I.

Legal intention

1) Balfour v. Balfour

Contention(s): Mrs. Balfour contended that if the wife is living apart from her husband by
mutual consent then the right of the wife to pledge her husband’s credit arises. If
however, instead of doing so, she agrees to give up that right and to accept an allowance
instead, she is entitled to sue for it. Therefore, consideration for the promise by the
husband to pay the allowance was that Mrs. Balfour gave up her right to pledge her
husband’s credit (which means that, she will not be asking for greater sum of money from
her husband directly, or, using the knowledge that she has the right to act in capacity of
his agent, she would not use his credit to a greater advantage).
Lord Duke: The husband has a right to withdraw the authority from his wife to pledge his
credit. Giving up of that which was not a right was not a consideration.
There must be intention of parties to create legal relations while entering into any
agreement so as to make it enforceable by law. This intention is to be determined
objectively (Smith v. Hughes): If a reasonable person in the position of offree would
consider that the offer made by the offeror was intended to create legal relations, then
offeror will be so bound by contract subject to fulfilment of other requirements.

In case of social engagements and family arrangements, there is a strong presumption that
parties therein have no intention to enter into legally enforceable contract. Such
agreements are made in amity, grounded on domestic relations between the parties and
obligations arising out of those relations; and no legal consequences could reasonably
have been contemplated by them for breach of such agreements.

Held: Since the agreement was made in the ordinary domestic relationship of husband
and wife out of amity and necessity; intention to enter into a legally binding contract was
missing and hence there was never a contract made b/w Mr. and Mrs. Balfour

2) Meritt v. Meritt

The agreement was binding. The Court of Appeal distinguished the case of Balfour v
Balfour on the grounds that the parties were separated. Where spouses have separated it is
generally considered that they do intend to be bound by their agreements. The written
agreement signed was further evidence of an intention to be bound

3)Parker v. Clarke

It was held that the exchange of letters showed the two couples were serious and the
agreement was intended to be legally binding because (1) the Parkers had sold their own
 home, and (2) Mr Clarke changed his will. Therefore the Parkers were entitled to
damages. There was share of maintenance. Wording of the agreement if you cannot
maintain it you can sell out shows intention that at the time of their deaths they would still
be living there.

4) Simpkins v. Pays
It was held that the presence of the outsider rebutted the presumption that it was a family
agreement and not intended to be binding. The mutual arrangement was a joint enterprise
to which cash was contributed in the expectation of sharing any prize. EQUAL
CONTRIBUTION AND MUTUALITY IN PAYING INCIDENTAL EXPENSES.

5) Jones v. Padvatton

 The daughter thought that her mother was promising her 200 United States dollars, or
£70 a month, which she regarded as the minimum necessary for her support. The mother
promised *337 200 dollars, but she had in mind 200 British West Indian dollars, £42 a
month, and that was what she in fact paid from November 1962 to December 1964. Those
payments were accepted by the daughter without any sort of suggestion at any stage that
the mother had legally contracted for the larger sum. (2) When the arrangements for the
purchase of No. 181, Highbury Quadrant were being discussed, and the new arrangement
was made for maintenance to come out of the rents, many material matters were left open:
how much accommodation was the daughter to occupy; how much money was she to
have out of the rents; if the rents fell below expectation, was the mother to make up the
difference below £42, or £42 less the sum saved by the daughter in rent; for how long was
the arrangement to continue, and so on. The whole arrangement was, in my view, far too
vague and uncertain to be itself enforceable as a contract; but at no stage did the daughter
bring into the discussions her alleged legal right to £42 per month until her studies were
completed, and how that right was to be affected by the new arrangement
There is no doubt that the daughter gave consideration for a promise by her mother to provide
maintenance at the rate of £42 per month so long as she was reading for the Bar in England
by giving up her job and her other advantages in Washington, and by reading for the Bar. But
various incidental matters appear never to have been thought out at all. There were no terms
recorded in writing, no sort of businesslike statement of the parties' respective obligations,
not even of how long the mother was to go on paying if the studies were prolonged or
unsuccessful. In fact the daughter has passed all the examinations in Part I except one, but
Part II is still to be taken.
The question therefore arises whether any binding legal contract was intended, or whether
this was simply a family arrangement in which one member of the family relies on a promise
given by another person and trusts that person to carry out the promise. But such an
arrangement is not intended to create actionable legal rights. The situation so far has been
called “step one.”

6) Motilal Padampat (PE Case brief)

Waiver means abandonment of a right and it may be
either express or implied from conduct, but its basic
requirement is that it must be "an intentional actwith
knowledge". There can be no waiver unless the person who is
said to have waived is fully informed as to his right and
with full knowledge of such right, he intentionally abandons
it. [657A, B]
In the instant case, on the facts, the plea of waiver
could not be said to have been made out by the State
Government: There was nothing to state that at the date when
the appellant addressed the letter dated 25th June 1970, it
had full knowledge of its right to exemption under the
assurance given by the 4th respondent and that it
intentionally abandoned such right. It is not possible to
presume in the absence of any material placed before the
Court, that the appellant had full knowledge of its right to
exemption so as to warrant an inference that the appellant
waived such right by addressing the letter dated 25th June
1970. It is difficult to speculate what was the reason why
the appellant addressed the letter 25th June 1970 stating
that it would avail of the concessional rates of sales tax
granted under the letter dated 20th January 1970.

Promissory Estoppel
one party has by his words or conduct made to the
other a clear and unequivocal promise which is intended to
create legal relationship effect a legal relationship to
arise in the future, knowing or intending that it would be
acted upon by the other party to whom the promise is made
and it is infact so acted upon by the other party, the
promise would be binding on the party making it and he would
not be entitled to go back upon it, if it would be
inequitable to allow him to do so having regard to the
dealings which have taken place between the parties, and
this would be so irrespective whether there is any pre-
existing relationship between the parties or not.
he doctrine would
apply even where there is no pre-existing legal relationship
between the parties, but the promise is intended to create
legal relations or affect a legal relationship whish will
arise in future.
Therefore, despite the fact that allowing promissory
estoppel to found a cause of action would seriously dilute
the principle which requires consideration to support a
contractual obligation, this new principle, which is a child
of equity
When the Government is able to show that in view of the
facts, as they have transpired public interest would be
prejudiced if the Government were required to carry out the
promise, the Court would have to balance, the public
interest in the Government carrying out a promise made to a
citizen which has induced the citizen to act upon it and
alter his position and the public interest likely to suffer
if the promise were required to be carried out by the
Government and determine which way the equity lies.
It cannot be invoked
to compel the Government or even a private party to do an
act prohibited by law. There can also be no promissory
estoppel against the exercise of legislative power. The
Legislature can never be precluded from exercising its
legislative function by resort to the doctrine of pro-
missory estoppel.
Fourthly, even when there is no overriding public interest, if government gives a reasonable
notice, thereby providing promisee a reasonable opportunity to resume his position, it will be
allowed to go back on it unless promisee has so altered his position that status quo can’t be
restored.

Hence, in light of categorical promise made by Chief Secretary, on behalf of Government,

that plaintiff will be entitled to sales tax exemption in respect of new industrial plant
established in UP, and the knowledge of government that such promise is to be acted on, it
will be inequitable to allow Government to go back on promise because it was in fact acted
on by promisee resulting into altering his position which could not now be restored. Plaintiff
not only borrowed money from various financial institutions, purchased machinery but also
established hydrogenation plant in UP and went ahead with production. Hence, rule of
promissory estoppel can be evoked in present case to be of avail to plaintiff.

7) Central London property trust ltd. V. High trees ( Promissory Estoppel )

ourts have not gone so far as to give a cause of action in damages for breach of such a
promise (which was made with the intention of creating legal relations, to be acted upon and
was in fact acted upon) but they have refused to allow a party to act inconsistently with it. It
is in that sense that such a promise gives rise to estoppel.”

 
Shield not a sword was overruled.
II. Offer and invitation to offer

1) Carlill v. Carbolic smoke ball (QB and CoA)

(1) That the advertisement was a unilateral offer to the entire world
(2) The satisfying conditions for using the smoke ball constituted acceptance of the offer.
(3) That purchasing or merely using the smoke ball constituted good consideration, because it
was a distinct detriment incurred at the behest of the company and, furthermore, more people
buying smoke balls by relying on the advert was a clear benefit to Carbolic
(4) That the company's claim that £1000 was deposited at the Alliance Bank showed the
serious intention to be legally bound.
Not a wagering agreement because lack of mutuality of gain and loss. Not an insurance
policy as it did not follow the required format of insurance as it must refer to a specific
person and not in the form of a general offer made to the world at large.

2) Esso petroleum ltd v. Comissioners of Customs and Excise

3) Bank of India vs. OP Swarakar [ Case brief ]
4) Felthouse v Bindley
5)Morris Lefkowitz v Great Minneapolis Surplus Store
6) Queen v Demers
7) Tata Cellular v. UOI ( Article 299+ICA) ( go to journal room)
8) Bhagwandas Kedia v Giridharlal & Co. (Formation + Invitation ) [Case brief]

III.Acceptance

1) Entores v. Miles Far East corp (TELEX, Place of formation +Instant communication)
2) Trimex Int FZE Ltd v. Vedanta (Communication of Acceptance S4)
3)Butler machine tool co. v. Excell-o-corp (S7)

III i). Conditional Acceptance

1) Jawaharlal Burman v UOI

2) UOI v Walaiti Ram
3) Holwell Securities v Hughes
4) Glenn Mulcaire v News Group
5) D Wren International (Case brief)
6) State of Rajasthan v Deep Jyoti Company and another

Sub Contract

MK Engineers v Som Dutt builders

Implied Terms

The Moorcock

IV. Consideration

1)Chappel v Nestle Co. (CoA and HoL)

2) McArdle v McArdle
3) Lampleigh v. Bratlwait
4) LE Godfrey v Parbati Paluni [ Past consideration ]
5) Pao Ch v Lau Yin Long
6) Combe v Combe (KBD and CoA)
7) Dutton and wife v Pool [ Forbearance ]
8) District Board of Ramnad v DK Mahomed Ibrahim [ Reciprocal Promise ]

Privity

1) Samuel Pillai v Ananthanatha Pillai

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 plaintiff to the deceased; and
in consideration thereof, defendant to sign the PN for paying the debt due to the plaintiff.
When plaintiff sued the defendant for the PN due, defendant took the defence of absence of
consideration and the suit being barred by limitation.

ISSUE:  Whether the PN signed by the defendant to pay off the debt to plaintiff, which was
barred by limitation, was valid in the absence of consideration?

HELD:

U/s 25(3) of the Indian Contract Act (ICA), promise made in writing and signed by the
person charged therewith to pay wholly or partly the debt of which the creditor might have
enforced payment but for the law of limitation, is valid and subsisting contract though devoid
of any consideration.

