ACCORDING TO FORMATION

2. According To Formation :
By Chartered Accountant

According to formation, a contract has the following three kinds.

(a) Express Contract :

Express contract is one which is expressed in words spoken or written. When such a contract is formed, there is no difficulty in understanding the rights and obligations of the parties. In express contract, the parties directly state the terms of the contract. (Sec. 9)

EXAMPLES :

A tells to B that he wants to sell his car and B informs A that he agrees to buy the car, there is an express contract.

(a) Implied Contract :

An implied contract is made otherwise than by works spoken or written. It arises from the acts, conduct of the parties, course of dealings or circumstances. It arises when one person, without being requested to do so, renders services under circumstances indicating that he expects to be paid for them, and the other person, knowing such circumstances, accepts the benefit of those services. (Sec. 9)

EXAMPLES :

(a) A went into a restaurant and took a cup of tea. It is a implied contract and A will pay for the cup of tea.

(b) M, a shoe shiner starts polishing the shoes of W in his presence, and W allows him to do so. It is an implied contract.

(c) Quasi Contract :

In quasi contract the law imposes certain obligations under some special circumstances. It is based upon the principle of equity that a person shall bot be allowed to get benefit at the expense of another. In fact it is not a contract but creates relations similar to contract. It is also called constructive contract.

EXAMPLES :

(a) A, finds lost goods of B. A is bound to return the goods to B.

(b) A leaves his goods at B's house by mistake, B treats then as his own and uses. It is a quasi contract. B is bound to pay for the goods.

3. According To Performance :

According to performance a contract is of the following two kinds:

(a) Executed Contract :

A contract is said to be executed when both the parties have completely performed their obligations. It means that nothing remains to be done by either of the party under the contract.

EXAMPLES :

(a) A, buys a book from B. A delivers the books and B pays the price. It is an executed contract.

(b) A agrees to paint a picture from B for Rs. 2,000. When A paints the picture and B pays the price, the contract is said to be executed.

b) Executory Contract :

In an executory contract something remains to be done. In other words a, contract is said to be executory when both the parties to a contract have yet to perform their obligations.

EXAMPLES :

(a) M sells his car to N for Rs. 2 lac. N has not yet paid the price and M has not delivered the car. The contract between M and N is executory.

(b) A agrees to teach B, in May and B promises to pay Rs. 800 to A. It is an executory contract because the promises are yet to be performed.