How did contract law evolve in India before the 1872 Act?

Ancient and Medieval Periods

• Hindu Law Sources: In the absence of a specific codified law, contracts were governed by various sources of Hindu law, including the Vedas, Dharam shastras, Smritis, and Shrutis.
• Mauryan Era: During the Mauryan period, contracts took the form of “bilateral transactions” which required the free consent of all parties involved regarding the terms and conditions.
• Competency Rules: Hindu law established specific rules for who could enter a contract. It excluded minors, intoxicated persons, the elderly, or those with handicaps. According to the Narada smriti, a person was considered competent to enter a contract only after reaching the age of 16.

The Mughal Rule

• Mohammedan Law: During this period, contracts were governed by Mohammedan Law.
• Terminology: The law utilized specific Arabic terms: Aqd for contract (meaning conjunction), Ijab for proposal, and Qabul for acceptance.
• Formation: Islamic law did not require strict formalities; the primary requirement was the express consent of both parties on the same thing in the same sense.

The British Period (Pre-1872)

• Presidency Towns: Under the Charter of 1726 issued by King George, English Law was applied to the Presidency Towns of Madras, Bombay, and Calcutta.
• Conflict of Laws: If a contract involved parties from different religions, the law of the defendant was used to resolve the matter.
• Outside Presidency Towns: In regions outside the main presidency towns, contractual disputes were settled based on the principles of justice, equity, and good conscience.