1.

Business law AWW

Chapter 1

Define Law and explain its dynamic nature.

 Answer: Law refers to a set of rules or a system of rules of conduct designed and enforced by the state to control and
regulate the conduct of people. Law is dynamic, meaning it changes as circumstances and conditions in society change,
adapting to the requirements of the society.
2. What is the purpose of studying law in Chartered Accountancy?
 Answer: The purpose of studying law in Chartered Accountancy is to be aware of legal problems, to know when legal
assistance is needed, to evaluate the financial implications of the law, and to communicate effectively with lawyers.
3. List and briefly explain the sources of law in Pakistan.
 Answer: The sources of law in Pakistan are legislation (Acts of Parliament, Ordinances, and delegated legislation),
precedents (case law), customs, and agreements.
4. Differentiate between civil law and criminal law, providing examples for each.
 Answer:
 Civil law deals with disputes between individuals or organizations and focuses on providing remedies. Example:
property disputes, contract breaches.
 Criminal law deals with crimes against the state or society and aims to punish offenders. Example: murder, theft.
5. Explain the structure of the Constitution of the Islamic Republic of Pakistan, including its preamble and main parts.
 Answer: The Constitution of Pakistan contains a preamble, twelve parts, 280 articles, and five schedules. The preamble
defines the objectives of the Constitution. Parts cover fundamental rights, the federation, provinces, judicature, elections,
Islamic provisions, emergency provisions, amendment procedures, and miscellaneous matters.
6. Describe the process of legislation in Pakistan, particularly focusing on the steps involved in passing a Money Bill.
 Answer:
 A Money Bill originates in the National Assembly.
 It is presented to the President for assent after passing in the National Assembly.
 If it involves the Senate, recommendations are sought, but Senate's approval is not mandatory.
 If the President returns the Bill, it may be reconsidered by the Parliament.
 The Bill lapses if not passed within a specific period.
7. What is delegated legislation and what are its advantages and disadvantages?
 Answer: Delegated legislation is the power given to a minister or public body to make subordinate laws. Advantages
include time efficiency, expert opinion incorporation, and flexibility. Disadvantages include reduced democratic oversight
and potential volume overload.
8. Explain the role and powers of the President in the legislative process of Pakistan.
 Answer: The President of Pakistan is the Head of State. They approve statutes passed by the National Assembly and
Senate. The President acts on advice from the Cabinet or Prime Minister.
9. Describe the composition and functions of the Senate in Pakistan's legislative system.
 Answer: The Senate is the Upper House of Parliament, with equal representation from provinces and Islamabad Capital
Territory. It approves all statutes passed by the National Assembly except Money Bills.
10. How does the Constitution prevent the abuse of power in the legislative process?
 Answer: The Constitution limits the powers of the President, ensures separation of powers, requires parliamentary
approval for legislation, and allows judicial review.
11. What happens to a Bill if the National Assembly is dissolved before it is passed?
 Answer: If the National Assembly is dissolved, a Bill pending in it lapses if not passed by the Senate. If a Bill is pending in
the Senate, it does not lapse.
12. Discuss the control mechanisms in place for delegated legislation.
 Answer: Parliament controls delegated legislation by restricting the power to make rules. Rules made under delegated
power can be challenged in courts on the grounds of exceeding authority.
13. What happens if the President returns a Bill for reconsideration?
 Answer: The Bill is reconsidered by Parliament. If passed again, it is presented to the President for assent.
14. How is the Prime Minister elected in Pakistan, and what are their responsibilities?
 Answer: The Prime Minister is elected by a majority of members in the National Assembly. Responsibilities include
forming and heading the Cabinet, advising the President on matters, and overseeing the implementation of government
policies.
15. Explain the concept of precedence in law, giving examples where it might be applied.
 Answer: Precedence refers to legal decisions made by higher courts that serve as guiding principles for lower courts. For
example, if a lower court is deciding a case similar to one already decided by a higher court, it will usually follow the
decision made by the higher court.
1.

CHAPTER 2
Define a contract and explain how it differs from an agreement.
 Answer: A contract is a legally binding agreement between two or more parties that creates mutual obligations enforceable by law. An
agreement, on the other hand, is a wider term that includes every promise and set of promises, forming the consideration for each other.
2. What is the legal significance of a social agreement compared to a legal agreement?
 Answer: Social agreements are not legally binding, meaning they cannot be enforced in a court of law. Legal agreements, however, are
enforceable by law.
3. Explain the difference between an offer and an invitation to offer, providing examples for each.
 Answer: An offer is a proposal by one party to another intended to create a legally binding contract. An invitation to offer, also known as an
invitation to treat, is an invitation to others to make an offer. Example of an offer: "I offer to sell my car for $5,000." Example of an invitation
to offer: Goods displayed in a store with a price tag.
4. Describe the essential elements of a valid offer.
 Answer: The essential elements of a valid offer include: intention to create legal relations, definite and clear terms, communication of the
offer, and an intention to be bound by the offer.
5. Can an offer be terminated after its acceptance? Explain with examples.
 Answer: No, once an offer is accepted, it becomes a binding contract and cannot be terminated unilaterally. Example: A offers to sell a
house to B for $200,000. B accepts the offer. A cannot revoke the offer after B's acceptance.
6. How is communication of a proposal considered complete? Provide an example.
 Answer: Communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. Example: A sends a
letter of offer to B. The communication of the proposal is complete when B receives the letter.
7. Discuss the methods by which an offer can be revoked, and give an example of each.
 Answer: An offer can be revoked by communication of notice, lapse of time, death or insanity of the offeror, or failure of a condition.
Example: A offers to sell a house to B. Before B accepts, A communicates to B that the offer is revoked.
8. What constitutes a valid acceptance of a proposal? Provide examples of both valid and invalid acceptances.
 Answer: A valid acceptance must be absolute and unconditional. Example of valid acceptance: B says, "I accept your offer to buy my car for
$5,000." Example of invalid acceptance: B says, "I accept your offer to buy my car, but only if you deliver it next week."
9. Explain when the communication of acceptance is considered complete as per the Contract Act, 1872.
 Answer: The communication of acceptance is complete as against the proposer when it is put into a course of transmission to the person to
whom it is made. As against the acceptor, it is complete when it comes to the knowledge of the proposer.
10. Can an acceptance be revoked? If so, under what circumstances? Give examples.
 Answer: An acceptance can be revoked before it is communicated to the offeror. Example: B accepts A's offer by sending a letter, but
before the letter is delivered, B sends another letter revoking the acceptance.
11. What is the effect of acceptance with variation of terms on the original offer? Provide an example.
 Answer: Acceptance with variation of terms amounts to a counter-offer, which terminates the original offer. Example: A offers to sell a
house to B for $200,000. B responds, "I accept your offer, but I will pay $180,000." B's response is a counter-offer, which terminates A's
original offer.
12. Explain what is meant by "consideration" in a contract and its significance.
 Answer: Consideration is something of value exchanged between parties to a contract, usually money, goods, or services, given in exchange
for something else. It is necessary for a contract to be valid. It signifies that the parties have bargained for something and have reached a
mutual agreement.
13. Discuss the types of consideration recognized by law.
 Answer: The types of consideration recognized by law are:
 Executed consideration: When something is done in return for a promise.
 Executory consideration: When a promise is made in return for a promise.
 Past consideration: When a promise is made for an act already done.
 Present consideration: When something is given at the time of the promise.
14. Explain the concept of "free consent" in a contract.
15. Answer: Free consent means that the parties to a contract must give their consent freely, without any coercion, undue influence, fraud,
misrepresentation, or mistake. The consent must be genuine and not obtained through improper means.
16. What are the different ways in which consent to a contract can be affected? Provide examples for each.
 Answer: Consent to a contract can be affected by:
 Coercion: Threatening to harm someone if they do not agree to a contract. Example: A threatens to harm B if B does not sell his
car to A.
 Undue influence: Exerting influence over someone in a way that affects their free will. Example: A, who is B's caretaker, influences
B to sell his property to A for a very low price.
 Fraud: Intentionally deceiving someone in order to get them to agree to a contract. Example: A sells B a painting, claiming it to
be an original work of a famous artist when it is actually a copy.
 Misrepresentation: Providing false information that induces someone to enter into a contract. Example: A tells B that a car has
only been driven for 10,000 miles when it has actually been driven for 100,000 miles.
 Mistake: When both parties are mistaken about a fundamental aspect of the contract. Example: A agrees to sell a painting to B,
mistakenly thinking it's a replica when it's actually an original.
17. Explain when a contract is considered voidable.
 Answer: A contract is voidable when it is valid, but one of the parties has the option to either affirm or reject the contract due to some
defect such as coercion, undue influence, fraud, misrepresentation, or mistake.
18. Describe the legal effects of void agreements.
 Answer: Void agreements are not enforceable by law, and they create no legal obligations. Any money or property transferred under a void
agreement cannot be recovered.
19. Explain the circumstances under which a contract becomes void.
 Answer: A contract becomes void under the following circumstances:
 When it is entered into under a mistake of fact
 When it is impossible to perform
 When it is illegal
 When the parties become incapable of performing the contract
20. What are the rights of a person whose consent is obtained by fraud?
 Answer: A person whose consent is obtained by fraud has the right to:
 Avoid the contract
 Claim damages for any losses suffered
 Seek restitution of any benefits conferred under the contract
21. Discuss the remedies available for a breach of contract.
 Answer: The remedies available for a breach of contract include:
 Damages: Monetary compensation for the losses suffered due to the breach.
 Specific performance: Court order requiring the breaching party to fulfill their obligations under the contract.
 Rescission: Canceling the contract and returning the parties to their pre-contractual positions.
 Injunction: Court order preventing the breaching party from taking certain actions.

Chapter 3
Practice Question 01: Shoaib, aged 15, is the son of a billionaire businessman, Ijaz Munsif. Last month Shoaib drove his father’s 2018 Model BMW to a
vintage car exhibition arranged by Volkswagon Club of Pakistan. At the exhibition he saw a vintage Mercedes-Benz and entered into a contract with the
seller for the purchase of the car. The seller, knowing Ijaz Munsif’s status, delivered the car to Shoaib at his house. The seller requested for payment for
the car but Shoaib refused to pay. The seller is now requesting for full payment by Ijaz Munsif. Discuss whether the seller would succeed in recovering
the payment from Shoaib or Ijaz Munsif.

Solution: Shoaib, being a minor, lacks the capacity to enter into a legally binding contract with the seller. Therefore, Shoaib is not bound by the
contract and the contract is void ab-initio. A minor can only be bound by a contract if he has been supplied with necessaries suited to his condition in
life. His liability in such a case would be limited to the extent of his property, if any. In this case, the vintage car cannot be regarded as a necessary
good. Therefore, the seller cannot enforce payment for the vintage car against Shoaib.

The seller can only claim for the return of his car through an order of restitution. Similarly, Ijaz Munsif cannot be held liable for the price of the car
which his son Shoaib bought. He would have been held liable if his son had either entered into a contract jointly with him or on behalf of Ijaz Munsif as
his agent.
Practice Question 02: Mohsin promised Ahsan that he will pay his university fee. Later Mohsin suffered losses in his business and refused to pay the
fee. Mohsin is of the view that since the agreement was without consideration, it does not constitute a valid contract. However, Ahsan believes that the
agreement is enforceable under law as it meets certain other conditions. You are required to narrate the conditions which Ahsan may be referring to.

Solution: The conditions under which the said contract is enforceable are:

 Mohsin and Ahsan stand in near relation to one another.

 The agreement is out of natural love and affection.
 The said contract is in writing.

