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Contracts Case Review
Contracts Case Review
The Indian Contract Act, 1872 is based on English Common Law principles. It
determines the situation and circumstances under which promises made by parties would be
legally binding on each other. Section 2(h) of the Indian Contract Act, 1872 provides the
definition of contract as an agreement enforced by law. All contracts are contracts, but all
agreements are not contracts. This Act plays an important role in deciding how a contract is
formed. This case review would be focusing on a very important aspects in formation of a
valid contract that is Section 3 of the Indian Contract Act which deals which acceptance of
the offer and acceptance in ignorance of the offer in the landmark judgement of Lalman
Shukla v. Gauri Dat.
The defendant, Gauri Dat was a resident of the town of Cawnpore (now Kanpur). She
had a nephew who went missing and no traces of him was found for several days. The
defendant sent his servants to different places in search of his nephew. The plaintiff, Lalman
Shukla, the munim of his firm, was one among then. He was given money for travelling
expenses. Gauri Dat issued handbills and displayed it all over the town which rewards Rs.
501 to anyone who find his nephew. Meanwhile, Lalman Shukla traced the boy in Hrishikesh
and gets him back to Gauri Dat. In the immense happiness he rewarded the plaintiff with Rs.
20. After six months when the plaintiff was dismissed from the job, he came to know about
the offer made by the defendant. The plaintiff filed a suit against the defendant and claimed
Rs. 499.
ISSUES:
The High Court of Allahabad held that the plaintiff cannot claim the reward of Rs.
501 and dismissed the claimed made by the plaintiff as there was no contract formed between
the parties. The communication of acceptance is an essential element in formation of a valid
contract.
CASE ANALYSIS:
The judgement held in the favour of defendant was in accordance with the Indian
Contract Act, 1872 and the researcher has tried to analyse it in two major arguments-
Therefore, the plaintiff is not entitled to reward of Rs. 501 on the basis of arguments
cited above. There was no contract between the plaintiff and the defendant.
2
Ramachandra Chintaman vs Kalu Raju [1878 ILS2 Bom 362]