contract and agreement

STAY BLESSED

PRESENTED BY-Waqas Ali (0071)PRESENTED BY-Waqas Ali (0071) Zain Umar (0032)Zain Umar (0032)

Zeeshan Khan (0076)Zeeshan Khan (0076) Haroon Shahzad (0060)Haroon Shahzad (0060)

Malik Usman (0091)Malik Usman (0091)

PRESENTATION ONPRESENTATION ON

CONTRACT CONTRACT ACT,1872ACT,1872UNDER THE GUIDANCE- PROF. ZIA-UL-HAQ

CONTENTCONTENT

Business law is a rule which helps us to regulate and manage Business law is a rule which helps us to regulate and manage

our business transactions and activities system. It has direct relation our business transactions and activities system. It has direct relation

with trade, industry and commerce. e.g. insurance act, contract act, with trade, industry and commerce. e.g. insurance act, contract act,

tax act, sale of goods act, agency act etc.tax act, sale of goods act, agency act etc.

Business LawBusiness Law

Enacted byEnacted by Parliament of IndiaParliament of India

Date enactedDate enacted 25 April 187225 April 1872

Date commencedDate commenced 1 September 18721 September 1872

Total sectionsTotal sections 238238

Extent Extent All States of India except All States of India except

the State of Jammu & Kashmirthe State of Jammu & Kashmir

INDIAN CONTRACT ACT, 1872 INDIAN CONTRACT ACT, 1872

What is a Contract? What is a Contract?

An agreement which is legally enforceable alone is a contract. An agreement which is legally enforceable alone is a contract.

Agreements which are not legally enforceable are not contracts but Agreements which are not legally enforceable are not contracts but

remain as void agreements which are not enforceable at all or as remain as void agreements which are not enforceable at all or as

voidable agreements which are enforceable by only one of the parties voidable agreements which are enforceable by only one of the parties

to the agreementto the agreement.

““All contracts are agreements, But all agreements are not contracts.”All contracts are agreements, But all agreements are not contracts.”

All contracts are agreement because there must be mutual understanding

between two parties for a contract to be formed. All parties should agree

and adhere to the terms and conditions of an offer.

Contract sec 2(h) Contract sec 2(h) - An agreement enforceable by Law is a contract. - An agreement enforceable by Law is a contract.

AGREEMENTAGREEMENT ENFORCEABLE BY LAWENFORCEABLE BY LAW CONTRACTCONTRACT

CONTRACT

AN AGREEMENT ENFORCEABLE BY LAW

CONTRACT = AGREEMENT + ENFORCEABILITY

AGREEMENT

PROMISES FORMING FOR CONSIDERATION

AGREEMENT = PROMISES + CONSIDERATION

SOCIAL AGREEMENTS LEGAL AGREEMENTS

PROMISE WHEN SOMEONE OFFER AND OTHER SHOW WILLINGNESS IT IS CALLED PROMISE. PROMISE = OFFER + ACCEPTANCE OFFER(Proposal)

WILL TO DO SOME THING

Parties to a ContractOFFERER (PROPOSER)OFFERER (PROPOSER) – The party who makes an offer to enter into a contractOFFEREE(PROPOSEE)OFFEREE(PROPOSEE) – The party to whom an offer to enter into a contract is made

ACCEPTANCE ACCEPT THE OFFER

Offer

Acceptance

Offerer Offeree

Offeror makes an offer to the offeree

Offeree has the power to accept the offer and

create a contract

As per Section 10 “All agreements are contracts, if they are As per Section 10 “All agreements are contracts, if they are

made – by free consent of the parties, competent to contract, made – by free consent of the parties, competent to contract,

for a lawful consideration and with a lawful object, and not for a lawful consideration and with a lawful object, and not

hereby expressly declared to be void .”hereby expressly declared to be void .”

ESSENTIALS OF A VALID CONTRACT ESSENTIALS OF A VALID CONTRACT

ZAIN UMAR

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ESSENTIAL ELEMENTS OF A VALID CONTRACTESSENTIAL ELEMENTS OF A VALID CONTRACT

• •Agreement (Offer and acceptance)Agreement (Offer and acceptance)

• • Legal relationship Legal relationship

• • Capacity of parties Capacity of parties

• • Free consent. Free consent.

• • Writing & RegistrationWriting & Registration

• • Lawful objectLawful object

• • Lawful consideration Lawful consideration

• • CertaintyCertainty

• • Possibility to performPossibility to perform

• • Not declared as void Not declared as void

AGREEMENT (OFFER & ACCEPTANCE)

THERE MUST BE AN AGREEMENT PROMISE = OFFER + ACCEPTANCEOFFER (PROPOSAL)According to Section 2 (A) of Contract Act 1872, WHEN ONE PARTY SHOWS HIS WILLINGNESS TO DO OR TO ABSTAIN FROM DOING ANY THING TO GET THE ASSENT OF THE OTHER PARTY OFFERER (PROPOSER) OFFEREE (PROPOSEE)EXAMPLE: LET “A” OFFER HIS BOOK TO “B” FOR SALE FOR RS 100

AND “B” ACCEPTS THE OFFER. SO THERE WILL BE A VALID CONTRACT BETWEEN THEM.

