History of the word contract and when is the first time its legislation came into statute form and get enforced , why it is so essential for all of us to acknowledge its significance and be vigilant about our rights related to contractual obligation is been given to us . our Pakistani contract act 1878, have its root from English common law, How much years and tenure it takes to evolve as an English common law ? this could be seen that common law have also faced such turmoil, Basically if we want to see contract origin we have to know about the common law and its development and history , Common law and English law itself took its evolution during Roman empire in Babylonian era . As we may further proceed by 5th and 6th century in Theodosian and Justinian era, they codified this law and after 6th century Anglo Saxons and canons have tried to improve it but, by 11th century, Common law took its real shape which cannot be later neglected and all the credit goes to Glanvill and Bracton . In 16th century statute took upper hand on common law, though by then common law have introduced much about contract and its terms and condition, then till 1688 Parliamentary supremacy overruled everything and by that time legislations passed by parliament hold upper hand , new statutes have been created so contract laws got further modified but its true development can be traced back from the 18th century when it is been try to legally enforced and has legal sanctity . As we have gone through the history of English contract law what we see it is a part of civil law and its inception can be seen when commercial contracts and transactions spread all over the world and repercussions of laissez faire could be heard due to industrial revolution by 19th century so it becomes essential, to shaped something in form of law to control the unfair daily conducts occur between the parties in the name of business and during the course of commercial transactions.
It’s a short history which let us know about the background of contract Act which we have today in our hands , the main question still yet to answer how it is formed , we can best answer it in this way that by 12-13th century merchants used to enter into contract and do trade so they need a law to made other party bound by it , for that they have law of merchant(made on their own) which results from the usages and practices at that time and later this becomes a sound brick on which principles of law of contract is based. There are more essentials and development stories about it but these pertinent things should be acknowledged at starting point to have a little grasp on this subject.
Primarily English Contract law is the mixture of HAMONURABI code, Roman law, Anglosaxon law and common law ,but what theologist says that elements of contract are the part and parcel of their respective religion to, and contract laws have its back from religious and customs as well , which prevailed at that time and according to their respective public policies.
Hindu says their books named Vedas and Kashkyatri discover this principle that a person of unsound mind cannot enter into the contract,this is given in section 12 of Indian contract act which laid down the principle of sound mind and person capacity to enter into the contract.
What I think that 1400 years back Holy Prophet SAW told us all about these laws because at that time merchandising , trading , business are their way of livings so we as a Muslim can say that Islam have also laid down the essentials of contractual obligations but those differ with English law and in some cases contrary to it.
For instance , mere silence rule which is allowed in our contract act have its extract from English common law but Islam denies this concept and Federal Shariah court have its ruling on it that seller should beware buyer about all the defects of product which he is buying or interested to buy.
Nature ofthe Law of Contract
Historically it was believed that contract of adhesion are valid contracts and consumer contracts came to be regarded as “adhesion contract” where there was no real negotiation took place and most people were given “take it or leave it” terms. But this practice needs to end so to define true nature of contract many jurist put up their theories which later become the part of law. According to PatricAtiyah in his book named Promise and the law of Obligation , introduced a concept named “will” theory which means ”reliance based rather than exchange based” , this theory formulates 3 concepts
What this theory basically laid down is the true nature of contract that this law is of fact as well of value. The formation of a contract is based on obligations that are freely assumed rather than imposed. Liability in contract is based on voluntary undertaking of the obligations by the individual. As such, the law assumes that the parties are free to make a contract any way they wish, based on the concept of freedom and equality. In making the bargains, the parties enjoy equal position. The obligation imposed under a contract is self-imposed, entered freely by the parties.
Simultaneously, according to freedom of contract theory, it is assumed; “that everyone is free to choose which contracts they entered into and the terms on which they wished to do so”.
According to equality of bargaining power theory, “the parties were deemed to have equal power to bargain on their businessand deemed to be of equal bargaining strength” (during legal framework of business transaction).
There should be no coercion, undue influence while making the contract nor the parties to the contract tries to change the will of other party through unconscionable transaction and try to take benefit under fiduciary relationship.
