Special Types of Contract

There are 4 types of Contracts: 1. Quaisi Contract 2. Indemnity and Guarantee 3. Bailment and Pledge 4. Agency

Quaisi Contacts: It is basically not a contract because one or more essentials of the valid contract are missing from this but it is enforced by the law. In such types of contract there is always right to money, One of the parties always claim for money. It is always based on Equity (justice). Incase of breach of contract because it is enforced by law, damages can be claimed as claimed in valid contract.

For Example: The person A who is a Lunatic (insane), so definitely an insane person needs some necessities to sustain survival like food items, medicines, clothes etc and Person B supplies the necessities to Person A which are suitable to his lives. Now, These necessities are entitled to be reimbursed from the property of Person A. In short Person B is entitled to be reimbursed for his supplies from the property of person A. Now for instance if Person B is not being reimbursed for his supplies from Person A's property, Then person B can give an application to court along with the receipts of all the supplies he provided person A with. Person B can tell the court that Person A is insane, however he has been provided with all the daily necessities of his life by me (person B), Now court can enforce this case and makes sure Person B gets reimbursed from person A's property. This proves that one party has a right to claim money and it is based in equity. Example 2: The person A who is a Lunatic (insane), so definitely an insane person needs some necessities to sustain survival like food items, medicines, clothes etc, and there are 4 suppliers which are Person B, Person C, Person D and Person E. Now person B supplied a Laptop to Lunatic Person C supplied an S4 Cell phone to Lunatic, Person D supplied a Swiss watch to Lunatic, and Person E supplied Grocery, medicine and Clothes to Lunatic. Now, non of these 4 suppliers got reimbursed for their supplies provided to Person A. Now, All these 4 suppliers go to court and claims that they need money for their supplies from Person A. Now will the court enforce this case and will all 4 of the suppliers will get their money for their respective supplies to person A? Ans) No, all 4 suppliers will not get their money from person A, Only person E will get his money because Laptop, s4 cell phone and Swiss watch are luxury items and are not necessary for person A's life. however court will make sure that Person E will get reimbursed from Person A's property as person E was providing person A will necessities of daily life without which the Lunatic (person A) may not have a proper life.. Only necessary items are needed to live a life and not laptop, s4 or swiss watch. Example 3: Person A is a Lunatic (insane), Person B is a Lunatic's Family (wife and kids) and Person C is the supplier of necessary items, providing supplies to Person B (Lunatic's Family) Now, if the amount is not been reimbursed to Person C for his supplies provided to Lunatic's family from Lunatic's property, first, it is understood that Lunatic (person A) is incharge of his family (person B), So all the money should be reimbursed from the property of person A. Now if Person C provided necessities to person B and Person C is not been reimbursed by Person B (lunatic's family), Now, If Person C goes to court and claims that he has not been reimbursed for his supplies of necessary items provided to lunatic's Family, Then court can order lunatic (person A) to reimburse the amount to person C Lunatic's Property as Person A (lunatic) is the head of his family or in charge of his family. Example 4: There are 3 person, Ali Polani, Mateen and Ali Zakir. Mateen has his agricultural land in Thatta and Ali Polani is financially a strong party who went to Sunway Lagoon once and was interested to purchase a piece of land, So Ali Polani purchased a piece of land from Mateen on Lease (That means

ownership of land remains with Mateen but it will be under usage of Ali Polani for a number of years, This is lease) Now Polani had an agreement with Mateen that Mateen will give the piece of land to Ali Polani for 5 years and for which Ali Polani will pay 10 Lack Rs to Mateen. Now After few weeks Ali polani got to know that Mr. Mateen was a defaulter of revenue department and Mateen hasn't paid tax. Now, Ali Zakir who is a tax Commissioner from Revenue department went to that piece of land and claims that this piece of land which is currently being under the usage of Ali polani should now be auctioned. Now, Ali Polani got to know that the Tax on this Piece of land is 7 Lacks Rs. Now Ali Polani had an agreement with Ali Zakir claiming that Ali Polani will pay 7 Lack Rs, and Ali Zakir should Cancel the Auction, Consent was obtained from Mr Mateen also. Now, Ali Polani payed the tax so that mateen's piece of land gets saved and so Ali Polani's contract on Lease. Now, in future will Ali Polani be payed from Mateen's property for the Tax he paid to revenue department on Mateen's behalf, will Ali polani be entitled to reimbursed for his amount or not? Ans) Yes, Now Mateen is entitled to pay Ali polani for the tax amount which was payed to revenue department. Now there is no contract at all between Mateen and Ali Polani, as Mateen is insolvent and no one can make a contract with insolvent person but One party here has a right to money and even court can enforce mateen to pay the amount to Ali polani if Mateen refuse to pay the money to Ali Polani in the future. Indemnity: It means to make someone's loss good. This is the basic concept of Indemnity. In the contract of Indemnity one party promises to make someone else's loss good. The loss is called the third party. The one who makes others loss good is known as Indemnifier and one whose loss is going to make good is known as Indemni-holder. For Example: Person is A is a person who is going to ship his 100 Bikes from Lahore to Karachi, This shipment is sent through railway department and after accepting the shipment, The railway department (person B) issues a receipt to person A, and person B tells person A that after showing this receipt to cargo department in Karachi, Person A can take the delivery of 100 Bikes. Now somehow Person A looses the receipt and that receipt is very important for the delivery of shipment. Without that receipt a person cannot receive the delivery of 100 Bikes. Now Person A tells the railway department that he has shipped 100 bikes but he his lost the receipt, Now Railway said that they can't give the bikes without the receipt, So Person A said to sign the bond of indemnity that means if any person C comes with the receipt to claim the delivery of 100 Bikes to railway department, Then person A will make Railway department's loss good. Person A is indemnifier and Person B is the indemni-holder. Suppose if any third party finds the receipt and comes to the railway department to claim 100 Bikes. So whatever loss Party B had to bare that time, That all the loss will be covered by party A. Party A will compensate railway apartment for the suffered loss because of party C came with the receipt to claim 100 Bikes. Example 2: Polani has a 10,000 Shares of PnG. Now Mr. Polani lost the share certificate on which Polani's name was not written. The certificate clearly meant that whoever will come up with the certificate will get the money for the 10,000 shares. Now Polani goes to PnG's office to take the share certificate claiming he had 10,000 Shares of PnG but he has lost the certificate. Now Polani signs a bond of indemnity that if any third party comes to claim the shares and on the basis of that if PnG suffers any loss, That loss will be covered by Polani. Now for instance if third party claims the shares after showing the certificate to PnG. Now whatever loss PnG will bare at that time it will be covered by Mr Polani because Polani is the indemnifier and PnG is indemni-holder. Contract of Bailment: There are 4 essentials of the contract of Bailment, 1. Agreement 2. Goods (Transfer of goods) 3. Purpose 4. Return of goods or disposal of goods. - "General property & goods" means transfer of ownership, In this case, property or goods is sell to a new owner in general after taking the money.

- "Special Property & goods" means transfer of possession, In this case possession of goods or a property is transferred to someone else just for a specific purpose, Once the purpose is completed then the property or goods gets back to the original owner. "Delivery of goods in an agreement for a purpose from one party to another party and once the purpose is fulfilled, the goods are returned or disposed off, this is known as contract of bailment." The person who delivers the goods is known as Bailor and the person to whom the goods are delivered are known as Bailee, In the contract of Bailment there is only "special Agreement of goods"" Example: Sana is going to Islamabad, She own a kitten, Sania is the neighbor of Sana, So Sana decided to leave her kitten with Sania. Sania agreed to take care of Sana's Kitten. It was winters, so When Sana left Karachi, Her kitten got severely ill due to winter. Sania was actually covering all the expenses of the kitten from her treatment to all the food and everything. Now Sana came back from Islamabad twenty days later, Till that time, the amount of expense covered on Kitten by Sania was 7,500 Rs, now can Sania claim that amount from Sana? Ans: Yes, sans is bailor and Sania is bailee, In this case sana and Sania had an agreement that she is going to Islamabad for 20 days and she requested Sania to take care of Sana's Kitten and Sana will take it back once she gets back to Karachi, So, Sania agreed on terms that Sania will take care of Sana's Kitten but sana will pay for Cat's expenses on food or treatment (if required). So, This is known as Gratuitous Bailment, Now After Sana Gets back and she doesn't pay for the expenses she promise to pay for, Then Sania has the right to sue Sana in the court of Law. The purpose was the protection of Kitten for 20 days and once the purpose was fulfilled, Sana was suppose to get back her Kitten. But if Sana Doesn't pay the expenses then Sania has a right to Stop Sana's Kitten until she gets the money and if Sania has given the Kitten back to Sana and still Sana hasn't pay the expenses, then Sania can sue Sana in the court of law. Example 2: Ali Zakir took the car from Polani, Polani agreed that he can give the car to Ali Zakir for 48 Hours, For 24 Hours Ali Zakir will Pay Polani 1500 Rs and the amount becomes 3000 rs for 48 hours. Now while driving, Ali Zakir had a minor accident which left a dent on the car, the cost of the dent was 10,000 Rs, Now can Polani claim those 10,000 Rs from Ali Zakir when he comes to return that car to Polani? Ans: Yes, He can claim for any damages which were not there at the time of delivering the car to Ali Zakir, Once the purpose is fulfilled, Ali Zakir will return the car back to Polani along with the money and damages (if Any). If Ali Zakir doesn't Pay the money, Then Polani has a right to sue her in the court of Law. Or the Car which was given to Ali Zakir by Polani had non working Brakes. Now If Ali Zakir smashed the car somewhere and now can Ali Zakir Claim for the damages occurred on himself or the third party because of non working breaks in the car given by Polani? Ans: Yes, In this case, since Polani has given the Car with non Working Breaks to Ali Zakir, Then Polani has to compensate for any sort of losses, In this case Polani was bailor and Ali Zakir is Bailee. Example 3: Person A went to tailor and asked him to sew 10 suits for Person A. When Person A went to pick his delivery of Suits, he forgot the money at home, Tailor said no worries, Person A can give the money later, Just 2 days later, Person A went again to the same tailor and gave the order of 20 new suits, knowing that he had not yet paid for his 10 Suits in the previous order. Now when Person A went to pick the order of 20 new suits, the tailor stopped the delivery of his suits because person A didn't pay for his previous order. So in this condition does the tailor have a right to Stop person A's 20 Suits order? Ans: Yes, Person A is Bailor and Tailor is Bailee. In This Case Tailor has the right to retain his goods until the time, Person A pays his money. Example 4: If Person A went to mechanic once and didn't pay his bill of 7500 Rs, He went to mechanic the Second time got his car repaired again but still didn't pay another new bill from him worth 7500 Rs, Now Person A went to the mechanic again and got his car repaired the third time, The new Bill was now 3000 Rs. But Now mechanic stopped his car saying, that he won't let it go till he get his initial two Bills

payed to him of worth 7,500 Rs each. Does mechanic had a right to stop his car the third time he went to get his car repaired? Ans: Yes, there is no sale of goods, There is only transfer of possession in these types of contracts. In this case Person A is Bailor and Mechani was Bailee Duties of a Bailor: (They are also known rights of Bailee) 1. Duty to disclose defects: For example Bailor is going to deliver some goods and in that types of goods if there is any defect, then bailor is suppose to disclose the defects, it is his duty, and if he does not discloses the defect and bailee suffers any loss because of that, than bailee is entitled to reimburse his amount for whatever loss he has suffered. 2.Duty to Bare Expenses: For Example, If a person Banana's are kept in Cold Storage, Whatever expenses are bared on that, Bailor is responsible to cover them up and once the purpose is fulfilled, then bailor will get back to the owner. 3. Duty to indemnify the Bailee against the defective title of the bailor: For Example, Person A gave the Horse to Person B for while and While Person B was riding the horse, on the way Person C saw that Person B was riding His horse and he called the cops at that very moment (that means in reality the horse didn't belong to Person A) Person B had to pay heavy amount of fine, Now who will pay back Person B's loss? So, Person A is suppose to cover the loss of person B due to defective title. Or Example 2: Polani has given the car to Ali Zakir for 48 Hours claiming that it's Polani's own car. When Ali Zakir was driving, few mins later party C saw the car and claims that it was their car, that means Mr. polani was not the original owner of the car. Now police was running after the Car Ali Zakir was driving, Now whatever loss Ali Zakir will suffer due to defective title, It will be compensated by Polani. 4. Duty to receive back the goods: Once the purpose of the goods is fulfilled then its duty of a bailor to receive back his goods. for example, If Sana has went to Islamabad and gave her cat to sania, so When she gets back, She should take her cat back from Sania. If the car is given to mechanic for repairing, then its Bailor's duty to take it back once its repaired. 5. Duty to bare the risk of laws: For Example, If Sana has given a Cat to Sania for 20 days and if the cat dies during that time during sickness then Bailor will have to bare that loss. Or if a horse is given to someone for a day and during that time, the horse dies due to sickness, then Bailor will have to bare the loss. Duties of Bailee: (They are also known as rights of Bailor) 1. Duty to take care of goods bailed: Bailee is suppose to take care of these goods as he take care of his own goods, so he should not leave any security measure un touched or un left. 2. Duty not to make un authorized use of goods: For example, If the tailor has received an order of sewing a shirt, after sewing the shirt, he wore the shirt himself. Or For example If a person has given a car to mechanic, and mechanic gives the car on rent-a-car. So these types of things are not permitted. 3. Duty not to mix Bailor's goods with his own goods: For example if someone has asked you to keep his Raw materials, and you yourself has a business of raw materials, Then don't mix your Raw Materials with other person's raw materials. Or if you have a cold storage, and if a party asks you to keep banana in cold storage, Then you are not suppose to mix your banana's with bailor's Banana's. The same thing can apply for rice, Cotton, Otherwise Bailee will have have to get bailor's stuff separated on bailee's own expenses. 4. Duty to return the goods 5. Duty not to setup any adversed title: The goods remain on the name of the his owner. Pledge: Delivery/Bailment of goods as security for repayment of goods or performance of debt is known as pledge. For Example: Ali Zakir goes to Bank, and he makes an application to bank to give him the loan of 10 Lacks Rs, so Ali Zakir Asked on what are the conditions to get loan? Then Bank asks if Ali Zakir has any guarantee or pledge to get the loan? Ali Zakir replied that he has bonds of 20 Lacks and can give it to bank to get the loan. then Bank replied that they can give the loan of 15 Lacks to Ali Zakir. Here Bonds are kept with bank as security for repayment of debt. Here Zakir is known as Pledger or Pawner and Bank

is known as Pledgee or Pawnee. Now when Ali Zakir will return the loan back to the bank, Then he will get his bonds of 20 Lacks. For Example: Nation Bank has a scheme of giving a loan by giving them Gold as pledge. Right of Lien: This right is given to bailee, This means that until you are given your whatever fee or the expenses and that have not been given to you, so now you have a right to retain the goods until you get the goods, that is the retainer of the goods. Right of Bailee: 1. Rights to claim damages: If bailor delivers the goods and if the bailor has any defects in the goods and he does not disclose the defects in the goods for example in the case of cars, if somebody is going to get the car on rent and if the person delivering the goods on the rent does not disclose any defects like break-fail, or anything like that. So if the bailee suffers any damage because of that it will claim the same from bailor. Or when Bailor delivers a vicious horse of unsound mind and bailee when he rides the horse, bailee falls down and his leg is broken and in that case bailee is entitled to compensate the damage by the bailor. 2. Right to claim Reimbursement of expenses: 3. Right to recover loss incase of bailor's defective title: 4. Right to particular lien: Case of "Finder of the goods": If you are delivered a parcel from DHL at your house and the parcel is filled with diamonds or with expensive material, and the delivery of that parcel is made to you by mistake, Now do you have any duties on that? Or for Example someone parks few trucks in front of Mr.Polani's House and the trucks remained parked for a number of days, Now What should Mr Polani do? Polani drives the truck in his home, now are there any duties of Mr Polani? Even the law says if you are given something which is not meant to be given to you, First, you have to take care of your own goods, secondly, you don't have to mix your goods with someone else's goods, third, You are not authorized to use the goods, Now in this case, Polani had given advertisement regarding the trucks and no one is coming to pick these trucks then after reasonable time if he is unable to keep the trucks at his home, then he can sell the trucks and keep the money and then he can give away the money to owner of the goods, and If Mr Polani's expenses exceed the price of the trucks/goods, Then he can also claim for reimbursement. This is the duty of the Bailee. One of the duty is to find the finder of the goods. Duties of Pledger: 1. Duty to comply with the terms of pledge: For Example If he has obtained loan for two years, that means he has to return the loan in two years or If he has to pay Interest on the loan, Then he has to return it in the given time or If pledgee is going to bare any kind of expenses, in retaining them, he has to comply with terms of pledgee. 2. Duty to compensate Pledgee for extra ordinary expenses: Duties of Pledgee: 1.Duty to take reasonable care of the goods pledged. 2.Duty not to make unauthorized use of the goods. 3. Duty not to mix pledged goods with his own goods. 4.Duty to return the goods. Rights of pledgee: 1. Right to claim reimbursement of extraordinary expenses: 2. Right of Retainer 3. Right to sue Pledger

4. Right to sell . Difference between contract of Bailment and Pledge

Contract of Bailment 1. The bailee does not have any right to sell the goods pledge. 2.In contract of Bailment, Bailee can use the goods. 3.In the contract of Bailment, goods are not delivered as security.

