Contract Law – 1 Cases ~ Aamnaya Jagannath Mishra National Law University Odisha Legend: Red – Case mentioned in book, not mentioned in class Black – Case mentioned in class Topic Sub-topic Case Court Facts General Offer Acceptance by conduct, Continuing offer Carlill v. Carbolic Smoke Ball Company Court of Appeal The Carbolic Smoke Ball Co. made a product called the "smoke ball" and claimed it to be a cure for influenza and a number of other diseases. The Company published advertisements claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions provided with it. Carlill saw the advertisement, bought one of the balls and used it three times daily for nearly two months until she contracted the flu on 17 January 1892. She claimed £100 from the Carbolic Smoke Ball Company. Decided in favour of Carlill. Cross Offer Tinn v. Hoffman The defendant, Mr Hoffman wrote to the complainant, Mr Tinn with an offer to sell him 800 tons of iron for the price of 69s per ton. He requested a reply to this offer by post. On the same day, without knowing of this offer, Mr Tin also wrote to Mr Hoffman. He offered to buy the iron on similar terms. This case concerned the validity of these two cross offers. It was held in this case that there was no contract between Mr Tinn and Mr Hoffman. Lalman Shukla v. Gauri Datt Allahabad HC Defendant’s nephew absconded from home. He sent his servant in search of the boy. When the servant had left, the defendant announced a reward of Rs. 501 for
Transcript
Contract Law – 1 Cases
~ Aamnaya Jagannath Mishra
National Law University Odisha
Legend: Red – Case mentioned in book, not mentioned in class
Black – Case mentioned in class
Topic Sub-topic Case Court Facts
General Offer Acceptance by conduct,
Continuing offer
Carlill v. Carbolic Smoke Ball
Company
Court of
Appeal
The Carbolic Smoke Ball Co. made a product called the
"smoke ball" and claimed it to be a cure for influenza
and a number of other diseases. The Company published
advertisements claiming that it would pay £100 to
anyone who got sick with influenza after using its
product according to the instructions provided with it.
Carlill saw the advertisement, bought one of the balls
and used it three times daily for nearly two months until
she contracted the flu on 17 January 1892. She claimed
£100 from the Carbolic Smoke Ball Company. Decided in
favour of Carlill.
Cross Offer Tinn v. Hoffman The defendant, Mr Hoffman wrote to the complainant,
Mr Tinn with an offer to sell him 800 tons of iron for the
price of 69s per ton. He requested a reply to this offer by
post. On the same day, without knowing of this offer, Mr
Tin also wrote to Mr Hoffman. He offered to buy the
iron on similar terms. This case concerned the validity of
these two cross offers. It was held in this case that there
was no contract between Mr Tinn and Mr Hoffman.
Lalman Shukla v. Gauri Datt Allahabad
HC
Defendant’s nephew absconded from home. He sent his
servant in search of the boy. When the servant had left,
the defendant announced a reward of Rs. 501 for
anyone who finds the boy. Servant came to know of the
reward only when he had traced the child, brought an
action for reward. Decided in favour of defendant.
Har Bhajan Lal v. Har Charan
Lal
Communication
when Complete
Lalman Shukla v. Gauri Datt (given above)
Intention to
Contract
Balfour v. Balfour Court of
Appeal
Wife living England, husband living in Ceylon. Husband
agreed to send 30 pounds for expenses and
maintenance. Due to some differences between the
two, he stopped sending the amount. Held that there
was no intention to contract.
McGregor v. McGregor Court of
Appeal
Wellington
Husband and wife agreed to withdraw their complaints.
Agreement was held to be binding.
Jones v. Padavatton Court of
Appeal
Mother agreed to pay for her daughter’s legal education
so that she can come live with her afterwards as a
lawyer. She also bought a house for the daughter, part
of which was rented out. Daughter did not complete
education during a period of 5 years, and also remarried.
Mother stopped payments and started eviction
proceedings against the daughter. Decided in favour of
mother as there was no intention to contract.
Objectivity test of
intention
Simpkins v. Pays Queen’s
Bench
Ms. Simpkins was a paying boarder at Ms. Pays house,
who lived with her granddaughter. Ms. Simpkins
habitually entered into newspaper competitions.
Concerning one weekly Sunday newspaper competition,
the three agreed that Ms. Simpkins would fill in a weekly
coupon, with each person making three forecasts, yet
submitting them in Ms. Pays name, and divide the prize
in the event of winning. A forecast made by Ms. Pays’ granddaughter in one of the coupons submitted won a
prize of £750 under Ms. Pays name. Ms. Pays refused to
distribute the prize and Ms. Simpkins claimed for one-
third of the prize under their agreement. The Court held
that the mutual arrangement, no matter how informal,
constituted a legally-binding agreement to divide the
shares in thirds.
Meritt v. Meritt Court of
Appeal
Mr. Merritt and his wife jointly owned a house. Mr.
Merritt left to live with another woman. They made an
agreement (signed) that Mr. Merritt would pay Mrs.
Merritt a £40 monthly sum, and eventually transfer the
house to her, if Mrs. Merritt kept up the monthly
mortgage payments. When the mortgage was paid Mr.
Merritt refused to transfer the house. The Court of
Appeal held that nature of the dealings, and the fact
that the Merritts were separated when they signed their
contract, allowed the court to assume that their
agreement was more than a domestic arrangement and
legally binding.
Gould v. Gould
Business Matters Rose & Frank Co. v. J. R.
Crompton & Bros Ltd.
House of
Lords
Rose and Frank Co was the sole US distributor of JR
Crompton's carbon paper products. In 1913, the parties
signed a new document which included this clause:
“This arrangement is not entered into, nor is this
memorandum written, as a formal or legal agreement
and shall not be subject to legal jurisdiction in the law
courts ..., but it is only a definite expression and record
of the purpose and intention of the three parties
concerned to which they each honourably pledge
themselves with the fullest confidence, based upon past
business with each other, that it will be carried through
by each of the three parties with mutual loyalty and
friendly co-operation.”
The relationship between the two parties broke down as
JR Crompton refused to supply some of the orders of the
plaintiff. Rose & Frank Co sued on enforcement of the
agreement. Held that the arrangement was not a legally
binding contract.
