ESSENTIAL ELEMENTS OF A VALID CONTRACT

Raza Lilani . razamr@hotmail.com

12/09/15 09:29

OUTLINE
1. Offer and Acceptance
2. Contractual capacity
3. Free Consent
4. Consideration
5. Void agreement
6. Agreement in written

Raza Lilani . razamr@hot

12/09/15

OFFER & ACCEPTANCE

First essential of a valid contract is agreement

Proposal

Raza Lilani . razamr@hot

Acceptance

12/09/15

Promise

Agreement
Consideration

Raza Lilani . razamr@hot

12/09/15

WHAT IS PROPOSAL OR OFFER?

Section 2(a)
when one person signifies to another his
willingness to do or
to abstain from doing anything,
with a view to obtaining the assent of
that other to such act or abstinence,
he is said to make a proposal;

Raza Lilani . razamr@hot

12/09/15

Raza Lilani . razamr@hot

12/09/15

ESSENTIAL OF VALID OFFER

Express or Implied
Legal relations
Definite and clear
Different from invitation to offer
Specific or General

Raza Lilani . razamr@hot

12/09/15

 Communicated to the Offeree

Should not contain negative conditions
Subject to any conditions
Must not contain cross offers

Raza Lilani . razamr@hot

12/09/15

OFFER OR PROPOSAL CAN BE REVOKED

BY
Sending a notice of REVOCATION
Laps of time
Failure to fulfill conditions
Death or Insanity of Offeror
Revocation of offer by Offeree

Raza Lilani . razamr@hot

12/09/15

 Counter offer by the Offeree

Death or Insanity of Offeree
Subsequent Illegality
Destruction of Subject matter

Raza Lilani . razamr@hot

12/09/15

ACCEPTANCE

Section 2(b)
The person to whom the proposal is made
signifies his assent thereto,
the proposal is said to be accepted.
A proposal, when accepted becomes a promise;

Raza Lilani . razamr@hot

12/09/15

Raza Lilani . razamr@hot

12/09/15

ESSENTIAL OF VALID ACCEPTANCE

Given by the Offeree
Absolute & Unconditional
In a prescribed manner
Communicated to the Offeror
Express or Implied
Follow the offer
Given within reasonable time
Raza Lilani . razamr@hot

12/09/15

Communication of
Offer, Acceptance and Revocation

Raza Lilani . razamr@hotmail.com

12/09/15 09:29

COMMUNICATION WHEN COMPLETE

Communication of a proposal:
The communication of a proposal is complete
when it comes to the knowledge of the person to
whom it is made.

Raza Lilani . razamr@hot

12/09/15

ILLUSTRATION

A proposes, by letter, to sell a house

. to B at a certain price
The communication of the proposal
is complete when B receives the
.letter
Raza Lilani . razamr@hot

12/09/15

COMMUNICATION OF AN 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;
Raza Lilani . razamr@hot

12/09/15

As against proposer

As against acceptor

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
proposer

Raza Lilani . razamr@hot

12/09/15

ILLUSTRATION

B accepts A's proposal by a letter sent by post

Communication complete
As against A

As against B

When the letter is

posted by B

When the letter is

received by A

Raza Lilani . razamr@hot

12/09/15

THE COMMUNICATION OF A REVOCATION

The communication of a revocation is complete
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 of
the person who makes it;

Raza Lilani . razamr@hot

12/09/15

The communication of a revocation is

complete

as against the person as against the person

, who makes it
to whom it is made
when it is put in a course when it comes to his
of transmission to the
knowledge
person to whom it is made
, so as to be out of the
power of the who makes
; it

Raza Lilani . razamr@hot

12/09/15

ILLUSTRATION

A revokes his proposal by telegram

Revocation is complete
As against A

As against B

when the telegram is

dispatched

when B receives it

Raza Lilani . razamr@hot

12/09/15

ILLUSTRATION

. B revokes his acceptance by telegram

Revocation is complete
As against A

As against B

when it reaches him

when the telegram is

dispatched

Raza Lilani . razamr@hot

12/09/15

REVOCATION OF
PROPOSALS & ACCEPTANCES
SECTIONS 5 & 6
Revocation means:
1) mutual cancellation of a contract by the parties to it.
2) withdrawing an offer before it is accepted.
3) cancelling a document before it has come into legal
effect or been acted upon, as revoking a will.

Raza Lilani . razamr@hot

12/09/15

Revocation of a Proposal Revocation of Acceptance

A proposal may be
revoked at any time
before the
communication of its
acceptance is complete
as against the proposer
but not the afterwards

Raza Lilani . razamr@hot

An acceptance may be
revoked at any time
before the
communication of the
acceptance is complete
as against the acceptor
but not the afterwards

12/09/15

COMMUNICATION OF REVOCATION
OF A PROPOSAL
The Person who makes
Revocation

The Person to whom

Revocation made

Letter of Revocation of Proposal

Letter posted on
10th April
Communication completes
as against A on 10th April
Raza Lilani . razamr@hot

Letter received
on 12th April
Communication completes
as against B on 12th April
12/09/15

COMMUNICATION OF REVOCATION
OF ACCEPTANCE
The Person to whom
Revocation made

The Person who makes

Revocation

Letter of Revocation of Acceptance

Letter received on
12th April
Communication completes
as against B on 12th April
Raza Lilani . razamr@hot

Letter posted on
10th April
Communication completes
as against A on 10th April
12/09/15

Illustration
IN CLASS ACTIVITY
Raza Lilani . razamr@hotmail.com

12/09/15 09:29

FACTS:
1.Mr. Ali proposed by letter dispatched on 1st
April, to sell his car to Mr. Kamran in Karachi.
2.Mr. Kamran received the proposal on 3rd April
and gave his acceptance by letter posted 4th
April.
3.Mr. Kamran received acceptance letter on 6th
April
4.On 10th April Mr. Ali wrote a letter revoking his
proposal.
5.The letter was received by Mr. Kamran on 12th
April.
Raza
Lilani . razamr@hot
12/09/15

Questions:
1.Whether contract has been effected?
2.On what date communication of proposal
complete
3.On what date communication of
Acceptance complete
1.as against A and
2.As against B
4.Was revocation of effect?
Raza Lilani . razamr@hot

12/09/15

ANSWER
1. Contract has been effected when communication of
acceptance complete.
2. Communication of proposal complete
1. As against A on 1st April

3. Communication of Acceptance complete

1. as against A on 4th April and
2. As against B on 6th April
Raza Lilani . razamr@hot

12/09/15

Held
THE REVOCATION WAS OF NO EFFECT UNTIL IT
REACHED B
The contract made on the date when acceptor accepts the
proposal
on 4th April.
Raza Lilani . razamr@hot

12/09/15

REVOCATION HOW MADE

A proposal is revoked:
(1) by the communication of notice of revocation by the
proposer to the other party;

(2) by the lapse of the time prescribed in such proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
Raza Lilani . razamr@hot

12/09/15

 (3) by the failure of the acceptor to fulfill a condition

precedent to acceptance; or
(4) by the death or insanity of the proposer, if the
fact of his death or insanity comes to the knowledge
of the acceptor before acceptance.

Raza Lilani . razamr@hot

12/09/15