Discuss the need and importance of Indian Contract Act by

coating 10 cases of Indian Contract Act 1872.

The Indian Contract Act, 1872[1] prescribes the law relating to contracts in India
and is the key act regulating Indian contract law. The Act is based on the
principles of English Common Law. It is applicable to all the states of India.. It
determines the circumstances in which promises made by the parties to a contract
shall be legally binding. Under Section 2(h), the Indian Contract Act defines a
contract as an agreement which is enforceable by law.

The Act as enacted originally had 266 Sections, it had wide scope and included.

 General Principles of Law of Contract – Sections 01 to 75

 Contract relating to Sale of Goods – Sections 76 to 123
 Special Contracts- Indemnity, Guarantee, Bailment & Pledge and Agency –
Sections 124 to 238
 Contracts relating to Partnership – Sections 239 to 266
At present the Indian Contract Act may be divided into two parts:

 Part 1: deals with the General Principles of Law of Contract Sections 1 to 75

 Part 2: deals with Special kinds of Contracts such as

1. Contract of Indemnity and Guarantee

2. Contract of Bailment and Pledge
3. Contract of Agency.
1. Offer 2(a): When one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the assent of that other to
such act or abstinence, he is said to make a proposal.
2. Acceptance 2(b): When the person to whom the proposal is made, signifies
his assent there to, the proposal is said to be accepted.
3. Promise 2(b): A Proposal when accepted becomes a promise. In simple
words, when an offer is accepted it becomes promise.
4. Promisor and promisee 2(c): When the proposal is accepted, the person
making the proposal is called as promisor and the person accepting the proposal
is called as promisee.
 5. Consideration 2(d): When at the desire of the promisor, the promisee or any
other person has done or abstained from doing or does or abstains from doing
or promises to do or to abstain from doing something such act or abstinence or
promise is called a consideration for the promise. Price paid by one party for
the promise of the other Technical word meaning QUID-PRO-QUO i.e.
something in return.
6. Agreement 2(e): Every promise and set of promises forming the
consideration for each other. In short,

7. Contract 2(h): An agreement enforceable by Law is a contract.

Therefore, there must be an agreement and it should be enforceable by law.
Contract = Agreement + Enforceable by Law
8. Reciprocal Promises 2(f): Promises which form the consideration or part of
the consideration for each other are called 'reciprocal promises'.
9. Void agreement 2(g): An agreement not enforceable by law is void.
10. Voidable contract 2(i): An agreement is a voidable contract if it is
enforceable by Law at the option of one or more of the parties there to (i.e. the
aggrieved party), and it is not enforceable by Law at the option of the other or
others.
11. Void contract 2(j): A contract which ceases to be enforceable by Law
becomes void when it ceases to be enforceable.

 Characteristics of a Contract :

 Enforceability by Law :

In section 10 of Indian Contract Act all the agreement if they are made by “free
consent” of the “parties competent” to contract for the “lawful consideration”
and “lawful object” is known as enforceability by law.

 Free consent :

According to Section 13, " two or more persons are said to be in consent when they
agree upon the same thing in the same sense (Consensus-ad-idem). According to
Section 14,
Consent is said to be free when it is not caused by coercion or undue influence or
fraud or misrepresentation or mistake.

 Lawful consideration :

According to Section 2(d), Consideration is defined as: "When at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or
does or abstains from doing, or promises to do or abstain from doing something,
such act or abstinence or promise is called consideration for the promise".
Consideration means 'something in return'.

 Parties competent to Contract :

Section 11 of The Indian Contract Act specifies that every person is competent to
contract provided:

1. He should not be a minor i.e. an individual who has not attained the age of
majority i.e. 18 years in normal case and 21 years if guardian is appointed
by the Court.
2. He should be of sound mind while making a contract. A person who is
usually of unsound mind, but occasionally of sound mind, can make a
contract when he is of sound mind. Similarly if a person is usually of sound
mind, but occasionally of unsound mind, may not make a valid contract
when he is of unsound mind.
3. He is not disqualified from contracting by any other law to which he is
subject.

