ZAFAR & ASSOCIATES - LLP | Contract Law Services - Pakistan
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Contract Law Practice in Pakistan
Contract law is a body of law which encompasses an agreement between private parties creating mutual obligations enforceable by law, basic elements required for the legally enforceable contract are mutual assent, expressed by a valid offer and acceptance, adequate consideration, capacity and legality, an agreement naturally involves the exchange of goods, services, money, or promises of any of those.
In the sophisticated and competitive world of contracts, businesses turn to ZA-LLP as legal advisers who do more than structure bids, negotiate agreements, ensure compliance with rules and regulations and resolve disputes. Our government, commercial and international contracts practice consists of attorneys who pair deep experience in contract law with in-depth, firsthand knowledge of the way business works.
Pakistan, having been a former British-colony, derives much of its legal principles from the British legal system. The contract law in Pakistan is also derived from the English common law principles. In Pakistan, the Contract Act 1872 is the primary statute dealing with the formation, termination and regulation of contracts. Some of the salient features of contract law shall be explored here.
What is contract law?
The law of contract defines the circumstances when a promise or promises are enforceable at law. However, not all promises are enforced by courts. For a promise to be legally enforceable, it must meet four essential and cumulative requirements:
There must be an agreement, constituted by a corresponding offer and acceptance;
The agreement must be supported by consideration, that is the mutual exchange of something which the law recognises as having value;
There must be an intention to create legal relations; and
The parties making the contract must have legal capacity to enter into a contract.
If a promise has the above-mentioned features, it would be classed a legally enforceable contract. Each of these elements of contractual formation shall be looked at in turn referring to the Contract Act, 1872.
What is an agreement?
An agreement between parties is reached when one party makes an offer that is irrevocably accepted by the other party. Therefore, for acceptance, two elements have to established:
The Offer
Prof. Treitel defines an offer as an expression of willingness to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed. The person making the offer is called the offeror. An offer exists whenever the objective inference from the offeror’s words or conduct is such that they intend to commit themselves legally to the terms they propose. For a communication to be an offer, it must be clear, precise and must not require further clarifications, negotiations or discussions. For a statement to be a valid offer, it must be communicated to the offeree clearly. Thereafter, a party cannot be bound by an offer of which they were unaware.
If a communication is not in fact clear, precise and one that requires further clarifications and negotiations, it will be considered an invitation to treat, but not an offer. An invitation to treat is an indication of a willingness of a party to make an offer or to commence negotiations that may eventually lead to an offer.
An offer can be revoked by a number of ways:
Express rejection: the offeree may reject the offer;
Revocation: The offeror may withdraw the offer before the offeree can accept it, provided that revocation takes place at a reasonable time;
Lapse of time: an offer that must be accepted within a time frame will cease to exist beyond the time frame;
Failure to comply with a condition: An offer may also terminate if the parties to it had agreed to meet certain conditions and then failed to do so; and
Death of one of the parties.
The Acceptance
An acceptance is a final and unqualified expression of assent to the terms of an offer (G.H. Treitel). An acceptance must correspond exactly to the offer made. For this reason, it is often said that the acceptance must ‘mirror’ the offer in order to be valid.
If however, an acceptance does not correspond exactly to the offer made and instead introduces a new set of terms, it will be classed a counter offer, not an acceptance. This new ‘counter-offer’ can then be accepted or rejected by the other party.
An acceptance must be clearly communicated to the offeror, and silence may not amount to acceptance. When communicating acceptance, the offeree must use the method prescribed by the offeror.
What is consideration?
As per the Contract Act 1872, consideration is when: “at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise” ~ Sec.2(d).
What is an intention to create legal relations?
It is essential that the contracting parties have an intention to create legal relations. this means that the parties intend that legal consequences are attached to their agreement. These legal consequences mean that the agreement will be binding with recourse to a court or arbitrator for its enforceability.
What is legal capacity/competency to contract?
The Contract Act 1872 specifies a person’s competency to make a contract. As per the Act, a person is said to have capacity to enter into a contract if:
The person is not a minor;
He / she is of sound mind while making a contract; and
The person is not personally disqualified by law to enter into a contract.
