109 Revised Schon ane iflabus for CSS Conpasitive Bsarimation ER: MERCANTILE LAW (100 MARKS} i Law of Contract, 1872 "= Definitions * Essentials of a valid contract (Proposal, Acceptance, Consideration, Free consent, Capacity of Parties, Not hereby declared to be Void) = Kinds of Contracts (Valid, Void, Voidable, Not Voidable) * Variety of Contracts (Contingent, Quasi, Bailment, Pledge, Indemnity, Agency) = Performance of Contract, contracts that need not to be performed. Breach of contract, consequences of breach, damages for breach of contract. Il, Sales of Goods Act, 1930 * Definitions * Differences: Sale & agreement to sell, conditions and warranties, express & implied conditions. = Doctrines: Caveat emptor, Nemo dat = Right and duties of seller & buyer, rights of unpaid seller. lll, Partnership Act, 1932 * Definitions = Essentials of partnership = Kinds of partnership (partnership at will, particular partnership, limited partnership) * Rights and duties of Partners = Relation of partners to third persons (implied authority of partner, doctrine of holding out) * Incoming and outgoing partners (minor) * Dissolution of firms (compulsory, by agreement, by court, by notice on happening of contingencies) IV. Negotiable Instrument Act, 1884 + Definitions = Types of negotiable instruments (Cheque, bill of exchange, promissory note) + Parties to instruments, holder & holder in due course + Rules (as to negotiation, presentment, payment & interest, discharge, noting and protest, compensation, acceptance, payment for honour) Special rules of evidence * Special provisions relating to cheques & bills of exchange (dishonor, duties of banker) * Provisions as to foreign instruments Scanned with CamScannervi. VAL Vill 110 Revised Scheme ard Syllabus for CSS Conpetitive Baamination Competition Act, 2010 * Definitions * Prohibition and abuse of (dominant position, certain agreements, discipline, marketing practices) = Approval of mergers = Competition commission of Pakistan (established, composition, term) = Functions and powers of commission + Provisions as to penalty and appeals. Electronic Transaction Ordinance, 2002 * Definitions + Recognition and presumption of electronic transactions (writing, signature, stamp duty, attestation etc.) * Electronic documents (attribution, acknowledgement, time and place of dispatch) * Certification of service providers * Application to acts done outside Pakistan * Offences & Nature (false information, false certificates, damage to information system etc) ‘The Arbitration Law in Pakistan * Definitions * Appointment, number and removal of arbitrator + Award by arbitrator + Powers of court upon award (remittance, modification and setting aside of award) = Types of arbitration (with or without intervention of court) * Stay of legal proceedings in presence of arbitration agreement Consumer's Protection Act, 2006 + Definitions * Consumer Commission (establishment, powers and functions, complaints before commission and disposal) * Provisions as to compulsory recall of goods = Duties and liablities of provider of goods (return and refund of goods) * Offences and penalties = Contract between consumer and provider Scanned with CamScanner1 ‘Revised Schon and Syllabus for CSS Conpatitive Bxarination Companies Ordinance, 1984 = Definitions * Types of Companies Fundamental papers of company (Memorandum of association, articles of association, prospectus) + Transfer of shares and debentures Management and administration (promoters, share holders, directors, chief executive, auditors) Meeting’s and proceedings (statutory, general, annual general meeting) + Winding up (voluntary, by court) Electronic Fund Transfer Act, 2007 = Definitions Payment system and their operation (designation of payment system & revocation, real time gross settlement system, governance & operation arrangement) + Payment instruments (designation, issuing and prohibition of instruments) + Clearing and other obligations = Supervisory Contral of state bank * Documentation of transfers * Notification of error and liabilities of parties "Law relating to action before court. SUGGESTED READINGS S.No. Title Author 1. | Lawof Contract Agarwala, M. Mehmood 2._| Sales of Goods Act Pollock & Mulla 3._ | Bare Acts: Government of Pakistan i) | Contract Act, 1872 Negotiable Instrument Act, 1881 Sale of Goods Act, 1930 Companies Ordinance, 1984 Arbitration Act, 