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Carlill v. Carbolic Smoke Ball Co.

Facts
Facts
CarlillThe Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed
to prevent users contracting influenza or similar illnesses. The company's
advertised (in part) that:

“100 pounds reward will be paid by the Carbolic Smoke Ball Company to any
person who contracts the increasing epidemic influenza, colds, or any disease
caused by taking cold, after having used the ball three times daily for two
weeks according to the printed directions supplied with each ball. 1,000
pounds is deposited with the Alliance Bank, Regent Street, showing our
sincerity in the matter”.

After seeing this advertisement Mrs Carlill bought one of the balls and used it
as directed. She subsequently caught the flu and claimed the reward. The
company refused to pay. Mrs Carlill sued for the reward.

Legal Issue
1. Can one make a contract with the whole world?
2. How does one interpret vague terms?
3. Was the ad a "mere puff"?
4. Does performance of the conditions advertised in the paper constitute
acceptance of an offer?
5. Was there any consideration?

Judgment
At the trial stage the defendants denied that there was any contract between
them and the plaintiff; and alternatively, that, if there were any, it was void
as a wagering agreement. The trial court gave judgment in favour of the
plaintiff and the defendants appealed.

The appellate court observed as following on the issues raised and gave the
judgment in favour of Mrs. Carlill:
1. Can one make a contract with the whole world?
It is quite possible to make an offer to the world.

2. How does one interpret vague terms?


Whilst there may be some ambiguity in the wording this was capable of being
resolved by applying a reasonable time limit or confining it to only those who
caught flu whilst still using the balls.

3. Was the ad a "mere puff"?


The determination of a serious offer will be determined from the words and
actions. The statement referring to the deposit of £1,000 demonstrated intent
and therefore it was not a mere sales puff.

4. Does performance of the conditions advertised in the paper constitute


acceptance of an offer?
There was a unilateral contract comprising the offer (by advertisement) of the
Carbolic Smoke Ball company) and the acceptance (by performance of
conditions stated in the offer) by Mrs Carlill. In unilateral contracts there is no
requirement that the offeree communicates an intention to accept, since
acceptance is through full performance. Although as a general rule
communication of acceptance is required, the offeror may dispense with the
need for notification and had done so in this case. Here, it was implicit that
the offeree (Mrs Carlill) did not need to communicate an intention to accept;
rather acceptance occurred through performance of the requested acts (using
the smoke ball)

5. Was there any consideration?


There was consideration; the inconvenience suffered by Mrs Carlill in using
the smokeball as directed was sufficient consideration. In addition, the
Carbolic Smoke Ball received a benefit in having people use the smoke ball.

Mohoribibi vs Dharmodas Ghose (1903)


Brief facts of the case :
Dharmodas Ghose (a minor) executed a mortgage of his house in favour of
Brahmo Dutt to secure the repayment of Rs.20000 at 12% interest. He signed
a declaration that he was a major at that time. The agent who was acting on
behalf of Brahmo Dutt in this transaction knew that Dharmodas Ghose was
only a minor at that time but he did not disclose this fact to his master. Plaintiff
sued on the ground that minor agreement is void and mortgage must be
cancelled.

Questions of law :
1. Can a minor validly execute a mortgage deed?
2. What is the effect of the minor's misrepresentation of his age?
3. If the deed of mortgage was cancelled can the Court order the minor to
refund the amount to the lender?

