Durga Prasad v Baldeo on Consideration : Facts,

Issues, Contentions, Judgement & Analysis

Name of the Case– Durga Prasad v. Baldeo and Others ILR [1881] 3 ALLAHABAD
221

Deciding Bench of Judges– Hon’ble Justice Pearson, Hon’ble Justice Oldfield

High Court of Judicature at Allahabad

Decided on- 3 March 1880

Introduction to the case

The case is based upon the requirement of a valid contract- ‘Consideration’. As

stated under section 2(d) of The Indian Contract Act, 1872, consideration is one of
the essential elements of a valid contract, and without consideration, no agreement
shall attain the validity of a legal obligation between the parties to the said
contract. Consideration is something that is paid by either of the parties and could
be something in return to compensate the performance of the other party or could
be a promise to do or to abstain from doing something. Any agreement without a
legally accepted consideration shall be termed as a ‘void agreement’ as per the
provisions of the Indian Contract Act, 1872.

Facts

The plaintiff was approached by the District Authority of Etawah with the proposal
to build up a market in the local area. To satisfy the said proposal and gain the trust
of the defendant, the plaintiff set up a two-grain market at Etawah, one known by
the name Hume Ganj and the other knowns as Ram Ganj, and he had extended a
large number of rupees for building shops and buying land for the same.
Defendants leased the shops on the lookout and did the work of commission
specialists and even got some level of commission from the dealers in return.

In 1875 by mutual consent, the commission to be paid to the plaintiff was fixed as 6
annas and the defendants executed an arrangement giving effect to the same in
1875. This was done following the wishes of the plaintiff to be paid only through
the mode of commission regularly.

The plaintiff, on being recommended that he ought to get the agreement for
commission registered by the Municipal Corporation, took the matter seriously and
subsequently arranged for the agreement to be registered to make the agreement
legally binding and have it verified for the purposes of their security in regards to
receiving the commission promised to them.

As per the Indian law and the Indian Contract Act, 1872, for an agreement to be
registered, both the parties to the agreement must confirm that they have entered
into the agreement and have given their full consent for the applicability of the said
agreement.

The issue began at the point when the plaintiff requested the defendant to give
their consent for registration of the above-said agreement, they responded with
either unwillingness to give their consent for the agreement or denying having to
execute it.

As a result of this, the plaintiff was obligated to sue for the foundation of his rights,
and accordingly, he brought a suit against the Respondents for enforceability of
 the understanding in the lower court and later filed an appeal in the High court on
the unsatisfactory response from the lower court.

Issues involved

Two main issues arose in this case-

 If the above-said agreement constitutes a valid contract

 If the above-said agreement can be enforceable by the law

Judgment

The plaintiff’s claims were rejected and the ca

se was dismissed by the court. This was done based on the fact that there was no
prominent and recognized consideration involved in this case and hence section
2(d) of the Indian Contract Act, 1872 dismisses the agreement from being
recognized as a contract. The absence of a consideration resulted in the contract
being termed as a void contract, according to section 25 of the Act. It was also
decided by the judges that since the  Act specifies the importance of consideration
as an essential element for a contract, there lies no chance for an appeal, and the
same was dismissed by the court.

Conclusion

The above case is based upon section 2(d) of the Indian Contract Act, 1872, which
states- “when at the desire of the promisor, promisee or any other person has done
or abstained from doing or does or abstains from doing or promises to do or to
abstain from doing something, such act or abstinence, or promise is called a
consideration for the promise.”

What happened, in this case, was that the plaintiff recognized the proposal of the
building of the market as a consideration for the commission to be paid by the
defendant to them. However, the defendant argued on the fact that the
construction of the market has nothing to do with the commission being referred
to here by the plaintiff as he has never been inclined towards the construction of
the building. And since consideration was absent, the contract cannot be termed as
a valid contract.

If the break the case into segments, we would be able to identify the absence of
the willingness of the defendant to offer a commission based on the construction
of the market, and this was the basis of the plaintiff’s case. Since the building was
constructed even before the involvement of the defendant, he cannot be held liable
to pay the commission to the plaintiff.

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2 case study
Mohori Bibee v/s Dharmodas Ghose suit relates to the nature of contracts of a minor, fraudulent false interference by
him, enforcement of the principle of Estoppel, sections 64, 65 of the Contract Act, etc.

Name Of The Case: Mohori Bibee v/s Dharmodas Ghose

Citation: (1903)ILR30Cal539(PC)
Date Of Judgement: 04 March 1903
Name Of The Judges: Lord McNaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, Sir Andrew
Wilson.

