First we understand what the contract is. So the contract means two parties put into writing an agreement which contains certain obligations which are t be performed by such parties, and when such written agreement becomes enforceable by law, it becomes a Contract.
Enforceable by law means when the agreement has acquired the force of law only for those who are a party to it and a violation of those obligations would attract legal action, including repudiation of the entire contract.
Therefore an agreement consists of reciprocal Promises which are to be performed by parties to the contract. Promises are reciprocal when both parties have to perform something for the other.
Contract = Agreement + Enforceability
Illustration: A contracted with B for purchase of 10 bags of cement of a certain quality, for Rs 1, 00,000. In this case, B’s promise is to provide A with 10 bags of cement of that quality only for which A has contracted and A’s promise is to duly pay B Rs.1, 00,000. In this case, both have to perform something for the other, thus it is a case of reciprocal promise.
- Types of contract on the basic of its enforcement.
- Types of contract on the basic of mode of creation.
- Types of contract on the basic of the extent of execution.
- Types of contract on the basic of its enforcement:
- Valid Contract: An agreement which is enforceable by law is known as contract. To be enforceable it has to satisfy the requirements under Section 10 of Indian Contract Act. This requirements are as follow:
- There is some consideration for the contract by both the parties.
- The parties are competent to contract.
- The consent of the party is free consent.
- The object of the contract is lawful.
- Voidable Contract: According to Section 2(i) of the act 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 is consider as a voidable contract. A voidable contract remains valid until rescinded.
- Void Contract: A void contract is not enforceable at the option of either party. According to Section 2(j) of the act, void contract means A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
- Unenforceable Contract: This type of contract is good in substance, but because of some technical defect, one or both parties cannot be sued on it. These defect may be is absence of writing, registration, time barred by the law of limitation act, etc.
- Unlawful Contract: Agreements whose object or consideration is forbidden by law are called illegal or unlawful contract. All illegal contracts are considered as void contracts, but all void contracts are not considered as unlawful contracts.
- Types of contract on the basic of mode of creation:
- Express Contract: According to section 9 of the act, proposal or acceptance of any promise is made in any words, the promise is said to be express. Thus contracts entered into between the parties by words, spoken or written are known as express contracts.
- Implied Contracts: According to second part of section 9, proposal or acceptance is made otherwise then in words, the promise is said to be implied. Thus contracts entered into between parties by virtue of their conducts are known as implied contracts.
- Quasi- Contract: A contract which does not arise by virtue of any agreement between the parties, but due to certain circumstances, the law recognizes it as a contract. Such contracts come into existence because of interference from courts in the interest of justice.
- Types of contract on the basic of extent of execution:
- Executed Contracts: When both the parties have completely performed their respective obligations under the contract, it is said to be executed contract. When the object of the contract is carried out it is considered as executed contract.
- Executor Contract: an executor contract is one which is one or both parties are still to perform their obligations. Such controls are future contracts. Delivery and payment are to be made after 15 days. The contract is executory.
- Unilateral Contract: These types of contracts are one sided contracts. A unilateral promise from one side only and intended to induce some action by other party. The promisee is not bound to act, for he gives no promise from his side.
- Bilateral Contracts: A bilateral contract is a legally binding contract formed by the exchange of reciprocal promise. Here both parties are outstanding at the time of formation of contract. In such a case, each party is promisor and promisee. This type of contracts are also known as reciprocal contracts.