Carlill v. Smoke Balls Co.

Citation : [1893] 1 QB 256

Bench: Lindley LJ, Bowen LJ, and AL Smith LJ

Date of Judgement: 7 December 1892

Fact:

In this case, a company named Carbolic Smoke Ball Co. released an advertisement, to pay 100 pounds to anyone who suffers from influenza, cold, or any other related disease, and that claims after taking the ball as per the printed directions disease will be diagnosed. To make it more serious, they added that “1000 pounds are deposited with the Alliance Bank showing our sincerity in the manner.” The plaintiff, suffering from influenza, used the ball according to the prescribed manner but her disease was not diagnosed. She filed a suit to claim the reward.

Issue raised : 

1. Whether the language used in the advertisement regarding the offer to pay 100 pounds was really an express promise or rather it was merely a sales puff?

Judgement:

It was held that the plaintiff was entitled to claim the promised amount. The defendant contended that there was no intention to create any legal relationship, and the advertisement was simply a sales puff.

Justice Bowen LJ observed that the advertisement says that 1000 pounds are deposited in the bank for that purpose. So, It cannot be said that the statement of giving a reward of 100 pounds is mere a sale puff and not intended to form a legal relationship. He also said that when an offer is made world at large, can ripen into a contract if anybody who comes forward and performs the conditions. 

The ratio decidendi of this case was that the advertisement published by the Carbolic Smoke Ball company was a unilateral contract, and whoever comes forward and performs the condition of the proposal, converts the offer into a binding contract.

Personal Opinion:

This is a landmark case of a general offer. By this verdict, the court provides a clear picture of a situation which occurs in our daily life. It describes and clears the importance of the acceptance to the offer. Through this decision, we can differentiate between a sales puff and actual offer or proposal as the court has clearly differentiated both. 

Powell v. Lee

“Acceptance is not effective unless it is communicated by the offeree or by a duly authorised agent.”

Citation: – (1908) 99 LT 284 

Bench: – Kings Bench Division 

Facts of the case: –

Powell referred to as the plaintiff applied for the post of headmastership of a school. The manager hereby referred to as the appointing authority passed a resolution of appointing him; however, no formal acceptance was conveyed to him. One of the board members overheard the discussion and, in his individual capacity, informed the same to the plaintiff.

However, later the manager cancelled the resolution, aggrieved by the decision of the authority plaintiff sued the school for breach of contract.      

Issue Raised: –

  1. Whether there was a breach of contract?

Judgment: –

The Hon’ble Court held that there was no breach of contract between the plaintiff and the defendant as the acceptance was never conveyed by someone authorized by the school board; The Hon’ble Court further stated that in order to render a valid acceptance the same must be conveyed to the offeror by the offeree or someone authorized on his behalf. The Hon’ble Court opined, there must be notified of acceptance from the contracting party in some way information by an unauthorized person will not form a valid contract. 

Personal Opinion: –

In case of considering revocation of the contract, the authorization must be checked; the natural principle which should be followed is acceptance must come from a person who has the authority to accept.

Tweddle v. Atkinson

Citation: – [1861] EWHC J57 (QB); (1861) 1 B&S 393 

Date of Judgement: – 7th June 1861

Bench: – Wightman J, Crompton J, Blackburn J 

“A person who has not paid consideration; has no claim on the contract.”

Facts of the Case:

John Tweddle and William Guy mutually decided in writing to pay a sum of (£100 and £200, respectively) to Tweddle’s son William who was about to engage with Miss Guy. Unfortunately, before the fulfilment of the contract, the father of the bride died, and circumstantially, the father of the son died before he could solve the argument between them. As a result of which the groom brought a legal suit against the legal executor of the will made between the parties for its non-fulfillment.  

Issue Raised:

  1. Whether the groom is entitled to take the stand for the enforcement of the contract?
  2. Whether the Doctrine of Privity of Contract is applicable in this case?

Judgment:

The court, after analyzing the fact and the issue raised by the groom, held that the groom is not entitled to claim for the enforcement of the contract. The court said that the groom was neither a party to the contract nor has any consideration in the matter of the promise made by the father’s of the bride; He was solely a third party to the whole agreement entered into by both of the fathers. 