Application in India Banwari Lal v. Sukhdarshan
Daval
Invitation to Treat Harvey v.Facey Privy
Council
Facey was going to sell his store to Kingston when
Harvey and another telegraphed him a message stating
“Will you sell us Bumper Hall Pen? Telegraph lowest
cash price—answer paid."
Facey answered by telegram, “Lowest price for Bumper
Hall Pen £900."
Harvey answered by telegram, “We agree to buy
bumper Hall Pen for the sum of nine hundred pounds
asked by you." Harvey sued for specific performance of
the agreement, and for an injunction to restrain
Kingston from taking a conveyance of the property.
Court dismissed the action on grounds that the
agreement did not disclose a concluded contract.
Col. D. I. McPherson v. M.N.
Appanna
Harris v. Nickerson High Court
of Justice
The Defendant placed an advertisement in London
papers that certain items, including brewing equipment
and office furniture, would be placed up for auction over
three days in Bury St. Edmunds. The Plaintiff obtained a
commission to buy the office furniture and expended
time and expense to travel to Bury St. Edmunds to bid
for the office furniture. On the third day, the lots for the
office furniture were withdrawn. The Plaintiff sued for
loss of time and expense. The Plaintiff submitted that
the advertisement constituted a contract between
themselves and the Defendant that the latter would sell
the furniture according to the conditions stated in the
advertisement, and that accordingly the withdrawal of
the furniture was a breach of contract. The Defendant
submitted the advertisement of a sale did not constitute
a contract that any particular lot or class of lots would
actually be put up for sale. The court held unanimously
that the advertisement did not constitute an offer, but
rather was a mere declaration of intent.
Display of Goods Pharmaceutical Society of
Great Britain v. Boots Cash
Chemists (Southern) Ltd.
Court of
Appeal
The defendant ran a self-service shop in which non-
prescription drugs and medicines, many of which were
listed in the Poisons List provided in the Pharmacy and
Poisons Act 1933, were sold. These items were
displayed in open shelves from which they could be
selected by the customer, placed in a shopping basket,
and taken to the till where they would be paid for. The
till was operated by a registered pharmacist. However,
the claimant brought proceedings against the defendant
for breach of section 18(1) of the Pharmacy and Poisons
Act 1933, which requires the supervision of a registered
pharmacist for the sale of any item in the Poisons List.
The Court of Appeal held that the defendant was not in
breach of the Act, as the contract was completed on
payment under the supervision of the pharmacist. The
display of the goods on the shelves were not an offer
which was accepted when the customer selected the
item; rather, the proper construction was that the
customer made an offer to the cashier upon arriving at
the till, which was accepted when payment was taken.
Fisher v. Bell Divisional
Court
The Defendant displayed a flick knife in the window of
his shop next to a ticket bearing the words "Ejector knife
– 4s," (i.e. four shillings). Under the Restriction of
Offensive Weapons Act 1959, section 1(1), it was illegal
to manufacture, sell, hire, or offer for sale or hire, or
lend to any other person, amongst other things, any
knife "which has a blade which opens automatically by
hand pressure applied to a button, spring or other
device in or attached to the handle of the knife". On 14
December 1959, the Claimant, a chief inspector of police
force, brought forward information against the
Defendant alleging the Defendant has contravened
section 1(1) by offering the flick knife for sale. Held there
was no offence because there was no "offer for sale".
Communication of
Acceptance
Ghaziabad Development
Authority v. Union of India
Supreme
Court of
India
An invitation to offer was made for the sale of property.
Various offers were made for the property. However,
the offerors were subsequently informed that due to
some unavoidable reasons, the development work was
delayed, and hence handing over of the possession of
the plot was also delayed. After waiting for a reasonable
amount of time the offerors sued. Decision in favour of
plaintiffs.
Validity of Acceptance Suraj Besan & Rice Mills v.
Food Corpn. of India
Delhi HC Plaintiff firm registered as having 1500 M.T.
requirement. Defendant invited tenders for the
purchase and removal of damaged food grains. Plaintiff
firm submitted its tender. It also wrote a letter that the
offer was for 1500 M. T. only. However, tender was
accepted for 6200 M. T. Plaintiff did not furnish the
required security deposit and due to this reason was
threatened by defendant that plaintiff’s certificate
(which talked about the 1500 M.T. requirement) would
be cancelled and all related benefits that the plaintiff
had been enjoying would be withdrawn. Decided in
favour of plaintiff that there was no binding contract.
Acceptance with
condition subsequent
Kerala Financial Corpn. v.
Vincent Paul
SC In an auction sale of the borrower company’s assets, the
highest bidder deposited the earnest amount but not
the 25% of the bid money within the stipulated period.
Held that there was no concluded contract.
Acceptance sub silentio Bharat Petroleum SC Vessel hired for two years, extended for 1 month for 2
Corporation Ltd. v. Great
Eastern Shipping Ltd.
consignments of 15 days each. This was notified to the
shipping company via post. Shipping company received
post without reply and asked for compensation for use
of vessel after the hiring period. Petrol corp was held
liable for compensation as silence does not amount to
acceptance.
Felthouse v. Bindley Court of
Common
Pleas
The plaintiff offered through a post to purchase his
nephew’s horse, which said that if the nephew did not
reply, the horse would belong to the uncle. No reply
was sent. Nephew told his auctioneer to not sell the
horse as it was already sold to his uncle. Auctioneer sells
horse by mistake. Uncle sued the auctioneer for selling
off his alleged property. Held that there was no sale
contract as silence does not amount to acceptance.
Acceptance by Conduct Brogden v. Metropolitan
Railyway Co.
Carlill v. Carbolic Smoke Ball
Co.
(given above)
Hindustan Coop Insurance
Society v. Shyam Sunder
General Assurance Society v.
Chandmull Jain
M/S Bhagwati Prasad Pawan
Kumar v. Union of India
SC 2 consignments were to be delivered to the plaintiffs via
rail, which were lost. Plaintiffs applied for compensation.
Consignments were worth approximately Rs. 1,00,000,
but railways offered compensation of much less amount
and sent cheques of that amount. Cheques were
encashed by the plaintiffs, and a letter of protest was
written to the railways. However, they were not able to
prove when the letter was written, before or after the
encashment of the cheque. Hence, in absence of proof,
it was held that, encashment of the cheques was
acceptance by conduct and defendants are not liable to
pay compensation.
