This article is written by Wardah Beg, student, Faculty of Law, Aligarh Muslim University
You probably are in your first year, trying to get a grip of the immensely overwhelming law-school atmosphere around you. Or it has been long and you want to see how much you remember from your very first contract classes here. Or you are not in a law school, but contracts fascinate you? (Let’s just admit here that the chances of that one are extremely low). Whoever you are, I hope you benefit from this attempt to summarize nearly the most important cases in Indian Contract Law, with obvious references back to the Common Law of England. To make these cases easier to learn and memorize, I have added some keywords at the end of each case. Without much adieu, here is the list of cases you very much need to know:
Acceptance should be communicated: Felthouse v. Bindley
Can a person’s silence be considered acceptance?
In this case, the petitioner, Mr. Paul Felthouse wanted to purchase a horse from his nephew, but the price he offered to pay for the horse was less than that his nephew was willing to sell it for. The horse, therefore, was still in his possession. The Uncle communicated his offer through a letter, saying, “If I hear no more about him, I consider the horse mine at £30.15s” The nephew could not respond to the letter because he was busy with an auction on his farm. Though he asked the auctioneer, Mr. Bindley, not to auction the horses, he accidentally did. Mr. Felthouse then sued the defendant for conversion of his property. The defendant argued that the horse was not actually Mr. Felthouse’s property, as there existed no contract between him and his nephew at the time of the auction because Mr. Felthouse’s offer was not accepted by his nephew and the nephew’s silence cannot be considered to be an acceptance of the offer.
It was held that Mr. Felthouse did not have the ownership of the horse at the time of the auction, which is why he could not sue for conversion, as the offer he made was not actually accepted.
Keywords: Uncle-Nephew, horse, auction, conversion of property
General Offer: Carlill v. Carbolic Smoke Balls Company
Can offers be open to the public in general? Can a general offer lead to a contract?
In this case, a company carried out advertisements about their product, carbolic smoke balls, that claimed that any person who took the smoke balls in the prescribed manner (i.e., three times daily for two weeks) will not catch influenza. In case someone does, the company promised to pay 100£ to them immediately. To show their sincerity regarding this offer, the company deposited a sum of 1000£ in a public bank. Now, the plaintiff, Carlill bought the smoke balls and used them as prescribed in the advertisement, but still ended up catching the flu. She filed a suit for the recovery of 100£ as promised in the advertisement. The company denied the payment saying there existed no contract between them and the plaintiff. It was held that a contract came into existence between the plaintiff and the company as soon as the plaintiff bought the smoke balls and used them as prescribed.
Keywords: Carbolic smoke balls, prescription, general offer, public bank
Offer and Invitation to Treat: Harvey v. Facey
Can a mere quotation of price be considered an offer?
In this case, the petitioner, Harvey communicated with the defendant, Facey, about a Hall Pen through telegram, saying “”Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid”. The same day, Facey responded with the price of the Pen to be £900. To which, the appellant replied, “We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession.” The defendant refused to sell at that price that they had initially quoted. It was finally held in this case that no contract came into existence between both the parties because their exchange of telegrams was merely an informational exchange where the appellant asked for the price of the Hall Pen and the defendant quoted the price. Therefore the appellant had no right to sue.
Keywords: Bumper Hall Pen, price quotation, telegram
Offer and Counter Offers: Hyde v. Wrench
This is a leading case eliciting the concept of offers and counter-offers.
In this case, Wrench, the defendant offered to sell his farm to the petitioner, Hyde for £1000. The petitioner declined the offer. The defendant again reinstated his offer for selling the farm at £1000 to the petitioner’s agent stating that it is the final offer from their side. The petitioner, through a letter, offered to buy the farm for £950. The defendant refused to sell the farm at that price. The petitioner, several days later, offered to buy the farm at the initial price of £1000. The defendant did not send any agreement to that and refused to sell the farm, because of which the petitioner sued for breach of contract. It was held that no contract came to arise between the parties as the price was not agreed upon. Rather, offers and counter-offers were exchanged.
Keywords: Farm, offer, counter-offer
Agreement, Not Contract: Balfour v. Balfour
Can a promise between married parties result in a legally binding agreement?
