INTRODUCTION NATURE AND SCOPE

OF BUSINESS LAW


Business comprises all profit seeking
activities and enterprises that provide
goods and services necessary to and
economic system.
Law refers to the principles and regulations
established by a Government , applicable to
people and enforced by judicial decision.
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 law
Legislations.
Customs.
Case Law.
Natural Law.
Indian Law
English Law.
Scope of Business law
The Indian Contract Act,1872
The Sale of Goods Act,1930
The Partnership Act,1932
The Negotiable Instruments Act,1881
The Companies Act,1994
The Patents Act,1970
The Trade and Merchandise Marks Act,1958
The Consumer Protection Act,1986.


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

Law & Judiciary

Bangladeshi law is primarily in accordance with the English legal
system, although since 1947 the legal scenario of Bangladesh has
significantly drifted from the West owing to differences in socio-
cultural values and religious guidelines. Laws are loosely based on
English common law, but family laws such as marriage and
inheritance are based on religious scriptures, and therefore differ
between religious communities. The Constitution of Bangladesh
was drafted in 1972 and has undergone 15 amendments.
The highest judicial body is the Supreme Court, with justices
appointed by the President. The judicial and law enforcement
institutions are comparatively weak.[57] On 1 November 2007,
Bangladesh successfully separated the Judiciary Branch from the
Executive, but several black laws, including the Special Powers Act,
still influence the rulers.[58] It is expected that this separation will
make the judiciary stronger and more impartial.

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

The Supreme Court
The Supreme Court of Bangladesh comprises the Appellate Division
and the High Court Division. It is the apex Court of the country and
other Courts and Tribunals are subordinate to it.
The Appellate Division
The Appellate Division will have Jurisdiction to hear and determine
appeals from judgments, decrees, orders or sentences of the High
Court Division. It has rule making power for regulating the practice
and procedure of each division and of any Court subordinate to it.
Chancery Research and Consultants Trust (CRC-Trust) maintains a
website Chancery Law Chronicles-First ever Online Database of
Bangladesh Laws (www.clcbd.org) where it has already included
7000 judgements of the Appellate Division and High Court Division
of the Supreme Court of Bangladesh from 1972 to till date.
The High Court Division

The High Court Division, though a Division of the Supreme Court, is
for all practical purposes, an independent court with its powers,
functions and jurisdictions well defined and determined under the
Constitution and different laws. It has both appellate as well as
original jurisdiction. It hears appeals from orders, decrees and
judgments of subordinate courts and tribunals. It has original
jurisdiction to hear Writ Applications under article 102 of the
Constitution, which is known as extra ordinary constitutional
jurisdiction. It has further original jurisdiction, inter alia, in respect
of company and admiralty matters under statutes. The High Court
Division, in special circumstances, has also powers and jurisdiction
to hear and dispose of cases as the court of first instance under
article 101 of the Constitution. The High Court Division shall have
Superintendence and control over all Courts and tribunals
subordinate to it.

The Subordinate Courts and Tribunals

There are a wide variety of subordinate courts and
tribunals. Such courts and tribunals are created by some
relevant statutes. All their powers, functions and
jurisdictions are well determined by the respective
statutes. These are the basic courts in the system of the
judiciary of Bangladesh. The major bulk of the cases, both
civil and criminal, are tried and heard in such courts and
tribunals. Certain tribunals are termed as administrative
tribunals, Nari-o-Shishu Nirjato Daman Tribunals, Special
Tribunals etc. Such courts and tribunals spread all over the
country at district levels. The subordinate courts in
Bangladesh can be divided in two broad classes, namely,
civil courts and criminal courts.

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 civil
courts 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 in
the court:
Criminal Courts
Courts of Sessions
Courts of Metropolitan Sessions
Special courts/tribunals (Criminal)
Courts of Metropolitan Magistrate
Courts of Magistrate

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.
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.

Essentials of a valid contract

1.Offer and Acceptance
2. Free consent
3. Contractual capacity
4. Lawful consideration
5. Lawful object
6. Agreement not expressly declared void
7. Possibility of performance
8. Certainty of terms
9. Intention to create legal relationship
10. Legal formalities.
Classification of Contracts
According to validity:
1.Valid contract: A contract satisfies al the essential elements of a
contract and enforceable through the court.
2.Void contract: A contract which was valid when first entered into
but 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 be
set aside at the option of one of the parties. eg. Agreement by
influence.
5.Illegal agreement: one which is against a law enforce in
Bangladesh. Ex. Agreement to commit a murder.
6.Unenforceable agreement: an agreement cant be enforced in
court of law, one or both parties because o some technical defects.
Ex. Non payment of the requisite stamp.

Classification of Contracts
According to formation:
1.Express contract-expressed by word, spoken or written.
2.Implied contract-understood by act, conduct and course of
dealings.
3.Quasi contract- certain dealings, which are not contract strictly,
though the parties act as a contract. Ex. obtaining benefit at the
expense of other and the circumstances are that he ought equitable
to pay for it. Ex. supplier of necessaries to minors, lunatics, married
women.
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 fulfill
his obligation ,as other party has already performed the obligation.
4.Bilateral contract- must be at least two parties in a contract.

Offer and Acceptance
According to Sec 2(a),when one person signifies to another his willingness to do
or abstain from doing anything, with a view to obtain the assent of the other
to 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 terms
3. 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 conditional
7. Cross offer and counter offer. When parties make identical offers to each
other 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 a
counter offer.
8.Offer should not contain a term, the non-compliance of which would amount
to acceptance


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


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.


Communication of offer and
acceptance

Methods:

By Act: It includes conduct, words.(written or oral) It
can also be through letter, telegram or telephone.
By Omission: It includes an abstinence or forbearance
on the part of one person.
Communication of acceptance not necessary:
When there is a prescribed mode and the offeree
follows it, b) when the offeror has acted in a certain
conduct on the part of the offeree as equivalent to
acceptance.


