CLASSIFICATION OF CONTRACTS

by • 29/05/2012 • B.com part 2 Business LawComments (0)1068

Q1. Describe the classification of contract in details.

 

CLASSIFICATION OF CONTRACTS

 

The various bases on which the contract can be classifies are following:

Contract on the basis of Creation

Contract on the basis of Execution

Contract on the basis of Enforceability

 

 

CONTRACT ON THE BASIS OF CREATION

On the basis of creation, the contract may be classified as under:

 

  1. Express Contract:

Express contract is one, which is made by words spoken or written.

 

Example:

X says to Y, “will you buy my car Rs. 1,00,000? Y says to X “I am ready to buy your car for Rs. 1,00,000”. It is an express contract made orally.

 

  1. Implied Contract:

An implied contract is one, which is made other wise than by words spoken or written. It is inferred from the conduct of a person or the circumstances of the particular case.

 

Example:

A transport company runs buses on different routes to carry passengers. This is an implied offer by Transport Company. X boards a bus. This is an implied acceptance by X. now, there is an implied contract and X is bound to pay the prescribed fare.

 

 

CONTRACT ON THE BASIS OF EXCEUTION

On the basis of execution, the contracts may be classified as under:

 

  1. EXECUTED CONTRACT:

It is a contract where both the parties to the contract have fulfilled their respective obligation under the contract.

 

Example:

X offers to sell his car to Y for Rs. 1, 00,000. Y accepts X’s offer. X delivers the car to Y pays Rs. 1, 00,000 to X. it is an executed contract.

 

  1. EXECUTORY CONTRACT

It is a contract where both the parties to the contract have still to perform their respective obligation.

 

Example:

X offers to sell his car Y for Rs.1, 00,000. Y accepts X’s offer. If X has not yet delivered the car and Y has not yet paid the price. It is an executory contract.

 

  1. PARTY EXECUTED AND PARTY EXECUTORY CONTRACT

It is a contract where one of the parties to the contract has fulfilled his obligation and the other party has still to perform his obligation.

 

Example:

X offers to sell his car to Y for Rs.1, 00,000 on a credit of one month. Y accepts X’s offer. X delivers the car o Y. here the contract is executed as to X and executory as to Y.

 

CONTRACT ON THE BASIS ON ENFORCEABILITY

 

On the basis of enforceability, the contracts may be classified as under:

 

  1. Valid Contract:

A valid contract, which satisfies all the condition prescribed by law, is a valid contract.

 

Example:

X offers to marry Y, Y accepts X’s offer. This is a valid contract.

 

  1. Void contract:

The term ‘void contract’ is a contradiction in terms. But according to Contract Act, 1872:

 

“A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”.

 

Example:

X offers to marry Y, Y accepts X’s offer. Later on Y dies. This contract was valid at the time of its formation but became void due to impossibility of performance, change of law or some other reason.

 

  1. Void Agreement:

According to the Contract Act, 1872:

“An agreement not enforceable by law is said to be void.”

 

Example:

An agreement with a minor ir a person of unsound mind is void-ab-initio because a minor or a person of unsound mind is incompetent to contract.

 

  1. Voidable Contract:

According to the Contract Act 1872:

“An agreement that is enforceable by law an option of one or more of the parties thereon but not at the option of the other or others, is a voidable contract.

 

Example:

X threatens to kill Y if he does not sell his house for Rs. 1, 00,000 to X. Y sells his house to X and receives payment. Here Y’s consent has been obtained by coercion and hence this contract is voidable at the option of Y, the aggrieved party.

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