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Junayed Mohammed Hashib (JMH)

Lecturer

American International University BangladeshCoyright ! "#$% byJMH

Legal Environment in

Business

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Types of Contract

Void & Voidable

Illegal Agreement

Capacity of Parties to Contract

Free Consent

Outline

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Express Contract Implied Contract Executed Contract

Executory Contract Bilateral Contract Unilateral Contract

Types of Contract

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The oer and acceptance of a contractif made in words, either expressedorally or in written words, the contractwill be considered to be an expressedone.

Contract between companies

!ritten contract

"ou buyin# $sh in the mar%et Oral contract

E&'(E)) CO*T(+CT

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+n implied contract is formed whenthe oer and acceptance of a contractis made without the use of any words,

rather by some other means. or example, if a repairer starts to

repair the watch of one person and thelater permits it remainin# silent

%nowin#ly that the $rst person is doin#so to #et a payment in exchan#e ofthis ser-ice, it will be treated as a

implied by law.

I'/IE0 CO*T(+CT

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!here there are two or more partiesof a contract and both of the partiesha-e their obli#ations on each other,

the contract is said to be a bilateralcontract 1or multilateral in case ofmore parties2

BI/+TE(+/ CO*T(+CT

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Essentially the promises mo-e fromone direction 1lateral2 only with theother party performin# it.

+ reward case oer for $ndin# andbrinin# the lost cat.

U*I/+TE(+/ CO*T(+CT

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The contract is valid, but subsequently becomesinvalid due to some reasons

ue to subsequent change in any la! or impossibilityof an act, !hich are beyond the imagination and

control of the parties to the contract, the contractcannot be performed and hence it becomes void"Further, no party cannot sue the other party for the

non#performance of the contract

"

3OI0 CO*T(+CT

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$%amples of void Contract

made by incompetent parties '(inor)of

unsound mind)Incapacitated Person forother reason* is void"

Any bilateral mista+e# as to essential

fact's*# is void"

unla!ful consideration are void

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A promises to sell his horse after onemonth to for -s" ./,///" efore thecompletion of one month, the horse died"0o!, the contract becomes void as thecontract cannot be performed, i"e" theob2ect on !hich the parties agreed is nomore so there is an impossibility ofperformance of contract" This type ofContract is +no!n as Void Contract"

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An contract !hich is enforceable by la! atthe option of one or more of the parties#thereto, but not at the option of the other orothers, is a voidable contract"

$%ample uress, fraud and misrepresentation are

voidable"

3OI0+B/E CO*T(+CT45

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0istinction Between 3oid and3oidable Contract

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An unenforceable contract is one !hichcannot be enforced in a court of la! onaccount of some technical defects"

5ome unenforceable contract can beenforced in a court of la! if the technicaldefect is removed"

U*E*O(CE+B/ECO*T(+CT

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A contract is illegal if it involves doingsomething that is a criminal act or civil!rong or against the public good" It is voidand avoids connected contracts also" (oneypaid recovered"

$g6 5elling 7re arm to one !ho doesn8t

have a license to hold one" under illegalcontract can8t be

//E6+/ CO*T(+CT

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A contract !hich is other!ise legal mightalso become illegal if it8s sub2ect matter isto be used for an unla!ful purpose"

$g6 If a 7rearm dealer enters into a contractto sell a gun to a person licensed to holdone +no!ing that he !ill use it to +ill

someone, the contract !ill become illegal"

I//E6+/ CO*T(+CT

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$very person is competent to contract !ho

is of the age of ma2ority according to thela! to !hich he is sub2ect, and !ho is ofsound mind and is not disquali7ed fromcontracting by any la! to !hich they are

sub2ect""

Capacity of 'arties

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(a2ority

Persons of 9nsound (ind"

Idiocity"

Insanity"run+enness"

(ental decay"

:ypnotism"

Persons disquali7ed by la! to !hich he is sub2ect"

Alien enemies"

Foreign 5overeigns and ambassadors"

Insolvents"

Convict"

Capacity of 'arties

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A person is said to be of sound mind for thepurpose of ma+ing a contract if, at the time!hen he ma+es it he is capable ofunderstanding it and forming a rational

2udgment as to its e;ect upon his interests"

Capable of understanding

Forming a rational 2udgment

'ersons of Unsound ind

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Alien enemies"

Foreign 5overeigns and ambassadors"

Insolvents"

Convict

'E()O*) 0I)7U+/IIE0 (OCO*T(+CTI*6 B" +*" OT8E( /+!.

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