Contract of Pledge 1. The Pledgee have the right to sell the goods pledge. 2.In the contract of Pledge, Pledgee can not use the goods. 3. In contract of pledge, goods are delivered as security

Contract Of Guarantee (surety): For Example, Zohaib and Ali Zakir are going to a wholesaler of medicine, Zohaib has got his medical store, Ali Zakir tells the dealer of wholesaler that Give zohaib the medicine of 1 month and Zohaib will pay you for all the medicines in 6 months and If Zohaib doesn't pay the money to the dealer in 6 months then Zakir will pay the money to the dealer on Zohaib's behalf. There are 3 types of parties in this contract. Party A, Party B and Party C, Party A is known as Guarantee or surety, Party B is known as Principle Debtor and Party C is creditor. There are 3 contracts in this, First contract is between B and C that Party B will purchase goods on credit from Party C and Party B will pay for the goods after some time, the second contract is between Party A and Party C, that if party B does not pay the money to Party C, Then party A will pay the amount to Party C on Party B's behalf. the third contract is that in the event Party B failed to pay party C (the creditor), Then Party A paid the amount to Party C on behalf of Party B, then whatever rights are due on party B , Now Party B will pay the money to Party A. It is known as tripartite contract. How much is the liability of the surety? Ans: For Example, if Party B takes the medicine from Party C of worth 1 Million Rs. Then what percent will be the surety of party A? Ans) If in the contract it is not mentioned its liability, the liability will be co extensive and if it is mentioned that party A is liable for 0.8 Million Rs only, Then definitely party is liable for the amount mentioned in the contract. Types of guarantee: 1. Specific guarantee: For one type Transaction., the above mentioned example is for specific guarantee. 2. Continuing Guarantee: It is for continuing guarantee, for example the same above mentioned example, the guarantee is given for the series of transaction like, party B will purchase medicines from party C for 6 months for Rs 1 Million and party B will purchase the medicines in 6 installments, up to the amount of 1 Million. so there will be different transactions, So these transactions will take place in different times and different amounts. So in this case party A is liable for all the transactions. Now, Can a person revoke his guarantee? Ans) 1st Mode: By serving Notice: No, in specific guarantee he cannot revoke and continuing guarantee, he can revoke, he can revoke anytime between the transactions in such a way that he will only be responsible for past transaction and he can revoke his future transactions. He will provide a proper notice to the creditor regarding this. 2nd Mode By death of surety

2nd mode of revoking the guarantee is this that lets suppose after 3 transactions the guarantee dies then guarantee automatically gets revokes. 3rd Mode By changing terms and conditions of the contract between principle debtor and Creditor: 3rd mode of revoking is that principle debtor and creditor changes the terms and conditions of their contract and don't tell surety about it or without informing the surety, then surety will be discharged from this contract. Essentials of the contract of Guarentee: 1. Tripartite Contract: there are three parties and three contracts, 1st contract between Principle debtor and creditor, 2nd between guarantee and creditor and 3rd between guarantee and principle debtor. 2. Consent of three parties: 3. Existence of liability: 4. essentials of a valid contract 5.Guarentee must not be obtained by misrepresentation: by keeping Guarentee in darkness, Principle debtor and creditor intentionally, illegally obtains the guarantee from a person. 6. extent of surety's liability: If the amount of surety's liability is not expressed the liability of the surety must be Co extensive (it means the liability of the surety is 100%)

Contract of Guarantee 1. In contract of guarantee, there are 3 agreement. 2. In contract of guarantee, you are not making some one else's loss good, in this surety is just paying in case if other party defaults. 3. In guarantee, there are 3 parties to the contract.

Indemnity 1. In contract of Indemnity there is one agreement. 2. In indemnity, you make other party's loss good. 3. In indemnity, There are 2 parties to the contract

The concept of Co - Surety: There may be more than one surety in the contract, when there is more than one surety in the contract, Now in that case all the sureties are known as co surety. For Example: Mateen is going to obtain goods of Rs 100,000 and he is a principle debtor and he is getting goods from Imtiaz (creditor) and Mateen's sureties are Arshad, Iqra and Ayesha. Now if Mateen defaults in paying Imtiaz, Then Arshad has promised to pay Rs 50,000 (50%), Iqra has promised to pay Rs 20,000 (20%) and Ayesha has promised to pay Rs 30,000 (30%). Now, Arshad Iqra and Ayesha are co surety . Lets Assume Mateen Makes the payment of 50,000 Rs and he defaults in making the payment of 50,000 Rs. Now all the sureties will pay according to their promised amount of percentage, As Arshad promised to pay 50% of the amount if Mateen defaults, so he will pay 50% of the 50,000 Rs, whereas Iqra and Ayesha will pay 20% and 30% of the Mateen's defaulted amount. So this is the concept of Co Surety. Rights of Surety against Principle Debtor: (a) Rights of Subrogation: If principle Debtor defaults in making the payment to creditor, now principle debtor cannot pay the amount but surety comes to pay the amount on behalf of the principle debtor. Whatever the rights of creditor were due towards principle debtor, now they are transferred or shifted towards surety. This is the meaning of rights to subrogation. (b) Rights to Indemnity: Lets assume for example, In the contract it was mentioned that if principle debtor is going to make default in payment, now within 5 days after principle debtor defaults, he will

inform surety and after informing surety the information, surety will pay the amount within 15 days to the creditor. This means that there is a total gap of 20 days, Now principle debtor defaulted and he has not been able to inform surety that he has not payed the amount to creditor. After 20 days, creditor sued surety for no payment, Now Surety will definitely will defend the law suit by appointing any lawyer. Whatever amount surety will be paying to lawyer for defending the suit, That amount will be compensated by principle debtor as a part of indemnity, That principle debtor will make surety's loss good. This is known as Right to Indemnity. Rights of Surety Against Creditor: (a)Right to securities: Lets assume if there is a case in which principle debtor has kept bonds or gold or any other thing as security with the creditor, Now if principle debtor defaults in paying the amount to creditor and surety pays the entire amount on principle debtor's behalf to creditor. Now whatever security which principle debtor gave to creditor, All that security will now be transferred to surety. Right of surety against Co - Surety: (a) Right to claim contribution: Lets assume there were 3 co surety in the contract in the above mentioned example, Now Arshad who was the relative of Mateen payed the entire 100% of the amount on mate en's behalf, So now Arshad has a right to claim money from Ayesha and Iqra for the percentage of the amount of their respective promises. (b) Right to Share the securities: Let's assume, Mateen kept his security with Mr Imtaiz of Rs 50,000 Rs. But Mateen defaulted and all the Co-surety paid the amount to Imtiaz on Mateen's behalf. Now the 50,000 Rs of the security which Mateen gave to Imtaiz earlier on, will now be distributed among all the cosurety depending on the percentage of their respective liability. Concept of Agency: Lets assume Danyal has got 7 or 8 Businesses, now Danyal can't make all the transactions for each of his Business on his own as he has to travel the world for Business purposes. So it becomes very difficult for Danyal to manage all his business activities/transactions. Now Danyal delegates his powers to his agent, who makes contracts with the third party and binds Danyal in the contract with the third parties to the extent of the powers given to the agent by Danyal. For example the name of Danyal's Agent is Ahsan, now Danyal has given him the powers to make contracts upto 100,000 Rs only, That means Ahsan cannot make any contract whose value is exceeding 100,000 Rs. Now in this case Danyal is known as the Principle, The person appointed by the principle is known as Agent (Ahsan) and law in this case is known as the contract of Agency. Let's Assume the principle is person A and his Agent is person B, Now since Person A is so busy with his work, he appoints an agent who makes contracts with the third parties, An Agent can make contracts with the number of parties at a time. An Agent can also be an agent of number of people at a time simultaneously. Can one person be an employee of different companies at a time? Ans) No, its in the law, that one employee can be employed at one firm at a time. Employee is usually paid in fixed salaries whereas, Agent gets commission. - A Principle can be a person who has contractual capacity means he must a major, sound mind and must not be bide by the law. - Whereas, for Agent it is not necessary to have a contractual capacity because an agent only gets principle into the contractual relationship with the third party. You can even make a mad person your agent but if he gets you in trouble then you yourself will be responsible for your loss.

Agent

Employee

1. Agent can be an agent for number of people 1. Employee cannot work for different at a time simultaneously. companies at a time. 2. Agent gets Commission. 2. Employee gets fixed salary.

3. Agent has the authority to bring the principle 3. Employees does not have the authority to into the contractual relationship with the third bring principle in the contractual relationship party. with the third party.

Creation of Agency: 1. Agency By Express Authority 2. Agency By Implied Authority: (a) Agency By Estople (b) Agency by Holding out Agency in Necessity or Emergency 3. Agency by Ratification 4. Agency By Operation of law. 1. Agency By Express Authority: It means that telling somebody in written or by word of mouth that "this person is my agent". For Example Ahsan is Principle and he appoints Polani as his agent, and he gives in writing that "Polani is my agent", then it is agency by express authority, and if he tells someone that "Polani is my agent", Then it is also Agency by express Authority. 2. Agency by Implied Authority: It means that it is concluded by behavior or actions of the party that someone is the agent of that party. (a) Agency By Estople: For Example: Now Riaq and Danyal are making a contract, Now Raiq is working in a huge medical store, and Danyal is a representative of a pharma-suitical company. While they are making the contract, Osama who is standing at some distance, can listen to Riaq and Danyal's conversation related to a contract. Riaq tells Danyal that he is making a contract on behalf of Osama as Riaq is Osama's Agent. Now this conversation is in the reach of Osama and Osama can listen and understand everything. Now after listening to Raiq's Statement Osama does not contradict on his statement, Now Riaq is purchasing medicine of Rs 1,000,000 Rs from Danyal and incase that Riaq does not pay the amount, Now can Danyal sue Riaq along with Osama? Ans) Yes, Believing that Riaq made a contract with Danyal on behalf of Osama, and Osama didn't contradict when Raiq was making the statement, Osama's conduct was silence which induced Danyal in believing the contract was serious and real. This is known as Agency by implied Authority and by Estople. (b) Agency by Holding out: For Example, We have 3 parties, Hasan has got a wholesale shop of electronics, Nabeel is employee of Polani and once Polani sends Nabeel to Hasan electronics to purchase the refrigerator and on the purchase Nabeel Tells Hasan, that money will be paid by Polani, Hasan believed on what Nabeel said and as promised payment for the refrigerator is made the next day to Hassan by Mr. Polani. Now this same situation happened a number of times while purchasing other products from Mr Hasan, Nabeel always use to purchase the items and payments were made the following day by Mr Polani. Now, Once Polani gave Nabeel some amount of money and asked Nabeel to purchase an electronic product, now Nabeel misappropriates and keeps the money in his pocket and purchase the product from Mr Hasan claiming the payment will be made the following day by Mr Polani. Now based on the trust Hasan gave the product to Mr Nabeel, Now after few weeks when Mr Hasan sent the invoice to Mr Polani saying that he owes Mr Hasan some amount of money which he hasn't paid yet. Mr Polani replied saying he sent the money and Mr Hasan said he didn't get the money for the product purchased by Mr Nabeel. Now does Mr Hasan hold a right to demand money from Mr Polani? Ans) Yes he does. This is the conduct agency by holding out, because the series of such transactions were always in such process and that by conduct Mr Polani induced Mr Hasan that Nabeel was Mr Polani's Agent. Agency in necessity or Emergency: For example, Mehdi is the Driver of a huge trawler. Mehdi's Job is to bring vegetables and fruits from Lahore to Karachi. Now when Mehdi was on the way to Karachi, he was struck by a heavy thunderstorm/Rain. Now he is bringing an order for someone in Karachi, Now he

was afraid that all the fruits and vegetables in his trawler will get wasted. So Mehdi came in immediate need of selling all the fruits and vegetables in his trawler as he can't reach Karachi in such weather conditions. Secondly, at this point he is unable to contact the person who transported the goods. Thirdly, at this point he is trying to act in the best interest of the principle (the person who transported the goods) trying to save him from heavy loss. Now these 3 conditions are fulfilled and now Mehdi has become an agent in necessity or emergency. 3. Agency By Ratification: For Example, Usman is a principle, Zohaib is Usman's Agent and Polani is the owner of Sugar Mill industry. Now Zohaib makes a contract with Mr Polani without having the authority of such contracts from Usman, that Polani will sell 50,000 Tons of sugar to Zohaib, and Zohaib also decided the amount of sugar per ton. Now After sometime, Polani revokes the contract with Zohaib. The three essentials: 1. Agent does not have the authority to make a contract with the third party, as he is not told by his principle, means his principle is unknown to the contract. 2. Agent makes the contract with the third party. 3. Third Party revokes/breaches the contract. Now to Intact this contract again Zohaib needs to have Principle's authority. Now it will come under the notice of principle that his agent made the contract, Now principle will ratify the contract means that principle will say yes that it was in his information that agent made a contract with the third party, When Principle ratify it, Then it will have retrospective effects. (Retrospective effects means that the agent makes the contract with the author since day 1) Now once the Principle ratify's it, only then his agent will be able to sue the third party in the court of law. It means that Principle has empowered his agent to sue the third party in the court of law. This is known is Agency by ratification. 4. Agency By Operation of Law: In Partnership, both the partners or any number of partners less than 20, All the partners are each other's agent by law, For example If one partner makes the contract, he bounds all the partners in that contract , This is agency by Operation of Law. Types of Agents: General Agent: If a person has appointed an agent for 1 type of Business only, and he has been given an authority to make contracts and transactions in that one type of Business, This type of agent is known as General Agent. Special Agent: If a person appoints an agent for 1 time project, or just for specific 1 time assignment, that type of person is known as special agent. Universal Agent: If a person has number of Businesses and he appoints an agent and he has been the authority to make contracts in all types of businesses. This type of agent is known as Universal Agent. Broker: He can either be a general agent, special agent or a universal agent who is not given possession of goods. This type of agent is known as broker. Factor: He can either be a general agent, special agent or a universal agent who is also given possession of goods. This type of agent is known as a factor. Auctioneer: If a person appoints an agent for auction sell purposes, he is given a possession of goods and power to go for the best action bid. Commission Agent: All types of agents are known as commission agents. Extents of Agents Authority: (i) In Normal Circumstances: for example and agent has been direct by his principle that not to exceed the stock trading from Rs 500,000, So in normal circumstances he is bound to trade up to Rs 500,000. (ii) In Emergency: He Holds stock on the behalf of his principle and he has been told not to exceed the limit of Rs 500,000 in selling those stocks and he has a stock of Rs 800,000 but he has a risk that if he does not sale the goods of Rs800,000, Then his principle will suffer the loss of Rs 200,000 because of the downfall in the market. Now, In emergency, he has to do every act in the best interest of his principle, he has the authority to sell the goods of Rs, 800,000.

