Essential elements of valid contract

07/04/23 19:33Raza Lilani . [email protected]

ESSENTIAL ELEMENTS OF A VALID CONTRACT


OUTLINE

1. Offer and Acceptance

2. Contractual capacity

3. Free Consent

4. Consideration

5. Void agreement

6. Agreement in written


OFFER & ACCEPTANCE

• First essential of a valid contract is agreement

Proposal Acceptance


Promise

Consideration

Agreement


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;



ESSENTIAL OF VALID OFFER

• Express or Implied

• Legal relations

• Definite and clear

• Different from invitation to offer

• Specific or General


• Communicated to the Offeree

• Should not contain negative conditions

• Subject to any conditions

• Must not contain cross offers


OFFER OR PROPOSAL CAN BE REVOKEDBY

• Sending a notice of REVOCATION

• Laps of time

• Failure to fulfill conditions

• Death or Insanity of Offeror

• Revocation of offer by Offeree


• Counter offer by the Offeree

• Death or Insanity of Offeree

• Subsequent Illegality

• Destruction of Subject matter


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;



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


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.


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.


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;


As against proposerAs against acceptor

when it is put in a course of transmission to him, so as to be out of the power of the

acceptor ;

as against the acceptor, when it comes to the knowledge of the proposer


ILLUSTRATION

B accepts A's proposal by a letter sent by post

Communication complete

As against AAs against B

When the letter is posted by B

When the letter is received by A


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;


as against the person who makes it ,

as against the person to whom it is made

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

it ;

when it comes to his knowledge

The communication of a revocation is complete


ILLUSTRATIONA revokes his proposal by telegram

Revocation is complete


when the telegram is dispatched

when B receives it


ILLUSTRATIONB revokes his acceptance by telegram .

Revocation is complete


when it reaches him when the telegram is dispatched


• 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.

REVOCATION OF PROPOSALS & ACCEPTANCES

SECTIONS 5 & 6


Revocation of a ProposalRevocation of Acceptance

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not the afterwards

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor but not the afterwards


COMMUNICATION OF REVOCATIONOF A PROPOSAL

The Person who makes Revocation

The Person to whom Revocation made

Letter of Revocation of Proposal

Letter posted on 10th April

Letter received on 12th April

Communication completes as against B on 12th April

Communication completes as against A on 10th April


COMMUNICATION OF REVOCATIONOF ACCEPTANCE

The Person who makes Revocation

The Person to whom Revocation made

Letter posted on 10th April

Letter received on 12th April

Communication completes as against B on 12th April

Communication completes as against A on 10th April

Letter of Revocation of Acceptance


IN CLASS ACTIVITY

Illustration


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 April4.On 10th April Mr. Ali wrote a letter revoking his proposal.5.The letter was received by Mr. Kamran on 12th April.


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 and2.As against B

4.Was revocation of effect?


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

ANSWER


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.


• 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;

REVOCATION HOW MADE


• (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.

Business

Essential elements of valid contract