A contract is legally valid in Bangladesh when legally competent parties freely agree to definite terms for lawful consideration and a lawful purpose, and the agreement is not declared void by law. A document labelled “agreement” is not automatically enforceable. The court examines whether the legal requirements of formation and validity were actually satisfied.
Governing law
The principal statute is the Contract Act, 1872. Section 2 distinguishes a proposal, acceptance, promise, consideration, agreement, and contract. In particular, an agreement enforceable by law is a contract, while an agreement that is not enforceable is void.
Section 10 provides the central validity test. Agreements are contracts when made with the free consent of parties competent to contract, for lawful consideration and a lawful object, and are not expressly declared void. Section 10 also preserves other laws requiring particular contracts to be written, witnessed, registered, or made in a prescribed form.
Sections 11, 13, 14, 23, 25, and 29 deal respectively with contractual capacity, consent, free consent, lawful consideration and object, agreements without consideration, and uncertainty.
The legal requirements explained
There must be a definite proposal and valid acceptance
One party must make a proposal showing willingness to do or abstain from doing something with a view to obtaining the other party’s assent. The other party must accept that proposal. Under section 7, acceptance must be absolute and unqualified. A response that changes the price, delivery date, quantity, or another material term is generally a counter-proposal rather than an acceptance. Acceptance must also be made in the prescribed manner, or, if no manner is prescribed, in a usual and reasonable manner.
Acceptance may be communicated through words, writing, or conduct. Section 8 recognises acceptance by performing the conditions of a proposal or by accepting consideration offered with the proposal. Section 9 recognises express and implied promises.
For example, a supplier offers to sell 500 units for Tk 300,000, delivery by 1 September, and asks for written acceptance by 10 August. A reply saying “accepted, but delivery must be by 15 September” is not an unconditional acceptance. If the supplier begins delivery after receiving an order that clearly specifies the agreed terms, the conduct may help establish acceptance.
The parties must intend and agree on the same transaction
Section 13 states that parties consent when they agree upon the same thing in the same sense. This is often described as consensus ad idem. A contract may fail where one party believes it is buying an entire business while the other believes it is selling only particular assets.
In Bangladesh Muktijoddah Kalyan Trust v Kamal Trading Agency, reported at 50 DLR (AD) 171, the Appellate Division is reported to have emphasised that acceptance must be expressed in the prescribed, usual, or reasonable manner and that conduct such as retaining or encashing tender security does not necessarily establish acceptance of the tender.
In Sahana Chowdhury v Md Ibrahim Khan, reported at 21 BLD (AD) 79 and 6 BLC (AD) 67, the Appellate Division is reported to have found no concluded contract where a tender had not been accepted and communicated.
The parties must be legally competent
Under section 11, a person is competent to contract if the person has attained the age of majority according to the applicable law, is of sound mind, and is not disqualified from contracting by another law.
A contract purportedly made by a person lacking legal capacity may be void or unenforceable. Companies, partnerships, trusts, and public bodies must also act through persons with proper authority. A company employee’s signature does not bind the company merely because the employee works there. The employee must have actual, apparent, or otherwise legally recognised authority.
Consent must be free
Section 14 provides that consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation, or mistake, as those concepts are dealt with in the Contract Act.
A contract obtained by threats, deception, abuse of a position of dominance, or a material false statement may be voidable at the option of the affected party. The result depends on the precise ground, the evidence, and the relief claimed.
In Abdul Majid v Bangladesh Chemical Industries Corporation, reported at 9 BLC (AD) 37, the Appellate Division is reported to have considered coercion in the contractual setting. In Abul Hossain v Farooq Sobhan, reported at 19 BLD (AD) 291 and 4 MLR (AD) 392, the Court is reported to have addressed undue influence, dominance, and an unconscionable transaction.
Consideration and the contractual purpose must be lawful
Consideration is what is given, done, promised, or abstained from in exchange for the other party’s promise. Section 23 makes consideration or an object unlawful where it is forbidden by law, defeats the provisions of law, is fraudulent, involves injury to another person or property, or is regarded by the court as immoral or opposed to public policy.
An agreement to pay for lawful consultancy services may have valid consideration. An agreement to conceal an offence, unlawfully influence a licensing decision, create a fraudulent transfer, or evade a statutory prohibition will not become enforceable merely because it is signed and stamped.
