A Lawful contract must not be contradictory with the state or region law & Consideration must be sufficient, but courts will not weight the adequacy of consideration. – Explain evaluate the statements in the parlance of law of contract?
Contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be “damages” or compensation of money. In equity, the remedy can be specific performance of the contract or an injunction. Both of these remedies award the party at loss the “benefit of the bargain” or expectation damages, which are greater than mere reliance damages, as in promissory estoppels. The parties may be natural persons or juristic persons. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract. Although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration. “According to Sir William Anson, “A contract is-an agreement enforceable at law made between two or more persons, by whom rights are acquired by one or more to acts or forbearances on the part of the other or others”. A contract intends to formalize an agreement between two or more parties, in relation to a particular subject. Contracts can cover an extremely broad range of matters, including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute, and ownership of intellectual property developed as part of a work for hire. In a contract there must be an agreement and the agreement must be enforceable by law”.
Offer and Acceptance:
An offer as an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the “offer” An offer is a statement of the terms on which the offer or is willing to be bound. It is the present contractual intent to be bound by a contract with definite and certain terms communicated to the offered. The “expression” referred to in the definition may take different forms, such as a letter, newspaper, fax, email and even conduct, as long as it communicates the basis on which the offer or is prepared to contract.
Unilateral contract: In Australian woolen Mills Pty Ltd vs. The commonwealth (1954), the High court of Australia held that, for a unilateral contract to arise, the promise must be made “in return for” the doing of the act. The court distinguished between a unilateral contract and a conditional gift. The case is generally seen to demonstrate the connection between the requirements of offer and acceptance, consideration and intention to create legal relations.
Revocation of offer: An offer or may revoke an offer before it has been accepted, but the revocation must be communicated to the offered, although not necessarily by the offer or. If the offer was made to the entire world, such as in Cargill’s case, the revocation must take a form that is similar to the offer.
Whenthe person to whom the proposal is made signifies his assent to the proposal is said to be accepted. There are some types of offer which are given below:
Rules of acceptance:
Communication of acceptance: An exception exists in the case of unilateral contracts, in which the offer or makes an offer to the world which can be accepted by some act. A classic instance of this is the case of Cargill v. carbolic smoke ball co. .484 in which an offer was made to pay 100 to anyone who having bought the offer or’s product and used it in accordance with the instructions nonetheless contracted influenza. The plaintiff did so and the court ordered payment of the 100. Her actions accepted the offer – there was no need to communicate acceptance. Typical cases of unilateral offers are advertisements of rewards (e.g., for the return of a lost dog).An offer can only be accepted by the offered, that is, the person to whom the offer is made.
Death of offer: Generally death of the offer or terminates the offer. This does not apply to option contracts. The offer cannot be accepted if the offered knows of the death of the offer or. In cases where the offered accepts in ignorance of the death, the contract may still be valid, although this proposition depends on the nature of the offer. If the contract involves some characteristic personal to the offer or, the offer is destroyed by the death.
If the offered rejects the offer, the offer has been destroyed and cannot be accepted at a future time. A case illustrative of this is ”Hyde v. Wrench” (1840) 49 E.R. 132, where in response to an offer to sell an estate at a certain price, the plaintiff made an offer to buy at a lower price. This offer was refused and subsequently, the plaintiffs sought to accept the initial offer. It was held that no contract was made as the initial offer did not exist at the time that the plaintiff tried to accept it, the offer having been terminated by the counter offer.
It should be noted that a mere inquiry (about terms of an offer) is not a counter offer and leaves the offer intact. The case ”Stevenson v. McLean” (1880) 28 W.R. 916 is analogous to this situation.
Consideration has been defined as “some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other” in the contract act Consideration has been defined as “when at the desire of the promissory, the promise or any other person has done or abstained from doing, or promises to do or to abstain from doing something, such act or abstinence or promise is called consideration for the promise.
Example: Hossain agrees to sell his car for tk 5,00,000/= to Hassan, For hossain promise, the consideration is tk 5,00,000/=.for hassans promise,the consideration is the car only.
There are three legal maxims that apply to consideration:
- Consideration must move from the promise
- Consideration need not move to the promise
- Past consideration is not good consideration
Consideration must be sufficient, but courts will not weight the adequacy of consideration. For instance, agreeing to sell a car for a penny may constitute a binding contract. All that must be shown is that the seller actually wanted the penny. This is known as the peppercorn rule. Otherwise, the penny would constitute nominal consideration, which is insufficient. Parties may do this for tax purposes, attempting to disguise gift transactions as contracts.
Transfer of money is typically recognized as an example of sufficient consideration, but in some cases it will not suffice, for example, when one party agrees to make partial payment of a debt in exchange for being released from the full amount.
