Classification of contract

1. Classification of contract
According to legal validity or
Enforceability
Submitted by:
Abhishek (1) , Kasish (19), mohit (29),
parul(35), saurav (41), sonali (48)

2. Contract Act ( key point)
• This act is governed by the INDIAN CONTRACT ACT
1872.
• Act came into force on the first day of September ,
1872.
• Extended to whole India except Jammu and Kashmir.
• The first part section ( 1 to 75 )deals with the general
principles of law of contact
• The second part section (124- 238) deals with the
certain special kinds of contacts, namely Contact of
indemnity and guarantee, bailment, pledge and
agency

3. Classification of contract according to - legal
Validity
Void Valid
Voidable Illegal
Unenforceble
contract

4. Valid Contract
According to Section 10 of the Indian Contract
Act , 1872 –
“ All Agreement are contact if they are made by
the free consent of parties Competent to
Contract, for A lawful Consideration and with a
lawful object, and are not hereby expressly
declared to be void.”

5. Essential element of Valid contract
• An offer or proposal by one party and
acceptance of that offer by another party.
• An intention to create legal relations.
• The agreement is supported by lawful
Consideration.
• The parties to the contract are legally capable
of Contracting.
• The agreement is capable of being performed.
i.e it is not impossible of being performed.

6. Example
- A promise to sell a L.C.D TV to B in rupees
10,000 and B make promise to make payment
at time of delivery of good.
( In the above case )
- it is an Agreement.
- based of genuine consent of the parties.
- supported by lawful consideration.
- made for a lawful objects.

7. Voidable contract
A contract which is deficient in only free
consent, is called voidable contract that mean it
is a contract which is made under certain
pressure either physical or mental.
Reasons that can make a contract voidable
include failure by one or both parties to disclose
a material fact; mistake; misrepresentation;
fraud, breach of contract.

8. Example of voidable contract
X says to Y, that he should sell his new bungalow
to him at a nominal price otherwise, he will
damage his property and Y enter into Contract
due to fear. In this situation, the contract
voidable as the consent of Y is not free, so he
has the right to avoid the performance of his
part. As well as he can claim for any damages
cause to him.

9. Void contract
The term void contract is define as under
section 2(j) of Indian Contract Act 1872,
A contract which cases to be enforceable by law
become void when it ceases to be enforceable.
In the other words, a Void contract is a contract
which is valid when entered into But which
subsequently become void due to impossibility
of performance, change of law or some other
reason.

10. Example of void contract
A promise to B to sell his horse after one month
to B for rupees 50,000. before the completion of
one month, the horse died. Now the contract
become void as the contract cannot be
performed. The object on which the parties
agreed is no more, so there is impossibility of
contract.

11. Unenforceable contract
A contract which has not properly fulfilled legal
formation is called unenforceable contract that
means unenforceable contracts suffers from
some technical defect like insufficient stamp,
written form, legal procedure after rectification
of that technical defect, it becomes enforceable
or valid contract.

12. Example of unenforceable contract
A and B drafted their agreement on Rs. 10/-
stamp where it is to be written actually on Rs/-
100 stamp.

13. Illegal Contract
Illegal contract are those contract in which is
legally not supported or if the contract has
unlawful object it is called illegal contract.

14. Example of illegal contract
There is a contract between X and Z according to
which Z has to murder Y for a Consideration of
Rs 1,00,000 from X.
In that case this type of contract is illegal.

15. Summary of above concept

16. Voidable vs void (case diff)
• X says to Y, that he should
sell his new bungalow to
him at a nominal price
otherwise, he will damage
his property and Y enter
into Contract due to fear. In
this situation, the contract
voidable as the consent of Y
is not free, so he has the
right to avoid the
performance of his part. As
well as he can claim for any
damages cause to him.
• A promise to B to sell his
horse after one month to B
for rupees 50,000. before
the completion of one
month, the horse died. Now
the contract become void as
the contract cannot be
performed. The object on
which the parties agreed is
no more, so there is
impossibility of contract.

17. Illegal vs unenforceable
• An contract between A
and B to sell and
purchase the DRUGS.
according to Indian law
selling of drugs is illegal
• There is a proper
stamps and legal
document prescribed
by Indian law while
purchasing the house. If
the stamps or
documentation are not
in a prescribed manner
than it become
unenforceable.

18. thankyou