Sarvajanik Education Society

SARVAJANIK COLLEGE OF LAW

(Constituent College of Sarvajanik University)
Notes of Case Law
Law of Contract

(1) Balfour v. Balfour, [1919] 2KB 571

One of the essentials of valid contract is that there should be intention of parties to
create legal relations - mere domestic arrangement is not contract - Landmark case
on this point is Balfour v Balfour
Facts of The Case
1) Mr. Balfour and Mrs. Balfour were husband and wife from Ceylon ( Sri Lanka) and
once they went for a vacation to England in the year 1915
2) Unfortunately during the course of vacation, Mrs. Balfour fell ill; she was in urgent
need of medical attention.
3) Then they decided and made an agreement that Mr. Balfour would return to Ceylon
and his wife i.e. Mrs. Balfour shall stay back until she recovers from her illness.
4) They had also decided that during that period of time Mr. Balfour shall pay Mrs.
Balfour 30 pounds as maintenance every month until everything falls into place, unless
she recovers and returns back to Ceylon. Now this understanding and interpretation was
made when their relationship was fine and there was not any sort of sourness in between
them.
5) Then slowly and gradually their relationship deteriorated which resulted in non-
payment of the amount of maintenance by Mr. Balfour to Mrs. Balfour. Mr. Balfour
wrote the letter to his wife suggesting to make their separation permanent.
6) Then, Mrs. Balfour brought the action against Mr. Balfour for non-payment of the
amount he was supposed to pay in court of law in the year 1918.
Issues Raised In The Case
1) Did Mr. Balfour ever intended to enter into any sort of agreement with his wifeMrs.
Balfour?
2) Is the agreement between Mr. And Mrs. Balfour valid in nature at all?
Procedural History Of The Case
Lower Court ruled in favour of the plaintiff (Mrs. Balfour) and against the defendant
(Mr. Balfour).The defendant’s promise to pay the maintenance was enforceable.The
consideration to the agreement of monthly transfer of the amount of money was lawful
and held binding obligations, but Mr. Balfour appealed in higher court.
Contention At The Part Of The Appealant (Mr. Balfour)
The Agreement made between Mr. Balfour and Mrs. Balfour was purely domestic in
nature, it does not hold any legal enforcement. Moreover Mr. Balfour never had any sort
of intention to to form an agreement which is legal in nature.
Contention At The Part Of The Respondent (Mrs. Balfour)

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 The husband must be obliged to pay her the maintenance because, because the husband
got into the domestic agreement by entering into the contract that he would pay her the
amount of 30 pounds as support for which she had agreed to stay back in England.
Judgment:
It was held that the characteristics of the agreement was purely and completely domestic
in nature, Lord Justice Atkin held that when a husband and a wife enter into an
agreement they never intend to create a legal relationship. Both the parties must have an
intention to create a legal relationship while entering into an agreement, then only it
becomes enforceable in court of law.
Moreover, a court will never take into account the domestic agreements between spouses
made in daily course of life.
The agreement was outside the realm of contracts altogether.