 Lawful Object :

Section 23 of the Indian Contract Act clearly states that the consideration and/or
object of a contract are considered lawful consideration and/or object unless they
are

 specifically forbidden by law

 of such a nature that they would defeat the purpose of the law
  are fraudulent
 involve injury to any other person or property

 the courts regard them as immoral

IMPORTANCE OF INDIAN CONTRACT ACT, 1872

Law of contract is the most important branch of mercantile law. It
determines the circumstances under which promises made by the
contracting parties shall be legally binding on them. It specifies the
remedies that are available against a person who fails to perform the
contract entered into by him, in a Court of law. It also defines the
conditions under which the remedies are available.

The law of contract is essential to carry on trade or commerce smoothly, because it

introduces definiteness in the business transactions. It does not mean that it affects
only the business people. It affects the entire society. That is, it affects all of us in
one way or the other. Every one of us enters into a number of contracts from
morning to night. When a person purchases a book, or goes to cinema, or gives his
car to the mechanic for repair etc., he enters into a contract. Hence, the Contract
Act is considered as the most important factor in legal environment.

The law relating to contracts in India is contained in the Indian Contract Act, 1872.
The Act provides the general principles and rules governing contracts. All
transactions that relate to the agreements and obligations of the contracting parties
come under the purview of the Act. However, there are some contracts, which are
governed by separate Acts. They are — Partnership Act, Sale of Goods Act,
Negotiable Instruments Act, Insurance Act etc.
The Indian Contract Act deals with two aspects. The first aspect is the general
principles of the law. Secs. 1 to 75 deals with them. The second aspect is certain
special contracts such as indemnity, guarantee, bailment, pledge and agency. The
provisions relating to these contracts are contained in Secs. 124 to 238 of the Act.
As the Act is not exhaustive, in cases not provided for in the Act, or other
enactments relating to particular contracts, the High Courts may apply the Hindu
Law of contract to Hindus, and the Mohammedan Law of contract to
Mohammedans.
Need of Indian Contract Act 1872

Every country got the laws which govern the contracts executed in their
jurisdiction. Therefore, in India, we have Indian Contract Act, 1872 to govern the
contracts executed in India so that in the event of dispute, their legality or validity
can be established and judiciary will have uniform approach to see or judge the
cases and rule based on their merits.

This Act came into effect at the time when India was ruled by britishers means pre
independence era. Originally contracts governed under sales of goods act were part
of Indian Contract Act and only in 1930 provisions governing sales of goods were
separated from original Indian Contract Act in order to have smooth trade of
commodities. After Independence, India has adopted the Indian Contract Act 1872
as it is because not much changes felt necessary to the law makers at that point of
time.

To create a standard framework, set of rules and law that governs legal relations
between private individuals. Standardization, like any branch of law or civilized
society is necessary so that two people who are entering into a legal relationship
are aware of the consequences of the relation they’d be entering into and are not
left to guesswork. The rules that govern the conduct of the parties is thereby made
same for all persons bound by that law.

Every act has the motive of regulating the concerned objectives mentioned the act.
Similarly, even the Indian Contract Act, 1872 aims at regulating the contracts
registered under this act. It has all the provisions which regulate all the contracts,
reliefs in case the contract is rescinded and define the legality of the contract as
well

Case 1

Arjun proposes to sell his one acre land to Neha for one lac and both the
parties agree for the contract. which contract is this . Explain.

Arjun proposes sell his one acre land to Neha for one lac and the parties are
capable to do the contract by law. So this contract is valid. If arjun fails to deliver
the land Neha can sue him in the court for the delivery of land. On other hand
Neha fails to make the payment, Arjun can sue him for the recovery of payment.
According to Section-2(h) of Indian Contract Act, 1872,An agreement enforceable
by law is called a contract. In it, each party is legally bound by promise.

It can be made by three ways:

1. By Agreement: where one party proposes and other accepts.

2. Standard Form Contract: pre drafted forms, i.e one party sets the
conditions leaving no or little ability for other party to negotiate.
3. Promissory Estoppel: Legal inability of the person who made false
statement to deny it makes it an enforceable promise is called promissory
estoppel.

Case 2

A promise to B to sell his house after a month in 5 lakh rs but before the
completion of one month , one person dies . Now which contract does it
becomes ? Explain.

