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LAW OF CONTRACT

1.0 INTRODUCTION

The Law of contract is a very important branch of business Law. The basic principles of
the Law of Contract are provided under the Law of contract Act Cap 345 of 1975 R.E
2002 (Law of Contract Ordinance cap 433 of 1961) and case Law lay down by courts.

1.1. Sources of Law of Contract

The Law governing contracts in Tanzania has its source in the following:-

i. Local Statutes

These are legislation passed by the parliament since the independence to date

ii. English Common Law of Contract

English common Law simply means decision of courts on matters based on business
and commerce in Britain. It is found in the Law Report like, Appeal cases Law
Reports (A.C.) English Law Report (E.R) and All English Report (All ER). This Law
applies in Tanzania when the contract ordinance is silent on any particular aspect to
contract Law.

iii. Case Law

This is Law laid down in course of deciding cases at the level of High Court or Court
of Appeal. It is obtained on interpreting the statute or other precedents. It is
binding like a statutory Law.

iv. Text books

These are authoritative works written by legal experts in this field of Law. They
interpret the Law putting it in the correct perspective. Because of this function
courts refer to them when seeking an interpretation on certain areas of Law.

v. Sage of Trade and Customs

Are found in customs and norms of different tribes. They are used whenever there
is a legal vacuum.

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2.0 THE FORMATION OF CONTRACT

A contract is an agreement enforceable by Law between two or more persons to do or abstain

from doing an act or acts, their intention being to create legal relation and not a mere exchange
of mutual promises.

In order for a valid and enforceable contract to be formed, the following elements must be
proved as all existing:-

 Offer and acceptance ( i. e. parties)

 Considerations

 Legal capacity

 Intention to create legal relation.

 Reality / genuiness of consent.

 Written formalities.

2.1 OFFER AND ACCEPTANCE

In any valid contract there must be two parties. One party makes an offer and another party
makes acceptance.

I. Offer / proposal

Is a statement or presentation made by the offeror to offeree in order to induce the offeree to
enter into binding agreement upon acceptance of it’s terms.

An offer is communicated expressly (i.e. orally or in writing) or impliedly (through conduct) and it
can be made to a specific person or group of persons (i.e. specific offer) or to the public at large
(i.e. general offer).

However for a statement to be an offer, it must contain terms which are:-

 Certain
 Definite
 Capable of acceptance and
 Indicating firm and final expression of intention

Other wise such statement will remain a mere invitation to treat ( i.e. invitation to make an
offer).

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OFFER DISTINGUISHED FROM INVITATION TO TREAT (ITT).

An invitation to treat is a statement or presentation made prior to an offer. It invites a person to

whom it is made to make an offer. An invitation to treat contain terms which are:-

 Not definite i.e. begs for questions

 Not certain
 Not capable of acceptance and
 Does not indicate firm and final expression of Intention
However further distinction can be made under the following headings:-

(a) Auction

Advertisement for an auction is not an offer but merely an invitation to treat.

See. Harris V. Nickerson (1873)

 Offer is made when potential buyers (bidders) bid for the price at auction.

(b) Tender

Advertisement for tender is not an offer but merely an invitation to treat. (Nditi
1985:18)

 Offer is made when tenderers submit their tender bids

(c) Advertisement for sale of goods at stated price

Such advertisement is not an offer but merely an invitation to treat.

See Schawel V. Reade (1913)

 Offer is made when customer place an order to supplier who advertised.

(d) Self Service / Supermarket

Display of goods on shelves with their Price tags is not an offer for sale but merely
invitation to treat.

See Pharmaceutical Society V. Boots Cash Chemist (1953)

 Offer is made when customer pick the items and present them to cashier ready for
payment.

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(e) Price List / Catalogues

Issue of circular / catalogues advertising goods with their prices is not an offer but
merely invitation to treat. See Spencer V. Harding (1879)

 Offer is made when interested customers place order to supplier.

(f) Request for Information

When a person request information in order to make up his minds before making an offer,
such request is not an offer it self but a mere invitation to treat. See Harvey V. Facey
(1893)

(g) Passenger bus:

When passenger bus brake and stand at bus stop, that is an invitation to treat not an
offer

 Offer is made when Passengers board the bus for the purpose of being transported.

