Types of contracts
Types of Contracts
Contracts can be classified in various ways based on their characteristics. Here’s a detailed overview:
1. Express and Implied Contracts
A. Express Contract
Terms are stated clearly, either orally or in writing.
Parties explicitly agree on the terms.
Example:
A signed agreement to sell a car for ₹5 lakhs.
B. Implied Contract
Formed by conduct or circumstances, not expressly stated.
Actions of parties indicate mutual agreement.
Example:
Taking a taxi and paying the fare implies a contract for transportation.
Case Law:
Carlill v Carbolic Smoke Ball Co. (1893)
Court held the advertisement was a unilateral offer, and acceptance was by performance, an express contract.
2. Bilateral and Unilateral Contracts
A. Bilateral Contract
Both parties exchange promises to perform.
Most contracts are bilateral.
Example:
A promises to sell goods, B promises to pay.
B. Unilateral Contract
One party promises something in exchange for the other party’s performance.
No promise is made by the performing party.
Example:
A offers a reward for finding a lost dog; contract formed when someone finds and returns the dog.
Case Law:
Carlill v Carbolic Smoke Ball Co. (1893) is also an example of unilateral contract.
3. Executed and Executory Contracts
A. Executed Contract
Both parties have fully performed their contractual obligations.
Example:
Bought and paid for goods delivered immediately.
B. Executory Contract
Contract where performance is yet to be done by one or both parties.
Example:
Contract to build a house to be completed in six months.
4. Valid, Void, Voidable, and Illegal Contracts
A. Valid Contract
Meets all essential elements (offer, acceptance, consideration, capacity, lawful object).
Enforceable by law.
B. Void Contract
No legal effect from the beginning.
Lacks one or more essential elements.
Example:
Agreement for illegal activity.
C. Voidable Contract
Valid contract but one party has the option to rescind due to factors like coercion, misrepresentation.
Case Law:
Derry v Peek (1889) – Established principles about misrepresentation making contracts voidable.
D. Illegal Contract
Contract involving unlawful acts.
Not enforceable and no remedy for breach.
5. Contingent and Quasi Contracts
A. Contingent Contract
Depends on the happening or non-happening of a certain event.
Example:
“A agrees to pay B ₹1,00,000 if it rains tomorrow.”
Case Law:
Balfour v Balfour (1919) distinguished social agreements from enforceable contingent contracts.
B. Quasi Contract
Imposed by law to prevent unjust enrichment where no actual contract exists.
Example:
If A mistakenly pays B’s debt, B must repay A.
Case Law:
Karnataka Power Transmission Corp. Ltd. v. Ashok Iron Works (2006) — recognized quasi-contractual obligations.
6. Standard Form Contracts
Pre-drafted contracts where terms are fixed by one party.
The other party has little or no negotiation power (e.g., software licenses).
7. Contracts of Adhesion
A type of standard form contract.
Usually take-it-or-leave-it basis, often scrutinized for fairness.
8. Summary Table
| Type | Definition | Example | Case Law Reference |
|---|---|---|---|
| Express Contract | Terms explicitly stated | Written sale agreement | Carlill v Carbolic Smoke Ball Co. |
| Implied Contract | Formed by conduct | Taxi fare payment | - |
| Bilateral Contract | Exchange of mutual promises | Sale of goods | - |
| Unilateral Contract | Promise for performance | Reward offer | Carlill v Carbolic Smoke Ball Co. |
| Executed Contract | Fully performed | Completed sale and delivery | - |
| Executory Contract | Performance pending | Contract to build a house | - |
| Valid Contract | Legally enforceable | Most contracts | - |
| Void Contract | No legal effect | Illegal agreement | - |
| Voidable Contract | Can be rescinded | Contract induced by misrepresentation | Derry v Peek |
| Illegal Contract | Unlawful purpose | Contract for illegal trade | - |
| Contingent Contract | Depends on uncertain event | Payment if it rains | Balfour v Balfour |
| Quasi Contract | Imposed by law | Recovery for unjust enrichment | Karnataka Power Transmission |
9. Conclusion
Understanding the types of contracts helps identify their validity, enforceability, and appropriate legal remedies. Case law provides clarity on practical application and interpretation in courts.
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