How a Contract is made: (How a proposal is converted to a contract)
| 1. Proposal ________________ | 2. Promise ________________ | 3. Agreement ________________ | 4.Contract ________________ |
| Two or more persons Offer | Two or more persons offer Acceptance | Two or more persons Offer Acceptance Consideration | Two or more persons Offer Acceptance Consideration Enforceable by law |
1. Proposal: Offer is the first steps of a contract. To create an offer there must be a proposal and a person. For this, an offer has two elements
- Two or more persons
- Offer
2. Promise: Promise is the second step of a contract. When an offer is accepted by the person to whom the offer is made it created a promise.
- Two or more person
- Offer
- Acceptance
When an offer is not accepted by the person to whom the offer is made, it creates a promise.
3. Agreement: Agreement is the third steps of a contract. When a promise is made with consideration for each other is an agreement
- Two or more persons
- Offer
- Acceptance
- consideration
4. Contract: An agreement enforceable by law is a contract. Only such agreement is converted to a contract which is enforceable by law.
- Two or more persons
- Offer
- Acceptance
- Consideration
- Enforceable by law
Definition of Contract:
- Section 2(h) of the Contract Act 1872 – “An agreement enforceable by law is contract.”
- Prof Salmond, “A contract is an agreement creating and defining obligations between parties.”
- Frederick Pollock , “ Every Agreement and promise enforceable by law is a contract”
- Prof Anson “A contract is an agreement enforce at law made between two or person by which right are acquired by one or more to act or forbearance on the part of the other”.
Essential Elements of Contract:
An agreement becomes enforceable by law when it fulfills certain terms and conditions. This terms and conditions are the essential elements of contract and these are giving below –
- Parties to contract
- Capacity of the parties
- Lawful offer
- Lawful acceptance
- Lawful consideration
- Free consent
- Intention to create legal relation
- Lawful purpose and object
- Certainty
- Specific subject matter
- Possibilities of performance
- Not declared as void
- Formalities
1. Parties to contract: There must be two or more parties in a contract.
2. Capacity of the parties: All the parties to the contract must be major and sound mind.
3. Lawful offer: There must be an offer to make a contract. Here lawful offer means an offer which is supported by the Contract Act, 1872.
4. Lawful acceptance: There must be a lawful acceptance to make a contract. Here lawful acceptance means an acceptance which is supported by the Contract Act, 1872.
5. Lawful consideration: There must be a lawful consideration to make a contract. Here lawful consideration means the consideration which is supported by the Contract Act, 1872.
6. Free consent: To make contract it is essential that the consent of the parties to enter in to the contract is free. Here free consent means the consent which is not affected by coercion, undue influence, fraud, misrepresentation or mistake.
7. Intention to create legal relation: By a contract the intention of the parties must be expressed that they are creating a legal relationship.
8. Lawful purpose and object: A contract must be made to lawful purpose and object. Here lawful object means the object which is supported all existing laws of Bangladesh.
9. Certainty: The language and expression of the contract must be certain and specific by which the actual intention of the parties is expressed.
10. Specific subject matter: In every case the subject matter of the contract must be specific.
11. Possibilities of performance: A contract may not be for such a form which is impossible to perform in fact.
12. Not declared as void: A contract must be a form which is not declared as void with any relevant laws.
13. Formalities: A contract may be writer or oral and registered or non-registered according to the provision of the relevant laws.
