Classification of Contracts according to formation
According to the mode of formation of contracts, contracts may be classified into three namely,
- Express Contract,
- Implied Contract, and
- Quasi – Contract.
We shall now discuss them briefly.
1. Express Contract: A contract is said to be an express contract, if the terms of a contract are expressly agreed upon between the parties (either by words spoken or written) at the time of formation of the contract. An express promise results in express contract. A promise is said to be an express promise, when the offer or acceptance of any promise is made in words.
2. Implied Contract: An implied contract is one for which the proposal or acceptance is made otherwise than in words. Where the proposal or acceptance of any promise is made otherwise than in words, the promise is known as implied promise. Implied contracts are inferred from the circumstances of the case and conduct of the parties. For example, when A takes a cup of milk in a hotel, there is an implied contract.
3. Quasi – Contract: A quasi-contract is one, which is created by law. In the quasi-contract, there is no intention on either side to make a contract. In a quasi contract, rights and obligations arise not by an agreement but by operations of law. For example, where certain letters are delivered to a wrong addressee, the addressee is under an obligation to return the letters.
Classification of Contracts according to performance
According to the extent of performance of contracts, contracts may be classified as
- Unilateral Contract, and
- Bilateral Contract.
1. Unilateral Contract: It is also called as one-sided contract. In a unilateral contract, only one party has to satisfy his obligation at the time of the formation of it, the other party having fulfilled his obligation at the time of the contract or before the contract comes into existence. For example, A takes a public auto to go to Mount Road. A contract comes into existence as soon as A was dropped in Mount Road. By that time, auto man has fulfilled his obligation, only A has to fulfill his obligation i.e. paying the auto- man.
2. Bilateral Contract: A contract is said to be a bilateral contract where the obligations of both the parties to the contract are pending at the time of formation of the contract. In this type of contract, a promise on one side is exchanged for a promise on the other. For example, A promises to stitch a blouse and 0 promises to pay Rs.30. Here A promises to stitch the blouse and 0 promises to pay. Thus each party is both a promisor and a promisee.
Classification of Contracts according to execution
According to the execution of the contracts, contracts are classified into 2 as
- Executed Contract, and
- Executory Contract.
1. Executed Contract: A contract is said to be executed contract when both the parties to contract have performed their share of obligation.
2. Executory Contract: An executory contract is one, which is either wholly unperformed, or something remains in there to be done by both the parties to contract. Sometimes, a contract may be partly executed and partly executory.
Besides the above said classification, there are other types of contract also. Contingent Contract is one such type.
Contingent Contract: Contingent contract is one, which is collateral to do or not to do something, if some event collateral to such contract, does or does not happen. For example, A agrees to sell a certain piece of land to 0, in case he succeeds in his litigation concerning that land. This is a contingent contract.
The essential elements of a contingent contract are:
1. There is an uncertain event,
2. The uncertain event is collateral to the contract,
3. The performance of the contract depends upon the contingency.
Contracts of insurance, indemnity and guarantee are the commonest instances of a