case study on contract act with solution

• Popular Courses
• CCI Pro @20% OFF
• More classes
• More Courses

Contract Act, 1872 - Some important Case Studies (CPT/IPC)

CASE STUDIES

Balfour vs Balfour

Where parties to contract do not intend to create binding agreement, the agreement cannot be enforced.

The case of balfour vs balfour is a well known illustration of a domestic agreement. In this case a husband (Mr. Balfour) was working in ceylone. During the holidays, he and his wife (Mrs. Balfour) went to England to enjoy the leave. When Mr. Balfour was to return to ceylone, his wife was advised to remain in England, due to ill health. Mr. Balfour agreed to send a sum of $930 per month for probable expense of maintenance. For some time he sent the amount but afterwards differences arose between them which resulted in their separation and the allowance fell into arrears. Mrs. Balfour suit for recovery was dismissed by Lord Atkin on the ground that parties did not intend that it will be attended by legal consequences.

Carlill vs. Carbolic Smoke Ball Co

A General offer may be accepted by any person from among the public who has the knowledge of it. The performance of conditions of offer will amount to acceptance.

The case of Carllil vs. Carbolic Smoke Ball Co. is an illustration of a contract arising out of a general offer. As per the facts of the case, the company issued an advertisement in a newspaper about its product, “the smoke ball” a preventive medicine against influenza. In the advertisement, the company offered to pay a sum of $ 1,000 as compensation to anyone who contacted influenza or a cold after having used the smoke ball according to the printed directions. The advertisement also contained that a sum of $ 1,000 had been deposited with the Alliance bank to show the sincerity of the company. A lady, Mrs. Carllil relying on the advertisement purchased and used the smoke balls as per directions but still contacted influenza. She sued the company to claim the compensation of $ 1,000. Held, it was a general offer and Mrs. Carllil had accepted it by her act, by performing the conditions for acceptance. She was therefore entitled to get the claim.

Lalman Shukla vs. Gauri dutt

Offer must be communicated- in this case, Gauri Dutt sent his servant, Lalman to search his missing nephew. After L had left in search of the boy, G issued hand bills announcing a reward of Rs. 5000 to anyone who might find out the boy. L who was ignorant of such reward, he claimed the reward. Held, L was not entitled for reaward since he was ignorant of it i.e proposal.

Mohori Bibee vs. Dharmodas Ghose

In this case, a minor (dharmodas) mortgaged his house for Rs. 20,000 and received Rs. 10,500 from the mortgage. Subsequently, the mortgagor sued for setting aside the mortgage on the ground of his minority at the time of execution of mortgage deed. The privy council held that according to Section 11, a minor is incompetent to contract and therefore, minor’s agreement was absolutely void, not merely voidable. Hence, mortgage was cancelled. Moreover, the morgagee’s request for refund of Rs. 10,500 was also turned down on the ground that minor’s agreement was void from the beginning and therefore, mortgagee has not right of restitution.

Nash vs Inman

A, a minor, purchased 11 fancy waist coats and other clothes while he was already having sufficient clothes to wear. Held, the 11 waist coats and other clothes purchased were not necessaries and the price was irrecoverable.

Chinnaya vs. Ramaya

A, an old lady, by a deed of gift, granted certain property to her daughter ®. The terms of the deed stipulated that R will pay an annuity of Rs. 653 to A’s sister ©. On the same day, R entered into an agreement with C to pay her the sum directed by A. the stipulated sum was however not paid and C sued to recover it. R contended that no consideration was moved by C to him. Madras high court held, the consideration furnished by C’s sister was enough to enforce the agreement between C and R.

Rose and Frank Co vs. J R Compton

It is a glaring example of a business deal in which the parties did not intend to create legal relations. As per the facts of the case, an agreement was drawn between the American and English firms. The agreement mentioned that “this agreement is not entered into as a formal legal agreement and shall not be subject to legal jurisdiction of law courts.” The agreement was terminated by one of the parties and other party brought an action for breach of contract. Held, the agreement was not a binding contract as there was no intention to create legal relations.

Kedar Nath vs. Gorie Mohamed

In order to construct a town hall at howrah, the commissioner of Howrah Municipality started to obtain necessary fund by public subscription. A also promised to subscribed Rs. 1000 to fund by signing his name in the subscription book for the purpose. On the faith of the promised subscriptions, the secretary of the town hall construction committee engaged a contractor for construction of town hall and thus, incurred liability. A refused to pay his subscription. Held, engaging a contractor and starting the construction work on the faith of the promise to subscribe was sufficient consideration. Hence, A was liable to pay the amount to the extent of the liability incurred by the promise.

Damodar Murlidhar vs. Secretary of State of India

The government repaired a certain tank, which had irrigated lands belonging to the government itself and zamindars. The government did not undertake the repairs gratuitously for the zamindars. Zamindars enjoyed the benefit of the repaired tank. Held, zamindars were liable to contribute to the cost of repairs.

Dunlop Pneumatic Tyre Co Ltd vs. Selfridge & Co

The doctrine of privity of contract can be best illustrated by an English case Dunlop Pneumatic Tyre Co Ltd vs Selfridge & Co. As per the facts of the case, Dunlop & Co sold some tyre to one dew & co with an agreement that these tyres will not be sold below the list price. Dew & Co in turn sold some of the tyres to selfridge & co with an agreement that they will observe conditions as to the Price and They also promised that they will pay to the Dunlop & Co a sum of Rs. 500 for every tyre sold below the list price. Selfridge sold some tyres below the list price and the Dunlop & Co brought an action to recover the damages for the same. Held that Dunlop & Co cannot bring an action against Selfridge because there was not contract between the two.

The author can also be reached at [email protected]

Published by

CA Amit Talada (CA, NCFM (level IV)) Category Students   Report

Related Articles

Popular articles.

• Expert Analysis: How Recent Income Tax Cases Are Shaping the Future of Taxation
• TDS Amendments in Budget 2024
• Big Relief for Taxpayers: Budget 2024 Proposes New Section 128A to Waive GST Interest and Penalties
• Revised ITR: Deadlines, Common Errors, Procedures and Tips
• FAQs on GSTR-1A: Amendment to GSTR 1
• Latest Changes in Property Taxation
• GST on Hostels/Student Residences - Changes post July 2024
• Form 67 and Foreign Tax Credit: Balancing Compliance and Rights in Indian Tax Law

Trending Online Classes

LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)

5 days Certification Course on GST Practical Return Filing Process

Mastering Power BI for Financial Analysis - Data-Driven Finance

CCI Articles

You can also submit your article by sending to [email protected]

Browse by Category

• Corporate Law
• Info Technology
• Shares & Stock
• Professional Resource
• Union Budget
• Miscellaneous

Whatsapp Groups

Login at caclubindia, caclubindia.

