BUSINESS & INDUSTRIAL LAWS

ANSIR ALI KHAN

The principles & regulations established in a community by a certain authority & applicable to its people, whether in the form of legislation or of customs & policies recognized and enforced by judicial decision.

Law is a system of rules, enforced through a set of institutions used as an instrument to underpin civil obedience, politics, economics, and society.
Law serves as the foremost social mediator in relations between people

According to Holland Law refers to a general rule of action, taking cognizance only of external acts enforced by a determinate authority, which authority is human, and among human authorities is that which is permanent in a political society. According to John Erskine Law is the command of a sovereign, containing a common rule of life for his subjects and obliging them to obedience. According to De Montmorency Coercion is a weapon of law which law has forged, but it is not the basis of law. According to Pound Law is the body of principles recognized or enforced by public and regular tribunals in the administration of justice.

The science & philosophy of law is called Jurisprudence. It is the knowledge of law.

Kinds of Jurisprudence
Historical Jurisprudence Ethical Jurisprudence Analytical Jurisprudence

Imperative Law Physical or Scientific Law Natural or Moral Law Conventional Law Customary Law Practical or Technical Law International Law Civil Law

Sources of Law

Formal Sources

Material Sources

Legal Sources

Historical Sources

Legislation

Precedent

Customs

Agreement

Sharia

Al-Quran

Sunnah

Ijtehad

Process of legislation When N.A is in session When N.A not in session

Money bill

All other bills

President

N.A

Senate
Ordinance President

Assent Reject Act

Sent for reconsideration by Parliament

Two important Bodies

Law Making (Legislating)

President Parliament Governor Provincial Assembly

Law Implementing (Judiciary)

Supreme Court High Court Lower Courts

Court/ Judiciary Complete Judiciary

Half (Quasi) Judiciary Powers of Lower Court Special Court/ Tribunals Income Tax Appellate Tribunals Insurance Tribunals Banking Tribunals

Supreme Court High Court

Lower Court

Labor Courts

Supreme Court
High Court

Lower Court is Comprising of Below

Criminal

Civil

Judicial Magistrate

District Judge/ Additional District Magistrate

Senior Civil Judge

Civil Judge

Chief Justice - Supreme Court

Four Chief Justice- High Court

In Every Province

Punjab

Sindh

NWFP

Balouchistan

Islamabad

High Court

In Every Province

Islamabad

Punjab

Sindh

NWFP

Balouchistan

Law

Name of Law

Making Body

Year of Becoming Law

Contract

ACT

1872

Always read three parts as name of Contract

Law

Name of Law

Making Body

Year of formation

Income Tax

Ordinance

2001

Always read three parts as name of Contract

Law making body

President and Governor

Parliament and Provincial assembly

Ordinance

ACT

ACT is made by

Parliament

Provincial Assembly

Jurisdiction Of Law

Jurisdiction Of Law

Whole Country

Whole Province

Ordinance is made by

President

Governor

Jurisdiction Of Law

Jurisdiction Of Law

Whole Country

Whole Province

Jurisdiction area

President Parliament

Governor Provincial assembly

Whole Country

Whole Province

Parliament

National Assembly

Senate

Bill

National Assembly

Simple Majority Pass

Senate

President Of Pakistan

Become LAW

Constitutional Amendment

National Assembly

2/3rd Majority Pass

Senate

President Of Pakistan

Become LAW

Relationship Is Created by

Blood

Contract

Brother & Sister Father & Son

Husband & Wife Sale / Purchase Employer / Employee Landlord / Tenant Partnership Business

How to become owner of Property/Goods By

Inheritance

Contract

Seller looses ownership & buyer gets ownership Includes GIFT, Purchase, Sales

It extends to the whole of Pakistan. It had 266 sections Initially Sec 1-75 ( General principles relating to all types of contracts) Sec 76-123( Repealed after enactment of Sale of Good Act) Sec 124-147 (Contracts of Indemnity & Guarantee) Sec 148-181 ( Contracts of Bailment & Pledge) Contracts of Agency (Section 182-238) SEC 239-266 (Repealed after enactment of Partnership Act)

Contract is an agreement between two or more persons creating rights & obligations that are enforceable by law. Section 2(h) of the Contract Act defines Contract as an agreement enforceable by law Contract
A) Agreement B) Enforceable by law

Section 2(e) defines Every promise or every set of promises forming the consideration for each other, is an agreement. Agreement
Promise Consideration Plurality of persons

Section 2(b) of the Contract Act defines when a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Promise is
Assent for acceptance To a proposal

contract is an agreement An agreement is a promise A promise is an accepted proposal Every agreement is result of a proposal from one side and its acceptance from the other.

An agreement is enforceable if it is recognized by courts. It must create legal obligations between the parties( otherwise not a contract) All contracts are agreements but all agreements are not contracts. Agreements
Social ( do not enjoy the benefit of law, donot create legal obligation) Legal (creates legal obligations)

Valid Contract - FLIPCANS

Free Consent Legal Relationship Legal Object In writing if required by Law Possible to Perform Consideration Capacity of the parties Agreement Not Expressly declared Void Subject Matter

According to Enforceability According to formation According to Performance

Valid Contract
Voidable Contract Void Contract

Contract
Enforceability

Valid

Void-able Aggrieved Party may Make Contract as

Void

Fully Enforceable By law/ court

Can not be Enforceable By Court Or Law

Express Contract
Implied Contract Quasi or constructive Contract

Contract Formation

Expressed Oral

Constructive Quasi By Conduct Implied Contract

Written

Executed Contract
Executory Contract

Contract Performance

Executory

Executed

Unilateral Contract

Bilateral Contract

Spot Ready Contract

Executed Contract

Delivery 100% on Spot

Payment 100% on Spot

Executory Contract

Unilateral Case-1

Case -1 Delivery Part now Remaining in future Full Delivery in Future Delivery 100% Now

Payment 100% now

Payment Part now Remaining in future Full Payment in Future

Executory Contract

Bilateral Delivery In Future Payment in Future

Today just Words are shared

Bilateral Contract Performance Executed Contract Both parties do their part of work at the time of contract

Executory Contract Future/ Forward Contract Both parties are Bound to do as per contract

Spot/ Ready basis

Unilateral Contract Performance

One party has done His part of act Before contract or At the time of contract

Other party is to Do his part of act

At the time of Formation of contract After the Formation Of Contract

Unilateral Contract Buying of Goods

Advance Payment 100%

Delivery of Goods By Seller

At the time of Contract

In Future Date

Consent of Parties to the Contract

Consent is Free

Consent is not Free Existence of of the Following

No elements of the following

Coercion Undue Influence Fraud Misrepresentation Mistake CUFMM

Consent of Parties to the Contract

A G G R E I V E D

Party A

Party B

Commits Fraud With Party B

Consent of B is Now not free Because B is Under wrong impression

Consent of Parties to the Contract

A G G R E I V E D

Party A

Party B

Makes Misrepresentations With Party B

Consent of B is Now not free Because B is Under wrong impression

Misrepresentation is different from fraud

Consent of Parties to the Contract

A G G R E I V E D

Party A

Party B

Makes Undue Influence With Party B

Consent of B is Now not free

Because B is Under influence of Mr. A

Every body can not influence Except parents, master, spiritual leader

Consent of Parties to the Contract

A G G R E I V E D

Party A

Party B

Makes Coercion Influence With Party B

Consent of B is Now not free

Because B is Under threat of Mr. A

Coercion means using criminal tactics Or weapon to threat other party

Consent of Parties to the Contract

Party A

Both are under Mistake

Party B

Consequence: Contract is Void

Voidable Contract -CUFM

When Consent is Not Free due to

Fraud

Misrepresentation

Undue Influence

Coercion

Consequence may be following

Contract may be enforceable

Contract may be terminated

Consequences of the Following

Fraud Misrepresentation

Undue Influence

Coercion

Mistake

Contract is voidable

Void

DISTINCTION B/W COERCION & UNDUE INFLUENCE PARTICULARS COERCION UNDUE INFLUENCE

Nature

Coercion is a physical threat either Undue influence is a mental or moral to property or person threat

Illegal & Unfair Penal Action

Coercion involves doing or thereatening to do an illegal act In coercion, penal action is also taken against guilty party

In under influence the act may not be illegal, it may only be unfair In undue influence, generally no penal action is taken aginst guilty party

Parties

Coercion may be exercised by or against the party to the agreement. Undue influence must be exercised by or It may also be exercised by or agianst the party to the agreement against some third party For coercion no specific relationship b/w the parties is necessary For undue influence there must be a specific relationship b/w the parties

Relationship

Refund of Benefit

Effect

In undue influence, the court has In coercion the aggrieved party has discretion to direct the aggrieved party to to refund the benfits, if he has refund the benefit, if he received from the received any, from the other party other party. In coerction, the contract is In undue influence, the contract is eight voidable at the option of aggreieved ervoidable or the ourt may set aside it or party enforece it in a modified form.

