Contracts - Cases

CONTRACTS – I
YEAR – I
SEMESTER – II
COMPILATION
OF
CASE BRIEFS
SATVIK CHAUDHARY
62LLB18
NATIONAL LAW UNIVERSITY, DELHI
2019
CONTRACTS – I YEAR – I, SEMESTER – II
TABLE OF CONTENTS
Elements a Contract Must Have.......................................................................................4
Carlill v Carbolic Smoke Ball Co. [1891-4]....................................................................4

Pharmaceutical Society v Boots Cash Chemist..............................................................11
Balfour v Balfour...........................................................................................................12
Lalman Shukla v Gauri Dutt..........................................................................................13
Harvey v Facey..............................................................................................................14
Felthouse v Bindley........................................................................................................15
Mac Pherson v MN Appanna.........................................................................................16
Bhagwandas Goverdhandas Kedia v Girdharilal Parshottamdas...................................19
Bhagawati Prasad Pawan Kumar Vs Union of India (2006)..........................................21
Bank of India v O. P. Swarnakar (2002)........................................................................22
PRIVITY OF CONTRACT.................................................................................................24
Tweddle v Atkinson (1861)............................................................................................24
Chinnaya v Ramayya (1881)..........................................................................................25
MC Chacko v State Bank of Travancore (1970) AIR 500.............................................25
Currie v Misa (1874)......................................................................................................27
Dunlop Pneumatic Tyre Co Ltd. v Selfridge Ltd. (1915)...............................................28
Dutton v Poole (1678)....................................................................................................29
Khwaja Muhammad Khan v Hussaini Begum (1910)...................................................29
Iyer v Iyer.......................................................................................................................30
Pinnel’s Case (1602)......................................................................................................30
UoI v Chaman Lal Loona AIR (1957) SC 652..............................................................31
TENDERS........................................................................................................................32
UoI v Maddala Thathiah (1966).....................................................................................32
Kanhaiya Aggarwal v UoI (2002)..................................................................................33
G. J. Fernandez v State of Karnataka (1990).................................................................35
CAPACITY TO CONTRACT.............................................................................................36
Jyotirindra Bhatacharjee v Sona Bala Bora (2005)........................................................36
Mohori Bibee v Dharmodas Ghose (1903)....................................................................36
Leslie v Sheill (1914).....................................................................................................37
Stocks v Wilson (1918)..................................................................................................38
Cowern v Nield (1912)...................................................................................................38
Khan Gul v Lakha Singh................................................................................................38
Ajudhia Prasad v Chandan Lal.......................................................................................39
Ramchandra v Manikchand (1968)................................................................................39
2
FACTORS VITIATING A CONTRACT...............................................................................41

Subhash Chandra Das Mushib v Ganga Prasad Das Mushib (1967).............................41
Lakshmi Amma v T Narayana Bhatta (1970)................................................................42
Spice Girls Ltd v Aprilia World Service (2002).............................................................43
Anil Rishi v Gurbaksh Singh (2006)..............................................................................45
Trimex International Fze Limited v Vedanta Aluminium Limited (2010).....................46
Phillips v Brooks (1919)................................................................................................47
Ingram v Little (1961)....................................................................................................48
Tarsem Singh v Sukhminder Singh (1998)....................................................................49
Central Inland Water Transport Corporation Limited v Brojo Nath Ganguly (1986)....50
AGREEMENT TO SALE...................................................................................................52
Raffles v Wichelhaus (1864)..........................................................................................52
Cundy v Lindsay (1878).................................................................................................52
Shogun Finance Ltd v Hudson (2003)...........................................................................54
3
ELEMENTS A CONTRACT MUST HAVE
1. Reasonability
2. In Public Policy
3. Certainty and Definiteness
 Contingency is ground for a valid contract
CARLILL V CARBOLIC SMOKE BALL CO. [1891-4]
CARBOLIC SMOKE BALL CO. CARLILL
Non-binding promise Intended to increase sales

Advertisement/Policy of insurance
Wager/Bet Express promise
Money deposited with Bank
General offer Specific performance fulfils criteria
No consideration Extra sale intended based on promise
is consideration from Carbolic
Smoke Ball Co.
Terms of contract vague – uncertain offer
Defendant:
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
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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.
Advertisement:
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.
“£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.”
Plaintiff:
Louisa Carlill
5
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.
The defendants appealed.
JUDGMENTS
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
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(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.
Lindley.L.J:
He dismissed the appeal. He, giving his decision first and reasons later, explained his
judgment answering to all allegations put up by the defendant’s counsel and upholding
the lower court’s decision. An excerpt which makes a short shrift of the insurance and
wagering contract 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.”
7
He discussed the following issues with respect to this case:
The advertisement was not a “mere puff” as had been alleged by the defendant. The
very fact that £1000 was deposited with Alliance Bank, Regent Street. So what is that
money for? What is that passage put in for, except to negative the suggestion that this
is a mere puff, and means nothing at all? The deposit is called in aid by the advertisers
as proof of their sincerity in the matter. What do they mean?-The advertisement
definitely means seriousness.
The advertisement was an offer to the world. It was contended that it is not binding. It
is said that it is not made with anybody in particular. In point of law this advertisement
is an offer to pay 100ℓ to anybody who will perform these conditions, and the
performance of the conditions is the acceptance of the offer.
Communication of acceptance is not necessary for a contract when people’s conduct

manifests an intention to contract. But then the defense council put forth a point
“Supposing that the performance of the conditions is an acceptance of the offer, that
acceptance ought to have been notified.” Unquestionably, as a general proposition,
when an offer is made, it is necessary in order to make a binding contract, not only that
it should be accepted, but that the acceptance should be notified. But in cases of this
kind, it is apprehended that they are an exception to the rule that the notification of the
acceptance need not precede the performance. This offer is a continuing offer. It was
never revoked, and if notice of acceptance is required, then the person who makes the
offer gets the notice of acceptance contemporaneously with his notice of the
performance of the condition before his offer is revoked.
The defense counsel has argued that this advertisement is a nudum pactum – that there
is no consideration. They say “it is of no advantage to them how much the ball is
used”. The judged answered “The answer to that I think is this. It is quite obvious that,
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in the view of the defendants, the advertisers, a use of the smoke balls by the public, if
they can get the public to have confidence enough to use them, will react and produce
a sale which is directly beneficial to them, the defendants. Therefore, it appears to me
that out of this transaction emerges an advantage to them which is enough to constitute
a consideration.” But there is also another view to this point which the Judge Lindley
aptly asserts: what about the person who puts himself/ herself in an inconvenient, if
not detrimental to his health, while inhaling potent fumes of carbolic gas? So therefore
there is ample consideration to this promise.
Bowen, L.J:
He concurred with Lindley, L.J. He was of the same opinion but he also discussed few
points with respect to vagueness and time period of the contract. His opinion was more
tightly structured in style and frequently cited.
In response to Defense’s council point that this contract is too vague to be enforced.
He, dismissing their claim, relied on his construction of the document and he said that
there is no time limit fixed for catching influenza, and it cannot seriously be meant to
promise to pay money to a person who catches influenza at any time after the inhaling
of the smoke ball. There is also great vagueness in the limitation of the persons with
whom the contract was intended to be made. But this document was intended to be
issued to the public and to be read by public. So it is very important to understand how
would a commoner interpret this advertisement? And the effect of this advertisement
was to attract people and make them use it, which would amount to more sales, thus
more profit. Based on this intention to promote the distribution of the smoke balls and
to increase its usage, the advertisement was accepted as a contract addressing public at
large but limited to those people who are using it either for prevention or treatment of
influenza and other mentioned diseases.
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Another point which was discussed in the court was that of the time limit of the
contract. How do you define reasonable time period? And after great discussion, the
respected judge came to a conclusion that the protection warranted by the contract was
to last during the epidemic (1889-90 Flu epidemic).If so, it was during this epidemic
that the plaintiff contracted this disease. So the contract holds.
A.L.Smith, L.J:
His judgment was more general and concurred with both Lindley LJ and Bowen LJ’s
decisions.
AFTERMATH
The appeal was dismissed unanimously by all the three judges and Mrs. Carlill finally
received compensation of £100. She lived to the ripe old age of 96. She died on March
10, 1942; according to her doctor principally of old age. There was one cause noted
though: Influenza.
Mr. Roe, owner of Carbolic Smoke ball Co., continued with his aggressive marketing.
This time he increased the reward to £200 following the loss of the case.
Conclusion
This is the most frequently cited case in the common law of contract, particularly
where unilateral contracts are concerned. It provides an excellent study of the basic
principles of contract and how they relate to every day life. Essential elements of
contract including Offer & Acceptance, Consideration, Intention to create Legal
Relations, etc. were mentioned in this case. This case forms the foundation for
Contract Law.
10
PHARMACEUTICAL SOCIETY V BOOTS CASH CHEMIST
FACTS
The Boots Cash Chemists shop was organised on a 'self-service' basis: packages of
various drugs and medicines were displayed on shelves, with a price marked on each
one. Some of these drugs and medicines contained dangerous substances, the sale of
which was regulated by legislation requiring that they be sold only under the
supervision of a registered pharmacist. Customers who wanted these drugs and
medicines selected what they wanted from the shelves and took them to cashiers at the
two exits to pay for them. There was a registered pharmacist in the shop who
supervised the transactions at the stage where the goods were brought to a cashier for
payment. The Pharmaceutical Society of Great Britain alleged that, in these
circumstances, the regulated drugs were being 'sold' without the supervision of a
registered pharmacist.
ISSUE
Were drugs and medicines selected by customers from the display shelves 'sold' to the
customer before or after the customer took them to the cashier?
REASONING
The display of goods in a shop, even at stated prices, is not to be construed as an 'offer'
to sell, which is accepted when a customer selects those goods from the shelves. The
display of the goods is construed only as an invitation to customers to select goods and
offer to buy them (sometimes referred to as an 'invitation to treat'). The contract of sale
is made only at a later stage, when the customer's offer to buy is accepted by the seller.
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JUDGMENT
No sale of the drugs took place before the customer had taken the goods they had
chosen to a cashier. At the cashier’s desk, the customer made an offer to buy the goods
they had selected at the marked price, and the cashier would accept the offer, thereby
bringing a contract into existence. At the time these events took place, they were
properly subject to supervision by the registered pharmacist in the shop.
RATIO
A contract is only complete for goods which a person selects in a shop after s/he
presents an offer to the cashier of their will to buy such item and the cashier accepts
their offer.
BALFOUR V BALFOUR
FACTS
The Plaintiff and the Defendant were a married couple. The Defendant husband and
the Plaintiff wife lived in Ceylon where the Defendant worked. In 1915, while the
Defendant was on leave, the couple returned to England. When it was time to return to
Ceylon, the Plaintiff was advised not to return because of her health. Prior to the
Defendant returning, he promised to send the Plaintiff £30 per month as support. The
parties" relationship deteriorated and the parties began living apart. The Plaintiff
brings suit to enforce the Defendant"s promise to pay her £30 per month. The lower
court found the parties" agreement constituted a contract.
ISSUE
Does the husbands promise to pay £30 per month constitute a valid contract which can
be sued upon?
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REASONING/ JUDGMENT
The court first recognized that certain forms of agreements do not reach the status of a
contract. An agreement between a husband and wife is often times such a form of
agreement. In such agreements, one party is give a certain sum of money on a daily,
weekly, monthly, etc.. basis. This agreement is sometimes termed an allowance.
However, these agreements are not contracts because the "parties did not intend that
they should be attended by legal consequences." One reason the court is hesitant to
treat these agreements as contracts, is that there would not be enough courts to handle
the volume of cases. Thus, here, the husband"s promise did not rise to the level of a
contract.
RATIO
Agreements between husband and wife to provide monies are generally not contracts
because generally the parties do not intend that they should be attended by legal
consequences.
LALMAN SHUKLA V GAURI DUTT
FACTS
Gauri Dutt sent his servant Lalman to trace his missing nephew. He then announced
that anybody who traced his nephew would be entitled to a certain reward. Lalman
traced the boy in ignorance of this announcement. Subsequently when he came to
know of the reward, he claimed it.
ISSUE
Can there be acceptance of an offer made to the world at large, without any knowledge
of it?
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REASONING/ JUDGMENT
An action without the knowledge of the proposal is no acceptance and does not confer
any rights on acceptor. Also, communication of offer to offeree is an essential to a
valid offer.
RATIO
It was held that Lalman Shukla was not entitled to the reward because he has no
knowledge of the proposal.
HARVEY V FACEY
FACTS
Harvey was interested in a piece of property owned by Facey. He sent Facey a

