CONTRACTS LAW SYNOPSIS

Topic:- Case Analysis: Lalman Shukla v.Gauri Dutt

 INTRODUCTION
The Indian Contract Act occupies the most important place in the Commercial Law. Without
contract Act, it would have been difficult to carry on trade or any other business activity and
in employment law. It is not only the business community which is concerned with the
Contract Act, but it affects everybody.The objective of the Contract Act is to ensure that the
rights and obligations arising out of a contract are honored and that legal remedies are made
available to those who are affected. According to Indian Contract Act, 1872 Section 1, this
Act may be called the Indian Contract Act, 1872.1

Figuring prominently in the canon of cases every student who has gone through a course
on Indian contract law must know is Lalman v Gauri Datt (1913) 40 ALJ 489. An internet
search for Lalman v Gauri Datt throws up a great number of results all confirming one
proposition—that a person without the knowledge of the offer cannot accept it.2

 FACTS OF THE CASE

In the January, 1913 defendant’s nephew has absconded from his house and in order to find
his nephew he sent all his servants to different parts, so that he can be traced at his position.
Defendant was among those several servants who were sent for the search of master’s
child. He was sent to Hardwar from Cawnpore and there he was able to trace the child and
for this accomplishment he was awarded with two sovereigns and Rs. 20 when he returned
to Cawnpore. In the meantime when plaintiff was at the search of child defendant issued a
hand bill offering reward of Rs. 501 to the person who traces the missing child and
defendant was totally ignorant of this reward. Later on after 6 months of this incident plaintiff
brought a suit against his master claiming Rs. 499 stating that the master had promised to
the person who will find the missing child a reward. He alleged his master of not providing
reward for the specific performance of his promise.

Respondents: It was contended by the respondents that there must be an acceptance to

offer in order to convert it into a contract and assent is the basic essential in order to
constitute a contract. At the time he was tracing the boy he was unaware about this reward
associated with child, so without knowledge how can it create a contract between parties. It
was also argued by them that at the time of tracing the missing child he was acting as a

1
https://www.netlawman.co.in/ia/indian-contract-act
2
https://indiacorplaw.in/2016/02/lalman-v-gauri-dutt-legend-and-reality.html
servant and thus fulfilling the responsibilities and obligations for which he was sent to
Hardwar from Cawnpore.

Petitioners: The petitioners strongly contended that performance of an act is sufficient for
providing rewards attached with such performance. They stated that it is immaterial that
whether person performing the act has knowledge of rewards associated with it or not. He
also argued that § 8 of the Indian Contracts Act, 1872 states that performance of a condition
of proposal is an acceptance of proposal and in the present case the condition was that the
person who will find the missing child will be rewarded and thus as per this provision he has
fulfilled the condition, hence plaintiff is entitled to claim reward.3

 ISSUES OF THE CASE

1. Does it become a contract?

2. Does Lalman Shukla have the right to get the reward money from Gauri Dutta for
finding the boy?

 LAWS AND PROVISIONS RELATED TO THE CASE

According to section 2 (a) of the Contract Act 1872 (the act), when a person signifies to
another person his or her willingness to do or to abstain from doing anything, intending to
obtaining the consent of that other person to such act of abstinence, he or she is said to
make a proposal.

Section 2 (b) contends that when the person, to whom the proposal has been made signifies
his or her assent to the proposal or offer, it is to be said as acceptance.

On the other hand, section 2 (h) states that an agreement is to be said as a contract if such
an agreement is enforceable by law.

Thus, Offer + Acceptance = Agreement and Agreement + Enforceable by Law = Contract.

Section 3 of the of the aforementioned act states that the proposal must be communicated to
the person who is expected to accept the offer.4

 ANALYSIS

3
http://lawtimesjournal.in/lalman-shukla-vs-gauri-datt/
4
https://judicialeconomist.blogspot.com/2019/08/lalman-shukla-vs-gauri-dutt-1913.html
 In the case of Lalman Shukla Vs Gauri Dutta, the plaintiff (Lalman Shukla) contended that
the missing boy had been found by himself, and according to the condition of the defendant
(Gauri Dutta), he is entitled to the declared reward. Here, the plaintiff had found the boy after
the reward was declared by the defendant. The plaintiff was not aware of the offer proposed
by the defendant. Thus, there was no possibility for Lalman Shukla (the plaintiff) to accept
the offer of the defendant. As there was no acceptance, there was no agreement, which can
be said as enforceable by the law under section 2(h) of the act. On the other hand, there
was no communication made to the plaintiff for accepting the proposal, thus, section 3 of the
act is also to be stated as ineffective in this case.5

 JUDGEMENT

The High Court dismissed the revision application upholding the Judgement & Order of the
Judge of the Court of Small Causes at Cawnpore in favour of the Defendant-Respondent.

