Types of Agreements

Types of Agreement

There are different types of agreements in Indian contract law. These are;

Valid Agreement,
Void Agreement,
Voidable Agreement,
Express and Implied Agreement
Domestic Agreement,
Unenforceable or Illegal Agreement.

As we know, the agreement has been defined under section 2(e) of the Indian Contract Act, as "Every promise or set of promises forming consideration for each other is an agreement".

In simple words, the agreement is a promise between the parties to the contract which forms the consideration for each other. Herein, we discussed different types of agreements in business law.

The primary element of a valid contract creates a contract between two or more parties in an agreement, which is a result of an offer and acceptance, that forms consideration for the parties concerned. This is the general principle in the law of contracts.

So, Let's discuss the different kinds of agreements one by one;

1. Valid Agreement

A valid agreement has been defined under section 2 (h) of the Indian Contract Act, i.e. contract.

As per section 2 (h), every agreement which is enforceable by law is a contract i.e. valid agreement.

Promise 2(b) + Consideration 2(d) =Agreement 2(e).

In simple words, when an agreement does not violate any provision of law and is enforceable by law then it is a valid agreement.

Example: A makes an agreement with B to sell his house for Rs. 5,00,000/-. B accepts it.

Here, in the above example purchasing property does not defeat any provision of law, hence it is enforceable by law. It is called a valid agreement i.e. contract.

What if an agreement defeat the provision of law? The answer is below;

2. Void Agreement

Generally, the void agreement means an agreement that violates the provisions of law and which is not enforceable by law is called a void agreement.

According to section 2 (g) of the Indian Contract Act, the void agreement is an agreement that is not enforceable by law.

This means all those contracts or agreements which are forbidden by the law to perform, such agreements are called Void Contract or Void Agreement.

Example: An agreement to sell smuggled goods is a void agreement.

Section 26 to 30 and 56 provides the provisions relating to void agreements;

a. Agreements in restraint of marriage (Sec. 26)
b. Agreements in restraint of trade (Sec. 27)
c. Agreements in restraint of proceedings (Sec. 28)
d. Uncertain agreements are void (Sec. 29)
e. Agreements for a wager are void (Sec. 30)

f. Agreements to do impossible act (Sec. 56)

3. Voidable Agreement

The voidable agreements are the agreements in which the agreement is formed but the consent of one of the parties is not valid or free.

The consent of the contracting parties must be free and without force. But, if there is any use of force to get the consent of the party to the agreement, then this amounts to the voidable agreement.

In the voidable agreement, the validity of the agreement totally depends upon one of the parties to the agreement.

The consent of the parties is free unless it is caused by;

1. Coercion (Se. 15)

2. Undue Influence (Sec. 16)

3. Fraud (Sec. 17)

4. Misrepresentation (Sec. 18)

5. Mistake (Sec. 20,21,22)

4. Express and Implied Agreement

The express agreement is an agreement that is made in oral words or in writing is known as express agreement.

And, the implied agreement is an agreement that is made by the conduct of the parties and other than oral words and writing, this is known as implied agreement.

5. Domestic Agreement

Agreements that are of domestic nature are also void.

Example: A makes a request to B that B has to come for dinner to A's house. B promised, but he failed to come to A's house for dinner.

This is not an agreement because there is no intention of the parties to create a legal relationship. Hence, it is called a domestic agreement. And, such agreements are void.

6. Unenforceable or Illegal Agreement

The agreements which are prohibited by the law or defeat any provision of law are called unenforceable or illegal agreements.

Example: A makes an agreement to sell smuggled goods to B. this is an illegal agreement because selling or purchasing smuggled goods is forbidden by the law.

Referred Books:

Legal Katta

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Types of Agreements