JUDGEMENT:
The Privy Council rejected the defence of estoppel of the defendant stating
that the defendant's agent knew the real age of the minor at the time of
execution of the document and held that there was no estoppel. It was held
that the question whether a contract is void or voidable presupposes the
existence of contract within the meaning of the Act, and cannot arise in the
case of an infant (Section 10 & Section 11 of Contract Act). In this case court
held that the mortgage was entered into with a minor and hence void. Request
for repayment of the amount advanced to the minor as part of consideration
also turned down.
The court although took note of the s. 41 of the Specific Relief Act which says
“On adjudging the cancellation of the instrument the Court may require the
party to whom such relief is granted to make any compensation to the other
which justice may require” and s. 38 which provides in similar terms for a
case of rescission of a contract; but observed under the circumstances of this
case justice did not require them to order the return by the respondent of
money advanced to him with full knowledge of his infancy.
Khan Gul v. Lakha Singh (1928) - A minor fraudulently concealed his age
and contracted to sell a plot of land to another. The minor received the
consideration of Rs. 17, 500/- and then refused to fulfil his part of the bargain.
The other party prayed for possession or refund of consideration. The question
rose whether a minor who entered a contract through false representation
retain the benefits from the contract while refusing to perform his part. Since
a minor’s contract is void, specific performance was not granted. However,
the court ordered refund of the consideration.
The questions raised in this case were: (1) Whether a minor, who, by
falsely representing himself to be a major, has induced person to enter into a
contract, is estopped from pleading his minority to avoid the contract. (2)
Whether a party who, when a minor, has entered into a contract by means of
a false representation of his age, whether he be defendant or plaintiff, in a
subsequent litigation, refuse to perform the contract and at the same time
retain the benefit he may have derived therefrom.
Regarding the first question court has held that where an infant has
induced a person to contract with him by means of false representation that
he was of full age, he is not estopped (i.e. prevented) from pleading his infancy
in avoidance of the contract.
Regarding the second question the court observed that an infant though
not liable under the contract, may in equity, be required to return the benefit
he has received by making a false representation as to his age. It makes no
difference whether in such litigation he is plaintiff or the defendant.
In this case the court order the minor to refund Rs. 17,500 which he
had taken as advance payment, thus the scope of the doctrine of equitable
restitution was extended to cover cash also.

The Law Commission of India in its Ninth Report expressed its agreement with
case of Khan Gul. Further, the new Specific Relief Act, 1963 incorporated the
principle of restitution under Section 33.
Section 33 of the Specific Relief Act, 1963 greatly reduces the potential for
ambiguities and uncertainty in the matter. Section 33(1) seeks to restore the
parties to their original position to the extent possible. If a void or voidable
contract is cancelled at the instance of a party to the contract, the court may
require such party to restore the benefits received under the contract and to
such compensation as justice may require.
This discretion can also be exercised where the plaintiff is a minor. Thus, under
Section 33(1), a minor who is a plaintiff can be compelled to return all the
advantages and benefits received under the void contract as under the older
law.

However, the court will not compel any restitution by a minor (even if he is a
plaintiff) if:

a) the other party was aware of the fact of infancy and thus, was not deceived;

b) the other party was unscrupulous in his dealings with the minor;

c) the other party was overzealous to enter into the agreement that the
minor’s misrepresentation did not influence him;

d) the other party provided no material for the court to conclude that justice
required return of the money paid to the minor in the instant case.

Section 33(2) attempts to put the parties in the pre-contract position. Even if
the defendant is a minor and successfully resists a suit on grounds of his
incompetence and resultant void agreement, he can be compelled to account
for the advantage, the money or anything else received by him which benefits
him personally, such as education or training, or results in a benefit of a
permanent nature to his estate. It is implied in Section 33(2) (b) that the
English law as laid down in Leslie v Sheill is not applicable in India as it if for
it extends the doctrine of restitution to money matters.

Bhagwandas Goverdhandas Kedia v. M/s. Girdharilal Parshottamdas


& Co. (1966) – The plaintiffs filed a suit at Ahmedamad against the
defendants for compensation on the plea that the defendants had failed to
supply cotton seed cake which they had agreed to supply under an oral
contract negotiated between the parties by conversation on long distance
telephone. 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.
On the issue of jurisdiction raised by the appellants, the trial court found
that the Ahmedabad Court had jurisdiction to try the suit. The High Court
rejected the appellant’s revision petition whereupon by special leave, he came
to the Apex Court.

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.

