Professional Documents
Culture Documents
1. Definition of Contract
As per section 2(h) of contract Act 1872, “An agreement enforceable by law is a
contract.”
The elements mention above must all be present. If any one of them is absent, the
agreement does not become a contract. An agreement which fulfills all the above
essential elements is enforceable by law and is called a contract.
From this, it is said that “All contracts are agreement but all agreements are not
contracts.”
Proposal:
Acceptance:
When the person to whom the proposal is made signifies assent thereto, the
proposal is said to be accepted. A proposal when accepted becomes a promise.
Specific offer:
A offers to reward Tk. 1000 to any student who finds out and returns a book lost
in the college.
General offer:
A transport Company runs buses in the streets. This is an offer by the company to
carry passengers at the scheduled fares.
An offer and an acceptance are like a lighted match and a bucketful of gunpowder.
Acceptance:
An offer can be accepted only by the person or persons for whom the offer is
intended.
Example:
Y accepts X’s proposal by a letter sent by post. The communication of the acceptance
is complete as against X, when the letter is posted, as against Y, when the letter is
received by X.
Revocation of acceptance
An acceptance can be revoked any time before the acceptance comes to the
knowledge of the proposer but not afterwards.
Example:
Consideration
“When, at the desire of the promisor, the promisee or any other person has done or
abstained from doing or does or abstains from doing or promises to do or to abstain
from doing something, such act or abstinence or promise is called a consideration for
the promise.”
Types of consideration:
i. Past consideration
ii. Present consideration
iii. Future consideration
Rules of consideration:
Exceptions:
Exceptions:
i. Beneficiaries of trust
ii. Provision of marriage settlement of Minor
iii. Assignee of a contract
iv. Family settlement( by any members)
v. Acknowledgement as an agent
Valid Contract:
An agreement which satisfies all the essential elements of a contract, and which is
enforceable through the court is called valid contract.
Void agreement:
An agreement not enforceable by law is said to be void. A void agreement has no legal
effect. It creates no right / obligation on any person to the agreement.
Avoidable agreement:
An agreement can be avoided by some of the parties to it. Until it is avoided it is a
good contract. As per section 2(i) “An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option of other or others,
is a voidable contract. Agreement done by coercion, undue influence, etc.
Unenforceable Agreement:
An agreement which cannot be enforced in a court of law because of some technical
defect. eg: want of registration, non payment of requisite stamp duty, etc.
Illegal agreement:
The agreement which is against a law in force in the country. An agreement to commit
murder, robbery, cheating, etc.
Capacity to contract:
- A minor
- An unsound mind
- A disqualified person by any law
Free consent:
( i) Coercion ( Threatening)
Exceptions:
(a) Prosecution
(b) High price, high rate of interest
(c) A threat to commit suicide
etc.
Wagering (no insurable interest, Gambling, one party gains other party losses)
i. Novation- The parties agreed to substitute a new contract for the old one,
May be also change of parties.
ii. Recession-Declined by one party, may rescind by other party.
iii. Remission-Acceptance of less what was contracted.
iv. Alteration- alteration of terms under mutual agreement
v. Accord and satisfaction
Methods of termination:
i. By performance
ii. By mutual consent canceling the agreement or novation
iii. By Supervening impossibility
iv. By operation of law such as : Death, insolvency, merger
v. By lapse of time- limitation
vi. By material alteration without consent of other parties
vii. By Breach of contract
Exception:
i. Difficulty of performance
ii. Commercial impossibility
iii. Strikes, lock out, riots etc
iv. Failure of one of the object
Doctrine of frustration:
When the common object of a contract can no longer be carried out, the court may
declare the contract to be at an end. This is known as doctrine of frustration.
Damages:
i. Nominal/contemptuous damages
ii. Compensatory damages
iii. Special damages
iv. Exemplary/punitive damages
v. Liquidated damage
The person for whom such act is done or who is so represented is called the principal.