India's largest network for finance professionals

Alternatively, you can log in using:

Bringing you the Best Analytical Legal News

Supreme Court clarifies interplay between S. 55 and S. 74 of Contract Act in Welspun v ONGC

by Hiroo Advani†, Sheikh Yusuf Ali†† and Manav Nagpal ††† Cite as: 2022 SCC OnLine Blog Exp 18

• Click to share on Facebook (Opens in new window)
• Click to share on Twitter (Opens in new window)
• Click to share on LinkedIn (Opens in new window)
• Click to share on WhatsApp (Opens in new window)
• Click to print (Opens in new window)
• Click to email a link to a friend (Opens in new window)
• Click to share on Telegram (Opens in new window)
• Click to share on Reddit (Opens in new window)
• Click to share on Tumblr (Opens in new window)
• Click to share on Pinterest (Opens in new window)
• Click to share on Pocket (Opens in new window)
• Click to share on Skype (Opens in new window)

INTRODUCTION

The Bench of the  Supreme Court comprising the  Chief Justice of India N.V. Ramana, J. and Surya Kant, J. has in its judgment passed in Welspun Specialty Solutions Ltd. v. ONGC Ltd. [1] ( Welspun Specialty Solutions ) clarified the interplay between Sections 55 with 73 and 74 of the Contract Act, 1872 (Contract Act) with respect to the performance of time-conditioned obligations and the assessment of the quantum of damages for delay. The judgment has been a subject of judicial discourse and may have cast a shadow on the reliability of a provision for liquidated damages in contracts where it is stipulated that time will be of the essence. The present article will study the judgment of the Supreme Court with respect to its interpretation of the aforesaid sections of the Contract Act.

Oil and Natural Gas Corporation (ONGC) floated a global tender for the purchase of certain seamless steel casing pipes (pipes). A company known as Remi Metals Gujarat Ltd. which is now known as Welspun Specialty Solutions Ltd. (Remi Metals) was considered the successful bidder and pursuantly was awarded the contract (contract) by ONGC. Subsequently, ONGC issued four purchase orders. These purchase orders laid down that the supply of pipes are subject to the strict adherence of time-conditioned obligations and that delivery must not be later than the dates mentioned therein. It was clearly enunciated that time will be of the essence in view of the principles enshrined under Section 55 of the Contract Act. Moreover, the general terms and conditions of the purchase orders allowed ONGC to levy liquidated damages, if there is a delay in supply of pipes on the part of Remi Metals.

Amidst performance of the obligations under the contract, there were certain delays on the part of Remi Metals in meeting the timely supply of pipes as per the dates mentioned in the purchase orders and owing to that, ONGC granted extension of time on numerous occasions. These extended periods were accepted by Remi Metals and ultimately its obligations stood discharged under the contract. However, owing to the various periods of delay on the part of Remi Metals, ONGC deducted an aggregate amount of USD 8,07,804.03 and INR 1,05,367 as liquidated damages from various invoices that were submitted by Remi Metals. Aggrieved by the high-handed deduction of liquidated damages, Remi Metals invoked arbitral proceedings against ONGC and sought refund of the amounts deducted along with certain other claims.

Award of Arbitral Tribunal

The Arbitral Tribunal framed numerous issues in order to determine whether Remi Metals were rightfully entitled to the refund of liquidated damages that were withheld by ONGC. One of the most critical issues framed by the Arbitral Tribunal was to ascertain whether time was of the essence of contract. The Arbitral Tribunal held that a mere clause in a contract which stipulates that “time is of the essence” would not at all be determinative to safely conclude that the performance of the obligations are strictly time conditioned in view of Section 55 of the Contract Act. It held that in order to conclusively determine whether time is of the essence, an inquiry must be made into the overall nature of the contract by examining the contract as a whole.

Moreover, in the light of the pertinent clauses of the contract, the Arbitral Tribunal held that since the contract contained provisions for extension of time, payment of penalty for delay, levy of liquidated damages that such clauses diluted time being of the essence and rendered the time-conditioned stipulation as nugatory. Resultantly, the Arbitral Tribunal held that with regard to the issue lawful imposition of liquidated damages, that in view of the well-settled legal position that liquidated damages being in the nature of pre-quantified damages could not be granted. The reasoning employed by the Arbitral Tribunal to arrive at this is rather interesting, it held that since it was concluded that time is not of the essence of the contract that there could be no breach of the contract on account of the delay on the part of Remi Metals. Hence, as there is no breach there could be no question of allowing ONGC to withhold the monies deducted as liquidated damages.

Accordingly, the Arbitral Tribunal held that damages, if any, which are payable to ONGC would be those damages which are in the nature of unliquidated damages being actual/tangible damages that require a discharge of a high evidentiary burden. Thereafter, ONGC was constrained to provide an estimation of its tangible losses which were under four categories amounting to an aggregate of USD 3,80,64,830. This estimation was accepted by the Arbitral Tribunal. Although, the Arbitral Tribunal held the opinion that ONGC could not be entitled to claim any damages for those losses that it incurred during the period when time was extended for completion of delivery as they expressly waived the imposition of liquidated damages for that period.

Ultimately, the Arbitral Tribunal passed an award in favour of ONGC entitling them to retain a sum of USD 4,40,610.42 out of the monies already deducted as liquidated damages from the various invoices submitted by Remi Metals.

Setting-aside Proceedings Before High Court of Uttarakhand

Being aggrieved by the arbitral award, ONGC was quick to prefer a petition under Section 34 before the District Court under the Arbitration and Conciliation Act, 1996 (A&C Act) for setting aside of the award contending that the award was not in accordance with the contract. The District Court found no infirmity in the award and refused to interfere with the Arbitral Tribunal’s findings.

Aggrieved by the judgment of District Court, both parties preferred an appeal under Section 37 of the A&C Act before High Court of Uttarakhand. The High Court found that the Arbitral Tribunal and the District Judge erred in the construction of contract and observed that the Arbitral Tribunal committed a gross error by holding that ONGC had to prove loss suffered before recovering damages.

Judgment of Supreme Court

At the time of hearing before the Supreme Court, the learned counsels appearing on behalf of the parties put forth their legal submissions in order to buttress their contentions. The learned Senior Counsel appearing for Welspun reiterated that the view taken by the Arbitral Tribunal was plausible and thus did not warrant any interference. It was contended that as the contract made provisions for extension of time and levy of liquidated damages, that it could not be said that time was of the essence of the contract. Further, emphasis was laid on ONGC’s conduct whereby they waived the imposition of liquidated damages on earlier occasions while granting extension of time. It was submitted that in the light of this waiver, it was not proper that liquidated damages could be imposed for another extension period. Summing up its submissions on interpretation of the contract and corresponding provisions of the Contract Act, Welspun relied on the judgment of the Supreme Court in Associate Builders v. DDA [2] ( Associate Builders ) where it was laid down that the courts should ordinarily refrain from interfering with arbitral awards under their jurisdiction envisaged by Section 34 of the A&C Act. The celebrated Judge R.F. Nariman, J. laid down in Associate Builders [3] , that interference was warranted only in exceptional circumstances i.e. where awards are vitiated by “patent illegalities”.

The learned counsel appearing on behalf of ONGC, vehemently contended that the arbitral award stood vitiated as the Arbitral Tribunal had transgressed the four corners of the contract by making certain extraneous findings. It was contended that the contract stipulated the imposition of liquidated damages and in the light of these pre-estimated damages, the Arbitral Tribunal grossly erred by awarding unliquidated damages in terms of Section 55 r/w Section 73 of the Contract Act. The learned counsel on behalf of ONGC relied on the controversial ruling of the Supreme Court in ONGC Ltd. v. Saw Pipes Ltd. [4] ( Saw Pipes ) to strengthen its contention.

After the conclusion of the oral submissions made by the parties, the Supreme Court at the outset outlined the ambit of its jurisdiction under Section 34 of the A&C Act as it stood before the 2015 amendment of the A&C Act. The Court observed that the term “public policy” in Section 34(2)( b )( ii ) has been an exploited ground for the challenge of arbitral awards and has been a subject of judicial controversy for a considerable period of time. The Court observed that “public policy” does not indicate “a catch-all provision” to challenge arbitral awards before an appellate court on infinite grounds. The Court discussed the scope of the term “public policy” from the time of its initial exposition in the seminal dictum of the Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co . [5] ( Renusagar ) where the Court propounded a narrow interpretation of the term. Subsequently, the Court discussed the infamous judgments in Saw Pipes [6] and ONGC Ltd. v. Western Geco International Ltd. [7] ( Western Geco ) which broadened the scope of ambit of the term “public policy” in the context of setting aside arbitral awards under Section 34(2)( b )( ii ).

