CHAPTER 1

PREAMBLE AND FORMATION OF A CONTRACT

ihe first Chapter will focus on the preamble of the Contract

Act, ] 872 (Ac! No. IX of 1972) and the formation of a contract
generall y . The governing Act in Bangladesh in the field of
law of contract is the Contract Act, 1872. It starts with a
preamble. It is the traditional mode of the law passed b y the
parliament that it starts with a preamble which basically
conta ins the ob1ect of that particular law. The Con I ract Act,
1572, is not an exception to this general rule since it also
contains a preamble.

Preamble: Object of the Contract Act, 1872:

[he Preamble to the Act states that the objects of the

Contract Act, 1572, are-

i. to cicf/iic certain puts of Pie Ian' re/at/no to

contracts; 0)1(1

ii. to tum'uil certain parts of thC Ian' n'la!iu,' to

cut rods.

[he object implies that this is not a law first of its kind in
this field in Ban g ladesh. Because it speaks also about
amendment of certain parts of the law relating to contracts.
5o it is understood from the \cnrcl I np used n the Act that
alread y there were some laws in this field but this is a new


( L,' / Pii'u iI!'/ i2 H 'H!

\erion of its kind winch ensures crtaiii aineiidment of the

e\isti rig laws in this field and as such ci is ares a set of better
la%10, i a the Codified form relating to contracts.

Scheme of the Contract Act, 1872:

1 he Content, of the Act can be divided into two broad -

ate>ries:

1. General laws relating to contract;

2. Laws relating t6 Inc particular types of contracts.

Again each of these categories can be diviolud into three

fad parts: )

(T'cneraI laws relating to contract.

0/'!! aL

La l''rfaeiaoc' n(

Ii at H)ltiiiLf na] iilcciics.

Laws relating to sonic particular types of contracts.

a. (aitiacts at iiideimii(ii iI ranaHee;

Li. C ciiitiac/s of Li/uii'ul aiirl tuic0(t'

C. C on [cia! at I'll, C)

So, the first part reki Ling to contract is aboi: t how is a

contract formed, after a contract is brined the Cluestion of
perlorniaice of that c intract arises. Sometimes law e\cuses
certain performances and if not [hen either the parties will
Perform their respective coi'tractual obligations or the party
\\h to
fails
porforni accordingly will he held liable for
 Ci!lp/1 1 PIL'nu!'L f1/1!(1!Ial1 Vt cout ?'OCI

breach of contract. So the last part relates with the breach of

contract and the remedies thereb y . -- -
Scope of the Contract Act, 1872:
The Contract Act, 1872, is not exhausti'e and where the Act
does not cover the case with which the Court has to deal, the
of
Court is bound to follow the principles the I nghsh
Common Law, i.e., the rules of justice, ejuitv and
conscicnc(2. 1 The Contract Act, 1872, does not saY anything
about the place where the contract is made and it is no part
of the ordinar y law of contract'

Conflict of laws:

Where the contract is made in one jurisdiction and is to he

performed in another Jurisdiction or other countries, or is
sued upon in a jurisdiction where it was not made or to be
performed it becomes necessar y to determine the law of
which legal svsteni will govern the contract, or any
particular aspect of it. Our Act is silent on this issue

FORNi ATIO N OF A CONTRACT

,j1at is accftt

It is mentioned in section 20) of the C on tract Act 1872, that

' an agreement enforceable b y law is a contract'.
1 his is the simple definition of the term 'contract' given by
the Act. So, accordingl y it means that whenever the
agreement \? the qualilication of enforceabilit y b y law
then it becomes a' contract. 1 In other words, the agreements
ma y be of bpi

51$ 3 101: 1052 tHin) I'$: 62 ( l) 612: 50 L\\\ -161: 1046

(Nag) 114.
- 515 C 5031 )CdI) 651),

3
(7liipttr I Pn',I/c aletLrm(,tum n/a uc.1l(ti(1( I

I Agreements enforceable b y law; and

2. Agreements not enforceable b y law.

1'he agreements which are enforceable h\' law onl y those can
be the con tract ,,, and never the others which are not
enforceable b y law. '1 here may he plenty of agreements,
some of which are enforceable b y law. Suppose, an
agreement to p l. 1-0g heroine is not enforceable by
law and as such i c^nnot he a contract, hut an agreement for
the purchase of a computer is enforceable by law and as
such is a contract. In this regard, we can reach to a
conclusion that ( all coiztracts are ac.,'ret'JJu'n ts, mit iii]
agrt'enrL'nts are not contracts. Because, to be a con tract it
must be an agreement not of all, so a contract is necessaril
an agreement. But an agreement is not necessaril y a
con tract, suppose the above agreelflent to purchase heroine
is not a contract since it is not enforceable b y law. So, all
contracts are agreements but all agreements are not
contracts. It was observed in Ahdu/ Gain -Sheikh Vs. /a,thIl!41
Cliaudin Mud/ia a,id otlicm that—

the alleged agreement between the parties is not a

contract as all contracts are agreements, but all
agreements are not contracts and such agreement cannot
hr r'nto reed as it is an illegal agreement and its
entorcement would tantamount to sub-lease clereating the
clause 10 of the lease deed."
I lowever, in fact, the definition of the term 'contract' given
in section 2(h) is not exhaustive one, because it does not give
a clear idea about a contract, since the two terms 'ao'r'iiu'nt
and 'en!-on-cabl e he laze' used b y the law have not been
clarified here. So for a clear idea about a contract we have to
depend on at least two other definitions, of (i) agreement

3j3' 121.
CJui'Ier IjK W Qq C I I uiittiu oti

and (ii) entorceahilitv bY law, even in fact this will not

suffice, because this attempt will further make us dependent
on some other necessar y definitions. Let us start the effort
with the definition of 'agreement'.

Section 2(e) provides that

every promise and ever y set of promises forming the

onsidcration for each other is an acreement.

13v a proper dissection of the definition we get two

constituent elements ot an agreement:

1. Promise; and

2. Consideration.

It was held in Jaiic/ai1i'sIi ivlukti iIil/ui ku/iuii Jrul

rcprcscu lcd by tin' Alamgiu Ducctur \ . 's. Lamal TraLIIu , An ICI!
and Men' that the consensus ad idem or meeting of minds
of the parties is required to constitute an agreement.

TVozo, WInt is conslilera tion and '1iii I is promise?

IV,/at is CL) 115 /L (cia! iou?

Section 2(d) while defining the term 'consideration'

provides that-

When at the desire of the pi'omisor the prolilisee

or any other person has done or abstained rum
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
tor the promise.

(1998) 50 DL1 (Al)) 17 1

5
 Li'n?p?r I - l'IE'iin//I' 1))'tWH,':i!iO)l (t (1

Analyzing the above definition we getthe following

ingredients oI consideration:
It is an act or abstinence. That means it w he
positive or negative. It is worth mentioning here that
Hie law uses the word 'something' in connection
with the terms, 'act or abstinence to constitute a
consideration. Thus the law does not confine the
requirement of such act or abstinence within any
pa rticu ar t y pes or nature, rather makes it open
using the term something which means in fact
every tl ing.

ii. It is done at the desire of the promisor. So, if it is done

at the desire of an y third person that will not be a
consideration. Conversel y , if an y thing is clone at the
desire of the promisor, then that will be a good
consideration irrespective of the nature of the thing
clone, even that may be legal or illegal, adeq nate or
inadequate. Thus the key condition here is not the
nature of the act or abstinence rather the desire of the
promisor.

iii. It ma y be of three forms, has been done, or is being

done or is promised to he done at some future time.
Thus consideration ma y he past, present or future.

i-V/mt is ucouusc?

Section 2(h) sa y s that 'a proposal when accepted becomes a

promise'. If we analyze this definition of promise then we
see that to constitute a promise two components are
essential:

Proposal; and
2. Acceptance.

C'!iip!cr I : I'rc'uu!Ic !(OIHilt?i ti iOlitI'lif

That riicans first of all a proposal is necessar\ and then that

must he accepted to have a promise. So 11011' tilt, IJ1IL'StlOhlS
i? L' towards proposa l (111(1 accepta flee:
nce:
I \ii it is i rei osal?

Section 2 (a) sas-

When oneperson signifies to another

\\iIIilLss to do or to abstain troin doini;
, with i ViC\V to obtaiiii ri [hO
anV thinh,
tiia other to ucli act or abstinence, he is
make a proposal.

Here two const Lien I sectors of an offer are found. I irs!, to

he an otler there must be a significat i o n of ones iv lluigness
to another. 'cou1/i, the sini tiCa ton must be made with a
definite object that that is intended to have the consent I rum
the person to whom it is addressed. As such, we see [hat,
genera liv. here no new terminolog y to no clot ned has been
used b y the law and accord i n1 y it can be identified a the
starting point of the definition of a contract.

tWicE ciccc?/1cL'? ____

After an offer is found there must he an acceptance to reach

the stae of ira.nisc. Sect on 2 (U) sans---
when the person to whom the proposal is made
signifies his assent thereto the proposal is said to be
.iccup ted.
Thus the essence of the acceptance is the assent or consent
that is from the offeree. it simpl y speaks of gi\g
ones consent to the offer as if is made b y the offeror and as
si ich it iv ill he a ia I d acce ptance to convert an otter into a
prol1ise.
CIi?'tc'i I Pri'i,wI/c iiIti)ii1iO,i of a COi?t?iLt

Since we have got b y this time at least a starting point, so

now, let us take an effort to summarize the whole chain
towards the meaning of contract. Accordin g ly, a contract is
constituted b y an agreement and enforceabilit y b y law, and
an agreement is constituted b y pi-om ise and consideration,
and a promise is constituted by offer and acceptance, and
we observed the defini 11011 of consideration a iso. The
deficienc y of this summary based on the above discussion is
that it onl y analyzed one of the two components of the
contract, that is, agreement and kept silence about
enforceable by law. In order to analyze the phrase
'enforceable b y law', we have to concentrate on sectt.Qp]0
that speaks about the issue, that is, when does an agreement
become enforceable by law. Section 10 says-
\il agreements are contract if they are made by the free
- consent of pilrtles competent to contract for i lawful
consideration and with a law! u I object a iid are not hereby
e\pressl \ declared to be v iI.
/
We have seen earlier in the first precise definition of the
contract that an agreement enforceable b y law is a contract,
that means to be a coil tract a ll agreement must be
enforceable b y law. So it can he expressed from another
dimension that an agreement which is a contract is, of
course, enforceable by law. So, since section 10 of the Act
s it ii cLgivivcni.; ' 'bdab a a: to-t, H
says when does all agreement become enforceable b y law,
and accordingly we get the answer that to be enforceable by
law, i.e., to be a contract, an agreement must fulfil the
following conditions:

. the parties must he competent;

.-2. theIlsof parties must be free.;
the consideration must he lawful;

8
CIiitt'r I Prt'i III b/e aiiI fc111itit1(ii oti silrlct

,4 the object nuist he lawttil; and

5. the agreement must not expressl y declared void by

law.
So, these five conditions are the Itirther conditions to he
satisfied to convert an agreement into a cont. ract.
Accordingl y , there may be an agreement by the incompetent
parties without fret' consent and it is immaterial whether the
consideration or object is lawful or not. Thus, if two persons
agree to have a transaction the ultimate object of which is
smuggling that will he nevertheless an agi-eemcnt though
that cannot be a contract. Again, if a person of unsound
mind enters into a business transaction that ma y be an
agreement though that will not be a contract. But that
particular agreement cannot he a contract without satisfying-
the above conditions.

It would he convenient if the above conipinents are

projected through the following diagram:

Contract

Agreement I
I by

Promise
I
iiertion
I C,t,-, °c0
I
()li-i !' L7tI(!
1. C)U.'i"O!,'!

Prop. o^;tll cceptance

9
 I !'a,iil/c i It',ieiici vetracf

I he above drawn diagram shows the tormation of a

contract. Lack of the ][)o% , ('. Constituent elements Of con tract
will be discussed in detail in the hOmwing Chapters. Before
starting that elaborate discussion about torina Ofl of if
contract let us now concentrate on different t y pes of
contracts. We can categorize con tract from various
dimensions and perspectives.

es of contracts:

It is possible to classif y the t y pes ot contracts if-em two

perspectives, i.e. as regards the modes of creation and as
regards the enforceability and validity.

As regards the mode of creation:

'ZI L.vpress and implied contract: In tact, we get the idea to

di \ ideCo ntract in t,,\()
hese di sions to ni section 9 of the-
Act , which sa y s that in so far as the proposal (.) I . ice
of an y promise is made in words, the promise is said to be
express. In so far as such proposal Cr acceptance is made
otherwise than in words, the promise is said to be implied.
I. Lpress contract: If the offer and acceptance of a
contract are made in words, i.e., either e\pressed
orally or in words, the contract will he deemed to
be an express one. For instance, A tells i would
like to sell this car for 1k. 3 I1-acs
- acs f and B replies 'I
agree'—this is an express contract. Ihus express
contract ma y he of two tpes:

/. lVr/tt'u :oiil rod; 011I

ii. Oral C0111 NO

Implied contract: If the offer and acceptance of a
contract are made otherwise than in words, it

lit


LJi'tei 1 1icuu!'lc I , ? lfi)i1) ll/!).l _I.r_

will he treated a. an implied contract. For

instance, if a shoe shiner starts roli c-diing the
shoes of one person and the later permits
remaining silent kno\vinglv that the first person
is doing so to get a pa y ment in e\chaulge of this
service, it will he treated b y the law as a case of
implied contract.

As regards the enforceability and validity:

1 Va lid C01111-act.
2. 'Voidable contract.
3. Void contract.
p
Valid contract: An agreement enforceable b y law is a
contract and this is valid contract, in other words, the
valid contract is that agreement wli ich fulfils all
requirements of a valid contract as imposed b y the law.
Accordingl y , section 10 niust be taken into consideration
which sa y s directl y about the ren rements of a alid
contract. It has been discussed above elaborately.

Voidabh' contract: Voidable contract has been defined in

section 2 (i) as

an agreement which is enforceable hy law at the option of

one or more of the parties thereto, hot not at the option of
the other or others.

Thus it appears that the V0id,1bilitY of a contract is a

temporary status. It has to he made enforceable b y law or
has to he set aside and both these are dependent at the
option of the parties of one side and not at the option of
other side A contract can become voidable for ma nv
reasons if determined b y the law. Once a contract becomes

U'
tibi 1 : Pn'iiii(!t itOiiini(l,i, Q central!

voidable, it acquires a temporar y and transitional status. It

ha to he either validated or annulled. The law gives this
power of validating it to the parties of one side of the
contract, not of the other side. The law determines at whose
option it will he valid in each particular case considering the
nature of that voidable contract. I bus a contract cannot
remain as voidable forever, rather it has to he valid or void.

Void contract: Section 2(j) sa y s that-

a contract which Leases to be enforceable by law heconie

void when it Ceases to he enforceable.

Thus the law defines void contract \ erv precisely saving

that a contract becomes void by ceasing its enforceability by
law. The definition in fact implies two things to be void
contract:

i. One valid ontract n. there.

A. Then it iiiust cease its enforceabilit y b\ law

I hus, it does not speak about void iib mu in. Because, law
sa y s that it has to cease its en forceabilit y and it will he void
onl y when it will cease that enforceabi Ii tv. SC) that for
-- 0-. i 1 . - F •-, F - F f -f r
whenever it will have the enforceabilAN , b y law that implies
the presence of a valid contract. 1hus, the precondition of a
void contract is the existence of a alid contract and
afterwards somehow its enforceabilit y will be ceased and
then it will he treated as void contract. It can he concluded
b y saving that a void contract was a valid contract once
upon a time and subsequentl y for some reasons it lost its
enforcea hi Ii ft in law and then it has become a void contract.

12
 hip!'i' 1 Prnni y He nil tnrniit!oH cti

And there ma y have various grounds for ceasing the

enforceability of law, e.g., supervening impos'ihi I itv or
illega lit.
et us now concentrate on certain other terms—

Void agreement: It has been clearl y defined b y section 2(g)

which sa y s—

an agreement not tnlorceahle b y la' is said to he void.

1hus an agreement, in tact, will either be enforceable b y law

or not. If it becomes entorceahle b y law it will he a contract
and if failed to be so then it will remain as agreement and
the legal status of that agreement will be void agreement.
And there are obviously certain criteria set by law for the
entorceahilitv and those criteria have been discussed earlier.

/i5fiucLiwi hi'tat'cn eo/il ir'ewenI mid :oidco;iiracl: There is a

imilaritv between these two terms, void agreement and
void contract, that is, both of these are not enforceable by
law. The onl y basic distinction between these two is that a
void contract was valid once upon a time, but a void
agreement was never in a position to be enforceable by law.
In other words, void agreement implies void oh oullo, i.e.,
void from ver y beginning or from its birth, \vhereas void
contract implies that it is not \ oid at its ver y inception rather
it was born as valid or was enforceable b y law and
subsequentl y it ceased to he enforceable b y law.

Illegal agreement: The concept illegal agreement' has not

been defined b y the Act, but its definition can be inferred
from the relevant laws that it means the agreement which is
illegal. It is worth mentioning here that all illegal
agreements are void but all void agrcement are not illegal.
because illegality is one of the grounds to he void but there

K
 ( 'Iii I I'iea,7' It riiiitjs, i)tii uslleii

ma y l other reasons for which an rinent may he \'Ok I

but in that case that same cannot He termed as illegal.
Suppose, entering into an agreenwnt to write 100 standard
pages w4hin five in mutes in one's own handwriting is void
agreurnenh but this is not an Illegal agreement. Hut, if some
ho\ an agreenient becomes illegal then ohvii iusly that Will
he void agreement.

Jflt'c?CQflfr7ç .
This is a m isnoma, because it creates a
paradoxical situation .A contract implies that it is
enforceable b y law. So, whenever the term coni ract' is used
it cannot bear the term 'ii le,gal , with it, because that will
create self contradiction w hich
ich will give rise to a paradox.
Because the agreement which is enforceable b y law cannot
he termed as illegal. That is wh y , illegal agreement is a
Correct term but not the legal con tract.

k!J±' nIorceai)!cconHct: This another interesting

is

terminology which has no been defined in the Contract Act,

1871 it nouns a contract which cannot He enfoned b y the
comm rts ol law lor some technical reasons. Suppose, the right
arising oLit nf a time barred contract ma y not he enforceable
in the courts of law and such a contract may He termed as
unenforceable contract.

14
 CHAPTER 2

PROPOSAL AND ACCEPTANCE

Definition of 'Proposal':

I roposa I is the starting point from where an agreementgels

life tormallv which ultimatel y ma y take the shape of a
legally biidiig contract. '1 he term 'proposal' which is used
in bangladesh is s y nonymous with the lerni offer' used
Wider English law. Section 2(a) of the Contract Act, 1872,
while defining the term 'proposal' says that -

Where one person sigiiities to another hk ':i I lmgiss

to Jo or to abstain from doini soinethin with a view
to oh1ainin the assent of thit 010cr to such act or
abstinence he i' siid to i1wkc a propose I.

If we dissect the above mentioned definition then one may

find out the following elements 01'a proposal:

I) Signification of ones willingness;

2) Willingness is expressed to another person;
3) The willingness ma y he affirmative or negative, i.e.,
either to do something or to abstain from doing;
4) The said willingness is expressed to other peon
with a definite object, Ii a t is, the person v ho makes

No
011114 (T 2 Proposal Mid ', / 1 / 1 Ct'

it intends to obtain the consent to the same froni the

person to whom it is made.

Aua!ijsis of the definition:

What is mi oiler? The sin plest a nswer to this question is

that it is a willingness of one person. Butif someone has a
willingness in his mind it will not he sullicient to constitrite
an offer, rather it must be expressed to someone else. So if
someone alone being in a closed sound proof room utters
the words 'I would like to sell m y car for Tk, 3 lacs'---it will
not be an offer, the foremost reason is that it is not expressed
to another person Now, what will be type of that
willingness? Of course, that willingness ma y be to do
something or to abstain from doing something. The last
Important element of an offer is relating to the intention of
the person who is making the proposal i.e. proposer, that is
one must make it with the intent ion otgetting the consent
From the other person to whom it is made. I oF us examine
the following conversation:

(A conversation is taking place between .\ and B while the y are

taking tea at fine evening of autumn sitting in the garden of B.)

A: I late ,oil boie/it auoflu'r car? I just /ieani it/loin C f/lot YOU

pu rd /USCL! a lex us tar /t'stt'rthni.

B : Yea/i. it's trio'

A : But 1 think the SL'COihl Cu it/i! he na/h,' iit'h'fi /00, (mt

is sif7ciciit.

H : I a/n !!iiuiki,i (0 St/i i/il! 0/ui 0/it',

A : For how unic/i?

B :5 !i?dS.

4: 111171 S i/Jut'.

16
Chcitdi'i 2 Pripcisiil 101 accaplititO'

Here the atements made b y B failed to constitute an otter

because of at least two reasons—tirst 01 all, he was not
serious about his willingness so it's not the final e\pression
01 his willingness, rather he was merel y thinking like this.
Secondl y . here 13 told that he was thinking to sell the car for
a certain price but it was not intended b y his statement that
he made it with a view to obtain the consent from A in this
regard. How will it he und eNtood that it is intended a.
such? The simple answer is it\ %-ill he inter red from the
construction of the offer and the circumstances.
Thus according to the definition given by the Act the centre
point of an offer is willingness' and the sum total 01 the
answers to certain questions around the term willingness
constitutes an offer.

Ownnc' t
The vil tingness ma y be a ft irmative or negative. i.e., the
willingness ma y be either to do something or to abstain
from doing something.

1i1g1ie

Willingness is expressed to The Qd \eilliriiilesS is

another person. 5(b it a person expressed to other person
merel y keeps an y willingness in with a (1L'Iinite obtct, that is,
his mind, it will not suffice, rather the person who ma k- it
it is to he expressed. Even mere intends to obtain the consent
expression is not sufficient, rather to the same tram the person to
it must he expressed to another whom it is m,lLte. Thu'., the
person. So, it someone sitting in a eisteiice of proper intention
room alone C\ presses ally is also required to constitute
yilljngne's which no body hears, all 'ter
ill not he an offer.
 J?O! ill

Characteristics of a proposal and some rules rcgarding

valid proposal:

Ilk , proposer must intend to create legal relations and as

such expressed willingness (which in turn is going to he
an offer) must he capable of creating legal relations. We
can discuss an English case in this regard to make the
concept clear:

I four Vs,B rJ i 9 1 9J, 2 K,B.571 CA

A, a businessman residing in Ce y lon, promised B, Iii

Wile, who was living in England for reasons of health, to
pay her a monthly a llova ncq. It was promised also that
the allowance will be continued till her none back to
(:evk. 11 w dispute arose when A denied suHequeniiv 1
give her the promised allowance. It wiis held that B could
not enforce the obligation, as from the 11,11MV of the
agreement it appeared that no intention existed to glee
rise to a legal obligation and as such even there was no
offer at all to he accepted and conseL}uentiv there was no
contract between A and B in respect of paving the said
allovjnce.'

Similarl y an invitation to dine is not an offer. So, if someone

invites his trieneis 0 na\ C Led iii oLiSC :d f :f th
invited guests after accepting the said invitation misses that
tea part y , that persi in will not be held liable for breach of
contract, though the host has alread y incurred certain
expenses in the preparation of the part y , because, these are
purel y social relations, where legal obligations and
consequences are never intended, so there was no offer - no
acceptance - no contract - no breach of Contract. It is
presumed ordinirilv that the business expressions are

I Bolfnur \s. 13alioiir. 1919. 2 23. 571.

18
 • J1)7I and t1ct7'/i'ice

intended to create legal relations, hut there ma y be sonle

ssiona
cases where even business expressions n intend to i
m y ot
create legal relations, of con rse that will depend on the
construction of the offer and the relevant circtiistince.

2. Mere expression of intention is not so ft iCiefl t to

constitute an offer, rather that must he the final decision
of his thought which is made with a definite purpose,
i.e., to obtain the consent of the person J vhin o it is
makiThus if A sa y s to B,'l niav sell one of m y cars if I
an offer;ut if A sa y s to B,
can et 1k. 3 lacs'this is not
'I will sell y ou m y latest car for Tk. 3 1acs'it is an ofle
.;gain, if someone makes an y statement rogard iO hl--,
during a conversation, of course that will
an y intention
not suffice to constitute an offer, even though the person
to whom such intention is expressed acts accordingly,
there will he no offer, so no question of acceptance and
as such of an y contract. For example: A told B, while
taking tea, I \.x'ill he happ y if 1 can sell nv house sit ua ted
at Uttara for Tk. I crore to a universit y teacher, B being a
universit y teacher conies forward with the said money
and claims the house. B's such performance will not
anhc)unt to acceptance, because A's statement did not
constitute an y offer, since it was a mere statement of
intention expressed to B out of a conversation.

3. An offer must be definite i.e. an y vague or ambiguous

statement is incapable to give birth to a proposal. The
terms and conditions also must be defini te or capable to
he made definite. So, if a person indicating two cars of
the same model kept in front of him and tells that 'I will
sell one car for IL. 3 lacs and another for 'I "k. 2 lacs'—we
have not an ufftr due to the ambiguit y and uncertainty
in the statement made. But if though the statement is not
definite at the moment directl y but is capable to he made

19
 CJiiph'i 2 : sal a iLl ih n'p (air te

definite appl y ing the common sense and gellcrfl idea

then that sta tenrent ma y constitute an otter. For
example, one l.'.mus car of new model and another
scooter are kept in one place and indicating these the
owner sa y s '1 will sell these two, one for 1k. 1 lac and
another for I k. 30 lacswe ma y have an otter, because
it is capable to be made definite by appl y ing the
common idea that a scooter is not Sn pposed to he sold
for Tk. 30 lacs. \Ve can refer the following case to make
our idea clear:

Montreal Gas Co. Vs. Vaset1, 1900. 11C.595

• I here was a contract between A and B where, iiitrr alia, A

promised that if he was satisfied with him asa customer
he would favorabl y consider an application for renewal of
the contract. It was held that there wa nothing ill these
words which would create a legal obliatiou, as the
promise was a vague uric. 'a rice there is rio criterion to
determine the sa tisfiction as customer:

An offer mav be made to a specific person or specific

class of persons or even to the world at large generally.
Because the definition of the term 'proposal' does not
restrict that the oiler shoti Id he made onl y to one person
raitier toe jaw su oc gc :;or', :gn tiw to
a;,ollwr.. which implies that the offer m tist not be
addressed to the offeror himself, rather 'to another'—so
it is not a bar in making an offer even to the whole world
at large. Anson rightl y observed: 'an offer need not he
made to an ascertained person, but no contract can arise
until it has been accepted b y an ascertained person.'

I Montreal Gas Co. Vs. Vasev. 1900, A.C. 595.

Car-fill VS. Carbolic Snioke Hall Co.. 1892. 2 QB 484. is a famous
English Law (use on this paii icrilar point..
Ansuns Law of Coritracl 409 23'a ad. b y A.G. Guest, (1971).

20
(_/ia;'t'r 2 uit/ ac(/'tiiCt'

a) A sa y s [3 to sell his computer to hi ni in a certain price—

it is a specific proposal made to one specific person, 13
which is capable to be accepted onl y b y [3 alone, and no
other purson except 11 Can acpt the offer.

h A moPes an offer to sell some computers at low price

and speci tica liv mentions in the offer that it is mode only
for the law students—it is an offer made to a specific
class of persons.

C) A promises to y ea reward otT P. 100(1 through an

oclvertisenient published in his own website to anyone
who can ci- eate a new software relatmg to CuS'

rctcrc ine-- i L is a general offer made to the whole world

at large which is capable of being accepted by an
person of the world.

5. C)ffer ma y be expressed or implied. If it is made by

words, written or oral, it becomes an express offer and it
it is made otherwise than in words, i.e., by conduct—it is
an implied one. because the definition of offer says
'when one person signifies to another.... ' —here the
mode of signification is not mentioned, o it can he made
in whale\ er mode, either express or implied, since the
Univ important thing to be considered is whether the
willingness is signified to another person or not.

3 '1 will sell m y car to von for I P. 10()0—it is

(a) A tells
an express offer which was made orally.

21
 CI ipI'i 2 Iupos ? I ?I (LCt7O17i1

(h) A send all u-mail to B (Wring to sell his land

situated at Childian for a certain price—it is also an
express offer which is in the form of writing.

(c) A professional shoe shiner when starts polishing

ones shoes in front of the Owner of the shoes, and
the owner does not den y . That is a case of implied
offer which is made b y cooL KaL.

6. Since one's v ii lingness ma y be posi cc or r ie;a five, an

otter also may he positive or negative, because an offer is
nothing but the expression of one's willingness. Again,
the definition of 'proposal' provides that ' ..........his
willingness to do or to abstain from doing something
'—here it expressl y includes the positive (to do)
willingness and nega live ( t o obstoi;i ft om doiuç)
willingness and as such it in fact speaks of positive and
negative offer.

-1 xample:

(a) A tells that 'I will sell m y car for 1k. 3 lacs'—it is a
positive offer.

(h) A tells B that 'It : do not go Cox's Bazar

tomorrow, I will not give C Tk .3 lacs'—it is a
neca tive offer.

7. Offer ma y he conditional or unconditional. It is natural

that besides unconditional offers one can make a
proposal subject to certain stipulations also. For
example, if A tells B that '1 will sell my car to von if you
recrti it m y nephew in your company as a ma nagei-'—it is
a conditional offer. In case of a conditional offer the
Ife1ee must fulfill all terms and conditions of offer in
order to accept A.
ChaPter 2 : and ico'p(ii to'

S. it is true that an otter is an e\presSiOfl 01 ones

willingness but if that willingness is e\preSed in the
form of a mere answer in repl y to an inquiry in tha
t

regard that will not constitute a definite offer. Fhere

must be a clear intention of entering into a binding
contract and for that purpose the said offer must he
acid ressed to the ofteree with the intention of taking the
consent to the Same f 7 rom the person to whom it 15 made.
Negotiations for the sale of land ma y involve the
adjustments of so man y questions Of detail that the
courts will require cogent evidence of an intention to he
hound before the y will find the existence of an offer
capable ptance. I rhus in llamaeo I 's. 1-'mo'ii'

- a plaintiffs telegraphed to the efeilants, \ ill vim sell

Us Bumper Hall Pen I elegraph lowest cash price. I he

defendant telegraphed in repl y , 'Lowest price br

Bumper I lall Pen, 000.' The plaintiffs then telegraphed,
, e agree to buy Bunpgr Hall Pen for OO asked b\ 'doll.
Please send us vomrt e-de. 1 flit rt'st were silence. It
was held b y the hudicial Commi 0ev ol I 1 rivy Council that
there was no contract. the second telegmamn was not an
oHer, but onl y an indication ot minim urn price if the
defvndants ul Ornatel y resolved to sell, and the third
[('I C'4 1-11111 was therefore not an acceptance.

