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Published by Diana Soni

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Published by: Diana Soni on Dec 31, 2012
Copyright:Attribution Non-commercial


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1.Read the Study Text provided below2.Assigned readings:Chapter 5 of Hussein3.Attempt the reinforcing questions given at the end of the lesson4.Compare your answers with those given in lesson 9
1.Sources the Kenya Law of Contract2.Elements of a contract3.Capacity4.Consideration5.Formality6.Legality7.Intention8.Terms of a Contract9.Vitiating elements in a contract10.Discharge of contract11.Remedies for breach of contract
The Law of Contract Act 1961, S. 2(2) provides that, except as may be provided by any written law for thetime being in force, the common law of England relating to contract, as modified by doctrines of equityand by the Acts of the United Kingdom Parliament specified in the schedule to the Act, to the extent andsubject to modifications in the said schedule, shall extend and apply to Kenya. The U.K. Acts specified inthe schedule are:(i)The Law Reform (Married Women and Tortfeasors) Act, 1935.(ii)The Law Reform (Frustrated Contracts) Act, 1943.(iii)The Disposal of Uncollected Goods Act, 1952. (This Act is no longer applicable, having beenrendered inapplicable by S. 10 of the Kenya Disposal of Uncollected Goods Act, 1987).1.1
Types of Contract
The common law of England relating to contract classifies contracts into the following categories:(i)Specialty Contracts - which are executed in a special way (i.e. written, signed and sealed).The Kenya Law of Contract Act, S. 2(1) provides that no contract in writing shall be
by reason only that is not under seal. This provision constitutes a significantstatutory departure from the English law relating to specialty contracts.(ii)Contracts of record e.g. court orders.(iii)Simple contracts - i.e. agreements that are enforceable by the courts.For the purpose of these notes "the law of contract" means the law relating to "simple contracts".
This is a legally binding agreement made between two or more parties or persons. It has also beendefined as a promise or set of promises for the breach of which the law provides a remedy and the performance of which the law recognizes as an obligation.All contracts are agreements, but all agreements are not contracts. This is because a contractimposes upon the parties legally binding obligations.
Types of ContractsFormation of Contract
A contract comes into existence when an offer by one party is unequivocally accepted by another, both parties must have the requisite capacity and some consideration must pass between them. The parties must have intended to create legal relations and the purpose of the agreement must have been legal. Any requisite legal formalities must have been complied with.The above passage summarises the so-called elements of a contract. In order to constitute a contactand agreement must be attended by the basic elements.
This is an unequivocal manifestation by one party of its intention to contract with another. It is a clear intimation of intention to contract. The party manifesting the intention is the offeror and the one to whomit is made is the offeree. 2.2
Nature of An Offer
An offer may take many forms - written, verbal or merely implied from conduct. The cases whichwill be referred to in these notes will illustrate this point. But whatever be the manner of itsmanifestation, an offer is either a
made or 
something done
by a person from which thelaw will deduce his intention to enter into a contract with another person
if that other person doesor promises to do, something required
. It must be distinguished from other acts which resembleit, such as:(i)
Invitation to treat
This is a mere invitation by a party to another or others to make offers. Again the offeror  becomes offeree and invitee the offeror. A positive response to an invitation to treat is anoffer.(a)A registered company issues a prospectus inviting the public to apply for its shares.This is an
to treat (i.e. an attempt to "attract" offers) and not an offer. It isnot regarded as an offer because of 
reasons: If it was an offer, everyapplication made pursuant thereto would constitute an
and the companywould be contractually bound to allot all the shares applied for. If the issue wereoversubscribed, the company would be sued by some of the applicants for breach of contract. As this appears to be unjust, the courts have avoided the eventuality byregarding the issue of the prospectus merely as an
invitation to treat
. Whenapplications are made, they will constitute the offers. The company then finds outhow many shares have been applied for and, if the issue is oversubscribed, acceptsapplications which
the shares available and "rejects" the others. The companycannot be sued by those to whom shares have not been allotted since there is nocontract between them and the company: they made an offer which was not accepted by the company - and the company could not accept the offer because it did not haveshares to sell.(b)The display of goods in a shop or supermarket with price labels attached thereon.The reasons why the courts decided
to regard this as an offer was explained byLord Goddard in
Pharmaceutical Society v. Boots
Cash Chemists (Southern)Ltd
Fisher v Bells.
A government ministry puts an advertisement in the newspapers asking for tendersfor the supply of a specified quantity of goods during a specified period of time. Theadvert constitutes an invitation to treat and a trader's response thereto is the
which the ministry may accept or reject.(d)Advertisement of sale by auction
Harris v Nickerson

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