INDIAN CONTRACT ACT 1872

CASE LAWS

OFFER & ACCEPTANCE

1.       Carlill v Carbolic Smoke Ball Co. (1893)

Court of Appeal (England) -

The court held that an advertisement offering reward can constitute a valid offer to the public at large. Acceptance does not need communication; performance of conditions (using the smoke ball and getting sick) amounts to valid acceptance, creating a binding contract.

2.       Lalman Shukla v Gauri Dutt (1913)

Allahabad High Court - No acceptance without knowledge of offer. The court held that a person cannot accept an offer unless he has knowledge of it. Since the servant traced the boy without knowledge of the reward, he was not entitled to claim it.

3.       Harbhajan Lal v Harcharan Lal (1925)

Allahabad High Court- The court held that a reward advertisement is a general offer and can be accepted by anyone who performs the required act with knowledge of the offer.

4.       Felthouse v Bindley (1862)

Court of Common Pleas (England)- The Court held: Silence is NOT Acceptance. The nephew’s silence did not amount to acceptance. An offeror cannot impose a condition that silence will be treated as acceptance. Acceptance must be: Communicated, or Clearly implied by conduct.

5.       Entores Ltd v Miles Far East Corp. (1955)

Court of Appeal (England)- In instantaneous communication, acceptance complete on receipt.

6.       Bhagwandas Goverdhandas v Girdharilal (1966)

Supreme Court of India- In instantaneous modes of communication (like telephone), Acceptance is complete when it is received (heard) by the offeror, not when it is spoken.

7.       Balfour v Balfour (1919)

Court of Appeal (England) - The court held that agreements between husband and wife made in a domestic setting lack intention to create legal relations and are therefore not enforceable.

8.       Merritt v Merritt (1970)

Court of Appeal (England) - The court distinguished Balfour and held that where spouses are separated, agreements between them are presumed to have legal intention and are enforceable.

CONSIDERATION

9.       Durga Prasad v Baldeo (1880)

Allahabad High Court- The court held that consideration must move at the desire of the promisor. An act done voluntarily or at the instance of a third party does not constitute valid consideration.

10.   Chinnaya v Ramaya (1882)

Madras High Court- Consideration may move from third party. The court held that consideration can move from a third party and not necessarily from the promisee, thereby validating such agreements under Indian law.

11.   Kedarnath Bhattacharji v Gorie Mohammad (1886)

Calcutta High Court- The court held that a promise to subscribe to a fund becomes enforceable when the promisee incurs liability on the faith of such promise, thus constituting valid consideration.

12.   Abdul Aziz v Masum Ali (1914)

Allahabad High Court- Promise without consideration is void.

13.   Tweddle v Atkinson (1861)

Queen’s Bench (England)- The court held that a stranger to the consideration cannot sue upon a contract, establishing the doctrine of privity.

14.   Dunlop Pneumatic Tyre v Selfridge (1915)

House of Lords (England)- Doctrine of privity reaffirmed. The court reaffirmed that only a party to a contract can sue on it and consideration must move from the promisee.

CAPACITY OF PARTIES

15.   Mohori Bibee v Dharmodas Ghose (1903)

Privy Council- The court held that agreements with minors are void ab initio and cannot be enforced, even if the minor has misrepresented his age.

16.   Nash v Inman (1908)

King’s Bench (England) - Minor liable for necessaries. The court held that a minor is liable for necessaries supplied to him, provided such goods are suitable to his condition in life and actual requirements.

17.   Leslie Ltd v Sheill (1914)

King’s Bench (England)- No estoppel against minor. The court held that the doctrine of estoppel does not apply against a minor, and fraudulent misrepresentation of age does not make the contract enforceable.

18.   Raghava Chariar v Srinivasa (1916)

Madras High Court- Minor’s agreement cannot be ratified. The court held that to establish undue influence, it must be shown that one party was in a position to dominate the will of the other and used that position to obtain an unfair advantage.

19.   Inder Singh v Parmeshwardhari Singh (1957)

Patna High Court held that: A minor cannot enter into a contract (i.e., cannot incur liability). However, a contract can be enforced for the benefit of a minor. Thus, a minor can be a beneficiary, even though he cannot be bound by contractual obligations.

FREE CONSENT (COERCION, UNDUE INFLUENCE, FRAUD, MISREPRESENTATION)

20.   Chikkam Ammiraju v Seshamma (1917)

Madras High Court - Threat to commit suicide amounts to coercion. The court held that a threat to commit suicide amounts to coercion under the Indian Contract Act, as it involves committing an act forbidden by law.

21.   Ranganayakamma v Alwar Setti (1889)

Madras High Court - Consent obtained by coercion is voidable.

22.   Raghunath Prasad v Sarju Prasad (1924)

Privy Council - Burden to prove undue influence lies on alleging party.

23.   Derry v Peek (1889)

House of Lords (England) - Fraud requires intent to deceive. The court held that fraud requires proof of false representation made knowingly, without belief in its truth, or recklessly.

24.   Smith v Land & House Property (1884)

Queen’s Bench (England) - Opinion may amount to misrepresentation if facts known. The court held that a statement of opinion can amount to misrepresentation if the person making it knows facts inconsistent with the opinion.

