Contract act 1872

Contract act 1872CONTRACT ACT 1872Difference between Contract and Agreement.Offer, Acceptance, Consideration.Free Consent. Alteration, Rescission

CONTRACT DEFINITION:Section 2 (h) of contract Act defines a contract as an agreement enforceable by law

Thus to make a contract there must be An agreement The agreement shall be enforceable by law.

DEFINITIONS ACCORDING TO DIFFERENT SCHOLARSEvery agreement and promise enforceable at law is a contract. Pollock.A legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearances on the part of the others. Sir William Anson. An agreement creating and defining obligations between the parties. Salmond

Difference between agreement and contractAnagreementis any understanding or arrangement reachedbetweentwo or more parties. Acontractis a specific type ofagreementthat, by its terms and elements, is legally binding and enforceable in a court of law.Agreement-Section 2(e) Every Promise and every set of promises forming consideration for each otherAll agreements are not enforceable by law and therefore, all agreements are not contracts.

ESSENTIALS OF A VALID CONTRACT

Offer and acceptanceOffer Proposal section 2(a) "when one person signifies to another his willingness to do or to 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/offer". There must be expressed willingness to do or not to do something. An offer should be made to obtain the assent of the other. The offer should be communicated to the offeree.If there is no offer, there is no contact, because there is no meeting of minds. If there is an offer by one party, but it is not accepted by the other party or if the ostensible acceptance of the offer is defective, then also, there is no agreement and therefore no "contract".

Offer and acceptanceOffer must be :Absolute and unqualifiedIt must beEXAMPLES..CASESHarvey v Facey[1893] AC 552 Privy CouncilCarlill v Carbolic Smoke Ball Co[1893] 1 QB 256 Court of Appeal

Consideration Sec 2(d) of Contract ActConsideration in contract lawis simply the exchange of one thing of value for another. It is one of the six elements that must be present for acontractto be enforceable.Considerationmust be both legally sufficient and bargained-for by the receiving

Rules regarding considerationThere are various rules governing the law of consideration:1. The consideration must not be past.2. The consideration must be sufficient but need not be adequate.3. The consideration must move from the promisee.4. An existing public duty will not amount to valid consideration.5. An existing contractual duty will not amount to valid consideration.Part payment of a debt is not valid consideration for a promise to forego the balance

Free consentThe term free consent refers to meeting of free and fresh minds of two parties of an agreement when two parties take and understand, purpose, subject matter and terms and conditions of the agreement in the same sense it is free consent. Both of them must take things in the same way. They must not understand it in different way. An agreement which is made freely it becomes a valid contract due to presence of free consent of both the parties. In any of the free consent of both there will no free consent in the agreement.a.Coercion: - threading.b.Undue influence: - pressure and misuse of power for unfair advantage.c.Fraud, deceiving on cheating the other.d.Misrepresentation: - false statement without an intention to deceive the other. e.Mistake error

Kinds of contracts

Kinds of contracts from the point of view of EnforceabilityValid contract: contract which has all the essential elements of a valid contract is a valid contract. Like valid agreement, capacity to contract, lawful consideration, lawful object etcVoidable contract. A contract which is cancellable at the option of the party. It is enforceable by law at the option of one party and not the other party. Void contract: which has no value in the eyes of law. such type of contract can not be taken to court of law. Unenforceable contractIllegal or unlawful contract

According to Formation1. Express Contract2. Implied Contract 3. Quasi Contract it is obligation created by the law in absence of contract.

According to performance1. Executed ContractAll the obligations are fulfilled and nothing needs to be done.2. Executory Contract.Some Obligations are done and some are left.

Breach of contractBreach of contract is the failure to perform what a party is under a duty to perform. When this happens, the non breaching party can choose one or more remedies

Remedies for breach of contract

Damages/ Monetary Compensation.Suit for specific performance;Quantum meruitrecessionSpecific Performance requires the performance of the act promised in the contractInjunction stay order.

