Balfour v Balfour 

Related to: intention to create contract 

Facts: wife is ill in England. Husband offers to pay her some remuneration for her ailment
while she is in England. Husband falters after a few months. Wife sues. 

Judgement: court held that he was liable to pay regardless of his intention to enter into a
binding agreement 

Carlyle v carbolic smokeball company 

Related to: universal offer

Facts: defendant issues an ad saying that anyone who uses their product for a specified
amount of time in the given dosage they would not contract flu. Plaintiff even after doing so
contracted the disease and sued for the promised 100 pounds 

Judgement: court held that this was a universal offer and not a buffer of any kind because in
the ad there was a line mentioning their sincerity, and keeping of 1000£ in a bank for this
very purpose. 

Chappel and co. V nestle 

Related to: whether consideration needs to have real value. 

Facts: Nestle ran a sales promotion whereby if persons sent in 3

chocolate bar wrappers and a postal order for 1 shilling 6d they
would be sent a record. Chappel owned the copyright in one of
the records offered and disputed the right of Nestle to offer the
records and sought an injunction to prevent the sales of the
records which normally retailed at 6 shillings 8d. Under s.8 of the
Copyright Act 1956 retailers were protected from breach of
copyright if they gave notice to the copyright holders of the
ordinary retail selling price and paid them 6.25% of this. Nestle
gave notice stating the ordinary selling price was the 1 shilling 6d
and three chocolate bar wrappers. The question for the court was
whether the chocolate bar wrappers formed part of the
consideration. If they did it was impossible to ascertain the value
they represented and therefore Nestle would not have complied
with their obligation to give notice of the ordinary retail selling
price. If the wrappers were a mere token or condition of sale
rather than constituting consideration, then the notice would be
valid and Nestle could sell the records.
Judgement: court said that The wrappers did form part of the
consideration as the object was to increase sales and therefore
provided value. The fact that the wrappers were simply to be
thrown away did not detract from this. Therefore Chappel were
granted the injunction and Nestle could not sell the records as
they had not complied with the notice requirements under s.8.

Harvey v. Facey, [1893] A.C. 552. (Privy Council of Jamaica)

Facts: Facey (D) was in negotiations with the Mayor and Council of Kingston
regarding the sale of his store. Harvey (P) sent Facey a telegram stating: “Will you
sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid.” On the same
day, Facey sent Harvey a reply by telegram stating: “Lowest price for Bumper Hall
Pen £900.” Harvey sent Facey another telegram agreeing to purchase the property
at the asking price. D refused to sell and P sued for specific performance and an
injunction to prevent Kingston from taking the property. The trial court dismissed on
the grounds that an enforceable contract had not been formed and P appealed. The
Supreme Court of Jamaica reversed and D appealed.
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 court held that by replying to P’s question regarding the lowest price of the
property, D did not make an affirmative answer to the first question regarding his
willingness to sell. The court held that D had made an invitation to trade and not an
offer.

Disposition: Reversed, judgment of trial court restored.

Stilk v Myrick [1809] EWHC KB J58 King's Bench Division

The claimant was a seaman on a voyage from London to the

Baltic and back. He was to be paid £5 per month. During the
voyage two of the 12 crew deserted. The captain promised the
remaining crew members that if they worked the ship
undermanned as it was back to London he would divide the
wages due to the deserters between them. The claimant agreed.
The captain never made the extra payment promised.

Held:

The claimant was under an existing duty to work the ship back to
London and undertook to submit to all the emergencies that
entailed. Therefore he had not provided any consideration for the
promise for extra money. Consequently he was entitled to
nothing.

Hartley v Ponsonby [1857] 7 EB 872 

Half of a ship's crew deserted on a voyage. The captain promised

the remaining crew members extra money if they worked the ship
and completed the voyage. The captain then refused to pay up.

Held:

The crew were entitled to the extra payment promised on the

grounds that either they had gone beyond their existing
contractual duty or that the voyage had become too dangerous
frustrating the original contract and leaving the crew free to
negotiate a new contract.

 Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.

[1915] AC 847

(Consideration-agency)

FACTS:
Dunlop, a tire manufacturing company, made a contract with Dew for sale of tires at a discounted
price on condition that they would not resell the tires at less than the listed price and that any reseller
who wanted to buy them from Dew had to agree not to sell at the lower price either. Dew sold the tires
to Selfridge on the same Price Maintenance Terms, but Selfridge proceeded to sell the tires below the
price he promised to sell them for.

ISSUES:
1) Whether there was any contract between Dunlop and Selfridge?

2) Whether Dew contracted with Selfridge in the capacity of an agent of Dunlop?

3) Whether Dunlop gave any consideration by itself or through the promisee, acting as his agent in
giving it?

HELD:
1) Dunlop was acting as complete stranger to the contract between Selfridge and Dew and thus on
account of privity of contract couldn’t sue Selfridge for breach of its agreement with Dew. It was a
mere beneficiary to it on account of Price Maintenance Clause.

2) On whatever terms the contract between Selfridge and Dew was made was to be solely determined
by them and was not in any way regulated or stipulated by Dunlop apart from the Price Maintenance
Clause. While Dew was assumed to be acting as agent while inserting PMC in the contract it was
acting as principal while stipulating terms of the contract with Selfridge–but as held by Court, a person
can’t contract in two capacities in the same agreement. Hence, HoL held that Dunlop wasn’t acting as
the undisclosed principal of Dew.

