When both the parties to contract have completely performed their obligations, such contract is called an executed It means there is nothing left to perform by the concerned parties.
‘A agrees to sell his car to ‘B’ for Rs 50,000r When ‘A’ delivers his car and ‘B’ pays the price, contract
is sard to be executed
i When the parties to contract have yet to perfoiTn
their obligations, such contract is called an executory. It means there js something left to perform by the concerned parties.
‘A’ agrees to sell his car to *B’ for Rs. 50;000 *B* agrees to buy it. But no party has yet performed his pan of obligation. So it is an executory contract
(c) UNILATERAL CONTRACT
It is a contract in which only one party has to perform his part of obligation at the time of formation of the contract but the other parly having performed his pan of obligation before the contract comes into existence.
A has paid the fare Rs 700 for making journey from Lahore to Karachi. It means he lias performed his part of obligation. Now it is the duty of transport company to cany him. ,
4. DIVISION BY ENFORCEABILITY
According to enforceability, there are following types of contract.
(a) Vaiid contract (b) Void contract
(c) Voidable contract
(d)* Unenforceable contract (e) Unlawful contract
(a) VALID CONTRACT
A valid contract is that which U enforceable by law. The object of such contract is to create the legal obligation between the parties. It enables one party to compel another party to do something or not to do something.
OBLIGATION OF PARTIES
(i) It creates no legal rights between the parties (it) It creates no legal obligations between the parties.
“A” agrees to sell his horse to *&” for Rs.5,OOG This horse at the time of agreement was in a village. it was settled that the transaction would be completed next day at village. When “A” and “IT reached the village they found the horse lying dead. The performance of contract becomes impossible because the horse was dead This contract will be regarded as void.
(c) VOIDABLE CONTRACT
According to section 2(i)
“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 is a voidable contract.
Generally when the consent of o-ie party is obtained by fraud, misrepresentation, coercion o- undue influence, the contract becomes voidable at his option.
A compels B on gun point to purchase his motor cycle for Rs. 6000. B agrees. As consent of B waf obtained by coercion, so this is voidable contract at the option of B.
(i) The contract is voidable at the option of the party . whose consent is caused.
voidable contract can only be objected by the party who has been subject for fraud, undue influence or misrepresentation.
Contract caused by fraud, undue influence or misrepresentation are voidable contract
(iv) U is enforceable at law atthe option of one or more of the parties. ,
(v) If the contract is revoked by a person rightfully then he can also receive the compensation.
(d) UN-ENFORCEABLE CONTRACT
It is a contract which is valid but cannot be enforced due to some technical defect or lack of any formality such as absence of writing, registration, stamp, attestation etc. Such contracts can be enforced after removing the defects
Similarly a bill exchange or promissory note though valid in itself but after three years from the date of maturity these become unenforceable.
The Following contracts are called unenforceable contracts
(i) A contract made by the parties verbally. ‘ (ii) “Contract made under the transfer property act are not in writing or not registered in the
OBLIGATION OF PARSTES
In case of unenforceable contract the parties may perform the contract But in case of breach of contract the aggrieved party is not entitled for legal remedies.
A borrows Rs. 50,000 from B and makes a promissory note. But he does not paste any stamp on it The contract is unenforceable as the pro note is not stamped.
(e) ILLEGAL OR UNLAWFUL CONTRACT
It is better to say here that illegal contract are not contracts so word illegal agreement should be used. Such agreement can never become contracts.
Section 23 states that an agreement is illegal and void if it.-
(a) is forbidden by law or
(b) is of such a nature that if permitted, it would defeat the provisions of any law or
(c) is fraudulent or
(d) it involves or implies injury to the’person or property of an other or
(e) The court regards it as immoral/ or opposed to public policy.
A and B enter into agreement to smuggle goods from qne country to another Such agreement is illegal
DIVISION BY APPLICATION
According to practical application, contracts are of the following kinds:
(a) Contingent contract
(b) Quasi contract
(c) Wagering contract.
(d) Contract of indemnity
(e) Contract of guarantee
(0 Contract of Bailment
(g) Contract of agency
WHAT IS VOID CONTRACT? WHAT ARE THE CIRCUMSTANCES UNDER WHICH A CONTRACT BECOMES VOID.?
A contract which can not be enforced by either party is called a void contract.
In other words a void contract is that which is perfect in every respect and enforceable by Jaw at the lime when parties enter into a contract but afterwards due to happening of an uncertain event it becomes void.
(i) It creates no legal rights between the parties.
(ii) It creates no legal obligations between the parties.
(in) Under this contract any party who has received any
benefit is bound to return ii ( (iv) No compensation is paid to any party.
CIRCUMSTANCES UNDER WHICH A CONTRACT BECOMES VOID
IMPOSSIBILITY OF PERFORMANCE
Sometimes the performance of a contract becomes impossible after formation of a contract because of destruction of subject matter or some other reasons.
“A” agrees to sell his horse to “B” for Rsr5,GGG. This horse at the time of agreement was in a village. U was settled that the transaction would be completed next day at village. When “A” and “B” reached the village they found the horse lying dead. Tie performance of contract becomes impossible because the horse was dead This contract will be regarded as void.
Sometimes a legal contract becomes illegal’before performance and as a result void due to certain reasons.
A agrees with B to sell 100 tons sugar at Rs.2,GQQ per ton. But before the delivery the government ‘bans private trade in sugar. It is a contract which afterwards becomes void.
REJECTION OF VOID ABLE CONTRACT
A voidable contract becomes void, when the party whose consent is not tree, rejects the contract.
A compels B to enrer into a contract on gun point It is not a valid contract as consent of B is hot free. It is a case of coercion. This contract is voidable at the option of B. In case B rejects the contract, it becomes void
IMPOSSIBILITY OF EVENT IN CONTINGENT CONTRACT
A contingent contract depends upon the happening of a certain event. If the event becomes impossible the contract becomes void.