1940 Competition Act, 2010 vil) | Electronic Transactions Ordinance, 2002 vili) | Consumers’ Protection Act, 2006 ix) | Electronic Fund Transfer Act, 2007 Scanned with CamScannerScanned with CamScannerContract: LS keeegaaaaaaaaaaaaaaaaaawawawawamawaaaaaeee Definition of Contract by Pollack “every agreement and promise enforceable at law is contract.” Scanned with CamScannerContract Act Definition of Contract by Salmond “a contract is an agreement creating and defining obligations between the parties” Scanned with CamScannerContract Act Definition of Contract u/s 2(h) “An agreement enforceable by law is a Contract.” Scanned with CamScannerEnforceability: An agreement is enforceable if it is recognized by court. In order to be enforceable by law, the agreement must create legal obligations between the parties. Scanned with CamScannerTypes of Agreement: Social Agreement: Social agreement are not enforceable because they do not create legal obligations between the parties. Example: invitation for dinner Legal Agreement: Legal agreement are enforceable because they create legal obligations between the parties. Example: “A” promise to sell his car to “B” Scanned with CamScannerContract Act Contract = Agreement + Enforceability Agreement = Offer + Acceptance Enforceability = Legal obligations b/w parties Scanned with CamScannerESSENTIALS OF VALID CONTRACT Scanned with CamScannerESSENTIALS OF VALID CONTRACT ° Offer and Acceptance ° Legal Obligation ° Lawful Consideration * Capacity of Parties ° Free Consent Lawful Object In Writing and Registration Certainty of Terms Possibility of Performance Not expressly declared void Scanned with CamScannerESSENTIALS OF VALID CONTRACT HE (eR ERNE ERED E DEDEDE EEEE RENEE Dffer and Acceptance an agreement, there must be a lawful offer by one party and lawful 2ptance of that offer by other party. The term lawful means that the * and acceptance must satisfy the requirements of contract act. mple: offers to sell his cycle to “B” for Rs.45000, This is an offer, if “B” pts this offer there is an acceptance. Scanned with CamScannerESSENTIALS OF VALID CONTRACT | Legal obligation: The parties to an agreement must create legal obligations. It means that if one party does not fulfill his promise, he shall be liable for breach of contract. Example: “A” offers to “B” to sell his home for Rs.2 Million, It is a contract as it creates legal obligation. Scanned with CamScannerESSENTIALS OF VALID es eee NA eee Lawful Consideration: For a valid contract, consideration must be lawful, Consideration is the price paid by one party for the promise of the other party. A contract is enforceable only when both the parties give and take something. That something given or taken is called consideration. Example: “A” promises to sell his car to “B” for 1 million, For “A” the 1 million is consideration and for “B” car is the consideration. Scanned with CamScannerESSENTIALS OF VALID es eee NA eee Capacity of Parties: An agreement is enforceable if it is made by parties who are the competent to contract. To be competent to contract, it is essential that the parties are of the age of majority, have sound mind etc. Example: “M’ a person of unsound mind agree to sells his house to “S” for Rs 2 lacs. It is not a valid contract because “M” is unsound. Scanned with CamScannerESSENTIALS OF VALID es eee NA eee " Free Consent: For a valid contract, it is essential that the consent of parties must be free, Consent is free when it is not obtained by force, undue influence, fraud, mispresentation or any kind of mistakes, If the consent of either party is not free, the agreement cannot become a contract. Example: “A” forced “B” at gun point to enter into a contract. Scanned with CamScannerESSENTIALS OF VALID es eee NA eee " Lawful Objects: It is necessary that agreement is made for a lawful object. The object of contract must not be illegal, immoral, opposed to public policy. Every agreement with unlawful object is illegal and therefore contract is void. Example: “A” hires a house to use for gambling. The object of agreement is illegal and void. Scanned with CamScannerESSENTIALS OF VALID CONTRACT FE (ee EERE EERE Writing and Registration : A contract may be oral or in writing, It is preferable that the contract be in writing because it is easy to prove in court. Scanned with CamScannerESSENTIALS OF VALID CONTRACT FE (ee EERE EERE " Certainty