance Executed contract Executory contract Unilateral contract Bilateral contract
- 5. On the basis of Formation 1. Express contract : In an express contract the terms are made clear in writing or orally at the time of entering into an agreement. Example: A writes a letter to B that he offers to sell his car for ₹ 60000 and B in reply informs A that he accepts the offer. This is an express contract. 2. Implied contract: These are the contracts comes into existence on account of act or conduct of the parties. Sec9 states that “ in such proposal or acceptance is made otherwise than in words, the promise is said to be implied”. Example: Mr. X went to a restaurant and took a cup of coffee. in this there is an implied contract that he will pay for cup of coffee. Even though no express promise to do so.
- 6. Quasi contract There are certain transactions which cannot be strictly called contract but which create obligations. Such obligations are: 1. Supplier of necessaries to minors, lunatics etc. 2. Person paying money owed by others. 3. Finder of goods. 4. Person receiving goods or money belongs to another under mistake . In all the above cases person receiving the benefits has an obligations to compensate the person paying the benefit.
- 7. On the basis of Validity 1. Valid contract: A contract which satisfies all the legal requirements laid down in sec.10 of the act , is known as a valid contract. Example: see the image 2. Void contract: An agreement not enforceable by law is said to be void. Sec2(g). Example: see the images of child marriage.
- 8. 3)Voidable contract: A voidable contract is the one that can be set aside at the option of one of the parties to the contract. Example: obtain the consent of other party by force, undue influence, fraud etc. 4) Illegal contract: An agreement is illegal and void if its object or consideration a) is forbidden by law. b) is fraudulent. C)involves injury to the person or property of another. D)the court regards it as immoral or opposed to public policy. Thus an agreement to commit murder, robbery etc.
- 9. 6)Unenforceable contract:The unenforceable contract are those which can’t be enforced in a court of law because of some technical defects. E.g: partnership agreement must be in writing , should be signed and stamped, must be attested . such contracts can be enforced if the technical defects is removed .
- 10. On the basis of performance 1) Executed contract: An executed contracts is the one which is wholly performed both the parties to the contract and there remains nothing to be performed by either party. Example: when A agrees to paint a picture for B for ₹ 100. when A paints the picture and B pays ₹ 100 the obligations are performed and the contract is executed.
- 11. Executory contract: Under this contract parties are not performed their respective obligations or it may be partly performed and partly not. E.g: A offer to paint a house for ₹20000 and B agrees to paint and received ₹5000 as advance . In other ways Unilateral contracts: here one party has already performed his part of obligations at the time of or before forming the contract. These contracts also called contract with executed consideration. Bilateral contracts: here both the parties to the contracts have to fulfil their respective obligations and also called as contracts with executory consideration.
- 12. Form a group of 5 students and tell to collect case laws for each type of contracts. Or tell to collect examples for each type of contracts.
- 13. 1. Business Law - RSN Pillai and Bagavathi – S. Chand publication 2. Business Law – P. Saravanavel and S. sumathi- HPH 3. Business Law – K. Aswathappa and G. Sudarsana Reddy- HPH 4.Right to information Act- P.K. Das – Universalpublishing. 5. Business and corporate Law- P.P.S. Gogna – S.Chand publication. Images copied from Google .