How to make a Contract in accordance with law
In our everyday life a number of transactions go on whether it’s for business purpose or others where it’s required to enter into so many agreements i.e. contracts with several parties. Simply to say, a contract or an agreement is composed of a proposal from one side and its acceptance by the other side. However, It will not be feasible here to briefly utter all the legal aspects for making a valid contract. We should fulfill minimum legal requirements to make a contract in accordance with law which can be enforced under the present legal system of Bangladesh.
Otherwise, the ultimate aim of the parties to a contract to make any agreement will be vain for legal shortcoming and defects. Here, I have just drawn up some common principles and rules regarding the law of contract continuing in our country consistent with ‘The Contract Act 1872’. However, before going to enter into a contract there should be an agreement between or among the respective parties. But all agreements are not contract in the eye of law. As stated by sub-section (h) of section 2 of the ‘The Contract Act 1872’, that ‘an agreement enforceable by law is a contract’. And it’s also construed in sub-section (g) of the same section of the aforesaid act that ‘an agreement not enforceable by law is said to be void’. In view of these two subsections, we can easily infer that mere an agreement between or among the parties is not a contract. Rather an agreement which can be enforced by law will achieve the status of a valid contract. For example – Rabiul and Erfan are two friends. They enter into an agreement to go to a cinema hall to enjoy a movie. Here the agreement they made can’t be said a contract because the agreement between them is not enforceable by law.
For making a valid contract, two or more persons have to agree upon the same thing in the same sense where a lawful object and also a lawful consideration exist. Agreement without consideration is void unless it’s in writing and registered according to the law for the time being in force. But in case of gift, consideration is not mandatory here. Now the question comes to us that what the consideration is? To say in short, when any person (called promisee) does anything or abstains from doing anything at the desire of other person (called promisor), such act or abstinence is called a consideration. In another way, it can be said that consideration is some act which is done or promised to be done, at desire of the promisor e.g. any benefit, right, interest, profit etc. or any responsibility, loss, compensation, detriment etc. from one to another party to a contract.
A contract cannot be made upon coercion, undue influence, fraud, misrepresentation. Besides, in a contract a mistake of a fact of the both parties or a mistake of a law not enforceable in Bangladesh is void. There has to have free consent between or among the parties. Often, a question is seen to raise among the common people of our country that whether a oral contract is valid or not. It’s seen valid by the several judgments of the higher court. For example in Rezaur Rahman & others Vs. Al-Haj Ahmed Hossain Khan (1986), BLD 14 that oral contract is valid as written contract. But in the matter of oral contract, once it is denied by one of the parties, a heavy onus of proof lies on the other party in establishing its truth. A party to a contract has to reach the age of majority (from or below the age of eighteen). Because, in the eye of law, a contract entered into by a minor is void. But when it’s necessary to execute a contract by a minor, then a next friend i.e. the guardian appointed by court can execute the same on behalf of the said minor.
A person who is unsound mind at time of making contract is also unable to enter into an contract. When any restriction is accredited by any agreement on a lawful profession, trade or business of anyone, is void except good will of a business when it’s sold. But in this case such limits have to be reasonable to the competent court regarding to the nature of the business. Also any agreement which restricts anyone to enforce his/her rights under any contract or restrains to initiate any legal proceeding is void. An agreement ousting the ordinary jurisdiction of a court is also void. So no such provision can be added to an agreement. Which agreement is not certain or not capable of being made is also void. Agreement by way of wager and contrary to the public policy is void. Any illegal contract and also any activity arise from it, void ab initio. In case of contingent contract when the contingency happens then it’s enforced by law. Contingent contract means when some event, collateral to such contract, does or does not happen and for this reason something has to do or not to do. For example – A contracts B to pay 1,00,000 Taka if B’s house is burnt. This is a contingent contract. When no time is mentioned for performance of a contract then the contract must be performed within a reasonable time. The time mentioned in the contract can be extended as well as the contract can be terminated before specific time mentioned by the mutual consent of the parties.
The terms, conditions, place, time and execution manner stipulated in a deed of agreement or contract will be binding on all parties to a contract. But these terms, conditions, place, time and execution manner should be reasonable, logical, above all, valid according to law and also be enforceable by court of law. The rights and duties arisen from a contractual obligation will also be compulsory and maintainable for the respective party reciprocally according to law.
After making a contract afterwards or in the time of entering into a contract, if the contract becomes impossible or unlawful to perform for any reason where any party is not responsible itself then the contract will be null and void. But if any party is responsible for his own cause then the same will not happen. If the parties to a contract agree to substitute a new contract or rescind or alter the contract or add anything new to the contact, the original contract need not be performed.
However, any party to a contract cannot unilaterally alter the terms and conditions of the contract. But a contract will be voidable when the contract is enforceable by law at the option of one or more of the parties but not at the option of the other or others. As a whole by satisfying these criterion mentioned above, we can make any valid contract in our day to day life when it’s necessary.
About the Author
The Writer is An Independent Legal Researcher and A Young Columnist, e-mail: [email protected] 01878-369852