Department of Marketing

University of Rajshahi

ASSIGNMENT
ON
Commercial Law

Course Code : 104

Course Name : Commercial Law

Submitted by: Submitted to:

Md. Emdadul Hasan Sagar
ID No: 2010235172
Year: 1st (Semester – 1st)
Department of Marketing
University of Rajshahi
Mst. Anjuman Ara
Assistant Professor
Department of Marketing
University of Rajshahi
1.
 Define contract and state the essential element of contract.

Contract is an agreement between two or more competent parties in which an offer is

made and accepted, and each party’s benefits which is enforceable by law. In a contract
there must be an agreement and the agreement must be enforceable by law.

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.
 Certainly.
 Possibility of performance.
 Void agreement.
 Writing, registration and legal formalities.

 All agreements are not contract but all contracts are agreement. (Explain)

An agreement is any understanding or arrangement reached between two or more parties.

A contract is a specific type of agreement that, by its terms and elements, is legally
binding and enforceable in a court of law.

For a contract to be there an agreement is essential. Without an agreement, there can be

no contract. As the saying goes, “where there is smoke there is fire; for without fire there
is no smoke”. It could will be said, “Where there is contract, there is agreement. Without
an agreement there can be no contract”. Just as fire gives birth to smoke, the same way
agreement gives birth to a contract.

An agreement to become a contract must give rise to a legal obligation. If an agreement is

incapable of creating a duty enforceable by law it is not a contract. Thus an agreement is
a wider term than a contract. On the other hand, legal agreement is contracts because they
create relationship between the parties. Thus an agreement becomes a contract when at
least the following conditions are satisfied.
 Free consent.
 Competency of the parties.
 Lawful consideration.
 Lawful object.
In a nut shell, an agreement is the basis of a contract and contract is the structure
constructed on this basis. An agreement starts from an offer and ends on consideration
while a contract has to achieve another milestone that is enforceability. Due to this,
brunch of an agreement does not give rise to any legal remedy to the aggrieved party
 while breach of contract provides legal remedy to the aggrieved party against the guilty
party. Thus we can say that all contracts are agreement but all agreements are not
contracts.

2.
 When is an offer completed? How and when an offer may be revoke?

An offer is complete when it comes to the knowledge of the person to whom it is made.
When an offer is made by post, its communication will be complete when the offeree
receives the letter.

Revocation means an offer is withdrawn by the offerer. The general rule was established
in Payne v Cave that an offer can be revoked at any time before acceptance takes place.
However, the revocation must be communicated effectively directly or indirectly to the
offeree before acceptance. Moreover an offer can be revoke by:

 Revocation of offer by communication of notice by offerer to offeree before

acceptance.
 Revocation by lapse of time.
 Revocation by failure to fulfil a condition precedent to acceptance.
 Revocation by death or insanity of the offerer
 Revocation by cross offer.
 Revocation by failure to accept according to the prescribed mode.
 “A” offers to sell “B” his horse for taka 10,000 and tells “B” “this offer will open for
one week. The following “B” reject the offer within a week “B” change his mind and
notifies “A” that he accept the offer. Is there a contract?

Yes, there is a contract. According to the law of offer an acceptance when the proposer
prescribes a time within which the proposal must be accepted, the proposal lapses as soon
as the time expires. In the above question a make the offer open for one week but B
changes his mind within a week to accept the offer.

 “An offer is made when and not until, it is communicated to the offeree” explain
with illustration.
A person cannot accept an offer unless he knows of the existence of the offer. An offer
may be communicated to the offeree or offerees by word of mouth, by witling or by
conduct. A written offer may be contained in a letter or a telegram. An offer cannot be
made until the offerer communicated with the offeree.
Examples: P offers to sells his bicycle bicycle to Q at Taka 1,000 by phone. Q may accept
this offer by stating so orally or through telephone or by writing a letter or by sending a
telegram to that effect.
In the example we can see that P communicates with Q by phone. If p doesn’t communicate
with Q then P couldn’t know about the existence of offer.

3.
 What are the types of consideration?

A Consideration may be classifies into three types:

 Executory Consideration or Future Consideration,

 Executed Consideration or Present Consideration, or
 Past Consideration.
 “No consideration no contract” explain the statement.

A promise without consideration cannot create a legal obligation. The general rule is that
an agreement made without consideration is void. This rule is contained in Section 25 of
the Indian Contract Act, which declares that 'an agreement made without consideration is
void'.

 A, for natural love and affection, promise to give his son taka 5,000 than A put his
promise to be in writing and register it. Is this a contract? (Sec- 25)

Yes it is a contract. There are exceptional cases where a contract is enforceable even
though there is no consideration. According to sec 25(1):
Natural love and affection: An agreement made without consideration is valid if it is
expressed in writing and registered under the law for the time being in force for the
registration of documents, and is made on account of natural love and affection between
parties standing in a near relation to each other.

