Definations Of Business Law Flashcards
All Chapters
Law
Law means a set of rules or a system of rules of conduct designed and enforced by the state to control and regulate the
conduct of people.
Mercantile Law
Mercantile Law is part of civil law which deals with rights and obligations of persons dealing with each other. It
includes laws relating to contracts, partnership, negotiable instruments etc.
Proposal / Offer:
Proposal / Offer: When one person signifies to another his willingness to do or to abstain from doing anything, with a
view to obtaining the assent of that other to such act or abstinence, he is said to make a proposa
Promise:
Promise: When the person to whom the proposal is made signifies his assent to it, the proposal is said to be
accepted. A proposal, when accepted becomes a promise
- The person making the proposal is called the promisor / offereor
- The person accepting the proposal is called the promisee. / offeree
Agreement:
Agreement: Every promise and every set of promises forming the consideration for each other is an agreement
Contract:
: An agreement enforceable by law is a contract
Acceptance:
When the person to whom the proposal is made signifies his assent to it, the proposal is said to be
accepted.
Void agreement:
An agreement not enforceable by law is said to be void. Notice that a void agreement is void ab initio i.e.
void from the beginning.
Valid contract:
An agreement enforceable by law is a contract
. Void contract:
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Note: Void contract was valid contract at the time of formation but subsequently it ceases to be enforceable
Voidable contract:
An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at
the option of the other or others, is a voidable contract. (Contract is voidable at the option of aggrieved party and not at
the option of defaulting party)
Consideration:
When at the desire of the promisor, the promisee or any other person who has done or abstained from
doing, or does or abstains from doing, or promises to do or to abstain from doing something, such act or abstinence or
promise is called a consideration for the promise.
Consent:
Two persons are said to consent when they agree upon the same thing in the same sense
Free consent:
The consent is said to be free when it is not caused by: Coercion or Undue influence or Fraud or
Misrepresentation or Mistake
Coercion
Coercion is Committing or threatening to commit any act which is forbidden by Pakistan Penal Code; or Unlawful detaining
or threatening to detain any property with an intention of causing any person to enter into an agreement
Undue influence:
A contract is said to be induced by undue influence where the relations subsisting between the parties
are such that, 1) one of the parties is in a position to dominate the will of the other; and 2) uses that position to obtain
unfair advantage over the other
“Fraud”
“Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his
agents, with intent to deceive another party thereto his agent, or to induce him to enter into the contract;
1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true; (false assertion)
2) the active concealment of a fact by one having knowledge or belief of the fact;
3) a promise made without any intention of performing it (empty promise);
4) any other act fitted to deceive;
5) any such act or omission as the law specially declares to be fraudulent
Misrepresentation
Misrepresentation means and includes1) Unwarranted statement, When a person makes a positive statement that a fact is true when his information does
not warrant it to be so, though he believes it to be true.
2) Breach of duty, Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it,
or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
3) Inducing mistake about subject matter (Innocent misrepresentation), A party to an agreement induces (however
innocently) the other party to make a mistake as to the nature or quality of the subject of the agreement
Mistake:
Where both the parties to an agreement are under a mistake as to matters of facts essential of the agreement,
the agreement is void.
Wagering agreement:
Agreement between two persons (a bet) under which money or other thing is payable, by one
person to another on happening or non-happening of a future uncertain event
Contingent contract:
A “contingent contract” is a contract to do or not to do something, if some event, collateral to such
contract, does or does not happen.
Performance of a Contract
Acontract is said to have been performed when the parties to a contract either perform or offer
to perform their respective promises
Actual performance:
When the promisor has made the performance in accordance with the terms of the contract and is
accepted by the promisee it is called an actual performance.
Attempted performance:
When promisor has made an offer of performance but the offer of performance of promisor is not
accepted by the promisee. Attempted performance is also known as tender
Discharge of contract:
A contractis said to be discharged either by performance or when contractual relations between
the parties to a contract are terminated or comes to an end otherwise
Reciprocal Promises:
the Promises which form the consideration or part of the consideration for each
other
Quasi contract
A Quasi contract is an obligation imposed by law in absence of any agreement between the parties. A quasi-contract is not
an actual contract, but is a legal substitute formed to impose equity between two parties. These are also known as
constructive contracts.
Breach of contract
Breach of contract occurs when a party either refuses or fails to perform his part of contract (other than when such
performance is excused under the law)
Agent:
An agent is a person employed to do any lawful act for another or to represent another (the Principal) in
dealing with a third person.
Partnership:
“Partnership is the relation between persons who have agreed to share the profits of a business carried
on by all or any of them acting for all”
Firm and partners:
“Persons who have entered into partnership with one another are called individually “partners” and
collectively “a firm” and the name under which their business is carried on is called the “firm name”
Act of firm:
“An act of firm means any act or omission by all the partners, or by any partner or agent of the firm which gives
rise to a right enforceable by or against the firm.”