The apex court observed as under:


The language of section 4 of the Indian Contract Act covers acceptance
by telephone, wireless etc. The communication of a proposal is complete when
it comes to the knowledge of the person to whom it is made but a different
rule is made about acceptance. Communication of an acceptance is complete
in two ways -(1) against the proposer when it is put in the course of
transmission to him so as to be out of the power of the acceptor; and (2) as
against the acceptor when it comes to the knowledge of the proposer.
In this case 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 his acceptance
thereafter. It may be that the gap of time was so short that one can say that
the speech was heard instantaneously, but if we are to put new inventions
into the frame of our statutory law we are bound to say that the acceptor
by speaking into the telephone put his acceptance in the course of
transmission to the proposer, however quick the transmission.
The court denied the applicability of the English Common law here
(which is capable of being moulded by judicial dicta) and restricted itself to
the language of the statute. It is contended that the communication of an
acceptance is complete as against the acceptor when it comes to the
knowledge of the proposer but that clause governs cases of acceptance lost
through the fault of the acceptor. In this case both sides admit that the
acceptance was clearly heard at Ahmedabad.
The court opined that the language of s. 4 of the Indian Contract Act
covers the case of communication over the telephone. The Contract Act does
not provide separately for post, telegraph, telephone or wireless. Some of
these were unknown in 1872 and no attempt has been made to modify the
law. It may be presumed that the language has been considered adequate to
cover cases of these new inventions. The communication of an acceptance is
complete as against the proposer, when it is put in a course of transmission
to him, so as to be out of the power of the acceptor. Thus, the court held that
the contract was complete at Khamgaon.

Union of India v. Maddala Thathaiah (1966) – This was an appeal filed by


the Railways against the order of the High Court. In this case the Railways
invited tenders for the supply of jaggery to the railway grain shops and
awarded the tender to Maddala Thathaiah. The Railways cancelled and closed
the contract without completion of full supply taking the plea that the Railways
reserved the right to cancel the contract at any stage during the tenure of the
contract without calling up the outstandings on the unexpired portion of the
contract as already mentioned in the contract. The High Court held that the
clause reserving the right in the appellant to cancel the contract was void. In
response appeal was filed in SC challenging the HC order.
The appeal was dismissed and the court observed that “any such
terms in a contract which destroys the contract itself according to
earlier terms is void as in that case there would be nothing in the
alleged contract which would have been binding on the appellant”.

Abdul Aziz v. Masum Ali – In this case the appeal arise out of a suit brought
by the plaintiffs against heirs of Muslim Abdul Karim who promised made a
subscription for repairing and reconstructing a mosque. But the cheque was
returned by Bank as it was out of date and in the meanwhile Muslim Abdul
Karim died. The plaintiffs demanded the subscription from his heirs. In this
case court has held that the subscription of Muslim Abdul Karim was a mere
gratuitous promise on his part and thus dismissed the claim.

Raghunath Prasad v. Sarju Prasad – The case was for recovery of the
amount of principal and interest due by the appellant to the respondents (the
plaintiffs) under a mortgage. The question in this case was whether the
contract was induced by undue influence (Section 16 of the Indian Contract
Act).
The court observed that to make a case for undue influence three matter
are to be dealt with. In the first place the relations between the parties to
each other must be such that one is in a position to dominate the will of the
other. Once that position is substantiated the second stage has been reached
– namely the issue whether the contract has been induced by undue influence.
Upon the determination of this issue a third point emerges, which is that of
the onus probandi. If the transaction appears to be unconscionable, then the
burden of proving that the contract was not induced by undue influence is to
lie upon the person who was in a position to dominate the will of the other.
And the orders stated above must be followed to avoid any error.
In this case the court has held that only relation between the parties
that was proved was simply that they were lender and borrower. In these
circumstances, even though the bargain had been unconscionable (and it has
the appearance of being so), a remedy under the Indian Contract Act does not
come into view until the initial fact to dominate the will has been established.

Satyabrata Ghose vs. Mugneeram Bangur & Co. (doctrine of


frustration of contract).
The dispute in the present matter pertained to the question as to whether a
contract for sale of land was discharged and came to an end by reason of
certain supervening circumstances which affected the performance of a
material part of it. The court while adjudicating the above issue was also
sought to distinguish the law relating to frustration of contract as applicable
in England and in India.

