CONTRACT ACT (1872)

Q.1 What is lease?

A. A lease is a transfer of an interest in the immovable property.

Q.2 What is difference between lease and license?

A. The criterion for distinguishing between lease and license is simple i.e. whether any right in the immovable property itself, a right in rem, has passed to the person concerned? A license is a personal right granted to a person to do something upon immovable property of license is a personal right granted to a person to do something upon immovable property of the grantor and does not amount to the creation of an interest in the property itself. The license has no other effect than to confer a privilege upon the licensee to go upon the land and does a certain act, which would in the absence of such license, be unlawful.

Q.3 What is the legality and propriety of the Tender Notice?

A. A tender notice means an invitation extended to the contractors for making offers. Such invitation and tender documents would be considered to the extent of proposal.

Q.4 What will you call submission of bid, its acceptance and submission of performance guarantee bond by bidder either as acceptance or an agreement?

A. it would not constitute an acceptance as defined in S. 2(b) of Contract Act and not an agreement as defined in S. 2€ of contract Act or Contract as per 2 (h) thereof. Bid submitted and tender documents would itself constitute a proposal, which might be accepted or rejected by the person inviting it.

Q.5 What does Memo of understanding (MoU) imply in the eye of law?

A. It is only an understanding and executor instrument in nature and where the parties though a deliberated subsequent agreement on the same subject substitute the memorandum of understanding by adding the exclusive jurisdiction clause, memorandum of understanding should loose its relevance, it is then only the succeeding instrument which should determine the rights and obligation interest of the parties. 2010 CLC 670

Q.6 whether an agreement or memorandum containing family arrangement for deed of Family Settlement exceeding an amount of Rs. 100/- require registration?

A. No, 1989 MLD 2899

Q.7 What is private of contract?

A. Only the parties to a contract are bound by it or entitled under it, which principle is known as ‘’privatise of contract’’ Generally a contract does not confer right or impose obligation arising under it on any person. Except party of contract. Third parties were entitled to sue in their own right in certain cases namely, 1. Beneficiary under a trust; 2. Contract executed as an agent of defendants without any implied or written authority of the defendants would not be binding on them. Under the law of contract an agreement can be binging against the parties to it, though consideration of an agreement may proceed from a third party, a person not a party to an agreement cannot sue upon it . 2004 CLC 487 + AIR 1957 Punjab 169

Q.8 Explain contract, what are its requirements and how its legality is proved?

A. The definition of contract as given u/s 2 of the Contract Act, 1872 appears to be built upon a succession of definitions of the elements which go to make a contract, that is to say, proposal, acceptance, promise, promisor, promise, consideration and agreement. In order toconstitute a binding agreement, the intention of the parties must be clear, and unambiguous. The terms of the contract must be acceptable to each of parties in detail. In order to constitute a contract it is essential that there essentials that there should be consideration for promise. Lawful agreement or contract consists of three essentials; i.e. proposal, acceptance and consideration; any transaction without consideration cannot be lawfully enforced nor on the basis thereof declaration of any right can be made. 2001 MLD 1925

Q.9 Explain in your own words the purport of ‘’agreement’’ as is implied in the Contract Act under definition 2 (e).

Note: The definition is somehow big one. The question is important as it is being raised in different forms; rather in a twisted manner. Every effort is made to cover te entire purport of definition for which the relevant case laws are traced out to know the magnitude & mechanism of the Agreement. It is now your efficiency to understand the question first & then prepare yourself to return the answer in the wake of case laws.

A. Agreement has been defined as, every promise and every set of promises, forming consideration for each other. It means no more than concord, a transaction between two parties that may lead to a contract. It consists of mutual expressions, though not of harmonious intentions or state of mind. It is by the conduct of the parties, by their bodily manifestations, that the Court determines the existence of ‘agreement’. Indeed, an agreement is nothing more than a manifestation of mutual assent by two of more legally competent persons to one another. According to clause(e) of S. 2, Contract Act every ‘’ promise’’ and every set of promises, forming the consideration for each other, is an agreement. There must be a proposal from one party and acceptance by the other in order to constitute an agreement.An agreement which his enforceable in law is a contract. A promise ripens into an agreement only after an offer has been accepted by the offeree and until there is such an agreement the question whether there was any consideration for the promise would not arise at all.

Under the Contract Act, 1872, an agreement is an act in law, whereby two or more persons declare their consent as to any act or thing to be done or forborne by some or one of these persons for the use of the others or other of them through the process of writing. It is the essence of a contract that there should be an ‘’aggregation mention’’ (the meeting of the minds of the contracting parties). Where the parties are under agreement as to the terms, it is not necessary that they should enter into a regular written contract. The existence of the contract can be inferred from their conduct. A contract is a consensual act, the parties being free to settle any terms they pleased. A contract creates legal obligations. A promise which is voluntary and by which the parties do not intended creates legal obligations. A promise which is voluntary and by which the parties do not intend otcreate any legal obligation cannot amount to a ‘contract. 2007 CLC 1372

Q.10 Can we seek specific performance of oral agreement from the Court of law?

A. Yes,

Q.11 If there is simple receipt showing part payment of sale consideration, how other terms and conditions for further payment, or schedule of the payment will be proved, when the agreement is oral?

A. Buyer only tenders receipt in evidence to prove part payment of sale consideration in pursuance of the oral agreement. Absence of the details of other terms and conditions of sale are of no significance and the buyer was entitled to prove the terms of sale by leading oral evidence. 1994 SCMR 2189

Q.12 Can we rely upon Arbitration Agreement, made orally?

A. No, Arbitration Agreement within meaning of S. 2(a) of the Arbitration Act, 1940 means a written agreement to submit present or future difference to arbitration whether an arbitrator, is named there in or not. Mention of the terms in the agreement is essential, which will reveal the mutual intention of the parties to resolve all the disputes concerning the implementation and

execution of the contract through the nominated arbitrator jointly agreed upon without any duress or coercion. PLD 2003 SC 808

Q.13 Define with simple meaning the specific performance of contract?

A. Every contract creates not only a right but also corresponding obligation in another. It is called specific performance of contract.

Q.14 what is legality of void and voidable contracts? Whether both these contracts are excluded from the operation of specific performance?

A. Only void contracts are excluded; whereas voidable are not.

Q.15 Under Specific Relief Act, there are some proisions relating to grant of decree for specific performance, which are those?

A. Those provisions are laid down from Sections 12 to 22 towards grant of decree for specific performance.

Q.16 Every contract is an agreement but every agreement is not a contract, Explain?

A. that agreement is a contract, which his enforceable at law. Subsection (h) of

s. 2 of the Act provides that only any agreement enforceable by law is a contract.

Q.17 The term ‘’Force majeure’’ is written in the contract deeds, what does it mean?

A. It means overpowering, compulsion or constraint, such as lightening, earth quack, storms. Floods, sunstrokes, freezing etc.

Q.18 Marriage has been defined as a contract. Which type of contract will you name it?

