Case Studies Related to Nature of Contracts (Part-1) - The Indian Contract Act 1872

1. Balfour vs Balfour - A social agreement is not legally binding
In this case, a husband promised to pay his wife a monthly allowance while she stayed in England while he worked in Sri Lanka. However, when the couple separated, the wife sued her husband for failing to fulfill his promise. The court ruled that the agreement was not legally binding as it was a domestic arrangement and did not intend to create legal relations. Thus, a social agreement is not enforceable under the Indian Contract Act.

2. Carlill vs Carbolic Smoke Ball Company - Offer and acceptance creates a binding contract
The Carbolic Smoke Ball Company marketed a product that they claimed would prevent influenza. They offered a reward of £100 to anyone who contracted influenza after using their product. Mrs. Carlill used the product but still got influenza. She claimed the reward, but the company refused to pay. The court held that the advertisement was an offer, and Mrs. Carlill had accepted the offer by using the product. Thus, a binding contract had been formed, and the company was obliged to pay the reward.

3. Mohori Bibee vs Dharmodas Ghose - Contracts with minors are void
In this case, a minor named Dharmodas Ghose mortgaged his property to Mohori Bibee for a loan. Later, he sued to set aside the mortgage, claiming that he was a minor and could not enter into a contract. The court held that the contract was void ab initio as a minor is not competent to enter into a contract. Thus, contracts with minors are not legally binding.

4. Felthouse vs Bindley - Silence does not amount to acceptance
In this case, Felthouse made an offer to buy a horse from Bindley and asked him to let him know if he did not want to sell the horse. Bindley did not respond to the offer, but his nephew mistakenly sold the horse to Felthouse. Felthouse claimed that Bindley had accepted his offer by his silence. The court held that silence did not amount to acceptance, and thus no contract had been formed.

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