Question) Can an agent delegate the authority further? Ans) An agent cannot delegate the author further because an agent is bringing his principle and third party into a contractual relationship, so he cannot delegate the authority further. So, an agent cannot delegate given authority to someone else. But there are some exceptions to it: (i) If it is in the customs of the trade or it is a normal norms of the business, then the task can be delegated further by an agent. For Example, in stock exchange we have brokers and sub brokers, SECP regulates sub broker, that means it is in the norms of the business. (ii) If an principle has given an authority to an agent to appoint a sub agent. Only then an agent is responsible to appoint a sub agent by the permission of his principle. - If an agent is not given an authority to appoint a sub agent, and he still does appoint one, in this case if an principe suffers any loss then agent will be responsible for it. Right of Agents: 1. Right of Retainer: In "right of retainer" and agent and retainer can retain the amount. (i) That an agent has paid any advance money on the behalf of his principle. (ii) Agent has incurred some expenses on the behalf of the principle. (iii) Commission is due on his principle. 2. Right to receive rumination. 3. Right of Lein: I means he has right of possession of goods (or to hold the goods) until the amount is paid. 4. Right to be Indemnified: Lets assume an agent has made a contract with a third party, That agent will deliver 2000 devices in one month to the third party, Now because of Principle, agent failed to to deliver the devices in one month and principle delayed the delivery further. So now the third party sued the agent in the court of law and third party also claimed the damages they have suffered because of the delay of the delivery. Now the amount of damages suffered by the third party will not be covered by the agent , but Principle will indemnify the agent for such losses & the fee of hiring a lawyer to defend the case because the delay of delivery was made because of the principle. 5. Right to be indemnify for the consequences of the acts done in good faith: For example Ali Zakir is the principle and Bismah is an agent, Ali Zakir gave the garments to Bismah and asked Bismah to deliver it to the third party. Now Bismah's duty was to check the delivery before delivering, She delivered the garments to the third party and she was in good faith that her Principle must have given top quality products to her. After the delivery the third party spotted too many defected products and the third party sued the agent for delivering bad quality products. Now whatever losses Bismah had to bare at that time will now be indemnified or compensated by the principle. Example 2, Principle had some products at his godown and agent was not aware of the fact that these goods belonged to the principle as it was the goods of some party C , but agent was given the authority that agent can sell the goods. Now agent sold that goods to Party D, when the partyC found out that agent sold their good to party D, Party C sued the agent for selling their goods to party D, Now in this case agent's act was in good faith with clear intentions, So whatever looses agent will bare at this point will be indemnified by the principle. 6. Right to receive compensation for injury cased by principle's neglect: For example, Principle asked to deliver Shan Products in Lyari, agent said he can't go there as the conditions of that area are

not good, Principle said nothing will go wrong as he will be supervising. Now agent goes to deliver the Shan products in Lyari, after he reached there his legs got broken, So in this case Principle will compensate for agent's injury. Duties of an Agent: 1. Duty to perform agreed Undertaking Or Duty to act according to directions or custom of trade: It simply means whatever directions you are given by the principle, act according to it. 2. Duty to act with reasonable care and skill: Means agent has discharge the goods with care and skill, avoid negligence 3. Duty to maintain accounts or duty to render accounts: Whatever transactions of goods are there, you have to maintain it with responsibility. 4. Duty to communicate with principle and obtain principle's instructions: If third party is introducing any new instructions, then agent should tell them to his principle if he agrees with them or not. 5. Duty not to make secret profits: Keeping extra profit of which principle doesn't known about. 6 Duty to disclose all material circumstances and to obtain principle's consent in personal dealings: For example Principle has asked his agent to sell a piece of land to third party, but agents wants to purchase himself, so he should not hide anything but inform his principle even an agent needs to purchase it himself. 7. Duty to pay sums received for principles

Contract of Sale of goods and

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Conditions and Warranty: For example Zohaib wants to purchase the dry cleaning plant and he told the number of specifications that it should dry the clothes

Partnership Act 1932

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There are 5 essentials of a partnership firm. 1. 2 or more parties 2. Agreement 3. Profit Sharing 4. Business 5. Mutual Agency There should be an association of people and they should have an agreement to run a profitable business operations and they should act together or 1 or 2 people should act for all of them.

-There should be an association of people means that in the partnership firm there should be a minimum of 2 members and maximum of 20 members to create a legal partnership. -If the partners are more then 20 then it will be considered as an illegal entity or illegal business operations, so there will be consequences that 5000 Rs penalty will be imposed on that business, and every partner of the partnership firm will be severely liable for their debts of the partnership firm. - It is mandatory for every partner to get the partnership firm registered as a company. -If someone has to start Banking Business on the basis of partnership firm then the maximum number of partner can go up to 10 partners. Difference between Co ownership and Mutual Agency There are two types of Partnership firm: 1. Partnership at Will: It is not for any specific time or specific period, but if Any Partner who wishes to leave a partnership firm after serving a proper notice can disassociate himself from the partnership firm. 2. Particular Partnership: This type of partnership is for specific time. could be 1 year, 10 years or even just for one particular project. What are the Benefits of the registered partnership firm: - Partnership firms are registered by registrar.

What are the disadvantages of the Unregistered partnership firm: 1. In unregistered partnership firm, partners cannot sue each other. 2. They cannot sue third parties but can sure to recover the amount of Rs 100. 3. Third Party can sue partnership firm.

Property of the firm: Whatever property is bought by the firm for example Building, all the partners will be liable to use that property for business purposes of the firm. Non of the partners can use that property for personal use. For example there are 3 partners in a partnership firm and one of the partners bring any machine to the firm on his own and says that only he will be using that machine, is that possible? Ans: No that is not possible, Whatever machine brought to the partnership firm will be used by all three members equally and earn profit from it. Non of the partners can make a secret profit of the partnership firm and no one can say that, if a partner has bought any machine and no other person can use that. He cannot do so. 3 Mandatory Duties of the Firm: 1. He will suppose to do all the acts to maximize the advancement of the partnership firm. 2. He is suppose to do all the acts in good faith with honesty. 3. He is suppose to disclose all the information and render accounts to all the partners. General Duties of a partner: 1. To Attend diligently: To take part in business by using skills and abilities fully or carry out the business with care without any ignorance and negligence. 2. Not to claim remuneration for taking part: For example, In a partnership firm, if you invest something, you cannot tell your partners that you know more accounting or law, so there can be no extra remuneration. 3. To contribute equally to the losses: 4. To indemnify the firm: for example there are 3 partners A, B and C. Now one of the partners went to bank to ask for the loan for the partnership firm and he doesn't disclose this point to the rest of the partners. Now If that partner fails to payback the loan and Bank sues the partnership firm. Now partnership firm is bound to payback the loan of the partnership firm with interest. Now the firm hired a lawyer to defend the case and payed the loan of the bank with interest. So The person who obtained the

loan is suppose to indemnify the firm and make the partnership's firm's loss good because the firm didn't use the money obtained from the bank, it was the partner who obtained the loan used it. So he is suppose to make the firm's loss good. 5. To hold and use firm's property for business purpose. 6. To account for & pay the personal profits from transactions of the firm: For example, the price of the plot is 6 Million Rs and one of the partners sold told the plot for Rs 7.5 Million and he tells the firm that he sold the plot for 6Million and he made a secret profit of Rs 1.5 Million which he didn't disclose to the rest of the partners and if the rest of the partners find out about it then he is suppose to Share that secret profit to the partnership firm. 7. To account for & pay the personal profits from a competent business: for example if a partnership firm has a business of selling cell phones. If one of the partner gets an order of 200 Cellphones and the same partner himself already has a business of cellphones. Now he sells 100 cellphones from the partnership firm's business and 100 cellphone from his own personal business but he shows the partnership firm that there was an order of 100 cellphones and he sold 100 cellphones. Now if other members found out about this extra profit he made from his personal business then he is liable to share the amount of profits with the remaining of the partners. That means he is doing competitive business. Rights of a partner: 1.Right to take part in business 2. Right to express opinion: 3. Right to have excessed books: 4. Right to share profits equally: 5. Right to receive interest on capital out of profits: For Example, Partnership firm wanted to obtained loan from a bank but one of the partners gave his consent that he will give the loan to the partnership firm of Rs 10 Million, now usually interest is given on the loan from a bank. but if a partner himself is giving loan to the partnership firm then, interest will only be given if there are profits available. If the profits are not available then interest will not be given on the loan. 6. Right to claim interest on advances: If a partner pays the advance anywhere from his own pocket on the behalf of the partnership firm, as he was told that he would get interest profits on the advances. So he can claim for profit or 6% of fixed interest on the advances 7. Right to be indemnified: 8. Right to prevent introduction to a new partner: 9. Right to retire 10. Right not to be expelled: No you cannot expel any partner, there are 3 conditions in this. (i) If you want to expel any parter then this should be mentioned in the partnership deed. (ii) If the expulsion condition is mention in the deed and If there is consensus of all the partners and not on the basis of personal grudge or biasses. (iii) If the expulsion condition of given an opportunity to the partner is mention in the deed then he will be given an opportunity to prove himself. 11. Right to share subsequent profits: for instance if a partner from the partnership firm is retired and he has has not been given profits of the tenure he has worked for the firm, then he can claim for those profits or 6% of the interest on amount of his investment in that partnership firm. 12. Right to dissolve the partnership: in the particular partnership you cannot dissolve the partnership until you get the majority consensus from all the partners. Implied Authority: Free hand to do any act for the benefit of the partnership firm is known as implied authority. Statutory Restrictions on the implied authority of a partner: These are the restrictions imposed by law. 1. He cannot open a bank account on behalf of the partnership firm on his own name. 2. He cannot purchase partnership firm's property on his own name. 3. to submit the dispute to arbitration relating to the business of the firm without the consent of the other partners to acquire immovable property on behalf of the partnership firm. 4. To transfer immovable property belonging to the firm.

5. To withdraw a suits or proceedings on the behalf of the firm. Reconstitution of the partnership firm: 1. Introduction of a partner 2. Retirement of a partner. 3. Expulsion of a partner 4. Insolvency of a partner 5. Death of a partner 6. Transfer of a partner's Interest Dissolution of a partnership firm: There are 2 ways of dissolution of the firm 1. By the order of the court (i) By insanity (ii) Mis conduct: crime for the contempt of court (iii) persistent breach of agreement: series of breaches of contract (iv) Transfer of interest (v) Perpetual losses: loss of the firm every year 2. Without order of the court (i) by mutual agreement (ii) by Compulsory dissolution (iii) in happening of certain contingencies (iv) By notice

Contract Act 1872

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In 1947, the only change that was brought to the contact was that, On all the places where "indian" was mentioned in the Contract, it was changed to Pakistani. This was the only thing changed. This contract is related to Businesses. All types of businesses. What is the difference between Contract and Agreement? Lets assume there are two parties, Party A offers party B that they are willing to sell 5 cars at the cost of 2.5 million Rs. This offer can be through email, through telephone, through TCS or one on one meeting whatever. So in this case Party A will be known as "offerer or proposer", as they are placing an offer or proposal and party B will be known as offeree or proposee. If the party B replies 'Yes' to this offer, then it all be known as acceptance. Any case in which there is an offer and an acceptance between the two parties is known as agreement.( i.e offer + acceptance = agreement ) If an Agreement is enforceable by the law is known as a contract. For example, if a lady name "sana" asks a poor lady to take admission in USA to complete her studies as sana is 100% willing to support the poor lady financially. now the poor lady accepted the offer verbally and few days later, the poor lady returned to sana & tells her that she successfully got admission in USA,

but at this point, Sana refuses to support her financially, In this case there was an offer and the acceptance both, which makes it a agreement, now can the poor lady sue Sana in court? Ans: No, the poor lady cannot sue Sana in the court as this agreement was not forcible by law because one or more essentials of the valid agreement or a contract are missing. All the contacts are agreements but all agreements are not contracts. Essentials(compulsory or mandatory) of a Valid Contract : 1. Valid offer and acceptance: Valid offer has 3 essentials: 1. Intension to create legal relationship: 2. Certain terms & conditions: it should be clearly defined, there should be no hidden meaning. 3. Proper Communication: it should be communicated by means of communication. Essential of a valid acceptance: 1. Absolute & unconditional. Types of offer or proposal: 1. Express Proposal: A proposal given either in writing or word of mouth is known as express proposal 2. Implied Proposal: This is concluded by the behavior of the party. 3. Specific Proposal: A proposal presented to specific group of people is known as specific proposal 4. General Proposal: A proposal which is presented to the general public i.e. everyone. 5. Counter Proposal: A proposal presented against a proposal, the legal effect of the counter proposal is that it terminates the initial proposal. 6. Cross Proposal: Receiving a proposal of offer or proposal of acceptance, both at the same time. Can the Offer be revoked? Condition 1: For Example, If a person A places an offer on the 1st April 2013 to person B of selling 100 computers for 500000 Rs and the party B has not responded till 20th April, So can the offer be revoked? Ans: So, the offer can be revoked anytime before the acceptance. Condition 2: For Example, If a person A places an offer on the 1st April 2013 to person B for selling 100 computers for 500000 Rs and Person A has specified the time that Person B can accept this Offer by the 20th April. So can the offer be revoked? Ans: As in this case the time is specified by Person A, so the offer cannot be revoked till the 20th april. Condition 3: For Example, If a person A places an offer on the 1st April 2013 to person B for selling 100 computers for 500000 Rs and Person A has specified the time that Party B can accept this Offer by the 20th April. Now, Person B accepted this offer and has posted the letter of acceptance to person A on the 16th April through a registered post, but the letter of acceptance has not yet been delivered to Party A till the 20th April So, now can the offer be revoked? Ans: No, now offer cannot be revoked as in this condition Postal rule is applied. In this case even if the letter of acceptance is delivered to person A on the 25th April or any other date after the 20th April, He will be bind to accept that offer as the letter of acceptance was posted before the 20th April. Condition 4:

