Business law

Legal system of Pakistan

Definition of law

By Austin law is command of sovereign backed by sanction.

Command >order Sovereign> supreme power Sanction> punishment

Source of law

1) Legislation
2) Case law/precedents/citation
3) Customs
4) Agreement

1) Legislation

This is the First Source to make law. the process of law making is called legislation.

The law making body is called legislature in Pakistan legislature is called( majlis e Shura)

Parliament is combination of three things

1) national assembly 2) senate 3) president

2) Case law/precedents/citation

The record source of law is precedents it means to follow on example. case law or previous decision of
the Superior Court(supreme Court/ high Court). La is made by parliament but these superior court
explain and interpret these laws. This interpretation is so important that it becomes law itself.

3 Customs

Some areas have their own customs and their custom make laws for them e.g. jirga system

For example, in auction sale it is a custom that acceptance is done with third fall of hammer.

4 Agreement

Some laws are made by agreement people do agreement with other people and their agreements
become law for all of them for example, partnership deed signed by all partner in partnership form.

Legislative process

Act
The complete name is act of parliament in short we call IT Act a rough draught of proposed law to, after
its approval from national assembly, sent to the national assembly for approval, it is sent to
senate,(upper house) for approval. Then it is sent to president of Pakistan for assent(approval). If
president give his assent he signs it and it becomes act of Parliament for example, contract Act 1872
Negotiable Instrument Act 1881 Companies Act 1881. Before becoming act this rough draught is called
bill(before approval)

If this rough draft Sent to to national assembly for approval and national assembly approve it. But it is
this approved by Senate the discussed is discord join house. This bill is discussed in joint house with
mutual understanding this bill is approval by your joint house and sent to president for assent, if
president signs it, it becomes act of parliament.

Ordinance

It is a law passed by president Pakistan under article 89 of the Constitution of Pakistan 1973. By the
president single handedly. The life of Ordinance is 120 days(4 month). President can withdraw his
ordinance before 120 days or national assembly rejects it. Ordinate should passed by the president if
national assembly is not in session.

Pillars of state

1 Legislature

Act of Legislature is legislation.

(we will explain detail of legislation both are same)

2) Executive

Laws are made by legislature and these laws are implemented by executive. Executive is responsible for
due implementation of laws.

If executive does not work effectively then law making will fertile exercise.

3) Judiciary

Judiciary is the third pillar of state. It is the most important pillar. The function of Judiciary is to interpret
the law. It gives the judgement by applying the right now in the light of facts.

The Other function of Judiciary is to supervise these three pillars. Judiciary is a check on a legislature. It
is a check on executive and it is a check on law judiciary. If legislature makes any law which is ultra
virus(against) to the constitution of Pakistan 1973, judiciary can strike it down. Judiciary is a check on
executive. If executive does not perform its function properly Judiciary can take notice and pass and
order to perform that function properly.
If police does not look which was due judiciary superior Judiciary is check on lower judiciary if lower
Judiciary does not perform its function properly the upper judiciary can take action.

Concept of State

State is a combination of four things.

1) Land 2)population 3) govt. 4)sovereignty

Contract act 1872

Definition

According to section 2 h of the Contract Act 1872 an agreement enforceable by law is a contract

1) offer and acceptance

2) intention to create legal relation
3) lawful consideration
4) capacity of parties
5) free consent
6) lawful object
7) writing and registration
8) certainity
9) Possibility of performance
10) not expressly declared void

Type of agreement

1) social agreement

2) domestic agreement

All contracts are agreement but all agreement are not contract

Kinds of contract

According to enforceability

1) valid contract

an agreement enforceable by law is a valid contract an agreement which full fills all the Essentials given
in section 10

2) void agreement

void mean having no value in law according to section 2 g of Contract Act 1872
An agreement not enforceable by law is called void agreement. Void agreement is void from its
formation.

3) void contract

Void contract is a contract which to be enforceable by law. Which is not word from its formation. Due to
subsequently change in law, due to destruction subject matter.

