Section 10 of the Indian Contract Act, 1872 defines contract as “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”. The concept of contract can be traced back to the common law countries. This is the fundamental law on which all other laws are dependent on. Every law students reads the Indian Contract Act, 1872 in the beginning of their course. There are many landmark cases decided by the courts of India as well as the common law courts and evolved different principles which are being followed now also.
In Carlil v. Carbolic Smoke Ball Co. case, there was a general offer made in an advertisement that whoever consumes smokeballs and contracts influenza, that person will get reward. Carlil did the same thing as per the instructions and contracted influenza. He was denied the reward but the court held that it was a general offer and it was accepted by Carlil. Therefore the company has to give the reward.
In the case of Lalman v. Gouri Dutt, Gouri Dutt’s son was not traceable. He sent his servant to search him. In the meantime, he declared reward for the person who can trace his son. One person named Lalman found his son and brought him home. He was not aware of the reward. He later on claimed the same. The court held that as Lalman was not aware of the reward when he brought back the child, he would not be entitled to the reward.
In the case of Mohiri Bibee v. Dharmodas Ghosh, a minor executed an agreement for rupees 20000 and received rupees 8000 as earnest money from the mortgagee. He sued the minor for setting aside the agreement and claimed for the earnest money. The court held that agreement with a minor is void-ab-initio and he was not entitled to anything under the agreement.
In the case of Rajlucky v. Bhootnath, the husband entered into agreement while quarrelling with his wife whereby he will give some part of his property to his wife. After this, the husband refused to perform the contract. The court held that the contact is void as it will not come under the exception of ‘natural love and affection’ under the statute. The wife has not made any lawful consideration to her husband. Therefore it is void.
In the case of Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib, the court held that under the circumstances where the grandfather merely promises to give some part of his property to his grandson few days before his death will not qualify for unconscionable transaction. The court came to the conclusion that merely parties are related to each other, there will not be any presumption of undue influence.
In the case of Shrimati v. Sudhakar R. Bhatkar, the court held that in the cases of unconscionable contracts, the burden of prove is on the party who has been alleged to exercise undue influence on the other.
In the case of Kharbuja Kuer v. Jangbahadur Rai, the pardashin women were acting under the influence of the defendants as the defendants gave a false impression of the contents of the documents to them. The court held the contract as void as there was no free consent.
In the case of Mithoo Lal Nayak v. L.I.C. of India, the court, in furtherance of the principle of fraud, held that in any contract of insurance the assured has to specify all the material facts that is going to affect the contract.
In the case of King’s Nortan Metal Co. v. Edridge, Merrett & Co., the court of England held when there is a mistake of fact as to the identity of a person , the conditions are: firstly the plaintiff bears some different identity of the person in question in his mind and he is willing to deal with that person, but not the actual one. It will be a void contract.
In the case of Nutan Kumar v. IInd Additional District Judge, Banda, the court held that any agreement entered which is against the statute or public policy or forbidden by law, it is void-ab-initio. It will not be validated even if the parties agrees to do so.
Reference : http://www.vakilno1.com/bareacts/indiancontractact/indiancontractact.html