The Article explains '24 landmark cases related to Contract Law' and the cases are basically related to the formation of a contract, a minor's position under contract law, offer, an invitation to offer, acceptance, and many more. The idea of the author is to make all the readers well-versed with the case laws of contract law. As the… Read More »

The Article explains '24 landmark cases related to Contract Law' and the cases are basically related to the formation of a contract, a minor's position under contract law, offer, an invitation to offer, acceptance, and many more. The idea of the author is to make all the readers well-versed with the case laws of contract law. As the contract is an essential concept, so a thorough analysis enables us to understand the ratio-decidendi of the cases. The Article also covers, in brief, the...

The Article explains '24 landmark cases related to Contract Law' and the cases are basically related to the formation of a contract, a minor's position under contract law, offer, an invitation to offer, acceptance, and many more. The idea of the author is to make all the readers well-versed with the case laws of contract law. As the contract is an essential concept, so a thorough analysis enables us to understand the ratio-decidendi of the cases. The Article also covers, in brief, the meaning of the contract and its essential.

Introduction: Meaning & Definition of Contract

According to Section 2(h) of the Indian Contract Act of 1872, a contract is defined as an agreement that is legally binding. Contracts in respect of any matter, more generally referred to as "contracts between individuals," are agreements made between two private parties that are legally enforceable on both of them. Case laws have the potential to provide a wide range of knowledge regarding contract law.

Keep in mind: Important Contract Law Cases

Before we get to the case laws, let's just go through the basics of a valid contract, which are as follows:

  • Making an offer;
  • Accepting the offer;
  • Both parties must be able to sign a contract;
  • There must be a legal reason for the contract;
  • Both parties must freely agree to the contract;
  • Both parties must want to form a formal partnership;
  • The contract must be clear;
  • A contract can't be ruled void in a certain way.

24 Landmark Cases related to Contract Law

1. Balfour v. Balfour (1919)[1]

Balfour v. Balfour decided in 1919, established the rationale for contract law by explaining why the legal response premise was created. According to the legal reaction theory, one legal act leads to the occurrence of another legal act. Lord Justice Atkin asserts that agreements between a husband and his wife, especially in the context of a personal family connection, to pay for maintenance costs and other associated capitals are often not contracts because the parties do not intend to make a legally enforceable agreement. Therefore, a contract cannot be enforced by its very nature if the parties do not intend to be legally committed to one another.

Facts

The Balfours travelled to England, where Mrs. Balfour fell unwell and was hospitalized. Mr. Balfour compromised by promising to pay Mrs. Balfour thirty pounds each month until she returns to Ceylon (Sri Lanka). When they drafted this pact, they had a harmonious relationship. Sadly, over time, their bond deteriorated. Mr. Balfour filed an appeal to the lower court and the court concluded that Mrs. Balfour's approval of the contract was sufficient to render it valid. But the decision got changed when the matter was referred to a higher court. The Agreement made between Mr. Balfour and Mrs. Balfour was purely domestic in nature, it does not hold any legal enforcement.

Issue

  • Did Mr. Balfour ever intend to enter into any sort of agreement with his wife, Mrs. Balfour?
  • Is the agreement between Mr. And Mrs. Balfour valid in nature at all?
  • Does the contract between husband and wife enforceable in a court of law?

Reasons

Contract law, according to Atkin, is not intended for personal or familial interactions. There cannot be a legally binding contract because neither party had entered into a legally binding contract during the formation of their agreement.

According to Atkin,

if all women could sue their husbands for breach of contract, the courts would be overwhelmed with fraudulent cases.

Warrington concurred with Atkin regarding the sequence of events but emphasized that Mrs. Balfour had not consented to anything in a manner adequate to create a legally binding contract.

Rationale

Promises made in spousal (or family) responsibilities are not legally binding as they are domestic in nature.

2. Lalman Shukla v. Gauri Dutt (1913)[2]

In the case of Lalman Shukla v. Gauri Dutt, the Allahabad High Court emphasized the importance of knowledge and communication in contract formation. 

Facts

Gauri Dutt's nephew was missing. Gauri Dutt sent various servants in the search of the missing body. Among them, one of the servants was Lalman Shukla. Shukla's train ticket and other expenses were covered by her. After he left the home in the search of the boy, Gauri Dutt announced that whoever finds her nephew would be rewarded Rs. 501. Shukla was completely unaware of this.  With his efforts, Lalman Shukla found the boy and brought him to Kanpur. When he came to know about the reward he started claiming it from his master. But Gauri Dutt refused to give him. Thereafter, he filed a case in court for the failure on the part of the defendant to pay the reward even upon the accomplishment of the task.

Decision

The plaintiff's claim required a contract with the defendant. The defendant claimed there was no agreement between him and the plaintiff and that the plaintiff was already compelled to undertake the action. 

In the present case, It is derived that in order to enter into the contract between two parties there have to be two things that are very essential for creating the contract:

  • To have complete knowledge of the facts of the offer or proposal
  • Acceptance of the offer

Communication of the offer is very important as per section 4 of the Indian contract act which states that the communication can only be complete when it comes to the knowledge of the person to whom it is made. In order to convert a proposal into an agreement both knowledge and assent must be present.

 As the plaintiff had no knowledge and also neither gave his approval nor accepted the proposal that was offered by the defendant Gauri Dutt. Hence there was no such existence of a valid contract between the two parties. At the time of searching for the boy, the plaintiff was doing his obligations and duties as a servant. Hence, the plaintiff Lalman Shukla was not entitled to get the award. So, there was no valid reason to claim it.