4) voidable contract

Voidable contract is a contract which can be contracted into a valid contract or void contract in the
option of aggrieved party.

Guilty party> who injures the right

Aggrieved party> who's right has been injured

These contacts are usually without free consent

For example, if a girl marry forcefully, then she can accept it or go against it.

5) illegal agreement

An agreement which is Forbidden by law. It is an agreement of crime. Any act or omission made possible
by law.

For example, agreement smuggling, agreement to sell wine in Pakistan, agreement to murder of
someone

6) unenforceable contract

Unenforceable contract is a contract which have some technical defect but that defect can be removed.
If we do not remove the defect it is not become a valid contract. But if we remove defect it become a
valid contract.

According to formation

1) expressed contract

Expressed contract is a contract which is made in clear words written or spoken

2) implied contract

Implied contract is a contract which is made by action, conduct, dealings or circumstances. It is not
made in clear words or written or spoken.

Silence is acceptance

3) quasi contract
Quasi contract or not really contract. These contracts bare on some principles no one should be reached
at the expense of other.

Second name of contract is constructive these are some obligation

If you are finder of Lost goods you must return the goods to the owner.

According to performance

1) executed contract

Executed contract is a contract which has been performed by both parties completely and nothing is
remaining to be done.

For example, I will give you 40000 rupees and you will give me bike on 1st April. And then at the time of
maturity the contract done.

2) executory contract

Executory contract is a contract which is totally and profound or partly performmed.

According to parties

1 Unilateral

Unilateral is a contract in which one party has performed, its obligation but other parties still has to
perform its obligation. It is a unilateral contract.

2. Bilateral contract

It is a contract between two parties.

Offer/ proposal

According to Section 2(a) of the Contract Act 1872 proposal is defined as "when a person signifies to
another his willingness to do or to abstain from doing anything with a view of obtaining to assent of that
other to such act or abstinence he is social to make a " proposal""

Legal rules regarding a valid offer.

1) An offer may be express or implied.

2) It must be legal
3) It must be certain
4) An invitation to offer is not offer
5) An offer may be specific or general
6) An offer must be communicated to the offeree
7) It should not have negative condition
8) It must be conditional
 9) Cross offers are not valid

2) It must be legal

If offerer make offer with intention to create legal relation no social offer

3) It must be certain

It must be clear and clarity it should not be uncertain vague if there is no clarity, is not valid offer

4) An invitation to offer is not offer

In return of invitation to offer we get offer e.g auction offer, prospectus for company, organisation,
more example catalogue.

Case law

Haris vs nikerson

plaintiff vs defendent

Is used to live in London, nickerson is live in bahrain, nickerson made an advertisement in newspaper to
send his old house horace went to the baharain for auction he came to London auction being proposed
due to

5) An offer may be specific or general

Specific offer, is an offer which is made to a specific person

General offer, is an offer which is made to general people and anybody can accept it

7) It should not have negative condition

Offer should not have negative condition. If an offer makes a conditional offer. The condition should not
be negative .if an afferor says to offeree that if oferee does not reply his over by a specific time the
offerer will considered as acceptance this offer is not valid because it contain negative

8) It must be conditional

offer can be conditional offer can make conditions

9) Crocs offers are not valid

Cross offers are those offers which are made by both parties at a time in ignorance, this offers or similar
offers, and these offers cancel/ revoke each other.

Acceptance
According to section 2(b) contract Act 1972 acceptance is defined as" when person to whom the
proposal is made signifies his assent there to the proposal is said to be accepted"

Legal rules regarding a valid acceptance

1) Acceptance must be given by oferee

2) Acceptance must be unconditional
3) Express or implied
4) Acceptance must be communicated by the acceptor
5) Acceptance must be given with in a reasonable time
6) Acceptance must be follow/succeed by offer
7) No cross offers

1 Acceptance must be given by offeree

Offer should be accepted by the oferee. Only oferee can accepted. If other person get permission fro m
offere on behalf offeree , duffer.

note general offer can be accepted by everyone.

