Classification of contracts Classification according to validity Valid contracts When all the essential elements of a valid contract are

present in the contract, it is called a valid contract. Voidable contract An agreement which is enforceable at the option of one or more parties and not at the option of the other or others is a voidable contract. This happens Firstly when the essential element of free consent is missing from the contract. Secondly when a person promises to do something for another person but this another person prevents him from doing it. The contract is voidable at the option of the former party. Thirdly when a party promises to perform his promise within a specified time and fails to do so within the specified time, the contract is voidable at the option of the other party. 1. When the party at whose option the contract can be rescinded, rescinds it, the other party need not perform his promise.

2. If the party rescinding the contract has received any benefit under the contract from the other party, he must return or restore the benefit to the person from whom he has received.. It is called as Restitution. 3. The party rightfully rescinding the contract is also entitled to compensation for any damage sustained through the non fulfillment of the contract. Void Agreement An agreement not enforceable by law is said to be void. It does not create any legal rights or obligations. It is void abi nitio. Void contracts A contract originally entered into may be valid but subsequently ceases to be unenforceable, becomes void. A void contract cannot be entered into originally. Illegal contracts An agreement against public policy, immoral or criminal in nature is an illegal contract. It is a nullity. All illegal contracts are void but all void agreements need not necessarily be illegal.

An illegal contract is not only void as between immediate parties but has the same effect on all collateral transactions to it. They too become tainted with illegality. Example: B borrows Rs.5000 from A to import prohibited goods. A is aware of the purpose of the loan. The contract between B and A is collateral to the main contract of importing prohibited goods. Since the main contract is illegal, the collateral transaction also gets tainted with illegality. Unenforceable contracts These contracts cannot be enforced in a court of law because of some technical defect in the contract. Like paper insufficiently stamped or signatures not attested by witnesses etc. Classification according to formation Express contracts When the terms of the contract are expressly agreed upon by writing or orally at the time of formation of the contract, it is an express contract. Implied contract

That which is inferred from the conduct of the parties or from course of dealings between them. There is implied contract when A gets inside a public bus, takes a cup of tea in a restaurant or obtains a ticket from an automatic weighing machine. 5 Quasi contract Quasi contract is not a contract. A contract is intentionally entered into whereas a quasi contract is created by law. It rests on the Principle of Equity (fairness) that A person shall not be allowed to enrich himself unjustly at the expense of the other. Ex: T a tradesman leaves goods at Cs house by mistake. C treats the goods as his own. C is bound to pay for the goods. E Commerce contracts are entered into between parties by internet. Classification according to performance Executed contracts

Where the respective parties have performed their respective obligations. Executory contracts Where both the parties are yet to perform their obligations. Partly executed and partly executory B has paid the price to A for him to paint a picture. A has still to paint the picture. Unilateral or one sided promise Where only one party has to perform the obligation at the time of formation of the contract. Ex: A permits his luggage to be carried by a coolie and to be placed in a carriage. The contract is created as soon as the coolie puts the luggage in the carriage. Now only A has to perform his obligation i.e., to pay the coolie a reasonable amount. Bilateral contracts Where the obligation of both the parties are outstanding at the time of formation of the contract like executory contracts.