9. Communication k another ke y feature and ,m so all

essential constituent element of an offer, ince there can
not he an y offer without it's being communicated to
another person. There is an independent section in the
Contract Act, 1572, dealing with the communication of
offer, but the basic condition of it's being present in an
offer, in fact, is mentioned in the definition of' proposal

(Thesimire and Vilooi, Loit' oJCorm(rnci. p.3 I

mg A U 5a2,

23
C/ ii !er 2 : J(iS(/ i)iti iCi JtllI(t

itself, since tilt , ciefinitinn sa y s that 'when one person

signifies to another...'--this signification in fact
indicates the communication Non of offer that it is to he
signified i.e. it has to he communicated to (he other
per'-on. So, it a person makes a ste tement witli a view to
have an otter through it and nohodv listens or knows it
then in spite of satisf y ing all conditions and having all
other constituent elements of an offer it ill not he an
otter for the absence of communication or signification
as required b y the law.

fer and Invitation to Trcat:

C)ifers must be distinguished from invitation to treat,

because there are man y statements which seem to he offers,
but, in fact, these are invitation to treitSimply speakingj we
discussed earlier the constituent elements of an offer, and if
any statement lack' an y of those elements that ma y he
tcrnitLi a an in flation to treatI In tact, the Contract Act,
1872 1 does not define this term ai even nowhere in tfik Act
this term has been used. But it has become the popular
subject to judicial pronouncements, beca ti'e a lot of
problems have arisen b y this time centering one specific
question that whether a particular incident is an offer or
invitation to treat. Because, (in this basic answer the whole
agreement Deconies cndcnt b:'c" if there is no offer
then there can not arise any agreement at subsequent time
since the offer is the first formal step towards the formation
of a contract Sometimes the distinction between these is
quite obvious and sometimes it is reall y a trick y one and
frequentl y confusion arises regarding this question to
determine whether a particular incident (statement or act) is
an offer or a mere invitation to treat.

24
 i' I; 1 1 7 1;?

It is the usual practice in b mess that a transaction begins

vi th neg O tiations and so ma nv sta tei ants and ac IS take
place at this stage of negotiation which usual K al-L' not otters
but invital ions to treat. \ number of invitations to treat may
he present in one busmess transaction whereas at the end of
negotiation a definite offer"Al come out which are capable
of being accepted. The offeror must have completed his
Share in the formation of a contract b y finall y declaring his
readiness to undertake an obli g ation upon certain
conditions, lea\ ing the of feree the option of acceptance or
refusal and he must not merel y have been feeling his wa
towards an agreement, not merel y initiating negotiations
trom which an agreement might or rnigh I not in time result,
rather he must he prepared to inipleman t his promise, if
such is the wish of the other pa rtv.

( It will he convenient to listinguish between an offer and an

invitation to treat on the basis of two factors:

L.Nature of the statement; and

Intention of the part y who is ma king [he
statement.

In the context of the nature of the statement it is to be

examined whether the said statement satisfies all
requirements of a valid offer, ifl!i'i v/il, final expression of
ones \vi1linp'ss and sutficientfimite to he capable of
acceptance. Lif the statement or conduct becomes so
satistactor\' then it will he an offer, but if it is in short of it at
an y degree then it will he an invitation to 1waQ treat not an otter.
In this regard the case of (7i1'so,i Vs .\ tiui!i'sh'r Ci!i Cvii ilci/
is remarkable here:

C'Iwsliire ni1 Fitoot. IAOL' of-Contract. 2 ccl. 1)27

1979. 1 .\l1 ER 972: 1979, 1 \v1.k 22•i

25
C/i i/ i /cr 2 Propnsii/ iu/ acLcptiiu c

In September 1070 the council adopted a polic y of selling

council houses to council tenants. On Ib Februi rv 071 the
City Treasurer wrote a letter to Nil-, Gibson stating that the
Council ma y he prepared to sell the house to y ou at the
purchase price of f2 . 725 less 20' = L2,180 (freehold). 1 lie
letter invited Mr. Gibson to nm Lu a formal application
which he did. Ill normal course, this would probably
liae been In! liawed b y the 1'repa ra tioll and e\chinre of
contracts hut before that pr( 055 had been concluded,
control 01 the coiun ii cliani.ed hands as a meu It of the
local goirniiuemit elections of Ma y 1971. polic y of
setliuu cmiuncil houses reversed and the council
decided only to complete those transactions where
exchange of contract had taken place. vIi. Gibson cia i med
that a binding contract had conic ii ito esa tence but the
( House of lords held that the 11vannKs letter ot 16
February was at most an invitation to treat and that
therefore NI r. Gibsons application was an oIler and not an
accep hi nec.':

1 hen in the con text of intention it is to be j Lidgud whether

the pers mu who made the sI a tement in ad e it with the object
of getting the consent fri mm the person to whom it was
made. In other words, here the intention of the party
making it must he discovered and if it is found that the
statement was made with a view to obtaining the assent of
Hut other to such act or abstinence then it will he an offer;
hid if it lacks this issue then in spite of satisf y ing all other
requirements to he a valie madei, ii dl c an n ' ' nFnn to
treat. So, what we see in practice, a iO-LFT' hoard is not an
offer for various reasons, ill/cr a/n?, it is not the intention of
the part y who is hanging or publishing a '10-I .h F' hoard to
obtain the consent from the other party, rather it is made
merel y to attract the prospcctu\ e customers or tenants and to

[his case, suniuimar' has been taken front Cheshire L md FOunt,

Lam L y / (lot liraci. T O cr1.. y32.

26
 Pr;'il 0111 11('Jt(iiiL1

invite the interested parties to come for iicotiation. In tact,

such a 'TO-L[T hoard is riot usuall y i rCad\ statement to
he capable to constitute an of Icr, rather there ma y he so
maliv issues vet to he settled

It has been the subject of judicial debate for man y y ears and
the distinction wi I he clear if we examine certam n cases, ftc
question to determine [he distinction bet\\ecn an offer and
an in\ Mon to treat arose first in the law 0! uctiomis. Let
US now concentrate on some specific issues relating to offer
and invitation to treat and in doing so it will be a better
effort if sonic Lnglish law cases are referred here, since there
are a lot of Fnglish law cases on this particular point which
Will definitel y make the stud y on the distinction bet\c&eii an

offer and invitation to treat easier resultmg to some effective

conclusions.

ALUCHOH MICK

It is well established principle regarding auction sale that an

offer is made h\ the bidder, i.e., the hid itself is an offer
which is to he accepted b y the fall of the hammer of the
auctioneer on hi table.-' I here are certain issues relating to
auction sales.
The first issue is about the request lor bids. is the request for
hid a definite offer? The issue was held negativel y in J'aiio'
V* Car'c.
the second issue is about the nature of advertisement of an
auction sale—is it an offer or invitation to reat? The
ad\ ertisemcnt of an auction is generall y held to he an
invitation to treat. 4 Next question arises -does an

I Clicshireit]I(f ISloot, 1,(IU' of ( :ojilrocl, .27.. 211 c(l.

British Car Auctions Lid. Vs. \Vr111t. 1972. 1 \VLk 15 It).
1789, 3 I cnn Rep 1 45L
I larris \s. Nicker-,on. 1873, LP Si QB 286.

27
C/iip!ei 2 ln.'szil uiI accpfiuct'

advertisement that specified guiids Will be 101d Nv arictioii

on a certain da y Conti tute a prom so to potential bidders
that the sale will actuall y he held?' In WO V. \1ickursui
this criestion was answered negatively, where the plaintiff
ailed to recover damages for has suffered in I ravel jug to
the advertised place of an auction sale which was poctpuned
ul tiinatelv before the Lime fi\ccl for the sale to he held.

I he thirdissue is regarding the advertisement that mentions

the sale to he held without reserve—is it a definite offer to
sell to the highest bidder? In I ciiu'ick Vs. A. lar IaiiiIiI, Fnici &
Ce.' the Scottish court decided it negatively holding that no
agreement is complete ri nle the auctioneer aPknowledges
the acceptance of the hid b y the fall of his hammer. But in
English case l\r!eie Vs. Harrisoji it was the subject of ohiter
dicta where the court opined that the addition to the
advertisement of the two words 'without reserve' converts it
into an offer that the sale will in fact he subject to no reserve
pret' and that the offer is accepted b y the highest bidder at
IN auction sale. IN is i/ida has been followed in a recent
English case in 2000 in Parr-11 Vs. flaz'ic (7'naliii as
Rail & Co)

kz1iL'rs:

The genera] rule is that an invitation to tender for a

pai Ilcuce h1 oC :ittb n t' and Ihe nerson
who submits the tender is cleenecl he law as an offeror as

the suhniission of tender is in offer which in turn is to he

accepted b y the person who Mites the tender for any
particular project. 1 hus the mere fact that a perso n mack' a

Ibid.
H.
1904 6 V (C tol Sess) 850.
1859. 1 6 &'E 309.
1 \\' LR 1962. C ourt of Appeal.

28
CI itci 2 ; I'rocei! eel

certain quotation ill respne to the tender not ce even

grantingthat it Xva L, the iwestquotation, will not, in
manner create an obligation to accept it on the person who
issued the tender notice.

But in the following two recent cases in Fngland different

approach of the court is found regarding the legal position
of tenders, where in I act an ta lion to tender has been
treated as an offer capable of creating contractual
obligations under certain circumstances. 1 he cases are:

j Harvcla Investments Ltd. Vs. Ro y al Trust _Copan y of

Canada (Cl) Ltd2.

[lie first defendants owned a block of shares in a

compan y . The plaintiff (1 larvela) and the second
defendant (Sir I .eoiia rd Outerhridge) were ri cal
bidders for the shares. The reason for their interest in
the shares was that the ownership of the shares
would give the successful bidder effective control of
the companY. The first defendants sent out an
invitation to both Ha rvela and Sir Leonard in which
they invited both parties to submit 'any revised offer
which y ou ma y wish by sealed tender or confidential
telex to the first defendants solicitors. The first
defendants in turn stated that 'we confirm that if any
offer made b y y ou is the highest offer received b y us
we hind ourselves to accept such offer provided that
such offer complies with the terms of this telex'.
Harvela submitted a hid of $2,175,000, while Sir

II.[) 1983 K:tratlu 340 (D13).

2 (19861 AC 207.

29
 c/ l iJ l i r 2 : 1014

I eona rd submitted a hid of S2,100,000 Or (aiiadianj

SlO 1,000 in V\CCSS of an y offer which y ou may
receive which is es pressed as a fixed monetary
arnou n L wli ichc cr is the higher. The first
defendants accepted Sir I eonards offer, treating it as
a hid of 52,270,00t) and entered into a contract \VitIl
the second defendant for the sale of the shares.
Harela issued proceedings against both the first
defendants and Sir Leonard in which, among other
th i ngs, it challenged the validity of Sir Leonard's bid.
l'he House of Lords held that Sir Leonard's bid was
indeed invalid and that /iwfiic/ defeuilaut was
coot 1aCuI17lfij touiid to transji'r //ic S/101L'S to Harn'Io in
i?ccori/iio i'lil tI' IL'r)'ls of its

I H us it appears from the above case that the invitation to

tender has been treated b y the court u ltimatelv as an oIler
which was made accompanying the declaration of assurance
rega 'c "1 the acceptance of the highest bid. Lor1I Teii;p feinaii
obscl ve a:

1 lie invitation required Sir Leonard to rio me his price and

re q
uired I Ia rvela to no me its price and hound toe venuors
to accept the higher price. The invitation .vas not difficult
to Lifldirtand and the result was hound to be certain and
to accord with the presumed intentions of the vendors
discernible from the expres pro isions of the invitation.
I tarvelo named the price of 52,1 75,000: Sir Leonard failed
to na me any price except 52,! 00,00!) which was less than

This case suninIarv is liken froni M;wkcTiclrick. Ewan, Conirocr

Lao': 7 y'vr, ('cisos crud McriertciLs. 1 edition, 2003, Osfra'd
Uriiv&'rsitv I 'russ. UK. p - $2.

30
C t iapli'i 2 : f'r'csi! iu2 in p! ice

th price named Lv 1-larvela. -I'lic i!Ht7 Ic

c1cel [['i/a ' s /'i I.

Ihe legal nature of the invitation to tender sent Lv the first

defendant in the above case has been e\plaiiied Lv I.onl
Dipluck in the following words:

A unilateral or i contract, or rather of two unilateral

smitrick in identical terms to one of which the vendors
and Harvela were the parties as promoor and promisce
respectivel y . ivlule to the other the vendors were
proinoiors and Sir Leonard was promisee. Such unilateral
contracts were niade at the time when the invitation was
received Lv the proiiuee to whom i wan; addrec-ed Lv
the vendors; under neither of them did the promisee,
Ha rvtia and Sir I 001IM-Li assume an y lepal
obIiation to an y one to do or to retrain from LiolnO
anything-'.

The following aria Iyis of kzini XJckeii1ricD regarding this

case is worth mentioning here:

1 he first defendants did, ho\ve\tr, assume a legal

obligation to Harveia and Sir I eonard under these two
con tracts. It asiuined an obligation to enter into a contract
to sell shares to the promisee who submitted the higheO
bid in accowla we with the icons of the invitation. In this
va\' unilateral contract concluded with the successful
bidder would be transformed into a binding bilateral
contract, white the unilateral contract vi t the

I Hai'vcla iiwstmrients Li ci. Vs. Ro y al 'i'rnst Compu1v ol (Am "in

(CI) Lid. I O)SH ;\C207. ,ii t. 230.
Ibid. alp. 22-1.
\lcc'kendmiek, Ewan, '( oIi(rcmcI Lni.': Text. Cases (mn(! \lan 'Octis
1)11. 2003. Oxford t:niversi v Press. OK. p. 3.

'I


Cl i aJlr'r 2 [1oJ kisal and 7ccpf71u

o nsuccessfu I bidder v odd be te:rn Ma ted by the

sinission of the higher hid.,

i Blackpool andjylde Aero Club Ltd. Vs. Blackpool

Borough CounciP

In the above case the Court adopted a 'two-contract anal sin

which has been summarized b y TTwaii Mckc'ridrick in the
following words:

The ckitmank bid was not considered b y the Council

because they considered it to be a late submission and
Concession Was awarded to another party. The clainiants
brought an action for damages, infer ilia, for breach of
contract. The obvious dill icultv which they faced was that
he y did not appear to be it a contractual relationship
With the defendants hecaue an invitation to tender is only
in invitation to treat. flie claimant-L; had therefore simply
subni it ted all offer which the defendant had not accepted.
Bitt the Court of Appeal took a different approach. They
held that the defendants were contractually obliged to
consider the claimants tender and, for breach of that
obligation, tlie' were liable for damages. The court
appeared to adopt a two-contract analvsi.A contract was
concluded with the park.' whose tender was accepted but
llie Invitation 10 tcituui 'cd n:era!
to consider' any cont ornung tender which was submitted
and that offer was accepted b y an y part y who submitted
such a tender.

Display of goods:
y
Nov-adavs, fi\ed price shops are increasing and being
popular da y by day. The issue is whether the display of

(1990) 1 WLR 1195. Court of Appeal.

Mckenclriek. Ewan. Contract Lou, '. -V' ed. 2000. Pa1rave. p.39.

32
Ciiipter 2 15i'sii/ 100 ih (1' tliiti'

goods for sale is an oiler or incitation to treat. It goods are

exhibited in a shop-window or inside a shop with a price
attached, doe this constitute an otter to sell at that price? I
The general English Law view is in favor of it's being
treated as an invitation to treat, lent l'rk1'r in Fistic,' 1's. Rc112
undoubtedl y decided the issue suggesting that:

it is clear that. accurdini to Ihe ordinar y law of contract,

the displa y of an article with a price on it in a sIitp
\VIndO\\' is merely an invitation to treat. It is in n'nse in -

stiffer for sale, the acceptance of which conslitu1e_ a

Contract.

In i'imothii Vs. Simpson it was suggested b y the counsel that

'if a man advertises goods at a certain price. I have a right to
go into his shop and demand the article at the price
marked', and the learned judge Park B em phatical Iv replied
that No; it coo do, he has a right to turn von mit'. In I act
this view was conlirmed ill a suhser1ueift case after I 1$ years
ii 1952 in [ I ll, ii toni iI tint! Socich l of Grout hii/iui I s
C-,(,sh Ch'iii!sts (5u 11mm) LItt

The defendants adapted one of their s5op to a '-,011--

service s y stem. A cutoiner, en entering, was given a
basket and, having selected t roiu the sllclvu, the articles
he required, put them in the ba'het and took them to the
cash desk. Near the desk was a registered pharmacist who
was authorized, it necessar y , to stop a customer from
removing an y drug from the shop.

e did the
The basic question was regarding the time that whn
sale take place and that was dependent on another primarY

Cheshire and l'itoot, Law Of Curitmct, 2.1 ed. p.20.

2 1961 QB 391 at 309: 1900. 5 All O.k 731 at 731.
a 1t534. 6 C P . 1)) at 500.
1952. 2 Qit 795: 1052. 2 All ER 456, aIld 10531 1 QLI 401
119531 1 All ER 432.
 Cliupti'r 2 Pro;vsal iiut acccphill,

question: does display of goods with the price tags attached

with it amount to an offer or invitation to treat? Ihe plaintiff
claimed that such display was an oIler and it was accepted
when the said drug is put into basket and the contact has
become complete, whereas the contention of the defendant
was that the displa y was a mere invitation to treat and so
that b y putting the drug into the basket at best he made an
oiler which the compan y is at absolute libert y to accept or
refuse, I,or1 GIa, at first instance, decided that the
display of goods is only an invitation to treat though it hears
a price tag with it and the status will remain same even
though the shop concerned becomes a sell service shopping
mall. The Court of Appeal upheld the decision accepting the
HI lowing reasoning made b y Loni GoiiIaP:

The tranaction is in no wa y different from the normal

lraiisaction in a shop ill which tlieie i:e sell-service
'-chime, ] am quite atisfii'd it would be X%7011 ,4 say that
the shop keeper is makinp an offer to sell \ Cl' article in
Me shop Lu an y person ' ho mih t come in and that that
person can insist on bu y ing an y article by saving I accept
\'our offer. I agree with the illustration pot forward
during the case of a person who might go into a shop
where books are d ispla ed. In most hook-ships customers
are invited to sm in and pick up books and look at them
even if the y do not actoall y buy them. There is no contract
by the shopkeeper to sell until the customer has taken the
hook to the shopkeeper or his assistant and said 'I want to
bu y this hoc k' and the shopkeeper sa y s 'Yes'. That would
not prevent the shopkeeper% seeing the hook picked up,
sa'ing: 'I am sorry I can not let y ou have that book, it is
the onl y cop y I have got and 1 have already promised it to
another customer'. Therefore, in my opinion, the mere fact
that a customer picks up a bottle of medicine from the

i. Ibid

34
C/ii1h'i 2 : PiuusaI 0)11 aci' Eiit

shelves in this does not ainotint to an 'Icceptance of ni_I

otter to sell- It is a i_I offer b y the 01',1 011101- ti bu y , and there
is no sale ettccted until the bu y er s otter to bu y is accepted
b y the acceptance of the price.

It is well established principle that the mere exposure of

oods br sale b y a shopkeeper indicates to the public that
he is wiIlini to treat but does not amount to an offer to
Sell. That principle is not completely reversed merely
because there is a sell service scheme in operation... it
comes to no more than that the customer is inlormed that
he niav himself pick up article and brinp it to the
shopkeeper with a view to bu y ing it and if, but onl y it, the
shopkeeper then expresses his \V ill ingiess to sell, ti_Ic
contract for sale is completed. Iii tact, the of ter is an otter
to bu y , a id there is no offer to sell; li_Ic customer bii_Iis
We oods to the shopkeeper to see whether he Will sell or
not. Ill cases Of a 10(1 he Will 'W11 and, so lie accepts the
customers offer, hut he iieed not do so.

So it is the well established rule that the display of goods is

not an offer, but it is criticiLed on the ground that it creates
I_Iardsi_Iip on the buyers. .1 here is an Nnglisl_I authorit y where
displa y of goods ill self-service store was held an Lff1l. : It
was held in another case 2 that the dis1ilay of deck LAWS for
hire oil beach was an offer which was accepted b y a
customer L_Ikii_Ig a chair from the slack.

Advertisemen ts:

The general principle relating to advertisement is that it is

not all offer, but an il_Ivitation to treat. It is also dl_I
established principle that a circular, catalogue advertisi_Ig
goods for sale is not 01_I offer itself, but it is a mere attempt to

Lasky Vs. Economy Grocery Stores, 310 \Iass 224)35 NO 20 305.

1946.
2 çhaplctou \s. t3irrv UDC (1910) 1 KB 532.

35
Limp/cr 2 1/5)5?! HILl IL Lc/t)nILc

induce otfers a nil in this regard Lord 1 WA 1! Ohser\a lion

is worth menticiling here

The tran s mission ot such a price-iLt don' lvi ,iinioiiit li

a 11 tfi to suppl y an unlimited 111,11) ti of tlic wine
described at the price naiiiecl, 51) Iha I a s()c )fl as an order i
given, there is binding contract to supplY that c1uantitv. If
m
it were so, the merchant ight find liiinsel I iiivol veil in
an y number of c)ntractual ohliiations to suppl y wine of a
particular description which he would be L]uite unihie to
carry oLit, his stock of vino of that description being
necessarily limited.;

But it does not necessaril y mean that an advertisement can

never he an offer; of course there are certain instances where
even an advertisement may constitute an oiler and Car/ill
Vs. c±iiLiQIirSnloke Roll Company -, is one of lhose instances
where on advertisement was held to he an otter.

IC defendinL who were the proprietors of a medical

prepara lion called 'The Carbolic Smoke Ba I ' . issued an
\ ,T advertisement in which the y Offered to pa y SI 00 to am
person who succri nibed to influenza alter having used one
of their smoke balls in a aeci find manner and for a
specified period The y added that the y had deposited a
sum of 51000 with their bankers to show their sincerity'.
Inc plum 011, iLL faith of b.c a y s"' 1 hi slit
and used Ihe ball as prescribed, but succeeded in catching
influenza. She sued For the $100.

one of the issues in the above case was whether the

advertisement was an otter or invitation to treat and it
was held that the said advertisement was i definite offer
made to the world at larrtc.

' CF Spencer Vs. Ai-ding . 870. CR 5 CO 501.

1 Grainger & Son Vs. Gouih (1896) AC 325 at 331.
]S02. 2 Q 4t,-(4 , L Od 1803. 1 Q 1 256.

3(3
Ciiaj'fri 2 : Pisil int/ ct7ttiflCt'

lzi'in Li referring the advertisement in the Cailill case

observed that: It is not like cases in W 1 ich y ou otter to
negotiate, or y ou issue lvertisements that y ou have got a
stock of books to sell, or houses to let, in which case there is
no otter to he hound b\ an y con tract. 5uh advertisements
are otters to negotiate— offers to receive otfers—ot ters to
AMC As such we see that the advertisement in the Car/ill
case was differentiated from ordinar y other advertisements
and this particular advertisement is given the status of a
valid offer as one of the except ions to the general principle
that the advertisements are not offers but invitations to treat.
Wh y has it been considered as an offer? Ma y be that is due
to the reasons, i,iti a/ia, that the advertisement was clear
and definite enough to constitute an offer and that it was
inferred from the wording used in the advertisement that it
was intended to create legal oh ligation treating as an offer to
be capable of acceptance and that their deposit in the hank
ha\ e shown their sincerit y that thev are reall y read y to
create some legal obligations and mere inspiration is m >t the
motto rather it was made with sufficient precision and
seriousness to be capable of acceptance b y the prospecti e
customers following the instructions, terms and conditions
given in the said ad \ertlsemeflt.

'linmL'tables and 1,oiiri1i,ic on bus or trcmi;i

The matters of dail y life are in most of the cases become

confusing. Such as in case of hoarding on a bus or train there
ma y he four probable explanations':

I) The bus time-table and the running of the bus are

an oiler b y the bus compan y which is accepted

MelserRirick. Ewami. Co>mirctci Lumr'. 41 ed.. 200. T';ilCrave. >41

37
 Cliiiptei 2 : f > ?J)()ü/ eiiiI a ci I-1 1hillt

by hoarding on the bus. This was the view of

Lord (21t'i'Jlt' expressed in WiIki' Vs. Limo
ir(msporI BOord2 where he sa y s in the Ol 1 itL'I
dir/a
that the offer was made b y the bus compan y and
it was accepted when a passenger puts himself
either on the platform or inside the bus.

2) Al [erna tive] y an acceptance takes place when the

passenger asks for a ticket and pays the fa re,

3) The bus time-table is an invitt ion to treat, the

offer is made b y the passenger on boarding the
bus and the acceptance takes place when the bus
conductor accepts the mone y and issies the
ticket.

4) 1 lie bus conductor makes the offer when he

issues [lie ticket and tIns offer is accepted by
paving the fare and retaining the ticket.

Which particular view ic correct? There is no case law in

Bangladesh regarding this issue. English authorit y in W//kj3
case has been also criticized by the academicians, e.g., in the
hook 'Lin of Coii/mc/ writ ten by Cia's/nrc
il/it! litoot (at page
I this onin ion Has been criticized as such that if it
represents the law it would seeni that the corporation makes
MI offer of carriage by running the bus and that We
passenger accepts the oiler when he gets properl y on hoard;
and the conti-act would then he complete even if no fare is
vet paid or ticket given. However, does this debate have
an y practical utilit y or onl y of academic interest? This issue

2 (1947) 1 All ER 258,

2 Thid.

3$
C/rapIer 2 Pip c u arul acceptaircr'

has been answered b y !Ia'n; .\ ickr'uIrik in the following

\\ords:

In i ar-iv wa y s the issue ma y seem to be an academic one,

devoid Of an y practical consequence. But this is not tile case.
It has serious consequences if there is an exclusion cktise
contained on the back of the ticket. 11 the f i rct ana lvsis is
adopted then the exclusion clause is lot part of the ton tract
heca use the contract is concli,idcd before tile ticket is handed
oven On the other hand it the final alternative is adopted
then the exclusion cia use is part k t the contrail Net ause it i'c
contained in the offer made Nv the conductor. A court might
adopt the first Of these a terila ti\Cs ill our exclusion clause
e\ampie in order to protect the passenger but, would it a iso
applV it \vllere the same passenger hoards the bus b\
mistake and wishes 11) get off the hu hetore it moves f rum
tile SIOP without paving for his fare? As ProCssrr 1 rh/c! ir
stated tl)bh, the cases y ield no single rule and all that can
he 'a id 'the exact time of contracting depends iii each case
on the wording of the relevant docurlrent and on th
circu mstances in which it was issuciL

Communication of offer

Communication plays the keN role 1 the tiltima te forrna

it
of one event, because without corn monica tion both the ofter
and acceptance become meaningless. C omniuriication of
offer is the prior condition of its acceptance. When does the
comrntrn ica tiorl ol offer become corn plete? Section 4 of the
Contract Act, 172, specificall y deals with this issue and
sa y s that--

the comnluruca tion of a proposal complete when it

comes to the knowledge of tile person to whom it is made

hlc'ltciidriclt, l'\vul, Corm-act Lou'. 4111 ed, 2000. l'algrirve, p41.

39


(3iiter 2 In qi! si (/c o7 i q5i'

What is acceptance?

Section 2(h) of the Contr a ct Act, 1872, states [ha t

I he person to ovliom the propo Osa i mdde signifies

His assent thereto, [he pro osa I is sai Ito be acccpted.

We can dissect the definition at least into three constituent

parts:

1 Signification of the assent;

2. Assent is signified b y the person to whom the

Proposal was made;

3. ilie term thereto' used in this section implies

that the assent niust he given to the offer as it is.

B y an anal y sis of the above de fi nition we can reach to the

following condusiuns:

.Aproposa I must he accepted b y the person to whom the

offer is made. So, if A offers B to sell his car to him, C
cannot accept the offer.

2. If the consent is not signified then there will not he a

valid acceptance. It implies that if Someone keeps the
assent in his own mind then it will not he enough to
constitute In acceptance. So, that assent must he
signified.
3. TI e term 'thereto' in fact indicates to some essential
conditions of acceptance. The law specifically used the
term for an assent to he given towards 'thereto', i.e., to
the exact incident which is considered as an offer. It
implies that nothing can he excluded from the offer or
nothing can even he added with the offer. So, if someone
would like to sell his car for a certain price and the
person to whom it is addressed he accepts the offer

40


2 lhnj'i)StlI 1111 1 t'/(iiU I

adding ' 11lother condition that it must he painted before

the dehverv of possessioni t is not a sign ii ca Lion of his
assent thereto, i.e., to the offer as it is and so is not an
acceptance in the eve of law. The conseLirlenie v111 be
the rn-ic ii soiiiethin is e\cluded from the otter at the
time of acceptance b y the other patty to whom the otter
\V5 imide.

.\ssent must he sini

I- htd to the pit ipoer. Thu " u're
ascnt of one person in his O'.'. 0 mmd 'tilt not utice,
rotlier it must he mmuumnic.itcd to tho roper persomm

Assent, time centre p oint-I mcctpLmncc

co ti' son.' :!mt' .-\m.emmt iimm.mst

Assent monO he ien Lw he cci) thm'rct . that
tl'r -,tmli tü '.vlum Iii the iii',iiis. tO the P10P sOt
prmipm iI '.vm mm,mm.ie. it is iidc.

ii hull U(CtJ7thi!!CL' : iitifiH't' nut! uiioili' .LL

f\htt :i.ill h' fit1' )iiititim'

Section 7 of the Act deals with the basic rules reardin a

valid acceptance It savs
(In order to convert a proposal into a prom se the
acceptance must be absolute and unual i fiec

Accordingl y about the nature of a \al ci acceptance the law

in1poes two requirements to he fuhil led i.e. the acceptance
must b'-

i. Absolute; and
ii. Lnquali fled .
 Ci'iepiri 2 : I'ropvsiil niI €1cp1iiicc

So, acceptance with a V1r]atR)n is no acceptance it all. In

fact, the indication to these basic points is found in the
definition of acceptance itself where the term 'thereto' has
been used to mean that the consent must he given to the
offer exactl y as it is made b y the offeror.
However, just to
make it more clear and togi 'e em phasis it has been
elaborately mentioned in section that 111 oiticr to (onzx'rt ii
proposal 11110 a pnuiii'
that means the acceptance to he an
effect' e one it most l y ithso/titc iind lii)(JiioIlth'd. 'Absolute'
and 'unqualified' these Iwo terms together make one thing
emphatically clear that acceptance iii ust be made to the oiler
as it is made without an y Va rion
di in it. In other words,
nothing can be added with the offer or nothing can he
excluded and no part or no term of offer can he varied to
an y extent in its acceptance. Few examples can help us to
understand the discussion clea rlv.

Jiti;iipJ' 1

will St/i 1 /1w car to i/iii for Tk .3 lacs.

B : 1 a, i'e, Bitt You 111/IS? P0/I!! the
(01 LYtOi't' gi'ii' It to Iyit'.

Here B's statement is not an acceptance, bemuse it addss one

more condition which did not exist in the offer. Tb is, it is
not an unqualified acceptance as required by law.

Lxninplt' 2

A: I will sc/I t'o COIS toc/i'r for Tk .5 /acs.

B: / 0'1'L'L' 10 pit i'dias (1111/ mu' of it fr Tk. 2.5 lac-;,

Here B's statement does not constitute a valid acceptance.

Because it is not absolute one as required b y law. It excluded
soniethmg from the original offer and agreed partially, so it
is not a valid acceptance.

42
t ' ??;'!i'i 2 Proposal a,il fic t'o'it'

Lviuuplc 3

A: 1 oili sell ?77t1 COM1 7 11t(T to i/OH tr Tk .5() tlio:isinils 0111Y.

B: I iiit'i' to icce/'t !i R. 19 tluouisa;uIs.

