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INTRODUCTION NATURE AND SCOPE

OF BUSINESS LAWBusiness comprises all profit seeking

activities and enterprises that provide

goods and services necessary to andeconomic system.

Law refers to the principles and regulations

established by a Government , applicable to

people and enforced by judicial decision.


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Meaning and Definition

Business law is that portion of the legal system which guarantees an orderly conduct of business

affairs and the settlement of legitimate disputes in a just manner. It establishes a set of rules and

prescribes conduct to order to avoid misunderstandings and injury in our business relationships

Sources of business lawLegislations.

Customs.

Case Law.Natural Law.Indian Law

English Law.Scope of Business lawThe Indian Contract Act,1872The Sale of Goods Act,1930The Partnership Act,1932The Negotiable Instruments Act,1881

The Companies Act,1994The Patents Act,1970The Trade and Merchandise Marks Act,1958The Consumer Protection Act,1986.


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Objectives of Business Law: To enable enforcement of right

To facilitate industrial growth To achieve social justice

To define the rules

Requirements of effective Business law: Rules must be obeyed voluntarily

Rules must be just and reasonable

Rules must be flexible

Rules must be knowable


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Law & Judiciary

Bangladeshi law is primarily in accordance with the English legalsystem, although since 1947 the legal scenario of Bangladesh hassignificantly drifted from the West owing to differences in socio-cultural values and religious guidelines. Laws are loosely based onEnglish common law, but family laws such as marriage and

inheritance are based on religious scriptures, and therefore differbetween religious communities. The Constitution of Bangladeshwas drafted in 1972 and has undergone 15 amendments.

The highest judicial body is the Supreme Court, with justicesappointed by the President. The judicial and law enforcementinstitutions are comparatively weak.[57] On 1 November 2007,

Bangladesh successfully separated the Judiciary Branch from theExecutive, but several black laws, including the Special Powers Act,still influence the rulers.[58] It is expected that this separation willmake the judiciary stronger and more impartial.


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The Judiciary of BangladeshThe Judiciary of Bangladesh consists of a Supreme Court, subordinate courts and tribunals.

The Supreme Court

The Supreme Court of Bangladesh comprises the Appellate Divisionand the High Court Division. It is the apex Court of the country andother Courts and Tribunals are subordinate to it.

The Appellate Division

The Appellate Division will have Jurisdiction to hear and determineappeals from judgments, decrees, orders or sentences of the HighCourt Division. It has rule making power for regulating the practiceand procedure of each division and of any Court subordinate to it.Chancery Research and Consultants Trust (CRC-Trust) maintainsawebsite Chancery Law Chronicles-First ever Online Database ofBangladesh Laws(www.clcbd.org) where it has already included7000 judgements of the Appellate Division and High Court Divisionof the Supreme Court of Bangladesh from 1972 to till date.
http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/http://www.clcbd.org/


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The High Court Division

The High Court Division, though a Division of the Supreme Court, isfor all practical purposes, an independent court with its powers,functions and jurisdictions well defined and determined under theConstitution and different laws. It has both appellate as well asoriginal jurisdiction. It hears appeals from orders, decrees and

judgments of subordinate courts and tribunals. It has originaljurisdiction to hear Writ Applications under article 102 of theConstitution, which is known as extra ordinary constitutionaljurisdiction. It has further original jurisdiction, inter alia, in respectof company and admiralty matters under statutes. The High CourtDivision, in special circumstances, has also powers and jurisdiction

to hear and dispose of cases as the court of first instance underarticle 101 of the Constitution. The High Court Division shall haveSuperintendence and control over all Courts and tribunalssubordinate to it.


