ASSIGNMENT OF LAW OF CONTRACT

Name :- KHALIQ UR REHMAN

ACKNOWLEDGMENT
I would like to express my special thanks of gratitude to my
contract teacher PROF. JOBY BHASKAR who gave me the
opportunity to do this project. I also learned many things and
earn so much knowledge by doing this.
What is Contract?
According to section 2 (h) of the India Contract Act,’’ An agreement
enforceable by law is a contract ‘.
Thus, for the formation of a contract, there must be –
 An agreement, and
 The agreement should be enforceable by law.
All agreements are not enforceable by law and therefore, all agreements
are not contracts. Some agreement not enforceable by law.
For example- An agreement to sell a radio set any be a contract, but an
agreement to go to see a movie may be a mere agreement not
enforceable by law.

CASE-1
Mehul was a business man from Kerala. He was brutally murdered by
some of his rivals. Suresh, Rajeev and Kishore were the prime suspects.
All of the suspects had absconded and were missing for almost six
months. Since the investigation did not move an inch further the police
department was under great pressure. Hence Kerala police offered a
reward of 25000 rupees to anyone giving information about the suspects.
The offer further added that if the information was given by an
accomplice then he would be entitled to pardon. Laxmi, who was an
accomplice saw the offer and having been so exited by the hope of
pardon, she gave information to save herself, completely forgetting the
reward. Laxmi claimed the reward, but it was rejected by the department
saying that she was influenced by motives other than reward. Laxmi
wants to sue the department. Advice.
ISSUES INVOLVED
The main issues involved in the case are:
1. If there exists a contract or if the situation amounts to contract between the
two
2. If Laxmi was entitled to get the reward from police for department giving
information about suspects
3. If there was a valid acceptance of the offer made by the plaintiff
4. If the claim of Rs. 2500 be provided or not

Questions of Law:
*Whether the decision given by
the lower court is valid?
*What kind of offer did the
defendant claim to have made?
*Can the act of the plaintiff be
termed as a valid acceptance of
the offer made by the defendant?
*Is this a valid contract?
*Whether the reward of Rs.
25000 claimed by the plaintiff
should be provided?

QUESTION OF LAW
1. What kind of offer did the defendant claim to have made?
2. Is this a valid contract or not?
 3. Whether the reward of rupees 25000 claimed be the plaintiff
should be provided?
RATIO
In the case of Laxmi versus police department it is derived that in order
to enter into the contract between two parties there has to be two things
which are very essential for creating contract: -
1. To have complete knowledge of facts of offer
2. Acceptance to offer
A person to whom the offer is made that means the offeree must accept
the proposal which is offered by the proposer and communication to the
offer is also very important as mentioned in section (4) of the Indian
contract act which states that the communication can only be complete
when it comes to the knowledge of the person to whom it is made. In
order to convert a proposal into an agreement both knowledge and assent
must be present.
But in this case both things don't exist. As the plaintiff had no
knowledge and had also did not gave his approval and accepted the
proposal which was offered by the defendant police so hence there did
not exist a valid contract between the two parties.
JUDGMENT OF THE CASE
In the case of Laxmi Verses Kerela Police, case the petitioners appeal
against the respondent Police will be dismissed by the court. After
analyzing all the facts of the case. It will be held by the honorable court
that for creating or entering into a valid contract there has to be
knowledge and assent to the offer being made by the proposer. There has
to be proper acceptance or the offer must give his approval before
accepting which was absent in the present case. The plaintiff had no
knowledge about the reward before performing his act. He came to
know afterwards in which there is no possibility of accepting the offer.
Hence there exist no contract so as a result the court will come to the
decision that the appellant Laxmi will not be entitled to get the reward.
without having any prior knowledge and information about the facts
which restricts him to claim the reward.
The judge will say that Laxmi was fulfilling his obligations as a servant
of searching the missing suspects. It was a part of her duty which she
was merely doing. so hence her suit against the defendant is completely
dismissed by the court as there is no contract between both the parties.
ARGUMENTS
PLAINTIFF (Laxmi): Laxmi intention is giving the information was to
clear her name from the case and protected herself so, in hope of pardon
she gave the information to the Kerala police, thought claiming the
reward is not her motive but Kerala police offer 25000 rupees reward for
anyone to give information about prime suspect of murder, the offer also
mentioned any accomplice gave information then would be pardoned
according to the offer Laxmi must get the reward.
DEFENDANT (Kerala police): Kerala police reject the offer when they
know the motive of Laxmi. That they came to protect herself not to take
reward. She tries to influence the Kerala police to herself. When the
Kerala police know the truth, he forgot about reward to give the Laxmi.
Laxmi motive is not to take reward so according to Kerala police Laxmi
has no right to claim reward.

RELATED CASES
1.Fitch V. Snedaker:
Fitch v Snedeker 38 NY 248 (1868), Snedeker offered a
reward to anyone who found and return the dog. Fitch
found the dog and returns it to before being aware of the
offer made by Snedeker. The court was held that Fitch
would not be entitled to reward. This is because
acceptance of an offer, in ignorance of offer, is no
acceptance and does not confer any on Fitch. A person
who gives information without knowledge of the offer of
reward cannot claim the reward.
2.Gibbons V. Proctor:
 This case is sometimes cited for the proposition that a person can
accept a contract without knowledge of the offer, but given
 One way to interpret this case is that by the time the information
actually reached the superintendent, C knew of the reward, thus the
case is weak authority for saying that one can accept in ignorance
of an offer

CASE –2
ABC insurance company was engaged with both life insurance as well
as general insurance business for a very long time. Mr. Kammat has
been their old customer and has a life insurance policy worth 10 lakhs in
Favour of his wife. The scheme of the policy mandated annual premium
payment. On 4th October. Kammat sent the premium due on the life
insurance by money order. Two days later Mr. Kammat died. Mrs.
Kammat claimed the insurance amount. The company rejected the claim
saying that the premium was unpaid at the time of death. Decide.

