LECTURE 1 & 2

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 Q. DEFINITION OF LAW?
• According to Holand, Law is “a rule of external
human action enforced by the sovereign political
authority”. From this definition it follows that
there are three essential characteristics of law.
• Law is a rule relating to the actions of human
beings
• Law attempts to regulate the external actions of
human beings.
• Law is enforced by the state.

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• According to Salmond “Law is the body
of principles recognized and applied by
the state in the administration of justice”
• So we can say that law, as it is, is the
command of the sovereign. It means
• Law has its source in sovereign authority
• Law is accompanied by sanctions and
• The command to be a law should compel
a course of conduct.

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• Being a command the law
must flow from a determinate
person or group of persons
with the threat of displeasure if
it is not obeyed.
• Sovereignty is however only a
part of the state. So in ultimate
sense, law emanates from the
state.
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• Thus the term law is used to denote
rules of conduct emanated from and
enforced by the state.
• People lining in an organized society
have to follow certain common rules
otherwise peaceful living is
impossible. It is the function of the
state to enforce these rules.
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 Q. SOCIETY AND LAW

• The term society is used to

mean a community or a group
of persons, living in any
region who are united together
by some common bond.
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• A common bond is formed when some
uniformity of factors like nearness, nature of
the people, habit, custom, inhibition, beliefs,
culture, tradition etc appears.
• The common bond leads to forming social
rules or rules of social behavior. The rules are
made by members of the society.
Disobedience of the rules is followed by
punishment in the form of social disapproval.
• There is no positive penalty associated with
the violation of social rules except
excommunication or ostracism.
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Q. COMMERCIAL LAW OR
MERCANTILE LAW
• The laws of a country relate to many subject,
e.g, inheritance and transfer of property,
relationship between persons, crimes and their
punishment, as well as matters relating to
industry, trade and commerce.
• The term commercial law or mercantile law is
used to include only the last of the aforesaid
subject rules relating to industry trade and
commerce.
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 Q. COMMERCIAL SUIT
• A suit between merchants, bankers, and
traders, relating to mercantile transactions
is a commercial suit. If follows that all
laws which must be referred to in order to
decide such suits come within the scope
of commercial law.
• Commercial law or mercantile law may
therefore be defined as that part of law
which regulates the transaction of the
mercantile community.
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 Q. SCOPE OF COMMERCIAL
LAW
• The scope of commercial law is
large. It includes the laws
relating to contract, partnership,
negotiable instruments, sale of
goods, companies etc.

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 Q. OBJECT AND SCOPE OF LAW
• The law of contract deals with
agreements which can be enforced
through courts of law.
• The law of contract is the most
important part of commercial law
because every commercial
transaction starts from an agreement
between two or more persons.
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• According to Salmond a contract is an
agreement creating and defining
obligations between the parties.
• According to Sir William Anson” A
contract is an agreement enforceable at
law made between two or more persons,
by which rights are acquired by one or
more to acts or forbearances on the part
of the other or others.
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• For an example-
• X enters into a contract to deliver 10
tons of coal of Y on a certain date.
Since such a contract is enforceable
by the courts, Y can plan his
activities on the basis of getting the
coal on the fixed date. If the contract
is broken Y will get damages from
the court and will not suffer any loss.
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 Q. DEFINITION OF CONTRACT.
• An agreement enforceable by law is a
contract. Therefore in a contract there must
be (1) an agreement and (2) the agreement
must be enforceable by law.
• An agreement comes into existence whenever
one or more persons promise to one or others
to do or not to do something. Every promise
and every set of promises forming the
consideration for each other is an agreement .

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• Some agreements can not be
enforced through the courts of
law e.g An agreement to play
cards or go to cinema.
• An agreement which can be
enforced through the courts of
law is called a contract.
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Q. THE ESSENTIAL ELEMENTS OF
A CONTRACT
• An agreement becomes
enforceable by law when it fulfils
certain conditions.
• These conditions, which may be
called the essential elements of a
contract, are explained
below………
• OFFER AND ACCEPTANCE:
There must be a lawful
offer by one party and a
lawful acceptance of the
offer by the other party or
parties.
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• INTENTION TO CREATE LEGAL
RELATIONSHIP: There must be an
intention that the agreement shall
result in or create legal relations.
An agreement to dine at a friend’s
house is not an agreement intended
to create legal relations and is not a
contract.
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• But an agreement to buy and sell
goods or an agreement to marry
are agreements intended to
create some legal relationship
and are therefore contracts
provided the other essential
elements are present.
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• LAWFUL CONSIDERATION: Subject
to certain exceptions, an agreement
is legally enforceable only when
each of the parties to it gives
something and gets something.
• An agreement to do something for
nothing is usually not enforceable
by law. The something given or
obtained is called consideration.
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• CAPACITY OF PARTIES: The parties to an
agreement must be legally capable of
entering into an agreement; otherwise it
cannot be enforced by a court of law.
Want of capacity arises from minority,
lunacy, idiocy, drunkenness, and similar
other factors.
• If any of the parties to the agreement
suffers from any such disability, the
agreement is not enforceable by law,
except in some special cases.

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• FREE CONSENT: In order to be
enforceable an agreement must be based on
the free consent of all the parties.
• There is absence of genuine consent if the
agreement is induced by coercion, undue
influence, mistake, misrepresentation and
fraud.
• A person guilty of coercion, undue influence
etc, cannot enforce the agreement. The other
party can enforce it, subject to rules laid
down in the act.
• LEGALITY AND OBJECT:
The object for which the
agreement has been entered
into must not be illegal or
immoral or opposed to public
policy.

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• CERTAINTY: The agreement must
not be vague. It must be possible to
ascertain the meaning of the
agreement, for otherwise it cannot be
enforced.
• POSSIBILITY OF PERFORMANCE: The
agreement must be capable of being
performed. A promise to do an
impossible thing cannot be enforced.
• VOID AGREEMENTS: An agreement so made
must not have been expressly declared to be
void.
• WRITING, REGISTRATION AND LEGAL
FORMALITIES: An oral contract is a perfectly
good contract, except in those cases where
writing and /or registration is required by some
statute.
• In Bangladesh writing is required in cases of
lease, gift, sale and mortgage of immovable
property: negotiable instruments, memorandum
and articles of association of a company etc.
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 CONCLUSION
• The elements mentioned above must all be
present. If any one of them is absent, the
agreement does not become a contract.
• An agreement which fulfils all the essential
elements is enforceable by law and is called
a contract.
• From this it follows that every contract is an
agreement but all agreements are not
contracts.
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