3. Rose and Frank Co v. Crompton and Brother Ltd. (1925)[3]

In the historic case, Rose and Frank Co. v. Crompton and Brother Ltd., the House of Lords emphasized the importance of legally enforceable contracts. The court concluded that the orders and acceptances were legally binding, notwithstanding the fact that the agreement between the parties was not a legally enforceable contract. Since an agency agreement establishes an unenforceable legal arrangement, legal transactions are not halted.

Facts

In 1913, two companies — one American and one English—entered into an agreement to market paper products in the United States. According to the written agreement, the business partners' "honourable commitment" was not a formal or legal contract, but rather an "honourable pledge." The American firm then submitted paper orders to the British firm, which the British firm accepted. A British company terminated its contract with the agency and refused to transport the items until all orders had been fulfilled. They stated that the orders were not legally enforceable since the 1913 agreement was not legally enforceable.

Issues

There were two questions:

(1) whether the sole agency agreement of 1913 constituted a legally binding contract, and

(2) whether the orders constituted enforceable contracts of sale.

Decision/Outcome

The agreement's exact language, which states that it is just an "honourable pledge," made it plain to the court that the parties did not intend for the arrangement to be legally binding. According to the Court, stipulations that make it more difficult to enforce a contract only apply if the agreement is legitimate in all other respects. Since neither the contract nor the circumstances, in this case, were intended to create a legal interest, the clause prohibiting its use in court is valid.

Even though this was not a legally binding contract, the orders and acceptances were determined to exist. An agency agreement does not enforce a declared legal arrangement, legal transactions can nonetheless occur. None of the transactions was significant, and both parties agreed on the orders.

4. Harvey v. Facey (1893)[4]

This case is significant in contract law as it illustrates the distinction between an invitation to offer and an offer. The Judicial Committee of the Privy Council ruled that Harvey v. Facey and Others was appropriate. Lord Chancellor, Lord Watson, Lord Hobhouse, Lord McNaughton, Lord Morris, and Lord Shand had decided this case

  1. Section 2(a) of the Indian Contract Act of 1872 states, "A proposition is formed when one person tells another that he is willing to do or refrain from doing something in exchange for the other person's commitment to do or refrain from doing that thing."
  2. According to section 2(b) of the Indian Contract Act of 1872, an offer is considered accepted when the person to whom it is extended responds affirmatively. When a proposal is accepted, it becomes a legally enforceable contract."
  3. Once an acceptance has been conveyed, it cannot be withdrawn or altered.
  4. In Contract Law, an invitation to treat (offer) indicates a party's desire to discuss a proposition.

Facts

  • Harvey and the Mayor and Council of the Kingdom of Kingston City were simultaneously discussing the acquisition of this property. In Jamaica, Mr. Harvey was the head of a partnership company.
  • The appellant did not want Kingston to purchase the land, therefore on October 6, 1893, an appeal was filed requesting that Mr. Facey, who was travelling by rail, purchase the land from the appellant.
  • "Do you sell Bumper Hall Pens?" Telegram was curious. According to The Telegraph, the response was "the lowest cash price." When questioned about the lowest price, Mr. Facey replied, "Bumper Hall Pen£900." He stated, "We are willing to purchase Bumper Hall Pen for £900." Please provide us a copy of your title documents as soon as possible."
  • When Mr. Facey refused to sell the property, Mr. Harvey sued him, claiming they had a contract and that Mr. Facey had agreed to a telegraphed offer.
  • Even while Justice Curran initially found "no conclusive evidence" to support the Petitioner's assertion that the parties had established an agreement, an appeals court overruled that ruling and determined that the parties had indeed reached a legally enforceable agreement. He filed an appeal to the Queen of Council after obtaining permission from the court of appeal (i.e. The Privy Council).

Issues

  1. Facey's offer to sell the aforementioned property to Mr. Harvey for £900, Whether it was clear, and was it capable of acceptance?
  2. Was the contract legitimate or void?

Judgment

According to the Privy Council, the parties did not reach any agreements. The initial conversation was more of an inquiry than an offer. Therefore, it was impossible to believe anything Mr. Facey said. Mr. Facey's telegram contained only one bit of information. Mr. Facey said there was nothing that might be interpreted as a proposition.

Conclusion

For a contract to be legally binding, the proposal must be accepted, and the proposer must be informed of the acceptance. For a contract to be legally binding, a guarantee is necessary. This circumstance teaches us a great deal about how an invitation to offer differs significantly from a genuine offer.

5. Ramsgate Victoria Hotel v. Montefiore (1866)[5]

In Ramsgate Victoria Hotel v. Montefiore, the Court of Exchequer examined the withdrawal of an offer due to the passage of too much time (1866). Six months after the defendant expressed interest in purchasing a stake in the plaintiff's hotel, the plaintiff accepted his offer.

At that time, the stock's price had decreased, and the defendant was no longer interested in purchasing it. While deciding to grant the defendant's request, the court stated that the plaintiff had ample time to consider the offer before rejecting it. Since the offer was accepted six months after it was made, even if the defendant declares he does not want the shares, he will not be required to pay for them.

Facts

Mr. Montefiore, the defendant, desired to purchase shares in the complainant's hotel (Ramsgate Victoria Hotel). When an offer was made and the defendant paid for the items, payment was received in June. This was not free. After six months of silence, the complaint accepted his offer and sent him a letter to let him know. Since the value of his shares had decreased, the defendant had lost interest. When we spoke with Mr. Montefiore, the sale had not occurred despite the fact that he had not backed out of the agreement.

Issues

  • Was there a binding contract between the defendant (Montefiore) and the company (Ramsgate Victoria Hotel)?

