OCTOBER

Acceptance by overt act-

Brogden v metropolitan railway company – B supplied coal to railway and B asked to make a contract.
agents of both companies drafted a contract B later ratified the price at which trade took place. B gave it
to the Railway’s agent and he kept the agreement in a drawer. the conduct of the company’s agent in
keeping the agreement in the drawer was evidence of the fact that he had mentally accepted it but the
subsequent conduct of the parties of supplying coal on the basis of proposed agreement was a conduct
that manifested their intention. SECTION 9

Felthouse v bindley- uncle sent a letter to nephew that he wanted to buy his horse and his silence would
amount to acceptance. nephew told the auctioneer not to sell that horse in the auction as it had already
been sold to his uncle. Accidentally the horse was sold in the auction and the uncle filed a suit that the
horse had already been sold to him by his nephew.

Communication has to be written or spoken and not only be there in the mind, so silence does not
amount to acceptance. The contract was not between auctioneer and uncle but it was between the
nephew and uncle. [privity of contract] the auctioneer was not a party to the contract.

The court said that it is clear that the nephew in his own mind intended the uncle to have the horse but
he has not communicated his intention to the uncle. SECTION 2B

Powell v lee- plaintiff wanted job of headmaster, his interview was taken and the managers took a
resolution to appoint him as the manager. One of the managers informally communicated this news to
the headmaster but later the appointment was withdrawn and he sued the school for not appointing
him later.

Here the communication was made by an unauthorized person hence its not a valid contract.

The court observed “there must be notice of acceptance from the contracting party in some way,
information by an unauthorized person is insufficient. SECTION 2B

When communication is not necessary- carlil v carbolic. [GENERAL OFFER]

Elison v Henshaw- a wanted to purchase flour, he was told to send the acceptance through a wagon but
A sent it through a letter which reached much later than the wagon. There was no acceptance and no
contract in place as the manner in which acceptance was conveyed was not proper and the time was
also not proper as it got late. SECTION 7 subclause 2, SECTION 4 subclause 1
Postal rule- have to wait for a reasonable time, not subjective approach.

India- send acceptance through post unless prescribed otherwise.

Acceptance is complete and contract comes into existence as soon as

Adams v Lindsell – on 2 sep the defendant sent a letter offering to sell goods to the plaintiff. The letter
added receiving your answer in course of post. The letter reached the plaintiff on 5 september, on the
same day the plaintiff posted the letter of acceptance which reached defendant on 9 September. The
defendant had already sold the goods to someone else on september 8, held that a complete contract
aroused on the date when the letter of acceptance is posted in due course(5 th) thus there is a binding
contract between the parties. This is not applicable in English law.

Revocation

Section 4B –

Household fire and accident and accident insurance co. V grant

The defendant made an application for 100 shares in the plaintiff’s company agreeing to pay a further
sum of 19 per share within 12 months of the date of allotment in favor of the defendant. The letter
never arrived; the defendant’s name was entered on register of shareholder. The company then went
into liquidation and the liquidator sued for the balance. It was held that the contract was actually made
when the letter of acceptance was posted. It is a valid contract.

Entores ltd vs miles far east corporation- acceptance was sent through telex wherein traditional postal
rules are not applicable. In this form of communication, the acceptance must come to the knowledge of
the offeror directly and that is when the contract would come into existence. London sent offer to
holland. Holland sent acceptance through telex back to London

Bhagwandas goverdhandas kedia vs Girdharilal parshottamdas and co - Telephone conversation was

going on, offer made from Ahmedabad to khangaon. The acceptance was communicated from khangoan
to Ahmedabad, the contract came into existence in Ahmedabad. Majority view- Section 4 would not
apply in this case. Minority view was that section 4 can be interpreted in a way which can include this
form of communication as well. Issue is if the ordinary rule of postal communication would be applied or
not. The supreme court endorsed the principle of Entores case. It observed “where no statutory
provision to the contrary is in existence in Indian contract act in India have generally been guided by the
common law of England.”

Counter offer- an acceptance with a variation is no acceptance it is a counter proposal which must be
accepted by the original offeror.
COUNTER PROPOSAL

Hyde v wrench- an acceptance with a variation is no acceptance. The defendant offered to sell the farm
he owed to plaintiff he offered to sell his farm at 1200 euro which was declined by plaintiff.

The defendant made another offer of 1000 euro in response plaintiff made a counter proposal which
was refused by defendant so the plaintiff decides to buy for 1000 euro however the defendant refuses.

The court held that there was no binding contract between plaintiff and defendant because when a
counter offer is made it supercedes and destroys the original offer.