The Court applied the Doctrine of Privity of contract in this regard which clearly specifies that no third party to a contract has the title to claim for its fulfilment in the court of law as being a stranger to the contract; the groom has no legal footing for the enforcement of the contract entered by the other party. Thus, after observing the Doctrine of Privity of Contract in the whole matter court found in favour of the executor of the will.

Personal Opinion: – 

The problem arising out of the Privity of contract is it acts as a bar to the fulfilment of the personal choices of an individual; thus to avoid such complexion following may be adopted for the same:

1. The court should have given thought about the personal choices that both of the fathers had to contribute to the newly married couples in their new life.

2. Being a bar to the personal choices of any individuals, it narrows the definition of Privity of contract.

Madhub Chunder v. Rajcoomar Doss

Citation- (1874) Beng LR 76

Bench- Sir Richard Couch C.J

Facts

In this case, the Defendant faced competition from Plaintiff due to which he incurred a heavy loss. Consequently, both parties entered into an agreement. The terms of the contract state that if the Plaintiff closes his business then the Defendant would pay him the money that Madub Chunder advanced to his workers. Later on, Rajcoomar refused to pay the money as promised in the contract. Both the parties of the present case were involved in businesses established in Calcutta.

As a result, the Plaintiff filed a lawsuit to claim the amount from the Defendant.

Issues

  1. Whether Plaintiff’s lawsuit against the defendant is maintainable?
  2. Whether the Plaintiff was entitled to receive the amount as promised?

Judgement

Sir Richard Couch C.J while referring to the case of Mitchel v. Reynolds laid a distinction between partial and absolute restraints of the trade. He stated that any contract which falls within the ambit of Section 27 of ICA is void unless certain exceptions. 

He also asserted that “The words “restrained from exercising a lawful profession, trade or business” do not mean an absolute restriction and are intended to apply to a partial restriction, a restriction limited to someplace.” 

Further, he cited Section 28 of the Indian Contract Act that has the word ‘absolutely’, proving that the intention of Section 27 is only partial restraint but not an absolute restraint. The agreement entered by both parties in the present case is a complete restraint of trade making it void and not enforceable.

Personal Opinion:

The landmark ruling of the present case protects fair competition. It also broadly elucidated the scope of Section 27 of the Indian Contract act. The doctrine of Restraint of Trade was introduced in India through this judgement. It cleared all the uncertainties and confusion that may arise from the doctrine. 

(By – M. Soujanya)

Bhagwandas Goverdhandas Kedia vs. Girdharilal Parshottamdas & Co. & Ors.

Citation: – 1966 AIR 543 1966 SCR (1) 656

Date of Judgment: – 30/08/1965

Bench: – SHAH, J.C, WANCHOO, K.N, HIDAYATULLAH, M. 

Facts of the Case: – 

Bhagwandas Goverdhandas Kedia, the respondent, came in contract with M/s Girdharilal Parshottamdas & co, the plaintiff, via a telephonic line to supply cotton seed cakes; however, the respondent failed to supply the goods this resulted to the filing of the case in city civil court of Ahmedabad.

The respondent argued that Ahmedabad Civil Court does not have jurisdiction over the matter; however, it was held that City Civil Court had jurisdiction over the matter as the offeror informed about the offer to offeree in Ahmedabad where the contract was made; further, a revision application was filed in Gujarat High Court which was rejected therein finally a special leave petition was filed in the Hon’ble Supreme Court.        

Issue Raised: – 

1. Whether the conversation resulted in contract at Khamgaon or Ahmadabad and did the Ahmedabad City Civil Court had jurisdiction over the matter? 

Judgment: –  

A majority of Judges relied on the English law laid down in the Entores case and saw no reason to extend the post office rule (laid down Adams Case) to telephonic communication. The court stated that the language of the Contract Act cannot be completely ignored. Saha, J stated that when acceptance of the offer was intimated by the offeror the contract becomes complete. The Hon’ble Supreme Court stated that trail court was correct and the decision exercised was rightfully within the jurisdiction of the City Civil court thereby the petition was dismissed with costs.

Personal Opinion: –

The Case has widened the scope of communication of offer since when the law was drafted the legislators have not contemplated telephone, wireless, early bird. When the words of acceptance were spoken in a telephone; they were put into a course of transmission to the offeror and are beyond the power of the acceptor. 

Also, the context of jurisdiction is well explained by the Honorable Court and the said order can be used as mutatis mutandis in a similar situation matrix.  

