Daily Times

A contract is a magnificent tapestry weaved in words, a legal pact created to bring order to the chaos of our endeavours. It is a solemn commitment that binds parties together, rich with promises and obligations, and serves as a guidepost for productive and fruitful engagements. Contracts act as guardians of interests in the arena of commerce, whether for businesses or individuals. They act as a shield, protecting participants from the unpredictability that may develop during collaboration. These extraordinary instruments ensure clarity and understanding by clearly defining the rights, duties, and expectations of all parties involved. The recipe of a legally enforceable contract in Pakistan must have four elements: a proposal, an acceptance, a legitimate consideration, and authority and competence to enter into a contract. With the fulfilment of these four prerequisites, a promise becomes an enforceable contract.

Contracts are the foundation of trade, orchestrating economic activities and building trust between parties. However, when it comes to contract enforcement, Pakistan is entangled in a web of complications and impediments. The purpose of this piece is to investigate imperfections in Pakistan’s contract enforcement process, discuss their impact on the people and economy, and provide reasonable reforms centred on successful models from around the world.

A system plagued with deficiencies and inefficiencies that impede justice exists within the maze of legal complexities. These flaws are as follows:

– The foremost deficiency in the system is a lack of understanding in society regarding the significance and advantages of engaging in contracts. This lack of understanding is prevalent in small or informal businesses, as well as among individuals who lack proper education and guidance. Resultantly, the majority of transactions are unregulated and unenforceable by the legal system.

Contracts are the foundation of trade, orchestrating economic activities and building trust between parties.

– The dearth of alternative dispute resolution options, such as mediation or arbitration, aggravates the situation. These approaches enable parties to reach mutually acceptable agreements without the need for lengthy litigation and expensive trials. While certain programs exist, their reach is restricted in comparison to international standards, leaving many Pakistani residents and enterprises to navigate traditional judicial proceedings on their own.

– Due to backlogs and procedural delays, Pakistan’s courts frequently leave parties in limbo for resolution. This discourages investment and disheartens individuals from entering into contracts.

– Inadequate resources and obsolete systems plague the legal structure, contributing to the slow resolution of contract disputes. This absence of modernized infrastructure undermines public trust.

– At times, contractual disputes, particularly those involving development initiatives, trigger protracted and draining investigations by law enforcement organizations such as the NAB, FIA, and others. This instils fear in the corporate community, discourages foreign investment in the country, and stifles economic growth.

– Tragically, corruption taints certain segments of the judiciary, jeopardizing contract enforcement’s reliability. This stigma reinforces inconsistent outcomes, deteriorating trust and impeding commercial development.

The detrimental consequences of Pakistan’s contract enforcement faults resonate throughout society, impacting the fate of individuals as well as the economy in general. Due to the uncertainty surrounding the enforcement of contracts, both foreign and domestic investors are wary of entering into them. This lack of trust stifles investment, leaving unexplored economic potential and impeding job creation. Small and medium-sized businesses (SMEs) bear the burden of the system’s flaws, as they frequently lack the necessary resources to fight lengthy legal battles. The resulting reluctance to enter contracts blocks entrepreneurship and limits the enlargement of these vital economic contributors. When contracts fail, consumers are left exposed, with few options for seeking justice. Substandard products and services predominate, undermining quality standards and resulting in markets losing confidence. Furthermore, businesses like to invest in an environment that is both safe and rewarding for them. Due to poor contract enforcement and lengthy court processes, many domestic and foreign enterprises have left the country in search of better business-friendly conditions.

Pakistan can get important insights from successful contract enforcement procedures around the world by looking beyond its borders. Singapore and the United Kingdom, for example, have adopted mediation and arbitration to expedite commercial dispute settlement. By encouraging parties to employ Alternate Dispute Resolution, Pakistan can achieve faster and more cost-effective solutions, reducing the burden on the courts. Pakistan can develop dedicated commercial courts by replicating models used in places such as the United States and India. These specialized institutions, well-versed in the complexities of commercial contracts, would speed up the settlement process and establish confidence in the system’s effectiveness. Pakistan could incorporate online dispute resolution (ODR) services into its legal landscape by taking inspiration from Estonia and the Netherlands. Utilizing technology would improve accessibility, cut expenses, and create accessible routes for contract dispute resolution. Furthermore, educating the general public on the need to enter into contracts is critical. The significance of this can easily be instilled in people’s minds by incorporating it into the curriculum of formal education and through public awareness campaigns.

A reliable and efficient contract enforcement mechanism is critical for economic growth, investor confidence, and a country’s overall well-being. The present system in Pakistan faces severe barriers, resulting in delayed justice, reduced investments, and lower consumer trust. Pakistan ought to bolster its contract enforcement system by employing reforms inspired by successful models. Adopting these measures will allow corporations greater rights, boost investment, and offer citizens a fair and dependable framework for resolving contractual disputes. It is high time to untangle the complexities of contract enforcement in Pakistan to foster a business-friendly ecosystem.

The writer is a lawyer and can be reached at mumerrafiqawan@gmail.com. He tweets @mumerrafiq