The promissory note thus signed by the defendant was valid and subsisting. The contention of
the defendant that the note was signed under undue influence exercised by the Administratrix
could not be upheld for the defendant, under his free will signed the note on account of the
agreement with the Administratrix to convey the property without any deduction
2) MC Chacko v State Bank of Travancore
A ‘charge’ may be created on immovable property when either through express words or
implied from deed, it is clear that party intended to make a specified property or fund,
belonging to him, liable for debt due by him.

In present case, no such charge was created in favor of State Bank—the deed merely set
out an internal arrangement between the donor and members of family which conferred a
right of indemnity upon them against M.C. Chacko and his inherited property—however, no
intention to convert a personal debt into a secured debt in favor of the bank could not be
inferred. Since it was a debt of K such that he was personally liable under the debt; after his
death all his inheritors were liable to satisfy the debt out of his estate, inherited by them.
However, in such a case, other members would have been indemnified by M.C. Chacko for
any share of debt paid by them.

By the definition of promisor and promisee as contained in S.2 along with constructive
interpretation of ICA in light of similar provisions in English Law, the notion that ‘a stranger
to a contract could enforce the obligations there under’ is completely excluded. A person not
a party to contract cannot enforce the terms of the contract unless he is a beneficiary under
the contract or the contract is one of family arrangement (which confers upon him equitable
rights, albeit not contractual)

Even if charge would have been created in favour of State Bank, it wouldn’t have been able
to enforce it since it is not a party to the deed and, was a complete stranger to it: it wasn’t a
beneficiary under the contract.

3) Dunlop Pneumatic Tyre Co. V Selfridge & Co. [ Privity of Consideration ]

Dunlop was acting as complete stranger to the contract between Selfridge and Dew and thus
on account of privity of contract couldn’t sue Selfridge for breach of its agreement with Dew.
It was a mere beneficiary to it on account of Price Maintenance Clause.

2) On whatever terms the contract between Selfridge and Dew was made was to be solely
determined by them and was not in any way regulated or stipulated by Dunlop apart from the
Price Maintenance Clause. While Dew was assumed to be acting as agent while inserting
PMC in the contract it was acting as principal while stipulating terms of the contract with
Selfridge–but as held by Court, a person can’t contract in two capacities in the same
agreement. Hence, HoL held that Dunlop wasn’t acting as the undisclosed principal of Dew.

3) Dew had the title to goods manufactured by Dunlop independently of any contract with
Selfridge. They were free to sell the tyres to anyone they wished. Secondly, the consideration
by way of discount was given wholly out of Dew and neither directly nor indirectly out of
Dunlop. Neither Dunlop gave any consideration directly to Selfridge nor through Dew as his
agent. Further since all the terms of the contract including whether to give any discount to
Selfridge or not was solely stipulated by Dew on its own account and not as Dunlop’s agent,
therefore HoL unanimously held appellant’s contention that their permitting and enabling
Dew, with the knowledge and desire of Selfridge, to sell to the latter on the terms of its
contract was consideration moving from Dunlop to Selfridge, as unsustainable.

4) Hughes v The Metropolitan Co. (LC + Appeal]

Tenant was under an obligation to repair given six months notice- negotiations between
landlord and tenant for buying tenants interest in land. Tenant was under assumption that 6
month period was not running at this time. Landlord wants to cancel lease agreement for
failure to repair within 6 months.
It is the first principle upon which all Courts of Equity proceed, that if parties who have
entered into definite and distinct terms involving certain legal results - certain penalties or
legal forfeiture - afterwards by their own act or with their own consent enter upon a course of
negotiation which has the effect of leading one of the parties to suppose that the strict rights
arising under the contract will not be enforced, or will be kept in suspense, or held in
abeyance, the person who otherwise might have enforced those rights will not be allowed to
enforce them where it would be inequitable having regard to the dealings which have thus
taken place between the parties.

V. Capacity of a minor

1) Proforma Sports Mgmt v. Proactive Sports Mgmt Ltd (Case Brief)

In present case, the contract of proform with Wayne didn’t fall either into contract for
necessity or analogous to contracts for employment, apprenticeship or education. Proform
was neither giving any training to Wayne nor was it compulsory for him, as a professional
footballer, to enter into such a contract. In these circumstances, the contract did not fall into
the category of enforceable contracts against minor for it being contract of necessity rather
was voidable at the option of Wayne.

There could be no liability for inducing or facilitating the breach of a voidable contract with
the minor. Where a contract was determinable, no liability was incurred merely by inducing a
contracting party who enjoy the right to rescind, to determine the contract lawfully, for there
was no breach.

Distinction between position in English Law: Contract is voidable at the option of minor.
Contracts for necessity or analogous to employment, apprenticeship etc are valid and
enforceable.
In indian law- void ab initio, contract for necessity is only enforceable if entered by guardian
on behalf of minor.
2) Mohri Bibee & Another v. Dharmodas Ghose [ Sec. 68 ]
where the statement relied upon is made to a person who knows the real facts and is not
misled by the untrue statement. There can be no estoppel when the truth of the statement is
known to both parties and in accordance with English authorities, a false representation made
to a person who knows it to be false is not such a fraud as to take away the privilege of
infancy. The same principle is recognised in section 19 of the Indian contract act in which it
is said that a fraud or misrepresentation which did not cause the consent to a contract of the
party on whom such fraud was practised, or to whom such representation was made, does not
render a contract voidable. Thus mohri bibee could not claim refund of money under sec 65
as it was not discovered to be void as she had prior knowledge of invalidity of contract.

Section 64 and 65 presupposes the existence of contract. Relief cannot be granted when
contract was void ab initio. That would be equivalent to enforcing a void agreement.
3) R. Leslie v. Sheill
If an infant obtains property or goods by misrepresenting his age, he can be compelled to
restore it so long as the same is traceable in his possession. This is known as equitable
doctrine of restitution.

However, in present case, since the money was spent by the defendant, there was neither any
possibility of tracing it nor any possibility of restoring the thing got by fraud, for if the court
will ask defendant to pay the equivalent sum as that of loan received, it would amount to
enforcing a void contract. Restitution stops when repayment begins and equity does not
enforce against minor any contractual obligation.

4) Manik Chand v. Ramachandra Son of Chawriraj

Minor can seek specific performance because contract entered into by guardian for the minor
for his benefit if necessary and reasonable can be enforced.

VI. Mental Capacity

1)Chacko v Mahadevan
Principle of res ipsa loquitor, when the unconscionability of bargain is so obvious, it is a
presumption that there did not exist free consent or capacity. When one cent is 18000, 3 cents
would ordinarily be 54000. To sell it for 1000. Also the fact that he was being treated for
psychosis. Consent vitiated by fraud. Section 12. Sound mind for purpose of contracting.
2) S. Basavaraj & others v. N Adilakshmamma [ Sec. 12 – Unsoundness of mind ]
that a party cannot taken advantage of its own wrong and in this view of the law, if a person
puts himself into a position of alcoholic addiction, executes contracts after accepting money
from third parties and creating rights that the law would be extremely slow in allowing such a
party to escape the consequences of the contract unless it is demonstrated to the hilt that the
executant virtually did not know what he was doing when the contract took place ."

Owing to the fact that the medical documents presented by the appellants were of a general
nature, the fact that Mr. Basavaraj was a self induced alcoholic and the legal requirements set
forth in the Indian Contract's Act which specify the competence of an insane man to contract
in case of periods of sanity, Judge Saldana upheld the ruling of the Appellate Court. General
plea of alcohol addiction must prove at the time of contracting he wasn’t lucid to make a
valid judgement as to its effect. SELF INDUCED ADDICTION

3) The Imperial Loan Co. v Stone [ Lunatic – Capacity to contract ]

In English law, there exists a necessity to prove knowledge of insanity of the defendant in
order to render the contract voidable. However in Indian law- void ab initio.
4) Dunhill v. Burgin
Plaintiff did not possess the capacity to contract and thus was not competent to conduct legal
proceedings on her own and was in need of a litigation friend. Thus suit was invalidated.
Need for protection of people without capacity to contract from their legal advisors.

FREE CONSENT Sec. 14

VII. Coercion (Sec 15)

1) Bansaraj Das v. Secretary of State

The payment was made under threat of attachement, not voluntary payment as it was joint
family property there was no legal obligation to pay or right to attachment thus it is
voidable due to coercion.Unlwfully detaining.
2) P. Rangaswami Pillai v. Sairangan Municipal Council
when a Municipality erroneously believing itself justified in making a demand, makes a
demand in common form requiring the assessee either to pay or show cause for non-
payment and warning him that in case of default steps will be taken in distraint to enforce
payment and that he has a right of appeal, the payment in pursuance of such notice is not
sufficient to take it out of the category of voluntary payments. Payments so made without
any expression of objection or unwillingness under the erroneous belief that it was
unobjectionable cannot be recovered on the ground of its involuntary character

VIII. Undue Influence (Sec 16)

1) Bhimrao Naik v. Dattatraya Shripad Jamadagni (Case brief)

When the plaintiff isn’t aware of his rights and full knowledge of what he is signing
away. Position b/w the mother and adopten son, to dominate. All elements of undue
influence satisfied.
In present case, plaintiff was living under the authority of his adoptive mother such that he
was dependent on her for maintenance and education to the extent that she was in a position
to dominate his will. Secondly, in threatening plaintiff, she used her position of dominance to
obtain an advantage aversive to plaintiff’s rights; plaintiff wouldn’t have executed the gift
deed but for the threatening attitude, pressure and admonitions from defendant, relatives and
other well wishers of family. Thirdly, plaintiff wasn’t aware of his legal rights nor was he
allowed to consult his natural father; he didn’t act with open and free mind and with the
knowledge that the gift deeds which ere by themselves invalid could be validated only by his
signature. Therefore, the deed is liable to be set aside. 

2) Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib & others
Proof of familial relationship does not presume or establish undue influence. fully
conscious and consented the transfer of property to the defendant. Further, the fact that
donor was actively involved in the management of his property clearly proves that no
undue influence was exercised over him.
3) Mohanlal v. Kashiram
A person who seeks his own advantage by stifling a prosecution or compounding an
offence which is not compoundable in law as against the interests of justice, does a
serious abuse of the right of private prosecution; an act against public policy. No court
can give countenance to an agreement between the parties which proceeds on such
bargain whether implied or express. Void under section 23
Putting him in fear of conviction to obtain his consent was undue influence voidable
under section 16.
TERMS OF AGREEMENT MUST BE INFERRED FROM CONDUCT OF PARTIES
AFTER ANALYSING THE CIRCUMSTANCES. CLAUSES TO PERFORM ILLEGAL
ACTS ARENT USUALLY EXPLILCITLY LAID OUT IN CONTRACTS. To award
uncle property in leui of him compounding a non compoundable offence wasn’t explicitly
mentioned cos illegal.
4) Ladli Prasad Jaiswal v Karnal Distillery Co (Case brief)
that the burden of proof that the transactions were not induced by undue influence was
upon the plaintiff, he being in a position to dominate the will of others which he failed to
discharge. Equity does not lend aid to person whos conduct has been inequitable.
5) Parbhu v. Puttu
This being the position on the facts and the terms of transaction being
unconscionable and wholly on the side of the influencer, it follows as a corollary that the
influence exercised by these defendants was "un-due". Parbu wasn’t aware of the extent
of his rights or the true valuation of his uncles property. He was illiterate and new to the
village.
6) Dai-ichi Karkaria v. ONGC [ Economic Duress] (Case Brief)
Defendant introduced an unconscionable term in the contract, plaintiff had no real choice
or opportunity to negotiate as they had already invested a large amount into the contract.
They claimed only to pay the export price and not the domestic price, regardless of
whether plaintiff had gotten a refund of export duty. Court held it voidable at the option
of plaintiff under coercion section 15. Layed down that only the unconscionable term can
be severed from the contract and the contract as a whole would still stand, for the benefit
of plaintiff. Doctrine of severability. As only that term was brought out by
 unconscionability. Multiplicty of proceedings to be avoided. So bring it under section 23
opposed to public policy to declare it void as opposed to voidable.
7) Poosathurai v. Kannappa Chettiar
Proof of relation only shows influence and not undue influence.
8) Central Inland Water Transport v. Brojo Nath Ganguly (Pg 227 onwards) (Case brief)
When the bargain is harsh or unconscionable, equity, grounded upon ‘distributive justice’
curtails the freedom of contract so as to protect the interests of party who entered into such
bargain under distress. Freedom of contract is of little value when parties don’t stand on equal
footing; party with weaker bargaining power enjoys no realistic opportunity to bargain and
party has no alternative between accepting a set of terms proposed by other or doing without
the goods or services offered. These agreements are called as ‘Adhesion Contracts’, however
not every such contract is unconscionable: only when there is gross inequality of bargaining
powercompounded with terms unreasonably favourable to stronger party can the indication
that weaker party had no meaningful choice except to consent to the unfair and unreasonable
terms, hold ground.

Therefore Courts will strike down any unfair or unreasonable clause/ agreement entered into
by parties when there is gross inequality in their bargaining power, and the victimized party
had no meaningful choice butto give his assent to the contract, however unreasonable, unfair
and unconscionable a clause in that contract may be.

These adhesion/ standardized contracts are entered into by parties enjoying much superior
bargaining power with a large no. of people, hence, affect people at large and if
unconscionable, unfair and unreasonable are injurious to public interest. These bargains
therefore must be void on account of being opposed to public policy (S.23). Further, if they
were to be merely voidable on account of undue influence (for in many cases, superior party
has ‘real or apparent authority over other party’ and hence, uses that position to obtain unfair
advantage over another as according to S.16) it would compel each victimized party to go to
Court to get the contract adjudged as voidable which would lead to multiplicity of litigations.

In present case, plaintiffs had much less bargaining power as compared to that of
Corporation, for they did not have any meaningful choice while assenting to the terms and
conditions of their appointment in the Corporation. If they would have refused to accept the
said rule, it would have led to their termination from service and exposed them to consequent
anxiety, harassment and uncertainty of finding alternative employment.

Rule 9(i) was unreasonable and unfair to the extent of being unconscionable for it gave
arbitrary and absolute power to the Corporation to dismiss its employees without providing
any guidelines to that effect. The rule was also violation of principle of natural justice-audi
alteram partem-for it neither provided for any inquiry to take place nor did it provide for any
opportunity to accused employee to be heard.
Therefore it was unconscionable and opposed to public policy for it adversely affected the
rights and interests of the employees and created a sense of insecurity and subservience to
unfair and unreasonable terms of corporation. Hence, it was void according to S.23 of ICA

Henry the 8th clause: arbitrary power

IX. Privity of Contract

1) Essar Oil Ltd. V. Hindustan Shipyard

ONGC-HINDUSTAN SHIPYARD- ESSAR OIL
There existed no privity of contract between ongc and essar. Payment was made for
the purpose of business efficacy convenience and due to financial problems of HS
there existed no legal or contractual obligation to pay. Thus they cannot be compelled
to pay.
2) UOI v. Shri Hanuman Industries [ Promissory Estoppel ]
Due to negligence and inaction on the part of shri hanuman industries they are denied
their claim of promissory estoppel.They filed a suit two years after the closure of the
scheme only after the judgements by the other companies had come out. Cannot claim
promissory estoppel as government had provided notice about the suspension of
SPINE scheme and given hanuman reasonable time to restore his position. Promissory
estoppel cannot be enforced against the government if it would be inequitable to do
so, taken into consideration public interest, if requiring the government to hold their
promise would be against equity, which it was in this case as the scheme was already
closed due to financial difficulties.

X. Fraud

1) Laidlaw v. Organ----
Sale of tobacco, plaintiff was aware of end of war and that would drastically affect
The question in this case is, whether the intelligence of extrinsic circumstances, which might
influence the price of the commodity, and which was exclusively within the knowledge of the
vendee, ought to have been communicated by him to the vendor? The court is of opinion that
he was not bound to communicate it. It would be difficult to circumscribe the contrary
doctrine within proper limits, where the means of intelligence are equally accessible to both
parties. But at the same time, each party must take care not to say or do any thing tending to
impose upon the other.The court thinks that the absolute instruction of the judge was
erroneous, and that the question, whether any imposition was practised by the vendee upon
the vendor ought to have been submitted to the jury.

2) Trojan & Co. Ltd v. Rm NN Nagappa Chettiar – read definition of fraud section 17
Where a person is induced to purchase shares at a certain
price by fraud the measure of damages which he is entitled
to recover from the seller is the difference between the
price which he paid for the shares and the real price of the
shares on the date on which the shares were purchased.
Ordinarily the market rate of the shares on the date when
the fraud was practised would represent their real price in
the absence of any other circumstance. If, however, the
market was vitiated or was in a state of flux or
790
panic in consequence of the very fact that was fraudulently
concealed, then the real value of the shares has to be
determined on a Consideration of a variety of circumstances,
disclosed by the violence led by the parties.
A firm of sharebrokers sold 3,000 shares to the plaintiff
who was a constituent of the firm, on the 5th April, 1937,
at Rs. 77 and Rs. 77-4as, per share without disclosing to
the plaintiff the fact that the shares were owned by one of
the partners of the firm and also the fact that they had
received telephonic information on that day from a member of
the Stock Exchange that there was going to be a sharp
decline in the price of the shares. On the 6th April the
Stock Exchange Association passed a resolution for closing
the Exchange on the 8th and 9th April. The plaintiff had to
sell 2,000 shares through the defendants on the 20th April
at Rs. 47 to Rs. 42 per share, and 1,000 shares on the 22nd
April at Rs. 428as. The High Court awarded the difference
between the price paid by the plaintiff and the prices
fetched on resale as damages. On appeal,
Held, that the prices received at the resale on the 20th
and 22nd April could not represent the true value of the
shares on the 5th April. The real question for
determination was what the market value would have been on
the 5th April of these shares if all the buyers and sellers
know that the Stock Exchange was to be closed on the 8th and
9th April.
Held also that the plaintiff was entitled to get interest
on the amount awarded as damages from the 5th April till the
date of suit on the principle that where money is obtained
or retained by fraud a court of equity will order it to be
returned with interest

3) Derry v. Peeke –

“Fraud is proved when it is shown that a false representation has been made
knowingly, or without belief in its truth, or recklessly without caring whether it is true or
false.” A false statement made without reasonable grounds for believing it to be true, may be
evidence of fraud in light of plaintiff’s contention that defendant had no actual belief in its
truth; but such a presumption is rebuttable. Such a statement, if made in the honest belief that
it is true, is not fraudulent and no action for deceit will lie. ‘Fraud without damage’ and
‘damage without fraud’ doesn’t give rise to an action for deceit which lies only when both
fraud and damage converge, i.e. when plaintiff relying upon the fraudulent statement acts
upon it to his detriment.

The alleged statement was untrue in the sense that it was stated as an absolute right which
was in fact conditional on the approval of BoT. The directors honestly believed that it was the
mere question of formality to obtain BoT approval and the Co. having complied with the
procedures and requirements, the approval was due. Hence, they had honest belief in the
truth of the impugned statement and it never dwelled in their minds that BoT will refuse such
consent. In light of these observations, the honest belief was reasonable and defendants could
not be held liable for deceit.

The tramway in the prospectus claimed that they had an absolute right to use steam power
though it

4) RC Thakkar v. The Bombay Housing Board

false estimates of costs of construction given in a tender – contractor agreed to some
reduction on the belief that the estimate was correct – Held, representations contained in
tender were fraudulent – no defence that plaintiff could have discovered the true costs by
reasonable efforts. 
In this connection, it should be remembered that the estimate of cost published with
regard to the first two projects of Malek Saban Area. were correctly representing the
actual cost which was involved in the construction work. Therefore. an impression was
created by the Board amongst the contractors interested in offering the tenders that the
estimate of cost involved in the undertakings.68. All these facts. therefore, clearly show
that it was the misrepresentation in question which was solely responsible for inducing
the plaintiff to enter into the suit contracts.
The foundation of the vice of fraud contemplated by Section 17 of the Contract Act
manifestly is that a man making any representation which he intends another to act
upon. must be taken to warrant his belief in its truth. A person making such a
representation should be presumed to be aware of the fact that the person to whom it is
made will at least understand that he. the representator, believes it to be true.
Therefore, if the respresentor does not in fact. entertain any such belief in the truth of
his representation. he is as much guilty of fraud as if he had made any other
representation which he knew to be false. or did not believe to be true. In this view of
the matter. the consideration of the grounds of the belief of the person making the
statement renders an important aid in ascertaining whether the belief was really
entertained. In Derry v. Peek. (1889) 14 AC (373) Lord Herschell. has made very
 pertinent remarks on this point: Says the learned Lord:
"At the same time I desire to say distinctly that when a false statement has been made the
questions for believing it. and what were the means of knowledge in the possession of the
person making it. are most weighty matters for consideration. The ground upon which an
alleged belief was founded is a most important test of its reality. I can conceive many

cases where the fact that an alleged belief was destitute of all reasonable foundation ould
suffice of itself to convince the Court that it was not really entertained. and that the
representation was a fraudulent one. So. too. although means of knowledge are, as was
pointed out by Lord Blackburn in Browlie v. Campbell. ((1880) 5 AC 925) a very ifferent
thing from knowledge. if I thought that a person making a false statement had shut his
eyes to the facts. or purposely abstained from inquiring into them. I should hold that
honest belief was absent. and that he was just as fraudulent as if he had knowingly stated
that which was false".
XI. Misrepresentation

1) With v. O’Flanagan---
During the course of negotiations for the sale of a medical practice, the vendor made
representations to the purchaser that it was worth £2000 a year. By the time when the
contract was signed, they were untrue. The value of the practice had declined in the
meantime (to £250) because of the vendor's inability to attend to it through illness. Lord
Wright MR quoted:
"So again, if a statement has been made which is true at the time, but which during the
course of negotiations becomes untrue, then the person who knows that it has become
untrue is under an obligation to disclose to the other the change of circumstances."
Therefore, the failure of the vendor to disclose the state of affairs to the purchaser
amounted to a misrepresentation.