(Doctrine of Promissory
Estoppel)
Vishakhapatnam Port Trust
Ltd v. Bihar Alloy Steel Ltd.
Andhra
Pradesh
HC
Bihar Alloy Steel wrote letter to port offering to lease
some area in the port for the purpose of unloading
goods. However, the lease was found to be incomplete
due to the absence of signatures of the port authority.
Subsequently, Bihar Alloy Steel was sued for illegal use
of the area in the port. However, court held that Bihar
Alloy Steel is not liable to pay compensation for the
mistake of the port authority as they were acting on the
promise of the port authority.
Communication to
offeror himself
Felthouse v. Bindley
(Offer cannot impose burden
of refusal)
(given above)
Communication by
Acceptor himself
Powell v. Lee King’s
Bench
Plaintiff was an applicant for headmastership of a
school. The managers passed a resolution appointing
him, but the decision was not communicated to him.
One of the members, however, in his individual capacity
informed him. Managers cancelled their resolution and
plaintiff sued for breach of contract. Held that
communication was not complete and hence no
concluded contract
Communication not
necessary
Carlill v. Carbolic Smoke Ball
Co.
(given above)
Har Bhajan Lal v. Har Charan
Lal
Communication by Post Adams v. Lindsell King’s
Bench
Defendants sent a letter offering to sell wool to plaintiffs
on September 2 and specified that acceptance is
expected through post. Letter reached plaintiffs on
September 5, acceptance letter sent on the same date.
Acceptance letter received on September 9 but
defendants had sold the wool to some other party on
September 8, having waited till then for acceptance and
were sued for breach of contract. It was held that
contract was concluded on September 5, when the
acceptance letter was put in the course of transmission.
Acceptance must be
unconditional and
absolute
Trimex International FZE Ltd.
v. Vedanta Aluminium Ltd.
SC Order was placed for goods through a third party. Offer
was accepted and was stipulated to be completed
through 5 shippings of the goods from Australia to India.
Shipping company was engaged for transport of goods.
Suppliers of goods breached the contract. Held that
acceptance was unconditional and contract is binding.
Direct communication Entores Ltd. v. Miles Far East
Corporation
Court of
Appeal
Entores was a London-based trading company that sent
an offer by telex for the purchase of copper cathodes
from a company based in Amsterdam. The Dutch
company sent an acceptance by telex. The contract was
not fulfilled and so Entores attempted to sue the owner
of the Dutch company for damages. The controlling
company, Entores, was based in the UK and under
English law Entores could only bring the action in the UK
(serve notice of writ outside the jurisdiction) if it could
prove that the contract was formed within the
jurisdiction, i.e. in London rather than Amsterdam.
Denning LJ, delivered the leading judgment. He said that
the postal rule could not apply to instantaneous
communications, such as telephone or telex: if a
phoneline "went dead" just before the offeree said
"yes", it would be absurd to assume that the contract
was formed and the parties would not have to call each
other back. The same applied to telex. Since the contract
was therefore only formed when and where the telex
was received, the place of formation was London.
Bhagwandas Govardhan Das
Kedia v. M/s Girdharilal
Parshottamdas & Co.
SC Plaintiffs made an offer from Ahmedabad to the
defendants at Khamgaon to purchase certain goods and
the defendants accepted the offer. Issue raised was
whether the contract was in the jurisdiction of
Ahmedabad or Khamgaon. Majority opinion held that in
case of direct communication, place of contract was the
place where the acceptance was heard by the offeror,
i.e., Ahmedabad, therefore, Section 4 of ICA would not
apply. However, Justice Hidyatullah had a dissenting
opinion that Section 4 should be applied to direct
communication as well and thus, place of contract
should be where the acceptance was put in course of
transmission, i.e., Khamgaon.
Rickmers v. Indian Oil
Corporation
SC Indian Oil Corpn. entered into agreement to purchase
pipes with M/s Tubacero of Mexico. Pipes were to be
delivered at Tampico Port, Mexico. Indian Oil Corpn. got
into an agreement with Rickmers for transportation of
the pipes. However, to execute a contract, IoC was
required to establish a standby letter of credit as per the
format to be mutually agreed upon by the parties while
the appellant was to furnish a performance bond also in
a format to be mutually agreed upon by both the
parties. Letter of credit was not acceptable by Rickmers,
thus no contract was made. IoC made alternative
arrangements but was sued by Rickmers for breach of
contract. Held that there was no binding contract in the
first place.
Acceptance of counter
proposal
Hargopal v. People’s Bank of
Northern India Ltd.
Provisional Acceptance Union of India v. S. Narain
Singh
S.Narain Singh accepts tender. Tender was provisionally
accepted subject to sign of high commissioner. S. Narain
Singh was allowed to revoke provisional acceptance.
Koylash Chunder Doss v.
Tariney Churn Singhee
Provisional arrangements Winn v. Bull
Branca v. Cobarro
Acceptance &
Withdrawal of Tenders &
Bids
(No obligation to accept
tender or accept the
lowest tender)
Bengal Coal Co. Ltd. v.
Homee Wadia & Co.
Gammon India Ltd. v. Punjab
State Electricity Board
Punjab-
Haryana
HC
Gammon India Ltd. had been allotted a tender to
construct, design and commission cooling towers for a
nuclear plant. Since its bid was far lower than other
qualifying bidders, it was asked to extend the validity of
its tender to Jan 19, 1995. However, due to possible
financial repercussions, they agreed to extend only till
Dec 31, 1994, clearly stating that any further extension
will cost above and more the original bid. Board
accepted this. However, the work was allotted to
another bidder, that had previously been rejected, in an
illegal and arbitrary manner. However, it was held that
there was no merit in the petition, and case was held in
favour of the Electricity Board.
Karan Singh v. The Collector
Chhatarpur
Madhya
Pradesh
HC
Two quarry leases were conducted. In the first one,
Bhupat Singh was the highest bidder but wasn’t accepted. In the second one, the petitioner was the
highest bidder and was accepted. However, the
acceptance of bid was sent to Bhupat Singh instead of
petitioner. Instead of returning the amount to
petitioner, he was asked to realise the bid money upon
expiry of lease. As no acceptance was communicated to
the petitioner, there was no contract, hence decision in
favour of Karan Singh, petitioner.
