“Answering Some Questions About Law Of

Contract”
 Title page

Mid-Term Assignment on

“Answering Some Questions about Law of Contract”

Course Title: Business Environment Analysis

Course Code: CC-509

Submitted by

Sadia Sultana

ID No: 20G10013

Batch: 5th

Department of Business Administration

Submitted to

Ashutosh Roy

Assistant Professor

Department of Business Administration

Date of Submission: 20 August, 2020

 Letter of Transmittal

Date: 20 August, 2020

To
Ashutosh Roy
Assistant Professor
Department of Business Administration
Ranada Prasad Shaha University
Narayanganj.

Subject: Submitting an Mid-Term Assignment on “Answering Some Questions about Law of

Contract”

Respected Sir,

This is my pleasure to submit my mid-term assignment entitled of “Answering Some Questio

ns about Law of Contract” of “Business Environment Analysis”. It was a great opportunity fo
r me to acquire my knowledge and experience in respect of the functions, procedures and oper
ational activity, other than my topic of study.

I have concentrated my best efforts to achieve the objectives of the mid-term assignment stud
y and hope my endeavor will serve the purpose. However, I will always be ready to provide a
ny further clarification that you may require.

Thanking you for your kind supervision.

Yours Sincerely,

Sadia Sultana
ID No:20G10013
Batch : 5th
Department of Business Administration,
Ranada Prasad Shaha University
Narayanganj.
 Table of Contents

Serial NO Topic name Page No

1) Answering Some 1-5

Questions about Law of

Contract

2) References 6
 Answering Some Questions About Law Of Contract
1) Answering Some Questions About Law Of Contract:

Question-1: Define contract. “All contracts are agreement but all agreements are not
contract.” – Explain.
Answer: Contract: “A contract is an agreement between two or more person which is
intended to be enforceable at law and is contracted by the acceptance one party of an offer
made to him by the other party to do or abstain from doing some act.”— (Halsbury)
According to Indian Contract Act 1872 and Under Section 2(h), contract may be defined
as an agreement enforceable by law. So a contract has two parts. They are;
a) It must be an agreement.
b) It must be enforceable at law.
For example, “If Mr A wants to sell his car for Rs.100000 to Mr B, here the aggreement
between the two parties A and B is enforceable by law and hence it is a contract.”
“All contracts are agreements but all agreements are not contract”: All contracts are
agreement when it is enforceable in the court of all law. It is made by free consent of parties
who are competent to contract for a lawful consideration with a law full objects. On the other
hands, all agreements are not contract because when the agreement are create the parties must
be come to same intention as led down in the Act two or more persons are said to have
consented when they agree upon the same things in the same sense and at the same time. And
also the agreement may or may not be enforceable by law or may or may not create legal
obligation. An agreement which does not create legal obligation on both the parties and those
obligation must have their sources in their aggreement. For example, Mr B invites Mr A for a
dinner at his house and Mr A accepts the invitation, this is an agreement and it cannot be treated
as a contract because it does not create legal obligation.
All above we say that, an aggreement is a wider term than contract whereas all contracts are
agreement and all agreements are not contract. Hence we can conclude “All contracts are
agreement but all agreements are not contract.”

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Question-2: What is offer? “An offer must be expressed.” – Explain. How is an offer
to be communicated?
Answer: Offers: An offer involves the making of a proposal. And proposal is also called an
offer. For a lawful offer, there will be at least two persons (Offeror and Offeree). Offeror or
promisor is the person making the proposal or offer to another and Offeree or Promisee is the
person to whom offer or proposal is made. For example, X offers to sell his motor car to Y at
the price of Rs.5000. this is a proposal. X is the promisor or the offeror and Y is the promisee
or offeree. If Y agrees to buy the car at the price stated Y become the promisee or the acceptor.
There is a contract.
According to Indian Contract Act 1872 and Under Section 2(a) defines offer as, “when
one person signifies to another his willingness to do or to abstain from doing anything, with a
view to obtaining the assent of that other to such act or abstinence, he is said to make an offer
(proposal).”
“An offer must be Expressed”: When offer and acceptance of any promise is made by
words spoken or written it is called express offer. So, when the offer words are spoken or
written it must be expressed.
An offer to be Communicated: An offer may be communicated to the offeree or offerees
by word of mouth, by writing or by conduct. A written offer may be contained in a letter or a
telegram. A circular or advertisement or a notice may be written in such a language that it
amounts to an offer. A tramway car and bus going along a street and picking up passengers are
examples of offers by conduct.
Section 4 States: “The communicated of an offer is complete when it comes to the knowledge
of the person to whom it is made.”

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Question-3: How do you define consideration? “No consideration no contract.” – State
this rule with exceptions.