I iere also B's statement is not a valid accepta nec, because it

is a statement with a variation and deviation I rorn the offer.

cf

Section 7(2) of the Act la\s du)\\n that

In order to convert a proposal into a promise

the acceptance must be e\pressed in some
usual and reasonable i na nner, unless the
proposal prescribes the manner in which it is
to be accepted, and the arceptanco is not
made in such manner, the proposer may,
Within a reasonable time after the acceptance
is communicated to him, insist that his
proposal shall he accepted in the precrihed
manner, and not otherwise; hut it he tails lu
do so, he accepts the acceptance.

Section 7(2) in fact la y s down two rule' regardina, the

manner of acceptance based on the different circumstances:

1) If the proposal doe s not pr es g ib y an y manner of

acceptance then it must he pertornied in usual and
reasonable manner. What is a reasonable manner? Of
course, it is a 1uestioui of tact which depends on the
circumstances of each and ever y case. But it seems that
the above section using the term usLial probabl y gave
an indication regarding \\'hal should be treated as
I
roastumbIj that what is usual that is reasonabli'.

43
 CJii1eer 2 ; Ioi/ 1 110 a(((jfaIlce

2) If the proposal prescribes a nv yifIc mode aj_j2an1ier

then it must he done accord nelv. [h LI the pn poser

requires the answer to be made b\ c-ma it, acceptance
cannot be m ade b y post. Whether sme o particular niode
has been precrihed depends upon the inherence to he
drawn from the ci rctimstances. Ihere is authorit y for
I. he \ iew that an oIler b y telegram is evidence of a desire

for a prompt reply, so an acceptance sent b y post ma y he

trea ted as n ua tor'

,A nd it i s mcii tioned ill the Act that ii [he acceptance

liSt)

is not made in the prescribed invinner, then if the

objection that, he will not accept the acceptance made
otherwise than in the manner prescribed by him, is not
raised within a reasonable time then [hi acceptance will
he trea ted as a valid one I horih n )t performed in the
manner prescribed b y him. In I npiand, the Court of
\htqiier C hamher opined that a repl y sent b y some
other net hod equally exped i tioi is Would constit rite a
valid acceptance. An other must rise ver y clear words to
iii a he a mode of comm tin ica ti on to be treated as
ma nda tory

It was held in Bin i'/aili'sli Al uk! !/i)tIuIim ka/1171i Trust

::: !:; •(• fl'ot Vc K, miol I i,itIUly

yC)ict/ aini OtJk'lS that an acceptance must he e\pr(,ssed

(Iit-;hii-e arid [Stool. Lou oJ ('oiurocl. p.435cc, Kenned y Vs.

ilioniuissi ri, U129. 1 (ii 420,
C)unrduwuie V.S. Cole. 1883, 32 \VR 185.
' i ' iriii \'s. Hoffmann Co. 1873. 29 i:i' 27 1
See. 111 [his r'cr ird Yates l3iiildiiit Cu Ltd Vs. N .J Piilievn & Sons
( ark) Liii (1975) 119 So! Jo 370, r'cvcrsrIlc (1973) 228 Estates
(.a/1'tte 1597.
[1998) 50 Dl,R [Al)) 171.

44
C/ui pt'r 2 : Th)''o/ l)lL( (/f

in some usual and reasonable manner, unless the

is
proposal prLcrihes the manuel' in which it to be

accep ted.

J( Il l L elf cc

I/u' effer:

It niu'.t he
Acceptance made
n'n.ist be made I1h)w1nr a
in the mode re, s o 11. 1 h
as pri'scl - ibed.
mode.

offer

\1cin/n f 'Coon/ic O/'i':

The concept counter otter has not been defined an y where

in the Contract Act, 1872. it is a technical term used in
judicial pronouncements. The quest inn of counter oFfei' is
related with the nature of acceptance A counter oiler maY
come upon the scene not bearing its badge upon its sleeve
but dressed as an 'acceptance' i . The otleree is required to
give his assent Luconditiollaliv to the exact terms proposed
b y the offeror, if it is not so identical with the otfei' then this
so called acceptance in fact will he treated as a counter
otter. It the acceptance does not become absolute and
unqualified as discussed above then two consequences arise:

1. It cannot be a valid acceptance; and

2. It turns into a counter otter.

let us June an tomnok

ui!1 s'11 nit ecu to You fr Tk. 20.

21
Cheshire and P'iloot. Luit' f Couiracl. p.34..

45


Chapter 2 : Pi'eui ai1 aId//a/ne

B.' 111111 110//if to 1/reP11' if foi' Tk. 19 01 I arL'L' NO itO/I I/art' to

MC (1/NH I/eli/e) . 01 /1(1 /'vll'a ('05/.

I lere B' statement is not a vol id accep tai ice and it is termed
as clii n ter ff&'r in lO\\'.

But a mere i Ilk li lir does 1101 constitute a counter offer and as
such it does not destroy the original otter. The case
V. MeL1'u7 is worth men honing here:

1 he defendant offered on iiturday to sell to the plaintiffs

3,80() tens at iron 'at 40 net cash per ton, open till
\ londa y '. Farl on \iondav the plaintiffs telegraphed to
tile defendant: l'lease \cire whether von 'vol: Id accept I()
br deliver y over two months, or if net longest limit you
would give' No reply was received, so Nv a telecrani sent
at 1.34 p.m. on the same da y the plain i ffs accepted the
offer to sell at 'lOs cas, NICMANde tile defendant sold To
iroii to a third person and :1iter111cd the plaintiOs of th5 in
a teleprani dopatiiled at 1.25 p.m. I he ti'legi-ams crossed.

0 plainlifk sued to recover the damages for breach of

Con tract. To settle the dispute one of the important issue
before the n art was that whether the first telegram sent
by the plain H ff a o un/er offer or not. It was held that the
plaintiffs did not had not made a Counter Offer, hut had
addl-cssed n the rieteintant mere inquiry, wllit'tl houIrb
have been answered nid not twa ted as a rejection of the
of It' r

Legal consequence oJ'colfflter

I.
At the moment a counter offer
is made the original offer becomes dead. So, if Someone

2
1880, 5 Qfll) 316.
1 850. 5 çI31) p '2

40
cg'ci 2 ; i'? t (?51i i2,1 I C(f'1?!

makes a counter OH fer and then he ci nge h k mind

suhs&'1uentiv and ti ion would like to be agree on the
same terms and Condition s 'Is were e\ict Iv made bv the
riginal offeror without an y variation he ciii not so
accept the earlier of fer, because at the moment he makes
the counter otter, the original offer has become dead, i.e.,
that it does not e\ist an y more to be accpted h\ the
person who reectecl it at one time b y making a coo titer
offer. In I 'i/dc Is. 1 Vii' ch

I he defendant on ( Tune oIler ed to sell an estate to the

plaintiff tor 51 .000. On 3 June, in repl y , the plaiiititt made
an offer ol4')0, widen was refused b\ the defendant on
27 lone. Finall y , on 29 Tune, the plaintiff wrote thalt
he as
now prepared to pa\ S1(0(.

I was held that no colitriet e\lsted. fly his letter Of S I Line

the_plaintiff had rejected he original ot Icr and he va no -
longer able to revive it he chgg annish mind and
teiidenng iii

7. !th'ceii' [his counter offer becomes capable

if acceptance b y the party to whom it is macic and if o
accepted then a contract arises based on this counter
otfer not on the offer originall y made.

Knowledge )f offer: Prior condition of accepta nce

One must have the knowledge of ofter before accepting the
same. Because. how will a person accept one of ler about
which he has no knowledge at all? Therefore it is the well
etahlished principle of law that the acceptance in ignorance

1840, 3 Iieov 334.

47
 Clwplcr2: 1710 fit (&?t111ILt

offer is no acceptance to give rise to a legall y hind ing

contract. In human Shukla V. Gamin Do! ! :

The nephew of the defendant tan imwav from home and no

trace of him was found for sometime. [lie defendant SCI II
Servants to different places in search of the bo y and
ainoig them VV&I the plaintil!. When the plaintiff had left,
the defendant Nv liatidhills uttered
to pa y Rs. 501 to
an y bod y discovering the bo y . The plaintiff traced the
missing bo y and then comes to know of this offer. He
hiought an action to recover the reward and it was failed.

J imstice I5oierji observed: 'In order to constitute a contract,

there must be an accepta nec of an offer and there can he
no acceptance unless theco k knowledge of the offer.

1 he American case 1 tcIm Vs - nei1aJni 4 is ver y clear on this

portico ar point where ft 0,11111 1, reiuiarkecl on the question
'I low can there be ctisenf ci ,ww'nt to that of which the
party has never heard

The Australian case R Vs. Cliui*e in laCt advanced the rule in

one stage ahead which provides that even
the mere knowledge of the offer is not sufficient but the fact
Of otter must he present in the mind of the ofleree at the
moment of acceptance, otherwise there vvill not he any
acceptance. in this ca s e-

Vie Government of Western Australia offered a reward of

TON) 'for such information as shall lead to the arrest and
conviction oP the murderers of two police officers and
added that, if the information should be given b y an

1913. II i\l1 LI '189.

3 Ibid. at p.192.
1868, 38 NY 248.
5 1927. 40 CAN 227.

48
 J!d/'tii 2 1 :ola I I C L

accomplice not being lliill'eII liii niurderi, he Slililti

receive a We pardon. Cklikc sd\\ tilL' olfc r an tine time
letter gave tlie no s'arv information, he Claimed Ihe
rev1 rd from the Crvn b y petition of right I-k admit ted
not univ I hat he had acted S0101V to d\ e his O\ n kmn, but
that, at the t i ll I C \Vhen he oa'e the intornia ton, the
r1ltiOtl of the reward hail msed out ot hi ininl.

I k could not recover the reward Ill onov as it was held

IlCgatl\ el y b y the court. In the words of H:ti J:

Clarke had seen the (lIfer, indeed, but i was not preeiit to
hi. mind—lie had forgotten it 1110 rd\ e no consideration
to it in IllS intense e.\Ci teflleflt a to NH Owl) daner. I here
cannot bP assent wi IhoLit know ledee of the olfer; 111)d
ignorance of the otter is the same thing, whether it is due
to never hearing of it or to titrgettini it It ter Illaring.

Chief Justice Isaac has given a classic ill u'tra ton in tlii'
connection to prove the ohsoletenes tel acce p tance in
ignorance of offer:

An (fter SlOt) to an y person will) should so'inl a hundred

vaWs in tile harbour on the first d,lVolf till veai' would not
in rn' opinion be satisfied by a person %%-ho wm
accidentally or iieihci tusk thrown overboard and swani
We distance Si nlpl\ to d\ e NH Ii te, \Vi Non dIl thought 01
the offer.

I he poci Non 01 English law is not clear ill this respect. in old
texts' it is seen that the decision in C/ll Vs. !bnclor 4 in fact
favoured the acceptance of offer la y periormance of the
relevant conditions mentioned in the offer though that is in

R Vs. Clarke. Thul.

Ibid.
Chcstiive and lofItil. LiuL' of UyUnrrk p.17. 21 eel.
1891 4 NT 591.

49
C7iaper 2 : I 1 r PSL7J and acct'Oani'

ignorance of offer. But in a recent text' it ha'. been opined

that a closer examination of Gibbons Vs. Proc/or reveals that
in that case in fact the person claiming the reward knew of
the offer at the time when the information was given to the
police. However, the present View does not in an y case
permit the acceptance in ignorance of oiler.

In Williams V. Cnrwardine6 it was held that if the fact of the

otter is present in the mind of the offei-ee at the time of
acceptance then the motive of the acceptance will be
irrelevant. Here the fact was similar to the facts of R Vs.
Clarke, 1927 and the argument 'that the plaintiff gave the
information to ease her conscience and not for the sake of
the reward' was dismissed and made no change in the
judgement and it was observed by the King's Bench that
'motive wa irrelevant, provided that the act was (lone with
Lnowledge of the reward Acceptance was then related to
ot IOI
In Bloom Vs. A iiicricumm Switch fVo(cli Co (I 15) App I) 100, the
Appellate Division of the Supreme Court of South Africa
held, disapproving ç±Ltheiis iLsJiitcfor, that, where
information had been given without knowledge that a
reward had been offered, the informer could not recover the
row a rd. -- -
----
Acceptance by perfomiance._

Sectioii 8 of the Act deals with acceptance b' performance

and says:

Performance of the eoi:Jit:on of a propi wil or 11w

acceptance of any cmid'ra tion for a reciprocal prunioc

Treitel, Law of ContrucL

1833. SC P 566.
Cheshire and Filool. Law of (o'm1rnm, P48

50
CIiiptci 2 Pi07l illlci icceJitulI,'

which ma y be offered with a proposal i-111 acceptance OF

the pr'()51I

So, in fact, it waives the requirement Of communiatioui,

rather it sa y s that the acceptance ma y he made b y the
performance of the relevant conditions mentioned in the
offer, i.e., it someone does the performance according to the
instructions given ill offer then that vi Ii lie deemed h
the law as a valid acceptance though the same was not
communicated to the other part y . It ma y be mentioned in
the offer or sometimes it will he inferred from the wording
and nature of the oiler. If someone advertises that I will
give $100 to an y one who call niv lost car out'—if any
person with the knowledge of this offer finds out the car
then it will he deemed as an acceptance of offer by
performance and the finder need not communicate any
further fact o f accepta. Cii!ill Vs. Carlo/ic Sinokc Ri/I Col
nce
is classic illustration of acceptance b y performance where
the defendant company advertised to pay $100 to an y one
who will he caught influenza after using a smoke ball
produced 1w the compan y and Mrs. Carhill used the smoke
as per the instructions given by the compan y and she was
caught influenza and sued to recover S100. Her claim was
accepted by the Court and the Court rejected the arguments
of the defendants, in tcr alia, that the plaintiff should have
notified her intention of acceptance to the defendant and the
observation made b y Howcu 11 is remarkable here:

But there is this clear gloss to he made upon that doctrine,

that is notification of acceptance is required br the benefit
of the person who makes the offer, the person who makes
tileoffer ma y dispense with notice to himself it he thinks

I 1692, 2 QLI 484. ai]d 189, 1 9H 256.

2 1893. 1 QO 256 pp. 269-270.

51

932.
 (T!iipt'i 2 lr'1'oil iiij ico'ji/ai

it desirable to do so :. and if the poi ()n ivakii the

oiler expressly or implied lv intinia es in his offer that it
will he sufficient Lu act on the proposal without
comnunicaling acceptiiice ot it to liinisell, perfo'i1iaiice (II
the condition is a sri tlicieii t accepla flee \vi thou
notification .......... 0 the advertisement cases it eems to
me to F >1 lo\\ a in in ierence to be ci ia wn I mm the
transaction itself that a person is not to notitv his
acceptance of the offer hefore lie pwornis the cuiid ition
From the pi nit of ViC\' of &oninioii sense no ther
idea could be entertained. If I advertise to the world that
ow dog is lost and that an y bod y who brings the dog to a
particular place will he paid some mone y , are all the
police or oilier people whose brismess it is to find lost
dogs to sit down and wri Ic me a note saying that they
have accepted lily proposal?

If acceptance b y silence is inposed a rbi Ira H lv b y the offeror

upon the otteree and it the otteree becomes silent alter
getting the otter as required b y the offemr, this mere silence,
OfCOUrse, \vi II not amount to acceptance b y performance,
because in fact the offeror cannot impose such condition
With his offer. In f r'lfhotist' Vs. B1r1/rj

'I lie p laintiff. Paul Fel Iliouse. \v i'ote his ne p hew, John, on
2 February, offering to bo y his liore for '3() I 5s. and
adding , it I hear no more aboti t hi iii, I consider the horse
mine at that price'. The nephew made no repl y to this
letter, hut intimated to the defendant, an auctioneer, who
was going to sell his stock, that the horse was to he kept
out of the sale. The defendant inadvertently sold the hoi-se
to a third party at an aLiction held on 25 February, and the
plaintiff sued in Conversion."

1 862. II CONS 869.

i ibid.

52
C111131 L 'r 2 [rOJs)N1/ iiiI 17OL77t111L

1 he action was held to be tailed as the court did not see any
acceptance of the plai ii tills oiler before 25 F:ehrlr\
I ? , remarked:
It is clear that the uncle had no right to impose upon the
nephe\\ a sale of lìir- hoNe for SO I .s unles he chose to
compl\ \vlth the cmditon Of writing to repudiate the
otter.

Inferring acceptance from cond

Whether there has been an acceptance by one park of an

offer made to him b y the other ma y be collected from the
documents that have passed het\\ een them. It
words or docurnents
ma y he interred from their conduct a Hi and oci f course this
task of inferring an assent and of ti\ing the precise moment
at which it ma y he said to have emerged is one of obvious
difficult y , particularl y when the negot at ions between the
parties have covered a long period of time or are Contained
Such a difficult
in protracted or desultor y cotrespondence.
situation arose in Rro1Iii Vs. .\ I! roje/iiaji k/it CO
[3rogLlen had suppled the cletenda at c in panv ith coal
or y ears without a formal agreement at length the parties
decided to regu larise their relation [he conlpan\'s agent
sent a draft form of agreement to Brogden, and the latter,
having inserted the name of arbitrator ill space which
had been left blank for this purp se, s ig i i L , cl it and
returned it, marked approved. The compan\ s agent put
it in his desk and nothing further was done to complete its
e\ecution. Both parties acted thereafter on the strength of
its terms, suppl y ing and paving for the coal ill accordance
With its clauses, until a dispute arose bet\\ eon them and
Brogden denied that an y hind ing Contract es eted.

Ibid.
(hesInre and Htoot. Lan of ('aiitraci, p . 33. 2 cci.
(1577) 2 App Ca t, 666.
Ibid.

53
c hap 1 r 2 : Proposal an dI accL'p (till

It was really a difficult point to deterni ii ie at who monien

there wasa con tract and when did the acceptance take
place, it ever. Lastl y the Court decided that there was a
binding contract and the House of I ords opined that a
contract came into existence either \\heri the company
ordered its first load of coal from Brogden upon these terms
Or at least when I3rogd en ti ppl ied it.

Rules regarding communication of proposal, acceptance

and revocation:

Conirnunicalion plays the central role in the formation of a

contract and without comm U U cation even revocation of
proposal or acceptance is also impossible. In fact, the seed
for necessity of communication is rooted in the definitions
of' proposal' and 'acceptance', respectively, which is evident
from the word signifies used in both the definitions, that
there •il I he no proposal if the e\pressiL)n of wil I ingness i
not sign i tied to another, and there will he no accepla nce if
the assent is not signified to another. 1 lie vu es regarding
comm unica to in have been enumerated in sect ions 3 and 4 of
the Act.

'Vheii does the communication become complete? Section 4

of the Contract Act, 1872, gives answer to this question
\ IlicO O\

I he comniunicatiitn Of pr(.)o is complete \\hLfl it

comes ti) the kno\\'ledge of the person to whom it is mode.
I he conimunica Non of acceptance is complete—

,is against the proposer, when it is put ill a course of

transm isSioli to him, sO as to be out of the power of the
acceptor;
as against the acceptor when it collies lo the knowledge of
the proposer.

54
 Chapter Proposal an! Oti

The comniiinicatioil of revticati n is complelc

as against the person who makes it, when it is put into a

course of transmission to the person to whom it is made.,
so as to out of the power of the person who makes it;

as against the person to whom it is made, when if comes

to his kno\\'ledgL'.

ll/iist rations

a A t7 ia i ) St', i'i/ letter, to i'!l ii hOuSe to B at J certie b'iILi'.

1 h e cojuniunication of the proposal is complete when
[3 receive the letter.
13 accepts A's proposal b y a letter sent b y post.

lt 'I/ic nan.intuuioitioii vi !Iu iieci'pta??Ct' is einnph'te:

as against A, when the letter is poslcd

vs against B when the letter is received h A.

A ret 'kt'S 'iOpoaI 1'i !ile' rn iii.

[hi' revocation is complete as against A when the

telegram is despatched. It is complete as against 13
\vlk'n B receives it.

B rtevki's bis iuit';ti e by t'IeçrauPu.

A's revocation is complete as against 13 hen the

telegram is despatched, and as against 1$' hen it
reaches him.

1 hus the above-mentioned section lays down the following

ru le

/Conunuuatirm of proposal: The communication of proposal is

/ complete when it comes to the knowledge of the person to
it
/ whom it is marie. So, here the criterion is univ one i.e.

55
 i 2 f'rcj auI tircj/aiicc

roust come to the know ledge of the person t whom it is

addressed. lbw LIS, it A,a letter posted to B communicates
one p r( )posa I, and the letter reaches to B on 1 January
vh ich is opened and read out bY B on the 3' Januar y , the
commuilica tion of proposal has become complete oil the 3
Of January, not oil the clay, because it conies to the
knowledsre Of B on the 3° da y of Januar y . This time of
commlinicat!on is important in the sense that before such a
comm tin iCa lion has become completed no acceptance oftthat
otter is possible. I bus, if in the above e\ample, B on the 20
da y pos[s a letter to A expressing tile same intention what A
e\ pected from B, that will n ot amount to an a ccep ta rice,
rather that will he treated as a cross offer, because, no
o.ILJCsti011 of acceptance arises before the communication of
proposal is complete.

In case of fate to lace

transaction the rule is simple, i.e., when tile words
constil iitniy the acceptant e tire tittered, the corolnuosotion
of accepta nce W ill he coinplele its soon as the >lher parl\
listens to it. But prohiem arises in case of postal transactions.
In tact, section 4 deals th the postal rLiles of
communication of acceptance which sa y s that the
communication of acceptance becomes complete in fact in
t wo phases.

firs hose'of comm mimi icmou o t occ) till cc: (15011 lit'
/oj p scr:The Coln ill unication of acceptance becomes
complete as against the proposer when it is put in a cotirse
of transmission to him, si) as to he out of the power of the
acceptor. It implies posting the letter of acceptance, heca use
a letter is posted means that the letter is put in a course of
transmission to him, so as to he out of the power of the
person who posted it. 'I bus the moment a letter is posted
conlilulnication of acceptance is complete as against the

56


- J)? . '() i/ (lii

Chipt

proposer, that mea us at the same moment the proposer

beC0111C.', hound b y his proposal \vhlch has been accepted b\
tim other, because the corn monica lion Of ceptailL e has
become conipk'L' as aii iit the proposer .. thong1 i still the
acceptor does not heconm ho md h\ it bnm' (it the reason
that ciimuniCatiOn (it a cepta nce vet not ha, become
cOflil7I(tL' as aa i risE the acceptor.
at i? t'] iic: l ti'UflE ho'
1cppr. The communication of acceptance will be coinpiete
as against the acceptor %% hell it conies to the kmro\vledge of
Ill( , prioser. I hus it A posts tim letter of acceptance on iii,
June, which reaches to B un the 21 Jo ne and B read it out
on the anie day, then the corn munica lion of acceptance has
beLonm complete as against the proposer on the da y of
posH ng the letter, i.e., on 01 June; and the communication of
acceptance will he complete as against the acceptor on 02.
inew hen the proposer read out the letter of accepta ice.
the acceptor will not he bound hetore 02, June th n gb he
posted his letter of acceptance on [he 1-1 da y of June.

However, in ever y case, the acceptance needs to he

communicated to the other part y , and till this
communication is made no contract v ili he there. J H us. the
tenderer acquired no vested right of a propert\ merely
because his tender for that property had not been rejected
and hi earnest nmne\ has not been retund ed lw the
Corporation and as there was iio d elm ile coil m un ica t ion of
acceptance of tender b y the Corporation no vested right as
acquired by the plaintiff. It is inipraticahle to consider
\vha t are the terms of a particular contract wit lion I

cu1t rliu\ dlllui\ \\L(t V. .Li h .. \1(1,. RI

iiid uiii.1iui, 1l.0 (i\I)) 67.

57
 C/it ij ttr 2 J-i 'I 15 71 111 id acci'p I iii ci'

Considering precisely what Steps constituted the offer and

whet constituted the acceptance end precisely whet
particular terms ought to he reed into the con ract.

Coll ' niuniciiiwu of offer and acceptance bil telephone

As regards the Communication of offer and acceptance by

telephone, the rule which is applicable in kngland ma y he
ippl ied in Bangladesh. though there is no direct
Bangladeshi case law on this particular point, the English
law enunciated on this point in [0f'i case has been
generally accepted by the I nd an SLIpYenle Court in
Bluia ifts C'e'dJie tides k'cdia 's. Gird/ia/il Pai'shotta,iiIas
and accordingl y the law in brief is that the message nmst he
communicated to the other park' actually and the mere
utterance of the words through an y machine will not
amount to coin in unica tioti if the other party does not
act will y hears it. The observation made Nv fl' iii, ii in
iJiIor "I" Vs. A-li/es hit' I as) Liirpii.' is worth mentioning
here—

'Now take a case where two people make a contract by

telephone. Suppose, for instance, t1 1 ,1 1 I make an offer to a
man h .' telephone and, in the middle of his repl y the line
es 'dead' so that I do not hear his words of acceptance.
'I here is no contract at that moment. - 1 lie other man may
not know the precise moment when the line failed. Rut he
will know that [lie telephone conversation was abruptly
broken off, because people usuall y sa y something to
signify the end of thU conversation. If lie wishes to make a

liraiii Ch Cupki Cliowclliurv Vs. Ja kannatli Rice Mills. (1951) 3

1 M 23.
Enioi-es LI ci Vs. Miles Far East Corpn. (1955) 2 IB 327. 1955 All
ER (vol.2) 493.
All 19 6G SC 543.
(1955) 2 c/l3 327. 1955 All ER (vol.2) 493,

58
CIiipter 2 J ) rosa/ uid ic1ptH1Lc

c intract, he niust there ore cit this )i.i ili aa in so as to

make sure that I heard. Suppose next that the line does not
o dead, hut it is iievertlieless so indistinct that 1 do not
catch what he sa y s and 1 ask him to repeat it. He then
repeats it and I hear his acceptance ihe contract is made,
not on the first time when I do not hear, but onl y the
second time when I do hear. It he does not repeat R. there
is no contract. The contract is onl y complete when I have
his answer accepting the otter.

I astiv take the Telex. Sri ppose a clerk in a I oiidon office

taps out on the teleprinter an offer which is mi med iatelv
recorded on a teleprinter in a Manchester office, and a
clerk at that end taps out an acceptance. If the line coes
dead in the middle of the sentence oF accepta lice, I hr
teleprinter motor will stop. There is then obvious! no
contract. The clerk at Manchester must et throuyli again
and send his complete sentence. hit it ma y happen that
the line does not go deact vet the message does riot get
tlirouyli to I .ond in. Thus the clerk at Nlanchecter ma y tap
out his message of acceptance and it will not be recorded
in London because the link at the Lond m end tails or
something 01 that kind. In that case the Manchester clerk
will not know of the failure but the I .ond on clerk ill
know of it and will immediatel y send hack a message not
receiving'. Then, when the fault is rectified, the
Manchester clerk will repeat his message. Onl y then is
there a contract. If he does not repeat in there is no
contract. It is not until his niessige is received that the
contract is complete.

In all the instances I have taken SiI far, the nwn who sends
the message of acceptance knines that it has not been
received or he has reason to know it. Si) he must repeat it.

Nh conclusion is that the rule about instantaneous

ciunic.1tlon het\\ic:i the uarties different Horn the
rule about the post. 'Ihe contract is unIv complete when

59
 Chapter 2: am! 04 1 i'pfmn'

the acc tance i rcceivej Nv the offeror, and the contract

is ilici de at the place \'h('r1' tile 1 CC('p a Oct Is 10CC] cd

It' we follow I he above rue enunciated in British case

(!z1f(Jz'' cnsc), how will it
He just lied in the light ()t section
4 of tile Contract Act, 1872? I N is issue h as Ne(2n resoled
neatl\ h\ an Indian writer I. I). JanC in the Jollowing words:
Section 1 of [lie Contract Act no doubt sa\ S that the
Clmrnunicatjoii or an acceptance is complete ji', iunst
Nc proposer when it is ] -)Ut i ll a coLirse of traiwiniian to
him, so a to he out Of the power of the 1cceptor, and as
against the acceptor
accupMr it is complete when it Comes to the
nowIedge of the proposer, l3tit it is obvious from the very
lcTh3LiagL' used in cction 4 Thou I the completion of [lie
COfl till unicatiou 01 111 acceptance that those provisions can

have no applicahitity where the p.lrtii's nepoliate a

contractin [tie presence of each other or O\ er teleph mc.
I he object of scctions 1 to 6 is to f ix the point of Link' at
which either party 'g<ittitni, the contract is piuLILided
Oom cN,11 3i
n his mind. %% hen the parties ncttj,ite a
contract jace to l,ice or in er the telephone, no ucstiio of
revoca lion can posshlv arise for in such instailt,uieoiis
coninniiticatio ti a dt'Iinitt' otter is made and accepted it
ont 0 and the same time. But where the parties are at some
distance and have to negotiate a contract h letter or
messenper, there is necessarily an interval of time during
n liich there is a possihili tv of the offcror as well as the
acceptoi changing mind. Sec tions 4 to 6, therefore, are
in tended to t i\ the point Of time at which either part y is
precluded from revoking the offer or acceptance. Section
4, when it speaks of tIn' communication of an acceptance
becoming complete asagainst the proposer when it is put
in course of triiisniission to him so as to be out of the

Entorcs Lid Vs. Miles Far East Corpn. (1955) 2 f40 327.
1955 All
FE (vol.2) 403.
-Jain. 3D. The IncHn C'oziroci Act. 15' cc]., 198$, AllalinIjail
I,iiw Aienev, p. 39.