X appoints Y to buy rice on his behalf. X is the principal and Y is the agent. Agreement
between the two is called agency.
A dealer, who purchased petrol from a company and sold the petrol on commission,
is not an agent.
i. Remuneration
ii. Lien
iii. Indemnification
iv. Compensation
Principal’s rights:
i. Compensation
ii. Agent’s duties
iii. Revocation
Agent’s rights:
i. Principal’s duties
ii. etc.
Termination of agency:
A contract of indemnity is a “contract by which one party promises to save the other
from loss caused to him by the conduct of the promisor himself or by the conduct of
any other person”
The person promises to save from loss is called Indemnifier. The person who is saved
by the indemnifier is called indemnity holder.
The person who guarantees is called the surety. The person on whose default the
guarantee is given is called the principal debtor and the person to whom the guarantee
is given is called the creditor.
Continuing Guarantee:
A continuing is a guarantee which extends to a series of transactions. It comes to an
end under the following ways:
i. By notice of revocation
ii. Death of surety
Surety’s right
i. Right of subrogation
ii. Right to indemnity
iii. Right of security
Law of Bailment:
A bailment is the delivery of goods by one person to another for some purpose upon
a contract that they shall, when the purpose accomplished by returned or otherwise
disposed of according to the directions of the persons delivering them”
The person delivering the goods is called the bailor, the person to whom they are
delivered is called the bailee. The transaction is called bailment.
Characteristics of Bailment:
i. Delivery
ii. purpose
iii. return
iv. contract
v. ownership
vi. Moveable goods
vii. Possession
Duties of Bailor:
i. Duty to disclose faults in goods bailed
ii. Payment of damages
Right of Bailee:
i. Possession-Not an owner
ii. Compensation- For trouble, expenses, find out expenses, lien
iii. Reward-Claim
iv. Sale-for special type
Sale
Condition
A condition is stipulation/terms essential to the main purpose of contract, the
breach of which gives rise to right to treat the contract as repudiated/rejected.
Warranty
A warranty is stipulation/terms collateral ( subsidiary to main purpose) to the
main purpose of contract, the breach of which gives rise to claim for damages
but not a right to reject the goods and treat the contract as repudiated.
Implied conditions
1. Condition as to tile
2. Sale by description
3. Sale by sample
4. Sale by sample and description
5. Condition as to fitness or quality
Exceptions:
1. When the buyer relies upon the skill and judgment of seller
2. Where by custom an implied condition of fitness is annexed to a contract of
sale
3. Where there is a sale of goods by description, there is an implied condition
that the goods are fit for sale
4. Where the seller is a guilty of fraud (Free consent?)
Implied Warranties
1. The buyer must get quiet possession
2. The goods must be free from encumbrance
3. Fitness of goods
The owner of goods can sell the goods. No one can convey to a transferee a better
title than he himself has. Generally, if a person transfers articles not belonging him,
the transferee gets no title. This rule applies to both moveable and immoveable
property. But as regards moveable goods, it is subject to certain exceptions.
1. Estoppel
2. Sale by a mercantile agent
3. Sale by one of several joint owners
4. An unpaid seller
5. Sale under the Contract Act( Finder of a goods, a pawnee)
Duties of buyer
1. Payment of price
2. Compensation for non acceptance of goods
3. Liability /compensation/charge for not taking delivery of goods
4. Interest and special damages
Un-paid seller
-When the whole of the price has not been paid; and, or
- When a bill of exchange or other negotiable instrument has been received as
conditional payment and the condition was not fulfilled by dishonoring the instrument
or otherwise.
Definition:
Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.
