week 3 law of contract
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8/3/2019 Week 3 Law of Contract
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CORPORATE LAW
Week 3
Law of Contract
Department of
Management
Sciences
By
Muhammad Naveed Chohan
Wednesday, May 02, 2012 1
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Outline
Wednesday, May 02, 2012 2
Formation of Contract Classification of Contracts
Discharge of Contract
Remedies for Breach of Contract
Contingent and Quasi Contracts
Indemnity and Guarantee
Bailment and Pledge
Contact of Agency
Week 2
Week 3
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Week 3
Wednesday, May 02, 2012 3
Contingent and Quasi Contracts
Indemnity and Guarantee
Bailment and Pledge
Contact of Agency
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Contingent Contract
Wednesday, May 02, 2012 4
What is Contingent Contract?
‘‘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 ’’
[Sec. 31 of Contract Act 1872]
Essentials of a Contingent Contract:
Conditional performance
Uncertain event (Example of 30th Ramadan-ul-Mubarak)
Event must be collateral
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Contingent Contract
Wednesday, May 02, 2012 5
Rules of Performance of Contingent Contract: (Sec.32-35)
Happening of uncertain event (Enforcement on happening)
Not happening of uncertain event (Enforcement on not happening, Example of Ship)
Act of a person at unspecified time
Happening of event within fixed time Not Happening of event within fixed time
Agreement contingent on impossible events (Void Contract)
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Quasi Contract
Wednesday, May 02, 2012 6
What is Quasi Contract: (Sec. 68-72)
‘‘Quasi contract or constructive contract is the term used to denote certain
relations resembling those created by contract’’
Principle of Equity: No person is allowed to get benefit unjustly at the expense
of another.
Quasi Contracts:
Supply of Necessaries
Payment by Interested Person
Liability to pay for non-gratuitous acts Responsibility of finder of goods
Liability under mistake or coercion
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Contract of Indemnity
Wednesday, May 02, 2012 7
What is Contract of Indemnity: (Sec. 124)
‘‘A contract by which one party promises to save the other from loss caused
to it by the conduct of promisor himself or by the conduct of any other
person, is called a contract of indemnity’’
Parties:
Indemnifier:
‘‘A person who promises to compensate the loss is called indemnifier’’
Indemnified or indemnity holder:‘‘The person whose loss is to be compensated is called indemnified or indemnity
holder’’
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Contract of Guarantee
Wednesday, May 02, 2012 8
What is Contract of Guarantee: (Sec. 126)
‘‘A contract of guarantee is a contract to perform the promise or discharge
the liability of a third person in case of his default’’
Parties:
Surety:
‘‘A person who gives guarantee is called a surety’’
Creditor:
‘‘The person to whom the guarantee is given is called creditor’’
Principle Debtor:
‘‘The person in respect of whose default the guarantee is given is called principle
debtor’’
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Contract of Guarantee
Wednesday, May 02, 2012 9
Essentials of a Contract of Guarantee:
Secondary Contract
Consideration (Section 127)
No Misrepresentation (Section 142 & !43)
Writing not Necessary (Section 126)
Essentials of a Contract of Guarantee:
Specific Guarantee
Continuing Guarantee (Section 129)
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Wednesday, May 02, 2012 10
Contract of Guarantee
GUARANTEE
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Wednesday, May 02, 2012 11
Contract of Bailment
What is Contract of Bailment: (Sec. 148)
‘‘A bailment is the delivery of goods by one person to another for some
purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the
direction of the person delivering them’’
Parties:
Bailor:
‘‘The person delivering the goods is called bailor’’
Bailee:
‘‘The person to whom the goods are delivered is called bailee’’
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Wednesday, May 02, 2012 12
Contract of Bailment
Kinds of Bailment:
Benefit• For the benefit of the bailor
• For the benefit of bailee
• For the benefit of the bailor and bailee
Reward• Bailment without reward
• Bailment for reward
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Wednesday, May 02, 2012 13
Contract of Bailment
Duties of Bailor:
Duty to disclose faults
Duty to repay necessary expenses
Duty to repay extra ordinary expenses
Duty to indemnify for demanding back Duty to indemnify for defective title
Duty to receive back the goods
Rights of Bailor:
Right to claim damages
Right to demand return of goods
Right to claim increases
Right to terminate bailment
Right to sue
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Wednesday, May 02, 2012 14
Contract of Bailment
Duties of Bailee:
Duty to take reasonable care
Duty not to make unauthorized use
Duty not to mix the goods
Duty to return the goods Duty to return increase
Rights of Bailee:
Right to claim damages
Right to recover expenses Right to deliver goods
Right to compensation
Right to stop delivery
Right to lien
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Wednesday, May 02, 2012 15
Contract of Pledge
What is Contract of pledge: (Sec. 172)
‘‘The bailment of goods as security for the payment of a debt or
performance of a promise is called pledge’’
Parties:
Pledgor:
‘‘The bailor is called pledgor’’
Pledgee:
‘‘The bailee is called a pledgee’’
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Wednesday, May 02, 2012 16
Contract of Pledge
Duties of Pledgor:
Duty to compensate
Duty to complete
Rights of Pledgor : Right to redeem
Right to claim damages
Right to claim increase
Right to redeem the debt
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Wednesday, May 02, 2012 17
Contract of Pledge
Duties of Pledgee:
Duty to take reasonable care
Duty not to make unauthorized use
Duty not to mix the goods
Duty to return the goods Duty to return increase
Rights of Pledgee :
Right to retain
Right to retain for other debts Right to extraordinary expenses
Right to sue and sell
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Wednesday, May 02, 2012 18
Contract of Agency
What is Contract of Agency: (Sec. 182)
‘‘The contract or the relationship between agent and principle’’
Parties:
Agent:
‘‘An agent is a person employed to do any act for another or to represent
another in dealing with third persons’’
Principal:
‘‘The person for whom such an act is done, or who is represented is called
the principal’’
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Wednesday, May 02, 2012 19
Contract of AgencyCreation of
Agency
Agency byExpress
Contract
Agency byImplied
Agreement
Agency byRatification
• Agency by Estoppel• Agency by Holding Out• Agency by Necessary
Agency byOperation of
Law
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Wednesday, May 02, 2012 20
Contract of Agency
Kinds of Agent:
General Agent
Special Agent
Universal Agent
Mercantile Agent Factor
Commission Agent
Del Creder Agent
Broker
Auctioneer
Indenter Banker
Advocates
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Wednesday, May 02, 2012 21
Contract of Agency
Duties of Agent:
Duty to Follow Principal's Directions
Duty to work with Reasonable Skill and Diligence
Duty to Render Accounts
Duty to Communicate in Difficulty
Duty on Termination of Agency
Duty not to Deal on His own Account
Duty not to make any Secret Profit
Duty to Pay Sums received
Duty not to Delegate Authority
Rights of Agent : Right to Retain
Right to Receive Remuneration
Right of Lien
Right to be Indemnified for Lawful Acts and in good faith
Right to Compensation for Injury
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Wednesday, May 02, 2012 22
Contract of Agency
Duties of Principal:
Duty to Indemnify for Lawful Acts and in good faith
Duty to Compensate for Injury
Duty to pay Remuneration and Dues
Rights of Principal :
Right to Recover Damages
Right to Recover Secret Profit
Right to Refuse to Indemnify Agent