INDIAN CONTRACT CASE LAWS

SR. NO NAME OF CASE JUDGEMENT

OFFER
1. Lalman Shukla vs Gauri A proposal cannot be accepted unless it comes to the
Dutt (1913) knowledge of the person accepting it

2. Carlill vs carbolic smoke The court observed following points:-

ball company (1893)
Offer a can be made to the world at large and contract is made
with the person who comes forward and accept the offer

In such a case communication of acceptance is not necessary.

Performance of condition is a sufficient acceptance without
communication.

general offer is continuing in nature and it is open for

acceptance to the number of person until it is retracted

3. Hyde vs Wrench (1840) A offered to sell her estate for 20 £1,000. B offered to pay £950.
A refused. B replied immediately, accepting the original offer
of £1,000. A now refuses.

It was held that A was no longer bound by the terms of her

original offer because it had lapsed when B made the counter-
offer to the original offer.

Therefore, an offer lapses if a counter offer is made. A counter

offer is considered a fresh offer, which must be accepted in
order to give rise to a contract.

4. Upton rural District The contract can be expressed or implied. In this case the fire
Corporation Vs Powell broke out Independence farm and his some point the fire
(1942) brigade services thinking them to be free. Defendant’s house
was not in the free service zone. The court held that the
services were rendered upon an implied promise to pay.

5. Harris vs Nickerson An Advertisement for auction is mere invitation to offer.

(1873)

6. Spencer Vs Harding An Advertisement inviting tenders and quotations is an

(1870) invitation to offer.
7. Henderson Vs There must be reasonable notice to the offeree of the printed
Stevenson (1875) terms and conditions. If such notice is not given then the
offeree is not bound by such terms and condition.

8. Harvey v. Facey (1893) The difference between an “invitation to offer”, and “offer” has
been laid down . for a contract to be valid, a proposal and an
acceptance are needed and to make the contract binding.
Further, acceptance of the proposal must be notified to the
individual who is proposing because a legally enforceable
agreement requires sureness to hold from both the parties to
the contract.
9. Pharmaceutical Society In this case, the defendant, a pharmaceutical company who
of Great Britain v. Boots introduced a new method of displaying the drugs for the
Cash Chemist (1953) shoppers, which could be used for purchasing drugs, and the
plaintiff objecting to the same. The Court observed that “goods
on a display are an invitation, not an offer” instead, the
customers make an offer when they take the medicines to the
register with the cashier being under the shopkeeper to accept
the offer proposed. The Court reasoned that displaying
medicines to the customers will be treated as an “invitation to
treat”, and not as an “offer”.

10. Fisher v Bell (1960) A shopkeeper was charged for offering for sale a flick knife
prohibited by Restriction of Offensive Weapons Act 1959 s.1(1)
that he had displayed the knife in his shop window.

He was acquitted for the court held that displaying goods in

window is an invitation to treat. He and the potential buyer can
change their mind anytime.
11. Spencer v Harding Harding sent out a circular which stated an offer to the
(1870) wholesale trade and must be cash payment. Spencer claimed
that the advertisement was an offer which he should be
accepted by submitting the highest tender. However, it held
that the defendant didn’t state in the circular that they will sell
to the highest tender. A circular is not amount an offer unless
it specific indicated.
 ACCEPTANCE
12. Powell vs Lee (1908) Communication must be received from the authorised person
only. It should be communicated by the person who has
authority to accept. Communication from the unauthorised
person is no communication in the eyes of law

13. Felthouse vs bindley Acceptance must be communicated to the offer only

(1863) communication to any other person is no communication in the
eyes of law. An offer cannot impose upon the offeree the burden
of refusal of duty to reply. In other words silence cannot be
prescribed as mode of acceptance.

14. Bhagwandas vs In case where contract are concluded by postal communication

girdharilal (1966) the place of contract is where the letter of acceptance is
dispatched. In case of instantaneous communication the place
of contract is where the acceptance is heard

15. Adams v. Lindsell (1818) the defendant offered to sell the claimant fleeces of wool for a
certain price. They requested that the response be made by
post. This letter was misdirected by the defendant so that it was
not received for 3 days after it was sent. The claimant decided to
accept the offer and responded on the same day.

This was posted on the 5th September but not received until the
9th September. However the defendant decided on the 8th
September that as they had not received a response decided to
sell the wool to someone else. The claimant argued that a
contract had been created as he had accepted their offer.

The Court confirmed that the delays were entirely the fault of
the offeror. Had the letter been posted correctly then this
scenario would in all likelihood not have arisen. Furthermore the
contract was created on the 5th September when the
acceptance was posted, not when it was received. While the
agreement was not communicated to the offeror, it could not
prevent the contract being created.
16. Dunlop v Higgins,(1848) A offered, by post, to sell B some iron at a particular price. The
letter reached B two days later, and B posted a letter of
acceptance on the same day.