60
C ipter 2 Ua/ iirf lcci7'failce
I

power 01 the acceptor, and is aga Inst the acceptor when

cOiWS to the kimvledge of the prpoer, necessa dlv
cciii templates two di tteren t Points Of ti rile. Ru it is edsv to
the application (it the Li ngLla ge or the
see I h t even (ill
section 1 in the Contract!, neotia td
material rrox isions of
personall y or over the telephonic the coiuiniuiiiicatioil on an
acceptance is complete as against both the proposer and
Ow acceptu ur almost if riot ci mpietel\ at the mine p1 innut ot
time. For acceptance b y spoken words transmitting
through the nuediu m perme -It inug space CI nnmt be s I d to
he effecttua liv put in a counne 01 tranisnu'sion to the
proposer so as to be uiu I of the ponver power of the acceptor
uttering the words of acceptance unlcs the\ are 1011d
enough to be audible to the pr poer and are heard Nv
him; and ii the words of acceptance have been heard Nv
the proposer, the acceptance comes to his knowledge.
ihu.ns the effective emanation of acceptance from the
acceptor arid proposers knowledge of acceptance are
instantaneunn.l here is thus no room for the 1pp1 icahilit\
O f the provi s ions ot section 4 relating to coinniunuLatlon if
acceptance to such contracts. In fact, ther ere never
intended to appl y to contracts made by telephone or by
other modern methods of i n-; tantallCOLP4 comniuiucation
which were unknown in 1872 when the Contract Act was
enacted and were not in the Coll teinpla Lion of the framers
of the Act. As the provisions of section 4 about Ihe
completion of the comm unica hon Of a ii acceptance do not
appl y to contracts made by telephone or b y other
communications which arevirtuall y inslantaneoris, so the
general rule that acceptance of an otter must he
commu nica ted to thu ofteror has to he fol lo\\'ed in such
contracts. In a contract negotna ted orall y b y the parties in
the presence of each other there can be no binding
contract until the offeror receives the acceptance h\
hearing and understanding A. in contracts made by
telephone, the parties are no doubt at a diM,Ilicc. 13cr
communication is instantaneous arid oral. The rule that
acceptance is incomplete until received, heard and

61
(11i/ l t)i 2 Pri1ssal uif iop' tulc('

1 I I)derstoi Id b\ tile I)ttCiOr would therefore, govern

lot rack no otia ted over the Leiepll( 11w 0(1 Ins thdll those
settled in Oral negotiations in the ph ysical presence of the
larties (k!i!ai1(:?11I I aclon?! I ) iIOIILIiIiIIdri \iiiiI'S/'1
iiiiu,\.lR. 1)\11.234). -

rule o/ cOuuuJuiHfl lea! ion:;;^

I le
communication of acceptance becomes complete in two
phases if made b y post according to section of Contract
Act as discussed earlier. but English Law is different on this
point which sa y s that such an acceptance by post becomes
complete as soon D q the letter of acceptance is p o s te d. Eaau
Mckeuilrick' neatly sums tip the position of the law in
England on th is point in the following word s :

\\ hen doe an acceptal lie sent Ill rough the post become
ettei Ed e? Is it when the acceptance is posted b y the
oil eret, \\ lien ii is posted through the letter hi \ of the
oltercir or when it is opened and read by the olleror? One
might have expected the answer to be that acceptance
occurs upon coiiiiviu ii cation of the accep [a nce to the
er) r (whether that communication takes place upon
receipt or upon actual reading of the letter) but English
law has adopted the former view, namely that acceptance
takes place upon posting of the letter of acceptance. This
rule has been the subject 01 con,iiicrai:' ie crilKisli) liii ,i
no been adopted in man y i ther jurisllicliom in the
norm. Yet the rule is one of some antd 1 uitv in Imiglish liw
the imsu that is commonl y cited as authorit y for the
esistence of the rule is A1Liun ts. j 818, 1 ii & Aid
681 kit its place was not secured until the l a tur decision
Of the House of I ords in fun! 7 ) s. Hi'<uius, 1848, 1 HI .0
381) and is ni w unlikel y to be uprooted udicia] lv. Rather,

Mnehinch irk. Ewan. ( o,Urnct Lou,: Text. (]ase 0(i)) Mculertcii.s, I

edition. 2003. Oxford Universit y Press, 1K. i 11 7.
CIiipter 2 Prvp )5OI iii1 ace 1111,0'

the co y ts are likel y to widen the cptions to the 4eneral

rule rather thiii attel pt to ) ish the general rule itsel t.

J'i'i't"'c bet u'ecn Ra,iIalcs/u /iw iniI I .nIish Ii':

In I Ingland, once a letter of acceptance is posted the

acceptance becomes complete at once forever which cannot
be revokeu. Even that acceptance through the posted letter
Cannot he revoked b y an y subsequent quicker wa y of
corn i unicatiofl, e.. b y telera m arriving before the letter
of acceptance reaches the offeror. hereas. in Buiglad esh
such a revocation possible even alter posting the letter of
acceptance under the express provisions of sections 4 and
gi \'es a wondertul,llnstrationotdicjdcntal
lormatiutiot contract, which is worth mentioning here-

\ makes 1 proposal k ft B accepts the proposal and

pu:rsts ,i letter to that effect m 26e" October. On the sane
da y B sends a telerani revoki n h i, acceptance and it so
happens that both the te!eran and the letter reach A at
the same time when he was out or a walk. [Ile servaiì
takes deli\ civ of both and keeps them on the rnatei"s
table. On return A reads the telegram first and then the
letLr In this case there Wil l Ix' no binding contract
between A' and 'B' because the communication of
revocation comes to A's notice first then the
cenmiinication acceptance. Put if A' reads the letter
first and then the telegram cef'aes there will be a binding
contract between them. SW-11 contr.icts are called
the y depend merely

V/it'n does f/ic Contract hcconii' coniplctL'?

Under Englishaw, in case of acceptance made by post .. the

communication of acceptance becomes coniplete as soon as

Jain. j.D.. The liition ( ' ontiiet Act, 1 5 :! ; ed.. lOSS '\11.111ubid
Law Ai,ten r v. p. 42.

64
 Chajtcr 2 P-j'esil fiLl 1lLCL'tal!o'

the letter of acceptance is posted and the contract is also

cornp leted at the same mornen I, even i I • the letter dr x not
reach the destination ever. But what is the law ill
Bangladesh ? As it has been discussed earlier, in Banlade,h,
in case of acceptance made by post, the communication of
acceptance becomes complete in two phases. But when is
the contract concluded? The rule which is generally
fol owed inIndian sub-continent is that the contract is
concluded at the first phae of communication of
acceptance, i.e., ichen the letter of n ccel.tdnce is posted

It we follow this pr flCi pIe a proNem ma y arise in the

circumstance where the letter never reaches the other party,
because, in Bangladesh the communication of acceptance
does not become complete as against the acceptor unless the
letter of acceptance reaches to the other part y according to
section4of the Act. So, under such circLIrlistances, how can
a contract he concluded where even the communication of
acceptance has not yet become complete totall y ? Rules of
Coll) m ii riical ion of acceptance by post in Bangladesh are

different from English I .aw because of the clearl y different

drafting of section 4 of the Act. So, such con Hid ing situation
arises if we follow the English Ia w in this regard. Suppose, if
it is taken that the contract is concluded when the letter of
acceptance is posren, Wei 1 What win happen i inc accep[or
revokes his acceptance by any quicker method? The
acceptance will he revoked under section 5, hut if it is
deemed that the contract was concluded beforehand when
the letter was posted then obviously how can the acceptance
he revoked a! ter conclusion of legally binding contract?
Well, if the acceptor is given an option to revoke his

Adams Vs. t.jiiclsell, 1818. 1 13 & Aid 68 I

Karuisetti Subbjah Vs. Km ha \'enkatas\vairl\' (1903) ILR 27 Mad
355.

64
C/iqItr 2 : PropesiI ned 7L ';)(?5i C

acceptance before his letter of acceptance reaChes the other

party, then it appea is, it we Lollow English law regarding
the moment Of conclusion of a contract, that during tiletime
when the letter of acceptance is i ll transit the contract
reall y becomes a voidable one, because it becomes binding
on the olleror whereas the acceptor becomes still at liberty
to revoke his acceptance. But, is it reall y so? The answer is,
no', as our Act is silent about the issue. If the letter of
acceptance does not reach to the other party what will he
the legal conser1ence? Our Act is silent about it also.May
he the reason Of such anomalous situation is the absence of
an y clear statutory provision regarding the moment of
conclusion of a contract.

Commiti: ica tion o,( revocation

The rules regarding communication of re ocation are more

simple. Section 4 simpl y sa y s that the commtinicatiofl of
revocation is complete as against the person who makes it,
when it is put into a course of transmission to the person to
whom it is made, so as to out of the power of the person
who makes it; and as against the person to whom it is made,
when it comes to his knowledge.

f-Ion' is a communication made?

Section 3 of the Act reads out:

The communication of proposals, the acceptance of
proposals and the revocation of proposals and
acceptances, rcspectivelv are deemed to he made b y any
act or omission of the party proposing, accepting or
revokin g by which he intends to communicate such
proposal, acceptance or revocation, or which has the effect
of communicating it.
So, it means that the communication of proposal. acceptance
or revocation can he made by two ways:

65
 Cli 11 'tt'r 2 in id lccep tan LC

1) B y the act or omission of the concerned part y which

intended it.

2)
By the act or omission of the part y which though did
not intend it clearl y but it has the effect of such
corn mit n cat i in of proposal, acceptance or
revocation.
Revocation of offer

Two questions ma y arise in this regard

When can an o Ier he revoked?

Section 5 ol the Contract Act deals with this issue and says:

A proposal may he revoked at any time hefre the

comm tinica lion of its acceptance is complete a against the
prop sui but not a iterivrds.

I hu [lie law makes the time hr revocation of oiler \ ery

clear saying that if the proposer likes to revoke it then he
must do so before the communicationof its acceptance is
complete as against toe proposer and it cannot he revoked
alter the communication of acceptance of such proposal is
complete as against the proposer. When such
communication becomessc, complete that has been shown
Li L)L 1 I •1.0 IdmI LiL,1L IL), IL L).LiL) 1/1 \)IIL i LL

moment when the communication of acceptance has become

complete as against the proposer, i.e., the moment when the
letter of acceptance is posted b y the acceptor towards the
Proposer.

Hun' can an o ffer be revoked?

An offer once made does not make it irrevocable, rather it

may he revoked within the framework of law. Section 5 says

H
0 iaplt'r 2 Pro/k?51I tiiid a,('tt(i)i(

about the last time within which an offer ma y be revoked

and section 6 la ys down the mechanisms or different ways
of revocation of offer. Section 6 of the Act sa y s—
A proposal is revoked-

1 B y the communication of notice (it revocation b y the

Proposer to the other party;

2) By the lapse of time prescribed in such proposal for its

acceptance, or, if no time is so prescribed b y [he lapse of
reasonable time, without communication of acceptance;

) B y the failure of the acceptor to fulfill a condition

precedent to acceptance; or

4 By the death or insanit y of the proposer, if the fact of his

death or insanit y comes to the knowledge of the acceptor
before acceptance.

Thus according to section 6 an offer ma y he revoked by the

following modes:

1) B y notice:
2) By lapse of time;

3) By non-fulfillment of condition precedent;

4) By death or insanity.

1) Bii notice: An otter ma y be revoked by

communication of notice of revocation b y the
proposer to the other part y . Thus an otter ma y be
revoked b y notice of revocation subject to the
satisfaction of the following conditions:

I. [he notice of revocation must he communicated

to the other party.

67
(Jiaptt'r 2. Proposal and acccptaiict,

ii. Such communication must he made b y the

proposer to the other party. So, if the other party
knows it purel y from a stranger, then it will not
amount to revocation of offer. I hus, the Act
makes it a condition for revocation of offer by
communication of notice of revocation that such
notice must be served by the proposer to the
other party . Obviousl y here the proposer also
includes his authori7ed agent to do so, but it
will not suffice if the other part y becomes aware
of the fact of revocation purely from an
stranger source. This particular provision
distinguishes Bangladeshi law from English law
where such condition of service of notice to he
made b y the proposer is not obligatory. Thus in
F.ngland, the offer will be revoked ii the other
party heconies aware of the fact of revoca to )n at
offer from whatever source the other party
knows about it.
2) By lapse of time: An offer may also he revoked by
the expirv of a certain time. Because, once an offer is
made does not necessarily mean that it has to he
open for acceptance forever. l bus for the purpose of
such revocation the offers ma y be categorized into
two categories:

O tter wifli stipulated time: Sometimes there ma y be

an offer which hears with it the time for its
acceptance that it cannot he accepted after the
expiry of that period. In that case, after the expiry
of that stipulated time, if the offer is not accepted.,
it will he revoked automatical lv.
ii. Oft'r without stipulalini time: [ y en there ma y he an
offer which does not say an y thing regarding its

68
C.'uipter 2 : i'O pciStlI eii I ii 'i'e I i?1) iCC

duration to remain open for acceptance. In other

words, if the offer does not mention the last time
for its acceptance, then the offer will be revoked
automaticalk , after the expirv of a reasonable time
and what is a reasonable time that is a question of
fact which depends on the nature of each
transaction and other relevant circumstances. Thus
in case of selling of gold an offer generally will not
he open for more than twent y four hours since the
price of gold fluctuates ever y day. But an offer to
sell a piece of land generall y Will rema n open for
a few _months. Ihus, it was held in.JIaLIstmu' V\
A.B.A1. 5!uuj'sIa what is reasaThe
mmmmeaning of section 6(2) of the Contract
Act, 1872 is undoubtedly dependant upon the facts
and circumstances of each case. It was held-

Linderstanding given by the plaintiff to the

defendant compan y for completion of the
construction of bungalows for the cletendan
within 4 months' time from 17,1130 not fulfilled
defendant compan y paid a large sum of mone y to
the plaintiff for constrution in advancewith the
e\pirv of 4 months time defendant extended
further time to the plaintiff to complete
construction and also paid further sums of money
construction remained incomplete even till 73.2
when the defendant companY took possession of
the incomplele hungalov—plaintiIf failing to
compl y with the terms of the Contract, the
defendant company served a notice on 27, 12.55 in
which ten da y s lime was given to complete the
construction in default it was said it would
amount to failure to fulfill the coiitractthe

10761 25 DLR 345.

69
 Chip tt'i 2 Piopi II1 / 00 11CCC17timc c

repudiation of contract on 27.1 2 by the

defendant compan y quite legi tinia ft - --No plea
caii be -tnt up on that acCOLillt3

3) Be iiou-fttffi//jn'ui j Of c011cIltiOl? L'LTL'thult; An offer may

be revoked b y non-fulfillment of a condition
precedent b y the other part y in time An offer may
be conditional or unconditional. Again a conditional
offer ma y he conditional on a cond i tioii precedent,
i.e., the condition -v ii ich has to be satisfied before the
acceptance of' that offer. Suppose, if A tells B that he
is read y to sell his car to him provided B gets first
class in LL.B. (Honours) examination and the result
is published but it is found that B has not got first
class, then the offer will be revoked for non-
fulfillment of the condition precedent.

1) Bi1 tlt'ath or An offer also ma y be revoked Liv

death or insanity of the proposer. But the Condition
is that the tact of tile death or in'-tanitv of the
proposer m list come to the knowledge of tile offeree
before the acceptance made b y him. Thus, if the fact
of the proposer does not come within the knovlede
of the acceptor before acceptance then the offer will
not he revoked though the proposer dies actually.
So, the death or insanit y of the proposer does not
Ii1tU tile olici IU\ ONLLI IfOL) JULIO, I 011iUl 0011 Lc0k1ie

conditional oil fact that the acceptor must know

about the death or such insanit y of the proposer
before the acceptance made by him. If unknowingly
of the death or insanit y of the proposer the offeree
makes the acceptance then the acceptance will be
operative and the offer will not he treated as

2 J/,jd

70
Chat 't r 2 fwposal a ii / aCCLp I ai cc

revoked. In fact, this is the dear meaning of this

section, but the section does not distingtiish between
offers of personal nature, i.e., otter which involves
the personal skill or performance, e.g., oiler to sing a
song or to paint a picture, and offers involving
proprietary matters, the performance of which is not
dependant on the peNonal skill or performance of
the proposer, e.g., offer to sell a car. -1 his distinction
is important in the sense that an otter personal
nature is no more possible to be performed after the
death or insanit y of the proposer, chereas this is
possible in case of offers involving onl y proprietary
matters. But the law plainl y imposes the condition ot
becoming aware of the fact of the death or insa nih of
the proposer helm-c acceptance to make the proposal
revoked in ever y t y pe of oiler. I 'h u if all offeree
accepts, being ignorant about the death (it a
proposer, the offer which is about to sing in a
concert, according to this section the offer Will not he
revoked and the acceptance will be operative, but
how will it be performed? Section 6 k silent about i1

Rezoco Iin of iccep teince

t\hii' Co?! an acLcttaoLc h' rccokci!?

Section 5 of the Act la y s down

An acceptance ma y be rcvoked at an y time befcre the

communication of the acceptancc is conlptL'tc as against
the acceptor, but not afterwards.

Thus mere posting the letter of acceptance b y the acceptor

does not amount to the legal consequence that the acceptor
will he hound h\ it, rather he viil he hound b y IL onl y when

Irma
C!i:ij'tt'i 2 !osal nuLl

it comes to the knowledge of the proposer. And obviously

one should be ]eft at lihert to revoke one b y which lie has
not become still hound b y the law. I hus ill may
be revoked at any time before the Communication of the
acceptance is complete as against the acceptor, and such
C01'11 munication becomes complete when the fact of

acceptance conies to the kno'ledge of the proposer and in

no Lose the acceptance call revoked after the moment
when the communication of acceptance becomes complete
as against the proposer, i.e., after the moment when the fact
of acceptance conies to the knowledge of the proposer-,
because at the same moment the acceptance will he
complete as against the acceptor b y which he will also
become hound.

In fine, it is clear that the offer cannot be revoked alter

acceptance is made and it has been made clear b y the
to! low i rig classic illustration b y S ir i/fuiiii 11 11i-;OH:

Acceptance is to offer what a lighted match is to a train of

gunpowder. It produces something which can not be
recalled or undone. Out the p mdcr nmav have lain till it
tins become damp, or the man who laid the train may
rerno\ c it before the match is applied. So an offer mas
lapse for want of acceptance, or be revoked before
acceptance. Acceptance converts [lie offer into a promise,
II ILL Li ILL II I LL) II LU LI) LII IL) IL IL

Arisoris Law of Connrac-I, ed. 1999. p. 60.

72
 CHAPTUR 3

CAPACITY OF PARTIES

Qualifications of the Parties:

The law does not give license to ever y one to enter into a
contract, rather the Contract Act, 1872, prescribes certain
specific qualifications to attain to he competent to enter into
a contract. Section . 10 of the Act la y s down certain
requirements to be fulfilled to turn an agreement into a
contract and competenc y of the parties is one of those
conditions and accordingly the first requirement is that the
parties must he competent to enter into a contract. Section It)
does not speak further about the competenc y of the parties.
Section 1 1 is the further elaboration of the principle laid
down in section 10 about competenc y of parties and who are
competent to contract that is mentioned in section II:
Ever y person is competent to contract who is of the age of
majority according to the I\v to which he is subject, and
who is Of soLind mind, and is not de- 1 Liaiified from
contracting by aiq Mw Ni which he is subju t.
So, if we dissect the section then we get three conditions to
be fulfilled b y a person to he competent to enter into a
contract, that the person is--
• of the age of in
2. of sound mind; and
3. not disqualified from contracting by an y law to
which he is subject.

73
 CIt'r 3. Capaini jirti

Thus we can eNpruss the competenc y of parties negatively,

that the tot owing Persons cannot enter into a contract:

ors;
(I) minors;
(2) persons of unsound mind; and
(3) persons disqtialified b y an y law.
Now let us disus the qualifications one b y one.

Tilt' person itiist be of the

To be c ompetent to enter into a contract one in usE at ta in the

age of majorit y according to the law b y which he is
governed. It clearly indicates that each and e\erv legal
S) - stem prescribes a particular age as the age of niajoritv
which also ma y vary trom state to state. Now, the question
is what is the age of majorit y in Bangladesh?

Age of maoritv

ihough section 11 of the Act speaks that the person to enter

into a Contract Iii us I be of the age of majori ty it does, not
prescribe the age of majority and that is in fact determined
b y the Majorit y Act, 1875. According to section 3 of the
Majority Act, 1875, the age of majority is 18 years on less the
superintendence of his pn ) p ( ,r-ty as been assumed by the

person becomes 1j 1. in A cases,'

Tue person ,nustbe of sound ;i,i,,il

The second qualification to enter into a contract is that ti-ic

person must he Of sound mind Again section Ii mentions
the requirement of being sound mind onl y and it remains

Sen ion I of I he 1' iiiiIv Law ieIorni Act.1 ¶169.

71
Clraj 't r 3 C i;' iciti n( parties

silent about the question 'who is a person of sound mind?'

and section 12 gives this answer which specifically mentions
the meaning of sound mind for the purpose of entering into
a contract. Section 12 of the Act savs-

A person is said to be of sound mind for the purpose of

making a contract if, at the time when he maLts it, he i
capable of understanding it and of brining a raiional
judgment as to it ' effect upon his interests.

(h) A sane man, who is d&'liit i is frun fever or who is

so drunk that he cannot understand the terms ol a
contract or form a rational udginent as to its
effect on his interests, cannot contract whilst such
deli ri urn or d ru nkenne lasts.

So, it appears from the wording of section 12 that for the

purpose of making a contract a person "AH be deemed to he
of sound mind if he has the capabilit y to do the following
two things:

I. to understand the contract; and

2. to Form a rational judgement considering its

eflect upon his own interests.

So, a person who does not have the above two capabilities
will be treated b y the law as a person of unsound mind and
as such to be incompetent to enter into a contract. A person
ma y lose this capability due to idioc y , lunac y , drunkenness
W Justice SitIltl in an Indian case nicel y anal y zed the
provision of section 12 in the following ways:

i\ccording to this section, therefore, the peon entering

into the contract must he a person who understands what
Ile is doing and is able to f rm a ra ti na indgcnerit ,is to
whether what he is about to do is lo hi interest or not.

75
CJiaJ?t 1 3 Cipacitii if rE ii's

I lie Lrucial point, therfore, i to find unt whether he is

entering into the contract after he has understood it and
has decidud 11) ('flIer iflto that contract aLter forming i
rational jL1dgC1llC1lt in regard to his interest .........II
does not necessaril y mean that a man roust be suffering
from lunac y to disable him from entering into a contract.
A person miiv to all appearances ces behave i a normal
fashion, but, at the same time he ma y be inca pable of
formi hg a judgenient of his own, as to ivht'thi'r the act he
is about t do is to his interest or not

Contract in lucid in ti'i'ciil

Unsoundness of in md sometimes ma y he occasional. What

S the rule of law regarding such t y pe Of unsoundness?
I

'econd paragraph to section 12 of the Act deals with this

spec fic issue:

A person, who is usuall y Of unsound mind, hut

occasionally of sound min-1., mac iiukc a contract when lie
is of sound mind.

A person, lie is usual I\ Ut Mind,

sound but occasionally
of sound nil nd, ma' not iria kr a contract when he is of
unsound Mind.
Il/us! rut ill/i

(a) A patient in a tuna tic as y lum, who is at intervals

01 Si und mmd, ma con tract during those
ii LIL'i \ IS

Accordingly, we see that section 12 la y s down two rules

regarding it:

If the person is usuall y of unsound mind, but

occasionall y of sound mind, can enter into a contract at
the time when he becomes of sound mind.

Indur Siiirih Vs. ParmeshvardIiari Sin g h, AIR 1957 tat 491.

76
CIiijti . Cipuiti/ W palli

2. If the person is LlsuaIlv of sound mind, hut occdsionallV

01 unsound mind, he cannot enter into a contract when
Ile becomes of unsound 111111d. In other words in such
case also one Call enter into a contract when he is of
sound mind.
i\ common phenomenon is found in both the rules that a
person can enter into a contract onl y when he is of sound
mind, and in no case he is permitted to enter into a contract
when he will he at unsound mind, either it is occaioiial or
usual in his case.

Agreement by a person of unsound mind

Effect of agreement entered into by a person of unsound

mind
In Bangladesh, the agreement of a person of unsound mind
is void. But the provision of English law on this particular
point is different where the contracts of persons of unsound
mind are generally voidable.

The person must not be declared disqualified bii the law

The third requirement of competency to contract is that the

person must not he declared by the law disqualified to enter
into a contract. It clearl y indicates that the law sometimes
may prohibit certain persons to enter into a contract or that
one can not enter, into a contract with such and such
persons- if the person is within that prohibited degree of
disqualified persons then there cannot be an y contract with
that person. Suppose the law declares an insolvent person as
disqualified to enter into a contract and one cannot enter
into a con tract with the citizens of enem y states.

So far, the conditions of competenc y have been discussed-

Now, let us consider a specific issue relating to the violation

77
C/ia jeer . . cij iaclñ! o/ j?iifi1c

of the first condition, that means what will he the effect if a

person enters into an agreement who is not of the age Of
majorit y . '[his specific issue rather is preferred to be
discussed under a separate heading on 'm nor's agreement'.

/LLt) r 's agreement

t'\"/io 25 1

A person who has not attained the age of majorit y is a

minor. So, in Bangladesh every person under the age Of 18
years is a minor in the eve of law.

Lwi o iniiior Cu I ter lUtof?

A minor cannot enter into a contract. Because section 1 '1 of

the Act categorical k , hark a person Ironl entering into a
contract who has not ,i t tamed the age of majorit y, and
accordingly a miil( 1 5 nionipetent to eiitcr S Ic) a contract.

Nature of Minor's .4rL''nu'uui

What W i ll he the nature of a minor's agreement? Section '10

of the Contract Act, 1872, la ys down that competenc y of
parties is required for the validit y of a contract and section
11 mentions the criteria of cornucterlcv, and the total impact
Of these two sections is that a minor is an incompetent
person to enter into a contract. So, if a minor enters into an
agreement then that one will never turn into a valid
contract, as section 10 requires the competency of parties as
a prior condition to turn an agreement into a contract. So, it
is clear that a minor cannot enter into a contract. But if a
minor enters into an agreement what will be the legal status
of that agreement? This question is not solved clearl y b y the
Act, whereas in Inghish law minor's agreements are
generally voidable. So, being influenced by the English cases

78
Chapterr 3 Capacity if ii ti s

our courts sometimes considered it as voidable. But this

i'ue was final k" settled in 1903 in the lanmus case of
Al ii!: iji fl/// Vs. D1110nl2das Chose I where it was held that a
minors agreement is void ab iiiifio, that means without of
an y legal effect at all-- it is horn as ii void one. In deciding
the case Sir lord North observed :2

I ookin ,4 at Section 11 there Lordships are satisfied tLi F the

Act makes it essential that all contraclin parties shou Id
be competent to contract and cxpivs,ly provides that a
Person who b y reason of infanc y is incompetent to
contract cannot make •i contract VI thin the meaning of the
Act. The question whether a contract is void or voidable
presupposes the C\istence of a contract \V thin the
meaning of the Act, and cannot a rise in the case of an
infant.

Ihe Contract Act, 1872, laid down that a minor cannot enter
into a contract and the rule enunciated in ATuhm-i H/hi Vs.
L),'u;riuif:is C)iosr° is a further advancement of th I rule
which made it clear that what will he the consequence of a
minors agreement?'. So, now it is the established rule of law
in Bangladesh that a minors agreement is void 7! iiutio and
as such it has no legalit y at all. A transaction which is void is
a no i litv; it does not exist and never existed in the e y e of
law 3

iL?j_?i id1fl0 of!octriui' (f 'tI i1,i)fi?1S[ ii1I,'i0

Meanin g .of'estoppel'

Fstoppel ma y he described as a rule b y o hich, in some

cases, one will not he allowed to plead the contrar y of a fact

(1903) 0 74 114:30 Cal 539.

- ibid.
11)1(1.
1 PLR (L)ic) 627.

79
Cha p ter
tcr .3: Cap a( i fit at a if ii s

or state of things which lie has formerl y asserted by words

or conduct. ? his is a principle of law of evidence which has
been embodied in section 115 of the Evidence Act, 1872, as
applicable in Bangladesh. Section 115 of the Evidence Act,
1872, sa ys-

A,il i en one person has, b y his discretion, act or omission

intentionall y caused or permitted another person to believe a
thing to he true, and to act upon such belief, neither he nor his
representatives shall he allowed in an y suit or proceeding
between himself and such person or ins representative to deny
the truth of that thing.

In fact section 115 of the Evidence Act, 1872, is founded on

the rule laid down in the famous case of Pickard Vs. Sears,
183 I where it is observed that:

Where one by his words or conduct u'illfullv causes another to

believe in the existence of a certain state of things and induces
him to act on that behalf so as to alter Its own previous
position, the former is concluded from averring against the
latter 'a different state of things as existing it the same time

Is it applicable against minor?

No, it is not applicable against the minor. In tact, the

question of applicabilit y of this rule against the minor arises
when he misrepresents hiniself as a person of the age of
majorit y and as such enters into a contract, then the question
arises whether the minor can den y his earlier statement as
regards his age. Since the doctrine of estoppel is not
applicable against the minor so a minor will be permitted to
den y his earlier misstatement regarding his age.

Sarkers !Xi[L of Ei'tdenci', 1 2'' cr1.. p. 1029.

1831. A & E 468.

80
(h?t'r Cth it aitics

RL'ason br non-applicability ut'esto pel against minor

The doctrine ot'estoppel Cannot be applied against the
minor, because, there is no €stoppel against the statute. If we
anal y ze a case where a minor represents him as a major
person then it the minor is not given the opport un ft at
subsequent time to den y his WrOrIg statement then the
ultimate consequence will he that a minors agreement will
be enforceable b y law. In other words, it a minor is
prohibited b y the application of 'estoppel to den y his
wrong representation then such application in fact
ultimately will validate the minor's agreement. But the
policy of the statute is that a minor cam )()t enter in to a
contract. Eo, if'estoppel' is so applied then it will go against
the policy of the statute. But there cannot he an y 'estoppel
against the statute. So 'estoppel' is not applicable against the
minor.

L)ocIrluL' of ki'!iftion'

This an equitable doctrine which means that if a minor takes

an y propert y or goods b y misrepresentation of his age, then
l ie led to restorJ1gs so obtained so long a
tpjoods will he found in his possess on and if the goads
are alread y sold or converted b y the minor, he ct be
compelled to repa y the value of goods, because that would
aii to enforce a void agreement. 1 he well known
authorit' ot flm doctrineob fttitutiOI1 of qit\ iTd1n (R)
LhL Is .SIuil1.2

Rat ifical iou of in i wr 's açrcenu'n

Since a minor's agreement is void oh 1111(10 in Bangladesh, so

there is no scope of its ratification at subsequent time even

( 19 1 fl. S Turin Rep 335.

81
Chapter . Ciit'acit I

when the minor will attain the age of map t\ Because, all
agreement having no legal effect at all can never he awarded
the enforceabilit y . It was held in Jul/hiS/i Mo/Ia/i (Ml) alud
oh nitlu'r Vs. Ramimi Kan (a 2%4a10 and ino/Ie'C that an agreement
which is void oh initia cannot be validated b\ rati lieu tn ni.

hiificiii/ Coot OiL

1 he general law is that the minors agreement is voidO It is

argued that this rule is to he confined onl y in the cases
where the minor has to bear an y obligation. But it a minor
does not need to bear an y obligation, rather he can enjoy
only benefit, what will happen in that case? It was observed
in As/i raf A/i Vs. E tim A //4 that-

in an executed contract where the minors part has

been perb >rmecl and nothing is left In he executed
by the minor, i.e., obligation is left to be
dislargsl 1w the minor and tU h enforced
against him, such a contract K enforceable by the
minor as it is a contract for the benefit of the
nunor, such as completed by sale or, mortgage in
favor of the minor and is enforceable in law.

ection 10 and 11 of the Contrwt Act enacted for

the beiiefi I and protection Of [hi minor ci nniit be
made lii opera Lu against the minor.

In a lease b y 111C honor in favor of the defendants

and of which tue 1easeholih property was given i1
possession of the defendants, there I no
obligation on the part of the minor which can he
enforced b y the defendants lessees.

2 (1905) 47 1)1,R (Al)) 35.

:1Mu huh 0151 Vs. Ditarinadas Ghost. (1903) 30 Cal 539.
4 (1959) 11 DLR 155.

82
 3 C'p:ifil,:'ii

I he opinion expressed in G'iici'a1 A 'riiii Iii ironco Co. W.

V. Al lii?HIOI 5ono/fl is also worth mentioning here. It was
held that

the provision of the law which make a contract by

a minor not binding were no doubt intended to he
for the benefit of the minors,, and the courts in this
countr y when faced with a contract which has
been canied out b y or on behalf of the minor, the
performance of which b y the other part y is then
raised on the ground of minorit y , have struggled
hard to a void holding the contract wholl y void to
the detriment of the minor.

Cool rolls c tin' or of sert'icr'

Though according to Fnhish Law the minor \\'oLlld be liable

in the case of a contract of service where the COMM was for
his benefit, it is clear that tinder section 1 I, the nii nor's
contract (it should he agreement) being void, the minor
would not he held liable.

iia!i/it ii for Nei 'lSSt 1

In Bangladesh, minor's agreements are generall y void ii

is so, sometimes it will be difficult absolutely
iUjtjO. If this
for the minors to sur\ive, because then no bod y Will he
interested to enter into a contract with a minor, even though
that becomes a fundamental necessit y for that minor. The
law thus gives a scope for minor to enter into certain types
of tnsactions, but of course it mut he kept in mind
carelti Iv that the Ia w still does not permit a ni i nor to enter
into a contract, rather the law mereI provide a scope for

1935) 59 Bun 0513.

