Types of Contracts on the Basis of Validity or Enforceability and Formation

Depending on the validity of the contracts, they are divided into 5 as described below. Commercial contracts serve to oblige the parties concerned to fulfill their obligations by exposing them to the risk of legal consequences in the event of a breach.3 min read Very useful article. It contains all the necessary information for a document on the types of contracts. I would like to know that the author of this document would be duly recognized in my citation and reference. An illegal contract is the contract that is prohibited by law. For example, a contract that violates public order, a contract intended to harm a person or his property or a person associated with him, etc. A contract of an illegal nature due to its object or illicit consideration or any other element is always null and void (void from the outset). Let`s know some characteristics of illegal contracts – Invalid contract – Null contract was defined in section 2(j) of the Indian Contracts Act of 1872. A void contract was once a valid contract, but it has now become invalid due to changes to some of the original terms. There is no concept of obligation or rights in a void contract and is not enforceable by either party.

These contracts are not covered by law and cannot be made valid even if both parties agree. Finally, a modern concern that has developed in contract law is the increasing use of a special type of contract known as “membership contracts” or model contracts. This type of contract may be advantageous to some parties because in one case, the strong party has the ability to impose the terms of the contract on a weaker party. Examples include mortgage contracts, leases, online purchase or registration contracts, etc. In some cases, the courts view these accession treaties with special scrutiny because of the possibility of unequal bargaining power, injustice and lack of scruples. However, in certain circumstances, certain promises that are not considered contracts may be enforced to a limited extent. If a party has reasonably relied on the statements or commitments of the other party to its detriment, the court may apply a fair doctrine of forfeiture of promissory notes to award damages to Reliance to the non-infringing party in order to compensate the party for the amount it suffered as a result of the party`s reasonable reliance on the agreement. Read more: Types of contracts based on education Unenforceable contract – These contracts are good in substance, but due to some technical shortcomings, they are not legally enforceable.

Defects could be: Articles 24 to 30 define the following types of null contracts: The difference between valid and voidable contracts is that a void contract is not enforceable at any price, but a voidable contract will only be treated as void if a party decides to treat it as voidable by opposing the performance of the contract. A distinction must be made between a null and void contract and an illegal contract. An illegal contract is a contract whose consideration is prohibited by law, while in the case of a void contract, the law only states that the court will not apply it if it is concluded. According to this definition, all illegal contracts are invalid, but not all invalid contracts are. Different types of contracts in business law are used for different types of commercial agreements. Commercial contracts serve to oblige the parties concerned to fulfil their contractual obligations by exposing them to the risk of legal consequences in the event of a breach of contract. Contracts can take many different forms to meet different situations, needs and objectives. They can be classified according to how they are formed, the type of consideration offered, how they are executed, and whether or not they are valid. A contract can be a simple verbal or written agreement that does not need to be signed, attested or sealed. It can also be a formal written agreement, attested, signed and sealed by the parties concerned. Traditionally, a contract was only considered legally enforceable if it was sealed. Now that the courts are recognizing tacit contracts and other types of informal contracts, the use of formal contracts under seal has decreased.

When it comes to contracts, there are four classifications, including: Contracts based on validity or legal effects – Contracts based on legal implications fall into this category of contracts. Contracts based on validity can come in five different forms, including valid contracts, invalid contracts, countervailable contracts, illegal contracts and unenforceable contracts. A valid contract is a legally enforceable contract, while a void contract is unenforceable and does not impose any obligation on the parties involved. When a contract is concluded under certain physical or psychological pressure, it is called a questionable contract. Such a contract may become a valid or void contract in the future. An illegal contract refers to a contract with an illegal object, while an unenforceable contract is a contract that has not fulfilled certain legal formalities. Illegal contracts are those that are prohibited by law. All illegal contracts are therefore void.

Due to the illegality of their nature, they cannot be enforced by any court. .