CAPACITY OF PARTIES

A person disqualifiedBy law

A person of Unsound mind

A minor

A minor ,person of unsound mind and personDisqualified by law cannot enter into contractAny contract with any such party will be void

MINOR

A Person Who Has Not Completed His 18th Year Of Age Is Considered To Be A Minor.In Case A Guardian To The Person Or Property Of The Minor Is Appointed By The Court Or The Property Of The Minor Is Put Under The Charge Of A Court Of Wards ,During The Period Of His Minority .

EXAMPLE: Waqar a minor sold scooter to Waqas for Rs1000 and receive 500 as advance .later on Waqas refuses to buy the scooter and sued the advance money .held that he cannot sued it as the contract was void and no question of refunding money could arise in these circumstances.

18

Person of unsound mind

• A person is said to be of sound mindsound mind for the purpose of making a contract if at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.

• The idiot, lunatic and drunkards are the person of unsound mind.

ZEESHAN KHAN

76

Shweta Verma,Research scholar 20

Following are the people disqualified by law

• Alien enemy: A person who is not a citizen of Pakistan is called an alien.

• Convicts: convict is incapable of entering into contract .and the incapability ends when sentence expires or punishment finish.

• Corporation: A company is artificial person created by law. it can only contract through its board of directors.

LAWFUL OBJECT OBJECTIVE OF THE CONTRACT SHOULD BE LEGAL

(LAWFUL) IMMORAL AND ILLIGAL ACTIVITIES SHOULD BE AVOIDED

EXAMPLE:

LET THREE PARTIES ARE INVOLVED IN THE SMUGGLING, THEY SETTELED THE DISTRIBUTION OF THE PROFIT AT THE SPECIFIC RATIO FROM THE SMUGLING. HERE IT IS NOT VALID CONTRACT.

FREE CONSENTAccording to Section 13 of Contract Act 1872, TWO OR MORE THEN TWO PERSONS SHOW

THEIR CONSENT WHEN THEY AGREED UPON THE SAME

THING IN SAME SENSE.

EXAMPLE: ‘A’ AT THE AIM OF PISTOL, ENTER INTO AN AGREEMENT,

SUCH AGREEMENT IS NOT VALID CONTRACT BECAUSE, HERE IS CONSENT IS NOT FREE.

LAWFUL CONSIDERATIONBY CONCIDERATION, WE MEAN ‘SOMETHING IN RETURN’.

IT CACN ALSO BE CALLED PRICE OF THE AGREEMENT.

FOR A VALID CONTRACT,IT IS NECESSARY THAT THERE SHOULD BE A LAWFULL CONSIDERATION.IT CAN BE TREATED AS BENEFIT RECIVED FROM ONE PARTY TO OTHER.

EXAMPLE:

WHEN ‘A’ AGREES TO SALE HIS BOOK TO ‘B’ FOR RS 100 HERE BOOK ISCONSIDERATION FOR ‘B’ AND PRICE OF BOOK RS 100 IS THE CONSIDERATION FOR ‘A’.

LEGAL RELATIONSHIP

THERE MUST BE LEGAL RELATIONSHIP BETWEEN THE PARTIES LEGAL RELATIONS BOUND PARTIES TOMPERFORM OBLIGATIONS

EXAMPLE:

LET“A” OFFER HIS BOOK TO “B”FOR SALE FOR RS 100 AND “B” ACCEPTS THE OFFER AND SO HERE CREATE A LEGAL RELATIONSHIP BETWEEN THEM. SO THEY ARE BOUND TO PERFORM SUCH AGREEMENT.

WRITTEN & REGISTEREDCONTRACT MAY BE ORAL & WRITTENMAY BE REGISTERED (RECOMMENDED)

EXAMPLE: LET ‘A’ SELLS HIS HOUSE TO ‘B’ FOR RS

20 LAC THEY DESIGN AN AGREEMENT OF PROPERTY SUCH AGREEMENT IS ALSO REGISTERED IN THE REVENUE DEPARTMENT OF THE PROVINCIAL GOVERNMENT.

CERTAINITY TERMS & CONDITIONS SHOULD BE CERTAIN

(CLEAR) VAGUE AND COMLEX TERMS SHOULD BE

AVOIDEDEXAMPLE:

‘A’ AGREES TO SUPPLY 100 PACKS OF COOKING OIL WITHOUT INDICATING THE BRAND NAME.HERE AGREEMENT IS NOT VALID BECAUSE OF UNCERTAINITY OF BRAND NAME AND QUANTITY.

