PROJECT TOPIC:

EVOLUTION OF CONTRACTS AND ITS

VARIOUS TYPES

Hidayatullah National Law University,

Naya Raipur, Atal Nagar,
Chhattisgarh

Submitted To: MR. Saurabh-Bara Submitted By: MS Subah Tagotra

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 SYNOPSIS

The research paper discusses about the evolution of contract law throughout the world, how it
emerged and how it is still an important part of the society. The concepts of contract law have
emerged from various societies like the Ancient Roman and Greek societies as well as the
English society. It also discusses about the circumstances in England which led to the
evolution of contracts. This research paper also deals with the development of the concept of
contracts in India. Starting from the pre-British era where scholars like Manu, Kautilya and
scriptures like “the Vedas” discussed about the principles of contracts to the Muslim era
when Islamic law laid down the foundation of contracts.

“Indian Contract Act 1872”, which at present governs the contract system in our country was
also evolved due to some circumstances and was amended in many ways after its formations.
The paper also deals with the essential elements of a contract and the various types of
contracts available to us.

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 Declaration

I hereby declare this research work as my original creation and a portrayal of my notions and
opinions, and if the views and opinions of another person have been added, it has been rightly
mentioned. I also pronounce my adherence to principles of academic honesty and integrity, I
also claim that I have not forged or misapprehended any idea, fact, data, or source in my
submission.

Thanks

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 Acknowledgment
My heartfelt gratitude to MR. Saurabh-Bara for overseeing my work. I am also highly
appreciative of the HNLU library and IT lab staff for aiding my research throughout its
course.

I would also like to thank my parents and peers who have also been a great support and
helping hand in this trajectory.

Thanks

Name- Subah Tagotra

Semester- “1”

Section- “B”

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 TABLE OF CONTENTS

S NO. TOPIC PAGE NO.

1. SYNOPSIS I

2. DECLARATION II

3. ACKNOWLEDGEMENT III

4. INTRODUCTION 2-5
REVIEW OF LITERATURE
RESEARCH QUESTIONS
RESEARCH OBJECTIVES
RESEARCH METHODOLOGY
CAHPTERIZATION AT GLANCE

5. CHAPTER1- 6-7
EVOLUTION OF
CONTRACTS

6. CHAPTER 2- THE 8-9

HISTORY OF
CONTRACT LAW IN
INDIA

7. CHAPTER3- THE 10-11

INGREDIENTS OF THE
CONTRACT

8. CHAPTER 4- THE 12-14

WORLD OF
CONTRACTS

9. CONCLUSION

10. BIBILOGRAPHY/

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 REFRENCES

INTRODUCTION
“Until an agreement turns into a contract, there exists no legal remedies”

As the quotes explains that contracts are nothing but an agreement which is enforceable by
law. In today’s world contracts is a very important part of law. We enter into agreements
every day examples of which can be brother and sister agreeing on sharing a chocolate or
husband and a wife agreeing on sharing household chores. However, these are not considered
as contracts because they do not require legal interference. Thus, “every contract is an
agreement but every agreement is not a contract”.

Since the very beginning of trade-based civilisations, contracts have existed but their nature
has changed over the period of time. A layman can easily relate the word contracts with
business but this is a very narrow definition of contracts. In its broadest senses contracts
range from business partnerships, trade-based contracts to marriage contracts. They play a
very significant role in our lives because they provide us with a legal guarantee that if one
completes his/her obligations then they will get the desired result which they expect. For
example: When we form a contract to sell our car to someone for Rs.3 lakhs, in this case one
will complete his obligation to sell the car to get Rs. 3 lakhs which is the expected outcome.

It also protects common man from being cheated. To explain this, we can consider the case
that if you work for an organisation for a month and then discover that they are not going to
pay you for your hard work, without a contract nothing can prevent you from being cheated,
but if in the same case there was a contractual obligation between the organisation and you,
then you could sue the organisation and receive your compensation. Contracts is also an
essential element of any business deal and trade partnerships because they provide for legal
remedies in case of breach of trust or promise.

Now, we at least understand what contracts are and why do they have so much significance in
our lives. This essential element of law also has a very interesting history which will be
further discussed in the research paper. Further, there exist different kinds of contracts which
have their unique functions and remedies.

