Contract were governed before 1872
Before the enactment of the Indian Contract Act, 1872, Contracts in India were largely governed by personal laws and customary practices. These personal laws varied based on religious and community backgrounds, as India has always been a diverse society with multiple religions, customs, and traditions.
- Hindu and Muslim Personal Laws
Hindu Law:- Under Hindu personal law, contracts were often linked to family and inheritance matters as well as property transactions. Contractual obligations were largely guided by principles found in ancient Hindu texts, such as “Manusmriti” and “Dharmashastra” which emphasized good faith and fair dealing.
Muslim Law:- Islamic law, or Sharia also influenced contracts, particularly in areas like marriage, partnerships and property transactions. Muslim law included principles of Ijara, Mudarba, and Musharaka, which guided business dealings.
- Local Customs and Practices
Local customs and traditions played a significant role in regulating contracts, especially in trade and commerce. Merchants and traders in different regions followed trade customs unique to their communities, which were based on mutual trust and repeated transactions.
- British Influence and Common Law Principles
When the British began to establish control over India, they introduced “English Common Law Principles” into the Indian legal system. British courts, such as the Supreme Court of Calcutta (established in 1774), and they used English laws to resolve disputes between parties when no local laws or customs applied.
The lack of standardization created uncertainty in contract enforcement, as decisions could vary depending on the region, the judge, or the religious and community background of the parties involved.
- Need for a Uniform Code
The lack of a single, cohesive framework led to the need for a codified contract law. The British government recognized that a consistent, nationwide law was necessary for India’s growing trade and commerce sectors. In response, the “Indian Contract Act, 1872” was enacted and the Act provided a uniform, secular framework for all individuals and businesses, regardless of religion or custom.
Written By: – Rajat Ranjan
