This article is written by K.Sai Saketh.

TYPES OF CONTRACTS

Introduction

There are several forms of contracts, and each one has certain terms and conditions that are meant to meet the requirements of the parties involved. Even after accounting for the differences, certain similarities are still found. A contract’s execution, character, legality, and creation process may all be classified. Some of the kinds of contracts covered in this article may overlap because most contracts can take on multiple forms. For example, a verbal, enforceable, unilateral contract may exist. Consequently, the categories that are being described are distinct and equally important.

Understanding Contract Law in India

The foundation of each company or personal transaction is a legally enforceable agreement or contract. A framework for establishing and upholding these agreements is provided by the many categories of contracts depending on their creation, legality, character, and execution. Safe business transactions are built on the many forms of contracts contained in business law. From the precise wording of explicit contracts to the nuances of implicit agreements. It is critical to comprehend these differences. With clearly defined contract types, businesses may confidently traverse the legal landscape, assuring clarity, compliance, and protection of rights.

There are several types of Contract, as follows :

Bilateral Contracts

These are the agreements wherein the parties exchange reciprocal commitments. As a result, the contract is created by the exchange of an offer and an acceptance, fixing the parties. These are the most often used kind of contracts and are also referred to as two-sided contracts. Nevertheless, because both parties owed each other reciprocal responsibilities, the court categorized it as a bilateral contract. Mrs. Carlill sued the corporation and won the lawsuit after using the product and getting the flu. ^{^[1]}

Unilateral Contracts

Unilateral contracts are ones in which only one side makes a pledge, as the name implies. The contract is fulfilled by performance, and the other party is not identified. Until someone performs, the offeror cannot be required to fulfill the offer. It is a generic offer that has been made. General offers are those kinds of offers presented to the whole globe; for their acceptance to be recognized by the law, it is not necessary for it to be conveyed. According to Section 8 of the Indian Contract Act, unilateral contracts and general offers are legitimate when acceptance is made by fulfilling the terms of the proposal or by accepting payment in exchange for consideration.

Express Contracts

Proposals, offers, and the acceptance of those offers or proposals constitute contracts. It is possible for proposals to be made explicitly or implicitly accepted. A proposition that is presented in writing is considered an explicit offer under Section 9 of the Indian Contract Act. Therefore, an express contract is formed in writing or verbally using words. For instance, A may ask B whether he wants to sell his house for X dollars. B says “yes” in agreement to the same. An illustration of an explicit contract is this one. As a result, the provisions of an express contract are stated explicitly.

Implied Contracts

Implied contracts are likewise recognized under Section 9. It says that an implicit offer (or acceptance) is one that is made by any means other than words. An implied contract is determined by the parties’ conduct, gestures, etc. For instance, in an auction, the customer’s lifting of the numbered paddle represents an implicit offer, and the auctioneer’s final gavel-bang when a commodity is sold indicates that the offer is accepted.

Executory Contracts

These are contracts that are in a perpetual state. Take a leasing deal, for instance. Here, the renter would pay monthly rent to the owner, who would permit the tenant to occupy the property for the lease.

Adhesion Agreements

An adhesion contract is a written agreement signed by one party, not the other. This suggests that the party that signed the agreement had no chance to bargain over its terms. Instead, it is a “take it or leave it” situation. The consumer receives a contract and has the option to sign it after reading it. There is not a middle ground. Either the customer chooses to accept the conditions “as is” or they do not.

Aleatory Contracts

An aleatory contract permits the parties to defer doing a certain action until a specified, trigger event occurs. Events are uncontrollable phenomena that happen to people, such as natural disasters or fatalities. A lot of insurance policies have aleatory contracts.

Indian Law-Specific Contracts

Beyond the fundamental kinds, there are contract forms that are exclusive to Indian law or have legal ramifications:

Contract for indemnity:

A contract of indemnity is described as such under Section 124 of the Indian Contract Act, 1872, where one party agrees to protect the other against losses that may be incurred due to the promisor’s own actions or the actions of third parties. Such a contract aims to safeguard the pledge against unforeseen losses. It is a contingent contract as it depends on the fulfillment of a certain circumstance to function. It does not provide coverage for damages resulting from natural disasters, accidents, or breach of contract.

Guaranteed contracts:

The conditions of the Contract of Guarantee bind the individual, who must either fulfill the guarantees or release himself from the responsibilities in the case that he is unable to do so. In accordance with Indian Contract Act of 1872, Section 126

Bailment Contracts:

The Indian Contract Act of 1872 specifies bailment under Section 148. A bailment contract states that one party gives the other items for a certain purpose, and after that purpose is completed, the owner receives the commodities back. A ‘Bailor’ is the individual who has the commodities. ‘Bailee’ refers to the individual who receives the items for a certain purpose. The products are held under a contract of bailment as security for a debt or the fulfillment of a contract-specified obligation. The Indian Contract Act’s Section 172 restricts what constitutes a promise when commodities are bailed out for security or to settle debt. A pledge contract is thought of as a subset of a contract of bailment.

Quasi-Contract:

In the absence of a legal contract, an implicit agreement between two parties that resolves their differences is also known as a quasi-contract. Rather than a standard contract wherein one party is obligated to compensate the other, a quasi-contract is a legally defined responsibility as decided by the courts. Therefore, in cases when one party profits at the expense of the other, a quasi-contract finding is applied retrospectively.