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A Study on the Contrast of Evolution of Contract Laws Inside and Outside India
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- May 11
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Paper Details
Paper Code: RP-VBCL-31-2025
Category: Research Paper
Date of Publication: April 20, 2025
Citation: Mr. Jino M Kurian & Dr. Amrithalingam, “A Study on the Contrast of Evolution of Contract Laws Inside and Outside India", 2, AIJVBCL, 467, 467-478 (2025).
Author Details: Mr. Jino M Kurian, Assistant Professor,Tamil Nadu National Law University,Tiruchirappalli
Dr. Amrithalingam, Assistant Professor,Tamil Nadu National Law University,Tiruchirappalli
ABSTRACT
Business Lawyers advocate that laws of contracts have a prominent role in establishing and fulfilling objectives of trade and commercial relationship between men from the origin. Laws of Contracts have such a long history of evolution. Indian Contract Act 1872 has already crossed 150 years of its commencement. This author is tracing the history of contract laws inside and outside India in this research paper. Many authors reported the evolution of Contract Laws in English history. But evidence for evolution of Indian contract laws can be traced from the traditional culture and knowledge of ancient India. The first part of the paper is covering evolution of English Contract laws in the early world history connecting the period before Christ. It is describing the evolution of various contractual concepts and how it has resulted in the making of law. Then the second part discusses the evolution of Contract Laws in Indian context connecting the early manuscripts such as Manusmriti. The third part discusses the establishment of Courts and contract laws. Then the making of the Act in India and finally a brief evaluation of post Independence law commission reports on Contract laws.
Keywords: Contract, Manusmriti, India, Evolution, Law Commission Reports
INTRODUCTION
Everything in the universe is bound to relationships. Tumbling of a tiny particle affects the existence of others. The existence of man and society shows a similar relationship. The entire clan may become extinct if they don’t keep that connection. The Greek Philosopher, Aristotle expressed that ‘man is essentially a social animal by nature.’ John Locke highlights the social contract theory. Certain philosophers view power as the reason for keeping these connections, but for some others the economic objectives keep men together. The scholars of different disciplines have different views about this inter relationship of man.
Business Lawyers who emphasise trade and commerce focus on how law is connecting men. They advocate that law facilitates the mobility of resources. Laws of contracts cannot be separately viewed from the above discussion. It has a prominent role in establishing and fulfilling objectives of trade and commercial relationship between men from the origin. Laws of Contracts have such a long history of evolution. Indian Contract Act 1872 has already crossed 150 years of its commencement. This author is tracing the history of contract laws inside and outside India.
EVOLUTION OF ENGLISH CONTRACT LAWS
The concept of contract is naturally evolved. But it was influenced by man made laws from time to time. Even though the origin of the contractual concepts can be traced from the ancient historic period (1000 BCE to 500CE), it transformed into the present appearance in the 19th century. The Mediaeval historic period (500 CE to 1400-1500 CE) has contributed largely to the development of the concept of contracts. Glanvill stated in his writings of 1180 that ‘it is not the custom of the court of the Lord King to protect private agreements.’ It was the time when contractual business issues were not heard or settled by a single judicial body as today.[1] Similarly, in the 1756 publication of Blackstone’ Commentaries on the Laws of England, less significance was given to the law of contract but emphasis was given to the law of real property. He devoted 380 pages to the laws of real property and only 28 pages to contract.[2] Another jurist, Sir William Anson, wrote in 1879, that
“The law of contract so far as its general principles are concerned has been happily free from legislative interference: it is the product of the vigorous common sense of English judges.”
That means although the common law countries including India brought separate statutes to present the contractual concepts; the English law has not adopted a contract law code nor a “Contract Act”. It can be observed that the first dedicated legislation on contract laws in England was the Unfair Contract Terms Act, 1977 until then the concepts were evolving through the comments of judges. The evolution of contractual concepts was along with the development of common laws. It can be found in the history that such issues were dealt by county courts, borough courts, courts of markets and fairs, courts of universities, courts of the church, courts of manors, and courts of privileged places of Cinque Ports, before the growth of common law courts.[3] In the earlier days, the local and manorial courts were taking actions on contractual or tortious liabilities. The defendant has to wage his law i.e., he should deny his liability before compurgators whose number will be specified by the court. If he is successful in all the oaths, then he won.
