Learning Outcome: After completion of this lesson students will be able to- a) Define contract b) Classify contracts c) Identify the legal source in determining contractual relationship d) Determine the capacity of parties to enter into a contract e) Identify the elements of a contract

1. AIS 2102: Introduction to Law of Contract
PREETI SIKDER, ASSISTANT PROFESSOR, JU

2. Contract in Everyday Life
BUYING A TRAIN
TICKET TO GO TO
HOME
HIRING A TAXI CONSTRUCTION
COMPANY IS HIRED
TO WORK IN A SITE

3. Classical model of Contract
Discrete, two party, commercial,
executory exchange

4. Contracts Not under the scope of
Law of Contract
 Contracts of employment = Employment Law
 Marriage contracts = Family Law
 Consumer credit contracts = Consumer Law
 Contracts for the sale of goods = Commercial Law
 Contracts for the sale of land, mortgages and leasehold
agreements = Land Law, Landlord and Tenant Law

5. GeneralPrinciplesofLaw
ofContract

6. Judicial Precedent
THE DOCTRINE OF JUDICIAL PRECEDENT REQUIRES THAT
JUDGES MUST FOLLOW EARLIER COURT DECISIONS GIVEN
BY COURTS HIGHER IN THE COURT HIERARCHY.

7. Examples
General Principles of formation
General Principles of Content
General Principles of
misrepresentation
General Principles of mistake
General Principles of capacity

8. Definition
WHAT IS A CONTRACT?

9. Sir Guenter
Heinz Treitel
“A contract is an
agreement giving
rise to obligations
which are
enforced or
recognised by
law.”

10. The Contract Act, 1872
AN AGREEMENT ENFORCEABLE BY LAW IS
CONTRACT

11. Section 2: Interpretation Clause
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;

12. Section 2: Interpretation Clause
(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’:

13. Section 2: Interpretation Clause
(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:

14. Section 2: Interpretation Clause
(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:
(h) An agreement enforceable by law is a contract:

15. Classification of
Contracts

16. Classification according to
Validity
Formation
Performance

17. Classification regarding
Enforceability and Validity
VALID CONTRACT VOID CONTRACT VOIDABLE
CONTRACT

18. ValidContract
An agreement enforceable by law.
Section 10 of the Contract Act reads:
All agreements are contracts if they are
made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be void.

19. Instances of Void Contract
Agreement in restraint of marriage (Sec
26)
Agreement in restraint of profession (Sec
27)
Agreement in restraint of legal proceeding
(Sec 28)

20. Instances of Void Contract
Uncertain agreement (Sec 29)
Wagering (betting) contract (Sec 30)
Unlawful Object (Sec 23)
Contingent Contract

21. VoidContract Section 2 (j) reads: A contract which
ceases to be enforceable by law becomes
void when it ceases to be enforceable.
Two stages of declaring a contract to be
void:
There shall be a valid contract in the beginning
It must cease to be enforceable by law

22. Voidable Contract
Section 2 (i) reads: 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.
A contract has to be enforceable at first, then if it can be set
aside by one or more of the parties.
Upon which party the power of validating or dismissing the
agreement can rest upon will be determined by law.
The status of a voidable contract is temporary, either it becomes
a valid contract or void agreement.

23. Classification according to
Validity
Formation
Performance

24. Classification regarding mode of
formation
Express Contract
Implied Contract

25. Section 9:
Promises, express and implied
In so far as the proposal or acceptance of any
promise is made in words, the promise is said
to be express.
In so far as such proposal or acceptance is
made otherwise than in words, the promise is
said to be implied.

26. ExpressContract When the proposal or acceptance
of any promise is made in words,
the contract is deemed to be an
express contract.
It can be of two types:
1. Written Contract;
2. Oral Contract.

27. Implied Contract
When the proposal or acceptance is made
otherwise than in words, it is deemed to be
an implied contract.
A shoe shiner starts polishing the shoes of
a person standing before him and that
person allows him to do so keeping his
silence.

