Enforcement of Contracts: The Key to Ease of Doing Business in India

Abstract

A ranking received under the Ease of Doing Business Reports by the World Bank is not a mere publicity boost for countries but directly has an effect on the perception of the standards of business, commerce and economics of the countries itself and the companies that are established in these countries. The enforcement of contracts is integral to the functioning of every company and business. Without the ability to enforce contracts efficiently, companies will be compelled to resort to unsavoury means to resolve disputes, big corporations would use their financial might to impose unfair terms and conditions on smaller companies, companies would let go of losses under contracts outweighed against the costs and time taken to litigate under the contracts and foreign investors and companies would lose faith in the ability to enforce obligations against domestic companies. Hence, it becomes necessary for a country like India who has a dismal rank in the enforcement of contracts to analyse the importance of the Ease of Doing Business ranks, what are the reasons behind such a low rank for India, and how can the rank be improved. The objective of the paper is to highlight the shortcomings in the legislations that govern judicial processes and how they can be improved to streamline the adjudication process.