3. KINDS OF CONTRACTS
GROUP MEMBERS
Syeda Afsheen 7453
Ghazala 8212
Muhammad Nasir 8820
Nafees Imam 8162
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4. KINDS OF CONTRACTS
ACCORDING TO ENFORCEABILITY
Valid Contract:
A valid contract is an agreement that is enforceable by law. An agreement becomes
enforceable by law when all essential elements of a valid contract are present.
Before the two companies merged, they created and signed a valid contract, thus
making their merger valid.
A contract that complies with all the essentials of a contract has binding and
enforceable on all parties.
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5. Example 1:
A homeowner, who is over the age of 18 and of sound mind, signed a contract
with the appliance store to buy a refrigerator. The homeowner pays for the refrigerator and
the appliance store presents the refrigerator for the home owner to take home.
Example 2:
KFC offer a good value deal of fast food in Rs 800 including 4 items. If a
customer buys those four items individually that will cost Rs 1100. KFC contracts with
customer that the customer can avail this deal on any day for 2 months in Rs 800 and
customer can get this deal on any day within 2 months validity period.
Example 3:
A contract between China Mobile and Pakistan telecommunication was that China
Mobile announced investment of 1$ billion in Pakistan’s telecommunication infrastructure
and training of its officials within a period of 3 years the contract succeeded from both the
parties.
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6. Voidable Contract:
A voidable contract is a contract which may appear to be valid and have all of the necessary
elements to be enforceable, but has some type of flaw which could cause one or both of the
parties to void the contract. The contract is legally binding, but could become void. If there is
an injured party involved, the injured party or the defrauded must take action, otherwise the
contract is considered valid.
Example 1:
Mr: A had a contract with a minor to purchase his cell phone. A contract entered
into with a minor could be voidable.
Example 2:
A, threatens to shoot B if he does not sell his bike to A. B agrees. This contract is
voidable at the option of B.
Example 3:
A, make a contract with B, to sell 40 bags of sugar to B. At price of Rs 100 each
when there will be shortage of sugar in the city. A, also mentioned that sugar will be of high
quality so then B agreed and purchased all 40 bags and then found 30 bags of sugar with bad
quality. Fraud in contract is voidable.
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7. Void Contract:
A void contract is not a contract and has no effect in a court of law and cannot be enforced in
a court of law. A void contract will be missing one or all of the essential elements needed for
a valid contract. Neither party needs to take action to terminate it, since it was never a
contract to begin with.
Example 1:
A Contract between a drug dealer and a supplier for purchasing an specific
quantity of drug in a particular amount. Either one of the parties could void the contract since
there is no lawful objective and hence missing one of the elements of a valid contract.
Example 2:
Arm dealer from Darra Adam Khel contract with arm supplier in Karachi that arm
dealer will bring 40 pistols all the way from Darra Adam Khel to Karachi for Rs 10,000
each. When arm dealer reaches Karachi so then arm supplier refuse to purchase each weapon
in 10,000 thousand, it’s not enforceable by law, illegal so the party A, cannot reach court.
Void contract.
Example 3:
Illegal animal trader from Balochistan, Pakistan contract with an illegal traded
animal purchaser in Iran for selling 30 Goats in Rs 15,000 each at the time of receiving those
30 Goats the purchaser refuse to pay 15,000 for each. It’s a void contract.
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8.
ON THE BASIS OF FORMATION
Express Contracts:
The Contracts where there is expression or conversation are called
Express Contracts. For example: A has offered to sell his house and B has given acceptance.
It is Express Contract. An exchange of promises in which the terms by which the parties agree
to be bound are declared either orally or in writing, or a combination of both, at the time it is
made. Whether oral or written, the contract must manifest a mutual intent to be bound
expressed in a manner capable of being understood, and include a definite offer,
unconditional acceptance and consideration.
An express contract is differs from a contract implied in fact only in the mode of manifesting
assent and the mode of proof required; the distinction involves no difference in legal effect.
Both forms of contract require mutual assent and a meeting of the minds, but an express
contract is proved by an actual agreement where a contract implied in fact is proved by
circumstances and the conduct of the parties.
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9. Example No 1:
X says to Y, will you buy a car for Rs. 100000? Y says to X, I am ready to buy
you car for Rs. 100000. It is an express contract made rally.
Example No 2:
X writes a letter to Y, I offer to sell my car for Rs. 100000 to you. Y send a
letter to Y, I am ready to buy you car for Rs. 100000. It is an express contract made in
Implied Contract:
The Contracts where there is no expression are called implied contracts.
Sitting in a Bus can be taken as example to implied contract between passenger and owner of
the bus. Implied contract is an agreement which is not reduced to writing but is created on the
basis of the behavior of the parties involved. Under an implied contract, it is suggested that
the parties involved are acting under an agreement. In the medical field, an implied contract
exists when a veterinarian examines and treats an animal. It is implied that the veterinarian
will do his/her best and that the client will pay the fee charged. Historically the veterinarian
has treated animals and the owners have paid.
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10. Example No 1:
Ordering a burger at a restaurant- there is an implied contract that the restaurant
will fill your order (i.e. serve you whatever you order) and its implied that you pay for that.