It is in our opinion and evident from the leading judgments and the opinion of experts in the arbitral fraternity, that the judgments of the Supreme Court in Saw Pipes [8] and Western Geco [9] had cast a shadow on the fate of domestic arbitral awards in India. It is true that the legislature had enacted the 2015 amendment of the A&C Act to mitigate the negative repercussions of these controversial rulings and in spite of which, they still continue to cause havoc at the time of setting aside of arbitral awards. After the discussion on the ambit of the interference with arbitral awards on the ground of “public policy”, the Court was posed with the question of whether an arbitral award could be sustained under Section 37 of the A&C Act.

The Court in Welspun Specialty Solutions [10] observed that the substratum of the challenge to the award was whether the imposition of unliquidated damages is sustainable in spite of the fact that the contract expressly contemplated imposition of liquidated damages. After discussing the legal framework of liquidated damages in India with regard to Section 74 of the Contract Act, the Court observed that the finding of the Arbitral Tribunal that time was not of the essence of contract was beyond reproach. The Court concurred with the reasoning employed by the Arbitral Tribunal that the very existence of extension of time provisions together with the stipulation of liquidated damages and the subsequent conduct of ONGC (granting extension of time on earlier occasions) rendered the stipulation of time-conditioned performance as diluted. The Court concurred with the finding of the Arbitral Tribunal that since it was found that time was not of essence, that resultantly the amount stipulated as pre-estimated damages in form of liquidated damages would not be appropriate in order to fairly quantify the actual/tangible loss sustained by ONGC due to the delay. The Court held the opinion that these findings of the Arbitral Tribunal were in accordance with the well-known principles of contractual interpretation and did not suffer from any perversity.

The Court in Welspun Specialty Solutions [11] took the opportunity to exposit and reiterate certain well-known principles at common law with respect to the adherence of time-conditioned obligations that it deemed worthy of import to the principle in Section 55 of the Contract Act. The Court affirmed the general principle at common law, as envisaged by the English Court in Percy Bilton Ltd. v. Greater London Council [12] ( Percy Bilton ) that the general rule is that the promisor is bound to complete the obligation by the date of competition stated in the contract. In addition, it highlighted an exception to the rule of levy of liquidated damages as carved out in the century-old precedent of the English Court in Holme v. Guppy [13] where it was laid down that the promisee is not entitled to liquidated damages, if by his act or omission he has prevented the promisor from completing the work by the completion date.

After a substantial discussion on the applicable jurisprudence, the Court found that in order to ascertain whether time was of the essence of the contract, one must read the entire contract as a whole and on a holistic basis and not by examining singular clauses in isolation.

This doctrine was laid down in 1979 by the Full Bench of the Supreme Court in Hind Construction Contractors v. State of Maharashtra [14] (Hind Construction Contractors ). However, it is surprising to note that the judgment in Welspun Specialty Solutions [15] has no mention of the judgment of the Full Bench in Hind Construction Contractors [16] .

An in-depth factual analysis was undertaken by the Supreme Court, as it further interpreted Clause 9( i ) of the contract wherein it was clearly enunciated that “subject to extension granted without prejudicing the right of ONGC to recover damages”. It was held that the ‘‘damages’’ contemplated by this provision meant unliquidated damages within the meaning of the 2nd paragraph of Section 55 and not pre-estimated/liquidated damages as envisaged under Section 74 of the Contract Act. The Court upheld the findings of the Arbitral Tribunal that said term “damages” in Clause 9( i ) of the contract meant actual/tangible loss and not pre-estimated loss.

It is our opinion that the finding of Arbitral Tribunal that damages would be granted under Section 55 read with the principles enshrined in Section 73 in place of the pre-estimated sum stipulated under Section 74 of the Contract Act is not entirely correct. It is our opinion that once it is found that time is not of the essence, the delay in completion would still attract the provisions for liquidated damages. It is pertinent to note that the Court has concurred with these findings without sufficient examination of the interplay of the various sections of the Contract Act and the underlying rationale of liquidated damages under Section 74.

The Court rejected ONGC’s reliance on the judgment in Saw Pipes [17] by observing that in Saw Pipes [18] no waiver was granted for levying liquidated damages on earlier occasions amidst performance as in the present case. On this basis it held that ONGC was not entitled to benefit from the exceptions carved out in Saw Pipes [19] . The Court observed that in the present case it was undisputed that ONGC had waived liquidated damages on numerous earlier occasions while granting time extensions for completion of the obligations. The Court concurred with the finding of the Arbitral Tribunal that as liquidated damages were waived on earlier occasions, subsequent impositions could not be imposed unless agreed upon by the parties. This finding was upheld and recognised as the autonomy of a party to engage in contract terms and one which requires a clear intention.

Ultimately, the Court in Welspun Specialty Solutions [20] in view of its limited jurisdiction refused to interfere with any of the findings of the Arbitral Tribunal and upheld the award, while setting aside the judgments passed by the High Court of Uttarakhand.

It is our opinion that the judgment of the Supreme Court in Welspun Specialty Solutions [21] has drastically changed the perspective of the employers with respect to the reliability of a provision for liquidated damages, more particularly one which caters to recompense for delay in performance of time-conditioned obligations. It  also remains uncertain that even when the contract stipulates that time will be of the essence, that whether such a stipulation will prevail after the arbitral tribunals/courts examine the contract as a whole.

It is true that the decision in Welspun Specialty Solutions [22] is welcome step with respect to judicial non-interference with arbitral awards, but at the same time has cast a shadow of doubt on the efficacy of a clause for liquidated damages in contract where the performance of obligations is strictly time conditioned. It is our opinion that such an undesirable situation, nonetheless warrants cognizance by the Supreme Court at the earliest possible opportunity to clarify the essence of the underlying rationale of liquidated damages in Section 74 of the Contract Act.

† Founder and Chairman, Advani Law LLP.

†† Partner, Advani Law LLP.

†††Associate, Advani Law LLP.

[1]   (2022) 2 SCC 382 .

[2] (2015) 3 SCC 49 .

[3] (2015) 3 SCC 49 .

[4] (2003) 5 SCC 705 .

[5] 1994 Supp (1) SCC 644 .

[6] (2003) 5 SCC 705 .

[7] (2014) 9 SCC 263 .

[8] (2003) 5 SCC 705 .

[9] (2014) 9 SCC 263 .

[10] (2022) 2 SCC 382 .

[11] (2022) 2 SCC 382 .

[12] (1982) 1 WLR 794.

[13] (1838) 3 M & W 387 : 150 ER 1195

[14] (1979) 2 SCC 70 .

[15] (2022) 2 SCC 382 .

[16] (1979) 2 SCC 70.

[17] (2003) 5 SCC 705 .

[18] (2003) 5 SCC 705 .

[19] (2003) 5 SCC 705 .

[20] (2022) 2 SCC 382 .

[21] (2022) 2 SCC 382 .

[22] (2022) 2 SCC 382 .

Section 125 CrPC: Can the second wife be entitled to maintenance from her husband?

Delhi HC granted bail to a man accused of raping woman he met on dating app on pretext of marriage

Do convicts have a fundamental right to procreate? Watch to know what Delhi High Court recently held

Book release of 8th edition of “Criminology, Penology and Victimology” revised by Sanjay Vashishtha

Join the discussion, leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Notify me of follow-up comments by email.

