Case Studies-Types of Business Contract

Business Law-Types of Business Contract Presentation

1. Semester Project Case Studies Types of Contract

2. Name of Student: Muhammad Asif Khan Student ID: MB-2-05-51271 Program: MBA- Regular Campus: PAF-KIET (City Campus) Course Name: Business & Labour Laws Course ID: 71416 Instructor: Javed Akhtar Semester: Summer 2016

3. AN INTRO TO LEGAL SYSTEM The law does not operate in a vacuum. It is part of system commonly referred to as the ‘legal system’. The term can be defined broadly as including the components set out below:

4. AN INTRO TO LEGAL SYSTEM Institutions Laws People Parliament Courts Government Departments Correctional Institutions Statue Law Common Law Equity Delegated Legislation Members of Parliament Judges Magistrates Barristers Solicitors Court Officials Correctional Service Officers

5. BUSINESS LAW Definition of Business Today's business means: “Exchange of goods, services or money for mutual benefit or profit.” Definition of Law L aw can be defined as: “A standard or rule established by the society to oversee the behavior of its members".

6. BUSINESS LAW Definition Business Law The business law can be defined as:   “Business Law is the body of law that governs business and commercial transactions.” Business law lays down the rights, duties and obligations owed by parties to a contract. It will define the areas of law relevant to the world of business, and the rights of people who engaged with in it.

7. BUSINESS LAW Type of Business Contracts Contracts of Consumer Credit Contracts for sale of Goods and Services Contracts of agency Employment Contracts Contracts of Lease Contracts to purchase goods Contracts for mortgage of land Contracts to insure property

8. BUSINESS LAW Purposes of Business Law Business Laws Exist To Create Reliable Standards For Companies To Follow. Business Laws Create Consistent, Predictable Standards. Some Most Important Purpose Are: Uniform Commercial Code Uniformity Enforcement Predictability Enforcement Provide Enforcement That Allows Contractual Relationships To Stay Intact.

9. BUSINESS LAW Purposes of Business Law Predictability Allow People In Business To Enter Into Multiple Transactions With Certain Protection. Uniformity When Business Owners Rely On The Same Laws To Conduct Business, They Need To Know That State Agencies And Courts Apply The Laws In A Uniform Fashion. Uniform Commercial Code Extensive set of Law Governing Commercial Transactions between Businesses.

10. BUSINESS LAW Sources of Business Law Common Law: Is known when a law is created through the court decisions by judges. It’s mostly based on tradition, usage and court rulings. Statutory Law: A law created by parliament, constitution, law commission or agreement is called statue. Most laws created today are statues. A statutory law is made up by various legislative endorsed bodies Administrative Law: Laws troubled with the rules and tasks of the executive branch of the government, its organizations, their interrelations with each other, citizens and the non-governmental entities.

11. BUSINESS LAW Business Being Affected By Different Laws Several and different laws control the actions of all the businesses and each person involved in the business, from the manager the employee and even the owner. Some major business law categories are as follows: The Law of Tort Intentional Torts Negligence Torts

12. BUSINESS LAW Business Being Affected By Different Laws The Law of Contract Law of Sales The Law of Agency The Law of Property The Law of Bankruptcy The Law of Negotiable Instruments

13. BUSINESS LAW How Business Laws Effect Business Operations The Legal system of a country provides a progressive legal framework to the organization to operate their business in manner that it will be mutually beneficial for the society and their ownself.

14. BUSINESS LAW Business & Labour Laws Prevailing In Pakistan Following are some prominent business laws exist in Pakistan: Bill of lading Act 1856 Contract Act 1872 Indemnity & Guarantee Pledge and Bailment Agency Negotiable Instruments Act 1881 Carriage of Goods Trust Act 1882 Carriage of Goods By Sea Act 1925 Sales of Goods Act 1930 Partnership Act 1932

15. BUSINESS LAW Business & Labour Laws Prevailing In Pakistan Companies Ordinance 1984 Insurance Law Labour Laws Workmen Compensation Act 1923 Factories Act 1934 Payment of Wages Act 1936 Industrial & Commercial Establishment (Standing Order) Ordinance 1968 Social Security Act 1968 Employees’ Old Age Benefit Act Industrial Relations Act 2008

