Types of Contracts

The Indian Contract Act, 1872 does not provide one single statutory classification of all contracts. Contracts are commonly classified in Contract Law according to their validity, mode of formation, performance and enforceability.

Understanding these classifications is important because the legal consequences of a contract depend upon the category into which it falls. For example, a valid contract may be enforceable, while a void agreement is not enforceable. Similarly, an executed contract has different characteristics from an executory contract.

The principal types of contracts are:

1. Valid Contract
2. Void Agreement
3. Voidable Contract
4. Void Contract
5. Illegal Agreement
6. Unenforceable Contract
7. Express Contract
8. Implied Contract
9. Quasi-Contract
10. Executed Contract
11. Executory Contract
12. Unilateral Contract
13. Bilateral Contract

Classification of Contracts

Contracts can broadly be classified on the following bases:

Basis	Types
Validity and enforceability	Valid, void, voidable, illegal, unenforceable
Formation	Express, implied, quasi-contract
Performance	Executed, executory
Number and nature of outstanding promises	Unilateral, bilateral

Each category is discussed below.

Valid Contract

A valid contract is an agreement that satisfies the requirements of law and is enforceable by law.

Section 2(h) of the Indian Contract Act, 1872 defines a contract as:

“An agreement enforceable by law is a contract.”

Section 10 provides the principal requirements for a valid contract.

Generally, there must be:

• Agreement between the parties;
• Competent parties;
• Free consent;
• Lawful consideration;
• Lawful object;
• No express statutory declaration making the agreement void; and
• Compliance with other applicable legal requirements.

Example

A agrees to sell his car to B for ₹5 lakh. B accepts the offer. Both parties are competent, consent is free, and the consideration and object are lawful.

If all other legal requirements are satisfied, the agreement constitutes a valid contract.

Void Agreement

Section 2(g) provides:

“An agreement not enforceable by law is said to be void.”

A void agreement creates no enforceable contractual obligation.

Examples include certain agreements:

• In restraint of marriage under Section 26;
• In restraint of trade under Section 27, subject to statutory exceptions;
• In restraint of legal proceedings under Section 28, subject to statutory exceptions;
• By way of wager under Section 30, subject to applicable law; and
• Void for uncertainty under Section 29.

Example

A agrees to sell B a property, but the terms of the agreement are so uncertain that the subject matter cannot be identified.

The agreement may be void for uncertainty under Section 29.

Voidable Contract

Section 2(i) provides that an agreement is a voidable contract when it is enforceable by law at the option of one or more parties but not at the option of the other.

A common example is an agreement where consent has been obtained through:

• Coercion;
• Fraud;
• Misrepresentation; or
• Undue influence,

subject to the relevant provisions of the Act.

The affected party may have the option to affirm or avoid the contract.

Example

A threatens B and obtains B’s consent to sell property at an unfair price.

If the requirements of coercion under the Act are established, B may have the right to avoid the contract.

Void Contract

Section 2(j) provides:

“A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.”

A contract may therefore be valid when initially formed but subsequently become void.

Example

A agrees to supply certain goods to B. Before performance becomes due, the subject matter is destroyed in circumstances recognised by law, making performance impossible.

The contract may subsequently become void under the applicable provisions.

Illegal Agreement

An illegal agreement is an agreement whose object or consideration is prohibited by law or otherwise unlawful.

Section 23 provides circumstances in which consideration or object is unlawful.

It includes situations where the consideration or object:

• Is forbidden by law;
• Defeats the provisions of law;
• Is fraudulent;
• Involves injury to a person or property;
• Is immoral; or
• Is opposed to public policy.

Example

A agrees to pay B ₹1 lakh to commit a crime.

The agreement is illegal because its object is unlawful.

Difference Between Void and Illegal Agreement

Void and illegal agreements are not identical.

Void Agreement	Illegal Agreement
Not enforceable by law	Unlawful in object or consideration
May not necessarily involve prohibited conduct	Involves an unlawful element
Every illegal agreement is void	Every void agreement is not necessarily illegal
Collateral transactions may sometimes remain unaffected	Collateral transactions may also be affected depending upon the nature of illegality

The distinction is particularly important when determining the consequences of related transactions.

