The Indian Contract Act 1872

Indian Contract Act, 1872 was drafted in order to provide guidelines for the Indian citizens involved in business transactions or legal relationships to come into legally binding agreements. The Act provides detailed documentation on what the terms should be for initiating this type of contract, where they will be legalized, where they will be null and void, and what the limitations and extents of the contracts should include. The law also dealt with properties that were to be sold or were considered moveable, the terms of indemnity, guaranteed deals, agencies, relationships between partners, bails, and so on.

Drafting of the law and conversion

The law was first taken up in the British Parliament in 1861 for discussion and was actually made by 3rd Indian Law Commission in England , the bill was drafted and converted into a law. The Indian subcontinent was considered a part of the British Empire and therefore, the British legislative structure rigidly followed and adhered to in the legal and judicial matters.

Purpose of the Indian Contract Act, 1872

The Indian Contract Act, 1872, was drafted and enforced to resolve the legal crises in the Indian Contract Act, 1872 when there was a legal dispute and the judges were not sure about the situation and were not ready to give a certain verdict in contractual relationships in business transactions. As the Indian society was divided into many states, small regions, and linguistic groups, it was impossible to bring the citizens under a common legal code and legislature. So in business transactions, partnerships, and legal contracts often there were disputes, conflicts of interest, and different interpretations of different parties. So this Act was used to provide legal guidelines until a more concrete act came into existence.

Structure of the Indian Contract Act, 1872

The Indian Contract Act, 1872 had 266 sections at the time of drafting and after amendments. The first 75 sections of the Act discussed the common guidelines. The next sections until 126, deal with the guidelines the parties involved in the selling of properties, goods, and commodities should follow and adhere to. The third part which extends up to section 238 discusses special guidelines where guarantees, indemnities, and bails are involved. The last part which extends up to section 266 discusses the relationship between partners and the principles they should follow.

Amendments of the Indian Contract Act, 1872

After several amendments, the Indian Contract Act is now divided into two sections, where, the first section is on the general structure of the law and the next section is on special conditions and contracts. The Act discusses the extent to which the business relationship will be regulated. It talks about what the terms and conditions of acceptance should be, how the promise between two parties will be interpreted, what the rules the ‘promisor’ and the ‘promisee’ should follow when the contract could have the provision of legal enforcement when the contract will be null and void and therefore the promises will not be supported by the legal structure, what the general considerations should be for initiating business relationships, what the legal bindings of an agreement and a contract will be and how they will be different from each other, what the considerations for reciprocation of promises could involve and so on.

The extent of the Indian Contract Act, 1872

The legal structure of the Act was not ultimate and it was drafted only as a temporary solution and as supporting legal legislation to the existing legal codes. Even after the independence of India, several additional terms were included and in order to prevent the law from depending on the Common Law of Great Britain, the background framework was expanded.

Conclusion

Thus this article has discussed in detail the Indian Contract Act, 1872, which covers the details on how legally binding contracts can be initiated and enforced by the parties involved in business operations and financial or formal transactions. The historical background of the law, the conditions for drafting and framing it, and the important terms for enforcement have also been discussed in brief. The working of the law and the interpretations of the conditions have also been dealt with.