1. Bhagwan das v.

girdharilal
Facts
On July 22nd 1959, Kedia Ginning Factory and Oil Mills (appellant) of Khamgaon entered into a
contract over telephone to supply cotton seed cakes to M/s. Girdharilal Parshottamdas and Co.
(respondents) of Ahmedabad.  The respondents commenced an action against the appellant in the
City Civil Court of Ahmedabad for failing to supply cotton seed cakes as per the aforementioned
agreement. The respondents contended 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 at 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 of 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.
Judgement
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 of 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 was communicated by telephone to the respondents. The appeal was dismissed with
costs.

2. Carill v. carbolic smokeball

Carbolic Smoke Ball Company

The company made a product called “Smoke Ball”. It claimed to be a cure to influenza
and many other diseases, in the context 1889-1890: Flu pandemic which is estimated to
have killed 1 million people. The smoke ball was a rubber ball with a tube fixed to its
opening. The ball is filled with Carbolic acid (Phenol). The tube is supposed to be
inserted in one of your nostrils and the bottom part of the rubber ball is to be pressed. The
gas enters your respiratory tract and flushes out al the viruses.
 The Company published advertisements in the Pall Mall Gazette and other newspapers on
November 13, 1891, claiming that it would pay £100 to anyone who got sick with
influenza after using its product according to the instructions set out in the advertisement

Louisa Carlill She, believing in the accuracy of the statement made in the advertisement with
respect to efficacy of the smoke ball in cases of influenza, purchased one packet and used it
thrice everyday from mid November, 1891 until 17th Jan, 1892, at which latter date she had an
attack of influenza.

Thereupon, her husband wrote a letter for her to the defendants, stating what had happened, and
asking for £100 as promised in the advertisement. They refused and this action was brought in
court before Hawkins J. and a special jury. Arguments were heard on both the sides and finally
the verdict was given in favor of Mrs. Carlill.

Judgements

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 a unilateral offer to the entire world

(2) The 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 advert 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.

Dickinson v Dodds
Facts

The defendant, Mr Dodds, wrote to the complainant, Mr Dickinson, with an offer to sell his
house to him for £800. He promised that he would keep this offer open to him until Friday.
However, on the Thursday Mr Dodds accepted an offer from a third party and sold his house to
them. It was claimed that Mr Dickinson was going to accept this offer, but had not said anything
to Mr Dodds because he understood that he had until Friday. Mr Dodds communicated that the
offer had been withdrawn through a friend to the complainant. After hearing this, Mr Dickinson
went to find the defendant, explaining his acceptance of the offer. The complainant brought an
action for specific performance and breach of contract against the defendant.
Issues

The issue in this case was whether the defendant’s promise to keep the offer open until Friday
morning was a binding contract between the parties and if he was allowed to revoke this offer
and sell to a third party.

Held

The court held that the statement made by Mr Dodds was nothing more than a promise; there
was no binding contract formed. He had communicated an offer for buying his house to the
complainant and this offer can be revoked any time before there is acceptance. There was no
deposit to change this situation. Thus, as there was no obligation to keep the offer open, there
could be no ‘meeting of the minds’ between the parties. In addition, the court stated that a
communication by a friend or other party that an offer had been withdrawn was valid and would
be treated as if it came from the person themselves.

Duddell v Simpson
This case considered the issue of a vendors entitlement to rescind a contract for the sale of land
and whether or not a vendor had the entitlement to rescind a contract after they were unable to
comply with a requisition by the purchaser.

Dunlop Pneumatic Tyre Company v New Garage & Motor co

Facts

The Claimant (C) manufactured and supplied goods to the Respondents (R) who were dealers
and under an agreement C prohibited R from selling than their list price sold an item under the
list price, hence C bought a claim in the breach of contract and wanted R to pay a sum of 5l. R
argued that the clause that C had relied upon was penalty clause and therefore could not be
enforced.

The court at First Instance held in favour of C on the basis that their clause was in fact a damages
clause. However, the Court of Appeal reversed this and held that the clause was simply a penalty
clause.

Issue

Was the sum of 5l, a penalty or liquidated damages?

