The Indian Contract Act 1872: A Unique Achievement?

Professor (Dr.) Warren Swain, D.Phil (Oxon) [Professor, University of Auckland; Visiting Professor, George Washington University] |

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The recent one hundred and fiftieth birthday has brought about renewed interest in the Indian Contracts Act 1872. A comprehensive volume reevaluating the Act was published in 2024. An excellent introduction to the history of Indian contract law by Professor Swaminathan appeared last year. My own contribution to this literature has examined the rather convoluted history of the drafting of the legislation in India and England. The legislation also attracted plenty of attention at the time. One of the major English jurists of the nineteenth century, Sir Frederick Pollock, wrote a commentary on the Act with Justice Mulla. Pollock also drew on the legislation in his work on English law, Principles of Contract in Law and Equity published a year later. In that book he wrote of the Act that:

It is a most instructive example of what can be done to consolidate and simplify English case-law, and shows better than any discussion can do what are the real advantages of codification, the real difficulties to be overcome, and the most likely means of overcoming them.

As the passage hints at, wider debates were going on in this period, about the merits of codification of private law in England. The nineteenth century which was bookended by the French Code Civil in 1804 and the German Bürgerliches Gesetzbuch in 1900, was unquestionably the age of codification.

The nineteenth century also saw the development of a new framework for English contract law. The French writer Robert Joseph Pothier was a key figure. A translation of his Treatise on the Law of Obligations by Sir William Evans popularised the idea that contracts were formed by a meeting of wills. At the same time, the decline of the civil jury and the process of clarifying of the boundary between law and fact meant that there was pressure on the courts to specify the details of contractual liability. This involved putting the subject in some sort of rational order – a process begun a century before by the likes of Henry Ballow and John Joseph Powell. Sometimes, the solution was to solidify existing jury practice, as in the exposition of the expectation rule of contract damages. On other occasions, it meant trying to rationalise existing legal rules – for example, to account for the doctrine of consideration, contractual interpretation or privity of contract. Other doctrines like common law mistake and offer and acceptance were developed with little previous precedent. Perhaps unlike any period before or since, the work of legal writers was particularly influential in shaping the law of contract. In the face of significant opposition, no major code resulted in England. Reform in so far as it happened was a product of the common law. Statute had some more limited role notably in legislation on certain types of contracts which included the Sale of Goods Act 1893.

Sir William Blackstone, in his eighteenth century, Commentaries on the Laws of England wrote that while English law was the ‘birth-right of every subject’, he also conceded that ‘[s]uch colonists carry with them only so much of the English law as applicable to their own situation and the condition of an infant colony’. At the time he was, no doubt mainly, thinking about the North American colonies. But New South Wales and New Zealand were also very different from India. New South Wales was a penal colony until the mid-nineteenth century. New Zealand, although not a penal colony, had very few British settlers before the 1850s. In New South Wales contract disputes before 1814 were handled by the Court of Civil Jurisdiction which applied ‘equity and good conscience’. Bruce Kercher’s detailed history of the time shows that the law of contract was, for the most part, a version of English law. A Supreme Court of Civil Judicature opened in 1814. To begin with, the new court was presided over by a judge and two lay magistrates. New Zealand had a very legalistic system with a Supreme Court from near the beginning of the colony in 1841. In practice in both New South Wales and New Zealand, the small claims courts, which heard a good deal of litigation, were more informal. But these courts also operated against the background of a very legalistic and hierarchical legal systems. India in contrast had no major modernisation of the courts until the Indian High Courts Act 1861.  

The relationship between English law and indigenous custom was complicated. As Lisa Ford has observed, ‘The emergence of an understanding of sovereignty antithetical to Indigenous self-government has, in short, a shared Anglophone settler history’. From the 1820s it was widely accepted that English law applied to colonial subjects – both settlers and the indigenous populations. This was true both New South Wales and in New Zealand where the English Laws Act 1858 declared, and in this respect echoing Blackstone, that English law in force in 1840 applied so ‘far as applicable to the circumstances’ in the colony. Imposing English contract law on both the indigenous and settler populations in these circumstances was, for the most part, relatively straight forward. It after all reflected long standing practice in New South Wales. This is not to suggest that there were not instances where contract law in New South Wales and New Zealand might not sometimes diverge from that in England. Sometimes this was the result of legislation passed in the colony. In New Zealand there was some resistance to the settler law on the part of the indigenous population in disputes between themselves which the authorities attempted to counter by encouraging use of the Residents Magistrates Court.

