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Welcome to our presentation
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We are Group 1
Serial No. Name roll1 Mainul Hasan Alin 15-0262 Md. Abu Sanzid 15-0663 Sanowara Nasrin 15-0984 Nafisa Khanum 15-162
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Chapter 1
Nature and kinds of contracts
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What is Contract Law?
The law of contract is a set of rules governing therelationship, content and validity of an agreementbetween two or more persons (individuals,companies or other institution) regarding the sale of
goods, provision of services or exchange of interestsor ownership.
According to Sir William Anson, The law of contractin intended to ensure that what a man has been ledto expect shall come to pass; that that what hasbeen promised to him shall be performed.
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The Indian contract act,1872
Indian Contract Act 1872 is the main source of law
regulating contracts in Indian law, as subsequently
amended.
It determines the circumstances in which promise made by
the parties to a contract shall be legally binding on them.
All of us enter into a number of contracts everyday
knowingly or unknowingly. Each contract creates some
right and duties upon the contracting parties.
Indian contract deals with the enforcement of these rights
and duties upon the parties.
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Definition of contract
A contract is a voluntary agreement, whetherverbal or in writing, between two or moreparties, that creates a legal relationship and isenforceable by law.
Thepurpose of contracts is:
to protect the reasonable expectations of the
parties involved in an agreement to provide an avenue for dispute settlement
according to the rule of law.
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Elements of Contract
AgreementLegal
Obligations
Contract
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ALL CONTRACTS ARE AGREEMENT
Example: An agreement to buy 100 bags of wheat at tk.430 per bag is acontract because it gives right to a duty enforceable by law and in caseof default on the part of either party an action for breach for contractcould be enforced.
ALL AGREEMENTS ARE NOT CONTRACTExample:A promise to launch together at a friends house is not a
contract because it is not likely to create a duty enforceable by law forthe simple reason that the party never intended that they should beattended by legal consequences.
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Essential elements of a valid contract
1.OFFER AND ACCEPTANCE Must have a lawful offer and a lawful acceptance of the
offer.
Offer and acceptance must satisfy the requirements of thecontract act in relation thereto.
EXAMPLE :Abir offers to sell a wrist watch to Vinod for Rs. 500and Vinod accepts the offer. There is a valid contract
2.INTENTION TO CREATE LEGAL RELATIONS There must be an intention among the parties that the
agreement should be attached by legal consequencesand
create legal obligations.
Agreements of a social or domestic nature do not
contemplate legal relations .
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If the parties have expressly declared their resolve that theagreement is not to create legal obligations, does notamount to a contract.
EXAMPLE :Aftab promises his wife Nila to get her a sareeif she will sing a song. Nila sang the song but Aftab didnot bring the saree for her. Nila cannot bring an action ina court to enforce the agreement as it lacked theintention to crate legal relations.
3. LAWFUL CONSIDERATION Consideration is the price paid by one party for the promise
of the other.
An agreement is legally enforceable only when each of theparties to it gives something and gets something.
Gratuitous promises are not enforceable at law.
May be an act or forbearance or a promise to do or not to dosomething.
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it may be past, present or future.
the consideration is lawful unless -it is forbidden by law.
EXAMPLE :Mina promises to maintain Rinas child and Rinapromises to pay mina Rs 2000 yearly for the purpose. Here thepromise of each party is the consideration for the promise of the
other party.
4. CAPACITY OF PARTIES
Parties to an agreement must be competent to contract. The parties must be of the age of majority and of sound
mind and must not be disqualified from contracting by anylaw to which they are subject.
If any of the parties suffers from minority, lunacy, idiocy,
drunkenness etc the agreement is not enforceable at law.
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In the case of necessaries supplied to a minor or lunatic, the supply ofgoods is entitled to be reimbursed from their estate
EXAMPLE :Rahim, an infant, obtains a loan from Jahan. Rahim cannotbe asked to repay the money. A minors agreement is void-ab-initio asagainst him.
5. FREE CONSENT
Consent' refers that the parties must have agreed upon the same thingin the same sense.
