BUSINESS AND LABOR LAWS (8514)

SEMESTER AUTUMN 2019

Name Sania Saad
Roll Number BU551482
Q1- Discuss various provisions of a valid contract keeping in view the
offer acceptance and its revocation?

A legal contract is enforceable by law and, if a contract is not legitimate, it can

lead to business interference and illegal and insincere transactions. Let's talk
about the fundamentals of a valid contract.

Essential elements of a valid Contract

 Offer and Acceptance

There has to be a lawful bid and approval to shape an arrangement. The
term' lawful' means that, in relation to this, the offer and acceptance must
meet the requirements of the contract act. Section 2(a) of the Contract Act
sets out the bid or plan. Section 2(b) of the Act stipulates that when an
offer is accepted, it becomes a pledge.
Felthouse v. Bindley– In this case, it was held that “An offer cannot
prescribe silence mode of acceptance”.
Lalman Shukla v Gauri Dutt – In this case, it was held that ‘The mere
knowledge of an offer does not imply acceptance by the offeree’.

 Intention to create a legal relationship

There has to be a clear intention among the parties to attach legal
consequences to the agreement and to create a legal obligation. Social or
domestic agreements do not envisage a legal relationship, and as such they
do not give rise to a contract.
Balfour v. Balfour– In this case, it was held that if an agreement is domestic
in nature then that agreement is not enforceable by law.
Jones v. Padvattan– In this case, it was held that domestic agreements are
presumed not to be legally binding unless there is a clear intention.

 Lawful Consideration
A third essential element is recognition of the valid contract.
 In Currie v. Misa, Justice Lush described consideration "A valuable legal
consideration can consist of either some rights, interest, profit or gain
accruing to one party or some forbearance damage, failure or duty granted,
suffered or undertaken by the other party."

Section 25 of the Act specifies that an arrangement is null and void without
consideration.

 Competent parties
Paragraph 11 of the Act declares who is competent to contract. According
to this section, the contracting parties Section 11 of the Act sets out the
criteria of the contracting parties, which is as follows:
 must reach a majority age (an agreement with a minor is void ab
initio–Mohri bibi v. Dharmodas Ghose, 1903)
 Person of sound mind
 The person should not be disqualified by law.

 Free consent
Another important part of the contract is the free consent of the parties.
Section 14 of the Act described the term free consent as follows-consent is
deemed free if it is not induced by consent
 coercion (S.15)– Committing any demonstration illegal by The Indian
Penal Code 1860 or unlawful keeping of property, or taking steps to
submit these demonstrations. Chickam Amiraju v. Chickam
Sheshamma – Threat to suicide adds up to pressure

 Undue impact (S.16)– The utilization by one gathering to the

agreement of his predominant situation for getting an uncalled for
advantage over the other party.

 Fraud (S.17)– In Derry v. Look, It was held that portrayal made with
careless lack of concern add up to extortion.
 Deception (S.18)– It implies a bogus portrayal.

 Slip-up (S. 20, 21 and 22): there are two sorts of mix-ups for example
botch truth and error of law.

 Legitimate item – For the development of an agreement, it is

additionally fundamental that the gatherings to an understanding
must consent to a legal article. The article must not be deceitful or
illicit or corrupt or against the open strategy or must not suggest
injury to the individual or the other of the explanation referenced
over the understanding is void. on the off chance that A powers B to
sign an agreement for killing C. This is certifiably not a legal item.
Thus, the agreement will be void.

 Not explicitly proclaimed void-An understanding must not be one of

those, Which have been explicitly pronounced to be void.

For example, unconsidered agreement(S.25), marriage restraint

agreement(S.26), trade restraint agreement(S.27), restraint court
agreements(S.28), a wager agreement(S.30) etc.

