Business law

Topic 1: Sources of business law in Bangladesh.

Definition:Business law, also called commercial
law or mercantile law, the body of rules, whether by
convention, agreement, or national or international
legislation, governing the dealings between persons in
commercial matters.
Characteristics of Law:
Some characteristics of law are found. These are- laws
regulate the external conduct of man. Every law is
approved and recognized by the state. Laws are universal
and equally applicable to all. Laws are to be obeyed. The
violator of law gets punishment.
Sources: There are many sources of law. The political
scientists have pointed out the six sources of law. These
main sources of laws are- (1) Customs (2) Religion (3)
Adjudication (4) Scientific deliberation/discussion (5) Equity
(6) Legislature.
1. Customs: The rules and regulations that are prevalent in
society for a long time are called customs. With the change
of time the different customs get the statutes of law. Most
of the laws of Great Britain grew up on the basis of customs.
2. Religion: From religion, the religious dictates and the
religious books the laws originated. The Hindu laws, the
Muslim laws etc. are the best example.
3. Adjudication: In many cases judgment cannot be made
with the prevalent laws. The existing laws fall short to settle
the case. The judges then, with their intelligence and
wisdom, give interpretation of the prevalent ambiguous law
to settle the matters. Thus new laws are created and later
these laws are taken as a precedent in the similar cases.
These laws are called the judge-made laws.
4. Scientific deliberations: Writings and scientific
deliberations of renowned jurists are also regarded as
important source of laws. The commentaries of the jurist
and their opinions are very often accepted by the court. In
England great importance is attached to the opinions of
coke. Black Stone, and Hale.
5. Equity: Many a time the judges settle the case by their
own sense of justice. Thus new laws are formulated by the
judge's sense of justice.
6. Legislature: In modern time legislature is the most
important source of law. The legislature creates new laws
according to the needs of the state.
Topic 2:Legal rules regarding a valid of acceptance.
Acceptance:
Sec 2(b)
• "When the person to whom the proposal is made
signifies his assent thereto, the proposal is said to be
accepted".
 • Manifestation by the offeree of his assent to the terms
of the offer.
Legal Rules Regarding a Valid Acceptance :
1. Acceptance must be given by the person to whom the
offer is made. The rule of law is clear that "if you
propose to make a contract with A, then B cant
substitute himself for A without your consent"

2. Acceptance must be absolute and unqualified. (sec

7(1)
• Acceptance of all the terms of the offer.

• Even a lightest deviation is not allowed.

3. Acceptance must be expressed in some usual and

reasonable manner, unless the proposal prescribes
the manner in which it is to be accepted. (sec7(2)
• Mental acceptance ineffectual.
• Example: (Brogden Vs Metropolitan Co)

4. Acceptance must be communicated to the acceptor.

Must not only be made by the offeree but must also be
communicated by, or with the authority of the
offeree/acceptor.Example: Powell vs LeeDuties and
delivery of goods.

5. Acceptance must be given within a reasonable time

and before the offer lapses/revoked.
 • Must be given within the specified time limit, if any
and within a reasonable time, if no time is
stipulated.
• Example:- Ramsgate Victoria Hotel Co Vs
MontifioreContract and agreement.

6. Acceptance must succeed the offer.

• Must be given after receiving the offer.
• Example:- allotment of shares previous to
application invalid.

7. Rejected offers can be accepted only, if renewed.

Topic 3: Bailment
Definition:
• A bailment is a contract, which results from delivery
of goods.
• It implies a sort of relationship in which the personal
property of one person, temporarily, goes into the
possession of another person for some specific
purpose, while the ownership is with another person.
• Therefore, the bailment involves a change of
possession only (not ownership) from one person to
another, for example, delivering a car, cycle, radio,
T.V., etc., for repair or delivering garments to a
drvcleaner. leaving a car at the parking, etc.
 • The term bailment may be defined as the delivery of
goods by one person to another for some purpose,
upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of
according to the directions of the person delivering
them.
• Therefore, the delivery of goods by one person to
another for some specific purpose, is known as
bailment.
• The delivery of goods may also be for some specified
period.
• The goods are delivered on the condition that they
shall be returned back on the fulfillment of the
specific purpose.

Characteristics of bailment:

1. Contract: There must be a contract between the party

who delivers the goods i.e. bailor and the party which
receives the goods, i.e. bailee, no matter if it is express or
implied.
2. Delivery of Goods: Goods must be delivered by one
party to another.
3. Change in possession: Only the possession and custody
of good changes, and not the ownership. Meaning that the
bailor remains the owner of the delivered item. Further, the
change in possession takes place either by actual delivery
or by any act, which results in the change in possession of
the goods, from bailor to bailee.
4. Movable items: Bailment applies to movable items only,
and not to immovable items or money.
5. Return: The bailee must return the item to the bailor. The
bailee cannot deliver any other item to the bailor in place
of the actual item, even if the other item is of high value.
The delivery of goods in case of bailment is done
voluntarily, for a specific purpose for short term only which
may be safekeeping or temporarily using it, on
the agreement that the item delivered is to be returned in
its original or altered form to the bailor when the objective
for which it is transferred is over.

