Study Material

Subject : Contracts 1
Prepared by: B.V.S.Suneetha
Assistant Professor
Damodaram Sanjivayya
National Law University
Sabbavaram.
1. Balfour v Balfour [1919] 2 KB 571
2. Merritt v Merritt [1970] 1 WLR 1211
EWCA Civ 11 QB 256
3. Carlil v Carbolic Smoke Ball company
4. Galloway v Galloway (1914) 30 TLR 531
5. Harvey v Facie [1893] UKPC 1
6. Pharmaceutical society v Boots Cash Chemist Ltd 2 WLR 427
7. Lalman Shukla V Gauri Datt 1913 40 ALJ 489
8. Boulton v Jones (1857) 2 H and N 564
9. Ramsgate v Victoria Montefiore (1866) LR 1 Ex 109
10.Henderson v Stevenson (1843) 3 Hare 100
11.Parker v South eastern railway [1877] 2 CPD 416
12.Brogden v Metropolitan Railway Co (1877) 2 AppCas 666
13.Henthorn v Fraser [1892] 2 Ch 27
14.Felthouse v Bindley (1862) EWHC CP J 35
15.Powell v Lee (1908) 99 LT 284
16.Thornton v Shoe lane parking ltd. [1970] EWCA Civ 2
17.Entores v Far Miles East Company [1955] EWCA Civ 3
20.Bhagwandas Goverdhandas Kedia vs. Girdharilal [1965] Insc 171
Parshottamdas & Co. & Ors.
21.Tweedle v Atkinson [1861] EWHC J57 (QB)
22.Chinnaya v Ramayya ILR (1876-82) 4 Mad 137
23.Durgaprasad v Baldeo 1880 3 ALL 221
24.Kedarnath v Gorie Muhammad (1887) ILR 14 Cal 64
25.Shuppu Ammal v K. Subramaniam 4 Ind Cas 1083
26.Khwaja Mohammad Khan v Hussaini Begum (1907) ILR 29 All 222
27.Mohireebibi v Dharmodas Ghose (1903) 30 Cal. 539
28.Leslie v Shiell [1914] 3 KB 607
29.Chikkam Ammiraju v Chikkam Seshamma (1917) 41 Mad 33
30.Derry v Peek [1889] UKHL 1
31.Peek v Gurney [1873] LR 6 HL 377
32.With v O’Flanagan [1936] Ch 575
33.Shri Krishnan v Kurukshetra University AIR 1976 SC 376
34.Mannu singh v Umadatt (1890) 12 All 523
35.Cundy v Lindsay LR 3 App Cas 459
36.Griffith v Brymer 1903 19 T.L.R. 434.
37.Ingram v Little [1961] 1 QB 31
38.Bai Vijili v Nansa Nagur (1886) I.L.R. 10 B. 152

39.Sumitra Devi Agarwal v Sulekha AIR 1976 Cal 196

40.Pearce v Brooks (1865) LR 1 Ex 213
41.Nordenfelt v Nordenfelt [1894] AC 535
42.Sb fraser v Bombay Ice Manufacturing Company (1905)ILR29BOM107

43.Guthing v Lynn (1831) 2 B7 Ad 232

44.Startup v Mcdonald (1843) 6 Mann & G 593
45.Dominion of India v Gaya Pershad AIR 1954 All 747 (A)
46.Caltex v Bhagwan Devi Marodia AIR1969SC405
47.Couturier v Hastie 1856] UKHL J3
48.Taylor v Caldwell [1863] EWHC QB J1
49.Henry v Krell [1903] 2 KB 740
50.Satyabrata Ghosh v Mugneeram 1954 SCR 310
51.Frost v Knight (1872) LR 7 Exch 111
52.Cutter v Powell 101 ER 573
53.Dominion of India v. All India Reporter AIR 1952 Nag 32
54.Hadley v Baxendale [1854] EWHC J70
55.Prema v Ahmed (1987) 1 GLR 462

INTENTION TO CREATE LEGAL

RELATIONS
 At first instance, judge Charles Sargant
held that Mr Balfour was under an
BALFOUR
obligation to support his wife.
V
JUDGMENT
BALFOUR
The Court of Appeal unanimously held
[1919] 2 KB 571 that there was no enforceable agreement,
although the depth of their reasoning
differed. Warrington LJ delivered his
BENCH
opinion first, the core part being this
WARRINGTON LJ, DUKE LJ AND passage.
ATKIN LJ
“The matter really reduces itself to an
FACTS absurdity when one considers it, because
if we were to hold that there was a
Mr Balfour was a civil engineer and
contract in this case we should have to
worked for the Government as the Director
hold that with regard to all the more or
of Irrigation in Ceylon (now Sri Lanka).
less trivial concerns of life where a wife,
Mrs Balfour was living with him. In 1915,
at the request of her husband, makes a
they both came back to England during Mr
promise to him, that is a promise which
Balfour's leave. But Mrs Balfour had
can be enforced in law. All I can say is
developed rheumatic arthritis. Her doctor
that there is no such contract here. These
advised her to stay in England, because the
two people never intended to make a
Ceylon climate would be detrimental to
bargain which could be enforced in law.
her health. Mr Balfour's boat was about to
The husband expressed his intention to
set sail, and he orally promised her £30 a
make this payment, and he promised to
month until she came back to Ceylon.
make it, and was bound in honour to
They drifted apart, and Mr Balfour wrote
continue it so long as he was in a position
saying it was better that they remain apart.
to do so. The wife on the other hand, so far
In March 1918, Mrs Balfour sued him to
as I can see, made no bargain at all. That
keep up with the monthly £30 payments.
is in my opinion sufficient to dispose of the
In July she got a decree nisi and in
case.”
December she obtained an order for
alimony. Then Duke LJ gave his. He placed weight
on the fact that the parties had not yet been
divorced, and that the promise had been
made still whilst as husband and wife.
In the Court below the plaintiff conceded
that down to the time of her suing in the
Divorce Division there was no separation,
and that the period of absence was a period
of absence as between husband and wife
living in amity. An agreement for
separation when it is established does
involve mutual considerations.
That was why in Eastland v Burchell 3
QBD 432, the agreement for separation
was found by the learned judge to have
been of decisive consequence. But in this
case there was no separation agreement at
all. The parties were husband and wife,
and subject to all the conditions, in point
of law, involved in that relationship. It is
impossible to say that where the
relationship of husband and wife exists,
and promises are exchanged, they must be
deemed to be promises of a contractual
nature. In order to establish a contract
there ought to be something more than
mere mutual promises having regard to the
domestic relations of the parties. It is
required that the obligations arising out of
that relationship shall be displaced before
either of the parties can found a contract
upon such promises. The formula which
was stated in this case to support the claim
of the lady was this: In consideration that
you will agree to give me 30l. a month I
will agree to forego my right to pledge
your credit. In the judgment of the
majority of the Court of Common Pleas in
Jolly v Rees (1864) 15 C. B. (N. S.) 628,
which was affirmed in the decision of
Debenham v Mellon (1880) 6 App. Cas.
24 Erle C.J. states this proposition: “But
taking the law to be, that the power of the
wife to charge her husband is in the
capacity of his agent, it is a solecism in
reasoning to say that she derives her
authority from his will, and at the same
time to say that the relation of wife creates
the authority against his will, by a
presumptio juris et de jure from marriage.”
What is said on the part of the wife in this
case is that her arrangement with her
husband that she should assent to that
which was in his discretion to do or not to
do was the consideration moving from her
to her husband. The giving up of that
which was not a right was not a
consideration. The proposition that the
mutual promises made in the ordinary
domestic relationship of husband and wife
of necessity give cause for action on a
contract seems to me to go to the very root
of the relationship, and to be a possible
fruitful source of dissension and
quarrelling. I cannot see that any benefit
would result from it to either of the parties,
but on the other hand it would lead to
unlimited litigation in a relationship which
should be obviously as far as possible
protected from possibilities of that kind. I
think, therefore, that in point of principle
there is no foundation for the claim which
is made here, and I am satisfied that there
was no consideration moving from the
wife to the husband or promise by the
husband to the wife which was sufficient
to sustain this action founded on contract. I
think, therefore, that the appeal must be
allowed.”
Lord Justice Atkin took a different
approach, emphasising that there was no
"intention to effect legal relations". That
was so because it was a domestic
agreement between husband and wife, and
it meant the onus of proof was on the
plaintiff, Mrs Balfour. She did not rebut
the presumption.
“The defence to this action on the alleged
contract is that the defendant, the husband,
entered into no contract with his wife, and
for the determination of that it is necessary
to remember that there are agreements
between parties which do not result in
contracts within the meaning of that term
in our law. The ordinary example is where
two parties agree to take a walk together,
or where there is an offer and an
acceptance of hospitality. Nobody would
suggest in ordinary circumstances that
those agreements result in what we know
as a contract, and one of the most usual
forms of agreement which does not
constitute a contract appears to me to be
the arrangements which are made between
husband and wife. It is quite common, and
it is the natural and inevitable result of the
relationship of husband and wife, that the
two spouses should make arrangements
between themselves - agreements such as
are in dispute in this action - agreements
for allowances, by which the husband
agrees that he will pay to his wife a certain
sum of money, per week, or per month, or
per year, to cover either her own expenses
or the necessary expenses of the household
and of the children of the marriage, and in
which the wife promises either expressly
or impliedly to apply the allowance for the
purpose for which it is given. To my mind
those agreements, or many of them, do not
result in contracts at all, and they do not
result in contracts even though there may
be what as between other parties would
constitute consideration for the agreement.
The consideration, as we know, may
consist either in some right, interest, profit
or benefit accruing to one party, or some
forbearance, detriment, loss or
responsibility given, suffered or
undertaken by the other. That is a well-
known definition, and it constantly
happens, I think, that such arrangements
made between husband and wife are
arrangements in which there are mutual
promises, or in which there is
consideration in form within the definition
that I have mentioned. Nevertheless they
are not contracts, and they are not
contracts because the parties did not intend
that they should be attended by legal
consequences. To my mind it would be of
the worst possible example to hold that
agreements such as this resulted in legal
obligations which could be enforced in the
Courts. It would mean this, that when the
husband makes his wife a promise to give
her an allowance of 30s. or 2l. a week,
whatever he can afford to give her, for the
maintenance of the household and
children, and she promises so to apply it,
not only could she sue him for his failure
in any week to supply the allowance, but
he could sue her for non-performance of
the obligation, express or implied, which
she had undertaken upon her part. All I can
say is that the small Courts of this country
would have to be multiplied one
hundredfold if these arrangements were
held to result in legal obligations. They are
not sued upon, not because the parties are
reluctant to enforce their legal rights when
the agreement is broken, but because the
parties, in the inception of the
arrangement, never intended that they
should be sued upon. Agreements such as
these are outside the realm of contracts
altogether. The common law does not
regulate the form of agreements between
spouses. Their promises are not sealed
with seals and sealing wax. The
consideration that really obtains for them
is that natural love and affection which
counts for so little in these cold Courts.
The terms may be repudiated, varied or
renewed as performance proceeds or as
disagreements develop, and the principles
of the common law as to exoneration and
discharge and accord and satisfaction are
such as find no place in the domestic code.
The parties themselves are advocates,
judges, Courts, sheriff's officer and
reporter. In respect of these promises each
house is a domain into which the King's
writ does not seek to run, and to which his
officers do not seek to be admitted. The
only question in this case is whether or not
this promise was of such a class or not. For
the reasons given by my brethren it
appears to me to be plainly established that
the promise here was not intended by
either party to be attended by legal
consequences. I think the onus was upon
the plaintiff, and the plaintiff has not
established any contract. The parties were
living together, the wife intending to
return. The suggestion is that the husband
bound himself to pay 30l. a month under
all circumstances, and she bound herself to
be satisfied with that sum under all
circumstances, and, although she was in
ill-health and alone in this country, that out
of that sum she undertook to defray the
whole of the medical expenses that might
fall upon her, whatever might be the
development of her illness, and in MERRITT
whatever expenses it might involve her. To
V
my mind neither party contemplated such a
result. I think that the parol evidence upon MERRITT

which the case turns does not establish a

contract. I think that the letters do not
[1970] EWCA Civ 6
evidence such a contract, or amplify the
oral evidence which was given by the wife, [1970] 1 WLR 1211
which is not in dispute. For these reasons I
think the judgment of the Court below was
BENCH
wrong and that this appeal should be
allowed.” LORD DENNING J

FACTS

Mr Merritt and his wife jointly owned a

house. Mr Merritt left to live with another
woman. They made an agreement (signed)
that Mr Merritt would pay Mrs Merritt a
£40 monthly sum, and eventually transfer
the house to her, if Mrs Merritt kept up the
monthly mortgage payments. When the
mortgage was paid Mr Merritt refused to
transfer the house.

JUDGMENT

The Court of Appeal held that nature of the

dealings, and the fact that the Merritts
were separated when they signed their
contract, allowed the court to assume that
their agreement was more than a domestic
arrangement. Lord Denning MR stated:

“The husband and the wife were married

as long ago as 1941. After the war, in 1949
they got a building plot and built a house.
It was a freehold house, 133 Clayton Road,
Hook, Chessington. It was in the
husband’s name, with a considerable sum
on mortgage with a building society. There
they lived and brought up their three
children, two daughters, now aged 20 and
17, and a boy now 14. The wife went out
to work and contributed to the household
expenses.
Early in 1966 they came to an agreement
whereby the house was to be put in joint
names. That was done. It reflected the
legal position when a house is acquired by
a husband and wife by financial
contributions of each. But, unfortunately,
about that time the husband formed an
attachment for another woman. He left the
house and went to live with her. The wife
then pressed the husband for some
arrangement to be made for the future. On
25 May, they talked it over in the
husband’s car. The husband said that he
would make the wife a monthly payment
of £40 and told her that out of it she would
have to make the outstanding payments to
the building society. There was only £180
outstanding. He handed over the building
society’s mortgage book to the wife. She
was herself going out to work, earning net
£7 10s a week. Before she left the car she
insisted that he put down in writing a
further agreement. It forms the subject of
the present action. He wrote these words
on a piece of paper:
‘In consideration of the fact that you will
pay all charges in connection with the
house at 133, Clayton Road, Chessington,
Surrey, until such time as the mortgage
repayment has been completed, when the
mortgage has been completed I will agree
to transfer the property in to your sole
ownership. Signed. John B. Merritt
25.5.66.’
The wife took that paper away with her.
She did, in fact, over the ensuing months
pay off the balance of the mortgage, partly,
maybe, out of the money the husband gave
her, £40 a month, and partly out of her
own earnings. When the mortgage had
been paid off, he reduced the £40 a month
to £25 a month.
The wife asked the husband to transfer the
house into her sole ownership. He refused
to do so. She brought an action in the
Chancery Division for a declaration that
the house should belong to her and for an
order that he should make the conveyance.
The judge, Stamp J, made the order; but
the husband now appeals to this court.
The first point taken on his behalf by
counsel for the husband was that the
agreement was not intended to create legal
relations. It was, he says, a family
arrangement such as was considered by the
court in Balfour v Balfour and in Jones v
Padavatton. So the wife could not sue on
it. I do not think that those cases have any
application here. The parties there were
living together in amity. In such cases their
domestic arrangements are ordinarily not
intended to create legal relations. It is
altogether different when the parties are
not living in amity but are separated, or
about to separate. They then bargain
keenly. They do not rely on honourable
understandings. They want everything cut
and dried. It may safely be presumed that
they intend to create legal relations.
Counsel for the husband then relied on the
recent case of Gould v Gould', when the
parties had separated, and the husband
agreed to pay the wife £12 a week ‘so long
as he could manage it’. The majority of the
court thought that those words introduced
such an element of uncertainty that the
agreement was not intended to create legal
relations. But for that element of
uncertainty, I am sure that the majority
would have held the agreement to be
binding. They did not differ from the
general proposition which I stated ([1969]
3 All ER at 730, [1970] 1 QB at 280):
‘When … husband and wife, at arm’s
length, decide to separate and the husband
promises to pay a sum as maintenance to
the wife during the separation, the court
does, as a rule, impute to them an intention
to create legal relations.’
In all these cases the court does not try to
discover the intention by looking into the
minds of the parties. It looks at the
situation in which they were placed and
asks itself: would reasonable people regard
the agreements as intended to be binding?
Counsel for the husband sought to say that
this agreement was uncertain because of
the arrangement for £40 a month
maintenance. That is obviously untenable.
Next he said that there was no
consideration for the agreement. That point
is no good. The wife paid the outstanding
amount to the building society. That was
ample consideration. It is true that the
husband paid her £40 a month which she
may have used to pay the building society.
But still her act in paying was good
consideration. Counsel for the husband
took a small point about rates. There was
nothing in it. The rates were adjusted fairly
between the parties afterwards. Finally,
counsel for the husband said that, under s
17 of the Married Women’s Property Act
1882, this house would be owned by the
husband and the wife jointly; and that,
even if this house were transferred to the
wife, she should hold it on trust for them
both jointly. There is nothing in this point
either. The paper which the husband
signed dealt with the beneficial ownership
of the house. It was intended to belong
entirely to the wife.
I find myself in entire agreement with the
judgment of Stamp J. This appeal should
be dismissed

CARLILL claimed it to be a cure for influenza and a

number of other diseases. (The 1889–1890
V
flu pandemic was estimated to have killed
CARBOLIC SMOKE BALL 1 million people.) The smoke ball was a
COMPANY rubber ball with a tube attached. It was

[1892] EWCA CIV 1 filled with carbolic acid (or phenol). The
tube would be inserted into a user's nose
and squeezed at the bottom to release the
COURT MEMBERSHIP vapours. The nose would run, ostensibly
flushing out viral infections.
JUDGE(S) SITTING
The Company published advertisements in
LINDLEY LJ, BOWEN LJ AND AL
the Pall Mall Gazette and other
SMITH LJ
newspapers on November 13, 1891,
FACTS
claiming that it would pay £100
The Carbolic Smoke Ball Co. made a (equivalent to £11,000 in 2018) to anyone
product called the "smoke ball" and who got sick with influenza after using its
product according to the instructions
provided with it.
£100 reward will be paid by the Carbolic
Smoke Ball Company to any person who
contracts the increasing epidemic influenza
colds, or any disease caused by taking
cold, after having used the ball three times
daily for two weeks, according to the
printed directions supplied with each ball.
£1000 is deposited with the Alliance Bank,
Regent Street, showing our sincerity in the
matter. During the last epidemic of
influenza many thousand carbolic smoke
balls were sold as preventives against this
disease, and in no ascertained case was the
disease contracted by those using the
carbolic smoke ball.
One carbolic smoke ball will last a family
several months, making it the cheapest
remedy in the world at the price, 10s. post
free. The ball can be refilled at a cost of 5s.
Address: “Carbolic Smoke Ball
Company”, 27, Princes Street, Hanover
Square, London.
Mrs. Louisa Elizabeth Carlill saw the
advertisement, bought one of the balls and
used it three times daily for nearly two
months until she contracted the flu on 17
January 1892. She claimed £100 from the
Carbolic Smoke Ball Company. They
ignored two letters from her husband, a
solicitor. On a third request for her reward,
they replied with an anonymous letter that
if it is used properly the company had
complete confidence in the smoke ball's
efficacy, but "to protect themselves against
all fraudulent claims", they would need her
to come to their office to use the ball each
day and be checked by the secretary. Mrs.
Carlill brought a claim to court. The
barristers representing her argued that the
advertisement and her reliance on it was a
contract between the company and her, so
the company ought to pay. The company
argued it was not a serious contract.
JUDGMENT
The Carbolic Smoke Ball Company,
represented by H. H. Asquith, lost its
argument at the Queen's Bench. It
appealed straight away. The Court of
Appeal unanimously rejected the
company's arguments and held that there
was a fully binding contract for £100 with
Mrs. Carlill. Among the reasons given by
the three judges were
(1) that the advertisement was not a
unilateral offer to all the world but an offer
restricted to those who acted upon the
terms contained in the advertisement
(2) that satisfying conditions for using the
smoke ball constituted acceptance of the
offer
(3) that purchasing or merely using the
smoke ball constituted good consideration,
because it was a distinct detriment incurred
at the behest of the company and,
furthermore, more people buying smoke
balls by relying on the advertisement was a
clear benefit to Carbolic
(4)that the company's claim that £1000
was deposited at the Alliance Bank
showed the serious intention to be legally
bound. The judgments of the court were as
follows.
Lord Justice Lindley
Lindley LJ gave the first judgment on it,
after running through the facts again. He
makes short shrift of the insurance and
wagering contract arguments that were
dealt with in the Queen's Bench.
“I will begin by referring to two points
which were raised in the Court below. I
refer to them simply for the purpose of
dismissing them. First, it is said no action
will lie upon this contract because it is a
policy. You have only to look at the
advertisement to dismiss that suggestion.
Then it was said that it is a bet. Hawkins,
J., came to the conclusion that nobody ever
dreamt of a bet, and that the transaction
had nothing whatever in common with a
bet. I so entirely agree with him that I pass
over this contention also as not worth
serious attention.
Then, what is left? The first observation I
will make is that we are not dealing with
any inference of fact. We are dealing with
an express promise to pay £100. in certain
events. Read the advertisement how you
will, and twist it about as you will, here is
a distinct promise expressed in language
which is perfectly unmistakable —
“£100. reward will be paid by the Carbolic
Smoke Ball Company to any person who
contracts the influenza after having used
the ball three times daily for two weeks
according to the printed directions
supplied with each ball.”
He follows on with essentially five points.
First, the advertisement was not "mere
puff" as had been alleged by the company,
because the deposit of £1000 in the bank
evidenced seriousness. Second, the
advertisement was an offer made
specifically to anyone who performed the
conditions in the advertisement rather than
a statement "not made with anybody in
particular." Third, communication of
acceptance is not necessary for a contract
when people's conduct manifests an
intention to contract. Fourth, that the
vagueness of the advertisement's terms
was no insurmountable obstacle. And fifth,
the nature of Mrs. Carlill's consideration
(what she gave in return for the offer) was
good, because there is both an advantage
in additional sales in reaction to the
advertisement and a "distinct "inconvenience" of using it, and the
inconvenience" that people go to when company got the benefit of extra sales.
using a smoke ball.

LORD JUSTICE BOWEN

GALLOWAY
Bowen LJ's opinion was more tightly
V
structured in style and is frequently cited.
Five main steps in his reasoning can be GALLOWAY

identified. First, he says that the contract (1914) 30 TLR 531

was not too vague to be enforced, because
it could be interpreted according to what
ordinary people would understand by it. BENCH
He differed slightly from Lindley LJ on
JUDGE MITCHELL.
what time period one could contract flu
and still have a claim (Lindley LJ said a
"reasonable time" after use, while Bowen FACTS
LJ said "while the smoke ball is used"),
The presumption that the husband is the
but this was not a crucial point, because
supporting spouse, and thus by definition
the fact was that Mrs. Carlill got flu while
that the wife is the dependent spouse,
using the smoke ball. Second, like Lindley
controls until evidence has been presented
LJ, Bowen LJ says that the advert was not
tending to show that the wife is not in fact
mere puff because £1000 was deposited in
a dependent spouse, and the husband has
the bank to pay rewards. Third, he said that
not borne his burden in such cases until he
although an offer was made to the whole
has offered evidence tending to show that
world, the contract was not with the whole
his wife is neither substantially dependent
world. Therefore, it was not an absurd
upon him for her maintenance and support
basis for a contract, because only the
nor substantially in need of maintenance
people who used it would bind the
and support by him.
company. Fourth, he says that
communication is not necessary to accept JUDGEMENT
the terms of an offer; conduct is and Finding by the trial court that plaintiff wife
should be sufficient. Fifth, good had been gainfully employed prior to her
consideration was clearly given by Mrs. marriage to the defendant and was "able-
Carlill because she went to the bodied, intelligent and capable to find
employment" was not sufficient to support
the trial court's conclusion that plaintiff
was not a dependent spouse within the
meaning of, as it did not include a finding
that the plaintiff had a reasonable
opportunity to but did not adequately
support herself.
William A. Smith, Jr., for plaintiff
appellant.
The plaintiff instituted this action against
the defendant for alimony pendente lite,
permanent alimony and attorney's fees by
the filing of a complaint on 21 November
1977. During the hearing before the trial
court on these matters, the plaintiff
presented evidence tending to show that
she and the defendant were married to
each other on 17 August 1973. During the
latter part of 1975, the parties separated
and lived apart for approximately one year.
They reunited in December of 1976 and
moved their residence to Raleigh. Prior to
that time, the plaintiff had been working
part-time in her parents' motel in Wilson.
Despite her husband's objections, the
plaintiff continued to work at the motel in
Wilson after the couple had moved to
Raleigh. She normally worked at the motel
from 9:00 a.m. until 3:00 p.m., but about
twice every three weeks she was required
to stay at the motel overnight. The
plaintiff's weekly salary during this period
ranged from $60 to $90 depending upon
whether she worked on weekends.
On 27 October 1977 the plaintiff left a
message for her husband informing him
that she was planning to spend the night at
the motel in Wilson. The defendant called
the plaintiff at about 6:00 p.m. and told her
that he wanted her to come to Raleigh and
take all of her belongings out of the house
they were occupying. The next day, the
plaintiff complied with the defendant's
request.
The plaintiff's evidence further tended to
show that she then moved to her parents'
motel in Wilson. She helped with the work
at the motel when she was needed but was
not paid a regular salary and did not want a
regular salary. In addition to room and
board, however, the plaintiff's mother
occasionally gave her money for car
payments when she needed such money
and gave her "some spending money." The
plaintiff testified that she did not have any
regular source of income and that the
defendant had not provided any support for
her since their separation. In addition,
evidence was introduced tending to show
that the defendant had a gross income of
less than $13,200 per year and a net
income of approximately $8,400 per year.
The defendant introduced evidence tending
to show that he objected to the plaintiff
working at the motel during their marriage dependent spouse within the intent and
and asked her to quit working there. He meaning of the General Statutes of North
testified that she often failed to return from Carolina. From the entry of judgment
the motel until 6:00 p.m. or 7:00 p.m. and reflecting these findings and conclusions
would at times return as late as 9:00 p.m. by the trial court, the plaintiff appealed.
In addition, he testified that she spent the
MITCHELL, Judge.
night at the motel from three to five times
a month during this period. Only a dependent spouse is entitled to
alimony or alimony pendente lite. G.S. 50-
At the conclusion of the hearing on these
16.2 and 16.3. A dependent spouse is by
matters, the trial court found among other
definition married to a supporting spouse
things that the defendant had ordered the
since a dependent spouse always has a
plaintiff out of their home on 27 October
spouse "upon whom [he or she] is actually
1977 and had provided no support for the
substantially dependent or from whom [he
plaintiff since that time. The trial court
or she] is substantially in need of
also found that the plaintiff was gainfully
maintenance and support." Conversely, a
employed prior to the marriage and living
supporting spouse is by definition married
in her own apartment and was, at the time
to a dependent spouse. Therefore, a
of the hearing, "able-bodied, intelligent
determination that one spouse is a
and capable to find employment." The trial
supporting spouse is a determination that
court further found that the plaintiff had, at
the other is a dependent spouse and vice
the time of the hearing, no salary other
versa.
than room, board and spending money as
provided by her parents and that the A dependent spouse is "a spouse, whether

defendant had a net income of husband or wife, who is actually

approximately $8,400 per year. Based substantially dependent upon the other

upon its findings, the trial court concluded spouse for his or her maintenance and

that the defendant abandoned the plaintiff support or is substantially in need of

on 27 October 1977. The Court also maintenance and support from the other

concluded that the plaintiff was not spouse." A wife is actually substantially

substantially dependent upon the defendant dependent upon her husband for her

for her maintenance and support or in maintenance and support or in substantial

substantial need of maintenance and need of support by him if she is incapable

support and was not, therefore, a of adequately providing for herself or is

capable of adequately providing for herself
but does not have a reasonable opportunity
to do so.
Once it is established, however, that the
defendant is the plaintiff's husband and
that he is capable of supporting her, the
defendant is presumed to be the supporting
spouse provides in part that, "A husband is
deemed to be the supporting spouse unless
he is incapable of supporting his wife."
This sentence of the statute establishes a
presumption that a male spouse is the
supporting spouse and, conversely, that the
female is the dependent spouse. The
defendant did not seek during the hearing
before the trial court, nor has he sought
before this Court, to challenge this
presumption on the ground that it
constitutes unconstitutionally gender based
discrimination. Therefore, we are not
required to express an opinion here with
regard to the very substantial constitutional
questions which would arise should this
portion of the statute be challenged on
constitutional grounds.
The presumption that the husband is the
supporting spouse, and thus by definition
that the wife is the dependent spouse,
controls until evidence has been presented
tending to show that the wife is not in fact
a dependent spouse. The husband has not
borne his burden in such cases until he has
offered evidence tending to show that his
wife is neither substantially dependent
upon him for her maintenance and support
nor substantially in need of maintenance
and support by him. G.S. 50-16.1(3). Such
evidence may be presented in the form of
evidence tending to show that the wife is
in fact adequately supporting herself or is
capable of adequately supporting herself
and has a reasonable opportunity to do so
but has not sought to support herself. Cf.
Conrad v. Conrad, 252 N.C. 412, 113
S.E.2d 912 (1960) (capacity of supporting
husband to earn rather than actual earnings
considered in determining amount of
alimony); Robinson v. Robinson, 10 N.C.
App. 463, 179 S.E.2d 144 (1971) (same).
The trial court in the present case found
that the plaintiff wife had been gainfully
employed prior to her marriage to the
defendant and was "able-bodied,
intelligent and capable to find
employment." This finding was not
sufficient, however, to support the trial
court's conclusion that the plaintiff was not
a dependent spouse within the meaning of
G.S. 50-16.1(3), as it did not include a
finding that the plaintiff had a reasonable
opportunity to but did not adequately
support herself.
Additionally, the evidence presented
would not have supported such a finding.
Evidence of a reasonable opportunity by
the wife to adequately support herself
might have been shown by introducing
evidence, if any existed, that the plaintiff
did not make reasonable efforts to obtain
employment for which she was suited and
which was available, that she had refused
employment opportunities that
available to her, or that she had been
employed in a manner which would have
adequately supported her but terminated
such employment in order to establish her
status as a dependent spouse. As the
defendant failed to offer sufficient
evidence to overcome the presumption that
the plaintiff was a dependent spouse, the
trial court erred in concluding in the order
appealed from that the plaintiff was not a
dependent spouse.
We additionally note that the order
appealed from was entered more than one
year ago and that some change in the
conditions of the parties is likely. Further,
the record on appeal does not reflect any
evidence with regard to the reasonable
value of attorney's fees sought by the
plaintiff. For the reasons previously stated,
the order of the trial court from which the
plaintiff has appealed will be vacated and
the cause remanded to the trial court for a
new hearing with regard to the plaintiff's
application for alimony pendente lite and
counsel fees and for such other actions as
accord with applicable law and the present
status of the parties.
INVITATION TO OFFER
were
HARVEY V FACIE
1893 UKPC 1
RULING COURT:
JUDICIAL COMMITTEE OF THE
PRIVY Council
FACTS
Letters were written back and forth
Harvey – Will you sell us bumper hall
pen? Telegraph lowest price -answer paid.
Facey – Lowest price for bumper hall is
$900.
Harvey – We agree to buy bumper hall for
the sum of $900 asked by you.
Harvey sued for specific performance of
this agreement and for an injunction to
restrain the town of Kingston from taking
conveyance of the property (Facey was
previously engaged in negotiations to sell
the land to Kingston)
PROCEDURAL HISTORY
Trial court dismissed the action on the
ground that the agreement did not disclose
a concluded contract. Appealed by
plaintiffs, Supreme court of Jamaica
reversed the decision. Defendant’s of Kingston to sell a piece of property to
appealed to the judicial committee of privy Kingston City. On 7 October 1893, Facey
council was traveling on a train between Kingston
and Porus and the appellant, Harvey, who
ISSUE
wanted the property to be sold to him
Was there an explicit offer from Facey to rather than to the City, sent Facey a
sell the land for $900 to Harvey? telegram. It said, "Will you sell us Bumper

HOLDING Hall Pen? Telegraph lowest cash price-

answer paid". Facey replied on the same
No, there was not.
day: "Lowest price for Bumper Hall Pen
RULE £900." Harvey then replied in the
following words. "We agree to buy
An offer CAN NOT be implied by writing.
Bumper Hall Pen for the sum of nine
It can only be concrete and sound…The
hundred pounds asked by you. Please send
appellants can’t imply that Facey made an
us your title deed in order that we may get
offer when he, as a matter of fact, did not
early possession."
make an offer.
Facey, however refused to sell at that
REASONING
price, at which Harvey sued. Harvey had
(from Harvey) 1st question was
his action dismissed at trial but won his
willingness to sell, 2nd question asks the
claim on the Court of Appeal, which
lowest price. Facey only replied to the
reversed the trial court decision, declaring
second question in regard to the price.
that a binding agreement had been proved.
Harvey treated his response as an
The appellants obtained leave from the
unconditional off to sell them the price
Supreme Court of Judicature of Jamaica to
named. Only binding aspect is the lowest
appeal to the Queen in Council (i.e. the
price in regard to a contract being formed.
Privy Council). The Privy Council
Agreement could have ONLY been legit if
reversed the Supreme Court's opinion,
Facey responded to the third telegram from
reinstating the appeals court's decision and
Harvey.
stating the reason for its action.
The case involved negotiations over a
The Privy Council advised that no contract
property in Jamaica. The defendant, Mr
existed between the two parties. The first
LM Facey, had been carrying on
telegram was simply a request for
negotiations with the Mayor and Council
information, so at no stage did the
defendant make a definite offer that could argued that under the Pharmacy and
be accepted. Lord Morris LC gave the Poisons Act 1933, that was an unlawful
following judgment practice. Under s 18(1), a pharmacist
needed to supervise at the point where "the
DISPOSITION
sale is effected" when the product was one
Reversed, judgment to the trial court in listed on the 1933 Act's schedule of
favour of Harvey is restored. poisons. The Society argued that displays
of goods were an "offer" and when a
shopper selected and put the drugs into
their shopping basket, that was an
"acceptance", the point when the "sale is
effected"; as no pharmacist had supervised
PHARMACEUTICAL SOCIETY OF
the transaction at this point, Boots was in
GB
breach of the Act. Boots argued that the
V
sale was effected only at the tills.
BOOTS CASH CHEMIST
JUDGMENT
[1953] 1 All ER 482, [1953] 2 WLR 427
Both the Queen's Bench Division of the
High Court and the Court of Appeal sided
with Boots. They held that the display of
BENCH
goods was not an offer. Rather, by placing
SOMERVELL LJ, BIRKETT LJ AND the goods into the basket, it was the
ROMER LJ customer that made the offer to buy the

FACTS goods. This offer could be either accepted

or rejected by the pharmacist at the cash
Boots Cash Chemists had just instituted a
desk. The moment of the completion of
new way for its customers to buy certain
contract was at the cash desk, in the
medicines. Shoppers could now pick drugs
presence of the supervising pharmacist.
off the shelves in the chemist and then pay
Therefore, there was no violation of the
for them at the till. Before then, all
Act.
medicines were stored behind a counter
meaning a shop employee would get what Somervell LJ said,

was requested. The Pharmaceutical “Whether that is a right view depends on

Society of Great Britain objected and what are the legal implications of this
layout, the invitation to the customer. Is it
to be regarded as an offer which is
completed and both sides bound when the
article is put into the receptacle, or is it to
be regarded as a more organised way of
doing what is done already in many types
of shops — and a bookseller is perhaps the
best example - namely, enabling customers
to have free access to what is in the shop
to look at the different articles and then,
ultimately, having got the ones which they
wish to buy, coming up to the assistant
and saying "I want this"? The assistant in
999 times out of 1,000 says "That is all
right", and the money passes and the
transaction is completed. I agree entirely
with what the Lord Chief Justice says and
the reasons he gives for his conclusion
that in the case of the ordinary shop,
although goods are displayed and it is
intended that customers should go and
choose what they want, the contract is not
completed until, the customer having
indicated the articles which he needs, the
shop-keeper or someone on his behalf
accepts that offer. Then the contract is
completed. I can see no reason at all, that
being I think clearly the normal position,
for drawing any different implication as a
result of this layout. The Lord Chief
Justice, I think, expressed one of the most
formidable difficulties in the way of the
suggestion when he pointed out that, if the
Plaintiffs are right, once an article has
been placed in the receptacle the customer
himself is bound and he would have no
right without paying for the first article to
substitute an article which he saw later of
the same kind and which he perhaps
preferred. I can see no reason for implying
from this arrangement which the
Defendants have referred to any
implication other than that which the Lord
Chief Justice found in it, namely, that it is
a convenient method of enabling
customers to see what there is and choose
and possibly put back and substitute
articles which they wish to have and then
go up to the cashier and offers to buy what
they have so far chosen. On that
conclusion the case fails, because it is
admitted that then there was supervision
in the sense required by the Act and at the
appropriate moment of time. For these
reasons, in my opinion, the appeal should
be dismissed. ”
Birkett LJ followed on by saying,
“The short point of the matter was, at what
point of time did the sale in this particular
shop at Edgware take place? My Lord has
explained the system which has been
introduced into that shop (and possibly
other shops since) in March 1951. The two
ladies in this case, Miss Mainwaring and
Miss Marrable, who went into that shop,
each took a particular package containing
poison from the particular shelf, put it into
their basket, came to the exit and there
paid. It is said upon the one hand that
when the customer takes the package from
the poison section and puts it into her
basket the sale there and then takes place,
On the other hand, it is said the sale does
not take place until that customer who has
placed that package in the basket comes to
the exit.
The Lord Chief Justice dealt with the
matter in this way, and I would like to
adopt these words:
"It seems to me therefore, applying
common sense to this class of transaction,
there is no difference merely because a
self-service is advertised. It is no different
really from the normal transaction in a
shop. I am quite satisfied it would be
wrong to say the shopkeeper is making an
offer to sell every article in the shop to any
person who might come in and that he can
insist by saying 'I accept your offer'".
think I am bound to say in this case the
sale was made under the supervision of a
pharmacist. By using the words 'The sale
is effected by, or under the supervision of,
a registered pharmacist', it seems to me
the sale might be effected by somebody not
a pharmacist. If it be under the
supervision of a pharmacist, the
pharmacist can say 'You cannot have that.
That contains poison'. In this case I
decide, first that there is no sale effected
merely by the purchaser taking up the
article. There is no sale until the buyer's
offer to buy is accepted by the acceptance
of the money, and that takes place under
the supervision of a pharmacist. And in
any case, I think, even if I am wrong in the
view I have taken of when the offer is
accepted, the sale is by or under the
supervision of a pharmacist".
I agree with that and I agree that this
appeal ought to be dismissed.

