TYPES OF CONTRACTS

1. On the basis of formation
a. Expressed, b. Implied and c. Quasi

2. On the basis of performance
a. Executed. b. Executory c. Partly both d. Unilateral e. Bilateral

3. On the basis of validity
a. Valid b. Void c. Voidable d. Illegal e. Unenforceable

EXPRESSED CONTRACTS

There are two types of contracts: an expressed contract, which states the promises in clear language, and an implied contract, which is where behaviors or actions lead parties to believe an agreement exists.

Expressed Contracts

Minal wants to purchase his first home. He found the perfect place in Patna. The contract for purchase was signed, and he closed on the home within a month.

The contract Miguel entered into is an expressed contract because the elements are specifically stated, including offer, acceptance and consideration. To break it down, a contract contains six elements:

An offer
Acceptance of the offer
Consideration
Mutual assent
Capacity
Legally accepted terms

This is pretty straightforward. Minal searched for a home, found the perfect place and accepted the seller's offer to purchase.

Once Minal did that, he had to come up with the money to purchase the home. Both parties agreed to the terms, and are of age and mental capacity to enter into the contract, and there was nothing illegal about the sale. Minal is now a happy homeowner.

Thus if terms are expresses by words in writing . Sec 9 of the Act provides that id a proposal or acceptance of any promise is made in words clearly it is express.

Implied Contracts

An implied contract works differently. This type of contract evolves when no written contract is present, but circumstances may cause one person to become unjustly enriched as a result of their actions or an understanding exists.

There are two types of implied contracts:

Implied in fact
Implied in law

An example of each will help to explain the conditions necessary for each type of contract.

When you arrive at the hair salon for your usual cut, it is expected that you will pay for the services rendered. That is an implied in fact contract. The common understanding based on the conduct of the parties serves as a contract to pay for your new 'do!

Now, implied in law contracts work a bit differently. In fact, they are really not contracts at all. That is why the law gives them a clever name like 'quasi-contracts.' This is because the court determines whether this type of contract existed after performance or non-performance as a means to determine whether one party can collect restitution for a service they performed.

An example will help. Suppose you choked on a fish bone at your favorite seafood restaurant. Lucky for you, there was a doctor in the house. After the doctor performed the Heimlich maneuver to dislodge the obstruction, he handed you a bill for his services.

You may refuse to pay because you did not solicit his services, but you won't get very far. The law will look at whether you were unjustly enriched by accepting his services to clear your throat. And, this occurs when one party receives something of value from another unfairly, like receiving free medical treatment to save your life.

In this case, the judge would most likely require you to make restitution, or pay the other party fairly for the services provided to you, even though nothing was written or signed by either of you.

Thus Implied contract is one which is made otherwise than through words spoken or written. It comes into existence on account of an act or conduct of the parties

QUASI CONTRACTS

In absence of contracts, certain social relationships give rise to specific obligations. They are known as quasi because they create same obligations as in the case of regular contract. These are based on principles of equity, justice and good conscience.

Quasi contact is a binding obligation that is imposed by the courts to avoid injustice or unjust enrichment
An implied-in-law contract imposed by the courts to prevent injustice  A special form of contract that lacks mutual assent of the parties but which imposed on the parties by the courts to avoid injustice  A situation in which there is an obligation as if there was a contract although the technical requirements of a contract have not been fulfilled. It is also called as implied-in-law contract
A party has been enriched by some benefit. The enrichment is at the expense of other. The retention of the enrichment is unjust.
1. Supply of necessaries to person Incapable of contracting. (sec. 68) 2. Payment by interested person.(sec. 69) 3. Obligation to pay for non-gratuitous acts (sec. 70) 4. Responsibility of finder of goods (sec. 71) 5. When money is paid or things delivered by mistake or under coercion (sec. 72) Any person supplying necessaries of life to person who are incompetent to enter into contract is entitled to claim the price from the other person’s property. Similarly where money is paid to such person for the purchase of necessaries , reimbursement can be claimed
The following points must be considered- (i) The things supplied must come within the category of necessaries. (ii) Necessaries should be supplied only to such person to whom he is legally bound to support e.g. wife, children (iii) He is liable to pay only a reasonable price, not the price which he has agreed to pay
“A person who is interested in the payment of money which another is bound by law to pay, is entitled to be reimbursed by the other.”
In this case B purchases A`s agricultural land. On that land cess is in arrears for a longer period which are actually to be cleared by A, But B pays that amount. Here Court creates a quasi contract between them under.  Section 69 and thus capacitates B to recover that amount from A.
Plaintiff should be interested in making payment to protect his interest. The interest should be legally recognizable.  It is necessary that the plaintiff himself should not be bound to pay.  The defendant should have been ‘bound by law’ to pay the money.  The plaintiff should have made the payment to another person.
When one party Conducts an activity and its benefit is attained by another party, then also Court can create a quasi Contract.
In this case A is resident of a Village. The local government conducts repairs to the tank situated at A`s village. As a result A gets benefited because the surrounding lands belong to A. Here Court creates a Quasi Contract and decides that A has to bear cost of repairs
A person, who finds goods belonging to some another and takes them into his custody, is subject to the same responsibility as a bailee. Thus in respect of duties and liabilities, a finder is treated at par with bailee. The finder’s position is therefore considered along with bailment.
In this case B finds a diamond at A`s shop and hands it over to A, requesting A to send the diamond to true owner. True owner is not found. When true owner is not found. Finder gets the title. No one can claim share in it. Here court creates a bailment contract between B and A and thus capacitates B to get diamond back.
He can sue the owner for the specific reward announced for the return of goods and recover the reward.  He is entitled to recover his lawful charges incurred in preserving the goods and in order to find the true owner.  He can sell the goods if  The goods are perishable in nature  His lawful charges exceed two third of the value of goods.  When after due search, the true owner can not be found.
A person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it.
In this case Mr. A pays Sales tax by mistake though he is need to pay. Here Court creates a quasi Contract and capacitates A to recover that amount

