Classification of Contracts
Classification of Contracts
VALID CONTRACTS
VOID CONTRACT
VOID AGREEMENTS
VOIDABLE CONTRACTS
UNFORCEABLE CONTRACTS
ILLEGAL CONTRACTS
EXPRESS CONTRACTS
IMPLIED CONTRACTS
QUASI CONTRACTS
EXECUTORY CONTRACTS
EXECUTED CONTRACTS
UNILATERAL
CONTRACTS
BILATERAL CONTRACTS
Kinds of Contracts
(Point of view of
Enforceability)
Valid Contract
Void Contract
Void Agreement
Voidable Contract
Unenforceable Contract
Illegal or Unlawful Contract
Kinds of Contract
(Point of view of Mode of
Creation)
Express Contract
Implied Contract
Constructive or QuasiContract
Kinds of Contract
(Point of view of Performance)
Executed Contract
Executory Contract
Bilateral
Unilateral
Bilateral Contract
A bilateral contract is entered into by way
of exchange of promises of the parties-a
promise for a promise. No act of
performance is necessary to create a
Bilateral
contracts are formed when
bilateral contract.
parties exchange a set of promises. For
example, a contract to buy a house
involves a promise to pay an agreed price
in exchange for a promise to convey title
to the property. Making the promises is
what creates a bilateral contract; the
actual performance of paying the money
and transferring title is not required. A
party who breaks his promise to perform
Unilateral Contract
PROPOSAL OR OFFER
When one person signifies to
another his willingness to do or
to abstain from doing anything,
with a view to obtaining the
assent of that other to such act
or abstinence, he is said to
make a proposal or offer
Section 2(a)
Essentials of an OFFER
There must be an expression of
willingness to do or to abstain from
doing something
The expression of willingness to do or
to abstain from doing must be made
to another person
This expression must be made with a
view to obtain the assent of the other
person to such act or abstinence
The expression must be made with a
view to create legal relations
Contd.
An offer must be communicated to
the offeree
An offer can be made subject to any
terms & conditions
An offer should not contain a term the
non-compliance
of
which
would
amount to acceptance
Two identical cross-offers do not
make a contract
An offer may be one-time or standing
Types of Offer
Cross offer
Counter offer
Standing offer
Express or Implied offer
Specific or General offer
Positive or Negative offer
Contd.
An offer lapses by the death or
insanity of the offeror or the
offeree before acceptance
An offer lapses by revocation
Revocation by non-fulfillment of a
condition precedent to acceptance
An offer lapses by subsequent
illegality or destruction of subject
matter
ACCEPTANCE
When the person to whom
proposal has been made signifies
his assent thereto, the proposal
is said to be accepted. A proposal
when
accepted
becomes
a
promiseSection 2(b)
Legal Rules as to
Acceptance
Acceptance
must be absolute
and
unqualified.
Acceptance must be communicated to
the offeror.
Acceptance must be according to the
mode
prescribed
or
usual
and
reasonable mode.
Acceptance must be given within a
reasonable time or before the offer
lapse or is withdrawn.
Contd.
Acceptance must succeed an offer.
Acceptance must be given only by the
party to whom the offer is made.
Acceptance cannot be implied from
silence.
Rejected offer can be accepted only if
renewed
It may be express or implied
When
Consideration
at
promisor,
other
the
the
person
desire
of
the
or
any
done
or
promisee
has
promise
is
called
Legal Rules as to
Consideration
Consideration must move at the
desire of the promisor.
Consideration may move from
promisee or any other person.
Consideration may be an act,
abstinence or forbearance.
Consideration may be past,
present or future.
Contd.
Consideration need not be
adequate.
Consideration must be real and not
illusory.
Consideration must be something
which the promisee is not already
bound to do.
Consideration must not be immoral
or opposed to public policy.
No consideration, No
contractExceptions
Agreement made on account of
CAPACITY TO
CONTRACT
Position of Minors
Agreements
Contd.
No specific performance
Cannot be adjudged insolvent
Can be an agent
Minors liability in Tort
Minor as a Partner
Minor as a Shareholder
Liability of minor for necessaries
supplied to him- only his estate,
not his person
Tests of soundness of
mind
Idiots
Lunatics or insane persons
Drunkards
Hypnotized
Persons with mental decay
e.g. old aged persons
Other Persons
Disqualified by Law
Alien Enemy
Foreign Sovereigns and Ambassadors
A Company and a Corporation- for
contracts not made under its seal, for
ultra vires contracts, and for
contracts of personal nature
Convicts
Insolvents
Married women- in respect of
properties not their stridhan
Pardanashin women
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FREE CONSENT
Consent is defined:
Two or more persons are said to
consent when they agree upon the
same thing in the same sense.
Section 13
Consent involves consensus ad-idem
i.e. identity of minds about the subject
matter of the contract.
A mere consent is not enough, it should
be free and voluntary.
FREE CONSENT
Coercion
Coercion is the committing or
threatening to commit, any act
forbidden by the Indian Penal Code,
or
the
unlawful
detaining
or
threatening to detain, any property,
to the prejudice of any person
whatever, with the intention of
causing any person to enter into an
agreementSection 15
Legal rules as to
coercion
Committing or threatening to commit any act
forbidden by the Indian Penal Code
Unlawful detaining or threatening to detain any
property
The act of coercion must be done with the
object of compelling any person to enter into
an agreement
The act of coercion may be directed at any
person and not necessarily at the other party
to the agreement
The act of coercion may proceed from any
person and not necessarily from the party to
the agreement
Whether Threat to Commit Suicide Amounts To
Coercion?
Undue Influence
A Contract is said to be induced by
undue influence, where:
the relations subsisting between the
parties are such that one of the
parties is in a position to dominate
the will of the other, and
uses that position to obtain an unfair
advantage over the other.Section
16(1)
Presumption of
Domination
Master and Servant,
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Forbidden by IPC
Mainly physical in
nature
No prior presumption
Restoration of the
benefit received
Criminal liability
involved
Undue Influence
Domination of will
Moral or
psychological in
nature
Prior presumption
Restoration of the
benefit received at
the direction of the
court
No criminal liability
involved
Fraud
Fraud means and includes any of
the following acts committed by
a party to a contract, or with his
connivance or by his agent with
the intent to deceive or to
induce another party thereto, or
his agent, to enter into the
contract:
Effects of fraud
Rescission of the contract
Restitution and not rescission
(Performance with restitution)
Sue for damages/compensation
Misrepresentation
Where a person asserts
something which is not true,
though he believes it to be
true,
his assertion amounts to
misrepresentation.
Mistake