Here the bailee is responsible for taking reasonable care

of the goods. Further, both actual delivery and
constructive delivery are included in it.

Examples

1. John delivered his Activa to Michael, who is the owner of

the registered service centre, for servicing of his Activa. As
it contains all the essential elements it is a contract of
bailment.
2. Shane lends his laptop to his friend Paul, to use it without
taking any charges. This is a contract of bailment for the
benefit of bailee only.

Topic 4: Duties and delivery of goods.

A legal obligation that entails mandatory conduct or
performance. With respect to the laws relating to customs
duties, a tax owed to the government for the import or
export of goods.
A fiduciary, such as an executor or trustee, who occupies
a position of confidence in relation to a third person, owes
such person a duty to render services, provide care, or
perform certain acts on his or her behalf.
In the context of negligence cases, a person has a duty to
comport himself or herself in a particular manner with
respect to another person.

What is delivery of goods?

Delivery of Goods in the Sale of Goods Act is defined as
a voluntary transfer of possession from one person to
another. Thus, to effect a valid delivery, goods from one
person to another must be transferred willingly and not by
means of fraud, theft, or force, etc. Mere possession of
goods does not amount to delivery of goods.

Modes of delivery of goods

Delivery of goods may be made in any of the following
three ways:
1. Actual Delivery: Also known as physical delivery, actual
delivery takes place when the goods are physically
handed over by the seller or his/her authorized agent to
the buyer or his/her agent authorized to take possession
of the goods.
For example, A, the seller of a car hands it over to B, the
buyer; it is a case of actual delivery of the goods.
2. Symbolic Delivery: Where the goods are bulky and
heavy and it is not possible to physically hand them over
to the buyer, delivery thereof may be made by indicating
or giving a symbol. Here the goods itself are not delivered,
but the means of obtaining possession of goods is
delivered.
3. Constructive Delivery: In this case neither physical nor
symbolic delivery is made. In constructive delivery the
individual possessing the products recognizes that he
holds the merchandise for the benefit of, and at the
disposal of the purchaser. Constructive delivery is also
called attornment.
Constructive delivery may be effected in the following
three ways.
Where the seller, after having sold the goods, agrees to
hold them as bailee for the buyer
Where the buyer, who is already in possession of the
goods as bailee of the seller, holds them as his own, after
the sale, and
Where a third party, for example, a carrier/transporter,
who holds the goods, as bailee for the seller, agrees and
acknowledges holding them for the buyer
Topic 5: Contract and agreement
Contracts and agreements are important for conducting
business for all sizes of companies. In earlier decades,
there were few written business contracts, and many
business and personal deals were done with a handshake.
If a problem arose, the two parties could take the issue to
court, and a judge would hear the case even if the contract
was not put into writing

While a verbal contract is still legal (except for in specific

situations), most contracts are documented in written form.
Contracts have become increasingly detailed these days,
and every effort is made to make all possibilities and
eventualities clear.

Contracts vs. Agreements

Many people use the terms contract and agreement
interchangeably, but they are not precisely the same thing.
Black’s Law Dictionary defines an agreement as “a mutual
understanding between…parties about their relative rights
and responsibilities.” It defines a contract as “An
agreement between…parties creating obligations that are
enforceable.”
Essentials of Business Contracts
There are six required, essential elements for a contract to
be valid (enforceable by a court). The first three,
considered here together, relate to the agreement itself,
and the other three relate to the parties making the
contract.
Offer, Acceptance, and Mutual Consent.
Every contract must include a specific offer and
acceptance of that specific offer. Both parties must
consent to their free will. Neither party can be coerced or
forced to sign the contract, and both parties must agree to
the same terms. Implied in these three conditions is the
intent of the parties to create a binding agreement. If one
or both parties are not serious, there’s no contract.

Consideration
There must be something of value exchanged between
the parties. The thing of value may be money or services,
but both parties must give something (otherwise, it is a
gift, not a contract).
Competence
Both parties must be of “sound mind” to comprehend the
seriousness of the situation and understand what is
required. This definition requires that neither party be
minors, both must be sober (not under the influence of
drugs or alcohol when signing the contract), and neither
can be mentally deficient. If one party is not competent the
contract is not valid and the non-competent party can
disavow (ignore) the contract.
Legal Purpose
The contract must be for a legal purpose. It cannot be for
something illegal, like selling drugs or prostitution.
Remember that it is not illegal to enter into a contract that
doesn’t have all of these essential items; it just means that
if an essential is missing the contract cannot be enforced
by a court.