 “D” finds “B” part and give it to him than “B” promises to give “D” taka 100. Is this
a contract?

There is a promise and also there is a consideration. So it is a contract.

4.
 Distinguish between void agreement and voidable agreement.
The main difference between the two is that a void agreement cannot be performed under
the law, while a voidable agreement act can still be performed, although the unbound
party to the contract can choose to void it before the other party performs.
“An agreement not enforceable by law said to be void” and “A voidable agreement is one
which can be avoided”.
 An illegal agreement is also void. But a void agreement is not necessarily illegal. An
agreement may not be contrary to law but may still be void. An agreement, the terms of
which are uncertain, is void but such a contract is not illegal.
When an agreement is illegal, other agreements which are incidental or collateral to it are
void. The reason underlying this rule is that the courts will not enforce any agreement
entered into with the object of assisting or promoting an illegal transaction.
If the main agreement is void, agreement which are incidental to it may be valid.

 State whether the following is valid contract “A promise to pay taka 1,000 to B who
is intend witness is a suit against A. In consideration of B absconding himself at the
trail.

It is not a valid contract. Because an agreement which is tent to create a conflict between
interest and duty is illegal and void being opposed to public policy or it’s against the law.

5.
 What do you mean by capacity to enter into contract?

Capacity to contract means a party has the legal ability to enter into a contract. Capacity
also means a person has to be competent as defined by law. Someone's capacity is
determined by whether or not they have reached the age of majority and if they are
mentally capable of understanding the applicable contract terms. Capacity to enter into a
contract are given below:
i. Attaining the Age of Majority: The age of majority in Bangladesh is defined as 18
years. For the purpose of entering into a contract, even a day less than this age
disqualifies the person from being a party to the contract. Any person, domiciled in India,
who has not attained the age of 18 years is termed as a minor. Any person less than 18
years of age does not have the capacity to contract, any agreement made with a minor is
void from the beginning.
ii. Person of Sound Mind: According to Section 12 of the Bangladeshi Contract Act,
1872, for the purpose of entering into a contract, a person is said to be of sound mind if
he is capable of understanding the contract and being able to assess its effects upon his
interests.

iii. Disqualified Persons: Apart from minors and people with unsound minds, there are
other people who cannot enter into a contract. I.e. do not have the capacity to contract.
The reasons for disqualification can include, political status, legal status, etc. Some such
persons are foreign sovereigns and ambassadors, alien enemy, convicts, insolvents, etc.
 “A” trader supplies “B” a minors with rice needed for his consumption. “B” refuse
to pay the price. Can “A” recover the price?

Yes, A can recover the price. The minor's property is liable for the payment of a
reasonable price for necessaries supplied to the minor or to anyone whom the minor is
bound to support. So, A can recover the price from the minor's property.

6.

 What is mean by undue influence distinguish between misrepresentation and fraud?

A representation of a material fact made by a party to contract who believes it to be

true, the other party relied on the statement, entered into the contract and acted upon it
which later on turned out to be incorrect is known as misrepresentation.
A false representation willfully made by a party to contract in order to mislead the other
party and inducing him to enter into the contract is known as fraud.

The major difference between misrepresentation and fraud are as under:

1. Fraud is a deliberate misstatement of a material fact. Misrepresentation is a bonfire

representation of misstatement believing it to be true which turns out to be untrue.
2. Fraud is done to deceive the other party, but Misrepresentation is not done to deceive
the other party.
3. Fraud is defined in Section 17 and misrepresentation is defined in Section 18 of the
Indian Contract Act, 1872.
4. In fraud, the party making representation knows the truth however in
misrepresentation, the party making representation does not know the truth.
5. In fraud, the aggrieved party can claim damages for any loss sustained. On the other
hand, in misrepresentation, the aggrieved party cannot claim damages for any loss
sustained

 “A” sells “B” his horse for taka 5,000. This horse is blind is one eye,but “B” does
know until after the sell is completed. Is “A” liable to “B” on the ground of fraud?
The term “fraud" includes all acts committed by a person with a view to deceive another
person. A knew that his horse is blind. So A is liable to B on the ground of fraud.

 “A contract cause by mistake is void” Explain it.

The three requirements that will render a contract void for unilateral mistake in relation
to the terms of a contract are:
i) One party is mistaken as to a term of the contract, and would not have entered the
contract but for this mistake
ii) He mistake is known or reasonably ought to be known to the other party
iii) The mistaken party is not at fault.
So, a contract made by mistake is void.