VOID AND VOIDABLE CONTRACT

unenforceable, voidable and legal contract/reality of contract

A contract may be unenforceable where by these a contracts which can not be enforced
in the court of law meaning it is valid but due to some technicality it can not be enforced by
actions in the court of law example in section 6 (1) of sales of goods Act Cap ….. in section
2(1)( j)of the LCA, section 2(2) provides a different view which says that ………. This section
helps people to comply. Example a person to sell land you have to have a permit from the
Commissioner of Lands so as for that contract will be legal.

VOIDABLE CONTRACTS: a voidable contract is an agreement which is enforceable

by law at the option of one or more of the parties there to but not at the option of the other or
others provided under section 2(1) (i). it means that it’s a valid contract but one of the parties
has to bring it to an end or affirm it. Example a contract which has a mistake then the option
becomes voidable, Example being forced to sign a contract or misrepresentation example in
section 15-19 (the law expressly declares certain contracts to be voidable) example in section
18(1) and 11-12 which concerns the capacity to contract.

VOID AGREEMENTS: these are agreements that have no legal effect meaning as if
you have not done anything, this is explained in section 2(1) (g) of the LCA it can not be a
contract because it has no requirements of section 10.
Once the contract has been declared void the court will tell you to return to your positions as
in start over, in section 2(1) (j) and section 11 of the LCA and section 20 and as well as section
23-30 of the LCA

ILLEGAL AGREEMENT: if someone thing is illegal means it is the opposite of

legal in section 10 it provides for the essential things for a contract to be legal and the element
of legality may be find under section 23(1) of the LCA

ELEMENTS OF ILLEGAL CONTRACTS

(1) Contracts which a contrary to law

These Contracts that are forbidden by law in section 23(1) (a).

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(2) where the object of the contract is contrary to law example entering to an agreement
and the consideration is lawful but the object is unlawful example when we had
problems with sugar supplies now when you enter to a contract it becomes a lawful
consideration but if you buy it for the reason of selling it later the object is unlawful but
the consideration is lawful automatically the contract becomes void. This is provided
under section 23(1) (b)

(3) The agreement is for a fraud purpose Section 23(1) (c). this is an illegal agreement.

(4) Where the agreement may cause injury to a person or property of another this is
automatically an illegal agreement. Hiring someone to torture or beat someone or
conspiring to beat someone. Example in section 23 (1) (d)

(5) Contracts which are immoral or false to public contrary this is in section 23 (1) (d) this
depends on the culture and beliefs of a particular society. Example adultery in Tanzania
mainland it is not an offence but it is immoral but in Zanzibar it is a crime then definitely
these contracts will be rendered void. `PEARCE V. BROOKS LR1 EX 213.

- Contracts which are contrary to public policy. Example interference with

marital relations example if you tell another woman that once my wife dies I
will marry you it a void agreement or contract.

(6) Contracts intending to impel the administration of justice: example a young man raping
a kid, this is an offence but people settle the matter at home because the other side has
paid the 2nd party and have agreed on that this is a void contract. Example buying
witness and give false information.

(7) In section 26 of the LCA or when a lawyer works on a firm and

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 CONSEQUENCES OF ILLEGAL CONTRACTS

consequences are provided under section 23 (2) of the LCA where by it is a general rule
although there are some exceptions in this section

3 things to consider or principals or exceptions

(1) State of mind of the parties

(2) Illegality of a contract when formed
(3) Illegal performance of a contract lawfully concluded

(1) STATE OF MIND OF THE PARTIES: as a general rule everyone knows the law so
ignorance of the law is not an excuse Impari delicto (equally blamed). Here as a general
rule the law has no mercy on you. When you enter to a contract where by a person takes
your motor vehicle and uses it for unlawful things and you know so but since he pays
you you find it okay then if that person is caught then both of you are to be blamed. But
once that person did not know then that person that has to prove his innocence that he
did not know about that business of the other party.

(2) ILLEGALITY OF A CONTRACT WHEN FORMED: if you enter to an agreement and

it is known that it is unlawful then that contract is termed as it is void from the beginning
this is discussed in section 23 (2) and at the end you can not go seek help from the help
court. If the court knows that you did not know when entering that contract, then you
will get help from the court.

Consequences when knowing this is an illegal contract

- NO TITLE CAN PASS: if a contract of sale is illegal the buyer can not claim
the goods from the seller because to do so he would have to rely on the illegal
contract and the court will not assist him in its enforcement. The position is
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 however different if the illegal contract has been fully executed and the seller
has transferred the title to the goods to the buyer. Title can pass under an illegal
contract and when it has passed the buyer has the normal remedy. of an owner
discussed in the case of BELVOIR FINANCE COMAPANY LTD V.
STAPLETON 1971 Vol 1 queens bench division 210. In this situation the court
can not help you meaning that you can not rely on the illegal.