A promise to B to sell his house after a month in 5 lakh rs but before the
completion of one month , one person dies , now this contract becomes Void
Contract because it is enforceable by law at the time of formation but due to
subsequent changes or impossibility of act which are beyond control on party then
such contracts become void contract.

A void contract is one that is not legally enforceable. Certain circumstances render
some contracts immediately void based on some aspect of the law.

A void contract is one that is not legally enforceable. Certain circumstances render
some contracts immediately void based on some aspect of the law. With void
contracts, both parties are released from the contractual obligations set forth in the
original agreement.
Void contracts often center around illegal activities, are patently unfair, or violate
public policy. Other void contract situations might involve someone who is not
competent to enter into a legal contract or contain terms that are impossible to
complete. You might be able to salvage contracts that are void in only one or two
parts by a process known as severance.
After declaring a contract void, it will no longer be valid and cannot be enforced
under federal or state laws. A contract can become void when:
  It is unfairly one-sided.
 It goes against public policy.
 Its subject matter is illegal.
 It is impossible to perform.
 It unfairly restricts one side's actions (such as the right to work).
 One of the parties is not legally competent to enter into a binding contract

Case 3

Arijit entered into a contract to sing a song in a film produced by T-series. On

the scheduled day at the time of recording arijit remain absent without any
reason , now what should be done ahead and which contract comes into
action. Explain.

Arijit entered into a contract to sing a song in a film produced by T-series. On the
scheduled day at the time of recording arijit remain absent without any reason, now
it is on T-series to continue with the contract or to terminate the contract. And the
contract becomes voidable contract.

A contract is voidable when one or both parties were not legally capable of
entering into the agreement, such as when one party is a minor.

A voidable contract is a formal agreement between two parties that may be

rendered unenforceable for a number of legal reasons. Reasons that can make a
contract voidable include the following:

 Failure by one or both parties to disclose a material fact

 A mistake, misrepresentation or fraud
 Undue influence or duress
 One party's legal incapacity to enter a contract
 One or more terms that are unconscionable
 A breach of contract

A voidable contract is originally considered to be legal and enforceable but can be

rejected by one party if the contract is discovered to have defects. If a party with
the power to reject the contract chooses not to reject the contract despite the defect,
the contract remains valid and enforceable. Most often, only one of the parties is
adversely affected by agreeing to a voidable contract in which that party fails to
recognize the misrepresentation or fraud made by the other party.
Case 4

Mukesh from Delhi sign a contract to supply tobacco to Suresh in M.P , after
sometime M.P government bans tobacco in M.P. Now can muskesh supply
tobacco tp suresh ? Which contract does it become ? Explain.

No, now mukesh cannot supply tobacco to suresh and if he does so it will be
considered illegal. And it will become illegal contract as M.P government has
already banned tobacco in their state no one can now supply it legally.

An illegal contract is a contract that was made for an illegal purpose and,
consequently, violates the law. Contracts are illegal if the performance
or formation of the agreement will cause the parties to engage in activity that is
illegal. The illegality must relate directly to the subject matter creation of the
contract and not some intervening circumstance.

 Contracts for the sale or distribution of controlled substances such as drugs

or paraphernalia
 Contracts for illegal activities including prostitution or gambling
 Employment contracts for the hiring of underage workers
Sometimes a contract will deal with a subject matter that is not specifically
prohibited by law, but is nonetheless against public policy and principles of fair
dealing. These contracts will also fall under the category of “illegal contracts” and
are also unenforceable as they are against public policy.

If a contract is found to be illegal, it is unenforceable and as if it was never

formed. The court will usually leave the parties “as they are” at the time of
breach. Neither party can recover losses because the court is basically saying, “No
contract exists.”

Illegal contracts can present some challenges for both parties since recovery of
damages is usually not available. That is, a person who is involved in an illegal
contract runs the risk of loss because their activity is not covered by contract
protections. Therefore, it is usually necessary to contact a contracts attorney before
entering into any type of contract agreement.