Practice Question 03: Mrs. Ikram was searching for a house for her family in city’s posh locality. Her grandfather Nadeem had promised to pay her Rs.
1.0 million by way of a gift for the purchase of the house. After finalizing the deal with one of the estate brokers, Mrs. Ikram asked Nadeem to pay her
Rs. 1.0 million as promised. Nadeem, however, refused to pay the amount. Mrs. Ikram filed a suit against her grandfather Nadeem for the enforcement
of the promise made by him. Discuss the circumstances in which Mrs. Ikram would be able to recover the amount from Nadeem.

Solution: An agreement made without consideration is void. However, Mrs. Ikram may claim the amount of Rs. 1.0 million from her grandfather
Nadeem, by proving either gift or love and affection. In case of a gift, it needs to be completed. The rule ‘No consideration no contract’ does not apply
to completed gifts.

An agreement made on account of natural love and affection without consideration will be valid if it is expressed in writing, registered under the law,
made on account of natural love and affection, and between parties standing in a near relation to each other.

However, in the given scenario, Nadeem only made a promise to pay Rs. 1.0 million by way of a gift and did not actually pay the amount. Similarly, the
promise was not made in writing and was not registered, therefore, the promise cannot be enforced in both of the above circumstances and Mrs. Ikram
cannot recover anything from her grandfather Nadeem.

Practice Question 04: Muneer wanted to complete his bachelor’s degree from Europe. His paternal uncle Furqan Butt had promised him to pay Rs. 2
million by way of a gift, at the time of his admission to a college in Europe. After getting admission to one of the renowned colleges in Europe, Muneer
asked Furqan Butt to pay him Rs. 2 million as promised. However, Furqan Butt refused to pay the amount and Muneer filed a suit against Furqan Butt
for the enforcement of his promise. Discuss the circumstances in which Muneer may be able to recover the amount from Furqan Butt.

Solution: An agreement made without consideration is void. However, Muneer may claim the amount of Rs. 2 million from his uncle Furqan Butt, by
proving either of the following two conditions.

i. gift ii. love and affection

Completed gift: In case of a gift, it needs to be completed. The rule ‘No consideration no contract’ does not apply to completed gifts.

Love and affection: An agreement made on account of natural love and affection without consideration will be valid if it is:

 expressed in writing,
 registered under the law,
 made on account of natural love and affection, and
 between parties standing in a near relation to each other.

However, in the given scenario, Furqan Butt only made a promise to pay Rs. 2 million by way of a gift and did not actually pay the amount. Similarly, the
promise was not made in writing and was not registered, therefore, the promise cannot be enforced in both of the above circumstances and Muneer
cannot recover anything from his uncle Furqan Butt.

Practice Question 05: Asif stole cash and merchandise from the ABC Store. Basit, the owner of store, initiated legal proceedings against him. Asif
contacted Basit with an offer to return the stolen cash and merchandise if Basit withdraws the suit. Basit accepted the offer. Is it a valid agreement?
Discuss.

Solution: No, the agreement is void as its object is unlawful and constitutes stifling the criminal prosecution.

Practice Question 06: Naeem was a treasury manager in Raheel Associates (RA). Naeem robbed Rs. 100,000 cash from the business. Raheel, the owner
of the business, instituted legal proceedings against Naeem. Naeem agreed to return the cash and Raheel agreed to withdraw the proceedings against
 him. Naeem fulfilled his part of the promise. Under the provisions of the Contract Act, 1872 explain whether Raheel is bound to withdraw the
proceedings against Naeem.

Solution: The agreement between Naeem and Raheel is void as its object is unlawful and constitutes stifling the criminal prosecution. Raheel, therefore,
is not bound to fulfill his part of the promise.

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Practice Question 07: Under what circumstances can a contract be considered voidable?

Solution: A contract can be considered voidable if the agreement is enforceable by law at the option of one or more parties, but not at the option of
the other or others. This typically occurs when consent is obtained through coercion, fraud, misrepresentation, or undue influence.

Practice Question 08: Explain the difference between a void contract and a voidable contract.

Solution: A void contract is one that is null and unenforceable from the beginning because it lacks an essential element such as legality or capacity. On
the other hand, a voidable contract is initially valid and enforceable, but due to certain factors such as coercion, fraud, or misrepresentation, one party
has the option to either enforce or void the contract.

Practice Question 09: What is the significance of the age of majority in contracts?

Solution: The age of majority is important because minors (those under the age of majority) lack the legal capacity to enter into contracts. Contracts
made with minors are generally voidable at the option of the minor. The age of majority in Pakistan is 18 years, although exceptions may apply when a
minor has a guardian appointed by the court.

Practice Question 10: Explain the concept of "sound mind" in the context of making contracts.

Solution: A person is considered to be of sound mind for the purpose of making a contract if, at the time of making the contract, they are capable of
understanding it and forming a rational judgment about its effect on their interests. This means they must not be suffering from any mental illness or
incapacity that impairs their ability to understand the contract.

Practice Question 11: What are the exceptions to the rule that an agreement without consideration is void?

Solution: Exceptions to the rule that an agreement without consideration is void include:

1. Agreements based on natural love and affection if they are in writing and registered.
2. Agreements to compensate for past voluntary services.
3. Agreements to pay a time-barred debt if made in writing and signed by the debtor.
4. Completed gifts, where property is transferred voluntarily without consideration.

Practice Question 12: Explain the concept of "adequacy of consideration" in contracts.

Solution: Adequacy of consideration refers to whether the value exchanged between parties in a contract is fair and reasonable. It's important to note
that a contract is not void merely because the consideration is inadequate. However, if the consideration is so grossly inadequate that it suggests a lack
of free consent, the court may take it into account when determining the validity of the contract.

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Practice Question 13: What is meant by the term "coercion" in contract law?

Solution: Coercion refers to the act of compelling a person to enter into a contract by the use of force or threat of force, either physical or
psychological. In contract law, coercion renders the contract voidable at the option of the party subjected to coercion.

Practice Question 14: Explain the difference between fraud and misrepresentation in contract law.

Solution: Fraud involves intentional deception or misrepresentation of material facts made with the intent to induce someone to act to their detriment.
Misrepresentation, on the other hand, is a false statement of fact made innocently, without the intention to deceive, but still leading the other party to
enter into the contract. Both fraud and misrepresentation can render a contract voidable.

Practice Question 15: Under what circumstances can a contract be deemed illegal?

Solution: A contract can be deemed illegal if its object or consideration is prohibited by law, is fraudulent, involves an injury to the person or property
of another, or is against public policy. Illegal contracts are void ab initio, meaning they are void from the beginning and cannot be enforced by either
party.

Practice Question 16: What is the doctrine of privity of contract?

Solution: The doctrine of privity of contract holds that only parties to a contract can enforce its terms or be bound by them. This means that a third
party who is not a party to the contract generally cannot enforce the rights or obligations under that contract.

Practice Question 17: What is the rule regarding the communication of acceptance in contracts?

Solution: The rule is that acceptance of an offer must be communicated to the offeror to create a binding contract. The acceptance must be
unconditional, unequivocal, and in the manner prescribed (if any) by the offeror. Silence generally does not constitute acceptance unless the offeree has
a duty to speak.

Practice Question 18: Explain the concept of "void agreements" in contract law.

Solution: Void agreements are those that are devoid of legal effect from the outset, meaning they are not enforceable by law and do not create any
legal obligations between the parties. Examples of void agreements include agreements made by parties lacking capacity, agreements with unlawful
objects, and agreements that are against public policy.

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Practice Question 19: What is the difference between a unilateral contract and a bilateral contract?

Solution: A unilateral contract involves a promise made by one party in exchange for the performance of an act by another party. In a unilateral
contract, acceptance is made by performing the required act. A bilateral contract, on the other hand, involves promises exchanged by both parties, and
acceptance is typically communicated through words or conduct.

Practice Question 20: Explain the concept of "consideration" in contract law.

Solution: Consideration is something of value exchanged between parties to a contract. It can be a promise to perform a certain act, refrain from doing
something, or providing something of value. Consideration is essential for the formation of a legally binding contract, and a contract without
consideration is generally unenforceable.
 Practice Question 21: What is the "doctrine of frustration" in contract law?

Solution: The doctrine of frustration applies when unforeseen circumstances make performance of a contract impossible, illegal, or radically different
from what was originally contemplated by the parties. In such cases, the contract is considered frustrated, and both parties are discharged from their
obligations.

Practice Question 22: Under what circumstances can a contract be discharged by breach?

Solution: A contract can be discharged by breach when one party fails to perform its obligations under the contract. This breach must be material,
meaning it goes to the root of the contract, and it must be substantial enough to justify the other party's refusal to continue with the contract.

Practice Question 23: Explain the concept of "statute of frauds" in contract law.

Solution: The statute of frauds requires certain types of contracts to be in writing to be enforceable. These include contracts involving the sale of land,
contracts that cannot be performed within one year, contracts for the sale of goods over a certain value, and contracts in consideration of marriage. The
purpose of the statute of frauds is to prevent fraudulent claims based on oral agreements.

Practice Question 24: What is the difference between an express contract and an implied contract?

Solution: An express contract is one where the terms are explicitly agreed upon by the parties, either orally or in writing. In contrast, an implied
contract is one where the agreement between the parties is inferred from their conduct, rather than being explicitly stated.

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Practice Question 25: What are the essential elements of a valid contract?

Solution: The essential elements of a valid contract are:

1. Offer: One party must make a clear, definite offer.

2. Acceptance: The other party must accept the offer as presented.
3. Consideration: There must be something of value exchanged between the parties.
4. Legal Capacity: Both parties must have the legal capacity to enter into the contract.
5. Legal Purpose: The contract's purpose must be legal and not against public policy.
6. Mutual Consent: Both parties must freely and willingly consent to the terms of the contract.

Practice Question 26: Explain the difference between void and voidable contracts.

Solution:

 Void Contract: A void contract is one that has no legal effect from the beginning. It is as if the contract never existed. This could be because
it violates the law or public policy, or because one party lacked legal capacity.
 Voidable Contract: A voidable contract is one that is valid and enforceable unless a party chooses to void it. These contracts can be voided
by one party if there is a defect such as fraud, duress, or undue influence.

Practice Question 27: What is the difference between misrepresentation and fraud in contract law?

Solution:
  Misrepresentation: Misrepresentation occurs when one party makes a false statement of fact that induces the other party to enter into the
contract. This false statement may be innocent (without knowledge of its falsity), negligent (without reasonable care to ascertain its truth),
or fraudulent.
 Fraud: Fraud is a deliberate misrepresentation of material facts made with the intent to deceive and induce the other party to enter into the
contract. Fraud involves an intention to deceive, whereas misrepresentation can be unintentional.

Practice Question 28: Explain the concept of "capacity" in contract law.

Solution: Capacity refers to a party's legal ability to enter into a contract. A person must have the mental capacity and legal competence to understand
the nature and consequences of the contract they are entering into. Minors, mentally incapacitated individuals, and those under the influence of drugs
or alcohol may lack capacity.

Practice Question 29: What is the difference between anticipatory breach and actual breach of contract?

Solution:

 Anticipatory Breach: Anticipatory breach, also known as anticipatory repudiation, occurs when one party to a contract makes it clear,
through words or actions, that they will not fulfill their contractual obligations when the time comes.
 Actual Breach: Actual breach occurs when one party fails to perform their obligations under the contract at the time performance is due.

Practice Question 30: Explain the concept of "liquidated damages" in contract law.

Solution: Liquidated damages are damages agreed upon by the parties in the contract, in advance, as the amount of compensation that will be payable
if one party breaches the contract. These damages must be a reasonable estimate of the anticipated loss caused by the breach. They are specified in the
contract to avoid disputes over the amount of damages in case of breach.

chapter 4

Consent: Coercion and Undue Influence

Question 01: Jamal threatened Rafia to murder her son Atif if she did not sell her house to Mujahid. Under the provisions of the
Contract Act, 1872, comment on the validity of the above contract.

