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Fabulous Friends Group
Contract’s Classification
Classification Based On Legal Effects
Valid Contract
A valid contract is enforceable by law. An agreement becomes enforceable by law when all the essential of a valid contract are present.
Example
C agree to sell a car to B. If all the essentials of a contract act are fulfilled. It is a valid contract. If C fails to deliver the car, B can sue him and if B fails to pay, C san sue him.
Void Contract
The word void means not binding in law. Section 2(j) states: A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable.
A Contract Becomes VOID Due To Some Reasons
Voidable Contract
An agreement which is enforceable by law at the opinion of one or more of the parties there to but not at the opinion of the other or the others is a voidable contract.
Example
A compels B to sell his car at gunpoint. The contract is made by coercion and is voidable at the option of B.
Unenforceable Contract
An unenforceable contract is one which cannot be enforced in a court of law because of some technical defects such as absence of writing, time barred, want of stamps etc.
Example
A sell his house to B on blank papers. It is an unenforceable contract as the law requires that contracts for the sale of immoveable properties must be on stamp papers.
Illegal Contract
An illegal agreement is one which criminal in nature or which is immoral or which is against public policy.
Example
A and B enter into a contract to run a smuggling and black Marketing business. It is an illegal contract.
Classification Based on Performance
Unilateral Contract
A contract where one of the parties to a contract has performed his part of obligation and the other party is still to perform then a contract is called unilateral contract.
Example
A handed over motorcycle to B but B promise to pay the price of Rs: 15,000/- after 15 days it is an unilateral contract.
Bilateral ContractWhen both the parties to a contract have still to perform their shares of obligations completely or there remain something to be done under the contract on both parties.
Example
A agree to teach B from the first day of the next month and B promises to pay Rs.1000/- per month to A. It is a bilateral contract because the promises are yet to be performed.
Executed Contract
If both parties of a contract have performed their respective obligation, contract is known as an executed contract.
Example
A contracts with B to buy a house for Rs 1,00,000. A paid Rs. 1,00,000 to B. B executed the sale deed and delivered its possession.
Executory Contract An executory contract is one in which both parties have not yet performed their obligations either wholly or in which there remains something to be done on both sides.
Example
A handed over motorcycle to B but B promise to pay the price of Rs: 15,000/- after 15 days it is an unilateral contract.
Classification Based on Formation
Express ContractWhere the offer & acceptance is made in words spoken or written, it is an express contract.
It can also be defined in this way that an express contract is one in which the parties directly state the terms of the contract orally, written at the time the contract is made.
Example
A send a letter to B that he wants to sell his car for the Rs. 1,00,000/- and B in reply informs A that he agrees to buy the car, there is an express contract.
Implied Contract
Where the offer or acceptance is made, otherwise than in words, i.e. by acts or conduct of the parties, it is an implied contract.
Example
Constructive or Quasi Contract
Such a contract does not arise due to express or implies agreement between the parties but the law recognizes a contract under some certain special circumstances.
Example
According to the law it is a duty if finder of lost goods to return them to the true owner.
Conclusion
From the above said discussion we come to the conclusion that a contract has different kinds and shapes prevailing in the business transactions or in the society according to their necessity.
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