Material facts of the case


The defendant company scheme for development of on a large tract of land
owned by it for residential and in
furtherance of the scheme the entire area was divided into a large number of
plots for the sale of which offers were invited from intending purchasers. A
major portion of the land-appertaining to the scheme was requisitioned by the
Government due to war and the company decided to treat the agreement for
sale as cancelled giving the option of taking back the earnest money, or
deposit the balance of the consideration money and take possession after
requisite construction by the company on termination of the war. The plaintiff
refused to accept either of the two alternatives offered by the company and
stated categorically that the latter was bound by the terms of the agreement
from which it could not, in law, resile.
High Court gave decision in favour of the defendants and the appeal was filed
by the plaintiff against it. The learned Attorney General, who appeared in
support of the appeal, has put forward following three-fold contention on
behalf of his client.
1. That the doctrine of English law relating to frustration of contract, upon
which the learned Judges of the High Court based their Decision has no
application to India in view of the statutory provision contained in
section 56 of the Indian Contract Act.
2. That even if the English law Applies, it can have no application to
contracts for sale of land and that is in fact the opinion expressed by the
English ,judges themselves.
3. That on the admitted facts and circumstances of this case there was no
frustrating event which could be said to have taken away the basis of
the contract or tendered its performance impossible in any sense of the
word.

The apex court observed as following on the above contentions:


1. A contention in the extreme form that the doctrine of frustration as
recognised in English law does not come at all within the purview of
section 56 of the Indian Contract Act cannot be accepted.
2. It is true that in England the judicial opinion generally expressed is, that
the doctrine of frustration does not operate in the case of contracts but
the reason underlying this view is that under the English law as soon as
there is a concluded contract for sell of land interest of the buyer in the
property is created. According to the Indian law a contract for sale of
land does not of itself create any interest in the property which is the
subject-matter of the contract. The obligations of the parties to a
contract for sale of land are, therefore, the same as in other ordinary
contracts and consequently there is no conceivable reason why the
doctrine of frustration should not be applicable to contracts for sale of
land in India. This contention of the Attorney General must, therefore,
fail.
3. Having regard to the nature and terms of the contract, the actual
existence of war conditions at the time when it was entered into, the
extent of the work involved in the development scheme and last though
not the least the total absence of any definite period of time agreed to
by the parties within which the work was to be completed, it cannot be
said that the requisition order vitally affected the contract or made its
performance impossible.

Thus, the apex court held that the events which have happened in this case
cannot be said to have made the performance of the contract impossible and
the contract has not been frustrated at all and set aside the order of the High
Court and restored those of the courts below it i.e. in favour of the plaintiff.

The apex court also observed that the doctrine of frustration is really an aspect
or part of the law of discharge of contract by reason of supervening
impossibility or illegality of the act agreed to be done and hence comes within
the purview of S. 56 of the Indian Contract Act. The view that s. 56 applies
only to cases of physical impossibility and that where this section is not
applicable recourse can be had to the principles of English law on the subject
of frustration is not correct. English cases can have only a persuasive value,
and are only helpful in showing how English courts decided cases under similar
circumstances. Section 56 of the Indian Contract Act lays down a rule of
positive law and does not leave the matter to be determined according to the
intention of the parties. In cases, therefore, where the court gathers as a
matter of construction that the contract itself contained impliedly or expressly
a term, according to which it would stand discharged on the happening of
certain circumstances, the dissolution of the contract would take place under
the terms of the contract itself and such cases would be outside the purview
of S. 56 altogether. Although in English law these cases are treated as cases
of frustration, in India they would be dealt with under s. 32 of the Indian
Contract Act which deals with contingent contracts or similar other provisions
contained in the Act.

