Business & Industrial Laws

By

Muhammad Sajjada Shamim Ahmed

M.Phil (Process), L.L.M(Process), L.L.B, M.A.(Eco), & MBA(Finance)
 Court/ Judiciary

Complete Half (Quasi) Judiciary

Judiciary Powers of Lower Court

Supreme Court Special Court/

Tribunals
High Court
Income
Tax Insurance Banking
Lower Court Tribunals Tribunals
Appellate
Tribunals
Labor
Courts
 Supreme Court

High Court

Lower Court is Comprising of Below

Criminal Civil

Judicial District Judge/ Senior Civil

Magistrate Additional District Civil Judge
Magistrate Judge
 Lower Court

Criminal Civil

Judicial District Judge/ Senior Civil

Magistrate Additional District Civil Judge
Magistrate Judge

When period When period

Of punishment Of punishment
upto 3 Years above 3 Years
 Judicial Senior Civil
Magistrate Civil Judge
Judge

Against Judgment of the Above the Appeal files before below

District Judge/
Additional District
Magistrate
 Chief Justice - Supreme Court

Four Chief Justice- High Court

In Every Province

Punjab Sindh KPK Balouchistan

 High Court

In Every Province

Punjab Sindh KPK Balouchistan

 Two important Bodies

Law Making Law Implementing

(Legislating) (Judiciary)

President Supreme Court

Parliament High Court

Governor Lower Courts

Provincial Assembly
 Law

Year of
Name of Making
Becoming
Law Body
Law

Contract ACT 1872

Always read three parts as name of Contract

 Law

Name of Making Year of

Law Body formation

Income Tax Ordinance 2001

Always read three parts as name of Contract

 Law making body

Parliament and
President and Provincial
Governor assembly

ACT
Ordinance
 ACT is made by

Provincial
Parliament Assembly

Jurisdiction Jurisdiction
Of Law Of Law

Whole
Country Whole
Province
 Ordinance is made by

President Governor

Jurisdiction Jurisdiction
Of Law Of Law

Whole
Country Whole
Province
 Jurisdiction area

Governor
President Provincial
Parliament assembly

Whole
Whole
Province
Country
 Parliament

National
Senate
Assembly
 Bill

National Assembly

2/3rd Majority Pass

Senate

Become
President Of Pakistan LAW
 Relationship

Is Created by

Blood Contract

Brother & Sister Husband & Wife

Father & Son Sale / Purchase
Employer / Employee
Landlord / Tenant
Partnership Business
 How to become owner of Property/Goods

By

Inheritance Contract

Seller looses ownership &

buyer gets ownership
Includes GIFT,
Purchase, Sales
 Contract

Division

Formation Enforceability Performance

 Contract Act, 1872

Definition of Contract by Pollack

“every agreement and promise enforceable at law is contract.”

 Contract Act, 1872

Definition of Contract by Salmond

“a contract is an agreement creating and defining

obligations between the parties”
 Contract Act, 1872

Definition of Contract by Sir William Anson

“a legally binding agreement between two or more persons

by which rights are acquired by one or more to acts or
forbearance on the part of others.”
 Contract Act, 1872

Definition of Contract u/s 2(h)

“An agreement enforceable by law is a Contract.”

 Contract Act, 1872

Contract = Agreement + Enforceability

Agreement = Offer + Acceptance

Enforceability = Legal obligations b/w parties

Agreement: Enforceability:
a. Plurality of persons Social Agreements (No)
b. Consensus Ad idem. Legal Agreements (Yes)
 Contract Act, 1872

ESSENTIALS OF VALID CONTRACT

F L I P C A N
2 2
 Contract Act, 1872

ESSENTIALS OF VALID CONTRACT

F L I P C A N
2 2
Free Consent
 Free Consent
• According to Section 14,
– “ consent is free when it is not obtained by
coercion, undue influence, fraud,
misrepresentation or mistake”.
– If the consent of the either parties is not free,
the agreement cannot become a contract.
 Example
• Mr. A compels Mr. B to enter into a
contract on the point of pistol. It is not a
valid contract as the consent of Mr. B is not
free.
 Consent of Parties to the Contract

