(GENERAL LAW OF

CONTRACT
Mtatilo mwita vs. mwita marianya 1968 hcd 82
Fadhili vs. lengipengi 1971 hcd 31
Ephraim obongo vs.naftaeli okeyo 1968 hcd 288
Read the cases and explain the position of customary
contract before 1968.
What is the current pisition?
Read Tanganyika Garage vs. marcel mafuruki 1975 lrt
23 on status of common law where LCA is silent
 Introduction

Meaning of the term contract:

It is an agreement enforceable by law, section. 2(1)
(h) of the Law of Contract Act CAP 345 (LCA) .i.e.
an agreement between two or more parties
intended to have legal consequences.
 An agreement is defined under 2(1)(e) to mean
every promise and every set of promises forming
the consideration for each other.
 Elements of a valid Contract

Parties
Offer
Acceptance
Free consent
Consideration
Intention to create legal relations
Capacity
Legality
 Parties

The term contract presupposes the existence of two

sides/parties, one proposing the other accepting:

Commonly referred as offeree and offeror

Therefore any contract requires two or more parties

in order to exist (natural or legal persons)
 Offer

Meaning of an offer:
It is a set of terms moving from one party to another
with intention of the former to be bound by them.
See section 2 (1) (a) of the Contract Act.
It states that; it is a signification to another person of
ones willingness to do or not do something with a
view of obtaining assent (or refusal) of that other
person
 Characteristic of an offer

The terms of an offer are usually Clear and certain,

definite and capable of acceptance.
They must constitute final and firm expression by
the proposer of his willingness to be bound should
the offer be accepted.
Read: Alfi Estates Africa Ltd V Themi Industries and
Distibutors Agency Ltd. [1984] TLR 362/256
 Nittin coffee estate vs United Engineering Works
(1988)TLR203
 Offer & Invitation to treat
contrasted

Invitation to treat are terms which aim at inviting

people to approach the owners of the goods or to
respond to the advertisements by making an offer.
Its terms are usually uncertain, ambiguous such
that it is not known exactly as to whether the
proposer intends to be bound by them and they
tend to beg for further questions i.e. not capable of
acceptance.
Common example here include the following
 examples of invitations to treat;
AUCTIONS
In an auction, the auctioneer's call for bids is an
invitation to treat, a request for offers.
The bids made by persons at the auction are offers,
which the auctioneer can accept or reject as he
chooses.
Similarly, the bidder may retract his bid before it is
accepted
 Payne v Cave (1789)

The defendant made the highest bid for the

plaintiff's goods at an auction sale, but he withdrew
his bid before the fall of the auctioneer's hammer.
It was held that the defendant was not bound to
purchase the goods. His bid amounted to an offer
which he was entitled to withdraw at any time before
the auctioneer signified acceptance by knocking
down the hammer.
DISPLAY OF GOODS
The display of goods with a price ticket attached in a
shop window or on a supermarket shelf is not an
offer to sell but an invitation for customers to make
an offer to buy
Fisher v Bell (1960)3 All ER 713
A shopkeeper displayed a flick knife with a price tag
in the window. The Restriction of Offensive Weapons
Act 1959 made it an offence to 'offer for sale' a 'flick
knife'.
The shopkeeper was prosecuted in the magistrates'
court but the Justices declined to convict on the basis
that the knife had not, in law, been 'offered for sale'.
"It is perfectly clear that according to the ordinary
law of contract the display of an article with a price
on it in a shop window is merely an invitation to
treat. It is in no sense an offer for sale the acceptance
of which constitutes a contract."
 PSGB v Boots (1953)1QB401

The defendants' shop was adapted to the "self-

service" system. The question for the Court of Appeal
was whether the sales of certain drugs were effected
by or under the supervision of a registered
pharmacist.
The question was answered in the affirmative.
Somervell LJ stated that "in the case of an ordinary
shop, although goods are displayed and it is intended
that customers should go and choose what they
want, the contract is not completed until, the
customer having indicated the articles which he
needs, the shopkeeper, or someone on his behalf,
accepts that offer. Then the contract is completed
 ADVERTISEMENTS

Advertisements of goods for sale are normally

interpreted as invitations to treat
Partridge v Crittenden (1968)AllER421
It was an offence to offer for sale certain wild birds.
The defendant had advertised in a periodical 'Quality
Bramblefinch cocks, Bramblefinch hens, 25s each'
His conviction was quashed by the High Court. Lord
Parker CJ stated that when one is dealing with
advertisements and circulars, unless they indeed
come from manufacturers, there is business sense in
their being construed as invitations to treat and not
offers for sale.
 
