MERCANTILE LAW COURSE WORK (GROUP WORK)

TUTOR: EMMANUEL KASHAIJA / RAZAK TIBAKUNO

LECTUTER: LUBOGO ISAAC

CLASS: LLB2

STREAM: A

GROUP MEMBERS.

BRIEF FACTS.
Franklin Deks planted three acres of coffee which he intends to harvest by
December 31th, 2020.Livingstone fero is desirous of buying the coffee from Deks at
20,000,000. Deks received the 20,000,000 and pledged to have the coffee
transferred to fero by the end of December after Harvesting it. Deks and Sixteen-
year-old Ronald Kads who had started the spraying business to raise money for his
school fees have meet and unanimously agreed that Kads will spray the three acres
of coffee against wild pests for 5,000,000. on 19th November 2020, after Kads spraying
the coffee, an angry group of youths burnt down the farm and all the coffee was
destroyed. However, Kads was not happy with a one Tumwebaze Pams who sold to
him gadgets used for spraying as the gadgets did not match the Specifications that
he brought to Pam’s attention. Pams claims that the gadgets she delivered were
similar to the sample of the Gadgets that Kads Showed her.

ISSUES:

1.Whether the contract between Franklin Deks and Livingstone Fero is one of
existing goods?

2.Whether there was a contract of sale between franklin Deks and Livingstone
Fero?

3.Whether Ronald kads has the capacity to contract?

4.Whether the contract made between Ronald kads and Franklin Deks is one of
supply of services?

5. Whether Fero can sue for discharge by frustration?

6.Whether Ronald Kads act of showing Pams the specific Goods he wanted amounts
to a condition of a contract?

7.Whether there any available remedies?

LAW APPLICABLE

THE 1995 CONSTITUTION OF THE REPUBLIC OF UGANDA AS AMENDED

SALE OF GOODS AND SUPPLY OF SERVICES ACT OF 2017

CONTRACTS LAW ACT NO.7 OF 2010

CASE LAW

COMMON LAW

RESOLUTION OF ISSUES.

ISSUE 1.

Whether the contract between Franklin Deks and Livingstone Fero is one of
existing goods?

Section 11 defines goods as “emblements, growing crops, unborn young of animals

and things attached to or forming part of the land which are agreed to be severed
before sale or under the contract of sale.”

Goods are also defined by the Black’s Law Dictionary as, “tangible personal
property other than money; esp., articles of trade or items of merchandise.” 2

According to Section 13 future goods are “goods to be manufactured or acquired

by the seller after the making of the contract of sale.”

The Black’s Law Dictionary defines future goods as, “goods that will come into
being, such as those yet to be manufactured; goods that are not both existing and
identified.”4

1
Sale of Goods and Supply of Services Act, 2018.
2
The Black’s Law Dictionary, 7th Edition, pg. 701.
3
Ibid;
4
The Black’s Law Dictionary, 7th Edition, pg. 702.
Section 6 (1)5 defines existing or future goods as “the goods which form the
subject matter of a contract of sale may be existing goods owned or possessed by
the seller, or goods to be manufactured or acquired by the seller after the making
of the contract of sale.”

In the case of Howell v Coupland6 the plaintiff was to buy 200 tons of potatoes
specifically grown on the defendant’s land. The crop was destroyed by disease and
the defendant could only deliver 80 tons which were accepted by the buyer who
then brought a suit for damages for the remaining 120 tons. The court held that
the sale of the 200 tons of potatoes to be grown was a contract of sale for future
goods. Additionally, the seller was discharged from his duties when the crops
failed to materialize because of no amount of skill could have stopped the disease
from spreading upon its onset. Had the failure occurred due to the seller’s actions,
the outcome would be different. The court ruled in favor of the defendant.

In relation to the instant facts, the two parties reached a contractual agreement
where the seller was to deliver the coffee after harvesting it before the end of
December. Therefore, the fact that the goods weren’t already in the seller’s
possession as they were still growing crops by the time the contract was
formulated classifies the contract as a Contract of Sale for future goods.

BRIDGET EDITH NABWIRE

AS19B11/323

ISSUE TWO:

Whether there was a contract of sale between Franklin Deks and Livingstone
Fero?

Section 10(1) of the Contracts Act defines a contact as an agreement made with
the free consent of the parties with capacity to contract, for a lawful
consideration and with a lawful object, with the intention to be legally bound.