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The Subordinate Courts and Tribunals

There are a wide variety of subordinate courts andtribunals. Such courts and tribunals are created by somerelevant statutes. All their powers, functions and

jurisdictions are well determined by the respectivestatutes. These are the basic courts in the system of the

judiciary of Bangladesh. The major bulk of the cases, bothcivil and criminal, are tried and heard in such courts andtribunals. Certain tribunals are termed as administrativetribunals, Nari-o-Shishu Nirjato Daman Tribunals, SpecialTribunals etc. Such courts and tribunals spread all over the

country at district levels. The subordinate courts inBangladesh can be divided in two broad classes, namely,civil courts and criminal courts.


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The Subordinate Courts and Tribunals

Civil Courts

The civil courts are created under the Civil Courts Act of 1887. The Act provides for five tiers of civilcourts in a district, which bottom-up are:

Court of Assistant Judge,

Court of Senior Assistant Judge,

Court of Joint District Judge,

Court of Additional District Judge and

Court of District Judge The first three are courts of first instances with powers, functions and jurisdictions in respect of

subject matter, territory and pecuniary value determined by or under statutes.

The rest two are generally courts of appeal in civil matters. now the civil suits are rapidly disclose inthe court:

Criminal Courts

Courts of Sessions

Courts of Metropolitan Sessions Special courts/tribunals (Criminal)

Courts of Metropolitan Magistrate

Courts of Magistrate


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Contract Act 1872

The Indian Contract Act came into force on 1st September 1872. The Act

applies to the whole of India except the state of Jammu and Kashmir.

The main objective of the Act is to ensure that the rights and obligations are

honored, the expectations created by the promises of parties to an

agreement are fulfilled and legal remedies are available to an aggrieved

party against the party failing to honor his part of the agreement. It extends

to the whole of Bangladesh; and it shall come into force on the first day of

September, 1872.This law is related to certain parts of the substantive law

dealing the formation and breach of contracts, awarding damages etc.

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.


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CONTRACT ACT, 1872

What is a contract?Section 2(h)

An agreement enforceable by law is a contract. Thus, Contract = Agreement+ Enforceability at Law

Agreement? Section 2(e)Every promise and every set of promises, forming the consideration for each other, is

an agreement:

Promise/(s ) Promise/(s) = Agreement (in exchange for)

Promise?Section 2(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:Promise = Proposal/Offer + Acceptance

Proposal? Section 2(a) Expression of willingness

With a view to seek the assent of the other

Thus, mere expression of willingness doesnt constitute offer/proposal.


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Essentials of a valid contract

1.Offer and Acceptance2. Free consent3. Contractual capacity

4. Lawful consideration5. Lawful object6. Agreement not expressly declared void7. Possibility of performance

8. Certainty of terms9. Intention to create legal relationship10. Legal formalities.


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Classification of Contracts According to validity:

1.Valid contract: A contract satisfies al the essential elements of acontract and enforceable through the court.2.Void contract: A contract which was valid when first entered intobut subsequently becomes unenforceable is called void contact.eg:war breaks out.3. Void agreement: An agreement not enforceable by law is said to

be void. Agreement made by minor.4.Voidable agreement: A voidable agreement is one which can beset aside at the option of one of the parties. eg. Agreement byinfluence.5.Illegal agreement: one which is against a law enforce inBangladesh. Ex. Agreement to commit a murder.

6.Unenforceable agreement: an agreement cant be enforced incourt of law, one or both parties because o some technical defects.

Ex. Non payment of the requisite stamp.


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Classification of Contracts

According to formation:1.Express contract-expressed by word, spoken or written.2.Implied contract-understood by act, conduct and course ofdealings.3.Quasi contract- certain dealings, which are not contract strictly,

though the parties act as a contract. Ex. obtaining benefit at theexpense of other and the circumstances are that he ought equitableto pay for it. Ex. supplier of necessaries to minors, lunatics, marriedwomen.According to Performance:1.Executed contract-parties perform the obligation immediately.

2.Executory contract- to be performed in future.3.Unilateral contract-circumstance in where one party has to fulfillhis obligation ,as other party has already performed the obligation.4.Bilateral contract- must be at least two parties in a contract.


