Name Ihsan Ullah Teacher Sir M.

Arif

By:
Ihsan Ullah

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Name Ihsan Ullah Teacher Sir M.Arif

Topics Discussed
• History of contract

• What is contract

• Law of contract

• Forming contract

• Difference between contract and agreement

• Essentials of law of Contract.

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Name Ihsan Ullah Teacher Sir M.Arif

The History of Contract

The act of contract was passed on 1872. Before this there was no law of contract
applicable to the whole of the country. All the judgments where done without any
specified contract. It was dealt on the basis of conditions present at time.
Then they applied the English contract but soon it was realized that it was creating
problems due to people living in sub-continent. There were Hindus, Muslims and
English living there and the law was not applicable due to the difference in
religion and culture.
After a huge struggle done by the specialists of law and implementers there
was a confirm law built and implement one year after its confirmation in 1872.
Which was carrying out all the demands and shortcomings of contract between
two parties?

The Stages of Contract

There are basically four stages of the creation of a contract which are as
under.

Proposal Consideration Promise Agreement

In the above diagram the four elements are representing the way how a contract is
formed.

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1. Proposal
It initiates the process of forming a contract. It means that
when one party shows his willingness in offering the other
party something or service.
For example:
If A Says to be that I want to sell you my house for Rs.
1000000.
It means that A is showing his willingness to sell his house to be or we can say
that A is offering his house to B for some Consideration.

2. Consideration
It is the return against a promise. Or we can say that when the
2nd party accepts that he is interested in the offer of the first
party and decide some return for the promise it is called as
consideration.
For Example:
If A Says to B that I want to sell you my house for Rs.
1000000 And B Agrees to buy the house from A for Rs.
1000000. This Amount paid to A for his offer is known as
Consideration.

3. Promise
When the Offer of 1st party is Accepted by the 2nd party this
Acceptance is known as Promise. Or the acceptance of the
proposal is called as promise.

For Example
If A says to B that I want to sell you my Car for Rs.100000
and B Accepts to buy the car from for Rs. 100000. it is called as Promise. In other
words we can say that B Promises A that he will buy his car at Rs.100000.

4. Agreement
Every set of promise forming consideration for each other is
called as agreement. Or we can say that proposal and
acceptance of proposal Is known as agreement.

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Name Ihsan Ullah Teacher Sir M.Arif

For Example:

If A says to B that I want to Sell my House to you for

Rs.500000 and B Accepts that offer. And promises to pay Rs.500000 to A. it is an
Agreement. And agreement is the sum of proposal and Acceptance.

When an agreement is enforceable by law it becomes a Contract. Any agreement

enforceable by law is known as agreement. All contracts are agreements but all
agreements are not contracts because in every contract we will have a sense of
agreement but since all agreements are not enforceable by law so they out of the
category.
To explain the agreement we can say.

Agreement =Proposal + Acceptance

Essentials of a Contract
According to the section 10 of the law of contract:

“All agreements are contracts. If they are made by the free consent of the parties,
competent to contract, for a lawful consideration and with a lawful object, and is
hereby expressly declared to be void where necessary, the agreement must satisfy
all the requirements of law regarding writing, attestation, or registration.”

The essentials of law of Contract are as under:

1. Offer and acceptance.

There has to an offer and the acceptance of offer by the
free and mutual consent of both the parties. The most
important feature of a contract is that one party makes
an offer for an arrangement that another accepts. This
can be called a 'concurrence of wills' or (meeting of the
minds) of two or more parties. Offer and acceptance
does not always need to be expressed orally or in
writing. An implied contract is one in which some of
the terms are not expressed in words. This can take
two forms. A contract which is implied in fact is one in

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which the circumstances imply that parties have

reached an agreement even though they have not done
so expressly. For example, by going to a doctor for a
checkup, a patient agrees that he will pay a fair price
for the service. If one refuses to pay after being
examined, the patient has breached a contract implied
in fact

2. lawful consideration
There must be some lawful consideration on the
contract between the parties. The contract is only
enforceable if both the parties agree to give and get
something this something is called consideration.
Consideration is known as 'the price of a promise' and
is a controversial requirement for contracts under
common law. Some common-law and civil-law
systems do not require consideration, and some
commentators consider it unnecessary. The idea
behind consideration is that both parties to a contract
must bring something to the bargain. A party seeking
to enforce a contract must show that it conferred some
benefit or suffered some detriment (though it might be
trivial, see below) that is recognized by law. For
example, money is often recognized as consideration,
but in some cases money will not suffice as
consideration (for example, when one party agrees to
make partial payment of a debt in exchange for being
released from the full amount).

3. capacity of parties
The parties should be competent to contract they
should be of the age of majority which 18 years or
above. And they should be of sound mind and not
disqualified to contract by any law.

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4. free consent of parties

There should be a free consent of both the parties to
contract. There should be a mutual willingness
between both the parties to contract with there free
will. They should not be force to contract.

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