As we have always heard the word Obligation and as a legal student law of obligation it means ‘duty of care’ we have to owed in terms of law, concept of law of obligations have its origin from common law and it is further bifurcate into two forms;
1. Law of tort and,
2. Law of contract.
Law of tort is a general duty of care owed towards the whole public and this concept has been laid down in Harvey v pender case , while law of contract deals with the specific or particular duty of care, which remains among the parties to the contract and if their relationship and dealing got affected by the conduct of one of the party then under contract laws principle , any sort of breach occurs then damages have to be awarded , damages can be of various nature, it’s a right of aggrieved party to have it, some types of damages can be given here;
• Pecuniary or monetary.
• Exemplary damages.
etc. etc., and penalties should be stipulated in some sections to.
Contract is a branch of civil law based on private law making and here obligations imposed on each of the parties is according to their own willingness and intention to enter into the contract, all the parties to the contract have consensus ad idem and agreed to obliged for their respective duties so the party here suing to the wrongdoer already knows him, rather than what we see in tort, the duty is general in nature and towards the whole world.
‘Contract’ what does the term contract means? In our daily life we used to hear this term a lot and most of the times we are the part of it too, but do we know what rights remedies can be availed from these normal transactions. How much benefit we can accrued to, if other party try to do some default in regards with that transaction. Here are some examples which I would like to quote for further understanding of the term contract;
1. A sells his car to B, B bought that car by paying certain amount of money, this is Contract.
2. I buy some fruits from a mart , I entered into a contract with them , if they try to deceit me by giving rotten goods so I have a remedy to ask them to compensate me , because they have infringed my right.
3. A and B enters into a contract that they both would jointly pay C’s debt , they both are liable if C wouldn’t be paid on time and if A at the time of payment denies to pay , then B have a right against A to make him held liable for the performance of the contract.
EXAMPLES OF CONTRACT FROM DAILY LIFE
• Buying and selling
• House purchase
• Renting a property
• Obtaining of servicesetc.
These are general examples to make you understand the term contract so it would become very easy for you to evaluate for yourself and then you can acknowledge on your own. Contract is a very vague term we can generalize it a lot, for instance if a child clean your car window, he is entering into a contract with you and you’re responsible to pay him, if you promise to teach your friend something so here you can be bound by a contract or cannot be, so how could we distinguish when someone’s having a binding relationship and when not. At first we would see what the term Contract means;
After its general understanding we come to its legal aspect, contract is a legal agreement or consensus ad idem between the parties in which both the parties exchange their promises in regard of some consideration and have shown their intention and willingness to be bound by that contract, the parties to the contract should be of sound mind and have attained the age of majority as given in Majority Act. When a proposal is accepted it becomes a promise and in return of the lawful consideration and lawful object it becomes an agreement, this lawful agreement is called a Contract.
Special Cases in Contract Laws; In some circumstances, we need to understand the peculiarity of law, that the person who is at specific time period loose his conscious level, means not lunatic and insane all of the time but for particular time period becomes an unsound can enter into a contract when he is of sound mind as stated in s.12 of contract act 1872.
Secondly intentions have to be deduced from surrounding circumstances because many contracts can be implied in nature, we are going to discuss this in communication of offer and acceptance part in detail that when intention bounds the both party when the consent is free? But till now we need to have in mind it’s an oddity of this law that exceptions and additional rights are there for pardanasheen ladies, illiterate so they don’t have to suffer much. Another thing to be noted here is that according to majority act, every one attains it majority at 18 but if someone’s guardians have been appointed then they will be major at age of 21.
Contracts can be of many types:
They all have their own nature as regards with the transaction.
Contracts can be void and voidable we are going to discuss this in detail at later stage, but another specialty arose which needs to be mentionedthat in void agreements, aggrieved party can be compensated according to s.56 (3) of the contract act, because here the defendant already knows about this factum, that contract is void ab initio still he made it.
