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History of the Indian Contract Act 1872

5339 words (21 pages) Essay in Cont ract Law

 02/02/18  Cont ract Law  Reference t his  Law St udent

Jurisdiction(s): India

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Introduction
The Indian Cont ract Act brings wit hin it s ambit t he cont ract ual right s t hat have been grant ed t o t he
cit izens of India. It endows right s, dut ies and obligat ions on t he cont ract ing part ies t o help t hem t o
successfully conclude business- from everyday life t ransact ions t o evidencing t he businesses of
mult i-nat ional companies. The Indian Cont ract Act , 1872 was enact ed on 25t h April, 1872 [Act 9 of
1872] and subsequent ly came int o force on t he first day of Sept ember 1872. The essence of t he
India Cont ract Act has been modelled on t hat of t he English Common Law. [1]

The ext ent of modificat ions made in t he Act as per t he Indian condit ions and it s adapt abilit y t o t he
Indian economy is an import ant area of research. In t his regard it is pert inent t o not e t hat since t he
enact ment of t he Act t here have been no amendment s and t hus t he Law t hat was made in 1872 st ill
st ands good. However, t hese are quest ions of int erpret at ion t hat not only depend on t he t ext of t he
Act , but also on t he English aut horit ies t hat framed t he law and before it , t he subsequent
development of law. [2]


The hist ory of t he Act brings t o light t he very origin of t he economic processes and in t his regard,
t he import ance of cont ract ing in order t o conduct one’s business in everyday life. The prevalent 
syst em in t he ancient t imes was bart er and it was based on t he mut ual principle of give and t ake.
This was confined t o commodit ies  as t
here was no
medium
 of exchange
 as is seen in t he form of
money t oday and t his syst em can be t raced back in t ime t o t he Indus Valley Civilizat ion (t he earliest
human civilizat ion). The syst em st ill finds relevance in t he cont emporary world, where it can be found
in commercially and economically underdeveloped areas.

However, t he relevancy of such a syst em in modern t imes is quest ioned as t he complexit y in t he

nat ure of t he economic syst ems as well as t he increasing demand and supply syst ems due t o t he
change in t he want s and needs of t he human beings came t o t he fore. Also, money had evolved as
t he medium of exchange such t hat t he value of every commodit y could now be quant ified. Thus, in
such an era of great er economic t ransact ion one finds t he exist ence of Cont ract Laws and wit h it ,
t heir relevance.

The Indian Cont ract Act codifies t he way we ent er int o a cont ract , execut e a cont ract and
implement provisions of a cont ract and effect s of breach of a cont ract . The cont ract ual capacit y is
rest rict ed in cert ain sit uat ions ot herwise it is t he prerogat ive of t he individual t o cont ract . There are
specific areas which deal wit h propert y, movable gods and specific performance such as t he
Transfer of Propert y Act , The Sale of Goods Act and The Specific Relief Act . Some of t hese act s,
were originally a part of t he Indian Cont ract Act enact ed in 1872 but were lat er codified as separat e
laws. Moreover t he Act is not ret rospect ive in nat ure. Hence a cont ract ent ered int o prior t o 1st
Sept ember 1872, even t hough t o be performed aft er passing of t his Act is not hit by t his
Act . [3] Hence, we arrive of t he conclusion t hat t he basic framework of cont ract ing is covered in t he
Indian Cont ract Act and it is an import ant area of law, wit h root s deep in t he hist ory of civilizat ion-
and t hus forms t he subject mat t er of t his project of t his course of Legal Hist ory.

1.1 RESEARCH METHODOLOGY

For t his project t it led, ‘Hist ory of t he Indian Cont ract Act , 1872’ t he doct rinal met hod was judged t o
be most appropriat e. Primary resources referred t o in t he course of research include books, journals,
law report s and cases, most of t hem accessed from t he NALSAR law library. Ot her sources like
art icles, and t he like were accessed online t hrough t he use of online dat abases. All direct quot at ions
have been properly foot not ed.

