Importance of Indian Contract Act, 1872
Law of contract is the most important branch of mercantile law. It determines the circumstances under which promises made by the contracting parties shall be legally binding on them. It specifies the remedies that are available against a person who fails to perform the contract entered into by him, in a Court of law. It also defines the conditions under which the remedies are available.
The law of contract is essential to carry on trade or commerce smoothly, because it introduces definiteness in the business transactions. It does not mean that it affects only the business people. It affects the entire society. That is, it affects all of us in one way or the other. Every one of us enters into a number of contracts from morning to night. When a person purchases a book, or goes to cinema, or gives his car to the mechanic for repair etc., he enters into a contract. Hence, the Contract Act is considered as the most important factor in legal environment.
Nature of the Indian Contract Act, 1872
The law relating to contracts in India is contained in the Indian Contract Act, 1872. The Act provides the general principles and rules governing contracts. All transactions that relate to the agreements and obligations of the contracting parties come under the purview of the Act. However, there are some contracts, which are governed by separate Acts. They are — Partnership Act, Sale of Goods Act, Negotiable Instruments Act, Insurance Act etc.
The Indian Contract Act deals with two aspects. The first aspect is the general principles of the law. Secs. 1 to 75 deals with them. The second aspect is certain special contracts such as indemnity, guarantee, bailment, pledge and agency. The provisions relating to these contracts are contained in Secs. 124 to 238 of the Act.
As the Act is not exhaustive, in cases not provided for in the Act, or other enactments relating to particular contracts, the High Courts may apply the Hindu Law of contract to Hindus, and the Mohammedan Law of contract to Mohammedans.