In India, contracts are primarily governed by the Indian Contract Act, 1872. Contracts can be classified in various ways based on their nature, execution, validity, and enforceability. Here’s a comprehensive classification of the various types of contracts in India:
Types of Contracts Based on Validity
- Valid Contract –
A legally enforceable agreement which fulfills all its essential elements (offer, acceptance, consideration, etc.) under the Indian Contract Act. A valid contract becomes an obligation on both the parties, i.e., the one making offer and the other accepting the said offer. - Void Agreement –
This one is among the types of contracts that are not legally enforceable. A void contract is invalid from the very beginning. The reason for such a contract being void is the lack of essential elements of a valid contract. - Voidable Contract –
A contract that is enforceable by law at the option of one party but not at the option of the other. (For example, contracts made under coercion or misrepresentation). The one who commits coercion or misrepresents does not enjoy the option to declare the contract as void. - Illegal Contract –
A contract that involves unlawful consideration or object is termed as an illegal contract. Such types of contracts are void and not enforceable. - Unenforceable Contract –
A contract that cannot be enforced due to some technical defect but can become enforceable if rectified.
Based on Formation
- Express Contract
This is the type of contract where the terms are explicitly stated, and agreed upon by the parties. The said terms may be stated in oral or written format. - Implied Contract
An implied one is among the types of contracts in India which are formed by the conduct of the parties. (For example, taking a bus ride implies a contract with the transport company). - Quasi-Contract
As the term suggests, quasi contracts are not actual contracts, but obligations imposed by law to prevent unjust enrichment (e.g., payment made by mistake).
Explore the Agreement and Contract Difference
Types of Contracts Based on Performance
- Executed Contract –
When both the parties have performed their obligations as per the contract, it is termed as an executed contract. - Executory Contract –
Among the types of contracts in India, an executory contract is one wherein the obligations are yet to be performed by one or both the parties. The parties have entered the contract by offer and acceptance, but the performance is yet to be done. - Unilateral Contract –
Unilateral contracts are one-sided contracts, where one party promises to do something for another. These are usually made against a group. For example, if a company makes a promise to reward someone performing a specific number of advertisements for their product, anyone who complies with the conditional offer will enter the contract. - Bilateral Contract –
When both the parties have reciprocal obligations to perform in the future, such a contract is termed as a bilateral contract.
Based on Nature of Obligation (Special Contracts)
- Contingent Contract
When the performance depends on the happening or non-happening of a future uncertain event, it is termed as a contingent contract. These types of contracts are performed on a specific event, or may never be performed, as the case may be. - Contract of Wager
Among the various types of contracts in India, wager is a contract based on betting, where parties agree that one will pay the other on the outcome of an uncertain event. Wagering contracts are void in India. - Contract of Indemnity
When one party promises to save the other from loss caused by the conduct of the promisor or another person, it is a contract of indemnity. One party indemnifies the other in case of loss incurred. - Contract of Guarantee
A contract to perform the promise or discharge the liability of a third person in case of default is termed as guarantee. - Contract of Bailment
This type of contract involves the delivery of goods by one person to another for a specific purpose with a promise to return or dispose of them as directed. - Contract of Pledge
This is a special type of bailment where goods are delivered as security for payment of a debt or performance of a promise. - Contract of Agency
A contract of agency is made between the Principal and agent. In this type of contract, one person (agent) is authorized to act on behalf of another (principal) for specific tasks.