1.2 RESEARCH SCHEME

1.2.1 AIM AND OBJECTIVES
The aim of t he project is t o t race t he hist ory of t he Indian Cont ract Act , 1872 and analyse t he
development s t hat led t o it s enact ment in 1872. The project also vent ures t o seek t he hist ory of
‘Law of Cont ract s’ in general and present a brief view on t he changing not ions about t he cont ract
law.

1.2.2 SCOPE AND LIMITATIONS

The project covers t he development of t he ‘Law of Cont ract s’ right from t he early st ages of human
civilizat ion, making it s way t hrough


 Roman
 and
 English
 not ionst hat 
event ually led t o t he format ion of
t he Indian Cont ract Act . The project also shows t he relevance of such legislat ion, codifying t he
principles of cont ract making.

The research is limit ed t o t he resources available at t he NALSAR Library. Books relat ed t o t he t opic
are available at t he library. Also, t he sources available on t he int ernet helped a considerable deal.
Suggest ions from t he course-inst ruct or and fellow st udent s have been incorporat ed wherever
necessary.

2. EARLY LAW OF CONTRACT: INDIA

2.1 VEDIC AND MEDEIVAL PERIOD
During t he ent ire ancient and medieval periods of human hist ory in India, t here was no general code
covering cont ract s. Principles were t hus derived from numerous references- t he sources of Hindu
law, namely t he Vedas, t he Dhramshat ras, Smrit is, and t he Shrut is give a vivid descript ion of t he law
similar t o cont ract s in t hose t imes. The rules governing cont ract s form a part of t he law called
Vyavaharmayukha. [4]

St udies of t he smrit is reveal t hat t he concept of cont ract originat ed in t he Vedic period it self.
Topics, as we know t hem t oday like debt deposit and pledges sale wit hout ownership, mort gage and
gift s, which are all cont ract s in nat ure, are ment ioned t herein. [5] The general rules of cont ract bear a
st riking resemblance t o t he modern law of cont ract . For e.g. as ment ioned in t he Manusmrit i, t he first
and t he foremost requirement for a cont ract process t o st art is t he compet ence of t he persons
who are willing t o ent er int o a cont ract . This norm laid down for compet ence corresponds wit h t he
provisions of t he present law (Sect ion 11, Indian Cont ract Act ), namely, dependent s, minors,
sanyasis, persons devoid of limbs, t hose addict ed t o vices were incompet ent t o cont ract . [6] The
Narad smrit i cat egorizes compet ent persons int o t hree; t he king, t he Vedic t eacher and t he head of
t he household. [7]

The concept of liabilit y in cont ract law finds it s birt h in t he Vedic period t oo. Spirit ual debt s were
referred as ‘wrin’ and it was const ant ly reinforced by t he srmit is t hat failure t o pay back t he debt s
meant re-birt h as a slave, servant , woman or beast in t he house of credit or. [8] So, t he son was liable
t o pay of his fat her’s debt s even if he did not inherit any propert y from him.

Towards t he end of t he medieval age, t he law of cont ract s was pret t y much being governed by t wo
fact ors; t he moral fact or and t he economic fact or. Act ivit ies like t ransfer of propert y, performance
of services et c. required rules for agreement s and promises, which covered not just business and
commercial t ransact ions, but also personal relat ionships in all walks of life. This t akes us t o t he next
source, i.e. t he Art hashast ra by Kaut ilya, which is considered t o be t he only exist ing secular t reat ise


on polit ics and government s.

During Chandragupt a’s reign, cont ract exist ed in t he form of “bilat eral t ransact ions” bet ween t wo
individuals of group of individuals. The essent ial element s of t hese t ransact ions were free consent
      
and consensus on all t he t erms and condit ions involved. It was an open cont ract openly arrived at . It
was laid down t hat t he following cont ract s were void:

Cont ract s formed during t he night .

Cont ract s ent ered int o t he int erior compart ment of t he house.

Cont ract s made in a forest

Cont ract s made in any ot her secret place [9] .

There were cert ain except ions t o clandest ine cont ract s such as:

Cont ract s made t o ward off violence, at t ack and affray

Cont ract s made in celebrat ion of marriage

Cont ract s made under orders of government

Cont ract s made by t raders, hunt ers, spies and ot hers who would roam in t he forest frequent ly.