A. It is a civil contract, which has the object of procreation and legalizing of children.

Q.19 Suppose there is mutual agreement between the parties, which is enforceable in law however, there is one illegal clause in the agreement, which is mentioned as an ‘’alternative’’ at the choice of one party. Give your expert opinion as to what shall be the legality of such an agreement?

A. The illegal clause, which affects an agreement in the alterative, will remain void in-effective; whereas the other agreement will continue to be effective. PLD 1964 SC 337

Q.20 What may we say the transaction of contract between the parties?

A. ‘’Contract’’ is a bilateral transaction between two or more than two parties. Every contract has to process several stages of negotiations. When parties discuss proposals and counter proposals as also the consideration resulting finally in the acceptance of the proposals.

Q.21 What happens then when proposal is accepted?

A. an acceptance of proposal gives rise to an agreement.

Q.22 what kind of material is contained in the agreement?

A. The agreement is reduced into writing and formal document is executed on which parties affix their signature or thumb impression so as to be bound by the terms of the agreement set out in that document. AIR 1988 SC 1440

Note: In the light of above five answers, we can make the paragraph ready on contract and agreement in the following sequence.

‘’Every contract is an agreement but every agreement is not a contract. Only an agreement is a contract which is enforceable in law. Subsection (b) of S. 2 of the Contract Act, 1872, provides the same that only an agreement enforceable by law is a contract. ‘’ contract’’ is a bilateral transaction between two or more than two parties. Every contract has to pass through several stages beginning with the stage of negotiation during which the which the parties discuss and negotiate proposals ans counter-proposals as also the consideration resulting finally in the acceptance of the proposals. The proposal when accepted gives rise to an agreement. It is at this stage that the agreement is reduced into writing and a formal document is executed on this parties affix their signatures or thumb impression so as to remain bound by the terms of the agreement set out in that documents. The definition of ‘contract’ in S. 2 appears to be built upon a succession of definitions of the elements which go to make a contract, that is to say, proposal, acceptance, promise, promisor, promise, consideration and agreement’’.

Q.23 Which things are required for formation of complete contract enforceable in law?

A. Proposal, acceptance, promise, promisor, promise,consideration and agreement.

Q.24 Explain CIF and FOB contracts.

A. CIF (Cost, Insurance, and Freight) refers to a contract, whereby the seller assumes the responsibility to make available the goods at the port for loading of the ship on which the goods are to be dispatched. FOB (Free on Board) refer to category of contracts whereby the seller assumes the responsibility for all the charges incurred till the goods are loaded on to the ship at the port of the loading, where after the buyer alone is responsible for all subsequent charges such as storage on board, freight, insurance and uploading charges.

Q.25 Whether contract duly entered into between the parties can be rescinded at the choice of one party?

A. No.

Q.26 What is the procedure for rescinding of that contract?

A. when the contract is mutually entered into, the same cannot be rescinded unilaterally. The procedure is that the interesting party will give notice to other party and without consent of the later when no breach of the contract was alleged the contract cannot be cancelled.

Q.27 what do you mean by voidable contract?

A. an agreement which is enforceable by law at the option of one or more of the parties thereto but not at the option of others is called voidable contract.

Q.28 whether voidable contract is binding upon the parties?

A. It is binding on the parties unless set aside on the ground that the transaction was vitiated by fraud, undue influence, misrepresentation or any other circumstances which would entitle a party to a contract to avoid it.

Q.29 whether a decree can be passed in foavour of the defendant?

A. Law provides that no decree can be passed in favour of the defendant; however, one exception is provided in law:

Q.30 A contract when comes into being is a good contract but ceases to be enforceable by law after its becoming into being. What this definition implies and which is the relevant provision of contract Act in support of this definition?

A. The definition is provided u/s 56 of the Contract Act, whereby a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, becomes void when the act becomes impossible or unlawful.

Q.31 A and B contracts to marry each other. But before the time fixed for marriage, a goes mad. Within meaning of S. 56 of the contract Act, what is the legality of this contract?

A. Within S. 56, when one person has promised to do something which he knew and the promise did not know to be impossible or unlawful. Such promisor must make compensation to such promise for any loss sustained through non- performance. Moreover, the situation explained in the question is quite different, which has made the contract almost impossible; and the principle that an agreement to do an act impossible to be performed in itself is void; as a lawful contract after it was made between A and B had become impossible to be performed by reason of some intervening events.

Q.32 When communication of the proposal is complete?

A. It is complete when it comes to the knowledge of the person to whom it is made.

Q.33 when communication of acceptance is complete?

A. Communication of an acceptance is complete, as against the proposer, when it is put in a course of transmission to him, and be put out of the power of the acceptor.

Q.34 when communication of revocation is complete?

A. It is complete as against the person, who makes it when it is put into the course of transmission and as against the person to whom it is made when it comes to his knowledge.

Q.35 When offer is complete ?

A. S. 4 of the Contract Act says that the offer is not complete unless it is communicated to the person to whom it is made, the nit follows that offer is completed not at the place where it was sent but where it was received.

Q.36 What is the legality of offer when it is accepted?

A. It becomes the contract.

Q.37 Whether simple receipt of payment constitutes a sale agreement, if yes, in what circumstances?

A. When a receipt contains full particulars of property, which was subject matter of sale, amount of sale consideration and agreement on part of vendor to dell, genuineness of receipt, may constitute a sale agreement.

Q.38 what is express contract?

A. Reciprocal promise contained in the words of the contract is an express contract.

Q.39 What is implied contract?

A. Reciprocal promise made otherwise than in word is called an implied contract.

Q.40 What do you mean by contingent contract?

A. When agreement to sell provided for obtaining permission, such is condition subsequent and does not make agreement void bonito or violated to S. 23 of Contract Act; or otherwise where agreement cannot be performed without such condition subsequent, as a consequence of operation of law or otherwise the denial of such condition subsequent would result in frustration of the agreement.

Q.41 What do you mean by consent for entering into upon any contract?

A. ‘’Consent’’ means voluntarily accordance with our concurrence in what is done or proposed by another. It further implies to agree to give assent, to yield; to comply. It necessarily implies agreement as a free agent with presence of the free mind and free will. PLJ 1997 FSC 33

Q.42 There is some legal impediments hurdles upon free consent, which are those with reference to particular provisions of the Contract Act?

A. 1. Coercion (S. 15 of contract Act)

2. Undue influence (S.16 of contract Act)

3. Fraud (S. 17 of Contract Act)

4. Misrepresentation (S. 18 of Contract Act)

5. Mistake subject to provisions of (Ss. 20,21 and 22 of Contract Act)

Q.43 The term coercion is somehow linked with Pakistan Penal Code, how?

A. coercion as defined under section 15 of the Contract Act means, committing or threatening to commit any act forbidden by the Pakistan Penal Code; or unlawful detaining or threatening to detain any property to the prejudice of any person, whatever with the intention of causing any person to enter into an agreement.

