Important questions

1. Discuss essential of valid contract

2. What are the kinds of contract
explain them 3. Explain the
essentials of valid ofer
4. What are the essentials of a valid
acceptance? 5. Discuss void
agreement in detail
6. What are the rules and exceptions of consideration
7. What do you understand by capacity to contract? What are the
effects of agreements made by the person not competent to
contract?
8. What do you mean by free consent discuss in detail
9. What are the ways in which a contract may be discharged
10. Give the remedies available to the aggrieved party in case of breach of
contract
11. Discuss in detail the position of a quasi-contract when the
obligations of contract are imposed by the law
12. Differentiate between indemnity and
guarantee 13. What are the features of
bailment?
14. What are the rights and duties of
bailer? 15. What are the rights and
duties of Bailee? 16. What are the
essential features of pledge? 17.
What are the rights and duties of
Pledger? 18. What are the right and
duties of pledgee
19. Differentiate between the sale and
agreement to sell 20. Rights and duties of
unpaid seller
21. Discuss the rights of buyer in a contract of sale
22. Discus the rules relating to the delivery in a
contract of sale 23. Rights duties and liabilities of
common carrier
24. Rights duties and liabilities of railway as a
common carrier 25. Differentiate between the
common carrier and private career 26.
Differentiate between the bill of lading and
chartered party 27. What are the types of crossing
of cheque
28. Difference between bill of exchange, cheque and
promissory note 29. What are the requirements for the
registration of trade union?
30. What are the powers and functions of national industrial relationship

commission

Contract
An agreement enforceable at law is
called contract.

Agreement

Every promise or set of

promises forming
consideration for each
other is called agreement.

Types of agreement
i. Social
agreement ii.
Legal
agreement

Social agreement
Agreements which do not create legal obligation between the
parties are called social agreements. In social agreements, parties
to a contract are not legally bound to perform the contract

Legal Agreements
Agreements which create legal obligation between the parties
are called legal agreements.
In legal agreements, parties are legally bound to perform the contract.

Promise
When one person makes a proposal and other person accept it, it
becomes promise
Or
An accepted ofer is called promise

Enforceable
An agreement creating legal relationship between the parties is
enforceable. If a contract does not create legal obligation between
the parties it is not enforceable by law.

Page 3

Q#1 An agreement enforceable at law is contract

discuss
Or
Describe the essentials / requirements of valid
contract
Contract
An agreement enforceable at law is called contract.
Essentials of a valid contract
1. Offer& Acceptance
For a valid contract there must be lawful offer and lawful acceptance.
Lawful means that the ofer and acceptance must fulfill the requirement
of law
Example
A offers to sell her house to B for 10 lac, this is an offer. Tania agrees
to buys her house, there is an acceptance.
2. Legal Obligation
There must be legal obligation / relation between the parties to make a
contract valid
If parties do not intend (
enforceable at law.

) to create legal relationship, contract is not

Example
A agrees to sell his house to B for 20. Lac. It is a valid contract as it
is creating legal relationship between the parties
3. Lawful consideration
Consideration is the price paid by the one party for the promise of
other party. Thus for a valid contract consideration must be lawful
Example
A agrees to sell his house to H for Rs 20 lac

For A 20 lac is consideration

For B house is the consideration
Page 4

4. Competent to contract
For a valid contract parties must be of sound mind, must attain the age of
majority and are not disqualified from contracting by law
Example
A, a person of unsound mind agrees to sell his cycle to B for Rs 10. The is
void as the parties not competent to contract
5. Free consent
For a valid contract the consent of parties must be free. Consent is free
when it is not obtained by coercion,(
) undue influence (
) misrepresentation and fraud
Example
A compels (
) X to enter into an agreement on gunpoint, it is a
valid contract because the consent of a party is not free
Lawful Object
The object of agreement must not be illegal, immoral (
public policy or to imply injury to any person

) opposed to

Example
A agrees to sell his cycle to B for rs 2000 if he beats C. the agreement is
void as its object is illegal
Writing & registration
A contract may be oral (
) or in writing but it is preferable that the
contract must be in writing because it is easy to prove in court. If
required by law certain agreements must be in writing signed and
attested by witness and registered
Example
X verbally promise to sell his books to Y. it is a valid contract as it
does not required in writing
A verbally promise to sell his house to B. it is a void agreement
because law requires it in writing.
Certainty of terms
For a valid contract it si essential that the terms and conditions of

contract must be definite and clear. Agreements the meaning of which

is not clear are void
Page 5

Example
A promised to sell one of his books to B. It is void agreement because it
is not mentioned which book A wants to sale
Possibility of performance
An agreement to do an impossible act is void. If the act is legally or
physically impossible to perform the agreement is not enforceable by law
Example
X promised Y, that she will discover gold by magic. It is a void agreement
as it is impossible to perform

Page 6

Q#2
What are the kinds of contract? Explain them
The contract can be classified into following four categories
1. According to
enforceability 2.
According to formation
3. According to
performance 4.
According to parties

1. According to enforceability
According to enforceability a contract has
following five types i.
Valid contract
ii.
Void
contract iii.
Void
agreement
iv.
Voidable agreement
v.
Unenforceable contract
i.

Valid contract

A contract is valid only when it contains all essentials of a valid contract

Obligation of parties
In a valid contract all the parties are legally bound to perform their
obligations. If one party refuses to perform the other party can enforce it
through court.
Example
A agrees to sale his car to B. It is a valid contract if it fulfils all the
essentials of a valid contract.
ii.

Void contract

A contract is void when it is not enforceable by law

Obligation of parties
In a void contract both the parties are not legally bound to perform
the obligations of contract. If any party has received benefit from void
contract is legally bound to return it to other party.

Example
Page 7

A agrees with B to smuggle sugar. Contract between the parties is

void as smuggling is illegal.
iii.

Void agreement

An agreement which does not create legal obligation between the

parties is void. An agreement with minor and agreement without
consideration is void.
Obligation of parties
In a void contract both the parties are not legally bound to perform
the obligations of contract. If any party has received benefit from void
contract is legally bound to return it to other party.
Example
Ali agrees with Shahid a minor to buy his house. Contract between the
parties is void as agreement with minor is void.
iv.

Voidable contract

A contract which is enforceable at the option of one party but not at the option
of other party
A contract is voidable when consent of one party is not free. Voidable
contract can be avoided by the party whose consent is not free.
Example
Maria compels Nadia to sell her Bag. The consent is made with coercion.
It can be avoided when Nadia refuses to perform it.
v.

Unenforceable contract

A contract is unenforceable which cannot be enforced in court of law.

Because of some technical defects, Such as absence of writing and
registration
Example
Ali orally agreed to sale his house to Bilal. Contract is unenforceable
because writing and registration for this contract is required by law

2. According to formation
According to formation a contract has following three types.
a.
Express
contract
b.
Implied contract
c.
Quasi
contract

Page 8

a. Express contract
When a contract is formed by the words spoken or written it is called express
contract
Example
Ali tells saad on telephone that he wants to sell his car. It is an express
contract.
b. Implied contract
An implied contract arises from the acts, course of dealing or
circumstances. It arises when one person without asking to do so,
render services under circumstances indicating that he expect to be paid
for the services and other person accept the benefit of those services.
Example
Ali went to a hotel and had a cup of tea, it is an implied contract and Ali
will pay for the cup of tea.
c. Quasi contract
Quasi contracts are based on the principle of equity and justice. That a
person shall not be allowed for the benefit at the cost of other
Example
Shahid finds the lost goods of Majjid. Shahid is bound to return the goods to Ma
jjid.

3. According to performance
Following are the types according to performance
i.
Executed
contract ii.
Executory
contract
i.

Executed contract

When all the parties to a contract have performed their obligations the
contract is said to be executed.
Example
Kaleem buys a Book from Shahzeb. Shahzeb delivered book and kaleem
made the payment. Both the parties have performed their obligations.
ii.

Executory contract

When one of the parties has yet to perform his obligations, such contract
is called executory contract.

Page 9

Example
Kaleem buys a Book from Shahzeb. Shahzeb delivered book but kaleem
has not yet made the payment.

4. According to parties
According to parties the contract has following two types
a. Unilateral
contract b.
Bilateral contract

a. Unilateral contract
It is a contract where only one party is bound to perform the contract
and the other party chooses to perform contract
Example
Ali promised to give 1000 Rs to the person who finds his lost bag. It is a
unilateral contract it will come into existence when the bag is found.
b. Bilateral contract
It is a contract where both the parties have yet to perform their obligations.
Example
Khalid promised to manufacture a chair for Nadeem and Nadeem
promised to pay RS 4000 to Khalid

Page 10

Q#3

Define the ofer / proposal. Explain the essentials of a

valid ofer
Ofer / proposal
When one person shows his willingness to do or not to do
something to obtain the consent of other, it is known as ofer
Oferor / Promisor
The person making the offer is called Oferor or Promisor.
Oferee
The person to whom offer is made is called Offeree. Or the person
accepting the offer is called Offeree.

Essentials of a valid ofer

The following are the essentials of a valid offer
1. Express or
implied 2. Legal
relation
3. Definite & clear
4. Specific & general
5. Communication with
Offeree 6. Negative
condition
7. Conditions in
ofer 8. Cross
offers
1) Express or implied
An ofer may be made by words or conduct (
). An offer which
is made by words spoken or written is called express ofer.
An implied offer appears from the actions of parties,
course of dealing or circumstances of case.