Notify me of new posts by email.

This site uses Akismet to reduce spam. Learn how your comment data is processed .

• Help and information
• Comparative
• Constitutional & Administrative
• Criminal Justice
• Criminology
• Environment
• Equity & Trusts
• Competition
• Human Rights & Immigration
• Intellectual Property
• International Criminal
• International Environmental
• Private International
• Public International
• IT & Communications
• Jurisprudence & Philosophy of Law
• Legal Practice Course
• English Legal System (ELS)
• Legal Skills & Practice
• Medical & Healthcare
• Study & Revision
• Business and Government
• Share This Facebook LinkedIn Twitter

Essential Cases: Contract Law (6th edn)  

Essential Cases : Contract Law provides a bridge between course textbooks and key case judgments. Essential Cases provides you with succinct summaries of some of the landmark and most influential cases in contract law. Each summary begins with a review of the main case facts and decision. The summary is then concluded with expert commentary on the case from the author, Nicola Jackson, including an assessment of the wider questions raised by the decision.

It can act as a succinct reference source alongside your core textbooks as you proceed through your course. It can also be used as a stand-alone revision aid as you approach examinations. But central to the Essential Cases series is the aim to encourage your own critical exploration of the legal matters under discussion.

Where possible, a link to a free-to-access full version of the judgment is included in each summary, providing you with an opportunity to deepen your understanding by reading the judgment of the court for yourself.

You do not currently have access to this chapter

Please sign in to access the full content.

Access to the full content requires a subscription

• Alphabetical contents  
• Adams v Lindsell [1818] EWHC KB J59; (1818) 1 B & Ald 681; (1818) 106 ER 250  
• Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401, Court of Appeal  
• Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256  
• Dickinson v Dodds (1876) 2 Ch D 463  
• Entores Ltd v Miles Far East Corporation [1955] 2 QB 327  
• Felthouse v Bindley [1862] EWHC CP J35; 142 ER 1037  
• Fisher v Bell [1961] 1 QB 394; [1960] 3 WLR 919  
• Harvey & Facey [1893] AC 552  
• Hyde v Wrench (1840) 49 ER 132  
• Partridge v Crittenden [1968] 1 WLR 1204  
• Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401  
• Balfour v Balfour [1919] 2 KB 571 including commentary on Merritt v Merritt [1970] EWCA Civ 6; [1970] 1 WLR 1211.  
• Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130  
• Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87  
• Pao On & others v Lau Yiu Long and another [1980] AC 614  
• Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24  
• Stilk v Myrick [1809] EWHC KB J58; (1809) 2 Camp 317  
• Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1  
• Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407  
• Shogun Finance Ltd v Hudson [2003] UKHL 62  
• Smith v Hughes (1871) LR 6 QB 597 includes commentary on Centrovincial Estates plc v Merchant Investors Assurance Company Ltd [1983] Com LR 158  
• Bisset v Wilkinson [1927] AC 177  
• Edgington v Fitzmaurice (1885) 29 Ch D 459  
• Spice Girls Ltd v Aprilia World Service [2002] EWCA Civ 15  
• With v O’Flanagan [1936] Ch 575  
• Zurich Insurance Co. Ltd plc v Hayward [2017] AC 142; [2016] UKSC 48  
• Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833  
• Times Travel (UK) Ltd v Pakistan International Airlines Corporation [2021] UKSC 40; [2021] 3 WLR 727  
• Royal Bank of Scotland v Etridge (No.2) [2001] UKHL 44  
• George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803  
• Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371  
• Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433  
• L’Estrange v Graucob Ltd [1934] 2 KB 394  
• Parker v The South Eastern Railway Company (1877) 2 CPD 416  
• Arnold v Britton [2015] UKSC 36  
• Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896  
• Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26  
• Lombard North Central plc v Butterworth [1987] QB 527  
• L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235  
• White and Carter (Councils) Ltd v McGregor [1962] AC 413  
• Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696  
• J. Lauritzen v Wijsmuller (The ‘Super Servant Two’) [1990] 1 Lloyd’s Rep 1  
• Krell v Henry [1903] 2 KB 740  
• Attorney General v Blake & another [2000] UKHL 45; [2001] 1 AC 268  
• Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Ltd v Beavis [2015] UKSC 67  
• Farley v Skinner [2001] UKHL 49  
• One Step (Support) Ltd v Morris-Garner [2019] AC 649; [2018] UKSC 20  
• Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344  
• Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528  
• Watts & another v Morrow [1991] 1 WLR 1421  

External resources

Printed from Oxford Law Trove. Under the terms of the licence agreement, an individual user may print out a single article for personal use (for details see Privacy Policy and Legal Notice).

date: 15 August 2024

• Cookie Policy
• Privacy Policy
• Legal Notice
• Accessibility
• [185.147.128.134]
• 185.147.128.134

Characters remaining 500 /500

• Browse All Articles
• Newsletter Sign-Up

Contracts →

• 28 Apr 2022
• Research & Ideas

Can You Buy Creativity in the Gig Economy?

It's possible, but creators need more of a stake. A study by Feng Zhu of 10,000 novels in the Chinese e-book market reveals how tying pay to performance can lead to new ideas.

• 26 Jun 2020
• Working Paper Summaries

Weak Credit Covenants

Prior to the 2020 pandemic, the leveraged loan market experienced an unprecedented boom, which came hand in hand with significant changes in contracting terms. This study presents large-sample evidence of what constitutes contractual weakness from the creditors’ perspective.

• 13 May 2019

The Unexpected Way Whistleblowers Reduce Government Fraud

Even unfounded allegations by whistleblowers can force government contractors to renegotiate their terms, say Jonas Heese and Gerardo Perez Cavazos. Open for comment; 0 Comments.

• 23 Jan 2018

Transaction Costs and the Duration of Contracts

When buyers transact with sellers, they select not only whom to transact with but also for how long. This paper develops a model of optimal contract duration arising from underlying supply costs and transaction costs. The model allows for the quantification of transaction costs, which are often unobserved, and the impact of these costs on welfare.

• 20 Oct 2015

Internalizing Global Value Chains: A Firm-Level Analysis

Manufacturing activities that used to be performed in close proximity are increasingly fragmented across firms and countries. This paper provides strong evidence that considerations driven by contractual frictions critically shape firms' ownership decisions along their value chains.

• 27 Feb 2006

When Rights of First Refusal Are a Bad Deal

Contracts that include a right of first refusal usually benefit the holder of that right. But not always. New research by professor Alvin E. Roth and colleague Brit Grosskopf explains when it's wise to say no. Closed for comment; 0 Comments.

• 03 Mar 2003

Top Ten Legal Mistakes Made by Entrepreneurs

The life of a startup can be precarious, a wrong turn disastrous. Harvard Business School professor Constance Bagley discusses the most frequent legal flops made by entrepreneurs, everything from hiring the wrong lawyer to puffing up the business plan. Closed for comment; 0 Comments.