Answer: Consideration: Consideration is technical term used in the sense of something in

return. When a parties to an agreement promises to do something, he must be get in return.
Subject to certain exceptions, an agreement made without consideration is “nudum pactum” (a
nude contract) and is void.

Justice Patterson defines consideration as “Consideration means something which is of value

in the eye of law. It may be some detriment to the defendant.”— {Thomas vs Thomas (1842)}

According to Indian Contract Act 1872 and Under Section 2(d) defines consideration as,
“when at the desire of the promisor, promise or any other person has done or abstained from
doing or does or abstains from doing, or promises to do or to abstain from, something, such act
or abstinence or promise is called a consideration for the promise.”

Exceptions to the “No Consideration No Contract” Rule: A promise without

consideration cannot create a legal obligation. The general rule is that an agreement made
without consideration is void rule is contained in Section 25 of the Indian Contract Act, which
declares that an agreement made without consideration is void. This means that consideration
is must in all the cases. But this Section provides certain exceptions where an agreement is
enforceable even though there is no consideration. They are as follow:

1. Natural Love and Affection: A written or registered aggreement based on natural love
and affection between the parties standing in near relation to each other is enforceable
even without consideration.
For Example, Peter and John are brothers. In his will, their father nominates Peter as the
sole owner of his entire property after his death. John files a case against Peter to claim
his right to the property but loses the case. Peter and John come to a mutual decision where
Peter agrees to give half of the property to his brother and register a document regarding
the same.
Eventually, Peter didn’t fulfil his promise and John filed a suit for recovery of his share in
the property. The Court held that since the agreement was made based on natural love and
affection, the no consideration no contract rule didn’t apply and John had the right to
recover his share.

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2. Voluntary Compensation: In order that a promise to pay for the past voluntary services
be binding the following essentials must exist.
a) The act must be done voluntary.
b) For the promisor or it must be something which was the legal obligation of the
promisor.
c) The promisor must be in the existence at the time when the act was done.
d) The promisor must agree now to compensate the promisee.
For Example, Peter finds Johns wallet on the road and returns it to him. John is happy to
find his lost wallet and promises to pay Peter Rs 2,000. In this case, too, the no
consideration no contract rule does not apply. This contract is a valid contract.
3. Time –Barred Debt: Where a promise in writing signed by the person making it or by his
authorized agent, is made to pay a debt barred by limitations it is valid without
consideration.
For Example, Peter owes Rs 100,000 to John. He had borrowed the money 5 years ago.
However, he never paid a single rupee back. He signs a written promise to pay Rs 50,000
to John as a final settlement of the loan. In this case, ‘the no consideration no contract’
rule does not apply either. This is a valid contract.
4. Agency: According to section 185 of the Indian Contract Act, 1872, no consideration is
required to create an agency.
5. Completed Gift: In this case the rule “No consideration, No contract” does not apply to
completed gifts. According to explanations 1 section 25 states that, “Nothing in this
section shall affect the validity as between the donor and the donee, of any gift actually
made.” Thus gifts do not require consideration.

6. Bailment: According to Section 148 of the Indian Contract Act, 1872, defines bailment
as the delivery of goods from one person to another for some purpose. This delivery is
made upon a contract that post accomplishment of the purpose, the goods will either be
returned or disposed of, according to the directions of the person delivering them. No
consideration is required to effect a contract of bailment.
7. Charitable Subscription: Where a person undertakes a liability on the promise of another
to contribute to charity, then the contract is valid. In this case, the no consideration no
contract rule does not apply.
For Example, Peter is the trustee of his town’s charity organization. He wants to build a
small pond in the town to enhance greenery and offer the residents a good place to walk

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 around in the evenings. He raises a charity fund where he appeals to people to come ahead
and contribute to the cause. Many people come forward as subscribers the fund and agree
to pay Peter their share of the amount once he enters into a contract for constructing the
pond.
After raising half the amount, Peter hires contractors for building the pond. However, 10
people back out at the last moment. Peter files a suit against them for recovery. The Court
ordered the 10 people to pay the amount to Peter since he had undertaken a liability based
on their promise to pay. Even though there was no consideration, the contract was valid
and enforceable by law.

All above this rules exceptions we can say that, without consideration this an exception and the
agreement can be registered. Hence we can conclude exceptions of the rule is “No
consideration no contract.”

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2) References:
a) Sen.A.K,& and Mitra.J.K,(eds.) (2008),Commercial Law and Industrial Law,
37A College Street, Kolkata-700 073, India, World Press Pvt. Ltd, 25 Edition.
b) https://www.learnpick.in/prime/documents/notes/details/3399/business-law
c) https://www.slideshare.net/pattapusrinulatha/business-law-7761123
d) https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-
i/agreements-without-consideration/
e) https://www.slideshare.net/shrinivas1648/law-of-consideration-business-law
f) https://slideplayer.com/slide/4459992/

THE END

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