1. An offer must be made with an intention to create legal relation.

2. An offer may be expressed or implied.
3. The terms of the offer must be certain and not vague.
4. An offer cannot prescribe silence as mode of acceptance.
5. An offer must be an expression of willingness to do or abstain from doing something.
6. An offer must be made to obtain the assent of the other.
7. An offer must be communicated.
8. Two identical cross offers do not result in a contract.
9. An offer is different from invitation to offer.
10. An offer may be general or specific.
The Court observed, that a suit like the present one could “only be founded on a contract. In
order to constitute a contract, there must be an acceptance of the offer and there can be no
acceptance unless there is a knowledge of the offer. Motive is not essential but knowledge
and intention are.” It was observed that in the case of a public advertisement offering a
reward, the performance of the act raises an inference of acceptance in terms of section 8 of
the Indian Contract Act, 1872, which provides that, “performance of the conditions of a
proposal… is an acceptance of the proposal.”

Therefore, in the present case it was observed that the right to a reward could only be
founded upon a contract.

Lastly, no relief could be granted to the Plaintiff since he was in the service of the Defendant
and as such he was sent to trace the missing boy.

The application was, therefore, dismissed.6

 SIMILAR CASES
5
https://judicialeconomist.blogspot.com/2019/08/lalman-shukla-vs-gauri-dutt-1913.html
6
https://lawzmag.com/2018/01/04/lalman-shukla-vs-gauri-datt/
 Section 4 in The Indian Contract Act, 1872 [Complete Act]
 Indian Contract Act, 1872 4. Communication when complete.—The
communication of a proposal is complete when it comes ... post." The
communication of the acceptance is complete, The communication of the
acceptance is complete," as against A when
 Central Government Act
 Bhagwandas Goverdhandas Kedia vs M/S. Girdharilal Parshottamdas ... on 30
August, 1965
 Indian Contract Act, namely, "The communication of an acceptance is complete as
against the proposer when ... where a contract takes place, but with the completion
of communication of a proposal, acceptance and revocation. In determining
 Supreme Court of India
 - Baroda Oil Cakes Traders vs Parshottam Narayandas Bagulia ... on 25 January,
1954
 doubt. A proposal which is made becomes complete only when its communication
comes to the knowledge of the person ... gestae', but unless the communication is
complete it would not become a constituent of the bundle of facts which
 Bombay High Court
 Save Mon Region Federation & Anr vs Union Of India & Ors on 14 March, 2013
 date on which applicant claims the completion of communication of the order. The
applicant could download the copy ... order upon an individual. But the act of
communication cannot be completed unilaterally. It does require the element of
participation
 National Green Tribunal

 Kuldip Gandotra vs Union Of India (Uoi) And Ors. on 7 October, 2005

 effect of communicating it. Section 4 . Communication when complete. -The
communication of a proposal is complete when it comes ... terms of the offer.
Acceptance is not complete unless communicated to the offeror/promisor. It has no
legal effect till
 Delhi High Court
 Oil And Natural Gas Commission And ... vs Modern Construction And Company on
18 March, 1997
 knowledge of the proposer ; The communication of revocation is complete-- as
against the person who makes it, when ... true that as against acceptor, such
communication will become complete when it comes to the knowledge of the
proposer. When
 Gujarat High Court
 M/S. Shyam Biri Works Pvt. Ltd. vs U.P. Forest Corporation And ... on 20 March,
1990
 formalities of communications and when such communications are complete.
Both an offer or an acceptance are modalities of communications, without ...
contract does not surface. Fortunately, when a communication is complete, in
reference of time, is codified
 Allahabad High Court

 Medha Patkar Anr vs Ministry Of Environment Ors on 11 July, 2013

 order upon an individual. But the act of communication cannot be completed
unilaterally. It does require the element of participation ... required to fulfill their
obligations to make the communication complete in terms of the provisions
 National Green Tribunal

 Indo Gulf Industries Ltd. vs U.P. State Industries ... on 3 April, 2003
  Indian Contract Act read thus: "4. Communication when complete.-- The
communication of a proposal is complete when it comes ... deals not with the
place, but with the completion of communication of a proposal, acceptance and
revocation. In determining
 Delhi High Court

 The Gram Panchayat Tiroda Anr.` vs The Moef Ors on 25 November, 2013
 word "communication" in para 16 as follows : 'A communication will be complete
once the order of granting Environmental Clearance ... required to fulfill their
obligations to make the communication complete in terms of the provisions
 National Green Tribunal7

 CONCLUSION

It can be concluded that through this case it was clearly established that firstly, acceptance
or assent is a must for converting a proposal into enforceable contract. Secondly, parties
must have knowledge about the proposal and without knowledge of the proposal it cannot
converted into agreement even if condition associated with such proposal is fulfilled.

BIBLIOGRAPHY

 Books referred:

1) Dr. S.K. Kapoor; The Law of Contract; sixth edition; Central Law Agency.
2) Dr. Avtar Singh; Contract and Specific Relief; twelfth edition; Eastern Book Company.
3) The Indian Contract Act, 1872; Universal Law Publishing.

 Websites referred:

1) SCC ONLINE
2) https://www.legalcrystal.com
3) Legal500.com

7
https://www.legalcrystal.com/cases/search/name:indian-contract-act-1872-section-4-communication-when-
complete