Roman law-based systems (including Scotland) do not require consideration, and some commentators consider it unnecessary—the requirement of intent by both parties to create legal relations by both parties performs the same function under contract. The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in the Middle Ages and remained the normal action for breach of a simple contract in England & Wales until 1884, when the old forms of action were abolished, secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, promoted by the 18th century French writer Pother in his Trait des Obligations, much read (especially after translation into English in 1805) by English judges and jurists. The latter chimed well with the fashionable will theories of the time, especially John Stuart Mill’s influential ideas on free will, and got grafted on to the traditional common law requirement for consideration to ground an action in assumpsit’s.
· In addition to the elements of a contract:
· A party must have capacity to contract,
· The purpose of the contract must be lawful,
· The form of the contract must be legal,
· The parties must intend to create a legal relationship; and The parties must consent.
As a result, there are a variety of affirmative defenses that a party may assert to avoid his obligation.
The understanding between two or more legally competent individuals or entities about the rights and duties regarding their past or future performances and consideration as manifested by their language (oral or written) or by implication from other circumstances such as the usage of trade and the course of performance. Any legally binding agreement voluntarily entered into by two or more parties that places an obligation on each party to do or not do something for one or more of the other parties and that gives each party the right to demand the performance of whatever is promised to them by the other parties. To be valid, all parties must be legally competent to enter a contract, neither the objective nor any of the obligations or promised performances may be illegal, mutuality of the agreement and of its obligations must exist, and there must be consideration.
The problem arises, and the contract is void, if the contract is for an illegal good or service; you are a minor under the age of 18; you are over the age of 18, but found to legally lack the mental capacity to enter into a contract; the terms of the contract become illegal due to laws passing while the contract is in progress; or the contract violates a fundamental principal of law. With a void contract, there was never a valid contract, title to the item does not pass and the contract is legally unenforceable. For example, if you enter into a contract to buy an illegal drug, like cocaine, pay for it but receive baby powder instead, the courts will not enforce the contract for the seller to give you cocaine, as buying cocaine is illegal.
A voidable contract can start out as a valid contract and later become voidable. This happens because one party to the contract, through no fault of his own, is unable to perform. For example, if you enter into a contract to sell a boat and a hurricane destroys the boat, you can no longer supply the boat, so either you or the buyer can void the contract due to the impossibility of performance. A voidable contract is binding on one party but the other party can decide whether to void or ratify the contract. For example, a minor signs a contract for the gym several days before his birthday. As the contract was entered into while he was a minor, the gym must provide the membership if he desires, although if the minor chooses he can void, or cancel, the contract without penalty. However, the minor can also ratify, or accept, the gym contract once he becomes of age, making this a valid contract.
These agreements which cannot be enforceable in a court of law because of technical defects are called Unenforceable agreement.
6.4 Illegal Agreement:
Agreement made against the law in force in Bangladesh, are called illegal agreement.
It is implicit within all contracts that the parties are acting in good faith. For example, if the seller of the Galaxy SII knows that the buyer thinks he is purchasing a mobile phone, but secretly intends to sell the buyer a Galaxy SII, the seller is not acting in good faith and the contract will not be enforceable.
No Violation of Public Policy
Wrongful Termination Law
There is no specific wrongful termination law. Rather, there are a number of federal laws that, if violated, can constitute a wrongful termination. An employer must illegally discharge an employee to violate wrongful termination laws. No matter how unfair it seems, if your discharge is not illegal, wrongful termination law may not apply.
Some examples of wrongful termination occur if an employer lay off or fired an employee:
In violation of a state or Federal discrimination law (1)
In violation of the employment-related provisions in the Fair Credit Reporting Act or Bankruptcy Act
In violation of rights granted by the First Amendment to the U.S. Constitution
In violation of a state voting leave law
In violation of the employer’s own discharge policy
In breach of an explicit or implied contract of employment or an employer-union collective bargaining agreement (contract law)
In breach of the covenant of good faith and fair dealing
According to the constructive discharge doctrine (2)
Because the employee would not break a law (public policy violation)
Under the guise of a false statement of fact
for jury duty (Judiciary and Judicial Procedure Act)
Insufficient Cause (3)
(1) Discrimination: if you have been discriminated against because of race, sex, religion, disability or age, it may be a breach of your human rights.
(2) Constructive Dismissal: If you felt pressured to resign, or your working conditions were made to be so horrible you couldn’t continue working, you may be able to claim constructive discharge. You may also claim constructive dismissal if your pay or working conditions have been degraded or if your level of responsibility has been reduced.
(3) Insufficient Cause: Actions such as theft, violence or threatening behavior may be cause for immediate dismissal. However, isolated instances of a less serious nature can not normally be used as an excuse to fire someone, unless there is a history of such behavior.
In some states an employee might be wrongfully terminated if an employer discharged an employee in retaliation for:
Reasonably exercising employee rights under relevant employment and labor laws
Reasonably exercising union rights
Legitimately taking leave under the Family and Medical Leave Act
Serving in the military
Oral Contracts are contracts and most of us have an idea what the term “contract”. Ask anyone and you will generally be told that a contract is a written agreement that says what each party will do, how they will do it, and when they will do it. It basically lays out the framework for a business relationship of one sort or another.
