Lecture#01 22022011
Transcript of Lecture#01 22022011
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Business & Industrial Laws
By
Muhammad Sajjada Shamim AhmedM.Phil (Process), L.L.M(Process), L.L.B, M.A.(Eco), & MBA(Finance)
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Court/ Judiciary
Complete
JudiciaryHalf (Quasi) Judiciary
Powers of Lower Court
Supreme Court
Lower Court
High Court
Special Court/
Tribunals
Labor
Courts
BankingTribunalsInsuranceTribunals
Income
TaxAppellate
Tribunals
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High Court
Supreme Court
Lower Court is Comprising of Below
Criminal Civil
Judicial
Magistrate
District Judge/
Additional District
Magistrate
Senior
Civil
Judge
Civil
Judge
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Judicial
Magistrate
District Judge/
Additional District
Magistrate
Senior
Civil
Judge
Civil
Judge
Against Judgment of the Above the Appeal files bef ore below
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Four Chief Justice- High Court
In Every Pr ovince
Punjab KPK BalouchistanSindh
Chief Justice - Supreme Court
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High Court
In Every Pr ovince
Punjab KPK BalouchistanSindh
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Two important Bodies
Law Making
(Legislating)
Law Implementing
(Judiciary)
President
Parliament
Governor
Pr ovincial Assembly
Supreme Court
Lower Courts
High Court
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Law
Name of
Law
Year of
Becoming
Law
Making
Body
Contract ACT 1872
Always read three parts as name of Contract
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Law
Name of
Law
Year of
f or mation
Making
Body
Income Tax Ordinance 2001
Always read three parts as name of Contract
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Law making body
President and
Governor
ACTOrdinance
Parliament and
Pr ovincial
assembly
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ACT ismade by
ParliamentPr ovincial
Assembly
Jurisdiction
Of Law
Whole
Country
Jurisdiction
Of Law
Whole
Pr ovince
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Ordinance ismade by
President Governor
Jurisdiction
Of Law
Whole
Country
Jurisdiction
Of Law
Whole
Pr ovince
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Jurisdiction area
President
Parliament
WholePr ovince
WholeCountry
Governor
Pr ovincial
assembly
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Parliament
National
AssemblySenate
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Bill
National Assembly
2/3rd Majority Pass
Senate
President Of PakistanBecome
LAW
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R elationship
Is Created by
Blood Contract
Br other & Sister
Father & Son
Husband & Wife
Sale / PurchaseEmployer / Employee
Landlord / Tenant
Partnership Business
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How to become owner of Pr operty/Goods
By
Inheritance Contract
Seller looses ownership &
buyer gets ownershipIncludes GIFT,
Purchase, Sales
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Contract
Division
For mation Enf orceability Perf or mance
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Contract Act, 1872
Definition of Contract by Pollack
³every agreement and promise enforceable at law is contract.´
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Contract Act, 1872
Definition of Contract by Salmond
³a contract is an agreement creating and defining
obligations between the parties´
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Contract Act, 1872
Definition of Contract by Sir WilliamAnson
³a legally binding agreement between two or more persons
by which rights are acquired by one or more to acts orforbearance on the part of others.´
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Contract Act, 1872
Definition of Contract u/s 2(h)
³An agreement enforceable by law is a Contract.´
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Contract Act, 1872
Contract = Agreement + Enforceability
Agreement = Offer + Acceptance
Enforceability = Legal obligations b/w parties
Agreement:
a. Plurality of persons
b. Consensus Ad idem.
Enforceability:
Social Agreements (No)
Legal Agreements (Yes)
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Contract Act, 1872
ESSENTIALS OF VALID CONTRACT
F L2 I P C2 A N
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F
ree Consent
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F
ree Consent� According to Section 14,
± ³ consent is free when it is not obtained by
coercion, undue influence, fraud,misrepresentation or mistake´.
± If the consent of the either parties is not free,
the agreement cannot become a contract.
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Example� Mr. A compels Mr. B to enter into a
contract on the point of pistol. It is not a
valid contract as the consent of Mr. B is notfree.
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Consent of Parties to the Contract
Consent is FreeConsent is not
Free
�Coercion
�Undue Influence�Fraud
�Misrepresentation
�Mistake
Existence of of the Following
CUFMM
No elements of the f ollowing
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Coercion� ³Coercion is the committing or threatening
to commit, any act, f orbidden by the
Pakistan Penal Code, or the unlawfuldetaining, or threatening to detain, any
pr operty, to the prejudice of any person
whatever, with the intention of causing anyperson to enter into an agreement´.
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Explanation� The explanation to the section says that, ³it
is immaterial whether the PPC is or is not in
f orce in the place where the coercion isemployed´.
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Example� A threatens to cause physical har m to B if B
does not sign the contract and B signs it.
This contract is made by B under thepressure of threat. In such a case B may
avoid the contract because it was not made
by B voluntarily.
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Undue Influence� A contract is said to be induced by undue
influence where the relations subsisting
between the parties are such that one of theparties is in a position to dominate the will
of the other, and uses that position to obtain
an unfair advantage over the other´.
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F
raud� Fraud means and includes any of the
f ollowing acts committed by a party to a
contract, or with his connivance, or by hisagent, with intent to deceive or to induce
another party thereto or his agent, to enter
into the contract´.
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Example� A tells B knowing to be false that his
factory pr oduces 500 pounds of butter per
day. On this suggestion, B agrees to buy thefactory. A is guilty of fraud.
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Misrepresentation� It means an innocent misstatement of facts
about the contract, made by one party to
induce the other party to enter into acontract.
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Mistake� Mistake can be divided into
± Mistake of fact
± Mistake of law
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Mistake� A enters into an agreement with B to sell his
car which both the parties believe to be in
A¶s garage. Actually the car was destr oyedby fire an hour bef ore the agreement was
made. Since this fact was not known to both
the parties, so agreement is void.
