Business & Labour Law

7/27/2019 Business & Labour Law

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Answer No. 1

Acceptance must be communicated

A simplify definition of a contract can be a legally bindingagreement between two parties. Basically, Contract Act 1950 was

governing the contractual transactions in Malaysia. If there are somecases which the law of contract unable to dealt with sufficiently, theEnglish law can be applied. There are lots of contract is beingoffered, accepted or even rejected daily around the globe. All thesecontracts are made orally or in the written form. As the examples fororally made contract such as buying coffee at a shop, buying a reloadcoupon for mobile phone. Whereas contracts in written form such asbuying a house or a contract of buying a car.

Definition of Contract

Contract is a written or spoken agreement between two or moreparties, intended to be enforceable by law. Contracts are essential tocommercial life. In order that the business community may regard

contracts with a high degree of confidence, it is important ensurethat the contracts are well regulated, and certain in form and effect.

Definition of Contract Act 1950

Generally, in Malaysia, the Contract Act 1950 regulates the law ofcontracts. In section 2(h) of the Contracts Act 1950 (CA), contract isan agreement enforced by law. It makes a contract legalized. If a

particular subject, concerning the law of contract is not dealtsufficiently or not at all by the Contract Act or Malaysian decidedcases, may the English law be applied.

A contract is formed when two parties with the correct mentalintent, under the correct circumstances, within the boundaries of


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the law, and with some detriment to each of them agree to docertain acts in exchange for the others acts. This formation requires

the presence of all these elements; the lack of one elements orpresence of a problem, such as illegality, can invalidate the contract.

There essential elements or pre-requisites of a valid contract areoffer, acceptance, consideration, intention to create legal relations,certainty and capacity.

Offer

The offer is the first part of a contract. The person who makes theoffer is called the offeror, and the person to whom the offer is makesis called the offeror. Offer is a proposal offered by the offeror andofferee. In section 2(a) when one person signifies to another hiswillingness to do or to abstain from doing anything, with a view toobtaining the assent of that other to the act or its abstinence, he issaid to make a proposal. Therefore, a proposal or offer is something,which is capable of being converted into an agreement by its

acceptance.

An offeror is people who are propose a contract or a person whomake a contract while an offeree is a person who accepts theproposal made by offeror. The offer example is when A offers hisFerrari to B for the price of RM300,000. B is accepts to offer bybuying the car from A. Therefore, A is the offeror and B is theofferee.

There are 2 types of offer; bilateral offer and unilateral offer.Bilateral offer is an offer made to a specific person or group ofpersons. On the other hand, unilateral offer is not made to anyspecific person rather it is made to the world at large.


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There are five types of unilateral offer that are display of goods inshop, advertisement in the newspaper, auction sale, tenders andoffer made to the world at large.

Auction sale is the auctioneer call for bids is only an invitation tothreat. When there are someone calls his bid, he is consideringmaking an offer and the auctioneer is free to accept or reject the bid.Besides, tender is means that when the tenders are invited from thepublic for the highest price or the lowest price for the tendereditems or services to having the required items or services. All thisare regarded as mere invitation to treat.

The example of unilateral offer is Carlill v The Carbolic Smoke BallCompany [1893] 1 QB 525. The fact is the Carbolic Smoke BallCompany has made a product called smoke ball which claimed thatit could protect the person from getting influenza. The company alsoadvertised that they will offer 100 to anyone who still succumbedto influenza after using the products in a fixed period. Furthermore,the company also already deposited 1000 to the bank to show theirgenuine intention in the matter. The plaintiff; Mrs Carlill has bought

the smoke ball and used it for a fixed period but she still contractedsuffer from this influenza. While she asked for the reward theCarbolic Company claimed that there was no enforceable contract.Conclusion, the Court of Appeal that the plaintiff was gets the 100as she had accepted the offer made to the world at large.

Acceptance

There are a few principles and rules of acceptance. According to S4(1) CA 1950, the communication of proposal is complete when itcomes to the knowledge of the person to whom it is made (offeree).Besides, communication of acceptance is complete when it iscommunicated to the offeror.


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As the topic we are discussing, acceptance must be communicated tothe proposer in order to make a contract valid. There are severalrules dealing with the communication of acceptance that are the

acceptance must be communicated. It was depending on theconstruction of the contract, the acceptance may not have to comeuntil the announcement of the performance of the conditions in theoffer but nevertheless the acceptance must be communicated.

Besides, the offeree who is the person to whom the offer is made canonly accept an offer. Furthermore, an offeree is not limit if anotherperson accepts the offer on his behalf without his approval.