However, advertisements may be construed as offers
if they are unilateral, ie, open to all the world to
accept .
Carlill v Carbolic Smoke Ball Co
(1893)1QB256
An advert was placed for 'smoke balls' to prevent
influenza. The advert offered to pay £100 if anyone
contracted influenza after using the ball. :
The company deposited £1,000 with the Alliance
Bank to show their sincerity in the matter. The
plaintiff bought one of the balls but contracted
influenza. It was held that she was entitled to recover
the £100. The Court of Appeal held that;
(a) the deposit of money showed an intention to be
bound, therefore the advert was an offer;
(b) it was possible to make an offer to the world at
large, which is accepted by anyone who buys a
smokeball;
(c) the offer of protection would cover the period of
use; and
(d) the buying and using of the smokeball amounted
to acceptance.
TENDERS
Where goods are advertised for sale by tender, the
statement is not an offer, but an invitation to treat;
that is, it is a request by the owner of the goods for
offers to purchase them. The process of competitive
tendering came under scrutiny in the following
cases:
 Offer in advertisement

Proposal or offer can be made under various

circumstances, which include the following.
Carlill v Carbolic smoke Ball Co (1893) 1 Q.B. 256.
 Simple facts of the case

A reward of 100 pounds was advertised to anyone

who contracts the increasing epidemic influenza
after having used their balls three times daily for
two weeks as per the printed directions supplied
with each ball.
That 1000 pounds was deposited with the Alliance
Bank to show their sincerity in the matter
Mrs Carlill, on the faith of the advertisement
bought and used one ball as directed but
contracted influenza
 Continuation

She sued the Company to recover the 100 pounds as

advertised.
One argument in favor of the defendant was that the
advertisement was a mere puff and it was
unreasonable to suppose it to be a definite offer
It was held that they were intended to be understood
by the public as an offer which was to be acted upon
and not a mere puff.
 Communication of Offer

Expressly (S.9 LCA) offer is said to be

communicated expressly when it is made in
writing or orally (verbally)
 Impliedly – when made by conduct example:
stepping into an omnibus (daladala) and
consuming eatables at a self service restaurant,
both create an implies promises to pay for the
benefits enjoyed.
See:1. Witkie vs. London Passengers Transport Board 1917 1 ALL
ER 258.
 continuation

Offer is effectively communicated (or

communication of offer is complete) when it comes
to the knowledge of the person to whom it was made
s4(1) LCA
Types of offers are:
 specific offer- made to a definite person or definite
class of persons and
General offer- when made to the world at large.
 Termination of an offer/proposal S.
6(1) of the LCA

Means by which offer can be terminated:

Rejection
Counter offer; See for Hyde v Wrench (1840).

Revocation before acceptance ; Byrne v Van Tienhoven

(1880
Failure of a condition subject to which the offer was
made
Lapse of time
Death of offeror
Hyde v Wrench (1840)
6 June W offered to sell his estate to H for £1000; H
offered £950
27 June W rejected H's offer
29 June H offered £1000. W refused to sell and H
sued for breach of contract
Lord Langdale MR held that if the defendant's offer
to sell for £1,000 had been unconditionally accepted,
there would have been a binding contract; instead
the plaintiff made an offer of his own of £950, and
thereby rejected the offer previously made by the
defendant.
REVOCATION
The offer may be revoked by the offeror at any time
until it is accepted. However, the revocation of the
offer must be communicated to the offeree(s). Unless
and until the revocation is so communicated, it is
ineffective.
Byrne v Van Tienhoven (1880)5 CPD334
1 Oct. D posted a letter offering goods for sale.
8 Oct. D revoked the offer; which arrived on 20 Oct.
11 Oct. P accepted by telegram
15 Oct. P posted a letter confirming acceptance.
It was held that the defendant's revocation was not
effective until it was received on 20 Oct. This was too
late as the contract was made on the 11th when the
plaintiff sent a telegram. Judgment was given for the
plaintiffs.
. LAPSE OF TIME
Where an offer is stated to be open for a specific
length of time, then the offer automatically
terminates when that time limit expires. Where there
is no express time limit, an offer is normally open
only for a reasonable time. See
Ramsgate v Montefiore (1866)
On 8 June, the defendant offered to buy shares in
the plaintiff company. On 23 Nov, the plaintiff
accepted but the defendant no longer wanted them
and refused to pay.
 It was held that the six-month delay between the
offer in June and the acceptance in November was
unreasonable and so the offer had 'lapsed', ie it could
no longer be accepted and the defendant was not
liable for the price of the shares.
FAILURE OF A CONDITION
An offer may be made subject to conditions. Such a
condition may be stated expressly by the offeror or
implied by the courts from the circumstances. If the
condition is not satisfied the offer is not capable of
being accepted. See
Financings Ltd v Stimson (1962)
The defendant at the premises of a dealer signed a
form by which he offered to take a car on HP terms
from the plaintiffs. He paid a deposit and was
allowed to take the car away. He was dissatisfied
with it and returned it to the dealer, saying he did
not want it.
The car was stolen from the dealer's premises and
damaged. The plaintiffs, not having been told that the
defendant had returned the car, signed the HP agreement.
It was held by the Court of Appeal (a) that the defendant
had revoked his offer by returning the car to the dealer. (b)
In view of an express provision in the form of the contract
that the defendant had examined the car and satisfied
himself that it was in good order and condition, the offer
was conditional on the car remaining in substantially the
same condition until the moment of acceptance. That
condition not being fulfilled, the acceptance was invalid.
(b) In view of an express provision in the form of the
contract that the defendant had examined the car
and satisfied himself that it was in good order and
condition, the offer was conditional on the car
remaining in substantially the same condition until
the moment of acceptance.
That condition not being fulfilled, the acceptance
was invalid.
DEATH
The offeree cannot accept an offer after notice of the
offeror's death. However, if the offeree does not
know of the offeror's death, and there is no personal
element involved, then he may accept the offer. See:
Bradbury v Morgan (1862)
JM Leigh requested Bradbury & Co to give credit to
HJ Leigh, his brother. JM Leigh guaranteed his
brother's account to the extent of £100. Bradbury
thereafter credited HJ Leigh in the usual way of their
business..
JM Leigh died but Bradbury, having no notice or
knowledge of his death, continued to supply HJ
Leigh with goods on credit.
JM Leigh's executors (Morgan) refused to pay,
arguing that they were not liable as the debts were
contracted and incurred after the death of JM Leigh
and not in his lifetime. Judgment was given for the
plaintiffs, Bradbury
 ACCEPTANCE