Example
Ali ofer to majid to sell his motorcycle for 4000 Rs. This is an express
ofer
Page 11

New khan run buses to carry passengers at scheduled rates, this is an

implied ofer
2) Legal relation
For a valid contract the offer must be made to create legal relation. If
an offer does not create legal relation it is not a valid offer.
Example
Ali invites Farrukh to dinner. It is not a valid offer because it does
not create legal relation between the parties
Maria ofer to sell her watch to Anam for Rs. 200. It is a valid
contract as it create legal relation between parties
3) Definite & clear
Terms and conditions of offer must be clear and definite. If the
terms and conditions are not clear, it cannot be called valid ofer.
Example
Majid has two motorcycles, he offer Khalid to sold one motorcycle for
Rs. 40000. It is a void contract as it is not clear that which motorcycle
he offered to sale
4) Specific or general
When an offer is made to a specific person it is called specific offer.
Such an offer can be accepted only by the person to whom it is
made.
When an offer is made to general public it is called general offer.
Such an offer can be accepted by any person who fulfils the
conditions of ofer
Example
Ali ofered to sell his cycle to Majid. It is a specific offer and only majid
can accept it
Basher announced in a newspaper a reward of Rs 500. For anyone
who finds his lost N.I card.
5) Communication with Oferee
An ofer is valid only when it is communicated to the Oferee. If is not
communicated to Oferee it is not a valid ofer

Example
Page 12

Sidra wants to sale her bag to Mehwish but forget to communicate

her about offer. Thus there will no acceptance as it is not
communicated to Offeree.
6) Negative conditions
An ofer must not include negative conditions. Such as an Oferor
cannot say that if the acceptance is not communicated within a
specific period of time the offer would be treated as accepted.
Example
Majid wrote to sajid to sell his watch adding that if he did not reply
within 2 days, the offer will be considered accepted.
7) Conditions in ofer
An ofer may include some comedians. For a valid contract all the
conditions must be accepted. If the Oferor prescribe a specific
mode, it must be accepted in the same manner.
Example
Shahid asks Hammad to send him reply of his offer by telegram,
but hammad reply him by letter. Shahid may reject the
acceptance.
8) Cross ofer
When both parties makes similar offer without having knowledge of
others offer. It is called valid ofer. Acceptance of such ofer does not
result in complete Agreement.
Example
Wasim wrote to Karim to sell him his motorcycle. On the same day
Karim wrote to Wasim that he wants to buy his motor cycle. There
is no contract.

Page 13

Q#4
Define the acceptance. Explain the essentials of a
valid acceptance
Acceptance
Acceptance is the act of giving consent to the offer.
Example
Majid ofer to sell his house to sajid for 20lac Rs. If sajid agrees to buy,
this is an
acceptance.

Essentials of a valid ofer

The following are the essentials of a valid offer
9. Acceptance by oferee
10. Definite & unconditional
11. Reasonable manner
12. Communication with Offeror
13. Express or implies
14. Acceptance after offer
15. Reasonable time
1) Acceptance by oferee
For a valid acceptance it is necessary that it must be accepted by the
person to whom
it is made. If the offer is made to a group it can be accepted by any
member of group.
If offer is made to general public it can be accepted by any person who
has the
knowledge of it.
Example

A ofer to B to sell his motorcycle for 4000 Rs. C was aware of this offer,
he said that
he is ready to buy his motorcycle, there is no contract with C.
Page 14

2) Definite and unconditional

For a valid contract the acceptance must be definite and unconditional. If
acceptor
attach any condition with his acceptance, it is not acceptance but a
counter ofer
Example
Maria ofer to sell her watch to Anam for Rs. 200. Anam replies that she
can buy it for
100 Rs. there is no acceptance but a counter offer
3) Reasonable manner
Acceptance must be given in a particular manner as prescribed in offer. If
no
particular manner is prescribed than it must be accepted in a reasonable
manner.
Example
Shazia ofered to Nadia, and ask her to accept the offer by telegram. But
Nadia send
her acceptance by post, Shazia may reject her acceptance
4) Communication with Oferor
An acceptance is valid only when it is communicated to the Offeror. If it is
not
communicated to Offeror it is not a valid Acceptance
Example
Sidra wants to sale her bag to Mehwish, she express her intention to buy
it but did not
reply. Sidra sold it to Maria. Mehwish cannot sue sidra.
5) Express or implied
Acceptance given by the word spoken or written is called express
acceptance.
When acceptance is given by the action or conduct it is called implied
acceptance.

Example

Page 15

Shahid wrote a letter to majid that he is agree to buy his mobile for 4500
Rs. This is an
express acceptance.
Junaid went to a tea stall and took a cup of tea. This is an implied
acceptance
appearing from the action
6) Acceptance after offer
Acceptance must be given after receiving the offer. If acceptance is given
without
having knowledge of offer; there is no contract because acceptance
cannot be given
without ofer
Example
Asad ofered a reward for anyone who finds his lost mobile. Khurram in
ignorance of
offer finds his bag and return it to Asad. Khurram cannot claim for the
reward

7) Reasonable time
Offer must be accepted within a prescribed time. If time of acceptance is
not
mentioned than it should be accepted within a reasonable time
Example
Razib Applied for admission in a college. But admission was made after 6
month of
application. Razib can refuse to take admission as it was not accepted
within
reasonable time.

Page 16

Q#5
What agreements have been declared void by law?
Void agreement
An agreement not enforceable by law is called
void agreement following are the agreements
that are declared void
1. Agreement in restraint of
marriage 2. Agreement in
restraint of trade
3. Agreement in restraint of legal
proceedings 4. Uncertain
agreements
5. Agreement by way of wager
6. Agreement against the
public policy 7. Agreement to
do an impossible act 8.
Agreement under mistake
9. Agreement without consideration
Agreement in restraint of marriage
Every agreement which prevents a person other than minor
from marrying is void. A contract which interfere with the
freedom of choice in marriage is also called void
Example
Aslam agrees with Bilal that he will not marry with
Fatima. It is a void agreement
Agreement in restraint of trade
Every person has a right to carry on a lawful business,
profession, or trade. Thus, every agreement which prevent a
person from doing a lawful business, profession or trade is
void
Example
Amjad agrees with Tayyab to give him 10000 Rs. If he stops
doing business in Faisalabad, such agreement is void

Page 17

Agreement in restraint of legal proceedings

An agreement which restrict a person from enforcing his right
in court of law is void.
An agreement which limits the time within which he can
enforce his right is void
Example
Fahad sells wheat to Majid. Both parties agree that if any party
fails to perform the contract, none of them would file a case,
the agreement is void.
Uncertain agreements
If the meaning of an agreement is not certain or it cannot be
made certain, the agreement is void
Example
Shehroz agrees to sell his books to Ali and there is no indication
which books are to be sold, the agreement is void

Agreement by Way of Wager

Wager mean bet, a wager is an agreement to pay on the happening
or non-happening of future event, each party has equal chance to
win or lose the bet and the parties are only interested in betting
amount.

Example
Wahid and Majid agree that if Pakistan won the cricket match today,
Wahid will pay Majid 100 Rs. If Pakistan loses Majid will pay 100 Rs.
It is a wager agreement, so declared void

Agreement against the public policy

Every agreements which is against the public policy or involve
injury to person is called void

Example
Umair agrees with asif that if he adds drugs in food he will pay him Rs
1000.
The agreement is void

Page 18

Agreement to do an impossible act

An agreement to do an impossible act is called void.

Example
Shazia agrees with Tania to discover Gold by magic, is void

Agreement under Mistake

Every agreement where both the parties are under the mistake
and they dont have clear information about the fact, the
agreement is void

Agreement without Consideration

Every agreement which is made without consideration, is void

Example
Ahmed Agrees to give his car to Hassan without consideration is void

Page 19

Q#6 what are the essentials of consideration? Or what are the rules
of consideration?
Consideration
Consideration is the price paid by one party for the promise of other.
Example
Ali sold his house to Hassan for Rs. 500,000. For Hassan house is the
consideration and for Ali Rs500, 000 is consideration.

Essentials of a consideration
1. Desire of promisor
For a valid consideration the act must be done at the desire of promisor.
Any act done without the desire of promisor cannot form a valid
consideration.
Example
Razib saved Mehmoods house from fire. Mehmood did not ask for the
help. Razib cannot demand price for his service.
2. Act
A consideration may be an act or doing of some thing
Example
Sadia promised to stitch Nadias dress. And Nadia promised to pay Rs
400 to sadia as consideration for stitching her dress.
3. Abstinence
Abstinence means promising not to do something. Consideration may
be decided for promising not to do something.
Example
Ali promised not to sue waqas, if he pays waqas Rs. 20000. The
abstinence of Ali is the consideration for Bs payment
4. Promise
For a valid contract there must be promise from both the parties.
Example
Majid agrees to cell his mobile to Bilal for Rs 4800. For Majid Rs4800 is
the consideration and for Ali mobile is the consideration
Page 20

5. Real and certain

For a valid consideration it must be real and certain. If the payment
of consideration is physically impossible it would not real. On the other
hand if the payment of consideration is uncertain it would be void.
Example
a) Ali promised to put life in shaans dead body if he pay him Rs 5000
Alis promise is physically impossible.
b) Ali promised to sell his mobile to Nadia for some amount of money.
Consideration is not valid as the value of mobile is not decided.
6. Legally impossible
A promise to do something illegal is also void and do not form a valid
consideration.
Example
Khuram promised Abid to pay Rs 4000 if he Beats Bilal. The
consideration to beat Bilal is illegal.
7. Need to be adequate
It is not necessary that the consideration must be adequate. Only
Presence of consideration is necessary.
Example
Ali promised to sell his house to waqas worth Rs 500000 for Rs 200000
only, and his consent is free. The consideration is valid.
8. Lawful
The consideration and must be lawful and should not against the public policy.
Consideration is unlawful:
If it is forbidden by law
It is fraudulent
It involve property of other
It is opposed to the public policy

9. Past consideration

Page 21

When the act have been done before a contract is made it is called past
consideration
Example
A gives some services to B at Bs desire.
Later on B compensate A for his services.
10. Present consideration
If the consideration is decided at the
time when contract is made it is called

present consideration.
Example

Ali sold his car to B and Ali make the

payment at the
same time it is called present
consideration.
11. Future consideration
When both the parties promise to do
something in future it is called
consideration.
Example
Ali promised to sell his house B after 10 days. B also promised to pay the price
after ten days.