For Example, If a person A places an offer on the 1st April 2013 to person B of selling 100 computers for 500000 Rs and the person B is posting the letter of acceptance through a registered post at 11am on the 16th April, but on the same day at 10:50am, through any speedy means of communication, Person A communicated to person B that they have revoked the offer. So now can the offer be revoked? Ans: Yes, now the offer will be considered as revoked even if the person B has posted the letter at 11am. In this case postal rule won't be applied. Can a acceptance be revoked? Condition: For Example, If person B has posted the letter of acceptance to person A, but the letter has not yet been delivered to person A and through a speedy communicator Person B communicates to person A before the delivery of letter of acceptance, that person B has revoked the acceptance, now can the acceptance be revoked? And: Yes, Now the acceptance can be revoked as the letter of acceptance has not been deliver to person A, so in this case, Letter of acceptance shall be considered as "null & void". Termination of offer: now, the offer can be terminated through following modes. 1. By revocation of offer/acceptance. 2. By lapse of prescribed or reasonable time. 3. By Lapse of prescribed or reasonable mode of acceptance. (conditions on proposal) 4. By death or insanity of offerer before acceptance. 5. By death or insanity of offeree before acceptance. 6. By rejection. 7. By counter proposal. Question: What are Tenders, Display of goods, advertisement, supply of information, Auction Sale? Ans: This is known as "invitation to treat", that means inviting people to make an offer. Example Case for "Supply for information": If a person A sends information to person B that we have lots of models of Printers with their specifications, Person B after looking at information got really interested in making an attempt to purchase the printers, So person B made an offer that they need to purchase 1000 Printers from person A, But now person A refused that they don't have enough printers in stock, so they can't accept the offer from person B. At this point, person B got so angry that he wants to sue person A in court. So, Can Person B sue person A? Ans: No, they cannot sue person A because person A didn't give a proposal to person B, Person A only provided the information, they were inviting person B to make the proposal. - Tenders is known as request for proposal(rfq's). - Auction Sale means you have the goods and you are inviting people to make bids. - Display of goods, means that goods have been displayed in showroom and they are inviting you to make an offer. - Advertisement, if an ad is displayed to the general public to sell any goods, inviting people to make an offer. 2nd Essential "Consideration" (means something for something)

For example: Party A offers an aircraft for 400 Million to party B. So the consideration FROM Party A is an aircraft and the consideration FROM party B is 400 Million Rs. This is called consideration. FOR A the consideration is 400 Million and FOR B the consideration is an aircraft. offer + acceptance = Promise. So in this case offerer (party A) is a promiser and the offeree (party B) is an promisee. Contract without consideration from 1 side is valid if the following conditions are fulfilled: (Agreement made on account of natural love and affection) 1. It is expressed in writing 2. It is registered under the law 3. It is made on account of love an affection 4. It is between parties standing in a near relation to each other & this stands to married couple. 3rd Essential "Capacity of the parties to a contract" There are 3 conditions, 1. Major: A person who is 18 years old is eligible to make a contract. Ward and guardian act: (a) For example if a a child is 14 year old, that means he is minor (below 18) and he doesn't have parents, then according to ward and guardian act court gives the authority to any close relative of the child to be a guardian and keep a child under his supervision. Then a child will be considered as a major at the age of 21. (b)In this condition, court itself act as a guardian of the child if he has lost his parents, and the child will be considered as major at the age of 21. 2. Sound Mind (sane) (a) if a person is in 80% Sanity and 20% in insanity (could be considered if a person is drunk), so in this case if he makes the contract under the condition of sanity then it will be considered as valid or if he makes the contract under the condition of being insane, then contract can be declared null & void. (b) If a person is seriously ill, and he is in the condition of being 20% sane and 80% Insane, then his contract will only be valid if he makes the contract in the condition of 20% sanity and it will be considered as invalid if he makes the contract in the condition of being 80% insane. 3. Should not be legally Barred (a) Convict: The person who has been sentenced to any punishment, So in the duration of his punishment he can not sign any contract. (b) Ambassador: All the foreign embassy consultants can not be sued so it's better they no one should make a contact with them. Bankrupt: Not to make a contract with a person whose debt exceeds its assets.

(d) Alien Enemy: If a two countries are at war, then they will be declared as alien enemies in the eyes of law. So not make a contract with any alien enemy. What is Consent? Ans: Lets assume you ask party B, that you are selling a watch for 1 Million Rs, and if they say "has", that means connect has been given. (A permission)

4th Essential of the Contract "Free Consent": Free Consent: we consider the consent to be free if it is not opting by using any of these four points. 1. Coercion 2. Undue Influence 3. Fraud 4. Misrepresentation

1. Coercion: This is prohibited by Pakistan Penal Court 1866. Coercion means making someone sign the contract by giving a direct or indirect threat. Example 1: Person A and Person B are traveling in a ship, Now person A texts Person B that, "The house you own in defense phase 8 ext, I need it for 2 Million Rs otherwise I will throw you in the sea" and after the treat Person B said "YES" to agree and sell the house to person A. This is Coercion by threat - Now after some time, there are changes in the leadership of Pakistan, now if Person A goes to court and if he proves that in court that the house was taken away from him due to coercion, now can the contract be cancelled or terminated? Ans: Yes. If he doesn't go to court, do you think the contract will be a valid one? Ans: Yes. Example 2: lets assume Person A goes to Person B and asks him to sell his house for 100,000 Rs otherwise you shall be dead or will take away his child and Person B says "yes" and agrees to sell the house after coming under threat. This is Coercion which is prohibited by Pakistan Penal Court. - In this case if the person B gets powerful after few months of this contract, and he sue person A in the court and after proving in court that his house was taken away from him due to coercion, can the contract be terminated? Ans: Yes. Example 3: Person A who is married and his wife (person B) belongs to a very rich family but person A (husband) is a stupid person. Person A tells his wife in front of his kids to name all property on his name otherwise he will commit suicide. Will it be a Coercion? - Now after sometime of this contract, Person B (wife) finds out that her husband (person A) is misusing the property and she goes to court and sue her own husband, now will the property will be given back to the wife? Ans: Yes Example 4: There is a young widow of 20 years and currently his husband's body lies in the hospital, Officials in hospital says, we are not going to release your husband's body unless you adopt this child we have. - Similarly just like all the above mentioned examples, if the widow proves in court that Hospital officials made her adopt the child due to coercion, now can she get rid of the child after proving in court? Ans: Yes

In coercion, Onus of proof or burden of proof lies on the aggrieved party (which is person B in the above mentioned examples) In above mentioned examples, person A applied coercion to obtain the consent of person B. So person B whose consent was applied due to coercion is known as aggrieved party. If an aggrieved party proves in the court of law whose consent was obtained due to coercion, and when the court is satisfied with the evidence, then the court will order both the parities to go back to pre contractual relationship. So this known as voidable contract (it means initially the contract was valid but when the aggrieved party proves in the court of law, and if the court is satisfied with the evidence, then the court asks both parties to go back to the pre contractual relationship means the aggrieved party can void the contract).

2. Undue Influence: It means that two parties are in such a relationship that one party dominates the will of other party. It has 3 factors under it. 1. Apparent or real authority 2. Fiduciary relationship 3. Affected mental capacity Apparent or real authority: For example: the condition of a Boss and sub ordinate can be a example apparent authority. For example, Person A is a commissioner and Person B is a Clerk, lets assume Clerk has a piece of land in Thatta of worth 1 Corer Rs, Commissioner asks the clerk to buy that piece of land for 30 lacks Rs. Now the clerk says, he can't sell it for 30 Lacks as he has already gotten an offer of 1 Corer rs. Commissioner says, if you don't sell it to me for 30 Lacks, I can transfer your job to Fata. It is a real authority. Another Example, let's Assume Person A is an Inspector and Person B is accused, Inspector tells the accused that he wants accused's house on a cheap price otherwise inspector will impose the dugs crime on accused too. -In both the above mentioned examples, The aggrieved party (Clerk and accused) can go to the court, the Onus of proof or the burden of proof lies on the aggrieved party and when the aggrieved party proves in the court of law, and if the court is satisfied with their evidence, then the court asks both parties to go back to the pre contractual relationship Fiduciary Relationship of Trust: It is a relationship of trust For Example: In the relationship of a spiritual guide and disciple, lets assume spiritual Guide asks his disciple that he wants his disciple to sell him his vigo for only worth 5 lacks but after sometime, disciple realizes that spiritual guide has taken away his Vigo at a very cheap price. Now, can he repudiate or void the contract? Ans: Exactly, Yes, Now the Onus of proof or the burden of proof lies on disciple and if he proves in the court of law with the evidence, then they can order both the parties to go back to pre contractual relationship. Affected Mental Capacity: In this case for Example Person A who is a grand Father and Person B is a grandson, Lets assume a grand father is in a seriously ill condition and during that condition, his grandson comes to him and ask him to sell his property of worth 85 Lacks for just 50 Lacks and if he does not sell his property then his grandson will no longer take care of him or might even send him to his old house. After hearing this, grand father signs the contract. After few months, Grandfather gets well and goes to court to sue his grandson for his act, the court after going through the evidence will direct and order both the parties to go back to pre contractual relationship. This is also undue influence. Again this is voidable contract.

Question) If there is a contract and in that contract a person's consent that has been obtained by one person means one party that is not free consent, Now exemplify that in such a manner that after that what will be the legal effects and how that contract will be cancelled or what are the essentials for that? Ans: Lets assume Party A offered Party B to purchase his farmhouse for Rupees 5 Million, now the consideration from party A is Rs 5 Million and consideration from party B is farmhouse, now after sometime, party B sued Party A in the court of law, Party B claims that his consent was not a free consent, it was obtained by undue Influence and the real price of that farmhouse is Rs 50 Million. Now court can ask what was the undue influence? Party B can say that was the parent of real authority. Now they can tell the court that I (party B) was accused in an FIR and inspector asked me if i'm not going to sell my sell my farmhouse for Rs 5 Million Rs to me, then I'm going to book you in the case of Hash. now the aggrieved party (Party B), onus of proof lies on him that his consent was not a free consent, Ones he proves in the court of law, then court will order them to go back to pre contractual relationship and the aggrieved party will be given back his farmhouse and party A will be given back their 5 Million Rs. 3. Fraud: Fraud is always intensional, there are three assertion of fraud: (Section 420) a. False Assertion b. Active Concealment c. Empty Promise a. False Assertion: It means whatever you are saying, you are telling lies intentionally and you know that you are lying. b. Active Concealment: It means that you are hiding something and you are not clearly defining your concern to the other person, you are hiding something in the deal. For Example: a person selling the local made furniture which is partially cracked, but he sells it after getting it repaint, and tells the customer that it is made in Italy and sells it for 80,000Rs, however in reality that furniture is locally made and its real price is 20,000 Rs. so this is the example of active concealment that means this contract can be void. c. Empty Promise: means you don't have intention to perform the promise you are making. For Example if party A tells party B, that on the purchase of 50 Laptops, they will give 5 printers Free but when Party B actually purchase 50 Laptops, they are not given Free printers, so this contract can be voidable. 4. Misrepresentation: it means whatever statement you make, you believe in the truth of the statement, you are making a factual statement but unintentionally you make a mistake which leads to deceive another party. For example: Party A wants to sell agricultural land to Party B and Party A says that this land produces 500 tons of rice per anum and Party A wants to sell the agricultural land for 50 Million Rs. Now Party B purchased the land in 2011 and after using it for a year, in 2012 they realized that the land has produced only 400 tons of Rice per anum, Now can the party B void the contract? Ans: Now, If party B could finds out with ordinary diligence (to check the past records from the past registers) to know the facts of the claim, Then Party B can not void the contract but if party B could not find the claim with ordinary diligence but party B need extra ordinary diligence (expertise) to find out the facts of the claim, then party B could void the contract. These are the examples of the Free Consent. The Contract is of 4 Types: 1. Valid Contract:

2. Void Contract 3. Void Agreement 4. Voidable Contract

Valid Contract: A contract which fulfills all the essentials of the contract are known as valid contract. Void Contract: It means that the contract which is initially enforceable by law but after sometime, by the operation of law or contingency it becomes un enforceable or impossible to perform. For example: one person promises to marry a girl after 3 months the guy died, that means initially it was a valid contract but later on it became impossible to perform, that means it is a void contract. For Example: Party A is a car dealer, and Party A signs a contract with Party B that they will sell 50 cars to Party B's city, but suddenly new government takes over and issues the policy that no car will be imported from outside Pakistan. so initially this contract was valid but now it has become impossible to perform for party A, so now it is a void contract. For Example: Person A lives in Haafsabad in punjab, He signs a contract with person B to export rice to him, but before he sends it, his land becomes a victim of flood and all his rice gets destroyed. Now it has become impossible for person A to perform the contract therefore it has become a void contract. Void Agreement: It is an agreement which is illegal from the very beginning, that is known as void agreement or it misses one of more essentials of a valid contract. For Example two brothers signs a contract one would give other 10 Lack Rs if he never gets married, The day he gets 10 Lack Rs.He gets married after 3 months. so its a void agreement. For Example, if one person tells another person that he would give him 10 Lack Rs if he never applies for any job. That is a basic human right, therefore it is a void agreement. For Example, Dr Ayesha is running a huge Hospital and Dr Myra needs a Job, so Dr myra was offered a 2 year contract which said, that Dr Myra will be given a 25000 Rs monthly salary, and once her 2 year tenure is over, Dr Myra will not open any hospital or clinic within 25 meters of radius from Dr Ayesha's hospital or if she opens then Dr Ayesha would charge 200,000 Rs for liquidated damages, The day Dr Myra tenure's gets over from Dr Ayesha's Hospital, Dr Myra opens the clinic right in front of Dr Ayesha's hospital. So now can Dr Ayesha sue Dr Myra in the court of law? Ans: No She cant. because it was a void agreement. Voidable Contract: The Consent if not free ( free consent we have done above) Difference Between Coercion and Undue Influence:

Coercion 1. In Coercion, Parties may or may not be in a relationship. 2. In coercion, the act amounts to criminal liability. 3. The nature if pressure in Coercion in physical.

Undue Influence 1. In Undue Influence, The party must be in a relationship because in undue Influence, we categorize in 3 sub topics, apparent or will authority, fiduciary relationship and affected mental capacity

2. In undue Influence, There is no criminal act.

3. The Nature of Pressure in Undue Influence is Moral Pressure.

Question): If someone attempts to commit the suicide in the lake but life guards saved her, so will she be prosecuted? Ans: Through it is not penalized but definitely It is not allowed by Pakistan Penal Court, but it amounts to Coercion.

Difference Between Fraud and Misrepresentation:

Fraud 1. Fraud is Intentional 2. The person who does Fraud believes in his false Statement.
Mistake: We will study about two types of Mistakes. i. Mistake of law ii. Mistake of fact.

Misrepresentation 1. Misrepresentation is Unintentional 2. In Misrepresentation, the person believes his statement is true.

