Key Case: Carlill v Carbolic Smoke Ball Co (1893)

Facts
The manufacturers of a ‘smoke ball’ published an advertisement at the time of an influenza
epidemic, proclaiming the virtues of their smoke ball for curing all kinds of ailments. In addition,
they stated that anybody who bought one of their smoke balls, used it as directed, and then
caught influenza, would be paid £100. Mrs Carlill, having bought and used a smoke ball, but
nevertheless having caught influenza, claimed £100 from the company. The company argued
that the advertisement could not be taken to be an offer which could turn into a contract by
acceptance. They claimed that it should be regarded as a “mere puff” which meant nothing in
contractual terms. There was, however, apparent evidence of serious intent on the part of the
defendants. The advertisement had stated that “£1,000 is deposited with the Alliance Bank,
showing our sincerity in this matter”. The defendants raised two further objections. First, they
argued that the advertisement was widely distributed, and that this was therefore not an offer
made to anybody in particular. Second, the defendants said that Mrs Carlill should have given
them notice of her acceptance.
Held
The court held in favour of Mrs Carlill. It took the view that the inclusion of the statement about
the £1,000 deposit meant that reasonable people would treat the offer to pay £100 as one that
was intended seriously, so that it could create a binding obligation in appropriate
circumstances, such as those that had arisen. As to the wide distribution of the advert, the
court did not regard this as a problem. Offers of reward (for example, for the return of a lost
pet or for information leading to the conviction of a criminal) were generally in the same form,
and could be accepted by any person who fulfilled the condition. There was plenty of authority
to support this, such as Williams v Carwardine3. Finally, as regards the fact that Mrs Carlill had not given
notice of her acceptance, again the court, by analogy with the reward cases, held that the form
of the advertisement could be taken to have waived the need for notification of acceptance, at
least prior to the performance of the condition which entitled the plaintiff to claim.

Key Case: Felthouse v Bindley (1862)

Facts
An uncle was negotiating to buy a horse from his nephew. The uncle wrote to his nephew offering a
particular sum and saying “If I hear no more about him, I consider the horse mine”. The nephew did not
respond, but told an auctioneer to remove this horse from a forthcoming auction. The auctioneer
omitted to do so, and the horse was sold to a third party. The uncle sued the auctioneer, and the
question arose as to whether the uncle had made a binding contract for the purchase of the horse.
Held
There was no contract, because the nephew had never communicated his intention to accept his uncle's
offer. It is true that he had taken an action (removing the horse from the auction) which objectively
could be taken to have indicated his intention to accept, but because his uncle knew nothing of this at
the time, it was not effective to complete the contract

Key Case: Balfour v Balfour (1919)

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Facts
There was an agreement between husband and wife, resulting from her inability (due to illness)
to return with him to his place of work, in Ceylon. He agreed to pay her £30 per month while
they were apart. Later, the marriage broke up and the wife sued the husband for his failure to
make the promised payments.
Decision
The Court of Appeal held that her action must fail. Two members of the court centred their
decision on the lack of any consideration supplied by the wife. Atkin LJ, however, stressed that
even if there were consideration, domestic arrangements of this kind are clearly not intended
by the parties to be legally binding. He used the example of the husband who agrees to provide
money for his wife in return for her “maintenance of the household and children”1. If this was a contract, then
each would be able to sue the other for failure to fulfil the promised obligation. As regards this
possibility, Lord Atkin commented:2
All I can say is that the small courts of this country would have to be multiplied one hundredfold
if these arrangements were held to result in legal obligations. They are not sued upon, not
because the parties are reluctant to enforce their legal rights when the agreement is broken,
but because the parties, in the inception never intended that they should be sued upon.
Agreements such as these are outside the realm of contracts altogether.
The onus was on the wife to establish a contract and she had failed to do so. Mr Balfour was
not contractually bound to make the payments.

Rajlukhy V Bhootnath

Rajlukhy & Bhootnath was a married couple. Bhootnath got some difference with his wife and
said her to give some money monthly without love & affection on a written paper. Rajlukhy got
it registerd. After some time Bhootnath denied to give money. Rajlukhy went to court but the
decision was in favour of Bhootnath. It was said that Bhootnath agreed to give her money
because they had fights. He is not getting anything by giving her money. So according to
consideration he is not benefitted & is not entitled to give her money. Also one of the three
exceptions to consideration are not met.

Fyazbuksh Vs. Poorubibi

Husband promised the wife to pay fixed monthly allowances. Wife took it in written and got it
registered. When later on husband refused to pay, wife filed the case and court announced in
wife’s favour as all the three conditions of enforceability of an agreement without consideration
were met.

