30 Important Contract Law Cases

Harvey v. Facey

Decided by the Privy Council in 1893. It is an important case on the difference between an offer and a reply that merely gives information. That difference decides whether a binding contract exists. The central question: can someone force you to sell land just because you have told them its lowest price?

Facts

• Harvey wanted to buy a property in Jamaica called Bumper Hall Pen.
• He sent Facey a telegram asking (1) whether Facey would sell the property and (2) the lowest cash price.
• Facey replied with the lowest price, 900 pounds, but did not say that he was willing to sell.
• Harvey sent another telegram saying that he agreed to buy the property for 900 pounds.
• Facey did not accept that message. Harvey nevertheless tried to obtain an order compelling the sale.

Issues

The question was not simply whether the parties had discussed a price. The court had to decide whether Facey's telegram was a definite offer to sell:

• If it was an offer, Harvey's reply might have accepted it.
• If it was only an answer to a question, Harvey's reply was merely a new offer that Facey could reject.

Arguments

• Harvey: relied on the exchange of messages and argued, in substance, that agreement on the stated price was enough to conclude the bargain.
• Facey: he had quoted a price without promising to sell the land.

The court examined what the telegrams actually communicated, rather than what Harvey hoped those words would mean.

Judgment (held)

The Privy Council held that no contract had been made.

• Harvey's first message contained two questions. Facey answered the question about price but did not answer the question whether he would sell.
• A lowest-price statement did not turn into an offer simply because Harvey later said he would buy.
• Facey had never accepted Harvey's proposed purchase.

Principle / ratio

Relevant provisions of the Indian Contract Act, 1872:

• Section 2(a): a proposal must show willingness to do or not do something with a view to obtaining the other person's agreement.
• Section 2(b): acceptance is agreement to that proposal. A person cannot accept an offer that has not been made.
• Section 10: requires an agreement that the law can enforce.

The key is the intention shown by the words. A price quotation can help negotiations move forward without ending them. It may identify a possible amount, but it need not create any duty to transfer property. Courts look at the whole communication.

Significance

Contract law protects actual agreement, not imagined agreement.

Exam points

• Read each communication in time order.
• Identify who first showed a final willingness to be legally bound.
• Separate a question from an answer, and an offer from an acceptance.
• Do not assume that the last person to say yes must win.
• A court cannot order specific performance of a sale when the parties never concluded an enforceable contract.
• Especially useful for questions involving telegrams, emails, price lists, property discussions, and messages that appear to agree only on an amount.

Carlill v. Carbolic Smoke Ball Company

Decided by the Court of Appeal in 1892; commonly reported under 1893. The case explains how a public advertisement can become a serious legal offer, and answers whether a company can be made to pay a reward promised in an advertisement to thousands of unknown people.

Facts

• The company sold a device called a carbolic smoke ball.
• Its advertisement said that a person who used the device as directed but still caught influenza would receive 100 pounds.
• The company also stated that it had deposited 1,000 pounds at a bank to show that it was sincere.
• Mrs Carlill bought and used the device according to the instructions. She later caught influenza and asked for the promised reward.
• The company refused to pay.

Issues

• Was the advertisement a real offer or only sales talk?
• Could an offer be made to the public?
• Did Mrs Carlill need to send a separate message accepting the offer before using the product?

Arguments

• Company's objections: an advertisement to everyone could not create a contract with anyone; the promise was too uncertain; and she had not communicated acceptance in the usual way.
• Mrs Carlill: her claim depended on the clear conditions in the advertisement and on the fact that she performed them.
• The deposited money was important evidence of the company's serious intention.

Judgment (held)

The Court of Appeal held that the promise was enforceable.

• The advertisement was an offer to anyone who performed its stated conditions.
• Mrs Carlill accepted by using the device as required and then falling ill.
• In this type of offer, called a unilateral offer, the requested act itself can be acceptance.
• The company had to pay the reward.

Principle / ratio

• Section 8 of the Indian Contract Act recognises acceptance by performing the conditions of a proposal.
• Section 2(a) and 2(b) explain proposal and acceptance.
• Section 7 deals with absolute and unqualified acceptance.

These provisions explain why a person who completes a public reward condition may not need to write back separately.

Significance

A carefully worded public promise can have legal force. A business must take responsibility when it makes a serious offer and someone acts exactly as requested. That is why this old advertisement case remains valuable even in the age of websites and online rewards.

Exam points

• The law does not require a person accepting through conduct to perform a needless formality when the offer itself invites acceptance by action.
• Yet the person must actually meet the conditions. A student who skips required classes cannot rely on the hypothetical refund promise; a consumer cannot demand a reward by ignoring the advertised directions.
• Read the promise carefully, prove performance, and then ask whether the company showed a legal intention to pay.
• In modern India, consumer law may provide additional remedies, but this judgment itself is about offer and acceptance.

Lalman Shukla v. Gauri Dutt

Decided by the Allahabad High Court in 1913. The case is taught to explain a basic rule: a person cannot accept an offer without knowing about it. The problem: if you rescue a missing child and only later learn that a reward had been announced, can you demand the money?

Facts

• Gauri Dutt's nephew went missing.
• Gauri Dutt sent his employee, Lalman Shukla, to search for the boy.
• The employee had already left when Gauri Dutt announced a reward for finding the missing child.
• Lalman located the boy and helped bring him home. He did the search without knowing of the reward announcement.
• Later he learned about the reward and claimed it. When payment was not made, he brought a legal claim.

Issues

• Could performing the required act, without knowledge of the public offer, amount to acceptance?
• The added fact that Lalman had undertaken the search as part of his employment duties before the reward was announced.

Arguments

• Lalman: wanted the announced reward because he had in fact found the missing boy.
• Gauri Dutt: relied on the absence of knowledge and on Lalman's earlier duty to search.

The court needed to distinguish doing a useful act from doing that act in response to a proposal. Those are not always the same legal event.

Judgment (held)

• The court rejected Lalman's claim.
• There was no acceptance of the reward offer when he did not know that it existed.
• The employment duty supplied an additional reason why the search did not establish the new bargain he claimed.
• The result does not deny that the search was valuable; it means its value alone did not create a reward contract.

Principle / ratio

• Section 4: communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
• Section 2(b): acceptance is giving assent to a proposal.
• Section 8: allows acceptance by performing conditions, but that does not remove the need for knowledge of the offer when one claims a reward contract.

Order of events: first the worker was asked to search; then, while he was away, a reward was announced; next, he found the boy; only later did he learn of the announcement. When he acted, he could not have chosen to accept the reward terms. A valid acceptance involves responding to a known proposal. A court cannot treat an unrelated act as acceptance merely because the act happens to match words the actor has never heard.

Significance

Contract law looks for agreement, not simply a good result. A person may do something helpful without having accepted anyone's offer. Knowing about the promise at the relevant time is the bridge between a helpful act and an enforceable reward contract.

Exam points

Students sometimes confuse this case with Carlill. Both involve public rewards, but the facts that matter are different.

Point	Carlill v. Carbolic Smoke Ball Co.	Lalman Shukla v. Gauri Dutt
Nature of offer	Public reward offer	Public reward offer
Knowledge of the offer	The customer knew the published conditions and acted under them	The worker had no knowledge of the offer before performance
Result	Reward recoverable	Claim rejected

• Do not write that the mere announcement of a reward binds the announcer to anyone who unknowingly performs the act.
• Do not assume that Section 8 creates a right without communication of the proposal.
• In a problem, check the announcement, the person's knowledge, the timing of the act, and any duty that already existed.

Felthouse v. Bindley

Decided in England in 1862. The classic warning that one party cannot write to another and say that failure to reply means agreement. Contract law requires a real acceptance; one person cannot normally manufacture another person's consent by choosing silence as the answer.

Facts

• Paul Felthouse wanted to buy a horse belonging to his nephew.
• After discussion over the price, the uncle wrote that he would treat the horse as his if he heard nothing more.
• The nephew did not reply to the uncle. However, he told an auctioneer, Bindley, not to include the horse in an auction because it was to be kept out of the sale.
• The auctioneer made a mistake and sold the horse.
• The uncle sued the auctioneer as though he already owned the horse.

Issues

• Had the uncle and nephew made a binding sale contract before the auction?
• The nephew may have intended to let his uncle have the horse, but had he accepted the offer in a legally effective way? The uncle's claim against the auctioneer depended on the answer.

Arguments

• Uncle: relied on his letter and on the nephew's wish to keep the horse out of the sale.
• Difficulty: the nephew's wish had not been communicated as acceptance to the uncle. The auctioneer's knowledge of an instruction about the auction did not itself complete an agreement between uncle and nephew.

Judgment (held)

• The uncle had not become the horse's owner by contract.
• The letter did not make the nephew's silence an acceptance.
• The nephew's private intention was not enough to create the claimed sale agreement, so the uncle's action failed.
• The ruling is usually remembered as the rule that silence does not amount to acceptance.

Principle / ratio

• Section 2(b): assent must be signified.
• Section 7: acceptance must be absolute and unqualified.
• Section 8: recognises acceptance by conduct.
• Section 9: recognises express and implied promises.

These sections show that words are not always necessary, but conduct must still communicate a real choice to accept.

Significance

Consent cannot be created by one party alone. A lawful bargain needs a response that the law can recognise. Silence may leave an offer unanswered, and an unanswered offer is not automatically a contract.

Exam points

• Describe the sequence carefully: an offer was made; the offeree did not communicate acceptance; the offeror could not turn silence into assent.
• Do not confuse the nephew's instruction to the auctioneer with an acceptance addressed to the uncle.
• Remember that acceptance may be made through conduct in appropriate circumstances.
• Useful for questions about automatic subscriptions, unsigned letters, unanswered emails, and terms hidden in small print.

Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas and Company

A Supreme Court judgment delivered in 1965 and reported in 1966. It remains a major Indian authority on instant communication: when someone accepts a business offer during a telephone call, is the contract formed where the acceptor speaks, or where the proposer hears the acceptance?

Facts

• A business in Ahmedabad proposed over the telephone to buy cottonseed cake from a business in Khamgaon.
• The seller accepted the offer while speaking from Khamgaon.
• A disagreement arose over supply of the goods, and the buyer brought a suit at Ahmedabad.
• The seller objected that the contract was formed only at Khamgaon, where the words of acceptance had been spoken.
• The objection mattered because the place of contract could affect which court was entitled to hear the dispute.

Issues

How does the communication rule apply to a telephone conversation? Section 4 contains a special rule for an acceptance put into transmission, such as an acceptance letter posted to the other party. But both participants in a telephone conversation communicate almost at the same time.

Arguments

• Seller: speaking the acceptance into the telephone at Khamgaon completed it there.
• Buyer: a contract made by an instant exchange is complete when the proposer actually hears the acceptance, at Ahmedabad.

The judges had to decide whether the postal rule should govern a telephone call without adjustment.

Judgment (held)

• The majority of the Supreme Court held that telephone acceptance is complete where it is heard by the proposer.
• On the facts, that place was Ahmedabad, so the suit could proceed there.
• Justice Hidayatullah dissented. He preferred applying the statutory transmission rule, so that acceptance would be complete at the place from which it was spoken.
• Both views should not be presented as the decision of the court. The majority view is the ruling.

Principle / ratio

• Sections 3 and 4 of the Indian Contract Act deal with communication of proposals and acceptances.
• Section 2(b) explains acceptance.
• The postal exception: acceptance is complete against the proposer when it is put beyond the acceptor's control.
• The Supreme Court treated instantaneous speech differently from post, because a speaker can discover immediately whether the other person has heard the answer.

Point	Acceptance by post	Acceptance by telephone (majority rule)
When complete against the proposer	When put into transmission, beyond the acceptor's control	When actually heard by the proposer
Reason for the rule	The acceptance is put into transmission, as with a posted letter	Both participants communicate almost at the same time; a speaker can discover immediately whether the other person has heard

Consider a disconnected call: if the intended acceptance is never heard, it would be unsafe to assume that the other party knows a contract has been concluded. The majority's approach gives weight to actual communication, and provides the foundation for thinking about communication that is practically instantaneous.

Significance

The way a message travels can affect when and where a contract is made. A telephone promise is not treated in exactly the same way as a posted letter. The majority rule focuses on the place where the proposer receives the acceptance.

Exam points

1. Identify the medium of communication. Do not apply the rule for posted letters automatically to a live phone call.
2. Locate the proposer, the acceptor and the place where the acceptance was heard.
3. Mention that the decision was by a majority and that there was a reasoned dissent.
4. Separate the question where the contract was formed from any other possible grounds for court jurisdiction.

Balfour v. Balfour

Decided by the English Court of Appeal in 1919. The case deals with intention to create legal relations, meaning an intention that the promise should carry legal consequences. It shows why the surrounding relationship matters: is every promise by a husband to pay his wife a monthly sum a contract a court will enforce?

Facts

• Mr Balfour worked in Ceylon, now Sri Lanka.
• During a visit to England, his wife was advised to remain there for health reasons while he returned to his work.
• He promised her 30 pounds each month during their separation.
• Later their relationship broke down, and he stopped the payments. Mrs Balfour sued to recover the promised allowance.
• There was no dispute that the couple had discussed the payment. The problem was whether the promise had the legal character of a contract.

Issues

Was an ordinary arrangement between spouses, made while they were living as husband and wife, intended to be enforceable by law? A promise can be sincere and important to the people involved without necessarily becoming a contract.

Arguments

• Mrs Balfour: relied on the promise of support and the fact that she had stayed in England.
• Opposing position: the arrangement was a domestic understanding rather than a bargain designed for the courts.

The judges considered the nature and context of the promise, not just the fact that an amount had been stated.

Judgment (held)

• The promise was not a legally enforceable contract.
• At the time of the arrangement, the spouses were making an ordinary agreement within their married life. They had not shown an intention to create legal relations.
• The court did not decide that husbands or wives are incapable of making contracts with each other. It decided that these particular circumstances did not show one.

Principle / ratio

• Section 2(h) of the Indian Contract Act defines a contract as an agreement enforceable by law.
• Section 10 explains the requirements for enforceable agreements.
• Although the Act does not list intention to create legal relations in those exact words, Indian contract teaching uses this idea to separate ordinary social promises from legal bargains.

In daily life, a person may promise to buy groceries, arrange a family holiday, or pay household spending money.

Domestic / social promises	Commercial promises
Many depend on trust and affection, not legal enforcement	Usually different, because people expect rights and duties to be legally binding

Neither label is conclusive. A written family settlement, an agreement made during separation, or a clear legal bargain between spouses may well be enforceable. Balfour does not create a blanket exemption for anything involving a family.

Significance

Balfour asks a practical question before considering remedies: did these people mean to make a legal bargain? Contract law enforces agreements that have legal force, not every good intention expressed within a home.

Exam points

• Identify the parties' relationship, the purpose of the promise, any formal writing, any serious reliance, and the situation when the promise was made.
• Do not assume that a promise becomes a contract merely because it has an exact sum.
• Do not assume that it cannot become one because a spouse made it.

Rose and Frank Company v. J. R. Crompton and Brothers

Decided by the House of Lords in 1924; the reported citation is from 1925. It shows that legal intention is important even in a commercial setting: two businesses can write down their trading relationship and still agree that the arrangement itself will not be legally enforceable.

Facts

• An American company, Rose and Frank, arranged to act as a selling agent for English paper manufacturers in North America.
• The written arrangement contained an unusual clause: it was not a formal legal agreement, and both sides would honour it as an expression of their business intentions instead of taking disputes to court.
• Trading continued, and particular orders for goods were made and accepted.
• Later, the manufacturers ended the general arrangement and refused some orders.

Issues

The judges had to separate two different questions; treating both as one would have given the wrong answer:

1. Was the general agency arrangement legally binding?
2. Were the individual orders for goods, already made and accepted, separate enforceable contracts?

Arguments

• Rose and Frank: wanted legal relief after the relationship ended and the orders were not fulfilled.
• Manufacturers: relied on the express words excluding legal enforcement for the broad arrangement.

The court also examined the separately placed and accepted orders, because actual contracts of sale might exist despite the broad non-binding understanding.

Judgment (held)

• The general arrangement was not legally binding because the parties had expressly said so.
• The individual orders that had been placed and accepted were separate contracts, which could create legal duties.
• The non-binding label on the general relationship did not automatically destroy specific sales completed under it.

Principle / ratio

• Section 2(h) of the Indian Contract Act describes a contract as an agreement enforceable by law; Section 10 states other requirements for enforceability.
• In Indian business practice, the case helps explain why wording that denies present legal commitment may matter. Yet parties must still comply with applicable Indian statutes, and labels do not override the true substance of a concluded bargain.
• Most business discussions are understood as attempts to make legal agreements, but parties may clearly say that a broad memorandum is only an expression of present intentions. The court then asks what the words and actions objectively show.
• A document titled "agreement" is not necessarily binding in every respect. Equally, a non-binding relationship can include particular transactions that are binding. Examine each promise separately.

Significance

Contract law respects genuine commercial choice. The case teaches us to read every promise at the correct level.

Exam points

• Avoid the mistaken answer that all business promises are automatically contracts. Business context raises an expectation of legal intention, but clear contrary words can matter.
• The opposite error is thinking that an honourable pledge removes all duties connected with later trading.
• Explain the general arrangement first, then analyse each accepted order.
• Look for definite offer, absolute acceptance, price, goods, capacity, and lawful purpose.
• Cite this case when a problem uses phrases such as "binding in honour only", "not subject to courts", or "no legal obligation intended".

Mohori Bibee v. Dharmodas Ghose

The leading Indian answer to what happens if a minor mortgages property to borrow money, even though the lender's agent knows the borrower is underage. Decided by the Privy Council in 1903, it established that a minor lacks the legal capacity to make a contract, and the purported agreement is void from the beginning.

Facts

• Dharmodas Ghose, while still a minor, signed a mortgage over his property to secure a loan from Brahmo Dutt.
• The mortgage referred to a loan of 20,000 rupees.
• Before the transaction, the moneylender's attorney had received notice that Dharmodas was under the required age.
• Despite that knowledge, the transaction went ahead, and the minor signed a statement suggesting that he was an adult.
• The minor, acting through his guardian, challenged the mortgage.
• The litigation reached the Privy Council after the moneylender had died.

Issues

• Was the mortgage void, or merely capable of cancellation?
• Could the minor's incorrect statement about his age prevent him from relying on minority?
• Could the moneylender force repayment under the ordinary rules governing void agreements?

Arguments

• Lender's side: sought to preserve the mortgage or recover the money advanced, relying in part on the minor's statement about his age and on provisions requiring benefits to be restored.
• Minor: Section 11 of the Indian Contract Act made him legally incapable of creating the mortgage agreement.
• The agent's knowledge of minority was an important fact.

Judgment (held)

• The mortgage was void from the start.
• Section 11 does not allow an agreement with a minor to operate as a normal contract.
• Sections 64 and 65 could not be used as an ordinary contractual repayment route in these circumstances.
• The minor's statement about being an adult did not save the transaction, since the lender's agent had already been informed of the true position.