Case 5

In October of 1964, Michelle Marvin claimed that actor Lee Marvin made an oral
agreement with her in regards to their living arrangements. She stated that the
couple agreed to pool together all earnings and share any property accumulated
while living together.
Michelle further explained that Lee agreed to be referred to as married publicly
despite the fact they would not be legally married. As they lived together, Michelle
offered her services as homemaker, housekeeper, cook, and companion. In
exchange, Lee was to make sure that Michelle's financial needs would be met for
the rest of her life.
Michelle claimed that she had met the terms of their agreement while she lived
with Lee between October of 1964 through May of 1970 when Lee forced her to
leave his home. Lee continued to provide for her until November of 1971 and then
refused further support.
Michelle filed a lawsuit, asking the court to determine her rights to the express
contract and the rights to her half of the property acquired during her relationship
with Lee, a small fortune which included over $1 million in motion picture rights.

Lee filed to dismiss the case on the following arguments:

 The contract created occurred during an "immoral" and "illicit" relationship

(living as an unmarried couple) and would "violate public policy" to enforce
it.
 Lee felt his earnings were the community property with his first wife,
despite the fact they lived apart during this time.
 Lee argued that the contract is not valid under California's Civil Code
section 5134, which said that marriage settlements should be made in
writing.
 He argued that the express contract made between nonmarital partners could
not be enforced.

The court struck down these arguments and ruled that:

 Living together and having sexual relations does not invalidate any
agreements they made about expenses, earnings or property.
 In regards to his second claim, the court felt that enforcing the express
contract made with Michelle in no way would impact his first wife.
 The court felt that the contract being disputed here did not fall within the
definition for marriage settlements.
 Furthermore, the court found that the original case should not have been
dismissed. The Supreme Court felt that the terms of Michelle and
 Lee's express contract was sufficient and the trial court could have rendered
"declaratory relief."

Case 6

An example of an implied contract in a court of law concerned a case wherein a

potential screenwriter believed one of his ideas had been stolen by a major
television network. Here, Larry Montz, a parapsychologist, submitted several ideas
to NBC network in the hopes at least one would be accepted for production into a
television show. NBC responded to Montz, indicating that it was not interested in
the ideas he had submitted. However, three years later, the network produced the
successful television show Ghost Hunters – the premise of which, Montz claimed,
was very similar to his idea.
Montz sued NBC for restitution on a federal copyright claim, alleging that NBC
had breached an implied contract with him, and that he was entitled to
compensation. Montz lost at the District Court level, with the court ultimately
siding with NBC. The Court held that copyright law preempted the claims of
breach of implied contract and breach of confidence, which were state law claims.
Montz appealed the District Court’s ruling, and was successful, with the 9th
Circuit reversing the lower court in a 7-4 decision.
The 9th Circuit referred to the fact that the California Supreme Court had
previously ruled that an implied contract is formed between a writer and a
producer. Within this contract, an idea is disclosed by the writer to the producer
under the premise that the writer will be paid for his idea, should it be used by the
producer. The main point noted by the Court is the difference between an
individual’s rights that are protected by a state cause of action, compared to those
rights that are protected by copyright. Specifically:
“[T]he contractual claim requires that there be an expectation on both sides that use
of the idea requires compensation, and that such bilateral understanding of
payment constitutes an additional element that transforms a claim from one
asserting a right exclusively protected by federal copyright law, to a contractual
claim that is not preempted by copyright law.”
To put it simply, Montz had a contract claim (“tort”), as well as a copyright
infringement claim. The court explained that, even if the copyright claim is
dismissed by a court of law, Montz still has a right to pursue the contract claim.
This decision was monumental in the fact that it broadened the application of the
definition of an implied contract. In other words, the decision made here protects
what could potentially be thousands of “little guys” who frequently submit their
ideas to major studios, in the hopes that one of those ideas will be a success. On a
similar note, this ruling served as motivation for studios to be more careful about
how they handle submissions from potential screenwriters, as well as to beef up
their legal team in the event they are sued for using an idea similar to one that was
submitted.
Case 7
A classic quasi contract circumstance may be created by the delivery of a pizza to
the wrong address—that is, not to the person who paid for it. If the individual at
the incorrect address fails to fess to the error and instead keeps the pizza, he or she
could be seen as having accepted the food, and thus be obliged to pay for it. A
court could then rule to issue a quasi contract that requires the pizza recipient to
pay back the cost of the food to the party who purchased it or to the pizzeria if it
subsequently delivered a second pie to the purchaser. The restitution mandated
under the quasi contract aims for a fair resolution of the situation.
Certain aspects must be in place for a judge to issue a quasi contract:

