8/2/2019 Essentail of Valid Contract Presentation
1/19
1
Presentation on:-Essential Elements of Valid
Contract
SUBJECT :-BUSINESS LAW
Presented By:
KALEEMULLAH MEMON BM
25466
UMAIR ALI ALVI BM 25462
8/2/2019 Essentail of Valid Contract Presentation
2/19
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
2
8/2/2019 Essentail of Valid Contract Presentation
3/19
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
3
8/2/2019 Essentail of Valid Contract Presentation
4/19
ESSENTIAL OF A VALID CONTRACT
4
8/2/2019 Essentail of Valid Contract Presentation
5/19
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
5
8/2/2019 Essentail of Valid Contract Presentation
6/19
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)
6
8/2/2019 Essentail of Valid Contract Presentation
7/19
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
7
8/2/2019 Essentail of Valid Contract Presentation
8/19
Coercion
Coercion is the committing orthreatening to commit any actforbidden by the Pakistan Penal code
or the unlawful detaining orthreatening to detain any property.
8/2/2019 Essentail of Valid Contract Presentation
9/19
Undue Influence
Consist in the improper exercise of apower over the mind of one of thecontracting parties by the other.
8/2/2019 Essentail of Valid Contract Presentation
10/19
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
8/2/2019 Essentail of Valid Contract Presentation
11/19
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.
8/2/2019 Essentail of Valid Contract Presentation
12/19
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.
8/2/2019 Essentail of Valid Contract Presentation
13/19
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)
13
8/2/2019 Essentail of Valid Contract Presentation
14/19
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
8/2/2019 Essentail of Valid Contract Presentation
15/19
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
8/2/2019 Essentail of Valid Contract Presentation
16/19
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.
8/2/2019 Essentail of Valid Contract Presentation
17/19
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
8/2/2019 Essentail of Valid Contract Presentation
18/19
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
8/2/2019 Essentail of Valid Contract Presentation
19/19
Thank You
19