Principle / ratio

• Section 11: a contracting person must have reached the age of majority, be of sound mind and not otherwise be legally disqualified.
• Section 10: requires competent parties.
• Section 68: separately allows reimbursement from the property of an incapable person for suitable necessaries supplied.
• Section 33 of the Specific Relief Act, 1963: now gives courts limited powers to order restoration of benefits in specified situations.

These are distinct questions from enforcing the minor's void promise.

Significance

The case puts legal capacity ahead of contractual convenience. A minor's signature does not become binding simply because an adult relied on it. Protection of the minor is the main rule, while recovery of particular benefits requires its own legal basis.

Exam points

1. Identify the minor's age on the date of the agreement.
2. Apply Section 11, then explain why an agreement void from inception differs from one cancelled later.
3. Separate estoppel (stopping someone from denying an earlier representation) from capacity.
4. Discuss restitution only if the question raises the receipt of a benefit.

• Do not claim that Mohori Bibee automatically gives every dishonest minor an unconditional right to retain the lender's property.
• Equally, do not treat the lender's loss as proof that a void loan must be enforced.

Chinnaya v. Ramayya

A decision of the Madras High Court reported in 1882. It explains why consideration in India may come from a third person, answering whether the person who sues on a promise must always be the person who gave something in return.

Facts

• A woman transferred property to her daughter by a registered gift.
• The arrangement required the daughter to continue paying an annual allowance of 653 rupees to family beneficiaries.
• In a connected written promise, the daughter agreed to make those payments.
• When she later refused, the promised recipient sought to enforce the undertaking.
• The daughter responded that the recipient had personally given her nothing in exchange for the promise.

Issues

• Must consideration move from the person who accepts and enforces the promise?
• Could the gift and the promise to pay the allowance be read together as connected parts of one transaction?

Arguments

• Daughter: the claimant was a stranger to the consideration.
• Claimant: relied on the property transferred by the mother and the connected agreement made for the beneficiary.

The court had to apply the words of the Indian Contract Act rather than import a narrower English rule without checking the statute.

Judgment (held)

• The Madras High Court enforced the promise.
• The mother's transfer of property furnished consideration for the daughter's undertaking.
• The recipient of the promise did not have to provide that consideration personally.
• The connected documents were examined as parts of a single arrangement.

Principle / ratio

• Section 2(d) defines consideration broadly: it expressly permits an act, abstinence, or promise by the promisee or any other person, done at the desire of the promisor.
• Section 10 requires lawful consideration for an ordinary enforceable agreement.
• The phrase "any other person" is the special point that distinguishes the Indian rule.

Stranger to consideration	Stranger to the contract
Someone who did not personally supply the benefit or act given in exchange	Someone who is not a party entitled to enforce the promise
Indian law is generally flexible about who provides consideration	The principle of privity of contract still matters; a person cannot sue on every promise merely because it would benefit them

Here the recipient was connected to the promise and the transaction supported it.

Significance

Indian contract law recognises the reality of family and other transactions involving more than two people. A third person may supply the consideration, while the person to whom the promise was made can still have an enforceable right.

Exam points

• Start with the exact words of Section 2(d). Ask who was the promisor, what was promised, what was given in exchange, and whether the promisor wanted that act or transfer.
• Then ask whether the person suing was entitled to enforce the promise.
• An answer loses accuracy if it states that Indian law has abolished every rule of privity. The rule here is narrower: consideration can move from someone other than the promisee.
• Do not confuse a voluntary gift made independently of a later promise with a connected transfer that supplies consideration.

Dunlop Pneumatic Tyre Company v. Selfridge and Company

Decided by the House of Lords in 1915. A famous explanation of privity of contract, which means the legal relationship between the actual parties to a contract. The question: can a manufacturer sue a retailer for breaking a price promise made to a different seller?

Facts

• Dunlop manufactured tyres and sold them through a dealer, Dew and Company.
• Dunlop wanted dealers to maintain stated resale prices. Dew agreed to take similar price promises from buyers further down the selling chain.
• Selfridge bought tyres from Dew and undertook, in its agreement with Dew, not to sell below the list price. The documents contemplated a payment linked to each tyre sold at a lower price.
• Selfridge sold below the agreed price.
• Dunlop, which was not a direct party to the Dew and Selfridge contract, brought a claim.

Issues

Could Dunlop enforce a promise that Selfridge had made through its transaction with Dew? The problem was not simply whether Selfridge had sold tyres cheaply, but whether Dunlop itself held a contractual right against Selfridge.

Arguments

• Dunlop: relied on the arrangement intended to protect its prices.
• Selfridge: any relevant bargain had been made with Dew, not directly with Dunlop, and Dunlop had not furnished consideration for a separate promise from Selfridge.

The judges had to follow the rules governing rights under a simple contract.

Judgment (held)

• Dunlop could not recover from Selfridge on this basis.
• Dunlop was not a party to the contract through which the promise was made, and the structure did not establish the necessary enforceable right in Dunlop.
• The result illustrates the ordinary English rule that a person who is not party to a contract cannot sue to enforce its terms.

Principle / ratio

• Compare with Section 2(d) of the Indian Contract Act: consideration may come from the promisee or any other person, but this does not automatically allow every outsider to sue on a contract.
• The Supreme Court later explained the Indian privity rule in M. C. Chacko v. State Bank of Travancore, subject to recognised exceptions such as trusts and certain family arrangements.

Significance

The case is a lesson about the limits of contractual rights. A person can be deeply affected by a bargain without becoming a party who may sue on it. Always identify the exact promise and the people legally entitled to enforce it.

Exam points

• Draw a simple chain: manufacturer to distributor, then distributor to retailer. Mark exactly which parties exchanged promises at each step.
• Ask whether a trust, agency, assignment or another recognised route gives the manufacturer an independent right.
• Do not state that all third-party enforcement is impossible in every legal system. English law now has statutory third-party-rights rules, while India applies its own statutory and judicial framework.
• Do not confuse this privity judgment with the separate Dunlop case dealing with penalties and agreed damages.

M. C. Chacko v. State Bank of Travancore

Decided by the Supreme Court in 1969. It answers, through the doctrine of privity of contract, whether a deed between relatives automatically gives a bank a right to sue on it when the bank wants to recover its money from property transferred within a borrower's family.

Facts

• A man had guaranteed a bank's lending to a business.
• Later, he executed a family deed transferring property among family members, including his son, M. C. Chacko.
• The deed referred to the bank liability and to the property and responsibility connected with it.
• When the bank attempted to recover its outstanding debt, it tried to make the son and the transferred property answer for the father's undertaking.
• The son resisted because the bank was not a party to the family deed.

Issues

• Did the wording of the family transaction create a charge on property enforceable by the bank?
• Or did it make the son personally liable for the father's guarantee?

M.C. Chacko

A Supreme Court case on privity of contract: whether a bank, owed money under a father's guarantee, could enforce a separate family deed to which it was not a party merely because the deed mentioned the bank debt.

Arguments

• Bank: relied on the family deed and argued that the arrangements in it supported its recovery claim.
• Son: an outsider to the deed cannot enforce it merely because the deed mentions a debt payable to that outsider.

The court examined the terms of the deed carefully instead of treating every reference to a creditor as a new promise owed to that creditor.

Judgment (held)

• The Supreme Court held that the son was not personally liable for the father's guarantee.
• The identified properties were not liable on the claimed basis.
• The bank, not being a party to the deed, had not established a right to enforce it as an entitled beneficiary.
• The court acknowledged that recognised exceptions to privity exist, but the bank's case did not fit them.

Principle / ratio and relevant provisions

• Section 2(h) of the Indian Contract Act defines a contract as an agreement enforceable by law.
• Section 2(d) allows consideration to come from someone other than the promisee.
• Neither section means that every stranger to a contract may sue.
• The judgment recognises exceptions in suitable circumstances, including genuine contractual trusts and certain family arrangements.

Stranger to consideration	Stranger to the contract
Permitted: under Section 2(d), consideration may come from someone other than the promisee.	Generally cannot enforce the contract unless a proper legal right or a recognised exception exists.
The person providing consideration need not be the one demanding performance.	The person demanding performance must show a right under the agreement or an established exception (e.g. a genuine contractual trust or certain family arrangements).

Significance

M.C. Chacko separates a creditor's financial interest from an enforceable contractual right. A promise between other people does not normally become yours to enforce simply because it discusses your debt.

Exam points

1. Draw a boundary around each agreement: first identify the guarantee to the bank, then the separate family deed.
2. Ask who signed each document, who made promises, and whether any property was legally charged.
3. Consider the recognised exceptions rather than saying that privity is absolute.
4. Do not say the case invalidates all family settlements. The court addressed the particular claim made by a bank against a person who was outside the relevant undertaking.

Raffles v. Wichelhaus

Decided by the English Court of Exchequer in 1864, the case shows why identical words do not always mean identical agreement. It is famous for the ship Peerless and the problem of mutual misunderstanding: two people agree on the name of a ship but secretly mean two different ships with that exact name.

Facts

• Raffles agreed to sell 125 bales of Surat cotton arriving from Bombay aboard a ship named Peerless.
• There were two different vessels called Peerless: one sailed from Bombay in October, the other in December.
• The buyer understood the bargain to concern the October ship; the seller tendered cotton connected with the December ship.
• The buyer refused to take it, and the seller brought an action for failure to accept the goods.

Issues

Whether the written words identified the agreed subject of the contract with enough certainty.

Arguments

• Seller: he had provided cotton carried by a ship fitting the description.
• Buyer: a particular October voyage, not any vessel bearing the name Peerless, had been meant.