Conclusion
Contracts have a very important part to play in every person's daily
life. The contract law allows for the structure and enforcement of
contracts or agreements between different parties. So the parties
must satisfy the above-mentioned requirements for the existence of
a contract.
 Q2- Highlight main features of a partnership business. How this
type of organization is different from other forms of organization.
Partnership Firms
Ownership types suffer from certain limitations such as limited
resources, limited skills and limitless liability. Business expansion
requires more resources and management skills, which entails more
risk as well. A proprietor discovers that he is unable to meet those
requirements. This call for more people, with different edges, to
come together and start business. For example, a person lacking
managerial skills but possessing capital.
Another manager who may be a good manager but may not have
money. It is called collaboration when these people come together,
pool their resources and expertise and coordinate a company.
Collaboration is increasing primarily because of the ownership
constraints or disadvantages.
Main Features
 Two or More Persons
To start a partnership company, at least two individuals must pool
resources. The 1932 Marriage Act does not provide for a fixed limit on the
number of partners. Nevertheless, the Companies Act of 1956 stipulates
that any partnership or association of more than 10 persons is unlawful in
the case of a banking business and 20 persons in other types of business
unless registered as a joint stock corporation.
 Agreement
A relationship is formed through an arrangement between individuals who
are competent to enter into a contract (e.g., unqualified minors, lunatics,
insolvents etc.). The agreement may be expressed orally, in writing or
implied. Nonetheless, it is about putting everything in black and white and
clearing the cloud that covers all knotty problems.
 Lawful Business
The spouses are only allowed to take up lawfully licensed practices. Any
criminal partner activity does not receive the legislative protection.
 Registration
Under the Act a company's registration is not mandatory. (The registration
is voluntary in most states in India). Nevertheless, if the company is not
licensed, it cannot gain other legal advantages. The consequences of non-
registration are-
 the company cannot take any action in a court of law against any
other party to settle claims
 It is not possible to settle disputes through a court of law in the case
of a conflict between partners.
 Profit Sharing
The Partnership Agreement will clarify how the parties will divide the
profits and losses. As there is no share of profits or expenses, a charitable
hospital, educational institution run jointly by like-minded individuals is not
to be seen as collaboration. Yet pure profit-sharing is not a conclusive proof
of collaboration. In this context, workers or investors who share profits
cannot be considered partners unless the partners agree.
 Agency Relationship
In general, each partner is considered to be both an agent of the company
and other partners. Partners have their own partnership with the agency.
The enterprise can be run jointly on behalf of all by one nominated partner.
Any actions performed in good faith by a named partner and on behalf of
the firm are binding on other partners as well as the business.
 Unlimited Liability
All partners shall be jointly and severally responsible for all of the
partnership's activities. In other terms, in all situations where the
company's assets are not sufficient to meet the company's creditors '
obligations, the partners ' private assets may be added as well. Creditors
may keep only one partner— who is financially sound— and be happy with
their arguments.
 Not a Separate Legal Entity
The company does not have its own personality. In the case of the death,
bankruptcy or lunacy of any of the partners, the company is terminated.
 Major Differences between a Corporation and a Partnership
 Structure of Corporations and Partnerships
Companies and alliances vary in their systems, with companies becoming
more diverse and the decision-making process involving more individuals. A
business is an autonomous, shareholder-owned legal entity in which the
shareholders determine how the company is run and who is running it. A
partnership is an enterprise in which two or more persons share ownership.
All administrative responsibilities, costs, liabilities and assets are divided by
two or more proprietors in general partnerships. General partners share
ownership obligations and limited partners only act as members within
limited partnerships.
 Business Startup Costs
Corporations are more costly than associations and more difficult to create.
Includes a lot of administrative fees and complex tax and legal criteria to
create a company. Corporations are required to file incorporation papers,
and receive state and local licenses and permits. Corporations frequently
employ lawyers to help with the case.
The U.S. Small Business Administration only advises established, large
companies start corporations with multiple employees. Partnerships are
less expensive to form and are more simple. Partners must register the
business with the government and obtain local or state licenses and
permits
 Liability of Corporations and Partnerships
The general partners are held liable in partnerships for all business debts
and legal obligations. The assets of general partners may be taken for
payment of company debts. Partnerships often include partnership
agreements which specify exactly what percentage of the business is
responsible for each general partner and the percentage can vary from
partner to partner.
On the other hand, companies do not hold people responsible for the
liability or legal obligations of the company. The corporation is considered
to be a separate entity and thus the corporation itself is responsible for
 assuming all debts and legal fees and the shareholders are not at risk of
losing personal assets.
 Taxation of Corporations and Partnerships
Partnerships do not have to pay business taxes but instead, according to
the United States, the profits and losses are "passed through" to the
individual general partners. Small Business Management. Partnerships
must file a tax return to the Internal Revenue Service to record expenses
and gains, and joint partners provide their share of profits and losses in
return. Corporations are required to pay national and state taxes and
shareholders also have to pay taxes on their salaries, bonuses and
dividends. According to the SBA, the corporate tax rate is typically less than
the individual income tax rate.
 Management of Corporations and Partnerships
Partnerships have clearer systems of management than the companies.
Both general partners in a relationship agree how the company is run.
General partners often assume managerial responsibilities or share in hiring
and supervisory manager decisions.
Corporations are regulated by shareholders, who hold regular meetings to
decide the management and policies of corporations. In general,
shareholders are not interested in the company's day-to-day operations but
rather oversee executives who run the company.

Q3- Explain various contents of prospectus of a public limited company.

