Author: Gitika Sonthalia, a student at KIIT University
One of the fundamental components of regular transactions is a contract. Everywhere we walk in daily life, we come across contracts. Everywhere a contract is signed, from the purchase of a small chocolate bar to taking the bus to the job contract, it is binding. All financial transactions are based on contracts. We all enter into contracts, whether consciously or unconsciously. Contracts may be verbal or written. The Indian Contract Act, 1872 regulates contracts in India. In addition to discussing the offer and acceptance components of the contract, we will also analyze the case of Lalman Shukla v. Gauri Dutt in this article.
Essential facts of the case
Citation: 1913 14 ALJ 489
Court: Allahabad High Court
Bench: J. Banerjee
Petitioner: Lalman Shukla
Respondent: Gauri Dutt
Date of judgment: 17 April, 1913
Current status: Valid
Facts of the case
- Gauri Dutt’s nephew was missing and nowhere to be found. He sent his servants to different places to find the missing boy, among them one was the munib of Dutt’s firm.
- Some amount of money was given for railway and miscellaneous expenses.
- Handbills were issued, quoting Rs.501 reward to whoever would find the boy, regarding which the plaintiff had no information.
- The plaintiff, Lalman Shukla traced the boy and was brought back to Cawnpore by Gauri Dutt. Rs.2 was given as the award to the plaintiff for finding the boy.
- The plaintiff did not know about the reward being announced, six months later being removed from the job, the plaintiff claimed his reward.
- Being denied the reward, the plaintiff filed a suit against Gauri Dutt, claiming his remuneration.
- Whether Lalman Shukla is entitled to receive the remuneration from Gauri Dutt for finding the missing boy?
- Whether there was a valid acceptance of the offer or not?
- If there exists a contract between them or was there a contract between them due to the situation that existed?
In the present case of Lalman Shukla vs Gauri Dutt, it is derived that in order to enter into a contract, two critical aspects should be considered,
- To have complete knowledge of the facts of the offer or proposal
- Acceptance of the offer
A person to whom the offer is made, the offeree, must accept the proposal. The communication regarding the offer is also very important as mentioned in section (4) of the Indian Contract Act, 1872. It states that communication can only be complete when it comes to the knowledge of the person to whom it is made. To convert a proposal into an agreement both knowledge and assent must be present. Here, in the given instance, both were missing.
As the plaintiff had no knowledge and hadn’t given his approval or accepted the proposal there did not exist a valid contract between the two.
At the time when the plaintiff was searching for the boy, his obligations and duties were as a servant. Therefore, the plaintiff Lalman Shukla was not entitled to get the award.
The Allahabad High Court in the case of Lalman Shukla v. Gauri Dutt held that the acceptance of the offer as was claimed to be fulfilled by the plaintiff was not a complete one because the plaintiff had no information about the hand-bills declaring the reward.
For the acceptance of an offer, there has to be knowledge of accepting that offer. The act of the plaintiff to search for the missing boy was not with the intention to receive the reward but to perform his duties as a servant to his master. He was just fulfilling his employee obligation.
The offer and agreement cannot be claimed as valid one because there was no proper communication of the offer to the plaintiff and he had not done any new act to receive the reward. there was no consideration on behalf of the plaintiff for which he can claim the defendant’s reward. Therefore, Lalman Shukla was not entitled to the relevant award from the defendant.
A Short Analysis
The case established the intention to enter and perform the obligations as an essential part of Section 10 of Indian Contract Act, 1872. The High Court very efficiently pointed out the limitations on the part of the appellant to provide a valid acceptance. The striking point about this judgement was that the definition of ‘consideration’ under Section 2 (d) of the Indian Contract Act, 1872 does not find a mention while deciding the case which would have otherwise raised more questions to answer while settling the principle in this case, on the assumption that the definition of consideration in Section 2(d) is the same as the English definition replete with elements of benefit and detriment.
This case played a crucial role in laying down the principle of general offer, which is made to public at large. This case is important and relevant in law to understand the concept of offer and acceptance altogether. An action without the knowledge of the proposal is not accepted and does not confer any rights on acceptor. Also, communication of offer to the offeree is an essential element to validate an offer.
Offers that are issued to the general public rather than a specific individual are referred to as general offers. The ruling was well-received since it made clear what constitutes an acceptance under generic offers that are explicit ones. The position that general offers can only be accepted when there is knowledge of the offer has been made clearer by this. The case Lalman Shukla v. Gauri Dutt dealt with fundamental contractual ideas, including offer and acceptance—the key components of any transaction.