It is defined under S.2(1)(b) to mean signification of

assent to the proposal by a person to whom it was
made.
Acceptance must be absolute and unqualified i.e.
final and conclusive (S.7 Cap345 ).
ACCEPTANCE
An acceptance is a final and unqualified acceptance
of the terms of an offer. To make a binding contract
the acceptance must exactly match the offer. The
offeree must accept all the terms of the offer
However, in certain cases it is possible to have a
binding contract without a matching offer and
acceptance. See s.9 LCA
Brogden v MRC (1877)
B supplied coal to MRC for many years without an
agreement. MRC sent a draft agreement to B who
filled in the name of an arbitrator, signed it and
returned it to MRC's agent who put it in his desk.
 Coal was ordered and supplied in accordance with
the agreement but after a dispute arose B said there
was no binding agreement.
It was held that B's returning of the amended
document was not an acceptance but a counter-offer
which could be regarded as accepted either when
MRC ordered coal or when B actually supplied. By
their conduct the parties had indicated their
approval of the agreement.
 Communication of an acceptance

Communication of acceptance is deemed to be

made by act or omission of the party accepting, by
which he intends to communicate it and which has
the effect of communicating it (S.3 LCA).
 Generally acceptance has no effect until it is
communicated to the offeror i.e. when it comes to
the knowledge of offeror S.2(1)(b) Cap. 345. In
Household Fire Insurance Co v Grant (1879) 41
L.T 298
COMMUNICATION OF ACCEPTANCE
The general rule is that an acceptance must be
communicated to the offeror. Until and unless the
acceptance is so communicated, no contract comes into
existence:
Lord Denning in Entores v Miles Far East Corp
(1955)
If a man shouts an offer to a man across a river but the
reply is not heard because of a plane flying overhead,
there is no contract. The offeree must wait and then shout
back his acceptance so that the offeror can hear it.
The acceptance must be communicated by the
offeree or someone authorised by the offeree. If
someone accepts on behalf of the offeree, without
authorisation, this will not be a valid acceptance:
Powell v Lee (1908)
The plaintiff applied for a job as headmaster and the
school managers decided to appoint him. One of
them, acting without authority, told the plaintiff he
had been accepted. Later the managers decided to
appoint someone else.
The plaintiff brought an action alleging that by
breach of a contract to employ him he had suffered
damages in loss of salary
The county court judge held that there was no
contract as there had been no authorised
communication of intention to contract on the part
of the body, that is, the managers, alleged to be a
party to the contract. This decision was upheld by
the King's Bench Division.
 Waiver of communication

The offeror may dispense with the need for

communication of acceptance, act by the offerre may
constitute acceptance though not communicated to
the offeror, see Carlill case above;
Held it was sufficient for the claimant to act on the
offer without notifying her acceptance to it
 Communication of acceptance by
post

Under Cap. 345 it is governed by S.4(2) (i) and (ii)

which stipulates that communication of acceptance
is complete as against the proposer when it is put in
course of transmission to him so as to be out of
power of the acceptor and as against the acceptor
when it comes to the knowledge of the proposer.
 continuation

This means that once a letter is posted the proposer

is bound and he cannot revoke his offer afterwards.
 On the other hand the acceptor becomes bound only
when the acceptance comes to the knowledge of the
proposer, so the acceptor can revoke his acceptance
before it comes to the knowledge of the proposer
using the quickest means
 Communication under common law

