CLASSIFICATION OR TYPES OF CONTRACT

Contract may be of various types. These may be classified under:-

1. Express and implied contracts

This is one in which the parties specifically agree about the nature and terms of
their relationship. This is then said to be an express agreement.

Example:-

A agrees to sell his goods to party B for 10,000/= and B agrees to buy the goods
at that price, there is then said to be an express contract for the same of goods at
an agreed price.

On the other hand there is no specific agreement in the implied contracts.

Conduct or the parties as well as all the surrounding circumstances must be taken
into account to ascertain whether or not a contract exists.

Example

Thus where A hires a taxi and boards it, there is an implied contract that the taxi
man shall convey A upto his destination and that A shall pay such fare as is
usually paid for that trip.

2. Unilateral and Bilateral contracts

Unilateral contract is one in which only one party is bound. It is a rare type of
contract which arises, for instance where there is an offer of a reward. Thus if A
offers a reward to anyone who will recover his lost property , then no one is
bound to recover the property
But A himself is bound to give the promised reward to anyone who might recover
the lost property.
Most contracts are bilateral. A Bilateral contract is one in which both parties are
bound, thus if A agrees to sell to B and B agrees to buy goods at a stated price,
both party are bound. A is bound to deliver the goods to B and B is bound to
accept the goods and pay the price.

3. Valid, Void and Voidable contructs

A valid contract is an agreement enforceable by law. An agreement becomes

enforceable by law when all essentials or a valid contract discussed above are
present.
 A Void Contract is an agreement which is not binding or enforceable by law.
This is because it has no legal effect at all and is therefore not binding in any of
the parties.
A contract is rendered void in certain case where both the parties were mistaken
or where it is prohibited by law or where it is entered into without
consideration.
 An agreement not enforceable by law is said to be void. For example, an
agreement by a minor is void ab initio. Agreement without consideration,
agreement is restraint of trade etc.
 A voidable contract: is 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.
 If such a party does not avoid the contract, the contract remains valid, but
if he prefers to avoid the contract, then the contract becomes void.
 Usually a contract becomes voidable when the consent of one or the
parties to the contract is obtained by undue influence, misrepresentation,
fraud. Such a contract is voudaly at the option of the party whose consent
was so caused. The party entitled to avoid it must do so within a reasonable
period of time. This may be done by notifying the other party that he is not
intending to be bound by the contract.

4. Illegal and unenforceable contract

 An illegal contract is one which is prohibited by law or which contravenes a

provision of law or one which is contrary to public policy where both the parties are
guilty of the illegality. Then none of them can enforce the contract. But when one
of the parties is guilty of the illegality. The contract may in circumstances be
enforced by the innocent party.
 Thus an agreement to commit murder, assault, robbery, would be illegal.

NB:- All illegal agreements are void but not all void agreements are necessarily illegal
e.g. an agreement with a minor is void as against him but not illegal.

Similarly when an agreement is illegal other agreements which are incidental or

collateral to it are also considered illegal, provided the third party has knowledge
of the illegal or immoral design of the main transaction.

Example

A engages B to murder C and borrows 10,000/= from D to pay B. We assume D

is aware of the purpose of the loan. Here the agreement between A & B is
illegal and the agreement between A & D is collateral to the illegal agreement.
As such the loan transaction is also considered to be illegal and void and therefore
D cannot recover the money. However, if D is not aware of the purpose of the
loan, then the transaction is not collateral to illegal agreement and is therefore a
valid contract.
5. Executed Contract

A contract is said to be executed when both the party to the contract have
performed their share of obligations and nothing remains to be done by either
party under the contract.

6. Executory Contract

This is one in which both of the obligations are outstanding one on either party to
the contract either wholly or in part at the time of the formation of the contract.
In other words a contract is said to be executory when either of the parties to the
contract have still to perform their share of obligation. Under the contract of
there remains, something to be done under the same contract on both sides.

7. (Quasi) Contract

This type of contracts have little or no astinity with contract. It does not arise by
virtue of any agreement express or implied between the parties but the law
recognizes the contract under certain circumstances.

Example:-
Obligation of the founder of lost-goods to retain them the true owner or liability to
whom money is paid under mistake to repay it back cannot be said to arise out of
a contract even in its remotest sense as there is neither offer, acceptance, nor
consent.
Principal- is based upon the equitable principle that a person shall not be allowed
to retain unjust benefits at the expense of another.