Law of contracts that shows how business.pdf

academic purpose

1. MODULE 2 MEDIATION (LAW OF
OBLIGATIONS) TRAINING
PART 1: LAW OF CONTRACT

2. 1.0 OUTLINE
Law of Contract
A.Types of contract:
B.Formation of a valid contract
C.Content of contract
D.Vitiating factors
E.Privity and third parties
F.Discharge of a contract
G.Limitations
H.Agency
I.Disputes

3. Introduction
Contract: “A legally binding agreement made by 2 or more parties”
“A promise or set of promises, a breach of which the law provides a remedy and the performance of which the law
recognizes as an obligation.
Contractsmaybeclassifiedas:
1.Written
2.Contractsrequiringwrittenevidence
3.Simplecontracts
4.Contractsunderseal
WrittenContracts
Thesearecontractswhich,underthelaw,mustbewritten,i.eembodiedinaformaldocumente.g.hirepurchase
agreement,contractofmarineinsurance,contractofsaleofland.
ContactsRequiringWrittenEvidence
Thesearecontractswhichmustbeevidencedbysomenotesormemorandum.
Contentsofthenote/memorandum:
1.Adescriptionofthepartiessufficienttoidentifythem.
2.Adescriptionofthesubjectmatterofthecontract
3.ATheconsideration(value)
4.ASignatureoftheparties
Examplesinclude;contractsofinsurance

4. TYPES OF CONTRACTS
SimpleContracts
Thesearecontractswhoseformationisnotsubjecttoanylegalformalities.
Thecontractmaybe:
1.Oral
2.Written
3.Partlyoralandwritten
4.Impliedformconductoftheparties
Examplesinclude;contractofsaleofgoods,partnershipagreement,and
constructioncontracts.
Contractsunderseal:
Thisisacontractdrawnbyoneparty,sealedandsenttotheparty/partiesforsignature.Suchacontract
requiresno
consideratione.g.aleaseagreement,mortgage,charge.Guarantee

5. FORMATION OF A CONTRACT
Themostimportantcharacteristicofacontractisthatitisenforceable.Itisanagreementgivingrisetoobligations
whichareenforcedorrecognisedbylaw.
Incommonlaw,thereare3basicessentialstothecreationofacontract:
(i)agreement;
(ii)contractualintention;and
(iii)consideration.
Essentially,acontractcomesintoexistencewhenanofferbyonepartyisunequivocallyacceptedbyanotherandboth
partieshavetherequisitecapacity.Someconsiderationmustpassandthepartiesmusthaveintendedtheirdealingsto
giverisetoalegallybindingagreement.Thepurposeoftheagreementmustbelegalandanynecessaryformalities
musthavebeencompliedwith.

6. FORMATION-OFFER
OFFER
Anofferisanexpressionofwillingnesstocontractonspecifiedterms,madewiththeintentionthatitistobe
bindingonceacceptedbythepersontowhomitisaddressed.
Theremustbeanobjectivemanifestationofintentbytheofferortobeboundbytheofferifacceptedbytheother
party.Therefore,theofferorwillbeboundifhiswordsorconductaresuchastoinduceareasonablethirdparty
observertobelievethatheintendstobebound,evenifinfacthehasnosuchintention.
Anoffercanbeaddressedtoasingleperson,toaspecifiedgroupofpersons,ortotheworldatlarge.Anexampleof
thelatterwouldbearewardposterforthereturnofalostpet.
Anoffermaybemadeexpressly(bywords)orbyconduct.

7. FORMATION-OFFER
Anoffermustbedistinguishedfromaninvitationtotreat,bywhichapersondoesnotmakeanofferbutinvites
anotherpartytodoso.
Whetherastatementisanofferoraninvitationtotreatdependsprimarilyontheintentionwithwhichitismade.
Aninvitationtotreatisnotmadewiththeintentionthatitistobebindingassoonasthepersontowhomitis
addressedcommunicateshisassenttoitsterms.
Invitationstotreatincludeadvertisementsordisplaysofgoodsonashelfinaself-servicestore.
See:CarlillvCarbolicSmokeBallCompany[1893]2QB256
Amedicalfirmadvertisedthatitsnewdrug,acarbolicsmokeball,wouldcureflu,andifitdidnot,buyerswouldreceive
£100.Whensued,Carbolicarguedtheadvertwasnottobetakenasalegallybindingoffer;itwasmerelyaninvitationto
treat,amerepufforgimmick.However,theCourtofAppealheldthattheadvertisementwasanoffer.Anintentiontobe
boundcouldbeinferredfromthestatementthattheadvertisershaddeposited£1,000intheirbank"shewingour
sincerity".

8. FORMATION-OFFER
maybeoral,writtenorimpliedfromtheconductoftheofferor.
mustbecommunicatedtotheintendedoffereeorofferees.Remainsineffectiveuntilitisreceivedbytheofferee.
mustbeclearanddefinitei.e.itmustbecertainandfreefromvaguenessandambiguity.InSandsv.MutualBenefitsas
wellasinScammellandNephewLtdv.Ouston,itwasheldthatwordsusedweretoovagueanduncertaintoamounttoan
offer.
maybeconditionalorabsolute.Theofferormayprescribeconditionstobefulfilledbytheoffererforanagreement
toarisebetweenthem.
Theofferormayprescribethedurationtheofferistoremainopenforacceptance.However,theofferorisfreeto
revokeorwithdrawhisofferatanytimebeforesuchdurationlapsese.g.inDickinsonv.Dodds,thedefendantoffered
tosellahousetotheplaintiffonWednesday10/06/1874andtheofferwastoremainopenuptoFriday12
th
at9.00
am.Howeveronthe11
th
ofJune,thedefendantsoldthehousetoa3
rd
party.Theplaintiffpurportedtoacceptthe
offerofFridaymorningbefore9.00am.Itwasheldthattherewasnoagreementbetweenthepartiesasthe
defendanthadrevokedhisofferbysellingthehousetoa3
rd
partyonJune11
th
.Asimilarholdingwasmadein
Ruoutledgev.Grant,wherethedefendant’sofferwastoremainopenfor6weeksbutherevokedorwithdrewitafter4
weeks.Itwasheldthattherewasnoagreementbetweentheparties.
The offeror may prescribe the method of communication of acceptance by the offeree. If he insists on a particular
method, it becomes a condition.
An offer may be general or specific i.eit may be directed to a particular person, a class of persons or the public at
large. In Carlill v. Carbolic Smoke Ball Co,

