India: Contracting Under Indian Or English Law: Part 1 – The Indian Legal Framework

Last Updated: 1 September 2008
Article by Jonathan Riley


This article is the first in a series of three articles looking at some of the key differences between contracts made under Indian law and those made under English law. The articles assume that the reader is familiar with the principles of English contract law, and so in explaining the differences the focus is on the position under Indian law.

This first article looks at the statutory framework in India to the extent that it is relevant to contracting; the second article highlights a number of key differences between specific contract provisions, and the final article considers some of the issues which arise in relation to technology contracts.

Indian Contract Act, 1872

The Indian law of contract is based on common law contract principles which have been codified in the Indian Contract Act (ICA).

The ICA has borrowed extensively from the provisions of codes governing the law of contracts in other countries, but is mainly based on English law and, indeed, if there are no relevant domestic cases, Indian courts have taken into consideration English common law in the absence of express provisions in this Act. That probably goes some way to explaining why Indian law and English law have remained similar in terms of contract law principles despite the fact that India has had this codified law for nearly 150 years whilst the UK has continued to rely more on its common law principles. However, it should be noted that when the ICA does deal with a specific matter then it is not permissible to draw on English principles of contract law, and you should certainly not fall into the trap of assuming that because a provision in the Act was originally derived from a familiar English law principle that it will now be applied in the same way under both laws.

The ICA functions at a relatively basic level and is not a complete contractual code: it also preserves the provisions of other statutes, regulations, trade customs etc. as long as they are not inconsistent with the provisions of the Act. The ICA lays down the general principles relating to the formation, performance and enforceability of contracts, and the rules relating to special types of contracts like indemnity and guarantee, bailment and pledge, and agency.

The Act is now less comprehensive than in its original form, because provisions relating to certain specific types of contract including partnership, carriage of goods, and sale of goods, have since been removed and covered in separate legislation.

Requirements of Form

The ICA itself does not stipulate any 'requirements of form', in other words procedural requirements for a contract to be valid and enforceable such as being in writing and signed by one or more parties, or executed in a particular manner. However, there are such requirements of form in some other Indian statutes. For example, the Indian Trusts Act requires the creation of a trust to be in writing, and there are similar requirements under intellectual property laws and the Transfer of Property Act.

There are also registration requirements. The relevant statute dealing with registration of documents in India is the Registration Act 1908, which provides that contracts relating to the transfer of property or the assignment of patents, for example, have to be registered.

Sale of Goods Act, 1930

The Sale of Goods Act 1930 (SGA) is complementary to the ICA. As you would expect, the provisions of the ICA, including the basic requirements for a contract (offer, acceptance, consideration, etc.) apply equally to a contract for the sale of goods.

The SGA imposes various duties, and grants certain rights, to both buyer and seller. For example, the seller must deliver the goods and the buyer must accept and pay for them in accordance with the terms of the sale contract. The Act requires that the goods transferred by the seller to the buyer must be ascertained and there should be an intention of the seller to pass such goods to the buyer. However, this is all basic level contract law which is not going to cause any surprises.

What happens if goods are agreed to be sold and the property in the goods passes to the buyer under the contract terms, but the buyer then does not pay for the goods in breach of contract?

  • If the seller is still in possession of the goods then the unpaid seller can exercise both a lien over the goods and the right to withhold delivery (section 46);

  • If the goods are in transit and the buyer is insolvent then the unpaid seller can exercise a right to stop the transit and recover the goods. Note that this right only arises if the buyer is insolvent; OR

  • If the buyer is already in possession of the goods then the unpaid seller's sole remedy is to sue for the price (section 55). The seller does not have a lien and cannot recover the goods from the buyer once both the property has been transferred and the goods have been delivered to the buyer.

Does Indian law recognise transactions carried out electronically?

The Information Technology Act 2000 (ITA) provides legal recognition for transactions carried out by electronic means. The ITA presumes that an electronic contract has been validly concluded by the parties concerned if it has been made with the digital signatures of the parties. The IT Act also provides for a system to authenticate digital signatures, and the licensed certifying authorities are authorised to issue digital signature certificates to applicants.

Electronic records are also admissible in evidence in courts in India if they meet certain conditions.

There was a worldwide spate of legislation between 1999 and 2001 to address issues such as the legal validity of electronic contracts, and the IT Act provides a good example of modern English and Indian legislation adopting a similar approach.

Consumer Protection Act 1986

This series of articles focuses on B2B rather than B2C contracts, but for completeness mention should be made of the Consumer Protection Act 1986 (CP Act). The CP Act aims to regulate the activities of a 'manufacturer' or 'service provider' to ensure that the consumer does not suffer from defective goods or deficient services. An entity which provides goods or services in India is required to avoid any trade practice that may be classified as 'unfair' or 'restrictive', as defined under the Act.

The CP Act also provides for the establishment of consumer councils and other authorities to settle consumer disputes which arise under the provisions of the Act.

Monopolies and Restrictive Trade Practices Act, 1969

The Competition Act 2002 is intended to repeal the Monopolies and Restrictive Trade Practices Act (MRTP Act), but the substantive provisions of the new Act are not yet in force (and indeed that Act was amended by the Competition Amendment Act in 2007) and so the MRTP Act remains the relevant law for what in the UK we would call anti-competitive practices.

The MRTP Act governs the activities and practices of all industrial undertakings which are engaged in the production, storage, supply or distribution of goods. However, industrial undertakings do not include government undertakings. The Act prohibits 'restrictive trade practices', 'unfair trade practices' and 'monopolistic trade practices', and is policed by the Monopolies and Restrictive Trade Practices Commission.

The new Competition Act, which will replace the MRTP Act, seeks to achieve the following objectives:

  • Promote and sustain competition in markets;

  • Protect the interest of consumers;

  • Ensure freedom of trade; and

  • Provide for the establishment of the Competition Commission of India.

So, in terms of the regulation of both anti-competitive practices and unfair trade practices the message at the moment is 'watch this space', but one may expect that the same issues that start the red lights flashing in the UK will also need to be considered in India.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions