Business Law will include the Law Of Contract 1872, The Sale of Goods Act 1930, The partnership Act 1932, Companies Act 1994, The Negotiable Instrument Act 1881, The Bankruptcy Act, 1997 the Labour Act

Definition of Contract An contract is a agreement between two parties to perform certain duties based on the terms and conditions mentioned in the agreement In order to form a contract there must be a offer which has to be accepted with consideration based on terms and conditions. An offer is an expression of willingness to contract made with the intention that it will become binding upon acceptance.

The essential elements of a contract All contracts are agreement but all agreements are not contract. According to section 10 of the Contract Act all agreements are contracts if they are made by the free consent of competent parties for a lawful consideration, with lawful object and are not expressly declared to be void by the Contract Act.

In short an agreement in order to be a contract should fulfill the following requirements: a) The agreement must be made by free consent. b) The parties to the agreement must be competent to contract. c) The agreement must be for a lawful consideration. d) The object of the agreement must be lawful e) The agreement must not be expressly declared to be void by the Contract Act.

Invitation to Treat an Offer An invitation to treat is a mere statement of the person’s intention or declaration of his willingness to enter into negotiations. It is an advertisement inviting others to make an offer. It is not an offer, which is capable of being turned into an agreement by acceptance. Thus, a catalogue of goods; quotation of the lowest price in answer to an inquiry; an advertisement for tenders; or an advertisement of an auction are all invitations to offer. In such cases it is the purchaser who makes the offer and it is the trader or auctioneer who accepts the offer or rejects it.

Offer and Proposal a) A person is said to make an offer when he signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of the person to whom it is made. But a mere statement of intention is not an offer. Thus, A says to B in course of conversation that he intends giving Tk.1000 to any one who marries his daughter with his consent. B marries A’s daughter with A’s consent. Thus there is no contract between A and B, because A’s statement is not an offer.

b) The Proposal/offer must be made with the intension of creating legal relations, otherwise there will be no agreement. If A invites his friend B to a party, which B accepts, there is no agreement, in as much as there the parties do not obviously intend to create legal relationship and this is why if B fails to join the party A has no legal remedy against B. Hence social engagements are not contracts. c) Every offer/ proposal must be communicated- either by words or conduct. An offer is open to a person who ignores it. As a matter of fact, an offer may be made to the public at large, but the offer can only be accepted by a definite person. Thus an offer of a reward for a lost ring though made to the public can only be accepted by a definite person.

d. Every offer/ proposal remains open for a reasonable period after which it lapses, i.e. it loses its legal efficacy. What is a reasonable time is a question of fact and it varies with different kinds of contract. An offer does not by itself create any legal right, it ripens into a contract by acceptance. e. In case of revocation of an offer an offer must be revoked before acceptance and revocation must be bought to the knowledge of the offeree before acceptance. An acceptance is not complete as against the acceptor unless and until the letter of acceptance reaches the offero, though it is complete, as against the offereor as soon as it is put in course of transmission to the offeror so as to be out of the power of the acceptor.

Rules Regarding Acceptance An offer must be accepted before there can be an agreement. An offer by itself creates no obligations. An accepted offer is an agreement. An agreement may have one or more obligations. a) Every offer must be accepted as it is. Thus an offer to sell a house for Tk. 20,000 is not accepted when the offeree says that he is ready to buy it for Tk.15,000. It is only a counter offer. Similarly, an offer once refused, cannot be accepted, unless renewed.

b) Acceptance must be communicated. An offer is not communicated unless it is bought to the knowledge of the offeree; but an acceptance is sufficiently communicated, even though the offeror may be ignorant of the acceptance. Thus, in contract by post, A makes an offer to B by a letter. The offer is communicated to be when gets the letter. c) A conditional element to an offer does not amount to acceptance. For example, where the offeree accepts all the terms of the offeror “subject to the contract”, the assent is conditional and hence it does not amount to acceptance.

d) In a tender for the purchase or sale of goods or the supply of services, the person asking for tender normally makes an invitation to treat. The offer comes from the person making the tender; the other party can accept or reject the tender.

Acceptance Must be Absolute Section 7 of the Contract Act. In order to convert a proposal into a promise, the acceptance must- (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

Consideration Consideration is the price for which the promise of one party is purchased by the other. Thus, consideration is either some act, forbearance or promise, done, suffered, or made by the promise of the promise of the promisor.

Consideration need not be Adequate This means that it is not the business of the court to inquire whether the consideration in a particular case is substantial, that is, whether the act or forbearance or promise of the promisee is proportionate in value to the promise of the promise of the promissor. Even a minimum consideration is sufficient. Thus for example if a promises to pay Tk.100 to B for an old stamp which B gives to A, later on A cannot say that the stamp was of much lower value than the price claimed by B.

Consideration must be real and not Sham This means every consideration must have a real value and not one, which has only an apparent value. Thus, if A promises to pay B TK.1,00, in consideration of B’s promise to take him to the moon, the consideration is sham and not real, as B’s promise is an absurdity.

Consideration must not be illegal A consideration is said to be illegal when it is intended to defeat that provisions of any law or is against the public policy. If A promises to pay Tk. 10, to B in consideration of B’s promise to drop a prosecution for robbery instituted by him against A, is illegal as being aimed at defeating the provisions of Law.

Consideration must not be past A consideration is said to be executed when the promisee has already done or forborne something. Thus, A promises to pay a sum of money to B if he paints a picture for A. B paints the picture. B’s act is consideration for A’s promise; since the act is done already it is said to be executed consideration. An executed consideration is a present consideration. Thus something is done or not done by the promisee on account of the promise, while where in an executory consideration already done something for another and that becomes a promise, that promise is unsupported by any consideration and in this case we may say that the consideration is past.

Consideration must move from the promise: The consideration must move from the party entitled to sue on the contract. This means that consideration ought to proceed from the party who is entitled to sue on the contract, for the rules is that “No stranger to the consideration can sue on the contract.” For example, if A promises to pay B Tk.50 if C works for him in an election the promise is not enforceable and B cannot sue on it for he has neither done noe forborne/suffered anything/ made any promise in return for A’s promise.

Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law.

Example An agreement made without consideration is void, unless– (1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do, or unless

(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract. Explanation 1 – Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made. Explanation 2 – An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

Agreements generally Must be in Tk 300 stamp paper Must have at least 2 witnesses Must be signed by the parties

Please read all kinds of agreements very carefully before signing it.