NOT DECLARED AS VOID AGREEMENT SHOULD NOT BE VOID (UNENFORCEABLE) WAGERING CONTRCAT, CORRUPTION AND IRREAL

CONTRACTS EXAMPLE:

LET ‘A’ PROMISES TO PAY RS 1000 TO ‘B’ IF PAKISTAN BEAT INDIA. IT IS NOT A VALID CONTRACT BECAUSE OF WAGERING CONTRACT.

POSSIBILITY TO PERFORM

• FOR A VALID CONTRACT IT IS ALSO NECESSARY THAT IT CAN BE PERFORM. IF THE SUBJECT OF THE CONTRACT IS IMPOSSIBLE TO PERFORM, THEN IT IS NOT CONSIDERED AS A VALID CONTRACT.

EXAMPLE:LET A SHIPPING COMPANY CLAIMS TO CARRY GOODS

FROM KARACHI TO NEW YORK IN JUST TWO DAYS IT IS IMPOSSIBLE DUE TO THE SLOW SPEED OF SHIP AND A HUGE DISTANCE.

KINDS OF CONTRACT ACCORDING TO FORMATION ACCORDING TO PERFORMANCE ACCORDING TO ENFORCEABILITY ACCORDING TO PARTIES

Muhammad Usman

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Ziaulhaq.pcc@gmail.com

CONTRACT BY FORMATION EXPRESSED CONTRACT THE CONTRACTS IN WHICH THE PARTIES DIRECTLY STATES

THE TERMS OF THE CONTRACT ORALLY OR IN THE WRITTEN FORM AT THE TIME OF FORMATION

IMPLIED CONTRACT THE CONTRACTS THAT IS NOT MADE IN THE WORDS (ORAL OR

WRITTEN), BUT PARTIES ARE BEING REQUESTED TO PERFORM THEIR OBLIGATIONS.

QUASI OR CONSTRUCTIVE CONTRACT THE CONTRACTS THAT IS NEITHER EXPRESSED NOR IMPLIED

BUT IMPOSES UNDER CERTAIN CIRCUMSTANCES.

CONTRACT BY PARTIESBILATRAL CONTRACT LIABILITY TO PERFORM ON BOTH PARTIESUNILATRAL CONTRACT LIABILITY TO PERFORM ON JUST ONE PARTY

CONTRACT BY PERFORMANCE EXECUTED CONTRACT

A CONTRACT IS SAID TO BE EXECUTED WHEN BOTH PARTIES

COMPLETELY PERFORMED THEIR OBLIGATIONS. EXECUTORY CONTRACT A CONTRACT IS SAID TO BE EXECUTORY CONTRACT

WHICH REMAINS TO BE DONE. PARTIES YET TO PERFORM

CONTIGENT CONTRACT A CONTRACT IS SAID TO BE CONTINGENT WHEN THE

PERFORMANCE BASED UPON SOME CONDITIONS

CONTRACT BY ENFORCEABILITY

VALID CONTRACT

According to Section 10 of Contract Act 1872,

ALL THE AGREEMENT MADE BY THE FREE CONSENT

OF ALL THE PARTIES AND ENFORCEABLE BY LAW

AGREEMENT ENFORCEABLE BY LAW ALL PARTIES LEGALLY RESPONSIBLE FOR PERFORMANCE AGGRIEVED PARTY CAN SUE THE GUILTY PARTY

VOIDABLE CONTRACT

According to Section 2 (i) of Contract Act,

AN AGREEMENT WHICH IS ENFORCEABLE BY LAW AT THE

OPTION OF ONE OR MORE PARTIES BUT NOT OF OTHERS

AGREEMENT ENFORCEABLE BY LAW ALL PARTIES LEGALLY RESPONSIBLE FOR PERFORMANCE AGGRIEVED PARTY CAN SUE THE GUILTY PARTY

VOID CONTRACT

According to Section 2 (j) of Contract Act 1872,

A CONTRACT THAT IS UNLAWFUL. THE PROMISES CANNOT BE PERFORMED.TECHNICALLY IT CAN BE CALLED VOID.

THE AGREEMENT MADE BY MINOR, UNSOUND MINED AND DISQUALIFIED PERSONS ARE VOID.

UNENFORCEABLE CONTRACT CONTRACTS THAT HAVE TECHNICAL DEFECT NOT REGISTERED NOT PROPERLY DESIGNED PARTIES ARE NOT DEFINED

THANK YOUTHANK YOU HAVE A FABULOUS DAY HAVE A FABULOUS DAY