2) Esso Petroleum Ltd. v. Mardon

Esso's experienced representative told Mardon that Esso estimated that the throughput of
petrol on a certain site would reach 200,000 gallons in the third year of operation and so
persuaded Mardon to enter into a tenancy agreement in April 1963 for three years. Mardon
did all that could be expected of him as tenant but the site was not good enough to achieve a
throughput of more than 60,000-70,000 gallons. Mardon lost money and was unable to pay
for petrol supplied. Esso claimed possession of the site and money due. Mardon claimed
damages in respect of the representation alleging that it amounted to (i) a warranty; and (ii) a
negligent misrepresentation.
The Court of Appeal affirmed the finding of negligence under the principle of Hedley Byrne
v Heller (1964). On the issue of warranty, Lord Denning MR stated:
"... it was a forecast made by a party, Esso, who had special knowledge and skill. It was the
yardstick (the "e a c") by which they measured the worth of a filling station. They knew the
facts. They knew the traffic in the town. They knew the throughput of comparable stations.
They had much experience and expertise at their disposal. They were in a much better
position than Mr Mardon to make a forecast. It seems to me that if such a person makes a
forecast -intending that the other should act on it and he does act on it- it can well be
interpreted as a warranty that the forecast is sound and reliable in this sense that they made it
with reasonable care and skill.... If the forecast turned out to be an unsound forecast, such as
no person of skill or experience should have made, there is a breach of warranty."

3) Sorasshah Pestonji v. The Secretary of State for India---

 Their main case was really put to us on the other branch of Section 18, viz., that they
must be put in the same position in which they would have been if the representation
made had been true, In the present case that involves, I think, this that they are to be put
in the same position as if the liquor shop No. 85 had never been removed to Khareghat
4) Hedley Byrne & Co. Ltd v Hella & Perthness Ltd.---
Hedley Byrne were a firm of advertising agents. They intended to advertise on behalf of
Easypower Ltd. They wanted to know if Easypower were creditworthy, and asked their bank,
the national Provincial, to find out. The National Provincial got in touch with Easypower's
bankers, Heller & Partners. Heller told the National Provincial, "in confidence and without
responsibility on our part," that Easypower were good for £100,000 per annum on advertising
contracts. Hedley Byrne relied on this statement in placing orders on behalf of Easypower
and, as a result, lost more than £17,000 when Easypower went into liquidation. They sought
to recover this loss as damages.
In the House of Lords, Lord Pearce stated that a man may come under a special duty to
exercise care in giving information or advice. Whether such a duty has been assumed must
depend on the relationship of the parties. Was there such a special relationship in the present
case as to impose on Heller a duty of care to Hedley Byrne as the undisclosed principals for
whom National Provincial was making the inquiry? The answer to that question depends on
the circumstances of the transaction. A most important circumstance is the form of the
inquiry and of the answer. Both were plainly stated to be without liability. The words clearly
prevented a special relationship from arising.
People accepting a reply with a stipulation cannot later reject that stipulation. Disclaimed
exclusively negates liability.
5) Barclays Bank Plc v. O’Brien & Another –

In Barclays Bank plc v O’Brien ([1994] 1 AC 180, HL) a married couple granted the bank a
second charge over the family home as security for the overdraft facility of a company in
which the husband had an interest. The wife signed the document without reading it; she did
so because of her husband’s misrepresentation to the effect that the liability to the bank was
limited to GBP60,000 and that the exposure under the arrangement would only last for three
weeks. In fact, it was an unlimited guarantee. The bank took no steps to have the documents
explained to the wife nor did it suggest that the wife should take independent legal advice.
When the company failed to meet its obligations, the bank sought an order for possession of
the home. W sought to set the charge aside on the grounds that it was the result of H’s
misrepresentation and undue influence.

Only the misrepresentation defence was relied upon in the House of Lords. Nevertheless,
Lord Wilberforce (giving the only full judgment) spoke about undue influence and
considered the steps that a lender must take to protect itself from a claim that its agreement
with a surety might be set aside in the event that it is entered into as a result of
misrepresentation or undue influence.

Lord Wilberforce prefaced his analysis with a reminder that there are policy considerations to
be borne in mind in shaping the law. The law needs to strike a balance between the need to
protect wives from an abuse of the trust and confidence that they place in their husbands, on
the one hand, and the need to avoid the creation of a draconian regime that would render
family homes unacceptable as security for loans (at p. 188).

Lord Wilberforce considered the proposition that wives enjoy some special equity and are the
object of special tenderness on the part of equity. He accepted that there was a greater risk of
undue influence ‘than in the ordinary run of cases where no sexual or emotional ties affect the
free exercise of the individual’s will’ (at p. 191). At the same time, with an eye no doubt to
the future rational and orderly development of the law, he rejected the broad proposition that
wives should be accorded special rights in relation to surety transactions. He rejected then the
idea of ‘a special equity applicable only to such persons engaged in such transactions.’ (at p.
195).

The judgment seeks to create a legal environment that properly balances the interests of
wives and lenders (described below). It is not only applicable to wives. Towards the end of
the judgment, Lord Wilberforce emphasises that the same principles apply ‘to all other cases
where there is an emotional relationship between cohabitees.’ (at p. 198). Thus, the principles
and procedures set out in the judgment are to be followed ‘if, but only if, the creditor is aware
that the surety is cohabiting with the principal debtor’. (at p. 198). Marriage is only one
instance of a broader category.

The core of the judgment is its consideration of the circumstances in which lenders will take
subject to the prior rights of the person whose consent was procured by undue influence or
misrepresentation.

In a case like this, it may sometimes be possible for W to argue that H was the bank’s agent.
This would provide a basis upon which H’s undue influence or misrepresentation could be
attributed to the bank. An agency analysis of this situation, however, would usually be highly
artificial (at p. 194).

Rather, the doctrine of notice provides the key: did the lender have actual or constructive
notice of the misrepresentation or undue influence (at pp. 194 – 5)? The question is whether
the lender is aware of facts or circumstances that put him on enquiry as to the possibility that
the surety might have a right to rescind on the grounds of undue influence or
misrepresentation. If the lender is put on enquiry and does not take reasonable steps to satisfy
himself that W’s agreement to stand surety has been properly obtained then it will have
constructive notice of W’s rights (at p. 196).

When is a lender on enquiry (so that it needs to take further steps)?

‘[A] creditor is put on enquiry when a wife offers to stand surety for her husband’s debts by
the combination of two factors: (a) the transaction is on its face not to the financial advantage
of the wife; and (b) there is a substantial risk in transactions of that kind that, in procuring the
wife to act as surety, the husband has committed a legal or equitable wrong that entitles the
wife to set aside the transaction.’ (at p. 196).

When the lender is on enquiry it must ‘take steps to bring home to the wife the risk she is
running by standing as surety and to advise her to take independent advice.’ (at p. 196).

The steps that a lender is expected to take are set out in this passage:

‘in my judgment a creditor will have satisfied these requirements if it insists that the wife
attend a private meeting (in the absence of the husband) with a representative of the creditor
at which she is told of the extent of her liability as surety, warned of the risk she is running
and urged to take independent legal advice.’ (at . 196)

In exceptional circumstances, where the lender knows of circumstances that make the
exercise of undue influence probable rather than merely possible, the lender will need to
ensure that the wife is separately advised (at p. 197).

This procedure seeks a fair balance between the wife and the lender, even though it does not
guarantee that the wife fully understands the transaction (at p. 197).

As the bank had not taken steps to ensure that Mrs O’Brien had been properly informed of
the nature of the transaction, it was fixed with constructive notice of Mr O’Brien’s
misrepresentation

XII. Mistake

1)Bell & other v. Lever Brothers Ltd & other (Case brief) – Wikipedia
The jury found that at the time of their entering into compensation contracts, they did not
have in their mind breaches of duty committed by them, such that they did not actively
conceal it and were not guilty of any fraud.
“Mistake as to the quality of thing contracted for doesn’t affect assent unless it is the mistake
of both parties and is as to the existence of some quality which makes the thing essentially
different from the thing as it was believed to be.”

In present case, mutual mistake related not to the subject matter but as to the quality of the
service contract. Now, an agreement to terminate a rescindable contract is not different in
kind from an agreement to terminate a valid contract. The contract released is the identical
contract in both cases and the party paying for release gets exactly what it bargained for. It
seems immaterial that he could have got the same result otherwise.

The mistake was not to the existence of the agreement which required termination—for they
did exist—but as to the possibility of terminating them by other means. The variation of the
possibility (that the service contracts would have been terminated without any
compensation) as against contemplated by the parties (that they were to be dispensed with
only by paying compensation in return) was the mistake only as to the quality of the subject
matter of contract which didn’t affect its identity or substance (which was terminating the
services of B and S).

B and S were under no legal obligation to reveal their secret transactions to Lever. Hence,
their concealment didn’t render the contract voidable. Neither did they induce Lever to pay
them compensation (howsoever innocently) nor did they actively conceal it from them.

As regards Mistake as to the false and fundamental assumption, a contract is void where

parties contract under a false assumption, going to the root of the contract, and which both of
them must be taken to have had in mind at the time they entered into it as the basis of their
agreement (or as an essential or integral element of the subject matter).

In present case however, no sufficient evidence was there to indicate that both parties
regarded indefeasibility of services of B and S as the essential and integral element in the
subject matter of bargain. As lord Atkin puts it, “it would be wrong to decide that an
agreement to terminate a definite specified contract is void if it turns out that the contract had
already been broken and could have been terminated otherwise.