Under common law once a mail is correctly addressed,

properly stamped and put in right hands of the postal
officer that is effective communication unless expressly
excluded and the contract is concluded immediately as
the parties are bound there and then.
The Postal Rule - even if the letter is delayed, destroyed
or lost in the post so that it never reaches the offeror
 See Adams v Lindsell (1818) 106 E.R. 250. and Helthorn v
Fraser (1892) 2 Ch.27
Adams v Lindsell (1818)
2 Sept. The defendant wrote to the plaintiff offering
to sell goods asking for a reply "in the course of post“
5 Sept. The plaintiff received the letter and sent a
letter of acceptance.
9 Sept. The defendant received the plaintiff's
acceptance but on 8 Sept had sold the goods to a
third party.
It was held that a binding contract was made when
the plaintiff posted the letter of acceptance on 5 Sept,
so the defendant was in breach of contract.
 Household v Grant (1879)

G applied for shares in the plaintiff company. A

letter of allotment of shares was posted but G never
received it.
 When the company went into liquidation G was
asked, as a shareholder, to contribute the amount
still outstanding on the shares he held. The trial
judge found for the plaintiff.
The Court of Appeal affirmed the judgment. Thesiger
LJ stated that "Upon balance of conveniences and
inconveniences it seems to me
… it was more consistent with the acts and
declarations of the parties in this case to consider the
contract complete and absolutely binding on the
transmission of the notice of allotment through the
post, as the medium of communication that the
parties themselves contemplated, instead of
postponing its completion until the notice had been
received by the defendant."
The postal rule applies to communications of
acceptance by cable, including telegram, but not to
instantaneous modes such as telephone, telex and
fax.
However The postal rule will not apply:
(i) Where the letter of acceptance has not been
properly posted, as in Re London and Northern Bank
(1900), where the letter of acceptance was handed to
a postman only authorised to deliver mail and not to
collect it.
(ii) Where the letter is not properly addressed. There
is no authority on this point
(iii) Where the express terms of the offer exclude the
postal rule, ie if the offer specifies that the
acceptance must reach the offeror. In Holwell
Securities v Hughes (1974, below), the postal rule
was held not to apply where the offer was to be
accepted by "notice in writing". Actual
communication was required.
(iv) It was said in Holwell Securities that the rule
would not be applied where it would produce a
"manifest inconvenience or absurdity".
 INTENTION TO CREATE LEGAL
RELATIONSHIP

The parties must intend the agreement to be legally

binding.
But how can the court find out what is in the parties'
minds?
The nearest the courts can get to discover this intention is
to apply an objective test and judge the situation by what
was said and done.
The law divides agreements into two groups, social &
domestic agreements and business agreements.
Tanganyika Garage vs. Marcel
Mafuruki(1975)LRT 23
SOCIAL & DOMESTIC AGREEMENTS

This group covers agreements between family members,

friends and workmates.
The law presumes that social agreements are not
intended to be legally binding.
Lens v Devonshire Club
 It was held that the winner of a competition held by a
golf club could not sue for his prize where "no one
concerned with that competition ever intended that there
should be any legal results flowing from the conditions
posted and the acceptance by the competitor of those
conditions".
However, if it can be shown that the transaction had
the opposite intention, the court may be prepared to
rebut the presumption and to find the necessary
intention for a contract.
The cases show it is a difficult task to rebut such a
presumption
Agreements between a husband and wife living
together as one household are presumed not to be
intended to be legally binding, unless the agreement
states to the contrary.
 Balfour v Balfour [1919] 2 KB 571

The defendant who worked in Ceylon, came to England

with his wife on holiday. He later returned to Ceylon
alone, the wife remaining in England for health reasons.
The defendant promised to pay the plaintiff £30 per
month as maintenance, but failed to keep up the
payments when the marriage broke up. The wife sued.
 It was held that the wife could not succeed because: (1)
she had provided no consideration for the promise to
pay £30; and (2) agreements between husbands and
wives are not contracts because the parties do not intend
them to be legally binding
 EXCEPTIONS

The presumption against a contractual intention will not

apply where the spouses are not living together in amity at
the time of the agreement
Merritt v Merritt [1970] 2 All ER 760
The husband left his wife. They met to make arrangements
for the future. The husband agreed to pay £40 per month
maintenance, out of which the wife would pay the mortgage.
When the mortgage was paid off he would transfer the house
from joint names to the wife's name. He wrote this down
and signed the paper, but later refused to transfer the house.
It was held that when the agreement was made, the
husband and wife were no longer living together,
therefore they must have intended the agreement to
be binding, as they would base their future actions
on it.
 This intention was evidenced by the writing. The
husband had to transfer the house to the wife
If a social agreement will have serious consequences
for the parties, this may rebut the presumption too
Parker v Clarke [1960] 1 All ER 93
Mrs Parker was the niece of Mrs Clarke. An
agreement was made that the Parkers would sell
their house and live with the Clarkes.
 They would share the bills and the Clarkes would
then leave the house to the Parkers
. Mrs Clarke wrote to the Parkers giving them the details of
expenses and confirming the agreement. The Parkers sold
their house and moved in.
 Mr Clarke changed his will leaving the house to the
Parkers. Later the couples fell out and the Parkers were
asked to leave. They claimed damages for breach of contract
It was held that the exchange of letters showed the two
couples were serious and the agreement was intended to be
legally binding because (1) the Parkers had sold their own
home, and (2) Mr Clarke changed his will. Therefore the
Parkers were entitled to damages
Tanner v Tanner [1975] 1 WLR 1346.
A man promised a woman that the house in which
they had lived together (without being married)
should be available for her and the couple's children.
 It was held that the promise had contractual force
because, in reliance on it, the woman had moved out
of her rent-controlled flat.
It seems that agreements of a domestic nature
between parent and child are likewise presumed not
to be intended to be binding
Jones v Padavatton [1969] 2 All ER 616.
In 1962, Mrs Jones offered a monthly allowance to her
daughter if she would give up her job in America and
come to England and study to become a barrister.
Because of accommodation problems Mrs Jones
bought a house in London where the daughter lived
and received rents from other tenants.
In 1967 they fell out and Mrs Jones claimed the house
even though the daughter had not even passed half of
her exams.
It was held that the first agreement to study was a
family arrangement and not intended to be binding.
Even if it was, it could only be deemed to be for a
reasonable time, in this case five years.
The second agreement was only a family agreement
and there was no intention to create legal relations.
Therefore, the mother was not liable on the
maintenance agreement and could also claim the
house.
 BUSINESS AGREEMENTS