The dispute reached the court through pleadings (formal written statements of the parties' positions). The court had to decide whether the buyer's defence was legally sufficient. It was not a trial in which a judge simply guessed which ship the parties would have preferred after the dispute arose.

Judgment (held)

The court accepted the defence and gave judgment for the buyer. On the pleaded facts, the two parties had attached different meanings to a central description. There was no binding agreement on the same shipment. The judgment is commonly used to explain the absence of a meeting of minds where a crucial term is genuinely ambiguous.

Principle / ratio and relevant provisions

• Section 13 of the Indian Contract Act: parties consent when they agree upon the same thing in the same sense.
• Section 20: a mistake of fact essential to an agreement made by both parties.
• Section 29: agreements are void where their meaning is not certain or capable of being made certain.

The exact provision for a new Indian problem depends on whether the difficulty is lack of consent, mutual mistake or uncertainty.

Nature of the difficulty	Provision
Lack of consent (not agreeing on the same thing in the same sense)	Section 13
Mutual mistake of fact essential to the agreement	Section 20
Uncertainty of meaning	Section 29

Significance

Agreement is about shared meaning, not shared spelling. When an essential description points to two different things, an apparent bargain may contain no true consent at all.

Exam points

1. Write the facts in one sequence: one description, two possible ships, different intended voyages, refusal of delivery, and the court's rejection of the claim.
2. Apply Section 13.
3. Explain the difference between uncertainty about the subject and a mere later change of mind.
4. The important question is what the parties actually agreed on when they contracted, viewed through the law's objective rules.
5. Do not describe this case as a general rule that any error about a contract automatically makes it void.

Chikkam Ammiraju v. Chikkam Seshamma

Decided by the Madras High Court in 1917, this is a leading case on coercion. It addresses whether a threat to harm oneself can be used to force a family member to sign away property.

Facts

• A woman, Seshamma, and her son had interests in family property.
• Her husband threatened that he would end his own life unless they signed a release deed surrendering rights in favour of other relatives.
• Fearing the threatened act, the wife and son signed. They later challenged the release.
• The courts examining the evidence accepted that the threat had caused the execution of the document. The legal dispute was whether this particular threat fell within the statutory definition of coercion.

Issues

1. Whether threatening suicide counted as threatening an act forbidden by the criminal law then referred to in Section 15 of the Indian Contract Act.
2. Whether coercion could come from a person who was not receiving the property under the deed.

Arguments

• Those defending the deed: argued for a narrow reading of Section 15, under which the threat did not satisfy the required criminal-law connection.
• Those challenging it: relied on the seriousness of the threat and its direct effect on their free choice.

The judges did not all agree, and this difference of opinion is important to the case.

Judgment (held)

The majority of the Madras High Court treated the threat as coercion under the law then applicable. The release could therefore be challenged as obtained without free consent. A dissenting view read the statute more narrowly. The majority is the decision; the disagreement concerned the statutory meaning, not whether the family's distress was real.

Principle / ratio and relevant provisions

• Section 15: defines coercion by reference to forbidden acts and unlawful detention of property, with the purpose of causing someone to enter an agreement.
• Section 14: explains free consent.
• Section 19: generally makes a contract caused by coercion voidable at the option of the party whose consent was affected.

Modern caution

India's current B.N.S. does not contain the former general offence of attempting suicide in the same form; its Section 226 punishes an attempt to commit suicide only where it is made with intent to compel or restrain a public servant from discharging official duty. Other conduct or threats can still be legally significant depending on the facts. It would therefore be inaccurate to announce, without qualification, that every modern threat of suicide necessarily satisfies Section 15 for the same historic reason.

Significance

Contract consent must be a meaningful choice. The case also teaches a careful modern habit: a famous historical rule must be read with the law in force today, not repeated without checking whether the statutory background has changed.

Exam points

1. State the threat, the release deed, the statutory issue, the majority outcome and the existence of a dissent.
2. Distinguish the historical rule from any changed criminal-law provisions.
3. Do not call every emotional argument coercion. The law asks for the particular conduct, its purpose, its causal effect on consent and the relevant statutory language.
4. Mention Section 19 when explaining why a contract tainted by coercion is usually voidable rather than automatically void in every situation.

Derry v. Peek

Decided by the House of Lords in 1889, the case draws an important line between fraud and a mistake made without dishonesty. It asks whether every false statement is fraud, even when the speaker honestly believes it is true. It is central to the law of deceit, meaning deliberately or recklessly misleading another person.

Facts

• A tramway company issued a prospectus inviting people to invest in its shares.
• The prospectus described the company's power to operate its trams with steam power.
• The legal authority to use steam depended on obtaining the consent of the Board of Trade. That consent was later refused.
• Investors said the prospectus had given them a false picture. An investor named Peek, who had lost money, brought a claim against the directors.

Issues

Whether the directors' statement was fraudulent. The directors had believed that the necessary approval would be obtained. The difficulty was whether a statement that proved wrong, and might have been made too confidently, automatically amounted to the tort of deceit.

Arguments

• Investor: the public had been misled into putting money into the company.
• Directors: relied on their actual belief about the legal approval and denied that they knowingly made a false statement.

The judges focused on the state of mind required for a finding of fraud.

Judgment (held)

The House of Lords rejected liability for deceit on these facts. Fraud was not proved merely because the statement was inaccurate or the belief unreasonable. The judgment did not, however, give all careless statements a permanent legal immunity.

Relevant Indian provisions

• Section 17 of the Indian Contract Act defines fraud and lists conduct such as suggesting a false fact by someone who does not believe it to be true, active concealment and other acts intended to deceive.
• Section 18 separately covers misrepresentation, which may occur without fraudulent intent.
• Section 19 concerns the consequences where consent was caused by fraud or misrepresentation.

Deceit (English tort) and fraud (Indian Contract Act)

The two are related but not identical legal questions. The English test should not simply be copied while ignoring the statutory wording. Both systems distinguish dishonest deception from some honest but wrong statements, yet remedies and proof depend on the precise claim. A false statement might support a misrepresentation remedy even if deceit is not proved. The timing of the statement and the listener's reliance also matter.

Fraud / deceit	Misrepresentation
Dishonest deception: statement made knowingly false, without honest belief, or recklessly.	May occur without fraudulent intent (Section 18).
Indian provision: Section 17.	Indian provision: Section 18.

Consequences where consent is caused by either: Section 19.

Significance

The law takes dishonesty seriously but does not assume it whenever someone is wrong. The truth of a statement and the honesty of the person making it are two different questions.

Exam points

1. Do not write that every inaccurate business statement is fraudulent.
2. Identify exactly what was represented, what the speaker believed, whether the statement mattered, and whether it caused the other person to act.
3. Distinguish fraud from innocent misrepresentation and from a promise about future conduct.
4. Remember that this decision concerns the tort of deceit, while an Indian contract problem should be answered through Sections 17, 18 and 19 as appropriate. That separation prevents a technically wrong answer despite an appealing general principle.

Gherulal Parakh v. Mahadeodas Maiya

Decided by the Supreme Court in 1959, this is an important case on wagering agreements and public policy. It turns on the distinction between an agreement that is void (a court will not enforce it) and one that is illegal (the law forbids it).

Facts

• Gherulal Parakh and Mahadeodas Maiya entered a business arrangement involving forward transactions that, in the circumstances, were treated as wagers.
• A dispute arose over the partnership accounts and liabilities.
• One side argued that because the underlying wagering transactions were void, the related partnership itself was unlawful and could not be enforced.
• The courts had to consider whether the Act treated every promise connected with wagering as forbidden.

Issues

1. The difference between an agreement that Section 30 makes void and an agreement that Section 23 treats as having an unlawful object.
2. Whether public policy (a legal rule protecting important interests of society) required all related bargains to be struck down.

Arguments

• Challenge: relied on the moral and legal objections to wagering and argued that the partnership was illegal.
• Response: the Act deliberately declared wagers void but did not generally prohibit making them.

The parties disagreed about whether another lawful arrangement could stand beside an unenforceable wager.

Judgment (held)

• An ordinary wagering agreement is void under Section 30 but is not, for that reason alone, forbidden by law.
• A collateral arrangement, such as the partnership under discussion, was not automatically unlawful under Section 23.
• The Court warned judges against expanding public policy without a firm legal basis.
• Special local legislation could create a different rule in a place to which it applied.

Principle / ratio and relevant provisions

• Section 30 of the Indian Contract Act deals with wagering agreements.
• Section 23 describes unlawful consideration and objects, including what the law forbids or what defeats a law's purpose.

Void agreement	Illegal agreement
A court will not enforce it.	The law forbids it.
A wager is void under Section 30.	Unlawful consideration or object under Section 23.
Collateral arrangements are not automatically unlawful.	An illegal transaction may also affect connected arrangements.

Caution: later gambling laws

The ruling is not permission to ignore later gambling laws. Wagering, betting and related activities may be regulated or prohibited by specific current statutes, and those laws can change the analysis. The Supreme Court was interpreting the general Contract Act and the relevant legal setting before it. A narrow conclusion about collateral agreements must not be turned into a claim that all modern gambling businesses are lawful throughout India.

Significance

Legal words have consequences. Courts must apply the enacted law before relying on broad moral opinions.

Exam points

1. First define a wager and explain Section 30.
2. State that being void does not necessarily mean being prohibited.
3. Discuss Section 23 and the alleged unlawful purpose.
4. Mention the warning about public policy and check for a special statute that changes the position.
5. Writing only "Gambling is against public policy" earns little credit; the Supreme Court required a more disciplined legal analysis.
6. It is equally wrong to treat the decision as a defence to an act that a specific law actually prohibits.