Then he goes on to deal with the

illustration of the bookshop and continues:

"Therefore, in my opinion, the mere fact

that a customer picks up a bottle of
medicine from the shelves in this case does
not amount to an acceptance of an offer to
sell. It is an offer by the customer to buy. I
daresay this case is one of great
importance, it is quite a proper case for
the Pharmaceutical Society to bring, but I
 the reward offered by plaintiff under the
hand bills issued by him.

An appeal is filed against the order of

subordinate court in the High Court of
Allahabad in order to provide claim of Rs.
49 to the appellant.

Statutes and provisions involved:

OFFER MUST BE COMMUNICATED § 2 (h), and 8 of Indian Contracts Act,

TO THE OFFEREE 1872

Issues Dealt:

1. Whether the claim of Rs. 499 should be

LALMAN SHUKLA
provided to the appellant or not?
V
2. Whether subordinate court’s decision
GAURI DATT
was according to the general principles of
1913 40 ALJ 489 law or not?

FACTS

BENCH In the January, 1913 defendant’s nephew

has absconded from his house and in order
BANNERJI J.
to find his nephew he sent all his servants
BACKGROUND to different parts, so that he can be traced

Plaintiff was a servant of defendant who at his position. Defendant was among

was sent to Hardwar for finding the those several servants who were sent for

nephew of his master, who has absconded the search of master’s child. He was sent

from his house. The servant was able to to Hardwar from Cawnpore and there he

find the missing child and he was was able to trace the child and for this

rewarded with two sovereigns and Rs. 20. accomplishment he was awarded with two

Later on after 6 months when he was sovereigns and Rs. 20 when he returned to

dismissed from his work he brought a suit Cawnpore. In the meantime when plaintiff

against his masters claiming Rs. 499 for was at the search of child defendant issued
a hand bill offering reward of Rs. 501 to
the person who traces the missing child
and defendant was totally ignorant of this
reward.
Later on after 6 months of this incident
plaintiff brought a suit against his master
claiming Rs. 499 stating that the master
had promised to the person who will find
the missing child a reward. He alleged his
master of not providing reward for the
specific performance of his promise.
CONTENTIONS OF BOTH THE
PARTIES
PETITIONERS
The petitioners strongly contended that
performance of an act is sufficient for
providing rewards attached with such
performance. They stated that it is
immaterial that whether person performing
the act has knowledge of rewards
associated with it or not. He also argued
that § 8 of the Indian Contracts Act, 1872
states that performance of a condition of
proposal is an acceptance of proposal and
in the present case the condition was that
the person who will find the missing child
will be rewarded and thus as per this
provision he has fulfilled the condition,
hence plaintiff is entitled to claim reward.
RESPONDENTS
It was contended by the respondents that
there must be an acceptance to offer in
order to convert it into a contract and
assent is the basic essential in order to
constitute a contract. At the time he was
tracing the boy he was unaware about this
reward associated with child, so without
knowledge how can it create a contract
between parties.
It was also argued by them that at the time
of tracing the missing child he was acting
as a servant and thus fulfilling the
responsibilities and obligations for which
he was sent to Hardwar from Cawnpore.
JUDGMENT
It was held by the Honorable Court that
knowledge and assent about a proposal is
must in order to convert a proposal into
enforceable agreement and in the present
case plaintiff was neither aware nor has
assent about the particular act. It was also
said by the Honorable Judge that plaintiff
was merely fulfilling his obligations at the
time when he was tracing the boy.
So, the appeal was dismissed and it was
held that plaintiff was not entitled to claim
reward for finding the missing boy. In this
case it was highlighted by the Honorable
High Court of Allahabad that knowledge
and acceptance of a proposal are the basic
essentials in order to constitute a valid
contract. If the person gives his assent and
then performs the condition of proposal
than only he is entitled to claim rewards
associated with such proposal.
CONCLUSION
It can be concluded that through this case
it was clearly established that firstly,
acceptance or assent is a must for
converting a proposal into enforceable
contract. Secondly, parties must have
knowledge about the proposal and without
knowledge of the proposal it cannot
converted into agreement even if condition
associated with such proposal is fulfilled.
BOULTON
V
JONES
{1857} 2H AND N564
BENCH
POLLOCK CB
BRAMWELL B
FACTS
This case is based on the offer made to a
particular person. In Contract Law, an
offer is a promise in exchange for
performance by other party. An offer can
be revoked or terminated under certain
conditions.
KINDS OF OFFER
There are two kinds of offer which are as
follows:-
GENERAL OFFER – General offer is
made to the public at large. It may be
accepted by any person who fulfills the
necessary conditions.
SPECIFIC OFFER – Specific offer is
made to a particular person. No right of
action accrues to persons other than those
to whom the offer is made.
FACTS
The defendant i.e. Jones sent a written
order for goods to a shop which is owned
by Brocklehurst and which was addressed
to him by name. Unknown to the
defendant, Brocklehurst had earlier that
day sold and transferred his business to
Boulton.But Boulton fulfilled the order
and delivered the goods to the defendant
without notifying him that he had taken
over the business. The defendant accepted
the goods and consumed them in the belief
that they had been supplied by
Brocklehurst. When he received Boulton’s
invoice he refused to pay it claimimg that
he had intended to deal with Brocklehurst
personally, since he had dealt with them
previously and had a set-off on which he person’s name another person cannot sue
had intended to rely. upon it, except in cases of agency.

ISSUES “CHANNELL B” said that the plaintiff is

clearly not in a situation to sustain this
1 Is whether Jones is liable to pay
action, for there was no contract between
Boulton?
himself and the defendant. The case is not
2 Is it the duty of the Brocklehurst or one of Principal and agent; it was a
Boulton to inform about the takeover of contract made with B, who had
the business to Jones? transactions with the defendant and owed

3 Can Boulton claim the amount of the him money, and upon which A seeks to

goods which was used by the Jones? sue.” So, the Jones will not be liable to pay
{Section 64 will also apply} which talks
JUDGEMENT
about rescissions of a voidable contract.
The court held that the defendant i.e. Jones
COMMENT
was not liable for the price. When a
Contract is made for the identity of the Originally the contract is between

person is important to the Contract. Hence, Brocklehurst and Jones has no idea that

there was no Contract. “POLLOCK” said now the business is taken over by the

that the rule of law is clear, that if you Boulton. Jones assumed that he placed an

propose to make a contract with A, then B order to Brocklehurst which is the original

cannot substitute himself for A without party to the contract but not to the Boulton.

your consent and to your disadvantage, Only the person to whom the offer is made
securing to himself all the benefit of the can acceptit. No other party can accept on
contract. behalf of the either party. According to me

“MARTIN B” said that where the facts the judgement which is given in this case

prove that the defendant never meant to is right according to the facts of the case.

contract with A alone, B can never force a Acceptance is only made by that person to
contract upon him, he was dealt with A, whom it is given. For example- Contract to
and a contract with no one else can be set write a book or perform a concert, paint a
up against him. portrait then no other person can adopt the

“BRAMWELL B” said that I do not lay it contract.

down because a contract was made in one Pollock CB

 The point raised is, whether the facts
proved did no shew an intention on the
part of the defendants to deal with
Brocklehurst. The plaintiff, who succeeded
Brocklehurst in business, executed the
order without any intimation of the change
that had taken place, and brought this
action to recover the price of the goods
supplied. It is a rule of law, that if a person
intends to contract with A, B. cannot give
himself any right under it. Here the order
in writing was given to Brocklehurst.
Possibly Brocklehurst might have adopted
the act of the plaintiff in supplying the
goods, and maintained an action for their
price. But since the plaintiff has chosen to
sue, the only course the defendants could
take was to plead that there was no
contract with him.
Bramwell B
The admitted facts are, that the defendants
sent to a shop an order for goods,
supposing they were dealing
Brocklehurst. The plaintiff, who supplied
the goods, did not undeceive them. If the
plaintiff were now at liberty to sue the
defendants, they would be deprived of
their right of set-off as against
Brocklehurst. When a contract is made, in
which the personality of the contracting
party is or may be of importance, as a
contract with a man to write a book, or the
like, or where there might be a set-off, no
other person can interpose and adopt the
contract. As to the difficulty that the
defendants need not pay anybody, I do not
see why they should, unless they have
made a contract either express or implied. I
decide the case on the ground that the
defendants did not know that the plaintiff
was the person who supplied the goods,
and that allowing the plaintiff to treat the
contract as made with him would be a
prejudice to the defendants.
REVOCATION OF OFFER,
IMPORTANCE OF TIME IN A
CONTRACT
with
RAMSGATE VICTORIA HOTEL
V
MONTEFIORE
FACTS
In this case defended who applied to buy
shares in the company in June and also
paid a deposit into the company account.
So, the offer was not accepted in a
reasonable time by the company. The
acceptance took place in November and
the company informed the defendant that
shares had been allotted to him and that the
balance of the purchase price should be
paid. But at that time the value of the
shares was less and the defendant refused
to accept the shares and the court held the
refusal justified because such a proposal
should have been accepted within a
reasonable time. The period between June
and November was clearly not reasonable.
Issues: The issues in the above case deal
with: Revocation of offer by lapse of time
and provides for two situations:
Lapse of time occurring upon
expiration of the time prescribed in the
proposal for its acceptance. Therefore, the
issue in the case was that there was no
specific time limit for the acceptance of
the offer given by the defended by the
company.
By the lapse of a reasonable time, in the
above case the acceptance
communicated after a reasonable
practiced time. The issue in the case is
based on the lapse of a reasonable time
since there was no specific time was
assigned for the acceptance.
JUDGMENT
Based on the nature of a proposal, once
communicated, remains open until it lapses
or is withdrawn. Under normal
circumstances, there is no obligation for
the proposer to keep his proposal open
indefinitely.
He may revoke it at any time before
acceptance. Furthermore, one of the
conditions that automatically revoke the
proposal is the lapse of time either
specified or reasonable time limits. As in
the above case the court accepted and
judged against the plaintiff because no
specific time was prescribed by the
company and they did not communicated
their acceptance within a reasonable time
the limit.
The offer lapsed after the reasonable time
not because this must be implied in the
offer but because failure to accept the offer
within a reasonable time.
Moreover, the proposer at the beginning
when he was submitting his application
forms to be allotted shares did not allow
was
such a long period of time and as a result
or
he was winner of the case and the court
accepted his refusal to pay the share price
when the acceptance was communicated to
him. Lesson learned: Firstly, from the
above case I have learned that an offer can
be made from any party in the contract.
It is not necessarily or compulsory that the 2. Where an offer is stated to be open
offer should come from the party who ones for a reasonable length of time in
the object consideration. As, in the above which the chance for acceptance
case the offer comes from the buyer of the open utile the lapse of the
shares which are owned and to be allotted reasonable time. The reasonable
by the company. Secondly, I have learned time is based on the nature and the
about the revocation of an offer in which custom of the business which
the proposer can claim that the offer is determines for how long the door
revoked. Based on this case the revocation for the acceptance is open or what
was made based on the lapse of a is the range of time that is
reasonable time which is accepted by both acceptable for giving the
parties. acceptance after the proposal is
communicated.
Although the plaintiff which sued the
defendant in the court but because of the
lapse of a reasonable time the court judge
against the plaintiff because they didn’t
have an specific time prescribed for the
acceptance and also the reasonable time
was lapsed. To conclude my learning from
the case: The communication of proposal
can be from any party who wants to
conclude the contract with the second
party. And in the case, two possible
situations could be seen;

1. Where an offer is stated to be open ACCEPTANCE

for a specific length of time in

which the time would be prescribed
either by the proposer or by the
acceptor. So, when the acceptance BROGDEN
is not given or communicated
V
during the specified time the
proposal is revoked. METROPOLITAN RAILWAY
COMPANY
 (1876–77) L.R. 2 APP. CAS. 666
COURT
JUDICIAL COMMITTEE OF THE
HOUSE OF LORDS
FACTS
Mr Brogden, the chief of a partnership of
three, had supplied the Metropolitan
Railway Company with coals for a number
of years. Brogden then suggested that a
formal contract should be entered into
between them for longer term coal supply.
Each side's agents met together and
negotiated. Metropolitan's agents drew up
some terms of agreement and sent them to
Brogden. Brogden wrote in some parts
which had been left blank and inserted an
arbitrator who would decide upon
differences which might arise. He wrote
"approved" at the end and sent back the
agreement documents. Metropolitan's
agent filed the documents and did nothing
more. For a while, both acted according to
the agreement document's terms. But then
some more serious disagreements arose,
and Brogden argued that there had been no
formal contract actually established.
JUDGMENT
The House of Lords (The Lord Chancellor,
Lord Cairns, Lord Hatherley, Lord
Selborne, Lord Blackburn, and Lord
Gordon) held that a contract had arisen by
conduct and Brogden had been in clear
breach, so he must be liable. The word
"approved" on the document with
Brogden's name was binding on all the
partners, since Brogden was the chief
partner, even though the standard signature
of “B. & Sons” was not used. A mere
mental assent to the agreement's terms
would not have been enough, but having
acted on the terms made it so. Lord
Blackburn also held that the onus of
showing that both parties had acted on the
terms of an agreement which written
agreement had not been, in due format,
executed by either, lies upon person
alleging such facts. A key extract from
Lord Blackburn's judgment [Lord
Blackburn was one of the most
distinguished judges of his time]:
“I have always believed the law to be this,
that when an offer is made to another
party, and in that offer there is a request
express or implied that he must signify his
acceptance by doing some particular thing,
then as soon as he does that thing, he is
bound. If a man sent an offer abroad
saying: I wish to know whether you will
supply me with goods at such and such a
price, and, if you agree to that, you must
ship the first cargo as soon as you get this
letter, there can be no doubt that as soon as
the cargo was shipped .the contract would
be complete, and if the cargo went to the
bottom of the sea, it would go to the
bottom of the sea at the risk of the orderer.
So again, where, as in the case of Ex parte
Harris, a person writes a letter and says, I
offer to take an allotment of shares, and he
expressly or impliedly says, If you agree
with me send an answer by the post, there,
as soon as he has sent that answer by the
post, and put it out of his control, and done
an extraneous act which clenches the
matter, and shews beyond all doubt that
each side is bound, I agree the contract is
perfectly plain and clear.”
But when you come to the general
proposition which Mr. Justice Brett seems
to have laid down, that a simple
acceptance in your own mind, without any
intimation to the other party,
expressed by a mere private act, such as
putting a letter into a drawer, completes a
contract, I must say I differ from that. It
appears from the Year Books that as long
ago as the time of Edward IV, Chief
Justice Brian decided this very point. The
plea of the Defendant in that case justified
the seizing of some growing crops because
he said the Plaintiff had offered him to go
and look at them, and if he liked them, and
would give 2s. 6d. for them, he might take
them; that was the justification. That case
is referred to in a book which I published a
good many years ago, Blackburn on
Contracts of Sale, and is there translated.
Brian gives a very elaborate judgment,
explaining the law of the unpaid vendor's
lien, as early as that time, exactly as the
law now stands, and he consequently says:
“This plea is clearly bad, as you have not
shewn the payment or the tender of the
money;” but he goes farther, and says (I
am quoting from memory, but I think I am
quoting correctly), moreover, your plea is
utterly naught, for it does not shew that
when you had made up your mind to take
them you signified it to the Plaintiff, and
your having it in your own mind is
nothing, for it is trite law that the thought
of man is not triable, for even the devil
does not know what the thought of man is;
but I grant you this, that if in his offer to
you he had said, Go and look at them, and
and
if you are pleased with them signify it to
such and such a man, and if you had
signified it to such and such a man, your
plea would have been good, because that
was a matter of fact.
I take it, my Lords, that that, which was
said 300 years ago and more, is the law to
this day, and it is quite what Lord Justice
Mellish in Ex parte Harris accurately says,
that where it is expressly or impliedly
stated in the offer that you may accept the
offer by posting a letter, the moment you enough), that if a draft having been
post the letter the offer is accepted. You prepared and agreed upon as the basis of a
are bound from the moment you post the deed or contract to be executed between
letter, not, as it is put here, from the two parties, the parties, without waiting for
moment you make up your mind on the the execution of the more formal
subject. instrument, proceed to act upon the draft,
and treat it as binding upon them, both
But my Lords, while, as I say, this is so
parties will be bound by it. But it must be
upon the question of law, it is still
clear that the parties have both waived the
necessary to consider this case farther
execution of the formal instrument and
upon the question of fact. I agree, and I
have agreed expressly, or as shewn by
think every Judge who has considered the
their conduct, to act on the informal one. I
case does agree, certainly Lord Chief
think that is quite right, and I agree with
Justice Cockburn does, that though the
the way in which Mr. Herschell in his
parties may have gone no farther than an
argument stated it, very truly and fairly. If
offer on the one side, saying, Here is the
the parties have by their conduct said, that
draft,—(for that I think is really what this
they act upon the draft which has been
case comes to,)—and the draft so offered
approved of by Mr. Brogden, and which if
by the one side is approved by the other,
not quite approved of by the railway
everything being agreed to except the
company, has been exceedingly near it, if
name of the arbitrator, which the one side
they indicate by their conduct that they
has filled in and the other has not yet
accept it, the contract is binding.
assented to, if both parties have acted upon
that draft and treated it as binding, they
will be bound by it. When they had come
so near as I have said, still it remained to
execute formal agreements, and the parties
evidently contemplated that they were to
exchange agreements, so that each side
should be perfectly safe and secure,
knowing that the other side was bound. POSTAL RULE
But, although that was what each party
contemplated, still I agree (I think the Lord
Chief Justice Cockburn states it clearly HENTHORN
 V letter, to sell a house to B at a certain
FRASER
2 CH 27
BENCH
LORD HERSCHELL
4. Communication when complete.—The
communication of a proposal is complete
when it comes to the knowledge of the
person to whom it is made. —The
communication of a proposal is complete
when it comes to the knowledge of the
person to whom it is made." The
communication of an acceptance is
complete,— as against the proposer, when
it is put in a course of transmission to him
so as to be out of the power of the
acceptor; as against the acceptor, when it
comes to the knowledge of the proposer.
The communication of a revocation is
complete,— as against the person who
makes it, when it is put into a course of
transmission to the person to whom it is
made, so as to be out of the power of the
person who makes it; as against the
person to whom it is made, when it comes
to his knowledge. Illustrations
(a) A proposes, by letter, to sell a house to
B at a certain price. (a) A proposes, by
price." The communication of the proposal
is complete when B receives the letter. The
communication of the proposal is
complete when B receives the letter."
(b) B accepts A’s proposal by a letter sent
by post. (b) B accepts A’s proposal by a
letter sent by post." The communication of
the acceptance is complete, The
communication of the acceptance is
complete," as against A when the letter is
posted; as against A when the letter is
posted;" as against B, when the letter is
received by A. as against B, when the
letter is received by A."
(c) A revokes his proposal by telegram. (c)
A revokes his proposal by telegram." The
revocation is complete as against A when
the telegram is despatched. The revocation
is complete as against A when the
telegram is despatched." It is complete as
against B when B receives it. It is
complete as against B when B receives it."
B revokes his acceptance by telegram. B’s
revocation is complete as against B when
the telegram is despatched, and as against
A when it reaches him. B revokes his
acceptance by telegram. B’s revocation is
complete as against B when the telegram
is despatched, and as against A when it
reaches him."
FACTS
The defendant and the claimant were importance of this decision's ratio is that a
situated at Liverpool and Birkenhead postal acceptance will only be valid at the
respectively. The defendant called at the time of posting if it is reasonable for the
office of the claimant in order to negotiate offeror to expect an acceptance by post.
the purchase of some houses. The The fact that both parties were living in
defendant handed the claimant a note different towns justifies the inference that
giving him the option to purchase some both parties had contemplated that a letter
houses within 14 days. On the next day, sent by post was a mode by which
the defendant withdrew the offer by post, acceptance might be communicated
but his withdrawal did not reach the
claimant until 5 P.M. Meanwhile, the
claimant responded by post with an
unconditional acceptance of the offer,
which was delivered to the defendant after
its office had closed. The letter was opened
by the defendant the next morning.

JUDGEMENT

The Court of Appeal ordered that the

claimant was entitled to specific
performance. Lord Herschell argued:
"Where the circumstances are such that it
must have been within the contemplation
of the parties that, according to ordinary
usage of mankind, the post might be used
as a means of communicating the
acceptance of an offer, the acceptance is
complete as soon as it is posted."

SIGNIFICANCE

The case is based on a line of decision

starting with Adams v Lindsell (1818),
according to which the acceptance was
valid at the time of posting. The
 MERE SILENCE IS NOT —The communication of proposals, the
ACCEPTANCE acceptance of proposals, and the
revocation of proposals and acceptances,
respectively, are deemed to be made by
FELTHOUSE any act or omission of the party
proposing, accepting or revoking, by
V
which he intends to communicate such
BINDLEY
proposal, acceptance or revocation, or
which has the effect of communicating it."

(1862) 11 CB (NS) 869; [1862] EWHC FACTS

CP J35; 142 ER 1037
Paul Felthouse was a builder who lived in
London. He wanted to buy a horse from
his nephew, John Felthouse. After a letter
BENCH
from the nephew concerning a discussion
WILLES J, BYLES J about buying the horse, the uncle replied

KEATING J saying,

Section 2(b) of Contract Act 1872- When "If I hear no more about him, I consider

the person to whom the proposal is made the horse mine at £30.15s."

signifies his assent thereto, the proposal is The nephew did not reply. He was busy at
said to be accepted. A proposal, when auctions on his farm in Tamworth. He told
accepted, becomes a promise. the man running the auctions, William

3. Communication, acceptance and Bindley, not to sell the horse. But by

revocation of proposals.—The accident, Bindley did. Uncle Felthouse

communication of proposals, the then sued Bindley in the tort of conversion

acceptance of proposals, and the - using someone else's property

revocation of proposals and acceptances, inconsistently with their rights. But for the

respectively, are deemed to be made by Uncle to show the horse was his property,

any act or omission of the party he had to show there was a valid contract.

proposing, accepting or revoking, by Bindley argued there was not, since the

which he intends to communicate such nephew had never communicated his

proposal, acceptance or revocation, or acceptance of the uncle's offer.

which has the effect of communicating it. JUDGMENT

The court ruled that Felthouse did not have no complete bargain at that time. On the
ownership of the horse as there was no 1st of January, 1861, the nephew writes,
acceptance of the contract. Acceptance
"I saw my father on Saturday. He told me
must be communicated clearly and cannot
that you considered you had bought the
be imposed due to silence of one of the
horse for £30. If so, you are labouring
parties. The uncle had no right to impose a
under a mistake, for 30 guineas was the
sale through silence whereby the contract
price I put upon him, and you never heard
would only fail by repudiation. Though the
me say less. When you said you would
nephew expressed interest in completing
have him, I considered you were aware of
the sale there was no communication of
the price."
that intention until before the horse was
sold at auction on 25 February. The To this the uncle replies on the following

nephew's letter of 27 February which was day,

submitted as evidence by Felthouse was "Your price, I admit, was 30 guineas. I

judged to be the first instance of offered £30.; never offered more: and you
communication where the acceptance was said the horse was mine. However, as
communicated to the offeror there may be a mistake about him, I will
(Felthouse).And by this time, the horse split the difference. If I hear no more
had already been sold. Accordingly about him, I consider the horse mine at
Felthouse had no interest in the property. £30 and 15s."

Willes J delivered the lead judgment. It is clear that there was no complete

“I am of opinion that the rule to enter a bargain on the 2nd of January: and it is

nonsuit should be made absolute. The also clear that the uncle had no right to

horse in question had belonged to the impose upon the nephew a sale of his

plaintiff's nephew, John Felthouse. In horse for £30 and 15s. unless he chose to

December, 1860, a conversation took place comply with the condition of writing to

between the plaintiff and his nephew repudiate the offer. The nephew might, no

relative to the purchase of the horse by the doubt, have bound his uncle to the bargain

former. The uncle seems to have thought by writing to him: the uncle might also

that he had on that occasion bought the have retracted his offer at any time before

horse for £30, the nephew said that he had acceptance. It stood an open offer: and so

sold it for 30 guineas, but there was clearly things remained until the 25th of February,
when the nephew was about to sell his
farming stock by auction. The horse in
question being catalogued with the rest of
the stock, the auctioneer (the defendant)
was told that it was already sold. It is clear,
therefore, that the nephew in his own mind
intended his uncle to have the horse at the
price which he (the uncle) had named, £30
and 15s.: but he had not communicated
such his intention to his uncle, or done
anything to bind himself. Nothing,
therefore, had been done to vest the
property in the horse in the plaintiff down
to the 25th of February, when the horse
was sold by the defendant. It appears to me
that, independently of the subsequent
letters, there had been no bargain to pass
the property in the horse to the plaintiff,
and therefore that he had no right to
complain of the sale.
Then, what is the effect of the subsequent
correspondence? The letter of the
auctioneer amounts to nothing. The more
important letter is that of the nephew, of
the 27th of February, which is relied on as
shewing that he intended to accept and did
accept the terms offered by his uncle's
letter of the 2nd of January. That letter,
however, may be treated either as an
acceptance then for the first time made by
him, or as a memorandum of a bargain
complete before the 25th of February,
sufficient within the statute of frauds. It
seems to me that the former is the more
likely construction: and, if so, it is clear
that the plaintiff cannot recover. But,
assuming that there had been a complete
parol bargain before the 25th of February,
and that the letter of the 27th was a mere
expression of the terms of that prior
bargain, and not a bargain then for the first
time concluded, it would be directly
contrary to the decision of the court of
Exchequer in Stockdale v. Dunlop to hold
that that acceptance had relation back to
the previous offer so as to bind third
persons in respect of a dealing with the
property by them in the interim. In that
case, Messrs. H. & Co., being the owners
of two ships, called the " Antelope" and
the "Maria," trading to the coast of Africa,
and which were then expected to arrive in
Liverpool with cargoes of palm-oil, agreed
verbally to sell the plaintiffs two hundred
tons of oil,- one hundred tons to arrive by
the "Antelope," and one hundred tons by
the "Maria." The "Antelope" did
afterwards arrive with one hundred -tons
of oil on board, which were delivered by
H. & Co. to the plaintiffs. The "Maria,"
having fifty tons of oil on board, was lost
by perils of the sea. The plaintiffs having
insured the oil on board the "Maria,"
together with their expected profits
thereon, it was held that they had no
insurable interest, as the contract they had
entered into with H. & Co., being verbal
only, was incapable of being enforced.
Byles J delivered to Morrisons, it was held that the
defendants were liable to the plaintiffs.
I am of the same opinion, and have
nothing to add to what has fallen from my
Brother Willes.

Keating J

I am of the same opinion. Had the question

POWELL
arisen as between the uncle and the
nephew, there would probably have been V

some difficulty. But, as between the uncle LEE

and the auctioneer, the only question we
257 S.W. 308 (TEX. CIV. APP. 1923),
have to consider is whether the horse was
the property of the plaintiff at the time of 99 LT 284
the sale on the 25th of February. It seems
to me that nothing had been done at that
BENCH
time to pass the property out of the nephew
and vest it in the plaintiff. A proposal had KING’S BENCH DIVISION
been made, but there had before that day
Section 2(b) of Contract Act 1872- When
been no acceptance binding the nephew.
the person to whom the proposal is made
Willes J. signifies his assent thereto, the proposal is
said to be accepted. A proposal, when
Coats v. Chaplin is an authority to shew
accepted, becomes a promise
that John Felthouse might have had a
remedy against the auctioneer. There, the 3. Communication, acceptance and
traveller of Morrisons, tradesmen in revocation of proposals.—The
London, verbally ordered goods for communication of proposals, the
Morrisons of the plaintiffs, manufacturers acceptance of proposals, and the
at Paisley. No order was given as to revocation of proposals and acceptances,
sending the goods. The plaintiffs gave respectively, are deemed to be made by
them to the defendants, carriers, directed to any act or omission of the party
Morrisons, to be taken to them, and also proposing, accepting or revoking, by
sent an invoice by post to Morrisons, who which he intends to communicate such
received it. The goods having been lost by proposal, acceptance or revocation, or
the defendants' negligence, and not which has the effect of communicating it.
—The communication of proposals, the renewed written promise to pay in a letter
acceptance of proposals, and the to appellant, dated May 30, 1917, all of
revocation of proposals and acceptances, which supplemental pleadings were
respectively, are deemed to be made by properly excepted to and denied by
any act or omission of the party appellee. The case was tried before the
proposing, accepting or revoking, by justice of the peace and judgment rendered
which he intends to communicate such for defendant. On appeal to the county
proposal, acceptance or revocation, or court, it was tried before a special judge,
which has the effect of communicating it." the appellee being the regular county
judge, and Judgment again rendered for
defendant. From this judgment plaintiff
FACTS appeals.

Appellant, as plaintiff below, sued Opinion.

Appellee on April 25, 1922, in the justice
Appellant only has one assignment of
court, on a written order signed by
error, which is multiplicitous. In this
appellee, for a set of law books, entitled
assignment it sets up all the alleged errors
"Standard Encyclopedia of Procedure."
of which it complains, and under it sets out
This order was dated May 23, 1916. The
eight propositions. Only a part of these are
order called for delivery of the books as
propositions of law, and these so mixed
published at $6.50 per volume, all volumes
with argument as to be difficult of
in excess of 26 to be furnished free, and
ascertainment. Its brief does not comply
provided payment of $8 on September 1,
with the rules, but we have, nevertheless,
1916, and $3 per month for the remainder,
considered the salient points raised. There
with privilege of paying $9 each three
is an agreed statement of facts, but no
months. Appellee defended on three
findings of fact nor conclusions of law
grounds, as follows: First, that the order
made by the trial court. Nor is it made to
was procured through fraud; second,
appear that any such were requested. Only
failure of consideration; and, third, the
one witness, the appellee, testified, all
statutes of limitation. Appellant, by
other evidence being documentary.
supplemental petition, pleaded waiver by
appellee on any question of fraud or failure
of consideration, and that appellee had
JUDGEMENT
tolled the statute of limitation by a
We think appellee's testimony clearly
establishes his pleas of fraud and limitation
unless same were defeated by his letter to
appellant, dated May 30, 1917. This letter
as shown in the record, and omitting the
parts not pertinent to our inquiry,
contained the following language:
"I want to make you the proposition to pay
you $25.00 and reship you the books, and I
will pay freight on same. The books are in
as good condition as when I opened them,
for the reason that they are not suited to
my practice and therefore have not been
used.
"I am inclosing you my check for $10.00.
If you will accept my proposition I will
immediately send you the other $15.00. If
you do not accept this, then I will pay you
for the books as I can. At any rate do not
ship me any more of the books, I cannot
use them."
It appears that when this letter was written
appellee had paid nothing on the books
and that, due to failure to pay the
installments called for in the order, the
appellant had exercised its option,
provided for in the order, of declaring the
full amount due, and had demanded
payment in full. Appellee testified that it
was in response to threats to sue him made
in letters of appellant that he wrote the
letter above quoted from, and that such
offer was made only as a compromise.
This is not denied nor contradicted by
appellant. The undisputed testimony shows
that appellant did not ship any more books
to appellee, that it kept the $10 sent, and
that it sent the local expressman for the
books to be reshipped to it. He declined to
receive same from appellee because not
properly boxed, but we think this
immaterial. We think that there was
sufficient evidence to authorize the trial
court in finding that appellant accepted
appellee's offer of compromise and that it
could not, therefore, sue upon the original
contract. This would sustain a judgment
against appellant.
If the trial court did in fact find that the
order sued upon was supplanted by a
compromise between the parties on May
30, 1917, inasmuch the suit was not filed
until April 25, 1922, nearly five years
later, we think he could also have found
for the appellee on his plea of limitation
even as applied to the new agreement,
which would also support his judgment.
Appellant contends, however, that
appellee's letter was not a compromise
offer, but a renewed promise to pay for the
books, in the following language of his
letter: "If you do not accept this, then I will
pay for the books as I can" — and urges
that this defeats his plea of limitation. In
order for a new promise to pay to toll the
statutes of limitation it must contain an
unqualified admission of a just subsisting
indebtedness and express a willingness to
pay it. Krueger v. Krueger, 76 Tex. 178,
12 S.W. 1004, 7 L.R.A. 72. In the instant
case, neither the amount of the debt nor
that it is just appears to have been admitted
by appellee in said letter, and his promise
to pay is expressly contingent upon his
ability to pay. Being, to that extent at least,
a conditional promise to pay, the burden
was cast upon the plaintiff, if it depended
upon such new promise, to prove that
appellee was in fact able to pay within
such time as would stop the running of the STANDARD FORM OF CONTRACT
statute of limitation against it. Lange v.
Caruthers, 70 Tex. 718, 8 S.W. 604. A
finding of the trial court against the HENDERSON

appellant on this issue would likewise V

support a judgment against it.
STEVENSON
We have taken occasion in this opinion to
[1873] SLR 1198
set out some of the issues on which the
trial court, under the evidence, could have
found against the appellant. It is not the
FACTS
province of this court to pass upon the
weight of testimony. There being evidence Plaintiff bought a steamer ticket. Which

to support the judgment of the trial court, contained on the face, words “Dublin to

in the absence of his findings of fact and White heaven” on the back, certain terms,

conclusions of law, this court must affirm one of which excluded liability of the Co.

the judgment below. for loss, injury or delay to the passenger or

his luggage. Plaintiff had not seen back of
Affirmed.
the ticket not there was any indication on
the face about the conditions on the back.
Plaintiff’s luggage was lost by the ship
wreck caused by the fault of Co’s servants.
ISSUES
Can the plaintiff recover from the
company?
Plaintiff claimed :
- that they failed to complete their part of
the contract
- that the conditions on the ticket were
insufficient to protect them against the
consequences from near future.
HELD
Plaintiff was entitled to recover his loss
from the Company inspite of exemption
clause.
JUDGEMENT
Plaintiff could not be said to have accepted
the a term which he has not seen, of which
he knew nothing and which is not in any
way ostensibly connected with that which
is printed and written upon the face of the
contract presented to him. The result
would have been otherwise, if words like
“for conditions see back” had been printed
on face of the ticket to draw the
passengers’ attention to the place where
the conditions were printed.
PRINCIPLE
“Where a written document is presented to
a party for acceptance, a reasonably
sufficient notice shall be given of the
presence of terms and conditions. Notice
will be regarded as sufficient if it will
convey to the minds of people in general
that ticket contains conditions.
REASONABLE NOTICE
It is the duty of the person delivering the
document to give adequate notice to the
offeree of the printed terms and conditions.
Otherwise acceptor is not bound by these
terms.
PARKER
SOUTH EASTERN RAILWAY [1877]
2 CPD 416
BENCH
MELLISH LJ, BAGGALLAY LJ,
BRAMWELL LJ
FACTS
Mr. Parker left a bag in the cloakroom of
Charing Cross railway station, run by the
South Eastern Railway Company. On
depositing his bag and paying two pence
he received a ticket. On the front it said
"see back". On its back, it stated that the
railway was excluded from liability for
items worth £10 or more. Mr. Parker failed
to read the clause as he thought the ticket
was only a receipt of payment. However,
he admitted that he knew the ticket
contained writing. Mr. Parker's bag, which
was worth more than £10, was lost. He
sued the company. The question of law put
to the court was whether the clause applied
to Mr. Parker. At trial the jury found for
Mr. Parker as it was reasonable for him not
to read the ticket.
JUDGMENT
Divisional Court
Lord Coleridge CJ, Brett J and Lindley J
decided in favour of Mr. Parker, upholding
the jury award. Lindley J remarked,
On the finding of the jury, I think we
cannot say that the defendants did not
accept the article, to be taken care of by
them, without any special terms.
Henderson v Stevenson, therefore, is
undistinguishable from this case, except
for the words “see back,” which did not
appear on the face of the ticket in that case.
But the findings here make that distinction
immaterial. After the conclusions of fact
which the jury have drawn, it is, upon the
authority of that case, quite immaterial
whether the special terms relied on were
on the front or on the back of the ticket.
”
COURT OF APPEAL
The majority of the Court of Appeal held
there should be a retrial. They said that if
Mr Parker knew of the conditions he
would be bound. If he did not know, he
would still be bound if he was given the
ticket in such a way as amounted to
"reasonable notice". Mellish LJ said the
following.
I am of opinion, therefore, that the proper
direction to leave to the jury in these cases
is, that if the person receiving the ticket
did not see or know that there was any
writing on the ticket, he is not bound by
the conditions; that if he knew there was
writing, and knew or believed that the
writing contained conditions, then he is
bound by the conditions; that if he knew
there was writing on the ticket, but did not
know or believe that the writing contained
conditions, nevertheless he would be
bound, if the delivering of the ticket to him
in such a manner that he could see there
was writing upon it, was, in the opinion of
the jury, reasonable notice that the writing
contained conditions. ”
Baggallay LJ concurred, and predicted that
the same result would be reached by the
jury (in Mr Parker's favour). Bramwell LJ
dissented, holding that reasonable notice
should be a question of law, and that he at Farringdon Hall with the BBC. He took
would have decided in favour of the a ticket from the machine and parked his
railway company. car. It said

"this ticket is issued subject to the

conditions of issue as displayed on the
premises". And on the car park pillars near
the paying office there was a list, one
excluding liability for "injury to the
Customer howsoever that loss, mis-
delivery, damage or injury shall be
caused".

