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Indian Contract Act 1872

Rights Available to Parties

The commercial world and economy of a nation heavily dependent on the mercantile law that prevails in the country. In India, we have the Indian Contract Act 1872, the main commercial activities of the nation and hence the most important. Here we will see the rights available to parties under this act – rights in rem and rights in personam. Let us get started.

Rights in Rem and Rights in Personam

Indian Contract Act

The Indian Contract came into effect in the month of September in 1872. It is applicable to the whole of India except the state of Jammu and Kashmir. It is the central law of the commercial world in India.

The act mainly deals with the provisions for everyday contracts and the promises that bind two or more parties. It has specific provisions to deal with special transactions like bailment, pledge, guarantee, indemnity etc.

The Indian Contract Act, 1872 will also determine which promises and agreements are binding on the parties. And the contract will lead to the birth of some rights and duties for the parties to the transaction. Let us take a closer look at the rights available to parties under the contract act.

Rights Available to Parties

1] Rights in Rem or Jus in Rem

As per the law of the land, every person entering into a contract has rights in rem. This is right available to him or her against the entire world. It protects a person’s property from the entire world.

This is why we call such a right as a negative right. Because it gives the right to any person to be left alone. This means that no other person can interfere with his right.

This specific right (jus in rem) is given via the freedoms written in Article 19 of the Indian Constitution with its restrictions. This right in rem is available to an indefinite or open class of people, i.e. available to all. Let us see some examples.

  • Mr. X owns a house. This house exclusively belongs to him. He has right in rem with respect to the house. So nobody can interfere with his ownership of the house. No one can disturb his right in rem.
  • Mr. Y has a suitcase full of cash. This money belongs to Mr. Y exclusively. The world or anyone in it cannot take away the money from him, .i.e. they cannot disturb his possession or interfere with his ownership of the money.

2] Right in Personam or Jus in Personam

This is the opposite of right in rem. Right in personam gives the person rights against one person or party to the contract. It generally will correspond with a duty imposed on the said person or party.

The Indian Contract Act grants rights in personam to the parties of a contract. So the parties of a contract have these contractual rights only against each other, i.e. jus in personam. Let us see some examples,

  • A sold his car to B. A has the right to receive the sale proceeds. This right to receive the money only belongs to A, so it is a right in personam. No other party is involved.
  • B loaned money to C. The right to recover the money belongs only to B, not the world in general.

Solved Example on Rights Available to Parties

Q: Does the Indian Contract Act have retrospective effect?

Ans; No the Indian Contract Act, 1872 does not have any retrospective effect. It was effective from September 1872, and any contracts prior to that are not governed under the act.

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Varinder Gulati

Can a pledgee to whom the gold jewellery is pledged can re pledge the jewellery to some other financer

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