Contract Law in Bangladesh — The 2025 General Counsel’s Guide by TRW Law Firm

1. Home
2. Legal Services
3. Corporate & Commercial

Featured snippet (quick answer)

Contract law in Bangladesh is primarily governed by the Contract Act, 1872, complemented by the Sale of Goods Act, 1930, Specific Relief laws, Evidence Act, 1872, Stamp Act, 1899, Registration Act, 1908, ICT Act, 2006 (e-signatures/e-records), and the Arbitration Act, 2001 (New York Convention recognition). A valid contract needs offer, acceptance, consideration, capacity, free consent, and lawful object. Core commercial issues are risk allocation (indemnities, warranties), price and tax, governing law/jurisdiction/arbitration, force majeure, and compliance with stamping/registration.

Why this guide — and why TRW

TRW Law Firm is Bangladesh’s largest cross-border law firm, advising multinationals, listed issuers, SOEs, DFIs, banks/NBFIs, and scale-ups on high-stakes contracts: M\&A, mega procurement, EPC/EPCM, technology/SaaS, IP licensing, real estate, supply & distribution, JV/shareholders’ agreements, and project finance. With teams in Dhaka, Dubai, London, and the U.S., we align Bangladesh law with your group policies, industry standards, and cross-border enforceability, so your contracts are not just signed—they are bankable, auditable, and enforceable.

Related reading: our in-depth primer on Corporate Governance in Bangladesh (internal). For company setup and board mechanics, see TRW’s guide on Company Formation in Bangladesh.

1) The legal backbone of contracting in Bangladesh

1.1 The Contract Act, 1872 (core principles)

• Offer & acceptance: Clear proposal and unqualified assent; silence doesn’t constitute acceptance; counter-offers extinguish the initial offer.
• Consideration: “Something in return.” Bangladesh follows the classic rule: agreements without consideration are void except for limited categories (e.g., natural love & affection if in writing and registered; past voluntary services; written promise to pay a time-barred debt).
• Capacity: Parties must be of majority age, of sound mind, and not disqualified. Agreements with minors are void ab initio; however, “necessaries” supplied to a minor may be reimbursed from the minor’s property.
• Free consent: Consent is invalid if caused by coercion, undue influence, fraud, misrepresentation, or mistake (of fact). Economic duress is analysed through undue influence/fairness of bargain.
• Lawful object/consideration: Agreements with unlawful object or opposed to public policy are void.
• Void & voidable agreements: Restraint of marriage; restraint of legal proceedings; agreements in restraint of trade (subject to narrow exceptions like sale of goodwill); wagering agreements are void.

1.2 Surrounding statutes every in-house team should know

• Sale of Goods Act, 1930: Title, risk, and implied conditions/ warranties (e.g., merchantable quality, fitness by description/sample).
• Specific Relief (as amended): Specific performance, injunctions, and declaratory relief—critical for property, IP, and bespoke goods/services.
• Evidence Act, 1872: Admissibility and proof, including secondary evidence and e-records.
• Stamp Act, 1899 & Registration Act, 1908: Stamping and registration requirements; under-stamping can make an instrument inadmissible; certain instruments must be registered (e.g., transfers/leases of immovable property beyond prescribed terms).
• ICT Act, 2006 (and rules): Recognition of electronic records and digital signatures—the foundation for e-contracts.
• Arbitration Act, 2001: Largely UNCITRAL-based; Bangladesh is a New York Convention country—foreign arbitral awards are generally enforceable.

2) Essentials of a valid contract — and how they play out commercially

2.1 Offer & acceptance (formation mechanics)

• Clarity of terms: Price, quantity, delivery, scope, performance standards, and acceptance mechanics (sign-back, clickwrap, email acknowledgement).
• Battle of forms: In supply chains, adopt master terms with order-specific schedules; specify priority of documents to defeat conflicting T\&Cs.
• Revocation & lapse: Offers can be revoked before acceptance is complete; time-bound offers should state validity windows and acceptance conditions.

2.2 Consideration (and its limited exceptions)

• Present/future consideration is typical; past consideration may be recognised only in narrow statutory circumstances.
• For intra-group arrangements (e.g., shared services), ensure consideration is explicit and arm’s-length (helps both enforceability and transfer pricing).

