Lecture#01 22022011

8/7/2019 Lecture#01 22022011

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Business & Industrial Laws

By

Muhammad Sajjada Shamim AhmedM.Phil (Process), L.L.M(Process), L.L.B, M.A.(Eco), & MBA(Finance)

8/7/2019 Lecture#01 22022011


Court/ Judiciary

Complete

JudiciaryHalf (Quasi) Judiciary

Powers of Lower Court

Supreme Court

Lower Court

High Court

Special Court/

Tribunals

Labor

Courts

BankingTribunalsInsuranceTribunals

Income

TaxAppellate

Tribunals

8/7/2019 Lecture#01 22022011


High Court

Supreme Court

Lower Court is Comprising of Below

Criminal Civil

Judicial

Magistrate

District Judge/

Additional District

Magistrate

Senior

Civil

Judge

Civil

Judge

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8/7/2019 Lecture#01 22022011


Judicial

Magistrate

District Judge/

Additional District

Magistrate

Senior

Civil

Judge

Civil

Judge

Against Judgment of the Above the Appeal files bef ore below

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Four Chief Justice- High Court

In Every Pr ovince

Punjab KPK BalouchistanSindh

Chief Justice - Supreme Court

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High Court

In Every Pr ovince

Punjab KPK BalouchistanSindh

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Two important Bodies

Law Making

(Legislating)

Law Implementing

(Judiciary)

President

Parliament

Governor

Pr ovincial Assembly

Supreme Court

Lower Courts

High Court

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Law

Name of

Law

Year of

Becoming

Law

Making

Body

Contract ACT 1872

Always read three parts as name of Contract

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Law

Name of

Law

Year of

f or mation

Making

Body

Income Tax Ordinance 2001

Always read three parts as name of Contract

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Law making body

President and

Governor

ACTOrdinance

Parliament and

Pr ovincial

assembly

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ACT ismade by

ParliamentPr ovincial

Assembly

Jurisdiction

Of Law

Whole

Country

Jurisdiction

Of Law

Whole

Pr ovince

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Ordinance ismade by

President Governor

Jurisdiction

Of Law

Whole

Country

Jurisdiction

Of Law

Whole

Pr ovince

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Jurisdiction area

President

Parliament

WholePr ovince

WholeCountry

Governor

Pr ovincial

assembly

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Parliament

National

AssemblySenate

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Bill

National Assembly

2/3rd Majority Pass

Senate

President Of PakistanBecome

LAW

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R elationship

Is Created by

Blood Contract

Br other & Sister

Father & Son

Husband & Wife

Sale / PurchaseEmployer / Employee

Landlord / Tenant

Partnership Business

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How to become owner of Pr operty/Goods

By

Inheritance Contract

Seller looses ownership &

buyer gets ownershipIncludes GIFT,

Purchase, Sales

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Contract

Division

For mation Enf orceability Perf or mance

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Contract Act, 1872

Definition of Contract by Pollack

³every agreement and promise enforceable at law is contract.´

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Contract Act, 1872

Definition of Contract by Salmond

³a contract is an agreement creating and defining

obligations between the parties´

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Contract Act, 1872

Definition of Contract by Sir WilliamAnson

³a legally binding agreement between two or more persons

by which rights are acquired by one or more to acts orforbearance on the part of others.´

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Contract Act, 1872

Definition of Contract u/s 2(h)

³An agreement enforceable by law is a Contract.´

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Contract Act, 1872

Contract = Agreement + Enforceability

Agreement = Offer + Acceptance

Enforceability = Legal obligations b/w parties

Agreement:

a. Plurality of persons

b. Consensus Ad idem.

Enforceability:

Social Agreements (No)

Legal Agreements (Yes)

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8/7/2019 Lecture#01 22022011


Contract Act, 1872

ESSENTIALS OF VALID CONTRACT

F L2 I P C2 A N

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F

ree Consent

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F

ree Consent� According to Section 14,

± ³ consent is free when it is not obtained by

coercion, undue influence, fraud,misrepresentation or mistake´.