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 REVIEW OF LITERATURE

1. “Arthur Taylor von Mehren” (1998)- He authored the book “the civil law system”
and the article “contract law”, which talks about the definition of contracts, and its
historic evolution starting from the Roman law to the common law and its process of
codification.
2. “Sagnik Sarkar” (2019)- He has authored the article “Historical evolution of contract
In India” which discusses about the history of contract law in India. It discusses about
the Hindu and the Muslim law. It further throws light on the circumstances in the
British era which led to the evolution of the “Indian Contract Act 1872”. The article is
not very extensive but it does justify the history of contract with respect to India.
3. “Randy Bishop” (2018)- The article “Six things you didn’t know about the contract
law” basically talks about the 6 aspects of the history of the contract law which in
many cases are ignored or missed. One of the examples of this is that there existed
various types of contracts in Mesopotamia and this reflects that ever since the
existence of civilisations the concept of contracts also existed.
4. “Atul Chandra Patra” (1962)- The journal historical evolution of the Indian
Contract Act was authored by him. The journal extensively explains the evolution of
contract law in India, starting from the Muslim era and the British period. It also
provides a broad review of the Hindu law.
5. “Sankalp Jain” (2015)- The article talks about the 14 major types of contracts which
are discussed in the research paper further. It is a comprehensive study of all the
possible types of contracts, important case laws and their exceptions.

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 RESEARCH QUESTIONS

1. How did the concept of contracts evolved?

2. What is “the Indian contract act 1872”?

3. What are the essentials of a contract to be valid?

4. What are the various types of contracts?

OBJECTIVES OF THE STUDY

1. To discuss about the evolution of contracts.

2. To understand how contracts were introduced in India.

3. To discuss about the various essentials of the contract.

4. To get the understanding of various types of contracts.

RESEARCH METHODOLOGY

The paper is descriptive in nature and doctrinal in approach. It is largely based on secondary
and electronic sources. The researcher has resorted to documentary material in the form of

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books and articles in the library and several online articles for the completion of the project.
The mode of citation used in the project is Bluebook (19th Ed.) Citation Format.

CHAPTERIZATION AT GLANCE

Chapter 1- The evolution of contracts

Chapter 2- The History of Contract Law In India

Chapter 3- Ingredients of a valid contract.

Chapter 4- The world of contracts

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 CHAPTER 1

THE EVOLUTION OF CONTRACTS

ANCIENT HISOTRY:

As we trace our steps back in the history of contracts what is the most surprising thing is that
contracts seem to be as old as the civilization of Mesopotamia, which dates back to c.2300-
428 BCE, what is more amazing that Mesopotamia had a wide range of contracts for different
activities. These contracts were written on tablets. Archaeologists have discovered such
tablets for the following happenings:

 Sale and purchase of goods

 Rent based contracts
 Co-partnerships
 Labour contracts
 Loans and advances
 Marriage
 Power of attorney
 Divorce
 Inheritance
 Adoption
 Bankruptcy

In Europe, what we know as English law today is majorly influenced by Roman and Greek
thoughts. Roman law considered four form of agreements as major contracts. Although the
system is more complex today but the ideas of cancelling a contract are exactly the same as

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were laid by Plato. It is believed that the Greek legal system was exactly similar to the
modern Civil law.

MEDEVIAL HISTORY

The English legal system in the middle-ages was trifling and therefore there were not many
courts in England. Citizens also used to prevent using the court system for resolving disputes
because of the system called “the wager of law” which meant that a person had to take a oath
that he/she is not guilty and have 12 witnesses who could claim that they believe in the oath,
this was sued as a popular defence in those times and if one could satisfy the “wager of law”
then the person was declared innocent. But at that time people were very religious and the
oath could cost them perjury if they lost.

The royal courts however did not include this system of “wager of law”, a jury was set and
the decision was taken in case of “trespass on the case”. But the royal courts were not
uniform they sometimes considered the tort of using arms and force and in some cases
ignored the tort. It was also not easy for common man to reach the royal court and with
problems like inflation and plagues the doors of the royal courts closed for many. As the
restraints for trade increased the “doctrine of consideration” evolved which meant that for
every responsibility there has to be a valid return. Some historic cases like “SHEPTON VS
DOGGO” and “SLADE VS MORLEY” and the formation of the “court of common pleas”
led to the evolution of contract laws as it made “wager of law” and covenants unnecessary
elements of contracts. “Statue of frauds 1677” led to the codification of different types of
contracts.

INDUSTRIAL REVOLUTION

With the coming of industrial revolution, a new age of contracts started. “Freedom of
contracts” was discussed in depth and with new case laws and historical judgements contracts
was given a new shape. Terms like patents and promissory estoppel emerged. This was also
the time when the concept of void contracts emerged.

