Beruflich Dokumente
Kultur Dokumente
A Case Study
On
Bell v Lever Brothers
Mugdha Tomar
IInd Semester
Sec - B
201263
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Contents
Introduction - What is a Contract ?....................
3
Essentials For a Valid Contract..
3
Agreement..
3
What Agreements are Contracts ?......................
4
Consent Definition of Consent [S.13]
4-5
Free Consent Defintion of Free Consent[S.14]..
5
Free Consentdefined.............
5- 6
Mistake Definition of Mistake
6- 7
Section 21 of Indian Contract Act,1872
7
Effect of Mistake as to Law..
7
Section 22 of Indian Contract Act, 1872..
7
Kinds of Mistake [S.20]
8-10
Bell v Lever Bros Ltd
Facts of the Case..
11
Issues Involved in the Case.
11
Proceedings & Judgement
11-12
Other Cases Where Bell v Lever Brothers Have Been Referred
to...
12-13
Conclusion.
14
Bibliography..
15
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Introduction
What is a Contract ?
The term contract is defined in Section 2(h) of the Indian Contract Act,1872,as follows:
An agreement enforceable by law is a contract;
Thus for the formation of a contract there must be
(1) An agreement,and
(2) The agreement should be enforceable by law 1
Agreement
Agreement is defined as every promise and every set of promises forming the
consideration for each other.And a promise is defined as an accepted proposal.Section 2(b)
says: A proposal,when accepted,becomes a promise.This is another way of saying that an
agreement is an accepted proposal.The process of definition thus comes down in the
following manner: A contract is an agreement; an agreement is a promise and a promise is an
1Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg - 3
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accepted proposal.Thus every agreement, in its ultimate analysis, is the result of a proposal
from one side and its acceptance by the other.2
Nothing herein shall contained shall effect any law in force in [India] and not hereby
expressly repealed, by ehich any contract is required to be made in writing or in the presence
of witnesses,or any law relating to the registration of documents.
Thus every contract is an agreement, but every agreement is not a contract.An agreement
becomes a contract when the following conditions are satisfied:
1.
2.
3.
4.
2 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg - 3
3 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg - 4
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Consent
Definition of Consent[S.13]
Section 13 of the Indian Contract Act,1872 defines Consent as follows;
Two or more persons are said to consent when they agree upon the same thing in the same
sense.
An agreement upon the same thing in the same sense is known as true consent or consensus
ad idem,and is at the root of every contract.
This seems to have been picked up fro apassage in the judgement of Lord HANNEN in the
famous case of Smith v Hughes.4
It is essential to the creation of a contract that both parties should agree to the same thing in
the same sense.Thus if two persons enter into an apparent contract conserning a particular
person or ship,and it turns out that each of them,misled by a similarity of name,had a
different person or ship in mind,no contract would exist between them.5
Free Consent
Definition of Free Consent [S.14]
According to Section 10 of the Indian Contract Act,1872 free consent is an essential
requirement of a contract.Section 14 of the Indian Contract Act,1872 defines free consent.
Free
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Coercion is the commiting,or threatening to commit,any act forbidden by the Indian Penal
Code(45 of 1860), or the unlawful detaining, or threatening to detain, any property, to the
prejudice of any person whatever, with the intension of causing any person to enter into an
agreement6
(2) Undue influence, as defined in Section 16,
A contract is said to be induced byundue 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 unfair advantage over the other.7
(3) Fraud, as defined in Section 17,
Fraud means and includes any of the following acts committed by a party to a contract,or
with his connivance, or by his agent, with intent to deceive another party thereto or his agent,
or to induce him to enter into the contract :
The suggestion, as a fact, of that which is not true by one who does not believe it to be
true;
The active concealment of a fact by one having knowledge or belief of the fact;
A promise made without any intention of performing it;
Any other act fitted to deceive;
Any such act or omission as the law specially declares to be fraudulent.8
77 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 180
8 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg - 212
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Mistake
Definition of Mistake
There the mistake does not defeat consent, but only misleads the parties,Section 20 shall
apply.This section provides:
Where both the parties to an agreement are under a mistake as to a matter of fact essential to
the agreement,the agreement is void.