Consent is not
Consent is Free
Free

No elements of the following Existence of of the Following

•Coercion
•Undue Influence
•Fraud
•Misrepresentation
•Mistake
CUFMM
 Coercion
• “Coercion is the committing or threatening
to commit, any act, forbidden by the
Pakistan Penal Code, or the unlawful
detaining, or threatening to detain, any
property, to the prejudice of any person
whatever, with the intention of causing any
person to enter into an agreement”.
 Explanation
• The explanation to the section says that, “it
is immaterial whether the PPC is or is not in
force in the place where the coercion is
employed”.
 Example
• A threatens to cause physical harm to B if B
does not sign the contract and B signs it.
This contract is made by B under the
pressure of threat. In such a case B may
avoid the contract because it was not made
by B voluntarily.
 Undue Influence
• A contract is said to be induced by undue
influence where the relations subsisting
between the parties are such that one of the
parties is in a position to dominate the will
of the other, and uses that position to obtain
an unfair advantage over the other”.
 Example
• A, a police officer bought a property worth
Rs.1 lac for Rs.50,000 from B, an accused
under his custody. Later on B sued to cancel
the contract on the ground of undue
influence. Here A, a police is a in a position
to dominate the will of B, the accused.
 Fraud
• Fraud means and includes any of the
following acts committed by a party to a
contract, or with his connivance, or by his
agent, with intent to deceive or to induce
another party thereto or his agent, to enter
into the contract”.
 Example
• A tells B knowing to be false that his
factory produces 500 pounds of butter per
day. On this suggestion, B agrees to buy the
factory. A is guilty of fraud.
 Misrepresentation
• It means an innocent misstatement of facts
about the contract, made by one party to
induce the other party to enter into a
contract.
 Mistake
• Mistake can be divided into
– Mistake of fact
– Mistake of law
 Mistake
• A enters into an agreement with B to sell
his car which both the parties believe to be
in A’s garage. Actually the car was
destroyed by fire an hour before the
agreement was made. Since this fact was
not known to both the parties, so agreement
is void.
 Consent of Parties to the Contract

A
G
Party A G Party B
R
I
V
Commits Fraud Consent of B is
E
With Party B Now not free
D

Because B is
Under wrong impression
 Consent of Parties to the Contract

A
G
Party A G Party B
R
I
V
Makes Consent of B is
E
Misrepresentations Now not free
D
With Party B
Because B is
Under wrong impression

Misrepresentation is different from fraud

 Consent of Parties to the Contract

A
G
Party A G Party B
R
I
Makes Undue V
Consent of B is
Influence E
Now not free
With Party B D

Because B is Under
influence of Mr. A
Every body can not influence
Except parents, master, spiritual leader
 Consent of Parties to the Contract

A
G
Party A G Party B
R
I
Makes Coercion V
Consent of B is
Influence E
Now not free
With Party B D

Because B is Under
threat of Mr. A
Coercion means using criminal tactics
Or weapon to threat other party
 Consent of Parties to the Contract

Party A Both are under Party B

Mistake

Consequence: Contract is Void

 Voidable Contract -CUFM

When Consent is
Not Free due to

Misrepresentation Undue
Fraud Coercion
Influence

Consequence may be following

Contract may be Contract may be

enforceable terminated
 Consequences of the Following

Fraud Undue
Misrepresentation Coercion Mistake
Influence

Contract is Voidable Void

 DISTINCTION B/W COERCION & UNDUE INFLUENCE

PARTICULARS
COERCION UNDUE INFLUENCE

Coercion is a physical threat either Undue influence is a mental or moral

Nature
to property or person threat

Coercion involves doing or In under influence the act may not be

Illegal & Unfair
thereatening to do an illegal act illegal, it may only be unfair
In coercion, penal action is also In undue influence, generally no penal
Penal Action
taken against guilty party action is taken aginst guilty party
Coercion may be exercised by or
against the party to the agreement. Undue influence must be exercised by or
Parties
It may also be exercised by or agianst the party to the agreement
against some third party

For coercion no specific

For undue influence there must be a
Relationship relationship b/w the parties is
specific relationship b/w the parties
necessary
In undue influence, the court has
In coercion the aggrieved party has
discretion to direct the aggrieved party to
Refund of Benefit to refund the benfits, if he has
refund the benefit, if he received from the
received any, from the other party
other party.
In coerction, the contract is In undue influence, the contract is eight
Effect voidable at the option of aggreieved ervoidable or the ourt may set aside it or
party enforece it in a modified form.
 DISTINCTION B/W FRAUD & MISREPRESENTATION

