CHAPTER 3 Flashcards
1
Q
List down essential elements of a valid contract.
2
Q
In a valid contract there must be offer and acceptance. Elaborate. (2 Points)
A
In a valid contract, there must be two parties to an agreement, one making offer and other making acceptance.
Offer can be accepted only by that person to whom offer is made.
3
Q
In a valid contract, there must be intention to create legal relationship. Elaborate.
A
In a valid contract, parties should have intention to create legal relationship between them. I.e. In the case of default they intend to sue each other.
4
Q
In a valid contract, There must be capacity/competence of parties. And which persons are incompetent to contract? Elaborate.
A
In a valid contract, parties to the contract must be competent to contract. Following persons are incompetent to contract:
1. Minor.
2. Person of unsound mind.
3. Persons disqualified by law.
5
Q
In a valid contract, there must be free consent. Elaborate, Also, 1.Define free consent. 2.What happens if consent is not free?
A
In a valid contract, there must be free consent.
1. Free consent means there should be no Coercion, Undue influence, Fraud, Misinterpretation, or Mistake.
2. If consent of a party is not free, contract becomes voidable at the option of party whose consent is not free.
6
Q
Define consideration. In a valid contract, there must be consideration. Elaborate.(3 Sentences)
A
Consideration means benefits moving from one party to another, or simply “something in return”.
In a valid contract, there must be a consideration, which should also be lawful.
Generally, an agreement without consideration is void.
7
Q
In a valid contract, there must be lawful object. Elaborate.
A
In a valid contract, object of an agreement must be lawful.
If object is unlawful, it cannot be enforced by law.
8
Q
In a valid contract, there must be possibility of performance. Elaborate. (1 line)
A
Agreement to do an impossible act is void.
9
Q
In a valid contract, there must be certainty. Elaborate.
A
In a valid contract,, meaning, terms and conditions of an agreement must be certain or capable of being certain.
10
Q
In a valid contract, there must legal formalities regarding writing and registration. Elaborate.
A
A contract can be done in writing as well as oral. However, in certain cases, agreements are required to be in writing and registered,
For example:
1. Agreement to make a gift for natural love and affection must be in writing and registered.
2. Promise to pay time-barred debt must be in writing.
3. Arbitration agreements must be in writing.
11
Q
Enlist different types/classification of contracts.
A
Valid contract.
Void contract.
Voidable contract.
12
Q
What is valid contract?
A
It means an agreement enforceable by law.
13
Q
What is void contract?
A
It means a contract which ceases to be enforceable by law.
14
Q
What is voidable contract?
A
Voidable contract is a contract, which is enforceable at the option of one party. (i.e. aggrieved party).
For example:
1. Agreement in which consent is not free.
2. Agreement in which goods or services are not delivered on specific time.
3. Agreement in which goods or services are not accepted by buyer.
15
Q
What is the definition of consideration? (Long one, 2 sentences)
A
When at the desire of the promisee, the promisor (or his agent on his behalf) has done or does or promises to do something, such act is called a consideration for the promise.
Consideration may be either a positive act (i.e. to do) or abstinence (i.e. not to do).
16
Q
List down essential elements of consideration. (7 Points)
A
Consideration must be given at the desire of promisee.
Consideration may be given by promisor or any other person.
Consideration may be past, present or future act or abstinence.
Consideration must be something in value.
Consideration must be real.
Consideration must be something which promisor is not already bound to do.
Consideration must be lawful.
17
Q
Consideration must be given at the desire of promisee, elaborate.
A
Consideration must be given at the desire of promisee, acts done without the desire of the promisee, or done voluntarily cannot become a valid consideration.
18
Q
Consideration may be given by promisor or any other person. Elaborate.
A
Consideration may be provided by promiser himself or by any other person on his behalf.
19
Q
Consideration may be past, present or future act or abstinence, Elaborate. (3 points)
A
Past consideration (i.e. something has been done before agreement, for example past voluntary services.)
Present consideration (i.e. consideration moves simultaneously with the promise).
Future consideration (i.e. consideration will move at a future date after agreement).
20
Q
Consideration must be something in value. Elaborate. (2 points)
A
Consideration must be some valuable thing, although it is not required to be of equal value of something given.
Inadequate consideration is a valid consideration.
21
Q
Consideration must be real. Elaborate. (2 points)
A
Consideration must be real.
It should not be:
1. Physically impossible (e.g. To make a dead man alive, to run at speed of 100 km/h).
2. Uncertain or illusory (e.g. to make someone happy).
22
Q
Consideration must be something which promisor is not already bound to do. Elaborate. (2 points)
A
A promise to do what someone is already bound to do is not a valid consideration for a new promise.