telegram asking him the minimum price for which he would sell the property. Facey
quoted a price and Harvey sent a telegram stating that he would pay it. Harvey sued
for specific performance.
ISSUE
Does a statement of the minimum price at which a vendor will sell constitute an offer?
RATIO
A mere statement of the lowest price at which a vendor will sell is not an offer to sell
at that price to the person making the inquiry.
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FELTHOUSE V BINDLEY
FACTS
Felthouse negotiated to purchase a horse from his nephew. There was a mix-up with
the price, as the uncle offered less than the nephew desired. The uncle gave a definite
offer to the nephew in January, however no response was given, and no actions were
performed as the horse remained in the possession of the nephew. In February the
nephew sold all of his farm stock in an auction, and the horse, despite the nephew's
instructions that it be reserved, was sold. Felthouse sued the auctioneer, Bindley, in
conversion to recover the horse. Felthouse was successful at trial, receiving £33, which
Bindley appealed.
ISSUE
Could silence constitute acceptance?
REASONING
Willes, writing for a unanimous court, says that it is clear here that nothing had been
done at the time of the auction to imply that the property had changed hands to the
uncle, and the nephew had given no acceptance. Therefore, with no acceptance or
implied acceptance through actions, the property remained that of the nephew at the
time of the auction, and the uncle has no case against the auctioneer for selling goods
that were not owned by the nephew. If the nephew wanted to enter into the contract he
must have given clear indication of his acceptance, which he had failed to do.
JUDGMENT
No Contract.
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RATIO
Silence does not amount to acceptance.
MAC PHERSON V MN APPANNA
FACTS
M. N. Appanna filed a suit in front of the Judicial Commissioner of Coorg against Mac
Pherson asking for the relief of specific performance of the contract from where Mac
Pherson has appealed to the Supreme Court of India. Mac Pherson owned a bungalow
in Mercara known as “Morvern Lodge”.
Mac Pherson = Def 1

MN Appanna = Plaintiff
There was also some talk about the conveyance charges, and ultimately the plaintiff
agreed to bear those charges. Afterwards, he wrote to Youngman a letter on the 14th
August in which after referring to the conversation he had with the latter he stated as
follows : "I hereby confirm my oral offer of ten thousand for the bungalow. I shall be
grateful if you will kindly hurry up with consultation with your lawyers at Madras and
make arrangement to receive the money and hand over the bungalow as early as
practicable." It appears that 3 days later, i. e, on the 17th August, one Subbayya Wrote
to Youngman stating that "he confirmed his offer of Rs. 10,500 made to him
(Youngman) the previous dey for the purchase of the bungalow," and he excepted that
the latter had cabled to defendant 1 communicating the offer as promised. It seems that
Youngman did not communicate Subbayya's offer to defendant 1 but sent a cable to
him on the 26th August to the following effect: "Offered ten thousand Morvern Lodge
immediate possession. May I sell."On the same day, White cabled to defendant 1 in the
following terms : "Hold offer for Morvern Bungalow rupees eleven thousand cash
subject immediately acceptance and occupation. Strongly recommend acceptance." On
the 29th August, Youngman sent an airgraph to defendant 1 in which he wrote as
follows : "Thank you for your Airgraph letters of 8th August which reached me on
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24th instant. I cabled you on Saturday an offer of Rs. 10,000 for Morvern Lodge from
the would-be purchaser who previously had offered Rs. 6,000, but I had a call from
White a day or two ago and he tells me that he cabled an offer on the same day of Rs.
ll,000. I expect you will have answered these and will have accepted White's offer. If
you have decided will you please arrange for a Power-of-Attorney to be prepared as
soon as possible." In the meantime, defendant 1 sent a cable to White to the following
effect: "Accept rupees eleven thousand Morvern Lodge occupation permitted, when
full amount deposited my account Mircantile Bank Madras inform Youngman."
Thereafter, defendant 1 paid the amount of Rs, 11,000 and occupied the bungalow.
The plaintiff desired to buy “Morvern Lodge” owned by the first defendant in
Mercara. Mr Youngman was the manager of the Morvern Lodge. Mr White was
the manager of another one of the firs defendant’s estates. The plaintiff conveyed
his offer to buy the Morvern Lodge to the first defendant. MacPherson responded
to the offer saying that he would not accept anything fewer than 10,000 Rupees.
The plaintiff took this to be a counter-offer and accepted it immediately. In the
meantime, the first defendant accepted another offer made by the second
defendant. The second defendant paid the 11,000 rupees and occupied the
Bungalow. The Judicial Commissioner of Coorg held in favour of the plaintiff. It
was against this order that this appeal was made under section 109(c) of the Civil
Procedure Code.
ISSUE
The question to be decided in this Case is whether in view of the correspondence

which has been reproduced, it could be held that there was a concluded contract for the
sale of "Morvern Lodge" in favour of the plaintiff on the14th August, as stated by him
in the plaint. The Judicial Commissioner of Coorg who tried the suit held that there
was a concluded contract, but, instead of giving to the plaintiff a decree for specific
performance, awarded a sum of Rs. 3,000 as compensation to him. Against this decree,
defendant 1 alone has appealed, after obtaining a certificate under S. 109 (c), Civil P.
C. from the Judicial Commissioner. The plaintiff has not preferred any appeal.
Whether a contract was culminated when the plaintiff signified his acceptance of
the “counter-offer” made by the first defendant?
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REASONING/ JUDGMENT
The court, using Harvey v. Facey as precedent, held that there was no concluded
contract in the present case. In Havey v. Facey, the Lordships held that the mere
statement of the lowest price at which the vendor would sell contains no implied
contract to sell at that price.
The plaintiff himself in his letter responding to the alleged counter-offer said that he
was confirming his own offer and not the counter-offer of the plaintiff. Even the
manager of the disputed estate, Mr Youngman treated it to be an offer and not an
acceptance to any counter-offers made by the plaintiff. Any offer to be made by the
plaintiff was subject to the acceptance by the first defendant. On these grounds the
court held that the first defendant had made no counter-offer and was merely inviting
offers.
The court also rebutted the contention of the plaintiff that the managers of the estate of
the defendant were biased towards the second defendant to his prejudice. Mr
Youngman had found the offer made by the second defendant improper and did not
even communicate the same to the first defendant. Mr Youngman’s learning, if there
was any, could only be said to be in favour of the plaintiff. Hence, it was difficult for
the court to find that Mr Youngman had deliberately misdescribed the plaintiff’s
acceptance as his offer.
RATIO
Same as Harvey v Facey.
18
BHAGWANDAS GOVERDHANDAS KEDIA V GIRDHARILAL

