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Ages of Obscure Relationship between Indian and English Contract Law

Sometimes a promise to pay bonus for extra labour is not enforceable in court[1] and sometimes even a peppercorn is enough consideration to hold a contract valid[2] - such is the eccentric nature of English contract law. Consideration under English law is the detriment suffered by the promisee which is the same as the promisor's benefit.[3].

Doctrine of Consideration has its origin embedded in assumpsit[4], which in turn has evolved from the law of torts a few centuries ago. The need for consideration was stressed, during the 1560s, by the fact that plaintiffs in court proceedings were not allowed to file assumpsit claims simply because the defendant pledged to do anything. As a result, there was a need to bind a promise so that the plaintiff could have a proof of their claim and seek redressal.[5]

Even though consideration acts as the gatekeeper for English contract law and regulates the functioning of the same, over the years several legal scholars have resented its peculiar principles and some have even tried to disable it. But their efforts had achieved little success. One such attempt was by Lord Mansfield in 1765 through Pillans v. Van Mierop [1] case, where he established the rule that a written promise made in or as part of a business transaction is enforceable without regard to consideration[2].

The intention to contract or the purpose to take on a legally binding obligation, was all that mattered to him. Later, in the 19th century Lord Denning made great efforts to further the stance of removing consideration from the English law through the High Trees [3] case, where he tried to do away with Pinnel's rule[4], but received similar fate.

The Indian Contract Act (ICA), 1872 was being drafted when all these English cases were gaining popularity. The ICA is said to be adopted from the English Contract Act but the sections are in complete contrast to the principles of consideration of English law. India, as UK, used 'will theory' as the basis for forming a contract, where the foundation of the contract is meeting of the minds, everything else is secondary.

The diction of s 2(d), ICA is such that it is not in line with the English contract law, where detriment to the promisee has major significance.

For example: Kedarnath v. Gorie Mohammed [10] held that, under s 2(d), ICA, the municipal corporation (promisee) making the temple at the desire of the subscribers (promisor) is enough consideration to make the contract enforceable. But the same is not enforceable under English law because there is no detriment faced by the promisee and would result into a gratuitous promise.

The drafters of the ICA have not totally shunned the English law, but modified it to their own liking, providing consideration a decidedly subjective tonality[11]. Likewise, under s 25(1), ICA does include that an agreement in writing does not require consideration, as stated in English Law.

But under Indian law that written agreement will only be enforceable if the relation between the promisor and promisee is of 'natural love and affection' and said agreement is registered. While s 25(1) had been inclusionary of English contract law, s 25(2) and s 63 ICA, are in complete opposition of past consideration rule [12] and the Pinnel's rule respectively.

Frederick Pollock and Dinshah Mulla are authors to the most influential work in Indian contract law even considered as the Bible of Indian contract law. Though they were very prestigious scholars, they made fundamental errors in understanding the mindset and wishes of the framers of ICA.

They read English Law in ICA, incorporating meaning into words that the drafters of the act never wanted and completely overlooked core elements that made consideration in Indian law as it was. The broad ambit of s 2(d) was misused by Pollock and Mulla to impute English meaning of consideration to Indian contract law.

In Doraswamy v Arunachala[13], though the case was very similar to the Kedarnath case a completely different judgement was given because of strict application of the adopted English law, i.e., the absence of the detriment and benefit factor. The mindset that Indian law should incorporate everything followed by the English law suggests that even great scholars couldn't leave their colonised notions behind because for more than hundred and twenty years no one questioned the great conjecture between English contract law and Indian contract law.

The more astonishing fact is that the Indian courts agreed with the new meaning of consideration drawn by Pollock and Mulla. The only reasonable answer for this is: that generation of lawyers have been made to study doctrine on consideration under ICA from an English law perspective. Nevertheless, let us hope that Indian lawyers, scholars and also judges remove this imposed British blindfold and look at Indian contract law from the outlook it is meant to be seen with.

End-Notes:
  1. Pre-existing duty rule in Stilk v Myrick (1829) 6 ep 129, 2 camp 317
  2. A peppercorn is a metaphor for a very minimal cash payment needed to meet the requirements for the formation of a legal contract in legal jargon. First used in Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
  3. Currie v. Misa (1875) LR 10,162
  4. Merriam Webster states Assumpsit is 'A former common-law action to recover damages for breach of a contract', https://www.merriam-webster.com/dictionary/assumpsit
  5. A.W.B. Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit, Oxford Scholarship Online (2012)
  6. Pillans v van Mierop, (1765) 3 Burr 1663.
  7. Bernard L. Shientag, Lord Mansfield Revisited-- A Modern Assessment, 10(3), Fordham L. Rev. 345, P.18 (1941
  8. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
  9. Pinnel v Cole, (1602) 5 Co Rep 117
  10. Kedarnath v. Gorie Mohammed, (1887) ILR 14 Cal 64
  11. Shivprasad Swaminathan, Eclipsed by Orthodoxy, 12, Asian Journal of Comparative Law, pp. 141�16 (2017)
  12. Promise to compensate past voluntary actions
  13. Doraswamy Iyer v Arunachala Ayyar [1936] AIR Mad 135

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