CASE LAWS

Consensus ad idem:

 Example: A has two houses – one at City A and the other at City B. He wants to
sell his house situated at City A. Now he is making an offer to B to sell away one of
his house to which he gives his acceptance. Here A is thinking about house at City
A and B has given acceptance with a view to purchase house at City B. Here is no
consensus ad idem.
 Raffels Vs Wichelhaus. In this case there is a contract between A & B
according to the terms of which A has to supply raw cotton to B in peerless ship.
There are two ships with the same name. While entering into the contract A
thinks about second peerless and B thinks about first peerless. Here court decides
that their contract has no consensus ad idem & hence it is void.

Certainty:

 Taylor Vs Portington. In this case there is a Contract between A and B

according to which A has to modernize his house and B has to join as tenant. If
the mode of modernization is satisfactory to B. Here court decides that their is no
Certainty and therefore it is Void.

Free Consent:

 Ranganayakamma Vs AlwarSetty. In this case B gives a threatening to A

saying that he (B) will not allow cremation of dead body of A`s husband, unless A
adopts B`s sons. Here it is decided that there is no free consent from the side of
A. There it is voidable, at the option of A.

Capacity of Parties:

 Mohiribeabee Vs Dharmades Ghosh. In this case A is a money lender and

B is a minor. A Contract gets formed between them according to which B has to
pledge his property with A to obtain a loan. On that occasion the minor executes a
deed also saying that money lender has write off lien on the pledged property till
settlement of debt. There after the minor sues to get in his property back without
settling the debt. Money lender claims that he has write-off lien as per the deed.
Here court decides that the deed executed by minor is void and therefore lender
has no lien.

Legal Formalities:If legal formalities are not satisfied the contract becomes
unenforceable.

 Example: A and B have written their agreement on Rs. 10/- stamp where it is to
be written actually on Rs. 100/- stamp. It is not Valid Contract.

Lawful Object: Un-lawful object makes the contract illegal & hence void.

 Example: There is a contract between X and Z according to which Z has to

murder Y for a consideration of Rs. 10000/- from X. It is unlawful object.
Legal Obligations:

 Balfour Vs Balfour. In this case A and B are husband and wife respectively. As
per their contract, husband has to send money to his wife at regular intervals of
time for the purpose of medical treatment. Here Court decides that there is only
one directional consideration and hence their contract is not creating legal
relations. So, their contract is held to be void.

Possibility of Performance: Impossibility makes the contract void.

 Example: A contract to join two parallel lines, has no possibility for performance
and hence such a type of contract is void.


Agreement not declared void:

 Madhav Vs Rajkumar. In this case a contract gets formed between A and B

according to which B has to stop his business and for that A has to pay Rs. 900/-
to B. There-after B stops his business and A fails to pay. B Sue’s for recovery.
Court decides that it is agreement in restraint of trade and hence void.

Offer may be General or Specific:

 Mrs. Cary Lli (Vs) Carbolic Smoke bal Company. In this case Carbolic
Smoke bal company is a pharmaceutical company. During contemporary period
of this case a fever called `Influenza` is in existence. This fever arises as a result
of rat bite. This fever is characterized by propagation from one person to the
other. On that occasion the company has invented capsules to cure influenza.
Here the company makes a general offer saying that those capsules can cure
influenza very quickly and prior consumption of their capsules will avoid attack
by influenza. In addition to it the company says that if any person gets attacked
by influenza even after prior consumption, the company will pay 100 pounds to
such person. Mrs. Cary Lli makes prior consumption & gets attacked by that
fever. Court decides that general offer also is valid and hence the company is
under obligation to pay 100 pounds to her.

Offer must be Communicated:

 Lalman (Vs) Gowridutt. In this case Gowridutt is fond of children, but he has
no children. Therefore he has brought his sister`s son. On one day, the boy gets
missed from the house. Lalman is Gowridutt`s servant. Gowridutt sends Lalman
to search for the missed boy. After Laman`s departure, Gowridutt makes an offer
according to which he will give a reward to the person who brings the boy back.
Thereafter the boy is found back by Lalman himself. After sometime Lalman
comes to know about the reward and claims that reward. Here court decides that
Lalman has no knowledge of the offer and hence he cannot claim the reward.

