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PRIVITY OF CONTRACT AND CONSIDERATION

M.C.Chacko v. The State Bank of Travancore

ISSUE:

Whether a charge was created in favor of the bank to satisfy the debt arising under the letter of guarantee?

And if such a charge existed, is it enforceable by the bank even though they were not a party to the contract.

RULE:

A beneficiary under a contract that creates a trust in his favor can sue upon a contract.

A beneficiary under a contract who is a part of a family arrangement can sue upon a contract.

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CAPACITY

Imperial Loan Co Ltd v. Stone [1892] 1 QB 599

ISSUE:

Can the defendant successfully claim the defense of insanity?

RULE:

A defendant who seeks to avoid a contract on the ground of his insanity, must prove, not merely his incapacity, but also the plaintiffs' knowledge of that fact about the insanity and if he fails to do so, he cannot avail the defense.

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CONSIDERATION

Chappel & Co v. Nestle

ISSUE:

Can the toffee wrappers be constituted as good consideration for the purchase of the records?

RULE:

Consideration for a promise need not be sufficient as long as it constitutes something.

In this case, Nestle encouraged the sale of their sweets by putting this advertisement and so it was valuable to them.

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CONSIDERATION

Lalman Shukla v. Gauri Dutt

ISSUE:

Does Lalman Shukla have the right to claim the reward that was being given to anybody who found the missing boy?

Did there exist any contract between the two parties?

RULE:

The knowledge and assent of a proposal is a must in order to convert a proposal into an enforceable agreement.

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