India was quite a different proposition. The indigenous population was much larger. When the British arrived in India it already had a much more advanced economy compared to the other colonies. At this point it then became a company state with the East India Company controlling significant parts of the country. The fact that it took so long to become a British colony in a formal sense was another difference. Legally speaking India was more complicated as well. The British recognised that there were already what they perceived as systems of law (as opposed to more vague customary practices) in operation. These attracted attention from British writers including, Sir William Jones who produced a book, Institutes of Hindu Law, in the 1790s. As late as the 1850s Muslim and Hindu residents continued to be governed by their own law. This was even true in the Charter Courts found in the British controlled Presidency towns, although there is also some evidence of attempts to apply English law to the local population too. English law certainly applied to Europeans, but it was not necessarily a very sophisticated version. Rather it was what Sir Henry Maine called a combination of ‘some half-remembered legal rule learnt in boyhood, or culling a proposition of law from a half-understood English textbook…to decide ‘by equity and good conscience’.[1] In this respect, for Europeans at least, there are some parallels with New South Wales prior to 1814.

The East India Company structure, which included courts, meant that reform of the courts was much more difficult than elsewhere. It only became a realistic possibility by the 1860s when the British government took over. At this point English trained lawyers also began to arrive in larger numbers, and one option might have been just to apply English common law and not worry about legislation. This was after all what happened in other colonies. India was very different. The existing bodies of non-English law were already well established. Members of the colonial authorities viewed these practices in more legalistic terms than the customary practices in New South Wales and New Zealand. But there are several more positive reasons why India was seen differently.

Benthamite figures were particularly influential in Indian affairs. One of them was James Mill the father of JS Mill. Another, Thomas Macaulay, in a speech to Parliament in 1833, said that ‘I believe that no country ever stood so much in need of a code of law as India, and I believe also that there never was a country in which the want might be so easily supplied.’ Macaulay would become a member of the Indian Legislative Council and was one the driving forces behind the Indian Penal Code. Although the Penal Code took decades to enact it showed the possibility of significant codification. It also meant that there existed a mechanism for the process of drafting through the Indian Law Commission. In New South Wales there were certainly statutes passed in the state legislature but even relatively small reforms, for example relating to usury, were sometimes difficult to achieve.

With the enactment of the Indian Penal Code in 1860 the whole codification project in India gained further momentum. This is not to underestimate the ideological battles that lay ahead. Some of these were played out in the details of the final legislation. But they also reflected a particular vision about how the law should work. In this respect, those who favoured codification had several things in their favour. The first was the acknowledged complexity of Indian contract law and the perceived need to produce a unified body of contract law. The second was timing. By the 1860s it was increasingly obvious that there were some problems with the common law of contract as it applied in England. Pollock and other contemporary commentators would detail some of these problems at some length. In essence this whole issue came down to a tension between the idea that contracts were formed by consent and the way some older doctrines like consideration were still applied even though they were otiose in a consent-based model. Reformers in Indian toyed with some more radical options but in the end the doctrine of consideration for example was preserved in an altered state rather than, as logic dictated, abandoned altogether. India was potentially an experiment for those who wanted reform of contract law in England. Someone like Pollock certainly saw merit in the Indian reforms. Those who wanted more radical change in England would end up disappointed.  

There is a paradox at the heart of the Indian contract legislation. As David Cannadine shows in, Ornamentalism How the British Saw Their Empire,  British attitudes towards India were shifting during this period. The older view that India without the British was a corrupt and despotic society was replaced by another stereotype that saw value in a society that was traditional, timeless and unchanging. On the surface this would militate against reform. But at the same time strong forces pushed in the opposite direction. It is perhaps understandable that a comprehensive contract statute was always going to be a big ask in England where the existing law was so well embedded. Equally it is telling that other British colonies did not follow the lead of India in this regard until the Malaysian Contract Act 1950 which became law less than a decade before the colony became independent. Seen in a wider context the Indian Contract Act, 1872 was a very significant achievement, and it was also a unique one.   

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Professor (Dr.) Warren Swain has authored multiple books, book chapters, and journal articles including the chapter on the History and Drafting of the Indian Contract Act, 1872 in Krishnaprasad, KV, and others (eds), Foundations of Indian Contract Law (Oxford, 2024); the book "Swain, Warren, and Sagi Peari (eds), Rethinking Unjust Enrichment: History, Sociology, Doctrine, and Theory (Oxford, 2023)" and the book "Swain W. The Law of Contract 1670–1870. Cambridge University Press; 2015"

[1] H Maine, Village-Communities in East and West (3rd edn, John Murray 1876) 299.