Solution 01: The contract in the above situation is voidable at the option of Rafia as her consent is not free and has been obtained
by coercion.

Question 02: Haroon was engaged to be married to Ghazala. Haroon wanted to establish his own business and therefore he
entered into a contract with Ghazala for providing him all her jewelry and apartment by way of a gift, and in return Haroon agreed to
give her a small share in business profit. After some time, Ghazala filed a suit against Haroon, requesting for setting aside the gift
deed as it was not made with her free will. Discuss whether Ghazala would succeed in her contention.

Solution 02: Ghazala may succeed to recover her jewelry and apartment from Haroon on the presumption of undue influence. A
contract is said to be induced by undue influence where the relation subsisting between the parties is such that one of the parties is
in a position to dominate the will of the other and uses that position to obtain unfair advantage over the other. Haroon in this case is
a fiancé of Ghazala and is in a position to dominate her will. When the consent to an agreement is caused by undue influence, the
agreement is voidable at the option of the party whose consent is so caused. Therefore, the contract is voidable at the option of
Ghazala. The Court may set aside the contract either absolutely or, in case if Ghazala has received any benefit under the contract,
upon such terms and conditions as the Court may seem just. The burden of proof that the above contract, which on the face of it
appears to be unconscionable, was not induced by undue influence lies on Haroon, as he is the one who is in a position to dominate
Ghazala’s will.
Practice Question 01: Jamal threatened Rafia to murder her son Atif if she did not sell her house to Mujahid. Rafia did as she was
told. Under the provisions of the Contract Act, 1872, comment on the validity of the above contract.

Solution 01: The contract in the above situation is voidable at the option of Rafia as her consent is not free and has been obtained
by coercion.

Practice Question 02: Haroon was engaged to be married to Ghazala. Haroon wanted to establish his own business and therefore
he entered into a contract with Ghazala for providing him all her jewelry and apartment by way of a gift, and in return Haroon
agreed to give her a small share in business profit. After some time, Ghazala filed a suit against Haroon, requesting for setting aside
the gift deed as it was not made with her free will. Discuss whether Ghazala would succeed in her contention.

Solution 02: Ghazala may succeed to recover her jewelry and apartment from Haroon on the presumption of undue influence. A
contract is said to be induced by undue influence where the relation subsisting between the parties is such that one of the parties is
in a position to dominate the will of the other and uses that position to obtain unfair advantage over the other. Haroon in this case is
a fiancé of Ghazala and is in a position to dominate her will. When the consent to an agreement is caused by undue influence, the
agreement is voidable at the option of the party whose consent is so caused. Therefore, the contract is voidable at the option of
Ghazala. The Court may set aside the contract either absolutely or, in case if Ghazala has received any benefit under the contract,
upon such terms and conditions as the Court may seem just. The burden of proof that the above contract, which on the face of it
appears to be unconscionable, was not induced by undue influence lies on Haroon, as he is the one who is in a position to dominate
Ghazala’s will.

uestion 03: Define fraud according to Section 17 of the Contract Act, 1872, and provide an example for each type of fraudulent act.

Solution 03: Fraud, as per Section 17 of the Contract Act, 1872, includes the following acts committed by a party to a contract, or
with their connivance, or by their agent, with intent to deceive another party thereto or their agent:

a) Suggesting as a fact something which is not true, by one who does not believe it to be true. Example: Azam sells locally
manufactured goods representing them to be imported goods at a higher price, which amounts to fraud. b) Actively concealing a
fact by one having knowledge or belief of the fact. Example: Zia, a furniture dealer, conceals the cracks in furniture sold by him using
packing material and polishing it in such a way that the buyer, even after reasonable examination, cannot trace the defect. This
would amount to fraud through active concealment. c) Making a promise without any intention of performing it. Example: Ali
promises to deliver a product to Bilal, knowing that he has no intention to do so. This is fraud. d) Any other act fitted to deceive.
Example: Sara sells a car, knowing that the odometer has been tampered with to show a lower mileage. This act is fitted to deceive.
e) Any act or omission as the law specially declares to be fraudulent. Example: Selling a property without disclosing known defects,
despite being obligated to do so by law, is considered fraudulent.

Question 04: Discuss the burden of proof in cases of undue influence, as outlined in Section 16 of the Contract Act, 1872.

Solution 04: In cases of undue influence, as outlined in Section 16 of the Contract Act, 1872, where a person in a position to
dominate the will of another enters into a contract with them, and the transaction appears, on the face of it or on the evidence
adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence lies upon the person
in a position to dominate the will of the other. For example, if Ameer, who is enfeebled by disease or age, agrees with Asif, his
medical attendant, to pay Asif a large sum for his professional services, the burden of proof that undue influence was not exercised
lies on Asif, as he is presumed to be in a position to dominate Ameer's will.

Question 05: Explain the effect of undue influence on an agreement as per Section 19A of the Contract Act, 1872.

Solution 05: According to Section 19A of the Contract Act, 1872, the agreement induced by undue influence is voidable at the
option of the party whose consent was caused by undue influence. Any such contract may be set aside either absolutely or, if the
party who was entitled to avoid it has received any benefits under the contract, upon such terms and conditions as the Court may
deem just. For example, if Kanwar, a money lender, advanced money to Sajid, an agriculturist, in an emergency situation and by
undue influence made him execute a bond of double the amount with a high-interest rate, the court may set aside the bond,
ordering Sajid to repay the original amount with such interest as may seem just.

Question 06: Differentiate between fraud and misrepresentation.

Solution 06: Fraud and misrepresentation are both instances where one party to a contract deceives the other, but they differ in
intent and execution:

Criteria Fraud Misrepresentation

May or may not involve intention
Intent Intention to deceive to deceive
Act Active deception Unintentional or innocent act
Suggesting false facts, active False statement of fact, false
concealment, false promises, assertion, silence when there's a
Elements acts fitted to deceive duty to speak
Intention to
Deceive Present May be absent
Selling locally manufactured
goods as imported, promising Mistakenly stating the age of a
Example without intention to perform building for sale

Question 07: Define misrepresentation and provide an example.

Solution 07: Misrepresentation is a false statement of fact made by one party to another, which induces the other party to enter
into the contract. An example would be if Ali mistakenly states the age of a building for sale as 10 years instead of its actual age of
20 years, and Bilal buys it based on this information. This would constitute misrepresentation.

Question 08: Discuss the effect of misrepresentation on an agreement under the Contract Act, 1872.

Solution 08: Under the Contract Act, 1872, the effect of misrepresentation on an agreement depends on whether the
misrepresentation is innocent or fraudulent:

a) Fraudulent Misrepresentation: If misrepresentation is fraudulent, the contract is voidable at the option of the party whose
consent was so caused (Section 19). The aggrieved party can either rescind the contract or choose to affirm it.

b) Innocent Misrepresentation: If the misrepresentation is innocent, meaning the party making it had no fraudulent intent, the
contract is not automatically voidable. However, the innocent party may still have a remedy of rescission if the misrepresentation was
material (Section 19(2)).

Question 09: Explain the difference between coercion and undue influence in terms of nature of pressure.

Solution 09: Coercion and undue influence differ in the nature of pressure applied to obtain consent:

 Coercion involves physical pressure. It compels a person to enter into a contract through threats of an offense or by
committing an offense, such as physical violence or restraint.
 Undue influence, on the other hand, involves moral pressure. It dominates the will of the party, usually due to a special
relationship or a position of authority, without resorting to physical force.

For example, if Ali threatens to harm Bilal unless Bilal signs a contract, it's coercion. If Bilal's doctor, Asif, pressures him into signing a
contract because of their doctor-patient relationship, it's undue influence.

Question 10: Discuss the difference between coercion and undue influence regarding the relationship between the parties.

Solution 10: Coercion and undue influence differ based on the relationship between the parties:
  Coercion can be applied between parties regardless of their relationship. It may involve a stranger forcing someone into a
contract through threats or violence.
 Undue influence typically occurs in relationships where one party is in a position of trust, authority, or dominance over
the other. This could be due to familial, fiduciary, or professional relationships.

For instance, if Ali threatens to harm Bilal unless Bilal signs a contract, it's coercion. If Bilal's guardian, his uncle, uses his position to
pressure Bilal into signing a contract, it's undue influence.

Question 11: Discuss the burden of proof in cases of coercion and undue influence.

Solution 11: In cases of coercion:

 The burden of proof lies with the party seeking to avoid the contract. They must prove that coercion was involved in
obtaining their consent (Section 16).
 They must show evidence of the threat or pressure exerted by the other party.

In cases of undue influence:

 The burden of proof lies with the party in a position to dominate the other's will (Section 16).
 They must prove that the contract was not induced by undue influence, especially if the transaction appears
unconscionable.
 The burden shifts to the dominant party to prove the absence of undue influence.

Question 12: Discuss the restoration of benefits in cases of coercion and undue influence.

Solution 12: In cases of coercion:

 The aggrieved party must restore any benefit received under the contract (Section 64).
 This means they must repay or return any money or property received as a result of the coerced contract.

In cases of undue influence:

 The party avoiding the contract may or may not need to restore the benefit received (Section 19A).
 The court decides whether the benefit should be returned, and if so, on what terms and conditions.
 The decision depends on the circumstances and fairness of the case.
Question 13: Explain the effect of misrepresentation on an agreement under the Contract Act, 1872.

Solution 13: Misrepresentation affects an agreement under the Contract Act, 1872 as follows:

 Fraudulent Misrepresentation: If misrepresentation is fraudulent, the contract is voidable at the option of the party
whose consent was so caused (Section 19). The aggrieved party can choose to rescind the contract or affirm it.
 Innocent Misrepresentation: If the misrepresentation is innocent, meaning the party making it had no fraudulent intent,
the contract is not automatically voidable. However, the innocent party may still have a remedy of rescission if the
misrepresentation was material (Section 19(2)).

Question 14: Discuss the difference between coercion and undue influence regarding the nature of pressure.

Solution 14: Coercion and undue influence differ in the nature of pressure applied to obtain consent:

 Coercion involves physical pressure. It compels a person to enter into a contract through threats of an offense or by
committing an offense, such as physical violence or restraint.
  Undue influence, on the other hand, involves moral pressure. It dominates the will of the party, usually due to a special
relationship or a position of authority, without resorting to physical force.

For example, if Ali threatens to harm Bilal unless Bilal signs a contract, it's coercion. If Bilal's doctor, Asif, pressures him into signing a
contract because of their doctor-patient relationship, it's undue influence.

Question 15: Explain the difference between coercion and undue influence regarding the relationship between the parties.

Solution 15: Coercion and undue influence differ based on the relationship between the parties:

 Coercion can be applied between parties regardless of their relationship. It may involve a stranger forcing someone into a
contract through threats or violence.
 Undue influence typically occurs in relationships where one party is in a position of trust, authority, or dominance over
the other. This could be due to familial, fiduciary, or professional relationships.

For instance, if Ali threatens to harm Bilal unless Bilal signs a contract, it's coercion. If Bilal's guardian, his uncle, uses his position to
pressure Bilal into signing a contract, it's undue influence.

Question 16: Discuss the burden of proof in cases of coercion and undue influence.

Solution 16: In cases of coercion:

 The burden of proof lies with the party seeking to avoid the contract. They must prove that coercion was involved in
obtaining their consent (Section 16).
 They must show evidence of the threat or pressure exerted by the other party.

In cases of undue influence:

 The burden of proof lies with the party in a position to dominate the other's will (Section 16).
 They must prove that the contract was not induced by undue influence, especially if the transaction appears
unconscionable.
 The burden shifts to the dominant party to prove the absence of undue influence.