DISTINCTION B/W FRAUD & MISREPRESENTATION PARTICULARS FRAUD In case of fraud, the party makes a false statement with an intention to deceive the other party In case of fraud, the parson making the suggestion does not believe it to be true In fraud the aggrieved party can claim damages in addition to the right of avoiding the contract MISREPRESENTATION In case of misrepresentation, there is no intention to deceive the other party In case of misrepresentation, the person making the suggestion believe it to be true

INTENTION

Belief

Damages

Offence

Truth

In misrepresentation entitiles the party to avoid contract and there can be no suit for damages Misrepresentation does not amount to a Fraud may amount to an offecne of offence of cheating. It is not a criminal cheating. It is a criminal act act. In case of fraud, the aggrieved party In case of misrepresentation, the can avoid contract even if it had the aggrieved party cannot avoid the contract means to discover the truth with if it had means to discover the truth with ordinary diligence ordinary diligence

Coercion

Fraud

Undue Influence

Misrepresentation

Made by either Person to other

Contract becomes Voidable

The party on whom Coercion, Fraud, Misrepresentation Undue influence is made is called aggrieved party

Aggrieved Party

Has Option

Makes Contract Void

Makes Contract Valid

By terminating the Contract

By Keeping silence By Using the goods By ignoring/ consuming By lapsing time By apprehension of threat By Resale of goods

Consent

Parties

Aggrieved Party

Party A Free

Party B Not Free

Contract becomes Voidable

Aggrieved Party
Consent

Parties

Party A UnFree

Party B Free

Contract becomes Voidable

Voidable Contract Depends upon Aggrieved Party

Accept

Reject

Contract Becomes Valid

Contract Becomes Void

Contract is Enforceable

Contract is Not enforceable

Un free Consent Due to Coercion Undue Influence Fraud Misrepresentations Consequence Contract becomes Voidable No Contract

MISTAKE

Consequence

Free

See other Ingredients LIPCANS

Contract Becomes Void Reject

Consent
Due to Un Free Due to Mistake Contract is Void
Coercion Undue Influence Fraud Misrepresentation

Contract Is Voidable

Aggrieved Party

Accept Contract Becomes Valid

When a Voidable Contract becomes Valid

When Aggrieved Party

After lapse Of reasonable time

Restitution is not possible Goods Resale Goods Consumed Shape of Goods Changed Goods theft Goods Broken

Accepts
Silent

Apprehensive

DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS PARTICULARS AGREEMENTS VOID CONTRACTS

A void contract is A void agreement is unenforceable enforceable when it is Enforceability from the very beginning. originally made. It becomes un-enforceable later on. A void contract can be A void agreement can never be Enforced enforced before its being unenforced. enforceable. In a void contract the parties In a void agreement the parties are are entitled for restoration of Restoration of not entitled for restoration of benefits which they have Benefit benefits which they have exchange exchange during the during the process of contract. process of contract.

DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS PARTICULARS Prohibited Punishable Nature Collateral Agreement ILLEGAL AGREEMENTS VOID AGREEMENTS

An illegal agreement is prohibited A void agreement is not by law. prohibited by law. A void agreement is not An illegal agreement is punishable punishable An illegal agreement is also void A void agreement is not agreement illegal agreement A collateral agreement to a A collateral agreement to an illegal void agreement is agreement is not enforceable. enforceable.

DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS PARTICULARS VOID AGREEMENTS A void agreement is unenforceable by law. VOIDABLE CONTRACTS

A voidable contract is a valid Enforceability contract and enforceable till it is rejected. A voidable contract is not A void agreement is void ab-initio Defects void ab-initio and its defects and its defects are incurable. are curable. In a void agreement even a thrid In a voidable contract a third Rights of Third party cannot acquire any right from party can acquire a right Party person claiming undr such a from a person claiming contract. under such a contract. In a void agreement the person is not entitled to compensation fro Compensation loss arising due to non performance of the agreement. Collateral Agrement Collateral agreement to void agreement is a void contract. In a voidable contract a person is entitled to compensation for loss arising due to nonperformance of the contract. A collateral agreement to a voidable contract is not a void contract.

MISTAKE

Fact Quality Quantity Ownership Fundament Facts Identity Existence

Law

Private Rights

Foreign Law

Pakistani Law

Contract is Void

Contract is Binding

Reasons for doing

Business Transactions

Through

CONTRACT
If any party breaches Promise
Other Party goes to Court For getting Justice

Relationship Is Created by

Blood

Contract

Brother & Sister Father & Son

Husband & Wife Sale / Purchase Partnership Business

Object of the Contract

Legal

Illegal

To buy goods/ To acquire service

To buy weapons for killing To pay a person to defame other person

Contract Valid

Illegal Contract

Right to Sue available to aggrieved party Available

Criminal Law

In Contract

In Tort

Right to Sue available to aggrieved party When in a contract one party Breaches

In Tort

In Contract

If more benefit Than contract terms

Aggrieved party asks As per Law of tort Law

If less benefit In law of Tort

Aggrieved party asks As per Contract between them

Contract may be in the form of ORAL WRITTEN IMPLICATION

Contract Formation

Expressed Oral

Constructive Quasi By Conduct Implied Contract

Written

In writing if required by Law

Oral Contract

Implied

Written

Most of the Contract are in Oral form

Some of the Contract are in Made by implication

Important contract Are usually in Writing but writing form is not necessary EXCEPT FEW

By Conduct Mean

Body Language

Silently allow other Person to enter into A contract

Here words & Written form are not Shared b/w parties

Contract in written

Mandatory

Optional All contacts may be made by words of mouth except a few contracts

Purchase of Immovable Property Charter Party Contract Agreement for time barred debt Agreement on the basis of love & affection

Oral

By Conduct

Written

Contract

Purchases

Sales

Service

Rent

Amount/ Goods both are immaterial.

Usefulness of Written Contract

Documentary Proof

Easily preserve For a longer period

No party can Easily deny

Less disputes As some disputes arises as one party forgets

Law considers Written evidence more powerful than Oral

Both parties are able / capable To act/ meet their part of obligations

Possible to Perform

Person A

Both Party

Person B

Shall do /act as per contract

At the time of execution of contract

Possible to Perform

Patient ABC

Doctor XYZ

Able to pay

Able to prescribe medicine

Possible to Perform

Student ABC

Teacher XYZ

Able to pay

Able to deliver knowledge

Possible to Perform

Patient ABC

Doctor XYZ

Wants to operate His part of HEAD

Is a Physician

He cant operate because for operation one must be surgeon

A benefit which is normally enjoyed by Both Parties

Consideration in a Contract

Bilateral

Unilateral

No Consideration Agreement is Void

Normal Case

Few Cases Agreement is Valid

Consideration need not equal

Seller

Buyer

Sale a Book
Price Rs. 20

Buy a Book Which pass the exam

Here Rs. 20 are nothing but passing of exam is more important

Consideration need not equal

Seller

Buyer

Sale a sugar tablet

Price Rs. 2

Buy a Tablet Saves life of Diabetic Person

Here Rs. 2 are nothing but saving of life is more important

Bilateral

Consideration Bilateral

A benefit enjoyed By both the Parties Price

Goods

Seller enjoys

Buyers enjoys

Must be Legal Not Illegal

Consideration: Legal

A benefit enjoyed By both the Parties Doctor

Patient

Amount

Prescription & Checkup

Consideration: Legal

A benefit enjoyed By both the Parties KASBIT

Student

Amount

Knowledge

Consideration: Legal not Illegal

A benefit enjoyed By both the Parties

Muderer

Other Party
Removal of Enemy It is not a contract

Amount

Consideration: Legal not Illegal

A benefit enjoyed By both the Parties

Seller

Buyer
Illegal Weapons It is not a contract

Amount

Consideration: Legal not Illegal

A benefit enjoyed By both the Parties

Seller

Buyer
Illegal Weapons It is not a contract

Amount

Unilateral Consideration

Gift

Agreement Time Barred Debt

Past Voluntarily Service

Contribution To Charity

Agreement on the basis of Love and Affection

Agreement to pay TIME Barred Debt

Time barred Debt

Pay back Period

Defined

Not defined

After expiry of 3 years

After expiry of 3 years

The lender can not legally recover amount from borrower

Lending Rs. 100,000 Lending Date March 10,2007 Pay back Date June 10, 2015 After expiry of March 2018 Not defined

After expiry of March 2010

The lender can not legally recover amount from borrower

Lending Rs. 100,000 Lending Date March 10,2007 Pay back Date June 10, 2015 After expiry of March 2018 Not defined

After expiry of March 2010

The lender can not legally recover amount from borrower

Lending Rs. 100,000 Lending Date March 10,2000 Borrower Enjoys the Right Over fund Date Expire On March 10,2003 Current Date June 2007

Lender can not Recover the Amount from Borrower

Borrower promises to pay back to Lender

Such Contract benefits to only LENDER not the borrower

Agreement on the basis of Love & Affection

Agreement on the basis of Love and affection

Between Parties At the time of This agreement

Form of agreement

Other Requirement

In Writing

Registered at Registrar

Relationship of love must be present

All the conditions must be existing

Agreement to pay for Past Voluntarily Service

Contract for Past Voluntarily Service

First Party Needs service Example: Lost of Passport

2nd Party fulfill the need voluntarily

First party after getting Benefits from 2nd party Now promise to reward

2nd party finds and handover to 1st party

This Act/Promise gives benefit to 2nd party but it will not give anything to 1st party