PARSHOTTAMDAS
FACTS
Plaintiff offered to get certain goods supplied at Ahmedabad to defendants who
accepted the offer at Khamgaon. On defendants’ failure to supply requisite goods,
plaintiff sued them at Ahmedabad. Dispute arose as to where was contract formed- at
Khamgaon where acceptance was given by defendants or at Ahmedabad where
acceptance was received by plaintiffs.
Defendants contended that according to the section 2, 3 and 4 of ICA, the place where
the offer is accepted is the place where the contract is made and therefore Ahmedabad
trial court did not have the jurisdiction to try the suit.
ISSUES
1. When and where could a contract assumed to be complete concluded over a

telephonic conversation?
2. Whether the contract where the mode of communication is via a telephonic
conversation could be attributed to be judged on the same lines as a post or a
telegraph?
REASONING/ JUDGMENT
MAJORITY
An agreement does not result from mere intent to accept the offer: Acceptance must be
by some external manifestation (either by speech, writing, conduct in further
negotiations, or any other overt act) accompanied by its communication to the offeror
(Brogden v. Metropoliton Rly Co.) unless expressly waived by him or impliedly by the
course of negotiation to the contrary (Carlill v. Carbolic Smoke Ball).
Entores v. Miles: An offer was made from London by telex to a party in Holland and
was duly accepted through telex; the question arose as to which court had jurisdiction
to try the dispute between the parties. Denning L.J. observed that in case of
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instantaneous communications between the parties, i.e. where parties are in each
other’s presence or though separated in space are in direct communication with each
other as for example by telephone or telex, contract is complete when the acceptance
of offer is duly received by the offeror and the contract is formed where such
acceptance is received.
Adams v. Lindsell: An offer was made by defendants by post to sell certain goods.
Though, the acceptance was duly posted by plaintiff but, it reached defendants nearly
after a week when latter had already sold the goods to a third party. Court ruled that
‘when parties aren’t in each other’s presence and communicate long distance either by
post or telegram, both parties get bound by contract as and when the acceptor puts the
letter of acceptance in the course of transmission to offeror so as to be out of his
power to recall’ (postal rule).
But in India, according to S.4 of ICA, application of Postal Rule results that acceptor
is bound only when the acceptance “comes to the knowledge of the proposer” while
proposer becomes bound much before when letter was “put in course of transmission
to him as to be out of the power of acceptor to recall”. “S.4 doesn’t imply that the
contract is formed qua the proposer at one place and qua the acceptor at another
place”. The gap of time between posting of acceptance and its coming into knowledge
of proposer can be utilised by acceptor in revoking his acceptance by speedier
communication which will overtake the acceptance (S.5 of ICA)
The postal rule came into existence in Adams case for two prominent reasons:
The rule was based on commercial expediency/empirical grounds: for if the
defendants were not bound by their offer till the acceptance by the plaintiffs is not
received by them, then the plaintiffs ought not to be bound till after they had received
the notification that the defendants had received their acceptance and had assented to
it; and so it might go on ad infinitum.
Secondly, if the contract is not finally concluded till the intimation of the acceptance
by the promisee to the promisor, then there may be instances that the promisor will
deny the receiving of any acceptance even though he may have received it. This may
lead to instances of fraud and also delay in commercial transactions. Further, the
satisfactory evidence of posting a letter is generally available as against of its having
been received.
 He held that the contract act does not expressly deal with the place where a
contract is made. The conversation over telephone is analogous to the
conversation when the parties are in presence of each other, wherein, the
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negotiations are concluded by instantaneous speech and therefore

communication of the acceptance becomes a necessary part of the contract
and the exception to the rule on grounds of commercial inexpediency is
inapplicable.
 Further, in case of correspondence by post or telegram, a third agency
intervenes which is responsible for effective transmission of letters at every
instance, however, in case of telephonic conversation, once the connection has
been established, there is no need of any third agency to transmit the
correspondence between the parties.
Hence, as against cases of correspondence by post or telegram, in present case where
there was correspondence by telephone, contract was formed when acceptance was
duly communicated to the offeror and hence, at Ahmedabad.
DISSENTING (J. HIDAYATULLAH)

 Stressing on literary interpretation of Indian Contract Act and not be moulded
by English dicta, Hidayatuallah held that when acceptor put his acceptance in
transmission (in form of telephonic conversation) to proposer as to be out of his
power to recall (According to section 4 of the Indian Contract Act 1872),
communication of acceptance was complete and proposer was bound by
contract so formed, however quick the transmission.
It was obvious that the word of acceptance was spoken at Khamgaon and the moment
the acceptor spoke his acceptance he put it in course of transmission to the proposer
beyond his recall. He could not revoke acceptance thereafter, albeit the gap of time
was so short that one can say that the speech was heard instantaneously.
RATIO
A contract is concluded only when the acceptance is communicated to the offeror over
telephone. Therefore, the place where the acceptance is communicated or reaches, is
the place where the contract is concluded and it is the court having territorial
jurisdiction over that area which has jurisdiction in the suit. In this case, the place
where the acceptance was communicated was at Ahmedabad. Hence, the Civil Court
of Ahmedabad had jurisdiction over the suit.
21
BHAGAWATI PRASAD PAWAN KUMAR VS UNION OF INDIA

(2006)
Two consignments of iodised salt, booked in favour of the appellant, were not
delivered by the Railways. So, the appellant lodged two claims for Rs.53,264 and
Rs.51,686, being the value of the said goods. The Railways admitted the claims only to
the extent of Rs. 9,111 and Rs.9,032 and enclosed two cheques for the same. The offer
was made with the condition that if it was not acceptable, the cheques should be
returned forthwith, failing which, it would be deemed that the appellant had accepted
the offer in full and final settlement of the claim. The appellant accepted the two
cheques sent by the Railways and encashed them. Twenty days later, he wrote to the
Railways stating that the claims were placed under protest and could not be accepted
and that the balance amount should be remitted. It was laid down that the protest and
non-acceptance must be conveyed before the cheques were encashed and if the
cheques were encashed without any objection, then it must be construed that the offer
stood unequivocally accepted and the offeree cannot be permitted to change his mind
after obvious acceptance of the offer and the appeal was dismissed accordingly.
BANK OF INDIA V O. P. SWARNAKAR (2002)
A large number of employees (1,01,000 employees approx.) submitted their

applications out of whom a small number of employees (200 employees approx.)
withdrew their offer. Despite withdrawal of their offer the same was accepted. In some
cases offers despite withdrawal thereof were accepted within the period during which
the scheme was operative and in some beyond the same. Questioning the action on the
part of the banks, in accepting the applications of the concerned employees despite
their withdrawal, writ petitions were filed, the legality or validity of the said scheme
also came to be questioned.
1. If a contractual scheme provides that the voluntary retirement by exercise of

option by the employee will come into effect only on its acceptance by the
employer, it will not create any enforceable right in the employee to claim SV
retirement. Any term in such a scheme that the employee shall not withdraw
from the option once exercised, will be an agreement without consideration
and therefore, invalid. Consequently, the employee can withdraw the offer (that
is option exercised) before its acceptance. But if the contractual scheme gives
22
the option to an employee to voluntarily retire in terms of the scheme and if