2) Acceptance must be unconditional

Only acceptance is required in a return of offer,there should be no counter offer in certain of in original
offer.

3) Express or implied

Express or implied acceptance is valid

4) Acceptance must be communicated by the acceptor

Acceptance must be communicated by the oferee . He should be inform

5) Acceptance must be given within a reasonable time

oferee should give acceptance within a specific time. It depends on goods

6) Acceptance must be follow / succeed by offer

Except acceptance must to follow the offer

7) No cross offer

A cross offer cannot be accepted.

Consideration
According to Section 2(d) of Contract Act 1872 consideration is defined as" when at the Desire of the
promisor the promiseree on any other person has done or abstained from doing something, search act
or abstinence a promise is called consideration for the promise

Legal rules regarding a valid consideration

1) Consideration must move at the Desire of the promisor.

2) Consideration main move from the promisee or any other person
3) Consideration may be past present or future
4) There must be some existence of consideration
5) Consideration must be real

Chinmaya versus Ramayya

old lady said to his daughter. I will give you my property in my life on this condition, if you share rent of
this house to my brother after death ramaya refuse to share rent of house to chammya. chammay went
to court.

3) Consideration may be past present or future

Present, a consideration which is settled and given at the time of formation of contract

Future, which is settled at the time of formation of contract but given in future.

past, is not valid. it is valid only in exceptions

Is consideration which is given before formation of contracte e.g, a person wash a car and say let's
decide a consideration,

The existence of consideration is necessary. If there is no consideration, then there is no contract but if
consideration is existing weather there is little consideration, it is a valid.

4) There must be some existence of consideration

The existence of consideration is necessary/compulsory.

5) Consideration must be real

Physically impossible > should not be impossible consideration should be able to perform

leggaly impossible > if consideration is legal it is not a valid consideration

Uncertain consideration > consideration should be real it should be wague

illusory consideration > illusory is a consideration on consideration which is not real when a person
demand any extra reward, for performing or duty. It is not valid consideration.it is illusory.

Exceptions to the rule " no consideration no contract"

 1) Agreement made on account of natural love and affection
2) Agreement to compensate for part voluntary services
3) Agreement to pay a time-barred debt
4) Complete gifted
5) Contract of agency
6) Ression by the promisee of performance of the promise
7) Contribution to charity

1 Agreement made on account of natural love and affection

If any person makes agreement on account of natural love and affection it is a valid contract. It is a
without consideration but it fulfill for consideration

a) This agreement should be in writing form

b) It should be registered

c) There should be close relation between the parties

d) The word love and affection is written in the contract

If a person promise to give reward for the past services it is a valid contract. though it is without
consideration.

According to limitation act 1908

If a creditor gives loans to a debtor and that does not return on with in due time. If a creditor does not
file a case against debtor within the 3 years date of violation. Creditor cannot file Suit against debtor
because it is a time Bard.

Fundamental rights given in constitution of Pakistan 1973

5) Contract of agency

Contract of agency is a contract in which there is no consideration even then it is valid. because, it is an
exception.

6) Agreement of remission

To accept a lesser performance of contract is full satisfaction

for example, if a debtor is not in Position to return the whole debt and creditor makes an agreement of
remission in which he promised to accept the lesser performance of the contract in full satisfaction. it is
an agreement without consideration, but valid contract.

7) Contribution to charity
If any person makes an agreement to give a charity. It is an agreement without consideration.but, valid
because, it is an exception.

Capacity of parties

a) Major
b) Sound mind
c) person not disqualified

by value

a) Minor
b) unsound mind
c) Person disqualified

Nature of minor agreement

void agreement

An agreement in which minor is getting benefit only without burden, its a valid contract.

no ratification

a person do not agreement while is minor.

a minor can not retify an agreement which he made during the age of minority, even after getting major

4) Estoppel

Estoppel is not applicable on major, estoppel is a principle which means that no one can get benefit
from his own misstatement. The principle of estoppel cannot applied on minors. Minors can get Benifit
from his statement.

