THE

1. THE LAW OF CONTRACT

2. Essential Elements of a Contract • The law of contract deals with agreements that can be enforced through courts of law. • This is the most important part of commercial law because every commercial transaction starts from an agreement between two or more persons

3. A Contract is an agreement creating and defining obligations between the parties Salmond Definition of Contract

4. A Contract is an agreement enforceable at law made between two or more persons, by which rights are acquired by one or more to acts forbearances on the part of the other or others Sir William Anson Definition of Contract

5. An agreement enforceable by law is a contract. Therefore in a contract there must be– an agreement the agreement must be enforceable by law two or more persons are involved The Indian Contract Act, 1872 Definition of Contract

6. Definition of Contract • Finally, The object of the law of contract is to introduce definiteness in commercial and other transactions For Example……. X enters into a contract to deliver 10 tons of coal to Y on a certain date. Since such a contract is enforceable the basis of getting the coal on the fixed date. If the contract is broken, Y will get damages from the court and will not suffer any loss

7. An agreement becomes enforceable by law when it fulfils certain conditions. These conditions are called the Essential Elements of a Contract Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities The Essential Elements of a Contract

8. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities There must be a lawful offer by one party and a lawful acceptance of the offer by the other party or parties. The adjective “Lawful” implies that the offer and acceptance must conform to the rules laid down in the Indian Contract Act regarding offer and acceptance. It may be verbal or written. The Essential Elements of a Contract

9. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities There must be an intention among the parties that the agreement shall result in or create legal relations. An agreement to buy and sell goods or an agreement to marry, are agreement intended to create some legal relationship and are contracts. The Essential Elements of a Contract

10. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities An agreement is legally enforceable only when each of the parties to it gives something and gets something. The something given or obtained is called consideration. The consideration may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. It may be past (something already done or not done), present or future. But only those considerations are valid which are “Lawful”. The Essential Elements of a Contract

11. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities The parties to an agreement must be legally capable of entering into an agreement, otherwise it cannot be enforced by a court of law. Want of capacity arises from minority, lunacy, idiocy, drunkenness and similar other features. The Essential Elements of a Contract

12. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities In order to be enforceable by law, an agreement must be based on the free consent of all the parties. There is absence of genuine consent if coercion, undue influence, mistake, misrepresentation, and fraud induce the agreement. The Essential Elements of a Contract

13. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities The object for which the agreement has been entered into must not be illegal, or immoral or opposed to public policy. The Essential Elements of a Contract

14. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities The agreement must not a vague. It must be possible to ascertain the meaning of the agreement, for otherwise it cannot be enforced. The Essential Elements of a Contract

15. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced. The Essential Elements of a Contract

16. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities An agreement must have been expressly declared to be valid. They must not be void. Under Indian Contract Act, there are five categories of agreements that are expressly declared to be void. They are: Agreement in restraint to marriage, Agreement in restraint to trade, Agreement in restraint to proceedings, Agreements having uncertain meaning, Wagering agreement The Essential Elements of a Contract

17. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities Contract may be oral, written, or registered. It is better if the contract is in written form. If it has done in oral form, then it will create problem. In India, writing is required in cases of lease, gift, sale and mortgage of immovable property; negotiable instruments; memorandum and articles of association of a company. The Essential Elements of a Contract

18. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities Some contract must be registered as per government law. Registration is compulsory in cases of documents coming within the preview of Section 17 of the Registration Act, e.g., mortgage or sale deeds covering immovable property. The terms of an oral contract are sometimes difficult to prove. Therefore, important agreements are usually entered into in writing even in cases where writing is not compulsory. The Essential Elements of a Contract

19. Offer and Acceptance Intention to create Legal Relationship Lawful Consideration Capacity of Parties Free Consent Legality of the object Certainty Possibility of the performance Valid Agreements Writing Registration Legal Formalities In a contract, legal formalities should be abided by. An oral contract is a perfectly good contract, except in those cases where writing and/or registration are required by some statute. The Essential Elements of a Contract

20. The elements that were mentioned above must all be present in a valid contract. If any of them is absent, the agreement doesn’t become a contract. An agreement that fulfills all the essential elements is enforceable by law and is called a contract. • Finally, we can say that, every contract is an agreement but all agreements are not contract.

