Types of Contract on The Basis on Validity


Chapter 2 of the Indian Contract Act, 1872 discusses voidable contracts and void agreements. On the premise of validity or enforceability, we’ve got five different kinds of contracts as given below. 

Types of Contracts – based on Validity: 

  1. Valid Contracts – The Valid Contract as discussed within the topic on “Essentials of a Contract” is an agreement that’s legally binding and enforceable. It must qualify all the essentials of a contract.1
  2. Section 2(j) of the Act defines a void contract as “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. This makes all those contracts that don’t seem to be enforceable by a court of law void. We have already stated samples of these styles of contracts within the “Essentials of a Contract”. Example: A agrees to pay B a sum of Rs 10,000 after 5 years against a loan of Rs. 8,000, A dies of natural causes in 4 years. The contract isn’t longer valid and becomes void because of the non-enforceability of the agreed terms. 
  3. Voidable Contract-These kinds of Contracts are defined in section 2(i) of the Act: “An agreement which is enforceable by law at the choice of one or more of the parties thereto, but not at the choice of the opposite or others, maybe a voidable contract.” This might seem difficult to wrap your head around but consider the subsequent example: Suppose someone A agrees to pay a sum of Rs. 10,0000 to someone B for an antique chair. This contract would be valid, the sole problem is that person B may be a minor and can’t legally enter a contract. So, this contract may be a valid contract from the purpose of view of A and a “voidable” contract from the purpose of view of B. As and when B becomes significant, he may or might not comply with the terms. Thus, this can be a voidable contract. A voidable contract may be a Valid Contract. In a very voidable contract, a minimum of one amongst the parties must be absolute to the terms of the contract. for instance, person A within the above example. The other party isn’t bound and will opt to repudiate or accept the terms of the contract. If they so favour repudiating the contract, the contract becomes void. Otherwise, a voidable contract could be a valid contract. 
  4. Illegal Contract An agreement that ends up in one or all the parties breaking a law or not conforming to the norms of the society is deemed to be illegal by the court. A contract opposition public policy is additionally illegal. Several examples could also be cited let’s say an illegal contract. as an example, A agrees to sell narcotics to B. Although this contract has all the essential elements of a sound contract, it’s still illegal. The illegal contracts are deemed as void and not enforceable by law. 

As section 2(g) of the Act states: “An agreement not enforceable by law is claimed to be void.” Thus, we will say that everyone’s illegal contracts are void but the reverse isn’t true. Illegal contracts are void (from the start or the beginning). Also due to the criminal aspects of the illegal contracts, they’re punishable under law. All the parties that are found to own agreed on an illegal promise are prosecuted in a very court of law. 

Unenforceable Contracts- Unenforceable contracts are rendered unenforceable by law. The Contract cannot be enforced by any of the parties. For example, A agrees to sell to B 100kgs of rice for 10,000/- But there was an enormous drought in the state and the rice crops were destroyed. Now, this contract is unenforceable and may not be enforced against either party.

Aditya Mehrotra
Hello Everyone, this is Aditya. I am a First year B.A.LL.B. student from Symbiosis Law School, Pune. Being a firm believer of the Pt. Nehru's quote, "Facts are Facts and will not disappear on account of your likes", My aptitude for Law and Journalism is witness to the basic fact that you will find me in the library reading my favorite Legal Books, my favorite being 'The Courtroom Genius' by Nani Palkhivala. I chose Law as my career because I was inspired by the likes of Lawyers like Nani Palkhivala and Ram Jethmalani. I always wanted to contribute to the field of Social Work through Legal means and Emancipation of the Poor. My oratory skills won various accolades both at regional and global level. In my opinion dream does not become reality through magic; it takes sweat, determination, and hard work.