The cont ract would be rendered void if t here was any undue influence or if t he cont ract was ent ered
int o a fit of anger or under influence of int oxicat ion et c. [10] In general, women could not make
cont ract s binding on t heir husbands or against family propert ies. It was possible for a compet ent
person t o aut horise a dependent t o ent er int o t ransact ions. [11] The dependent s in such case
included a son whose fat her was living, a fat her whose son managed t he affairs, a woman whose
husband was alive, a slave or hired servant . [12]

It has t o be not ed t hat money lending was seen as an occupat ion. Usury was a sin only when t he
usurer cheat ed t he debt or, for e.g., when he lent goods of a lower qualit y, but received goods of a
higher qualit y in ret urn or if he ext ract ed fourfold or eight fold ret urn from a dist ressed debt or. The
int erest would be fixed wit h reference t o t he art icle pledged or suret y given. Alt hough, all
comment aries are not in agreement wit h t he amount of int erest t o be charged, t hey all agree t hat it
was sinful t o t ake exorbit ant int erest and such int erest would not be enforceable in court . The
Yajnavalkya smrit i provided t hat in case of cat t le being loaned, t heir progeny was t o be t aken as
profit . [13]

Also, t he right s and dut ies (of a Bailee) in a Bailment , as we know it t oday in t he form of sect ions 151
and 152 of t he Indian Cont ract Act , 1872, has it s root t o t he Kat yaynasmrit i cont aining a special
provision called t he ‘silpinyasa’ dealing wit h t he deposit of raw mat erials wit h an art isan- t alking


about t he degree of care at t ached. The t ext laid down t hat “if an art isan does not ret urn t he t hings

deposit ed wit h him during t he st ipulat ed t ime, he should be made t o pay it s price even in t he cases,
where t he loss is due t o act s of God or King. The art isan, however, is not responsible for t he loss of
      
an art icle which was defect ive at t he very t ime of bailment , unless t he loss is due t o his own
fault .” [14]

It is also int erest ing t o not e t hat t here was no ‘limit at ion’ for bringing a suit for money lent . This was
because of t he rule of ‘damdupat ’ which laid down t hat ‘t he amount of principle and int erest
recoverable at one t ime in a lump sum cannot be more t han double t he money lent .’ It t ook int o
considerat ion t he fact t hat debt s were not necessarily recoverable from a man himself, his
descendent s were also liable. Thus t here was no concept of a ‘limit at ion period’ for filing a
suit . [15] The rule of ‘damdupat ’ is st ill prevalent in Calcut t a and Bombay as it has been upheld t o be
a valid cust om and t hus enjoys enforceabilit y under t he savings clause, Sect ion 1. [16]

2.2 ISLAMIC LAW:

During t he Muslim rule in India, all mat t ers relat ing t o cont ract were governed under t he
Mohammedan Law of Cont ract . The word cont ract in Arabic is Aqd meaning a conjunct ion. It
connot es conjunct ion of proposal (Ijab) and accept ance which is Qabul. A cont ract requires t hat
t here should be t wo part ies t o it one part y should make a proposal and t he ot her accept it , t he
minds of bot h must agree t hat is t here declarat ion must relat e t o t he same mat t er and t he object
of cont ract must be t o produce a legal result  [17] .

It also supplied rules t o govern specific cont ract s t o commercial, mercant ile and propriet ary nat ure
like agency (vakalat ), guarant ee and indemnit y (zamaanat and t amin), part nership (shirkat ), one
person’s money and anot her’s work (muzarabat ), bailment (kafalat ). All t ransact ions were t reat ed as
secular cont ract s and rules were provided for set t lement of all t ypes of disput es even relat ing t o
propert y and succession.

