Definition of Agent and Principal as contained in section 182 of the Contract Act, 1872

Definition of Agent and Principal as contained in section 182 of the Contract Act, 1872 is given below

Agent is a person employed to do any act for another or to represent another in dealing with a third persons. The person for whom such act is done, or who is so represented, is called the Principal.

Explanation

The legal relation between a merchant in one country and a commission agent in other is that of principal and agent, and not seller and buyer, though this is consistent with the agent and principal, when the agent consigns the goods to the principal, being in a relation like that of seller and buyer for some purposes. A merchant, therefore, in this country who orders goods through a firm of commission agents in Europe cannot hold the firm liable as if they were vendors for failure to deliver the goods. And the result is the same if the goods are ordered through a branch in this country of a firm of commission agents in another country. For the same reason, where a commission agent buys goods for a merchant at a price smaller than the limit specified in the indent, he cannot charge any price higher than that actually paid by him, except in the case of a custom to the contrary. An agent may have, and often has, in fact, a large discretion, but he is bound in law to follow the principal's instructions provided they do not involve anything lawful. To this extent an agent may be considered it’s a superior kind of servant; and a servant who is entrusted with any dealing with third persons on his master's behalf is to that extent an agent. But a servant may be wholly without authority to do anything as an agent, and agency, in the case of partners, even an extensive agency, may exist without any contract of hiring and service. ]

 Form of business

The instrument of letter of credit is governed by Uniform Customs and Practices for documentary credit, called UCP 600 which is issued by the international chambers of commerce. According to UCP 600, letter of credit.

The instrument of letter of credit is governed by Uniform Customs and Practices for documentary credit, called UCP 600 which is issued by the international chambers of commerce. According to UCP 600, letter of credit is defined as under

Credit means any arrangement, however named or described that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honor a complying presentation.

In a letter of credit the following parties are engaged:

1) Applicant (opener of L.C): means the party on whose request the credit is issued.

2) Issuing bank (opening bank): means the bank that issues a credit at the request of an applicant or on its own behalf.

3) Advising bank: means the bank that advises the credit  at  the request of issuing bank.

4) Confirming bank: means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request.

5) Negotiating bank: means the bank where negotiation of documents is carried out. Negotiation means the purchase by the nominated bank of drafts and/ or documents under a complying presentation by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.

6) Nominated Bank: means the bank with which the credit is available or any bank in the case of the credit available with any bank.

Form of business in which a banking company may engage is continued below

Bill of exchange is an important type of negotiable instruments, and has been defined in section 5 of the Negotiable Instruments Act, 1881

Bill of exchange is an important type of negotiable instruments, and has been defined in section 5 of the Negotiable Instruments Act, 1881 the said definition is reproduced below

“A bill of exchange is an instrument in writing containing an unconditional order, signed by maker, directing a certain person, to pay on demand or at fixed or determinable future time a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument”.

Ingredients of a bill of exchange

Some of the ingredients of bill of exchange are outlined below:

1. It must in writing
2. It must contain an order to pay and addressed to some person
3. The order must be unconditional
4. The order must be signed by the maker
5. The order must direct to pay on demand or at a fixed or determinable future time.
6. The sum ordered to be paid must be certain.
7. The payment should be ordered to be paid to a certain person, or to his order, or to the bearer.

 Features of a bill of exchange

Features of bill of exchange are discussed below:

A promise or order to pay is not conditional by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.

Forms of business carried out by a banking company under section 7 of theBanking companies ordinance 1962.

Forms of business carried out by a banking company under section 7 of the Ordinance

A banking company may engage in any one or more of the following forms of business, namely

• Borrowing, raising, or taking up of money
• the lending or advancing of money either upon or without security 
• the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates,

[The different instruments such as bill of exchange can be drawn, discounted and endorsed under the provisions of this Ordinance. All instruments including promissory notes, bills, bills of lading, drafts and debentures play an important role in various transactions carried out by the banks and provide liquidity to financial system. Role of bill of exchange is particularly very important. We shall discuss the concept of bill of exchange in greater details. Some aspects of bill of exchange are discussed so that the purpose and scope of these provisions may be duly understood. 