Q.44 Can contract be induced by undue influence. If yes, under what circumstances?

1. The relations between the parties are such, that one of the parties is in a position to dominate the will of other; and

2. the first party uses that position to obtain an unfair advantage over other party.

Q.45 In what circumstances, misrepresentation can be established?

A. 1. The positive assertion in a manner not warranted by the information of the person making it, of what which is not true, though he believes it to be true;

2. any breach of duty, which an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him.

3. causing any party to an agreement to make a mistake as to substance of the thing which is the subject of the agreement.

Q. 46 Who is sound mind for the purpose of contracting?

A. within meaning of Section 12 of the contract Act, a person is said to be of sound mind for the purpose of making a contract, if at the time when contract was made, that person was capable to understand it , forming rational judgment, as to its effect upon his interests.

Q.47 Under Section 10 of the Act, it is provided that all contracts are agreements if they are made by the free consent of the parties. There is an independent

section of free consent ‘’under the Contract Act, which his that provision and what it implies?

A. Section 14 of the Act defines ‘’free consent’’ in the meaning that consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation, and mistake of fact or law.

Q.48 Define coercion and duress in the legal format:

A. what the Pakistan law calls coercion is called in English law duress. Duress is an unlawful constraint, exercised upon a man whereby he is forced to do some act that he otherwise would have not done. It being species of fraud need not be specifically alleged and proved. Coercion is much wider than duress. It includes unlawful detention of property, may be committed by any person, not necessarily a party to the contract and may be directed even against a stranger.

Q.49 What is doctrine of unconscionability?

A. As provided u/s 16(3) of the Contract Act, the equitable doctrines of unconscionability, in equity of bargaining power, economic duress and like principles to ensure substantive fairness in the out come of a contract can well be invoked by the courts of Pakistan as illustration and instances of the wider concept of undue influence. The courts not only have the power to look into procedural fairness obtaining before the finalization of the contracts, but the courts have the powers to ensure substantive farness of contracts as well. PLD 1997 Kar. 62

Q.50 A fraudulently informs B that A ‘s estate is free from encumbrances. B thereupon buys the estate. The estate is subject to a mortgage. What should B do then?

A. B may either avoid the contract, or may insist on its being carries out and the mortgage deem redeemed.

Q.51 Gift is not contract, though in Muslim Law it is called contract. However, the principle of section 19 as to void ability of the document obtained on fraud, misrepresentation etc, is applicable upon gift under Muslim Law. Give your expert opinion that what would be the legality of that gift found tainted with fraud or misrepresentation?

A. that gift would be voidable and not void. PLD 1963 SC 143

Q.52 what is legality of that agreement, whereby both the parties are under a mistake of fact essential to the agreement?

A. that agreement is void. (S. 20)

Q.53 That agreement is void, the object whereof is unlawful. Give some example in support of this definition.

A. A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. Here the agreement is void as its object is unlawful.

Q.54 Can simple payment receipt constitutes a contract or an agreement?

A. In the circumstances, when going through the receipt, four components to form an agreement are established:

1. identification of seller & purchaser,

2. sale consideration amount,

3. identification of property to be sold,

idem. 1815

4. parties to agreement to sell property in question are at consensus ad Receipt containing term is an agreement. PLD 2006 Kar. 523 + 2006 CLC

Q.55 As per section 25 of Contract Act, that agreement, which is made without consideration is void. However some exceptions are provided whereby such an agreement is not void. Which are those?

A. The agreement is in writing and registered under the law for the time being in force; or agreement made on account of natural love and affection between parties standing in a near relation to each other; or is a promise to compensate for something done; or is a promise ot pay a debt, barred by a law of limitation.

Q.56 Give two examples showing agreement without consideration as void or contract.

A. (i) A promises, for no consideration, to give B Rs. 1000/-. This is a void agreement.

(ii) A for natural love and affection, promises to give his son A, Rs. 1000/- A puts his promise to B into writing and register it. This is a contract.

Q.57 Section 25 of the contract Act resembles with provision of section 28 of the Specific Relief Act as to void ability of the contract for want of consideration amount, What S. 28 implies?

A. A power is conferred upon the Court to refuse specific performance within meaning of S. 28 on account of the consideration amount being inadequate.

Q.58 What is the legality of Relinquishment Deed?

A. No contract or agreement will attain legality without payment of consideration amount. Whereas, the relinquishment of right or share in the inherited property is against the public policy, morality and undue influence, which concepts were to be decided on the basis of Islamic teachings and principles. PLD 1990 SC 1

Q.59 What do you mean by mortgage without consideration?

A. Without consideration, mortgage is a nullity and inoperative in law.

Q. what is mutuality?

A. When the sale and promise to resell are parts of the bilateral transaction; whereas, when sale and promise to resell are part of a single transaction, no question of mutuality arises.

Q.61 what is the legality of that agreement, by which some body is restrained from exercising a lawful profession, trade or business?

A. the agreement to that extent is void.

Q. 62 Whether an agreement can be executed in terms that a person is restrained form coming to court of law to enforce his right?

A. No, a void ability of such agreement is contained under Section 28 of the contract Act, whereby the litigants, by private agreements, cannot confer jurisdiction upon court, which hit does not possess, nor can they divest a court of jurisdiction, which it possesses under the ordinary law.

Q.63 Can agreement be termed void for uncertainty?

A. Yes, as per provision of S. 29 of the Act, the agreement, the meaning of which is not certain or capable of being made is void.

Q.64 Illustrate your answer as to void ability of agreement for uncertainty and removal of certainty.

A. Illustration:

(1) A agrees to sell to be a hundred tons of oil. There is nothing whatever to show what kind of oil is intended. This agreement is void for uncertainty.

(2) A agrees to sell to B one hundred tons of kerosene oil of particular description. There is no uncertainty to make the agreement void.

Q.65 What does that agreement mean executed by way wager?

A. ‘’Wager’’ means ‘’gaming and wagering in English Law. ‘’Under waging contract two persons are professing to hold opposite views touching the issue of the future uncertain event, mutually agree that determining that event one shall win from the other and that other shall pay or hand over to him a sum of money or other stake. S. 30 of contract Act.

Q.66 Define simply the purport of contingent contract?

A. a contingent contract is an agreement which his based or contingent on the happening of some future or subsequent event. In other words, it is a qualified agreement and unless such contingency is made up no enforceable contract comes into being.

Explanation

Life insurance contract is in the nature of contingent contract as it is complete only when the insurer passed away.

The essential features of contingent contract are:-

1. The certainty and futurity of the event to which the contract is related;

2. The event being collateral to the contract.

Illustration

‘’A contracts to pay B Rs. 10,000/- if B’s house is burnt, this is contingent contract.’’

Q.67 Under Section 32 enforcement of contract contingent on an event happening. The exception is provided whereby the contract becomes void, if the event becomes impossible. Illustrate you answer for both happening and happening of the event.