Similarly, a promise to perform a public duty by a public servant is not a consideration.
23
Q
Consideration must be lawful. Elaborate.
A
If consideration or object is unlawful, agreement will be void.
24
Q
List down all exceptions to the rule,” no consideration, no contract”/Situations in which agreements without consideration are valid. (6 points)
A
Agreement made on account of natural love and affection.
Agreement to compensate for past voluntary service.
Agreement to pay time-barred debt.
Completed gift.
Contribution to charity.
Other contracts.
25
Q
Agreement made on account of natural love and affection is valid without consideration. Elaborate. (4 points)
A
Such an agreement is valid even without consideration if it is:
1. Between parties having a near relation to each other &
2. Made on account of natural love and affection &
3. Expressed in writing &
4. Registered under the Law for registration of documents.
26
Q
Agreement to compensate for past voluntary service Is valid without consideration. Elaborate.
A
A promise to compensate a person who has already done something voluntarily for the promisor Is valid even without consideration.
27
Q
Agreement to pay time-barred debt is valid without consideration. Elaborate. (3 points)
A
An agreement to pay a time-barred debt is enforceable provided:
1. Debt cannot be recovered because of law of limitation.
2. It is made in writing &
3. Signed by debtor or his authorized agent.
28
Q
Completed gift is valid agreement without consideration. Elaborate.(Definition + legal implication)
A
Gifts are property given by one person (called donor) to another person (called donee) without consideration.
Any gift is valid without consideration if it is completed (i.e. transferred), written and registered.
29
Q
Contribution to charity is valid contract even without consideration. Elaborate.
A
A promise to contribute to charity would be enforceable if, on the faith of the promise, promisee takes step and undertakes a liability.
30
Q
Some other agreements without consideration are valid, Enlist all.
A
Consideration is not necessary in:
1. Contract of bailment.
2. Contract of guarantee.
3. Contract of agency.
4. Complete waiver of a right.
31
Q
An object/consideration is unlawful if:
List down all points.
A
An object/consideration is unlawful if:
1. It is forbidden by Pakistan Penal Code i.e. punishable by law (e.g. wagering).
2. It involves injury to a person or his property.
3. It is fraudulent.
4. If permitted, it would defeat the provisions of any law.
5. Court regards it immoral or opposed to public policy.
32
Q
Enlist all agreements opposed to public policy.
A
Trading with an alien enemy.
Stifling criminal prosecution.
Sale of public office.
Marriage brokerage agreement.
Restraint of parental rights.
Restraint of personal liberty.
Agreement to create monopoly.
33
Q
Under agreements opposed to public policy, define trading with an alien enemy.
A
Contracts entered before the declaration of war are either suspended or terminated during the period of war.
34
Q
Under agreements opposed to public policy, define stifling criminal prosecution.
A
If a person has committed a crime, he must be punished. Hence, any agreement which seeks to prevent the prosecution of guilty is void.
35
Q
Under agreements opposed to public policy, define sale of public office.
A
Agreement for sale of public office are illegal because they will lead to corruption. Similarly, agreement to pay to a public servant to act corruptly or to retire our void.
36
Q
Under agreements opposed to public policy, define marriage brokerage agreement.
A
Agreement to procure marriage for reward is void.
37
Q
Under agreements opposed to public policy, define restraint of parental rights.
A
An agreement which prevents a parent to exercise his right of guardianship is void.
38
Q
Under agreements opposed to public policy, define restraint of personal liberty.
A
An agreement which unduly restricts the personal liberty of a person is void.
39
Q
Under agreements opposed to public policy, define agreement to create monopoly.
A
Agreement to create monopoly is void.
40
Q
What is the status of object or consideration Partly lawful and partly unlawful?
A
If some part of an agreement is legal and other part is illegal, status of such agreement is as follows:
1. If the illegal part can be separated. Then legal part will be enforced and illegal part will be rejected.
2. If the legal part cannot be separated, then whole agreement is void.
41
Q
List down persons which are incompetent to contract.
A
Minor.
Person of unsound mind.
Person disqualified by law.
42
Q
Who is a minor?
A
A minor is a person who has not attained age of majority which is 18 years of age. However, if a Guardian is appointed by court for a minor, then age of majority will be 21 years.
43
Q
Position of agreement with minor-Headings.
A
Agreement by a minor is void against him.
Rule of Estoppels does not apply to a minor.
No ratification of agreement by minor.
Minor in a partnership.
Minor in an agency.
Agreement by guardian or parents on behalf of minor.
Contracts by minor and adult jointly.