Section 2 (1) of the Sale of Goods and Supply of services Act defines a contract of
sale of goods as a contract by which the seller transfers or agrees to transfer the
property in goods to the buyer for a money consideration, called Price.
5
Ibid;
6
Howell v Coupland (1867) 1 Q.B.D 258.
Under the Sale of goods and supply of services act, Section 2 (4) provides that
where, under a contract of sale, the goods is transferred from the seller to the
buyer, the contract is called is called a sale and (5) where the transfer of the
property in the goods is to take place at a future time or subject to conditions to
be fulfilled after the making of the contract, the contract is called an agreement
to sell.

Section 22 of the Sale of goods act provides that where there is a contract for the
sale of unascertained goods, property in goods shall not pass to the buyer until the
goods are ascertained.

Section 25(1) of the Sale of goods act provides that where there is a contract of
sale of specific or ascertained goods passes to the buyer at such time as the parties
to the contract intend it to pass and (2) states that for the purpose of ascertaining
the intention of the parties’ regard shall be had to the terms of the contract, the
conduct of the parties and the conduct of the parties and the circumstances of the
case.

Section 26(1)(b) of the Sale of goods Act provides that where there is a contract
of sale of specific goods and the seller is bound to do something to the goods, for
the purpose of putting them into a deliverable state, the property shall not pass
until that thing is done, and the buyer has notice of it.

In the facts at bar, Deks agreed to sell his coffee from the three acres of to Fero
and received UGX 20,000,000 from him. He pledged to have the coffee transferred
to Fero by the end of December after harvesting it. Therefore, with regard to the
law, there was an agreement to sell between Deks and Fero.

ISSUE THREE

Whether Ronald Kads has the capacity to contract?

Article 34(4)7 of the constitution states that children are entitled to be protected
from social or economic exploitation and shall not be employed in or required to
perform work that is hazardous or to interfere with their education or to be

7
The 1995 Constitution of Uganda as amended
harmful to their health or physical, mental, spiritual, moral or social development
further more clause 58 states that a child shall be a person under the age of
sixteen years. In addition section 11(1)9 states that person has a capacity to
contract where that person is eighteen years and above. However section 11(2)10
states that a person of sixteen years or above has the capacity to contract as
provided under the constitution, this is further stated under section 411 the sales
of goods and supply of services Act, however, section 4(3)12 states that where
necessaries are sold to a person under eighteen years he/she must pay reasonable
price for the necessaries, this is evidenced in the case of Nash v Iman13 where the
court held that the tailor could not recover the money as the clothes were not
necessary to minor because he had sufficient of his own. Section 4(4)14 defines
necessaries as goods or services suitable to the condition in life of a person under
eighteen or other person to his or her own actual requirement at a time of
sale ,however, the rule where a minor is bound by a service contract which is for
their benefit this does not mean that a minor is bound by a contract which is
beneficial but only those which relate to the employment or similar contract and
this is evidenced in the case of Chaplin v Leslie15 Frewin publisher limited were
it was held that the contract enabled the minor to become the author which
means that the contract was of his benefit. In relation to the above facts Kads had
the capacity to contract since he was sixteen years of age as evidenced above and
the contract made between him and Tumwebaze Pams was a necessity since he
wanted to spray the coffee which was of his own benefit because he wanted to
raise money for his school fees.

In conclusion therefore, Kads had the capacity to contract.

Namiiro Benita AS9B11/339

NAMAKADDE WINNIE AS9B11/335

8
supra
9
The Contract Act,2010
10
supra
11
Sales of Goods and Supply of Service Act, 2017
12
Sales of Goods and Supply of Service Act, 2017
13
(1908) 2 KB 1
14
Sales of Goods and Supply of Service Act, 2017
15
[1966] Ch. 71
ISSUE FOUR

Whether the contract made between Ronald kads and Franklin Deks is one of
supply of services?

According to section 3 (2) of the Sale of Goods and Supply of Services Act 2017 a
contract for supply of services is not a contract for services or apprenticeship.
Section 2 of Employment Act 2006 defines a contract of services as any contract
whether oral or in writing whether express or implied where a person agrees in
return of remuneration to work for an employer and includes a contract for
apprenticeship.

In the case of South East Limited V Minister of Pensions 1968 2QB 497 A
contract of service exists if these three conditions are fulfilled (I) the servant
agrees that in a consideration of a wage or other remuneration he will provide his
own work and skill in the performance of some services for his master. (II) He
agrees expressly or impliedly that that in the performance of that service he will
be subjected to another’s control in a sufficient degree to make that other the
master. (Iii) The other provisions of the contract agree with its being a contract of
service.

In relation to the instant facts the contract between Kads and Decs was one of
contract of services and not supply of services. This is because Decs anonymously
met with Kads and agreed to give remuneration of UGX 5,000,000 for skill in the
performance of his service. Kads in doing so impliedly agreed that Decs would have
sufficient degree of the control over him. Thirdly no other provision in the
agreement between Kads and Decs prevents it from being a contract of services.

