Cases on contract Act

Consideration
1.Abdul Aziz vs. Masum Ali, (1914).
The secretary of a Mosque Committee filed a suit to enforce a promise which the promisor had made to subscribe Rs. 500 to the re-building of a mosque.
Held: “the promise was not enforceable because there was no consideration in the sense of benefit”, as “the person who made the promise gained nothing in return for the promise made”, and the secretary of the Committee to whom the promise was made, suffered no detriment as nothing had been done to carry out the repairs. Hence the suit was dismissed.

2.Kedar Nath vs. Gauri Mohamed, (1886)
The facts of this case were almost similar to those of the above case, but the secretary in this case incurred a liability on the strength of the promise.
Held: The amount could be recovered, as the promise resulted in a sufficient detriment to the secretary. The promise could, however, be enforced only to the extent of the liability (detriment) incurred by the secretary. In this case, the promise, even though it was gratuitous, became enforceable because on the faith of the promise secretary had incurred a detriment.

3.Durga Prasad vs. Baldeo, (1880)
B spent some money on the improvement of a market at the desire of the Collector of the district. In consideration of this D who was using the market promised to pay some money to B.
Held: The agreement was void being without consideration as it had not moved at the desire of D.

4.Chinnaya vs. Ramayya, (1882)
An old lady, by a deed of gift, made over certain property to her daughter D, under the direction that she should pay her aunt, P (sister of the old lady), a certain sum of money annually. The same day D entered into an agreement with P to pay her the agreed amount. Later, D refused to pay the amount on the plea that no consideration had moved from P to D.
Held: P was entitled to maintain suit as consideration had moved from the old lady, sister of P, to the daughter, D.

5. Debi Radha Rani vs. Ram Dass, (1941)
D is ready to sue her husband for maintenance allowance. On husband’s agreeing to pay her a monthly allowance by way of maintenance, she forbears to sue.
Held: The wife’s forbearance to sue amount to consideration for the husband’s agreement for payment of maintenance allowance.

6. Ramchandra Chintaman vs. Kalu Raju, (1877)
There was a promise to pay to the Vakil an additional sum if the suit was successful.
Held: The promise was void for want of consideration. The Vakil was under a pre-existing contractual obligation to render the best of his services under the original contract.

7. Dunlop Pneumatic Tyres Co. Ltd. Vs. Selfridge & Co. Ltd., (1915)
S bought tyres from the Dunlop Rubber Co. & sold them to D, a sub-dealer, who agreed with S not to sell these tyres below Dunlop’s list price and to pay the Dunlop Co. £5 as damages on every tyre D undersold, D sold two tyres at less than the list price and thereupon the Dunlop Co. Sued him for the breach.
Held: The Dunlop Co. Could not maintain the suit as it was stranger to the contract.

Capacity to Contract
Mohiri Bibi vs. Dharmodas Ghose, (1903)
In this case, a minor mortgaged his house in favour of a money-lender to secure a loan of Rs. 20,000 out of which the mortgagee (the money-lender) paid the minor a sum of Rs. 8,000. Subsequently the minor sued for setting aside the mortgage, stating that he was underage when he executed the mortgage.
Held: The mortgage was void and, therefore, it was cancelled. Further the money-lender’s request for the repayment of the amount advanced to the minor as part of the consideration for the mortgage was also not accepted.

Mistake of Law
Solle vs. Butcher, (1950)
Ignorantia juris non excusat, i.e., ignorance of law is no excuse, is a well settled rule of law. A party cannot be allowed to get any relief on the ground that it had done a particular act in ignorance of law. A mistake of law is, therefore, no excuse, and the contract cannot be avoided.

Mistake as to the Subject-Matter
Couturier vs. Hastie, (1856)
A agreed to sell a cargo of corn supposed at the time of contract to be in transit from Salonica to the United Kingdom. Unknown to the parties, the corn had become fermented and had already been sold by the master of the ship at Tunis.
Held: The agreement was void and the buyer was not liable for the price.