(2) Carlil v. Carbolic Smoke Ball Co., 1893 1 QB 256

Headnote: General offers when binding explained - Acceptance of proposal need not
always be expressed in words - Though the general rule is that an acceptance must
be communicated to proposer , it is possible to accept a proposal by performing the
conditions of such proposal - S. 8 of Contract Act. - Judgment in Weeks v. Tybald
that an offer must be made to a definite person overruled
Brief Fact Summary. The Plaintiff, believing Defendant’s advertisement that its product
would prevent influenza, bought a Carbolic Smoke Ball and used it as directed from
November 20, 1891 until January 17, 1892, when she caught the flu. Plaintiff brought
suit to recover the 100£, which the Court found her entitled to recover. Defendant
appealed.
Principle of law to be decided: This case considers whether an advertising gimmick (i.e.
the promise to pay 100£ to anyone contracting influenza while using the Carbolic Smoke
Ball) can be considered an express contractual promise to pay.
Facts. The Defendant, the Carbolic Smoke Ball Company of London (Defendant), placed
an advertisement in several newspapers on November 13, 1891, stating that its product,
“The Carbolic Smoke Ball”, when used three times daily, for two weeks, would prevent
colds and influenza. The makers of the smoke ball additionally offered a 100£ reward to
anyone who caught influenza using their product, guaranteeing this reward by stating in
their advertisement that they had deposited 1000£ in the bank as a show of their
sincerity. The Plaintiff, Lilli Carlill (Plaintiff), bought a smoke ball and used it as
directed. Several weeks after she began using the smoke ball, Plaintiff caught the flu.
Issue. Lindley, L.J., on behalf of the Court of Appeals, notes that the main issue at hand
is whether the language in Defendant’s advertisement, regarding the 100£ reward was
meant to be an express promise or, rather, a sales puff, which had no meaning
whatsoever.
Judgment : Defendant’s Appeal was dismissed, Plaintiff was entitled to recover 100£.
The Court acknowledges that in the case of vague advertisements, language regarding
payment of a reward is generally a puff, which carries no enforceability. In this case,
however, Defendant noted the deposit of £1000 in their advertisement, as a show of their

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 sincerity. Because Defendant did this, the Court found their offer to reward to be a
promise, backed by their own sincerity.

(3) Lalman Shukla v. Gauri Dutt (1913) 11 All LJ 489

Offer must be communicated and effect of act done in ignorance of proposal - it is
no acceptance of proposal - so no contract - was discussed in this case.
Lalman Shukla V. Gauri Dutt is the landmark judgment for the validity of the contract
under the Indian Contract Act, 1872. The case was filed in the Allahabad high court in
the year 1913 and was presided over by Justice Banerji at the Allahabad High Court.
Facts Of The Case:
1. In this case, the defendant Gauri Dutt’s Nephew had absconded and was nowhere to be
found. After the defendant became aware of the same, Dutt had sent all the servants in
search of the missing nephew. The plaintiff Lalman Shukla was one of the servants who
had gone out in search of the nephew. The plaintiff eventually found him and brought
him back.
2. When Lalman Shukla had left the house to leave for Haridwar from Kanpur he was
handed some money for his railway fare and other expenses. As soon as Lalman Shukla
had left the house, the defendant announced a reward of Rs. 501 for whosoever found
Dutt’s nephew. Shukla had no idea that such an announcement was made. The plaintiff
found the missing nephew and brought him back to his home in Kanpur. Six months after
the said incident occurred, Dutt removed the plaintiff from the job.
3. After being removed from the job, the plaintiff claimed the reward money from the
defendant and the latter denied to pay the same. As a result, the plaintiff Lalman Shukla
filed a case against Gauri Dutt, his master, for not rewarding him as he was entitled to.
Issues Raised In This Case:
The main issues which were raised in this case were as follows:
1. Whether Lalman Shukla was entitled to get the reward from Gauri Dutt for tracing the
missing boy?
2. Whether there was a valid acceptance of the offer made by the plaintiff?
3. Whether there exists a contract or whether the situation amounts to a contract between
the two?
Ratio Decidendi:-(Principle of law laid down)
In the present case of Lalman Shukla vs Gauri Dutt, it is derived that in order to enter
into a contract, two critical aspects should be considered,
1. To have complete knowledge of the facts of the offer or proposal
2. Acceptance of the offer
The communication regarding the offer is also very important as mentioned in section 4
of the Indian Contract Act. It states that communication can only be complete when it
comes to the knowledge of the person to whom it is made.
To convert a proposal into an agreement both knowledge and assent must be
present. Here, in the given instance, both were missing.
Judgement
In the said case, the petitioners’ appeal against the respondent Gauri Dutt was
dismissed by the court.