Contracts don’t just cover business to business relationships either. In fact, the majority of contracts are developed between businesses and their customers. Written contracts are usually obvious. What aren’t as obvious are the contracts that we form when we speak with each other.
If you agree to do something, sell something, or buy something and someone else acts on your statement, you may have formed an enforceable contract. Things can get a bit tricky though since rules vary about what contracts can be formed verbally.
If someone does act on your statement, a contract has still not been formed if:
1. You have agreed to do something that is illegal. You cannot enforce a contract to do something that is a violation of any local, state, or federal law.
2. If the terms of the agreement were not specified. If an amount or a specific action was not indicated, you don’t have a contract.
3. If one or both parties were mistaken about a fundamental part of the agreement (ex. I agreed to purchase your stereo but I thought we were talking about the big one and you thought we were talking about the small one)
4. The subject or terms of the agreement are prohibited under the law. (examples: real estate contracts must be in writing and credit card companies cannot charge 50% annual interest).
Types of contract
There are basically three types of contracts.
- Express Contract
- Implied Contract
- Quasi Contract
Express Contract is a contract in which the agreement of the parties has been expressed in words, either in oral or written form. An exchange of promises in which the terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time it is made. Whether oral or written, the contract must manifest a mutual intent to be bound expressed in a manner capable of being understood, and include a definite offer, unconditional acceptance and consideration.
An express contract is differs from implied contract only in the mode of establishing assent and the mode of proof required; the distinction involves no difference in legal effect. Both forms of contract require mutual assent and a meeting of the minds, but an express contract is proved by an actual agreement where an implied contract in fact is proved by circumstances and the conduct of the parties. An acceptable alternative way of describing an express contract is; a contract in which the terms have been agreed upon either orally or in writing.
For example, the landlord presents the tenant with a preprinted lease on the apartment and the tenant wants and agrees to the terms and signs it. This is an express, written contract.
An Implied Contract is a contract where the agreement of the parties is indicated by their conduct. Acceptable alternative ways of describing an implied contract are; a contract in which the performance of the parties infers agreement. The parties indicate their agreement to a contract by their actions, rather than by making a promise.
For example, a transporter regularly ships a garment owner’s goods and there is no written contract between them but it acts like a written agreement.
A quasi contract is an obligation that is imposed by the courts to avoid injustice or unjust enrichment. Acceptable alternative way of describing a quasi-contract is, an implied-in-law contract imposed by the courts to prevent injustice. We can also say that, a quasi-contract is a special form of contract that lacks mutual assent of the parties but which is imposed on the parties by the courts to avoid injustice. For example, a supplier supplies to the buyer bad goods and the buyer refuses to pay as there is no contract exists. Therefore, the supplier goes to the court and claims for his payment. Then the verdict of the court allows the buyer to pay the supplier. This is an example of Quasi Contract.
Statute of Frauds:
The most important thing to know about the statute of frauds is that it involves a lot of technicalities. So if you get a case involving an oral contract, you look up the technicalities. There is no point in memorizing the technicalities now. You will just forget them. We will just try to get some sense of the kinds of problems that arise under the statute.
Categories covered by the statute
You should learn what kinds of contracts are governed by the statute. There are five categories:
(1) Contracts involving the sale of an interest in land;
(2) Contracts the performance of which extends beyond one year;
(3) Contracts in which someone assumes responsibility for someone else’s debt; that is, promises to be a surety;
(4) Promises the consideration for which is getting married;
(5) Contracts for the sale of goods worth more than 500.
Various states have added other categories; often contracts to make a will are included, as are contracts to pay a real estate agent’s commission.
Right to freedom of expression and speech is our fundamental right. This is the fundamental right in most of the countries. But most of the people of Bangladesh are not aware about the right. For certain thing the right can be restricted like in the interests of the security of the State, friendly relations with foreign states, public order, decency or morality, or in relation to contempt of court, defamation or incitement to any offense. In the emergencies, it can also be restricted. From the above explanation we can easily conclude that, in a contract willingness of the all parties is required. Otherwise it will not be considered as any contract. To make a contract an offer or should place any offer to an offered and the offered willingly has to accept the offer. In the contract there should be a mutual consent between the parties otherwise the contract will not be a valid contract. Also it should be a lawful contract or the contract must not be contradictory with the state or region law. If the contract is not lawful then it will void the contract. The contract can be in any form, formal or casual, written or oral but must be regular and with a set of certain regular activities. Therefore, we can easily conclude with the statement that, a contract is a legal relationship between two or more people or parties who accept or refrain from doing certain act.
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7. Authentic English text 1ST Oct 1995 bangladesh Govt.
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