If the agreement is induced by coercion, undue influence, fraud,misrepresentation, or mistake then there is absence of free consent.
if the agreement is vitiated by coercion, undue influence, fraud and
mistake then the contract would be voidable.
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if the contract is induced by mutual mistake which is material tothe agreement, it would be void.
EXAMPLE : Rizvi threatens to shoot Moin , if he does not let out his
house to him. Moin agrees to let out his house to Rizvi. The consentof Moin has been induced by coercion and it is voidable.
6. LAWFUL OBJECT
The object of the agreement must not be fraudulent or illegal orimmoral or opposed to public policy or must not imply injury to the
person or property of another
If the object is unlawful then the agreement is void.
EXAMPLE : An agreement between husband and wife to live
separately is invalid as being opposed to law.
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7.WRITING AND REGISTRATION
A contract may be oral or in writing.
in certain cases it lays down that the agreement, to be valid, must
be in writing or registered.
An arbitration agreement must be in writing as per arbitration and
conciliation act.
An agreement for a sale of immovable property must be in writing
and registered under the transfer of property act before they can
be legally enforced.
EXAMPLE :It requires that an agreement to pay a time barred debtmust be writing and an agreement to pay a gift for natural love and
affection must be in writing and registered.
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8. CERTAINTY
The terms of the agreements must not be vague or uncertain.
It must be possible to ascertain the meaning of the agreement .
Agreements , the meaning of which is not certain are void.
EXAMPLE : : Amar agrees to sell Amit a hundred tons of oil. There
is nothing whatever to show what kind of oil was intended. The
agreement is void for uncertainty.
9. POSSIBILITY OF PERFORMANCE
An agreement to do an act impossible in itself is void.
If the agreement is physically or legally impossible in itself, then
it cannot be enforced at law.
EXAMPLE : Mishu agrees with Nilam, to discover treasure by magic.
The agreement is not enforceable.
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10. NOT EXPRESSLY DECLARED VOID
The agreement must not have been expressly declared to be void.
In certain types of agreements which have been expressly declared
to be void.
EXAMPLE :An agreement in restraint of marriage, an agreement inrestraint of trade, and an agreement by way of wager have been
expressly declared void.
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Kinds of Contract
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From the point of view of enforceability
Contracts
Valid contract
Unenforceablecontract
Void contractIllegal orunlawful
Voidablecontract
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Valid contract
an agreement enforceable by law, an
agreement becomes enforceable by law
when all the essential elements of a valid
contract is present
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Voidable contract
an agreement enforceable by law at the
option of one or more of the parties thereto,but not the option of the other or others
Contract usually becomes voidable when Coercion,Undue influence, Misrepresentation, Fraud is used
to get the consent of one of the parties
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EXAMPLE : Mithun sells a car to Shakil saying
that it is 6 months old, later it is proved that
the car is six years old, the contract is
voidable by the option of Shakil.
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In case of reciprocal promises, if one party prevents the
other from performing his promise, contract becomes
voidable at the option of the party so prevented
EXAMPLE : Mushfiq promises to shaptak to sell a motorbike
for 150000 tk. Later shaptak rejects to buy it, the contract
becomes voidable at the option of Mushfiq
In case of a party promising to do something in a specified
time but fails to do it, the contract becomes voidable at the
option of the promisee.
EXAMPLE : Apu promises to deliver awad 10 bags of europian
strawberry for 2000 within 1 month but couldnt within
time, the contract becomes voidable at the option of awad.
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Consequences of rescission of voidable contract
If one party rescinds it, the other need notperform any of the promise where he is a
promisor
Rescinding party must restore any benefit hetook from the other party under the contract
If an amount has been received as a security for
the due performance of the contract, the
money deposited is not needed to be returned
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Void contract
A contract which ceases to be enforceable by law becomes voida void contract is not void from its inception
Reason for becoming void
1. Supervening impossibility: void because impossibility ofperformance
EXAMPLE : A makes a contract with B to sell goods worth 10000 tk, but Bbecomes declared insolvent by the court, thus he cannot complete thecontract.
