Consideration
The exchange which takes place under a contract
The price for which the promise is bought
Something of value in the eyes of law
Essential and Legal rules for a Valid Consideration
1. The Consideration must move at the desire of the Promisor
2. The consideration must be lawful
3. Consideration must be real and not illusionary/or impossible
4. Consideration has to be of some value in the eyes of law
5. Consideration must not be the performance of existing duties
6. Consideration has to be sufficient it need not be adequate
7. Consideration can be furnished by third parties
8. Consideration can be positive or negative
9. Consideration can be forbearance to sue (not going to the court)
10.Consideration may be present past or future
Capacity Of Parties
The following are incompetent to enter into any contact:
1. Minor
2. Any person of an unsound mind
3. Any person disqualified by law
Minor
1.
2.
3.
4.
5.
Void ab initio
No restitution except in certain cases
Minors liability for necessities
Minors liability for tort (civil wrong)
Minor can be a beneficiary
6. No ratification (ratification is confirming or approving a contract)
7. Minor can not be a partner In a partnership
8. Minor can be an agent
9. Minor can be a shareholder (provided that the shares are fully paid)
10.Minor can not be a surety
Unsound mind=idiots, lunatics, drunken/delirious=absolutely null and void
Any person disqualified by law
1.
2.
3.
4.
5.
6.
Alien enemies
Foreigners
Insolvents/bankrupt
Convicts
Corporations
Married women/men
FREE CONSENT
Consent: two or more persons are said to consent when they agree upon the
same thing in the same sense. No effective contract can come into existence
unless the parties are ad idem on all the essential terms of the transactions.
Ad idem= meeting of the minds
Absence of Consent
1. Error as to the nature of contract itself
2. Error as to the party with whom the contact is being made
3. Error as to the subject matter of the contract
Consent is said to be free when it is free from the following:
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Coercion=it is based on an act involving physical force (voidable)
Undue influence= based on moral force (voidable)
Fraud (voidable)
Misrepresentation (voidable)
Mistake (void)
Essential and legal rules of a Valid coercion
1. Coercion must be commiting of any act forbidden by the penal
code(criminal law)
2. Coercion must be threatening to commit any act forbidden by the penal
code(criminal law)
3. Coercion must be unlawful detaining or threating to detain any property
4. Coercion must be done with the intention of causing the other party to
enter into a contract
5. Coercion can be initiated by any person
6. Threat to commit suicide also comes under coercion
7. Threat to file a false suit on false charges is also coercion
Essential and valid rules of undue influence
1. Must be in a position to dominate the will of others
2. The dominating party must be in a superior position to obtain an unfair
advantage over the weaker party
3. Undue influence is said to exist whenever an undue advantage is gained
Essential and valid rules of Fraud
1.
2.
3.
4.
With an intention to deceive the other party
Knowledge of falsity should be present
Fraud is committed by a party to the contract
It has to deceive the other party
Essential and valid rules of Misrepresentation
1. Any untrue statements
2. Breach of duty
3. Innocent mistake
Classification of Mistake
1. Mistake of Fact
 Bilateral mistake (both parties are confused about the facts of the
contract)
 Unilateral mistake (one party is confused about the facts of the
contract)
2. Mistake of law
 Mistake of Pakistani Law (VALID) because ignorance of law is no
excuse.
 Mistake of foreign law (VOID)
VOID AGREEMENTS AND CONTINGENT CONTRACTS
Void Agreements
Any agreement not enforceable by law is void. It does not give arise to any legal
consequences hence its void ab initio.
e.g
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Incompetent people
Mistake
Consideration illegal
No consideration
Restraint of marriage/trade/legal proceedings
Not certain/not possible
Contingent contracts
“A contingent contract is a contract to do or not to do sth, if some event collateral
to such contract does or does not happen.”
It is a contract the performance of which is dependent upon the happening or
non-happening of an uncertain event collateral to such a contract.
Characteristics:
1. Future event
2. Collateral= incidental to the contract
3. Contingent event should not be the mere will of the promisor
Performance of Contracts
Actual Performance=when the promises are performed and when the contract is
fulfilled.
Attempted Performance=willingness of both parties is present but due to the
circumstances actual performance could not be achieved.
DISCHARGE OF A CONTRACT
Discharge of a contract means finishing or ending of a contract.
1.
2.
3.
4.
5.
6.
By performance
By Agreement
By impossibility of performance (frustrustration)
By lapse of time
By operation of Law (Death/Insolvency)
By Breach of contract
BREACH OF CONTRACT
Actual Breach of Contract
1. Actual breach of contract on the due date of performance
2. Actual breach of contract during its performance
Anticipatory Breach of Contract
Anticipatory breach is when the party declares in advance about his intention of
not performing the contract.
This can be express repudiation or implied repudiation.
Options available to aggrieved party in anticipatory breach
1. He can go to the court immediately without waiting for the actual date of
performance
2. He can wait till the due date and then go to the court
3. Compromise
REMEDIES AVAILABLE FOR BREACH OF CONTRACT
1. Recission: is a right of not performing your side of the contract and going to
the court because the other party has committed a breach.
2. Damages: Monetary compensation for the loss or damage caused by the
breach of contract.
Ordinary damages=actual loss will be calculated by applying the market
price rule.
Special damages=extra loss occurred due to the breach
Non fin loss=if you can prove it to the court (the inconvenience or
discomfort)
Nominal damages=technical violation in a contract, but no loss has been
suffered so the court can award nominal damages such as rs1 or rs 50. The
court may or may not award these damages.
3. Specific performance=Asking the defaulting party to carry out the promise
according to the terms of the contract. ( do what you were supposed to do)
Cases where specific performance is inappropriate:
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4.
Where damages are considered appropriate and adequate remedy
Personal nature contracts eg marriage
Where the court can not supervise the performance of the contract
Where one of the parties is a minor
When it isn’t fair or inequitable
Injunction=stay order, its an order to prohibit a person to do an act.
5. Quantum Meriut (how much it is worth/as much as is earned)= meaning
that whatever work is done we have to pay for that.
QUASI CONTRACTS
In certain cases, the law enforces legal rights and obligation when no real contract
exists. For eg if a trader A leaves certain goods at Bs shop by mistake and B treats
those goods as his own, he shall be bound to return them to A. This kind of a
contractual relation is known as a quasi contract.
Basis of quasi contracts is that “ no man must grow rich out of another person’s
cost”
TYPES OF QUASI CONTRACTS
 Necessaries supplied
 Responsibility of finder of goods
 Non gratuitous acts