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Regulatory Requirements: Contract Law:
Classification of Contracts
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Express Contract:-A contract wherein both the offer and acceptance are made in words, spoken or written.

Implied Contract:- A contract which is inferred from the conduct of parties or course of dealings between them.

Quasi Contract:- It is a contract which does not arise by virtue of an agreement, express or implied, but the law recognises the contract under certain special circumstances. These contracts are based on the principle of equity, justice and good conscience. The Act describes the obligations arising under these contracts as 'certain relations resembling those created by contracts'. Some of the transactions that will be considered as 'quasi-contract' under the law are:-

  • When a person who is interested in the payment of money which another person is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other person

  • When a person finds goods belonging to another person, it is his duty to restore them to the rightful owner;

  • A person to whom money is paid or anything delivered, by mistake or under coercion, is liable to repay or return it

  • Where necessaries are supplied to a person, who is incompetent to contract such as minors or to someone whom he is legally bound to support, the supplier is entitled to recover the price of the property of the incompetent person,etc.

Valid Contract:- A valid contract is a 'contract which satisfies all the requirements of the Act'. Such a contract creates rights in personam and is legally enforceable.

Void Agreement:- It is an agreement not enforceable by law. It is void ab initio because it lacks one or more of the essentials of a valid contract. Such an agreement does not create any legal relations. However, it is different from unlawful agreements which are forbidden by the law. An illegal agreement must necessarily be void but a void agreement need not be illegal.The following agreements that have been declared void by the Contract Act:-

  • Agreements by incompetent persons

  • Agreements wherein consideration and objects are unlawful

  • Agreements in restraint of marriage

  • Agreements in restraint of trade

  • Agreements in restraint of legal proceedings

  • Agreements the meaning of which are uncertain,etc.

Void Contract:- A contract which ceases to be enforceable by law becomes void. In other words, an agreement may be enforceable initially and due to certain circumstances may become void subsequently. Thus a contract is not void from its inception.Some of such circumstances which makes a contract void are:-

  • An agreement without lawful consideration becomes void

  • A contingent contract to do or not to do something on the happening of an event becomes void when the event becomes impossible

  • When the party, whose consent is not free, repudiates the contract,etc.

Voidable Contract:- A voidable contract is 'an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of other or others'. In such a contract, the consent of one of the parties is not free and the law regards it as an aggrieved party. The aggrieved party has the option to either affirm or rescind the contract within a reasonable time.The other party does not have any such right. However,the aggrieved party is entitled to recover from the other party the damages which it may have suffered but it must restore the benefits received by it.

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