 One party, the plaintiff, must have furnished a tangible item or service to
another party, or the defendant, with the expectation or implication that
payment would be given.
 The defendant must have accepted—or acknowledged receipt of—the item
of value, but made no effort or offer to pay for it.
 The plaintiff must then express why it is unjust for the defendant to receive
the good or service without paying for it. In other words, the plaintiff must
establish that the defendant received unjust enrichment.

Considering the example above, the individual who ordered the pizza and paid for
it would have every right to demand payment from the individual who actually
received the pizza—the first individual being the plaintiff, the latter being the
defendant.

Case 8

John has been looking at a car he wants at a car lot, debating whether to buy
it. Finally deciding to make the purchase, John walks into the dealership,
signs a purchase contract, pays for the car in cash, and walks out with the
keys to the car. Which contract is this ? Explain.
This contract is called as Executed contract as in the contract all the parties to the
contract has performed their respective promises.

An executed contract is an agreement or contract between two or more parties that

has been signed and is binding to all parties involved. It is a fully implemented
contract. Executed contracts are easy to identify in real life. A person agreeing to
pay for a particular service or participating in it, either by signing a physical or an
online contract, is in a situation where an executed contract is created. By agreeing
to the terms of the document, whether it is implied or it is explicitly agreed upon,
the contract is executed accordingly. Also, the term applies to a contract that has
been completely fulfilled and it has come to a conclusion.

Case 9

John has been looking at a car he wants at a car lot, debating whether to buy
it. Finally deciding to make the purchase, John walks into the dealership,
signs a lease contract agreeing to pay a specified amount each month until the
car is paid off, or he returns the car at the end of the lease. Until the car is
either paid off or returned, the terms of the contract have not been fulfilled.
Which contract is this ? Explain.

This is an executary contract as in this contract overall or something still remains

to be performed by the parties.

An executory contract is a contract made by two parties in which the terms are set
to be fulfilled at a later date. The contract stipulates that both sides still have duties
to perform before it becomes fully executed. The contract is often in place between
a debtor or borrower and another party. To explore this concept, consider the
following executory contract definition. Before signing, or “executing” a contract,
it is very important for all parties involved to read and understand all of the terms
contained within. Some contracts contain legal jargon or information that may be
difficult to understand. In this case, having an experienced attorney review the
contract before signing helps protect the parties from entering into an agreement
they are unable or unwilling to fulfill.
 How Sales of Goods Act plays an important role for buyer and
seller. Discuss 5 cases of Sales of Goods Act.

Sale of commodities constitutes one of the important types of contracts under the
law in India. India is one of the largest economies and also a great country where
and thus has adequate checks and measures to ensure the safety and prosperity of
its business and commerce community. Here we shall explain The Sale of Goods
Act, 1930 which defines and states terms related to the sale of goods and exchange
of commodities.

he Sale of Goods Act, 1930 herein referred to as the Act, is the law that governs the
sale of goods in all parts of India. It doesn’t apply to the state of Jammu & Kashmir.
The Act defines various terms which are contained in the act itself. Let us see
below:

I. Buyer And Seller

As per the sec 2(1) of the Act, a buyer is someone who buys or has agreed to buy
goods. Since a sale constitutes a contract between two parties, a buyer is one of the
parties to the contract.

The Act defines seller in sec 2(13). A seller is someone who sells or has agreed to
sell goods. For a sales contract to come into existence, both the buyers and seller
must be defined by the Act. These two terms represent the two parties of a sales
contract.

