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CASE BRIEFS
Invitation to Offer

Pharmaceutical Society of Great Britain v. Boots Cash Chemists

(Southern) Ltd., [1952] 2 QB 795

Defendant ran a self-service pharmaceutical store. Non-prescription

medicines and drugs were displayed, including items included in the
Poisons list of the Pharmacy and Poisons Act, 1933. Customers could
choose the ones which they wanted and pay for these at a counter with a
registered pharmacist. Plaintiffs filed case against defendant for breach
of Section 18(1)(a)(iii) of the Pharmacy ad Poisons Act as there was no
registered pharmacist supervising the transaction of items included in
the Poisons list.

1. When is the transaction complete?

2. Is it when the customer selects the drug (breach) or when the
customer pays for it (no breach)?

Held that the contract comes into existence only when the customer pays
for the items to the registered pharmacist. The display of goods is merely
an INVITATION TO OFFER and the customer is free to take and put back
anything until the payment is made, signifying the conclusion of the
contract.

McPherson v. Appana, AIR 1951 SC 184

A offers Rs.6000 to buy B's house. Y is looking after the house and
conveys information of the offer to B. B on 5th August says, "I will not sell
for less than Rs.10,000." Y tells A. A agrees to pay Rs.10,000. Y tells B. B
receives an offer from W to buy house for Rs.11,000. He sells the house.
A sues B for breach of contract.

1. Is there a contract between A and B?

2. Does B's statement qualify as a counter-offer?

Held that B's statement was merely information as to the minimum

amount that he would consider to sell his house. It lacks specificity and
there is not implied contract. A's willingness to pay Rs.10,000 is thus a
new offer. Thus, there is no contract between A and B.

Revocation of Offer

Dickinson v. Dodds [1876] 2 Ch D 463

Dodds (D1) offered to sell Dickinson (D2) some houses and gives time till
Friday 9am to accept. On Thursday, Mr. Berry tells D2 that the houses
have already been sold to Mr. Allan. D2 meets D1 Friday at 7am and
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accepts the offer. When D1 says it is too late, D2 sues for breach of
contract.

1. Is there a contract between them?

2. Is D1 legally bound to wait till Friday 9am before entertaining other
offers?

Held that the intimation of D2 by B of the selling of the houses qualifies

as valid communication of withdrawal of the offer.
Also, D1 is not legally bound to keep the offer open till the specified time
as this is the subject matter of a separate contract. Since there was no
consideration on the part of D2, there was no contractual obligation for
D1.

In India, as per Section 6(1) of the ICA, the revocation must be

communicated by the promisor to the promisee. Knowledge of revocation
from a third party does not qualify as valid revocation of a proposal.

Advertisement as Offer

Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256

Carbolic Smoke Ball Co. (CSBC) put out an advertisement stating that
they would pay £100 to any person who gets influenza even after
consuming their wonder drug. To show their seriousness, they deposited
£1000 in a bank account. Carlill acted upon hearing their offer and took
the Smoke Ball, however she contracted influenza. She claimed her £100.
CSBC refused, claiming their advertisement was a mere puff and they
had no intention to enter into a contract. She sued them for breach of
contract.

1. Is CSBC's advertisement an offer?

2. Is there a contract between C and CSBC?

Held - YES, advertisement released by CSBC takes the form of a general

offer. Their claim that they did not intend to enter into a contract is
rejected. When they deposited £1000 in the bank account, they showed it
was not a mere puff and that they intended on following through on their
promise.
Further, as C had been induced to act based on their offer and had
performed the action, this performance qualifies as acceptance of the
offer. Thus, there is a valid contract that exists between C and CSBC and
the latter owes C £100.

Leonard v. Pepsico, 88 F.Supp.2d (1999)

PepsiCo releaed a commercial telling people they would be awarded

'Pepsi points' for drinking Pepsi and use them to purchase items from a
catalogue. In the commercial, a student is showing flying into school on a
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Harrier Jet shown to be 70000 Pepsi points. Each Pepsi point is said to be
10 cents. Leonard sent an order for a Harrier jet to Pepsi along with
$700,000 and 15 Pepsi points. When Pepsi refused, he sued them for
breach of contract.

1. Is the advertisement an offer?

2. Is he entitled to the Harrier Jet?

Held - NO. The attitude of the advertisement is such that it would not
lead any reasonable person to believe it was an offer in itself. Further,
the advertisement refers the consumer to a catalogue which can be said
to be an offer for the items listed in the catalogue. However, since there
was no Harrier Jet in the catalogue, this was not an offer. Thus, the
advertisement is not an offer and he is not entitled to the jet.

Acceptance

Harvey v. Facey, [1893] 3 App. Cas. 459.

Harvey wished to buy a property (Bumper Hall Pen) from Facey. He sent
F a telegram articulating desire to purchase and asking for the lowest
price. F replies saying the lowest price is £900. H sends a telegram
agreeing to buy the property for £900. F refuses to sell the property. H
sues for specific performance of the contract.