Brief Facts And Disputes Of The Case:

The respondent was Dharmodas Ghose, who was a minor, received a loan from Brahmodutt, a lender in Calcutta, by
saying that he was an adult and had written a mortgage deed (Mortgage Deed) in his favour to get a loan. At the time
when the mortgage was being considered for advance money, At the time of standing, Kedarnath, the agent of
Brahmodutt, had received information that the respondent was a minor; So, he cannot execute the deed. But still he
executed a mortgage deed from Dharamdos Ghose.

The minor then filed a suit against Brahmodutt by his mother and guardian in which he appeal to the court to cancel
the mortgage deed, as he was a minor at the time of the mortgage deed being executed. Justice Jenkins (Jenkins J.)
who was a judge of the trial court, Accepting the appeal of the respondent, he cancelled the mortgage deed.

The appeal against the order was also quashed by the High Court; Therefore, the appellant appealed to the Privy
Council. Brahmodutt had died at the time of making this appeal. So, he was replaced by his successor, Mohori Bibee.

The following arguments were presented by Mohori Bibee:

 1. While cancelling the mortgage deed, the court should have forced the minor to pay the money (Rs. 10,500)
under the deed Return it. In favour of this argument, he referred to the Specific Relief Act, 1963 under which
the Court has the power to pass such an order.
2. Under Sections 64 and 65 of the Indian Contract Act 1872, the return of the money received under the deed
cancelled may be compelled.
3. According to the principle of 'Estoppel', the minor, who called himself a minor, cannot now be allowed to argue
that he was a minor while contracting.
4. The Contract made by the minor is null and voidable.

Verdict: The court dismissed the appeal.

Rule propounded:

1. The contract made by the minor is not null and void from the beginning
2. Section 64 of the Contract Act against the minor does not apply as these sections require that the parties to the
contract should be able to make contracts.
3. The principle of restriction cannot apply in this case because both the parties were aware that the contract was
being done with a minor.
4. Under the Specific Relief Act, 1963, the minor may be compelled to return the benefits availed under zero
contract. But in this case, the court does not think it appropriate, because when Dharmodas Ghose was given a
mortgage loan, the appellant knew that he was a minor.

Conclusion:
Based on the above principles, the Privy Council rejected the appeal of the appellant.
3rd case study
4th case study
Balfour vs Balfour Case summary (1919) is a snippet to understand
the theory of legal relationships easily. Balfour vs Balfour case gave
birth to the theory of legal relationship, which is essential to forming
a contract. The creation of legal relations is important, without
which a contract cannot be formed.
FACTS OF BALFOUR v. BALFOUR CASE:

 Mr. Balfour and his wife went to England for vacation. During their vacation, his wife
became ill and needed medical attention for the same.
 They made an agreement that Mrs. Balfour would remain in England and that Mr. Balfour
would go back to Ceylon and would pay £30 to her every month until he returned.
 The particular agreement was made when their relationship was fine. Later, their
relationship got sour and her husband stopped sending her money.
 Mrs. Balfour sought to enforce this agreement. Later, they both got separated and were
divorced.
 The wife sued Mr. Balfour that he had promised to pay her money but failed to do so.
 The additional judge of King’s Bench held that Mr. Balfour was under responsibility to
support and pay his wife, and there is a firm agreement between the two for which Mr.
Balfour appealed.

ISSUES IN BALFOUR vs. BALFOUR CASE:

1. Was there an intention by Mr. Balfour to be legally bonded?

2. Is the contract between the wife and husband valid?

CONTENTIONS:
Plaintiff’s contention
The appellant argued it was a domestic agreement and not a legal agreement. Mr.
Balfour never intended to make a legal relationship and a legal agreement between the two.
Defendant’s contention
The defendant argued that the wife is deemed to get £30 as the husband entered a domestic
contract by offering his wife to pay £30, to which his wife agreed and stayed back in England.
RATIO DECIDENDI:
The judges present to hear this case were Justice Atkins, Justice Warrington, and Justice
Duke. Lord Justice Atkins held that contract law is not for personal relationships and family.
There was no intention to create a legal relationship, thus there can be no legally binding
contract. Atkins added if courts were to allow wives when the contract is broken between the
two, then courts would be engaged with frivolous cases. The rest two justices agreed with Lord
Justice Atkins.
DECISION IN BALFOR CASE:
The appeal made by Mr. Balfour succeeded and the court ruled that there was no legal
relationship or any legal contract between the wife and husband. If the parties intend to create a
legal relationship can be decided by examining the circumstances under which the contract was
made and executed. Therefore, Mr. Balfour was not legally bound to pay money to Mrs.
Balfour.

CONCLUSION OF BALFOUR v BALFOUR CASE:

Studying and understanding the Balfour vs Balfour case cleared that social agreements made
between members of the family or other personal relationships will not be enforced in a court of
law. It also emphasized the importance of creating legal relationships for a contract to be
enforced. The Balfour law gave a new perspective on contract validation.

5th case study