ISSUES INVOLVED
1. Whether there had been an acceptance of share offer.
2. if there was a legally binding contract.
QUESTION OF LAW
1. Whether there had been an acceptance of the offer?
 2. Whether the liquidator had an entitlement to receive the payment
of shares from the defendant?
RATIO
A contract becomes binding the instant that the acceptance is put in the
money order, so long as the parties have contemplated the money order
as a viable means of communication in their dealings
JUDGMENT OF THE CASE
The Court of Appeal held in favor of the claimant. The postal rule will
be applicable to this case, meaning that the claimant communicated their
acceptance the moment they posted the letter. It did not matter that the
letter never arrived.
This Case is Authority For…
Where the offeree sends their acceptance by post, it is communicated to
the offeror immediately. This is true even if the letter never arrives. This
is known as the postal rule.
ARGUMENTS
Plaintiff (Mrs. Kammat): A contract is formed when the insurer
accepts the premium and retains it. Plaintiff husband sent the
premium by money order on 4th October before he died. He died
on 6 October; later the insurance company denied about the
payment during the time of his death rejected the claim.
According to the plaintiff, i.e., his wife the payment is done before
the death.
Defendant (ABC insurance company): The insurance company
claim that life insurance policy is active only is its premium is paid
on time. But the company denied the payment of premium at the
time of Mr. Kammat death.
RELATED CASES
Household insurance company vs Grant 1879
The defendant, Mr. Grant, applied for shares in the complainant’s
company, the Household Fire Insurance. The complainants allotted
shares to Mr. Grant and they completed this contract by posting him a
letter with notice of the allotment. However, this letter never reached
Mr. Grant and it was lost in the post. Mr. Grant never paid for the shares
as a consequence. When the Household Fire Insurance company went
bankrupt, the liquidator asked the defendant for payment of the shares.
Mr. grant refused to pay, as he did not believe he was a shareholder nor
was there a binding contract in his mind.
DOCTRINE OF PROMISSORY ESTOPPEL
The Doctrine of Promissory Estoppel is basically an equitable doctrine.
The Doctrine of Promissory Estoppel means where one party by his
words or conduct made to the other a clear promise which is intended to
create legal relations or even affect 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 fact 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. It clearly means that administrative action would be
marked by certainty, predictability and consistency.
CASE –3
Ahmed gave a notice to his tenant George to repair the premises
within 3months, failing which the lease was to be forfeited.
Three weeks later, Ahmed entered into negotiation for the sale
of the rented property to George. Consequently, during these
period of negotiation George carried out no repairs as directed
under the notice. The negotiation failed to materialize, there
after shortly the period of three months expired. Ahmed claimed
the lease to have been forfeited.

ISSUES INVOLVED
The question that arose before the House of Lords was that whether
negotiation between the parties would imply that promise of month term
would stand suspended?
QUESTION OF LAW
Was there an implied promise that the month term would be suspended
during the negotiations?
RATIO
If a promise is implied in negotiations and one party relies on that
promise then it is inequitable to allow the other party to act as though the
promise does not exist.
JUDGMENT OF THE CASE
It will be held that, it is the primary principle that if two parties have
entered into certain terms that involve legal results and after that they
enter into some sort of negotiation which leads one party to suppose that
such legal results would no longer be enforced or would stand withheld
due to this new course of dealing, the person who otherwise might have
adhered to those rights will not be allowed to enforce them where it
would be unfair taking in consideration the dealings which have thus
taken place between the parties. Hence, the rights of the landlord were
suspended temporarily while allowing the tenant some more time to
finish the repairing.
ARGUMENTS
Plaintiff (Ahmad): plaintiff gives a notice to her tenant George
to repair the premium with in 3 months failing which the lease
was to be forfeited. After 3 months had passed George did not
carry out the any repairs. Ahmad claimed that the lease was
forfeited and sought to reject George.
Defendant (George): George had already entered in to a
negotiating with Ahmad to by the premises. The initiation of the
negotiations. An implied promise by the landlord not to enforce
their strict legal right with respect to the time limits on the
repair, and the tenant acted on this promise to their detriment.

RELATED CASES
HUGHES VS METROPOLITAN RAILWAY 1877
A landlord gave a tenant 6 months' notice to carry out repairs failure to
do so would result in forfeiture of the lease. The landlord and tenant then
entered into negotiations for the tenant to purchase the freehold of the
property. It was thought by both parties that a conveyance of the
property would take place. The tenant had not carried out the repairs as
they believed they would be purchasing the freehold and the repairs
required by the landlord were not essential to his use of the property. At
the last-minute negotiations broke down and the Landlord gave the
tenant notice to quit for failure to carry out the repairs.

Held:

The time limit imposed for carrying out the repairs was suspended
during the negotiations.

Lord Cairns CJ: -

"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."

CERTIFICATE
This is to certify that MR. KHALIQ UR REHMAN has completed the
project of the subject LAW OF CONTRACT under the guidance of
PROF. JOBY BHASKAR during the year 2022.

THANK YOU.