A. Illustrations (Event happening)

1. A makes a contract with B to sell a horse to B at a specified price, if C, to whom horse has been offered, refuses to buy. The contract cannot be enforced by law unless C refuses to buy the horse.

2. A contacts to pay B a sum of money when B marries C. C dies without being married to B. the contract becomes void.

Q.68 Unlike Section 32, the Section 33 provides enforcement of contracts contingent on an event not happening explain?

A. A agrees to pay B sum of money, if a certain ship does not return. The ship sunk. The contract can be enforced when the ship sinks.

Q.69 Section 34 of the Contract Act provides for impossibility of the contract, if it is the future conduct of ling person. Define in your simple words.

A. Section 34 is the supplementary provision to S. 33, it provides, if the future event on which a contract is contingent is the way in which ha person will act at an specified time; the event shall be considered to become impossible when such person does anything, which renders it impossible that he should so act within any definite time, or otherwise than under future contingencies

Under the following illustration, the definition becomes very simple.

‘’A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C must now be considered impossible; although it is possible that D dies and that C may after wards marry B.’’

Q.70 Some agreements are based on impossible events; whether events are known or not known to the parties to the agreements at the time when made. What is legality of that agreement?

A. That agreement is void.

Q.71 Illustrate your answer on the point of impossibility of the event.

A. A agrees to pay B. a sum of Rs. 1000/- if B marries A’s daughter C. C was dead at the time of agreement. The agreement is void. S. 36 of the Act.

Q.72 Suppose A agreed to sell the land to B, making it clear that he was not owner of the land but had applied to the Government to accept his title to the land and promised to complete the deal after his title was confirmed. B asked for specific performance of the contract under law suit; what may be decision of Court?

A. As the sale was conditional to be completed after title of A was confirmed, the contract becomes enforceable.

Q.73 When it is contained in the terms of contract agreement that certain thing is to be done at or before a specified time. How the court of law will enforce such terms of agreement in the order / judgment?

A. The court will not enforce such a promise in accordance with its terms, but is to enforce it subject to the provisions of S. 55 of the Act, which mainly provides ‘’Effect of failure to preformat fixed time in contract in which time is essential.’’

Q.74Whether in transaction of sale of immovable properties, sale is essence of the contract? If yes how, if no, how?

A. It well settled law, with reference to case law reported in AIR 1988 SC 1074 that in transactions of sale of immovable properties, time is not essence of the contract’’.

However, one exception is provided, whereby ‘’the time is not essence of the contract in immovable properties unless it is expressly stated to be so in the contract.

Q.75 Suppose there is an agreement wherein some impossible act is mentioned and agreed between the parties to be performed, whether that mutual agreement is enforceable in law?

Q.76 What may we say that agreement in the legal terminology?

A. Void agreement.

Q.77 There is an agreement between the parties, wherein there are two sets of promises, reciprocally entered into between parties. First part is to do certain things which are legal: another part is to do certain other things which are illegal. What is legality of the agreement?

A. That first set of promise to do legal things is a contract; and the second set to do illegal things is a void agreement.

Q.78 What do you mean by novation, rescission and alteration of contract as per section 62 of the Act?

A. Novation means the wiping out of the original contract as well as the creation of a new valid contract. It is to extinguish all the terms and conditions of the old contract by modifying, altering or rescinding the same, so as to emerging a new altered or substituted valid contract.

Q.79 in case of an invalid agreement, whether it will serve as novation of contract?

A. No. if the new agreement is invalid, it cannot serve as novation and the original contract continues unless the rights there under are expressly abandoned.

Q.80 When novation of contract takes place?

A. When for the existing contract some new contract is substituted either by the same parties or between different parties. When the contract is innovated a fresh contract comes into existence, directly or by implication in place of the original contract.

Q.81 Explain in simple words, what is the effect of novation of contract?

A. Novation extinguishes the original contract and replaces it by another. 2004 CLD 1715

Q.82 Section 64 of the Act provides consequences as to rescission of the voidable contracts. You may explain how same agreement is enforceable and voidable?

A. Agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of other or others, is a voidable contract. Section 64 speaks of the consequences of rescission of a voidable contract.

Q.83 Whether a contract entered into by a minor is entertain able under U.Ss 64 or 65 of contract Act.

A. No, these sections are applicable only to contracts between competent parties. A contract entered into by minor, is absolutely void and beyond the scope of section 64 or 65 of the Act.

Q.84 Con the contract becomes unenforceable by rule of limitation?

A. A contract the enforcement of which alone is barred by the operation of law cannot be considered to be a void because in such a case it is not the right under the contract itself which is extinguished, but it is only the right to sue to enforce the same, that is barred. AIR 1953 Pat. 259

Q.85 whether agreement to receive ‘’Pagri’’ is void agreement being not enforceable in law?

A. Plaintiff was tenant in ship owned by defendant and was evicted in accordance with law. Suit for recovery of the amount of pagri was dismissed on the ground that the terms of pagri are not maintainable under the rent laws. Plaintiffs claim was that under section 65 of the Act, the defendants were under obligation to compensate him for benefit they derived under void agreement i.e receiving the pagri amount. Order of Civil judge dismissing suit was set aside and the suit restored to see whether there was in vogue the system of pagri in the market. 2012 CLC 324 Sindh

Q.86 What do you know the doctrine of a ‘’quasi contract?’’ There is a philosophy of Lord Wright regarding quasi contracts as provided u/s 68 of the Act? Discuss.

A. The answer is returned with reference to following illustration as contained u/s 68.

‘’A supplies B (a lunatic) with necessaries to his condition in life; A is entitled to be reimbursed from B’s property.’’

A quasi contract may be described as an obligation to pay a sum, which arises independent of contract on the ground that in the circumstances of the case it is considered by law to be just and fair. It is held by Lord Wright;

‘’These statements of the principle do not put the obligation on any ground of implied contract or of constructive or notional contract. The obligation is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is debt or obligation constituted by the act of the law apart from any consent of intention of the parties or any private of contract.’’

Q.87 Under section 68, the persons mentioned are incapable of entering into a contract; name those incapable persons.

A. They are minors, persons of unsound mind, persons incapable of making contracts or disqualified from entering into a contract e.g persons whose property is under control of Courts of Wards.

Q.88 the doctrine of ‘’unjust enrichment’’ is provided under sections 69 and 70 of the Contract Act. Explain its purport for easy understanding?

A. Section 69 provides ‘’reimbursement of person paying money due by another in payment of which he is interested ‘’ , whereas S. 70 relates to obligation of person enjoying benefit of non-gratuitous act.

The doctrine of unjust enrichment compels a person who gets unjustifiably enriched at the expenses of another to make restitution. The basis of doctrine is that if a person has received any property or benefit form another it is just that he should make restitution as otherwise he would be unjustly enriched at the expense of the other.

Q.89 Under section 73 of the Contract act, a liability of the person is shown, who has delivered money or goods by mistake or coercion. This provision is co-related to sections 21 and 22 of the Act. Discuss?

