Classification of Contracts

II. Classification of Contracts

Contracts may be classified in following categories:

1.Executed and Executory Contracts

Executed contracts are those in which the party or parties concerned have done all that

they are,under the contract,required to do.

Executory contracts are those in which one or both sides have not yet performed the con­tractual obligations,fox example,goods have not actually been delivered.

2.Specialty and Simple Contracts

A specialty contract is made by deed. It is legally binding because of the special solemnity attached to its form. It does not derive its legally binding quality from the operation of the law of contract but from its solemnity;so it does not need to be a true contract at all. To take effect as a deed, an instrument must make it clear on its face that it is intended to be a deed and must be validly executed.

Simple or" parole" contracts are not made by deed( e. g. , orally, by conduct, or in writ­ing) . They derive their legal status entirely from the law of contract. It is with this kind of con­tracts that we are primarily concerned.

3.Void,Voidable and Unenforceable Contracts

A void contract is one which does not exist and -which has never existed. A contract is void when it is destitute of all legal effect.

A contract is voidable when the law allows one of the contracting parties to withdraw from the contract if he so wishes.

The distinction between void and voidable contracts is crucial where the interest of a third party is involved. A voidable contract remains effective unless and until the innocent party chooses to avoid it; therefore, in case of a contract for the sale of goods, if the buyer resells the goods before the contract is avoided, the sub - buyer becomes the owner and retain the property provided that he took it in good faith. When a Contract is void, ownership of the property which has been sole will not pass to the buyer,who will not be able to sell it to anyone else. The origi­nal seller will be able to recover the property from whoever has it.

A contract is unenforceable when, although it is valid if the parties perform it;it can not be enforced in the courts of law if either party fails to do so,thus,we call these contracts as unen­forceable.