In business agreements the presumption is that the

parties intend to create legal relations and make a
contract.
This presumption can be rebutted by the inclusion of an
express statement to that effect in the agreement
Rose and Frank Co v Crompton Bros Ltd [1925] AC
445
The defendants were paper manufacturers and entered
into an agreement with the plaintiffs whereby the
plaintiffs were to act as sole agents for the sale of the
defendant's paper in the US.
The written agreement contained a clause that it was
not entered into as a formal or legal agreement and
would not be subject to legal jurisdiction in the courts
but was a record of the purpose and intention of the
parties to which they honourably pledged themselves,
that it would be carried through with mutual loyalty
and friendly co-operation
 The plaintiffs placed orders for paper which were
accepted by the defendants. Before the orders were
sent, the defendants terminated the agency agreement
and refused to send the paper.
It was held that the sole agency agreement was not
binding owing to the inclusion of the "honourable
pledge clause".
Regarding the orders which had been placed and
accepted, however, contracts had been created and
the defendants, in failing to execute them, were in
breach of contract
If a clause is put in an agreement and the clause is
ambiguous then the courts will intervene and
interpret it
 Edwards v Skyways [1964] 1 All ER 494

The plaintiff pilot was made redundant by the

defendant. He had been informed by his pilots
association that he would be given an ex gratia
payment (ie, a gift).
The defendant failed to pay and the pilot sued. The
defendant argued that the use of the words "ex
gratia" showed that there was no intention to create
legal relations.
It was held that this agreement related to business
matters and was presumed to be binding. The
defendants had failed to rebut this presumption.
The court also stated that the words "ex gratia" or
"without admission of liability" are used simply to
indicate that the party agreeing to pay does not
admit any pre-existing liability on his part;
but he is certainly not seeking to preclude the legal
enforceability of the settlement itself by describing
the payment as "ex gratia".
 CAPACITY TO CONTRACT

Section 11(1) of LCA provides for a presumption of

capacity;
Every person is competent to contract who is of the
age of majority according to the law to which he is
subject, and who is of sound mind, and is not
disqualified from contracting by any law to
which he is subject.
The Age of Majority Act , cap 43 provides that a
person who is 18 yrs old and above is of majority age.
S. 2 reads;
Every person domiciled in Tanzania shall attain full
age and cease to be under any disability of minority
at the beginning of the eighteenth anniversary of the
day on which he was born
The sales of Goods Act, cap 214 provides;
Capacity to buy and sell is regulated by the general
law concerning capacity to contract, and to transfer
and acquire property.
Who is a person of sound mind? S. 12(1) LCA define;

A person is said to be of sound mind for the purpose

of making a contract if, at the time when he makes it,
he is capable of understanding it and of forming a
rational judgment as to its effect upon his interests
Disqualification by any Law to which he is subjected?
S. 34 Bankruptcy Act cap 25; a bankrupt cannot enter
into an employment contract.
Under Companies Act, once a company is declared
Insolvent, the court may wind it up and appoint an
official receiver, the company looses the legal capacity
to contract
The consequence of contracting with the above persons
is that the contract becomes VOID. S 11(2) LCA
 EXCEPTIONS TO s. 11(2)

As it can easily be noted, the consequences of S. 11(2)

are so harsh to the opposite party as a void contract
is as good as no contract existed at all.
Hence the law and the court have developed some
exceptions to mitigate the harshness of the section.
Valid Contracts with Minors/unsound mind/

S. 4 SOGA, Cap 214;

4(2) Where necessaries are sold and delivered to an

infant or minor, or to a person who by reason of
mental incapacity or drunkenness is incompetent to
contract, he must pay a reasonable price therefor.
4(3) Necessaries in this section mean goods suitable
to the condition in life of such infant or minor or
other person, and to his actual requirements at the
time of the sale and delivery.
S. 68 LCA also provide for this exception