Minor and insolvency.
Filing suit.
Necessities supplied to minor.
44
Q
Agreement by a minor is void against him. Elaborate.
A
An agreement with the minor is void against him, but minor can enforce it for his benefits.
45
Q
Rule of Estoppels does not apply to a minor. Elaborate.
A
If a minor falsely represents himself as of age of majority, he will still not be liable and can avoid contract.
46
Q
No ratification of agreement by minor. Elaborate.
A
An agreement made by minor cannot be ratified subsequently by him after he attains age of majority.
47
Q
Minor in a partnership. Elaborate.
A
A minor cannot be a partner in a partnership firm. However, he can be admitted to the benefits of partnership with the consent of all partners.
48
Q
Minor in an agency. Elaborate.
A
A minor can be an agent and can bind principle with his acts.
However:
1. A minor cannot be personally liable for negligence or breach of duty.
2. A minor cannot be a principal. (If so, agreement will be void and agent will be personally responsible.
49
Q
Agreement by guardian or parents on behalf of minor. Elaborate.
A
If guardian or parents enter into a contract on behalf of minor for the benefit of minor, such agreement can be enforced by or against minor.
50
Q
Contracts by minor and adult jointly. Elaborate.
A
If a minor and an adult jointly enters into a contract with another person, minor has no liability under the contract and contract can be enforced only against adult.
51
Q
Minor and insolvency. Elaborate.
A
A minor cannot be declared as insolvent because he is incapable of contracting debts.
52
Q
Minor and Filing suit. Elaborate.
A
A minor can sue but cannot be sued in civil court.
53
Q
Necessities supplied to minor. Elaborate.
A
If a person supplies necessities of life (e.g. paying expenses for living, medicine, studies) to a minor or to his dependents, he can recover the reasonable price from the property of such minor.
54
Q
Who is a person of unsound mind?
A
A person is of unsound mind if at time of making a contract:
1. He is not able to understand it &
2. He’s not able to judge its effects on his interest.
Examples of persons of unsound mind include Specific persons/Idiot (i.e. mentally deficient by birth), Lunatic (i.e. mentally deficient in intervals), Drunken person, or a person delirious from fever.
55
Q
What is the position of agreement with specific person?
A
Specific person is a person who is of unsound mind by birth. Agreements with such a person is always void.
56
Q
What is position of agreement with lunatic?
A
Lunatic is a person who is normally of unsound mind, but occasionally of sound mind.
1. If lunatic is of unsound mind at time of contract, it will be void.
2. If lunatic is of sound mind at time of contract, it will be valid. However, party enforcing contract will have to prove this.
57
Q
What is position of agreement with a person of sound mind who occasionally becomes unsound?
A
This may be the case when a sane man is delirious from fever, or drunken so much that he cannot understand terms of a contract or is mentally disturbed due to a sudden crisis.
1. If such person is of sound mind at time of contract it will be valid.
2. If such person is of unsound mind at time of contract, it will be void. However, party avoiding contract will have to prove this.
58
Q
What is the position of agreement if necessaries supplied to person of unsound mind?
A
If a person supplies necessities of life (e.g. paying expenses for living, medicine, studies) to a person of unsound mind or to his dependents, he can recover the reasonable price from the property of such person of unsound mind.
59
Q
Which persons are disqualified by law?
A
Alien enemy (citizen of a foreign country which is at war with Pakistan.)
Foreign sovereigns and ambassadors.
Convicts (i.e. a person who is found guilty and is imprisoned).
Insolvent.
60
Q
What is position of agreement with alien enemies?
A
An alien enemy means citizen of a country at war with Pakistan.
1. A new contract cannot be made with alien enemy during war.
2. Existing contracts stand suspended. No action can be taken on them. However, they can be revived after war is over.
61
Q
What is position of agreement with foreign sovereigns and ambassadors?
A
Such persons can enter into contracts and can sue others to enforce contracts. However, they have immunity and cannot be sued unless they have choose to submit themselves to our courts.
62
Q
What is position of agreement with convicts?
A
During the period of imprisonment, a convict is incompetent:
1. To enter into new contracts &
2. To sue on contacts made before conviction.
This disability ends on expiry of sentence or when he is on parole.
63
Q
What is position of agreement with insolvent?
A
A person who is declared undischarged insolvent cannot make agreements to dispose his property because his property rests with official assignee/receiver.
1:Offer and acceptance.
2:Intention to create legal relationship.
3:Capacity/Competence of parties.
4:Free content.
5:Consideration.
6:Lawful object.
7:Possibility of performance.
8:Certainty.
9:Legal formalities regarding writing and registration
