ASSIGNMENT # 1

Q. 1 In what ways an offer can be communicated, accepted and revoked? (20) Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. Agreement consists of an offer by an indication of one person (the "offeror") to another (the "offeree") of the offeror's willingness to enter into a contract on certain terms without further negotiations. A contract is said to come into existence when acceptance of an offer (agreement to the terms in it) has been communicated to the offeror by the offeree and there has been consideration bargained-for induced by promises or a promise and performance. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been weakened by developments in the law of estoppel, misleading conduct, misrepresentation and unjust enrichment. 1 Offer 1.1 Unilateral contract 1.2 Invitations to treat 1.3 Revocation of offer 2 Acceptance 2.1 Test of acceptance 2.2 Rules of acceptance 2.2.1 Communication of acceptance 2.2.2 Correspondence with offer 2.2.3 Battle of the forms 2.2.4 Postal acceptance rule 2.2.5 Knowledge of the offer 2.3 Rejection, death or lapse of time 2.3.1 Death of offeror 2.3.2 Death of offeree 2.4 Counter Offers 3 Formation Offer Treitel defines an offer as "an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed", the "offeree". An offer is a statement of the terms on which the offeror is willing to be bound. It is the present contractual intent to be bound by a contract with definite and certain terms communicated to the offeree. The "expression" referred to in the definition may take different forms, such as a letter, ewspaper, fax, email and even conduct, as long as it communicates the basis on which the offeror is prepared to contract. Whether two parties have an agreement or a valid offer is an issue which is determined by the court using the Objective test. Therefore the "intention" referred to in the definition is objectively judged by the courts. The court emphasised that the important thing is not a party's real intentions but how a reasonable person would view the situation. This is due mainly to common sense as each party would not wish to breach his side of the contract if it would make him or her culpable to damages, it would especially be contrary to the principle of certainty and clarity in commercial contract and the topic of mistake and how it affects the contract. As a minimum requirement the conditions for an offer should include at least the following 4 conditions: Delivery date, price, terms of payment that includes

the date of payment and detail description of the item on offer including a fair description of the condition or type of service. Without one of the minimum requirements of condition an offer of sale is not seen as a legal offer but rather seen as an advertisement. Unilateral contract Unilateral contract is one in which the offeree accepts the offer by performing an act which indicates their agreement with the bargain. This can be something as simple as raising an eyebrow or wearing a certain color t-shirt. It can be contrasted with a bilateral contract, where there is an exchange of promises between two parties. For a unilateral contract to arise, the promise must be made "in return for" the doing of the act. The court distinguished between a unilateral contract and a conditional gift. The case is generally seen to demonstrate the connection between the requirements of offer and acceptance, consideration and intention to create legal relations. Invitations to treat An invitation to treat is not an offer, but an indication of a person's willingness to negotiate a contract. It's a pre-offer communications. An indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat. The words "may be prepared to sell" were held to be a notification of price and therefore not a distinct offer, though in another case concerning the same change of policy underwent a change of political control and stopped the sale of council houses to their tenants, the court held that an agreement was completed by the tenant's signing and returning the agreement to purchase, as the language of the agreement had been sufficiently explicit and the signature on behalf of the council a mere formality to be completed. The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions. The display of goods for sale, whether in a shop window or on the shelves of a self-service store, is ordinarily treated as an invitation to treat and not an offer. The holding of a public auction will also usually be regarded as an invitation to treat. Auctions are, however, a special case generally. The rule is that the bidder is making an offer to buy and the auctioneer accepts this in whatever manner is customary, usually the fall of the hammer. A bidder may withdraw his or her bid at any time before the fall of the hammer, but any bid in any event lapses as an offer on the making of a higher bid, so that if a higher bid is made, then withdrawn before the fall of the hammer, the auctioneer cannot then purport to accept the previous highest bid. If an auction is without reserve then whilst there is no contract of sale between the owner of the goods and the highest bidder (because the placing of goods in the auction is an invitation to treat) there is a collateral contract between the auctioneer and the highest bidder that the auction will be held without reserve (i.e., that the highest bid, however low, will be accepted) Revocation of offer An offeror may revoke an offer before it has been accepted, but the revocation must be communicated to the offeree, although not necessarily by the offeror. If the offer was made to the entire world, the revocation must take a form that is similar to the offer. However, an offer may not be revoked if it has been encapsulated in an option. If the offer is one that leads to a unilateral contract, then unless there was an ancillary contract entered into that guaranteed that the main contract would not be withdrawn, the contract may be revoked at any time. Acceptance Test of acceptance For the Acceptance, the essential requirement is that the parties had each from a subjective perspective engaged in conduct manifesting their assent. Under this meeting of the minds theory of contract, a party could resist a claim of breach by proving that he had not intended to be bound by the agreement, only if it appeared subjectively that he had so intended. This is unsatisfactory, as one party has no way to know another's undisclosed intentions. One party can only act upon what the other party reveals objectively to be his intent. Hence, an actual meeting of the minds is not required. Indeed, it has been argued that the "meeting of the minds" idea is entirely a modern error: 19th century judges
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spoke of "consensus ad idem" which modern teachers have wrongly translated as meeting of minds but actually mean "agreement to the [same] thing" The requirement of an objective perspective is important in cases where a party claims that an offer was not accepted and seeks to take advantage of the performance of the other party. Here, we can apply the test of whether a reasonable bystander (a "fly on the wall") would have perceived that the party has impliedly accepted the offer by conduct. Rules of acceptance Communication of acceptance There are several rules dealing with the communication of acceptance: The acceptance must be communicated: Prior to acceptance, an offer may be withdrawn. An exception exists in the case of unilateral contracts, in which the offeror makes an offer to the world which can be accepted by some act. A classic instance of this is in which an offer was made to pay to anyone who having bought the offeror's product and used it in accordance with the instructions An offer can only be accepted by the offeree, that is, the person to whom the offer is made. An offeree is not usually bound if another person accepts the offer on his behalf without his authorisation, the exceptions to which are found in the law of agency, where an agent may have apparent or ostensible authority, or the usual authority of an agent in the particular market, even if the principal did not realise what the extent of this authority was, and someone on whose behalf an offer has been purportedly accepted it may also ratify the contract within a reasonable time, binding both parties It may be implied from the construction of the contract that the offeror has dispensed with the requirement of communication of acceptance which is generally implied in unilateral contracts If the offer specifies a method of acceptance (such as by post or fax), acceptance must be by a method that is no less effective from the offeror's point of view than the method specified. The exact method prescribed may have to be used in some cases but probably only where the offeror has used very explicit words such as "by registered post, and by that method only". However, acceptance may be inferred from conduct, Correspondence with offer The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without modifications; if you change the offer in any way, this is a counter-offer that kills the original offer. However, a mere request for information is not a counter-offer. It may be possible to draft an enquiry such that it adds to the terms of the contract while keeping the original offer alive. An offeror may revoke an offer before it has been accepted, but the revocation must be communicated to the offeree, although not necessarily by the offeror. If the offer was made to the entire world, the revocation must take a form that is similar to the offer. However, an offer may not be revoked if it has been encapsulated in an option. Battle of the forms Often when two companies deal with each other in the course of business, they will use standard form contracts. Often these terms conflict (e.g. both parties include a liability waiver in their form) and yet offer and acceptance are achieved forming a binding contract. The battle of the forms refers to the resulting legal dispute of these circumstances, wherein both parties recognize that an enforceable contract exists, however they are divided as to whose terms govern that contract. Under law, the question was raised as to which of the standard form contracts prevailed in the transaction. The view that the documents were to be considered as a whole and the important factor was finding the decisive document; on the other hand is traditional offer-acceptance analysis, and considered that the last counter-offer prior to the beginning of performance voided all preceding offers.