Contracts are express and implied in nature if the parties to the contract entering in by giving their own express consent, so how much loss they suffered if they don’t been vigilant at that time and later want to claim for damages they couldn’t do that because they can renew the terms of contract but it’s a legal principle that both the parties have to consented towards it and if a term is been issued so new contract is made, because counter offer means that a new offer can reject the old one and this is why on negotiation table contracts cannot be formed .
RekoDiq Project Case
This is a latest international case, related to contract terms and conditions. Pakistan enter into the contract with Australia, that they can mine a special mineral from Baluchistan because they hold the latest machinery while Pakistan lacks in it , prima facie everything seems good but then Pakistan government realize it’s going in their loss so supreme court of Pakistan held this contract null and void. While, on other hand an arbitration tribunal of the World Bank’s International Center for Settlement of Investment Disputes (ICSID) has ruled against the Islamic Republic of Pakistan in relation to the unlawful denial of a mining lease for the RekoDiq project in 2011, Chilean mining company Antofagasta plc announced on Tuesday.
This case rightly defines the pertinence of terms and condition laid down in a contract but there are certain exception to it too that if everything appears very good on the face of it and transaction occurs in bonafide manner to, but if other party faces a loss so court will consider the loss of other and gives order under section 39 of specific relief act, to cancel the instrument which is injurious and harmful to the nature and if got enforced will seriously affects or harm or injured or infringed the rights of parties. But if parties in pari delicto (both are at fault) so nothing could be awarded.
We can understand this from various illustrations:
1. Hindu widow having a property, which defendants want to wrongfully possess so her lawyer give her advice that transfer the said property to him on low price and then after he won the case wouldn’t return it to the widow so court declare this transaction sham .
Another case to support my argument,
2. When a pardanasheen illiterate old woman named her 1 crore property to his nephew without knowing its true value and in return just got few lacks, so court in such circumstances after going through the whole scenario and facts held this transaction void, because here consideration was not sufficient at all.
DEFINITIONS IN LIGHT OF SOME EMINENT JURIST
ACCORDING TO WEX
“An agreement creating obligations enforceable by law. The basic elements of a contract are mutual assent, consideration, capacity, and legality. In some states, the element of consideration can be satisfied by a valid substitute”.
ACCORDING TO DUHAIME
“An agreement between persons which obliges each party to do or not to do a certain thing”.
ACCORDING TO BLACK
“An agreement, upon sufficient consideration, to do or not to do a particular thing”.
ACCORDING TO JACOB
“A covenant or agreement between two or more persons, with a lawful consideration or cause”
ACCORDING TO WHARTON
“A deliberate engagement between competent parties, upon a legal consideration, to do or abstain from doing, some act.”
According to Pollack
“Every agreement and promise enforceable at law is a contract”
According to Salmond
“A contract is an agreement creating and defining obligation between two or more persons by which rights are acquired by one or more to acts or forbearance on the part of others”
According to Sir William Anson
“A legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearance on the parts of others”
Steph in his commentary page 54 defines contract as, “A contract or agreement is either where a promise is made on one side and assented to on the other; or where two or more persons enter into engagement with each other by a promise on either side”.
According to our Contract act 1872, section 2 (h) “contract is an agreement enforceable by law”.
What the preamble (introduction) of our contract act laid down is that, all the laws related to contract have been put down on this Act ( act is a legislation passed by parliament and many acts together comprise of statute) . This contract has been laid down in 25thApril 1872 and from now all the queries or issue related to contracts would be seen under the light of provisions given here and according to the given sections which is enacted by legislature for our convenience that now people can freely do their business in open market and don’t have to bare much harm or suffer from the competition or other sorts of wrongful act done by the other party etc.
APPLICATION OF THIS LAW
This law is going to be enforced all over the Pakistan but it have its application or force from the 1st September 1872 its main purpose and object to be laid down is to ensure the contracting parties their rights and the violation and infringement results arose from those rights , remedies are available to.
Essentials and Fundamentals of law of Contract
According to English law there are 5 essentials of contract act
1. Agreement which forms due to offer and acceptance.
3. Capacity to enter into the contract.
4. Certainty in terms of the contract.
5. Intention of the parties to enter into the contract.
These are the elements on which our Contract Act is been based too, with some further amendments as in light of our usage , custom and public policies.
