Business Law and Practice

Lecture 1 Introduction to Law

by
Barrister Shahrina R. Juhi
Barrister-at-Law, Honourable Society of Lincoln’s Inn, UK
PGDL, Northumbria University, UK
MBA, Bangladesh University of Professionals
HR Associate, HRCI, USA
LL.B, University of London, UK
Diploma in Law, University of London, UK
OBJECTIVES
AFTER STUDYING THIS CHAPTER,
YOU SHOULD BE ABLE TO LEARN:

1. The definition of law

LEARNING

2. Characteristics of law
3. Why should one know law
4. Definition of business law
5. Three rules of law

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O B J E C T I V E S (cont’d)
AFTER STUDYING THIS CHAPTER,
YOU SHOULD BE ABLE TO:

6. Definition of a contract
7. Essential elements of a contract
8. Basics of case law (Balfour v Balfour , Merritt v
Merritt)
LEARNING

9. Social agreements
10. Contractual agreements

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 Definition of Law
• Law means a ‘set of rules’.
• Since the value system of a society
keeps on changing, the law also keeps
changing according to the changing
requirements of the society.
• As the culture and value of each society
is different, laws are also different. So,
law is not universal.

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 Definition of Law, Contd.,
Law denotes rules and principles to control
and regulate peoples behavior with a view
to securing justice, peaceful living and
social security.

Characteristics:
• Set of rules and principles
• Enforced by an authority
• To control peoples behavior
• To securing justice, peaceful living and
social security
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 Definition of Business Law
Business law is the branch of law which comprises
laws concerning trade, industry, and commerce.
It is a part of civil law which deals with the
rights and obligations of mercantile persons
arising out of mercantile transactions in respect
of mercantile property.
It is an ever growing branch of law with changing
circumstances of trade and commerce.

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 Definition of Business Law,
Contd.,

It broadly includes, the laws relating to

Contracts, Sale of Goods, Partnership,
Companies, Negotiable Instruments,
Insurance, Insolvency, Carriage of
Goods, and Arbitration.
We can consider transactions between
shopkeepers, transactions between corporations,
experiencing the service in the restaurant, and the
purchase of tickets, etc.
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 Branches of Law
1. International law
2. Constitutional law
3. Criminal law
4. Civil law
5. Mercantile or Business law
6. Labor/Industrial law
7. Intellectual Property Law

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Civil law - Civil law is the part of a country's set of laws which is
concerned with the private affairs of citizens, for example marriage
and property ownership, rather than with crime. Four of the most
important types of civil law deal with :
1) contracts,
2) property,
3) family relations, and
4) civil wrongs such as defamation and breach of contract.

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 Three Rules of Law
1. No man is punishable except for
breach of law
2. No man is above the law
3. The result of statutes and judicial
decisions determine the rights of
private persons.

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 Origins of Contract Law

➢ The word contract originated from the Latin Term

“Contractum” meaning “ Uniting”. So it simply
means the uniting of two or more minds with a
common object.
➢ Application of Contract Law can be observed in our
daily lives: in sale of goods, transfer of property,
financial transactions, travelling, employment etc.
➢ Our contract law was framed on the basis of
fundamental principles of British Law of Contract.

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➢ In 1947 the British India was divided and independent
sovereign states, India and Pakistan were created.
Both countries after Independence retained the law of
contract enacted in 1872.
➢ In 1971 through an unprecedented mass revolution
the then East Pakistan was separated and an
independent Bangladesh came into existence in the
world map. But this new nation continued to follow
the law of 1872.
➢ So, the CONTRACT ACT OF 1872 is still in force
in India, Pakistan and Bangladesh.

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 What is a Contract? Contd.,

An agreement enforceable by law is

contract - Section 2(h) of Contract
Act, 1872.
For example, When you purchase a
newspaper, you enter into a contract
with the vendor of newspaper.

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 Two Elements are Important for a
Contract

1. An agreement
2. Legal obligation or Legal
Enforceability
Contract = An Agreement + Enforceability

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 Intention to Create Legal
Relations
All agreements cannot be enforceable by law. E.g.,
an agreement to play cards or go to cinema.
E.g., An agreement to dine at a friend’s house is
not an agreement intended to create legal
relations and therefore is not a contract.

