Essential elements of valid contract

ESSENTIAL ELEMENTS OF A VALID CONTRACT

Raza Lilani . razamr@hotmail.com 09/10/12 07:59

OUTLINE
1. Offer and Acceptance
2. Contractual capacity
3. Free Consent
4. Consideration
5. Void agreement
6. Agreement in written

09/10/12
Raza Lilani . razamr@hotmail.com
07:59

OFFER & ACCEPTANCE
• First essential of a valid contract is agreement

Proposal Acceptance

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Promise

Agreement

Consideration

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WHAT IS PROPOSAL OR OFFER?
• Section 2(a)
• when one person signifies to another his
willingness to do or
• to abstain from doing anything,
• with a view to obtaining the assent of
that other to such act or abstinence,
• he is said to make a proposal;

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ESSENTIAL OF VALID OFFER
• Express or Implied
• Legal relations
• Definite and clear
• Different from invitation to offer
• Specific or General

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• Communicated to the Offeree
• Should not contain negative conditions
• Subject to any conditions
• Must not contain cross offers

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OFFER OR PROPOSAL CAN BE REVOKED
BY
• Sending a notice of REVOCATION
• Laps of time
• Failure to fulfill conditions
• Death or Insanity of Offeror
• Revocation of offer by Offeree

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• Counter offer by the Offeree
• Death or Insanity of Offeree
• Subsequent Illegality
• Destruction of Subject matter

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ACCEPTANCE

Section 2(b)

The 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;

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ESSENTIAL OF VALID ACCEPTANCE
• Given by the Offeree
• Absolute & Unconditional
• In a prescribed manner
• Communicated to the Offeror
• Express or Implied
• Follow the offer
• Given within reasonable time

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Communication of
Offer, Acceptance and Revocation


COMMUNICATION WHEN COMPLETE
Communication of a proposal:

•The communication of a proposal is complete
when it comes to the knowledge of the person to
whom it is made.

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ILLUSTRATION

A proposes, by letter, to sell a house
. to B at a certain price

The communication of the proposal
is complete when B receives the
.letter

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COMMUNICATION OF AN ACCEPTANCE

• The communication of an acceptance is
complete,–

• as against the proposer, when it is put in a
course of transmission to him, so as to be
out of the power of the acceptor;

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As against proposer As against acceptor

when it is put in a as against the
course of transmission acceptor, when it
to him, so as to be out comes to the
of the power of the knowledge of the
; acceptor proposer

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ILLUSTRATION
B accepts A's proposal by a letter sent by post
Communication complete

As against A As against B

When the letter is When the letter is
posted by B received by A

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THE COMMUNICATION OF A REVOCATION
• The communication of a revocation is complete

• as against the person who makes it, when it is put
into a course of transmission to the person to
whom it is made, so as to be out of the power of
the person who makes it;

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The communication of a revocation is
complete
as against the person as against the person
, who makes it to whom it is made
when it is put in a course when it comes to his
of transmission to the knowledge
person to whom it is made
, so as to be out of the
power of the who makes
; it

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ILLUSTRATION
A revokes his proposal by telegram

Revocation is complete


when the telegram is when B receives it
dispatched

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ILLUSTRATION
. B revokes his acceptance by telegram

Revocation is complete


when it reaches him when the telegram is
dispatched

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REVOCATION OF
PROPOSALS & ACCEPTANCES
SECTIONS 5 & 6
• Revocation means:

• 1) mutual cancellation of a contract by the parties to it.
• 2) withdrawing an offer before it is accepted.
• 3) cancelling a document before it has come into legal
effect or been acted upon, as revoking a will.

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Revocation of a Proposal Revocation of Acceptance
A proposal may be An acceptance may be
revoked at any time revoked at any time
before the before the
communication of its communication of the
acceptance is complete acceptance is complete
as against the proposer as against the acceptor
but not the afterwards but not the afterwards

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COMMUNICATION OF REVOCATION
OF A PROPOSAL

The Person who makes The Person to whom
Revocation Revocation made

Letter of Revocation of Proposal

Letter posted on Letter received
10th April on 12th April

Communication completes Communication completes
as against A on 10th April as against B on 12th April

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COMMUNICATION OF REVOCATION
OF ACCEPTANCE

The Person to whom The Person who makes
Revocation made Revocation

Letter of Revocation of Acceptance

Letter received Letter posted on
on 12th April 10th April

Communication completes Communication completes
as against B on 12th April as against A on 10th April

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Illustration
IN CLASS ACTIVITY


FACTS:

1.Mr. Ali proposed by letter dispatched on 1st
April, to sell his car to Mr. Kamran in Karachi.
2.Mr. Kamran received the proposal on 3rd April
and gave his acceptance by letter posted 4th
April.
3.Mr. Kamran received acceptance letter on 6th
April
4.On 10th April Mr. Ali wrote a letter revoking his
proposal.
5.The letter was received by Mr. Kamran on 12th
April.
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Questions:

1.Whether contract has been effected?
2.On what date communication of proposal
complete

3.On what date communication of
Acceptance complete
1.as against A and
2.As against B
4.Was revocation of effect?
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ANSWER

1. Contract has been effected when communication of
acceptance complete.
2. Communication of proposal complete
1. As against A on 1st April
3. Communication of Acceptance complete
1. as against A on 4th April and
2. As against B on 6th April
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Held
THE REVOCATION WAS OF NO EFFECT UNTIL IT
REACHED B

The contract made on the date when acceptor accepts the
proposal
on 4th April.
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REVOCATION HOW MADE

• A proposal is revoked:

• (1) by the communication of notice of revocation by the
proposer to the other party;
•
(2) by the lapse of the time prescribed in such proposal
for its acceptance, or, if no time is so prescribed, by the
lapse of a reasonable time, without communication of
the acceptance;
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• (3) by the failure of the acceptor to fulfill a condition
precedent to acceptance; or

• (4) by the death or insanity of the proposer, if the
fact of his death or insanity comes to the knowledge
of the acceptor before acceptance.

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Essential elements of valid contract

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Essential elements of valid contract