Price Declaration, Advertisement, Prospectus etc are not offers:

 Harve (Vs) Facie. In this case A is owner of a pen corner and B is an officer.
On one day B sends a telegram to A requesting to inform the price of Bumper ball
pen. A sends Telegram to B saying that price of bumper ball pen is 10 pounds.
 Now B gives telegram to A send one pen. Afterwards A gives telegram saying that
he has no stock of Bumper ball pens. B sues A. Here court decides that price
declaration is invitation to make offer and therefore there is no Contract at all
between A and B.

Reticence leads to acceptance - This wording sound should not be included

in the offer:

 Felthour (Vs) Bindley. In this case A makes an offer to B saying that he (A)
wants to purchase B`s property for 30 pounds and still says that B`s reticency
indicates acceptance. Court decides that the offer is not Valid.

Legal Obligations:

 Balfour (Vs) Balfour. In this case husband offers to send money to his wife at
regular intervals of time for the purpose of medical treatment to which she gives
acceptance. Here the offerer is not willing to get any consideration from offeree.
Hence it is decided that the offer as well as contract are not creating legal
relations.

Certainty:

 Taylor (Vs) Portington. In this case B makes an offer to A saying that A has
to modernize his house & if the mode of modernization is satisfactory to B, He (B)
will join as tenant. In this offer un-certainity can be seen. It is not Valid offer.

Acceptance must be given by that person only to whom the offer is made:

 Balton Vs Jones. In this case A and B are traders and C is A`s Customer. On
one day C writes a letter to A requesting A to send goods. It Constitutes C`s offer
to A. By the time of receiving that letter, A has no such business & it had already
been sold to B, his fellow delivery. Here court decides that the acceptance given
by B is not valid because C has made this offer to A.

Acceptance must be Communicated:

Brogden Vs Metropolitan Railway Company. In this case Mr. A obtains a

coal mine on lease. He wants to supply the extracted coal to a railway company.
Therefore he writes a letter to the manager of Metropolitan Railway Company,
Communicating his willingness to Supply Coal. That letter constitutes offer. The
Manager of Railway Company gives his acceptance on the letter, but gets failed in
communicating his acceptance. In the court it is decided that un-communicated
acceptance is not valid.

Acceptance Period:

 Rarmsgate Victoria Hotel Company Vs Montiforie. In this case an

investor applies for shares, in a company. It is well known that share application
constitutes offer. Therefore allotment becomes acceptance. Here the company
makes allotment after five months from the date of share application. Court
decides that acceptance is not made within reasonable period and hence the
allotment is not valid.
Acceptance must be Un-Conditional:

 Union of India Vs Mrs. Babulal. In this case A makes an offer to sell his car
to B at a price of Rs. 5000/-. B gives acceptance conditionally saying that he
wants to purchase that car at Rs. 4500/-. Here court decides that conditional
acceptance carries no validity and moreover it is B’s counter offer to A.

Affection based Contract:

 Raj Lukhy (Vs) Bhoothnadh. In this case A and B are husband and wife
respectively. There are frequent clashes and misunderstandings between them.
As a result, on one day, a contract has formed between them according to which
they have to live separately and for B`s livelihood, A has to Contribute amounts to
B. Upon breach of Contract by husband, wife files a suit. Here only one
directional consideration can be observed. At the same time it can be confirmed
that their Contract is not at outcome of affection. Thus the Contract is held to be
Void.
 VenkataSwamy (Vs) RangaSwamy in this case A and B are brothers. A, as
a consequence of affection on B, Promises to discharge B`s debts. In the court it is
held that it is a Valid Contract due to presence of affection. Same decision is made
in poon bee bee (Vs) FaizBhiksh and Bheema (Vs) Shivaram

Charities:

 Kedarnadh (Vs) Ghorie Mohammad. In the case a Contract gets formed

between A and B according to which A has to donate certain amount to B for
construction of a town hall. Having trust in A`s promise, B borrows money
temporary and commences the construction work. Thereafter A refuses to pay
and B sues. As B has come across laws court decides that the contract is Valid and
hence, he can recover the amount.