21. Difference between Agreement and Contract

22. Difference between Agreement and Contract

23. Method of formation of a Contract • Express Contact • Implied Contract • Quasi Contract

24. Express Contact Implied Contract Quasi Contract Express Contract is one, which is expressed in words spoken or written. When such a contract is formed there is no difficulty in understanding the rights and obligations of the parties. Section-9 Indian Contract Act defines Express Contract as, “In so far as the proposal or acceptance of any promise is made in words, the promise is said to be expressed.” Method of formation of a Contract

25. Express Contact Implied Contract Quasi Contract Section-9 Indian Contract Act defines Implied Contract as, “In so far as such proposal or acceptance is made otherwise then in words the promise is said to be implied.” The condition of an implied contract is to be understood from the acts, the contract of the parties and/or the course of dealing between them. There is no spoken or written contract between them. Method of formation of a Contract

26. Express Contact Implied Contract Quasi Contract There are certain dealings that are not contracts strictly, though the party’s act as if there is a contract is called quasi contract. Method of formation of a Contract

27. The time of Performance • Executory Contract • Executed Contract

28. Executory Contract Executed Contract There are certain contracts where the parties perform their obligations immediately as soon as the contract is formed. For Example……… X sells 500 kg rice to Y atTk.15 per kg. The time of Performance

29. Executory Contract Executed Contract In this contract, the obligations of the parties are to be performed at a later time. For Example……. X will supply 500 kg rice to Y within next two months. The time of Performance

30. Parties of the Contract • Bilateral Contracts • Unilateral Contract

31. Bilateral Contracts Unilateral Contract There must be at least two parties of the contract. Therefore all contracts are bilateral or multilateral. For Example……. A sells his horse to B for Tk 1000. Parties of the Contract

32. Bilateral Contracts Unilateral Contract In unilateral contracts one party has to fulfill his obligations whereas the other party has already performed his obligations. Such a contract is called Unilateral Contract. Parties of the Contract

33. Legality or Validity of the Contract • Valid Contract • Void Agreement • Voidable Agreement • Illegal Agreement • Unenforceable Agreement

34. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement An agreement that satisfies all the essential elements of a contract and which enforceable through the courts is called Valid Contract. The object of the contract must be valid and it must be lawful and enforceable by law. For Example…… An exporter contract with an importer of other country to exports goods. It is a Valid Contract. Parties of the Contract

35. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement Sec-2 (g) explains Void Agreement as, “An agreement not enforceable by law is said to be void.” A void agreement has no legal effect. It confers no legal rights on any person and creates no legal obligations. Parties of the Contract

36. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement Void agreements may be An agreement made by minor, Agreements without consideration, and Certain agreements against public policy Parties of the Contract

37. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement Agreements which become void – An agreement, which was legal and enforceable when it was entered into, may subsequently become void due to impossibility of performance, change of law or other reasons. When it becomes void the agreements cases to have legal effect. Parties of the Contract

38. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement A Voidable Agreement is one, which can be avoided, i.e. set aside by some of parties to it. Until it is avoided, it is a good contract. Parties of the Contract

39. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement “An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others is Voidable Contract.”- Sec-2(i) Indian Contract Act. For Example…… Contracts bought about by Coercion, Undue Influence, Misrepresentation etc. Parties of the Contract

40. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement An illegal agreement is one, which is against a law in force in a country. For Example….. An agreement to commit murder, robbery or cheating. Parties of the Contract

41. Valid Contract Void Agreement Voidable Agreement Illegal Agreement Unenforceable Agreement The term unenforceable agreement is used in English law. It means an agreement that cannot be enforced in a court of law, one or both of the parties, because of some technical defect. For Example……. Want of registration or non-payment of the requisite stamp duty. Parties of the Contract

42. Difference between Valid Contract and Void Contract

43. Distinction between Valid Contract, Void Contract and Voidable Contract • An agreement that satisfies all the essential elements of a contract and which enforceable through the courts is called Valid Contract. • An agreement not enforceable by law is called a Void Contract. • An agreement, which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is Voidable Contract.

44. Distinction between Valid Contract, Void Contract and Voidable Contract • Valid contract is a good contract. • Void contract is not a good contract. • Voidable contract is a good contract until it is said to be void.

45. Distinction between Valid Contract, Void Contract and Voidable Contract • In a Valid Contract there is legal rights of each parties on it. • In a Void Contract there is no legal rights of any party on it. • In a Voidable Contract there is legal rights of the parties until it is said to be void.

46. Distinction between Valid Contract, Void Contract and Voidable Contract • A valid contract can be transferable. • A void contract cannot be transferable. • A Voidable Contract can be transferable until it is said to be void.

47. Distinction between Valid Contract, Void Contract and Voidable Contract • A valid contract has legal effect. • A void contract has no legal effect. • A voidable contract has legal effect until it is said to be void.

48. Difference between Legal Contract and Illegal Contract

49. Difference between Enforceable Agreement and Unenforceable Agreement

50. Difference between Void Agreement and Illegal Agreement