Sequence of events

At 9.00 pm Wallet was Lost by Javed

At 9.30 pm Wallet found By Imran

At 10.00 pm Mr. Imran handover Wallet to Mr. Javed

At 10.30 pm Mr. Javed promises To pay Rs. 300 As reward

Mr. Javed gets The benefit

Mr. Imran is getting Benefit but Mr. Javed Is not getting nay benefit

Agreement to pay for Charity Contribution

Charity Contribution

Donor (Contributor)

Donee (Receiver of the Funds)

Loosing the Funds

Receiving the Funds

Charity Contribution

Donor (Contributor)

Donee (Receiver of the Funds) Donor may ask refund

Utilized the Funds Not Utilized the Funds Donor may Not ask refund

All persons are competent to Contract

Except

President

King/Queen
Unsound Mind

Head of State

Minor

Foreign Alien

Convict

Insolvent/ Dead Person

Company (Natural Contract)

Unsound Mind

Lunatic (Over drunken/ Suffering illness) Some times OK Some times Senseless

Idiot

All contracts are Void

When he is Ok Then Contract is Valid

Minor Person

Below 18

Age 18 to below 22

22 or more

All contract are void

All contracts are Valid except Sale/ Purchase Of Property

All contracts are Valid

Company Legal Peron Makes

Business Contract Sales/ Purchase Rentals/ Lease/ Services Job Contract with employee

No Natural Contract Marriage between UBL and ABCL

Contract between

Mr. A

President

If President Breaches his Promise

Mr. A can not file a suit against him in Court

Useless Contract as no right to go to court against President

Contract between

Mr. A

Minor

If Minor Breaches his Promise

Mr. A can not file a suit against him in Court

Useless Contract as no right to go to court against Minor

Contract between

Mr. A

Insolvent

If Insolvent Breaches his Promise

Mr. A can not file a suit against him in Court

Useless Contract as no right to go to court against Insolvent

Contract between

Mr. A

Already Dead Person

Impossible for a dead person to offer OR accept

Offer

& Acceptance

Offer From A Results Agreement

Acceptance By B

Offer It must Create Legal Relationship

Expressed

Implied

Oral

By Conduct No Words

Written Delivered By Mouth Written By Hands

Who can Offer

Owner of the Goods

Person Authorized by The Owner

Such authorized Person is Called Agent

Directors Of the Company

Status of them

Agent of the Company

The directors makes all contract on behalf of Company

Offer Shall not contain

Presumption

For Communication & Acceptance

Example of Negative Condition

Mr. X offers

Presumption If Y Does not Reply within 10 day It means he has given acceptance

Such presumption Is wrong

No agreement Come into existence

Offer terminates

By Mr. A himself

By Counter Of Mr. B

By Lapse Of Time

Subsequent Illegality

Counter offer of other Party

Offer Normal Offer Revokes Original Offer Counter Offer First some one offers us We instead of acceptance ask some changes

When some body offers to another

Offer By Mr. A

Acceptance By Mr. B

Agreement Between Mr A & Mr. B

Offer By Mr. A

Mr. B Rejects

Offer of Mr. A Is cancelled

By rejection of Mr. B
OFFER Mr. A himself Cancels it TERMINATES

EXISTS

ACCEPTANCE

ACCEPTANCE

Agreement

No agreement

By lapse of time
OFFER Subsequent Illegality EXISTS TERMINATES

ACCEPTANCE

ACCEPTANCE

Agreement

No agreement

Offer By Mr. A

Such act of Mr. B Terminates Automatically offer of MR. A

Mr. B disagrees And Makes Changes

Mr. B accepts

If acceptance is made when offer terminates then NO agreement

No Agreement Between Mr A & Mr. B

Example of Counter/ Cross Offer

Offer By Mr. A Mr. B disagrees And Makes Changes It is an Offer of Mr. B

Mr. A may reject Or accept the Offer

Mr. A Offers To Sell His Car Rs. 200,000

Mr. B says 190,000

Offer of Mr. A is Cancelled Now it is an offer of Mr. B

Offer of B Stands cancelled Offer of Mr. A of 195000 is existing

Mr. A says no 195,0000

Mr. A Offers To Sell His Car Rs. 200,000

Mr. B says 190,000

Offer of Mr. A is Cancelled Now it is an offer of Mr. B Mr. A may accept the Offer& it becomes an agreement

Offer By Mr. A

Canceled Mr. B disagrees And Makes Changes in Offer

Birth of New Offer

It is an Offer of Mr. B

There is an Agreement Arises between Parties

If Mr. A Accepts The Offer

If Mr. A Rejects the Offer

Example of Cross Offers

Mr. B Offers is legally cancel. After rejection Mr. A if wants, to accept but he didn't

Mr. A Offers Status

Offer of Mr. B comes into existence And offer of Mr. A stands cancelled If Mr. A Accepts offer Agreement between A & B

Mr. B Changes

Offer stands cancelled

When other Party rejects

When other Party makes Counter Offer

Valid Agreements

Offer By A

Acceptance By B

Agreement

Again Offer + Rejection Offer By A By B + By A

Acceptance = + By B

Agreement

Valid Agreements

Offer By A

Counter Offer by B

Acceptance = By A

Agreement

No Agreement
Offer By A Rejection By B Acceptance By B No Agreement

Offer By A

Counter + Offer by B

Acceptance By B

No Agreement

Offer in General or Specific

General

Specific

Not to Particular person Mr. A offers whosoever Finds my passport I will give reward of Rs. 1000

To specific Person / Entity

Purchase agreements

Offer in General or Specific

General

Specific

Not to Particular person Mr. A offers if any one gets Illness having used my pills I shall pay Rs. 20,000

To specific Person / Entity Sale / Purchase Gift/ Partnership agreements

Invitation to Offer

Purpose

Goods in Windows/ Advertisement

All displays items

Instigate Motivate

It is not an offer But a tool to induce

Words of Seller To motivate buyer

Results
Other party makes Offer

Invitation to invite Offer

Not always necessary

Before Offer

Communication of Offer

Reached

Not Reached
Other party can Not accept consequence No Agreement

Other Party may accept Consequence Agreement

Mr. Javed offers Whosoever finds my NIC I will give Rs. 10,000 Mr. Wasim finds it but he did not have any communication of offer

Wasim search Mr. Javed handovers to Mr. Javed

Mr. Wasim is not entitled for Reward Because Wasim had no communication of Offer

Offer Definite & Clear Contains

Ambiguity

No Ambiguity Acceptance By other Party Agreement comes into existence

Acceptance By other Party No Agreement

Offer Definite & Clear

Mr. A has Two Cars Toyota & Mazda He offers to Sell his Toyota For Rs. 500,00 Offer is clear No Ambiguity Agreement comes Into existence

Acceptance of B

Offer Definite & Clear Mr. A has Two Cars Toyota & Mazda He offers to Sell his Car For Rs. 500,00 Offer is not clear Which Car

No Agreement

Even Acceptance of B

Creation of Legal Relationship Contains For Commercial Purpose Acceptance By other Party Legal Relationship Is created between parties Agreement comes into existence

For Social Purpose

Acceptance By other Party No Agreement And NO

Valid Agreement Offer From Mr. A

Buying an item For price Acceptance By Mr. B Agreement Comes into existence

Valid Agreement Offer From Mr. A

Inviting For Dinner Acceptance By Mr. B Social Interaction Only

Terms and Conditions Quiz This offer is ??? Attached With Offer With Acceptance Law does not Allow Status of acceptance Becomes Counter Offer Quiz This Accept is ???

Law Allows

Offer remains Valid

REVOCATION(Cancellation) OF OFFER

Must be Made by Offeror

Before Acceptance

After the Lapse Of reasonable time

Subject Matter destroyed

REVOCATION/ (Cancellation) OF OFFER

Subsequent Illegality

Death/ Insanity Of either party

Failure To fulfill condition

Counter Offer by Other party

Before Acceptance

Offer of Mr. A

Mr. B Listens But not gives his acceptance

Mr. A May revoke His Offer

Acceptance Of Mr. B now useless

Offer of Mr. A

Acceptance Of Mr. B

Mr. A shall not Revoke His Offer

After the Lapse Of reasonable time

Offer For no specific Time Even then Time mentioned After expiry Of mentioned time

If no acceptance is Given within reasonable time

Offer automatically revoked

Destruction of Subject Matter

Offer of A To Sell his Car to B

Car theft Or Destroyed

Offer Of Mr. A Automatically Revoked

Subsequent Illegality

Offer of Mr.A To Sell Gold to "B"

