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Balfour v.

Balfour
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(Intention to create legal relationships)

Facts:
 Mr. and Mrs. Balfour lived in Ceylon.
 Came to England in November 1915
 Mr. Balfour had to go back in August 1916
 He promised to give his wife, who had to stay back in England on a doctor’s advice,
30 pounds a month for maintainance.
 Later they decided to stay apart.
 Mr. Balfour stopped paying the money.
 Mrs. Balfour sued, won in the lower court, Mr. Balfour appealed.
Decision:
In favour of Mr. Balfour.
Justification:
There is no contract, as it is a mutual agreement between a husband and a wife. The parties
did not attend that they would be bound by legal consequences. The consideration for such
agreements is natural love and affection, which does not count for much in courts.
Not every agreement is a contract and as such is not enforceable by law.
Remark:
Has been a leading case in law of contract though has been criticised from some quarters.

Ghaziabad Development Authority v. Union of India(Compensation for breach of contract)-
Section 21(1)
Agreement-According to Poddar
Facts:
 GDA announced through advertisements, allotment of development plots
 Unreasonable delay in completing the scheme.
 GDA sued by purchaser.
Decision:
In favour of the purchaser.

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Balfour v. Balfour (1919) 2 K.B. 517
Ratio:
It was held that the purchaser could claim the loss of profit that occurred due to the delay in
allotment of plot but no compensation could be claimed for mental anguish caused by the
delay due to breach of an ordinary commercial contract.

Titagarh Paper Mills
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All clauses of a contract should be read in order to reach a conclusion. This case overruled
Oriental Paper Mills Case in which it was held that in order to reach a conclusion, it is not
necessary to some important clauses of the module.

Progressive Constructions Pvt. Ltd.
3
(Formation of Contract)
Facts:
 BHPL invited tenders for construction of 3 storey building.
 Conditions: To be built in not more than INR 1 crore, each floor to have 50 rooms and
to be complete d in 6 months’ time.
 Certain clauses in the contract were modified after by BHPL after the conclusion of
the contract.
Ratio:
Changing a contract substantially renders it void. Terms and conditions can be changed only
to the extent that the original contract stands.



Amar Singh
4
(Formation of Contract)
Contract that does not fall within the purview of Indian Contract Act, 1872 can still be valid
contract.
Article 372 of the constitution states that laws applicable before the framing of the
constitution shall be applicable after the commencement of the Constitution.


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Titagarh Paper Mills v. State of Orissa Air 1985 SC 1293
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Progressive Constructions Pvt. Ltd. V. Bharat Hydro Power Corp. Ltd. AIR 1992 Delhi 92
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Amar Singh v. Union territory of Chandigarh AIR 1993 P&H 100
Lalman Shukla v. Gauri Dutt
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(Communication of Offer)
Facts:
 Gauri Dutt’s nephew went missing from his home.
 Lalman, Gauri Dutt’s servant was sent to trace the missing boy.
 After the plaintiff had left, the defendant announced a reward (general offer) of INR
500 to anybody who would find the boy.
 Meanwhile, the servant traced the missing boy.
 He came to know of the reward, only after he had completed the duty entrusted to
him.
 Lalman brought an action to recover the award.
Decision:
In favour of Gauri Dutt.
Justification:
An offer cannot be accepted (i.e. there can be no formation of a contract) unless it comes to
the knowledge of the offeree.
Remark:
Lalaman was already in Gauri Dutt’s service and as such it was his duty to trace Gauri Dutt’s
nephew after he was specifically asked to.
A general offer (for that matter, any offer) cannot be accepted until it is known to the person
to whom it is made. Even if Gauri Dutt had awarded the INR 500 to Lalman, it would not
have been the performance of contract but an ex-gratia payment since he wasn’t bound by
any contract.


Carllyal v. Carbolic Smoke Ball Co.
6
(General offer)
Facts:
 The Carbolic Smoke Ball Co. Came out with an advertisement to promote their
product, a remedy against influenza.
 An award of pound 100 was announced for anyone who caught influenza after taking
the smoke ball in accordance with the printed instructions.
 An amount of pound 1000 was deposited with Alliance Bank to show the company’s
sincerity in the matter.

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Lalman v. Gauri Datt (1913) 11 All LJ 489
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( 1893) I Q.B. 256 at 268
 A purchaser sued the company.
Ratio:
It was a general offer and as such addressed to the whole world and had evolved into a
contract as the plaintiff by her conduct had accepted the offer.

Thompson v. Sothern Railway Co.
Facts:
 Man travels by train
 Falls while boarding the compartment
 Claims compensation, alleging fault on the part of railways.
 The ticket, at the back, says that no compensation lies for personal injury.
 Plaintiff claims that it is not normal to read instructions printed on the back of the
ticket.
Ratio:
A person cannot claim illetracy and ask for compensation. The special condition has been
communicated to the plaintiff.

Lilly White v. Munnuswami
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(Formation of Contract- Terms of
contract should be reasonable)
Facts:
 The plaintiff gave a saree costing Rs. 220 to the laundry firm M/s Lilly White.
 The launderer misplaced the saree.
 The plaintiff claimed the full amount of the saree but the launderer agreed to pay only
half the amount as there was a printed term on the receipt stating the same.
Ratio:
It was held that such a term of the contract was unreasonable and against public policy and as
such unenforceable.

Broagden v. The Metropolitan Railway Co. (Communication of Acceptance)
Facts:

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AIR 1966 Mad 13
The plaintiff made an offer to the manager of the railway company. The manager put an
acceptance seal on the offer letter and kept it in his drawer. The plaintiff came to know of it
through a third party and pressed for the performance of the contract in the court of law.
Ratio:
It was held that there was no formation of contract as there was no communication of
acceptance.

Powell v. Lee(Communication of Acceptance)
Facts:
 Powell contested for the post of headmaster of a school.
 Was elected by the board of managers.
 His election was subsequently cancelled and another candidate was chosen.
 The decision of the first meeting was communicated to Powell by an unauthorised
party.
 Powell sued Lee, the chairman of the board of managers.

Ratio:
It was held that there was no contract, as there had been no communication of acceptance by
the board or any one authorised by it.


Dodds v. Dickinson (Privity of Contract)
Facts:
 On Wed, 10
th
June, Dodds offered Dickinson houses for sale.
 Gave him time upto Friday, 9 am to accept the offer
 On Thursday, Dickinson, through his agent Berry, came to know that Dodds was
agreeing to sell the concerned property to Allen.
 Dickinson accepted the offer on Thursday evening and left a letter to that effect at
Dodds’ place which was overlooked.
 On Friday morning, at 7 am, Dodds was given another copy of the letter of acceptance
by Berry.
 Dodds had already signed a formal contract regarding the sale of property with Allen
on Thursday.

Decision:
Judgement in favour of Dodds.
Justification:
There can be no acceptance, when there is no continuing offer. There was no meeting of
minds between the two parties as before acceptance, Dickinson was aware of Dodd’s change
of mind.
It is too late for the promisee to accept the offer, once he already knows that the contract
regarding the good in question has already come in existence. It can be equated to the death
of a promise, as in both cases the performance of the offer impossible.
Remarks:
This case is now obsolete in both English as well as Indian law. According to Section 5 of the
Indian Contract Act, the revocation of offer has to be communicated by the offerer himself,
and not a third party.
Section 5 of ICA: “A proposal may be revoked at any time before the communication of its
acceptance is complete as against the proposer, but not afterwards.”