Classification based on

Performance
Unilateral contract A unilateral contract is
one in which only one party has to fulfill his
obligation at the time of the formation of the
contract and the other party having fulfilled
his obligation at the time of the contract or
before contract comes into existence.
Amina permits a coolie to put his luggage to a
carriage. The contract comes into existence
as soon as the coolie place the luggage. So
Amina has only to fulfill his part.

Bilateral Contract A bilateral

contract is one in which the obligation
on the part of both the parties to the
contract are outstanding at the time of
the contract.
Athulya promises to paint a picture in
Executed
Contract
If Saranya
both parties promises
of a contract to
return for
which
have performed their respective obligation,
Rs 1000.
contract is known as an executed contract.
Amal contracts with Bessy to buy a house for Rs
1,00,000. Amal paid Rs. 1,00,000 to Bessy. Bessy
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.
Rahul agrees to paint a picture for Rejith
for Rs. 500. Rahul has not painted the
picture and Rejith has not paid the price
also.

Classification based on
Formation

Express contract If the terms of a

contract are expressly agreed upon
(whether orally or in writing) at the time
of the formation of the contract, the
contract is said to be an express
contract.
Collin writes to Aby I am willing to sell
my car to you for Rs 50,000. Aby
accepts Collins offer by another letter.

Implied contract An implied

contract is one which is inferred from
the act or conduct of the parties or
course of dealings between them.
Diljith gets into a public bus. Then he
enters into an implied contract with
the authorities of the bus that he
wishes to travel in the bus.

Quasi Contract Under certain circumstances,

law itself creates legal rights and obligations
against the parties. These obligations are known
as quasi contracts. It is created by law and it only
resembles a contract.
Aiju , a trademan leaves goods at Sajids house
by mistake. Suppose Sajid treats the goods as his
own, then Sajid is bound to pay to Aiju a
reasonable price for the goods.
.

 OFFER - According to Sec.2(a), when a person made a

proposal, when he signify (indicate) to another his willingness
to do or to abstain (withdraw) from doing something.

CONSENSUS - AD IDEMAccording to Sec.13, meeting of minds or identity of

minds or receiving the same thing in same sense at
same time.
Synonyms - meeting of the minds when two
parties are in an agreement (contract) both
have the same understanding of the terms of
the agreement.

TYPES OF OFFER

Express offer
Implied offer
Specific offer
General offer
Cross offer
Counter offer
Standing offer

Express offer - When offer is given to

another person either in writing or in oral.

Implied offer - When offer is given to

another person neither in writing nor in oral.

Specific offer - When offer is given to a

specific person.

General offer - When offer is given to

entire world at a large.

Cross offer - When both the persons

are making identical offers to each other
in ignorance of others offer.

Counter

offer

- When both the

persons are making offers to each other

which are not identical in ignorance of
others offer.

Standing offer - An offer which

remains continuously enforceable for a
certain period of time.

When a party to an agreement promises to

do something he/she must get something
in return .This something is defined as
consideration.
1)It must move at the desire of
the promisor.
2)It may move by the promisee .
3)It must be past ,present or future
.
4)It need not be adequate .
5)It must be real .
6)It must not be illegal , immoral or
opposed to public policy .

What Are Quasi Contracts?

Quasi means almost or
apparently but not really or as
if it were
A quasi contract is a contract
that exists by order of a court,
not by agreement of the parties
Courts create quasi contracts to
avoid the unjust enrichment of a
party in a dispute over payment

Negotiable Means transferable from one person

to another in return for consideration.
Instrument means a written document by which
a right is created in favour of some person.
Negotiable Instrument literally means is a
written document transferable by delivery

Definition-Negotiable Instrument
Sec 13 (1) of N I Act states that
A negotiable instrument means a
promissory note, bill of exchange or
cheque payable either to order or to
bearer.

Essential Features of a Negotiable Instrument:

1.Negotiability- it means transferability. It can be
transferred without any formality.
2. Property- The possessor of negotiable
instrument is presumed to be the owner of the
property contained there in.
3. Equivalent to cash- Even though is a
document it is as good as cash.
4.Recovery- The transferee of the negotiable
instrument can sue in his own name, in case of
dishonor for the recovery of the amount with
out giving notice to the debtor.

5. Contract- A negotiable instrument is

a contract to pay money.
6. Prompt payment-A negotiable
instrument enables the holder of the
instrument to expect prompt
payment.
7. A negotiable instrument can be
transferred any number of times till it
is at maturity and the holder of the
instrument need not give any notice

Types of negotiable instruments.

A. Negotiable instruments recognized by statute.
1) Promissory notes
2) Bill of exchange
3) Cheque
B. Negotiable instruments recognized by custom.
1. Money order
2. Fixed deposit receipts
3. Share certificates
4. Postal orders
5. National saving certificates

A. Promissory note
Sec.4
A promissory note is an instrument in
writing containing an unconditional
undertaking signed by the maker, to
pay a certain sum of money only to
or to the order of a certain person or
to the bearer of the instrument.

Parties
Two parties:
The person who makes the
promissory note and promises to pay
is called the maker.
The person to whom the payment is
to be made is called the payee.
Eg I promise to pay A or order Rs
500.

