India's Position in Enforcing Contracts

Contracts are an important part of our day to day life. For business, contracts are its soul. Enforceable contracts are a way to a good economy.

Team Law Community
July 29, 2020

Contracts are an important part of our day to day life. For business, contracts are its soul.Enforceable contracts are a way to a good economy. 

In the ranking by World Bank, India is at 63rd position with 71.0 EODB scores. It's to sustained business reforms over the past years. India put in place 4 in introducing new business reforms. It is the world's 10 improvers for 3 consecutive years. In the last two years, India has 59 regulatory reforms. This is 1/5th of total reforms in the world.

However, it's still low than the target set by the government, i.e. 50th position as set by the Department of promotion of industry and internal trade (DPIIT). Also, India's ranking in enforcing contract remains the same, i.e. 163rd, as of last year. 


EODB is the ranking of the economy of a particular country in the world. Every year World Bank releases this ranking. 

The reasoning behind showing this ranking is to make business more effective. And also to make developing countries grow faster.

There are 10 parameters for this-

1. Starting business

2. Dealing with construction permits

3. Getting electricity 

4. Registering property

5. Getting credit

6. Protecting minority investors

7. Paying taxes

8. Trading across borders

9. Enforcing contracts

10. Resolving insolvency 

In all these parameters, India ranks lowest in Enforcing Contracts ranking.

According to data, it takes 1,445 days for a company to resolve a commercial dispute. It is almost three times the average OECD high-income economies.


There are certain obligations on both the parties which need to be performed to enforce a contract. However, if not fulfilled, it results in the breach of contract.Whenever a contract is breached, damages are the general rule. However, it does not serve the purpose of the contract.

Effective contract enforcement is important to the economic growth of the country. In India, the Indian Contracts Act, 1872 and Specific Relief Act, 1963 are main Acts governing the contract enforcement.

The Contract Act basically provides general principles. And the Specific Relief Act provides for enforcement of contract as relief in certain conditions. 



In an event whereactual damage for not performing the contract cannot be measured, or monetarycompensation is not adequate, one can ask the court for specific relief in theform of contract enforcement. These conditions must be satisfied for relief-

  • That     the monetary compensation is not adequate with breach
  • That     the extent of damage caused by the breach could not be ascertained



The following arechanges to made to Specific Relief Act in respect of contract enforcement-

  • Takes     away the discretion of the court. Now the courts have mandatory     enforcement of a contract. Except in a case where contract can't be     specifically enforced. 
  • Removed     section 14 of the Act. Section 14 provides the contracts which were not     specifically enforceable.
  • A newly     substituted section 20 provides an aggrieved party with the option for     substituted performance. It can be through a 3rd party or its own agency.

Provides for disposal ofsuits within 12 months. The time period will be counted