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Types of DamagesThere are basically four broad categories of damages:1.Compensatory (to cover direct losses and costs). 2.Consequential (to cover indirect and foreseeable losses).3.Punitive (to punish and deter wrongdoing).4.Nominal (to recognize wrongdoing when no monetary loss is shown).

Damages/ Monetary CompensationConsequential Damages:Damages caused by special circumstances beyond the contract itself. They flow from the consequences, or results, of a breach.The breaching party must know (or have reason to know) that special circumstances will cause the additional loss.

Suit of RecessionRescission terminates a contract and Restitution returns the contracting parties to the positions they occupied prior to the contract.

Quantum Meriut Suit upon Quantum Meriut as much is earned or in proportion to work:A right to use upon quantum meruit usually arises where after part performance of the contract by one party, there is a breach of contract, or the contract is discovered void or becomes void. This remedy may be availed of either without claiming damages (i. e., claiming reason-able compensation only for the work done)A, engages B, a contractor, to build a three storied house. After a part is constructed A prevents B from working any more. B, the contractor, is entitled to get reasonable compensation for work done under the doctrine of quantum meruit in addition. to the damages for breach of contract.

Discharge of Contract Act

Methods of discharging a contract

Modes of discharging a contract Contd

By Agreement or by ConsentAccording to Section 62-64 of Pakistani Contract Act :A contract can be terminated or discharged by mutual express or implied consent of both the parties in the following ways:A) By NovationB) By accord and satisfactionB)By Remission and WaiverC)By Recession

Contract of Indemnity

Contract of IndemnityA form of contingent contract, whereby one party promises to the other party that he will compensate the loss or damages occurred to him by theconduct of the first party or any other person, it is known as the contract of indemnity. The number of parties in the contract is two, one who promises to indemnify the other party is indemnifier while the other one whose loss is compensated is known as indemnifiedMeaning of Indemnify is: to make good the loss of another.

Indemnity exampleexample; Mr. Joe is a shareholder of Alpha Ltd. lost his share certificate. Joe applies for a duplicate one. The companyagrees, but on the condition that Joe compensates for the loss or damage to the company if a third person brings the original certificate.One more common example of indemnity is the insurance contract where the insurance company promises to pay for the damages suffered by thepolicyholder, against the premiums.

Contract of guarantee:Contract of guarantee, surety, principal debtor and creditorA contract of guarantee is a contract of perform the promise or discharge the liability, of a third person in case of his default. The person who gives a guarantee is called the surety; the persons in respect of those default the guarantee is given is called the principal debtor, and the person the whom the guarantee is given is called the creditor. A guarantee may be either oral or written.Sec 126

GuaranteeThree contracts will be there, first between the principal debtor and creditor, second between principal debtor and surety, third between the surety and the creditor. The contract can be oral or written. There is an implied promise in the contract that the principal debtor will indemnify the surety for thesums paid by him as an obligation of the contract provided they are rightfully paid. The surety is not entitled to recover the amount paid by him wrongfully.Here we have an example of the contract of guarantee; Mr. Harry takes a loan from the bank for which Mr. Joesph has given the guarantee that if Harrydefault in the payment of the said amount he will discharge the liability. Here Joseph plays the role of surety, Harry is the principal debtor and Bank isthe creditor.

Contingent Contract and Wagering ContractScenario: 1There is a program conducted by a FM Radio station while League Cricket matches were going on. In that program the RJ (Radio Jockey) asks some questions to the callers and the conversation is as follows:Radio Jockey: Hi Hi Hi This is Shiva from Radio Onion FM. For another one hour we are going to play a game. At present League Cricket match is going on. You can call me and predict what could be the score of a particular over. If your expectation is right then we will pay you Rs.5,000/-. Now we shall meet the first caller. [A ring (phone call) comes ]Caller:Hi sir. This is Raja.RJ Shiva:Hi Raja, What is the expected runs for this over?Raja:Sir, I predict it is 10 runs.[Actually, the runs scored were 10]RJ Shiva:Congratulations Raja! What you have predicted is right. You have won Rs.5,000/-Raja:Thank you sir.