9. TERMINATION OF AN OFFER
Revocation:Thisisthewithdrawaloftheofferbytheofferor.Atcommonlaw,anofferisrevocableatanytimebefore
acceptance.
Rejection:Anofferterminatesiftheoffereerefusestoacceptthesame,therefusalmaybeexpressorimpliedfromthe
conductoftheoffereee.g.silencebytheoffereeamountstoarejectionaswasthecaseinFelthousevBindley.
Counteroffer:Thisisachangeorvariationofthetermsoftheofferbytheofferee.Itisaformofrejection.The
legaleffectofacounterofferistoterminatetheoriginalofferaswasthecaseinHydev.Wrench.
LapseOfTime:Ifanofferisnotacceptedwithinthestipulatedtimeandnotrevokedearlier,itlapsesonexpirationof
suchduration.Wherenodurationisspecified,theofferlapsesonexpirationofreasonabletime.Whatisreasonable
timeisaquestionoffactandvariesfromcasetocase.
Death:Thedeathoftheofferororoffereebeforeacceptanceterminatesanoffer.However,theofferonlylapseswhen
noticeofdeathoftheoneiscommunicatedtotheother.
Insanity:Theunsoundnessofmindofeitherpartyterminatesanoffer.However,theofferonlylapseswhennoticeof
theinsanityoftheoneiscommunicatedtotheother.
Failureofaconditionsubjecttowhichtheofferwasmade:Theseareconditionaloffers.Ifaconditionorstateof
affairsuponwhichanofferismadefails,theofferlapses.

10. ACCEPTANCE
anagreementcomesintoexistenceatthesubjectivemomentwhenthemindsofthepartiesmeet.Thismomentisreferred
toasConsensusadidem(meetingofminds).
RulesofAcceptance
Acceptancemaybeoral,writtenorimpliedfromtheconductoftheofferee.InCarlillv.CarbolicSmokeBallCo,
acceptancebyMrs.Carlilltooktheformofherconductbypurchasingandconsumingthesmokeballs.
Theoffereemusthavebeenawareofandintendedtoaccepttheoffer:Apersoncannotacceptanofferwhose
existenceheisunawareof.InCrown-v-Clarke,theAustraliangovernmentoffered£1,000toanypersonwho
volunteeredinformationleadingtothearrestandconvictionofthekillersof2policeofficers.Anyaccomplicewho
gaveinformationwouldbepardoned.Clarke,whowasawareofthemurdergavetheinformationandthekillerswere
arrestedandconvicted.However,hemadeitclearthathehadgiventheinformationtoclearhisname.Itwasheldthat
hewasnotentitledtotherewardashehadgiventheinformationforadifferentpurposeandthereforehadnot
acceptedtheoffer.
Acceptancemustbeunconditionalandunqualified:Theoffereemustaccepttheofferinitsterms,anyvariation
ormodificationoftheofferamountstoaconditionalacceptancewhichisnotanacceptanceaswasthecaseinHydev.
Wrenchwheretheplaintiffmodifiedthedefendant’sofferof£1,000to£950.
Anoffermustbeacceptedwithinthestipulatedtimeifanyorwithinareasonabletimefailingwhichit
lapses.AswasthecaseinRamsgateVictoriaHotelv.Montefoire,wherethedefendant’soffermadeinJunewasnot
accepteduntilNovemberbywhichtimehadelapsed.

11. ACCEPTANCE
Acceptancemustbecommunicatedtotheofferorintheprescribedmethodifanyoranequallyexpeditions
method.Wherenomethodofcommunicationisprescribed,themethodtoapplydependsonthetypeofofferand
thecircumstancesinwhichtheofferismade.
Asageneralrule,silencebytheoffereddoesnotamounttoacceptance,itwassoheldinFelthousev.Bindley.
TheplaintiffintendedtobuyahouseownedbyanephewnamedJohnwhohadnoobjection.Theplaintiffintended
tobuyitor£3015p.HewrotetoJonstating‘ifIhearnomoreabouthim,Iconsiderthehorsemineatthatprice.’
Johndidnotrespondbut6weekslaterhegavethehorsetothedefendantforsalebutinstructedhimnottosellthe
particularhorse.Itwassoldbymistake.Theplaintiffsuedtheauctioneerindamagesforconversion.Questionwas
whethertherewasacontractofsalebetweentheplaintiffandJohn.ItwasheldthattherewasnocontractasJohnhad
notcommunicatedhisacceptanceoftheoffer.
Wherepartiesnegotiatebywordofmouthineachotherspresence,acceptanceisdeemedcompletewhen
theofferorhearstheofferee’swordsofacceptance.ItwassoheldinEntoresLtdv.MilesFarEastCorporation,
whereLordDenningobservedthattherewasnocontractbetweenthepartiesuntiltheofferorhearsthewords.
Wherepartiesnegotiatebytelephone,acceptanceisdeemedcompletewhentheofferorhearstheofferee’swordsof
acceptance
Wherepartiesnegotiatebytelexacceptanceisdeemedcompletewhentheofferee’swordsofacceptancearereceived
bytheofferor.

12. ACCEPTANCE
Inunilateraloffers,commencementandcontinuationofperformanceconstrictsacceptance.Duringperformance,
theofferorcannotrevoketheofferbuttodosoifperformanceisdiscontinuedaswasthecaseinErringtonv.
ErringtonandWoods.Afatherboughtahousewherethesonanddaughterin-lawlivedbypayingadepositof£250
andraisingthebalancebyaloanfromaBuildingsociety.Hepromisedtotransferthehousetothemiftheypaidall
installmentsasandwhentheyfalldue.The£250wouldbeagifttothem.Theycommencedpaymentofthe
installmentsbutstoppedbeforetheentiresumhadbeenpaid.Thefatherwascompelledtopaytheremaining
installments.Hedeclinedthetransferofthehousetothem.Itwasheldthathewasnotboundtodosoastheyhad
discontinuedpayments’oftheinstallments.
Instandingoffers,aspecificorderorrequisitionbytheoffereeconstitutesacceptanceandtheoffererisbound(Great
NorthernRailwayCo.v.Witham.)
Anoffertoaparticular/specificpersoncanonlybeacceptedbythatpersonforanagreementtoarise.(Boultonv.
James.)
Anoffertoaclassofpersonscanonlybeacceptedbyamemberofthatclassforanagreementtoarise.(Woodv.
Lecktrick.)
Anoffertothegeneralpublicmaybeacceptedbyanypersonwhofulfillsitsconditions.(Carlillv.CarbolicSmokeBall
Co.)
Thepostalruleofacceptance:Wheretheofferorexpresslyorimpliedlyauthorizestheoffereetocommunicate
acceptancebypost,acceptanceisdeemedcompletewhentheletterispostedwhetheritreachesitsdestinationornot.
(Byrnev.VanTienhovenandCoLtd.)

