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CAF 04 Business Laws by M. Asif [Spring 2024] Premium Course > Chapter 4 Free Consent and Void Agreements > Flashcards

Chapter 4 Free Consent and Void Agreements Flashcards

1
Q

Define “Consent”.

[Chapter 4]

A

Two persons are said to consent when they agree upon the same thing in the same sense. This is called “consensus-ad-idem”.

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2
Q

Define “Consent”.

[Chapter 4]

A

Two persons are said to consent when they agree upon the same thing in the same sense. This is called “consensus-ad-idem”.

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3
Q

Define “Free Consent”.

[Chapter 4]

A

Consent is said to be free when it is not caused by (a) coercion, or (b) undue influence, or (c) fraud, or (d) misrepresentation, or (e) mistake”.

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4
Q

Define “Coercion”.

[Chapter 4]

A

“Coercion” is the committing (or threatening to commit) any act forbidden by the Pakistan Penal Code or unlawful detaining (or threatening to detain) any property, with the intention of causing any person to enter into an agreement.

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5
Q

**Who has burden of proof in case of Coercion. **

[Chapter 4]

A

Party rescinding the contract will have to prove that there was coercion at time of contract.

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6
Q

What are the effects of Coercion.

[Chapter 4]

A
  1. The contract is voidable at the option of aggrieved party.
  2. If contract is rescinded, parties will restitute (i.e. restore) benefits received, if any.
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7
Q

Define Undue Influence.

[Chapter 4]

A

A contract is caused by undue influence if:
* one party is in a position to dominate the will of other because of close relation between them, and
* dominant party uses that position to obtain an unfair advantage.

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8
Q

Give some examples of Relations in which Undue Influence is assumed.

[Chapter 4]

A
  1. Real or Apparent Authority (e.g. Employer and Employee, Police officer and Accused, Tax officer and Tax payer).
  2. Fiduciary Relationship (e.g. Parent and Child, Guardian and Minor, Advocate and Client, Trustee and Beneficiary, Fiance’ and fiance’e)
  3. Mental capacity is affected (e.g. Doctor and Patient, Medical Attendant and Patient, a Family Member and an Enfeebled Old Man)
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9
Q

Give some examples of Relations in which Undue Influence is assumed.

[Chapter 4]

A
  1. Real or Apparent Authority (e.g. Employer and Employee, Police officer and Accused, Tax officer and Tax payer).
  2. Fiduciary Relationship (e.g. Parent and Child, Guardian and Minor, Advocate and Client, Trustee and Beneficiary, Fiance’ and fiance’e)
  3. Mental capacity is affected (e.g. Doctor and Patient, Medical Attendant and Patient, a Family Member and an Enfeebled Old Man)
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10
Q

Give some examples of Relations in which Undue Influence is NOT assumed.

[Chapter 4]

A
  1. Husband and Wife
  2. Creditor and Debtor
  3. Landlord and Tenant
  4. Principal and Agent
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11
Q

What is the effect on contract if Undue Influence is exercised.

[Chapter 4]

A
  1. The contract is voidable at the option of aggrieved party.
  2. However, Court has discretion to set aside such contract either absolutely or on such terms and conditions as it thinks fit.
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12
Q

List down the points of difference between Coercion and Undue Influence.

[Chapter 4]

A
  1. Relationship
  2. Consent (obtained by)
  3. Nature of Pressure
  4. By whom
  5. On whom
  6. Burden/Onus of Proof
  7. Criminal liability
  8. Reason
  9. Restoration of benefit
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13
Q

Define “Misrepresentation”.

[Chapter 4]

A

There is a misrepresentation in following cases:
1. A person believes and gives a statement to be true, but which is false.
2. A person obtains an advantage through breach of duty, without an intent to deceive.
3. A party innocently causes other party to make a mistake as to the nature or quality of subject of agreement.

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14
Q

What are the essentials of Misrepresentation.

[Chapter 4]

A
  1. By Party to the contract.
  2. False representation.
  3. Representation as to fact.
  4. Acted upon it.
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15
Q

State the circumstances in which contract caused by Misrepresentation, cannot be rescinded.