Mistake of Law: Question) What will be the legal consequences if someone makes a mistake will making the contract? Ans: Lets say for example, in Pakistani Law, it is not allowed to make a contract for smuggled goods. Party A makes a contact with Party B, that party A will send 10,000 Tons of smuggled sugar from India, and for some reason, they couldn't send it. Now can party B sue Party A in the court of law? Ans: NO, because in Pakistani Law contract of smuggled goods are is not allowed. There is no escaping from punishment for this, This is known as Mistake of law, means there is no excuse. There is no provision for the mistake of Law. Mistake of Fact: Question) What will be the consequences for the mistake of law? Example 1) There is Person A and Person B, Person A is a importer of goods and Person B is a wholesaler or a retailer. They are in a process of making a contract in which Person B's electronic goods are coming in a ship from Germany and both the persons are in the process of bargaining in which they are trying settled the deal for 200,000 Rs. Just during that deal, Person A's ship sank in the middle of the sea. Now, Can person B sue person A in the court of law just because he need's his electronic goods? Ans) This is known as void agreement, when they were in a process of bargaining, and person B has paid some amount to person A, then person A should return that amount back to person B. However, person B cannot sue person A for the recovery of goods and can also not claim any damages. Example 2) Person A is a buyer and Person B is owner of a Horse. Now person A goes to Person B to purchase his horse and person A starts bidding his demand for example he offers to purchase the horse 1,000,000 Rs. Now during the process of that bargain, person A has already handed over 100,000 Rs to Person B and the horse Person A was about to purchase died while the deal was in the middle of the negotiation. Ans) In this situation, Person A had already been given 100,000 Rs to Person B during the process. Now the legal consequences are that Person B will return the money to Person A but person A cannot sue person B in the court of law. This is also a void agreement. Example 3) There are 3 person's, Person A (principle), Person B(Agent) and Person C (Third Party). Person A tells person B, that during person A's lifetime person B has to make a deal about certain Person A's property that belongs to Person C. In this situation, Person A is empowering Person B to sell Person A's 100 Acres property to any person C (third party) for the amount of 1 Billion during person A's Lifetime.

Now once the person B is dealing with person C to sell the property, during the process of negotiation, Person A died. Now will the contract be valid? Ans) No it won't be a valid contract because it is again a bilateral mistake or the mistake of fact. This is again a void agreement. 5th Essential of a valid contract "Legality of object and Consideration" (a) It is forbidden by law. Example 1) There are two parties, Party A and Party B. In this case, party B stole goods from party A, now, party A found out from somewhere that their goods got stolen by party B, now party A lodged a criminal case against party B for the act of stealing party A's goods. Now Party B comes to negotiations with Party A to make an contract in which party A should drop criminal prosecution against party B and party B will give back party A's goods. Now, party A dropped the criminal prosecution against party B but party B didn't return party A's good back. Now is this contract valid or can party A sue party B again in the court of law? Ans) No, Party A cannot sue party B again because its a criminal prosecution that no one can take away their case until the trail or until the magistrate passes their decision. It is forbidden by law to take away the case and further making a illegal contract. So, because of illegality of consideration, the contract is a void agreement and is illegal from the very beginning. Example 2) There is a person A and there is a person B, Person A has deep/strong contracts with Tappi Sahab, so person A requested person B to handover 20 lacks to person A and person A can get person B a job of deputy commissioner. In this case person A is actually attempting to give a government job to person A by taking bribery (illegal means), now if person B doesn't get the job despite giving the money to person A, Now can person B sue person A in the court of law to get his money back or either get person B a job in return of the money person B gave? Ans) No, in this case money can't be restored neither person B can get the job because the deal of giving a government job by bribery is forbidden by law. So, in this case money can't be restored. Example 3) There are two people. Person A and Person B, In this case, person B is a banker, So person A wants 200,000 Rs loan from person B because person A wants to spend the money gained from loan on his ward's wedding who is a 13 year old minor. Now, Person B gave person A 200,000 Rs of loan but in future when the time came for person A to return the loan back to person B, Person A didn't return the Loan. Now can, Person B sue person A in the court of law for not paying back his loan? Ans) No, in this case person B cannot sue person A because Person A's object of obtaining the loan was illegal. In this case person B cannot recover his money from person A because of illegality of object (Object: Marriage of a Minor) (b) It is fraudulent Example 1) There are 3 parties, Party A, Party B and Party C. All three of them agreed to commit a fraud or robbery and after the fraud, all three of them will distribute the gains from robbery among themselves, Now, after the actual robbery, Party C ran away with all the money, but the agreement which all three of the parties signed initially is still with Party A and Party B, now, can party A and Party B can sue party C for doing something against the contract and running away with the money? Ans) No, in this case also, Party A and Party B cannot sue party C because the consideration and object both are illegal in this case. Consideration was robbery and fraud and object was to distribute the gains among themselves after the robbery. These are void agreements and they are illegal from the very beginning.

illegal Agreements: It means void abinitio (it means illegal from the very beginning). (i) Trading with alien enemies: Have done this in earlier lectures (ii) Agreement for stifling prosecution (in this case case is not lodge): For Example there are two persons, Person A and Person B, in this situation person A murder's person B's Son, now there is agreement between A and B now, person A says to person B that don't lodge an FIR against my murder and i'm going to give you 2 Million Rs. Now Person A, doesn't pay person B the 2 Million Rs. Now, can person B sue person A in the court of law? Ans) No, not at all because this is punishable by law or it is illegal. (iii) Agreement tending to create monopoly: For Example, All the owners of the sugar industry in Pakistan make an agreement with each other that all the sugar industry owners will sell sugar at the price of 100 Rs per Kg. Every owner signed on the agreement, it also stated that any one who started selling sugar below the rate of 100 Rs per kg will have to pay 1,000,000 Rs to every other owner of the sugar industry, Now 5 out of the 20 owners started selling the sugar at the price of 50 Rs per kg. Now can the remaining 15 people sue those 5 people in the court of law those who are going against the agreement? Ans) No, not at all because creating monopoly is illegal in Pakistani Law. So this in illegal and it is a void agreement (iv) Agreement in restraint of Marriage: For Example, person A makes an agreement with Person B, Person A tells person B that Person B should never get married person A would give person B 10,000,000 Rs. So, person B signs the contract and takes 10,000,000 Rs but 3 months later person B gets married. Now can person A sue person B in the court of Law? Ans) No, person A can't sue person B because it is forbidden in the constitution of Pakistan and it is against the basic human rights. (V) Agreement in restraint to trade: For example,Dr Ayesha is running a huge Hospital and Dr Myra needs a Job, so Dr myra was offered a 2 year contract which said, that Dr Myra will be given a 25000 Rs monthly salary, and once her 2 year tenure is over, Dr Myra will not open any hospital or clinic within 25 meters of radius from Dr Ayesha's hospital or if she opens then Dr Ayesha would charge 200,000 Rs for liquidated damages, The day Dr Myra tenure's gets over from Dr Ayesha's Hospital, Dr Myra opens the clinic right in front of Dr Ayesha's hospital. So now can Dr Ayesha sue Dr Myra in the court of law? Ans) No She cant. because it was a void agreement.

Wagering Agreement: There is person A and person B, Person A tells person B that, it will rain today, person B says no it wont. Person A says lets have a bet for 10,000 Rs that it will rain, he signs it on the agreement with person B. If it rains, person B will give person A 10,000 Rs and if it doesn't rain person A will give per on B 10,000 rs, Now it doesn't rain, and person A doesn't pay person B 10,000 rs. Now can person B sue person A in the court of law? Ans) No, he can't. neither party to have control over the event, this is known as wagering argument. Essentials of wagering Agreement: 1. Promise to pay money or Money's worth 2. Uncertain event 3. Mutual chance of gain or loss 4. Neither party to have control over the event. 5. No other interest in the events. Such agreements are wagering agreements and these are also known as void agreements.

Example) Danyal makes a contract with Nabeel that Danyal will sell nabeel 100 tons of oil and nabeel will pay 1 million to purchase the oil. Ans) The subject matter (subject: Type of oil is not mentioned) is uncertain, therefore it is a void agreement. Essentials of a valid contract "Possibility of a contract: 1. Valid offer and acceptance 2. Consideration 3. Capacity of the parties to a contract 4. Free consent 5. legality of the object and consideration 6. Possibility of the performance of the contract 7. Written and registered one Conflicting modification on June 26, 2013 11:47:32 AM: In 1947, the only change that was brought to the contact was that, On all the places where "indian" was mentioned in the Contract, it was changed to Pakistani. This was the only thing changed. This contract is related to Businesses. All types of businesses. What is the difference between Contract and Agreement? Lets assume there are two parties, Party A offers party B that they are willing to sell 5 cars at the cost of 2.5 million Rs. This offer can be through email, through telephone, through TCS or one on one meeting whatever. So in this case Party A will be known as "offerer or proposer", as they are placing an offer or proposal and party B will be known as offeree or proposee. If the party B replies 'Yes' to this offer, then it all be known as acceptance. Any case in which there is an offer and an acceptance between the two parties is known as agreement.( i.e offer + acceptance = agreement ) If an Agreement is enforceable by the law is known as a contract. For example, if a lady name "sana" asks a poor lady to take admission in USA to complete her studies as sana is 100% willing to support the poor lady financially. now the poor lady accepted the offer verbally and few days later, the poor lady returned to sana & tells her that she successfully got admission in USA, but at this point, Sana refuses to support her financially, In this case there was an offer and the acceptance both, which makes it a agreement, now can the poor lady sue Sana in court? Ans: No, the poor lady cannot sue Sana in the court as this agreement was not forcible by law because one or more essentials of the valid agreement or a contract are missing. All the contacts are agreements but all agreements are not contracts. Essentials(compulsory or mandatory) of a Valid Contract: 1. Valid offer and acceptance: Valid offer has 3 essentials: 1. Intension to create legal relationship: 2. Certain terms & conditions: it should be clearly defined, there should be no hidden meaning. 3. Proper Communication: it should be communicated by means of communication.

Essential of a valid acceptance: 1. Absolute & unconditional. Types of offer or proposal: 1. Express Proposal: A proposal given either in writing or word of mouth is known as express proposal 2. Implied Proposal: This is concluded by the behavior of the party. 3. Specific Proposal: A proposal presented to specific group of people is known as specific proposal 4. General Proposal: A proposal which is presented to the general public i.e. everyone. 5. Counter Proposal: A proposal presented against a proposal, the legal effect of the counter proposal is that it terminates the initial proposal. 6. Cross Proposal: Receiving a proposal of offer or proposal of acceptance, both at the same time. Can the Offer be revoked? Condition 1: For Example, If a person A places an offer on the 1st April 2013 to person B of selling 100 computers for 500000 Rs and the party B has not responded till 20th April, So can the offer be revoked? Ans: So, the offer can be revoked anytime before the acceptance. Condition 2: For Example, If a person A places an offer on the 1st April 2013 to person B for selling 100 computers for 500000 Rs and Person A has specified the time that Person B can accept this Offer by the 20th April. So can the offer be revoked? Ans: As in this case the time is specified by Person A, so the offer cannot be revoked till the 20th april. Condition 3: For Example, If a person A places an offer on the 1st April 2013 to person B for selling 100 computers for 500000 Rs and Person A has specified the time that Party B can accept this Offer by the 20th April. Now, Person B accepted this offer and has posted the letter of acceptance to person A on the 16th April through a registered post, but the letter of acceptance has not yet been delivered to Party A till the 20th April So, now can the offer be revoked? Ans: No, now offer cannot be revoked as in this condition Postal rule is applied. In this case even if the letter of acceptance is delivered to person A on the 25th April or any other date after the 20th April, He will be bind to accept that offer as the letter of acceptance was posted before the 20th April. Condition 4: For Example, If a person A places an offer on the 1st April 2013 to person B of selling 100 computers for 500000 Rs and the person B is posting the letter of acceptance through a registered post at 11am on the 16th April, but on the same day at 10:50am, through any speedy means of communication, Person A communicated to person B that they have revoked the offer. So now can the offer be revoked? Ans: Yes, now the offer will be considered as revoked even if the person B has posted the letter at 11am. In this case postal rule won't be applied. Can a acceptance be revoked? Condition: For Example, If person B has posted the letter of acceptance to person A, but the letter has not yet been delivered to person A and through a speedy communicator Person B communicates to person A before the delivery of letter of acceptance, that person B has revoked the acceptance, now can the acceptance be revoked?

And: Yes, Now the acceptance can be revoked as the letter of acceptance has not been deliver to person A, so in this case, Letter of acceptance shall be considered as "null & void". Termination of offer: now, the offer can be terminated through following modes. 1. By revocation of offer/acceptance. 2. By lapse of prescribed or reasonable time. 3. By Lapse of prescribed or reasonable mode of acceptance. (conditions on proposal) 4. By death or insanity of offerer before acceptance. 5. By death or insanity of offeree before acceptance. 6. By rejection. 7. By counter proposal. Question: What are Tenders, Display of goods, advertisement, supply of information, Auction Sale? Ans: This is known as "invitation to treat", that means inviting people to make an offer. Example Case for "Supply for information": If a person A sends information to person B that we have lots of models of Printers with their specifications, Person B after looking at information got really interested in making an attempt to purchase the printers, So person B made an offer that they need to purchase 1000 Printers from person A, But now person A refused that they don't have enough printers in stock, so they can't accept the offer from person B. At this point, person B got so angry that he wants to sue person A in court. So, Can Person B sue person A? Ans: No, they cannot sue person A because person A didn't give a proposal to person B, Person A only provided the information, they were inviting person B to make the proposal. - Tenders is known as request for proposal(rfq's). - Auction Sale means you have the goods and you are inviting people to make bids. - Display of goods, means that goods have been displayed in showroom and they are inviting you to make an offer. - Advertisement, if an ad is displayed to the general public to sell any goods, inviting people to make an offer. 2nd Essential "Consideration" (means something for something) For example: Party A offers an aircraft for 400 Million to party B. So the consideration FROM Party A is an aircraft and the consideration FROM party B is 400 Million Rs. This is called consideration. FOR A the consideration is 400 Million and FOR B the consideration is an aircraft. offer + acceptance = Promise. So in this case offerer (party A) is a promiser and the offeree (party B) is an promisee. Contract without consideration from 1 side is valid if the following conditions are fulfilled: (Agreement made on account of natural love and affection) 1. It is expressed in writing

2. It is registered under the law 3. It is made on account of love an affection 4. It is between parties standing in a near relation to each other & this stands to married couple. 3rd Essential "Capacity of the parties to a contract" There are 3 conditions, 1. Major: A person who is 18 years old is eligible to make a contract. Ward and guardian act: (a) For example if a a child is 14 year old, that means he is minor (below 18) and he doesn't have parents, then according to ward and guardian act court gives the authority to any close relative of the child to be a guardian and keep a child under his supervision. Then a child will be considered as a major at the age of 21. (b)In this condition, court itself act as a guardian of the child if he has lost his parents, and the child will be considered as major at the age of 21. 2. Sound Mind (sane) (a) if a person is in 80% Sanity and 20% in insanity (could be considered if a person is drunk), so in this case if he makes the contract under the condition of sanity then it will be considered as valid or if he makes the contract under the condition of being insane, then contract can be declared null & void. (b) If a person is seriously ill, and he is in the condition of being 20% sane and 80% Insane, then his contract will only be valid if he makes the contract in the condition of 20% sanity and it will be considered as invalid if he makes the contract in the condition of being 80% insane. 3. Should not be legally Barred (a) Convict: The person who has been sentenced to any punishment, So in the duration of his punishment he can not sign any contract. (b) Ambassador: All the foreign embassy consultants can not be sued so it's better they no one should make a contact with them. Bankrupt: Not to make a contract with a person whose debt exceeds its assets. (d) Alien Enemy: If a two countries are at war, then they will be declared as alien enemies in the eyes of law. So not make a contract with any alien enemy. What is Consent? Ans: Lets assume you ask party B, that you are selling a watch for 1 Million Rs, and if they say "Yes", that means consent has been given. (A permission)

4th Essential of the Contract "Free Consent": Free Consent: we consider the consent to be free if it is not opting by using any of these four points. 1. Coercion 2. Undue Influence 3. Fraud

