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Report No. 13

3. Need for codification of supplementary principles.-

As its Preamble says, the Act of 1872 does not profess to be a complete Code dealing with the law relating to contracts. The legislature, while enacting this Act, did not intend to exhaustively codify the whole of the law of contract to be applied by the Courts in India1 or even any particular sub-division thereof. Thus, it has been held2 that sections 124 and 125 of the Act do not lay down the whole of the law of Indemnity. As a result, on all matters on which it is silent the courts have had to resort to the rules of English Common Law, as principles of 'justice, equity and good conscience3' We are of the opinion that this reliance on the principles of English law to supply the deficiencies of an Indian enactment is not conducive to certainty or simplicity of the law. We think it is preferable to add to the Act the English common law principles which have been applied by our Courts for nearly a century, so that it may not be necessary to refer to the English law in many cases.

1. Irrawaddy Flotilla Co. v. Bugwandas, 18 Cal 621 (PC).

2. Gajana v. Madan, AIR 1942 Bom 302 (303.

3. Section 37 of the Bengal, Agra and Assam Civil Courts, Act, 1887; section 16 of the Madras Civil Court Act, 1873; section 26 of Bombay Regulation IV of 1829.

The formulation of these principles is thus one of the objects of the revision undertaken by us.

4. Another aspect of revision arises from the fact that the law of Contract in India is not contained in the Indian Contract Act alone and there are a number of statutes dealing with its various branches. Whitley Stokes was of the view that all these should be consolidated and incorporated into the Contract Act.1 But the legislative trend since the enactment of the Contract Act has been in the other direction. Not only have separate Acts been passed on special aspects of contractual transactions, such as the Negotiable Instruments Act, 1881, but parts of the Contract Act itself have been taken out to constitute independent enactments relating to particular contracts, such as the Sale of Goods Act, 1930, the Partnership Act, 1932. On this point, the observations of the Select Committee on the Partnership Bill are interesting-

1. Whitley Stokes Anglo Indian Codes, Vol. I, p. 534.

"When Sir James Stephen moved the Indian Contract Bill, he admitted that it was not and could not pretend to be, a complete code upon the branch of law to which it related. He, however, expressed a hope that in later years it would be easy to enact supplementary chapters relating to the several branches of law of contract which the Bill did not touch. This hope has never been fulfilled. In later years it was found more convenient to have separate enactments for the several branches of the law of contract e.g., the Transfer of Property Act, the Negotiable Instruments Act, and the Merchant Shipping Act. In our opinion, in view of the complexity of modern conditions, the time has now come when this process should be accelerated by embodying the different branches of the law relating to contract in separate self-contained enactment.1"

1. Gazette of India, dated the 24th January, 1931, Part V, pp. 31-32.

We agree with these observations in so far as they suggest that special aspects of the law of contract should be dealt with in separate enactments inasmuch as owing to the expansion of the law it is not possible to include all its branches in one statute without making it unwieldy or cumbrous. It is this consideration which has induced us to recommend in our previous Report on the Sale of Goods Act1 that the law relating to hire-purchase should be codified in a separate enactment apart from the general law of sale of goods. On the same principle, we are of the opinion that laws relating to carriers should be codified and consolidated into one separate statute. The Contract Act should be left to deal with the general principles relating to contractual relationship.

1. Eight Report of the Law Commission on the Sale of Goods Act, 1930, para. 12.

In this view, we do not see any existing Act which can expediently be consolidated with the Contract Act.

Indian Contract Act, 1872 Back

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