Hadley v. Baxendale
Plaintiffs operated a mill, and a component of their steam engine broke
causing them to shut down the mill. Plaintiffs then contracted with Defendants,
common carriers, to take the component to W. Joyce & Co. to have a new part
created. When delivery was delayed due to Defendants’ neglect, causing
Plaintiffs’ mill to remain closed longer than expected, Plaintiffs sued to recover
damages. The Defendant argued that he was unaware that the mill would have
to be closed during the delay and therefore the loss of profit was too remote.

Issues:
Under what circumstances a breaching party should be held liable for
consequential damages?

Held:
The Court of Exchequer declined to allow Hadley to recover lost profits in this
case, holding that Baxendale could only be held liable for losses that were
generally foreseeable, or if Hadley had mentioned his special circumstances in
advance. The mere fact that a party is sending something to be repaired does
not indicate that the party would lose profits if it is not delivered on time. The
court suggested various other circumstances under which Hadley could have
entered into this contract that would not have presented such dire
circumstances, and noted that where special circumstances exist, provisions
can be made in the contract voluntarily entered into by the parties to impose
extra damages for a breach.

The court further observed that it is obvious, in the great multitude of cases
of millers sending off broken shafts to third persons by a carrier under ordinary
circumstances, such consequences would not, in all probability, have
occurred, and these special circumstances were here never communicated by
the plaintiffs to the defendants. It follows, therefore, that the loss of profits
here cannot reasonably be considered such a consequence of the breach of
contract as could have been fairly and reasonably contemplated by both the
parties when they made this contract.

The court laid down the rule such a case as the present is this as follows:

Where two parties have made a contract which one of them has broken, the
damages which the other party ought to receive in respect of such breach of
contract should be such as may fairly and reasonably be considered either
arising naturally, i.e., 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. Now, if the special circumstances under
which the contract was actually made were communicated by the plaintiffs to
the defendants, and thus known to both parties, the damages resulting from
the breach of such a contract, which they would reasonably contemplate,
would be the amount of injury which would ordinarily follow from a breach of
contract under these special circumstances so known and communicated. But,
on the other hand, if these special circumstances were wholly unknown to the
party breaking the contract, he, at the most, could only be supposed to have
had in his contemplation the amount of injury which would arise generally,
and in the great multitude of cases not affected by any special circumstances,
from such a breach of contract. For, had the special circumstances been
known, the parties might have specially provided for the breach of contract
by special terms as to the damages in that case, and of this advantage it would
be very unjust to deprive them.
(Thus it led to reducing contractual remoteness to foreseeability)

The damages available for breach of contract include:


1. Those which may fairly and reasonably be considered arising naturally from
the breach of contract or
2. Such damages as may reasonably be supposed to have been in the
contemplation of both the parties at the time the contract was made.

If any special circumstances exists which were actually communicated to the


Defendant, the Claimant may recover any damages which would ordinarily
follow from a breach of contract under the special circumstances
communicated.

State of West Bengal v. M/S. B. K. Mondal and Sons


FACTS:
In addition to the construction work as stipulated under the contract, plaintiff
did some more construction work as requested by an officer of State of West
Bengal. Government though started using the constructed warehouse, yet on
account of the work not being recorded in form of contract as provided under
Article 299 of Constitution, denied any liability to pay for it.

ISSUES:
Whether there was any contract between the State of W.B. and plaintiff?
Whether the rule of Promissory Estoppel can be evoked?
Whether plaintiff can claim under S.70 of Indian Contract Act (ICA)?

HELD:
The trial Judge found that although there was no valid contract, the claim was
justified under s.70 of the
Contract and decreed the suit. The Court of appeal affirmed that decree. The
State appealed by special leave. The apex court held that the courts below
were right in holding that s.70 of the Contract Act applied to the case and the
appeal must fail.

Three conditions must be satisfied before S.70 could be invoked:


First, person should lawfully do something for another person or deliver
something to him;
Second, in doing so, he must not intend to act gratuitously;
Third, other person for whom something is done or to whom something is
delivered must ‘voluntarily’ enjoy the benefit thereof. Such other person must
have the option not to accept the thing and to return it. It is only when he
voluntary accepts the thing or enjoys the work done, that the liability u/s 70
arises. The person must not be incompetent to exercise his volition u/s 11.