Essential elements:
i. Voluntary agreement
ii. Sharing of profits of a business
iii. Mutual agency
Classes of Partners:
i. Active partners
ii. Dormant, sleeping partners
iii. Nominal partners
Classes of Partnership:
i. Partnership at will- not for a fixed period, no provision for winding up
ii. Particular Partnership
i. A Partner of an unregistered firm cannot file a suit ( against the firm or any
partner thereof) for the purpose of enforcing right arising from contract or
a right conferred by the partnership Act
ii. No suit can be filed on behalf of an unregistered firm against any third party
of the purpose of enforcing a right arising from a contract
Right of partners:
i. Conduct of business
ii. Can express opinion
iii. Access, inspection, Copy
iv. Equality of profit
v. Interest on capital
vi. Interest on advance
vii. To get indemnity
viii. Application of property of firm
ix. Reconstitution of firm- Death, Retirement, admission
x. Dissolution
Duties of partners
i. Justice, faith, true accounts, full information to all partners
ii. To pay indemnity
iii. To attend diligently
iv. No remuneration
v. Equality of losses
vi. To pay indemnity for willful neglect
vii. No Personal benefit
viii. To account for secret Profit
ix. No secret profit
x. Unlimited liability
A person may under certain circumstances be liable for the debts of a firm
although he is not a partner. If a person, by words spoken or written or conduct
represents himself or knowingly permits himself to be represented to be partner
in the firm, he is liable as a partner in that firm to any one who has on the faith of
any such representation given credit the firm.
Dissolution of firm:
i. By agreement
iv. By notice
In case of a partnership of will
a. Insanity
b. Permanent incapacity
c. Guilty of misconduct
d. Persistent Breach of contract
e. Transfer of whole interest
f. Loss of firm is high
g. Just and equitable.
i. If he is a Debtor
and
ii. He has committed an act of bankruptcy
Acts of bankruptcy:
i. Transfer of all or substantially all his property for the benefit of creditors
ii. Transfer of property with intent to defeat/delay creditors
iii. Transfer of property which would be void as fraudulent preference
iv. If with intent to defeat/delay creditors :
(a) Remains out of BD;
(b) Departs from dwelling house or usual place of business;
(c) Secludes himself so as to deprive his creditors of the means of
communicating with him.
v. If any of the property has been sold in execution of a decree for money
vi. If he petitions to be adjudged as bankrupt
vii. If he notifies his creditors that he has suspended payment of debts
viii. If he is imprisoned in execution of decree for money
i. The debt owning by the debtor to the creditor(s) amounts to Tk. 5,00,000
ii. The debt is a liquidated sum payable either immediately or at a certain
future time
iii. The act of bankruptcy has occurred with in last one year
Dismissal of Plaint:
iii. the court is satisfied that for any reason, no order of adjudication should
be made
An order of the court shall release of all debts except the following:
i. Any debt payable to the Govt.
ii. Debt of fraud himself/a party
iii. Liability under an order of maintenance( wife, child)
Exempted property:
Subject to the exceptions noted below, all disputes which can be decided by a civil suit
can also be decided by arbitration. Matters of personal right and disputes regarding
dignity which cannot be decided by civil courts can nevertheless be decided by
arbitration.
“Holder in due “Holder” in due course” means any person who for consideration
course” becomes the possessor of a promissory note, bill of exchange or
cheque if payable to bearer, or the payee or indorsee thereof, if
payable to order, before it became overdue, without notice that the title
of the person from whom he derived his own title was defective.
Acceptance for When a bill of exchange has been noted or protested for non-
honour acceptance or for better security, any person not being a party
already liable thereon may, with the consent of the holder, by
writing on the bill, accept the same for the honour of any party
thereto.
Cheque crossed (1) Where a cheque crossed generally bears across its
“account- face an addition of the words “account payee” between
payee” the two parallel transverse lines constituting the general
crossing, the cheque, besides being crossed generally,
is said to be crossed “account payee”. Cheque crossed
“account payee”
“Holder” “Payee”
The “holder” of a promissory note, bill of exchange
or cheque means the payee or indorsee who is in
possession of it or the bearer thereof.