Business & Corporate Law (AE)

Assignment # 01

Submitted to: Miss Zartashia Kiran

Submitted by:
Syed Wasif Ahmed
SP19-MBAP-0059
Business & Corporate Law Assignment # 01

Types of contracts
Contracts based on formation
For the sake of understanding, we divide contracts based on formation into the followings:
1. Express contracts
2. Implied contracts
3. Bilateral contracts
4. Unilateral contracts
5. Formal contracts
6. Informal contracts
7. Quasi contracts

1. Express contracts: These are the contracts that are fully & explicitly stated in words, oral
or written.
Example: Ahmed wants to purchase his first home. He found the perfect place in Karachi.
The contract for purchase was signed, and he closed on the home within a month.

2. Implied contracts: These are the contracts that are defined by the conduct of the parties
instead of their words.
Example: When Ammar arrives at the hair salon for your usual cut, it is expected that he will
pay for the services rendered.

3. Bilateral contracts: These are the contracts that are essentially “a promise for a promise”
& come into existence at the time the promises are exchanged.
Example: Imran orders meal at a restaurant, he has promised to pay in response to serving
the meal.

4. Unilateral contracts: These are the contracts that are essentially “a promise for an act” &
come into existence at the time when the contract is performed.
Example: Ahmed has lost his car. He places an advertisement in the newspaper or online
offering Rs. 25,000 reward to the person who returns his missing car. By offering the
reward, he entered into a unilateral contract.

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Business & Corporate Law Assignment # 01

5. Formal contracts: These are the contracts that require a special form or method of
creation (formation) to be enforceable e.g. negotiable instruments because special form &
language are required to create them.
Example: After a day's worth of tough negotiations over the sale of a high-rise building, Imran and
Sikandar finally reached a price. Imran offered Sikandar Rs. 8,500,000 for the classy building and
Sikandar accepted the offer.

Sikandar typed up a written agreement, including:

Imran’s offer of Rs. 8,500,000

Sikandar's acceptance of the offer

The collection of Imran's Rs. 8,500,000, also known as consideration

Transfer of the title, changing owners from Sikandar to Imran

Both Imran and Sikandar were, of course, of sound mind, and the contract contained terms that
were lawful.

6. Informal Contract: These are the contracts that are also known simple contract, include
all other contracts, which require no special form or method of creation.
Example: Leases, sales contracts, and employment contracts are all common examples of
informal contracts.

7. Quasi Contract: These are the contracts that are fictional contracts that a court can
impose on the parties “as if” (quasi) the parties had entered into an actual contract.
Example: In disputes overpayments for goods or services, the court is created quasi-
contract when no official agreement exists between the parties.

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Business & Corporate Law Assignment # 01

Contracts based on performance

We divide contracts based on performance into the followings:
1. Executed contracts
2. Executory contracts

1. Executed contracts: These are the contracts that have been fully performed on both
sides.
Example: Asad has been looking at a Samsung A51 smartphone he wants to purchase. After
deciding to go forward with the purchase, Asad walks into the electronics store and pays for
the smartphone in cash. Asad walks out of the store with the smartphone and the store has
the full payment. This contract is considered executed since the smartphone was paid for in
full and all terms of the contract were met.

2. Executory contracts: These are the contracts that are have not been fully performed by
one or both parties.

Example: Asad has been looking at a Samsung A51 smartphone he wants to purchase. After
some debate, he finally decides to go lease it. Asad enters the electronics store, signs a lease
agreement that states the he will pay Rs. 4,500 per month until the purchase price has been
paid in full. Until Asad makes the final payment, the contract has not been fulfilled.

Executory vs. Executed Contract

An executed contract is a contract that is fully legal immediately after all parties involved
have signed, and the terms must be fulfilled immediately. With an executory contract, the
terms are set to be fulfilled at a future date.

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Business & Corporate Law Assignment # 01

Contracts based on enforceability

We divide contracts based on enforceability into the followings:
1. Valid contracts
2. Void contracts
3. Voidable contracts
4. Unenforceability contracts

1. Valid contracts: These are the contracts that have all the necessary elements of a
contract: offer & acceptance, competent parties, free consent, legal object, consideration
etc.
Example: Noman agrees to pay a sum of Rs. 500,000 to Ahsan for an antique chair. This
contract would be valid contract.

2. Void contracts: No contract exists or there is a contract without legal obligations.

Example: "A" threatens "B" with dire consequences unless "B" enters into a contract to sell
a piece of land to "A" at Rs. 1,000. In this case, "B" can choose to either sell the land to "A"
at the agreed price or avoid the contract by approaching a Court of law and getting the
contract to be declared void.

3. Voidable contracts: These are the contracts that can be avoided at the option of one or
both of the parties.
Example: Ammar agrees to pay a sum of Rs. 2,500,000 to Bilal for an antique car. The only
problem in this contract is that Bilal is a minor and can’t legally enter a contract.

4. Unenforceable contracts:
A contract that cannot be enforced because of certain legal defenses against it.
A valid contract rendered unenforceable by some statute or law.
Example: Ahmed agrees to sell to Imran 100kgs of rice for Rs. 10,000. But there was a huge
flood in the states and all the rice crops were destroyed. Now, this contract is unenforceable
and cannot be enforced against either party.

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