The Contract Law

1 THE CONTRACT ACT, 1872
(ACT NO. IX OF 1872).
[25th April, 1872]
Preamble Whereas it is expedient to define and amend certain parts of the law
relating to contracts; It is enacted as follows:-
PRELIMINARY
Short title 1. This Act may be called the Contract Act, 1872.
Extent
Commencement
It extends to the whole of Bangladesh; and it shall come into
force on the first day of September, 1872.
Enactments
repealed
Nothing herein contained shall affect the provisions of any
Statute, Act or Regulation not hereby expressly repealed, nor
any usage or custom of trade, nor any incident of any
contract, not inconsistent with the provisions of this Act.
Interpretation clause
2. In this Act the following words and expressions are used in
the following senses, unless a contrary intention appears from
the context:-
(a) When one person signifies to another his willingness to do
or to abstain from doing anything, with a view to obtaining
the assent of that other to such act or abstinence, he is said to
make a proposal:
(b) When the person to whom the proposal is made signifies
his assent thereto, the proposal is said to be accepted. A
proposal, when accepted becomes a promise:
(c) The person making the proposal is called the "promisor"
and the person accepting the proposal is called the
"promisee":
(d) 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:
(e) Every promise and every set of promises, forming the
consideration for each other, is an agreement:
(f) Promises which form the consideration or part of the
consideration for each other are called reciprocal promises:
(g) An agreement not enforceable by law is said to be void:
(h) An agreement enforceable by law is a contract:
(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 the
other or others, is a voidable contract:
(j) A contract which ceases to be enforceable by law becomes
void when it ceases to be enforceable.




Semester Final Examination.
Subject: The Contract Law


1. What is consent? What are elements of free consent?

Consent:
The law requires consent to a contract should be free and voluntary.
A party's genuine consent is an essential element of a legally binding contract. Genuine consent to enter into a contract can be affected by a number of issues. For example, during the contractual negotiations, there may have been:
• undue influence;
• mistake as to the terms and identity of the person;
• misrepresentation;
• unconscionable conduct; or
• Duress.
Each of these factors or events may mean that consent was not freely given by one of the parties and that party may therefore be able to avoid their contractual obligations.
Free Consent of Contract Act:
The contract, to be valid must contain some ingredients. One of the most important elements is the free consent of parties. The contract is the agreement between two or more persons. So there must be meeting of minds in similar manner. So the meeting must be voluntary. It must be free from any compulsion or pressure. A contract without free consent is not proper.

Section 13: "Consent” defined-
Two or more persons are said to consent when they agree upon the same thing in the same sense.

Section 14: "Free consent" defined-
Consent is said to be free when it is not caused by -
(1) Coercion, as defined in section 15, or
(2) Undue influence, as defined in section 16, or
(3) Fraud, as defined in section 17, or
(4) Misrepresentation, as defined in section 18, or
(5) Mistake, subject to the provisions of sections 20, 21, and 22.

Consent is said to be so caused when it would not have been given but for existence of such coercion, undue influence, fraud, misrepresentation or mistake.


2. Define mistake? Discuses typological mistake of contract?

MISTAKE:
An error committed in relation to some matter of fact affecting the rights of one of the parties to a contract.
Mistakes in making a contract are distinguished ordinarily into, first, mistakes as to the motive; secondly, mistakes as to the person, with whom the contract is made; thirdly, as to the subject matter of the contract; and, lastly, mistakes of fact and of law. In general, courts of equity will correct and rectify all mistakes in deeds and contracts founded on good consideration.

Mistake of contract:
Section 20: Agreement void where both parties are under mistake as to matter of fact.- Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
Explanation: An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement is not to be deemed a mistake as to a matter of fact.

Section 21: Effect of mistakes as to law .– A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in [India] has the same effect as a mistake of fact.
Illustration
A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation: the contract is not voidable.

Section 22: Contract caused by mistake of one party as to matter of fact. – A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

Section 72: Liability of person to whom money is paid or thing delivered by mistake or under coercion .– A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Illustrations
(a) A and B jointly owe 100 rupees to C. A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.


3. What is mean by consideration? What are assent of consideration?

Definition of consideration:
Section 2 (d) of the contract act defines as follows:
• Consideration is what a promisor demands as the price for his promise. In simple words, it means 'something in return.'
• Consideration has been defined as
"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 promises to abstain from doing some¬thing, such act or abstinence or promise is called a consideration for the promise."

Assent of consideration:
Consideration must also be present for a legal contract to be formed. The essence of consideration is that a party receives some kind of benefit in return for his promise. Consideration may consist of money, goods, or a promise to do or not do something. The statement "I'll give you my guitar" is not a contract because the giver would receive no specified consideration in return.
When the mutual assent of legally capable parties, which includes an offer and an acceptance, accompanied by consideration, to a specific exchange or set of promises occur, a valid contract has been formed.


4. What is element contingent of contract?

Contingent contact:
A contingent contact is contracting to do or not to do something if some event collateral to such contract does or does not happen (Section 31).
Illustration: A contacts to pay B Tk. 5,000.00 if B’s house is burnt. This contingent contract.

Essential elements of a contingent contract:
The essential elements of a contingent contract are following:-
1. There must be a contract to do or not to do smoothing,
2. If some event does or does not happen,
3. That event must be collateral to the contract.

5. Which contract are specific enforceable? Which contract is not unenforceable?

Enforceable of Contract:
An enforceable contract is one for which a legal remedy is offered in the event that the contract is not fulfilled. For example, an oral contract to buy land would not be enforceable because the Statute of Frauds requires such an agreement to be in writing. Similarly, statutes of limitations, which limit the length of time available for legal action, may apply to contracts of certain types.

Unenforceable of Contract:
An unenforceable contract is a legal contract that a court cannot or will not enforce due to a technical defect. An unenforceable contract is valid, but gives the court system reason to refuse to offer remedy to either party. As there are many different types of contracts, there are many different reasons that a contract may be voidable, such as statute of limitations, omitted provisions, and ambiguity.
In essence, a contract is the exchange of promises for which the law provides remedy in case of breach by one or both parties. An example of a simple contract would be the promise by a homeowner to pay a contractor a specific sum of money to paint interior walls. If the painter finishes painting the walls, the homeowner is then bound to pay for the job as promised.