TYPES OF CONTRACT

Saroj Ghimire
For BBA KUSOM ONLY
 TYPES OF CONTRACT
 1. EXPRESS AND IMPLED
 2. EXECUTED and EXECUTORY
CONTRACT
 3. UNENFORCEABLE CONTRACT
 4. VOID CONTRACT
 5. VOIDABLE CONTACT
 1. EXPRESS AND IMPLED
 Word wrrtten or expression : express
 By conduct: implied
 2. EXECUTED: Performance happens at the
time of contract. Contract and performance
simultaneously
 EXECUTORY: Performance to be done in the
future after entering into contract.
 3. UNENFORCEABLE CONTRACT:
 No enforceable due to non fulfilment of
requirements either lapse of limitation of
registration.
 4. VOID CONTRACT
Section 13
 A contract not enforced by law is void.
 A void contract is an illegal contract.
 Has no legal effect and does not give any
legal rights on the parties.
 Circumstances of void contract
 1. A contract prohibiting anyone from
engaging in any occupation, business or
trade which has not been prohibited by
current law.
 Exception
 (1) Contract prohibiting selling and buying of the
goodwill of any trade;
 (2) A contract preventing partners from carrying
similar business or trade with other competitors
as long as the partnership continues.
 (3) A contract preventing partners from
engaging in a similar trade or business for the
specified time or place after being separated
from the partnership
 (4) Contract preventing employees for certain
period of time
 Contracts prohibiting marriages other
than those prohibited by current law.
13(b)

 Catherine Lowes Vs. Peers; P and C

enters into the contract where P says that
if he marry with other lady he will pay
$2000 to C. Later P marries other lady
and C filed a suit.


 Held: Contract was not a valid contract.

 Contracts prohibiting anyone from using
the public utilities. 13(c)
 Contracts seeking to prevent the legal
rights of any person from being enforced
by any government office or court. [13(d)]
 Contracts concluded in violation of current
law or on issues prohibited by current law.
[13(e)]
 A contract concluded for immoral purpose
or against Public morality or public
interest. [13(f)]
 Contracts whose performance have become
impossible because the parties thereto do not
exactly know the matter in relation to which
they have been concluded. [13(g)].
 Contracts which become impossible to
perform at the time they are concluded.
[13(h)].
 Contracts which are not explicit because there
is lack of reasonable interpretation.[13(i)]
 Contract concluded by persons who are
disqualified or incompetent to conclude
contracts.
 Contracts with illegal considerations or
objectives. [13(k)]
 Contract against public policy, morality
 Polygamy
 slavery ( Kamara Kamari)
 converting religion
 human trafficking.
 If a contract is made between A nd B where B
is giving his daughter as his Rakhauti and he
will be paid Rs 3000 per month than that
contract is void contract.
 5. VOIDABLE CONTRACT
 Voidable contracts are those which are not
void as such but may be made void at the
desire of one party if his free consent is
lapsed in the contract.
 Thus a contract where the party whose
consent is lacked or who is sufferor can
take to step to make it void.
 What is Consent?

 Two or more persons are said to consent

when they agree upon the same thing in
the same sense.
 Consent involves a union of the wills and
an accord in the minds of the parties.
 When the parties agree upon the same
thing in the same sense, they have
consensus ad idem. For a valid contract
the parties must be ad idem.
 In the case of Bala Debi Vs.
Majumdar, AIR(1956)Cal.575,
 An illiterate woman executed a deed of gift in
favor of her nephew under the impression that
she was executing a deed (act) authorizing her
nephew to manage her lands. The evidence
showed that the women never intended to
execute such a deed of gift, nor was the deed
ever read or explained to her. The court held that
the deed was void and inoperative. In this case
the consent of the woman altogether absent. Had
she known the true position, she would not have
signed the document.

 What is Free Consent?
 Consent is said to be free consent if it is not caused
by:
 Coercion,
 Undue influence,
 Fraud,
 Misrepresentation
 In other words, where there is consent, i.e., where
it is caused by Coercion, Undue influence, Fraud,
Misrepresentation the contract is said to be the
absence of free consent.
 For example,
 A is forced to sign a cheque at the point
of pistol. A knows what he is signing but
his consent is not free. The contract in this
case is void able at the option of the
parties. The consent in this case is not
altogether missing. It is there but it is not
free or the will of the party is not there.
 Voidable contract:

 The contract where parties consent is not

taken freely are voidable contract. In case of
voidable contract the aggrieved party is in
the position to make that contract void. If he
remains silent the contract will be valid.
 It depends upon him only. Where as in the
case of void contract they are void from the
beginning even if the parties are agreed.
 The elements by becomes
voidable (Section 4)
 Coercion:
 The word coerce mean forcing or threatening
somebody to do some thing. When the person is
compelled to enter into a contract by the use of
force by the other party or under a threat,"
coercion" is said to be employed.
 In life, including the life of commerce and finance,
many acts are done under pressure, sometimes
overwhelming pressure, so that one can say that
the actor had no choice to act”. Barton v
Armstrong, 1976
 Coercion is the committing or threatening
to commit. any act or
 the unlawful detaining or threatening to
detain any property, or
 Do some thing against the interest of any
person whatever,
 with the intention of causing any person
to enter into an agreement.
 Section 14(1) (a) of Nepalese
Contract Act2000 defines Coercion as,"
A person shall be deemed to have
indulged in coercion if he, with the
objective of compelling any person to
accept any contract against his will,
 withholds or threatens to withhold his
property or
 issues a threat to his life, body or
 prestige, or
 takes or threatens to take any other
action in contravention of current law.
 objective is to compel any
person to accept any contract
against his will.