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 After analyzing all the facts of the case, the honourable high court held that for creating
or entering into a valid contract there has to be knowledge and assent to the offeree made
by the proposer.
Here, the plaintiff did not know the reward before performing his act. He only came
to know about it later, in which case there was no possibility of accepting the offer.
Hence, there was no contract. Therefore, Lalman Shukla was not entitled to get or
claim the reward.
The judge reiterated that the plaintiff was fulfilling his obligations as a servant of tracing
the missing boy which was a part of his duty. Therefore, the plaintiff’s suit against the
defendant was completely dismissed by the court.
(4) Kedarnath v. Ghorie Mohd. , 1886 ILR 14 Cal 64
Gratuitous Promise when enforceable - Landmark case - It is to be noted that a
promise though gratuitous would be enforceable if on the faith of the promise,
promisee suffers a detriment or undertakes a liability.
Facts of the case and decision based on this principle-
1) A had agreed to subscribe Rs. 1000 towards the construction of a Town Hall at
Howrah.
2) B, the secretary on the faith of A’ promise called for plans and entrusted the work to
contractors and undertook liability to pay them
3) In a suit by B on A’s failure to pay the amount, it was held that though it was
gratuitous promise by A, it was supported by consideration - B suffered detriment on
faith of A’s promise.
Judgment
Court observed that A knew the purpose to which the subscriptions were to be applied
and he further knew that on faith of such subscriptions - obligation was to be incurred to
pay contractors, hence he was liable to perform his promise.
(5) Khwaja Muhammad Khan v. Hussaini Begum [(1910) ILR 32 All 40 (PC) ]
Landmark case regarding exception of doctrine of privity of contract that
beneficiary (cestui que trust) under the contract can sue on the agreement though
such beneficiary is not a party to the contract.
Introduction - Doctrine of privity of contract means “ A stranger to the contract cannot
sue on the contract” . This doctrine under English law is applied in India subject to
certain exceptions as per the situation and personal laws prevailing in India. One of such
exception is that of beneficiary. This case is landmark case illustrating this exception
mentioned above.
Facts of the case:
- Husaini Begum (plaintiff) sued her father in law - Khwaja Muhammad Khan
(defendant) to recover the arrears of certain allowances called Kharch-i-pandan,
payable by Khawaja Muhammad Khan to Husaini Begum under an agreement made
by defendant and plaintiff’s father prior to and in consideration of plaintiff’s marriage
with defendant’s son.
- Both plaintiff and defendant’s son were minors at the date of marriage. The
agreement created the distinct charge in favour of plaintiff on certain immovable

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 property belonging to defendant for the payment of allowance.
Defendant’s (Appellant’s) contention- Relying on the authority of Tweedle v.
Atkinson, it was contended that plaintiff who is the not the party to the contract between
defendant and plaintiff’s father could not sue upon the contract. But this contention was
overruled in this case and suit was decided in favour of plaintiff i.e. respondent - Husaini
Begum.
Judgment:
Court observed that in India and particularly in communities such as Mahomedans
among whom the marriages are contracted for minors by parents and guardians, it might
occasion serious injustice if the common law doctrine of privity of contract of England
was applied to agreements entered into connection with such contracts. Relief as prayed
for by the plaintiff of recovery of arrears of maintenance (Kharch – i – pandan) as agreed
in the contract was granted to the plaintiff.

(6) Mohoribibee v. Dharmodas Ghose- ILR (1903) 30 Cal 539 (PC)