Q#6(b) what are the exceptions of consideration?

According to law agreement without consideration is void. Following are
the agreements that are valid even without consideration.
1. Natural love and affection
The agreement which is expressed in writing and is made on account of natural
love is valid even If there is no consideration.
Example
Ali promises to pay Rs 2000 to his son junaid for no consideration. Ali got it in
writing and registered with law. Junaid can enforce it
2. Voluntary compensation
A promise to compensate a person wholly or partly a person who has
already voluntarily do something for the promisor is enforceable even if there is
no consideration.
Example

Page 22

Ali gave medical treatment to Bilal voluntarily. Bilal after discharging from
hospital promised to Pay Rs. 4000 to Ali. Ali can enforce it.
3. Gift
Gift does not need any consideration. Any gift given or received is valid
even if without consideration. Donor cannot take back the goods which are
delivered as a gift.
Example
Irum gave her watch to Misbah as gift. Irum cannot get back the watch as there
was no consideration for her.
4. Contract of agency
Consideration is not paid to the agent on his appointment. Normally an agent
is paid commission against his services.
Example
Ali appointed Razib as his agent. The agreement between Ali and Razib is
valid even without consideration.
5. Discount / remission
If a creditor agrees to receive less than what is due, it is known as remission or
discount. There is no need of consideration for the remitted amount.
EXAMPLE
Ali borrowed Rs. 6000 from Ahmed. Later Ali paid Rs. 5500 as full settlement of
claim, the whole debt is discharged
6. To extend the time for performance
Agreement to extend the time for the performance of contract needs no consideration.
Example
Zubair agreed to construct Razibs house within three month. Later zubair
requested to extend the time for the completion of contract, there is no need to
of consideration for the extended time.

Page 23

Q#7
What do you understand by the capacity of parties? State the
positions of a minor under contract act
Or
What do you understand by the capacity of parties? What is the
effect of agreement made by the person not competent to
contract?
Or
Explain the effect of contract made by the person not qualified to
contract
Or
What do you understand by contractual capacity?

For entering in to a valid contract the parties must be competent to contract

Every person is competent to contract who is of age of majority, is of
sound mind and is not disqualified from contracting by law
Nature of minors agreement
1. Void
agreement 2.
Minor as a
partner
3. Minor as a
beneficiary 4. Minor
as a agent
5.
Minor
and
insolvency 6. Minor
and ratification
7. Contract by minor and
adult 8. Minor as member
of company 9. Surety for
a minor
10. Minors parent

1) Void Agreement
Minor is a person who has not attained the age of majority (18 years).
Agreement with minor is void from beginning because minor has no legal
capacity to enter in to an agreement. He is not liable to perform any act
or promise under the agreement.

Example
Page 24

Rashid enter in to an agreement with a minor Shahid, on the date of

performance Shahid refuses to perform the contract. Rashid cannot sue
Shahid because agreement with minor is void.
2) Minor as a partner
A minor cannot become a partner in profit and losses of a firm.
However a minor can be admitted to the benefits of the firm only.
Example
Ali, and Shahid are partners in a firm they admitted a new partner sajid a
minor in profits and loss of firm. This is a void agreement as minor cannot
be admitted to profits and loss.
Bashir and Nazir are partners in a firm; they admitted a minor Bilal in
profits of the firm only. This is valid agreement
3) Minor as a beneficiary
If an agreement is made for the benefit of minor then the minor
take the benefit of that agreement. A minor can enter in to
agreement which do not required to bear any obligation. A minor
enforce a promissory note which is prepared in his favor but he is
liable.

can
any
can
not

Example
Sajid, a minor delivered goods to Habib under an agreement. Habib
refused to make Payment. It was held that minor can recover the price of
goods
4) Minor as Agent
A minor can act as an agent. But a minor is not responsible for any
negligence. If a minor breaches any duty, he cannot be held
responsible. Therefore the whole the risk goes to the principal.
Example
Ali appoints Munir a minor as his agent to sell his house to a third party.
Munir makes an agreement to sale his house to sajid. The agreement is
valid.

5) Minor and insolvency

A minor cannot be considered insolvent because he is not liable to
perform any obligations. Only his property is liable. If he has no property
than the payment cannot be recovered
Example

Page 25

Shahid a minor buys medicine from Riaz under an agreement. Shahid has
no property. Shahid cannot be held responsible. He cannot be declared
insolvent.
6) Minor and Ratification
A minor cannot confirm those agreements that were formed during the
age of minority. It is necessary that a fresh agreement should be made
after attaining the age of majority.
7) Contract by minor and adult
If a minor and major (adult) jointly enter into an agreement with other
party, only major will be liable but a minor will not be responsible
Example
Khalid a Minor and adult jointly enter in to an agreement to purchase Alis
house. In case of breach of contract only adult is liable but not minor.
8) Minor as Member of company
A minor cannot directly buy shares of the company because he is not
competent to contract. If parents of a minor are shareholders of a
company, the company can transfer shares in favor of minor after the
death of his parents.
Example
Jamaal holds share of a company. He dies and leaves Zain (His Son) a
minor as his legal representative. Company is bound to transfer shares to
M.
9) Surety for Minor
When an adult gives surety in a contract of guarantee, only the adult
is liable under the contract. Minor is not responsible for any obligation.
Example
Ali a minor makes a contract with waqas. Ahmed gives surety for Ali. The
contract is valid.
10) Minors parents
If an agreement is made by a minor than parents of minor are not
responsible for the payment. The parents are responsible only when
minor acts as an agent of his parent.
Example

Ali sends his son to buy goods from Jamaal, his son bought goods from
Jamaal. Ali is liable to make payment.

Page 26

Q#8

What is consent and free consent? What

is the efect of consent on contract?
Or
What is consent? What is the efect of consent when
it is not free?
Consent
When two or more parties agree upon the same thing in the same
manner in the same sense, when the both the parties agree upon the
same thing in the different manner it is not a real consent.
Free consent
Consent is free when it is not obtained by;
i)
Coercion
ii)
Undue
influence iii)
Misrepresentation
iv)
Fraud
v)
Mistake

Efects of consent on the validity of contract

1. Coercion
Coercion means committing or threading to commit any act which is
forbidden by law. In other words coercion means obtaining the consent of
other party by threatening him.
Effects on consent
i.

Committing or threatening to commit

When a person commits or threatens to do a person a work which is

forbidden by law. Is called coercion
Example
Ali threats to kill Majid, if he does not gave his car to Mohsin. The
agreement is void as consent is not free
ii.

Unlawfully detaining or threatening to detain property

When a person unlawfully detain the property of other person for the
purpose of compelling him to enter into an agreement, it is coercion
Page 27

Example
A driver refuses to deliver the documents of car to his employer unless he
is paid Rs 1000 it is coercion
Effect of coercion on the validity of contract
A contract formed under the coercion, the contract is voidable at the
option of that party whose consent is not free.

2. Undue influence
Undue influence is when one party uses his position or power to dominate
the will or consent of other party and uses his power to obtain unfair
advantage over the other.
It is further explained as follows:
i.

Dominating position

In order to prove undue influence. The relation between the parties

should be such that the one of them should be in a dominating position.
ii.

Unfair advantage

In order to prove undue influence, it is necessary to prove that the person

who has dominating position has used his powers to get unfair advantage.
Effect of undue influence on the validity of contract
Contract made under the undue influence can be avoided by the party
whose consent is obtained by undue influence.
3. Fraud
All acts committed by a party with the intention to deceive the other party.
There is fraud in the following cases:
i.

False statement

When a party to contract makes false statement intentionally, he is liable for

fraud
Example
Khuram khurrram knows that his mobile has been made in Pakistan but
tells Ahmed that the mobile made in Japan, khurrram is liable for fraud.
ii.

Object of fraud

Page 28

The object of fraud must be to deceive other party and the other party
have been actually deceived by the other party.
iii.

Loss

It is also necessary that the party acting upon the misrepresentation has
suffered loss
Effects of fraud on consent
The following remedies are available to the aggrieved party:
a) He can avoid the
contract b) He can sue
for the damages
c) He can ask for the specific performance and restoration
4. Misrepresentation
Misrepresentation means the giving the false statement of fact about
contract to obtain the consent of consent of other party.
Misrepresentation must be made with the intention to deceive other
party.
In order to prove misrepresentation the followings things are necessary:
i.
It must relate to the
contract ii.
It must be
untrue
iii.
The other party must suffer loss
iv.
The other party cannot discover the truth by ordinary diligence
Effects of fraud on contract
The contract is voidable at the option of that party whose consent is
affected by the misrepresentation.
The contract may be accepted by the injured party.

Page 29

Q#9
What is discharge of contract? What are the
ways in which a contract may be discharged /
terminated?
Discharge of contract
When the rights and duties created by law come to an end the
contract is said to be discharged or terminated
A contract can be discharged by the following ways
1. Discharge by
Performance 2.
Discharge by
Agreement
3. Discharge by Subsequent
impossibility 4. Discharge by
Laps of time
5. Discharge by Operation
of law 6. Discharge by
Breach of contract

Discharge by Performance
When all the parties to a contract have performed there services
required by law the contract is discharged by performance. If only
one party performs his duties he is alone discharged. The
performance may be;
i.
ii.

