A contract is made by process of lawful offer by one

party and lawful acceptance of the offer by the other

party to whomit is made.
Thus an offer is the starting point of making a
contract.
1. Express and Implied Offer:
An offer made by words, spoken or written
2. Specific and General Offer:
When an offer is made to definite class of people
3. Positive and Negative Offer:
Whether the offer is positive or negative
Legal Rules and Essentials Regarding Offer
1. The offer may be Express and Implied
2. The offer may be Specific and General
3. The offer may be Positive and Negative
4. Offer must intend to create legal relationship
5. Term of offer must be certain
6. The offer must express the final willingness of the
offeror
Legal Rules and Essentials Regarding Offer
7. Every offer must be communicated to the offeree
8. An offer must be distinguished
9. Offer must be made with a view to obtaining the
assent
10. Offer should not contain a term, the compliance
of which would amount to acceptance
11. An offer may be conditional
1. By notice of revocation
2. By lapse of time
3. By failure of acceptor to fulfil a condition precedent to
acceptance
4. By failure to accept according to the mode prescribed
5. By the death or insanity of the offeror
6. By rejection
7. By subsequent illegality or destruction
An acceptance is defined as when the person to
whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A
proposal when accepted become a promise.(Sec 2(b))
Legal Rules and Essentials Regarding Valid
Acceptance
1. Acceptance must be absolute and unconditional
2. Acceptance by usual mode as desired by offeror
3. Acceptance can not precede an offer
4. Acceptance must be express or implied
5. Acceptance must be given within a reasonable
time
6. Acceptance must show to fulfil a promise
Legal Rules and Essentials Regarding Valid
Acceptance
7. Acceptance must by an ascertained person
8. Offer once rejected can not be accepted until it is
renewed
9. Acceptance of offer means acceptance of all terms
attached to the offer
10. Acceptance must be made before the lapse or
revocation of an offer
11. The acceptor must be aware of the proposal at the
time of the offer
Communication When Completed:
In Case of Proposal/Offer:
The communication of proposal is complete when it comes to the
knowledge of the person to whom it is made.
In Case of 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;
as against the acceptor, when it comes to the knowledge of the proposor.
As against the person who makes it- when it is put
into course of transmission
As against the person to whom it is made- when is
comes to the knowledge of the person
1. An offer sent by post is communicated only when it
reaches the offeree
2. An acceptance sent through post is completed, the
moment the letter of acceptance properly addressed
and stamped is posted
3. An acceptance binds the acceptor only when it
reaches the offeror
4. The place where letter of acceptance is posted will be
the place where the contract is made
Communication of Revocation When Completed:
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 to the person who makes it;
As against the person to whom it is made, when it comes
to his knowledge.
Section . 13
Two or more persons are said to consent they agree
upon the same thing in the same sense.
Section . 14
Consent is said to be free when it is not caused by.
1. Coercion, as defined in section 15, or
2. Undue influence, as defined in section 16, or
3. Fraud, as defined in section 17, or
4. Misrepresentation, as defined in section 18, or
5. Mistake, subject to the provisions of section 20,
21 and 22
Coercion is;
i. The committing or threatening to commit any act
forbidden by the Pakistan Penal Code or
ii. The unlawful detaining or threatening to detain
any property to prejudice of any person
whatsoever
iii. With the intension of causing any person to enter
into an agreement.
i. The committing of any act forbidden by the Pakistan Panel
Code
ii. The Threat to commit any act forbidden by Pakistan Panel
Code
iii. The unlawful detention of any property
iv. Threatening to detain any property wrongly
v. The intention to get consent to the agreement
vi. Coercion may proceed from any party
vii. It is immaterial whether the Pakistan Panel Code is or not
in force in the place where the Coercion is employed.
Does a threat to prosecute a man or file a
civil or criminal suit against a man amount
to coercion?
Does a threat to charge high prices amount
to coercion?
Does a threat to charge high rate of interest
amount t coercion?
A contract is said to be induced by undue
influence where
i. One of the parties involved is in position to
dominate the will of the other
ii. He has been in a position to obtain an
unfair advantage over the other
Where a person who is in a position to dominate
the will of another, enters into a contract with
him, and the transaction appears, on the face of
it or on the evidence adduced, to be
unconscionable, the burden of proving that such
contract was not induced by undue influence
shall lie upon the person in a position to
dominate the will of the other
1. Property: The consent is obtained by threat of an offence
2. Crime: Includes criminal act and criminal liability
3. Character or Force: Coercion is mainly of physical character
4. Consent: Destroying the consent
5. Place: May be committed outside Pakistan but undue
influence is exercised in Pakistan
6. Presumption: Has to be proved by a person who alleges it
7. Third party: may be directed against a third party
Fraud
Fraud means and includes any of the following acts limited by a party
to a contract, or with his connivance, or by his agent with intent to
deceive another party thereto or his agent, or to induce him to enter,
into the contract;
1. The suggestion, as a fact, of that which is not true, by one who
does not believe it to be true;
2. The active concealment of a fact by one having knowledge or
belief of the fact;
3. A promise made without any intention of performing it;
4. Any other act fitted to deceive; and
5. Any such act or omission as the law specially declares to be
fraudulent.
i. Suggestion as to a fact
ii. The active concealment of a fact
iii. The representation must relate to a fact
iv. Fraud by a party or his agent to the
contract
v. The representation must in fact deceive
vi. Actually deceived or suffered damage
1. The general rule is that mere silence is not fraud
2. Silence is fraudulent
3. Silence is Fraudulent where the circumstances are such
that silence is in itself equivalent to speech
Exceptions to General Rule (Good Faith):
1. Statutory obligation to disclose
2. Duty to disclose in contracts of utmost good faith
3. Silence is , in itself, equivalent to speech
Misrepresentation is any undue statement made by a
party to the contract to another, which is a material
statement of fact and not of law and which induced
the other party to act upon the statement and enter
into the contract.
Misrepresentation arises when the presentation or
statement made is inaccurate but the inaccuracy is
not due to any desire to defraud the other party.
In case of misrepresentation, the contract becomes voidable
and the aggrieved party can
i. Avoid the agreement
ii. Insist that the contract be performed and he shall be put in
the position in which he would have been if the
representation made had been true.
iii. If the party to whom the innocent misrepresentation is
made had the means of discovering the truth with
ordinary diligence, the contract is not voidable.
Similarities between Fraud &
Misrepresentation
i. In both the cases, a false representation
is made by a party
ii. In both the cases, the contract is
voidable at the option of the party
whose consent is obtained by fraud or
misrepresentation
Distinction between Fraud &
Misrepresentation
i. Intention: The type of statement
ii. Damages: Suit for Damages
iii. Rescission: When contract is vitiated by innocent
misrepresentation
iv. Where true can be recovered with ordinary diligence: Discovering
the truth
v. Criminal Act: Criminal act punishable under the Pakistan Panel
Code
vi. Silence: Silence can be Construed as fraud
Mistake may be defined as erroneous belief
concerning something, consent cannot be said
to be free when an agreement is entered into
under a mistake.
An agreement is valid as contract only when the
parties agree upon the same thing in the same
sense
Mistake by Law
Mistake as to Law in Pakistan
Mistake as to a Foreign Law
Mistake of Fact
Bilateral
Unilateral