Contract Act, of 1872: Analysis of Case Scenarios

Scenario (a): Rahim and Usama's Agreement with Farah

Facts: Rahim, an IT firm owner, collaborates with Usama, a minor with graphic designing skills,
to design a website for Farah's boutique for Rs. 500,000. Rahim and Usama falsely represent
Usama as an adult.
Legal Issue: Can Farah enforce the contract against Rahim and Usama?
Relevant Law:
1. Capacity to Contract (Sections 10, 11, and 12): A contract requires the parties to be of
legal age (18 years), sound mind, and not disqualified by law. A minor's contract is void-
ab-initio.
Analysis:
• Usama is a minor, making him legally incapable of entering into a binding contract.
• The contract with Farah is void because one party (Usama) is a minor, regardless of the
misrepresentation.
Conclusion: Farah cannot enforce the contract against Rahim and Usama due to Usama's minority
status. The contract is void from the outset as per the Contract Act.

Scenario (b): Rahim's Bet with Nadir

Facts: Rahim claims his gaming team will win a tournament and agrees to a wager with Nadir,
where Rahim pays Rs. 100,000 for a chance to win Rs. 200,000 if the team wins.
Legal Issue: Can Rahim sue Nadir if Nadir refuses to pay after the team wins?
Relevant Law:
1. Wagering Agreements (Section 30): Agreements based on wagering are void, and no
legal action can be taken to enforce them.
Analysis:
• The agreement between Rahim and Nadir is a wager, as it depends on an uncertain event
(the outcome of the tournament).
• Such agreements are expressly void under Section 30 of the Contract Act.
Conclusion: Rahim cannot sue Nadir to recover the Rs. 200,000 as the agreement is a wager and
void under the Contract Act.

Scenario (c): Rahim's Contract with Organdy Limited (OL)

Facts: OL contracts Rahim’s IT firm to manage its social media for one year at Rs. 1,500,000 per
quarter. OL fails to provide necessary passwords despite several reminders.
Legal Issue: What is the validity of the contract, and what remedies are available to Rahim?
Relevant Law:
1. Performance of Contract (Sections 37-39): Each party must perform their contractual
promises unless performance is excused or dispensed with.
2. Remedies for Breach (Section 73): Compensation for any loss or damage caused by
breach of contract.
Analysis:
• The contract between OL and Rahim is valid.
• OL’s failure to provide passwords constitutes a breach of contract, preventing Rahim from
fulfilling his obligations.
Remedies Available to Rahim:
• Rahim can claim compensation for losses incurred due to OL’s breach.
• Rahim may also treat the contract as rescinded and seek damages for non-performance.
Conclusion: The contract is valid, but OL’s failure to provide passwords is a breach. Rahim can
seek compensation and other remedies for OL's breach of contract.

Scenario (d): Rahim’s Regret Email to OL

Facts: Rahim accepts a similar project from Muslin Limited and informs OL on 31 August 2022,
that performance is impossible due to lack of resources.
Legal Issue: What is the validity of Rahim’s correspondence, and what is OL’s position?
Relevant Law:
1. Discharge by Breach (Section 39): When a party refuses to perform their part of the
contract before the time of performance, the other party may treat the contract as rescinded
or wait and sue for breach.
Analysis:
• Rahim’s email constitutes an anticipatory breach of contract.
• OL has the right to accept the breach, treat the contract as terminated, and claim damages.
OL’s Position:
• OL can claim damages from Rahim for the breach of contract.
• Alternatively, OL can enforce specific performance if feasible or seek another service
provider and recover additional costs from Rahim.
Conclusion: Rahim’s email represents an anticipatory breach. OL is entitled to claim damages or
seek other remedies under the Contract Act.

Partnership Act, of 1932: Analysis of Case Scenarios

Scenario (a)(i): Adeeb’s Widow Receiving Profit Share
Facts: Moiz, Adeeb, and Mumtaz were partners in a firm. After Adeeb's death, Moiz and Mumtaz
continued the business and agreed to give 10% of the profits to Adeeb's widow as an annuity.
Legal Issue: Would Adeeb’s widow be deemed to be a partner in the firm?
Relevant Law:
1. Definition of Partnership (Section 4): Partnership is the relation between persons who
have agreed to share the profits of a business carried on by all or any of them acting for all.
2. Rights of Legal Representatives (Section 42): On the death of a partner, the partnership
firm may continue with the consent of the remaining partners and the legal representatives
of the deceased partner.
Analysis:
• Adeeb’s widow is receiving a share of the profits as an annuity, but there is no indication
that she is participating in the business.
• Sharing profits alone does not constitute a partnership. A partner must also be involved in
the business activities and management.
Conclusion: Adeeb’s widow would not be considered a partner in the firm simply by receiving a
share of the profits. The agreement to give her 10% of the profits is an annuity, not an indication
of partnership.

Scenario (a)(ii): Bari’s Misuse of Client's Advance

Facts: Saima, Ahsan, and Bari are partners in a law firm. Bari received an advance of Rs. 150,000
from a client for a lawsuit. Bari used the money for personal purposes without informing his
partners.
Legal Issue: What are the rights and liabilities of the partners and the firm regarding Bari’s
actions?
Relevant Law:
1. Liability of Partners (Section 25): Every partner is liable jointly with all the other partners
and also severally for all acts of the firm done while he is a partner.
2. Misapplication of Money or Property (Section 27): The firm is liable to make good any
loss caused by a partner's misapplication of money or property received in the course of
the business.
Analysis:
• Bari acted outside his authority by using the client’s money for personal purposes.
• All partners are jointly and severally liable for the acts of the firm, including the
misappropriation by Bari.
• The firm is responsible for compensating the client for the misapplied funds.
• Saima and Ahsan have the right to claim indemnity from Bari for his wrongful act.
Conclusion: The firm is liable to the client for the Rs. 150,000 misappropriated by Bari. Saima
and Ahsan, as partners, are jointly and severally liable, but they can seek indemnity from Bari for
his unauthorized actions.

Scenario (b): Restrictions on the Implied Authority of a Partner

Relevant Law:
• Implied Authority (Section 19): The implied authority of a partner allows them to bind
the firm in acts done in the usual course of business. However, there are restrictions.
Four Restrictions on the Implied Authority of a Partner:
1. Admitting a Liability in a Suit: A partner cannot admit any liability in a suit or proceeding
against the firm.
2. Compromise or Relinquish a Claim: A partner cannot compromise or relinquish any
claim or portion of a claim by the firm.
3. Withdraw a Suit or Proceeding: A partner cannot withdraw any suit or proceeding filed
on behalf of the firm.
4. Enter into a Partnership: A partner cannot enter into a partnership on behalf of the firm
with another person.