Why a Promise Binds

The reliance theory explains what both rivals cannot: why a promise unsupported by consideration and unaccompanied by any bargain can still bind where the promisee has altered their position on the faith of it.

Taken in full in [Bargain and Reliance].

Answer four: because the law says so

The positivist or institutional answer. A promise binds because a legal system has decided which promises to enforce, for reasons of commercial convenience, and the search for a deeper principle is misconceived.

Its evidence is section 10's negative condition and section 25's exceptions, both of which are legislative choices no theory predicts. A promise in writing and registered, made on account of natural love and affection between parties standing in a near relation to each other, binds without consideration because section 25 says so, and no theory of promise explains the registration requirement.

Why the choice matters, in three places

This is the part that separates a good answer, because it shows the theory doing work.

One: it decides what consent means. On the will theory consent is a state of mind, and a party who did not subjectively agree is not bound. On a bargain or objective view, consent is what a reasonable person would understand from the words and conduct, and the party's private intention is irrelevant. Indian law takes the objective view in practice, which is why section 13 speaks of agreeing upon the same thing in the same sense rather than of inward assent.

Two: it decides what consideration is for. On the bargain theory consideration is the very reason the promise binds. On the will theory it is at most evidence that the parties meant business. That difference decides how strictly section 2(d) is read, and in particular whether consideration must move from the promisee, which section 2(d)'s words the promisee or any other person answer in the negative.

Three: it decides when a court may refuse. If the ground of obligation is the will, the court's job is to find and enforce it, and refusing on grounds of fairness is an intrusion. If the ground is a legislative choice about which promises are worth enforcing, then sections 16, 23 and 27 are not intrusions but the same choice being made again, and the modern regulatory statutes are continuous with the Act rather than opposed to it.

The case that shows the question is real

The case. Balfour v. Balfour, (1919) 2 KB 571.

Facts. A husband employed in Ceylon returned to England on leave with his wife, who on medical advice remained in England while he went back. Before leaving he promised to pay her thirty pounds a month for her maintenance. The marriage later broke down and the wife sued on the promise.

Held. The promise was not enforceable, because agreements between husband and wife in the ordinary domestic relationship are not intended to create legal relations, and one of the essentials of a contract, the intention that it should be attended by legal consequences, was absent.

Notice what the reasoning does not rely on. The promise was willed, it was clear, and it was relied on. What was missing was an intention to create legal relations, which is a requirement no section of the Indian Contract Act states. Indian courts have applied it nonetheless, which is itself evidence for the fourth answer: enforceability is a legal choice, and this is one of them.

Worked example

Foundation theories appear on ten of the twelve papers in this folder, usually as a full question.

Open by stating the question: a promise is a statement about the future, and the subject exists to say why it binds.

Give the four answers, one paragraph each, with the statutory home of each.

Then the three places the choice matters, which is where the marks are.

Close on the fact that the Act contains all four, so the honest Indian position is eclectic rather than doctrinaire.

What it does NOT mean

It does not mean one theory is correct. Each explains what the others cannot.

It does not mean theory is separable from doctrine. The three consequences above are all doctrine.

And it does not mean intention to create legal relations is in the Act. It is not, and saying so is worth a mark.

