Which act governs contracts in India?

The Indian Contract Act, 1872, is the primary legislation that governs contracts in India. This act lays down the principles concerning the formation, performance, and enforcement of contracts, establishing a comprehensive legal framework for contractual agreements and obligations between parties. It offers definitions, rules regarding the validity of contracts, and provides remedies for breach of contract, thereby ensuring that individuals and businesses understand their rights and obligations when entering into agreements.

The other choices do not pertain to contract law. The Indian Policies Act, 1972, is unrelated to contract regulation and instead may refer to policies governing other areas. The Indian Trade Act, 1961, primarily focuses on trade regulations rather than contractual agreements, while the Indian Business Act, 1980, is not a recognized piece of legislation in the Indian legal system concerning contracts. Hence, the Indian Contract Act, 1872, stands out as the correct answer as the definitive source of law for contracts in India.