An agreement creating obligations enforceable by law, called Contract. The basic elements of a contract are mutual consent, consideration, capacity, and legality. Contracts are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Contract in Pakistan is contained in the Contract Act 1872. The Act defines “contract” as an agreement enforceable by law. The following ingredients are necessary in a valid contract.
These agreements may or may not be enforceable, but which the parties think is enforceable. The agreements between Employer and Employee are enforceable but the remedy available for Employee after termination from his service is not Reinstatement in service but the claim for Damages caused by illegal termination.
There are six essential elements for a contract to be valid (enforceable by law). The first three, considered here together, relate to the agreement itself; the other three relate to the parties making the contract:
• Offer, Acceptance, and Mutual Consent: Every contract must include a specific offer and acceptance against that specific offer. Both parties must consent of their free will. Neither, party can be coerced or forced to sign the contract, and both parties must agree to the same terms. Implied in these three conditions is intent of the parties to create a binding agreement. If one or both parties are not serious, there’s no contract.
• Consideration: There must be something of value exchanged between the parties. The thing of value may be money or services, but both parties must give something (otherwise, it is a gift, not a contract).
• Competence: Both parties must be of “sound mind” to comprehend the seriousness of the situation and understand what the requirement. This definition requires that neither party be a minor, both must be sober neither can be mentally deficient. If one party is not competent the contract is not valid and the non-competent party can disavow (ignore) the contract.
• Legal Purpose: The contract must be for a legal purpose. It cannot be for something illegal, like a selling drugs etc.
When can take a Contract to Court?
Most contracts are completed to the satisfaction of both parties. You would take a contract to court when one party has ‘breached’ the contract, or failed to fulfill contractual obligations.
Remedies for breach of contract:
The principal remedies for breach of contract are:
b. Specific performance of the contract.
c. Injunction (Temporary and Permanent).
The Law applicable for the above are governed by the provisions of Specific Relief Act and Code of Civil Procedure.
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