2.3 Capacity & authority

• Verify board approvals, PoAs, and signing authority. For corporates, insist on specimen signatures and a copy of the board resolution/DoA (delegation of authority). For cross-border parties, consider legalization/apostille and translation.

2.4 Free consent and fairness

• Watch for non-negotiable terms with MSMEs; avoid clauses that may be attacked as unconscionable under undue influence doctrines.
• Ensure pre-contract disclosure (especially in technology, franchise, and long-term distribution) to prevent misrepresentation claims.

2.5 Lawful object & public policy

• Be mindful of anti-bribery, competition/antitrust, FX rules, sanctions, and data/cyber controls; embed compliance clauses and audit rights.

3) Boilerplate that actually matters (and typical Bangladesh pitfalls)

Below are the “boring” clauses that win (or lose) disputes:

🟩 Definitions & interpretation: Draft precision into capitalized terms; add order of precedence across attachments.

🟩 Scope & deliverables: Tie scope to SOWs with acceptance tests, service levels (SLAs), KPIs, and remedies.

🟩 Price, taxes & payment: State currency, net/gross, VAT treatment, and withholding tax mechanics. Add gross-up clauses for cross-border services where permissible.

🟩 Delivery & risk of loss: For goods, align Incoterms with customs/VAT logistics. For services/software, define milestones and acceptance.

🟩 Warranties & disclaimers: Distinguish conditions vs. warranties; cap warranties to measurable standards; for software, include uptime/response times and update/security commitments.

🟩 Indemnities: Carve out third-party IP infringement, death/personal injury, data breach, and willful misconduct. Define procedures: notice, control of defence, settlement approvals.

🟩 Liability caps: Tiered structure (e.g., 12–24 months’ fees) with uncapped carve-outs for fraud, gross negligence, and IP infringement (as negotiated).

🟩 Force majeure: Cover epidemic, government restrictions, export controls, cyber incidents; include mitigation and business-continuity obligations.

🟩 Termination: For cause (material breach, insolvency, regulatory illegality) and for convenience (with notice and wind-down fees). Provide step-in or assignment rights for lenders/owners in project contracts.

🟩 IP & confidentiality: Ownership of foreground/background IP; licence scope (territory, field-of-use, term), FOSS compliance, and trade secret protection.

🟩 Data protection & cybersecurity: Reference Bangladesh cyber rules; add incident notification, minimum security controls, audit rights, and cross-border transfer safeguards.

🟩 Governing law & dispute resolution: Choose Bangladesh law or a neutral law; pair with arbitration (seat, rules, venue, language). Ensure waiver of sovereign immunity when contracting with state entities (where applicable).

🟩 Compliance clauses: Anti-bribery, AML/CFT, sanctions, competition, export controls—make breach a termination for cause event.

🟩 Notices, assignment, change control: Set valid notice methods (email + courier), assignment conditions, and a change request workflow for scope/price adjustments.

4) E-contracts, e-signatures, and digital evidence

• E-records & e-signatures are recognised. For high-value deals and filings, use reliable digital signature solutions and keep hash/verification evidence.
• Clickwrap & browsewrap: Prefer clickwrap (explicit assent). Log IP, timestamp, device, and consent text snapshots.
• Email contracts: Clearly designate authorised email addresses and set acceptance language.
• Hybrid executions: For instruments that still require stamping/registration, plan blended workflows (e-signature plus wet-ink originals for the stamped/registered version).

5) Stamping, registration, and admissibility (don’t get tripped up)

• Stamp duty: Share transfers, leases, bonds, mortgages, and many property/finance instruments attract ad valorem or fixed duty. Under-stamped instruments may be inadmissible in evidence until duty & penalties are paid.
• Registration: Transfers and certain interests in immovable property must be registered within statutory time limits. Long-term leases generally require registration.
• Practical tip: Build a closing checklist for stamping, notarisation/legalisation, translation, and registration. In cross-border deals, align governing-law choices with local formalities.

6) Remedies for breach — what realistically happens in Bangladesh

6.1 Damages

• Expectation damages (put the innocent party in the position as if the contract were performed) are the starting point.
• Remoteness & foreseeability limit claims; mitigation is required.
• Liquidated damages vs. penalty: Courts award reasonable compensation not exceeding the sum named. Draft LDs around genuine pre-estimate and tie to measurable KPIs.

