Types of Contract - Based on Validity, Formation, Performance for CLAT - Practice Questions & MCQ

Introduction:

• In Contract Law, contracts can be categorized into various types based on different criteria, such as their validity, formation, and performance. These categories help us understand the nature and characteristics of contracts and play a crucial role in determining their legal enforceability. 

Types of Contract Laws based on their Validity, Formation and Performance

I. Types of Contracts Based on Validity:

Valid Contracts:

• Valid contracts are legally binding agreements that meet all the essential elements required by law. These elements include an offer, acceptance, consideration, legal capacity, intention to create legal relations, and a lawful purpose.
• Parties to a valid contract are obligated to fulfill their respective promises.
• Example: A agrees to sell his bicycle to B for ₹5,000. B accepts the offer and pays ₹5,000. Both parties have the capacity to contract, and the contract has all essential elements. It is a valid contract.

Void Contracts:

• Void contracts are agreements that lack one or more essential elements from the beginning, making them unenforceable by law. Essentially, these contracts are considered null and void.
• Example: A contracts with B to engage in illegal activities. The contract is void because its purpose is illegal.

Voidable Contracts:

• Voidable contracts are initially valid but can be voided at the option of one of the parties due to certain defects or circumstances. These defects could include coercion, undue influence, fraud, or misrepresentation.
• Example: A, under duress, agrees to sell his property to B. A can choose to void the contract if he so wishes due to the duress.

II. Types of Contracts Based on Formation:

Express Contracts:

• Express contracts are formed when the terms and conditions are explicitly and clearly stated, either verbally or in writing. The parties overtly define their obligations and expectations.
• Example: A and B sign a written contract specifying that A will provide consulting services to B for six months in exchange for a monthly fee of ₹10,000.

Implied Contracts:

• Implied contracts arise from the parties' actions or conduct, without explicit written or spoken terms. The agreement is inferred from their behavior and circumstances.
• Example: A visits a restaurant, orders a meal, consumes it, and then refuses to pay. An implied contract to pay for the food arises from A's actions and the restaurant's customary practices.

III. Types of Contracts Based on Performance:

Executed Contracts:

• Executed contracts are those in which both parties have fulfilled their respective obligations, and nothing remains to be done. The contract is completed.
• Example: A hires B to repair his car. B completes the repairs, and A pays the agreed-upon repair fee. The contract is executed.

Executory Contracts:

• Executory contracts are those where one or both parties have yet to perform their obligations as per the contract terms. These contracts are ongoing and not yet completed.
• Example: A hires B to paint his house. B has started painting but hasn't finished the job. The contract is executory until B completes the painting.