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Contract Law Cases: Analysis of Offer, Acceptance, and Consideration, Study notes of Law

Symbiosis InternationalLaw

A series of contract law cases that explore various aspects of contract formation, including offer, acceptance, consideration, and communication. The cases cover topics such as void and illegal contracts, domestic agreements, catalog and display of goods, self-service stores, and acceptance by overt act. Each case provides a factual scenario, issues, judgement, and decision/outcome, offering valuable insights into contract law principles.

Typology: Study notes

2021/2022

Uploaded on 02/24/2024

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CONTRACT CASES
1) Rajiv Amar Singh vs State of Rajasthan
VOID AND ILLEGAL
2) Sunil Chandra Mishra vs the state of Bihar
3) UN Automobiles Pvt ltd vs Bank of Baroda
4) Syed M.M Rizvi vs Subhash Singh
5) Investors Compensation scheme ltd. Vs
Promise, express and implied
6) R.D.C vs Powell
Communication when complete:
7) Lalman Shukla vs Gauri Dutt 1913
FACTS:
In this case, the defendant Gauri Dutt’s Nephew had absconded and was
nowhere to be found. After the defendant became aware of the same,
Dutt had sent all the servants in search of the missing nephew. The
plaintiff Lalman Shukla was one of the servants who had gone out in
search of the nephew. The plaintiff eventually found him and brought
him back.
When Lalman Shukla had left the house to leave for Haridwar from
Kanpur he was handed some money for his railway fare and other
expenses. As soon as Lalman Shukla had left the house, the defendant
announced a reward of Rs. 501 for whosoever found Dutt’s nephew.
Shukla had no idea that such an announcement was made. The plaintiff
found the missing nephew and brought him back to his home in Kanpur.
Six months after the said incident occurred, Dutt sacked the plaintiff.
After being removed from the job, the plaintiff claimed the money from
the defendant and the latter denied to pay the said remuneration. As a
result the plaintiff Lalman Shukla filed a case against Gauri Dutt, his
master, for not rewarding him as he was entitled to.
ISSUE:
Whether Lalman Shukla was entitled to get the reward from Gauri
Dutt for tracing the missing boy.
Whether there was a valid acceptance of the offer made by the
plaintiff.
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CONTRACT CASES

  1. Rajiv Amar Singh vs State of Rajasthan VOID AND ILLEGAL
  2. Sunil Chandra Mishra vs the state of Bihar
  3. UN Automobiles Pvt ltd vs Bank of Baroda
  4. Syed M.M Rizvi vs Subhash Singh
  5. Investors Compensation scheme ltd. Vs Promise, express and implied
  6. R.D.C vs Powell Communication when complete:
  7. Lalman Shukla vs Gauri Dutt 1913 FACTS : In this case, the defendant Gauri Dutt’s Nephew had absconded and was nowhere to be found. After the defendant became aware of the same, Dutt had sent all the servants in search of the missing nephew. The plaintiff Lalman Shukla was one of the servants who had gone out in search of the nephew. The plaintiff eventually found him and brought him back. When Lalman Shukla had left the house to leave for Haridwar from Kanpur he was handed some money for his railway fare and other expenses. As soon as Lalman Shukla had left the house, the defendant announced a reward of Rs. 501 for whosoever found Dutt’s nephew. Shukla had no idea that such an announcement was made. The plaintiff found the missing nephew and brought him back to his home in Kanpur. Six months after the said incident occurred, Dutt sacked the plaintiff. After being removed from the job, the plaintiff claimed the money from the defendant and the latter denied to pay the said remuneration. As a result the plaintiff Lalman Shukla filed a case against Gauri Dutt, his master, for not rewarding him as he was entitled to. ISSUE :  Whether Lalman Shukla was entitled to get the reward from Gauri Dutt for tracing the missing boy.  Whether there was a valid acceptance of the offer made by the plaintiff.

 Whether there exists a contract or whether the situation amounts to a contract between the two. JUDGEMENT : After analyzing all the facts of the case, the honourable high court held that for creating or entering into a valid contract there has to be knowledge and assent to the offeree made by the proposer. Here, the plaintiff did not know the reward before performing his act. He only came to know about it later, in which case there was no possibility of accepting the offer. Hence, there was no contract. Therefore, Lalman Shukla was not entitled to get or claim the reward.

  1. R.V Clarke Facts The defendant was apprehended for shoplifting after she placed certain items (including a jar of coffee, a jar of mincemeat and butter) into her handbag. She was charged with theft, contrary to Theft Act 1968 c.60, s.1 and was convicted. The Defendant asserted that she had no recollection of doing so and that she must have done so in a bout of absent mindedness and hence, that she had no mens rea for the offence. Medical evidence was adduced to show that she was diabetic and in addition, both her GP and a psychiatrist testified that she was suffering from depression, which was associated (or could be associated) with such bouts of absent mindedness. The trial judge ruled that the appropriate defence was one of insanity. Issues The issue in this case was whether the defence of insanity was appropriate in the case of someone suffering from depression and experiencing a temporary instance of absent mindedness. Decision / Outcome The court held that the defendant had not articulated an insanity defence (rather was merely seeking to deny mens rea ) and that in any event a case of temporary absent mindedness is very far removed from the standard necessary to succeed in an insanity defence. In order for a defence of insanity to succeed, the defect of reason of the defendant must be substantial. Further, the defendant in this case had simply momentarily lapsed in her ability to use her power to reason, whereas insanity is related to a more long term lack of ability to use one’s reasoning.

