Bench: Hon'ble Justice Banerji

Facts:

In this case, the plaintiff, Lalman Shukla, was employed as a servant by the defendant, Gauri Dutt. During the course of his employment, Gauri Dutt’s nephew went missing, causing distress in the household. In response, Gauri Dutt directed Lalman to go in search of the missing boy and provided him with money for travel and related expenses. Lalman immediately set out on his employer’s instructions to look for the boy. After Lalman had already left, Gauri Dutt published a handbill announcing a monetary reward of ₹500 for anyone who would successfully find and return the boy. Lalman, without any knowledge of this public offer, eventually managed to find the boy and brought him back. Sometime after completing this task, Lalman came across the reward notice and subsequently demanded the ₹500 reward from Gauri Dutt. The defendant, however, refused to pay, asserting that Lalman was merely fulfilling his duties as a servant and had no knowledge of the offer at the time he performed the act, and hence was not entitled to claim the reward.

Issue:

i. Whether an offer not known to the offeree can be accepted by conduct?

ii. Whether Lalman Shukla, without knowledge of the reward, is entitled to claim it after performing the act?

Analysis:

• The court pointed out that for a contract to be valid, the person accepting the offer must know about the offer when they perform the act. Without this knowledge, there can be no real acceptance.

• In Lalman’s case, he had no idea that a reward had been announced when he went out to search for the boy, so he wasn’t acting in response to the offer — which meant there was no contract between him and Gauri Dutt.

• The judges made it clear that a person can’t just accidentally fulfil the conditions of an offer and then claim a reward later — there needs to be an intention to accept the offer at the time of the act.

• Lalman was simply doing his job as a servant when he found the boy. The court said this was part of his pre-existing duty, and that doesn’t count as valid consideration for a separate promise like a reward.

• For a unilateral offer (like a reward), the law expects the person to act because of the offer, not just coincidentally do the act and later find out there was a reward.

• Since Lalman didn’t act in reliance on the reward, the court found that he hadn’t met the requirements needed to claim it under contract law principles.

Judgement:

The Allahabad High Court ultimately ruled in favour of the defendant, Gauri Dutt, and dismissed Lalman Shukla’s claim for the reward. It held that since Lalman had no knowledge of the offer at the time he performed the act of finding the boy, there could be no valid acceptance of the offer, and thus no enforceable contract was formed between the parties. The court further observed that Lalman was acting in the course of his employment when he undertook the search, and therefore, he was merely fulfilling a pre-existing obligation to his employer. Because of this, his actions could not be treated as fresh consideration for a new promise (the reward). In light of these findings, the court concluded that Lalman was not legally entitled to claim the ₹500 reward, reinforcing the principle that knowledge and acceptance of an offer are essential components of contract formation.

Conclusion:

The case of Lalman Shukla v. Gauri Dutt established an important principle in contract law: that a person cannot claim the benefit of an offer without having knowledge of it at the time of performance. It clarified that acceptance must be made knowingly and with intent, and that an act done as part of a pre-existing duty does not constitute valid consideration for a new contract. Since Lalman had no knowledge of the reward when he found the missing boy and was acting under his role as a servant, no valid contract existed, and therefore, he was not entitled to the reward. The case continues to serve as a key precedent in Indian contract law, especially in matters involving unilateral offers and acceptance by conduct.