Practice Question 03: Shafiq bought Abad’s motorcycle factory in Faisalabad on Abad’s representation that fifty thousand
motorcycles are assembled at his factory annually. Shafiq later found that the factory has a capacity to manufacture thirty five
thousand motorcycles only per annum. Shafiq now wants to rescind the contract on the ground that his consent was obtained by
misrepresentation. Under the provisions of the Contract Act, 1872 list the circumstances under which Shafiq may not be able to
rescind the contract.

Solution: Shafiq may not be able to rescind the contract under the following circumstances:

 If Shafiq had the means of discovering the truth with ordinary diligence; or
 Abad’s misrepresentation was not the basis for Shafiq’s consent.

Practice Question 04: Ghaffar purchased a piece of land from Sharif who is an engineer by profession. During the discussion prior
to the purchase, Sharif had told Ghaffar that in his opinion, the land would be able to support 2,500 mango trees. However, only
2300 trees could eventually be planted on the land. Under the provisions of the Contract Act, 1872 discuss whether Ghaffar can claim
damages on the grounds of fraud.
Solution: Sharif’s statement that in his opinion the land could support 2,500 mango trees clearly indicated that he was not sure
about it and was just giving an opinion. Therefore, unless Ghaffar can show that the statement was made with the intention to
deceive him and representation was as to fact and not mere an opinion, he cannot claim damages on the grounds of fraud.

Practice Question 05: Mughal and Dawood are trading in rice. Dawood entered into a contract with Mughal for the purchase of 50
tons of rice. Dawood had private information of change in prices which would have affected Mughal’s willingness to enter into the
contract. When Mughal, through his own resources, came to know about the prices, he accused Dawood of fraud and repudiated the
contract. Under the provisions of the Contract Act, 1872 explain whether Mughal is justified in repudiating the contract.

Solution: No, Mughal is not justified in repudiating the contract. Dawood is not bound to disclose the information to Mughal as the
relationship existing between them is not that of ‘utmost good faith’ (i.e., fiduciary relationship). Mere silence as to facts likely to
affect the willingness of a person to enter into a contract is not fraud, unless there is a duty to disclose such fact or where silence is
equivalent to speech.

Practice Question 06: Sultan bought electronic appliances worth Rs. 700,000 from Zameer on thirty days’ credit. At the time of
purchase, Sultan knew that he was in insolvent circumstances. Discuss the validity of the contract.

Solution: A promise made without any intention of performing it tantamount to fraud. Therefore, in this case since Sultan had no
intention of performing the contract, he committed a fraud and the contract is voidable at the option of Zameer.

Practice Question 07: Explain what effects following have on the validity of the contract: a) Unilateral mistake of law in force in
Pakistan b) Unilateral mistake as to matter of fact c) Mutual mistake of foreign law

Solution: The effects on the validity of the contract are given below:

 In case of a unilateral mistake of law in force in Pakistan, the contract is not voidable.
 In case of a unilateral mistake of fact, the contract is not voidable.
 In case of mutual mistake of foreign law, the agreement is void.

Practice Question 08: Two wrestlers Goga and Sheeda agreed to play a wrestling match on the condition that if any of them would
fail to appear for the match, he would have to pay Rs. 5,000 to the other party. The winner was to receive Rs. 20,000 out of the sale
proceeds of the tickets. Goga failed to appear in the match and Sheeda sued him for Rs. 5,000. Goga, however, refused to pay
claiming that being wagering in nature, the contract is not enforceable by law. Under the provisions of the Contract Act, 1872
describe whether Sheeda can recover the amount from Goga.

Solution: All agreements knowingly made to further or assist the entering into, effecting or carrying out, or to secure or guarantee
the performance, of any agreement void being in nature of a wager, are void. But in this case, Goga and Sheeda were not going to
win or lose in terms of money as a result of the wrestling match (i.e., an uncertain event). The winning amount had not to be given
out of their pockets, but had to be paid from the gate money which was provided by the public. As for the condition of payment for
non-appearance, no uncertain event provided the equal chances of winning or losing. Therefore, Sheeda is entitled to recover the
amount from Goga as the agreement between Goga and Sheeda is not a wagering agreement and therefore, it is enforceable at law.

Practice Question 09: Until recently Mansoor and Arif were independently engaged in the business of selling sweets at Multan
railway station. Mansoor incurred a loss due to competition. Arif, in view of his friendship with Mansoor, agreed to move his business
to the old city area. They reached an agreement that Arif would not engage in any competing business with Mansoor. It was also
agreed that in case of a breach, none of them would have recourse to a court of law for the enforcement of their rights.
Subsequently, due to economic downturn, Arif in addition to the old city area has also started to sell sweets at Multan railway
station. Mansoor, in order to restrain Arif from selling sweets, has filed a suit against him. Under the provisions of the Contract Act,
1872 analyse the above situation and explain the following: i. whether Arif is justified in starting sweets business at Multan railway
station. ii. whether Mansoor can claim the goodwill of Arif’s business. iii. whether Mansoor is justified in filing a suit against Arif. iv. if
both Arif and Mansoor agreed to refer disputes to arbitration, whether Mansoor can seek remedies from a court of law.

Solution:
  (i) Arif is justified in starting sweets business at Multan railway station. The reason is that he is free to engage in the
business in any place he likes and he is not bound by the terms of the agreement with Mansoor.
 (ii) If Mansoor bought the goodwill of Arif’s business, then he could claim the goodwill of Arif’s business.
 (iii) Mansoor is justified in filing a suit against Arif because the agreement not to compete was void as it was made
without consideration.
 (iv) If both Arif and Mansoor agreed to refer disputes to arbitration, then Mansoor can seek remedies from a court of law
if Arif fails to comply with the arbitration award.

Practice Question 10: Basit, a businessman, entered into a forward contract for the sale of 1000 tons of sugar for Rs. 4 million with
Taimure. It was agreed that Basit would be entitled to recover the difference between the price agreed upon in the contract and the
market price prevailing on the date of delivery. Under the provisions of the Contract Act, 1872 discuss whether the above contract is
valid.

Solution: The above contract is not valid because it is a wagering agreement. Both parties are intending to settle the transaction
based on price fluctuations without any actual delivery of goods.

Practice Question 11: Ali offered to sell his car to Bilal for Rs. 500,000. Bilal accepted the offer. However, before the acceptance was
communicated to Ali, Bilal died. Discuss the effect of Bilal’s death on the contract.

Solution: The contract is terminated upon the death of Bilal. Bilal's acceptance of Ali's offer must be communicated to Ali for the
contract to be formed. Since Bilal died before the acceptance was communicated, the contract never came into existence.

Practice Question 12: Rehman offered to sell his house to Zahid for Rs. 2 million. Zahid accepted the offer and paid Rehman Rs.
200,000 as earnest money. Later, Zahid changed his mind and refused to complete the purchase. Rehman sued Zahid for specific
performance of the contract. Discuss the rights of the parties.

Solution: Rehman has the right to sue Zahid for specific performance of the contract, i.e., to compel Zahid to complete the purchase
of the house as agreed upon. Additionally, Rehman can retain the earnest money paid by Zahid. Zahid, on the other hand, has
breached the contract and may be liable for damages to Rehman.

Practice Question 13: Ahmed offers to sell his bike to Ali for Rs. 50,000. Ali accepts the offer and pays Ahmed Rs. 10,000 as part
payment. Before the bike is delivered to Ali, it is destroyed by fire. Discuss the rights and liabilities of the parties.

Solution: The contract is void due to the destruction of the subject matter (the bike) before the delivery. Ahmed is obligated to
refund the Rs. 10,000 paid by Ali as part payment. Ali has no obligation to pay the remaining Rs. 40,000, and neither party has any
further rights or liabilities under the contract.

Practice Question 14: Ayesha, a minor, purchased a laptop from Bilal. Later, Ayesha decided to return the laptop and demanded the
refund of the purchase price. Bilal refused, arguing that Ayesha cannot disaffirm the contract. Discuss the validity of Bilal’s argument.

Solution: Bilal's argument is invalid. A contract with a minor is voidable at the option of the minor. Ayesha has the right to disaffirm
the contract and demand the refund of the purchase price. Bilal must comply with Ayesha's request for a refund.

Practice Question 15: Faisal sold his car to Kamran and promised to deliver the car on May 1st. However, due to an unforeseen
circumstance, Faisal was unable to deliver the car on the agreed date. Discuss the rights of Kamran.

Solution: Kamran has the following rights:

 He can treat the contract as void and seek a refund of any money paid to Faisal.
 He can grant Faisal an extension of time for delivery.
 He can sue Faisal for damages for breach of contract, if the delay has caused him any loss or inconvenience.
  Practice Question 16: Saima offers to sell her smartphone to Ali for Rs. 20,000. Ali
agrees to buy it for Rs. 18,000. Saima accepts the offer but insists on the original price.
Ali refuses to buy at the original price. Is there a valid contract between Saima and Ali?
Discuss.
 Solution: There is no valid contract between Saima and Ali because there was no
meeting of the minds (a mutual agreement) on the essential terms of the contract, namely
the price. Saima's counter-offer at the original price constitutes a rejection of Ali's offer.
Ali's refusal to accept the original price means there was no acceptance of Saima's
counter-offer. Therefore, there is no valid contract.
 Practice Question 17: Asad offers to sell his laptop to Fahad for Rs. 30,000. Fahad
accepts the offer and pays Rs. 5,000 as earnest money. Later, Fahad changes his mind
and refuses to complete the purchase. Can Asad keep the earnest money?
 Solution: Yes, Asad can keep the earnest money. When Fahad paid the earnest money, it
indicated his serious intention to buy the laptop. Since Fahad refused to complete the
purchase without any valid reason, Asad has the right to keep the earnest money as
compensation for Fahad's breach of contract.
 Practice Question 18: Ali and Bilal enter into a contract for the sale of Ali's motorcycle.
Bilal agrees to pay Ali Rs. 40,000 in three installments over three months. Bilal pays the
first installment, but before paying the second installment, he changes his mind and
refuses to complete the purchase. Can Ali sue Bilal for the remaining installments?
 Solution: Yes, Ali can sue Bilal for the remaining installments. Once Bilal paid the first
installment, it constituted partial performance of the contract. Even if Bilal changes his
mind later, he is still obligated to fulfill the terms of the contract regarding the remaining
installments unless there is a valid reason for his refusal. Ali can enforce the contract
through legal action.
 Practice Question 19: Nadia offers to sell her car to Sara for Rs. 300,000. Sara accepts
the offer and pays Nadia Rs. 30,000 as part payment. Before the car is delivered, it is
stolen. Discuss the rights and liabilities of the parties.
 Solution: Since the car was stolen before the delivery, the contract is void. Nadia must
refund the Rs. 30,000 paid by Sara as part payment. Sara has no obligation to pay the
remaining amount, and neither party has any further rights or liabilities under the
contract.
 Practice Question 20: Zubair, a minor, purchases a mobile phone from Asma. Later,
Zubair decides to keep the phone and pay the agreed price. Is the contract enforceable
against Zubair?
 Solution: No, the contract is not enforceable against Zubair because he is a minor.
Contracts with minors are voidable at the option of the minor. Zubair can choose to
disaffirm the contract and return the phone, or he can keep the phone without paying the
agreed price. Asma cannot enforce the contract against Zubair.


Chapter 5

1.1 Definition [Section 31] A "contingent contract" is a contract to do or not to do something, if

some event, collateral to such contract, does or does not happen.
Examples of contingent contracts: a) Contracts of indemnity (e.g., insurance contract) b)
Contract of guarantee (where the surety is liable to pay the creditor in case of default of the
principal debtor)

Example 01: Akram contracts to indemnify Basit up to Rs. 1 million in consideration of Rs.
20,000 annual premium if Basit’s house is burnt. This is a contingent contract.

