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CA Foundation · Business Laws · The Indian Contract Act, 1872

Nisha, a shopkeeper, pays Rs 2,000 to Omkar and in return Omkar delivers goods worth Rs 2,000 to Nisha at once. Both parties have fully performed their sides on the spot. How is this contract classified on the basis of performance?

It is an executed contract. Both Nisha and Omkar have completely performed their obligations at the same time, with money paid and goods delivered, so nothing remains to be done. Classification on the basis of performance calls such a contract executed rather than executory.

  1. AExecutory contract
  2. BExecuted contractCorrect
  3. CContingent contract
  4. DQuasi contract

Explanation

A contract where both parties have completely performed their obligations is an executed contract. An executory contract is one where performance is still due from one or both parties. Here nothing remains to be performed, so executory is wrong.

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