The absence of any additional counter-offer or refusal by the other party is understood as an implied acceptance. This principle is referred to as the last shot rule. Under the Uniform Commercial Code a definite expression of acceptance or a written confirmation of an informal agreement may constitute a valid acceptance even if it states terms additional to or different from the offer or informal agreement. The additional or different terms are treated as proposals for addition into the contract under. Between merchants, such terms become part of the contract unless: a) The offer expressly limits acceptance to the terms of the offer, b) Material alteration of the contract results, c) Notification of objection to the additional/different terms are given in a reasonable time after notice of them is received. Material is defined as anything that may cause undue hardship/surprise, or is a significant element of the contract. If there is no contract under conduct by the parties that recognize there is a contract may be sufficient to establish a contract. The terms for this contract include only those that the parties agree on and the rest via gap fillers. Postal acceptance rule As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted. This rule only applies when, impliedly or explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication. The relevance of this early 19th century rule to modern conditions, when many quicker means of communication are available has been questioned, but the rule remains for the time being. Knowledge of the offer There is a requirement that an acceptance is made in reliance or pursuance of an offer. Rejection, death or lapse of time An offer can be terminated on the grounds of rejection on the part of the offeree that is if the offeree does not accept the terms of the offer. Also, upon making an offer, an offeror may include as a condition to the contract the duration in which the offer will be available. If the offeree fails to accept the offer within this specific period, then the offer will be deemed as terminated. Death of offeror Generally death (or incapacity) of the offeror terminates the offer. This does not apply to option contracts. The offer cannot be accepted if the offeree knows of the death of the offeror. In cases where the offeree accepts in ignorance of the death, the contract may still be valid, although this proposition depends on the nature of the offer. If the contract involves some characteristic personal to the offeror, the offer is destroyed by the death. Death of offeree An offer is rendered invalid upon the death of the offeree. Counter Offers If the offeree rejects the offer, the offer has been destroyed and cannot be accepted at a future time. A case illustrative of this where in response to an offer to sell an estate at a certain price, the plaintiff made an offer to buy at a lower price. This offer was refused and subsequently, the plaintiffs sought to accept the initial offer. It was held that no contract was made as the initial offer did not exist at the time that the plaintiff tried to accept it, the offer having been terminated by the counter offer. It should be noted that a mere inquiry (about terms of an offer) is not a counter offer and leaves the offer intact. The case is analogous to this situation. 3. Formation A contract will be formed (assuming the other requirements are met) when the parties give objective manifestation of an intent to form the contract. Of course, the assent must be given to terms of the agreement. Usually this involves the making by one party of an offer to be bound upon certain terms, and the other parties' acceptance of the offer on the same terms. Because offer and acceptance are necessarily intertwined, in and acceptance are analyzed together as sub elements of a single element, known either as consent of the parties or mutual assent.
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10 Ways to Get Your Offer Accepted

1) Include Pre-approval Letter This may seem elementary to most people, but youd be surprised at the number of potential buyers that think they can just shop for homes without getting full loan pre-approval from a reputable mortgage company. The fact is that no seller (traditional or bank) will even look at your offer until they see you have been approved for a loan amount large enough to purchase their property. Make sure your loan officer includes the property address youre making an offer on, and also the purchase price youre offering. If you need a good mortgage company, try Cornerstone Mortgage. 2) Include a Summary Cover Sheet This is an example of the little things that make life easier. If the seller receives 3 or 4 offers, you want a way to make yours stand outeven if it is not the highest price offer. Including a Summary Cover Sheet to the offer can help the agent and their seller see the key points of your offer without having to flip through 15 to 20 pages of documents. Make sure it contains: Purchase Price, Earnest Money amount, any Seller Paid Closing Costs, the current Listing Price on the MLS, Date the Offer was made, your proposed Closing Date, Type of Loan you are getting, any contingencies youre including, buyers full legal names, buyers agent name and company (with full phone, fax, and email contact info), and of course the property address youre making an offer on. By just including this basic information up front, it shows the seller you are organized and serious about buying their home. 3) Sign All Required Pages of The Contract Duh, right?!?! You would think most buyers would sign the appropriate pages of the purchase agreement, but youd be wrong. In most cases, its not their fault. The agent theyre working with may not know exactly what theyre doing when filling out the offer paperwork. In most cases there will be a 7 page Purchase Agreement followed by anywhere from 5-15 more pages of Addenda to the Purchase Agreement. Those are basically attachments that protect you from certain dangers (i.e. LeadBased Paint hazards, Inspection Contingency, Short Sale Contingency, etc.) It can be a little overwhelming if this is your first home purchase, but with the help of an experienced agent you will find it easy to weed through these forms and make sure you are signing the correct pages. If you submit an offer without signing an appropriate form, it may give the seller the impression that you are not serious about buying their home and lack attention to detail. So make sure you dot every i and cross every t! 4) Offer a Price Based on Comparable Sold Properties Too often buyers get caught up in the Listing Price or Asking Price they see for a home. What they fail to realize is most cases is that this price has absolutely nothing to do with the actual Market Value of the house. Just because someone puts a For Sale sign on their car for $20,000 doesnt mean its worth any more than $5,000. They may just be trying to get more money for their junker! The same is true with properties. Just because someone is asking for $200,000 doesnt make their home worth that amount. In fact, most seller list their homes for more money than its worth in the hope of getting some sucker to come along and buy it. Well I dont know about you, but I dont like being a sucker! So how can you tell what the true value of the home is? Easy: check the comparable sold properties nearby. Your agent should be able to do a Market Analysis which shows you all the similar style homes in the area that have sold within the last 6 months. By comparing your home to these sold properties, you will be able to gauge what a fair Market Value is for the home youre trying to buy. 5) Increase Your Earnest Money Amount Earnest Money is essentially a Good Faith payment to the seller when they accept your offer. It shows them youre willing to put up some of your money in order to buy the house. If you back out of the contract for any undisclosed reasons they get to keep the money as damagesmuch like a landlord would keep your security deposit. If everything goes to plan you will receive this money back at closing at it will go towards your down payment amount. By increasing the amount of your

