Contract Act, 1872 Case Studies

8/19/2019 Contract Act, 1872 Case Studies

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Reference https://tanaysaraf.wordpress.com/2009/07/18/contract-i-case-laws/

Contract I

alfo!r "s. alfo!r # Intention to Create $e%al Relationship

&acts:

' h!s(and promised to pay his wife a ho!se hold allowance of ) *0 e"ery month.

$ater the parties separated and the h!s(and failed to pay the promised amo!nt.

+he wife s!ed for the promised allowance

,eld:

+he wife will not s!cceed as a%reements s!ch as this did not create any le%al

o(li%ations "is a "is le%al relations.

Rose &ran Co. Crompton ros. $td. # Intention to Create $e%al Relationship


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&acts:

+here was an a%reement (etween these two companies (y means of which rose and

fran co. was appointed as the a%ent of Crompton ros. $td. ne cla!se in the

a%reement stated that the a%reement is not entered into as le%al and formal and

shall not (e s!(ect to le%al !risdiction in the law co!rts.

,eld:

+here was no (indin% and le%ally enforcea(le contract (etween the 2 companies as

there was no intention to create le%al relationship.

3pton R!ral 4istrict Co!ncil 5owell # Implied Contract

&acts:


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' 6re (roe o!t in 5owells farm. ,e called !pon the 6re (ri%ade to p!t o!t the 6re

which the latter did. ow 5owells farm did not come !nder 6re ser"ice one

altho!%h he (elie"ed it to (e so.

,eld:

,e was lia(le to pay for the ser"ice rendered as the ser"ices were rendered (y

3pton &ire ri%ade on an implied promise to pay.

illie "s. $ondon passen%er transport (oard # Implied '%reement

hen a transport company r!ns a (!s there is an implied o;er (y the transport

company to carry passen%ers for certain fare. +he acceptance of the o;er is

complete as soon as a passen%er (oards a (!s # that is< implied acceptance.

o!lton s =ones >18?7@ # ;er made to a partic!lar person


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&acts :

=ones !sed to ha"e (!siness dealin%s with rocle ,!rst. ,e sent an order >o;er@ to

rocle ,!rst for the p!rchase of certain %oods. y the time the order reached

rocle ,!rst< he had sold his (!siness to o!lton. o!lton recei"in% the order sent

all the %oods to =ones as per the order witho!t informin% =ones of the chan%in% of

the hands of the (!siness. hen =ones learnt that the %oods were not s!pplied (y

rocle ,!rst< he ref!sed to pay for the %oods. ,is contention was that he had

ne"er placed an order to o!lton< the o;er (ein% made to rocle ,!rst< and

therefore had no intention to mae a contract with o!lton.

,eld:

=ones was not lia(le to pay > # ection AB will also apply @

Carlill Car(olic moe all Co. >189*@ # eneral o;er

&acts:


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+he defendant company ad"ertised in se"eral newspapers that a reward of ) 100

wo!ld (e paid to any person who contracted inD!ena< cold< or any other disease

associated with cold e"en after !sin% the smoe (alls of the company # a pre"enti"e

remedy< * times a day< for 2 wees in accordance with the printed directions. +hey

also anno!nced that a s!m of ) 1000 had (een deposited with the 'lliance an asa proof of their sincerity.

+he plainti;< Ers. Carlill had seen the ad"ertisement< !sed the smoe (alls

accordin% to the printed directions and for a period as speci6ed< (!t still contracted

inD!ena. he s!ed the defendin% company to claim the reward of ) 100 as

ad"ertised (y the company.

+he defendants ar%!ed inter alia that it was impossi(le to contract with the whole

world and that she sho!ld ha"e noti6ed / comm!nicated to them of her acceptance

of the o;er.

,eld:

Reectin% the ar%!ment the Co!rt held that the ad"ertisement constit!ted the o;er

to the whole world at lar%e > # %eneral o;er@ which was accepted (y the plainti; (y

cond!ct. > # (y !sin% smoe (alls@ . +herefore she was !sti6ed to the reward of )100.


