Business Law Assignment

Name: Abdulqadir Shabbir Enrollment: 01-111101-002 Class: BBA IV (A) Subject: Business Law Due Date: 26 November 2011

Acknowledgment
This research report has been prepared during 2011-2012 Fall at Bahria University, Islamabad in fulfillment of business law project. It was arguably one of the most thrilling experiences of this semester and I would like to acknowledge all those people who helped me throughout and made this work possible.

Thanks to ALLAH for giving me skills as well as will to survive with my head held high throughout the last four months. To my parents and family who supported me.

To my teacher, Azam Beig, for giving me chance and polishing I manifold. It is undoubtedly through his excellent supervision and knowledge during the whole process that has helped me in coming up with support.

Definition of contract A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. Sec 2(h) of Contract Act: An agreement enforceable by law is a contract Law of Contract The law relating to contracts in Pakistan is contained in the contract Act, 1872. It extends to the whole of Pakistan and came into force on the 1st day of September, 1872. Enforceable contracts 2 (H) Essential for valid Contract (a) Competent person _Sec 11 & 12 In order to make a valid contract the parties to it must be competent to be contracted. According to section 11 of the Contract Act, a person is considered to be competent to contract if he satisfies the following criterion: The person has reached the age of maturity. The person is of sound mind. The person is not disqualified from contracting by any law.

Examples:
Umar, a person of unsound mind agrees to sell his house to Usman for Rs. 5million. It is not a valid contract because Umar is not competent to contract. Ali aged 25 promises to sell his car to Huzaifa for Rs. 1million. It is a valid contract because Ali is competent to contract.

(b) Free consent _Sec 14 To constitute a valid contract there must be free and genuine consent of the parties to the contract. It should not be obtained by misrepresentation, fraud, coercion, undue influence or mistake. Otherwise the contact is voidable at the option of the aggrieved party.

Not Enforceable Void Agreement 2 (G)

Invalidity Causes
(a) Consideration or object unlawful _sec 23 as being
If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Example: A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A's promise and the consideration for B's promise being in part unlawful.

(i) Forbidden by law.

If the consideration or object of an agreement is forbidden by law, the agreement is unlawful and void. An act is forbidden by law: (a) When it is punishable by the criminal Law of the country (b) When it is prohibited by special act of legislature. Examples: Umar and Usman agree to divide the goods obtained by theft. The agreement is unlawful. The sale of guns without license is illegal and so void.

(ii) Defeating the provisions of any law.

If the object or consideration of an agreement is of such a nature that if permitted, I t would defeat the provisions of any law, it will be illegal. Such object or consideration may not be directly forbidden by law but it will indirectly violate law and so illegal. Example: Usman fails to pay his loan to Allied Bank. Usmans office is sold for recovery of debt. According to law, Usmans is prohibited from purchasing his office. Usman asks Umar to purchase his office and ransfer it back to me. The agreement is void.

(iii) Fraudulent.
If the object or consideration of agreement is to defraud others is unlawful and so void. Where the parties agree to commit a fraud on third person, the agreement is illegal. Example: Shahbaz is the agent of Ali. Shahbaz agrees to sell the land to his friend Amir, at a lesser price without knowledge of his principal. The agreement between Shabaz and Amir is void as it is fraud by Shahbaz against Ali. Javed promises to pay Talha Rs 1million, on Talhas promise to commit fraud on Hassan. The agreement is illegal and void.

(IV) Injurious to person or property of another.

If the object or consideration of agreement is to cause an injury to the person or property of another is illegal and also void. Injury means criminal or wrongful harm. Examples: An agreement to put certain property on fire is unlawful and void.

An agreement to commit an assault or to beat a man is held unlawful and void. (v) Immoral or opposed to public policy.
If the consideration or object of an agreement is such that it leads to corruption, injustice or immorality is considered to be against the public policy. Examples: The agreements to give money to induce a person to give false evidence. The agreements to influence judges. The agreements with an alien army. The agreements which disturb the friendly relations of the state. The agreements the purpose of which is to influence over the officers of justice.

(b) Without considerations _Sec 25

(i) Unless by writing registered between neat relations out of natural love and affection.
This type of contract shall be valid if following conditions are satisfied: The contract is in writing. The contract is registered. The contract is made on account of natural love and affection. There must be near relation between the parties to the contract.