Earnest Money, you are showing the seller that you have more to lose by backing out of the contract, and this may make your offer more attractive to them. 6) Offer a Closing Date of No More Than 30 Days From Acceptance Depending on the type of seller and their individual situation you may need to push closing further into the future. But for most sellers a closing date of around 30 days is just the right amount of time to get ready for closing. The longer the wait until closing, the more potential problems that could arrive and risk blowing the transaction up. So sellers usually want to close sooner rather than later. If you offer a closing date of around 30 days from the time of offer acceptance, this should protect you if something does rise to the surface that would deter you from buying the home, but also give the seller the peace of mind that the deal will be done in about a month. 7) Dont Ask For Seller Paid Closing Costs For a lot of buyers, this is not an option. Most people dont have the money necessary for both their down payment amount and the closing costs associated with obtaining their loan and transferring title to the property. So in a lot of cases the buyer request that the seller pick up the tab for a portion of their closing costs. If you are flexible on this issue then consider NOT asking for any seller paids in your offer. This makes your offer more desirable to the seller and can help you get an acceptance faster. 8.) Limit Your Contingencies A contingency is basically an option for the buyer to cancel the contract and receive their Earnest Money in return. By eliminating any unnecessary contingencies in your offer, you give the seller more confidence in the belief that you will go through with the purchase. The two most common contingencies today are the Inspection Contingency and the Financing Contingency. Beyond those two, you may just be adding unnecessary road blocks for the seller to get past. 9) Be Flexible With Your Loan Type What if you perform your inspection and you find out there is a plumbing leak? If the house is a foreclosure you probably have little hope that the bank is going to fix anything in the house before closing. So you may have to consider switching your loan type to an FHA 203k loan, or some other form of renovation financing. The bottom line is that sometimes issues come up that would prevent you from purchasing the home with your current type of financing. If you have a good loan office they should be able to help guide you through some of your options in this area and figure out what plans B and C would be if this scenario arises. 10) Write a Personal Note With Your Offer and Include a Picture It sounds sappy, but it can work to your advantage. If a seller is faced with multiple offers from several buyers, you may want to add a personal touch to try and win some empathy. Try including a personal handwritten note which briefly outlines who you are and why you want to buy the house. You may even consider including a picture of you or your family to add another layer of personality. Whether the seller is a person or a bank, this can sometimes push your offer to the front of the line and show them that there is a real family on the other end of the offer that would benefit from living in that home. Buying and selling real estate is about more than just numbers and documents, its a transfer from one human to another, and by giving your offer a glimpse of your personality you may find yourself at the closing table (in about 30 days)! Q. 2 What are the rights and obligations of partners before and after the dissolution of a partnership firm? (20) What is dissolution? Dissolution of a firm means the end of a firm by the break up o the relation of partnership between all the partners. Dissolution is to be distinguished from reconstitution of a firm. In the latter case, the partnership continues but there is a change in the number of partners. In the former case there is complete severance of jural relation between all the partners. The Grounds of Dissolution A firm by dissolved on any of the following ground: 1. By Agreement
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A firm may be dissolved any time with the consent of all the partners of the firm. Partnership is cared by contract; it can also be terminated by contact. 2. Compulsory Dissolution A firm is dissolved By the adjudication of all the partners or of all the partners but one as insolvent, or By the happening of any event which makes the business of the firm unlawful. 3. On the happening of Certain Contingencies Subject to contract between the partners, a firm is dissolved 1. If constituted for a fixed term, by the expiry of that term; 2. If constituted to carry out one or more adventures or undertakings, by the completion thereof: 3. By the death of a partner; and 4. By the adjudication of a partners as an insolvent. The partnership agreement may provide that the firm will not be dissolved in any of the aforementioned cases. Such a provision is valid. 4. By notice Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all other partners of his intension to dissolve the firm. The firm is dissolved as form the date mentioned in the notice as the date of dissolution, or, if no date is mentioned, as from the date of communication of the notice. 5. Dissolution by the Court. At the suite of a partner, the court may dissolve a firm on any one of the following ground: (A) Insanity: If a partner has become of unsound mind. The suit for dissolution in this case can be filed by the next friend of the insane partner or by any other partner. (B) Permanent Incapacity: If a partner becomes permanently incapable of performing his duties as a partner. Permanent incapacity may arise from an incurable illness like paralysis. A partner was attacked with paralysis which on medical evidence was found to be curable. Dissolution was not granted. The suit for dissolution in this case must be brought by a partner other than the person who has become incapable. (C) Guilty Conduct: If a partner is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business. To justify dissolution under this clause the misconduct must be of such a nature as to affect adversely the particular business concerned. Misconduct which affects one business may not affect another business. Therefore the court must take into account the nature of business that the partnership carries on. The test generally applied is whether the act complained of is likely to affect the credit and custom of the particular business. The suit for dissolution on the ground mentioned in this clause must be brought by a partner other than the partner who is guilty of misconduct. (D) Persistent Break of Agreement: If a partner wilfully and persistently commits breach of the partnership agreement regarding management or otherwise conducts him in such a way that is not reasonably practicable for the other partners to carry on business in partnership with him. The suit for dissolution in cases coming under this clause is to be brought by a partner other than the partner guilty of the acts. (E) Transfer of whole Interest: If a partner has transferred the whole of his interest in the firm to an outsider or has allowed his interest to be sold in execution of a decree. Transfer of a partners interest does not by itself dissolve the firm. But the other partners may ask the court to dissolve the firm if such a transfer occurs. Only the transfer of the entire interest of the partner gives ground for action. The transfer of a part of the partners interest does not provide any ground for dissolution. The formation of a sub-partnership is, therefore, not a ground for dissolution. The suit for dissolution on the ground mentioned in this clause must be brought by a partner other than the partner whose interest has been transferred or sold.
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(F) Loss: if the business of the firm cannot be carried on except at a loss. Since the motive, with which partnership are formed, is acquisition of gain, the courts have been give discretion to dissolve a firm in cases where it is impossible to make profits. (G) Just and Equitable clause: If the court considers it just and equitable to dissolve the firm. This clause gives a discretionary power to the court to dissolve a firm in cases which do not come within any of the foregoing clauses but which are considered to be fit and proper cases for dissolution. TYPES OF PARTNERSHIP FIRM Different kinds of partnership may be explained as follows. 1. General or Unlimited Partnership 2. Limited Partnership 1. General or Unlimited Partnership A partnership in which the liability of all the partners is unlimited is known as unlimited partnership. All the partners can take part in the working of the business. Only this kind of partnership exists. General partnership can be classified into three types such as partnership-at-will, particular partnership and joint venture. They are discussed below. a. Partnershipatwill Partnership-at-will is a partnership which is formed to carry on business without specifying any period of time. The life of such a partnership continues as long as the partners are willing to continue it as such. The partnership can be terminated, if any partner notifies his desire to quit. b. Particular Partnership It is a partnership established for a stipulated period of time or for the completion of a specified venture. It automatically comes to an end with the expiry of the stipulated period or on the completion of the specified venture, as the case may be. For example, a partnership may be created for one year only. When the time lapses, the partnership comes to an end. c. Joint Venture A joint venture is a temporary partnership which is formed to complete a specific venture or job during a specified period of time. Every partner does not have the right of implied agency. No partner can withdraw his interest in the firm before the completion of the venture. For example, a partnership is formed for the construction of a building. The partnership comes to an end if theconstruction is over. 2. Limited Partnership A partnership in which the liability of the partner is limited is called limited partnership. The Law does not permit the formation of a limited partnership in Pakistan. But in Europe and U.S.A. and U.K limited partnership is allowed. A limited partnership firm must have at least one partner whose liability is unlimited. The liability of remaining partners is limited. Thus limited partnership consists of two types of partners, general partner and limited partner. PARTNER CANNOT SUE IF FIRM IS UNREGISTERED - No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or an {person alleged to be or to have been a Partner in the fir} unless the firm is registered and the person suing! is or has been shown in the Register of Firms as a partner in the firm. [Section 69(1)]. - Thus, a partner cannot sue the firm or any other partner if firm is unregistered. - If third party files suit against a partner, he cannot claim of set off or institute other proceeding to enforce a right arising from a contract.- Suit or claim or set off upto Rs 100 can be made as per section 69(4)(b), but it is negligible in todays standards. - Criminal proceedings can be filed, but civil suit is not permissible. UNREGISTERED FIRM CANNOT SUE THIRD PARTY - No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. [section 69(2)].- If third party files suit against the unregistered firm, the firm cannot claim set off or institute other proceeding to enforce a right arising from a contract. - Suit or claim or set off upto Rs 100 can be made as per section 69(4)(b), but it is negligible in todays standards. - Criminal proceedings can be filed, but civil suit is not permissible.
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GENERAL DUTIES OF A PARTNER Subject to a contract to the contrary between the partners the following are the duties of a partner according to section 9 of The Pakistani Partnership Act, 1932 To carry on the business of the firm to the greatest common advantage. Good faith requires that a partner shall not obtain a private advantage at the expense of the firm. Where a partner carries on a rival business in competition with the partnership, the other partners are entitled to restrain him. To be just and faithful. Partnership as a rule is presumed to be based on mutual trust and confidence of each partner, not only in the skill and knowledge, but also in the integrity, of each other partner To render true accounts and full information of all things done by them to their co-partners. According to sec. 10 of the said act every partner shall indemnify for loss caused by fraud. Every partner shall indemnify the firm for loss caused to it by his fraud in the conduct of the business of the firm. Not to carry on business competing with the firm. If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business. To carry out the duties created by the contract. The partners are bound to perform all the duties created by the agreement between the partners. RIGHTS AND DUTIES/ OBLIGATIONS OF THE PARTNERS Determination of rights and duties of partners by contract between the partners: Subject to the provisions of the Partnership Act, the mutual rights and duties of the partners of a firm may be determined by contract between the partners, and such contract may be express or may be implied by a course of dealing. Such contract may be varied by consent of all the partners, and such consent may be express or may be implied by a course of dealing. [Section 11(1)]. Thus, partners are free to determine the mutual rights and duties by contract. Such contract may be in writing or it may be implied by their actions. According to section 17 of the said act, rights and duties of partners is subject to a contract between the partners: After a change in a firm- where a change occurs in the constitution of a firm, the mutual rights and duties of the partners in the reconstituted firm remain the same as they were immediately before the change. After the expiry of the term of the firm- where a firm constituted for a fixed term continues to carry on business after the expiry of that term, the mutual rights and duties of the partners remain the same as they were before the expiry, so far as they may be consistent with the incidents of partnership at will. Where additional undertakings are carried out- where a firm constituted to carry out one or more adventures or undertakings carries out other adventures or undertakings are the same as those in respect of the original adventures or undertakings. Subject to a contract to the contrary a partner has the following rights. To take part in the conduct and management of the business To express opinion in matters connected with the business. He has a right to be consulted and heard in all matters affecting the business of the firm To have free access to all the records, books of account of the firm and take copy from them. To share in the profits of the business. Every partner is entitled to share in the profits in proportion agreed to between the parties. To get interest on the payment of advance. Where a partner makes for the purpose of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, he is entitled to interest thereon at the rate of 6% per annum. To be indemnified by the firm against losses or expenses incurred by him for the benefit of the firm.