Decision/Outcome

The court denied the Ramsgate Victoria Hotel's request for preferential treatment. With the defendant's June proposal, a settlement was no longer viable. After a considerable period of time, the offer was no longer valid. According to the court, the length of time an offer is valid depends on its purpose. Six months was defined as the maximum period of time before the offer for shares would expire on its own. In contrast, the court would determine the disposition of all other property. Six months was sufficient time to accept an offer. The company accepted the offer after six months so, it was no longer valid due to expiry/lapses of a reasonable period of time.

6. Felthouse v. Bindley (1862)[6]

In Felthouse v. Bindley, the British Courts of Exchequer Chambers determined that acceptance was the most crucial factor. If he or she accepts a bargain, he or she must indicate also. If this behaviour continues, the proposed contract cannot be considered approved. The Court of Law states that the offer and acceptance of the offer must be clearly stated prior to the formation of a legal contract.

Facts

The complainant, Paul Felthouse, met with his nephew, John Felthouse, to discuss the purchase of his horse. After their conversation, the uncle addressed a letter to his nephew stating that if he did not hear from him within a week regarding the horse, he would consider the transaction finalized and ask to remove that animal. Because he was too preoccupied with auctions to respond to his uncle's letter, nothing was conveyed. The auctions were managed by Mr. Bindley's nephew, who advised him not to sell the horse. However, he accidentally sold the horse to someone else.

Issues

The issue, in this case, was whether silence or a failure to reject an offer amounts to acceptance.

Decision

The investigation revealed that neither the plaintiff nor his nephew had a contract for the horse. In the end, no one had taken advantage of the offer. Silence does not indicate agreement, and no one can concur with another. Any acceptance of an offer must be made crystal clear. Even though the nephew expressed interest in selling the horse to the plaintiff, there was no contract. Therefore, the nephew's silence to the complainant did not indicate that he had accepted his offer.

7. Pharmaceutical Society of Great Britain v. Boots Cash Chemist (1953)[7]

1953 case between the Pharmaceutical Society of Great Britain and Boots Cash Chemist included the phrase "invitation to offer." A court of appeal in England and Wales rejected the plaintiffs' complaint about how the pharmaceutical firm of the defendant offered pharmaceuticals to customers in a way that may be used to purchase drugs.

The Court of Law ruled that "goods on display are an invitation, not an offer," and that when customers bring drugs to the checkout, they are making an offer that the cashier must accept. The Court ruled that clients should not be offered medicines as an offer, but as an invitation to seek assistance.

Facts

In a self-service store, the defendant offered prescription-free medications. The Pharmacy and Poisons Act of 1933 included a number of these drugs on its Poisons List. Customers could examine the items on the open shelves, select the items they desired, place them in their basket, and pay at the cash register. A pharmacy technician was in charge of the cash register. Only licenced pharmacists may purchase or sell items from the Poisons List. The claimant filed a lawsuit against the defendant for allegedly violating Section 18(1) of the Pharmacy and Poisons Act of 1933.

Issues

Customers may choose their own things from the shelves (in which case the defendant was in violation of the Act at the time since there was insufficient monitoring) or they could sign a contract of sale after they paid for their purchases (in which case there was no breach due to the presence of the pharmacist at the till).

The question was whether the contract of sale was concluded when the customer selected the product from the shelves or when the items were paid for?

Judgment

According to the Court of Appeals, the defendant did not violate the Act because the contract was performed for payment while the pharmacist observed that at the register, the customer made an offer, which the cashier accepted. This conclusion is supported by the fact that shoppers can return any item they don't like prior to completing a purchase.

8. Bhagwandas Kedia v. Girdharilal & Co. (1959)[8]

The Indian Supreme Court examined Sections 2, 3, and 4 of the Indian Contract Act of 1872 in the case of Bhagwandas Kedia v. Girdharilal & Co. (1959). The court ruled that a party who accepts an offer in a separate location cannot be sued for breach of contract damages. Most contracts are formed when one party accepts an offer and notifies the other. This notification must adhere to the law.

Facts

  • On July 22, 1959, Girdharilal Parshottamdas & Co. (the plaintiff-respondent) in Ahmedabad agreed over the phone to provide cottonseed cakes to Bhagwandas Goverhandas Kedia Oil Mills (the defendant-appellant).
  • In the City Civil Court of Ahmedabad, the complainants sued the appellant for failing to produce seed cakes in accordance with the contract.
  • He argued that the Ahmedabad City Civil Court lacked jurisdiction because the defendants' offer to purchase was accepted in Khamgaon, where the goods were to be sent and paid for.
  • The Ahmedabad City Civil Court asserts that the contract was formed in Ahmedabad because the offer was accepted, the offeree was intimidated, and the offer was made in Ahmedabad.
  • The appellants submitted a petition to the Gujarat High Court, which was denied. The Supreme Court finally granted exceptional permission to hear the case.

Issues

  • Was the Ahmedabad Civil Court an appropriate venue for the case?
  • Whether the contract was formed at the place of acceptance, or where the acceptance was received?

Ratio Decidendi

  • Judges Shah, Wanchoo, and Hidayatullah heard the case. By a vote of 2 to 1, the case was ruled in favour of the respondents.
  • According to Justices Shah and Wanchoo, ad idem exists in both Europe and the United States. When the acceptance is displayed, the contract is formed.
  • The Indian Contract Act of 1872 does not apply to contracts formed via direct communication, such as a phone conversation. Since the contract was signed and accepted in Ahemdabad, the Ahemdabad Civil Court has jurisdiction over the case.
  • Justice Hidayatullah stated that the Indian Contract Act, which is used in India, was affected by the English Contract Law. A contract is not formed until the person who made the offer receives and hears the "yes" message. The contract is formed when the acceptance is received, not when the agreement is made over the phone. Thus, the Ahmedabad municipal civil court cannot hear the case.

