THELAW OFCONTRACT

OBJECTI
VE

To pr
ovi
de t
he candi
dat
e wi
th a br
oad under
standi
ng oft
he f
oll
owi
ng concept
s
per
tai
ningt
otheLawofCont
ract
;

 Thenat
ureofacont
ract
.

 For
mat
ionofacont
ract
.

 Cl
assi
fi
cat
ionofCont
ract
s.

 Ter
msofcont
ract
;Exempt
ioncl
auses,
condi
ti
onsandwar
rant
ies.

 Vi
ti
ati
ngf
act
ors;
mist
ake,
misr
epr
esent
ati
on,
dur
essandunduei
nfl
uence.

 Pr
ivi
tyofcont
ract
.

 Ter
minat
ionanddi
schar
geofacont
ract
.

 Remedi
esf
orbr
eachofcont
ract
.

 Li
mit
ati
onsofact
ions.

I
NTRODUCTI
ON

Thi
schapt
erdeal
swi
tht
hef
ormal
i
tiest
hatar
einv
olv
edbef
oreacont
ractcomesi
nto
exi
stence.I
tthenl
ooksatt
het
ermsofcont
ract
,vi
ti
ati
ngf
act
orsandt
heev
ent
ual
t
ermi
nat
ionordi
schar
geofacont
ract
.

KEYDEFI
NITI
ONS:

 Of
fer
:anunequi
vocalandcl
earmani
fest
ati
onbyonepar
tyofi
tsi
ntent
iont
o
cont
ractwi
thanot
her
.

 Unequi
vocal
:cl
ear
,def
ini
teandwi
thoutdoubt

 I
nvi
tat
iont
otr
eat
:Thi
sisamer
einv
itat
ionbyapar
tyt
oanot
herorot
her
sto
makeof
fer
sorbar
gai
ns.Thei
nvi
teebecomest
heof
fer
orandt
hei
nvi
tor
becomest
heof
fer
ee.Aposi
ti
ver
esponset
oani
nvi
tat
iont
otr
eati
sanof
fer
.

 Accept
ance:Thi
sist
heext
ernal
mani
fest
ati
onofassentbyt
heof
fer
ee.
 Rev
ocat
ion:Thi
sist
hewi
thdr
awal
oft
heof
ferbyt
heof
fer
or.

 Consi
der
ati
on:I
thasbeendef
inedas“
anactorpr
omi
seof
fer
edbyt
heone
par
tyandaccept
edbyt
heot
herpar
tyaspr
icef
ort
hatot
her
spr
omi
se.
”

 Est
oppel
:Itadoct
ri
net
hati
stot
heef
fectt
hatwher
epar
ti
eshav
eal
egal
r
elat
ionshi
p and one oft
hem makes a new pr
omi
se orr
epr
esent
ati
on
i
ntendedt
oaf
fectt
hei
rlegal
rel
ati
onsandt
ober
eli
eduponbyt
heot
her
,once
t
heot
herhasr
eli
eduponi
tandchangedhi
slegalposi
ti
on,t
heot
herpar
ty
cannotbehear
dtosayt
hatt
hei
rlegal
rel
ati
onshi
pwasdi
ff
erent
.

 Condi
ti
ons:Thi
sisat
erm ofmaj
orst
ipul
ati
oni
nacont
ract
.Ifacondi
ti
oni
s
br
eached,
itent
it
lest
hei
nnocentpar
tyt
otr
eatt
hecont
ractasr
epudi
atedand
t
osuei
ndamages.

 War
rant
ies:Thi
sisami
nort
erm ofacont
ractorat
erm ofmi
norst
ipul
ati
on.
I
fbr
eached,i
tent
it
lest
hei
nnocentpar
tyt
osuei
ndamagesonl
yast
he
cont
ractr
emai
nsenf
orceabl
eandbot
hpar
ti
esar
eboundt
ohonourt
hei
rpar
t
oft
hebar
gai
n.

 Mer
chant
abl
equal
it
y:Fi
ttobeof
fer
edf
orsal
e.Reasonabl
yfi
tfort
hebuy
er’
s
pur
poses

 Pr
ivi
tyofcont
ract
:Thi
sdoct
ri
nei
stot
heef
fectt
hatonl
yaper
sonwhoi
s
par
tyt
oacont
ractcansueorbesuedoni
t.

 Voi
d:Lacki
ngl
egal
for
ce.

 Voi
dabl
e:Capabl
eofbei
ngr
esci
ndedorv
oided.

