Contract : Definition ,Essentials , Types : Genearl Contract

This article is written by Krishnaraj Choudhary, Student of Dr. Anushka Law College Udaipur. The author in this article has discussed the concept of Contract Definition and Types

CONTRACT :

👉 According to Section 2 (h) , of Indian Contract Act ,1872 " An agreement enforceable by law is a contract."

👉 The objective of Indian Contract Act ,1872 is to ensure that the right and obligation orising out of a contract out of a contract are honoured and that legal remedies are made available to an aggrevid party against the party failing to honour his part of agreement.

👉 According to Pollock "Every agreement and promise enforceable at law is a contract."

👉According to Salmond "A contract is an agreement creating and defining obligations between the the parties."

Essentials of Contract :

⮚ According to Section 10 , "All agreement are contract if they are made made by the free consent of parties competent to contract , for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void".

⮚ Thus, According to Section 10 , following are the essentials of the valid contract.

An agreement between two parties : The primary element that creates a contract between parties is an agreement between two parties. There must be atleast two parties , one making the offer and the other accepting it. Such offer and acceptance must be valid.
Parties must be competent to contract : The parties to agreement must be capable of entering into the contract. If either of the parties does not have the capacity to contract, the contract is not valid. According to Section 11 , the following person are incompetent to contract (A) Minor
(B) Person's of unsound mind
(C) Person's disqualified under any law from contracting.
Lawful Object : The object for which the contract is created must be lawful, or else it is declared as void.
Lawful Consideration : An agreement must be supported by lawful consideration. Consideration means something in return.
Free Consent : Consent of the parties is another important aspect of a contract, which means that parties entering into the contract, must agree upon the same thing in the same sense. The consent of the parties is said to be free when it is not influenced by coercion, under influence, fraud, misrepresentation and mistake.
Agreement not declared to be void : The law should not expressly declared the contract as void, such as contract in restraint of marriage, trade or legal proceedings.

Classification of Contract :

👉 Contract can be classified into four brand divisions namely :

On the basis of creation formation
On the basis of validity or enforceability
On the basis of execution or performance
On the basis of liability

On the basis of creation or formation : Under the method of creation or formation of a contract may be of four kinds :

Expressed Contract : An express contract is one entered into by words spoken or written. When the proposal and acceptance is made in words, it is an expressed contract. Illustration : A person 'A' sends a text from his phone to person 'B' proposing to sell their bike for a cost of Rs 10,000 /-. The person 'B' calls the first person and agrees to the terms of the promise. This is an express contract as the term have been stated clearly in oral as well as written form.
Implied Contract : Where the proposal or acceptance is made otherwise then in word, it is an implied contract. Implied contract can be inferred from the surrounding circumstance and the conduct of the parties who made them. Illustration : An individual enters a restaurant and order food. A contract to receive the food, service and the payment for for the same is established. An implied contract is legally binding in the same manner as a written contract.
Quasi Contract or Constructive Contract : It is a contract in which there is no intention on either side to make a contract, but the law imposes a contract.in such a contract, rights and obligation arise not by any agreement between the parties but by operation of law. Thus , a finder of lost goods is under an obligation to find out the true owner and return the goods. Similarly when certain goods are delivered to a wrong address, the address is under an obligation either to pay for them or return them. Illustration : 'A' went to his friend's home for group studies and forget hobile there, which is found out by his friend's brother. So it is the duty of his friend's brother to return the phone to 'A'.
E - Contract : An E-contract or electronic contract is a legal document created and signed online. It is essentially a digital version of a traditional paper contract. As with paper contract E-contract are enforceable and legally binding documents that are typically used regarding employment, sale, service or tenancy. With a typical paper contract a party drafts an "offer" and the other party reads over it.

On the basis of validity or Enforceability : Under the method of validity or enforceability of contract may be of five kinds:

Valid Contract : A contract that fulfill the provisions under Section 10 , of Indian Contract Act i.e. the contract of the parties, parties must be competent to contract to contract, there should be a lawful consideration and with the lawful object, and are not expressly declared to void is a valid contract. Illustration : 'A' offer to sell his house for Rs 5 lac. to 'B' agree to buy it for this price. It is a valid contrat.
Valid Contract : According to Section 2(j) , "A Contract which cease to be enforceable by law becomes void when it cease to be enforceable". In other words a void contract legally enforceable when entered into but which subsequently become void due to subsequent impossibility of performance, change of law or some other reason. Illustration : 'A' agrees to sell his house to 'B' after two days. This house is burnt next day. The contract become void.
Voidable Contract : According to Section 2(i) "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 a voidable contract". A contract become voidable due to absence of free consent in the contract. The consent is said to be not free when it is obtain by coercion, undue influence, fraud, mistake or misrepresentation thus, a voidable contract is a one which can be set aside at the option of aggrieved party whose consent was not free. Also a voidable contract remains void until it is set aside. Illustration : 'A' offers to 'B' sell land. All documents related to the land was taken fraudulently by 'A' . If later on 'B' realised that 'A' was not the true owner as 'C' claim that 'C' is the real owner, 'B' can terminate the contract or seek damages.
Void Contract : Void agreement are those agreement which are not enforced by law courts. According to Section 2(g) of Indian Contract Act , defines a void agreement as "An agreement not enforceable by law". Thus no legal right or obligations arise out of a void agreement and the parties to the contract do not get any legal redress in the case of void agreement. It is void ab initio i.e. from its very inception, for example an agreement with out consideration or with minor. Example : An agreement with minor.
Illegal Agreement : An illegal agreement in business law is a contract that was made for an illegal reason and is consequently against the law. If the contract of the agreement cause the parties to perform illegal actions, then the contract is illegal. Example : Contract for gambling and other illegal activities.

On the basis of Execution or performance : Under the method of execution or performance of contract may be of two types:

Executed Contract : A contract is said to be executed contract when both the parties to contract have performed their share obligation. Illustration : 'A' offer to sell his car to 'B' for Rs 2 lac. 'B' accepts 'A's offer. 'A' delivers the car to 'B' And Rs 2 lac to 'A'. It is executed contract.
Executory Contract : An exucatory contract is one, which is either wholly unperformed, or something remains in there to be done by both the parties to contract. Illustration : 'A' agrees to teach 'M' in june and 'M' promise to pay 1000 to 'A'. It is an executory contract because the promises are yet to be performed.

On the basis of Liability : Under the method of liability of contract may be of two kinds:

Unilateral Contract : It is also called as one - sided contract. In a unilateral contract, only one party has to satisfy his obligations at the time of the formation of it, the other party having fulfilled his obligation at the time of the contract or before the contract comes into existence. Illustration : 'A' takes a public auto to go to Mount Road. Contract comes into existence as soon as 'A' was dropped in Mount Road. By that time, auto man has fulfilled his obligations, only 'A' has to fulfill is obligation i.e. Paying the auto - man.
Bilateral Contract : A contract is said to be bilateral contract where the obligation of both the parties to the contract are pending at the time of formation of the contract. In this type of contract, a promise on one side is exchanged for a promise on the other. Illustration : 'A' promise to stitch a shirt and 'B' promises to pay Rs 300. Here 'A' promises to stitch the shirt and 'B' promise to pay. Thus each party is both a promisor and a promisee.

Written By - KR Choudhary