Contract Act, 1872

The Contract Act, 1872 is Pakistan's foundational general law of contract, and its table of contents shows how comprehensively it covers the life of an agreement from formation to breach. Chapter I (Sections 3-9) deals with how a proposal is communicated, accepted, or revoked. Chapter II (Sections 10-30C) defines what actually makes an agreement a binding contract: Section 10 states the basic requirement, Section 11 addresses who is competent to contract, and Sections 13-19 define "consent," "free consent," "coercion," "undue influence," "fraud," and "misrepresentation," along with the effect of their absence on an agreement's validity. Sections 24-30 list categories of void agreements, including agreements without lawful consideration, agreements restraining marriage or trade, agreements restraining legal proceedings, agreements too uncertain to enforce, and wagering agreements.

Chapter III (Sections 31-36) covers contingent contracts -- agreements that depend on an uncertain future event. Chapter IV (Sections 37-67) is the largest section, governing performance: who must perform a promise, what happens when one party refuses to perform, how joint promisors and joint promisees are treated, timing and place of performance, and the order of performance for reciprocal promises. Sections 73-75 set out the consequences of breach, including compensation for loss caused by breach and the effect of a penalty clause in the contract.

Notably, Chapter VII (Sections 76-123), which originally dealt with sale of goods, has been repealed -- that subject is now governed separately by the Sale of Goods Act, 1930.

Chapter VIII (Sections 124-147) covers indemnity and guarantee, including the surety's liability, what a "continuing guarantee" is, and the various ways a surety can be discharged from liability (such as when the creditor gives time to the principal debtor or varies the contract's terms without the surety's consent). Chapter IX (Sections 148-181) covers bailment -- the duties of a bailor and bailee -- and pledges (pawnor/pawnee rights, including the pawnee's right to retain goods and what happens on default).

Chapter X (Sections 182-238) governs the law of agency: how an agent is appointed, the extent of an agent's authority, sub-agents, and the liability of principals and agents to third parties. For example, Sections 234-238, quoted in the extract, address who can be sued when a person contracts through an agent, the liability of a person falsely claiming to be an agent, and how a principal can become bound by an agent's unauthorized acts if the principal's own conduct led a third party to reasonably believe the agent was authorized.

This is an 1872 statute that has been amended and partially repealed multiple times (the extract notes repeals connected to the Partnership Act, 1932 and the Repealing and Amending Act, 1914), so anyone relying on a specific provision should confirm it against the current official text.