 Cav
eatempt
or:I
tli
ter
all
ymeans“
buy
erbewar
e” Thi
sisaCommonLaw
pr
inci
plet
otheef
fectt
hati
ntheabsenceoff
raudormi
sint
erpr
etat
ion,t
he
sel
l
eri
snotl
i
abl
e i
fthegoodssol
ddonothav
ethequal
i
tiest
hebuy
er
expect
edt
hem t
ohav
e.

 Quant
um mer
uit
:Thi
sli
ter
all
ymeans“
asmuchasi
sear
nedordeser
ved”
.
Thi
siscompensat
ionf
orwor
kdone.Thepl
aint
if
fispai
dfort
hepr
opor
ti
on
oft
het
askcompl
eted.

 Br
eachofcont
ract
:Af
ail
uret
oper
for
m somepr
omi
sedactorobl
i
gat
ion
  Fr
ust
rat
ionofcont
ract
:Acont
racti
ssai
dtobef
rust
rat
edwhenper
for
mance
oft
heobl
i
gat
ionsbecomesi
mpossi
ble,i
l
legalorcommer
cial
l
yusel
essby
r
easonofext
raneousci
rcumst
ancesf
orwhi
chnei
therpar
tyi
stobl
ame.

 Damages:i
tisamonet
aryawar
dbycour
ttocompensat
ethepl
aint
if
ffort
he
l
ossoccasi
onedbyt
hebr
eachofcont
ract
.

 Ex-
grat
iaSum:-af
ree-
sum,
onenotr
equi
redt
obemadebyal
egal
dut
y

 I
nfut
uro:-i
nfut
ure:

 Uni
lat
eralMi
stake:Thi
sisami
stakeast
othei
dent
it
yofoneoft
hepar
ti
est
o
t
hecont
ract
.Onl
yonepar
tyi
smi
stakenandt
hemi
stakei
sinducedbyt
he
ot
herpar
ty.

 Mi
srepr
esent
ati
on:Thi
sisaf
alser
epr
esent
ati
on.I
tisaf
alsest
atement
madebyapar
tyt
oinduceanot
hert
oent
eracont
ract
ual
rel
ati
onshi
p.

 Dur
ess:-act
ual
viol
enceort
hreat
sther
eof

CONTEXT

Whet
herweknowi
tornotweal
lcont
ractatsomepoi
nti
nti
mei
nonewayoranot
her
.
Thi
sther
efor
eisachapt
ert
hatmostexam quest
ionswi
l
lbecent
eredont
oensur
ethat
t
hest
udentcl
ear
lycanexpl
ainf
rom t
hef
ormat
iont
odi
schar
geofacont
ract
.It
’sofhi
gh
i
mpor
tancet
ounder
standt
hev
ari
ousconcept
sbr
oughtouti
nthi
schapt
er.

Weal
lcont
ractwhet
herconsci
ousl
yorsubconsci
ousl
y.Thebul
koft
hedayt
oday
cont
ract
swemakedonothav
eal
lthef
ormal
i
tiesandar
emer
elyagr
eement
s.Cont
ract
l
awi
sther
efor
eav
eryv
italchapt
erasmostper
sonsandcompani
escont
ractonadai
l
y
basi
s.Adeptknowl
edge oft
his chapt
erwi
l
lmake t
he candi
dat
e appr
eci
atet
he
machi
nat
ions behi
nd t
he pr
ocedur
es and r
ules of cont
ract
s e assi
st i
n t
he
ascer
tai
nment
3ofar
eal
i
zat
ionoft
hei
rownr
ight
sandt
her
emedi
esav
ail
abl
eincaseof
br
eachofcont
ract
.

THELAW OFCONTRACT

Acont
ractmaybedef
inedasal
egal
l
ybi
ndi
ngagr
eementmadeby2ormor
epar
ti
es.I
t
hasal
sobeendef
inedasapr
omi
seorsetofpr
omi
sesabr
eachofwhi
cht
hel
aw
pr
ovi
desar
emedyandt
heper
for
manceofwhi
cht
hel
awr
ecogni
zesasanobl
i
gat
ion.

Themosti
mpor
tantchar
act
eri
sti
cofacont
racti
sthati
tisenf
orceabl
e.Thegenesi
sof
cont
racti
san agr
eementbet
ween t
hepar
ti
eshenceacont
racti
san enf
orceabl
e
agr
eement
.Howev
er,wher
easal
lcont
ract
sar
eagr
eement
s,al
lagr
eement
sar
enot
cont
ract
s.