A faint difference between the definition of buyer and seller established by the Act
and the colloquial meaning of buyer and seller is that as per the act, even the person
who agrees to buy or sell is qualified as a buyer or a seller. The actual transfer of
goods doesn’t have to take place for the identification of the two parties of a sales
contract.
II. Goods
One of the most crucial terms to define is the goods that are to be included in
the contract for sale. The Act defines the term “Goods” in its sec 2(7) as all types of
movable property. The sec 2(7) of the Act goes as follows:

“Every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and things attached to or forming
part of the land which are agreed to be severed before sale or under the contract of
sale will be considered goods”

As you can see, shares and stocks are also defined as goods by the Act. The term
actionable claims mean those claims which are eligible to be enforced or initiated
by a suit or legal action. This means that those claims where an action such as
recovery by auction, suit, refunds etc. could be initiated to recover or realize the
claim.

We say that goods are in a deliverable state when their condition is such that the
buyer would, under the contract, be bound to take delivery of these goods. Goods
may be further understood in the following subtypes:

(Source: SimplyNotes)

1. Existing Goods
The goods that are referred to in the contract of sale are termed as existing goods if
they are present (in existence) at the time of the contract. In sec 6 of the Act, the
existing goods are those goods which are in the legal possession or are owned by
the seller at the time of the formulation of the contract of sale. The existing goods
are further of the following types:

A) Specific Goods

According to the sec 2(14) of the Act, these are those goods that are “identified and
agreed upon” when the contract of sale is formed. For example, you want to sell
your mobile phone online. You put an advertisement with its picture and
information. A buyer agrees to the sale and a contract is formed. The mobile, in this
case, is specific good.

B) Ascertained Goods:

This is a type not defined by the law but by the judicial interpretation. This term is
used for specific goods which have been selected from a larger set of goods. For
example, you have 500 apples. Out of these 500 apples, you decide to sell 200
apples. To sell these 200 apples, you will need to separate them from the 500
(larger set). Thus you specify 200 apples from a larger group of unspecified apples.
These 200 apples are now the ascertained goods.

C) Unascertained Goods:

These are the goods that have not been specifically identified but have rather been
left to be selected from a larger group. For example, from your 500 apples, you
decide to sell 200 apples but you don’t specify which ones you want to sell. A seller
will have the liberty to choose any 200 apples from the lot. These are thus the
unascertained goods.

2. Future Goods
In sec 2(6) of the Act, future goods have been defined as the goods that will either
be manufactured or produced or acquired by the seller at the time the contract of
sale is made. The contract for the sale of future goods will never have the actual
sale in it, it will always be an agreement to sell.
For example, you have an apple orchard with apples in it. You agree to sell 1000
apples to a buyer after the apples ripe. This is a sale that has to occur in the future
but the goods have been identified already and the agreement made. Such goods are
known as future goods.

3. Contingent Goods
Contingent goods are actually a subtype of future goods in the sense that in
contingent goods the actual sale is to be done in the future. These goods are part of
a sale contract that has some contingency clause in it. For example, if you sell your
apples from your orchard when the trees are yet to produce apples, the apples are a
contingent good. This sale is dependent on the condition that the trees are able to
produce apples, which may not happen.

Case No. 1

Title of the Case:

Barrow, Lane & Ballard Ltd v Phillip Phillips & Co Ltd [1929] 1 K.B. 574

Summary of the Fact:

A sold to Y 700 bags marked “E.C.P.” and known as lot 7 of Chinese groundnuts,
lying in a specified warehouse. At the time of the sale there were, unknown to
parties, only 591 bags, and 109 bags having been stolen.

Issue:
1. Whether the non-existence of the goods at the time of the contract will
render the contract void?
2. Whether the seller is entitled to the full amount of money which was
agreed between the parties as the price of the goods in total?

Decision:
It was held that the contract was void. Therefore no duty or liability on the part of
either party shall accrue in this case. The seller is not entitled to the price and the
goods accepted by the buyer shall be returned.

Reasoning:
If, in a contract for the sale of specific goods, the goods have, without the seller’s
knowledge, perished at the time when the contract was made, the contract is void
according to section 6 of the Sale of Goods Act 1979 of United Kingdom.

Case No. 2

Title of the Case:

Couchman v. Hill [1947] K.B. 554.

Summary of Fact:
In the catalogue at a sale by auction a heifer was described as “unserved”. Both the
owner and the auctioneer confirmed this in answer to a question by the bidder. The
printed conditions of sale excluded liability for misdescription. But the plaintiff
buyer was an insistent sort of fellow and he asked both the auctioneer and the
defendant seller specifically if they could confirm what was in the catalogue,
namely, that the heifer was unserved. He received a positive answer from each. He
then bid for the heifer and was successful. Later it was found that the heifer was
pregnant and she died from carrying a calf at too young an age.

