Legal Aspects of Business

Mini Project

- Done By
Geetha. G( RA1452001010577)
Jegadesh.A ( RA1452001010572)
Sundara rajan. R (RA1452001010565)
Manoj.R (RA1452001010576)
Mohamed Ismail (RA1452001010575)
Nithya.R (RA1452001010590)
Kaustav Protim Kaushik (RA1452001010594)

INDEX
S. NO

TOPIC

Page No

Harvey Vs Facey

Lalman Shukla v. Gauri Datt

Fisher Vs Bell

Dickinson v Dodds

Rajlukhy Dabee Vs. Bhootnath

Mokerjee

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Void Vs Voidable Contract

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1: Harvey vs Facey
-[1893] A.C. 552. (Privy Council of Jamaica)
Facts of the case:
Facey was in negotiations with the Mayor and Council of Kingston
regarding the sale of his store. Harvey sent Facey a telegram stating: "Will
you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid".
Facey replied on the same day: "Lowest price for Bumper Hall Pen 900."
Harvey then replied in the following words. "We agree to buy Bumper Hall
Pen for the sum of nine hundred pounds asked by you. Please send us your
title deed in order that we may get early possession."
Facey, however refused to sell at that price, at which Harvey sued. Facey
successfully defended his action at trial, but Harvey appealed to the Court of
Appeal, which reversed the trial court decision.

Issue:
Is a statement of the minimum price at which a seller would sell an
offer?

Holding and Rule:

No. A mere statement of the minimum selling price is an invitation to
treat and not an offer to sell.
The appellants obtained leave from the Supreme Court of Judicature of
Jamaica to appeal to the Queen in Council (i.e. the Privy Council). The Privy

Council reversed the Supreme Court's opinion, reinstating the trial court's
decision and stating the reason for its action.
The Privy Council advised that no contract existed between the two
parties. The first telegram was simply a request for information, so at no stage
did the defendant make a definite offer that could be accepted. Lord Morris LC
gave the following judgment.
"In the view their Lordships take of this case it becomes unnecessary to
consider several of the defences put forward on the part of the respondents, as
their Lordships concur in the judgment of Mr. Justice Curran that there was no
concluded contract between the appellants and L. M. Facey to be collected from
the aforesaid telegrams. The first telegram asks two questions. The first question
is as to the willingness of L. M. Facey to sell to the appellants; the second
question asks the lowest price, and the word Telegraph is in its collocation
addressed to that second question only. L. M. Facey replied to the second
question only, and gives his lowest price. The third telegram from the appellants
treats the answer of L. M. Facey stating his lowest price as an unconditional
offer to sell to them at the price named. Their Lordships cannot treat the
telegram from L. M. Facey as binding him in any respect, except to the extent it
does by its terms, viz., the lowest price. Everything else is left open, and the
reply telegram from the appellants cannot be treated as an acceptance of an offer
to sell to them; it is an offer that required to be accepted by L. M. Facey. The
contract could only be completed if L. M. Facey had accepted the appellant's
last telegram. It has been contended for the appellants that L. M. Facey's
telegram should be read as saying yes to the first question put in the
appellants' telegram, but there is nothing to support that contention. L. M.
Facey's telegram gives a precise answer to a precise question, viz., the price.
The contract must appear by the telegrams, whereas the appellants are obliged
to contend that an acceptance of the first question is to be implied. Their
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Lordships are of opinion that the mere statement of the lowest price at which the
vendor would sell contains no implied contract to sell at that price to the persons
making the inquiry. Their Lordships will therefore humbly advise Her Majesty
that the judgment of the Supreme Court should be reversed and the judgment of
Curran, J., restored. The appellants must pay to the respondents the costs of the
appeal to the Supreme Court and of this appeal."

Comments:
In the above mentioned case,
From Harvey 1st question was willingness to sell, 2nd question
asks the lowest price.
Facey only replied to the second question in regards to the price.
Harvey treated his response as an unconditional offer to sell them
the price named. Only binding aspect is the lowest price in regards
to a contract being formed.
Facey's reply to the telegram was just an invitation to trade and not an
offer.
Agreement could have ONLY been legit if Facey responded to the
third telegram from Harvey.