Remedies for Breach of Contract
When a party breaches a term the contract (the breaching party), it is obliged by law to compensate the aggrieved party who has suffered from such breach. Under contract law, a range of remedies are available to the aggrieved party to choose from:
Damages
Damages are a financial remedy that aims to compensate the injured party for the consequences of the breach of contract. in general, the principle that guides the award of damages is that the injured party should be put into the position, as far as is possible, that they would have been in if the contract had been carried out. All losses that are reasonably foreseeable by both parties and are a direct result of the breach contract can be recovered.
Specific Performance of the Contract
As per The Specific Relief Act 1877, the aggrieved party can oblige the breaching party to perform the contractual obligation under the direct of a court. However, the availability of the specific performance remedy is limited on the basis of three considerations:
It is available only if damages are not an adequate remedy;
As it is an equitable remedy, it is available at the discretion of the judge; and
It is available only for certain types of contracts.
Injunction
Equity offers the possibility of an injunction by the court prohibiting some form of conduct.
ZA-LLP provides a professional contract drafting, negotiation and advisory service for business. Whether you are looking for a standard form commercial contract for everyday use in your business, or a bespoke contract to cover a particular transaction or relationship, we will be able to provide you with quality documentation at reasonable rates. Each contract we prepare for you will have been carefully drafted to reflect your commercial requirements. We are also skilled contract negotiators, and we are able to get the best for our clients from any contractual negotiation.
We have substantial experience of advising both suppliers and customers on a broad range of commercial contracts across many different sectors and jurisdictions. Our experience includes commercial contracts for services, licensing, development, distribution, marketing, manufacturing, outsourcing, maintenance and support and on-line terms and conditions. Our commercial practice incorporates specialist tax, intellectual property and regulatory expertise to ensure that clients benefit from appropriate structuring advice and are able to protect and exploit their valuable proprietary rights.
Contract Enforcement & Business
A commercial contract refers to a legally binding agreement between parties in which they are obligated to do or not do certain things. Contracts may be written or verbal and drawn up in a formal or informal way. Most businesses create contracts in writing to make the terms of agreement clear, often seeking legal counsel when drawing important contracts. Contracts may encompass all aspects of a business, including hiring, salaries, employees rights protection, leasing and loans. A breach of contract occurs when one of the parties fails to live up to the agreements. In such a case, the law is required to provide a remedy, which in many cases involves the court system enforcing the contract or asking the party to compensate for any damage done by the breach.
Our government, commercial and international contracts practice is in its third decade of successfully representing companies and organizations that contract with federal, provincial, local and international governments and with other private firms. We focus on helping clients maintain their current and long-term competitive positions, by advising them at every step in the bidding and contracting process, in a manner that maximizes their bottom line and industry reputation.
We represent clients in a broad range of industries, from aerospace to munitions, electronics to services, and information technology to manufacturing. Our attorneys have particular experience in the procurement of complex, high-technology supplies and services, as well as commercial sales to government customers. We represent companies in commercial contract transactions with large and small private domestic and international infrastructure projects. Clients include owners, prime and sub-contractors, designer-builders, architects, engineers, and construction managers.
Legal Features of Contract
ZA-LLP has developed a special program to leverage our unparalleled experience, reputation and stability to create a comprehensive single-source solution for businesses like those from our clients. It is a comprehensive, integrated solution providing maximum market access through only one contact, a perfect mix of quality, control, and cost efficiency and a customized package of services, sectors and geographical coverage. Thus our main features are:
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Table: Contract Standardisation
If you are interested in hearing more about our program and the options for international accounts and framework agreements, please contact us.
Choice of Agreements / Contracts
There are many categories and sub-categories of commercial contracts. Examples of the classes of contracts we are able to prepare include:
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Table: Agreement / Contract Choices
Given its business mix, ZA-LLP are very well placed to provide services to an increasing number of employers requiring staff across multiple countries. For international contracts have a dedicated team of specialists in place. The team's role is to specifically enhance the service we provide to our multinational clients, and, if required, act as a single point of contact coordinating fulfillment across multiple ZA-LLP brands.
Our Core Competencies
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