II. Acceptance

Refer to willingness or assent shown by the offeree to the term of the offer. Once offer and
acceptance cross each other, a binding agreement (Promise) arises as between the parties

1. Acceptance under various ways

 Auction sale – In this situation, an auctioneer makes acceptance. He signifies this through
various ways depending on the circumstance e. g. when the hammer falls to the highest
bidder.

 Tenders - The person(s) who invites tenders are the one who will accept the successful
tender.

 General offers - An offer by way of advertisement, of a reward for the rendering of

certain services addressed to the Public at large is a general offer. Acceptance takes
place when an individual person performs the stipulated services not before.

See Carlli LV. Carbolic Smoke ball co. (1893)

 Advertisement for sale of goods at stated price – When advertiser fills customers order.

 Self service store / Supermarket – When cashier accept the money and issue receipt to
customer.

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 Passenger bus – When the bus driver takes off at the bus stop with passengers and yet
takes the correct fares.

2. Rules governing Acceptance of an offer.

i. Acceptance must be in response to and in exchange of promise ( i.e. offeree must

have seen the offer not withstanding the motive).

See Williams V. Carwardine (1843)

ii. Acceptance must take place before offer is lapsed

iii. Silence does not amount to acceptance – i.e. acceptance must be by some positive
act.

iv. Acceptance must correspond exactly with the terms of the offer. ( i.e. must be
absolute and unqualified).

v. Acceptance must not amount to counter offer

See Hyde V. Wrench (1840)

vi. Acceptance must be communicated to the offeror

See Felthouse V. Bindley (1862)

 However communication of acceptance may be waived under the following

instance:-

- Unilateral Contracts – Carllil V. Carbollic Smoke ball Co.

- The use of Post Office – Household fire Insurance Co. V. Grants (1879)

- Cross offer – Tinn V. Hoffman

3. Postal Rules related to communication of acceptance.

At Common Law the Postal rule states simply that once a mail is correctly addressed a proper
stamp put on it and put in right hands of the Postal officer, then, that is effective communication
(See House hold Fire Insurance Co. V. Grant (1879) Unless expressly excluded by the offeror
(See Adams V. Lindsell)

This means that acceptance is binding as against both proposer and acceptor when it is put in the
course of transmission.

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Any Supported revocation by acceptor using quickest means of communication will be in effective.

The Laws of Contract Ordinance Cap 433 does not provide expressly for a rule governing Postal
services. However S. 4(2) of the ordinance is used instead. It reads – The communication of an
acceptance is complete.

a. As against the proposer, when it is put in the course of transmission to him, so as to be

out of the power of the acceptor.

b. A against the acceptor, when it comes to the knowledge of the proposer.

From the above quoted provision one may deduce the rule that where an acceptor posts his letter
of acceptance so that the letter is out of his power, then the proposer is bound but not the
acceptor himself. That is to say a contract has been concluded in as far as the proposer is
concerned. The acceptor is not bound until his acceptance comes to the knowledge of the
proposer. i.e. he may revoke his acceptance by using any quickest means of communication such as
telephone etc.

4. Communication of Acceptance by Telex, Fax and e-mail:

There is no authority at the moment in Tanzania on instantaneous forms of communication, like

Fax and e-mails (Internet services). However regarding e-mail Services or the internet generally,
it has been recently passed in the European Union Parliament that a contract is formed when an
acceptance is confirmed. It is not clear as to whether the Parliament in Tanzania will adopt the
same position, but for the purposes of harmonization of commercial Law Principles this will be
desirable.

See Entores V. Miles Far East Corporation (1955)

5. Lapse /’Termination of the Offer

Lapse / termination of the offer means to bring to an end or to cause the offer to cease. It
means the offer become negative thus incapable of being accepted to bring into being a binding
promise.

Offer may terminate under the following situations:-

(i) Lapse of time

Non acceptance within prescribe time terminate an offer, if no time is fixed, non acceptance
within reasonable time terminate an offer (See Ramsgate Victoria Hotel co. V. Montefiore (1866)

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(ii) Revocation

Offer lapse / terminate when offeror revoke (draw back) his offer at any time before
acceptance is made by the offeree. However, for such revocation to be effective, notice of
revocation must reach the offeree himself or by means of any other reliable person.

