Contract Law-1 Assignment

- Arjav Khurkhuriya

 Unlawful Consideration-
Nagamma  and  Ors.  vs.  Syed  Shafiulla  (05.11.2020 - KARHC)

Facts- Sale of Property takes place between both the parties for the
consideration of Rs. 15,000/- on 25.11.1990 but later it came out that the
was restriction on sale of that property. Court find out that the agreement
of this nature defeats the purpose of law.

 Consensus ad idem-
Adhinarayanan  vs.  Babu  and  Ors. (27.07.2020  -  MADHC)
Facts- The Plaintiff entered into the contract to purchase the property
from the defendant for the consideration of Rs. 1,53,090/- including
advance payment of Rs. 40,000 but later plaintiff found out that the
defendant is not the absolute owner of the property thereby refused to
perform his part of the contract. Court concluded that there was no
Consensus ad idem between parties for transfer of property.
 Void and Unenforceable Contract-
Ericsson Communication Ltd  vs.  Dy. Cit
(14.12.2001  -  DELHC)

Facts-LME a subsidiary of Ericsson passed an entry regarding royalty

payment to Parent Company Ericsson which is the part of the contract but
the Income Tax Department found out that the entry was passed without
deducting TDS (Tax Deducted at Source) but later in the court it was
found out that the royalty payment was not according to Industrial Policy
Declared by Ministry of Industry therefore the contract is not enforceable
by law and is void and there is  no enforceable debt was created in favour of
LME.

 Expressed and Implied Contract-

Taj  Mahal  Hotel  vs.  United  India  Insurance  Co.  Ltd. and  Ors.
(14.11.2019  -  SC)

Facts- In this case a Car was parked in the valet parking of the hotel which
was stolen from the parking. The Insurance Company and the Owner of
the Car asked the Hotel Management to pay for the theft of the car as
 there was contract between owner and the hotel to take care of the car
when it was in the parking The Hotel Company argued that there was no
contract between owner and hotel regarding parking and parking service
was free of cost. Court concluded that the complimentary services provided
by the hotels are not actually free of cost and here exists an implied contract
created by virtue of the valet parking service.

 Communication of Acceptance-
Kash  Ind  Roller  Flour  Mills  and  Ors.  vs.  Union  of  India  (UOI)
and  Ors. (16.03.2007  -  JKHC
Facts- In this Case the Respondent announced the tender for the
processing of wheat crop and the petitioner was the lowest tenderer for the
crop but even though the petitioner was the lowest tenderer the
respondent renounced new tender for same crop without communicating
about it to the petitioner before the commencement of the contract.
Petitioner challenged the new tender on the ground that the petitioner was
declared the lowest tenderer and thereby exist a contract between
petitioner and respondent but the court concluded that there is no
contractual relationship between the parties as there was no communication
from the side of respondent about the acceptance or rejection.

 Revocation of Offer-
Madhya  Pradesh  State  Road  Transport  Corporation  vs.  Manoj 
Kumar  and  Ors. (29.08.2016  -  SC)

Facts- In this case the Corporation introduced a voluntary retirement

scheme for its employee for which had to be applied within particular
period. However, there was condition that once the application is
submitted employees are not allowed to withdraw their application but the
employees applied for withdrawal which was not accepted the
corporation. Court concluded that the application submitted by the
employees for VRS is an offer which can be withdrawn by them only during
the validity period and cannot be withdrawn after the validity period even
though they are not accepted.

 Transmission of Acceptance-
Santosh Kr. Ranka vs. The Food Corporation of India
(05.01.2011 - PATNAHC)
 Facts- In this case the plaintiff appointed the defendant as the transport
contractor for the term of two years also he had to deposit a security
deposit to the plaintiff but the defendant neither started the work nor
deposited the security amount as result of this defendant was asked to pay
the compensation for the loss suffered by the plaintiff. Defendant argued
that there was no concluded contract as the acceptance was never received
by the defendant secondly, they never deposited the security amount. On
the first argument of the defendant the court concluded that there is a
contract between the parties because as soon as telegram was put into the
course of transmission, it becomes the out of the control of the plaintiff
therefore acceptance is completed.

 Contract without consideration is void-

National Insurance Co. Ltd. vs. Subhadraben and Ors.
(27.11.2015 - GUJHC)

Facts- In this case a vehicular accident took place in which a one person
died; the family members of the deceased claimed for the compensation of
amount Rs. 3,00,000 /- from the insurer as there was a contract of
insurance between insurer and insured but it was argued by the insurer
that the cheque deposited by claimant for the premium of the policy was
dishonoured and thereby policy of the insurance is cancelled and the
intimation of the same was made to the claimant before the accident took
place. The Court concluded that contract between insurer and the claimant
is void as there was no consideration (because of the dishonour of the
cheque) so Insurance company is not liable to pay any to compensation to
the other party

 Inadequacy in consideration-
Trilok Nath vs. Khem Chand and Ors. (03 .07.2017 - DELHC)