25.   Redgrave v Hurd (1881)

Court of Appeal (England) - Misrepresentation makes contract voidable even if truth discoverable. The court held that a contract induced by misrepresentation is voidable even if the aggrieved party had the means to discover the truth but did not do so.

LEGALITY OF OBJECT & CONSIDERATION

26.   Gherulal Parakh v Mahadeodas Maiya (1959)

Supreme Court of India- Wagering agreements void but not illegal. The court held that wagering agreements are void under Indian law but not illegal, unless specifically prohibited by statute.

27.   Pearce v Brooks (1866)

Queen’s Bench (England) - Immoral agreements are void. The court held that agreements entered into for immoral purposes are void and unenforceable.

28.   Nordenfelt v Maxim Nordenfelt (1894)

House of Lords (England) - Restraint of trade valid if reasonable. The court held that restraint of trade agreements are valid if they are reasonable in scope and necessary to protect legitimate interests.

29.   Madhub Chunder v Rajcoomar (1874)

Calcutta High Court - Agreement restraining trade is void

CONTINGENT CONTRACT & FRUSTRATION

30.   Taylor v Caldwell (1863)

Queen’s Bench (England) - Contract void if performance impossible due to destruction of subject matter. The court held that a contract becomes void when performance becomes impossible due to destruction of the subject matter, establishing the doctrine of frustration.

31.   Satyabrata Ghose v Mugneeram Bangur (1954)

Supreme Court of India - Frustration when performance becomes impracticable. The court held that frustration occurs when performance becomes impossible or impracticable due to circumstances beyond control, not merely because it is difficult.

32.   Krell v Henry (1903)

Court of Appeal (England) - Contract frustrated if foundation destroyed. The court held that a contract is frustrated when the fundamental purpose of the contract is destroyed.

33.   Herne Bay Steamboat v Hutton (1903)

Court of Appeal (England) - No frustration if main purpose not completely defeated

QUASI-CONTRACT

34.   State of West Bengal v B.K. Mondal (1962)

Supreme Court of India - Compensation for non-gratuitous act. The court held that where a person lawfully does something for another without intention to act gratuitously, the latter must compensate under quasi-contract.

35.   Haji Mohammad v Spinner (1900)

Privy Council - Finder of goods has rights of bailee

BREACH & DAMAGES

36.   Hadley v Baxendale (1854)

Court of Exchequer (England) - Damages limited to foreseeable loss. The court held that damages are recoverable only for losses that arise naturally or were within the contemplation of both parties at the time of contract.

37.   Victoria Laundry v Newman Industries (1949)

Court of Appeal (England) - Special damages recoverable if known. The court held that special damages are recoverable only if the special circumstances were communicated to the defendant.

38.   Fateh Chand v Balkishan Das (1963)

Supreme Court of India - Reasonable compensation under Section 74. The court held that under Section 74, the court can award only reasonable compensation and not automatically the amount stipulated in the contract.

39.   ONGC v Saw Pipes Ltd (2003)

Supreme Court of India - Liquidated damages enforceable if genuine pre-estimate. The court held that liquidated damages can be awarded without proof of actual loss if the amount is a genuine pre-estimate.

40.   Maula Bux v Union of India (1969)

Supreme Court of India - Forfeiture subject to reasonable compensation. The court held that forfeiture of earnest money is subject to the principle of reasonable compensation.

41.   Robinson v Harman (1848)

Exchequer Court (England) - Damages place party in position as if contract performed. The court held that damages should place the injured party in the position they would have been in if the contract had been performed.

AGENCY

42.   Pannalal Jankidas v Mohanlal (1951)

Supreme Court of India- Agent must compensate principal for breach. The court held that an agent who breaches his duty must compensate the principal for any resulting loss.

43.   Keighley Maxsted v Durant (1901)

House of Lords (England) - Undisclosed principal can sue. The court held that an undisclosed principal can enforce a contract made by an agent acting within authority.

44.   Lloyd v Grace Smith & Co (1912)

House of Lords (England) - Principal liable for agent’s fraud. The court held that a principal is liable for the fraud committed by his agent within the scope of authority.

45.   Bolton Partners v Lambert (1889)

Queen’s Bench (England) - Ratification relates back to date of act. The court held that ratification by the principal relates back to the date of the agent’s act, making it valid from the beginning.

BAILMENT

46.   Coggs v Bernard (1703)

King’s Bench (England) - Defined duties of bailee based on type of bailment. The court laid down foundational principles of bailment and duties of a bailee based on the nature of bailment.

47.   Great Northern Railway v Swaffield (1874)

Court of Exchequer (England)- Bailee entitled to necessary expenses reimbursement

IMPORTANT MISCELLANEOUS

48.   Alopi Parshad v Union of India (1960)

Supreme Court of India - Commercial hardship is not frustration. The court held that commercial hardship or increased cost does not excuse performance of a contract.

49.   Union of India v Rampur Distillery (1973)

Supreme Court of India - Government contracts governed by contract law principles. The court held that government contracts are governed by the same principles as ordinary contracts unless modified by statute.