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+he Co!rt o(ser"ed that (y performin% the reF!ired act and complyin% with the

necessary conditions attached to the o;er of this ind > # %eneral o;er@ G the

o;eree has s!Hciently accepted the o;er and there is no need for any formal

noti6cation / comm!nication of her acceptance to the o;er.

ote # +his is the principle of n%lish $aw of contract and endorsed (y ection 8 of

IC'. +he e;ect of the decision in Carlills case is that performance of stip!lated

condition of the proposal is not only acceptance of the proposal (!t it is also

s!Hcient comm!nication of the acceptance.

$alman h!la "s. a!ri 4!tt >191*@

&acts :

In this case< >defendant@ sent his ser"ant l >plainti;@ in search of his missin%

nephew. afterwards anno!nced a reward for information concernin% the missin%

(oy. It traced the (oy in i%norance of any s!ch anno!ncement. s!(seF!ently when

he came to now of this reward< he claimed it.

,eld :


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It was held that since the plainti; was i%norant of the o;er of reward< his 'ct of

(rin%in% the lost (oy didnt amo!nt to the acceptance of o;er and therefore he was

not entitled to claim the reward.

&itch "s. meda(ar

,eld :

In this case the 'merican Co!rt has held that a reward cannot (e claimed (y one

who didnt now that it had (een o;ered.

,ar(haan $al "s. ,archaran $al

&acts :


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In this case a yo!n% (oy had r!n away from his fathers ho!se. +he father had

o;ered a reward of Rs. ?? to anyone who 6nds the (oy and (rin%s him home. +he

plainti; who was aware of the o;er of reward fo!nd the (oy on a railway station

and informed the father. +he plainti; claimed the reward. the father contended that

since the plainti; had not (ro!%ht the (oyJ he is not entitled to the reward.

ritish !d%e means the> C.= of the pri"y co!ncil @ held that altho!%h there is no

strict compliance of the condition of the reward< the plainti; was howe"er aware of

the reward< the plainti; was howe"er aware of the reward an there is s!(stantial

performance. +he plainti; was held entitled to s!cceed.

Kinformation was "ery m!ch tr!st worthy (ased on which father.L

,ar"y "s. &acey

&acts :

+he defendants were the owners of the plot of land named M !mper ,all 5en N. +he plainti; (ein% interested in p!rchasin% the same sent a tele%ram to the

defendants Nwill yo! sell !s !mper ,all 5en O +ele%raph lowest cash price N.>1st

tele%ram@


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+he defendants replied also (y a tele%ram M lowest price for ,5< ) 900 ased (y

yo!M. >2nd tele%ram@

+he plainti; immediately sent another tele%ram to defendants # Nwe a%ree to (!y

,5 for ) 900 as ased (y yo!M. >*rd tele%ram@

+he defendants s!(seF!ently ref!sed to sell the plot of land at that price. +heplainti;s contained that the tele%ram from the defendants F!otin% lowest price was

an o;er and the same has (een accepted (y the plainti; and th!s< the contract is

complete.

+he defendants contended that F!otin% the price was not an o;er which co!ld (e

accepted.

,eld:

+he =!dicial Committee of 5ri"y Co!ncil held that the ePchan%e of the a(o"e

tele%rams ha"e not res!lted into a contract. It was o(ser"ed that the 1st tele%ram

had ased two F!estions re%ardin% willin%ness to sell and the other re%ardin% the

lowest price. In reply only the lowest price was F!oted and this was not an o;er (!t

a mere s!pply of information as desired (y the other party.


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+he third tele%ram from the plainti;s sayin% M he a%rees to (!yM was only an o;er

and not the acceptance of an o;er. ince this o;er of the plainti; had not (een

accepted< there was no (indin% contract (etween the parties.

&ischer "s. ell >19A1@ # 4isplay of %oods

&acts:

+he defendant # ell< ePhi(ited in a show window in his shop< a nife with a maredprice. +he F!estion arose whether the ePhi(ition of that nife in the show window

ePec!ted an o;er for sale.

,eld:

$ord 5arer< the chief !stice< stated that the display of an article in a shop window

is merely an in"itation to treat. It is in sense an o;er for sale< the acceptance of

which constit!tes a contract. It is F!ite impossi(le to say that an ePhi(ition of %oods

in a shop window in itself an o;er for sale.


