Contract Law
This domain tests the Contract Act, 1872: formation, free consent, void agreements, discharge, and remedies for breach.
Formation
- Offer and acceptance: acceptance must be absolute and unqualified (s. 7); a counter-offer destroys the original offer. Communication rules are in ss. 4–5.
- Consideration (s. 2(d)): something done or promised at the promisor's desire. It may be past where it moved at the promisor's request (s. 25(2)), and it need not be adequate - inadequacy is only evidence on the question of free consent (Explanation 2 to s. 25).
- Capacity (s. 11): age of majority, sound mind, and not disqualified by law.
Vitiating factors
Coercion (s. 15), undue influence (s. 16, dominant position plus unconscionable transaction), fraud (s. 17), misrepresentation (s. 18) and mistake (ss. 20–22). Consent so caused makes the contract voidable at the option of the aggrieved party (ss. 19, 19A), not automatically void.
Void agreements and discharge
Section 23 voids agreements with unlawful object or consideration. Sections 24–30 cover restraint of marriage, restraint of trade (s. 27, with statutory exceptions), restraint of legal proceedings and wagers. Discharge occurs by performance, agreement, breach or frustration (s. 56), where an unforeseen event makes performance impossible or unlawful.
Remedies
Section 73 gives compensation for loss naturally arising in the usual course, or loss the parties knew was likely. Section 74 allows reasonable compensation for a stipulated sum, not automatically the full amount.
Worked example
A agrees to deliver imported machinery by 1 March; war makes import illegal. The contract is frustrated under s. 56 and future obligations end. If instead A simply failed to book shipping, that is breach, and B recovers losses under s. 73.
Traps
Believing consideration must be adequate; treating past consideration as always invalid in Pakistan; enforcing a penalty in full under s. 74; ignoring the requirement that acceptance be unqualified.