Actual performance
Attempted performance (or) tender

Actual performance
When all the parties to a contract have performed their promise the
contract comes to an end by actual performance

Example
Shazia agrees to sell her bag to Maria for 500 Rs. Shazia delivers
her bag and Maria makes payment. This is an actual performance

Attempted performance (or) Tender

When one of the parties, ofered to performed contract but other
party does not accept it. This is an attempt to perform

Example
Shazia agrees to sell her bag to Maria for 500 Rs. Shazia offers to
deliver her bag but Maria does not accept it. This is an attempted
performance.

Discharge by Agreement

Page 30

A contract may be discharged by the agreement between the

parties in any of the following ways
i.
Novation ii.
Alteration
iii.
Rescission iv.
Remission
v. Waiver

Novation
Novation means the replacement of old contract by new contract. In
new contract the parties may change or remains the same, thus an
old contact is discharged with the new contract
Example

A owed (
) to B and B to C, As debt to b is cancelled and
C accepts A as his Debtor. It is novation
Alteration
Alteration means the changing in the terms and conditions of
contract. If alteration is made with the consent of all the parties the
contract is discharged and a new contract takes place
Example
Ali agrees to sale goods to Riaz for Rs 1000. Later, Riaz decided
to purchase high quality Goods for Rs 2000. The old contract is
altered.

Rescission
Rescission means the cancellation of contract by mutual agreement.
The cancellation free the parties from obligations of contract
Example
Majid Agrees to sale goods to Sajid for Rs 2000. Later, Sajid
requested Majid to cancel the supply of Goods. This is rescission.

Waiver
When a party surrenders his right to contract, the other party is
free from his part of obligation. It is called waiver.
Example

Ali owes Majid Rs. 5000. Ali agrees to accept Rs. 4000 in full
satisfaction of claim. The whole debt is discharged.

Page 31

Discharge by Subsequent impossibility

If the performance of contract is possible at time of formation
of contract but afterwards it becomes impossible or unlawful.
The contract will be discharged.

Example
a) Bilal promise to sell wheat Habib, before delivery government
banned private trading of wheat
b) Farukh and Sidra promise to marry each other, before
the time fixed for marriage Farukh dies. The contract
becomes void and discharged

Discharge by Laps of time

According to the limitation act, the contract should be performed
within a specified or reasonable time. In case of breach of contract,
legal action should be taken within a specified period of time. If no
legal action is taken within specified period of time the contract is
discharged.

Example
Bashir took loan form Nazir. Last date for repayment of loan has
expired but no legal action has been taken by Nazir for 3 years.
Bashir is discharged from his liability.

Discharge by operation of Law

A contract may be terminated by the operation of law in the following
ways
i. Insolvency
ii. Death of any
party iii. Alteration

Insolvency
A contract is discharged when court declares a person
insolvent; such person is discharged from his liabilities incurred
before insolvency.

Death of any party

If any of the party before performance dies, the contract is discharged.

Alteration
Alteration means change in rights and duties of the parties. If the
terms and conditions are changed by any party without consent of
other party the contract is discharged

Discharge by Breach of contract

Page 32

Breach of contract means when one or more of the parties fail to

perform their obligations. Breach of contract discharge the
aggrieved party from performing his obligation.
Breach of contract may of two types;
i.
ii.
i)

Actual breach
Anticipatory breach
Actual Breach

When a party fails to perform his obligations when the performance is due

Example
th

Zeeshan agrees to sale goods to Razib on 6 November, but he

does not deliver goods at agreed time. This is actual breach.
ii)

Anticipatory Breach

An anticipatory breach occurs before the time fixed for performance. It

has two types
Express breach and implied breach.
a. Express breach
When one party communicates the other party his attention not
to perform the contract. This is express breach.

Example
Mehmood agrees to sale his house to Razib. Before the date
of performance Mehmood informs Razib that he will not sale
his house.
b. Implied Breach
When a party does an act which makes the contract impossible
to perform. This is called implied breach.
Example
th

Misbah agrees to sale her bag to Anam on 7 November but

before the due date Misbah sold her Bag to Iqra.

Page 33

Q#10
What are the remedies available to an aggrieved
party for breach of contract?
Or
Discuses the consequences of breach of contract
Or
State the principles on which court award for breach of
contract

Breach of contract
Breach ( ) of contract means when one party fails or refuses to
perform his obligation

Remedies for breach of contract

Following remedies (
) are available to aggrieved ( )
party for breach of contract against the guilty (
) party
1. Suit for
rescission 2.
Suit for damages
3. Suit upon quantum meruit
4. Suit for specific
performance 5. Suit for
injunction

1) Suit for rescission

Rescission means cancellation of contract. When one party
breaches the contract the other party may rescind contract and
refue to perform his part of obligation. The aggrieved party may
sue the guilty for damages
Example
A agrees to sell his car to B for 6 lac Rs. But on due date A refuses
to hand over his car. B is discharged from contract and can claim
damages

Page 34

2) Suit for damages

Damages are the monetary compensation allowed to aggrieved
party for the lose suffered by him as a result of breach of contract.
The aggrieved party can claim the following damages
i)

General
damages ii)
Specific damages
iii)
Exemplary
damages
iv)
Liquidated
damages
i)

General damages

Ordinary damages are those which naturally arise as a result of breach

of contract
For example in a contract of sale of goods the diference between
the contract price and market price are the damages that can be
claimed
ii)

Specific damages

These are the direct loses which arise due to the breach of
contract. These damages arise under some special cases
iii)

Exemplary damages

These damages are awarded not to punish the guilty party and
not compensate the injured (aggrieved) party for the loss suffered.
iv)

Liquidated damages

When the parties to a contract fix the amount of damages at the

time of formation of contract such damages are called liquidated or
nominal damages.
3) suit for quantum meruit
Quantum meriut means payment in proportion of work done.
Sometimes one of the parties has done a part of his obligation but
the other party commits the breach of contract. In such case the
party who has performed some work has right to claim for the value
of work done and damages for the remaining work.

Example
A agrees to construct a three story house for B. when only one story
was constructed, B prevented A from doing more work. So here A
is entitled to get the reasonable compensation for the work done
and the damages for remaining work.
Page 35

4) Suit for specific performance

When only damages are not enough to compensate then the court
may order guilty to perform specific performance
Specific performance is granted in the following ways
a) When compensation in money is
not enough b) When compensation
cannot be obtained
c) Where one of the parties is a minor
d) Where the contract involves personal skills, taste and
qualification
Example
Ali agrees to sale his plot of land to Majid who agrees to purchase it
to erect his mill there. Later, Ali commits breach. It was held by court
to carryout contract
5) Suit for injunction
Injection is an order from the court of law prohibiting a person from
doing a specific act. It is granted where the damages are not the
adequate relief
Example
Farrah a lady singer enter into an agreement with Salman to sing at
salmans theater and nowhere else. Afterwards Farrah made a
contract with Sheraz to sing at his theater and refused to perform
her contract with Salman. It was held that, Farrah could not be
compelled to sing at salmans theater she was prohibited by the
court form singing for Sheraz.

Page 36

Q#11

Discuss in detail the position of a quasicontract when the obligations of contract are
imposed by the law
Or
What are the types of quasi contract?

Quasi / constructive / implied Contract

Quasi contracts are based on the principle of equity (
Justice ( ).

) and

It means that nobody is entitled to benefit at the cost of other. Some

time law requires that a particular person must perform some
obligations such obligations are called quasi contract they are also
called constructive or implied contract.

Kinds of contract
Or
Conditions under which quasi contract arise
1. Supply of necessaries
2. Payment by interested person
3. Compensation for non
gratuitous acts 4. Finder of
goods
5. Mistake or under coercion
1) Supply of necessaries
Where necessaries are supplied to a person who is incompetent
to contract or to someone whom he is legally bound to support,
the supplier is entitled to recover the price from the property of
incompetent person.
Example
Ali supplies Hammad a minor, necessaries suitable to their
conditions in life. Ali is Entitled to reimburse (
) form Hammads

Property.

2) Payment by interested person

Page 37

A person who is interested in the payment of money which another is

bound by law to pay and who therefore pays it; it is entitled to be
reimbursed by other.
Example
a) A pays arrears of rent of B to avoid dispute between B
and his landlord ( )
A cannot recover from as he has no interest in payment
b) A imported Goods and stored in Bs warehouse without
paying the custom duty. The custom duty Authorities
recovered custom duty from B. B can recover from B
3) Compensation for Non- gratuitous act
When a person lawfully does anything for another person, or delivers
anything to him, not intending to give as a free gift, the other person
also enjoys benefit thereof. Later he is bound to compensate former (
).
Example
A coolie takes the luggage of passenger at the railway station
without asking. Passenger does not object ( ) to it. Coolie can
get the payment
4) Finder of goods
A person who finds the goods belonging to other and takes them into
his custody, he is entitled to recover compensation for the trouble in
finding the owner of goods. If he fails to find the true owner he can
retain the ring
Example
Ali found a ring at a party he told the other guests about it but
could not find the owner. Ali can retain the ring.