2: Lalman Shukla v. Gauri Datt

- Allahabad High Court (1913) 11 ALJ 489

Facts of the Case:

In January last, the nephew of Mrs. Gauri Dutt absconded from home and
no trace of him was found. Mrs. Gauri Dutt sent her servants to different places
in search of the boy and among them was Lalman Shukla who was the munim
of her firm. He was sent to Hardwar and money was given to him for his
railway fare and other expenses. After this Mrs. Gauri Dutt issued handbills
offering a reward of Rs. 150 to anyone who might find out the boy. Lalman
Shukla traced the boy to Rishikesh and found him there. He wired to Mrs. Gauri
Dutt who went to Hardwar and brought the boy back to Cawnpore. He gave to
Lalman Shukla a reward of two sovereigns and afterwards on his return to
Cawnpore gave Rs. 20 more. Lalman Shukla did not ask for any further
payment and continued in Gauri Dutts service for about six months when he
was dismissed. He then brought this suit, out of which this application arises,
claiming Rs. 499 out of the amount of the reward offered by Mrs. Gauri Dutt
under the handbills issued by him. The record shows that the handbills were
issued subsequently to Lalman Shuklas departure for Hardwar. It appears,
however, that some of the handbills were sent to him there.
The court below having dismissed the claim, this application for revision has
been made by Lalman Shukla and it is claimed on his behalf that as he traced
out the boy he is entitled to the reward offered by Gauri Dutt.
Mrs. Gauri Dutt contends that Lalman Shukla claim can only be maintained on
the basis of a contract, that there must have been an acceptance of the offer and
an assent to it, that there was no contract between the parties in this case and
that in any case Lalman Shukla was already under an obligation to do what he
did and was, therefore, not entitled to recover. On the other hand, it is contended
on behalf of Lalman Shukla, that a privity of contract was unnecessary and
neither motive nor knowledge was essential.

Issue:
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1. Is it a Contract?
2. Is Lalman Shukla liable to get the reward money from Mrs. Gauri Dutt?

Holding and Rule:

1. No it is not a Contract. An agreement enforceable by law is a contract;
Offer+ Acceptance= Agreement
Agreement+ Enforceable by Law= Contract
2.According to Indian Contract Act 1872, Lalman Shukla is not liable to get
award money because, offer given by Gauri dutt was not accepted by Lalman
Shukla, So Gauri Dutt bound to refuse the claim made by Lalman Shukla
In any opinion a suit like the present one can only be founded on a contract. In
order to constitute a contract there must be an acceptance of the offer and there
can be no acceptance unless there is knowledge of the offer. Motive is not
essential but knowledge and intention are. In the case of a public advertisement
offering a reward, the performance of the act raises an inference of acceptance.
This is manifest from S. 8 of the Contract Act, which provides that
Performance of the conditions of a proposal is an acceptance of the proposal.
In the present case the claim cannot be regarded as one on the basis of a
contract. Lalman Shukla was in the service of Gauri Dutt. As such servant he
was sent to search for the missing boy. It is true that it was not within the
ordinary scope of his duties as a minim to search for a missing relative of his
master but he agreed to go to Hardwar in search of the boy and he undertook
that particular duty. Being under that obligation, which he had incurred before
the reward in question was offered, he cannot, in my opinion, claim the reward.
There was already a subsisting obligation and therefore, the performance of the
act cannot be regarded as a consideration for Gauri Dutts promise. For the
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above reasons hold that the decision of the Court below is right and I dismiss
the application with cost.

Comments:
In the above mentioned case,

Lalman Shukla had no knowledge about the reward offered.

Offer and acceptance are critical parts of Contracts Act.
An action without the knowledge of the proposal is no acceptance.
This landmark case is based on the rule that if the offer is not known at all
then no acceptance to the offer is made, hence the offer is invalid and no
compensation can be claimed for the same.

3: Fisher Vs Bell
- [1961] 1 QB 394
Facts of the Case:
Bell displayed a flick knife in the window of his shop next to a ticket
bearing the words "Ejector knife 4s." He was charged with offering it for sale,
an offence under the Act. Under the Restriction of Offensive Weapons Act 1959,
section 1(1), it was illegal to manufacture, sell, hire, or lend to any other person,
amongst other things, any knife "which has a blade which opens automatically
by hand pressure applied to a button, spring or other device in or attached to the
handle of the knife". On 14 December 1959, the Claimant, a chief inspector of
police force, brought forward information against the Defendant alleging the
Defendant has contravened section 1(1) by offering the flick knife for sale. This
loophole was closed by Restriction of Offensive Weapons Act 1961 Ban on
Flick Knives: which inserted after the words offers for sale or hire the words
or exposes or has in his possession for the purpose of sale or hire."The words
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offer for sale were not defined in the Act, and therefore the magistrates
construed them as under the general law of contract, in which case the
shopkeeper had merely issued an invitation to treat.
The display of the knife in the window was indeed only an invitation to
treat, and the knife had not been offered for sale. The appeal was dismissed.

Issue:
1.Is the Flick knife offered for sale an offence under the Act ?

Holding and Rule:

According to the law of contract the display of an article with a price on it
in a shop window is merely an invitation to treat. It is in no sense an offer for
sale the acceptance of which constitutes a contract.