Examples: Ali Promises for no consideration, to give to Akbar Rs. 1,000. This is a void agreement Ali for natural love and affection promises to give his son, Fahad, Rs. 1,000. Ali puts his promise to Fahad into writing and registers it. This is a contract.

(ii) Voluntary compensation.

If a promise is made to compensate, wholly or in part, a person who has done something for the promisor, is enforceable even though without consideration. In other words, a promise to pay for a past voluntarily service is binding. This is an exception to the principle that past consideration is no consideration. For this exception, the following points should be noted: (Sec 25(2))

The services were rendered voluntarily for the promisor. The promisor must be in existence at the time the services were rendered. The intention of the promisor should be to compensate the promisee. The services rendered must be legal.

Examples: Ali found Amir Purse and gives it to him. Amir promises to give Ali Rs. 50. This is a contract. Amir supports Ali infant son. Ali promises to pay Amir Expenses in doing so. This is a contract.

(iii) Time barred Debt

A debt becomes time barred if it is not claimed for a period of three years from the date it becomes due. Where there is an agreement, made in writing and signed by the debtor to pay wholly or in part a time barred debt, the agreement is valid even though it is not supported by any consideration. Such an agreement is valid if the following conditions are fulfilled. (Sec 25(3)) The debt must be time barred. The promisor himself must be liable for the debt. There must be an express promise to pay a time barred debt. The promise must be in writing and signed by the debtor or his agent.

(c) In restraint of the marriage of a person not a minor _ S.26

Every agreement is restraint of the marriage of any person, other than a minor, is void. The restraint may be general or partial but the agreement is void, and therefore, an agreement agreeing not to marry at all, or a certain person or, a class of persons, or for a fixed period, is void. However, an agreement restraint of the marriage of a minor is valid under the section. Examples: A agrees with B for good consideration that she will not marry C. It is a void agreement. A agrees with B that she will marry him only; it is a valid contract of marriage.

(d) Agreement in restraint of legal proceeding _S.28

Its basically an out of court agreement and is defined as: An agreement , by which any party there to is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, or which limits the time within which he may thus enforce his rights is void. Such agreements qualify restrictions of two types: Agreements wholly or partially restricting the enforcing of rights in a Court of Law, for example, where a contract contains a stipulation that no action shall be brought upon it, would be void as ousting the jurisdiction of the Court. Agreements limiting the time allowed by the law of limitation.

In both cases, an agreement would be void as an agreement in restraint of legal proceedings. This article applies to agreements which wholly or partially prohibit the parties from having recourse to a court of law. Example: An action on dishonored promissory note may be brought within 3 years under the limitation Act. If parties agree that action shall be brought within 2 years such an agreement limiting the time of enforcement of a right shall be void or considered as a void agreement.

(e) Of uncertain meaning _Sec.29

Agreements, the meaning of which is not certain, or capable of being made certain, are void. this means that such words are used in the agreement that they do not tend to show the exa show the exact meaning or exact purpose of contract which leads to uncertainty(unsurity) For e.g A agrees to sell to B my white horse for rupees five hundred or rupees one thousand. There is nothing to show which of the two prices was to be given. The agreement is void. A agrees to sell to B 100 maunds of rice at a price to less than 2000rs a maund if the crop turns out to be more than six tons.this statement has a factor of uncertainity, so this agreement is void.

AGREEMENT BY WAY OF WAGER Agreement by way of wager also come in the listof void agreements and is defined as: Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which may wager is made. For e.g Betting, gambling and activities like match fixing are the examples of agreement by way of wager.

As these all are illegal and unlawfull activities and agreements made under these activities would also be totally unlawfull and void,because no legal authority or the court permits these kinds of activities. AGREEMENT TO DO IMPOSSIBLE ACTS An agreement to do an act impossible in itself is a void agreement. An agreement may also becomes impossible to carry on with after entering into the contract. Contract to do act afterwards becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. For e.g A agrees with B to discover treasure by magic. The agreement is void. A and B contract to marry each other. Before the time fixed for the marriage, A goes mad, as it became impossible for A to carry on the agreement so it finaaly becomes void. A agrees to act at a theatre for six months in a consideration of a sum paid in advance by B. On several occasions A is too ill to perform at theatre.so the agreement becomes void. A contracts to take in cargo for B at a foreign port. A's Government afterwards declares war against the country in which the port is situated. The contract becomes void when war is declared, because nothing can be done in such scenerioS.