PECULIAR NATURE OF LAW
Contract act 1872 basically comprise of 274 sections, there are four parts to it ;
• Laws related to Contract,
• Sales of good Act,
• Law related to Partnership,
• Negotiable instrument laws.
But last three in previous years had been repealed from the main contract act so we are left with 193 sections in total, and here we are going to define their special nature and oddity as respects with their applicability.
After going through what contracts are and their general nature , theories to support them , examples for understanding and object or purpose behind this law , how it has been laid down , we now come to our main topic and before coming to this we need to understand the general principles of contract as laid down in contract 1872 act, which we have already discussed above in a precise way because now we are going to talk about the exceptions , where general law don’t prevail and in these circumstances defendant got the advantage that he couldn’t be sued by the claimant , basically these exceptions laid own here are not for the protection of any party , they just give rights to both of the parties to save themselves if any extraordinary situation incurred, exceptions in every act or law gives many benefit to lawyers to protect their client because they used in rare cases and when they got applied general applicability of the law relinquished . These exceptions are there to promote peace and justice in society and prevent the chaos if arose from the loss suffer to any party in regards with the judgment and decree passed against him. Exceptions are of two kind
• Express and
Express exceptions are those which has been laid own expressly in the given section, while on the other hand implied exceptions are those which are given below like where ever these two terms has been written unless and provided we have to presume on our own that exception is been created here .
There are two words which we frequently see in the contract act , if we have grasp just on these two terms , we would be able to make surrender other party in every case , so what are those magic words ;
1. Unless and,
2. Provided for or provided that.
If you see unless in anywhere of the act it means you got a exception ahead, and this is the best part when you see an exception you have to understood to its fullest because it is in contradiction with the general provision which have laid already there in first paragraph or before that exception, which might give upper hand and benefit to you as against the other party case. Now we comes to proviso it means “to limit the scope of that section” where ever you find provided that or provided for it means it’s a proviso exception to an exception and basically laid down to restrict the section within prescribed parameters.
There are various sections in contract act and each and every one is unique in its own way now one by one we are going to see the exceptions and proviso given in here and we could have help through case laws too, every act and law contains interpretation clause which can also be stated as definition clause , here we see the meanings of word which commonly used all over the act but with slightest interpretation they can have different meanings which we deduce from case laws and these exceptions given here help us in to mold the law in our benefit.
Preamble shows the intent of the legislature while making the certain statute and what is the purpose behind it, it is clearly stated there why this law has come into existence and what would be its nature .Preamble means the introduction and from preamble we can easily extract what law is all about and in which sort of cases it would be applied.
Due to the peculiar nature of law we got many befits under Contract act 1872, mainly in section 2. There laid down the golden words “unless the contrary intention appears from the context” it means the definitions defined here, their meanings unless the context shows contrary to the intention of the parties will prevail as such with regards to context in which it has been laid down.
First we would see offer, offer is a mere proposal but this term varies as with the section to section like if somewhere offers appearing in some other context so its definition would be prevailed as in the given section, offers, communication, revocation approval took place like according to the given rules prescribed in said sections but exception we need to entertain here is that if offer stipulate some condition so according to s.7 acceptor is bound by the term or condition laid there to follow it because that term is making the subject matter of the contract it has to be accepted by acceptor , he cannot counter against it or put a new condition, nonoccurrence of condition will leads to the revocation of an offer.
But if the acceptor in return put another condition still then offer stands revoke because adding of a new term is the counter offer which terminates last offer and now from acceptor side new offer had been put up and he becomes the offeror. Here do remember this cross offers have no validity in the eyes of law (Tin v Hoffman). Acceptance should fulfill the condition if an offeror has put itand obliged according to said manner as prescribed in given section. But if acceptor don’t accept that condition and fulfill the offer in his own manner and offeror remain silent on this , and reasonable time ends so offeror got no claim against acceptor because by conduct offeror give his assent and shows his willingness to be bound by that contract. Once acceptance made, there is no need to move back but if in the violation of any term of the contract both the parties got a right to rescind the contract, it have its own condition too which we later discuss.
