The Legal Position of Customs/Usage of Trade In View of Indian Contract Act, 1872

Article for Blog Post Writing Competition 2011 | by Abhimanyu Singh

April 29th, 20118:01 pm

A trade practice that is so common in a particular region which is that an expectation of its being followed in a given particular transaction is justified.It is usual and customary practice or set of practices connected with a particular type of business or trade. The rights, duties and obligation under a contract may arise through different ways, the usage or custom of trade is one of them. The Indian Contract Act, 1872 specifically preserves any usages or custom of trade or any incident of any contract which is not inconsistent with the provisions of the Act. The position of customs and usage of trade in Indian contract is inferred from saving clause of Section 1.This section provides that nothing contained in the act shall affect any usage or custom of trade, not inconsistent with the authoritative provision of the act. It is to be examined that the object and effect of this section and that of section 62 of the Indian Sale of Goods Act, 1930 which tells about exclusion of implied terms and conditions, and therefore it is to maintain such usages or customs of trade, although they negative or vary, and therefore, it is inconsistent with the general provisions of the law, so long they bind both the parties to the contract. It is said in a case Moult vs. Halliday[1] that the trade usage controls the mercantile contracts, as they are in addition to being subject to express enactments.

A trade usage is merely a usage which is well understood and known in fact in terms of a class of persons and places, and with reference to the business such that the parties are supposed to have made their contract with the implied reference to it and having the same intention to be governed in the same manner and to the same extent as other like persons. In Metzner vs. Boltan,[2] said: “It is quite certain that general usages are tacitly annexed to all contracts relating to the business with reference to which they are made, unless the terms of such contracts expressly or impliedly exclude them.”

It is evident that cultural diversity in India is a result of years of intermingling of people. People have inhabited in India since time immemorial. According to the history, people migrated to India in leaps and bounds irrespective of their caste, creed, culture or religion. In fact many writers and thinkers find that Indian culture is an ambiguous concept and in fact numerous cultures have given rise to this composite Indian culture. However unity in diversity is something that almost every Indian boasts about. Though there are a number of languages, and variety of literature, art and cultural practices still everyone are known as Indians.

India is the second most populous country in the world. And as we all know that no matter how much we try, creating a class less society is not possible. No two persons can be the same. We should now examine the population and their customs and traditions in a legal point of view. It is not possible on part of the legislative to identify each and every customs or usages of the communities and mention it in a legislative act.

However special care should be taken in order to save such customs or usages. Not only are they the epitome of the identity of a community but also because usages or customs have been prevalent since the very inception of mankind. Such customs or usages date back to history, when even laws did not exist.

Therefore the view of researcher is that the legal system should have special respect for such usages and customs and save it in order to save the unity in diversity and the integrity of the communities inhabiting India.

[1] (1898)1 Q.B. 130

[2] (1854) 9 Ex. 518 at p. 521


Article by-

Abhimanyu Singh

Student,  National Law University, Orissa

[Submitted as an entry for the Blog Post Writing Competition, 2011]


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