Contract A binding agreement between two or more parties for performing, or refraining from performing, some specified act(s)

in exchange for lawful Contract law

ESSENTIAL OF CONTART
These essential elements are explained below: 1.Offer The offer has to express the willingness of a party to enter a bargain or a contract. The offer usually has a date until it is valid. However, if the date is not present, then it is valid until accepted or rejected. Once rejected, the offer is not valid any more. So if a party offers a house for sale and another party rejects the offer because the price seems too high, then the seller has the right to refuse to sell the house at the given price if the buyer changes his mind and calls back to negotiate. Whether a statement is an offer or not, when considered in the court several points are important: If the offer points any quantity, price, place of delivery, or other specifications concerning the stock for sale (like quality and measures). The general rule is that it must be a reasonable under the circumstances. For example if a merchant offers pipes for sale and in Craigslist there is an offer stating "Pipes for sale. 24-36 gauge, $3.60 per foot, it will be considered an offer although the quantity is not mentioned. The statement "I am selling pipes" with a phone number will not be considered an offer. If the offer is accepted and a partial payment is made, then both of the parties are obliged to follow through the agreement. The offer may or may not be in writing. A contract may or may not be in writing also. However, the terms are more difficult to argue when in writing. Offers for goods that cost more than $500, real estate offers, and transactions that can not be completed in one year by law have to be in writing. That is according to statute of frauds. If an offer is accepted with some changes then the original offer is terminated and the new offer is valid. It is called counteroffer and the first offerer may or may not accept it. An offer becomes irrevocable when the side accepting the offer performs his obligations When the offerer is paid to keep the offer open for certain time and when there is a firm offer under sec. 2-205 of the Uniform Commercial Code. This kind of offer can only stay open 90 days. It does not need consideration. It must be in writing. 2. Acceptance When a buyer accepts the offer, keeps the goods or fails to reject them in a limited time, then the offer is considered accepted. There are three types of acceptance:

-Conditional acceptance- When a contract is made under certain conditions. This kind of acceptance usually counts as counteroffer and is valid only if the other side agrees. Conditional acceptance is also when a side agrees to pay after good is delivered on certain date at certain location -Expressed acceptance- this kind of acceptance is a direct acceptance of the offer, without any changes or additions. -Implied acceptance- An implied acceptance is when the party implies with conduct that he accepts the offer. If a cosmetic product is sent to a customer and the customer fails to return it in the period he agreed to return it if he does not like it, he actually accepts the product and is obligated to pay it. There are many firms operating on this principals and even insurance companies are making money on the fact that the customers forget to cancel the offer on time. 3. Consideration Consideration is when a party agrees to the terms of a contract. In the past shaking hands was the expression of consideration. This is so called "closure" of a contract. In our complicated times when there are many different contracts consideration may have a very different expression. For example when there is a contract between two parties that the first one will get paid after he builds a house on certain location for certain time. If the party does build a house on the location for the time in the contract, it is expressing a consideration in action. Consideration may be a promise to do something or to refrain from doing something. Consideration must have a value that can be objectively determined. For example the marriage binding promise to love someone is not a consideration. A person can not be charged in court for not keeping this promise because "love "is a very stretchable notion. It is not enforceable because love is subjective by nature. From another point of view when there is a contract that is unilateral or payment is supposed to come after one party is fulfilled their promise, there are many things that may go wrong. For example, when a party promises to build a house on certain location, for certain time in exchange for a payment at the certain date when the project will be finished. Let's say that the payer does not like the quality of the house or on the date when the house is supposed to be finished, it is not. Those cases fill the courts and make the judges worth their money. In a case like this the reasonable expectations are considered in order to take a fair decision.

Kinds of Contract: We have discussed different kinds of contracts; same are reproduced here under for ready reference. (a) Valid contract (b) Voidable contract (c) Void contract (d) Unenforceable contract (e) Express contract

(f) Implied contract (g) Executed contract (h) Executory contract Unenforceable Contract Such contracts are unenforceable before a court of law due to some technical defects such as non-deposit of court fee, submission of unsigned documents, absence of writing, wherever writing required, absence of registration, wherever required under law. On removal of these discrepancies, the contract becomes enforceable . Express contract An express promise shall lead to an express contract. Such a contract may be expressed by words spoken or written. Express contracts are contained in the provisions of section 9 of the Act. Void Contract: A void contract is the one which is not enforceable by law. It has been provided in section 2(j) of the Contract Act. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. A voidable contract is a good contract as long as it is not avoided by the person who has the option to avoid whereas a void contract is not a contract at all from the very beginning in the eye of law. Example: Mr. Aslam resident of Lahore entered into an agreement with Mr. Kamal, a rice dealer at Gujranwala for the purchase of 100 tons of rice. District Coordination Officer (DCO) Lahore had imposed restriction on entry of rice in the territorial jurisdiction of District Lahore well before the date of the above agreement. The said agreement is not enforceable at law, hence void. Situations of void contract; Impossibility of performance: It has been discussed in section 56 Legal contract may become void due to some illegality afterwards. Revocation of a voidable contract by the party at whose option, the contract is avoidable becomes void contract Valid Contract Valid contract is an agreement enforceable by law. In such contract all essentials of a contract as mentioned in section 10 are required to be fulfilled. In case breach of contract by one party, the other party has a right to file a suit for this breach . Illustration: A contract for the sale of a car between Mr. Yasir and Mr. Waqas has been concluded and all necessary formalities have been completed. The said contract meets all essentials of a valid contract. If either of the two that is Mr. Yasir or Mr. Waqas fails to perform his part of contract, the counter party can sue the other party for the breach of contract. Voidable Contract A voidable contract is the one which is enforceable by law at the option of one or more of the parties to the contract, but not at the option of the other or others. As long as the contract is not avoided or cancelled by the party who is entitled to do so, the contract shall remain a valid contract. Such contracts are voidable at the option of aggrieved party. Voidable contract has been defined in section 2 (i) of the Contract Act which is reproduced below: An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract

Executed contract Such contracts are those where interactive parties have completely performed their respective obligations under the contract. Example: Mr. Ali entered into an agreement with Mr. Aslam to sell his car for Rs 800,000. Mr. Ali delivers the car to Mr. Aslam and he paid the promised amount i.e. Rs 800,000 to Mr. Ali. Such a contract is called an executed contract since both parties have performed their part of promises. Executory contract: In such contracts both parties are yet to perform their obligations under the contract. Example: We take the same example as quoted above but with some difference. Mr. Ali entered into an agreement with Mr. Aslam to sell his car for Rs 800,000. Mr. Ali has not yet delivered the car to Mr. Aslam and Mr. Aslam has not yet paid the promised price that is Rs 800,000 to Mr. Ali. Such a contract is executory contract since both parties are yet to perform their part of promises. Express contract An express promise shall lead to an express contract. Such a contract may be expressed by words spoken or written. Express contracts are contained in the provisions of section 9 of the Act. Implied contract Such contracts are inferred from the acts and conduct of the contracting parties. Example: Mr. Aslam was engaged by a business man as a helper at his shop. He has been performing the job assigned to him, however no appointment letter was issued by the shopkeeper. Although there is no express agreement as to the employment of Mr. Aslam but the acts and the conducts of the respective parties shall lead to a conclusion regarding the nature of contract between them. Since the conclusions shall be inferred from the acts and conduct of the respective parties, such contract would be called an implied contract. The provisions regarding express and implied contract as contained in section 9 are given below: In so far as the proposal or acceptance of any promise is made in words, the promises is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.