The concept of ‘trespass’ in Tort was an equivalent concept in practice then. There was little or no hesitation in seeing the defeat of contractual obligations as trespass. But it was only when it caused a ‘breach of the king’s peace.’ The term ‘king’s peace’ means where there is royal interest. It indicates that King was not interested in all matters. Certain wrongs which may have royal interest will come before the King’s bench. The plaintiffs were seeking actions of trespass when the defendant had caused damage while carrying out an undertaking.[4] Damages were allowed and no judgements of specific performances were provided. Then in the thirteenth century, the action of covenant became prevalent.This ‘Covenant’ is the nearest term equivalent to ‘Agreement’ and to a wider extent the ‘Contract’ in use today. Actions for money were called ‘debt’ but breaches of agreement for services like building or for sales or leases of land were called ‘Actions for Covenant’.[5] Only formal contracts which are in writing and sealed could have taken for actions.[6] The term ‘covenant’, originally meaning simply ‘agreement, came to mean ‘agreement under seal’.[7] By the fifteenth century, it was started using the writ of Assumpsit (i.e.,the defendant undertook on himself/ assumpsit super se).[8]
‘Humber Ferry’[9] is the first known case which held someone liable for performing a task badly. The allegation was that a ferryman agreed to take the plaintiff's horse across the River Humber. Due to the overload of the ferry, the mare perished. The trial judge was satisfied with the arguments that the action should have been a covenant but no one used deeds while taking ferries. Hence trespass was the only remedy available for the plaintiff. A substantial change in the judicial approach can be seen in the Skyrne v Butoff,[10] where the plaintiff alleged that a doctor undertook to cure him of ringworm disease for a previously received amount but later negligently treated him. The defendant pleaded that he had cured him according to the terms of the covenant. Thirning CJ spoke of the undertaking as a covenant. It was marking a different route of justifying the undertakings as covenants where deeds were not necessary.
In Aylesbury v Wattes,[11] the defendant sold a horse to the plaintiff knowing that it was blind but warranting that it is sound in the eye and limb. That means the buyer would have bought it if he was aware of the fact. Despite alleging the knowledge on the part of the defendant the decision emphasised the plaintiff having been deceived.[12]
By this period, one was able to achieve an action by trespass even though an action of covenant i.e., based upon a sealed instrument not available.[13] Later the court rejected this action, Martin J:
“Verily if this action be maintainable on this matter, for every broken covenant in the world a man shall have an action of trespass.”[14]
Hence a significant change happened in the fifteenth century. Assumpsit lay for misfeasance, for doing something badly, but not for nonfeasance, doing nothing at all.
In the Doige’s case,[15] the plaintiff Mr.William Shepton bargained with the defendant, Joan, widow of John Doggee of London. She received advance money for which agreed to transfer the land. While she got another better offer her mind has changed. The judges found that there was bargain; and it was of the essence of bargains that they were reciprocal. If Mrs. Doige conveyed the land and not paid, clearly debt arose against the purchaser and there should be binding the other way as well. Paston J commented that one shall have an action of Debt and the other should have the land.
The sixteenth and early seventeenth centuries witnessed the evolution of promissory liability. In the Slade’s case[16] and Pinchon’s case[17] it was evident that actions remedied by sur contract (debt) were overridden by assumpsit. That means in an action where the principal form of action can be an undertaking; or breach of promise. An allegation of an undertaking was indeed commonly coupled with one of a promise.[18] There was a quest to analyse the evolution of consideration surrounding the promissory liability by the mid sixteenth century. A consideration meant a motivating reason, and the essence of the doctrine was the idea that the actionability of a parol promise should depend upon an examination of the reason why it should be enforced or not enforced.[19]
During the Elizabethan period, the structure of informal contracts were reassigned: in Golding’s Case (1586), it was held that:[20]
‘In every action upon the case upon a promise there are three things considerable, consideration, promise and breach of promise’
In the words of Furmstone, the evolution of commercial laws of that period was elaboration rather than innovation. After a period of time in history, it is possible to see that laws are establishing the contractual concepts on English land. A significant piece of evidence was the Statute of Frauds,1677. The primary objective of the statute was to prevent fraudulent transactions and perjury but it was regulating the certain kinds of contracts.[21]
The nineteenth century made tremendous changes in the legality of contractual concepts. First, it has achieved a structure with a certain set of principles and concepts. It has moved from its primitive stage of being crude and inadequate. Secondly, the later period of the Industrial Revolution made legal professionals feel that contract laws are constituting their fundamentals. Thirdly, more contract treatises appeared in this period some of them are Chitty (1826), Addison(1847), Leake (1867), Pollock (1875) and Anson (1879).[22] This was the period recognising the liabilities founded on implied contracts i.e., quasi-contract. The twentieth century has reshaped the contract laws and achieved its current stature. Thus the current contract law has moulded by way various stages of developments.