there is no condition that it will be effective only on acceptance by the
employer, the scheme gives an enforceable right to the employee to retire, by
exercising his option. In such a situation, a provision in the contractual scheme
that the employee will not be entitled to withdraw the option once made, will
be valid and binding and consequently, an employee will not be entitled to
withdraw from the option exercised.
2. Where the scheme is statutory in character, its terms will prevail over the
general principles of contract and the provision of the Contract Act. Further,
there will be no question of any "consideration" for the condition in the scheme
that the employee will not withdraw from the option exercised. Subject to any
challenge to the validity of the scheme itself, the terms of the statutory scheme
will be binding on the employees concerned, and once the option is exercised
by an employee to voluntarily retire in terms of the retirement package
contained in the scheme, the employee will not be entitled to withdraw from
the exercise of the option, if there is a bar against such withdrawal.
23
PRIVITY OF CONTRACT
TWEDDLE V ATKINSON (1861)
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.
REASONING/ JUDGMENT
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.
24
CHINNAYA V RAMAYYA (1881)
FACTS
A, an old lady, granted / gifted an estate to her daughter, the defendant, with the
direction/condition that the daughter should pay an annuity (annual payment) of Rs.
653 to A’s brother, the plaintiff. On the same day, the defendant, daughter (promisor),
made a promise vis a vis an agreement with her uncle that she would pay the annuity
as directed by her mother, the old lady. Later, the defendant refused to pay on the
ground that her uncle (promisee, plaintiff) has not given any consideration. She
contended that her uncle was stranger to this consideration and hence he cannot claim
the money as a matter of right.
REASONING/ JUDGMENT
The Madras HC held that in this agreement between the defendant and plaintiff the
consideration has been furnished on behalf of the plaintiff (uncle) by his own sister
(defendant’s mother). Although the plaintiff was stranger to the consideration but since
he was a party to the contract he could enforce the promise of the promisor, since
under Indian law, consideration may be given by the promisee or anyone on his behalf
– vide Section 2 (d) of ICA.
Thus, consideration furnished by the old lady constitutes sufficient consideration for
the plaintiff to sue the defendant on her promise. Held, the brother/ uncle was entitled
to a decree for payment of the annual sum of money.
MC CHACKO V STATE BANK OF TRAVANCORE (1970) AIR 500
FACTS
H bank had an overdraft account with State Bank. MC Chacko was the manager of H
bank and his father K had guaranteed the repayment of debt. K gifted his properties to
members of his family. The gift deed provided that liability if any under the said
guarantee should be met either by MC personally or through property gifted to him
25
under the said deed. State Bank sued all the heirs under the deed alongwith MC; albeit
limitation period to sue on letter of guarantee had already passed.
ISSUES
1. Whether a ‘charge’ was created in favour of State Bank under the said deed to
satisfy the debt under the letter of guarantee?
2. Whether the charge, assuming that a charge exists, is enforceable by bank
when it is not a party to the deed?
REASONING/JUDGMENT
A ‘charge’ may be created on immovable property when either through express words
or implied from deed, it is clear that party intended to make a specified property or
fund, belonging to him, liable for debt due by him.
In present case, no such charge was created in favour of State Bank—the deed merely
set out an internal arrangement between the donor and members of family which
conferred a right of indemnity upon them against M.C. Chacko and his inherited
property—however, no intention to convert a personal debt into a secured debt in
favour of the bank could be inferred. Since it was a debt of K such that he was
personally liable under the debt; after his death all his inheritors were liable to satisfy
the debt out of his estate, inherited by them. However, in such a case, other members
would have been indemnified by M.C. Chacko for any share of debt paid by them.
By the definition of promisor and promisee as contained in S.2 along with constructive
interpretation of ICA in light of similar provisions in English Law, the notion that ‘a
stranger to a contract could enforce the obligations there under’ is completely
excluded. A person not a party to contract cannot enforce the terms of the contract
unless he is a beneficiary under the contract or the contract is one of family
arrangement (which confers upon him equitable rights, albeit not contractual)
Even if charge would have been created in favour of State Bank, it wouldn’t have been
able to enforce it since it is not a party to the deed and, was a complete stranger to it: it
wasn’t a beneficiary under the contract.
26
Since limitation period has passed, State Bank couldn’t claim anything under the letter
of guarantee either from MC Chacko (who personally never guaranteed payment) and
or from any other heir of K.
CURRIE V MISA (1874)
FACTS
Lizardi & Co. sold a number of bills of exchange to Mr. Misa, drawn from a banking
firm owned by Mr. Currie, and were to be paid on the next day. However, Lizardi was
in substantial debt to Mr. Currie’s bank and was being pressed for payment. A few
days later, upon paying in the cheque, Mr. Misa learned of Lizardi’s stopped payments
and outstanding debts, instructing his bankers not to honour the cheque. The question
arose as to whether the cheque was payable, particularly as to whether the sale of an
existing debt formed sufficient consideration for a negotiable security, so as to render
the creditor to whom it was paid, Mr. Currie, a holder for the value of the cheque.
ISSUE
The question arose as to whether the existing debt constituted sufficient consideration
for the security so as to constitute a legally-enforceable contract for the creditor.
REASONING/ JUDGMENT
The Court held that consideration must “consist either in some right, interest, profit, or
benefit accruing to the one party, or some forbearance, detriment, loss, or
responsibility, given, suffered, or undertaken by the other.” (p 162). Thus, there can be
no legal contract unless there is consideration in the form of a benefit gained, or
detriment suffered arrangement by the parties. On the facts, the Court held that the title
of a creditor to a negotiable security on account of a pre-existing debt and transferred
to him, bona fide, without any notice of infirmity of title by the debtor is indefeasible.
The pre-existing debt did not in and of itself form a sufficient consideration for the
negotiable security. Accordingly, there was an absence of any consideration or the
making or payment of the cheque by Mr. Misa.
27
DUNLOP PNEUMATIC TYRE CO LTD. V SELFRIDGE LTD.

(1915)
FACTS
Dunlop was a tire manufacturer who agreed with their dealer to not sell the tires below
a recommended retail price (RRP). As part of the agreement, Dunlop also required
their dealers to gain the same agreement with their retailers, who in this instance was
Selfridge. The agreement held that if tires were sold below the RRP, they would be
required to pay £5 per tire in damages to Dunlop. This was agreed between the dealer
and Selfridges, which effectively made Dunlop a third-party to that agreement.
Sometime after this, Selfridge sold the tires below the agreed price and Dunlop sued
for damages and an injunction to prevent them from continuing this activity. At the
initial trial, the decision was given to Dunlop. This was appealed by Selfridge and the
decision was reversed. Dunlop appealed.
ISSUE
Selfridge argued that Dunlop could not enforce the contract as Dunlop was not part of
the agreement between the dealer and Selfridges. On this basis, the question for the
court was whether Dunlop had the right to access damages without a contractual
relationship.
REASONING/ JUDGMENT
The court held in a unanimous decision that Dunlop could not claim for damages in
the circumstances. The court found that firstly, only a party to a contract can claim
upon it. Secondly, Dunlop had not given any consideration to Selfridge and
therefore there could be no binding contract between the parties. Lastly, Dunlop
was not listed as an agent within the contract and could therefore not be included
as a valid third-party who had rights to claim on the contract.
28
DUTTON V POOLE (1678)
FACTS
A son made a contract with his father for his father to not cut down an oak woodland.
As consideration for this, the son would make a payment to his sister of £1000 once
she had married. The money gained from the woodland would have been paid to the
sister. The father died before the sister was married and the son subsequently refused
to pay his sister the money as was previously agreed, at the time of her marriage. The
sister sued her brother for the amount that was originally promised between the father
and son.
ISSUE
The concept of privity of contract had not been fully established at this stage and
therefore this decision had significant importance to the broader subject. The court had
to understand whether the daughter could be considered to be privy to the contract
between the father and son regarding the payment. Within this, it was vital for the
court to establish whether the daughter had given consideration for the promise that
was made by the son, to his father, to pay the daughter the sum of money upon her
marriage.
REASONING/ JUDGMENT
The court found in favour for the sister on the basis that the relationship between the
father and the daughter had made the sister a party to the agreement, even if she was
not included at the time the contract was agreed. The relationship between father
and daughter was found to extend the consideration that the father gave in the
promise to the children.
29
KHWAJA MUHAMMAD KHAN V HUSSAINI BEGUM (1910)
There was an agreement between the father and father-in-law of ‘A’ that in
consideration of her marriage with his son, he would pay to her Rs.500 per month for
the betel-leaf expenses and some immovable property was charged for the payment of
these expenses. In suit by ‘A’ for recovery of arrears, it was held that although she was
not a party to the agreement, she was entitled to enforce her claim being the
beneficiary.
IYER V IYER
The Supreme Court, in this case, held, that consideration must be of some value in
the eyes of law.
PINNEL’S CASE (1602)
FACTS
The defendant, Cole, owed the plaintiff, Pinnel, the sum of £8 10s. Pinnel sued Cole
for recovery of the debt. Cole had, at Pinnel’s request, paid £5 2s 6d one month before
the debt was due to be paid and stated that they had an agreement that this part
payment would discharge the entire debt.
ISSUE
The defendant argued that the plaintiff had accepted partial payment of the debt as
satisfaction of the whole. However, it was a general rule that payment of a lesser sum
than that which was owed in satisfaction of a debt could not discharge the obligation to
repay the whole amount.
30
REASONING/ JUDGMENT
The court confirmed the general rule that part payment of a debt cannot be satisfaction
for the whole. However, since the payment had been made early this was sufficient to
discharge he debt. Lord Coke said:
‘Payment of a lesser sum on the day in satisfaction of a greater sum cannot be any
satisfaction of the whole… but the gift of a horse, hawk, or robe etc. in satisfaction is
good. For it shall be intended that a hawk, horse, or robe, etc. might be more beneficial
to the plaintiff than the money’
Therefore, by paying some money early the defendant had provided the plaintiff with a
further benefit and had not just repaid the money which he already owed.
Consequently, this was good consideration, and the court found for the defendant.
UOI V CHAMAN LAL LOONA AIR (1957) SC 652
If the contract has been fully and completely performed on both sides, no question of
any further rights and liabilities under the contract is likely to arise. If, however, the
contract is one in which the consideration is executed on one side, there will be a right
on one side and an outstanding liability on the other. If the consideration is executory
on both sides, there will be outstanding rights and liabilities on both sides.
31
TENDERS
UOI V MADDALA THATHIAH (1966)
The General Manager of a Railway invited tenders for the supply of jaggery to the
railway grain shops. Paragraph 2 of the tender set out the quantity required and
described dates of delivery. There was a note in that para that "the Administration
reserved the right to cancel the contract at any stage during the tenure of the contract
without calling up the outstanding on the unexpired portion of the contract.” Under
para 8 the successful tenderer was required to pay security deposit towards proper
fulfillment of the contract. Paragraph 9 stated that a formal order for supply would be
placed after the security deposit referred to in para 8 was made. The respondent
submitted his tender for the supply of 14000 maunds as mentioned in the tender, and
by the letter dated January 29, 1948, the Deputy General Manager accepted the tender
stating that the official order would be placed on the respondent on receipt of the
remittance of security. In his letter dated February 16, 1948, the Deputy General
Manager reiterated the acceptance of the tender subject to the respondents' acceptance
of the terms and conditions printed on the reverse of that letter, under which 3500
maunds each were to be delivered on March 1, March 22, April 5 and April 21, 1948
respectively. At the end of the terms and conditions was a note that the administration
reserved the right to cancel the contract at any stage during the tenure of the contract
without calling upon the outstanding on the unexpired portion of the contract. By his
letter dated March 8, 1948, the Deputy General Manager informed the
respondent that the balance quantity of jaggery outstanding on date against the order
dated February 16, 1948, be treated as cancelled and the contract closed. In the suit
instituted by the respondent for the recovery of damages resulting from breach of
contract, the appellant relied, by way of defence, on the stipulation in the contract that
the appellant was at livery to terminate the contract at any stage. Held that, on the true
construction of the contract, the condition mentioned in the note 2 of the tender or in
the letter dated February 16, 1948 referred to a right in the appellant to cancel the
agreement for such supply of jaggery about which no formal order had been passed by
the Deputy General Manager with the respondent and did not apply to such supplies of
jaggery about which a formal order had been placed specifying definite amount of
jaggery to be supplied and the definite date or definite short period for its actual
delivery. Once the order was placed for such supply on such dates, that order
32
amounted to a binding contract making it incumbent on the respondent to supply

