Coupon Accepted Successfully!


Types of Contract

On the basis of creation
On the basis of validity
On the basis of
nature of obligation
On the basis of performance
On the basis of formalities
  • Expressed contract
  • Implied/Tacit contract
  • Quasi contract
  • E - contract
  • Valid contract
  • Void contract
  • Voidable contract
  • Unenforceable Contract
  • Void Agreement
  • Illegal Agreement
  • Unilateral contract
  • Bilateral contract
  • Executed contract
  • Executory contract
  • Formal contracts
    • Contract of records
    • Contracts under seal
  • Simple contract

Express contract

Where the terms of the agreement are expressly agreed upon by the parties in words either written or spoken, at the time of formation, the contract is said to be an express contract.



Amar said to Akbar, “Will you buy my watch for ₹ 50?” Akbar replies, “I am ready to buy”. This is an express contract made orally.

Implied / Tacit contract

Where a proposal or acceptance is made otherwise than in word spoken or written, promise is said to be implied. These contracts are not created by words, either spoken or written but created by act or conduct of parties.



Buying a cup of tea in a restaurant, getting into public bus, using a phone booth are some of the many examples where parties do not signify there offer and acceptance by words spoken or written.

Quasi contracts

These contracts are created neither by words (spoken or written) nor by the conduct of parties, but created by law. A quasi contract is based on the principle that a person shall not be allowed to enrich himself at the expense of another.



Amar a trader leaves goods at Akbar’s place. Akbar treats the goods as his own and uses the goods. Akbar is bound to pay for the goods to Amar as Akbar has used the good to his benefit.


An E-contract is the one, which is entered between the parties via internet. It is one of the most common ways of contracting in the current scenario. The offer and acceptance of the parties do not happen in person but over the information highway (internet).



Rohit ordered a law book from an online book store. The book store makes the delivery in four working days and rohit pays for the same.

Sec. 2(h) Valid contract

“An agreement enforceable by law is a contract”. An agreement which has all the essential elements of a contract is known as a valid contract. A valid contract is one which can be enforced by any of the parties to the contract and the party not at fault can also file a suit in the court of law.



Amar offers to sell his horse for ₹ 1,000 to Akbar. He accepts the offer. It is a valid contract. Here either of the parties to the contract can enforce the contract.

Sec. 2(i) Voidable contract

“An agreement enforceable by law at the option of one or more parties, but not at the option of other or others is voidable contract.” A voidable contract is one which can be set aside, repudiated or avoided at the option of the aggrieved party. Until the contract is set-aside or repudiated by the aggrieved party, it remains a valid contract.



Amar promises to sell his horse to Akbar for ₹ 10 and Amar’s consent was obtained forcefully. The contract is voidable at the option of Amar. If he fails to avoid, the contract remains valid.

Sec 2(j) Void contract

“A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. In other words a void contract is a contract which was enforceable by law, when originally created, but due to the happening of some events, it ceases to be enforceable by law



Amar offers to marry Laxmi. Laxmi accepts the offer. Later, Laxmi dies. The contract was valid at the time of formation but subsequently becomes void on the death of Laxmi

  • Circumstances under which a contract was valid at the time of formation but subsequently becomes void:
  • Destruction Of subject matter
  • Contract becoming unlawful
  • Death of the parties
  • Parties becoming unsound mind
  • Party becoming Alien enemy

Unenforceable contracts

A contract which is good in substance, but due to technical defects cannot be enforced by law is known as unenforceable contract. If the defect is removed, the contract can be enforced.



When the law requires that a contract should be in writing, stamped or registered, the contract cannot be enforced by law if such formalities are not properly observed.

Sec 2(g) Void agreement

“An agreement not enforceable by law is said to be void”. A void agreement is in nullity of substance and destitute of any legal effects in the eyes of law. It is void ab initio i.e. void from the very beginning. Such an agreement does not result in a contract at all.



Ashwin a major extends a loan of ₹ 10,000 to Raj a minor, Raj fails to pay the loan amount. Ashwin cannot recover the same as an agreement with the minor is void ab initio.