Decision/outcome

The Court of Appeal's decision was correct, and the offeror was at the proper location when he called to accept. In light of this, the appeal was denied.

In this instance, communication between the individual making the offer and the individual accepting it was enhanced. In a case involving a breach, the court inquired as to the origin of the cause of action. There were rules about how a phone offer may be made, accepted, or withdrawn.

According to the document, this regulation does not apply to phone acceptances. When they reach an agreement over the phone, it is the same as if they were speaking face-to-face. Therefore, if communication is instantaneous, such as via the phone, the offer is accepted at the location where it was made.

9. Kedarnath v. Gorie Muhammad (1886)[9]

The Calcutta High Court held the defendant was accountable for the pledge, notwithstanding the fact that the promise was made for a good purpose and the defendant received no benefit from it. This type of event occurs frequently. The court has determined that the defendant would be held accountable since others were persuaded to join in order to obtain the funds needed for this litigation. Customers were also aware that membership entailed payment to the contractor.

The Honorable High Court agreed, pursuant to Section 2(d) of the Indian Contract Act of 1872, that the applicant's legal firm had entered a contract with its contractor at the request of the promoter.

Facts

Howrah was slated to receive a town hall. The complainant was a member of the Howrah Municipal Commission as well as a trustee for the Howrah Town Hall Fund. If sufficient funds were available, a Town Hall would be constructed in Howrah.

Later, as the number of participants expanded, so did the plans. The intended budget for construction was 26,000 rupees, but it ended up costing 40,000 rupees. As the population of the Town Hall grew, the Commissioners and others, including the plaintiff, who was also the Vice-Chairman of the Municipality, contracted a function to construct it.

The defendant agreed to contribute Rs. 100 towards the cost of the Howrah Town Hall as part of his plea agreement. Everyone who want to aid in the construction of the Town Hall contributed money, commodities, or time. The plaintiff then selected the best contractor and provided them with all the necessary plan details.

After then, he changed his mind and refused to pay. Plaintiff ultimately decided to launch a lawsuit to recover any unpaid subscription fees.

Issues

  • Could the Plaintiff and other parties pertaining to this issue bring their case to court?
  • Who was accountable for the unpaid amount?

Judgment

The plaintiff told the court that if an individual voluntarily subscribes to a charitable publication, the money cannot be refunded because there was no exchange of value. In this case, however, the subscribers were aware of the purpose of the funds, and the plaintiff signed the contract because of them. After much discussion, the court determined that it was acceptable.

The defendant argued in court that the plaintiff lacked standing to sue him because he was not involved in the action. The Small Cause Court sent the case to the High Court.

Decision of the High Court

In accordance with the Code of Civil Procedure of 1908, a trustee or a Municipal Commissioner may file an action in his or her own name and on behalf of anyone with an interest in him or her.

If the criminal did not receive immediate compensation for his charitable work, he must pay the subscription charge. There was also a lack of reasoning. People were urged to sign up, and it was made plain what would happen to their funds if they failed to meet the conditions of the contracting entity.

When a person subscribes to a publication, he agrees to donate to a specific cause. This type of contract is legally binding. Consequently, he was obligated to follow his word. Once a commitment has been made and work has commenced, it cannot be broken. Rule of law states that a contract's consideration is satisfied when the promisor fulfils his or her obligations.

The Judges determined that the defendant must pay the pledged funds for the construction of the Town Hall since the contract can be enforced by the proper party.

10. Durga Prasad v. Baldeo (1880)[10]

The famous Durga Prasad v. Baldeo contract case was resolved by a two-judge panel at the Allahabad High Court that included Justices Pearson and Oldfield (1880). In this decision, the Court examined Section 2(d) of the 1872 Indian Contract Act using rule of law philosophy. According to sections 2(d) and 25 of the Act of 1872, "no agreement may be entered without consideration." If it is written in the law, you cannot agree to something that is illegal.

Facts

The District Authority of Etawah approached the plaintiff with a proposal to open a market in Etawah. The plaintiff was able to pay the defendant in full and gain his trust after constructing two-grain markets in Etawah, one named Hume Ganj and the other Ram Ganj. As part of their agreement with dealers, the defendants rented out lookout shops and performed commissioned expert services.

In 1875, the parties reached an agreement that the commission rate would be six annas; the next year, the defendants signed a document making this rate official. According to the plaintiff's request, this was done so that he could be paid exclusively through commissions on a regular basis.

After hiring an attorney, the plaintiff took steps to ensure that the Municipal Corporation documented the commission agreement. This ensured that the plaintiff would be paid in accordance with the agreement.

Before an agreement can be registered under Indian law under the Indian Contract Act of 1872, both parties must attest that they have signed and authorized its use.

In this instance, things went awry when a lawsuit was brought against a defendant who allegedly refused to register the agreement.

As a result, the plaintiff had to go to court to have his rights acknowledged. He sued the Respondents in a lower court to ensure compliance with the agreement and then appealed to the High court because the lower court's decision was inadequate.

Issue:

  • Is the arrangement we just discussed legally enforceable?
  • Is the above agreement legally enforceable?

Judgment

The court did not believe the assertions of the plaintiff, hence the case was dismissed. According to Section 2(d) of the Indian Contract Act of 1872, this agreement cannot be considered a contract due to the absence of significant and well-known consideration. According to Section 25 of the Act, the contract was void for lack of consideration. Due to this stress on cognition, the justices determined that there was no basis for an appeal and dismissed the case.