13. CONSIDERATION
Consideration is the bargain element of a contract.
Itmustbesomethingofvalueintheeyesofthelaw
“considerationmeanssomethingwhichisofsomevalueintheeyeofthelawmovingfromtheplaintiff.Itmaybe
somebenefittothedefendantordetrimenttotheplaintiffbutatalleventsitmustbemovingfromtheplaintiff.”
(ThomasvThomas)
TheRules
Considerationmustnotbepast:ReMcArdle
MajorieMcArdlecarriedoutcertainimprovementsandrepairsonabungalow.Thebungalowformedpartoftheestate
ofherhusband'sfatherwhohaddiedleavingthepropertytohiswifeforlifeandthenontrustforMajorie'shusband
andhisfoursiblings.Aftertheworkhadbeencarriedoutthebrothersandsisterssignedadocumentstatingin
considerationofyoucarryingouttherepairsweagreethattheexecutorspayyou£480fromtheproceedsofsale.
However,thepaymentwasnevermade.Held:Thepromisetomakepaymentcameaftertheconsiderationhadbeen
performedthereforethepromisetomakepaymentwasnotbinding.Pastconsiderationisnotvalid.
Past consideration may be valid where it was proceeded by a request: (Lampleighv Braithwaite)
The defendant had killed a man and was due to be hung for murder. He asked the claimant to do everything in his
power to obtain a pardon from the King. The claimant went to great efforts and managed to get the pardon
requested. The defendant then promised to pay him £100 for his efforts but never paid up. Held: Whilst the promise
to make payment came after the performance and was thus past consideration, the consideration was proceeded by a
request from the defendant which meant the consideration was valid. The defendant was obliged to pay the claimant
£100.

14. CONSIDERATION
Considerationmustbesufficient,butneednotbeadequate;.Courtsdonot,ingeneralaskwhether
adequatevaluehasbeengiven(inthesenseoftherebeinganyeconomicequivalencebetweenthevalue
oftheconsiderationgivenandthevalueofanygoodsorservicesreceived).Thisisbecausetheydonot
normallyinterferewiththebargainmadebetweentheparties10.Accordingly,nominalconsiderationis
sufficient.
Considerationmustmovefromthepromisee;Thepromiseemustprovidetheconsideration.Traditionally,a
persontowhomapromisewasmadecanenforceitonlyifhehimselfprovidedtheconsiderationforit.Hehasno
suchrightiftheconsiderationmovedfromathirdparty.Forexample,ifApromisesBtopayKshs.10,000toBifC
willpaintA'shouseandCdoesso,BcannotenforceA'spromise(unlessBhadprocuredorundertakentoprocureC
todothework).
Anexistingpublicdutywillnotamounttovalidconsideration:(CollinsvGodefrey);Whereapartyhasapublic
dutytoact,thiscannotbeusedasconsiderationforanewpromise:Unlessthepromisorgoesbeyondtheirduty
(GlasbrookBrosvGlamorganCountyCouncil)
Anexistingcontractualdutywillnotamounttovalidconsideration;Ifapartyhasanexistingcontractualdutyto
doanact,thisactcannotbeusedasconsiderationforanewpromise:Unlessthepartygoesbeyondtheir
existingduty:oriftheyconferapracticaladvantage:Iftheexistingcontractualdutyisowedtoa3rdpartythis
maybeusedasvalidconsiderationforanewpromise:

15. CONSIDERATION
Part payment of a debt is not valid consideration for a promise to release the debt in full: (Pinnel'scase) Part
payment of a debt is not valid consideration for a promise to forebear the balance unless at the promisor's request part
payment is made:
a). before the due date
b). with a chattel
c). to a different destination
Other Exceptions to the Pinnelscase
a)Wherepartpaymentismadebyathirdparty:(HirachandPunamchandvTemple)
b)Promissoryestoppel
Consideration must be legal
The act or promise offered by the promise must be lawful as illegal consideration invalidates the contract.

16. PRIVITY OF CONTRACTS
Onlyapersonwhoispartytoacontractcansueorbesuedonit.(onlyapersonwhohasprovided
considerationtoapromise)
strangertoconsiderationcannotsueorbesuedevenifthecontractwasintendedtobenefithim.InPrice
Easton,XagreedtopaytheplaintiffasumofmoneyifYdidsomeworkforhim.Yrenderedtheservices
toXbutXdidnothonourthepromisetopay.Theplaintiffsuedtoenforcethepromise.Itwasheldthat
thepromisewasunenforceableastheplaintiffwasnotapartytothetransaction.Hehadprovidedno
consideration.AsimilarholdingwasmadeinDunlopv.SelfridgeaswellasinTweddlev.Atkinson.
Exceptions
Agency;Inanagencyrelationship,theagentcontractsonbehalfoftheprincipal.Theprincipalisnot
directlyinvolvedinthetransaction.Howevertheprincipalmaysueorbesuedonacontractenteredinto
bytheagent.Thisexceptionismoreapparentthanrealasinlawtheagentrepresentstheprincipal.
LegalAssignment;Whereacreditorassignshisdebttoanotherpersoninalegalassignmentthe
assigneebecomesentitledtosuethedebtorasifheweretheoriginalcreditor.

17. PRIVITY OF CONTRACTS
NegotiableInstruments:Aholderofanegotiableinstrumentcansueonitinitsownnamenot
withstandingtheabsenceofconsiderationprovidedapreviousholderoftheinstrumentgavesome
consideration.
Trust:Thisisanequitablerelationshipwherebyapartyexpresslyimpliedlyorconstructivelyholds
propertyonbehalfofanotherknownasthebeneficiary.Incertaincircumstances,thebeneficiarycansue
orbesuedunderatrust.
ThirdPartyInsurance:UndertheprovisionsoftheInsurance(MotorVehiclesThirdPartyRisks)Act,,
victimsofmotorvehicleaccidentsareentitledtocompensationbyInsurancecompaniesforinjuries
sustainedfromtheuseofmotorvehiclesontheroad.Howevertheinsurerisonlyliableifthemotor
vehiclewasinthehandsoftheinsuredorsomeauthorizeddriver.Iftheauthorizeddriverpaysthe
amountduetothevictimfortheinjury,suchamountisrecoverablefromtheinsurerbutthroughthe
insuredaswasthecaseinKayanjav.NewIndiaInsuranceCo.Ltd.
RestrictiveCovenants(Contractsrunningwithland)certainrightsandliabilitiesattachedtolandare
enforceablebyoragainstsubsequentholdersoftheland.Thisisparticularlythecaseinthelawofleases.

