The law relating to contracts which is to a great extent based on the Common Law of England is to be found in codified form in the Contract Act 1872. Previously this Act had contained sections on the sale of goods and on the Law of Partnership. Subsequently in 1930 and 1932 respectively these sections were repealed and separate Acts covering these subjects passed. Amongst the main differences between the Act and the Common Law are the provisions of the Act to the effect that a third party’s actions may constitute sufficient consideration for the performance of promise and that past consideration is good consideration. (§ 2). Promisee may also dispense with, or remit wholly or in part, performance of promise made to him or may extend time for such performance or may accept instead of it any satisfaction which he thinks fit. There is however nothing corresponding to enforceable document under seal without consideration. See, however, § 25 of Contract Act (Act IX of 1972).
Contract with a minor is void. For purposes of contract persons under 18 are minors.
Agreement to contracts obtained by force, fraud or undue influence are voidable at option of person coerced, defrauded or influenced. The consideration must be permissible by law. Illegal contracts, wagering contracts and contracts against public policy cannot be enforced. Contracts in restraint of trade are void to extent of the restraint except where made on the sale of goodwill of business, when a reasonable restraint upon the Vendor will be enforced.
Principle of negotiorum gestor is also recognized and person benefitting must make some sort of payment to the other.
Just as in British Law
In four instances a contract even without consideration is valid. Firstly, where agreement is in writing and is based on natural love and affection, secondly, where agreement is to compensate person who has performed some act voluntarily for promisor or done something which promisor would have been legally obliged to do, thirdly, where it is promise in writing to pay time-barred debt, and, lastly, where there is contract of agency.