Example A, agrees to buy from b a certain horse.It turns out that the horse was dead at the
time of the bargain, though neither party was aware of the fact.The agreement is void
9Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg - 200
10 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 227 -228
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Example
A and B make a contract grounded on the erroneous belief that a particular debt is barred by
the Indian law of limitation;the contract is not voidable.11
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contract.The defendants agent intended to contract only with Ss brother and not with S and
S knew this.14
The defendant bought of the plaintiff a quantity of Surat Cotton to arrive ex Peerless from
Bombay.Two ships with the name Peerless sailed from Bombay, one in October, which the
defendant had in mind and the other in December which the plaintiff had in mind.The court
14 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 229
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said: the defendant meant one Peerless and the Plaintiff another.That being so,there was no
consensus ad idem and therefore no binding contract.16
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land.The plaintiff agreed to it and placed his thumb impression upon a deed which was in
fact a gift of the land.The court held the deed to be void ab intio.21
Mistake as to Price
Important Case
BankuBehariSahu v.KrishtoGobindo(1930)22
Mistake as to Substance
Important Case
Sheikh Bros Ltd v. Ochener(1957)23
The appellant company, the lessor of a forest in Kenya,granted a licence to the respondent
to cut, process and manufacture all sisal growing in the forest.The respondent to cut, process
and manufacture and deliver to the appellant 50 tons of sisal fibre per month.But it turned iut
that the leaf potential of the sisal area was not sufficient to permit the manufacture of the
stipulated quantity and the respondent was sued for the breach. The agreement was helf to be
void.Their Lordships, relying upon the statements from the landmark case of Bell v Lever
Bros,came to the conclusion that having regard to the nature of the contract, which was a
kind of joint adventure, it was the very basis of the contract that the sisal area should be
capable of producing an average of 50 tons a month throughout the term of licence, and the
mistake was as to a matter of fact essential to the agreement.24
21 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg
245
22 (1930) 30 Cal 433
23 1957 AC 136 (PC)
24Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg
239
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Mistake as to Quality
Definition of Quality:
Blacks Law Dictionary defines quality as
1. The particular character or properties of a person,thing or act,after essential for a
particular result <she has leadership> <greed is a negative quality
2. The character or degree of excellence of a person or substance,esp. in comparison
with other <the quality of work performed under the contract
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The plaintiffs contended that they agreed to pay compensation on the assumption that the
service contract was one which could not be terminated without compensation, whereas the
true fact was that the defendant could have been dismissed without compensation.Referring
to this, Lord ATKIN said:
I have come to the conclusion that it would be wrong to decide that an agreement to
terminate a definite specified contract is void if it turns out that the agreement had already
been broken and could have been terminated otherwise.The contract of release is the identical
contract in both cases, and the party paying for release gets exactly what he bargains for.It
seems immaterial that he could have got the same result in another way, or that if he had
known the true facts he would not have entered into the bargain.
26 Bhangia R.K,Contract I ,Faridabad :Allahabad Law Agency(2009), Pg - 187
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The mistake was mutual as the jury found out that at the time of negotiating the compensation
agreement the defendant had not in mind his breaches of duty.28
Have Been
Referred To
English Case
Great Peace Shipping Ltd v Toavliris Salvage International Ltd.
[2002] 4 ALL ER 689 (CA)
In this case two vessels were hired to reach for a stricken vessel to save the life of its crew.It
was believed at the time of contract that the two vessels were in close proximity to each
other, located at a distance of 35 miles.Unknown to both the parties, the two vessels were at a
distance of 410 miles and it would have taken 39 hours for the rescue vessels to reach the
stricken vessel.The defendants looked for other vessels which they got cancelled the contract.
The Court of Appeal applied the case of Bell v Lever Brothers Ltd here
It was held to be a breach of the contract.The defence of mistake failed.The court said that the
mistake as to the diatance between the two vessels had not rendered the services that the
distant vessel was able to provide something essentially different from those which t he
parties had agreed. The vessel would have arrived in time to provide several days of escort
service.The fact that the vessels were further apart than both the parties had appreciated did
not mean that it was impossible to perform the contractual venture.29
Indian Case
Seikh Bros Ltd v Ochener
1957 AC 136(PC)
28 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 241 ,242
29 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 242
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In this case the appellant company, the lessor of a forest in Kenya, granted a licence to the
respondent to cut,process and manufacture all sisal growing in the forest. The
respondent, in return, undertook to manufacture and deliver and them to the appellant 50
tons of sisal fibre per month. But it turned out that the leaf potential of the sisal area was not
sufficient to permit the manufacture of the stipulated quantity and the respondent was sued
for the breach.
The agreement was held to be void. Their Lordships, relying upon the statements in Bell v
Lever Bros Ltd, came to the conclusion that having regard to the nature of the contract,
which was a kind of joint adventure, it was the very basis of the contract, that the sisal area
should be capable of producing an average of 50 tons a month throughout the term of the
licence, and the mistake was to a matter of fact essential to the agreement.30
Conclusion
Thus the case Bell v Lever Brothers Ltd (1932) as seen is a landmark case as it has been
referred/cited in many judgements be it Indian or English cases.This shows the prominence
and the importance of the case and the judgement thus given.I solely agree with the
judgement given in the case that mere silence on the part of Bell did not amount to Fraud and
he did not owe any duty to disclose this fact and also I agree that during the time of
negotiating the compensation agreement the defendant that is Bell did not had in his mind
breaches of duty.Thus I agree with the judgement and Bell was so liable not to par back the
money to Leve Brothers as Fraud was not his intention at during the course of the contract.
30 Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10th ed,(2008),Pg 239
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Bibliography
1. Singh Avatar, Contract and Specific Relief, Lucknow: Eastern Book Company.10 th ed,
(2008)
2. Bhangia R.K,Contract I ,Faridabad :Allahabad Law Agency(2009)
3. Anson, Ansons Law of Contract, New York : Oxford University Press,(200)
4. www.westlawindia.in