Consideration may move from Promisee or any other Person:

 Chinnayya (Vs) Ramayya. In this case A has a daughter namely B and a

brother namely C. A makes an offer to B according to which A will transfer certain
property to B and B has to pay annuity to C. Thus a Contract gets formed in
between them. There after B promises to C to pay annuity. Afterwards B gets
failed in paying annuity to C on the ground that she (B) has no Consideration
from C. Here Court decides that consideration is obtained by B from A. Thus it is
held that B has to pay annuity to C.

Consideration should be passed at the request of offerer:

 Durga Prasad Vs Baldeo. In this case there is a contract between A and B

according to which A has to provide for all requirements to B to run a market and
the profits are to be shared between them. Upon C`s request B makes the market
24 hours market for a consideration from C. There after C refuses to give
remuneration to B on the ground that he (C) has no consideration from B.
Afterwards B claims remuneration from A for rendering additional work to which
A refuses. Here Court decides that the additional work done by B is not wanted by
A and hence B cannot claim anything from A.
Consideration may move from promise or any other person:

 Dutton Vs Poole. In this case A has a son called B and a daughter called C. A
wants to conduct his daughter`s marriage out of the sale proceeds of branches of
mango plantation which is inherited property. But B does not like it. A Contact
gets formed between A and B according to the terms of which B has to conduct
C`s marriage out of his (B`s) own savings and A should not destruct the
plantation. Afterwards B says to C that it is his (B`s) obligation to perform her
marriage to which C has given her acceptance. Thereafter A becomes no more and
B does not render her (C) marriage on the ground that he (B) has no
consideration from C. Here Court decides that there is blood relation between C
and A. B had already obtained consideration from A in the form of abstinence.
There it is decided that B has to perform C`s marriage.

Consideration need not be adequate:

 Thomas Vs Thomas. In this case there is a Contract between A and B

according to the terms of which A has to provide his house to B at a rent of one
rupee. Court decides that it is a Valid Contract because Consideration need not be
adequate.

Consideration must be Lawful:

 Example: there is a Contract between X and Z according to which Z has to

murder Y for a Consideration of Rs. 10000 from X. Here Consideration from Z to
X is unlawful and it is illegal contract.

Stranger to Contract cannot sue upon the Contract:

 Dunlop Pneumatic Type Company [A] (Vs) Selfridge and Company

[B]. In this case A sends goods to their agent Due and Company [C]. C sell those
goods and has to remit amount to A. On account of excessive work load, C
appoints B as its sub-agent, without having any relationship with A. As per the
agency contract formed between C and B, if B sells goods below the specified
price, B has to pay five pounds per unit to C. Thereafter, B sells two units below
the specified price and also fails to pay ten pounds to C. A files a suit against B to
arrange that amount to C. Here Court decides that A is a stranger and therefore
its suit is not supportable.

Exceptions to the Statement 'Stranger to Contract cannot sue upon the

Contract'

Trust deeds:

 Example: A has a Son namely B who is a minor. For the sale of B, A has executed a
trust deed, appointing C as trustee. Here A is trust maker, C is trustee and B is
beneficiary. Here actually the Contract between A and C. But B can proceed legally if
C breaches the trust.

When charge on property is made:

  Khaja Mohammed (Vs) Hussend Begum. In this case B is A`s Son and C is
B`s wife. A contract gets formed between A and B according to which A has to
provide for C`s betel box expenses, out of the proceeds which A gets from his
property A fails to pay and C sues. Court decides that C`s suit is supportable
though it is stranger`s suit because there is charge on property.

Family Arrangements:

 ShuppaAmmal (Vs) Subramanyan. In this case ShuppaAmmal has two sons.

A contract gets formed between those brothers according to which each of them
has to contribute certain amount for their mother`s livelihood. The contract gets
breached and ShuppaAmmal files a suit. Her suit is given validity under this
exception.

Contingent Contract

 Example: There is a Contract between A and B according to which A has to sell

his goods which are in voyage, to B if the ship reaches the harbor safely. Here
condition can be seen and it is Contingent Contract. All indemnity contracts,
guarantee contracts and insurance contracts are Contingent Contracts. According
to Sec. 31 of Indian Contracts Act, a Contract performance of which depends upon
happening or non happening of an un-certain event is called Contingent Contract.