jaggery in accordance with the terms of the order and also making it incumbent on the
Deputy General Manager to accept the jaggery delivered in pursuance of that order.
KANHAIYA AGGARWAL V UOI (2002)
FACTS
The first respondent invited tenders for execution of five items of work including
supply, delivery and stacking of 75,000 cubic metre Machine crushed track ballast as
per specifications at its depot in Naurozabad and loading it into railway wagons. The
supply period was for 24 months. The conditions in the tender notice required that the
rates at which supply was to be made had to be stated in words as well as in figures
against each item of work as per Schedule attached thereto; that the tenders submitted
with any omissions or alteration of the tender document were liable to be rejected;
however, permissible corrections could be attached with due signature of tenderers;
that the tenderer should hold the offer open till such date as may be specified in the
tender which was for a minimum period of 90 days from the date of opening of the
tender; that contravention of the conditions would automatically result in forfeiture of
security deposit; that the tender was liable to be rejected for non-compliance of any of
the conditions in the tender form. Five tenders were received. The appellant made his
tender on 27.02.2001 with a covering letter that if his offer is accepted within the
stipulated time rebate would be offered by him to the effect that in case the contract
was given to him within 45 days, 60 days and 75 days, he would extend rebate of 5%,
3% and 2% respectively on the rates tendered by him. Respondent No. 5 had made a
similar offer but after five days of the opening of the tender, while the appellant had
made such offer of rebate even at the time of making the tender in the letter
accompanying the tender documents. However, respondent No. 5 offered to reduce
rates by 1.25% if accepted in 30 days and 1% if accepted in 45 days. The 1st
respondent accepted the tender offered by the appellant on the rates subject to rebate.
Agreement was entered into by him on 19.04.2001. Respondent No.5 filed a writ
petition claiming that his tender should have been accepted, as the rates offered by him
are the lowest. The learned Single Judge, before whom acceptance of the tender
offered by the appellant was challenged, took the view that the tender notice did not
admit of an offer being made in the form of rebate as offered by the appellant and it
33
was also clear that an offer made by respondent No. 5 after the opening of the tender is
of no consequence and gave the direction of taking fresh offers from the appellant and
Respondent No. 5. The matter was carried in appeal to the Division Bench. The
Division Bench, after adverting to several decisions on the question of award of
contracts, stated that the tender notice did not contemplate any attachment of
conditions by giving rebate which would amount to alteration of the tender document
which is impermissible; that the tender should be unconditional and relaxation, if any,
should have been notified to all the tenderers to enable them to change their rates; that
all the tenderers should have been treated equally and fairly, and on that basis, took the
view that the tender of Respondent No. 5 is at a lower rate and hence, acceptable and
set aside the order of the learned Single Judge directing fresh negotiations with the
parties. The Division Bench directed that supply of material by the appellant be
stopped forthwith and balance material be taken from Respondent No.5 at the rate
furnished by him. Hence, these appeals against the order of the High Court.
ISSUE
The short question that falls for consideration is whether the tender offered by the
appellant with the rebate could have been accepted and whether such acceptance
would affect the interests of any other party.
REASONING/ JUDGMENT
The rates offered are clear and the time within which they are to be accepted is also
clear. As long as such offer does not militate against the terms and conditions of
inviting tender it cannot be said that such offer is not within its scope. All that is
required is that offer made is to be kept open for a minimum period of 90 days. Offer
in compliance of that term has been made by the appellant. The concession or rebate
given is an additional inducement to accept the offer expeditiously to have a proper
return on the investment made by the tenderer in the equipment and not keeping the
labour idle for long periods which is part of commercial prudence. The commercial
aspect of each one of the offers made by the parties will have to be ascertained and,
thereafter a decision taken to accept or reject a tender. There was nothing illegal or
arbitrary on the part of Railway Administration in accepting the offer of the
appellant, which was made at the time of submitting the tender itself.
34
G. J. FERNANDEZ V STATE OF KARNATAKA (1990)
The petitioner aggrieved by the award of a contract by the respondent in favour of