Held Appeal allowed – Court of Appeal decision was set aside; the clause was not a penalty
clause but rather a limited damages clause; thus enforceable.

Eliason v. Henshaw
Facts
On February 10, 1813, (Defendants) sent a letter from Harper’s Ferry to the seller (Plaintiff) at Mill Creek
offering to purchase flour at $9.50 per barrel. The letter was sent to Plaintiff by wagon. The letter required
that an acceptance by Plaintiff be sent to Defendants by the same wagon returning to Harper’s Ferry.
Plaintiff received the offer on February 14, 1813. Plaintiff sent a letter accepting the offer to Defendants
at Georgetown on February 19, 1813. On February 25, 1813, Defendants sent Plaintiff a letter
acknowledging receipt of Plaintiff’s acceptance, but stating that, because they had not heard from
Plaintiff previously, they had purchased flour elsewhere. In March 1813, Plaintiff delivered the flour to
Georgetown. Defendants refused to accept the delivery. Defendants moved to instruct the jury that if their
evidence was found to be true, Plaintiff was not entitled to recover on the alleged contract. The court did
not give the requested instruction and judgment was rendered for Plaintiff. Defendants appealed.

Decision
An acceptance must mirror the terms of the offer. Any deviation from the terms of the offer will
invalidate the offer, unless the offeror agrees to the deviation. Here, it is clear that Defendants required
that any acceptance letter be delivered to Harper’s Ferry, and that this term was an essential part of the
offer. Plaintiff, however, sent his acceptance to Georgetown.

Entores limited v miles far east corporation

Facts

The complainants, Entores, were a company that was based in London. They had sent an offer to
purchase 100 tons of copper cathodes to the defendants, Miles Far East Corp. Their company
was based in Amsterdam and this offer was communicated by Telex, a form of instantaneous
communication. The Dutch company sent an acceptance of this offer by Telex to the
complainants. When the contract was not fulfilled, the complainants tried to sue the defendants
for damages.

Held

The court held that the contract and damages were to be decided by English law. It was stated
that the postal rule did not apply for instantaneous communications. Since Telex was a form of
instant messaging, the normal postal rule of acceptance would not apply and instead, acceptance
would be when the message by Telex was received. Thus, the contract was created in London.
This general principle on acceptance was held to apply to all forms of instantaneous
communication methods. Acceptance via these forms of communication had to be clear before
any contract is created.
Felthouse v Bindley
Facts

The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse, about
buying his horse. After their discussion, the uncle replied by letter stating that if he didn’t hear
anymore from his nephew concerning the horse, he would consider acceptance of the order done
and he would own the horse. His nephew did not reply to this letter and was busy at auctions.
The defendant, Mr Bindley, ran the auctions and the nephew advised him not to sell the horse.
However, by accident he ended up selling the horse to someone else.

Held

It was held that there was no contract for the horse between the complainant and his nephew.
There had not been an acceptance of the offer; silence did not amount to acceptance and an
obligation cannot be imposed by another. Any acceptance of an offer must be communicated
clearly. Although the nephew had intended to sell the horse to the complainant and showed this
interest, there was no contract of sale. Thus, the nephew’s failure to respond to the complainant
did not amount to an acceptance of his offer.

HARBHAJAN LAL v HARCHARAN LAL

acts of the Case

A young boy between the ages of 13-14 years ran away from his father's home at Baheri on 9th
June 1924. The father issued a pamphlet offering a reward: "Anybody who finds trace of the boy
and brings him home, will get Rs. 500." Harbhajan Lal saw one of these pamphlets and had the
boy's name in his memory. On 19th July, the plaintiff was at the dharamshala of the Bareilly
Junction Railway Station. He saw the boy and sent a telegram to the boy's father saying he had
found his son.
Judgement read by MEARS CJ
I am of the opinion that the plaintiff substantially fulfilled the terms of the contract. The hand-bill was an offer open
to the whole world and capable of acceptance by the person by any person who fulfilled the condition.
I am of opinion that the plaintiff substantially performed the condition and that the judgment of the Small Cause
Court is extremely artificial. In these circumstances that decision must be reversed and there must be a decree in
favor of the plaintiff for Rs. 500 with costs.
Harvey v Facey