1.2 Characteristics of contingent contracts a) The performance of a contingent contract

depends upon the happening or non-happening of some future event. b) The event must be
collateral to the contract. c) The event must be uncertain.

Example 02: Javed contracts to pay Rs. 50m to Farhan (a contractor) for constructing a building,
provided the construction is approved by an architect. It is a contingent contract because the
consideration of the promise to pay Rs. 50m is the construction of the building, and the event,
namely, approval by an architect is a collateral event.

Example 03: Azam agrees to construct a building for Babar for Rs. 5 million, on the terms that
no payment shall be made till the completion of the work. This is not a contingent contract
because the uncertain event (i.e. Azam’s completing the work) is not collateral to the contract but
is the very thing contracted for and is thus an integral part of the contract.

1.3 Contingent contract vs wagering agreement

Contingent contract Wagering agreement

Validity Valid Void and illegal
Interest of Real interest in the occurrence or non- Interested in winning or losing
parties occurrence of the event the amount
Sole determining factor of the
Uncertain event Collateral to the contract agreement
Reciprocal May or may not consist of
promises Consists of reciprocal promises reciprocal promises

Practice Question 01: Vazir said to Saulat, “I will buy speed boats worth Rs. 10,000,000 from
you, if you obtain the licence for me to operate the boats at Clifton beach”. Saulat agreed and
applied for the licence and deposited Rs. 100,000 as processing fee. However, before the
issuance of licence, the city government imposed ban on the issuance of new licences. Saulat
wants Vazir to buy the speed boats as he had made necessary efforts to arrange for the licence.
However, Vazir refuses to buy the speed boats from Saulat. Identify the type of contract between
Vazir and Saulat. Also state whether Vazir is now bound to purchase the speed boats from
Saulat.

Solution: The contract between Vazir and Saulat is a contingent contract whose performance is
based on the happening of an uncertain event collateral to the contract, i.e., arranging for a
license for Vazir. If such event has not happened, the performance of the contract does not
become due. It does not matter at all that Saulat had applied for the license and also paid a
processing fee of Rs. 100,000 to the authorities. Thus, Vazir is not bound to purchase the boats
from Saulat.

Practice Question 02: Zubair agrees to construct a bungalow for Ubaid for Rs. 20 million on the
condition that payment will only be made after Muneer, an architect, certifies that the bungalow
has been constructed in accordance with the layout plan. Under the provisions of the Contract
Act, 1872, describe the nature and validity of the above contract.

Solution: It is a contingent contract as the condition, i.e., certification of the construction in

accordance with the layout plan by a third party, is collateral to the contract. Although it is a
valid contract, the performance can only be enforced by Zubair after the happening of the
collateral event, i.e., certification by Muneer.

Practice Question 03: Asim agreed to construct a bungalow for Ali at a cost of Rs. 50 million.
However, it was agreed that payment would only be made on completion of the project. Is this a
contingent contract under the Contract Act, 1872? Give reasons. Also list the requisite
characteristics of a contingent contract.

Solution: No, this is not a contingent contract as the condition, i.e., construction of a bungalow,
is not collateral to the contract but in itself forms consideration and is thus an integral part of the
contract.

Essentials of a contingent contract: i. The performance of such a contract depends upon the
happening or non-happening of some future event. ii. The event must be uncertain. iii. The event
must be collateral, i.e., incidental to the contract.

2. Rules Regarding Contingent Contracts

2.1 Enforcement of contingent contracts [Section 32, 33, 35 & 36]

Contingent
on Time fixed When enforceable When void
Uncertain - If the event
Happening of future event - If the event happens. becomes impossible.
- If time expires or
event becomes
uncertain - If the event happens within time impossible before
future event fixed. time expires.
Non- Uncertain - If the event
happening of future event - If the event becomes impossible. happens.
uncertain - If time expires or event becomes - If the event happens
future event impossible before time expires. within time fixed.
Such agreements are void whether
the impossibility of the event is
known or not to the parties to the
Happening of Impossible agreement at the time when it is
an event made.
 Contingent
on Time fixed When enforceable When void
impossible
event

Example 04: Aslam makes a contract to sell a horse to Baqir if Chand (to whom the horse has
been offered) refuses to buy it. Chand rejected the offer. The contract is enforceable.

Example 05: Andrew contracts to pay a sum of money to Becca if Becca marries Christopher.
Christopher dies before getting married. The contract becomes void.

Example 06: Azam promises to pay a sum of money to Babar if a certain ship returns within a
year. The contract becomes enforceable when the ship returns within a year.

Example 07: Adeel promises to pay a sum of money to Badar if a certain ship returns within a
year. The contract becomes void if the ship sinks within a year or if it returns after a year.

Example 08: Arslan agrees to pay a sum of money to Burhan if a certain ship does not return.
The ship is sunk. The contract becomes enforceable when the ship is sunk.

Example 09: Amjad agrees to pay a sum of money to Basit if a certain ship does not return. The
ship returns. The contract becomes void.

Example 10: Alia promises to pay a sum of money to Beenish if a certain ship does not return
within a year. The contract becomes enforceable when the ship does not return within a year or is
sunk earlier.

Example 11: Ashwin promises to pay a sum of money to Bumrah if a certain ship does not
return within a year. The contract becomes void when the ship returns within a year.

Example 12: Adam agrees to pay Rs. 1,000 to Boris if he can run at 500 kilometres per hour.
The agreement is void.

Example 13: Asma agrees to pay Rs. 1,000 to Basheer if he marries Asma’s daughter, Chanda.
Chanda is not alive at the time of the agreement. The agreement is void.

2.2 When event based on future conduct is deemed impossible [Section 34] If the future
event on which a contract is contingent is the way in which a person will act at an unspecified
time, the event shall be considered to become impossible when such person does anything that
renders it impossible that he should so act within any definite time, or otherwise than under
further contingencies.

Example 14: Kamal agrees to pay Sarmad a sum of money if Sarmad marries Shazia. Shazia
marries Dawood. The marriage of Sarmad to Shazia must now be considered impossible,
although it is possible that Dawood may die and that Shazia may afterwards marry. If later
Sarmad actually marries Shazia (Dawood’s widow), it will not revive the old obligation.
 Practice Question 01: Vazir said to Saulat, “I will buy speed boats worth Rs. 10,000,000 from you, if you obtain the licence for me to
operate the boats at Clifton beach”. Saulat agreed and applied for the licence and deposited Rs. 100,000 as processing fee. However,
before the issuance of licence, the city government imposed a ban on the issuance of new licences. Saulat wants Vazir to buy the
speed boats as he had made necessary efforts to arrange for the licence. However, Vazir refuses to buy the speed boats from Saulat.
Identify the type of contract between Vazir and Saulat. Also state whether Vazir is now bound to purchase the speed boats from
Saulat.

Solution: The contract between Vazir and Saulat is a contingent contract whose performance is based on the happening of an
uncertain event collateral to the contract, i.e., arranging for a license for Vazir. If such an event has not happened, the performance
of the contract does not become due. It does not matter at all that Saulat had applied for the license and also paid a processing fee
of Rs. 100,000 to the authorities. Thus, Vazir is not bound to purchase the boats from Saulat.

Practice Question 02: Zubair agrees to construct a bungalow for Ubaid for Rs. 20 million on the condition that payment will only be
made after Muneer, an architect, certifies that the bungalow has been constructed in accordance with the layout plan. Under the
provisions of the Contract Act, 1872, describe the nature and validity of the above contract.

Solution: It is a contingent contract as the condition, i.e., certification of the construction in accordance with the layout plan by a
third party, is collateral to the contract. Although it is a valid contract, the performance can only be enforced by Zubair after the
happening of the collateral event, i.e., certification by Muneer.

Practice Question 03: Asim agreed to construct a bungalow for Ali at a cost of Rs. 50 million. However, it was agreed that payment
would only be made on completion of the project. Is this a contingent contract under the Contract Act, 1872? Give reasons. Also list
the requisite characteristics of a contingent contract.

Solution: No, this is not a contingent contract as the condition, i.e., construction of a bungalow, is not collateral to the contract but
in itself forms consideration and is thus an integral part of the contract.

Essentials of a contingent contract: i. The performance of such a contract depends upon the happening or non-happening of
some future event. ii. The event must be uncertain. iii. The event must be collateral, i.e., incidental to the contract.

These questions and solutions provide practical understanding and application of contingent contracts under the Contract Act, 1872.

Chapter 6

1. What is an offer of performance, and what are its essentials?

 Offer of Performance: It's when a promisor is ready and willing to perform their obligation under a contract.
 Essentials of Offer of Performance:
 Unconditional: The offer must be unconditional, without any strings attached.
 Proper Time, Place, and Circumstances: Offer must be made at the right time, place, and under suitable
conditions.
 Opportunity for Inspection: The promisee must have the opportunity to examine the performance.
 Reasonable Opportunity to Ascertain Willingness: The promisee must be able to ascertain the promisor's
willingness and ability to perform.
2. What happens if the promisee refuses to accept an offer of performance?
 If the promisee refuses to accept a valid offer of performance, the promisor is not responsible for non-performance, and
they don't lose their rights under the contract.
3. Under what circumstances can a promisor be excused from performing their promise?
 A promisor can be excused from performing their promise under the following circumstances:
 Novation, Rescission, or Alteration: If the parties agree to substitute, rescind, or alter the original contract.
 Dispensation by Promisee: If the promisee waives, extends, or accepts an alternative form of performance.
  Promisee's Refusal or Neglect: If the promisee neglects or refuses to provide reasonable facilities for
performance.
 Impossibility or Unlawfulness: If performance becomes impossible or unlawful.
4. How are payments applied when there's no indication of which debt to discharge?
 If there's no indication of which debt to discharge:
 The creditor can apply the payment to any lawful debt owed by the debtor.
 If neither party makes an appropriation, payments are applied to debts in order of time, or if of equal standing,
proportionally.
5. Can representatives of promisors bind them to contracts?
 Yes, unless the contract specifically states otherwise, representatives of promisors can bind them to contracts.
6. What happens if a promisor refuses to perform their promise in full?
 If a promisor refuses or is unable to perform their promise in full, the promisee can either:
 End the contract, unless they express a willingness to continue despite the partial performance.
7. When both interest and principal are due, how are payments applied?
 When both interest and principal are due, payments are applied first to the interest and then to the principal amount.
8. What is a unilateral contract, and can you provide an example?
 Unilateral Contract: It's a contract where only one party makes a promise or undertakes an obligation.
 Example: A offers a reward of $100 to anyone who finds and returns their lost dog. B finds the dog and returns
it to A. B is not obligated to find the dog, but if they do, they are entitled to the reward.
9. Explain the difference between a void contract and a voidable contract, with examples.
 Void Contract: It's a contract that has no legal effect from the outset.
 Example: A contract to commit an illegal act, such as hiring someone to commit a crime, is void.
 Voidable Contract: It's a contract that one party has the option to either enforce or void.
 Example: A contract entered into under duress, where one party is forced to agree, is voidable at the
option of the coerced party.
10. What is an anticipatory breach of contract, and can you provide an example?
 Anticipatory Breach of Contract: It's when one party to a contract indicates, before the time for performance
arrives, that they will not perform their contractual obligations.
 Example: A contracts with B to deliver goods on May 1st. On April 15th, A informs B that they will not deliver
the goods. This is an anticipatory breach by A.
11. Explain the concept of "privity of contract" and provide an example.
 Privity of Contract: It's the relationship between parties to a contract, where only those who are parties to the
contract can enforce its terms.
 Example: A contracts with B to paint B's house. A then subcontracts the work to C. If C does a poor job, B can't
directly sue C because there's no privity of contract between them. B's recourse is against A.
12. Define the term "consideration" in a contract, and give an example.
 Consideration: It's something of value exchanged between parties to a contract, essential for the formation of a
legally binding agreement.
 Example: A promises to sell their car to B for $5,000, and B promises to pay $5,000 to A in return. The
consideration for A is the promise of payment, and for B, it's the promise of the car.
13. Explain the "parol evidence rule" and provide an example.
 Parol Evidence Rule: It's a rule that prevents parties from introducing evidence of prior or contemporaneous
agreements or negotiations that contradict, modify, or add to the terms of a written contract.
 Example: A and B enter into a written contract for the sale of land, which specifies a purchase price of $100,000.
A later tries to introduce evidence of a prior oral agreement to reduce the price to $90,000. The court would
likely apply the parol evidence rule and exclude this evidence.
14. Define "specific performance" in contract law and give an example.
 Specific Performance: It's a remedy where a court orders a party to perform a specific act, usually the act
promised in a contract.
 Example: A contracts to sell their rare painting to B. A later refuses to sell. B can sue for specific performance,
asking the court to order A to sell the painting as promised
15. Offer and Acceptance:
 Situation: A offers to sell their car to B for $5,000. B replies, "I'll buy it for $4,500."
 Solution: B's response is a counteroffer, not an acceptance. The original offer of $5,000 is terminated, and now
B is the offeror. A can accept, reject, or make a counteroffer in response.
 16. Consideration:
 Situation: A promises to give their old laptop to B as a gift.
 Solution: There's no valid consideration from B's side because a gift is a voluntary transfer without
consideration. For a contract to be valid, both parties must provide consideration, something of value
exchanged.
17. Capacity:
 Situation: A, who is intoxicated, agrees to sell their car to B.
 Solution: A contract entered into by an intoxicated person may lack capacity and could be voidable by the
intoxicated party upon regaining sobriety. B might not be able to enforce the contract against A.
18. Legality:
 Situation: A contracts with B to smuggle illegal goods across the border.
 Solution: Contracts to perform illegal acts are void and unenforceable. Both parties would be unable to enforce
the contract, and they might face legal consequences for attempting to engage in illegal activities.
19. Misrepresentation:
 Situation: A sells their car to B, claiming it has only been driven 50,000 miles when, in fact, it has been driven
100,000 miles.
 Solution: This is a misrepresentation of fact. If B can prove the misrepresentation, they may be able to rescind
the contract (return the car and get their money back) or sue for damages.
20. Undue Influence:
 Situation: A, who is elderly and vulnerable, is pressured by their caregiver B to sign over their valuable property.
 Solution: If A can prove that they were unduly influenced by B, the contract may be voidable. Undue influence
involves one party taking advantage of a position of power over another to coerce them into making a contract.
21. Statute of Frauds:
 Situation: A and B agree orally that A will sell B a piece of land.
 Solution: The Statute of Frauds requires certain contracts, such as contracts for the sale of land, to be in writing
to be enforceable. If there's no written agreement, the contract may be unenforceable.
22. Impossibility of Performance:
 Situation: A contracts to build a house for B, but before construction starts, the house burns down in a fire.
 Solution: If the subject matter of a contract is destroyed, making performance impossible, the contract is
discharged. A is not obligated to build the house, and B is not obligated to pay for it