Madhub Chunder v. Rajcoomar Doss

Decided by the Calcutta High Court in 1874, the case explains the strict Indian rule against agreements in restraint of trade. It asks whether competing shopkeepers can pay another shopkeeper to stop trading in their neighbourhood and then refuse to pay because the promise itself is unlawful.

Facts

• The plaintiff sold copper utensils in a part of Calcutta.
• Other traders in the same locality wanted him to close his business there.
• They promised to repay advances that he had made to his workers if he stopped trading in the area.
• He shut the shop as requested, but the others did not pay what they had promised. He sued to recover the money, arguing that he had done what they asked.

Issues

Whether an agreement restricting trade in only one area was caught by Section 27 of the Indian Contract Act. The restraint did not stop the plaintiff from selling copper utensils everywhere in India; it applied to a particular locality. Was this limited promise nevertheless void?

Arguments

• Plaintiff: he had actually closed his shop and sought the agreed payment.
• Defendants: the underlying undertaking prevented lawful trade, and the payment promise could not be enforced through that restraint.

The court had to apply the statutory words, not a general guess about whether the arrangement was commercially reasonable.

Judgment (held)

• The restraint was void.
• Section 27 is not confined to complete bans on a person's trade; a restriction on trading in one area can also fall within it.
• The plaintiff could not enforce the promised payment on the basis of the void undertaking.
• The court interpreted the Indian statute strictly, rather than importing every English common-law exception for reasonable restraints.

Principle / ratio and relevant provisions

Section 27 says that an agreement restraining a lawful profession, trade or business is void to that extent, subject to its exception concerning sale of goodwill.

Other rules recognised by Indian law, including limits on restrictive terms during employment and legislation dealing with partnerships, require separate consideration. No single old case decides every modern restraint question.

Comparison with English law

English law	Indian law (Section 27)
Courts historically examined whether a trade restriction was reasonable between the parties and in the public interest.	Uses broader statutory words, so a court cannot save every restraint simply by calling it reasonable.
Reasonable restraints may be upheld.	Even a local or modest restraint can be void; exception for sale of goodwill.

Context matters: a clause requiring faithful service during lawful employment may differ from a ban on working for competitors after employment ends.

Significance

The freedom to carry on lawful trade is protected even when a restraint appears local or modest. A party cannot always buy someone else's promise to stop earning a living and expect that promise to be enforced.

Exam points

1. Identify the trade, the restriction and the payment promise.
2. Ask whether the clause restricts a lawful business, then apply Section 27 and its relevant exceptions.
3. Explain why a restriction limited by place can still be a restraint.
4. Do not confuse an unlawful restriction with an ordinary agreement about business hours, confidentiality or a genuine transfer of goodwill.
5. Do not claim that Indian courts use the English reasonableness test without statutory limits.

Taylor v. Caldwell

Decided in England in 1863, this is a foundation of the law of frustration. It asks whether a hall owner must pay damages when the hall is destroyed by an accidental fire before the concerts for which it was hired, even though nobody caused the disaster.

Facts

• Taylor arranged to use the Surrey Gardens and Music Hall for concerts on four days.
• Caldwell was to make the named venue available, and Taylor would pay 100 pounds for each day.
• The organisers expected to use the hall for performances and to earn money from visitors.
• Before the first event, fire destroyed the hall. The destruction was not the fault of either party.
• The organisers had already spent money preparing and advertising. They sued because the contracted venue was not delivered.

Issues

Whether the obligation to provide the hall remained absolute after the specific building ceased to exist. If the owner remained bound regardless of events, the organiser might obtain damages. If the parties' duties depended on the hall continuing to exist, the unexpected loss could discharge the bargain.

Arguments

• Taylor: relied on the promise to provide the venue and the cost of preparing the events.
• Caldwell: relied on the accidental destruction of the very place that had been promised.

The court looked at what both parties must have assumed when making a contract for a particular building.

Judgment (held)

The court excused the parties from future performance. Justice Blackburn explained that the contract depended on the continued existence of the hall. Where a thing essential to performance is destroyed without fault, and the contract has not placed that risk on one party, the duty may come to an end. The organiser did not obtain ordinary breach damages for the accidental failure to provide the destroyed hall.

Relevant Indian provisions

• Section 56 of the Indian Contract Act is the key provision for an act that later becomes impossible or unlawful. Its first paragraph also concerns an agreement to do something impossible from the beginning.
• An Indian answer should begin with the statute rather than simply copying English implied-term language.
• Section 65 may raise a separate issue about benefits that must be restored when a contract becomes void.

Significance

Contract law does not demand the impossible after the essential subject of the bargain disappears without fault. The case remains the classic example of an unexpected event bringing a lawful contract to an end.

Exam points

1. Identify the promised performance, the specific subject matter, the later event, its effect on performance, and whether either party caused it.
2. Distinguish an original impossibility from a later one.
3. Do not call an ordinary rise in costs frustration.
4. Treat claims for damages and claims for return of advance payments as separate questions. The discharge of future obligations does not automatically answer how every payment already made must be handled.

Krell v. Henry

Decided by the English Court of Appeal in 1903, the case shows that the destruction of a contract's common purpose may matter even where the building itself is unharmed: the room remains standing and usable, but the event for which it was hired is cancelled.

Facts

• Henry agreed to hire rooms overlooking Pall Mall in London for daytime use on two days in June 1902.
• Those were the days planned for the coronation procession of King Edward the Seventh; he wanted to watch the procession from the rooms.
• The agreed price was 75 pounds, and he paid 25 pounds in advance.
• The King became ill and the procession was cancelled.
• Henry refused to pay the balance. Krell sued for the unpaid amount.

Issues

Whether the procession was merely Henry's private reason for hiring the room or an essential purpose understood by both parties. If the hire was simply for ordinary accommodation, the rooms still existed. But if the event was the shared basis of the bargain, cancellation could change the entire contract.

Arguments

• Krell: sought the balance because the premises remained available.
• Henry: paying a special price for daytime use made sense only because the procession was expected.

The judges considered the circumstances and what the parties understood when they agreed to the hire.

Judgment (held)

The Court of Appeal held that the contract was frustrated. The coronation procession was so central to the arrangement that its cancellation destroyed the common foundation of the bargain. The rooms remained physically available, but they could no longer serve the particular shared purpose for which this hire was arranged. Henry was not held liable for the claimed balance on the original basis.

Indian law

The concept should be linked cautiously with Section 56 of the Indian Contract Act. That section covers later impossibility and unlawfulness; Indian courts have also explained that impossibility can involve practical frustration of a contract's foundation, not simply physical impossibility. Nevertheless, disappointment of one party's personal aim is not automatically frustration.

Shared essential purpose v. private motive

Private motive	Shared essential purpose
Someone books a normal hotel room during a festival but never tells the hotel why.	The agreement unmistakably concerns a special viewing room for a named procession that both parties have in mind.
Cancellation of the festival may not end the accommodation contract.	Cancellation of the event has a different legal effect and may frustrate the contract.

The exact wording and surrounding facts must decide the result.

Significance

Contracts sometimes depend on an event that both parties treat as the very reason for the bargain. When that shared foundation disappears without either party causing it, legal duties may also come to an end.

Comparison with Taylor v. Caldwell

Taylor v. Caldwell	Krell v. Henry
The hall itself was destroyed by fire.	The building was unharmed; the coronation procession was cancelled.
Performance became physically impossible.	The rooms remained available, but the common purpose was destroyed.

The two cases show two different routes by which performance can lose its foundation.

Exam points

1. Do not say that the building burned down. It did not. The important event was cancellation of the procession.
2. Explain the common purpose, the special timing and the daytime hire.
3. Compare with Taylor v. Caldwell, where the hall itself was destroyed.
4. Under Indian law, state Section 56 and examine whether the event genuinely destroys the essential object of the contract.
5. Avoid giving every cancelled holiday plan the same outcome.

Satyabrata Ghose v. Mugneeram Bangur and Company

An important Supreme Court decision on whether a temporary government takeover of land automatically cancels a contract to sell it. The judgment came in 1953 and was reported in 1954. It explains Section 56 of the Indian Contract Act and the limits of the doctrine of frustration.

Facts

• A company planned a housing development near the Dhakuria lakes in Calcutta. It agreed to sell plots and intended to build roads and drains as part of the development.
• A buyer paid earnest money, and the claimant later acquired the buyer's rights.
• During the Second World War, the government requisitioned parts of the land for military purposes.
• The developer treated the unexpected requisition as ending the sale arrangement and offered alternatives.
• The buyer objected and wanted the original contractual right recognised.

Issues

Whether wartime requisition made performance impossible in the legal sense. The government had taken possession for its needs, but the ownership and future development of the land were not necessarily destroyed forever. The contract had not fixed an absolute date by which all development work had to finish.

Arguments

• Developer: relied on the wartime interruption and argued that the contract had become impossible.
• Buyer: the temporary event did not make the promised sale permanently unworkable.

The Supreme Court considered the terms of the original bargain and the realistic effect of the requisition.

Judgment (held)

• The agreement had not been frustrated on these facts.
• Temporary interference and delay did not destroy the fundamental basis of the contract.
• The word "impossible" in Section 56 is not confined to physical impossibility, but the event must make performance radically different in the relevant legal sense.
• Mere inconvenience or delay is not enough.

Relevant provisions

• Section 56: the central Indian rule on impossibility and frustration.
• Section 32: may apply instead where the parties themselves have expressly agreed what should happen upon a particular uncertain event.
• Section 65: can be relevant to restoration of advantages when a contract becomes void.

These provisions must not be treated as interchangeable. Start with what the contract actually says.