Secy of State v. Madho Ram
Union of India v. Maddala
Thai
Nottinghamshire County
Council R v. Secy of State for
Environment, Exp
Cambatta Aviation Ltd. v.
Cochin International Airport
Ltd.
Government contracting Mahabir Auto Stores v.
Indian Oil Corpn
Lapse of Offer Notice of revocation
(Withdrawal before
expiry of fixed period)
(Communication of
revocation should be
from the offeror himself)
(Revocation of Bid)
Henthorn v. Fraser Court of
Appeal
The defendant and the claimant were situated at
Liverpool and Birkenhead respectively. The defendant
called at the office of the claimant in order to negotiate
the purchase of some houses. The defendant handed
the claimant a note giving him the option to purchase
some houses within 14 days. On the next day, the
defendant withdrew the offer by post, but his
withdrawal did not reach the claimant until 5 P.M.
Meanwhile, the claimant responded by post with an
unconditional acceptance of the offer, which was
delivered to the defendant after its office had closed.
The letter was opened by the defendant the next
morning. The Court of Appeal ordered that the claimant
was entitled to specific performance. Lord Herschell
argued: "Where the circumstances are such that it must
have been within the contemplation of the parties that,
according to ordinary usage of mankind, the post might
be used as a means of communicating the acceptance of
an offer, the acceptance is complete as soon as it is
posted."
Alfred Schonlank v.
Muthunya Chetti
Dickinson v. Dodds
Union of India v. Bhim Sen
Walaiti Ram
Haridwar Singh v. Bagun
Sumbrui
SC A forest was knocked down to a bidder below the min
price. Its confirmation was still in process that the bidder
agreed to pay the min. Dept accepted this and
telegraphed its acceptance to the forest officer for
onward transmission to the bidder. The forest officer
never received the telegram. Meanwhile, another
person offered a higher price. Dept accepted this and
passed it on to the new bidder. It was held that no
contract had been made on the earlier bid.
Revocation of
Acceptance
Countess of Dunmore v.
Alexander
The Countess of Dunmore (C) was looking to change
servant and wrote to Lady Agnew (LA) requesting
information on the character of one of her servants,
Alexander. LA responded and recommended Alexander,
stating that she would accept the proposed wage. C
accepted this and sent a letter to LA, acknowledging the
agreement. LA was away from her residence but had the
letter forwarded to the appropriate address. She
acknowledged the letter and sent this on to Alexander. A
day later, C wrote to LA stating that she no longer
needed Alexander. LA forward the second letter by
express post and both letters were delivered to
Alexander at the same time. After C refused to house or
pay Alexander, Alexander brought an action against her
on the basis that there had been a completed contract
and C had breached the terms. The court held that there
was no completed contract and therefore Alexander was
not entitled to the wages for which she had claimed.
Voluntary Retirement
Scheme
Bank of India v. O.P.
Swarnakar
SC Plaintiff signed up for voluntary retirement scheme of
Bank of India. However, he revoked the same. It was
held that the VRS was an invitation to offer and that the
employee had merely made an offer which he revoked.
Postal Revocation Byrne & Co. v. Leon Van Tien
Hoven & Co.
HC
Common
Pleas
Division
Van Tienhoven & Co posted a letter from their office in
Cardiff to Byrne & Co in New York City, offering 1000
boxes of tinplates for sale on 1 October. Byrne and Co
got the letter on 11 October. They telegraphed
acceptance on the same day. But on 8 October Van
Tienhoven had sent another letter withdrawing their
offer, because tinplate prices had just risen 25%. They
refused to go through with the sale.
E-Contracts Shrink-wrap agreements ProCD Inc. v. Zeidenberg &
Silken Mountain Web
Services Inc.
US Court
of Appeal
(7th
Circuit)
The case involved a graduate student, Matthew
Zeidenberg, who purchased a telephone directory
database, SelectPhone, on CD-ROM produced by ProCD.
ProCD had compiled the information from over 3,000
telephone directories, at a cost of more than $10
million. To recoup its costs, ProCD discriminated based
on price by charging commercial users a higher price
than it did to everyday, non-commercial users.
Zeidenberg purchased a non-commercial copy of
SelectPhone and after opening the packaging and
installing the software on his personal computer,
Zeidenberg created a website and offered the
information originally on the CD to visitors for a fee that
was less than what ProCD charged its commercial
customers. At the time of purchase, Zeidenberg may not
have been aware of any prohibited use; however, the
package itself stated that there was a license enclosed.
Moreover, because "the software license splashed
across the screen and would not let him proceed
without indicating acceptance," Zeidenberg had ample
opportunity to read the license before using
SelectPhone. Zeidenberg was presented with this license
when he installed the software, which he accepted by
clicking assent at a suitable dialog box—this type of
license is commonly known as a "click-through license"
or "clickwrap". The license was contained, in full, on the
CD. The court then held the license valid and
enforceable as a contract.
Web-wrap agreements Pollstar v. Gigmania
Ticketmaster Corp. v.
Tickets.com
Specht v. Netscape
Communications Corp.
US Court
of Appeal
(2nd
Circuit)
The plaintiffs brought suit against Netscape
Communications Corporation, alleging the defendant's
SmartDownload plug-in invaded the plaintiffs' privacy in
violation of the Electronic Communications Privacy Act
and the Computer Fraud and Abuse Act. Netscape
moved to compel arbitration and to stay court
proceedings, arguing that the plaintiffs agreed to
arbitration in the End User License Agreement. This
means that any disputes, such as an invasion of privacy,
would be settled out of court by an arbitrator. The
plaintiffs allegedly accepted this EULA when they
downloaded the plug-in. The U.S. District Court for the
Southern District of New York denied Netscape's
motion. The United States Court of Appeals for the
Second Circuit heard the appeal, and affirmed the
district court's decision, finding that "plaintiffs neither
received reasonable notice of the existence of the
license terms nor manifested unambiguous assent to
those terms before acting on the web page’s invitation
to download the plug-in program".
The court found that "a reasonably prudent Internet
user in circumstances such as these would not have
known or learned of the existence of the license terms
before responding to defendants’ invitation to download
the free software, and that defendants therefore did not
provide reasonable notice of the license terms".