2) ITC Limited v. George Joseph Fernandes (Case brief)

3) Sri Tarsem Singh v. Sri Sukhminder Singh
Learned counsel for the petitioner has invited our attention to Section 73 and 74 of the
Contract Act which, in our opinion, are of no aid to the petitioner. Section 73 stipulated a
valid and binding contract between the parties. It deals with one of the remedies available for
the breach of contract. It is provided that where a party sustains a loss on account of breach of
contract, he is entitled to receive, from the party who has broken the contract, compensation
for such loss or damage. Under Section 74 of the Act, however, the parties to the
agreement stipulate either a particular amount which is to be paid in case of breach or an
amount may be mentioned to be paid by way of penalty. The party complaining of the breach
is entitled, whether or not actual damage or loss is proved to have been caused, to receive
from the party who has committed the breach of contract, compensation not exceeding the
amount mentioned in the agreement or the penalty stipulated therein. But this Section also
contemplates a valid and binding agreement between the parties. Since the stipulation for
forfeiture of the earnest money is part of the contract, it is necessary for the enforcement of
that stipulation, that the contract between the parties is valid. If the forfeiture clause is
contained in an agreement which is void on account of the fact that the parties were not ad-
idem and were suffering from mistake of fact in respect of a matter which was essential to the
contract, it cannot be enforced as the agreement itself is void under Section 20 of the Contract
Act. A void agreement cannot be split up. None of the parties to the agreement can be
permitted to seek enforcement of a part only of the contract through a court of law. If the
agreement is void, all its terms are void and none of the terms, except in certain known
exceptions, specially where the clause is treated to constitute a separate and independent
agreement, severable from the main
agreement can be enforced separately and independently.
Since, in the instance case, it has been found as a fact by the below that the agreement in
question was void from its inception as the parties suffered from mutual mistake with regard
to the area and price of the plots of land agreed to be sold, the forfeiture clause would, for
that reason, be also void and, HOWEVER the principle contained in Section 65 of the Act,
DISCOVERED TO BE VOIDthe petitioner having received Rs. 77,000/- as earnest money
from the respondent in pursuance of that agreement, is bound to refund the said amount to the
respondent. A decree for refund of this amount was,therefore, rightly passed by the Lower
Appellate Court.
4) State of Karnataka & Ors v. Stellar Construction Company
parties were suffering from a mistake of fact with regard to the terms of the contract falls to
the ground. The very premise based on which this argument has been developed, has no
factual basis at all. On the other hand, the specific term of the contract which is binding
between the parties is that it is the exclusive concern of the contractor who offers his bids, to
verify these aspects and then to give his offer. It is to be remembered that a contractor is
making his offer with reference to the estimation and the value which has already been
indicated in the tender form. The contractor is required to give his offer with reference to this
estimated value which includes all expenditure that he incurs for the execution of the work
and it is the exclusive responsibility of the contractor. It is also a term of the contract that the
offer is to be made by the intending bidder after physically verifying either the work-spot and
its surroundings

Unilateral mistake (Sec. 22)

Chwee Kin Keong & Ors. V Digilandmall.com Pte Ltd (Case brief) – Wikipedia
 Accordingly, the law will declare void a contract which was purportedly entered into where
the non-mistaken party was actually aware of the mistake made by the mistaken party. This
proposition is not in dispute. But should this rule also apply to a case where the non-mistaken
party did not have actual knowledge of the error but ought to have known about the other
party's mistake, ie, where there is constructive knowledge? The judge below thought that it
should be the case.

38     Rajah JC found, at [140] and [142], that the appellants had actual knowledge that the
price stated on the websites was a mistake. However, he also found, in the alternative, that the
appellants had constructive knowledge 
Mistake as to the fundamentals of the contract, no consensus ad idem- void for lack of free
consent. Section 20

Mistake as to quality (voidable) vs. Mistake as to subject matter (void ab initio)

1) Smith v. Hughes OATS CASE

Mere silence as to anything which the other party might by proper diligence have discovered,
and which is open to his examination, isn’t fraudulent unless a special trust or
confidence exists between the parties or be implied from the circumstances of the case.
Passive acquiescence of seller in the self-deception of buyer didn’t entitle latter to avoid the
contract. If the buyer has full opportunity of inspecting the products contracted for and
thereupon form his judgment, and if he relies only on his own judgment, the rule caveat
emptor applies
However, if it were not so and H was only unilaterally mistaken about the age of oats without
any inducement of seller (even if S knew about that mistake), and not about S’s offer then
contract was valid as there was consent as to the same thing in the same sense. In this case,
applying the objective test–any reasonable person in the place of buyer would understand
seller’s offer to sell oats good in quality and not old oats in the absence of any representation
or active concealment. 
2) Shogun Finance Ltd. v. Hudson (Case brief)
“An offer can be accepted only by the one to whom it is addressed: (Boulton v. Jones) Offer
and acceptance should be understood in objective sense. Test should not be merely ‘did the
offeror intend to contract with the person to whom offer was made?’ rather test should be
‘how would a reasonable person in the position of offree have interpreted the offer?’ So if A
makes an offer to B in mistake for C and B reasonably believing that the offer is intended for
him, accepts, then A is bound even though he can prove that he made a mistake.

But no contract will be formed when a person accepting an offer believes on reasonable
grounds that he is accepting an offer from someone other than the person by whom it has in
fact been made, i.e. when A disguises himself as C and enters into an agreement with B, who
reasonably believes him to be C, then agreement is void. (Cundy v. Lindsay) This is because
of the fact that B never thought of A and never intended to deal with him. Their minds were
never in consensus
and thus a contract was never formed.

However, if a party’s mistake doesn’t go to the identity of the other party, i.e. if it is mistaken
only about the attributes and not identity per se, then contract is valid and subsisting. Law
distinguishes between cases where there are two individuals in the picture (A contracts with
B in mistake for C) and where there is only one (A contracts with B in belief that B isn’t B).
In former, contract is void but in latter it is not because in order to establish mistake as to
identity, the party contracting must prove that it wanted to contract only with the person with
whom it stipulated the agreement to be but turned to be otherwise. (King Norton Metal Co.
Ltd. v. Edridge)

All these principles aptly apply in cases where the contracts are wholly in writing, identity of
the parties to be established by written contract only. If the agreement is unequivocal and
clear as to who parties to contract are, then extrinsic or oral evidence can’t be adduced to
contrary. (Hector v. Lyons)

However, where the parties don’t conclude their contracts in writing, nor through
communications at distance, but deal face to face, there is a strong presumption that each
intended to deal with the ‘person present and identified by sight and hearing’ (Phillips v.
Brooks) But such a presumption is a rebuttable one on fact-to-fact basis (Ingram v. Little)”

HP agreement was void in this case. Since the contract was in writing, the identity of parties
could be determined w.r.t. written agreement only. Hence such agreement could be made
only between Shogun and Patel which wasn’t possible because Patel knew nothing of it and
hadn’t signed the agreement.

3) Raffles v. Wichelhaus and another PEERLESS CASE

The court applied an objective test and stated that a reasonable person would not have been
able to state with certainty which sailing had been agreed. Therefore the contract was void as
there was no consensus ad idem
4) Dhulipudi Namayya v. UOI

*Non est factum a plea that a written agreement is invalid because the defendant was
mistaken about its character when signing it.it is not his deed
So there must be a heavy burden of proof on the person who seeks to invoke this remedy. He
must prove all the circumstances necessary to justify its being granted to him, and that
necessarily involves his proving that he took all reasonable precautions in the circumstances.
1) Saunders v. Anglia Building Society (Case Brief)
It must be proved that the document was signed on account of false representation and
only because of that representation. But here, Gallie had failed to prove this. As per
evidence, she would have executed the deed even if the true character and nature of the
 deed would have been explained to her. Further, the document would have helped achieve
the same purpose of her nephew’s raising money on the house (if the arrangement would
have worked well) as the purported document.

Moreover, the lady was careless in the sense that she was capable of reading the document
had her spectacles be in perfect condition. She should have waited for her spectacles to get
repaired. In her believing the misrepresentation made by Lee without taking toil and having
patience to get the contract read by her, she was careless in her conduct.

DID NOT TAKE REASONABLE PRECAUTIONS TO FIND OUT THE CHARACTER OF

THE DOCUMENT. NO MAN CAN TAKE ADVANTAGE OF HIS OWN WRONG. SHE
CANNOT RELIVE HERSELF OF THE CONSEQUENCES OF HER MISTAKE AT THE
EXPENSE OF THE INNOCENT 3RD PARTY. BUILDING SOCIETY WHO RELIED ON
THE VALIDIITY OF THE TITLE OF LEE.

2) Gallie v. Lee & another (Case Brief)

whenever a man is of full age and understanding, who can read and write, signs a legal
document which is put before him for signature then, if he does not take the trouble to read it
but signs it as it is, relying on the word
of another as to its character or contents or effect, he cannot be heard to say that it is not his
document.
If his signature was obtained by fraud, or under the influence of mistake, he may be able to
avoid it up to a point – but not if when it has come into the hands of the innocent party and
has advanced money on the faith of it being his document or otherwise had relied upon it as
being his document.

3) Teegula Babiah v. Mohammad Abdus Sushan Khan –LIQUOR LICENSE

The purpose of the contract was void as it was illegal and opposed to public policy- it was
not an agreement of service due to lack of control to establish master servant relationship
but transfer of license.
In this connection we have also to consider whether the intention of the Legislature in
enacting Ss. 14, 15 and the other prohibitory provisions of the Hyderabad Abkari Act is to
prevent certain things from being done or the conditions with respect of permission for
partnership, etc. are of collateral nature imposed for reasons of administrative convenience.
In Pollock and Mulla'sIndian Contract Act (7th Edition, page 139) it is observed as follows:
"It is possible for a statute to attach a penalty to making a particular kind of agreement, and at
the same time to provide that such an agreement, if made, shall not be, therefore void."
In our opinion the conditions in the Hyderabad. Abkari Act have been imposed for the
purposes of maintaining public order. The purpose in imposing conditions under Ss. 14
and 15, Hyderabad Abkari Act is not merely for the convenient collection of revenue but
also to control the sale of liquor and Sendhi, inasmuch as the Rules prescribe the
conditions and the manner in which the Shop licensed is to be run. The transaction in
question, in our opinion, is against public policy and violative of the provisions of S. 23,
Indian Contract Act and therefore void. Plaintiff cannot get a decree upon a void contract.
Plaintiff's suit must be dismissed with costs throughout.

XIII. In Pari Delicito (Lawful consideration)

1) Nutan Kumar & ors v. Iind additional district judge

2) An agreement of lease between the landlord and the tenant for letting and occupation
of a building in contravention of the provisions of the U.P. Urban Buildings
(Regulation of Letting, Rent and Eviction) Act, 1972 is void.
3) 2. The said agreement is uneforceable in law and no decree for ejectment of the tenant
can be passed in favour of the landlord on the basis thereof.

4) Taylor v. Chester
Plaintiff deposited with the defendant half of alleged bank note as pledge. The debt was
contracted to enjoy the services of brothel kept by the defendant. The plaintiff brought an
action to recover the half note.
The maxim, “in pari delicto…” is founded upon the principles of public policy, which
states that courts will not assist plaintiff who has paid over money or handed over
property in pursuance of an illegal or immoral agreement, fully knowing its nature. The
true test for determining whether plaintiff and defendant were ‘in pari delicto’ is by
considering whether plaintiff could make out his case without the aid of illegal
transaction of which he himself was party.
3) Smt. Surasaibalani v. Phanindra Mohan (Case Brief)
the  object of the parties at the time when the transaction
was  entered into to circumvent or defeat the provisions  of
the Income-tax Act.  It is true that the plaintiff  obtained
benefit of a lower rate of tax for the business income and
his personal income escaped taxation.  But it cannot on that
account be held that the transaction on which he founded his
claim  was  unlawful.  In claiming a decree  for  possession
from  the  defendant,  the  plaintiff  did  not plead any
invalidity of the transaction under which possession of the
business was entrusted to the defendant.  The plaintiff., as
the owner of the business, was therefore not prevented from
enforcing  his title against the defendant there  being  no
taint  attached to the entrustment in the  circumstances  of
the case.
4) Sundara Gownder v. Balachandran
The agreement was to circumvent rules of the Toddy Welfare Fund i.e. unlawful
consideration. As people who had defaulted under toddy welfare fund could not participate
under the auction.