Government Bans to Sell Gold

Offer Of Mr. A Automatically Revoked

Death / Insanity of Either Party

Offer of Mr.A To Sell Car to B

Death Of Mr. A

Offer Of Mr. A Automatically Revoked

Offer of Mr.A To Sell Car to B

Death Of Mr. B

Offer Of Mr. A Automatically Revoked

Death/ Insanity of Either Party

Offer of Mr.A To Sell Car to B

Insanity Of Mr. A

Offer Of Mr. A Automatically Revoked

Offer of Mr.A To Sell Car to B

Insanity Of Mr. B

Offer Of Mr. A Automatically Revoked

Failure of Condition

Offer of A To buy House Of Mr. B

With Condition That all Tenants Must vacant House

Tenants Do no Vacant House

Offer is Revoked

Counter offer by Other Party

Offer By Mr. A Mr. B disagrees And Make Changes It is a Counter Offer

Offer of Mr. A Is Revoked

Communication & Revocation

Offer

Acceptance

The offer can be cancelled Even after communication

Acceptance can't be cancelled after communication

Acceptance & Revocation

In written Form

Oral Communication

Unless it is Read it can be revoked

Impossible to revoke

(1) Mr. A Writes offer Letter (2) Sends Offer Letter

(3) Letter in Transit

(10) Letter Read by Mr. A

(9) Letter Received By Mr. A

(8) Letter in Transit

(4) Letter Received But not read

(5) Mr. B reads the Letter

(6) Mr.B Writes the Acceptance

(7) Put In letter Box

Steps

5-Five

7-Seven

10-Ten

Communication of Offer

Revocation of Offer Is possible up to

Step 2 to 6

Communication of Acceptance
Acceptor is Bound

At step 7 no revocation of offer is allowed Offer is bound to do what he has offered

Step 8 and 9 The Acceptor may

Revoke his acceptance

But at step 10 the Acceptor is bound

Acceptance

Unconditional

Absolute

B says YES
Valid Acceptance Agreement

Acceptance

Unconditional

Absolute
Valid Acceptance Agreement Offer of Mr. A Cancel Counter Offer

B says YES
Offer of Mr. A to sell Car Rs. 200,000 B refuses

B disagrees
B bargains

B says YES
Offer of Mr. A to sell Car Rs. 200,000 B refuses

Valid Acceptance Agreement

Offer Cancel

B disagrees
B bargains Counter Offer

Who gives acceptance

The person to whom offer is made

If agent is so Authorized then Agent can accept On behalf of Acceptor

Offeror Mr. A

Acceptor Mr. B

Who gives acceptance

If Offer to a Specific person

If offer to General Public

By specific person or his authorized person

Any person

Example: Offer to pay Rs. 20,000 Whosoever Search my passport

To Mr. D Brother of Mr. A Offer of Mr. A to Sell Car Rs. 300,000 Mr. B gives acceptance

Valid Acceptance It becomes an Agreement

To Mr. A

Valid Acceptance It becomes an Agreement

Manner of Acceptance

Ordinary Manner

Prescribed Manner When Offeror Requires Manner

Normal Case

Offeror mentioned Acceptance shall be by way of Demand Draft

Manner of Acceptance

Ordinary Manner

Prescribed Manner When Offeror Requires Manner

Normal Case

Offeror mentioned Acceptance has to be at my email address

Mode of Acceptance

Oral

Written

By Conduct

Prescribed manner if Offerer has made mandatory

Time Period of acceptance

Not mentioned
Goods Perishable As soon as possible

Not Mentioned Goods Not Perishable

After the lapse Reasonable time

Mentioned

After expiry Of mentioned time given by offeror

Communication

Offer

Acceptance

Possible to Revoke before Acceptance

If communicated; Impossible to Revoke

Revocation -Acceptance

Oral

Written Mode

Before offeror listens

Before Offeror reads

Relationship

Blood

Legal

Fiduciary

Fiduciary Relationship

Relationship on the basis of

Trust and Confidence

Where fiduciary Relationship

Exists
Holder of such relation Must disclose of facts essential to the Contract

Agreement in restraint of Following

Trade

Legal Proceeding

Marriage

Restraints makes Contract Void But there are certain exceptions where restraints do not make contract VOID

Agreement in restraint of Trade

Normally

Exceptionally

It is Void Contract

It is allowed In special cases

Restraint although makes contract Void But there are exceptions

Although not allowed but allowed under certain conditions

Agreement in restraint of Trade

Exceptionally

It is allowed In special cases

Seller Of Goodwill

Partnership agreement

Trade Combination

Service Contract

Buyer of Goodwill
Offers with condition that

Seller of Goodwill

Seller of The business

Shall restrain from doing Similar business

Up to a Specified area

Up to a specified Time period

Partnership Agreement

During Partnership

After Retirement

At the time Of dissolution

Not to do similar business

Within Specific area

For a particular Period

Trade Combination Cartels

Legal

Illegal

Monopoly OPEC

Service Contract During employment

Employee can not do other Job

Mr. B is a Engineer

Working in Khalid Engineering

Job contract mentions Not to do private practice Void

Valid

If he is allowed to do after leaving job

If restriction is after retirement

Mr. B is a Engineer

Working in Khalid Engineering

Job contract mentions Not to do private practice Void

Valid

If he is allowed to do after leaving job

If restriction is after retirement

Mr. Abbas is an Advocate

Working in KASBIT

Job contract mentions Not to do private practice Void

Valid

If he is allowed to do after leaving job

If restriction is after retirement

Mr. B is a doctor

Working in Civil Hospital

Job contract mentions Not to do private practice Void

Valid

If he is allowed to do after leaving job

If restriction is after retirement

Although not allowed but allowed under certain conditions

Agreement in Restraint of Marriage

For Minor

For Major

Allowed

Not allowed

Restriction on Remarriage Even a Person is Married Muslims

Non Muslims

Four Wives Concept

Divorce then Remarriage

Although not allowed but allowed under certain conditions

Agreement in restraint of Legal Proceedings

Both parties may be agreed on the following

In case of dispute Matter shall be Referred to

Neither party Will file an Appeal to Higher/ Superior Court

Select one of the Courts among other

Having equal authority

Arbitrator only

by Debtor ( A man who has to pay) by Creditor ( A man who has to receive) by Law

Appropriation by Debtor

When debtor Express his intention The creditor must apply As per direction of Debtor

When debtor does Not express his intention The law gather the intention From the circumstances

Appropriation by Creditor

No indication Implied or expressed The creditor has option to settle debt

Irrespective of the question Of limitation

The creditor Can not apply Payment to Disputed debt

Appropriation by Debtor

When debtor No express/ implied intention

When Creditor does not make Any appropriation

According to law earlier debt is settled,

If two debt has equal due period then They are settled proportionately

Loan on Mr. B is Rs. 120,000

Principal 100,000

Interest 20,000

Mr. B pays Rs. 15,000

Interest is settled with 15,000

Principal Rs. 100,000; Interest Rs. 5,000

Importance of Time in a Contract

When Time in the Contract

Important

Not Important

Other party delays Contract is Voidable

Other Party delays If the delay is

Unreasonable
Contract is Voidable

Reasonable then Contract is Vaild

BIPSOAL
Termination of Contract

Breach

Impossible To Perform

Performance

Subsequent Illegality

Operation Of Law

Agreement

Lapse of Time

Breach

Actual Anticipatory (Expressed/ Implied)

Remedy for Effected Party against Breach Committed Person

Suit for Damages

Suit for Injunction Order

Suit for Quantum Meriut

Suit for Specific Performance

Contumacious Nominal Ordinary Not claiming full But claiming up to the job performed

Special
Exemplary

Types of Breach

Actual

Anticipatory

Actual Breach

Actual Breach

At time time of Contract both parties are agree

One party Expressly decline

Before Execution of Contract

Execution stage Of Contract

Actual Breach

Happens in Unilateral Executory Contract

Happens in Bilateral Executory Contract

In Spot Contract Transaction is done by Both side Simultaneously

So no question of Breach

Breach

Not happen SPOT

Mostly Happen

Executory

Unilateral

Bilateral

Why existence of Breach Price of PIV Computer Rs. 100,000 B sells to A for Rs. 120,000

Market Value Down and PIV is Available at price 80,000

Breach of Mr. A A refuses to Buy Mr. B goes to Court

Why existence of Breach Price of P-IV Computer Rs. 100,000 B sells to A for Rs. 120,000

Market Value Up and PIV is Available at price 140,000

Breach of Mr. B B refuses to Sell Mr. A goes to Court

Why existence of Breach Price of Land Rs. 2,000,000 B sells to A for Rs. 2,500,000

Market Value Down Available at price 1,800,000

Breach of Mr. A A refuses to Buy Mr. B goes to Court

Why existence of Breach Price of Land Rs. 2,000,000 B sells to A for Rs. 2,500,000

Market Value Up Available at price 4,000,000

Breach of Mr. B B refuses to Sell Mr. A goes to Court

Why existence of Breach Adnan Sami Promise for Concert on November 10, 2007 Contract Sheraton with Adnan Same Rs. 200,000

Meridian Hotel Offers him Rs. 300,000

Breach of Mr. Adnan Sami Adnan Sami Refuses to Sheraton on November 10, 2007 Sheraton goes to Court

Why existence of Breach Adnan Sami Promise for Concert on November 10, 2007 Contract Sheraton with Adnan Same Rs. 200,000