4. Misrepresentation ` 1. Coercion: This is prohibited by Pakistan Penal Court 1866. Coercion means making someone sign the contract by giving a direct or indirect threat. Example 1: Person A and Person B are traveling in a ship, Now person A texts Person B that, "The house you own in defense phase 8 ext, I need it for 2 Million Rs otherwise I will throw you in the sea" and after the treat Person B said "YES" to agree and sell the house to person A. This is Coercion by threat - Now after some time, there are changes in the leadership of Pakistan, now if Person A goes to court and if he proves that in court that the house was taken away from him due to coercion, now can the contract be cancelled or terminated? Ans: Yes. If he doesn't go to court, do you think the contract will be a valid one? Ans: Yes. Example 2: lets assume Person A goes to Person B and asks him to sell his house for 100,000 Rs otherwise you shall be dead or will take away his child and Person B says "yes" and agrees to sell the house after coming under threat. This is Coercion which is prohibited by Pakistan Penal Court. - In this case if the person B gets powerful after few months of this contract, and he sue person A in the court and after proving in court that his house was taken away from him due to coercion, can the contract be terminated? Ans: Yes. Example 3: Person A who is married and his wife (person B) belongs to a very rich family but person A (husband) is a stupid person. Person A tells his wife in front of his kids to name all property on his name otherwise he will commit suicide. Will it be a Coercion? - Now after sometime of this contract, Person B (wife) finds out that her husband (person A) is misusing the property and she goes to court and sue her own husband, now will the property will be given back to the wife? Ans: Yes Example 4: There is a young widow of 20 years and currently his husband's body lies in the hospital, Officials in hospital says, we are not going to release your husband's body unless you adopt this child we have. - Similarly just like all the above mentioned examples, if the widow proves in court that Hospital officials made her adopt the child due to coercion, now can she get rid of the child after proving in court? Ans: Yes In coercion, Onus of proof or burden of proof lies on the aggrieved party (which is person B in the above mentioned examples) In above mentioned examples, person A applied coercion to obtain the consent of person B. So person B whose consent was applied due to coercion is known as aggrieved party. If an aggrieved party proves in the court of law whose consent was obtained due to coercion, and when the court is satisfied with the evidence, then the court will order both the parities to go back to pre contractual relationship. So this known as voidable contract (it means initially the contract was valid but when the aggrieved party proves in the court of law, and if the court is satisfied with the evidence, then the court asks both parties to go back to the pre contractual relationship means the aggrieved party can void the contract).

2. Undue Influence: It means that two parties are in such a relationship that one party dominates the will of other party. It has 3 factors under it. 1. Apparent or real authority 2. Fiduciary relationship

3. Affected mental capacity Apparent or real authority: For example: the condition of a Boss and sub ordinate can be a example apparent authority. For example, Person A is a commissioner and Person B is a Clerk, lets assume Clerk has a piece of land in Thatta of worth 1 Corer Rs, Commissioner asks the clerk to buy that piece of land for 30 lacks Rs. Now the clerk says, he can't sell it for 30 Lacks as he has already gotten an offer of 1 Corer rs. Commissioner says, if you don't sell it to me for 30 Lacks, I can transfer your job to Fata. It is a real authority. Another Example, let's Assume Person A is an Inspector and Person B is accused, Inspector tells the accused that he wants accused's house on a cheap price otherwise inspector will impose the dugs crime on accused too. -In both the above mentioned examples, The aggrieved party (Clerk and accused) can go to the court, the Onus of proof or the burden of proof lies on the aggrieved party and when the aggrieved party proves in the court of law, and if the court is satisfied with their evidence, then the court asks both parties to go back to the pre contractual relationship Fiduciary Relationship of Trust: It is a relationship of trust For Example: In the relationship of a spiritual guide and disciple, lets assume spiritual Guide asks his disciple that he wants his disciple to sell him his vigo for only worth 5 lacks but after sometime, disciple realizes that spiritual guide has taken away his Vigo at a very cheap price. Now, can he repudiate or void the contract? Ans: Exactly, Yes, Now the Onus of proof or the burden of proof lies on disciple and if he proves in the court of law with the evidence, then they can order both the parties to go back to pre contractual relationship. Affected Mental Capacity: In this case for Example Person A who is a grand Father and Person B is a grandson, Lets assume a grand father is in a seriously ill condition and during that condition, his grandson comes to him and ask him to sell his property of worth 85 Lacks for just 50 Lacks and if he does not sell his property then his grandson will no longer take care of him or might even send him to his old house. After hearing this, grand father signs the contract. After few months, Grandfather gets well and goes to court to sue his grandson for his act, the court after going through the evidence will direct and order both the parties to go back to pre contractual relationship. This is also undue influence. Again this is voidable contract. Question) If there is a contract and in that contract a person's consent that has been obtained by one person means one party that is not free consent, Now exemplify that in such a manner that after that what will be the legal effects and how that contract will be cancelled or what are the essentials for that? Ans: Lets assume Party A offered Party B to purchase his farmhouse for Rupees 5 Million, now the consideration from party A is Rs 5 Million and consideration from party B is farmhouse, now after sometime, party B sued Party A in the court of law, Party B claims that his consent was not a free consent, it was obtained by undue Influence and the real price of that farmhouse is Rs 50 Million. Now court can ask what was the undue influence? Party B can say that was the parent of real authority. Now they can tell the court that I (party B) was accused in an FIR and inspector asked me if i'm not going to sell my sell my farmhouse for Rs 5 Million Rs to me, then I'm going to book you in the case of Hash. now the aggrieved party (Party B), onus of proof lies on him that his consent was not a free consent, Ones he proves in the court of law, then court will order them to go back to pre contractual relationship and the aggrieved party will be given back his farmhouse and party A will be given back their 5 Million Rs. 3. Fraud: Fraud is always intensional, there are three assertion of fraud: (Section 420)

a. False Assertion b. Active Concealment c. Empty Promise a. False Assertion: It means whatever you are saying, you are telling lies intentionally and you know that you are lying. b. Active Concealment: It means that you are hiding something and you are not clearly defining your concern to the other person, you are hiding something in the deal. For Example: a person selling the local made furniture which is partially cracked, but he sells it after getting it repaint, and tells the customer that it is made in Italy and sells it for 80,000Rs, however in reality that furniture is locally made and its real price is 20,000 Rs. so this is the example of active concealment that means this contract can be void. c. Empty Promise: means you don't have intention to perform the promise you are making. For Example if party A tells party B, that on the purchase of 50 Laptops, they will give 5 printers Free but when Party B actually purchase 50 Laptops, they are not given Free printers, so this contract can be voidable. 4. Misrepresentation: it means whatever statement you make, you believe in the truth of the statement, you are making a factual statement but unintentionally you make a mistake which leads to deceive another party. For example: Party A wants to sell agricultural land to Party B and Party A says that this land produces 500 tons of rice per anum and Party A wants to sell the agricultural land for 50 Million Rs. Now Party B purchased the land in 2011 and after using it for a year, in 2012 they realized that the land has produced only 400 tons of Rice per anum, Now can the party B void the contract? Ans: Now, If party B could finds out with ordinary diligence (to check the past records from the past registers) to know the facts of the claim, Then Party B can not void the contract but if party B could not find the claim with ordinary diligence but party B need extra ordinary diligence (expertise) to find out the facts of the claim, then party B could void the contract. These are the examples of the Free Consent. The Contract is of 4 Types: 1. Valid Contract: 2. Void Contract 3. Void Agreement 4. Voidable Contract

Valid Contract: A contract which fulfills all the essentials of the contract are known as valid contract. Void Contract: It means that the contract which is initially enforceable by law but after sometime, by the operation of law or contingency it becomes un enforceable or impossible to perform. For example: one person promises to marry a girl after 3 months the guy died, that means initially it was a valid contract but later on it became impossible to perform, that means it is a void contract. For Example: Party A is a car dealer, and Party A signs a contract with Party B that they will sell 50 cars to Party B's city, but suddenly new government takes over and issues the policy that no care will be imported from outside Pakistan. so initially this contract was valid but now it has become impossible to perform for party A, so now it is a voidable contract.

For Example: Person A lives in Haafsabad in punjab, He signs a contract with person B to export rice to him, but before he sends it, his land becomes a victim of flood and all his rice gets destroyed. Now it has become impossible for person A to perform the contract therefore it has become a voidable contract. Void Agreement: It is an agreement which is illegal from the very beginning, that is known as void agreement or it misses one of more essentials of a valid contract. For Example two brothers signs a contract one would give other 10 Lack Rs if he never gets married, The day he gets 10 Lack Rs.He gets married after 3 months. so its a void agreement. For Example, if one person tells another person that he would give him 10 Lack Rs if he never applies for any job. That is a basic human right, therefore it is a void agreement. For Example, Dr Ayesha is running a huge Hospital and Dr Myra needs a Job, so Dr myra was offered a 2 year contract which said, that Dr Myra will be given a 25000 Rs monthly salary, and once her 2 year tenure is over, Dr Myra will not open any hospital or clinic within 25 meters of radius from Dr Ayesha's hospital or if she opens then Dr Ayesha would charge 200,000 Rs for liquidated damages, The day Dr Myra tenure's gets over from Dr Ayesha's Hospital, Dr Myra opens the clinic right in front of Dr Ayesha's hospital. So now can Dr Ayesha sue Dr Myra in the court of law? Ans: No She cant. because it was a void agreement. Voidable Contract: The Consent if not free ( free consent we have done above) Difference Between Coercion and Undue Influence:

Coercion 1. In Coercion, Parties may or may not be in a relationship. 2. In coercion, the act amounts to criminal liability. 3. The nature if pressure in Coercion in physical.

Undue Influence 1. In Undue Influence, The party must be in a relationship because in undue Influence, we categorize in 3 sub topics, apparent or will authority, fiduciary relationship and affected mental capacity

2. In undue Influence, There is no criminal act.

3. The Nature of Pressure in Undue Influence is Moral Pressure.

Question): If someone attempts to commit the suicide in the lake but life guards saved her, so will she be prosecuted? Ans: Through it is not penalized but definitely It is not allowed by Pakistan Penal Court, but it amounts to Coercion.

Difference Between Fraud and Misrepresentation:

Fraud 1. Fraud is Intentional 2. The person who does Fraud believes in his false Statement.
Mistake: We will study about two types of Mistakes.

Misrepresentation 1. Misrepresentation is Unintentional 2. In Misrepresentation, the person believes his statement is true.

i. Mistake of law ii. Mistake of fact. Mistake of Law: Question) What will be the legal consequences if someone makes a mistake will making the contract? Ans: Lets say for example, in Pakistani Law, it is not allowed to make a contract for smuggled goods. Party A makes a contact with Party B, that party A will send 10,000 Tons of smuggled sugar from India, and for some reason, they couldn't send it. Now can party B sue Party A in the court of law? Ans: NO, because in Pakistani Law contract of smuggled goods are is not allowed. There is no escaping from punishment for this, This is known as Mistake of law, means there is no excuse. There is no provision for the mistake of Law. Mistake of Fact: Question) What will be the consequences for the mistake of fact? Example 1) There is Person A and Person B, Person A is a importer of goods and Person B is a wholesaler or a retailer. They are in a process of making a contract in which Person B's electronic goods are coming in a ship from Germany and both the persons are in the process of bargaining in which they are trying settled the deal for 200,000 Rs. Just during that deal, Person A's ship sank in the middle of the sea. Now, Can person B sue person A in the court of law just because he need's his electronic goods? Ans) This is known as void agreement, when they were in a process of bargaining, and person B has paid some amount to person A, then person A should return that amount back to person B. However, person B cannot sue person A for the recovery of goods and can also not claim any damages. Example 2) Person A is a buyer and Person B is owner of a Horse. Now person A goes to Person B to purchase his horse and person A starts bidding his demand for example he offers to purchase the horse 1,000,000 Rs. Now during the process of that bargain, person A has already handed over 100,000 Rs to Person B and the horse Person A was about to purchase died while the deal was in the middle of the negotiation. Ans) In this situation, Person A had already been given 100,000 Rs to Person B during the process. Now the legal consequences are that Person B will return the money to Person A but person A cannot sue person B in the court of law. This is also a void agreement. Example 3) There are 3 person's, Person A (principle), Person B(Agent) and Person C (Third Party). Person A tells person B, that during person A's lifetime person B has to make a deal about certain Person A's property that belongs to Person C. In this situation, Person A is empowering Person B to sell Person A's 100 Acres property to any person C (third party) for the amount of 1 Billion during person A's Lifetime. Now once the person B is dealing with person C to sell the property, during the process of negotiation, Person A died. Now will the contract be valid? Ans) No it won't be a valid contract because it is again a bilateral mistake or the mistake of fact. This is again a void agreement. 5th Essential of a valid contract "Legality of object and Consideration" (a) It is forbidden by law. Example 1) There are two parties, Party A and Party B. In this case, party B stole goods from party A, now, party A found out from somewhere that their goods got stolen by party B, now party A lodged a criminal case against party B for the act of stealing party A's goods. Now Party B comes to negotiations with Party A to make an contract in which party A should drop criminal prosecution against party B and party B will give back party A's goods. Now, party A dropped the criminal prosecution against party B but party B didn't return party A's good back. Now is this contract valid or can party A sue party B again in the court of law?