Unenforceable Contract

An unenforceable contract is one that may have the elements of a contract but cannot be enforced because of a technical or procedural defect.

Examples may involve:

• Failure to comply with a required form;
• Absence of required registration;
• Limitation-related issues; or
• Other procedural requirements affecting enforceability.

The precise consequence depends upon the statute governing the transaction.

An unenforceable agreement should therefore be distinguished from an agreement that is inherently void.

Express Contract

Section 9 recognises express and implied promises.

A contract is express when the proposal or acceptance is made in words, whether oral or written.

Example

A writes to B:

“I will sell you my laptop for ₹40,000.”

B replies:

“I accept.”

The contract is express because the terms have been communicated through words.

Implied Contract

A contract is implied when the proposal or acceptance is inferred from conduct rather than expressed words.

Section 9 recognises promises that are express or implied.

Example

A enters a taxi and asks the driver to take him to a particular destination.

The parties may be understood to have entered into an implied contractual relationship concerning the journey and payment of the fare.

Quasi-Contract

A quasi-contract is not an actual contract created through offer and acceptance.

It is an obligation imposed by law in circumstances where one person has received a benefit or where justice requires a legal obligation to arise.

The Indian Contract Act deals with such relationships under Chapter V, Sections 68 to 72, under the heading “Of Certain Relations Resembling Those Created by Contract.”

Important provisions include:

• Section 68 — necessaries supplied to a person incapable of contracting;
• Section 69 — payment by an interested person of money due by another;
• Section 70 — non-gratuitous act;
• Section 71 — responsibility of finder of goods; and
• Section 72 — money or goods delivered by mistake or under coercion.

Example

A mistakenly pays money to B, when the money was actually payable to C.

Depending upon the circumstances, Section 72 may require B to repay the money.

Executed Contract

A contract is executed when the parties have completely performed their contractual obligations.

Example

A buys a book from B for ₹500.

A pays ₹500 and B immediately delivers the book.

Both parties have performed their obligations. The contract is executed.

Executory Contract

A contract is executory when performance remains to be completed by one or both parties.

Example

A agrees to deliver 100 bags of rice to B next month, and B agrees to pay on delivery.

The contractual obligations remain to be performed.

The contract is therefore executory.

Partly Executed and Partly Executory Contract

A contract may be partly executed and partly executory where one party has performed their obligation but the other party’s obligation remains outstanding.

Example

A agrees to sell goods to B for ₹50,000.

A delivers the goods, but B has agreed to make payment after 30 days.

A’s obligation has been performed, while B’s obligation remains outstanding.

Unilateral Contract

A unilateral contract is one in which, after the offer is made, the obligation is generally accepted through the performance of the required act rather than by a separate promise to perform.

A classic example is a reward offer.

Example

A announces:

“I will pay ₹10,000 to anyone who finds and returns my lost dog.”

B finds the dog and returns it.

B’s performance of the specified act may constitute acceptance of the offer, subject to the applicable principles of offer and acceptance.

Bilateral Contract

A bilateral contract involves mutual promises, with each party undertaking an obligation to the other.

Example

A agrees to sell his car to B for ₹6 lakh.

• A promises to deliver the car.
• B promises to pay ₹6 lakh.

These are reciprocal promises.

Difference Between Unilateral and Bilateral Contracts

Basis	Unilateral Contract	Bilateral Contract
Nature	Promise in return for performance of an act	Promise in return for another promise
Acceptance	Generally through performance	Generally through acceptance and reciprocal promise
Obligations	Usually one side becomes bound upon the required performance	Both parties undertake reciprocal obligations
Example	Reward for finding lost property	Sale agreement

Executed vs Executory Contract

Executed Contract	Executory Contract
Obligations have been performed	Obligations remain to be performed
Performance is complete	Performance is pending
Example: cash purchase with immediate delivery	Example: goods to be delivered next month

Valid, Void and Voidable Contracts

Type	Legal Position
Valid contract	Fully enforceable according to law
Void agreement	Not enforceable from the beginning
Voidable contract	Enforceable at the option of the entitled party
Void contract	Initially valid but later becomes unenforceable
Illegal agreement	Object or consideration is unlawful
Unenforceable contract	Cannot be enforced because of a legal or procedural defect

Important Cases

Mohori Bibee v. Dharmodas Ghose (1903)

The Privy Council held that a minor’s agreement is void ab initio.