Types of Contingent Contracts

Depending Upon Happening of an Uncertain Event: Void.

 Example: According to Contract formed between A and B, A has to sell goods to

B, if ship comes there safely, their Contract is valid and if the ship gets drowned,
their Contract is void.

Depending upon non-happening of an uncertain event: void.

 Example: There is a contract between A and B according to which A has to sell

goods to B, if the ship does not come back. Here, if the ship come back, the
Contract is void and if the ship gets drowned away, then it is valid.

Depending upon happening of an Uncertain event in a fixed period: void.

 Example: As per the contract formed between A and B, A has to sell goods to B, if
the ship comes back within 10 days. If it comes on 8th day (or) 9th day, the
contract is valid and if it comes back on 12th day (or) 13th day, the contract is
void.

Depending upon non-happening of an uncertain event in a fixed period:

 Example: A has to sell goods to B if the ship does not come back within 10 days. If
it comes on 8th day (or) 9th day, the contract is void and if it comes back on 12th
day (or) 13th Day, the contract is valid.

Depending upon an Impossible Event:abinitio void.

  Example: there is a contract between A and B where A will pay Rs.100000/- to B
if B marry C. Assume that C was dead 5 years ago, now element of impossibility
can be seen and their contract is abinitio void.

Incapacity in Contract Act:

Foreign Rulers:

 Mighel Vs Sulthan of Johore. In this case Ms. Mighel an England citizen.

Sulthan of Johore is a foreign ruler. A marriage agreement has got formed
between them. But Sulthan breaches that agreement. Mighel Sues. It is to be
noted that she has filed the suit without permission from Sulthan. So her suit is
striked off.

Aliens:

 Metropolitan Water Board Vs Dick Kerr and Company. In this case

Metropolitan water board is a municipality board. On one occasion, It wants to
Construct a dam. In this Connection it enters into a Contract with engineers who
are aliens. The Contract is breached. Afterwards War breaks out between the
nations. Thereafter the water board files a suit and Court decides that their
Contract has lost Validity. Soon after declaration of war.

Agreement in Restraint of Trade - One citizen cannot restrict lawful

business of the other.

 Cohen Vs Wilken. In this case A is owner of a theater and B is a dancer.

According to their Contract B has to Conduct his dance programs at A`s theater
only throughout life. Thereafter B breaches the Contract and A Sue`s. Court
decides that it is agreement in restraint of trade and therefore A cannot take any
legal action.

Analysis as per England Lawagreement in restraint of trade attain

validity if it is reasonable restraint. Absolute restraint is Void.

 Nordenfelt Vs Maxim Nordenfelt Gun Company. In this case B purchases

A`s gun manufacturing business. Thereafter, by means of an agreement, B
restricts A from carrying on production of guns for a period of 10 years. This
agreement is breached and a suit is filed by B. England Court decides that as
restriction is of reasonable nature, it is Valid and B should not do the same
business till expiry of agreed period.

Contracts made by Minors

Valid Minor Contracts: If Minor Contract is made for necessaries, then it is Valid.

 Nash Vs Inman. In this case A is a tailor and B is a minor and under graduate.
In England Court is necessary to graduate and luxury to undergraduate. By
means of that Contract B gets 11 coats from A on Credit basis. Thereafter B gets
 failed in the graduation examination and doesn't pay amount to it. A files a suit.
Court decides that coat is not necessary and hence the Contract is Void.
 Robert Vs Grey. In this case A is a billiards player and B is a minor. As per their
Contract A has to provide for coaching to B upon certain consideration where B
has selected billiards game as his livelihood. Afterwards B fails in paying amount
to A. Court decides that the Contract is related to necessaries and therefore Valid.

Contracts made by Minors as per Indian law

Minor Contracts are ab-initio Void:

 Example: A case on this occasion is Mohirb bee bee Vs Dharmabas Ghosh.

Ratification is not Valid: A Contract made by minor cannot attain Validity though it
is ratified after becoming a major. Since minor contract is ab-initio Void, ratification
cannot bring Validity.

 Arumugan Vs Dorai Singh. In this case A is a money lender and B is a minor.