Plaintiff had an agreement with the def whereby they would bid in the auction on behalf of
the defendant, 3 shops of the 28 bid would be transferred to him,they breached. Plaintiff
claiming refund of the money
It defeated the provisions of the law. “Any action to realize the amount pursuant to void
agreement cannot be entertained in the court of law”. In Lower Court sub judge said
according to section 65, the plaintiff is allowed to recover amount. But under 65, if parties
know at the time of entering into agreement that it is void, amount cannot be recovered. Here,
it was known, as it was to defeat the provisions of law, which is illegal and therefore, void ab
initio. Therefore, no relief under 65.

Note : Sec. 23 is always read with Sec 10

XIV. Sec 27 – Agreement in restraint of trade

1) Superintendence Co. of India v. Sh Krishnan Murgai
The agreement was to circumvent rules of the Toddy Welfare Fund i.e. unlawful
consideration. It defeated the provisions of the law. “Any action to realize the amount
pursuant to void agreement cannot be entertained in the court of law”. In Lower Court sub
judge said according to section 65, the plaintiff is allowed to recover amount. But under 65, if
parties know at the time of entering into agreement that it is void, amount cannot be
recovered. Here, it was known, as it was to defeat the provisions of law, which is illegal and
therefore, void ab initio. Therefore, no relief under 65.
Neither the test of reasonableness nor the principle of that the restraint being partial was
reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls
within Exception 1. We, therefore, feel that no useful purpose will be served in discussing the

several English Decisions cited at the Bar.

It is well settled that employees covenants should be carefully scrutinised because there is
inequality of bargaining power between the parties; indeed no bargaining power may occur
because the employee is presented with a standard form of contract to accepts or reject.
Under Section 27 of the Contract Act, a service covenant extended beyond the termination of
the service is void. Not a single Indian Decision has been brought to our notice where an
injunction has been granted against an employee after the termination of his employment.

2) Percept D’Mark v. Zaheer Khan (Pg 261) (Case Brief)

Right of first refusal clause: Thereafter, Zaheer Khan agrees not to accept any offer for his
endorsement, promotion, advertising, or other affiliation with regard to any goods or services
or for arrangement similar to the transaction hereunder without first providing percept with
written notice of such offer and all the material terms and conditions thereof and offering
percept the right to match the third party offer.
Therefore a clause of First Refusal contained in a contract between the parties is not per se
void or hit by section 27 of the Contract Act. Clause No. 31(b) in the present case is in the
nature of a contract of First Refusal The restriction put under latter part of sub-clause (b) on
the respondent to first offer his product Brand endorsement to the petitioner on the terms
offered to him by a third party is not agreed with a view to put a restraint on the respondent
No. 1 in his freedom of contract but with a view to promote trade, at worst to regulate trade.
3) Gujarat Bottling Co. Ltd v. Coca Cola ( Pg 244) (Case brief)
Since 1993 agreement was grant of license to GBC under common law and 1994 agreement
is executed under the requirements of statute for the purpose of registration of GBC as user
under the relevant act, hence, the nature and scope of two agreements was considerably
different; such that 1994 agreement could not be considered as substituting 1993
agreement. Mutuality as under S.62 required for substitution of agreement requires both
consensus ad idem between the parties and an intention to substitute the original
agreement. No such intention of the parties to substitute 1993 agreement could be construed
from 1994 agreement.

In UK: While contracts in restraint of trade whether general or partial, are prima facie void.
But, if such a restraint is held to be reasonable in regard to public policy and in consideration
of interests of both the parties, then such a restraint, whether general or partial, is subsisting.

In India: “A contract in restraint of trade is one by which a party restricts his future liberty to
carry on his trade, business or profession in such manner and with such person as he chooses”
(Superintendence Company of India v. Krishan) unless such a restriction is in furtherance or
promotion of trade in which he is presently voluntary engaged (GBC v. Coca Cola).

Under S.27 of ICA, no distinction, whatsoever, exists between the contracts whether in
partial or in general restraint of trade; such that every such agreement is void. Further, no test
of reasonableness in such a restraint, as applied in UK, is applicable according to literal
interpretation of S.27 in Indian context, such that notwithstanding whether a restraint of trade
is reasonable/conscionable or not, it is nevertheless void according to S.27 (Upheld: Zaheer)

When the contract is in promotion, furtherance or facilitating of trade, then it cannot be said
to be in restraint of trade. Secondly, except in cases where the contract is wholly one sided
and unconscionable, normally when the restriction is subsisting only during the period of the
contract and not thereafter, such restriction isn’t held to be in restraint of trade. However,
while construing a covenant in light of S.27, balance of rights of both the parties needs to be
taken into consideration. “A negative covenant, if subsisting during the existence of contract,
must not be greater than necessary to protect the interest of employer, nor unduly harsh and
oppressive to the employee” (Superintendence Company of India v. Krishan) But, a post-
contractual restriction of trade imposed upon the party, whether partial or complete, is to be
held as violative of S.27 (Zaheer & Krishan)

Restrictions imposed on employees must be carefully scrutinized for there is inequality of

bargaining power between the parties in employment contracts; with employees being
presented with standardized forms of contract either to accept or reject (both cases).
However, the general rules as to restraint of trade are applicable in case of all contracts
(GBC).

1993 agreement was commercial agreement where under both parties undertook obligations
to ‘wholeheartedly’ promote the sale and production of Coca Cola goods for their mutual
benefit, such that the restriction not to deal with the competing goods was for facilitating the
distribution of goods of franchiser (Coke) and was not in anyway restraint of trade.

Further, since the negative covenant is applied only during the period of sustenance of 1993
contract and not thereafter, hence it not being ‘unduly harsh or unconscionable’ cannot be
held to be in restraint of trade.

XV. Agreement in restraint of legal proceedings ( Void)

1) Manohar Singh & Sons v. Raksha KAramchari Cop & Anr

Therefore, in Manohar Singh and Sons Vs. Raksha Karamchari Coop. Gr. H. Soc. and
Anr., MANU/DE/3478/2009 the plaintiff, an architecture rendering services to defendant
cooperative society, claimed arbitration after three months of defendants’ withholding of
the consideration amount against alleged defects in the work; however, the contract
provided for the period of 28 days after the Architect’s notice within which the notice for
arbitration could be served upon. Plaintiff sought to struck down the covenant on the
basis of S.30 of Indian Contract Act alleging that it was in restraint of legal proceedings.
The Court observed that the aforesaid clause limits the time within which the arbitration
proceedings could be invoked and therefore, must be void to that extent as u/s 30(a).
However, if the clause, as in Ganesh Nayak case (supra), would have provided that “the
liability of Cooperative society shall cease to exist after the period of 28 days from the
Architect’s notice are over”, then, it would have been struck down u/s 30(b).

2) National Insurance Co. Ltd v. Sujir Ganesh Nayak Co. & Anr
In no case whatsoever shall the company be liable for any loss or damage after the
expiration of 12 months from the happening of loss or the damage unless the claim is the
subject of pending action or arbitration” After the amendment of the Indian Contract Act,
the second clause (b) was added to S.28 with the effect that any agreement which
provides for forfeiture or waiver of any rights of the party under the contract
 or extinguishment of any liability thereof of the party after the specified period of time,
will be void to that extent.

Note : Scope of S 23 – Lachoo Mal v. Radhay Shyam

The general principle is that every one has a right
to waive the advantage of a law, made for his benefit in his
private capacity, when a public right or public policy is
not infringed thereby. Section 1A was meant for the benefit
of owners of buildings constructed after January 1, 1951.
But there is no prohibition in the section against a land-
lord and his tenant entering into an agreement, that they
would not be governed by that section. If a particular
owner did not want to avail himself of the benefit of the
section, there was no bar created by it to his waiving or
giving up or abandoning the advantage and no question of
policy, or public policy is involved. Therefore, the
performance of the agreement in the present case would not
entail the transgression of any law and the agreement was
not void under s. 23 of the Indian Contract Act

XVI. Sec 30 – Agreements by way of wager ( Void)

1) Subhash Kumar Manwani v. State of M.P & ors

In our considered opinion, neither the provisions of the State nor the Central Act would take
out the nature of the agreement for payment of prize money on a lottery ticket from the
category of it being a "wagering contract" which the civil Court has to declare as void under
the provisions of Section 30 of the Contract Act. lotteries is a trade or business
constitutionally recognised and protected under Article 19'(1)(g) or it is a pure gambling or a
game of chance. The Supreme Court held that even the State sponsored lotteries have the
same element of chance with no skill involved in it. It is observed that the measures provided
in the State and Central legislations are only to inculcate faith to the participants of the State
Lotteries that it is being conducted fairly with no possibility of fraud, misappropriation or
deceit and assure the hopeful recipients of high prizes that all is fair and safe. The Supreme
Court, however, refused to recognise it as a trade or profession.
2) Mahadodas and Ors v. Gherulal Parakh and ors (Pg 285) (HC and SC)
 A collateral contract to a wagering agreement is not void, in this case the parties enter
into a partnership agreement regarding forward contracts on wheath, plaintiff bought a
case for recovery of amount due to them under the partnership. therefore even though
it may be void and unenforceable, it still isn’t forbidden by law and thence the object
of a collateral agreement is not unlawful under sec 23. Therefore the partnership is not
unlawful.
  It is not against public policy as judges cannot formulate a new head of public policy
must rely on precedents, wagering is not against public policy. Not immoral as that is
confined to sexual promiscuity.

3) Lottery wagering – Peter v. State of Kerala

The petitioner had bought tickets to the sports super bumper lottery organized by the Kerala
government. The promised prize money was not given. A writ petition was filed. The Kerala
government said that it expected to sell at least 2 crore tickets but it could barely sell 40 lakh
tickets. The plaintiffs cited rule 9(1) of the Kerala paper lotteries regulations and rules, 2005
whereby the Government promised to pay the declared amount. It was argued that the
Government was estopped from going back on its word.
Issue –
Whether the Government is estopped from going back on its promise according to rule 9 (1)
and therefore is obliged to pay the prize money.
The right of a person taking part in a lottery is restricted to him having the right to take part in
it and nothing else. He could not claim compensation. Also, rule 9 was said to be
unconstitutional.

CANNOT CLAIM ESTOPPEL AGAINST THE GOVERNMENT WHEN IT WOULD BE

ILLEGAL TO DO SO

XVII. Contingent Contract – Sec 31,32,33

1) Deokabai Smt v. Uttam (Sec 33.)

