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Essential elements of valid contract


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Essential elements of valid contract

  1. 1. ESSENTIAL ELEMENTS OF A VALID CONTRACTRaza Lilani . 09/10/12 07:59
  2. 2. OUTLINE1. Offer and Acceptance2. Contractual capacity3. Free Consent4. Consideration5. Void agreement6. Agreement in written 09/10/12Raza Lilani . 07:59
  3. 3. OFFER & ACCEPTANCE• First essential of a valid contract is agreement Proposal Acceptance 09/10/12Raza Lilani . 07:59
  4. 4. Promise Agreement Consideration 09/10/12Raza Lilani . 07:59
  5. 5. WHAT IS PROPOSAL OR OFFER?• Section 2(a)• when one person signifies to another his willingness to do or• to abstain from doing anything,• with a view to obtaining the assent of that other to such act or abstinence,• he is said to make a proposal; 09/10/12Raza Lilani . 07:59
  6. 6. 09/10/12Raza Lilani . 07:59
  7. 7. ESSENTIAL OF VALID OFFER• Express or Implied• Legal relations• Definite and clear• Different from invitation to offer• Specific or General 09/10/12Raza Lilani . 07:59
  8. 8. • Communicated to the Offeree• Should not contain negative conditions• Subject to any conditions• Must not contain cross offers 09/10/12Raza Lilani . 07:59
  9. 9. OFFER OR PROPOSAL CAN BE REVOKED BY• Sending a notice of REVOCATION• Laps of time• Failure to fulfill conditions• Death or Insanity of Offeror• Revocation of offer by Offeree 09/10/12Raza Lilani . 07:59
  10. 10. • Counter offer by the Offeree• Death or Insanity of Offeree• Subsequent Illegality• Destruction of Subject matter 09/10/12Raza Lilani . 07:59
  11. 11. ACCEPTANCE Section 2(b) The person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise; 09/10/12Raza Lilani . 07:59
  12. 12. 09/10/12Raza Lilani . 07:59
  13. 13. ESSENTIAL OF VALID ACCEPTANCE• Given by the Offeree• Absolute & Unconditional• In a prescribed manner• Communicated to the Offeror• Express or Implied• Follow the offer• Given within reasonable time 09/10/12Raza Lilani . 07:59
  14. 14. Communication of Offer, Acceptance and RevocationRaza Lilani . 09/10/12 07:59
  15. 15. COMMUNICATION WHEN COMPLETECommunication of a proposal:•The communication of a proposal is completewhen it comes to the knowledge of the person towhom it is made. 09/10/12Raza Lilani . 07:59
  16. 16. ILLUSTRATION A proposes, by letter, to sell a house . to B at a certain price The communication of the proposal is complete when B receives the .letter 09/10/12Raza Lilani . 07:59
  17. 17. COMMUNICATION OF AN ACCEPTANCE• The communication of an acceptance is complete,–• as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; 09/10/12Raza Lilani . 07:59
  18. 18. As against proposer As against acceptorwhen it is put in a as against thecourse of transmission acceptor, when itto him, so as to be out comes to theof the power of the knowledge of the; acceptor proposer 09/10/12Raza Lilani . 07:59
  19. 19. ILLUSTRATIONB accepts As proposal by a letter sent by post Communication complete As against A As against B When the letter is When the letter is posted by B received by A 09/10/12Raza Lilani . 07:59
  20. 20. THE COMMUNICATION OF A REVOCATION• The communication of a revocation is complete• as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; 09/10/12Raza Lilani . 07:59
  21. 21. The communication of a revocation is completeas against the person as against the person , who makes it to whom it is madewhen it is put in a course when it comes to hisof transmission to the knowledgeperson to whom it is made, so as to be out of thepower of the who makes; it 09/10/12Raza Lilani . 07:59
  22. 22. ILLUSTRATION A revokes his proposal by telegram Revocation is complete As against A As against Bwhen the telegram is when B receives it dispatched 09/10/12Raza Lilani . 07:59
  23. 23. ILLUSTRATION . B revokes his acceptance by telegram Revocation is complete As against A As against Bwhen it reaches him when the telegram is dispatched 09/10/12Raza Lilani . 07:59
  24. 24. REVOCATION OF PROPOSALS & ACCEPTANCES SECTIONS 5 & 6• Revocation means:• 1) mutual cancellation of a contract by the parties to it.• 2) withdrawing an offer before it is accepted.• 3) cancelling a document before it has come into legal effect or been acted upon, as revoking a will. 09/10/12Raza Lilani . 07:59
  25. 25. Revocation of a Proposal Revocation of AcceptanceA proposal may be An acceptance may berevoked at any time revoked at any timebefore the before thecommunication of its communication of theacceptance is complete acceptance is completeas against the proposer as against the acceptorbut not the afterwards but not the afterwards 09/10/12Raza Lilani . 07:59
  26. 26. COMMUNICATION OF REVOCATION OF A PROPOSAL The Person who makes The Person to whom Revocation Revocation made Letter of Revocation of Proposal Letter posted on Letter received 10th April on 12th April Communication completes Communication completes as against A on 10th April as against B on 12th April 09/10/12Raza Lilani . 07:59
  27. 27. COMMUNICATION OF REVOCATION OF ACCEPTANCE The Person to whom The Person who makes Revocation made Revocation Letter of Revocation of Acceptance Letter received Letter posted on on 12th April 10th AprilCommunication completes Communication completes as against B on 12th April as against A on 10th April 09/10/12 Raza Lilani . 07:59
  28. 28. IllustrationIN CLASS ACTIVITYRaza Lilani . 09/10/12 07:59
  29. 29. FACTS: 1.Mr. Ali proposed by letter dispatched on 1st April, to sell his car to Mr. Kamran in Karachi. 2.Mr. Kamran received the proposal on 3rd April and gave his acceptance by letter posted 4th April. 3.Mr. Kamran received acceptance letter on 6th April 4.On 10th April Mr. Ali wrote a letter revoking his proposal. 5.The letter was received by Mr. Kamran on 12th April.Raza Lilani . 09/10/12 07:59
  30. 30. Questions: 1.Whether contract has been effected? 2.On what date communication of proposal complete 3.On what date communication of Acceptance complete against A and 2.As against B 4.Was revocation of effect? 09/10/12Raza Lilani . 07:59
  31. 31. ANSWER1. Contract has been effected when communication of acceptance complete.2. Communication of proposal complete 1. As against A on 1st April3. Communication of Acceptance complete 1. as against A on 4th April and 2. As against B on 6th April 09/10/12Raza Lilani . 07:59
  32. 32. Held THE REVOCATION WAS OF NO EFFECT UNTIL IT REACHED B The contract made on the date when acceptor accepts the proposal on 4th April. 09/10/12Raza Lilani . 07:59
  33. 33. REVOCATION HOW MADE• A proposal is revoked: • (1) by the communication of notice of revocation by the proposer to the other party; • (2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance; 09/10/12Raza Lilani . 07:59
  34. 34. • (3) by the failure of the acceptor to fulfill a condition precedent to acceptance; or• (4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance. 09/10/12Raza Lilani . 07:59