PARTICULARS
FRAUD MISREPRESENTATION

In case of fraud, the party makes a

In case of misrepresentation, there is no
INTENTION false statement with an intention to
intention to deceive the other party
deceive the other party
In case of fraud, the parson making
In case of misrepresentation, the person
Belief the suggestion does not believe it
making the suggestion believe it to be true
to be true
In fraud the aggrieved party can In misrepresentation entitiles the party to
Damages claim damages in addition to the avoid contract and there can be no suit for
right of avoiding the contract damages
Misrepresentation does not amount to a
Fraud may amount to an offecne of
Offence offence of cheating. It is not a criminal
cheating. It is a criminal act
act.
In case of fraud, the aggrieved party In case of misrepresentation, the
can avoid contract even if it had the aggrieved party cannot avoid the contract
Truth
means to discover the truth with if it had means to discover the truth with
ordinary diligence ordinary diligence
 Undue
Coercion Fraud Misrepresentation
Influence

Made by either Person to other

Contract becomes Voidable

The party on whom Coercion, Fraud, Misrepresentation

Undue influence is made is called aggrieved party
 Aggrieved Party

Has Option

Makes Contract Void Makes Contract Valid

By terminating the •By Keeping silence

Contract •By Using the goods
•By ignoring/ consuming
•By lapsing time
•By apprehension of threat
•By Resale of goods
 Consent

Aggrieved
Parties Party

Party A Party B
Free Not Free

Contract becomes Voidable

Aggrieved
Party
Consent

Parties

Party A Party B
UnFree Free

Contract becomes Voidable

 Voidable Contract

Depends upon
Accept Reject
Aggrieved Party

Contract Contract
Becomes Becomes
Valid Void

Contract is Contract is
Enforceable Not enforceable
 Un free Consent

Due to

•Coercion
•Undue Influence MISTAKE
•Fraud
•Misrepresentations
Consequence

Consequence

Contract becomes No Contract

Voidable
 See other Ingredients Contract
Free
LIPCANS Becomes Void

Reject
Consent
Due to
Coercion Contract Is Aggrieved
Un Free Undue Influence Voidable Party
Fraud
Misrepresentation
Due to
Mistake Accept

Contract Contract
is Void Becomes Valid
 When a Voidable Contract becomes Valid

After lapse Restitution is

When
Of reasonable not possible
Aggrieved Party
time

Accepts •Goods Resale

•Goods Consumed
Silent •Shape of Goods Changed
•Goods theft
Apprehensive •Goods Broken
 DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS

PARTICULARS VOID
AGREEMENTS CONTRACTS

A void contract is
A void agreement is unenforceable enforceable when it is
Enforceability
from the very beginning. originally made. It becomes
un-enforceable later on.
A void contract can be
A void agreement can never be
Enforced enforced before its being un-
enforced.
enforceable.
In a void contract the parties
In a void agreement the parties are
are entitled for restoration of
Restoration of not entitled for restoration of
benefits which they have
Benefit benefits which they have exchange
exchange during the
during the process of contract.
process of contract.
 DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS

PARTICULARS ILLEGAL AGREEMENTS VOID AGREEMENTS

An illegal agreement is prohibited A void agreement is not

Prohibited
by law. prohibited by law.
A void agreement is not
Punishable An illegal agreement is punishable
punishable
An illegal agreement is also void A void agreement is not
Nature
agreement illegal agreement
A collateral agreement to a
Collateral A collateral agreement to an illegal
void agreement is
Agreement agreement is not enforceable.
enforceable.
 DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS

PARTICULARS VOID AGREEMENTS VOIDABLE CONTRACTS

A voidable contract is a valid

A void agreement is un-
Enforceability contract and enforceable till
enforceable by law.
it is rejected.
A voidable contract is not
A void agreement is void ab-initio
Defects void ab-initio and its defects
and its defects are incurable.
are curable.
In a void agreement even a thrid In a voidable contract a third
Rights of Third party cannot acquire any right from party can acquire a right
Party person claiming undr such a from a person claiming
contract. under such a contract.
In a voidable contract a
In a void agreement the person is
person is entitled to
not entitled to compensation fro
Compensation compensation for loss
loss arising due to non
arising due to non-
performance of the agreement.
performance of the contract.
A collateral agreement to a
Collateral Collateral agreement to void
voidable contract is not a
Agrement agreement is a void contract.
void contract.
 MISTAKE

Fact Law

Quality Private Foreign Pakistani

Quantity Rights Law Law
Ownership
Fundament Facts
Identity Contract is Void
Existence Contract is
Binding