If a person incapable of entering into a contract, or

anyone whom he is legally bound to support, is
supplied by another person with necessaries suited
to his condition in life, the person who has furnished
such supplies is entitled to be reimbursed from the
property of such incapable person.
 CLARIFICATION ON NECESSARIES

Necessaries" are those things without which a person

cannot reasonably exist and include food, clothing,
lodging, education or training in a trade and
essential services
The "condition of life" of the minor means his social
status and his wealth. What is regarded as necessary
for the minor residing in a stately home may be
unnecessary for the resident of a council flat
Whatever the minor's status, the goods must be
suitable to his actual requirements-if he already has
enough fancy waistcoats, more cannot be necessary:
Nash v. Inman [1908] 2 KB 1, CA.
 EXTENT OF MINOR’SLIABILITY

The nature of the minor's liability for necessary goods

is uncertain. The fact that the Sale of Goods Act makes
him liable only for goods "sold and delivered" and to
pay, not any agreed price, but a reasonable price.
The SOGA suggests quasi-contractual liability-he must
pay, not because he has contracted to do so, but
because the law requires him to recompense the seller
for a benefit conferred and accepted.
Some dicta support this view but others treat the
minor's liability as contractual.
In Roberts v Gray [1913] KB 520, CA, a minor
was held liable for his failure to perform a contract for
a tour with the plaintiff, a noted billiards player. It
was a contract for the instruction of the minor. The
contract was wholly executory and but it was held that
the contract was binding on him from its formation.
A contract which would otherwise be binding as a
contract for necessaries is not so if it contains harsh
and onerous terms: Fawcett v. Smethurst (1914) 84
LJKB 473, (Atkin J)
 Beneficial contracts of service

 It is for the minor's benefit that he should be able to

obtain employment which wou1d be difficult if he
could not make a binding contract.
The law allows him to do so, provided that the
contract, taken as a whole, is manifestly for his benefit.
So where a young railway porter agreed to join an
insurance scheme and to forgo any claims he might
have under the Employers' Liability Act, he had
forfeited his rights under the Act, the contract as a
whole being for his benefit
Clements v London & North Western Railway
[1894] 2 QB 482, CA.
Contracts enabling a minor to pursue a career as a
professional boxer and as an author have been held
binding as being for their benefit.
 Acquisition of property with obligations.

When a minor acquires "a subject of a permanent

nature … with certain obligations attached to it"-such
as a leasehold, or shares in a company-he is bound
by the obligations as long as he retains the subject.
He must pay the rent or calls on the shares: London
& North Western Railway v M'Michael (1850)
5 Ex 114.
The contract is voidable by the minor-he may
repudiate it any time during his minority or within a
reasonable time thereafter
 Restitution by a minor.

Where a minor has obtained property under a

contract which is not enforceable against him, the
adult party who can neither sue for the price nor get
the property back may suffer an injustice.
Even where the minor has lied about his age, no
action in deceit will lie because this would, in effect,
enable the contract to be enforced against him; and
for the same reason it is improbable that the minor
would be estopped from asserting his true age.
The UK, Minors' Contracts Act 1987, s3, now affords
a limited measure of redress. Where a contract made
after the commencement of the Act is unenforceable
against a defendant because he was a minor when it
was made;
"… the court may, if it is just and equitable to do so,
require the defendant to transfer to the plaintiff any
property acquired by the defendant under the
contract or any property representing it."
 continuation

Past consideration
Is the type of consideration when the act constituting
consideration is wholly executed and furnished
before the promise is made. If follows therefore that
the act was not done in response to the subsequent
promise.
 Exceptions to the general rule on
past consideration
 1. Past act done at the desire of the promisor
 Past act or service rendered at the request of the promisor
constitutes consideration for the subsequent promise by the
promisor. See Lampleigh v Brathwaite in which the
paintiff’s efforts incurring several expenses to get a free
pardon for the defendant at the latter’s request amounted
to a good consideration for defendants subsequent
promise to pay for his friends efforts.
 2. Time barred Debts
 Acknowledgement of a time barred debt is sufficient to
make that debt enforceable, provided that
acknowledgement is in writing, signed by the person
making it, admits the liability to pay the sum claimed and
relates to the that debt.
 continuation

 3. Debt in relation to Negotiable Instruments

 There is a statutory exception to the general rule that past
consideration is not a good consideration. Section…..of the
Bills of Exchange Ordinance provides that an antecedent
debt or liability may constitute valuable consideration for
the bill.
 4. Promise to compensate for a past act
 A promise to compensate wholly or in part a person who
has already voluntarily done something for the promisor, or
something which the promisor was legally compellable to
do S 25(1)(b) LCA.
 CONSIDERATION

The general rule is that an agreement without

consideration is void under S.25 of the LCA.
Consideration centers on exchange of values
embedded in goods or services:
 So one who parts with value must be given value
in return by the one in whose favour he parted with
his value.
 Nothing should go for nothing (quid pro quo –
nothing should go for nothing)
See: Currie v Misa (1875) LR 10 Ex. 153
 Forms of consideration

