Chapter - 3 Validity Of Contract and Agreement

Question 1

Essential element of a valid contract

Answer 1

1- Offer and Acceptance
2- Intention to create legal relationship
3- Capacity / Competence of parties
4- Free Consent
5- Consideration
6- Lawful Object
7- Possibility of performance
8- Certainty
9- Legal formalities regarding writing and registration

Question 2

Valid contract

Answer 2

Agreement enforceable by law

Question 3

Void Contract

Answer 3

Which ceases to be enforceable by law

Question 4

Voidable Contract

Answer 4

Which is enforceable at the option of one party (i.e. aggrieved party)

Question 5

Consideration

Answer 5

When at the desire of the promisee, the promisor has done or doesor promises to do something, such act is called a consideration for the promise. Consideration may be either a positive act or abstinence.

Question 6

Essential element of Consideration

Answer 6

1- Consideration must be offered at the desire of promisee
2- Consideration may be given by promisor or any other person
3- Consideration may be past , present or future act or abstinence
4- Consideration must be something in value
5- Consideration must be real
6- Consideration must be something which promisor is not already bound to do
7- Consideration must be lawful

Question 7

Exceptions to “No Consideration, No
Contract”

Answer 7

1. Agreement made on account of natural love and affection.
   - Near Relation
   - Natural love and affection
   - Written
   - Registered
2. Agreement to pay a time barred debt
   - Not recoverable under Law of limitation
   - Written
   - Signed
3. Completed Gift.(i.e.Transferred).
4. Contribution to Charity. (If promisee incurred liability)
5. Agreement to compensate for past voluntary services.
6. Other contracts (Bailment, Guarantee, Agency)

Question 8

Object/consideration is unlawful if:

Answer 8

1. Forbidden by Pakistan Penal Code.
2. Involves injury to a person.
3. Fraudulent.
4. If permitted, would defeat provisions of any law.
5. Court regards it Immoral or Opposed to public policy.

Question 9

Agreements Opposed to Public Policy includes:

Answer 9

1- Trading with Alien Enemy
2- Stifling criminal prosecution
3- Sale of public office
4- Marriage brokerage agreement
5- Restraint parental rights
6- Restraint of personal liberty
7- Agreement to create monopoly

Question 10

If some part of an agreement is legal and other part is illegal, status of such agreement:

Answer 10

If Illegal Part can be separated:
Legal part is valid, Illegal part is void.

If Illegal Part cannot be separated:
Whole Agreement is Void.

Question 11

Example of combined legal and illegal agreement

Answer 11

1. Agreement with alternate promises.
2. Agreement first to do legal, and then illegal
   things.

Question 12

Who is minor

Answer 12

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.

Question 13

Position of agreement with minor

Answer 13

1. Agreement by a minor is void against him
   (restoration possible, if in hands)
2. Rule of Estoppel does not apply to minor.
3. No ratification of agreement by minor.
4. Minor in a partnership (cannot be partner,
   can be admitted into benefits)
5. Minor in an agency (not personally liable)
6. Agreement by Guardian (valid for benefits
   of minor)
7. Contract by minor and adjult jointly.
8. Minor and insolvency.
9. Filing suit.

Question 14

Necessities Supplied to Minor:

Answer 14

Can be recovered from property if:
- Necessities of life
- Provided to minor/dependent
- Price is reasonable

Question 15

Who is the person of unsound mind

Answer 15

A person is of unsound mind if at time of making a contract:
- he is not able to understand it, and
- he is not able to judge its effects on his interest

Question 16

Examples of unsound mind

Answer 16

Specific person/idiot
Lunatic
Drunken person or a person delirious from fever

Question 17

Agreement with specific person/idiot

Answer 17

• Unsound mind by birth
• Always void

Question 18

Agreement with lunatic

Answer 18

• normally of unsound mind, but occasionally of sound mind
• Unsound mind at the time of contract , it will be void
• sound mind at the time of contract, it will be valid.
  However, party enforcing contract will have to prove this

Question 19

Agreement with a person of sound mind who occasionally becomes unsound

Answer 19

Sane man delirious from fever, drunken so much
- sound mind at the time of contract, it will be valid
- Unsound mind at the time of contract, it will be void
However party avoiding contract will have to prove this.

Question 20

Necessaries supplied to person of unsound mind

Answer 20

• Necessities of life
• provided to unsound mind/dependent
• price is reasonable

Question 21

Agreement with Disqualified Persons

Answer 21

1. Alien Enemy (agreements suspended
   during war)
2. Foreign Sovereigns and Ambassadors
   (cannot be sued)
3. Convicts (cannot contract during
   imprisonment)
4. Insolvent

Question 22

Position of agreement with alien enemies

Answer 22

• New contract cannot be made during war
• Existing contract stand suspended. They can be revived after war is over

Question 23

Position of agreement with foreign sovereign and ambassador

Answer 23

• Such person can enter into contracts and can sue others to enforce contracts.
• However, they have immunity and cannot be sued unless they choose to submit themselves to our courts

Question 24

Position of agreement with convicts

Answer 24

• incompetent to enter into new contract
• incompetent to sue on contracts made before conviction

Question 25

Position of agreement with insolvent

Answer 25

Cannot make agreement to dispose his property because his property rests with official assignee/receiver