Indian Journal of Law and Legal Research Volume IV Issue III | ISSN: 2582-8878

CONTRACT LAW THROUGH THE LENS OF ANCIENT

INDIAN RELIGIOUS TEXTS

Krish Bhati, SVKM’S, NMIMS School of Law, Navi Mumbai

ABSTRACT

Law and Religion have co-existed for as long as civilization has, with both
aiming to regulate the nature and conduct of civilization. Law is abstract and
well defined at the same time while religion is a source of law and exists as
a separate entity as well. During ancient times, civilization drew on nature
and society to form laws, while in the modern era, laws are more formal in
nature and are enacted by the legislature. With religion being a source of law,
it is natural for law to have ideas and rules that are similar to that of religion.
For instance, the concept of dharma has permeated modern laws and
continues to influence laws even today. Contracts exist in every aspect of
life, and it is certain that religion too has aspects of contractual obligations
in some form or other. The law of contracts is an important and well settled
body of commercial law and contracts are indispensable, not only in modern
trade but also in modern life. It is assumed that most of the contemporary
principles of contract law were developed in England, India is also governed
by the Indian Contract Act of 1872, which was drafted by the British,
however, contract law existed even during the ancient medieval period which
is evident from the Manusmriti, a centuries old religious text of India, that
contains detailed verses matters such as breach of contract and its
consequences for both parties, it also comments on the contract of pledge
and its intricacies. The Ramayana, an Indian epic also contains various
relations and instances which can be related to modern principles of contract
law. India is famous for the rich culture and history it has, and this paper is
an attempt at analysing and interpreting principles of contract law and
contractual relations through religious and historical texts.

Keywords: Law, Religion, Contracts, Ancient India, Historical texts

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Indian Journal of Law and Legal Research Volume IV Issue III | ISSN: 2582-8878

INTRODUCTION

The legal system of India is one of the oldest in the world and given India’s history, religion
and law have an inseparable bond in the legal history of the country, with religion being the
source of some laws while laws also being the source of a few religious principles. The history
of the judiciary in India goes back to the 2nd Century BCE, with the Brihaspati Smriti containing
a detailed account of Judicial hierarchy that existed during that era. The hierarchy today is
similar to that mentioned in the Brihaspati Smriti which had the emperor’s court at the top
while today the Supreme court of India lies at the top of the hierarchy with both the courts
having similar powers and jurisdictions.1 There are many such instances wherein modern laws
of India have been drafted by digging deep into religion and borrowing innumerable ideas and
concepts from it.

The Indian Contract Act, 1872 is the law that regulates contractual obligations in India.2 The
Law was enacted by the British due to the advancement of trade in India and the issues that
were cropping up due to the difference between laws that governed different parties of a
contract. For instance, Mohammedan law of contracts is different from that of Hindu law, and
it was certain that multiple disputes would arise due to such a situation. This led to the
enactment of the act, which served as a common law for trade which would reduce the number
of disputes and thereby ease and promote the growth of trade.3

The idea of dharma which refers to a duty towards others, exists in all modern laws including
contract law, wherein the parties to a contract owe a duty to each other for the performance of
a contract. There are many instances in religious and other historical texts of India such as the
Ramayana and Manu smriti which either directly contain principles of contract law or through
some acts establish and perform contractual principles and obligations. The purpose of this
paper is to analyse and interpret contractual principles and obligations as mentioned in religious
texts of ancient India and to compare the principles mentioned in such texts with principles of
modern contract law.

1
Brihaspati Smriti, https://brah.ma/granth/brihaspati-smriti/ (last visited Jun 3, 2022).
2
Indian Contract Act, 1872, TO DEFINE AND AMEND CERTAIN PARTS OF THE LAW RELATING TO CONTRACTS. (1872),
http://indiacode.nic.in/handle/123456789/2187 (last visited Jun 3, 2022).
3
Atul Chandra Patra, HISTORICAL BACKGROUND OF THE INDIAN CONTRACT ACT, 1872, 4 JOURNAL OF
THE INDIAN LAW INSTITUTE 373–400 (1962).

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Indian Journal of Law and Legal Research Volume IV Issue III | ISSN: 2582-8878

RESEARCH METHODOLOGY AND OBJECTIVES

The Research has been conducted using the conceptual method of legal research, which aims
at interpreting and re-interpreting existing concepts and gives out a logical outcome of the
same. The information for this research has been derived from primary sources such as the
Manu Smriti, Ramayana, and the Indian Contract Act, 1872.