See Dickson V. Dodds (1876)

It should be noted here that, even if offeror gives out time for acceptance, he can still revoke
his offer at any time before the expiry of such time unless the offeree has furnished
consideration.

See RoutLedge V. Grant (1828)

(iii) Death

Death of offeree terminate the offer and personal representative can not accept the offer on
behalf of his estate (Nditi 1987: 30)

Also see Cheshire Banking Co. V. Duff (1986)

On the other hand the death of the offeror requires notification to the offeree especially for
contract not involving personal Services.

(Guest 1986: 56) Also see Brandburry V. Margan (1862)

(iv) Rejection / Renunciation

When the offeree rejects an offer, it comes to an end and any subsequent attempt to accept it is
inoperative. (Masawe 1995:20)

III. Formation of Contracts with Automatic machines

In contracts with automatic machines e.g. dispensing, cigarettes, admission of cars to parking
lots, cash dispenser machines etc. the machine makes an offer and are accepted by paying /
receiving money and receiving a ticket as receipt.

See Thomton V. Shoe Lane Parking Ltd (1971)

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Related Past Examinations

QN 1

The acacia store wrote in news paper advertisement saying that one TV set Sony 20” made in
Japan was on sale for Tshs. 200,000/=

Norah telephoned the store that she wanted one of the set. The store replied that it was sold
out and therefore could not fill her order. Norah sued Acacia store for breach of contract. Was
Acacia Liable? Give reason for your answer. (20 marks)

QN .2

(a) What are the essential elements of valid contract?

(b) Distinguish between offer and an invitation to treat.

(c ) In what ways may an offer be accepted?

(d) When does an offer Lapse?

QN .3

Dudubaya say to Anna “I wish to marry you” Anna Smiles broadly and during the weekend, she
takes him to visit her parents in the home village at Bagamoyo Coast Region. Dudubaya was very
exited and presented gifts to the parents of Anna. Both of them thereafter return to Dar Es
Salaam late on Sunday. Then a week later Anna marries Pesamingi. Is there a breach of contract.

QN. 4

(a) Daud L. proposes by letter to sell a house to Khamis B. for Tshs. 5,000,000/= A
letter was posted on 6th instant. The letter reaches Khamisi B on 8 th instant.
Khamisi B accepted Daudi’s proposal by letter sent by post on 9 th instant. The letter
reaches Daudi on the 11th.

(i) When is the offer complete? (5 marks)

(ii) When is the communication of acceptance complete? ( 5 marks)

(b) In the above case, if Daudi L. revokes his offer on 8 th instant and the letter
reaches Khamisi B. on 10th. When is the communication of revocation complete? (10
marks)

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QN.5

(a) List down he circumstances which may give rise to Lapse of an offer.

(b) A Dodoma business man wrote to ‘A’ of Dar Es Salaam offering to sell a certain
product item. Upon receipt of the letter, he telephoned acceptance. Three days
before this the offeror had posted a letter of revocation which arrived after
dispatch of the acceptance telegram.

Required

Determine the position of the parties and indicate the post rule referred to.

QN.6

J. happened to walking along the sea shore when come across a handbag full of Documents.
She picked it up and handed it over to a nearest Police post. Later in the Days she read in
the standard news paper an advertisement announcing a reward to the finder of a lost
handbag similar to the one she had delivered. She immediately report at the police post to
claim for the reward.

Ascertain the legal implications involved and position of J. in the case above. (10 marks)

QN.7

(a) Define the concept “contract” (4 marks)

(b) Explain how and when contracts with automatic machines e.g. dispensing cigarettes,
admission of cars to parking lost, cash dispenser machines etc. are formed (8
marks).

QN.8

Explain the application of the Postal Rule in Tanzania. (8 marks)

2.2 Consideration

Consideration centres on exchange of values embodied in goods or service. So one who parts with
value must be given some value in return by the one in whose favour he parted with his value.
(Quid Pro quo) nothing should not go for nothing.

(1) In the case of CURRIE V. MISA (1895)

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Consideration in defined as:

“Some right, interest, profit or benefit accruing to the one party or some forbearance, detriment
losses or responsibility given suffered or undertaken by the other”.