If acceptance is made by conduct then the offeror is bound by it simultaneously acceptor is bound by it too (Brodgenv.railway case)
Offer can be revoke in certain matters but if offeror on mere sentiments want to revoke his offer, this behavior cannot be considered and bearable. If any of the parties wants to made a contract they have to communicate, if they are mere silent and think that their wish comes true so on desires no contract can be formulated which remain with them and in their hearts solely.
What agreements are contracts we already know this but what is the hidden exception here related to Quasi contractual liabilities, section 10 of the contract act, says only competent parties can enter into the contract but according to section 68 of the contract act, if someone take care of the unsound person or the person who is not mentally and also take care of his property then can claim compensation as a reward from estate in his property.
Section 1 of the contract act clearly stated in its clause 3 that, contract act is not an exhaustive law and cannot affect any;
• Act, or
• Usage or custom,
• Incident of any contract i.e. lawful terms and condition subject to the contract between the parties.
Which are not inconsistent or in contradiction with this law, so it distinctly means and evidently shows that for instance if some contract arise out of the result of any usage or trade it will have its own significance and will be valid in the eyes of law.
The first six chapters of the Contract Act contain the general principles of the law of Contract. The remaining chapters refer to particular contracts arising out of the ordinary transactions of merchants and traders. The preliminary section 2 professes to be merely terminology but in effects it declares substantive law and embodies some of the principles of the English common law.
Section 2 of the contract Act is the interpretation clause and can also be known as the definition clause , here the meaning of words given can be used as it is in all over the Act and its section except where some exception related to the subject matter occur and change the concept of that meaning and then that word would be apply in terms of the meaning of that given section and change its true character or nature as per the requirements given there.
For instance here are some examples given,
Section 2(a) defines offer which in general sense means proposal and offeror binds here himself, it is absolutely different from invitation to treat which is an offer to chaffer “a general invitation to whole public”. The peculiar nature of this section is that advertisements are not offer they are just merely invitation to treat but in unilateral contracts (one sided contract), here advertisements become binding if the offeror clearly states his intention to be bound by the said advertisement.
Carlil v. carbolic
In this case what happen was this that carbolic co. have made some sniff balls and declare that if anyone is going to sniff it, wouldn’t suffer from influenza and if someone still suffers from it will have a reward of 100 pounds, Miss Carlill take the medicines as the prescribed manner and suffer from influenza. Now the question arose are the defendant liable to compensate her and give her reward so court said yes because if the company just use these words for the mere invitation and advertising purpose then they don’t have to deposit 1000 pound in the bank as the surety , so once they bound themselves in their own offer by submitting a security too hence there forth they held liable to award Miss Carlill the given reward.
Section 2(B)defines that the term “promise” it means proposal when accepted becomes a promise and acceptance’s assent should be given thereby or make its acknowledgment later on, but postal rule creates anomaly here which deviates it the term promise actual means from the given sense, many judges even try to disown this rule and uphold it but it still prevails , in postal rule acceptance of letter took place as when the letter was posted , the place from where it had been posted contract formed there and then, now issue arose is this that if letter wouldn’t be receive by offeror he would still be bound by it.
Adams v Lindsell (1818) 106 ER 250
The defendant wrote to the claimant offering to sell them some wool and asking for a reply ‘in the course of post’. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the delay the defendant’s had assumed the claimant was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract.
Held: There was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box.
This case established the postal rule. This applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. The acceptance then becomes effective when the letter is posted.
Section 2(d) defines consideration it means a loss, forbearance or detrimental accrued to one party and the benefit accrued to the other party. Every promise needs consideration to become a valid contract, it based on bargain principle and means things in exchange of something. Valid considerations need to be sufficient not adequate , executed and executory considerations are perfect in an eye of law but past considerations could not be considered but there are 2 exceptions to it when;
• Parties have already ascertained the price and
• The offer is moved from the promisor.