• --> Login or Sign Up

Shop by Author

• Sabrineh Ardalan
• Robert Bordone
• Robert Clark

John Coates

• Susan Crawford
• Alonzo Emery
• Heidi Gardner
• Philip B. Heymann
• Howell E. Jackson
• Wendy Jacobs
• Adriaan Lanni
• Jeremy McClane
• Naz Modirzadeh
• Catherine Mondell
• Ashish Nanda
• Charles R. Nesson
• John Palfrey
• Bruce Patton

Todd D. Rakoff

• Lisa Rohrer
• Jeswald W. Salacuse
• James Sebenius

Joseph William Singer

• Holger Spamann
• Carol Steiker
• Guhan Subramanian
• Lawrence Susskind
• David B. Wilkins
• Jonathan Zittrain

Shop by Brand

• Howell Jackson
• Ashish Nanda and Nicholas Semi Haas

Chad M. Carr

• John Coates, Clayton Rose, and David Lane
• Ashish Nanda and Lauren Prusiner
• Ashish Nanda and Lisa Rohrer
• Ashish Nanda and Monet Brewerton
• View all Brands
• $0.00 - $2.00
• $2.00 - $4.00
• $4.00 - $6.00
• $6.00 - $8.00
• $8.00 - $10.00

Contracts & Transactions

• Published Old-New
• Published New-Old

Project Merchandise: An Introduction to Private Equity

Holger Spamann and Johnathan Robertson

Teaching Guide for Project Merchandise: An Introduction to Private Equity

Digital Currencies

Margaret E. Tahyar, Trevor I. Kiviat, Madison J. Roberts, and Suiwen Liang of Davis, Polk and Wardwell with assistance by Howell Jackson

The Case of the Smoking Tenant

Joseph William Singer and Esme Caramello

After the Sale (B)

After the Sale (A)

AmesCard Role Play Package

John Coates and Karina Shaw

The Case of Cross-Deputization

Joseph William Singer, Jeremy McClane, and Nicholas Price

Diego Primadonna Spanish Language Version

Robert Ricigliano

Sheila Heen

The Case of the Anti-Bacterial Toys

Wendy Jacobs and David Abrams

Zen & Kerry's

Robert C. Bordone

The Vineyard

Pandora's Box

Mark Freeman

Iqbal's Big Venture

Robert C. Bordone and Tobias C. Berkman

Scott R. Peppet and Melissa Bast

Diego Primadonna

Amity Island Focus Group

The Case of the Encumbered Employee

The Case of the Medical Stent

The Case of the Rent-Paying Tenant

David Grossman, Todd Rakoff, Joseph William Singer, with Chris Bates

The Case of the Lead Toys

Todd Rakoff and Joseph William Singer

Business Law Case Studies with Solutions

• Post author: myspeakhr
• Post category: Case Study
• Reading time: 5 mins read

Discussed here is the Business Law Case Studies with Solutions. Business Law is also known as Legal Aspects of Business, Commercial Law etc. Here we have given short case studies along with solutions in business law. These simple case law in commercial law contains cases related to Contract Act 1872, Sale of goods Act and Consumer protection Act with solutions. All the 3 Acts discussed here is majorly used in business transactions. These short case studies on commercial law with answers will be helpful for students of MBA, BBA, B.com and Law. These case studies and solutions are explained in very simple words without much difficult legal terms for the benefit of the students.

Below is the Business Law Case Studies with Solutions.

I. Indian Contract Act Case Studies

1. case study on basic contract act.

“A gives an offer in the newspaper for the sale of his HP laptop for Rs. 15000. He also stated that Those who are willing to purchase can send a message to his mobile.”” In this simple case consider the following situation and discuss the solution:

a) B was interested to purchase the laptop and sent a message stating that he wish to purchase for 12000. Was it an acceptance is given by B-

No it was not an acceptance It can be termed as counter offer. If feasible A has to give acceptance.

b) B was interested to purchase the same but he asked C to message on behalf of B. and C messaged as follows

“My friend B is interested to purchase your laptop for 15000”  . Here is this a valid Acceptance? is A binded by the acceptance.

No this is not a valid acceptance. The acceptance needs to be given by the accept-or itself. Hence A is not binded by the action of C.

c)  B who is much interested in purchasing the laptop had called Mr.A and given the acceptance through his phone. Is A obliged for acceptance given by B.

The acceptance must the given by the mode prescribed by the offer-or only. Hence in the given case the acceptance given by B through telephone is not an acceptance.

2. Case study on Valid Contract

Mr. X invited Mr. Y his business partner for X’s sisters marriage. Y accepted the invitation in this ground X booked a table in a costly hotel where the marriage takes place. Due to some reason Y could not attend the function. What type of contact is this. Is this a valid contract. Justify your answer.

This is not a valid contract on the following basis:

a. This is a social agreement. The agreement is not created with an intention to create legal relationship rather to create a social relationship.

b. There is no consideration involved in the contract hence it is not a valid contract.

II. Consumer Protection Act Case Studies

3. case study on who is a consumer.

a. Mr. A bought a printer from an electronics store for using it at home. The TV was defective. Is Mr. A a consumer?

Yes Mr. A is a consumer as he purchased the printer for his own use.

b. Balu is a distributor for computer accessories. He bought 100 pen-drives for selling to other computer vendors. Is Balu a consumer?

Balu is not a consumer as he has obtained accessories for resale.

4. Case study on Restrictive and Unfair trade practices

Mr. X went to a electronic shop to purchase a TV for his newly built house. He asked the information about Samsung 40 inches LED TV to the shop keeper. The shop keeper being a dealer of other brands misguide the customer stating that Samsung had planned to stop the production of 40 Inch LED TV’s. The shopkeeper made the customer believed the same and advice him to purchase some other brand.

The act of Shop keeper is Restrictive trade practice or Unfair trade practices?

The act of shopkeeper is a unfair trade practice as he had mislead the customer with a motive to increase his sale.

III. Sale of Goods Act 1930 Case studies

5. case study on sale or agreement to sell.

On 1st March 2017, Alex agreed to sell his car to Beny for Rs. 80,000. It was agreed between themselves that the ownership of the car will transfer to B on 31st March 2017. when the car is gets registered in Beny`s name. Justify whether it is sale or agreement to sell.

It is an agreement to sell and it will become sale on 31st March when the car is registered in the name of Beny.

6. Case study on Warranty

Anay purchased a second hand typewriter from Balu. Anay used it for sometime and also spend some money on its repairs. The typewriter turned out to be stolen one and as such Anay had to return it to the true owner chand. Is it a breach of Warranty or not. What remedy will Anay get?.

It is a breach of warranty. It is a implied warranty as to quite possession. It was held that Anay could recover damages from Balu amounting to the price paid and the cost of repair.

Share this:

You might also like, 17 things to remember in solving a case study, case study on job analysis in shrm, free hrm case study with solution, submit a comment cancel reply.

This site uses Akismet to reduce spam. Learn how your comment data is processed .

Contract with a minor – Mr. Sharma v. Mr. Nitin

Editor’s note: This paper lays down the facts and circumstances of a fictitious case – dealing with primarily the law of contracts, whether a contract entered into with a minor is void, and the remedies one may avail upon entering into such contract conditionally with the guardian assenting to pay the price. It also examines the definition and scope of “necessary” under S. 68 of the Indian Contract Act, 1872. Arguments are presented for both sides, and a conclusion is drawn by the author.

Mr Sharma owns a furniture shop. Kamal, a class X student wanted a study table for his room. His father Nitin was adamant at not splurging money in buying unnecessary items. Kamal visited Mr Sharma’s shop and offered to buy a study table for 5000/- rupees. Mr Sharma looked at Kamal and realized that Kamal was not yet eighteen year old. Mr Sharma told Kamal that only if his father agreed to pay the price, will Mr Sharma sell the table to Kamal. Kamal promised to Mr Sharma that he would ensure that his father Nitin makes the payment.  Nitin refused to make the payment.

Is the contract valid, voidable or void ab initio ?

Is the study table a “necessary” under the definition of Section 68, Indian Contract Act, 1872?

If at all, what remedies does Mr Sharma have?

