Success Roar Classes

Types of contract based on the performance of Contract – CA Foundation Business Law

Unit-1 Nature of contract

Chapter-1 The Indian Contract Act 1872

Earlier we learned about types of contracts based on formation and enforceability. Here we will know about the types of contracts based on the performance of the contract. These types are based on the criteria that parties performed the contract or not. Let’s understand all one by one. (Types of contract based on the performance of Contract – CA Foundation Business Law)

  • Executed Contract

When both parties of the contract have performed the act and forbearance stated in the contract on their part than such a contract is known as an executed contract. In this type of contract, no performance is left on any side, therefore it is called an executed contract.

Example- Ram made a contract with Shyam to buy his house. Shyam created and signed the sale deed and Ram paid money to Shyam. In this case, both parties performed on their part. No act is remaining. Hence this will be called an executed contract.

  • Executory Contract

An executory contract is the opposite of the executed contract. In this type of contract, the performance of the contract remains pending on the part of one or more parties of the contract.

If a contract involves a long period of performance, then the performance may pending up to the completion of that period. For example contract for lease in which payment of lease rent paid over the life period of the lease.

An executory contract is further divided into two parts-

  • Unilateral Contract- These are those contracts in which performance in pending on the part of one party. This type of contract can be seen in the case of a Public offer where one party performs the agreement first. Example- Ram made a contract with Shyam to buy his watch. Shyam given his watch to Ram but payment is pending on part of Ram.

Types of contract based on the performance of Contract – CA Foundation Business Law

  • Bilateral contract- In this contract, obligation or performance is pending on both sides of parties. This means no party performed any act or forbearance stated in the contract. Example- Ram made a contract with Shyam to buy his watch. Neither Shyam given his watch to Ram nor payment made by Ram. This is a bilateral executory contract.

Read More: Types of Contract based on Enforceability or validity

Share and Enjoy !

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
error: Content is protected !!