ECONOMICS,COMMERCE AND MANAGEMENT: CLASSIFICATION OF CONTRACT

Wednesday, February 6, 2019

Ø CA FOUNDATION SERIES BUSINESS LAW LECTURE 2

CLASSIFICATION OF CONTRACTS

Ø BUSINESS LAW

Ø CLASSIFICATION OF CONTRACT

VALID CONTRACT :- AN AGREEMENT ENFORCEABLE AT VALID LAW IS VALID CONTRACT. AN AGREEMENT BECOMES A CONTRACT WHEN ALL THE ESSENTIALS OF A VALID CONTRACT LAID DOWN IN SECTION 10 ARE FULFILLED.
VOID CONTRACT :- SEC 2(g) CONTRACT WHICH INITIALLY IT WAS LEGALLY ENFORCEABLE BUT BECOMES LATER ON VOID DUE TO SUPERVENING IMPOSSIBILITY OF PERFORMANCE. A CONTRACT TO IMPORT GOODS FROM A FOREIGN COUNTRY,LATER DUE TO WAR BETWEEN IMPORTING AND EXPORTING COUNTRY IT MAY BECOME VOID

VOID AGREEMENT :- THE WHICH IS NOT ENFORCEABLE AT LAW IS SAID TO BE VOID (sec 2(g).IT DOESN'T NOT CREATE ANY LEGAL RIGHTS OR OBLIGATIONS. IT IS NULL AND VOID FROM AB INITO. AN AGREEMENT WITH MINOR IS VOID
. VOIDABLE CONTRACT :- VOIDABLE CONTRACT IS VALID AND ENFORCEABLE UNTIL IT IS CANCELLED BY THE PARTY ENTITLED TO AVOID IT.SEC 2(i). THIS HAPPENS WHEN THE CONSENT OF THE PARTY IS NOT FREE.THE PARTY WHOSE CONSENT IS NOT FREE MAY EITHER CANCEL THE CONTRACT OR BOUND BY IT. A PROMISE TO SELL HIS CAR FOR 50,000 TO B. THE CONSENT OF A IS OBTAINED BY FORCE. THIS CONTRACT IS VOIDABLE AT THE OPTION OF A

ILLEGAL AGREEMENTS:-AN ILLEGAL AGREEMENTS IS ONE WHICH VIOLATES THE BASIC PUBLIC POLICY OR WHICH IS CRIMINAL IN NATURE OF IMMORAL.SUCH AN AGREEMENT IS NULL AND VOID. ALL ILLEGAL AGREEMENTS ARE VOID BUT ALL VOID AGREEMENTS OR CONTRACTS ARE NOT NECESSARILY ILLEGAL. AN ILLEGAL AGREEMENT MAY AFFECT THE COLLATERAL TRANSACTION WHICH IS SUBSIDIARY OR INCIDENTAL.

A BORROWS RS 20,000 FROM B. AND ENTERS INTO A CONTRACT WITH ALIEN TO IMPORT PROHIBITED GOODS. THE TRANSACTION BETWEEN A AND B IS COLLATERAL ND ILLEGAL

UNENFORCEABLE CONTRACT: WHICH CAN NOT BE ENFORCED IN COURT OF LAW DUE TO SOME TECHNICAL DEFECTS.NOT PROPERLY SIGNED/NOT PROPERLY STAMPED ETC.

EXPRESS CONTRACT:-IF THE TERMS OF CONTRACT ARE EXPRESSLY AGREED UPON EITHER BY SPOKEN/WRITTEN. LIKE A OFFERS B THAT I WANT TO SELL MY BICYCLE FOR 1000.
IMPLIED CONTRACT:-AN IMPLIED CONTRACT IS ONE WHICH IS INFERRED FROM THE ACT OR CONDUCT OF THE PARTIES OR THE COURSE OF DEALING BETWEEN THEM. AN IMPLIED PROMISE RESULT IN IMPLIED CONTRACT.EXAMPLE:-

CONSTRUCTIVE OR QUASI CONTRACT:- IT IS NOT A CONTRACT AT ALL. A CONTRACT IS INTENTIONALLY ENTERED BY THE PARTIES BUT QUASI CONTRACT IS CREATED BY LAW.IT IS A CONTRACT THAT EXISTS BY ORDER OF THE COURT. LIKE A A TRADER LEAVES HIS GOODS AT B HOUSE BY MISTAKE AND B TREATS THE GOODS AS HIS OWN. HE IS LEGALLY BOUND TO PAY THE AMOUNT.
E-COM CONTRACT:-IT IS THE CONTRACT WHICH IS ENTERED INTO BETWEEN THE TWO PARTIES VIA INTERNET.

EXECUTED CONTRACT:-EXECUTED MEANS THAT WHICH S DONE. BOTH THE PARTIES HAVE PERFORMED THEIR RESPECTIVE OBLIGATIONS.LIKE A PAINTED THE PICTURE OF B AND B PAID THE MONEY FOR IT.
EXECUTORY CONTRACT :- CONTRACT IS YET TO BE PERFORMED. IT IS OF TWO TYPES
UNILATERAL CONTRACTS : IN WHICH ONLY ONE PARTY HAS FULFILLED HIS OBLIGATION AND THE OTHER PARTY HAS TO FULFILL HIS OBLIGATION. LIKE A PAINTED THE PICTURE OF B BUT B HAS NOT YET PAID
BILATERAL CONTRACTS:-IN WHICH BOTH THE PARTIES HAS TO PERFORM THEIR OBLIGATIONS. LIKE A HAS TO PAINT THE PICTURE OF B AND B HAS NOT MADE THE PAYMENT YET.

FORMAL CONTRACTS :- ARE RECOGNIZED IN ENGLAND BUT NOT IN INDIA. CONSIDERATION IS NOT ESSENTIAL IN SUCH CONTRACTS. THESE INCLUDE :-
CONTRACT OF RECORD :- THESE ARE JUDGMENTS OF COURT OR RECOGNIZANCE IS A WRITTEN ACKNOWLEDGMENT OF A DEBT DUE TO THE CROWN.
CONTRACTS UNDER SEAL :-A CONTRACT UNDER SEAL IS WHICH DERIVES ITS BINDING FORCE FROM ITS FORM.IT IS WRITTEN AND SIGNED.SEALED AND DELIVERED BY THE PARTIES. NO CONSIDERATION IS NECESSARY.

1. CONTRACT MADE BY COMPANIES

2. CONTRACTS OF LEASE RELATING TO LAND FOR MORE THAN THREE YEARS

3. CONTRACTS RELATING TO TRANSFER OF A BRITISH SHIP OR ANY SHARE THEREIN

SIMPLE CONTRACT:-ALL CONTRACT WHICH ARE NOT MADE UNDER CONTRACT UNDER SEAL ARE SIMPLE CONTRACT.