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5harmace!tical ociety of reat ritain "s. oots Cast Chemist $td. >19?2@ #

4isplay of oods

,eld :

+he display of articles on shel"es in a self-ser"ice shop / store merely amo!nts to

in"itation to treat.

Rams%ate ictoria ,otel Company "s. Eontefeire >18AA@ # if time not stip!lated

&acts :

n 8th =!ne< E o;ered to tae shares in R company. ,e recei"ed a letter ofallotment on 2*rd o"em(er. E ref!sed to tae the shares.

,eld:


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E was entitled to ref!se as the o;er had lost (y the delay of acceptance since the

period of ? months was not a reasona(le one.

,yde "s. rench >18B0@ # Co!nter o;er

&acts :

< the defendant< had o;ered to sell his farm to ,< the plainti;< for ) 1000. !pon

the defendants ref!sal to sell the farm< the plainti; (ro!%ht an action for speci6c

performance.

,eld:

+he Co!rt held that an o;er to (!y for ) 9?0 was not an acceptance of the o;er to

(!y (eca!se the o;er to sale was for ) 1000. it was a co!nter o;er and a co!nter

o;er to a proposal amo!nts to its reection. 's s!ch no contract had come into

ePistence (etween the parties.


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eale "s. Eerret # Co!nter o;er

ote # this case law also hi%hli%hts that the o;eree m!st not de"iate from the terms

and conditions of the ori%inal o;er as laid down (y the o;erer.

&acts :

E< the defendant o;ered to sell land to the plainti; at ) 280. accepted and

enclosed Q80 with a promise to pay the (alance (y monthly installments of ) ?0

each.

,eld:

+here was no contract (etween E and as the acceptance was not F!ali6ed

> !nconditional@. +h!s< an o;er once reected is dead and cannot (e re"i"ed (y its

s!(seF!ent acceptance.


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ro%den "s. Eetropolitan Railway Co. >1877@ # 'cceptance comm!nication

necessary

&acts :

' draft a%reement relatin% to s!pply of coal was sent to the mana%er of a railway

company "i. Eetropolitan Railway company. &or his acceptance the mana%er wrote

the words< appro"ed and p!t the draft in his drawer of his ta(le intendin% to sent it

to the companies solicitors for a formal contract to (e drawn !p. +hro!%h o"ersi%ht

the contract remained in the drawer.

,eld:

+here was no contract (eca!se there was no comm!nication of acceptance.

&eltho!se "s. indley >18A2@ # 'cceptance comm!nication necessary


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&acts :

& >!ncle@ o;ered to (!y his nephews horse for ) *0 sayin% Nif I hear no more a(o!t

it I shall consider the horse mine at ) *0.M >o;er m!st not thr!st the (!rden of

acceptance.@ the nephew did not write / reply to & at all. ,e told his a!ctioneer< toeep the partic!lar horse o!t of sale of his farm stoc as he intended to reser"e it

for his !ncle< &. the a!ctioneer< inad"ertently< sold the horse. & s!ed him< < for

con"ersion of his property.

,eld:

& has no ri%ht of action a%ainst the a!ctioneer since the horse was not sold to him.

+his o;er of ) *0 ha"in% not (een properly accepted< since the nephew had not

properly comm!nicated the acceptance to &.

+he Co!rt o(ser"ed that it was clear that the nephew had in his mind the intention

to sell his horse to his !ncle. !t an !nconditional assent to accept !naccompanied

(y any ePternal inclination will not s!Hce. ormally the person to whom the

proposal is sent need not reply and the %eneral r!le # acceptance of o;er # will not

(e implied< intended from the mere silence on the part of the o;eree.


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'dams "s. Eindsell >1818@ # 'cceptance (y non-instantaneo!s methods

ote # this was the 6rst case in which the r!le of acceptance (y non # instantaneo!s

methods was propa%ated.

