Name: Maaz Khalil

Reg No: L1F19BBAM0458

Instructor: Shahid Hussain

Subject: Business Law

 Assignment 1

Question 1
(a). What do you understand by
contract?
Answer: A contract is a type of agreement which is
enforceable by law. For a legal contract, there must
always be an agreement between parties enforceable
by law. Agreement forms a consideration for both
parties. In every contract, one party makes an offer to
other party to enter the contract. One party offers to
do something particular and if the other party accepts
the offer, a contract is created.
(b). “all contracts are agreement but all
agreements are not contract’’ Illustrate
the statement.
Answer: A contract is a legally binding agreement
that exists between two or more parties to do or not
do something. An agreement starts from an offer and
ends on consideration but a contract has to achieve
another target i.e. enforceability. Due to this breach of
the contract provide a legal remedy to the aggrieved
party against the guilty party. So we can say that all
contracts are an agreement but all agreements are not
contracts.  
For example, if a promises to give to B Rupees 10,000
without any consideration, it will be a void agreement.
And in another example where A supports B’s infant
son and B promises to pay A’s expenses in doing so will
be a contract.

Question 2
(a). What is offer in accordance of
contract act?
Answer: To create a valid contract, one party must
have to make an offer and the other party has to
accept the offer, and also consideration must be
exchanged. Party who makes an offer is known as
“offeror” while the other party who receives the offer
is known as “offeree”. Usually, an offer can be made by
just a single statement but formally you have to write a
detailed description of the offer and its terms. An offer
refers to a promise that is dependent on a certain act
given in exchange for the initial promise.
(b). Explain the rules regarding offer.
Answer: There are 9 important rules/essentials
related to offer:
Express or Implied: An offer may be express or
implied. Any offer which is in written form is known as
express offer and the one which appears in form of any
action or conduct of parties is known as implied offer.
Legal Relations: An offer must be made to create
legal relations between both parties and if it does not
create legal relations then it’s not a valid offer.
Definite & Clear: An offer must be definite & clear
and if it isn’t then it’s not a valid offer and such offer if
accepted does not make a legal contract.
Invitation to Offer: If a party invites the other party
to make an offer it would be considered only as
invitation not the offer.
Specific or General: When an offer is made to any
specific person it is known as a specific offer and it only
can be accepted by that specific person. While when
an offer is made to the general public it is called as
general offer and it can be accepted by any person who
fulfills the conditions mentioned on it.
Communication of Offer: An offer is only valid when
it is communicated to the offeree. The acceptance of
an offer without having knowledge of it does not make
it valid.
Negative Condition: An offer cannot contain any
negative condition. The offeror cannot include any
negative rule that if he does not receive any reply from
the other side, he will consider it accepted. If the
offeree does not reply, there is no contract.
Conditions of Offer: An offeror can include any
condition to contract and the offeree has to accept all
the conditions to make it a valid contract. If the offeree
cannot accept any condition, then the contract cannot
be made.
Cross Offer: When two parties make a similar offer to
each other without having knowledge of other’s offer,
it is known as cross offer.
 Question 3
(a). Describe different types of
considerations with examples.
Answer: The consideration is a price for which the
promise of the other is bought and the promise thus
given for value is enforceable.
There are three types of considerations which are past,
present and future. These are explained as follows:
Past Consideration: In terms of a contract, past
consideration is a promise or any act that was made or
performed prior to a contract. It comes into play when
someone is trying to enforce a new promise. When a
new contract is written, past consideration will not
count as consideration for the purposes of the
contract. The reason for this is that past consideration
occurred before the new contract was entered,
meaning it could not have been provided for the new
contract. Past consideration usually occurs when
someone has a moral obligation to perform a duty for
someone else.
For Example: Mathew teaches James at his request in
January. In February, James to pay Mathew 2,000 for
his services. Mathew can recover because past
consideration is valid.
Present Consideration: The immediate transfer of
consideration by one party to another at the time of
contract, is called as Present Consideration.
For Example: David sells a furniture table to a
customer and the customers pays at the moment. It is
a present consideration.
Future Consideration: When both parties decide
to move the consideration at a future date after
the formation of contract, it is called as a future
consideration.
For Example: Hania promises to deliver fruits basket to
her customer after 3 days. Customer promises to pay
the price at the time of delivery. It is a future
consideration.

(b). Explain the exceptions of the rule

“No consideration no contract”.
Answer: An agreement without consideration is void
but there are some agreements which are valid even
without consideration:
1) Any agreement made on account of natural love
or affection can be valid if it is in written form and
registered according to law.
2) If the promise is made to compensate a person
who has voluntarily done something for promisor,
it is enforceable even without consideration.
3) An agreement to pay a time-barred debt is valid
even without consideration. The debt must be
time barred and the promisor himself must be
liable for the debt.
4) Any gift given by the donor to donee is valid even
without consideration.
5) The consideration is not necessary to create an
agency. If an agent promises to perform any act
for his principal without charging any commission,
the agreement is valid even without consideration.
6) When a person agrees to receive less than what is
due, it is known as remission. If a creditor agrees
to give up a part of his claim, there is no need for
consideration in such an agreement.

Question 4
(a). Distinguish between (i) void
agreement and voidable agreement (ii)
Enforceable and unenforceable
agreement and (iii) void agreement and
illegal agreement with examples.
Answer:
(i). Void Agreement: Any agreement which is not
enforceable by law is known as void agreement. Void
agreements are those agreements which are made
illegally and against the laws. Void agreements have no
effect at all for it neither create an obligation nor
establish a right for it can never be enforced by law.
Voidable Agreement: Voidable agreement is a type
of agreement whose creation is forbidden by the court
of law. Example of this type of agreement is an
agreement entered into where the consent of one
party was obtained by fraud. Voidable agreement can
have an effect for it can create obligation nor establish
a right for it can never be enforced by law.
(ii). Enforceable Agreement: A type of agreement
which is in a written or oral form so it can be entered
into a court of law. If the law allows the agreement to
be enforced, the implementation of that agreement is
the obligation of the assuring parties. Terms cannot be
breached without voiding the agreement.
Unenforceable Agreement: Any type of agreement
which is unrecoverable and which is valid but a court
will not enforce is known as unenforceable agreement.
If the parties compromise, it will be valid otherwise the
court will not force them.
(iii). Void Agreement: A void agreement is one which
cannot be enforced by law. Sometimes an agreement
which is enforceable by law can become void. No legal
rights or obligation arise out of a void agreement.
Illegal Agreement: An illegal agreement under the
common law of contract, is one that the court will not
enforce because the purpose of the agreement is to
achieve an illegal end. The illegal end must result from
performance of the agreement.
(b). How voidable agreements can be
voided? Discuss.
Answer: Agreements happen between parties and it
is usually in a very professional manner but sometimes
there be undue influence, misrepresentation or
coercion. These circumstances make the agreement
voidable. Voidable agreements arise when either of the
parties deny the rights. In case of voidable agreements,
the suppressed party has the right either to continue
with the agreement or make the agreement void. That
party has that right because it invested the money and
efforts in a very professional manner without knowing
it have to face undue influence and suffer losses. Thus,
a voidable agreement can be voided on the choice of
suppressed party.

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