LANDMARK CASES ON CONTRACT LAW

Contract law is a crucial aspect of business law and governs the enforceability of agreements. Over time, courts have dealt with various contract disputes and established important precedents in the field of contract law. In this article, we will discuss some of the most significant landmark cases that have shaped contract law in different countries around the world.

1. Carlill v. Carbolic Smoke Ball Co. – In 1893, the English Court of Appeals decided this case which established the doctrine of unilateral contract. The Carbolic Smoke Ball Co. marketed a product that it claimed could prevent influenza, and offered a reward of £100 to anyone who caught influenza after using their product. Mrs. Carlill bought the smoke ball and used it as directed but still caught the flu. When she claimed the reward, the company refused to pay. In the court’s decision, it was held that the advertisement constituted a unilateral offer that Mrs. Carlill had accepted by using the product as directed. The court’s ruling thus stated that a promise made to the whole world can be accepted by anyone who meets its terms.

2. Hadley v. Baxendale – This is a leading case in contract law for determining the types of damages that can be recovered in breach of contract cases. The case was decided in the English Court of Exchequer Chamber in 1854. Hadley, the plaintiff, contracted with Baxendale, the defendant, to transport a broken crankshaft to be repaired. Baxendale delayed in transporting the part causing a loss of profits for Hadley’s business. The court held that only those damages that arise naturally from the breach of contract or were within the contemplation of the parties at the time of contracting will be recoverable.

3. Peerless Limited v. Bhacku Oil Limited – This is a landmark case in Indian Contract Law. This case was decided by the Supreme Court of India in 2009. In this case, it was held that a breach of a condition of a contract gives rise to a right to repudiate the contract. The court, in its decision, stated that if one party is unable to meet its contractual obligations, then it amounts to a fundamental breach of the contract and the aggrieved party can terminate the contract.

4. Williams v. Walker-Thomas Furniture Co. – This case was decided by the U.S. Court of Appeals for the District of Columbia Circuit in 1965. The court in this case established the doctrine of unconscionability. In this case, the defendant, a furniture company, sold furniture to the plaintiff, who was a low-income buyer who could not afford to pay all the instalments for the furniture. The contract signed by the parties granted the company a security interest in all the items sold, including those previously purchased. The court held that the terms of the contract were unconscionable since they were oppressive and unfairly advantageous to the seller. 

5. Balfour v. Balfour – This is a landmark case that established the distinction between social and commercial agreements. The case was decided by the House of Lords in 1919. The court held that an agreement made between spouses during their marriage, which is not intended to be legally binding, cannot be enforced by the courts. This case established that social and domestic agreements are presumed not to be legally binding unless the parties intended to create legal relations.

In conclusion, these landmark cases have played a significant role in shaping the field of contract law. They have established important principles that govern contract law across different countries. It is essential to understand these cases to comprehend the legal framework that governs contractual relationships and obligations.