Three hours later he had an accident before

getting into his car. The car park argued
that the judge should have held the matter
THORNTON
regulated by this contract, not tort.
V
JUDGMENT
SHOE LANE PARKING LTD
Lord Denning MR held that the more
onerous the clause, the better notice of it
needed to be given. Moreover, the contract
[1970] EWCA CIV 2
was already concluded when the ticket
came out of the machine, and so any

COURT MEMBERSHIP condition on it could not be incorporated

in the contract.
JUDGE(S) SITTING
“The important thing to notice is that the
LORD DENNING MR, MEGAW LJ
company seek by this condition to exempt
AND SIR GORDON WILMER
themselves from liability, not only for
FACTS damage to the car, but also for injury to
the customer howsoever caused. The
Francis Thornton, "a freelance trumpeter
condition talks about insurance. It is well
of the highest quality", drove to the
known that the customer is usually insured
entrance of the multi-storey car park on
against damage to the car. But he is not
Shoe Lane, before attending a performance
insured against damage to himself. If the
condition is incorporated into the contract and gets a ticket. He cannot refuse it. He
of parking, it means that Mr. Thornton cannot get his money back. He may protest
will be unable to recover any damages for to the machine, even swear at it. But it will
his personal injuries which were caused remain unmoved. He is committed beyond
by the negligence of the company. recall. He was committed at the very
moment when he put his money into the
We have been referred to the ticket cases
machine. The contract was concluded at
of former times from Parker v South
that time. It can be translated into offer and
Eastern Railway Co (1877) 2 CPD 416 to
acceptance in this way: the offer is made
McCutcheon v David MacBrayne Ltd
when the proprietor of the machine holds it
[1964] 1 WLR 125. They were concerned
out as being ready to receive the money.
with railways, steamships and cloakrooms
The acceptance takes place when the
where booking clerks issued tickets to
customer puts his money into the slot. The
customers who took them away without
terms of the offer are contained in the
reading them. In those cases the issue of
notice placed on or near the machine
the ticket was regarded as an offer by the
stating what is offered for the money. The
company. If the customer took it and
customer is bound by those terms as long
retained it without objection, his act was
as they are sufficiently brought to his
regarded as an acceptance of the offer: see
notice before-hand, but not otherwise. He
Watkins v Rymill (1833) 10 QBD 178,
is not bound by the terms printed on the
188 and Thompson v London, Midland
ticket if they differ from the notice,
and Scottish Railway Co [1930] 1 KB 41,
because the ticket comes too late. The
47. These cases were based on the theory
contract has already been made: see Olley
that the customer, on being handed the
v Marlborough Court Ltd [1949] 1 KB
ticket, could refuse it and decline to enter
532. The ticket is no more than a voucher
into a contract on those terms. He could
or receipt for the money that has been paid
ask for his money back. That theory was,
(as in the deckchair case, Chapelton v
of course, a fiction. No customer in a
Barry Urban District Council [1940] 1 KB
thousand ever read the conditions. If he
532) on terms which have been offered
had stopped to do so, he would have
and accepted before the ticket is issued.
missed the train or the boat.
In the present case the offer was contained
None of those cases has any application to
in the notice at the entrance giving the
a ticket which is issued by an automatic
charges for garaging and saying "at
machine. The customer pays his money
owner's risk," i.e., at the risk of the owner
so far as damage to the car was concerned.
The offer was accepted when Mr Thornton
drove up to the entrance and, by the
movement of his car, turned the light from
red to green, and the ticket was thrust at
him. The contract was then concluded, and
it could not be altered by any words
printed on the ticket itself. In particular, it
could not be altered so as to exempt the
company from liability for personal injury
due to their negligence.
Assuming, however, that an automatic
machine is a booking clerk in disguise - so
that the old-fashioned ticket cases still
apply to it. We then have to go back to the
three questions put by Mellish LJ in Parker
v South Eastern Railway Co, 2 CPD 416,
423, subject to this qualification: Mellish
LJ used the word "conditions" in the
plural, whereas it would be more apt to use
the word "condition" in the singular, as
indeed the lord justice himself did on the
next page. After all, the only condition that
matters for this purpose is the exempting
condition. It is no use telling the customer
that the ticket is issued subject to some
"conditions" or other, without more: for he
may reasonably regard "conditions" in
general as merely regulatory, and not as
taking away his rights, unless the
exempting condition is drawn specifically
to his attention. (Alternatively, if the plural
"conditions" is used, it would be better
prefaced with the word "exempting,"
because the exempting conditions are the
only conditions that matter for this
purpose.) Telescoping the three questions,
they come to this: the customer is bound
by the exempting condition if he knows
that the ticket is issued subject to it; or, if
the company did what was reasonably
sufficient to give him notice of it.
Mr. Machin admitted here that the
company did not do what was reasonably
sufficient to give Mr. Thornton notice of
the exempting condition. That admission
was properly made. I do not pause to
inquire whether the exempting condition is
void for unreasonableness. All I say is that
it is so wide and so destructive of rights
that the court should not hold any man
bound by it unless it is drawn to his
attention in the most explicit way. It is an
instance of what I had in mind in J
Spurling Ltd v Bradshaw [1956] 1 WLR
461, 466. In order to give sufficient notice,
it would need to be printed in red ink with
a red hand pointing to it - or something
equally startling.
But, although reasonable notice of it was
not given, Mr. Machin said that this case
came within the second question
propounded by Mellish L.J., namely that
Mr. Thornton "knew or believed that the
writing contained conditions." There was
no finding to that effect. The burden was opinions on where the contract was
on the company to prove it, and they did concluded. Furthermore, Sir Gordon
not do so. Certainly, there was no evidence Wilmer distinguished this from the other
that Mr. Thornton knew of this exempting ticket cases based upon the fact that a
condition. He is not, therefore, bound by it. human clerk proffered the ticket and the
buyer had the opportunity to say I do not
Mr. Machin relied on a case in this court
like those conditions.
last year - Mendelssohn v Normand Ltd.
[1970] 1 QB 177. Mr. Mendelssohn The car park at Shoe Lane was demolished
parked his car in the Cumberland Garage in early 2014
at Marble Arch, and was given a ticket
which contained an exempting condition.
There was no discussion as to whether the
condition formed part of the contract. It
was conceded that it did. That is shown by
the report in the Law Reports at p. 180.
Yet the garage company were not entitled
to rely on the exempting condition for the
reasons there given.
ENTORES LTD
That case does not touch the present,
V
where the whole question is whether the
exempting condition formed part of the MILES FAR EAST CORP
contract. I do not think it did. Mr.
[1955] EWCA CIV 3,
Thornton did not know of the condition,
and the company did not do what was [1955] 2 QB 327
reasonably sufficient to give him notice of
it.
JUDGEs SITTING:
I do not think the garage company can
TOM DENNING, BARON DENNING,
escape liability by reason of the exemption
NORMAN BIRKETT, 1ST BARON
condition. I would, therefore, dismiss the
BIRKETT, HUBERT PARKER,
appeal.”
BARON PARKER OF WADDINGTON
Megaw LJ and Sir Gordon Wilmer agreed
with the onerous point but reserved their
FACTS
Entores was a London-based trading
company that sent an offer by telex for the
purchase of copper cathodes from a
company based in Amsterdam. The Dutch
company sent an acceptance by telex. The
contract was not fulfilled and so Entores
attempted to sue the owner of the Dutch
company for damages. The controlling
company, Entores, was based in the UK
and under English law Entores could only
bring the action in the UK (serve notice of
writ outside the jurisdiction) if it could
prove that the contract was formed within
the jurisdiction, i.e. in London rather than
Amsterdam.
JUDGMENT
Denning LJ, delivered the leading
judgment. He said that the postal rule
could not apply to instantaneous
communications, such as telephone or
telex: if a phoneline "went dead" just
before the offeree said "yes", it would be
absurd to assume that the contract was
formed and the parties would not have to
call each other back. The same applied to
telex. Since the contract was therefore only
formed when and where the telex was
received, the place of formation was
London.
there was a completed contract by which
the defendants agreed to supply 100 tons
of cathodes at a price of £239 10s. a ton.
The offer was sent by Telex from England
offering to pay £239 10s. a ton for 100
tons, and accepted by Telex from Holland.
The question for our determination is
where was the contract made?
When a contract is made by post it is clear
law throughout the common law countries
that the acceptance is complete as soon as
the letter is put into the post box, and that
is the place where the contract is made.
But there is no clear rule about contracts
made by telephone or by Telex.
Communications by these means are
virtually instantaneous and stand on a
different footing.
The problem can only be solved by going
in stages. Let me first consider a case
where two people make a contract by word
of mouth in the presence of one another.
Suppose, for instance, that I shout an offer
to a man across a river or a courtyard but I
do not hear his reply because it is drowned
by an aircraft flying overhead. There is no
contract at that moment. If he wishes to
make a contract, he must wait till the
aircraft is gone and then shout back his
acceptance so that I can hear what he says.
Not until I have his answer am I bound. I
do not agree with the observations of Hill J
in Newcomb v De Roos.
Now take a case where two people make a
contract by telephone. Suppose, for
instance, that I make an offer to a man by
telephone and, in the middle of his reply,
the line goes "dead" so that I do not hear
his words of acceptance. There is no
contract at that moment. The other man
may not know the precise moment when
the line failed. But he will know that the
telephone conversation was abruptly
broken off: because people usually say
something to signify the end of the
conversation. If he wishes to make a
contract, he must therefore get through
again so as to make sure that I heard.
Suppose next, that the line does not go
dead, but it is nevertheless so indistinct
that I do not catch what he says and I ask
him to repeat it. He then repeats it and I
hear his acceptance. The contract is made,
not on the first time when I do not hear,
but only the second time when I do hear. If
he does not repeat it, there is no contract.
The contract is only complete when I have
his answer accepting the offer.
Lastly, take the Telex. Suppose a clerk in a
London office taps out on the teleprinter
an offer which is immediately recorded on
a teleprinter in a Manchester office, and a
clerk at that end taps out an acceptance. If
the line goes dead in the middle of the
sentence of acceptance, the teleprinter
motor will stop. There is then obviously no
contract. The clerk at Manchester must get
through again and send his complete
sentence. But it may happen that the line
does not go dead, yet the message does not
get through to London. Thus the clerk at
Manchester may tap out his message of
acceptance and it will not be recorded in
London because the ink at the London end
fails, or something of that kind. In that
case, the Manchester clerk will not know
of the failure but the London clerk will
know of it and will immediately send back
a message "not receiving." Then, when the
fault is rectified, the Manchester clerk will
repeat his message. Only then is there a
contract. If he does not repeat it, there is
no contract. It is not until his message is
received that the contract is complete.
In all the instances I have taken so far, the
man who sends the message of acceptance
knows that it has not been received or he
has reason to know it. So he must repeat it.
But, suppose that he does not know that
his message did not get home. He thinks it
has. This may happen if the listener on the
telephone does not catch the words of
acceptance, but nevertheless does not
trouble to ask for them to be repeated: or
the ink on the teleprinter fails at the
receiving end, but the clerk does not ask
for the message to be repeated: so that the
man who sends an acceptance reasonably
believes that his message has been
received. The offeror in such
circumstances is clearly bound, because he
will be estopped from saying that he did
not receive the message of acceptance. It is
his own fault that he did not get it. But if
there should be a case where the offeror
without any fault on his part does not
receive the message of acceptance - yet the
sender of it reasonably believes it has got
home when it has not - then I think there is
no contract.
My conclusion is, that the rule about
instantaneous communications between
the parties is different from the rule about
the post. The contract is only complete
when the acceptance is received by the
offeror: and the contract is made at the
place where the acceptance is received.
In a matter of this kind, however, it is very
important that the countries of the world
should have the same rule. I find that most
of the European countries have
substantially the same rule as that I have
stated. Indeed, they apply it to contracts by
post as well as instantaneous
communications.
Applying the principles which I have
stated, I think that the contract in this case
was made in London where the acceptance
was received. It was, therefore, a proper
case for service out of the jurisdiction.
Apart from the contract by Telex, the
plaintiffs put the case in another way. They
say that the contract by Telex was varied
by letter posted in Holland and accepted
by conduct in England: and that this
amounted to a new contract made in
England. The Dutch company on
September 11, 1954, wrote a letter to the
English company saying: "We confirm
having sold to you for account of our
associates in Tokyo: 100 metric tons
electrolitic copper in cathodes: £239 10s.
for longton c.i.f. U.K./ Continental main
ports: prompt shipment from a Japanese
port after receipt of export licence:
payment by irrevocable and transferable
letter of credit to be opened in favour of
Miles Far East Corporation with a first
class Tokyo Bank. The respective import
licences to be sent directly without delay
to Miles Far East Corporation." The
variations consisted in the ports of
delivery, the provisions of import licence
and so forth. The English company say
that they accepted the variations by
dispatching from London the import
licence, and giving instructions in London
for the opening of the letter of credit, and
that this was an acceptance by conduct
which was complete as soon as the acts
were done in London.
I am not sure that this argument about
variations is correct. It may well be that
the contract is made at the place where
first completed; not at the place where the
BENCH
variations are agreed. But whether this be
so or not, I think the variations were J.C. SHAH, K.N. WANCHOO AND M.

accepted by conduct in London and were HIDAYATULLAH, JJ

therefore made in England. Both the BACKGROUND

original contract and ensuing variations
were made in England and leave can
properly be given for service out of the
jurisdiction.
I am inclined to think also that the contract
is by implication to be governed by
English law, because England is the place
with which it has the closest connection.
For the formation of a contract, an offer
must be made and accepted. The contract
is deemed to be complete only when the
acceptance of such offer is expressly or
impliedly communicated to the offeror.
The earlier laws regarding contracts did
not envisage the formation of contracts
through instantaneous modes of

I think that the decisions of the master and communication such as telephone which

the judge were right, and I would dismiss facilitate formation of contract between

the appeal. parties in different territories

instantaneously. Therein, the question of
the place of formation of contract arises
which was decided in this case.

FACTS

On July 22nd 1959 Kedia Ginning Factory

and Oil Mills (appellant) of Khamgaon
entered into a contract over telephone to
BHAGWANDAS GOVERDHANDAS supply cotton seed cakes to M/s.
KEDIA Girdharilal Parshottamdas and Co.

VS. (respondents) of Ahmedabad. The

respondents commenced an action against
GIRDHARILAL PARSHOTTAMDAS
the appellant in the City Civil Court of
& CO. & ORS.
Ahmedabad for failing to supply cotton
seed cakes as per the aforementioned
agreement. The respondents contended
1966 AIR 543, 1966 SCR (1) 656
that the cause of action for the suit arose at
Ahmedabad as the appellant’s offer to sell
was accepted at Ahmedabad and the
appellant was to be paid for the goods
through a bank in Ahmedabad. The
appellant contended that the respondents’
offer to purchase was accepted
Khamgaon; the delivery and payment of
the goods were also agreed to be made in
Khamgaon and the City Civil Court of
Ahmedabad did not have jurisdiction to try
the suit. The City Civil Court
Ahmedabad held that it had jurisdiction as
the acceptance of the offer was intimated
to the offerree at Ahmedabad and that is
where the contract was made. The
appellants filed a revision application in
the High Court of Gujarat which was
rejected. Then, the appellants preferred an
appeal to the Supreme Court with special
leave.
ARGUMENTS
CONTENTIONS OF APPELLANT
In the case of a contract by telephone, only
the court within whose territorial
jurisdiction the acceptance of offer is
spoken into telephone has jurisdiction to
try any suit regarding the contract.
Sections 3 and 4 of the Indian Contract Act
(1872) are applicable in determining the
place where a contract is made and not the
decisions of UK courts.
CONTENTIONS OF RESPONDENTS
The making of an offer is a part of cause of
action in a suit for damages for breach of
contract. Hence, the court in whose
territorial jurisdiction such offer was made
can try such suit.
at
The contract is formed where the
acceptance of offer is intimated to the
offerree. Hence, the court in whose
territorial jurisdiction such acceptance of
of offer was intimated can try such suit.
JUDGMENT
A contract comes into existence when an
offer is accepted and the acceptance of the
offer is intimated through anexternal
manifestation by speech, writing or other
act recognised by law. However, an
exception to this rule has been made in the
interest of commercial expediency. When
a contract is negotiated through post, the
communication of acceptance is deemed to
be complete when the acceptance of offer
is put into a course of transmission to the
offerer. The same rule is applicable in case
of a contract by telegram. Mere making of
an offer does not form part of the cause of
action for damages for breach of contract
which has resulted from acceptance of the
offer (Baroda Oil Cakes Traders v.
Purshottam Narayandas Bagulia and Anr.
AIR1954Bom491).Though sections 3 and
4 of the Contract Act speak about the
communication, acceptance and revocation
of a proposal and acceptance respectively,
the Act does not expressly deal with the
place where a contract is made and in
determining the same, the interpretation
clauses in section 2 of the Act must be
taken into consideration.
In the case of a telephone conservation, the
contract is only complete when the answer
accepting the offer is made [Denning LJ in
Entores Ltd. v. Mills Far East Corporation,
(1955) 2 Q.B.D. 327]. In the majority of
European countries and the US, the
generally accepted rule based on the theory
of consensus ad idem is that the contract is
made in the district where the acceptance
is spoken. The Indian Contract Act (1872)
did not envisage the formation of contracts
through an instantaneous mode
communication such as telephone. The
exception of commercial expediency
applicable to contracts formed via post is
not applicable to contracts made through
telephone. Hence, the Hon’ble Court held
that the trial Court was right in taking that
a part of the cause of action arose within
the jurisdiction of the Civil City Court.
Ahmedabad, where acceptance
communicated by telephone to
respondents. The appeal was dismissed
with costs.
DISSENTING OPINION BY JUSTICE
HIDAYATULLAH
Though the Contract Act is applicable in
India, it was drafted in England and
English common law permeates it.In
Entores Ltd. v. Mills Far East Corporation,
it was held that a contract made by
telephone is complete only where the
acceptance is heard by the proposer
[offeror in English common law] because
generally an acceptance must be notified to
the proposer to make a binding contract
and the contract emerges at the place
where the acceptance is received and not at
the place where it is spoken into the
telephone. In cases of contracts by
correspondent or telegram, a different rule
prevails and acceptance is complete as
soon as a letter of acceptance is posted or a
telegram is handed in for dispatch.
of In Carrow Towing Co. v. The Ed Mc
William, (46 D.L.R. 506), it was held:
“Where a contract is proposed and
accepted over the telephone, the place
where the acceptance takes place
constitutes the place where the contract is
made. Acceptance over the telephone is of
the same effect as if the person accepting it
had done so by posting a letter, or by
was sending off a telegram from that place”. In
the an old English case Newcomb v. De Roos
[(1859) 2 E & E 271], Hill J. observed:
“Suppose the two parties stood on different
sides of the boundary line of the district:
and that the order was then verbally given
and accepted. The contract would be made contracts made through post would not be
in the district in which the order was applicable to contracts made over the
accepted.” telephone.

Where the speech is fully heard and

understood there is a binding contract and
in such a case the only question is as to the
place where the contract can be said to be
completed. The acceptance was put in the
course of transmission at Khamgaon and
under the words of the Contract Act, it is
difficult to say that the contract was made
at Ahmedabad where the acceptance was
heard and not at Khamgaon where it was
spoken. Section 4 of the Act covers in its
language a contract through telephone. The
decision in Entores case was based on
interpretation of common law whereas in
the instant case, the interpretation of
statutory law is in question. Hence, the
contract was completed at Khamgaon
where the acceptance was spoken.

CASE COMMENT

In this case, the court decided the question

of the place of origin of the cause of action CONSIDERATION
in a suit for breach of contract made over
telephone. Here, the court also clarified the
rules regarding the communication, TWEDDLE V ATKINSON

acceptance and revocation of proposal and (1861) 1 B&S 393

acceptance with respect to a contract made
over the telephone. The decision further
clarified that the rule of communication JUDGE(S) SITTING
and acceptance of offer applicable to
 WIGHTMAN J, CROMPTON J,
BLACKBURN J
FACTS
The son and daughter of the parties
involved in this dispute were getting
married. As such, the father of the groom
and father of the bride entered into an
agreement that they would both pay sums
of money to the couple. Unfortunately, the
father of the bride died before he paid the
money to the couple and the father of the
son died before he could sue on the
agreement between the parties.
As a result of this, the groom brought a
claim against the executor of the will for
the payment that was previously agreed
between the fathers.
ISSUE
The primary issue for the court was
whether or not the son could, as a third
party to the agreement, enforce the
contract between the fathers, which was
ultimately for the benefit of him and his
wife.
It was argued that the intention of the
agreement between the fathers was for the
couple to derive a benefit from the
payment of the money. Moreover, it was
argued that preventing the son from being
able to enforce the contract would
effectively ignore the intention of the
fathers.
HELD
The groom’s claim was rejected by the
court. It was held that the groom was not a
part of the agreement between the fathers
and he did not provide any consideration
for the promise made by the father of the
bride. Also, as a stranger to the contract,
the son could not enforce it. On this basis,
the court found in favour for the executor
of the will.
REASONS
Wightman held that there was precedent
that a stranger to the consideration of a
promise can still have an action if the
relationship is close enough (Bourne v
Mason, 1669). Despite this precedent, he
maintains that the current position is that
no stranger to the consideration can take
action, even if it was for his benefits.
Crompton examines whether there was
consideration from the son and holds that
natural love and affection (from the
marriage) was not sufficient consideration.
This is in contrast to Provender where the
governing ethic was honour; here the
governing paradigm is exchange and
reciprocity. Crompton further says it
would be "a monstrous proposition" if an
individual would be able to sue for a In the Madras High Court
contract but not be able to be sued under it.

Blackburn deals with an agency argument

Equivalent Citation:
that natural love and affection trickles
from the father to the son and this entitles ILR (1876-82) 4 Mad 137

son to sue in his father's place (as if he had BENCH

provided the consideration). Blackburn
INNES J, KINDERSLEY J.
holds that the cases say that natural love
and affection are not sufficient FACTS
consideration for an action
A lady transferred her property which
consisted of certain lands to her daughter
(defendant), by a deed of gift. Such deed
was registered. One of the terms of the gift
deed was that the daughter would pay a
sum of Rs. 653/- every year to the lady’s
sister (plaintiff). The defendant executed
an Iqrarnama or agreement in favour of the
plaintiff promising to do the same. The
defendant failed to pay the annual amount
to the plaintiff. Hence, the plaintiff sued
the defendant for the recovery of the same.

ISSUE

Whether the plaintiff can bring an action

against the defendant for the amount
promised in a contract where the
consideration for such promise has been
furnished by the mother of the defendant
(plaintiff’s sister)?

ARGUMENTS ADVANCED
CHINNAYA V RAMAYYA
CONTENTIONS BY THE PLAINTIFF
ILR (1876-84) 4 Mad 137
The consideration for the defendant’s
mother to gift the property to the defendant
was defendant’s promise to pay an annuity
to the plaintiff. Hence, the plaintiff is
entitled to sue the defendant to recover the
same.
CONTENTIONS BY THE
DEFENDANT
The plaintiff had not furnished any
consideration under the contract. Hence,
she is not entitled to sue the defendant for
the recovery of the amount promised to
her.
JUDGMENT
According to section 2(d) of the Indian
Contract Act (1872), “When, at the desire
of the promisor, the promisee or any other
person has done or abstained from doing
or does or abstains from doing, or
promises to do or abstain from doing,
something, such act or abstinence or
promise is called a consideration for the
promise. From this definition, it is clear
that in a valid contract the consideration
need not flow from the promisee only. It
could flow from any other person who is
not a party to such contract. The Hon’ble
Court in this case, upheld this point of law
in the plaintiff’s right to recover the
annuity due to her from the defendant
under the contract in question but their
reasons for the same were different.
Innes J drew similarities between the
instant case and the English case Dutton v.
Poole [(1677) 2 Levinz 210]. In Dutton v.
Poole, a man had a daughter of
marriageable age and wanted to sell a
portion of wood that he possessed at the
time to meet his daughter’s wedding
portion. The man’s son (defendant)
promised to pay the daughter (plaintiff)
£.1000 if the man forbore from selling the
wood. The man forbore but the defendant
failed to pay the promised sum. The
daughter and her husband sued the
defendant for the sum. Though the
defendant made the promise to his father
and the father furnished the consideration
for it, it was clear that the contract was
made for the benefit of the plaintiff. The
court held that it would be highly
inequitable to deprive the plaintiff of the
money and held the defendant liable to pay
the same to her.
Innes J observed that prior to the creation
of the contract in question, the plaintiff had
been receiving a sum of money out of her
sister’s estate. When the lady transferred
the same to her daughter, the defendant,
the contract stipulated that the same
arrangement be continued by her. When
the plaintiff’s sister transferred the
property to the defendant, the plaintiff
suffered a loss of annuity that she had been
receiving so far. It was held that such loss
formed the consideration for the promise. Consideration must be moved at the
Hence, the plaintiff was deemed to have desire of the promisor
given the consideration.
DURGAPRASAD
Kindersley J also arrived at the same
V
conclusion but his reasoning was different.
The deed of gift and the defendant’s BALDEO
agreement to pay the annuity to the
plaintiff were executed at the same time.
1880 3 ALL 221
Thus, they could be considered parts of the
same transaction. The defendant’s promise FACTS
to pay the plaintiff was the consideration
The plaintiff sued to establish an
for the defendant’s mother to transfer the
agreement in writing by which the
property to the defendant. Hence, the
defendants promised to pay him a
defendant’s failure to pay the same would
commission on articles sold through their
amount to breach of contract and would
agency in a azar in which they occupied
entitle the plaintiff to sue her for the
shops, in consideration of the plain tiff
recovery of the same. The defendant was
having' expended, money in the
held liable to pay the annuity to the
construction of such bazar. Such money
plaintiff.
had not been- expended by the plaintiff at
the request of the defendants nor had it
been expended by him for them
voluntarily, but it had been expended by
him voluntarily.

In this case there was a contract between A

and B. According to the contract A was
supposed to provide for all requirements to
B to run the market and the profits were
agreed to be shared between the parties.
Upon C`s request, B made the market
available for 24 hours for a consideration
from C. Thereafter C refused to give
remuneration to B on the ground that he
(C) has no consideration from B.
Afterwards B claimed remuneration from
KEDARNATH BHATTACHARJI VS
A for rendering additional work to which
A refused. GORIE MAHOMED

EQUIVALENT CITATIONS
JUDGEMENT
(1887) ILR 14 CAL 64
The agreement was void being without
consideration as it had not moved at the
IN CALCUTTA HIGH COURT
desire of A. Hence the Court decided that
the additional work done by B was not
BENCH: W C PETHERAM,
wanted by A and hence B cannot claim
BEVERLEY
anything from A.

The plaintiff is a Municipal Commissioner

of Howrah and one of the trustees of the
Howrah Town Hall Fund. Some time ago,
it was in contemplation to build a Town
Hall in Howrah, provided the necessary
funds could be raised, and upon that state
of things being existent, the persons
interested set to work to see what
subscriptions they could get. When the
subscription list had reached a certain
point, the Commissioners, including the
plaintiff, entered into a contract with a
contractor for the purpose of building the
Town Hall, and plans of the building were
submitted and passed, but as the
subscription list increased, the plans
increased too, and the original cost, which
was intended to be Rs. 26,000, has
swelledbup to Rs. 40,000; but for the
whole Rs. 40,000 the Commissioners,
including the plaintiff, have remained
liable to the contractor as much as for the
original contract, because the additions to
the building were made by the authority of
the Commissioners and with their sanction.
The defendant, on being applied to,
subscribed his name in the book for Rs.
100, and the question is, whether the
plaintiff, as one of the persons who made
himself liable under the contract to the
contractor for the cost of the building, can
sue, on behalf of himself, and all those in
the same interest with him, to recover the
amount of the subscription from the
defendant.
JUDGEMENT
Persons were asked to subscribe, knowing
the purpose to which the money was to be
applied, and they knew that on the faith of
their subscription an obligation was to be
incurred to pay the contractor for the work.
Under these circumstances, this kind of
contract arises. The subscriber by
subscribing his name says, in effect,--In
consideration of your agreeing to enter into
a contract to erect or yourselves erecting
this building, I undertake to supply the
money to pay for it up to the amount for
which I subscribe my name. That is a
perfectly valid contract and for good
consideration; it contains all the essential
elements of a contract which can be
enforced in law by the persons to whom
the liability is incurred. In our opinion, that
is the case here, and therefore we think
that both questions must be answered in
the affirmative, because, as I have already
said, we think that there is a contract for
good consideration, which can be enforced
by the proper party, and we think that the
plaintiff can enforce it, because he can sue
on behalf of himself and all persons in the
same interest, and, therefore, we answer
both questions in the affirmative, and we
consider that the Judge of the Small Cause
Court ought to decree the suit for the
amount claimed, and we also think that the
plaintiff ought to get his costs including
the costs of this hearing
REASONING
Section 25 of the Indian Contract Act,
1872 states openly that “an agreement
made without consideration is void”. In
other words, the presence of consideration
is essential for a contract to be valid.
Section 2(d) of the Indian Contract Act,
1872, talks of Consideration for a promise
is “When the promisor wishes, the fiancé
or any other person has done or abstained
from doing, or does or refrains from
doing, or promises to do or refrain from
doing something, such act or abstinence
or Promise.” It is the price paid by one BENCH
party for the promise of the other. The
J STANLEY, W BURKITT
consideration is the benefit that
corresponds to the parties to a contract. FACTS

The consideration may be “right, interest,
profit or benefit” for one of the parties. It
may also be ‘some indulgence, prejudice,
loss or responsibility given, suffered or
assumed by the other.
SHUPPU AMMAL AND ANR. VS K.
SUBRAMANIAM AND ORS
4 IND CAS 1083
BENCH
This appeal arises out of a suit brought by
the plaintiff Muhammad Rustam Ali Khan
against his wife for restitution of conjugal
rights. The plaintiff is the son of Khwaja
Muhammad Khan, a Nawab of Dholepur,
and was married to the defendant Husaini
Begam, who is the daughter of a wealthy
resident of Moradabad, now deceased, on
the 2nd of November 1877. At the time of
the marriage the plaintiff's father agreed to
give the defendant Rs. 500 a month for
pin-money. The plaintiff and the defendant
lived together from the year 1883 up to the

R BENSON, OFFG., K AIYAR year 1896, when she left her husband and
went to her father's house on the ground,
as she alleges, of her husband's
FACTS misconduct. She subsequently sued her
father-in-law for arrears of the monthly
JUDGEMENT
annuity, agreed to be paid to her, up to
1901, and obtained a decree in the terms of
MUHAMMAD RUSTAM ALI KHAN a compromise. Her father-in-law failing to
VS pay the annuity after the date of this
decree, a suit was instituted by the
HUSAINI BEGAM
defendant against him for arrears of it,
IN ALLAHABAD HIGH COURT from the 1st of May 1901 to the 31st of

EQUIVALENT CITATIONS October 1903. The Court below dismissed

her suit, but upon appeal to this Court the
(1907) ILR 29 ALL 222
decision of that Court was reversed and a
decree passed in her favour.
During the pendency of that suit, the suit
which has given rise to this appeal was
instituted. In his plaint the plaintiff makes
serious charges against his wife, alleging
not merely that she had become immoral,
but that she had actually committed
adultery and was at the time, as a
consequence of that adultery, pregnant.
The following is the allegation in
paragraph (6) of the claim: "Although her
parents are dead, yet the defendant lives
alone at Moradabad, where there is no near
relative of hers who may look after and
take care of her. She wanders about
wherever she likes and has become
immoral. Moreover, she has now became
pregnant by adultery." It is a significant
fact that it only occurred to the husband to
institute a suit for restitution of conjugal
rights when the wife had taken legal steps
to recover her arrears of annuity from his
father. And it is also significant that he
should desire to resume connubial
relations with a person in the condition in
which he alleges his wife to be.
In her defence the defendant avers that
owing to the enmity subsisting between
her and the plaintiff she has strong
apprehension of danger to her life. She
further alleges acts of immorality on the
part of her husband, and that owing to
pressure exercised by his father he had
shamelessly charged her with adultery. She
further states that she has what she
describes as magnificent houses of her
own in the city of Moradabad, and that she
is willing that her husband should live with
her in that city as he formerly did or
arrange for a separate house at Moradabad.
She charges in answer to the suit that it
was brought in consequence of the
institution of the suit for arrears of pin-
money.
JUDGEMENT
Both the Courts below have found that
there is no reasonable apprehension of
danger to the life of the defendant if she
goes and lives with her husband in his
house, or of serious maltreatment. The
learned District Judge in the course of his
judgment says: "It is urged that the case at
present pending in appeal before the High
Court between the appellant in this case
and the respondent's father shows that
enmity exists and the fact that the
respondent charged her with having
committed adultery indicates that he
would maltreat her were she to be
compelled to live with him. I do not think
that these facts are sufficient to warrant
the conclusion that the danger of the
woman being maltreated is so great as to
justify the Court in a refusal to grant a
decree for restitution of conjugal rights,
and I note that the parties have admittedly
lived together after the institution of the
suit by the appellant against the
respondent's father." From this we gather
that in the opinion of the learned judge
there is some danger. The last remark of
the learned Judge refers to a visit paid by
the plaintiff to the defendant in
Moradabad.
A case such as the present must, as Mr.
Karamat Husain has rightly said, be
decided according to the Muhammadan
law
If it be granted that according to the
Muhammadan law a husband may sue to
enforce his right to the custody of his wife,
and that, if her defence be legal cruelty,
she must prove cruelty of the nature just
described, it does not follow that she has
no other defences to a suit for the
restitution of conjugal right. In the case
which we have cited their Lordships say
(at p. 712): "The marriage tie amongst;
Muhammadans is not so indissoluble as it
is among Christians. The Muhammadan
wife, as has been shown above, has rights
which the Christian, or at least the English,
wife has not against her husband. An
Indian Court might well admit defences
founded on the violation of those rights,
and either refuse its assistance to the
husband altogether, or grant it only upon
terms of his securing the wife in the
enjoyment of her personal safety and her
other legal rights; or it might, on it
sufficient case, exercise that jurisdiction
which is attributed to the Kazee by the
Fatwa (if the law indeed warrants such a
jurisdiction) of selecting a proper place of
residence for the wife other than the
husband's house." Lord Herschell, L.C., in
the course of his judgment in Mackenzie v.
Mackenzie (1895) A.C., 384 dismissing
the question whether in an action in
Scotland for adherence by the husband,
which corresponds to a suit for restitution
of conjugal rights in England, misconduct
on his part short of cruelty or other
matrimonial offence may be a ground for
refusing relief, observes (at p, 390): "It
seems to me open to question whether the
Courts ought in all cases to disregard the
conduct of the party who invokes their aid
in an action for adherence, and to decree
it in all cases where a matrimonial offence
cannot be established by the defender. It is
certain that a spouse may, without having
committed an offence which would justify
a decree of separation, have so acted as to
deserve the reprobation of all right-
minded members of the community. Take
the case of a husband who has heaped
insults upon his wife, but has just stopped
short of that which the law regards as
saevitia or cruelty; can he, when his own
misconduct has led his wife to separate
herself from him, come into Court and,
allowing his misdeeds, insist that it is
bound to grant him a decree
adherence?"
Now we have it here that the defendant left
her husband's house and came
Moradabad in 1896. From that time until
the time when the suit out of which this
appeal has arisen was instituted, namely,
on the 12th of July 1904, plaintiff took no
steps to obtain restitution of conjugal
rights. It was only when the suit for arrears
of pin-money was instituted by his wife
against his father that he took action. This
suggests the idea that the suit was not
instituted with a view to renew happy
connubial relations, but with the sinister
object of giving trouble and annoyance to
his wife. We find him in the plaint itself
heaping the vilest insults upon her. He
charges her with immorality and with
adultery. In view of her parentage, position
and fortune, this charge, if untrue, is sheer
cruelty. If the plaintiff believed that there
was any truth in it, it is hard to understand
why he should desire to resume conjugal
relations with a woman who had proved so
faithless. If he believes it to be true, as we
must assume he does, can we say that the
defendant has not any ground
reasonable apprehension, that, if she return
to Dholepur, a native State, in which she
could not invoke the protection of the
British law, she will be subject to
of maltreatment and violence. We think that
the charge of immorality and adultery,
which has not been substantiated, is of so
cruel a nature as to justify a Court in
refusing to grant him a decree for
to restitution of conjugal rights. The
defendant in view of all the facts has
established that she has reasonable
grounds for believing that her health and
safety would be endangered if she returned
to her husband's house at Dholepur. We
arrive at this conclusion as an inference of
law from the facts found and admitted in
the lower Courts.
The defendant states in her defence, and it
is not denied, that she has property worth
between 4 and 5 lakhs of rupees, and has
houses in the city of Moradabad suitable to
the position in life of her husband, She
says that she has no objection to her
husband residing with her in one of her
houses as he did formerly, and that she has
no objection to resume connubial relations
with him in her own home or in a separate
house, if he so choose, in Moradabad. We
think under the circumstances that this
offer is not unreasonable. The course then
which we propose to adopt is to allow this
appeal, set aside the decrees of the Courts
for
below, and dismiss the plaintiff's suit upon
the defendant's undertaking, as mentioned
in the written statement, to live with her
husband in Moradabad and there resume
conjugal relations with him.
If this undertaking be not fulfilled, liberty
is reserved to the plaintiff to seek in
another suit restitution of conjugal rights.
We accordingly allow the appeal, set aside
the decrees of the Courts below and
dismiss the plaintiff's suit with costs in all
Court
MINOR
MOHIREEBIBI
V
DHARMADAS GHOSE
7 CWN 441
interest with respect to some houses
belonging to the respondent. At the time,
the respondent was a minor and attained
21 years of age only in the month of
September of the same year. In the absence
of Brahmo Dutt from Calcutta, the whole
transaction was carried out by his attorney
Kedar Nath Mitter and the money was
advanced by his manager, Dedraj. It was
claimed that while the transaction was
being considered, the respondent’s mother
and guardian, Smt. Jogendranundinee
Dasi, had sent a letter through her attorney,
Mr. Bhupendra Nath Bose, revealing the
minority of the respondent and intimated
to Mr. Kedar Nath Mitter that any money
lent to the respondent would be at the
lender’s own peril. The deed of mortgage
contained a declaration by the respondent
that hehad attained majority and the
mortgagee’s assent to lend him money was
obtained upon assurance of the same. Mr.

