5 Landmark Judgement on the Law of Contract

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Brief Overview

Contract law is the codification of general principles which serves and regulate personnel and economical cycle. The contract act governs our daily life aspects and clear confusion and clashes in society. Thus, bring out clarity in all operational cycles and enforces its performance. The contract act gives contractual rights to the parties of the contract and puts obligations on the parties to perform it. Thus, helps to successfully conclude business cycles. The Law of Contract is among those which are least amended, developed only some parts of the act are repealed.


Leading Cases of Contract here below

Case on Legal Intention (Balfour v. Balfour 1919  2 KB 571)

A contract at the end is protected by Law and creates legal obligation. Therefore, the creation of moral or entirely social obligation is not the basis of the contract. Here, before entering into a contract, the party must intend to create a legal obligation between them.


Mr. Balfour had promised her wife, Mrs. Balfour, to pay monthly allowances £30 until she came back to live with him. Soon relationship drifted wife sued her husband to enforce such a promise. The court held that the agreement between husband and wife didn't reach the status of the contract the mere reason behind it that parties did not intend that they should be attended by legal consequences. Therefore, here, the husband’s promise did not rise to the level of a contract.


Case on Invitation to offer ( Harvey v. Facey 1893 UKPC 1)

An invitation to offer is an opportunity given by a person eventually willing to contract to invite offers. A reply to an invitation to offer is not acceptance, itself is an offer. Let us more understand it with a case.


Harvey was interested in buying a property owned by Facey. He sent Facey a telegram stating “Will you sell us Bumper Hall Pen? Telegraph lowest cash price – answer paid.” Facey replies stating “Bumper Hall Pen £900. Harvey responded stating that he would accept £900 and asking Facey to send the title deeds. Facey then stated he did not want to sell. Harvey sued facey alleging that telegram was an offer and he had accepted, therefore there was a binding contract.

The Court held that the telegram was an invitation to treat, not a valid offer. Therefore no valid contract existed. The telegram only advised of the price, it did not explain other terms or information and therefore could not create any legal obligation.


Case on consensus ad idem ( Raffles v. Wichelhaus 1864 EWHC Exch J19

Consensus Ad Idem is a latin maxim generally means understanding the same thing in the same sense. This is an important basis of a valid contract.


Mr. Raffles offered to sell an amount of Surat cotton to the defendant, Mr. Wichelhaus, which was arriving by a ship named 'Peerless'. There were two ships that had this name. Both parties were thinking about different ships at the time of the contract. One of the ships was due to leave Bombay in October, which was what the Wichelhaus had thought for his Surat cotton delivery, but Mr. Raffles was referring to the ship that was to leave in December. When the Surat cotton arrived in Liverpool, Mr. Wichelhaus refused to pay, as, in his mind, it was months late. Mr. Raffles sued Wichelhaus. The Court held that the contract between the complainant and defendant was not enforceable as there was no consensus ad idem and therefore no contract between the parties.


Case on Competency to Contract [Mohori Bibee v. Dharmodas Ghose Ilr (1903) 30 Cal 539 (Pc)]

Dharmodas Ghose, the defendant who was alleged to mortgage his property fraudulently by misrepresenting his age to the plaintiff Bramho Dutt. The defendant was minor at the time of the contract. The mother already informed the attorney of Bramho Dutt about the minority of the defendant at the time of contract. The Brahmo Dutt executors sued Dharmodas and demanded to repay the sum of 10,500 advanced to him. The Court held that since the minor is not competent for contract formation, hence it is not enforceable by law and is Void ab initio(Zero from the beginning).


Case on Acceptance to an offer (Lalman Shukla v. Gauri Datt Civil Revision No. 10 of 1913)

Gauri Datt's, nephew ran away from home. Datt sent his servant to search out his nephew. After servant left Gauri Datt announced a reward of Rs 501 to anybody giving information relating to the whereabouts and discovery of his nephew. Later, on reading the notice of reward, the servant claimed the reward. When Datt refused the formed the brought a suit. The Court dismissed the suit on the ground that he could not accept the offer unless he had knowledge of it.