Desu, 3.. in Ral Rant \'s. 1-'reni Adib AIR 1949 Born 215.

83
C/ia p6'r 3 : Ca 'iCtti/ 01 iitii"

ill cases imposing certain

certain t y pes of transaction
liabilities upon the minor which are of cirse not
ill 68 of
contractual in nature. The law is embodied
the Contract Act, 1872:

If a person, in apabli' ot entering into a contract, or any

(Wit' whom lie 15 le f allv loiiiid 10 support, is Supplied by

another person with necessaries suited to his coi'iditioii in

life, the person who has furnished such supplies is
entitled to be reimbursed from the propert y of such
incapable person.

(a) A supplies B, a lunatic, with necessaries suitable

to his condition ill A is entitled to he
reimbursed from B's property.

b) A supplies the wife and children of B, a lunatic,

with necessaries suitable to their condition iii Ii ti.
A is entitled to he reimbursed from B's property.

A'lL'111 uie of ni'ccssari('s

The ke y term used in the above section is "necessaries",

because the question of liabilit y will arise onl y if necessaries
supplied b y any person. So, the term necessaries is to he
defined clearly.

It is mentiohed in section 68 with 'necessaries' the terms

'suited to his condition in life which clearl y indicates that
the concept of 'necessaries is not absolute, rather it is a
variable idea which of course differs based on the condition
of life. In fact, this has been made clear in some cases, the
stud y of which shall provide us a clear idea about the
meaning of the term 'necessaries'! In this regard, we wIll

84
C/i ij tel 3 : i/ic! (y at p11/i!

concentrate on some Fnglish law cases where the meaning

of necessaries has been made clear.

In C/uippi'I Vs. Cop par 1 , Alderson B observed:

Things necessar y are those without which an individual

cannot reasonabl y exist. In the first place, food, raiment,
lodgin and the like. About these there is no doubt.
Again, as the propel , cultivation of the mind is as
expedient as the support of the bod y , instruction in art or
trade, or intellectual, moral and religious information may
be necessarY also. Again, a man lives in ocietv. the
assistance and attendance of others ma y be a necessal v to
his well-being. Hence, attendance ma y be the uhlect ot an
intant's contract. Then the classe s being established, the
subject matter and extent of the contract ma y vary
according to the state and condition of the infant himself.
His clothes nia\ he fine of couNe according to Ili`rank;
his education ma y var y according to the station hi is to
fill; and the medicines will depend on the illness with
which he is afflicted, and the extent Of hi probable means
when of full age. So again, the nature and extent 01 the
attendance will depend on his position in societ y .........
But in all these cases it must first he macIc out that the
class itself is one in which the things furnished are
essential to the existence and reasonable advantage and
comfort of the infant contractor. Thus, articles of mere
luxur y are alwa y s e\cluded, though luxuriou articles of
utilit y are in some cases allowed.

in Pi'/i'i's Vs. Tli'uuu, ' the Court opined that the word
necessaries is not confined to articles necessarY to the
support of life, but includes articles and services fit to
maintain the particular person in the station of HO in which
he moves.

• 11o441 13 M \V 252. 25.

(1840) 0 Ni & \V 42 at 16-17. Per Parke B.

85
 C/ni1 fr C ipacit , of1a it /o

To render an inlant liable for necessaries it must be proved,

not onl y that the goods are suitoble to his station in life, but
also that the y are suitable to his actual requirements at the
time of their deliver y and if he is alread y sufficiently
provided with goods of the kind in question, then, even
though this fact is not known to the plaintiff, the price is
i rrecoverahle lb us in \'isli V iiiinan 4 a Sa\i le Now tailor
sought to recover £122 22 I 9s lor clothes including ii fancy
va istcoats, supplied to an infant, a Cambridge
undergraduate, the action failed, because the evidence
showed that the defendant was alread y ampl y supplied
with clothing suitable to his position.
The following points are found regarding 'necessoric':
i. Thing must be essential.
ii. It will he determined based on onCs condition and
station of lile.

Though a rt icti a r thing is treated as necessary per

se, that does not amount to the fact that an unlimited
number or quantit y of that thing will he treated also
as necessaries. Thus, it also must he considered
whether the minor has got already adequate supply
of the said necessaries.

i\. Food, cloth, AMC medical treatment, these are

trea tea as necessaries pi 01 filL /i'.
V. One particular thing may he proved as essential at
an y time hosed on that peculiar circumstance, then
that will he necessaries, though that same may not be
treated as necessaries in ordinary times.

Cheshire and Hhot. Ixiw of ('orurcici. 1).381. rckrrin ihe ease

Barnes & Co Vs. Tove (1851) 13 Ql ID 41 0: Nash %K in (1 hUS)
2 KN 1
Ibid.

St i
 I
Cir ij ci 3 Capaci t y of / i rt It '

i. Thus it vanes from person to person, time to time

and circumstance to circumstance.

In fine it ma y be summarized, a, thing, which are

essential to survive reasonabl y as huiian being are
necessaries.

j\iifiiri' ct Lia/iiIi1if ninior for iicct'ssarics

The liabilit y of minor for necessaries isydearl determined

b y the law in Bangladesh. Section 68 of the Contract Act,
174 sa y s that a right is conferred upon [hi' person who
supplies the necessaries to a minor to he rei mhu red from
the propert y ot the minor. Here the m nor has an extended
liability [hat the minor will be liable to reimburse the
supplier even if the necessaries supplied to the person
whom he is legall y hound to support. It follows two things:

The nature Of such liabilit y is

\atiirc of /ii/iili/ i/:
quasi contractual, and in no case it is contractual.

ii. Extent of Ho1nliti: Minor is not personall y liable

rather his liability is limited against his property.

87
 CHAPTER 4

FREE?CONSENT

Free Consent is an essential element of a va id contract. It is

natural that for an agreement both parties to it must come to
d Common point. For that reason consent has become an
essential element of an agreement. To constittite a contract
even mere consent is not sufficient, rather the consent must
hefrcc consent according to law. First of all, we have to know
the meaning of consent, then the criteria to he a free consent.

Meaning of 'consent'

Zsectlon 13 of the Contract Act, 172, sa y s that

(two or more persons are said to consent when they agree

upon the same thing in the same sellse,)

1 huc there are t o statutor y r quirc ment to he 0 L ont nt

To the same thing, and

In the same sense.

So, if the parties agree upon different things or in different

senses then this will not be treated as 'consent'. Of course,
the term 'thing' used in the first requirement means 'the
contents of agreement'.

88
 Chat '1cr 4 Frcc onseu

Meaning of 'free consent

VSL'Ch011 14 defines frOe consent. It reads on 1—

Consent is said to be fret' Wh011 it is not caused b y -

1) Coercion, as defined ill section. 15, or

2) Lndue influence, as defined in section ft. or

31 Fraud, as detined in section 1 , or

4) Mkreprr'ntation, as defined in L4 0Cti on 1,S , or

5) Mistake, nhject to the p t -onhAms 212 and 22.

(.onsent is said In be so caused when it n ould not have

been i.iven but for the i\i'tence of such coercion, undue
influence, fraud o nurepreenta lion or mistake.

Thus, to be a free consent, that must not be caused by an y of

these five factors I.e. Coercion, Undue In fluence, Fraud,
\lisrepresentation and \listakc. In other words, if a consent
isgiv en being affected b y an y of the above five factors, the
consent will not be treated b y the law as a 'free consent'.

When will it be deemed that a consent has been caused by

an y of these five factors? Second paragraph to section 4
answers to this Lluestion as that the consent will he deemed
to he so caused when it would not have been given but for
the e\istence of an y Of such elements. So, the mere existence
of an y of such elements is not sufficient, rather it must he
proved that there is a 'causal connection' between that
element and the consent obtained.

Let us now have a detail discussion of the above five factors

from which a consent must be tree.

89
 C/ni; tc'i Frcc consent

Coercion
..
Section 15 of the Contract Act, 18 7/2 ', defines coercion. It
says—

('Coercion' is the committing, or threatening to commit,

any act forbidden
n unlawful b y the Peal (ide, or the l
detaining, or threatening to detain, any property, to th0
prejudice cif any person whatever, with the intention of
causing any pernon to enter into anagreeilicn)

LxpIiiiatioci. — it is immaterial whether the penal code is or

is not in force in the place where the coercion is employed.

I/lust i'afioii

A, on hoard an English ship on the high seas, caii'es B. to

enter into an agreement b y an act amounting to criminal
intimidation under the Penal Code. A afterwards sues B
or breach of contract at Chiliagoog. A has emplovwl
coercion, al thourh Ills act is not an offence b y the law of
England, and a though section 506 of the Penal Code was
not in force at the time when or place where the CiCt
done.

Analyzing the above definition we see that there are two

types of elements of coercion:

Substantial element; and

2. Psychological element.

1. Siilslan/ial L'lL'IIIL'??t: To be a coercion any of the following

four acts must take place-

i. Comnhitting any act forbidden b y [he Penal Code,

90


()
0

ii. I hreatening to commit an y act torbidden t

Penal Code, 1O.

iii. Unlawful detaining an\ propert\, to the prejudice

of an y person w ia Lever.

i -threatening to detain, an y propert y , to the

p rej ud ice of an y person whatever.

It is worth mentionini here that the explanation to section

15 makes it cleai- that it k immaterial whether the Penal
Code, 1(), is or is not in force in the place where the
coercion is emplo y ed. So, if someone does an y of the above
acts in an y place other than Bangladesh where the penal
code is not in force that will not prevent the act to he termed
as coercion because of this reason. Onl y material fact is that
whether any of the above acts has been committed as such
Or not. 1 he abo e illustration given with ecLion I makes
this principle clear.

2. /c/t1IceI cicea'ii I: it re q uire that the lb o e act must

he done with the intention Of an person to
enter into an agreement. Ihat means, there must be an
interrela ted cha iii of causation that the act is committed
with the purpose of obtaining the consent from the other
part y . So, if such intention cannot he proved there will
not be an y coercion for the purpose of this section. Of
course, the e\istence of such intention will be proved
either b y direct evidence or will be inferred from the
circumstances.

influ€''
*i lle
i
tioIii6ski'
(I) A cont r act k said to be induced Nv undue (hence
where the relations subskting between the parties are

IN
(7iat'r ,j : Lrci co( l 5(')

SLIJ1 that one of the parties is in 1 position to

ofliinate the will of the other and uses that po,itioii
to obtain an unfair advantage over the othe

(2) In particular and without prejudice to the generality

Of the foregoing principle, a peron is deemed to be ill
a position to doiiunate the will of another:

(a) where he holds a real or appa rentauthori t

the other or where he stands in a fiduciary
relation to 11w other; or

(h) where he makes a contract with a person whose

mental mpacitv is temporarily or permanently
itfcctcd h irison of gi illne s s, ()r inLntilol
hdydIjtr5t.

(3) Where a person who is in a position to dominate the

will of another, enters into a contract with him, and
the transaction appears, on the face of it or on the
evidence adduced, to be unu Iisciun,ll7le, the burden
of pro ing [hal such contract was not iiid uced by
undue influence shall lie upon the person hi a position
to dominate the will of the other,

Nothing in this subsecth m shall affect the provisions

Of section 111 of the Evidence Act, 1872.

111115 lull/OhS

(a) A, having advanced mone y lo his son, B, during his

minorit y, upon 13's conhing ol age obtains, b\' misLise
of parental influence, a bond from [3 For a greater
amount than the sum due in respect of the ad\'anct' A
emplo y s undue influence.

(b) A. a man enfeebled by disease or age, is induced, by

B's influence over him as his medical attendant, to
agree to pay B an unreasonable sum for his
professional services. B emplo y s undue influence.

92
CIrr1'ter 4 : I rn H

(c A. being in debt to B, the iiv-leirder of his village,

con tracts a fresh loan on terms which appear to be
unconscionable. It lies on 1$ to prove that the contract
was 1 10t md uced b y undue influence.

(di A i rplics to a ha oker for a loan at a time when there is

stringencY in the mone y market. I he banker declines
to make the loan e\cept at an unusuall y high rate of
interest. A accepts the loan on these terms. This is a
transaction in the ordinar y Of business, and the
course
-contract is not md uceLl I' influence.

thgre di c nts of undue influence:

Two ingredients must be present to prove that a contract is
indl- b y undue influence:

1 he relationship subsisting
• between the parties is of such nature that one of the
parties is in a position to dominate the will of the other.
In other words, one of the two parties of a
sup(rior sinnnd tlic rinont\a s regird s the
control of the others power of Will. I hat means that
suprTor part y will be in such position tht he can
doninate the decisiodmking of thother So, it is
on of psychological ctrol over the other-11-i's is
first rejui rement to exist to prove undue inflrno.

Use of rela[iarr: Mere existence of the above relation is not

sufficient to constitute 'und rio Influence',- rather the
second condition is that the above relation must he used
to obtain anai dvantap So, only when it will be
proved that not onl y the relation is of above t y pe but
this relation also has been used to gain an unfair
advantage from the other part y , there will be the proof
of undue influence that it will he deemed that the
contract is induced b y undue influence.

93
Chapter 4 : I-n' conSent

Still the above elements can not provide a clear idea about
undue influence as there is no mention as regards 'how will
it he deemed that the relation is of the said nature?' that one
of the parties can dominate the will of the other part y since
the power of domination upon anothers will is an abstract
one. The Second paragraph to section 16 makes it clear,
providing thit---

In the following cases a person will be deemed to he

in a position to dominate the \\: ill of another:

i. Where he holds a real authorit y over the

other, e.g.., the relation between police officer
and the accused.

ii. Where he holds an apparent authori tv over

the other, ea.., the relation between master
nd servant.

iii. Where he stands in a fiduciar y relation to [he

other. That means the relationship is of utmost
good faith,e.g., relation between parents and
child, doctor and patient, lower and client,
teacher and student, etc.

ix. Where he ma hes a contract xx ith a person

whose mental capacity is temporarilY or
permanentl y affected b y reason oh axe, illness,
or mental or hod iv distress....

It xx'as observed in Piurncntlti Kitmoc Dos s. I luau kmemno

Dos that ' 'file fact that since the agreement was entered
when there was a case under section 406 of the Penal Code,

I ([ 9 1.9) 21 I)LI' ii 1$.

C/ia1 Icr 4 S 1rc iW iS it

1860 \Ve are of the view that this is sufficient ground for
holding that there was coercion and undue influence
CC

oil defendant.'

In 11/nc/u Muklu Vs. Sin, Sarlo 5iinc1iri the Court observed

order to determine the 9ues6on of anus in a case

attracted b y section 160 of the Con tract Act the first thing
W be considered is the relationship between the parties,
that is to sac, whether one part y was in a position to
dominate over the other and then it nut be proved that
posit m was used to obtain an unfair advantage and even
tuiouh the transaction man be uiiconscionahle, relief can
not he granted until the initial fact of the position to
dominate the will is estahlihed. If such position is proved
and the transaction also appears to he unconscionable, the
burden at proof that the contract was not induced by
undue intl uence lies on the person i ri a position to
doiiiiicate the will of the othcri

Presumption Of undue influence and the burden of proof

[he general principle is that he who claims an y thing must

pro e it. Onus of the plea thal the lander was not onl y in a
position to dominate over the borrower but actuall y did so,
is on the horro\ver. So if someone claims that his consent is
caused b y undue influence then he must prove the fact. But,
clause 3 to section 16 provides an e\ception to this general
rule of burden of P10o1 in which case burden of proof will
be shifted that the burden of proving that such contract was
not induced by undue influence shall lie upon the person
who is in a position to dominate the will of t he other, that
means in this case in fact the undue influence will he

13 DLR 97.
\Iolicin Ilashi S,chs %s 1 iu:l I IuiI,cl 3.nk. it i ;H 20 DLR 9.

95
 L/I?tr •] I ?C

presumed b y the law. T k hwTden will he 'hifted as such

subject to the satisfaction two cond fiuns:

-file person who is in a position to dominate the will

of another, enters into a contract with him.

2. The transaction appears, oQ the face of it or on the

evidence adduced, to be unconscionable, Thi'
condition is essential for shifting the burden of proof
on the person who was in a dominating position;
otherwise the actual use of that possibility must be
proved as a tact.' That means in the absence of this
condition Undue Influence will not be presu med and
consequently the burden of proof will not he shifted,

The ke y term of this condition is 'unconscionable' that the

transaction —must he 'unconscionable' and it ma appear Ill--
either of the two wavs -

L On the face of it; or

On the evidence adduced.

F—That means this 'unconscionable' will appear on the face of
it or it will he proved b y producing the relevant evidence3
Thus, if the above two conditions are satisfied then there
will he the oresumption that undue influence has taken
place and consequently the person who was in a position to
dominate the will of the other must prove that he did not
use his position and have not gained an unfair advantage as
such from the other party.
The Court in [3j/jj Aiiiklii Vs. Sni. Sai'da Sun,/iri 2 observed
that—

I Poosatlu.irni 'Vs. Kannappa Chettiir (19 19) L.R. 47 LA. 1, 43

Mad. 546.
(1954) (3 DLR 97.
C/nipter 4 : I) CC i'OHSi'H t

The burden of proof lie in the fi r s t insta nce on the party

who r.ues the plea of li ndlik , i nfluencC. It that party
proves that the oilier pally was not onl y in a position to
dominate his will, hut that the Lr nsactiofl entered into
proof^ that he
was also unconscionable, then the burden of
did not use his (loiilin,lilt position to obtain an unfair.
g e over the other is W AY
advanta on to him.

When there is evidence of \t'rpi iwering 111 H UL'iiCe

and the transaction i s iiiiderate and irrational prool of
undue in iluence is complete. It is not ii essar\ 11111[such
Lie nce should hi' b y threat or
overpowci'tng ill il
committing any act forbidden b y law or b y unlawful
detention. etc. If a person has sonic influence over another
person and b y means of that influence reduces the will of
that person to his suhii'ction, whatever ma y be the cia lure
of the influence- -spiritual, moral, social or am other
i nQuence, then it is such coercion as is sufficient to
constitute nidui' intluence.

Undue influence usuall y arises ill position. lint

as between strangers between whom there L'Xists no
fiduciar y relation certain forms of coercion, oppression or
compulsion ma y amount to undue influence invalidating
a contract. Undue intl uence is not a matter alwa y s capable
of direct proot.

It was iibi.'i'ved in ALiu/ I Iossaiit Vs. Eun 'j obIiini & ors

that—

'when the defendant No.1 had a doni ian t Position on

account of close association with the Martial Law
Authorit y and the bargain obtained h\ defendant No.1 in
thePetition
compromise was clearl y unconscionable
because the plaintiff had to give up 111', rightful claim in
the contractual land, the deleiidant \o,1 has to prove that

4 HI.0 (AD) 24 L

97
 L/?t'r . 1 1 cc

4- >1

the compromise was not attained b y undue jell uenct

whichias miserably failed to discharge.

of utiuJinfJuence

The effect of undue influence is that the agreement which is

induced by undue influence becomes a voidable contract at
the option of the party whose consent was so caused.
Section 19A says—

'hen consent to an agreement is caused b y undue

inf1ucn6, the agreement is a contract voidble at the
option of the party whose consent was so caused.
An y such contract ma y he set aside either aholutctv or, if
the party who was entitled to avoid it has received any
benefit thereunder, upon such terms and conditions as to
the Court ma y seem jUst.

Illustrataiiis

A'S SOflhas forged B's name to a promissor y note. Ii,

under threat of prosecuting A's Sun, obtains a bond
from A for the amount of the forged note. If B sues on
this bond, the Court may set the bond aside.
/
rnrn p v-1-nc]pr. advances Taka 100 to B, an
agriculturist, and, b y undue influence, induces B to
execute a bond for Taka 200 with interest at 6 per cent
per month. The Court may set the bond aside,
ordering B to repay the Taka 100 with such interest as
ma y seem just.

The term 'fraud' has been defined in section 17 of the

Contract Act, 1872. Section 17 sa y s-
-
98
 -? ci' ciicf

Fraud' means and includes an y of the fol lo\\'lng acts

committed b y a party to a contract, or with his
connivance, or h his agent, with intent to deceive another
part y thereto or his agent, or to induce him to enter into
the contract

V The suggestion, as to a fact, of that which is not true by

one who does not believe it to be true;

L.- 'the active concealment of a fact b y one having

knowledge or belief of the fact;

V promise made without ,uw intention of performig

I

it.;

other act fitted to deceive;

such act or omission as the law speciall y declares

to he fraudulent.

to affect the
F ip1auatiOfl. Mere silence as to facts likel y
willingness of a person to enter into a contract is not
fraud, unless the circumstances of the case are such that,
regard being hadto them, it is the dut y of the person
keeping silence to speak. or unless his silence is, in itself
equivalent to speech.

U!ustra ticiliS

(a) A sells, b y M16011; to B, a horse which A knows to be

unsound, A sacs nothing to 13 about the horse's
unsoundness. This is not fraud in A.

h B is As daughter and has just come of age. Here, the

relation between the parties would make it As dut y to
tell B if the horse is unsound.

(c) B says to A if y ou do not den y it, 1 shall assume that

the horse is sound . A sacs nothing. I lere A's silence
is equivalent to speech.

99
Chapter 4 I ice auseo I

(d) \ and B, bein trdrs, enter lipo n a con Lia L A ho.

private informa lion ot a change in rici' w hieli ooid
effect l' villingnes to proceed wi [Ii the contract A i,
not hound to inform 13.
Ingredients ol fraud

L\flh]y/jflcr the above definition

ion We see that there are two
types of elements of fraud:

1 Ps y chological element.
V
2. Substantial element.
V
jc110/0ica1 It requires that the fol Io\\ing act
'IciiienI:

nut he done with the intention to decei\ e another pa t\

thereto or his agent, or to induce him to enter ink) the
contract. Put means to (%mstiArte a fraud there must be
the fraudulent intention and as such to cause an y person
to enter into an agreenien I. I his (I jilt
eceptive enoon is
the distinguishing tactor between fraud and
misrepresentation.

2. 5ii1 o fajiiin/ 'IL'171c'i/ I: The initial scheme of th is section \\ds

to enumerate the different t y pes of fraud u eli activities
and that is evident from first three t y pes of fraud as are
I1iL j [LjUjjCU it iit Put aicr un prbab!'.' it h
been tell that it is never possible to give the list of
fraudulent activities and however long that list is that
will never cover ever y kind of fraud. That is wh y fourth
and fifth t y pes have been added to widen the scope ol
fraudulent activities and as such to ensure that all
probable forms of fraud are being covered b y the
section. First three are the enumeration of three kind of
fraudulent acts, the fourth one saff that ever y act fitted
to deceive will he deemed as at act capable to constitute

100
 - I 10

fraiRl and the fifth one is more wide in this sense that it
" i% L'S in fact a wide power in the hands of the law that if
the law declares an y act as fraud ulent that vill be fraud.
ho, according to the fifth one however innocent an act is
that ma y constitute a traud if that is declared merel y by
the law a fraudulent. lo be a fraud an y of the following
live acts iii nsf ta Pc pl ace—

Vi . Ihe suggestion, as to a fact, ot that which is n it true,

b y one who does not believe it to he true. I ha
jjjeaj l s i i a person makes a false slatement
will be fraud.
kno\vi nglv to another peron it wIll

/Cl 1 he activ e conceal niciit of a fact b y one who has the

knowledge or be! cf of the fact. I Lie two things
must he present—one i the concealment and that
concealment must be an active one. Active
concealment m tist he distingu ihed from a passive
conci'a I ment. It iieans that the concealment must he
C10110 acti\ el y. ho.. if the seller sho\vs a dress keepin g

it ' s one corner into his hands where the cloth is

defective, then if he does it unkno\v'nglv that there
iS a defect and he is putting, the detective area into
his hands, it will not he a fraud; but if he does it
activel y with fraud ulent intention there will be a
fraud— Secondl y , the peon who concealing the
fact must have either the actual kno\ledge of the
fact or must haVC the belief about the fact-

i. A promise made without an y intention to perform it.

Of course, this mri't he pro ed based on the
circumstances ot that case. So, it an insok ent person
enters into a contract to purchase a car of latest
model, it ma y he proved as a promice made without

101
 Chapter 4 free am mot

an y intention to perform it and as such thei-e is c

high probability of it to be a fraud.

v. Any other act fitted to deceive. It hac widened the

concept of fraud for the purpose of this Act.
Because, first three are mentioned in section 17 in
fact as instances of fraud, but it is never poible to
mention all t y pes of fraud and in fact nobod y knows
how man\' ty pes of fraud ma y be. That is whv by
thk mention law has widened the scope of fraud to
include all types of fraud that any act which fitted to
deceive the commission of that act, with the above
mentioned fraudulent intention, will he fraud.

v. An other act or omission that the law specially

declares as to be fraudulent. That means though an
at is not considered to he fitted to be fraud vet if
that is declared speci a liv b y the Ia w as fraud then
that will be fraud. So, if there is an y question like
Hit that ON is it fraud?' the answer will he
'because the law declared is as void'. For example,
the seller of an immovable propert y is required by
section 55 of the Transfer of Property Act, 1882 (Act
IV 1 ') In d i'c!ose to the buyer an y material
defect relating to that immovable properl y , and if
no such disclosure is made then this non-disclosure
shall amount to he a fraud.

es mere silence amount to fraud?

The general principle is that mere silence does not amount

to fraud According to the 'explanation to section 17 it
appears that silence amounts to fraud only in the following
two circumstances:

102
 Chipfer 4 Free COt'i/

if the silence is in breach of dut y . That means

considering the nature and circumstances of the
transaction if it appeals that it was the duty ol that
person to speak but he remains silent then such silence
Shall amount to fraud.

If the silence is equal to speak fraudulent statement.

Suppose, a bu y er asks the seller indicating a Intel
Pentium 11 computer 'it is a Intel I km t i urn Ill computer,
is not it?' and the seller remains silent—this silence
amounts to fraudhA,

Vilisrepr esentatioll j

\. lisrepresentation is defined in section IS ot the Act. It says:

Misrepresentation' means and includes: -

(I) the positive assertion, in a manner nut 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 dut y which, wilborm I an intent to

deceive, gains and advantage to the person
committing it, or an y one clamming under him, by
misleading another to his prejudice or to the preiudmce
of an y one claiming under him;

3) causing, however innocentl y , a part y to an agreement

to make a inista ke as to the suhstance' of the Ihing
which is the subject of the agreement.

of Misrepresentation:
Section IS speaks ot the following three types of acts as
ni sre p resCll tat ion:

103
 Chapt er 4 : F ive cwisen I

Lhiri'arraiit1tt1e I17IL'ule12t: If a person positively

asserts (meaning of positive assertion is an absolute
and explicit statement of a fact) that a fact is true and
he believes it to he true when his information does
not warrant it to be So A statement is said to be
warranted bY the in 1, irma tion of the person making
it when, he receives the information from a
trustworthy source' According to section 1 ( '1), a
positive assertion to he a misrepresentation must
AMU two conditions-firstly, it must be in a manner
not warranted by the in formaLimi of the person
making it, and, second lv, the statenten t is not true
though the person making it believes it to be trite.
Simpl y speaking, in contrast with t'raud, if some one
makes an y false statement considering it as true then
it will he a ni isrepresen tat ion.

Rreiich of 1up If there is an y breach of ditt y iii

consequence of which another part\ is nusled but
this breach was done without an intention to
deceive then it will he a misrepresentation. Some
compared it with equitable rule of Constructive
fraud. In the case of a contract of insurance the
Policy holder requires the total disclosure and here
d Hur nv material fact which likel y to
affect the willingness of the other part y if done
without an intent to deceive may amount to
misrepresentation being covered b y this category.

^h C,nisiu' mistake as to the sol?ject malIce: Causing

however innocently a party to an agreement to make
a mistake as to the substance of the thing which is
the subject of the agreement. In other words, if some

Strigli, Avtcr, r,, Iritr'd,ictjon to the Lou' ojCoritrcut, 2'' ed., p.05.

104


CIiiijh'r 4 rIO COUSin

one does anvtluiig in c eLI u c nC of which another

PC , rson III usia he as to the su Nject of the
Japreument and it i done b y that person in fact
/ innocentl y then it Wall a mount to inisrepresun ta hon.

told fraud

The relevant laws have been laid down in section 19 which

sas—
When c ni'nt to an arument is caused Nv coercion,
iraud or misrupresrntatioiL the apritmunt is i contract
voidable at the option of the pa rt\ \\'hoe consent Was so
caused.

.\ part y to a contract, whose consent was consuLt h\ fraud

or misrcpres'ntaliofl, uiiiv, if he think fit, iuisit that [he
contract shill He perFormed inch that he shall he put in (he
position in which he would hove heun if the
represun ta tion made had heei i ti-nc.

Exi'1'f ion.- If such consent was coLied by

inisrupreseiitatioii or b y silence, Iroudnk'nt within thu
neai0n of section 17, the contract, nevurttiulus, is not
voidable, it the part y \\'hOse consent was so caused hid
the means of 0 kcovering the tin th with ordinary
diIi'ence.

11'!, OtiCli- A Fraud cr i nisrupresentl tit lui which did not

cause tNt consent to a contract of the pa tv on vhoin such
Mud was practised, or to whom such mircpresuuta tion
was madu, does not rendur a contract voidable.

ha) A to deceive N, ialselv represents ilia F 500

mdi' -i art made annuall\ at -\'s fact iry.
Nv ii , to buy the factor y . The contract
is t cidible a peon of Ii.

105
 J .' F ice ut'jit

(b) A, b y a misrepresentation, leads B erroneously to

believe that 00 maunds of indigo arc made annudll\
at A's factory. B examines the accounts of the factory,
W hich shows that onl y 400 niaunds of indigo have
been macic Al icr this 13 buys the factor y . The con tract
IS not voidable on account of As misrepresentation.

c 3 A I rand ulenilv informs B that !\S esti ft is free from

encumbrance. 13 thereupon bu y s the estate. 'I l i e estate
is subject to a mortgage. B ma either avoid the
contract, or ma y insist on its being carried out, and the
mortgage-debt redeemed.

(ci) B, havin g discovered a vein of ore on the estate of A,

adopts means to conceal, and does conceal the
existence of the ore from A. Through A's ignorance B
is enabled to buy the estate at an under-value.
The
contract is voidable at the option of A.

(e) A is entitled to succeed to an ('state at the (lea tli of 13; B

dies; C, having recei\ ed infelligcn e of H Jca th,
prevents the intelligence reaching A, and thus induces
A to sell him his interest in the estate. 1 he sale is
voidable at the option of A.

'Ihus, the effect of coercion, fraud and misrepresentation is

that the agreement becomes a voidable contract whose
u p on the option of the part y whose
consent is so caused as appears from section 19:
\\hen consent to an agreement is caused b y coercion,
fraud or misrepresentation, the agreement is a contract
voidable it i1e option of the part y whose consent was so
ca used.