BENCH OF JUDGES Kedar Nath Mitter was aware of the

respondent’s status as a minor. On
LORD MCNAUGHTON, LORD
10th September 1895, the respondent and
DAVEY, LORD LINDLEY, SIR FORD
his mother initiated an action for the
NORTH, SIR ANDREW SCOBLE, SIR
declaration of the mortgage as void and
ANDREW WILSON, JJ
sought cancellation of the same. The Court
FACTS of First Instance granted the relief sought
by the respondent and the Appellate Court
On 20th July, 1895 the respondent
dismissed the appeal of the appellants.
Dharmodas Ghose executed a mortgage in
After the institution of this appeal, Mr.
favour of Brahmo Dutt to secure the
Brahmo Dutt died and this appeal was
repayment of Rs. 20,000 at 12 per cent
prosecuted by his executors.
ARGUMENTS ADVANCED
CONTENTIONS BY APPELLANTS
 The respondent was a major when
he executed the mortgage.
 Neither the appellant nor his agent
had any notice that the respondent
was a minor.
 The respondent made a fraudulent
declaration regarding his age and is
hence disentitled from seeking any
relief.
 The knowledge of the respondent’s
actual age which Mr. Kedar Nath
Mitter possessed should not be
imputed to the appellants as Mr.
Dedraj acted as the agent of
Brahmo Dutt in this transaction.
 The respondent is estopped by
section 115 of the Indian Evidence
Act, 1872 from claiming that he
was a minor at the time of
executing the mortgage.
 The respondent must repay the
amount advanced according to
section 64 and 38 of the Indian
Contract Act (1872); and section
41 of the Specific Relief Act
(1877).
 The Indian Contract Act (1872)
does not deal with contract by
minors.
CONTENTIONS BY RESPONDENT
Brahmo Dutt and his agents, Mr. Kedar
Nath Mitter and Mr. Dedraj, possessed
knowledge of the respondent’s actual age.
Since the respondent was a minor at the
time of executing the mortgage, the
contract is void.
JUDGMENT
Though Mr. Brahmo Dutt was not
personally present at the time of the
transaction, Mr. Mitter acted as his
authorised agent in the transaction and Mr.
Dedraj too acted under his instructions in
good faith believing Mr. Mitter to be Mr.
Dutt’s authorised agent. Hence, their
Lordships held that the knowledge of the
respondent’s minority possessed by Mr.
Mitter was rightly imputed to Mr. Dutt.
Section 115 of the Indian Evidence
Act,1872 was held to be not applicable in
the instant case as both the parties were
aware of the truth. Further, such provision
was held to be not applicable in the case of
minority as held in Nelson v. Stocker 4 De
G. and J. 458 (1859). Their Lordships also
relied on section 19 of the Indian Contract
Act (1872) which says that a fraud or
misrepresentation which does not cause
the consent to a contract of the party on Their Lordships, taking into consideration
whom such fraud is practised, or to whom sections 2, 10 and 11 of the Indian
such misrepresentation is made, does not Contract Act (1872), held that the Act
render the contract voidable. makes it essential that all contracting
parties should be “competent to contract,”
According to section 64 of Indian Contract
and expressly provides that a person who
Act (1872), when a person at whose
by reason of minority is incompetent to
option a contract is voidable rescinds the
contract cannot make a contract within the
contract, he must restore to the other party
meaning of the Act. Their Lordships also
any benefits that he might have received
considered various other provisions of the
from that party. Their Lordships found the
same Act to point out the void nature of a
same to be applicable only in the case of
contract by a minor. Sec. 68 states that if a
persons competent to contract and not in
person incapable of entering into a contract
the case of minors who are incompetent to
or any one whom he is legally bound to
contract. The decision of the lower courts
support is supplied by another person with
to decree in the respondent’s favour
necessaries suited to his condition in life,
without ordering him to return the money
the person who has furnished such supplies
advanced was upheld by the Privy
is entitled to be reimbursed from the
Council.
property of such incapable person.It is
clear from the Act that a minor is not liable
The impugned mortgage in the instant case
even for necessaries, and that no demand
was executed under the Transfer of
with respect to the same is enforceable
Property Act (1882). Section 7 of the
against him by law, though a statutory
aforementioned Act says that a person
claim is created against his property.
must be competent to contract in order to
Under sections 183 and 184 no person
be competent to transfer property. Section
under the age of majority can employ or be
4 of that Act provides that the chapters and
an agent. Again, under sections 247 and
sections of that Act which relate to
248, although a person under majority may
contracts are to be considered part of the
be admitted to the benefits of a
Indian Contract Act, 1872. Hence, the
partnership, he cannot be made personally
instant case was considered to fall
liable for any of its obligations; although
underTransfer of Property Act (1882).
he may on attaining majority accept those
obligations if he thinks fit to do so.
Their Lordships held that when there was
no question of creation of a contract on
account of one of the parties being a
minor, the question whether such a
contract is void or voidable does not arise
at all as the contract itself is void ab initio.
The Indian Contract Act (1872) is
exhaustive and imperative and clearly
provides that a minor is not capable of
entering into a contract. Their Lordships
further found no merit in interfering with
the decisions of the lower courts not to
order the respondent to return the money
advanced. They relied on the decision in
Thurston v. Nottingham Permanent
Benefit Building Society [L. R. (1902)1
Ch. 1 (1901); on appeal, L. R. (1903) App.
Cas. 6] wherein it was held that a Court of
Equity cannot say that it is equitable to
compel a person to pay any moneys in
respect of a transaction which as against
that person the Legislature has declared to
be void and rejected the appellants’ claim
for an equitable remedy. The appeal was
dismissed.
According to Section 2(A) of the Indian
Contracts Act, 1872, when one person
signifies to another his willingness to do
or to abstain from doing anything, with a
view to obtaining the assent of that other
to such act or abstinence, he is said to
make a proposal. Hence, a proposal is
synonymous to offer. So, we can say that
the above definition of the proposal is also
valid for an offer. According to Section
2(B) of the Indian Contract Act, 1872,
when the person to whom the proposal is
made signifies his assent thereto, the
proposal is said to be accepted. A
proposal, when accepted, becomes a
promise.
Offer is an open invitation by the promisor
for the acceptance of the terms and
conditions of the undertaking, which when
accepted by the promisee becomes binding
on both parties and the proposal becomes a
promise. Hence the difference between an
offer (proposal) and a promise lies in
acceptance of the offer (proposal).
Under Section 2(h) it is said that an
agreement enforceable by law is said to be
a contract. American Law defines contract
in the following manner -A contract is a
promise or a set of promises for the
breach of which the law gives a remedy or
the performance of which the law in some
way recognizes as a duty.
LESLIE LTD.
V.
SHEILL
(1914) 3 K.B.607
FACTS
 Defendant obtained loans from plaintiff
by fraudulently misrepresenting that he
was of full age at the time of contract.
Defendant sued him to recover the money.
ISSUES
1) Whether defendants are entitled to
equitable restitution against loan given to
minor?
2) Whether they could claim restitution
either under action for tort arising out of
contract, or of quasi-contractual claim?
JUDGEMENT
If an infant obtains property or goods by
misrepresenting his age, he can be
compelled to restore it so long as the same
is traceable in his possession. This is
known as equitable doctrine of restitution.
However, in present case, since the money
was spent by the defendant, there was
neither any possibility of tracing it nor any
possibility of restoring the thing got by
fraud, for if the court will ask defendant to
pay the equivalent sum as that of loan
received, it would amount to enforcing a
void contract. Restitution stops when
repayment begins and equity does not
enforce against minor any contractual
obligation.
Infant can’t be held liable for a wrong
when the cause of action is ex contractu or
is so directly connected with the contract
that it would be an indirect way of
enforcing the contract. But, if the wrongful
act though connected with the subject
matter of the contract, yet is independent
of it in the sense of not being an act
contemplated by it, then infant can be
liable.
In present case, since an action either on
torts or on quasi contractual claim would
be tantamount to enforcing the contract by
making defendant liable to pay the
damages or restitution, hence, no such
action lies.
Lord Sumner further repeated the decision
in Sinclair in the case of R. Leslie Ltd v
Sheill that gave an understandable
indication about the way that Lord Sumner
further helped to develop equity in regard
to this area. Since Sinclair’s decision
applied the qualification that equity
involves the principle of the receiver to
recognise the obligation, “it is a decision
which tends to confirm the formulation” as
is clearly seen in the R. Leslie case.
This case is about a minor who has lied
about his age in order to obtain a loan from
the plaintiff in order to recover the amount
of the advances on the reason that they had
obtained by fraudulent misrepresentation.
In addition, as such, it was held that, in
reliance of the formulation exemplified in
Sinclair, that the minor could be forced to acquired by the defendant under the
pay back the money in which he borrowed. contract, or any property representing it.”.
Accordingly, Sumner’s judgement in this
Yet, the contract was not enforceable.
case brought up the existence of this Act,
Nevertheless, it was held; that “Sheill
and this shows that his decision helped in
could not be sued for deceit because that
the development of equity law.
would make a minor indirectly liable for
an unenforceable contract and the court To conclude, all the above cases
could only order restitution if the lender demonstrate how Lord Sumner helped in
could prove Sheill still possessed the his decisions to develop the equity law.
actual notes and coins he had borrowed.” Moreover, each case affected the
development of equity in a different way.
Efficiently, this evidently shows how the
For example, his decision in Blackwell v
reasoning in Sinclair will be capable to
Blackwell developed the equity in relation
apply as supportive argument in other
to half-secret trusts; the reasoning that was
cases even where the facts of these cases
provided is still in use nowadays in respect
are completely different. As a result, this
of this area of the law, which clearly
makes it easy to realise the method that
exemplifies its significance. Additionally,
Lord Sumner had used to assist in the
the way that Lord Sumner explained and
development of equity; he expanded upon
applied the reasoning in Blackwell
the legal principles which laid down in
exemplifies major the fact that subsequent
another cases such as; Sinclair v
cases applied the reasoning in Blackwell
Brougham.
further highlights the contribution of
Sumner’s explanations to the principle of
For instance, the principles which were
equity law with great clarity. In addition,
identified in Sheill are now accounted for
the decision in Leeds Industrial Co-Op v
under the Minors Contracts Act. Which,
Slack further specifies the importance of
provides that; “in relation to contracts
Sumner’s analysis in regards to damages
entered into after the commencement of
and injunctions ought to be effectuated.
the Act which are unenforceable against
the defendant (or which he repudiates)
Thus, Lord Sumner judgment in this case
because he was a minor when the contract
allows a straightforward explanation of
was made, the court may if it is just and
how damages may be awarded in
equitable to do so, require the defendant to
substitution for an injunction developed
transfer to the claimant any property
because of Sumner’s decision. In addition, SADASIVA AIYAR, J
because succeeded cases have extended
FACTS
upon the reasoning of Sumner further
demonstrates the cases significance. As The defendants are the appellants. The

such, it is palpable that equity in this area only question in this case is whether the

was developed with the assistance of release-dead Ex. A. was executed by the

Sumner’s judgments.  plaintiffs with their free consent or

whether it was obtained from the two
plaintiffs (mother and son) through the
exercise of coercion or undue influence or
both, brought to bear upon them by the
defendants (the younger brothers of the 1st
plaintiff's husband) and their father
Doraiyya through the 1st plaintiff's
husband Swami who threatened to commit
suicide unless the plaintiffs executed the
release deed in respect of their
reversionary rights in certain lands which
the 1st plaintiff's mother had sold without
necessity to the defendant's father's
vendor.

The lower Courts found

(a) that the 1st plaintiff's husband (the 2nd

CHIKKAM AMMIRAJU
plaintiff's, father) did threaten to commit
V suicide if the plaintiffs would not execute
SHESHAMA the release deed and that it was on account
of that threat working on their minds that
the plaintiffs executed the deed;
MADRAS HIGH COURT
(b) that such a threat was "coercion" and a
CITATIONS: deed brought about by such a threat is not
a deed executed with free consent and
34 IND CAS 578, (1917) 32 MLJ 494

BENCH
(c) that though the threat was not made by
the defendants (the parties to the deed) but
by their brother, the document was
voidable as "coercion".
Used by a person who is not a party to the
deed also negatived free consent. On these
findings the plaintiffs suit for cancellation
of the deed was decreed.
REASONING
The Courts below ought to have held that
any persuasion on the part of the 1st
plaintiff's husband who is no party to Ex.
A, even if proved, cannot invalidate the
document," Coercion is defined (Contract
Act, Section 15) as "committing, or
threatening to commit, any act forbidden
by the Indian Penal Code, or the unlawful
detaining, or threatening to detain any
property to the prejudice of any person
whatever, with the intention of causing any
person to enter into an agreement". I think
the words "any person whatever" have
been advisedly used by the legislature to
indicate that the act need not be to the
prejudice of the person entering into the
Contract. I think also that the words " to
the prejudice of any person whatever,"
which are separated by a comma from the
previous word "property" relate both to the
committing or threatening to commit an
act forbidden by the Penal Code and to the
unlawful detaining or threatening to detain
property. It means the same thing whether,
when a man kills himself, it is called an act
of suicide or a successfully accomplished
attempt to commit suicide; and an attempt
to commit suicide is punishable under the
Penal Code. Hence suicide and an attempt
to commit suicide are acts forbidden by the
Penal Code though the former cannot be
punished under the code as a dead man
cannot be punished. Provided the threat of
the forbidden act does have the intended
effect of bringing about the consent to the
agreement, it does not matter who made
the threat or to whose prejudice it was
made.
Mr. Patanjali Sastriar for the appellants
argued that the "prejudice" to the feelings
or to the supposed spiritual welfare of the
wife and son of Swami by the carrying out
of Swami's threat was not the sort of
prejudice contemplated by Section 15 and
that the "prejudice" to Swami's own life by
the threatened act was immaterial as ho
was not a party to the deed. It is
unnecessary to go into the question
whether prejudice or injury to sentiments,
feelings or supposed spiritual welfare is
also contemplated in the definition of
coercion in the Contract Act.
I agree with the lower Courts that the
prejudice to Swami's own life is sufficient
to bring his threat within the definition of
"coercion," provided it was intended by
the person using the threat to bring about
the agreement thereby. Mr. Sastriar put the
following question in support of his
contention : "Suppose A threatens to blow
up the Taj Mahal unless B gives C a
pronote for Rs. 10,000 and suppose B is a
man of such fine artistic feelings that to
save the noble structure, he gives the
pronote, is the note voidable for coercion?"
I see no difficulty in answering the
question in the affirmative, provided the
court is able to arrive at the conclusion that
the threat (which was to do an act of
mischief or vandalism prohibited by the
Penal Code to the prejudice
Government) was in-tended to bring about
the execution of the pronote and did have
that effect (I need not say that the mere use
of the threat will not render the agreement
voidable unless the agreement was not
only intended to be but was actually
"caused" by it. See Section 19 of the
Contract Act and the explanation thoreto.)
It is unnecessary to consider in detail the
question whether the release deed was
caused by undue influence. The line
between coercion (Section 15 of the
Contract Act) and undue influence
(Section 16 of the Act) is sometimes thin
and it is possible to conceive of cases
where the Act might fall under both beads.
In Ranganayakamma v. Alwar Setti (1889)
I.L.R. 13 Mad. 214 a widow executed a
deed of adoption, as her relations (not the
adopted boy) obstructed the removal of her
husband's corpse by her or her guardian to
the cremation ground unless she executed
the deed.
Collins, C.J. and Muthuswami Aiyar, J.,
held that the act of the defendants was an
unlawful act covered by Section 15 or
Section 16 of the Contract Act. I think
that when a man uses a threat of suicide to
his wife and his son and they owing to the
distress of mind caused by the strength of
that threat execute a document, they are
persons "whose mental capacity" which, I
of
take it, includes volitional freedom and
strength) "is temporarily affected by
reason of mental distress" within the
meaning of that expression in Clause 2(b)
of Section 16 of the Contract Act.
JUDGEMENT
The court held in favour of the respondents
and dismissed the appeal. The court agreed
with the contention of Mr.Venkataramaih
that forbidden act is a wider term. It held
that suicide and attempt to commit suicide
are both punishable, but suicide is not
punishable as it is impossible to reach that
person. The court observed that in
definition, the words “to prejudice to any
person whatsoever” are included. The
respondents will not execute such a deed
unless they were prejudicially affected by
the threat of the husband. This case does
not fall under the undue influence because
the husband was not a party to the
contract. The threat by the husband
amounted to coercion and the appeal by
the younger brothers of the husband was,
thus dismissed.
MISREPRESENTATION AND
FRAUD
DERRY V PEEK
[1889] UKHL 1
JUDGE(S) SITTING
LORD HALSBURY L.C., LORD
WATSON, LORD BRAMWELL,
LORD FITZGERALD, AND LORD
HERSCHELL
FACTS
The Plymouth, the Devonport and District
Tramways company issued a prospectus
stating that the company had permission to
use steam trams, which would replace their
horse-powered trams. In fact, the company
had no such permission because the right
to use steam power was subject to the
Board of Trade's consent. The company
applied, honestly believing that they would
get permission because it was a mere
formality. In reality, after the prospectus
was issued, permission was refused and
the company ended up in liquidation.
Led by Sir Henry Peek, shareholders who
had purchased their stakes in the company
on the faith of the statement sued the
directors in misrepresentation.
JUDGMENT
The House of Lords held that the
shareholders' action failed because it was
not proved that the director lacked honest
belief in what they had said. Lord
Herschell, however, pointed out that
although unreasonableness of the grounds
of belief is not deceitful, it is evidence
from which deceit may be inferred. There
are many cases, "where the fact that an
alleged belief was destitute of all
reasonable foundation would suffice of
itself to convince the court that it was not
really entertained, and that the
representation was a fraudulent one."
SIGNIFICANCE
The tort of deceit would have been
established only if the misstatements had
been fraudulently made. Derry v Peek thus
validated the perspective of the majority
judges in the Court of Appeal in Heaven v
Pender. That is, for there to be deceit or
fraud (which is the same) it must be shown GURNEY
that a defendant:

(i) knows a statement is untrue, or

1873 LR 6 HL 377
(ii) has no belief in its truth, or

(iii) is reckless as to whether it is true or

BENCH
false.
LORD CAIRNS R
Derry v Peek also outlined that no duty
would be required in relationship to non-
fraudulent misrepresentation, without the FACTS
presence of a contract, a fiduciary
The appellant purchased shares on the faith
relationship, fraud or deceit; but this was
of false statements contained in a
later overruled in Hedley Byrne v Heller.
prospectus issued by the promoters of the
The finding of fact that the directors "had company. The appellant was not a person
an honest belief in the statement" runs to whom shares have been allotted to on
contrary to the evidence that although they the formation of the company. He had
expected to get planning permission as a merely purchased shares from such
mere formality, they plainly knew that allottees.
they did not yet have that permission.
HELD

House of Lords held that the prospectus

was only addressed to the first applicants
for shares. It could not be supposed to
extend to others other than these. Thus the
appellant's action against the promoters
failed since the false statements in the
prospectus were not addressed to him.

The action failed because he had not in

fact relied on the prospectus but had
purchased the shares in the market. Lord

PEEK Cairns expressed his agreement with the

observations of Lord Chelmsford and Lord
V.
Colonsay that mere silence could not be a by the directors in the prospectus. share,
sufficient foundation for the proceedings: would in my opinion form no ground for
‘Mere non-disclosure of material facts, an action in the nature of an action for
however morally censurable, however that misrepresentation. There must, in my
non-disclosure might be a ground in a opinion, be some active misstatement of
proper proceeding at a proper time for fact, or, at all events, such a partial and
setting aside an allotment or a purchase of fragmentary statement of fact, as that the
share, would in my opinion form no withholding of that which is not stated
ground for an action in the nature of an makes that which is stated absolutely false
action for misrepresentation. There must,
in my opinion, be some active
misstatement of fact, or, at all events, such
a partial and fragmentary statement of fact,
as that the withholding of that which is not
stated makes that which is stated
absolutely false

RATIO

A prospectus for an intended company was

issued by promoters who were aware of
the disastrous liabilities of the business of
Overend and Gurney which the company
was to purchase. The prospectus made no
mention of a deed of arrangement under
which those liabilities were, in effect, to be
transferred to the company. The appellant
bought shares in the company and, when it
was wound up, he was declared liable as a
contributory and had to pay almost
andpound;100,000. He sought an
indemnity against the directors, alleging
misrepresentation and concealment of facts
 WITH V O’FLANNAGAN
[1936] Ch 575
COURT OF APPEAL
BENCH
LORD WRIGHT MR
FACTS
Dr O’Flanagan said truthfully in January
1934 that his medical practice had takings
of £2000 pa. However, in May the takings
were only £5 a week because O’Flanagan
had become ill. The contract was signed
with Mr With to buy the medical practice,
but Mr O'Flanagan did not disclose the
change in circumstances.
At trial the judge held that because the
contract was not made uberrimae fidei.
Where a statement is rendered false by a
change in circumstances there is a duty to
disclose the change. A failure to do so will
result in an actionable misrepresentation
JUDGMENT
Lord Wright MR held that Mr With could
rescind either because there was a duty to
point out the change in circumstance or
because the representation continued till
the point when the contract was signed. He
referred to Fry J in Davies v London
Provincial Marine Insurance that there is
no duty to disclose, even when someone
believes facts to be operating on another’s
mind. He noted fiduciary relationships can
bring an entire duty of disclosure.
Uberrimae fidei contracts, including
partnership and marine insurance, do too.
But also where in negotiations a statement
is false and then the representor discovers
it, though if he had said nothing he is
entitled to hold his tongue throughout. He
noted that a ‘representation made as a
matter of inducement to enter a contract is
to be treated as a continuing
representation.’
Romer LJ stated,
“I agree. The only principle invoked by the
appellants in this case is as follows. If A
with a view to inducing B to enter into a
contract makes a representation as to a
material fact, then if at a later date and
before the contract is actually entered
into, owing to a change of circumstances,
the representation then made would to the
knowledge of A be untrue, and B
subsequently enters into the contract in
ignorance of that change of circumstances
and relying upon that representation, A
cannot hold B to the bargain. There is
ample authority for that statement and,
indeed, I doubt myself whether any
authority is necessary, it being, it seems to SHRI KRISHNAN
me, so obviously consistent with the
VS
plainest principles of equity.”
THE KURUKSHETRA UNIVERSITY
Clauson J concurred.

SIGNIFICANCE
AIR 1976 SC 376, (1976) 1 SCC 311,
This affirms a general principle that any
1976 (8) UJ 15 SC
change to a fundamental reason for
contracting (supervening falsification)
must be communicated, where it is known BENCH
to one party. It does not matter what the
H KHANNA, P BHAGWATI, S M ALI
reason or motive is for not communicating
is, it need not be malicious or fraudulent,
but merely known to the representor
FACTS

What appears to have, been a clear case of

refusal of admission to the appellant or the
cancellation of his candidature at the
proper time has been completely bungled
and destroyed by the inherent
inconsistency and seemingly contradictory
stand taken by the respondent and lack of
proper vigilance on the part of the Head of
the Department of Law. The facts of the
present case lie within a very narrow
compass and only two short points of lay
have been raised before us by Mr. Kapil
Sibbal learned Counsel for the appellant

The appellant was a teacher in the

Government High School, Dumarkha in
the District of Jind (Haryana). The
University of Kurukshetra was running
law classes for three years course and had
extended the facility to persons who were
in service to attend the evening classes and
complete the three years course in that
manner. The appellant decided to take the
benefit of the facility given to the
Kurukshetra University and joined LL.B.
Part I classes some time in years 1971.
According to the University statute a
student of the Faculty of Law was given
the option to clear certain subjects in
which he may have failed at one of the
examinations before completing the three-
years course. The students were to appear
in six papers each year. In April 1972 the
petitioner appear in the annual
examination of Part I but failed in three
subjects, namely, Legal Theory,
Comparative Law and Constitutional Law
of India. Subsequently he was promoted to
Part II which he joined in the year 1972.
Under the University Statute the appellant
was to appear in Part II Examination in
April 1973. On April 26, 1973 the
appellant applied for his Roll Number to
the University in order to reappear in the
subjects in which he had failed and to clear
them but he was refused permission and
according to the appellant without any
reason. The annual examination for Part II
was to be held on May 19, 1973 and the
appellant approached the University for
granting him provisional permission to
appear subject to his getting the permission
from his employer to attend the Law
Faculty. In between it appears that the
appellant had been prosecuted for offences
under Sections 376, 366 and 363 I.P.C.
and was suspended during the period when
the case was going on against him. The
appellant was, however, acquitted and was
reinstated by his employer on August 22,
1972. It would thus appear that on May 18,
1973 as also on April 25, 1973 when he
had applied for his Roll Number to clear
the subjects, the stigma of criminal case
had been completely removed.
HELD
A copy of this letter is appended as
Annexture 'Rule 1' to this affidavit. A
perusal of this letter would show that the
petitioner had not been granted permission
by his employer to attend the law classes at
the University. Furthermore, the
approximate distance between his station
of posting and the University is more that
fifty miles. Keeping in view the fact that
he was posted in the interior of District
Jind, it is impossible that the petitioner
could have attended the requisite number
of lectures. Evidently, the petitioner was
himself aware of the fact that he had not
attended the requisite number of lectures,
It is also incorrect to suggest that the
petitioner's name could be sent for the
examination only if he had completed and
required minimum attendance of lectures.
The examination forms are always sent in
December. Rule 2(b) of Ordinance 10 of
the Kurukshetra University Calendar,
Volume I, provides as under inter alia:
Mr. Sibbal learned Counsel for the
appellant submitted two points before us.
In the first place it was argued that once
appellant was allowed to appear at LL.B.
Part II examination held on May 19, 1973
his candidature could not be withdrawn for
any reason whatsoever in view of the
mandatory provisions of Clause 2(b) of the
Kurukshetra University Calender Vol. I,
Ordinance X under which the candidature
could be withdrawn before the candidate
took the examination. Secondly it was
argued that the order of the University was
mala fide because the real reason for
canceling the candidature of the appellant
was the insistence of the District Education
Officer that the appellant should not have
been admitted to the Law Faculty unless
he had obtained the permission of his
superior officers. In order to appreciate the
first contention it may be necessary to
extract the relevant portions of the statute
contained in Kurukshetra University
Calender Volume I, Ordinance X. Clause 2
of this Ordinance runs as follows:
 The following certificates, signed
by the Principal of the
College/Head of the Department
connerned, shall be required from
each applicant:
(a) that the candidate has satisfied him by
the production of the certificate of a
competent authority that he has passed the
examinations which qualified him for
admission to the examination; and
(b) that he has attended a regular course of
study for the prescribed number of
acadamic years.
Certificate (b) will be provisional and can
be withdrawn at any time before the
examination if the applicant fails to attend
the prescribed course of lectures before the
end of his terra.
The last part of this statute clearly shows
that the University could withdraw the
certificate if the applicant had failed to
attend the prescribed course of lectures.
But this could be done only before the
examination. It is, therefore, manifest that
once the appellant was allowed to take the
examination, rightly or wrongly, then the
statute which empowers the University to
withdraw the candidature of the applicant
has worked itself out and the applicant
cannot be refused admission subsequently
for any infirmity which should have been
looked into before giving the applicant
permission to appear. It was, however,
submitted by Mr. Nandy learned Counsel
for the respondent that the names of the
candidates who were short of percentage
were displayed on the Notice Board of the
College and the appellant was fully aware
of the same and yet he did not draw the
attention of the University authorities
when he applied for admission to appear in
LL.B Part II Examination, Thus the
appellant was guilty of committing serious
fraud and was not entitled to any
indulgence from this Court.
It appears from the averments made in the
counter-affidavit that according to the
procedure prevalent in the College the
admission forms are forwarded by the
Head of the Department in December
preceding the year when the Examination
is held. In the instant case the admission
form of the appellant must have been
forwarded in December 1971 whereas the
examination was to take place
April/May 1972. It is obvious that during
this period of four to five months it was
the duty of the University authorities to
scrutinise the form in order to find out
whether it was in order, Equally it was the
duty of the Head of the Department of Law
before submitting the form to
University to see that the form complied
with all the requirements of law. If neither
the Head of the Department nor the
University authorities took care
scrutinise the admission form, then the
question of the appellant committing a
fraud did not arise. It is well settled that
where a person on whom fraud is
committed is in a position to discover the
truth by due diligence, was fraud is not
proved. It was neither a case of suggestion
falsi, or suppression yeri. The appellant
never wrote to the University authorities
that he attended the prescribed number of
lectures. There was ample time and
opportunity for the University authorities
to have found out the defect. In these
circumstances, therefore, if the University
authorities acquiesced in the infirmities
which the admission form contained and
allowed the appellant to appear in part I
Examination in April 1972, then by force
of the University Statute the University
had no power to withdraw the candidature
of the appellant. A somewhat similar
situation arose in Premji Bhai Ganesh Bhai
in
Kshatriya v. Vice Chancellor, Ravishankar
University, Raipur and Ors. where a
Division Bench of the High Court of
Madhya Pradesh observed as follows:
From the provisions of Ordinance Nos. 19
and 48 it is clear that the scrutiny as to the
the requisite attendance of the candidates is
required to be made before the admission
cards are issued. Once the admission cards
are issued permitting the candidates to take
to their examination, there is no provision in
Ordinance No. 19 or Ordinance No. 48
which, would enable the Vice-Chancellor order suffers from yet another infirmity.
to withdraw the permission. The discretion The annexures filed by the appellant and
having been clearly exercised in favour of the respondent as also the allegations made
the petitioner by permitting him to appear in the counter-affidavit clearly show that
at the examination, it was not open to the there were series of parleys and
Vice-Chancellor to withdraw that correspondence between the District
permission subsequently and to withhold Education Officer and the respondent in
his result. the course of which the respondent was
being persuaded, to the extent of
We find ourselves in complete agreement
compulsion, to withdraw the candidature
with the reasons given by the Madhya
of the appellant because he had not
Pradesh High Court and the view of law
obtained the permission of his superior
taken by the learned Judges. In these
officers. Mr. Nandy appearing for the
circumstances, therefore, once the
respondent has not been able to show any
appellant was allowed to appear at the
provision in the statutes of the University
Examination in May 1973, the respondents
which required that the candidates
had no jurisdiction to cancel his
attending the evening law classes who are
candidature for that examination. This was
in service should first get the prior
not a case where on the undertaking given
permission of their superior officers. We
by a candidate for fulfilment of a specified
have also perused the University Statute
condition a provisional admission was
placed before us by counsel for the
given by the University to appear at the
appellant and we do not find any provision
examination which could be withdrawn at
which could have afforded justification for
any moment on the non-fulfilment of the
the respondent to cancel the candidature of
aforesaid condition. If this was the
the appellant on the ground that he had not
situation then the candidate himself would
obtained the previous permission of his
have contracted out the statute which was
superior officers.
for his benefit and the statute therefore
would not have stood in the way of the Mr. Nandy counsel for the respondent
University authorities in cancelling the placed great reliance on the letter written
candidature of the appellant. by the appellant to the respondent wherein
he undertook to file the requisite
As regards the second point that the order
permission or to abide by any other order
was passed malafides, it is difficult to find
that may be passed by the University
any evidence of malafides in this case. The
authorities. This letter was obviously
written because the appellant was very
anxious to appear in Part II Examination &
the letter was written in terrorem and in
complete ignorance of his legal rights. The
appellant did not know that there was any
provision in the University Statute which
required that he should obtain the
permission of his superior officers. But as
the respondent was bent on prohibiting
him from taking the examination he had no
alternative but to write a letter per force. It
is well settled that any admission made in
ignorance of legal rights or under duress
cannot bind the maker of the admission. In
these circumstances we are clearly of the
opinion that the letter written by the
appellant does not put him out of court. If
only the University authorities would have
exercised proper diligence and care by
scrutinising the admission form when it
was sent by the Head of the Department to
the University as far back as December
1971 they could have detected the defects
or infirmities from which the form
suffered according to the University
Statute. The Head of the Department of
Law was also guilty of dereliction of duty
in not scrutinising the admission form of
the appellant before he forwarded the same
to the University.
Moreover, the stand taken by the
respondent that as the appellant did not get
the requisite permission from his superior
officers, therefore he was not allowed to
appear at the examination, does not merit
consideration, because the impugned order
does not mention this ground at all and it
was not open to the respondent to have
refused admission to the appellant to LL.B.
Part III or for that matter to refuse
permission to appear at the examination on
a ground which was not mentioned in the
impugned order.
Having gone into the circumstances
mentioned above, we are of the view that
the impugned orders suffers from errors of
law patent on the face of the record, and in
any event this was not a case which should
have been dismissed by the High Court in
liming.
The appeal in accordingly allowed and the
order of the University dated June 26,
1973, is hereby quashed by a writ a
certiorari. The respondent is directed to
declare the result of LL.B. Part II
Examination in which the appel ant had
appeared on May 19, 1973 and also to give
him an opportunity to appear in the three
subjects in which he had failed in LL.B.
Part I Examination, at the next
examination which may be held by the
University.
UNDUE INFLUENCE
 MANU SINGH

UMA DATT

FACTS

MISTAKE

CUNDY

LINDSAY

1877-78 LR 3 APP CAS 459

HOL OF UK

BENCH

BLACKBURN J.,

LORD CAIRNS

FACTS

Lindsay & Co were manufacturers of linen

handkerchiefs, amongst other things. They
received correspondence from a man
named Blenkarn. He had rented a room at
37 Wood Street, Cheapside, but purported
to be 'Blenkiron & Co'. Lindsay & Co
knew of a reputable business of this name
which resided at 123 Wood Street.
Believing the correspondence to be from
this company, Lindsay & Co delivered to
Blenkarn a large order of handkerchiefs.
Blenkarn then sold the goods – 250 dozen
linen handkerchiefs – to an innocent third
party, Cundy. When Blenkarn failed to
pay, Lindsay & Co sued Cundy for the
goods.
JUDGMENT
The Divisional Court held that Lindsay
could not recover the handkerchiefs from
Cundy. Blackburn J, giving judgment, held
the following.
“The rule of law has been thoroughly
established—the cases are numerous, and
I need not cite them—that where a
contract is voidable on the ground of
fraud, you may avoid it, so long as the
goods remain in the man's hands who is
guilty of the fraud, or in the hands of
anybody who takes them from him with
notice; but where a person has bonâ fide
acquired an interest in the goods, you
cannot, as against that person, avoid the
contract. Where the goods have come into
the hands of a bonâ fide purchaser you
cannot take them back. The case is very
closely analogous to the old common-law
rule, in the case of felony or trespass. If
goods are stolen or taken away by
trespass, no title whatever is conferred, in
general, upon a purchaser from the person
who took them, however bonâ fide the
purchase may have been; but if the sale be
in market overt to a person who has no
knowledge of the felony or trespass, then
the purchaser acquires the property,
notwithstanding the goods had been taken
from the owner by felony or trespass.”
Mellor J and Lush J agreed.
COURT OF APPEAL
The Court of Appeal, with Mellish LJ,
Brett J and Amphlett JA overturned the
Divisional Court, holding that Lindsay
could recover the handkerchiefs, since the
mistake about the identity of the rogue
voided the contract from the start. Cundy
appealed.
HOUSE OF LORDS
The House of Lords held that Lindsay &
Co had meant to deal only with Blenkiron
& Co. There could therefore have been no
agreement or contract between them and
the rogue. Accordingly, title did not pass
to the rogue, and could not have passed to
Cundy. They were forced to therefore
return the goods.
Lord Cairns explained the mistake to
identity, and the consequences:
“Now, my Lords, stating the matter shortly
in that way, I ask the question, how is it
possible to imagine that in that state of
things any contract could have arisen
between the Respondents and Blenkarn,
the dishonest man? Of him they knew
nothing, and of him they never thought.
With him they never intended to deal.
Their minds never, even for an instant of
time rested upon him, and as between him
and them there was no consensus of mind
which could lead to any agreement or any
contract whatever. As between him and
them there was merely the one side to a
contract, where, in order to produce a
contract, two sides would be required.
With the firm of Blenkiron & Co. of course
there was no contract, for as to them the
matter was entirely unknown,
therefore the pretence of a contract was a
failure.”
DEVELOPMENTS
As such, the contract was held void, rather
than voidable. This has introduced a
distinction from cases such as Phillips v
Brooks, where parties dealing face to face
are presumed to contract with each other.
Despite still being good
commentators, as well as the courts, have
been critical of this distinction. In Shogun
Finance Ltd v Hudson Lord Nicholls,
dissenting, stated it to be an "eroded"
principle of law.
“The distinction in outcome thus drawn
between these two kinds of fraudulent
misrepresentation, one as to 'attributes' and
the other as to 'identity', is unconvincing. It
has been described as a reproach to the
law. To a considerable extent the
distinction has now been eroded. Cundy v
Lindsay was decided over a century ago,
and since then there have been significant
developments in this area of case law.
Unfortunately these developments have
left the law in a state of disarray. The
question before the House on this appeal is
whether this distinction, so far as it
remains, should still be regarded as good
law
and
GRIFFITH
V.
BRYMER
19 T.L.R. 434 (1903)
KING’S BENCH DIVISION
law,
FACTS
On June 24, 1902, Murray Griffith
(plaintiff) agreed to rent a room from W.E.
Brymer (defendant) in order to view the
king’s coronation procession, which was
scheduled for June 26. Griffith paid
Brymer 100 pounds. Approximately one
hour prior to the parties’ agreement,
unbeknownst to the parties at the time, it
was determined that the king would
undergo surgery and that the coronation
procession would therefore be cancelled.
Griffith sued Brymer to recover his
payment.
At 11 a.m. on June 24, 1902, the plaintiff
entered into a verbal agreement with
Messrs. Pope, Roach, and Co., the
defendant’s agents, to take the room for
the purpose of viewing the procession on
June 26, and handed over his cheque for
100 pounds. It was admitted that the
decision to operate on the King, which
rendered the procession impossible, had
been reached at about 10 a.m. that
morning. But neither party was aware of
this fact when the agreement was entered
into and the cheque given; and it was
contended for the plaintiff that as both
parties were under a misconception with
regard to the existing state of facts about
which they were contracting, the plaintiff
was entitled to the return of his money
HELD
Mr. Justice Wright held that the agreement
was made on the supposition by both
parties that nothing had happened which
made the performance impossible. This
was a mis-supposition on the state of the
facts which went to the whole root of the
matter. The contract was therefore void,
and the plaintiff was entitled to recover his
100 pounds.
The court holds that the contract is void
because
(1) both parties thought, at the time they
entered the contract, that the parade would
take place, and
(2) this mistaken belief goes “to the whole
root of the matter.”
INGRAM V LITTLE
[1961] 1 QB 31
BENCH
PEARCE LJ, DEVLIN LJ
FACTS
The Plaintiffs were joint owners of a car.
A fraudster attempted to purchase the car
by cheque, which they initially refused. He
pretended to be a reputable businessman
and the Plaintiffs then accepted payment
by cheque. The cheque dishonoured the
next day. By then, the fraudster had sold
the car to the defendants who were the
bona fide purchasers of the car. The
Plaintiffs sought to recover the car or the
value of the car from the defendants.
ISSUES
The issue here was whether the defendants
could claim possessory title over the
vehicle based on a contract made by
mistaken identity.
HELD
The Plaintiffs claim was successful. The
court applied the general principle of the
process of forming a binding contract to
the current facts. Where an offeror makes
an offer to the promisee, the offeror is
making such an offer only with the person
identified and no one else. The fraudster
pretended to be a well known business
man and that was the only reason why the
Plaintiffs accepted payment by cheque, as
initially they had refused. The contract for
sale was therefore only made with the
wealthy businessman and not the fraudster
in his personal capacity. Thus, the fact that
the fraudster used someone else’s identity
to make the contract prevented a contract
from being formed. It also prevented the
possessory title from being passed to the
fraudster and then on to the defendant.
BAI VIJILI
V (1976) 1 COMPLJ 333 CAL
NANSA NAGAR
(1886) ILR 10 BOM 152
SIR SARGENT, KT., CJ &
BIRDWOOD, J
FACTS
The Respondent had advanced money to
the Appellant who was a married woman
in order to enable her to obtain a divorce
from her husband. He promised to marry
her as soon as she was divorced. He then
sued to recover the advances he had made.
JUDGEMENT
The object of the agreement with the wife
to divorce her husband and marry the
Respondent was immoral and, therefore,
the agreement was void. Hence the
Respondent could not recover the money
he had advanced.
SM. SUMITRA DEVI AGARWALLA
VS
SM. SULEKHA KUNDU AND ANR.
AIR 1976 CAL 196
 defendant No. 1, a total sum of Rs. 16,000
on diverse dates between November 7,
BENCH
1973 and February 19, 1974 out of the sum
M DUTT, SHARMA of Rs. 20,000 agreed to be paid by the

