There are four main categories of contracts according to different criteria:
1) According to enforceability: valid contracts are legally enforceable, void contracts become unenforceable due to reasons like impossibility, and voidable contracts can be enforced or avoided by one party.
2) According to formation: valid contracts meet all requirements while void agreements lack essential elements.
3) According to performance: valid contracts legally bind parties to perform, void contracts do not, and voidable contracts can be enforced or avoided.
4) According to parties: contracts differ based on the parties involved and their legal obligations.
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Kinds of Contract: Abdul Majid Khalil
There are four main categories of contracts according to different criteria:
1) According to enforceability: valid contracts are legally enforceable, void contracts become unenforceable due to reasons like impossibility, and voidable contracts can be enforced or avoided by one party.
2) According to formation: valid contracts meet all requirements while void agreements lack essential elements.
3) According to performance: valid contracts legally bind parties to perform, void contracts do not, and voidable contracts can be enforced or avoided.
4) According to parties: contracts differ based on the parties involved and their legal obligations.
Download as PPTX, PDF, TXT or read online on Scribd
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Kinds Of Contract
Abdul Majid Khalil
KINDS OF CONTRACT • The contract can be classified into the following four categories: • According to Enforceability • According to Formation • According to Performance • According to Parties Explanation of each kind is given below in detail. 1. According to Enforceability According to enforceability, a contract can be divided as under: a. Valid Contract A valid contract is enforceable by law. An agreement becomes enforceable by law when all the essentials of a valid contract are present. Obligation of Parties In a valid contract, all the parties are legally responsible for the performance of the contract. If one of the parties breaches the contract, the other party can enforce it through the court of law. Example A agrees to sell a car to B. if it fulfills all the essentials of a contract, it is a valid contract. If A fails to deliver the car, B can sue him and if B fails to pay, A can sue him. Void Contract The word void means not binding in law. Section 2(j) defines “A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable.” it means that a void contract is not void from the beginning. It is valid contract when it is made but subsequently it becomes void due to a certain reasons. Obligation of Parties In void contract both the parties are not legally responsible to fulfill the contract. Under this contract the party who has received any benefit is bound to return it to the other party. A contract becomes void under the following circumstances: i. Impossibility of Performance A contract becomes void due to impossibility of performance. A contract becomes void before performance when it becomes impossible to be performed by any party due to any reason. (sec. 56) Example A agrees to sell his house to B after two days. The house is burnt next day. The contract becomes void. ii. Subsequent Illegality A contract becomes void by subsequent illegality. A contract may become illegal before performance due to certain reasons. (sec.56) Example A agrees to sell 100 bags of wheat to B. before delivery the government bans private trade in wheat. The contract becomes void. iii. Rejection of a voidable contract A voidable contract becomes void when the party whose consent is not free rejects the contract. (sec. 19) Example A forcibly buys B’s car for Rs. 50,000. the contract is voidable at the option of B. B may accept or reject it. If B rejects the contract it becomes void. iv. Impossibility of depending event The performance of a contingent contract depends upon the happening or non happening of a certain event. It becomes void when that event does not happen. (sec 32) Example A contracts to give Rs. 1 Lac to B, if B gets admission in Comsats University. B fails to get admission. The contract becomes void. c. Void agreement An agreement not enforceable by law is said to be void. The void agreement does not create legal obligations among the parties. An agreement which is void from the beginning is void ab initio. In void agreement, there is absence of one or more essentials of a valid contract except free consent. An agreement with minor and an agreement without consideration is void from the beginning. Sec. 2(g) Obligation of Parties In void agreement, the party who has received any advantage is bound to restore it to the party from which he received it. Both the parties are not responsible for the performance of the agreement. Example A promises to buy a dog from B for Rs. 10000. the dog was dead before the contract. The parties were unaware. The agreement is void. d. Voidable contract 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 or others, is a voidable contract. ( sec 2 (i)) A contract is voidable when consent of one of the parties is not free. It is a valid contract until it is avoided by the party having the right to avoid it. If the party decides to confirm it, it remains valid. A contract becomes voidable under the following circumstances: A. A contract becomes voidable when the consent of one or more of the parties to a contract is obtained by coercion, undue influence, misrepresentation or fraud. (sec. 15-18 of contract act, 1872) Examples a. A compels B to sell his car at a gunpoint. The contract is made by coercion and is voidable at the option of B. b. A deceives B by stating that his factory produces 90 kg of sugar daily and induces B to buy it. The contract is voidable at the option of B. When one party promises to do something for the other party but the other party prevents him from performing his promise, the contract becomes voidable at his option. (Sec. 53) Example A contracts to paint B’s house. A is ready to paint but B prevents him from doing so. This contract is voidable at the option of A. c. When a party to the contract promises to do a certain thing within a specified time, but fails to do it, then the contract becomes voidable at the option of promisee, if time is essence of the contract. (sec. 55) Example A contracts to paint B’s house within one week. A, does not come within the specified time. the contract is voidable at the option of B. • Obligation of Parties the following are obligations of the parties: a. It is a valid contract for both the parties if it is not rejected by the party having the right to reject. b. The law gives an option to one of the parties to avoid it. c. The party entitled to cancel the contract is not bound to cancel. If he confirms it, the other party remains bound to perform. d. The aggrieved party can get damages from the other party. e. If one party has received some benefit, he must return it to the other. Burden of Proof the burden of proof lies on plaintiff i.e. the aggrieved party. It means that the party, who claims that his consent is unfree, has to prove in the court of law. If he fails to prove, the contract remains valid. e. Unenforceable Contract An unenforceable contract is that contract which cannot be enforced in a court of law because of some technical defects such as absence of writing, registration, requisite stamp etc. when these defects are removed, the contract can be enforced. Example A borrows Rs. 1 billion from B and makes a pronote on a Rs. 10 stamp paper. It is unenforceable because pronote is undervalue. Obligation of Parties In an unenforceable contract, the parties may perform the contract. But in case of breach of such contract, the aggrieved party is not entitled to legal remedies. f. Illegal agreement An agreement is illegal when its performance is forbidden by any law such an agreement can never become a contract. An agreement is illegal and void if it is forbidden by law or is of such a nature that if permitted, it would defeat the provisions of any law or is fraudulent or involves injury to the person or property of another or the court regards it as immoral or opposed to public policy. (sec. 53) Example A gives money to B, a smuggler to buy smuggled goods. The agreement is illegal and the money cannot be recovered. Obligation of Parties The parties to the agreement are not responsible to perform their promises. There is punishment for the parties according to law.