1. Is there a contract between H and F?

Held - NO. F merely specified what would be the lowest price he would
accept, he did not make an offer to sell at that price. This was thus an
invitation to offer by F and not a proposal. The onus was on H to make an
offer to purchase the property. Thus, there is no contract concluded
between H and F.

How to Accept – Offer and Counter Offer

Hyde v. Wrench [1840] EWHC Ch J90

Wrench offered Hyde to sell his property for £1000. Hyde refused.
Wrench quoted this as final price. Hyde sends offer for £950 which
Wrench refused. Hyde agrees to buy property for £1000. Wrench refuses
to sell. Hyde sues for breach of contract.

1. Is there a contract between H and W?

Held - NO. When a counter offer is made, all prior offers are said to be
cancelled. Thus, when Hyde offered to buy the property for £950,
Wrench's previous offer for £1000 is held to be cancelled. So H's later
acceptance of the offer does not stand.
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Butler Machine Tool Co. Ltd. V. Ex-Cell-O Corpn (England) Ltd.,

(1979) 1 WLB 401 CA

BMT offered to deliver a machine tool for £75,535 to ECO. In their terms
and conditions, they mentioned that the price was variable and that the
buyers would be charged the price ruling at the date of delivery. ECO
sends back an acceptance to receive the tool, however makes changes to
the terms applicable in the contract, most notable rejecting the clause for
prive variation. BMT sends back an acknowledgement stating the
contract would be on the terms as per their original offer. They then
proceed to deliver the tool but ECO refuses to pay the excess amount.

1. When was the contract concluded?

2. Is the price variation clause valid?

HELD - In Lord Denning's judgement, he says that this case is a "Battle of

Forms". He says that when ECO sent their order, they did not accept the
terms of the seller but rather made changes to the applicable terms, in
effect making a counter-offer. BMT's acknoledgement thus counts as an
acceptance. He thus uses the 'last-shot rule' by which the contract is
concluded on the terms of the person who makes the final offer. In this
case, it is ECO that makes the final offer so the contract is concluded
without the price variation clause.

Battle of Forms - Last Shot Rule

Acceptance by Conduct

Pro CD v. Zeidenberg, 86 F. 3d 1447 (7th Cir. 1996)

ProCD made a telephone directory database and was selling it at

different prices for personal and commercial use. They had specified that
anyone buying it at a personal rate could not use it for commercial
purposes, a clause specified inside the package as well as in the software
itself. Z buys the non-commercial version and sets up a website with the
same information at a lower price that ProCD. He gets sued for breach of
contract.

1. Does a buyer have to comply with the terms of a shrink-wrap license?

Held - Z is liable for breach of contract. Even if he did not accept the
terms inside the package when he bought and opened the package, he
would not have been able to proceed with the software unless he
accepted the terms including the bar from commercial use. This is thus a
clickwrap contract. Since he did not reject the package even after having
ample opportunities to read the terms of the license and return the
software, he is said to accept the terms of the contract by conduct.

Acceptance in Ignorance of Offer

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R v. Clarke (1927) 40 CLR 227 (Australia)

Clarke was on trial for being an accessory to murder. He gave

information regarding the murders of two policemen as a way of clearing
himself. Later, he claimed a $1000 reward which the Crown had
promised to any person who came forth with information regarding the
murders. He claimed that he had 'forgotten' about the offer when he first
gave the information but since he fulfilled the conditions of the offer, he
should be entitled to the reward. He sued the Crown.

1. Is there a contract between Clarke and the Crown?

Held - No, there is not contract. 'Forgetting' the offer is the same as
ignorance as to the offer and one cannot accept an offer without knowing
of the offer. Further, he gave the information to clear himself and was
thus not induced by the offer. Thus there is not contract between them
and he is not entitled to the amount.

Communication of Acceptance

Entores v. Miles Far East Corporation, [1955] 2 QB

E, a London based trading company, sent an offer by telex to purchase

copper cathodes from M, a Dutch company based in Amsterdam. They
agreed via telex. Contract was not performed and E sued. E could only
sue if they could prove that the contract had been concluded in London,
i.e. within the jurisdiction of English contract law. According the postal
rule of contracts, the contract is concluded when it is put into
transmission and the place where it is put into transmission is where the
contract is said to be formed.

1. Where was the contract formed?

LJ Denning said that the postal rule does not apply to instantaneous
modes of communication such as telephone and telex. In the latter
case, the acceptance is sent and received instantly, thus the contract
comes into existence only when the acceptance is received and the place
where it is received is where the contract is formed.
In this case, the contract was thus formed in London and E was abke to
sue for non-performance of the contract.

Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas &

Co., AIR 1966 SC 543

Contract was made over the telephone between two parties, one in
Ahmedabad and one in Khamgaon. The dispute was regarding where the
contract had been formed and which jurisdiction the dispute would be
contested in.
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Dissenting opinion - J Hidayatullah - said that postal rule should be

applied because we should prioritise statutory pprovisions over common
law provisions and that the contrat was concluded in Khamgaon not
Ahmedabad.