. Executed consideration:
When the act constituting consideration is
completely performed at the time of making the
contract. for example in cash sales where one picks
the item and pays cash instantly.
 Executory consideration
This is a kind of consideration when an act
constituting consideration is to be performed in
the future
 Intention to create legal relations

It is important to know whether in all situations if

parties are entering into a contract they intend to
create legal relations between them
i.e. do they intend the legal consequences to follow
their failure to fulfill the promises they make.
 For that purpose agreements are divided into two
categories
 Social or Domestic Agreements

It is generally presumed that in entering domestic

agreements parties do not intend to create legal
relations but this presumption can be rebutted in
evidence if the contrary is adduced.
In Coward v Motor Insurers Bureau 1963 offer to
share the cost of petrol used on a picnic journey was
not intended to create legal relations.
 Commercial Agreements

In commercial agreements the general presumption

is that parties do intend to create legal relations i.e.
to create a contract in commercial agreements there
must be a common intention of the parties to enter
into legal relations.
 Capacity

 Is an ability to perform legally valid act i.e. ability to incur

liability or acquire legal rights. It is an essential element of
a contract that parties to a contract must have
capacity/competency to contract as provided under s. 10
Cap 345
 Under S.11(1), Cap 345every person is competent to
contract who is of the age of majority according to the law
to which he is subject, and who is of sound mind and is not
disqualified from contracting by any law to which he is
subject.
 According to the above provision the following persons are
declared incompetent to contract
 continuation

1) Minors
2) persons of unsound mind
3) persons disqualified by any law which they are
subject e.g. bankrupt persons
See also trading with an enemy under the LCA.
 Legality or legal object

For a valid contract the law also requires that both

object and the consideration should be legal, i.e. in
accordance to law (s.23(1) LCA)
A contract will be declared illegal if:
The objects are by themselves contrary to law
(s.23(1)(b)
Where the making of the contract is forbidden by the
law (s.23(1)(a)
 continuation

Where the agreement may cause injury to the person

or property of another (S. 23(1)(d) LCO
Immoral or contrary to public policy (S.23(1)(e)LCO)
Where the contract is for fraudulent purpose (s.
23(1)(c) LCO )
 continuation

Where the agreement may cause injury to the person

or property of another (S. 23(1)(d) LCO
Immoral or contrary to public policy (S.23(1)(e)LCO)
Where the contract is for fraudulent purpose (s.
23(1)(c) LCO )
 Free consent

Consent means that the parties must have agreed

upon the same sense.
This means that the parties must be free and
willingly to be bound by the terms of the agreement
For a valid contract it is necessary that the consent of
parties to the contract must be free.
 continuation

According to section 13 of LCA consent is free when

it is not obtained by coercion, under influence, fraud,
misappropriation or mistake. (these will be discussed
in details in the next immediate session)
 If the consent of either of the parties is not free the
agreement cannot become a contract.
 Kinds of contracts

The following are the main kinds of contract:

Valid contract
Voidable contracts
Void Contracts
Unenforceable Contracts
Illegal contracts
 Valid contract

 This is a contract which has fulfilled the conditions under section 10 of

the LCA
 A valid contract is said to have been formed where it is evidenced by the
following elements:
 Parties
 Offer and Acceptance
 Free consent
 Consideration
 Intention to create legal relations
 Capacity
 Legality/ legal object

 In short it is a n enforceable contract

 Void Contracts

An agreement which the court holds to be no

contract but a nullity from the beginning (as of no
legal effect) e.g. S.11(2) LCA- and agreement by a
person who is not hereby declared to be competent
to contract is void,
S.25(1) LCO an agreement made without
consideration is void.
 Effects of a void contract

The effects of declaring it void is to make it

unenforceable. That is a agreement with no legal
force
Any payment become recoverable except if void for
illegality.
 Voidable contracts

Is an agreement which is enforceable by law at the

option of one or more parties there to, but not at the
option of the other or others s.2(1)(i) LCO.
In other words it is a contract with full legal force
until the party entitled to rescind (set it aside by
returning the parties at their original position) it
does so, short of which the contract remains intact.
 Illegal contracts

For an agreement to be a good contract it should

be made for lawful consideration and lawful object.
Where the object or consideration of a contract is
unlawful or is contrary to public policy it will be
declared illegal.
So illegal contracts are those formed contrary to
the law (penal code) or immoral or those which the
courts declare to be so.
 Unenforceable Contracts

These are contracts whose enforceability is

conditional upon fulfillment of certain requirements.

