Case Studies
There is a contract between the buyer and seller that if price is paid before
a particular date, reduced rates would apply. Is this a valid contract?
There is an agreement between two parties that if a newly released
movies enters the 100 Cr club in 1 week the first one would pay the other
1 lac rupees. Is this a valid contract? Reasons
Distinguish between the two kinds
Wagering agreements sec 30
Agreements by way of wager are void; and no suit shall be brought for
recovering anything alleged to be won on any wager, or entrusted to any
person to abide the result of any game or other uncertain event on which
any wager is made.
Exceptions: horse race- crossword competitions and lottery
WIN and LOOSE situation
Mutual chances 50-50 probability
Neither party to have control over the event
Contingent Contracts sec 31
A “contingent contract is a contract to do or not to do something, if some
event, collateral to such contract, does or does not happen.
Uncertain event as the condition- future event- precedent condition
Contingency is collateral to the contract- performance is due only when the
condition is fulfilled- contract has come into existence
Contingency is dependent on the will of a person
Joint Promises
Devolution of joint liabilities- Sec 42
Joint and several liability- Sec 43
Any one of the joint promisors may be compelled to perform
Each promisor may compel contribution from other joint promisors
Sharing of loss by default in contribution can be demanded from other joint
promisors
Reciprocal Promises
Ss. 51-54
Sec 2 (f) promises which form the consideration or part of the consideration for
each other, are called reciprocal promises
Promisor not bound to perform, unless reciprocal promisee ready and willing to
perform
Order of performance of reciprocal promises
Liability of party preventing event on which contract is to take effect
Effect of default as to that promise which should be first performed
Measurement of Damages
Hadley v. Baxendale (1854)
Leading rule to determine consequential damages from a breach of contract: a breaching party is
liable for all losses that the contracting parties should have foreseen.
The claimant, Hadley, owned a mill featuring a broken crankshaft. The claimant engaged
Baxendale, the defendant, to transport the crankshaft to the location at which it would be
repaired and then subsequently transport it back. The defendant then made an error causing the
crankshaft to be returned to the claimant a week later than agreed, during which time the
claimant’s mill was out of operation. The claimant contended that the defendant had displayed
professional negligence and attempted to claim for the loss of profit resultant from the
unexpected week-long closure. The defendant retorted that such an action was unreasonable as
he had not known that the delayed return of the crankshaft would necessitate the mill’s closure
and thus that the loss of profit failed to satisfy the test of remoteness.
Ratio Decidendi
A party could only successfully claim for losses stemming from breach of contract where the loss
is reasonably viewed to have resulted naturally from the breach, or where the fact such losses
would result from breach ought reasonably have been contemplated of by the parties when the
contract was formed.
Foreseeable losses, natural consequences and within the contemplation of
the parties
Quantum Meruit
Originating from the Latin phrase meaning “as much as he has earned” or “what one has
earned,” quantum meruit pertains to the equitable remuneration for services rendered or goods
provided.
Section 70 states: “Where a person lawfully does anything for another person or delivers
anything to him, not intending to do so gratuitously and such other person enjoys the benefit
thereof, the latter is bound to make compensation to the former in respect of or to restore, the
thing so done or delivered.”
Section 73: Provides for compensation for any loss or damage caused by a breach of contract.
Section 74: Deals with liquidated damages and stipulates that compensation should not exceed
the amount specified in the contract.
Section 75: Covers compensation for any advantage gained by the party not in breach when a
contract is rescinded.
Case studies
C, a magazine owner, hires P, an author, to write a book, with each chapter to be published monthly. P
is to be paid ₹5,000 per chapter, with full payment upon completion. After a few chapters, the
magazine stops publication. P can claim payment for the published chapters on a quantum meruit
basis.
A agrees to supply dinner to B daily for a month at ₹300 per meal, with payment due at month’s end.
After five days, B stops the service, citing health issues. A can recover payment for the five days as
the contract is divisible and B enjoyed part performance.
Quantum meruit applies if the defaulting party meets the following conditions:
1. The contract is divisible.
2. The party not at fault has enjoyed the benefits of part performance.
Case studies
Plaintiffs advanced a sum of Rs 35000 to a minor for the purpose of meeting
medical expenses. The action is defended on the ground of incapacity to contract
on age of minority. Analyse
