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Law of Contract


Law of Contract is an agreement of the parties, the object of which is to create a legal obligation. Contract essentially consists mainly of two elements:' an agreement and a legal obligation which is enforceable by law.

Before the British rule in the country, principles of contract under the Muslim law were applicable to the members of the society irrespective of their caste, creed or religious belief, but special rules of contract between members of the Hindus were not disturbed. Indiscriminate use of English law by the Supreme Court in the Presidency town of Calcutta led to inconveniences to the native people and caused discontentment amongst them. To obviate the same, British Parliament enacted a law in 1781 which allowed the use of Muslim law of contract in dealings between Muslims, and Hindu law of contract in dealings between the Hindus. But the British rulers continued to apply principles of English common law to all foreigners including the Englishmen residing in the presidency towns and also to persons serving in the East India Company's various factories outside the presidency towns. British rulers gradually started changing their policy and introduced some of the principles of English common law through the regulations made by the Governor-General-in-Council. But ultimately they felt the necessity of codification of laws of the country, and thus came into being the Indian Contract Act 1872 which is still in operation in Bangladesh with little modification. This Act deals with general principles of contract. Originally the Act contained provisions regarding sale of goods in sections 72-123, repealed after enactment of the Sale of Goods Act 1930 and partnership in sections 239-266 repealed after the enactment of the Partnership Act 1932. In addition to the above three enactments, the Carrier's Act 1865, the Railways Act 1890, the Carriage of Goods by Sea Act 1925, the Carriage by Air Act 1934, and the Insurance Act 1938 deal with special areas of contract. Contract Act after repeal of these sections contain general principles of laws of contract (sections 1-75) and specific kinds of contracts namely, contracts of indemnity and guarantee (sections 124-147), contracts of bailment and pledge (sections 148-181) and contracts of agency (sections 182-238). [Kazi Ebadul Hoque]