Kinds of contracts by enforceability

On the basis of enforceability (validity), agreements and contracts are classified as follows.

1. Valid contract. An agreement enforceable by law is a contract (s. 2(h)).

It has all the essentials of a valid contract: for example, A agrees to sell his bike to B for ₹50,000 and B agrees to buy it.

2. Void agreement. An agreement not enforceable by law is said to be void (s. 2(g)).

It is void from the beginning (for example, an agreement without consideration, or in restraint of trade).

3. Void contract. “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable” (s. 2(j)).

A contract valid when made may become void later, for example when performance becomes impossible.

4. Voidable contract. “An agreement which is enforceable by law at the option of one or more of the parties”, “but not at the option of the other or others, is a voidable contract” (s. 2(i)).

A contract induced by coercion, undue influence, fraud or misrepresentation is voidable at the choice of the party whose consent was obtained in that way.

5. Unenforceable contract. A contract good in substance which cannot be sued upon because of a technical defect, such as want of writing or being barred by limitation. A debt not sued upon within three years becomes unenforceable under the Limitation Act.

6. Illegal agreement. An agreement forbidden by law; it is void, and agreements collateral to it are void too.