of Terms: The terms and conditions of a contract must be clear, complete and certain. If the terms are uncertain the agreement is void. | Example: “A” promises to sell 200 books to “B” without specifying their titles. The agreement is void because the terms are not clear. Scanned with CamScannerESSENTIALS OF VALID CONTRACT a " Possibility of Performance: A valid contract must be capable of being performed, An agreement to do an impossible act is void. If the act is legally or physically impossible to perform, the agreement cannot be enforced by law. Example; “A” agrees with “B” to discover a treasure by magic, the agreement is not enforceable. Scanned with CamScannerKINDS OF CONTRACT: " There are four types of contracts. "1: According to Enforceability. 2: According to Formation. 1 3: According to Performance. “4: According to Parties. Scanned with CamScannerKINDS OF CONTRACT: | a: 1: According to Enforceability: According to enforceability, a contract can be divided as under; a: Valid Contract. “bp: Void Contract. “¢: Void Agreement. e: Unenforceable contract. Of. Illegal Agreement. Scanned with CamScannerKINDS OF CONTRACT: & 1: According to Enforceability: a: Valid Contract: A valid contract is enforceable by law, An agreement becomes enforceable by law when all the essentials of a valid contract are present. Obligations of Parties: In a valid contract, all parties are legally responsible for the performance of the contract, if one of the parties breaches the contract, the other party can enforce it through court of law. Example: If “A” agrees to sell a car to “B”, if it fulfills all the essentials of a contract, it is a valid contract, If “A” fails to deliver the car, “B” can sue him and if “B” fails to Scanned with CamScannerKINDS OF CONTRACT: “1: According to Enforceability: Ob: Void Contract: The term void means not binding by the law. A contract which is not enforceable by law is a void contract. Obligations of Parties: A contract becomes void due to impossibility to performance. A contract becomes void before performance when it becomes impossible to be performed by any party due to following reasons. Scanned with CamScannerKINDS OF CONTRACT: A contract becomes “void” before performance when it becomes impossible to be performed by any party due to following reasons. Impossibility to performance “Subsequently illegality ORejection of voidable contract “Impossibility of depending event Scanned with CamScannerKINDS OF CONTRACT: 7 1: According to Enforceability: c: Void Agreement: An agreement not enforceable by law is said to be void. The void agreement does not creates any legal obligations on among parties. An agreement which is void from the beginning is void agreement. Example: “A” promise to buy a cow from “B” for 25000Rs/= .The cow was dead before the contract. Both parties were unaware. The agreement is void. Scanned with CamScannerKINDS OF CONTRACT: 1: According to Enforceability: d: Voidable Contract: It is voidable contract when the consent of one of the parties is not free, contract which has been made on by using false means, through fraud and mispresentation. Example: “D” forced “Q’ to sell his car at gunpoint. “A” deceives “B” by stating that his factory produces 10 million kg of sugar monthly and induces “B” to buy it. The contract is voidable Scanned with CamScannerKINDS OF CONTRACT: 1: According to Enforceability: e: Unenforceable contract: An unenforceable contract is that contract which cannot be enforced in a court of law because of some technical defects and faults such as absence of writing, registration, requisite stamp etc. Example: “A” borrow Rs. 1 billion from “B” and makes a pronote on a Rs.10 stamp paper, it is unenforceable because pronote is undervalued. Scanned with CamScannerKINDS OF CONTRACT: 1: According to Enforceability: f: illegal Agreement: An agreement is illegal when its performance is forbidden by any law. Such an agreement can never become a contract. An agreement is illegal and void if it is forbidden by law or is of sucha nature that if permitted. " Example: “A” gives “B” money to buy smuggling goods, The agreement is illegal and the money cannot be recovered. Scanned with CamScannerKINDS OF CONTRACT: 2: According to Formation: According to Formation a contract has the following three kinds. Express Contract. Implied Contract. Quasi Contract. Scanned with CamScannerKINDS OF