Mohori Bibee v. Dharmodass Ghose

Mahoree Bibee & Dharamodass Ghose was a married couple. Dharamodass Ghose promise
Mahoree Bibee with love & affection to give her some money every month. Mahoree Bibee got
it in written & also registered it. After some time Dharamodass Ghose denied to give money.

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Mahoree Bibee filed a case against her husband in which she won. Dharmodass Ghose was
directed to give money to her wife.

Sharafat Ali Vs. Noor Mohd.

S went to N for buying his scooter and gave Rs. 200 as advance to him. N afterwards changed
his mind and refused to sell the scooter. S went to court for getting the benefit, and the court
announced decision in favour of S.

Leslie Vs. Shiell

In this case, a minor signed a contract on the pretext of being a major. Later on, when it was
found that he was a minor, the court could not enforce the minor to stick to the contract on the
appeal of the plaintiff.

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915)

Facts
Dunlop had a contract with Dew & Co, who were wholesalers in motor accessories, under
which, in exchange for a discount, Dew agreed that in selling the tyres to retailers they would
would not give a discount, unless the retailer agreed to sell at Dunlop's list price. Dunlop's
objective was to prevent the tyres being sold to the public at a discount. Selfridge & Co entered
into such an agreement with Dew & Co. Dunlop subsequently sought an injunction and
damages against Selfridge in relation to alleged breaches of this agreement.
Held
The House of Lords held that they could not succeed. The following passage from the speech of
Viscount Haldane LC indicates the approach taken:1
My Lords, in the law of England, certain principles are fundamental. One is that only a person
who is a party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio
arising by way of contract. Such a right may be conferred by way of property, as, for example,
under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the
contract in personam. A second principle is that if a person with whom a contract not under
seal has been made is to be able to enforce it, consideration must have been given by him to
the promisor or to some other person at the promisor's request. On both grounds, Dunlop's
action failed. They were not parties to the agreement between Dew and Selfridge and,
moreover, had provided no consideration for Selfridge's promise not to sell below the list price.

Parker v South Eastern Railway1

(1877)
Facts
The plaintiff had deposited a bag at a railway cloakroom. He was given a ticket in exchange. The
front of the ticket, which contained a number and date, also said ‘See back’. On the other side
of the ticket were various clauses, including one excluding liability for goods exceeding the
value of £10. The plaintiff's bag, worth £24.50, was lost. The jury found that the plaintiff had not

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read the ticket, nor was he under any obligation to do so. On that basis, the judge had directed
that judgment should be given for the plaintiff. The defendant appealed.
Held
The Court of Appeal ordered a new trial, on the basis that the proper test was whether the
defendants had given reasonable notice of the conditions contained on the ticket. The relevant
principle was stated by Mellish LJ in the following terms:2
I am of the opinion, therefore, that the proper direction to leave to the jury in these cases is
that if the person receiving the ticket did not see or know that there was any writing on the
ticket, he is not bound by the conditions; that if he knew there was writing, and knew or
believed that the writing contained conditions, then he is bound by the conditions; that if he
knew there was writing on the ticket, but did not know or believe that the writing contained
conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a
manner that he could see there was writing upon it, was, in the opinion of the jury, reasonable
notice that the writing contained conditions.
Olley Vs. Marlborough Court Ltd.
Mr. & Ms. Olley went to a hotel during holidays. They booked a room for themselves. After
payment for the room when they reached their room it was written that hotel will be liable for
misplacement of luggage. The luggage was lost & then the couple filed a case against the hotel.
Olley won the case as there was concealment of facts before signing the contract. The hotel
owners concealed the fact of responsibility of luggage & represented this fact after signing of
contract.
Brogden Vs. Metropolitan Railways
Brogden was a supplier of coal to Metropolitan Railways for some years without a formal
contract. The parties decide to formalize the transactions & the Metropolitan Railways Co sent
Brogden a draft agreement. Brogden completed certain details in the draft which had been left
blank, including the name of the arbitrator & Brogden then signed the document & wrote
‘approved’ & written it to the Metropolitan Railway Co whose Manager put it in his desk.
Nothing further was done formally with the document, but for some time the parties acted in
accordance with its arrangements by supplying & paying for the coal. Finally a disagreement
arose & Brogden denied that there was a binding contract between the parties.
The court gave favour to Brogden as there was no formal agreement between the to prties
Harvey Vs. Facey
The case was regarding the sale of property in Jamaica. The respondent L. M. Facey was carrying on
negotiations with the Mayor and Council of Kingston for the sale of the property in question. On the 7th
of October 1891, Facey was travelling from Kingston to Porus by train and the appellants caused a
telegram to be sent to him saying:
"Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid"
Facey replied on the same day:
"Lowest price for Bumper Hall Pen £900."
The appellants then replied in the following words:
"We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us
your title deed in order that we may get early possession."
The defendant however refused to sell at that price.