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SPECIAL RIGHTS AND DUTIES/ OBLIGATIONS OF THE PARTNERS After the change of the firm-Where the change occurs in the constitution of a firm, the mutual rights and duties of the partners in the reconstituted firm remain the same. Rights and Duties of the Partners of the Firm Mutual trust and cordiality are the heart of smooth functioning of the partnership firm. Acts of the partner bind the firm and all partners of the firm to the outside world: Rights of the Partners 1. Right to take part in the conduct of management of the firm. 2. Right of being consulted and chance of expression of opinion in the conduct of the business. Decisions are taken on the basis of the vote of the majority. However for the following acts the decisions needs to be taken on unanimous basis: a) Change in the nature of the business. b) Change in the place of business. c) Incase of any particular item if the partnership deed provides that decision needs to be taken on unanimous basis. d) Admission or expulsion of partner (subject to as provided in deed). 3. Right to have access to books of accounts of the firm. 4. Right to share profits of the firm as per the partnership deed, and if the deed is silent in this regard, to share profits equally. 5. Right to have interest on capital deployed for the firm. 6. Right to receive remuneration for conduct of management of the firm. 7. Right to receive interest on temporary advances made to the firm. 8. Right to be indemnified for any acts done in an ordinary course of business for the best interests of the firm. Duties of the Partners 1. Absolute Duties Following are the absolute duties of partners: a) Duty to act in good faith in the conduct of partnership. b) Duty to carry on business in true and commercial prudence for the advantage of all the partners. c) Duty to account for true account for other partners. d) Duty to indemnify firm for any loss caused to the firm on account of fraud done by a partner to any third party. e) Duty to provide true and correct information with regard to transactions of the firm to all the other partners of the firm. f) Every partner of the firm is jointly and severally liable for all the liabilities concerning the firm. A creditor of the firm can proceed against the firm or any partner of the firm to enforce his right. g) No partner can transfer his interest or assign his interest without the permission of other partners of the firm. 2. Qualified Duties Following are the implied duties on the part of partners of the firm unless any contrary is proved: a) Duty to act diligently with care and prudent means in the conduct of business. b) Duty to share losses of the firm. c) Duty to use firm's property exclusively for the best interest of the firm's business. d) Duty to indemnify to the firm any loss caused to the firm on account of willful neglect on part of the partner. e) Not to account for the secret profits at the expense of the firm. f) Not to start any business of competing nature. LIABILITIES OF PARTNER 1. Every partner is liable for the debts of the firm to an unlimited extent, jointly and severally. 2. A retiring partner is liable for all the debts incurred before his retirement
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3. An incoming partner is liable only for the debts incurred by the firm after his admission into the partnership. 4. In case of deceased partner, his legal representatives are liable only for the debts incurred by the firm before his death. 5. In the case of minor partner, he is not personally liable for the debts of the firm. Only his share in the profits and assets of the partnership is liable for the debts of the firm. 6. Every partner is liable to make good the loss that the firm or other partners suffer as a result of his negligence. RIGHTS OF A MINOR 1. A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership. 2. Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and of the accounts of the firm. 3. Such minors share is liable for the acts of the firm, but the minor is not personally liable for any such act. 4. Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm 5. At any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm, provided that, if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months. 6. Where any person has been admitted as a minor to the benefits of partnership in a firm, the burden of proving the fact that such person had no knowledge of such admission until a particular date after the expiry of six months of his attaining majority shall lie on the person asserting that fact. 7. Where such person becomes a partnera. His rights and liabilities as a minor continue upto the date on which he becomes a partner, but he also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of the partnership, and b. His share in the property and profits of the firm shall be the share to which he was entitled as a minor. 8. Where such person elects not to become a partnera. His rights and liabilities shall continue to be those of a minor up to the date on which he gives public notice, b. His share shall not be liable for any acts of the firm done after the date of the notice, and he shall be entitled to sue the partners for his share of the property and profit. RESTRICTIONS ON AUTHORITY OF A PARTNER Restrictions are governed by Contract and by the Partnership Act The partners may by contract extend or restrict the implied authority of any partner. Under the Partnership Act in the absence of any usage of trade to the contrary, the implied authority of a partner does not empower him to do the following acts: 1-Submit a dispute relating to the business of a firm to arbitration. 2-Open a bank account in his own name. 3-Compromise or relinquish any claim of the firm. 3-Withdraw a suit or proceeding on behalf of the firm. 4-Admit any liability in a suit or proceeding against the firm. 5-Acquire immovable property on behalf of the firm. 6-Transfer immovable property belonging to the firm, or 7-Enter into partnership on behalf of the firm. LIABILITY FOR ACTS OF PARTNERS DONE AFTER DISSOLUTION
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(1) Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm, if done before the dissolution, until public notice is given of the dissolution : Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under this section for acts done after the date on which he ceases to be a partner. Notices under sub-section (1) may be given by any partner. The first sub section of sec. 45 of the Partnership Act is really equivalent to s.36, sub s.(1). Of the English Act, but is more explicitly stated. That enactment speaks of dealings with a firm after a change in its constitution, but older authority makes it clear that the meanings of these words cannot be narrowed to a change short of dissolution. it will be observed that in Pakistan public notice as per sec, 72 is now sufficient in all cases, without any distinction between old and new customers. The question arises whether as a literal readings of the term would suggest, public notice is necessary as well as sufficient; in other words, that it would be no answer to a party suing on an act such as here described that, although public notice of dissolution has not been given, the plaintiff was in fact aware that the firm was dissolved. Compare the English Act, s.36 sub s. (2), where there is no express savings of private notice. The best opinion is that notice in fact, of any kind, is good if proved. It will not, of course, be established by matter of mere surmise or conjecture. Section 45(1) has a twofold objective. On the one hand it seeks to protect third parties dealing with the firm who had no notice of its prior dissolution and on the other hand, it also seeks to protect partners of a dissolved firm from liability to third parties for acts of other partners done subsequent to the dissolution. RIGHT OF PARTNERS TO HAVE BUSINESS WOUND UP AFTER DISSOLUTION Section 46 of The Pakistan Partnership Act says that: On the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or which representatives according to their rights. Rights of partners in dissolution (A) When dissolution is caused in any way, except in contravention of the partnership agreement, each partner, as against his partners and all persons claiming through them in respect of their interests in the partnership, unless otherwise agreed, may have the partnership property applied to discharge partnership liabilities, and the surplus applied to pay in cash the net amount owing to the respective partners. But if dissolution is caused by expulsion of a partner, bona fide under the partnership agreement and if the expelled partner is discharged from all partnership liabilities, either by payment or agreement, he shall receive in cash only the net amount due him from the partnership. (B) When dissolution is caused in contravention of the partnership agreement the rights of the partners shall be as follows: (1) Each partner who has not caused dissolution wrongfully shall have: (a) All the rights specified in division (A) of this section; (b) The right, as against each partner who has caused the dissolution wrongfully, to damages for breach of the agreement. (2) The partners who have not caused the dissolution wrongfully, if they all desire to continue the business in the same name, either by themselves or jointly with others, may do so, during the agreed term for the partnership and for that purpose may possess the partnership property, provided they secure the payment by bond approved by the court, or pay to any partner who has caused the dissolution wrongfully, the value of his interest in the partnership at the dissolution, less any damages recoverable under division (B)(1)(b) of this section, and in like manner indemnify him against all present or future partnership liabilities. (3) A partner who has caused the dissolution wrongfully shall have: (a) If the business is not continued under division (B)(2) of this section all the rights of a partner under division (A), subject to division (B)(1)(b) of this section; (b) If the business is continued under division (B)(2) of this section the right as against his partners and all claiming through them in respect of their interests in the partnership, to
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have the value of his interest in the partnership at the damages caused to his partners by the dissolution, ascertained and paid to him in cash, or the payment secured by bond approved by the court, and to be released from all existing liabilities of the partnership; but in ascertaining the value of the partners interest the value of the good will of the business shall not be considered. Q. 3 Discuss various steps involved in the registration of a company? (20) Registration of a Company in Pakistan Company Registration in Pakistan - Requirements and Procedure Registration of a Private Limited Company, Single Member Company, Pubic Limited Company in Pakistan The procedure and requirements for registration of a company in Pakistan are as follow: Types and Forms of Companies which may be Registered in Pakistan The following types of companies may be registered in Pakistan: A private limited company, which may be a single member company A public limited company, which may be listed or unlisted A foreign company How to Register a Company in Pakistan? Companies remain the most favored form of business organisations in Pakistan especially for medium and large-scale business enterprises. Legal regime for establishment and regulation of companies in Pakistan is given in the Companies Ordinance, 1984. Whereas the function of administration of these companies is vested in the Securities and Exchange Commission of Pakistan and the Registrar of Companies appointed by the Securities and Exchange Commission of Pakistan for a Province of Pakistan where such company is to be registered. Under the provisions of the Companies Ordinance, 1984 a company is a corporate body with separate legal entity and a perpetual succession and a company may be formed by persons associating for any lawful purpose by subscribing their names to the Memorandum of Association and complying with other requirements for registration of a company under the provisions of the Ordinance. The Companies Ordinance, 1984 provides three different types of companies: A company limited by shares A company limited by guarantee An unlimited liability company Further, under the Companies Ordinance, 1984 two types of limited liability companies are provided namely, a) a private limited company and b) a public limited company (which may be listed or unlisted). Any one or more persons associated for any lawful purpose by subscribing their name(s) to the Memorandum of Association and complying with other registration specific requirements of the Companies Ordinance, 1984 may incorporate a private limited company. Provided that where a company has only one subscriber to the Memorandum of Association then such a company is called a Single Member Company, however, a Single Member Company remains a private limited company for all intents and purposes of the Ordinance. Whereas any three or more persons so associated may form a public limited company. A company limited by shares whether a private company or a public company is the most common vehicle for carrying out a business enterprise in Pakistan. Prior approval of the relevant Ministries/Departments is required to be obtained before incorporation of the following companies: A banking company A non-banking finance company A security service providing company A corporate brokerage house A money exchange company An Association not for profit u/s42 of the Companies Ordinance, 1984 A trade organization u/s 42 of the Companies Ordinance, 1984