2. Subsequent illegality:
EXAMPLE : Apu who lives in London promises to sayeef to export 100pieces of jeans pants to sayeef in Bangladesh. Later the governmentput ban on jeans importing. The contract becomes void.
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3. Repudiation of voidable contract: becomes void when the
party whose consent is not free repudiates the contract.
EXAMPLE : Mithun sells a car to Shakil saying that it is 6
months old, later it is proved that the car is six years old, the
contract is voidable by the option of Shakil. In case shakil
rescinds the contract, it becomes void.
4. Incase of contract contingent on the happening of an
uncertain future event, if that event becomes impossible:
EXAMPLE : A makes contract with B that he will buy goods
worth 1 million from B if B provides part of the profit to C. C
dies before the event . The contract becomes void
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Unenforceable Contract
valid in itself, but not capable of being enforced in a court of
law because of some technical defect suck as absence of
writing, registration, requisite stamp, etc. or time barred by
the law of limitation
EXAMPLE : Alcohol business is legal in limited way in
Bangladesh, but in case of buying and selling alcohol, if
either refuses to complete the bargain (either the seller
after being paid, or the buyer after receiving the service)then the court will not assist the disappointed party.
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Illegal Contract or Illegal agreement
An illegal agreement, under the common law of contract, isone that the courts will not enforce because the purposeof the agreement is to achieve an illegal end
An agreement is illegal If its object or consideration1.Is forbidden by law
2.Is of such nature that, if permitted, it would defect theprovisions of any law
3. Is fraudulent
4. Involves or implies injury to the person or property ofanother
5. The court regards it as immoral
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Kinds of contracts from the point of
view of mode of creation
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Express contract
where both the offer and acceptance constituting
an agreement enforceable at law are made in
words spoken or written
EXAMPLE : Mr. Sajjad tells Mr. Allin on phone that he
offers to sell his house for 10000 tk and MR. Allin
in reply informs MR. Sajjad that he accepts the
offer.
This is an express contract.
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Why this is an express contract
M. Sajjad made the offer to Mr. Allin in word
spoken.
MR. Allin accepted the offer also in word
spoken.
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Implied contract
Where both the offer and acceptance constituting an
agreement enforceable at law are made otherwise than in
words by acts and conduct of the parties it is an implied
contract.
EXAMPLE : Mr. Sujats car stopped on a signal and a boy
started to wash the car and he let that boy to wash the
car.the boy expected to be paid from Mr.sujat and there
comes an implied contract and Mr.sujat is under obligation
to pay the boy.
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onstructive or quasi contract
Such a contract does not arise by virtue of any agreement .
A quasi contract is based upon the equitable principle that
a person shall not be allowed to retain unjust benefit at the
expense of another.
EXAMPLE : Mr. Shakil finds Mr.Mithuns wallet on the street .
now this is the obligation of Mr.Shakil to return the wallet
to his true owner. although there wasnt any offer and
acceptance term between them.
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Kinds of contracts from the point of
view of the extent of execution
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Kinds of contracts from the point of view
of the extent of executionExecuted contract: a contract is said to be executed when
both the parties to a construct have completely performed
their share of obligation and nothing remains to be done by
either party under the contract
EXAMPLE : Mr. Saif sells a computer on cash payment to
Mr.Mushfiq.it is an executed contract because:
Both the parties executed their obligation under the contract.
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Where only one of the parties to a contract has performed his
share of obligation and the other one still to perform his
share of obligation then it is also an executed contract.
It is also called Unilateral Contracts.
EXAMPLE : suppose, Mr. Awad orders a pizza from Pizza Hut.The delivery boy comes and placed the order and the
obligation of pizza hut has been done by placing the pizza.
Now,it remains for Mr. Awad to pay the delivery boy.
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Executory contract
When both the parties of the contract have still to perform
their share of obligation or there remains something to be
done under the contract on the both sides
EXAMPLE : Bangladesh Government arrange a tender on
building roads and eastern company draft their proposal
and it is accepted .but both the parties have to do their
obligation . so this is a executory contract because:
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Eastern limited must built roads as they are
asked by government. Government have to pay for those roads.
Neither party done with their obligation.
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Thank you all for being with us