Minor as a partner

Generally minor cannot be a partner in a partnership form. But he can be given benefits of partner.

1) When all the remaining partner are ready to accept him as a partner
2) Is partnership deed will be signed by his guardian
3) He will only share profit, his liability will be limited upto his share.

Discharge of contract

when Rights and obligation arising out of contract comes to an end

Discharge performance actual performance

A contract is discharged by actual performance. When both party perform the contract actually and
nothing is remaining to be done

Attempted performance

if one party tries to perform the contract but other party stop him to perform. The contract is
discharged by tender

Discharge by mutual consent or agreement

Change of parties to substitute a contract, to replace a contract with a new contract have a new parties
or party

2 alteration

To replace up previous contract with a new contract having some alteration

3 recession

Both parties cancel contract with mutual consent contract is this changed by recession

4 remission

To accept the lesser performance in full satisfaction

5 Waiver

When one party of a contract ……his……. Completely in full satisfaction.

To loan debt and promise not be case them

Discharge of contract by subsequent impossibility

1 destruction of the subject matter

If two parties enter into the contract for sale or purchase of anything and subject matter destroyed later
on, the contract become white and it is discharged by subsequent impossibility.

2 death or in capacity of promisor or promisee

Personal skills contract, end due to death of promisor and promisee

If two parties enter into a contract with each other and it was contract a person skills but before date of
performance, any one of the parties dies or become unsound mind contract is discharge by subsequent
impossibility.

Change of law
If two parties enter into a contract for sale or purchase of anything. But before date of performance law
is changed by state and imposes on the sale and purchase of those things. This contract is discharged by
change of law.

Discharge by operation of law

a) Death

b) Insolvency

c) Merger

d) Unauthorized material alteration

Insolvent:

A person who is unable to pay off his debts

If a person get some loan from other person or persons and after sometime, he goes in the court, and
declared in the court ,that he is unable to pay off he is debt court declared him insolvent and all his
assets are given to officially receiving for sale and all the contracts made by that insolvent person get
discharged by operation of law.

Merger:

If two parties enter into a contract which is inferior in nature and both parties enter into a contract
which is superior, the inferior contract will be merged into superior contract and inferior contract will be
discharged by Merger.

Unauthorized material alteration

If two parties enter into a contract and any one of them does any alteration without permission of other
party the contract is discharged by operation of law.

Discharge by breach of contract

Actual Breach.

If two parties enter into a contract and one of them does not perform the contract, so that is called
actual Breach.

Anticipatory .

If two parties enter into contract and before date of performance, one of them breach the contract or
does not perform the contract before date of performance, it is called anticipatory breach.

Remedies for the breach of the contract

Suit for recession

If two parties enter into a contract and one party does not perform the contract .the aggrieved party can
go in the court and file a suit for the cancellation of contract, it is known recession of contract.

Suit for damages

Compensation in terms of money- if two parties enter into a contract and one party commits breach of
the contract the aggrieved party has option to file a suit for damages against two failure party.

Ordinary damages.

Ordinary damages are those damages which are claim for the actual loss, which take place in result of
breach of contract.

Special damages are indirect damages. If two parties enter into a contract and there are certain other
contract which are dependent upon this contract,, and both parties were aware that if this contract is
not perform, the other contract.

Exemplary damages.

Are those which are goanted to aggrieved party in order to punish guilty party. This damages on be only
in 2 case

1 breach of agreement to marry

2 dishonor of a cheque by a Banker, when there was sufficient amount

These are not awarded to compensate aggrieve party but these damages are awarded to punish guilty
party.

Liquidated damages

Liquidated damages are those damages which are settled by the parties themselves at the time of
formation of contract. These damages or pre settled damages

Nominal damages

Nominal damages are those which are claimed by the aggrieved party, when aggrieve party suffers no
loss in result of breach of contract. These damages are awarded to guilty party not awarded to
compensate, these are symbolic images which are awarded as a symbol of Justice.