Facts

Harvey, Anor (plaintiffs), and L.M. Facey (defendant) resided in Jamaica, which at the
time was a British colony. The three men negotiated for the sale and purchase of
Jamaican real property owned by Facey's wife, Adelaide Facey. Harvey and Anor asked
Facey if he would sell them the property and the minimum price at which Facey would
sell it. In response, Facey stipulated his minimum price for the property, but he was silent
as to whether he was ready to sell the property to Harvey and Anor. Harvey and Anor
sent Facey a telegram in which they agreed to pay Facey the stipulated price. Harvey and
Anor regarded this telegram as obligating Facey to sell them the property at that price.
When Facey attempted to sell the property to other buyers, Harvey and Anor accused
Facey of breaching their contract and sued Facey for specific performance. The Jamaican
trial judge dismissed the suit, finding there was no completed sale contract. On appeal,
the Jamaican Court of Appeal found there was a valid contract and awarded Harvey and
Anor monetary damages. However, the court of appeal declined to order specific
performance because there was no proof that Adelaide Facey had consented to the sale.
The Jamaican Supreme Court of Judicature affirmed the court of appeal's decision, and
Harvey and Anor appealed to the Privy Council of the United Kingdom.

Jones v. Padvatton
A mother and daughter came to an arrangement whereby the mother agreed to maintain her
daughter if she agreed to study for the bar. The daughter commenced her studies and the mother
paid her an allowance. The arrangement was later altered and the mother agreed to provide a
house in which her daughter could reside whilst she studied. Mother and daughter fell into
dispute as to the occupancy of the house, and the mother sought possession. It was held the
daughter was entitled to remain in possession and the mother appealed.

Held

The mother’s appeal was successful and she was awarded possession. There is a
presumption that family arrangements are based on mutual trust, family ties and
affection, and that there is no intention to create legally binding contracts capable of
enforcement in the courts. This presumption can be rebutted, but the lack of formality
regarding the agreement between mother and daughter strongly indicated there was no
such intention and the daughter had no defence to her mother’s claim for the house.
Khan Gaul v. Lakha Singh

Section 10 of the contract act requires that the parties must be competent to contract. According to
the decision in the present case, asking a minor to return the ill gotten gain in the form of money, is
not the enforcement of contract, but it is only the restoration of the pre-contract position. The relief is
allowed not because there is a contract between the parties, but it is because there is no contract but
one of the parties has unjustly benefited at the cost of the other.

Lal man Shukla v. Gauri dutt

In the January, 1913 defendant’s nephew has absconded from his house and in
order to find his nephew he sent all his servants to different parts, so that he can be
traced at his position. Defendant was among those several servants who were sent
for the search of master’s child. He was sent to Hardwar from Cawnpore and there
he was able to trace the child and for this accomplishment he was awarded with
two sovereigns and Rs. 20 when he returned to Cawnpore. In the meantime when
plaintiff 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.

Judgement

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.
Lampeigh v.Braithwaite

The defendant, Braithwaite, killed a man. He asked the plaintiff, Lampleigh to secure him
a pardon from the king. The plaintiff spent many days doing this, riding and journeying
at his own cost across the country to where the King was and back again. Afterwards,
the defendant promised to pay the plaintiff £100 in gratitude. He later failed to pay the
money. The plaintiff sued.

Judgement

The court found in favour of the plaintiff. The promise was indeed given after the
plaintiff had acted. However, the plaintiff had acted upon a request made by the
defendant. The court considered that the original request by the defendant contained
an implied promise to pay the plaintiff for his efforts. Bowen LJ said:

‘A mere voluntary courtesie will not have a consideration to uphold an assumpsit. But if
that courtiesie were moved by a suit or request of the party that gives the assumpsit, it
will bind’.

Consequently, the court held that if A does something for B at their request and
afterward B promises to pay A for their trouble, then that promise is good consideration.
The later promise was considered to be part of the same single transaction and was,
therefore, enforceable.