Failure to comply with those may render the

contract, which is otherwise valid unenforceable i.e.
the court will not call upon the party or parties to
fulfill his or their obligations under the contract.
 VITIATING FACTORS

Contract has to be entered by the parties out of their

fee consent.
However consent can sometimes be vitiated by
several factor which has the effect of inducing it
causing it not to be freely and voluntarily given.
Those vitiating factors include the following:
 continuation

Coercion or Duress (s. 15 of LCA)

Undue influence ( s. 16 of LCA)
Misrepresentation (s. 18 LCA)
Fraud (s 17of LCA)
Mistake
 Coercion or Duress (s. 15 of LCA)

Defined under S.15 LCO to mean commiting or

threatening to commit, any act forbidden by the
penal code, or unlawful detaining, or threatening
to detain, any property to the prejudice of any
person whatsoever, with the intention of causing
any person to enter into a contact.
It covers actual or threatened physical violence to
or unlawful confinement of a contracting party or
his/her immediate family.
 CONTINUATION

Note that the threat must however be to the person

not to the goods/properties.
Effect: contract is voidable at the option of the
party whose consent was so causes.
Coercion once proved, not only renders the
voidable contract into which a person has entered
under its compulsion but is actionable as a tort, if it
causes damage or loss.
See the case of Universe Tankships v ITWF
[1982] All ER 67
 Undue influence (s. 16 of LCA)

Undue influence involve improper use of power to

affect somebody’s character, belief or actions
through e.g. fear, admirations etc. s.16 LCO.

The doctrine is designed to give relief where, in

circumstances not amounting to duress, a person
enters into a disadvantages transactions, so it
covers any influence by which the exercise of free
will and fact has been prevented.
 Circumstances under which it can
happen:

 Where the relation subsisting between the parties

are such that one of the parties is in a position to
dominate the will of the other party and (
client/lawyer relation, doctor/patient relation etc.

 Uses that position to obtain an unfair advantage

over the other.
 explanation

Where he holds a real or apparent authority over the

other or where he stands in a fiduciary relation to the
other
 Where he makes a contract with a person whose
mental capacity is temporarily or permanently
affected by reason of old age, illness, or mental or
bodily distress.
 Kawila Matata v Grace Titus Matata [1981] TLR 23
 Presumptions of undue influence

Where a person who is in a position to dominate the

will of the other enters into a contract with him, and
the transaction appears, on the face of it or on the
evidence adduced to be unconscionable, the law
presumes that the consent of that person has been
unduly influenced, unless otherwise proved.
 continuation

The burden of proving that such contract was not

induced by undue influence lies upon the party in a
position to dominate the will of the other
Cases involving unconscionable bargains and
inequality of bargaining power or economic duress
also give rise to the presumption of undue
influence.
See Sluis Brothers (EA) Ltd v Mathias Tawari Kitomari &
Others (1980) TLR 294
 Misrepresentation (s. 18 LCA)

A misrepresentation is a false statement of fact

made by one party to another, which, whilst not
being a term of the contract, induces the other
party to enter the contract.
Before contract is concluded various
representations are made with the aim of
inducing a party to enter into a contract.
 They amounts to misrepresentation when they
since are untrue, still forms part of the contract
 Categories of misrepresentation

Fraudulent misrepresentation
Is a false statement
Made knowingly or without belief in its truth.
Or recklessly , careless as to whether it be true or
false.
Simply it is a statement when made the presenter
did not honestly believe it to be true.
 Negligent misrepresentation

Untrue statement made recklessly by a person who

does not care whether it is true or not or who does
not take reasonable care to inquire in its truth.
See Hadley Byrne v Heller [1964] AC 465
 Innocent misrepresentation

Is stating facts which are not true but maker believes
them to be true.
The maker does not intend to deceive, but still a
misrepresentation because statement is not
warranted by information within his knowledge
 Fraud (s 17of LCA)

Fraud means and include the following:

The suggestion as to the fact, which is not true by
one who does not believe it to be true
It is an active concealment of a fact by one having
knowledge but misleading another to his prejudice
A promise made without any intention of
performing it
Any other act fettered to deceive
 Mistake

Is the misapprehension or misunderstanding as to

material fact.
 Common Mistake

Both parties are under a mistake as to a matter of

fact essential to the agreement. Both make the
same mistake e.g.
Due to change precedent or because of
impossibility of performance at the time of the
contract. in such case there was a real consent at
the time of the contract which is then nullified.
For example both parties working on assumption
that the subject matter about which they are
contracting is in existence at the time the contract
when it has in fact ceased to exist.
 Discharge of contract

 Discharge means release of a person from a

contractual obligation.
 Discharge can be effected in the following ways:
 Discharge by performance:
 Discharge by agreement
 Discharge by breach
 Discharge by Frustration/Impossibility
 Circumstances upon which a
contract may be frustrated

 Destruction of the subject matter

 Change in law: S.56 (2) LCAMetropolitan water
board v. Dick Ker & Co. (1918) AC 119
 Death or illness Robinson v Davidson: (1871) LR 6
EX LCO
 Change of circumstances Victoria industries v.
Ramanbhai Bros – (1961) EA
REMEDIES FOR BREACH OF THE
CONTRACT

 Remedies – refer to the means by which the

violation of a right is prevented, redressed or
compensated
 The following remedies are available to a person
whenever there is a breach of contract:
 Damages
 Specific performance
 Injunction
 end

PRESENTED
BY
COSMAS, J.