Scenario: 2A conversion between Bookie and Cricketer:Bookie:You should miss all the catches which you are about to do. You should voluntarily bowl 25 noballs and wides. If so we will pay you Rs.10,00,000/-Cricketer:Yes Sir. I agree.

Contingent ContractWagering ContractWhat we discussed under Scenario: 1 is contingent What we discussed under Scenario: 2 is wagering contract.A contingent contract has been defined as a contract to do or not to do something, if some event collateral to such contract does or does not happen. A contingent contract is wider in scope.The intention of contingent contract is to run business. While in wagering agreement there is no intention of doing a business.In contingent contract there is a loss and profit of both the parties. While in wagering agreement one party is completely at loss while the other is at profit. A wager is a promise to pay money or moneys worth on the happening or non-happening of an uncertain event. In a contingent contract mutual promises are not necessary. In case of a wagering agreement promise must be mutual. A contingent contract is valid. A wagering agreement is void/illegal.

PARTNERSHIP ACT 1932

PARTNERSHIP ACT 1932Nature of partnership.Rights of PartnersGeneral duties of partner.

Definition of Partnership in Partnership Act

RIGHTS OF PARTNERSCATEGORY A:1. Right to share profits.2. Right to take part in conduct of business3. Right to be consulted.4. Right to access books.

CATEGORY B:5. Right to Remuneration. 6. Right to interest on capital.7. Right to interest on advances.

CATEGORY C:8. Right to retire.9. Right to stop admission of a new partnere.10. Right of outgoing partnere to do competing business.11. Right of outgoing partner to share subsequent profits. 12. Right not to be expelled.

CATEGORY D:12. Right to be indemnified.13. Right to use property of partnership business.

Duties of Partners:General Duties:1. To carry on the business of the firm, to do what is in the greatest common advantage.2. To be just and faithful, to give true accounts and complete information.3. To Indemnify the firm for the loss caused by him during the conduct of the firms business.4. To contribute to the losses of the firm in equal proportion.5. Have partners advantage of his knowledge.6. Return personal profit from the firm assets or name.7. Return profit for competing business.

Negotiable Instruments

Definition

Promissory Note

Characteristics of Promissory Note

Parties of promissory Note

PROMISSORY NOTE

Bill of Exchange

Essentials of Bill of Exchange

Parties to Bill of Exchange

Specimen of Bill of Exchange

Cheque

Essentials of cheque

Parties to cheque

Specimen of cheque

Types of Cheques

Negotiation

SALE OF GOODS ACTDefinition of Sale:

Why is the transfer of ownership important

Agreement to SellDefinition: Anagreementofsaleconstitutes the terms and conditions ofsaleof a property by the seller to the buyer. These terms and conditions include the amount at which it is to besoldand the future date of full payment.Explanation: An agreement to sell does not involve any transfer of the property in the goods. In an agreement to sell the arrangement is that the transfer of property in the goods in (1) to take place at some future date, or (2) subject to some condition to be fulfilled thereafter. An agreement to sell becomes a sale when the condition are fulfilled.

Basis for comparison Sale Agreement to sell

Company Law

Definition: Salient features of the companyLifting up the corporate veil.

Definition of a Company

TYPES OF RESOLUTIONS1. Ordinary resolutions(1) An ordinary resolution of the members (or of a class of members) of a company means a resolution that is passed by a simple majority.(2) A written resolution is passed by a simple majority if it is passed by members representing a simple majority of the total voting rights of eligible members.(3) A resolution passed at a meeting on a show of hands is passed by a simple majority if it is passed by a simple majority of-(a) the members who, being entitled to do so, vote in person on the resolution, and(b) the persons who vote on the resolution as duly appointed proxies of members entitled to vote

Special Resolutions

A special resolution requires twenty-one days clear notice to those entitled to attend and vote. It is passed by a majority of not less than 75% of those voting, in person and by proxy, or of shares voted by way of a poll.Examples of decisions passed by special resolution are:Amendments to memorandum and articles of association;Change in company name;Reduction in share capital;Voluntary wind up of a company; andVarying of class rights attaching to classes of shares.