Arguments for Plaintiff (Mr Sharma)

Though the contract with a minor is void ab initio , [i] the person who supplies another with a “necessary” is entitled to be reimbursed out of the minor’s estate. [ii] Section 68, [iii] provides for liability when a “necessary” is supplied to a person incapable of entering a contract under Section 11. [iv] A minor is a person incapable of contracting within the meaning of Section 11, [v] and hence, Section 68 [vi] applies to his case. “Necessaries” under Section 68, [vii] includes not only ‘necessities’, but anything which might be necessary to maintain the incapable person in his state orastationainalife. [viii] aFurthermore,a“necessary”a is a relative fact,and should be determined with reference to theafortuneaandacircumstancesaof aaparticularaminor. [ix]

To render the minor’s estate liable for “necessaries”, two conditions must be satisfied, Viz .:(a) the contract must be for a commodity which was reasonably necessary to maintain his station or stage in life, and (b) he must not have a sufficient  supply of these “necessaries”. [x] Coming to the first criterion, the factual matrix here shows that Kamal was a class X student. Being a class X student, he would obviously require a study table to maintain himself in his station of student life. It is a known fact that in every civilised country of the world, a study table is a very fundamental requirement for a school goer. Now addressing the second criterion, nowhere does the factual matrix show that Kamal had already got another study table or he could manage in his stage of life without it. In the light of the aforementioned law and the subsequent application of the same to the facts of this case, his estate is liable for the “necessary” which he got out of this contract. Thus, to ensure that Defendant is not “unjustly enriched” [xi] on cost of Plaintiff, the latter should be reimbursed. [xii] Therefore, this contract is a quasi -contract or restitution [xiii] and on the lines of the judgement of Manmatha Kumar Saha v. Exchange Loan Co. Ltd. , [xiv] Plaintiff here should be entitled to reimbursement out of minor’s estate.

In the alternative, under Section 65, [xv] Defendant is entitled to compensation since the contract was void and Defendant was “unjustly enriched”. This view was taken by the Bombay High Court in the case Motilal Mansukhram v. Maneklal Dayabhai . [xvi] Furthermore, under Specific Relief Act, [xvii] if a minor is brought before the court as a Defendant, he can be compelled to account for anything which is going to benefit him personally, such as education or training. [xviii] Thus, it would be perfectly just and equitable if the Honourable Court uses its discretion in the matter and, for the sake of justice orders restitution of the table, which benefited his education.

Arguments for Defendant (Mr Nitin)

Under the Family Law Reform Act, [xix] the age of majority was lowered from 21 to 18. [xx] Thus, Kamal is a minor and therefore is incompetent to contract under Section 11, [xxi] and thus the contract will be void ab initio . This counsel contends that the study table in question was not a “necessary”. The court is supposed to consider the character of the supplied goods, and the circumstances of the minor. As was held in the case Jagon Ram Marwari v. Mahadeo Prasad Sahu , [xxii] things mayabe a “necessary” to a minor, but the quality or quantity supplied may render them unnecessary. Objects though of real use, but excessively costly cannot be “necessaries”. [xxiii] A study table isanot a good which is quintessential to a high school student’s education. The seller (owns the burden of proof) has to prove that the goods supplied were suitable for the estate or station of a minor’s life, and that they were suitable to his actual requirements at the time, i.e., the minor had no supply from other sources. [xxiv]  As has been already mentioned, and was is clearly evident in the factual matrix, in words of Defendant, buying the study table was “splurging money in buying unnecessary items.” Further, the table was in  no way quintessential to the minor’s academics. Furniture was held not be a “necessary” in the case Stocks v. Wilson . [xxv] In arguendo, “a study table for 5000/- rupees” is excessively costly. In the case Ryder v. Wombwell , [xxvi] it wasaheld that though buttons are used in usual kind of clothing, and would constitute a “necessary” underanormal circumstances, the fact that the buttons in question were diamond buttons rendered them otherwise. Similarly, a furnished or lavish study table (which costs as much as 5000 rupees) cannot be a necessary, when several foldable and proper study tables are available for less than 1100 rupees. [xxvii] Even if one of these arguments is taken it would be sufficiently evident that the study table in question was not a “necessary”. Also, the counsel for Plaintiff failed to back its assertion that the minor had no supply from the other sources with evidence.

Furthermore, in the case Amolakchand (Seth) v. Pralhadsingh , [xxviii] the Indore bench of Madhya Pradesh High Court held that for Plaintiff to be entitled to compensation under a void contract Plaintiff should have not have had the knowledge that the contract was void ab initio , in case it is void ab initio  and only then Section 65 [xxix] would apply . The factual matrix clearly shows that it was not the case and Plaintiff had knowledge of the same before entering into the void contract. In arguendo, even if a study table is held to be “necessary” and minor’s estate is held liable for the same, [xxx]  Section 70 [xxxi]  cannot be read so as to create any personal liability. [xxxii]  It was held in  Bankey   Behari   Prasad v. Mohendra Prasad [xxxiii]  case that Section 70 [xxxiv] is applied in contractual cases and a minor cannot be held liable under the same as a contract with a minor is void ab initio . Most importantly, as was held in the case Sadhu Laxmi Sunderamma v. Sadhu Suryanarayana , [xxxv] a claim lies only and only against the estate of a minor, and the father of the minor cannot be held liable. Only if the minor has hisaown estate, theaminoracan be held to be liable.

The court holds that the contract is void ab initio . [xxxvi] Furthermore, the law clearly shows, that merely vague assertionsaby Plaintiff, who also owns the burden of proof, would not suffice. [xxxvii] With all due respect, the counsel for Plaintiff has just made vague assertions throughout. Firstly, as has been stated by the counsel for Defendant, the counsel for Plaintiff has failed to show that a study table is in any reasonable way quintessential to a high school student’s educationunder Section 68. [xxxviii] Secondly, we should look at the very basis of Section 11, [xxxix] which is that a party incompetent of understanding the consequences should not be the party which suffers losses, monetary or otherwise, because of its inability to understand the consequences of the contract, in perspective with the law, [xl] which says a good may be a “necessary” to a minor, but the quality or quantity supplied may render them unnecessary. The counsel for Plaintiff has failed to show through valid arguments or evidence that the study table in question was indeed a “necessary” and has also failed in negating the fact that 5000/- rupees is not a huge amount to pay for a study table. This leads us to the conclusion that the study table in question is out of the definition of “necessaries”. The court therefore holds that the study table in question is not a “necessary” under the definition of Section 68. [xli]

Also, even if the claim lies, it lies solely against the estate of a minor, and the father of the minor cannot be held liable. [xlii] Same was held in the case Sadhu Laxmi Sunderamma v. Sadhu Suryanarayana . [xliii] Furthermore, Defendant is not liable either under Section 65 [xliv]  or Section 70 [xlv] . Moreover, even if Section 70 [xlvi]  might in principle, be applicable in ca-se of a contract with a minor, in practice, perhaps stricter standards of proof  might be required to show that the the payment or act was really for the minor’s benefit than in the case of a major. [xlvii]   The counsel for Plaintiff also failed on this account. Thus, Mr Nitin is not liable to pay anything. Lastly, the table need not be reimbursed under Specific Relief Act. [xlviii]  As was held in the landmark  Mohoria Bibi (wife of Brahmo Dutt) v. Dharmodas Ghose case, [xlix] “ There is no need to pay special relief as the appellant knew that they were contracting with a minor. ” The court also held that one who seeks equity must do equity (cannot take advantage of your own faults). Similarly, in the instant matter, the Plaintiff knew that Kamal was a minor and hence they are not entitled toareimbursementaunderaSpecificaRelief Act. [l] Thus, the judgement is passed for Defendant with both parties bearing individual costs. [li]

Edited by Neerja Gurnani

[i] Indian Contract Act, 1872, § 11.

