Types of Contracts on the basis of Execution:

Types of Contracts on the basis of Execution:

By:- thelawiq.com. Author:-Janhavi Birajdar

Introduction

A contract is a legally enforceable agreement. This agreement creates, defines and governs mutual rights as well as obligations among its parties that make the contract. In general, a contract consists of the transfer of goods, services, money, a promise to transfer, a promise to do a certain task, a promise not to do a certain task, etc. If this duty is not done, i.e., in the case of breach of a contract, the party who became injured or went into loss can seek judicial remedy. Remedy can be in form of damages, recession, etc. The law which is related to all aspects of contracts is Contract Law.

What is a Contract?

According to Section 2(h) of The Indian Contract Act, 1872; an agreement enforceable by law is a contract[2].
For example, John proposes to Jason that he wants to sell his house for 50 lakh rupees. The offer is made. Jason accepts that offer. So, the acceptance is done. The amount of 50 lakh rupees for the house is the consideration. Till now, the agreement to sell John’s house for 50 lakh rupees to Jason is made. And this agreement is enforceable by the law because the house is not an illegal quantity. As stated under the section 2(h) of The Indian Contract Act, 1872; the agreement made between John and Jason is enforceable by law in ideal conditions. Here, ideal conditions mean that all the essentials of valid contract are fulfilled. As the agreement is enforceable by law, it is a Contract.
In this Contract Law, there are various types of contracts. But here, I will throw light only on two types of Contracts based on the execution. Those are 1. Executed Contracts and 2. Executory Contracts:
Contracts

  • Executed Contracts
  • Executory Contracts
  • Partly executed & partly executory Contracts
  • Unilateral Contracts
  • Bilateral Contracts

Types of Contract (On the basis of execution)

Executed Contracts:

As the word suggests, executed contracts are such contracts in which one or both or all the parties have performed the promised duty or task.
For example, Jordan goes who lives in a big city goes to a restaurant and orders a cup full of soup. The staff working at the restaurant sells Jordan a cup of soup and takes cash payment from Jordan for the price of that soup. This scenario can be said as an executed contract as all the components that are needed to form a contract are present. And both the parties have done their part of the contract. So it is an executed contract.

Executory Contracts:

Executory contracts are contracts in which the consideration is mainly either a promise of a performance or a promise of a obligation. And such consideration can be executed in future only. So, these contracts can be executed. That is the reason behind the name executory contracts.
For example, in executory contracts, all the conditions cannot be executed immediately. They are executed over the time. Lease is the best possible example of Executory contract. Similarly, assume that Jessica decides to open a coaching institute for the subject of current affairs. She will tutor some students. So, the students who want to learn from Jessica have to pay her some fess at the starting of the month. And when the students pay the fees, they have done their part but as of now, Jessica has not taught them anything. She will teach them in the future. So, this contract is an executory contract.

Partly executed and partly executory:

As the name suggests, in these contracts, only one party has executed the half part of the contract.
For example, Jay sells his bike to Jassi. Though Jai has delivered the bike, Jassi has yet to pay the price. For Jay, it is an executed contract, whereas it is an executory contract on the part of Jassi since the price has yet to be paid.

Unilateral Contracts:

Unilateral contracts are contracts in which only one party makes the promise. The promise is open which means anyone can fulfill that promise. Once, some one fulfils the said promise, the contract will be executed.
For example, Joey bought a brand-new iPhone 13 and, on the way, back to his place, he lost his iPhone while travelling through local trains. As a result, he announced a reward of Rs 10000/- to anyone who finds and returns iPhone. Here in this scenario, Joey is the only one party to the contract. If someone finds that iPhone and returns it to Joey, Joey is obligated to pay the reward. This type of contract is a unilateral contract.

Bilateral Contracts:

Bilateral contracts are contracts in which two parties agree to the terms of the contract. So, these contracts are also called as reciprocal contracts. These are most common contracts, in these contracts, parties agree on a time frame when the contract will be executed.
For example, Janice who is a not so famous actress decides to buy a sports car but she doesn’t have enough money to buy the car immediately. So, she decides to buy the car on down payment of 3 lakh rupees. And promises to pay remaining amount and whatever the interest will be in next 2 years. So, the seller agreed to it and gave her the possession of the car nd agrees to deliver the title against the specified sale price. In this scenario both the parties will be performing their duties in future. So, this is a bilateral contract.
[1] THE INDIAN CONTARCT ACT 1872. Sec. 2(e)
[2] THE INDIAN CONTARCT ACT 1872. Sec. 2(h)
[3] Types of Contract, GEEKTONIGHT (Feb. 6, 2022; 4:00 PM), https://www.geektonight.com/types-of-contract/

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