Specht was not bound by the SmartDownload
agreement as a non-contracting beneficiary because he
had no preexisting relationship with the parties, was not
an agent of any party, and received no direct benefit
from users downloading files from his website.
Click-wrap agreements Hotmail Corp. v. Van Money
Pie Inc.
Hotmail’s T&C expressly prohibit the use of its email
accounts for transmission of spam. Defendants used it
for spam. Return addresses were Hotmail accounts. A
large number of complaints to the return addresses took
up a large amount of space within Hotmail’s finite space
on its network. It was held that Hotmail’s click wrap
agreement was a valid contract and that the defendants
had breached it.
Caspi v. Microsoft Network,
LLC
Groff v. America Online
Standard Form of
Contracts
Imputed Notice InterGlobe Aviation Ltd. v. N.
Sachidanand
SC
Exploitation of Weaker
Party
Thornton v. Shoe Lane
Parking Ltd.
L’Estrange v. F. Graucob Ltd.
Protective Devices
(Reasonable Notice)
{Difference between
Henderson v. Stevenson Court of
Chancery
Plaintiff was travelling in a ship. His baggage was
misplaced. On the back of his ticket were some terms &
conditions which included the exclusion of liability of the
company in case of loss or mishandling of luggage or
delay to the passenger. However, it was held that there
was no indication on the face of the ticket that terms &
conditions were printed on the back, hence plaintiff was
allowed to recover compensation for losses despite the
exemption clause.
contract and receipt}
{Contract signed by
acceptor}
{Notice of unusual terms}
Mackillican v. Compagnie Des
Messagries Maritimes de
France
Parker v. South Eastern
Railway Co.
Chapelton v. Barry UDC
Thornton v. Shoe Lane
Parking Ltd.
George Mitchell (Chesterhall)
Ltd. v. Finney Lock Seeds Ltd.
L’Estrange v. F. Graucob Ltd.
Curtis v. Chemical Cleaning &
Dying Co.
Tilden Rent-A-Car v.
Clendenning
Interfoto Picture Library Ltd.
v. Stiletto Visual Programmes
Ltd.
Spruling J. Ltd. v. Bradshaw
Thornton v. Shoe Lane
Parking Ltd.
(Notice should be
contemporaneous with
contract)
Thornton v. Shoe Lane
Parking Ltd.
Indian Airlines Corp. v.
Madhuri Chawdhuri
Calcutta
HC
Plaintiff’s husband was killed in a plane crash. Plaintiff
asked for compensation worth Rs. 20,00,000 as the
husband was the sole earning member. Exemption
clause of the airlines was held to be valid as enough
notice had been given of the same. Hence,
compensation was not given.
(Theory of Fundamental
Breach)
{“Core” of Contract}
{Departure from main
purpose}
Davies v. Collins
Alderslade v. Hendon
Laundry Ltd.
Alexander v. Railway
Executive
Gibaud v. Great Eastern Rly
Co.
Hollins v. J. Davey Ltd.
U.G.S. Finance Ltd. v.
National Mortgage Bank of
Greece, S.A.
Suisse Atlantique Societe
D’Armement S.A. v. N.V.
Rotterdamsche Kolen
Centrale
Harbutt’s “Plasticine” Ltd. v.
Wayne Tank & Pump Co. Ltd.
Kenyon Son & Craven Ltd. v.
Barter Hoare & Co. Ltd.
(Strict Construction)
{Contra Proferentem}
Lee (John) & Sons
(Grantham) Ltd. v. Railway
Executive
Akerib v. Booth
Hollier v. Rambler Motors
AMC Ltd.
{Rule of
Construction}
(Liability in Tort) White v. John Warwick & Co.
Ltd.
Rutther v. Palmer
Haseldine v. C.A. Daw & Son
Ltd.
(Unreasonable Terms) Lily White v. Munuswami Madras HC A laundry receipt contained a condition that a customer
would be entitled to claim only 15% of the market price
of the article lost. A brand new sari belonging to the
plaintiff was lost. It was held that the such a limitation
clause was absurd and against public policy, hence, it
was held to be invalid and full compensation was
allowed.
Levison v. Patent Steam
Carpet Cleaning Co. Ltd.
(Exemption clauses &
third parties)
Haseldine v. C.A. Daw & Son
Ltd.
Elder, Dempster & Co. v.
Paterson Zochonis & Co.
Norwich City Council v.
Harvey
Consideration Definition Currie v. Misa House of
Lords
A company named Lizardi & Co,then in good credit in
the City, sold four bills of exchange to Mr Misa, drawn
from a bank in Cadiz. Mr Currie was the owner of the
banking firm and the plaintiff bringing the action. The
bills of exchange were sold on the 11th of February, and
by the custom of bill, brokers were to be paid for on the
first foreign post-day following the day of the sale. That
first day was the 14th of February. Lizardi & Co. was
much in debt to his banking firm, and being pressed to
reduce his balance, gave to the banker a draft or order
on Mr Misa for the amount of the four bills. This draft or
order was dated on the 14th, though it was, in fact,
written on the 13th, and then delivered to the banker.
On the morning of the 14th the manager of Misa's
business gave a cheque for the amount of the order,
which was then given up to him. Lizardi failed, and on
the afternoon of the 14th the manager, learning that
fact, stopped payment of the cheque.
Held that the banker was entitled to recover the
amount.
Lush J defined consideration as “A valuable
consideration in the sense of the law, may 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”.
(Desire of the promisor) Durga Prasad v. Baldeo Allahabad
HC
The plaintiff, on the order of the Collector of a town,
built at his own expense, certain shops in a bazar. The
shops came to be occupied by the defendants who, in
consideration of the plaintiff having expended money in
the construction, promised to pay him a commission on
articles sold through their agency in the bazar. The
plaintiff’s action to recover the commission was rejected
as any construction that was done was done at the
desire of the town’s Collector, not the defendants,
hence consideration was absent.
[Acts done at request] Kedarnath Bhattacharji v.
Gorie Mahomed
Calcutta
HC
The plaintiff is a Municipal Commissioner of Howrah and
one of the trustees of the Howrah Town Hall Fund. Some
time ago, it was in contemplation to build a Town Hall in
Howrah, provided the necessary funds could be raised,
and upon that state of things being existent, the persons
interested set to work to see what subscriptions they
could get. When the subscription list had reached a
certain point, the Commissioners, including the plaintiff,
entered into a contract with a contractor for the
purpose of building the Town Hall, and plans of the
building were submitted and passed, but as the
subscription list increased, the plans increased too, and
the original cost, which was intended to be Rs. 26,000,
has swelled up to Rs. 40,000; but for the whole Rs.