18. CONTENT OF A CONTRACT
Parties negotiating a contract make many statements some of which are intended to be terms while the
others are mere representations.
Whether a statement was intended to be a term or representation is a question of fact and courts are
guided by certain rules e.gspecial knowledge (Dick Bentley Productions V. Harold Smith)
Terms can be express or implied
Expressterms:Thesearetheoralandwrittentermsagreeduponbytheparties..Ifcontractualtermsarewritten,oral
evidenceisgenerallynotadmissibletovaryorexplainthewrittenterms.However,suchevidenceisadmissibletoprove
that:
Thecontractwassubjecttoaparticulartradeusageorcustom.
Thepartieshadnotincorporatedallthetermsintothedocument.
Thepartieshadagreedtosuspendtheagreementuntilsomeeventoccurred
Ifhandwritten,printedandtypedtermscontradict,thehandwrittentermsprevailastheyareabettermanifestationof
theparties’intentions.ItwassoheldinGlynnv.Margetson.
Impliedterms:Thesearetermswhichthoughnotagreedtobytheparties,areanintegralpartofthecontract.These
termsmaybeimpliedbystatutesorbyacourtoflaw.
A.TermsimpliedByStatutes.
Certainstatutesimplytermsincontractsenteredintopursuanttotheirprovisions.Thesetermsbecomepartofthe
contract.
1.TermsimpliedinSaleofGoodscontractsbytheSaleofGoodsAct.
TheSaleofGoodsActimpliesbothconditionsandwarrantiesincontractsofSaleofgoodsunlessadifferentintention
appears.

19. CONTENT OF A CONTRACT
CONDITIONS
Righttosell:UnderSection4(a)oftheActthereisanimpliedconditionthatthesellerofgoodsshallhavethe
righttosellwhenpropertyinthegoodsistopass.
Correspondtodescription:UnderSection5oftheAct,inasalebydescriptionthereisanimpliedconditionthat
thegoodsshallcorrespondtothedescription.
Fitnessforpurpose.:UnderSection16(a)oftheAct,wherethebuyerexpresslyorbyimplicationmakesknownto
thesellertheparticularpurposeforwhichthegoodsarerequiredsoastorelyonthesellersskillandjudgement,there
isanimpliedconditionthatthegoodsshallbereasonablyfitforthatpurpose.
MerchantableQuality:UnderSection16(b)oftheAct,wheregoodsareboughtbydescriptionfromapersonwho
dealsinsuchgoodsintheordinarycourseofbusinesswhetherasellerormanufacturer,thereisanimpliedcondition
thatthegoodswillbeofmerchantablequality.
SalebySample:UnderSection17(1)oftheAct,inasalebysample,thefollowingconditionsareimplied:
1)Thebulkshallcorrespondwiththesampleinquality.
2)Thebuyershallbeaffordedareasonableopportunitytocomparethebulkwiththesample.
3)Thatthegoodsshallbefreefromanydefectsrenderingthemunmerchantable.

20. CONTENT OF A CONTRACT
WARRANTIES
QuietPossession;UnderSection14(b)oftheActthereisanimpliedwarrantythatthebuyershallhaveandenjoy
quietpossessionofthegoods.
FreefromChargeorencumbrance;UnderSection14(c)oftheActthereisanimpliedwarrantythatthegoods
shallbefreefromanychargeorencumbrancenotmadeknowntothebuyerwhenthecontractwasmade.
TermsImpliedByCourtsofLaw;Courtsoflawreluctantlyimplytermsincontractsasitisthedutyofthepartiesto
agreeastowhatthecontractualtermsshallbe.Howeverincertaincircumstances,courtsarecalledupontoimplytermsin
contractsanddosofor2reasons:
a)Togiveeffecttotheintentionsoftheparties.
b)Tofacilitatecommercialtransactionsorgivebusinessefficiency.
Courtsoflawimplytermsincontractsonthebasisof:
a)Thereasonablebystandertest.
b)Tradeusagesandcustoms.

21. CONTENT OF A CONTRACT
Contractualtermsmaybeconditions,warrantiesorinnominateterms.
Conditions
Thisisatermofmajorstipulationinacontract.Itrunstotherootofthecontract.Itispartofthecentral
themeofthecontract.Ifaconditionisbreached,itentitlestheinnocentpartytotreatthecontractas
repudiatedandtosueindamagesAswasthecaseinPoussardv.SpiersandPond.Asingerwasengagedto
playtheleadingroleinaFrenchOperafromthebeginningoftheseasonbutowingtoillnessshewasunable
totakeupherroleduringthefirst1weekforcingtheorganizerstoengageasubstituteandconsequently
rejectedthesinger’sserviceswhosued.
Itwasheldthattheorganizerswereentitledtotreatthecontractasrepudiatedasthesingerhadbrokena
majortermofthecontract.
Aconditionmaybeexpressorimpliedinacontract.
Warranties
Thisisaminortermofacontractoratermofminorstipulation.Itisaperipheralorcollateraltermthat
doesnotrunintotherootofthecontract.Ifbreached,itentitlestheinnocentpartytosueindamagesonly
asthecontractremainsenforceableandbothpartiesareboundtohonourtheirpartofthebargain.InBettini
v.Gye,anactresswasengagedtoperforminconcertsandtheatresfromthebeginningofperformances.
Howeversheadditionallyagreedtoappearfor6daysinadvanceforrehearsalbutappearedforonly3days.
Theorganizerspurportedtotreatthecontractasrepudiated.Itwasheldthatthecontractwassubsistingas
theagreementtoappearforrehearsalswasacollateralterm.