In this case, Mr. and Mrs. Balfour, who used to live together as a married couple in Sri Lanka, went for a vacation to England. During this time, Mrs. Balfour developed rheumatic arthritis. The doctor advised Mrs. Balfour to stay back in England as, according to him, Sri Lankan climate would worsen her health. Before Mr. Balfour returned to Sri Lanka, he promised to send £30 to her per month. During their stay away, the parties drifted apart and separated. It was held in this case that Mr. Balfour’s promise to pay a monthly sum of £30 did not amount to a contract, as there was no intention to create a legal relationship on part of either of the parties.
Keywords: Husband & Wife, Sri Lanka, Rheumatic Arthritis, intention to create legal relationship absent
Communication of Offer is Necessary: Lalman Shukla v. Gauri Dutt
In this case, the defendant’s nephew went missing and the petitioner, who was a servant under the defendants was sent out in his search to Hardwar. After sending the petitioner, the defendant carried out an offer to the general public offering Rs. 501 to whomsoever finds the missing boy. The Plaintiff found the boy and helped return him back to his home. He had been paid the money he spent in going to search for the boy, i.e., his travel expenses. When he returned, he continued working for the defendants for about six months. After six months, he sued the defendants for paying him the prize money that was offered earlier. It was held that the petitioner was not entitled to the prize money, as he was only obliged by the duty he had as the defendant’s servant to find the missing boy, and the reward was announced after he had already been sent.
Keywords: Missing boy, nephew, servant, travel expenses, reward money
Minor’s Capacity to Contract: Mohori Bibee v. Damodar Ghose
Is a minor’s agreement void ab initio?
In this case, the defendant, Darmodar Ghose, as a minor was the sole owner of his property. His mother was his legally appointed guardian. One Mr. Brahmo Dutt who was a moneylender, through his agent Kedar Nath, lent Damodar Ghose a sum of Rs 20,000 at 12% interest per year. The loan was taken by way of mortgaging the property. The same day this deal was made, Damodar Ghose’s mother notified the appellant that Damodar was a minor, and anybody who would get into an agreement with him would do so at his own risk. Kedar Nath claimed that Damodar Ghose had lied about his age on the date of the execution of this deed, which turned out to be untrue. Therefore, Brahmo Dutt’s appeal was dismissed and his request for the return of Rs 10,500 advanced towards him was also rejected. It was held that a minor’s agreement is void ab initio.
Keywords: minor, property, mortgage, moneylender, 12% interest, loan, void ab initio
Doctrine of Frustration: Krell v. Henry
In this case, the defendant agreed to rent a flat of the plaintiff to watch the coronation of King Edward VII from its balcony. The plaintiff had promised that the view from the flat’s balcony will be satisfying since the procession will be perfectly visible from the room. The parties corresponded through letters and agreed on a price of £75 for two days. Nowhere in their written correspondence did the parties mention the coronation ceremony. The coronation did not take place on the days the flat was booked for, as the kind fell ill. The defendant refused to pay the whole sum of money that the parties had agreed upon, for this reason. It was held that it could be incurred from the circumstances surrounding the contract what the implied purpose behind the contract was. Due to the cancellation of the procession, the purpose of booking the flat was frustrated.
Keywords: King Edward VII, coronation, balcony, flat, cancelled, implied purpose, frustrated
The remoteness of Damage: Hadley v. Baxendale
In this case, the plaintiffs were operators of a mill, that they had to shut down temporarily when the crankshafts of the mill broke. Plaintiffs then contacted the manufacturers of the engine to make a new engine on a similar pattern. A servant of the defendants was then sent to the carriers to transport the crankshaft to the engine manufacturers. The servant told the Defendants that the mill is shut down, so the crankshafts must be sent immediately. The defendants informed that whenever the old crankshaft is given to them, the new one will be delivered by 12 o’clock its next day. Due to the delay of the defendants, the delivery got delayed and the mill had to stay shut for several days. In this case, due to the involvement of a third party (the carriers), the delay and loss could not entirely be blamed upon the defendants. Whatever damages or loss rose, did not come to existence because of a direct breach of contract by the defendants.
Keywords: mill, crankshaft, carriers, delay, damages, remote