Part A

Issue-

Whether the advertisement constituted an offer or invitation to offer? 2 Marks

• Meaning of offer or invitation to offer

• Carlil v carbolic smoke ball company

• Leftkoviz v great minnepolis store

• Clear, precise, definite and nothing is left for negotiation

• Section 8

Was there a valid offer made by Nina to Arya?

Rule-

One of the elements for the formation of a contract is an offer/ proposal. Section 2(a) of the

Indian Contract Act, 1872 (‘the Act’) states that a proposal is made when someone signifies

their willingness to do or abstain from doing something, in order to obtain the assent of

another person to such act or abstinence.

Analysis-

An offer as under section 2(a) should be contrasted from an invitation to offer which entails

statements or providing information in order to invite offers from people based on such

information. Nina places an advertisement in her monthly newsletter for the sale of the vase.

As a general rule, advertisements usually do not constitute offers. 1 The facts in the present

1
Leonard v. Pepsico [1999] 88 F. Supp. 2d.
situation can clearly be contrasted with cases like Carlill v. Carbolic Smoke Ball Co. 2 and

Lefkowitz v Great Minneapolis Surplus Store Inc3 where the conditions were specific and did

not involve room for negotiation. They gave interested parties room to make an offer to the

shopkeeper who would then have an option to accept or reject any such offers. Should have

been a separate issue.

Arya inquired about the lowest possible price of the vase, to which Nina quoted 8000rs. An

analogy can be drawn to the case of Harvey v Facey4, where the on being asked the lowest

price for a particular property alongside willingness to sell; the seller only quoted a minimum

price and remained silent as to willingness.5 The Court held that by quoting minimum price

the seller did not create an offer.6 In fact, the buyer stating willingness to buy at that price

was an offer which could be accepted or rejected by the seller.7 Similar situation arises here,

as Nina merely stated the minimum price. The text on 22nd August would in fact constitute an

offer made by Arya. We are not told whether this was accepted by Nina or not. McPhersons

v M N Appanaa?

Conclusion-

As there is no offer, there would be no contract between the parties so Nina will not be liable.

Issue:

Was Nina of sound mind when creating a contract for sale of the vase to Rumi?

Rule:

2
[1893] 1 QB 256.
3
[1957] 86 NW 2d 689.
4
[1893] AC 552.
5
Harvey v Facey [1893] AC 552.
6
Ibid.
7
Ibid.
Section 10 of the Indian Contract Act requires parties to be competent in order to create

contracts. Reading of Section 11 and 12 of the Act provide that a person who is capable of

understanding and forming of rational judgement in one of a ‘sound mind’ and in turn

competent to contract.8

Analysis:

Here Rumi gives an offer to purchase the vase from Nina, who in turn accepts this offer. The

question is whether Nina was competent to contract at the time. The facts inform us that she

was intoxicated to the point where she was hardly in her senses and barely able to understand

the situation. This is similar to Illustration (b) under Section 12 of the Act which states that a

sane person who is drunk to the point of being unable to form a rational judgement and

understanding as to the terms of the contract, cannot contract till such state of drunkenness

applies.9 Clearly, Nina was unable to understand and gave her acceptance during her state of

drunkenness.

Moreover, as they were friends meeting in a social setting one can question whether there

was an intention to create legal relations. In the case of Lucy v Zehmer10, the defendants

argued their conduct to be a joke made in state of drunkenness, through which they did not

intend to effect legal relations.11 The situation is different here, separate from the seriousness

of the defendants’ words and conduct in Lucy v Zehmer12 which a reasonable person would

believe, to create a contract.13 One could question whether a reasonable person would believe

that there was a contract due to Nina’s rather informal words; but even if this conclusion

8
Indian Contract Act, 1872.
9
Indian Contract Act, 1872.
10
Lucy v Zehmer [1954] 196 Va. 493.
11
Ibid.
12
Ibid.
13
Ibid.
could be made, the level of intoxication based on evidence is clearly in excess to the situation

in Lucy v Zehmer14. Balfour v Balfour?

Conclusion:

Owing to the state of Nina’s drunkenness it cannot be said that she was competent to contract

or had the intention to create legal consequences. Based on this, there is no contract between

the parties.

Issue:

Was there a valid contract / consideration between Nina and Anamika?

Rule:

Section 10 of the Indian Contract Act, 1872 required a lawful consideration for an agreement

to be a contract. Section 25 stands for the position that all contracts without consideration are

void, and Section 2(d) lays out acts or abstinence (done past/present/future) at the desire of

the promisor as consideration. 15

Analysis:

Based on the facts, we can assume that there was a valid contract for services between the

parties. Anamika’s consideration was the service provided in return for Nina’s remuneration.