(2) Under S.2 (i)(d) of Law of Contract ordinance, consideration is defined as follows:-

“Where at the desire of the promisor the promisee or any other person has done or abstained
from doing or does or abstain from doing or promise to do or abstain from doing something, such
act or abstinence or promise is called consideration for the promise.

I. Types of consideration

The above definitions of consideration suggest two main types of consideration namely:-

i) Executory consideration

This is a type of consideration to be furnished in future. It is in a form of promise E.g. ‘A’

promise ‘B’ Tshs. 2000/= if he wash his car and ‘B’ agree to wash the car for the same amount.
Here the promise given by ‘B’ to wash the car is an executory consideration

ii) Executed Consideration

This is a type of consideration whereby the act or abstinence constituting consideration is

completed furnished / performed. E.g. ‘A’ offer a reward to any one who find his lost bag. ‘B’
found A’s lost bag. Here ‘B’ has furnished executed consideration.

II. Rules governing Consideration

In order for consideration to support contractual claims the following rules apply:-

(a) Consideration must not be past:

A past consideration is the one which is wholly furnished before the promise is
made. As a general rule past consideration is not good consideration ( i.e. null and
void).

See Re Mc Ardle (1951)

However the following exceptions are there to the above general rule.

(i) A promise to compensate for a past act which has been performed without any

Promise for payment –is binding. See Stewart V. Casey (1892)

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(ii) Work done by an authorized person in circumstance which rise an opportunity to

the recipient to accept or reject, yet recipient accept and enjoy the benefit
thereof. See Riddoch Motor V. Coast Co. op union (1971).

(iii) Promise made in writing to pay time barred debt and signed by both Parties.

(iv) Debt in relation to negotiable instrument.

(b) Consideration must move from the promisee or any other person.

If proposal is made to a specified person no any other person can furnish

consideration instead. On the other hand if proposal is general, any one who fulfills
the terms of the proposal can furnish consideration.

(c) Consideration must be sufficient but need not adequate recompense to the
promise. (ie Consideration must be sufficient but need not be adequate)

 Since not every act, abstinence or promise constitute consideration, the following tests
are essential to determine sufficiency of consideration:-

1. Performance of public duty owed to the defendant is not sufficient consideration even if
there was a promise made prior to it. See Collins V. Godefroy (1831)

How ever performance of Public duty in excess of the one owed to the plaintiff following
promise of payment from the defendant is sufficient consideration to support claims for
such payment.

See Glassbrook V. Glamogan (1925)

2. Performance of contractual obligation already owned to the plaintiff is not sufficient

consideration. See Stillk V. Myrick (1809)

 Consideration need not be adequate provided it is the one agreed by the parties at
the time of making contract, provided no element of fraud, unsoundness of mind or
coercion can be proved before the court of Law. Under this rule, the court is able
to enforce a contract for washing a saloon car for Tshs. 200,000/= provided both
parties have attended to this value.

(d) Consideration must not be illegal

Consideration furnished or to be furnished must not be contrary to the Public

Policy. E.g. ‘A’ promise ‘B’ Tshs. 1,000,000/= if ‘B’ kill ‘C’. in this if ‘B’ kill ‘C’ yet he
can not enforce payments of Tshs. 1,000,000/= through the courts

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QN .9

a) Distinguish between executory and executed consideration

b) What test of sufficiency is there to consideration

c) Past consideration is null and void thus can not support any contractual claim.” Discuss

d) Mr. X. offered a reward of Tshs. 500,000/= to whoever found his lost briefcase. He reported
the fact to the Police station and given Rb no. 05/001/04. One day Omera, Police man
arrested Dudubaya from his home for beating Mr. Nice and when searching he found a
briefcase belonged to Mr. X. and submitted it the police Station. Mr. Omera now demand
Tshs. 500,000/=. Advice him accordingly.

2:3 INTENTION TO LEGAL BOUND

The parties to a contract must intend to create legal relationship; otherwise their agreement will
become unenforceable by law.

Tests of intention can be analyses under the following two headings:-

(a) Domestic / Social Agreements

The presumption is that all domestic agreements do not intend to legal bound.

