Business Laws and Management · Elements of Law of Contracts

Classification of Contracts Under the Indian Contract Act

Updated 11 October 2026 · Fact-checked

Contracts are classified in three ways: by validity (valid, void, voidable, illegal, unenforceable), by formation (express, implied) and by performance (executed, executory). To solve a question, find the feature the question tests, apply its definition, and match the example to the right class.

Understand Classification of Contracts

A contract is an agreement enforceable by law. But not every contract is of the same kind. Lawyers sort contracts into classes so that we know what happens when something goes wrong. The three common ways to sort them are by validity, by formation and by performance.

By validity. A valid contract has all the essentials and can be enforced. A void contract cannot be enforced by law. It may be void from the start, or it may become void later. A voidable contract can be set aside at the option of one party, usually because his consent was not free (for example, fraud or coercion). Until that party rejects it, the contract stays valid. An illegal agreement is forbidden by law, and it is void as well. An unenforceable contract is good in itself, but a court will not enforce it because of a technical defect, such as a missing formality or the claim being barred by limitation.

Void agreement vs void contract. An agreement that is void from the beginning (for example, one made without consideration, or to do an impossible act) never becomes a contract. A contract that was valid when made but later becomes void (for example, because the act becomes impossible or unlawful after the contract) is a void contract. Section 56 says a contract to do an act that afterwards becomes impossible, or unlawful through an event the promisor could not prevent, becomes void when the act becomes impossible or unlawful.

By formation. An express contract is made in words, spoken or written. An implied contract is made by conduct or the circumstances, not in words. Section 9 draws this line: a promise is express in so far as the proposal or acceptance is made in words, and implied in so far as it is made otherwise than in words. Boarding a city bus and taking a seat is an implied contract to pay the fare.

By performance. An executed contract is one where both sides have fully performed. An executory contract is one where something remains to be done by one or both sides. For example, you pay a shopkeeper ₹500 and he hands over the goods at once: this is executed. If you order a sofa today and it will be delivered and paid for next week, it is executory.

Key formulas to remember

Valid contract: Valid contract = agreement + enforceable by law (all essentials present); Can be enforced by either party in a court.
Void vs voidable: Void: enforceable by no one. Voidable: enforceable until the aggrieved party rejects it.; The option to cancel belongs only to the party whose consent was not free.
Void agreement vs void contract: Void agreement = void from the start. Void contract = valid at first, later becomes void.; Section 56: a contract becomes void when the act becomes impossible or unlawful by an event the promisor could not prevent.
Express vs implied (Section 9): Express = in words. Implied = otherwise than in words.; Implied means conduct or circumstances. It is still a real contract.
Executed vs executory: Executed = nothing left to do. Executory = something still to be done.; A contract can be executed on one side and executory on the other.
Restoration after void (Section 65): Advantage received under a void agreement or a contract that becomes void must be restored or compensated for.; Example: advance of ₹1,000 for a concert that cannot happen must be refunded.

How to solve Classification of Contracts questions

Use this method for any question that asks you to name or distinguish a type of contract.

1Read the facts and decide which basis is being tested: validity, formation or performance.
2For validity, ask first: are all essentials present? If yes, it is valid.
3If not, ask what is missing. Free consent missing means voidable. Lawful object or consideration missing, or impossible act, means void. Forbidden by law means illegal.
4Check timing. Void from the start is a void agreement. Valid at first and defeated later is a void contract.
5For formation, ask: was it made in words or by conduct? Words mean express. Conduct means implied.
6For performance, ask: is anything still pending? Nothing pending means executed. Something pending means executory.
7Pick the option that matches the exact word in the definition, and check the other three for a trap word like 'always' or 'only'.

Quickest way: Three-question shortcut for Paper 4 MCQs

When to use it: Use it when you have under a minute for a classification MCQ.

Free consent absent but everything else fine: voidable.
Law forbids it or the act is impossible or lacks consideration: void (illegal if forbidden).
Valid first, then something happens later: void contract.
Words used: express. Conduct used: implied.
Anything left to do: executory. All done: executed.
If the only defect is a formality or limitation, think unenforceable.

Common mistakes in Classification of Contracts

Saying a voidable contract is void.
Both words sound alike and both involve a defect.
Fix: Remember that a voidable contract is valid until the injured party avoids it. Only that party can choose to cancel it.
Treating void agreement and void contract as the same thing.
Students ignore the timing of when it became void.
Fix: Ask when the defect arose. At the start: void agreement. After a valid beginning: void contract.
Thinking an implied contract is not a real contract.
Students link contracts only with written documents.
Fix: Section 9 says a promise made otherwise than in words is implied. It is as binding as an express one.
Calling every executed contract complete on both sides.
Mixing up 'executed' with 'one side has performed'.
Fix: Executed means both parties have fully performed. If one side still has a duty, it is executory.
Confusing illegal and void.
Both cannot be enforced.
Fix: Every illegal agreement is void, but not every void agreement is illegal. An agreement without consideration is void but not illegal.
Forgetting refund rules after a contract turns void.
Students stop at 'void' and ignore consequences.
Fix: Under Section 65, advantage received must be restored or compensated for. An advance paid for a concert that cannot be held must be refunded.

Worked examples

Example 1

Ravi agrees to sell his car to Meena for ₹4,00,000. Meena agreed because Ravi falsely told her the car had never been in an accident. Classify the contract by validity.

Show the solution

Identify the defect: Meena's consent was induced by a false statement, so it was not free.
All other essentials are present.
A contract whose consent is not free is voidable at the option of the party whose consent was affected.
Meena may choose to cancel it or to go ahead with it. Until she cancels, the contract stays valid.

Answer: The contract is voidable at Meena's option.

Example 2

Asha contracts to sing at Bharat's concert on 10 March for ₹1,000, paid in advance. Before that date she falls too ill to sing. What kind of contract is it now, and what happens to the ₹1,000?

Show the solution

The contract was valid when made.
Her illness makes performance impossible after the contract was made.
Under Section 56, a contract to do an act that afterwards becomes impossible becomes void when the act becomes impossible. So it is a void contract, not a void agreement.
Under Section 65, a person who has received an advantage under a contract that becomes void must restore it.
Asha has received ₹1,000, so she must refund it. She is not bound to pay Bharat for the profit he would have made.

Answer: It is a void contract. Asha must refund the ₹1,000 but is not liable for Bharat's lost profits.

Exam tips

In MCQs, look for key words: 'at the option of' signals voidable, 'cannot be enforced by anyone' signals void.
Learn the pair void agreement and void contract with one example each. This pair is a frequent trap.
For Section 9, remember the test is words versus no words, not written versus oral. Oral contracts are express.
Practise matching real-life examples, such as buying from a vending machine or taking a bus, to implied contracts.
In a written answer, give the definition, one example and the effect (who can enforce it) for each class.

Practice questions from Elements of Law of Contracts

Classification of Contracts in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Classification of Contracts: frequently asked questions

What is the difference between a void and a voidable contract?

A void contract cannot be enforced by law. A voidable contract is valid until the party whose consent was not free chooses to cancel it. Only that party has the option.

What is the difference between a void agreement and a void contract?

A void agreement is void from the start, so it never becomes a contract. A void contract was valid when made but later became void, for example when performance becomes impossible.

Is an implied contract valid?

Yes. Section 9 says a promise is implied when the proposal or acceptance is made otherwise than in words. Conduct and circumstances can form a binding contract.

What are executed and executory contracts?

In an executed contract, both sides have fully performed. In an executory contract, something is still to be done by at least one party. Paying cash for goods taken at once is executed. Ordering goods for later delivery is executory.