According to the terms of the contract it is clear that the transfer would occur only after
she had found new accommodation for her family, which was considered by the court to
be a contingency. However he did not wait for that and got papers ready for the transfer a
mere 10 days after the permission for transfer was given, which according to the court is
not sufficient time for looking for a house, especially considering her condition.
2) Gian Chand v. Gopala and others
The appellant had entered into an agreement to buy 1/3rd of the respondent’s land for a total
sum of Rs. 78,000 and paid a sum of Rs. 20,000 as earnest money. Later he came to know of
the notification of section 4(i) of the Land Acquisition Act 1894, which was published in
1977, a fact hidden from him. He filed a suit for the recovery of his earnest money. The
notification said that any sale transactions or encumbrances created by the owner after the
publication of the notification under section 4(1) would be void and does not bind the state.
The trial court ruled in favour of the appellant giving him the money with 6% interest, the
district and High court reversed it and ruled in favour of the Respondent.
Issue –
1. Whether the appellant is entitled to obtain refund of earnest money

Rule –
Section 33 of the ICA
Analysis –
One of the terms of the contract was that if the Government acquired the land for public
purpose, the earnest money would be returned without interest. The notification rendered the
agreement of sale frustrated. Therefore, the appellant is entitled under section 33 to seek
refund of the earnest money. It was a contingent contract as evident and therefore, when it got
frustrated, the contracting party is entitled to enforce the terms of refund.

3) SAIL v. Tycoon traders

4)HPA International v. Bhagwandas Fateh Chand Daswani & Ors
ISSUES:
1.  Whether during the pendency of the suit for sanction, actions on the part of the
vendor such as terminating contract by notice, instructing lawyer to withdraw the suit,
amounted to breach of the contract?
2. Whether the performance of obligation of vendor to transfer his lone title also arose
upon the sanction of the Court and not otherwise?
HELD:
1) Since there were pressing demands from public authorities requiring vendor to discharge
public debts, and the sale of the property was an urgent necessity well before the impending
initiation of coercive recovery by the authorities (as recited in the agreement also), hence, in
view of prolonged proceedings before the said Court for sanction (due to opposition by
reversioners), vendor could not have waited for an “unreasonably long time” of pendency of
sanction suit. “Obtaining the Court’s sanction within a reasonable time and in any case, well
before the initiation of recovery proceedings for debt, was in contemplation of parties as
implied term”; since even after waiting for a reasonable time Court’s sanction was not
obtained, hence repudiation was not breach.
2) “When an agreement is entered into subject to ratification by others not party to contract, a
concluded contract is not arrived at and such ratification is held to be condition precedent for
coming into force of a concluded contract.”
The contract stipulated the transfer of entire interest in the property of that of vendor and of
reversioners, hence, was one single indivisible contract, conditional upon sanction of the
Court. The reversioners were not parties to contract and parties were conscious that vendor
had only life interest in property and he could not convey more than his own interest.
Therefore it was in contemplation of parties that transfer of entire interest was conditional
upon sanction of the Court been granted, hence, the obligation of vendor to transfer his own
title was also subject to sanction of the Court unless varied by agreement. Since such
variation never took place nor was asked by vendee even during initiation of Court
proceedings, hence, it will be inequitable for vendor to be compelled to give specific
performance.

Random
 1) Errington v. Wood (Tenancy, Unilateral contract)
The father made a unilateral contract, which could not be revoked once they began
performance, but would cease to bind him if they did not perform their side. The wife was
entitled to remain in the house. The father had made the couple a unilateral offer. The
wife was in course of performing the acceptance of the offer by continuing to meet the
mortgage payments. Under normal contract principles an offer may be revoked at any
time before acceptance takes place, however, with unilateral contracts acceptance takes
place only on full performance. Lord Denning held that once performance had
commenced the Mother was estopped from revoking the offer since it would be
unconscionable for her to do so. Furthermore there was an intention to create legal
relations despite it being a family agreement.
2) Interglobe Aviation Ltd v. Satchidanand (Case Brief)

XVIII. Performance (Sec 37-55)

1) Khardah Co. Ltd v. Raymon Co.

2) Tolhurst v. Associated Portland Cement [HoL and CoA (Case Brief)]
3) Guna Krishna Gauns v. Antonio Braganza (Sec 37 & 38)
4) Williams v. Roffey Bros & Nicholls (Case Brief) (Sec. 37)
5) White & Carter v. McGregor (Case Brief)
6) Startup v. MacDonald (Sec. 46) (Case brief)
7) Heyman v. Darwins (Case Brief)
8) IK Sohan Singh v. SBI (Sec 46)
9) Sardamani Kandappan v. S. Rajalakshmi (Sec 51-55) (Case brief)
10) Bolton v. Mahadeva (Pg. 335)
11) Nevilal Rohita Construction Pvt. Ltd. vs. State of Bihar
12) Cutter v. Powell (Pg. 354)
13) K.S Vidyanadam v. Vairavan (Pg. 358)
14) Mohammed v. Pushpalatha ( Sec 51)
15) Albert Hochster v. Edgar Frederick De La Tour (Sec. 39)
16) Barber Maran v. Ramana Goudan (Sec 38,42, 43, 45)
17) M. Annapurnamma v. U. Akkayya (Sec 38 & 45)
18) State of Orissa v. Harekrishna Mahtab (Sec 53 & 54)
19)Nathulal v. Phoolchand (Sec 52)
20) Chanakya and Company v. Kay Aar Decobuild (Sec 50)
21) Ismail Bhai v. Adam Osman (Sec 38)
22) Arunachallam Chettiar v. Krishna Ayyar (Sec 38)
23) Mukanchand Rajaram Balia v. Nihalchand Gurrmikhrai (Sec 47)
24) Benode Behari Das Gupta v Benoy Bhusan Choudhary (Sec 51, 52, 54, 55)
25) MS Shoes East Limited v. Munak Chemicals Ltd (Case Brief) (Sec 39)

i) Agreement to do impossible act (Sec. 56)

1)Ganga Saran v. Ram Charan Ram Gopal
2) Ms. Gwalior Rayon Silk v. Shri Andavar and Company
3) Mugneeram Bangur v. Gurbachan Singh (Pg. 371)
4) Satyabrata ghose v. Mugneeram Bangur & co.
5) Raja Dhruv Dev v. Rajaj Harmohinder Singh

ii) Appropriation of Payments (Sec. 59-61)

1) Cory Brothers v. The Owners of the Turkish Steamship (THE MECCA CASE!) (Sec 59)
2) Devaynes v. Noble; Baring v. Noble (THE CLAYTON’S CASE!)
3) Chaganlal Shrilal v. Gopilal Choturam
4) Ouseph Lukka v. Ananthanarayana Iyer
5) ICD v. Smithaben H. Patel (Sec 59 & 60)
6) Gajram Singh v. Lala Kalyan Mal

XIX. Contracts which need not be performed (Sec 63, 64, 66 & 67)

1) KMPRNM Firm Merchants v. P. Theperumal Chetty (Sec 62 & 63)

2) Payana Reena v. Pana Lana (Sec 63)
3) Chhunna Mal v. Mool Chand (Pg 422) (Sec 63 & 39)
4) New Standard Bank v. Probodh Chandra (Pg 409) (Sec 41, 43, 62 & 63)
5) The FCI v. M/s Anupama Warehousing Establishment
6) Alopi Parshad and Sons v. UOI (Pg 431) (Sec 56, 73)
Under Section 56 ICA, a contract is not frustrated unless its performance

became impossible or unlawful. It is not merely frustrated because the

circumstance in which it was made was altered. The court said that it could not

absolve a party from its performance simply because its performance has

become onerous due to an unforeseen turn of events.

4. Regarding the principle of Quantum Meruit and the application of this case to

it, the court said that the award which ignored the express terms of the contract

could not be justified as proceeding on the basis of quantum meruit.

Compensation quantum meruit may be awarded for work done or services

rendered only when the price thereof is not fixed by a contract. Such quantum

meruit cannot be claimed in cases where the contract provides the

consideration payable in that behalf.
7) Muralidhar Chatterjee v. International Film Co. Ltd (Sec 64) (Pg 415) (Case Brief)
8) Puran Lal Shah v. State of UP (Pg 439)
9) Bengal Nagpur Ry. Co. Ltd v. Ruttanji (Pg 390)
10) Moris v. Bason & Co.  As put forth by Lord Dunedin– whether there has been rescission
or mere variation of terms must depend upon the intention of the parties and the nature of the
new contract itself: In case of variation/alteration, there is no such executory clause in second
contract as would enable parties to sue upon it alone if the first contract did not exist; while in
case of novation /substitution, parties could sue on the second contract alone and the first
contract is extinguished either by express words or because second dealing with the
same subject matter or having the same legal effect as the first but in a materially different
way.

In present case, both the parties mutually intended and agreed not merely to vary the original
contract but to set it aside and substitute another for it, as the two contracts are in conflict
with each other w.r.t. fundamental or material provisions which go to their ‘root’.

Present case involves the breach of original contract and formation of arrangement B in lieu
of it. B was the ‘accord’ by which obligations under original contract A were discharged.
Further, withdrawal of legal proceedings by both parties was the ‘satisfaction’ which acted as
consideration for making the accord operative.

2) Baron’s refusal of due payment under contract B (even after 3 months period was over)
unless delivery of remaining goods was made, amounted to repudiatory breach (which when
accepted by plaintiff—could have amounted to rescission). Since, he himself was at breach,
hence, could not claim any damages from plaintiff

a) Effect of novation, recission, and alteration of contract (Sec 62)

1) Young achievers v. Learning Resources Pvt. Ltd

2) Lata construction v. Dr. Rameshchandra
3) Nathulal v. Musamnat Gomti Kuar
4) State of Bihar v. Ram Ballabh Das Jalan (Case Brief)
5) UOI v. Kishorilal (Sec.62) (Pg. 375) (Case Brief)
6) Pachkodi gulab v. Krishnaji (Pg 400)

b) Obligation of person who has received advantage under void agreement (Sec 65)
1) Utamchand v. Mohandas
Although the parties to the contract are presumed to know the law, yet the presumption is
rebutted if it is proven that the parties are in misapprehension, lack of knowledge or
apprehension as to their rights.
the contract was discovered to be void and plaintiff was entitled to recovery of the possession
of the property.
2) Thakurain Harnath Kuar v. Thakur Bahadur Singh
Plaintiff paid litigation fees of defendant. Cannot transfer expectacncy. No legitimate title or
interest to transfer. Misapprehension as to his rights- discovered to be void. Plaintiff cannot
claim specific performance as subject matter could not be bound in this particular way.
However he can claim compensation.
3) Kujju Collieries v. Jharkhand Mines (Pg 426)
As the plaintiff was already in the business of the mining operations and had the advantage of
consulting solicitors evidenced by the fact that the deed was prepared by the solicitors, hence,
there was no occasion for plaintiff to be in ignorance of law such that the deed was void ab
initio and not subsequently discovered to be void. Since the plaintiff is to be imputed with the
knowledge of law in present circumstances, hence the act of paying the consideration money
could not be said to be induced by ‘mistake’ as to law in force under the realm of S.72 such
that plaintiff could not recover anything

