From Colonial Origins to Contemporary Needs: The Case for Modernizing Pakistan’s Contract Act, 1872

Abstract

One of the colonial era laws, Contract Act, 1872, still remains the centrepiece of the Pakistan legal system, and it is no longer applicable to the demands of the modern technological-driven economy. Its archaic clauses are not applicable in new areas such as digital contracts, investment and Islamic finance. Modernization is therefore required to enhance economic growth to be able to accommodate such principles as liquidated damages, good faith, and fairness, but to also be aligned to the international commercial principles. Following the comparative analysis of the law of contract in India, the English and the United States jurisdiction, the paper illuminates how the jurisdictions have adjusted to the current needs by the reforms of electronic contracting and fair enforcing. It also hypothesizes that Pakistan too must engage in the undertaking of reforming its Contract Act in order to introduce modern nature of contract to provide protection against fraud besides to keep pace with the international legal provisions. This kind of modernization would enhance an increase in contractual justice, investor confidence and sustainable economic development.