A contract of loan gets formed between them before repayment of loan, B
becomes a major and upon money lender`s request, B executes another deed in
support of debt which is taken during minority. Upon his failure from A files a
Suit on the basis of second deed which is given after attaining majority. Court
decides that the Second bond also is not Valid because it is just ratification of
Minor Contract.

Estoppel principle is not applicable to Minors.

 Sadiq Ali Khan Vs Jaikishore. In this case A and B are moneylender and
minor respectively. Upon A`s suggestion, the minor executes a deed saying that
he (B) is a major and thus obtains loan. Thereafter a Suit is filed for recovery.
Court decides that the situation is out of applicability of Estoppel principle and
hence a chance is given to B to prove his minority.

Restitution of fraud:

 Lesly Vs Sheele. In this case A is a money lender and B is minor. A minor,

convinces the money lender that he is a major and thus obtains loan. Here a
minor has committed fraud. It should be noted that is matter of money. Hence
the suit filed by money tender for recovery, is dismissed.

Minor and Necessaries: According to Indian law also, If minor Contract is made for
necessaries, It attains Validity.

 Polaram Vs Ayubkhan. In this case A is a law practitioner and B is a minor. A

contract gets formed according to which A has to safe-guard B`s property for
certain consideration from B. Afterwards B comes across default in paying
remuneration to A. Court decides that though it is minor Contract, it is Valid
because it is made for necessaries.

Mistake in Contract
Mistake of Home Law
  For example: A has given a loan of Rs. 10000/- to B. It has become time barred. A
has no awareness with regard to limitation act and therefore he has filed suit for
recovery after becoming time barred. Now Court will not excuse him. His Suit will
not be taken into consideration.

Existence of Subject Matter:

 Couterior Vs Hastie. In this case, there is Contract between A and B according

to which A has to sell his corn to B which is coming in a ship. They think that the
corn is in existence. But before their Contract an incident has taken place. The
Corn has got spoiled and to get rid of the unbearable smell, Captain of the ship
has thrown away the parcels into the sea. Court decides that it is bilateral mistake
and parties can avoid the Contract. There is no question of Compensation.

Identity of Subject Matter:

 Raffles Vs Wichelhaus. In this case a contract gets formed between A and B

according to which A has to send his raw cotton to B in Peerless Ship. While
entering into the Contract A thinks about 2nd Peerless and B thinks about 1st
Peerless. Here mistake as to Identity of Subject Matter from both sides can be
seen. Court decides that Contract can be avoided and Compensation need not be
paid.

Quality of Subject Matter:

 Nicholson Vs Smith. In this case a Contract gets formed between A and B

according to which A has to sell Charles I Napkins to B. A gathers some napkins
and sells them to B. At that time both parties think that those Napkins belong to
Charles but actually it is not so. They belong to King George. Court decides that
reversal of Considerations can be made. (i.e. avoiding the Contract.)

Quantity of Subject Matter:

 Cox Vs Prentice. In this case there is a Contract between A and B according to

which A has to sell a Silver bar to B weight of which is to be X gms. A collects
Silver bar and both of them think that its weight will be X gms. But actually the
weight is Y gms. It is decided that Contract can be avoided.

Title of Subject Matter:

 Cooper Vs Phybbs. In this case a lease agreement gets formed between A and
B. Where A has to provide his fish pond to B on lease. Both of them think that it is
A`s pond. But actually it belong to B. Court decides that lease agreement does not
operate.

Price of Subject Matter:

 Webster Vs Dessil. In this case A Contract gets formed between A and B

according to which A has to sell his property to B, At a price of $2250/-. But in
the document price is written as $1250/- by mistake. While signing on the deed A
 and B think that the drafted price is $2250/- Court decides that Contract can be
avoided.

Mistake as to possibility of Performance:

 Example : A has to pay Rs. 100000 to B and for that B has to marry C. While
entering into the Contract A and B think that C is alive. But actually C was dead
five years ago. Here mistake as to possibility of performance can be seen soon
after formation, the Contract gets discharged due to Pro-Contractual
impossibility.