40,000 the Commissioners, including the plaintiff, have
remained liable to the contractor as much as for the
original contract, because the additions to the building
were made by the authority of the Commissioners and
with their sanction. The defendant, on being applied to,
subscribed his name in the book for Rs. 100, and the
question is, whether the plaintiff, as one of the persons
who made himself liable under the contract to the
contractor for the cost of the building, can sue, on
behalf of himself, and all those in the same interest with
him, to recover the amount of the subscription from the
defendant. Plaintiff was allowed to recover the sum.
[Promises of charitable
nature]
Doraswami Iyer v.
Arunachala Ayyar
Madras HC The repair of a temple was in progress. As the work
proceeded, more money was required and to raise said
money, subscriptions were invited and a subscription list
raised. The defendant put himself down on this list for
Rs. 125 and it was to recover this sum that the suit was
filed. Recovery was not allowed as the temple repair
were proceeding with or without the subscription
money that was claimed. Since the promisee had not
acted solely upon the bargain made with the promisor,
hence not taken any liability as part of the bargain with
the promisor, the sum does not amount to
consideration.
Creed v. Henderson
Distinguish
between
these cases
[Unilateral Promises] Abdul Aziz v. Masum Ali
[Revocation of unilateral
promises]
Kedarnath Bhattacharji v.
Gorie Mahomed
(given)
Errington v. Errington &
Woods
Morrison Steamship Co. Ltd.
v. Crown
[Promissory Estoppel &
Govt. Agencies]
Amrit Banaspati Co. Ltd. v.
State of Punjab
Union of India v. Indo Afghan
Agencies Ltd.
Motilal Padampat Sugar Mills
v. State of UP
Union of India v. Godfrey
Philips India Ltd.
Delhi Cloth & General Mills
Ltd. v. Union of India
Pournami Oil Mills v. State of
Kerala
Privity of Contract &
of Consideration
Promisee or any other
Person
Dutton v. Poole King’s
Bench
A person had a daughter to marry and in order to
provide her a marriage portion he intended to sell some
wood possessed by him at that time. His son, the
defendant, promised that if ‘the father would forbear to
sell at his request he would pay the daughter £1000.’ The father accordingly forbore but the defendant did
not pay. The daughter and her husband sued for the
amount. Although the defendant was not privy to the
contract, it would have been highly inequitable and
against public policy to not provide the plaintiffs with
their marriage portion. Hence, defendant was held
liable.
(Position of Beneficiary
who is not party)
Tweddle v. Atkinson Queen’s
Bench
John Tweddle and William Guy mutually agreed in
writing to pay sums of money (£100 and £200,
respectively) to Tweddle's son William (who was
engaged to Miss Guy). Guy then died before payment,
and when the estate would not pay, Tweddle jr. then
sued Mr Atkinson, the executor of Guy's estate, for the
promised £200. Tweddle jr's suit would not succeed as
no stranger to the consideration may enforce a contract,
although made for his benefit.
Privity of Consideration Chinnaya v. Ramayya Madras HC An old lady, by deed of gift, made over certain landed
property to the defendant, her daughter. By the terms
of the deed, which was registered, it was stipulated that
an annuity of Rs. 653 should be paid every year to the
plaintiff, who was the sister of the old woman. The
defendant on the same day executed in plaintiff’s favour
an Iqrarnama (agreement) promising to give effect to
the stipulation. The annuity was, however not paid and
the plaintiff sued to recover it. Plaintiff was allowed to
recover as it was held that if some loss is caused to the
promisor due to the promise, that loss in itself is
sufficient consideration. Hence the plaintiff had given
her consideration, entitling her to recover the sum.
Drive Yourself Hire Co.
(London) Ltd. v. Strutt
Dunlop v. Selfridge (given)
Privity of Contract Beswick v. Beswick Court of
Appeal
B was a coal merchant. The defendant was assisting him
in his business. B entered into an agreement with the
defendant by which the business was to be transferred
to the defendant. B was to be employed as a consultant
for his life and after his death the defendant was to pay
his widow an annuity of £5 per week, which was to
come out of the business. After B’s death, the defendant
paid B’s widow only one sum of £5. The widow brought
an action to recover the arrears of the annuity and also
to specific performance of the agreement. What was
held?
Darlington Borough Council
v. Wiltshier Northern Ltd.
Scruttons Ltd v. Midland
Silicones Ltd.
(Position in India: Cases
in favor of English law)
Jamna Das v. Pandit Ram
Autar Pande
Krishna Lal Sadhu v. Promila
Bala Dasi
(Position in India: Cases
not in favor of English
Law)
Nawab Khwaja Muhammad
Khan v. Nawab Hussaini
Begum
(given)
(Supreme Court upholds
privity)
M.C. Chacko v. State Bank of
Travancore
SC The Highland Bank was indebted to the State Bank of
Travancore under an overdraft. M was the manager of
the Highland Bank and his father K had guaranteed the
repayment of the overdraft. K gifted his properties to
the members of his family. the gift deed provided that
the liability, if any, under the guarantee should be met
by M either from the bank or from the share of property
gifted to him. The State Bank attempted to hold M liable
under this provision of the deed. Held that State Bank
cannot hold M liable as he is not party to the contract.
Exceptions to privity rule
(Benficiaries under trust
or charge or other
arrangements)
Nawab Khwaja Muhammad
Khan v. Nawab Hussaini
Begum
Privy
Council
The appellant executed an agreement with the
respondent’s father that in consideration of the
respondent’s marriage with his son (both being minors
at the time) he would pay to the respondent Rs.
500/month in perpetuity for the betel-leaf expenses and
charged certain properties with the payment, with
power to the respondent to enforce it. The husband and
wife separated on account of a quarrel and the suit was
brought by the plaintiff-respondent for the recovery of
the arrears of this annuity.
It was held that the respondent, although no party to
the contract, was clearly entitled to proceed in equity
and enforce her claim.