Minor’s agreement is void ab initio related landmark case law
Bench of Judges: Lord Mcnaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir
Andrew Scoble, Sir Andrew Wilson, JJ.
In this case, the Privy Council declared the law that any contact by minor or any minor's
agreement is "absolutely void". Section 10 of Indian Contact Act, 1872 provides for what
agreements are contracts? and Section 11 provides that a person who are competent to
contract. According to court’s opinion, any person who is below 18 yrs of age or who has
not completed the age of 18 yrs. of age i.e. a minor cannot intend to create contract or
make major decisions according to the definition of major given under Section 3 of
Indian Majority Act, 1875.
Facts of the case :-
1. Dharmodas Ghose, was the respondent in this case. He was a minor (i.e. has not
completed the 18 years of age) and he was the sole owner of his immovable property.
The mother of Dharmodas Ghose was authorized as his legal custodian by Calcutta High
Court.
2. When he went for the mortgage of his own immovable property which was done in the
favor of appellant i.e. Brahmo Dutta, he was a minor and he secured this mortgage deed
for Rs. 20,000 at 12% interest rate per year.
3. Bhramo Dutta who was a money lender at that time and he secured a loan or amount of
Rs. 20,000, and the management of his business was in the control of Kedar Nath, and
Kedar Nath acted as the attorney of Brahmo Dutta.
4. Dharmodas Ghose's mother sent a notification to Brahmo Dutta informing him about
the minority of Dharmodas Ghose on the date on which such mortgage deed was
commencedbut the proportion or sum of loan that was actually provided was less than
Rs. 20,000.
5. The negotiator or representative of the defendant, who actually acted instead of on
behalf of money lender has given money or sum to the plaintiff, who was a minor and he
fully had knowledge about the incompetency of the plaintiff to perform or enter into

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contract and also that he was incompetent legally to mortgage his property which
belonged to him.
6. After that, on 10thSept. 1895 Dharmodas Ghose along with his mother brought an
legal suit or action against Brahmo Dutta by saying that the mortgage that was executed
by Dharmodas was commenced when he was a minor or infant and so such mortgage was
void and disproportionate or improper and as a result of which such contract should be
revoked or rescinded.
7. When this petition or claim was in process, Brahmo Dutta had died and then further
the appeal or petition was litigated or indicted by his executor's.
8. The plaintiff argued or confronted that in such case no relaxation or any sought of aid
should be provided to them because according to him, defendant had deceitfully or
dishonestly misinterpreted the fact about his age and because if mortgage is cancelled at
the request by defendant i.e. Dharmodas Ghose.
Issues Raised:-
1. Whether the deed was void under section 2, 10, 11 of Indian Contract Act, 1872 or
not?
2. Whether the defendant was liable to return the amount of loan which he had received
by him under such deed or mortgage or not?
3. Whether the mortgage commenced by the defendant was voidable or not?
- According to he verdict of Trial Court, such 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 mortgage.
- When Brahmo Dutta was not satisfied with the verdict of Trial Court he filled an appeal
in the Calcutta High Court.
- According to the decision of Calcutta High Court, they agreed with the verdict of Trial
Court and dismissed the appeal of Brahmo Dutta.
- Then he later went to Privy Council for the appeal and later the Privy Council also
dismissed the appeal of Brahmo Dutta and held that there cannot be any sought of
contract between a minor and a major person.
- The final decision that was passed by the Privy Council was :-
1.Any sought of contract with a minor or infant is void/ void ab-initio (void from
beginning).
2.Since minor was incompetent to make such mortgage hence the contact such made or
commenced shall also be void and is not valid in the eyes of law.
3.The minor i.e. Dahrmodas Ghose 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.
Principles of Law laid down in the case:-
- Any contract with a minor or an infant is neither valid nor voidable but is void ab-
initio(void from beginning)
- Section 64of Indian Contract Act,1872 is only applicable in the case, where the
parties entering in contact are competent to make such contract and is not applied
to cases where there is no contract made at all.

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 - The legal acts done by a representative or any knowledge of an agent means that
such acts done or having knowledge of anything is of his principal.

(7) Cundy v. Lindsay, [(1878) 3 App Cas 459]

Landmark case on unilateralmistake of material fact of identity caused by fraud of
one party - hence no contract
Facts of the case
1) Plaintiffs received orders in writing from fraudulent man called Blenkarn - order
papers had a printed heading - “Blenkarn & Co. Wood Street”.
2) There was well known and respectable firm named “Blenkiron & Co. in the same
street . The plaintiffs believed that orders had come from this firm sent large quantity of
handkerchiefs.
3) Blenkarn received the goods and disposed them of to Cundy who acted in good faith .
Lindsay sued Cundy for conversion of goods.
Judgment:
House of Lords held that - Lindsay was entitled to recover as due to mistake, there was
no contract between Lindsay and Blenkarn. Therefore he had no right to sell the goods.
The plaintiff intended to contract with Blenkiron & Co. And consequently no contract
could have arisen between plaintiff and Blenkarn. “Of him they knew nothing and
of him they never thought. They never intended to deal with him and there was no
consensus of mind which could lead to an agreement or contract. As between him
and them there was merely one side to contract whereas in order to produce contract, two
sides would be required” - So Cundy also got no title to goods.