The Objectives of this research are to:

1. Compare the ancient and modern principles of contract law

2. Determine whether modern contract law principles conform to ancient contract law

RELIGIOUS TEXTS AND THE MENTIONS OF CONTRACT LAW

Manusmriti: Manusmriti is one of the oldest pieces of literature that is available in Hindu law
and is considered to be an authoritative book on Hindu jurisprudence. 4 It contains various laws
that are still in use which shows how advanced the jurisprudence of that time was. Though the
Manu Smriti was advanced by the standards of that time, today it is largely considered
controversial and illogical as it contains contradictory verses and is also seen as a text which
promoted the degradation of women5 and the lower castes which was also the reason why Dr
Ambedkar burned the Manusmriti publicly.6

Chapter eight of Manusmriti contains various verses which related to contractual obligations.
For instance, failure to perform an act agreed upon is mentioned as a ground for legal action
and it also discusses the contract of pledge. The punishment for failure to perform has also been
mentioned, it states that a fine shall be levied upon the party not performing the said obligation.
Manusmirti contains verses which comment on who competence of parties to enter into a
contract and disqualified persons who have not yet attained the age of majority, which was 12
years at that time and persons under the influence and even those who had some mental
incapacity.7

4
Jayaram V, Manusmriti the Laws of Manu - Introduction,
https://www.hinduwebsite.com/sacredscripts/hinduism/dharma/manusmriti.asp (last visited Jun 3, 2022).
5
The Manusmriti and a Divided Nation, THE WIRE, https://thewire.in/caste/manusmriti-history-discrimination-
constitution (last visited Jun 3, 2022).
6
Akanksha Saxena, Why BR Ambedkar Burned “Manusmriti” On December 25? (2021),
https://thelogicalindian.com/history/br-ambedkar-manusmriti-32813 (last visited Jun 3, 2022).
7
MANU, MANUSMRITI IN SANSKRIT WITH ENGLISH TRANSLATION, http://archive.org/details/ManuSmriti_201601
(last visited Jun 3, 2022).

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The Indian Contract Act, 1872, contains provisions which are very similar to those mentioned
by Manu, S.73 of the Act states that if a breach occurs, the party must be compensated for the
damage that it has suffered due to the breach. S.11 of the Act is related to competency of parties
to a contract and states that all persons above the age of 18 years, which is the current age of
majority in India8, all persons of sound mind are competent to enter into a contract.9

Manusmriti may be considered archaic in certain sense, however, in terms of contractual

principles, the principles have remained unchanged even in modern contract law which shows
that the legal knowledge of that time was not illogical, rather it is best suited for that time and
can still be applied during the current era with a few changes to suit the modern societal
dynamic and structure.

Ramayana: Ramayana is an Indian epic that is based on the life of Lord Rama and his consort
Sita. It contains a detailed account of Lord Rama’s life ranging from his exile and other quests.
The epic has the Hindu concept of dharma as it’s main theme and it teaches various lessons on
righteousness and truth, through the actions of Lord Rama. Though there are not many legal
aspects in the epic, it contains a few instances which mention contractual obligations.10

An example of contractual obligation in the Ramayana would be the fact that the Lord’s father
had made a promise to one of his wives that his younger son would be his successor instead of
Lord Rama. When the Lord’s father declares that Lord Rama will be his successor, the wife to
whom the promise was made, reminds the Lord’s father that he had made a promise to her, and
he is bound by that promise.11 Another instance is when the Lord was to cross a river and was
offered a boat by one of his devotees, the Lord tried to pay the devotee by offering him a ring,
however, the devotee refused and instead asked the lord to do him a similar deed in the future.

The mentioned instances can be interpreted as future consideration which is a prominent feature
of the Indian Contract Act. As per S.2 of the Act, consideration can be past, present, or future.
The same section also discusses the concept of reciprocal promises12, the concept which also

8
Indian Majority Act, 1875, http://www.bareactslive.com/ACA/ACT1876.HTM (last visited Jun 3, 2022).
9
Indian Contract Act, 1872, supra note 2.
10
Ramayana | Summary, Characters, & Facts | Britannica, https://www.britannica.com/topic/Ramayana-
Indian-epic (last visited Jun 3, 2022).
11
Manasa Kambanna, Law as the epics propound it, THE HINDU, July 9, 2020,
https://www.thehindu.com/entertainment/art/law-as-the-epics-propound-it/article32036136.ece (last visited Jun
3, 2022).
12
Indian Contract Act, 1872, supra note 2.

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existed in the epic. Since the concepts mentioned in the epic still exist, it again displays the fact
that Indian religious texts were very advanced and ahead of their time.

CONCLUSION

This paper analysed and interpreted two religious and historical texts, the Manusmriti and the
Ramayana, both of which form an integral part of Indian history and culture. Both the texts had
elements of contract law present in them and on comparing the texts with contemporary Indian
contract law, the principles, and elements of contract law as present in the century’s old texts,
were in conformity with contemporary Indian contract law. Though ancient Indian legal texts
like the Manusmriti and Brihaspatismriti are often neglected in India as they are considered to
be factually incorrect and incapable of contributing to modern society, these texts have proved
their veracity by withholding the test of time, as even in the modern society they are as relevant
as any other historical text. The present Indian contract law is attributed to the British, however,
India was way more advanced in legal principles than even Britain and texts like
Brihaspatismriti, Manusmriti and the Ramayana attest to this fact.

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