FACTS plaintiff under the contract, so as to enable

the defendants to complete the renovation
This appeal is at the instance of the
of the suit premises. It is alleged that the
plaintiff and it is directed against the order
defendants failed and neglected to deliver
dated October 1, 1975 of the learned
possession of the suit premises to the
Judge, 8th Bench, City Civil Court,
plaintiff even though the plaintiff offered
Calcutta, dismissing the plaintiff's
to pay the balance sum of Rs. 4,000. On
application for recording a compromise in
the aforesaid allegations, the plaintiff has
adjustment of the suit under Order 23,
claimed a decree for specific performance
Rule 3 of the Code of Civil Procedure. The
of the contract of lease by letting out the
suit was instituted by the plaintiff for
suit premises to her at a monthly rental of
specific performance of a contract of lease
Rs. 400.
dated November 2, 1973, for khas
possession of the suit premises and for a The plaintiff also filed an application for

permanent injunction restraining the temporary injunction under Order 39,

defendants from letting out the suit Rules 1 and 2 of the Code of Civil

premises to any person other than the Procedure praying for restraining the

plaintiff. The suit premises is the first floor defendants from letting out or parting with
of premises No. 310, Rabindra Sarani, the possession of the suit premises to any

Calcutta. It is not, disputed that the person other than the plaintiff till the

defendant No. 1 Sm. Sulekha Kundu is the disposal of the suit. Before the application

owner of the said premises. The defendant for temporary injunction was disposed of,

No. 2 Kestodas Kundu is the husband's on January 14, 1975, the plaintiff filed the

elder brother of Sulekha Kundu. The application under Order 23, Rule 3 inter

plaintiff's cape is that on November 2, alia alleging therein that on October 13,

1973, she entered into a contract of lease 1974, due to the intervention of common

of the suit premises with the defendants on friends, the parties settled the disputes

certain terms and conditions. Pursuant to between them in the presence of their

the said agreement, the plaintiff advanced respective lawyers. The terms of

to the defendant No. 2 as the agent of the settlement were recorded in writing in the
form of a letter addressed by the defendant
No. 1 Sulekha Kundu to the plaintiff. The
original, and duplicate letters bearing the
signatures of the defendant were detained
by Shri Sunil Krishna Dutta, Advocate,
representing the defendants in the matter.
It is alleged that a true copy of the said
letter was handed over to the plaintiff
through her husband Krishna Kumar
Agarwal (hereinafter referred to
Agarwal). A copy of the said letter
incorporating the terms of settlement
agreed to by the parties has been annexed
to the application. It is alleged that the
defendants deliberately and with
ulterior motive have backed out from the
said terms and are not willing to perform
their part of the agreement, though the
plaintiff at all material times was and is
still ready and willing to abide by the
same. Accordingly, it has been prayed by
the plaintiff that the terms and conditions
referred to in the letter dated October 13,
1974 should be recorded and the suit
should be decreed on the said terms.
The defendant No. 1 Sulekha Kundu and
the defendant No. 2 Kestodas Kundu both
opposed the said application under Order
23, Rule 3 by petitions of objection. They
have denied the allegations made by the
plaintiff in the said application. It has been
averred by Sulekha Kundu that she was
made to sign the said letter under duress
and threat without the knowledge of the
contents thereof and without any
independent legal advice. It is contended
that the said purported agreement is void
and not legally enforceable. Further, it is
contended that the terms of the said
alleged agreement are not lawful. It is also
her case that Sunil Krishna "Dutta,
Advocate was never engaged by her and
as she had no occasion to give any instruction
to him. The said Sunil Krishna Dutta was
acting on behalf of and represented the
defendant No. 2 Kestodas Kundu. She has
enumerated the circumstances under which
an she was compelled to sign the said letter in
duplicate containing the terms and
conditions of the purported settlement.
JUDGEMENT
The learned Judge after considering the
evidence and the facts and circumstances
of the case has held that the said agreement
is in the nature of an executory contract
and not a concluded one and, as such, does
not come within the purview of Order 23,
Rule 3; that the consideration for the
agreement was unlawful and opposed to
public policy and, consequently, the
agreement was hit by Section 23 of the
Contract Act and that, the agreement was
not read over and explained to Sulekha
Kundu before she put her signature
thereon. It has been held by him that the
plaintiff has failed to satisfy the Court that
the suit has been wholly or partly adjusted
by a lawful agreement or compromise.
Upon the aforesaid findings, he has
dismissed the application under Order 23,
Rule 3. Hence, this appeal,
The first question that arises is whether the
documents, Exts. 1 and 1 (a) embodying
the purported terms of settlement have
been executed by the defendant No. 1
Sulekha Kundu under threat and coercion.
It has, however, been strenuously urged by
Mr. B.C. Dutt, learned Advocate appearing
on behalf of the plaintiff-appellant that an
enquiry as to whether an agreement in
adjustment of the suit is vitiated by fraud,
undue influence or coercion does not come
within the purview of the provision of
Order 23, Rule 3. In order to consider this
contention, we may refer to the provision
of Order 23, Rule 3 which provides as
follows:
"Where it is proved to the satisfaction of
the Court that a suit has been adjusted
wholly or in part by any lawful agreement
or compromise, or where the defendant
satisfies the plaintiff in respect of the
whole or any part of the subject-matter of
the suit, the Court shall order such
agreement, compromise or satisfaction to
be recorded, and shall pass a decree in
accordance therewith so far as it relates to
the suit."
Mr. Dutt has placed before us a number of
decisions of different High Courts in
support of his contention. The first of such
decisions on which reliance has been
placed by him is a Bench Decision of the
Allahabad High Court consisting of
Sulaiman and Kendall JJ. in Quadri Jahen
Begum v. Fazal Ahmad, ILR 50 All 748 =
(AIR 1928 All 494). In that case, it has
been observed as follows;
"In our opinion the word "lawful" in Order
XXIII, Rule 3, does not merely mean
binding or enforceable. A contract which
is brought about either by undue influence,
misrepresentation or fraud is, under
Sections 19 and 19-A of the Indian
Contract Act, merely avoidable and not
absolutely illegal or unlawful. Section 23
of the Act indicates when the consideration
or object of an agreement is unlawful.
These are cases where it is forbidden by
law or is of such a nature that, if permitted,
it would defeat the provisions of any law,
or is fraudulent, or involves or implies
injury to any person or property, or where
the court regards it as immoral or opposed
to public policy. We think that the word
"lawful" in Order XXIII, Rule 3, refers to
agreements which in their very terms or
nature are not "unlawful", and may
therefore include agreements which are
avoidable at the option of one of the
parties thereto because they have been
brought about by undue influence,
coercion or fraud."
It has been further observed that it is
possible to take the view that,
independently of Order XXIII, Rule 3, the
Court has inherent jurisdiction under
Section 151 of the Cede to refuse to record
a compromise which has been brought
about by undue influence.
It is clear from Order 23, Rule 3 that
before the Court considers whether, or not
an agreement is lawful, it must be satisfied
that there has been an agreement between
the parties. An agreement is brought into
existence where one party makes an offer
and another accepts the same. It is the
consensus of minds of two persons in
regard to certain matter. Of these two
persons if one has not agreed to the term
proposed by the other, there is no
agreement between them. When the
consent of one to the term is obtained by
the other by some illegal means, namely,
by fraud, coercion or undue influence, it is
difficult to hold that the person whose
consent has been so obtained has agreed to
the term.
Is it that the satisfaction of the Court is
confined only to the proof of the signatures
of the parties on the document containing
the terms? Even in spite of the fact that the
signature of a party or his consent to the
agreement has been obtained by the other
party by some illegal means, namely, by
fraud, undue influence or coercion, would
the Court be able to hold that there is an
agreement? With respect, we are unable to
understand the principle of law laid down
in those two decisions. It has been already
observed that if the consent of one party is
obtained by fraud, undue influence or
coercion, it cannot be said that he has
agreed to the term to which his consent has
been so obtained and consequently the
Court has to come to the finding that there
is no agreement. If it is required under
Order 23, Rule 3 that the Court has to be
satisfied as to whether an agreement has in
fact been reached as held by the Allahabad
High Court in the above two decisions, we
are of the opinion that an enquiry by the
Court for such satisfaction will include
also an enquiry into the allegation of a
party that his consent to the terms of the
agreement has been procured by fraud,
undue influence or coercion. It is true that
fraud, undue influence or coercion makes a
contract a avoidable one and not void. But
as soon as a party complains about the
practice upon him of fraud, undue
influence or coercion by another party, he
avoids the contract. If the party complains
to Court that his signature to a document
containing the terms has been obtained by
the other party at the point of a revolver,
would the Court refuse to make an enquiry
into the same on the ground that the
agreement is only avoidable and not void?
With due respect, we are unable to
subscribe to such a bold proposition and,
in our opinion, to consider whether or not
an agreement has been reached between
the parties, the Court will of necessity
embark upon an enquiry as to the
allegation of a party that his consent to the
"agreement or his signature on the
document containing the terms, has been
obtained by fraud, undue influence or
coercion. It is true that the
complaining has his remedy by way of suit
He can obtain a declaration that the con-
agreement is the withdrawal and non-
prosecution of a criminal case, the
agreement is opposed to public policy and
is void.
For the reasons aforesaid, we affirm the
order of the learned Judge dismissing the
plaintiff's application under Order 23, Rule
3 of the Code of Civil Procedure and
dismiss the appeal with costs. No separate
order need be passed in the connected
Rule, which shall be deemed to have been
disposed of without any order as to costs,
party
Sharma, J.
PEARCE

tract is vitiated by fraud, undue influence V

or coercion and, as such, is not binding
BROOKS
upon him. In our opinion, to drive such a
party to a separate suit will be against (1865) LR 1 Ex 213
justice, equity and good conscience.

It has been held by the learned Judge that

BENCH
the agreement is hit by Section 23 of the
POLLOCK CB, PIGOTT,
Contract Act as one of the terms is
BRAMWELL, MARTIN BB
opposed to public policy. In our opinion,
there are cogent reasons for the said FACTS
finding of the learned Judge.
The defendant was a prostitute who hired a
Under Section 23 of the Indian Contract carriage from the plaintiff, who was a
Act, every agreement of which the object coachbuilder, on hire purchase terms to be
or consideration is unlawful is void, it paid for in instalments. She wanted the
provides inter alia that the consideration or carriage to attract customers. The
object of an agreement is unlawful when it defendant did not pay the second
is opposed to public policy It is now well instalment on the carriage and returned it
settled that where the consideration of an in a damaged condition, in breach of the
agreement. At first instance the jury found
on the evidence that the coachbuilder knew
that she was a prostitute at the time the
contract was made. The coachbuilder sued
for non-payment and for the damage.
ISSUES
It was argued that, as the coachbuilder
knew the defendant was a prostitute, he
expected to be paid out of the profits of
prostitution. He, therefore, knew of the
immoral purpose to which the carriage was
to be put and should not be allowed to
recover on the contract.
JUDGEMENT
The court found for the defendant. It was
immaterial that the immoral purpose was
not part of the contract or whether the
claimant was to be paid out of the
proceeds. Bramwell B distinguished
between a contract to supply a prostitute
with a carriage to be used to attract
customers and a contract to supply her a
pair of shoes, as shoes were one of the
necessities of life. It was part of the
principle ex turpi causa non oritur actio
that anyone who supplies something for
the performance an illegal act with
knowledge that it was to be used for that
purpose cannot sue for the price of it. An
immoral purpose was the same thing as an
illegal purpose. Therefore, the plaintiff
could not recover.
NORDENFELT
V
NORDENFELT
1894 AC 535
BENCH
LORD MACNAGHTEN, LORD
WATSON LORD HERSCHELL,
LORD ASHBOURNE LORD MORRIS
FACTS
Thorsten Nordenfelt, a manufacturer
specialising in armaments, had sold his
business to Hiram Stevens Maxim. They
had agreed that Nordenfelt ‘would not
make guns or ammunition anywhere in the
world, and would not compete with
Maxim in any way for a period of 25
years’.
JUDGMENT
The House of Lords held that the restraint
was reasonable in the interests of the
parties. They placed emphasis on the
£200,000 that Thomas Nordenfeldt had
received as full value for his sale.Restraint
of trade clauses were prima facie void at
common law, but they may be deemed
valid if three conditions are met:
- the terms seek to protect a legitimate
interest
- the terms are reasonable in scope from
the viewpoint of the parties involved
- the terms are reasonable in scope from
the viewpoint of public policy.
The question on severability was whether
the reasonable restriction could be
enforced when it was in the same contract
as an unreasonable and unenforceable
restriction. The court used the test of
whether striking out (with a blue pencil)
words containing unreasonable provisions
would leave behind a contractual
obligation that still made sense. If it did,
then the amended contract would be
enforced by the court.
In this case, the unreasonable restraint was
severable, and the court enforced the
amended agreement that Nordenfelt "for
the next 25 years, would not make guns or
ammunition anywhere in the world , thus
permitting him to trade in those very items
in direct competition with Maxim,
illustrating the limited practical utility of
the rule under its strike-out only stricture.
At common law a restraint of trade is
prima facie contrary to public policy and
void, unless it can be shown that the
restraint is, in the circumstances of the
particular case, reasonable.
Lord Watson said: ‘I think it is now
generally conceded that it is to the
advantage of the public to allow a trader
who has established a lucrative business to
dispose of it to a successor by whom it
may efficiently be carried on. That object
could not be accomplished if, upon the
score of public policy, the law reserved to
the seller an absolute and indefeasible right
to start a rival business the day after he
sold. Accordingly it has been determined
judicially, that in cases where the
purchaser, for his own protection, obtains
an obligation restraining the seller from
competing with him, within bounds which
having regard to the nature of the business
are reasonable and are limited in respect of
space, the obligation is not obnoxious to
public policy, and is therefore capable of
being enforced.’
Lord MacNaughten discussed the doctrine
of restraint of trade: ‘In the age of Queen
Elizabeth all restraints of trade, whatever
they were, general or partial, were thought
to be contrary to public policy, and
therefore void.’ and ‘The true view at the
present time I think, is this: The public
have an interest in every person’s carrying
on his trade freely: so has the individual.
All interference with individual liberty of
action in trading, and all restraints of trade
of themselves, if there is nothing more, are
contrary to public policy, and therefore
void. That is the general rule. But there are BENCH
exceptions: restraints of trade and
SIR LAWRENCE JENKIM, K.C.I.E.
interference with individual liberty of
CHIEF JUSTICE AND JUSTICE
action may be justified by the special
BATCHELOR
circumstances of a particular case. It is a
sufficient justification, and indeed it is the
only justification, if the restriction is FACTS
reasonable – reasonable, that is, in
In March 1903, certain Ice Manufacturing
reference to the interests of the parties
Companies in Bombay entered into an
concerned and reasonable in reference to
agreement relating to the manufacture and
the interests of the public, so framed and
sale by them of ice. The agreement fixed,
so guarded as to afford adequate protection
inter alia, the minimum price at which ice
to the party in whose favour it is imposed,
was to be sold by the parties the proportion
while at the same time it is in no way
of the manufacture which earlier was to
injurious to the public.’
bear, and the proportion of the profits
RATIO which, each was to receive. It farther

he purchaser of the goodwill of a business created a monthly obligation to pay into

sought to enforce a covenant in restraint of and a corresponding right to receive from,

trade given by the seller. a general common fund the different if

any, between the profits actually received
by the parties and those to which they
were, under the agreement, entitled. On a
suit being instituted for breach of the
agreement, in which damages, sustained
S.B.FRASER AND COMPANY prior to and pending the hearing of the

V suit, were claimed.

BOMBAY ICE MANUFACTURING JUDGEMENT

COMPANY Held the fact that an agreement, if carried

out, would limited competition and keep
np prices, did not necessarily bring it
(1905) ILR 29 BOM107
within the terms of section 27 of the Indian
Contract Act (I X of 1872) : to succeed in
the defence under that section it was
necessary to establish that the agreement
was one whereby a person was restrained
from exercising a lawful profession, trade,
or busiaoas of any kind. Meld, further, that
whether or not a High Court in India
would award damages, in respect of a
continuing cause of action, up to the date
of its decree, subsequent successive
accruals of an obligation to contribute to a
fund could not be treated as falling within
that description, and could not be awarded
in a suit where they had accrued due
subsequently to its institution. An order
directing a Company to furnish an account
would not extend beyond, or include
contributions which accrued later than, the
date when the business of such Company
was transferred to a limited Company.
APPEAL from Russell J.
On the 15th of March 1902, the Bombay
Ice Manufacturing Company, Limited,
Messrs. J. and J. Moir, Messrs. S. B.
Fraser and Company, and Chubildas
Lulloobhoy entered into an agreement
relating to the manufacturer and sale by
them of ice, which contained, inter alia, the
following provisions.
That the defendants S. B. Fraser and
Company be decreed to pay the plaintiffs^
costs of this suit.
The defendants put in a written statement
denying their liability on the grounds
therein appearing, and ultimately the
parties came on fur hearing’ before
Russell, J., when the following issues were
raised:
1. Whether the agreement in A. and B to
plaint was ever an agreement binding on
the plaintiffs and the defendants?
2. Whether the defendants were not
induced to sign the said A and B to plaint
by the representations of the plaintiffs or
their agents respecting as alleged in
paragraphs
3. Whether the said representations or any
of them were true in fact ?
4. Whether, if last two issues are decided
in defendants’ favour, the defendants are
bound by the agreement?
5. Whether the agreement in A and B is a
valid agreement in law and binding on
defendants?
6. If not, whether the plaintiffs are entitled
to maintain this suit on the said
agreement?
7. Whether the plaintiffs have performed
their part of the agreement as alleged?
8. Whether the plaintiffs are in any event
entitled to specific performance of the said
FACTS
agreement?
In this case the parties to the contract
I therefore am of opinion that so far as
carried on business as braziers in a certain
contributions are concerned relief must.
part of Calcutta. As the mode of the
The restricted to those that accrued before
business of the plaintiff was found by the
suit, and I further hold that no claim can be
defendants to be detrimental to their
made in respect of the sale of frosted ice.
business interest, an agreement was
The plaintiffs cannot recover the whole of
entered into between the plaintiff and the
each instalment, but only damages for the
defendants whereby the plaintiff agreed to
non-payment. In the view I take it is
stop his business in that quarter and the
unnecessary to discuss the transfer by
defendant promised in consideration of his
Frasers to the limited Company and the
doing so to pay the plaintiff all the sums
development by the P, & O. Company of
which he had then distributed as advance
their ice business, as both are subsequent
to the workers. In terms of the agreement
to the suit.
the plaintiff ceased carrying on the
From the course which the case took business in that quarter, but the defendants
before Russell,, no evidence of these failed to perform their part of the contract,
damages, so that unless the parties can namely, to pay to the plaintiff all the sums
come to some agreement an enquiry must which the plaintiff had advanced to their
be directed. workmen.

The plaintiff therefore sued to recover

from the defendants Rs. 900 being the
amount advanced by him to their
MADHUB workmen. It was held by the High Court

V that the agreement was void under section

27 of the Indian contract act even though
RAJCOOMAR
the restriction put on the plaintiff’s
14 BLR 76 business was limited to a particular
location. The plaintiff’s suit failed on the
ground that when the agreement on the
BENCH
part of the plaintiff was void, there was no
consideration for the agreement on the part
of the defendants to pay the money and the
whole contract was to be treated as one
which could not be enforced.
JUDGEMENT
The plaintiff sued the defendants, for that
the plaintiff having opened a shop in
Kansareepara, in Simla, in the town of
Calcutta, for the sale of copper utensils,
the defendants proposed to the plaintiff to
cease carrying on the said business in the
said locality, on the ground of its being
detrimental to their business, and offered
and agreed in consideration of his doing so
to pay to the plaintiff all sums which he
had then disbursed as advances
workmen, whereupon the plaintiff did
agree and consent to cease carrying on the
said business, and did accordingly cease;
and that the defendants have neglected and
refused to perform their part of the
contract, to wit, to reimburse the plaintiff
in all same that he had advanced to
workmen, whereby the plaintiff
sustained damages to the amount stated,
namely, Rs.900.
Section 27- "Every agreement by which
any one is restrained from exercising a
lawful profession, trade or business of any
kind, is to that extent void."
Exception 1- One who sells the goodwill of
a business may agree with the buyer to
refrain from carrying on a similar
business, within specified local limits, so
long as the buyer, or any person deriving
title to the goodwill from him, carries on a
like business therein: Provided that such
limits appear to the Court reasonable,
regard being had to the nature of the
business.
As what constitutes restraint of trade is
summarized in Halsbury’s Laws of
England , where it is opined that it is a
general principle of the Common Law that
a man is entitled to exercise any lawful
trade or calling as and when he wills and
the law has always regarded jealously any
interference with trade, even at the risk of
to interference with freedom of contract, as it
is public policy to oppose all restraints
upon liberty of individual action which are
injurious to the interests of the State. In
deciding whether a contractual term
amounts to a restraint of trade, the Court
looks not at the form of the term but its
effect. It was held that the doctrine can
has therefore apply to indirect restrictions,
such as a financial incentive not to
compete with the employer. Agreements in
restraint of trade are extremely common
and it would be intolerable hindrance to
business if they were not allowed.
 S. B. FRASER AND COMPANY which damages, sustained prior to and
pending the hearing of the suit, were
V
claimed, Eeld) the fact that an agreement,
BOMBAY ICE MANUFACTURING if carried out, would limifc competition
COMPANY LIMITED and keep np prices, did not necessarily
bring it within the terms of section 27 of
the Indian Contract Act (I X of 1872) : to
BENCH
succeed in the defence nnder that soetion it
SIR LAWRENCE JENKIN, K.C.I.E., was necessai'y to establish that the
CHIEF JUSTICE AND MR. JUSTICE agreeuient was one wbereby a person was
BACHELOR restrained from exercising a lawful
i)rofession, trade, or busiaoas of any kind.
FACTS
Meld, further, th at whether or n ot a High
Agreement—Restraint of Trade— Sections
Court in India eoiild award damages, in
23 and 8,- Indian Contract Act {IX of
respect of a continuing cause of action, up
1873)-—Continuous cause of action—
to the date of its decree, subsequent
Damages—Transfer of business to a
successive accruals of an obligation to
limited Company—effect. In March 1903,
contribute to a fund could not be treated as
certain Ice Manufacturing Companies in
falling within that description, and could
Bombay entered into an agreement relating
not be awarded in a suit where they had
to tlie manufacture and salo by them o f
accrued due subsequently to its institution.
ice. The agreement fixed, inter alia, the
An order directing a Company to furnish
minimiim price at which ice was to bo sold
an account wiU not extend beyond, or
hy the parfciesj the proportion of the
include contributions which accrued later
manufacture which eacli was to bear, and
than, the date wten the business of such
tlie propartion of the profits which, each
Company was transferred to a limited
was to receive. It farther created a monthly
Company.
obligation to pay liitoj and a correponding
right to receive from, a general common
fund the differanoej if any, hob ween the GUNTHING
profits actually raoexved by the parties and
V
those to which they were, under the
agreement, entitled. On a suit being LYNN

instifcnted for breach o£ the agreement, in (1831) 2 B7 AD 232


FACTS
The buyer of a horse, who was the plaintiff
in this case, promised the seller that they
would pay $5 more for the horse, or buy
another horse from the seller if the horse
was lucky. The horse was not in the
condition that the plaintiff believed and a
dispute arose between the parties as to
whether the seller was owed the
conditional payment mentioned by the
buyer.
ISSUE
The court had a number of issues to
decide. The most prominent issue was
whether the offer from the buyer, to pay
more for the horse if it was lucky, could be
considered to be a valid offer for the
purposes of the sale. This would give an
indication as to whether the seller could
rely on the payment that had been
mentioned. Specifically, the court was
required to understand whether the terms
‘lucky’ and ‘buy another horse’ could be
defined and considered legally binding on
the parties.
JUDGEMENT
The court held that the condition to pay $5
extra for the horse if it was lucky, was
deemed to be too vague to create a binding
contract between the parties. The words
contained in an agreement must be clear so
that the parties can be sure of the terms
upon they are contracting. As a result of
this, the only part of the transaction that
was sufficient for the court was the
purchase of the horse for the price of $63
and that was the vast majority of the legal
agreement between the parties.
29. Agreements void for uncertainty.—
Agreements, the meaning of which is not
certain, or capable of being made certain,
are void. —Agreements, the meaning of
which is not certain, or capable of being
made certain, are void." Illustrations
(a) A agrees to sell B “a hundred tons of
oil”. There is nothing whatever to show
what kind of oil was intended. The
agreement is void for uncertainty. (a) A
agrees to sell B “a hundred tons of oil”.
There is nothing whatever to show what
kind of oil was intended. The agreement is
void for uncertainty."
(b) A agrees to sell B one hundred tons of
oil of a specified description, known as an
article of commerce. There is no
uncertainty here to make the agreement
void. (b) A agrees to sell B one hundred
tons of oil of a specified description,
known as an article of commerce. There is
no uncertainty here to make the agreement
void."
(c) A, who is a dealer in coconut-oil only,
agrees to sell to B “one hundred tons of
oil”. The nature of A’s trade affords an
indication of the meaning of the words,
and A has entered into a contract for the
sale of one hundred tons of coconut-oil.
(c) A, who is a dealer in coconut-oil only,
agrees to sell to B “one hundred tons of
oil”. The nature of A’s trade affords an
which of the two prices was to be given.
The agreement is void. (f) A agrees to sell
to B “my white horse for rupees five
hundred or rupees one thousand”. There
is nothing to show which of the two prices
was to be given. The agreement is void."
DISCHARGE BY PERFORMANCE

indication of the meaning of the words, STARTUP

and A has entered into a contract for the
V.
sale of one hundred tons of coconut-oil."
MCDONALD
(d) A agrees to sell B “all the grain in my
granary at Ramnagar”. There is no
uncertainty here to make the agreement
(1843) 6 MANN & G 593
void. (d) A agrees to sell B “all the grain
in my granary at Ramnagar”. There is no
uncertainty here to make the agreement (Section 38—tender)
void."

(e) A agrees to sell to B “one thousand

maunds of rice at a price to be fixed by
C”. As the price is capable of being made
certain, there is no uncertainty here to
make the agreement void. (e) A agrees to
sell to B “one thousand maunds of rice at
a price to be fixed by C”. As the price is
capable of being made certain, there is no
uncertainty here to make the agreement
void."
(f) A agrees to sell to B “my white horse
for rupees five hundred or rupees one
thousand”. There is nothing to show
FACTS:
Startup (S) contracted with McDonald (M)
to supply specified quantity of linseed oil
within the last fourteen days of the month
of March. S tendered on the last of the
fourteen days at 9’o clock at night. M
refused to accept owing to the lateness of
hour.
ISSUES:

1) Whether S supplying the goods at such
period of time amounted to valid tender?
2) Whether M by denying to take delivery
breached the contract?
HELD:
1) The promisee must have a reasonable
opportunity of ascertaining that the thing
offered by promisor is thing which latter is
bound to deliver. (S.38-2)
Though the time of delivery
unreasonable due to lateness of the usual
business hours, yet there was full and
sufficient time for M to weigh, examine
and receive into their possession the
delivered oil before midnight
dissenting opinion, however, C.J. points
out there ought to be reasonable time as
well as opportunity. Absence of all
workers from the warehouse or any other
reason thereof due to the lateness of the
hour could be pleaded as factor negating
the tender for it will not provide
reasonable opportunity to examine the
product).
In contracts of sale of goods, if parties
don’t stipulate the place and time for the
performance of the contract, then
according to law, “party who is to receive
is bound to attend at a reasonable place,
and wait till a reasonable time, for the
purpose of receiving what the other party
is bound to deliver”. If the party bound to
deliver doesn’t come at the reasonable
place till the reasonable hour, other party
isn’t bound to wait any further and if
former comes after latter has departed, he
by his own conduct has rendered tender to
be made impossible.
REPORT THIS AD
was
Since in present case, M was present at the
warehouse and was in a position to
reasonably ascertain the quality, quantity
(in
of the product delivered, hence, there was
a valid tender even when made at
unreasonable time for it was made within
the time stipulated under the contract and
thus rendered literal possibility of
performance within the letter of contract.
DOMINION OF INDIA
VS
 GAYA PERSHAD of April, 1946. In each case it was
mentioned in the railway receipt that the
AIR 1957 ALL 193
wagon was to be carried by C. O. G.
Special. We understand from learned