Specimen of a promissory
note
Rs 5000
Ernakulam
Date
On demand , I promise to pay Mr Rajesh or order
, the sum of Rs 5000( Rupees Five Thousand only)
with interest at 8% per annum for value received.
To
Rajesh
(Address)
Sd/- Stamp
Babu

Essentials of a promissory note

1. Pro notes must be in writing
2.A Promise to pay must be express.
3Definite and unconditional
4. To be signed by the maker
5.Certainty in the case of parties.
6. Certainty in the case of sum of money
7. Promise to pay money only

8. Formalities are not essential. Formalities like time

,place registration Number etc is not required. But it
must be stamped as per stamp act.
9. It may be payable on demand or after a definite
period of time - Where there is no time is mentioned
the note is payable on demand.

B. Bill of Exchange
Sec.5
A bill of exchange is an instrument in
writing containing the unconditional
order, signed by the maker,
directing a certain person to pay
a certain sum of money only to or to
the order of a certain person or to
the bearer of the instrument.

Parties to a Bill of Exchange

Three parties:
1.The maker of bill of exchange is
called the drawer.
2.The person who is directed to pay is
called the drawee.
3.The person who will receive the
money is called the payee

Specimen of Bill of
Exchange
Rs 5000
Place.

Date.
On demand pay to Rajesh or order, the sum of Rs
5000/- (Rupees Five thousand only) for value
received.
To Ajith
( Address)

Sd- Stamp
Babu

 Here Babu is the drawer

Ajith is the drawee (Acceptor)
Rajesh is the payee

Essentials of Bill of Exchange.

1. The instrument must be in writing.
2.The instrument must contain an order to pay.
3. There must be three parties.
4. The instrument must be signed by the
drawer.
5. The amount of money to be paid must be
certain.
6. The payee must be certain.
7. It must comply with the formalities as
regards date, stamp etc.

C. Cheque
A cheque is a bill of exchange drawn on a
specified banker and not expressed to be
payable otherwise than on demand. That is the
drawer directs the bank to pay a certain sum to
payee on his demand.
(A bill of exchange is an instrument in writing
containing an unconditional order, signed by
the maker, directing the banker to pay a certain
sum of money only to or to the order of a
certain person or to the bearer of the
instrument)

Definition
Sec.6 a bill of exchange drawn upon a
specified banker and payable on demand
Rules
1. All cheques are bill of exchange but all bill
of exchanges are not cheques.
2. Usually banks provide their customers
with printed cheque forms which are filled
up and signed by the drawer.
3. The signatures must tally with specimen
signature of the drawer kept in the bank.

4. A cheque must be dated.

5. A cheque becomes due for payment on the date
specified in it.

6. A cheque drawn on a future date is

valid but it is payable on and after
the date specified. Such cheques are
called post dated cheques.

Essentials of a Cheque
1.
2.
3.
4.
5.

It must be unconditional order

It must be in writing
It must be drawn on a specified banker
it must be signed by the drawer
The order must be for the payment of a
certain sum of money only
6. Drawer, drawee and payee must be certain
7. The payee must be certain
8. The amount must be payable on demand

Endorsement
The literal meaning of the word endorsement
is writing on the back of an instrument.
Under the NI Act, it means, writing of the
name of the endorsee on the back of the
instrument by the endorser under his
signature with the object of transferring the
rights therein.
If an instrument is fully covered with
endorsements and no space is left, further
endorsement can be made on a slip of paper
(called alonge) annexed thereto

Kind of Endorsement
1. Blank or general endorsement
Just put the signature 0of endorser without
mention the name of endorsee
Eg: sd/D.Mohan
2. Special or full endorsement
Including the name of endorsee
Eg:
Pay to Ghosh or order sd/D.Mohan

3. Restrictive endorsement
An endorsement, when it prohibits or restricts
the further negotiation of the instrument.
Eg: pay to Ghosh only sd/D.Mohan
4. Conditional or Qualified
An endorsement is conditional or qualified if it
limits or negates the liability of the endorser
Eg: pay to ghosh on Signing a receipt Sd/D.mohan

5. Partial endorsement
When an endorser endorses only a
part of the amount mentioned in the
instrument. it is irregular

Type of cheques

1.
2.
3.
4.
5.
6.
7.
8.

Open cheque
Crossed cheque
Ante dated cheque (before)
Post dated cheque (after)
Stale cheque (out dated)
Mutilated cheque (Torn)
Travellers cheque
Marked cheque (drawee banker initials or
write good/approved)
9. Truncated cheque (later further physical
movement of cheque in writing)
10.Cheque in electronic form (digital signature)

Types of crossing a cheque

A) General crossing
B) Special crossing
C) Not Negotiable Crossing
D) Restrictive crossing

1. General crossing
A cheque must contain two parallel
transverse lines.
When a cheque is crossed generally
the paying banker shall not pay it
other than to a banker, holder cannot
get payment over the counter of
bank

2. Special crossing
The cheque must contain the name of
a banker. The cheque must be paid
only to the banker to whom it is
crossed.
Here the payee can receive the
amount only through the banker
named on the cheque.