TYPESOFCONTRACTS

Cont
ract
smaybecl
assi
fi
edas:

1.Wr
it
ten/speci
alt
ycont
ract
s

2.Cont
ract
srequi
ri
ngwr
it
tenev
idence

3.Si
mpl
econt
ract
s

4.Cont
ract
sunderseal

1.WRI
TTENCONTRACTS

Thesear
econt
ract
swhi
chundert
hel
awmustbewr
it
ten,t
hati
sembodi
edi
naf
ormal
documente.
g.hi
repur
chaseagr
eement
,cont
ractofmar
inei
nsur
ance,cont
ractofsal
e
ofl
and.

Cont
ract
sunderseal
:thi
sisacont
ractdr
awnbyonepar
ty,
seal
edandsentt
othepar
ty/
par
ti
esf
orsi
gnat
ure.Suchacont
ractr
equi
resnoconsi
der
ati
one.
g.al
easeagr
eement
,
mor
tgage,
char
ge.

2.CONTACTSREQUI
RINGWRI
TTENEVI
DENCE

Thesear
econt
ract
swhi
chmustbeev
idencedbysomenot
esormemor
andum.

Cont
ent
soft
henot
e/memor
andum:

1)Adescr
ipt
ionoft
hepar
ti
essuf
fi
cientt
oident
if
ythem.

2)Adescr
ipt
ionoft
hesubj
ectmat
teroft
hecont
ract

3)Theconsi
der
ati
on(
val
ue)

4)Si
gnat
ureoft
hepar
ti
es

Exampl
esi
ncl
ude;
cont
ract
sofi
nsur
anceot
hert
hanmar
ine,
cont
ractofguar
ant
ee.
3.SI
MPLECONTRACTS

These ar
e cont
ract
swhose f
ormat
ion i
snotsubj
ectt
o anyl
egalf
ormal
i
ties.The
cont
ractmaybe:

 Or
al

 Wr
it
ten

 Par
tl
yor
alandwr
it
ten

 I
mpl
i
edf
orm conductoft
hepar
ti
es

Exampl
esi
ncl
ude;cont
ractofsal
eofgoods,par
tner
shi
pagr
eement
,andconst
ruct
ion
cont
ract
s.

ELEMENTSOFACONTRACT

Thesear
etheconst
it
uent
sori
ngr
edi
ent
sofacont
ract
.Theymakeanagr
eementl
egal
l
y
enf
orceabl
e.Theseel
ement
sar
e:

a.Of
fer

b.Accept
ance

c. Capaci
ty

d.I
ntent
ion

e. Consi
der
ati
on

f
. Legal
i
ty

g.For
mal
i
ties,
ifany

SOURCESOFLAW OFCONTRACT

Undersect
ion2(
1)oft
heLawofCont
ractAct
,Cap23,t
hesour
cesofl
awofcont
ract
ar
e:

1.Subst
anceofcommonl
aw

2.Doct
ri
nesofequi
ty

3.Cer
tai
nSt
atut
esofGener
alAppl
i
cat
ion

4.Ot
herAct
soft
heKeny
anPar
li
ament
CREATI
ON/FORMATI
ONOFCONTRACTS

Acont
ractcomesi
ntoexi
stencewhenanof
ferbyonepar
tyi
sunequi
vocal
l
yaccept
ed
byanot
herandbot
hpar
ti
eshav
ether
equi
sit
ecapaci
ty.Someconsi
der
ati
onmustpass
andt
hepar
ti
esmusthav
eint
endedt
hei
rdeal
i
ngst
ogi
ver
iset
oal
egal
lybi
ndi
ng
agr
eement
.Thepur
poseoft
heagr
eementmustbel
egalandanynecessar
yfor
mal
it
ies
musthav
ebeencompl
i
edwi
th.

THEOFFER

Anof
ferhasbeendef
inedas:anunequi
vocalmani
fest
ati
onbyonepar
tyofi
tsi
ntent
ion
t
ocont
ractwi
thanot
her
.Thepar
tymani
fest
ingt
hei
ntent
ioni
stheof
fer
orandt
hepar
ty
t
owhom i
tismani
fest
edi
stheof
fer
ee.

RULES/CHARACTERI
STI
CSOFANOFFER:

1.Anof
fermaybeor
al,
wri
tt
enori
mpl
i
edf
rom t
heconductoft
heof
fer
or.

2.Anof
fermustbecommuni
cat
edt
othei
ntendedof
fer
eeorof
fer
ees.Anof
fer
r
emai
nsi
nef
fect
iveunt
ili
tisr
ecei
vedbyt
heof
fer
ee.

