Instructions

1) Describe the basic elements required for a contract to be binding, legal and enforceable. (10 marks)

2) Review the following legal and contract related cases and state the legal lessons your draw from each case: (10 Marks)

Felthouse V. Bindley

Carlill V. Carbolic Smoke Balls Company

Harvey V. Facey

Lalman Shukala V. Gauri Dutt

Hadley V. Baxendale

Source: 9 Cases that Should be on your Fingertips while studying contracts-https://blog.ipleaders.in/9-cases-related-to-contracts/

Description:

Felthouse V. Bindley

In this case, the petitioner, Mr. Paul Felthouse wanted to purchase a horse from his nephew, but the price he offered to pay for the horse was less than that his nephew was willing to sell it for. The horse, therefore, was still in his possession. The Uncle communicated his offer through a letter, saying, If I hear no more about him, I consider the horse mine at 30.15s The nephew could not respond to the letter because he was busy with an auction on his farm. Though he asked the auctioneer, Mr. Bindley, not to auction the horses, he accidentally did. Mr. Felthouse then sued the defendant for conversion of his property. The defendant argued that the horse was not actually Mr. Felthouses property, as there existed no contract between him and his nephew at the time of the auction because Mr. Felthouses offer was not accepted by his nephew and the nephews silence cannot be considered to be an acceptance of the offer. It was held that Mr. Felthouse did not have the ownership of the horse at the time of the auction, which is why he could not sue for conversion, as the offer he made was not actually accepted.

Carlill v. Carbolic Smoke Balls Company

Can offers be open to the public in general? Can a general offer lead to a contract?

In this case, a company carried out advertisements about their product, carbolic smoke balls, that claimed that any person who took the smoke balls in the prescribed manner (i.e., three times daily for two weeks) will not catch influenza. In case someone does, the company promised to pay 100 to them immediately. To show their sincerity regarding this offer, the company deposited a sum of 1000 in a public bank. Now, the plaintiff, Carlill bought the smoke balls and used them as prescribed in the advertisement, but still ended up catching the flu. She filed a suit for the recovery of 100 as promised in the advertisement. The company denied the payment saying there existed no contract between them and the plaintiff. It was held that a contract came into existence between the plaintiff and the company as soon as the plaintiff bought the smoke balls and used them as prescribed.

Harvey v. Facey

Can a mere quotation of price be considered an offer?

In this case, the petitioner, Harvey communicated with the defendant, Facey, about a Hall Pen through telegram, saying Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid. The same day, Facey responded with the price of the Pen to be 900. To which, the appellant replied, 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. The defendant refused to sell at that price that they had initially quoted. It was finally held in this case that no contract came into existence between both the parties because their exchange of telegrams was merely an informational exchange where the appellant asked for the price of the Hall Pen and the defendant quoted the price. Therefore the appellant had no right to sue.

Lalman Shukla v. Gauri Dutt

In this case, the defendants nephew went missing and the petitioner, who was a servant under the defendants was sent out in his search to Hardwar. After sending the petitioner, the defendant carried out an offer to the general public offering Rs. 501 to whomsoever finds the missing boy. The Plaintiff found the boy and helped return him back to his home. He had been paid the money he spent in going to search for the boy, i.e., his travel expenses. When he returned, he continued working for the defendants for about six months. After six months, he sued the defendants for paying him the prize money that was offered earlier. It was held that the petitioner was not entitled to the prize money, as he was only obliged by the duty he had as the defendants servant to find the missing boy, and the reward was announced after he had already been sent.

Hadley v. Baxendale

In this case, the plaintiffs were operators of a mill, that they had to shut down temporarily when the crankshafts of the mill broke. Plaintiffs then contacted the manufacturers of the engine to make a new engine on a similar pattern. A servant of the defendants was then sent to the carriers to transport the crankshaft to the engine manufacturers. The servant told the Defendants that the mill is shut down, so the crankshafts must be sent immediately. The defendants informed that whenever the old crankshaft is given to them, the new one will be delivered by 12 oclock its next day. Due to the delay of the defendants, the delivery got delayed and the mill had to stay shut for several days. In this case, due to the involvement of a third party (the carriers), the delay and loss could not entirely be blamed upon the defendants. Whatever damages or loss rose, did not come to existence because of a direct breach of contract by the defendants.