Moreover, if the offer specifies a manner of acceptance such as bypost or fax, then we must accept it using a manner that is no lesseffective than the manner specified but it is an exception to thepostal rule. Finally, silent is not considered as an acceptance.However, there is an exception for postal rule. In the case ofFelthouse v Bindley, A make an offer to sell his house to B but B didnot communicate to A to buy his house. Finally, B was bought thehouse under the pressure that given. It was held that silent cannot

be implied as acceptance.

The definition of acceptance is looking at a situation an offereeagreed to the offer made by the offeror. In section 2(b) when theperson to whom the proposal is made signifies his assent thereto,the proposal is said to be accepted: a proposal, when accepted,becomes a promise. According to section 2(c), the person whomaking proposal is called the promisor and the person accepting the

proposal is called the promise. The promisor is also known as aproposer or an offeror. A promisee is also referred to as an

acceptor or offeree.

An acceptance must be differentiating with a counter offer. If theofferee denies and refuses the offer or changes the terms of the


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offer, the offer has been broken and cannot be accepted at a futuretime. In the case of Hyde v Wrench, the defendant offer to sell anestate to the plaintiff at a certain price. However, the plaintiff madean offer to buy at a lower price. This offer was refused.

Subsequently, the plaintiff was willing to accept the initial offer. Itwas held that no contract was made as the initial offer did not existat the time the plaintiff tried to accept it. Therefore, the offer hasbeen terminated by the counter offer.

There are a few conditions of acceptance. Firstly, the acceptancemust be absolute and unqualified. In section 7(a) in order to converta proposal into a promise the acceptance must be absolute and

unqualified. According to Oxford Advanced Learners Dictionary,absolute means definite and without any doubt or confusion, whileunqualified means having the right knowledge.

Secondly, the communication of proposal is very important part. Ofcourse, an offer or a proposal needs to be communicated to theintended promisee. In section 4(1), the communication of proposal

is completed when it comes to the knowledge of the person to whom

it is made. Similarly, the acceptance by the promisee needs to becommunicated to the promisor. This is important because, thepromisor can always revoke his or her offer before there is anacceptance, but no after.

Lastly, communication of acceptance is the last part of the offer andacceptance. In section 4(2), the communication of acceptance is

complete; as against the proposer, when it is put in a course of

transmission to him, so as to be out of the power of acceptor; asagainst the acceptor, when it comes to the knowledge of theproposer So, for the promisor proposer, his offer is deemed to be

accepted the moment the promise has transmitted the acceptance tothe promisor and there is no possibility for him to retract it, evenbefore the promisor has received it or comes to know about it.


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However, for the promisee or acceptor, the acceptance is consideredto be communication to the promisor only when the promisor hasreceived it to come to know about it. An offeror cannot stipulate inthe offer that silence or no communication will deem to be

acceptance.

Communication of acceptance

I agree with the statement of A contract is not made until

acceptance is actually communicated to the proposer.

Acceptance, whether by the words or conduct, is not effective until itis actually communicated to the offeror by the offeree or hisauthorized agent. The main reason for this rule is to protect theofferor who could otherwise find himself in the unenviable positionof being bound to a contract without his knowing that his offer hadbeen accepted.

An exception to this general rule is the acceptance, which sent by

post. This exception is commonly known as the postal rule. Thepostal rule states that an acceptance by post takes effect when theacceptance is posted and not when the acceptance is actuallyreceived. The effect of this rule is that the acceptance is valid beforeit is actually communicated to the offeror. This is true even wherethe letter never reaches its destination.

However, the postal rule cannot be applied in all cases where theacceptance is by post. It can only apply where it is specified thatacceptance may be by way of post or where it is reasonable to postthe acceptance, such as where the offer itself was sent by post. Ofcourse, where the terms of the offer itself exclude the postal rule, itwill not be applicable. For instance, the terms of the contract maysay expressly that the acceptance is effective only when received by


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or communicated to the offeror. If this is the case, then there isobviously no scope for the application of the postal rule. It shouldalso be noted that the postal rule applies only to letters, which havebeen properly stamped and addressed.

The postal rule also does not apply where the acceptance is made byway of instantaneous communication, such as during a face- to-faceconversation or a telephone conversation. However, with the adventof new modes of communication, for example facsimile, voice-mailor electronic mail messages, which are neither as delayed as postnor as instantaneous as an actual conversation, the precise scope ofthe postal rules application becomes more uncertain. The

application of this rule can be crucial where disputes arise as towhether there has been valid acceptance in the event. Theacceptance is transmitted but not necessary must be received by orcommunicated to the offeror.

The law in relation to this issue is still uncertain. There have beensuggestions, however, that the answer should depend on eachparticular set of facts and whether it was possible in each case for

the sender of the acceptance to be aware of the fact that thecommunication of acceptance had not been successful. Where it ispossible for the sender to defect non-communication, the burden ison the sender to re-transmit the message and the postal rule wouldnot apply. On the other hand, where detection is not possible, thenthe postal rule would apply to render the acceptance effective upontransmission. This reasoning would apply as well to voice-mail orelectronic mail messages which are garbled or which go astray.

