Landmark cases for contracts

Introduction:

Contracts govern our everyday life. Many examples of day to day activity, perhaps something as simple as buying a railway ticket, falls under the ambit of a contract.

The Indian Contract Act came into force in the year 1872. From that year till 2022, there have been various interesting cases which have challenged our understanding of contracts and have pushed the boundaries of how we interpret our relationship with each other.

  1. Does silence speak? Analyzing Felthouse vs Bindley.

How many times do we avoid saying a simple word so as to not to be implicated? Yet! Be careful, you never know when your silence will be interpreted as speech itself!

Facts of the case:

  • Paul Felthouse was a builder in London.
  • He asked his nephew John Felthouse to sell to him a horse of his and offered a price he was willing to pay.
  • The letter sent to his nephew ended with him saying that if he doesn’t hear from him, he will assume that the nephew has accepted the offer.
  • John Felthouse did not reply because he was busy with the auction of his farm wares, however he did ask his auctioneer, Mr Bindley to not sell the horse. 
  • Mr Bindley sold the horse by mistake.
  • Ultimately Paul Felthouse sued Mr Bindley for ‘conversion’- that is using someone else’s property. 

Issues in the case:

  • The primary issue in this case was if the horse actually was Paul Felthouse’s for him to sue for conversion.

Plaintiff’s Contention

  • The plaintiff contended that since his nephew hadn’t replied , he had implied that the offer was accepted because of what was written in the letter.

The defendant’s contention 

  • The defendant contended that since John Felthouse hadn’t really replied to the letter, he hadn’t accepted his uncle’s offer. Thus the plaintiff had no right to sue for conversion. 

The Judgement:

  • The court ruled in favor of the plaintiff reiterating the fact that “silence doesn’t amount to acceptance of fact”. Since John Felthouse hadn’t replied, he hadn’t accepted the uncle’s offer. 

However, it is now believed that the Judgement was not exactly correct. The nephew could be said to have accepted the contract on the basis of his conduct.

  1. But who cares why I did it! Analyzing Williams vs Cawardine

Many times we do “good” for our own vested interests… nonetheless we receive rewards for doing good. What if everytime we do good our inherent motive was counted? Perhaps, many times we would miss out on our reward!

Facts of the case:

  • Walter Cawardine was murdered.
  • After a police inquiry,it came to light that he was last seen with Mary Williams.
  • When questioned Mary Williams refused to say anything.
  • Walter’s brother announced a reward for anyone offering information leading to finding the killer.
  • One day, when Mary’s husband beat her, she gave evidence to the police which ultimately led to her husband getting arrested.
  • Mary claimed the reward but Walter’s brother refused to give it to her.

What did Mary believe?

Mary believed that since she provided the information, the reward was rightfully hers. 

What did Walter’s brother say?

Walter’s brother said that as in her statement , Mary confessed due to her “own conscience” and not because of the reward and hence she would not get the reward.

The judgement

The court held that Mary was liable to get her reward. It did not matter what her motive was; as long as she had fulfilled her part of the contract.

  1. But you did not inform me before! Analyzing Carril vs Carbolic Smoke Ball  Company.

If someone openly challenges any group of people to do something, do they have to do it or individually first tell the challenger that they accept verbally and then do the challenge? That, in a nutshell,in Carril vs Carbolic Smoke Ball Company.

Facts of the case:

  • The Carbolic Smoke Ball Company challenged , in an advertisement, a group of people saying that their influenza medicine- the smoke bomb-  is the actual deal. They deposited 100 pounds  in Alliance Bank to show their earnestness. And said that incase someone gets influenza after having their medicine, they would get the 100 pounds. 
  • Mrs Carrill tried the Smoke bomb but still got influenza.
  • However, the company said that since they were not informed by Mrs Carril that she was going to try the medicine, the acceptance was not conveyed and therefore the contract was not valid.

Judgement:

The Carril Smoke Ball Company lost the case. The court held that there was a binding contact between Mrs Caril and the Smoke Ball Company and she would have to be paid her 100 pounds. Even though this case was upheld, it was ruled that Mrs Carril had signified her acceptance by performing  the terms of the contract. 

  1. But I didn’t inform you , ha ! Analyzing Lalman Shukla vs Gauri Dutta

What if we do something, and then we realize it had a reward! Please don’t tell me it could be taken away because we didn’t know about the reward!

Facts of the case:

  • The plantiff , Lalman Shukla, worked as a munim for the defendant.
  • The defendant’s nephew absconded.
  • The plaintiff went to go search for him.
  • Later, while the plaintiff was away, the defendant announced a reward of Rs 501  for finding the nephew.
  • The plaintiff,unaware of the reward bought the nephew back.
  • Later, the defendant- Gauri Dutta sacked Lalman Shukla.
  • Lalman Shukla claimed the reward which the latter refused to give him.

The Plaintiff’s assertion:

  • The plaintiff asserted that he should get the reward as he had found the nephew. 
  • Moreover, the contract was such that its acceptance would require performance of the conditions and hence his acceptance was given. 

The defendant’s assertion:

The defendant asserted that for there to be a contract, the person who is accepting it has to atleast be aware that such a contract exists. Thus since the plaintiff was not aware of such a contract, the contract did not exist and the defendant is not liable to give him the reward. 

The judgement

It was held that the defendant’s assertion would prevail. Thus, Lalman Shukla’s appeal was dismissed and Gauri Dutta was held not liable.

Conclusion

Thus, these are some of the very interesting and landmark cases with respect to contracts. They do not just deal with contracts in India but also English cases. Many of the aspects of our Indian Contracts Act are borrowed from many of these cases.

References:

  1. Lawoctopus:https://www.google.com/amp/s/www.lawctopus.com/academike/lalman-gauri-ica/%3famp=1

2. Law teacher: https://www.lawteacher.net/cases/felthouse-v-bindley.php

3. Case briefs: https://www.google.com/amp/s/www.casebriefs.com/blog/law/contracts/contracts-keyed-to-calamari/the-agreement-process/carlill-v-carbolic-smoke-ball-co-2/

4. Casebrief : https://casebrief.fandom.com/wiki/Williams_v_Carwardine 

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