± If the consent of the either parties is not free,

the agreement cannot become a contract.

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Example� Mr. A compels Mr. B to enter into a

contract on the point of pistol. It is not a

valid contract as the consent of Mr. B is notfree.

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Consent of Parties to the Contract

Consent is FreeConsent is not

Free

�Coercion

�Undue Influence�Fraud

�Misrepresentation

�Mistake

Existence of of the Following

CUFMM

No elements of the f ollowing

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Coercion� ³Coercion is the committing or threatening

to commit, any act, f orbidden by the

Pakistan Penal Code, or the unlawfuldetaining, or threatening to detain, any

pr operty, to the prejudice of any person

whatever, with the intention of causing anyperson to enter into an agreement´.

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Explanation� The explanation to the section says that, ³it

is immaterial whether the PPC is or is not in

f orce in the place where the coercion isemployed´.

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Example� A threatens to cause physical har m to B if B

does not sign the contract and B signs it.

This contract is made by B under thepressure of threat. In such a case B may

avoid the contract because it was not made

by B voluntarily.

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Undue Influence� A contract is said to be induced by undue

influence where the relations subsisting

between the parties are such that one of theparties is in a position to dominate the will

of the other, and uses that position to obtain

an unfair advantage over the other´.

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F

raud� Fraud means and includes any of the

f ollowing acts committed by a party to a

contract, or with his connivance, or by hisagent, with intent to deceive or to induce

another party thereto or his agent, to enter

into the contract´.

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Example� A tells B knowing to be false that his

factory pr oduces 500 pounds of butter per

day. On this suggestion, B agrees to buy thefactory. A is guilty of fraud.

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Misrepresentation� It means an innocent misstatement of facts

about the contract, made by one party to

induce the other party to enter into acontract.

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Mistake� Mistake can be divided into

± Mistake of fact

± Mistake of law

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Mistake� A enters into an agreement with B to sell his

car which both the parties believe to be in

A¶s garage. Actually the car was destr oyedby fire an hour bef ore the agreement was

made. Since this fact was not known to both

the parties, so agreement is void.

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Party A Party B

Commits Fraud

With Party B

Consent of B is

Now not free

Because B is

Under wr ong impression

A

G

G

R

IV

E

D

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Party A Party B

Makes

Misrepresentations

With Party B

Consent of B is

Now not free

Because B is

Under wr ong impression

A

G

G

R

IV

E

D

Misrepresentation is different fr om fraud

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Party A Party B

Makes Undue

Influence

With Party B

Consent of B is

Now not free

Because B is Under influence of Mr. A

Every body can not influence

Except parents, master, spiritual leader

A

G

G

R

IV

E

D

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Party A Party B

Makes Coercion

Influence

With Party B

Consent of B is

Now not free

Because B is Under threat of Mr. A

Coercion means using criminal tactics

Or weapon to threat other party

A

G

G

R

IV

E

D

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Party A Party BBoth are under

Mistake

Consequence: Contract is Void

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Voidable Contract -CUFM

When Consent is

Not Free due to

Fraud UndueInfluence

Misrepresentation Coercion

Consequence may be following

Contract may be

enforceable

Contract may be

terminated

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Consequences of the Following

Fraud

MisrepresentationUndue

InfluenceCoercion Mistake

Contract is Voidable Void

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PARTICULARS

COERCION UNDUE INFLUENCE

NatureCoe ion i a ph i al h ea ei he

o p ope or person

ndue in luen e is a men al or moral

thr eat

Illegal & Unfair Coercion involves doing or

ther eatening to do an illegal act

In under in luence the act may not be

illegal, it may only be un air

Penal ActionIn coercion, penal action is also

taken against guilty party

In undue in luence, generally no penal

action is taken aginst guilty party

Parties

Coercion may be exercised by or

against the party to the agr eement.

