Más contenido relacionado


Ch# 1.pptx

  1. Business Law Instructor Dr. Sami Ullah Dept. of Management Sciences FA-2022
  2. Chapter 1 Contract, Types and Essentials
  3. Chapter 1 Definition of Law Law means a set of rules/procedures/policies/principles made and enforced by state/institutions to i. control and regulate the conduct of people ii. Secure justice iii. Protect the human, property & business rights of the people iv. Maintain law & order Business Law B. Law is also known as commercial law or mercantile law. It is a branch of law which governs & regulates business/trade/commerce. i. The contract Act 1872 ii. The sales of goods Act 1930 iii. The partnership Act 1932 iv. The negotiable instruments Act 1881 v. The companies Act 1913
  4. The contract Act 1872 The law relating to contracts in Pakistan is contained in the contract Act 1872. It deals with i. The general principles of governing all types of contracts (section 1-75) ii. The contracts of indemnity, guarantee, bailment, pledge, agency ( section 124-238) Definition(s) Pollack “ Every agreement and promise enforceable at law is contract”. Salmond “ A contract is an agreement creating and defining obligations between the parties”. Section 2(h) of contract act “ An agreement enforceable by law is a contract”. Two elements i. Agreement ii. Enforceable by law
  5. Conti… Agreement Section 2 (e) of the contract act defines agreement as “Every promise and every set of promises, forming the consideration for each other is an agreement”. Section 2 (b) defines promise as “ When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A promise come into existence when party/person makes a proposal to other party/person and that party/person gives consent. Therefore, a contract is an agreement, an agreement is a promise and a promise is an accepted proposal.
  6. Conti…. Enforceability An agreement is enforceable by law if it is recognized by court. In order to be enforceable by law, the agreement must create legal obligations between the parties. The term agreement is wider than contract as all contracts are agreement but all agreement are not contracts. i. Social Agreement ii. Legal agreement Social agreement is not enforceable by law and does not create legal obligation between the parties. While legal agreement is opposite to social agreement. C offers to sell his car to B for Rs. 8 Lac. B accepts the offer. This offer after acceptance becomes promise. This promise is treated as an offer.
  7. Conti… Difference between Agreement & Contract Agreement Contract 1. Formation An offer and its acceptance make an agreement 2. Legal Obligation An agreement may or may create legal obligations 3. Scope All agreements are not contracts 4. Binding All agreements are not binding on the concerned parties An agreement and its enforceability make a contract A contract necessarily creates legal obligation All contracts are agreements All contracts are binding on the concerned parties
  8. Conti… Essentials of valid contract In a valid contract, all the parties are legally bound to perform the contract. If one party refuses to perform the contract, the other party can enforce it through court. Following are the essentials of a valid contract i. Offer & Acceptance ii. Legal obligations iii. Lawful consideration iv Capacity of parties v. Free consent vi. Lawful object vii. Writing & registration viii. Certainty of terms xi. Possibility of performance
  9. Conti... Classification of contract Contracts can be classified into following four categories i. According to enforceability ii. According to formation iii. According to parties iv. According to performance According to enforceability i. Valid Contract A valid contract is enforceable by law. It becomes enforceable by law when it fulfills all the essentials of a valid contract.
  10. Conti.. ii. Void contract (Sec, 2 j) The term void means not binding of law. At the beginning it is valid but subsequently becomes void. This happen due to impossibility of performance (Sec, 56) , subsequent illegality (Sec, 56) and impossibility of depending event (Sec 32). iii. Voidable contract (sec 2. i) An agreement which is enforceable by law at the option of one or more parties but not at the option of other party. A contract becomes voidable when the consent of one or more of the parties is obtained by coercion, undue influence, misrepresentation or fraud.
  11. Conti iv. Unenforceable contract An unenforceable contract is a contract which can not be enforced through the court due to technical defects such as absence of writing, registration etc. v. Illegal agreement An agreement is illegal when its performance is forbidden by law. Such agreement can never become a contract. C gives money to B, a smuggler, to buy smuggled goods. The agreement is illegal and money can not be recovered.
  12. Conti.. According to formation According to formation, a contract has the following three types. i. Express contract (Sec 9) Express contract is a contract which is expressed in words spoken or written. ii. Implied contract (Sec 9) An implied contract is made otherwise than by words spoken or written. It arises from the acts or conduct of parties. iii. Quasi contract Quasi contract is not a contract as there is no intention of the parties to enter into a contract. It is obligation created by law in the absence of contract. C leaves his goods at B’s house by mistake. B treat the goods as his own and uses them. B is bound to pay for the goods.
  13. Conti.. According to performance i. Executed contract A contract is called executed when both the parties completely fulfill their obligations. It means nothing remains to be done by either party under the contract. ii. Executory contract In an executory contract, some obligations remains to be fulfilled. According to parties i. Unilateral contract In a unilateral contract only one party makes a commitment. In other words, only one party is bound to perform. ii. Bilateral contract It is a contract where both parties are bound to perform.