Example 01:
Situation: Azam contracted to deliver 500 bales of cotton to Babar at his warehouse on 1st November. Azam brought the cotton of
requisite quality to the appointed place on the appointed day during business hours, and Babar took the delivery of goods.
Solution: This is an example of actual performance.

Example 02:
Situation: Azam contracted to deliver 500 bales of cotton to Babar at his warehouse on 1st November. Azam brought the cotton of
requisite quality to the appointed place on the appointed day during business hours, but Babar refused to take the delivery of
goods.
Solution: This is an example of attempted performance because Azam made the offer of performance, but it was not accepted by
Babar.

Example 03:
Situation: Anum offers to pay her debt to ABC Limited only if they also allot her 500 shares at par value.
Solution: Anum's offer is not valid because it's conditional, which is not allowed.
Example 04:
Situation: Adeel ordered a cake for his daughter’s birthday on 17th August but the cake was brought on 15th August.
Solution: Adeel is not bound to accept the cake as it wasn't delivered at the proper time.

Example 05:
Situation: Azam offers Babar rent at a marriage party.
Solution: Babar is not bound to accept because the offer wasn't made at the proper place.

Example 06:
Situation: Waqas offers to pay Babar in instalments instead of paying the full amount as stipulated in the contract.
Solution: This offer is not valid as it's not for the whole obligation as agreed upon.

Example 07:
Situation: Kamran delivers goods to Waqas but doesn't allow him any time for inspection.
Solution: This is not a valid tender as Waqas wasn't given an opportunity to inspect the goods.

Example 08:
Situation: Akmal contracts to deliver cotton to Basit.
Solution: Akmal must bring the cotton to Basit’s warehouse on the appointed day under circumstances allowing Basit to verify the
quality and quantity.

Example 09:
Situation: Ashraf owes Rs. 15,000 to Rizwan and Tanveer jointly. He offered to pay Tanveer, but he refused.
Solution: This is a valid tender of performance by Ashraf.

Sure, let's continue with more situational examples and their solutions:

Example 10:
Situation: Naeem properly tendered goods to Asim according to the contract terms, but Asim refused to accept them.
Solution: Naeem is not responsible for non-performance, and he can sue Asim for damages caused by non-acceptance of goods.

Example 11:
Situation: Ajmal promises to deliver goods to Bano, but Ajmal dies before the delivery date.
Solution: Ajmal's representatives are bound to deliver the goods to Bano, and Bano is bound to pay for them.

Example 12:
Situation: Anwar promises to paint a picture for Saleem, but Anwar dies before completing the task.
Solution: The contract cannot be enforced either by Anwar's representatives or by Saleem.

Example 13:
Situation: Asma, a singer, enters into a contract to sing at Babar's theater two nights every week for two months, but she wilfully
absents herself on the sixth night.
Solution: Babar can put an end to the contract.

Example 14:
Situation: Asma, a singer, enters into a contract to sing at Babar's theater two nights every week for two months, but she wilfully
absents herself on the sixth night. However, with Babar's assent, she sings on the seventh night.
Solution: Babar cannot put an end to the contract, but he is entitled to compensation for the damage sustained by Asma's failure to
sing on the sixth night.

Example 15:
Situation: Masoom offers to deliver 300 Rolex watches to Mubarak on 1st March 2015.
Solution: Masoom's offer must fulfill conditions like being unconditional, made at a proper time and place, and allowing Mubarak to
ascertain the quality and quantity of watches.

Example 16:
Situation: Mehboob makes an offer of performance to Saulat, but Saulat refuses to accept it.
Solution: Mehboob is not responsible for non-performance, and he retains his rights under the contract.

Example 17:
Situation: Azam owes several debts to Babar, including one debt of Rs. 100,000 that is time-barred. Azam sends Rs. 200,000 to
Babar without specifying which debt it should be applied to.
Solution: Babar can appropriate Rs. 100,000 against the time-barred debt.

Example 18:
Situation: Azam owes several debts to Babar, with varying due dates. Azam sends Rs. 90,000 to Babar.
Solution: The payment will be applied proportionately against the debts according to their due dates.

Example 19:
Situation: Azam owes Rs. 100,000 as principal amount and Rs. 20,000 as interest. Azam sends Rs. 30,000 to Babar.
Solution: Babar can apply Rs. 20,000 towards interest and Rs. 10,000 towards the principal amount.

Example 20:
Situation: Jameel employs coercion on Talat to sell goods above market price. Jameel also delivers the goods, and payment is due
from Talat. Later, Talat proves in court that coercion was employed and rescinds the contract.
Solution: Talat must return the goods to Jameel.

Example 21:
Situation: Azam pays Basit Rs. 100,000 in consideration of Basit's promise to marry Azam's daughter, Chanda. Chanda is deceased at
the time of the promise.
Solution: The agreement is void, but Basit must repay Azam the Rs. 100,000.

Example 22:
Situation: Adeel contracts with Babar to deliver 250 kg of rice before the first of May. Adeel delivers only 130 kg before that day.
Solution: Babar must pay Adeel for the 130 kg delivered.

Example 23:
Situation: Alia contracts with Bisma to sing at her theater for two nights every week for two months, but Alia wilfully absents herself
on the sixth night, and Bisma rescinds the contract.
Solution: Bisma must pay Alia for the five nights she did perform.

Example 24:
Situation: HB agrees to let out a boat to Harry for viewing a naval review on the occasion of the coronation of King Edward VII.
However, the naval review is abandoned due to the King's illness.
Solution: The contract is not discharged because the boat could still be used to sail around the fleet.

Chapter 7

a) Who can claim performance in the following situations?

 Both Hatim and Tahir are alive on the due date. Answer: Both Hatim and Tahir can claim performance.
 Hatim dies before the due date. Answer: Tahir can claim performance.
 Both Hatim and Tahir die before the due date. Answer: The legal representatives of Hatim and Tahir can claim
performance.

b) Explain the rights available to Mohsin if he repays the full amount to Afaq and Laila becomes insolvent. Answer: If Mohsin
repays the full amount to Afaq and Laila becomes insolvent, Mohsin can claim contribution from Laila's estate in proportion
to her share of the debt.

Practice Question 02: a) Can Afaq compel Mohsin to pay the full amount? What rights are available to Mohsin if he repays the full
amount?

 Answer: Yes, Afaq can compel Mohsin to pay the full amount. If Mohsin repays the full amount, he has the right to
claim contribution from Afaq and Laila in proportion to their shares of the debt.
b) What rights and liabilities would be there if Kamal releases Jameel from the joint liability?

 Answer: If Kamal releases Jameel from joint liability, Jameel is discharged from his obligation. However, Kamal
remains liable for the entire debt.

Practice Question 03: a) In the absence of an express agreement, what are the rights and liabilities of joint promisors? What if Kamal
releases Jameel?

 Answer: In the absence of an express agreement, joint promisors are jointly liable. If Kamal releases Jameel, Kamal
remains solely liable for the debt.

b) How would the liability devolve in the case of death of one or more of the joint promisors?

 Answer: In the case of death of one or more joint promisors, the liability devolves upon the legal representatives
of the deceased promisors jointly with the surviving promisors.

Practice Question 04: a) What are the rights of RGS assuming time was the essence of the contract?

 Answer: If time was the essence of the contract, RGS has the right to treat the contract as voidable and claim
damages for any loss suffered due to late performance.

b) What if GF supplied the cans late and RGS accepted the performance but suffered a loss?

 Answer: If GF supplied the cans late and RGS accepted the performance but suffered a loss, RGS can claim
damages for the loss suffered due to the late delivery.

Practice Question 05: Should Nasir keep his promise? What remedy is available to him?

 Answer: Nasir should keep his promise. If the other party breaches the contract, Nasir can seek specific
performance or claim damages for the breach.

Sure, here are more questions and their answers:

Practice Question 06: a) Can a creditor demand performance from one of the joint debtors? Explain.

 Answer: Yes, a creditor can demand performance from one of the joint debtors. Each joint debtor is individually
liable for the entire debt, so the creditor can demand payment from any one of them.

b) What happens if one joint debtor pays the full debt?

 Answer: If one joint debtor pays the full debt, he has the right to claim contribution from the other joint debtors
in proportion to their shares of the debt.

Practice Question 07: a) What are the rules regarding the performance of mutual and independent promises?

 Answer: Mutual promises are those in which each party's performance is dependent on the other's, while
independent promises are those where each party's performance is not dependent on the other's. In mutual
promises, performance must be simultaneous unless otherwise agreed, whereas in independent promises, each
party's performance can be independent of the other's.
b) Explain with an example of mutual and independent promises.