In conclusion the contract between Decs and Kads is one of contract of services
and not supply of services.

ISSUE FIVE

Whether Fero can sue for discharge by frustration?

In Mogas(U) Ltd vs Benzina (U) Ltd (CIVIL SUIT NO 88 OF 2013) Frustration was
defined to simply mean that both parties ought to be discharged of their
obligations for the future performance of the contract.
According to the Black’s law dictionary 8th Edition, frustration means the
prevention or hindering of the attainment of a goal, such as contractual
performance.

Under section 66(1) of the Contracts Act, it is provided that where a contract
becomes impossible to perform or is frustrated and where a party cannot show
that the other party assumed the risk of impossibility, the parties to the contract
shall be discharged from further performance.

Section 8 of the Sale of Goods Act provide that where there is an agreement to
sell specific goods, and subsequently the goods, without any fault on the part of
the buyer, perish before the risk passes to the buyer, the agreement is void. This
section only covers specific goods and future goods will not be avoided under this
section. However, at common law, a contract for sale of future goods will be
avoided. In Howell v Coupland [1876] 1 Q.B.258, a sale of 200 tons of potatoes to
be grown on a particular piece of land was held to be a sale of specific goods
despite of the fact that they were not existing goods for the purpose of the
common law rules of frustration. The destruction of the crop was thus held to
avoid the contract.

Section 27(1) of the Sale of Goods Act provides that unless otherwise agreed, the
goods remain at the seller’s risk until the property in the goods is transferred to
the buyer.

In the case of Taylor v Caldwell [1863] 3 B & S 826, a music hall was hired and a
week before being used for the concert, was destroyed accidentally by a fire. The
court held that the contract had been frustrated because the destruction meant
the contract was impossible to perform.

In the instant facts, Deks’ three acres of coffee was destroyed by a fire before the
property in goods had transferred to Fero. The three acres of coffee remained at
Deks’ risk. The destruction of the three acres of coffee by the fire rendered the
agreement to sell between Fero and Deks impossible to perform. Therefore, Fero
can sue for discharge by frustration.

ISSUE 6:
WHETHER KADS’ ACT OF SHOWING TUMWEBAZE PAM’S THE SPECIFIC GOODS HE
WANTED AMOUNTED TO A CONDITION OF CONTRACT?

Under section 1 of the Sale of Goods Act, a condition means an agreement with
reference to goods which are the subject of a contract of sale but collateral to the
main purpose of such a contract, the breach of which gives rise to a right to reject
the goods and treat the contract as repudiated.

According to Black’s law dictionary 9th Edition, a condition is a stipulation or

prerequisite in a contract constituting the essence of the instrument.

In Kampala General Agencies Ltd (1942) v Moody’s EA Ltd (1963) EA 549, Court
stated that a condition in a contract of sale is an obligation, the performance of
which is so essential to the contract that if it is not performed the other party may
fairly consider that there has been a substantial failure to perform the contract.

Section 14 of the Sale of Goods Act provides that (1) where there is a contract of
goods by description, there is an implied condition that goods shall correspond
with the description and (2) where the sale is by sample, as well as by description,
it is not sufficient that the bulk of goods correspond with the sample if the goods
do not also correspond with the description.

Section 17(1) of the Sale of Goods Act provides that a contract of sale is a sale by
sample where there is a term in the contract, express or implied, to the effect
that the contract is a sale by sample and (2)(a) in case of a contract for sale by
sample, there is an implied condition that the quality of the sample the quality of
the bulk shall correspond with the quality of the sample.

In Drummond v Van Ingen [1887] 12 AC 284, Lord Macnaghten states that “In
truth, a sample is simply a way of describing the subject matter of the bargain
and the principles which are applicable here”.

In Bunge Corporation v Tradax [1981] 1 WLR 711, under a contract of sale for
soya beans, a term required the buyers to give the sellers 15 days’ notice of
readiness of loading. The House of Lords held that this term was a condition that
the defendants were entitled to do.
In the instant facts, Kads described to Pams the specifications of the gadgets that
he wanted for spraying. Kads also brought a sample of the specific type of gadget
that he wanted and showed it to Pams. Pams was therefore under obligation and
required to perform as Kads expected. Thus, it amounted to a condition.

ISSUE 7:

WHETHER THERE ANY AVAILABLE REMEDIES?

The first remedy is specific performance .Under Section 63(1) of the sale of goods
and services Act, in an action for breach of a contract to deliver specific or
ascertained goods or services, the court may on application of the plaintiff, by its
judgment or decree direct that the contract shall be performed specifically 16.

