The law of contract is not the whole law of agreements nor is it the whole law of obligations. Discuss.
The Indian Contract Act is the most important part of Mercantile Law. It affects every person, as every one enters into various types of contracts in the daily life. Our all transactions are based on contracts. For example, purchase of goods on credit, borrowing a book from a friend, traveling in a bus, hiring of labor for the construction of house etc. are contracts. However, the Indian Contract Act is neither exhaustive nor retrospective.
Neither does it deal with all branches of contracts, nor does it affect contracts entered before 1st Sept., 1872. It deals only with such agreements which give rise to legal obligations he. agreements enforceable by law. Social agreements are covered under the Act since they do not create legal obligations.
The Act deals only with general principles of the law of contracts and some special contracts viz., contracts of indemnity, guarantee, bailment and agency. A large number of contracts are outside its scope. Contracts relating to partnership, sale of goods, negotiable instruments, insurance etc. are not dealt by the Contract Act because there are separate Acts which deal with these contracts viz. Partnership Act, Sale of Goods Act, Negotiable Instruments Act, Insurance Act. Further, Contracts Act does not affect particular customs and usage’s of trade.
Thus, we can conclude that Indian Contract Act excludes from its purview all obligations which are not contractual in nature and agreements which are social in nature. Salmond has rightly observed: Law of contracts is not the whole law of obligations. It is the law of those agreements which create obligations and those obligations. which have their source in agreements.