But according to section 25 of contract act agreements do exist without having a consideration, certain conditions has been laid down here when
• Where it is in writing and registered under the law for time being in force and made out of love and affection between the parties and can be other reasons to when there is no side to move the consideration or,
• Where it is a promise to compensate for something done or,
• Where it is a promise to pay a debt, barred by limitation law.
(a) A, for natural love and affection, promises to give his son, B, Rupees
1,000. A puts his promise to B into writing and registers it. This is a
(b) A finds B’s purse and gives it to him. B promises to give A Rupees 50.
This is a contract.
Contract of agency and gratuitous contract need not to have consideration.
Section 2 (e) of the contract act, defines agreement that, every promise and every set of promises, forming the consideration for each other, is an agreement
But according to s.23 if consideration and object of an agreement is unlawful then it becomes void,
Lawful Agreements used to enforce in the court of law but void and voidable agreement have different rules secondly there is a term called agreement to sale which creates some ambiguity here, it means that agreements which are to be executed on future date. In concurrence with immovable property it has no imposition, section 4 of the sales of Good act, defines this terms and have its discharge in regards with the goods but another thing need to be mentioned here is this that receipt as define in section 2 subsection (23) of stamp act, is entirely different from agreement to sell ` `
“Agreement” and “receipt”—Distinction—Both agreement and receipt were different in characteristics—“Receipt” was only an acknowledgement of receiving some articles while agreement to sell comprised of some promise to sell some property against some consideration—“Receipt” might be signed and executed by a person having acknowledged that some articles had been received but an “agreement to sell” must contain promise of both the parties to the same i.e. vendee and vendor, description of property and consideration to be paid against the said property. (2016 YLRN 131 LAHORE-HIGH-COURT-LAHORE)
Conditions when agreement could be enforced:
• Agreement between the parties had the status of a statute and unless it was shown that any term of the agreement was violative of the law, it could not be rescinded by a party.( 2016 PLD 199 SUPREME-COURT)
In void contracts, remember this thing in mind if one party already knows about this fact, that in near future certain act would occur which made this contract ceases to be enforced, then the loss suffered by other party he have to bare but this can only happen if the defendant side actively tries to conceal the mere fact.
Section 20 and 21 of the contract act, as mistake regards with law and matter of fact considered to be voidable agreement.
Contract can be of various types according to their nature and intention it is of void and voidable in nature.
Void contract none of the party can enforce the contract it ceases to be enforced by law, for example in some cases of contingent contract when an event become impossible then it becomes void no applicability at all in the eyes of law, but if one of the parties knows about this factum, that event on which they are entering into a contract is ceased or prevented then the other party is entitled to have compensation.
Agreement by of wager are also void and no suit can be made against such agreement neither any party hold any right against each other, hence cannot be tryable in the court of law but there are certain exceptions regarding it:
This section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be rewarded to the winner or winners of any horse-race.” Section 294A of the Pakistan Penal Code not affected. Nothing in this section shall be deemed to legalize any transaction connected with horse-racing, to which the provisions of section 294A of the Pakistan Penal Code (45 of 1860) apply. Nothing in this section shall be deemed to legalize any transaction connected with horse-racing, to which the provisions of section 294A of the Indian Penal Code (45 of 1860) apply.”
Agreements by way of wager void Exceptions in favor of certain prizes for horse-racing Section 294A of the Penal Code not affected. Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be own on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which wager is made. This section shall not be deemed to render unlawful a subscription, or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred Rupees or upwards, to be awarded to the winner or winners of any horse race. Nothing in this section shall be deemed to legalize any transaction connected with horse-racing, to which the provisions of section 294A of the Pakistan Penal Code apply.