3.An of
fermustbe cl
earand def
ini
tei
.e.i
tmustbe cer
tai
n and f
ree f
rom
v
aguenessandambi
gui
ty nSandsv
.I .Mut
ualBenef
it
saswel nScammel
lasi l
andNephew Lt
dv.Oust
on,i
twashel
dthatwor
dsusedwer
etoov
agueand
uncer
tai
ntoamountt
oanof
fer
.

4.Anof
fermaybecondi
ti
onalorabsol
ute.Theof
fer
ormaypr
escr
ibecondi
ti
onst
o
bef
ulf
il
ledbyt
heof
fer
eef
oranagr
eementt
oar
isebet
weent
hem.

5.Theof
fer
ormaypr
escr
ibet
hedur
ati
ont
heof
feri
stor
emai
nopenf
oraccept
ance.
Howev
er,t
heof
fer
ori
sfr
eet
orev
okeorwi
thdr
aw hi
sof
feratanyt
imebef
ore
suchdur
ati
onl
apsese. nDi
g.i cki
nsonv
.Dodds,t
hedef
endantof
fer
edt
osel
la
houset
othepl
aint
if
fonWednesday10/
06/
1874andt
heof
ferwast
oremai
n
openupt
oFr
iday12th at9.
00am.Howev he11th ofJune,t
eront hedef
endant
sol
dt oa3rd par
hehouset ty.Thepl
aint
if
fpur
por
tedt
oacceptt
heof
ferofFr
iday
mor
ningbef
ore9.
00am.I
twashel
dthatt
her
ewasnoagr
eementbet
weent
he
par
ti
esast
hedef
endanthadr
evokedhi
sof
ferbysel
l
ingt oa3rd par
hehouset ty
onJune11th.A si
mil
arhol
di nRuout
ngwasmadei ledgev
.Gr
ant
,wher
ethe
def
endant
’sof
ferwast
oremai
nopenf
or6weeksbuther
evokedorwi
thdr
ewi
t
af
ter4weeks.I
twashel
dthatt
her
ewasnoagr
eementbet
weent
hepar
ti
es.
 6.Theof
fer
ormaypr
escr
ibet
hemet
hodofcommuni
cat
ionofaccept
ancebyt
he
of
fer
ee.I
fhei
nsi
stsonapar
ti
cul
armet
hod,
itbecomesacondi
ti
on.

7.Anof
fermaybegener
alorspeci
fi
ci.
eitmaybedi
rect
edt
oapar
ti
cul
arper
son,
a
cl
assofper
sonsort
hepubl
i
catl
ar nCar
ge.I li
llv
.Car
bol
i
cSmokeBal
lCo,t
he
def
endantcompanymanuf
act
uredandownedadr
ugnamet
he“
Car
bol
i
cSmoke
Bal
l
”whi
cht
hecompanyt
houghtwast
hebestcur
efori
nfl
uenza,col
dandot
her
di
seasesassoci
atedwi
tht
aki
ngcol
dwat
er.Thecompanyputanadv
ert
isement
i
nanewspapert
otheef
fectt
hata£100r
ewar
dwoul
dbegi
vent
oanyper
son
whocont
ract
edi
nfl
uenzaorr
elat
eddi
seasesaf
tert
aki
ngt
hesmokebal
las
pr
escr
ibedi
.e.2t
abl
ets,3t
imesadayf
or2weeks.Theadv
ert
isementf
urt
her
st
atedt
hatt
hecompanyhaddeposi
ted£1000wi
tht
heAl
l
ianceBankonReagent
St
reetasasi
gnoft
hei
rsi
ncer
it
yint
hemat
ter
.Mr
s.Car
li
llwhohadr
eadt
he
adv
ert
isementboughtandt
ookt
heSmokebal
l
saspr
escr
ibedbutcont
ract
ed
i
nfl
uenza.Thecompanyr
eject
edhercl
aim andshesued.Thecompanyar
gued
t
hatt
headv
ert
isement
;

a.Wasnot
hingbutmer
esal
est
alk

b.Wasnotanof
fert
othewhol
ewor
ld

c. Wasnoti
ntendedt
ocr
eat
elegal
rel
ati
ons

TheCour
tofAppealhel
dthatt
hought
hewor
dingoft
headv
ert
isementwasuncl
ear
,it
amount
edt
oanof
fert
othewhol
ewor
ldandt
heper
sonwhof
ulf
il
ledi
tscondi
ti
ons,
cont
ract
edwi
tht
hecompanyhenceMr
s.Car
li
ll
wasent
it
ledt
othe£100r
ewar
d.

