Plaintiff offered to get certain goods supplied at Ahmedabad to defendants who accepted the offer at Khamgaon.

On defendants failure to supply

requisite goods, plaintiff sued them at Ahmedabad. Dispute arose as to where was contract formed- at Khamgaon where acceptance was given by
defendants or at Ahmedabad where acceptance was received by plaintiffs.
CONTENTION(S):
Defendants contended that according to the section 2, 3 and 4 of ICA, the place where the offer is accepted is the place where the contract is made
and therefore Ahmedabad trial court did not have the jurisdiction to try the suit.
HELD:
Majority Judgment:
An agreement does not result from mere intent to accept the offer: Acceptance must be by some external manifestation (either by speech, writing,
conduct in further negotiations, or any other overt act) accompanied by its communication to the offeror (Brogden v. Metropoliton Rly Co.) unless
expressly waived by him or impliedly by the course of negotiation to the contrary (Carlill v. Carbolic Smoke Ball).
Entores v. Miles: An offer was made from London by telex to a party in Holland and was duly accepted through telex; the question arose as to which
court had jurisdiction to try the dispute between the parties. Denning L.J. observed that in case of instantaneous communications between the parties,
i.e. where parties are in each others presence or though separated in space are in direct communication with each other as for example by telephone
or telex, contract is complete when the acceptance of offer is duly received by the offeror and the contract is formed where such acceptance is
received.
Adams v. Lindsell: An offer was made by defendants by post to sell certain goods. Though, the acceptance was duly posted by plaintiff but, it
reached defendants nearly after a week when latter had already sold the goods to a third party. Court ruled that when parties arent in each others
presence and communicate long distance either by post or telegram, both parties get bound by contract as and when the acceptor puts the letter of
acceptance in the course of transmission to offeror so as to be out of his power to recall (postal rule).
But in India, according to S.4 of ICA, application of Postal Rule results that acceptor is bound only when the acceptance comes to the knowledge of
the proposer while proposer becomes bound much before when letter was put in course of transmission to him as to be out of the power of acceptor
to recall. S.4 doesnt imply that the contract is formed qua the proposer at one place and qua the acceptor at another place. The gap of
time between posting of acceptance and its coming into knowledge of proposer can be utilised by acceptor in revoking his acceptance by speedier
communication which will overtake the acceptance (S.5 of ICA)
The postal rule came into existence in Adams case for two prominent reasons:
The rule was based on commercial expediency/empirical grounds: for if the defendants were not bound by their offer till the acceptance by the
plaintiffs is not received by them, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received
their acceptance and had assented to it; and so it might go on ad infinitum.
Secondly, if the contract is not finally concluded till the intimation of the acceptance by the promisee to the promisor, then there may be instances that
the promisor will deny the receiving of any acceptance even though he may have received it. This may lead to instances of fraud and also delay in
commercial transactions. Further, the satisfactory evidence of posting a letter is generally available as against of its having been received.

He held that the contract act does not expressly deal with the place where a contract is made. The conversation over telephone is
analogous to the conversation when the parties are in presence of each other, wherein, the negotiations are concluded by instantaneous
speech and therefore communication of the acceptance becomes a necessary part of the contract and the exception to the rule on grounds
of commercial inexpediency is inapplicable.

Further, in case of correspondence by post or telegram, a third agency intervenes which is responsible for effective transmission of letters
at every instance, however, in case of telephonic conversation, once the connection has been established, there is no need of any third agency to
transmit the correspondence between the parties.
Hence, as against cases of correspondence by post or telegram, in present case where there was correspondence by telephone, contract was formed
when acceptance was duly communicated to the offeror and hence, at Ahmedabad.
Dissenting Opinion (J. Hidayatullah):

Stressing on literary interpretation of Indian Contract Act and not be moulded by English dicta, Hidayatuallah held that when acceptor put
his acceptance in transmission (in form of telephonic conversation) to proposer as to be out of his power to recall (According to section 4 of the
Indian Contract Act 1872), communication of acceptance was complete and proposer was bound by contract so formed, however quick the
transmission.
It was obvious that the word of acceptance was spoken at Khamgaon and the moment the acceptor spoke his acceptance he put it in course of
transmission to the proposer beyond his recall. He could not revoke acceptance thereafter, albeit the gap of time was so short that one can say that the
speech was heard instantaneously.
CONTRAST:
Q 1. Where owing to some fault in telephone connection, the proposer could not hear the acceptor who in turn knows or has reason to believe that the
proposer hasnt heard the acceptance, is the contract formed? Compare the situation with the voice of acceptor drowned in noise from an aircraft when
speaking of his acceptance to proposer standing in front of him.