Page 38

Q#12 what is the difference between

indemnity and guarantee?
Basi
s
Meanin
g

Parties
Liability

Indemnity
A contract of indemnity
is to comansate the loss
sufered by a person from
the conduct of any third
person
In a contract of indemnity
there are three parties,
indemnifier and indemnity
holder
The liability of
indemnifier is primary

Number
of
contract

In contract of indemnity
there is only one contract
between
the indemnifier
and indemnity holder

Performa
nce of
contract

In

Nature
Request

contract of
indemnity
performance
depends
upon the possibility of loss
This contract is made
for the payment of loss
The indemnifier, promises
without the request of
debtor

Guarantee
In contract of gurantee
one person gives
the
gurantee
for
the performance of
contract
In a contract of guarantee
there are there parties, surety,
debtor, creditor
The liability of surety is
secondary as he is liable only
when the creditor fails to pay
the debt
There are there
contracts Between
surety and creditor
Between creditor and
principal Between surety
and principal
In contract of gurantee
the performance depends
upon if the creditor fails to
make the payment. This
contract is made for the
payment of debt
It is necessary that the surety
must give the gurantee at the
request of debtor

Page 39

Q#13

WHAT IS BAILEMENT? ALSO EXPLAIN

THE ESSENTIAL FEATURES OF BAILMENT.
Contract of bailment
Bailment
Bailment is a voluntary transfer of goods by the owner to another person
for specific purpose under a condition that such other person shall
return the goods after the purpose is accomplished.
Example
Ali delivered a piece of cloth to Bashir to make a suit, there is a contract of
bailment between Ali and Bashir.
Bailor
The person who delivers the goods to the other person is called Bailor.
Bailee
The person to whom goods are delivered under the contract of bailment is
called Bailee
Essential features
i.
Contract
ii.
Specific purpose
iii.
No change of
ownership iv. Return of
same goods
1. Contract
There must be a contract of bailment between the parties. If the
goods are delivered by mistake, there is no bailment
2. Specific purpose
The goods must be delivered for some specific purpose. If the goods are
delivered without any purpose there is no contract of bailment.

3. No change of ownership
In contract of bailment only the possession of goods changed but the
ownership remains in the same hands. If the ownership of goods is
changed it cannot be called bailment.
4. Return of same goods
When the purpose of bailment is accomplished, same goods must be
returned to the bailer. The deposit of money in a bank is not bailment
because bank cannot return the same money, however notes and other
valuable goods deposited in bank are the examples of bailment.
Page 40

Q#14 what are the rights and duties of Bailor?

Rights and duties of Bailor are given below

Rights of Bailor
Following are the rights of Bailor
1.

Right to recover damages

Bailor can claim for the damages that arise due to bailees negligence.
He can also claim damages arising due to unauthorized use of goods.
Example
Ali bailed some goods to Zeeshan but due to the negligence of
Zeeshan the goods were stolen. Ali can recover the damages.
2. Right to demand return of goods
The Bailor has right to get back the goods bailed after as soon as
the purpose is accomplished. If Bailee fails to return the Bailor can claim
for the compensation
Example
Sajjid give a car to majjid on hire for 5 days. Majjid fails to return on
5thd day. Sajjid can claim damages
3. Right to claim increase
The Bailor can claim any increase or profit, which may accrued from the bailed
goods.
Example
Asad bailed a cow to khurram. Cow gave birth to a calf. Asad can claim cow
along with calf.
4. Right to terminate bailment
The Bailor has a right to terminate the bailment if Bailee does any act
which is against the terms and conditions of bailment.
Example
Ali gives his car on hire to Junaid for personal use but Junaid start driving
it as carriage. Ali can terminate contract.
5. Right to sue
Page 41

Bailor can sue Bailee if he fails to return goods or breaches contract.

Example
Ali gives his mobile to Zain for repairing. Zain sold it to Tania. Ali can sue zain.
6. Compensation
If the Bailee without the permission of Bailor mixes the goods of Bailor
with his own goods in such a way that it becomes impossible to separate
them, the Bailor has a right to claim for the compensation for the loss of
goods.
Example
Moshsin bailed 2 bags of Basmati Rice to Hassan. Hassan mixed them
with his own rice that was of cheap quality. Moshsin can claim for the
compensation
Duties of Bailor
Following are the duties of Bailor
i)
Duty to disclose faults
ii)
Duty to repay necessary expenses
iii)
Duty to repay extra ordinary
expenses iv) Duty to indemnify for
defective title v)
Duty to receive
back goods
1. Duty to disclose faults
2. It is the duty of Bailor to disclose all the faults in bailed goods
which are known to him. If he does not disclose them he will be
liable for the damages arising due to such faults.
Example
Ali hires a carriage of Mehmood. The carriage was unsafe and Mehmood
had not disclosed that fact to Ali. Ali is injured. Mehmood is liable for the
damages.
3. Duty to repay expense
When the goods are to be kept or carried by the Bailee. It is the duty of
Bailor to bear all the expense incurred on the bailed goods.
Example
Ali delivered a car to shahid for the safe custody. One tire of the car was
burst on the way. Shahid spent Rs.4000 to replace tire. Ali is liable to pay
Rs. 4000
4. Duty to repay extra ordinary expenses

Page 42

If the extra ordinary expenses are incurred by the Bailee on the bailed
goods then it is the duty of Bailor to repay those expenses.
Example
Habib bailed his horse to Asif for journey. The expense for feeding horse is
ordinary expense and falls on Bailee but if horse becomes sick then it
is the duty of Bailor to repay the expenses incurred on the treatment of
horse.
5.

Duty to indemnify for the defective title

Where the title of goods to Bailor is defective and Bailee suffers loss due
to such title, It is the duty of Bailor to indemnify the Bailee for such loss.
Example
Ali gives his neighbors scooter to Bilal for use without neighbors
permission. The Neighbor files a suit on Bilal and received compensation.
Ali is liable to compensate Bilal.
6. Duty to receive back goods
It is the duty of Bailor to receive back goods when the Bailee
returns them after the accomplishment of purpose
Example
Ali bailed his horse to Bilal to feed for two months. Ali does not take his
horse after two months. Bilal has to spend more to feed horse. It is the
duty of Ali to compensate Bilal.

Page 43

Q#15 what are the right and duties of Bailee?

Rights of Bailee
Followings are the rights of Bailee
1. Right to recover damages
A Bailee has right to recover damages suffered due to fault in bailed
goods that were known to the Bailor
Example
Ali hires a carriage of Mehmood. The carriage was unsafe and
Mehmood had not disclosed that fact to Ali. Ali is injured.
Mehmood is liable to compensate for the damages.
2. Right to recover expense
It is the right of Bailee to recover expenses that were incurred on the
bailed goods.
Example
Ali delivered a car to shahid for the safe custody. One tire of the car
was burst on the way. Shahid spent Rs.4000 to replace tire. Shahid
has a right to claim for the expenses incurred on the car.
3. Right to compensation
If Bailee suffers loss due to the defective title of goods to Bailor, The
bailee has right to claim for the compensation.
Example
Ali gives his neighbors scooter to Bilal for use without neighbors
permission. The Neighbor files a suit on Bilal and received
compensation. Bilal has right to receive compensation from Bailor.
4. Right to stop delivery
If the person other than Bailor claim bailed goods from Bailee, the
Bailee may apply to the court to stop delivery of goods to Bailor and
to decide the title of goods.
Example
Page 44

Sheraz bailed goods to Faraz. Hammad claimed that he is the owner

of goods and demand goods form Faraz. Faraz can stop the delivery
of goods to Sheraz and request the court to decide the ownership of
goods.
5. Right to sue
If an unauthorized person forcefully uses or take the procession of
bailed goods, the bailee has right to sue that unauthorized person.
Bailor can also file a suit for those goods.
Example
Ali gives a piece of cloth to Taylor to make a coat. Sheraz an
unauthorized person forcefully take the coat form Taylor and start
using it. Ali or Taylor can file a suit against Sheraz.
6. Right of lien
Lien means the right to retain the goods until he is not paid for the
services rendered.
A bailee has a right to retain the bailed goods until he is not paid
for the services rendered.
Example
Ali gives his watch to Salman for repairing. Salman can retain the
watch till he is not paid for his services

Duties of bailee
Following are the duties of bailee
1. Duty to take reasonable care
It is the duty of bailee to take reasonable care of goods bailed. If he
does not take care of goods and the goods are damaged due to his
negligence he is responsible for the damages.
Example
Shakeel bailed his car to nazir. Nazir did not lock up the car. The car is
stolen. Nazir is liable for the damages
2. Duty not to make unauthorized use

Page 45

The bailee must use the goods according to the terms and
conditions. If he makes an unauthorized use of goods, he is liable
for the damages to the goods.
Example
Ali gives his car on hire to Junaid for personal use. Junaid allows Faraz
to drive but he got accident and got injured. Junaid is liable to
compensate Ali.
3. Duty not to mix the goods
If the Bailee without the permission of Bailor mixes the goods of
Bailor with his own goods in such a way that it becomes impossible
to separate them, it is the duty of bailee to compensate Bailor for
the loss of goods.
4. Duty to return goods
It is the duty of bailee to return the goods to bailer as soon as the
purpose of bailment is accomplished. If he fails to return goods at
specified time he is responsible to compensate bailer for the loss.
Example
Ali bailed his horse to Bilal to feed for two months but Bilal does not
return the horse after two months. The horse dies after the period
of bailment without any fault of Bilals part. Bilal is liable for the
loss.
5. Duty to return increase
It is the duty of bailee to return any increase or proft accrued from the
goods bailed.
Example
Asad bailed a cow to khurram. Cow gave birth to a calf. It is the
duty of Khurram to return cow along with calf.

Page 46

Q#16

WHAT IS PLEDGE OR PAWN? WHAT

ARE THE ESSENTIAL FEATURES OF PLEDGE?
Pledge
The bailment of goods as security for the payment of debt or
performance of promise is called pledge. Or Bailment is the transfer of
possession of moveable property by one person to another person to get
loan.
Example
Ali borrows 500 Rs. From saad and keeps his watch as security for the
payment of loan. The bailment of watch is called pledge.
Parties of pledge
i.
Pleger/
pawner ii.
Plegee /Pawnee
Pledger / pawnor
The person delivering his goods as security is called pawner
Plegee / Pawnee
The person to whom the possession of goods is given is called Pawnee.
Features of pledge
1. Moveable property
A pledge is only valid when moveable property is pledged. It includes
any kind of goods, documents, valuables.
2. Transfer of possession
In pledge only the possession of goods is transferred by the pawnor to Pawnee
3. Not Transfer of ownership
In contract of pledge, ownership is not transferred from pawnor to Pawnee
4. Mere custody of goods
The person having only the custody of goods cannot pledge them. For
example a servant having the control of principals goods cannot
make a valid pledge of them.