Quick revision

• The question: a promise is a statement about the future and nothing changes when it is made, so why does the law compel a person to do a thing they have merely said they would do?
• Answer one, the will theory: it binds because it was willed. Home in section 13, consent as agreeing upon the same thing in the same sense, consensus ad idem, and section 14, free consent. Explains the structure of the vitiating factors in sections 15 to 22.
• Answer two, the bargain theory: it binds because it was bought. Home in section 2(d), consideration at the desire of the promisor, and section 25, an agreement without consideration is void subject to three exceptions. Explains what the will theory cannot: why a fully intended promise to make a gift is unenforceable.
• Answer three, the reliance theory: it binds because the promisee acted on it. No home in the Act at all, and enters through promissory estoppel, developed in equity principally against the State.
• Answer four, the positivist answer: it binds because a legal system chose which promises to enforce. Evidence: section 10's negative condition and section 25's exceptions, including a promise in writing and registered, made on account of natural love and affection between parties standing in a near relation, which no theory of promise predicts.
• Three places the choice matters: what consent means, subjective or objective, and section 13's words point objective; what consideration is for, and whether it must move from the promisee, which section 2(d)'s "the promisee or any other person" answers no; and when a court may refuse, so that sections 16, 23 and 27 are either intrusions on the will or the same legislative choice made again.
• The case. Balfour v. Balfour, (1919) 2 KB 571: a domestic promise of maintenance, unenforceable for want of an intention to create legal relations. That requirement appears in NO section of the Indian Contract Act and is applied nonetheless, which is evidence for the fourth answer.

Test yourself

1. State the question and the four answers. A promise is a statement about the future, and nothing in the world changes when it is made; the promisor may become poorer by keeping it and the promisee has parted with nothing at the moment it is given. The question the subject exists to answer is therefore not why the law punishes a wrong but why it compels a person to do a thing they have merely said they would do.

Four answers have been given. The will theory says the promise binds because the parties willed it, the law's contribution being only enforcement; its statutory home is section 13, which defines consent as two or more persons agreeing upon the same thing in the same sense, and section 14, which defines free consent as consent not caused by coercion, undue influence, fraud, misrepresentation or mistake. The bargain theory says the promise binds because it was bought, consideration being the price of the promise; its home is section 2(d) and section 25, which makes an agreement without consideration void subject to three exceptions. The reliance theory says the promise binds because the promisee acted on it and would be worse off if it were broken than if it had never been made; it has no home in the Act at all and enters Indian law through promissory estoppel. And the positivist answer says the promise binds because a legal system has decided which promises to enforce, for reasons of commercial convenience, its evidence being section 10's negative condition and section 25's exceptions, which no theory of promise predicts.

2. Why does the choice of theory matter? In three places, and this is where the marks are because it shows the theory doing work. It decides what consent means: on the will theory consent is a state of mind and a party who did not subjectively agree is not bound, while on an objective view consent is what a reasonable person would understand from the words and conduct; Indian law takes the objective view in practice, which is why section 13 speaks of agreeing upon the same thing in the same sense rather than of inward assent.

It decides what consideration is for: on the bargain theory consideration is the very reason the promise binds, while on the will theory it is at most evidence that the parties meant business, and that difference decides how strictly section 2(d) is read, in particular whether consideration must move from the promisee, which the words the promisee or any other person answer in the negative.

And it decides when a court may refuse to enforce: if the ground of obligation is the will, then refusing on grounds of fairness is an intrusion upon it, whereas if the ground is a legislative choice about which promises are worth enforcing, then sections 16, 23 and 27 are not intrusions but the same choice being made again, and the modern regulatory statutes are continuous with the Act rather than opposed to it.

3. What does Balfour show? In Balfour v. Balfour, (1919) 2 KB 571, a husband employed in Ceylon returned to England on leave with his wife, who on medical advice remained in England while he went back, and before leaving he promised to pay her thirty pounds a month for her maintenance; the marriage later broke down and the wife sued on the promise.

Facts. Those are the facts: a promise of monthly maintenance made by a husband to a wife within a subsisting domestic relationship, sued on after the relationship broke down.

Held. The promise was not enforceable, because agreements between husband and wife in the ordinary domestic relationship are not intended to create legal relations, and the intention that an agreement be attended by legal consequences is one of the essentials of a contract.

What matters for this chapter is what the reasoning did not rely on. The promise was willed, it was clearly expressed, and it was relied on, so on the will theory and on the reliance theory it should have bound. What was missing was an intention to create legal relations, and that requirement is stated in no section of the Indian Contract Act. Indian courts apply it nonetheless, which is itself evidence for the fourth answer: enforceability is a choice a legal system makes about which promises are worth its machinery, and this is one of those choices.