A 1. Communication in contemplation of S.3 of ICA means effective or reasonable communication. In case of telephonic conversation or face-to-face
correspondence, contract is formed only when communication of acceptance of offer is duly complete to the offeror. In present case therefore, when
the acceptor knows that communication of acceptance, which was necessary for him to do, parties cant be objectively taken as ad-idem and no
contract results.
Q 2. If in facts of Q1, due to some fault at the proposers telephone end, the acceptance is not heard by him and he does not ask the acceptor to
repeat his acceptance while the acceptor reasonably believes that the acceptance is communicated, will there be a valid contract?
A 2. The application of objective test will result into existence of valid contract in this case. A reasonable person in the position of acceptor would
believe that offeror has heard the acceptance and that the contract is formed. Therefore offeror should be bound by contract for his own fault in not
asking again the acceptor. In alternative, as Lord Denning said in Entores v. Miles, offeror in such circumstances is clearly bound, because he will be
estopped from saying that he didnt receive the message of acceptance because of his own fault.

Sec 16. 1[ " Undue influence" defined.(1) A contract is said to be induced by" undue influence where the relations subsisting between the parties are
such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an
unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a
position to dominate the will of another(a) where he holds a real or apparent authority over the other or where he stands in a fiduciary relation to the
other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by
reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the
transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving
that such contract was not induced by undue influence shall lie upon the person in a position to dominate the
will of the other. Nothing in this sub- section shall affect the provisions of section Ill of the Indian Evidence Act,
1872 . (1 of 1872 .) Illustrations
(a) A having advanced money to his son, B, during his minority, upon B' s coming of age obtains, by misuse of
parental influence, a bond from B for a greater amount than the sum due in respect of the advance. A employs
undue influence.
(b) A, a man enfeebled by disease or age, is induced, by B' s influence over him as his medical attendant, to
agree to pay B an unreasonable sum for his professional services. B employs undue influence.
(c) A, being in debt to B, the money- lender of his village, contracts a fresh loan on terms which appear to be
unconscionable. It lies on B to prove that the contract was not induced by undue influence.
(d) A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines
to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a
transaction in the ordinary course of business, and the contract is not induced by undue influence.]

casesPlaintiff claimed that the will deed of his father conveying the entire property to defendant, plaintiffs nephew, was brought about by exercising
undue influence over the donor. To the contrary, the deed details that the gift of the property was made out of natural love and affection between the
donor and defendant. Further, after the conveyance of the property to defendant, when some suit arose on the independent settlement deeds executed
upon the transferred property (before the death of the plaintiffs father,i.e. donor), donor explicitly filed the statement that he no longer holds any
interest in the property. Nevertheless, High Court assumed the presence of undue influence vitiating the deed on account of the relations between the
donor and defendant being of a grandparent and grandchild.

ISSUE: Whether the deed of gift was brought about by the undue influence?

HELD:

U/s 16 of Indian Contract Act (ICA), the first thing to prove so as to claim undue influence is the existence of such a relationship between the parties
that one is in a position to dominate the will of the other. But mere relationship of such a nature will not raise any presumption of undue influence;
for it must be further proved that the defendant had used such a relation to obtain an unfair advantage over the plaintiff.

U/s 16(2)(a) the phrase real or apparent authority can be taken to mean relations of the parties such that one naturally relied on the other for
advise and the latter was in a position to dominate the will of the first in giving it. The Court observed that no presumption of undue influence arises in

case of gift to a son, grandson, son-in-law, although made during the donors illness or old age. Though, the relationship of solicitor-client, spiritual
advisor and devotee, doctor-patient, parent and child are those in which such a presumption arises.

The statement filed by donor that he no longer holds any interest in the property shows that he was fully conscious and consented the transfer of
property to the defendant. Further, the fact that donor was actively involved in the management of his property clearly proves that no undue influence
was exercised over him.