[Chapter 4]

A
  1. Aggrieved party had the means of discovering the truth with ordinary diligence;
  2. Aggrieved party did not act on the basis of misrepresentation;
  3. Aggrieved party takes a benefit under the contract after becoming aware of misrepresentation,
  4. An innocent third party acquires interest in the property in good faith for consideration;
  5. Parties cannot be restored to their original position.
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16
Q

Define “Fraud”.

[Chapter 4]

A

“Fraud” includes acts done to make contract with other party by deceiving him. It includes following:
1. False representation.
2. Active concealment.
3. Empty promise.
4. Fitted act.
5. Declared act.

17
Q

Does silence amount to Fraud?

[Chapter 4]

A

Keeping silence is not fraud unless:
* where silence is equivalent to speech, or
* there is a duty/legal obligation to disclose such fact.

18
Q

What are the essentials of Fraud.

[Chapter 4]

A
  1. By Party to the contract.
  2. False representation.
  3. Representation as to fact.
  4. Acted upon it.
  5. Suffered loss.
19
Q

What are the essentials of Fraud.

[Chapter 4]

A
  1. By Party to the contract.
  2. False representation.
  3. Representation as to fact.
  4. Acted upon it.
  5. Suffered loss.
20
Q

State the circumstances in which contract caused by Fraud, cannot be rescinded.

[Chapter 4]

A
  1. If aggrieved party had the means of discovering the truth with ordinary diligence;
  2. If aggrieved party did not act on the basis of fraudulent statement;
  3. If aggrieved party takes a benefit under the contract after becoming aware of fraudulent representation;
  4. If an innocent third party acquires interest in the property in good faith for consideration;
  5. If the parties cannot be restored to their original position.
21
Q

List down the points of difference between Misrepresentation and Fraud.

[Chapter 4]

A
  1. Intention
  2. Remedies
22
Q

What is the effect on Contract in case of Mistake of Fact?

[Chapter 4]

A
  1. In Unilateral Mistake, Contract remains Valid.
  2. In Bilateral Mistake, Contract becomes Void.
23
Q

What is the effect on Contract in case of Mistake of Law?

[Chapter 4]

A
  • In Mistake of Pakistani Law, Contract remains valid.
  • In Mistake of Foreign Law, Effect is same as mistake of Fact (i.e. unilateral is valid, bilateral is void).
24
Q

List down some examples of agreements which are declared VOID by Contract Act.

[Chapter 4]

A
  1. Illegal Agreement.
  2. Impossible Agreements.
  3. Uncertain agreements.
  4. Agreements with persons incompetent to contract.
  5. Agreement made without consideration.
  6. Agreements in restraint of marriage (exception of minor).
  7. Agreements in restraint of trade.
  8. Agreements in restraint of legal proceedings.
  9. Wagering Agreements
25
Q

Agreements in restraint of Trade are void. What are its exceptions?

[Chapter 4]

A

Sale of Goodwill/Business:
Provided, such restriction:
* relate to a similar business.
* for such period till buyer carries on same business.
* for specified local limits.
* local limits must be reasonable.
*
Agreements between partners:
1. Existing partners may agree that they will not carry on any other business.
2. An outgoing partner may agree that he will not carry similar business for specified period and for specified local limits. *[Specified period and local limits must be reasonable]
*

26
Q

Agreements in restraint of Legal Proceedings are void. What are its exceptions?

[Chapter 4]

A
  1. Parties can agree to refer dispute between them to Arbitration.
  2. Parties can make an out-of-court settlement, and may submit arbitration agreement to court.
  3. Parties can agree that they will not file an appeal in upper court of law.
  4. Parties can choose any one court of law (between equally competent courts) to file suit.
27
Q

Give some examples of agreements which are Wagering Agreements, and some examples which are NOT Wagering Agreement.

[Chapter 4]

A

Examples of Wagering Agreements:
1. Bet on match.
2. Bet on rain.
3. Gambling.
4. Lottery.

Examples of Agreements which are NOT Wagering Agreements.
1. Prize competitions which are games of skill, e.g. picture puzzles, athletic competitions.
2. Agreement to pay winner of a horse race.

28
Q

What is the effect of Illegal/Wagering Agreements.

[Chapter 4]

A
  1. Illegal agreements are void (whether becoming illegal initially or subsequently).
  2. Agreements collateral on void agreements, also become void (if made knowingly).

CAF 04 Business Laws by M. Asif [Spring 2024] Premium Course (9 decks)

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