A. Section 72 of the Act makes no distinction between mistake of fact and mistake of law; but it must be read together with the rest of the Act and particular with section 21 relates to mistake of law and S.22 relates to mistakes of fact. However, the law provides that the person paying under mistake of fact is legally entitled to recover money unless he has waived his claim or has been stopped by reason of the conduct by which the payee has altered his position by parting with the money.

Q.90 When there is a breach of contract as embodied in section 73 of the contract Act, the party who suffers by the breach is entitled to recover compensation from the other party for the loss caused to him by the said breach. In such circumstances what should be the role of the courts of law?

A. The courts adopt the principle under maxim ‘’restitutio in intergrum’’ to put every endeavour to place the injured / affected person in the same position as if the contract had been performed. However, it is the option of the plaintiff either to accept the repudiation of the contract forth with and sue for general damages or to

keep the contract alive for his benefit and to sue at the end of the period stipulated in the contract.

Q.91 Section 73 of the Contract Act provides compensation against breach of contract; whereas the court u/s 19 of the Specific relief Act grants compensation for breach of contract. How? Discuss and distinguish.

A. Section 73 provides that when contract has been broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby; whereas, u/s 19 of the Specific Relief Act, the court grants compensation for breach of contract or allow specific performance of the contract. The court can also grant both relief(s) vis. Specific performance of contract and compensation; and further that the court can grant only compensation, holding that although the plaintiff is entitled to relief of specific performance yet same cannot be granted as contract has been broken by the defendant due to hardship, equity etc.

Q.92 Suppose the Court reaches the conclusion that the plaintiff that the plaintiff is not entitled for specific performance and allows compensation only. What provision will be invoked by the court for plaintiffs remedial i.e S. 73 of contract Act or S. 19 of the specific Relief Act?

Q.93 Under which type of agreement / stipulation in the agreement, the agreement, the aggrieved party could recover the compensation for the damage so caused or sustained?

A. A stipulation by way of liquidated damages only entitles the aggrieved party to recovery only reasonable compensation for the damage / injury so sustained.

Q.94 What material is necessary to bring in the suit for Damages?

A. Under section 73 of the contract Act, the party claiming damages has to firstly plead and then prove by reliable and credible evidence that the concluded agreement existed between the parties; and the other party committed breach of contract, such breach entitled the first party for the claim of damages followed by quantum of damages as per circumstances of the case. The party claiming for damages has to prove the extent of damages, for which burden lies on the claimant.

Q.95 which is necessary in proof of claim to assert the right of damages?

A. Two important principles towards grant of damages are that the claimant should not himself be guilty of any negligence and should have taken all the reasonable steps to minimize the loss to be suffered by him; and further that the amount of damages to be awarded can never exceed the loss actually suffered by him or which he is likely to suffer, provided that his acts are lawful not contrary to the law, rules or bye laws duly enacted. AIR 1956 Bhopal 65

Q.96 what does the word indemnity imply?

A. Indemnity is an undertaking, where by one person agrees to indemnity the other for an anticipated loss. To indemnify means to make good, to compensate, to make reimbursement of a loss already incurred by him.

Q.97 How indemnity is defined under the Contract Act?

A. Within meaning of Section 124 of the Act, ‘’A contract by which hone party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of any other is called a ‘’contract of indemnity.’’

Q.98 what do you mean by performance guarantee?

A. It is a new type of guarantee, introduced for large and international contracts. Such a guarantee though independent and autonomous in nature generally, yet import and scope thereof could differ form case to case, according to facts of each case; and according to working of performance guarantee furnished therein.

Q.99 what things are reuired as pre-requisite of guarantee?

A. An offer, acceptance and consensus ‘ad idem’ are the essential to construe a contract of guarantee.

Q.100 What components the contract of guarantee involves as per provisions of S. 126 of the Contract Act?

A. A contract of guarantee involves three parties, the creditor, the surety and the principal debtor. There must be contract between the principal debtor and the creditor, by which the guarantor guarantees the debt. Then there be a third contract, by which the principal debtor expressly or impliedly requests the guarantor to act as a guarantee. The presence of three parties is essential to complete the contract. 2009 CLD 1157

Q.101 What is continuing guarantee?

A. as provided u/s 129 of the Contract Act, a guarantee which extends to a series of transitions, is called a continuing guarantee.

Q.102 Whether continuing guarantee can be revoked? If yes, by whom and how?

A. U/s 130, a continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

Q.103 In case any change or variance in terms of contract is brought between principal debtor and creditor without notice to surety where shall stand the surety?

A. u/s 133 of the Act, the surety will be discharged as to transaction subsequent to variance.

Q.104 What is hailment?

A. As defined u/s 148 of the contract Act, ‘’bailment’’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.

Q.105 What are called the delivering and receiving persons of the goods?

A. the person delivering the goods is called the ‘’bailor’’ and the person to whom the goods are delivered or receiver of the goods is called ‘’bailee’’.

Q.106 In case, if a person already in possession of the goods of another contract to hold them as a ‘’bailee’’, what shall be his status?

A. He will remain the bailee, the owner becomes the bailor of such goods although they may have not been delivered by way of bailment.

Q.107 What is role of the bailee in the goods?

A. Bailee is a person to whom goods are entrusted by another person upon a contract that he shall, when the purpose is accomplished be returned or otherwise disposed of according to the terms of the contract.

Q. 108 What are rights and duties of bailee?

A. The bailee has no right to dispose of or sell the property unless specifically authorised to do. Bailee has only right to retain the goods bailed with them until they receive due remuneration for the services rendered in respect of the goods.

Q.109 What is to be done in the contract of bailment by the bailee to the bailor?

A. In a contract of bailment specific goods have to be returned by the bailee to the bailor.

Q.110 What it is the legal obligation of the bailor towards bailee for the goods bailed?

A. The bailor, with reference to S. 150 of the Act, is duty bound to disclose to the bailee faults in the goods bailed. If he doesn’t so, he is responsible for damage arising to the bailee directly from such faults.

Q.111 The term ‘’lien’’ is used in the contract Act. This term probably is used in the contracts as to retention of some right. You may define, what is ‘lien’?

A. Lien is a right in one man to retain that which is in his possession, but belongs to another till certain demands of the person in possession are satisfied.

Halsbury’s Laws of England and Corpus jurissecondum define the lien as under:

‘’Lien in its primary sense is a right in one man to retain that which his in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract.’’

Q.112 There is various forms of ‘lien’ under the Contract Act within different provisions of law. Which hare those provisions?

A. 1. Section 168 deals with lien of finder of goods.

2. Section 170 provides for particular lien of bailee’s.

3. Section 171 deals with general lien of banker, wharfingers, attorney’s

etc.

4. Section 173 and 174 deal with lien of Pawnees.

5. Section 221 deals with in lien of agents.

Q.113 There is also general ‘lien’ provided to the different individuals in their individual capacity to retain the goods bailed as security for a general balance of account without any covenant or written contract. Elucidate it?