3) Dew had the title to goods manufactured by Dunlop independently of any contract with Selfridge.
They were free to sell the tyres to anyone they wished. Secondly, the consideration by way of
discount was given wholly out of Dew and neither directly nor indirectly out of Dunlop. Neither Dunlop
gave any consideration directly to Selfridge nor through Dew as his agent. Further since all the terms
of the contract including whether to give any discount to Selfridge or not was solely stipulated by Dew
on its own account and not as Dunlop’s agent, therefore HoL unanimously held appellant’s contention
that their permitting and enabling Dew, with the knowledge and desire of Selfridge, to sell to the latter
on the terms of its contract was consideration moving from Dunlop to Selfridge, as unsustainable.     

    
M.C. Chacko v. State Bank of Travancore
 1970 AIR 500

[Section 25(1) of Indian Contract Act, Privity Of Contract, Exceptions, Section 40]

FACTS:

H bank had an overdraft account with State Bank. MC Chacko was the manager of H bank and his
father K had guaranteed the repayment of debt. K gifted his properties to members of his family. The
gift deed provided that liability if any under the said guarantee should be met either by MC personally
or through property gifted to him under the said deed. State Bank sued all the heirs under the deed
alongwith MC; albeit limitation period to sue on letter of guarantee had already passed.

ISSUES:

1) Whether a ‘charge’ was created in favor of State Bank under the said deed to satisfy the debt under
the letter of guarantee?

2) Whether the charge, assuming that a charge exists, is enforceable by bank when it is not a party to
the deed?

HELD:

A ‘charge’ may be created on immovable property when either through express words or implied from
deed, it is clear that party intended to make a specified property or fund, belonging to him, liable for
debt due by him.
In present case, no such charge was created in favor of State Bank—the deed merely set out an
internalarrangement between the donor and members of family which conferred a right of
indemnity upon them against M.C. Chacko and his inherited property—however, no intention to
convert a personal debt into a secured debt in favor of the bank could not be inferred. Since it was a
debt of K such that he was personally liable under the debt; after his death all his inheritors were liable
to satisfy the debt out of his estate, inherited by them. However, in such a case, other members would
have been indemnified by M.C. Chacko for any share of debt paid by them.

By the definition of promisor and promisee as contained in S.2 along with constructive interpretation
of ICA in light of similar provisions in English Law, the notion that ‘a stranger to a contract could
enforce the obligations there under’ is completely excluded. A person not a party to contract
cannot enforce the terms of the contract unless he is a beneficiary under the contract or the
contract is one of family arrangement (which confers upon him equitable rights, albeit not
contractual)

Even if charge would have been created in favour of State Bank, it wouldn’t have been able to enforce
it since it is not a party to the deed and, was a complete stranger to it: it wasn’t a beneficiary under the
contract.

Since limitation period has passed, State Bank couldn’t claim anything under the letter of guarantee
either from MC Chacko (who personally never guaranteed payment) and or from any other heir of K.

Crabb v Arun District Council

In Crabb v Arun District Council ([1976] Ch. 179) P owned land with access to a road owned
by D at point A. P then decided to sell his land as two separate plots. This meant that he
needed an extra right of access to the road from one of the plots at a different point. P and D
agreed in principle that a right of access would be granted at a point labelled ‘B’, although
details remained to be negotiated (as to whether the right would be an easement or licence
and as to the payment required from P). Nevertheless, D erected a new substantial gate at
point B. P, thinking he had the new right he needed, sold off the part of the land that would
use the access at point A without reserving a right for the retained plot to be able to get to
point A. P did this thinking that the retained plot had the benefit of the access at point B. D,
however, changed its mind and blocked off the access at point B. P sought a declaration and
injunction to the effect that D was estopped from denying that P had a right of access to the
road at point B.
The English Court of Appeal agreed that B should have an easement starting at point B on the
basis of proprietary estoppel. The agreement reached and D’s conduct in encouraging P to
believe that he had the relevant right (eg by installing a permanent gate at point B) provided
the necessary representation. The sale of the plot without the reservation of a right of way
from point A was the detrimental reliance. It would be unconscionable for D to dispute that P
had the right claimed. Given the loss and delay caused by D’s high-handed actions (that had
prevented the land from being put to use in a way that would have benefited not only P but
also, perhaps, the local economy) the appropriate award was an easement (rather than a
licence) and an award of damages for the lost opportunity to profit from the land during the
time that it was land-locked.
It is interesting to note that the assurance was effective in this case despite the parties’
awareness that the agreement in principle would need to be made firmer (by agreeing on
details such as payment) and would need to be incorporated in a deed or contract. The
subsequent conduct both illustrated that the parties’ thought that there was a firm agreement
and amounted to a representation in its own right.
Lord Denning commented (at 187) on the fact that some estoppels (proprietary estoppel) can
provide a cause of action. He also sought to explain that, in this case too, equity is modifying
common law rights where conscience required it. Lord Scarman doubted that there was any
benefit in distinguishing between proprietary and promissory estoppel (at 193).

Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761 House of

Lords 

Tungsten had been infringing a patent right held by TMM. When TMM
heard of this they waived all infringements in return for Tungsten paying
10% Royalty and also 30% 'compensation' if sales exceeded 50KG in any
month. These sums were excessive but Tungsten agreed to pay them
otherwise they would be faced with a claim for infringing the copyright.
Tungsten struggled to make payments. They got into arrears during the
war times and an agreement was reached to waive the 'compensation'
payments during the war years.

Held: 

TMM could not enforce the compensation payments during the war years
but could enforce them on termination of the war. TMM were estopped
from going back on their promise to waive the payments in equity.
Generally promissory estoppel will merely suspend legal rights rather
than extinguish them. However, where periodic payments are involved
and a promise has been made to reduce the payments because of pressing
circumstances which are not likely to persist, promissory estoppel can be
used to extinguish legal rights.