ALLAHABAD HIGH COURT counsel for the appellant that the correct
term used is C. O. G. which letters connote
BENCH
trains known as Coaching Specials. These
AGARWALA, V BHARGAVA trains are parcel trains which run faster
than goods trains like parcel express. The
FACTS
goods consigned on the 21st of March
These four appeals arise out of four
1946 were delivered at Lucknow to the
different suits which were numbered as
plaintiff-respondent on the 30th of March,
Suits Nos. 64/5 of 1947, 72/10 of 1947,
1946 when it was found that the oranges
73/11 of 1947 and 74/12 of 1947 in the
had considerably deteriorated. The amount
trial Court. In all the four suits the
of deterioration was estimated by the
plaintiffs and the defendants were the
Station Superintendent, Lucknow at 75%
same. The suits all related to a claim made
which was noted down in the delivery
by the plaintiff-respondent against the
book. The other three consignments were
defendants-appellants who are the two
offered for delivery at Lucknow to the
railway administrations at present known
plaintiff-respondent on 3rd May, 1946
as the Central Railway and the Northern
when the plaintiff refused to take delivery
Railway and which, at the time of the suits
on the ground that the goods had
were known as the G. I. P. Railway and the
deteriorated completely and become unfit
E. I. Railway; The claim was in respect of
for consumption.
damages to baskets of oranges which were
A note was made by the plaintiff-
sent from the railway station Katol on the
respondent In the delivery book that the
Central Railway to Lucknow on the
contents of these wagons were extremely
Northern Railway. The consignors of the
rotten and unfit for human consumption so
four consignments were different but the
that he was refusing to take delivery.
consignee in each case was the plaintiff-
Thereafter the plaintiff-respondent gave
respondent. The first consignment in
notice to the two railway administrations
question was booked from Katol on the
concerned and then instituted these four
21st of March, 1946 and the other three
suits for recovery of damages incurred by
consignments were booked 011 the 22nd
the plaintiff by reason of the late delivery
of the goods.
Various defences were raised to the suits.
All the four suits were tried together and
decided by one single judgment. The Court
rejected the pleas in defence and decreed
the suit for damages.
Four different appeals have been filed in
this Court but since all the suits were
decided by one judgment and common
questions are involved, we are also
deciding these four appeals by one single
judgment.
When these appeals came up for hearing
before us, learned counsel for the
appellants urged three points before us.
The first point urged was that the plaintiff-
respondent, who was only the consignee
and not the owner of the goods of these
four consignments, had no right to bring
suits for damages to or loss of the goods.
The second point urged was that it was
incumbent upon the plaintiff-respondent to
establish that the damage to the goods was
the result of misconduct on the part of the
railway administrations or their servants in
view of the risk notes which had been
executed by the consignors at the time
when the goods were booked and since the
plaintiff-respondent failed to establish any
such misconduct, he was not entitled to a
decree in any of these suits. The third
point, which learned counsel took up, was
that the amount of damages awarded by
the lower Court had not been properly
assessed. No other points besides these
three were canvassed before us on behalf
of the appellants.
The first point raised an important question
of law. In that question it had to be
determined whether the consignee had a
right to bring a suit for damage to the
goods in respect of which he was entitled
to take delivery from the railway
administration even though he was not the
owner of these goods. It was found by us
that in considering this question it was
necessary to reconsider a Division Bench
decision of this Court. Consequently we
framed a question and referred it for
opinion to a Full Bench. The decision of
the Full Bench on that point was given on
the 23rd of March, 1955 (Reported as (S)
AIR 1956 All 338). That decision of the
Full Bench is against the appellants and in
favour of the plaintiff-respondent. The
decision was that the consignee in these
cases had a right to bring the suits for
damage to the goods even though he was
not the owner of these goods. That point is
thus disposed of by the decision of the Full
Bench.
The main contention on the second point
on behalf of the appellants was that though
the position of the railway as carrier of the
goods was that of a bailee by virtue of the
provisions of the Indian Railways Act, in
this particular case the appellants were
specially protected by the risk notes in
Form B which had been executed by the
consignors when these four consignments
were booked. Under these risk notes the
consignors had, in consideration of lower
charge, agreed and undertook to hold the
railway administration harmless and free
from all responsibility for any loss,
destruction or deterioration of, or damage
to the said consignments from any cause
whatever except upon proof that such loss,
destruction, deterioration or damage arose
from the misconduct on the part of the rail
way administration or its servants. There
were also some provisos to this clause but
they, need not be quoted as they are not
applicable and relevant to the case before
us. On behalf of the appellants stand was
taken on this condition in the risk notes
and it was urged that, unless the plaintiff-
respondent had proved that the damage to
the goods was the result of misconduct on
the part of the railway administration or
their servants, the plaintiff-respondent
could not claim damages from the
appellants. In the lower Court, this point
was sought to be met on behalf of the
respondent on the ground that the risk
notes had been obtained from the
consignors by misrepresentation of facts
by the servants of the railway
administration concerned. This plea of the
plaintiff-respondent was not accepted by
the lower Court, nor has it been pressed
again before us. The position, that has
been taken up on behalf of the plaintiff-
respondent before us, is that in this case
the facts admitted and proved showed that
the goods were not carried by the railway
administrations in accordance, with the
contracts entered into as evidenced by the
parcel way bills and since the goods were
not carried in accordance with the contract
and there was a breach of the contract on
the part of the railway administrations, the
railway administrations were not entitled
to claim the protection of the risk notes. It
appears from a joint statement given by
learned counsel for the parties in the lower
court that the wagons in respect of all the
four consignments were despatched from
Katol railway station, where the goods
were consigned, by C. O. G. Specials. In
all cases the goods were carried up to
Jhansi by C. O. G. Specials. The first
consignment, which was in Wagon No.
8126, was sent from Jhansi by being
attached to a goods train which left Jhansi
on the 26th of March, 1946 at 4.00 a.m. It
arrived at Juhi near Kanpur Central Station
on the 26th of March, 1946 at 4.40 p.m.
and from there it was despatched by
another goods train on the 27th of March
at 12.00 a.m. The wagon arrived at
Lucknow on the 28th of March, 1946, at
11.50 a.m. when it was placed in the goods
yard. Thereafter it was placed at the parcel
delivery siding on the 29th of March, 1946
at 5.00 p.m. So far as the other three
consignments are concerned, they were
carried by C. O. G. Special from Jhansi up
to Juhi where they arrived on the 27th of
April, 1946 at 7.15 a.m. From Juhi,
however, the wagons were attached to a
goods train which left Juhi on the 1st of
May, 1946 at 11-20 p.m. The wagons then
arrived at Lucknow on the 2nd of May,
1946 at 6.30 a.m. and were placed for
delivery at the parcel delivery siding on
the 3rd of May, 1946, on which date
delivery was refused by the plaintiff-
respondent. This movement of the wagons
containing the goods shows that part of the
way the goods were carried by the type of
train which was agreed upon between the
consignors and the railway administration,
but for part of the way the wagons were
carried by goods train which was contrary
to that contract. The reason in the case of
Wagon No. 8126 given on behalf of the
railway administration is that though that
wagon could be attached to a passenger
(No. 603 Down) which was to leave Jhansi
at 3.00 a.m. on the 26th of March, 1946,
this could not be done as that train was
already carrying an overload. According to
the evidence of defence witness S. D.
Awasthi, that train usually had a load of 10
bogies whereas on that day it was actually
carrying 11 bogies. Further questioned, the
witness went on to say that the train was
actually carrying 10 passenger bogies, one
military motor van and one military stores
wagon. The train ordinarily carried 8
passenger bogies but there were 10
passenger bogies in the train that day. He
has also stated that this excess in the
number of bogies in the train came about
since two extra passenger bogies had come
in the train from Bombay. This does show
that the train was carrying an overload that
day so that this Wagon No. 8126 could not
be attached to that train. The witness has
also stated that in order to avoid heavy
detention, this Wagon No. 8126 was then
attached to the goods train No. D-5. It has
been urged by the learned counsel for the
appellants that this step which was taken at
Jhansi was a prudent act of a bailee
inasmuch as the wagon was attached to the
goods train to avoid further detention as
far as possible in view of the fact that the
wagon contained perishable goods. Having
heard learned counsel on this point, we are
not satisfied that this step, which was taken
on behalf of the railway administration,
was really a prudent act. The facts
disclosed by the railway administration
themselves show that the result of the
attachment of that wagon to the goods
train at Jhansi was that the wagon went to
Juhi where there had to be a detention of
about 17 hours. Even when it was sent
from Juhi by another goods train to
Lucknow, there was a further delay in
delivery of the goods, the wagon having
come by a goods train, which according to
rules, had to be sent to the goods yard. It
actually reached the goods yard at 11.50
a.m. on the 28th of March, 1946 and
thereafter there was a delay of about 30
hours before it could be placed at the
delivery siding. There were thus two long
delays at Juhi and Lucknow which were
clearly very material delays in view of the
nature of the goods that were being
carried. The delays occurred because the
goods were sent from Jhansi onwards by a
goods train and not by the type of train
which had been agreed upon between the
consignor and the railway administration.
If the wagon had not been sent by goods
train from Jhansi on the 26th of March,
1946, but had been sent by the passenger
train No. 603 Down on the 27th or 28th of
March, 1946 even then it could have been
available for delivery at Lucknow earlier
than the time when it became available on
being attached to the goods train. Further,
it appears that when that wagon was
attached to the goods train at Jhansi, no
steps were taken to ensure that the railway
servants, who had to deal with the wagon
at later stages, came to know that there had
been a contract to carry that wagon by C.
O. G. Special. If any such step had been
taken, the delays, which occur in the case
of wagons ordinarily sent by goods train,
could have been avoided. No such prudent
step was taken either. Another aspect that
has to be kept in view is that the failure to
attach the wagon to No. 603 Down
passenger train was also the result of the
actions of the railway administration itself.
The two extra coaches, that had been
attached from Bombay, were attached by
the same railway administration which
accepted the hooking of these goods at
Katol. It is true, as urged by learned
counsel, that during those days there was
pressure of traffic on the railways and
there was at the same time shortage of
rolling stock and engines but if the railway
administrations anticipated that the goods
booked by C.O.G. Special from Katol
could not be carried by passenger train and
had to be carried by goods train, they
should not have contracted to carry the
goods by C.O.G. Special. Having,
contracted with the consignors to carry the
goods by C. O. G. Special, the equivalent
of which is a passenger train, it was the
duty of the railway administration to take
steps that the goods were carried in the
expeditious manner contracted between the
parties and not by a slower train. For all
these reasons, we are unable to hold that
the alteration of the type of train from the
C. O. G. Special to goods train was a
prudent act on behalf of the railway
administration. The result of this alteration
by the railway administration was that the
goods were no longer being carried in
accordance with the terms of the contract
between the parties. Once the carriage of
the goods was no longer in accordance
with the terms of the contract, and a breach
of the contract in that respect had been
committed by the railway administration,
the railway administration could no longer
seek the protection of the risk note in Form
B as that risk note was executed by the
consignor on the clear understanding that
the goods would be carried by C. O. G.
Special and not by goods train. In the case
of perishable goods like oranges, the term
of contract that the goods are to be carried
by a special type of train which is faster
than the ordinary goods train, is clearly of
the essence of the contract. The arrival of
the goods was delayed in consequence of
the change of type in train and not because
it was not possible for the railway
administration to carry the goods
throughout by C. O. G. Special.
The railway administration need not have
contracted to do so, but when they did
contract to do so, the risk note, which was
executed by the consignor, could protect
the railway administration only so long as
they carried out the transit of the goods in
accordance with the terms of the contract.
This view of ours is fully supported by a
decision in Gunyon v. South Eastern &
Chatham Rly. Co.'s Managing Committee,
1915-2 KB 370 (A). In that case also an
owner's risk note had been executed by the
consignor under which the consignor had
elected to book the goods at a reduced rate
agreeing to relieve the Managing
Committee and all other companies or
persons over whose lines the merchandise
may pass, or in whose possession the same
may be during any portion of the transit,
from all liability for loss, damage,
misdelivery, delay, or detention, except
upon proof that such loss, damage,
misdelivery, delay, or detention arose from
wilful misconduct on the part of the
Managing Committee's servants. It was
held that the owner's risk clause could only
be effective in cases in which the railway
afforded the consignor an alternative rate
below the general rate. The rate was
alternative to a general rate "for the
carriage of fruit by passenger train or by
other similar service" which of course the
Midland goods train (by which the goods
were actually carried for part of the way)
was not. To make the owner's risk
operative the contract had to be one for
carriage by passenger or equivalent train.
It was held that it was during any portion
of such transit only that the sender agreed
to relieve the company from liability. It
was only during the performance by the
railway company of such transit that the
sender could be called upon to show that
his loss had arisen from the wilful
misconduct of the company's servants. But
when in London the cherries were shipped
on a goods train, that contract was no
longer being performed and the goods
were no longer being carried at owner's
risk. The Midland Railway Company
shipped the goods upon a train to which
neither the contract nor the rate of payment
applied and consequently the ordinary
incidents of carriage by carrier at once
became applicable. The mere fact that they
were being carried over the line of rails of
the Midland Railway Company did not
constitute the performance or an attempted
performance of that special contract. The
company never carried and never intended
to carry at owner's risk; for they must have
known that the only valid owner's risk rate
for fruit in force was oae for carriage by
passenger train. It will be noticed that the
above case was similar in facts to the cases
before us. In both cases owner's risk forms
had been executed under which the railway
administrations were exempted from
liability for damage, etc., except upon
proof of misconduct on the part of the
railway administrations or their servants.
In the case of Gunyon v. South Eastern
and Chatham Railway Companies'
Managing Committee (A) the goods were
to be carried by passenger train and were
instead carried by goods train for part of
the way. It was held that the damage
resulting from delay on that part of the
transit could be claimed without proof of
misconduct. In our case also, the delay
occurred materially in the transit between
Jhansi and Lucknow when the goods were
not being carried in accordance with the
terms of the contract under which they had
to be carried by C. O. G. Special. They
were being carried by goods train which
was slower than C. O. G. Special and to
which the rates applicable must be lower.
This principle was applied in India by the
Bombay High Court in B. B. & C. I.
Railway v. Mahamadbhai Rahimbhai and
Anr., AIR 1929 Bom 355 (B). In that case
also the goods were being carried under a
risk note which was in Form H under
which the railway administration was
protected unless there was wilful neglect
on. their part. It was held that the carriage
of goods, which were of a perishable
nature, by passenger or parcel train was the
essence of the contract and when that
contract was broken by carrying the goods
by goods train the protection of the risk
note was no longer available to the railway
administration. In these circumstances,
since we are unable to hold that the
railway administration was justified in
sending the Wagon No. 8126 from Jhansi
by goods train and in committing breach of
contract, the railway administration is not
entitled to the protection of the risk note in
Form B. The facts with regard to the other
three consignments are very similar. In
these cases also the goods were sent from
Juhi by goods train. There
considerable delay at Juhi where the
wagons were dealt with like wagons being
sent at ordinary rate by goods train. Again
at Lucknow, there was delay in placing the
wagons for delivery, because, having been
treated as wagons coming by goods train,
they first went to the goods yard and were
later placed at the delivery siding, in these
circumstances, no question arises of the
plaintiff-respondent being required
prove that the damage to the goods booked
was due to any misconduct on the part of
the railway administrations or
servants and consequently we need not go
into the question whether there was any
such misconduct in this case or not.
Learned counsel for the appellants also
urged before us that there was no evidence
that the deterioration in the goods was the
result of delay in delivery occasioned by
the carrying of the goods by goods train
instead of C. O. G. Specials. The nature of
the goods itself indicates that detention of
the goods before delivery was likely to
affect the quality of the goods. The longer
they were delayed, the more deterioration
was bound to occur. In the case of goods
sent on the 21st of March, 1946, there was
an assessment by the Station
Superintendent, Lucknow, himself that the
deterioration was to the extent of 75%. So
far as the goods of the other three
consignments are concerned, there is
was evidence on behalf of the respondent that
there was complete deterioration and the
goods had become unfit for consumption.
There is no evidence to the contrary on
behalf of the appellants to show that the
goods were still in good condition and fit
for consumption. The deterioration was
due to delay in delivery as no alternative
cause for deterioration has been alleged or
proved on behalf of the appellants. The
to second point urged on behalf of the
appellants must also, therefore, be decided
against them.
their
So far as the question of the amount of
damages is concerned, learned counsel has
only pressed it before us with regard to the
amount of damages in one suit, No. 64/5
of 1947 out of which First Appeal No. 89
of 1948 has arisen. It was in that case that
the amount of loss was estimated at 75%.
Learned counsel's argument was that the
value of the damage to the goods accepted
by the lower Court as Rs. 3,447-5-0 has
not been properly proved by the plaintiff-
respondent whose evidence on this point
was unsatisfactory. We, however, find that
the value of the damage was assessed by
an officer of the railway administration at
Lucknow who has also been produced in
this case as a witness on behalf of the
appellants. No attempt was made to show
in his evidence that his assessment was
wrong or had been arrived at on some
misrepresentation made by the plaintiff-
respondent. There is, therefore, no reason
for rejecting the figure of assessment of
damage made by him. In the other three
cases, the rate per basket for the goods
damaged was fixed by the lower Court on
the basis of the statement of Mr. G. Dan,
who was the Assistant Fruit Marketing and
Utilisation Officer and who had been in
Government service. We see no reason to
differ from the views taken by the learned
Judge of the lower Court that his evidence
is reliable.
Consequently we find that there is no force
in these appeals and they are dismissed
with cost
CALTEX
V or non observance of any of the covenants
BHAGWAN DEVI MORODIA
969 AIR 405, 1969 SCR (2) 238
SUPREME COURT OF INDIA
BENCH
BACHAWAT, R.S.
FACTS
Appeal from the judgment and decree,
dated June 3, 1966 of the Calcutta High
Court in Appeal No. 251 of 1965. M.C.
Chagla and S.N. Mukherjee, for the
appellant. S. V. Gupte, M.G. Poddar and
D.N. Mukherjee, for the respondent.
The Judgment of the Court was delivered
by Bachawat,I. By an indenture of lease,
dated February 17, 1954 the respondent
leased to the appellant a plot of land at
premises No. 22, Jatindra Mohan Avenue,
Calcutta, for a term of 10 years
commencing from February 1, 1954.
Clause 3(c) of the deed provided for a
renewal of the lease and was in the
following terms :--
"3 (c). The lessor will on the written
request of the lessees made two calendar
months before the expiry of the term
hereby created and if there shall not at the
time of such request be any existing breach
on the part of the lessees hereinabove
contained grant to it one renewal of 10
years from the expiry of the said term at
the same rent and containing the like
convenants and provisos as are herein
contained except that as regards the clause
for renewal for further period the rent shall
be as may be agreed between the lessor
and the lessees."
On December 1, 1963, the time fixed for
applying for the renewal of the lease
expired. On December 13, the appellant
made a written request for the renewal. On
December 23, 1963 the respondent's
solicitors replied stating that the request
being out of time was ineffective and
asking the appellant to, vacate the land on
the expiry of the lease. The appellant had
erected structures on the land for the
purpose of running a petrol delivery station
and was a Thika tenant within the meaning
of the Calcutta Thika Tenancy Act, 1949.
In February 1964 the respondent filed an
application before the Controller asking
for eviction of the appellant under ss. 3(vi)
and 5 of the Calcutta Thika ,,Tenancy Act.
The Controller allowed the application. An
appeal from this order was dismissed by
the appellate Authority. A revision petition
against the order was dismissed by the
High Court. While dismissing the revision
petition, the High Court stayed the
execution of the order of eviction for a
month and observed that the authorities
under the Calcutta Thika Tenancy Act had
no power to decide whether the appellant
was entitled to a renewal of the lease.
Thereafter the appellant filed the present
suit on the Original Side of the Calcutta
High Court asking for a declaration that it
was entitled to a renewal of the lease,
specific performance of the covenant for
renewal, an injunction restraining
execution of the order of eviction passed
by the Controller and for other reliefs. In
paragraphs 13 and 14 of the plaint the
appellant alleged that the delay in giving
notice of renewal should be excused in
view of the following special
circumstances: (a) the delay was due to
oversight; (b) the respondent had not
altered her position for the worse or to her
detriment within the space of 12 days; (c)
neither party had treated the matter of time
as being as the essence of the transaction;
(d) the appellant had constructed a service
station for petroleum products of immense
utility to the public of the locality; (e) the
appellant was in possession of the land.
The respondent contended that the
application for renewal being made out of
time was ineffective and that there was no
ground for excusing the delay. S.P. Mitra,
J. accepted the respondent's contention and
dismissed the suit. An appeal under clause
15 of the Letters Patent was dismissed by a
Divisional Bench of the High Court. Both
the courts concurrently held that the letter,
dated December 13, 1963 was not a proper
exercise of the option by the ,appellant
under the lease, dated February 17, 1954
and that there were no special
circumstances for excusing the delay in
,giving the notice. The appellant has filed
the present appeal after obtaining a
certificate from the High Court under Art.
133 ( 1 ) (a) and (b) of the Constitution.
The appellant neglected to make the
application for renewal of the lease within
the stipulated time. Mr. Chagla has
submitted that the time is not of the
essence of the contract having regard to
sec. 55 of the Indian Contract Act, 1877 as
interpreted in the case of Jamshed
Khodaram Irani v. Durjorji Dhunjibhai(1).
Section 55 of the Indian Contract Act
provides that "when a party to a contract
promises to do a certain thing at or before
a specified time, or certain things at or
before specified time, and fails to do any
such thing at or before the specified time,
the contract, or so much of it as has not
been performed, becomes voidable at the
option of the promisee, if the intention of
the (1) L.R. 43 I.A. 26.
parties was that time should be of the
essence of the contract." In Jemshed's
case(1) Viscount Haldane observed that
the section did not lay down any principle
as regards contracts to sell land in India
different from those which obtained under
the law of England. It is well known that
in the exercise of its jurisdiction to decree
specific performance of contracts the
Court of Chancery adopted the rule,
especially in the case of contracts for the
sale of land, that stipulations .as to time
were not to be regarded as of the essence
of the contract unless they were made so
by express terms or unless a clear
indication of a contrary intention appeared
from the nature of the contract or the
surrounding circumstances. In his well
considered judgment Viscount Haldane
carefully refrained from saying that time
was not to be regarded as of the essence in
all contracts relating to land.
At common law stipulations as to time in a
contract giving an option for renewal of a
lease of land were considered to be of the
essence of the contract even if they were
not expressed to be so and were construed
as conditions precedent. Equity followed
the common law rule in respect of such
contracts and did not regard the stipulation
as to time as not of the essence of the
bargain. As stated in Halsbury's Laws of
England, 3rd ed., vol. 3, art. 281, p. 165
"An option for the renewal of a lease, or
for the purchase or re-purchase of
property, must in all cases be exercised
strictly within the time limited for the
purpose, otherwise it will lapse." This
passage was quoted with approval by
Danckwerts L.J. in Hare v. Nicoll(2). A
similar statement of law is to be found in
Foa's General Law of Landlord and
Tenant, 8th Art. 453, p. 310, and in Hill
and Redman's Law of Landlord and
Tenant, 14th ed., p. 54. The reason is that a
renewal of a lease is a privilege and if the
tenant wishes to claim the privilege he
must do so strictly within the time limited
for the purpose. With regard to equitable
relief against the failure of the tenant to
give notice of renewal within the stipulated
time. the law is accurately stated in
Halsbury's Laws of England, 3rd ed.,vol.
23, p. 626, Art. 1329, footnote (u)
thus :--"Relief will not be given in equity
against failure to give notice in time, save
under special circumstances. The decided
cases show that in such cases relief is not
given in equity save upon the ground of
unavoidable accident, fraud, surprise,
ignorance not wilful or inequitable conduct
on the part of the lessor precluding him
from refusing to give the renewal. The
limits of the equitable interference in such
cases were clearly stated by the Master of
the Rolls (Sir R.P.Arden) in Eaton v.
Lyon.(3) He observed :- "At law a
covenant must be strictly and literally
performed; in equity it must be really and
substantially.
performed according to the true intent and
meaning of the parties so far as
circumstances will admit; but if
unavoidable accident, if by fraud, by
surprise or ignorance not wilful, parties
may have been prevented from executing it
literally, a Court of Equity, will interfere;
and upon compensation bei ng made, the
party having done everything in his power,
and being prevented by means, I have
alluded to, will give relief ... I decide this
case upon the principles on which, Lord
Thurlow decided (Bayley v. The
Corporation of Leominster 1792, 1 Ves.
476), and I hope now, it will be known,
that it is expected, these covenants shall be
literally performed where it can be done;
and that Equity will interpose, and go
beyond the stipulations of the covenant at
law, only where a literal performance has
been prevented by the means,-I have
mentioned, and no injury is done to the
lessor?' We are of the opinion that the
stipulation as to time in clause 3 (c) of the
indenture of lease dated February 17, 1954
should be regarded as of the essence of the
contract." The appellant not 'having
exercised the option of renewal within the
time limited by the 'clause is not entitled to
a renewal.
The appellant claims relief against the
consequences of its default on the grounds
enumerated in paragraphs 13 and 14 of the
plaint. Grounds (b) and (e) cannot be
regarded as special circumstances. As. to
ground (d), it is. not shown that the service
station is of immense public utility. The
fact that the appellant constructed a service
station is an irrelevant consideration.
Ground (c) is not established and it is not
'shown that the time is not of the essence
of the bargain. As to ground (a) there is stipulated time. Equity will not relieve the
some evidence to show that the delay in tenant from the consequences of his own
giving the notice of renewal was due to neglect which could well be avoided with
oversight. But it is not shown that the reasonable diligence.
delay was due to any unavoidable
The appeal is dismissed with costs.
accident, excusable ignorance, fraud or
surprise. The delay arose from mere
neglect on the part of the appellant and
could have been avoided by reasonable
IMPOSSIBILITY EXISTING AT THE
diligence. As observed 'by the Master of
TIME OF CONTRACT
the Rolls in Reid & Anr. v. Grave &
Others(1): "The rule is now well
established, that no accident will entitle a
party to renew unless it be unavoidable. I
am of opinion, that nothing but accident, COUTURIER
which, could not have been avoided by V
reasonable diligence, will entitle the
HASTIE
plaintiff to a renewal in this Court."

We may add that where no time is fixed

for the purpose, an application for renewal [1856] INT.COM.L.R. 06/26
for the lease may be made within a
reasonable time before the expiry of the
term (see Foa's General Law of Landlord BENCH

& Tenant, 8th ed., article 455, pp. 311-12, MR. BARON ALDERSON, MR.
Ram Lal (1) 9 L.J. Ch, 245, 248. JUSTICE WIGHTMAN, MR.

Dubey v. Secretary of State for India (1), JUSTICE CRESWELL, MR. JUSTICE

Maharani Hemanta Kumari Devi v. ERLE, MR. JUSTICE

Safatulla Biswas & Ors.(2). In the present

case, the lease fixes a time within which
FACTS
the application for renewal is to be made.
The time so fixed is of the essence of the The Plaintiffs were merchants at Smyrna;
bargain. The tenant loses his right unless the Defendants were cornfactors in
he makes the application within the London; and this action was brought to
recover from them the price of a cargo of
Indian corn, which had been shipped at
Salonica, on board a vessel chartered by
the Plaintiffs for a voyage to England, and
had been sold in London by
Defendants in Error, upon a del credere
commission. The purchaser, under the
circumstances hereafter stated,
repudiated the contract. In January 1848,
the Plaintiffs chartered a vessel
Salonica, to bring a cargo of 1180 quarters
of corn to England. On the 8th of February
a policy of insurance was effected on
"corn, warranted free from average, unless
general, or the ship be stranded." On the
22nd of that month, the master signed a
bill of lading, making the corn deliverable
to the Plaintiffs, or their assigns, "he or
they paying freight, as per charterparty,
with primage and average accustomed."
On the 23d February the ship sailed on the
homeward voyage. On the 1st May 1848,
Messrs. Bernouilli, the London agents of
the Plaintiffs, and the persons to whom the
bill of lading had been indorsed, employed
the Defendants to sell the cargo, and sent
them the bill of lading, the charterparty,
and the policy of insurance, asking and
receiving thereon an advance of £600.
On the 15th May the Defendants sold the
cargo to A. B. Callander, who signed a
bought note, in the following terms:
"Bought of Hastie and Hutchinson, a
cargo of about 1180 (say eleven hundred
and eighty) quarters of Salonica Indian
corn,
the
of fair average quality when shipped per
the Kezia Page, Captain Page, from
Salonica; bill of lading dated twenty-
had
second February, at 27s. (say twenty-
seven shillings) per quarter, free on board,
at
and including freight and insurance, to a
safe port in the United Kingdom, the
vessel calling at Cork or Falmouth for
orders; measure to be calculated as
customary; payment at two months from
this date, or in cash, less discount, at the
rate of five per cent per annum for the
unexpired time, upon handing shipping
documents."
In the early part of the homeward voyage,
the cargo became so heated that the vessel
was obliged to put into, Tunis, where, after
a survey and other proceedings, regularly
and bona fide taken, the cargo was, on the
22d April, unloaded and sold. It did not
appear that either party knew of these
circumstances: at the time of the sale. The
contract having been made on the 15th of
May, Mr. Callander, on the 23d of May,
wrote to Hastie and Hutchinson: "I
repudiate the contract of the cargo of
Indian corn, per the Kezia Page, on the
ground that the cargo did not exist at the
date of the contract, it appearing that the
news of the condemnation and sale of this this contract was made, the Plaintiffs could
cargo, at Tunis, on the 22d April, was not recover in the action. He therefore
published at Lloyd's, and other papers, on directed a verdict for the Defendants. The
the 12th instant, being three to four days case was afterwards argued in the Court of
prior to its being offered for sale to, me." Exchequer before the Lord Chief Baron,
Mr. Baron Parke, and Mr. Baron Alderson,
The Plaintiffs afterwards brought this
when the learned Judges differed in
action. The declaration was in the usual
opinion, and a rule was drawn up directing
form. The Defendants pleaded several
that the verdict found for the Defendants
pleas, of which the first four are not now
should be set aside on all the pleas except
material to be considered. The fifth plea
the sixth, and that on that plea judgment
was that before the sale to Callander, and
should be entered for the Plaintiffs, non
whilst the vessel was on the voyage, the
obstante veredicto. That the Defendants
Plaintiffs sold and delivered the corn to
should be at liberty to treat the decision of
other persons, and that since such sale the
the Court as the ruling at Nisi Prius, and to
Plaintiffs never had any property in the
put it on the record and bring a. bill of
corn or any right to sell or dispose thereof,
exceptions (8 Exch. 40). This was done,
and that Callander on that account
and the Lord Chief Baron sealed the bill of
repudiated the sale, and refused to perform
exceptions, adding, however, a
his contract, or to pay the price of the corn.
memorandum to the effect that he did so as
Sixthly, that before the Defendants were
the ruling of the Court, but that his own
employed by the Plaintiffs, the corn had
opinion was in opposition to such ruling.
become heated and greatly damaged in the
vessel, and had been unloaded by reason The case was argued on the bill of
thereof, and sold and disposed of by the exceptions in the Exchequer Chamber,
captain of the said vessel on account of the before Justices Coleridge, Maule,
Plaintiffs at Tunis, and that Callander, for Creswell, Wightman, Williams, Talfourd,
that reason, repudiated the sale, etc. and Crompton, who were unanimously of
opinion that the judgment of the Court of
The cause was tried before Mr. Baron
Exchequer ought to be reversed (9 Exch.
Martin, when his Lordship ruled, that the
102). The present writ of error was then
contract imported that at the time of the
brought.
sale, the corn was in existence as such, and
capable of delivery, and that as it had been
sold and delivered by the captain before
The purchaser bought in fact the shipping they are shipped "to arrive," which saves
documents, the rights and interests of the the vendee from all risk till they are safely
vendor. A brought to port. The intention of the
parties is understood to be declared by
contract of such a kind is valid, Paine v.
different terms of expression, and the
Meller. The language of the contract
judgment of the Exchequer Chamber here
implies all this. The representation that the
really violates that intention.
corn was shipped free on board at
Salonica, means that the cargo, was the As Lord Chief Baron Richards said, in
Hitchcock v. Giddings (4 Price, 135), " If a
property of, and at the risk of the shipper.
man will make a purchase of a chance, he
The Court of Exchequer proceeded on the
must abide by the consequences." Here,
words of this contract and gave the correct
however, the chance was only that of the
meaning to them. Mr. Baron Parke said,
arrival of the cargo, and that chance was
"There is an express engagement that the
covered by the policy, for the cargo, itself,
cargo was of average quality when
as stated in the contract, had been actually
shipped, so that it is clear that the
shipped. Had the cargo been damaged at
purchaser was to run the risk of all
the time of this contract, the loss thereby
subsequent deterioration by sea damage
arising must have been borne by the
or otherwise, for which he was to be
purchaser. Suppose the corn had been
indemnified by having the cargo fully
landed at Tunis, and had remained in the
insured; for the 27s. per quarter were to
warehouse there, it would have ceased to
cover not merely the price, but all
be a cargo in the strict and literal meaning
expenses of shipment, freight, and
of the word, but the purchaser would still
insurance." In a contract for the sale of
have been bound by his contract.
goods afloat, there are two periods which
are important to be regarded, the time of There was a total loss, and the Plaintiff
sale and the time of arrival. If at the time recovered on the policy, it is difficult to
of the sale there is anything on which the understand how such an opinion could be
contract can attach it is valid, and the entertained. A technical objection arising
vendee bound. on the form of the policy would not affect
this question. The contract here was, that
The goods are either shipped, as here, "free
the cargo was shipped "free on board." To
on board," when it is clear that they are
that extent the vendor was bound, but he
thenceforward at the risk of the vendee, or
was not bound by any farther and implied
warranty. The Lord Chancellor: My
Lords, this case has been very fully and
ably argued on the part of the Plaintiffs in
Error, but I understand from an intimation
which I have received, that all the learned
Judges who are present, including the
learned Judge who was of a different
opinion in the Court of Exchequer, before
the case came to the Exchequer Chamber,
are of opinion that the judgment of the
Court of Exchequer Chamber sought to be
reversed by this writ of error was a correct
judgment, and they come to that opinion
without the necessity of hearing the
counsel for the Defendants in Error.
If I am correct in this belief, I will not
trouble the learned counsel for the
Defendants in Error to address your
Lordships, because I confess, though I
should endeavour to, keep my mind
suspended till the case had been fully
argued, that my strong impression in the
course of the argument has been, that the
judgment of the Court of Exchequer
Chamber is right. I
should therefore simply propose to ask the
learned Judges, whether they agree in
thinking that that judgment was right. Mr.
Baron Alderson said: My Lords, Her
Majesty's Judges are unanimously of
opinion that the judgment of the
Exchequer Chamber was right, and that the
judgment of the Court of Exchequer was
wrong; and I am also of that opinion
myself now, having been one of the Judges
before whom the case came to be heard in
the Court of Exchequer.
The Lord Chancellor: My Lords, that
being so, I have no hesitation in advising
your Lordships, and at once moving that
the judgment of the Court below should be
affirmed. It is hardly necessary, and it has
not ordinarily been usual for your
Lordships to go much into the merits of a
judgment which is thus unanimously
affirmed by the Judges who are called in to
consider it, and to assist the House in
forming its judgment. But I may state
shortly that the whole question turns upon
the construction of the contract, which was
entered into, between the parties. I do not
mean to deny that many plausible and
ingenious arguments have been pressed by
both the learned counsel who have
addressed your Lordships, showing that
there might have been a meaning attached
to that contract different from that which
the words themselves impart. If this had
depended not merely upon the construction
of the contract but upon evidence, which,
if I recollect rightly, was rejected at the
trial, of what mercantile usage had been, I
should not have been prepared to say that a
long continued mercantile usage
interpreting such contracts might not have
been sufficient to warrant, or even to
compel your Lordships to adopt a different
construction. But in the absence of any
such evidence, looking to the contract
itself alone, it appears to me clearly that
what the parties contemplated, those who
bought and those who sold, was that there
was an existing something to be sold and
bought, and if sold and bought, then the
benefit of insurance should go with it. I do
not feel pressed by the latter argument,
which has been brought forward very ably
by Mr. Wilde, derived from the subject of
insurance. I think the full benefit of the
insurance was meant to go as well to losses
and damage that occurred previously to the
15th of May, as to losses and damage that
occurred subsequently, always assuming
that something passed by the
contract of the 15th of May. If the contract
of the 15th of May had been an operating
contract, and there had been a valid sale of
a cargo at that time existing, I think the
purchaser would have had the benefit of
insurance in respect of all damage
previously occurring.
TAYLOR
V find and provide, at their own cost, all the
CALDWELL
[1863] EWHC QB J1
BENCH
BLACKBURN J
FACTS
Caldwell & Bishop owned Surrey Gardens
& Music Hall, and agreed to rent it out to
Taylor & Lewis for £100 a day. Taylor had
planned to use the music hall for four
concerts and day and evening fetes on
Monday 17 June, Monday 15 July,
Monday 5 August, and Monday 19 August
1861. They were going to provide a variety
of extravagant entertainments including a
singing performance by Sims Reeves, a
thirty-five to forty-piece military and
quadrille band, al fresco entertainments,
minstrels, fireworks and full illuminations,
a ballet or divertissement, a wizard and
Grecian statues, tight rope performances,
rifle galleries, air gun shooting, Chinese
and Parisian games, boats on the lake, and
aquatic sports.
According to the contract the parties had
signed, the defendants were to provide
most of the British performers. Taylor &
Lewis agreed to pay one hundred pounds
sterling in the evening of the day of each
concert by a crossed cheque, and also to
necessary artistes for the concerts,
including Mr. Sims Reeves. Then, on 11
June 1861, a week before the first concert
was to be given, the music hall burned to
the ground. The plaintiffs sued the music
hall owners for breach of contract for
failing to rent out the music hall to them.
There was no clause within the contract
itself which allocated the risk to the
underlying facilities, except for the phrase
"God's will permitting" at the end of the
contract.
JUDGMENT
Judge Blackburn began his opinion by
stating that the agreement between the
parties was a contract, despite their use of
the term "lease". Under the common law
of property in England at the time, under a
lease the lessee would obtain legal
possession of the premises during the lease
period, while the contract at issue in this
case specified that legal possession would
remain with the defendants.
Blackburn J reasoned that the rule of
absolute liability only applied to positive,
definite contracts, not to those in which
there was an express or implied condition
underlying the contract.
Blackburn J further reasoned that the
continued existence of the Music Hall in
Surrey Gardens was an implied condition
essential for the fulfilment of the contract.
The destruction of the music hall was the
fault of neither party, and rendered the
performance of the contract by either party
impossible. Blackburn J cited the civil
code of France and the Roman law for the
proposition that when the existence of a
particular thing is essential to a contract,
and the thing is destroyed by no fault of
the party selling it, the parties are freed
from obligation to deliver the thing. He
further analogized to a situation in which a
contract requiring personal performance is
made, and the party to perform dies, the
party's executors are not held liable under
English common law. Blackburn J thus
held that both parties were excused from
their obligations under their contract.
IMPORTANCE
Until this case, parties in a contract were
held to be absolutely bound and a failure to
perform was not excused by radically
changed circumstances. Instead, the
contract was breached and gave rise to a
claim for damages. This ruling, though
quite narrow, opened the door for the
modern doctrine of contract avoidance by
impracticability.
KRELL
V
HENRY
[1903] 2 KB 740
BENCH
 VAUGHAN WILLIAMS LJ, ROMER
LJ AND STIRLING LJ
FACTS
The defendant, CS Henry, agreed by
contract on 20 June 1902, to rent a flat at
56A Pall Mall from the plaintiff, Paul
Krell, for the purpose of watching the
coronation procession of Edward VII
scheduled for 26 and 27 June. The
housekeeper of the premises had informed
Henry that he would have an excellent
view of the procession from the room.
Desiring to secure the rental of Krell's flat
for the purpose of observing the coronation
procession, Henry wrote the following
letter to Krell's solicitor:
I am in receipt of yours of the 18th instant,
inclosing form of agreement for the suite
of chambers on the third floor at 56A, Pall
Mall, which I have agreed to take for the
two days, the 26th and 27th instant, for the
sum of 75l. For reasons given you I cannot
enter into the agreement, but as arranged
over the telephone I enclose herewith
cheque for 25l. as deposit, and will thank
you to confirm to me that I shall have the
entire use of these rooms during the days
(not the nights) of the 26th and 27th
instant. You may rely that every care will
be taken of the premises and their contents.
On the 24th inst. I will pay the balance,
viz., 50l., to complete the 75l. agreed
upon.
The defendant received the following reply
from the plaintiff's solicitor:
I am in receipt of your letter of to-day's
date inclosing cheque for 25l. deposit on
your agreeing to take Mr. Krell's
chambers on the third floor at 56A, Pall
Mall for the two days, the 26th and 27th
June, and I confirm the agreement that
you are to have the entire use of these
rooms during the days (but not the nights),
the balance, 50l., to be paid to me on
Tuesday next the 24th instant.
The parties agreed on a price of £75, but
nowhere in their written correspondence
mentioned the coronation ceremony
explicitly. Henry paid a deposit of £25 to
Krell for the use of the flat, but when the
procession did not take place on the days
originally set, on the grounds of the King’s
illness, Henry refused to pay the remaining
£50. Krell brought suit against Henry to
recover the remaining balance of £50, and
Henry countersued to recover his deposit
in the amount of £25.
JUDGMENT
Darling held in the initial case that there
was an implied condition in the contract,
using Taylor v. Caldwell and The
Moorcock, and gave judgment for the
defendant on both the claim and the
counterclaim. The Court of Appeal
dismissed the plaintiff's appeal.
Lord Justice Vaughan Williams framed the
legal question in this case as whether there
was an implied condition to the contract:
whether or not while the contract was
made, the two parties knew that the reason
behind the contract was for Henry to watch
the coronation procession.
The principle that an implied condition
that ceases to exist voids the contract
stems from the case of Taylor v Caldwell,
which, in turn, was borrowed from Roman
law. The principle was extended, in later
cases, to situations in which an underlying
condition that was essential to the
performance of the contract, rather than
simply being a necessary condition, ceases
to exist.
Vaughan Williams LJ held that such a
condition (here, the timely occurrence of
the coronation proceeding) need not be
explicitly mentioned in the contract itself
but rather may be inferred from the
extrinsic circumstances surrounding the
contract. Thus, the parol evidence rule was
inapplicable here.
Firstly, he examined the substance of the
contract, and then determined whether the
contract was founded on the assumption of
the existence of a particular state of affairs.
He then determined that given the
affidavits of the parties, Krell had granted
Henry a licence to use the rooms for a
particular purpose: watching the
coronation. He analogized the situation to
one in which a man hired a taxicab to take
him to a race. If the race did not occur on
the particular day the passenger had
thought, he would not be discharged from
paying the driver. However, unlike the
situation in the case, the cab did not have
any special qualification, as the room did,
its view of the street. Furthermore, the
cancellation of the coronation could not
reasonably have been anticipated by the
parties at the time the contract was made.
Romer LJ said,
With some doubt I have also come to the
conclusion that this case is governed by
the principle on which Taylor v Caldwell
was decided, and accordingly that the
appeal must be dismissed. The doubt I
have felt was whether the parties to the
contract now before us could be said,
under the circumstances, not to have had
at all in their contemplation the risk that
for some reason or other the coronation
processions might not take place on the
days fixed, or, if the processions took
place, might not pass so as to be capable
of being viewed from the rooms mentioned
in the contract; and whether, under this
contract, that risk was not undertaken by
the defendant. But on the question of fact 1954 AIR 44, 1954 SCR 310
as to what was in the contemplation of the
parties at the time, I do not think it right to
differ from the conclusion arrived at by SUPREME COURT OF INDIA

Vaughan Williams L.J., and (as I gather)

also arrived at by my brother Stirling. This
being so, I concur in the conclusions
arrived at by Vaughan Williams L.J. in his BENCH
judgment, and I do not desire to add
MUKHERJEA, B.K.
anything to what he has said so fully and
completely.
FACTS
Stirling LJ concurred.
The facts giving rise to this appeal are, for
the most part, uncontroverted and the
dispute between the parties centres round
the short point as to whether a contract for
sale of land to which this litigation relates,
was discharged and came to an end by
reason of certain supervening
circumstances which affected the
performance of a material part of it.