Page 47

Q#17EXPLAIN THE RIGHTS AND DUTIES OF PLEDGER

Rights of Pleger
1. Right to recover damages
Pledger can claim for the damages that arise due to pledgees
negligence. He can also claim damages arising due to unauthorized
use of goods.
7. Right to demand return of goods
The Pledger has right to get back the goods Pledged after as soon as the
payment of debt is made. If Pledgee fails to return, the Pledger can claim
for the compensation
8. Right to claim increase
The Pledger can claim any increase or profit, which may accrued from the
Pledged goods.
9. Right to terminate Pledge
The Pledger has a right to terminate the Pledge if Pledgee does any act
which is against the terms and conditions of Pledge.
10. Right to sue
Pledger can sue Pledgee if he fails to return goods or breaches contract.
11. Compensation
If the Pledgee without the permission of Pledger mixes the goods of
Pledger with his own goods in such a way that it becomes impossible to
separate them, the Pledger has a right to claim for the compensation for
the loss of goods.

Duties of Pledger
Following are the duties of Pledger
7. Duty to disclose faults
It is the duty of Pledger to disclose all the faults in Pledged goods which
are known to him. If he does not disclose them he will be liable for the
damages arising due to such faults.
8. Duty to repay expense
When the goods are to be kept or carried by the Pledgee. It is the duty of
Pledger to bear all the expense incurred on the Pledged goods.
9. Duty to repay extra ordinary expenses

Page 48

If the extra ordinary expenses are incurred by the Pledgee on the Pledged
goods then it is the duty of Pledger to repay those expenses.
10. Duty to indemnify for the defective title
Where the title of goods to Pledger is defective and Pledgee suffers loss
due to such title, it is the duty of Pledger to indemnify the Pledgee for such
loss.
11. Duty to receive back goods
It is the duty of Pledger to receive back goods when the Pledgee
returns them after the accomplishment of purpose

Page 49

Q#18

EXPLAIN THE RIGHTS AND DUTIES OF

PLEDGEE
Rights of Plegee
1. Right to retain
The Plegee has right to retain the goods until his dues are paid. He can
retain them for payment of debt or performance of promise and all
necessary expenses incurred by him for the safety of goods
Example
Shahid borrowed Rs. 2 lac from Irfan and pledges his diamond ring. If
shahid does not return the loan shahid can retain the ring
2. Right to retain for the other debt
If the Pledger again takes loan after the first loan, Plegee can retain the
goods over the second loan.
Example
Ali borrowed Rs 400,000 from Sheraz and pledges his car. After
3months Ali borrowed another sum of Rs. 300,000 and pays the first
debt. Sheraz can retain the car against his second loan.
3. Right to extraordinary expenses
The Pledgee has right to recover all those expense that are incurred on the
safety of goods. But Pledgee cannot retain goods if such expenses are not
paid, he can only sue Pledger for the recovery of extra ordinary expenses.
Example
Ali pledges his horse to Bilal. Horse falls sick and Bilal spent 400 Rs for
the treatment of horse. Bilal can sue Ali for the recovery of expenses.
4. Right to sell
If the Pledger refuses to make payment or debt or performance of
promise, the Plegee has right to sell goods after giving the notice of
intention of sale to Pledger.
Following points must be considered.
i.
ii.
iii.

Reasonable notice is necessary.

Pledgee cannot sale goods to himself
If the amount recovered from sale is less than the amount of

debt, he can recover the balance amount from Pledger.

Page 50

Example
Ali pledges his car to shahid to obtain a loan of Rs 500,000. But on the due
date Ali fails to pay the amount of loan. Shahid can sale car after giving a
notice of sale.

Duties of Pledgee
Following are the duties of Pledgee
6. Duty to take reasonable care
It is the duty of Pledgee to take reasonable care of goods pledged. If he does
not take care of goods and the goods are damaged due to his negligence he
is responsible for the damages.
Example
Shakeel pledged his car to nazir. Nazir did not lock up the car. The car is
stolen. Nazir is liable for the damages
7. Duty not to make unauthorized use
The Pledgee must use the goods according to the terms and conditions.
If he makes an unauthorized use of goods, he is liable for the damages
to the goods.
Example
Ali pledged his car to Junaid. Junaid start using it as carrier. Ali can
sue Junaid for unauthorized use
8. Duty not to mix the goods
If the Pledgee without the permission of Pledger mixes the goods of
Pledger with his own goods in such a way that it becomes impossible to
separate them, it is the duty of Pledgee to compensate Pledger for the loss
of goods.
9. Duty to return goods
It is the duty of Pledgee to return the goods to Pledger as soon as the
purpose of pledge is accomplished. If he fails to return goods at specified
time he is responsible to compensate Pledger for the loss.
Example
Ali pledged his horse to Bilal for two months but Bilal does not return the
horse after two months. The horse dies after the period of bailment without
any fault of Bilals part. Bilal is liable for the loss.

Q#19 what is the difference

between sale and agreement to
sell?
Basis
1. Transfer
of
property
2. Transfer
of
ownersh
3. ip
Type of
goods

Sale

Agreement to sell

The property of goods

passes from the seller to the
buyer immediately.
Ownership of the goods is
transferred immediately
after the sale
A sale can only be in case
of existing and specific
goods only.

The transfer of property

of the goods is to take
place at a future time.
Ownership of goods
does no change until
the property is
transferred.
An
agreement to sell is
mostly in case of future
and contingent goods.

In sale the if the

goods are destroyed,
the entire loss is
suffered
buyer
a sale by
thethe
seller
cannot
5. Right to re In
sell
re sell the goods
4. Risk of loss

6. Nature of
rights

7. Breach

8.
Insolvenc
y of seller

9.
Insolvenc
y of buyer

10. Nature of
goods

The buyer becomes the

owner of goods. If the seller
refuses to deliver the goods
the buyer can sue for the
recovery
of goods
If
the buyer
fails to pay the
price the seller can sue for
the recovery of price
If the seller becomes
insolvent, the buyer can
recover the goods from
oficial receivers of seller
because buyer is the owner
ofthe
goods
If
buyer becomes
insolvent and the price of
goods is paid than his legal
representative can demand
the goods from the seller. If
price of goods is not paid,
the
A
sale
seller
is an
can
executed
claim price
contract

In an agreement to sale
the whole loss is sufered
by the seller
It is merely a contract the
buyer can sue the seller for
damages in case of re sale
of goods
The
buyer does not
becomes the owner of goods
and he can only sue for the
damages
In an agreement to sale, if
buyer fails to pay the seller
can sue for the damages not
for the recovery of price
if buyer has paid the price of
goods and the seller
becomes insolvent, he can
recover the price of goods
but he cannot recover the
ownership
goods
If
the sellerofbecomes
insolvent before the
payment of goods than the
seller can refuse to sale
goods until the price is
paid by the legal
An
agreement toofsale
representatives
the
is an executory
contract

Page 52

Q#20
What are the rights of an unpaid seller?
Unpaid seller
An unpaid seller is a person, who has sold the goods for a price, but the
price has not been paid to him or the instrument which was given to
him has dishonored.

Rights of unpaid seller

An unpaid seller has the following rights
A. Right against
goods B. Right
against buyer

A. Right against goods

1. Right of lien
An unpaid seller has the right to stop the delivery of goods and to
keep the goods in his procession until the price is paid. If he has
delivered a part of goods, he can stop the delivery of remaining goods.
Seller can exercise the right of lien in the following cases;
i.
When the goods are sold on cash
ii.
When the goods are sold on credit and period of credit
has been expired iii. When the buyer becomes insolvent
Rules regarding lien
Following are the rules regarding the lien of goods.
i.
When the goods are in the procession of seller
ii.
The seller can use the right only for the price, not for
the other charges iii. If the seller has delivered a part of goods,
he can retain the reminder
Example
a. A sells his car to b for Rs. 100,000 to be paid in cash. B fails to
make the payment. A can retain the procession.
b. A sold a machine to B for Rs. 2000, it was not working properly
so B delivered it back to A for repairs, it was held that A could not
stop the delivery.

Page 53

2. Right of stoppage of goods in transit

When the buyer funds that the buyer became insolvent then he has the
right of stopping the goods in transit.
The seller can use this right in the following cases
a. When the goods are still in transit
b. When the property has not passed
to the buyer c. When the buyer
becomes insolvent
d. When the seller has right of topping of goods in transit
3. Right of resale
A seller has the right to resale the goods if the buyer does not pay the
price of goods. Seller can use this right in following cases
a. When the goods are of perishable nature and the buyer fails to
pay the rice within reasonable time
b. When the seller has given the notice of his intention to resale
c. When he right to resale is expressed in contract between the parties.