- MONEY PAID AND CHATTLES OR LEND TRANSFERS ARE

IRRECOVABLE: once the money is already passed to the other party it can not
be recovered.

EXCEPTIONS

- When the plaintiff needs not base his claim on the illegal contract: both are
aware that the agreement is illegal and you continued and the money was passed
already to the other party so the contract is fully executing, as a basic rule the
money can not be recovered, but if going to court that person should not rely on
the illegal contract but claiming that its your property it might be heard by the
court. In the case of ARMARSING V. KULUBYA 1964 AC 143.
- Money or chattels or land is recoverable even on the basis of illegal contract on
the 2 circumstances.

(a) Where the parties are not in impari delicto (equally blamed) meaning the
other party might be innocence he did not know what the other party would
do or when the person was forced to sign the contract.

(b) When the other party repents before performance of that illegal contract, by
confessing before starting the illegal contract, here you can recover anything
you gave away.

- Severance: it may happen that the contract is partly lawful an partly unlawful,
the unlawful part will be removed or struck out and the lawful part will be
enforced.

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- A SUBSEQUENT OR COLLATERAL CONTRACT WHICH IS FOUNDED
ON OR SPRINGS FROM AN ILLEGAL TRANSACTION BECOMES
ILLEGAL AND VOID

Entering a contract to kill someone and you go to the bank and get a loan to
proceed with that agreement then that agreement will be unlawful. Or entering
a contract with a person from TRA and making sure that he changes the details
of your car it becomes a collateral contract.

NEW TOPIC FREE CONSENT

Section 10 of the LCA free consent is one o the essential thing in an valid
agreement. There must be free consent of the parties, meaning there must be
lawful consideration.

FREE CONSENT:

in section 13 of the LCA says that a free consent is when two or more persons
are said to consent when they agree upon the same thing in the same sense.
Parties must come to agree upon the same thing, “Consensus ad idem”. The
people or the parties have equal bargaining power, meaning they negotiate.
Example in admission letters there is no bargaining power or going taking a
loan to the bank they have their own terms. Although in capitalism there is no
such a thing as equal bargaining power.

FACTORS VITIATING FREE CONSENT (section 14 of the LCA)

- COHESION: the use of fine defined under section 15 (1) of the LCA this is
committing any act by forcing or threaten someone to detain a certain property
such as a house or a car. That person may be you or another person who is
related to you or anyone who is close to you.

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 YOU MUST

(1) SHOW THAT YOU WERE REALLY THREATENED:

it will be a voidable contract under section 19 (1) of the LCA. You can affirm meaning going
on with the contract. Or you can set aside this is provided under section 64 of the LCA.

(2) UNDUE INFLUENCE

: defined under section 16 (1) of the LCA. This is when there is a party who are in position of
dominating your will and you must show that that particular person. 16(2) says that a person is
been in a position of dominating the will of the other when he makes a contract with a person
who has temporary mind problem.

FACTORS THAT SHOW THERE IS UNDUE INFLUENCE

;- Real authority; position of dominating someone’s will

;- Apparent authority; when you think that a particular person has a particular authority
while he is not example thinking that Davis Mwamunyange is still the General of the Army
while he is not so due

:- where he stands in a fiduciary relation; these are relations which are either related or
comes from trust. Example relationship between the bank and the client or wife and husband
or doctor and patient. Trusting your father or anyone who is related to you and tells you that I
will help you paying your fees but you have to sell me the house for lower price. AB

;- where a person who has temporary mental problems or a certain illness: Provided in
case number 8. Which is also provided under section 16 (3) of the LCA.

CONSCEQUENCES

- In section 19 (1) of the LCA provides for a general legal consequence for
agreement which lack free consent on grounds of undue influence. It means that
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 it is voidable. In section 19 (4) of the LCA shows that the victim party can affirm
the contract or set aside then he must return whatever he has benefited out of
that particular contract.

(3) MISREPRESENTATION: this is when the statements presented were

wrong.

KINDS OF MISREPRESENTATION
- Innocent misrepresentation; these are wrong statements which were made
innocently. This is in section 18 of the LCA.

: Unwarranted statement section 18 (a) of the LCA: thinking that he is right on

a certain thing but actually not.

: Breach of duty to speak in section 18 (b) of the LCA: this means when
someone misleads someone with out the intent to mislead. : :One is not obliged
to speak everything; my silence does not mean I decided to misrepresent you.

CIRCUMSTANCES

**WHEN YOUR SILENCE WILL CREATE A FALSE IMPRESSION

CIRCUMSTANCES THAT WILL LEAD TO A FALSE IMPRESSION

(i) Giving half truth: selling someone that a house and saying that you are
7 people while the owners of that house are 10 because the rest of the 3
will go to court and want their inheritance.