Mistake as to the Identity of the Subject-Matter
Raffles vs. Wichelhaus, (1864)
W agreed to buy from R a cargo of cotton “to arrive ex-peerless from Bombay”. There were two ships of that name sailing from Bombay, one sailing in October and the other in December. W meant the former ship but R meant the latter contract.

Remedies for Breach of Contract
Hadley vs. Baxendale
X’s mill was stopped by the breakdown of a shaft. He delivered the shaft to Y, a common carrier, to be taken to a manufacturer to copy it make a new one. X did not make known to Y that delay would result in loss of profits. By some neglect on the part of Y the delivery of the shaft was delayed in transit beyond a reasonable time (so that the mill was idle for a longer period than otherwise would have been the case had there been no breach of the contract of carriage).
Held: Y was not liable for loss of profits during the period of delay as the circumstances communicated to Y did not show that a delay in the delivery of the shaft would entail loss of profits to the mill.
Alderson, B observed in this case as follows:
“Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both the parties at the time they made the contract, as the probable result of the breach of it.”


Quasi Contracts
Damodar Mudaliar vs. Secretary of State for India, (1894)
A village was irrigated by a tank. The Government effected certain repairs to the tank for its preservation and had no intention to do so gratuitously for the zamindars. The zamindars enjoyed the benefit thereof.
Held: They were liable to contribute.

Acknowledgements:
Mercantile law by ND Kapoor
Nimita Singh

Assignment- 2

Note: Date of submission: 1.10.2009

Assignment
1. Describe the essentials of a valid contract with the help of relevant case law and examples.
2. What is quantum meruit? Explain the cases in which the claim of quantum meruit arises.
3. What are the remedies available to a seller in case of breach of contract of sale.
4. Discuss the various kinds of partners in a partnership firm.
5. What are the different modes through which a partnership firm may be dissolved.
6. Analyse the following cases and answer the questions with the help of statutory provisions and decided cases

Case Number 1
A representative from Eureka Forbes visits Andrew on the 1st February 2009. He informs Andrew that his company is prepared to install Aquaguard at a guaranteed price of Rs 5000. Andrew is hesitant and decides to think the matter over. The representative leaves, pointing out that the guaranteed price only remained open till 8th February 2009.
On the following day, Andrew sees an advertisement by Eureka forbes, which offers Aquaguard at a standard price of Rs 4500. He immediately telephones Eureka forbes in order to accept the terms of this advertisement. The company replies that owing to high demand, the advertised offer has been withdrawn.
On 7th February 2009, Andrew telephones Eureka Forbes again. He leaves a message with the answering service in which he accepts the offer of Rs 5000 made by the company representative. He also sends a letter confirming the order that afternoon. Andrew later goes to the pub for a drink where he meets a friend who informs him that he can obtain Aquaguard from another firm for Rs 4000. Andrew rushes home and telephones Eureka Forbes expressing his wish to cancel the order. The secretary, now on duty, points out that she has not yet had an opportunity of listening to the answering service tapes but that she will note down his wishes. Andrew’s letter of the 7th Feb 2009 arrives on the 9th Feb 2009 at Eureka Forbes Premises. The letter is received by the secretary of Eureka Forbes. Whether there is a valid contract between Andrew and Eureka Forbes.


Case Number 2
In Re McArdle 1951, a number of children were entitled to a house on the death of their mother. Whilst the mother was still alive, her son and daughter-in-law lived with her and the daughter-in-law made improvements to the property. The children later promised that they would pay the daughter-in-law for this work, but after her mother-in-law’s death, the children refused to pay. Was the daughter-in-law able to claim this payment?

Case Number 3
D bought tyres from Dunlop Co.and sold them to S a sub dealer, who agreed with D not
to sell below Dunlop’s list pirce and to pay Dunlop Co.Rs 75 as damages on every tyre he undersold. S sold two tyres at less than the list price and thereon Dunlop Co.sued him for the breach. Will Dunlop and Co succeed? Decide with the help of relevant law and cases.

Case Number 4

A contracts with B to build a house for B for RS 3,00,000/- After A has proceeded with the work for sometime and before the work is completed. B repudiates the contract and prevents A from proceeding with the work. What are the remedies available to A?

Classes

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