11. Leslie Ltd v. Sheill (1914)[11]

In Leslie Ltd. v. Sheill, the English Court of Appeal examined whether the defendants were entitled to equitable reparation for a loan granted to a juvenile (1914). Using fair restitution, a person who lied about his or her age in order to get property or items might be made to pay back that amount if the property or items are discovered in his or her possession. The court ruled that a kid is exempt from repaying debt after repayment has begun.

Facts

During the transaction, the defendant falsely claimed to be of legal drinking age. The defendant sought restitution in court.

Issues

  • What rights do defendants possess if they wish to be repaid for loans made to minors?
  • Could they file a tort claim for money damages based on a contract or something similar?

Judgment

If a youngster obtains property or goods through deception, he may be required to return them if they can be located. The law calls this concept "equitable restitution."

Since the defendant had already spent the money, it was impossible to locate or recover the stolen property. Therefore, enforcement of an invalid contract would have been equivalent to enforcement of a null contract. When payments commence, the equity system does not need minors to sign contracts.

An infant cannot be held liable if the case is filed ex contractu, as this is an indirect means of enforcing the contract. A baby may be held accountable for violating a law unrelated to the contract but connected to the subject of the contract.

In this situation, the contract could be enforced by filing a lawsuit against the defendant for damages or compensation based on a tort or a claim similar to a contract.

12. Mohiri Bibee v. Dharmodas Ghose (1903)[12]

In Mohori Bibee v. DharmodasGhose, a court of Lords Mcnaughton, Davey, Lindley, Ford, Scoble, and Wilson examined the extent of a minor's agreement (1903). According to the Privy Council,

it is illegal for anybody under the age of 18 to execute a contract or make significant choices regarding one.

Therefore, the plaintiff and the defendant signed an invalid mortgage deed because it was signed by a minor.

Facts

Dharmodas Ghose was a minor at the time, but he signed a mortgage deed in his favour so that Brahmo Dutta, a Calcutta banker, would provide him with a loan. Kedarnath, who worked for Brahmo Dutta, refused to sign the deed when he discovered that the respondent was a minor when the mortgage was being evaluated for advance money. He was uninterested in Dharamdos Ghose's loan offer.

Because he was a kid when he signed the mortgage, the youngster subsequently launched a lawsuit against Brahmo Dutta, as well as his mother and guardian. The trial court's Justice Jenkins (J. Jenkins) agreed with the respondent's appeal and voided the mortgage deed.

The appeal against the order was likewise denied by the High Court, so the appellant brought his case to the Privy Council. At the time the appeal was filed, Brahmo Dutta had already passed away. As a result, Mohori Bibee assumed his position.

Arguments

  • After the mortgage was repossessed, the court should have ordered him to repay his debts (Rs. 10,500). He strengthened his argument by citing the 1963 Specific Relief Act, which grants the Court the authority to issue such an order.
  • According to sections 64 and 65 of the Indian Contract Act of 1872, money made from a cancelled deed may need to be returned.
  • The concept of "Estoppel" states that those who signed a contract stating they were minors cannot claim they are minors anymore.
  • Consequently, the child's signature on the contract is invalid.

Decision/outcome

  • The court was not convinced by the appeal.
  • There is a discussion about creating a rule.
  • The contract with the minor is immediately void.
  • Section 64 of the Contract Act stipulates that both parties to a contract must be of legal age.
  • The restriction principle could not be applied to this contract because both parties understood it was established with a kid in mind.
  • The Specific Relief Act of 1963 allows the child's zero-contract benefits to be revoked.
  • However, given the appellant knew that Dharmodas Ghose was a minor when he obtained a mortgage loan, the court does not believe that this is appropriate in this instance.

On the basis of these arguments, the Privy Council refused the appellant's petition.

13. Raghava Chaiar v. Srinivara (1916)[13]

In Raghava Chariar v. Srinivara (1916), the Madras High Court was tasked with determining whether a mortgage signed in favor of a minor who also paid the full sum of the mortgage was enforceable by him or anyone else on his behalf. In Mohori Bibee v. DharmaGhose (1903), the court imposed limitations on the extent to which children might be held liable in contracts. However, the new judgment is more significant since it provides greater protection for children in contracts.

Because of this case law, contracts protecting children are now far more robust. This judgment attempted to avoid Mohori Bibee's severity by permitting minors to sign contracts and protecting them under English common law. However, there are certain issues with this plan. These regulations did not apply to contracts in which a portion of the minor's payment has been finalized or executed. Such agreements did not confer any rights on the minor because the contract's obligation for the minor remains unchanged.

Facts

The principal defendant and the plaintiff reached a mortgage agreement on March 23, 1903. Even though the mortgagor (Plaintiff) was a baby at the time of the mortgage, the mortgagee (mortgagee) received the entire amount of money that the mortgage secured. The plaintiff was required to pay the defendant, and he did so. Despite the fact that Plaintiff adhered to the agreement, the defendant did not.

The amount of Rs 1100 and the change outstanding on the mortgage was deemed sufficient to file a lawsuit. People were challenging the district judge's decision in Chingleput.

Issue

What rights does a minor have to enforce his or her own mortgage if it has been paid in full?

Judgment

According to the court, the mortgagee has already fulfilled his end of the bargain by delivering the promised funds to the mortgagor.

Reasoning

The transfer was deemed unlawful due to the fact that a child who signs a lease commits to pay rent and perform any other duties stipulated in the agreement. In the majority of transactions, such as sales, contributions, and mortgages, there are no basic agreements upon which both parties agree. The transfer of property under a mortgage, on the other hand, is only an agreement that the property will be restored to the original owner provided certain criteria are met (such as when the debt is cleared). Even if kids' contracts are illegitimate, they can nonetheless be the promisee because only the promiser must be an adult.