EXAMPLESOFOFFERS

1.Publ
i
ctr
anspor
t:aswast nWi
hecasei l
kiev
.LondonPassengerTr
anspor
tBoar
d.

2.Bi
ddi
ngatanauct
ionaswast nHar
hecasei ri
sv.Ni
cker
son.

3.Submi
ssi
onofat
ender

4.Appl
i
cat
ionf
orempl
oyment

Anof
fermustbedi
sti
ngui
shedf
rom anI
nvi
tat
iont
otr
eat
.

I
NVI
TATI
ONTOTREAT

Thi
sisamer
einv
itat
ionbyapar
tyt
oanot
herorot
her
stomakeof
ferorbar
gai
n.The
i
nvi
teebecomest
heof
fer
orandt
hei
nvi
torbecomest
heof
fer
ee.Aposi
ti
ver
esponset
o
ani
nvi
tat
iont
otr
eati
sanof
fer
.

Exampl
esofi
nvi
tat
iont
otr
eat

1.Adv
ert
isementofsal
ebyauct
ion:Atcommonl
aw,anadv
ert
isementt
osel
l
goodsorot
herpr
oper
tybypubl
i
cauct
ioni
sani
nvi
tat
iont
otr
eat
.Thepr
ospect
ive
buy
ermakest
heof
ferbybi
ddi
ngatt
heauct
ionandt
heauct
ioneermayacceptor
r
ejectt
heof
fer
.

I
twassohel
dinHar
ri
sv.Ni
cker
sonwher
eacommi
ssi
onagenthadsuedas
auct
ioneerf
orf
ail
uret
odi
spl
ayf
urni
tur
ehehadadv
ert
isedf
orsal
ebyauct
ion.I
t
washel
dthatt
her
ewasnocont
ract
ualr
elat
ionshi
pbet
weent
hepar
ti
esast
he
adv
ert
isementwasmer
elyani
nvi
tat
iont
otr
eatandassuch,t
heauct
ioneerwas
notl
i
abl
e.

2.Sal
ebydi
spl
ay:Atcommonl
aw,t
hedi
spl
ayofgoodswi
thcashpr
icet
agsi
san
i
nvi
tat
iont
otr
eat
.Thepr
ospect
ivebuy
ermakest
heof
fert
obuyt
hei
temsatt
he
st
atedorot
herpr
icewhi
cht
heshopownermayacceptorr
eject
.InFi
sher
-v-
Bel
l
,
t
hedef
endantwassued f
or‘
off
eri
ng f
orsal
e’a f
li
ckkni
fecont
rar
ytot
he
pr
ovi
sionoft
heOf
fensi
veWeaponsAct
.Thedef
endanthaddi
spl
ayedt
hekni
fei
n
ashopwi
thacashpr
icet
ag.Quest
ionwaswhet
herhehadof
fer
edt
hekni
fef
or
sal
e.I
twashel
dthathehadnotv
iol
atedt
heActast
hedi
spl
ayoft
hekni
fewas
ani
nvi
tat
iont
opr
ospect
ivebuy
erst
omakeof
fer
s.

3.Sal
ebysel
f-
ser
vice:Atcommonl
aw,
asal
ebysel
f-
ser
vicei
sani
nvi
tat
iont
otr
eat
.
Pr
ospect
ivebuy
ersmakeof
fer
sbyconductbypi
cki
ng t
hegoodsf
rom t
he
shel
vesandt
heof
fermaybeaccept
edorr
eject
edatt
hecashi
er’
sdesk.The
of
fer
ori
sfr
eet
orev
okehi
sof
fert
obuyt
hegoodsatanyt
imebef
orer
eachi
ng
t
hecashi
er n Phar
sdesk.I maceut
icalSoci
etyofGr
eatBr
it
ainv
.Boot
sCash
Chemi
sts(
Sout
her
n)Lt
d(1952)
. Thedef
endantownedandoper
atedasel
f-
ser
vice st
ore whi
ch st
ocked among ot
hert
hings,dr
ugs whi
ch undert
he
pr
ovi
sionsoft
hePhar
macyandPoi
sonsAct(
1933)coul
donl
ybesol
dwi
tht
he
super
visi
on oft
he r
egi
ster
ed phar
maci
st.The def
endant
’s phar
maci
stwas
st
ati
oned nextt
othe cashi
er’
s desk.The pl
aint
if
fsoci
etyar
gued t
hatt
he
def
endanthadv
iol
atedt
heActast
hephar
maci
stwasnotst
ati
onednextt
othe
shel
veswher
ethedr
ugswer
edi
spl
ayed.Quest
ionwasatwhatpoi
ntasal
etook
 pl
ace.I
twashel
dthatt
hedef
endanthadnotv
iol
atedt
hepr
ovi
sionsoft
heActas
i
tsphar
maci
stwasst
ati
onednextt
othecashi
er’
sdeskwher
etheact
ualsal
e
t
ookpl
ace.

