LEGAL ASPECTS OF BUSINESS

ASSIGNMENT
Goutham Sunil

AM.BU. P2MBA20036

Case no: 1

MOHORI BIBEE V/S DHARMODAS GHOSE

One of the seminal issues in contract law is Mohori Bibee v. Dharmodas Ghose ILR (1903)
30 Cal 539 (PC), in which the topic of consideration was whether a contract entered by a
minor was void or voidable. The ambiguity arose because section 10 stated that the parties
must be competent to contract, and section 11 stated that if a minor is incompetent to
contract, a contract formed by the minor is void or voidable, but neither section stated if a
contract made by the minor is void or voidable.

Court Name The Privacy Council

Case No 7 CWN 441; 30 M.I.A 114
Petitioner Dharmodas Ghose
Defender Brahmo Dutta
Bench of Judges Lord McNaughton, Lord Davey, Lord
Lindley, Sir Ford North, Sir Andrew
Scoble and Sir Andrew Wilson
Date of Judgement 04 March 1903

FACTS ABOUT THE CASE

In this case Dharmodas Ghose was the respondent or defender, and he was under the age of
18 and the sole owner of his immovable property. The Kolkata High Court designated
Dharmodas Ghose's mother as his legal guardian. He was a minor when he took out a Rs.
20,000 mortgage on his own immovable property in favour of petitioner Brahmo Dutta, with
a yearly interest rate of 12 percent. At the time, Brahmo Dutta, a money lender, obtained a
loan of Rs. 20,000, and his firm's administration was overseen by Kedar Nath, who also
served as Brahmo Dutta's advocate. The defendant's representative, who was actually acting
on behalf of the money lender, handed money to the plaintiff, who was a minor, despite the
fact that he was well aware of the plaintiff's inability to execute or enter into contracts, as
well as his legal inability to mortgage his own property. Dharmodas Ghose and his mother
filed a court complaint against Brahmo Dutta on September 10, 1895, saying that Dharmodas'
mortgage was initiated while he was a juvenile or new-born, and that the mortgage was void,
disproportionate, or unsuitable as a result, and that the contract should be terminated. Brahmo
Dutta died while this petition or claim was being processed, and his executors then litigated
the appeal or petition.

DECISION BY THE COURT

The final decision that was passed by the Council were
 Any sought of contract with a minor or infant is void/ void ab-initio (void from
beginning).
 Since minor was incompetent to make such mortgage hence the contact such made or
commenced shall also be void and id not valid in the eyes of law.
 The minor i.e. Dahrmodas Gosh cannot be forced to give back the amount of money
that was advanced to him, because he was not bound by the promise that was
executed in a contract.

RELEVANCE OF THE DECISION TAKEN BY THE COURT

WITH WHAT WE STUDIED
The agreement with a minor is void
Case NO: 2

CARLILL VS CARBOLIC SMOKE BALL COMPANY

Court Name The Privacy Council

Case No 7 CWN 441; 30 M.I.A 114
Petitioner Dharmodas Ghose
Defender Brahmo Dutta
Bench of Judges Lord McNaughton, Lord Davey, Lord
Lindley, Sir Ford North, Sir Andrew
Scoble and Sir Andrew Wilson
Date of Judgement 04 March 1903

FACTS ABOUT CASE

The defendant, Carbolic Smoke Ball Company, advertised its product in many publications
on November 13, 1891, claiming that if taken three times daily for two weeks, it would
prevent the flu (a pandemic that killed about a million people in 1889-90). Furthermore, the
product's creators offered a 100£ incentive to anyone who contracted flu or influenza after
using their product as directed by a prescription included with the ball, claiming that they had
deposited 1000£ specifically for the reward, motivating consumers to purchase their product.
The plaintiff Carlill followed all of the carbolic smoke ball's instructions. She still got the
illness despite following the protocol. As a result, she took legal action against the Carbolic
Smoke Ball Company. Her claim was for £100 from the company because the product was
advertised as such. Her case was upheld by the court. The defendants, on the other hand, filed
an appeal.

DECISION BY THE COURT

The Carbolic Smoke Ball Company, represented by H. H. Asquith, lost its case at the Queen's
Bench. It quickly drew my attention. Mrs. Carlill had entered into a legally binding contract
for £100, according to the Court of Appeal, which unanimously dismissed the company's
objections. The following are the reasons given by the three judges. Acceptance of the offer
was characterised as meeting the prerequisites for employing the smoke ball. The
advertisement was not a unilateral offer to the entire globe, but rather a limited offer to those
who act in accordance with the terms and circumstances of the advertisement. Buying or just
using the smoke ball was a good idea because it was an obvious disadvantage incurred at the
company's request, and that more people buying smoke balls as a result of the advertisement
was clearly beneficial to Carbolic.

KEY FACTORS OF JUDGEMNET

Mrs. Louisa Carlill was entitled to compensation. Because the offer was presented as part of a
general offer, and Mrs. Carlill accepted it by following the directions on the package, there
existed a contract between the firm and Mrs. Carlill. The general public was given a genuine
general offer. The smoke ball was more than simply a puff sale; the company had deposited
precise pounds in the bank as proof. The language was clear enough to be enforced. Although
the rule of acceptance communication is required, the offer or has the option of opting out of
the notice obligation. It is thought that the offeree did not need to declare his or her desire to
accept the offer. Rather, he has shown his readiness to enter into a contract or arrangement.
Mrs. Carlill's annoyance was a factor, and the company profited from increased sales as well.

RELEVANCE OF THE DECISION TAKEN BY THE COURT

WITH WHAT WE STUDIED
 It is a perfect example of ‘Unilateral Contracts’. It also points out the problems associated
with unilateral contracts. In general offers acceptance must be by performance of a condition.
Acceptance must be communicated.