Junoon Group approaches to Sheraton and agrees for 100,000

Breach of Sheraton Hotel Sheraton agrees with Junoon And Replace Adnan Sami Adnan Sami goes to Court

Actual Breach
If one Party Refuses at this Stage

Contract Initiation Time

If one Party Refuses at this Stage

Contract Performance Time

Remedy for Breach of Contract

Valid

Void

Voidable

Remedy is Available For aggrieved Party

No Remedy as the contract did not come into

If aggrieved Avoid it then it becomes Void If aggrieved party accepts then contract becomes valid

EXISTENCE

Anticipatory Breach

One party does Not explicitly refuses

Contract Initiation Time

If one Party Does any thing At this stage

Contract Performance Time

Consequence: Performance of it becomes doubtful

Anticipatory Breach Imran Khan Signs contract With County ABC ($ 200,000) On September 1, 2007 Imran Khan Signs contract With County XYZ ($ 300,000) On September 20, 2007

Season : November 1, 2007 to December 31,2007

Season : November 1, 2007 to December 31,2007

Aggrieved Party ABC

How can a person play with two teams at the same time

Remedy for aggrieved Party Under Anticipatory Breach

Injunction Order

Anticipatory Breach

Expressed

Implied

Before the execution of contract one party refuse to perform his part of duty

Before the execution of contract one party Does not refuse clearly but does an act which Signifies that he will breach the contract

CNOSEL
Remedy for Breach in (Damages)

Effected Party Claims for Valid Contract not for Voidable or Void Contract

Contumacious

Nominal

Ordinary

Special

Exemplinary Liquidated

Ordinary Damages

Naturally arises as a result of breach

Breach must be direct in nature

Loss sustained by other party must be direct related to contract

Remote losses are not taken

e.g. Difference B/W Price of Contract Date and the Price at the Time of Breach

Price

At the time of Contract Rs.1,000/-

At the time of Breach Rs.1,100/-

The Court fines Rs.100/- For Guilty Party to pay To Aggrieved party as Ordinary Damages

Special Damages

Loss is in Indirect Nature

Should be known / agreed to both parties

Court Awards to Aggrieved party from Fining to Guilty party Provided it was decided By both parties at the Time of initiation of contract

Not Naturally Arises As a result of Breach Like in Ordinary Damages

Exemplary Damages

Damages are awarded to Punish guilty party

Beneficiary of Damages Is aggrieved party

Awarding of such Damages is not to Compensate the injured Party as the loss is not In the amount

e.g.: When a man refuse To marry a Lady e.g.: When a bank dishonor A cheque of a person Even such person has Sufficient balance

Nominal Damages

Aggrieved Party Suffered No Loss

The court may award To aggrieved party in Recognition of his right

As there is no loss to Aggrieved party the Court may or may not Award damages to Aggrieved party

e.g.: Contract Price & Price at breach date is Same and goods are Easily available in Open market

Liquidated Damages
If loss is greater than The damages agreed The damages will be Given as per agreed amount e.g.: Rs.1,000/- was Decided as damages Actual loss to aggrieved Party is Rs.2,000/-. Rs.1,000/- will be paid to Aggrieved party

Such Damages are agreed B/W the parties at the Initiation of contract

BIPSOAL
Termination of Contract

Subsequent Illegality

Impossible To Perform

Performance

Breach

Operation Of Law

Agreement

Lapse of Time

Quantum Meruit Remedy

For Breach Ordinary Damages Injunction Order Specific Performance

Remedy for Effected Party against Breach Committed Person

Suit for Damages

Suit for Injunction Order

Suit for Quantum Meriut

Suit for Specific Performance

Contumacious Nominal Ordinary

When female betrays to male for marriage

Special
Exemplary
When man betrays a Lady for Marriage Cheque dishonor wrongly by Bank

With Mutual Agreement

Recession Remission Novation Expansion Waiver

Old Contract

Novation: Cancels Previous Contract

Novation: Creates new Contract

Right of recourse against previous party is lost

Old Contract

Remission: Cancels Previous Contract

Remission: Creates new Contract In a smaller size

Old Contract

Expansion: Cancels Previous Contract

Expansion: Creates new Contract in a larger size

Old Contract

Rescission : Cancels Previous Contract

No new Contract is created

Old Contract

Waiver : Cancels Previous Contract

No new Contract is created; It extinguishes recourse

Suit for Quantum Meruit

Suit for Quantum Meruit To get what has been done During Performance by one Party Contract terminates due to

Breach of Other Party

Death Of Other Party

Subsequent Illegality

Destruction Of Subject Matter

Here the full amount Amount is claimed upto the amount of work may be claimed

Suit for Quantum Meruit When Remuneration Is not decided At the time of agreement When Contract Is divisible Appointment Process is unauthorized Worker is innocent

Suit for Specific Performance

Suit for Specific Performance

Aggrieved party Goes to Court The Court Orders

To the Guilty Party to

Act as per Contract

When Specific Performance

Does not Grant When monetary Compensation is an adequate relief When actual damage Can be calculated

Grant When monetary Compensation is not an adequate relief When actual damage Can not be calculated

When Court can Supervise the actual execution

When Court can Not Supervise the actual execution

When Specific Performance

Does not Grant

When one party Is Minor If Contract for Marriage (Engagement) If Contracts involves Personal skills, taste

Suit for Injunction Order

Suit for Injunction Order

It is a Preventive Relief Suitable for Anticipatory Breach

Securing Specific Performance in the negative form

Court may or May not Grant it

When monetary Compensation is not an adequate relief

It is not the right Of Aggrieved Party to ask injunction Order against guilty Party

Difference Between Termination by Agreement Both Parties Are willing to Cancel the Contract Termination through Breach

One Party willing to cancel but the other party does not want to cancel

Aggrieved Party goes to Court

Termination by Agreement Both party Mutually Agreed to cancel the Contract

By Waiving

By Recession

By Remission

By Alteration

By Novation

Previous Contract Cancel; No new Contract

Previous Contract Canceled; New Contract comes into existence

By Alteration New Contract takes Place

Contract is made between Parties By offer & Acceptance Mutually agreed by both of them to bring alteration in the Contract

Alteration in the Contract Changes

Addition

Deletion

Changes

Modification

Novation (Change) in any Party Changes in the Party terminates the Old Contract

Contract is made between Parties By offer & Acceptance Mutually agreed by both of them to bring changes in the Contract

Changes in the Contract Parties

Originally A&B

Novation

Subsequently A&C

Contract between County & Waseem

Waseem request to county for not playing It is Novation

Contract was canceled

Shoaib Akther agrees to play

If Shoaib
Does not play Waseem is not responsible

By Remission (Reducing) Old Contract is terminated and New Contract comes

Contract is made between Parties By offer & Acceptance Mutually agreed by both of them to bring changes in the Contract Remission in the Contract Contract -1 Size of Contract Reduce

Contract -2

Building of 10 Houses
Cancelled

Original Contract

After Changes

Building of 4 Houses
New Contract

Subsequent Changes in Law terminates The Future Contract

Subsequent Changes in Law

No effect on Spot Contract

Makes effect Future Contract

If ban is imposed then the Previous contract becomes illegal Illegality always terminates the Contract

Topic: Subsequent Illegality

Food is allowed in wedding Today : Date is January 10, 2007

Future Contract

Mr. A makes a contract with Larosh Catering To supply Dinner on March 10, 2007 Government Bans food in Wedding on March 1, 2007
The contract between Larosh and Mr. A is terminated

Topic: Subsequent Illegality Here no Ban So contact is Valid

Mr. A makes a contract with Larosh Catering To supply Dinner on March 10, 2007
Government Bans food in Wedding on March 1, 2007 Here law Changes

The contract between Larosh and Mr. A is terminated

Subsequent Changes In law can make terminates the contract

Incapacity: At the time of contract both parties were competent but at he time of performance one party or both become incompetent.