(8) Frost v. Knight , 1872 LR 7 Exch 111.

Landmark case on anticipatory breach of Contract principle - relief can be claimed
for such anticipatory breach of contract
Headnote: Knight promised to marry the plaintiff on the death of his father- While the
plaintiff’s father was still alive, he refused to marry her and married another woman and
question was whether before due date of performance (death of the defendant’s father),
suit can be brought for breach of contract - Court held that suit is tenable as anticipatory
breach of contract - reliefs available in case of breach of contract are available to plaintiff
like damages.
Introduction
Anticipatory Breach of a contingent contract - Even when the performance of
contract is conditional upon the happening of contingency, an immediate action for
damages will lie, if before happening of contingency, the promisor disables himself
from performance. Frost v. Knight is landmark case on this point.
Facts of the case:
1) Defendant promised to marry the plaintiff on the death of his father
2) When the defendant’s father was still alive, defendant announced his intention of not
fulfilling his promise on his father’s death and broke off the engagement.
3) The plaintiff without waiting for the father’s death at once brought an action for the
breach.

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 Defendant’s contention- He contended that a breach could only arise on the happening
of contingency.
Issues raised in the case:
1) If one party to contract declares his intention of non-performance of contract before
due date of performance of contract then whether the other party can get immediate cause
of action to sue for the breach of contract?
2) Whether the other party to the contract should wait till time fixed for the performance
of contract and give opportunity to defendant to change his mind?
3) Whether defendant’s intention of non-performance of contract on his part and
declaration of such an intention itself discharges other party of the contract?
Judgment:
Cockburn CJ held that “ the case falls within the principle of Hochester v. De La
Tour and that the present action is well brought”. His Lordship said that when a
contracting party announces his intention not to fulfil the contract, contract should
be taken as broken as all its incidents and the damages consequent on non
performance being assessed at the earliest moment, many of the injurious effects of
such non-performance may possibly be averted or mitigated…. To hold that the
aggrieved party must wait until the time fixed for marrying shall have arrived would have
the effect of aggravating the injury, by preventing the party from forming any other union
and by reason of advancing age rendering the probability of such a union constantly
less.”

(9) Hadley v. Baxendale

Rule regarding measure of damages - remoteness of damages
Facts of the case similar to illus. (i) of S. 73 of Contract Act, 1872 except that defendants
did not know that the plaintiff’s mill was stopped for the want of machinery which they
were to supply - hence they were held not liable for the loss of profit caused by delay, but
they would have been held so liable had they known about the stoppage of mill.
It should be noted that S. 73 of Contract Act, 1872 is in fact based on this landmark
case of Hadley v. Baxendale and the observations made therein.
Facts of the case : (Note : For sake of brevity Hadley is referred as “H” and
Baxendale is referred as “B” in narration of case below)
1) A mill belonging to H had a broken crankshaft and H delivered the shaft to B, a
common carrier to take it to a maufacturer at Greenwich to copy and make a new one.
2) B negligently delayed delivery of the shaft beyond a reasonable time as a result of
which the mill was idle for a longer period.
3) He did not made known to B that delay would result in loss of profits.
4) Consequently H filed a suit against B to recover by way of damages the loss of profit
caused by the delay.
Judgment: In this suit Court held that there were only two grounds on which H could
sustain the claim:
1) In usual course of things, the profit of the mill would cease altogether for the want of
shaft, but this would not be the normal circumstances because H might well have had a

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spare shaft in reserve.
2) That the special circumstances were so fully disclosed that the inevitable loss of profit
was made apparent to B.
- This however was not the case. Therefore B was not liable for loss of profit during the
period of delay.