22. CONTENT OF A CONTRACT
Innominateterms
Thesearetermsofacontractcategorizedasneitherconditionsnorwarranties.Thebreachofsuchtermsmaybeattended
bytrivialorgraveconsequences.
Theremedyavailabledependsonthenature,effectandconsequenceofthebreach.
ItwassoheldinHongKongFurShippingCo.vKawasakiKisenKaishawhereashipwascharteredfor24monthsbutwas
unavailableforuseduringthe1
st
20weeks.Thecharterersuedallegingthattheunavailabilityofthevesselwasbreachofa
condition.Howeveritwasheldnottobe.
Exemptionorexclusionclauses(limitingorexcludingclauses)
Thetheoryoffreedomofcontractassumesthatpartiesarefreetocontractwithoneanotherandcanprotecttheirown
interests.
Itassumesparityincontractualbargainswhichisnotnecessarilythecase.Thestrongerpartymayinserttermsfavourable
toit.Thisisthegenesisofexemptionclauses.
Anexemptionclauseisaclauseinsertedinacontractbythestrongerpartyexempting,itselffromliabilityorlimiting
theextentofanyliabilityarisingunderthecontract.theseclausesarecommoninstandardformcontractse.g.
conveyanceofgoods,hirepurchaseagreementscontractsofinsuranceetc.Theseclausesarejustifiedonthetheoryof
freedomofcontract.
Fromanexampleclausetobegiveneffect,thecourtmustbesatisfiedthatitwasanintegralpartofthecontract.
Itmusthavebeenincorporatedintothecontract.–
Bysignature
Bynotice

23. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
Thesearecircumstanceswhichinterferewiththeenforceabilityofacontract.
Theymayrenderacontractvoidorvoidable.Avoidcontractisunenforceablewhileavoidablecontract
isenforceableunlessavoided.
Thesefactorsinclude:-
1.MISREPRESENTATION .
Afalsestatementmadebyapartytoinduceanothertoenterintoacontractualrelationship.
Rendersthecontractavoidableattheoptionoftheinnocentparty.
Howeverfortheinnocentpartytoavoidthecontract,itmustbeprovedthat:-
Thestatementinquestionwasfalseinanaturalparticulari.e.itwasuntrueinwhateveritreferredto.
Thestatementwasmorethanamerepufforsalestalk.Whetherastatementisapuffora
misrepresentationdependsonwhatareasonablepersoncoulddeemittobe.
Thestatementwasoneoffactnotopinion.Asageneralruleopiniondoesnotamountto
misrepresentation.
Howeveranopinionmayamounttomisrepresentationif:-
Themakerdoesnothonestlyholdthatopinion
Theopinionpurportstobebasedoncertainfactswithinthemaker’sknowledgebutwhose
truthfulnesshedoesnotverify.

24. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
Thefalsestatementwasintendedtoberelieduponbytherepresenter(recipient).
Thefalsestatementwasinfactmadebytheotherpartytothecontract.Asageneralrule,omission,
silenceornon-disclosuredoesnotamounttomisrepresentation.Howeveritmay:-
Incontractsofutmostgoodfaithe.g.insurance
Inconfidentialrelationships
Wheredisclosureisastatutoryrequirement
Wherethestatementmadeishalftrue
Ifthestatementwastruewhenmadebutturnsfalseduetochangesincircumstancesbeforethe
contractisconcludedbutthemakerdoesnotdiscloseitsfalsityaswasthecaseinWithv.
O’flanagan.
Thefalsestatementinfluencedtheparty’sdecisiontoenterintothecontract.
Thepartymustshowthatthefalsestatementwasmadebeforeorwhenthecontractwasconcluded.
Howeverthefalsestatementneednothavebeentheonlyfactorthepartyisconsidered.
Thefalsestatementwasinnocently,fraudulentlyornegligentlymade.

25. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
INNOCENT MISREPRESENTATION
Astatementisdeemedtobeinnocentlymisrepresentedifthemakerhonestlybelievedinitstruththoughit
wasfalseandhadnomeansofascertainingthatitwasfalse
FRAUDULENT MISREPRESENTATION .
Astatementisdeemedtobefraudulentlymisrepresentedifthemaker:-
Hasknowledgethatitisfalse
Makesitcarelesslyandrecklessly
Doesnotbelieveinitstruth
NEGLIGENT MISREPRESENTATION .
AstatementisdeemedtobenegligentlymisrepresentedifthemakerhasbothmeansoRcapacityof
ascertainingitsfalsitybutfailstodoso.(reasonabilitytest);
Itmustbeprovedthat:-
Therewasaspecialrelationshipbetweenthemakerandrecipientofthestatementshencethe
makerowedtherecipientalegaldutyofcare.
Thatthepartysufferedlossofafinancialnature.

26. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
MISTAKE
Therearetwotypesofmistakes:
Mistakeoflaw
Mistakeoffact
Amistakeissaidtobemisapprehensionofafactorfactualsituation.Itisanerroneousassumption.
Asageneralruleamistakeoflawdoesnotaffectacontract.Mistakeoffactthateffectcontractsare
generallyreferredtoasoperativemistakesandthelawrecognizesvarioustypesofoperativemistakes:
CommonMistake:Amistakeastotheexistenceorownershipofthesubjectmatter.Bothpartiesmake
thesamemistakes.Eachpartyunderstandstheothersintentionbutbotharemistakenaboutsome
underlyingfundamentalfact.Ex.InCouturierV.Hastlethepartiesenteredintoacontractforthesaleofa
largequantityofcornwhichatthetimewassupposedtobeontransittoBritainfromGreecebutunknown
tothepartiestheshipcaptainhadsoldthecorninTunisiaduetooverheatingandfermentation.
MutualMistake.:mistakeastothesubjectmatterofacontract.Itariseswhenpartiesmisunderstandeach
otheroratcrosspurposes.Noagreementarisesbetweenthemforlackofconsensusadidem.InRaffleV.
WichelhausethepartiesenterinintoacontractforthesellofcottontobeshippedtotheU.K.onboardthe
peerlessfromtheportofBombay.Unknowntothepartiesthereweretwoshipsbythenamepeerlessatthe
portofBombay.OnesailedinOctoberandtheotherinDecember.WhilethebuyermeanttheOctober
shipthesellerreferredtotheDecemberone.ThecottonwasshippedbytheDecembervesselandthebuyer
refusedtotakedelivery.Itwasheldthathewasnotboundasthecontractwasvoidformutualmistake.

27. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
UnilateralMistake:Thisisamistakeastotheidentityofoneofthepartiestothecontract.Onlyone
partyismistakenandthemistakeisinducedbytheotherparty.Unilateralmistakeariseswhereafraudulent
personmisrepresenthisidentitytoanothersoastoobtaingoodsoncreditorotherfavourabletermswhich
hethensellstoabonafide3
rd
partywhotakeswithoutnoticeofthefraud.Thedisputeisusuallybetween
theoriginalownerofthegoodsandthebonafidepurchaser.
Tobesuccessful,apartymustprovethat:-
Itdealtwithapersonotherthantheoneitintendedtodealwith.
Thepersonitdealtwithwasawareofthatfact.
Theidentityoftheperson,thepartyintendedtodealwithwasfundamentaltothecontract.
DocumentsMistakenlySigned:Thisisamistakeastothenatureofthecontract;itariseswhenaparty
toacontractsignsthewrongdocument.Suchamistakedoesnotrenderthecontractvoidbutavoidableat
theoptionoftheparty.
Toavoidthecontract,thepartymustprovethat:-
Thedocumentsignedwasfundamentallydifferentfromtheonethepartythoughtitwassigning.
Thepartywasneithercarelessnornegligentwhenitsignedthedocument.
Byprovingthesefacts,thepartyestablishesthepleaofnon-estfactumwhichliterallymeansthisisnot
mydeed.

28. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
MistakeastoQualityofSubjectMatter:Thismistakeariseswhenoneofthepartiestothecontractis
mistakenaboutthequalityofthesubjectmatterofthecontract.
3.DURESS
Atcommonlawduressmeansactualviolenceorthreatsthereof.Itexistswhereacontractualrelationshipis
procuredbyactualviolenceonthepersonorthreatsthereof.Itrendersacontractvoidableattheoptionof
theinnocentparty.Forthecontracttobevoided,theinnocentpartymustprovethat:-
Thethreatwasintendedtocausefear,injuryorlossoflife
Thethreatwasdirectedtohispersonorbodyasopposedtohisproperty.
Thethreatwasillegale.g.athreattosue,prosecuteorcauseimprisonmentfornoreasonablecause.
Athreattoenforceoncelegalrightsdoesnotamounttoduress.
4.UNDUEINFLUENCE
Itissaidtoexistwhereapartydominatestheotherswilltherebyinhibitingitsexerciseofanindependent
judgementonthecontract.Onepartythusexercisesoverwhelminginfluenceovertheother.Undue
influencewasdevelopedbyequitywithafairlywidescope.Itrendersacontractvoidableattheoptionofthe
innocentpartyinthefollowingcircumstances;
Wherepartieshaveaspecialrelationship.E.g.parent-child,advocate-client,doctor-patient,religious
leader-disciple;undueinfluenceispresumedinfavouroftheweakerparty.Itisthedutyofthestronger
partytoshowthattheweakerpartymadeanindependentdecisiononthecontract.e.g.hehadan
advocateofhisown.

29. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
Whenpartieshavenospecialrelationship.Thepartypleadingundueinfluencemustproveitby
evidence.Thecircumstancesmustbesuchthatthepartydidnotmakeanindependentjudgementonthe
transaction
Unconscionablebargains.Theseareunfairbargains.Theyaretransactionsenteredintoin
circumstancesinwhichonepartytakesadvantageofitspositiontoprocurethedeal.Suchtransactions
arevoidableattheoptionoftheinnocentparty.

30. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
ILLEGALITY
Anillegalcontractisun-enforceable.Thisisbecauseforanagreementtobeenforceable,itmusthavebeen
enteredintoforalawfulpurpose.Acontractmaybedeclared,illegalbystatutesoracourtoflaw.
a)ContractsdeclaredillegalbyStatutes.
Undertheemploymentact,wagesorsalariesarepayableinmoneyormoneysworth.Acontacttopaywages
orsalaryinkindisillegalandvoid.Suchacontractissaidtobeillegalasformedandisunenforceable.
b)Contractsdeclaredillegalbycourtsoflaw(contractsillegalatcommonlaw)
Longbeforestatutoryintervention,courtshaddeclaredmoneycontractsillegalforbeingcontrarytopublic
policye.g.
i)Acontracttocommitacrime,tortorfraud.
Suchacontractisillegalandunenforceableasitisacontrarytopublicpolicytocommitcrimes,tortsor
fraudinBigosv.BousteadwheretheobjectofthecontractwastoviolatetheEnglishExchangecontrol
regulations;itwasheldthatthecontractwasillegalandunenforceable.
ii)Contractsprejudicialtopublicsafety.
Thesearecontractswhichpromoteharmfulactivitiesinacountryoritsneighbours.E.g.acontractto
financerebelsinacountryorcoupplotters,assistingalienenemies.
iii)Contractsprejudicialtotheadministrationofjustice.
Thesearecontractswhichinterferewiththejudicialprocesse.g.
Acontracttostifleprosecutionofanallegedcrime.

31. VITIATING ELEMENTS (FACTORS AFFECTING CONTRACTS)
iv)Contractstodefraudstaterevenue.
Acontractwhoseobjectistodenythestaterevenuebywayofevadingtaxisillegalandunenforceable.
InMillerv.Karlnskitheplaintiffwhowasanemployeeofthedefendanta₤10perweekhadagreedthatthe
amountdeductedfromthesalaryastaxwasrefundableasanallowance.Inanactiontorecovertherefund,it
washeldthatitwasirrecoverableastheobjectofthecontractwastodefraudthestaterevenue.
v)Contractsliabletopromotecorruptioninpublic.
Suchacontractisunenforceableascorruptioniscontrarytopublicpolicy.InParkinsonv.CollegeofAmbulance
andAnother,thesecretaryofacharitableorganizationinformedthatplaintiffthatitwasontoit.The
plaintiffgave₤3,000butwasnotknightedasonlytheKingcouldbestowthetitle.Inanactiontorecover
thesum,itwasheldthatitwasirrecoverableasthecontractwasillegal.
vi)Contractsliabletopromotesexualimmorality
Thesearecontractscontrabonosmores(contrarytogoodmorals).Suchacontractisunenforceableon
accountofillegality.Thecontractmaybeillegalasperformed.InPearcev.Brookstheplaintiffowneda
beautifulhorsedrawncarriagewhichhetenttothedefendantfor12monthsatstatedcharges.Theplaintiff
knewthatthedefendantwasaprostituteandintendedtousethecarriagetosolicitinfluentialcustomers.In
anactiontoenforcepaymentofthehiringcharges,itwasheldthatthatcontractwasunenforceableasitwas
illegalasperformedasitspurposewastopromotesexualimmorality.

32. DISCHARGE
Acontractissaidtobedischarged,whentheobligationcreatedbyitceasestobindthepartieswhoarenow
freedfromperformance.However,whetherapartyisliableornotafterdischarge,dependsonthemethod
ofdischarge.
Acontractmaybedischargedinthefollowingways:-
Expressagreement
Performance
Breach
ImpossibilityorDoctrineofFrustration
OperationofLaw.

