Invitation to Treat

Advertisements: General Offer

Display of goods for sale
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Harvey v Facey [1893] AC 552
Will you sell us Bumper Hall pen, telegraph at what price
lowest price for the pen is 100
Powell v Lee [1908] 99 L Y 284
MC Pherson v Appanna [AIR 1951 SC 184]
wont accept less than 10,000.
Modes of Offer
Time table
Tenders and Auctions [Harris v Nickerson]
Restaurant menu card
ATM or vending machines
Termination of Offer
An offer can be withdrawn at any time
before it is accepted.
Distinction between lapse of offer and
revocation
Notice, Death, incapacity, lapse of time
Errington v Errington [1952] Father promises to son
and daughter in law that if they pay mortgage amount of the
property, the property would be theirs
Acceptance
Acceptance must be in toto: Mirror Image Rule
Manner/mode of acceptance [sec. 7]
By an act promise
Is Silence an acceptance ?
Felthouse v Bindley 1862 11 CB 869.: Uncle tells his nephew
If I hear no more from you, the horse in mine.
The nephew during an auction stated to the auctioneer to reserve the
horse for his uncle
Silence and thereafter a conduct of acceptance ?
LIC of India v Vasireddy AIR 1984 SC 1014
27
th
Dec. 1960 filing of proposal for LIC
Proposer died on 12
th
J an 1961
Can Acceptance be revoked ?
Acceptance: contd
Is Communication of Acceptance essential?
Acceptance through post: Mailbox rule
Adams v Lindsell [1818 1 B& Ald. 681.
- 2/9/1817, defendants offered to sell a quantity of wool at a
certain price and expected the answer by post, the letter
reached the plaintiff on 5
th
, the same day, he posted the
acceptance, which reached the defendants on 9
th
.
- The defendants waited till 7
th
and on 8
th
sold the same wool
to another person
- Is there an acceptance ?
Who can communicate the acceptance ?
When is a unilateral contract accepted ?
When does the mailbox rule apply?
Q. Is revocation of acceptance
possible ?
Henthorn v Fraser 1892
Secretary signed a note giving option to purchase for 14
days at P-750, next day withdraws through post at 12-1.00
pm, claimant posts the acceptance on the same day between
3-4 pm.
Which ever communication reaches
first is valid
Offer and Acceptance: Where the
contract is made?
It determines the time of forming the
contract
It stipulates the jurisdiction of the court;
and
It affixes the rights and obligations of
parties
Is the contract complete at the instance
and place of the acceptor or offeror?
Chapter-3: Capacity to
Contract
Two kind of persons
Natural
Legal or juristic person
Natural Person
Latent incapacity patent incapacity
[infancy, unsoundness, lunacy] [Bcos of Status: insolvency,
alien enemy, Married]
Legal person
Ultra vires winding up any other
Acts of sovereign, Corporate and companies
Liability of Minors in Contract
Sec. 68: if a person, incapable of entering
into a contract is supplied with necessaries in
life, the person who supplies is entitled to be
reimbursed
Doyle v White City Stadium 1935 1 KB
110,
Insanity/lunacy
Inder Singh v Parmeshardhni Singh
AIR 1957 Pat. 49
Mathews v Baxter [1873, L R 8 Ex. 132]
Other Incapacities
Political Status
Alien enemy
Foreign sovereigns and ambassadors
Mighell v Sultan of J ohore [1894, 1 QB 149]
[Also see sec. 86 of CPC which provides that in case of suit against
a foreign sovereign, the consent of the Central Govt is required]
Corporation
Ashbury Railways Carriage Co. V Riche 1875, 7 HL
653. [an agreement for purchase of railways which
was not mentioned in the MOA was held ultra vires]
Q. Does Ultra vires means void contract ? Are third
parties protected from such ultra vires acts ?
Other Incapacities
Married Status
Professional status: can an advocate sue
in contract, his client for fee ?
Chapter 4: Consideration
Sec. 10 requires Lawful consideration as an
essential factor for giving enforceability to an
agreement.
Sec. 25 an agreement without consideration is
void [nudum pactum]
Sec. 23 and 24 deal with circumstances in
which the consideration will be treated
unlawful
What is consideration
Money [need not be adequate]
An act, abstinence or promise
Must be real [White v Bluett]
Performance of a legal duty is no
consideration
Why Consideration ?
Consideration only at the desire of the promisor
Durga Prasad v Baldeo [Building a market place at the order of the
Collector, Defendants, a tenant made a promise to pay, later refused, was
held not liable to pay]
Consideration by the promisee or any other person
Chinnaya v Ramaya [old lady granted an estate to the daughter with a
direction that the daughter should pay an annuity of Rs 653 to the ladys
brother. On the same day the daughter executed a promise to pay to the
mothers brother Rs 653. She failed and claimed that the brother had not
given any consideration. Held: consideration by the mother is enough
consideration]
Consideration may be Past, Present or Future
Privity of contract
A person may not give any consideration, but is a party to the contract may
enforce the contract
A stranger to a contract cannot sue : Suppose A and B enter into a contract
for the benefit of C. The agreement between and A and B cannot be
enforced by C.