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Procedure for Registration of a Company in Pakistan Following are the requirements for registration of a company in Pakistan: Step No. 1 for Registration of a Company in Pakistan Availability of Name The first step with regard to incorporation of a company is to seek availability of the proposed name for the company from the Registrar. For this purpose, an application is to be made and a fee of Rs.200 is required to be paid for seeking availability certificate. Step No. 2 for Registration of a Company in Pakistan Filing of documents required for registration of a private limited company in Pakistan The following documents are required to be filed with the registrar concerned for registration of a private limited company in Pakistan: Copy of national identity card or passport, in case of foreigner, of each subscriber and witness to the memorandum and article of association. Memorandum and articles of association - Four printed copes of Memorandum and Articles of Association duly signed by each subscriber in the presence of one witness. Form 1 - Declaration of compliance with the pre-requisites for formation of the company. Registration/filing fee - A copy of the original paid Challan in the authorized branches of Habib Bank Limited or a Bank Draft/ Pay Order drawn in favour of the Securities and Exchange Commission of Pakistan of the prescribed amount. Authorisation by sponsors - The authorisation of sponsors in favour of a person to make good the deficiencies, if any, in memorandum and articles of association as may be pointed out by the registrar concerned and to collect the certificate of incorporation Documents required for registration of a Single Member Company in Pakistan. Any person may form a single member company and would file with the registrar at the time of incorporation a nomination in prescribed form indicating at least two individuals to act as nominee director and alternate nominee director, of the company in the event of his death. All requirements for incorporation of a private limited company shall mutatis mutandis apply to a single member company. Documents required for registration of an association not for profit in Pakistan All the documents meant for incorporation of a limited company along with a license issued by the SEC. In case of a trade body, a license issued by the Ministry of Commerce would also be submitted to the registrar concerned. The application for obtaining the requisite license from the Commission should be accompanied by draft memorandum and Articles of Association, list of promoters, bio-data of each promoter, declaration, names of companies in which the promoters of the proposed association hold any office, estimates of annual income and expenditure and brief statement of work already done or to be done. We are offering to register the following companies in Pakistan: A private limited company A single member company A public limited company A company limited by shares A company limited by guarantee An unlimited company Relevant laws of Pakistan for registration of a company in Pakistan: Companies Ordinance, 1984 Companies (General Provisions and Forms) Rules, 1985 Single Member Companies Rules, 2003 Schedule filing fees We have successfully dealt with registration of various companies including the following:
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IT related companies Construction related companies Real estate investment related companies Real estate development related companies Travel & tour related companies Textile related companies Garments & apparel related companies Home furnishing related companies Cosmetics & toiletries related companies Agricultural & agricultural products related companies Electronics related companies Telecommunications related companies Leather & leather goods related companies Pharmaceutical related companies Health & care related companies Manufacturing related companies Service oriented companies Q. 4 Briefly explain the various provisions of Companies Ordinance 1984 regarding the winding up of companies? (20)

