Read 3 minutes

Understanding key contract law judgments is crucial for judiciary aspirants as these decisions shape the interpretation of the Indian Contract Act, 1872. Here are five landmark judgments that every judiciary aspirant should be well-versed with, along with the facts, ratio decidendi, and relevant sections of the Indian Contract Act:

1. Mohori Bibee v. Dharmodas Ghose (1903)

Facts:
Dharmodas Ghose, a minor, mortgaged his property to Brahmo Dutt, a moneylender. At the time of the transaction, Brahmo Dutt’s agent was aware that Ghose was a minor. Ghose later filed a suit, contending that the mortgage was void as he was a minor and thus incapable of entering into a contract.

Ratio Decidendi:
The Privy Council held that a contract with a minor is void ab initio under Section 11 of the Indian Contract Act, 1872. Since a minor lacks the legal capacity to contract, any agreement entered into by a minor is not enforceable in law.

Relevant Section:

Section 11: Competency to contract.

2. Carlill v. Carbolic Smoke Ball Co. (1893)

Facts:
The Carbolic Smoke Ball Company advertised that anyone who used their product as directed and still contracted influenza would be entitled to £100. Mrs. Carlill used the smoke ball as per instructions but still contracted influenza. She sued the company to claim the reward.

Ratio Decidendi:
The court held that the advertisement constituted a unilateral offer, which Mrs. Carlill had accepted by performing the conditions specified. This case laid down the principles of unilateral contracts and established that an advertisement can be an offer to the public if it contains a clear promise to pay, subject to conditions being met.

Relevant Section:

Section 8: Acceptance by performing the conditions of a proposal.

3. Balfour v. Balfour (1919)

Facts:
Mr. Balfour, while working in Ceylon, promised to pay his wife a monthly allowance while she stayed in England. Their relationship deteriorated, and Mrs. Balfour sued for the allowance. Mr. Balfour contended that the agreement was not legally binding.

Ratio Decidendi:
The court ruled that agreements between spouses are not contracts unless there is a clear intention to create legal relations. In this case, the court held that the agreement was purely domestic and lacked the intention to create a legal obligation.

Relevant Section:

Section 10: What agreements are contracts (must include intention to create legal relations).

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

Facts:
Dunlop, a tire manufacturer, made an agreement with Dew & Co., a dealer, that the dealer would not sell Dunlop’s tires below a specified price. Dew sold the tires to Selfridge, who resold them at a price below the agreed-upon minimum. Dunlop sued Selfridge.

Ratio Decidendi:
The court held that Dunlop could not sue Selfridge as there was no direct contract between them. This case established the principle of privity of contract, meaning only parties to a contract can sue or be sued on it.

Relevant Section:

Section 2(h): Definition of a contract (requires privity of contract).

5. Hadley v. Baxendale (1854)

Facts:
Hadley’s mill stopped due to a broken crankshaft. He contracted with Baxendale to deliver the shaft to a third party for repair. Due to a delay in delivery, Hadley suffered significant financial loss and sued Baxendale for breach of contract.

Ratio Decidendi:
The court ruled that the loss could not be recovered as it was not within the reasonable contemplation of both parties at the time of the contract. This case laid down the rule of remoteness of damages—only losses that are foreseeable or that have been communicated to the other party can be claimed.

Relevant Section:

Section 73: Compensation for loss or damage caused by breach of contract.

Conclusion

These five judgments are foundational for understanding key principles of contract law in India—competency, offer and acceptance, intention to create legal relations, privity of contract, and remoteness of damages. For judiciary aspirants, mastering these cases will significantly enhance their comprehension of how courts interpret and enforce contract law under the Indian Contract Act, 1872.

Related Posts-