Anot her t hing t o be not ed is t hat under Islamic Law even marriages (Nikah) were t reat ed as
cont ract s and t ill dat e t he sit uat ion remains t he same. Eit her of t he part ies t o t he marriage makes a
proposal t o t he ot her part y and if t he ot her part y accept s, it becomes a cont ract and t he husband
eit her at t he t ime of marriage or aft er it has t o pay an amount t o t he wife as a symbol of respect
known as Mahr. Also t he Mahommedans were t he first s t o recognize t he concept of divorce. This
way, a part y t o marriage could absolve it self of t he cont ract ual obligat ions under marriage. Muslim
marriages are t hus considered cont ract s for t hese reasons.

3. EARLY LAW OF CONTRACT: ROME

In early Rome, t he law of cont ract s developed wit h t he recognit ion of a number of cat egories of
promises t o be enforced rat her t han creat ion of any general crit eria for enforcing promises. Thus,
t he not ion t hat promise it self may give rise t o an enforceable dut y was an achievement of Roman


law. [18] A promise might be morally binding but it was not legally enforceable unt il it fell wit hin t he
specified cat egories viz. “st ipulat ion”, “real” cont ract s and “consensual” cont ract s. 
STIPULATION: (st ipulat io) It put int o force formalit ies and dat es from a very early t ime in Roman
      
law. A part y could make a binding promise called “st ipulat ion” in which t he part y observed a
prescribed form of quest ion and answer. Though t he part icipat ion of bot h part ies was required, only
one part y was bound. [19]

REAL CONTRACTS: These were t hose t hat suit ed t o execut ory exchange of promises. For example,
t he cont ract of loan, in which t he recipient ’s promise t o rest ore t he subject mat t er was binding. [20]

CONSENSUAL CONTRACTS: These were more flexible and did not hold a legal basis for enforcing
purely execut ory exchanges of promises. They deviat ed from t he formalit ies in “st ipulat ion” and in
agreement alone, wit hout delivery, sufficed t o make t he promises binding. Alt hough t hey were limit ed
t o four import ant t ypes of cont ract s- sale, hire, part nership and mandat e.

These t hree cat egories of enforceable promises met t he Roman needs t hrough t he classical period
(500 BC – 300 BC). Lat er on a fourt h cat egory of enforceable promise was recognized as
“innominat e” cont ract s.

INNOMINATE CONTRACTS: These were agreement s under which one part y was promised t o give or
do somet hing in exchange for a similar promise by t he ot her part y. Unlike bot h real and consensual
cont ract s t hey were not limit ed t o specified classes of t ransact ions and were t herefore called
“innominat e”. The enforceabilit y of t he promise required some performance given in exchange and
was called quid pro quo (i.e. t he modern concept of ‘considerat ion’ of t he cont ract ). But t hese
cont ract s were limit ed because t hey were binding only when one of t he part ies had complet ed
performance and unt il t hat happened eit her part y could escape liabilit y.

Roman law always had t he t endency of primit ive societ ies t o view each t ype of t ransact ion as a
dist inct complex of right s and it never fully rid it self of t his proclivit y. [21] Thus t he development of
a general t heory of cont ract s was left t o t he modern legal syst ems t hat arose in Europe during t he
Middle Ages, t he common law syst em t hat arose in England and t he civil law syst ems of t he
European cont inent .

3.1 RELEVANCE OF ROMAN CONTRACT NOTIONS IN INDIAN LAW:

Though Roman not ions of cont ract law have not been direct ly included under t he Indian law of
cont ract s. However, t he framers of t he Indian Cont ract Act , t he English, were aware of t he
development s in t he field of law of cont ract s in Rome. Thus, Roman Cont ract not ions have helped in
t he development of English law, t hus affect ing t he Indian Cont ract Act . The int roduct ion t o t he next
chapt er deals wit h t he same discussion.

4. EARLY LAW OF CONTRACT: ENGLAND

As st at ed earlier, t he Roman law not ions of cont ract were known t o t he English but t heir influence

law in t he Middle Ages. The court s succeeded in a remarkable way keeping in t he view t he fact t hat
when t hey st art ed, t he English law of cont ract s was lit t le more advanced t han t hat of many

faded wit h t he break-up of t he Roman polit ical syst em. English Court s t herefore, had t o reconst ruct

primit ive societ ies. [22]       
Now, since no syst em can afford t o make all promises enforceable, t he English t ried out t wo
assumpt ions:

One, t he assumpt ion t hat promises are generally enforceable, and t hen creat e except ions for
promises considered undesirable t o enforce.

