Validity Of Contracts And Agreements

Question 1

List down the essentials of a valid contract?

Answer 1

1: Offer and Acceptance
2: Intentions to create legal obligations
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

What are the types of contracts ?

Answer 2

1: Valid contract
2: Void contract
3: Voidable contracts.

Question 3

Define Valid contract?

Answer 3

It means agreement enforceable by law.

Question 4

What is void contract?

Answer 4

A contract which ceases to be enforceable by law is called void contract.

Question 5

What is Voidable contract?

Answer 5

Voidable contract is a contract which is enforceable at the option of one party ( i.e aggrieved party).

Question 6

Write any three examples of Voidable contract?

Answer 6

1: Agreement in which consent is not free
2: Agreement in which goods or services are not delivered on specified time
3: Agreement in which good pr services are not accepted by buyer.

Question 7

Define consideration?

Answer 7

When at the desire of promisee, the promisor ( or his agent on his behalf ) has done or does or promises to do something, such act is called consideration for the promise. Consideration may be either a positive act (i.e to do) or abstinence (i.e not to do).

Question 8

What are the essential elements of Consideration?

Answer 8

Following are the essential elements of Consideration:
1: Consideration must be given at the desire of promisee.
2: Consideration may be given by promisor or any other person on behalf of promisor.
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 9

What are the exceptions to the rule “No Consideration, No Contarct”?

Answer 9

Following are the exceptions to the rule “No Consideration, No Contarct” :
1: Agreement made on account of natural love and affection.
2: Agreement to compensate past voluntary service.
3: Agreement to pay a time-barred debt.
4: Completed Gift.
5: Contribution to charity (enforceable only if, on the faith of promise, promisee takes step and undertakes a liability).
6: Other Contracts ( i.e contract of bailment, contract of guarantee, comtract of agency)

Question 10

State the circumstances under which agreement made on account of natural love and affection is considered valid?

Answer 10

Agreement made on account of natural love and affection is valid even without consideration if it is:
* Between the parties having a near relation to each other l,and
* Made on account of natural love and affection, and
* Expressed in writing, and
* Registered under the law for registration of documents.

Question 11

What are illegal agreements?

Answer 11

An object/consideration is unlawful if:
• It is forbidden by Pakistan Penal Code i.e punishable by law (e.g wagering)
• It involves injury to a person or his property
• It is fraudulent
• If permitted, it would defeat the provisions of any law
• Court regard it immoral or opposed to public policy.

If object or consideration of an agreement is unlawful, such agreement is illegal.

Question 12

Which agreements are opposed to public policy?

Answer 12

Following agreements are opposed to public policy:

• Trading with an alien enemy
• Stifling criminal prosecution
• Sale of public office
• Marriage brokerage agreements
• Restraint of parental rights
• Restraint of personal liberty
• Agreement to create monopoly.

Question 13

What is the status of an agreement in which subject or consideration of the agreement is partly lawful, and partly unlawful?

Answer 13

If some part of an agreement is legal and other part is illegal, status of such agreement is as follows;

° If the illegal part can be separated, then legal pary will be enforceable and illegal part is rejected.
° If the illegal part can’t be separated, then whole agreement is void.

Question 14

Which persons are competent to contract under the contract act 1872?

Answer 14

All the persons are competent to contract under the contract act 1872 except:

° Minor
° Person of unsound mind
° Person disqualified by law.

Question 15

Who is considered minor under the contract act 1872?

Answer 15

A minor is a person who has not attained the age of majority which is 18 years of age. However, if a guardian is appointed by court for a minor, then age of majority is 21 years.

Question 16

What is the position of agreement with minor?

Answer 16

• Agreement by a minor is void against him.
• Rule of estoppel does not apply to a minor.
• No ratification of agreement by minor.
• If a minor and adult jointly enters into a contract, the contract can be enforced only against adult, minor has no liability under the contract.
• A minor can sue but can’t be sued.

Question 17

Who is a person of unsound mind?

Answer 17

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.
Examples of persons of unsound mind include specific/idiot (i.e mentally deficient by birth), lunatic (i.e mentally deficient in intervals), Drunken persons, or a person delirious from fever.

Question 18

What is the position of agreement with specific person?

Answer 18

Specific person is a person who is of unsound mind by birth.
Agreements with such a person is always void.

Question 19

What is the position of agreement with lunatics?

Answer 19

Lunatic is a person who is normally of unsound mind, but occasionally of sound mind.
° If lunatic is of unsound mind at
time of contract, it will be void
° If lunatic is of sound mind at
time of contract, it will be
valid. However, party enforci-
ng the contract will have to
prove this.

Question 20

What is the position of agreement with a person of sound mind who occasionally becomes unsound?

Answer 20

This may be the case when a sane man is delirious from fever, or drunken so much that he can’t understand terms of a contract, or mentally disturbed due to a sudden crisis.
• If such person is of sound mind at time of contract, it will be valid.
• If such person is of unsound mind at time of contract, it will be void. However, party avoiding the contract will have to prove this.

Question 21

What is the relative provision of necessaries provide to person of unsound mind?

Answer 21

If a person supplies necessities of life (e.g paying expenses for living, medicines, 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.

Question 22

Which persons are disqualified from contract by law?

Answer 22

° Alien enemy (i.e 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.

Question 23

What is the position of agreement with Alien Enemies?

Answer 23

An alien enemy means citizen of a country at war with Pakistan.
• A new contract can’t be made with alien enemy during war.
• Existing contracts stand suspended. No actions can be taken on them. However, they can be revived after war is over.

Question 24

What is the status of agreement with foreign sovereigns and ambassadors.

Answer 24

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

Question 25

What is the position of agreement with convicts?

Answer 25

During the period of imprisonment, a convict is incompetent:
• To enter into new contracts, and
• To sue on contracts made before conviction.
This disability ends on expiry of sentance or when he is on parole.

Question 26

What is the status of agreement with insolvent?

Answer 26

A person who is declared undischarged. Insolvent can’t make agreements to dispose his property because his property rests with official assignee/receiver.