BUSINESS LAW

PRESENTED BY FAHEEM ALTAF

 DEFINITION

:ALL CONTRACT ARE

AGREEMENT BUT ALL
AGREEMENT ARE
NOT CONTRACT:
 CONTRACT ACT 1872
ACCORDING TO CONTRACT ACT
2(h)

:An Agreement Enforceable By Law is a

Contract:

CONTRACT =AGREEMENT +ENFORCEABILITY

 AGREEMENT
ACCORDING TO SEC 2(e)

:Every Promise and every set of promises

Forming the consideration for each other
Is called agreement;
Types of AGREEMENT
. Social Agreement
. Legal Agreement
 ACCORDING TO CONTRACT ACT 1872 SECTION 10

:All Agreements are contracts if they are made by

the free consent of parties, competent to a
contract, for a lawful considersation and with
a lawful object, are not hereby expressly
declared to be void, and where necessary,
satisfy the requirements of law as to writing,
attestation or registration.:
 Essentials of a Valid Contract
. Offer and Acceptance
. Legal Relationship
. Lawful Consideration
.Capacity of the Parties
. Free Consent
.Lawful Object
. Writing and Registration
. Certainty of Terms
.Possibility of Performance
. Not Expressly Declared Void
 OFFER

:When one person is signifies to another

his willingness to do or abstain from
doing anything , with a view to
obtaining the assent of that other to such
act or abstinence , he is said to make a
proposal:
 Essentials of Valid Offer
. It may be express or implied
. It must create legal relation
. It must be definite and clear
. It is different from invitation to offer
. It may be specific or general
. It must be communicated to offeree
. It should not contain negative condition
. It may contain a positive condition
. It must not contain cross offers
 ACCEPTENCE

:When the person to whom the proposal is

made signifies his assent there to , the
proposal is said to be accepted. A
proposal when accepted become a
promise.:
 Essentials of Valid Acceptence
.It must be given by the offeree
. It must be absolute and unconditional
. It must be in prescribed manner
. It must be communicated to the offeror
. It may be express or implied
. It must follow the offer
. It must be given within reasonable time
 CONSIDERATION

According to pollock:
:Consideration is a price for which the
promise of the other is bought and the
promise thus given for value is
enforceable:
 Exceptions
.Natural Love and Affection
.Voluntary Compensation
. Time barrend Debt
.Completed gift
. Contract of Agency
.Remission by the promisee
.Agreement to give donation
 Kinds of Contract
. According to Enforceability
. According to Formation
. According to Performance
. According to Parties
 According to Enforceability
. Valid Contract A contract which contains all the essentials of a valid contract is enforceable at law is called a Valid Contract .

. Void Contract A Contract which ceases to be enforceable by law becomes Void, when it ceases to be enforceable .

. Voidable Contract
 When the consent of one or more of the parties to contract is obtained by coercion, undue influence, fraud or misrepresentation.

 When the promisee prevents the promisor from performing his promise.

 When the promisor fails to perform his promise within the specified time, if time is essence of the contract .

. Unenforceable Contract AnUnenforceable Contract is one which cannot be enforced in a court of law because
of some technical defects e.g. absence of writing or registration or requisite stamps etc. when these defects
are removed the contract become enforceable.

.Void Agreement An agreement not enforceable by law is said to be void such agreement does not create
legal obligations among the parties and is void ab-initio.

.Illegal AgreementAn Agreement is illegal when its performance is forbidden by la w.

 According to Formation
. Express Contract A Contract in which offer and acceptance is given in words
spoken or written, is called Express Contract.

. Implied Contract In Implied contract offer and acceptance is made otherwise

than by words e.g. by the acts conduct of the parties.

. Quasi Contract A Contract in which no formal offer and acceptance is made.

However, under specific circumstances contractual relation are created between
the parties.
 According to Performance
.Executed Contract A contract which is performed by both the parties and
‘nothing remains to be done’ under contract is called Executed.

. Executory Contract A contract in which one or both the parties have yet
to perform their obligations is called Executory Contract
 According to Parties
. Unilateral Contract In unilateral contract the obligations of only one party are
created at the time of formation of contract.

