Contracting Under Indian Or English Law: Part 1 - The Indian Legal Framework

Introduction

This article is the first in a series of three articles

looking at some of the key differences between contracts made

under Indian law and those made under English law. The articles

assume that the reader is familiar with the principles of

English contract law, and so in explaining the differences the

focus is on the position under Indian law.

This first article looks at the statutory framework in India

to the extent that it is relevant to contracting; the second

article highlights a number of key differences between specific

contract provisions, and the final article considers some of

the issues which arise in relation to technology contracts.

Indian Contract Act, 1872

The Indian law of contract is based on common law contract

principles which have been codified in the Indian Contract Act

(ICA).

The ICA has borrowed extensively from the provisions of

codes governing the law of contracts in other countries, but is

mainly based on English law and, indeed, if there are no

relevant domestic cases, Indian courts have taken into

consideration English common law in the absence of express

provisions in this Act. That probably goes some way to

explaining why Indian law and English law have remained similar

in terms of contract law principles despite the fact that India

has had this codified law for nearly 150 years whilst the UK

has continued to rely more on its common law principles.

However, it should be noted that when the ICA does deal with a

specific matter then it is not permissible to draw on English

principles of contract law, and you should certainly not fall

into the trap of assuming that because a provision in the Act

was originally derived from a familiar English law principle

that it will now be applied in the same way under both

laws.

The ICA functions at a relatively basic level and is not a

complete contractual code: it also preserves the provisions of

other statutes, regulations, trade customs etc. as long as they

are not inconsistent with the provisions of the Act. The ICA

lays down the general principles relating to the formation,

performance and enforceability of contracts, and the rules

relating to special types of contracts like indemnity and

guarantee, bailment and pledge, and agency.

The Act is now less comprehensive than in its original form,

because provisions relating to certain specific types of

contract including partnership, carriage of goods, and sale of

goods, have since been removed and covered in...