Employment Contract between Mr. A & Mr. B

Mr. A makes offer for Partnership to Mr. B Mr. B accepts Now Contact of Partnership between Mr. A & Mr. B Employment Contract automatically terminates

Operation Of Law

Superior contract always terminates the sub-ordinate Contract

Debt Contract between Mr. A & Mr. B

Mr. "B" becomes insolvents Contract between them terminates

Operation Of Law

Insolvency

Teaching Contract between Mr. A & Mr. B

Teacher Mr. D dies before contract is implemented Death terminates future Contract

Operation Of Law

Death terminates future contract

Mr. Sohail purchased goods Rs. 10,000 from Mr. Kaleem

It is a Sales contract between them
Sohail dies before the Contract is implemented

Mr. Kaleem has right to recover amount from the property of Mr. Sohail

Mr. Sohail borrowed Rs. 10,000 from Mr. Kaleem It is a debt contract between them

Sohail dies

Mr. Kaleem has right to recover amount from the property of Mr. Sohail

Mr. Sohail agrees to teach Mr. Kaleem It is a future contract between them

Sohail dies Contract terminates; If Mr. Kaleem has paid then amount shall be returned to him Mr. Kaleem has right to recover amount from the property of Mr. Sohail

Mr. Sohail is a Chartered Accountant

Unilever appoints him as auditor

Audit Contract between Mr. Sohail and Unilever Due to certain negligence ICAP cancels the certificate of Sohail

Contract between Sohail and Unilver ends

Mr. Sohail is a Politician

He made a job contract with KASBIT

In lection 2008 he becomes President of Pakistan The moment he becomes President Contract becomes enforceable

If Sohail does breach; Kasbit can not sue him

Mutual & Concurrent

Reciprocal Promise Important to Learn Mutual & Concurrent Conditional & Dependent Mutual & Independent Where a Party Prevents Performance

Mutual & Concurrent

Spot Sales
Seller Delivers Buyer Pays

Executed Contract/ at the same time

Conditional & Dependent

Conditional & Dependent If the Promisor, who is required to perform his Promise in the FIRST place, fails to perform

The Promisee is not bound to perform his part of duty

Promisor shall compensate the Promisee if any loss suffered by Promisee

Promisee is bound only when the Promisor performs first

Party A Provides Wood Then Party B makes Furniture Party B is Dependent

Mr. A promise to Deliver 100 bags of Wheat @ 500

Mr. B promise to pay after one month of Delivery If Mr. A does not Deliver 100 Bags of Wheat

Price Changes Rs. 550 Mr. A pays to B Rs. 50 * 100 qty = 5,000 Ordinary Damages

Price no Change No Compensation As Ordinary Damages

Conditional & Dependent

Breach Cases

Promisor

Promisee

If First party Does not perform

If First party Perform & second party declines

Mutual & Independent

Mutual & Independent

Where one party has to perform his promise INDEPENDENTLY Without waiting for the performance

At the end of other Party

When One Party willing to do as per Contract & Other Party prevents

Where one party is willing to do as per contract

The other Party prevents

The party so prevents is guilty Party

Aggrieved party may Terminate the Contract Ask damages From guilty

Contract- Conditions

Depending upon Future UNCERTAIN Condition Fulfillment of Conditions May or may not be possible

Simple Conditions Possible to Perform Fulfillment of Conditions May be possible

Simple Condition in the Offer Example: I will buy your house if you change its Color (It is possible for Landlord)

Condition in the Offer which is not fully controlled Example: I will buy your House if tenant leaves; The Court decides; Judgment may or may not in favor of Landlord

Contingent Contracts

have Connected Event/(s)

Which are Not the Part Of Consideration

But are the Part of the Contract

Contingent Contracts

Must have Uncertain event In Future

Event Collateral To the Contract

Performance Of Contract

Happening Of future Uncertain event

Non Happening Of future Uncertain event

Conditions in Offer Easily Possible By the Parties

Depends upon Future Uncertain event Which may or may not happen

Simple Contract

Contingent Contract

Description Validity Uncertain Event

Contingent Valid Contract Uncertain event is merely collateral

Wagering Void Contract Uncertain event is the prime sole determing factor

Interest of Parties Purpose

the parties have no real the parties have real interest in the occurrence interest in the or non occurrence of the occurrence or non event for winning or occurrence of the event loosing the bet Beneficial to the Parties One Loose one gain.

QUASI CONTRACT
Based on the Principal of Equity & Justice Contract is Formed without Offer & Acceptance Without Offer & Acceptance Law Imposes Obligation of a Contract

QUASI MEANS HALF

BREACH OF A QUASI CONTRACT

As similar remedy as It is available under Normal contract

BREACH OF A QUASI CONTRACT

Payment by an interested Person

Supply of Necessaries

Responsibility of Finder of Goods

Liability to Pay non Gracious Act

SLLRP

Liability under Mistake

If a person, incapable of entering into a contract, or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life ; the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person

The person to whom the necessaries are supplied is incapable of entering into a contract (minor, unsound mind, insolvent)

The other person has supplied him with necessary suited to his condition of life
The other person may or may not be who is legally bound to support The things supplied must be necessaries not luxuries Incapable is not personally liable to compensate the other party for his support Property if any, of incapable is liable to compensate the other party for his support

Contract price shall not be charged to compensate;

A person to whom any thing has been delivered by mistake must return it to the person who delivered it wrongly. A person to whom money has been paid by mistake must repay to the person who paid it by mistake.

A person who is interested in the payment of money, which an other is bound by Law to pay, and who therefore pays it, is entitled to be reimbursed by the other. In other words, a person who is interested in the payment of money, which another person is bound by Law to pay, pays it, is entitled to recover from the other. If he has not interest in paying, he cannot claim back.

A person should be interested in payment to protect his own interest. Such person should not be legally bound to pay. Another person should legally bound to pay. A person should claim the payment from another person.

Where a person legally does any thing for another person not intending to do that gratuitously the other person enjoys the benefit so the another person is bound to compensate the person who has done a favor.

The person has done or delivered some thing to other person, the act was not illegal
The act was legally done. The intention was not gratuitous, the other party enjoys the benefits of his act. The other party must compensate for the act.

Finder of Goods

Status; Bailee (Ameen)

Rights & Duties

Goods; Moveable

He must try to find out the real owner of the goods He must not use or consume the goods He must take care of the goods as he takes care of his own goods

When the real owner is found, he must restore the goods to him

He can retain the goods unless the true owner is found He can ask the expenses of finding the goods from the owner He can ask the expenses of preservation of the goods from the owner. He can refuse to handover goods to the real owner if expenses are not paid the owner He is not entitled to sue the real owner for searching / preservation expenses. He can sue the real owner if the owner has declared any reward and afterwards he is refusing to pay.

If the owner declining to pay reward although he had declared the reward the finder of goods may retained the goods until the owner pays reward to him.

No body in the world can deprive possession of goods from the finder of goods; if any body does the finder of goods can file a suit against him.
The finder instead of handing over goods to the real owner may sell the goods

When the thing is perishable. When the owner refuse to pay expenses of searching & preservation of goods

If the expenses of searching & preservation of goods are 66.67% or more of the value of goods
After selling the goods and recovering the expenses (searching & preservation) the rest of the amount will be given to the real owner

Bailment of Goods

BAILMENT

Lender of Goods

Receiver / Borrower of Goods

Called

Called

Bailor

Bailee

Goods

Corpus

Usufruct

Body of the Goods

CAR

Benefits of the Goods

Driving/ Sitting

Goods

Ownership

Possession

Does not Transfer It remains with the Bailor

Possession goes to Bailee

BAILMENT Example

Video Cassette On rentals

Consignment Sales

Rent a Car or Leasing Ijara

Tents/ Bicycle On rent

Clothes/ Pen/ Pencils/ Utensils Borrowing

Cloth to Tailor / Dry Cleaner/ Goods given to Mechanic

Rentals are not necessary

Money Consideration

Bailor

Bailee

Rent a Car Leasing

Mechanic Tailors Dry Cleaner Lockers at bank Transporters

BAILMENT

Purpose

To allow Other person

To make/ alter/ repair use goods and then Return

To direct Other Person

Or

To sell the goods

Transport

Airplane

Ship

Suzuki

Cartage

Railway

All of the above are Bailee

Types : BAILMENT

Gratuitous

Non Gratuitous

Defect Unknown to Bailor

Bailor will not Compensate The bailee

Defect Unknown to Bailor

Bailor will Compensate the Bailee

BAILMENT

Gratuitous

Non Gratuitous

Exchange of Goods
Without Commercial Purpose

Exchange of Goods
With Commercial Purpose

BAILMENT

Gratuitous

Non Gratuitous

Rent

Rent

No rent is Payable by Bailee

Rent is payable By Bailee

Termination of BAILMENT before the Promised time

Gratuitous

Non Gratuitous

Possible
But the bailor Must arrange Other Goods

Not Allowed
As bailor has not done On the Charity/ Voluntarily Friendship basis

BAILMENT

Goods

Immoveable Not included

Must Be Moveable

House, Bungalow, Mountains, Buildings

Cash Actionable Claim Are not goods

Mixing of Goods

With the Permission of Bailee

Without the Permission of Bailee

Mixing of Goods Separation of Goods

Possible

Impossible

Heterogeneous

Homogenous

Mixing of Goods With the Permission of Bailor

Goods

Separable
Bailor will Pay separation Cost

Inseparable
Bailor & Bailee Become Owner As per ratio

Mixing of Goods Without the Permission of Bailor

Goods
Inseparable
Bailee will Pay whole Amount to Bailor

Separable
Bailee will pay Cost of Separation

Mixing of Goods With the Permission of Bailor Goods Without the Permission of Bailor

Goods
Inseparable
Bailee will Pay whole Amount to Bailor

Separable
Bailor will Pay separation Cost

Inseparable
Bailor & Bailee Become Owner As per ratio

Separable
Bailee will pay Cost of Separation

Bailment Contract Between A & B

A handovers his Cow

B takes Cow Cow gives birth

At the time of return

B will return both Cow and its Calf

Benefit

Exclusive to Bailor

Mutual

Mr. A puts his Meat in the Fridge of Mr. B

B charges no Rent

Mr. A puts his Meat in the Fridge of Mr. B

B charges Rent

Benefit

Exclusive to Bailee

Mutual

Mr. B asks to Mr. A to give His Bike

A charges no Rent

Mr. B asks to Mr. A to give His Bike

A charges Rent

Use of Goods

Authorized

Unauthorized

Goods Loss Bailee is not Responsible If loss is not made with negligence

Goods Loss Bailee is not Responsible Bailee compensates Even if Bailee is not negligent