A prospectus is a formal document authorized by and filed with the
Securities and Exchange Commission (SEC) that offers details of an offer to
sell to the public on an investment. A prospectus is prepared for the sales
of securities, bonds, and mutual funds. A prospectus is used to help
investors make a more informed decision about investment.
Contents of Prospectus of a Company
 Brief history and prospects
 Brief history of the company
 The key artifacts of the company
 The location of the plant Details about the project,
  the plant and its raw materials, etc.
 Capital structure.
 Company share capital; approved, published, subscribed and paid-up
capital, present subscription issue provided.
 Base of allocation of shares
 Facilities for the purchasing of shares open to non-resident etc.
 Information about the company management
Complete information about the past, key artifacts and present business of
the organization is given under this heading. The promoters experiment
and history, full addresses of the manager, managing director and other
managers are given.
 Details about the project
The key information given under this heading is the cost of the project, the
funding means for the project. Project location, services such as water
supply, quality of the goods etc.
 Financial information
Under budgetary data, the accompanying points of interest are given.

 Examiners report
 Shareholders value and liabilities
 Examiner endorsement on share capital
 Assessed cost of the task and the methods for the finance.6. General
data:

The fundamental data gave under this head are.

 Arrangement of CEO
 Appointment of executives
 Intensity of executives
 Acquiring forces of the executives
 Casting a ballot rights
 Move of offers
  Majority of general gathering
 Commission, business and duty exceptions

This part contains the accompanying data

 Commission to be paid to the investors to the issue Business

 Expense exclusion on speculation on the portions of the organization
 Exclusion from custom obligation and deals charge on plant and
hardware if any
 Top managerial staff

Under this head, the names, locations, and control of the top managerial
staff are given.
 Interest of Directors
This head gives data with respect to:

 Enthusiasm of chiefs in profits and different advantages.

 Compensation to be paid to the CEO, chiefs and the secretary.
 Miscellaneous
 Place of registration office
 business bankers
 factory to issue local and foreign legal advisors
 Issue consultants, etc.
 Application and allotment
In this section, the procedure for applying for shares, their scrutiny and
allocation of shares is made clear to prospective investors.

Q4- Highlight various penalties in case of breach of contract as discussed

in law of sales of goods.
 An agreement is an understanding between two gatherings wherein a
lawful commitment is made for every one of them to perform explicit acts.
These particular obligations could incorporate rendering an installment, or
conveying merchandise. All together for an agreement to be lawfully
enforceable, each gathering must trade something of significant worth. This
is lawfully alluded to as thought. Agreements might be oral or composed; in
any case, courts favor that understandings be placed into composing, and
there are a few agreements that are just legitimately enforceable in the
event that they are recorded as a hard copy.
Break of agreement happens when either of the gatherings included
neglects to maintain their settled upon obligations. Obligation can elude to
pretty much anything; however it ordinarily alludes to an installment,
decent, or administration, as referenced previously. Some normal ruptures
incorporate inability to perform obligations or difficulty (one gathering
makes the other party's obligations difficult to perform). A break could be
either fractional or unbiased, and the lawful ramifications for every one of
these kinds of rupture contrast.
Penalties for Breach of Contract
 Monetary Damages
The court is paying a sum of money for the infringement. This is also called
"expectancy damages." The most severe are compensatory damages.
Compensatory damages arise when the court grants what they were
originally promised in the contract to the non-breaching party, but were
not going to receive because of the violation. For contract disputes,
punitive damages are usually not paid except where the situation is serious,
such as fraud. Damage to reimbursement, too, is popular. Restitution
payments arise when the non-infringing party receives the amount they
paid, and the infringing party returns the money they took.

 Specific Performance
 It applies to a case in which the court compels the violating party to
perform the contract, or to deliver the goods or services agreed to in the
agreement.
 Nominal Damages
A solution happens when there is no actual monetary loss or when the
amount of damage done out of the bank is very low-sometimes as low as
one dollar.
 Liquidated Damages
It applies to a total amount of damages settled upon by the parties at the
time the contract is signed.
 Quantum Merit
The non-infringing party shall be awarded a sum consistent with the
reasonable value of the service they rendered
 Cancellation
This refers to a clause in the contract which states the amount of
compensation due to the non-infringing party if the infringing party decides
to terminate the contract.

Q5- How securities and exchange commission of Pakistan (SECP) can

improve its performance to make the capital market more attractive for
potential investors?
Security and Exchange Commission of Pakistan (SECP) has decreased
administrative duties to make capital market increasingly alluring
speculation road.
The Commission affirmed amendment in levy structures of National
Clearing Company of Pakistan Limited and Central Depository Company of
Pakistan Limited.
As indicated by an official statement of the commission, the decrease in
administrative charges will additionally limit the financial specialist related
expenses in various sections of value and obligation market and make it an
increasingly serious venture road.
 Under reconsidered duty structures, the sub-account support expense of
sub-account holders keeping up Investor Accounts with CDC has been
deferred off.
Tax for yearly charge of redeemable protections have likewise been
considerably decreased by practically 70% to help corporate obligation
showcase.