CONTRACT LAWS IN ANCIENT INDIA
The Britishers came to India during the 17th Century. It is an undeniable fact that they have contributed to the development of the modern legal and governance system in India. But there is evidence from ancient and mediaeval Indian history stating that contractual principles existed prior to the British invasion. Vyaharamukya, the part of the Dharmashastra and Arthashastra of Kautilya are examples for this. Unlike, Islamic and Chritsian traditions, money lending was a business practised in the Indian subcontinent. It was not considered a sin unless deceit was involved. There was no independent topic in Smirits about the contracts but it can be ascertained from the provision. In earlier days the Sanyasins, minors, persons devoid of limbs, those addicted to vices, etc. were considered as incompetent to contract. Similarly, a son whose father was alive; a father whose son managed the affairs; a woman whose husband was alive; a slave or a hired servant were considered as dependents incompetent to contracts.[23]
The Narada Smriti considered competent persons into three categories- the king, the vedic teacher and the head of the household. During the Rig Vedic period, they believed that if the father’s debts are not settled, he will rebirth as a slave or servant or woman or beast. This made children settle their father's debts even though they were not inherited to any property. Progeny of cattle was considered as a profit of cattle which is loaned as per the Yajnavallkya Smriti. The rule of damdupat means that while charging interest upon the principal amount as a lump sum amount, the former should not be double the amount of money lent. This was accepted in various parts of the Indian subcontinent. Similarly, the Islamic law also had clear references on contractual obligations. Pollock and Mulla states that the Islamic laws have supplied various rules to govern specific contracts in India like agency (vakalat), guarantee and indemnity (zamanat and tamin), partnership (shirkat), one person’s money and another’s work (muzarabat) and bailment (kafalat).[24]
Medhatithi, one of the oldest commentaries on Manusmriti provides an illustration that an agreement by A to let her daughter for hire to B for concubinage is illegal and invalid as the object is immoral. This is quite similar to the illustration (k) of section 23 of Indian Contract Act, which is expressly stating the consideration of a contract must be lawful. Closely comparing with the other provisions there are various examples. The Smriti texts are mandating that agreements that should be in accordance with law. Also it emphasises the importance of consideration as an essential element of contract. It warns about the inadequacy or absence of consideration when the party is not under free consent. It states that contracts brought about by force or fraud are invalid. Some references given by Justice M. Rama Jois are as follows:
Manu VIII 164:[25]
सत्या न भाषा भवति यद्यपि स्यात्प्रतिष्ठिता ।
बहिश्चेद्भाष्यते धर्मान्नियताद्व्यावहारिकात् ॥
Sanskrit version
| Truth is not a language, even if it is established.
If it is explained outside the religious principles, it is fixed in practice
(Google translation) |
It can be inferred from the above excerpts that law and practices should be followed in contracts. If the contracts are made contrary to the laws and practices, then even though they are executed, cannot be valid. Medthathi states that sale of the wife and children are unlawful. Similarly, the gifting of properties by a person who has children is unlawful.
Manu VII-165 and 168:[26]
योगाधमनविक्रीतं योगदानप्रतिग्रहम्। यत्र वाप्युपधिं पश्येत्तत्सर्वं विनिवर्तयेत्। बलाद्दत्तं बलाद्भुक्तं बलाद्यच्चापि लेखितम्। सर्वान्बलकृतानर्थानकृतान् मनुरब्रवीत्। (Sanskrit version) | It is the acceptance of contributions sold by the lowering of yoga. Wherever he sees an obstacle, he should turn away from it. It was given by force, it was eaten by force, and it was written by force. Manu rebuked all those who had done evil by force
(Google translation)
|
The above excerpt reminds that nothing shall be done forcefully. A mortgage, sale, gift, acceptance or any such transactions affected by force shall not be entertained.
These quotations from the Manusmriti feature the importance given to ethical values while forming contracts in ancient Indian society. The scholars are relating these with the evidence for the existence of contractual laws in those days. It indicates that consent is an essential element of contracts from the very old days of our land. If an agreement involves fraud, then that should be nullified. This is similar to the principles of vitiating factors provided in Indian Contract Act, 1872.