14. Donoghue v. Stevenson (1932)[14]

In Donoghue v. Stevenson, the English House of Lords introduced the concept of carelessness. Under the terms of the sales agreement between the parties, the plaintiff sought compensation for the damages caused by the defendant's defective goods. Because the plaintiff's friend was injured, but she herself was not, she could only sue the defendant for negligence. The court had to determine whether the defendant owed the plaintiff a duty of care. Under the "neighbour concept," the court ruled that the defendant owed the plaintiff a duty of care.

Facts

  • Donoghue's acquaintance purchased her ginger beer at Paisley's Wellmeadow Café on August 26, 1928.
  • She drank only half of the bottle before transferring the remainder to her tumbler. The discovery of the decaying corpse of a snail at this location reportedly caused shock and considerable stomach discomfort.
  • Donoghue had no legal recourse if she was sued for breach of contract because she was not a party to any contract. Therefore, she filed a lawsuit against Stevenson and was successful in front of the House of Lords.

Issues

  • On the basis of prior case law, the House of Lords has questioned whether the manufacturer owed Mrs. Donoghue a duty of care despite the absence of contractual obligations.
  • It was a test case to see whether or not Donoghue could pursue a claim for damages.
  • Therefore, allegations of negligence could only be asserted when a contract existed between the parties. In an earlier case involving two toddlers and floating mice, it was discovered that:
  • A producer owed no duty of care to a consumer when putting a product on the market unless a defect was concealed from the consumer (i.e., fraud) or a product was dangerous and no warning was provided.
  • Donoghue, like Mr. Mullen, resorted to the House of Lords to seek justice.

Judgment

Three to two, the House of Lords ruled in favor of Mrs. Donoghue. Buckmaster L and Tomlin L were the only individuals who opposed the decision. Lord Atkin authored the dominant viewpoint. The ratio decidendi was difficult to determine in this instance. If the legislation is read literally, widows with Scottish ancestry may not be permitted to purchase ginger beer containing the decaying remnants of a dead snail.

First, negligence is distinct from other torts. Second, creating a responsibility does not necessitate a contract. Thirdly, producers are accountable to the consumers of their commodities. These three elements influence the decision collectively.

People remember him primarily for his contribution to Lord Atkin's conception of the term "neighbour."

If a lawyer asks, "Who is my neighbour?" you must respond, "I have no idea." restricted reaction You should take every precaution to protect yourself and your neighbour. What is my next-door neighbour's name? Those directly affected by my acts or inactions should be considered while evaluating them.

The statements made by Mrs. Donoghue were accurate.

15. Phillips v. Brooks (1919)[15]

In Phillips v. Brooks, King's Bench Division Judge Horridge debated whether or not the fundamental elements of a contract may be misconstrued (1919). Even though the court sided with the defendant, it was evident that the claimant wanted to sell the ring to the individual standing in front of him. This transaction took place in person. Therefore, there was no grave error in this scenario. Since the burglar had stolen the ring, the plaintiff was not entitled to have it returned.

Facts

Phillips was employed in the jewellery industry. The con artist paid for the ring with a check made out to "Sir George Bullough" and provided the address of this fictitious person. Phillips contacted Bullough because he recognized him and knew his address. The purchaser said his name was "Sir George Bullough," which was not accurate. The ring was later offered as a promise to someone else.

Issue

In Phillips v. Brooks, Whether Phillips can utilize an error in his name to void the contract and claim ownership of the ring.

Judgment

Because the contract was signed in person, there was no doubt regarding the identity of the fraudster, despite the fact that the ring was removed without authorization. Even when false claims were made, the fraudster's identity was not "mistaken." If a contract can be broken, the ring's lawful owner can be transferred to a third party without breaking the law.

16. Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co. (1915)[16]

The House of Lords coined the term "contract construction" in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. (1915). Due to the absence of a contract between the plaintiff and the defendant, the court ruled that the plaintiff lacked standing in this matter. With the exception of a relationship between a principal and an agent in which the agent is not named by the principal, the Court clarified that only the parties to a contract can sue each other for breaching the contract they agreed to.

Facts

Dunlop and its dealer agreed that the tire's suggested retail price would not be discounted (RRP). As part of the transaction, Dunlop requested that their dealers, such as Selfridge, negotiate with their merchants. According to the agreement, Dunlop must receive $5 per tyre that is sold for less than the suggested retail price. This arrangement was made between the dealer and Selfridges, therefore Dunlop was not involved.

Dunlop also requested monetary damages and an order prohibiting Selfridge from selling the tyres at a lower price in the future. In the initial trial, the court sided with Dunlop. Following Selfridge's appeal, it was dismissed. Dunlop attempted to influence the decision.

Issue

Therefore, Selfridge stated that Dunlop's agreement with Selfridges was not legally binding. The court had to determine whether Dunlop could demand payment in the absence of a contract.

Decision/Outcome

In this instance, the court unanimously agreed that Dunlop could not file a claim for damages. Only parties to a contract may launch a lawsuit against the other party, the court ruled. Therefore, Dunlop and Selfridge may be unable to reach a legally enforceable agreement. Lastly, because Dunlop was not mentioned as an agent in the contract, he was not a valid third party who could file a claim under it.

17. Hadley v. Baxendale (1854)[17]

Hadley v. Baxendale, a well-known English case, states that if a contract is breached and there is resulting damage, the offending party is liable (1854). The plaintiff charged the defendant with professional negligence after the defendant made an error while performing work for him at his mill. The court had to determine if the plaintiff's claim was excessive in relation to the harm he caused. Because the plaintiff could not have known how the defendant's delay would affect him, the court ruled that the defendant is not required to compensate him for his losses.