Thi
scasei
saut
hor
it
yfort
hepr
oposi
ti
ont
hati
nasal
ebysel
f-
ser
vice,asal
e
t
akespl
aceatt
hecashi
er’
sdesk. A si
mil
arhol
di n Laskyv
ngwasmadei .
EconomyGr
ocer
sLt
d.

TYPESOFOFFERS

1.Cr
ossof
fer
s

Thi
sisasi
tuat
ionwher
eapar
tydi
spat
chesanof
fert
oanot
herwhohassentasi
mil
ar
of
ferandt
het
woof
fer
scr
ossi
nthecour
seofcommuni
cat
ion.Noagr
eementar
ises
f
rom cr
ossof
fer
sforl
ackofconsensusbet
weent
hepar
ti
es.Thepar
ti enotatad
esar
i
dem.

2.Count
erof
fer

Thi
sisachange,
var
iat
ionormodi
fi
cat
ionoft
het
ermsoft
heof
ferbyt
heof
fer
ee.I
tisa
condi
ti
onalaccept
ance.Acount
erof
feri
sanof
feri
nit
sownr
ightandi
faccept
edan
agr
eementar
isesbet
weent
hepar
ti
es.

I
tsl
egalef
fecti
stot
ermi
nat
etheor
igi
nalof
f n Hy
erasi dev
.Wr
ench(
1840)
,the
def
endantmadeanof
feronJune6tht
osel
laf
armt
othepl
aint
if
ff 000.On8thJune,
or£1,
t
hepl
aint
if
fwr
otet
othedef
endantaccept
ingt
opay£950f
ort
hef
arm.On27thJune,
the
def
endantwr
oter
eject
i he£950.On29th Junet
ngt hepl
aint
if
fwr
otet
othedef
endant
accept
ingt
opay£1,
000f
ort
hef
arm.

Thedef
endantdecl
i
nedandt
hepl
aint
if
fsuedf
orspeci
fi
cper
for
manceoft
hecont
ract
.It
washel
dthatt
hedef
endantwasnotl
i
abl
east
hepl
aint
if
f’
scount
erof
ferof£950
t
ermi
nat
edt
heor
igi
nalof
ferwhi
chwast
her
efor
enotav
ail
abl
eforaccept
ancebyt
he
pl
aint
ifon29thJuneast
f hedef
endanthadnotr
evi
vedi
t.

Acount
erof
fermusthowev
erbedi
sti
ngui
shedf
rom ar
equestf
ori
nfor
mat
ionori
nqui
ry.

Requestf
ori
nfor
mat
ion:

Ani
nqui
rywhi
chdoesnotchanget
ermsoft
heof
fer
.Theof
fer
eemayacceptt
heof
fer
bef
oreoraf
teri
nqui
ryi
srespondedt
oaswast nSt
hecasei evenson-
v-McLean,wher
e
t
hedef
endanthadof
fer
edt
osel
l3,
800t
onnesofi
ront
othepl
aint
if
fat£40pert
onne
andt
heof
ferwast
oremai
nopenf
rom Sat
urdayt
oMonday
.OnMondaymor
ning,t
he
pl
aint
if
ftel
egr
aphedt
hedef
endanti
nqui
ri
ngont
hedur
ati
onofdel
i
ver
y.Thedef
endant
t
reat
edt
hei
nqui
ryasacount
erof
ferandsol
dthei
ront
oat
hir
dpar
ty.Thepl
aint
if
f
subsequent
lyaccept
edt
heof
ferbutt
her
eaf
terr
ecei
vedt
hedef
endant
’snot
iceoft
he
r
d
sal
etot
he3 par
ty.Thepl
aint
if
fsuedi
ndamagesf
orbr
eachofcont
ract
.Itwashel
d
t
hatt
hedef
endantwasl
i
abl
e.

3.St
andi
ngof
fer
.

Ast
andi
ngof
ferar
iseswhenaper
son’
stendert
osuppl
ygoodsandser
vicet
oanot
heri
s
accept
ed.Suchaccept
ancei
snotanaccept
ancei
nthel
egalsense.I
tmer
elyconv
ert
s
t
het
endert
oast
andi
ngof
ferf
ort
hedur
ati
onspeci
fi
edi
fany
.Theof
feri
spr
omi
singt
o
suppl
ythegoodsorser
vicesonr
equestandi
sboundt
odosowher
ear
equi
sit
ioni
s
made.