Issue:
1. Whether a breach of warranty has occurred?
2. Whether the buyer is entitled to damages for such breach?

Decision:
It was held that breach of warranty has occurred and the seller was liable in
damages for breach of warranty.

Reasoning:
The special warranty overrides the printed conditions of sale. Though there was an
exemption clause in the catalogue but the decision of the buyer to buy the heifer
depended upon the positive assurance given by the seller and the auctioneer about
her being unserved. Therefore, it amounts to a special warranty which was
subsequently breached. Therefore, notwithstanding the exemption clause the seller
is liable to pay damages. The exemption clause affects the catalogue but not the
oral assurance which is given by the seller and the auctioneer.

Case No. 3

Title of the case: Cehave N.V. v. Bremer Handelsgesellschaft mbH; the Hansa
Nord [1976] Q.B. 44.

Summary of the fact:

A written contract to sell fruit pellets contained the express stipulation, “shipment
to be made in good condition.” In fact, some of the pellets were not in good
condition when shipped. However, they were, on arrival, still fit to be used for the
purpose the buyer had intended and although they were worth less than they should
have been, they could still have been re-sold at a reduced price.

Issue:
1. Whether there is a breach of condition?
2. Whether the buyer is entitled to repudiate the contract and reject the
goods?

Decision:
It was held that there was no breach of condition and the buyer was not entitled to
repudiate the contract and to reject the goods. But the buyer is entitled to damages.

Reasoning:
The sellers were not in breach of the implied conditions as to fitness for purpose
and merchantable quality. The express stipulation in the contract was not a
condition and the sellers’ breach of it had not been serious enough to go to the root
of the contract. Therefore the buyers were entitled only to damages.

Case No. 4

Title of the case: Rowland v. Divall [1923] 2 K.B. 500.

Summary of fact:
Rowland bought a motor-car from Divall and used it for four months. Divall had
no title to the car, and consequently Rowland had to surrender it to the true owner.
Rowland sued to recover the total purchase price he had paid to Divall.

Issue:
1. Whether there is a breach of condition?
2. Whether the buyer is entitled to recover the total purchase price?

Decision:
It was held that there is a breach of implied condition as to title by the seller and
therefore the buyer is entitled to recover the purchase price in full, notwithstanding
that he used the car for four months.

Reasoning:
There was a breach of condition. Consequently the buyer can repudiate the contract
and reject the goods. But in this case the car was already taken by the real owner;
hence no question of rejection of goods arises. Therefore, the buyer can repudiate
the contract by taking back the full purchase money as damages due to the breach
of condition. The consideration had totally failed on the part of the seller. The use
of the car that he had had was no part of the consideration that he had contracted
for, which was the property in and lawful possession of the car, whereas what he
got was an unlawful which exposed him to the risk of an action at the suit of the
true owner.

Case No. 5

Title of the Case: Microbeads A.C. v. Vinhurst Road Markings [1975] 1

W.L.R.218

Summary of fact:

In a contract, made before May 1970 the seller sold the buyers some road marking
machines. Unknown to them, another company was in the process of patenting
their own road marking apparatus under the patents Act which gave them rights to
enforce the patent from November 1970. In 1972 this company brought a patent
action against the buyers. The buyers then claimed against the sellers for breach of
the implied condition as to title and breach of the implied warranty as to quiet
possession.

Issue:
1. Whether there was a breach of condition as to title?
2. Whether there was a breach of warranty as to quiet possession?

Decision:
It was held that the sellers were not liable for breach of implied condition. But the
sellers were liable in damages for breach of implied warranty as to quiet
possession.

Reasoning:
There was no breach of condition because at the time of the sale the sellers had had
every right to sell. The goods were not yet brought under patent. The contract was
made before May 1970 and the Patent became enforceable in November 1970.
Therefore, the contract is not affected under the Patent Act. On the other hand,
there was a breach of warranty as to quiet possession because that was an
undertaking as to the future.