Nudum Pactum under the Indian Contract Act, 1872
The Indian Contract Act, 1872, is the most important piece of legislation controlling Indian contract law. It establishes the law governing contracts in India. The Act is based on the ideas of English Common Law. It applies to all of India's states. It specifies the conditions under which contractual parties' commitments are legally enforceable. Under Section 2 of the Indian Contract Act, a contract is defined as an agreement enforceable by law (h). The Imperial Legislative Council passed the Indian Contract Act on April 25, 1872, and it went into effect on September 1, 1872. In India, an agreement becomes a valid contract when it is enforceable in a court of law. The enforceability of an agreement depends on the six essentials of a valid contract namely, offer and acceptance, intention to create a legal obligation, free consent given by parties, the competence of parties, consideration, and lawful objective. Thus, if any one of the single essentials of a valid contract is not satisfied the contract becomes invalid and unenforceable in a court of law.
The term ‘Nudum Pactum’ has been derived from Latin terminology which means a naked agreement.
The adage denotes an agreement made without any consideration. As per law, a contract is only enforceable when it is inclusive of the basic requirement of consideration. Consideration is defined as a promise to pay money, valuable things, or any other perk as discussed by the parties engaged in the contract or agreement. Where there is no consideration that is a nudum pactum, and hence such a contract is neither enforceable nor valid.
A nudum pactum might be made verbally or in writing. Since these agreements are unenforceable, they may not be pursued in court. This indicates that these agreements do not come under the categories of agreements that can lead to legal action. Such agreement may constitute a modification or exemption to an existing duty.
The contract, on the other hand, is regarded as legitimate if it is sealed. Furthermore, some contracts, such as bills of exchange, sealed documents, and promissory notes, bear consideration as a result of their forms. Even if there is no formal consideration inside them, they are regarded as genuine.
No nudum pactum is enforced under English law. Every day, an enormous number of agreements are formed, and it would be absurd to treat each one as a legally enforceable contract.
Anson states that when one understands the history of assumption it would be clear that even in ancient days there was speculation that an agreement which is without any consideration is legally binding and can parties be bound to perform such agreements.
In 1756 Lord Mansfield stated that “All such agreements which are without consideration are merely a moral obligation.” This means that if an agreement is without consideration, then the performance of such obligation is mere moral duty and responsibility of the party performing it. But if the party does not perform such obligations, they cannot be legally bound to perform such obligations.
Under English law contracts can be formed in two ways namely, contract with consideration and contract by a seal. Contract with consideration is an agreement that satisfies all the six essentials of a valid contract. Whereas, contract by the seal is an agreement formed under a seal but without consideration.