Secondly t he assumpt ion t hat promises are generally unenforceable, and t hen creat e except ions for
promises t hought desirable t o enforce.

The common law Court s chose t he lat t er assumpt ion, t he same as Roman law i.e. “mere promise
doses not give rise t o an act ion.” This decision accorded well wit h t he procedural nicet ies of t he
common law court s, where t he plaint iff did not have t he recovery unt il his claim could be fit t ed wit h
one of t he est ablished forms of act ion. It also suit ed t he st at us-orient ed societ y of t he Middle
Ages where no great pressure exist ed for enforcing promises as cont ract s were not yet a significant
part of t he business of t he common law court s.

4.1 THE FIFTEENTH AND SIXTEENTH CENTURIES

The challenge faced by t he common law Court s in t he fift eent h and sixt eent h cent uries was t o
develop a general crit erion for enforcing promises wit hin t he framework of t he forms of
act ion. [23] And by t he end of t he 15t h cent ury, t wo forms of act ion for enforcing right s, which
included some of t hose which we now call cont ract ual, had t aken a fairly definit e shape. These were
act ion on ‘debt ’ and t he act ion on ‘convenant ’.

4.1.1 CONVENANT

The word ‘convenant ’ is t he nearest medieval equivalent t o current definit ion of ‘cont ract ’. The
act ion of convenant mainly concerned breaches of agreement for services like building or for sales
or leases of land. The primary claim was for performance, and in royal court s t he act ion was begun
by t he praecipe writ ordering t he defendant t o keep t he agreement ; but judgement s ceased t o order
specific performance and damages were awarded inst ead. But t he act ion of convenant soon fell out
of use, not because it was ineffect ive but because t he ot her act ion of ‘debt ’ proved more
effect ive. [24]

4.1.2 DEBT

The act ion on debt covered t he claims for t he price of goods sold and delivered. The essent ial
feat ure of it was t hat t he claim was for money compensat ion for benefit received. [25] The
defendant ’s liabilit y in debt was not based on a mere promise but on t he debt or’s receipt of what


t he debt or had asked for, called quid pro quo like t he Romans in t he form of loan. It was t herefore

t hought t o be unjust t o allow t he debt or t o ret ain it wit hout paying for it . The debt or’s wrong was
more in misfeasance t han nonfeasance. [26] Following t his rat ionale t he court s finally broadened t he
act ion of debt t o allow recovery by anyone
 who  had  conferred
 a subst  ant ial benefit . However, t he
lacuna in t his syst em was t hat t he defendant might avoid liabilit y by a procedure known as “wager of
law”, in which t he defendant denied t he debt under oat h accompanied by a number (usually 11) of
oat h-helpers, who swore t hat defendant was t elling t he t rut h.

4.2 THE SIXTEENTH CENTURY: DEVELOPMENT OF ‘ASSUMPSIT’

Now, at t his point t he main quest ion t hat confront ed t he court s as t hat how t he common law would
break out of t his mould of “wager of law”. The court s finally found answer t o t his quest ion in t he law
of t ort s. They had already developed a liabilit y in t ort , where if a person undert ook t o perform a dut y
and while performing it he caused harm t o t he obligee; t he obligee could sue on t he common law
act ion of “t respass on t he case” and t his principle came t o be known as ‘assumpsit ’ (from t he Lat in
assumere, meaning t hat t he defendant undert ook).

