Freedom of Contract


In India, Freedom of Contract is a concept that allows individuals parties, and entities to enter into contracts without any coercion or undue influence. In a short way, Freedom of Contract is one of the pillars which gives the right to individuals to freely enter into contractual agreements.

The concept of the freedom of the contract covers in the Indian Contract Act, 1872. This act was passed by then British government on 1 September,1872and later on, after independence, Indian Parliament also continue this act. Mainly Indian Contract Act deals with the formation, enforcement, and discharge of contracts in India. 

The principle of freedom of contract is a fundamental concept of contract law in India. Indian Contract Act, 1872 gives rights to the parties to freely negotiate the terms and conditions of their particular contract subject to certain limitations. As per the act, contracts that are contrary or against the law are considered as void. Also, When there is the absence of free consent in the contract that is also considered void.

As per the act, if any of the parties breaches the terms and conditions of the contract then that party may go to court for the enforcement of contracts and the party may seek legal remedies for such damages.


In India, the freedom of contract is not absolute. The Indian government may regulate various types of contracts which are related to tenancy, consumer protection, and employment to protect the interest of the parties which are involved in it. Additionally, the court also enforces contract when a breach of the contract is done by the parties then court also enforce a contract in a manner that promotes fairness.

As above mentioned, The concept of freedom of contract in India refers to the ability of parties to enter into contracts on mutually agreed terms with the free consent of the parties. This principle is recognized in the Indian Contract Act, 1872, which provides that a contract is a legally binding agreement entered into by two or more parties who have the capacity to contract and who freely consent to the terms of the agreement.

Most important cases decided by an Indian court that have shaped the development of the principle of freedom of contract:

1. Satyabrata Ghose v. Mugneeram Bangur and Co. (1954): 

In this case, the Supreme Court of India recognized that freedom of contract is not absolute and is subject to certain limitations, such as the requirement that contracts should not be illegal, immoral, or opposed to public policy.

2. Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly (1986): 

In this case, the Supreme Court held that freedom of contract cannot be used to justify unfair or oppressive terms that are one-sided and disadvantageous to one party.

3. Tata Cellular v. Union of India (1994): 

In this case, the Supreme Court recognized that freedom of contract includes the freedom to negotiate terms and conditions of the contract, and that contracts should be interpreted in a manner that gives effect to the intentions of the parties.

4.  Shashoua v. Sharma (2009):

In this case, the Delhi High Court held that contracts entered into by parties should be based on mutual trust and confidence, and that the principle of good faith should be applied to all contracts.

Summary of all the cases that, As agreed with all the points freedom of contract is an important concept in Law of Contract. Freedom of Contract is not an absolute right and is subject to certain requirement and limitations. In India, these cases perfectly shaped the concept of the freedom of contract. Which helped to clarify the boundaries and limitation of this important principle and aslo protect the interest of the parties whichs are involves into the contract.


In India, the Concept of freedom of contract is a fundamental aspect of the law of contract, it is subject to limitation. It also protects the interests of weaker parties of the contract. One of the important things is that party itself aware of this limitation and also ensures that their contract has all legal requirements.



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