 Answer: An example of mutual promises is where A promises to deliver goods to B on a certain date, and B
promises to pay for them upon delivery. Here, both performances are dependent on each other. An example of
independent promises is where A promises to deliver goods to B on a certain date, and B promises to pay for them
within a month of delivery. Here, A's delivery is independent of B's payment.

Practice Question 08: a) Can a promisee waive strict performance of a promise? Explain.

 Answer: Yes, a promisee can waive strict performance of a promise. This means the promisee can accept
performance that deviates from the exact terms of the promise without losing the right to enforce the contract.

b) Provide an example of waiving strict performance.

 Answer: For example, if A promises to deliver goods to B on a specific date, but due to unavoidable circumstances,
A delivers them a day later. If B accepts the delivery without insisting on strict adherence to the delivery date, B
has waived strict performance.

Practice Question 09: a) What happens if a promisor performs a promise in a manner different from what was agreed upon?

 Answer: If a promisor performs a promise in a manner different from what was agreed upon, the promisee has the
right to accept or reject the performance. If the promisee accepts the performance, the promisor is discharged
from his obligation.

b) Explain with an example.

 Answer: For example, if A promises to paint B's house with a specific brand of paint, but instead uses a different
brand, B can choose to accept or reject the painted house. If B accepts the painted house, A is discharged from his
obligation to paint with the specific brand.

Practice Question 10: a) What are the consequences if a promisor fails to perform his promise?

Answer: If a promisor fails to perform his promise, it constitutes a breach of contract. The promisee can then sue for specific
performance, damages, or both, depending on the circumstances.

b) Provide an example of the consequences of a failure to perform.

Answer: For example, if A promises to deliver goods to B on a certain date but fails to do so, B can sue A for damages for
the loss suffered due to the breach of contract.

Practice Question 11: a) What is the doctrine of substantial performance?

 Answer: The doctrine of substantial performance holds that if a promisor has substantially performed his
obligation under the contract, he is entitled to receive the contract price or payment, subject to any deduction for
the defects or omissions.

b) Explain with an example.

 Answer: For example, if A hires B to construct a house, and B completes the construction with minor defects or
omissions that do not substantially affect the value or utility of the house, B is considered to have substantially
performed the contract. A is then obligated to pay B the contract price, subject to deductions for correcting the
defects.
Practice Question 12: a) What are the rights of a party if the other party repudiates the contract before performance is due?

 Answer: If one party repudiates the contract before performance is due, the other party can treat the repudiation
as a breach of contract and sue for damages immediately, without waiting for the performance date.

b) Provide an example of a party repudiating the contract before performance is due.

 Answer: For example, if A agrees to sell goods to B and, before the delivery date, A informs B that he will not
deliver the goods, this is considered repudiation of the contract by A. B can then sue A for damages without
waiting for the delivery date to pass.

Practice Question 13: a) What happens if a party fails to perform his promise on the due date?

 Answer: If a party fails to perform his promise on the due date, it constitutes a breach of contract. The other party
has the right to sue for damages for the loss suffered due to the breach.

b) Explain with an example.

 Answer: For example, if A promises to pay B a certain sum of money on a specified date, but fails to do so, A is in
breach of contract. B can then sue A for damages for the loss suffered due to A's failure to pay on time.

Practice Question 14: a) Can a party be discharged from his obligation due to impossibility of performance?

 Answer: Yes, a party can be discharged from his obligation due to impossibility of performance if the contract
becomes impossible to perform due to circumstances beyond the control of the parties, such as natural disasters,
government regulations, or the death or incapacity of a necessary party.

b) Provide an example of a party being discharged from his obligation due to impossibility of performance.

 Answer: For example, if A contracts to deliver goods to B, but before the delivery date, the goods are destroyed in
a fire, A is discharged from his obligation to deliver the goods due to the impossibility of performance caused by
the fire.

Practice Question 15: a) Can a party claim performance of a contract if the other party becomes insolvent?

 Answer: Yes, a party can claim performance of a contract if the other party becomes insolvent, unless the contract
is executory on both sides and the insolvent party has not yet performed his part of the contract.

b) Explain with an example.

 Answer: For example, if A contracts to sell goods to B, and before delivery, B becomes insolvent, A can still claim
performance of the contract by demanding payment or seeking other remedies, unless B had already paid for the
goods in advance.

Practice Question 16: a) What are the consequences if a promisor fails to perform a promise without lawful excuse?

 Answer: If a promisor fails to perform a promise without lawful excuse, it constitutes a breach of contract, and the
promisee has the right to sue for damages for the loss suffered due to the breach.

b) Explain with an example.

  Answer: For example, if A promises to deliver goods to B by a certain date but fails to do so without any valid
reason, A is in breach of contract. B can then sue A for damages to recover the loss suffered due to A's failure to
deliver the goods on time.

Practice Question 17: a) Can a promisee claim performance if the promisor partially performs the promise?

 Answer: Yes, a promisee can claim performance if the promisor partially performs the promise, provided that the
partial performance is accepted by the promisee without prejudice to his right to claim damages for the deficiency
in performance.

b) Provide an example of a promisee claiming performance when the promisor partially performs the promise.

 Answer: For example, if A contracts with B to build a house and A partially completes the construction, B can claim
performance of the partial construction but is entitled to claim damages for the incomplete or deficient work.

Practice Question 18: a) What is specific performance?

 Answer: Specific performance is a remedy available to a promisee in which the court orders the promisor to
perform his promise according to the terms of the contract, rather than awarding damages for the breach of
contract.

b) Explain with an example.

 Answer: For example, if A contracts to sell a unique piece of artwork to B, and A later refuses to sell it, B can seek
specific performance from the court, which will compel A to complete the sale of the artwork as per the terms of
the contract.

Practice Question 19: a) Can a promisee sue for damages if the promisor repudiates the contract before the due date?

 Answer: Yes, a promisee can sue for damages if the promisor repudiates the contract before the due date, treating
the repudiation as a breach of contract and seeking compensation for the loss suffered.

b) Provide an example of a promisee suing for damages when the promisor repudiates the contract before the due date.

 Answer: For example, if A agrees to lease a property to B for a year, but before the lease term begins, A informs B
that he will not lease the property, B can sue A for damages for the loss suffered due to the breach of contract.

Practice Question 20: a) What are the rights of a party if the other party fails to perform his promise without any lawful excuse?

 Answer: If the other party fails to perform his promise without any lawful excuse, the aggrieved party has the right
to treat the contract as discharged and sue for damages for the loss suffered due to the breach of contract.

b) Explain with an example.

 Answer: For example, if A contracts to deliver goods to B by a certain date but fails to do so without any valid
reason, B can treat the contract as discharged and sue A for damages for the loss suffered due to A's failure to
deliver the goods.
Chapter 8
Practice Question 01: Under the provisions of the Contract Act, 1872 briefly describe various types of quasi-contracts.

 Solution:
 Supply of necessaries:
 If a person incapable of entering into a contract or his dependent is supplied by another person with necessities suited to
his condition in life, the person supplying such necessities is entitled to be reimbursed the price from the property of such
incompetent person.
 Payment by interested person:
 A person, who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is
entitled to be reimbursed by the other.
 Person enjoying benefit of non-gratuitous act/goods:
 Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in
respect of, or to restore, the thing so done or delivered.
 Finder of goods:
 A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a
bailee.
 Payment by mistake or under coercion:
 A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.

Practice Question 02: Under certain special conditions, obligations resembling those created by a contract are imposed by law
although the parties have never entered into a contract. In view of the provisions of the Contract Act, 1872 describe the conditions
which must be fulfilled for claiming the amount in each of the following cases: i. Baqir supplied a jacket to Sultan in order to save
him from cold weather. Sultan who was a minor agreed to pay Rs. 2,000 for the jacket although its market price was Rs. 1,500. ii.
Rohi, who paid the electricity bill of Saulat without being asked, is now demanding payment from Saulat. iii. Sami, a coolie picked up
the goods purchased by Nadia from the supermarket and took them to her car. Nadia did not object to it. Sami demanded service
charges from Nadia.

 Solution:
 Part (i) Claim for necessaries supplied to person incapable of contracting, or on his account:
 Baqir can recover the amount from Sultan if the following conditions were satisfied:
 The jacket supplied was the necessity suited to Sultan’s condition in life.
 Baqir can recover the reasonable market value of Rs. 1,500 only from Sultan’s property. He cannot recover Rs. 2,000 which
Sultan had agreed to pay to Baqir as Sultan, being an incompetent person was not in the capacity to contract.
 Part (ii) Reimbursement of person paying money due by another in payment of which he is interested:
 Rohi can recover the amount of electricity bill from Saulat only if the following two conditions were satisfied:
 Rohi who made the payment had an interest in such payment.
 The payment must be such which Saulat was bound by law to pay.
 Part (iii) Obligation of person enjoying benefit of non-gratuitous act/goods:
 Sami can recover the amount of service charges from Nadia if the following conditions were satisfied:
 Sami had lawfully done the service for Nadia, i.e. Nadia had the option to accept or reject the services rendered by Sami.
 Sami did not have an intention to act gratuitously and Nadia had enjoyed the benefits of the service so provided by Sami.

Practice Question 03: Sami rented his house to Qurban for a period of one year at an agreed sum of Rs. 10,000 per month. After the
first two months, Qurban defaulted in making payment of the rent. Baqir, a neighbor, being concerned with the strained relationship
between Sami and Qurban, paid the rent with good intention. Subsequently, on Qurban’s refusal to reimburse the amount, Baqir
filed a suit against him on the grounds that he made the payment to Sami which Qurban was legally bound to make and being a
quasi-contract Baqir is entitled to the reimbursement. Explain whether Baqir is justified in his suit.

 Solution:
 To constitute a quasi-contract and be entitled for reimbursement, the following conditions must be satisfied:
 The person who made the payment must have his own interest in the payment.
  The other person must be bound by law to pay.
 Baqir does not seem to have any interest in the payment and therefore, he is not justified in his suit.

Practice Question 04: Mohsin acquired a piece of agricultural land in Moro, Sindh from a local landlord, Qasim Soomro, on a lease
term of twenty years. The revenue payable by Qasim Soomro on his land to the Provincial Government was in arrears. As a result, the
land was advertised for sale by the Provincial Government. Mohsin, in order to prevent the sale of land, paid the sum due by Qasim
Soomro to the Provincial Government. Under the provisions of the Contract Act, 1872 explain whether Mohsin can recover such
amount from Qasim Soomro.

 Solution:
 To constitute a quasi-contract and be entitled for reimbursement, the following conditions must be satisfied:
 The person who made the payment must have his own interest in the payment.
 The other person must be bound by law to pay.
 In the given scenario, Qasim Soomro was legally bound to pay the land revenue to the Provincial Government and
Mohsin, being interested in such payment, as his lease would have been annulled upon sale of land by the provincial
government, is entitled to recover the amount from Qasim Soomro.

Practice Question 05: Explain the different types of quasi-contracts with examples.

