Contract
1. Definition of Contract.
A contract is a promise or sets of promises between two or more parties, which is
enforceable by law and requires a lawful consideration and free consent of both parties is
said to be a contract.
Section 2(h) of the Contract Act, 1872 says, " an agreement enforceable by law is a
contract".
In Bangladesh, the Contract Act, 1872 serves as the primary source of contract law.
Contracts can be written, oral, or implied through the conduct of parties.
For a contract to be valid, it must fulfill certain essential elements, including offer,
acceptance, consideration, capacity to contract, free consent, and lawful object and
consideration.
Definitions by Jurists:
Sir William Anson: "A contract is a promise or a set of promises which the law regards as
creating an obligation to perform them."
Sir Frederick Pollock: "A contract is an agreement creating obligations which the law will
enforce."
Salmond: "A contract is an agreement creating, defining, regulating, or extinguishing legal
rights and duties."
Maine: "A contract is a formal agreement expressing the intention of the parties which the
law recognizes as binding, creating mutual obligations which are enforceable by legal
proceedings."
Austin: "A contract is a promise or set of promises for breach of which the law gives an
action for damages."
Case References:
1. Balfour v. Balfour (1919): This English case established the principle that purely social
or domestic agreements don't create legally binding contracts.
2. Carlill v. Carbolic Smoke Ball Co. (1893): This English case clarified that unilateral
offers, where performance triggers acceptance, can form binding contracts.
, 3. Masterpiece Productions v. United Artists Productions, Inc. (1954): This US case
highlights the importance of "meeting of the minds" for a valid contract, meaning both
parties must have a shared understanding of terms.
Examples:
1. Employment Contract: An employer and employee agree on terms like job duties,
salary, and benefits. This creates legal obligations for both parties.
2. Sale of Goods: A buyer and seller agree on the price and delivery of goods. This creates
obligations for the seller to deliver and the buyer to pay.
Essential Elements of a Contract:
A valid contract requires several key elements to be enforceable in court. Here's a breakdown
of each element with examples and relevant case references:
1. Two or More Parties:
This means there needs to be at least two distinct entities entering the agreement.
Example: A company signing a service contract with a freelancer.
2. Offer:
This is a clear proposal by one party (offeror) to do something in exchange for something
else.
Example: A seller listing a product on an online marketplace with a price and specifications.
3. Acceptance:
This is the unequivocal agreement by the other party (offeree) to the terms of the offer.
Offeree must accept the offer of the offeror.
Example: Clicking "Buy Now" on a product page after reviewing terms and conditions.
Case Reference: Hyde v Wrench (1840) - Highlighted the difference between counter-
offers (not acceptance) and actual acceptance, requiring clear agreement to specific terms.
4. Intention to Create Legal Relationship:
Both parties must intend the agreement to be legally binding, not just social or casual.
Example: Two friends shaking hands on a bet is unlikely to be considered a legal contract.
Case Reference: Balfour v Balfour (1919) - Absence of intention to create legal relations can
render a seemingly valid agreement unenforceable.
1. Definition of Contract.
A contract is a promise or sets of promises between two or more parties, which is
enforceable by law and requires a lawful consideration and free consent of both parties is
said to be a contract.
Section 2(h) of the Contract Act, 1872 says, " an agreement enforceable by law is a
contract".
In Bangladesh, the Contract Act, 1872 serves as the primary source of contract law.
Contracts can be written, oral, or implied through the conduct of parties.
For a contract to be valid, it must fulfill certain essential elements, including offer,
acceptance, consideration, capacity to contract, free consent, and lawful object and
consideration.
Definitions by Jurists:
Sir William Anson: "A contract is a promise or a set of promises which the law regards as
creating an obligation to perform them."
Sir Frederick Pollock: "A contract is an agreement creating obligations which the law will
enforce."
Salmond: "A contract is an agreement creating, defining, regulating, or extinguishing legal
rights and duties."
Maine: "A contract is a formal agreement expressing the intention of the parties which the
law recognizes as binding, creating mutual obligations which are enforceable by legal
proceedings."
Austin: "A contract is a promise or set of promises for breach of which the law gives an
action for damages."
Case References:
1. Balfour v. Balfour (1919): This English case established the principle that purely social
or domestic agreements don't create legally binding contracts.
2. Carlill v. Carbolic Smoke Ball Co. (1893): This English case clarified that unilateral
offers, where performance triggers acceptance, can form binding contracts.
, 3. Masterpiece Productions v. United Artists Productions, Inc. (1954): This US case
highlights the importance of "meeting of the minds" for a valid contract, meaning both
parties must have a shared understanding of terms.
Examples:
1. Employment Contract: An employer and employee agree on terms like job duties,
salary, and benefits. This creates legal obligations for both parties.
2. Sale of Goods: A buyer and seller agree on the price and delivery of goods. This creates
obligations for the seller to deliver and the buyer to pay.
Essential Elements of a Contract:
A valid contract requires several key elements to be enforceable in court. Here's a breakdown
of each element with examples and relevant case references:
1. Two or More Parties:
This means there needs to be at least two distinct entities entering the agreement.
Example: A company signing a service contract with a freelancer.
2. Offer:
This is a clear proposal by one party (offeror) to do something in exchange for something
else.
Example: A seller listing a product on an online marketplace with a price and specifications.
3. Acceptance:
This is the unequivocal agreement by the other party (offeree) to the terms of the offer.
Offeree must accept the offer of the offeror.
Example: Clicking "Buy Now" on a product page after reviewing terms and conditions.
Case Reference: Hyde v Wrench (1840) - Highlighted the difference between counter-
offers (not acceptance) and actual acceptance, requiring clear agreement to specific terms.
4. Intention to Create Legal Relationship:
Both parties must intend the agreement to be legally binding, not just social or casual.
Example: Two friends shaking hands on a bet is unlikely to be considered a legal contract.
Case Reference: Balfour v Balfour (1919) - Absence of intention to create legal relations can
render a seemingly valid agreement unenforceable.