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, they are given below:
• Agreement made without free consent s.14
• Agreement made with coercion s.15
• Agreement made with undue influence s.16
• Agreement made with fraud s.17
• Agreement made with misrepresentation s.18
But there are exceptions to all of the above,
Consent means both of the parties agreed to same thing at the same time means they have consensus ad idem (meeting of mind) is there and consent should be free when it free from:
2. Undue influence
5. Mistake subject to the provisions of section 20,21 and 22
Coercionif these essentials of coercion cannot be proved than it cannot be said that agreement is voidable on the option of one of the parties regarding this transaction
1. Committing or threatening to commit any act forbidden by Pakistan penal code
2. Unlawful detaining or threatening to detain any property
3. To the prejudice of any person (it has wider scope, it means coercion can be done against third party too)
4. With the solely mala fide to make someone enter into an agreement.
It is to be noted here that it is immaterial whether Pakistan penal code has its applicability on the place where the coercion is employed.
Undue influence it can be exercised if one of the party to the contract is in a position to
1. Dominate the will
He can dominate the will when he have :
• Real or apparent authority , or stands in a fiduciary relationship
• Where a person makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress
2. Took unfair advantage of this position
If a transaction prima facie appeared to be unconscionable then the burden of proof lies on one who dominates the will of other, this is a peculiarity of this section, and it didn’t affect article 127 of Qanun-e- shahdat, 1984.
According to section 19(a) one who undue influence to other innocent party so that party got a right to avoid a contract because his consent got affected, and if the other party has gain any profit therein i.e. mesne profit so what court may seem just passed discretion according to it.
Fraud the only exception in fraud arose is this that mere silence don’t amount to fraud but there’s an exception to it, if silence is amount to speech then a person is liable for fraud or under the circumstances are this sort of that he is bound by them to speak then remaining silent accounts to fraud. Defendant wouldn’t be held liable for fraud If the plaintiff exercised reasonablediligence, with due diligence or ordinary diligence they have the means to discover the truth so in this case they got no right to avoid a contract same is the case for misrepresentation.
Subsection (1) of misrepresentation relies on this exception that innocent representation does not give cause for avoiding a contract unless the representation is made without any reasonable ground.
Mere forecast cannot amount to misrepresentation.
Subsection (2) and (3) parties can avoid a contract but the question would seem on principle to be whether the assertion in question was a mere statement of opinion or a positive assurance—especially if it came from a person better qualified to know—that the law is said so and so. It depends on,
• Strength of the statement
• Statement passed by the vendor in demand of buyer
• Statement passed by a skilled person or who have sufficient knowledge.
A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable.
FORMS OF CONTRACT
There are various forms of contract which shapes according to their characteristics:
• Contract of Bailment
• Contract of bailment of pledge
• Contract of indemnity
• Contract of guarantee
• Contract of agency.
These contracts hold their own exception as par regards the subject matter therein and according to the context laid down as if there is a special contract among parties so those rules prevail but absence of it contract act general principle hold.
Chapter 1 of the contract act, deals with the communication, acceptance and revocation of proposals basically this chapter deals all about the communication and aftereffects of it.
When these communications turn into miscommunication and due to the slightest err can lead near to the breach of contract. Previously we have seen general nature of Contract act, and its exception but now we would look into the minute details that when due to slightest err offer cannot remain valid and acceptance loose its efficiency and revocation becomes the dead tunnel.
According to section 3, acceptance, proposals and revocation should be communicated in a prudent manner so it can be consider reasonable (correct,authentic,genuine) in the eyes of law and it can be express (written or oral) as well as implied in nature i.e. can be inferred from the parties conduct , any provision of law , customs or usage prevailed or agents conduct on his principle behalf .
Communication of offer acceptance and revocation should be valid, absolute , if it’s in writing form can be easily perceived and terms therein should be certain , in oral could be simply audible and heard.
For instance.If A, offers B, on phone line and network got buzzed and B, couldn’t heard it properly so no offer would be there. While simultaneously if B, shouts to give its acceptance on the other side of river bank then if A, couldn’t heard it no acceptance would be taken place so these sorts of things shouldn’t be done, offer and acceptance should be communicated in a very sound manner.
Section 3 of contract act 1872 tell us how communication can be made and section 4 told us when it can be completed,
As soon as the person has the knowledge as regards with the offer, communication, and revocation his duty starts from there and then.