The term winding up of a company may be defined as the proceedings by which a company is dissolved (i.e. the life of a company is put to an end). Thus, the winding up is the process of putting an end to the life of the company. And during this process, the assets of the company are disposed of, the debts of the company are paid off out of the realized assets or from the contributories and if any surplus is left, it is distributed among the members in proportion to their shareholding in the company. The winding up of the company is also called the liquidation of the company. The process of winding up begins after the Court passes the order for winding up or a resolution is passed for voluntary winding up. The company is dissolved after completion of the winding up proceedings. On the dissolution, the company ceases to exist. So, the legal procedure by which the existence of an incorporated company is brought to an end is known as winding up. 1. LIQUIDATOR A person appointed to carry out the winding up of a company is called liquidator. If the winding up is through Court, the term used for such person is official liquidator. The duties of liquidator include to get in and realise the property of the company, to pay its debts, and to distribute the surplus (if any) among the members. The official liquidator acts under the supervision of the Court, through a recognized reporting system. The following are the general powers of liquidator(s):1. To institute or defend any suit, action, prosecution or other legal proceeding, civil or criminal on behalf of the company. 2. To carry on the business of the company so far as may be necessary for the beneficial to it. 3. To pay to the creditors. 4. To make any compromise or arrangement with creditors. 5. To compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts. 6. To sell the movable and immovable property and things in action of the company by public auction or private contract, with power to transfer to any person or to sell the same in parcels. 7. To do all acts and to execute all deeds, receipts and other documents in the name and on behalf of the company and for that purpose to use in the companys seal when necessary. 8. To prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his estate and to receive dividends as a separate debt due from the bankrupt or insolvent in the bankruptcy. 9. To draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company.
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10. To raise on the security of the assets of the company any money. 2. Consequences of winding up Some important consequences of winding up of company are: 2.1 As regards the company itself: winding up does not mean that the company has ceased to exist. The company exists as a corporate entity with all the rights of such entity, with only change that its management and administration is to be carried on through liquidator / liquidators till the final dissolution of the company. 2.2 As regards the shareholders: A new statutory liability as contributories comes into existence. Every transfer of shares or alteration in the status of a shareholder, after the winding up has commenced by the order of the Court , shall unless approved by the liquidator , be void. 2.3 As regards the creditors: i. They cannot file or continue suits against the company, except with the leave of the Court. ii. They cannot proceed with the execution, if they have obtained decrees already. iii. They must lodge their claim and prove their debt before the liquidator. 2.4 As regards the management, on appointment of liquidator, all the powers of the directors, chief executive and other officers, shall cease, except for the purpose of giving notice of resolution to wind up and appointment of liquidator and filing of consent of liquidator etc. 2.5 As regards the disposition of companys property, all such dispositions are void unless with the leave of the Court or the liquidator. 3. Modes of winding up: The winding up of a company may be either(i) by the Court; or (ii) voluntary; or (iii) subject to the supervision of the Court. 3.1 Winding up of the company by the Court: (i)The winding up of a company by an order of the Court is called the compulsory winding up. Section 305 of the Ordinance envisages the following circumstances, under which a company may be wound up by the Court on the petition submitted to it:(a) if the company has, by special resolution, resolved that the company be wound up by the Court; (b) if default is made in delivering the statutory report to the registrar or in holding the statutory meeting or any two consecutive annual general meetings; (c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; (d) if the number of members is reduced, in the case of private company, below two or, below three in case of public company and below seven in case of listed company.; (e) if the company is unable to pay its debts; (f) if the company is(i) conceived or brought forth for, or is or has been carrying on, unlawful or fraudulent activities; (ii) carrying on business not authorised by the memorandum; (iii) conducting its business in a manner oppressive to any of its members or persons concerned with the formation or promotion of the company or the minority shareholders; (iv) run and managed by persons who fail to maintain proper and true accounts, or commit fraud, misfeasance or malfeasance in relation to the company; or (v) managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions of this Ordinance or fail to carry out the directions or decisions of the Court or the registrar or the Commission given in the exercise of powers under this Ordinance; (g) if, being a listed company, it ceases to be such company; (h) if the Court is of opinion that it is just and equitable that the company should be wound up; or (i) Complete deadlock in the management of the company. (ii) Failure of companys main object. (iii) Recurring losses.
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(iv) Aggressive or oppressive policy of majority shareholders. (v) Incorporation of company for fraudulent or illegal purpose. (vi) Public interest. (i) if the company ceases to have a member 3.1.1 Procedure for winding up of company and filing of petition before respective High Court: 1. To pass Special Resolution by 3/4th majority of the members of the company that the company be wound up by the Court in case if the company itself intend to file a petition and to file the Special Resolution on Form 26 with the registrar. 2. To prepare a list of the assets to ascertain that the company is unable to pay its debts. 3. To prepare a list of the creditors 4. In case of defaults in payments the creditor or creditors to make a decision for the filing of the winding up petition. 5. In case if the Commission or Registrar or a person authorised by the Commission intend to file a petition, they should not file a petition, for winding up of the company, unless an investigation into the affairs of the company has revealed that it was formed for any fraudulent or unlawful purpose or that it is carrying on a business not authorised by its memorandum or that its business is being conducted in a manner oppressive to any of its management has been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members. 6. To engage advocates for the preparation and filing of the petition. 3.1.2 Who is competent to file petition for winding up in the Court? Petition may be presented by any one of the following: 1. The company may itself by passing a special resolution 2. Creditor or Creditors. 3. Any contributory or contributories 4. Registrar of Companies 5. Securities and Exchange Commission of Pakistan or by a person authorized by the Commission 3.1.3 Check List filing of petition before respective High Court: 1. Have you gone through General Heading provided under rules. Rule 4 of the Rules 2. Whether the petition is prepared / drafted on and in accordance with the Rules. Rule 75 of the Rules 3. Have the petitions / written statements / affidavits and other proceedings are being presented to the Court is fairly and legibly written, type written, cyclostyled etc. and in accordance with the format described under the Rules. Rule 5 of the Rules 4. Have the language of the said documents stated at column 3 are in language of the Court? Rule 6 of the Rules 3.1.4 Documents to be annexed with the petition 1. Petition for winding up to be filed on form prescribed under the Companies Rules, (On Form 24 (General Form) (Form 25 (petition by creditor) Form 26 (petition by company) Rule 75 read with rule 4 of the Rules 2. Affidavit verifying the petition on Form 1 Rule 16 read with rule 4 of the Rules 3. Copy of special resolution in case if the company itself intends to file petition Section 172 of the Ordinance 4. Copies of the agreements and other documents on the basis of which creditors intend to file a winding up petition will be annexed with the petition 5. All other supporting documents on the basis of which the petitioner rely as evidence 3.2. Voluntary winding up of members of the company (ii (a)) A company can be wound up voluntary (a) on expiration of the period fixed for the duration of the company by its Articles of Association or on occurrence of event leading to dissolution of the company as provided in the Memorandum and Articles of Association and company has to pass a special resolution in general meeting for its wound up voluntarily within five weeks of filing of declaration of solvency, and(b) on passing of the special resolution that the company be wound up voluntarily.
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A voluntary winding up is deemed to commence at the time of passing of the resolution for voluntary winding up. The company ceases to carry out business just on commencement of winding up. However, it can carry on its activities and business for beneficial winding up of the company. 3.2.1 PROCEDURE FOR VOLUNTARY WINDING UP The following steps are to be taken for Members voluntary winding up under the Provisions of the Ordinance, and the Companies Rules. Step 1. Where it is proposed to wind up a company voluntarily, its directors make a declaration of solvency on Form 107 prescribed under Rule 269 of the Rules duly supported by an auditors report and make a decision in their meeting that the proposal to this effect may be submitted to the shareholders. They, then, call a general meeting (Annual or Extra Ordinary) of the members (Section 362 of the Ordinance) Step 2. The company, on the recommendations of directors, decides that the company be wound up voluntarily and passes a Special Resolution, in general meeting (Annual or Extra Ordinary) appoints a liquidator and fixes his remuneration. On the appointment of liquidator, the Board of directors ceases to exist. (Sections 358 and 364 of the Ordinance) Step 3. Notice of resolution shall be notified in official Gazette within 10days and also published in the newspapers simultaneously. A copy of it is to be filed with registrar also. (Section 361 of the Ordinance) Step 4. Notice of appointment or change of liquidator is to be given to registrar by the company along with his consent within 10 days of the event.