It is importance to realize that the postal rule only applies to thecommunication of acceptance. It does not apply to communication ofan offer or the communication of a revocation of an offer or to thecommunication of a revocation of an acceptance.


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Difference Between An Offer & An Invitation To Treat

An invitation to treat is not an offer but an invitation to bid orbargain for an item. For example, at an auction persons may bid on

various items presented. An invitation to treat also occurs alsowhen goods are advertised for sale in the media or in shop windows.Goods in a shop window or goods advertised are not an offer by theowners of the goods but are technically an invitation for interestedpersons to make an offer.

Conditions Under Which Offer And Acceptance Are CommunicatedAn offer must be very clearly made. An offer can be made to one

person, a group or to the whole world. For example, offering areward for a lost wallet is an offer to anyone finding the wallet. Incases where there is a counter-offer the original offer is no longervalid. A counter offer is an implied rejection of the original offer.Foe example: John offers to sell Paula a laptop for $10,000. Paulasubsequently offers him $8000.00 as she thought $10,000 was tooexpensive. Paula has rejected Johns original offer and has made acounter-offer of $8,000.

Acceptance must also be clear. In the case of a counter offer a clearacceptance to the new offer must be identified.Contracts may be made orally, in writing or they may be implied.

Oral Contracts

Are based on what the parties said. For example, asking someone towash your car for payment

Written Contracts

Both offerer and offeree must sign the contract documentImplied Contracts

Implied Contracts are made by the observed actions of the partiesinvolved. For example, someone who sits at a table in a restaurant


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and places an order has implied that he will pay for the food thatwill be served.

Answer No. 2

Partnership

An association of two or more persons engaged in a business

enterprise in which the profits and losses are shared

proportionally. The legal definition of a partnership is

generally stated as "an association of two or more persons to

carry on as co-owners a business for profit" (Revised Uniform

Partnership Act 101 [1994]).Early English mercantile courts

recognized a business form known as the societas. Thesocietasprovided for an accounting between its business partners, an agencyrelationship between partners in which individual partners couldlegally bind the partnership, and individual partner liability for thepartnership's debts and obligations. As the regular English courtsgradually recognized the societas, the business form eventuallydeveloped into the common-law partnership. England enacted itsPartner-ship Act in 1890, and legal experts in the United States

drafted a Uniform Partnership Act (UPA) in 1914. Every state hasadopted some form of the UPA as its partnership statute; somestates, however, have made revisions to the UPA or have adoptedthe Revised Uniform Partnership Act (RUPA), which legal scholarsissued in 1994.

The authors of the initial UPA debated whether in theory apartnership should be treated as an aggregate of individual partners

or as a corporate-like entity separate from its partners. The UPAgenerally opted for the aggregate theory in which individualpartners ("an association") comprised the partnership. Under anaggregate theory, partners are co-owners of the business; thepartnership is not a distinct legal entity. This led to the creation of anew property interest known as a "tenancy in partnership," a legal


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construct by which each partner co-owned partnership property. Anaggregate approach nevertheless led to confusion as to whether apartnership could be sued or whether it could sue on its own behalf.Some courts took a technical approach to the aggregate theory and

did not allow a partnership to sue on its own behalf. In addition,some courts would not allow a suit to go forward against apartnership unless the claimant named each partner in thecomplaint or added each partner as an "indispensable party."

The RUPA generally adopted the entity approach, which treats thepartnership as a separate legal entity that may own property andsue on its own behalf. The RUPA nevertheless treats the partnership

in some instances as an aggregate of co-owners; for example, itretains the joint liability of partners for partnership obligations. As apractical matter, therefore, the present-day partnership has bothaggregate and entity attributes. The partnership, for instance, isconsidered an association of co-owners for tax purposes, and eachco-owner is taxed on his or her proportional share of thepartnership profits.

Relationship of Partners to Each Other

Each partner has a right to share in the profits of the partnership.Unless the partnership agreement states otherwise, partners shareprofits equally. Moreover, partners must contribute equally topartnership losses unless a partnership agreement provides foranother arrangement. In some jurisdictions a partner is entitled tothe return of her or his capital contributions. In jurisdictions thathave adopted the RUPA, however, the partner is not entitled to sucha return.


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In addition to sharing in the profits, each partner also has a right toparticipate equally in the management of the partnership. In manypartnerships a majority vote resolves disputes relating tomanagement of the partnership. Nevertheless, some decisions, such

as admitting a new partner or expelling a partner, require thepartners' unanimous consent.