6.2 Specific performance & injunctions

• Available especially for unique goods, IP/technology, real estate, and where damages are inadequate. Interim injunctions preserve status quo (e.g., for confidential information or IP misuse).

6.3 Rescission & restitution

• For misrepresentation, undue influence, or mistake—subject to restoration of benefits where appropriate.

6.4 Frustration & impossibility

• Supervening events that destroy the foundation of the bargain may discharge obligations (narrowly applied). Keep FM clauses robust; don’t rely solely on frustration.

7) Sector playbooks (Bangladesh-specific contracting patterns)

7.1 EPC/EPCM & infrastructure

• Risk allocation: Designs, geotech, site access, utilities, and interface risks.
• Security: Performance guarantees, advance-payment guarantees, parent guarantees.
• Payment: Milestone-based with retention and LDs for delay/performance shortfall.

7.2 Technology & SaaS

• Data & cyber: Uptime SLAs, DDoS/business-continuity, breach notification.
• IP: Background vs. foreground; open-source licence compliance; escrow for source code (on-prem).
• Subscription mechanics: Auto-renewal, price-increase caps, exit/data portability.

7.3 Manufacturing & supply/distribution

• Exclusivity/territory: Avoid illegal resale price maintenance; use performance targets instead.
• Quality & recall: Clear QC regimes; recall cost allocation; product liability insurance.
• Trade terms: Incoterms, customs, VAT rebates; documentary accuracy for banks.

7.4 Banking & financial services

• Lending docs: Security creation, perfection, priority, and enforcement; covenant packages; intercreditor mechanics.
• Services/BPO: Confidentiality, outsourcing oversight, data localisation, and regulatory audit rights.

7.5 Media & IP licensing

• Licence scope: Territory, platform, language, DRM obligations.
• Royalties: Audit rights, MFR clauses, and reporting standards.
• Morality & takedown: Content standards and termination triggers.

7.6 Real estate & hospitality

• Title & encumbrances: Strong representations; indemnities; registration and stamp workflow.
• Hotel contracts: Owner vs. operator responsibilities; brand standards; capex reserves; termination triggers.

8) Cross-border contracts: governing law, forum, enforcement

• Choice of law: Bangladesh courts respect parties’ choice unless it offends public policy or mandatory laws (e.g., employment, consumer, competition).
• Arbitration: The Arbitration Act, 2001 enables foreign awards enforcement. Choose clear seat, rules, and institution; draft an escalation clause (negotiation → mediation → arbitration).
• Jurisdiction clauses: For court jurisdiction, choose exclusive jurisdiction to minimise forum shopping.
• Sovereign counterparties: Add waiver of immunity (jurisdiction and enforcement) where applicable.
• Cross-border payments: Draft net-of-tax, gross-up, and FX clauses aligned with bank documentation.

9) Public sector & procurement contracting (quick primer)

• PPR & standard forms: Public entities use regulated procurement processes with standard bidding documents; deviations require approvals.
• Bid-stage risks: Bid security, performance security, post-award compliance (tax, VAT, trade licences).
• Disputes: Multi-tier clauses are common; make sure arbitration permissions and seats are properly authorised.

10) Negotiation strategies that work in Bangladesh

• Sequence & choreography: Use issues lists with traffic-light status. Close deal-breakers early (IP/indemnity/liability cap) to avoid last-minute collapses.
• Authority mapping: Confirm who can sign and what approvals are required (board, regulator, lender).
• Cultural nuance: Be direct on compliance (anti-bribery, AML, sanctions) and payment mechanics; propose objective, auditable standards rather than vague “best efforts.”
• Model-to-contract alignment: In project/finance deals, pressure-test that cash waterfall, tax, and FX logic in the model matches the contract text.

11) Dispute resolution playbook (Bangladesh & international)

• Escalation ladder: Business negotiation → senior-executive meeting → mediation → arbitration/courts.
• Arbitration drafting: Identify institution (e.g., SIAC, ICC), seat (e.g., Singapore, Dhaka), venue, language, number of arbitrators, governing law; add interim relief carve-out to courts.
• Evidence readiness: Preserve emails, versions, audit logs, QA reports; keep a contract file with SOWs, change orders, and meeting minutes.
• Interim relief in Bangladesh: Injunctions to prevent asset dissipation, protect confidential information, and maintain status quo.