Specific performance is an equitable remedy where court orders the breaching

party to actually perform the contract. In a contract of sale of goods, the goods
contracted ought to be unique, ascertained or specific goods. Specific goods are
goods that have been identified and agreed upon by the buyer and seller at the
time of making the contract.

In the case of Behnke V Bode, a contract was established between exclusive and
cuvee to supply two types of champagne. One was an ordinary champagne and was
available on the market whereas the other was a one rare vintage 1995 cuvee
champagne and specific by description17.

Therefore, from the instant facts provided, the fact that Kads had made
specification to the gadgets for spraying made them specific goods because they
were identified and agreed upon hence making the seller liable for specific
performance upon failure for the identified goods as per Kads claims.

The other remedy available is consequential damages. Under Section 65(3),

consequential damages resulting from the sellers breach include any loss resulting
from general or particular requirements and needs of which the seller at the time
of contracting had reason to know and which couldn’t reasonably be prevented by
insurance cover or otherwise.18

In the case of Hadley V Baxendale, the crankshaft broke in the claimant’s mill. He
engaged the services of the defendant to deliver the crankshaft to the place where
it was to be repaired and to subsequently return it after it had been repaired. Due
to neglect of the defendant, the crankshaft was returned 7 days late. The claimant
was unable to use the mill during this time and claimed for loss of profit. The
defendant argued that he was unaware that the mill would have to be closed

16
THE SALE OF GOODS AND SUPPLY OF SERVICES ACT, 2017
17
BEHNKE V BODE (1927) 27 LI.L.REP.24
18
THE SALE OF GOODS AND SUPPLY OF SERVICES ACT,2017
during the delay and therefore the loss of profit was too remote. The damages
available for breach of contract include: those which may fairly and reasonably be
considered arising naturally from the breach of contract or such damages as may
be reasonably be supposed to have been in the contemplation of both the parties
at the time the contract was made.19

In the instant facts, Livingstone Fero can seek consequential damages from
Franklin Deks because he had already paid money for the coffee but the coffee
plantation was later burnt down by angry youths who disliked Franklin Deks.

Service Agreement

This Service Agreement (“Agreement”) is being made between Ronald Kads located
at Kabaale-Uganda P.o box 356 and Franklin Decks located at Kabaale-Uganda P.o
box 897 on November 2, 2020. This Agreement will become effective on this very
date.

1. Services

The service provider agrees to perform the services of spraying a three (3)
acre-coffee plantation.

2. Compensation

The services stated in Section one amounts to a total cost of Five million
Ugandan Shillings only (5.000.000)

Amount Due at Signing:

Two million Ugandan Shillings only (2.000.000) which is to be paid upon

completion.

3. Expenses

19
HADLEY V BAXENDALE (1854) EWHC EXCH J70 COURTS OF EXCHEQUER
The service provider shall be entitled to cater for all expenses during the
course of his service execution.
.

4. Term
The term of this Agreement is that the service must be executed in less
than twenty (20) days from the Effective Date, unless terminated
earlier for other reasons available in this Agreement.

5. Termination
a. If either Party wishes to terminate the Agreement, they must
provide the other Party a three (3) day written notice.

b. This Agreement will automatically terminate when both Parties

have performed all of their obligations under the Agreement.

6. Relationship of the Parties

a. No Exclusivity. The Parties understand that this Agreement is
not an exclusive arrangement (i.e. – the Parties aren’t “going
steady”). The Parties agree that they are free to enter into
other similar agreements with other parties.

b. Independent Contractors. The Parties to this Agreement are

independent contractors which means there are no strings
attached. Neither Party is an agent, representative, partner,
or employee of the other Party.

7. Waiver
Neither Party can waive any provision of this Agreement, or any rights or
obligations under this Agreement, unless agreed to in writing by the
Parties. If any provision, right, or obligation is waived, it’s only
waived to the extent agreed to in writing.
 8. Amendments
This Agreement may be modified as needed. To make a modification, the
Parties have to agree to the modification in writing. The terms of this
Agreement will apply to any Amendment the Parties make.

9. Entire Agreement
This Agreement takes precedence of any other written or verbal
communications between the Parties.

10. Severability
If any section of this Agreement is found to be invalid, illegal, or
unenforceable, the rest of the Agreement will still stand.

Franklin Decks Service Receiver

Signed: ____frdk_______________

Name: Franklin Decks.

Date: November 2, 2020.

Ronald Kads. Service Provider

Signed: _____rkds______________

Name: Ronald Kads.

Date: November 2, 2020.