Facts

Plaintiffs owned and operated a mill that was forced to close due to a broken crankshaft on their steam engine. The engine manufacturer, W. Joyce & Co. (Joyce), agreed to create a new shaft that resembled the previous one. When a worker for the plaintiffs went to the office of the defendants' common carriers, Joyce ultimately received the crankshaft.

The plaintiffs' servant reported that the mill had been shut down and that the shaft must be sent immediately. If the shaft was not delivered to the plaintiffs' servant by 12 p.m. on any given day, it would be delivered the following day. The next day, before noon, Plaintiffs gave Defendants the boot. The delivery to Joyce was late due to the carelessness of the defendants, and the plaintiffs did not get the new shaft until several days after it was scheduled to arrive.

Issue

Should the Defendants reimburse the Plaintiffs for any lost funds?

Decision

The party that did not breach the contract is entitled to recover any damages caused by the breach or that the parties might have reasonably anticipated at the time the contract was executed. True, the Defendants breached the contract, which resulted in the Plaintiffs losing income, but this type of damage would not have occurred in a normal circumstance. A miller may hire a third party to repair the crankshaft for a variety of reasons.

The defendants were unaware that their hack would prolong the mill's downtime and cost them money. In addition, neither the Plaintiffs nor the Defendants were aware of the unique circumstance.

18. Dickinson v. Dodds (1876)[18]

In Dickinson v. Dodds (1876), the English Court of Appeal examined whether a defendant who agreed to keep his offer open until a specific date would be bound by contractual commitments if he sold his offer to a third party prior to that date. Because the parties engaged in the case did not sign a contract, the defendant was not required to take any action prior to withdrawing his offer. Even though the defendant made an offer, the court ruled that he could have withdrawn it before the plaintiff accepted it, exonerating him from responsibility for his actions.

Facts

In an open letter, the defendant, Mr. Dodds, offered to sell his home to the complainant, Mr Dickinson, for £800. He agreed to keep the accord through Friday. On Thursday, Mr. Dodds accepted an offer from a third party and sold his home to them.

People claimed that Mr. Dickinson was considering accepting the offer, but he did not inform Mr. Dodds until Friday, as planned. Mr. Dodds informed the complainant that the offer had been declined by a friend. As soon as Mr. Dickinson learned of this, he went after the accused and informed him that the offer had been accepted in writing. The plaintiff sued the defendant for breach of contract and specific performance.

Issues

In this instance, the question was whether the defendant's pledge to wait until Friday morning to make a choice was a legally enforceable agreement and whether it could be broken so that he might sell to another party.

Decision/Outcome

The court ruled that Mr. Dodds's remarks were merely a promise and therefore no contract existed. He had made an offer to purchase the complainant's home, which he may rescind at any point until it was accepted. A deposit would not have altered the situation in any way. Since there was no responsibility to keep the offer open, the parties were unable to reach a "meeting of the minds." In addition, the court ruled that communication from a friend or other third party that an offer had been withdrawn was legal and would be treated as if it had originated directly from the individual.

19. Powell v. Lee (1908)[19]

Powell v. Lee (1908), in which the plaintiff sued the defendant for contract breach, is a well-known instance of an offer and acceptance. The King's Division Bench considered whether or not a person committing an illegal act could accept an offer. The court dismissed the plaintiff and defendant's breach of contract allegations because an acceptance must be made, known, and executed by the offeror while in a legal position.

Facts

"Plaintiff" Mr. Powell desired to be the school's principal, and he was hired. After reviewing his application, the School Board made the decision to hire him.

However, one of the board members, acting independently, informed the plaintiff of the board's decision prior to the authorized power. Later, the board changed its mind and opted to select a different candidate.

The plaintiff sued the institution for breach of contract as a result.

Issue

Whether or not the school breached the agreement and was at fault.

Observations

According to the Kings Bench Division, the issue to be investigated is whether or whether an individual acting outside of his power sends an acceptance of an offer. According to the Honorable District Court Judge, acceptances must be made public. In addition, such a message must be received by the offeree in his official role or by a person selected by him.

The board member in question was unable to accept the offer, and he was not tasked with expressing acceptance in the aforementioned situation. Therefore, the school board did not breach the agreement when they failed to notify the applicant of their acceptance.

Judgment

Therefore, the court ruled that there was no contract between the plaintiff and the school board because the approval of the applicant's application was not published by an official body (the school board) (i.e., the school board).

This example demonstrates that for a contract to be valid, the offeree must accept it in his authorized capacity or through a legally authorized representative. If someone who is not authorized to send the acceptance offer does so, the contract is invalid.

20. Merritt v. Merritt (1970)[20]

The 1970 judgment of the Master of the Rolls in the case Merritt v. Merritt had a significant impact on contract law. Even though this case is similar to Balfour v. Balfour (1919), the Court was able to distinguish them since the parties in Balfour v. Balfour (1919) were married whereas the parties in this instance were divorced. To pay off their mortgage, the husband and wife decided to make monthly payments of £40. After the money had been made, the wife claimed ownership of the property. Unlike the Balfours case, the Court of Appeal ruled that the transaction was legitimate.

Facts

Mr. and Mrs. Merritt were married in 1941. After their marriage, the home was registered in both of their names. Mr. Merritt left the family home in 1966 to live with another woman. Mr. Merritt agreed to provide Mrs. Merritt with £40 every month. At Mrs. Merritt's request, he signed a contract stating that he would transfer the property to her only when the mortgage had been paid off. After paying off the mortgage, Mrs. Merritt was able to convince a court that the house belonged to her. Mr. Merritt appealed the ruling.