Facts The claimant was a paying boarder at the defendant’s home. The claimant, the defendant and the defendant’s granddaughter had a lottery arrangement. They would submit a weekly coupon to a fashion competition. The submission was in the defendant’s name, but on the understanding that all three would share any winnings. One of their coupons won, but the defendant would not give the claimant her third of the prize. The claimant argued that there was a contract between them obliging the defendant to pay her a third of any prize money. The defendant responded that there was no contract, because the parties did not intend to be legally bound. Issues The question arose as to whether there was an intention to create legal relations in the informal arrangement between the Parties so as to constitute a legal agreement to distribute the shares. Decision/Outcome The Court held that, irrespective of the familial relations and the informal context, there was mutuality in the arrangement between the Parties, by which they agreed to the manner of the submission of the forecast in Ms. Pays name on a weekly basis and that, if there were a success, all three persons would share the prize money equally. Despite the domestic context, the filling out of the coupon by Ms. Simpkins was not a voluntary service to Ms. Pays but rather pursuant to an agreement by which each Party had shares in the result, thus showing an intention to create legal relations. The Court held that the mutual arrangement, no matter how informal, constituted a legally-binding agreement to divide the shares in thirds. GENERAL OFFER

  1. Weeks v Tybald
  2. Carlill v Carbolic Smokeball Company Facts The defendant, the Carbolic Smoke Ball Company, placed an advertisement in a newspaper for their products, stating that any person who purchased and used their product but still contracted influenza despite properly following the instructions would be entitled to a £100 reward. The advert further stated that the company had demonstrated its sincerity by placing £1000 in a bank

account to act as the reward. The claimant, Mrs Carlill, thus purchased some smoke balls and, despite proper use, contracted influenza and attempted to claim the £100 reward from the defendants. The defendants contended that they could not be bound by the advert as it was an invitation to treat rather than an offer on the grounds that the advert was: mere ‘puff’ and lacking true intent; that an offer could not be made ‘to the world’; the claimant had not technically provided acceptance; the wording of the advert was insufficiently precise; and, that there was no consideration, as necessary for the creation of a binding contract in law. Issue Whether the advert in question constituted an offer or an invitation to treat. Held The Court of Appeal found for the claimant, determining that the advert amounted to the offer for a unilateral contract by the defendants. In completing the conditions stipulated by the advert, Mrs Carlill provided acceptance. The Court further found that: the advert’s own claim to sincerity negated the company’s assertion of lacking intent; an offer could indeed be made to the world; wording need only be reasonably clear to imply terms rather than entirely clear; and consideration was identifiable in the use of the balls.

  1. Harbhajan Lal v Harcharan lal Facts : a young boy of 14 or 15 years old ran from his father’s home. The father of the boy was the defendant in this case. He issued a pamphlet, wherein he stated “Anybody who finds my son and brings him home, I will give him Rs 500 as a reward”. Plaintiff Har Bhajan Lal discovered him at Bareilly Junction railway station from wherein he took the boy to Dharamshala police station and informed the defendant that he had found his son through telegram. But at the time of giving the reward, the father of the boy claimed that he did not receive any acceptance so isn’t entitled to get any reward of the offer. ISSUE: Judgment: The Court held that the pamphlet was an offer open to the whole world and capable of acceptance by any person who fulfilled the condition.

system of self-service. They objected, claiming that S.18 (1) of the Pharmacy and Poisons Act mandated pharmacists while on the sale of the medicine. The plaintiff alleged that the displaying of goods was an offer and a customer, upon choosing a drug, had accepted this offer. As there is a lack of supervision by the chemist, the society said it violated S.18 (1) of the act and they brought the matter to the court. The trial court’s decision was in favor of the defendant, so the society appealed to the higher court. ISSUES

  1. Is there acceptance of an offer at any stage in a self-service store?
  2. Is the p urchase of the drug compulsory when placed in their basket?
  3. Is the c hemist liable for drugs without the pharmacist’s supervision? DECISION: All three judges unanimously rejected the society’s appeal and upheld the decision of the trial Court. Judges gave the reasons: 1) The goods displayed in the medical store were an invitation to offer, and not an offer. The customers make the offer when they take the medicine to the cashier. 2) The cashier has to make the acceptance and is under the authority of the shopkeeper. Hence the contract is not made until the cashier accepts to sell. ACCEPTANCE BY OVERT ACT
  4. Brogden v metropolitan railway company Facts The complainants, Brogden, were suppliers of coal to the defendant, Metropolitan Railway. They completed business dealings regarding the coal frequently for a number of years, on an informal basis. There was no written contract between the complainant and the defendant. However, the parties decided that it would be best for a formal contract to be written for their future business dealings. The Metropolitan Railway made a draft contract and sent this to Brogden to review. The complainant made some minor amendments to this draft and filled in some blanks that were left. He sent this amended document back to the defendant. Metropolitan Railway filed this document, but they never communicated their acceptance of this amended contract to the complainants. During this time, business deals continued and Brogden continued to supply coal to the Metropolitan Railway.

