Part 2

I have carefully drafted the legal considerations that will assist you through the transaction of
privatization of Heavy Electrical Complex (Pvt) Ltd (HEC), while safe guarding your interests.
The legal advice offered is supported by The Contract Act, 1872, which extends throughout
Pakistan.
The process would be initiated by the invitation of proposals for example through advertisement
in print media or road shows. In response, multiple bids would be received from the interested
parties. These bids are proposals (or offers), since according to section 2 subsection a (S.2
(a)), a proposal is made when one person signifies to another his willingness to do or abstain
from doing anything. A proposal should be distinguished from an invitation to receive
proposals. These advertisements are offers to negotiate and receive proposals. The Privatization
Commission should be conscious of the fact that, according to S.5, a proposal may be revoked
at any time before the communication of its acceptance is complete against the proposer, but not
afterwards. A proposal may be communicated in any way which has the effect of laying before
the Commission the willingness to do or abstain which can be done by the way of speech,
writing or other act. Thus the bidders may revoke their proposals at any time before or at the
moment when the letter communicating it reaches the Commission, but not afterwards.
Privatization Commission should carry out a valuation process to ascertain that a fair deal is
struck between the parties. The bids received will be evaluated on different criteria and it is not
binding upon the Commission to accept the highest bid. The Commission would then start
negotiations with a party whose bid it deems worthy. In case the Commission is not satisfied
with some aspects of the conditions, it will make a counter proposal before an acceptance is
made, since S.7 states that in order to convert a proposal into a promise, the acceptance must be
absolute and unqualified. When both parties agree upon the terms and conditions, the
Commission can accept the offer which will become a promise. An acceptance is the assent
given to a proposal and it has the effect of converting the proposal into promise. According to
S.2 (b) a proposal when accepted becomes a promise. Furthermore, according to S.2 (c) the
person making the proposal is promisor and the person accepting the proposal is a promisee. In
this case, the interested buyer is the promisor and the Privatization Commission is the promisee.
This promise becomes an agreement between the two parties because an agreement is an
accepted proposal, by mandate of S 2. (e) an agreement is every promise and set of promises
forming the consideration for each other . S.2 (d) states that when at the desire of the promisor
the promisee promises to do or abstains from doing something such an act is called consideration
for promise. The agreement without consideration is void but in this case, the consideration
fulfills the two conditions: (1) it exists and (2) the object of interest- HEC, is of value.
The agreement would then become a contract when, according to S.2 (h), it is enforceable by
law. A law is enforceable when, according to S.10, the following conditions are met:
1. There is some consideration for it.
2. The parties are competent to contract.
3. Their consent is free.
4. Their object is lawful.

Thus, every contract is an agreement but every agreement is not a contract.

An agreement requires an explicit act of acceptance by speech, writing or other act. The
Commission should be aware that all the dealings should be done with the person in authority.
Communication to any other person is as ineffective as if no communication had ever taken
place.
When the Commission (acceptor) dispatches the letter of acceptance to the chosen bidder, the
letter is no more in their power; the chosen bidder (proposer) is legally bound to comply with the
contract. On the other hand, the Privatization Commission will only become bound to comply
with the contract when posted letter is received by the chosen bidder. This is backed by S.4
which states the communication of acceptance is complete, as against the proposer, when it is
put in course of transmission to him, so as to be out of the power of the acceptor; as against the
acceptor, when it comes to the knowledge of the proposer.
The Privatization Commission should keep in mind that they can revoke their acceptance subject
to some conditions, according to S.5, an acceptance may be revoked at any time before the
communication of its acceptance is complete against the acceptor, but not afterwards. Thus the
communication of revocation, to be effective, must reach the chosen bidder before the
acceptance itself.
Acceptance should be made before the offer lapses in the circumstances provided for in S.6
which states that a proposal is revoked by the lapse of time prescribed in such proposal for its
acceptance.
An offer lapses on the death or insanity of the buyer provided that the fact comes to the
knowledge of the Commission before the acceptance of the proposal is made. This is supported
by S.6, which states that a proposal is revoked by the death and insanity of the proper if the fact
of his death or insanity comes to the knowledge of the acceptor before acceptance.

Comment [KAAR1]: paraphrase