1
Core Concept — From Proposal to Contract
🤝The law governing contracts in Pakistan is the Contract Act, 1872 S. 1 — applicable since 1 September 1872. Despite its age and minimal amendments, it remains the principal legal framework for contracts in Pakistan.
Proposal+Acceptance=Promise
Promise(s)+Consideration=Agreement
Agreement+Enforceability by law=CONTRACT
Golden rule: Every contract is an agreement, but every agreement is not a contract. An agreement is enforceable only when it creates a legal obligation (not a social or moral one).
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Key Definitions (Section 2)
📖Proposal / Offer S. 2(a)
When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence.Adeel offers to buy Babar's bike for Rs. 50,000.Acceptance & Promise S. 2(b)
When the person to whom the proposal is made signifies his assent, the proposal is accepted. A proposal, when accepted, becomes a promise.Promisor & Promisee S. 2(c)
Person making the proposal = Promisor (offeror). Person accepting = Promisee (offeree).Agreement S. 2(e)
Every promise and every set of promises forming the consideration for each other.Adeel's promise to pay Rs. 50,000 is consideration for Babar's promise to sell the computer, and vice versa.Contract S. 2(h)
An agreement enforceable by law.Express & Implied promises S. 9
Express: proposal/acceptance made in words (spoken or written).Implied: made otherwise than in words — inferred from conduct or circumstances.Shoe shiner polishes Sajid's shoes and Sajid allows it → implied contract.
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Comparison Blocks
🆚| Basis | Social / Domestic Agreement | Commercial / Business Agreement |
|---|---|---|
| Presumption | Parties do not intend to create legal relations | Parties intend to create legal relations, unless otherwise agreed |
| On breach | Cannot be enforced in court (dinner invitation example) | Action for breach can be enforced, if all essentials of a valid contract exist |
| Basis | Offer (Proposal) | Invitation to Offer |
|---|---|---|
| Intention | Willingness to be bound, to obtain the other's assent | Only circulates information of readiness to deal |
| On acceptance | Becomes a promise | Does not amount to a promise on "acceptance" |
| Examples | Bid at auction; customer selecting goods in a self-service store; advertisement of reward for finding a lost dog | Goods displayed for auction; goods displayed in a departmental store; asking for/giving information (e.g. "highest price offered so far") |
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Legal Rules on a Valid Offer
📜🙅
A person cannot make an offer to himself — at least two persons are needed.
A person cannot make an offer to himself — at least two persons are needed.
🎯
Offer must be certain and definite."Will buy another horse if first proves lucky" → vague, unenforceable.
Offer must be certain and definite."Will buy another horse if first proves lucky" → vague, unenforceable.
📌
Offer may be conditional; special terms must be specifically communicated.
Offer may be conditional; special terms must be specifically communicated.
⚖️
An offer has no legal consequence until it is accepted.
An offer has no legal consequence until it is accepted.
Communication of proposal S. 3
By any act or omission of the proposer by which he intends to communicate it or which has that effect — words spoken, written, or conduct.Communication complete S. 4
When it comes to the knowledge of the person to whom it is made.Offer by letter is complete when Babar receives the letter.5
Revocation / Termination of a Proposal
✂️Time limit S. 5: A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer (i.e. before the acceptance is posted), but not afterwards.
Modes of revocation S. 6
- Notice of revocation communicated by the proposer.
- Lapse of prescribed time, or if none, a reasonable time, without communication of acceptance.Shares applied in June, allotted in November → offer lapsed.
- Failure of acceptor to fulfil a condition precedent to acceptance.
- Death or insanity of the proposer — only if it comes to the acceptor's knowledge before acceptance.
Additional ways an offer ends
- Rejection / non-acceptance by offeree (even before the offer period expires)
- Counter offer — an offer by offeree in response; it rejects the original offer
- Offer once accepted becomes a contract — cannot be revoked
Death known ✖
Zain dies 18 Jan; Dawood accepts 20 Jan knowing of death → no contract.Death unknown ✔
Dawood accepts in ignorance of death → contract; legal representatives liable.Counter-offer case: Wajid offers farm for Rs. 1,000 → Hamid offers Rs. 950 (rejected) → Hamid later offers Rs. 1,000 → no contract; the original offer was already rejected.
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Acceptance — Conditions & Rules
✅Valid acceptance S. 7
- Must be absolute and unqualified (unconditional); and
- Expressed in the manner prescribed in the proposal; or
- If no manner prescribed, in some usual and reasonable manner.