 Solution:
 Supply of necessaries:
 If a person, incapable of entering into a contract (e.g., minor or person of unsound mind), or any one whom he is legally
bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has
furnished such supplies is entitled to be reimbursed from the property of such incapable person.
 Example 01:
 Habib supplies necessaries to the wife and children of Arslan, a minor. Habib can recover expenses from Arslan’s property
if any.
 Example 02:
 Habib supplied a coat with diamond buttons to Arslan, a minor. Habib cannot demand the price of the coat from Arslan’s
property.
 Reimbursement of payment by interested person:
 A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is
entitled to be reimbursed by the other.
 Example 03:
 Babar holds land in Sindh, on a lease granted by Azam, a Zamindar. The revenue payable by Azam to the Government
being in arrears, his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale
will be the annulment of Babar's lease. Babar, to prevent the sale and the consequent annulment of his own lease, pays the
Government the sum due from Azam. Azam is bound to make good to Babar the amount so paid.
 Person enjoying benefit of non-gratuitous act/goods:
 Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in
respect of, or to restore, the thing so done or delivered.
 Example 04:
 Awais, a tradesman, leaves goods at Afaq's house by mistake. Afaq treats the goods as his own. He is bound to pay Awais
for them.
 Responsibility of finder of goods:
 A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a
bailee. He must take as much care of the goods as a man of ordinary prudence would under similar circumstances.
 Example 05:
 Adeel found a diamond ring at the wedding reception of Bilal. Adeel told Bilal and other guests about it with an intention
to find the true owner. If he is not able to find the owner, he can retain the ring as bailee.
 Payment or delivery by mistake or under coercion:
 A person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it.
  Example 06:
 Anum and Bilal jointly owe Rs. 100 to Saima. Anum alone pays the amount to Saima, and Bilal, not knowing this fact, pays
Rs. 100 over again to Saima. Saima is bound to repay the amount to Bilal.
 Example 07:
 A railway company refuses to deliver up certain goods to the consignee except upon the payment of an undue charge for
carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the
charge as was excessive.

Chapter 9

Q1: What is breach of contract, and what are the remedies available to the aggrieved party? A1: Breach of contract occurs
when a party refuses or fails to perform their part of the contract. The remedies for breach of contract include damages, specific
performance, and injunction.

Q2: What are ordinary damages and how are they calculated? A2: Ordinary damages, according to Section 73, compensate for
any loss or damage caused naturally by the breach of contract. They are calculated as the difference between the contract price and
the market price at the date of breach.

Q3: Can you give an example of ordinary damages? A3: Sure, for instance, if Naveed promises to deliver food for Rs. 85,000 but
fails to do so, causing Adeel to spend Rs. 93,000 for an alternative, Adeel can claim damages of Rs. 8,000 from Naveed.

Q4: What are special damages, and how are they different from ordinary damages? A4: Special damages compensate for losses
that parties knew would likely result from the breach when they made the contract. They are specific to the circumstances of the
contract.

Q5: Could you provide an example of special damages? A5: Certainly. If Azam contracts to erect a house by a certain date for
Babar to rent out, and Azam's poor construction causes Babar to lose rent and compensate the tenant, Azam must pay for
rebuilding, lost rent, and compensation to the tenant.

Q6: What are remote and indirect losses, and are they compensable? A6: Remote and indirect losses are those not directly
resulting from the breach. They are not compensable unless they were known to both parties when they made the contract.

Q7: Can you give an example of a remote and indirect loss? A7: Of course. If Qasim contracts to sell wheat to Yousaf, who in turn
contracts to sell it to Haris, but Qasim fails to deliver, causing Yousaf to lose a higher resale price to Haris, Yousaf can only recover
the direct loss from Qasim, not the indirect profit.

Q8: What is the rule regarding compensation when a penalty is stipulated in a contract? A8: The rule is that the compensation
should not exceed the amount named or the penalty stipulated. The court will award reasonable compensation.

Q9: Could you provide an example of a penalty clause? A9: Certainly. If Azam contracts to repay Rs. 1 million to Babar with a
penalty clause stating he'll pay Rs. 2 million if he defaults, but defaults, Babar can only recover a reasonable amount, not the full Rs.
2 million.

Q10: How is increased interest treated as a penalty? A10: Stipulating increased interest from the date of default may be
considered a penalty. The court will determine reasonable compensation in such cases.

Q11: What is the principle regarding damages in quasi contracts? A11: In quasi contracts, the compensation for damages arising from breach is the
same as in any other contract.

Q12: Could you provide an example of damages in a quasi contract? A12: Certainly. If Anwar mistakenly leaves goods at Saleem’s house, and
Saleem consumes them, Anwar can recover from Saleem the market price paid for those goods.
Q13: How does the duty to mitigate losses apply in breach of contract cases? A13: The aggrieved party has a duty to take reasonable steps to
mitigate the loss caused by the breach. They cannot claim compensation for losses that could have been reasonably avoided.

Q14: Can you give an example of the duty to mitigate losses? A14: Sure. If Bilal contracts to pay Rs. 500,000 to Jamal for procuring raw materials,
and Jamal fails to deliver, Bilal can only claim compensation for the additional cost incurred in procuring materials from the market if it was reasonable
to do so.

Q15: When is a person entitled to compensation after rightly rescinding a contract? A15: A person who rightly rescinds a contract is entitled to
compensation for any damage sustained through the non-fulfillment of the contract.

Q16: Could you provide an example of compensation after rescinding a contract? A16: Certainly. If Asifa contracts to sing at Behzad's theatre but
wilfully absents herself, and Behzad rightfully rescinds the contract, Behzad can claim compensation for the damage suffered due to the nonfulfillment
of the contract.

Q17: How are damages determined when a penalty is stipulated in a contract? A17: The court will award reasonable compensation not exceeding
the amount named or the penalty stipulated.

Q18: Can you give an example of damages when a penalty is stipulated? A18: If Azam contracts to repay Rs. 1 million with a penalty clause stating
he'll pay Rs. 2 million if he defaults, but defaults, Azam can only recover a reasonable amount, not the full Rs. 2 million.

Q19: What is the rule regarding increased interest as a penalty? A19: Stipulating increased interest from the date of default may be considered a
penalty, and the court will determine reasonable compensation in such cases.

Q20: Could you provide an example of increased interest as a penalty? A20: Certainly. If Azam's bond stipulates 12% interest but increases to 75%
in case of default, Azam can only be held liable for reasonable compensation, not the full increased interest.

Example 07: Ajmal contracts to let his ship to Saeed for a year for Rs. 28 million. Freights rise, and on the first of January, the hire
obtainable for the ship is higher (Rs. 32 million) than the contract price. Ajmal breaks his promise. What compensation is Saeed
entitled to?

Solution: Ajmal must pay Saeed compensation equal to the difference between the contract price and the price for which Saeed
could hire a similar ship for a year. So, Ajmal owes Saeed Rs. 4 million (Rs. 32 million - Rs. 28 million).

Example 08: Adeel contracts to supply Jazib with 1,000 kg of iron at Rs. 20 per kg above the price at which Adeel could procure and
deliver the iron. Jazib wrongfully refuses to receive the iron. What compensation is Adeel entitled to?

Solution: Jazib must pay Adeel compensation equal to the difference between the contract price and the sum for which Adeel could
have obtained and delivered the iron. So, Jazib owes Adeel Rs. 20,000 (Rs. 20 per kg x 1,000 kg).

Example 09: Abid sells certain merchandise to Sajid, warranting it to be of a particular quality. However, the goods prove to be not
according to the warranty, and Sajid becomes liable to pay Habib a sum of money by way of compensation. How much is Sajid
entitled to be reimbursed?

Solution: Sajid is entitled to be reimbursed the sum he pays to Habib by way of compensation. So, Sajid will receive the same sum
from Abid.

Example 10: Amjad contracts to deliver 5,000 kg of rice to Tanveer on the first of January at Rs. 100 per kg. Tanveer contracts to sell
the rice to Rizwan at Rs. 125 per kg before the first of January. However, Amjad breaks his promise. What compensation is Tanveer
entitled to?

Solution: The compensation payable by Amjad to Tanveer is based on the market price of Rs. 120 per kg on the first of January, not
the profit Tanveer would have made. So, Tanveer can claim damages of Rs. 20 per kg, totaling Rs. 100,000 (Rs. 20 x 5,000 kg).
 Example 11: Azam, a builder, contracts to erect and finish a house by the first of January for Babar, who has contracted to let it to
Qasim. However, Azam builds the house so badly that it falls down before the first of January. Babar loses the rent he was to receive
from Qasim and has to compensate Qasim for the breach. Azam must compensate Babar for the cost of rebuilding the house, the
lost rent, and the compensation made to Qasim.

Solution: Azam is liable to pay Babar compensation for:

1. The cost of rebuilding the house.

2. The lost rent.
3. The compensation made to Qasim.

Example 01: Naveed promised to deliver food for an event for 80 persons to Adeel for Rs. 85,000. However, just an hour before the
event, Naveed informed Adeel that he couldn't deliver the food. Adeel arranged the food from another caterer, costing him Rs. 93,000.
Adeel can claim damages of Rs. 8,000 from Naveed, which is the differential amount between what he paid and the original contract
price.

Solution: Adeel can claim Rs. 8,000 from Naveed as compensation for the additional expense incurred due to Naveed's breach of
contract.

Example 02: Asif hires Bilal’s ship to go to Karachi and then to Gwadar to carry a cargo provided by Asif. However, Bilal's ship doesn't
go to Karachi. Asif, finding alternative transportation, incurs extra expenses. Asif is entitled to receive compensation from Bilal for the
trouble and additional expense incurred.

Solution: Asif is entitled to compensation for the trouble and extra expenses incurred due to Bilal's failure to fulfill the contract.

Example 03: Azam contracts to buy rice from Babar at Rs. 150 per kg. However, Azam later refuses to accept the rice when the market
price drops to Rs. 130 per kg. Babar is entitled to receive Rs. 20 per kg by way of compensation, totaling Rs. 10,000.

Solution: Babar is entitled to receive Rs. 10,000 from Azam as compensation for Azam's refusal to accept the rice at the agreed
price.

Example 04: Alia contracts to buy Bisma’s ship for Rs. 6 billion but breaks her promise. The market price at the time of breach was Rs.
5.8 billion. Alia must pay Bisma Rs. 0.2 billion by way of compensation.

Solution: Alia must pay Bisma Rs. 0.2 billion as compensation for breaching the contract to sell the ship.

Example 05: Arslan contracts with Burhan to take a cargo of yarn to Gwadar, but due to delay, the market price falls. The
compensation payable to Burhan by Arslan is Rs. 1 million, which is the difference between the price Burhan could have obtained if the
boat sailed on time and the actual market price.

Solution: Arslan must compensate Burhan Rs. 1 million for the loss incurred due to the delayed delivery of the cargo.

Example 06: Akmal contracts to repair Kamran’s house in a certain manner but fails to do so. Kamran is entitled to recover from
Akmal the cost of making the repairs conform to the contract.

Solution: Kamran can recover from Akmal the cost of bringing the repairs up to the standard specified in the contract.

Example 12: Asif contracts with Basheer to supply 1,000 kg of iron at Rs. 500 per kg, to be delivered at a stated time. However, Asif
contracts with Saleem for the purchase of 1,000 kg of iron at Rs. 400 per kg to fulfill his contract with Basheer. Saleem fails to
perform his contract with Asif, who cannot procure other iron, and Basheer rescinds the contract. Saleem must compensate Asif for
the profit Asif would have made by the performance of his contract with Basheer.
Solution: Saleem is liable to pay Asif Rs. 100,000, which is the profit Asif would have made by fulfilling his contract with Basheer.

Example 13: Amjad contracts with Bilal to make and deliver a certain piece of machinery by a fixed day for a specified price.
However, Amjad fails to deliver the machinery on time. As a result, Bilal is obliged to procure another piece at a higher price and is
prevented from performing another contract he had made. Amjad must pay Bilal the difference between the contract price and the
price paid for the new piece of machinery, but not the compensation paid by Bilal to the third person.

Solution: Amjad must pay Bilal the difference between the contract price and the price paid for the new piece of machinery, but not
the compensation paid to the third person.

Example 14: Aslam contracts to sell and deliver 500 bales of cotton to Kunal on a fixed day. However, Aslam breaks his promise.
Kunal, who knows nothing of Aslam’s business, is obliged to close his mill. Aslam is not responsible to Kunal for the loss caused by
the closing of the mill.

Solution: Aslam is not liable to Kunal for the loss caused by the closing of the mill.

Feel free to ask for more examples or solutions!