Ans) No, Party A cannot sue party B again because its a criminal prosecution that no one can take away their case until the trail or until the magistrate passes their decision. It is forbidden by law to take away the case and further making a illegal contract. So, because of illegality of consideration, the contract is a void agreement and is illegal from the very beginning. Example 2) There is a person A and there is a person B, Person A has deep/strong contracts with Tappi Sahab, so person B requested person A to handover 20 lacks to person A and person A can get person B a job of deputy commissioner. In this case person A is actually attempting to give a government job to person B by taking bribery (illegal means), now if person B doesn't get the job despite giving the money to person A, Now can person B sue person A in the court of law to get his money back or either get person B a job in return of the money person B gave? Ans) No, in this case money can't be restored neither person B can get the job because the deal of giving a government job by bribery is forbidden by law. So, in this case money can't be restored. Example 3) There are two people. Person A and Person B, In this case, person B is a banker, So person A wants 200,000 Rs loan from person B because person A wants to spend the money gained from loan on his ward's wedding who is a 13 year old minor. Now, Person B gave person A 200,000 Rs of loan but in future when the time came for person A to return the loan back to person B, Person A didn't return the Loan. Now can, Person B sue person A in the court of law for not paying back his loan? Ans) No, in this case person B cannot sue person A because Person A's object of obtaining the loan was illegal. In this case person B cannot recover his money from person A because of illegality of object (Object: Marriage of a Minor) (b) It is fraudulent Example 1) There are 3 parties, Party A, Party B and Party C. All three of them agreed to commit a fraud or robbery and after the fraud, all three of them will distribute the gains from robbery among themselves, Now, after the actual robbery, Party C ran away with all the money, but the agreement which all three of the parties signed initially is still with Party A and Party B, now, can party A and Party B can sue party C for doing something against the contract and running away with the money? Ans) No, in this case also, Party A and Party B cannot sue party C because the consideration and object both are illegal in this case. Consideration was robbery and fraud and object was to distribute the gains among themselves after the robbery. These are void agreements and they are illegal from the very beginning. illegal Agreements: It means void abinitio (it means illegal from the very beginning). (i) Trading with alien enemies: Have done this in earlier lectures (ii) Agreement for stifling prosecution (in this case case is not lodge): For Example there are two persons, Person A and Person B, in this situation person A murder's person B's Son, now there is agreement between A and B now, person A says to person B that don't lodge an FIR against my murder and i'm going to give you 2 Million Rs. Now Person A, doesn't pay person B the 2 Million Rs. Now, can person B sue person A in the court of law? Ans) No, not at all because this is punishable by law or it is illegal. (iii) Agreement tending to create monopoly: For Example, All the owners of the sugar industry in Pakistan make an agreement with each other that all the sugar industry owners will sell sugar at the price of 100 Rs per Kg. Every owner signed on the agreement, it also stated that any one who started selling sugar below the rate of 100 Rs per kg will have to pay 1,000,000 Rs to every other owner of the sugar

industry, Now 5 out of the 20 owners started selling the sugar at the price of 50 Rs per kg. Now can the remaining 15 people sue those 5 people in the court of law those who are going against the agreement? Ans) No, not at all because creating monopoly is illegal in Pakistani Law. So this in illegal and it is a void agreement (iv) Agreement in restraint of Marriage: For Example, person A makes an agreement with Person B, Person A tells person B that Person B should never get married person A would give person B 10,000,000 Rs. So, person B signs the contract and takes 10,000,000 Rs but 3 months later person B gets married. Now can person A sue person B in the court of Law? Ans) No, person A can't sue person B because it is forbidden in the constitution of Pakistan and it is against the basic human rights. (V) Agreement in restraint to trade: For example,Dr Ayesha is running a huge Hospital and Dr Myra needs a Job, so Dr myra was offered a 2 year contract which said, that Dr Myra will be given a 25000 Rs monthly salary, and once her 2 year tenure is over, Dr Myra will not open any hospital or clinic within 25 meters of radius from Dr Ayesha's hospital or if she opens then Dr Ayesha would charge 200,000 Rs for liquidated damages, The day Dr Myra tenure's gets over from Dr Ayesha's Hospital, Dr Myra opens the clinic right in front of Dr Ayesha's hospital. So now can Dr Ayesha sue Dr Myra in the court of law? Ans) No She cant. because it was a void agreement.

Wagering Agreement: There is person A and person B, Person A tells person B that, it will rain today, person B says no it wont. Person A says lets have a bet for 10,000 Rs that it will rain, he signs it on the agreement with person B. If it rains, person B will give person A 10,000 Rs and if it doesn't rain person A will give per on B 10,000 rs, Now it doesn't rain, and person A doesn't pay person B 10,000 rs. Now can person B sue person A in the court of law? Ans) No, he can't. neither party to have control over the event, this is known as wagering argument. Essentials of wagering Agreement: 1. Promise to pay money or Money's worth 2. Uncertain event 3. Mutual chance of gain or loss 4. Neither party to have control over the event. 5. No other interest in the events. Such agreements are wagering agreements and these are also known as void agreements. Example) Danyal makes a contract with Nabeel that Danyal will sell nabeel 100 tons of oil and nabeel will pay 1 million to purchase the oil. Ans) The subject matter (subject: Type of oil is not mentioned) is uncertain, therefore it is a void agreement. Essentials of a valid contract "Possibility of a contract: 1. Valid offer and acceptance 2. Consideration 3. Capacity of the parties to a contract 4. Free consent 5. legality of the object and consideration 6. Possibility of the performance of the contract 7. Written and registered one 6th Essential of a valid contract "Performance of the contract":

Contract which are impossible to perform are 1. Wagering contract 2. Contingent contract Contingent contract is a contract for example, if a person says the car parked outside, if it catches fire within the next 10 days, then I'll pay the entire amount of your car to you. This contract is now known as contingent contracts, there is no possibility to perform them but now giving a legal cover to them under insurance laws and possibility of performing those contracts have increased and are now known as insurance contracts. Contract should be written and registered. Performance of Contract: It means both the parties of the contract perform their respective promises. This is known as performance of the contract. As discussed earlier, offer + acceptance is a promise and now in that case one to makes offer becomes offerer and the person who is given offer is known as offeree. So, offerer becomes promisor and offeree becomes promisee. So both the parties now have got their respective promises. For Example, Party A tells Party B that Party A will give party B 100 cartons of Shampoo and each carton will contain 24 pieces of shampoo and party B will have to pay 10 Million Rs against that, now to send those pieces of shampoo is promise of party A and to pay against that is a promise of party B. Now party A delivers the good to party B and Party B pays against those goods is known as performance of the contract. Another example, Hassan promise to sell 100 Tons of Rice to Ali Zakir for Rs 5 Million, now once Hassan delivers 100 tons of rice to Ali Zakir, that means Hassan has performed his part of promise and when Ali Zakir pays the amount to Hassan, that means Zakir has perform his part of promise, this is known as performance. Now performance is of two types: 1. Actual Performance: Example, There are two parties A and B, now party A promises to deliver 10 cars to party B on 1st june 2013, When Party A delivers 10 cars to party B that mean party A has performed his part of promise and party B promises to pay Rs 5 Million against those cars on 1st July 2013, when party B pays the entire amount on 1st July,2013 that means Party B has also performed his part of promise, that means both the parties have performed their respective promises, this is known as actual performance. Another Example, Danyal has a business of carpets, He says to Ali that, I will deliver you 500 carpets on 1st Jan, 2013 and Ali has promised to pay the money on 1st Feb, 2013. Now when both the parties deliver their promises of the deal, it is known as actual performance. Another Example, you might have seen number of overhead bridges which are constructed throughout karachi.Now CDGK, it comes into contract with a contractor for example Mehran constructor company, now the contract is that CDGK gives the contract that you have to construct a flyover near airport within 6 months and against that construction of the bridge we will give you 5 Coror, now once the mehran contractor constructs the bridge, that means he has performed his part of promise and once CDGK pays the entire amount to Mehran Contractor, that means CDGK has performed their part of promise. This is known as Actual performance. 2. Attempted Performance: Party A promised to deliver 200 Tons of Raw Materials for PVC and party B promised to pay Rs 10 Million for that, party A promised to deliver raw materials on 1st April 2013 to party B but when they reached the warehouse of party B, they (party B) refused to accept the delivery, according to the promise party A attempted to deliver raw materials to the warehouse of party B but party B refused to accept the delivery therefore it is an attempted performance on part of party A.

Types of Contracts in terms of Execution: 1. Executed Contract: When two parties are in a contractual relationship and both the parties perform their respective promises of the contract, it is known as executed contract. 2. Executory Contract: There are two parties who made an agreement on 1st Jan 2013, one of the parties will deliver the cars on 1st June, now both the parties have to perform their promises. It is known as executory contract. When both the parties have yet to perform their promises of the contract is known as executory contract. 3. Partly Executory Contract: There are two parties, party A and Party B. these two parties had a contract and promise is made by one Party only, and another party has yet to perform his part of promise or another party still has to fulfill his party of promise, then it is known as partly executory contract.

Discharge of Contract: It means termination of a contract, When contractual relationship of parties to the contract comes to an end is known as discharge of the contract. There are different ways/modes of discharging a contract 1st Mode: By Performance: It means when the contract is performed as promised, once the promised contract is performed, it means the contract is completed and no more liabilities or duties are left of either of the party to perform, that means the contract has been discharged by performance. 2nd Mode: By Mutual Agreement: 1. Novation: It means the terms and conditions of the contract are not changed but parties to the contract change. For example, There are 3 parties in a contract. party A, party B and Party C. Now Party A has to pay 50,000 Rs to party B and Party B has to pay 50,000 Rs to Party C. Now, all three of the parties mutually agree under the point that party C has to take 50,000 Rs from Party B and party B has to take 50,000 Rs from Party A but all three parties mutually agree that Party B requests Party C that to accept 50,000 Rs from Party A on his (party B) behalf. Now party A will pay the 50,000 Rs amount directly to Party C. Now in this case, one of the party gets discharged from its obligation by mutual agreement and by mode of novation. Now instead of party B, Party A will pay the entire 50,000 Rs to Party C. Question) Now few days later, Party A tells party C that he will pay the entire amount after 1 month. Now if Party A doesn't pay the entire amount to party C after a month. Now, can party C sue party B in the Court? Ans) No, Party C can't sue party B because Party B is no more in the contract. Party B was discharged from the contract by the mode of novation. Now, Party C and sue only party A. This is discharge of contract by novation. 2. Alteration: It means to change the terms and conditions of the contract. For Example, Party A delivers goods to party B and the amount for the goods was 50,000 Rs which party B has to give to party A in 3 months, Now for some reason Party B is finding it difficult to pay the amount in 3 months so they mutually agree that now Party B can pay the amount in 6 months but instead of 50,000 Rs party B will now pay 55,000 Rs. OR for example Party B wants to pay the entire amount earlier and now party B requests party A to give Party B some relief. So now they both agreed that if party B wants to pay early, he will have to pay just 35,000 Rs. There is change in terms of payment and change in terms of time. The original contract is discharged by mutual agreement and by alteration. 3. Rescission: It means to cancel the contract with mutual agreement. For Example, There are two parties in a contract, party A agrees to deliver 20 bags of wheat to Party B and Party B would pay 150,000 Rs against that 20 bags of wheat. Both the parties signed the contract in Jan. 2013 but they were to perform the duties of the contract in april 2013 but before they perform their duties, they mutually agree that non of the party will perform their respective promises and neither of the party can sue the other party in the court. So, this is known as rescission, to cancel the contract.

Party A promised Party B to import sugar from India and deliver it to Party B in Lahore as party B is a trader against the specified amount in millions. Now party A showed some inablilty to perform the contract and both the parties mutually agree that they recite the contract and non of the party will perform their duties of the contract, this is known as rescission. 4. Waiver: For Example, Party A sells 20 Machines to Party B and Party B says that She will pay the entire amount for 20 Rs in 6 months. Now Party B, couldn't pay the entire amount to Party A due to financial problems. Now, Party A was so rich and they felt as if they are not in need of the money, So Party A waived 80% or 100% or some percent of obligation of the Party B. So the original contract comes to an end. 3rd Mode: Discharge of Contract By Operation Of Law: (1) By death of Promiser: For Example there is a person who makes portraits, Mr President says to the portrait maker that I'll give you 1 Million Rs if you make a portrait for me. Now Portrait makers personal skills were involved in making a contract. Portrait maker was even paid for his portrait. Now, the portrait maker died on the day when he had to make the portrait, So now he can't be sued. So this contract is discharged by the operation of law as he is no more in this world and he can not perform the contract. (2) By Insolvency: It means bankruptcy. The person whose debts or liabilities exceed's its assets is known as bankrupt or Insolvent. If a person becomes insolvent, that means he is no more responsible to perform his part of promise and he can't even make another contract. Supervene(Meaning): It has become impossible for a person to perform the contract. 4th Mode: Cases when a contract is discharged on the ground of supervening impossibility. (1) Destruction of Subject Matter: Party A and Party B makes a contract. Party A says that whatever crops of wheat he has, he will sell it to Party B and party B will pay 900 Rs per month. Now because of natural climate, all the crops of party A has been destroyed. Now because of supervene impossibly party A is discharged to perform his part of promise. Another Example, People of EPS society makes a contract with the auditorium management that EPS will do 10 Shows using the auditorium. Now If the Auditorium caught fire so it becomes impossible for EPS to perform their part of promise. (2) Declaration of War: For Example, If you make a contract with a certain country and war has been declared with that country, then they will become our alien enemy. (3) Change of Law: For Example, If you purchase something and further contracting people by using your purchased item, and by the change of law, your purchased item is banned that you cannot sell or purchase this item anymore, so by the operation of law, that contract will now be terminated. 5th Mode: Breach of Contract: A contract is discharged or breached by either of the party to the contract. When one of the parties of the contract breaches the contract, then other party is discharged from its responsibilities. Breach means any party to the contract does not fulfills its promise. If a party is unable to perform its part of performance that means that party has breached the contract. For Example, Party A has to deliver 200 tons of seeds to Party B on 1st July, but due to some reason they didn't deliver the seeds, that means party A breached the contract and Party B who had to pay 80,000 Rs as a part of the contract is now discharged from its liabilities and duties of the contract. So this contract is discharged by breach by party A and party B is now discharged from its Liabilities.

Anticipatory Breach:

For Example, there are two parties, Party A and Party B, so, Party A has to delivery 500 bales of cotton to Party B for Rs 5 Million Rs but there are certain terms and conditions, for example, this contract was made on 1st November 2012 and it was decided that Party A will deliver 500 bales of cotton at the go down or warehouse of party B on 15th December and on 15th January 2013, party B will pay Party A with Rs 5 Million. Now how can we understand that in this contract we had anticipatory breach? Ans) On 1st December 2012 Party A delivered 500 Bales of cotton to Party C for Rs 6 Million. That means 30 days after the inception of a contract, Party A breached the contract, this is anticipatory breach because party A breached the contract before the given date of the delivery at an higher amount to party C. Example 2,In winter, Party A is a manufacturer of leather jackets. if party A and party B had a contract of leather jackets in which party A has promised to deliver 2000 jackets to party B on 1st december, now party A was in the process of manufacturing those jackets. On 25th November Party A sold out that jackets to Party C. This is anticipatory breach. Example 3: Now Mr Sheikani is importing 500 Tankers of diesel from somewhere. Mr Shaikhani has promised to sell all these tankers to PSO on 15th Jan. Mr Shaikhani received all the tankers by the 5th Jan, by 10th Jan he received a better offer from party C and he sold all the 500 tankers to Party C. This is anticipatory breach on part of Mr Shaikhani or the party who has not fulfill his part of promise. Actual Breach: (a) On due date of performance: For Example, there are two parties, Party A and Party B, so, Party A has to delivery 500 bales of cotton to Party B for Rs 5 Million Rs but there are certain terms and conditions, for example, this contract was made on 1st November 2012 and it was decided that Party A will deliver 500 bales of cotton at the go down or warehouse of party B on 15th December and on 15th January 2013, party B will pay Party A with Rs 5 Million. Now on 15th December Party A failed to delivery 500 bales of cotton to party B, This is actual breach on due date of performance. Example 2: Now Mr Sheikani is importing 500 Tankers of diesel from somewhere. Mr Shaikhani has promised to sell all these tankers to PSO on 15th Jan but he failed to deliver the tankers on 15th jan, that is breach of contract on due date of performance. Example 3: In winter, Party A is a manufacturer of leather jackets. if party A and party B had a contract of leather jackets in which party A has promised to deliver 2000 jackets to party B on 1st december but party A did not perform on the due date to deliver the jackets to Party B, now this is the breach of contract on due date of performance. Example 4: Daniyal deals in cricket bats and balls and promised to deliver 500 Bats and 500 Balls to South Africa on 1st Jan but on the date of performance he could now deliver the 500 Bats and 500 Balls to South Africa, now this is breach of contract on due date of performance. (b) During the course of performance: For Example: there are two parties, Party A and Party B, so, Party A has to delivery 500 bales of cotton to Party B for Rs 5 Million Rs but there are certain terms and conditions, for example, this contract was made on 1st November 2012 and it was decided that Party A will deliver 100 bales of cotton on 5 different Installments, but after delivering 2 installments of 100 bales of cotton each party A refused to deliver the remaining 3 installments of bales of cotton, So this was breach of contract during the course of performance.