Third party:
“Third party used in relation to form or to a partner therein means any person who is not a partner in the
firm.”
Holding out:
A person who expressly or impliedly represents himself, or knowingly permits himself to be so represented to
third party that he is a partner in a firm, is called partner by holding out. If third party gives credit to the firm, ‘partner by
holding out’ shall be liable just like any other partner
Rights of transferee of a partner’s interest:
A partner may transfer his interest in the firm by sale, mortgage or charge
fully or partially
Minor’s admission to the benefits of partnership:
A minor cannot enter into a partnership agreement but with the
consent of all the partners for the time being a minor may be admitted to the benefits of partnership
Negotiable instruments:
Anegotiable instrument means a:
Promissory note, Bill of exchange or, Cheque ( - payable either to order or to bearer.)
Delivery:
Transfer of possession, actual or constructive, from one person to another
Maker:
The person who makes a promissory note
Payee:
The person named in an instrument, to whom or to whose order money is to be paid
Drawer:
The maker of a bill of exchange or cheque.
Drawee:
The person on whom bill of exchange or cheque is drawn and who is directed to pay the amount
Acceptor:
A bill of exchange (other than a cheque) must be presented to drawee for acceptance first, and then
presented for payment on due date. Drawee becomes acceptor when he accepts the bill duly signing it
Holder:
Aperson is called holder of a negotiable instrument if he satisfies following two conditions:
- He must be entitled to the possession of the instrument in his own name and
- He must be entitled to receive / recover the amount due on the instrument from the parties liable under the instrument
(So holder means bearer of the bearer instrument and endorsee or payee of the order instrument.)
Holder in due course:
Any person who for consideration becomes the possessor of a promissory note, bill of exchange
or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before it became overdue, without
notice that the title of the person from whom he derived his own title was defective. Title of a person is defective when
he is not entitled to receive the amount due thereon.
Aperson becomes holder in due course when he fulfills the following conditions:
- He must be a holder.
- There must be a lawful and adequate consideration.
- Aperson should receive the instrument before its maturity.
(For instrument payable on demand, he must have taken it within reasonable time of issue)
- The instrument must be Complete and regular (It is duty of every holder in due course to examine the form and
contents of instrument to ensure that it does not contain any unauthorized material alteration or incompleteness)
- He should take the instrument without any negligence on his part and in good faith without having any reason to believe
that any defect existed in the title of the transferor
Endorsement:
“When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for
the purpose of negotiation on the back or face or on a slip of paper annexed to it thereto, or so signs for the same purpose a
stamped paper intended to be completed as negotiable instrument he is said to endorse the same and is called the
endorser.”
Negotiation:
“When a promissory note, bill of exchange or cheque is transferred free from defects to any person, so as to
constitute that person the holder of it, the instrument is said to be negotiated
Payment in due course:
Payment in accordance with the apparent tenure (period expressly written) ofthe instrument in
good faith and without negligence to any person in possession of it under circumstances which do not raise doubts over its
title
Promissory note:
“A promissory note is an instrument in writing (not being a bank note or currency note) containing an
unconditional undertaking, signed by the maker, to pay on demand or at a fixed or determinable future time a certain sum
of money only, or to the order of a certain person, or to the bearer of the instrument
Bill of exchange:
“A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker,
directing a certain person to pay on demand or at a fixed or determinable future time a certain sum of money only, to or to
the order of, a certain person, or to the bearer of the instrument.”
Cheque:
Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on
demand
Crossing of cheques:
-A cheque is said to be crossed when it bears across its face two parallel transverse lines which are usually drawn on the left
hand top corner of the cheque.