Each partner owes a fiduciary duty to the partnership and tocopartners. This duty requires that a partner deal with copartners inGood Faith, and it also requires a partner to account to copartnersfor any benefit that he or she receives while engaged in partnershipbusiness. If a partner generates profits for the part-nership, for

example, that partner must hold the profits as a trustee for thepartnership. Each partner also has a duty of loyalty to thepartnership. Unless copartners consent, a partner's duty of loyaltyrestricts the partner from using partnership property for personalbenefit and restricts the partner from competing with thepartnership, engaging in self-dealing, or usurping partnershipopportunities.

Liability

Generally, each partner is jointly liable with the partnership for theobligations of the partnership. In many states each partner is jointlyand severally liable for the wrongful acts or omissions of acopartner. Although a partner may be sued individually for all thedamages associated with a wrongful act, partnership agreementsgenerally provide for indemnification of the partner for the portionof damages in excess of her or his own proportional share.

Some states that have adopted the RUPA provide that a partner isjointly and severally liable for the debts and obligations of thepartnership. Nevertheless, before a partnership's creditor can levy a


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judgment against an individual partner, certain conditions must bemet, including the return of an unsatisfied writ of execution againstthe partnership. A partner may also agree that the creditor need notexhaust partnership assets before proceeding to collect against that

partner. Finally, a court may allow a partnership creditor to proceedagainst an individual partner in an attempt to satisfy thepartnership's obligations.

Dissolution

A dissolution of a partnership generally occurs when one of thepartners ceases to be a partner in the firm. Dissolution is distinctfrom the termination of a partnership and the "winding up" ofpartnership business. Although the term dissolution impliestermination, dissolution is actually the beginning of the process thatultimately terminates a partnership. It is, in essence, a change in therelationship between the partners. Accordingly, if a partner resignsor if a partnership expels a partner, the partnership is considered

legally dissolved. Other causes of dissolution are the Bankruptcy ordeath of a partner, an agreement of all partners to dissolve, or anevent that makes the partnership business illegal. For instance, if apartnership operates a gambling casino and gambling subsequentlybecomes illegal, the partnership will be considered legally dissolved.In addition, a partner may withdraw from the partnership andthereby cause a dissolution. If, however, the partner withdraws inviolation of a partnership agreement, the partner may be liable for

damages as a result of the untimely or unauthorized withdrawal.

After dissolution, the remaining partners may carry on thepartnership business, but the partnership is legally a new anddifferent partnership. A partnership agreement may provide for apartner to leave the partnership without dissolving the partnership


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but only if the departing partner's interests are bought by thecontinuing partnership. Nevertheless, unless the partnershipagreement states otherwise, dissolution begins the process wherebythe partnership's business will ultimately be wound up and

terminated.

Dissociation

Under the RUPA, events that would otherwise cause dissolution areinstead classified as the dissociation of a partner. The causes ofdissociation are generally the same as those of dis-solution. Thus,

dissociation occurs upon receipt of a notice from a partner towithdraw, by expulsion of a partner, or by bankruptcy-relatedevents such as the bankruptcy of a partner. Dissociation does notimmediately lead to the winding down of the partnership business.Instead, if the partnership carries on the business and does notdissolve, it must buy back the former partner's interest. If, however,the partnership is dissolved under the RUPA, then its affairs must bewound up and terminated.

Winding Up

Winding up refers to the procedure followed for distributing orliquidating any remaining partnership assets after dissolution.Winding up also provides a priority-based method for dischargingthe obligations of the partnership, such as making payments to non-partner creditors or to remaining partners. Only partners who have

not wrongfully caused dissolution or have not wrongfullydissociated may participate in winding up the partnership's affairs.

State partnership statutes set the procedure to be used to wind uppartnership business. In addition, the partnership agreement mayalter the order of payment and the method of liquidating the assets


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of the partnership. Generally, however, the liquidators of apartnership pay non-partner creditors first, followed by partnerswho are also creditors of the partnership. If any assets remain aftersatisfying these obligations, then partners who have contributed

capital to the partnership are entitled to their capital contributions.Any remaining assets are then divided among the remainingpartners in accordance with their respective share of partnershipprofits.

Under the RUPA, creditors are paid first, including any partners whoare also creditors. Any excess funds are then distributed accordingto the partnership's distribution of profits and losses. If profits or

losses result from a liquidation, such profits and losses are chargedto the partners' capital accounts. Accordingly, if a partner has anegative balance upon winding up the partnership, that partnermust pay the amount necessary to bring his or her account to zero.

Limited Partnerships

A limited partnership is similar in many respects to a generalpartnership, with one essential difference. Unlike a generalpartnership, a limited partnership has one or more partners whocannot participate in the management and control of thepartnership's business. A partner who has such limited participationis considered a "limited partner" and does not generally incurpersonal liability for the partnership's obligations. Generally, theextent of liability for a limited partner is the limited partner's capitalcontributions to the partnership. For this reason, limitedpartnerships are often used to provide capital to a partnershipthrough the capital contributions of its limited partners. Limitedpartnerships are frequently used in real estate and entertainment-related transactions.