,o!sehold &ire Carria%e 'ccident Ins!rance Co. $td "s. rant

ote # one of the more o("io!s conseF!ence of the postal acceptance r!le is that

the o;erer m!st (ear the price of the letter of acceptance (ein% delayed or lost. +his (ased on the fact that postin% the acceptance maes it in"aria(ly o!t of the

o;erees control.

,eld:

In ho!sehold 6re case< the Co!rt of appeal held that the defendant< rant< was the

o;erer who had applied for shares in the company and to whom a letter of

allotment > acceptance letter< hence the company is the acceptor@ had (een posted

(!t which had not reached him was ne"ertheless< lia(le as a share holder. +he le%al

defects of the Co!rts decision is that acceptance is complete as a%ainst the o;erer


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that is< the o;erer will (e (o!nd as soon as the letter is posted. ' (indin% contract

taes place (etween the parties e"en if the letter of acceptance is delayed d!e to

postal strie or loss in transit.

here howe"er< the delay or loss is d!e to the fa!lt of the acceptor< as in the case

of an acceptance< which is incorrectly addressed< or ins!Hciently stamped. +he r!le

is that it will tae e;ect of and when it is recei"ed (y the o;erer< pro"ided the o;er

is still enforced (y them or is recei"ed within a reasona(le time.

4!r%a 5rasad "s aldeo >1880@ # Consideration m!st (e %i"en at the desire of the

promisor.

&acts :

+he plainti;< (aldeo< at the desire and reF!est of the collector of the town ePpanded

money in the constr!c"tion of a maret in the town. !(seF!ently the defendants<

4!r%a 5rasad rs. cc!pied the shops in the maret. ince the plaint; had spent

money for the constr!ctoin of the maret< the defendants in consideratoin thereof<

promised to pay to plainti;< a commission on the articles ssold thro!h% their

>defendants@ shops in that maret. 4efendants howe"er< failed to pay the promised

commission< the plainti; (ro!%ht an action to reco"er the promised commission.

,eld:


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+he plainti; will not s!cceed since the a%reement was "oid for the want of

consideration.

It was o(ser"ed in this case that the consideration of the promisre to pay the

commission was the constr!ction of maret (y the plainti;. !t the ePpenses

inc!!rred (y the plainti; in constr!ction of the maret was not there in the desire of

the defendants >promisors@ (!t at the instance/ reF!est of the *rd party ie<

contractor of the town.

It was therefore< held that since the consideraion for the constr!ction of mareet did

not mo"e at the desire of the defendants.< that is< the promisor > 4 rs.@. It did

not constit!te a "alid / %ood consideration. ,ence the defendants were not lia(le in

respect of the promise made (y them< followin% the 6rst le%al r!le.

edarnath haattacharya "s a!ri Eohammed. >1887< Cal ,C @

&acts :


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+he town planners of howrah


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Chinnaya "s ramayya >1882 Eadr ,C@

&acts :

'< an old lady< %ranted / %fted an estate to her da!%hter the defendant< with the

direction / condition that the da!%hter sho!ld pay an ann!ity > ann!al payment @ of

Rs A?* to 's (rother< the plainti;.

n the same day the defendant< da!%hter >promisor@ < made a promise "is a "is an

a%reement with her !ncle that sshe wo!ld pay the ann!ity as directed (y her

mother< the old lady.

$ater the defendant ref!sed to pay on the %ro!nd that her !ncle >promisee<

plainti;@ has not %i"en any consideration. he contended that her !ncle was

stran%er to this consideration and hence he cannot claim the money as a matter of

ri%ht.

,eld:


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+he Eadras ,C held that in this a%reement (etween the defendant and plainti; the

consideration has (een f!rnished on (ehalf of the plainti; >!ncle @ (y his own sister

>defendants mother@. 'ltho!%h the plainti; was stran%er to the consideration (!t

since he was a party to the contract he co!ld enforce the promise of the promisor<

since !nder Indian law< consideration may (e %i"en (y the promisee or anyone on

his (ehalf # "ide ection 2 >d@ of IC'.

+h!s< consideration f!rnished (y the old lady constit!tes s!Hcient consideration for

the plainti; to s!e the defendant on her promise. ,eld< the (rother / !ncle was

entitled to a decree for payment of the

ann!al s!m of money.

