CAF 04: Business Laws

Overview:
Chapter 04: Free Consent and Void Agreements
This chapter discusses:
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Free Consent: Examples when Consent is not free, and their Effects.
(For students of Muhammad Asif, FCA) (For Spring 2022)
Void Agreements: List of agreements which are Void, and their Exceptions.

Part 1: Free Consent

(Consent not by Coercion, Undue influence, Fraud, Misrepresentation, Mistake.)

LO 2: Coercion LO3: Undue Influence LO 4: Misrepresentation LO 6: Mistake

Definition: Definition of Undue Influence: Examples of Relations/Positions in which Undue Definition: Mistake of Fact:
Doing act forbidden by law to make contract A dominating party uses his position/ Influence is assumed: 1. A false statement, or breach of duty, or mistake 1. Unilateral Mistake --> Contract remains valid.
with others. relation to make agreement and obtain 1. Employer and Employee, Police officer and Accused, 2. Without intention to deceive. 2. Bilateral Mistake --> Contract becomes void.
unfair advantage. Tax officer and Tax payer.
Effects of Coercion: 2. Parent and Child, Guardian and Minor, Advocate and Essentials of Misrepresentation: Mistake of Law:
Contract voidable. Effect of Undue Influence: Client, Trustee and Beneficiary, Fiance’ and fiancee’. 1. By Party to the contract: (not by stranger) 1. Mistake of Pakistani Law --> Contract remains valid.
If rescinded, restore benefits. Contract voidable. 3. Doctor and Patient, Medical Attendant and Patient, a 2. False representation: (not intention to deceive) 2. Mistake of Foreign Law --> Effect is same as mistake of Fact.
Court may set-aside contract absolutely Family Member and Enfeebled Old Man 3. Representation as to fact: (not opinions or intentions)
Burden of Proof: or conditionally. 4. Acted upon it: (not on other information)
On Party rescinding the contract. Burden of Proof:
Coercion Vs. Undue Influence (Main Points): Party in dominating position will prove “no undue Effect of Misrepresentation:
1. Relationship influence”. Contract voidable, except:
2. Consent (obtained by) 1. Party had means of discovery of truth.
3. Nature of Pressure Examples of Relations/Positions in which Undue 2. Party did not act on the basis of misrepresentation;
4. By whom Influence is NOT assumed: 3. Party received benefit after discovery.
5. On whom Husband and Wife 4. A third party acquired interest;
6. Burden/Onus of Proof Creditor and Debtor 5. Restoration not possible.
7. Criminal liability Landlord and Tenant
8. Reason Principal and Agent
9. Restoration of benefit
Burden of Proof:
Party rescinding the contract will prove “undue
influence”.

LO 5: Fraud Part 2: Void Agreements

Definition of Fraud: Remaining Silent: LO 7: List of Void Agreements LO 8: Agreements in Restraint of Trade LO 9: Agreements in Restraint of Legal
1. False Representation (intentionally) Not a fraud, unless: Proceedings
2. Active Concealment. 1. silence is equivalent to speech, or
3. Empty Promise. 2. there is obligation to disclose Examples of void agreement: Sale of Goodwill:
4. Fitted or Declared Act 1. Uncertain agreements. Restriction valid if: Restriction valid to:
Misrepresentation Vs. Fraud (Main Points): 2. Illegal Agreement. similar business. 1. Refer dispute to Arbitration.
Essentials of Fraud: 1. Intention 3. Impossible Agreements. for period till buyer runs same business. 2. Not to appeal in upper court of law.
1. By Party to the contract (not by stranger) 2. Remedies 4. Agreements with incompetent persons. for specified local limits. 3. Choose a specific court of law.
2. False representation (intentional) 5. Agreement made without consideration. local limits must be reasonable.
3. Representation as to fact (not opinions or intentions). 6. Agreements in restraint of marriage.
4. Acted upon it (not on other information) 7. Wagering Agreements Agreements between partners:
5. Suffered loss 8. Agreements in restraint of trade. Restriction valid for:
9. Agreements in restraint of legal 1. Existing partners.
Effect of Fraud: proceedings. 2. Outgoing partner (if similar business,
Contract voidable (exceptions same as of for specified period, for specified
Misrepresentation) Effect on Collateral Agreements: local limits, local limits must be
Damages for loss. Agreements collateral/contingent on void reasonable).
agreements, also become void.