CONTRACT CASE LAWS

Balfour v. Balfour
Mr. and Mrs. Balfour were married. In Ceylon, Mr. Balfour worked as a civil engineer. Mr.
Balfour and his wife had a holiday to England in 1915, but his wife became ill and her doctor
informed her she couldn't return to Ceylon due to her arthritis. They decided that Mrs. Balfour
would stay in England while Mr. Balfour would return to Ceylon. Mr. Balfour promised Mrs.
Balfour that he would pay her $30 every month until he returned.

However, the marriage deteriorated and the husband stopped paying the payments. Mrs.
Balfour, on the other hand, decided to seek enforcement of the agreement and went to court. In
the year 1918, Mrs. Balfour filed a lawsuit in court against Mr. Balfour for failing to pay the
sum owed to her.

According to the idea of creating legal intentions, in order for a contract to exist, both parties
involved must have the intention to engage into a legally binding contract and be willing to
suffer legal penalties if either one of them fails to comply.

The Appellate Court bench found that the agreement between Mr. Balfour and Mrs. Balfour
was not enforceable and that the two parties had no intention of establishing an enforceable
contract. This agreement is not contract because parties did not expect for their actions to
be accompanied by legal repercussions.

Rose and Frank v Crompton

An American organization and English organization went into a sole office agreement in 1913
for the offer of paper products in the USA. The composed agreement contained a condition
specifying that it was anything but a formal nor lawful agreement, and a “Honourable
pledge” between colleagues. Hence, the American organization set requests for paper which
were acknowledged by the British organization. Before the requests were satisfied, the British
organization ended the office agreement and would not send the products, asserting that the
1913 agreement was not lawfully official and that, subsequently, the requests didn’t make
lawful commitments. The House of Lords held that the written agreement was not a contract.
This was because the ‘binding in honour only’ clause clearly indicated that the parties did
not intend to be legally bound by that arrangement. However, once the claimant placed an
order and that order was accepted, there was a separate, legally enforceable contract for the
delivery of goods. While it is presumed that commercial parties intend to be legally bound by
their arrangements, it is open to them to agree that they will not be.

Taylor v. Portington

A offered to rent his house to B for 3 years. B agreed to accept the offer on the condition that
the house must be repaired properly and that the living room of the house be modified and
decorated according to the “present style”. The term “present style” was held to be ambiguous
and uncertain and therefore the promise can’t be enforced. The court held that the terms and
conditions of an agreement to become a contract must be uncertain and unambiguous.

Carlill v. Carbolic Smoke Ball Co.

The Carbolic Smoke Ball Company (defendant) advertised in the Pall Mall Gazette about
their product, smoke ball. In the advertisement, they promised to pay 100 pounds as
compensation to anyone who contracts influenza after using their ball three times daily for
two weeks as per the instructions printed. The advertisement also stated that they have
deposited 1000 pounds with the Alliance bank as an assurance. Mrs. Carlill (plaintiff) after
going through the advertisement purchased the smoke balls and used it as per the directions
but subsequently caught influenza. The plaintiff’s claim was refused by the defendant and
therefore, she brought a suit against them for the recovery of the amount.

The Court of Appeal held that the plaintiff is entitled to claim 100 pounds from the defendant
as it was a binding contract with valid consideration. The advertisement is a promise.
Because in a unilateral offer, the offer is made to the world at large and anybody who
performs the specific conditions, accepts the offer. Unilateral offer for the sale of goods via
advertisement waves of the rule of notification of acceptance. The performance of the
condition i.e. using the smoke ball itself amounts to an acceptance of the offer.
Consideration does exist as the defendant would benefit from the advertisement as it would
attract more people leading to an increase in the sale of the smoke ball and thus their profit .
Lalman Shukla v. Gauri Dutt
In this case the defendant Gauri Dutta’s Nephew was absconded from his house. The trace of
the boy was not found. Gauri Dutt sent all his servants in search for his missing nephew and
one of the servants was the plaintiff Lalman Shukla, who had also gone to find the boy.
Lalman shukla had left the house and was provided with money and other expenses for his
railway fare. As soon as Lalman Shukla left the house Gauri Dutt made an announcement that
any person who will trace and find his missing Nephew will be rewarded with money of Rs
501. Lalman Shukla had no idea and was not aware of the fact. He had no knowledge about it
before he went to trace the missing boy. Then Lalman shukla traced the boy and brought the
boy back to Kanpur. After knowing about the reward, Lalman Shukla claimed the money
from his master Gauri Dutt. But Gauri Dutt denied paying the reward of Rs 501 to him. As a
result, the plaintiff Lalman Shukla filed a case against Gauri Dutt.

It was held by the honorable court that for 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 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 exists no contract so as a result the court came
to the decision that the appellant Lalman Shukla was not entitled to get the reward.

Bhagwandas Goverdhandas Kedia v. M/S. Girdharilal Parshottamdas

X (appellant) of Khamgaon entered into a contract over telephone to supply cotton seed cakes
to Y (respondents) of Ahmedabad. Y commenced an action against X in the City Civil Court
of Ahmedabad for failing to supply cotton seed cakes as per the aforementioned agreement.
Y contended that the cause of action for the suit arose at Ahmedabad as X’s offer to sell was
accepted at Ahmedabad and X was to be paid for the goods through a bank in Ahmedabad. X
contended that Y’s offer to purchase was accepted at Khamgaon; the delivery and payment of
the goods were also agreed to be made in Khamgaon and the City Civil Court of Ahmedabad
did not have jurisdiction to try the suit. The court held that the contract act does not expressly
deal with the place where a contract has been made. As against cases of correspondence by
post or telegram, in the present case of correspondence by a telephone, a contract was formed
when acceptance was duly communicated to the offeror and hence at Ahmedabad.
Felthouse v Bindley
The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse, about
buying his horse. After their discussion, the uncle replied by letter stating that if he didn’t
hear anymore from his nephew concerning the horse, he would consider acceptance of the
order done and he would own the horse. His nephew did not reply to this letter and was busy
at auctions. The defendant, Mr Bindley, ran the auctions and the nephew advised him not to
sell the horse. However, by accident he ended up selling the horse to someone else.

It was held that there was no contract for the horse between the complainant and his nephew.
There had not been an acceptance of the offer; silence did not amount to acceptance and an
obligation cannot be imposed by another. Any acceptance of an offer must be
communicated clearly. Although the nephew had intended to sell the horse to the
complainant and showed this interest, there was no contract of sale. Thus, the nephew’s
failure to respond to the complainant did not amount to an acceptance of his offer.

Harvey v. Facey

The plaintiffs and the defendants communicated by telegram. Harvey was interested in
purchasing a Jamaican property owned by Facey. It’s worth noting that these telegrams
constituted the entire communication between the parties in this case. The defendants did not
reply to the plaintiffs’ final telegram and therefore did not accept the plaintiffs’ offer to buy
the land for £900. As a result, on the face of it, no contract was formed between the parties.

In contrast, the plaintiffs argued that the exchange of telegrams between the parties
constituted an offer and they had given their acceptance to it, and therefore there was a
binding contract in place. Hence, they sued the defendants for breach of contract. The Court
decided in favor of the defendants.

The Court ruled that the defendants’ statement of the lowest price at which they would sell
the plot of land (Bumper Hall Pen) did not constitute an offer. This is because an offer must
be an expression of willingness to enter into a contract, and the defendants’ statement did not
indicate any such willingness. It was merely an invitation to offer. In addition, the plaintiffs’
subsequent telegram, in which they agreed to buy the land for the stated price, was an offer to
buy, but since it was not accepted by the defendants, no contract was formed.