Additional essentials
- Offeree must be aware of the proposal at the time of acceptance
- Given before the offer lapses or is withdrawn
- Cannot accept an offer already rejected or terminated (e.g. a later law banning sale)
Silence ≠ Acceptance
Acceptance cannot be by negative confirmation ("if no reply in 5 days, deemed accepted"). Silence is not acceptance.Communication of acceptance S. 3: by any act or omission intended to communicate it.🧭 Acceptance NOT in the prescribed manner — Roadmap
Acceptance made in a manner other than prescribed
➜Proposer may, within a reasonable time after it is communicated, insist on the prescribed manner
➜Insists & not complied → No contract
ORFails to insist → deemed to accept the acceptance
Acceptance by performance S. 8
Performing the conditions of a proposal, or accepting consideration offered with it, is acceptance.Jameel deposits 10% advance as required → valid acceptance without other communication. Reward offers (lost dog) are accepted by performance.Revocation of acceptance S. 5
Acceptance may be revoked before communication of acceptance is complete as against the acceptor (i.e. before it reaches the proposer), but not afterwards.7
Communication — When Complete? S. 4
📨| Communication of | As against the person making it | As against the person receiving it |
|---|---|---|
| Proposal | Complete when it comes to the knowledge of the person to whom it is made | |
| Acceptance | As against proposer: when put in course of transmission to him, so as to be out of the power of the acceptor (e.g. letter posted) | As against acceptor: when it comes to the knowledge of the proposer |
| Revocation | As against maker: when put in course of transmission, out of his power | As against recipient: when it comes to his knowledge |
📅 Timeline — Adeel offers house to Kashif by letter (Example 40)
1Offer reaches KashifOffer communication complete
24 May — postedAcceptance complete v. Adeel. Adeel can revoke his offer only before this
36 May — receivedAcceptance complete v. Kashif. Kashif can revoke acceptance only before this
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Application to Scenarios
🧩Revocation crosses acceptance
Saleem's offer reaches Ghazi 5 Sep; Saleem posts revocation 5 Sep (reaches 7 Sep); Ghazi posts acceptance 6 Sep.➜ Revocation reached Ghazi after he posted acceptance → binding contract.
Qualified acceptance
Car offered for Rs. 400,000; buyer sends Rs. 150,000 with balance in instalments ➜ counter offer, no contract (unless seller accepts it).Request for information
"What's the highest price offered?" → "Rs. 35m" → "I agree to buy at Rs. 36m" ➜ the last letter is only an offer; not accepted → seller may sell to another.Social-media discount post
Post = invitation; customer's order = offer; seller quoting higher price = no acceptance ➜ customer cannot compel sale.Implied acceptance by conduct
Painter mistakenly paints Jamal's quarters; Jamal sees and does not stop him ➜ implied acceptance, charges recoverable.Wrong mode, no objection
Acceptance by email instead of posted letter; proposer reads it and does not insist ➜ deemed accepted; cannot refuse.9
Common Exam Traps
⚠️Acceptance by post is complete against the proposer on the date of posting — not date of receipt.
Selecting goods & handing them at the counter = making an offer, not acceptance.
Proposal may be revoked before acceptance is complete as against the PROPOSER — acceptor / offeree / promisee.
Acceptance in wrong mode is automatically void → valid unless proposer insists within reasonable time.
Death of proposer revokes the offer only if acceptor knew before accepting; otherwise legal representatives are bound.
Reward offer: finder ignorant of the offer cannot claim; contract forms on performance (finding/returning), not on payment.
"If you don't reply, it is accepted" — implied acceptance → silence is NOT acceptance.
Offer made to FA accepted by FA's manager in his private capacity → acceptance not effective; only the offeree can accept.
An offer once rejected can later be accepted → cannot; a fresh offer is required.
"Will sell at a very favourable price" — lacks essential element of an offer (not definite).
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Quick Revision Box
⚡1872Contract Act (in force 1 Sep 1872)
4 + 2S. 6 modes of revocation + rejection & counter offer
3S. 7 conditions of valid acceptance
S. 4Posting = complete v. proposer; receipt = v. acceptor
- S. 2(a) Proposal · 2(b) Acceptance/Promise · 2(c) Promisor/Promisee
- S. 2(e) Agreement · 2(h) Contract · S. 9 Express/Implied
- S. 3 Communication by act/omission · S. 4 When complete
- S. 5 Revocation of proposal & acceptance — timing
- S. 6 Modes of revocation · S. 7 Valid acceptance
- S. 8 Acceptance by performing conditions / receiving consideration
One-line memory: Offer → knowledge · Acceptance → posting (v. proposer) / receipt (v. acceptor) · Offer revocable till acceptance posted · Acceptance revocable till it reaches.
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