A. The proposition is contained u/s 171 of the Contract Act, which provides for lien to retain as a security for a general balance of account any goods bailed to them, an authority of general lien as contained under this provision is lying with bankers, factors, wharfingers,

Q.114 How many kinds of lien are there?

A. Liens are of two kindsi.e general and particular. General liens are those in which the right to retain the property is claimed for a general balance of accounts; while particular lien is a right to retain property for a charge of account of labour employed or expenses having upon the identical property detained.

Q.115 what is the legality of lien and how it arises?

A. 1. By common law;

2. By express or implied contract; and

3. By the general course of dealing in the trade in which the lien is claimed.

Q.116 What is pledge used in Contract Act?

A. In terms of Section 172 of the contract Act, a pledge is defined as the bailment of goods as security for payment of debt or the performance of a promise.

Q.117 What are the essential ingredients of pledge?

A. They are:

(i) There must be bailment of goods as defined in section 148 i.e. delivery of good;

(ii) Bailment must be by way of security;

(iii) Security must be for payment of debt or performance of promise.

Q.118 Distinguish between pledge and ownership?

A. A pledge creates an estate, which vests in the pledge and is distinguishable from ownership.

An owner owns:

(a) The right of possession;

(b) The right of enjoyment; and

But the pledgee does not have the right of ownership, though he has the right of pledge, which includes only the right of possession; but not the right of enjoyment.

A pledgee has also right of disposition, which is limited disposition of pledgee’s right only and of a sale only after notice and subject to certain limitations. 2004 CLD 1490

Q.119 What bailment of goods relates to immovable property as well?

A. No. bailment relate to specific movable property, of which delivery has been given by one person to another for a specific purpose with a direction that it shall be returned or disposed of according to the direction of the person delivering the goods that is bailor.

Q.120 Whether mortgage and pledge is same thing? If no, what is the distinction?

A. A mortgage is quite different from a pledge under which money id advanced upon security of goods delivered into possession of the lender, which is pre- requisite of the transaction. As against that mortgagor transfer an interest in the mortgaged property to the mortgagee. The essential distinction between plege and mortgage is that a pawnee has only a special property in the goods pledged, namely, the right ot retain the goods pledged as the security and in case of default in payment of the debt or performance of the promise for which the pledge is made, to sell the goods after giving reasonable notice. On the other hand in case of mortgage an interest in the property mortgaged is transferred to the mortgagee subject to the right of redemption of the mortgagor.

Q.121 Define Hypothecation. How does it imply in law of contract?

A. Hypothecation is specie of pledge. Hypothecation though not necessarily accompanied by possession of the property and though it may not create a title as such would in deed provide a security. Thus, hypothecation does create a charge.

Q.122 What is difference between Hypothecation and pledge?

A. In the case of pledge, the possession of a thing is made. In hypothecation the thing pledged remains with the debtor. A sharp distinction between pledge and hypothecation is that in case of hypothecation the hypothecator can be in possession of the goods hypothecated and enjoy the same without causing any

damage to the right of the hypothecate, whereas in the case of pledge the possession of movables will be transferred to the pawnee and he will be in possession, and the pawnor will not be able to enjoy the same as the possession has already been parted with.

Q.123 How agency is created?

A. Chapter X of the Contract Act, from Sections 182 to 283 relates to the agency. However, no particular formality is required ot constitute agency. Principal’s authority to agent to represent him or act for him into contractual relationship with third parry constitutes essence of agency. Such an authority of agency need not be necessarily in writing, it may be inferred from circumstances.

Q.124 Who may employ an agent, or what shall be his her qualification to employ an agent?

A. Section 183 of the Act provides the rule as to who may employ an agent? It enacts that any person who is of the age of the majority according to the law to which he is subject and man of sound mind may employ an agent. The ingredients of the section may be referred from the language of section.

Q.125 What is the qualification of agent?

A. Section 184 of the Act provides as to who may act an agent it enacts ‘’as between the principal and third persons any person may become agent, but no person, who is not the age of majority and of sound mind can become an agent. Further more he should be responsible to his principal according to the provisions contained herein.

Q.126 Whether any consideration is necessary to create an agency?

A. No, it is not every agent who is in a fiduciary position vis-à-vis his principal. For example,

‘’If A appoints to B his agent merely to sign, a memorandum and places no particular trust in B, the doctrine of fiduciary relations would not apply.’’

Likewise, where the principal authorize an agent to do particular or specified acts, the doctrine of fiduciary relation may not arise.

Q.127 Define licensee.Lease and license.

Note: This is very important question and generally raised both in written and oral tests. It is also important for MCQ’s (NTS Paper). Although definition of lease, license and licensee is gathered form the Contract Act, yet these terms are not the part of contract Act; but defined some else where .An elaborate definition of these terms/phrases will enable the readers to know the purport and mechanism thereof; and whatever question raised there from in whatever manner, will conveniently be answered within their easy approach. It is reader’s efficiency to understand the magnitude of definition and sort out the definite answers to be returned in all rounds of the examination.

Answer in detail reads as under:

Lease is a transfer of an interest in immovable property. Ownership of physical property consists of a number of rights and the owner of such property when he creates a lease, transfers to the lessee apart of the rights of ownership,

i.e. the right of enjoyment of the property, for a period, for consideration. During the continuance of the lease the right of enjoyment of the property belongs to the tenant and not to the landlord. The rights of ownership as well the rights of which it is composed are rights in rem and not in personem and by the lease aa right in

rem is transferred to the lessee. On the other hand a ‘’license’’ is merely a competency to do something which except for the permission would be unlawful.it does not confer any rights in physical property. There is in the case of a licensee only a personal agreement between the licensor and the licensee whereby the licensor agrees not to interfere with the doing of particular acts on property which is in his possession. No right in rem passes to the licensee. The criterion for distinguishing between a lease and a license is simple, i.e. whether any right in immovable property itself, a right in rem has passed to the person concerned. A license is a personal right granted to a person to do something upon immovable property or the grantor, and does not amount to the creation of an interest in the property itself. It is purely a permissible right and is personal to the grantee. It creates no duties and obligations upon the person making the grant and is, therefore, revocable in certain circumstances expressly provided for in the act itself. The license has no certain circumstances expressly provided for in the Act itself. The license has no other effect than to confer a privilege upon the licensee to go upon the land and to do a certain act, which would, in the absence of such license, be unlawful. PLD 1964 SC 106

Q.128 What are the essential features of a license?

A. The essential features of the license are as under:

1. A license is not concocted with the ownership of any land but creates only a personal right or obligation hence it cannot be assigned.

2. It is purely permissive right arising only by permission, express or implied, and not by adverse exercise or in any other way, hence it is generally revocable at the will of the grantor.

