Syed Danyal Shah

BBA

Group E

Business Law

Submitted To: Hassam Raoon

Contents
Types Of Contract........................................................................................................................................3
Competency of Parties in a Contract...........................................................................................................3
Capacity Of Parties:.................................................................................................................................3
Contract By Minor:..................................................................................................................................3
Sound Mind.............................................................................................................................................3
Void And Voidable Contracts.......................................................................................................................4
Void agreement.......................................................................................................................................4
Voidable Agreement................................................................................................................................4
Types Of Contract
There is different forms of contract which includes

 Valid Contract
 Void Contract
 Voidable Contract
 Illegal Contract
 Unenforceable Contract

A valid contract is that contract which is acceptable to law and enforceable while the void
contract is not acceptable and cannot be enforced and it imposes no obligation on the parties involved.
If a contract is done by any force, threat or any pressure, it is called voidable contract. It can be valid or
void in the future depends on the party which has been forced for the contract. Illegal contracts are
those contracts which are unlawful or their terms and condition of the contract is illegal.
An unenforceable contract or transaction is one that is valid but one the court will not
enforce. Unenforceable is usually used in contradiction to void and voidable.

Competency of Parties in a Contract

To constitute a valid and binding contract one of the essential is that the parties to the contract
must be competent to contract. And the competency of the contracts are:

1. The contracting party must be major.

2. The contracting party must be of sound mind.
3. Party must not be disqualified from contracting by law to which he is a subject.

Capacity Of Parties:
To constitute a legally enforceable and competent contract, it is necessary that there must be
AGREEGATIVE MENTIUM (Aggregatio Mentium is a Latin term meaning meeting of minds.
Aggregatio mentium is an essential element in a contract requiring actual consent by both parties to the
formation of a contract).
Assent to create legal obligations can only give by one who is

• The person should be in a position to understand the transactions.

• The person should be declared capable by law.

Contract By Minor:
A minor is considered to be under the protection of the court and court has to watch over the
interest of such minor. The reason being that a minor cannot bind himself in contract.

In foreign countries, the minor is allowed to involve in a contract but this contract will be voidable.

Sound Mind
 In English law a person of unsound mind is competent to contract, although he may avoid his contract if
he satisfies the court that he was incapable of understanding the contract and other party knew it. The
contract is voidable at his option.
In Pakistan, the agreement of a person of unsound mind is, like that of minor, absolutely void.

Void And Voidable Contracts

Void agreement
Contracts that are void mean they cannot be enforced by either party. Essentially, it’s a contract
that is no longer able to be used, and the courts will look at it like there was never a contract to begin
with. One issue that can lead to a contract being void is the subject matter of the contract being illegal in
the particular state or throughout the country. Depending on the terms, and what aspect was illegal,
one or both parties could be facing criminal charges.

Voidable Agreement
With a voidable contract, one party can be bound by the contract terms while the other party
has the right to change their mind. In other words, they can cancel the contract whenever they want.
Another situation that could render a contract voidable is mutual mistake or when important material is
missing from the contract.