State of Punjab v. Nestlé
Industries
(given)
Gregory & Parker v. Williams
Touche v. Metropolitan Rly
Warehousing Co.
Rana Uma Nath Bakhsh Singh
v. Jang Bahadur
Ramchand v. Thakur Janki
Ballabhji Maharaj
(Marriage settlement,
partition or other family
arrangements)
Rose Fernandez v. Joseph
Gonsalves
Daropti v. Jaspat Rai ----
(Acknowledgement &
Estoppel)
State of Punjab v. Nestlé
Industries
Supreme
Court
Government of UP announced to give tax exemption
from sales tax for three years to all new industrial units
of the state. Based on this, plaintiff sought confirmation
from Director of Industries who reiterated the decision
of UP govt. Further unequivocal assurance was given by
Chief Secy of Govt., on behalf of UP Government, to
plaintiff about the same. Plaintiff on this categorical
assurance, borrowed money from financial institutions,
brought plant and machinery and set up a new plant in
UP. However, State govt. went back upon this assurance
and instead now promised to give partial concession to
which plaintiff consented and started production. Once
again, however, State govt. went back even on this
promise denying any concession to be given. Plaintiff
sued the government on account of promissory
estoppel.
Dunlop v. Selfridge House of
Lords
Dunlop made tyres. It did not want them sold cheaply
but to maintain a standard resale price. It agreed with its
dealers (in this case, Dew & Co.) not to sell them below
its recommended retail price. It also bargained for
dealers to get the same undertaking from their retailers
(in this case, Selfridge). If retailers did sell below the list
price, they would have to pay £5 per tyre in liquidated
damages to Dunlop. Dunlop thus was a third party to a
contract between Selfridge and Dew. When Selfridge
sold the tyres at below the agreed price, Dunlop sued to
enforce the contract by injunction and claimed damages.
Selfridge argued that Dunlop could not enforce the
burden of a contract between Dunlop and Dew, which
Selfridge had not agreed to. Court held that there was
no consideration present between the parties and
hence, Dunlop was not allowed to recover.
N. Devaraja Urs v.
Ramakrishniah
Kshirodebihari Datta v.
Mangobinda Panda
(Covenants running with
land)
Tulk v. Moxhay ----
Smith & Snipes Hall Farm Ltd.
v. River Douglas Catchment
Board
“…has done or abstained from
doing…”
Past Consideration
(Past act at request good
consideration)
Lampleigh v. Brathwait
(Position in India)
[Past service at request]
Upton-on-Severn RDC v.
Powell
Courts can infer an implied promise with the help of the
principle laid down in this case
[ Stewart v. Casey
Sindha Shri Ganpatsinghji v.
Abraham
----
[Past & Executed
Consideration]
Union of India v. Chaman Lal
Loona
----
“such act,
abstinence or
promise is called
consideration”
Consideration must be of
some value
White v. Bluett ----
Performance of
existing duties
Performance of
contractual obligations
(Pre-existing contract
with 3rd party)
Shadwell v. Shadwell
Scotson v. Pegg
Firm Gopal Co. Ltd. v. Firm
Hazarilal Co.
Consideration & Motive Thomas v. Thomas
Exceptions to
consideration
Natural Love & Affection Rajlukhy Dabee v. Bhootnath
Mookerjee
Calcutta
HC
Defendant promised to pay his wife a fixed sum of
money every month for her separate residence and
maintenance. The agreement was contained in a
registered document which mentioned certain quarrels
and disagreements between the two. Held that it was
not covered by exception.
Bhiwa v. Shivaram Bombay
HC
A sued B, his brother, for a share in certain lands. But
the suit was dismissed as B solemnly affirmed that the
property was not ancestral; B then agreed by registered
writing to give A one-half of the same property. The
present suit was brought to obtain that share.
Ram Charan Das v. Girja
Nandini Devi
Maturi Pullaiah v. Maturi
Narasimham
Past voluntary service Sindha Shri Ganpatsinghji v.
Abraham
Free Consent
Coercion Techniques of causing
coercion
(Acts forbidden by IPC)
Askari Mirza v. Bibi Jai Kishori
Chikham Amiraju v. Chikham
Seshamma
Madras HC By threat of suicide, a Hindu induced his wife and son to
execute a release in favour of his brother in respect of
certain properties which they claimed as their own. Held
that threat of suicide amounted to coercion.
Andhra Sugar Mills v. State of
AP
SC
Undue
Influence
Relations which involve
domination
Williams v. Bayley
(Fiduciary relation) Moody v. Cox
Presumption of Undue
Influence
Lancashire Loans v. Black
(Unconscionable
bargains, inequality of
bargaining power or
economic duress)
Wajid Khan v. Raja Ewaz Ali
Khan
[position of dominance
necessary]
Ragunath Prasad Sahu v.
Sarju Prasad Sahu
[relationship of blood,
marriage or adoption not
sine qua non]
Subhas Chandra Das Mushib
v. Ganga Prasad Das Mushib
SC Some agricultural property was gifted by a person to his
only grandson, through one of his two sons to their total
exclusion. Although the donor was of great age, he was
taking active interest in his property. 8 years later, 4
years after his death, validity of contract was
questioned. Held that undue influence was not present
[inequality of bargaining
power]
Lloyds Bank v. Bundy
[economic duress by
forcing renegotiation of
terms]
Universe Tankships Inc. v.
International Transport
Workers’ Federation
Pao On v. Lao Yiu Long
D. & C. Builders v. Rees
[Exploitation of needy] National Westminster Bank
P&C v. Morgan
Contracts with
‘pardanashin’ women
Kalibakhsh Singh v. Ram
Gopal Singh
Moonshe Buzloor Raheem v.
Shumsoonisa Begum
Misrepresentation Inducing mistake about
subject matter
(Suppression of Vital
Facts)
R v. Kylsant The prospectus of a company stated that the company
had regularly paid dividends, creating the false
impression that the company was having profits, while
in reality dividends were being paid from wartime
profits, and currently company was running into losses.
Held to be misrepresentation.
(Expression of opinion) Smith v. Land & House
Property Corpn
Bisset v. Wilkinson
(Representation of state
of mind)
Edgington v. Fitzmaurice
(Change of
circumstances)
With v. O’Flanagan
(Means of discovering
truth)
Redgrave v. Hurt
Fraud Definition Derry v. Peek Company’s prospectus claimed that they were allowed
to run steam or mechanical trams. Authority for steam
trams was subject to approval of Board of Trade, no
mention made of this. Permission was refused by Board
and company wound up. Shareholder sued for fraud,
failed.
