The Law of Contract its Essentials

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contract act
Pakistan High Resolution Justice Concept

contract act 1872 Pakistan notes

INTRODUCTION

The British India enacted the law of contract act on 25th April 1872. The law came into force on the first day of September 1872. It extends to the whole of Pakistan.

The law of contract belongs to a branch of mercantile law. It provides rulings related to commercial transactions.  It does not affect any custom or usage of trade in Pakistan.

DEFINITION

According to the law of contract act;

“An agreement enforceable by law is a contract.” [Section 2(e)]

Therefore, the contract is an agreement between two or persons (parties). The persons agree to do, not to do a particular thing. They may also make a promise to do or not to do any particular thing. Nevertheless, such agreement should be enforceable at law.

DEFINITIONS BY DIFFERENT THINKERS

SALMOND DEFINITION

“An agreement creating and defining obligation between the parties.”

POLLACK DEFINITION

“Every agreement and promise enforceable at law contract.”

STAGES OF A CONTRACT

An agreement becomes a contract if it fulfills the following essentials.

PROPOSAL

A person signifies his willingness to do or not to do anything to the other. This means the person has made a proposal to the other.

ACCEPTANCE

The other person shows his willingness to do or not to do any particular thing at the proposal. This means he has accepted the proposal. [2 (b)]

PROMISE

A proposal becomes a promise when it is accepted. The person who makes a proposal is called the “PROMISOR”. The person who accepts the promise becomes the “PROMISEE”. [2(c)]

 CONSIDERATION

When a promisee does or abstains from doing a particular thing as the promisor has said. This act of doing or abstinence refers to consideration for the promise. [2 (d)]

RECIPROCAL PROMISES

Promises of both the parties to an agreement which form consideration refer to reciprocal promises. [2(f)]

COMMUNICATION, ACCEPTANCE, AND REVOCATION OF PROPOSAL

The communication becomes complete. When a proposer has transmitted proposal. But it is still out of the reach of the acceptor. [sec,3]

However, for acceptor, the communication completes when the proposer comes to know about it.

The Law of Contract Act

For example, A sends a letter to the B to sell his house at a certain price. The communication is complete. When he sends the letter by post. Although the B has not received yet. when A comes to know of the will of the B.

In this case, the price shows the consideration for which the party gets the house.

A person may revoke a promise before or at the time. When the other person receives the letter. But not the afterward.

Hence, for example, A sends the letter by post to B to sell his house for a certain price. A may revoke his letter before or at the time B receives the letter. However, once B has received the letter, A cannot revoke his proposal afterward. [sec, 4]

WHEN PROMISE IS REVOKED

A proposer sends the notice of revocation to the other party.

Where the acceptor fails to accept within prescribed period of time.

And the acceptor fails to fulfill any condition precedent to acceptance.

Similarly, when an acceptor comes to know of the death or insanity of the proposer before acceptance. [sec, 5]

CLASSIFICATION OF CONTRACT ACT

A contract has the following three types. For example;

Contract of validity, Contract by creation and Contract of performance

COMPETENCY OF PARTIES

Every person is competent to contract who

Has attained the age of majority

Is of sound mind

Has not been disqualified from contracting by law to which he is in the subject.

ESSENTIALS OF A CONTRACT

A contract should be written having a lawful agreement. It must create an obligation on the parties. And it involves free consent. The contract does not involve anything illegal, immoral or opposed to public policy. Contract language is certain and definite. Anyone could understand its meaning.

However, one should register and attest the contract.

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