Tweddle v Atksinson : two father entered into an agreement to pay a new
couple money on their marriage. The couple cannot sue for enforcement of
the contract between the fathers.
Exceptions
Law of Trust/ Insurance
Klause Mittelbachert v East India Hotels [pilot, head injuries during a
dive at the swimming pool, contract between Lufthansa and hotel
Oberoi, can the pilot claim damages, though the consideration was not
moving from him ?]
Conduct, Acknowledgment or Admission
Narayani Devi v Tagore Commercial Corporation [If the defendants start
the payment and then withdraws]
Provision for marriage expenses or maintenance under family
arrangement/
Veeramma v Appayya [daughter agreed to take care of the father for
which the father promised to convey property to her. Later when the
father refused, the daughter sued successfully.
Sundaraja Aiyangar v Lakshmiammal [partition deed between brothers
to provide for marriage expenses of the sister, is enforceable by the
sister]
Subscription for a charitable purpose
Kedar Nath v Gorie Mahomed
Doctrine of Promissory Estoppel
Central London Property trust Ltd V High
Trees House Ltd 1947 KB 130.
Rule in Pinnel Case [promise to pay less
than the due amount]
D&C Builders v Rees 1966 2 QB 617
M P Sugar Mills v State of U PAIR 1979 SC 621
Forbearance to sue is good consideration
When Agreement without
consideration is valid
Natural love and affection
Compensation for past voluntary services
Promise to pay a time barred debt
Creation of Agency does not require
consideration
Free Consent
Coercion: committing or threatening to commit
an act forbidden by IPC
Ranganayakamma v Alwar Setti [Adoption of son by a
widow]
Chikkan Ammiraju v Chikkam Seshama [Threat to
commit suicide]
Economic duress
B& S Contracts & Designs v Victor Green Publications Ltd
1984 ICR 419 [erecting a stand, contractor claimed labour
strike and increased amount]
Undue Influence: a Specie of fraud
Taking of unfair advantage [sec. 16]
Misuse of influence
Abuse of trust and confidence
Connotation of impropriety
Classes of undue influence
Actual presumed undue influence
Based on proof
What constitute undue influence
Relationship of parties is such that one party is
in a position to dominate the will of the other.
Real and apparent authority fiduciary relationship mental capacity, age,
illness
The party in the dominating position uses that
position to obtain an unfair advantage
Presumption of undue influence:
position of domination
Parent and child
Guardian and ward
Trustee and beneficiary
Solicitor and client
Doctor and patient
Spiritual adviser and disciple
The list does not include husband and wife nor
does it include principal and agent, banker and
customer or teacher and student
Illustration
Tate v Williamson 1866 LR 2 Ch. App 55
Allcard v Skinner 1887 36 Ch.d 145
Rebutting the presumption of
undue influence
Whether the victim had independent and qualified
advise ?
Solicitors must give fair and disinterested advise
He must ensure that the decision of his client is proper and
to his benefit
The victim understood the nature and consequences
of the transaction ?
Disclosure of material facts
Whether he was able to arrive at independent and
informed decision/judgment.
Objective and conduct of parties
Fraud
False statement of facts
Mere silence is no fraud
Duty to speak by law
P Sarojam v LIC [aliments were not disclosed in
the form]
Rajinder Singh v Pomilla [premartial status of a
party was a material fact]
Active concealment
Shri Krishna v Kurukshetra University
Misrepresentation
Fraudulent Negligent Innocent
Rescind claim damages[tort] no claim
Misrepresentation
Conditions [sec 12 (2) of the Sale of goods Act] Warranties
A representation is a statement made at the time of the contract by way of
affirmation, denial or description or presentation of a material fact to
contract.
It is more than the intention of parties and different from opinion
Smith v Land & House Property Corp (1884) 28 Ch D 7
The plaintiff put up his hotel for sale stating that it was let to a 'most desirable
tenant'. The defendants agreed to buy the hotel. The tenant was bankrupt. As a
result, the defendants refused to complete the contract and were sued by the
plaintiff for specific performance. The Court of Appeal held that the plaintiff's
statement was not mere opinion, but was one of fact.
Representation
Must relate to fact and not law
Must relate to Fact and promise
There must be a representation or assertion
It must be made with the knowledge that it is false or without
belief in its truth
It must be acted upon
Damages must be suffered: No fraud no damages [sec. 17 read
with sec. 19 of ICA]
Ex: Prospectus of a company
Sec. 55 of the TP Act requires the seller of immovable propery
to disclose to the buyer material defects in the property
Implied representation
Spice Girls v Aprilia World Service BV 2002 Ch D
A entered an contract for endorsing product [scooter] with
Spice Girls [a group of 5]. Within two weeks, Ginger
spice left the group, making the product vulnerable in the
market. The Pop group did not disclose this to the Agency.
Was the group split before endorsement ?
Was there an intention to split ?
Was there a misrepresentation that the group was together ?
Held misrepresentation. [Carbolic smoke ball company]