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The limited partnership did not exist at Common Law. Like a generalpartnership, however, a limited partnership may govern its affairsaccording to a limited partnership agreement. Such an agreement,however, will be subject to applicable state law. States have for the

most part relied on the Uniform Limited Partnership Act in adoptingtheir limited partnership legislation. The Uniform LimitedPartnership Act was revised in 1976 and 1985. Accordingly, a fewstates have retained the old uniform act, and other states have reliedon either revision to the uniform act or on both revisions to theuniform act.

A limited partnership must have one or more general partners who

manage the business and who are personally liable for partnershipdebts. Although one partner may be both a limited and a generalpartner, at all times there must be at least two different partners in alimited partnership. A limited partner may lose protection againstpersonal liability if she or he participates in the management andcontrol of the partnership, contributes services to the partnership,acts as a general partner, or knowingly allows her or his name to beused in partnership business. However, "safe harbors" exist in which

a limited partner will not be found to have participated in the"control" of the partnership business. Safe harbors includeconsulting with the general partner with respect to partnershipbusiness, being a contractor or employee of a general partner, orwinding up the limited partnership. If a limited partner is engagedsolely in one of the activities defined as a safe harbor, then he or sheis not considered a general partner with the accompanying potentialliability.

Except where a conflict exists, the law of general partnershipsapplies equally to limited partnerships. Unlike general partnerships,however, limited partnerships must file a certificate with theappropriate state authority to form and carry on as a limitedpartnership. Generally, a certificate of limited partnership includes


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the limited partnership's name, the character of the limitedpartnership's business, and the names and addresses of generalpartners and limited partners. In addition, and because the limitedpartnership has a set term of duration, the certificate must state the

date on which the limited partnership will dissolve. The contents ofthe certificate, however, will vary from state to state, depending onwhich uniform limited partnership act the state has adopted.

Answer No. 3

Business Law in Pakistan

This overview of business laws of Pakistan is a very briefdescription of common forms of businesses adopted by private andpublic sector investors in Pakistan. An attempt has also been madeto outline general requirements and regulatory regimes for each ofthese forms of businesses in Pakistan. These brief notes are forgeneral guidance only and should not be taken as a substitute forthorough and professional legal advice.

What are the common forms of business in Pakistan?

Main forms of business organisations adopted by private sector inPakistan are as follows:

1. Sole proprietorship

2. Partnership

3. Limited liability company

4. Joint venture

Main forms of business organisations adopted by the public sector,where the government wishes to undertake an enterprise, inPakistan are either a limited liability company or a statutorycorporation.


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Out of these diverse forms of business set ups in Pakistan, a limitedliability company remains the most favourable form of businessorganisation for medium and large-scale businesses in Pakistan.

Business Laws of Pakistan

Relevant Laws of Pakistan

Companies Ordinance, 1984

Companies General Provisions and Forms Rules, 1985

Single Member Companies Rules, 2003

Schedule of Filing Fee

Companies remain the most favoured form of business organisationin Pakistan especially for medium and large-scale businessenterprises. Legal regime for establishment and regulation ofcompanies in Pakistan is given in the Companies Ordinance, 1984.Whereas the function of administration of these companies is vestedin the Securities and Exchange Commission of Pakistan and theRegistrar of Companies appointed by the Securities and Exchange

Commission of Pakistan for a province of Pakistan where suchcompany is to be registered.Under the provisions of the Companies Ordinance, 1984 a companyis a body corporate with separate legal entity and a perpetualsuccession and a company may be formed by persons associating forany lawful purpose by subscribing their names to the Memorandumof Association and complying with other requirements forregistration of a company under the provisions of the Ordinance.

The Companies Ordinance, 1984 provides for three different typesof companies:

A company limited by shares


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A company limited by guarantee

An unlimited liability company

Further, under the Companies Ordinance, 1984 two types of limitedliability 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 bysubscribing their name(s) to the Memorandum of Association andcomplying with other registration specific requirements of theCompanies Ordinance, 1984 may incorporate a private limitedcompany. Provided that where a company has only one subscriberto the Memorandum of Association then such a company is called aSingle Member Company, however, a Single Member Companyremains a private limited company for all intents and purposes of

the Ordinance. Whereas any three or more persons so associatedmay form a public limited company. A company limited by shares,whether a private company or a public company, is the mostcommon 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 tofile an application before the Registrar of Companies for availabilityof name. If the proposed name of the company is available and it isnot in contravention to the provisions of the Companies Ordinance,1984 and the Rules formed there under, then the Registrar shall


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issue a certificate stating that the proposed name is available to beadopted.

