Case Study In Indian Contract Act Case

Indian Contract Act, 1872: Top 10 Landmark Judgements of Law of Contracts


By LAWNN intern: Anirudh Agrawal

  • Balfour vs. Balfour [1919] 2 KB 571


Mr. and Mrs. Balfour were enjoying leave in England. When the time came for Mr. Balfour to return to Ceylon where he was employed, the wife stayed back in England for health reasons. Mr. Balfour promised to pay her allowance every month for her maintenance. Mr. Balfour stopped paying when the differences arose and the wife sued her husband for allowance. Lord Atkins explained that there should be intention between the parties to create a contract which was missing in the present case and the parties shall intend that they shall be attended by legal consequences.


  • Mohoribibi vs. Dharmodas Ghose 30 IA 114 : 30Cal 539 (1903)


A minor mortgaged his property in favour of the defendant and took some money in advance. He thereafter went on to file an action to cancel this mortgage. However defendant pleaded that he should be allowed his money back relying upon Section 64 of Indian Contract Act 1872 which deals with voidable contracts. The Court held that the contract entered by a minor was void ab initio and not voidable. Therefore the minor is not liable to pay any sum of money already advanced to him.


  • Lalman Shukla vs. Gauri Dutt (1913) 11 All LJ 489


Defendant’s nephew was absconded from home. His servant was sent to find out the child. Meanwhile, the defendant through handbills proposed to pay Rs 501 to anyone who find out the child. The servant found the child but came to know of the offer afterwards. The servant then claimed for the award by filing an action in the court of law but it was dismissed on the principle- In order to constitute a contract, there must be acceptance of an offer and there can be no acceptance unless there is knowledge of the offer.

  • Carlill vs. Carbolic Smoke Ball Co (1893) 1 QB 256


A company, through an advertisement, offered to pay 100 British pounds to anyone who infects with epidemic influenza, cold or any other disease after using their Carbolic ball according to the directions. A person who used it accordingly filed an action to recover the amount. The company contended that the offer was not made to anyone personally and hence they are not bound by the advertisement offer. The contention was not accepted and it was observed that in cases of general offer, communication of acceptance is not necessary and it can be claimed by anyone who comes and performs the said condition.


  • Philips vs. Brooks (1919) 2 KB 243


A person named North went to a jewellery shop and purchased some ring in the name of another person Sir George Bollough and also issued the cheque in favour of him by this name. After verifying the address told by North of George in the directory, the shopkeeper allowed North to take a ring with him. After some time, when the shopkeeper discovered of the fraud, North has already pledged the ring in favour of some other person. The shopkeeper filed a case against that other person for his ring. It was observed by the Court that- The minds of the parties met upon the terms of the sale. The fact that the seller was induced to sell by the fraud of the buyer made the sale voidable and not void. The sale could not be avoided because there was intention to sell the product to the person present.


  • Donoghue vs. Stevenson [1932] AC 562


A man ordered ginger beer for her lady friend in a restaurant. The ginger beer came in a dark bottle and the contents of the bottle were not visible from outside. After drinking some of the beer, the lady friend poured the remaining into a tumbler where a snail in a decomposed condition fell. The lady friend complained of stomach pain and she filed a case against the manufacturer. The court ruled in her favour on the principle- The manufacturer owed a duty of care towards the final consumer even in the absence of a contract. The element of privity is not essential for a consumer to sue the manufacturer for negligence.


  • Dunlop Pneumatic Tyre Co Ltd vs. Selfridge & Co UKHL 1, AC 847


The plaintiff Co. sold tyres to Dew & Co. with an undertaking that they shall not sell the product to anyone below the list prices. Dew & Co. sold some tyres with the similar undertaking that they shall not sell it below the list price. However the defendant company sold the tyres below the list price and the plaintiff brought an action against them. The doctrine of privity was applied in this case and it was held that there was no contract between the plaintiff and the defendant and therefore plaintiff cannot sue the defendants for breach of contract as there was no contract between them.


  • Damodar Murlidhar vs. Secretary of State of India (1894) 18 Madras 88


Government carried out some repairs in the irrigation tank the benefit of which was enjoyed by the villagers as well as some zamindars. The repairs made by the government was done for its preservation and was a result of non-gratuitous act. The court held that government is entitled to the proportional contribution towards the expenses of repairs on the principle- Even though the party making payment or rendering services was personally interested in the matter, he can recover proportional representation from the parties enjoying the benefits.

  • Chappell & Co. Ltd. vs. Nestle Co. Ltd. [1960] AC 8


The Court in the instant case held that the consideration to a contract should be sufficient and need not be adequate. Nestle offered to sell a music record, whose copyright was possessed by Chappel, to anyone who bring in three wrappers of “6D” Chocolate bars. The court held that the wrappers, even though does not possess monetary consideration, was a sufficient consideration and thus the contract entered into by such consideration is binding upon the parties.


  • Dickinson v. Dodds 2 Ch. Div. 463 (1876)

Defendant made an offer to the plaintiff to sell certain property and the offer was left open to accept by the plaintiff till 9 p.m. of Friday. However the defendant sold the property before Friday and plaintiff gave his acceptance on Friday. In an action by the plaintiff, the court held that the plaintiff had neither given his acceptance nor any consideration finalizing his intention to buy the property. Therefore it was a mere promise which the defendant was not bound to comply with.


