Bhutan’s legal landscape in private law pertaining to agreements must be transformed, particularly with the enactment of the Contract Act in 2013. This Act is derived primarily from the Indian Contract Act of 1872 and the Restatement (Second) of Contracts from the United States both in substance and formulation. This Act would suit well in emerging issues arising from private contractual disputes. However, there are some serious challenges as it contradicts the Evidence Act 2005.

At the crux of this conflict lies Sections 35, 37, 38 and 39 of the Evidence Act. Section 35 mandates the presence of witnesses, signatures of parties, and legal stamps for the validity of written agreements. Such requirements are not in line with modern realities of contractual transactions, particularly those conducted through electronic means such as emails and social media which is becoming the norm. Further, the Consumer Protection Act, of 2012, explicitly recognizes the validity of contracts, (Section 3) where receipts are enough for litigation. The courts have accepted consumer disputes based on advertisements and receipts as a form of written contracts but may not comply with the stringent requirements of Section 35 of the Evidence Act. Further, courts have recognized disputes arising out of agreements done through social media but have a different stand on the disputes arising out of the actual written agreements.

The courts’ inconsistent interpretation has led to uncertainty and potential injustice for litigants across the country. Further, Section 33-39 of the Evidence Act requires that in case of multiple agreements, the latter should be considered. These provisions of the Evidence Act prescribe rigid rules for interpreting rules contradicting the Contract Act. Moreover, Sections 202, 203, 204, and 205 of the Contract Act provide clear guidance on interpreting contractual terms, emphasizing the real intention of the parties, harmonious interpretation of conflicting provisions, and reading the contract. Section 205 states that “in interpreting a written contract constituted by two or more documents, all the documents shall be read in conjunction with one another.” This is because in contractual disputes, the determination of intention is one of the foremost important aspects of deciding the matter and when all the agreements are read together, it is easier for the courts to make more rational decisions.  This reiterated in Section 202 requires that the courts should strive to understand the genuine intentions of the parties while executing the agreement, by examining the language in context along with the relevant facts and circumstances of each case. The ultimate objective of the interpretation of contracts is to determine the actual intention and ensure that parties have understood the consequences of a breach of the contracts. In one recent court decision, the court relied on Section 39 of the Evidence Act to interpret multiple agreements, disregarding comprehensive provisions of the Contract Act. This highlights the urgent need for legislative intervention to resolve these contradictions and ensure a coherent and just legal framework for contractual disputes.

These provisions in the Evidence Act are vulnerable not only to different courts interpreting them differently but also vulnerable to abuse, as the law gives the courts the authority to interpret in one way or another, causing serious injustice to litigants across the country. Therefore, our legislature must take cognizance of such vulnerabilities, and amend the Evidence Act by repealing Sections 25, 36, 37, 38, and 39 of the Evidence Act.

Sonam Tshering

Lawyer, Thimphu

Disclaimer: The views expressed in this article are author’s own.