Issues

Mr. Merritt stated that the agreement was mostly between a husband and wife, and they did not wish to formalize it, so there was no enforceable contract. In addition, he stated that the alleged contract was not clear enough to be legally binding and that Mrs. Merritt had not demonstrated any interest in his pledge. Mrs. Merritt stated that the presumption that they did not wish to establish legal ties was incorrect because they were having a divorce.

She argued that she had every intention of establishing legal ties and that the fact that she had paid off the house's expenditures and the mortgage was sufficient to be regarded.

Decision/Outcome

The judge disapproved of Mr. Merritt's argument. When a relationship is ending or has ended, the rule that there was no motive to create legal connections does not apply. Mr. Merritt's guarantee was repaid by the mortgage payment, and the arrangement was unambiguous enough to be enforced. Mrs. Merritt was responsible for all aspects of the household.

21. Kaliaperumal v. Visalakshmi (1938)[21]

Facts

In this case, a goldsmith was employed by a lady in order to make new jewels from the old ones. The lady used to visit every day the goldsmith and she used to collect half-made jewels from the goldsmith and after that, she used to keep them in a box. She left the box in the house of the goldsmith. She had locked up the box and carried the key with her. One evening when she went to meet the goldsmith, she opened her box and found that the jewels were stolen. She sued the goldsmith for her loss.

Issue

Whether the goldsmith can be charged as a bailee and be made liable for the loss of the jewels belonging to the plaintiff?

Decision

The Madras High Court held that the goldsmith was not liable because there was already re-delivery of the jewels to the lady. She used to keep the keys with herself. Merely, the box was in the room of the goldsmith could not make him liable. Delivery of the goods is the essential component of the bailment and due to this, he could not be held liable.

22. Ram Gulam v. Govt. of Uttar Pradesh(1949)[22]

Facts

Ornaments of Ram Gulam were stolen. The Police arrested the thief and found the stolen ornaments of the Ram Gulam. Further, the ornaments were kept in police custody. The ornaments were stolen from police custody. Ram Gulab made the Government responsible and as per him they had failed to keep the duty of reasonable care as a bailee and were thus liable to compensate him for the loss.

Issue

Whether or not the Government was liable to indemnify the plaintiffs since it was in the position of a bailee and the ornaments were lost through its negligence or that of its servants?

Decision

It was held that the obligation of a bailee is a contractual obligation and cannot arise in its absence. As the ornaments were not handed over to the Government as a part of the contract. The government had not acquired the position of bailee and this made them not be liable to indemnify Ram Gulam.

23. Hyde v. Wrench(1840)[23]

Facts

Wrench offered to Hyde that he wanted to sell his farm for 1000 pounds. But Hyde wrote back that he wanted to buy the farm for 950 pounds. Wrench responded that he would not sell at the price demanded by Hyde. Further, Hyde wrote that he would buy at the offered price of Wrench. At that time Wrench had decided not to sell his farm. But Hyde sued against Wrench and claimed that Wrench was contractually bound to sell the farm to Hyde.

Issue

Was the defendant's (Wrench) original offer still capable of being accepted?

Judgment

The decision was in favour of Wrench because the original offer had been revoked by the counter-offer of the plaintiff and therefore, there was no such contract between the parties.

24. Chinnaya v. Ramayya(1882) [24]

Facts

In this case, an old lady owns the land. She decided and gave a part of that land to her sister. After some time that lady gifted that land to her daughter on the condition that her daughter would pay Rs. 653 as an annuity to the old lady's sister. The daughter agreed to the condition and signed it but later she failed to pay the said amount, and thus a suit was filed by the old lady's sister. Here, Chinnaya was the old lady's sister and Ramayya was the old lady's daughter.

Issue

Though the agreement was entered into between the respondent and her mother, would the appellant still be liable to receive the compensation that has been promised in the said contract?

Decision

The Supreme Court held that gift deed and annuity agreements are both simultaneous agreements and both can be considered as one transaction, thus consideration has to be paid by Ramayya v. Chinnaya. This is a leading case related to the privity of contract.

Conclusion

It is imperative that the examples presented in this article be committed to memory because they are regularly found in a variety of legal examinations. As a result, students of law need to have the ability to analyze these cases. Despite the fact that there are only twenty examples presented in this article, they are without a doubt the most important to master in conjunction with contract law.


References:

[1] [1919] 2KB 571

[2] (1913) 11 ALJ 489

[3] [1925] AC 445

[4] (1893) L.R. A.C. 652.

[5] 1866 LR 1 Ex 109

[6] [1862] EWHC CP J35

[7] [1953] 1 QB 401

[8] 1966 AIR 543, 1966 SCR (1) 656

[9] (1887) ILR 14 Cal 64

[10] 1881 ILR 3 ALL 221

[11] (1914) 3 K.B.607

[12] (1903) 30 Cal 539

[13] (1916 ) 31 MLJ 575

[14] 1932 AC 562

[15] [1919] 2 KB 243

[16] [1915] AC 847

[17] [1854] EWHC J70

[18] (1876) 2 Ch D 463

[19] (1908) 99 LT 284

[20] [1970] EWCA Civ 6

[21] (1938) AIR 1938 Mad 32

[22] AIR 1950 All 106

[23] (1840) 49 ER 132

[24] (1882) I.L.R. 4 Mad. 137


Updated On 2022-10-14T14:00:28+05:30
Vartika Kulshrestha

Vartika Kulshrestha

Content Writer and Research Intern

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