28. Classification According to Performance
Executed Executory

29. Identify the contract
A agrees to paint a picture for B
for BDT 1000. After A has painted
the picture B pays him the money
A agrees to engage B as his
driver from the next month.

30. Classification According to Performance
Unilateral Bilateral

31. Identify the contract
One party has to fulfill his obligation at
the time of the formation of the contract,
the other party having fulfilled his
obligation at the time of the contract or
before the contract comes into existence.
Obligations on the part of both the
parties to the contract are
outstanding at the time of the
formation of the contract.

32. Elements of Contract
1. Plurality of numbers
2. Offer and acceptance
3. Intention to create legal
relationship
4. Lawful Consideration
5. Capacity of the parties
6. Free consent of the parties
7. Legality of the object
8. Certainty
9. Possibility of performance
10. Writing, registration and
legal formalities
11. Void Agreements

33. Instances of Void Agreement
Agreement by incompetent parties (Sec 11)
Agreement made under a mutual mistake (Sec 20)
Agreement the consideration or object of which is unlawful (Sec
23)
Agreement made without consideration (Sec 25)

34. Instances of Void Agreement
Agreement the meaning of which is uncertain (Sec 29)
Agreement in restraint of marriage (Sec 26)
Agreement in restraint of profession (Sec 27)
Agreement in restraint of legal proceeding (Sec 28)
Agreement to do impossible acts (Sec 56)

35. Capacity of Parties
SECTION 11: EVERY PERSON IS COMPETENT TO
CONTRACT WHO IS OF AGE OF MAJORITY ACCORDING
TO THE LAW TO WHICH HE IS SUBJECT, AND WHO IS
OF SOUND MIND, AND IS NOT DISQUALIFIED FROM
CONTRACTING BY ANY LAW TO WHICH HE IS SUBJECT.

36. Who can not enter into contract?
1. Minor
2. Person of unsound mind
3. Person disqualified by law

37. Section 3 of the Majority Act, 1875
A minor is one who has not completed
his/her 18 years of age.

38. Position of Minor’s guardian
An agreement entered into by the guardian
on behalf of the minor is valid provided that
the obligations undertaken are within the
power of the guardian.

39. Section 12 of Contract Act, 1872
A person is of sound mind for the purpose of
making a contract if, at the time when he is
capable of understanding the subject matter of
the contract and of showing or forming a
rational judgment as to its effect upon his/her
interest.

40. Section 12 of Contract Act, 1872
When a person is usually of unsound mind but
occasionally sound mind can make a contract
when he is of sound mind
When a person is usually of sound mind but
occasionally unsound mind cannot make
contract when he is of unsound mind.

41. Sources of Unsound Mind
1. Idiocy
2. Lunacy or Insanity
3. Drunkenness

42. Section 68 of Contract Act, 1872
If a person, incapable of entering into a
contract, or anyone whom he is legally bound to
support is supplied by another person with
necessaries suited to his condition of life, the
person who has furnished such supplies is
entitled to be reimbursed from the property of
such incapable person.

43. Implication of Section 68 of Contract Act
An agreement by a person of unsound mind
is void. But an agreement entered into by a
lunatic or a person of unsound mind for the
supply of necessaries for him or for the
persons whom he is bound to support is
valid.

44. Implication of Section 68 of Contract Act
If a minor is supplied with necessaries, the
money for such supplies can be recovered
from the property of the minor. However, the
minor incurs no personal liability

45. What are Legal Necessaries?
Goods: Physical goods that are necessary
to forbear the existence and reasonable
comfort
Services rendered: Lessons from a Teacher
or care from a nurse
Loan: Loan can be taken to protect the
property of an incapable person

46. Disqualified Persons
1.Alien
2.Foreign Sovereign
3.Company and
Corporation
4. Professional
Persons
5. Contract by a
convict

47. Thank You