types of contracts in business law

PRESENTATION ON CONTRACTS

ABHINAV KUMAR YADAVROLL NO- 01

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DEFINITIONS• A contract is an agreement made between

two or more parties which the law will enforce.

• Sec 2(h) defines a contract as an agreement enforceable by law.

• Pollock: “ Every agreement and promise enforceable at law is a contract.”

• Salmond: “ A contract is an agreement creating and defining obligations between the parties.”

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CONTRACT

AGREEMENT+ ENFORCEABILITY

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AGREEMENT

• An agreement is defined as “ every promise and every set of promises, forming consideration for each other.”

• A proposal when accepted becomes a promise.

Agreement= Offer + Acceptance

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ENFORCEABILITY

• Enforceability is the “legal obligation” which imposes upon a definite person or persons the necessity of doing or abstaining from doing something.

• An agreement which gives rise to a social obligation is not a contract.

Agreement + Legal obligation Contract Agreement + Social obligation Contract

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EXAMPLES

• A promises to sell his car to B for Rs. 10,000 received by him as the price of the car. This agreement gives rise to an obligation on the part of A to deliver the car to B. This agreement is a contract.

• A father promises to pay his son Rs. 1000 every month as pocket money. Later he refuses to pay. In this case the agreement is not a contract as social obligation is involved.

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ESSENTIAL ELEMENTS OF A VALID CONTRACT

1) Offer and acceptance2) Intention to create legal relationship3) Lawful consideration4) Capacity of parties- Competency5) Free and genuine consent6) Lawful object7) Certainty and possibility of performance8) Agreement not declared void

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TYPES OF CONTRACT

• Contracts can be classified according to their-

i. Validityii.Formationiii.Performance

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CLASSIFICATION BASED ON VALIDITY

1. Voidable contract- “free consent missing”

2. Void contract- ceases to be inforceable by law

3. Illegal contract- criminal or immoral in nature

4. Unenforceable contract- can’t be enforced by law because of some technical defect

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VOIDABLE CONTRACT

• A promises to sell his car to B for Rs. 2,000. But his consent is obtained by use of force. The contract is voidable at the option of A. He may avoid the contract or may choose to bound by it.

Consent is obtained by coercion, undue

influence, fraud or misrepresentation.

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VOID CONTRACT

• A contract to import goods from a foreign country may subsequently become void when war breaks out between the two countries.

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ILLEGAL CONTRACTS

• B borrows Rs. 5,000 from A and enters into a contract with an alien to import prohibited goods. A knows the purpose of the loan but still gives the loan.The transaction between B and A is serving to support the main agreement.Hence the contract becomes illegal since the main agreement is illegal.

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UNENFORCEABLE CONTRACT

• The contract becomes unenforceable in a Court of law because of some technical defects such as absence of writing or no evidence of formation of contract or where the remedy has been barred by lapse of time.

• Thus in event of breach of such contract, the aggrieved party will not be entiltled to the legal remedies.

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CLASSIFICATION BASED ON FORMATION

• Express contract- The terms of a contract are expressly agreed upon (either by spoken words or in writing) at the time of formation of the contract.

Eg: A pays Rs. 20,000 to B with the purpose of

buying B’s car. The terms of the agreement are written in a document signed by both of them.

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• Implied contract- It is inferred from the acts or conduct of the parties.It is not a result of any express promise. No verbal means are used to express the acceptance of proposal of contract.

Eg: There is an implied contract when A-i. Gets into a public bus ii. Take a cup of coffee in a restaurantiii.Obtains a ticket from automatic weighing

machine

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• Quasi contract- It’s not a contract at all in strict sense. No intentional entering into contract is there. It is created by law. It rests on ground of equity that “ a person shall not be allowed to enrich himself unjustly at the expense of another.”

Eg: A supplier leaves goods at C’s shop by mistake. C treats the goods as his own. C is bound to pay for the goods.

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CLASSIFICATION BASED ON PERFORMANCE

• Executed contract- both parties have performed their respective obligations

Eg: A agrees to paint a picture for B for Rs.

1000. When A paints the picture and B pays the price, i.e., when both the parties have performed their obligations, the contract is said to be executed.

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CLASSIFICATION BASED ON PERFORMANCE

• Executory contract- Both the parties are yet to perform their obligations.

If A has not yet painted the picture and B has not yet paid the price, the contract is executory.

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THANK YOU

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types of contracts in business law

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