Anyr
equi
sit
ionofgoodsorser
vicesbyt
heof
fer
eeamount
stoaccept
anceandf
ail
uret
o
suppl
ybyt
heof
fer
oramount
stoabr
eachofcont
ract
.

Aswast nGr
hecasei eatNor
ther
nRai
l
wayCoLt
dv.Wi
tham.Thepl
aint
if
fcompany
i
nvi
ted t
ender
sfort
he suppl
yofst
oresf
or12 mont
hsand Wi
tham’
stenderwas
accept
ed.Thecompanymadear
equi
sit
ionbutWi
tham di
dnotsuppl
ythegoodsand
wassued.I
twashel
dthathewasl
i
abl
eindamagesf
orbr
eachofcont
ract
.

I
nst
andi
ngof
fer
,theof
fer
ori
sfr
eet
orev
oket
heof
feratanyt
imebef
oreanyr
equi
sit
ion
i
smade,unl
esst
heof
fer
orhaspr
ovi
dedsomeconsi
der
ati
onf
ort
heof
fer
ort
okeept
he
st
andi
ngof
feropen.

Thi
sconsi
der
ati
oni
sref
err
edt
oasanopt
ion.Thi
sisanagr
eementbet
weenanof
fer
or
andt
heof
fer
eebywhi
chanof
fer
eeagr
eest
okeephi
sof
feropenf
oraspeci
fi
ed
dur
ati
on.I
nthi
scase,
theof
fer
orcannotr
evoket
heof
fer
.

I
nast
andi
ngof
fer
,ifnoor
dert
orequi
sit
ioni
smadebyt
heof
fer
eewi
thi
nar
easonabl
e
t
ime,
thest
andi
ngof
ferl
apses.

TERMI
NATI
ONOFOFFERS

Acont
ract
ual
off
ermaycomet
oanendort
ermi
nat
edi
nanyoft
hef
oll
owi
ngway
s:

1.REVOCATI
ON:

Thi
sist
hewi
thdr
awal
oft
heof
ferbyt
heof
fer
or.Atcommonl
aw,
anof
feri
srev
ocabl
eat
anyt
imebef
oreaccept
ance.

Rul
esofr
evocat
ionofof
fer
s:

1.Anof
feri
srev
ocabl
eatanyt
imebef
orei
tbecomesef
fect
ivel
yaccept
ed.I
twas
sohel
dinPay
bev
.Cav
e.I
nDi
cki
nsonv
.Dodds,t
hesal
eoft
hehousebyt
he
r
d
def
endantt
oa3 par
tyr
evokedhi
sof
fert
othepl
aint
if
f.

2.Not
iceofr
evocat
ionmustbecommuni
cat
ed t
otheof
fer
ee.Howev
er,such
communi
cat
ionsneednott
obeef
fect
edbyt
heof
fer
or.I
tsuf
fi
ces(
suf
fi
cient
),i
f
r
d
communi
cat
edbya3 par
tyaswast nDi
hecasei cki
nsonv
.Dodds.

3. Anof
feri
srev
ocabl
eev
eni
nci
rcumst
ancesi
nwhi
cht
heof
fer
orhaspr
omi
sedt
o
keepi
topent
oaspeci
fi
eddur
ati
on,unl
essanopt
ionexi
sts,aswast
hecasei
n
Di
cki
nsonv
.Dodds.

4.Rev
ocat
ionbecomesl
egal
l
yef
fect
ivewhennot
icei
srecei
vedbyt
heof
fer
ee.

5.Anof
feri
sir
rev
ocabl
eaf
teraccept
ance.I
twassohel
dinBy
rnev
.VanTi
enhov
en.

6.I
nuni
l
ater
al(
aff
ect
ingonepar
tyonl
y)cont
ract
s,anof
feri
sir
rev
ocabl
eift
he
of
fer
eehascommencedandcont
inuest
oper
for
mtheactwhi
chconst
it
utes
accept
ance.

7.Abi
datanauct
ioni
srev
ocabl
eunt
ilt
hehammerf
all
s.

2.REJECTI
ON:

Anof
fert
ermi
nat
esi
ftheof
fer
eer
efusest
oacceptt
hesame,t
her
efusalmaybe
expr
essori
mpl
i
edf
rom t
heconductoft
heof
fer
eee.
g.si
l
encebyt
heof
fer
eeamount
s
t
oar
eject
ionaswast nFel
hecasei thousevBi
ndl
ey.