Ai:1Ji!w;utl option iii ((151' otfrotnl f7llol lnisi'epri'si'iilatioi;

The law gives an additional option in case of fraud and

misrepresentation to the person whose consent is so caused

06
Clii ptir 4 : TiO' L)1?St?

Out he can insist the con tract to he performed putting him

in the position in which he would have been if the
representations made had been true as appears from section
19:

A party to a contract whose consent was caused b y fraud

or i i srepreseiitatiOn, fla y . if he thinks fit, insist that the
contract shall he pei'fornli'd. and that he shall he put in the
position in which lie would have been if [he
representations nade had been true.

Thus, if the seller enters into a contract to sell one tan to a

customer representing it as W NW Fan' either fraudulently
or innocentl y which in fact is a National fan' then the hover
considering the contract as voidable ma y e\ercise another
option that lie ma y insist the seller to perform the con tract
b y selling -I 'Alii/ot Fan' to him.

Coiitlitioiis to lie f1tillctl to lIhlkc a coiliicl zvidO W C 01711k'

roiiiiii o( iuisr'tircseutaliou aol fiiul:

Section 19 of the Act adding two e\plana tions to it

specificall y made it clear that to make a contract voidable on
the ground of fraud and misrepresentation two conditions
must he satisfied:

hi rst condition iS imposed b y the first e\planation to section

19:

If such consent was caused b y m isrepresenta tion or by

si once, Ira udulent within the mean in of section 17. the
contract, ne\ ertkeless, is not voidable, if the part y whose
consent was so caused had the means of discovering the
truth with ordinar y diligence.

Thus, this specific condition in fact CM pill' on the

diligence to be applied hr the person whose consent is so

107
CJia1rtt7 4 1 icc

Arise that it the fraud or misreprentatii in \\ ruld

discovered b y the application of ordinar y prudence and
diligence which the concerned park' did not do r1ckk'sI\
the law will not further help him b y making the contract
vnidah]e in his favor.

Second condition is imposed b y another explanation added

to it which is about the conen to be caused b y fraud and
misrepresentation Accordingl y , the contract will not he
voidable if the consent was not in fact caused b y the said
fraud and misrepresentation. In other words, there m rist he
a logical casual relation of se1uence between the consent
and fraud or misrepresentation. Explanation to section 19
says:
A fraud or nusreprL'senfation which did not cause thc
consent to a con tract ol Ilw party on whom rrcli fniud
was prmcticed, or to whom such Ill srepresenlrtion \v,m
rri,mje, does not render i contrict voidable.
I hus, it appears that the mere commission of fraud
misrepresen Ia tion by one of the parties to a contract does-
not make it a voidable contract rather to make it voidable on
these Particular grounds the above two specific conditions
also must he satisfied.
crrt'cial_cwjdt[ jrrri fri lie fit/ filled to triake a coitiroef ooida/rh' on the
cpirinid of misrejrreseotit ion or silence oiuOinritirr to p01(1
doCtrine of ' crlr'c'o fr

Lien on fulfillment of above conditions a contract will not

He voidable if the consent is caused b y misrepresentation or
silence amounting to fraud within the meaning of section 17
of the Act if another additional condition is not fulfilled, that
is, it must be proved that the other part y could not discover
the truth b y his ordinary diligence. So, in these two specilic

108
CJitr 4 Jo'i' LLiit
cases to make the contract \-oidahle, ti-ic hover also must
P lay an active role in iscovering the truth isi-epresented
or fraudulently presented b y silence. 1 hus, it the buyer
neiientiv does not care about discovering the truth which
could he discovered appl y ing the prudence of a reasonable
person then he can not subsequently claim the benefit of
making the contract voidable though his consent has been
p i- W ed to be so caused. It reflects the polic y of the law to
assist a v iiiiant person, not a dormant careless one. It is
worth n-ientionin here that the law requires the application
Of reasonable degree of prudence of a reasonable person and
A does not require the application of the standa id of an
angel or super human being 01 extra ordinar y merit.

But this test of application of ordinary prudence to discover

ti-ic truth is not applicable in case of general fraud. Insuch
cases, the bu y ers ability to discover I he truth a 11 its
application thereby is y absolutel immaterial, this is because
ma y he for the reason that lao should he rigidly applicable
in cases of clear fraud.

The above condition is nothing but the embodiment of

C0111111011 law principle of 'bu y er he aware' which comes
troni Roman origin iai'i'atc ,1 p10)_'. 1 he theme of this
ci m loon law principle is thaL the bu yer should take
reasonable care in the transaction and Must he vigilant
about his rights and quality and genuineness of the product.
Otherwise he can not afterwards cia in to set aside tic
contract on the ground of misrepresentation made b y the
other party which i-ic could d isco\er by application of his
ordinar y prudence and diligence. It in fact imposes upon ti-ic
hover also a dut y of care about his own matters of interest.

109
 (.!iitcr 4 F ree

-I
Mistake

the relevant laws have been laid down in sections 20-22

Which are as lollows-
Section 20 sin.js-

\.Vhere both the parties to an agreement are under a

mistake as to a matter of tact essential to the agreement,
the agreemen I is void.

Ex planation . - An erroneous opinion as to the value of the

thing which forms the subject-matter of the agreement is
not to be deemed a mistake as to a matter of fact.

Il/us I ratioiis

A agrees to sell to B a specific cargo of goods

supposed to he on its way from England to
Chittagong. It turns out that, before the da y of the
bargain, the ship conveying the cargo had been cast
awa y , and the goods lost. Neither party was aware of
these facts. The agreement is void.

/b) A agrees to bu y from It a certain horse. It turns out

that the horse was dead at the time of the bargain,
though neither party was aware of the fact. The
agreement is void.

(c) A, being enti lied to an estate for the life of B, agrees to

sell it to C. B, was dead at the time of the agreement,
but both parties were ignorant of the fact. the
agreement 15 Void.

Section 21 srn/s-
A contract is not voidable because it was caused b y 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 tact.

110
c;ii 't r 4 : Frcc Consent

I/lust rili0ii
A and B make a contract irounded on the erroneous he! el
Unit a particular debt is barred b y the Law 01 Limitation.
1 he cuntract is not voidable.

Section 22 sas-

A contract is not voidable merely because it was caused

b y one of the parties to it hein under a mistake as to a
matter of fact.
Different types of mistake:

First of all, let us classify different t y pes of mistakes and

then will consider the legal impact of each if that causes any
consent to an agreement.

From the dimension of the nature of the mistake it i1ay be of

two types:

Mistake of fact; and

Mistake ofla

Again from the dimension of the person who is committing

it, mistake ma y he of two types:

i. Unilateral mistake; and

ii. Bilateral mistake.

XTl?kt'oJCt: The mistake which is related with facts of the

agreement and not of law that is called mistake of fact. But
an additional explanation of the term mistake of fact has -
been added b y section 20 which sa ys that an erroneous --
opinion regarding the value of the thing which forms the
subject matter of the agreement is not a mistake of fact. Thus
it appears from this explanation that e\ en though the

11
 Ch:i1'tcr 4 1 ic Lv)1)?t

erroneous Opinion regard ing the subject matter of the

agreement seems to be a mistake of fact but it has been
negatived to be sobv the statute.

X4isfak_of law:the mistake which is related with the la\v is

-caltdrnistake of law and section 21 makes it clear that such
law must he among the laws which are enforcehlL' in
Bangladesh. Ihis section adds another explanation of the
law which sa y s that the mistake of an y foreign law will he
treated like the mistake of fact for this purpose. [bus if any
mistake 01: foreign law occurs then the rules relating to
mistake of fact will come into operation.

,Lf11l7fr'1W1 mistake: Ifonly one Pa 1't-% - to an agreenien t is under

a mistake, but not the other or ots, it is called unilateral
mistake.

laterilwistaki': if both the pa rties to an agreement are

under a common iistake, that is termed bilateral mistake.

Legal consequence of mistake:

\'lere causing the consent b y mistake does not invalidate the

agreement. Legal consequences of each type of mi stakes, i
that causes the consent to an agreement, are given below:

I Na ture of the mistake Lec,'al C01ISI'/l1C1lCi'

—^I! ulalt era l mistnke of fact Arccmen1 becomes void.

L
Uni Ia teriI ni i,take of fact Contract does hecomi
Bilateral mishke of law Contract does not become voidable.
Undateral niktakeof IL 1ntrict does not become voichahleH
On the ground of absence of free consent for its being
caused h mistake the agreement becomes void on

112


(!?tc.' • F y '?n't

fri ifi II mont of the tol low i n three cond t ii)iv a mentioned in
section 20 ot the Contract Act, 1872, which are as fol lows:

j. The mistake nnnt he hilater,11, So a iere mistake

done b y one of the parties shall not I uva lid ate the
a p iee men t.
ii. The mistake must be of fact

ii. [he mistaken fact must he essential to the subject

matter of the agreement. So, if an y tin y bilateral
mistake of fact occurs the ap reement v i I not he
void.

This is the univ mstancu of invalidating of an agreement on

the pi- ound ol its consent being caused b y mistake on
of
fulfillment above three specific condit i on s. In case of
ever y other mistake even it that causes the consent the
validit y of the agreement Will not be affected ad erselr
When a contract was entered into between the parties on a
mistake of fact, that contract cannot be binding on the
parties in view of provisions of section 20 Of the Contract
Act. It was observed in S. S Ia:li hs. Al/s Stai [tim
D/s/ rdm tar that—

'If ilicre as no inisrepresentitiom1 and both parties had

been laboring under a mmapprcliension that the contract
had been cancelled, the abandonment due to a mutual
niitake, ould not affect the plainlmlfs ri g hts. Under
section 20 an arccnient based on a mutual mistake is \'Oid
and same principle will appl y to an abandonment of a
right under a contract.'

Itjk, OuII Naak V. K,ililuciclin C 11o\vdl1ul, (1959) II I

125.
2 (1964) 16 DLH (SC) 198.

113
 CHAP] ER 5

CONSIDERATION

Consideratiw is one of the essential elements of a contract.

The general principle is that 'no consideration no contract'.
But there are certain exceptions to this general principle
where there ma y he contracts even without consideration.

consideration

lii ordinar
y sense, consideration means the exchange price.
Ita d ifcent legal rniani og which doesnot restrict it
only within the area of monetar y compensa ti n rather this
term has been given a wider legal connotation.1 he concept
'consideration' has been defined insection 2(d) of the
Contract Act, 1872. It says:
( When, at the desire of [he promisor, the promisee or any
other person has done or a hstncd from doing, or does or
r nronljses to do or to abstain from
doingsomcthi ng, such act or abstinence or promise is
called a consideration for the promise.)

Analyzing the above-mentioned definition of 'consideration'

we get the following ingredients of consideration:

It is an act or abstinence. That means it ma y he

poi Live or negative.)

ii.It is at the desire of the promisor. if it is

done at the desire of Luiv third person that will not he

114
 (Tiia;'tcr .5

a Coll sideration.Converse1Y, if an y thing is done at

the desire of the promisor, then that will he a good
consideration irrespective O f the nature of the thing
done, even that ma y he legal or Hlegak adequate or
inadequa te.
lt ma y he of three torn-is, i.e. has been done, or is
being done or is promised to he done at sonic future
- tinie. 'S
/
,/ sencL of consulc'rii tion

According to the definition to he a consideration it is

required that something is to he done, forborne, or promised
at the desire of the promisor it is worth mentioning here
that consideration is not restricted onl y within monetary
compensation. Consideration even ma y be termed as a
burden discharged. In other words it call explained as
'suffering' in the sense of loosing something, ma y be that is
one ' s energ y , erv moneY on an y thing. In fact, it is
wonderfull y defined in faniou; biwlisli case Coo Ic Vs.
AI
A valuable consideration in the sense of law ni.i consist
either in some right, interest, profit or benefit accruing to
one part y , or some forbearance, d&'tni inent, loss or
responsibilit y given, suffered or undei-taken b y the other.

lust ice Pattcsou 's observation is ako remarkable here:

Consideration means something which is of value in the
CVC of the law, moving from the plain Li ff: it ma y he some
detriment to the plaintiff or some benefit to the
defendant.2
A paragraph from the hook 'Law of Contract"' written by
Irotcssor Treitcl is worth mentioning here-

10751 Lk tO Excli 153.

Thomas Vs. Thomas (I542) 2 Ql3 551.
Is h cOn, Sv,'cei & Maxwell. 1990- at P . 04

115
 C/iajtei 5 (.oiisu/r'ritivii

The trad tional detini hon of considera tom cmumtsates on

the reciiMmunt Wt ething of vah itc nuist he given
and accordingly states that consideration is either some
detriment to the promisee (in that he ma y give value) or
some benefit to the promisor (in that he ma y receive
vat ue). Usually, this detriment and be li clit are merel y the
same thing looked at from different points of v eu. FhLis
payment b y a bu y er is consideration for the sellers
promise to deliver and can he described as a detriment to
the bu y er or as a bend it to the seller; and cooversclv
deliver y b y a seller is consideration for the huveis
prom se to pa y and can be described either as a detriment
to the seller or as a benefit to the hover. These statements
relate to the consideration far the pi'eeiio' of ('ac/i /013/
looked at separately. For example, the seller suffers a
detriment when he delivers the goods and this enables
him to enforce the bu y ers promise to pa y the price. it is
quite irrelevant that the seller has made a good bargain
and so gets a benefit In mi the perlornia nce of the contract.
What the law is concerned with is the consideration ('r
/ h /01/,isc__not the cotisideration fJr a

fits! ICr' Pat/t'son I observed that—

'The consideration is, that the plaintift, at the defendant's

request, had consented to allow the defendant to weigh
the boilers. I suppose the defendant thought he had some
benefit; at any rate, there is a detriment to the pii 111111
from his parting with the possession for even so short a
HMO'

(.oizsileratjo,, may ???OVC trouli the J)rOflhiSCC or any otlur'r

p c rs 02?

It appears from the clear language used in the definition of

consideration that there is no such requirement that it

Uaiiibrtdge Vs. 1"irinsloric (1838) $ A E 713, at p. 744.

116
Ciiitcr 5 Cc

consideration must m o ve horn iOi1i i5Le, rather it niav be

furnished b y the promisee or an y other person and as such
onl y ma Lena I thing to he Lonsidered is that \\hetller there is
an y consideration or not. So, a promise is enforceable i
there e\ists an y consideration and it is immaterial that h'
whorii the consideration has been furnished. Thus in
Chi.iai Vs. I\L7imii/a.

All old Lad y , b y deed of gift, niide over certain landed

propert y to the defend.nt, her dighten. B y the terms ol
the dee(t which ws registered, I wa 'eiplilated that an
annuit y R. h3 SI100ILI be poid e\erv \ ei to the

plaintiff. who was the sister ot the old woman. The

defendint on thesime da y eecu ted in plaintiff's favour
an ekiiriiiiii l.igneenient priuiiiig to give effect to the
stipulati)n. Fbi aiinui ft \va. however, nut paid and the
plaiutiff sued to recover it.

ihe prom se was held to he enforceable though here the

defendant's promise was given to the plaintiff and the
Consideration was fli rnished b y the plaintiff's sister.

of ('onsidcrotion

Consideration ma y he of three t y pes; as it appears clearly

NMI the language used to define the term 'consideration'—
his ac/n' u thslaiui'l f, y'u dew. or lOiS or aI'stii/ustrcw
or 1 do or to a/s/a/it /hui doiii. So, we get the
following considera Li ens:

1) F.xecutory consideration;

2) consideration;
F\ecli ted

3) Past consideration.

5O) 4 \Iad 137: 6 bid ,Jnr 402.

'WA
Chap! c, 5 : ConsiLIcra! Wi?

1) l.xecutorv consideration:. jkxecutor y consideration

constsot Lprornis) do or to5lSsTSin frm doin.g
soniethin' i ir time In such case, the liability
econies outstanding oil the sides and in fact most
of the business contracts take place ill
A agrees to sell a car and B agrees to bu y it ata certain
price, here the consideration is executory.

2) Lxecutedconsideration:(1 If one of the parties thereby

performs his part and the liabilit y on another's part
remains outstanding, the performance of the earlier
person is an executed considera1ion. In other words, if
any party to a contract performs hi' part and the other
party keeps it for future time then the part which i
performed already will he called executed consideration.
Suppose, A agrees to sell his computer for 1k. 30,000, B
agrees and pa ys the amount stated In A but still A has
not delivered the car, then the pay men ma I' B y [3 will
he considered as an executed cunsiderati ii.

3) Past consideration: B y using the words 'has done or

abstained from doing' in section 2(d), the law clearly
recognized past consideration as a good consideration,
though it is not generally recognized as consideration in
En g lish Law.lf the service is rendered ill past at f-lie
request or desire ot the pronhis)i hc e': iin I
promise is regarded as an ad mission that the past
consideration was not gratuitous and which is evidence
of the amount of f-he reasonable reniLmeralioii oil
faith of which the services were rendered'.) Thus, in
SiudSa 1/..41'ra/mm 1, the plaintiff rendered Services to
the defendant at his desire during his minority and

I Re Casey's Pateni s ( 1 892) 1 rh - 104, 115, per Bowen, I..3.

' (1359) 20 Horn. 755: ci. 11918f 20 Boni. L. l. 14 I -

118


C!7iit'? : : Ce?H/h'ratioH

continued those services at his request after his majority

and this was held to he a good consideration for a
subRequent express promise b y the defendant to pa y an
annuit y to the plaintiffs but it was admitted that if the
services had not been rendered at the desire of the
defendant the case would have fallen within section 25
of the Act." According to section 2(d), the act should he
done at the desire Of the pomisor. A past consideration
should he distinguished from an execti ted cunsid oration.
An executed consideration is done in rLsponse to a
posit!ve promise. whereas the case of past consideration
is not so.

ConsiIeration.'arlc . SL'l i tiiil_e1errrent.qJi..±iciPlltl'CL

ig the
Section 25 la y s down the general principle regard
turh'nTit of corisid eration to form a contract in this way
that— an agreement made without consi 'r is void'.
From here t e rule has sprung t at I wre is no
consideration there is no contract.
to the venewl princij)lLv con tracts u'illwiit

\ colisiilcra I jell

ection 25 of the Contract Act, I also speaks of

he valid
exceptions In the general principle where there ma y
agreenlents without consideration. In the following three
circumstauccsther e can he valid agreements w it h out
con rtioI:
mt n. t made out of natural io u and , Itth ihifl
W(
g ection 25( I) while la y ing down the first exception sa s
that—

e\prehsed in writing and I'LgiStcied tinder Lhe law or

it iS
the time being in force for the reOistration of doctinwnt

Nititla, TJit Iridu1ri Coiii,'aci Act. IM ed. v I I



(Irap!ei .5 .

and is made on account nf na triral 1 '' and a Ifcct err

hetvuen partiv standing in a near relation to cacli oilier;

So, it appears that first exception requires to ltif\ three

ci )nd tii )ns. The y are as follows:
I

i. [he parties stand in a near relation to each other

and the a g reement is made oLit ci na H ra love and
' Iffection. l . It may he one between bi thur and iii,
mother and son, Ii usbarid and \\ Ic and likewise.
One thing should he emphasized here that mere
nature of the subsisting
relationship that the arc
nearl y c nnected with each other a rid existing of
natural love or affection are not sulticient to enj IV

the privilege of this sub-section rather it 111W;1he

proved that that particular agreement was made
out of that natural love and affection. So, even if
there is an agreement between father and son
where the relatronship k one of natural love am
affection Iii it the agreernen I was made at the hit of
anger not on account of love and a fectii in Ilia
agreement shall not he enforceable without
consid eration because of non-full II merit of the
requirements imposed b y law in this regard.
. . Itiswj
.
74itisregisHred)
Z) he second e\ception - is mentioned in ection 25(2)
\\hIChO,about toc (imJ l entd Past \ ( t r \ ser 111111

Suction 25(2)

It is a promise to compensate, wholl y or in part a

person who has alread y voluntaril y done something
for the promisor, or something which the promisor
was legally compellable to do;

1 20
C/;Ufs r 5:

Iwo t y pes of promises arec vered b y this exception:

To compensate who! lv or in Part a person who has

alread y vol untari I done snethin for the
promisor. Suppose, A finds the lost dog of B and
then B promises to gi\ e A Tl. . 1000, the promise
iiade is entorceable b y law w ithlut coiisidera hon.

To cnensate wholly or it a person \\ ho has

alread y voluntaril y done something I or the
prom so \% -h il-11 he was legallY compellable to do.
Suppose. if A pa y s the gas bill ot B and then B's
subsequent promise to compensate A is
eiifo rceahle Without an y considera I ion.

So, we see that a past voluntor, service has been considered

as a good consideration under section 212Y It is ml material
\\'hether that \VdS a mere \ ol unta iv act or \Olun Li ri lv doing
something which, in tact, [he promiser was legall y hound to
perform. One thi I I must be mentioned here that if
something is done at past ol the request of the p romisor then
it oiiies within the definition of section 2(d) as past
consideration. But here the act done volun Liii Iv is covered
bY it. This was not done at the request of the plomisor,
because then there would not arise of being covered by
exception as that would be covered b y the definition of
consideration itself.

ird exception is about the promise rega r: tjj

yic nt oLLub U_ ii hon 25(3) la y s down
that:

it is a promise. made in writing and signed h the person

to he charged tllere\vith or b y hisagent generall y or
speciall y authorized in that hehal I, to pa y wholl y or in
part a debt of which the creditor might have vnlo:ced
ga\ meaL but for the law for the limitation of Suits.

121
1-ol!owing conditions nit he satisfied to enjo y the privilege
of a con tract withont consideration according to the above
mentioned sub-section, these are:

he promise must be about avment of tiipeharred

deht)So if there is an' claim iiich i barred b y the
of limitation for the time being in force, then the
subsequent promise made to pa y the debt s
enforceable. without consideration if the next cond finn
is satisfied.
/ 1 5 Muld be writ ndin wt

It was held in L)iula/ W. K. 1 > iiLnli Bank' that such a

document must also he propok stamped. An uncoliditiOnfll
promise in writing and signed b\' the part y to pay on
demand a time-barred debt though not a tresh transaction
comes under Article 49 of Schedule to theStamp Act,. 1
(Act No. II of 1899) and hence w I I require rej itisi Ic stamp.

An unconditional promise to pay a time-barred debt in

writing duly signed does not come under section Ic) of the
Limitation Act, 1908 (Act No. IX of 908) if it Is not made
before the expiration of the period of limitation: It directly
comes under section 25(3) of the Contract Act. It was held
in Riasati,IIa Vs. i/u' Tripura ietudern Bank ltd. that when a
prunusu in .rprcne7 A , " AHne with signature froni \vlliCll a
contract to pa y a time barred debt can he spel eu oui, [
amount,'; to a contract within section 2(3) of the Contract
Act. The Court observed in Tripura Modeiii Bank JiLl. Vs.
1(7111 Bak5/17 that-

39 DLR 243.
2 lOrd,
Ibid
1 (1 nca) 20 1 )LN 41.

119130) 18 DLR 49ft

122
 C/i ij li '1 5 Co.' is it It' iii f io;

while an i1Ckl')\'IidL&.'InCrit unde section 19 Of the

Limitation Act is required to be made before the period of
imiti ion prescribed has e\plred, a pronuse under section
25(3) of the C tract Act ma y he 111)30 after the period of
limitation.
[lie letter in the present case Whic 11 conta ins the phrase
sign belowacknowledging the debt up to date) clearly
indicates a promise to pa y so di- to operate as a erontise
within the iiieaitiit ot section 23i ol the Cont I act Act.
lin1nalified ciLkiiovdedgumenl niade b y the debtor is by
itsl I a promise to pie. Therefore. the expression u'ed in
the letter reierl'eL) to above is in agreeiitent as
contempli ted b y section 25(3) of the Contract Act and
gives a fresh starting point LI limitation to the Bank for
realization of the debt specified in the si id letter.

/
KA, L(j,
uaciç of consideration Q
I he word something' used in the delinition of
'consideration in section 2(3) of the Contract Act implies an
important principle regarding consideration that it ma y be
nvthing. It is immaterial whet her [hat is sufficient or not.
The d efini I on sa s's:

W]1en. at the desire Of the protlusor, the 1 1t ' or aiiv

other person has done or absta med from LI Oi li. or does or
abstains from doi ig, or promises to do or to abstain trout
doing something, such act or abstinence or promise is
called a consid era ti m for I he promise.

Here siiir'tJii;O means an y thing which has ifl\ \ aloe in the

eve of law. It implies that consideration need not he
adequate because it is not mentioned in the law that
consideration must he sufficient rather 'sooii'lluuc which
requires the existence of consideration in an y form. In other
words, it is required by law that consideration must exist in
reali lv whether that is sufficient and adequate compensation
in exchange of the promise or grossl y inadequate against the

123
C/ia1 1 i'i .5; Con jil li itooi

proni.se made. I fence there is a popular Conk - ll.lsiml that

consideration must be real, it need not he admjuate.

SO, the only p(Ant is that whether a nvthi rig is done at the
desire of the prom isor? it so, then that will he su ti icien I to
consti tn tic a consideration as required bc law for the
for-matron of valid contract irrespective of the gravit\,
ual ity, quantity or inadequac y of the thing so chine. The
ohser\ at ion made b y Pe('r Gibson 1.1 in a mccii t English ease
is worth mentioning here--

On the second point, the consideration nio iiir from the

plaintiff, (counsel for the defendant( submitted that in
rca Ii tv there was no consideration pro vided b y the
plaintiff. The plaintiff was expressing himself to he reid,
willing and able to proceed to e\chailge contracts, which
was, he subnir tted, simply what he would have to do ill
an y case. Further, he said that the judge rightl y described
the threat b y tim plainti ff to issue an injunction as vapid.
that b, ti iv of no substance. lie ,ic ordiiilv submitted
that there was i rothin b wa y of valuahlc cons) eroti )n
which the defendant received. I cannot acr ept these
submissions either. I accept that the threat of an iiijunct ion
only had a nuisance \ a Inc in that I cannot see hon the
plaintiff could have succeeded in any claim. Nevertheless,
that nuisance was something which the defendant was
Need from b• the plaintiff agreeing to the lock out
agreement. Further, the threat of causing trouble with
()L L :.):',c .(te' 1-h ii!d have been a
nuisance to the defendant and again removal of that threat
provided some consideration. But I also believe that the
promise b y the plaintiff to get on b y (mu ting himself to
ust two weeks it lie was to exchange contrack was of
sonic value to the defendant. File defendant had the
benefit of knowing that if it chose to give the plai ntit I a
draft contract to agree, there would be no delay oil

I
Pitt \s. 11I11 Asset ManaCc-iiienl lid. (1994) 1 \\'l_f< 327 at p.
322.

124
 plaintiffs part beyond a n'ia\imuio of two weeks
held I hat these three items
therea Ocr. The j cle
constituted valuable ccii. deration ifI icien to support
the lock out recinent and I respectfull y agree with him.

If the parties agree ui a traisaction with inadequate

consideration then the law is not to ii tenure ill it. Because,
Hie amount of consideration is a matter to be decided b y the
parties to a contract. Ihe la\v Will examine onl y whether
there is an y consideration or not. I he parties will bargain
and at one stage the y will be agreed and as such the Count
or the law must not interfere in this freedom Of transaction.
But the Court will examine side b y side whether the consent
is given freel y or not. Once it is seen that the consent is
given freely then tie Court will not take the matter of
inadequac y of consideration into consideration, in other
words, if an y party freel y doii5ents to do something with
grossl y inadequate consideration, the law will not prohibit
him. But if the court sees that the consideration is
inadequate then the court ma y he suspicious about tree
consent that whether the consent was given freel y or not.
This provision of law is embodied in the explanation I1 to
section 2, which spells out as follows:

An agreemen I to which the consent Of the prumisor is

freel y given is not \ oid merely hecaue the consideration
is inadequate; but the mad equacv of the consideration
may Be taken into account b y the Court in determining the
question whether the consent of the pronusor was fi-eelv
given.

,1o,. the expfauiatioii makes it clear that if consent is given

freel y then the agreement will not be void merel y because
Hie consideration is inadequate. But the Court ma y take into
account the amount of consideration to clelernu ne the
question whether the consent of the promisor was freely
given or not.

125
 CHAPTER 6

LEGALITY OF OBJECT AND CONSIDERATION

It is one of the essential elements of a valid contract that the

object and consideration of an agreement must he ]awful.
1 bus there may be an agreement with an illegal
consideration or object, but not a contract. To constitute a
contract both consideration and oblect of an agreement most
be lawful.

?vtcansncg, f object and cons! Ierabo,z:

Section 2(d) of the Contract Act, 1872, defines the term

consJeration'. It Say When, at the desire of 1/ic pronhisor f/ic
prom. ci (1111/ of/icr person has done or ahsfai it'd [rote doing, or
W. ' sloitis from doitn, or prOhhiist'5 10 tlO or to ahisttiiii row
doin .sOillcfiiiny, site/i act or a1s1n1c11ci' or promise is called a
coiiidera1ioii br f/it' prom/sc.But there is no such statutory
definition of the term ubju V rd it rnli ,,l he understood
from its ordinar y legal sense. Vie term 'object' is different
Worn the word 'consideration' which implies the purpose of
an y particular act. So, in relation to an agreement the term
'object' means the specific purpose of the agreement. in
other words, consideration is something done at the desire
of the promisor whereas object is the purpose for which the
acts are being done. 1or instance, there may he an
agreement between persons to sale arms for killing some
persons unlawful tv—here the otpeci ol this agreement is to
kill some persons unlawfu liv.

126
 / \ :i"!ti !/

S ecti on 10 of the Act requires that to turn an a roe men t into

a contract the consideration and Object must he lawful.
Section 23 la y s down the basic rules regarding the
considera t ions and ohlects \vh ich are la \% fu I Again, section
24 deals with the ille y alit ol consid era Lion in part. let us
g
examine the provisions relating, to le "--ality of object and
Consideration:

Which cons e ra saric1ohjedsare not lavvful?

Section 23)

c nsideri Lion or oht ol on or iienL is a Wt 111,

unless—

it is forhictden h\ Liv, or

is of ucli nature that, if permitted, it would dufea

the provisiolls ot an y Liv; or

is fra oclu lent, or

ii\ok'es (if, implies fli j (ir\ to the person or

p roper t v of another:

the court Y ards it a mmoral, I ii opp msed to

puhOc policy.

In each of these cases, the consideration or (bicot of au

a 0 r eenient iS Said to he unliuhml.

11/its! ILium I(!S

a) A agrees to eII hi,s hos' to B for 10,000 ]aka. I-lore B's

promise to pay the sum of 0,000 1 aka k the consickra Lien
or A s promise to sell the hutic', and A's prom iso to sell

127
C/nip/cr 6 Le;a//tp Q[O/'it it and conshhMim

the house is the consideration for 13's proillist to pa y the

0,00(1 Taka. These are lawful considera Lions,
(b) A promises to pa y B 1400 1 aka at the end Of AN months if
C, who owes that sum to B, fails to pa y it. B pr mises to
granttime 10 C according ly. Here the proi' m'o of each
party is the G insidera tion for the prom se of the ()tile]-
party. and the\' are lawful i onsidera tions.

(C) A promises, for a certain sum paid to urn b y B, to make

good to B the value of his ship if it is wrecked oil certain
vo y age. Here A's promise is the consideration lot 13,;
pa y ment, and B's payment is the consideration lor A's
promise and these are lawful considerations.

(d) A promises to maintain B's child, and It promises to pay A

1,000 Taka yearl y Ini' the purpose. Here the promise of
each parts' is the considera finn for the promise of the other
part y . The y are 1a%\ !Ill considerations

(if A, B and ( enter hau an agreement for the di\ isua!l among
them of gains aciji.mi red, or to be auLlil I red. b\ II iem by
fraud. The agreement is void as its object is unlawful.

