B.

Law (CAF - 3) Page | 119 ICAP Recommended Answers

Chapter 3 – Lawful consideration and objects, and capacity of parties

Capacity of Parties

1 Aliya’s brother is justified in refusing the delivery to Salma, if at the time of making the agreement,
Aliya was:
- not capable of understanding it; and
- not capable of forming a rational judgment as to its effect upon her interests.

If Aliya is usually of unsound mind but occasionally of sound mind then she may enter into a contract
when she is of sound mind. However, if she was of unsound mind, then the agreement would be void.

2 Disqualified Persons
Following persons are disqualified from entering into the contract though they are major and of
sound mind:

(i) Alien enemies

If a war is declared with the enemy country then alien enemy of Pakistan can neither enter into a
contract or be sued during the period of war.

(ii) Foreign sovereigns and ambassadors

As such persons have immunity. They have a right to enter into a contract but can claim the privilege
of not being sued.

(iii) Convicts
A convict while under imprisonment is incapable of contracting.

Legality of object & consideration

1 Agreement
Every promise and every set of promises, forming the consideration for each other, is an agreement.
An agreement not enforceable by law is said to be void.

Circumstances in which an object of an agreement is considered unlawful: The object of an

agreement is unlawful when:
(i) it is forbidden by law; or
(ii) is of such a nature that, if permitted, it would defeat the provisions of any law; or
(iii) is fraudulent; or
(iv) involves or implies injury to the person or property of another; or
(v) the court regards it as immoral, or opposed to public policy.
B.Law (CAF - 3) Page | 120 ICAP Recommended Answers

Consideration

1 (b) Completed gift/love and affection:

An agreement made without consideration is void. However, Muneer may claim the amount of Rs. 2
million from his uncle Furqan Butt, by proving either of the following two conditions.
(i) gift
(ii) love and affection

Completed gift:
In case of a gift it needs to be completed. The rule ‘No consideration no contract’ does not apply to
completed gifts.

Love and affection:

An agreement made on account of natural love and affection without consideration will be valid if it
is:
 expressed in writing,
 registered under the law,
 made on account of natural love and affection, and
 between parties standing in a near relation to each other.

However, in the given scenario, Furqan Butt only made a promise to pay Rs. 2 million by way of a gift
and did not actually pay the amount. Similarly, the promise was not made in writing and was not
registered, therefore, the promise cannot be enforced in both of the above circumstances and Muneer
cannot recover anything from his uncle Furqan Butt.

2 Completed gift/love and affection:

An agreement made without consideration is void. However, Mrs. Ikram may claim the amount of Rs.
1.0 million from her grandfather Nadeem, by proving either of the following two conditions.

(i) Gift
(ii) love and affection

Completed gift:
In case of a gift it needs to be completed. The rule ‘No consideration no contract’ does not apply to
completed gifts.

Love and affection:

An agreement made on account of natural love and affection without consideration will be valid if it
is:
 expressed in writing,
 registered under the law,
 made on account of natural love and affection, and
 between parties standing in a near relation to each other.

However, in the given scenario, Nadeem only made a promise to pay Rs. 1.0 million by way of a gift
and did not actually pay the amount. Similarly, the promise was not made in writing and was not
registered, therefore, the promise cannot be enforced in both of the above circumstances and Mrs.
Ikram cannot recover anything from her grandfather Nadeem.
B.Law (CAF - 3) Page | 121 ICAP Recommended Answers

3 (i) Agreement without consideration void:

In order to make it a binding contract, Raheel needs to make his promise in writing and sign it either
by himself for by his agent generally or specially authorized in that behalf. In this case, Raheel must be
the person against whom the liability might have been enforced by Sameer but for the law for the
limitation of suits.

(ii) Agreement without consideration void:

To make it a binding contract, Shazia needs to express it in writing and get it registered under the law
for the time being in force for the registration of documents. This agreement must be made on account
of natural love and affection between the parties standing in near relation to each other.

4 Tahir’s suit will not be admitted by the Court because if the performance of a promise is contingent
upon the mere will and pleasure of the promisor, there is no contract. The rule of law is that
“agreements, the meaning of which is not certain, or capable of being made certain, are void.”

5 A is liable to B for damages as A had agreed to sell the motorcycle willingly; hence the contract is not
void merely because the consideration is inadequate.

6 Validity of an agreement made without consideration

An agreement without consideration is considered valid in any of the following circumstances:
(i) it is expressed in writing and registered under the law for the time being in force for the
registration of documents and is made on account of natural love and affection between parties
standing in a near relation to each other.
(ii) it is a promise to compensate wholly or in part, a person who has already voluntarily done
something for the promisor, or something which the promisor was legally compellable to do.
(iii) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent
generally or specially authorized in that behalf, to pay wholly or in part a debt which is barred by
the law for the limitation of suits.
(iv) any gift which is actually made as between the donor and the donee.