1. When is a contract complete?

When the contract is made by post, the contract is concluded at that

place where the acceptance is put into course of transmission by the
acceptor. In contracts made via telephone, the acceptance is complete
only when it is received by the offeror and is thus conclude where the
offeror is when he receives the accpetance.

Adequacy of Consideration

Chappel & Co. v. Nestle [1960] AC 87

Nestle was giving records of a song to people who presented them with a
sum of money and three chocolate wrappers. The copyright to the song
was owned by Chappel. Under S.8 of the Copyright Act, the copyright
owners are entitled to a 6.25% royalty of the retail sum. However, this
Act is said to be applicable only in monetary cases.

1. Do the chocolate wrappers form a part of the consideration?

Held - Yes, the wrappers are a part of the consideration. Consideration

need not be adequate and the contracting parties are at liberty to set the
consideration to whatever they wish. The wrapper may not have any
intrinsic economic value, but they are a part of the consideration. Thus,
S.8 is not applicable as the consideration is entirely monetary.
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Illusory consideration

Ramchandra Chintaman v. Kalu Raju, (1877) 2 Bom 362

Lawyer accepted vakalatnama (document allowing lawyer to act on

behalf of a person) and then was further promised an additional sum by
his client if the suit was successful. Later, he refused to pay the lawyer.
Lawyer sued.

1. Does the lawyer winning the case qualify as consideration?

Held - No, it does not. The Vakalatnama itself requires the lawyer to
perform his duty to the best of his ability, and thus he is merely
performing his pre-existing duty in this case. Success of the suit gives the
illusion of consideration but is actually furtherance of his existing duty.

Case also relevant for pre-existing duty

Past consideration

Mill v. Wyman, 3 Pick. 207 (Mass. 1825)

W's son fell ill while returning from a sea voyage. M took him in and
caref for him till he died. Hearing of what M had done, W expressed his
gratitude and promised to pay him a sum. He did not pay. M sued for
breach of contract.

1. Is W's promise enforceable?

Held - No, it is not enforceable. The actions had been performed prior to
there being any proposal and not on the request of W - thus this does not
form sufficient consideration. Further, as his son was not a minor, W is
not legally obligated to support his son in any way and is not liable for his
debts

In India, past consideration is valid. Section 25(2) of the ICA allows for a
contract to be formed based on actions performed in the past in the
absence of an offer.

Pre-existing duty

Lalman Shukla v. Gauri Dutt, (1913) 11 ALJ 489

G's nephew was missing so she asked all her servants to look for him.
When they are not able to, she puts out an advertisement promising Rs.
501 to anyone who finds him. Eventually, it was the janitor (L), unaware
of this promise, who finds and brings back the nephew. He then claimed
the reward. She refused to pay. He sued for breach of contract.
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1. Is there a contract between G and L?

Held - NO. Two principles established in this case.

1. As he was unaware of the offer when he started looking, he was not
induced to act by the offer and thus cannot claim to have accepted the
offer (see R v. Clarke)
2. As he was a servant of G, it was already his subsisting duty to look for
the nephew as he had been instructed to do so by G. Thus, finding him
was merely performance of his pre-existing duty and is therefore not
valid consideration.

Stilk v. Myrick (1809) 2 Camp 317

Two sailors abandoned their ship during their return journey. The
captain told the other sailors that they would be given an equally divided
share of the combined wages of both those sailors if they were able to
row and get the ship to its destination. They managed to do so but were
not paid.

1. Does the sailor's actions qualify as consideration?

Held - No. The sailors were already paid to row the boat to its destination
and thus were not performing any new action by compensating for the
absence of the other two soldiers. Thus, they were performing their pre-
existing duty which does not count as consideration.

Williams v. Roffey Brothers [1991] 1 QB 1

R were contractors who were supposed to refurbish 27 flats within a

specified period of time, failing which they would have to pay a late
penalty. They subcontracted some of the work to a carpenter - W. When
W was falling behind on his work, they offered him an additional amount
should he work faster and complete in time. He did so but was not paid.

1. Does W working faster qualify as consideration?

Held - Yes. Although completing the work was a part of his pre-exisitng
duty, this is an exception to the rule established in Stilk v. Myrick. Since
R received a practical benefit as a result of W working faster - they did
not have to pay the late penalty - it qualifies as consideration and he is
entitled to the additional sum.

Promissory Estoppel

Kedarnath Bhattacharji v. Gorie Mahomed. (1866) ILR 14 Calcutta

64
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K promised to pay Rs.100 towards the construction of a Town Hall in

Howrah. Relying on his promise, construction is started. Later, K
withdraws and refuses to pay.

1. Is K bound to pay the amount?

Held - Yes. Since it was upon reliance on his promise that the
construction was started, he is legally estopped from pulling out of the
promise as it becomes binding.

Doraswami Iyer v. Arunachala Ayyar, AIR 1936 Mad 135

A agreed to contribute an amount as subscription for the repairs being

made to a temple. He went on to pull out of the contract once the repairs
had begun. D sued A for breach of contract.