(Section 366 of the Ordinance) Step 5. Every liquidator shall, within fourteen days of his appointment, publish in the official Gazette, and deliver to the registrar for registration, a notice of his appointment under section 389 of the Ordinance on Form 110 prescribed under Rule 271 of the Rules. Step 6. If liquidator feels that full claims of the creditors cannot be met, he must call a meeting of creditors and place before them a statement of assets and liabilities. (Section 368 of the Ordinance) Step 7. A return of convening the creditors meeting together with the notice of meeting etc. shall be filed by the liquidator with the registrar, within 10 days of the date of meeting. (Section 368 of the Ordinance) Step 8. If the winding up continues beyond one year, the liquidator should summon a general meeting at the end of each year and make an application to the Court seeking extension of time. (Section 387(5) of the Ordinance) Step 9. A return of convening of each general meeting together with a copy of the notice, accounts statement and minutes of meeting should be filed with the registrar within 10 days of the date of meeting. (Section 369 of the Ordinance) Step 10. As soon as affairs of the company are fully wound up, the liquidator shall make a report and account of winding up, call a final meeting of members, notice of convening of final meeting on Form 111 prescribed under Rule 279 of the Rules before which the report / accounts shall be placed. (Section 370 of the Ordinance) Step 11. A notice of such meeting shall be published in the Gazette and newspapers at least10 days before the date of meeting. (Section 370 of the Ordinance). Step 12. Within a week after the meeting, the liquidator shall send to the registrar a copy of the report and accounts on Form 112 prescribed under Rule 279of the Rules. (Section 370 of the Ordinance) 3.2.2. DOCUMENTS REQUIRED FOR VOLUNTARILY WINDING UP BY MEMBERS pecial Resolution on Form-26 (prescribed under the Companies(General Provisions and Forms) S Rules, 1985 for voluntary winding up. Declaration of Solvency on Form 107 under the Rules. Affidavit by Directors of the company including Chief Executive verifying the attached auditors report, profit and loss account, balance sheet, statement of assets and liabilities prepared from the date of closing of last accounts till the latest practicable date, immediately before the making of declaration. Consent of liquidator. A copy of Notice of resolution passed for winding up the company voluntarily and published in the Official Gazette.
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A copy of Notice for appointment of liquidator and published in the Official Gazette. A copy of Preliminary report prepared by the liquidator. Final report and accounts of the company prepared by liquidator presented in General meeting of shareholders after finalization of winding up. Notice of final meeting. Return containing final report and accounts along with minutes of meeting to be filed with the concerned Company Registration Office. 3.3. CREDITORS VOLUNTARY WINDING UP OF THE COMPANY (ii(b) A procedure has been laid down under the provisions of the Ordinance whereby the company can also be voluntary wound up by creditors. For this purpose, the company shall call a meeting of the creditors of the company to be summoned for the day, or the day next following the day, on which there is to be held a general meeting of the company at which the resolution of voluntary winding up to be proposed. 3.3.1. PROCEDURE FOR CREDITORS VOLUNTARY WINDING UP Step 1. First of all, the company passes a special resolution in the general meeting of the members of the company for which following steps are to taken: Board of Directors approves the agenda of the general meeting especially the draft special resolution for winding up of the company. Notice of the general meeting along with copy of the draft special resolution is given to the members at least 21 days before the general meeting. Special resolution is passed by 3/4th majority of the members of the company and the members appoint a person to be liquidator of the company. Special resolution on Form 26 is filed with the registrar. Step 2 . Meeting of creditors is called at 21 days notice, (simultaneously with sending of the notices of the general meeting of the company) the notice of the meeting of the creditors to be send by post to the creditors, besides, the notice of the said meeting to be advertised in the official Gazette and the newspaper circulated in the Province and the creditors pass a resolution of voluntary winding up of the company. The creditors also appoint liquidator in that meeting. If the creditors and the company nominate different persons, than person nominated by the creditors shall be liquidator. Step 3. Notice of the resolution passed at the creditors meeting shall be given by the company to the registrar along with consent of the liquidator within ten days of the passing of the resolution. The company may either at the meeting at which resolution for voluntary winding up is passed or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons. Provided that the creditors may, if they think fit, resolve that all or any of the person so appointed by the company ought not to be member of the committee of inspection. Step 4. The liquidator should, with all convenient speed, realise the assets, prepare lists of creditors, admit proof, settle list of contributories, make such calls as may be necessary, etc. accordingly as the nature of the case may require, pay secured creditors, pay the costs including the liquidators own remuneration, pay preferential claims, and after meeting all the claims of creditors, and after adjusting all claims and rights, distribute the surplus on pro rata basis. Step 5. In the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company and a meeting of creditors at the end of the first year from the commencement of the winding up and lay before the meetings an audited account of receipts and payments and acts and dealings and of the conduct of winding up during the preceding year together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings and position of liquidation and forward by post to every creditor and contributory a copy of the account and statement together with the auditors' report and notice of the meeting at least ten days before the meeting required to be held. Step 6. The liquidator prepares the accounts, gets them audited and also presents a final report to the creditors. The steps at this stage are as under: The liquidator prepares a final report and accounts of the winding up, showing how the winding up has been conducted and the property of the company have been disposed of.
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Accounts are duly audited by the auditor appointed for the purpose. The notice of meeting is sent by post to each contributory of the company and creditor at least ten days before the meeting. The account with a copy of the auditors report is also enclosed with the notice. The notice of the meeting specifying the time, place and object of the meeting is published at least ten days before the date of the meeting in the official Gazette and in at least one newspaper. Within one week after the meeting, the liquidator is required to send to the registrar a copy of his report and account, and make a return to him of the holding of the meeting along with the minutes of the meeting. If a quorum is not present at the meeting, the liquidator makes a return stating that the meeting was duly summoned and that no quorum was present thereat. The return is filed with the registrar and considered as presented in the meeting. The registrar, on receiving the report, account and the return, is required to register them after their scrutiny. On the expiration of three months from the registration of final report, accounts and minutes, the company is deemed to be dissolved. 3.4. Winding up of the company subject to the supervision of the Court. (iii) When a company has passed a resolution for voluntary winding up, the Court may of its own motion or on the application of any person entitled to apply to the Court for winding up a company, make an order that the voluntary winding up shall continue, but subject to such supervision of the Court, and with such liberty for creditors, contributories or others to apply to the Court, and generally on such terms and conditions, as the Court thinks just. A petition for the continuance of a voluntary winding up subject to the supervision of the Court shall, for the purpose of giving jurisdiction to the Court over suits and other legal proceedings, be deemed to be a petition for winding up by the Court. The Court may, in deciding between a winding up by the Court and a winding up subject to supervision, in the appointment of liquidators, and in all other matters relating to the winding up subject to supervision, have regard to the wishes of the creditors or contributories as proved to it by any sufficient evidence, but subject to the provisions which would have been applicable had the company been wound up by the Court. Q. 5 Explain the contract of sales of goods by discussing its main features.(20) Sales of Goods Act :It is defined in these words, "A contract where by the seller transfers or agrees to transfer the property or the goods to the buyer for price." A contract to transfer the ownership of goods from seller to the buyer is known as contract of sale. Main Features or Essentials 1. Buyer and Seller :One person cannot become buyer and also the seller, there are always two parties to a contract of sale, buyer and seller. Example :- Mr. Kashif sells the shop to Mr. Zahir. Mr. Kashif is a seller and Mr. Zahir is a buyer in this case. 2. Goods :Every kind of movable property except actionable claims (which can be enforced by legal action) and money is regarded as goods. Example :- Mr. Yuva sells his car to Mr. Larson for Rs. 7 lac. In this case car is a moveable property, so it is a contract of sale. 3. Price :Price must be the consideration in the contract of sale. If goods are exchanged with goods it is barter and not a contract of sale. Example :- "X" sells a book to "Y" for Rs. 300. It is a contract of sale. 4. Transfer of Ownership :To constitute the sale contract the seller must transfer or agree to transfer the property ownership to the buyers. So possession and ownership both will be transferred to buyer.
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Example :- "X" sells the car to "Y" for 6 lac. The possession and ownership both will transfer to "Y". 5. Sale :When ownership and possession of the good is immediately transferred from seller to buyer it is called contract of sale. Example :- "X" buys a pen from the "Y" and pays the whole price on his hand. It is a sale. 6. Agreement to Sell :When the transfer of ownership in the goods is to take place at a future date the contract is called agreement to sell. Example :- Mr. Bazooka agrees to purchase Mr. Titoo bus for Rs. 25 lac. But the transfer of bus will take place after one year. It is agreement to sell. means every moveable property other than actionable claims and money, and includes electricity, water gas, stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be served before sale or contract of sale. means goods identified and agreed upon at the time a contract of sale is made. means goods to be manufactured or produced or acquired by the seller after making the contract for sale. means voluntary transfer of possession from one person to another. goods are under deliverable state when buyers would be bound to take delivery of them under contract. includes a bill of lading, dock-warrant, warehouse keepers certificate, wharfingers certificate, railway receipts, warrant or order for delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented. means the money consideration for a sale of goods. means the general property in goods, and not merely a special property. includes their state or condition. means a person who buys or agrees to buy goods. means a person who sells or agrees to sell goods. means a person who has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of insolvency or not. means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods. means wrongful act or default.