B. Right against buyer

1. Price
If the seller has delivered goods and buyer fails to pay the price of goods.
The seller has right to sue for the price of goods.
Example
A Sold goods to B, B fails to pay the price. A can sue B for the recovery of price
2. Damages for non acceptance
When the seller has delivered the goods and the buyer refuses to accept
them. The seller has right to sue for the recovery of damages.
Example
A sold and delivered goods to B, but B refuses to accept the goods and
pay the price. The seller has right to sue for the recovery of damages
3. Special damages and interest
If the buyer fails to make the payment at agreed time but he will pay late.
The seller has right to sue for the recovery of interest at reasonable rate.
Example
A Sold goods to B, B fails to make payment and promised to pay later. A
has right to sue for the recovery of interest
Page 54

Q#21
What are the rights of buyer in a contract of
sale?
Buyers right
The buyer has the following rights against the seller, if the seller breaches the
contract.
1. Damages for non delivery
The buyer has right to sue the seller for damages in case the seller
refuses to deliver the goods.
Example
A sales Rice to B but does not deliver them to the buyer at agreed time,
the buyer has right to sue for the damages.
2. Damages for the breach of warranty
When the seller breaches the contract of warranty, the buyer can sue for
the damages if he has paid the price. But if he has not yet paid the price,
then he can claim for the reduction in price.
Example
A promises to sell and deliver the tables to B on 15 November, but he
delivered the goods on 25 November, the buyer can recover damages
from seller.
3. Breach of condition
When the seller breaches the condition of contract, the buyer can
terminate contract and claim damages.
Example
A promises to sell Nokia phone to B, but he delivered Q Mobile. The
buyer can avoid contract.
4. Recovery of price with interest
If the buyer has paid the price but seller fails to deliver the goods, the
buyer has right to recover the price with interest at reasonable rate.
Example
A promised to buy wheat from B and make the payment in advance, but B
fails to deliver the wheat; the buyer can claim price plus interest.

Page 55

Q#22 what are the rules regarding the

delivery of goods? Or what are the kinds of
delivery?
Delivery
Delivery means voluntary transfer of procession of goods by one person to
another person.

Modes / kinds of delivery

Followings are the kinds of delivery
1. Actual delivery
When the procession of goods is transferred from buyer to seller, it is called
actual delivery.
Example
A sold his car to B. A handed over the car to B, it is actual delivery.
2. Symbolic delivery
When the goods are sold in bulk and the actual delivery is not possible,
in such a case the control over goods is transferred to the buyer, it is
called symbolic delivery.
Example
A sold goods in bulk to B which are locked in godown. A handed over the
key of Godown to B, it called symbolic delivery.
3. Constructive delivery
When procession of goods changed without any change in the actual
custody of the goods, it is called constructive delivery
Example
A Sold rice to B lying in Cs godown. A orders C to transfer rice to B. C
transfers the rice in his books to B.
Rules of the delivery of goods
1. Duty of seller and buyer
It is the duty of the seller to sell the goods and buyer to accept goods and pay
the price.
Example
A sold goods to B for RS 300. It is the duty of A to deliver the goods and B
is responsible to pay Rs 400 to A.

Page 56

2. Place of delivery
The goods must be delivered at a place which is stated in contract.
3. Time of delivery
It is the duty of seller to deliver the goods within the fixed time. If time
is not fixed, than delivery should be made within reasonable time.
4. Expenses of delivery
Expenses of delivery of goods must be bear by the seller or according to the
agreement.
5. Installment delivery
The buyer is not bound to take the delivery of goods in installment unless it
was agreed
6. Wrong delivery
When the goods delivered to the buyer are not in accordance with goods
specified in contract, the buyer can reject the goods.
7. Delivery to carrier
If the goods are delivered to carrier for transfer to buyer, it is deemed
the delivery to the buyer.
8. Procession of goods by third person
If at the time of sale the goods are in procession of third person. There is
no contract until that third person acknowledges the buyer that he holds
the goods on his behalf.
9. Demand of delivery
Buyer should demand for the delivery of goods, otherwise he cannot
blame seller for the delivery of goods.
10. Effects of part delivery
When a part of goods is transferred to buyer with the intention to
deliver the rest of goods also, the ownership in the whole of the goods
is deemed to pass to the buyer.
11. Mode of delivery
The delivery of goods can be made by any of the ways on which the parties
agree.
12. Liability in case of refusing to take delivery of goods
If seller delivers the goods to buyer and buyer refuses to take the
delivery of goods without any reason. The buyer is liable for the
damages.
13. Examining the goods
When the goods are delivered to the buyer, the buyer should be given a
reasonable time for the examination of goods.

Page 57

Q#23 what are the rights, duties and

liabilities of a common carrier?
Definition
A common carrier is an association or person (other than the
government) who agrees to carry goods on hire to transfer the goods
from one place to another place.

Rights of common carrier

1. Remuneration
A common carrier has right to receive remuneration for the work
performed. If the remuneration have not been agreed than he has right
to receive reasonable remuneration
2. Right of lien
A common carrier has right to retain the goods until the charges of hire are
paid.
3. Right to recover expense
If the carrier has incurred some expenses for the safety of goods, The
carrier has right to recover such expenses
4. Right to recover damages
A common carrier has right to recover damages arising due to
consignors negligence. For example if the goods are not properly
packed and the carrier sufer injury from them, the carrier can recover
damages
5. Right to sell goods
The carrier has right to sell goods if the consignee refuses to receive the
goods and the goods are of perishable nature.
6. Right of refusal
The common carrier has right to refuse to carry the goods under the following
circumstances
i.
When the goods are not
properly packed ii. When the
carriage is full
iii.
When the goods are of such nature which he
does not carry iv.
When the consignor is not
paid reasonable charges
7. Right to give concession
A common carrier has right to give concession to any person however he
cannot charge an unreasonable charges from any customer
8. Right to limit his liability

A common carrier has right to limit his liability by entering into a special
agreement with the consignor.

Page 58

9. Right of recovery of goods

A common has right to recover the price or goods from the person who
has wrongfully take the delivery of goods

Duties of a common carrier

1.

Carry goods

It is the duty of common carrier to carry the goods of all persons

according to his profession. If the consignor is paying reasonable amount,
he cannot refuse to carry goods.
2. Transportation of goods
It is the duty of carrier to transport goods on hire from one place to another
place.
3. Delivery of goods
It is the duty of common carrier to deliver goods in time. If time of
delivery is not mentioned in the contract the carrier is bound to deliver the
goods within the reasonable time.
4. Delivery to the right person
It is the duty of carrier to deliver the goods to the right person, if he
wrongfully delivers goods to the other person then it is the duty of
common carrier to get back the goods and deliver them to the right
person.
5. Safety of goods
It is the duty of common carrier to deliver the goods safely, common
carrier is responsible for the loss to the goods arising due to him.
6. Obey instruction
It is the duty of common carrier to obey the instructions of consignor
regarding the delivery, when the goods are in transit.
7. Delivery at right place
It is the duty of common carrier to deliver the goods to the person specified by
the consignor.

Liabilities of common carrier

1. Liability for delay
A common carrier is liable for the damages arising due to the delay in delivery
of goods
2. Breach of duty
A carrier is also responsible for the loss arising due to the breach of any duty.
3. Liability of loss
A carrier is also liable for the loss caused to goods while it is in his custody

Page 59

Q#24
What is the diference between
common carrier and private carrier?
Basis
1. Act

2. Regular
business
3. Persons

4.
Rejection
of ofer
5. Damages

Common carrier
The common carriers act,
1865

Private carrier
A private carrier is governed by
contract act, 1872.

governs a common carrier

A common carrier carries the
goods

A private carrier carries the

goods not

as regular business to earn

A common carrier carries

as a regular business.
A private carrier carries the

the goods of all the persons.

goods of a particular person

A common carrier cannot

A private carrier can reject

reject the ofer of goods for

the offer without any reason

carriage
If common carrier refuses

A private carrier cannot be

to carry the goods without

sued for the damages on his

any sufficient reason, he

refusal to carry goods

can be sued and made

6. Hire

liable for damages

A common carrier carries the
goods

A private carrier may carry the

goods

7. Terms

for hire (rent)

Common carrier has fixed
term of

for hire or free

A private carrier determines the
terms

carriage of goods
A common carrier is effected

of carriage of goods.
A private carrier is not affected.

8. Effects
on

by the change in rules and

busines

regulation of government

Page 60

Q#25 what are duties and liabilities of

a railway as a carrier?

What are the duties and liabilities of a

railway as a bailee of goods?
Liabilities of railway
1. Liability due to delay
Railway is liable for the loss of goods arising due to the delay in delivery.
For example if the goods were of perishable nature and become useless
due to the delay in delivery, railway is liable for such loss
2. Liability during transit
When the goods are consigned at railways risk then it is the liability of
railway to bear loss occurring during transit
When the goods are delivered at owners risk than the railway is not
responsible for such loss
3. Liability for wrong delivery
If the goods are delivered to the wrong person the railway is
responsible to get back the goods and deliver them to the right
person
4. Liability as carriage of animals
In case of animals the liability of railway shall not exceeds:
Rs. 50000 per elephant
Rs. 10000 per horse
Rs. 15000 per mule or horned cattle
Rs. 1000 per dog, donkey, goat, ping or other animal.
5. Carriage of passengers luggage
Railway is not responsible for any loss to the luggage of passenger unless
luggage is booked.
6. Accident of passenger
When a passenger dies or is injured due to the train accident. The
railway is responsible to pay Rs. 100,000 to the heirs of deceased
person and Rs 10,000 to the injured person.
7. Accident of person other than passenger

Page 61

If the person other than passenger dies or is injured, The railway is

responsible to pay Rs. 100,000 to the heirs of deceased person and Rs
10,000 to the injured person.
8. Liability for the valuable goods
The railways is not responsible for the loss of any parcel the value of
which exceeds Rs. 10000 unless the person sending the goods has
declared the value of goods
9. Goods falsely described
A railway is not responsible for the loss if the goods have been falsely described.

Duties of railway
8. Carry goods
It is the duty of railway carrier to carry the goods on hire from one place to
another place
9. Delivery of goods
It is the duty of railway carrier to deliver goods in time. If time of delivery
is not mentioned in the contract the carrier is bound to deliver the goods
within the reasonable time.
10. Delivery to the right person
It is the duty of carrier to deliver the goods to the right person, if he
wrongfully delivers goods to the other person then it is the duty of
common carrier to get back the goods and deliver them to the right
person.
11. Safety of goods
It is the duty of railway carrier to deliver the goods safely, railway carrier
is responsible for the loss to the goods arising due to railways
negligence.
12. Obey instruction
It is the duty of common carrier to obey the instructions of consignor
regarding the delivery, when the goods are in transit.
1. Delivery at right place
It is the duty of common carrier to deliver the goods to the person specified by
the consignor.
2. Delivery at right place
It is the duty of common carrier to deliver the goods to the person specified by
the consignor.

