Business

Business Law
Law and
and
Practice
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
AFTER STUDYING
STUDYING THIS
THIS CHAPTER,
CHAPTER,
YOU
YOU SHOULD
SHOULD BE
BE ABLE
ABLE TO
TO LEARN:
LEARN:

1. The definition of law

2. Characteristics of law
LEARNING

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
AFTER STUDYING
STUDYING THIS
THIS CHAPTER,
CHAPTER,
YOU
YOU SHOULD
SHOULD BE
BE ABLE
ABLE TO:
TO:

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

10. Contractual agreements

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 Definition
Definition of
of Law
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
Definition of
of Law
Law,, Contd.,
Contd.,

Law denotes rules and principles to

control and regulate peoples behavior
with a view to securing justice, peaceful
living and social security.

Characteristics:
Characteristics:
••Set
Setof
ofrules
rulesand
andprinciples
principles
••Enforced
Enforcedbybyananauthority
authority
••To
Tocontrol
controlpeoples
peoplesbehavior
behavior
••To
Tosecuring
securingjustice,
justice,peaceful
peacefulliving
living
and
and social
socialsecurity
security
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 Definition
Definition of
of Business
Business Law
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
Definition of
of Business
Business Law,
Law,
Contd.,
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
Branches of
of Law
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

1–8
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
Three Rules
Rules of
of Law
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
Origins of
of Contract
Contract Law
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
What is
is aa Contract?
Contract? Contd.,
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
Two Elements
Elements are
are Important
Important for
for aa
Contract
Contract
1. An agreement
2. Legal obligation or Legal
Enforceability
Contract = An Agreement +
Enforceability

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 Intention
Intention to
to Create
Create Legal
Legal
Relations
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
Writing and
and Registration
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.
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 Certainty
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
The Contract
Contract must
must not
not be
be
expressly
expressly Declared
Declared Void
Void by
by the
the
statute
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
Examples of
of Contractual
ContractualAgreements
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
Case Law
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. 1–22
Reasoning
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 1–23
Findings
Findings and
and Learnings:
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
Merritt vv Merritt
Merritt (1970)
(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:
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
Essential Elements
Elements of
of aa Contract
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
Essential Elements
Elements of
of aa Contract,
Contract,
Contd.,
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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