. Bilateral Contract A contract which creates obligations of both the

parties is called bilateral contract.
 FREE CONSENT
SEC 14
: Consent is said to be free when it is
not obtained by Coercion, Undue
influence, Fraud , Misrepresentation,
or Mistake :
 COERCION

According to section 15:

: Coercion is the committing or threatening to

commit, any act forbidden by pakistan penal
code , or the unlawful detaining, or
threatening to detain , any property, to the
prejudice of any person whatever , with an
intention of causing any person to enter into
an agreement.:
 ELEMENTS
.Committing or Threatening to Commit:
if a person commits or threatens to commit any
act which is forbidden by pakistan penal code
to compel the other party to enter into a
contract there is coercion.
.Detaining of Property:
If a person unlawfully holds or threatens to hold
the property of another person to compel him
to enter into an agreement there is coercion.
 ELEMENTS
.Threat Against Third Party:
The threat may be used against third person who are near relatives
of the person making the contract.
.Enforcement of Pakistan Penal Code:
It does not matter whether pakistan penal code is or is not in force
in the place where the coercion is employed.
.Effect of Coercion:
The contract is voidable at the option of the party whose consent is
obtained by coercion.
.Burden of Proof:
Burden of proof that coercion was used lies on the party who want
to cancel the contract.
 UNDUEINFLUENCE
SEC(16)

:Undue influence is the unfair use of one;s

superior power in order to obtain the
consent of the person who is in a weaker
position. :
 ELEMENTS
.Position of Dominate:
In order to prove undue influence the relation between
the parties should be such that one of them is in a
stronger position and the other is in a weaker position.
.Fiduciary Relation:
Fiduciary relationship is a relationship of mutual trust
and confidence.
.Mental Distress:
A person is said to be in distress when his mental
capacity is affected.
 ELEMENTS
.Unfair Advantage:
To prove undue influence it is also necessary that the
stronger party has obtained as un advantage from
the other.
.Effect of Undue influence:
The contract is voidable at the option of the party
whose consent is obtained by undue influence.
.Burden of proof:
It is presumed that the dominating person has
exercised undue influence in these cases .
 FRAUD
SEC(17)

:Fraud includes all acts committed by a

party to induce the other party to enter
into a contract with an intention to
deceive:
 ELEMENTS
.False Statement:
When a party to the contract makes a false statement
intentionally , he would be liable for fraud.
.Active Concealment:
When a party to the contract does not disclose material facts
to the contract to deceive the other he is guilty of fraud.
.Intentional Non Performance:
According to this sub section all the unfair ways which a
man can adopt to deceive the other party will be
considered fraud.
 ELEMENTS
.Act or Omission:
In some cases it is necessary to disclose relevant facts
to the other party. If some one omitts disclose facts
he would be guilty of fraud.
.Effect of Fraud:
The contract is voidable at the option of the party
whose consent is obtained by fraud.
.Burden of Proof:
The burden of proof lies on the party who wants to
cancel the contract.
 MISREPRESENTATION
SEC(18)

: A concept of English law a

misrepresentation is an untrue or
misleading statement of fact made
during negotiations by one party to
another the statement then inducing the
other party into the contract :
 ELEMENTS
.Unjustified Statements: when a person makes a clear statement of the fact their the
contract believing it to be true though it is not true there is misrepresentation.

.Breach of Duty: if any breach of duty without intention to deceive the other gives an
advantage to the person committing it and a loss to the other it will be considered
misrepresentation.

.Including Mistake: if a party to an agreement innocently induces the other party to commit a
mistake regarding the nature or quality of the subject matter of the agreement he becomes
guilty of misrepresentation.

.Effect of Misrepresentation:The contract is viodable at the option of the party whose consent is
obtained by misrepresentation.
.Burden of Proof: The burden of proof lies on the party who want to cancel the contract on
ground of misrepresentation.
 MISTAKE SEC (20)
:When one or more parties to an agreement
are under an error regarding the subject
matter or nature of the agreement or
parties to an agreement or law
agreement is said to be made by
mistake. :
 Mistake of Facts
.Bilateral Mistake:
: a mistake in which both the parties to agreement are under an error. :
.Mistake Regarding the Existence of Subject Matter:
.Mistake Regarding the Identity of Subject Matter:
.Mistake Regarding the Ownership of Subject Matter:
.Mistake Regarding the Quantity of Subject Matter:
.Mistake Regarding the Possibility of performance:
.Effect of Bilateral Mistake:
An agreement made under bilateral mistake is void ab-initio.
 Mistake of Facts
Unilateral Mistake:
:Mistake in which only one party to an agreement is under an error. :
.Valid contract:
Voidable contract:
Void agreement:

MISTAKE OF LAW:
.Mistake of Pakistani law:
Mistake of Foreign lw:
 CONCLUSION
. An agreement is the basis of a contract and
contract is the structure and constructed on
the basis.
.Thus we can say that all the contract are
agreement but all agreement are not contract.
. Only legal agreement s which contain all other
essentials are called contract and thus
enforceable by law.