33. DISCHARGE
DISCHARGEBYEXPRESSAGREEMENT
Thepartiestheretoexpresslyagreetodischargethecontract.Themutualpromisesconstituteconsideration
tosupportthedischarge.
Itisjustifiedonthepremisethatwhateveriscreatedbyagreementmaybeextinguishedbyagreement.
Dischargebyagreementmaybebilateralorunilateral
a)BilateralDischarge
Ifneitherperformsitspartofthecontract,theobligationaresaidtobeexecutoryandthedischargeis
bilateralasbothpartiesagreenottoperform.Themutualpromisesconstituteconsideration.
b)UnilateralDischarge
Ifeitherofthepartieshaswhollyorpartiallyperformeditspartofthecontract,theobligationsaresaidto
beexecutedandthedischargeisunilateral.Thepartythathasperformeddischargestheotherfrom
performance.
Unilateraldischargemaytakeanyofthefollowing3forms:-
ContractunderSeal;Suchacontractbindsthepartiesanddoesnotrequireconsideration.
Novation;Thisisthesubstitutionoftheoldcontractwithanewone.Theoldcontractisthereby
discharged.
Accordandsatisfaction;Thisisthepurchaseofareleasefromanobligationwhethercontractual
orotherwisenotbyperformancebuttheprovisionofneworextraconsiderationwhichisaccepted
bytheotherpartytodischargethecontract.Thepartythathasnotperformedprovidesthenew
considerationwhichisacceptedbytheotherparty.Thenewconsiderationisthesatisfactionandits
acceptancebytheotherpartyisaccord.

34. DISCHARGE
DISCHARGEBYPERFORMANCE .
Bothpartiesperformtheirmutualobligationsasagreed.
DoctrineofPreciseandExact-Itisafundamentalprincipleoflawthatcontractualobligationsbe
performedpreciselyandexactly.CutterV.Powell.;Mr.CutteragreedtoassistPowell,ashipcaptainasa
secondmatteronajourneyfromJamaicatoLiverpool,theshipsailedonAugust2
nd
,andCutterdiedon
September20
th
,19daysbeforetheshipwasdueatLiverpool.Mrs.Cuttersuedforcompensationfor
theworkdonebyMr.Cutter,itwasheldthatnothingwaspayablebythedefendantasMr.Cutterhadnot
performedthecontractpreciselyandexactly.Thiscasedemonstratesthatstrictapplicationofthe
doctrineofpreciseandexactoccasion’sunjustenrichment.

35. DISCHARGE
EXCEPTIONS:
Thesearethecasesforgrantingquantummeruitwhicharetheexceptionstothedoctrineof
preciseandexact
1.Divisiblecontracts.
Somecontractsarebytheirmaturedivisibleandperformanceofpartthereofentitlesthepartytopayment
forworkdone.E.g.Contractofcarriageofgoodspayablepertonne.Thecarrierisentitledtopaymentfor
thequantitycarriedbutmaybesuedfornotcarryingtheentirequantityaswasthecaseinRitchiev.Atkinson
2.Substantialperformance.
Ifapartyhassubstantiallyperformeditspartofthecontract,itisentitledtopaymentforworkdone.
Whetheracontractissubstantiallyperformedisaquestionisaquestionoffact.InMershidesMehtaandCo.v.
BaronVerhegen,thedefendantengagedtheplaintifftoconstructahouseforhimandthecontractualprice
waspayablebyinstallments.Aftercompletionofthehouse,thedefendantrefusedtopaythelastinstalment
onthegroundthatthehousehassomestructuraldefects.Theplaintiffsued.Itwasheldthattheplaintiff
wasentitledtotheinstallmentlesstheamountduedefendantmaylikelytospendtocorrectthedefect.
Thisdecisionwasbasedonthefacttheplaintiffhadsubstantiallyperformeditspartofthecontract

36. DISCHARGE
3.PartialPerformanceIfAccepted
Ifapartytoacontracthasexpresslyorbyimplicationagreedtopayforpartialperformance,theparty
performingisentitledtopaymentforworkdone.InSumpterv.Hedges,defendantengagedtheplaintiffto
construct2housesandstablesatcostof£565.Theplaintiffabandonedthehouseafterputtingup
structuresvaluedat£333,thedefendantwascompelledtocompletethehouses,subsequently,theplaintiff
suedforcompensationworkdone.Itwasheldthathewasnotentitledtopaymentasthedefendanthadnot
expresslyorbyimplicationagreedtopayforpartialperformance.
4.PreventedPerformance.
Ifapartyisreadyandwillingtoperformitspartofthecontractispreventedfromdoingsoorbytheother
ortheothersfault,suchpartyisentitledtopaymentonquantummeruit.InPlanchev.Colburn,thedefendant
engagedtheplaintifftowriteabookforhimabouthimselffor£100.Aftertheplaintiffhaddonetheinitial
researchandwrittenpartofthebook,thedefendantdiscontinuedthewriting,theplaintiffsued.Itwasheld
thathewasentitledto£50forworkdone.
5.FrustrationofContracts
Performanceoftheobligationsbecomesimpossible,illegalorcommerciallyuselessbyreasonofextraneous
circumstancesforwhichneitherpartyistoblame.Frustrationofcontractterminatesitanddischargesthe
partiesfromperformance.
6.TimeOfPerformance
Contractualobligationsmustbeperformedwithintheprescribedtimeifanyorwithinareasonabletime.If
thecontractspecifiesthedateofperformance,timeissaidtobeoftheessenceofthecontractandnon-
performancethereofdamagesthecontract.

37. DISCHARGE
DISCHARGEBYIMPOSSIBILITYORDOCTRINEOFFRUSTRATION
TheDoctrineisanexceptiontotheprincipleofabsolutecontractualobligationswherepartiestoacontract
mustperformtheirobligationsfailingwhichdamagesarepayablebythepartyinthedefault.
CIRCUMSTANCES INWHICHACONTRACTMAYBEFRUSTRATED
1.DestructionofSubjectMatter.
Ifthesubjectmatterofthecontractisdestroyedbeforeperformanceandneitherofthepartiesistoblame,
thecontractisfrustrated.InTaylorv.Caldwell,thedefendanthadhiredtheplaintiff’shalltoconductamusical
concertatspecifiedcharges,beforethedayofthefirstconcert,thehallwasdestroyedbyfireandneitherof
thepartieswastoblame.Inanactionbytheplaintifftorecoverhiringcharges,itwasheldthattheywere
irrecoverableasthedestructionofthehallfrustratedthecontractandtherebydischargedtheparties.
2.Non-occurrenceofanevent.
Ifacontractisbasedonaparticulareventorstateofaffairstoobtainataparticulartime,itsnon-
occurrencefrustratingthecontractanddischargestheparties.Itmustbeevidentthattheeventorstateof
affairswastheonlyfoundationofthecontract.InKrellv.Henry(1903),thedefendanthadhiredaroomin
theplaintiffhousetoenablehimviewRoyalProcessionofthecoronationofKingEdwardVII.However,
thekingwastakenillbeforethecoronationandtheceremonywascancelled.Itwasheldthatthehiring
chargeswereirrecoverableasthecancellationoftheceremonyfrustratedthecontractanddischargedthe
parties.

