Contracts are a crucial aspect of all businesses. They serve as legally binding agreements that define the terms and conditions of a transaction or relationship between two or more parties. However, not all contracts are created equal, and they can vary based on their validity. In this article, we will explore the different types of contracts based on validity.
1. Valid Contracts
A valid contract is an agreement that is legally binding and enforceable. It must meet all the essential elements of a contract, including offer, acceptance, consideration, and the intention to create legal relations. A contract may be in writing or verbal, but in both cases, it is legally binding as long as it fulfills all the essential legal requirements.
2. Void Contracts
A void contract is an agreement that is not legally binding and cannot be enforced. This type of contract is void from the beginning, and it is as if the contract was never created in the first place. A void contract lacks any of the essential legal elements, such as the lack of consideration or no mutual intention to create legal relations.
3. Voidable Contracts
A voidable contract is an agreement that can be legally terminated by one of the parties involved. This type of contract is enforceable until one of the parties decides to terminate or cancel it. An example of a voidable contract is one obtained through coercion, undue influence, or fraud.
4. Unenforceable Contracts
An unenforceable contract is an agreement that is otherwise valid, but due to a legal technicality, it cannot be enforced in the court of law. The most common example of an unenforceable contract is a contract that is not in writing, but required by law to be in writing, such as a contract for the sale of land.
5. Executed and Executory Contracts
An executed contract refers to an agreement where all parties involved have fully performed their obligations. An executory contract, on the other hand, is an agreement where one or more parties are yet to fulfill their obligations. For instance, when you shop online, you enter into an executory contract with the seller. After you receive the goods, the contract becomes executed.
Conclusion
In conclusion, contracts are essential documents that define the terms and conditions of a transaction or relationship between two or more parties. However, not all contracts are created equal, and they can vary based on their validity. It is crucial to understand the different types of contracts based on validity to ensure that your agreements are legally binding and enforceable.