“All contracts are agreements but all

agreements are not contracts”

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 Writing and Registration
In Bangladeshi Law
Contract may be oral or written but in
certain cases, it must be written.
For example,
An arbitration agreement must be in
writing.
An agreement for a sale of immovable
property must be in writing and
registered. 1–16
 Certainty
Agreements having uncertain terms (Section 29):
Contracts where the terms are not clear or certain, or
impossible to understand, are considered void.
A agrees to sell B “a hundred tons of oil”. There is nothing whatever to
show what kind of oil was intended. The agreement is void for
uncertainty.
Taylor V. Portington (1855) - A promised to take defendant B's house
on lease for three years provided “it is thoroughly repaired and the
drawing rooms are decorated according to the present style”. It was
held to be not enforceable since the terms were too vague and
uncertain.

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 The Contract must not be
expressly Declared Void by the
statute
Under the Contract Act 1872 of Bangladesh, certain contracts are
expressly declared void. These include the following:
1. Agreements by incompetent persons (Section 11): Contracts with
individuals who are minors, persons of unsound mind, or legally
disqualified from contracting are void.
2. Agreements made without consideration (Section 25): A contract
without consideration is void, except under certain conditions,
such as if it is in writing and registered or made out of natural
love and affection between parties standing in a near relation to
each other.
3. Agreements in restraint of marriage (Section 26): Any agreement
that restricts someone’s freedom to marry (other than a minor) is
void.
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4. Agreements in restraint of trade (Section 27):
Contracts that impose absolute restrictions on
someone’s right to trade, business, or profession are
void, with certain exceptions (e.g., sale of goodwill).
5. Agreements in restraint of legal proceedings
(Section 28): Contracts that restrict a person’s right to
enforce their rights through legal proceedings are void.
Example:
If a contract stated, "Party A shall never sue Party B under any
circumstances," such a contract would be void under Section 28
because it completely restricts legal proceedings. Settlements outside
court are valid as long as they do not completely prohibit legal action
but instead resolve disputes voluntarily. Courts in Bangladesh often
encourage such settlements to reduce case backlog and save litigation
costs.
6. Agreements having uncertain terms (Section 29):
Contracts where the terms are not clear or certain, or
impossible to understand, are considered void.
7. Agreements by way of wager (Section 30): Any
contract based on a wager (i.e., gambling) is void.
However, this does not apply to certain agreements that
are part of legal lotteries.
8. Agreements to do an impossible act (Section 56):
Contracts that require a party to do something
impossible are void.
Examples of Contractual Agreements

➢ Mary asks John whether he wants to buy her

Toyota car for 10 lacs. John agrees. Mary hands
over her car to John, while John pays Mary 10
lacs taka.
➢ Grameenphone offers Abby the post of Senior
Manager for a salary of 1 lac/month, Abby
accepts this job. Abby provides her service while
GP gives her the salary.
➢ You go to a supermarket and put items on your
trolley. You go to the checkout counter and self-
checkout. You pay the bill and walk out of the
store.

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Case Law
➢ The law as established by the outcome of former cases. Also
known as common law. Case law is the law created by the courts.

➢ Balfour v Balfour (1919)

➢ Brief Fact Summary. A husband promised to pay his wife a £30 per
month allowance. The wife sued her husband to enforce the promise.

➢ Facts. The Plaintiff and the Defendant were a married couple. The
Defendant husband and the Plaintiff wife lived in Ceylon where the
Defendant worked. In 1915, while the Defendant was on leave, the
couple returned to England. When it was time to return to Ceylon, the
Plaintiff was advised not to return because of her health. Prior to the
Defendant returning, he promised to send the Plaintiff £30 per month
as support. The parties’ relationship deteriorated and the parties
began living apart. The Plaintiff brings suit to enforce the Defendant’s
promise to pay her £30 per month. The lower court found the parties’
agreement constituted a contract. This decision was overturned in the
Court of Appeal.
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Reasoning :