3. It only legalizes a certain act, which would otherwise be unlawful and does not confer any interest in the property itself in or upon or over which such act is allowed to be done. 2005 CLC 1982

Generally a license which is also known as license of pleasure is founded on personal confidence and is purely personal privilege exercised by the grantee himself therefore its exercise cannot be delegated to anybody else as such it can neither be assigned to anybody else nor can it be exercised by the licensee’s servants or agents. However, exceptions to the general rule are mentioned in section 56 of Easements Act, 1882

Q.129 What are the obligations of licensee?

A. ‘’Licensee’’ cannot transfer more rights than what he himself has in the property. A license is normally created where a person is granted the right to use premises without becoming entitled ot exclusive possession thereof or the circumstances and conduct of the parties show that all that was intended was that the grantee should be granted a personal privilege with no interest in the land. If the agreement is for the use of property in a certain way and on certain terms, while the property remains in the possession and control of the owner, the agreement will operate as a license even though the agreement may employ words appropriate to a lease.

Q.130 Distinguish lease and license?

A. The line of demarcation between a lease and a license will sometimes be a very thin though there is no doubt as to the principle applicable. A lease is transfer of an interest in immovable property. Ownership of physical property consists of a number of rights and the owner of such property when he creates a lease, transfers to the lessee apart of the rights of ownership, i.e. the right of enjoyment

of the property, for a period, belongs to the tenant and not to the landlord. The rights of ownership as well as the tights of which it is composed are rights in rem and not in personem and by the lease a right in rem is transferred to the lessee.

Q.131 Under which statutes the terms lease, license and licensee are provided? Further more, why these provisions are discussed under the Contract Act?

A. ‘’License’’ is defined u/s 52 of the Easements Act, 1882; ‘’Lease is defined a/s 105 of the Transfer of Property Act;

Exception to the general rule as to license and licensee are contained under section 56 of the Easements Act.

As to discussion of these provisions under the Contract Act, the lease and license form contractual and binding implication and the enforcement of their contract/ agreement will definitely be made under the Contract Act; whereas creation of agency by the mercantile agent to dispose of the goods is emphatically given under the ‘’Sale of Goods Act.’’

Q.132 Whether there is existence of any ‘’doctrine of agency by necessity’’ if yes, whether it is workable and can be invoked?

A. The doctrine of agency by necessity is workable in the following circumstances.

1. In the absence of any authority in the specific power deed, under the common rule based on natural justice and public policy.

2. The donee of the power in the following circumstances can act on this doctrine i.e.

(a) in order to prevent irreparable injury to the donor of the power or to preserve the property of donor from any destruction with care and caution and such act of the attorney is necessary and bona fide;

(b) it is alone remedy which can be resorted to prevent the injury or preserve the property from any damage.

Q.133 The principal empowers the agent to act on his behalf under same authority. That authority may be either express or implied as contained u/s 186 of the Contract Act. You may define the purport of express and implied authority in the wake of some illustration.

A. As per definition of S. 186 of the Act, the authority is said to be express when it is given by words spoken or written, and implied authority is to be inferred from the circumstances of the case, and things spoken or written; or the ordinary course of dealing.

Illustration:

A owns a shop in Quetta living himself in Karachi and visiting the shop occasionally. The shop id managed by B, and he is in habit of ordering goods from C in the name of A for the purpose of the shop, and paying out of the funds of ‘A’ and that is also in knowledge of A. B has an implied authority from A to order goods from C in the name of A for the purpose of shop.

Note: This is an ordinary course of dealing leading to an implied contract. However, the definition of express and implied has emphatically been given u/s 187 of the contract Act.

Q.134 What is extent of agent’s authority to do everything, which is necessary in order to do such act?

A. An authority in terms of section 188 is conferred upon the agent to do every lawful thing.

Q.135 What is the purport of lawful as enunciated u/s 188 of the Act?

A. The word lawful and legal seems to have similar import; but they are distinct in substance and form. The principal distinction between these two terms is that the ‘lawful’ shows the substance of laws and the ‘legal’ the form of law.

Q.136 Con agent employ sub-agent, if yes, how and under what law and circumstances?

A. within meaning of S. 190 the Act, an agent cannot lawfully employ another person to perform his acts legally unless by the ordinary custom of trade the sub- agent may be employed. After his employment, the sub-agent will act under the control of original agent in the business of agency.

Q.137 Whether agent is responsible to the principal for the acts of the sub-agent or the sub-agent is directly responsible for all his acts to the principal?

A. As per provision of s. 192, the agent himself is responsible to the principal for all the acts of sub-agent.

Q.138 What do you mean by doctrine of ratification?

A. Doctrine of ratification as mentioned under section 196 of the Contract Act is an approval or affirmance by a person (principal) of previous act or contract done by another person on his behalf without the knowledge of authority. He may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority.

Q.139 How and under what circumstances the agency is terminated?

A. Within terms of section 201 of the Contract Act, an agency is terminated by the principal, or by the agent renouncing the business of agency being completed or by either the principal or agent dying or becoming of unsound mind or by the principal being adjudicated an as insolvent under the provisions of any Act for the time being in force for relief of insolvent debtors.

Q.140 What do you mean by approvable and reprobate?

A. Party once having accepted statement of opponent as true, could not wriggle out from such accepted position on the basis of well-known principle of approbate and reprobate.

Termination of Agency:

Chapter X of the Contract Act, in all covering 56 sections from section 182 to section 238 relate to agency i.e appointment and authority of agents. The duties and liabilities of the principal and agent are envisaged coupled with ratification of the acts of agent, termination and non-termination of agency, legal embargo on agents and agency are emphatically discussed. The below mentioned is a note on termination of agency, which interalia covers series of the sections in a nutshell followed by link of important question, which are expected in meq’s., written and oral interview. A detailed note will enable the readers to understand the through controversy on agency whereby the intended condidates of judgeship will be in a sound position to know the purport of asked questions in a test and interview. In order to avoid series of questions and answers, a reference of detailed note is made here with.

Detailed note on termination of agency:

Attorney ship dies with the author. Section 209 of the Contract Act enacts that the termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him or, so far as regards third persons, before it becomes known to them. It follows from the section that, where a principal gives an agent an express authority to do something on his behalf, the principal is bound, as regard third persons by every act done by the agent which he is authorized to do, or which is necessary for the proper execution of the authority, even though the existence of such authority is unknown to the third person; and where a principal gives an agent a general authority to conduct any business on his behalf, he is bound as regards the third person, by every act done by theagent which is incidental to the ordinary course of such business, or which falls within the apparent scope of the agent’s authority. The termination of a contract of agency, so far as third parties are concerned, takes affect only from the time the third party obtains the knowledge of it; a buyer having entered into an agreement without knowledge of the agent’s termination, held, the buyer’s interest there under would not be affected. On account of the death of the principal when the property in his estate immediately and automatically has devolved upon his legal heirs of the deceased of appointed by the principal in his life time, cannot deprive the legal heirs of the deceased of their ownership rights, by entering into a transaction for the alienation of their property with any third party and such third party on account of being unaware about the death of principal cannot take shelter under section 208, Contract Act. Because of the lack of authority of attorney on behalf of co- sharer who had a larger share in the property, which otherwise, indivisible, the Court can refuse specific performance. Principal is legally bound to give intimation of cancellation of power of attorney to agent under secant 208 of Contract Act. Where there was no evidence on record to show that attorney was ever given any intimation of termination of agency then mere fact that Abtalnama was registered was of no consequence.