[ii] Indian Contract Act, 1872, § 68.

[iii] Ibid , as held in Benaras Bank Ltd. V. Dip Chand , AIR 1936 All 172.

[iv] Supra footnote 1.

[v] Supra footnote 1, as held in Watkins v. DhunnooBaboo , (1881), 7 Cal 140,143.

[vi] Supra footnote 2.

[vii] Supra footnote 2.

[viii] Peter v. Fleming (1840), 6 M. & W. 42.

[ix] Jagon Ram Marwari v. Mahadeo Prasad Sahu , (1909) ILR36Cal768in Mulla, Page 1046.

[x] Buckley ljin Nash v. Inman , (1908) 2 KB 1,12in Avtar Singh, Law of Contract and Specific Relief Act, 10 th Edition Reprint, 2008 , (Hereinafter Avtar Singh), Page 172.

[xi] The doctrine was founded by Lord Mansfield in Moses v. Macferlan , (1558-1774) All ER Rep 581.

[xii] Emphasis added.

[xiii] Chesworth v. Farrar , [1966] 2 All ER 107.

[xiv] AIR 1936 Cal 567 in Mulla, Page 1049.

[xv] Indian Contract Act, 1872, § 65.

[xvi] AIR 1921 Bom 147.

[xvii] Specific Relief Act, 1963, § 33, §§ (2).

[xviii] Avtar Singh, Page 162 – 163.

[xix] Family Law Reform Act, 1969, § 1 in Anson, Page 215.

[xx] Anson, Page 215.

[xxi] Supra footnote 5.

[xxii] Supra footnote 9.

[xxiii] Supra footnote 9.

[xxiv] SadasheoBalaji v. Firm HiralalRamgopal , AIR 1938 Nag 65 in Mulla, Page 1049.

[xxv] [1913] 2 KB 235.

[xxvi] (1869) LR 4 Ex 32.

[xxvii]   http://www.ebay.in/itm/NEW-LAPTOP-BED-TABLE-MULTIPURPOSE-TOP-LAMINATED-HEAVY-BODY-FRAME-WOOD-BASE-/281162388560?pt=IN_Laptop_Desktop_Accessories&hash=item4176959450&_uhb=1 ; http://www.ebay.in/itm/Kawachi-Multipurpose-Folding-Study-Table-/111156732746?pt=IN_Furniture&hash=item19e175234a&_uhb=1#ht_3382wt_1037 ; http://www.ebay.in/itm/Multi-Purpose-Foldable-Table-Childrens-Study-Table-/141051911538?pt=IN_Furniture&hash=item20d7595d72&_uhb=1#ht_2877wt_1037 .

[xxviii] 1972 MP LJ 473. The Court held, “ The two phrases “discovered to be void” and “becomes void” should be understood to denote different situations. In the one cases at least the person who has given the advantage to the incompetent party has believed the agreement to be valid, and has at a later stage discovered that it was really void from the very beginning or at all events from an earlier date. When a contract becomes void the position is materially different; it is not void from before, but something has happened after the execution of the contract which has made it void. Thus, while it is clear that in the case of a contract becoming void it should have been valid ab initio; it is not necessary for an agreement to be discovered to be void, that it should necessarily have been valid from the beginning. The voidness should have been all the time unknown to one or the other of the parties. The party who would naturally be the one seeking restoration of the advantage given by him to the other, must have believed or led to believe that it is not void. Where both parties know that the agreement is void ab initio, and one of them later on claims restoration under Section 65 the latter cannot be held to have discovered the voidness of the agreement and as much will not be entitled to it. ”

[xxix] Indian Contract Act, 1872, § 68.

[xxx] Supra footnote 2.

[xxxi] Indian Contract Act, 1872, § 70 in Mulla, Page 1048.

[xxxii] Mulla, Page 1048.

[xxxiii] AIR 1940 Pat 324.

[xxxiv] Supra footnote 31.

[xxxv] AIR 1950 Mad 274.

[xxxvi] Supra footnote 1.

[xxxvii] Supra footnote 23.

[xxxviii] Supra footnote 2.

[xxxix] Supra footnote 1.

[xl] Supra footnote 9.

[xli] Supra footnote 2.

[xlii] Emphasis added.

[xliii] Supra footnote 31. It was held, “ Be this as it may, the claim for reimbursement in this case is not against the estate of the minor but personally against her father and Section 68, Contract Act, would not therefore apply. ”

[xliv] Supra footnote 27.

[xlv] Supra footnote 33.

[xlvi] Supra footnote 31.

[xlvii] K.R.S.V. MuthayyaChetti and Ors. v. Narayanan Chetti and Ors . , AIR 1928 Mad 317.

[xlviii] Supra footnote 17.

[xlix] (1903) 30 Cal. 539.

[l] Supra footnote 17.

[li] Extra emphasis.

Related Posts:

2 thoughts on “Contract with a minor – Mr. Sharma v. Mr. Nitin”

thankew for ur submission of ur time on this madam

Please give citation of case

Leave a Comment Cancel reply

Give it a try, you can unsubscribe anytime :)

Thanks, I’m not interested

• Law of torts – Complete Reading Material
• Weekly Competition – Week 4 – September 2019
• Weekly Competition – Week 1 October 2019
• Weekly Competition – Week 2 – October 2019
• Weekly Competition – Week 3 – October 2019
• Weekly Competition – Week 4 – October 2019
• Weekly Competition – Week 5 October 2019
• Weekly Competition – Week 1 – November 2019
• Weekly Competition – Week 2 – November 2019
• Weekly Competition – Week 3 – November 2019
• Weekly Competition – Week 4 – November 2019
• Weekly Competition – Week 1 – December 2019
• Sign in / Join

9 Cases That Should be on Your Fingertips While Studying Contracts

This article is written by Wardah Beg , student, Faculty of Law, Aligarh Muslim University

Introduction 

Dear reader,

You probably are in your first year, trying to get a grip of the immensely overwhelming law-school atmosphere around you. Or it has been long and you want to see how much you remember from your very first contract classes here. Or you are not in a law school, but contracts fascinate you? (Let’s just admit here that the chances of that one are extremely low). Whoever you are, I hope you benefit from this attempt to summarize nearly the most important cases in Indian Contract Law, with obvious references back to the Common Law of England. To make these cases easier to learn and memorize, I have added some keywords at the end of each case. Without much adieu, here is the list of cases you very much need to know:

Acceptance should be communicated: Felthouse v. Bindley  

Can a person’s silence be considered acceptance?

In this case, the petitioner, Mr. Paul Felthouse wanted to purchase a horse from his nephew, but the price he offered to pay for the horse was less than that his nephew was willing to sell it for.  The horse, therefore, was still in his possession. The Uncle communicated his offer through a letter, saying, “If I hear no more about him, I consider the horse mine at £30.15s” The nephew could not respond to the letter because he was busy with an auction on his farm. Though he asked the auctioneer, Mr. Bindley, not to auction the horses, he accidentally did. Mr. Felthouse then sued the defendant for conversion of his property . The defendant argued that the horse was not actually Mr. Felthouse’s property, as there existed no contract between him and his nephew at the time of the auction because Mr. Felthouse’s offer was not accepted by his nephew and the nephew’s silence cannot be considered to be an acceptance of the offer.

It was held that Mr. Felthouse did not have the ownership of the horse at the time of the auction, which is why he could not sue for conversion, as the offer he made was not actually accepted.