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Offer and Acceptance

According to Sec 2(a),whenone person signifies to another his willingness to door abstain from doing anything, with a view to obtain the assent of the otherto such act or abstinence, he is said to make a proposal. Proposal is offer.When the offer is accepted it is said as acceptance.

Essentials of a valid offer:1.Intention to create legal relationship-

2. Definite terms3. Statement of intention and invitation to offer.4. Offer must be communicated

5.Offer can be specific or general.(CarlillVs.Carbolic smoke ball Co.(1892).6. Offer can be conditional7. Cross offer and counter offer. When parties make identical offers to eachother in ignorance of each others offer, the offers are said to be cross offers.

When a new offer is made after the rejection of the original offer, it is called acounter offer.

8.Offer should not contain a term, the non-compliance of which would amountto acceptance

Example:


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Example:

A writes to B, I offer to sell my house for Rs.8 lacs. If I do not receive a reply by coming Monday ,

I will assume that you have accepted the offer to buy my house.

If B does not reply there is still no contract.

Lapse of an offer : An offer lapses if : a) either offeror or offeree dies before acceptance b) it is

not accepted within the specific time or a reasonable time c) the offeree does not make a valid

acceptance d) by notice of revocation.

Essentials of a valid acceptance Acceptance must be communicated

Acceptance must be absolute and unqualified

Acceptance can be express or implied

Acceptance by a definite person

Acceptance must be through reasonable or prescribed mode

Mental acceptance is no acceptance

Acceptance must be preceded by offer


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Termination of offer

By notice of revocation

By lapse of time

By failure of the acceptor to fulfill a condition

precedent to acceptance

By failure to accept according to the prescribed mode

By death or insanity of the offeror

By rejection

By subsequent illegality or destruction of subject-matter.

C i ti f ff d


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Communication of offer and

acceptance

Methods:

By Act: It includes conduct, words.(written or oral) Itcan also be through letter, telegram or telephone.

By Omission: It includes an abstinence or forbearanceon the part of one person.Communication of acceptance not necessary:When there is a prescribed mode and the offereefollows it, b) when the offeror has acted in a certain

conduct on the part of the offeree as equivalent toacceptance.


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CONSIDERATION

Section 2(d) When, at the desire of the promisor, the

promisee or any other person has done or abstainedfrom doing, or does or abstains from doing, or promisesto do or to abstain from doing, something, such act orabstinence or promise is called a consideration for thepromise.

o Essentials of valid consideration

It must move at the desire of the promisor(Kedarnath Vs. Gorie Mohamed)1886.

It must move from the promisee or any other person(ChinnayaVs.Ramaya)1882.

Consideration may be an act or abstinence.


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It may be past , present or future

It need not be adequate-The court can hardly assume therole of setting what should be the appropriateconsideration for a promise.

It must be real and not illusory- a promise by a man tomake two parallel lines meet is no good consideration.

It must be lawful. The consideration of an agreement islawful unless -a)it is forbidden by law. b)fraudulent c) it involves orimplies injury to person or property of another d) thecourt regards it as immoral or opposed to public policy e)

it defeats the provision of any law. Discharge of a pre-existing obligation is no consideration.

E ti t th l


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Exceptions to the rule no

consideration no contract

Natural love and affection

Compensation for past voluntary service

Time barred debt- but the promise must be in writingand duly signed by the promisor or his authorized

agent. Completed gifts

Agency-no consideration is required to create anagency

GuaranteeRemission- no consideration is required for anagreement to receive anything less than what is due.


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Contractual Capacity Of Parties

Capacity to contract means the competence

or capability of the parties to enter into a valid

contract.

Section 11 of the Contract Act says that everyperson is competent to contract who is of the

age of majority and who is of sound mind and

is not disqualified from contracting by any lawto which he is subject.


