week 3 law of contract

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



Outline


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



Week 3


Contingent and Quasi Contracts

Indemnity and Guarantee

Bailment and Pledge

Contact of Agency



Contingent Contract


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



Contingent Contract


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)



Quasi Contract


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



Contract of Indemnity


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’’



Contract of Guarantee


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’’





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)





GUARANTEE




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’’





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





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





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 recover expenses Right to deliver goods

Right to compensation

Right to stop delivery

Right to lien




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’’




Contract of Pledge

Duties of Pledgor:

Duty to compensate

Duty to complete

Rights of Pledgor : Right to redeem


Right to claim increase

Right to redeem the debt




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




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’’




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




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




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




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




End of Week #3 Lecture Presentation

Thanks for Patience

week 3 law of contract

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