Facts- In this case the plaintiff signed the sale deed for the property for the
price Rs. 1,00,000/- also plaintiff had given power of attorney to the
defendant. The property was furthered transferred to other parties
through valid sale deed for the higher price Rs. 3,25,000/-. The plaintiff
argues that the original sale deed should be held illegal as the deal was
undervalued. However, the court held that the mere inadequacy in
consideration is not a ground to cancel the contract.
 Privity of Contract-
Vysya Bank Limited vs. A.P. State Agro Industries,
Development Corporation Limited and Ors. (14.08.2003 -
APHC)

Facts- In this case plaintiff deals in fertilizers and its dealer issued cheques
in the favour of the plaintiff. Then the plaintiff presented these cheques to
its bank then the bank of the plaintiff transferred these cheques to the
bank of the dealers(defendant) for the settlement and the bank of the
dealer(defendant) retained these cheques for a considerable period of time.
The plaintiff then files suit against the defendant claiming that the
defendant retained the cheques for longer duration for its own benefit and
demanded interest for delayed payment. The Court held that there is no
privity of contract and the defendant is not entitled to pay interest for the
delay.

 Exceptions to privity of contract (third party insurance)-

National Insurance Co. Ltd. vs Smt. Asha Devi And Ors.
(18.11.2002 – ALLHC)

Facts- In this case a truck met with an accident and in the accident both
driver and mechanic lost their life, the families of the deceased asked for
the compensation however, the insurer argued that the deceased are the
third party means there is no privity of contract between them and they
are not liable to pay compensation moreover they died due to their
negligence.
The court held that the insure is liable to pay compensation because there is
statutory liability to recover compensation from insurer.

 Exceptions to Consideration (Time Barred debt)-

Dinesh B. Chokshi and Ors. vs. Rahul Vasudeo Bhatt and Ors.
(19.10.2012 - BOMHC)

Facts-In this case there was a dispute between parties whether there is a
contract between parties regarding a cheque issued towards repayment
towards a written promise as the accused argued that the facts of the case
do not show that there is any time barred debt. However, the court held
that the once a cheque is drawn for the discharge of time barred debt it
creates an enforceable contract
 Contract with minor is void ab initio-
Kuljinder Singh vs. Balwinder Singh (16.12.2014 - PHHC)

Facts- In this case there was a dispute between parties regarding specific
performance of sell agreement. It was claimed by the appellant that during
the during the course of the agreement the date of execution of agreement
was extended because the vendor was minor (the fact was earlier omitted
by the appellant). However, the court held that agreement between the
parties is void even if the later minor defendant had become major by void ab
initio.

 Minor can be beneficiary but not promisor-

K. Balakrishnan and Ors. vs. K. Kamalam and Ors.
(18.12.2003 - SC)

Facts- In this case both parties were brother and sister and their Mother
now deceased registered a gift deed in favour of both parties when they
were the minors however years after their mother cancelled the gift deed
and executed a new will in favour of her daughter only. The Appellant
argued that there as already a gift deed therefore the cancellation of deed
and will is void in the law. It was argued in the court that the gift deed was
void because the parties were minor at the time of execution of deed. The
court held that when a minor receives a gift from his/her parents no express
acceptance is required and acceptance can be implied by mere silence of the
minor thereby the gift deed is valid.

 Contract with person of unsound mind-

Angoori Devi and Ors. vs. Dalbir Singh and Ors. (21.02.2019 -
PHHC)

Facts- In this case the appellant signed the sale deed with the respondent
for the sale of a land. Dispute arises when respondent refused to transfer
their property to the appellant they argued that they had no received any
consideration for the land (which was claimed by the appellant) also the
respondent is an abnormal person who lost his mother and his father
became sadhu and signature of the respondent is obtained under the
coercion as he is of unsound mind. The court held that the contract between
 parties is void as one of the parties is of unsound mind thereby appellant
cannot claim his rights on the property.

 Temporary incapacity to contract-

Shiris Kumar Gupta vs. Keshav Prasad Sinha and Ors.
(21.06.2019 - CGHC)

Facts- In this case there was sale agreement signed between the parties
regarding sale of a piece of the land but the defendants refused to perform
their part of the contract as they argued that their signature in the sale
deed are obtained through fraud as they were under the influence of
liquor. The court held that agreement between parties is void as the
defendants were of unsound mind (under the influence of liquor) because A
person who is usually of sound mind, but occasionally of unsound mind, may
not make a contract when he is of unsound mind.

 Temporary capacity to contract-

Mst. Laxmi vs. Dr. Ajay Kumar and Ors. (31.08.2005 - PHHC)

Facts- In this case the appellant entered into the agreement for the sale of
the house of the defendants however the defendants refused to perform
their part of the contract as they argued that one of the owners is of
unsound mind therefore, she is unable to enter the contract. The court
held that documents regarding the mental state of the defendant are of the
past time from which she has recovered also court held that on the
principle- A person who is usually of unsound mind, but occasionally of
sound mind, may make a contract when he is of sound mind thereby contract
is valid.