PROVISIONAL ACCEPTANCE

The union of India vs S. Narain Singh- Final acceptance is subject to approval by another authority ….It
does not bind Either party until the final approval is given

Bengal coal v homie Wadia- coal had to be supplied to the party for 12 months, with different demands
each month. The supplier stopped supplying the coal before the 12 months were completed. So, each
demand was a new contract, hence he can withdraw before the completion of 12 months as it wasn’t a
singular offer but multiple.

A tender is the category as the quotation of prices. It is not an offer but invitation to offer. When a
tender is approved into a standing offer [an offer which is allowed to remain open for acceptance over a
period of time]

18th

Revocation of proposal

Henthorn vs fraser

An offer to sell a property gave acceptor the right to accept within 14 days. The next day at about
3:50PM, the acceptor sent by post, his letter of acceptance which was received by the offeror’s office at
8:30PM [then the office got closed, and the letter was opened next morning] but before that at about
1PM, the offeror had posted a letter revoking his offer. The revocation and acceptance crossed in the
course of post. The acceptor received the letter of revocation at 5:30 PM.

Whether this revocation is effective or not? no

E-Contract –

Electronic contract refers to a contract that takes place through e commerce. The parties do not meet
each other physically. It refers to commercial transactions conducted and concluded electronically. E.g.-
a customer drawing money from an ATM machine, online shopping.

The enabling provision for this is the IT ACT. The essential conditions for it are derived from the India
Contract Act. “pacta sunt servanda” – agreements must be kept or honoured.

Contract excluded from e contracting- Power of attorney, will etc

Types of e contract-

1. Website wrap [accepting terms and conditions of a website, cookies] there may be a hyperlink
for terms and conditions.
2. Click wrap [standard form of contract, no negotiation. Eg-are you 18 above]
3. Shrink wrap [as soon as you open the bubble wrap, you accept the offer and contract comes into
existence] you find out the terms and conditions after opening up the bubble wrap. Eg- software
license

Trimex international FZE ltd, Dubai vs Vedanta aluminum ltd

Communication through Electronic means like e mail is also recognized in court for the
conclusion of a contract.

2nd –>

Capacity of parties – section 10, 11

Only the persons who are of the age of majority are competent to contract
The rationale behind is clear, a child may show poor judgement in making a contract and it is a
protection against his own immaturity and ignorance. The general presumption that every man
is the best judge of his own interest Is suspended in the case of children, thus law acts as a
guardian of minors and protects their rights.

S Subramaniam vs K S Rao
1. Minor should be under the Competence of the guardian
2. The contract should be beneficial to the minor
3. Once entered in the contract, minor is bound to specific performance of the act
4. Guardian can enter on behalf of minor

Sadiq Ali khan vs jai Kishor

No liability in contract or in tort arising out of contract-

Burnard vs haggis- here the defendant was liable on the ground that the act resulting in injury to
the meiyer was quite outside the contract and could not be said to be an abuse of the contract.
Jennings vs Rundall- the court held him not liable on the grounds that the action was held in
contract

Leslie ltd vs sheill- frauduantly obtained money from moneylender

Doctrine of restitution
If an infant obtains property or goods by misrepresentation of age then he can be compelled to
restore it but only so long as the same is traceable in his possession. Where the infant has sold
the goods or converted them, he cannot be made to repay the value of goods because that
would amount to enforcing a void contract.
The doctrine of restitution is not applied where the infant has obtained cash instead of goods
for “restitution stops where repayment begins”.

Mohori Bibi vs dharmo das Ghosh-

Khan gul vs lakkha singh- minor fraudently conceived his age, wanted to sell a plot for 17,500.
He took the money but didn’t fulfill the agreement.
THE COURT OBSERVED that the doctrine of restitution finds expression in section 41 of specific
relief act, this section nowhere mentions that pecuniary compensation should not be allowed
when the award therefore would tantamount to a repayment of money borrowed on the
strength of void transaction.
The judge said that the grant of such a relief is not an enforcement of a contract but a
restoration of the state of affairs as they existed before the formation of the contract. {status
quo ante- previously existing state of affairs}.

section 33 of specific relief act 1963- the law commission of India 9th report preferred the view
emunciated in khan gul. Where a void or voidable contract has been cancelled at the instance of
the party[minor is the plaintiff] the court is required to restore such benefits as he has received
under the contract. When minor is the defendant in a case and he resists the enforcement of
the suit on the ground that he is incompetent to contract the court may ask him to restrore such
benefits to the other party to the extend he or his estate has benefitted.

Bhim mandal vs manji ram- if the other party knew that the other party was a minor since the
beginning, then the court cannot ask the minor to repay.

Mohd syed vs bishambar nath- doctrine of restitution will not be applied.

Beneficial contract-