Mysore Construction Company (M.C.C.) filed a Writ Petition and a further Writ
Appeal in the Karnataka High Court. Being unsuccessful there he came up in appeal
before this Court by way of special leave. The single judge of the High Court had
taken the view that prerequisites for the supply of tender forms were contained in Para
I of the Notification Inviting Tender (NIT) and the details called for in Para V could be
supplied any time. The Division Bench on appeal did not express any opinion
regarding the requirements set out in para V but was of the view that there was nothing
unfair or arbitrary about the award of the contract to the MCC. In appeal before this
Court the plea of the petitioner is that the Karnataka Power Corporation should not
have accepted the tender of MCC, as the MCC did not fulfil certain preliminary
requirements contained in Para I and V of the NIT which according to him have to be
fulfilled before the forms of tender could be supplied to any intending contractor.
Dismissing the appeal of the petitioner, the Court, Para V cannot but be read with para
I. The supply of some of the documents referred to in para V is indispensable to assess
whether the applicant fulfills the prequalifying requirements set out in para I. It will be
too extreme to hold that the omission to supply every small detail referred to in para V
would affect the eligibility under para I and disqualify the tenderer. If a party has been
consistently and bona fide interpreting the standards prescribed by it in a particular
manner, this Court should not interfere though it may be inclined to read or construe
the conditions differently. Assuming for purposes of argument that there has been a
slight deviation from the terms of the NIT, it has not deprived the appellant of its
right to be considered for the contract. On the other hand its tender has received due
and full consideration. If, save for the delay in filing one of the relevant documents,
MCC is also found to be qualified to tender for the contract. No injustice can be said to
have been done to the appellant by the consideration of its tender side-by-side with
that of the MCC and in the KPC going in for a choice of the better on the merits.
The comparative merits of the appellant vis-a-vis MCC are, however, a matter for the
KPC to decide and not for the Courts.
If other parties are affected and equal opportunity is not afforded to everybody, then
the contract is said to be arbitrary and hence, void.
35
CAPACITY TO CONTRACT
JYOTIRINDRA BHATACHARJEE V SONA BALA BORA (2005)
Late Bhagirath Bora executed a sale deed in favour of the Plaintiff transferring the
house property. It was alleged by the wife and sons of late Bora that at the time of
execution of sale deed, the executant was imbalanced in mind and his mental sickness
deteriorated so much that he instituted a criminal case against his family members and
therefore, the sale transaction was done surreptitiously and fraudulently. It was held
that the conduct of the executants indicates that he was a normal person and mentally
unsound at the time of execution of the sale deed and, therefore, did not confer any
right, title and interest on the Plaintiff.
Dharmodas Ghose, was the respondent in this case. He was a minor (i.e. has not
completed the 18 years of age) and he was the sole owner of his immovable property.
The mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta
High Court.
MOHORI BIBEE V DHARMODAS GHOSE (1903)
FACTS
The plaintiff, Dharmodas Ghose, while he was a minor, mortgaged his property in
favour of the defendant, Brahmo Dutt, who was a moneylender to secure a loan of Rs.
20,000. The actual amount of loan given was less than Rs. 20,000. At the time of the
transaction the attorney, who acted on behalf of the money lender, had the knowledge
that the plaintiff is a minor. The plaintiff brought an action against the defendant
stating that he was a minor when the mortgage was executed by him and, therefore,
mortgage was void and inoperative and the same should be cancelled. By the time of
Appeal to the Privy Council the defendant, Brahmo Dutt died and the Appeal was
prosecuted by his executors. The Defendant, amongst other points, contended that the
plaintiff had fraudulently misrepresented his age and therefore no relief should be
36
given to him, and that, if mortgage is cancelled as requested by the plaintiff, the
plaintiff should be asked to repay the sum of Rs. 10,500 advanced to him.
ISSUES
1. Whether the deed was void under section 2, 10 (5), 11 (6) of the Indian
Contract Act, 1872 or not?
2. Whether the defendant was liable to return the amount of loan which he had
received by him under such deed or mortgage or not?
3. Whether the mortgage commenced by the defendant was voidable or not?
REASONING/ JUDGMENT
1. Any contract with a minor or infant is void ab-initio (void from beginning).
2. The minor i.e. Dharmodas Ghose cannot be forced to give back the amount of
money that was advanced to him, because he was not bound by the promise
that was executed in a contract.
3. Since minor was incompetent to make such mortgage hence the contact such
made or commenced shall also be void and is not valid in the eyes of law.
RATIO/ RULE OF LAW
Any contract with a minor or an infant is neither valid nor voidable but is void ab-
initio (void from the beginning).
LESLIE V SHEILL (1914)
An infant deceived some money lenders about his age and obtained a loan of £ 400 on
the faith of his being an adult. When the attempt of the money lenders to recover the
principal amount and interest failed, they claimed return of the principal amount under
a quasi contract. At last, the money lenders relied upon the doctrine of restitution but
37
their contention was rejected. The money lenders claimed that an infant should be
compelled in equity to restore the money. But their argument failed for “Restitution
stops where repayment begins”. LORD SUMMER stated “…There is no question of
tracing, no possibility of restoring the very thing got by the fraud, nothing but
compulsion through a personal judgement to repay an equivalent sum out of his
present and future resources…I think this would be nothing enforcing a void contract.”
However, wherever a minor seeks the protection or aid of courts for cancelling his
contract, the court may require him to restore all benefits obtained by him under
the contract or make suitable compensation to the other party.
STOCKS V WILSON (1918)
Defendant minor fraudulently represent himself full age, induced plaintiff to sell and
deliver to him certain goods. Plaintiff failed to discharge burden showing these goods
are necessaries, thus could not sue for the price. Held defendant was not estopped from
proving his true age, if minor obtain property by fraud he can be compelled to restore
it, if he had money obtained he can be compelled to refund.
COWERN V NIELD (1912)
It was held that a minor who was a hay and straw merchant was not liable to repay the
price of the goods which he failed to deliver.
KHAN GUL V LAKHA SINGH
A minor fraudulently concealed his age and contracted to sell a plot of land to another.
The minor received the consideration of Rs. 17, 500/- and then refused to fulfil his part
of the bargain. The other party prayed for possession or refund of consideration. The
38
question rose whether a minor who entered a contract through false representation
retain the benefits from the contract while refusing to perform his part. Since a minor’s
contract is void, specific performance was not granted. However, refund of the
consideration was order.
AJUDHIA PRASAD V CHANDAN LAL
Two minors borrowed money under a mortgage deed. They were over 18 but less than
21 years of age, but fraudulently concealed the fact that a guardian had been appointed
for them. Question was whether the lender could get a decree for the principal amount
or sale of mortgaged property. Held, where property is not traceable, granting a money
decree would tantamount to enforcing minor’s pecuniary (monetary) liability under a
void contract – no decree under cloak of restitution.
RAMCHANDRA V MANIKCHAND (1968)
FACTS & HELD
The mother of the plaintiffs Smt. Phulibai had entered into an agreement on behalf of
the plaintiffs when they were minors for purchasing house property from the defendant
(appellant) for a consideration of Rs. 11,000. Rs. 1,000 were paid towards earnest and
the rest of the amount was to be paid at the time of the registration of the sale-deed.
The sale-deed was to be executed by the defendant by Kartik Sudi Poonam. A wall
partition was to be constructed by the purchaser according to the terms of the
agreement. They did not do so and hence, the suit in the trial court for want of specific
performance from the minor purchasers. The trial court ordered the minors a decree for
specific performance. They appealed to the MP High Court. Held, the plaintiffs' suit
cannot be decreed for want of mutuality.
39
RATIO/ RULE OF LAW
Where contracts had been entered into on behalf of minor for purchase of property and
thereby mulcting minor with liability personally or otherwise which at time of contract
cannot be enforced for want of mutuality, the minors cannot be held liable for specific
performance of the contract.
40
FACTORS VITIATING A CONTRACT
SUBHASH CHANDRA DAS MUSHIB V GANGA PRASAD DAS

MUSHIB (1967)
FACTS
Plaintiff claimed that the will deed of his father conveying the entire property to
defendant, plaintiff’s nephew, was brought about by exercising undue influence over
the donor. To the contrary, the deed details that the gift of the property was made out of
natural love and affection between the donor and defendant. Further, after the
conveyance of the property to defendant, when some suit arose on the independent
settlement deeds executed upon the transferred property (before the death of the
plaintiff’s father, i.e., donor), donor explicitly filed the statement that “he no longer
holds any interest in the property”. Nevertheless, High Court assumed the presence of
undue influence vitiating the deed on account of the relations between the donor and
defendant being of a grandparent and grandchild.
REASONING/ JUDGMENT
Under Section 16 of the Indian Contract Act, the first thing to prove so as to claim
undue influence is the existence of such a relationship between the parties that one is
in a position to dominate the will of the other. But mere relationship of such a nature
will not raise any presumption of undue influence; for it must be further proved that
the defendant had used such a relation to obtain an unfair advantage over the plaintiff.
U/s 16(2)(a) the phrase “real or apparent authority” can be taken to mean “relations of
the parties such that one naturally relied on the other for advise and the latter was in a
position to dominate the will of the first in giving it”. The Court observed that no
presumption of undue influence arises in case of gift to a son, grandson, son-in-
law, although made during the donor’s illness or old age. Though, the relationship
41
of solicitor-client, spiritual advisor and devotee, doctor-patient, parent and child

are those in which such a presumption arises.
The statement filed by donor that “he no longer holds any interest in the property”
shows that he was fully conscious and consented the transfer of property to the
defendant. Further, the fact that donor was actively involved in the management of his
property clearly proves that no undue influence was exercised over him.
LAKSHMI AMMA V T NARAYANA BHATTA (1970)
FACTS
Filed by the plaintiff, through his daughter and next friend, for declaring a prior will,
and a subsequent deed of settlement superseding the will, executed by him, invalid and
inoperative. In terms of the deed of settlement he had gifted away almost all his entire
properties which were considerable to his eldest grandson, the respondent, to the
exclusion of his two daughters and other grand children, eight in all. Of course he had
for himself retained an exclusive life interest over all the properties thus gifted away
and also had made some provision for the maintenance of his wife, Lakshmi Amma—
the appellant, who was his third wife, whom he had married after the death of his first
two.
The trial court decreed the suit in favour of the plaintiff which was reversed by the
High Court of Kerala in appeal. Now, the case has been appealed to a bench of the SC.
REASONING/ JUDGMENT
Deed of settlement was unnatural and unconscionable document – donor appellant was
person of weak mind and was incapable of making his own decisions and conducting
his affair - no draft was prepared with approval or under direction of appellant - no
valid reason given why testator should have given everything to respondent and
deprived himself of right to deal with property as owner during his life time - held,
execution of document was not genuine.
42
SPICE GIRLS LTD V APRILIA WORLD SERVICE (2002)
FACTS
The company ‘Spice Girls Ltd’ (SGL) owned by the 5 spice girls, Ginger Spice, Baby
Spice, Posh Spice, Scary Spice and Sporty Spice drew up a contract with Aprilia
World Service BV (Aprilia) such that Aprilia would sponsor their 1998 tour of Europe.
Aprilia was an Italian scooter manufacturer. The final contract was signed on 6th May
1998 – in which the Spice Girls group was described as ‘currently consisting’ of the 5
named members of the group. Under the deal Aprilia was to pay or provide £450,000
sponsorship fee, a £150,000 guaranteed royalty fee, 10% royalty on each Spice Sonic
scooter sold, 20 Sonic scooters and 10 motor bikes. In return, Aprilia was to receive
publicity as the ‘Official Sponsor of SpiceWorld’, extensive commercial rights for 12
months for the European tour and more limited rights for the proposed tours of the
USA and Japan. On 31st May it was announced that Geri Halliwell, Ginger Spice, had
left the group on 27th May. When Aprilia learned of this, they refused to pay the
remaining balance owed to SGL under the contract. Aprilia agreed that Geri leaving
was not a breach of contract but, when SGL sued them for the balance, Aprilia made a
counter-claim that SGL had made a false representation in the fax and commercial
shoot that the Spice Girls would consist of the exact 5 girls during the lifetime of the
deal. This was based on the fact that prior to the sending of the fax and prior to the
commercial shoot for TV, on three separate occasions, on 3rd March, 9th March and
on 25th April at Wembley Arena, Geri had made it clear to the other spice girls, and
hence the company SGL, that she was going to leave. As such, the representations in
the fax and commercial shoot were false.
REASONING/ JUDGMENT
At first instance, Arden J decided that SGL was liable to Aprilia under section 2 (1) of
the Misrepresentation Act 1967 (the Act) only in respect of the misrepresentation by
conduct arising from the participation of all five spice girls in the London commercial
shoot. She stated that,
43
‘… participation in the shoot carried with it a representation by conduct that SGL did
not know and had no reasonable ground to believe that any of the spice girls had an
intention to leave the group… nothing was done to correct that representation which
was a continuing representation. It was on the facts found MATERIAL to Aprilia’s
decision to enter the agreement… SGL had a duty to correct its misrepresentation… I
am satisfied that the representations by conduct were such as to be likely to induce a
person to enter into the contract. Such inducement to enter a contract need not of
course be the sole inducement.’
On appeal, SGL contended that there was no misrepresentation by conduct and that
even if there was, Aprilia was not induced by it to enter the contract. The court of
appeal disagreed. To decide if SGL was liable to Aprilia under section 2 (1) of the Act
they said that liability depended on four elements:
a) a misrepresentation made by one person to another;

