Law of Contract in Pakistan
In Pakistan the main source of law of contract is the Contract act 1872. Most of the contracts matters are solved under the above act and Civil Law. The Act defines all the conditions to make a contract or financial transactions. The act deals with the validity and invalidity of the contracts. it is the important branch of mercantile law. The Act Applies to the whole Pakistan.
Definition of a Contract :
According to Oxford Dictionary of Law: “A legally Binding agreement is called a contract.”
According To the Contract act 1872: “An agreement enforceable at law is a contract.”
Meaning of a contract:
An Agreement between two or more parties or persons to do or not to do some particular thing, which is legally enforceable at law is called a contract. More over the agreement should be with free consent of both parties.
when a person offers to do or not to do a specific task and the other person accepts the offer, then the task becomes a contract. I.E if there is an agreement between A and B that a will wash the car of B and B will pay 20 dollar to A then it will become a Contract.
Difference between Agreement and Contract:
you may be confused between the terms agreement and Contract, and think both have the same meaning, but these are different terms in law of contract.
“Every promise and every set of promises, forming the consideration for each other, is an agreement” while “An agreement enforceable by law is a contract.”
- An agreement is a step towards a contract, while a contract is a complete transaction or set of transactions.
- Every contract is based on an agreement.
- An agreement does not have any legal bindings or obligations while a contract legally binds both parties.
- You may or may not get a legal remedy in case of breach of an agreement, but in case of contract a party always get some remedy if other party breach the contract.
Types of Contract :
a contract may be a valid, void and voidable depending upon the terms and conditions of the contract. a valid contract is an agreement which is enforceable at law, while the void contract is not enforceable at law. and a voidable contract is valid at the end of one or more parties but not valid on the end of other party.
Essentials of a Valid Contract:
A valid contract is made up of below ingredients
one or more parties must propose a lawful act to the rest of parties, with a clear communication. “A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.”
The rest of the parties must lawfully accept the offer, with a clear communication. “B accepts A’s proposal by a letter sent by post.” and the acceptance must be absolute and unqualified. more over if the proposer have mentioned a procedure to accept the proposal, the acceptor must follow it.
The Agreement should be in written form.
The agreement should be lawful, because unlawful agreement will not be enforceable at law. hence the contract becomes void according to the Law of Contract.
Object Or Consideration must be Lawful :
moreover the object or the consideration of the contract must not be illegal, immoral or against a public policy.
Position of the Parties in Law of Contract :
All the parties of the contract must be competent to enter the contract. in other words all the parties should be in position to fulfill the conditions of the contract. if any of the party is not eligible to complete the contract, the contract will not be a valid contract. According to Contract act 1872 below are the competent persons to enter a contract, who
- has Attained the age of majority
- is of sound mind
- has not legally disqualified by any law to make the contract.
There must be some consideration or remedy in return. the agreement is not valid if it has no consideration.
Free Consent :
The consent of all the parties must be free. and the consent is not taken by coercion, undue influence, fraud, misrepresentation or mistake.
Certain and definite:
The contract should be clear and unambiguous. if the contract is vague or uncertain it will not be a valid contract.
Not Declared Void by any law:
The Contract should not be declared void by any law or legal institute of the country or state.
In the end of the article, I will say a contract is an agreement which legally binds two or more parties to do or not to do a task. and the agreement is enforceable at law, and it fulfills all the conditions described in the contract act of 1872. The Contract Act 1872 is the main Law of Contracts in Pakistan.