- Purpose of crossing is to direct the drawee (banker) to pay the amount only to a banker (so that the party who receives
the payment can easily be traced)
Financial institution:
Includes any institution carrying on any one or more of the following activities, namely:—
·*Acceptance of deposits and other repayable funds from the public;
* Lending in whatsoever form;
* Financial leasing;
* Money or value transfer;
* Issuing and managing means of payments including but not limited to credit and debit cards, cheques, travelers
cheques, money orders, bank drafts and electronic money;
* Financial guarantees and commitments;
* Trading in—
- Money market instruments;
- Foreign exchange;
- Exchange, interest rate and index instruments;
- Transferable securities; and
- Commodity futures trading:
- Participation in shares issues and the provision of services related to such issues;
- Individual and collective portfolio management;
- Safekeeping and administration of cash or liquid securities on behalf of other persons;
- Investing, administering or managing funds or money on behalf of other persons;
- Insurance business transactions;
- Money and currency changing; and
- Carrying out business as intermediary
Money Laundering:
Aperson shall be guilty of offence of money laundering, if the person:
- Acquires, converts, possesses, uses or transfers property, knowing or having reason to believe that such property is
proceeds of crime;
- Conceals or disguises the true nature, origin, location, disposition, movement or ownership of property, knowing or
having reason to believe that such property is proceeds of crime;
- Holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is
proceeds of crime; or
- Participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates, or counsels the commission of
the above 3 acts
“Electronic Fund or Electronic Money”
“Electronic Fund or Electronic Money” means money transferred through
- An Electronic Terminal,
- ATM,
- Telephone instrument,
- Computer,
- Magnetic medium or
- Any other electronic device
so as to order, instruct, or authorize
- Abanking company,
- AFinancial Institution or
- Any other company or person to debit or credit
an account; and
- includes monetary value as represented by a claim on the issuer which is stored in an electronic device or
Payment Instrument, issued on receipt of funds of an amount not less in value than the monetary value issued,
accepted as means of payment by undertakings other than the issuer and
- includes electronic store of monetary value on an electronic device that may be used for making payments
or
- as may be prescribed by the State Bank
“Electronic Fund Transfer”
means any transfer of funds, other than a transaction originated by cheque, draft or similar
paper instrument, which is initiated through an Electronic Terminal, telephonic instrument, point-of -sale Terminal,
stored value card Terminal, debit card, ATM, computer magnetic tape or any other electronic device so as to order,
instruct, or authorize a Financial Institution to debit or credit an Account.
“Operator”
“Operator” means any financial or other institution or any person, authorized by the State Bank to operate any
Designated Payment System (DPS).
Data Subject:
Anatural person who is the subject of the personal data
Personal data:
Any information that relates directly or indirectly to a data subject, who is identified or identifiable from
that information or from that and other information in the possession of a data controller, including any sensitive
personal data. Provided that anonymized, encrypted or pseudonymized data which is incapable of identifying an
individual is not personal data.
Sensitive personal data:
Data relating to access control (username and/or password), financial information such as
bank account, credit card, debit card, or other payment instruments, and, passports, biometric data, and physical,
psychological, and mental health conditions, medical records, and any detail pertaining to an individual’s ethnicity,
religious beliefs, or any other information for the purposes of this Act and rules made thereunder.
Consent of the data subject:
Any freely given, specific, informed and unambiguous indication of the data subject’s
wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the collecting,
obtaining and processing of personal data relating to him or her
Unauthorised access:
Access to an information system or data which is not available for access by general public, without
authorization or in violation of the terms and conditions of the authorization
Access to data:
Gaining control or ability to use, copy, modify or delete any data held in or generated by any device or
information system
Access to information system:
Gaining control or ability to use any part or whole of an information system whether
or not through infringing any security measure
Data damage:
Alteration, deletion, deterioration, erasure, relocation, suppression of data or making data temporarily or
permanently unavailable
Critical infrastructure:
Critical elements of infrastructure namely assets, facilities, systems, networks or
processes the loss or compromise of which could result in:
- major detrimental impact on the availability, integrity or delivery of essential services including those services, whose
integrity, if compromised, could result in significant loss of life or casualties, taking into account significant economic or
social impacts; or
- significant impact on national security, national defence, or the functioning of the state. (The Government may also
designate any private or Government infrastructure in accordance with the above objectives, as critical infrastructure.)
Goods:
Includes any item, raw material, product or by-product which is sold for consideration
Retailer:
In relation to the sale of any goods, means a person who sells the goods to any other person other than for
resale.
Wholesaler:
In relation to the sale of any goods, means a person who purchases goods and sells them to any other person
for resale.
Relevant market:
Market which shall be determined by CCP with reference to a product market and a geographic
market
- Product market comprises of all products/services which are regarded as interchangeable or ‘Substitutable by
consumers by reason of the products’ characteristics, prices and intended uses.
- A geographic market comprises the area in which the undertakings concerned are involved in the supply of products or
services and in which the conditions of competition are sufficiently homogenous and which can be distinguished from
neighboring geographic areas because, in particular, the conditions of competition are appreciably different in those areas;
Arbitration agreement:
means a written agreement to submit present or future differences to arbitration, whether an
arbitrator is named therein or not.
Legal representative
Legal representative means a person who in law represents the estate of a deceased person, and includes any person who
intermeddles with the estate of the deceased, and, where a party acts in representative character, the person on whom the
estate devolves on the death of the party so acting
Reference
Reference means reference to arbitration
Umpire
An umpire is a 3rd-party appointed by arbitrators to settle differences between arbitrators.