Under section 25, an agreement without consideration is generally void, subject to statutory exceptions. Those exceptions include certain written and registered promises based on natural love and affection between near relatives, promises to compensate for voluntary acts, and written promises to pay debts barred by limitation. The exact statutory conditions must be satisfied.
The terms must be sufficiently certain
Section 29 declares agreements void where their meaning is uncertain or incapable of being made certain.
An agreement stating “I will sell you some land somewhere in Dhaka at a fair price later” is unlikely to contain enough certainty. A contract should identify the parties, subject matter, price or pricing method, performance obligations, timing, payment method, and any essential conditions.
Required formalities must be followed
Many ordinary contracts may be oral or implied. However, section 10 preserves laws requiring writing, registration, witnesses, or another prescribed form. Land sale agreements are a major example. Section 54A of the Transfer of Property Act, 1882 and section 17A of the Registration Act, 1908 require a contract for the sale of immovable property to be made through a written and registered instrument.
The formal requirements applicable to guarantees, mortgages, leases, powers of attorney, corporate transactions, public procurement, financial instruments, and regulated transactions must be checked separately.
Practical procedure and documents
Before signing, verify the identity and legal capacity of every party. For a company, obtain its incorporation documents, current corporate records, tax and trade documents where relevant, board resolution or authority letter, and proof that the signatory is authorised.
The contract should clearly record the subject matter, price, payment schedule, delivery or performance date, quality standard, taxes, warranties, termination rights, dispute-resolution mechanism, governing law, notice addresses, force majeure provisions, and consequences of breach.
Retain the signed agreement, annexures, amendments, quotations, purchase orders, invoices, bank remittance records, delivery receipts, emails, messages, minutes, inspection reports, and legal notices. For a non-resident party acting through a representative in Bangladesh, the power of attorney and its execution, authentication, stamping, and registration requirements should be verified for the particular transaction.
Courts and authorities
Ordinary contractual disputes are generally brought before a competent civil court. Section 9 of the Code of Civil Procedure, 1908 recognises the jurisdiction of civil courts to try suits of a civil nature unless jurisdiction is expressly or impliedly barred.
Where the contract contains a valid arbitration agreement, the dispute may instead fall under the Arbitration Act, 2001. Land-related contracts may additionally involve the Sub-Registrar, land registration offices, and relevant land authorities. Public procurement, employment, banking, consumer, company, and regulated-sector contracts may be governed by additional statutes or specialised forums.
Exceptions and disputed questions
A signed document may still be void, voidable, illegal, uncertain, or unenforceable for failure to comply with mandatory formalities. Conversely, the absence of a signed document does not always mean that no contract exists.
Whether negotiations created a final contract is highly fact-sensitive. Courts examine the communications, conduct, completeness of terms, prescribed manner of acceptance, authority of signatories, and whether further approval or execution was intended as a condition.
Common mistakes
Common mistakes include treating a quotation as a completed contract, assuming silence amounts to acceptance, allowing an unauthorised employee to sign, leaving essential terms undefined, using unlawful payment arrangements, failing to register a land sale agreement, and relying on verbal assurances that contradict a detailed written contract.
Parties also frequently assume that a notarised document is automatically valid. Notarisation does not cure illegality, incapacity, absence of consideration, uncertainty, lack of authority, or failure to complete mandatory registration.
Law updated as of 13 July 2026.
Primary-source references
The Contract Act, 1872, sections 2, 7 to 11, 13, 14, 23, 25 and 29; the Code of Civil Procedure, 1908, section 9; the Transfer of Property Act, 1882, section 54A; the Registration Act, 1908, section 17A; Bangladesh Muktijoddah Kalyan Trust v Kamal Trading Agency, 50 DLR (AD) 171; Sahana Chowdhury v Md Ibrahim Khan, 21 BLD (AD) 79 and 6 BLC (AD) 67; Abdul Majid v Bangladesh Chemical Industries Corporation, 9 BLC (AD) 37; and Abul Hossain v Farooq Sobhan, 19 BLD (AD) 291.
Disclaimer
This article provides general legal information and is not legal advice. Contractual rights depend on the wording of the agreement, the evidence, the applicable special law, and the facts of the transaction. Consult a licensed advocate in Bangladesh before acting in a particular matter.