JUDGEMENT

To appreciate the merits of controversy, it

DOCTRINE OF FRUSTRATION
will be necessary to give a brief narrative
of the material facts. The defendant
company, which is the main respondent in
this appeal, is the owner of a large tract of
SATYABRATA GHOSE land situated, in the vicinity of the
Dhakuria Lakes within Greater Calcutta.
VS
The company started a scheme for
MUGNEERAM BANGUR
development of this land for residential
purposes which was described as Lake
Colony Scheme No. I and in furtherance of
the scheme the entire area was divided into
a large number of plots for the sale of
which offers were invited from intending
purchasers. The company's plan of work
seemed to be, to enter into agree- ments
with different purchasers for sale of these
plots of land and accept from them only a
small portion of the con- sideration money
by way of earnest at the time of the
agreement. The company undertook to
construct the roads and, drains necessary
for making the lands suitable for building
and residential purposes and as soon as
they were completed. the purchaser would
be called upon to complete the conveyance
by payment of the balance of the
consideration money. Bejoy Krishna Roy,
who was defendant in the suit and figures
as a pro forma respondent in this appeal,
was one of such purchasers who entered
into a contract with the company for
purchase of a plot of land covered by the
scheme. His contract is dated the 5th of
August, 1940, and he paid Rs. 101 as
earnest money. In the receipt granted by
the vendor for this earnest money, the
terms of the agreement are thus set out --
"Received with thanks from Babu Bejoy
Krishna Roy of 28 Tollygunge Circular
Road, Tollygunge, the sum of Rs. 101
(Rupees one hundred and one only) as
earnest money having agreed to sell to
him or his nominee 5 K. more or less in
plot No. 76 on 20 and 30 ft. Road in
Premises No. Lake Colony Scheme No. 1,
Southern Block at the average rate of Rs.
1,000 (Rupees one thousand only) per
Cotta. The conveyance must be completed
within one month from the date of
completion of roads on payment of the
balance of the consideration money, time
being deemed as the Essence of the
Contract. In case of default this agreement
will be considered as cancelled with
forfeiture of earnest money. Mokarari
Mourashi Terms of payment:One third to
be paid at the time of registration and the
balance within six years bearing Rs. 6 per
cent. interest per annum".
On 30th November, 1941, the plaintiff
appellant was made a nominee by the
purchaser for purposes of the contract and
although he brought the present suit in the
character of a nominee, it has been held by
the trial judge as well as by the lower
appellate court, that he was really an
assignee of Bejoy Krishna Roy in respect
to the latter's rights under the contract.
Some -time before this date, there was an
order passed by the Collector, 24-
Parganas, on 12th of November, 1941
under section 79 of the Defence of India
Rules, on the strength of which a portion
of the land covered by the scheme was
requisitioned for military purposes.
Another part of the land was requisitioned circumstances might permit, after the
by the Government on 20th of December termination of the war.
1941. while a third order of requisition,
The letter ended by saying that in the event
which related to the balance of the land
of the addressee not accepting either of the
comprised in the scheme, was passed
two alternatives, the agreement would be
sometime later. In November, 1943, the
deemed to be cancelled and the earnest
company addressed a letter to Bejoy
money would stand forfeited. This letter
Krishna Roy informing him of the
was handed over by Bejoy Krishna to his
requisitioning of the lands by the
nominee, the plaintiff, and there was some
Government and stating inter alia that a
correspondence after that, between the
considerable portion of the land-
plaintiff on the one hand and the company
appertaining to the scheme was taken
on the other through their respective
possession of by the Government and there
lawyers into the details of which it is not
was no knowing how long the Government
necessary to enter. It is enough to state that
would retain possession of the same. The
the plaintiff refused to accept either of the
constructs of the proposed roads and
two alternatives offered by the company
drains, therefore, could not be taken up
and stated categorically that the latter was
during the continuance of the war and
bound by the terms of the agreement from
possibly for many years after its
which it could not, in law, resile. On 18th
termination. In these circumstances, the
of January, 1946, the suit, out of which
company decided to treat the agreement
this appeal arises, was commenced by the
for sale with the addressee as cancelled
plaintiff against the defendant company, to
and give him the option of taking back the
which Bejoy Krishna Roy was made a
earnest money within one month from the
party defendant and the prayers in the
receipt of the letter. There was offer made
plaint were for a two-fold declaration,
in the alternative that in case the purchaser
namely, -
refused to treat the contract as cancelled,
he could, if he liked, complete the (1) that the contract dated the 5th of

conveyance within one month from the August 1940, between the first and the

receipt of the letter by paying the balance second defendant, or rather his nominee,

of the consideration money and take the the plaintiff, was still subsisting; and

land in the condition in which it existed at (2) that the plaintiff was entitled to get a
that time, the company undertaking to conveyance executed and registered by the
construct the roads and the drains, as
defendant on payment of the consideration
money mentioned in the agreement and in
the manner and under the conditions
specified therein.
The suit was resisted by the defendant
company who raised a large number of
defences in answer to the plaintiff's claim,
most of which are not relevant for our
present purpose. The principal contentions
raised on behalf of the defendant were that
a suit of this description was not
maintainable under section 42 of the
Specific Relief Act and that the plaintiff
had no locus standi to institute the suit.
The most material plea was that the
contract of sale stood discharged by
frustration as it became impossible by
reason of the supervening events to
perform a material part of it. Bejoy
Krishna Roy did not file any written
statement and he was examined by the
plaintiff as a witness on his behalf.
The trial judge by his judgment dated 10th
October, 1.947, overruled all the pleas
taken by the defendant and decreed the
plaintiff's suit. An appeal taken by the
defendant to the Court of the District
Judge of 24-Parganas was dismissed on the
25th February 1949, and the judgment of
the trial court was affirmed. The defendant
company thereupon preferred a second
appeal to the High Court which was heard
by a Division Bench consisting 'of Das
Gupta and Lahiri JJ. The only question
canvassed before the High Court was,
whether the contract of sale was frustrated
by reason of the requisition orders issued
by the Government? The learned Judges
answered this question in the affirmative in
favour of the defendant and on that ground
alone dismissed the plaintiff's suit. The
plaintiff has now come before us on the
strength of a certificate granted by the
High Court under article 133(I)(c) of the
Constitution of India. The learned
Attorney General, who appeared in support
of the appeal, has put forward a three-fold
contention on behalf of his client. He has
contended in the first place that the
doctrine of English law relating to
frustration of contract, upon which the
learned Judges of the High Court based
their Decision has no application to India
in view of the statutory provision
contained in section 56 of the Indian
Contract Act. it is argued in the second
place, that even if the English law Applies,
it can have no application to contracts for
sale of land and that is in fact the opinion
expressed by the English judges
themselves. His third and the last argument
is that on the admitted faacts and
circumstances of this case there was no
frustrating event which could be said to
have taken away the basis of the contract
or tendered its performance impossible in
any sense of the word.
The first argument advanced by the
learned AttorneyGeneral raises
somewhat debatable point regarding the
true scope and effect of section 56 of the
Indian Contract Act and to what extent, if
any, it incorporates the English rule of
frustration of contracts.
Section 56 occurs in Chapter IV of the
Indian Contract Act which relates to
performance of contracts and it purports
to deal with one circumstances under
which performance of a, contract is
excused or dispensed with on the ground
of the contract being-void. The section
stands as follows: "An agreement to do an
act impossible in itself is void. A contract
to do an act which after the contract is
made, becomes impossible, or, by reason
of some event which the promiser could
not prevent, unlawful, becomes void when
the act becomes impossible or unlawful.
Where one person has promised to do
something which he knew, or, with
reasonable diligence, might have known,
and which the promisee did not know to be
impossible or unlawful, such promisor
must make compensation to such promisee
for any loss which such promise sustains
through the non-performance of the
promise".
The first_paragraph of the section lays
down the law in the same way as in
England. It speaks of something which is
a impossible inherently or by its very nature,
and no one can obviously be directed to an
act. The second paragraph enunciates the
law relating to discharge of contract by
reason of supervening impossibility or
illegality of the act agreed to be done. The
wording of this paragraph is quite general,
and though the illustrations attached to it
are not at all happy, they cannotderogate
from the general words used in the
enactment. This much is clear that the
word "impossible" has not been used here
in the sense of physical or literal
impossibility. The performance of an act
may not be literally impossible but it may
be impracticbale and useless from the
point of view of the object and purpose
which the parties had in view and if an
untoward event or change of
circumstances totally upset the very
foundation upon which the parties rested
their bargain, it can very well be said that
the promisor found it impossible to do the
act which he promised to do. Although
various theories have been propounded by
the Judges and jurists in England regarding
the juridical basis of the doctrine of
frustration, yet the essential idea upon
which the doctrine is based is that of
impossibility of performance of the
contract: in fact impossibility and
frustration are often used as
interchangeable expressions. The changed
circumstances, it is said, make the
performance of the contract impossible
and the parties are absolved from the
further performance of it as they did not
promise to perform an impossibility The
parties shall be excused, as Lord Loreburn
says(1), "if substantially the
contract becomes impossible
performance or in other
impracticable by some cause for which
neither was responsible,."
In Joseph Constantine Steamship Line
Limited v. Imperial Smelting Corporation
Ltd., Viscount Maugham obseryed that the
"doctrine of frustration is only a special
case of the discharge of contract by an
impossibility of performance arising after
the contract was made." Lord Porter
agreed with this view and rested the
doctrine on the same basis. The question
was considered and discussed by a
Division Bench of the Nagpur High Court
in Kesari Chand v. Governor- General in
Council and it was held that the doctrine of
frustration comes into play when a contract
becomes impossi- ble of performance,
after it is made, on account of circum-
stances beyond the control of the parties.
The doctrine is a special case
impossibility and as such comes under
section 56 of the Indian Contract Act.
Ali J., in speaking about frustration,
observed in his judgment as follows:
"It seems necessary for us to emphasise
that so far as the courts in this country are
concerned, they must loot primarily to the
law as embodied in sections 32 and 56 of
whole
the Indian Contract Act, 1872."
of
words We hold, therefore, that the doctrine of
frustration is really an aspect or part of the
law of discharge of contract by reason of
supervening impossibility or illegality of
the act agreed to be done and hence comes
within the purview of section 56 of the
Indian Contract Act. It would be incorrect
to say that section 56 of the Contract Act
applies only to cases of physical
impossibility and that where this section is
not applicable, recourse can be had to the
principles of English law on the subject of
frustration. It must be held also that to the
extent that the Indian Contract Act deals
with a particular subject, it is exhaustive
upon the same and it is not permissible to
import the principles of English law
dehors these statutory provisions. The
decisions of the English courts possess
only a persuasive value and may be helpful
in showing how the courts in England have
decided cases under circumstances similar
of to those which have come before our
courts.
It seems necessary however to clear up
some misconception which is likely to
arise because of the complexities of the
English law on the subject. The law of
frustration in England developed, as is
well known, under the guise of reading
implied terms into contracts. The court
implies a term or exception and treats that
as part of the contract. In the case of
Taylor v. Caldwell, Blackburn J. first
formulated the doctrine in its modern
form. The court there was dealing with a
case where a music hall in which one of
the contracting parties had agreed to give
concerts on certain specified days was
accidentally burnt by fire. It was held that
such a contract must be regarded "as
subject to an implied condition that the
parties shall be excused, in case, before
breach, performance becomes impossible
from perishing of the thing without default
of. the contractor." Again in Robinson v.
Davison there was a contract between the
plaintiff and the defendant's wife (as the
agent of her husband) that she should play
the piano at a concert to be given by the
plaintiff, on a specified day. On the day in
question she was unable to perform
through illness. The contract did not
contain any term as to what was to be done
in case of her being too ill to perform. In
an action against the defendant for breach
of contract, it was held that the wife's
illness and the consequent incapacity
excused her and that the contract was in its
nature not absolute but conditional upon
her being well enough to perform.
Bramwell B. pointed out in course of his
judgment that in holding that the illness of
the defendant incapaciated her from
performing the agreement the court was
not really engrafting a new term upon an
express contract. It was not that the
obligation was absolute in the original
agreement and a new condition was
subsequently added to it; the whole
question was whether the original contract
was absolute or conditional and having
regard to the terms of the bargain, it must
be held to be conditional.
The English law passed through various
stages of development since then and the
principles enunciated in the various
decided authorities cannot be said to be in
any way uniform. In many of the
pronouncements of the highest courts in
England the doctrine of frustration was
held "to be a device by which the rules as
to absolute contracts are reconciled with a
special exception which justice demands".
The court, it is said, cannot claim to
exercise a dispensing power or to modify
or alter contracts. But when an unexpected
event or change of circumstance occurs,
the possibility of which the parties did not
circumstance occurs, the possibility
contract is taken to be not what the parties
actual intended, but what they as fair and
reasonable men would presumably have
intended and agreed upon, if having such
possibility in view they had made express
provsion as to their rights and
"In ascertaining the meaning of the
contract and its application to the actual
occurrences, the court has to decide, not
what the parties actually intended but what
as reasonable men they should have
intended. The court personifies for this
purpose the reasonable man.", where he
made the following observations:
"Though it has been constantly said by
high authority, including Lord Sumner,
that the explanation of the rule is to be
found in the theory that it depends on an
implied con- dition of the contract, that is
really no explanation. It only pushes back
the problem a single stage. It leaves the
question what is the reason for implying a
term. Nor can I reconcile that theory with
the view that the result does not depend on
what the parties might, or would, as hard
bargainers, have agreed. The doctrine is
invented by the court in order to
supplement the defects of the actual
contract...... To my mind the theory of the
implied condition is not really consistent
with the true theory of frustration. It has
never been acted on by the court as a
ground of decision but is merely stated as a
theoretical explanation."
In the recent case of British Movietonews
Ltd. v. London and District Cinemas Ltd.
(1), Denning L. J. in the Court of Appeal
took the view expressed by Lord Wright as
stated above as meaning that "the court
really exercises a qualifying power-a
power to qualify the absolute., literal or
wide terms of the contract in order to do
what is just and reasonable in the new
situation".
The learned Judge went on to say, "when
we can excuse an unforeseen injustice by
saying to the sufferer 'it is your own folly,
you ought not to have passed that form of
words. You ought to have put in a clause
to protect yourself'. We no longer credit a
party with the foresight of a Prophet or his
lawyer with the draftsmanship of a
Chalmers. We realise that they have their
limitations and make allowances accor-
dingly. It is better thus. The old maxim
reminds us that he who clings to the letter
clings to the dry and barren shell and
misses the truth and substance of the
matter. We have of late paid heed to this
warning, and we must pay like heed now."
This decision of the Court of Appeal was
reversed by the House of Lords and
Viscount Simon in course of his judgment
expressed disapproval of the way in which
the law was stated by Denning L.J. It was
held that there was no change in the law as
a result of which the courts could exercise
a wider power in this regard than they used
to do previously. "The principle remains
the same", thus observed his Lordship.
"Particular applications of it may greatly
vary and theoretical lawyers may debate
whether the rule should be regarded as
arising from implied term or because the
basis of the contract no longer exists. In
any view, it is a question of construction as
Lord Wright pointed out in Constantine's
case and as has been repeatedly asserted
by other masters of law." These
differences in the way of formulating legal
theories really do not concern us so long as
we have a statutory provision in the Indian
Contract Act. In deciding cases in India the
only doctrine that we have to go by is that
of supervening impossibility or illegality
as laid down in section 56 of the Contract
Act taking the word "Impossible" in its
practical and not literal sense. It must be
borne in mind, however, that section 56
lays down a rule of positive law and does
not leave the matter to be determined
according to the intention of the parties.
In the latest decision of the House of Lords
referred to above, the Lord Chancellor puts
the whole doctrine upon the principle of
construction. But the question of
construction may manifest itself in two
totally different ways. In one class of cases
the question may simply be, as to what the
parties themselves had actually intended
and whether or not there as a condition in
the contract itself, express or implied,
which operated, according to the
agreement of the Parties themselves to
release them from their obligations; this
would be a question of construction pure
and simple and the ordinary rules of
construction would have to be applied to
find out what the real intention of the
parties was. According to the Indian
Contract Act, a promise may be express or
implied. In cases, therefore, where the
court gathers as a matter of construction
that the contract itself contained impliedly
or expressly a term, according to which it
would stand discharged on the happening
of certain circumstances the dissolution on
of the contract would take place under the
terms of the contract itself and such cases
would be outside the purview of section 56
altogether. Although in English law these
cases are treated as cases of frustration, in
India they would be dealt with under
section 32 of the Indian Contract Act
which deals with contingent contracts or
similar other provisions contained in the
Act. In the large majority of cases however
the doctrine of frustration is applied not on
the ground that the parties themselves
agreed to an implied term which operated
to release them from the performance of
the contract. The relief is given by the
court on the ground of subsequent
impossibility when it finds that the whole
purpose or basis of a contract was
frustrated by the intrusion or occurrence of
an unexpected event or change of
circumstances which was beyond what
was contemplated by the parties at the time
when they entered into the agreement.
Here there is no question of finding out an
implied term agreed to by the parties em-
bodying a provision for discharge, because
the parties did not think about the matter at
all nor could possibly have any intention
regarding it. When such an event or
change of circumstance occurs which is so
fundamental as to be re- garded by law as
striking at the root of the contract as a
whole, it is the court which can pronounce
the contract to be frustrated and at an end.
The court undoubtedly has to examine the
contract and the circumstances under
which it was made. The belief, knowledge
and intention of the parties are evidence,
but evidence only on which the court has
to form its own conclusion whether the
changed circumstances destroyed
altogether the basis of the adventure and
its underlying object. This may be called a
rule of construction by English Judges but
it is certainly not a, principle of giving
effect to the intention of the parties which
underlies all rules of construction. This is
really a rule of positive law and as such
comes within the purview of section 56 of
the Indian Contract Act.
It must be pointed out here that if the
parties do con- template the possibility of
an intervening circumstance which might
affect the performance of the contract, but
expressly stipulate that the contract would
stand despite such circumstances, there can
be no case of frustration because the basis
of the contract being to demand
performance despite the happening of a
particular event, it cannot disappear when
that event happens.
This being the legal position, a contention
in the extreme form that the doctrine of
frustration as recognised in English law
does no come at all within the purview of
section 56 of the Indian Contract Act
cannot be accepted.. The second
contention raised by the Attorney General
can be disposed of in few words. It is true
that in England the judicial opinion
generally expressed is, that the doctrine of
frustration does not operate in the case of
contracts for sale of land. But the reason
underlying this view is that under the
English law as soon as there is a concluded
contract by A to sell land to B at certain
price, B becomes in equity, the owner of
the land, subject to his obligation to pay
the purchase money'. On the other hand, A
in spite of his having the legal estate holds
the same in trust for the purchaser and
whatever rights he still retains in the land
are referable to his right to recover and
receive the purchase money. The rule of rescission of a contract on the ground of
frustration can only put an end to purely repudiation or breach, or on the choice or
contractual obligations, but it cannot election of either party.
destroy an estate in land which has already
of what has actually happened on the
accrued in favour of a contracting party.
possibility of performing the contract.
According to the Indian law, which is
What happens generally in such cases and
embodied in section 54 of the Transfer of
has happened here is that one party claims
Property Act, a contract for sale of land
that the contract has been frustrated while
does not of itself create any interest in the
the other party denies it. The issue has got
property which is the subject-matter of the
to be decided by the court "ex post facto,
contract. The obligations of the parties to a
on the actual circumstances of the case".
contract for sale of land are, therefore, the
We will now proceed to examine the
same as in other ordinary contracts and
nature and terms of the contract before us
consequently there is no conceivable
and the circumstances under which it was
reason why the doctrine of frustration
entered into to determine whether or not
should not be applicable to contracts for
the disturbing element, which is allowed to
sale of land in India. This contention of the
have happened here, has substantially
Attorney General must, therefore, fail.
prevented the performance of the contract
We now come to the last and most as a whole.
important point in this case which raises
It may be stated at the outset that the.
the question as to whether, as a result of
contract before us cannot be looked upon
the requisition orders, under which the
as an ordinary contract for sale and
lands comprised in the development
purchase of a piece of land; it is an integral
scheme of the defendant company were
part of a development scheme started by
requisitioned by Government, the contract
the defendant company and is one of the
of sale between the defendant company
many contracts that have been entered into
and the plaintiff's predecessor stood
by a large number of persons with the
dissolved by frustration or in other words
company. The object of the company was
became impossible of performance.
undoubtedly to develop a fairly extensive
It is well settled and not disputed before us area which was still undeveloped and
that if and when there is frustration the make it usable for residential purposes by
dissolution of the contract occurs making roads and constructing drains
automatically. It does not depend, as does through it. The purchaser. on the other
hand, wanted the land in regard to which
he entered into the contract to be
developed and make ready for building
purposes before he could be called upon to
complete the purchase. The most material
thing which deserves notice is, that there is
absolutely no time limit within which. the
roads and drains are to be made. The
learned District Judge of Alipore, who
heard the appeal, from the trial court's
judgment found it as a fact, on the
evidence in the record, that there was not
an understanding between the parties on
this point. As a matter of fact, the first
requisition order was passed nearly 15
months after the contract was made and
apparently no work was done by the
defendant company in the meantime.
nection is that the war was already on,
when the parties entered into the contract.
Requisition orders for taking temporary
possession of lands for war purposes were
normal events during this period. Apart
from requisition orders there were other
difficulties in doing construction work at
that time because of the scarcity of
materials and the various restrictions
which the Government had imposed in
respect of them. That there were certain
risks and difficulties involved in carrying
on operations like these, could not but be
in the contemplation of the parties at the
time when they entered into the contract,
and that is probably the reason why no
definite time limit was mentioned in the
contract within which the roads and drains
are to be completed. This was left entirely
to the convenience of the company and as
at matter of fact the purchaser did not feel
concerned about it. It is against this
background that we are to consider to what
extent the passing of the requisition orders
affected the performance of the contract in
the present case.
The company, it must be admitted, bad not
commenced the development work when
the requisition order was passed in
November, 1941. There was no question,
therefore, of any work or service being
interrupted for an indefinite period of time.
Undoubtedly the commencement of the
work was delayed but was the delay going
to be so great and of such a character that
it would totally upset the basis of the
bargain and comercial object which the
parties had in view? The requisition
orders, it must be remembered, were' by
their very nature, of a temporary character
and the requisitioning authorities could, in
law, occupy the position of a licensee in
regard to the requisitioned property. The
order might continue during the whole
period of the war and even for some time
after that or it could have been withdrawn
before the war terminated. If there was a
definite time limit agreed to by the parties
within which the construction work was to
be finished, it could be said with perfect
propriety that delay for an indefinite period
would make the performance of the
contract impossible within the specified
time and this would seriously affect the
object and purpose of the venture. But
when there is no time limit whatsoever in
the contract, nor even an understanding
bet- ween the parties on that point and
when during the war the parties could
naturally anticipate restrictions of various
kinds which would make the carrying on
of these operations more tardy and difficult
than in times of peace, we do not think that
the order of requisition affected the
fundamental basis upon which the
agreement rested or struck at the roots of
the adventure.
The learned Judges of the High Court in
deciding the case against the plaintiff
relied entirely on the time factor. It is true
that the parties could not contemplate an
absolutely unlimited period of time to
fulfil their contract. They might certainly
have in mind a period of time which was
reasonable having regard to the nature and
magnitude of the work to be done as well
as the conditions of war prevailing at that
time. Das Gupta, J., who delivered the
judgment of the High Court, says first of
all that the company had in contemplation
a period of time not much exceeding 2 or 3
years as the time for performance of the
contract; the purchaser also had the same
period of time in contemplation. The
learned Judge records his finding on the
point in the following words:
"My conclusion on a consideration of the
surrounding circumstances of the contract
is that the parties contemplated that the
roads and drains would be constructed and
the conveyance would be completed in the
not distant future."
This finding is inconclusive and goes
contrary to what has been held by the
District Judge who was undoubtedly the
last court of facts. In our opinion, having
regard to the nature and terms of the
contract, the actual existence of war
conditions at the time when it was entered
into, the extent of the work involved in the
development scheme and last though not
the least the total absence of any definite
period of time agreed to by the parties
within which the work was to be
completed, it cannot be said that the
requisition order vitally affected the
contract or made its performance
impossible.
Mr. Gupta, who appeared for the
respondent company. put forward an
alternative argument that even if the
performance of the contract was not made
impossible. it certainly became illegal as a
result of the requisition order and con-
sequently the contract became void under
section 56 of the Indian Contract Act as
soon as the requisition order was made. In
support of his contention the learned
counsel placed reliance upon certain
provisions of the Defence of India Rules
and also upon illustration (d) to section 56
of the Contract Act. All that the Defence
Regulations show is that the violation of a
requisition order could be punished as a
Act. In our opinion, the events which have
happened here cannot be said to have
made the performance of the contract
impossible and the contract has not been
frustrated at all. The result is that the
appeal is allowed, the judgment and decree
of the High Court of Calcutta are set aside
and those of the courts below restored. The
plaintiff will have his costs in all the
courts.
Appeal allowed.

criminal offence. But no matter in

whichever way the requisition order could
FROST
be enforced, in substance it did nothing
else but impose a prohibition on the use of V
the land during the period that it remained
KNIGHT
in force. The effect of such prohibition on
the performance of the contract, we have
discussed above, and we do not think that
the mere fact that the requisition order was
capable of being enforced by a criminal
sanction made any difference in this
respect. In any view this question was not
raised in any of the courts below and has
not been indicated even in the respondent's
statement of the case. We do not think that
it would be proper to allow this question to
be raised for the first time before us, as it
requires consideration of the different
provisions of the Defence of India Act and
also of the implication of illustration (d)
appended to section 56 of the Contract

CUTTER
V Jamaica to England, a gross sum was
POWELL
(1795) 6 TR 320; 101 ER 573
BENCH
LORD KENYON CJ, ASHHURST J,
GROSE J, LAWRENCE J
FACTS
Cutter agreed he would sail with Powell
from Kingston, Jamaica to Liverpool,
England. The contractual note read as
follows.
“Ten days after the ship Governor Parry,
myself master, arrives at Liverpool, I
promise to pay to Mr. T. Cutter the sum of
thirty guineas, provided he proceeds,
continues and does his duty as second
mate in the said ship from hence to the
port of Liverpool. Kingston, July 31st,
1793.”
Cutter died after seven weeks. It was a ten-
week voyage. The ship left on 2 August,
Cutter died on 20 September and the ship
arrived on 9 October. The ship captain
refused to pay any wages at all. Mrs Cutter
sued to recover the wages for the part of
the journey that the husband had survived.
It was apparent that the usual wages of a
second mate of a ship on such a voyage
was four pounds per month: but when
seamen are shipped by the run from
usually given. The usual length of a
voyage from Jamaica to Liverpool was
about eight weeks.
SUBMISSIONS
The arguments for the plaintiff, Mrs
Cutter, went as follows.
“The plaintiff is entitled to recover a
proportionable part of the wages on a
quantum meruit for work and labour done
by the intestate during that part of the
voyage that he lived and served the
defendant; as in the ordinary case of a
contract of hiring for a year, if the servant
die during the year, his representatives are
entitled to a proportionable part of his
wages. If any defence can be set up against
the present claim, it must arise either from
some known general rule of law respecting
marine service, or from the particular
terms of the contract between these parties.
But there is no such rule applicable to
marine service in general as will prevent
the plaintiff's recovering, neither will it be
found, on consideration, that there is any
thing in the terms of this contract to defeat
the present claim. It is indeed a general
rule that freight is the mother of wages;
and therefore if the voyage be not
performed, and the owners receive no
freight, the sailors lose their wages; though
that has some exceptions where the voyage
is lost by the fault of the owners, as if the
ship be seized for a debt of the owners, or
on account of having contraband goods on
board; in either of which cases the sailors
are entitled to their wages though the
voyage be not performed. Vin. Abr.
“Mariners,” 235. But here the rule itself
does not apply, the voyage having been
performed, and the owners having earned
their freight. There is also another general
rule, that if a sailor desert, he shall lose his
wages: but that is founded upon public
policy, and was introduced as a mean of
preserving the ship. But that rule cannot
apply to this case; for there the sailor
forfeits his wages by his own wrongful act,
whereas here the canon was prevented
completing his contract by the act of God.
So if a mariner be impressed, he does not
forfeit his wages; for in Wiggins v
Ingleton Lord Holt held that a seaman,
who was impressed before the ship
returned to the port of delivery, might
recover wages pro tanto. Neither is there
any thing in the terms of this contract to
prevent the plaintiff's recovering on a
quantum meruit. The note is a security,
and not an agreement; it is in the form of a
promissory note, and was given by the
master of the ship to the intestate to secure
the payment of a gross sum of money, on
condition that the intestate should be able
to, and should actually, perform a given
duty. The condition was inserted to
prevent the desertion of the intestate, and
to ensure his good conduct during the
voyage. And in cases of this kind, the
contract is to be construed liberally.
In Edwards v Child, where the mariners
had given bonds to the East India
Company not to demand their wages
unless the ship returned to the port of
London, it was held that as the ship had
sailed to India and had there delivered her
outward bound cargo, the mariners were
entitled to their wages on the outward
bound voyage, though the ship was taken
on her return to England. This note cannot
be construed literally, for then the intestate
would not have been entitled to any thing
though he had lived and continued on
board during the whole voyage, if he had
been disabled by sickness from performing
his duty. But even if this is to be
considered as a contract between the
parties, and the words of it are to be
construed strictly, still the plaintiff is
entitled to recover on a quantum meruit,
because that contract does not apply to this
case. The note was given for a specific
sum to be paid in a given event; but that
event has not happened, and the action is
not brought on the note. The parties
provided for one particular case: but there
was no express contract for the case that
has happened; and therefore the plaintiff
may resort to an undertaking which the
law implies, on a quantum meruit for work
and labour done by the intestate. For
though, as the condition in the note, which
may be taken to be a condition precedent,
was not complied with, the plaintiff cannot
recover the sum which was to have been
paid if the condition had been performed
by the intestate, there is no reason why the
representative of the seaman, who
performed certain services for the
defendant, should not recover something
for the work and labour of the intestate in a
case to which the express contract does not
apply.”
Arguments on behalf of the defendant.
“Nothing can be more clearly established
than that where there is an express contract
between the parties, they cannot resort to
an implied one. It is only because the
parties have not expressed what their
agreement was that the law implies what
they would have agreed to do had they
entered into a precise treaty: but when
once they have expressed what their
agreement was, the law will not imply any
agreement at all. In this case the intestate
and the defendant reduced their agreement
into writing, by the terms of which they
must now be bound: this is an entire and
indivisible contract; the defendant engaged
to pay a certain sum of money, provided
the intestate continued to perform his duty
during the whole voyage; that proviso is a
condition precedent to the intestate or his
representative claiming the money from
the defendant, and that condition not
having been performed, the plaintiff
cannot now recover any thing. If the
parties had entered into no agreement and
the intestate had chosen to trust to the
wages that he would have earned and
might have recovered on a quantum
meruit, he would only have been entitled
to 8l.; instead of which he expressly
stipulated that he should receive thirty
guineas if he continued to perform his duty
for the whole voyage. He preferred taking
the chance of earning a large sum in the
event of his continuing on board during the
whole voyage to receiving a certain, but
smaller, rate of wages for the time he
should actually serve on board; and having
made that election, his representative must
be bound by it.
In the common case of service, if a servant
who is hired for a year die in the middle of
it, his executor may recover part of his
wages in proportion to the time of service:
[3] but if the servant agreed to receive a
larger sum than the ordinary rate of wages
on the express condition of his serving the
whole year, his executor would not be
entitled to any part of such wages in the
event of the servant dying before the
expiration of the year. The title to marine
wages by no means depends on the owners
being entitled to freight; for if the sailors
desert, or do not perform their duty, they
are not entitled to wages though the owner
earn the freight. Nor is it conclusive
against the defendant that the intestate was
prevented fulfilling his contract by the act
of God; for the same reason would apply
to the loss of a ship, which may equally
happen by the act of God, and without any
default in the sailors; and yet in that case
the sailors lose their wages. But there are
other cases that bear equally hard upon
contracting parties; and in which an
innocent person must suffer if the terms of
his contract require it; e.g. the tenant of a
house who covenants to pay rent and who
is bound to continue paying the rent,
though the house be burned down.
Lord Kenyon Ch.J
But that must be taken with some
qualification; for where an action was
brought for rent after the house was burned
down, and the tenant applied to the Court
of Chancery for an injunction, Lord C.
Northington said that if the tenant would
give up his lease, he should not be bound
to pay the rent.
With regard to the case cited from 2 Lord
Raym.; the case of a mariner impressed is
an excepted case, and the reason of that
decision was founded on principles of
public policy.”
JUDGMENT
The Court of King's Bench held that Cutter
was not entitled to wages because he had
not completed the journey. Part
performance was no performance at all.
Lord Kenyon CJ led with his judgment. I
should be extremely sorry that in the
decision of this case we should determine
against what had been the received opinion
in the mercantile world on contracts of this
kind, because it is of great importance that
the laws by which the contracts of so
numerous and so useful a body of men as
the sailors are supposed to be guided
should not be overturned. Whether these
kind of notes are much in use among the
seamen, we are not sufficiently informed;
and the instances now stated to us from
Liverpool are too recent to form anything
like usage. But it seems to me at present
that the decision of this case may proceed
on the particular words of this contract and
the precise facts here stated, without
touching marine contracts in general. That
where the parties have come to an express
contract none can be implied has prevailed
so long as to be reduced to an axiom in the
law. Here the defendant expressly
promised to pay the intestate thirty
guineas, provided he proceeded, continued
and did his duty as second mate in the ship
from Jamaica to Liverpool; and the
accompanying circumstances disclosed in
the case are that the common rate of wages
is four pounds per month, when the party
is paid in proportion to the time he serves:
and that this voyage is generally performed
in two months. Therefore if there had been
no contract between these parties, all that
the intestate could have recovered on a
quantum meruit for the voyage would have
been eight pounds; whereas here the
defendant contracted to pay thirty guineas
provided the mate continued to do his duty
as mate during the whole voyage, in which
case the latter would have received nearly
four times as much as if he were paid for
the number of months he served. He
stipulated to receive the larger sum if the
whole duty were performed, and nothing
unless the whole of that duty were
performed: it was a kind of insurance. On
this particular contract my opinion is
formed at present; at the same time I must
say that if we were assured that these notes
are in universal use, and that the
commercial world have received and acted
upon them in a different sense, I should
give up my own opinion.”
Ashhurst J concurred, emphasising that the
contract was entire and that completion
was a condition precedent to the obligation
to pay.
“We cannot collect that there is any
custom prevailing among merchants on
these contracts; and therefore we have
nothing to guide us but the terms of the
contract itself. This is a written contract,
and it speaks for itself. And as it is entire,
and as the defendant's promise depends on
a condition precedent to be performed by
the other party, the condition must be
performed before the other party is
entitled to receive any thing under it. It
has been argued however that the plaintiff
may now recover on a quantum meruit:
but she has no right to desert the
agreement; for wherever there is an
express contract the parties must be
guided by it; and one party cannot
relinquish or abide by it as it may suit his
advantage. Here the intestate was by the
terms of his contract to perform a given
duty before he could call upon the
defendant to pay him anything; it was a
condition precedent, without performing
which the defendant is not liable. And that
seems to me to conclude the question: the
intestate did not perform the contract on
his part; he was not indeed to blame for
not doing it; but still as this was a
condition precedent, and as he did not
perform it, his representative is not
entitled to recover.”
Grose J concurred.
“In this case the plaintiff must either
recover on the particular stipulation
between the parties, or on some general
known rule of law, the latter of which has
not been much relied on. I have looked
into the laws of Oleron; and I have seen a
late case on this subject in the Court of
Common Pleas, Chandler v Greaves. I
have also inquired into the practice of the
merchants in the city, and have been
informed that these contracts are not
considered as divisible, and that the
seaman must perform the voyage,
otherwise he is not entitled to his wages;
though I must add that the result of my
inquiries has not been perfectly
satisfactory, and therefore I do not rely
upon it. The laws of Oleron are extremely
favourable to the seamen; so much so that
if a sailor, who has agreed for a voyage,
be taken ill and put on shore before the
voyage is completed, he is nevertheless
entitled to his whole wages after deducting
what has been laid out for him. In the case
of Chandler v Greaves, where the jury
gave a verdict for the whole wages to the
plaintiff who was put on shore on account
of a broken leg, the Court refused to grant
a new trial, though I do not know the
precise grounds on which the Court
proceeded. However in this case the
agreement is conclusive; the defendant
only engaged to pay the intestate on
condition of his continuing to do his duty
on board during the whole voyage; and
the latter was to be entitled either to thirty
guineas or to nothing, for such was the
contract between the parties. And when we
recollect how large a price was to be
given in the event of the mate continuing
on board during the whole voyage instead
of the small sum which is usually given per
month, it may fairly be considered that the
parties themselves understood that if the
whole duty were performed, the mate was
to receive the whole sum, and that he was
not to receive anything unless he did
continue on board during the whole
voyage. That seems to me to be the
situation in which the mate chose to put
himself; and as the condition was not
complied with, his representative cannot
now recover any thing. I believe however
that in point of fact these notes are in
common use, and perhaps it may be
prudent not to determine this case until we
have inquired whether or not there has
been any decision upon them.”
Lawrence J concurred.
“If we are to determine this case
according to the terms of the instrument
alone the plaintiff is not entitled to
recover, because it is an entire contract.
In Salk, there is a strong case to that
effect; there debt was brought upon a
writing, by which the defendant's testator
had appointed the plaintiff's testator to
receive his rents and promised to pay him
100l. per annum for his service; the
plaintiff shewed that the defendant's
testator died three quarters of a year after,
during which time he served him, and he
demanded 75l. for three quarters; after
judgment for the plaintiff in the Common
Pleas, the defendant brought a writ of
error, and it was argued that without a full
year's service nothing could be due, for
that it was in nature of a condition
precedent; that it being one consideration
and one debt it could not be divided; and
this Court were of that opinion; and
reversed the judgment. With regard to the
common case of an hired servant, to which
this has been compared; such a servant,
though hired in a general way, is
considered to be hired with reference to
the general understanding upon the
subject, that the servant shall be entitled to
his wages for the time he serves though he
do not continue in the service during the
whole year. So, if the plaintiff in this case
could have proved any usage that persons
in the situation of this mate are entitled to
wages in proportion to the time they
served, the plaintiff might have recovered
according to that usage. But if this is to
depend altogether on the terms of the
contract itself, she cannot recover any
thing. As to the case of the impressed man,
perhaps it is an excepted case; and I
believe that in such cases the King's
officers usually put another person on
board to supply the place of the impressed
man during the voyage, so that the service
is still performed for the benefit of the
owner of the ship.”
DOMINION OF INDIA
VS.
ALL INDIA REPORTER LIMITED
IN THE HIGH COURT OF NAGPUR
AIR 1952 NAG 32
BENCH
HON’BLE JUSTICE R.
KAUSHALENDRA RAO
BACKGROUND
According to section 73 of the Indian
Contract Act (1872), when a contract has
been broken, the party who suffers by such
breach is entitled to receive, from the party
who has broken the contract, compensation
for any loss or damage caused to him
thereby, which naturally arose in the usual
course of things from such breach, or
which the parties knew, when they made
the contract, to be likely to result from the
breach of it. This section defines the
liability of a party who breaches the terms
of a contract. The question in this case was
whether the party can recover special
damages from the other party under this
section.
FACTS
The respondent lost three volumes of
Indian Digest in transit through railways.
The volumes were booked by the
respondent at Nagpur for being carried and
delivered at Delhi railway Station. The
consigned was addressed to the respondent
by himself. The respondent brought a suit
against the applicant for compensation for
the loss of the three volumes. The
respondent contended that the lost volumes
were the part of a series and their loss
rendered the remaining books unusable.
Hence, they sought the price of the entire
set of eight volumes as compensation. The
trial court accepted the respondent’s
contention and held the applicant liable to
compensate the respondent for the entire
set. The applicant filed a revision
application from this judgment.
ISSUE
Whether the applicant is liable for the loss
of three volumes or the entire set?
ARGUMENTS ADVANCED
Contentions by the applicant
The applicant is not liable to compensate
the respondent for the entire set as the fact
that the loss of the three volumes renders
the set useless was not brought to the
attention of the applicant and there is no
proof as the same.
Contentions By The Respondent
The lost three volumes were part of a set
and their loss renders the entire set useless.
Hence, the applicant is liable to
compensate the respondent for the entire
set.
JUDGMENT
According to section 73 of the Indian
Contract Act (1872), when a contract has
been broken, the party who suffers by such
breach is entitled to receive, from the party
who has broken the contract, compensation
for any loss or damage caused to him
thereby, which naturally arose in the usual contained parts of the machinery without
course of things from such breach, or which the mill could not be erected, was
which the parties knew, when they made missing. The plaintiffs were obliged to
the contract, to be likely to result from the replace those parts from England. So, there
breach of it. The same was applied in this was a delay of twelve months. The
case to hold the applicant liable only for plaintiffs claimed by way of compensation
the value of the three lost volumes. not only the value of the lost case, but also
the loss incurred by the stoppage of their
In the instant case, the consignment
works during the time the rest of the
consisted of three volumes and any loss
machinery remained useless owing to the
arising during the usual course of things
absence of the lost parts. Here, Bovill C.J
can only include the value of those three
held that since the defendant had no
volumes. The respondent had failed to
knowledge of the significance of the lost
mention that the three volumes were the
parts, awarding damages for the delay in
part of a set and that the loss of those
construction of the mill would be
volumes would render the set useless. The
speculative.
applicant had also not undertaken to
compensate the respondent for the value of
the entire set if the consignment was lost.
The respondent was awarded interest from
Since, the respondent had himself
1-9-1948 to 1-5-1949. The court relied on
furnished the value of the three lost
the cases Arjunsa Raghusa v. Mohanlal
volumes as Rs.42/- the Hon’ble court
Harakchand [ILR (1938) Nag 308] and
found it unnecessary to determine the cost
Brij Nath v. Lakshmi Narain [8 Luck. 35]
of the missing volumes.
where it was held that interest could be
given either by way of damages or under
some statute or under some contract but
In the case of British Columbia Saw-Mill
damages could not be awarded upon
Co. v. Nettleship [(1868) L R 3 C P 499],
damages. Hence, the claim for the interest
the plaintiffs delivered to the defendant for
prior to the suit was disallowed.
carriage to Vancouver Island several cases
of machinery intended for a saw-mill. The
defendant knew generally that the cases
CASE COMMENTARY
contained machinery. Upon the arrival of
the vessel, one of the cases which In this case, the application of section 73
of the Indian Contract Act (1872) was in
question. The Hon’ble Court while
deciding what amounts to loss arising in
the usual course due to breach of contract,
held that such loss would only include the
loss which was contemplated in the
contract and of which both the parties were
aware and nothing beyond that. Special
damages can be recovered only when the
special purpose of the contract is known to
the other party. Otherwise, the loss
incurred could only be confined to the
terms of the contract.
The claimants, Mr Hadley and another,
were millers and mealmen and worked
together in a partnership as proprietors of
the City Steam-Mills in Gloucester. They
cleaned grain, ground it into meal and
processed it into flour, sharps, and bran. A
crankshaft of a steam engine at the mill
had broken and Hadley arranged to have a
new one made by W. Joyce & Co. in
Greenwich. Before the new crankshaft
could be made, W. Joyce & Co. required
that the broken crankshaft be sent to them
in order to ensure that the new crankshaft
would fit together properly with the other
parts of the steam engine.