(ii) When a person discovers that he made a false statement then believing
it to be true: A duty to speak requires him to disclose the truth arises.

(iii) Even if the statement was true when it was made if the circumstance has
change so as to make it untrue a duty to speak arises to disclose the
change of circumstances. Example the land was well fertile when
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 negotiating and later on it changes due to a certain problem such as
volcano or earthquake you can immediately stop the contract.

**WHERE A CONTRACT REQUIRES ATMOST GOOD FAITH ( Uberimai

fidei). Example joint venture agreements such as entering a contract with a
company doing a certain thing such as construction of buildings. For this
contract duty to speak everything should be there.

**WHERE THERE IS FIDUCIARY RELATIONSHIP: if breaching the trust,

it will amount to innocence misrepresentation. Doctors should say the truth If
they can not deal with a particular patient.

?? INDUCING MISTAKE ABOUT SUBJECT MATTER (section 18 (c)

This means lying about something. Example when someone sells a a dog and
not saying that the dog Is ill, meaning knowing that it has no sickness or
problem. So there is a an innocent misrepresentation. So in the end you can
avoid the contract

REMEDIES FOR INNOCENCE MISREPRESENTATION AT COMMON

LAW:
The agreement will be termed as a voidable contract meaning the victim can
affirm and claim for damages and also put it aside. When the contract has been
put aside each party should restore any benefit that they got from each other.
However, when claiming for damages sometime they can be declined because
he did not intend to deceive you according to common law position

UNDER LCA section 19 (1) of the LCA;

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 A person should take necessary steps or ordinary diligence (as per section 17 of
the LCA) such as conducting an official search for what you want to buy. In
section 19 (2) of the LCA, it might be true that misrepresentation existed but
they did not induce you to engage in that contract. When affirming the contract
section 64 of the LCA will come into play meaning you have to be restored to
your original position.

- Negligent misstatement: these are wrong statement made negligently

- Fraudulent misrepresentation section 17 (1); these are wrong misrepresentations

which were made with the intentions to defraud the other person. This is when
you intended to induce someone to enter into a contract. Active concealment is
when you hide certain facts example you bought a land which is has debt and
when knowing so you sell it to another person without telling that person about
the fact that there is a debt on that particular land. Section 17 (2) of the LCA, it
looks at what were your intentions meaning “Mensrea” if you really had evil
intetions to fraud a person.

Section 19 (1) – (3) and section 64 to apply.

MISTAKE AS A FACTOR VIATING FREE CONSENT

This is when you do not have the correct perspective about the subject matter,
it would be lacking consensus

GROUPS MISTAKES

(1) COMMON MISTAKE: this occurs when both parties to the contract are
mistaken about the same state of affairs, this state of affairs may be a
mistake of subject matter or title

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 (i) MISTAKE AS TO THE EXISTENCE OF THE SUBJECT MATTER
(section 13 of the LCA ) (Resextincta): when the consent is free and
they enter into the contract but the subject matter of the contract no
longer exist example if you enter to a contract to get a car and the car
gets destroys. These two parties have committed a common mistake
because they both believe that the subject matter still exist while it does
not. It was based on a false assumption. So you would say that this
contract will be rendered Void because the subject matter no longer
exists. In the case of couturier V. Hastie 1856…..(not real names check
them later) also case number 23.
(ii) MISTAKE AS TO TITLE REST SUA
This occurs in a situation in which parties to the contract are mistaken
as to the title of the goods being sold. When you buy something and you
figure out that you are the true owner of that particular goods means that
the buyer will not buy anymore because it belongs to you already. For
that reason that contract will also be rendered void on the ground of
common mistake in the case of Cooper V. Phibbs
Then section 65 of the LCA will come into play

(2) MUTUAL MISTAKE: this is in a situation which both parties make the error, however
unlike common mistake it occurs when both parties are mistaken about different things.
Example you are selling cows of different color black and brown, the buyer wants a brown cow
and you intend to sell the black cow. That contract will be void according to common law
position but under the LCA it is on section 20.

NULIFYING CONSENT
NEGATIVES CONSENT:

(3) UNILATERAL MISTAKES: this situation occurs when one of the party who is mistaken
and the other one knows the truth. If a person comes and says that he is John while he is not
and he enters with that person and the party who does not know anything believes that he is
entering a contract with John. It could be a mistake on identity and attributes. Section 22 of the
LCA will come into play.

