Presentation on:Essential Elements of Valid Contract

SUBJECT :BUSINESS LAW

Presented By:
KALEEMULLAH MEMON
25466 UMAIR ALI ALVI BM 25462
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BM

CONTRACT
= AGREEMENT + ENFORCEABILITY

An agreement enforceable by law is Contract. - Section 2(h) There must be legal relationship.

Agreements of social or domestic nature are not contracts. Examples:

Invitation to a Birthday party Invitation to a Dinner etc

VOID AGREEMENT
= AGREEMENT + NO ENFORCEABILITY

An agreement not enforceable by law is said to be void agreement. Section 2(g) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. Section 2 (j) Example: An agreement with minor

ESSENTIAL OF A VALID CONTRACT

ESSENTIAL OF A VALID CONTRACT

AGREEMENT
Every promise and every set of promises, forming the consideration for each other, is an agreement. {Section 2(e)} A person makes a proposal (Offer). When it is accepted by other, it becomes a promise (Acceptance). Thus, Offer + Acceptance = Promise However, promise cannot be one sided. Only a mutual promise forming consideration for each other is agreement. Thus, Promise + Consideration = Agreement

ESSENTIAL OF A VALID CONTRACT

FREE CONSENT

Two or more persons are said to consent when they agree upon the same thing in the same sense. (Section 13)

ESSENTIAL OF A VALID CONTRACT

FREE CONSENT
Consent of both parties must be free. Consent is said to be free when it is not caused by (1) coercion (2) undue influence (3) fraud (4) misrepresentation (5) mistake

Coercion

Coercion is the committing or threatening to commit any act forbidden by the Pakistan Penal code or the unlawful detaining or threatening to detain any property.

Undue Influence

Consist in the improper exercise of a power over the mind of one of the contracting parties by the other.

Fraud
In the broadest sense, a fraud is a deception made for personal gain or to damage another individual. Fraud is a crime and is also a civil law violation The suggestion that a fact is true when it is not true, by the one who does not believe it to be true

Misrepresentation

It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation.

Mistake
Mistake refers to mis-understanding or wrong thinking or wrong belief. When both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement is void.

ESSENTIAL OF A VALID CONTRACT

WHO ARE COMPETENT TO CONTRACT?

Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. (Section 11)

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ESSENTIAL OF A VALID CONTRACT

The agreement is legally enforceable only when both the parties give something and get something in return. When, at the desire of the promisor, the promisee or any other person

CONSIDERATION =>SOMETHING IN RETURN

has done or abstained from doing (PAST), or does or abstains from doing (PRESENT), or promises to do or to abstain from doing, something (FUTURE),

such act or abstinence or promise is called a consideration for the promise. -Section 2 (d) A promise without consideration is not

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Elements of a Contract Intention to Create Legal Relations

Agreements which create legal relations or are capable of creating legal relations are contracts, for example, an invitation to a dinner does not create any legal relation and therefore is not a contract.
Husband & Wife Agreements The courts consider domestic arrangements between husband and wife to be social agreements and not legally enforceable

Elements of a Contract Certainty of Terms

The terms of a contract should be clear. In other words, the contract must not be vague. Contracts which are vague cannot be enforced.

Example: A agrees to sell to B a hundred tons of oil. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.

AGREEMENTS NOT DECLARED EXPRESSLY VOID

There are Certain agreements which have been expressly declared void by the law. Thus an agreement made by parties should not fall in this category.

August 21, 2009

Copyright Dipak Parmar

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Writing and registration

Oral contract is a valid contact. However the contract must be in writing and registered, if so required by any law, for example, gift, sale, lease under the Transfer of Property Act 1882, Memorandum and Articles of Association of a Company under the Pakistan Companies Act

August 21, 2009

Copyright Dipak Parmar

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Thank You

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