The Indian Contract Act of 1872 governs all contracts in India. The act defines a contract as an agreement between two or more parties that creates obligations that are enforceable by law. Under this act, a contract can be formed in any form, whether it is in writing, verbal, or implied.
There are various types of contracts under the Indian Contract Act, and each type has its own set of rules and regulations. Understanding these types can help individuals or businesses properly draft and execute contracts that are legally binding and valid in the court of law.
1. Express Contracts
An express contract is an agreement that is explicitly stated in writing or verbally. In this type of contract, the parties involved have a clear understanding of the terms and conditions outlined in the agreement. The parties mutually agree on the terms, and the contract is signed by both parties.
2. Implied Contracts
An implied contract is one that is not explicitly stated in writing or verbal communication. It is typically inferred from the actions or conduct of the parties involved. For example, if a person hires a plumber to fix a leaky pipe, it is assumed that the plumber will be paid for their services.
3. Void Contracts
A void contract is an agreement that is not enforceable by law. These types of contracts are considered invalid from the start because they violate the law or public policy. For instance, a contract that requires a person to commit a crime is void.
4. Unenforceable Contracts
An unenforceable contract is an agreement that cannot be enforced in a court of law due to some legal technicality. These contracts may be valid, but a court may not enforce them due to issues such as the statute of limitations, lack of formalities, or fraud.
5. Executed Contracts
An executed contract is a contract that has been fully performed by the parties involved. In this type of contract, all parties have fulfilled their obligations as outlined in the agreement. Once a contract is executed, it cannot be revoked or changed.
6. Executory Contracts
An executory contract is a contract that is yet to be performed by one or more parties involved. In this type of contract, the parties involved have agreed to fulfill their obligations at a later date.
In conclusion, understanding the various types of contracts under the Indian Contract Act is essential for anyone engaging in business dealings in India. Properly drafting and executing contracts that are legally binding can help avoid disputes and ensure that business operations run smoothly.