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SITUATION IN ENTERING THE CONTRACT
(i) When communicating at a distance: such as phone calls or emails
The presumption is that someone was trying to fraud you so that contract will be rendered
void. You have to prove to the court that you never intended to contract with such person
the contract may be void. In the case of Cundy V. Lindsay case (1879) 3. A.C 459

(ii) Face to face: the presumption of law is that you can not deny that you have mistaken
the identity of that person while you entered the contract while you were face to
face (meaning you have to take precaution such as asking for her identity card if the
identity card was forged then there you explain properly to the court so it will render
that contract void. In the case of Ingram V. Little [1960] 3 All E.R 332.

Mistake as to the person: it involves attributes or subject matter and identity. When it concerns
attributes then it is not easy to render the contract void it will surely be rendered valid by the
court.

2 PRINCIPALS OF LORD DENNNING:

says that he who acquires title he can defend it against the whole world

If the 3rd party acquires the title, then the 3rd party will be protected.

-identity: when someone claims he is someone while not then the law will be different.

UNDER THE LCA:

Section 21 and 22 will come in to play, in section 22 it shows that it is not void. For issue of
voidable agreements section 64 and 66 will come into play.

(4) THE PLEA OF NON EST FACTUM (documents mistakenly signed)

This is a common law principle and most of the time the cases that will be
used are the common law cases. When a person signs a contract without
knowing the content of that contract not negligently maybe he is too old or
sick or illiterate maybe language. One may not understand the legal effect
of that he may say that my mind did not accompanied my sign and I was

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 told something else which I did not sign that. In the case of Sluis Brothers
(E.A. Ltd V Mathias & Tawari Kitomari [1980] TLR 294. But you have to
prove to the court that it was not your intentions to sell. This contract is
rendered void meaning the things taken will have to be retuned back.

FORM AND CONTENT OF A CONTRACT

There are two kinds of contracts

(i) Contract under seal/ Deeds / Covenant /Specialties’ or Special

Contracts
(ii) Contracts under hand/ simple contracts

(i) CONTRACT UNDER SEAL: this is a contract which derives its validity from the
from it takes and not from the fact of the agreement or consideration for the promise.
It must be in writing or printed on paper, signed, sealed and delivered. Delivery
may either be by actual handling it to the other party or by stating an intention that
the deed to be operative even if it is retained in the possession of the party executing
it. They are rarely seen today. You do not have to prove that there is consideration
because they trust each other.

(ii) SIMPLE CONTRACTS: these are contracts that we find even today, they derive its
validity upon the presence of consideration amongst other essential ingredients of
a contract

FORMS THAT A SIMPLE CONTRACT MAY TAKE

(i) May be orally made: meaning that it is made by the word of mouth, by talking.
These contract is as valid as a written contract in the case of Buku V. Magori 1971
HCD 161 and the case of Merali Hirji and Sons Limited V. General tire East African
Ltd 1983 TLR 175.

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 (ii) It may be in writing: it may be written by hand or printed, written contracts have
rules its called (parole evidence rule) in section 100-109 of the Tanzania Evidence
Act cap 6. You may dispute on the capacity, or issues of misrepresentation or issue
of not being performance.
(iii) Contract which is partly Oral and partly in writing: this is one of the exception of
the general rule in the parole evidence rule, all this contract will be treated as a
single contract.
(iv) A contract required by the statutes to be in writing(STATUTORY
REQUIREMENT): example eland contracts such as selling it it has to be in writing,
there are land forms concerning seeking approval from the commissioner of land
that you re selling your piece of land.
(v) Contract required to be evidence by some writing: if not they are termed as an
enforceable contract.

CONTENTS OF A CONTRACT

There are certain contents that must be in contract to make that contract executable. There are
2 basic contents which are.

(i) You will see this when parties are negotiating, you may find representation and
terms of a contract, if it is breached you may sue as for a misrepresentation. If you
breach the terms the person can claim damages. The court will use the contractual
intention test to know what kind of statement will fall into misrepresentation or will
fall into terms. The court will ask itself was the statement made with the intentions
that its truth be guaranteed by the contract that inaccuracy of the statement would
result in automatic breach of the contract if the answer is yes than it is a contractual
statement and if the answer is no then it is a mare representation. What the court is
trying to see is that the moment the person making thee statement was he ready to
be liable incase the statements are wrong.

FACTOTRS THAT THE COURT WILL CONSIDER WHEN DETERMINING WHETHER

A STATEMENT IS A CONSTRRUCTUAL TERM OR MARE REPRESENATION

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 (i) Timing: the shorter the time the more it reflects that it is a contractual term. seen in
the case of Rutledge V. M…….number 4. And Shah V. Farley (1916) vol 2 ULR
189.
(ii) Importance of the statement: these are crucial statement which makes it a
contractual term, read the case Number 3.
(iii) Reduction of the terms into writing: if the statements were not reduced into writing
and entered into a written contract then parole rule of evidence will have to be
applied. In the case of Walker property investment (Bryton) Ltd V. Walker 1947
LTE 204.
(iv) Special Knowledge or skills: If the person making the statement has a skill or
knowledge on the particular subject he is making the statement on. Those
statements will be termed as contractual terms. In case Oscar Chess Ltd. V.
Williams [1957] 1 All E.R . 325; C & F 56. And in the case Dick Bentley
Productions Ltd. V. Harold Smith ( Motors Ltd. 1965] All E.R 65.