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MINOR

Minor is a person who has not completed the age of18 years.However, a minor for whom a guardian has beenappointed by the court or when his property is

managed by the court of wards, becomes a majoronly on completing 21 years of age.

Minors are often exploited, ill-treated and theirproperties stolen. Law provides that it is duty of the

court to guard against their lack of knowledge andexperience.


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Effect of minors agreement

An agreement with or by a minor is void. A minor is not competent tocontract and a contract by minor is void ab initio. (Mohoribibivs.Dharmodas ghose)1903.

No ratification. A minor cannot ratify the agreement on attaining majoritybecause a void agreement cannot be ratified.

Minor can be a promisee or beneficiary. Thus in case of goods sold by aminor he is entitled to recover the price from the buyer. He can be a payeein a contract.(Raghava Chariar Vs.Srinivasa).

No estoppel against a minor. A minor can always plead minority and willnot be prevented from doing so even when he has entered into a contractfalsely representing himself to be a major. estoppel is to prevent injusticeowing to inconsistency or Fraud.

Contract by guardian. A contract can be entered into by the guardian ormanager of a minor only if a) the contract is within the authority of theguardian or manager b) it is for the benefit of the minor.
http://legal-dictionary.thefreedictionary.com/Fraudhttp://legal-dictionary.thefreedictionary.com/Fraudhttp://legal-dictionary.thefreedictionary.com/Fraud


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Liability for torts. Where the tort is directly connected with thecontract the minor is not liable, (Mohoribibi Vs.Dharmodas

Ghose)but where the tort is independent of the contract, the minorcannot escape his liability.(Burnard v. Haggis.1863)

Doctrine of compensation or restitution. If an infant has obtainedgoods or property by misrepresenting his age , he can not becompelled to restore it as long as it is traceable in his possession.

Beneficial contracts : Agreements entered into by a minor for

his/her benefit are valid and enforceable. They area) Contracts of marriage- such contracts can be enforced against theother enforcing party at the instance of the minor but the samecannot be enforced against the minor.b) Contracts of apprenticeship- such contract can be made by theguardian on behalf and for the benefit of the minor.(Roberts v.

Gray)


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Minor as an agent- Although a minor is not entitled toemploy an agent, he can be an agent for someone else.

Minor as a Partner- A minor cannot make a contract ofpartnership although he may be admitted to itsbenefits with the consent of all the partners.

Minor as a shareholder-A minor cannot be a memberof a company because membership arises out of acontract.

Insolvency-minor cannot be declared insolvent as he isincapable of entering into valid contract.


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Person of unsound mind Section12; A person is said to be of sound mind

for the purpose of making contract if, at the timewhen he makes it, he is capable of understandingit and of forming a rational judgment as to itseffect upon his interests. For a valid agreement

,it is necessary to have sound mind.

Unsoundness of mind may arise from ---

Insanity or lunacy, idiocy, drunkenness, and similar

factors.A person who is usually of unsound mind ,but

occasionally of sound mind may make a contract,when he is of sound mind.


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Free Consent

Two or more persons are said to consent when they agree upon thesame thing in the same sense is said as consent

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.


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Coercion: According to Section 15 Coercion is

the committing or threatening to commit, any

act forbidden by the Indian Penal Code, or the

unlawful detaining, or threatening to detain,any property, to the prejudice of any person

whatever, with the intention of causing any

person to enter into an agreementRanganayakamma v. AlwarSetty. (1889).


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Undue InfluenceAccording to Section 16 A contract is said to beinduced by undue influence where the relationssubsisting between the parties are such that oneof the parties is in a position to dominate the willof the other and uses that position to obtain anunfair advantage over the other

Manu Singh V. Umadat Pandey. (1890)Lloyds Bank V.Bundy.(1975)


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Distinction between Coercion and

Undue Influence

Coercion Undue Influence

Consent is obtained under the threat of

offence.

It involves the use of physical or violent

forces

It attracts the provision of Indian PenalCode (IPC). It may proceed from a stranger to thecontract.