In the case of Ramchandra Chintaman v. Kalu Raju16, the Court found that the promise for an

‘Inam Chithi’ alongside the remuneration for the ‘Vakalatnama’, as an agreement was

14
Ibid.
15
Indian Contract Act, 19872.
16
Ramchandra Chintaman v. Kalu Raju [1877] 2 Bom. 362
without consideration.17 The acceptance of the Vakalatnama as a pleader, in itself made the

plaintiff bound to render his best service.18 An analogy can be drawn to the current facts, as

there was already a remuneration provided to Anamika for the services rendered by her.

There was no provision of any fresh consideration by Anamika in lieu of the vase, and her

providing ‘best service’ was something she was already bound to. Pre-existing duty. Section

25(2), rest of the cases?

Conclusion

Due to the lack of fresh consideration flowing from Anamika, the agreement is void.

Issue:

Was there a valid agreement between Nina and Risha?

Rule:

Section 10 the Indian Contract Act, 1872 required a lawful consideration for an agreement to

be a contract and Section 2(d) lays out acts or abstinence (done past/present/future) at the

desire of the promisor as consideration. Section 25 stands for the position that all contracts

without consideration are void unless certain exceptions apply.19

Analysis:

One of the exceptions to the requirement of consideration is stated in Section 25(1) which

allows such agreements if they are made between parties who are in a near relation to one

another, out of natural love and affection, alongside being written and registered.20 The

17
Ibid.
18
Ibid.
19
Indian Contract Act, 1872.
20
Ibid.
parties have a blood relationship as mother-daughter, which is a near-relationship and can

easily be seen as being made out of love and affection due to Nina feeling sentimental due to

Risha’s marriage. However, it does not appear based on the facts that this promise was

written and registered.

Moreover, there is a presumption arriving from the case of Balfour v Balfour21, that in

domestic arrangements there is no intention to create legal relations unless evidence suggests

otherwise.22 In the case of Jones v Padavatton 23, owing to the mother-daughter relationship

between parties the court did not find there to be intention to create legal consequences as it

was a purely domestic arrangement.24 Similarly, one can argue that there was no intention to

be bound by legal consequences by the parties.

For the purpose of Explanation 1 of the Indian Contract Act, we cannot say that the gift was

actually made out as it does not appear clear on the facts that the vase was actually delivered

to Risha. 25

Conclusion:

As Risha did not provide any consideration and section 25(1) does not apply, the agreement

between them will be void.26 Also noted, is the potential lack of intention to create legal

relations between the parties in the present situation.

Issue:

Was there a valid contract between Nina and Ajay?

21
Balfour v Balfour [1919] 2 K.B. 571.
22
Ibid.
23
Jones v Padavatton [1969] 1 WLR 325.
24
Jones v Padavatton [1969] 1 WLR 325.
25
Indian Contract Act, 1872.
26
Ibid.
Rule:

Section 10 of the Indian Contract Act, 1872 states that if an agreement is made by free

consent of competent parties for lawful consideration and object it will be a contract.

Analysis:

Here, we assume that the parties were competent to contract. It does not appear contrary to

the fact that the consideration and object of the agreement were illegal. The contention raised

by Nina was that the consideration was not adequate. However, Explanation 2 of Section 25

of the Indian Contract Act, 1872 states that even if consideration is not adequate, an

agreement is not void if consented to freely by the promisor. There is not much on the facts

to say that Nina’s consent was not given freely. If such is the case, the agreement would be

valid. Should there not be free consent, then the Court may take inadequacy into

consideration. There was acceptance through the parties’ conduct- by giving and receiving

consideration. 27

Also relevant is the intention to create legal relations as the parties shared a brother-sister

relationship. However, the relationship is different between the recognized categories of

spouses and parent-children.28 Also, the agreement happened in a commercial context as it

was performed at Nina’s shop.29

Conclusion:

There was a valid contract between the parties even if consideration was inadequate,

provided that Nina consented freely. Nina will not be able to claim the vase back from Ajay.

17 Marks

27
Indian Contract Act (1872) s8.
28
Jones v Padavatton [1969] 1 WLR 325; Balfour v Balfour [1919] 2 K.B. 571.
29
Rose and Frank Co. v Crompton & Bros. Ltd. [1925] A.C. 445.
 Part B 

Advertisements are an essential feature of the commercial environment which allow sellers to

garner interest for their goods and services. As a general rule, advertisements do not

constitute offers and are often seen as ‘mere puffery’ in order to effect sale.30 This essay aims

to discuss the qualities of advertisements through various case laws which result in them

being elevated to an offer. 