+homas "s +homas >18B2@

+weddle "s 'tinson >18A1@ Kee ottom L

,eld:

It was held in these cases that the !nder the n%lish law< that if the consideration is

f!rnished (y any person other than the promisee himself< then the promisee is

rele%ated to the position and stat!s of a stran%er to the consideration and

therefore< he cannot s!e for promise.


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,ar"ey "s i((ons :

&acts :

In this case a ser"ant was promised ) ?0 in consideration of promise that he wo!ld

release a de(t to his master.

,eld:

+his is le%ally impossi(le.

Collins "s odefroy >18*1@ #

&acts :


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+he promisee< plainti;< recei"ed s!(poena >s!mmon from the Co!rt@ to appear at a

trial as a witness on (ehalf of the defendant >promisor@. +he defendant promised

him a s!m of money for the tro!(les which was to (e taen (y him in appearin%that case. ' person who recei"es a s!(poena is (o!nd to attend and %i"e e"idence

(efore the Co!rt. $ater the defendant ref!sed to pay the promised amo!nt. +he

plainti; s!ed him to reco"er the promised amo!nt.

,eld :

It was held that there was no consideration for promise. +he plainti; (ein% already a

le%al d!ty to attend.

!t where the !ndertain% is to do somethin% more than what the promisee is

le%ally (o!nd. +his may constit!te a %ood consideration for the promise of the

promisor.

las(roo ros. $td. s lamer%lan Co!nty Co!ncil >192?@

&acts :


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lamer%lan Co!nty Co!ncil< a police a!thority< s!ed for a s!mm of ) 2200 promised

to it (y las(roo rothers $td. a colliery company. +he police a!thority had

pro"ided a stron%er %!ard d!rin% a strie< as reF!ired (y the company than was in

its opinion< necessary.

,eld :

It was held that pro"idin% stron%er %!ard then what was act!ally necessary was a

%ood consideration and the defendants were lia(le to pay for the same.

+weddle s 'tinson

ote # +he r!le that only parties to the contract can s!e each other was reco%nised

for the 6rst time in 18A1 in this case.

&acts:

In this case< the plainti;< ' < married a %irl . 'fter this marria%e a contract in

writin% was made (etween the fathers of the married co!ple that each sho!ld mae


25/28

a payment of a certain s!m to ' who sho!ld ha"e the power to s!e the ePec!tors of

her father in laws estate for the promised money (y the father in law.

,eld:

It was held that the h!s(and co!ld not s!e her since

,e was not a party to the contract >stran%er to a contract@< as also

o consideration has mo"ed from him to his father in law >stran%er to the

consideration@


26/28

!arantee # ailment

3'R'+

Eadho hah "s ita Ram

ote #

+he lia(ility of the s!rety is said to (e M "icario!s M with that of the 5rincipal 4e(tor.

icario!s lia(ility means that the lia(ility (etween two parties is oined and se"eral.

+he 5rinciple of icario!s $ia(ility in"ol"ed in a contract of %!arantee was

reco%nised for the 6rst time in this case.

R . $ila"ati "s an of aroda

ote #


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+he loss of sec!rities (y the creditor res!lts in the dischar%e of the s!rety # "ide

ection 1B1. If howe"er the pled%ed sec!rities are lost witho!t any fa!lt of the

creditor< for instance< theft< 6re< etc. the s!rety is not dischar%ed there(y. +his wasseen in the a(o"e mentioned case.

SS

'I$E+

Reed "s 4ean

&acts :

T' hired a motor from for a holiday on ri"er +hames. +he motor ca!%ht 6re and '

was !na(le to ePtin%!ish it as the 6re 6%htin% eF!ipment was o!t of order. 's s!chhe was in!red and s!;ered loss.


28/28

,eld :

was lia(le as it was a case of non %rat!ito!s (ailment.

Eisa "s C!rrie

&acts :

' c!stomer had two separate acco!nts with a (an and he owes to the (an on of

the acco!nts. +he (an can liF!idate / realie the de(t d!e to it (y transferrin%

money there from. +he same pro"ision is eF!ally applica(le to India.

Contract Act, 1872 Case Studies

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