History[edit]

Further information: Trade § History, Timeline of international trade, and Legal history

Contracts have existed since antiquity, forming the basis of trade since the dawn of commerce
and sedentism during the Neolithic Revolution. A notable early modern development in contract
law was the emergence of the hawala system in the Indian subcontinent[23] and the Arab world,
under which a series of contractual relationships formed the basis of an informal value transfer
system spanning the Silk Road. The hawala system influenced the development of
the agency in common law and in civil laws, such as the aval in French law and the avallo in
Italian law.[24] The transfer of debt, which was "not permissible under Roman law but became
widely practised in medieval Europe, especially in commercial transactions", was due to the large
extent of the "trade conducted by the Italian cities with the Muslim world in the Middle Ages". The
agency was also "an institution unknown to Roman law" as no "individual could conclude a
binding contract on behalf of another as his agent". In Roman law, the "contractor himself was
considered the party to the contract and it took a second contract between the person who acted
on behalf of a principal and the latter in order to transfer the rights and the obligations deriving
from the contract to him". On the other hand, Islamic law "had no difficulty in accepting agency as
one of its institutions in the field of contracts and of obligations in general", an approach that has
since become mainstream in common law, mixed law, and most civil law jurisdictions [25] In the
Indian subcontinent, the hawala system gave rise to the hundi, a transferrable contract entitling
its holder in due course to obtain money from its issuer or an agent thereof.