Hadley contracted with defendants

BREACH OF CONTRACT Baxendale and Ors, who were operating

together as common carriers under the
name Pickford & Co., to deliver the
HADLEY crankshaft to engineers for repair by a
certain date at a cost of £2 sterling and 4
V
shillings.
BAXENDALE

[1854] EWHC J70

Baxendale failed to deliver on the date in
question, causing Hadley to lose business.

EXCHEQUER COURT Hadley sued for the profits he lost due to

Baxendale's late delivery, and the jury
PARKE B, ALDERSON B,
awarded Hadley damages of £25.
PLATT B, MARTIN B Baxendale appealed, contending that he
did not know that Hadley would suffer any
FACTS
particular damage by reason of the late
delivery.
The question raised by the appeal in this
case was whether a defendant in a breach
of contract case could be held liable for
damages that the defendant was not aware
would be incurred from a breach of the
contract Judgment
BARON ALDERSON
The Court of Exchequer, led by Baron Sir
Edward Hall Alderson, declined to allow
Hadley to recover lost profits, in this case,
holding that Baxendale could only be held
liable for losses that were generally
foreseeable, or if Hadley had mentioned
his special circumstances in advance. The
mere fact that a party is sending something
to be repaired does not indicate that the
party would lose profits if it is not
delivered on time. The court suggested
various other circumstances under which
Hadley could have entered into this
contract that would not have presented
such dire circumstances, and noted that
where special circumstances exist,
provisions can be made in the contract
voluntarily entered into by the parties to
impose extra damages for a breach.
Alderson B said the following.
Now we think the proper rule in such a
case as the present is this: Where two
parties have made a contract which one of
them has broken, the damages which the
other party ought to receive in respect of
such breach of contract should be such as
may fairly and reasonably be considered
either arising naturally, i.e., according to
the usual course of things, from such
breach of contract itself, or such as may
reasonably be supposed to have been in the
contemplation of both parties, at the time
they made the contract, as the probable
result of the breach of it. Now, if the
special circumstances under which the
contract was actually made were
communicated by the plaintiffs to the
defendants, and thus known to both
parties, the damages resulting from the
breach of such a contract, which they
would reasonably contemplate, would be
the amount of injury which would
ordinarily follow from a breach of contract
under these special circumstances so
known and communicated. But, on the
other hand, if these special circumstances
were wholly unknown to the party
breaking the contract, he, at the most,
could only be supposed to have had in his
contemplation the amount of injury which
would arise generally, and in the great
multitude of cases not affected by any
special circumstances, from such a breach
of contract. For, had the special
circumstances been known, the parties
might have specially provided for the
breach of contract by special terms as to
the damages in that case, and of this
advantage it would be very unjust to
deprive them. Now the above principles
are those by which we think the jury ought
to be guided in estimating the damages
arising out of any breach of contract.
But it is obvious that, in the great
multitude of cases of millers sending off
broken shafts to third persons by a carrier
under ordinary circumstances, such
consequences would not, in all probability,
have occurred, and these special
circumstances were here never
communicated by the plaintiffs to the
defendants. It follows, therefore, that the
loss of profits here cannot reasonably be
considered such a consequence of the
breach of contract as could have been
fairly and reasonably contemplated by
both the parties when they made this
contract.
SIGNIFICANCE
Lon L. Fuller and WR Perdue evaluated
the idea of reducing contractual
remoteness to a foreseeability triumph in
this way:
In its second aspect Hadley v Baxendale
may be regarded as giving a grossly
simplified answer to the question which its
first aspect presents. To the question, how
far shall we go in charging to the
defaulting promisor the consequences of
his breach, it answers with what purports
to be a single test, that of foreseeability.
The simplicity and comprehensiveness of
this test are largely a matter of illusion. In
the first place, it is openly branded as
inappropriate in certain situations where
the line is drawn much more closely in
favor of the defaulting promisor than the
test of foreseeability as normally
understood would draw it. There are,
therefore, exceptions to the test, to say
nothing of authorities which reject it
altogether as too burdensome to the
defaulter. In the second place, it is clear
that the test of foreseeability is less a
definite test itself than a cover for a
developing set of tests. As in the case of all
"reasonable man" standards there is an
element of circularity about the test of
foreseeability. "For what items of damage
should the court hold the defaulting
promisor? Those which he should as a
reasonable man have foreseen. But what
should he have foreseen as a reasonable
man? Those items of damage for which the
court feels he ought to pay." The test of
foreseeability is therefore subject to
manipulation by the simple device of
defining the characteristics of the
hypothetical man who is doing the
foreseeing. By a gradual process of
judicial inclusion and exclusion this "man"
acquires a complex personality; we begin
to know just what "he" can "foresee" in
this and that situation, and we end, not
with one test but with a whole set of tests.
This has obviously happened in the law of
negligence, and it is happening, although
less obviously, to the reasonable man
postulated by Hadley v. Baxendale.
As early as 1894, the U.S. Supreme Court
recognized the influence of Hadley upon
American law:
The Hadley holding was later incorporated
into Section 351 of the Restatement
(Second) of Contracts. A 1994 law review
article noted that as of that year, Hadley
had been cited with approval by the state
supreme courts of 43 U.S. states; three
state supreme courts had adopted the
Hadley holding without citing Hadley
itself; and intermediate appellate courts in
the four other states had also favorably
cited Hadley.
Where two parties have made a contract
which one of them has broken, the
damages which the other party ought to
receive in respect of such breach of
contract should be such as may fairly and
reasonably be considered either arising
naturally, i.e., according to the usual
course of things, from such breach of
contract itself, or such as may reasonably
be supposed to have been in the
contemplation of both parties, at the time
they made the contract, as the probable
result of the breach of it.
IMMORAL CONTRACTS
UPFILL
V
WRIGHT
(1911) 1 KB 506
FACTS
There Upfill let a flat to the Miss wright, a
spinster. Upfill knew that Miss Wright was
the mistress of a certain man and that the
man would be giving her money to pay the
rent. The defendant said that she was a
prostitute and that she took the flat for the
purpose of receiving gentlemen there. The
plaintiff's agent, who let the flat, said that
he did not know that the defendant was a
prostitute until later, but that at the time of
letting he knew that she was the kept
mistress of a solicitor. Upfill sued Miss
Wright for arrears of rent.
JUDGEMENT
It was held that as the landlord knew that
the flat was to be used for an immortal
purpose the lease was tainted with
immorality and the landlord could not
recover. The plaintiff's claim
dismissed.
Darling J. said:
The flat was let to the defendant for the
purpose of enabling her to receive the
visits of the man whose mistress she was
and to
commit fornication with him there. I do
not think that it makes any difference
whether the defendant is a common
prostitute or whether she is merely the
mistress of one man, if the house is let to
her for the purpose of committing the sin
of fornication there.
That fornication is sinful and immoral is
clear. The Litany speaks of 'fornication
and all other deadly sin', and the Litany is
contained in the Book of Common Prayer
which is in use in the Church of England
under the authority of an Act
Parliament.' On these facts, showing a
prostitute receiving visits from a man who
is keeping her as his mistress, the decision
would be the
same even after Stable J.'s decision. But
there are various kinds of extra-marital
cohabitation. Some, Stable J.'s judgment
shows, are not immoral. Stable J. referred
to the action of the legislature. This,
however, is not a universal test. It is trite
law that some things may be legal, yet
immoral.
was
TRUSTS, WILLS, PROBATE
AGAINST PUBLIC POLICY
EGERTON
V
BROWNLOW
[1853] 4 HLC 484
BENCH
LORD TRURO, PARKE B
FACTS
John WilIiam Earl of Bridgewater devised
his freehold estates to trustees, in trust to
convey them to the use of Lord Alford, his
of great-nephew, for ninety-nine years, if he
should so long live ; remainder to trustees
and their heirs doing the life of Lord
Alford, in trust to preserve contingent
remainders ; remainder to the use of the
heirs male of the body of Lord Alford,
with diverse remainders over: provided
that, if Lord Alford should die not having
acquired the title of Duke or Marquis of
Bridgewater, the estate directed to be
limited to the heirs male of his body
should cease, and the estates should
thereupon go over and be enjoyed
according to the subsequent uses and against public policy or not. It is the
limitations directed by his will. Lord province of the statesman, and not the
Alford died leaving a son, but without lawyer, to discuss, and of the Legislature
having acquired the title. to determine, what is best for the public
good, and to provide for it by proper
The House considered a challenge to the
enactments. It is the province of the judge
terms of a trust on the basis that it
to expound the law only; the written from
offended public policy. The House
the statutes: the unwritten or common law
therefore considered the nature and
from the decisions of our predecessors and
importance of public policy.
of our existing courts, from the text writers
JUDGEMENT of acknowledged authority, and upon

Public policy ‘has been confounded with principles to be clearly deduced from them

what may be called political policy; such by sound reason and just inference; not to

as whether it is politically wise to have a speculate upon what is best, in his opinion,

sinking fund or a paper circulation, or the for the advantage of the community. Some

degree and nature of interference with of these decisions may have no doubt been

foreign States; with all which, as applied to founded upon the prevailing and just

the present subject, it has nothing whatever opinions of the public good; for instance,

to do.’ For these reasons, in our view, the the illegality of covenants in restraint of

defendants’ point on public policy is marriage or trade. They have become part

wholly unfounded.’ (Lord Truro) of the established law, and we are

therefore bound by them, but we are not
Parke B: ‘Public policy is a vague and
thereby authorised to establish as law
unsatisfactory term, and calculated to lead
everything which we may think for the
to uncertainty and error, when applied to
public good, and prohibit everything
the decision of legal rights; it is capable of
which we think otherwise.’
being understood in different senses; it
may, and does, in its ordinary sense, mean
‘political expedience,’ or that which is best
for the common good of the community;
and in that sense there may be every
variety of opinion, according to education,
habits, talents, and dispositions of each
REMEDIES
person, who is to decide whether an act is
 The appellant-plaintiff accompanied the
respondent-defendant to Rajkot on promise
to find out a job for her. Relying on him,
PREMA she came to Rajkot on 23-3-1981 and
stayed with the respondent-defendant in
V
Ashok Hotel for three days. The
AHMED
respondent-defendant being a Muslim,
although married, stated to the appellant-
plaintiff that his wife was unable to
AIR 1987 GUJ 106, (1987) 1 GLR 462
conceive and bear a child and, therefore,
he had to adopt the child of his sister-in-

BENCH law. But the respondent-defendant was

very much desirous of having his own
R MANKAD, R MEHTA
child and, therefore, the defendant who
FACTS could have another wife under his personal
law, proposed and promised to marry her
his appeal by the original-plaintiff is
and give her the status of wife. On such
against the judgment and decree
promise by the respondent-defendant and
dismissing her suit for damages of Rs. One
in expectation of married life, the
lac based on the ground of breach of
appellant-plaintiff was induced to
promise of marriage.
surrender herself to the respondent-
The case of the appellant is that she is defendant. The respondent-defendant also
Goanese Brahmin coming from poor changed the name of the appellant-plaintiff
family. In 1978, she had started working as from Prema Koregaonkar to Parvin
a part time typist in a typing institution Ahmad. The respondent-defendant took
Good luck Typing Centre in Santacruz her to a building 'Rafik Manzil' from
(East) Bombay which was run by the Ashok Hotel in Rajkot and thereafter, live
respondent-defendant. The defendant was with the appellant-plaintiff as husband and
also working as a Stenotypist in Indian Oil wife. However, when the appellant-
Corporation at Bombay. The respondent- plaintiff insisted on marriage, the
defendant developed friendly relations respondent-defendant started harassing has
with the appellant-plaintiff. In 1980, the and the appellant-plaintiff was put into a
defendant was transferred from Bombay to very awkward position. She was not even
Rajkot office of Indian Oil Corporation.
able to go to her relations. She had,
therefore, sought help of the Social
Security Branch of Rajkot police.
Ultimately, she was deserted by the
respondent at Rajkot a far away place from
her relations. She submitted that she had
lost everything in her life and all chances
of happiness in life and of finding out a
suitable life partner in her caste or society
and that the respondent has ruined her by
committing, breach of promise to marry
her and she claimed compensation for the
same amounting to Rs. One lac with
interest at 18% from the date of the suit.
JUDGEMENT
The respondent-defendant denied all the
material averments of the appellant-
plaintiff. He denied that they had stayed
together for three days in Ashok Hotel at
Rajkot. He denied that his wife was unable
to conceive or that he wanted to have a
child of his own. He denied that the
appellant-plaintiff had surrendered herself
in the respondent-defendant and that they
had lived together in 'Rafik Manzil' and at
various other places in Rajkot as husband
and wife. It is submitted that the appellant
had come to Rajkot and was residing in the
family of the respondent-defendant as it
friend and during the Course of the time, it
was found that she was not of good moral
character and she could not be kept with
the cultured family of the respondent-
defendant and ultimately she was asked to
leave the house of the respondent-
defendant and as a result she contacted the
Social Security Branch of Rajkot police. It
was denied that the respondent-defendant
had any illicit relations with the appellant-
plaintiff. It was submitted that as per the
writing before the Social Security Branch
of Rajkot police, the respondent-defendant
was only liable to pay the maintenance for
the period from 9-1-1982 till April, 1982
and, therefore, 'Novatio' was pleaded. It
was also submitted that the suit was filed
with a view to extort money from the
respondent-defendant.
The learned trial Judge, after recording the
evidence and considering the matter,
dismissed the suit holding that the plaintiff
had failed to prove that the defendant had
given a promise and played fraud and
misrepresentation regarding marriage. The
trial Court also held that the defendant had
failed to prove that the plaintiff was
staying with the family of the defendant as
his friend and also failed to prove that she
was not of a good moral character and,
therefore, she had to leave the house of the
defendant, that the defendant also failed to
prove that false allegations were made by
the plaintiff to harass and blemish the
defendant.
The learned counsel for the appellant
submitted that the judgment of the trial
Court is clearly contrary to the evidence on
record and even contrary to its own
findings. The learned counsel for the
appellant has referred to para 5 of the
Judgment wherein the learned trial Judge
has observed as follows : -
"The defendant has denied every thing in
his written statement. But in his evidence,
he has admitted his photographs with the
plaintiff. He also admitted that they have
resided together as husband and wife and
existence of illicit relation. But according
to him, it all were without any promise on
his part. It cannot be said true that she was
staying with him as friend and
subsequently, she was turned out to bad
character and, therefore, she was made
shelterless. They were in love with each
other and, therefore, they were staying as
friend of the defendant with him. There is
no question of harassment or to blemish
the defendant. It is admitted on the part of
the defendant that they were staying as
husband and wife in Ashok Hotel, in
Sadhna Guest House, in the house of
Mohmadbhai and in Mehta house at
Rajkot."
A telegram of the defendant from Bombay
to the plaintiff that he was coming. A letter
dated 22-6-1981 from Bombay purported
to have been signed by the defendant and
addressed 'My darling' and produced by
the appellant. In that letter, the respondent
has stated that he has extended his leave
for a week and he would be coming to
Rajkot by next Sunday and at present he
did not have money and would pay the rent
after coming there. This letter is proved by
the evidence of the plaintiff and there is no
cross-examination on this point by the
defendant. Even in his examination-in-
chief, he has not even said a word of
denial. In that view of the matter, there is
no reason to doubt that the defendant had
written this letter to the plaintiff.
The certified copy of the writing before
Social Security Officer. In that application,
she had stated that the respondent was
after her since last 3 years and pressing for
marriage. However, she had been delaying
the proposal and when she accepted the
proposal and agreed for marriage, the
respondent played some drama and called
his wife from Bombay.
Ramniklal is the neighbor and landlord of
house 'Mehta Nivas' who has deposed that
the appellant and the respondent lived as
husband and wife in the house for about
two months.
The Photographer who has proved tile
photograph Exs. 22 and 23 and also
proved the negatives Exs. 36 and 37. He
has also produced the bill for the same. He
has stated that the respondent had come for
the photograph.
Shivlal is the Accountant of Sadhana Hotel
who has proved the entry of 2-5-1981 of
two persons, and the witness has stated
that Ahmad was accompanied by one lady
and both of them were staying alone and
he had not enquired about their relations.
That part has come out in the cross-
examination of the witness.
The Manager of Ashok Hotel who has
proved the hotel entry which is in the name
of Ahmad M. Indian Oil Corporation from
Bombay with family and total member of
persons being two. In the cross-
examination the witness has stated that if
the Hotel Management comes to know that
the man and woman do not have the
relations of husband and wife, they would
not give accommodation to such persons.
He had not thought that plaintiff and
defendant were not husband and wife.
The appellant-plaintiff has also relied on
the falsity of the written statement and the
two line examination-in-chief of the
respondent-with a view to corroborate her
case of promise to marry and breach of
such promise of marriage. The respondent-
defendant in his evidence has stated in all
only two lines in his examination-in-chief
which read as follows : -
"I know the plaintiff. I had not promised to
marry her. There is no sexual intercourse
with her by me without her consent."
This is all he had said in his examination-
in-chief. He has not denied on oath several
circumstances and the evidence of promise
of marriage led. by the appellant-plaintiff.
As far as the promise of marriage is
concerned, only the parties would have
personal knowledge. The appellant-
plaintiff has stated on oath that the
respondent-defendant had given the
promise of marriage and the respondent-
defendant has denied it. There is word
against word. However, there are several
important circumstances which lend
credence and support to the word of the
appellant plaintiff, and the respondent has
utterly failed to explain these
circumstances appearing against him and
to show any circumstance in support of his
say. He has not examined any witness in
his defence. He has not examined even his
close friends with whom he had lived with
the appellant-plaintiff. A letter addressed
to the appellant-plaintiff as 'My darling' is
a strong circumstance to show that what
the appellant-plaintiff says is true. There is
no cross-examination of the appellant
regarding this letter. There is no attempt by
the respondent to explain and deny this
letter in his examination-in-chief.
At that time, there was no reason to give a
false name unless the appellant-plaintiff
and the respondent-defendant had been
living as a husband and wife and the
appellant plaintiff was living under that
name. This circumstance very strongly
corroborates the say of the appellant that
there was the promise to marry and,
therefore, they were living as husband and
wife and describing themselves as such.
Even the independent witness like landlord
and neighbour Ex. 34 who has seen the
two living together for three months in his
house has also stated that they were living
as husband and wife. In the cross-
examination, the respondent has admitted
that he stayed with her as she insisted to
stay in the hotel and they had stayed
together for two days. He has also
admitted that he stayed with her at Rajkot
for about 5 to 6 days. Regarding the
photographs, the respondent had to say in
the cross-examination that they had gone
to the photographer because of her
insistence. The averment in the written
statement that the respondent became.
aware of the bad character of the appellant
and, therefore, he thought that it was
unbecoming of the cultured family of the
respondent-defendant. However, nothing
whatsoever has been shown as to what was
that bad character except that she had
submitted herself fully to him. If that was
the bad character, that equally applied to
himself. She had submitted herself on the
promise of marriage. However, it appears
that so far as the respondent-defendant is
concerned, he had exploited her by the
false promise of marriage. If there is
anything bad in either of them, it is in !the
character of the respondent-defendant
rather than that of the appellant-plaintiff. It
appears that this false excuse of bad
character of the appellant as against the
"cultured" family of the respondent has
been merely given to get away from the
promise of marriage.
The learned counsel for the respondent
Mrs. Chinubhai has strongly submitted
that there was no promise to marry and it
was a voluntary and free relationship
between the two; the respondent was
already married and the close intimacy
between a man and woman does not
necessarily mean promise of marriage. If
there was merely word against word, such
argument may have some force. But
having regard to the circumstances
mentioned above, the word of the
appellant-plaintiff seems to be more
probable, natural and acceptable as against
the word of the respondent-defendant
which is less probable and absolutely
unacceptable. Mrs. Chinubhai submitted
that so far as so-called promise to marry is
concerned, there is no evidence except
bare word of the appellant-plaintiff who is
highly interested in making false
allegations and it is clearly an attempt to
extort money and her evidence cannot be
taken at its face value. If it was a matter of
her word only, this contention would have
some merit. But her word is supported by
many circumstances. She has submitted
that the photographs do not prove any
promise of marriage nor does the letter.
The photographs and the letter merely
show that the two were having some
intimate relations and nothing more and
certainly no promise of marriage.
It is not possible to accept this contention
also because one has to look to the entire
conduct for all the time. It is clear that
there was not only a promise, but a
continuing understanding between the two
that they would get married and only the
timing of the marriage was to be agreed
and fixed and ultimately when she insisted
for the marriage, the respondent-defendant
went back on his promise and committed
breach of the promise. Mrs. Chinubhai has
also submitted that if really she had a
promise of marriage, she would have
certainly talked to some friend or relative.
However, she has not examined anyone. It
is to be noted that she is a Brahmin girl
from Goa and the appellant-plaintiff and
the respondent-defendant are in Rajkot.
The respondent is already married and
Muslim, belonging to totally a different
religion. In such circumstances, it would
be natural that she would not inform any of
the relatives or friends. It is not shown that
she had any friend or relative in Rajkot.
Where they were living were the friends of
the respondent and not of the appellant.
Really speaking, this argument should
apply to the respondent who has examined
no witness on his behalf. He has not
examined his own wife who had visited
the place twice. He has not examined any
friend with whom they were living. In the
cross-examination of the appellant, it was
suggested to her by the respondent-
defendant that she was not ready to marry
with the respondent before he takes
divorce from his wife. She has denied this
suggestion. But this suggestion clearly
implies that the respondent wanted to
marry the appellant-plaintiff without
getting divorce from his first wife.
In view of the above discussion, the
finding of the lower Court that there was
no promise of marriage cannot be
sustained has to be reversed. The learned
trial Judge has observed that :
"considering the whole evidence and its
cumulative effect, I am of a view that
parties were in love since long with each
other and she surrendered (to) the
defendant for that reason only and not of
the so-called promise as stated by her."
"no doubt they remained as husband and
wife, but only for that reason, in the
instant case, it cannot be said that she
surrendered herself due to the promise."
"Their, love affairs ended into bodily
happiness. Mere residing as husband and
wife for some period cannot establish that
she only surrendered herself to the
defendant as she was promised by the
defendant to marry her. Circumstance
shows that they were in love since long but
when they got opportunity to live together,
both have taken it. Before surrendering
herself, she could have insisted to perform
the marriage first. That she had not done.
Therefore, I am of a view that the facts
regarding promise to marry her is
subsequently got up fact for the institution
of this suit."
Such conclusion of "no promise to marry"
cannot be sustained and is contrary to
evidence. Therefore, there is no escape
from the conclusion that the respondent-
defendant had promised to marry the
plaintiff. On that finding, there is no
further dispute that if there is such
promise, the respondent has committed
breach thereof. Even otherwise, there is
clear evidence to show that the respondent-
defendant has not been willing to keep and
fulfil his promise.
The next question that arises is whether the
appellant-plaintiff is entitled to any
damages or compensation and if yes, how
much. On this question, we had requested
the learned Advocate Mr. M. D. Pandya to
render his assistance as amicus curiae and
we have heard him also.
The learned counsel for the respondent-
defendant has submitted that award of
compensation in such a case would be
against the public policy and morality. If a
woman lives in illicit cohabitation with a
man and thereafter comes out with a case
of damages, such claim would not be
countenanced by any Court of Law and
justice and, therefore, the Court should
refuse any compensation. She has relied on
the decision in the case of Gherulal Parakh
v. Mahadeodas Maiya, AIR 1959 SC 781
wherein the Supreme Court has observed
as follows:-
"The primary duty of a Court of Law is to
enforce a promise which the parties have
made and to uphold the sanctity of
contracts which form the basis of society,
but in certain cases, the Court may relieve
them of their duty on a rule founded on
public policy; the doctrine of public policy
is extended not only to harmful cases but
also to harmful tendencies."
Relying on the aforesaid decision, the
learned counsel for the respondent has
submitted that if the Court were to award
damages in the present case, it would be
harmful and it would encourage harmful
tendencies and it would be against public
policies. In support of this contention, the
learned Counsel for the respondent has
also relied upon a judgment in the case of
Istak Kamu Musalman v. Ranchod Zipru
Bhate, AIR 1947 Bom 198 wherein it was
held that if the consideration is immoral,
transaction is void.
In the case of Manicka Gounder v.
Muniammal, AIR 1968 Mad 392 which is
strongly relied upon by the respondent, it
is observed as under : -
"Where due consideration relates strictly to
past cohabitation, which is illicit, in the
sense that it is outside matrimony, but
which otherwise does not constitute any
offence, it would be conceivably held, on
the circumstances, that the promise to pay
is supported by good consideration. But
even so, though this consideration is not
forbidden by any law, nevertheless it falls
under the interdict that it may be 'immoral
or opposed to public policy'. For the
Courts must, by every means in their
power, promote matrimony, and the
incurring of lawful sexual relationship
alone and ought not to give sanction or
approval, even in an implied form, to
irregular sexual relations outside the bond
of matrimony, even where they may
constitute no offence of infringement of
the Penal law."
None of these cases would be applicable in
the present case. It is true that there was
cohabitation between the parties and it was
illicit cohabitation without matrimony.
However, the damages are not claimed on
the basis of illicit cohabitation or for any
immoral consideration. It is only a side
effect or a by-product and the cause of
action is not based on such cohabitation.
The case is based on the promise of
marriage and breach of such promise. If
the appellant-plaintiff proves that case, a
clear actionable wrong is proved for which
claim for damages or compensation is
maintainable. Merely because the parties
had also illicit cohabitation would not
make the legal and valid cause of action
illegal and immoral. It is a well settle law
that breach of promise to marry is
actionable and damages and compensation
for such breach can be awarded.
The case of Maung Sein Kyi v. Maung
Sein Kyi, AIR 1916 Lower Burma 45 is a
case of breach of promise of marriage and
damages in such case and it was held as
follows : -
"Under S. 74 of the Contract Act, it is
open to the Court to award such
compensation not exceeding the amount so
named as appears to it to be reasonable.
The defendant urges that Rs. 2000/- is an
excessive amount to award against a
person in his position of a clerk on Rs.75 a
month. As he is insolvent it appears to me
improbable that the plaintiff would realize
any considerable sum from the defendant
himself but as pointed out, his step father
holds a well paid Government
appointment and the defendant's position
does not alone justify a reduction of the
damages. He has treated the plaintiff in a
shameful and hard-hearted manner and if,
as was stated in this Court and not denied,
he has since married another girl, he has
put it out of his power to make even tardy
amends to the plaintiff by offering her the
status of a chief wife. On the other hand,
Rs. 2000/- is a handsome sum to a girl in
the plaintiffs position and is, I consider, a
reasonable compensation under the
circumstances."
In Anson's Law Contract, it is observed as
follows under the head 'Compensatory
Nature of Damages' in Chapter 17 of
'Remedies for Breach of Contract',
"damages for breach of contract are given
by way of compensation for suffered, and
not by way of punishment for wrong
inflicted. Hence the 'vindictive' or
"exemplary' damages of the law of tort
have no place in the law of contract. To
this rule, however, the action for breach of
promise of marriage is an exception; in
that case injury to the feelings of the
disappointed party may be taken into
account in the assessment of damages."
This is the well settled common law in
England which applies in India also. Thus,
the breach of promise of marriage is not
only actionable and there is no bar of
public policy operating against the same
but even exemplary damages apart from
the normal damages would be awarded.
In the case of Jarvis v. Swans Tours Ltd.,
(1973) 1 QB 233, the Court of Appeal held
that the plaintiff is entitled to
compensation for his disappointment and
distress at the loss of the entertainment and
facilities for enjoyment which he had been
promised in the defendant's brochure and
his damages should be increased to 125. In
that case, the charges for the fortnight
holiday were 63.45 and it was proved that
he did not get the promised facilities,
entertainment and enjoyment and had
inconvenience and loss of benefit. It was
found that in the first week, he got a
holiday which was inferior and for the
second week, a holiday he got was very
largely inferior to what he had been led to
expect. The Court at the first instance took
the difference in value between what he
paid for and what he got and it was
thought that the plaintiff had got half of
what he had paid for and so the trial Court
gave him half the amount which he had
paid namely 131.72. The Court of Appeal
enhanced the damaged to 125 and
negatived the argument that on a breach of
contract, damages cannot be given for
mental distress and that damages cannot be
given for disappointment of
occasioned by breach of contract. Lord
Denning observed as follows : -
"I think that those limitations are out of
date. In a proper case damages for mental
distress can be recovered in contract, just
as damages for shock can be recovered in
tort. One such case is a contract for a
holiday, or any other contract to provide
entertainment and enjoyment. If
contracting party breaks his contract,
damages can be given for
disappointment, the distress the upset and
frustration caused by the breach. I know
that, it is difficult to assess in terms of
money, but it is no more difficult than the
assessment which the Courts have to make
every day in personal injury cases for loss
of amenities."
What is said to be applicable in a case of
breach of promise of a happy holiday
would must strongly and appropriately
apply in the case of breach of promise of
marriage and happy family life.
The next question that arises is about the
quantum of damages to be awarded. In a
case of this nature, there is no ready
measure of damages unlike commercial
contracts. There could be several relevant
circumstances to be taken into account.
Such as social and financial position of the
parties (even though inability to pay
damages may not result into denial or
mind dimination of damages if otherwise the
plaintiff is entitled to larger quantum of
damages). The respondent-defendant is
working as a Stenographer in a well
reputed public sector corporation like
Indian Oil Corporation. If the promise had
been fulfilled, the appellant-plaintiff would
have shared his life as a family member
and would have enjoyed all the facilities of
the family life including the earnings of
the
the husband. In the event of desertion by
the husband, she would be entitled to
the
maintenance commensurate with the social
and economic status of the husband and
wife. In the present case, it would not have
been less than Rs. 500/- per month. It
would probably be somewhere between
Rs. 750/- and Rs. 1000/-per month.
Another measure, is suggested, to compare
with the case where a wife loses her
husband in a fatal motor accident and to
come to annual loss and apply a multiplier
of 15 to arrive at a lump sum figure. Even
if a conservative amount of Rs. 500/- per
month is taken as a datum figure in this
case, that would be Rs. 6000/- per year. If 22. We put on record our appreciation of
a multiplier of 10 is applied, it would be Mr. M. D. Pandya for having assisted the
Rs. 60,000/-. Such amount would give a Court as amicus curiae at the request of the
reasonable maintenance per month for Court. His assistance was disinterested and
lifetime. That would also take care of all useful and was sought on the question
the aspects of damages including whether damages could be awarded in a
compensatory, aggravated or exemplary case like the present one and what would
damages. be the measure for such damages.

In a case decided 70 years ago, reported in

AIR 1916 Lower Burma 45 (supra) an
amount of Rs. 2000/- was awarded against
a person in a position of Clerk earning Rs.
75/- per month. Having regard to the
comparative money value of Rs. 2000/- in
1916 and Rs. 60,000/- in 1986, it appears,
that the damages can reasonably be
assessed in the present case at Rs.
60,000/-. The appellant plaintiff will also
be entitled to interest at the rate of 6% per
annum from the date of the suit till
realisation. The appellant-plaintiff would
also be entitled to costs of both the Courts.

In the result, the appeal succeeds. The

judgment and decree of the trial Court are
quashed and set aside and the suit of the
appellant-plaintiff is decreed and it is
directed that the respondent-defendant do
pay to the appellant-plaintiff a sum of Rs.
60,000/- with 6% interest per annum from
the date of the suit till realisation and also
the costs of both the Courts.