Use of Goods

Loss to Goods

Bailee is negligent

Bailee Compensates the Bailor

Loss to Goods

Due to Negligence of Bailee

No Negligence Of bailee

Bailee Compensate to The Bailor

All loss is suffered by Bailor

Expenses to be Paid by

Bailor

Bailee

Extra Ordinary

Wear & Tear

Registration Charges Major Repairs Insurance

Fuel, General Repairs

Retain by the Bailee

When bailor does not pay charges

Example

Goods in transporter Car with the Mechanic Cloths with tailor Goods at Warehouse

Care of Goods to be Undertaken by Bailee

Same as he does with his Goods Act of Bailee must be Prudent

Difference between Bailment & Pledge

Purpose
To uses & Return

Purpose
To Secure Debt

To sell

Possession

Actual

Constructive

When goods are handed over to Real owner

When goods are not handed to the real owner But seller is not responsible For any risk

Example of Constructive Possession

Seller sales the Goods

Goods are in the Possession of Ship

Any transporter not necessary ship

In Import / Export

Delivery to Ship means

Exporter has given

Constructive Possession to Importer

Because Shipper is the agent of Importer

Deliver to Agent means

Constructive Delivery to Buyer

If loss of goods

The Buyer is Responsible no the seller

Any person who is acting on behalf of buyer

Description

Bailment

Pledge

Party- Giver

Bailor

Pledgor/ Pawnor

Party- Receiver

Bailee

Pledgee/ Pawnee

Purpose

To Use/to Sell/To Repair/ To Put in case custody

To secure Debt

Using of Goods by receiver

May be allowed if goods are given for use

Not allowed Pledgee sells the goods if pledgor does not pay

Right to Sell

If Bailor has given right to Bailee

Lien

When Bailee has done any service for/ on goods

If debt is not paid When debt is not paid the pledgee gives notice to pledgor then sell for recovery of price After selling of goods; Debt is not fully received the pledgee ask remaing amount

Notice of Selling

Not required if bailor has given for selling purpose Bailee claims only service charges if bailee has performed any work

Extra Claim

Agency

Creation of Agency

Express Agreement

Implication

Ratification

Holding Out

Estoppel

Doctrine of Necessity

Operation of Law

Safety

Emergency

Husband & Wife

Agent

Major

Minor

Unsound mind

Principal

Must be a Major

Not Minor

Not Unsound mind

Express Agreement

Means
Appointment of agent

By writing OR By words of mouth

RATIFICATION Work done by Mr. B on behalf of Mr. A

Mr. A was unaware about the act of Mr. B

Afterwards Mr. A comes to know Mr. A accepts the work

Now from the back date Mr. B is considered

Agent of Mr. A

Retrospective

From the past date

In ratification a person becomes agent from the past date

Ratification:- Creation of agency

Mr. B Does an act On behalf of Mr. A Without getting Permission of Mr. A Mr. A Mr. A after the Act of Mr. B Comes to know that B has made a contract on behalf of him If Mr. A says Ok I approves it Now Mr.B from past date becomes agent of Mr. A

This process is Called Ratification

Ratification

Means
To make our self responsible of the act of other person

Ratification Number of Parties

Any person who Wants to do act on our behalf

Third party

We

May Reject Ratify

Ratification Number of Parties

Any person who Wants to do act on our behalf

Third party

We

Contract b/w 3rd party & us Without knowledge

If anybody does act

On our Behalf

We can Reject Ratify

Contract is terminated Or That party is responsible

We take responsibility Now that man is not Responsible. We are responsible

Mr. B made a contract with IBM on behalf of Mr. A

The contract was that Mr. A will buy 1000 computers from IBM @ 20,000 Date of Contract On January 1, 2007

Contract to be implemented June 30, 2007

Age of Mr. A is 16 years Ratification not allowed 19 years Ratification allowed

Date of Contract 1.1.2000 Mr. A Age on 1.1. 2000 If 18 or more Mr. A Can ratify If less than 18 Mr. A Can not ratify

Mr. B contract with Mr. Z

On behalf of A to buy Car from Z Rs. 100,000 Prices of Car increase 150,000 After Contract

Mr. A wants to ratify but at the time of contract

If 17 years If 18 Years Mr. Z has to sell Ratification is valid

Mr. Z refuses Ratification invalid

Rules for Ratification

Actual Person Does not know about the contract

Legal Contract

At the Time of Contract

Complete Ratification

Actual person shall not be Minor

Ratification

Complete

Incomplete

Valid

Invalid

Contract enforceable

By Ratification (if some Body has made a contact On our behalf in the past)

By making new contract

Old terms & conditions Will be considered

Latest price and Terms And conditions are considered

Agency and Partnership

Partner A

Partner B

He is agent of B as Well as principal of B If any work is done by B; both A & B are Responsible;if any work Is done by A both A & B are responsible

He is agent of A as Well as principal of A If any work is done by A; both A & B are Responsible;if any work Is done by B both A & B are responsible

Company

Director

Principal

Agent

The Act of Director binds the company So company is responsible for the act of Directors if the act is within authority Of directors

All type of transporters are

Agent

Of buyer / importer

General Rule

If by agreement B/w seller & buyer this rule may be changed; the transporter becomes the agent of seller / exporter

Substituted Agent

Appointed by Principal

The purpose of such Appointment is to provide Help to Agent

Appointment

Principal

Agent

Agent

Sub Agent

Substituted Agent
In general practice we hardly see Appointment of sub agent or substituted agent

Appointment of Sub Agent by Agent

Allowed

Disallowed

When agent delegates clerical work to another parson; such Person is called sub agent

When agent delegates Non clerical work to another parson; it is not allowed

SALES OF GOODS ACT 1930

Difference between

No contract is Made without

No Contract is Cancelled

Subject Matter

Restitution

At the formation of The Contract

At cancellation of contract

Both are same but called differently due to situation

Difference between

Subject Matter

Restitution

At the time Of Contract

At the time of Cancellation of Contract

Television

Returning of Television

GOODS

Subject Matter of the contract

All types of Goods except following

Local Currency Actionable Claim (debts) Immovable Property Wild Animal

Types of Goods

Existing

Not Existing

Ascertained Unascertained

Future

Contingent Specified

Contingent

Ascertained & Specified are same

Contingent Goods

Existing

Not Existing

Although the Goods are Available in shop But it has sold on Already Option

Goods are not in shop they are In transit they may Come or destroy in transit

Unascertained Goods Available in Shop But some process is still left

Counting

Weighing

Measuring

Apportionment

After the above process the goods are called Ascertained

Future Goods

To be purchased

To be manufactured

After purchasing The goods will be Sold to the buyer

After manufacturing Goods will be Sold to the buyer

Goods

Before Sale If destroyed or lost the seller is responsible even the goods are in the custody of buyer

After Sale If destroyed or lost the buyer is responsible even the goods are in the custody of seller

Repossession

Sale
When seller Sells goods

Bailment
When Bailor delivers goods

Right to Repossession is not existing

Right to Repossession is existing

Seller sells goods to buyer

If goods Not delivered By seller Status of seller Bailee. The Buyer Is bailor

If goods are Delivered By seller

Status of Seller
No bailment between Seller and Buyer

Seller sells goods to buyer

If goods not delivered by seller

Seller is Bailee Buyer is Bailor

Goods destroyed Goods destroyed

Without the negligence Of Seller Buyer is responsible

With the Negligence of Seller Seller is responsible

Importance of Following

Date & Time If the date & time Is crucial

Buyer may refuse to Accept after the agreed time

Goods Delivery

Full delivery Is must unless part delivery agreed

Buyer may reject Part delivery

Contract is executed b/w

Seller & buyer

Goods are in the possession of seller

Buyer is the owner of goods & Seller is Bailee

Contract is executed b/w

Seller & buyer Goods are in the possession of seller

Buyer is the owner of goods Seller is Bailee

If goods are destroyed due to the negligence of seller; the Seller is responsible

Contract is executed b/w

Seller & buyer

Goods are in the possession of seller

Buyer is the owner of goods Seller is Bailee If goods are destroyed not due to the negligence of seller; the Buyer is responsible

Course of Dealing Agreed Manner Third Party Valuation Expressed Manner Reasonable Manner

Fixation of Price
Course of Dealing Agreed Manner 3rd Party Valuation Expressed Reasonable Price

CATER

Expressed Condition Expressed Warranties Implied Conditions Implied Warranties

Right of Buyer Condition is a stipulation Warranty is a stipulation Condition may be expressed or Implied Warranty may be expressed or implied Expressed stipulations are decided by Parties Implied stipulations are mentioned in law

Stipulation

Implied

Expressed

Given by Law

Decided by Parties

Stipulations

Right of Buyer against the Seller

Condition

Warranty

Breach

Condition The buyer has right to terminate the contract and return the Goods

Warranty

The buyer has no Right to terminate The contract but He has right to ask Repair or Replacement of goods

Stipulation of the Contract

If Engine Ceases We refund Money

If Color of Car Faded We repaint the Car

Condition

Warranty

Contract Cancelled

Contract not Cancelled

Condition may vary from Customers to Customers

Customer A If Engine Ceases We refund Money

Customer B If Engine Ceases We change it

Condition

Warranty

Contract Cancelled

Contract not Cancelled

Stipulations

Sales of Goods Act 1930 Gives certain rights to Buyer in the following Heading

Condition

Warranty

Implied Stipulation

When Applied

When not Applied

If decided stipulations Not contrary to the Stipulations given by law

If parties decides the stipulation which is different as given by Law

Decided stipulation i.e. Expressed stipulation are applied

Stipulation

Expressed
Condition

Implied

Condition

Warranty

Warranty

Stipulation

Condition The buyer has right to terminate the Contract and return the Goods

Warranty

The buyer has no Right to terminate the Contract but He has right to ask Repair or Replacement of goods

Stipulations

Implied

Expressed

It is considered when There is no provision in The expressed stipulations

Always prevail over Implied stipulations

Stipulation

Condition

Warranty

If Car engine is ceased Within 3 months Amount-Refund

If the Paint of The Car is faded The Company repaint free of Cost.