Keywords: Uncle-Nephew, horse, auction, conversion of property

General Offer: Carlill v. Carbolic Smoke Balls Company 

Can offers be open to the public in general? Can a general offer lead to a contract?

In this case, a company carried out advertisements about their product, carbolic smoke balls, that claimed that any person who took the smoke balls in the prescribed manner (i.e., three times daily for two weeks) will not catch influenza. In case someone does, the company promised to pay 100£ to them immediately. To show their sincerity regarding this offer, the company deposited a sum of 1000£ in a public bank. Now, the plaintiff, Carlill bought the smoke balls and used them as prescribed in the advertisement, but still ended up catching the flu. She filed a suit for the recovery of 100£ as promised in the advertisement. The company denied the payment saying there existed no contract between them and the plaintiff. It was held that a contract came into existence between the plaintiff and the company as soon as the plaintiff bought the smoke balls and used them as prescribed.

Keywords: Carbolic smoke balls, prescription, general offer, public bank

Offer and Invitation to Treat: Harvey v. Facey 

Can a mere quotation of price be considered an offer?

In this case, the petitioner, Harvey communicated with the defendant, Facey, about a Hall Pen through telegram, saying “”Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid”. The same day, Facey responded with the price of the Pen to be £900. To which, the appellant replied, “We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession.” The defendant refused to sell at that price that they had initially quoted. It was finally held in this case that no contract came into existence between both the parties because their exchange of telegrams was merely an informational exchange where the appellant asked for the price of the Hall Pen and the defendant quoted the price. Therefore the appellant had no right to sue.

Keywords: Bumper Hall Pen, price quotation, telegram

Offer and Counter Offers: Hyde v. Wrench 

This is a leading case eliciting the concept of offers and counter-offers.

In this case, Wrench, the defendant offered to sell his farm to the petitioner, Hyde for £1000. The petitioner declined the offer. The defendant again reinstated his offer for selling the farm at £1000 to the petitioner’s agent stating that it is the final offer from their side. The petitioner, through a letter, offered to buy the farm for £950. The defendant refused to sell the farm at that price. The petitioner, several days later, offered to buy the farm at the initial price of £1000. The defendant did not send any agreement to that and refused to sell the farm, because of which the petitioner sued for breach of contract. It was held that no contract came to arise between the parties as the price was not agreed upon. Rather, offers and counter-offers were exchanged.

Keywords: Farm, offer, counter-offer

Agreement, Not Contract: Balfour v. Balfour 

Can a promise between married parties result in a legally binding agreement?

In this case, Mr. and Mrs. Balfour, who used to live together as a married couple in Sri Lanka, went for a vacation to England. During this time, Mrs. Balfour developed rheumatic arthritis. The doctor advised Mrs. Balfour to stay back in England as, according to him, Sri Lankan climate would worsen her health. Before Mr. Balfour returned to Sri Lanka, he promised to send £30 to her per month. During their stay away, the parties drifted apart and separated. It was held in this case that Mr. Balfour’s promise to pay a monthly sum of £30 did not amount to a contract, as there was no intention to create a legal relationship on part of either of the parties.

Keywords: Husband & Wife, Sri Lanka, Rheumatic Arthritis, intention to create legal relationship absent

Communication of Offer is Necessary: Lalman Shukla v. Gauri Dutt 

In this case, the defendant’s nephew went missing and the petitioner, who was a servant under the defendants was sent out in his search to Hardwar. After sending the petitioner, the defendant carried out an offer to the general public offering Rs. 501 to whomsoever finds the missing boy. The Plaintiff found the boy and helped return him back to his home. He had been paid the money he spent in going to search for the boy, i.e., his travel expenses. When he returned, he continued working for the defendants for about six months. After six months, he sued the defendants for paying him the prize money that was offered earlier. It was held that the petitioner was not entitled to the prize money, as he was only obliged by the duty he had as the defendant’s servant to find the missing boy, and the reward was announced after he had already been sent.

Keywords: Missing boy, nephew, servant, travel expenses, reward money

Minor’s Capacity to Contract: Mohori Bibee v. Damodar Ghose 

Is a minor’s agreement void ab initio ?

In this case, the defendant, Darmodar Ghose, as a minor was the sole owner of his property. His mother was his legally appointed guardian. One Mr. Brahmo Dutt who was a moneylender, through his agent Kedar Nath, lent Damodar Ghose a sum of Rs 20,000 at 12% interest per year. The loan was taken by way of mortgaging the property. The same day this deal was made, Damodar Ghose’s mother notified the appellant that Damodar was a minor, and anybody who would get into an agreement with him would do so at his own risk. Kedar Nath claimed that Damodar Ghose had lied about his age on the date of the execution of this deed, which turned out to be untrue. Therefore, Brahmo Dutt’s appeal was dismissed and his request for the return of Rs 10,500 advanced towards him was also rejected. It was held that a minor’s agreement is void ab initio.

Keywords: minor, property, mortgage, moneylender, 12% interest, loan, void ab initio

Doctrine of Frustration: Krell v. Henry 

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

Keywords: King Edward VII, coronation, balcony, flat, cancelled, implied purpose, frustrated

The remoteness of Damage: Hadley v. Baxendale 

In this case, the plaintiffs were operators of a mill, that they had to shut down temporarily when the crankshafts of the mill broke. Plaintiffs then contacted the manufacturers of the engine to make a new engine on a similar pattern. A servant of the defendants was then sent to the carriers to transport the crankshaft to the engine manufacturers. The servant told the Defendants that the mill is shut down, so the crankshafts must be sent immediately. The defendants informed that whenever the old crankshaft is given to them, the new one will be delivered by 12 o’clock its next day. Due to the delay of the defendants, the delivery got delayed and the mill had to stay shut for several days. In this case, due to the involvement of a third party (the carriers), the delay and loss could not entirely be blamed upon the defendants. Whatever damages or loss rose, did not come to existence because of a direct breach of contract by the defendants.

Keywords: mill, crankshaft, carriers, delay, damages, remote

RELATED ARTICLES MORE FROM AUTHOR

Jagmohan singh vs. state of up (1972), prafulla kumar mukherjee vs. bank of commerce, ltd. (1947), right against exploitation, leave a reply cancel reply.

Save my name, email, and website in this browser for the next time I comment.

How to kickstart your career as a corporate lawyer

Participants from more than 85 countries have attended our bootcamps so far

Register now

Thank you for registering with us, you made the right choice.

Congratulations! You have successfully registered for the webinar. See you there.

Provide details on what you need help with along with a budget and time limit. Questions are posted anonymously and can be made 100% private.

Studypool matches you to the best tutor to help you with your question. Our tutors are highly qualified and vetted.

Your matched tutor provides personalized help according to your question details. Payment is made only after you have completed your 1-on-1 session and are satisfied with your session.

• Homework Q&A
• Become a Tutor

All Subjects

Mathematics

Programming

Health & Medical

Engineering

Computer Science

Foreign Languages

Access over 35 million academic & study documents

9 case study on contract act.

Sign up to view the full document!

24/7 Study Help

Stuck on a study question? Our verified tutors can answer all questions, from basic  math  to advanced rocket science !

Similar Documents

working on a study question?

Studypool is powered by Microtutoring TM

Copyright © 2024. Studypool Inc.

Studypool is not sponsored or endorsed by any college or university.

Ongoing Conversations

Access over 35 million study documents through the notebank

Get on-demand Q&A study help from verified tutors

Read 1000s of rich book guides covering popular titles

Sign up with Google

Sign up with Facebook

Already have an account? Login

Login with Google

Login with Facebook

Don't have an account? Sign Up