FINE ENTERPRISES TRADERS vs CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD

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FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. S.2(d)---Contract---Validity---Consideration---Significance---Absence of consideration, effect of---Consideration is afundamental element of a legally enforceable contract but its absence renders the agreement void or of no legal effect---While a "stranger to consideration" may have the right to sue, a "stranger to the contract", someone who is not a party to the agreement, cannot enforce it, even if they stand to benefit from its terms. Citation Name: 2026 CLC 810 KARACHI-HIGH-COURT-SINDHBookmark this Case FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. Ss.2(a), 2(b), 2(d), 2(e), 2(h) & 10---Valid contract---Formation---Essential elements---Scope---Under the Contract Act, 1872, an agreement becomes a legally enforceable contract only when it satisfies the essential elements of offer, acceptance, and legal consideration---These components are foundational to the formation of a valid contract---An offer must be clear and made with the intention to create legal relations; acceptance must be absolute and communicated effectively; and consideration must involve something of value exchanged between the parties---In the absence of any of these elements, no document or arrangement can be deemed a contract capable of enforcement by a court of law. Citation Name: 2026 CLC 810 KARACHI-HIGH-COURT-SINDHBookmark this Case FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. Express and implied contracts---Distinction---A contract may either be expressed or implied---The distinction lies not in legal effect but in the mode of manifestation of mutual consent---An express contract arises where the terms are articulated in spoken or written words, whereas an implied contract is inferred from the conduct of the parties or the surrounding circumstances indicating a mutual intention to bind themselves---Besides, the Courts have also recognized that where parties continue to act in accordance with the terms of an expired express contract, an implied contract may be inferred, reflecting a tacit renewal of the original agreement---A conspicuous absence of any term mutually agreed upon, whether articulated in words or inferred through conduct, that would give rise to a binding contractual relationship between the parties and noticeable before the court to attribute towards injunctive relief. Citation Name: 2026 CLC 810 KARACHI-HIGH-COURT-SINDHBookmark this Case FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. Mere documentation or mutual understanding, without the statutory prerequisites, does not confer contractual validity. Citation Name: 2026 CLC 810 KARACHI-HIGH-COURT-SINDHBookmark this Case FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. Ss.2(a), 2(b), 2(d), 2(e), 2(h) & 10---Specific Relief Act (I of 1877), Ss.12 & 22---Civil Procedure Code (Amendment) Ordinance (X of 1980), S.15---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for specific performance of aMemorandum of understanding (MoU)---Whether MoU constituted enforceable contract---Lawful consideration and privity, absence of---Effect---Dismissal of application for grant of interim relief, challenge to---Three mandatory ingredients, fulfillment of---Scope---Brief facts of the case were that the appellant filed suit for specific performance, relying on amemorandum of understanding allegedly executed with the respondent No. 1 (Co-operative Housing Society) for sale/transfer of 36 flats along with the underlying land; it was pleaded that due to lease-expiry issues, the Society's members (36 flat owners) in a meeting agreed in principle to sell units at Rs.41,500,000/- per flat, and the appellant later entered into agreements with 18 owners and paid 10% earnest money through the Society; the appellant also sought interim injunction to restrain transfer/creation of third-party interest in the flats; a status quo order was initially passed; the Single Judge ultimately dismissed the injunction application, leading to the filing of present appeal challenging that dismissal---Issue requiring determination in the present matter was as to "whether the Memorandum of Understanding dated, allegedly executed between the parties, constituted a legally enforceable contract binding upon the 36 flat owners, thereby entitling the appellant to interim injunctive relief restraining transfer or creation of third-party interest in the property?"---Held:---There were no merits in the contentions of the appellant that respondents Nos. 2 to 37 were bound by MoU (contract) which was executed by and between the appellant and respondent No.1 and the said respondent No.1 was authorized by the respondents Nos. 2 to 37 vide "understanding" and therefore upon such express consent given by the respondents Nos. 2 to 37 handed down in favor of respondent No.1, the respondents Nos. 2 to 37 were bound by MoU being a qualified contract and, therefore, the appellant had a prima facie case to grant an injunction till the final determination of the rights between the parties in the said suit---Upon reading of the "MoU" and the "understanding", there was no discernible evidence of either an express or implied contract---Respondents Nos. 2 to 37 were not signatory to said MoU, neither 'understanding' relied upon the appellant had authorized the respondent No.1 to enter into contract on behalf of said respondents with any third party nor there was any reference with regard to fixation of sale consideration by and between the appellant and respondents (except respondent No.1) nor it had acknowledgement for payment of earnest money---Appellant did not furnish any consideration in exchange for the promise made to respondent No.1 and even the respondents Nos. 2 to 37 had not authorized the respondent No.1 to collect the consideration---For a discretionary relief it was the duty of plaintiff/purchaser to demonstrate the legal relationship of parties coupled with fact that he must show that he had a prima facie case---In the absence of express or implied contract between the parties, the appellant/plaintiff was not entitled for injunction of whatsoever nature against an alien person thereby to restrain the respondents to stop their valuable right from selling, transfering, alienating, conveying or disposing of their property which they owned under an independent valid and subsisting title within four corners of law---The appellant had no prima facie case and balance of convenience did not attract in favor of appellant, in absence of any contract specifically executed for the sale and purchase of the flats either individual or collectively or sale consideration was fixed or paid, therefore, no infirmity was found in the impugned order---Appeal was not maintainable and same was dismissed, in circumstances. Citation Name: 2026 CLC 810 KARACHI-HIGH-COURT-SINDHBookmark this Case FINE ENTERPRISES TRADERS VS CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD. Privity of contract, absence of---Effect---'How to establish privity',---Essential elements stated---Incases where privity of contract is absent and no direct contractual relationship exists between the promis or and the promisee, the courts have recognized that privity may be established through conduct, acknowledgment, or admission---Once such privity is created, the promisor may be entitled to bring an action---Conversely, where both elements of express or implied terms of a contract are absent, no action can be brought.

FINE ENTERPRISES TRADERS vs CONSTELLATION CO-OPERATIVE HOUSING SOCIETY LTD — 2026 CLC 810 KARACHI-HIGH-COURT-SINDH

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