1. Is there a contract between A and D?

2. Do the repairs qualify as consideration?

Held - No, there is no contract. Consideration is said to be something

that is done AT THE DESIRE OF THE PROMISSOR and D did not do
anything in return that A had asked for, there is no consideration and
hence no contract.

Central London Property Trust V High Trees House Ltd [1957] 1

KB 130

H leased property from C at an agreed rate of £2500 per year. Due to

outbreak of WW2, occupancy fell. C promised to take just half the rent
but did not change the lease nor specify the time period. After the war
ended, the property reached full occupancy. C claimed the payment of
the full rent from after the war. H claimed the new rate applied to the
whole lease and that C was estopped from claiming the original rent as C
had promised to accept the new rent.

1. Is C estopped from claiming the original rent rate?

Held - C is bound by promissory estoppel to accept the new rate,

however this is only for the duration of the war. C is entitled to the entire
amount post 1945.

M.P. Sugar Mills v. State of Uttar Pradesh, AIR 1979 SC 621

Govt issued statement promising a sales tax exemption for all new
industrial units in the state. The plaintiff (P) received further unequivocal
assurance from the Director of Industries. After this, he took loans and
set up a new plant. The govt then first changed their policy to a partial
concession before revoking the concession entirely.
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1. Is the Govt bound to provide the concession?

Held - Yes. Since P acted relying on th promise made by the Director and
Govt, they are estopped from going back on their promise and are bound
to give the promised concession.

Privity of Contract

Tweddle v. Atkinson, [1861] 1 B&S 393

Mr.T and Mr.G agree in writing to pay T certain sums of money but G
dies before he can do so. When his estate refuses to make the payment, T
sues A, who is the executor of the estate.

1. Can T sue A?

Held - No, he cannot sue A as there exists a privity of contract and he

cannot enforce the contract even if he is the beneficiary in the said
contract as he is not a party to the contract.

Left unanswered as to whether Mr.T (T's father and original party to the
contract) could sue the estate.

Dunlop Pneumatic Tyre Company v. Selfridge Co. [1915] AC 79

D sold tyres to S saying that they should only sell the tyre for a certain
price and not below. D further adds that should S sell the tyres to
another retailer, S should ensure that they also do not sell for below the
said price. S sells to retailer Dew who sells for below the price even after
assuring S they would not. D tries to sue Dew.

1. Is there a cause of action for D against Dew?

Held - By the doctrine of privity of contract, D cannot take up a cause of

action against N as D is not a party to Dew's contract with S.

M.C. Chacko v. State Bank of Travancore (1969) 2 Scc 343

KC Chacko owed money to State Bank. He died while the suit for the
payment was going on. He had established a deed as per which his
property and estate was inherited by his heirs, including his son MC
Chacko. SB sought to reclaim the loan from MC arising out of the estate.

1. Can MC Chacko be made to repay KC Chacko's loan?

2. Can SBT reclaim the amount from KC's estate?

Held - SBT is not entitled to be repayed. MC is not a party to the contract

between KC and SBT and so the contract cannot be enforced against him
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(privity). Also, the deed of inheritance is between KC and his heirs. SBT
is not a party or a beneficiary of the deed and so cannot claim payment
from the estate and its earnings.

Intention to create legal relations

Balfour v. Balfour [1919] 2 KB 571

A husband and wife travelled over-seas and the wife was forced to stay
back due to medical reasons to receive treatment. They mutually agree to
live separately and the husband promises to pay the wife maintenance.
After some time, they grew apart and the husband stopped paying. She
sued him for breach of contract.

1. Is there a contract between them?

Held - No. Upon appeal, the higher court held that the domestic nature of
the promise meant that it was erely a social agreement and not a binding
contract. Hence the principle was established that in social agreements
between close relations, it is assumed that there is no intention to create
legal relations and hence such agreements are not legally enforceable.

Lucy v. Zehmer, 84 S.E.2d 516

Z made a fake contract to sel his farmhouse to his friend as a practical

joke. He had no intention to actually sell the house, but joking nature of
the contract was known only to him and his wife. As far as the other
party was aware, he was actually selling his farmhouse. L accepted his
offer, and when Z refused to actually sell the house, she sued.

1. Is there a contract between them?

Held - Yes. The contract was held to be a valid binding one even though Z
did not intend to crate legal relations. His actual intentions are not
important if they remain unexpressed and your actions suggest
otherwise. His actions clearly showed that he intended to sell his
farmhouse, so intention is assumed to be there and the contract is held to
be valid.
Coercion

Chikham Amiraju v. Chikham Sesamma, 1917 41 Mad. 33

A man threatened to commit suicide (self-harm) unless his wife and son
signed a contract. They signed the contract.

1. Is there coercion used by the man?

Held - Yes. Attempt to commit suicide is forbidden u/s 309 of the IPC
(1860). Threatening to commit an act forbidden under the IPC qualifies
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as coercion and so the contract is rendered voidable at the option of the

wife and child.