NEGOTIABLE INSTRUMENTS ACT

Q.1 What is promissory note and where it is defined?

A. A promissory note is defined under section 4 of the Negotiable Instruments Act, 1881as an instrument in writing containing an unconditional under taking, signed by the maker, to pay on demand or on fixed determinable time a certain sum of money only to, or to the order of, certain person, or to the bearer of the instrument.

Q.2 May we say a promissory note as a bank-note or a currency- note?

A. No.

Q.3 Whether promissory note differs from the agreement, if yes, under which provision and subject of law?

A. In the definition of promissory note, there is no mention of consideration and in that it differs from the definition of an agreement as contained under the Contract Act.

Q.4 Under which requirements of law, the promissory note qualifies to be tenable in law?

A. There are four condition, viz.

(i) an un-conditional under taking to pay,

(ii) sum should be sum of money and should be certain;

(iii) payment should be to or to the order of a person, who is certain or to bearer of instrument; and

(iv) maker should sign it.

Q.5 Whether promissory or cheque being credible documents require attestation under Quannon-e-Shahadat Order?

A. Promissory note and cheque are negotiable instruments, which are not required to be attested by witnesses.

Q.6 What is legality of promissory note, executed on white paper?

A. It is requirement that promissory note in order to make it admissible in evidence is duly stamped as per terms of the Stamp Act, 1899 Promissory note not duly stamped is inadmissible in evidence and such defect cannot be cured by payment of duty as penalty as 2006 YLR 537

Q.7 Define bill of exchange. Does the cheque fall in the definition of bill of exchange?

A. Bill of Exchange is defined under section 5 of the Negotiable Instruments Act, by which it 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 to, or to the order of, a certain person tobearer of the instrument. Within section 6 of the Act, a cheque is a bill of exchange drawn on a specific banker and not expressed to be payable otherwise than on demand.

Q.8 What is sharp distinction between promissory note and bill of exchange?

A. cheque is negotiable instrument and there is rebuttable presumption that every negotiable instrument is made, drawn, accepted and endorsed for consideration. The term negotiable instrument as defined under the Negotiable Instruments Acts means, a promissory note, bill of exchange or cheque payable either to order or to bearer. Term cheque has been expressed as ‘bill’ of exchange’ drawn on a specified branch and not expressed to be payable otherwise than on demand. 2006 CLD 938

Q.10 The promissory note and cheque being negotiable instruments are exempted from attestation being negotiable instruments, whereas Article 17 of the Quanoon-e-Shahadat Order, 1984 provides that every document carrying financial transaction is to be attested by the number of witnesses, specified in the section. In that does not Negotiable Instruments Act go in conflict with the Law of Quanoon-e-Shahadat, Order?

A. Quanoon-e-Shahadat Order, 1984 is a general law and cannot override the special law. Moreover, exception is provided under Article 17(2) of the Order, 1984 with reference to application of special law. Negotiable Instrument Act being special law will not lie in the prerequisites of Article 17 of Q.S. Order as to mandatory attestation.

Q.11 If the cheque is dishonoured on presentation, what is the remedy to the aggrieved?

A. when intention of non-payment is visible, plaintiff is under no legal obligation to present the dishonoured cheque to the drawee again or to have immediately serve notice to the defendant. The plaintiff in terms of S. 79 is entitled to claim six present per annum interest. 2002 CLC 107

Q.12 When a promissory note or bill of exchange has been dishonoured by non- acceptance or non-payment, what may the holder do?

A. The holder may, within a reasonable time cause such dishonour to be noted and

Q.13 What is the legality of such certificate?

A. Such certificate is called a ‘’Protest’’ within meaning of section 100 of the Negotiable Instruments Act.

SALE OF GOODS ACT

Q.1 an agent holding an authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods; he is found involved in the customary course of business. What type of agent he is called?

A. He is called mercantile agent, [S. 2 (9) of the Sale of Goods Act].

Q.2 what id sale and agreement to sell as per Sale of Goods Act, 1930?

A. S. 4 of the Act provides a contract of sale of goods is a contract whereby the seller transfer or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part- owner and another.

Q.3 Distinguish between sale and agreement in the light of Sale of Goods Act?

A. Section 4(3) Sale of Goods Act provides, where under a contract of sale the property in goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time or subject to some condition to be fulfilled thereafter, the contract is called an agreement to sell.

Q.4 How Contract of sale is made?

A. it is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery of payment by instalments or that the delivery or payment or both shall be postponed. (S. 5 of Sale of Goods Act]

Q.5 How condition and warranty is imposed in the contract?

A. Within meaning of section 12 of the Sale of Goods Act, a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. On the other hand, a warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contracts as repudiated.

Q.6 What are the duties of seller and buyer in regard to performance of contract not within the contract Act; but within Sale of Goods Act? Explain.

A. within section 31 of the Sale of Goods Act, it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale. Section 32 provides payment and delivery being concurrent conditions, whereby shall pay the price in exchange for possession of the goods. Section 33 pertains to delivery of goods.

Q.7 when the seller has not been paid or tendered the whole of the price of the goods; or when cheque received to seller under some conditions has been dishonoured, then what that seller will be called u/s 45 of the Sale of Goods Act, 1930.?

Q.8 What are the legal rights of unpaid seller?

A. An unpaid seller of goods has following implications of law.

(a) a lien on the goods for the price while he is in possession of them;

(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted possession of them;

Q.9 what is un-paid sellers lien?

A. subject to provisions of this Act, the un-paid seller of the goods who is in possession of them is entitled to retain possession until payment or tender of price in the following cases namely:

(a) where goods have been sold without stipulation as to credit;

(b) where the goods have been sold on credit, but the term of credit has expired;

Q.10 When either party to contract of sale repudiates the contract before the date of delivery, what the other party may do to his redress?

A. The other /affected party may either treat the contract as subsisting or wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach. [S. 60 of Sale of Goods Act]

Q.11 Suit for breach of contract is provided under S. 55 and chapter IV of the sale of Goods Act, How specific performance of such breach of contract is sought under the provisions of S. 58 of Sale of Goods Act?

A. Subject to the provisions of chapter II of the Specific relief Act, 1877, in any suit for breach of contract to deliver specific or ascertained goods, the court may on the application of plaintiff direct though its decree that the contract shall be performed specifically without give defendant the option of retaining the goods on payment of damages. The decree may be unconditional or upon such terms and conditions as to damages, payment of the price or otherwise.