4.2.1 ASSUMPSIT

‘Assumpsit ’ was an act ion for t he recovery of damages by reason of t he breach or non-performance
of a simple cont ract , eit her express or implied, and whet her made orally or in writ ing. It was t he word
always used in pleadings by t he plaint iff t o set fort h t he defendant ’s undert aking or promise, hence
t he name of t he act ion. Claims in act ions of assumpsit were ordinarily divided int o (a) common
assumpsit brought usually on an implied promise, and (b) special assumpsit , founded on an express
promise. [27]

As an example it was explained t hat “if a carpent er makes a promise t o me t o make me a good
house and st rong and of cert ain form, and he makes me a house which is weak and bad and of
anot her form; I shall have an act ion of t respass on my case.” Just ice could be done by requiring t he
promisor t o pay compensat ion t o t he promisee in an amount sufficient t o rest ore t he promisee in t he
same posit ion as t he promise would have been, had t he promise never been made. [28]

Also, a case in point is t he case of a ferry- man who was sued. He had undert aken t o ferry a horse
across t he Humber, but he mismanaged t he whole affair in such a way t hat t he horse was
drowned. [29] The defendant knowing t hat t here was no sealed document about t he deal argued
t hat t he proper act ion would be ‘convenant ’. However, t he act ion was held right ly brought in t ort
because t he plaint iff complained about t he killing of t he horse and not t he failure t o t ransport it .
Such claims of ‘misfeasance’ regularly succeeded.

The principle of ‘assumpsit ’ was originally limit ed t o cases of ‘misfeasance’ but lat er on cases of
‘nonfeasance’ were also dealt wit h under t he same principle. Thus t he claim for t he act ion of
assumpsit lay whenever t he defendant had given an undert aking and had eit her fulfilled it improperly
or failed t o fulfil it at all. [30]



It was during t his period it self t hat t he word ‘considerat ion’ of a cont ract , which had earlier been
used wit hout t echnical significance, came t o be used as a word of art t o express t he condit ions
      
necessary for an act ion in assumpsit t o lie. It was t herefore a t aut ology t hat a promise, at least if
not under seal, was enforceable only if t here was a ‘considerat ion’.

4.3 THE SEVENTEENTH AND EIGHTEENTH CENTURIES

The sevent eent h and eight eent h cent uries saw t he recognit ion of t he t ransferabilit y of cont ract
right s as kind of propert y, t he enact ment of legislat ion requiring writ ing for some kind of
cont ract s [31] , and t he shaping of t he concept of t he dependency of promises. But t he movement
was slow during t his period.

Towards t he end of t he eight eent h cent ury, t hings had dramat ically changed. A modern legal
hist orian wrot e t hat in America years from 1800-1875 were, “above all else, t he years of cont ract .”
Cont ract expressed, “energet ic self-int erest ,” and t he law it governed it expressed “t he nat ure of
cont ract by insist ing t hat men assert t heir int erest s, push t hem, and fight for t hem, if t hey were t o
have t he help of t he st at e.” [32] It is also generally supposed t hat it was during t his period t hat
Adam Smit h had proclaimed t hat freedom of cont ract , freedom t o make enforceable bargains would
encourage individual ent repreneurial act ivit y. [33] Also from t he ut ilit arian point of view, freedom t o
cont ract maximizes t he welfare of t he part ies and t herefore works for t he good of t he societ y.

5. ENGLISH LAW IN INDIA AND THE SUBSEQUENT ENACTMENT OF

THE ACT
The English common and st at ut e law in force at t hat t ime came int o India by t he Chart ers of t he
eight eent h cent ury which est ablished t he Court s of just ice [34] in t he t hree presidency t owns of
Calcut t a, Madras and Bombay, so far it was applicable t o Indian circumst ances. It is a mat t er of
cont roversy whet her English law was int roduced by t he Chart er of 1726 by which t he st at ut es up t o
t hat dat e would be enforced in India wit h t he same amount of force as in England, or subsequent ly
by t he Chart ers of 1753-74 so as t o embrace st at ut es up t o 1774.