 Ranganayakamma vs. Alwarsetti, A girl of 13

was made to agree, by threatening, to adopt a
boy by her husband's relative who prevented the
removal of the dead body of her husband until she
consented to the adoption. The court held that the
agreement to adopt was not binding.

 13 Madras 214 (1889)

By Withholding or threatening to
withhold his property.
 Muthia v. Muthu Karuppa where an agent
refused to hand over the account books of
a business to the new agent unless the
principal released him from all liabilities.
The principal had to give a release deed
as demanded. Held, the release deed was
given under coercion.
 (1927) 50 Madras, 214
 By issuing a threat to life, body
or prestige or
 Chikhan Ammiraju v. Seshma,
 The court held that any contract
madeunder the threat to commit suicide is
voidable under the ground of coercion. In
this case A hindu man induced his wife
and son to execute a release in favour of
his brother in respect of certain properties
which they claimed as their own. It was
held by the majority judge that threat of
sucide amounted to coercion, therefore,
voidable.
 Consequences of Coercion:

 A contract brought by coercion is voidable

at the option of the party whose consent
was so caused. The aggrieved party can
have the contract set aside or he can
refuse to perform it and take defense of
coercion if the other party sought to
enforce it.
 Undue influence
Section 4 (b)
"Undue influence" means
influence exercised by a person
upon another person who is
under his influence or is
amenable to his wishes with the
intention of deriving some undue
advantage for personal benefit or
to fulfill selfish interests.
 Special relationships are:
 Happens in special relationship:
 In special relationship and in case of
inequality of bargaining power, there is
presumption that the transaction is the
consequence of undue influence
 For example, Parent and child, Guardian
and ward, Religious adviser and follower,
 Doctor and patient’, Lawyerand client
 Where there is such special relationship,
the stronger party must show that undue
influence was not exerted
 Misrepresentation
 What is representation?
 A representation is a
statement made by one party
to the other, before or at the
time of contracting, with
regard to some existing fact or
to some past event, which is
one of the causes inducing the
contract.
 Ifsuch representation is untrue
and the other party relying on this
entered into the contract, then
the party who has been deceived
may make the contract void.
 Such an untrue statement is
called a misrepresentation.
 Rules relating to misrepresentation
 1.The statement must be one of fact not
opinion :
 In negotiating a contract, all sorts of
statements are made. But all don’t form facts.
They may be;
 Mere sales puffs:
 For eg: ‘the best drink of the world’
 I intend to do, In my opinion, I think ,In my
view, As far as I know
 In Bisset v Wilkinson (1927),
 The vendor of previously ungrazed land in
New Zealand stated that it would be able
to support 2,000 ship. This turned out to
be untrue.
 It was held that the statement was only
an expression of opinion and, as such,
was not actionable; the purchaser knew
that the vendor had no expertise.
 Anderson v Pacific Fire Insurance
Co. Ltd (1872),
 A shopping company effecting an
insurance policy wrote to the company
and stated that in the ships master’s
opinion a certain anchorage was good.
The vessel was later lost at that
anchorage.
 Held: the letter was not a representation
of fact, but merely of opinion.
 The statement must induce the
contract means:
 The statement must have been made by one party to
the contract to the other, and not by a third party,
 The statement must have been addressed to the
person claiming to have been misled,
 The person claiming to have been misled must have
been aware of the statement, and
 The person claiming to have been misled must have
relied on the statement.
 If a false statement is made to which the other party
pays no attention, or which does not in any way
influence him, then this does not affect the validity of
the contract.
 The statement must addressed to
the contracting party
 Unless the untrue statement was either
made to the other party or it was made to
another person in the knowledge and with
the intent that that person should pass it
on to the other party, it does not affect
the validity of the contract.
 The statement must be untrue:
 Fraud
 Following acts to deceive the other party:
 Making false statement or representation
knowingly
 Concelament of material fact
 Believing not to be true
 A promise made without intention of
performing it
 Any other act of fraud
 Vokes vs Arthur Murray,
 Inc. where Murray began teaching peoples how to
dance. At that time, dancing was becoming
increasingly popular among young people, because
so many people were shocked by the new Jazz
dancing.
 Vokes, a widow without family, wished to become "
an accomplished Dancer" and to find new interest in
life went to Murray's school of dancing where she
receives elaborate praise from her instructor for her
grace, poise, and potential as an excellent dancer.
 The instructor sold her eight half hour
dance lessons for $15.50 each, to be
utilized with in one calendar month.
Subsequently over a period of 16 months,
Vokes brought a total fourteen dance
courses which amounted to 2302 hours
for a total cash $31090.45. When it
become clear to vokes that she did not, in
fact, have potential to be an excellent
dancer, she filed against him alleging
fraudulent misrepresentation.
 The court held that there was fraudulent
misrepresentation by Murray saying that
she was improving in her dancing ability,
that she had excellent potential, that she
was responding to the instructions in
dancing grace, and that they were
developing her into beautiful dancer,
whereas in truth and in fact she did not
develop in her dancing ability, she had no
dance aptitude and in fact had difficulty in
hearing the musical beat.