The case is a leading authority concerning contractual capacity.

Satyabrata Ghose v. Mugneeram Bangur & Co. (1954)

The Supreme Court explained the concept of impossibility under Section 56 and held that the expression “impossible” is not confined to literal or physical impossibility.

The case is important in understanding circumstances in which a contract may subsequently become void due to impossibility of performance.

Gherulal Parakh v. Mahadeodas Maiya (1959)

The Supreme Court considered agreements involving wagers and the distinction between agreements that are void and those that are illegal.

The case is important for understanding the legal consequences of wagering agreements.

Balfour v. Balfour (1919)

The case is commonly used to illustrate the distinction between ordinary domestic arrangements and agreements intended to create legal obligations.

Carlill v. Carbolic Smoke Ball Co. (1893)

The case illustrates offer and acceptance in the context of a unilateral offer and is commonly used to explain unilateral contracts.

State of West Bengal v. B.K. Mondal & Sons (1962)

The Supreme Court considered Section 70 concerning non-gratuitous acts and the obligation to compensate where a person lawfully does something for another person or delivers something without intending to act gratuitously and the other person enjoys the benefit.

The case is important for understanding quasi-contractual obligations.

Importance of Classifying Contracts

Classification helps determine the legal consequences of a particular contractual relationship.

It helps answer questions such as:

• Is the agreement enforceable?
• Can a party avoid the contract?
• Has the contract become void?
• Has performance been completed?
• How was the contract formed?
• Is the obligation based on an actual agreement or imposed by law?
• What remedies may be available?

Correct classification is therefore essential for applying the appropriate provisions of the Indian Contract Act.

Key Points for Examination

• Contracts may be classified according to validity, formation, performance and enforceability.
• A valid contract is enforceable by law.
• A void agreement is not enforceable by law.
• A voidable contract is enforceable at the option of one or more parties.
• A void contract was initially enforceable but subsequently ceased to be enforceable.
• An illegal agreement has an unlawful object or consideration.
• An unenforceable contract suffers from a legal or procedural defect affecting enforcement.
• Express contracts are formed through words.
• Implied contracts arise from conduct or circumstances.
• Quasi-contracts are obligations imposed by law and are dealt with under Sections 68–72.
• Executed contracts have been completely performed.
• Executory contracts remain to be performed.
• A contract may also be partly executed and partly executory.
• Unilateral contracts generally involve acceptance through performance of the required act.
• Bilateral contracts involve reciprocal promises.
• Section 9 deals with express and implied promises.
• Section 10 provides the principal requirements for a valid contract.
• Sections 68–72 deal with certain relations resembling those created by contract.
• Mohori Bibee v. Dharmodas Ghose is important for void agreements involving minors.
• Satyabrata Ghose v. Mugneeram Bangur & Co. is important for impossibility of performance.
• Gherulal Parakh v. Mahadeodas Maiya is important for wagering agreements.
• State of West Bengal v. B.K. Mondal & Sons is important for quasi-contractual obligations.

Conclusion

Contracts can be classified in several ways depending upon their validity, formation, performance and enforceability. The most important classifications include valid, void, voidable, illegal, unenforceable, express, implied, quasi-contractual, executed, executory, unilateral and bilateral contracts.

These classifications are not merely theoretical. They determine whether an agreement can be enforced, whether a party has the option to avoid it, whether the obligations have already been performed and what legal consequences follow from the relationship.

For examination purposes, the basic classification can be remembered as:

Validity: Valid, Void, Voidable, Void, Illegal, Unenforceable

Formation: Express, Implied, Quasi-contract

Performance: Executed, Executory

Promises: Unilateral, Bilateral

Understanding these categories provides the foundation for studying more specific areas of the Indian Contract Act, 1872, including offer and acceptance, consideration, capacity, free consent, contingent contracts, performance, breach and remedies.