Contract Law

Case Summary: Raffles v. Wichelhaus 1864 - The Peerless Case

(1864) 2 Hurl & C 906; 159 ER 375

Court of Exchequer (Pollock CB, Martin B, Pigott B) held in 1864 that where a contract term (ship "Peerless") was latently ambiguous and each party meant a different ship, there was no consensus ad idem and no binding contract. The leading English authority on latent ambiguity and mutual mistake in contract formation.

Case Summary: Embry v. Hargadine, McKittrick Dry Goods Co.

Explore Embry v. Hargadine, a landmark case on contract formation, highlighting the objective theory of contracts and its impact on employment law.

Olley v. Marlborough Court Ltd (1949): Exclusion Clauses

[1949] 1 KB 532

The Court of Appeal held that a notice in a hotel bedroom disclaiming liability for stolen valuables was not part of the contract, because the contract was concluded at the reception desk before the guest could see the notice. An exclusion clause binds only if notice is given before or at the time the contract is made — and the hotel remained liable as a negligent bailee for Mrs Olley's stolen fur coat.

Case Summary: Damodar S. Prabhu v. Sayed Babalal H

(2010) 5 SCC 663

Two-judge SC bench (3 May 2010) held that §147 Negotiable Instruments Act enables compounding of §138 cheque-dishonour offences at any stage — magistrate, sessions, HC, or SC. Introduced a graded cost scheme: nil at first hearings, 10% before magistrate, 15% before sessions/HC, 20% before SC, payable to Legal Services Authority. Later SC judgment clarified these guidelines are not mandatory in every case.

Dickinson v. Dodds (1876): Revocation of an Offer

(1876) 2 Ch D 463

Dodds offered to sell houses to Dickinson for £800, the offer "to be left over until Friday 9 a.m." Before then, Dickinson heard from a third party (Berry) that Dodds had sold to someone else (Allan). His later acceptance failed. The Court of Appeal held the promise to keep the offer open was not binding (no consideration for it), an offer can be revoked any time before acceptance, and a reliable third party's notice of the sale was as effective as a withdrawal by Dodds himself — so there was no meeting of minds.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

[1893] 1 QB 256

The Carbolic Smoke Ball Co advertised a £100 reward to anyone who used their product and still caught influenza. Mrs. Carlill did — and the Court of Appeal held that the advertisement was a binding unilateral contract and she was entitled to the £100.

Lucy v. Zehmer (1954): Case Summary & Objective Theory

196 Va. 493; 84 S.E.2d 516 (1954)

Lucy v. Zehmer (1954) is the classic "was it a joke?" contract case. Zehmer scrawled an agreement to sell his farm for $50,000 on the back of a restaurant check after an evening of drinking, then claimed he was only joking. The Supreme Court of Appeals of Virginia held the contract binding: under the objective theory of contracts, what matters is how a reasonable person would read your words and acts — not your secret intention.

Krell v. Henry (1903): Case Summary & Frustration of Purpose

[1903] 2 KB 740

Krell v. Henry (1903) is the famous "coronation case" that established frustration of purpose in contract law. Henry hired a London flat purely to watch Edward VII's coronation procession; when the King fell ill and the procession was cancelled, the Court of Appeal held the contract was frustrated and Henry did not have to pay the balance — even though the room could still physically be used. Note: Krell, the owner, lost.

Parker v. South Eastern Railway (1877): Reasonable Notice

(1877) 2 CPD 416

Parker deposited a bag in a railway cloakroom and got a ticket reading "See back"; the back limited the company's liability to £10. His bag (worth more) was lost. The Court of Appeal held a person can be bound by printed conditions he has not read — but only if the company did what was reasonably sufficient to give him notice of them. Because that question of reasonable notice had not been properly put to the jury, the Court ordered a new trial. The case is the source of the "reasonable notice" test for incorporating exclusion clauses.

Case Brief: Balfour v. Balfour 1919: A Landmark Case in Contract Law

[1919] 2 KB 571

Court of Appeal (Atkin, Warrington & Duke LJJ) held in 1919 that spouses' domestic arrangements carry a rebuttable presumption against an intention to create legal relations — so Mr. Balfour's promise of £30/month was unenforceable. Distinguished in Merritt v Merritt (1970).

Harvey v. Facey Case Summary: Offer vs Invitation to Treat

[1893] UKPC 1, [1893] AC 552

In Harvey v. Facey (1893), the Privy Council held that Facey's telegram quoting £900 as the lowest price for Bumper Hall Pen was a mere statement of price — an invitation to treat, not an offer. Harvey's "we agree to buy" telegram was itself the offer, which Facey never accepted, so no contract was formed.

Meeting of the Minds in Contract Law (Consensus ad idem)

"Meeting of the minds" (consensus ad idem) is the mutual agreement on the terms of a contract. This guide explains what it means, the objective standard courts use, how it is proved, and the leading cases — with the Indian Contract Act position.

Section 138 of the Negotiable Instruments Act: Cheque Bounce Law

Section 138 of the Negotiable Instruments Act, 1881 makes dishonour of a cheque issued for a legally enforceable debt a criminal offence in India. This guide explains the 30-day notice and 15-day payment timeline, the one-month deadline to file a complaint, penalties up to two years, and the leading Supreme Court rulings.