CHARACTERIZATION OF CONTRACTUAL TERMS

The terms may be implied or expressed, we have to characterize because they differ.

(i) Express terms: these are altered from your mouth, spoken.
(ii) Implied: this means it has not been heard or seen but just an assumption.

 EXPRESS TERMS

CATEGEORIES OF EXPRESS TERMS

(1) Conditions
(2) Warranties
(3) Intermediate or Innominate terms of a contract

CONDITIONS: this is a major term which is vital to the man purpose of the
contract, a breach of a condition will entitle the injured party to repudiate the
contract and claim the damages or he may decide to go on with the contract despite
14
the breach and recover damages instead. They may be condition precedent or
condition subsequent.
Example wanting Maize and you were given Beans. While your condition was
maize. If you breach a condition the injured party may sue for damages or rescind
the contract. Things to consider Time, …..

CONDITION PRECEDENT: this is a stipulation of a state of affairs which must be

achieved before any contractual liability is incurred. Example if you want to get a
loan and you mortgage your house you must go to municipal council to know the
exact value of your house so incase if you fail to pay back the loan. This is in case
of Poussard V. Splars & Pond [ 1876] 1 Q.B.D 410; S & T 351 and also in the case
of Bettini V. Gye [1876] QB 186 ( S & T 350)

CONDITION SUBSEQUENT: this is a condition where parties may agree that

upon the happening of a certain event then the contract should cease to bind or one
party is to have an option to cancel the contract, the injured party my inform the
other that if the price goes up inform me so I can cease the contract. This is in the
case This is in case of Poussard V. Splars & Pond [ 1876] 1 Q.B.D 410; S & T 351
and also in the case of Bettini V. Gye [1876] QB 186 ( S & T 350).

(2) WARRANTY: This is a less important term of a contract it does not go to

the route of a contract, a breach of it will only give the injured party the right
to claim or sue for damages but can not repudiate the contract. This is minor
because it exists to facilitate the vital terms of a contract. Example issue
concerning destination meaning the place of delivery, that person has not
delivered at the exact place, when that is breached you can only get your
luggage and sue that person for damages.

(3) INTERMIDIATE TERMS: in some circumstances it may be impossible to

classify a term as a either condition or warranty this term is assessed only in
the light of the consequences of a breach, if a breach of the term results in
severe loss and damage the injured party will be entitled to repudiate the
contract, while where the breach involves a minor loss the injured parties

15
 remedies will be restricted to damages, read case of Hong Kong Fir
Shipping Co. Ltd V. Kawasaki Kisen Kaisha Ltd. [1962] Q.B. 26 (S & T
338, c & P 75).

 IMPLIED TERM OF A CONTRACT: ideas that the two people have but have not
decided to put them down.
There are three ways things can be implied.

- Customs: there are some trade that have their own customs they may not be
expressed but will be impliedly inserted. Example borrowing 10mil from those
people who lend money and it is known that you must pay the interests.

- Terms implied by the court: as a general it is not a duty of the court to imply
terms into a contract how ever incase of seeking remedy where there is a conflict
then the court will apply an objective test and thinking as a third party any
reasonable person. As long as the terms do not contradict the terms of the
expressed terms. In the case of Merali Hirji nd Sons Ltd V. General Tire and
Legal pool city council V. Irwin (1976) vol AER 39.

- Terms implied by statutes: here there are certain statutes that regulate certain
kind of contract or business they have implied terms example the sales of goods
Act, there are terms which are implied. Rad section 12-17 of the sales of Goods
Act. Example when buying goods by descriptions.

STANDARD FORM CONTRACTS AND EXEMPTION CLAUSES

Standard formed contracts are contract prepared by one party who is the stronger contracting
party to be used by each customer who intends to contract with the company. Since the party
has to adhere to the terms of a contract as presented to him or rejects the contract this contracts
are also known as contract contract of adhesion. Contracts that are prepared to be used by the
mass they are uniform you can not negotiate anything because everything is already set

16
example in Banks you can not negotiate on the interest. Example the joining instruction of any
University. In preparing standard form contract the party preparing may decide to insert
whatever terms that may benefit him provided he does so within the arm beat of the law. Such
clauses or terms may be

(1) Exclusion clauses: it intends to exclude the breaching party completely from liability
in case he breaches the contract.
(2) Limitation clauses: it intends to limit the liability of the breaching party to certain
amounts only. Only says that I will only pay you 10% in case of anything.