16. BUSINESS LAW Law of Contract 1872 The law relating to contracts in Pakistan is adopted from the law existing during the British era. The contract law of 1872 has been enforced in Pakistan with some necessary amendments. It extends to the whole of Pakistan and deals with the following: General Principles governing all types of contracts, including: Contracts of indemnity Contact of Guarantee Contract of Bailment Contract of Pledge Contract of Agency

17. BUSINESS LAW Definition of Contract A contact is an agreement between two more persons to carry out a specified work or to accomplish a task for monetary or non monetary benefits. We can classify the agreements into following three categories: Social Agreements Domestic Agreements Business Agreements

18. BUSINESS LAW Definition of Contract According to Section 2(h): “An agreement enforceable by law is a contract.” This simple definition consists of following elements: 1) An Agreement 2) The agreement enforceable by law

19. BUSINESS LAW Classification of Contracts: The contracts can be classified in to following broader categories: According to Enforceability / Validity According to Formation According to Performance According to Parties

20. BUSINESS LAW According to Enforceability / Validity In this category the contracts can be divided in to following: Valid Contract Void Contract Voidable Contract Unenforceable According to Formation According to formation a contract has following three kinds: Express Contract Implied Contract Quasi Contract

21. BUSINESS LAW According to Performance According to performance a contract is of the following two kinds: Executed Contract Executory Contract According to Parties According to parties a contract may be of the following two kinds: Unilateral Contract Bilateral Contract

22. BUSINESS LAW Further Classification of Contract Contract can also be classified into following: Formal Contracts: Contract of Record Contract of Under Seals(Deeds) Simple Contracts:

23. BUSINESS LAW C ase Studies of Types of Contracts Following are the four selective case studies which help to understand the contract and its types.

24. BUSINESS LAW Case Study 1 Mr. S purchased a Triumph ‘Spitfire’ sports car from Mr. T who claimed that the car was part of a limited series released in the mid-1960s. At a Triumph car show Mr. S is advised by a number of experts that the Triumph is a later model with some of the trimmings associated with the earlier model. Mr. S wishes to know whether the elements necessary to give rise to a valid contract are present. Advise Mr. S on this point and outline his potential options.

25. BUSINESS LAW Case Study 1 Facts: Mr. S has purchased a Sports Car ‘Spitfire’ of Triumph, from Mr. T. The special characteristic of this sale contract was the unique quality of the Car that it belongs to the limited edition of the mid-1960, released by the Triumph. In a Triumph car show it has been revealed to Mr. S that the Car does not belong to the mid-1960’s special edition released by Triumph. This Car is the later version the same series.

26. BUSINESS LAW Case Study 1 Common Law: General rules that applicable to every kind of sales and purchase activity that seller will liable disclose all necessary facts that will help the buyer to make effective decision for the purchase of good. Law: The Law of Contract 1872 defines the parameters that make an agreement valid. According to act a contract is voidable when one of its essential is missing in the contract. From the above facts we can extract two assumptions:

27. BUSINESS LAW Law: Mr. T has misrepresent the facts, or Mr. T has an intention to make a fraud The section 14 of the Contract Act 1872 emphasize that a consent will be free if it has not been affected one of following elements: Coercion Undue influence Fraud Misrepresentation Mistake

28. BUSINESS LAW Conclusion: The following remedies available to the Mr. S: Mr. S can avoid the contract and can contact with the court for the revocation of the contract. If fraud or misrepresentation is proved Mr. S will be eligible to recover his amount from Mr. T paid against the purchase of car. Mr. S can sue for damages and recover the access amount paid for the unique characteristics of the car. Mr. S can plea the court for the specific performance of the contract and Mr. T will liable provide him the prescribed car .