➢ Oral Agreement
➢ Unregistered
➢ This case is not tenable (cannot be defended)
➢ This is not a contract
The appeal made by Mr. Balfour succeeded and the court ruled that
there was no legal relationship or any legal contract between the wife
and husband. If the parties intend to create a legal relationship can be
decided by examining the circumstances under which the contract was
made and executed. Therefore, Mr. Balfour was not legally bound to pay
money to Mrs. Balfour. Studying and understanding the Balfour vs
Balfour case cleared that social/domestic agreements made between
members of the family or other personal relationships will not be
enforced in a court of law. It also emphasized the importance of creating
legal relationships for a contract to be enforced. The Balfour law gave a
new perspective on contract validation.
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Findings and Learnings:

➢ Domestic agreements and Social Agreements

lack intention to create legal relationship.
➢ As such they are not contracts, subsequently
they are not enforceable in a court of Law.
➢ Discussion- The court makes an interesting
argument in not enforcing these types of
promises. The court argues that if these promises
are treated as contracts the flood gates will open.

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Merritt v Merritt (1970)
➢A separation agreement between
estranged spouses was held to be binding
after the presumption was successfully
rebutted and an intention between an
estranged husband and wife was
established. In this instance, the husband
agreed to give the wife £40 each month
to assist her with mortgage payments,
and in exchange for her paying all
mortgage costs until the mortgage was
paid off, he would transfer his part of the
property to her.

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➢ He lowered his monthly allowance to GBP
25 per month once the mortgage was
paid off and refused to transfer the
property. She filed a lawsuit seeking a
declaration that the home was hers. The
Court conducted an impartial analysis of
all relevant facts before finding that there
is an intention in such situations. In this
case, the Court of Appeal determined that
their contract was binding and
differentiated it from Balfour v Balfour
based on the parties’ separation.

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Reasoning:

➢ Written agreement
➢ Registered
➢ This case is tenable
➢ This is a contract

➢ The usual presumption was successfully rebutted

in the case of Merritt vs Merritt.

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Essential Elements of a Contract

1. Offer and acceptance

2. Intention to create legal relationship
3. Lawful consideration
4. Capacity of parties
5. Free consent

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Essential Elements of a Contract,
Contd.,

6. Lawful object
7. Writing and registration
8. Certainty
9. Possibility of performance
10. Agreement not Expressly Declared
Void

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Case Studies -1
Problem: X invites Y to dinner. Y accepts the invitation but fails to
turn up. Can X sue Y for the damage?
Solution: Section 2(h) of The Contract Act 1872 states that “an
agreement enforceable by law is a contract.” In other words, an
agreement coupled with an intention to create legal relations will
create a binding contract, the breach of which may give the
aggrieved party a right to damages. X cannot claim any damages from
Y because the agreement between X and Y is not enforceable by law.
It is a social agreement and the usual presumption is such agreement
is that the parties do not intend to create legal relationship (Balfour
vs Balfour). “All contracts are agreements but all agreements are not
necessarily contracts”. The above scenario provides a situation where
there is only an agreement but as it lacks legal enforceability, it is
not a contract that is enforceable in a court of law.

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Case Studies - 2
Problem: X polished Y’s shoes without being asked by Y to do
so. Y does not make any attempt to stop X from polishing the
shoes. Is Y bound to make payment to X?

➢ Solution: Y is bound to pay because he has accepted X’s

implied offer by conduct i.e., by not stopping from polishing the
shoes. Implied contracts are valid under Section 9 of the
Contract Act, 1872, which states that acceptance and offer
can be expressed through conduct. Since the act of polishing
shoes is a commercial service, and there is an expectation of
payment, the recipient is legally bound to pay a reasonable
amount.

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Case Studies -3
Problem: X agrees to pay Tk. 1,00,000 to Y if Y does not
marry throughout his life. Y promises not to marry at all but
later on X refuses to pay Tk. 1,00,000. Advise Y.

Solution: Under the Contract Act 1872 of Bangladesh,

certain contracts are expressly declared void. Section 26 of
the Contract Act 1872 states that any agreement that restricts
someone’s freedom to marry (except a minor) is void. As
such, Y cannot recover anything. The agreement between X
and Y is in restraint of marriage which has been expressly
declared void under the law of contract so Y cannot claim any
damages from the court of law.

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Any Questions?

THANK YOU!

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