Askari Mirza v. Bibi Jai Kishori, 1912 16 IC 44

A (minor) borrowed on a mortgage deal by falsely representing his age

but did not repay. The contract is voidable at the option of the minor as
per rules of capacity. A declared the contract to be void as a compromise
but claimed it was only because the other party threatened to institute
criminal prosecution against him for falsely representing his age.

1. Is the threat of prosecution against A coercion?

Held - No. For such a threat to qualify as coercion, it must be based on

false claims. However, the minor had falsely represented his age, which
is an offence in itself. Thus, the grounds for the threat were valid and it is
not coercion.

Kishen Lal Kalra v. NDMC, AIR 2001 Del 402

K was entitled to a sum of money in addition to his normal salary which

was owed to him by the Govt. The Govt refused to pay his salary unless
he forfeited his claim to the additional amount. He sued for coercion.

1. Does this detention qualify as coercion?

Held - Yes. Property need not be movable property, it is anything that

one is entitled to. Thus, the salary owed to K is his property. The govt's
refusal to pay him counts as detention of his property which qualifies as
coercion.
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Undue Influence

Subhash Chandra Mushib v. Ganda Prasad Mushib, AIR 1967 SC

878

A grandfather gave his entire property to one grandson of his who had
taken care of him. The other potential heirs sued the grandson, claiming
undue influence was used.

1. Did the grandson unduly influence his grandfather?

Held - No. The relationship between them was one of natural love and
affection, and the inheritance received was in appreciation of the
grandson taking care of him. There does not exist any element of undue
influence here.

Unconscionability

Central Inland Water Transportation Ltd. V. Brojo Nath Ganguly,

AIR 1986 SC 1571

Company had a policy by which they could fire an employee without

grounds as long as they provide a three month termination notice. This
was challenged as being unscionable.

1. Is the Company's policy unconscionable?

Held - Yes. There is a Real/Apparent authority that the Company holds

over its employees and is thus in a position to dominate them. This policy
was held to be void ab initio as it violates public policy due to there being
unequal bargaining power between the parties.

Inequality of Bargaining Power Doctrine

Lloyds Bank v. Bundy, [1975] 1 QB 326

A father and son hold bank accounts in the same bank. The son takes an
overdraft and the bank convinces the father to guarantee the loan,
mortgaging his farm as well. The son failed to pay back the loan and the
father lost all his property. The bank was sued for unduly influecing the
father.

1. Did the bank unduly influence him?

Held - Yes. There exists a fiduciary relationship between a bank and its
client. The client relies on the bank, and hence the bank has a duty to
sufficiently inform them and advise them. The bank did not do so as they
made the deal such that they benefit entirely, leaving the man destitute.
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Lord Denning's judgement lays down the duties of the stronger party in a
fiduciary relationship. Eg: Doctor cannot advise you to donate a kidney
without informing you of the dangers of doing so.
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Economic Duress

Universe Tankships Inc. of Monrovia v. International Transport

Workers' Federation [1982] 2 All ER 67

Workers’ Union refused to take the ship out on voyage unless the
shipping company agreed to pay them $80,000. The shipping company
took them to court claiming there existed a situation of economic duress.

1. Is there economic duress being imposed on the Company?

Held - Yes. It was held that there was a situation of economic duress
created and hence the amount was recoverable.

Atlas Express Ltd. Kafco [1989] 1 QB 833

Kafco and Atlas entered into a contract. K was to supply imported basket-
ware to A which A would display. A tried to negotiate with K saying that
the minimum amount of baskets each time should be £450 but was
unsuccessful, so the contract went ahead on its original terms. A sends a
truck to K saying that it will not leave unless goods worth £450 were
loaded into the truck. K felt that he had no choice but to comply in the
given situation and so loaded the truck. Later, K took A to court for
economic duress.

1. Is there economic duress being exerted on K?

Held - Yes. K won the case as there was lack of choice, pressure to
comply and economic nature of the exchange, i.e. all criteria for
economic duress were met.

Fraud

Vokes v. Arthur Murray, 212 So. 2d 1906 (1968)

Lady enrolled herself into dance classes. She made it clear that she
wanted to be a great dancer. Dancing institute promised to make her into
a great dancer. Even though she was not a good dancer, they convinced
her to sign up for more classes, continuing to pay more money. The
dance teachers knew that she had no aptitude for dancing but they told
her and made her believe she was improving and had great potential.
One day she realized she was being duped and took them to court.

1. By not telling her that she is not going to be a great dance, has the
institute acted fraudulently?

Held - Yes. Although generally making big claims in the course of trade is
not fraud. However, in this case, it was said to a particular person and
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this made her incur expenditure as a result of it. Thus, it qualifies as

fraud.

Although it is acceptable to engage in 'puffing' to promote services, the

defendant knew his puffing was costing V expenditures not justified by
her abilities, and his puffing became fraudulent when he caused her to
make expenditures in reliance of non-existent abilities.

