Indian Contract Act, 1872 – Landmark Cases

2
3
8

Offer can be made to public; acceptance by conduct; no need to inform acceptance in such cases

The company advertised that it would pay money to anyone who used its product and still got sick. Mrs. Carlill used the product as instructed but fell ill. She claimed the reward. The company argued there was no contract. The court held that the advertisement was a valid offer to the public. Her act of using the product was acceptance. No formal communication of acceptance was needed. The case shows that contracts can be formed by conduct.

3

Acceptance must be with knowledge of offer

A servant found a missing boy and later claimed a reward announced by the master. He did not know about the reward when he found the boy. The court held that he could not claim the reward. Acceptance requires knowledge of the offer. This case shows that a person must know about the offer to accept it.

4

Communication of acceptance is complete when posted (postal rule)

The defendants sent a letter offering to sell goods. Due to delay, the acceptance reached late. Meanwhile, the defendants sold goods to someone else. The court held that acceptance was complete when the letter was posted. This case created the postal rule.

5

Revocation must be communicated before acceptance

The defendant sent an offer and later sent a revocation letter. The plaintiff accepted before receiving the revocation. The court held that revocation was not valid as it was not communicated in time. This case shows that revocation must reach before acceptance.

7

Counter-offer cancels original offer

The defendant offered to sell property. The plaintiff made a counter-offer at a lower price. Later he tried to accept the original offer. The court held that the original offer was no longer valid. This case explains that counter-offer ends the first offer.

9

Contract can be formed by conduct

Parties worked together without signing a formal contract. They acted as if contract existed. The court held that a valid contract was formed by conduct. This case shows that actions can create a contract.

10
11

Agreement with minor is void (invalid)

A minor took a loan and mortgaged property. Later, he refused to repay. The lender argued contract was valid. The court held that agreement with minor is void. Minor cannot be forced to perform. This case is very important for capacity rules.

13

No contract if parties misunderstand subject

There were two ships named "Peerless". Both parties had different ships in mind. The court held that there was no agreement. This case shows that consent must be clear and about same thing.

14
15

Consent obtained by threat is not free

A person threatened suicide to force agreement. The court held that this was coercion. The contract was not valid. This case shows that threat (even to self) can affect consent.

16

Use of power to control another is undue influence

A person used his strong position to gain unfair benefit. The court held that undue influence existed. The contract could be cancelled. This case explains misuse of power in contracts.

17

Fraud requires intent to deceive

The company gave false information but believed it to be true. The court held no fraud as there was no intent to cheat. This case explains meaning of fraud.

18

Misrepresentation allows cancellation even if truth could be checked

A person was given false information but had chance to verify it. He still relied on it. The court allowed him to cancel contract. This case shows that false statement gives right to cancel.

20

Agreement void if subject matter does not exist

Goods were already destroyed before contract. Both parties did not know. The court held the contract was void. This case explains mistake of fact.

23

Agreement must be lawful

The case involved a wagering (betting) agreement. The court examined legality. It held that agreement must not be illegal. This case explains lawful object rule.

27

Reasonable restriction of trade is valid

A person agreed not to compete after selling business. The court held that reasonable limits are valid. This case explains exception to restraint of trade.

29

Unclear agreements are void

The agreement had unclear terms. The court could not enforce it. This case shows that certainty is required.

37
56

Contract becomes void if performance becomes impossible

A hall was rented for events but got destroyed by fire. The court held that contract ended due to impossibility. This case explains frustration (impossibility).

39

If one party refuses before time, other can sue immediately

A person was hired for future service. Before start date, employer cancelled. The court allowed immediate action. This case explains anticipatory breach.

40

Personal skill contracts end if person cannot perform

A pianist fell sick and could not perform. The court held contract ended. This case explains personal contracts.

25
63

Promise can be enforced without consideration in some cases; lesser performance can be accepted

A person promised donation for building. Work started based on promise. The court enforced promise. This case explains exception to consideration rule.

73

Damages only for expected (foreseeable) loss

A delay caused loss in business. The court limited damages to expected loss. This case explains compensation rules.

74

Court gives reasonable compensation, not full penalty

A contract had penalty clause. The court reduced amount. This case explains that penalty must be reasonable.

65
70

Benefit received must be paid for even without contract

Work was done without formal contract. The government used the work. The court ordered payment. This case explains fairness in law.

72

Money paid by mistake must be returned

Extra tax was paid by mistake. The court ordered refund. This case explains mistake rule.