The SEC has given various mandates during the last quarter for better
administration of the stock trades and the corporate part.
 In August 2002, the SEC gave an order to the three stock trades with
respect to rebuilding of the Board of Directors. As per this order, the Board
of Directors of the stock trade will contain eight executives, four chosen
from among the individuals by the general body of the stock trade and four
autonomous chiefs to be selected and designated by the Commission from
among the experts including protections showcase specialists, legal
counselors, contracted bookkeepers, speculation financiers, IT specialists in
conference with the expert bodies as the SEC may think about suitable.
 Furthermore, the Managing Director of the Exchange will be an executive
by temperance of his office, Chairman of the Board of Directors will be
chosen by the Board from among the non-part chiefs while the post of Vice
Chairman of the Exchange has been nullified.
 On September 2, 2002, this mandate was amended based on specific
proposals made by the KSE the board. As indicated by the reconsidered
order, the Board will involve 10 executives – five from individuals from the
trade and five pariahs including the overseeing chief. The Board will choose
the executive from among the chosen part chiefs, while the overseeing
chief will avoid the appointment of the Chairman.
 The SEC coordinated the Lahore Stock Exchange (LSE) to pull back the
choice to nullify administration charges imposed on exchanges and
stopping of commitment to the Members Contribution Fund (MCF). The
Commission has additionally guided the stock trade to guarantee that
assortment of administration charges is continued at the pace of Rs. 3.75
per Rs. 100,000 and that individuals are making commitment towards the
 Members Contribution Fund (MCF) at the pace of Rs. 5 for each Rs.
100,000. For future, the Board has been coordinated not to change the
pace of administration charges and different charges on all exchanges
without earlier composed endorsement of the SEC.

 With a view to improve divulgence measures in the corporate area in

Pakistan, in July 2002, the SEC advised rules, arranged in discussion with
partners, for the readiness of outline for open issues. To additionally
encourage the financial specialist and expand the flow and
comprehensibility of the outline, SEC, through the endorsed rules, has
urged that notwithstanding distributing the plan in English, a shortened
structure may likewise be distributed in Urdu. The Commission has likewise
coordinated that the language of the plan be basic, clear and brief with
accentuation on sequencing of data in the outline from the point of view of
a typical investor, and that the outline will not be utilized as a showcasing
apparatus.
 The SEC additionally gave an order on July 18, 2002 to specialists, business
firms and consolidated financier houses enlisted under the Broker and
Agents Registration Rules, 2001. The directive is powerful for appointment
of chiefs held after August 31, 2002.
The changes presented by the SEC, particularly the activities to extend the
capital market and upgrade institutional ventures, have gotten a good
reaction from potential financial specialists. This is apparent from the
expanded number of uses being gotten by SEC from different corporate
houses for enrollment of Asset Management Companies (AMC) and
floatation of open-end shared assets.
During the previous year, the Specialized Companies Division of the SEC
prepared four new applications for floatation of shared assets while
another two are in the pipeline. Arif Habib Investments was offered
consent to drift two new assets, specifically Pakistan Income Fund (PIF) and
Pakistan Stock Fund (PSF) with nine managerial plans. ABAMCO has been
given endorsement, on a fundamental level, to drift a subsequent open-end
support in the wake of exhibiting a decent reputation with their first
reserve Unit Trust of Pakistan (UTP). Another advantage the board
organization, United Asset Management Company (UAMC) has been
enlisted and given the endorsement, on a basic level, to glide currency
showcase finance.
The pattern is empowering considering the ongoing change measures
presented by the SEC both as to financial exchange activities and guideline
of the common reserve industry. The SEC has been effectively associated
with advancing the shared reserve division and making a situation helpful
for speculations through aggregate venture plans. A portion of these
formative endeavors incorporate permitting opportune assets to contribute
up to 50% of their assets in the shared store part; looking for different duty
exclusions for common assets and their financial specialists; and correcting
the applicable principles and guidelines to stay aware of the necessities of
the business.
With an end goal to keep up some base norms for the business, the SEC has
clung to severe qualification criteria for passage into the segment. The
certifications of the supporters of the plans are examined in detail and the
foundation, capabilities and mastery of work force evaluated to guarantee
that certified experts are endowed with the assignment of dealing with the
pooled reserve funds of individual financial specialists. Outside specialized
association with a universal resource the board organization is underscored
for those wishing to coast a value showcase open-end finance. On-going
specialized joint effort with remote reserve administrators is viewed as
significant for move of specialized information and ability from experienced
experts from around the globe just as to guarantee that nearby assets
receive universal accepted procedures in the administration and
administration of shared assets. All the open-end common finances
working in the private part specifically UTP, PIF and PSM have been set up
with global specialized coordinated effort. It is normal that with more
prominent aptitude available to them these assets will have the option to
perform better and have a demonstrational impact on the rest of the
business.