Misrepresentation

Bhagwani Bai v. LIC, Jabalpur, AIR 1984 MP 126

B filed a life insurance claim. He was supposed to mention if there were

any prior claims that had lapsed where he had not been granted
insurance. Although he had three such lapsed claims, he did not mention
them and they granted him insurance. When he died, his wife sought to
claim te insurance but LIC argued that the contract was not valid due to
misrepresentation.

1. Does not mentioning the prior lapsed claims amount to

misrepresentation?

Held - No. The Court held that information regarding previous claims
was not relevant to granting the insurance as they had all the relevant
health information at their disposal. Since the fact was not relevant to
the contract at hand, it is not misrepresentation.

Esso Petroleum v. Mardon, [1976] QB 801

M was buying a petrol station franchised by E. E had estimated that the

throughput of that petrol station would be 200,000 gallons a year;
however, the local council had made a decision regarding planning
permission which meant that there would be no direct access from the
main street and therefore fewer customers. The estimate provided by
Esso did not take this into account despite their knowledge of the
decision. Mr Mardon bought the petrol station and business did not go
well. He sued.

1. Does the incorrect estimation amount to misrepresentation?

Held - Yes. Altough in normal situations opinions and estimates are not
liable for misrepresentation, when someone claims to be an expert in a
field, as E claimed to be, the estimation assumes an importance similar to
fact as opposed to opinion.

Mistake

Tarsem Singh v. Sukhminder Singh, 1998 3 SCC 471

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T owned land and entered into a contract for sale of land with S. The
agreed rate was Rs.24,000 per acre. S paid Rs.77,000 in earnest. T
refused to transfer the land as he claimed the amount had yet to be paid.
S sued for Specific performance.

1. Is there a mistake of fact involved in the creation of the contract?

2. Can specific performance be mandated against T?

Held - There was a mistake of fact in the contract as there was a mix-up
between the rate being per 'bigha' or per 'kanal'. Since there was a
mutual mistake of fact, the contract is declared void. Thus the decree for
specific performance was not passed but a decree for refund of the
earnest Rs.77,000 was passed.
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Legality

Niranjan Shankar Golikari v. Century Spinning & Manufacturing

Co. Ltd., AIR 1967 SC 1098

N joined C as a Shift Supervisor. He signed a contract for 5 years which

contained clauses that he would not work for another company in a
similar capacity and that he would maintain secrecy as to the technical
aspects of his work. After his training, he joined a rival company for
higher emoluments. C filed for an injunction preventing him from
working in that capacity in a similar concern. Injunction was granted. He
appealed to the HC and then the SC. The appellant argued that the
clause violated s.27 of the ICA which deems all agreements in restraint of
trade to be void.

1. Is the clause in contravention of S.27 of the ICA?

Held - No. Negative covenants which operate during the period during
which the employee is bound to serve his employer do not fall under s.27,
unless the contract is excessively harsh, one-sided or unconscionable.
Further, this injunction is not unreasonable as it is for a limited time and
applicable only for a specific area of work.

Percept D’Markr v. Zaheer Khan, (2006) 4 SCC 277

Z entered into a contract with P such that P would manage his media
affairs. There was a term included by which P had the right to first
refusal in regard to any offers for management of media offers from other
companies, i.e. Z could not ccept any third-party offer without giving P
the opportunity to at least match the offer. If they failed to match it, he
was free to accept the offer and deal with other people. However, upon
termination of the first agreement, Z accepted an offer from a third-
party. P claimed a permanent injunction.

1. Is the clause in contravention of S.27 of the ICA?

Held - Yes. Once the first agreement had legally terminated, Z should be
free to trade and work with whosoever he chooses. The current
agreement compels him to have his affairs managed by P even if he does
not wish to. The covenant can be enforced as long as the agreement is
valid, but once it had terminated, the term becomes void.

Contingent Contract

Ramzan v. Hussaini, AIR 1990 SC 529

H and R (sister and brother) agreed that H would redeem the disputed
property under mortgage and R would execute the sales deed in her
favour on the day she took possession of the registry documents. She
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redeemed the property in 1970 but he did not respect the agreement.
She filed for specific performance in 1984, however the the limitation
was set as 3 years for specific performance from the date fixed for
performance or in the absence of such a fixed date, from the day the
plaintiff received notice that the performance is refused.

1. Can H sue R for specific relief?

Held - No. The Court declared that the three years would begin from the
day that she took the papers of registry into her possession, which was in
1970, as that is when he was supposed to have executed the sales deed.
As the statue of limitations had been exceeded, her case was dismissed.

Ganga Saran v. Firm Ram Charan Ram Gopal, AIR 1952 SC 9

F agreed to supply 61 bales of cloth to G by 17th Nov 1941. They

promised to 'keep supplying the goods as soon as they had been supplied
to them by the mills'. The mills referred to the New Victoria Mills,
Kanpur. G pleaded non-delivery of goods as he had not received it by the
fixed date. F argued that they had not been supplied the goods by the
mills.

1. Is F's agreement to supply G by the said date contingent on being

supplied with the goods by the Mills?