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Consent of Parties to the Contract
Party A Party B
Commits Fraud
With Party B
Consent of B is
Now not free
Because B is
Under wr ong impression
A
G
G
R
IV
E
D
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Consent of Parties to the Contract
Party A Party B
Makes
Misrepresentations
With Party B
Consent of B is
Now not free
Because B is
Under wr ong impression
A
G
G
R
IV
E
D
Misrepresentation is different fr om fraud
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Consent of Parties to the Contract
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
A
G
G
R
IV
E
D
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Consent of Parties to the Contract
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
A
G
G
R
IV
E
D
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Consent of Parties to the Contract
Party A Party BBoth are under
Mistake
Consequence: Contract is Void
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Voidable Contract -CUFM
When Consent is
Not Free due to
Fraud UndueInfluence
Misrepresentation Coercion
Consequence may be following
Contract may be
enforceable
Contract may be
terminated
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Consequences of the Following
Fraud
MisrepresentationUndue
InfluenceCoercion Mistake
Contract is Voidable Void
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PARTICULARS
COERCION UNDUE INFLUENCE
NatureCoe ion i a ph i al h ea ei he
o p ope or person
ndue in luen e is a men al or moral
thr eat
Illegal & Unfair Coercion involves doing or
ther eatening to do an illegal act
In under in luence the act may not be
illegal, it may only be un air
Penal ActionIn coercion, penal action is also
taken against guilty party
In undue in luence, generally no penal
action is taken aginst guilty party
Parties
Coercion may be exercised by or
against the party to the agr eement.
It may also be exercised by or
against some thir d party
Undue in luence must be exercised by or
agianst the party to the agr eement
Relationship
For coercion no speci ic
r elationship b/ the parties is
necessary
For undue in luence ther e must be a
speci ic r elationship b/ the parties
Refund of Benefit
In coercion the aggr ieved party has
to r e und the ben its, i he has
r eceived any, from the other party
In undue inf luence, the court has
discr etion to dir ect the aggr ieved party to
r ef und the benef it, if he r eceived from the
other party.
Effect
In coerction, the contract is
voidable at the option of aggr eieved
party
In undue inf luence, the contract is eight
er voidable or the ourt may set as ide it or
enfor ece it in a modif ied for m.
DISTINCTION B/W COERCION & UNDUE INFLUENCE
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PARTICULARS
FRAUD MISREPRESENTATION
INTENTION
In case of fraud, the party makes a
false statement with an intention to
deceive the other party
In case of misrepresentation, there is no
intention to deceive the other party
Belief
In case of fraud, the parson making
the suggestion does not believe it
to be true
In case of misrepresentation, the person
making the suggestion believe it to be true
Damages
In fraud the aggrieved party can
claim damages in addition to the
right of avoiding the contract
In misrepresentation entitiles the party to
avoid contract and there can be no suit for
damages
OffenceFraud may amount to an offecne of
cheating. It is a criminal act
Misrepresentation does not amount to a
offence of cheating. It is not a criminal
act.
Truth
In case of fraud, the aggrieved party
can avoid contract even if it had the
means to discover the truth with
ordinary diligence
In case of misrepresentation, the
aggrieved party cannot avoid the contract
if it had means to discover the truth with
ordinary diligence
DISTINCTION B/W FRAUD & MISREPRESENTATION
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CoercionUndue
InfluenceFraud Misrepresentation
Made by either Person to other
Contract becomes Voidable
The party on whom Coercion, Fraud, MisrepresentationUndue influence is made is called aggrieved party
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Aggrieved Party
Has Option
Makes Contract Void Makes Contract Valid
By ter minating the
Contract
�By Keeping silence
�By Using the goods
�By ignoring/ consuming
�By lapsing time
�By apprehension of threat
�By R esale of goods
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Parties
Consent
Party A
Free
Party B
Not Free
Contract becomes Voidable
Aggrieved
Party
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Parties
Consent
Party A
UnFree
Party B
Free
Contract becomes Voidable
Aggrieved
Party
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Voidable Contract
Depends upon
Aggrieved PartyAccept R eject
Contract
Becomes
Valid
Contract
Becomes
Void
Contract is
Enf orceable
Contract is
Not enf orceable
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Un free Consent
Due to
�Coercion
�Undue Influence
�Fraud
�Misrepresentations
MISTAKE
Consequence
Consequence
Contract becomes
VoidableNo Contract
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Consent
Free
Un Free
Due to
CoercionUndue Influence
Fraud
Misrepresentation
AggrievedParty
Contract IsVoidable
R eject
Accept
Contract
Becomes Void
Contract
Becomes Valid
See other Ingredients
LIPCANS
Due to
Mistake
Contract
is Void
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When a Voidable Contract becomes Valid
After lapse
Of reasonable
time
When
Aggrieved Party
R estitution is
not possible
Accepts
Silent
Apprehensive
�Goods R esale
�Goods Consumed
�Shape of Goods Changed
�Goods theft�Goods Br oken
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PARTICULARS ILLEGAL AGREEMENTS VOID AGREEMENTS
ProhibitedAn illegal agreement is prohibited
by law.
A void agreement is not
prohibited by law.
Punishable An illegal agreement is punishableA void agreement is not
punishable
NatureAn illegal agreement is also void
agreement
A void agreement is not
illegal agreement
Collateral
Agreement
A collateral agreement to an illegal
agreement is not enforceable.
A collateral agreement to avoid agreement is
enforceable.
DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS
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MISTAKE
Fact Law
Pakistani
Law
Foreign
Law
Private
R ights
Quality
Quantity
Ownership
Fundament Facts
IdentityExistence
Contract is
Binding
Contract is Void