Understanding Classifications of Contracts in Business Law
Explore the classifications of contracts in business law including valid, void, voidable, illegal, and unenforceable contracts. Learn about express, implied, quasi, and tacit contracts based on their formation. Gain insights into what makes a contract valid, void, or unenforceable under Indian Contract Act regulations.
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Presentation Transcript
BUSINESS LAW H. ANIS FATHIMA ASSISTANT PROFESSOR DEPARTMENT OF B.COM BANKING HKRH COLLEGE UTHAMAPALAYAM
Classifications of Contracts: According to Validity a) Valid Contract b) Void Contract c) Voidable Contract d) Illegal Contract e) Unenforceable Contract
Valid Contract An agreement entered into an enforceable under the Indian Contract Act is known as valid contract .
Void Contract An agreement not enforceable by law is said to be void. It does not give rise to any rights and obligations. It may be void from its very inception. Example: An agreement between the exporter and importer may become void if a war is declared between their countries.
Voidable Contract An agreement which is enforceable by law at the option of one or more of the parties but not at the option of other or others is voidable contract. Under this contract, the consent of one of the parties will not be free. A voidable contract may be avoided or enforced by one of the parties whose consent was not free. Example: B is forced to sell watch to A. B s consent is obtained by force. The contract is voidable at the option of B.
Illegal contract An agreement which is against public policy or immoral in nature is known as illegal agreement. It makes transactions between the immediate parties collateral transactions void. Thus, all the illegal agreements are void but not all void agreements are illegal. Example: A borrows Rs. 2000/- from B for the purchase of prohibited goods. and also the
Unenforceable Contract A contract which cannot be enforced in a court of law because of technical defects is known as unenforceable contract. Example: an unstamped document.
According to Formation Express Contract Implied Contract Quasi Contract Tacit Contract
Express Contract It is a contract formed in words spoken or written.
Implied Contract A contract which is not formed by words spoken or written is known as Implied contract . It may be of the following types.
Quasi / Constructive Contract It means a contract implied by law. Example: A pays money by mistake to B, then it creates an obligation on B to refund that money toA.
Tacit Contract It is a contract inferred from the contract of the parties. Example: A enters a bus and obtains a ticket for travel. Here the offer and acceptance are inferred from the conduct of the parties.
According to Performance Unilateral Contract Bilateral Contract
Executed / Unilateral Contract It is a contract in which one party has performed his obligation at the time of contract and the obligation of other is outstanding. For example, A has paid Rs.10/- to B. In return B promised to give a pen. In this case, B s promise to give a pen is outstanding. Therefore, it is an executed contract.
Executory / BilateralContract It is a contract in which the obligations of both parties are outstanding. Therefore, it is an executor contract.
Cross Offer Counter Offer The offer made by a person instead of accepting the offer made to him by another it is known as counter offer. The offers made by two persons to each other for a same matter at the same time are known as cross offers. 1. The offers are identical. The offers are different. 2. Only after the offer made by one party, the another party makes an offer. Both the parties are making their offers at the same time. 3. At the time of making offer, both parties does not know the offer of each other. At the time of making the offer the second party knows the offer of first party. 4. Here, the second person makes a different offer instead of accepting the offer made to him by the first person. The offers made by both the parties at the same time cross one another and reach each of them. 5.