S.70 does not deal with rights and liberties arising from contracts rather from
relations which resemble those created by contracts. Therefore, person
offering benefit to another could not compel for specific performance thereof
nor could ask for any damages for breach for there was never a contract
between the persons. But if the other person voluntarily enjoys the benefit
there from, former may claim either compensation or restoration u/s 70;
though such a claim for compensation is in no way to be treated as borne
contractually.

Further, “lawfully” u/s 70 must be read in accordance with S.23 of ICA. In


alternative “it indicates that after something is done or delivered by one
person to other who enjoys the benefit there from, a lawful relation is borne
which u/s 70 gives rise to a claim for compensation”.

After the plaintiff constructed the warehouse it was open to the State of W.B.
to have the benefit of it or to demolish it and instruct the plaintiff to take the
materials used therein. The government, by voluntarily enjoying the benefit
accruing from the constructed warehouses, became liable u/s 70. However, it
is urged by the defendant that allowing this cause of action would amount to
enforcing a contract in infringement of mandatory provisions of A.299 of the
constitution, rendering it invalid. But, the contention is not well founded for
the plaintiff did not allege any contract at all while claiming u/s 70. The cause
of action u/s 70 is independent of any contract. A.299 may forbid a
government to take work under a contract rendered invalid on account of its
not being in compliance with its terms, but does not make it unlawful for the
government to take the benefit of work done for it under no contract at all.

Held, further, that in construing a specific statutory provision such as s. 70 of


the Contract Act it would be unreasonable to seek assistance from English
decisions on statutory provisions contained in English law. The State
Government, as much as an ordinary citizen, must be subject to s. 70 of the
Contract Act and it was wrong to suggest that its position was like that of a
minor and, therefore, it was outside the scope of s. 70 of the Act.
The question in the instant case was whether the three requisites of s. 70 of
the Contract Act had been satisfied. There was no dispute that the
Government had taken benefit of the work it urgently needed the work and
put it to its use immediately. It was also clear that the respondent did not
intend to do the work gratuitously. Section 70 of the Contract Act applies
where its requisites exist, if it is necessary to imply a contract or contemplate
a quasi-contract for applying the section that must be done and neither s.
175(3) of the Government of India Act nor any other impediment can stand
in the way.

In Kanhaiya Lal Agarwal vs. Union of India (2002 SC), the appellant made
an offer of concessional rate if tender offered by him was finalised within a
short period. This offer was made at the time of submitting the tender. The
respondent also made a similar offer but after opening the tender. It was held
that the acceptance of tender offered by the appellant which was made at the
time of submission of tender itself, was not illegal or arbitrary.

Haridwar Singh v. Bagun Sumbrui (1973) - In this case the Bihar Forest
department held an auction for settlement of right to exploit a bamboo coup.
Though the reserve price fixed in the tender was higher than the bids received,
the appellant’s bid was accepted being the highest. When the matter for
finalization of contract was pending the appellant expressed his willingness to
take the settlement at the reserve price. In the meantime, another bidder filed
a petition to take the settlements of the coup for a price higher than the
reserved price. Finally the settlement of the coup with the appellant was
cancelled and settled with another bidder quoting higher price than reserved
price. The appellant sued the defendant stating that there was a concluded
contract when the bid of the appellant was accepted subject to confirmation
by the Government. The court in this case has held that the appellant himself
revoked the offer made by him earlier by proposing a higher bid subsequently.

Kedarnath Bhattacharji v. Gorie Mahomed (1886) – In this case to erect


a Town Hall at Howrah subscriptions were called for the purpose to obtain
necessary funds by public. On receipt of sufficient subscriptions a contract was
entered into with a contractor for the building the Town Hall. But as the
subscription list increased, the plan increased too, and the original cost
swelled up. The defendant was subscriber to this fund having signed name in
the subscription book. The defendant not having paid his subscription was
sued. In this case court has held that in this particular case persons were
asked to subscribe, knowing the purpose to which the money was to be
applied, and they knew that on the faith of their subscription an obligation
was to be incurred to pay the contractor for the work. Thus, under these
circumstances the contract arises and it is a perfectly valid contract and for
good consideration; it contains all the essential elements of a contract which
can be enforced by law by the persons to whom the liability is incurred.