See Balfour V. Balfour (1919)

However, this presumption is not applicable to any agreement made by the Couples if they are
separated or are about to separate. See Merrit V. Marrit (1970)

(b) Business / commercial Agreements

The presumption is that all business agreements intends to legal bound However the parties may
expressly declare that the do not wish to assume contractual obligations (i.e. not legal bound).

See Rose & Frank V. Crompton (1925)

QN .10

a) What do you understand by the term “Intention to Legal bound”.

b) The presumption in domestic agreement is that no intention to legal bound while in that of
business there is intention. Do you agree?

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2:4 CAPACITY TO CONTRACT

Capacity to contract refers to competence one has to make a valid contract.

The general rule is that every person is competent to contract provided.

 Is of the age of majority

 Who is of sound mind and

 Who is not disqualified from contracting by any Law to which he is subject”.

Factors Vitiating Capacity

(a) Age:

Any person below the age of majority is known as ‘minor’ or ‘Infant’ the general rule is that a
minor is incompetent to make contract. This general rule is supported by the following facts:-

(i) When a minor contract for supply of non –necessary the contract is void.

(ii) When a minor makes payments using negotiable instrument e.g. cheque – the contract is void.

(iii) Agreement made by major age person to pay debt incurred during minor age – is void. Hence
in the above sort of agreements a minor is not held liable because he is incompetent.

However the following EXCEPTIONS are there to the above general rule whereby a minor
becomes competent to such sort of contract and he becomes liable under the contracts:

(i) Executed contracts for necessaries

Necessaries in this context means goods suitable to the condition in life of such infant/ minor or
other person and to his actual requirements at the time of sale and delivery. If a minor is supplied
with necessary at the time he had well supplied with such necessaries the supplier of such items
is not entitled to reimbursement. See Nash V. Inman (1908)

(ii) Contracts for minors benefits

‘Contracts for minor’s benefits such as contract for service, education etc. are binding to minor.

See Robert V. Guy (1913)

(b) Unsoundness of minds

These categories include:

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 People who are mentally deficient by reason of lunacy

 Drunkenness

The general rule is that the listed above persons are in- competent to contract

However the following EXCEPTIONS are there to the above general rule.

(i) A person who is usually of unsound mind but occasionally of sound mind may make
contract when he is of sound mind.

(ii) A person who is usually sound mind, but occasionally unsound mind may not make
contract when he is of unsound mind.

(c) Corporation

A company once registered / incorporated becomes a legal person. As a person, its

contractual enter into those contracts which the memorandum of Association of the
company allows and not otherwise.

See Ash bury Railway Carriage V. Ritchie

QN. 11

(a) What are the facts underlying the general rule that minors are not competent to contract
(6 marks)

(b) There are two exceptions underlying the general rule where under some special
circumstances the law allows minors to enter into contracts. Outline the exceptions ( 14
marks)

QN12

(a) Explain the legal rules relating to:

(i) The contractual capacity of legal person or corporation ( 5 marks)

(ii) The contractual capacity of infant ( 5 marks)

(b) Describe the capacity of unsound person as per section 12(1) of the law of contract
ordinance, Tanganyika 1963.

(c ) What are the facts vitiating capacity to contract under the law of contract ordinance?

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2:5 REALITY / GENUINESS OF CONSENT

Consent means agree freely knowing the reality or truth of the fact i.e. Consensus ad idem
(meeting of two minds upon common purpose). Lack of real consent on either or both
parties to a contract renders such contract void or voidable.

Contract may be rendered unreal (vitiated) by

 Mistake
 Misrepresentation
 Duress / coercion and
 Under influence.
1. Mistake

Occur where one or both of the parties enter into contract under a misapprehension or
misunderstanding as to a fundamental fact of the contract. However, mistake should be of
fact not of law. See Sharp Bros and Knight V Chant (1917) 1

There are three types of mistake namely:

(i) Common mistake

This is bilateral identical mistake. Under this type mistake two cases are involved.