Consent is obtained by the dominant will

of another

It involves the use of moral or mental

forces

There is no criminal liability in this case. There must be certain relationshipbetween the parties to the contract


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Misrepresentation

Misrepresentation refers to the misstatement of factmaterial to the contract.According to Section 18 of the Act Misrepresentationmeans and includes1. the positive assertion, in a manner not warranted by the

information of the person making it, of that which is nottrue, though he believes it to be true2. Any breach of duty which, without any intent to deceive,gains an advantage to the person committing it bymisleading another to his prejudice

3. Causing ,however innocently, a party to an agreement, tomake a mistake as to the substance of a thing which is thesubject matter of the agreement.


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Types Of Misrepresentation:

Unwarranted Statements-When a party to a contract positively asserts that a particular fact relatingto the subject matter of the agreement is true, when his information doesnot warrant it to be so, he is guilty of misrepresentation.

Breach of DutyWhen a person commits a breach of duty without anyintention to deceive the other party, and thereby gains an advantage to

himself to the prejudice of the other party, the person committing thebreach of duty is said to be guilty of misrepresentation. Oriental BankingCorporation V. John Fleming (1879)

Inducing mistake about subject-matter : If a party to an agreementinduces the other party, although innocently, to commit a mistake as tothe nature or quality of the subject-matter of the agreement, he becomes

guilty of misrepresentation.Eg: Concealment of information relating to company in prospectus.


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FRAUD

Fraud" means and includes any of the following acts committed by a party to a contract, or

with his connivance, or by his agent, with intent to deceive another party thereto or his agent,

or to induce him to enter into the contract:-

(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be

true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent.

Explanation Mere silence as to facts likely to affect the willingness of a person to enter into

a contract is not fraud, unless the circumstances of the case are such that, regard being had to

them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself,

equivalent to speech.


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Distinction between fraud and

misrepresentationFraud Misrepresentation

Intention to deceive No intention to deceive

If the statement is dishonest belief, even

though it was wrong is fraud

If the statement is honest belief, even

though it was wrong is only

misrepresentation

The aggrieved party can rescind the

contract in case of fraud, also can sue for

damage

The remedy is only rescission, can not sue

for damage

The contract can be avoided ,if the

aggrieved party or other independent

source discovers the truth with ordinarydiligence in a circumstance.

The contract cannot be avoided ,if the

aggrieved party discovers the truth with

ordinary diligence in a circumstance.


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mistake

Mistake is an erroneous belief concerningsomething. An agreement is valid as the contractis made upon the parties in same sense.

A contract is not voidable because it was caused

by a mistake as to any law in force in Bangladesh;but a mistake as to a law not in force inBangladesh has the same effect as a mistake offact.

Mistake may be --- mistake of law, mistake of fact,mistake in opinion and unilateral .


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Legality of object and consideration

The consideration or object of an agreement is lawful, unless- it is forbidden by

law; or is of such a nature that, if permitted, it would defeat the provisions of any

law; or is fraudulent; or involves or implies injury to the person or property of

another; or the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be

unlawful. Every agreement of which the object or consideration is unlawful is void.


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VOID AGREEMENTS

An agreement can be void because of mistake, lack consideration, want ofcapacity etc. lists are.

Agreement made by incompetent parties.

Agreement made under a mutual mistake of fact.

Agreement , the consideration or object of which is unlawful.

Agreements , the consideration or object of which is unlawful in parts. Agreements made without consideration.

(subject to exceptions to the rule No Consideration No Contract).

Agreements in restraint of marriage- An agreement in restraint ofmarriage of any person , other than a minor is void. Example : P promisedto marry L only and no one else and to pay a definite sum if he married

someone else.P married X. Agreements in restraint of trade- An agreement restraining a person from

exercising a lawful profession, trade or business of any kind is void.However there are two types of exceptions to this rule.

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