38. DISCHARGE
3.Illegality.
Ifperformanceofcontractualobligationsbecomesillegalbyreasonofchangeoflaworotherwisethe
partiesaredischargedasthereisnoobligationtoperformthatwhichhasbecomeillegal.
4.DeathorPermanentIncapacitation.
Incontractsofpersonalserviceorperformancee.g.employment,thedeathorpermanentincapacitationof
apartyfrustratesthecontractanddischargesthepartiesastheobligationsarenotgenerallytransferable.
5.GovernmentIntervention.
Ifapolicyactorregulationmakeitimpossibleforapartytocompleteitscontractualundertakingthe
contractisfrustratedandthepartiesdischarged
6.SuperveningEvents.
Theseareeventsthatdelayperformanceandtherebychangethecommercialcharacteristicsofthecontract.
Thechangemustbefundamental.Asageneralrule,additionalexpensesdonotfrustrateacontract;
however,theymayiftheyrenderthetransactioncommerciallyuseless.
InVictoriaIndustriesLtdV.LamanbhaiBrothers,thesupplierwasliableindamageswheretheEastAfrica
RailwaysandHarboursCorporationhadagreedtorailmaizetoDarbutsubsequentlydeclinedtodosoand
thesellerwasunabletosupplierthemaize.Whensued,thesellerpleadedthatthecontracthadbeen
frustratedbythechangeofheartofthecorporationastherewasnoalternativeroutetothecoast.Itwas
heldthatthesupplierwasnotliableasthecontracthadbeenfrustrated.

39. DISCHARGE
Consequencesoffrustration
Whenacontractisfrustrated:-
Itisterminated
Moneypadisrecoverable
Moneypayableceasestobepayable
Ifapartyhassufferedlossbyreasonofperformance,thecourtmayordertheothertopaytosuch
partyasumofmoney
Ifapartyhasderivedbenefitotherthanfinancial,thecourtmayordersuchpartytopaytotheordera
sumofmoneywhichmustbelessthanthebenefititsoderived.

40. DISCHARGE
4.DISCHARGEBYBREACHOFCONTRACT.
Breachofacontractdoesnotdischargeit;itgivestheinnocentpartyanopportunitytotreatthecontractas
repudiatedorasexisting.
Ifittreatsthecontractasexisting,itisboundtohonouritsparthowever,iftreatsitasrepudiateditisnot
boundtodoso.
Breachofcontractmaybe:-
Anticipatory
Actual
1)ANTICIPATORYBREACHOFCONTRACT.
Thisisasituationwhereapartytoacontractexpresslyorbyimplicationintimatestotheotherinadvanceits
intentionnottoperformonthedateofperformance.Evidencemustclearlysuggestbreachofcontract.
Theinnocentpartymay;
SueinDamages.
Waitforthepartytoperformbytheduedate.
SuefortheDecreeofSpecificPerformance.
2.ACTUALBREACHOFCONTRACT.
Thisentailsthenon-performanceofaparty’sobligationontheduedateortenderingdefectiveperformance.
Theinnocentpartymaytreatthecontractasrepudiatedifthebreachisfundamentaltothecontract

41. DISCHARGE
DISCHARGEBYOPERATIONOFLAW.
Entailsthedischargeofpartiesformtheircontractualobligationsattheinstanceofthelaw.Sucha
dischargemaytakeplaceintheeventof:-
Mergeri.eincorporationoftheitemsofasimplecontractintoasubsequentwrittenagreementbetween
theparties.Thesimplecontractisdischargedbytheoperationothelaw.
Death;Incontractofpersonalserviceorperformance,thedeathofapartydischargesthecontract.
LapseofTime;Iftimeisoftheessenceofthecontractandapartyfailstoperformwithinthe
prescribedtime,thecontractisterminated

42. REMEDIES
When a contract is breached, the innocent party has a cause of action known as breach of contract which
entitles it to a remedy.
Remedies for breach of contracts are:-
Common Law and
Equitable
Whereas Common Law remedies comprise damages only, Equitable remedies include;
Injunction
Rescission
Specific performance
Quantum Meruit

43. Limitations
LOSSOFREMEDY(LIMITATIONOFACTION)
Whenaperson’slegalorequitablerightsareviolated,heissaidtohaveacauseofactione.g.breachof
contract,negligence,nuisanceetc.Causesofactionsarenotenforceableinperpetuity.
TheLimitationofActionActprescribesthedurationwithinwhichcausesofactionmustbeenforced.
Ifnotenforcedwithintheprescribedtimetheactionbecomesstatutebarredandisunenforceable.
E.g.abreachofcontractmustbeenforcedwithin6years.Negligence,assault,nuisanceandfalse
imprisonmentarealllimitedto3yearsandenforcinganarbitralawardorcourtorderis6years
Asageneralrule,timestartsrunningonthedatethecauseofactionaccruesorarises.Howeverthe
runningoftimemaybepostponedincertaincircumstancese.g
Iftheprospectiveplaintiffisaninfantorminor,timestartsrunningwhenitattainstheageofthe
majorityordieswhicheveroccursfirstor
isofunsoundmind,timestartsrunningwhenhebecomesofunsoundmindordieswhichever
comesfirst.
islabouringunderignorance,fraudormistaketimestartsrunningwhenheascertainsthefactor
whenareasonablepersonwouldhaveascertained.
isthepresident,timestartsrunningwhenheleavesofficeordieswhicheveroccursfirst.
Whentimestartsrunning,itgenerallyrunsthroughandtheactionbecomesstatutebarred.However,a
statutebarredactionmaybeenforcedwithleaveofthecourtifitisprovedthatthefailuretosuewas
justified.

44. THANKYOU
Co-operativeBankHouse,8thFloor,HaileSelassieAve
P.OBox548-00200,Nairobi,Kenya
Tel:[phone]|Mob:[phone]
Email:[email protected]
www.ncia.or.ke