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 proposedcompany is to be incorporated, along with other necessary formsprescribed under the Companies Ordinance, 1984. When thecompany 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 borrowingpowers 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:

1.Shares held subject to the payment of the whole amount thereofin cash have been allotted to an amount not less in the whole than

the minimum subscription.

2.Every director of the company has paid to the company the fullamount on each of the shares taken or contracted to be taken by himand for which he is liable to pay in cash.

3.No money is or may become liable to be repaid to applicants forany shares or debentures which have been offered for public

subscription by reason of any failure to apply for or to obtainpermission for the shares or debentures to be dealt in on any stockexchange.

4.There has been filed with the Registrar of Companies a dulyverified declaration by the chief executive or one of the directors


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and the secretary in the prescribed form that the aforesaidconditions have been complied with and the Registrar of Companieshas issued a Certificate of Commencement of Business.

5.In the case of a company which has not issued a prospectusinviting the public to subscribe for its shares, there has been filedwith the Registrar of Companies, a statement in lieu of prospectus.

A public limited company may either be listed or unlisted. In case ofa listed company its shares may be quoted and dealt with on one ofthe 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 astock exchange. A public limited company that intends to have itsshares listed on a stock exchange must obtain permission from therelevant stock exchange under the listing regulations of that stockexchange.Company Registration in Pakistan How to register a private

limited company in Pakistan

It is very easy to set up a private limited company in Pakistan;however, people generally dont know registration procedure. Thereare large numbers of law firms working in the country to provideconsultancy for incorporation but it is always good to have littleknowledge about processes involved in registration.

In Pakistan, private limited companies are incorporated andregulated by the Companies Ordinance, 1984 while Securities and

Exchange Commissioner of Pakistan (SECP) is a regulatory authorityestablished for regulation of stock markets and the Companiesordinance, 1984. One of the important functions of the Commissionis the registration/incorporation of public and private limitedcompanies. Therefore, people who want to get their private limitedcompanies registered are supposed to apply to the commission. The


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commission issues incorporation certificate when all requirementsare met by promoter(s) as per law.

Following steps are involved in incorporation process. The

explanation is oversimplified keeping in view that reader of thisarticle is a common man who doesnt have background of law orbusiness administration.

1. You are going to register a company and the first step is to namethat company. The SECP does not allow choosing name that isotherwise inappropriate, deceptive or designed to exploit or offendthe religious susceptibilities of the people and neither is identical

nor closely resembling with the name of an existing company.Moreover, SECP does not allow including prohibited words in nameof the company and if you want to know about these words clickhere. After selection of name, make sure this name is valid accordingto criteria laid down by the SECP. Click here to check validity ofproposed name of your private limited company.

2. Before applying for registration/incorporation you are required

to get name availability certificate from SECP. You may fileapplication before SECP for the purpose and application fee is Rs.200 & Rs. 500 for online and offline application respectively. SECPwill issue a certificate to you regarding availability and validity ofproposed name of your company.

3. Now, at this step you are advised to decide authorized capital orshare capital of your company. It means total investment you have

to run your business. Registration fee is based on total share capitaland fee calculator will help you in calculating the same.

4. Start preparing your documents now. You need copies of NationalIdentity Cards (NICs) of each subscriber (you may sayshareholder), four printed copies of Memorandum of Association


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and Articles of Association, Form I, Form 21 & Form 29, originalpaid challan evidencing payment of fee in any of authorizedbranches of MCB bank limited and authorization of sponsors infavor of a person to make good the deficiencies, if any, pointed out

by the Registrar in any documents submitted forincorporation/registration.

5. For understanding purposes, I would like to explain thatMemorandum of Association tells about business and sector of thecompany e.g. travel agency, educational institution, trading,supplies, chain of stores, manufacturing of cement etc. In otherwords Memorandum of Association tells about relationship between

your company and outside.

On the other hand, Articles of Association tells about the day-to-dayworking of the company i.e. how the company will run, how CEO anddirectors will be appointed and about Annual General Meeting(AGM) of the company etc..

Answer No. 4

Provisions as to applications for winding up.

