Different types of contracts may be classified as follows:
On the basis of the validity
An agreement which is binding and enforceable is a valid contract. It contains all the essential elements of a valid contract.
It is a contract without any legal effect and cannot be enforced in a Court of Law. Section 2(j) defines a void contract as a contract which ceases to be enforceable by law 2.
becomes void when it ceases to be enforceable”,
Example: A contracts with B (owner of the factory) for the supply of 10 tons of sugar, but before the supply is effected, the fire caught in the factory and everything was destroyed.
Here the contract becomes void.
A contract brought about as a result of Coercion, Undue influence Fraud or misrepresentation would be voidable at the option of the person whose consent was caused by any one of these factors.
Void and Voidable Contracts: Distinction
|Basis of Difference||Void Contract||Voidable Contract|
|Definition||Contract ceases to be enforceable by law.||Contract is enforceable at the option of the aggrieved party.|
|Nature||Contract becomes void either because of sudden and unexpected events or of law changes, before the performance becomes due.||Contract becomes voidable when it is caused by coercion, undue influence fraud and misrepresentation.|
|Rights||Does not Provide any legal remedy for the parties to the contract.||The aggrieved gets a right to rescind the contract and to declare it void otherwise it reminds valid.|