Significance

The case protects contracts from being cancelled merely when performance becomes troublesome. Section 56 offers relief for true frustration, not an easy exit whenever unexpected events interrupt business.

Exam points

1. Identify the original obligation, the later event, the contract's time requirements, and whether the event changes the bargain itself.
2. Write that impossibility may be practical, but avoid saying that difficulty automatically equals impossibility.
3. State that the Supreme Court rejected frustration in this actual case. Students sometimes quote the Court's wide explanation of impossibility but forget its narrow result; both must appear together.
4. Distinguish an event controlled by a force-majeure clause from one governed by Section 56.

Energy Watchdog v. Central Electricity Regulatory Commission

Decided by the Supreme Court in 2017, this is a leading Indian case about force majeure and commercial hardship. It asks whether a power company may refuse to supply electricity at the agreed price when imported fuel becomes much more expensive.

Facts

• Electricity generating companies had signed long-term agreements to supply power at tariffs determined through competitive bidding.
• Some plants depended on imported coal, including coal from Indonesia.
• Indonesia changed rules affecting the price at which its coal was sold, and the fuel became much more costly.
• The companies sought relief from the agreed tariffs, arguing, among other things, that the regulatory change triggered force majeure or frustrated the contracts.

Issues

1. Whether higher input costs made the contract legally impossible.
2. How the agreed force-majeure clauses should be read.
3. How to distinguish an obligation governed by an express contingency clause from one governed by the general rule in Section 56.

Arguments

• Generating companies: pointed to the substantial financial effect of the coal price change.
• Other parties: relied on the agreed price and the commercial risk taken by the suppliers when they bid for the contracts.

The Court examined the actual contractual language and the legal test, rather than deciding only on the size of the companies' losses.

Judgment (held)

• The Supreme Court rejected the claim that the price rise itself excused performance under those agreements.
• A bargain does not become impossible simply because it becomes costly or commercially unattractive.
• Where the contract contains a relevant force-majeure clause, its wording must be applied.
• A general appeal to fairness cannot replace that bargain or automatically secure a higher tariff.

Principle / ratio and relevant provisions

Section 32	Section 56
Governs contracts that depend on an uncertain event where the contract itself provides for that contingency.	Deals with later impossibility or unlawfulness under the statute.
If a force-majeure event is covered by the contract, the question is primarily one of applying the agreement.	Addresses frustration outside such agreed allocation.

Significance

A fixed-price promise remains a real promise during difficult markets. Contract law can excuse true frustration, but it does not normally rewrite a bargain merely because the cost of keeping it rises. The case is particularly useful for long-term infrastructure and supply agreements.

Exam points

1. Read the force-majeure clause before applying Section 56.
2. Identify the event, whether the clause covers it, and whether performance is prevented or only less profitable.
3. Explain the role of Section 32 where the parties have provided for the event.
4. Avoid saying that every major economic shock cancels a contract; equally, avoid saying that all events beyond control are irrelevant. The legal consequence depends on the contract terms and the statutory test.

Hochster v. De La Tour

Decided in England in 1853, the case established an important principle about anticipatory breach. It answers whether a person who is promised a job starting next month, but told today that the job is cancelled, must wait until the start date to sue.

Facts

• De La Tour engaged Hochster to work as a courier during a planned tour of Europe. The employment was to start on 1 June.
• Before that date, De La Tour informed Hochster that he no longer wanted his services.
• Hochster treated the message as a refusal to honour the bargain and, instead of waiting until June, brought his claim immediately.
• De La Tour objected that no breach could have occurred before the agreed start date.

Issues

Whether a clear refusal to perform a future duty gives the innocent party an immediate right to act. The agreement had already been made, even though the work itself was to begin later. The timing of the promised performance and the timing of the refusal were different facts.

Arguments

• De La Tour: the performance date had not yet come.
• Hochster: he should not be required to remain idle after being told the promised employment would not be provided; he needed to find other work and deal with the loss caused by the early refusal.

Judgment (held)

Hochster could sue before the agreed start date. When one party clearly announces an intention not to perform the contract, the other may accept that refusal as a breach and seek relief at once. The claimant need not pretend the promised performance remains certain after receiving an unmistakable rejection.

Relevant Indian provisions

• Section 39 of the Indian Contract Act: when a party refuses to perform, or disables themselves from performing, the promise in its entirety, the other party may put an end to the contract, unless they have signified their acceptance of its continuation.
• Sections 73 and 74 govern important questions about compensation.
• The English case supports understanding the idea of a refusal made ahead of time.

Responses open to the innocent party

Treat the contract as ended	Keep the contract alive
Accept the advance refusal as a breach and sue at once.	Continue to seek performance (available in some cases).
Must act reasonably to reduce avoidable loss when seeking damages.	May remain exposed to later events affecting both parties.

Significance

A binding promise has present legal significance even when performance is scheduled for a future day. Once the other party clearly rejects the bargain, the law need not force the innocent person to wait for the calendar date of performance before responding.

Exam points

• Distinguish an anticipatory breach from a mere question about whether performance may be possible. The refusal must be clear.
• Identify three dates: when the contract was formed, when performance was due, and when the rejection was communicated.
• Apply Section 39 of the Indian Contract Act and examine the innocent party's election.
• Do not automatically order specific performance of a personal service agreement; such contracts raise separate limits.
• Explain the right to sue and the measure of compensation as different questions.

Hadley v. Baxendale

If a delivery company is late, can the customer demand every rupee of business profit lost during the delay? Hadley v. Baxendale, decided in England in 1854, gives the classic rule on how far damages for breach of contract may go.

Facts

• Hadley operated a flour mill in Gloucester.
• The mill's crankshaft broke, and the mill could not operate properly without a replacement.
• The broken shaft had to be carried to engineers so that they could use it as a pattern for making a new one.
• A carrier associated with Baxendale undertook the delivery but was late.
• The mill remained out of operation for longer, and the owners claimed the profits they said they had lost because of the delay.

Issue

Whether the carrier should pay for the mill's lost profits. It was not enough to show that delivery was late and that the mill had suffered a loss. The question was whether that kind of loss was one the parties could reasonably have contemplated when they made the carriage contract.

Arguments

• Mill owners: they wanted compensation for the profit they could not earn.
• Carrier: its position turned on what it had been told and what a normal carrier would understand. A broken shaft might be sent as a pattern, but the carrier was not necessarily informed that the entire mill would remain shut until that particular shaft was returned.

Judgment

The Court of Exchequer set out a two-part approach:

1. Recoverable loss may arise naturally from a breach in the ordinary course of things.
2. Additional unusual loss may be recoverable when special circumstances were communicated or otherwise known to both parties when contracting.

The claimed lost profits did not automatically meet that test. The case was sent for a new trial under the stated principles.

Indian law: Sections 73 and 74

Section 73 of the Indian Contract Act expresses related rules:

• It permits compensation for loss that naturally arises in the usual course from the breach, or which the parties knew, when making the contract, was likely to result.
• It does not ordinarily compensate remote or indirect loss.
• The injured party's reasonable opportunities to lessen the inconvenience or loss are also relevant.

Section 74 deals separately with agreed sums and penalty clauses.

Principle: foreseeability

A courier knows that ordinary delay may cause inconvenience. It does not always know that one late parcel will stop an entire factory for a week. If the sender clearly explains that special risk when contracting, the legal result may change.

A claimant also needs evidence of actual loss and its connection with the breach. A large figure written in a demand notice is not, by itself, proof.

Significance

Damages are not an unlimited punishment for breaking a promise. Contract law compensates loss within a legally reasonable range, measured by ordinary consequences and by special risks known when the bargain was made.

Exam points

• Write the two limbs of the damages rule separately. First discuss ordinary consequences.
• Then ask whether unusual circumstances were known when the contract was made, not merely discovered after the breach.
• Apply Section 73 and explain why remote losses are excluded.
• Do not conclude that all lost profits are automatically irrecoverable. Some lost profits can be the natural and foreseeable result of a breach.
• The correct question is what risk was within the legal contemplation of the parties.

Cutter v. Powell

A sailor works for most of a long journey but dies before the ship reaches its destination. Should the sailor's family receive part of the promised wages? Cutter v. Powell, decided in England in 1795, is a famous example of an entire contract.

Facts

• Cutter agreed to serve as second mate on a voyage from Jamaica to Liverpool.
• The agreed sum was thirty guineas, higher than normal wages, but the wording linked payment to his continuing and performing his duties for the whole voyage.
• He served for much of the journey but died before the ship reached Liverpool.
• His widow brought a claim for a fair part of the promised payment, based on the work he had already done.

Issue

Whether a court could divide the agreed wage into separate daily or weekly amounts even though the bargain linked payment to completing the entire voyage. Cutter had genuinely worked; the legal difficulty came from the condition the parties had made part of their agreement.

Arguments

• Widow: the claim rested on the value of the service already provided.
• Other side: relied on the special terms requiring completion of the whole journey before the agreed wage became payable.

The judges focused on the wording and on the fact that the unusually high wage had been promised for an entire completed service.

Judgment

The court rejected the widow's claim under that contract. The promised payment was conditional on complete performance, and Cutter had not completed the voyage. The result is widely regarded as harsh.

Position in Indian law

Indian students should not treat this old English outcome as an automatic present-day rule for every worker.

• Section 37 of the Indian Contract Act requires parties to perform their promises unless performance is excused under the Act or another law.
• Sections 65 and 70 may raise separate claims where their conditions are met.
• Modern employment and wage legislation, and doctrines of substantial performance, may produce different results in suitable cases.

Entire and divisible contracts

A contract is not entire merely because it concerns one project. The court looks at the agreed payment structure and whether different portions have separate prices or milestones.