THINGS YOU NEED TO ADHERE TO IF YOU RELY ON THE CLAUSES

- Must be incorporated into your contract: it must be amongst the terms of the
contract, the weaker party must be in a position to know, by giving a notice
before entering to a contract. Read case number 13 Olley V. Malborough Court
Ltd. [ 1949] 1 K.B . 532. example when you want to go sleep in a hotel.
 Incorporated By notice: sticking a notice somewhere
 Incorporated By signature: here it is regarded that you know that there are terms. Case
number 15 Brahab V…..
 Incorporated By the cause of dealing: that you have done a lot of business with such
person and it happened that there was a deal that was not properly incorporated, and
you say I did not know the exemptions clauses the party will tell you that you know
this because we have done a lot of business together.
- Reasonable: example on the bus when they say that you should watch out for
your luggage which can be seen but if not seen obvious that is not reasonable.
When telling someone that I will pay only 10% while a person has lost a lot.
- Clear and unambiguous: any ambiguity in an exemption clause should be
interpreted against the party that drew the contract and inserted that exemption.
Known as (Contra Proferentum Rule). Read case of HOUGHTON V
.TRAFALGAR ISURANCE 1954 Vol QB 247
- Where there is a fundamental breach of contract, the breaching party may not
be allowed to invoke an exemption clause to his favor.

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FUNDAMENTAL BREACH OF CONTRACT:

DOCTRINE OF FUNDAMENTAL BREACH: this is a breach that goes to the route of the
contract it causes the non injury party or the injured party to loose all benefits he expected to
get under the contract. This was a common law concept

COMMON LAW POSITION: in the early 1950s once a fundamental breach had been
committed the breaching party could not invoke exemption clauses in his favor to avoid
liability. The burden of proving the breach was on the party alleging it read case number 5
P….. V. walis and case number 7. These two cases supported this position that existed that
time. This position started to change in the mid 1970s. in the case of UGS Finance LTD V.
National Mortgage Bank of Greece 1964 Vol 1 LLOYDS REP 466 page 470 and in case
number 6 . and in case number 9. These were criticisms the case that over rule the decision was
a decision of 1978. The situation changed after this decision now this doctrine no longer exists
because of case number 9 which has overruled it. There certain laws which have been enacted
to protect the weaker party.

THE POSITION OF LAW OF CONTRACT ACT: the doctrine is still applicable according
to case number 24.

WHAT TO DO WHEN THERE IS A FUNDAMENTAL BREACH

- it is the duty of the non injured party to prove that there was a fundamental breach.
- he should act within a reasonable time

DIS CHARGE OF A CONTRACT

This is the coming to an end of the obligations or liabilities of a party to a valid contract. If you
perform the obligations to the contract, then you can say that you have discharged your
contracts

METHODS OF DIS CHARGING

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(i) Dis charge by agreement
(ii) Dis charge by performance
(iii) Dis charge by breach and acceptance of such breach
(iv) Dis charge by impossibility of performance and frustration
(1) DIS CHARGE BY AGREEMENT: this is a dis charge where by its generally agreed
that what had began or what has been created by an agreement may be dissolved by an
agreement this may be effected through the following ways

(i) Release and waiver: this works best in holly executory contracts each party waives
his rights and thus releases the other party from his obligation under the contract,
the promise of one party is consideration for the promise of another party. This
occurs where party to a contract agree that each party will not enforce his rights and
waive the other party’s obligation not to perform his part of the contract.

(ii) Accord and satisfaction: (section 63 of LCA) where “A” performs his part of the
contract and therefore makes “B” enjoy the benefit under the contract but “B” is yet
to perform his part then “A” ay agree to accept from “B” something different in
place of the original obligation in order to release “B” from his original obligation.
The agreement to dis charge “B” from his original obligation is known as accord
and the acceptance of something different is know as satisfaction . ex someone
hiring you to build a building and then the person fails to pay that money

(iii) Novation: (section 62 of the LCA) parties to a contract may agree to conclude a
new contract and substitute it for the old one there by dis charging the old contract
this may either entail a change of the parties to the contract or replacing the old
contract with a new one. Thus the original contract will be recended and replaced
by the new contract therefore the old contract need not be performed. Ex a
partnership and later they decide that we should not work together so one of them
walks out if the partnership and then later one of them forms a another partnership
meaning a new contract with another person so the old contract is replaced by the
new contract. The terms may be altered example changing the business.