Due to some delay, the letter reached A after over a fortnight,

by which time the price of iron had risen. A refused to sell the
iron to B at the original price. It was held that there was a
binding contract.

In case of communication by a non-instantaneous mode of

communication, such as post or email,

(a) an offer is complete as against the acceptor when the offeror

puts it in a mode of transmission outside the control of the
offeror, and

(b) an acceptance is complete as against the offeror when the

acceptor puts it in a mode of transmission.

CONSIDERATION
17. Durga Prasad vs Baldev If an act is done at the Desire of promise then it will furnish a
(1880) good consideration .if the act is not done at the desire of
promise then it will not be considered to be a consideration.

18. Tweedle vs Atkinson It is necessary that the consideration must move from the
(1861) promise. Stranger to consideration cannot save

19. Chinnaya vs Ramya Consideration for a contract need not necessarily flow from the
(1881) parties to the contract.

20. Scotson vs Pegg (1861) A Promise to do thing which the promise is already bound to do
under a contract can be a good consideration to support the
contract.
 ESSENTIAL OF CONTACT
21. Balfour v. Balfour (1919) This case gave birth to the purpose behind the creation of the
legal reaction theory in contract law.

It was held that agreements that are made between a husband

and his wife, specifically personal family relationships, to
provide maintenance costs, and other related capitals are
generally not categorized as contracts because in general, the
parties to the agreement do not intend to enter into an
agreement that should be attending legal ends. Therefore, a
contract cannot be enforceable by nature if the parties to the
same do not intend to create legal relations with each other.

22. White v Bluett (1853) A owed a sum of money as a promissory note to his father. He
kept complaining of unequal treatment in the division of
property, till his father told him that if he stopped complaining,
he would waive A’s debt.

A stopped complaining and then refused to repay the debt when

the father asked him to do so. It was held that A’s stopping
complaining did not amount to valid consideration.

PRIVITY TO CONTRACT
23. Tweedle vs Atkinson The Doctrine of Privity of contract was followed and it was held
(1861) that no stranger to the consideration can take advantage of a
contract also made for his benefit

24. Jamna Das vs Pandit position under Indian law- Supreme Court held that Doctrine of
Ram avtar pandey (1911) Privity of contract is applicable in India and stranger to the
contract cannot sue.

25. Dunlop Pneumatic Tyre D supplied tyres to a wholesaler X, on condition that any retailer
Co. v. Selfridge Ltd to whom X re-supplied the tyres should promise X, not to sell
(1915) them to the public below Ds list price. X supplied tyres to S upon
this condition, but nevertheless S sold the tyres below the list
price. It was held that there was a contract between D and X and
a contract between X and S. Therefore, D could not obtain
damages from S, as D had not given any consideration for Ss
promise to X nor was he party to the contract between D and X.
 CAPACITY TO SUE
26. Mohri Bibi vs Indian Contract Act does not specifically Lays down the fate of
Dharamodas Ghose agreement if it has been entered into by minor however it was
(1902) authoritatively settled that minors. Agreement is absolutely void
a minor can not make a promise enforceable by law. The court
held that minor is not liable under section 64 and 65 of contract
at to repay any money or compensate for any benefit

27.

chappal versus Cooper Necessary is means such thing which are necessary to maintain
a person according to his condition and life. What are necessary
is may also depend upon the status of personnel and also his
requirement at the time of actual delivery

28. Nash vs Inman (1908) The court held that in order to render minor’s state liable for
necessary to condition must be satisfied:-

Supply must be for goods reasonably necessary for his support

in life, and

He must not already have sufficient supply of necessary at the

time of delivery.

29. Leslie Ltd v. Sheill (1914) The court laid down following proposition regarding doctrine of
restitution in English law:-

If the minor obtained property or goods by misrepresenting his

age he can be made liable to restore it but only so long as it is
traceable in his possession

If minor has sold the goods are converted them he cannot be

made to repay the value of the goods

Doctrine of restitution has no application with the minor has

obtained money on cash instead of goods because restitution
stops when repayment begins
30. Jamna Das v Ram Autar A borrowed Rs.40,000/- by executing a mortgage in favour of B.
Pande (1911) Later, A sold the property to C for Rs.44,000/- and allowed C to
retain Rs.40,000/- of the price in order to redeem the mortgage.
B, the mortgagee, sued C for the recovery of the mortgage. It
was held that B could not succeed because B was not a party to
the contract between A and C.

As per the doctrine of privity, a contract cannot confer rights or

impose obligations under it on any person except the parties to
it. A third person cannot be entitled to demand performance of
the contract.