(a) Cases of res extincta

Relate to mistake as to the existence of the subject matter of the contract

See Coutuner V. Haste (1856)

(b) Cases of res-sua

Relates to buying something which already belongs to you. See Cochrane V. Wills
(1865)

(ii) Mutual mistake

This is bilateral non- identical mistake. It relates to mistake as to the identity of

the subject matter of the contract. See Tramplin V. James (1880)

(iii) Unilateral mistake

This relate to mistake as to a person contracting with. It is a mistake made by one

party only. See Cundy V. Linsay (1879)

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Contract made under any of the above mistake become void. However where parties
contract face by face there will be no mistake as to a party contracting with, instead a
contract will be voidable for fraud

See Lewis V. Averay (1971)

Or Philips V. Brooks Ltd (1919)6

2. Misrepresentation

Occur when one of the parties to a contract made a false statement presentation either:-

 Innocently
 Negligently or
 Fraundlently
Contract made under circumstances of misrepresentation is voidable at an option of the
innocent party.

Remedies available to innocent party under:

(i) Innocent misrepresentation

The party misled can ask the court to rescind the contract but has no right to ask
for damages.

(ii) Negligently misrepresentation

The party misled may sue for rescission and /or damage.

(iii) Fraudulent misrepresentation

 The party misled may sue for rescission and /or damage.

Distinction between mistake and misrepresentation

Mistake Misrepresentation

Is on one or both parties Is on one party only

Render the contract void Render the contract voidable

Property moving can be recovered from Property moving can only be recovered from
contracting parties and even from third party contracting party but not from third party in
good faith.

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3. Duress /coercion

This means actual violence or threat of violence to the person of the contracting party or
those near and dear to him. Duress probably render the contract voidable.

NOTE:

The concept is not applicable to threat to property

See Skeate V. Beale (1840)

It must be calculated to produce fear of loss of life or bodly harm

See Cumming V. Ince (1847)

4. Undue influence

This occur when a contract is concluded by two parties, one has got stronger mind over another.
In this case it is presumed that the consent of weaker mind’ part is not freely given

The laws specify certain relations to contract as having circumstance undue influence. These are:

 Parents and children

 Religious leaders and their followers
 Solicitor and client
 Trustee and beneficiary
 Guardian and ward etc.
The contract is voidable at the option of weaker mind’s part.

QN. 13

a) What do you under by the term “consent” under the law of contract”

b) In what instances can consent be vitiated?

(c) Outline and explain briefly the circumstances which vitiate the consent of the
parties in a contract.

(d) i) Mention four (4) types of mistakes falling under unilateral or mutual mistake

ii) How will a mistake as to the identity of the other party make a contract
voidable?

(e) Briefly explain the following legal terms

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i) Misrepresentation
ii) Concealment
iii)Fraud
3.0 TYPES OF CONTRACTS

These are several types of contract including:

 Valid contracts
 Voidable contracts
 Void contract / unenforceable contracts
 Illegal contracts.
3.1 Valid contracts

Is the one which is enforceable by law i.e. it contains all essential elements for the creation of
contract in the eyes of law. As such it gives rise to rights and obligations between the
contracting parties.

3.2 Void contract

Is the one which is not enforceable by law. i.e. it lack essential element for the creation of a valid
contract. Void contract give no rights and obligations between the parties since the court holds
to be no contract at all but a nullity from the beginning.

Examples of void contracts:

 Agreement made by a person incompetent to contract.

 Agreement made under circumstances of mistake
 Agreement made without consideration if not under seal.
 Agreement made without written evidence required for the formation of such type of
contract
 Agreement with no intention to legal bound.
NB: If there is any property moved under a void contract, such property can be recovered the
contracting parties and even from third party.

3.3. Voidable contract

Is a contract with full legal forces until the party entitled to rescind it does so, short of
which the contract remain intact.

Examples of voidable contracts:

 Agreements the consent of one party is obtained by coercion, undue influence or

misrepresentation.

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 Agreement made by minor such as having shares in a company or becoming a partner. Such
contract could be enforced against him unless he avoid it within a reasonable time.

N.B. Property moving as between contracting parties can be recovered but not from third
party. See Philips V. Brooks

3.4. Illegal contract:

Is any contract formed contrary to the Public policy

Examples

 Agreement involving some degree of moral wrong

 Contract to commit crimes

 Contract to defraud revenue etc.

4.0 DISCHARGE OF CONTRACT

Discharge of contract means the end of contract i.e. the mutual release of the parties from their
contractual obligations.