Illegal Agreement

The term illegal refers to an act which is in contravention of law. In other words agreements which are forbidden and punishable by law are called illegal agreements. Making of such agreements is unacceptable and the law does not recognise such agreements and they are declared void-ab-initio. Moreover any collateral agreement to an illegal agreement is also tainted with illegality and hence void.



Salman agrees to pay ₹ 1,00,000 to Virat If he kills Smith. Such agreements are criminal in nature and therefore cannot be enforced in the court of law.




Salman takes a loan of  1,00,000 from Aryan. Salman agrees to pay  1,00,000 to Virat If he kills Smith. Such agreements are criminal in nature and therefore Salman cannot sue Virat for non-performance if Virat fails to kill smith. Neither can Aryan demand the repayment of loan from Salman as the primary transaction between Salman and Virat was illegal and therefore the collateral transaction between Aryan and Salman also cannot be enforced (If Aryan is not aware regarding the purpose of the transaction he can recover).



Note: All illegal agreements are void agreements, but all void agreements are not illegal.

Difference between Void Agreement and Illegal Agreement

Void Agreement Illegal Agreement
All void agreements are not necessarily illegal All illegal agreements are void
The benefit received has to be restored to other party The money advanced or thing given cannot be claimed back
It is not a punishable offence It is Punishable offence

Unilateral contract

A unilateral contract is one wherein at the time the contract is entered into there is an obligation to perform on the part of one party only.



Raj makes payment for rail tickets for his journey from Delhi to Mumbai. He has performed his promise. It is now for the railways company to perform the promise.



Note: Unilateral contract is a one sided contract where one party (offeror) promises to do something in the return for an act of the other party (offeree). Before the act is performed, the promise of the promisor is a mere unilateral offer. When the act is performed, this unilateral offer and the performed act give rise to a unilateral contract.




The offeror published a newspaper notice offering a reward for the return of a lost Boy. The offeree is under no obligation to look for the boy, but if he or she finds the boy and returns to the offeror, then the offeror is bound to reward the offeree.


Bilateral contract

This is a contract in which both the parties have an obligation to perform at the time of its formation as both have made promises for the future. Bilateral contracts are similar to executory contracts and are also known as contracts with executory consideration.



Amar promises to sell his two wheeler for ₹ 15,000 to Akbar and agrees to deliver the two wheeler on the receipt of the payment by the end of the month. The contract is bilateral as both the parties have exchanged a promise to be performed within a stipulated time period in future.


Executed contract

An executed contract is the one in which both the parties have performed their respective obligations. It is a contract where, in the terms of contract, nothing remains to be fulfilled by the parties.



Hussain agrees to paint a picture for Amitabh for ₹ 5,000. When Hussain paints and Amitabh pays the price, i.e., when both parties perform their obligations, the contract is said to be executed.


Executory contract

An executory contract is one wherein both the parties to the contract, are yet to perform their obligations.



In the above example, if Hussain has not yet painted the picture and Amitabh has not paid the price, the contract is executory.

Formal contracts

These include: (a) contracts of record, and (b) contracts under seal. Contracts of record and contracts under seal are known as formal contracts because their validity depends on the form in which they are made.
  • Contracts of record: A contract of record is either a judgment of a Court or a recognisance. A judgment is an obligation imposed by a Court upon one or more persons in favour of other or others. Strictly speaking, it is not a contract which rests on agreements. It is usually met with in connection with criminal proceedings.

When a person is arrested, he may be released on a promise to appear in the Court or to be in good behaviour, subject to money penalty, if this obligation is broken it is a recognisance.

  • Contracts under seal A contract under seal is the one which derives its binding force from its form alone. It is in writing and is signed, sealed and delivered by the parties. It is also called a deed or a speciality contract.
The contracts which must be made under seal, include:
  • Contracts made without consideration
  • Contracts made by corporations
  • Gift deeds

Note: Contracts of record derive their binding force from the authority of the Court. They are, in fact, not real contracts because they lack the essential element of consensus. They are enforced compulsorily by the Court of law.

Simple contract

A simple contract is the contract that is not formal. It can be made orally or in writing and must be supported by consideration.

Test Your Skills Now!
Take a Quiz now
Reviewer Name