Anyways, since t here was an indiscriminat e applicat ion of English law t o Hindus and Mahommedans
wit hin t he jurisdict ion of t he Supreme Court it led t o many inconveniences. To obviat e t his, t he
st at ut e of 1781 empowered t he Supreme Court at Calcut t a and t he st at ut e of 1797 empowered
t he Court s of Madras and Bombay (recorders court s), t o det ermine all act ions and suit s of
cont ract ual nat ure against t he nat ives of t he said t owns in t he case of Mahommedans by t he laws
and t he usages of t he Mahommedans and in t he case of Hindus (called ‘Code of Gent oo Laws’ in t he
St at ut es) by t he laws and usages of t he Hindus, and where only one of t he part ies was
Mahommedan or Hindus, by t he laws and t he usages of t he defendant . The result was t hat in a suit
of cont ract bet ween Hindus, t he Hindu law of cont ract was applied and in case of Mahommedans
t he law of Mahommedans applied. And t his cont inued unt il t he enact ment of t he Indian cont ract act .



The year 1862 saw t he int roduct ion of High Court s in t he presidency t owns of Calcut t a, Madras and
Bombay. The court s est ablished under t he st at ut es of 1781 and 1797 were abolished. The chart ers
 t he
of t hese new High court s cont ained same  provisions
 about
 t helaw t o be applied i.e. t he High
Court cont inued t o administ er t he personal law of cont ract s t o Hindus and Mahommedans in t he
same manner. But t his was made subject t o t he legislat ive powers of t he ‘Governor General in
Council’ under clause 44 of Chart er of 1865. [35]

By t his t ime, t he Indian legislat ure had got t he power t o alt er t he provisions of clause 19 of t he
Chart er of 1865. The Indian Cont ract Act was enact ed in t he exercise of t his power by t he Indian
legislat ure t o govern mat t ers of cont ract . St ill subject t o any law made by t he Governor General in
Council, t he High Court s were st ill bound, in t he exercise of ordinary civil jurisdict ion, t o apply t he
personal laws of cont ract t o Hindus and Mohammedans as being comprised in t he expression ‘law
and equit y’ in clause 19.

The Bengal Regulat ion 3 of 1793 (Sect ion 21) and Madras Regulat ion 2 of 1802 (Sect ion 17)
direct ed t he judges in t he zilla (dist rict ) and cit y court s t o act according t o just ice, equit y and good
conscience in cases where no specific rule exist ed. These regulat ions were repealed, but t he
direct ion t o act in t he absence of any specific rule according t o just ice, equit y and good conscience
found place in t he Bengal Civil Court s Act 1887 (Sect ion 37) and t he Madras Civil Court s Act 1873
(Sect ion 16) . The Bombay Regulat ion 4 of 1827 (Sect ion 26), which is st ill in force, provided t hat t he
law t o be observed in t he t rial of suit s be t he Act s of Parliament and regulat ions of government
applicable t o t he case, and in t he absence of such act s and regulat ions; t he usage of t he count ry in
which suit arose; and if none such appeared-t he law of t he defendant , and in t he absence of specific
law and usage, equit y and good conscience. [36]

The expression ‘just ice, equit y and good conscience’ was int erpret ed t o mean t he rules of English
law so far as applicable t o t he Indian societ y and circumst ances. [37] It has been observed t hat in
pract ice, t he applicat ion of English law did not raise difficult y because on many point s t here were no
differences bet ween t he English and t he personal law, and t here was no rule of personal law in many
cases, moreover because many Indian businessmen acquired experience from t heir relat ions wit h
Brit ons. [38] The law of England, so far as consist ent wit h t he principles of equit y and good
conscience, generally prevailed in t he count ry unless it came in conflict wit h Hindu or Mahommedan
law.

5.1 CONCEPT OF LEGISLATION

The Chart er Act of 1833 est ablished a legislat ure for t he whole of Brit ish India, and t he laws made
by it were called ‘Act s’. Some of t he legislat ions at t hat t ime before t he Indian Cont ract Act include
t he Int erest Act 1839, t he Usury laws Repeal Act 1855, t he Indian Bills of Lading Act 1856, t he
Workman’s Breach of Cont ract Act 1859, t he Merchant Shipping Act s (English) of 1854 and 1859,
t he Carriers Act 1865 and t he poli

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OSCOLA APA MLA MLA-7 Harvard Vancouver Wikipedia

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<ht t ps://www.lawt eacher.net /free-law-essays/cont ract -law/hist ory-of-t he-indian-cont ract -act -
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