CONSIDERATION

Section 2(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.
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.



It may be past , present or future
It need not be adequate-The court can hardly assume the
role of setting what should be the appropriate
consideration for a promise.
It must be real and not illusory- a promise by a man to
make two parallel lines meet is no good consideration.
It must be lawful. The consideration of an agreement is
lawful unless -
a)it is forbidden by law. b)fraudulent c) it involves or
implies injury to person or property of another d) the
court 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.


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 writing
and duly signed by the promisor or his authorized
agent.
Completed gifts
Agency-no consideration is required to create an
agency
Guarantee
Remission- no consideration is required for an
agreement to receive anything less than what is due.

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 every
person 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 law
to which he is subject.

MINOR
Minor is a person who has not completed the age of
18 years.
However, a minor for whom a guardian has been
appointed by the court or when his property is
managed by the court of wards, becomes a major
only on completing 21 years of age.
Minors are often exploited, ill-treated and their
properties stolen. Law provides that it is duty of the
court to guard against their lack of knowledge and
experience.

Effect of minors agreement
An agreement with or by a minor is void. A minor is not competent to
contract and a contract by minor is void ab initio. (Mohoribibi
vs.Dharmodas ghose)1903.
No ratification. A minor cannot ratify the agreement on attaining majority
because a void agreement cannot be ratified.
Minor can be a promisee or beneficiary. Thus in case of goods sold by a
minor he is entitled to recover the price from the buyer. He can be a payee
in a contract.(Raghava Chariar Vs.Srinivasa).
No estoppel against a minor. A minor can always plead minority and will
not be prevented from doing so even when he has entered into a contract
falsely representing himself to be a major. estoppel is to prevent injustice
owing to inconsistency or Fraud.
Contract by guardian. A contract can be entered into by the guardian or
manager of a minor only if a) the contract is within the authority of the
guardian or manager b) it is for the benefit of the minor.
Liability for torts. Where the tort is directly connected with the
contract the minor is not liable, (Mohoribibi Vs.Dharmodas
Ghose)but where the tort is independent of the contract, the minor
cannot escape his liability.(Burnard v. Haggis.1863)
Doctrine of compensation or restitution. If an infant has obtained
goods or property by misrepresenting his age , he can not be
compelled 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 are
a) Contracts of marriage- such contracts can be enforced against the
other enforcing party at the instance of the minor but the same
cannot be enforced against the minor.
b) Contracts of apprenticeship- such contract can be made by the
guardian on behalf and for the benefit of the minor.(Roberts v.
Gray)



Minor as an agent- Although a minor is not entitled to
employ an agent, he can be an agent for someone else.
Minor as a Partner- A minor cannot make a contract of
partnership although he may be admitted to its
benefits with the consent of all the partners.
Minor as a shareholder-A minor cannot be a member
of a company because membership arises out of a
contract.
Insolvency-minor cannot be declared insolvent as he is
incapable of entering into valid contract.


Person of unsound mind
Section12; A person is said to be of sound mind
for the purpose of making contract if, at the time
when he makes it, he is capable of understanding
it and of forming a rational judgment as to its
effect 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.


Free Consent
Two or more persons are said to consent when they agree upon the
same 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.

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 agreement
Ranganayakamma v. AlwarSetty. (1889).

Undue Influence
According to Section 16 A contract is said to be
induced by undue influence where the relations
subsisting between the parties are such that one
of the parties is in a position to dominate the will
of the other and uses that position to obtain an
unfair advantage over the other
Manu Singh V. Umadat Pandey. (1890)
Lloyds Bank V.Bundy.(1975)

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 Penal
Code (IPC).
It may proceed from a stranger to the
contract.
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 relationship
between the parties to the contract
Misrepresentation
Misrepresentation refers to the misstatement of fact
material to the contract.
According to Section 18 of the Act Misrepresentation
means and includes
1. the positive assertion, in a manner not warranted by the
information of the person making it, of that which is not
true, though he believes it to be true
2. Any breach of duty which, without any intent to deceive,
gains an advantage to the person committing it by
misleading another to his prejudice
3. Causing ,however innocently, a party to an agreement, to
make a mistake as to the substance of a thing which is the
subject matter of the agreement.

Types Of Misrepresentation:
Unwarranted Statements-
When a party to a contract positively asserts that a particular fact relating
to the subject matter of the agreement is true, when his information does
not warrant it to be so, he is guilty of misrepresentation.
Breach of Duty When a person commits a breach of duty without any
intention to deceive the other party, and thereby gains an advantage to
himself to the prejudice of the other party, the person committing the
breach of duty is said to be guilty of misrepresentation. Oriental Banking
Corporation V. John Fleming (1879)
Inducing mistake about subject-matter : If a party to an agreement
induces the other party, although innocently, to commit a mistake as to
the nature or quality of the subject-matter of the agreement, he becomes
guilty of misrepresentation.
Eg: Concealment of information relating to company in prospectus.



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.


Distinction between fraud and
misrepresentation
Fraud 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 ordinary
diligence in a circumstance.

The contract cannot be avoided ,if the
aggrieved party discovers the truth with
ordinary diligence in a circumstance.
mistake
Mistake is an erroneous belief concerning
something. An agreement is valid as the contract
is 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 in
Bangladesh has the same effect as a mistake of
fact.
Mistake may be --- mistake of law, mistake of fact,
mistake in opinion and unilateral .

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.


VOID AGREEMENTS
An agreement can be void because of mistake, lack consideration, want of
capacity 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 of
marriage of any person , other than a minor is void. Example : P promised
to 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.