Divisible bargain	Entire bargain
A contractor agrees to paint five rooms and the contract provides payment after each room.	The contract clearly makes an unusually large fixed reward depend on completing a particular journey.
Separate prices or milestones for different portions.	Payment linked to completion of the whole task.

The party who prevented completion may also face different consequences.

Significance

Words fixing when payment becomes due can be decisive. The case also shows that an old contractual rule may be legally important without being a fair answer to every modern employment dispute.

Exam points

• Identify the exact condition of payment, the extent of performance, the reason performance stopped and whether the obligation is divisible.
• State the result correctly: the widow could not recover the claimed proportional contractual wage.
• Then explain why current law may soften the historical result through statutes or distinct restitutionary claims.
• Avoid citing Cutter as permission for every employer to withhold all wages after substantial work has been completed. That would be far too broad.

State of West Bengal v. B. K. Mondal and Sons

Can a government use a contractor's completed work and then refuse to pay because no valid government contract was signed? The Supreme Court decided this dispute in 1961, and the case was reported in 1962. Its central rule comes from Section 70 of the Indian Contract Act.

Facts

• A building contractor carried out construction work for government authorities in Bengal, including structures and facilities needed by public departments.
• Government officers had requested the work.
• The government enjoyed the buildings and their use, but payment was disputed.
• The formal requirements for a valid government contract had not been met.
• The State argued that the lack of a properly executed contract prevented the contractor from enforcing any payment obligation.

Issue

Whether the contractor could obtain reasonable compensation even though it could not sue on a valid ordinary government contract. The court had to examine whether Section 70 creates an obligation independently of a signed bargain, where one party has lawfully supplied something and the other has freely used it.

Arguments

• Contractor: relied on lawful construction work done without intending to give it away for free, together with the government's enjoyment of the benefit.
• State: relied on the legal formalities protecting public funds against unauthorised commitments.

The judges had to respect those formalities without allowing the government to keep valuable benefits unfairly.

Judgment

The Supreme Court held that the contractor could recover under Section 70. This was not enforcement of the defective government contract. It was a separate statutory duty to compensate a person whose lawful, non-gratuitous work had been accepted and enjoyed. The State could not keep the benefit in these circumstances without paying reasonable compensation.

Ingredients of Section 70

1. The person must lawfully do something for another or deliver something to them.
2. The person must not intend the act as a gift (it must be non-gratuitous).
3. The other person must enjoy the benefit.

Constitutional and historical framework

• Government contracts today are governed by Article 299 of the Constitution.
• The transaction in this case was examined against the government-contract formalities in Section 175(3) of the Government of India Act, 1935.

Principle: quasi-contract

The government must genuinely accept or enjoy the work. Someone cannot force unwanted improvements upon another person and then demand payment merely by saying the work was useful.

Significance

Formalities matter, but the government cannot keep a benefit without payment when Section 70 applies.

Exam points

• First examine whether there is a valid contract. If not, do not stop the answer.
• Apply Section 70, proving lawful work, absence of an intention to make a gift, and enjoyment of the benefit.
• Explain why the claim differs from ordinary contractual damages. The contractor is not enforcing an unlawful promise through the back door; the statute recognises the value of work actually enjoyed.
• Include Article 299 only as the modern constitutional framework, while giving the historically correct law applicable to the case (Section 175(3), Government of India Act, 1935).

Trimex International FZE v. Vedanta Aluminium Limited

Can a chain of business emails create a binding international supply contract even when the final paper agreement is never signed? Trimex International FZE v. Vedanta Aluminium Limited, decided by the Supreme Court in 2010, says that it can. It is an important Indian judgment on electronic communication and the formation of contracts.

Facts

• Trimex, a trading company based in Dubai, negotiated with Vedanta Aluminium over the supply of bauxite.
• The parties exchanged an offer and responses by email. The proposal identified commercial terms for shipments and contained an arbitration arrangement.
• One early reply raised a further term, so it did not settle every question by itself.
• Later messages confirmed the deal for five shipments.
• Detailed written documents were exchanged afterwards but were not finally signed in the expected form.
• A dispute followed, and Vedanta denied that a concluded contract existed.
• The communications dated from 2007.

Issues

• Whether the essential terms had already been agreed through the emails.
• Whether an arbitration agreement existed.

The absence of the anticipated formal signature was a central part of the objection.

Arguments

• Trimex: relied on the commercial offer, the later confirmation and the steps it had taken in reliance on the negotiated deal.
• Vedanta: pointed to the continuing exchange of draft documents and argued that unresolved matters prevented formation of a binding agreement.

The court studied the full sequence instead of treating one draft document as the only possible contract.

Judgment

The Supreme Court found a concluded agreement on the material terms and accepted that the agreed arbitration clause could be acted upon. When parties have already made an absolute acceptance of an offer containing the essential terms, a plan to prepare a fuller document later does not automatically postpone contract formation. The result depends on whether the parties intended signature to be a required condition before becoming bound.

Statutory provisions

• Sections 2, 7 and 10 of the Indian Contract Act govern proposal, acceptance and the essentials of a contract.
• Section 7 requires absolute and unqualified acceptance.
• The Arbitration and Conciliation Act, 1996 contains the legal framework for arbitration agreements.
• Section 10A of the Information Technology Act expressly recognises electronic contracting, but the ordinary law of formation also matters.

Principle: reading emails in sequence

A message that adds a new condition may be a counter-offer rather than an acceptance. But a later clear confirmation can conclude the bargain. This is why each email must be read in chronological order. Conversely, emails containing only tentative discussions, or an express condition that no party is bound until signing, may not establish a present contract.

Significance

Contract law follows real agreement across new methods of communication. A clear electronic bargain can create serious legal duties even if the parties never put their final signatures on a later printed form.

Exam points

• Make a timeline: offer, conditional response, unconditional confirmation, later drafts.
• Ask when the essential terms became agreed and whether signing was meant to be a condition of validity.
• Do not say that every email exchange automatically creates a contract. Distinguish a final acceptance from negotiation.
• Distinguish proof of a contract from proof of the exact arbitration clause.
• Apply the relevant statute to each issue instead of relying only on an informal statement that online agreements are valid.

Central Inland Water Transport Corporation v. Brojo Nath Ganguly

If an employer writes that it may dismiss a permanent worker without giving any reason, can the worker challenge the term even after joining the company? This case, decided by the Supreme Court in 1986, addresses unfair terms where bargaining power is seriously unequal.

Facts

• The corporation was a government-controlled enterprise.
• Its service rules contained a provision allowing termination of a permanent employee by giving three months' notice or pay in place of notice, without an ordinary requirement to state proper grounds.
• Employees affected by the rule challenged its validity.
• The corporation relied on the agreed employment terms and claimed the authority to use the rule.
• The dispute reached the Supreme Court and raised both contract law and constitutional fairness.

Issues

• Whether a contract clause so one-sided could be enforced against workers who had little real opportunity to negotiate.
• Whether the public corporation's treatment of employees was consistent with the equality protection of the Constitution.

Arguments

• Corporation: relied on its service rules as part of the conditions of employment.
• Employees: the rule gave the employer unfair and uncontrolled power, and accepting a standard form could not make such treatment lawful.

The Court considered the real bargaining position of the parties rather than assuming that every signature reflects equal freedom.

Judgment

The Supreme Court struck down the unfair termination rule. It found the clause arbitrary and unreasonable in the context of unequal bargaining power. The reasoning drew on:

• Section 23 of the Indian Contract Act, which makes agreements with objects opposed to public policy void; and
• Article 14 of the Constitution, which protects equality before the law in relation to state action.

Principle: public policy and unequal bargaining power

Section 23 is not a general permission for courts to rewrite every price or commercial term they dislike.

The Court emphasised the particular problem of a powerful employer imposing a seriously unfair term on a weaker worker. Article 14 was also relevant because of the corporation's public character.

Standard form contracts appear in employment letters, insurance policies, travel bookings and online platforms. The decision teaches that consent alone is not always the end of the analysis. However, equality of bargaining power, the commercial setting, statutory regulation and the actual clause all matter.

Significance

Contract terms are not beyond legal scrutiny merely because they appear in a printed form. Freedom of contract is important, but it does not always protect the power to impose deeply unfair conditions.

Exam points

Section 23, Indian Contract Act	Article 14, Constitution
Concerns unlawful objects and public policy in agreements.	A constitutional rule of equality before the law; requires the appropriate state-action connection.

• Name both Section 23 and Article 14 without confusing their roles.
• Explain why a take-it-or-leave-it clause imposed on employees is different from a freely negotiated transaction between equal commercial businesses.
• Do not claim that any small imbalance in bargaining power makes a contract void. The Court's concern was a serious and unreasonable abuse of power.

Errington v. Wood (Errington v. Errington)

A father promises a house to his son and daughter-in-law if they pay the mortgage. Can the family withdraw that promise after the couple has started paying? Errington v. Wood, also called Errington v. Errington, decided by the English Court of Appeal in 1951 and commonly reported in 1952, explains a special kind of offer that is accepted through performance.

Facts

• A father bought a house for his son and daughter-in-law. He paid part of the price and financed the rest through a mortgage.
• He told the couple that the house would become theirs if they paid off the mortgage instalments.
• They began making the payments as agreed.
• The father later died, leaving the property to his widow.
• The son stopped living with his wife, but the daughter-in-law remained in the home and continued making payments.
• The father's widow sought possession of the house.

Issue

Whether the father's promise could simply be withdrawn while the requested payments were still being made. The couple had not necessarily completed the full condition when the dispute arose. Their right depended on how the law treats a promise that asks for a continuing course of performance.