Advertisements can take various forms- whether it be by display of goods, catalogues and

signage to newspaper, radio, television, and more recently other forms of digital

advertising.31 These are seen as an ‘invitation to offer’ or ‘invitation to treat’ as they consist

of statements or information made by sellers in order to invite interested parties to make

offers based on the information provided to them. A simple example of this would be seen in

the case of Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd32,

Leonard v. Pepsico [1999] 88 F. Supp. 2d; Carlill v. Carbolic Smoke Ball Co.,
30

[1893] 1 QB 256.
31
Leonard v. Pepsico [1999] 88 F. Supp. 2d.
32
[1952] 2 QB 795.
where the display of goods on shelves would amount to merely an invitation to the customer

to buy those goods; by creating offers themselves through taking goods to the cash desk. 33

What separates them from ‘general offers’, which are also made to the world at large is the

willingness to be bound, although in some circumstances it may be inferred. Section 2(a) of

the Indian Contract Act, 1872 (‘the Act’) defines a proposal which is the Indian equivalent to

the term ‘offer’ in English jurisdiction. It stipulates proposal as the willingness of a person to

act or abstain from acting with the objective or deriving the assent of the other person of such

act or abstinence. Offer signifies the final intention to enter a contract.34

Quite often sellers create claims and conditions as a part of their advertisements, thinking that

they lack the willingness to create enforceable claims for the performance of certain

stipulated conditions. However, it is noted that when specific conditions are created, which

can be performed by people; and when circumstances reveal the commitment and intention

behind these conditions, the Court can effect enforceable offers from what may appear as

mere puffs.35 A few such cases are discussed. In the case of Carlill v. Carbolic Smoke Ball

Co., the advertisement was seen as an express promise to pay 100 pounds; and when

someone in reliance of this promise comes forward and performs the stipulated conditions it

would result in a contract.36 The inconvenience a consumer would face in using the smoke

ball multiple times a day for a time period indicated ‘good consideration’ given by them.37

The fact that the company had chosen to deposit 1000 pounds in a Bank highlighting their

sincerity to the promise, clarified their intention of creating an offer intended to be acted

upon.38 Meanwhile, Lefkowitz v Great Minneapolis Surplus Store Inc created terms so ‘clear,

33
Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd.,
[1952] 2 QB 795
34
Indian Contract Act (1872) s2(a).
35
Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256.
36
Ibid.
37
Ibid.
38
Ibid.
definite, and explicit’ that no room for negotiation was left open.39 This would mean that a

promise was created, under which if the plaintiff performed conditions it would entitle them

to performance on part of the seller.40 Both parties acted in a manner that created a ‘sufficient

mutuality of obligation’ in order to form a contract of sale. 41

Different from the two situations above, Leonard v Pepsico stands for a position where

contracts lack such intention and commitment so as to bind the advertiser to the offer.42 The

Court rejected the ask for a military-use aircraft based on performance by the plaintiff in

response to an advertisement they found ‘obviously absurd’.43 The advertisement should

consist of some language of commitment or some invitation to take action by a party without

further communication which expresses their will or intention.44 And for them to be bound,

an objective test of reasonableness of the alleged offeree’s belief is to be applied.45 The Court

specifically found some situations where advertisements will not constitute offers, such as

acts of invitation and preliminary negotiations as well acts done in jest or without intention to

create legal relations. 46

In an attempt to reconcile the positions in these cases, the first two can be separated from

Leonard v PepsiCo47. In understanding whether an advertisement is an invitation to offer or

an offer the language used and the commitment of the parties through their words or acts are

essential.48 By creating specifically performable conditions, and acting with a certainty that

would indicate one’s willingness to perform one’s end of the bargain, an advertiser is

39
Lefkowitz v Great Minneapolis Surplus Store Inc [1957] 86 NW 2d 689.
40
Ibid.
41
Ibid.
42
Leonard v. Pepsico [1999] 88 F. Supp. 2d.
43
Ibid.
44
Ibid.
45
Ibid.
46
Ibid.
47
Ibid.
48
Ibid.
creating conditions where they would be bound by this willingness to act.49 Meanwhile, if

relying on an advertisement when performing its conditions is not sound from the perspective

of a prudent person, the advertiser will not be bound as no offer will be created. 50

Need to discuss it critically. Intention to create legal relation?

7 Marks

Total:24 Marks

49
Carlill v. Carbolic Smoke Ball Co., [1893] 1 QB 256; Lefkowitz v Great
Minneapolis Surplus Store Inc [1957] 86 NW 2d 689.
50
Leonard v. Pepsico [1999] 88 F. Supp. 2d.