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Contract Act 1872

Contract Act 1872 (Act No. IX of 1872) governs the law of contracts in Bangladesh. The Act came into force in Bengal on 1 September of 1872, and was adopted in Bangladesh without change. It contains the common rules relating to contracts and differentiates them. The Act has 238 sections under its 11 chapters. It begins with the preliminary aspects, including a short preamble and title, extent and date of commencement and interpretation of words and expressions used in the act.

The way of communication, acceptance, revocation, and conversion of proposal into promise is described in chapter one. Chapter two defines and interprets different types of contracts, voidable contracts, and void agreements. This chapter also defines essential terms such as consent, free consent, undue influence, fraud, and misrepresentation, and gives their legal interpretation. Competency of persons to be a party to contract and the conditions for void contracts are elaborated in this chapter. The definition of contingent contracts and inherent explanations on them and their enforceability are the concerns of chapter three.

Chapter four explains the obligations of parties to contract, effects of complying to these obligations and of refusal to meet them, the time and place of performance of reciprocal promises, appropriation of payments including their legal position, and situations when and by whom contracts must be performed or need not be performed. Effects of novation, rescission, and alteration of contract, consequence of rescission of voidable contract, obligation of persons who have received advantages under void agreement or contract are also described in this chapter. Chapter five explains the claims for necessaries supplied to persons incapable of contracting and the reimbursement of claims of persons who pay money due by another in payment of which he is interested. Obligation of persons enjoying benefit of non-gratuitous act and responsibility of a bailee and repayment claim of persons paying a sum of money by mistake are also elaborated in this chapter.

Chapter six narrates the consequence of breach of contract. Compensation for loss or damage caused by breach of contract and failure to discharge obligation resembling those created by contract, and the entitlement of compensation are explained in this chapter. Chapter Seven is related to sale of goods repealed by the Sale of Goods Act 1930 (Act III of 1930). Under the broad area of indemnity and guarantee, chapter eight defines contract of indemnity, contract of guarantee, surety, and principal debtor and creditor. Interpretation on consideration of guarantee, surety's liability, continuing guarantee, revocation of continuing guarantee in different situations, rights and obligations of surety and co-sureties are detailed in this chapter. It also explains surety's right to benefit of creditor securities, implied promise to indemnify surety, and liability of co-sureties bound in different sums. Chapter nine is concerned with bailment. It states the method of delivery to bailee, bailor's duty to disclose faults in goods bailed, and the care to be taken by the bailee. Responsibility of bailee for loss of things bailed, termination of bailment by bailee's act inconsistent with conditions, and liability of bailee making unauthorised use of goods bailed are elaborated in different sections of this chapter. Impact of mixture of goods with or without the consent of the bailor, repayment by bailor of necessary expenses, restoration of goods lent gratuitously, bailor's responsibility to bailee, bailment by several joint owners, right of third parties claiming goods bailed, bailee's particular lien, and the general lien of bankers, factors, wharfingers, attorneys and policy-brokers are also explained in detail in this chapter. A section of the chapter under the sub-title Bailment of Pledges defines pledge, pawnor and pawnee and explains their rights and responsibilities as well as provision for suits by balees or bailors against wrong-doers.

Chapter ten states the legal aspects of and provision for appointment and authority of agents and sub-agents. Detail provisions are made regarding the qualification of agents to be appointed, their duties and responsibilities, appointment of sub-agents and their responsibility and accountability, relation between agents and sub-agents, and with the principal. Provisions have also been made for revocation of authority. The chapter explains the principal's duty to agents and the effect of agency on contract with third persons. Chapter eleven is concerned with partnership, later repealed by the Partnership Act 1932 (Act IX of 1932). Finally, there are some schedules at the end of the Act, which have been repealed by the Repealing and Amending Act 1914 (Act X of 1914). [Abul Kalam Azad]