BANKING COMPANIES ORDINANCE, 1962

Statutory definitions

These definitions as contained in section 5 of the ordinance are given below:

(a) “approved securities” means the securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Trust Act, 1882 (II of 1882), and for the purpose of—

(i) sub-section (2) of section 13, includes such other securities as the Federal Government may, by notification in the official Gazette, declare to be approved securities for the purpose of that subsection; and

(ii) sub-section (1) of section 29, includes such types of Pakistan rupee obligations of the Federal Government or a Provincial Government or of a Corporation wholly owned or controlled, directly or indirectly, by the Federal Government or a Provincial Government and guaranteed by the Federal Government as the Federal Government may, by notification in the official Gazette, declare, to the extent determined from time to time, to be approved securities for the purpose of that sub-section;1 (b) “banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise; (c) “banking company” means any company which transacts the business of banking in Pakistan and includes their branches and subsidiaries functioning outside Pakistan of banking companies incorporated in Pakistan2; 

Banking companies ordinance, 1962

Introduction

Law relating to Banking Companies is governed by Banking Companies Ordinance, 1962.

As we have seen that there are other laws which are related to the banking transactions and are of interest to different stake holders as such we shall take into account these ancillary statutes/ laws besides this ordinance.

Application of other laws shall not be barred under section2

This ordinance shall have limited application to certain financial institutions

1.       The provisions of sections 6,25A, 25AA, 29,31,32,33,40, 41,41A, 41B, 41C, 41D, 42, 83, 84, and

94 of this Ordinance shall, with such modifications as the State Bank may determined from time to time in relation to activities which have implications for the monetary or credit policies of the State Bank, apply to the Investment Corporation of Pakistan, the National Investment Unit Trust, the Pakistan Industrial Credit and Investment Corporation, the House Building Finance Corporation, the National Development Finance Corporation, the Bankers Equity Limited, the Pak-Libya Holding Company Limited, the Pakistan Kuwait Investment Company Limited, the Saudi-Pak Industrial and Agricultural Investment Company Limited, the Small Business Finance Corporation, the Regional Development Finance Corporation, Investment Finance Companies, Venture Capital Companies, Housing Finance Companies Corporations or Institutions which carry on one or more of the businesses enumerated in section 7 of this Ordinance, save and except for leasing companies and modaraba companies, as the Federal Government may from time to time, by notification in the Official Gazette, specify in this behalf.

2.       All notifications issued by the Federal Government which are inconsistent with the provisions of sub-section (1) including such notifications in respect of the National Development Leasing Corporations, Leasing Companies and Modaraba Companies shall stand rescinded with immediate effect.

Pakistan Banking Council

Pakistan Banking Council

1.    At the time of promulgation of this Act, Pakistan banking council was established to oversee the working and performance of nationalized banks. However, the council was dissolved vide Banks (Nationalization) (Amendment) ordinance 1997, the main features as contained in section 9 of the Act are given below:

2.    The Pakistan Banking Council (hereinafter referred to as the Council) shall stand dissolved forthwith.

3.    All assets, properties and rights of the Council shall stand transferred to and vest in, and all liabilities and other encumbrances of the Council shall stand transferred to and become the liabilities and encumbrances of, the State Bank.

4.    Employees of the Council, including its members,-

Ø  who are on deputation or secondment from any public sector financial institution shall revert to, and continue to be employed by, their parent institutions on terms and conditions governing their employment in their parent institutions; and

Ø  Who do not fall in clause (a) shall become employees of the State Bank on terms and conditions governing their employment with the Council.

Ø  Every contract or instrument to which the Council is a party shall continue to be in force and effective as if the State Bank had been a party thereto instead of the Council.

Ø  Any legal proceedings or, as the case may be, any application pending before any authority by or against the Council may be continued by or against the State Bank.

Ø  Where under any statute or statutory instrument, the Chairman or a member of the Council is nominated for a specified assignment of task, the vacancy caused by operation of this section shall be filled by a person nominated by the State Bank.