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(iv) Provision for dis charge contained in the contract: presence of condition precedent
or subsequent in a contract shows an intention that the parties will not be bound by
the contract either until a certain condition is fulfilled or upon the happening of a
certain event, thus if the contingent even occurs parties will be mutually dis charged
from their obligation.

(2) DIS CHARGE BY PERFOMANCE: we enter into contract contemplating due

performance of obligation by either party there is a general rule which says a contract
will be dis charged when both parties have performed their obligation to the contract
however there are exceptions

EXCEPTIONS:

(i) Divisible contracts: (contract entire) is when you are in contract and the
obligation of the other party will commence when the other party has
completely finished performing his obligation. Divisible contracts: is when you
enter into a contract while paying on stages example after constructing 2 floors
if you are constructing a building so each step you are paid. With these contracts
part of the consideration of one party is set off against part of the performance
of the other. In the case of SUMPTER V. HEDGES 1898 Vol 1 QB 673 and
ROBERT V. HAVELOCK.

(ii) Acceptance of partial performance: where the party to whom the promise of
performance was made receives the benefits of partial performance of the
promise under such circumstances that he is able to accept or reject the work
and he accepts the work then the promisee is obliged to pay a reasonable price
for the benefits received, but it must be possible to infer from the circumstances
a fresh agreement by the parties that payment shall be made for the goods
supplied. In the case of CHRISTY V. RAW 1808 V 1 TAUNT 300. When only
part of the contract is done is called partial performance.

(iii) Completion of performance Prevented by the Promisee: where a party to a

contract entire is prevented by the promisee from performing all his obligations
then he can recover a reasonable price for what he has done on a “QUANTUM

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 MERUIT” basis in an action in (quasi- side contract) these are contracts that
are not really contracts (half contracts) PLANCHE V. COLBURN (1831) Vol
8 BIN 14.

(iv) Substantial Performance: when a person fully performs the contract but subject
to such minor defects that he can be said to have substantially performed his
promise it is regarded fart more just to allow him to recover the contract price
reduced by the extent to which his breach of the contract lessened the value of
what was done than to leave him with no right of recovery at all. The case of
DACKIN V. LEE (1916) Vol 1 KB 566 . you have to pay that person and you
minus the defect pay him according to what he has done only. Example building
a house where by you build a 2 rooms instead of 3 so they will reduce the value
of the defect and will pay you according to what you have done.

(3) DIS CHARGE BY BREACH AND ACCEPTANCE OF SUCH BREACH:

A failure to perform the terms to a contract constitute a breach which may be serious
enough to give the innocent party an option of treating the contract as dis charged the
breach may occur in 2 ways

(i) Anticipatory: (section 39 of LCA) one party to a contract may show by express
words or by implication form his conduct sometimes before performance is due
that he does not intend to perfume his obligations under the contract. Such an
announcement of intentions to perform must go to the (root) means breach. of
the contract otherwise the innocent party will not have justification to dis charge
the contract.

Where this breach is committed the innocent party is excused from further
performance
He is either entitled to an option either to sue from damages immediately after
accepting the breach or may wait until the day of performance becomes due. If
the innocent party fails to accept the repudiation thus leaving the contract intact
then party repudiating the contract may decide to perform the contract when the
time for performance arrives. Acceptance of repudiation must be done within a

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 reasonable time. Acceptance repudiation is termed as a waiver hence the
innocent party will have to perform his obligation. Example A person informs
you before the end of the contract that he will not continue with his obligations.
If you sue that person you can claim for damages.

(ii) Actual or Present breach: this occurs during performance of the contract if a
part fails to performs the main part of the contract or performs it inconsistently
he will have committed an actual breach. When a breach is committed the
innocent party may decide to treat the contract as repudiated and sue for
damages if the breach is accepted he becomes dis charged from performing his
obligations to the contract.

(4) DIS CHARGE IMPOSSIBLITY OF PERFORMANCE AND FRSTRATION: (section

66 of LCA) the doctrine of frustration operates in situations where it is established that
due to subsequent change and circumstances the contract is rendered impossible to
perform or it has become deprived of its commercial purpose by an event not due to the
act or default of either party. When you are in a valid contract but the time you want to
perform the obligation it comes to ur knowledge that you can no longer perform it may
it will not work

Instances of frustrations

(i) Destruction of the subject matter: in a contract and signed and you realized
the subject matter has been destroyed.

(ii) Non occurrence of the Contemplated events: there is a wedding and reserved
a hall and the bride did not appear while you have ordered everything
meaning everything is prepared, what happens is that you tell them that you
can not attend and the celebration to stop.

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 (iii) Death or incapacity of party for personal service: when you are in a contract
with a singer to perform on your party so the singer had was sick on that day
so he could not attend that contract will frustrated.