There are various ways through which a contract may come to an end. These are:-

1. By Performance:

This means each party to the contract fulfils his obligations or duties as agreed. For instance, ‘A’
agree with ‘B’ to sell his shoes for Tshs. 10,000/=. This contract is discharged by per formance
when ‘A’ deliver shoes to ‘B’ and ‘B’ pay Tshs. 10,000/=.

2. By agreement:

A contract may be discharged through mutual agreement. Parties may agree to abandon the
contract without claim for damage. This is easy to do since a contract which is freely formed may
be freely discharged. However in a situation whereby one of the parties has performed his duties
and the other one has outstanding obligations, to discharge such contract by agreement, the
latter must furnish a satisfactory consideration for his release ( i.e. accord and satisfaction)

3. By Frustration

This occur due to the happening of an event beyond the control of either party which makes
performance of the contract impossible

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For example: (Frustrating events)

 Destruction of the subject matter of the contract

 Death or illness (contract for personal services)
 Change of law (government interference)
 Non occurance of an event. Which froms the bens of the cutract.
NOTE: Shortage of supply of goods / materials does not form part of the frustrating events.

See M/s Kanyarwe Building contractor

V. Arttoney General & others (1985) T.L.R 161

4. By Breach

Discharge by breach occurs

(i) Where one party fails to perform his obligation under the contract. e.g. Seller fails to
deliver ordered goods or deliver wrong quality goods.

(ii) Where one party expressly states that he will not perform his obligation (renunciation).

See Hochster V Dela tour (1853)

(iii) Where one party’s act makes performance on the other party impossible. See Omnium
D’enterprises and other V. Sutherland (1919)

N.B

(a) Any breach which takes place before the time of performance has been arrived is called
“anticipatory breach” e.g (ii) above.

(b) Breach of contract entitle a right of action on the injured party.

QN. 14

Out line and discuss circumstances in which a contract may be discharged.

QN. 15

Explain any three (3) methods of discharging contract (20 marks)

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5.0 REMEDIES FOR BREACH OF CONTRACT

A remedy is the means given by law for enforcement of one’s infringed right.

The following remedies (courses of action) are avail able to an injured party whenever
there is a breach of contract.

(a) Damages

The term damages means compensation inform of money. In order to establish a

right for damages the plantiff is required to show that there was a contract and in
some particular aspect it has been breached leading to the sustenance of a loss or
infringement of legal right. Damage may be specific (liquidated) or general
(unliquidated) damage. It is specific when the parties quantify the amount of claim
in money terms at the time of making contract, whereas general damage is left to
the discretion of the court after the contract has been breached.

(b) Specific Performance

This is another type of remedy whereby the court on application by the plaintiff
orders the defendant to discharge his obligations as per terms of the contract.
(e.g. to deliver the goods). This is granted only where damages cannot be sufficient
compensation to the injured party.

(c ) Injuction

This is also an order issued by the court on application by the plaintiff seeks to the
defendants from committing a breach of contract or reverse the effect of an
existing breach. It restrains a party in breach of contract from performing more
of the acts which amount to further breach of contract.

(d) Refuse any further Performance / Rescission

Another remedy available to an injured party whenever there is a breach of

contract is to refuse any further performance on his part and set up the breach as
a defense if the party who has committed the breach attempts to enforce the
contract against him.

(e) Claims on quantum Merruit

This remedy is used to recover a reasonable sum where there is a contract for
supply of goods or services but the parties have not fixed any precise sum to be
paid or work has been done under a void contract.

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QN.16

What courses of actions are available in law to the injured party when a contract is broken? (20
marks)

QN. 17

What are the remedies available to the injured party in the event of a total breach of a contract
(10. marks)

QN.18

There are times when the remedy of damages will prove inadequate to the victim of a breach of
contract. this might occur where the plantiff wishes to purchase a unique item which cannot be
acquired elsewhere.

Required:

List the remedies which may be awarded by the court in the above circumstances. (10. marks)

(i) Specific performance

(ii) Injuction

QN 19

Explaining the course of action available in law to the party injured when there is breach of
contract.

QN 20

a) Define a contract

b) If you are not capable to contract, effect will not be given to your agreement except for a
few exceptions. Comment.

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