-An application to the Court for thewinding up of a company shall be by petition presented, subject

to the provisions of this section,

either by the company, or by any creditor or creditors

(including any contingent or prospective

creditor or creditors),or by any contributory or contributories, orby all or any of the aforesaidparties, together or separately, or by the registrar, or by theCommission or by a personauthorised by the Commission in that behalf.Provided that-


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(a) a contributory shall not be entitled to present a petition forwinding up a companyunless-

(i) either the number of members is reduced, in the case of a privatecompany,below two, or, in the case of any other company, below seven; or

(ii) the shares in respect of which he is a contributory or some ofthem eitherwere originally allotted to him or have been held by him, and

registered inhis name, for at least six months during the eighteen months beforethecommencement of the winding up, or have or devolved on himthrough thedeath of a former holder;

(b) the registrar shall not be entitled to present a petition for the

winding up of acompany unless the previous sanction of the Commission has beenobtained to thepresentation of the petition:Provided that no such sanction shall be given unless the companyhas first beenafforded an opportunity of making a representation and of beingheard;

(c) the Commission or a person aurhorised by the Commission inthat behalf shall notbe entitled to present a petition for the winding up of a companyunless an


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investigation into the affairs of the company has revealed that it wasformed for anyfraudulent or unlawful purpose or that it is carrying on a businessnot authorised

by its memorandum or that its business is being conducted in amanneroppressive to any of its members or persons concerned in theformation of thecompany or that its management has been guilty of fraud,misfeasance orother misconduct towards the company or towards any to itsmembers; and such

petition shall not be presented or authorised to be presented by theCommissionunless the company has been afforded an opportunity of making arepresentationand of being heard;

(d) the Court shall not give a hearing to a petition for winding up acompany by a

contingent or prospective creditor until such security for costs hasbeen given asthe Court thinks reasonable and until a prima facie case for windingup has beenestablished to the satisfaction of the Court;(e) the Court shall not give a hearing to a petition for winding up acompany by thecompany until the company has furnished with its petition, in the

prescribedmanner, the particulars of its assets and liabilities and businessoperations and thesuits or proceedings pending against it.


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Right to present winding up petition where company is being

wound up

voluntarily or subject to Court's supervision. - (1) Where a company

is being wound upvoluntarily or subject to the supervision of the Court, a petition forits winding up by the Courtmay be presented by any person authorised to do so under section309 and subject to theprovisions of that section.(2) The Court shall not make a winding uporder on a petition presented to it undersub-section (1) unless it is satisfied that the voluntary winding up or

winding up subject to thesupervision of the Court cannot be continued with due regard to theinterests of thecreditors or contributories or both.

COMMENCEMENT OF WINDING UP

Commencement of winding up by Court.

- A winding up of a company by the Courtshall be deemed to commence at the time of the presentation of thepetition for the winding up.

POWERS OF COURT HEARING APPLICATION

Hearing of winding up petition by the Court.

- A petition for winding up of a companyshall come up for regular hearing, be proceeded with and decided inthe manner laid down insection 9.


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Court may grant injunction.

- The Court may, at any time after presentation ofthe petition for winding up a company under this Ordinance, and

before making an order for itswinding up, upon the application of the company itself or of any itscreditors or contributories,restrain further proceedings in any suit or proceeding against thecompany, upon such terms asthe Court thinks fit.Powers of Court on hearing petition

. - (1) On hearing a winding up petition the Courtmay dismiss it with or without costs, or adjourn the hearingconditionally or unconditionally subjectto the limitation imposed in section 9 or make any interim order, oran order for winding up thecompany or any other order that it deems just; but the Court shallnot refuse to make a windingup order on the ground only that the assets of the company havebeen mortgaged to an amount

equal to or in excess of those assets, or that the company has noassets.(2) Where the petition is presented on the ground that it is just andequitable that thecompany should be wound up, the Court may refuse to make anorder of winding up, if it is ofopinion that some other remedy is available to the petitioners andthat they are acting

unreasonably in seeking to have the company wound up instead ofpursuing that other remedy.(3) Where the petition is presented on the ground of default indelivering the statutoryreport or in holding the statutory meeting or any two consecutiveannual general meetings, the


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Court may, instead of making a winding up order, direct that thestatutory report shall bedelivered or that a meeting shall be held, and order that costs to bepaid by any persons who, in

the opinion of the Court, are responsible for the default.(4) If, on hearing a petition, the Court is of opinion that, although thefacts wouldjustify the making of a winding up order, the making of such orderwould unfairly prejudice themembers or the creditors, the Court may, instead of making anorder for winding up thecompany, make such order as it thinks fit in the circumstances for

regulating the conductof the affairs of the company and bringing to an end the matterscomplained of, including anorder for a change in the management of the company.(5) Where the Court makes an order for the winding up of acompany, it shall forthwithcause intimation thereof to be sent to the official liquidatorappointed by it and to the registrar.

Copy of winding up order to be filed with registrar.

- (1) Within fifteen days from thedate of the making of the winding up order, the petitioner in thewinding up proceedings and thecompany shall file a certified copy of the order with the registrar.(2) If default is made in complying with the foregoing provision, thepetitioner or, as thecase may require, the company, and every officer of the companywho is in default, shall bepunishable with fine which may extend to one hundred rupees foreach day during which the


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default continues.(3) On the filing of a certified copy of a winding up order, theregistrar shall forthwithmake a minute thereof in his books relating to the company, and

shall simultaneously notify in theofficial Gazette that such an order has been made.(4) Such order shall be deemed to be notice of discharge to theservants of thecompany, except when the business of the company is continued.