b) a subsequent contract between them;
c) consequential loss and
d) an absence, at the time the contract was made, of a belief or reasonable
grounds for belief in the truth of the facts represented.
Thus, they said that the liability of SGL depended largely on whether at any time
before the contract was signed, SGL made a misrepresentation to Aprilia. This is what
we shall focus on.
The Court of Appeal said that it was irrelevant if Geri did not know of the wording in
the contract, ‘currently consisting of’, because in determining if a representation is to
be implied, the court would do so objectively in the light of what was said and done.
Further, they said that each episode of conduct, the fax and commercial shoot, whilst
considered separately, had to be considered as a whole.
They said that this was a case of a series of continuing representations made
throughout 2 months of negotiations leading to the final signing of the contract. They
44
were such as would induce a normal person to act as Aprilia did and in these
circumstances any requisite intention on the part of the representor would be
presumed. They said it was sufficient that the misrepresentation was a material
inducement and that it did not have to be the only one.
They thus concluded that the representations, express or implied, in both the fax and
commercial shoot, were material inducements to Aprilia to sign the contract on 6th
May.
ANIL RISHI V GURBAKSH SINGH (2006)
FACTS
An agreement to sell was entered into by and between the parties hereto in relation to
the premises bearing House No. 86, situated in Sector 18A, Chandigarh. A sale deed
was executed pursuant to the said agreement. However, a suit for declaration was filed
by the respondent herein alleging that the said sale deed was a forged, fabricated and
void document. The document was in possession of the defendant.
REASONING/ JUDGMENT
When fraud, misrepresentation or undue influence is alleged by a party in a suit,

normally, the burden is on him to prove such fraud, undue influence or
misrepresentation. But, when a person is in a fiduciary relationship with another and
the latter is in a position of active confidence the burden of proving the absence of
fraud, misrepresentation or undue influence is upon the person, in the dominating
position, he has to prove that there was fair play in the transaction and that the
apparent is the real, in other words, that the transaction is genuine and bona fide. In
such a case the burden of proving the good faith of the transaction is thrown upon the
dominant party, that is to say, the party who is in a position of active confidence.
A distinction exists between a burden of proof and onus of proof. The right to begin
follows onus probandi. It assumes importance in the early stage of a case. The question
45
of onus of proof has greater force, where the question is which party is to begin.
Burden of proof is used in three ways : (i) to indicate the duty of bringing forward
evidence in support of a proposition at the beginning or later; (ii) to make that of
establishing a proposition as against all counter evidence; and (iii) an indiscriminate
use in which it may mean either or both of the others.
The burden of proof lay on the defendant according to the judgement.
TRIMEX INTERNATIONAL FZE LIMITED V VEDANTA

ALUMINIUM LIMITED (2010)
FACTS
Trimex offered, via an email, the supply of bauxite to VAL which, after several
exchanges of e-mails, was subsequently accepted by latter, confirming the supply of 5
shipments of bauxite from Australia to India. Though a draft contract had also been
prepared but it yet needed to be formalised. After VAL received first consignments of
goods, it requested Trimex to hold back next consignment of goods so as to enable
them to check bauxite’s utility value. However, on same day, ship owners nominated
the ship for loading the cargo. Later when contract was cancelled by Trimex, it
claimed damages paid to ship owners from VAL which latter refused by denying any
contract.
ISSUE
Whether there was any valid subsisting contract between the parties in absence of any
formal contract?
46
REASONING/ JUDGMENT
Once the contract is concluded orally or in writing, the mere fact that a formal
contract has not been prepared by the parties does not affect either the
acceptance of the contract so entered into or implementation thereof.
A contract is said to be concluded when parties agree as to the ‘essential terms’ of the
contract though minor details can be left over for them to decide later, albeit subject to
satisfaction of other requirements as provided by S.10: without such essential terms
being decided, contract cannot be enforced by law as it is deemed to be incomplete.
PHILLIPS V BROOKS (1919)
FACTS
Phillips was a jeweller. The fraudster purchased a ring from the jeweller with a cheque
and signed his name “Sir George Bullough” and provided this person’s address.
Phillips knew of Bullough and knew he lived at the address, so allowed him to take the
ring before the cheque cleared. The cheque dishonored. The fraudster then pledged the
ring to Brooks Ltd who paid for it with a bona fide intent. Phillips brought action
against Brooks Ltd to recover the ring or its value.
ISSUE
Whether Brooks Ltd was a bona fide owner of the goods purchased from the
fraudster?
REASONING/ JUDGMENT
The claim by Phillips was allowed. The case of Cundy v Lindsay (1877) was applied
in that when the owner of the goods voluntarily parts with the possession of goods to a
person who he believes is someone else because of fraud, then there is no contract.
Therefore, there was found to be no contract between Phillips and the fraudster, as
47
Phillips believed he was making a contract with Sir George Bullough. If he had known
he was not, he would have had no intention to pass the ring onto him. This was
considered to be a material part of the contract. The property of the ring did not pass to
the fraudster so he never had a possessory title he could pass to Brooks Ltd on
consideration. Brooks Ltd were liable to Phillips and were required to return the ring.
INGRAM V LITTLE (1961)
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 business man and
the Plaintiffs then accepted payment by cheque. The cheque dishonored 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.
ISSUE
Whether the defendants could claim possessory title over the vehicle based on a
contract made by mistaken identity?
REASONING/ JUDGMENT
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.
48
TARSEM SINGH V SUKHMINDER SINGH (1998)

The petitioner owned land in a village of Patiala. He entered into a contract for sale of
that land with the respondent on at Rs. 24,000 per acre. At the time of the execution of
the agreement, an amount of Rs. 77,000/- was paid to the petitioner as earnest money.
The respondent was ready to perform his part of the contract but there was a confusion
between the parties as to whether 48 ‘bighas’ or 48 ‘canals’ of land was traded. The
parties were not ad-idem with respect to the unit of measurement. While the petitioner
intended to sell it in terms of “Canals”, the respondent intended to purchase it in terms
of “bighas”. Since these units relate to the area of the land, it was really a dispute with
regard to the area of the land which was the subject matter of agreement for sale, or, to
put it differently, how much area of the land was agreed to be sold, was in dispute
between the parties and it was with regard to the area of the land that the parties were
suffering from a mutual mistake.
If the forfeiture Clause is contained in an agreement which is void on account of the

fact that the parties were not ad-idem and were suffering from mistake of fact in
respect of a matter which was essential to the contract, it cannot be enforced as the
agreement itself is void under Section 20 of the Contract Act. The agreement in
question was void from its inception as the parties suffered from mutual mistake with
regard to the area and price of the plots of land agreed to be sold, the forfeiture Clause
would, for that reason, be also void and, therefore, the petitioner could not legally
forfeit the amount and seek the enforcement of forfeiture clause, even by way of
defence, in a suit instituted for Specific Performance by the respondent.
Hence, under the equitable doctrine of section 65 of the ICA, the petitioner has to
refund the amount of Rs. 77,000 received by him as the contract is void on account of
section 20 of the ICA.
49
CENTRAL INLAND WATER TRANSPORT CORPORATION

LIMITED V BROJO NATH GANGULY (1986)
FACTS
Plaintiffs worked in a company which was dissolved by Court’s order and they were
then inducted into defendant Corporation upon latter’s T&C. After years of serving
Corporation, plaintiffs were arbitrarily kicked out of the Corporation by virtue of Rule
9(i) of said T&C which provided for termination of employees’ services on three
months’ notice on either side upon which three months’ salary to be paid by
Corporation. Plaintiffs requested Court to quash Rule 9(i) on grounds of
unconscionability.
ISSUE
Whether an unconscionable term can be held to be void/ voidable under Indian

