History Of Contract Law

In ancient and medieval periods of human history in India, there was no uniform code covering contracts. Principles were thus derived from numerous references. Sources of Hindu law, i.e the Vedas, the Dhramshatras, Smritis, and the Shrutis give a detailed description of the law similar to law of contracts in that times. The principles dealing contracts form a part of the law called Vyavaharmayukha. Studies of the Smritis reveals us of contract originated in the Vedic period itself. The common rules of contract bear a striking resemblance to the modern law of contract. This lay down for ability corresponds with the provisions of the present law , namely, dependents, minors, sanyasis, persons devoid of limbs, those addicted to vices were incompetent

Spiritual debts were referred as rina and it was constantly reinforced by the Smriti that failure to pay back the debts meant re-birth as a slave, servant, woman or beast in the house of creditor. So, the son was liable to pay of his father‘s debts even if he did not inherit any property from him. Towards the end of the medieval age, the law of contracts was pretty much being governed by two factors, the moral factor and the economic factor. Activities like transfer of property, performance of services etc. required rules for agreements and promises, which covered not just business and commercial transactions, but also personal relationships in all walks of life. This takes us to the next source, i.e. the Arthasastra by Kautilya, which is considered to be the only existing secular treatise on politics and governments. During Chandragupta‘s reign, contract existed in the form of ―bilateral transactions‖ between two individuals of group of individuals. The essential elements of these transactions were free consent and consensus on all the terms and conditions involved. It was an open contract openly arrived

In general, women could not make contracts binding on their husbands or against family properties. It was possible for a competent person to authorize a dependent to enter into transactions. The dependents in such case included a son whose father was living, a father whose son managed the affairs, a woman whose husband was alive, a slave or hired servant. It has to be noted that money lending was seen as an occupation. Usury was a sin only when the usurer cheated the debtor, for e.g., when he lent goods of a lower quality, but received goods of a higher quality in return or if he extracted fourfold or eightfold return from a distressed debtor. The interest would be fixed with reference to the article pledged or surety given. Although, all commentaries are not in agreement with the amount of interest to be charged, they all agree that it was sinful to take exorbitant interest and such interest would not be enforceable in court. The Yajnavalkyasmriti provided that in case of cattle being loaned; their progeny was to be taken as profit. , the rights and duties (of a bailee) in a bailment, as we know it today in the form of sections 151 and 152 of the Indian Contract Act, 1872, has its root to the Katyaynasmriti containing a special provision called the silpinyasa‘ dealing with the deposit of raw materials with an