Issues When a dispute arose, the issue in this case was whether there was a contract between Brogden and the Metropolitan Railway and if the written agreement they had was valid. Decision/Outcome The House of Lords held that there was a valid contract between suppliers, Brogden and the Metropolitan Railway. The draft contract that was amended constituted a counter offer, which was accepted by the conduct of the parties. The prices agreed in the draft contract were paid and coal was delivered. Although there had been no communication of acceptance, performing the contract without any objections was enough.

  1. Felthouse v Bindley FACTS Paul Felthouse, a builder who used to live in London, wanted to buy a horse from his so-called nephew, John Felthouse. John sent a letter regarding the discussion about buying a horse. Responding to the letter uncle replied, “ If I hear no more about him, I consider the horse mine at £30.15s.” Due to engaging in some auction work which has to be held on February 25 th nephew forgot to reply to aforesaid letter and ask the man who was running the auction i.e. William Bindley not to sell the horse but by accidentally Bindley did. Paul Felthouse sued Bindley for using another property without the consent of the owner and showed that there was a valid contract existing between them but Bindley argued that there was not a valid contract that has been ever existed as nephew has never communicated his acceptance of the uncle’s offer. ISSUES FRAMED Whether there was a valid contract between plaintiff and Defendant i.e. Paul Felthouse and William Bindley, respectively. Whether silence or rejection to offer is considered being acceptance JUDGEMENT: The Court held that Paul Felthouse did not have the ownership right of the horse since from the beginning as there was no contract which was to be accepted. It’s the responsibility of the party who is accepting the offer to notify the offeror about the acceptance, mere silence can not be assumed

should be carried out by the offeree himself in his authorized capacity or by someone appointed by him. In the above case, it was observed that the said member of the board was not in the capacity to accept the offer nor was he appointed by the board to communicate the acceptance. So, the question of breach of contract never arises as the acceptance was never communicated by the school board acting in their authorized capacity. JUDGMENT: Therefore, the Court held that as the acceptance of application was not communicated by an authorized authority (i.e. school board), there was no contract between the plaintiff and the school board and, the concept of breach of contract did not arise. CONCLUSION: As observed from this case, for a contract to be valid it is essential that the acceptance must be communicated by an offeree acting in his authorized capacity or any other person duly authorized on his behalf. If any unauthorized person communicates the offer for acceptance then in such case the contract shall deem to be invalid. PROVISIONAL ACCEPTANCE:

  1. UOI v S Narain Singh INVITATION TO OFFER :
  2. bengal coal co. v. home wadia & co FACTS: In this case, the plaintiff supplied a certain quantity of coal to the Union Of India. The plaintiff claimed a sum of Rs. 10,901alleged to be due for the supply of coal together with a sum of Rs. 6540 by way of interest. The Union of India contested the claim denying the supply and stating that there was no valid contract between them and the plaintiff under Section 175 of the Government of India Act, 1935 read with Article 299 of the Constitution claiming that it is barred by limitation and there was no further notice under Section 80 of the Code of Civil Procedure.

ISSUE:

Whether the plaintiff entitled to the amount of unpaid amount from the defendant for the coal which he supplied? JUDGMENT: REVOCATION:

  1. henthorn v fraser FACTS: The complainant and the defendant had been negotiating the purchase price of houses. An original offer to buy the houses for £600 had been rejected. The defendant, Mr Fraser, handed the complainant, Mr Henthorn, a note that detailed an option to sell the property for £750, which would be valid for 14 days. While this offer was being considered, another buyer was interested and the defendant concluded a contract with them instead. The next day, the defendant then withdrew the offer to the complainant by post. This note did not reach Mr Henthorn until 5pm. In this time, Mr Henthorn had already responded to the offer by post with an unconditional acceptance to buy the houses for £750. But, this was not delivered to Mr Fraser until the office was closed and he did not read this acceptance until the morning. ISSUE: The issue in this case concerned the revocation of the offer. This was completed before the postal acceptance of the offer was received. It was for the court to decide whether the acceptance of the offer was valid or if the contract had been revoked successfully before the acceptance. RULE – Section 5 of ICA 1872 JUDGMENT: The Court of Appeal held in favour of the claimant. The defendant had failed to successfully withdraw the offer before the claimant accepted it. The claimant’s letter of acceptance took effect the moment it was posted (under the postal rule). However, the defendant’s withdrawal only took effect when the claimant received it. By then, it was too late.