The law of contract in India is contained in the Indian Contract Act 1872. This Act is based mainly on English common law, which is to a large extent made up of judicial precedents. (there being a separate contract act in England). It extends to the whole of India except the state of Jammu and Kashmir and came into force on the first day of September 1872(Sec.1 Indian Contract Act 1872). The act is not exhaustive. It does not deal with all the branches of the law of contract. There are separate acts, which deal with contracts relating to negotiable instruments, transfer of property, sale of goods, partnership, insurance, etc. Again the act does not affect any usage or custom of trade (Sec.1).
Scheme of the Act.
The scheme of the Act may be divided into two main groups:
1. General principles of the law of contract (Secs. 1-75).
2. Specific kinds of contracts, Viz;
(b) Contracts of Bailment and pledge (Secs. 148-181).
(c) Contracts of Agency (Secs. 182-238).
Before 1930 the Act also contained provisions relating to contracts of sale of goods and partnership. Sections 76-123 relating to sale of goods were repealed in 1930 and a relating to
partnership were repealed in 1932 when the Indian separate Act called the Sale of Goods Act was enacted. Similarly, sections 239-266 partnership Act was passed.