(iv) Unavailability of what was anticipated by the parties: when you are in a
contract and you anticipate the means of supplying cotton and the means of
transport is by train and you go to TRA and they say that they can not
operate during that week, so there is no performance there.

(v) Government or legislative intervention: you are in a contract and before you
perform it a law is enacted where such kind of business is illegal so the
contract will be frustrated

(vi) Intervention of war: you are in a valid contract and there is a war so you can
not trade with your enemy so that contract can not be performed.

(vii) Act of God: you are in a contract and a natural disaster appears the contract
will be frustrated.

LIMITATIONS OF DOCTRINE OF FRUSTRATION

(i) Mare increase in expense or loss of profit will not amount to frustration. When you
have a lot of commercial crops and knowing that 1 kilo is 5k and you realize the
price has decreased you can not say that it was a frustration.

(ii) Frustration It must not be self induced: meaning you enter in a contract sell a house
and you burn it. That is not frustration.

(iii) Foreseeability of the frustrating event: when one party foresees that there is a
problem somewhere and you keep on a contract and the contract can not be
performed and you proceed then you say that there was intervention that will not be
frustration of contract because there was already a notice of that place.

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EFFECTS OF FRUSTRATION

In section 56 (1) of LCA read also section 65 of LCA also in section 56 of the LCA

REMEDIES FOR BREACH OF CONTRACT:

There are 4 main types of remedies:

(1) DAMAGES: this is the monetary compensation given to the injured party it is always
calculated into monetary value.

TYPES OF DAMAGES:

(i) COMPENSATORY DAMAGES/NOMINAL DAMAGES: these are damages that

are awarded when the injured party or the innocent party has suffered no loss as a
result of the breach so this is a breach of right. When it comes to marriage on the
injured party is allowed to go to court for motional damage but for new law does
not provide but it only provides for monetary if incase you have been given gifts
such as cars you can claim it back.

(ii) SUBSTANTIAL DAMAGES: this is the opposite of nominal damages means it is

awarded as monetary compensation for loss suffered, they will calculate the loss in
terms of monetary value. In contract there are no punitive damages. In section 73
(1) and 2 of LCA provides for the right to be given compensation.

(iii) LIQUIDATED DAMAGES: ). Sometimes in international commercial contract

they may agree that who ever breaches the contract is suppose to pay an certain
amount of money this is called (Liquidated damages).

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RULES GOVERNING DAMAGES/ CALCULATION FOR DAMAGE OR PRINCIPALS:
These rules are provided in section 73

(i) The losses must flow naturally from the breach.

(ii) The damage must be cause by the proximate cause and not remote cause, this means
that the damage must be direct cause of the breach example demanding calculations
of a person being knocked over by a car. In insurance policy when you have insured
yourself with fire and then you were driving and it was raining and suddenly, refer
to the case of VICTORIA LAUNDRY LTD V. NEW MAN INDUSTRIES LTD

BRIEF FACT OF THE CASE:

The new man industries were supoosed to deliver boilers which they delayed, then
during that period they delayed there was an offer of the government to transfer
something , but since they did not have the boilers they failed to continue with the
tender , victoria laundry went to court and claimed damages that they should be
compensated of the 9 days and also they missed the tender which they could of
earned a lot of money. But obviously the court decided that they should be claim
only for the 9 days

(iii) The person must be able to contemplate or foresee, that failure to do this will
amount to loss, something you can not contemplate you will not be given damages
example the tender which was given by the government in the case of VICTORY.
Also in the case of HERON ii also provides issues of damages. A entered in a
contract with a ship, the contra t was to supply sugar and the ship was 9 days late
and when they arrived the price of sugar dropped so they sued the ship company
and the court said that they are entitled to compensation. Also HEDLEY V.
BAXENDELE (don’t forget them they will be a question In the exam.

(2) SPECIFIC PERFORMANCE: this means that you order the court that there is no way
such person should drop the contract he must fulfil the performance. But in issues of
marriages there is no specific performance. Meaning the person must perform what he
was supposed to.

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 - This means the actual carrying out of the legal obligation by the parties of a
contract. If you are to supply something you make sure that you should supply.
Usually it is present in an employment contract.

(3) QUANTUM MERUIT: this means payment for work done. There are 2 circumstances
where the claim can arise.

- When work has been done and accepted under a void contract, where by the law
presumes that there is no contract at all. Being in a contract with a minor. (title
can pass under illegal contract)
- When one party abandons or refuses to perform the contract. There is an
exception if there is a Lump sum contracts where parties agree that you must
perform fully then you will be paid if not then you wont.

(4) INJUNCTION ORDER: this is an order given by the court meaning a stop order, that
a certain thing must be stop. This is not a final judgment just an interim waiting for the
final judgment. This is the decision of the Court to give or not to.

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