Held - No. The Court held F liable for damages. In the construction of the
contract, the delivery of the goods was not made contingent on being
supplied by the Mills, as the mention of the mills was merely for
descriptive purposes. Thus, the doctrine of frustration cannot be invoked.
Further, F could not show that they had placed an order for the goods
with the mills, and had thus breached the contract.

Attempted Performance

Cutter v Powell, (1795) 101 ER 573

C was hired for a sea voyage as a second mate. He was promised a

certain sum, "provided he proceeds, continues and does his duty as a
second mate in the said ship from hence to e port of Liverpool." He died
after 6 weeks at sea, before they reached Liverpool. His wife sought to
claim a proportionate part of his wages for the time he spent on voyage.

1. Is C entitled to payment for substantial performance of the contract as

an implied term of the contract?

Held - No. When a contract is concluded on express terms, no implied

terms can be derived from it. The contract stipulated that he would be
paid upon completion of the voyage. Although he was not to blame for
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not being able to complete the voyage, he would not be entitled to any
partial payment.

Impossibility of Performance

Taylor v. Caldwell, QB (1863) 3 B & S: 122 ER 309

T hired a music hall from C for the purpose of hosting a music event for
four days. Before the event could take place, the hall caught fire and
burnt down. T sued C for breach of contract as he could not use the hall
for the purpose he had hired it for. Under the doctrine of absolute
obligations, C would be held liable.

1. Is C liable for breach of contract?

Held - No. Application of the dotrine of absolute obligations would be

harsh in this situation as the events were beyonf the control of C. Both
parties were released of all liabilities under the doctrine of frustration of
contract.

Frustration of Object

Satyabrata Ghose v. Mugneeram Bangu, 1954 SCR 310

M owned a large tract of land which was divided into smaller plots and
offers were invited from interested buyers. A certain amount was
collected and the remaining was to be collected later. Due to the ongoing
war conditions, the company's land was requisitioned by the Govt for
military purposes. The company informed Bejoy Krishna Roy, one buyer,
that the sale had been cancelled and that he may collect his money. S,
B's asignee, sued for wrongful repudiation of the contract and sought
specific performance. M claimed that due to supervening circumstances,
performance had become impossible and hence the contract habd been
frustrated.

1. Has the contract been frustrated u/s 56?

Held - No. The doctrine of frustration is applicable to contracts for the

sale of land in India as the obligations of the parties are the same as in
ordinary contracts. While s.56 is not limited to physical or literal
impossibility, the supervening circumstances were not such that they
made the performance of the contract impossible. The requisiton order
was temporary and the delay would not be so great so as to upset the
basis of the contract. Hence, the defendant did not have any reason to
avoid the contract.

Alopi Parshad and Sons v. Union of India

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A had been contracted to supply ghee to the Armed Forces at a particular

rate in 1937. With the outbreak of WW2, the demand for ghee in the
army increased, so the Gov negotiated and mutually decided on a
reduced price in 1942. In 1943, A asked for an enhancement in the rate
as abnormal conditions had made production difficult for them. Upon
receiving assurances from the Govt, they went ahead with the
production, incurring high costs in the process. When they did not
receive the enhanced amount, they approached the Court.

1. Will the original contract price prevail or the changed one?

2. Has the contract been frustrated due to impossibility of performance?

Held:
1. u/s 62, when the two parties mutually decided to change the price, the
originally decided price was no longer applicable. Hence, a new contract
was formed with the renegotiated price.
2. The war situations was known to both parties while making the
contract, hence it was not an unforseeable change in the conditions.
Further, a contract is not frustrated merely because the circumstances in
which it was made have changed - although it may be difficult, it is not
impossible for them to perform the contract and thus it is not frustrated.

Discharge by Agreement: Novation

Ram Khilona & Ors. v. Sardar & Ors., AIR 2002 SC 2548

Plaintiffs came to an agreement with Defendants 1 and 2 to purchase suit

land for Rs.14,000. They paid Rs.12,000. D1 and D2 put them in
possession of the suit property but continued possession themselved by
continuing agricultural activites on the land despite reminders to execute
the sale deed. P found out that D3 and D4 had got the sale deed executed
in their favour without the knowledge of P in May 1969. They sued,
seeking specific performance in the form of execution of the sale deed in
their favour in return for the balance of Rs.2000 from the agreed amount.

Held - The original agreement was valid and there was no need for
marginal witnessed to prove its validity in law. The SC set aside the HC
judgement and ruled in favour of P, granting them specific relief.

Discharge by Agreement: Alteration

Kalianna Gounder v. Palani Gounder, (1970) 2 SCR 455

K agreed to purchase lands from P for Rs.12,000. An advance payment of

Rs.2000 was made which was received by P. Three days later, P informed
K that only Rs.350 was paid and since the remaining Rs.1650 was
promised but not paid, the agreement stood cancelled. K filed for specific
performance and deposited Rs.10,000 in court for the remaining sum. P
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claimed that the agreemen had been altered in material particulars

after its execution by the addition of the words; "clear the debts and
execute the sale deed free from encumbrances", and thus the suit was
not maintainable.