(1) A promises to obtain for 13, all in the pi hi i

service, and 13. promises to pa 1,000 Li ka to A. The
agreement is void, as the consideration for it is unlawful.

(g) A, being agent for a landed proprietor, agrees for monc\',

without flie i,iiio H ho- ' rincinat, to obtain for 13 a
lease of land belonging to his prinii pm1. I he agm'eemeni
between A and II is void, as it implies a fraud H\
concealment by A, on his principal.

(h) A promises B to drop a prosecution which he ha

instituted against B for robbery, and B promises to restore
To vahe of the things taken. [he agreement is void, as its
Object is unlawful.

(i) A's estate is sold for arrears of revenue under the

provisions of an Act of the Legislature, b y which the

128
ChaJILI c L.yaiilii die/cu iii

defaulter is prohibi ted I miii purchasing the estate. B.,

upon an understanding with A, Hecomes the purchaser,
and agrees to conveY the esta ft to A upon receiving from
him the price which B has paid. 1 he agreement is void, as
it renders the transaction in effect, a purchase Nv the
defaulter, and would so defeat the object of the law.

(j) A, who is 13s miek/ttor, promises to e\erilse his influence as

such,with B in favour ot C, and C promises to pa y 1,000
TaLa to A. The agreement is void, because it is immoral.

(N) A agrees to let her daughter on hire to Ii br concubinage.

The agreement is void, hecause it is unmoral, though the
letting ma y not be punishahle under the Penal Code.
So the above section declares the following considerations
and objects as unlawful:

Fcr)iliIce 1 1 1/ 1, 1 ' V: If the consideration or object is ill

contravention of an y legislative enactment or regulation
made b y a competent authorit y that vil I not he a lawful
consideration. The obvious illustrations are the acts
forbidden b y the Penal Code, I Sot). Of course, beside Penal
Code, lSoO, there are man y other laws which also forbid
certain acts to he done, those are also covered b y this
provision. For example, if there is an y agreement between A
and B to comm t a theft and to d i\ ide the propert y so
acquired between them equally, that agreement is void,
because the object is forbidden b y law.

Def'it oh' proVision O f °B' /1W: It implies that though the act
agreed to he done is not a direct violation of law hut if that
is permitted to be done that would defeat the provision of
an y law, then such object or consideration will also he
unlawful. in such cases, it ma y deteat the provision of any
legislative enactment or an y pr vs:on of an personal la\\
or ofan y other law in force in Bangladesh. 1 bus, if a Niuslim

129
 Chai/er 6 Licgi6lii / a 7ecf and ccwsuii'ratioii

con pie enter into an agreement that the wile will 1 i\ e

separately after the marriage, the agreement is void, as the
agreement is made in violation of Muslim per'onal law.
It was ohsei-ved in Hafi AliiIe/lah K/ian Vs \7sar .1ii1iaiiiiiiaJ
KIiaii i that—

If under the law there is Some CcfldjtiO precedent

attached to the validity of a transfer it is open to the
parties to enter into an agreement subject to compliance
w th the condition precedent. The attack on the agreement
for sale on the ground of publi policy could oek succeed
if it was shown that the intention of the agrceoien t was to
defeat a law. If the parties that enter into an agreement for
sale conkninlate unIv it sale with the rejuisi te sanction
they are not making any effort to defeat the law.

: LLiL' nt: If the object or consideration becomes fraudulent.

hen the agreement will be illegal agreement. What is
fraudulent that is a question of fact. It may he fraudulent by
concealing the material facts or oTenklisp.

iWuriIp_the persii/i 01 injury means

jr'rh/ ctauol)icr: f IC 1-0
the violation of ones legal right though We ma y not have
an y actual loss or damage. Thus the agreements to break the
car of another, or to defame another, or to trespass to
another S pcupcl L', ca ;h may no cnim p arti al loss, are
void,

It was held in Hossain Ali K/ian Vs. Firo:ii Ri'cp077 2 that the
contract which adversel y affects the lawful interests of a
third party both in status and in respect of right to property
is void. In this case-

1 (1965) 17 1)LR (SC) 481.

2 (1969) 21 DLR 9.
:c

130
 o Le?1itl( to/i/cd lul/ l,Ni!l7ltivu

Fil e wife brought a suit for setting aside a compromise

decree on the ground that it was ohlainecl b y fraud and
the .Vi0!l)1!? was tiled ithou I her kiwIcdie. 1 He
defendant husbands case was that compromise was
signed b y the plaintiff after been aware Of itS contents and
that sin' leceives a sum of Us. 2,30000 in consideration Of
the COl11i'Ofli5e.

It Was stakd in the si'!i'i III ,u:i that the plaintiff had
admitted that the soii horn a, her was not of the defendant
and the said son was not entitled to an y monthly
allowance from the defendant.

IKe Court of appeal blow on ihis compromise observed as

follows: -
On the plain nieaiung of these terms, the bo y stands
In he illegitimate child and is not entitled to any
maintenance from the defendant. Needless to say
that these terms do involve ni wv to the status and
ppertvof the minor son. 1 hat being the position,
the consideration of the e/L'!nll11a is void-

1 h'!:

Lvi'rv ait reei n e nt unlawful in nature is void - Consequence

of the admission by the p Ia inti ft in the present siilcinimii
'vhicli tori-us part of (lie decree is t hat the son will He
"educed to the status of an illegitimate son. Itciearlv
in\olveiiiurv to his status, right to maintenance and also
inheritance. That being so, the terms of the contract would
come within ambit of section 25. Such an areeiin'nt is
uniawfiil and is void,

Tin' Court rd'arlis it cs i,wnord era uc Ud J2LIL This is

in fact a wide power given in the hands of the Courts, because
what is 'immoral' or 'opposed to public policy' is a mixed
uestioii of law and fact, since the ste fri K' dot' not define these
terms directl y , so the interpretation remains on the discretion
of the judges. Moreover, 'moralit y ' is reall y a variable concept

131
Chaptir a 1,e, thtij o/ oLjt'ct id

which is dependant on man y factors including the cniture of

one time. And public polic y ' precisely means public welfare
which indicates the ultimate well being of the people at large. It
Was observed in T)u/a Al/a Vs, Haji Aid. Llrahiin that --

l'ublic policr and nioralitv referred to in suction 23 of the

Contract Act, are by their ver y nature variable thugs and
d]wavs an unsafe and treacherous ground for l'g<i I decision.
The determination at what is or is not contra rv to public
policy or morality must necessaril y depend upon the merits ill
each case and upon the stage of development of public
opinion and moralit y of the ci mmuni tv concerned as a whole.
T ie Courts are, as such, very cautious in deciding the ilucstion
and normally rd uclant La invent new heads of public pol ic y or
to extend it be y ond the class of cases already covered b y it.

Public pnlicv douh not comprehend, a'- often popularly

imagined, all the political policies from time to time of the
Government nor does it render void agrenient'-- mire lv
because they tend to defeat some purpose ascribed to the law
which is neither apparent nor necessaril y implied in the
language of the enactment.

Plum it is now well settled that the provisions of section 23

of the Contract Act have to be construed strictl y and the
('ourt should not invent new categories or new heads of
public polic y in oi'dei- to invalidate a contract.-

If the contract of lease of a factory was lawful at the time

when the lease was executed the fact that the operation of
the factor y was found as falling within mischief of a statute
would not make the lease in its inception opposed to public
policv.

(1956) 8 DLP. 616.

2 Manzoor Hussain & (Ahcrs Vs. Walt Mulianimad & others, (19G)5)
17 l)L,R (SC) 369.
:1 Haji Abdul Karim Vs. Sb. Alt Mohr, (1959) 11 1)t.R (SC) 313.

132
Chapter ii . Lt'i/iti LJfO'JLt t luLl (L,uilcu atioui

ided th
In J . , 1 1 .\ ha A1'dui (..aiii 4 it was dec atit is aua inst
public polic y to make a We of felon y, or attempt to secure
henelit b y stifling a prosecution or compromising an offence
which is not compoundable in law and an agreement to that
effect is wholl y void. If from the evidence and circuintanceS
A can he inferred that the consideration is referable to the
withdrawal of a criminal proceeding the agreement must he
held to he void under section 23 of the Contract Act. r If,
however, there is a lana fiLa' civil dispute which the parties
have decided to settle and there happened to he subsidiary
proceedings in a criminal court, it would he contrar y to
public polic y and to justice and eq iii t y to allow an y person
to escape his legal liabilities on the mere technical ground
that there was some tindersLinding that these criminal
proceedings too would not he pressed to conclusion.'

The Court observed in Adati Ala Vs. 'teL's/I/i ) i at i u i r and

another that—

if fo l. %N-ithd i-awing and comproni 5mg a non-comiipouiidable

ca s e an arcemcnt is entired ink, between the parties then
We same is against public polic y and the bar of section 23 of
the Contract Act is attracted.

B y an oblique and indirect reference the object of the

agreement cannot he brought vi thin the mischief of section
23 of the Contract Act.

If consideration is for compromising a non-compoundable

offence then it is hit b y wction 23 of the Contract Act as
opposed top public policy.

4 (1953) 5 DLR 33.

Ibid.

1 9013l 4S DLR PUM 6-1.

133
C/iii'/er n Lccuiitv o[ u /c! au1

It v\'as observed in Rid/ia Ba/lai' 13a-aik V. Ki'is/wa ciiuIari

[i.ik that—
In order to determine whether the considera tioii ot a
document is prohibited b y section 23 of the Contact Act it
is to be seen whether the lads are that this contract came
into existence, when a criminal pr secu tion Was lining
on the head of the executant or the contract va entered
into for the purpose of taking au-av the prosecution N if a
i'iofl-coinpoi iiidable offence fron i the hands ot 11w Crown
prosecutor in their own hands . It would be ILgitilliate to
infer that in those circumstances, the condderatioii n oii!d
he a consideration which is prohibited b y Sctiofl 23.

The Court observed in Md. ALiItil Kaseui V. A4o[i:uddiii Shalt

that—

It has been contended that since the document was

brought into existence during the pendency of a criminal
proceeding in which plaintiff was the coniplainiol and
defej ida nt was the iccLisecl, it k4 hit b y sect ion 2' of the
Contract Act as being against public polic y , intnir'lv the
stifling of a criminal proecution. The most important
question in this behalf is, has the criminal case been
settled as result of and because Of the impugned
document? If it is so, it would he hit b y the prove- inns of
section 23, it not, it would not come within the mischief of
the said section, notwithstanding the tact that it come into
ho neridencv of the criminal proceeding.

The execution of the document at a time wnen [lie suit

was pending may amount to a strong piece ot
circumsta ntial evidence tending to show that the criminal
proceeding was compromised as a result thereof, hut it is
no more than a piece of evidence which ma y he rebutted.
fhie Court would look to the other evidence and attending
circumstances in order to arrive at a finding whether the

(1965) 17Dt.R435.

124
 L L'dfn ]V(ct iiid C:; ii9eu

e\CCUtiOfl of the document Nvas the c nsidera tion for a

compromise of the said Criminal proceeding. If the
document is merel y e cuted during the pendencv of such
a criminal proceeding and it it is not the hak ut
compounding the criminal proceeding, it would not hit by
ectiofl 23 of the said Act.

If the principal contract is one which is void all liii! in or

comes within the mischief of section 01 the Contract Act,
then the arbitration cia uses providing Ior set tienient of
dispute between the parties b y arbitration wi U be
II-(_i
unenforceable and the thereon becomes a nulhtv.
Where a person invoking the aid of a court to invalidate a
contract on the ground of illegal it , is himself imp] ica ted in
the illegalit y , the court will not, as a rule, assist hi m. It was
held in Centra/ Ruik ot (ti/i; (.11. l's. .\lcssr. Jati A
I /ii 1s117ail l that it is undoubted Iv true that the contracting
parties ma y enter into a contract on special terms if the y are
not contrar y to the provisions of section 23 of the Contract
Act and thev shall he bound b y the terms of such agreement,
but a part y seeking protection under such a special term
must first establish that an y of the clauses of the said special
contract k attracted to the case. The Court decided in 3d!.
A:aiu K/tin Vs. Ak/tariniin'ssu deguon that a suit for recover v
ofp propertytransferred in consideration for an illegal
promise would not he and so also a suit for declaration that
a sale deed executed in consideration for an illegal promise
will not lie. It was observed b y the Court"

When the parties to a contract are the:iielves in Liui Iclicw

neither of them is entitled to ask an y reliel from a Court of

(1905) 17 l)I,R (SC) 369.

Ibid.
1963) 17 E)L0 582
(1957) 9 ui.n \\I') 19.
Ibid.

135
Chiptcr t. L'i!it Y o 1foblec f 11101 i)lSi'i'iititiii

law. The Court will not conic to the aid of either park' to
retrieve his position. In a case where the illegal purpose
has already been executed in whole or in material part, the
law leaves both parties to I heir fate.
Section 65 is not applicable where a contract is void th untie
under section 23 or section 25 of the Act. In a Pakistani
case'

Anagreement entered into between the appellant and the

respondent contained a clause providing that if 11w
respondent attempts to offer bribe to an y eniplovee of I 1w
appellant, the appellant could confiscate the price of [hi'
work done b y the respondent even if such a ttenlpt
occasioned no loss to the appellant. Accordinlv, on an
allegation that the respondent offered bribe to an engineer
the appellant confiscated the price of the work done by
the respondent. The trial Court found that the said clause
was pe I within the niean ic of section 71, 0 'n tract Act
and held that the appellant could have confiscated onl\ a
reasonable sum out of the pride of 11w vork completed
before the otter of bribe. On appeal to the High Court, the
Court

(a) The clause providing that the price of the work done
by the contractor may be confiscated even it no loss
\\ 'l 5(5-lion 73, Contract
Act and void under section 23 but section 74 which
dealt with breach of valid contract had no application
to the present agreement which was void ab in it in;

(b) that the clause in question conferred on the appellant

jurisdiction to punish the offence of bribe and that the
appellant could not assume that jurisdiction unless

P. K. Basak Co. Vs. Gossen & Co.. (1960) 9 DLR I.

PLR (1960) 2 WI' (302.

136
 Ii?dii 1 /ccf ami

empowered b y the 1 islaturL' subject to the coildl lion

that sta ft %\ Is a part y to the prececLil ng*:

(c) that the claus % ) s a so e\cni He cCaL1e

subjected the iespond nt to double penalt y that is,
colisca tiOn ot price ot the work done and
prosecution in the criminal court.

It was held in / ii'ji/ti k'uwar 1)75 \ 's. I 11010 K otis flas

when
that a contract is hit b y section 2 of the Contract Act
consideration or object of an agreement is unlawful. In this
Cast,.;—

I he plaintiff had initialed three criminal pmceedings of

which one Wa 1 under section 406 I.E .6 - aainst
Inc

brother the defendant, and when these proceedings crc

pending belore the Nlagistra te, the said \lagi'-trate
suggested a cot promise Ni'tvecn the brothers as result of
\vIlich the deledant alter 4 da y s executed a i 1 0 iim!i t,1 in
favor of the plaintiff to setl to him the suit properties and
C)11
that ver y date proceeding under section 406 wac
dismissed or non-prosecution. When a suit for specific
pertori71dncc of contract was filed b y the plaintiff, it was
held:

The ver y fact that a case was initiated b y the

plaintiff under section 400 of Pakistan Penal COLIC
goes to show that the defendantwas in a very
difficult position when the learned \ lagitrate
was dealing with three caces and was suggesting
compromise and as it appearc that term of
agreement were settled on and the case
under section 406 Pakistan Penal Code remained
pending till 30.4.5 when the parties entered into

(19(03) 2 1 OLR 915.

- Ibtcf.

137
)
 CIiii'tcr (1, I ?!/ otOl/('Cf and (1'))sici(itji)fl

the agreement and an order was pa . -.ed in the

proceeding in these terms: 'The colupla ii:ant does
not proceed, dismissed under sochtin 203
Criminal Procedure Code.' We are of the view
that this is sufficientt to hold that this iS dntract is
hit b y section 23 of the Contract Act as the
consideration or object of the agreement is
unlawful.

It was observed b y the Court of Appeal in lifim 5 iiiii'I (Aid)

Vs. N uks/m?10 MatnN and others that

The phrase 'equit y and good conscience" is not in

Order VII rule 11 of the Code of Civil Procedure and
as such the learned single Judge wrongl y imported
this concept to that provision of the Code which he
\\ as not permitted to do and there is no reasoning as
to how the agreement is void as opposed to Public
Polic y under secth in 23 of the Contract Act and as to
why the suit ought to have been filed in the family
Court when there was no issue as to guardianship
anJ custod y of the child and as such, the juclgmen
suffers from irrelevant and rambling exercises bereft
of legal acumen and hence the same is set aside.

jca1 consequmices or acre('nleJ1ts wilcie L t.n3 a::;

( ect
S s are unla wful in part: Section 24 sa y s—
If an y part of a single consideration for one oi more
objects, or any one or any part of any one of se\erat
considerations for a single object is unlawful, the
agreement is void.

Ibid.
2 ] BIG (AD) (37.

138
Lnaplei 0 : LiIi1t Va1'o'c Wd L)S1LItJ1)1

,uIThu

A prnie to uprintciid 0 11 11011111 1' ot B, a legal

1 11 ,1 1 11 1 f,1 ol indigo, and in iIkil tiaIfi in other
of
,irticIe. B P I-0111i^' CS to pa y to 10,000
A a alarv 1 ,ika a
vcar The arccnuent u void , the object of A' promise and
the consideration fol B's p roillise bein in part unlawful-

Thuo, the laws en umerated in the above section ma y be

protected through the following table:
\,i1lrt Iuiuihi Leu,'ii - -
\uiur/uiu,nt''r ofwIs1'ri.?tiJll

An y pail iii ,i single c nsideration us I Fur one or more the arer'mcI1t

u111av1ut
oid
alIr one of I or a sincle lie ag1oemen
An y one or mn part 0
several consuderation l L1lilaWtUl I ohiect. i nJ.
 CHAPTER 7

VOID AGREEMENTS

A contract starts its formation with the proposal at its first

phase, which ultima tclv turns out as an agreement passing
through the stage of promise. That agreement then will
reach to its final destination, I.e., ma y be turned into a
contract if it can satisf y the requirements of a contract. But if
it fails to satisfy the legal requirements to he a contract t hen
that becomes nothing hut unenforceable h\' law which
cannel urn into a con tract e

What is void agreement?

Section 2(g) of the Contract Act, l 72, sa ys that "an

reement enfo EeI5iaw is said to e void". So the
lav" is ver y much simple on this Point which states that an
agreement is void if it is not enforceable by law. As such we
get two elements of a void agreement:

i. There is an a rnement, and

ii. law.

lhere must have been an agreement for the first time and a
mere promise which has not been turned into an agreement
can not he termed as void agreement though that does not
become enforceable b y law. Then the sole test for in
agreement to be declared as void is that whether that is
C/ii Eci ,1 CC/IC)!,s

enforceable b y law or not It not then will be termed as void

reenu,'nt.

A'lei ill c If t'iifii)'/r' (Iif

It is worth mentioning here that the law has not kept th

term 'enforceable b y Ia \V uncletined to be interpreted a
discretion, rather the reading of sections 2(h), 2((4) and 10
togefhei' gives a cleat answer to the citiestion that when will
an agreement be enforceable b y law' or'what a re the
conditions to be satisfied b y an agreement to he enlorceable
b y law or 'when can an agreement be termed as not
on forceable b y law'.

Section 2(h) states that 'an agreement enforceable b y law is a

Contract'. Section 10 la vs down that—

All y;reeinents are contracts it they are made Nv the free

consent ot pi 1'I ies Co) Ill t011 I to contract fer a lawful
coreidem ion ,ind witi lawful object and aic not hereby
e\ pres5lv d echi red to he void.

An agreement which is a contract that is, of course,

enlorceable b y law and since section tO la y s down the
agreements which are contracts, this in fact sa y s when does
an agreement become enforceable by law, and accordingly
we get the answer that to he enforceable b y lat,v, i.e., to he a
contract, an agreement must fulfill the following conditions:

i. ll-ie parties must be competent;

ii. There must have free consent of parties;

iii. 1—awful considera Non must be there:

C . [he object of the agreement must he lawful; and

i.
Cim1ifer 7 O1 I 1?( t'fllC)It

v. The agreement is not expressl y declared void Nv law.

Section 10 is nothing but a proper explanation to sections
2(g) and 2(h) that explains the phrase'enforceable b y law'. If
an agreement satisfies thu above five conditions then it will
he enforceable b y law and conse1ue11tialIv he termed as a
contract. So, if an iigreenient does not satistv an y of these
five conditions, it will not he enforceable b y law and an
agreement not cnlorceaole b y law is said to be void. So
there ma y be an agreement by the incompetent parties
without free consent and it is immaterial whether the
consideration or object is lawful or not, but obviousl y that
C,111 never turn into a contract rather it will he termed as

void agreement. So, according to the indication given by

section 10 there ma y be five t y pes of void agreements. The
toflowmg agreemen ts are void in which—

i. any of the parties is incompetent to enter into an

agreemen I, or

ii. free consent is absent, or

iii. consideration is not lawful, or

iv. the object is not lawful.

v. Apart froni the above mentioned four re.ison there are

certain other agrucilie Lo '.'nd ci' tin'
law declares them expressly as void And it is
mentioned clearl y that the last t y pe of cud agreement
is that agreement which is expressl y declared void by
the law.

First four Lv -) t\oidagreemen Is have already been

d i scussiJnjleoieceding lt e r s, which need not have
C
any further discussion, these.

I Section 2(g). the Contract Act, 1872.

142
 •'oiJ )ret'11ic?l!5

If the parties to) an agreenient are nconpetunLthat

will be void (sections 10, 11 ., 12 and AJ:duiujdjbtL. -
!J1a?aw?dcs_C1iosc).

ii. Consent ma y not be termed as 'free' as is required by

section 10 for various reasons-". I xerv agreement in
vIiic the consent is not ghvn lreelv cannot be termed
as void. Rather in most of such cases it becomes
voidable4 one and on this ground an agreement
becomes void univ in one circunistance where the
consent of an agreement is caused b y bilateral mistake
of fact essential to the ar'eement (section 20).

ui. F\ cry agreement of which the object or consideration is

unlawful is void.
• If a nv part of a single consideration for one or more
ohects, or an y one or an y part ol an y one o several
considerations for a single object, is unlawful, the
agrec'inent is void.'

[he discussion about the last t y pe Of void agreement will be

the main concert n this Chapter. ScCtion 10 la y s down
hat—

I agreen ents are contracts if .........and (10' not hen'bil

innicssiif £1L'cIarcd to Ls'

This pal ticular condition implies three things:

L If an agreement falls within the category of e\pressiv

declared voici agreements then it will not be contract.

2 (1903) 30 IA ii 4: 30 Ci1 539.

See section 14. the Contract Act. 1872.
See ser tRotS 1 D. I OA the (Toritrot I Act. 1872.
See section 23. the Contract Art, 1872.
See Sec flon 24, thc (ont ran t Act, 1572.

143
 C/ia pt i Void a 0/IlL')? I

• So, OLMOLISIV there are certain agreements which are

expressl y declared to he void.

iii. The term herebv' used b y section 10 iliiph€'5 to IYI(5ul't

the express declaration of void made by this law, i.e.,
the Contract Act ,l 872.

/6erent types of void agreements:

So, it can he concluded that there are certain agreements

-the Contract
which have been expressl y declared as void by
Act, 1872 These are the_Lollowing: -

1. Agreement made withoLit consideration (section 25).

2. Agreement in restraint of marriage (section 26),

3. Agreement in restraint ottrade (section 27).

4 Agrennientsn re iawLt-h.g1 proceedings (se(_tion
2$).
.Agimen1sJi.e meaning of which uncertain (section
29).
(i. Agreementshv wa y of wager (sectio) 30).
7. greements contingent on imptsib1es.vi'nts (section

8. Agreements to- do imp b-[€-acts (section 5(1).

Agreement made without consideration

An elaborate discussion has been made in chapter..)about it.

/rement in restraint of marriage

Section 26 la y s clown that—

every agreement in restraint of the marriage of an'
person other than a minor, is void.

144
jhi1'r : \ j

Thus the section prohibits ever y t y pe of restriction whether

total or partial or of an y t y pe. 1 he language used in this
section is wide enough so as to declare ever y t y pe of
agreement in restraint of marriage as void other than the
marriage of a minor. 1 his unguarded restriction ma y create
certain practical anomalies with some other laws.

Under Islamic Law, the wife enovs a limited power to

divorce her hu'hand and accordingl y the wife ma y divorce
her husband b y an exercise of her delegated power of
d \orce which ma y he given as conditional upon the 2i
marriage of the husband though Islamic law permits
polygam y . It would seem, therefore, that a provision in a
k'thijiiiamnli by which a Muslim husband authorises his wife
to divorce herself from him in the event of his marr y ing a
second wife is not void, and if the wife divorces herself from
Hie husband on his marr y ing a second wit e, the divorce is
valid, and she is entitled to maintenance from him for the
Period of iId1h.1

Again, an agreement by a 1 lindu at the time of his marriage

NOW his first wife not to marr y a second wife \\'h i 1st the first
was living would be void according to the literal terms of
this section. 2 Did the lcgislalure contemplate it? Niulla
rightly commented that 'it ma y be doubted whether such a
result was ever contemplated b y the Legislatu re'.'

Agreement in restraint of trade

Section 27 la y s down that—

ever' agreement b y which any

n one is mintrained from

i3aJu Vs. Bidauannesa (1919) 29 C.L.J.2,10.

Mulla. Thc
'F1 Indicin Contract ,c(, students cdii ion. I(W , cdn p.97.
ibid.

145
Chapter 7 : %ojtI a''rcenlL'i! t

exercising a lawful protesion, trade or huinc's 01 any

kind, is to that extent void.

Exeepticu 1 - Saving of agreement not to carr y on

business o which goodwill is sold: One who ell the
goodwill of a business may agree with the bu y er to
retrain from carrying on a sirn i1 r business " withill
specified local limits, so long as the bu y er, or any
person deriving title to the goodwill from him,
carries on a like business therein:
Provided that such limits appear to the Court
reasonable, regard being had to the nature of the
business.

Ambit of section 27: Does it require the restriiint to be

absolute?

The scope of this section is very wide so as to invalidate

man y agreements which are allowed even b y common law.
'The section declares all agreements m restraint of trade
(meaning a lawful profession, trade or business of an y' kind)
as void b y its general terms md iscriminatelv as it appears
1mm the plain reading of this section. So, even an agreement
b y which a partial restraint is imposed upon trade that will
he void. To escape the prohibition, it is not enough to show
ijiL iu ic r:nt' au 'd b y an agreement is partial, and not
general; it must be distinctly covered hv toe excepbui
mentioned in the Sect i on. It was contended in A1iuh
Cluiudr'r V. Rai Coo l ua i' : to validate an agreement in restraint
of trade in terms of partial local restraint hut the contention
was rejected b y the court where Justice Couch decided the
agreement to he void holding that "the' oorti restrained han
exercising a lawf ul p r ofe .s iot , trade or business, dv not menu no

I Mulla on The Iridon Coruruct Act, studcris edition. 10"' raIn..

.98.
2 (1874) 14 I3LR 76.

146
CI1ziJtLr Id 7çid'd')lid'll!

150/i/ft' it'StiiCti)i, I (lid! (10 llittli!0U tO 171 dJ ? hI a 'aitli/ iOf licE (Oil, 7

rOSE iiC 1012 11111 itO I to so 1112' ? 1

/ (LI'.

So, the words restrained from exercising a lawful

r
profession, trade or business' sho\\ the clea intention of the
legislature to appl y, it even to a partial restraint, in terms of
time or place, and obvioulv it does not re1uire the restraint
to he absolute to he termed as void under section 27. One of
the conditions of the section mentioned exception is that the
restraint must he partial and if proves again the above
meaning to he true that section covers ever y t y pe of
restriction, otherwise there would have been no further
necessit y of incorporation of such exception.'Tile words
used in section 28 la y down that an agreement in restraint of
legal proceeding to be void the restraint, iiiti'r a/ui, roust he
absolute. Section 27 uses no such word and so that the
ree]u i renient of an ahsol ute restraint cannot be imported
here in an y way. Thus the section does not distinguish
between total restraint and partial restraint for the purpose
of the legal conseci rience.

{reL'ments not in rt'strci j ut nJ tm dt'

is to restrict
[land cv, J., sa ys that the object of this section
contracts b y which a person precludes himself altogether
either for a limited time or over a limited area from
e\ercising his profession, trade, or business, nor contracts by
which in the exercise of his profession, trade, or husines, he
enters into orcli nar y agreements with persons dealing with
him which are reall y necessar y for the carrvi op on of his
bLisiness.'

Section 27 must he interpreted reasonabl y so as not to

invalidate the coni mon form of con t rack oh cli may

Ma(kc It/IC 'Y5. St iitainiai 1 (1 SOt)) 13 Mad. 472. 475.

147
 COL if) / el 7 ui,I n nie;

apparently seem to he made in restraint of trade. Thus if

some one enters into a contract with a manufactLirer that he
will sell his all products to him and not to an y one else, is
not an agreement in restraint of trade within the andi it of
section 27.

Ihus a stipulation in an agreement whereby the plaintiffs

agreed that the y would not sel I to others for a certain period
any goods of the same description the y were selling to the
defendant is not in restraint of trade.' Similarl y an
agreement to sell all the salt manufactured b y [he delendant
during a certain period to the plaintiff at a certain price is
not in restraint of trade.

Agreements in restraint of legal proceedings:

Section 28 sa y s—
Ever y agreement, by which an y party, tiwiclo is retrieted
absolutely from enforcing his rights under or in respect of
an y foniract, by the usual legal proceedings in the
ordmarv tribunals, or which limits the time within which
he may thus enforce his rights, is void to that extent.

Fxo.'plion 1.— . ]'his section shall not render illegal a

contract by which two or more persons agree that any
Qis P Ut e ' kit--it 110) 01 1.L •:cc:-. T"' ( any
subject or class of subjects shall be referred to arbitration
and that onl y the amount awarded in such arbitration
shall be recoverable in respect of that dispute so referred.

When such a contract has been made, a suit may be

brought for its specific performance, and it a suit other

I Carlisle. Nephews & Co. Vs. Ricknauth Huulctearni,ihh (1882)

Cal. 809: Mulla. Low of Conhroci. 10' ed.. 1).1)9.
Sadigopa Ri.imanjiah Vs. Mackenzie (181)11 15 Mad. 79: Mulla.
IXZ1L1 of Contract. 10t h cii. 1).99.

148
 Void ci-i,,it

than tor such speci tic performance, or tor the recovery of

the amount so awarded is brought b y Cue party to such
contract against an y other such part y ill epect of any
subject which the y have so agreed to refer, the e\i end' of
such contract sha I be a L 1 ,11' tO the suit.

fr 7'tiau 2, - Not- shall this section render illegal any

contract in wri 1in, b y which two or more persons agree
to refer to arbitration an y cluestion between them which
ha q alread y arisen, or affect any provision of an y law in
force for the ti inc hei n a to references to arbitration.

WITS to !c silist'i'l to niike on 'ccweif :'ouil iiudi'i YAW

-) S

[ver y agreement in restraint of legal proceedings is not

void, rather the followin g conditions are to he satisfied to
nuke an agreement void on this ground Linder section 28:
i. Ihe restraint ni ust he absoiti te.

ii. The restraint must he regarding rights under or in

respect of any CC in tract.

iii. It has to restrain usual legal proceedings.

iv. 11 has to limit the time for enforcement of the right.