The doctrine of privity of contract must not be confused with the

concept of privity of consideration. While parties to a contract
cannot confer rights or impose obligations under it on any third
person, S.2(d) implies that as long as there is a consideration for
a promise, it is immaterial if a third party has provided it.

VOID AGREEMENT
31. Alice Mary Hill v William In this case, the plaintiff (Hill) a married woman had agreed to
Clarke (1905) live in adultery with the defendant as well as serve him as the
housekeeper.

In return, the defendant had agreed to pay the plaintiff a

consolidated remuneration (payment) of 50 Dollars per month.

In this instance, the Court held that the lawful part of the
agreement cannot be separated from the unlawful part as the
entire agreement was rendered void.

The plaintiff was unable to recover any form of compensation,

even for the service she provided as a housekeeper.

32. Lowe v Peers (1786) In this case, the defendant (Peers) had promised the plaintiff
(Mrs Lowe) that he would not marry any other person, other
than the plaintiff and also promised to pay an amount of 200
pounds if the promise was not fulfilled. The agreement was
rendered void as it stood against the public policy of laws.

33. Madhub Chander v. In this case, where A and B who carried out business in the same
Rajcoomer Dass (1874) locality in Kolkata agreed. B offered to pay A some amount of
money if A closed his business.
 A closed his business but later sued B to recover the amount of
the agreement he entered into with B to recover the amount
promised.

It was held that even though the order had been partial in
curtailing A from conducting his business in a particular area,
but since it put a restraint on trade, it was held to be void and
consequently, A was not allowed to recover the amount.

34. Chikham Ammiraju V. In the instant case, the Husband Held held out a threat of
Chikkam Seshama (1917) committing suicide to his wife and son if they did not execute a
release deed in favor of his brother. The wife and son executed
the release deed under the threat. The question was whether a
threat of committing suicide amounts to coercion?

Court Held that the threat of suicide amounted to coercion

within Section 15 of the Indian Contract Act, 1872 and the release
deed was, therefore, voidable"

35. Wajid Khan vs. Raja Ewaz In this case, an old and illiterate woman conferred a high
Ali Khan (1891) monetary benefit onto her manager without any valuable
consideration and it was held that undue influence was applied.
The burden of proof was on the manager to show that it was a
bonafide transaction and no undue influence was exercised.

36. Long vs. Lloyd (1958) The defendant, in this case, sold his lorry to the plaintiff by
making a representation which was bogus that the lorry was in
good condition. However, after buying it the plaintiff discovered
serious defects in the lorry, and instead of rescinding the
contract, accepted the defendant’s offer of half the cost of
repairs. Subsequently, the lorry broke completely, and the
plaintiff wanted to rescind the contract however, the court held
that this right did not exist anymore as the plaintiff had affirmed
the contract by accepting to share costs.

37. Tarsem Singh v A agrees to buy B’s land. Both of them are mistaken as to the
Sukhminder Singh (1998) actual size of the plot of land: they think the plot is 10 acres in

size, whereas it is actually 15 acres in size.

The contract was held to be void. If both parties to an agreement

are under a mistake as to a matter of fact essential to the
agreement, there is no meeting of minds, and the contract is
void.

Section 13 of the Contract Act lays down the doctrine of

‘consensus ad idem’, that is, both parties must accept each
 other’s promises on the terms that they are made, that there
must be a meeting of minds.

If not, there is, in fact, no agreement between them at all. Lack

of consensus ad idem renders the contract void ab initio.

38. Firm Bhola Ram Minors can enforce contracts made in their favour for
Harbans Lal v Bhagat valuable consideration, because although they cannot
Ram (1927) incur liability, they are not debarred from acquiring title to
anything valuable.

Hence, Legal guardians of minors can enter into contracts

on their behalf and for their benefit. Also see, sec 68 of the
ICA that talks about the exception of necessity.
 DAMAGES
39. Hadley vs Baxendale The Court ruled out that the defendant will not be liable to
(1854) compensate the plaintiff for his losses on grounds that the
plaintiff had not reasonably foreseen the consequences of the
delay caused by the defendant.

when two parties have made a contract which one of them has
broken the damage with the other party ought to revive in
respect of such breach of contract should be fair and reasonable
to consider a loss arising naturally from the usual course of
thing or such as may be reasonable to be in contemplation of
the parties at the time they made contract.

40. Donoghue v. Stevenson In the present case, the injuries that were caused to the plaintiff
(1932) from the defendant’s defective products were claimed on the
basis of the contract of sale between the parties to the case.
While it was the plaintiff’s friend who suffered the damage, the
plaintiff did not, hence the plaintiff’s claim could only be on the
grounds of negligence by the defendant. The issue before the
Court was whether the defendant owed a duty of care to the
plaintiff or not. Applying the “neighbor principle”, the Court
rules out that the defendant did owe a duty of care to the
plaintiff.