ON THE BASIS OF PERFORMANCE

Executed v. Executory Contracts

You've been eying that 60-inch television in the appliance store window for weeks. Finally, it's payday, and you sprint to the store and make the purchase. It's simple. Fork over the cash and walk away with your very own television. See, the promisor, the appliance store, promised to give you a spanking new TV for $500, and you, the promisee, promised to pay for it. Done!

This is an example of an executed contract; a contract in which the promises are made and completed immediately, like in the purchase of a product or service. On the other hand, an executory contract means that the promises of the contract are not fully performed immediately. An example of an executory contract would be an apartment lease.

When you enter into a lease agreement, you are promising to pay the rent for a period of time. Until the term expires, the contract promises have not been fulfilled. Put another way, a landlord generally rents an apartment under a lease contract. This agreement identifies the name of the person leasing or renting, the name of the landlord, the terms and conditions, the length of lease and the monthly rental fee for occupying the space.

A lease cannot be fulfilled in one single transaction, like buying a television. Since a lease is usually written for a period of one year, it is an executory contract, because it is fulfilled over time. In general, an executed contract is a done deal. On the other hand, an executory contract isn't fulfilled right away, leaving time for things to go wrong.

McDonald v. Hewett

While the actual date of this case is unavailable, the issue between McDonald and Hewett demonstrates how confusing an executory contract can be. Listen as the case of the twice-sold timber unfolds.

Nelson sold timber to McDonald, to be paid for after the timber was cut, measured and delivered. Nelson secured the timber and contracted Hewett to move it to New York, have it measured and delivered to a waiting McDonald. Hewett arrived in New York, but decided not to measure the timber. Instead, he sold it to a third party.

McDonald, yelling breach of contract, sued Hewett for selling his timber to a stranger. McDonald contended that he, in fact and law, had an executed contract with Nelson for the wood. Based on the contract, he believed title for the timber passed to him. Further, Hewett had no right to broker a deal with someone else.

Remember, the important difference between an executed and an executory contract is in the time frame for the fulfillment of the promise. Hewett argued that the contract was executory, because the terms of the contract required several promises be fulfilled at a later date, like measuring and delivering the timber.

The court ruled that McDonald did not have a remedy against Hewett at all. It was decided that Nelson held the title for the lumber, until the timber was delivered to McDonald under the terms and conditions and when payment was collected. That didn't happen. On a side note, McDonald did have a remedy against Nelson, because none of the contract terms were performed.

As we witnessed, there is a fine line between whether the promises made in an executory contract exist. A good way to decide is to ask yourself: 'Was the promise fulfilled in a transaction, or are there things that need to be done to fulfill the promises?'

Partly executed and partly executory contract: It is a contract where one of the parties to the contract has fulfilled his obligation and the other party has still to perform his obligation. E.g X offers to sell his car to y for Rs. 1 lakh on a credit of 1 month. Y accepts X offer. X sells the car to Y. here the contract is executed as to X and Executory as to Y.