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 The Judicial Committee in its judgement pointed out that the plaintiff had asked two questions in the
first telegram - as to the defendant's willingness to sell and the lowest price. The defendant only
answered the second question and did not reply as to his willingness to sell. Thus he had made no offer.
The last telegram of the plaintiffs was an offer to buy but was never accepted.
Boulton Vs. Jones
Jones ordered piping from one Brocklehurst, who at the time owed a sum larger than the agreed
price. In fact, unknown to Jones, the piping was supplied by Boulton, who owed Jones nothing,
but who had since bought Brockehurst’s business. It was held-pretty uncontroversial- that
Boulton would have no contractual agreement against Jones, since Jones had clearly not intended
to deal with him at all. Boulton filed a case against Jones for the payment but the court declred
that there was no agreement between Boulton & Jones. So Jones was not enforced for the
payment.
Loftus Vs. Roberts
In a job, the salary was not decided at the time of appointment and was decided that it will be
decided in future. But afterwards it was announced to be a void contract as agreement to agree in
future is no contract.

Smith v Hughes (1871)

Facts
The plaintff had offered to sell oats to the defendant, who trained horses. The defendant was
shown a sample of oats, and agreed to buy the whole quantity. When delivered, they turned
out to be ‘new’ oats, which were of no use to the defendant. He sought to escape from the
contract on the basis that he thought he was buying ‘old’ oats. There was a conflict of evidence
as to whether the plaintiff had ever referred to the oats as ‘old’. The trial judge directed the jury
that if they thought that the defendant believed that he was contracting for old oats, they
should give a verdict for the defendant, which they did. The plaintiff appealed.
Held
The Queen's Bench held that it was not enough that the defendant had made a mistake. To
allow him to escape from the contract, it would be necessary to show that the defendant
thought that it was a term of the contract that the oats were ‘old’, and that the plaintiff was
aware that the defendant thought this (that is, a ‘unilateral’, rather than ‘mutual’, mistake).
Looked at objectively, it appeared to be simply a contract for the sale of a specific parcel of
oats, about which there was no ambiguity. The case was sent for retrial.

Cundy v Lindsay (1878)

Facts
A fraudulent individual named Blenkarn placed large orders for handkerchiefs with the
plaintiffs. Blenkarn was trading from Wood Street, and the plaintiffs thought that they were
dealing with a reputable firm by the name of Blenkiron & Co , which also had its business in
Wood Street. Blenkarn deliberately contributed to this mistake by the manner in which he
signed his order. The goods were supplied on credit and sold on by Blenkarn to the defendant,
who was an innocent third party.

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Held
The House of Lords confirmed that there was no contract between the plaintiffs and Blenkarn.
As Lord Cairns put it6:
Of him [Blenkarn], they [the plaintiffs] knew nothing, and of him they never thought. With him
they never intended to deal. Their minds never for an instant of time rested upon him, and as
between him and them there was no consensus of mind which could lead to any agreement or
any contract whatever.
The contract was void for mistake as to the identity of the other contracting party.

Baker v Jones (1954)8

Facts
The rules of the British Amateur Weightlifters' Association provided that the Association's central council
was to be ‘the sole interpreter of the rules’ of the association, and that the council's decision was in all
circumstances to be final.
Held
Although it was perfectly in order to give a tribunal or council the power to make final decisions on
questions of fact, the same could not be done as regards questions of law. These provisions in the rules
were to that extent contrary to public policy, and void.

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd (1894)

Facts
Thorsten Nordenfelt had established a valuable business in the manufacture of machine guns, operating
in Sweden and England. His customers included most national governments across the world. He sold
the business to a company, which then transferred it to Maxim Nordenfelt. At that time Thorsten
Nordenfelt entered into an agreement with Maxim that he (Thorsten) would not for a term of 25 years
engage in the manufacture of guns, explosives, etc, other than on behalf of the company. Thorsten
broke this covenant, alleging that it was unenforceable as being in restraint of trade.
Held
The House of Lords affirmed the decision of the Court of Appeal that the covenant, though operating as
a world-wide ban, was not wider than was necessary to protect the interests of Maxim Nordenfelt.

Hadley v Baxendale (1854)

Facts
The plaintiff, the owner of a flour mill, contracted with the defendant, a carrier, for the
transport of a broken mill-shaft to an engineer who was to use it as a pattern for new mill-shaft.
There was a delay in the delivery to the engineer, which constituted a breach of contract by the
carrier. The plaintiff received the new shaft five days late, which resulted in considerable losses
to his business, because no spare shaft was available, and the mill was shut for longer than
expected. The plaintiff sued for lost profits.
Held
The Exchequer Court held that the lost profits could not be recovered, because they were too
remote. In this case, there was delay in the transport of a broken mill-shaft which resulted in

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considerable losses for the mill owner, because no spare shaft was available. The court stated
the rule as being that the defendant will only be liable for losses6:
… either arising naturally, that is, according to the usual course of things, from such breach of
contract itself, or such as may reasonably be supposed to have been in the contemplation of
both parties at the time they made the contract as the probable result of the breach of it.
Applying this to the facts of the case, the court held that in most cases of a breach of this kind,
no such losses would have followed, so that it could not be said that the losses followed
naturally from the breach. Nor were the defendants aware, at the time of the contract, of the
circumstances which meant that the mill would not be able to function at all without this
particular shaft. Therefore, the losses were not recoverable.