Anirudh Agrawal is a student pursuing B.A.LL.B from Hidayatullah National Law University, Raipur and is an acquisitive learner and writer.

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Antecedent Agreements A concluded antecedent agreement may be relied upon in interpreting a later contract in pursuance of that agreement.  However, an antecedent agreement may be considered only on the basis of its particular facts and circumstances. Pre-Contractual Documents/Draft Agreements A concluded contract may be preceded by multiple drafts. Draft agreements may even be signed. Draft… Read More Rules for Interpretation of Contracts: Pre-Contractual Documents/Draft Agreements

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GREEV vs. KETTLE Key Words: mutual mistake in guarantee, estoppel, rectification Facts: Defendant Company (S), in consideration of Plaintiff Company’s (C) giving credit to principle debtor (D), guaranteed the payment of debt, which was stated in deed to be secured by ‘validly issued shares in Company’. Though both S and C believed this fact to… Read More GREEV vs. KETTLE

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Gray vs. Lewis AND Parker vs. Lewis (1873) 8 Ch App 1035 Facts: A shareholder, when initiated suit for damages against plaintiff-bank and defendant (who was the director of the plaintiff bank as well), director of a liquidated company for fraud and mala fide holding of accounts, got judgment against the bank and the defendant… Read More Gray vs. Lewis AND Parker vs. Lewis

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State Bank of Saurashtra vs. Chitranjan Rangnath Raja and Anr. Citation(s): 1980 AIR 1528, 1980 SCR (3) 915 Full Text here Facts: The appellant-bank allowed a cash credit facility limited to Rs. 75,000/- to the Principal Debtor (PD) on his pledging 5,000 tins of groundnut oil under the lock and key of the Bank and on… Read More State Bank of Saurashtra Vs. Chitranjan Rangnath Raja and Anr.

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Charan Singh vs Security Finance (P) Ltd. Citation(s): AIR 1988 Delhi 130 Full Text here Facts: The creditor after obtaining the money decree against the two principal debtors (PDs) and the Surety, holding them liable severally as well as jointly, decided to pursue his cause of action against the Surety, after he arrived at an agreement… Read More Charan Singh vs Security Finance (P) Ltd.

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Imperial Loan Co. Ltd. v. Stone [1892] 1 Q.B. 599 (competence of parties, mental capacity) FACTS: Defendant when lunatic signed a promissory note as surety upon which plaintiff brought an action and defendant took the defence of insanity ISSUE: Whether defendant can successfully claim insanity as a defence? HELD: To successfully take the defence of insanity as… Read More Imperial Loan Co. Ltd. v. Stone

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Samuel Pillai v. Anathan Pillai [Section 25(3) of Indian Contract Act, Consideration] FACTS: Administratrix of the deceased whose property was inherited by the defendant entered into an agreement with the latter to convey the title in the property without deducting the debt, which was barred by the limitation, for the promissory note paid by the… Read More Samuel Pillai v. Anathan Pillai

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Union of India & Ors. v. M/S. Bhim Sen Walaiti Ram  1970 SCR (2) 594 (Section 7 of Indian Contract Act -Acceptance must be absolute) FACTS: In an auction held for the sale of license of liquor shop, defendant offered the highest bid which was provisionally accepted “…subject to the confirmation of Chief Commissioner who may… Read More Union of India & Ors. v. M/S. Bhim Sen Walaiti Ram

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The State of Bihar v. Ram Ballabh Das Jalan and Anr. AIR 1960 Pat 400 Also See Morris v. Baron  (Novation=Substitution) FACTS: Defendant had a debt of certain amount due to plaintiff along with certain credit due from latter. Plaintiff, by its letter acknowledged the credit and made claim for remaining debt due. Defendant acknowledged… Read More The State of Bihar v. Ram Ballabh Das Jalan and Anr.

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Nathu Lal and Ors. v. Mst. Gomti Kaur and Ors.  AIR 1940 PC 160 (Material Alteration) FACTS: Plaintiff executed a sale deed (A) in favour of defendants who in turn executed a deed (B) for conditional transfer of the properties sold to them both on 25th March 1844, condition being paying the stipulated consideration amount… Read More Nathu Lal and Ors. v. Mst. Gomti Kaur and Ors.

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Morris v. Baron & Co. [1918] AC 1 (Section 62, discharge by agreement, substitution of new agreement, novation) FACTS: Morris entered into written contract (A) with Baron to supply him with certain no. of pieces of cloth: dispute arose between the parties as Morris demanded payment of supplied pieces of cloth while Baron claimed damages… Read More Morris v. Baron & Co.

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V.L. Narasu v. P.S.V. Iyer AIR 1953 Mad 300 (Section 56, Frustration, Section 39, breach) FACTS: Defendant contracted with plaintiff to screen latter’s film in his cinema house until the net collection fall below some stipulated amount. Later there were unprecedented heavy rains which made a wall of cinema house to collapse owing to some… Read More V.L. Narasu v. P.S.V. Iyer

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