Contracts on the basis of enforceability:

a) Valid contract: A contract which satisfies all the conditions prescribed by law is a valid contract. E.g. X offers to marry y. y accepts X offer. This is a valid contract.

b) Void Contract: the term void contract is described as under section 2(j) of I.CA, 1872, A contract which cases to be enforceable by law becomes void when it ceases to be enforceable. In other words, a void contract is a contract which is valid when entered into but which subsequently became void due to impossibility of performance, change of law or some other reason. E.g. X offers to marry Y, Y accepts X offer. Later on Y dies this contract was valid at the time of its formation but became void at the death of Y.

c) Void Agreement: According to Section 2(g), an agreement not enforceable by law is said to be void. Such agreements are void- ab- initio which means that they are unenforceable right from the time they are made. E.g. in agreement with a minor or a person of unsound mind is void –ab-initio because a mino or a person of unsound mind is incompetent to contract.

d) Voidable contract: According to section 2(i) of the Indian contract act, 1872, arrangement which is enforceable by law at the option of one or more of the parties thereon but not at the option of the other or other, is a voidable contract. In other words, A voidable contract is one which can be set aside or avoided at the option of the aggrieved party. Until the contract is set aside by the aggrieved party, it remains a valid contract. For e.g. a contract is treated as voidable at the option of the party whose consent has been obtained under influence or fraud or misinterpretation. E.g. X threatens to kill Y, if the does not sell his house for Rs. 1 lakh to X. Y sells his house to X and receives payment. Here, Y consent has been obtained by coercion and hence this contract is void able at the option of Y the aggrieved party. If Y decides to avoid the contract he will have to return Rs. 1 lakh which he had received from X. If Y does not exercise his option to repudiate the contract within a reasonable time and in the meantime Z purchases that house from X for 1 lakh in good faith. Y can not repudiate the contract.

e) Illegal Agreement: An illegal agreement is one the object of which is unlawful. Such an agreement cannot be enforced bylaw. Thus, illegal agreements are always void – ab- initio (i.e. void from the very beginning) e.g. X agrees to y Rs. 1 lakh Y kills Z. Y kill and claims Rs. 1 lakh. Y cannot recover from X because the agreement between X and Y is illegal and also its object is unlawful.

f) Unenforceable contract: It is contract which is actually valid but cannot be enforced because of some technical defect (such as not in writing, under stamped). Such contracts can be enforced if the technical defect involved is removed.

There are two types of contracts: a unilateral contract and a bilateral contract. The essential difference between the two is in the parties. Unilateral contracts involve only promisor while bilateral contracts involve both a promisor and a promisee.

Unilateral Contracts

While strolling along the beach, you notice a sign tacked to a palm tree that reads, 'Lost wallet, brown with several hundred dollars in it. Return to owner and receive a $50 reward.' This piques your interest, and you begin sifting through the sand, turning over seashells, and flipping beach towels in search of the missing wallet. After all, you could use the 50 clams!

So, you find the wallet under a coconut tree and contact the owner, return the wallet, and collect on the cash reward. What you really did was enter into a unilateral contract with the owner of the missing wallet. A unilateral contract requires that only one party make a promise that is open and available to anyone who performs the required action, like collecting the reward for finding a lost pet. This sometimes applies to advertisements to an extent.

Advertisements, in general, cannot be construed as an offer to all parties. However, in some cases, the courts do consider an advertisement an offer when it contains specific language. Like when Bruto's Tacos runs a special for 50% off tacos between the hours of 4:00PM and 6:00PM, four-taco limit and until tortillas run out. It's all in the details of the advertisement that creates the unilateral contract.

Bruto's ad is clear in that it contains language that the message is sent to anyone who happens to read the ad, but is limited to only a certain amount of people who can actually accept the offer. A bilateral contract works differently. In this type of contract, two parties enter into an agreement where both parties promise to do something. However, the elements of either contract remain the same:

Offer by the promisor
Acceptance by the promisee
Consideration or support for the offer, like money
Of legal capacity, meaning both parties are free from mental illness or addiction and
Lawful terms

Let's focus on the unilateral contract for the moment.

A unilateral contract is a contract in which one party makes a promise to whomever takes action as prescribed in the offer. In this case, returning the wallet was the action taken by you. To keep it simple, the owner (promisor) of the missing wallet places an all points bulletin for the safe return of his property. You (the promisee) found and returned it. You had no obligation to do so, but once you took action, you became a party to the contract, even without the promisor's knowledge.

In fact, until you happened upon the palm tree bearing the grim news of the missing wallet, you were no part of this mess. That is exactly how a unilateral contract works. The promisor makes a promise to whoever is willing to act on it. There is no promise until the action is complete and the exchange is made. Unilateral contracts are enforceable.

Using the lost wallet to stress this point, had the owner of the wallet refused to pay up the cash reward, you could take legal action against him, because the reward was posted as an advertisement, and you would not have searched for the wallet had you not known it was missing.

Of course, you would have to prove a couple of things:

A contract existed (reward sign on the tree).
The contract was breached by the promisor (failing to provide the reward).
Promisee suffered a loss as a result (time spent looking for the wallet).
Promisor was responsible for the loss (refusal of payment for returning the wallet).

If all of these things occur, there is a good chance the court will see it your way.

Bilateral Contracts

In a bilateral contract, there are two parties who both agree to do a certain promise. There are still some elements of a unilateral contract that remains, namely: the promisor’s offer, the promisee’s acceptance of the offer, consideration or support for the offer (can be monetary), legal capacities of both parties, and other lawful terms.

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