Contract Act (ICA)?
REASONING/ JUDGMENT
When the bargain is harsh or unconscionable, equity, grounded upon ‘distributive

justice’ curtails the freedom of contract so as to protect the interests of party who
entered into such bargain under distress. Freedom of contract is of little value when
parties don’t stand on equal footing; party with weaker bargaining power enjoys no
realistic opportunity to bargain and party has no alternative between accepting a set
of terms proposed by other or doing without the goods or services offered. These
agreements are called as ‘Adhesion Contracts’, however not every such contract is
unconscionable: only when there is gross inequality of bargaining power
compounded with terms unreasonably favourable to stronger party can the indication
that weaker party had no meaningful choice except to consent to the unfair and
unreasonable terms, hold ground.
Therefore Courts will strike down any unfair or unreasonable clause/ agreement
entered into by parties when there is gross inequality in their bargaining power, and
50
the victimized party had no meaningful choice but to give his assent to the contract,
however unreasonable, unfair and unconscionable a clause in that contract may be.
These adhesion/ standardized contracts are entered into by parties enjoying much
superior bargaining power with a large no. of people, hence, affect people at large
and if unconscionable, unfair and unreasonable are injurious to public interest. These
bargains therefore must be void on account of being opposed to public policy (S.23).
Further, if they were to be merely voidable on account of undue influence (for in many
cases, superior party has ‘real or apparent authority over other party’ and hence, uses
that position to obtain unfair advantage over another as according to S.16) it would
compel each victimized party to go to Court to get the contract adjudged as voidable
which would lead to multiplicity of litigations.
In present case, plaintiffs had much less bargaining power as compared to that of
Corporation, for they did not have any meaningful choice while assenting to the terms
and conditions of their appointment in the Corporation. If they would have refused to
accept the said rule, it would have led to their termination from service and exposed
them to consequent anxiety, harassment and uncertainty of finding alternative
employment.
Rule 9(i) was unreasonable and unfair to the extent of being unconscionable for it gave
arbitrary and absolute power to the Corporation to dismiss its employees without
providing any guidelines to that effect. The rule was also violation of principle of
natural justice-audi alteram partem-for it neither provided for any inquiry to take
place nor did it provide for any opportunity to accused employee to be heard.
Therefore it was unconscionable and opposed to public policy for it adversely affected
the rights and interests of the employees and created a sense of insecurity and
subservience to unfair and unreasonable terms of corporation. Hence, it was void
according to S.23 of ICA.
51
AGREEMENT TO SALE
RAFFLES V WICHELHAUS (1864)
The complainant, Mr Raffles, offered to sell an amount of Surat cotton to the

defendant, Mr Wichelhaus. This Surat cotton would be brought to Liverpool by a ship
from Bombay, India. This ship was called the Peerless, but there were two ships that
had this name. The complainant and the defendant were both thinking about a different
Peerless ship when they agreed to make the sale. One of the ships was due to leave
Bombay in October, which was what the defendant had thought for his Surat cotton
delivery, but the complainant was referring to the ship that was to leave in December.
When the Surat cotton arrived in Liverpool, Mr Wichelhaus refused to pay, as in his
mind, it was months late.
It was held that the contract between the complainant and defendant was not
enforceable. When the contract was being discussed, there was ambiguity in the
Peerless and what ship was being referred to, as well as no agreement on the terms on
the sale. There had been no consensus ad idem or meeting of the minds between the
parties to form a binding contract. The objective test made it clear that a reasonable
person would not have been able to identify with certainty what ship had been agreed
on.
CUNDY V LINDSAY (1878)
FACTS
The claimant received an order for sale of handkerchiefs from a person named
Blenkarn, who signed in his name in a manner resembling “Blenkiron & Co.”- a
reputed firm located at “123, Wood Street”. The purchaser further mentioned his
address to be at “37, Wood Street, Cheapside”, to which the claimant sent the goods.
Although no payment was made by Blenkarn, he sold the goods to a third person- the
defendants. Later, the claimants alleged that, as they sold the goods to Blenkarn under
52
the mistaken assumption that they were selling it to Blenkiron & Co., there was no real
consent to the contract of sale. Consequently, there was no valid transfer of title, which
remained with the claimants, and accordingly, they sued the defendants for conversion
of goods.
ISSUE
The case concerned whether a mistake as to the identity of a contracting party was so
fundamental so as to negate the consent of the other party, and thereby, causing the
contract to be void. In other words, the question was whether there was any contract
between the claimant and Blenkarn at the first place, and if not, could the third party
defendants procure a valid title to the goods.
REASONING/ JUDGMENT
It was held that, as the claimant did not intend to sell the handkerchiefs to Blenkarn
but to Blenkiron & Co., there was no consent of the claimant to the contract with the
former. Accordingly, as no contract was concluded between the claimant and Blenkarn
so as to constitute a valid transfer of title which the latter could rightfully convey to
the defendants, the title remained with the claimant. Hence, the defendants, being in
possession without a good title over such goods, were held liable for conversion.
This rationale found support in later cases of Ingram v Little, and Hector v Lyons. In
the former case, it was held that although the sale was undertaken face-to-face, as the
seller agreed to receive payment by cheque from only “Mr. Hutchinson” situated at a
specified address, and not from the actual purchaser who wrongfully transacted on his
name, the contract was void. Likewise, in the latter case, the court did not allow a
father to enforce a contract against the vendor in which his son was named as the
contracting party.
53
SHOGUN FINANCE LTD V HUDSON (2003)
FACTS
A car dealer sold a car to a fraudster, who produced a stolen license as his own. The
dealer wrote out the hire-purchase contract in the name written on the license. The
fraudster took physical possession of the car. The Defendant purchased the car from
the fraudster in good faith. Upon discovery of the dishonoured payment by the
fraudster and failure to make payments under the hire purchase agreement, Shogun
Finance brought action against Hudson for conversion. Hudson counterclaimed,
claiming to have obtained the right title of the vehicle.
ISSUE
Whether the vehicle was in the fraudster’s possession as a debtor. Whether possessory
title passed to the innocent purchaser and whether the contract was void.
REASONING/ JUDGMENT
The court dismissed the Defendant’s appeal. Under section 21(1) of the Sale of Goods
Act 1979, the title of the vehicle has been Shogun’s as there had been no consideration
on Shogun’s part for the vehicle, as the vehicle was subject to the terms of the hire
purchase agreement. Thus, Hudson could not have acquired a title from the fraudster
as he never owned the vehicle. The hire purchase agreement was not between the
fraudster and Shogun, as the name on the agreement was that of the stolen license
which was a fraudulent identity. Therefore, as there was no agreement or hire purchase
between Shogun and the fraudster, the fraudster could not have passed a possessive
title to Hudson, as he never had one. Hudson was required to return the car to Shogun.
54

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CONTRACTS – I

Carlill v Carbolic Smoke Ball Co. [1891-4]....................................................................4

FACTORS VITIATING A CONTRACT...............................................................................41

ELEMENTS A CONTRACT MUST HAVE

CARLILL V CARBOLIC SMOKE BALL CO. [1891-4]

CARBOLIC SMOKE BALL CO. CARLILL

Non-binding promise Intended to increase sales

Carbolic Smoke Ball Company

The defendants appealed.

Among the reasons given by the three judges were

The judgments of the court were as follows.

He discussed the following issues with respect to this case:

Communication of acceptance is not necessary for a contract when people’s conduct

PHARMACEUTICAL SOCIETY V BOOTS CASH CHEMIST

LALMAN SHUKLA V GAURI DUTT

Harvey was interested in a piece of property owned by Facey. He sent Facey a

Could silence constitute acceptance?

Silence does not amount to acceptance.

MAC PHERSON V MN APPANNA

Mac Pherson = Def 1

The question to be decided in this Case is whether in view of the correspondence

BHAGWANDAS GOVERDHANDAS KEDIA V GIRDHARILAL

1. When and where could a contract assumed to be complete concluded over a

negotiations are concluded by instantaneous speech and therefore

DISSENTING (J. HIDAYATULLAH)

BHAGAWATI PRASAD PAWAN KUMAR VS UNION OF INDIA

BANK OF INDIA V O. P. SWARNAKAR (2002)

A large number of employees (1,01,000 employees approx.) submitted their

1. If a contractual scheme provides that the voluntary retirement by exercise of

the option to an employee to voluntarily retire in terms of the scheme and if

TWEDDLE V ATKINSON (1861)

CHINNAYA V RAMAYYA (1881)

MC CHACKO V STATE BANK OF TRAVANCORE (1970) AIR 500

CURRIE V MISA (1874)

DUNLOP PNEUMATIC TYRE CO LTD. V SELFRIDGE LTD.

DUTTON V POOLE (1678)

KHWAJA MUHAMMAD KHAN V HUSSAINI BEGUM (1910)

PINNEL’S CASE (1602)

UOI V CHAMAN LAL LOONA AIR (1957) SC 652

UOI V MADDALA THATHIAH (1966)

amounted to a binding contract making it incumbent on the respondent to supply

KANHAIYA AGGARWAL V UOI (2002)

G. J. FERNANDEZ V STATE OF KARNATAKA (1990)

The petitioner aggrieved by the award of a contract by the respondent in favour of

JYOTIRINDRA BHATACHARJEE V SONA BALA BORA (2005)

MOHORI BIBEE V DHARMODAS GHOSE (1903)

RATIO/ RULE OF LAW

LESLIE V SHEILL (1914)

STOCKS V WILSON (1918)

COWERN V NIELD (1912)

KHAN GUL V LAKHA SINGH

AJUDHIA PRASAD V CHANDAN LAL

RAMCHANDRA V MANIKCHAND (1968)

FACTS & HELD

RATIO/ RULE OF LAW

FACTORS VITIATING A CONTRACT

SUBHASH CHANDRA DAS MUSHIB V GANGA PRASAD DAS

of solicitor-client, spiritual advisor and devotee, doctor-patient, parent and child

LAKSHMI AMMA V T NARAYANA BHATTA (1970)

SPICE GIRLS LTD V APRILIA WORLD SERVICE (2002)

a) a misrepresentation made by one person to another;

ANIL RISHI V GURBAKSH SINGH (2006)

When fraud, misrepresentation or undue influence is alleged by a party in a suit,

The burden of proof lay on the defendant according to the judgement.