Escolar Documentos
Profissional Documentos
Cultura Documentos
2012
Business Law
LAW OF PAKISTAN
The Law of Pakistan is the law and legal system existing in the Islamic Republic of Pakistan. Pakistani law is based upon the legal system of British India; thus ultimately on the common law of England and Wales. Pakistan as an Islamic republic also has been influenced by Islamic Sharia law.
HISTORY:
Upon the list of the Dominion of Pakistan in 1947 the laws of the erstwhile British Raj remained in force. At no point in Pakistan's legal history was there an intention to begin the statute book afresh. During the reign of General Muhammad Zia-ul-Haq, elements of Islamic Sharia law were incorporated into Pakistani law, leading to the institution of a Federal Shariat Court (FSC). In some Federally and Provincially Administered Tribal Areas [(FATA) and (PATA)], a system of law employing traditional methods persists at the local level. At this informal level, disputes are settled by a jirga, a council of tribal elders.
Sole proprietorship in Pakistan Partnership in Pakistan Limited liability company in Pakistan Joint venture in Pakistan
Companies Ordinance, 1984 Companies General Provisions and Forms Rules, 1985 Single Member Companies Rules, 2003 Schedule of Filing Fee
Companies remain the most favored form of business organization 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 body corporate 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 FOR THREE DIFFERENT TYPES OF COMPANIES:
Further, under the Companies Ordinance, 1984 two types of limited liability companies are provided for, namely:
A private limited company 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. . REGISTRATION OF A COMPANY AND COMMENCEMENT OF BUSINESS IN PAKISTAN: The first step toward incorporation of a company in Pakistan is to file an application before the Registrar of Companies for availability of name. If the proposed name of the company is available and it is not in contravention to the provisions of the Companies Ordinance, 1984 and the Rules formed there under, then the Registrar shall issue a certificate stating that the proposed name is available to be adopted. The next step is to file the Memorandum of Association and Articles of Association, which in effect is the constitution of any company, with the Registrar of Companies in the Province where proposed company is to be incorporated, along with other necessary forms prescribed under the Companies Ordinance, 1984. When the company has been registered, the Registrar issues a Certificate of Incorporation. Once such a certificate has been issued by the Registrar a private limited company may commence its business immediately. Nonetheless, a public limited company cannot commence its business or exercise its borrowing powers yet unless the Registrar has issued a Certificate for Commencement of Business. The Registrar issues the Certificate for Commencement of Business only if the following requirements have been fulfilled:
Shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription Every director of the company has paid to the company the full amount on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash
No money is or may become liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for or to obtain permission for the shares or debentures to be dealt in on any stock exchange There has been filed with the Registrar of Companies a duly verified declaration by the chief executive or one of the directors and the secretary in the prescribed form
that the aforesaid conditions have been complied with and the Registrar of Companies has issued a Certificate of Commencement of Business In the case of a company which has not issued a prospectus inviting the public to subscribe for its shares, there has been filed with the Registrar of Companies, a statement in lieu of prospectus
A public limited company may either be listed or unlisted. In case of a listed company its shares may be quoted and dealt with on one of the three stock exchanges of Pakistan viz. Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange. Whereas the shares of an unlisted public limited company may not listed on a stock exchange. A public limited company that intends to have its shares listed on a stock exchange must obtain permission from the relevant stock exchange under the listing regulations of that stock exchange.
a conditional promise by the surety that if the principal debtor defaults he shall be liable to the creditor. Difference between Indemnity and Guarantee:
In a contract of indemnity there are two parties i.e. indemnifier and indemnified. A contract of guarantee involves three parties i.e. creditor, principal debtor and surety. An indemnity is for reimbursement of a loss, while a guarantee is for security of the creditor. In a contract of indemnity the liability of the indemnifier is primary and arises when the contingent event occurs. In case of contract of guarantee the liability of surety is secondary and arises when the principal debtor defaults. The indemnifier after performing his part of the promise has no rights against the third party and he can sue the third party only if there is an assignment in his favour. Whereas in a contract of guarantee, the surety steps into the shoes of the creditor on discharge of his liability, and may sue the principal debtor.
A 'pledge' is a bailment of goods wherein the goods are delivered as a security for payment of a debt or performance of a promise.The bailor is called the 'pledgor' or 'pawnor' and the bailee is called the 'pledgee' or 'pawnee'. Thus, pledge is a special kind of bailment. Pledge can be made only of movable properties. In order to make the pledge legally valid it is essential that the pledgor has the legal right or title to retain the goods. Difference between Bailment and Pledge:
Purpose:- A pledge is made for a specific purpose, while bailment can be made for any purpose.
Property:- In bailment, the bailee gets only the possession of goods bailed. The ownership remains with the bailor. In the case of pledge, the pledgee acquires a special property in the goods pledged whereby he gets possession coupled with the power of sale, on default.
Right of sale :- Bailee can exercise a lien on the goods bailed. He has no right of sale. But in case of a pledge, the pledge can sell the goods after due notice to pawner.