Suits stayed on winding up order.

- (1) When a winding up order has been made or aprovisional manager has been appointed, no suit or other legalproceeding shall be proceededwith or commenced against the company except by leave of theCourt, and subject to such termsas the Court may impose.(2) The Court which is winding up the

company shall, notwithstanding anythingcontained in any other law for the time being in force, havejurisdiction to entertain, or dispose of,any suit or proceeding by or against the company.(3) Any suit or proceeding by or against the company which ispending in any Courtother than that in which the winding up of the company isproceeding may, notwithstandinganything contained in any other law for the time being in force, betransferred to anddisposed of by the Court.

Answer No. 5


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Sales of goods act and discuss the essential characteristics of a

contract of sales of goods

Sales of Goods Act :-

It is defined in these words, "A contract where by the seller transfersor agrees to transfer the property or the goods to the buyer forprice."

A contract to transfer the ownership of goods from seller to thebuyer is known as contract of sale.

Main Features or Essentials

1. Buyer and Seller :-

One person cannot become buyer and also the seller, there arealways two parties to a contract of sale, buyer and seller.

Example :- Mr. Kashif sells the shop to Mr. Zahir. Mr. Kashif is aseller and Mr. Zahir is a buyer in this case.

2. Goods :-

Every kind of movable property except actionable claims (which canbe enforced by legal action) and money is regarded as goods.

Example :- Mr. Yuva sells his car to Mr. Larson for Rs. 7 lac. In thiscase car is a moveable property, so it is a contract of sale.

3. Price :-


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Price must be the consideration in the contract of sale. If goods areexchanged 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 totransfer the property ownership to the buyers. So possession andownership both will be transferred to buyer.

Example :- "X" sells the car to "Y" for 6 lac. The possession andownership both will transfer to "Y".

5. Sale :-

When ownership and possession of the good is immediatelytransferred from seller to buyer it is called contract of sale.

Example :- "X" buys a pen from the "Y" and pays the whole price onhis hand. It is a sale.

6. Agreement to Sell :-

When the transfer of ownership in the goods is to take place at afuture date the contract is called agreement to sell.

Example :-

Mr. Bazooka agrees to purchase Mr. Titoo bus for Rs. 25 lac. But thetransfer of bus will take place after one year. It is agreement to sell.


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Characteristics of a Contract for a Sale of Goods

Contracts for the sale of goods within the United States are governedby Article 2 of the Uniform Commercial Code (UCC). The UCC is thestandard set of business laws that regulate financial contracts.Characteristics of a contract for the sale of goods includeidentification of quantity, price terms and delivery terms. If a partybreaches a sales contract, parties have extensive legal remedies. UCC2 contracts are considered more flexible than their counterpartcontracts for services, which are governed by common law.

Forming a Contract

Sales contracts can be formed orally if they are under $500 orcapable of being performed within one year. There must be a"meeting of the minds" between both parties to a sales contract andeach party must objectively believe the other is intending to belegally bound. Contracts for amounts in excess of $500 or for oneyear or more must be written and signed by both parties. A contract

is formed when one party makes an offer and the other partyaccepts. There must be an exchange between the parties ofsomething for value, known as consideration.

Terms

The one term that must be present in a sales contract is a quantityterm. The quantity term must set forth the amount of the product to

be shipped or supplied. Parties should include a price term as well.Delivery terms are often included, such as whether the buyer willpick up the items at the seller's place of business or if the seller willarrange delivery via freight carrier or some other means.


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Leniency in Performance

Article 2 of the UCC is business friendly and encourages parties not

to hesitate in forming contracts. Slight glitches in performance willnot result in an automatic breach and parties are generally free to fixthe problem within a reasonable time. If a buyer orders 10 redjackets in size large, for instance, and the seller sends 10 red jackets,8 of which are size large and 2 of which are size extra-large, if buyernotifies the seller of the deficiency, the seller will generally have anopportunity to fix the mistake.

Remedies

In the event a breach of contract takes place, the UCC provides awide variety of means for the non-breaching party to recover themoney he lost in the deal. These are known as legal remedies.Depending on the situation, remedies for breach are designed toplace the non-breaching party in the position he was in before theother party breached the contract, e.g., if a party expected to sell 10red jackets and due to supplier's breach was unable to sell any red

jackets, the buyer would have a cause of action for the price of the10 jackets. Of course, the court will need evidence of the injuredparty's damages, such as sales records indicating the usual salesvalue of red jackets.

Business & Labour Law

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