ASSIGNMENT 01

SYED SAQIB HASAN

BBA-5D
02-111152-287

SIR ABDUL GHAFFAR

DOS: 5TH October 2016
CONTRACTS:
A contract is an agreement between two or more parties to perform a service which

can be imposed by law.

KINDS OF CONTRACTS:

The four categories of contracts are defined as follows:

1. According to Enforceability:

According to enforceability a contract is divided as follows:

a. Valid Contract:

A valid contract is a written or expressed agreement between two parties to provide a

product or service. Both or all parties of this contract are responsible for performance or

results.

Example:

Ahmed proposes sell his one acre land to Ali for one lac and the parties are capable to

do the contract by law. If Ahmed fails to deliver the land Ali can sue him in the court for

the delivery of land. On other hand Ali fails to make the payment, Ahmed can sue him

for the recovery of payment so this contract is valid.

b. Void Contract:

A void contract cannot be impose by law. Void means binding in law, a void contract at

first is a valid contract but due to some reasons it becomes void. Under the following

circumstances a contract becomes void:

 i. Impossibility of performance:

A contract becomes void due to impossibility of performance. A contract

becomes void before the performance when it is impossible to be performed by

any party due to some reasons.

EXAMPLE:

If Mr. X agrees to sell his car to Mr. Y and after two days and the car is burnt to

next day so the contract becomes void due to unfeasibility of performance.

ii. Subsequent Illegality:

Subsequent illegality becomes void if performance becomes illegal as a result of

a change in the law the duty of performance is discharged.

EXAMPLE:

If Mr. X agrees to import cars from japan and after importing to sell the cars to

Mr. Y, so before the delivery of cars the government put a ban on the import of

cars so this contract becomes void.

iii. Rejection of voidable contract:

is a valid contract which may be either accepted or rejected at the option of one

of the parties. At most, one party to the contract is bound. The unbound party

may reject the contract at which the contract becomes void.

EXAMPLE:

If Mr. A forcefully takes the land from Mr. B. the contract is voidable on contract

b, but Mr. B can accept and rejects that contracts and id Mr. B rejects the

contracts so it becomes void.

 iv. Impossibility of depending event:

The performance of contingent contracts depends upon the existing and non-

existing of a particular event. If the event does not occur so it becomes void.

EXAMPLE:

Mr. X contracts to give driving license to Mr. Y, if Mr. X passes the driving test.

Mr. X fails to get admission the contract becomes void.

c. Void Agreement:

A contract which is not enforceable by court of law is called void agreement.

EXAMPLE:

Mr. X promises to buy a car from Mr. Y but the car was burnt before the agreement was

made but both the parties were unaware so this agreement is void.

d. Voidable Agreement:

A contract which is insufficient in only free constant is known as voidable contract. The

contract which is made forcefully it may become void for the suffering party.

EXAMPLE:

There is a contract between Mr. A and Mr. B where Mr. A has forced to buy a car and

involved him to the contract so it is void for Mr. A.

e. Unenforceable Contract:

An unenforceable contract is one that is valid but one the court will not enforce. If the

parties perform the agreement, it will be valid but the court will not push them if they

do not.
 EXAMPLE:

If Mr. A buys a land from Mr. B and Mr. B makes a promissory note on 100 rupees stamp

paper so it is unenforceable.

f. Illegal Agreement:

An illegal agreement is one that the courts will not enforce because the purpose of

the agreement is to achieve an illegal end. The illegal end must result from performance

of the contract itself.

Example:

Illegal agreement is that in which one party hires another party to kill a target individual

or group of people. It involves an illegal agreement between two or more parties in

which one party agrees to kill the target in exchange for some form of payment.

2. ACCORDING TO FORMATION:

According to the formation a contract has the three kinds:

a) Express contract:

Is an exchange of promises in which the terms by which the parties agree to be

bound are declared either verbally or in writing at the time it is made.

EXAMPLE:

If Mr. X says to Mr. Y that he wants to sell his phone and Mr. Y agrees to buy

phone from Mr. X so it is express contract.

b) Implied Contract

An implied contract is an agreement created by actions of the parties involved,

but it is not written or spoken. In this case, there is neither written record nor

any actual verbal agreement.

 EXAMPLE:

Mr. X had done shopping with credit card so it an implied contract.

c) Quasi Contract:

It is not a contract. It is an obligation of one party to another imposed by law

independently of an agreement between the parties.

EXAMPLE:

Mr. X left the mobile charge at Mr. Y home and Mr. Y is now using the charger so

Mr. Y is bound to pay the payment of the charger.

3. ACCORDING TO THE PERFORMANCE:

According to the performance a contract is of the following two types:

a) Executed to performance:

This contract means when both the parties are completely fulfilled by the

obligations and nothing would be remains to be done.

EXAMPLE:

If Mr. A buys the car and Mr. B pays the price of that car and Mr. A deliver that

car so it is an executed contract.

b) Executory Contract:

It is that contract in with both the parties are remained to fulfill their obligations.

EXAMPLE:

Mr. A buys a mobile to Mr. B and Mr. B fails to deliver the mobile and Mr. A fails

to give the payment so it is executory contract.

4. ACCORDING TO THE PARTIES:

According to the parties, a contract has the following two kinds:

a) Unilateral Contract:

A unilateral contract is a legally enforceable promise between legally competent

parties and it is one sided contract.

EXAMPLE:

Father says to his son that if he passes the exam with good grades so he would

get the reward, so the son passes the exam with good grades so therefore father

now must give reward to his son.

b) Bilateral Contract:

In this contract both the parties have to fulfill their obligations and it is two sided

contract.

EXAMPLE:

Mr. A promises his employee that if he finishes the target by the end of the

month so he will give him a great reward, so the employee fulfills the target on

time and Mr. A gives him the reward.