The Role of the State in the Implementation of the Contract Law

Leezer Kaur
May 2, 2023
3 min read

"Written by Leezer Kaur, a student".

Introduction

The state plays an important role in the implementation of contract law. A contract is a type of agreement with a valid consideration. The contract law of a country plays an important role in a country’s political and economic life. There are two kinds of legal systems for the implementation of contract law in a country:

Common law system- where there is a codification of law, and that is the dominant source for deciding the case.
Civil law system- where the court’s decisions are the dominant source for deciding the principles to be used in contract laws.

However, these differences may not be that absolute in many countries, and these countries may be having a mixed approach. Also, the state is considered more involved in the civil systems. Also, the state is responsible for punishing the contradiction of contracts by the party to such contracts. It may enforce penalties and grant specific performance in certain cases.

Contract Laws in India

In India, there are many judgments of court and codified laws that provide for the provisions related to contract laws. The following are the legislations related to contract laws:

The Indian Contract Act of 1872- It is the main legislation dealing with the contracts, their formation, enforcement, conditions for the discharge of contracts, the bailment-related aspects, remedies in case of breach of contract, etc.
The Specific Relief Act of 1963- It mainly deals with the recovery of damages of the injured person in case a person withdraws himself from the performance of a particular contract as agreed. This act is also considered a branch of the Indian Contract Act of 1872.
The Sale of Goods Act of 1930- This act mainly deals with the sale of movable properties and goods. Before its enactment, all such cases were dealt with under the Indian Contract Act of 1872. Sections 76 to 123 of the Indian Contract Act were replaced by this act. It deals with the transfer of ownership of goods, delivery of goods, rights and duties of the buyer and the seller, remedies for breach in such cases, and other aspects of the sale of immovable properties.
The Transfer of Property Act, 1882- This act deals with the transfer of immovable properties like land, house, buildings, etc. It deals with aspects like sales, gifts, leases, etc.

Some Case Laws dealing with The Contract Laws in India

In the landmark case of Lalman Shukla v. Gauri Dutt, the Allahabad High Court observed the importance of knowledge and communication in the formation of a contract.

In the case of Bhagwandas Kedia v. Girdharilal & Co., the court held that when we make an offer, it has to be accepted by the other party to form a valid contract.

In the case of Kedarnath v. Gorie Muhammad, the court observed that when a promise is made, even if for a charitable purpose, the same has to be fulfilled as it forms a valid contract.

In the case of Durga Prasad v. Baldeo, the court upheld the provision that there cannot be a contract without valid consideration.

In the case of Mohori Bibee v. Dharmodas Ghose, the Privy Council barred the contract which was entered into by a person below 18 years of age as it did not align with the provisions of a valid contract.

Government Contracts

These are the contracts entered into by the government of India. These are made in the name of the President of India. Art. 299 of the Constitution of India provides for the provisions which are to be followed and formalities that have to be fulfilled for the formation of such contracts.

In the case of Seth Bhikraj Jaipuria v. Union of India, the Supreme Court held that the Government contract should be made by a formal written contract.

Conclusion

The state plays an important role in the implementation of contract laws in a country. In India, there is codified legislation and many precedents given by the Indian courts that provide basic provisions dealing with the contract laws in our country and according to which the cases are resolved.\

References

Bhagwandas Kedia v. Girdharilal & Co., 1966 AIR 543.
Durga Prasad v. Baldeo, 1880.
Kedarnath v. Gorie Muhammad, (1887) ILR 14 Cal 64.
Lalman Shukla vs. Gauri Dutt, 1913 40 ALJ 489.
Mohori Bibee v. Dharmodas Ghose, [1903] UKPC 12.
Seth Bhikraj Jaipuria v. Union of India, 1962 SCR (2) 880.
The Indian Contracts Act of 1872
The Sale of Goods Act of 1930
The Specific Relief Act, 1963.
The Transfer of Property Act, 1882.