CONTRACTS OF AGENCY
An 'Agent' is a person employed to do any act or to represent another in dealings with third persons. The person who employs the agent and for whom such act is done,or who is so represented,is called the 'principal'. The relation between the agent and the principal is called 'Agency'. It is only when a person acts as a representative of the other in the creation,modification or termination of contractual obligations,between that order and third persons,that he is an agent. The essence of a contract of agency is the agent's representative capacity coupled with a power to affect the legal relations of the principal with third persons. Contracts of agency are based on two important principles:-
Whatever a person can do personally shall also be allowed to be done through an agent except in case of contracts involving personal services such as painting, marriage, singing, etc.
He who does an act through a duly authorised agent does it by himself i.e. the acts of the agent are considered the acts of the principal
CONTRACT OF SALE
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. [section 4(1)]. A contract of sale may be absolute or conditional. [section 4(2)]. Thus, following are essentials of contract of sale - * It is contract, i.e. all requirements of contract must be fulfilled * It is of goods * Transfer of property is required * Contract is between buyer and seller * Sale should be for price * A part owner can sale his part to another part-owner * Contract may be absolute or conditional.
delivery or payment or both shall be postponed. [section 5(1)]. 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 partly by word of mouth or may be implied from the conduct of the parties. [section 5(2)]. Thus, credit sale is also a sale. - - A verbal contract or contract by conduct of parties is valid. e.g. putting goods in basket in super market or taking food in a hotel.
TRANSFER OF PROPERTY
Property means the general property in goods, and not merely a special property. [section 2(11)]. In laymans terms property means ownership. General Property means full ownership. Thus, transfer of general property is required to constitute a sale. If goods are given for hire, lease, hire purchase or pledge, general property is not transferred and hence it is not a sale.
possession of seller after sale transaction is over, the possession is with seller, but property is with buyer.
GOODS
Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [section 2(7)].
PRICE
Price means the money consideration for a sale of goods. [section 2(10)]. Consideration is required for any contract. However, in case of contract of sale of goods, the consideration should be price i.e. money consideration. ASCERTAINMENT OF PRICE The price in a contract of sale may be fixed by the con tract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties. [section 9(1)]. 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. [section 9(2)].
main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. [section 12(2)]. Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the con tract. A stipulation may be a condition, though called a warranty in the contract. [section 12(4)]. Where a particular stipulation in contract is a condition or warranty depends on the interpretation of terms of contract. Mere stating Conditions of Contract in agreement does not mean all stipulations mentioned are conditions within meaning of section 12(2).
TIME OF PAYMENT IS NOT ESSENCE OF CONTRACT BUT TIME OF DELIVERY OF GOODS IS, UNLESS SPECIFIED OTHERWISE
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 stipula tion as to time is of the essence of the contract or not depends on the terms of the contract. [section 11]. As a general rule, time of payment is not essence of contract, unless there is specific different provision in Contract. In other words, time of payment specified is warranty. If payment is not made in time, the seller can claim damages but cannot repudiate the contract.
CAVEAT EMPTOR
The principle termed as caveat emptor means buyer be aware. Generally, buyer is expected to be careful while purchasing the goods and seller is not liable for any defects in goods sold by him. This principle in basic form is embodied in section 16 that subject to provisions of Sale of Goods Act and any other law, there is no implied condition or warranty as to quality or fitness of goods for any particular purpose. As per section 2(12), Quality of goods includes their state or condition.
AUCTION SALE
Auction sale is special mode of sale. The sale is made in open after making public announcement. Buyers assemble and make offers on the spot. Person offering to pay highest price gets the goods. Usually, auctioneer is appointed to conduct auction. Higher and higher bids are offered and sale is complete when auctioneer accepts a bid.- - - In the case of a sale by auction
(1) where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale; (2) the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary man ner; and, until such announcement is made, any bidder may retract his bid; (3) a right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so re served, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bid at the auction; (4) where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer; (5) the sale may be notified to be subject to a reserved or upset price; (6) if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer. [section 64].
other practice which cannot be carried out as a limited liability company under the provisions of law. In all other cases where the number of intended partners increases beyond the figure of twenty a company should be incorporated. A partnership may be registered with the Registrar of Firms of an area where the office of the firm is situated or proposed to be situated. A statement in prescribed form must be delivered to the relevant Registrar stating:
Firm name Place or principal place of business of the firm Names of any other places where the firm carries on business Date when each partner joined the firm Names in full and permanent addresses of the partners Duration of the firm
The aforestated statement must be signed by all the partners of the firm for the time being or any authorized agent on their behalf. Furthermore, the statement must be verified by the persons signing it. Once Registrar is satisfied that the abovementioned requirements have been complied with he records entry of the statement in Register of Firms and files the statement.
however, they merely agree to act together in a specific manner and under certain terms and conditions. In such a case each party retains its own individual identity which may be in the form of a company or a partnership. In a joint venture, therefore, these parties agree to enter into a consortium or a joint venture agreement. Relationship between the parties is created on the terms and conditions as stated in this agreement and no relationship that is beyond the ambit of this agreement comes into existence. Rights, liabilities etc. of each contracting party are also determined according to the terms and conditions of the agreement.