GLOBALISATION

Today we live in a global world where exists inter-state trading and thus this increases the
significance of contracts. The common example of this is UK joined the European Union
with the major aim to harmonise trade relations by bilateral contracts between the member
states.

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 CHAPTER-2

HISTORY OF CONTRACT LAW IN INDIA

In pre independent India the principles of contracts were laid down according to different
religious practices and customs. Many of these principles can be seen in the Indian Contract
Act 1872. The evolution of a codified system of contract law was a mixture of the Hindu law,
the Muslim law and the British law which are briefly discussed below:

HINDU LAW

The Hindu law was a collection of customs and the Vedas which were interpreted by the
“Smritikaras”. The Hindu law also prohibited the formation of contracts by a minor, drunk or
crippled person which can also be seen in the current contract act. Philosophers like Manu
came up with the concept of Fraudulent characteristic of contracts and declared that any
contract which is motivated with deceitful aspect shall be professed as null and void. He also
stated that contracts formed because of the use of force are also “void ab initio”. According
to the NaradaSmriti the age of a minor was 16 years, today it is 18 years. Katyanana who was
a priest by profession developed a principle which still holds power. The principle was that if
a person borrows money but is not able to return it, the king must step in and make that
person pay double the amount as a form of punishment.

MUSLIM LAW

In various instances Hindu law and Muslim law have the same principles for contract. The
main source of Muslim law is “Surah Al-Maida, Ayah”. The basic concept that a contract can
only be formed when there is an offeror and an offeree was laid down by the Muslim law.

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Like the Indian contract act today Muslim law also prohibited wagering contracts which they
considered as “Gharar”. Another similarity between Indian contract act and the Muslim law
was the importance of the acceptance and proposal of the same thing in the same sense.

BRITISH LAWS

In the 1600 when the British came to India and started governing the country with various
statues and regulations which were followed in the presidency towns, they realised that as
India is a diverse country to have a uniform contract law was difficult and therefore contracts
of trade, marriage, business etc were governed by personal laws of different communities.
This was officially declared in “the settlement Act of 1781”.

The problem of these personal laws was that if one of the contracting parties is Hindu and the
other one was Muslim or Muslim and British or Hindu or British then which system should
be applied and which laws remedies can be sued when there is a situation of breach.

THE INDIAN CONTRACT ACT 1872

At present, India follows “The Indian Contract Act 1872” for contract related laws and
statues. It prescribes acts which regulates contracts in India. It also validates legality of the
contracts and their key features. The remedies for various damages are also described in the
Indian Contract Act 1872.

Originally it was drafted by the third Indian Law Commission. Initially the major aim was to
form a universal contract law for bailment, movable property, partnership, Indemnity,
guarantee and Agency. Its basic model was inspired by the English common law but
principles from the Hindu and Muslim law was also included.

The drafters tried their best to form a contract law with which different communities could
connect and abide by. It was finally enacted and enforced in the year 1872 but soon was
amended. Sec 76 to 123 were repealed they were dealing with the sale and purchase of the
goods and later on a separate law called “Sales of Goods Act 1930” and “Indian Partnership
Act 1932” replaced section 239-266.

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 CHAPTER-3

INGREDIENTS OF A VALID CONTRACT

The Indian contract Act 1872 defines the essentials of a contract. Just like a dish cannot be
complete without the proper ingredients these elements are the ingredients for a contract to be
valid. If any of these are not there the contract cannot be legally enforceable. These essentials
elements of a contract are as follows:

1. OFFER
2. ACCEPTANCE
3. LEGAL INTENTION
4. LAWFUL CONSIDERATION
5. LAWFUL OBJECT

OFFER/ PROPOSAL

According to section 2(a)- “When one person signifies to another his willingness to do or to
abstain from doing anything, with a view of obtaining the assent of that other to such act or
abstinence, he is called to make a proposal.”

In simple words an offer is a proposition to the other person. For example- If you want to sell
your watch for Rs. 30,000 to your friend Aftab, you will communicate him about you will to
send you watch to him at the said price and hence make an offer. Offers however can be of
various kinds. Some of them are explained below:

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  EXPRESS-OFFER: When a person signifies his will or proposes an offer in spoken or
written form, it is known as express offer.
 IMPLIED OFFER: When a person signifies his will by any other means excluding
writing or spoken form, it is said to be an implied offer.
 SPECIAL OFFER: This is a kind of offers which are specifically made to a particular
individual or a specific group of individuals.
 GENERAL OFFER: When an offer is made to the general public and not specifically
to someone then that becomes a general offer
 CROSS OFFER: When coincidentally two parties exchange the same offer at the
same time then that becomes a cross offer.
 COUNTER OFFER: When the other party accepts your offer but with some changes
and conditions then that becomes a counter offer.
 STANDING OFFER: A standing offer is the type of offer when the offeror provides
for a time limit until which the offer can be accepted.

