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    Saturday, 25 March 2017

    Concept and Scope of Contract

    Contract
    An agreement enforceable by law is a contract; Section 2(h)

    (a) Definition
    To constitute an agreement, it was necessary that there was an unconditional offer and sale was accepted by competent person or authority giving rise to accrual of 'rights to parties to such agreement. Where a tenderer made an offer to purchase certain property and attached conditions thereto, an agreement could not come into effect unless conditions were also accepted by Authority issuing tenders. Offer of tenderer having not been excepted by Authority, no right had accrued to such tenderer on basis of his conditional offer.

    (b) Oral
    A contract can be entered into orally or in writing. Oral agreement would be valid and enforceable as a written agreement provided it fulfilled all the requirements of a valid contract. Oral agreement, however, requires for proof clearest and most satisfactory evidence. 'From the respondent had not signed any of the documents or no document was duly signed by both parties, it cannot be inferred that no valid agreement existed.

    c. Parties necessary for contract
    Since a contract can only be bilateral and the same cannot be party on both sides, there can hardly be a contract between a on the one side a and b on the other side, particularly in a contract of employment.

    d. Contract between more than two parties
    A contract may be made by more than two parties.

    e. Stage when contract is made
    A contract does not hold good against the law of the land which may be enforceable for the time being as public law. The question whether the parties had reached a concluded contract or not, is a question of fact to be deduced from the correspondence, and other documentary and oral evidence. The true test for deciding this question is to ascertain whether the parties where of one mind on all the whether they intended that the matter was closed and finalized between them and whether they time it is said to have been finalized between them and whether they intended that the :matter was closed and concluded between them.

    f. Agreement to contract is not a contract
    Where the parties agree to enter - into a contract such an agreement is not a contract in law at all. An agreement to sell per se does not create title in property. Such agreement only creates a right to obtain another document. No registration of it is requited even though it contains acknowledgment of receipt of earnest money or part payment of price.

    (g) License
    A license is in the nature. of a privilege conferred to do that which it would not have been permissible for the licenses to do otherwise. Therefore the arrangement, by which a liquor license was- enabled to sell excusable liquor under a license, cannot be described as a contract.

    (h) Not enforceable a agreement
    Contract implies free and conscious agreement between two Parties with regard to their rights and liabilities arising out of a particular transaction. Contract binds both the parties and such Contracts are subject to the law of the land.

    i. Promise without consideration
    A promise without consideration is unenforceable in a Court of law and cannot amount to a contract between the parties.

    j. Variation of statutory liability
    It is perfectly legal for parties to a transaction to agree that their liabilities should be different from that created by statutes and a contract containing such an agreement should be given effect to provide their intention to so vary the liability is clear beyond doubt from the terms of the contract itself.

    k. Cancellation or alteration of contract
    A party to a contract is not entitled in law to cancel a concluded contract unilaterally. Having entered into an agreement, it is not open to the defendant to resile from the same on untenable grounds as he pleases. Therefore, such a cancellation has no effect in law.

    l. Non-performance of his part of contract
    Where petitioner was awarded contract, he was required to deposit 5 per cent. Of contractual amount but he failed to do so. Petitioner could not claim that such contract could not: be awarded to any body without notice to him.

    (m) Unilateral alteration in terms of contract
    Once a contract was concluded terms thereof, could not unilaterally .be any one of the parties to such contract. If while a written contract remains executor, a party unauthorized so alters it as to very its legal effect do his advantage, whether he meditates a fraud or not or if, which the positive intent to defraud, he makes in it any alteration whatever-or, if another thus alters it under authority from him or, if one to whose custody he simply commits it makes in it a material alteration advantageous to him, then, at the election of the other party, he is estopped from relying upon it in a Court of justice.

    (n) Unilateral addition to terms is not permissible
    Where however, power to increase rates unilaterally is given by the contract. Such increase cannot be challenged as improper.

    (o) Alteration in public interest
    Where the 'purchaser of a shop in a plaza claimed that no deviation from stipulation except by mutual consent or with intendment to benefit members of public, could be permitted, such as reservation that no deviation had been made and that slight alteration, such as reservations of two parking floors, who chose to daily come to daily come up with their offer in response to general invitation: High Court upheld the contention of the defendant.

    p. Unilateral rescission of contract
    A contract or agreement duty entered into between parties cannot be unilaterally rescinded.

    q. Extension of contract after its expiry
    Where original contract had expired and there was no fresh agreement, and parties had continued previous relationship contract was deemed to have been extended, with modification of the contract if the same was.

    For specific period; extended contract was deemed to be without any specified period on day to day or month to month basis with rest of terms and conditions being identical to earlier.

    r. Loan granted on installment basis recall of on non-payment of one installment
    Where bank had granted a loan and loan amounts were to b repaid in 24 bit annual installments. It was, held that balance installments, under terms of loan agreement could always be recalled by plaintiff (Bank) in case of default on the part of defendant.

    (s) Contract between government and private individual
    All parties to a contract are equal before law. Therefore despite the fact respondents were officers of a agreement in question, their position and status was equal.

    (t) Denial of execution of contract
    Where a person denies due execution of a contract signed by him, he must prove any allegation which negative the existence of the agreement. A defendant's plea in written statement, that he had signed blank forms, not be substantiated for his failure to cross-examine plaintiff's witness and non-production of evidenced in support of such plea was turned down.

    (u) Contract containing term as to cancellation
    Where under a contract political Agent was competent to cancel at any time without assigning any reason on issuing 15 day prior notice. But the contract was cancelled without giving such notice. Though the action was improper and wrong yet political Agent cannot be said to have acted without. Jurisdiction, illegally and with mala fide intention.

    v. Constitutional jurisdiction
    No contract can be enforced through Constitutional petition.. If in every contractual matter giving rise to enforcement of contractual Obligation or dispute which could be redressed through other remedy available under the law, constitutional petitions were entertained, then the same would defeat the very purpose of law under which competent Courts were established and vested with jurisdiction under the law.

    w. Public contract awarded illegally
    Where a public contract was awarded to a person through negotiation and not through public auction. Such exercise was patently mala fide and without jurisdiction and contract awarded to such person was without lawful authority and of no legal effect and it may be declared so in Constitutional jurisdiction.

    x. Third party cannot seek of contract

    On the touchstone of Islamic' Rules of interpretation, which unless excluded. otherwise, under present Constitutional set up the Court are bound to apply in preference to the contract so-called accepted rules of interpretation under the other jurisprudential concepts (and the fiscal laws are no exception in this behalf) a third party such as income-tax Authorities cannot change the nature of the contract intended by the parties thereto, under the pretext that the rule of interpretation of a fiscal law in this behalf is different.
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    Item Reviewed: Concept and Scope of Contract Rating: 5 Reviewed By: Usman Ali
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