{"id":7008,"date":"2022-07-26T13:20:28","date_gmt":"2022-07-26T13:20:28","guid":{"rendered":"https:\/\/signdesk.com\/in\/?p=7008"},"modified":"2025-12-02T07:05:27","modified_gmt":"2025-12-02T12:35:27","slug":"types-of-contracts","status":"publish","type":"post","link":"https:\/\/melento.ai\/en-in\/blog\/types-of-contracts","title":{"rendered":"What Are the Types of Contracts And How Should Businesses Manage Them Efficiently?"},"content":{"rendered":"

Do you know that every contract is a risk exposure or revenue decision in disguise?<\/b><\/p>\n

Every business lives and dies by its contracts.\u00a0 And the stakes are higher than ever.<\/p>\n

\u2192 60\u201370% of B2B partnerships fail due to unclear contract terms.<\/i><\/b><\/p>\n

\u2192 1 in 3 large enterprises face regulatory action due to faulty paperwork.<\/i><\/b><\/p>\n

\u2192 72% of legal teams report rising contract risk post-digital acceleration.<\/i><\/b><\/p>\n

With regulatory frameworks tightening across jurisdictions, clarity on contract types can make the difference between growth and exposure.\u00a0 Contract types are formed based on their formation, enforceability, legality, and the nature of obligations.<\/p>\n

As organizations scale, CXOs in top enterprises are turning to AI-powered digital tools like Melento<\/b> to automate their contracting workflows. This contract playbook outlines the primary types of contracts used in business, categorized by various criteria, along with relevant use cases.\u00a0<\/span><\/p>\n

A Smarter Framework: The 4 Lenses of Contracts<\/b><\/span><\/h2>\n

Before drafting or signing any agreement, leaders must understand which contract type they\u2019re dealing with and what risks come with it. Are you using the right contract type to protect your next big deal?<\/p>\n

    \n
  1. \n

    Classification of Contracts Based on Formation<\/b><\/span><\/h3>\n<\/li>\n<\/ol>\n

    These types of contracts are classified based on the mode of formation and further divided into six different sub-categories<\/b> \u2013<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
    \n

    Contract Type<\/b><\/p>\n<\/td>\n

    		\n

    Definition<\/b><\/p>\n<\/td>\n

    		\n

    Risk \/ Limitation<\/b><\/p>\n<\/td>\n<\/tr>\n

    \n

    Verbal Contracts<\/b><\/p>\n<\/td>\n

    		\n

    Spoken agreements that are legally enforceable if evidence can be provided<\/b>.\u00a0<\/span><\/p>\n<\/td>\n

    		\n

    High ambiguity, weak audit trail.<\/p>\n<\/td>\n<\/tr>\n

    \n

    Written Contracts<\/b><\/p>\n<\/td>\n

    		\n

    Formally documented agreements signed by the involved parties. These are legally robust<\/b>, <\/span>auditable<\/b>, and offer <\/span>clear proof in disputes<\/b>.\u00a0<\/span><\/p>\n<\/td>\n

    		\n

    Manual drafting, physical storage, and low visibility slow teams down. Traditionally written contracts are prone to risks such as fabrication and breaches.<\/p>\n<\/td>\n<\/tr>\n

    \n

    Express Contracts<\/b><\/p>\n<\/td>\n

    		\n

    All terms are explicitly agreed\u2014verbally or in writing.<\/p>\n<\/td>\n

    		\n

    Vulnerable if terms aren\u2019t fully documented.<\/p>\n<\/td>\n<\/tr>\n

    \n

    Implied Contracts<\/b><\/p>\n<\/td>\n

    		\n

    Formed through actions, behavior, or circumstances<\/b> of one or more parties to a contractual agreement.<\/span><\/p>\n<\/td>\n

    		\n

    High litigation exposure due to interpretation gaps.<\/p>\n<\/td>\n<\/tr>\n

    \n

    Quasi-Contracts<\/b><\/p>\n<\/td>\n

    		\n

    Not actual contracts, but court-imposed obligations<\/b> to prevent unjust enrichment. These are created when one party benefits unfairly at another\u2019s expense, despite no formal agreement.<\/span><\/p>\n<\/td>\n

    		\n

    No prior negotiation; purely judicial.<\/p>\n<\/td>\n<\/tr>\n

    \n

    E-Contracts (Digital Contracts)<\/b><\/p>\n<\/td>\n

    		\n

    Digitally created and executed via emails, eSign<\/a> platforms, APIs, or digital signatures methods.<\/p>\n<\/td>\n

    		\n

    Requires compliant digital contracts automation and governance.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Top enterprises are adopting digital contracts to automate workflows and ensure legal enforceability at scale.<\/p>\n

    How Melento Helps?<\/b><\/span><\/h4>\n

    Melento CLM<\/b> streamlines bulk contracting and centralises <\/span>contract repositories<\/span><\/a>, enabling smooth operation and reducing turnaround time (TAT) by half. The contract <\/span>automation<\/span><\/a> has delivered significant cost savings for our clients across high-volume industries, including <\/span>entertainment<\/span><\/a> and<\/span> manufacturing<\/span><\/a>.<\/span><\/p>\n

    Check Melento eSigning Platform<\/b><\/p>\n

    2. Contract Types by Enforceability & Legality<\/b><\/span><\/h3>\n

    These types of contracts are founded on legal ramifications. The types of legal agreements under this category are:<\/p>\n

    Contract Classification by Enforceability & Legality<\/b><\/span><\/h4>\n\n\n\n\n\n\n\n\n\n
    \n

    Type of Contract<\/b><\/p>\n<\/td>\n

    		\n

    Definition<\/b><\/p>\n<\/td>\n

    		\n

    Legal Status<\/b><\/p>\n<\/td>\n<\/tr>\n

    \n

    Valid Contract<\/b><\/p>\n<\/td>\n

    		\n

    Meets all legal conditions: offer, acceptance, consideration, capacity, etc.<\/p>\n<\/td>\n

    		\n

    Fully Enforceable<\/p>\n<\/td>\n<\/tr>\n

    \n

    Void Contract<\/b><\/p>\n<\/td>\n

    		\n

    Initially valid but becomes unenforceable by law.<\/p>\n<\/td>\n

    		\n

    Not Enforceable<\/p>\n<\/td>\n<\/tr>\n

    \n

    Voidable Contract<\/b><\/p>\n<\/td>\n

    		\n

    Enforceable unless one party opts to cancel due to fraud, coercion, etc.<\/p>\n<\/td>\n

    		\n

    Enforceable Until Revoked<\/p>\n<\/td>\n<\/tr>\n

    \n

    Void ab initio<\/b><\/p>\n<\/td>\n

    		\n

    Invalid from the outset due to illegal consideration, coercion, or misrepresentation.<\/p>\n<\/td>\n

    		\n

    Invalid From Start<\/p>\n<\/td>\n<\/tr>\n

    \n

    Unenforceable Contract<\/b><\/p>\n<\/td>\n

    		\n

    Appears valid, but can’t be enforced due to legal formalities<\/p>\n<\/td>\n

    		\n

    Technically Invalid<\/p>\n<\/td>\n<\/tr>\n

    \n

    Illegal Contract<\/b><\/p>\n<\/td>\n

    		\n

    Involves an unlawful object or purpose<\/p>\n<\/td>\n

    		\n

    Void & Penalized<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

     <\/p>\n