41. Cellulose Acetate v The plaintiff contracted with defendant that if breach of contract
Widnes Foundries (1933) occurred, £20 will be to pay per working week. When the breach
happened, plaintiff appealed that the sum indicated was not
enough to recover the damage. However, the court held that it
is not a penalty clause. Therefore, the sum they earlier agreed
with is still effective.

42. Beswick v Beswick (1967) Defendant promised his uncle to pay plaintiff annually in return
to own his uncle’s properties. As plaintiff was not a party to the
contract, she sued as executor. It held that damages should be
specifically enforced by the executor against the nephew. The
loss of the estate was serious therefore the defendant had to
perform his obligation in the contract.

43. United Breweries Ltd. v ‘A’ sold beer in bottles and crates. The deposit paid by dealers
State of Andhra Pradesh, for the bottles and the crates was refunded to them upon return
(1997) of the bottles and crates.

‘A’ required from its dealers that bottles were not sold to the
customers, and bottles were to be returned in order to ensure
 that the bottling process could continue smoothly. It was held
that the deposit represented the liquidated damages for the loss
of the bottle if it was not returned.

As per Sec 74 if a contract stipulates a sum to be paid if there is

a breach, or contains any other stipulation by way of penalty, the
party complaining of the breach is entitled, whether or not
actual damage is proved to have been caused by the breach, to
receive reasonable compensation not exceeding the amount
named or as the case may be, the stipulated penalty.

However, even in a case where the losses resulting from the

breach are more than the liquidated damages, the plaintiff
cannot recover an amount higher than the liquidated damages.

DOCTRINE OF FRUSTRATION
44. Krell v. Henry (1903) the defendant agreed to rent a flat of the plaintiff to watch
coronation of King Edward VII from its balcony. The plaintiff had
promised that view from the flat’s balcony will be satisfying
since procession will be perfectly visible from room. The parties
corresponded through letters and agreed on a price of £75 for
two days. Nowhere in their written correspondence did parties
mention the coronation ceremony. coronation did not take
place on days the flat was booked for, as the kind fell ill. The
defendant refused to pay the whole sum of money that parties
had agreed upon, for this reason. held :- it could be incurred
from the circumstances surrounding the contract what the
implied purpose behind the contract was. Due to the
cancellation of booking flat was frustrated.

45. Durga Devi Bhagat v JB A enters into a contract with B, who is in another country, to
Advani & Co. Ltd (1970) deliver some linseed oil to B in B’s country. Subsequently, the
export of linseed oil is banned. A is not bound to perform the
promise under the contract, as the contract has been rendered
void under the doctrine of frustration.

As per s.56, of the Indian Contract Act, if the performance of a

promise becomes impossible for any reason which the promisor
could not prevent, or unlawful, after the contract is made, the
contract becomes void when the act becomes impossible or
unlawful. This is the doctrine of frustration.
46. Alopi Parshad & Sons The performance of a contract must become impossible or
Ltd. v. Union of India unlawful for the doctrine of frustration. A contract cannot be
(1960) regarded as impossible merely because it is more difficult to
perform than anticipated, or less remunerative.

CONTRACT OF INDEMNITY
47. State of Orissa v United A contract of insurance is a contract of indemnity, which covers
India Insurance Co. Ltd every kind of loss envisaged by the policy, and not just loss
(1997) caused by the party to the contract.

BAILMENT
48. Jan & Sons v A Cameron A stays at Hotel B, and leaves some luggage with the Hotel for
(1922) safekeeping. The Hotel is a bailee in respect of the luggage, and
A is a bailor. where the contract of bailment does not provide for
any remuneration to be paid to the bailee for the purpose for
which the goods are to be kept or carried, the bailor must repay
to the bailee the necessary expenses incurred by the bailee for
the purposes of the bailment.

AGENCY
49. Gaya Sugar Mills Ltd. v The distinction between an agent and a servant or employee is
Nand Kishore Bijoria that while in the case of an agent the principal merely directs
(1955) what must be done, in the case of employees, the employer also
directs how it is to be done.

An agent must conduct the principal’s business according to the

principal’s instructions, or, if there are no such instructions,
according to the custom which prevails in doing business of the
same kind at the place where the agent conducts business.

50. Bank of Bihar Ltd. v 50 A bank was asked to collect money on behalf of a customer and
Tata Scob Dealers (1960) remit it to the customer. The bank sent the money, about Rs.
34,000/- by draft, by ordinary post. The draft was lost. As an
agent, the bank was held to be negligent in sending such a large
amount through an ordinary post.

An agent must also conduct the business of the agency with

such skill as is generally possessed by a person engaged in a
similar business unless the principal had notice of the agent’s
lack of skill. r/w sec 212 ICA