It may also be exercised by or

against some thir d party

Undue in luence must be exercised by or

agianst the party to the agr eement

Relationship

For coercion no speci ic

r elationship b/ the parties is

necessary

For undue in luence ther e must be a

speci ic r elationship b/ the parties

Refund of Benefit

In coercion the aggr ieved party has

to r e und the ben its, i he has

r eceived any, from the other party

In undue inf luence, the court has

discr etion to dir ect the aggr ieved party to

r ef und the benef it, if he r eceived from the

other party.

Effect

In coerction, the contract is

voidable at the option of aggr eieved

party

In undue inf luence, the contract is eight

er voidable or the ourt may set as ide it or

enfor ece it in a modif ied for m.

DISTINCTION B/W COERCION & UNDUE INFLUENCE

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PARTICULARS

FRAUD MISREPRESENTATION

INTENTION

In case of fraud, the party makes a

false statement with an intention to

deceive the other party

In case of misrepresentation, there is no

intention to deceive the other party

Belief

In case of fraud, the parson making

the suggestion does not believe it

to be true

In case of misrepresentation, the person

making the suggestion believe it to be true

Damages

In fraud the aggrieved party can

claim damages in addition to the

right of avoiding the contract

In misrepresentation entitiles the party to

avoid contract and there can be no suit for

damages

OffenceFraud may amount to an offecne of

cheating. It is a criminal act

Misrepresentation does not amount to a

offence of cheating. It is not a criminal

act.

Truth

In case of fraud, the aggrieved party

can avoid contract even if it had the

means to discover the truth with

ordinary diligence

In case of misrepresentation, the

aggrieved party cannot avoid the contract

if it had means to discover the truth with

ordinary diligence

DISTINCTION B/W FRAUD & MISREPRESENTATION

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CoercionUndue

InfluenceFraud Misrepresentation

Made by either Person to other

Contract becomes Voidable

The party on whom Coercion, Fraud, MisrepresentationUndue influence is made is called aggrieved party

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Aggrieved Party

Has Option

Makes Contract Void Makes Contract Valid

By ter minating the

Contract

�By Keeping silence

�By Using the goods

�By ignoring/ consuming

�By lapsing time

�By apprehension of threat

�By R esale of goods

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Parties

Consent

Party A

Free

Party B

Not Free


Aggrieved

Party

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Parties

Consent

Party A

UnFree

Party B

Free


Aggrieved

Party

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Voidable Contract

Depends upon

Aggrieved PartyAccept R eject

Contract

Becomes

Valid

Contract

Becomes

Void

Contract is

Enf orceable

Contract is

Not enf orceable

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Un free Consent

Due to

�Coercion

�Undue Influence

�Fraud

�Misrepresentations

MISTAKE

Consequence

Consequence

Contract becomes

VoidableNo Contract

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Consent

Free

Un Free

Due to

CoercionUndue Influence

Fraud

Misrepresentation

AggrievedParty

Contract IsVoidable

R eject

Accept

Contract

Becomes Void

Contract

Becomes Valid

See other Ingredients

LIPCANS

Due to

Mistake

Contract

is Void

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When a Voidable Contract becomes Valid

After lapse

Of reasonable

time

When

Aggrieved Party

R estitution is

not possible

Accepts

Silent

Apprehensive

�Goods R esale

�Goods Consumed

�Shape of Goods Changed

�Goods theft�Goods Br oken

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PARTICULARS ILLEGAL AGREEMENTS VOID AGREEMENTS

ProhibitedAn illegal agreement is prohibited

by law.

A void agreement is not

prohibited by law.

Punishable An illegal agreement is punishableA void agreement is not

punishable

NatureAn illegal agreement is also void

agreement

A void agreement is not

illegal agreement

Collateral

Agreement

A collateral agreement to an illegal

agreement is not enforceable.

A collateral agreement to avoid agreement is

enforceable.

DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS

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8/7/2019 Lecture#01 22022011


MISTAKE

Fact Law

Pakistani

Law

Foreign

Law

Private

R ights

Quality

Quantity

Ownership

Fundament Facts

IdentityExistence

Contract is

Binding

Contract is Void

Documents

Lecture#01 22022011