Essentail of Valid Contract Presentation

8/2/2019 Essentail of Valid Contract Presentation

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Presentation on:-Essential Elements of Valid

Contract

SUBJECT :-BUSINESS LAW

Presented By:

KALEEMULLAH MEMON BM

25466

UMAIR ALI ALVI BM 25462


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CONTRACT=AGREEMENT + ENFORCEABILITY

An agreement enforceable by law isContract. - Section 2(h)

There must be legal relationship.

Agreements of social or domestic natureare not contracts.

Examples:

Invitation to a Birthday party

Invitation to a Dinner etc

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VOID AGREEMENT= AGREEMENT + NO ENFORCEABILITY

An agreement not enforceable by lawis said to be void agreement. -Section 2(g)

A contract which ceases to beenforceable by law becomes voidwhen it ceases to be enforceable.

Section 2 (j) Example: An agreement with minor

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ESSENTIAL OF A VALID CONTRACT

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ESSENTIAL OF A VALID CONTRACTAGREEMENT

Every promise and every set of promises,forming the consideration for each other, isan 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 formingconsideration for each other is agreement.Thus, Promise + Consideration =Agreement

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ESSENTIAL OF A VALID CONTRACTFREE CONSENT

Two or more persons are said to consentwhen they agree upon the same thing inthe same sense. (Section 13)

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ESSENTIAL OF A VALID CONTRACTFREE 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

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Coercion

Coercion is the committing orthreatening to commit any actforbidden by the Pakistan Penal code

or the unlawful detaining orthreatening to detain any property.


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Undue Influence

Consist in the improper exercise of apower over the mind of one of thecontracting parties by the other.


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Fraud

In the broadest sense, a fraud is adeception made for personal gain or todamage another individual.

Fraud is a crime and is also a civil lawviolation

The suggestion that a fact is true

when it is not true, by the one whodoes notbelieve it to be true


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Misrepresentation

It means a false statement of factmade by one party to another party,which has the effect of inducing that

party into the contract. For example,under certain circumstances, falsestatements or promises made by a

seller of goods regarding the quality ornature of the product that the sellerhas may constitute misrepresentation.


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Mistake

Mistake refers to mis-understanding orwrong thinking or wrong belief.

When both the parties to an

agreement are under a mistake as toa matter of fact essential to theagreement is void.


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ESSENTIAL OF A VALID CONTRACTWHO ARE COMPETENT TO CONTRACT?

Every person is competent to contractwho is of the age of majorityaccording to the law to which he issubject, and who is of sound mind,and is not disqualified fromcontracting by any law to which he is

subject. (Section 11)

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ESSENTIAL OF A VALID CONTRACTCONSIDERATION =>SOMETHING IN RETURN

The agreement is legally enforceable only

when both the parties give something andget something in return.

When, at the desire of the promisor, the

promisee or any other person 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 calleda consideration for the promise. -Section 2(d)

A romise without consideration is not 14


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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, aninvitation 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 legallyenforceable


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Elements of a Contract

Certainty of Terms

The terms of a contract should be clear. In otherwords, the contract must not be vague. Contractswhich 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. Theagreement is void for uncertainty.


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AGREEMENTS NOT DECLAREDEXPRESSLY VOID

There are Certain agreements whichhave been expressly declared voidby the law. Thus an agreement made

by parties should not fall in thiscategory.

August 21, 2009 Copyright Dipak Parmar 17


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Writing and registration

Oral contract is a valid contact.However the contract must be inwriting and registered, if so required

by any law, for example, gift, sale,lease under the Transfer of PropertyAct 1882, Memorandum and Articles

of Association of a Company underthe Pakistan Companies Act

August 21, 2009 Copyright Dipak Parmar 18


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Thank You

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Essentail of Valid Contract Presentation

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