12) TRW’s Contracting Toolkit (what you get from us)

• Best-in-class templates: MSA, SaaS, DPA, SOW, EPC/EPCM, supply, distribution, franchise, JV/Shareholders’, NDA, IP licence, property, finance, and security documents.
• Bangladesh law + global standard alignment: Boilerplate and risk allocation mapped to local law and to lender/investor expectations.
• Checklists: Stamping/registration matrix; signing authority & KYC pack; closing checklist.
• Negotiation & playbooks: Clause banks with fallback positions; decision trees for indemnities, liability caps, and LDs.
• Disputes readiness: Litigation/arbitration strategy memos; evidence preservation protocols; settlement frameworks.

13) A 90-day Contract Uplift Plan (TRW field-tested)

Days 1–15 — Diagnose & prioritise
🟩 Inventory all active templates and major contracts; map renewal/expiry; flag high-risk clauses (uncapped liability, absent IP indemnity, vague SLAs).
🟩 Build a risk register (top 15 counterparties/workflows).
🟩 Confirm signing authority and approvals policy.

Days 16–45 — Re-template & embed controls
🟩 Implement TRW-vetted MSA/SOW and SaaS stacks; install data protection, cyber, and compliance riders.
🟩 Adopt issues list and clause bank; train teams on fallback positions.
🟩 Roll out stamping/registration and closing checklists.

Days 46–75 — Train & negotiate
🟩 Workshops for sales, procurement, and tech leads on risk vocabulary and playbooks.
🟩 Re-negotiate top 10 counterparties on renewal with improved caps, indemnities, and SLAs.

Days 76–90 — Assure & monitor
🟩 Quarterly contract compliance dashboard for the board (claims, LDs, disputes, expiry/renewal).
🟩 Audit of e-signature flows and digital evidence; tabletop exercise on breach/cyber incident.

14) FAQs — fast answers for founders, GCs, and deal teams

Q1. Are e-signatures enforceable in Bangladesh?
Yes. Electronic records and e-signatures are recognised; for instruments needing stamping/registration, maintain wet-ink originals for the registrable version and store audit-ready digital trails.

Q2. Are restraints of trade enforceable?
Generally void, except for limited scenarios (e.g., sale of goodwill) and reasonable protection of legitimate interests. Use narrow, time-bound, and territory-specific clauses.

Q3. Can we choose foreign law and arbitration?
Yes, subject to mandatory local laws and public policy. Bangladesh recognises foreign arbitral awards under the New York Convention; draft clean arbitration clauses (seat, rules, language).

Q4. Do liquidated damages always apply as written?
Courts award reasonable compensation not exceeding the amount stipulated; draft LDs as genuine pre-estimates, link them to objective metrics, and preserve evidence.

Q5. What makes a contract “enforceable-ready”?
Proper formation, clear risk allocation, compliance with stamp/registration, defensible LDs/indemnities, and an evidence file (versions, approvals, logs).

15) TRW’s cross-border edge (why our contracts travel well)

• Scale & integration: The largest international law firm in Bangladesh, uniting corporate, disputes, tax, employment, finance, IP/tech, and projects under one roof.
• Sector depth: Energy/infra, TMT, manufacturing, retail, healthcare, finance, and public sector.
• Global reach: Dhaka–Dubai–London–USA teams that align Bangladesh documents with lender covenants, sanctions/export controls, data transfer regimes, and arbitration enforcement routes.
• Delivery: Templates, playbooks, and training your teams can deploy immediately—and documents your auditors, investors, banks, and courts will respect.

16) Contract Law in Bangladesh — TRW Summary Table

Talk to TRW’s Contracts & Commercial Team

Phones: +8801708000660 • +8801847220062 • +8801708080817
Emails: info@trfirm.com • info@trwbd.com • info@tahmidur.com
Global Law Firm Locations: Dhaka: House 410, Road 29, Mohakhali DOHS • Dubai: Rolex Building, L-12 Sheikh Zayed Road.

If you’d like, we can convert this guide into a contracting playbook for your sector—complete with template packs, clause banks, training decks, and a 90-day implementation plan so your teams draft faster and negotiate smarter.