What is Contract. Types of Contract.

What is a Contract?
According to section 2(h) of Indian Contract Act, 1872 "an agreement enforceable by law is a contract."
The contract involves-
(I) An Agreement
(II) Enforceable by law

Agreement
According to section 2(e) of Indian Contract Act, 1872 "every promise and every set of promises, which from the consideration for each other, is an agreement"
Promise
A person makes a proposal. when it is accepted by other, it becomes a promise
Promisor : Person who makes an offer
Promisee : Person who accepts the offer 
Agreement = offer/proposal + acceptance

Enforceability by Law
An agreement to become a contract must give give rise to a legal obligation which means a duly enforceable by law. 
Contact = Accepted Proposal/Agreement + Enforceable by Law 

Essentials of a Valid Contact
According to section 10 of the Indian Contract Act, 1872, following are the essential elements of a Valid Contact:
1. Offer and Acceptance or an agreement:
Proper offer and proper acceptance with intention to create legal relationship.

2. Free Consent
Two or more persons are said to consent when they agreed upon the same thing in the same sense. 
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. 
The contract is usually voidable at the option of the party whose consent was so caused i.e. aggrieved party.

3. Capacity of the parties
Capacity to contact means the legal ability of a person to enter into a valid contact. The Indian contact act specifies that every person is competent to contact who
(a) is of the age of majority
(b) is of sound mind
(c) is not otherwise disqualified from contracting by any law to which he is subject.

4. Consideration
Consideration is referred as 'quid pro quo' i.e. 'something in return'. In other words it may be defined as price paid by one party for the promise of other. 

5. Lawful consideration and object
It states that consideration or object is not lawful if it is prohibited by law, or it is such as would defeat the provisions of law, if it is fraudulent or involves injury to other person.

6. Not expressly declared to be void
The agreement entered into must not be which the law declares to be either illegal or void. 

Types of Contract
I. On the basis of validity
1. Valid contract: An Agreement which is binding and enforceable is a valid contract. It contains all the essential elements of a valid contract.
2. Void Contract: A Contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. 
3. Voidable Contract: An agreement which is enforceable by law at the option of one or more parties thereto, but not at the option of the other or others is a voidable Contract.
4. Illegal Contract: It is a contract which the law forbids to be made. The court will not enforce such a contract but also the connected Contracts. 
5. Unenforceable Contract: Where a contract is good in substance but because of some technical defect i.e. absence in writing, barred by limitation etc. one or both the parties cannot sue upon it. 

II. On the basis of formation of Contract
1. Express Contract: A Contract would be an express Contract if the terms are expressed by words or in writing. 
2. Implied Contract: These contracts come into existence by implication. Most often the implication is by law and or by action. 
3. Quasi Contract: These are the contract which are created by neither by words spoken nor written nor by conduct of parties but these are created by law. 

III. On the basis of performance of Contract
1. Executed Contract: When both the parties has done or executed there respective parts of execution.
2. Executory Contract: It is a contract where both the parties to the contract have still to perform their respective obligations. 
3. Unilateral Contract: It is a one sided Contract in which one party has performed his duty or obligation and the other party's obligation is outstanding. 

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