1. Is there a contract between K and P?

2. Can specific performance be instituted against P?

Held - Yes. The sum of Rs.2000 was paid and the claim that only Rs.350
was paid was untrue, used so that P may resign from the agreement.
Further, even if the words were added after the execution, they do not
amount to material alteration as they did not alter the rights and
liabilities of the parties.

Anticipatory Breach

Hochster v De La Tour, (1853) 2 E & B 678

D agreed to employ H as his courier to travel with him to Europe. They

were supposed to go on 1st June 1852. On 11th May, he wrote to H
telling him that he no longer required his services. On 22nd May, H
brought a suit for anticipatory breach of contract against D, who argued
that he could not bring a suit before the date that the contract was due to
commence.

1. Do D's actions qualify as anticipatory breach?

2. Can H bring a suit before the contract commencement date?

Held - Yes.
1. When a contract provides a promise for future conduct, a refusal to
perform the agreement, thereby a renouncement of the contract, is a
breach of contract. Further, a contract for future conduct carries an
implied promise that neither party will do anything to prejudice that
performance.
2. A breach of contract by renouncing future conduct immediately
renders the party liable for action for damages.

Remoteness of Damage

Hadley v. Baxendale, (1854), 9 Ex 341

A shaft in H's mill broke rendering the mill inoperable. H hired B to

transport the broken shaft o an engineer in Greenwich and to get a
duplicate. B promised to do so the next day, but he was negligent and
sent it later. He was unaware that the mill would be inoperable without
the shaft and the mill was shut for an additional five days. H had paid
2p4s for the shipping and sued for £300 for thewages and lost profits.
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1. Can B be sued for damages he was not aware would be incurred as a

result of his breach? Is the damage too remote, i.e. is B liable for the lost
profits and wages.

Held - No. A party can only successfully claim for losses stemming from
breach of contract where the loss is reasonably viewed to have resulted
naturally from the breach, or where the fact such losses would result
from breach ought reasonably have been contemplated of by the parties
when the contract was formed. As B was unaware and H had not
informed him, he was not liable for the lost profit and wages.

Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48

T chartered The Achilleas from M for a period of 5-7 months. M was to

supply crew and maintain operation of the vessel while T managed the
commercial operation of the vessel. Both parties agreed to extend this for
another 5-7 months and the date for redelivery was 2nd May. M
negotiated with Cargill (C) and agreed to let them charter it from 10
May. Due to an unavoidable matter, T delivered it on 11 May. M
renegotiated with C but suffered reduced profit. M sued T for damages
calculated as the difference between the original and new rates for the
entire period of C's charter. T argued that they should only be liable for
lesser damages calculated from the set date of delivery till the day M
could again use it.

1. Is the damage too remote for T to be held liable?

The Court allowed the appeal but on a narrower ground. The law on
remoteness is not only concerned to protect the contractual bargain but
to set limits of liabilities and allowed the appeal. It was not possible for T
to contemplate at the time of forming the contract that this damage could
be incurred. Judge says case may have been different if M had informed
T of the commitment to C and the consequences of not returning it on
time.

Adequacy of Damages

Beswick v. Beswick [1968] AC 58

B was in poor health and agreed with the defendant, his nephew, that he
would transfer the trade and good will of his coal business to him on the
basis that the nephew employed him as a consultant for the rest of his
life and paid him for this. The nephew also agreed to pay B's wife after
PB died for the rest of her life. She was not a party to the agreement.
Upon the death of PB, the nephew paid B’s wife once but then not again.
B's widow brought an action as administrator of B’s estate and also in
her personal capacity claiming for specific performance.
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1. Can she claim specific relief as the administrator of B's estate?

2. Can she claim performance in her personal capacity?

Held -
1. She was allowed to claim specific relief as the administrator of the
estate
2. She could not claim specific relief for herself as she was not a party to
the agreement between them.

Discharge by Agreement: Alteration

Discharge by breach
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Discharge by agreement: accord and satisfaction

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Was clearly established that the appellants accepted the sum of Rs.20lacs in full satisfaction
of their claim and duly discharged the promissory notes by endorsing full satisfaction;
therefore, according to s.63 of the Indian ContractAct,1872, the suit of the appellants was
liable to be dismissed.

List of missing cases:

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 Frustration of Object
o Energy Watchdog v. CERC, 2017 SCC Online SC 378
 Discharge of joint liabilities
o Devilal v. Himat Ram, AIR 1973 Raj. 39
 Liquidated Damages
o Cavendish Square Holdings v Talal El Makdessi
[2015] UKSC 67
o Fatechand v. Balkishan Das[1964] 1 SCR 515
o Maula Bux v. Union of India [1969] 2 SCC 554
o ONGC v. Saw Pipes [2003] 5 SCC 705
 Duty to Mitigate
o Jamaal v. Moola Dawood, (1916) ILR 43 Cal 493