Assertion of facts
without belief in truth
“
When silence is fraud
(Duty to speak)
Haji Ahmad Yarkhan v. Abdul
Gani Khan
Nocton v. Lord Ashburton
Limits of Rescission
(Loss of right of
rescission)
[By affirmation]
Long v. Lloyd
Mode of Rescission Car & Universal Finance Co.
v. Caldwell
Official Receiver v. Jugal
Kishore Lacchi Ram Jaina
Restitution Erlangar v. New Sombrero
Phosphate Co.
Mistake
Definition Smith v. Hughes
Raffles v. Wichelhaus
Mistake as to
Identity
Assumption of false
identity
Jaggan Nath v. Secy of State
for India
Mistake caused by
takeover of business
Boulton v. Jones
Mistake of identity
caused by fraud
Hardman v. Booth
James Cundy v. Thomas
Lindsay
Distinction between
identity and attributes
King’s Norton Metal Co. Ltd.
v. Edridge, Merrett & Co.
Phillips v. Brooks Ltd.
Ingram v. Little
Lewis v. Averay
Where identity holds
special importance
Said v. Butt
Sowler v. Butt
Mistake as to
subject-matter
Non-existent subject
matter
Gustavus Couturier v. Robert
Hastie
Mistake as to title or
rights
Cooper v. Phibbs
Solle v. Buthcher
Bell v. Lever Bros Ltd.
Great Peace Shipping Ltd. v.
Tsavliris Salvage
(International) Ltd.
Different subject-matters
in mind
Raffles v. Wichelhaus (given)
Mistake as to substance
of subject-matter
Seikh Bros Ltd. v. Ochsner
(Mistake as to quality of
subject-matter as
distinguished from
substance)
Smith v. Hughes
Misapprehension as to
parties’ respective rights
Magee v. Pennine Insurance
Co. Ltd.
Kalyanpur Lime Works Ltd. v.
State of Bihar
Mistake as to nature
of promise
Where the contract fails
to express parties’ intention
Hartog v. Colin & Shields Court of
Appeal
The defendants contracted to sell 3000 Argentine hare
skins, but by mistake offered the goods per pound
instead of per piece. Price per pound was much more,
buyers sued as the norm was to sell at per piece,
succeeded.
New India Rubber Works (P)
Ltd. v. Oriental Fire &
General Insurance Co. Ltd.
Joselyne v. Nissen
Crane v. Hegeman Harris Co.
Inc.
Documents mistakenly
signed or non est factum
Foster v. Mackinnon
Gallie v. Lee House of
Lords
Mrs. G, a widow (78), wanted to help her nephew and
wanted executed a gift deed transferring property to
him. Nephew brought with him Lee, who made her sign
a document saying that it was a gift deed. Due to the
inability of the widow to read, she did not realize that it
was, in fact, a sale deed in favour of Lee. Lee mortgaged
the house. Contract was held valid as it was voidable till
its completion, an option that was not exercised by the
victim of the breach of contract
Saunders v. Anglia Building
Society
Ningawwa v. Byrappa
Shiddappa Hireknrabar
SC Husband obtained the signature of his wife on a gift
deed without any misrepresentation. However he added
two more plots to the contract. Agreement was
voidable.
Limitations Mistake of both parties Haji Abdul Rahman Allarakhia
v. Bombay & Persia Steam
Navigation Co.
Thomas Bates & Son Ltd. v.
Wyndham (Lingerie) Ltd.
Couturier v. Hastie
Strikland v. Turner
Pritchard v. Merchants and
Tradesmen Mutual Life
Assurance Society
Galloway v. Galloway
Bell v. Lever Bros Ltd.
Solle v. Butcher
McRae v. Commonwealth
Disposals Commission
Leaf v. International Gallories
Frederick E. Rose (London)
Ltd. v. William H. Pim Junior
& Co. Ltd.
Capacity to Contract
Minor Nature of minor’s
agreement
Mohori Bibee v. Dhurmodas
Ghose
Privy
Council
The plaintiff, a minor, mortgaged his houses in favour of
the defendant, a money lender, to secure a loan of Rs.
20,000. A part of this amount was advanced to him.
After this, the money lender’s attorney realized that
plaintiff is a minor. Plaintiff contended that contract
should be cancelled as he is underage, succeeded (S. 31,
SRA, 1963). Money lender asked for restitution under S.
33, SRA, 1963, but failed, as he knew of the plaintiff’s
infancy.
Mir Sarwarjan v. Fakhruddin
Mahomed Chowdhury
Sirkakulam Subramanyam v.
Kurra Subba Rao
Effects of minor’s
agreement
(No liability in contract or
in tort arising out of
contract)
Johnson v. Pye
Fawcett v. Smethurst
Leslie (R) Ltd. v. Sheill
Burnard v. Haggis
Jennings v. Rundall
(Doctrine of resititution) Leslie (R) Ltd. v. Sheill
[Minor seeking relief,
compellable to restore]
Mohori Bibee v. Dhurmodas
Ghose
(given)
Khan Gul v. Lakha Singh Lahore HC The defendant, while still a minor, by fraudulently
concealing his age, contracted to sell a plot of land to
the plaintiff. He received the consideration of Rs. 17,500
and then refused to perform his part of the bargain.
Plaintiff prayed for recovery of sum and succeeded
under S.31 & S.33, SRA, 1963
Ajudhia Prasad v. Chandan
Lal
Beneficial Contracts Raghava Chariar v. Srinivasa
Raj Rani v. Prem Adib
Valentini v. Canali
(Contracts of
apprenticeship)
Roberts v. Gray
(Trade contracts not
included in beneficial
contracts)
Cowern v. Nield
Liability for necessaries Chapple v. Cooper
Peters v. Fleming
Nash v. Inman
Persons of unsound
mind
Position in India Inder Singh v.
Parmeshwardhari Singh
Asfaq Qureshi v. Ayesha
Qureshi
Family
Court
A marriage between a Hindu girl and Muslim man was
declared void as the girl was intoxicated at the time of
