LAW OF CONTRACTS

EVERY AGREEMENT OR PROMISE

ENFORCEABLE AT LAW IS A

CONTRACT.

KINDS OF CONTRACTS VALID CONTRACT VOID CONTRACT ILLEGAL CONTRACT UNENFORCEABLE

CONTRACT EXPRESS CONTRACT IMPLIED CONTRACT QUASI CONTRACT EXECUTED CONTRACT EXECUTORY

CONTRACT

ESSENTIALS OF VALID CONTRACT

PROPOSAL AND ACCEPTANCE

CAPACITY TO CONTRACT

FREE CONSENT CONSIDERATION LEGALITY OF

OBJECTS

PROPOSAL OR OFFERPROPOSAL IS THE

SIGNIFICATION BY ONE PERSON TO ANOTHER OF 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.

TYPES OF OFFER

EXPRESS OFFER IMPLIED OFFER SPECIFIC OFFER GENERAL OFFER STANDING OFFER CROSS OFFERS COUNTER OFFER

ACCEPTANCEWHEN THE PERSON

TO WHOM THE PROPOSAL IS

MADE SIGNIFIES HIS ASSENT

THERETO, THE PROPOSAL IS SAID TO BE ACCEPTED.

OFFER + ACCEPTANCE = CONTRACT

ESSENTIALS OF VALID ACCEPTANCE

ABSOLUTE AND UNQUALIFIED COMMUNICATED TO OFFEROR IN PRESCRIBED MANNER WITHIN TIME LIMIT CANNOT PRECEDE OFFER INTENTION TO FULFIL PROMISES CANNOT BE IMPLIED FROM SILENCE MUST BE BY OFFEREE

CAPACITY TO CONTRACTFOLLOWING PERSONS

ARE INCOMPETENT TO CONTRACT:

• MINORS• PERSONS OF

UNSOUND MIND• PERSONS

DISQUALIFIED BY ANY LAW TO WHICH THEY ARE SUBJECT

MINOR’S CONTRACTS MINOR’S CONTRACTS ARE VOID MINOR CAN BE BENEFICIARY HIS AGREEMENTS CANNOT BE RATIFIED BY HIM

LATER. NOT LIABLE TO RETURN BENEFIT CAN ALWAYS PLEAD MINORITY CANNOT BE ASKED FOR PERFORMANCE CANNOT BE PARTNER CANNOT BE INSOLVENT HIS ESTATE IS LIABLE FOR NECESSITIES

PROVIDED CAN BE AGENT PARENTS NOT LIABLE

Facts: A minor living in Poland was lent some money by a relative who paid for her passage to emigrate from Poland to Australia. The minor subsequently reneged on her promise andthe plaintiff sued to recover the money that had been lent.

Decision: The court held that migrating to Australia and the accompanying benefits did not amount to a conferral of the necessaries of life upon her. The minor did not have to repay the money that was lent. The court said that the minor did not come to Australia for the purpose of providing herself with a means of support, as she had a satisfactory job in Poland.

CASE EXAMPLEBojczuk v. Gregorcewicz [1961] SASR 128

PERSON OF UNSOUND MIND

A PERSON IS SAID TO BE OF UNSOUND MIND FOR THE PURPOSE OF MAKING A CONTRACT , IF AT THE TIME HE MAKES IT, HE IS INCAPABLE OF

UNDERSTANDING IT, AND OF FORMING A RATIONAL JUDGEMENT AS TO ITS EFFECT UPON

HIS INTEREST.

A person who is of unsound mind, or intoxicated because of alcohol or other drugs, will be bound by a contract unless two matters can be proved:

1. that the impaired person did not understand what they were doing because of the condition they were in2. that the person with whom the impaired person was contracting knew of the impaired person’s condition.

TWO CONDITIONS

Facts: Jubb contracted to purchase the plaintiff’s company business. On the date of contracting, he was technically insane and shortly thereafter was placed in a lunatic asylum. The receiver of his estate, who was appointed under a lunacy statute, repudiated the contract. The plaintiff company sued for damages, alleging the repudiation was wrongful.Decision: The court held that a contract entered by someone of unsound mind is valid unless the impaired person can show that the other party was aware, at the time of contracting, that the impaired person was so insane that he was incapable of understanding what he was doing. In this case, there was no evidence to show that the plaintiff company knew or suspected that Jubb had been insane at the point of contracting. The contract was valid and Jubb’s estate had to pay damages for not performing the contract.

CASE EXAMPLEYork Glass Co. Ltd v. Jubb [1925] All ER Rep 285

PERSONS DISQUALIFIED BY LAW ALIEN ENEMY FOREIGN

SOVEREIGN INSOLVENT CONVICT

FREE CONSENT

CONSENT IS SAID TO BE FREE WHEN IT IS NOT CAUSED BY:

• COERCION• UNDUE INFLUENCE• FRAUD• MISREPRESENTATION• MISTAKE

COERCIONCOERCION IS THE COMMITTING,

OR THREATENING TO COMMIT, ANY ACT FORBIDDEN BY

PAKISTAN PENAL CODE, OR THE 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.BURDEN OF PROOF LIES OF THE COERCED PERSON!

UNDUE INFLUENCEUNDUE INFLUENCE EXISTS

WHERE THE RELATIONS SUBSISTING BETWEEN

THE PARTIES ARE SUCH THAT ONE OF THE

PARTIES IS IN A POSITION TO DOMINATE THE WILL

OF THE OTHER AND USES THAT POSITION TO

OBTAIN UNFAIR ADVANTAGE OVER THE

OTHER.

PRESUMPTIONS OF UNDUE INNFLUENCE

MASTER AND SERVANT DOCTOR AND PATIENT FATHER AND SON PARENT AND CHILD LAWYER AND CLIENT TRUSTEE AND BENEFICIARY FIANCER AND FIANCEE GUARDIAN AND WARDS RELIGIOUS ADVISOR AND DISCIPLE

COERCION vs. UNDUE INFLUENCE

CONSENT CHARACTER INTENTION AND INFLUENCE OFFENCE EXERCISED AGAINST RELATIONSHIP BENEFIT OBTAINED

CONTRACT OF UBERRIMAE FIDEI

A CONTRACT OF UBERRIMAE FIDEI IS THAT IN WHICH IT IS THE DUTY OF ONE OF THE PARTIES TO DISCLOSE ALL THE FACTS WITHIN HIS KNOWLEDGE, TO THE OTHER, AND SILENCE IS DEEMED TO BE EQUIVALENT TO SPEECH e.g.

• Contract of insurance• Contract of purchase of shares• Contract of sale of land• Contract of family arrangement• Surety ship• Fiduciary relationships

Fiduciary An individual, corporation or

association holding assets for another party , often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party.

MISREPRESENTATION

MISREPRESENTATION IS A FALSE STATEMENT WHICH THE PERSON

MAKING IT HONESTLY BELIEVED IT TO BE TRUE, OR WHICH HE DOES

NOT KNOW TO BE FALSE.

FRAUD

FRAUD MEANS ALL ACTS COMMITTED BY A PARTY TO A CONTRACT WITH INTENT TO DECEIVE ANOTHER PARTY TO INDUCE HIM/HER TO ENTER INTO THE CONTRACT.