Formal Contracts under Indian Law

Formal contracts are those contracts that require certain formalities to be fulfilled in order to make them valid. For example, a contract may require to be in writing, signed by the parties, and witnessed by a third person. These contracts are also known as solemn contracts or contracts under seal.

In India, there are various laws that govern formal contracts, such as the Indian Contract Act, 1872, the Specific Relief Act, 1963, and the Transfer of Property Act, 1882. However, despite these laws, formal contracts are not recognized under Indian law.

Reasons for Formal Contracts Not Being Recognized

There are several reasons why formal contracts are not recognized under Indian law. These include:

1. Lack of Statutory Recognition: The Indian Contract Act, which governs contracts in India, does not recognize formal contracts. The Act only requires that a contract be made for a lawful consideration and with the free consent of the parties.

2. Confusion and Ambiguity: Formal contracts can be confusing and ambiguous, especially when it comes to determining whether the required formalities have been met. This can lead to disputes between the parties, which can be time-consuming and costly to resolve.

3. Difficulty in Enforcement: Formal contracts can be difficult to enforce, especially if the parties do not fulfill all the required formalities. This can make it difficult to prove the existence of a contract and the terms of the contract.

4. Lack of Practicality: Formal contracts are not practical in many situations, especially in the modern business world, where transactions are often conducted quickly and informally.

Conclusion

In conclusion, formal contracts are not recognized under Indian law. While there are certain formalities that may be required for certain types of contracts, such as deeds and mortgages, these formalities do not make the contract a formal contract. Instead, the validity of a contract in India depends on whether it meets the requirements of the Indian Contract Act, such as having a lawful consideration and free consent of the parties.