Kedarnath Bhattacharji v. Gorie Mahomed

Citation- (1887) ILR 14 Cal 64

Date of Judgement- 26 November 1886

Bench – W C Petheram, Beverley

“When at the desire of the promisor, promisee does something then it is a valid consideration under section 2(d) of the ICA.”

Facts:

A Town Hall was planned to build in Howrah. Based on it, all the subscriptions, funds, and interested persons came up for the construction. Municipal Commissioner of Howrah, the Plaintiff entered into an agreement with the contractor and supplied necessary information of the plans.

Later on, with an upswing of subscriptions and plans, there was a rise in the cost of construction making it from Rs.20,000 to Rs.40,000. The defendant made a subscription to pay Rs. 100 for the construction of Town Hall. However, he refused to pay the amount. The Plaintiff commenced an action to claim the amount.

Issues:

  1. Whether the lawsuit initiated by the Plaintiff and all other interested, is maintainable?
  2. Whether the Defendant is liable to pay the amount?

Judgement:

In an ordinary situation, if somebody puts his name for a subscription for a charitable object, it cannot be recovered, as there is no consideration.

However, in this particular case, persons subscribing knew the purpose for which the money was applied and was also aware that on the account of their subscription, the plaintiff entered into the contract. The court considered this a perfectly valid contract and with good consideration.

The Court held that even if the defendant does not benefit from the promise he made for a charitable purpose, he is liable to pay the amount. He was responsible for his promise. A promise once made cannot be taken back after its commencement. It reaffirmed the rule of law by stating that, “Any act done at the will of the promisor’s wish is taken as the fulfillment of consideration of a contract.

Personal Opinion:

This case sets a substantial example that a promisor cannot escape liability from a promise once made. He has to perform obligations under the contract. A consideration, which is an essential element of a contract has to be performed by both parties. The court, with the present case, reaffirmed the importance of promise and consideration.

(By – M. Soujanya)

Mohori Bibi v. Dharmodas Ghosh

Citation– 30 M.I.A 114

Date of Judgement- 04 March 1903

Bench- Lord Macnaughten, Lord Davey, Lord Lindley, Sir Ford North, Sir A. Scoble, and Sir A. Wilson

“This is a famed & benchmark judgement concerning the minor’s capacity to enter into a contract.”

Facts:

The Respondent, who was a minor, owned immovable property, executed mortgage of his property for Rs.20,000 at 12% interest rate per year in favour of Brahmo Dutt, a money lender. 

Though the Attorney of Brahmo Dutt, Kedar Nath, who executed the entire transaction, was completely aware of the incompetency of the Respondent, lent money to the minor. During the agreement, the mother of the Respondent informed Kedar Nath about Dharmodas’s minority and his incapacity to enter into a contract. 

Consequently, Dharmodas and his mother filed a lawsuit to get the mortgage declared as void.

The lower court held in favour of minor. Later, Brahmo Dutt died, and the further appeal was initiated by his representative, Mohori Bibi.

Issues:

  1. Whether the deed was void under section 2, 10[5], 11[6], of Indian Contract Act, 1872 or not?
  2. Whether the executed mortgage was voidable or not?
  3. Whether the money advanced to the defendant must be returned?

Judgement:

According to the verdict of Trial Court, such a mortgage deed or contract that was commenced between the plaintiff and the defendant was void as it was accomplished by the person who was an infant at the time of execution of the mortgage. An appeal was filled in the Calcutta High Court, and it was dismissed. Later, the appeal was made in Privy Council, and the Privy Council also dismissed the appeal and held:

  • Any kind of contract with a minor or infant is void/ void ab-initio (void from beginning).
  • Since minor was incompetent to make such mortgage hence the contact such made or commenced shall also be void and id not valid in the eyes of the law.
  • The minor i.e., Dahrmodas Gosh, cannot be forced to give back the amount of money that was advanced to him because he was not bound by the promise that was executed in a contract.

Personal Opinion:

Prior to this case, there was a lot of confusion regarding contracts with minors. Generally, minors are incapable of understanding the consequences of an agreement they enter into. Many would deceive and take unfair advantage of them. This historical case provided a protection shield to the minors and sets a precedent. It also cleared any ambiguity that may arise from the minor’s agreement. 

(By – M. Soujanya)