Example 2: Now Mr Sheikani is importing 500 Tankers of diesel from somewhere. Mr Shaikhani has promised to sell all these tankers to PSO on two different Installments of 250 Tankers each but after delivering 1 installment of tanker he refused to deliver the remaining 1 installment of tankers so Mr sheikani breached the contract during the course of performance. Example 3: In winter, Party A is a manufacturer of leather jackets. if party A and party B had a contract of leather jackets in which party A has promised to deliver 2000 jackets to party B on 4 different installments, party A after delivering 3 installments did not perform and refused to deliver the last installment, So that means Party A breached this contract during the course of performance. Example 4: Daniyal deals in cricket bats and balls and promised to deliver 500 Bats and 500 Balls to South Africa on different installments, now after delivering 200 Bats and 300 Balls, Daniyal breached the contract and refused to deliver the remaining of the installments, this is breach of contract during the course of performance.

Senario 1: In charge of Eps Society collected 2000 Rs from every member of Eps for giving away customized Eps shirt for every member, so the in charge of eps went to Atrium and the shop keeper said he will deliver all the shirts after 15 days and the cost per shirt is 250 Rs each. and the In charge of Eps ordered 200 Shirts for all the members and In charge of Eps even paid all the money at the time of contract. Now on due date the shop keeper didn't deliver the shirts. Here Eps party is the aggrieved party, and the shop keeper has breached the contract by saying that now each shirt cost 600 Rs, So how can't they deliver the shirts to Eps for the price of Rs 250 each. Now what possibly can eps do about it? Answer) Eps can take either of the following decisions. 1) Rescission: Now, Eps can recite the contract means they get themselves discharged from the contract. 2) Remidees: (a) damages: That means if one party breaches and because of that the aggrieved party suffers loss, so they can claim for damages. (b)Suit for specific performance (c )suit for injunctions (a) Damages: - Damages are of 4 types. 1. Ordinary damages. 2. Nominal damages 3. Special damages. 4. punitive or exemplary damages. Ordinary Damages Example: As Eps ordered 200 shirts at the price of 250 Rs each, So Eps expense till the due date was 50,000 Rs. (200x250 =50,000) but on the due date, shop keeper claimed that each shirt cost Rs 600, So the new actual amount they want from EPS is 120,000 Rs. (600x200 = 120,000) So now eps suffers a loss of (120,000 - 50,000 = 70,000) 70,000 Rs, So Eps will suffer the loss of 70,000 Rs on the due date. This an actual loss suffered by Eps due to direct breach of contract on the part of shop keeper. So this is a example of ordinary damages, Ordinary damages is basically the difference of the aggrieved price and the market price. Senario 2: (Nominal Damages Example) Party A (Eps society) ordered 300 Shirts from party B (Shop Keeper) and Party B said that each shirt cost 550 Rs, so total expense Eps bared at the time of signing the contract was 165,000 Rs (300x550 = 165,000) and he agreed to deliver the shirts a week later. So, on due date (a week later after signing the contract) the prices remained unchanged but Party B refused to deliver the shirts to party A.

In this case Party A didn't suffer any loss. Still if party A wants to apply for damages, they can apply in the court for nominal damages to show the party B that there should be a verdict for breaching the contract, so in this case court orders Party B to Pay Rs. 1 of nominal damages to party A. (b) If a certain Party has suffered some loss, so the other option he has is to file a suit for specific performance: It means if a certain party has not fulfilled his promise, then the opposing party will file a law suit with all the legal supporting documents and the opposing party will perform a prayer before a court that a court maybe pleased to direct the party who has breached the contract to perform his part of promise. For Example: There is a party A and Party B, they had a contract that party A will provide 1000 Bags of wheat to Party B and the price of each bag is 2900 Rs and the entire amount party B had to bare was 2,900,000 Rs and Party A was suppose to deliver all the bags of wheat on 1st april 2013. On due date party A did not perform their part of promise, On 1st April 2013 the price of each bag of wheat is 3700 Rs. So the total amount which party B have to bare now is 3,700,000 Rs. The difference of the price is 800,000. (3,700,000 - 2,900,00 = 800,000) That is the loss which party B will now suffer on the due date. Now Party B who has not breached the contract now has two options, 1. To File a suit for ordinary damages 2. To File Suit for specific performance: That means Party B makes a prayer before the court and after going through all the evidences and after listening to the arguments the court directs party A to perform their part of promise that is to provide 1000 bags of wheat to party B Senario 3: (special damages) Example 1: There are 3 parties, There is a government contractor which is party A, a government which is party B and a vendor which is party C. Now there is a contract between party A and party B that party B has to construct a bridge for party A for 200,000,000 Rs and Party A has to complete within 6 months and if Party A fails to build a bridge within 6 months, his money will be confiscated and the contract will be terminated. Now to construct a bridge party A needs heavy machinery, so now Party A signs a contract for 25,000,000 with Party C that Party C has to deliver specific machinery within 15 days to party A and if Party C fails to delivery the machinery in 15 days, Party A will cancel the contract, Party C delivers it after 3 months. Now how can party A start work so late? if they have paid some advance money to party B, it would go in loss too, Now the question is that, the bridge party A had to make in 6 months and profit they were earning from that contract will all go to loss. So who will bare the loss? Ans) These are known as Special damages. Since Party C was aware of the conditions of the contract between party A and Party B, therefore Party C will pay all the individual damages to Party A and Party B respectively. Example 2: Party A is a constructor, Party B is land owner who wants the house to be constructed on his land and party C will be Party B's tenant. Now the inception of the contract is on the 1st jan 2013 that Party A will build a house for party B and house should be constructed by 31st Dec 2013 and further there is a separate contract between Party B and Party C (party C is a multinational bank) that Party B will give their house on rent to party C in which party C paid 1,000,000 Rs in advanced to party B and said agreement was signed that Party C will pay Party B 200,000 Rs every month as a rent agreement once the house is built. Now Party A was also informed about the agreement between party B and Party C, So that party A realizes the seriousness of their contract. Now party A built the house way early before the 31st December and the house collapsed before the 31st December too. Now Party B got sued by Party C for the damages and for all the advanced money that went to waste. Now who will pay all the money back to party C and who will pay the construction money back to party B? Ans) Now these are special circumstances in which party A will pay all the money back to party B and Party C because party A was aware of the contract between party B and Party C. However if party A wasn't aware of the contract between party B and Party C then, Party A was only responsible for the to pay back the money to party B.

Senario 4: (Punitive or Exemplary Damages) Example: There is a party A and Party B, Party A promises to marry Party B (a girl) after 6 months, but after a while, Party A got a better option to marry. So Party A refused to Marry Party B but married another Girl instead. Now as soon as Party B got to know that party A now has a better option, Party B went to a mental depression. Now Party B's lawyer has filled damages of 1 Coror against party A claiming the girl (Party B) has a suffered a lot of mental pressure which can't be measured. Ans) So the damages which cannot be measured are known as punitive or exemplary damages but court will impose a heavy penalty against party A so that he should not do any such thing ever again. Example 2: Mehdi is a banker and Shaikhani has his own business and Shaikhani also has a amount of 2,000,000 Rs in his Bank Account. Now Mr. Shaikhani has given a check of 500,000 Rs to Mehdi but Mr Mehdi has dishonored that check. That means Shaikhani's check is bounced. Now all the reputation or value Mr Shaikhani has in the business market got spoiled because his check of Rs 500,000 Rs is bounced by Mr Mehdi. Now Mr Shaikhani has filled damages of worth 2 Coror Rs against Mr Mehdi for spoiling his business reputation for such huge worth. Ans) If Mr Shaikani has a huge huge business reputation in market, then he can file a heavy suit to recover heavy amount of money from Mr Mehdi, Worth 2 Corer Rs here is actually Business reputation Mr Shaikhani has in the market. Liquidated Damages: If one of the person delays their performance of a contract for a day or two or even for 15 days or could be more. Now you write some damages for that person in the contract, that each day of a delay, a person at fault will pay some amount of money. If a person delays the performance of his contract on his part, Then he will pay some amount for every precedent day. This is known as Liquidated damages. These damages are mentioned in a contract and you yourself determine them. For Example: Party A is hospital Management and Party B is Siemens, Party A ordered an electronic equipment from Party B, Party B actually signed a contract with Party A in which Party B will provide Party A with X-Ray Machines or MRI Machines etc within 6 Months & condition was put in the contract that if Siemens delays the delivery for 5 days, then Siemens will loose 5% of the whole cost of the contract. If Siemens does not perform their part of the contract and delays their performance. Siemens will pay Rs 15,000 for each day. On every precedent day, siemens will pay Rs 15,000 as liquidated damages. Example 2: You have a boutique and you ordered lets assume 5000 Dresses, You asked the tailor, that he has to deliver that dresses in 3 months and if they delay their delivery then for each day delay Rs 2,000 will be deducted from the tailor's Bill. Now You mentioning these damages in your contract is known as liquidated damages. Example 3: If you have got an International Contract from USA and you have to make some clothes for USA and it is mentioned in the contract that if you delay the delivery, then for each day you will have to pay 10 $, or you can even mention that for each day delay you have to pay the interest imposed by Labour. These are liquidated damages. Suit for Injunction: In Simpler terms if we want to understand Injunction, it means demanding Court's stay order. Stay order means to stop someone from doing something, For Example: Messi Signs a contract with Barcelona that he will be playing for Barcelona for 2 seasons and during those 2 Seasons he will not play for any other club. Now Messi got a very got offer from Manchester United. Now, Messi seems interested in this new offer from Manchester United, So Barcelona approaches court stating that Messi signed a contract with us and now he is breaching the contract. Now What is the demand? Barcelona is requesting the court to stop Messi from doing the act he promised not to do.

Example 2: In a Club there is a female singer, Now she made a contract with that club that she will sing for that club for 6 months. The agreement with the club states that the female singer will get 2,000 Rs for singing every night. During those 6 months time, she will not sing for another club throughout karachi. After 20 days she gets an offer Polani's club and in which he offers the female singer 10,000 Rs for each night. So she switched to Polani's Club. Now Club went to court to request that they have to stop her from breaching the contract because she promised not to sing for any other club. This is suit for Injunction. Example 3: Shahid Afridi makes a contract with Lester to play county Cricket and in the contract it is mentioned that he can't even play for IPL during that 6 months Season with Lester. Now before the season was over, Shahid Afridi signed a contract with IPL, now Lester can go to the court of justice to stop Shahid Afridi from doing the act he promised not to do so. So this is a suit for Injunction. Example 4: In the case of Business, There are two Parties , Party A and Party B, in which Party A promised to sell 2000 bags of Rice to party B. Instead of selling it to Party B, Party A is selling 2000 bags of rice to party C and Party B gets to know that from a very reliable sources, now party B can go to court and court maybe pleased to stop Party A from doing the act they promised not to do so. This is Stay order or suit for Injunction.

Business Law - Jurisdiction of Court. (class notes)

There are two Pillars of Law. 1. Sources of Law 2. Judiciary Judiciary - Parliament has the supreme authority to make the law but Judiciary has the right to interpret the law. Hierarchy of Judiciary Supreme Court of Pakistan Federal Shariat Court
High Court of Sindh Lahore High Court Peshawar High Court High Court District Session Court District judge Additional District Judge Senior Civil Judge Civil judge first Class Civil Judge second class Civil judge Third class Session Judge Addition Session Judge Magistrate first class Magistrate second class Magistrate third class ----------------------High Court of Balochistan Islamabad

Supreme Court of Pakistan Supreme court of Pakistan is the superior court of the land and it is also known as Epics Court because the jurisdiction of supreme court is the whole of Pakistan, Any Case from the entire Pakistan can be

heard in the supreme Court. Also it has the jurisdiction of Inter governmental disputes, can be settled in supreme court of Pakistan for example dispute between federal government and Punjab government, then supreme court has the jurisdiction to settle such dispute or there is a water dispute between the provinces, now this dispute can't be settled by the government, such dispute maybe taken to the supreme court and supreme court after having all of the parties and settle this dispute. Also if you have heard of National Financial Commission award, if there is a dispute between allocation of resources, then such dispute can also be settled by the supreme court of Pakistan. Supreme court has the jurisdiction of restoring the human rights for example if a certain law is passed by parliament but it is against the basic human right and if someone files a constitutional Petition (CP) in the supreme court against that law, then after hearing your concern, the court thinks that law is against the constitution of Pakistan, then Supreme Court of Pakistan has the right strike down that law. This is the jurisdiction & power of the supreme court. Now If High Court has made a certain judgment and if someone wants to appeal against that judgment, Then they can appeal in Supreme Court of Pakistan against the judgment of high court. Supreme Court of Pakistan also has powers of judicial review, it means that they have an authority to hear the existing case right from the beginning and pass the decision on it. Supreme Court of Pakistan also has a power listening to Civil Cases, Constitution matters and Criminal matters. Constitution of Pakistan is supreme law of Land. Constitution sets the parameter of how to set up a law. Constitution of Pakistan 1973 has mentioned the powers of the president of Pakistan, It has also mentioned the powers of the parliament, election commission , judiciary, cabinet and also the consists of the legal ways of how to appoint the election commissioner, the contents of taking an oath from the members of the national assembly, speaker, secretary chairmen, president and the prime minister. it also consists of the powers of the provincial assemblies and the governor. Every individual's power is mention in the constitution of 1973. Constitution of pakistan tells the powers of all the organs of the state. So any constitutional problem can be challenged by the Supreme court of Pakistan. Supreme Court is the final arbitrator of the constitution and the ultimate court of law. Federal Shariat Court: In Federal Shariat Court, all the judges are are muslim out of which 3 are muslim Ulamas, and if federal shariat court passes a judgement, Its judgement can also be challenged in Supreme Court of Pakistan. So definitely federal Shariat court falls under supreme Court of Pakistan. In Federal Shariat court, all the matters related to Hudood ordinance and matters related to Islam Shariah are heard. Judicial Policy: It is a policy which states that a certain case should be settled in specific number of days, it differs from the types of cases. for example, rental disputes must be settled within 6 months or Matters related to company law must be settled , it is mandated that these matters must be decided within 90 days. High Court is considered as the most superior court or it is the highest court of the individual province. The Head office of Supreme Court is in Islamabad, their individual registry offices are in the capital city of every provinces. The constitution of benches for these matters are decided by the chief justice of pakistan. Habeas Corpus: Police keeping anyone within their custody without registering their FIR is known as Habeas corpus or a person has been detent by law forcing agencies without lodging an FIR in an illegal manner is known as habeas corpus.

Killing a person without their proper trial is known as extra judicial Killings. Usually it is claimed that these people were killed in an encounter. Rule of Law means the law is same for everyone. "District Session judge" is a 22nd grade officer and they should be given a protocol. They District court settle all the matters related to civil cases. Whereas, all the session judge settle matters related to criminal cases. Judicial Magistrate Judge: He can handle matters related to both, Civil and Criminal cases. Qualification of judge At the initial stage it is necessary a person to complete his LLB, an individual can be eligible for LLB after a graduation of BBA or BA or B.com, Then an individual goes to a law college to complete his LLB, it is a field filled with law courses. After the completion of an individual's LLB, an individual has to do a 6 month internship under a senior lawyer of High Court, who has a experience of at least 10 years of work, after the completion of a 6 months internship an individual becomes a member of a bar council. Then after at least 2 years of experience at the bar council, then an individual is eligible to become the advocate of high court. After than an individual has to give a test of english and a test of Law and then you are eligible to become a judge of High Court. After the experience of 10 to 15 years at High Court then a person is eligible to become a judge of supreme court.