Tiii' restrain I ni i ist Ic aLsoIll fe:

The first condition to he satisfied is that it must restrain the

Jm-sofl from enforcing his right absolutel y , so if any way
remains open before him then the section will not come into
operatiow Thus the partial restraint of legal proceedings
shall not invalidate an agreement within the ambit of section
25 In other words, to make an agreement void a part y must
he restricted absolutel y from enforcing his rightsunder or in
respect of an y contract, 'I he languane o( section 25 of the
Contract ;\ct is clear b y itself, and can onl y mean that a

149
Ciiii1i(er 7 Void a'ncn(s

contract which absolutely restricts any pa rt to it from

enforcing his rights under or in respect of such a contract h\
the usual legal proceedings in the ordinary tribunals of the
countr y , will to that extent, he void.

T/ic rcs1rait must be re \ anJu rights uliI'r or ill rcpcei oI.HI/

cant ni C!:
In other words it will not he applicable in case of wrongs or
torts other than the rights under or in respect of any
contract.

It has to rt'straiii usual Ital joceeIii:

Section 28 makes it clear absolutel y that the restraint

imposed must be one that is against the enforcement of
rights b y the usual legal proceedings in the nrdinarv
tribunals. So, negatively interpreting it any one is restrained
from enforcing his rights before an y special tribunal OF
following a special pruceclura v, - ill not ha void on tIn:
ground of section 28.

Or limit tin' fwuL'for t')1(orcenui')1l oF/bc meld:

This is the last alternative way to make the agreement \ nid
which sa y s that if an agreement which makes an y party
bound to enforce his rights within a particular time limit
other than which is set 1w toe . givaiv eing that
agreement bars that party to enforce the rights after the
expir y of the new time limit agreed by the parties will be
void. The Limitation Act, 1908 (Act No. IX of 108) sets
down the particular time limit within which a suit is to he
instituted and if an y shorter period of limitation is set by an
agreement that will be void tinder section 28. For example,
according the law of limitation in Bangladesh a suit for

I M A Chowdhurv Vs. Murri Mitsui O5K lines luiitwcl.. 22 D1, (5L)

334.

150
Chapter \" iJ a lie/ne)

breach ol contract is to be instituted within three \'ear5, so if

the parties b y an agreement limits the period within one or
two veirs which is shorter than the three y ears time as fi\ed
b y the law, the agreement settling such a shorter period will
be oid. But what will happen if the parties b y an
agreement provide for a longer period than is pro ided by
the I imitation Act, 1908? Obviousl y , that will not come
within the ambit of this section, but that agreement "Al he
void under section 23 as it defeats the provision 01 other-
law, e.g.. the F imi tat ion Act, 190'S.

Casestroll! DLR on section 2S:

J MA. Chowdhurv Vs. Murri Mitsui OSKe Ltd'

'Burden as to who should satisf y the court as to the

istification br staving he case. It now renmins onl y to
consider the guestion of burden,. namel y , as to on whom
should be the burden to satistv the court as to the
justification or staving its proceeding. In such
ci rcunista nees, the part y who seeks to invoke the toreign
jurisdiction clause, sliou Id orJinarilv satisf y the court that
it is jUSt and e)Lntable to bind the parties to their bargain.
If there had been a pro ision similar to that of section 28
at the Contract Act in the I aw of Great Britain, there too
the same view would have been taken. The courts in Great
Britain have taken a different view because of their
\villininess to recognize, as rctiv has put it 'the rights of
the parties to contract in almost an y wa y the y please." If
there was b y law any ch g on such treedorn the resii I
might Nvell have been different-

2 Section a ni tlw Limitation Act. 1905.

tstaniic Republic oi Pikistmn Vs. Nizai- 1)1cm Riiaicak. 2 I
U 'cs1ivar) 31
(1970) 22 DLR (5(1 334.

151
C/ia p/ t'r 7 Vold/ tireci i U'? it

The language of section 28 of the Contract Act is clear by

itself, and call mean that a contract which absoltitcIv
restricts an y pa rh to it from enforcing his rights under or
in respect of such a contract b y the usual legal
proceedings nt the ordinary tribunals' of the coon try,
will to that extent, be void unless protected b y the
exceptions to the said section. In case of conlpeti tOO)
between two courts within the countr y there will of course
be no absolute bar but it cannot be said that where the
jurisdiction of all courts within the country is taken a\va\
and exclusive ii risd iction is given to a foreign court b y a
contract. It wilt net come within the mischief of that
section.'

Extensive jurisdiction clause in a bill of lading \vherei7y

jurisdiction of a ci untrvs court is ousted is to be na ted
no more than the Exception to sect ion 2$ of the Con tract
Act and does not take away the court's jurisdiction.

The ieya i proceedings' and "trihu na 1s referred to in

section 2 (d Contract Act can onl y clean legal
proceedings andI tribunals known to tile legsia 1 tire as
ordinary tribunals in tile country and the usual
proceedings available in these courts.

"Ordinarv tribunals' referred to in section 28 of the

Contract Act should mean ordinar y tribunals within the
countr y and not ever y an y and ever y kind of tribunal. 111C
areumeiit that because a foreign judgment can be
entorced b y a suit ill our country, Iheretore, a iorelgiI
tribunal which passed that judgment is iiso an ordinary
tribunal \\itilm the meaning of section 28, is clearl\
untenable.
Abdul Razzak Vs. East Asiatic Co.'
Section 28 of the Contract Act makes void onl y that
agreement which absolutel y restricts a part y to a contract

(1952) 5 DLR 394.

152
 hi1t&'i .' t .• oid iicii/tfliS

troin entorcin his rih t tier the contract in ordinary

tribunals but ha no a lication when a part y agrccs not
to restrict his right under the ordinar y I rilaunal but only
rees to the selection ot a particular tribunal in which the
suit is 1() be tried.
In areeing to bring a suit in one out 0! the two Courts
belniin to two foreign countries. hoth of which would
he corn petent Ii) tr y the sLut, the parties cannot he sd Id to
hive contracted out Of the jurisdiction vested in that unirt
or to hi (ieprlvinuz that Court of it jurisdiction, which it
otherwise posse,scd. Therefore, it two parties one heing a
lid tioiia I of In kktan and a iiother ol )enniark airL'ed by
their contract to have their dispute settled under the
contract b y a Court in I )enina rL according to Da nish Lao',
it Cannot
anm t" he said 1 hat I he y ha \'e contra venerl the
provisions ot section 25 ol the (ontrict Act.

j Tar Muhammad&Co Vs. Federation of Pakistan2

Mutual consent Lannot coiitei juukdiction upon ally
Court which that Court might not poses u nder the
eneral law nor individ ua Is b y agreement aillongs[
themselves can divest an y Court of its jurisdiction which
it might possess under the general law. Section 25 of the
Contract Act makes void onl y that contract which
ahsoh u [el y restricts a rt\ from enforcing hi right under
the ordinary tribunal but it does not attract a part y who
agrees not to restrict his rihI in the oro:nar y tribunal only
consents to the selection of Court in which the suit is to he
decided.'

British India Steam _N gation Co. Vs. A. R.

Clio wdhurv3
'The clause in the hill of lading runs as follows: "lhe
con tract evidenced hv this hilt of lading shall he governed

- (1107) 9 IMR 101.

11967) 19 L)LN 54.

151")
Chit1 /cr 7 : Void arc'ec1u'n hi

by [ngiish lao and disputes determined in i.i igland

according to kn 1_iish law to the exclusion of the
Lirisdiction ol the Courts of an y other country.

Ihe rslities to the contract agreed that the Court in

Fiiand whichtry
has a Iso jurisdiction 10 the suit in case
Of a dispute between the parties, would be the univ Court
which should try the soil.

_i Osaka Shosen Koisha 0. S. K Line Vs. Province of East

Pakistani

'ftc defenditit-peti tioners case is that in the contract

between the parties, as embodied in the bill of lading, it
was agreed that an y claim arising between the patties out
of the contract and involving an y breach of its terms,
would be decided b y the District Court O f Osaka, and
SIR-11 a claim would he governed b y the law Of lapan. II
was contended, in 1he first place, thaI in the aforesaid
premises. no 'iuit could be imititulcd against the
defiudank in a Court in Pakktan in \ iolitioo of the abo\ e
nien tioned teriii of the contract, namel y liii t t)istrict
Court of Osaka would be the forum for adjud cation Of a
Claim arising out of the contract. Secondl y , it was argued
that defendant No.1 (petitioner N0.1), Osaka Shosen
Koisha, 0. S. K Line, with whom the contract was entered
into Lw the plaintiff, was a compan y having its principal
registered office at Osaka inJapan, and was, therefore, a
fc:-cgn -'mp "•' In Lhis context, it was
submitted that a Court in Pakistan had no jurisdiction to
try the suit against the said defendant which was a foreign
cc m pa ny residing in a oreign tern tory.

On behalf of the plaintiff it was argued that 11w terms of

contract under reference come within the mischief of
section 25 of the Contract Act and as such has no legal
validity.

I [1965) 17DLR 659.

154
chip! ci eih

Hell:
The parties herein ha e b y 'reement chosen to have such
itters adjudicated onl y i the Osaka Pistrict Court and
tiretore section 2 of the Contract Act has no appi ca lion
to such a case. In the present case there is no absolute
prohibition which disentitles a part y to the contract to
have his claim decided in a competent Court of law. B\
agreement there is onl y a restriction upon the choice of
such a (ou rI.
The plainti II ha\ilig agreed to abide b y the a toresaid
clause cannot be allowed to sue the defendanh Osaka
Shosen 0. S. K I - i l le in a Court in Pakistan.

Evcr'ptions to section 28: 1 his section provides for the

following two exception s to the above general principle:

Hct:'rt'un'!O_[hi__(r!iIi(?!i(u: li'!__Exceuhiou: it two Or more

persons agree by a con ti-act that an y dispute which ma\
arise between them in respect of an y subject or class of
subjects shall be referred to arbitration, and that univ the
amount awarded in such arbitration shall be recoverable in
respect of the dispute so referred, then such a contract"'ill
he valid by way of an exception to the general principle
relating agreement in restraint of legal proceedings is void.

ía rats i]teccluaN [hit I7OZt' 71!i1ii/3ilSi'ii.__Ci11iI

I h iS section even \Vil not render ii legal, on the ground of

restraint of legal proceedings. an y contract in writing by
which two or more persons agree to reFer to arbitration any
guestion between them which has alread y arisen, or attect
to
an y provision of any law in force for the time being as
references to arhitra lion.
[bus, if according to the award of art" lion '1
legal right is barred that will not amount to an agreement in

155
 Chapter 7. VOW ig ret oic'i i/s

restraint of legal proceeding to be deda red as void \vi thu

i
the meaning of section 28. I was observed in 5adharan Roiio
Corporation Vs. Dhak,i Doiii nod iiiet rin Co. Ltd.,
tha t-

I lv arbitration agreement contained in the lice

policy in Ue5Iioti provided that if a claim he made and
re h cte d and an action be not comneiiced within three
months a I ter such rejection all benefits under the poi
shall he fond ted. the lnsii rance Company having
informed the plaintiff that their claims under the polic\
Were not pa y able anti such rejected the same as per
condition No. 1 of the policy and the plaintiff having not
commenced any action within mon [H, have forfeited all
their rights under the pol icy.

It was observed in Dan/a/par iriiticis ajid Co. Ltd. Vs. The

/1• Him-
Las/ru I-eifet,/ fill/nH Ill/it//ICr' Co. J

' t is gui/c clear that ci'e of v'titn to recover the laos

finally accrues onl y when the arbitrator, arbitrators or
umpire have finally settled the award as to the guantum
A has or claniage, but not before that. This principle of
common law has now found statutory recognition in
section 28 of the Contract Act. So, condition No. IS of the
policies has the full hacking of esplanation (1) of section
28 of the Contract Act. It would be a clear violation of the
!a\_ ot c,ntiai to ICI to utJ titJtt .i i
saddle insurers with tlie I abjit y to pa y ethloss though
they never acknowledged the liability ,,,(I right to
postpone a decision on liahilit\ wi/il arhitrator hid 1-i\-'d
the amount of loss or damage.
It was observed in lL?ll5'IadeIi
AN Sernio' (Pot) Ltd. Vs. Mulish
A irzeats that----

I (1991) 13 DLR 286.

9901 42 1 )LR 125.

Im
m
C/iipfir 7 : \ 7 e!LL ii''iciif

there iS nothing ill l:\ceptlon to Section 28 of the

Con lract Act prohibiting the parties to a contract from
choiiiig a foreign tOiOiii under tlir' iperv isiou Of ,ì
foreign court for 11-11i [I-,I [ill" its disputes. 8och contract
does not of tend the main provision of section 28, because
the local Courts still retain the urisd ctio:i to decide the us
between the parties.
The appellant is tree to file a suit for damages against the
respondent in the local court. I he respondent is also free
to ask Hr ci StclV of the suit, pending arbitration, and it is
for the local court having regard to all circuiiistinces .. to
cirrive at a conclusion whether sufficient reasons irr' made
out.
The plea of sovereignt y cii'id interest o f the countr y and its
citizens, if accepted will render foreign arhitral
jurisdiction ihsol utel V nugatory
We ventu ic to av that such a consequence will itself he
opposed to public polic y. for no countr y lives in all island
these da y s. Foreign ai'bi lration clause is c'ii integral part of
interna t i ona I tr,id' ui l commerce today.
Agreements the meaning of which are uncertain:
Certaint y of the terms is obviousl y a pre condition to an
agreement. Section 29 says:
Agreements. the meaning of which is not certain, or
capable at being made certain, are void.

(a) A agrees to sell to B 'a hundred tons of oil.' Fhei'e Is

nothing whatever to show what kind of oil was
intended. I he agreement is void for uncertainty.
lh) A agrees to sell to B one hundred tons of oil of a
specified description ., known as an article of

( 1 997) 40 l)LR (AD) 187. at parigral)liS 24 & 26.

157
(T/uip for 7 Void oreetnt'ii fs

commerce. I here i'; no wcertaintv here to make the

agreement void.

(c) A, who is a dealer it) cocoiui -oil onl y , agrees to sell to

13 one hundred tons uf oil. Ihe nature of A'5 trade
affords an indication ot the meaning of the words, and
A has entered into a contract for the sale of one
hundred tons of coconut oil.

(ii) /\ agrees to sell to 13 'all the grain in niv granar y at

Rangpur. There is no uncertai ntv here to make the
agreement void.

(e) A agrees to sell to 13 'one thousand maunds of rice at a

price to be fixed b y (..' As the price is capable of being
made certain, there is no uncertaint y hero to make the
agreement void

(1) A agrees to sell to B 'mv white horse for 'laka five

hundred or La ka one thousand I here is nothing to
show which of the two prices n'is to he given. The
agreement is void.

The above illustrations are su I ficient to gi\e a clear idea

about the law enunciated in section 29. Accordingly to he
enforceable b y law either the meaning of the agreement has
to be clear or capable to he made clear, otherwise it will he
coid. It lays down that sorneti mes the meaning 111,1V not be
Lieai ;Ji 1c hut '.''' orf,lin the manine
and as such the agreement can he made certi in. Thu . if in
no way the meaning can he made certain ill that use the
agreemnt will he ' oldfor uncerta i nt''.

Ti was held in -iiutosii I3osolc l's. S. vt. Ri/unot'iUa that a

contract for permanent lease not void for uncertaint y OvEn
though it depends upon pa y ment in future of salami when

1 (1966) 18 DI,R 578.

158
 i'i'emeuts

[hi' amount (it Sti/Oii1l is iscei't inable b y the Court. In this

case—
The written statement ran as follows: Alter ne talk
agreed to grant a pernianent settlement of the land to this
defendant. The annual rent was tl\Od at Rs. 396 and on is
asking to pa y one y ear s rent the defendant paid that
amount and thereafter the defendant was permitted to
enter into possession and start his business there. it was
further agreed that a reasonable a mount of salami which
would he ascertained atter measurement of land would he
paid b y the dcon&mt and a rei ula r deed of permanent
lease would he e\ecuted and registered b y both the
parties on defendant's pavnien I of SO/Oil money.'

l'hu a foresaid lu o ta tion goes to No'\ that there wa a

concuded contract and all that was left out was the
determination of the reasonable amount of N711 011i and the
e\ecu lion of the lease deed for permanent settlement after
pa y ment of ii:'i 1110110V-
Agreements byway ofygj:

Section 30 sa y s-

.\greeiiieuts h' vav 01 \va.er are void; and no suit shall

he brought for recoveri ig an hng alleged to be von on
auiv \Vagi'r, or entruted to an y - e rson to abide the result
of an y genie or other uncertain e cut on n hi ' 11 an y wager

is made.

Exception in favour of certain prizes for horse-racing-

This section shall not be deemed to render unlawful a
subscription or contribution, or agreement to subscribe or
contr:hutc, made or entered into for or toward a iv plate,

ibid.

159
 Chapter 7 Voi1 aiiunits

prize or sum of nicinev, ot the value or amount of live

hundred faka or upwards 0) be awarded to the winner or
winners of any horse-race.

Section 294j\ of the Penal Code. 1860 not affected:

Nothing ill section shall be deemed to legalise any
transaction connected with horse racing, to which the
provisions of section 24.\ of the Pena
(7, )de , 18() () apply.

Acreefnenfs collateri ito ?aerin ac1e('7 y 1eii ts: Section 30A

sas-
All agreements knowingly made to turther or assist the
entering into, effecting or carrying out, or to secure or
guarantee the performance, of an y aoreement Void under
section 30, are void.

No suit for recoveri/ of monelf, CO!flUiSSiOJi etc., in respect of

Voitl eiçreenxents: Section 30 B sa y s—

No cuit or other proceeding shalt lit' for the rccover' of

(a) an sum of mone y paid or payable in respect of

an y agreement void under section 30A, or

(h) any commission, brokerage, fee or reward in

respect of knowingly effecting or carrying out, or
aiding in effecting or carrying out, of an y such
agreement, or of an y sum of money otherwise
Ll,i!ij [Ukji ::-cyt th'y:.
(c) an y sum of money knowingly paid or payable on
account of an y person b y way of commission,
brokerage, fee, reward or other claim iii respect of
an y such agreement.

Paimeiut of guardian, executor etc., in respect of void

agreements not to be allowed credit: Section 30C says—

No guardian, executor, administrator, heir or personal

representative of any minor or deceased person, as the

160
C/tap/cr 7 : Void OL't?i&'II Es

case nviv he, shall be enti tied to or allow.'d ,inv Credit in

his account for or in respect of anv pa''nlent made b y him
on behalf of such minor or deceased person in i-espect of
an y such agreement, or an y such commission, brokerage,
fee, reward or claim as is referred to in sect ions 70A and
0B.

Areenients contin gent on im p ossible even

Section 36 sa ys—

Contingent agreements to do or not to do an y thing, if an

impossible event happens, are void whether the
impossihi lift of the event is known or not to the parties to
theagreement at the time when ii is made.'

i/inst t'titioi iS

(a) A agrees to pa y II 1,000 rupees if two straight lines

should enclose a space. The agreement is void.

(b) A agrees to pa y B 1,000 rupees it B will marr y A's

L1,11,1 1 '11 C. C was dead at the time of the agreement.
The agreement is void.

Analysis of section 36:

Contingent contract is a good contract generally. One

specific t y pe of contingent agreement has been declared
\c)jd b y this section. Contingent agreement necessarily
means an agreement which is dependent on the happening
or not happening of a future event. If that future event
becomes an impossible one and the agreement made is
dependent on the happening of that impossible event then
this t ype of contingent agreement will be void under section
06 of the Act.

161
Chu. it , i 7 O/L/ ac)('en1c/i s

Agreements to do impossible acts:

Types of impossibility:

An impossibility may be of two types:

i. Initial, and

ii. Subsequent.
Obviousl y in case of initial impossibility that agreement
cannot turn into a valid contract ever, because the
impossibilit y is at its root. Thus an agreement caused by
initial impossibility becomes a void agreement. First
paragraph to section 56 deals with this t y pe of void
agreernen L which says—

An recmen1 to do an act imp ssible in itself i void.

Illustration (a) to this section explains the law as such that if

A agrees with B to discover treasure tn magic, the
agreement is void. ] hus an agreement to write 1000 pages in
one's own handwriting is a void agreement.

in soc/i a coltI agrn'nicu I : Paragraph 3 to

Com',isatiou for loss
section 56 deals with the compensation for loss through
non-performance of act known to he impossible or unlawful
which sa ys—

Where one person has promised to do something which

he knew, or, with reason-able diligence, might have
known, and which the proini.ce did not know to be
iiipossibk' or uniawt Lii, SLICh promiser Must make
compensation to such promisee for an' loss which such
suslains through the non-performance of the
promise.

I/lu( ratio;i (c) to section 56 explains the above law in the

following words:

162
 JitlJI'1 , lil i'7'1l1t'1l ts

(c) A coiilrck to niarrv H, being d rwid\ mrried to (,

,ind Hi n forbidden b y the law to which he is subject to
practise poI\am\ A must make cot pention to 1$ for
OIL' loss caused to her b y the ii n-pertoimance of his
pru'flisL,.

Ihus, in this case, it was within the knowledge of A that

since he has been alread y married with C, O it is not
possible for him to marr y B, because of being forbidden by
the law to which he is subject to practise polvgaii'c.
Under
this circumstance, even if this prohibition of pol y gam y was
not within the actual knowledge of A, vet the law will
presume that it was within his knowledge, because with
reasonable diligence that might have known. Thus, under
such circumstance law imposes upon 'A' the liabilit y to pay
compensation to such promisee for in ' v loss which such
promisee suistains through the non-prformance of the
promise.

1(3
 CLIAFIER S

CONTINGENT CONTRACTS

The Contract Act, 1872, also covers certain special t y pes ot

contract. Contingent contract is one of them. Apart from
simple contracts sometimes even there ma y be a contract
dependent on any further contingenc y . It does not mean
that certainty does not remain as one of the conditions of a
contract. Because, here the act agreed to he done is certain,
though its happening or not happening has been
made
dependent on an y con I inenc\.

\ h'ht is contingent contract?

Section 31 savs
A contingent contract' is a contract to do or not to do
something, if some event, collateral to such contract, does
..................

rllnwiimi
A contracts to pay B Taka 10,000 if 13s house is burnt. This
is a contin-ent contract.

kEFiiellts _otconti n çcnt contract

The constituent elements of a contingent contract are

mentioned here in the following way:

1) It is a contract.

164
 /r;(r (inrtiiri'rit irrtnrit

It ma V be positive or negative, i.e., to do or not to do

something.

It is dependent on the In t ue event and this event-

i is tu te uncertain event, which ma y or ma y not

happen, arid

?i. (the event must he collateral to such contraciThus

' i ere condibonal conract will not he treated as
con5n. The event t
,eilt 'hich the contract is
dependent mu[ be laterato such contract. So,
if a person gives a declaration for giving reward to
anx person Who finds his lost laptop is not a
contingent contract within the meaning of section
31, because there is no collateral event upon which
the agreement is dependent. But, if a person says
that 1 will pay von Taka I Lac if y our car is burnt,
is a contingent contract within tHe meaning of
section 31, because here the contract is dependent
on an event (burning the car) which is collateral to
such contract.

The above simple illustration with the section about fire

insurance describes contingent contract nicel y . It was held in
$aura Nfomlol Vs. NW. Alruied Shcikh l that the agreement
that the parulrr document for sale of land will be
executed and registered after seekin g permission frolli the
Collector regarding the sale of the land, cannot he said to he
a contingent contract as defined in section 31 of the Contract
Act, inasmuch as the condition to take permission of the
Collector is not collateral to the agreement hut forms part of
the consideration of the contract.

1(1902) 14 DLR 709.

165
 C/uit'r Cobi'nt ciriirri !

L,tqrc'i y i'n t of co It tracts can fin çL'nt On an e'iiIt liapfufg

Section 32 sa y s—
Contingent contracts to do or not to do an y thing if Lill
Uncertain Iuture event happens cannot be eiilorced b y law
unless and until that event has happened.

It the event becomes jnipossihle LiCh cuntrack become

void.

Jllii51H7IiO1I

(a) A makes a contract with B to bu y B horse if A

survives C. This contract cannot be enforced b y law
unless and until C dies in A's lifetime,

(b) A makes a contract with 13 to sell a horse to 13, at a

specified if C., to whom the boise had been
offered, refuses to bu y him. The contract cannot he
enforced b y law unless and until C retuses to by the
horse.

(c) A contracts to pa y B a sum of mone y wHen 13 marries

C. C dies without being married to B. The contract
becomes void.

Fable: Enforcement of contracts_conUnS, t on IIH event .322

--T t,, r
the - Contingency enforceable Luij loll'? void?
Coll tract
I'D do or not When that fu lure If that event
to do event happens, i.e., becomes
Contingentanything if it will not be I impossible
contract an uncertain enforced on less such contract
fUt1IFC 011t \Oid

even I has

16E1
Chij'hr S (1ii;'.'e (c 1 )!f.' s

11111S, this is natural that if a contract to do or not to do

an y thingbecomes dependent iu t happening o f a future
eent then that will he enforced when that event happens
and in other col-dc it Will not he en forcea He till happening
o that event. C ' oi col ueiltl\, if that event becomes
impossible such contracts will he void, because it will be no
more capable to he enforceable because Of the in possihi ii lv
of that event on the happening Of which this con tract was
contingent.

L/IfrCL'/IIi'il t of CO it tnt cts CO/I ti/lcd! t on ii ii L' 'eii I not

!i_L7peni)!_Sd

Section 33 deals with the eflt()rceiTleflt Of contracts

contingent on an event not happening, which savs

Contiiient contracts to do or not to do 1-111vthin,4 if an

uncertu n to tore event does not happen can be en lorced
when the Happening of that event Heci nec niipossible^
and not before.

\ agrees to pa y B a sum of ntnne\ if a certain ship does

not ret urn. I he ship is sunk. [he contract can be enforced
when the ship sinks.

[hoc the reason for the above rule is obvious, since if a

contingent contract is made to do or not to do an y thing if an
uncertain future event does not happen can be enforced
when the happening of that event becomes impossible, and
not before. Because onl y impossibility of that event can
ensure satisfaction of the condition future event does not
hppen.

67
 Chapter 8 Cuntnn'enf ciiitract

Table: Enforcement of contracts contingent on an ecen t not ltaJ!Jieflin,

(5,33)

Nat of Nature of contingency When Will be

f/ic contract c,iforcciilile -
To do or not to di) when tlw' happening of
an y thing if an that eventbecomes
Contingent uncertain tn ture event impossi He, a nd not
[mtract does not hapjp before.

Vc1l1en event on which contract is contingent to be deemed

iimpossible:

Section 34 sa y s about the case when event on which contract

is contingent to he deemed impossible, if it is the future
conduct of a living person, which is as follows—
If the future event on which a contract is contingent is the
way in which a person will act at an un'pccitied time, the
event 'ha II he considered to become inpossitir' when
'Otch person do anvtluiig which renLler, it ui:p ','ible
that he should so act within im% definite time, or
otherwise than under further contingencies.

IIIus?nit ion

A agrees to pa y B a sum of mone y if B ma rries C. (_

marries D. The marriage of B to C must now be
considered impossible, although it is possible tha t I) nia
die and that C ma y afterwards marr y B.

Thus the illustration given with the section is clear enough

to clarify the section that if the happening of an event
becomes impossible once, then that will be treated
impossible forever, though there remains the possibility of
being possible again. And the contingent contract based on
that event will bear the consequence based oil first
impossibility and that will he final.

168
C/i1'tcr : ciitiii'i'Ht Ciu?1Lt.

/tiliiJ l Cltiilg o t specified L'Vt'?It withill

co l itracts COU tjnctpi1

Seebon 35 sa y s tlit
y thing if a
C L tingent contracts to do or not to do an
specified uncertain event happens within a tixed time
become void it, at the expiation of the tulle ficd, such
event has not happened or if, before the tune fixed, such
event becomes impossible.

Contingent contracts to do or not to do an y thing if a

speceied uncertain event does not Nar'il \\thifl a i\ed
L i llie ma y be enforced b y law when the tune fixed has
expired and such event has not happened or, before the
time fixed has expired if it becomes certain that such
event i1l not happen.

(a) A iomises to pa y [3, a sum of mone\ if a certain ship

rr'turn within a vi'ar the contract miiav he enforced if
the ship returns within the Year, and becomes void if
the lii p is burnt within the year.

(h) A promises to paY 13 a sum of money if a certain ship

y he
does not return within a - (', J r. [he contract ma
enforced if the ship does not return within the year, or
is burnt o: i thin the year.

Fable: Para rap/i 1 to section 3

'Vaturi' of lien wHit he void ?

\a tit 0
tIn.' contract con tiuil,'r'IiCil
I o do or not to do It becomes void if, at the
an y thing if a expiration of the tune fixed,
specified such event has not
Contingent
uncertain event happcned or it, before the
contract
itHn time fi\eJ, sad', event
fi\ed time. becomes impossible.

169
Chap/er S -. Cou/zii'eiit coiit /(0 t

2 to .''ction35

Nature Of !Vatit reof When il/i/be i'nJrceab/t' ?
the contract Con/i ,ZCIJ

To do or not to do Ma y be enforced b y la w
anything ii a when the time tixid has
Contingent specified expired and such e\eIlt his
Contract uncertain eventnot happened
does not happen or
within a fixed before the time fixed has
tue. e\pired, iiiit becomes certain
that such event Wilt not
happen.

Ag r eemen ts cpiit ii ,enton 11ilPossibl(?_/'I,(L'fl_tSI

Section 36 deals with the agreements contingent on

impossible C\ en ts, which sa yc-

(ontmgent igreemetiLs to do or not to do an y thing, if an

impossible e ent happens, are void, whether Ihi
im possibi!it of the event is km n n or not to the pi rties to
the agreement at the time when it is niade

(a) A agrees to pa y Ii 1,000 '1 aka if two straight Iine-

stiould enclose a space. Inc clgreeiikiii .

(h) A agrees to pay B 1,000 Taka it' B will marr y As

C1 aughter C. C was dead it the time of tile agreement.

The agreement is VOid.

1 hus, if the agreement becomes dependent on an impossible

event then that will be termed as void, though the act
actuall y promised to he done is not ill itself impossible. It is
not even essential that such impossihilit\ is to he known to

170
CIiiph'r S Ciiitiii'nt ctMt! tit Is

the parties rather such an agreement "MI he void "Teter

this impossibilit y is known or not to the parties to the
agreement when the agreement is made. It must he noted
here carefull y that the above section used the term
'contjnent agreement instead of 'contingent contract',
heca use such an agreement has never turned into a con tract
at an y time in an\' \vav, so it is void t " 0111 ver y beginning.
That is wh y , such a transaction has heen termed as
agreement void, instead of void contract.

•tc'i','.'H'ie:

,\a fI(rL'ot fun' of I J<;j)'1/' of the legal

flit' COil I iJR,'i')iClJ fit? iiit'' SI (I ills

ligIL'L'flltJit -
Contingent lo do or not The imjossihi1itv of
agreement to do the event is known to In huti the
uivlliing, it the 1artt's to the cases the
an agret'inen I at the time agreeme n t
impossible 'hen it is made, will be

event 111C inipossihil tv T void. I

]i,ippens. the event

known to the parties
N) the agreement at the
time when it Is made.

171