Stipulation

Condition

Warranty

May Become Warranty

Impossible To Become Condition

Stipulations

If contradiction arises Between Implied & Expressed Stipulations

Expressed is prevailed

Stipulation to the Contract & Right of Buyer

Condition

Warranty

Direct to The contract

Indirect to The Contract

Breach of Seller & Stipulations Condition The buyer has right to terminate the contract and return the goods The buyer may ask Repair or replacement Because condition can Be changed in warranty Warranty

The buyer has no right to terminate the contract but he has right to ask repair or replacement of goods The buyer cannot Terminate the Contract because Warranty cannot be changed in condition

When condition becomes warranty

Returning of restitution is not possible Defective item is lost Or theft

The buyer accepts Partially & the goods are undivided

It is a Rule of law. By this doctrine the seller may excape from stipulations. When buyer buys on the basis of his own skills and judgments. Buyer has to examine the goods thoroughly When buyer ask particular goods Any loss cause to buyer shall not be compensated by seller.

Against Goods Against Buyer

Unpaid Seller

When following Conditions are fulfilled

Goods sold on Spot but price Not paid by Seller

Goods sell on Credit Period of credit Is expired

Buyer has given

Cheque and Cheque is bounced

Unpaid Seller Right against

GOODS

BUYER

Unpaid Seller Right Over GOODS Right to Lien Against BUYER

Sue for the Price

Sue for the non acceptance of goods Sue for special damages

Right to stoppage in transit

Right to Resale

Sales not in present but in Future Token Money Option for buyer to buy or refuse Seller is bound confiscates to sell Seller the token if buyer refuses

Sales under Options Here buyer pays Some % as advance Goods are to be taken In future Date If price of the Goods decline If the Price of the Goods increase Buyer pays remaining Balance and takes delivery

Buyer will not Buy and token money is confiscated by Seller

Sales under Options

Price is fixed not Changed

Seller is bound to sell But buyer may refuse to buy

Sales under Options Here buyer pays Some % as advance Seller is bound to sell But buyer may refuse to buy

Option Sale Buyer pays Token Money Seller is bound Not to sale goods For a specific period Agreed between them After the expiry of agreed period Seller can sell The goods to Other party

If buyer does not purchase token money is confiscated by seller

Seller has no goods Seller sells the goods at specific rate Seller buys goods in lower price Difference between selling and buying rate is profit to seller

Short Sell Seller does not Possess Goods

Seller sales Goods to Buyer in Future Date

After Selling Seller Buys Goods to deliver Price

More than the Previous Selling Price

Loss

Price equal to the Previous Selling Price

Break Even

Price less then the Previous Selling Price

Profits

Short Sale

Seller Does not Have Goods

Seller sells Goods Without possession

Price Is Fixed

Seller Buys goods At lower rate

Seller delivers the Goods to Buyer

Difference of Rate
Income of Seller

Seller delivers the goods Time is decided Buyer has to tell within decided time about acceptance and rejection. If buyer is silent then sale is done

Sales on Approval Buyer takes delivery A specified time Is decided Buyer has right to Return goods Within that time After the expiry of agreed period Automatically Contract of Sale Arises between Seller & Buyer

If Buyer pledges the goods during time the sale is done

Covers Both Agreement to Sales Contract of Sales

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Ownership Remains with the Seller

Ownership transfers To buyer

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Ownership Remains with the Seller

Ownership transfers To buyer

Seller is bound to sell Only buyer

Seller can sell to other Person

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Goods may be in the Possession of Buyer or Seller

Goods may be in the Possession of Buyer or Seller But normally in the Possession of Buyer

But normally in the Possession of Seller

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

It is an Executory Contract

It is an executed Contract

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Seller becomes Insolvent; & Goods are with seller

Seller becomes Insolvent; & Goods are with seller

As Seller is the owner of Goods so Official assignee of Seller May refuse to deliver to Buyer

As buyer is the owner of Goods so Official assignee of Seller Can not refuse deliver to Buyer

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Seller becomes Insolvent; & Goods are with Buyer

Seller becomes Insolvent; & Goods are with Buyer

As Seller is the owner of Goods so Official assignee of seller asks buyer to return goods

Buyer is the Owner; Official assignee of seller ask price of the Goods if Buyer has not paid

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Buyer becomes Insolvent; & Goods are with Buyer

As Seller is the owner of Goods so seller will repossess the goods and official assignee Of buyer can not refuse to return

Buyer becomes Insolvent; & Goods are with Buyer

Buyer is the Owner; Official assignee of buyer pays ratable dividend to seller; this is a loss to seller

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

Buyer becomes Insolvent; & Goods are with Seller

Seller refuses to deliver the Goods to buyer; as buyer is Insolvent and he can not pay

Buyer becomes Insolvent; & Goods are with Seller

Buyer is the Owner; Official assignee of buyer takes delivery from Seller; Official assignee pays ratable dividend to seller; this is a loss to seller

Sales of Goods act 1930 Covers

Agreement To Sales

Contract of Sales

If Seller becomes insolvent & he has got advance from Buyer Official assignee of Seller Return ratable dividend to buyer

If Seller becomes insolvent & he has got advance from Buyer Buyer pays remaining amount and if he has not got delivery then he gets delivery

Who can sale the goods

Non Owner

Real Owner

Mercantile Agent

Auctioneer

Unpaid Seller

Pledgee

Bailee (Consignee) (when bailor allows)

Joint Owner

Finder of Goods

Natural Person
Male and Female

Artificial Judiciary Person

Companies Trust Wakf

New Topic

Negotiable Instruments

Cheques

Bills of Exchange

Promissory Notes

Maker (Drawer)

Maker (Drawer)

Creditor (Receiver of Amount)

Debtor (Payer of Amount)

Dishonor of Cheques

Stale Cheque

Post Dated Cheque

Difference In Figure & Wordings

Cheque Is mutilated

Signature Difference

Funds Short

Instruction of Account Holder To stop payment

If tax is not paid CIT ceases account

When account holder is dead; after his death the bank refuses to pay When account holder is insolvent; the bank refuses to pay

Post Dated Cheque

Dated mention on Cheque

Future

Stale Cheque

Dated mention on Cheque

Six or more months

Older than today

Difference in Amount Example Amount in Figures Rs. 2,950

Amount in Words Two thousand five hundred & fifty

Types of Cheques

Order

Bearer

Crossed

Special

General

Types of Cheques

General

Crossed

Payee account Only Two parallel cross lines

Payee account Only Two parallel cross lines At the left corner of the Cheque Also name the Bank

At the left corner of the Cheque

Types of Cheques

Orderer

Bearer

Can be encashed on Counter

Can be encashed on

Counter

NIC should Be shown

Also name the Bank

Difference between

Demand Draft

Pay Order

For Out Side City

For Out side Country

Within city i.e. For Karachi Only

Client Deposit Money To Bank Bank receives full amount & Issue Pay Order Chance of Bouncing of Pay Order ZERO

Client Deposit Money To Bank Bank receives full amount & Issue Demand Draft Chance of Bouncing of Demand Draft ZERO

Dishonor of Pay Order

When Bank Defaults

Dishonor of Demand Draft

When Bank Defaults

Clearing Process of Cheques

Same Branch

Same Bank

Different banks

No Clearance is required

Cheque of UBL deposited in KASB Bank

Issuing Bank

When any Bank Open Letter of Credit

On request of Client

The said bank is called Issuing Bank/ LC Issuing bank

Letter of Credit

Client Approach Bank

Bank takes collateral

Bank issue Letter of Credit

Exporter is secured

The Issuing bank will pay so Exporter is secured Importer may default but Bank can not default

Payment to Exporter
Client Refuse or Default Bank will Pay and

To Exporter and recover from Client

Bank has right of Recourse mean that Bank can approach to Client after payment to Exporter

Recourse

When one party pays liability of Debtor

Has right to Ask amount from the Debtor