Articles

1) Roscoe Pound
2) Performance of Contract (Pg. 311)
3) The Doctrine of Substantial Performance (Pg. 317)
4) Rules of advertisement in an electronic age (9/07/16)
5) IT Act, 2000 – A Contractual Perspective (25/07/16)
6) The Postal Acceptance Rule in Digital Age (22/07/16)
7) From Status to Contract (Pg. 27)
8) Exception without a Reason (5-10th/9/16)

20. Of Certain Relations Resembling Those Created by Contract (Sec 68-72)

1) Lipkin Gorman v. Karpnale Ltd & Another (Case Brief) (Pg 455)
The bona fide recipient of the stolen money is under an obligation to restore an equivalent
sum to the plaintiff if he had not given full consideration for it and thus had been unjustly
enriched by it unless he could show that he had altered his position in good faith so that it
would be inequitable to require him to make restitution or restitution in full. This alteration of
position must be, first of all, in good faith, i.e. a mala fide change in position, as where
defendant pays away the money with knowledge of facts entitling plaintiff to claim
restitution, is no defence; secondly, this change of position must not be in the ordinary course
of events, i.e. defendant must establish that he incurred expenditure of the money so received,
which he would not have incurred but for money so received.
The defence of alteration of position is allowed in equity because the injustice of requiring
innocent third party, who throughout acted in bona fide belief, to repay or repay in full the
amount received, outweighs the injustice of denying the plaintiff restitution. The rationale
behind this defence is not estoppel because, first of all, estoppel normally deals with
representation by one party, while cases of restitution don’t have normally to do anything
with representation; secondly, estoppel can’t operate pro tanto.

1) Although solicitors had no proprietary interest in any cash lying at the bank, the
bank’s indebtedness to them (because clients’ accounts were at all material times in credit
and therefore bank was debtor and solicitors creditors) constituted a chose in action, which
was legal property belonging to the solicitors since debt was enforceable under common
law. A legal owner is entitled to trace his property into its product, provided that the latter is
indeed identifiable as the product of his property.Therefore, solicitors should be entitled to
trace their property at common law in that chose in action into its product, i.e. cash drawn by
C from their clients’ accounts at the bank.

2) With respect to first contract of exchange of money with chips club didn’t give any
valuable consideration to C in return for stolen money because:

a) the chips were only a convenient mechanism which facilitated gaming in casino

b) gambler didn’t buy them for money from the club as throughout they remained property of
club and were to be redeemed by the club for money.

c) they were only a token of gratuitous deposit with club, with the person’s liberty to draw
upon that deposit to gamble and obligation in equity for club to refund any chips not used
again for money (to avoid the claim of unjust enrichment.)

With respect to second contract of placing bets on table, it was void by way of gaming or
wagering under the statute, hence, by accepting the bet, casino doesn’t thereby provide any
valuable consideration as it was under no legal obligation to honour the bet. If it pays
anything out of gambler’s successful bet that is to be treated as mere gift and not any valuable
consideration.

3) The court rules that solicitors were not entitled to recover all their money because the
club changed its position on each occasion he placed a bet with it and was successful in
winning. It would be inequitable to require casino to repay in full without bringing into
account the winnings paid by it to the gambler on any one or more of the bets so placed with
it. Therefore, club was asked to repay only to the extent of net amount which left with club
after paying C his substantial winnings out of gambled clients’ money.
 

a) Claim for necessaries supplied to person incapable of contracting, or on his a/c (Sec 68)

1) Nash v. Inman
Suitable to his condition of life-must be an actual necessity and he must not already have
sufficient supply of this at the time. Held burden of proving that it was necessity was on
plaintiff. Since he could not prove. It was held void ab initio.
“Necessaries means goods or services suitable to the condition in life of minor, or any other
person incapable of forming contract for himself, and as to his actual requirements at the time
of sale and delivery”. This means that not only the goods need to be suitable and necessary to
the condition in life of a minor (here) but also be needed by minor in actuality, i.e. he must
not be already having sufficient supply of such goods. The onus to prove that the thing
contracted for was a necessity lies on plaintiff, however difficult it may be to prove that it
was needed by minor in actuality.

In English Law, incompetent person is to compensate the supplier of necessities to him by

paying a reasonable price for such necessities. However, if the necessities so supplied are
services instead of goods, then action for recovery lies against estate of such person and not
against him.

2) P.E.R.M. Annamalai Chettyvs Satyavadivel Muthuswami

Although a guardian may under certain circumstances sell or charge the ward's property he
cannot bind the ward personally by a simple contract debt, by a covenant, or by any promise
to pay money or damages unless such promise is made merely to pay or to keep alive the debt
for which the ward's property was liable.5. This passage means according to Venkataramana
Rao, J., as indeed it does seem to mean, that a guardian cannot, without charging the estate,
contract so as to bind the minor, except it be to pay or keep alive a debt already in existence,
and binding on the estate. On this view a pre-existing debt or liability could alone support a
simple contract debt and not necessity, nor benefit. In fact he says that:

Negating the distinction between simple loan and collateral. Guardian must prove its for the
benefit for the minor and if it’s a necessity. Neccesity depends on personal law- like hindu
sister marriage.

b) Reimbursement of person paying money due by another, in payment of which he is

interested (Sec 69)

1) Musammat Munni Bibi Alias Ambika vs Tirloki Nath And Ors

2) Boja Sellappa Reddy vs Vridhachala Reddy
Plaintiff is the registered owner- defendant was in possession of the land- had no legal
obligation to pay- no vested interest to pay- MUST HAVE GONE UNDER SEC 70 BUT HE
WENT UNDER 69 BUT LOL
3) Mothooranath Chuttopadhya vs Kristokumar Ghose And Ors
4) Govindram Gordhandas Seksaria vs The State Of Gonda

c) Obligation of person enjoying benefit of non-gratuitous act (Sec 70)

1) Union Of India vs Sita Ram Jaiswal

2) State of West Bengal v. B. K. Mondal & Sons (Pg 484) (Case Brief)
3) Sri Sri Shiba Prasad Singh vs Maharaja Srish Chandra Nandi
4) Mulamchand vs State Of Madhya Pradesh
5) Sri Sri Sri Gajapathi Kistna vs P. Srinivasa Charlu

d) Liability of person to whom money is paid, or thing delivered by mistake or under

coercion (Sec 72)

1) Sales Tax officer v. Kanhaiya Lal (Pg 514)

2) Mahabir Kishore v. State of M.P. (Pg 500)
3) Mafatlal Industries Ltd. vs Union Of India (Case Brief)
4) Sri Sri Shiba Prasad Singh vs Maharaja Srish Chandra Nandi

21. Of the Consequences of breach of contract (Sec 73-75)

a) Compensation for loss/damage caused by breach of contract and failure to discharge

obligation resembling those created by contract (Sec 73)

1) Hadley and Another v. Baxendale and others (Pg 525)

2) Victoria Laundry v. Newman Industries (Pg 533)
Held, that the defendants, an engineering company, with knowledge of the nature of the
plaintiffs' business, having promised delivery by a particular date of a large and expensive
plant, could not reasonably contend that they could not foresee that loss of business profit
would be liable to result to the purchaser from a long delay in delivery; that although the
defendants had no knowledge of the dyeing contracts which the plaintiffs had in prospect, it
did not follow that the plaintiffs were precluded from recovering some general, and perhaps
conjectural, sum for loss of business in respect of contracts reasonably to be expected; and
therefore the appeal must be allowed and the damages referred to an Official Referee for
assessment in consonance with those findings of the court.
3) Murlidhar Chiranjilal v. Harishchandra Dwarkadas and Another (Pg 542)
4) M. Lachia Setty & Sons v. Coffee Board, Bangalore (Pg 547)

5) Ramgopal and other v Dhanji Jadhavji Bhatia

6) Ghaziabad Development Authority v. Union of India & Another

7) A.K.A.S. Jamal V Moolla Dawood Sons & Company

8) Great Eastern Shipping Co. Ltd. v UOI

9) Pannalal Jankidas v Mohanlal (Case Brief)

10) Anand Construction Works v. State of Bihar (Case Brief)

11) Photo Production Ltd v. Securicor Transport Ltd. (Case brief)

12) V.L. Narasu v. P.S.V. Iyer (Case Brief)

13) Millett v Van Heek & Co.

14) Melachrino v Nickoll

15) William Dunlop v. George Anthony Lambert

16) Funnel v Adam
The claim has been framed primarily on the basis that the measure of damages is the cost of
extrication from the predicament and coupled with costs wasted by embarking on a venture
which had to be aborted at an early stage. Both parties agree that this is the appropriate
measure of loss.17 The claimants had alternatively claimed loss and damage being the
difference between what they would have received for assigning the lease in 2002 had the
defendant not been negligent and the value of the lease as assigned by them, together with the
costs of moving into the property, executing the lease and moving out again. The parties are
agreed that this is not the appropriate measure of loss in this case.
CHAIN OF CAUSATION- LOSS AROSE DIRECTLY OUT OF THE BREACH
PLAINTIFF HAD APPROXIMATELY ESTIMATED RENT INTO THEIR BUSINNESS
PLAN, great hike was unforeseeable and was direct cause for assigning the property.

b) Compensation for breach of contract where penalty stipulated for (Sec 74)
1) A.S. Motors Ltd. v. UOI (Case Brief)
2) Fateh Chand v Balkishan Das (Case Brief)
3) Maula Bux v UOI
4) Jarvis v Swans Tours Ltd.
Representation in the brochure constituted a warranty. Thought damages for mental agony
are not usually awarded for breach of contract. When the prime purpose of the contract was
for enjoyment and entertainment, must take into consideration his inconvenience and mental
frustration annoyance and disappointment. Compensation for breach Section 73
Compensation for loss or damage caused by breach of contract.—When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from such breach, or which the parties knew,
when they made the contract, to be likely to result from the breach of it. Such compensation
is not to be given for any remote and indirect loss or damage sustained by reason of the
breach.

5) Frederick Thomas v. Secretary of State India

6) Quinn v Burch bros (Case Brief)
Assuming that the defendants were in breach of contract by not providing the equipment
reasonably necessary for the work, there was no obligation on the plaintiff to do the work
without suitable equipment. The plaintiff voluntarily and without the defendants; knowledge
chose to use the trestle, which was unsuitable and subject to the risk of slipping. The cause of
the plaintiff accident was the choice by the plaintiff to use the unsuitable equipment. The
failure of the defendants to provide the equipment required may have been the occasion of
the accident but was not the cause of the accident.
DID NOT NATURALLY ARISE OUT OF BREACH

7) Kailash Nath Associates v DDA (Case Brief)

8) ONGC v. Saw Pipes (Case Brief)
9) State of Kerala v United Shippers and Dredges
10) SAIL v Gupta Brother steel tubes
11) Venkataramiah Pillai v. P.V. Subramania Pillai