Example No 2:
Ambulance taking you to an emergency room. There is an implied contract
between you and the hospital for payment (this is true even if you claim you never gave
consent to be treated).
Example No 3:
A coolie (railway laborer) picks up the articles owned by the tourist without
asking the tourist and tourist also don't stop him to pick up his carriage; this shows the
consent of the tourist. So, there is contact between both. This type of contract is called
implied contract.
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11. Quasi Contract:
In case of Quasi Contract there will be no offer and acceptance so, actually
there will be no Contractual relations between the partners. Such a Contract which is created
by Virtue of law is called Quasi Contract. Sections 68 to 72 of Contract Act read about the
situations a quasi-contract (or implied-in-law contract or constructive contract) is
a fictional contract created by courts for equitable, not contractual, purposes.
A quasi-contract is not an actual contract, but is a legal substitute formed to
impose equity between two parties. The concept of a quasi-contract is that of a contract
that should have been formed, even though in actuality it was not. It is used when a court
finds it appropriate to create an obligation upon a non-contracting party to avoid injustice and
to ensure fairness. It is invoked in circumstances of and is connected with the concept
of restitution.
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12. Example No1:
A case on this occasion is Chowal Vs Cooper. In this case A`s husband
becomes no more. She is very poor and therefore not capable of meeting even cost of
cremation. B, one of her relatives, understands her position and spends his own money for
cremation. It is done so without A`s request. Afterwards B claims his amount from A Where
A refuses to pay. Here court applies Sec. 68 and creates a Quasi Contract between them.
Example No 2:
Suppose that vacationing physician Jane Doe is driving down the highway and
finds Joey Bloggs lying unconscious on the side of the road. Doe renders medical aid that
saves Bloggs's life. Although the injured, unconscious Bloggs did not solicit the medical aid
and was not aware that the aid had been rendered, he received a valuable benefit, and the
requirements for a quasi contract were fulfilled. In such a situation, the law will impose a
quasi contract.
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13. ACCORDING TO PERFORMANCE
Executed Contract:
Executed Contract means a contract that has been fully performed by both
parties. Like a contract whose terms have been completely fulfilled. It could also mean a
signed contract. Once all parties sign the contract and the transaction is closed, the contract is
considered an executed contract.
Example:
A company name ACX International registered in California, USA were signed a
contract with Al Dahra Agriculture Co. Pakistan (Pvt.) Ltd. Subsidiary of Al Dahra Group
UAE.
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14. Contract Details:
Goods: Agricultural Machinery Parts
Terms & Conditions
Payments were made in CAD (Cash Against Document) basis.
Goods delivered to Pakistan are on good condition and not damaged otherwise goods will
return to supplier and Al Dahra Pakistan is not legally bound to pay any compensation.
Goods are fully insured during transit. Delivery within 60 days after issuing purchase order. If
this contract were seen at the time of signing the contract it is an executor contract because
both the parties are currently not fulfill their duties.
On the other hand, if this contract was seen at the time when all goods handed over to Al
Dahra Pakistan and Al Dahra Pakistan accepted these goods this contract is executed because
both the parties were performed their duties and now the contract is terminated.
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15. Executory Contract:
An executory contract is a contract which has not yet been fully performed. Where one or
more parties have not yet performed their duties as stipulated in the contract document. Any
contract which is in ongoing process and still to be performed to complete the contract.
Likewise an ongoing lease agreement is an executory contract.
Example:
A company with the name of CNH International registered in USA were signed a
contract with Al Dahra Agriculture Co. Pakistan (Pvt.) Ltd. Subsidiary of Al Dahra Group
UAE.
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16. Contract Details:
Goods: Agricultural Machinery
Terms & Conditions:
Payments were made in CAD (Cash Against Document) basis.
Goods delivered to Pakistan are on good condition and not damaged otherwise goods will
return to supplier and Al Dahra Pakistan is not legally bound to pay any compensation.
Goods are fully insured during transit.
Delivery within 60 days after issuing purchase order. Currently, we are not delivering any
payment nor goods received that’s why it is an executor contract because both parties do not
perform their duties currently and will perform in future.
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Example No1:
It is the type of contract in which only one of the contracting parties is under
an enforceable obligation. For example, under an insurance contract, only the insurer makes
a promise (to make a loss good or pay compensation) whereas the insured does not make any
promise and, to keep his part of the deal, only pays a premium.
Example No2:
Amina permits a coolie to put his luggage to a carriage the contract comes in to
existence as soon as the coolie puts the luggage. So Amina has only to fulfil his part.
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Example No1:
Alia promises to paint a picture in return for which Maria promises to pay Rs
1000.
Example No2:
The contract for the sale of a home. A home buyer agrees to pay the seller a
certain amount of money in exchange for the title to the home; the home seller agrees to
deliver the title in exchange for the specified sale price.
Example No3:
Offers of Rewards: A bilateral contract cannot be applicable in reward of offers
because it requires both parties to make promises at the time the contract is being formed.
Example No4:
Travel agencies are bilateral having contract between agency and travelling
person.
