The law of contract in India is contained in the Indian Contract Act, 1872. 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.
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.
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Again the Act does not affect any usage or custom of trade (Sec. 1). A minor amendment in Section 28 of the Act was made by the Indian Contract (Amendment) Act, 1996.
The law of contract is the foundation upon which the superstructure of modern business is built. It is applicable not only to the business community, but also to others.
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Every one of us enters into a number of contracts almost every day, and most of the time we do so without even realising what we are doing from the point of law.
A person seldom realises, that when he entrusts his scooter to the mechanic for repairs, he is entering into a contract of bailment; or when he buys a packet of cigarettes, he is making a contract of the sale of goods; or again when he goes to the cinema to see a movie, he is making yet another contract; and so on.
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Besides, the law of contract furnishes the basis for the other branches of Business Law. The enactments relating to sale of goods, negotiable instruments, insurance, partnership and insolvency are all founded upon the general principles of contract law.
That is why the study of the law of contract precedes the study of all other sub-divisions of Business Law.