LAW OF CONTRACT

Nature of the Law of Contract

The law of contract says Sir Frederick Pollock may be described as the endeavour of public authority, a more or less imperfect one by the nature of the case, to establish a positive sanction for the expectation of good faith which in the mutual dealings of men of average right-mindedness Pollock continues that, he who has given a promise, is bound to him who accepts it, not merely because he had or expressed a certain intention, but because he so expressed himself as to entitle the other party to rely on his acting in a certain way.

Definition of Contract
Section 2(h) of the Contract Act, 1872, defines a contract as an agreement enforceable by law. In order to enforceable the agreement must create on obligation on both the parties bto be contract which law may justly step in to enforce whenever there is any default on the part of either. A contract is thus a combination of two ideasagreement and obligation.

Obviously, every agreement does not create obligation. When A offers to sell his horse to B for Tk. 5000, there is an obligation on A to sell and on B to buy the horse at the stipulated price. Such as agreement is therefore, enforceable by law. But an agreement between A and B to go together to a picnic does not create any obligation on either side and is not, therefore, enforceable in law. The former agreement is, therefore, a contract, while the latter is not.

The elements which go to make a contract

Proposal Acceptance Promise Consideration agreement Consideration and promise are the two incidents necessary to constitute a contract. Taken together they form the whole of it.

KINDS OF CONTRACT
Contracts so far brought into practice have been classified into different groups on the basis of different tests. Thus they are: 1. Formal and Informal Contracts; 2. Executed and Executory Contracts; 3. Valid, Void able and unenforceable contracts; 4. Quasi-contracts

1. Formal and Informal Contracts

The primary distinction between the two is that the formal contract depends for its validity on the observance of the forms prescribed by law for the execution of a contract while the informal contract derives its validity from the presence of consideration. Consideration means the price for which the promise of one party is purchased by the other. A formal contract is often known as a deed, contract under seal, and a specialty and an informal contract is called a simple contract, parol contract, etc.

Elements of Formal Contract

A formal contract to be valid must have the following elements: 1. Writing: does not mean hand-writing only, the contract may as well be typed or printed. 2. Signature: 3. Seal: may be waived where neither of the parties has any seal to use. 4. Delivery: may be conditional or unconditional. Its validity would depend upon the strict compliance with the formalities prescribed by law.

Examples:
(i) Formal Contract: In all important matters, a corporation must make a contract under seal, i.e. formal contract. (ii) A gratuitous promise, i.e. a promise made without consideration, must be under seal. Thus if A says B that he will give him Tk. 1000 it is not enforceable because it is gratuitous. But if the promise is made in writing and registered, it is binding. (iii) A lease of land for more than three years must be made by a contract under seal. Informal Contract: (i) A bill of exchange or promissory note (ii) A contract of insurance (iii) An acknowledgement of a debt barred by time.

Law in Bangladesh
Formal contract is not recognized by the contract Act, 1872. Although a gratuitous promise is enforceable in our country when it is in writing and registered, yet writing and registration alone are not conclusive proofs of its validity. The promise itself must be made on account of natural love and affection between the parties who, again. Must stand in a close relation to each other. In Bangladesh, besides a gratuitous promise the following contracts are required to be in writing: (i) A promise to repay a debt barred by time, i.e. by the Limitation Act. (ii) An agreement between two or more persons to refer a dispute to arbitration.

2. Executed and Executory Contract

Executed: Tasks has been performed by both sides. Executory: Tasks to be done in future. Like a promise A to engage B to do a work next week.

Agreement
There is no distinction between an agreement and a promise. According to Section 2(e) of the contract Act every promise and every set of promises, forming the consideration for each other is an agreement. Sir Pollock defines an agreements an act in the law whereby two or more persons declare their consent as to any act or thing to be done or forborne by some or one of those persons for the use of other or others of them.

Offer
The Contract Act defines an offer thus: Dignifies to another his willingness to do, or to such act or abstinence, he is said to make a proposal. There is no difference between a proposal and an offer. An offer becomes complete when it is communicated to the offeree. In the absence of such communication, the offer is of no effect so far as the offeree is concerned.