29. BUSINESS LAW Case Study 2 Mr. G has agreed verbally to pay Rs. 15,000/= for Mr. T’s collection of Literature. Before the matter can proceed any further Mr. T is involved in a serious car accident that results in him entering a coma. It is uncertain whether Mr. T will regain consciousness. Worried about Mr. T but still eager to purchase the Literature, Mr. G consults you to ascertain what essential elements required to give rise to valid contract. Advise Mr. G on this point and explain what facts may prevent the existence of a valid contract.

30. BUSINESS LAW Case Study 2 Facts: Mr. G was interested to purchase Literature from Mr. T amounted Rs. 15,000/=. There is verbal agreement between them. Before the performance of the contract Mr. T has got an accident and went into the coma. There is lesser chance that Mr. T will regain his state of consciousness.

31. BUSINESS LAW Case Study 2 Common Law: A general rule is that, when an agreement has been formed with the mutual consents of the parties and the process of formal offer and acceptance has been performed whether verbally or in written, the legal heirs or representative of the parties will liable to perform the contract. Law: Section 2(a) and Section (b) of the Contract Act 1872 has defined offer and acceptance. When the offer and acceptance has been taken place in defined manner between the parties then, it will become a valid contract.

32. BUSINESS LAW Case Study 2 Conclusion: Mr. G can ask the legal heirs or representatives of the Mr. T for the performance of the contract.

33. BUSINESS LAW Case Study 3   Mr. B owns a large yatch, which he moors at Island. Upon turning eighty years of age, he reluctantly decides to sell his beloved possession. After an existence period of advertising Mr. B finds a willing purchaser in his home town, Mr. A. At the time of contract, unbeknown to either of them, the yatch had been wrecked. The yatch was wrecked by storm the day before the agreement was made. What is the status of this contract?

34. BUSINESS LAW Case Study 3   Facts: Mr. B owns a yatch which moors at Island. He had decided to sell out his collection. He has made an advertisement for the same and got a tentative buyer Mr. A for the same. A storm has destructed the yatch the day before they are going to make a contract of sales. Common Law: A general rule is that if the subject matter is destructed due to the reason beyond the control of the parties then the sales agreement stands enforceable.

35. BUSINESS LAW Case Study 3   Law: Section (56) of the Contract Act 1872, explains that a contract will become void when the subject matter has been destructed or after the formation of the contract without the fault of the promisor or promisee. Conclusion: The destruction of the yatch, due to the storm, has discharged Mr. B and Mr. A from their obligations under the contract.

36. BUSINESS LAW Case Study 4   Mr. T owns two motorbikes, a Suzuki and a BMW. He agrees to sell his BMW to Mr. C for Rs. 200,000/=. Mr. C thinks that he is buying the Suzuki. Does a contract exist between the parties?

37. BUSINESS LAW Case Study 4   Facts : Mr. T owns two motorbikes of two different brands Suzuki and BMW. Mr. C agrees to purchase one of his bikes. Mr. T is intended to sale his BMW to Mr. C. Mr. C has an intention to purchase Suzuki.

38. BUSINESS LAW Case Study 4     Common Law: The general rules say that it is duty of the seller to clearly define the specification of the product (s) and its characteristics to the buyer and buyer has the responsibility to make all necessary investigation about the product that will help him to make buying decision and to avoid any misconception regarding the product (s).

39. BUSINESS LAW Case Study 4   Law: Section (14) of the Contract Act 1872, defines the free consent which make the contract valid. If a contract is free from of the following elements: Coercion Undue influence Fraud Misrepresentation Mistake

40. BUSINESS LAW Case Study 4   Law: Law further explains that if parties give their consent under any error, there is no agreement. It means that there should be consensus ad-idem. Mistake can be divided into: Mistake of Fact Mistake by law Mistake of fact further divided into following: Bilateral Mistake Unilateral Mistake

41. BUSINESS LAW Case Study 4   Law: According to Section (22). “A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.” Conclusion: The contract between Mr. T and Mr. C is a valid contract if it is the negligence of the Mr. C to understand the subject matter. Mr. C can avoid the contract or can sue for the cancellation of the contract if he proves the fraud or misrepresentation at the end of Mr. T.

42. Questions and Answers

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