ACCEPTANCE

According to Sec 2(b)- "When the person to whom the proposal is made, signifies his assent
thereto, the offer is said to be accepted. A proposal, when accepted, becomes a promise."

An acceptance has to communicated and once communicated cannot be revoked.

LEGAL INTENTION

As discussed earlier not every agreement is a contract for an agreement to be a contract there
has to be a legal intention which means “the intention to be legally bonded”. This is why a
agreement to share a toy between friends or siblings is not considered as contracts because
there is no legal intention behind these agreements and thus no contractual obligation arises.

LAWFUL CONSIDERATION

According to Sec 2(d)- “When at the desire of the promiser, the promisee or any other
person has done or abstained from doing, or does or abstains from doing, or promises to do or
abstain from doing something, such act or abstinence or promise is called consideration for
the promise"

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Anything which includes lawful or illegal object which is forbidden by law, or any immoral
or impossible consideration is considered to be unlawful and thus he contracts formed on
these considerations are considered as “void ab initio”.

LAWFUL OBJECT

A lawful object is anything which is not illegal or prohibited in the country or in other words
which is legal and official in a country.

FREE CONSENT

According to Section 13- " two or more persons are said to be in consent when they agree
upon the same thing in the same sense (Consensus-ad-idem).”

“Consent is said to be free when it is given without any coercion, misrepresentation, fraud,
undue influence or mistake of fact or law.”

CHAPTER 4

THE WORLD OF CONTRACTS

The cosmos of contract is really huge. There are various kinds of contracts in different fields
but majorly we only have 3 classifications of contracts. These are as follows:

ON THE BASIS OF VALIDITY

i) VALID CONTRACTS

In simple words a valid contract is an agreement which is legally enforceable by

law and has all the essentials of a contract.

ii) VOID CONTRACTS

Any agreement which does not satisfies the essentials of the contract or cannot be
enforceable by law, it is said to be void.

For example- A promises B to get her stars from the sky. This is an impossible
consideration and thus a void contract.

iii) VOIDABLE CONTRACTS

A voidable contract is not void by nature but can be declared void at the option of
one party due to misrepresentation, mistake of facts etc.

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 For example- If A wants to buy B’s land and forms a contract with him, but B is a
minor then the contract will become voidable.

iv) ILLEGAL CONTRACTS

An illegal agreement is the one which is against the law of land.

For example- any contract dealing with drug peddling or trafficking of humans is
considered to be illegal

v) UNENFORCEABLE CONTRACTS

An unenforceable contract is declared unenforceable by the court due to some

methodological problem in the contract.

ON THE BASIS OF PERFORMANCE

i) EXECUTED CONTRACT

It refers to a contract in which both the parties have already completed their
contractual obligations.

For example- You had to sell a car to Ram for Rs. 2 lakhs and you sell it to Ram and
he pays you Rs. 2 lakhs.

ii) EXECUTORY CONTRACT

In this type of contracts, the parties have to perform their contractual obligations.

For example- I have to deliver some goods to Ashok and he will pay me Rs. 30000.

iii) PARTLY EXECUTED AND PARTLY EXECUTORY

As the names explains this form of contract is a mixture of both executory and
executed

Contract and therefore some part of the contract is completed but still the other part is

Left.

For Example- B has paid me for some goods but I am yet to deliver those goods.

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 iv) UNILATERAL CONTRACT

A unilateral contract is a “one-sided contract” which means only one of the parties
have

To perform the contract.

For example- Reema promises to give Rs. 20,000 to anyone who finds her lost kitten.

v) BILATERAL CONTRACT

A bilateral contract is “two-sided contract”, in which both the parties have contractual

Obligation.

ON THE BASIS OF THE MODE OF FORMATION

i) EXPRESS CONTRACTS

Contracts which are made by either spoken or written words.

ii) IMPLIED CONTRACTS

Contracts which are made by either the actions of the person or the surroundings
of the situation.

iii) QUASI CONTRACT

This is a type of contract where there is no actual contract between the parties but
the obligation arises from the law.

For example- If you by mistake leave your goods at Shyama’s house then it is his
responsibility to return them back to you.

iv) E- contract

As the name suggests any contracts which is formed by the use of any digital
mode a social media site, email etc.

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