Harris Vs. Nickerson

Mr. Nickerson advertised sale of brewing material, plant & furniture in an auction in London
newspapers. The auction was being held at Bury St. Edmonds Mr. Harris travelled from London
to attend the auction. While other items were put on auction , office furniture was not, without
notice of its withdrawal. Mr. Harris had spent money to travel from London. He is claiming train
fare & money for loss of two days. The court ruled that the lots were never put up & no offer was
made by the plaintiff nor promise made by the defendant, except by his advertisement that
certain goods would be sold. It is impossible to say that this is a contract with everybody
attending the sale, & that the auctioneer is to be liable for their expenses if any single article is
withdrawn.

Lalman Shukla Vs. Gauri Dutt

In January last the nephew of Gauri Dutt absconded from home and no trace of him was
found. He sent his servants to different places in search of the boy and among these was Laxman
Shukla, who was the munim of his firm. He was sent to Hardwar and money was given to him
for his railway fare and other expenses. After this Gauri Dutt issued hand-bills offering a reward
of Rs. 501 to any one who might find out the boy. Laxman Shukla traced the boy to Rishikesh
and there found him. He wired to the Gauri Dutt who went to Hardwar and brought the boy back
to Cawnpore. He gave Laxman Shukla a reward of two sovereigns and, afterwards, on his return
to Cawnpore, gave him twenty rupees more. Laxman Shukla did not ask for any further payment
and continued in the Gauri Dutt’s service for about six months, when he was dismissed. He then
brought the suit, out of which this application arises, claiming Rs. 499 out of the amount of the
reward offered by Gauri Dutt under the hand-bills issued by him. He alleged in his plaint that
Gauri Dutt had promised to pay him the amount of the reward in addition to other gifts and travelling
expenses when he sent him to Hardwar. This allegation has been found to be untrue and the record
shows that the hand-bills were issued subsequently to the Laxman Shukla’s departure for Hardwar. It
appears, however, that some of Gauri Dutt’s hand-bills were sent to him there.

The claim cannot be regarded as one on the basis of a contract. Laxman Shukla was in the
service of the Gauri Dutt. As such servant he was sent to search for the missing boy. It was,

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therefore, his duty to search for the boy. It is true that it was not within the ordinary scope of his
duties as a munim to search for a missing relative of his master, but when he agreed to go to
Hardwar in search of the boy he undertook that particular duty and there was an obligation on
him to search for and trace out the boy. Being under that obligation, which he had incurred
before the reward in question was offered, he cannot, claim the reward. There was already a
subsisting obligation and, therefore, the performance of the act cannot be regarded as a
consideration for the Gauri Dutt’s promise.

Durga Prasad Vs Baldeo

In Durga Prasad Vs Baldeo case, a builder at his own expense but at the desire of the collector of
the district spent some money on the construction and improvement of the market. In
consideration of this, a shop keeper who was using the market assured to pay certain amount to
the builder. It was held in the case that the builder, who was the promise, constructed the market
by spending certain amount at the desire of the collector of the district and not at the desire of the
shopkeeper and therefore, the agreement was not valid for the want of a good consideration.

VENKATA CHINNAYA RAU v. VENKATARAMAYA GARU

The plaintiffs’ sister, by deed of gift on the 9th April 1877, made over certain landed property to
the defendant, her daughter. By the terms of the deed which was registered, it was stipulated that
an annuity of 653 rupees should be paid every year to the plaintiffs as had hitherto been paid by
the donor until a village could be given them. The defendant on the same date executed in
plaintiffs’ favour a Kararnama promising to give effect to the stipulation of the deed of gift by
paying the annuity until she gave them a village. The annuity was not paid and the plaintiffs sued
to recover it.

Various pleas were set up, one of which was that the document in favour of plaintiffs was
executed under coercion. The Courts below have found, upon evidence warranting the finding,
that there was no coercion, but that the document was executed and registered voluntarily by
defendant.

Ramchandra Vs. Kaluraju

K promised to pay a certain sum of money to R for doing some favor which was though his legal
work only. When the work was accomplished K refused to pay. In a suit by R it was held that
there was no consideration for the promise made by K (as it was his legal duty) and hence no
contract.