Q#26
What is the diference between bill
of lading and chartered party?
Basis
1. Nature

Bill of lading

Chartered party

a bill of lading is an
evidence

A chartered party is a

of receipt of goods on

contract relating to the

hiring of the ship

2. Title

board the ship

A bill of lading is a

A chartered part is not a

3. Transferability

document of title of
goods
A bill of lading is

document of title of
goods
A chartered party is not

4. Purpose

transferable by
transferable
endorsement
A bill of lading is always A chartered party may
for
be for

5. Sets

a particular destination
A bill of lading is drawn
in

6. Payment
7. Stamping

particular destination or
A chartered party is not
drawn in sets

two or three sets

Fright is generally

Freight is paid after

paid in advance

the safe delivery of

It may or may

goods
It
is always stamped

not be stamped

Page 63

Q#27 what are the types of crossing of

Cheque?
Types of crossing
Following are the types of crossing of cheque
1. General
crossing 2.
Special crossing
3. Accounts payee or restrictive
crossing 4. Not negotiable
crossing

1. General crossing
Generally a cheque can be crossed when;
i. There are two transverse parallel lines, marked
across its face or ii.
The cheque bears an
abbreviation &co between two lines or
iii. The cheque bears the words not negotiable between two lines
iv. The cheque bears the words A/c, payee between two parallel lines or
A crossed cheque can be made bearer cheque by cancelling the crossing
and writing that the crossing is cancelled and affixing the full signature of
drawer.

2. Special crossing
When a particular bank's name is written in between the two parallel
lines the cheque is said to be specially crossed.
In addition to the word bank, the words "A/c. Payee Only", "Not
Negotiable" may also be written. The payment of such cheque is not
made unless the bank named in crossing is presenting the cheque. The
efect of special crossing is that the bank makes payment only to the
banker whose name is written in the crossing. Specially crossed cheques
are safer than generally crossed cheques.

Page 64

3. Account payee or restrictive crossing

This crossing can be made in both general and special crossing by adding
the words Account payee. In this type of crossing it becomes the duty
of collecting bank to credit the amount of cheque to the account of the
payee named in the cheque.

4. Not negotiable crossing

The word not negotiable can be added to the general as well as special
crossing. It can be transferred by payee. The transferee will get the
same rights, as regards payment, as the transferor had.
The object of not negotiable cheque is to provide protection to the holder
or drawer of a cheque because even if such cheque goes to the wrong
hands, the true owner will not lose his claim.

Page 65

Q#28
What is the diference between cheque,
bills of exchange and promissory note?
Basis

Bills of
exchan
Bills of exchange
is
ge

Promiss
ory note

an instrument in
writing which
contains order of
payment by
creditor
tobill
debtor
In
case of
of
2 parties
exchange there are
three parties,
drawer drawee and
payee.
Acceptance
by
3
Acceptance drawee is
necessary.

Promissory note is
an instrument in
which debtor
promises to pay a
certain amount to
creditor
In
case of
promissory note
there are two
parties maker and
There
payee is no
need of
acceptance

Bills of exchange
4
Discounting can be discounted
from bank
Three
grace days
5 Grace
days
are allowed to make
payment
Promissory note
6 Area
can be inland or
foreign of Stamp on
Pasting
7 stamp
bills of exchange is
legally required
It is an
8 Nature
unconditional
order for making
payment
In
case of Bills of
9 liability
exchange it is the
liability of drawee to
make the payment
Noting charges are
10
paid in case of
Noting
dishonor of bills of
charge
exchange
s

Promissory note
cannot be
discounted
Three
grace days
are allowed to make
payment
Promissory
note is
generally
Pasting
of
Stamp on
promissory note
is legally
It is an
unconditional
promise for
In case
of
payment
promissory note it
is the liability of
drawer to make
the payment
Noting
charges are
not paid in case of
dishonor of
promissory note

1 Definition

Page 66

Cheque
Cheque is an
instrument which is
used to withdraw
money from bank
In case of cheque
there are three
parties depositor,
bank and payee
In case of cheque
there is no need of
acceptance, as it is
order by the
customer.
Cheque
cannot be
discounted
In
case of cheque
no grace days are
allowed for
making payment
Cheque
is drawn on
only depositors
bank
No
stamp is
required to paste
on cheque
Cheque is an
unconditional
order for making
payment
In
case of cheque it
is the liability of
bank to make
payment
Noting charges are
not paid in case of
dishonor of cheque

A bills of exchange
can be drawn on
simple or printed
paper

A promissory note
can be drawn on
simple or printed
paper

A cheque is always
drawn on printed
paper that is
provided by the bank

12 Crossing Bills of exchange

cannot be crossed

Promissory note
cannot be crossed

Cheque can be
crossed

In case of bills of
exhnage the
drawer and the
payee may be
same person
In case of bills of
exchange the
drawee is
responsible to
make the payment
In case of bills of
exchange the
people shows less
confidence as
compared to the
cheque
Payment of bills
of exchange
cannot be
stopped
Period for making
payment of bills of
exchange is written
on it

In case of
promissory note
the drawee and
the payee may be
same person
In case of bills of
exchange the
drawer is
responsible to
make the payment
In case of
promissory note
people shows less
confidence as
compared to the
cheque and bills of
Payment of
promissory note
cannot be stopped

In case of cheque
the drawer and the
payee may be same
person

18 Use

Bills of exchange is
less used than
cheque and more
used than the note

Promissory note is
less used than the
bills of exchange
and cheque

19 Drawer

Drawer of bill is
always a seller

Drawer of the
note is always
buyer

Drawer of the
cheque is always an
account holder

20 drawee

Drawee of bills is
always a buyer

Drawee of note is
always a seller

Drawee of
cheque is
always a bank

11
Printed
form

13 Payee

14 Default

15 Trust

16
Stop
payme
nt
17 Period

Page 67

Payment period is
written on the note

In case of cheque
the bank is
responsible to
make payment
than the drawer is
In case of cheque
the people shows
more confidence as
compared to the
bills of exchange
and promissory
Payment of cheque
can be stopped on
the orders of
depositor
Cheque can be
cashed within the
period of six
months from the
date of issue
Cheque is more
popular than the
bill and note

Q#29
What are the requirements for the
registration of trade union?
Trade union
It is a continuous association of wage earners for the purpose of
maintaining or improving the work conditions of their employment.

Requirement for the registration of trade union

1. Application
For the purpose of registration of trade union it is required to submit
the application for registration. Such application must be signed by
the secretary and president of union.
The application must contain the following information:
The name, occupation and address of the members making application
The name of trade union and the address of its head office
2.

Constitution

Constitution of the trade union contains information about the following

matters
i.

Name & address

The name and complete address of head ofice of trade union

ii.

Object

The object for which the trade union is formed

iii.

Use of funds

All purposes for which the funds of trade union will be used after its registration
iv.

Executive members

The number of persons who will form the executive body of trade union
must also be written in constitution
v.

Benefits to members

All those conditions according to which a member is entitled to benefit

must also be written in constitution

Page 68

vi.

Fines to members

All those conditions under which a member will be fined and his
membership will be cancelled must be written in constitution.
vii.

List of members

List of members of trade union must be provided with the application.

viii. Safety of funds
A constitution should provide the gurantee for the safe custody of funds.
ix.

Audit

The constitution should provide the manners of audit of accounts

x.

Dissolution

Circumstance under which the trade union will be dissolved must be written in
constitution.
xi.

Alteration

The procedure by which the alteration in constitution is made must be given.

xii.

Meetings

The procedures of meetings of the executive body and general

body must be given in constitution.
xiii. Procedure of no confidence
The procedure of expressing no confidence in any officer must be given in
constitution.
3. Issuance of certificate
If the registrar is satisfied with the information provided by the trade
union, he issues a certificate of registration within 15 days. Now the
trade union is registered.

Page 69

Q# 29 (b) What are the circumstances

under which the registration of trade
union is cancelled?
1. Act against ordinance
If the trade union does any act against the ordinance, the labor
court may cancel the registration of trade union.

2. Act against constitution

If the trade union does any act which against its own constitution,
the labour court can cancel the registration of trade union.
3. Disqualification of an oficer
The registration may also be cancelled if the trade union has
appointed an officer who is disqualified to be an officer by the court.
4. Cancellation by registrar
The Registrar cancels the registration of trade union if it has been dissolved
itself.

Page 70

Q#30
What are the powers and functions of national
industrial relation commission?
What are the powers and functions of registrar?
1. Registration of trade union
The main function of trade union is to register trade union and to issue
the certificate of registration.
2. Appointment of collective bargaining agent
The registrar can appoint any officer as collective bargaining agent.
He himself decides which trade union is entitled to be as collective
bargaining agent.
3. Inspection of accounts
The registrar has the powers to inspect the books of accounts of trade union at
any time.
He can authorize his subordinates to do this work.
4. Complaints to the labor court
Registrar can submit complaints to the labor court for the cancellation of
registration. if the trade union does any act against the ordinance and
constitution.
5. Cancellation of registration
Commission has powers to cancel the registration of trade union if
the trade union is dissolved itself.
6. Dealing with the unfair practices
The commission has powers to take action against the unfair practices
of labour. He can proceed directly with the case and may refer to the
court.
7. Power to punish
The commission has the powers to punish any person who have not
obeyed the orders of commission or he is going against the orders or
directions of trade union.
8. Promotion of trade unions
Another major function of the commission is to promote the formation
of trade union at national level

Page 71