Comments:
By displaying the knife in the window of the shop, it was an offer for the
people to buy.
But, according to the Restriction of Offensive Weapons Act 1959, it was
illegal to sell a weapon.
The words offer for sale were not defined in the Act.
Only the Acceptance of Sale was an Offence under the Restriction of
Offensive Weapons Act.
Therefore Mr Bell is not guilty of Offence.

4: Dickinson Vs Dodds
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- [1876] 2 Ch D 463
Facts of the Case:
On Wednesday, June 10, 1874 Dodds (D) sent Dickinson (P) a memorandum in
which he agreed to sell a specified piece of land for 800 pounds with the offer
held open until 9AM the following Friday. Dickinson alleged that he had
decided to accept Dodds offer on Thursday morning but did not contact him
immediately because he thought he had until Friday morning to accept. On
Thursday afternoon Dickinson learned that Dodds had offered or agreed to sell
the land to a third party. Dickinson wrote a note accepting the offer and
delivered it to his home, leaving it with his mother-in-law who neglected to give
the note to Dodds. On Friday morning before the original deadline to accept the
offer, both Dickinson and his agent gave Dodds a written acceptance of the
offer. Dodds stated that he had already sold the land to another party the
previous day.
Dickinson sued for specific performance. The trial court found in
Dickinsons favor and ordered that Dodds convey the property to him and
Dodds appealed.

Issue:
1. Whether a promise to hold an offer open is binding where the other
party does not accept until after he learns that the offeror has already
conveyed the property.

Holding and Rule:

No. An open offer to sell terminates when the offeree learns that the
offeror has already agreed to sell to someone else.

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The court stated that since Dickinson knew that Dodds offer had been
implicitly withdrawn when he learned that he had sold the property to someone
else, there was no meeting of the minds at the time acceptance was made and
therefore a binding contract was not formed.

Comments:
The offer between Dickinson and Dodds was open until 9AM the next
day.
Dickinson dint formally accept the offer and came to know that
Dodds had agreed to sell the land to a third Party
The open offer is terminated by the time Dickinson learnt that the
offerer has already conveyed the property.

5: Rajlukhy Dabee Vs. Bhootnath Mokerjee

- AIR 1900 Cal HC

Facts of the Case:

A Hindu husband Bhootnath Mokerjee promised to pay his wife Rajlukhy
Dabee a fixed sum of money every month for her separate residence and
maintenance. The agreement was contained in a registered document which
mentioned quarrels and disagreements between the two.Later on he changed his
mind and he refused to give her money. The wife filed a case against the
husband and claimed the maintenance amount.

Issue:
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1. What is the remedy available for the wife?

Holding and Rule:
The Cal HC refused to regard the agreement as one covered under the
exceptions to Section 25(1). The agreement was held void for want of
consideration because the essential requirement of natural love and
affection was missing.
It should, however, be noted that mere existence of a near relation
between the parties does not necessarily import natural love and
affection. Thus where a Hindu husband, after referring to quarrels and
disagreement between him and his wife, executed a registered document
in favour of his wife, agreeing to pay for separate residence and
maintenance, it was held that the agreement was void for want of
consideration because it was not merely out of natural love, and affection.

Comments:
The agreement was void for want of consideration. Because at that time
there was no presence of love and affection to make the contract
effective.

6. Void Vs Voidable Contracts

Void Contract:
A contract that is "void" cannot be enforced by either party., The law
treats a void contract as if it had never been formed. A contract will be
considered void, for example, when it requires one party to perform an act that
is impossible or illegal.
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Voidable Contract:
A "voidable" contract, on the other hand, is a valid contract and can be
enforced. Usually only one party is bound to the contract terms in a voidable
contract. The unbound party is allowed to cancel the contract, which makes the
contract void.
The main difference between the two is that a void contract cannot be
performed under the law, while a voidable contract can still be performed,
although the unbound party to the contract can choose to void it before the other
party performs.
Examples of Void and Voidable Contracts?
Void contracts are unenforceable by law. Even if one party breaches the
agreement, you cannot recover anything because essentially there was no valid
contract. Some examples of void contracts include:
Contracts involving an illegal subject matter such as gambling,
prostitution, or committing a crime.
Contracts entered into by someone not mentally competent (mental
illness or minors).
Contracts that require performing something impossible or depends on an
impossible event happening.
Contracts that are against public policy because they are too unfair.
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 Contracts that restrain certain activities (right to choose who to marry,

restraining legal proceedings, the right to work for a living, etc.).
Voidable contracts are valid agreements, but one or both of the parties to
the contract can void the contract at any time. As a result, you may not be able
to enforce a voidable contract:
Contracts entered into when one party was a minor. (The law often treats
minors as though they do not have the capacity to enter a contract. As a
result, a minor can walk away from a contract at any time.)
Contracts where one party was forced or tricked into entering it.
Contracts entered when one party was incapacitated (drunk, insane,
delusional).

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