CONTRACT: (RR ees eee ETE 2: According to Formation: Express Contract : Express contract is one which is expressed in words spoken or written. When such a contract is formed, there is no difficulty in understanding the rights, terms, obligations and conditions of a contract. Example: “A” gives his house on rent to “B’, on per month 10000 Rs and for one year of period, “A” mentioned terms and condition on a paper. Scanned with CamScannerKINDS OF CONTRACT: (RR ees eee ETE 2: According to Formation: Implied Contract: An implied contract is made without any words spoken and written, It arise from acts, conduct of parties, course of dealing or circumstances. Example: “A” went into a restaurant and had a cup of tea. It is implied contract that A will pay for the cup of tea Scanned with CamScannerKINDS OF CONTRACT: (RR ees eee ETE 2: According to Formation: Quasi Contract: In a quasi contract, the law imposes certain obligations under some special circumstances. It is based upon the principle of equity that a person shall not get allowed to get benefit at the cost of another. Example: “A” finds lost goods of “B” . “A” is bound legally to return goods back to “B”. Scanned with CamScannerKINDS OF CONTRACT: 3: According to Performance: According to performance a contract is of following two kinds. Executed Contract Executory Contract Scanned with CamScannerKINDS OF CONTRACT: 3: According to Performance: Executed Contract : A contract is said to be executed when both the parties have completely performed their obligations. It means that nothing remains to be done by either party under the contract. Example: “A” buys a book from “B” . “A” delivers the books “B” pays the price. It is an executed contract. Scanned with CamScannerKINDS OF CONTRACT: 3: According to Performance: Executory Contract : In an executory contract something remains to be done. In other words, a contract is said to be executory when both parties to a contract have yet to perform their obligations. Example: “M” sells his car to “N” for 1 million, “N” has not yet paid and “M” has not delivered the car. Scanned with CamScannerKINDS OF CONTRACT: 4. According to Parties: According to parties a contract may be of the following two kinds. Unilateral Contract © Bilateral Contract Scanned with CamScannerKINDS OF CONTRACT: Zz 4. According to Parties: Unilateral Contract: In a unilateral contract only one party has commitment. In other words, it is a contract where only one party is bound but the other party chooses to be bound by it. Example: A promises to pay Rs 10,000 to any one who finds his lost beg, B finds the bag and returns to A, it is a unilateral contract which comes "Scanned with CamScannerKINDS OF CONTRACT: 4. According to Parties: Bilateral Contract: It is a contract where both parties are bounded to perform certain duties, responsibilities and obligations. Example: A promises to supply raw material and B promises to pay the price of raw materials to B. Scanned with CamScannerDischarge of a Contract By Following modes in which a contract may be discharged. By Performance " By Mutual Agreement By impossibility of Performance By Operation of Law “ By Breach Scanned with CamScannerDischarge of a Contract LS ee By Performance : When the parties to the contract have duly performed their respective promises undertaken by them, the contract comes to an end. Scanned with CamScannerDischarge of a Contract LS ee By Mutual Agreement: A contract comes into being by the agreement between two parties, therefore it may also be discharged by their mutual agreement and willingness. Scanned with CamScannerDischarge of a Contract LS ee By the impossibility to perform: If the performance of contract becomes, or turns out to be, impossible, the parties to the contract are discharged from their respective obligations. Scanned with CamScannerDischarge of a Contract LS ee By Operation of Law: Some times the performance of a contract is discharged by the operation of some law. For instance, is soon as a person is discharged by an order of court. Scanned with CamScannerDischarge of a Contract By Breach: When one party to the contract breaks the contract by non performance of the promise or otherwise, the other party is discharged from his obligation under the contract and has right of action against the party responsible for the breach. 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