ESTABLISHMENT OF COURTS AND CONTRACT LAWS
The Britishers established Courts of Justice in Presidency towns of Calcutta, Madras and Bombay in the eighteenth century. The Courts were active with anglicised and professionalised British Barristers and Judges.[27] The indiscriminate application of English law to Hindus and Muslims caused many inconveniences in these courts. To overcome this, the Statute of 1781 (21 Geo III, c 7o, s.17) empowered the Courts at Calcutta (being the then Supreme Court) and the Statute of 1797 (37 Geo III, c 142, s. 13) empowered the Courts of Madras and Bombay (being the then Recorder’s Court), to be determined in the case of Mahommedans by the laws and usages of Mahommedans, and in the case of Hindus (called ‘Gentoos’ in the statutes) by the laws and usages of Hindus, and where only one of the parties should be a Mahommedan or Hindu, by the laws and usages of the defendant. The subjects to be dealt with are all actions and suits against the inhabitants of the said towns, provided that their succession and inheritance to lands, rents and goods, and all matters of contract and dealing between parties.[28] In 1772, a semblance to the judicial system, Adalats were established in Zilla (District) and cities. It was established to settle disputes in accordance with the religious texts but contracts were not included.[29] Thus in 1781, a rule was laid down emphasising that justice, equity and good conscience shall be standard for deciding on all cases where there is no specific provision. They applied the expression ‘justice, equity and good conscience’ in their own way of English law so far as applicable to Indian society. This helped them to use any rule or custom which might appear to them as reasonable. This practice was continued until the introduction of Indian Contract Act, 1872.
The Charter Act of 1833 established a legislature for the whole of British India. It vested for the first time legislative power in a single authority, namely, the Governor General in Council. By this authority and the authority vested in him under section 22 of the Indian Councils Act, 1861, the Governor General in Council made laws for India. The laws made until then were called ‘Regulations’ and later are called ‘Acts’. Before the enactment of Indian Contract Act, 1872, there were a number of other specific legislations made on contractual matters. Those were repealed by the Schedule, then existed with the Act of 1872 but later in 1914 this Schedule was also repealed. Pollock and Mulla provides the list of the statues as follows:[30] the Interest Act, 1839,
the Usury Laws Repeal Act, 1855,
the Indian Bills of Lading Act, 1856
the Workmen's Breach of Contract Act, 1859
the Merchant Shipping Acts (English) of 1854 and 1859,
the Carriers Act, 1865 and
the Policies of Insurance Assignment Act, 1866.
MAKING OF THE ACT
There were a lot of inconveniences due to the lack of a general contract law applicable throughout the whole country. What existed was a mixed bag. It was partly English law, partly Hindu law and partly Muslim law. [31] The main objective of the Charter Act, 1833 was to consolidate and codify the law in India. Thus attempts for consolidation of the laws started from 1833. It was the Second Law Commission (Pre-Independence)[32] recommended for the codification of contract laws in the country.[33] The Third Law Commission[34] undertook the task of preparing a body of substantive law simplifying the laws in England and applicable in India. They have submitted drafts of the Indian Succession Bill (1863), the Contract Bill(1866), the Negotiable Instruments Bill (1867), the Evidence Bill(1868), the Transfer of Property Bill(1870) and Revised Draft of Criminal Procedure Code (1870).[35] Due to the differences between the Indian legislature on certain insertions and objections, the Commission resigned from their role. Thus, the task of further drafting was the responsibility of the Indian Legislature.
The draft prepared by the Third Law Commission was sent for review and got objections on certain points especially specific performance. Sir Henry Maine, who was a law member in India then, strongly objected to the draft made by the Commission.[36] Further Sir James Fitzjames Stephen became the next law member and he made the final draft of the current Act. Sir Frederick Pollock states that the framers borrowed from various codes of other countries leaving an incongruous effect. Some provisions were borrowed from the New York Code of 1862.[37] Even though the process of making went long and hilarious troubles from various sides, the resultant Act was a sound and useful one.
The Preamble and section 1 clearly uphold the fact that the Act is not exhaustive. It is made to define and amend certain parts of the law relating to contracts. There are unrepealed statues, usages and customs existing among various sects of the Indian community. But such cases have been few, generally the Act superseded all including respective contract laws of Hindus and Mohammedans. In cases where no law was in place, the justice, equity and good conscience principles were applied by the Court. The Act has been amended from time to time. The Sale of Goods Act, 1930 and the Partnership Act, 1932 were made by repealing the respective provisions of the Contract Act,1872. There were statues made on specific contracts such as Negotiable Instruments Act, 1881, the Transfer of Property Act, 1882, the Powers of Attorney Act, 1882, the Merchant Shipping Act, 1883(now repealed), the Indian Emigration Act, 1883 (now repealed), the Indian Railways Act,1890, the Carriage by Air, 1934, the Carriage of Goods by Sea Act, 1925 (now repealed) and the Specific Relief Act, 1877 (now the Specific Relef Act, 1963. The Article 372 (1) and Article 13 of Indian Constitution upheld the validity of the statute in independent India.
