Landmark Judgments of Law of Contract & Allied
The 29 leading Law of Contract & Allied cases — each with a full brief (facts, issues, held, ratio). Verified against the original judgment. Free to read.
Breach & damages (S73-75)
- Hadley v. Baxendale Damages for breach recoverable only for loss arising naturally from the breach, or reasonably in the contemplation of both parties at contracting.
- Murlidhar Chiranjilal v. Harishchandra Dwarkadas On a seller's non-delivery, damages are the difference between contract price and market price at the place and date of breach; the buyer must mitigate and prove that market rate.
- Fateh Chand v. Balkishan Dass Section 74 entitles the aggrieved party only to reasonable compensation not exceeding the stipulated sum, and applies to forfeiture of money already paid as well as sums to be paid.
- Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd. Where parties expert in the field stipulate a genuine pre-estimate of damages in clear, unambiguous terms, the aggrieved party may recover it without proving actual loss, unless the term is shown to be a penalty or the loss is unreasonable.
Offer, acceptance, consideration & agreement (S1–25 ICA)
- Felthouse v. Bindley Acceptance must be communicated to the offeror; the offeror cannot impose silence as acceptance, so no contract arises from the offeree's mere inaction.
- Chinnaya v. Ramayya (Venkataramaya) Under S2(d), consideration may move from a person other than the promisee, so a stranger to the consideration can enforce the agreement.
- Kedar Nath Bhattacharji v. Gorie Mohamed A charitable subscription is enforceable where, on the faith of the promised subscriptions, the promisee undertakes a liability; the subscriber's promise is then supported by consideration.
- Carlill v. Carbolic Smoke Ball Co. An advertisement promising a reward is a general offer to the world that is accepted by performance of the stated conditions, forming a binding unilateral contract.
- Lalman Shukla v. Gauri Dutt There can be no acceptance, and thus no contract, where a person performs the act constituting the reward condition without knowledge of the offer, and a pre-existing duty is no consideration.
- Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd. Display of goods with price tags on shelves in a self-service shop is an invitation to offer; the customer offers to buy at the cash counter and the shopkeeper accepts there.
- Bhagwandas Goverdhandas Kedia v. M/s. Girdharlal Parshottamdas & Co. For instantaneous communication like telephone, a contract is made where the acceptance is heard/received by the offeror, not where it is spoken; the postal rule does not apply.
Free consent — coercion, undue influence, fraud, misrepresentation, mistake (S13–22)
- Smith v. Land and House Property Corporation A statement of opinion by a party who knows the facts best carries an implied assertion of facts justifying it, and may be a misrepresentation of fact.
- Derry v. Peek Fraud requires a false statement made knowingly, without belief in its truth, or recklessly careless whether true or false; an honestly believed false statement is not fraud.
- Chikkam Ammiraju v. Chikkam Seshamma A threat to commit suicide amounts to coercion under Section 15, rendering a document so obtained voidable.
- Raghunath Prasad v. Sarju Prasad Undue influence under Section 16 must be assessed in a fixed sequence: domination first, then unfair advantage, and only then does the burden shift; a harsh bargain alone is not enough.
- Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib Mere relationship or the donor's old age does not raise a presumption of undue influence; the party challenging the gift must first prove a position of domination.
Sale of Goods & Partnership leading cases
- Central National Bank Ltd. v. United Industrial Bank Ltd. For the Sec. 30(2) exception, possession obtained by the buyer must be with the seller's real consent; goods taken by theft/trick, without any consent, pass no good title.
- Morvi Mercantile Bank Ltd. v. Union of India An owner of goods can make a valid pledge of them by endorsing and transferring the railway receipts representing those goods.
- K.D. Kamath & Co. v. Commissioner of Income Tax Partnership requires only two essentials: an agreement to share profits and losses, and business carried on by all or any acting for all (agency); concentration of control in one partner does not negate it.
Performance, discharge & frustration (S37–67, S56)
- Satyabrata Ghose v. Mugneeram Bangur and Co. Frustration under S56 is a positive rule of law; 'impossible' means impracticable, not literal, but mere delay not striking at the root does not frustrate.
- M/s. Alopi Parshad and Sons, Limited v. Union of India A mere abnormal rise in prices making performance more onerous does not frustrate a contract; a performed (executed) contract cannot be frustrated, and parties cannot claim payment above stipulated rates on a plea of equity.
- Naihati Jute Mills Limited v. Khyaliram Jagannath Where parties expressly provide for a contingency it is governed by S32, not S56; refusal of a licence due to a party's personal disqualification does not frustrate the contract.
- Boothalinga Agencies v. V.T.C. Poriaswami Nadar A contract lawful when made becomes void under S56 when a subsequent change in law renders its performance unlawful.
Void/voidable, wagering & contingent agreements (S23–36)
- Gherulal Parakh v. Mahadeodas Maiya A wager is void under S.30 but not forbidden by law, immoral or against public policy; a partnership to carry on wagering is enforceable.
- Bashir Ahmad v. Government of Andhra Pradesh A contract is not contingent merely because it was entered into in anticipation of a future development; where performance does not in fact depend on a collateral uncertain event, the obligation is absolute and enforceable.
- Mannalal Khetan v. Kedar Nath Khetan A contract whose fulfilment requires doing an act prohibited by statute is void under S.23; a statutory penalty or mandatory negative language implies prohibition even without an express declaration of voidness.
- B.O.I. Finance Limited v. Custodian Where a transaction has a legal 'ready leg' and an illegal 'forward leg', S.57 severs the void forward part and the lawful ready leg remains a binding, enforceable contract.
Specific contracts — guarantee, bailment, pledge, agency
- Lallan Prasad v. Rahmat Ali A pawnee who sues for the debt must be in a position to redeliver the pledged goods on payment; if he has parted with or cannot produce the goods, he cannot recover the debt.
- State Bank of India v. Indexport Registered Surety's liability is co-extensive with the principal debtor's; the creditor may proceed against the guarantor first without first exhausting remedies against the principal debtor or the mortgaged security.