goods specific goods future goods delivery deliverable state document to title of goods

price property quality of goods buyer seller insolvent

mercantile agent

fault

It is a contract where: (a) the seller; (b) transfers or agrees to transfer; (c) the property in goods; (d) to the buyer; (e) for a price.
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The term contract of sale includes both sale and agreement to sell. The contract of sale may be absolute or conditional and there may be a contract of sale between one partowner and another. DIFFERENCE Transfer of property 1. (ownership) 2. Risk of loss SALE The property in goods passes to the buyer immediately at the time of making the contract. The risk of loss is that of buyer because the risk of loss prima facie passes with property. In case buyer makes default in payment, the seller can sue for price even if the goods are in his (seller) possession. AGREEMENT TO SELL The seller remains the owner of goods until the agreement to sell becomes sale. The risk of loss remains that of seller as he is still the owner of goods. If buyer makes default in payment, the seller can sue only for damages and not for price, even though the possession has been transferred to the buyer. The property in the goods remains with the seller and as such he can dispose of the goods as he likes and the original buyer can sue him for the breach of contract only.

3.

Consequences of breach

4.

Right of resale

The seller in possession of goods after sale cannot resale the goods. If he does so, the subsequent buyer having knowledge of the previous sale does not acquire a title to the goods.

Sale and agreement to sell.--(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called in agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. Formalities of the Contract Contract of sale how made.--(1) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. (2) Subject to the provisions of any law for the time being in force a contract of sale may be made in writing or by word of mouth, or partly in writing and party by word of mouth or may be implied from the conduct of the parties. Subject-matter of Contract Existing or future goods.--(1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.

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(2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen. (3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods. Goods perishing before making of contract.--Where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made, perished or become so damaged as no longer to answer to their description in the contract. Goods perishing before sale but after agreement to sell.--Where there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided. The Price Ascertainment of price.--(1) The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties. (2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. Agreement to sell at valuation.---(1) Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party and such third party cannot or does not make such valuation, the agreement is thereby avoided: Provided that, if the goods or any part thereof have been delivered to and appropriated by the buyer, he shall pay a reasonable price thereof. (2) Where such third party is prevented from making the valuation by the fault of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault. Conditions and Warranties Stipulation as to time.--- Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. Condition and warranty.---(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition of a warranty. (2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contact as repudiated. (3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to claim for damages but not to a right to reject the goods and treat the contract as repudiated. (4) Whether a stipulation in contract of sale is a condition or a warranty depends in each cease on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract. When condition to be treated as warranty,---(1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated. (2) Where a contract of sale is not severable and the buyer has accepted the goods are part thereof 5*** the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect. (3) Nothing in this section shall affect the case of any condition or warranty fulfilment of which is excused by law by reason of impossibility or otherwise.
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Implied undertaking, as to title, etc.--- In a contract of sale, unless the circumstances of the contract are such as to show a different intention there is--(a) an implied condition on the part of the seller that, in the case of sale, he has a right to sell the goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass; 5. The words and comma "or where the contract is for specific goods the property in which has passed to the buyer," omitted by the Sale of Goods (Amendment) Ordinance, 1962 (47 of 1962), S.3 (with effect from the 7th June, 1962). (b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods; (c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made. Sale by description.---Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description. Implied conditions as to quality or fitness.--- Subject to the provisions of this Act and of any other law for the time being in force, thee is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or products or not), there is an implied condition that the goods shall be reasonably fit for such purposes: Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose (2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed. (3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. (4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith. [16-A. Seller to inform buyer to defect in goods sold. - Notwithstanding anything contained in section 16, and save where the parties have entered into a agreement to the contrary, the seller shall be under an obligation to inform the buyer of any defect in the goods sold at the time of the contract, except in a case where the defect the defect is obviously known to the buyer.] Sale by sample.---(1) A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect. (2) In the case of a contract for sale by sample there is an implied condition--(a) That the bulk shall correspond with the sample in quality; (b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample; (c) that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

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