Law Commission Reports Post Independent India
In the post-independence period, the Central Government appointed twenty two law commissions.[38] In these the Thirteenth Law Commission Report, 1958[39] critically evaluated the Indian Contract Act,1872 and recommended many amendments. The recommendations of this Commission are very significant in its nature but no amendments were made on this ground. There are few other law commission reports on the specific aspects of contract laws such as: the Ninety Seventh Report, 1984 on Prescriptive Clauses in Contracts; the One Hundred and Third Report, 1984 on Unfair Terms in Contracts; the One Hundred and Eighth Report, 1984 on Promissory Estoppel and One Hundred and Ninety Ninth Report, 2006 on Unfair (Procedural and Substantive) Terms in Contract.
CONCLUSION
The jurisprudence of contract laws has evolved through centuries and is still evolving. It is urgent time for India to address critical legal developments in the arena of legal contracts to be considered in the Indian Contract Laws. Developments in certain sectors are happening but foundational concept still rigid to accommodate the latest developments.
* Assistant Professor,Tamil Nadu National Law University,Tiruchirappalli
** Assistant Professor,Tamil Nadu National Law University,Tiruchirappalli
[2] Ibid
[4] John Baker, ‘Contract: Assumpsit and Deceit’ in John Baker, Introduction to English Legal History (5th edn, Oxford University PressOxford 2019) <https://academic.oup.com/book/34968/chapter/298612575> accessed 20 July 2023.
[5] Michael Furmston, Cheshire, Fifoot & Furmston’s Law of Contract (16th edn, Oxford University Press 2012).p 2
[9] Bukton v Tounesende (1348) B&M 399 (KB at York).
[10](1388) B&M 556;
[11](1382) B.&M 556
[13] Watton v Brinth (YB 2 Hen 4)
[14] YB 3 Hen 6
[15] Shipton v. Dogge (1442) B. & M. 434 (KB). The defendant Joan, widow of William Dogge, is traditionally known by the year-book spelling ‘Doige’. Shipton had sued her without success in CP
[16] 4 Co Rep 91a
[17] 9 Co Rep 86b
[21] The Statute of Fraud has no relevance today unless otherwise special arises. It is an outdated statute in the context of today.
[23] Frederick Pollock and Dinshah Fardunji Mulla, The Indian Contract Act 1872 (R Yashod Vardhan and others eds, 15th edition, LexisNexis 2018).p 4
[25] Justice M Rama Jois, Legal and Constitutional History of India- Ancient Legal, Judicial and Constituional System (First, Universal Law Publishing Co Pvt Ltd, 1984).p 76
[27] MP Jain, ‘The Law of Contract Before Its Codification’ [1972] Journal of the Indian Law Institute 178.
[28] Nilima Bhadbhade, Frederick Pollock and Dinshah Fardunji Mulla, The Indian Contract and Specific Relief Acts (Updated 14th ed, LexisNexis 2013).p 5
[31] Jain (n 27).p23
[32] The Second Law Commission was appointed in England on 29th November 1853. The commission was composed of Sir Edward Rayan, Robert Lowe, Lord Sherbooke, V H Cameron, J M MacLeod and T F Ellis.
[34] The Third Law Commission was appointed on 2nd December 1861. It consisted of Lord Romilly (Chairman),Sir W Erle, Sir Edward Rayan, Lord Sherbooke, Robert Lowe, JM MacLeod and J Wills. Later W M James and JohnHenderson replaced Erle andWills on their treatment.
[35] http://law.uok.edu.in/Files/5ce6c765-c013-446c-b6ac-b9de496f8751/Custom/UNIT%20-%204.pdf (accessed on 14/8/23 at 4:15pm)
[36] Sir Henry Maine was a member of the Council of Governor General of India 1863-69.
‘Sir Henry Maine | Legal Scholar, Anthropologist, Historian | Britannica’ (11 August 2023) <https://www.britannica.com/biography/Henry-Maine> accessed 16 August 2023.
[38] Chairman, Justice Ritu Raj Awasthi 2020-2024, ‘Post-Independence Developments | Law Commission of India | India’ <https://lawcommissionofindia.nic.in/post-independence-developments/> accessed 17 August 2023.
[39] Under the chairmanship of Shri. M C Setalwad
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