Doraiswami Iyer v. Arunachala Ayyar (1935) – In this case the trustee


temple sought to recover a contribution promised by a subscriber to a
subscription list for the repairs of a temple. The question in this case was that
whether there was valid consideration. The court in this case has held that
there is no evidence that there was any request by the subscriber when he
put his name in the subscription list to the plaintiffs to do the temple repairs
or that there was any undertaking by them to do anything. The court opined
that this was a bare promise unsupported by consideration and dismissed the
suit.

Venkata Chinnaya Rau v. Venkataramaya Garu – In this case plaintiff’s


sister by a deed of gift transferred certain property to the defendant, her
daughter, with the directions that the she should pay an annuity to the
plaintiff. The defendant executed a writing in favour of plaintiff to pay the
annuity. Afterwards she declined to pay on the ground that no consideration
has moved from the plaintiff i.e. the promise. In this case court has held that
the plaintiff is entitle to collect annuity because consideration indirectly moved
from plaintiff’s sister to the plaintiff (this is known as doctrine of constructive
consideration).

Nawab Khwaja Muhammad Khan v. Nawab Husaini Begam (1910)–


Case was brought by the plaintiff a Muhammadan lady, against the defendant,
her father-in-law, to recover arrears of certain allowance, called kharch-i-
pandan, under the terms of an agreement executed by him prior to and in
consideration of her marriage with his son, both she and her future husband
being minors at the time. The defendant admitted the execution of the
document on which the suit was brought, but disclaimed liability principally on
two ground, namely, (1) that the plaintiff was no party to the agreement, and
was consequently not entitled to maintain the action, and (2) that she had
forfeited her right to the allowance thereunder by her misconduct and refusal
to life with her husband. The High Court in this case confined solely to the
question of the plaintiff’s right to maintain the action and decreed the
plaintiff’s claim. The His Majesty in Council on the appeal by the defendant
observed that by the agreement on which the present suit is based the
defendant binds himself unreservedly to pay to the plaintiff the fixed
allowance; there is no condition that it should be paid only whilst the wife is
living in the husband’s home, or that his liability should cease whatever the
circumstances under which she happens to leave it.

Ajudhia Prasad Vs. Chandan Lal (1937) - two minors borrowed money
under a mortgage deed. They were over 18 but less than 21 years of age,
but fraudulently concealed the fact that a guardian had been appointed for
them under Guardians and Wards Act. Question was whether the lender could
get a decree for the principal amount or sale of mortgaged property. It was
held that a mortgagee cannot recover the money lent by him to a minor on
the principle of restitution. The court refused to follow the enlarged view of
restitution and held that the grant of a money decree against the minor would
be tantamount to enforcing the minor’s pecuniary liability under the contract
which is void.

Subhash Chandra v. Ganga Prasad (1967) – Suit was filed for declaring
that a deed of settlement executed by the plaintiff’s father and the plaintiff’s
sister in favour of the plaintiff’s brother’s son in respect of certain properties
as fraudulent, collusive and invalid and for cancellation of the said document.
The High Court went on to presume from the great age of the donor that his
intelligence or understanding must have deteriorated with advancing years
and consequently it was for the court to presume that he was under the
influence of his younger son at the date of the gift. The Supreme Court based
on the English Common Law observed that there is no presumption of
imposition or fraud merely because a donor is old or of weak character.
Moreover, there is no presumption of undue influence in the case of a gift to
a son, grandson, or son-in-law, although made during the donor’s illness and
a few days before his death.
The SC observed in the present case there was practically no evidence
about the domination of plaintiff’s younger brother at the time of the execution
of the deed of gift or even thereafter. The circumstances that a grandfather
made a gift of a portion of his properties to his only grandson a few years
before his death is not on the face of it a unconscionable transaction.