Arguments

• Widow: relied on her ownership position and sought to recover the house.
• Daughter-in-law: relied on the father's promise and the mortgage instalments already paid and still being paid.

The court had to decide whether she could remain while faithfully performing the condition of the promise.

Judgment

The Court of Appeal allowed the daughter-in-law to resist immediate possession while she continued the payments. The judges treated the arrangement as a unilateral promise linked to performance. Once the couple had begun the requested course of performance, the promise could not simply be withdrawn at will while the condition was being performed. Failure to continue the payments would raise a different question.

Indian law

• Section 8 of the Indian Contract Act recognises acceptance by performing the conditions of a proposal.
• Section 2(d) describes acts and promises that can be consideration.
• Indian courts must apply their own contract and property statutes to a real house transfer. This English judgment cannot replace Indian rules about registration, transfer of immovable property or the legal formalities for conveying ownership.

Principle: unilateral contracts

That does not mean the performer immediately owns the promised property. The agreed condition may still need to be fulfilled. Here the special protection recognised by the court was connected with the payments continuing.

Significance

The law takes requested performance seriously. Where one person has begun doing exactly what an offer asks, the offeror may not always be free to change the rules halfway through.

Exam points

• Explain what was promised, who paid the mortgage, why the father's death mattered and why the daughter-in-law continued to qualify for protection.
• Avoid saying that the house was automatically transferred to her as soon as the first instalment was paid. The court dealt with her right to remain during continued performance.
• Do not confuse this decision with an ordinary two-sided (bilateral) contract in which both parties promise future acts at the start. The way the offer invited acceptance was important.

Ranganayakamma v. Alwar Setti

Can a grieving widow be forced to agree to an adoption before her husband's body is allowed to be taken for the last rites? Ranganayakamma v. Alwar Setti, decided by the Madras High Court in 1889, shows how extreme pressure can destroy the freedom to choose.

Facts

• A young widow, about thirteen years old, had just lost her husband.
• While his body remained in the house, people connected with a proposed adoption insisted that the body would not be removed for cremation unless she consented to adopt a particular boy.
• Under this distressing pressure, she signed an adoption document.
• Later the boy relied on the adoption to claim rights in property.
• The widow challenged the arrangement, saying that it had been forced upon her.

Issues

• Whether her consent had been freely given.
• Whether a legally effective adoption had taken place.

The court was dealing with a personal status and property dispute, not simply an ordinary business contract. The form and validity of the adoption ceremony were also important.

Arguments

• Those supporting the adoption: relied on the document and the claimed family arrangement.
• Opposing case: emphasised the conditions under which a young widow had been made to sign while mourning her husband, and the absence of the required adoption acts.

The court considered both the pressure and compliance with the rules then governing adoption.

Judgment

The Madras High Court held that the adoption was not binding in the circumstances. The refusal to allow the body to be removed until the widow agreed was unlawful pressure and did not provide genuine consent. The judgment also addressed the failure to complete a required adoption ceremony. There was more than one legal difficulty with the claimed adoption.

Contract law connection

• Section 15 of the Indian Contract Act defines coercion for contractual purposes.
• Section 14 explains free consent.
• These provisions give the familiar teaching connection. But adoption is a matter of personal law, not merely an exchange of contractual promises. The validity of any present-day adoption in India must be tested under the applicable adoption statute and its conditions, not solely by applying a nineteenth-century contract case.

Principle

Free choice can disappear without a person being physically struck or imprisoned. Someone in grief may appear to agree only because others are wrongly using a necessary family duty as leverage. The law looks beyond the piece of paper to how consent was obtained.

Significance

The case remains a powerful example of why the law examines how agreement was secured. A signature obtained by exploiting a moment of deep distress is not the same as a freely made and legally valid decision.

Exam points

• Describe the grief, the obstruction of the funeral and the forced adoption together.
• Explain that the court was not convinced by a document obtained under such pressure.
• Mention the separate legal problem concerning the required ceremony.
• Do not convert the case into a modern rule that consent alone makes an adoption valid.
• Do not assume that the historic language concerning a corpse and property settles every present criminal-law issue.
• The case's teaching value lies in the reality of the choice and the need for legal formalities.

Tweddle v. Atkinson

Two fathers promise to provide money to a young married couple. If one father dies without paying, can the intended recipient sue on the agreement between the fathers? Tweddle v. Atkinson, decided in England in 1861, provides the classic rule about an outsider trying to enforce a contract made by others.

Facts

• After a marriage, the two fathers, John Tweddle and William Guy, recorded promises to contribute money for the benefit of William Tweddle, the young husband.
• The written arrangement was made between the older men and referred to the benefit intended for the son. It even attempted to allow him to sue.
• William Guy died without making the promised payment.
• The young man brought an action against Atkinson, the executor of Guy's estate.

Issue

Whether a person could enforce a promise in an agreement to which he was not a party and for which he had not personally furnished consideration. The writing plainly intended to benefit the young man, but the question was whether benefit and intention alone were sufficient to give him a cause of action.

Arguments

• Claimant: relied on the written family promise and on the fact that he was meant to receive the money.
• Defendant: the promise had been made between the fathers, and the claimant was not one of the contracting parties.

Judgment

The Court of Queen's Bench rejected the claim. The young husband could not enforce the promise because he was not a party to the contract and had not provided the consideration required by the English rule. An expression in the fathers' document saying he might sue could not by itself overcome the legal difficulty.

Indian law

• Section 2(d) of the Indian Contract Act allows consideration to be supplied by the promisee or any other person. Indian law therefore does not require consideration to move only from the person who receives the promise.
• Yet privity of contract generally remains important, as the Supreme Court confirmed in M. C. Chacko v. State Bank of Travancore, subject to recognised exceptions.

Principle: two different questions

Question	English law (historically)	Indian law
Who supplied something in exchange for the promise? (consideration)	Restricted: the claimant must have provided consideration.	Third-person consideration expressly permitted by Section 2(d).
Who is legally entitled to sue on the promise? (privity)	Restricted to the parties.	Privity generally remains; a named beneficiary is not automatically a party, subject to recognised exceptions.

Family arrangements, trusts and other exceptions can give a third person rights where the legal conditions are met. Do not describe Tweddle as the final answer to every Indian family settlement.

Significance

A promise may be intended to help someone without automatically granting that person an enforceable claim. Before suing, the proposed claimant must show the legal source of the right, not simply the hope of receiving a benefit.

Exam points

• Begin by naming the parties to the actual agreement, not only the people who would gain from it.
• Write down who promised, who supplied consideration, and who brought the suit.
• State the English result and contrast the Indian statutory wording.
• Avoid the inaccurate sentence "In India anyone who benefits from a contract can sue."
• Avoid saying that consideration must always move from the promisee in India.
• The value of Tweddle lies in explaining exactly why these two rules must not be confused.

InterGlobe Aviation Limited v. N. Sachidanand

When an airline ticket is bought online, is the buyer bound by travel conditions that were never read? InterGlobe Aviation Limited v. N. Sachidanand, decided by the Supreme Court in 2011, helps answer that question. It also explains why a company cannot simply choose any court in India to hear every dispute.

Facts

• A passenger booked travel with IndiGo, operated by InterGlobe Aviation.
• A flight involving Delhi and Hyderabad was badly delayed because of fog.
• The passenger sought compensation before a Permanent Lok Adalat.
• The airline relied on its conditions of carriage, which were referred to through the ticket and made available through the airline's ordinary booking channels.
• The conditions addressed events beyond the airline's control and also named the courts of Delhi for disputes.

Issues

1. Were the ticket conditions part of the contract although the passenger had not personally read them?
2. Could the airline's general exclusive-court clause remove jurisdiction from every other place?
3. Did the airline have contractual liability for a serious delay caused by the weather?

Arguments

• Airline: its carriage conditions governed the journey, limited responsibility for uncontrollable delay, and directed disputes to Delhi.
• Passenger: pursued compensation for the inconvenience experienced and questioned the attempt to keep the dispute before a particular forum.

The Court examined notice of standard terms, limits on jurisdiction agreements and the actual reason for the delay.

Judgment

• Properly incorporated standard conditions could bind a passenger even if they had not been read word by word.
• A blanket condition could not give exclusive jurisdiction to courts that would otherwise have none. Parties may ordinarily choose among courts that already have jurisdiction; they cannot create jurisdiction by agreement.
• A Permanent Lok Adalat is also not simply a civil court for this purpose.
• The Court separately examined the duty to give basic care during delay on board, including water, snacks and access to toilets. It found that the minimum duty then required was met.
• The airline was not liable for the fog itself, and the compensation order was set aside.

Statutory framework

• Section 2(a) and (b) and Section 10 of the Indian Contract Act help explain the formation of the ticket contract.
• The Code of Civil Procedure provides important rules on where civil proceedings may be filed.
• The principle of reasonable notice is useful when studying standard form and online contracts.
• The legal status of a Permanent Lok Adalat involves its own statute and powers.

Principle: two opposite mistakes

Mistake 1	Mistake 2
Saying a person is never bound by printed or digital terms until each line has been read.	Saying any hidden term on a website is always enforceable.

The law looks at incorporation, notice, fairness and the applicable statutory controls.

Significance

Modern contracts are often made through standard terms, not personal negotiation. Those terms can bind when properly brought into the agreement, but they remain subject to limits imposed by law.

Exam points

Separate four questions:

1. Notice of terms: ticket terms may bind without being read.
2. Court jurisdiction: terms cannot create jurisdiction.
3. Weather delay: unavoidable delay is considered separately.
4. Care for passengers on board: failure to provide basic care is a distinct question from the delay itself.