Unilateral Mistake

 For example: A wants to sell away his house at a price of $6000. He makes an
offer to B and by mistake he quotes a price of $5000 to which B gives his
acceptance. Here only A is under mistake. It is Unilateral mistake and Contract
cannot be avoided.

Exceptions for Unilateral Mistakewhere contract can be avoided though there is

Unilateral Mistake.

Mistake as to identity of Parties:

 “Lake Vs Simons. In this case A is a gold merchant and B is a dacoit woman.

She convinces A that she is wife of Charles and thus obtains some Ornaments on
Credit basis. Here only A is under mistake. There after B sells away those
ornaments to C and goes out of which. Afterwards A comes to know that his
Ornaments are at C. He Sues C to get them back. Court decides that Contract can
be avoided and hence C is under obligation to return these Ornaments to A. Sale
of goods Act says that seller cannot pass on a better title that what he himself has.

Mistake as to Nature of Contract:

 Faster Vs Machillon. In this case A is a gentleman and he is not good at sight.

B is A`s relative. On one day B brings a bond to A and asks him to sign, saying
that it is Surety form. But it is actually bill of exchange. Believing that it is Surety
bond, A signs. Here mistake can be seen only from the side of A only. Under this
exception Court decides that A can avoid payment of the bill.

Agreements Opposed to Public Policy are declared as Void by Status.

Agreements in Restraint of Trade:

 Madhav Vs Raj kumar. A and B enters into a contract according to which B

has to close down his business for which he would be paid amount by A. B closes
his business but, A fails to pay B the agreed amount. B sues A for recovery and
court decides that it is an agreement in restraint of trade and hence void.

Agreements in Restraint of Marriage:

  Lowe Vs Peerless. In this case an agreement gets formed between A and B
according to which A should marry B only and B should marry A only. If only one
of them breaches the agreement a compensation of $ 2000/- is to be paid. Court
decides that the language used in the agreement is creating restriction on
marriage and hence void.

Agreements in Restraint of Personal Freedom:

 Ramasastry Vs Ambela Karen. In this case a contract of loan gets formed

between A and B and their Contract Specifies that B has to join as slave at A’s
house till Settlement of debt. Court decides that the contract is void.

Agreements in Restraint of Parental Rights:

 Maharaja of Vijayanagar Vs Secretary of State for India. In this case the

king entrusts his children to Court of Wards. On that occasion a deed is executed
by king according to which he is giving absolute Power on his Children to court of
Wards. After Sometimes Court of Wards decides to send those Children to
England for higher Studies. Then the king Sues for injunction order restricting
Court of Wards from Sending the Children to England. Court issues Such
injunction order Saying that by means of an agreements Parental rights cannot be
restricted and Court of Wards Cannot gets powers on kings Children.

Agreements with regard to Compromise of Offence:

 VenkataSubba Rao Vs Chandanmal. In this A is an Ayurveda doctor and B is

a money lender. A Contract of loan gets formed between them according to which
A has to pledge his medical instruments with B as Security. But A fills-up a
wooden box with bricks etc and pledges the box. It comes under public cheating
in accordance with Sec. 420 of IPC. After coming to know about the fraud B wants
to file criminal prosecution against A. In the mean while A`s Son-in-law namely C
makes a Compromise and executes a deed in support of debt taken by A. There
after B sues C for recovery Court decides that the Contract which has got formed
between B and C is agreement with regard to Compromise of offence and hence
void.

Agreements with regard to sale of Public Offices and Titles:

 Swamynathan Vs Muthu Swamy. In this case a Contract gets formed

between A and B according to which A has to transfer his position in govt. to B for
certain consideration. It is opposed to Public Policy and hence held to be Void.

Agreements with Alien Enemy:

 Metropolitan Water board Vs Dick Kerr And Company. Metropolitan

Water board wants to construct a dam and enters into a contract with people who
are aliens (other nation engineers). The contract is breached followed by a war in
between the two nations. Metropolitan Water board files a case up on breach of
contract. But, the case loses its validity since a war broke out in between the two
nations.

Agreements based on Bribes:

 Pandyan Vs Roy. In this case there is an agreement between A and B according
to which B has to pay Rs.15000 to A and for that A has to arrange for admission
of A`s Son to a Medical College. Court decides that their agreement is opposed to
Public Policy.