4.COUNTEROFFER:

Thi
sisachangeorv
ari
ati
onoft
het
ermsoft
heof
ferbyt
heof
fer
ee.I
tisaf
orm of
r
eject
ion.Thel
egalef
fectofacount
erof
feri
stot
ermi
nat
etheor
igi
nalof
feraswast
he
nHy
casei dev
.Wr
ench.

5.LAPSEOFTI
ME:

I
fanof
feri
snotaccept
edwi
thi
nthest
ipul
atedt
imeandnotr
evokedear
li
er,
itl
apseson
expi
rat
ionofsuchdur
ati
on.Wher
enodur
ati
oni
sspeci
fi
ed,
theof
ferl
apsesonexpi
rat
ion
ofr
easonabl
eti
me.Whati
sreasonabl
eti
mei
saquest
ionoff
actandv
ari
esf
rom case
t
ocase.

nRamagat
I eVi
ctor
iaHot
elLt
dv.Mont
efi
orei
near
ly6/
1864,t
hedef
endantmadean
of
fert
opur
chase40shar
esoft
hepl
aint
if
fcompany
,theof
ferwasnotaccept
edunt
il
Nov
emberbywhi
cht
imet
hedef
endanthadgi
venup.Thecompanywassuedf
ort
he
v
alueoft
heshar
es,
thedef
endantpl
eadedt
hatt
heof
ferhadnotbeenaccept
edwi
thi
na
r
easonabl
eti
me.I
twashel
dthatt
hedef
endantwasnotl
i
abl
east
heof
ferhadl
apsedf
or
non-
accept
ancewi
thi
nar
easonabl
eti
me.

Asi
mil
arhol
di nVi
ngwasmadei rj
iKhi
mjivChat
ter
buckThedef
endantor
der
edt
imber
f
rom t
hepl
aint
if
fandi
ndi
cat
edt
hati
tbesuppl
i
edassoonaspossi
ble.Thepl
aint
if
fdi
d
notr
espondbutdel
i
ver
edt
het
imber
.4½ mont
hsl
ater
,thedef
endantr
efusedt
otake
del
i
ver
yandwassued.I
twashel
dthathewasnotboundt
otakedel
i
ver
yashi
sof
fer
hadl
apsedf
ornon-accept
ancewi
thi
nar
easonabl
eti
me.

5.DEATH:

Thedeat
hoft
heof
fer
ororof
fer
eebef
oreaccept
ancet
ermi
nat
esanof
fer
.Howev
er,
the
of
feronl
ylapseswhennot
iceofdeat
hoft
heonei
scommuni
cat
edt
otheot
her
.

6.I
NSANI
TY:

Theunsoundnessofmi
ndofei
therpar
tyt
ermi
nat
esanof
fer
.Howev
er,t
heof
feronl
y
l
apseswhennot
iceoft
hei
nsani
tyoft
heonei
scommuni
cat
edt
otheot
her
.

7.FAI
LUREOFACONDI
TIONSUBJECTTOWHI
CHTHEOFFERWASMADE:

Thesear
econdi
ti
onalof
fer
s.I
facondi
ti
onorst
ateofaf
fai
rsuponwhi
chanof
feri
s
madef
ail
s,t
heof
ferl nFi
apses.I nanci
ngsLt
dv.St
imson,
thedef
endantopt
edt
otakeup
av
ehi
cleonhi
repur
chaset
erms.Hecompl
etedt
hehi
repur
chaseappl
i
cat
ionf
orm and
pai
dadeposi
t.Thi
sfor
m const
it
utedhi
sof
fer
.Het
ookdel
i
ver
yoft
hev
ehi
clebut
r
etur
nedi
ttot
heshowr
oom af
ter2day
sforsomemi
norr
ect
if
icat
ion.Thev
ehi
clewas
st
olenf
rom t
heshowr
oom andwhenr
ecov
eredi
twasbadl
ydamagedbyr
easonofan
acci
dent
.Thedef
endantr
efusedt
otakedel
i
ver
yorpayi
nst
all
ment
sandwassued.He
pl
eadedt
hest
ateoft
hev
ehi
cle.I
twashel
dthathewasnotl
i
abl
eashi
sof
ferhadl
apsed.
Thi
sof
ferwascondi
ti
onalupont
hemot
orv
ehi
cler
emai
ningi
nsubst
ant
ial
l
ythesame
condi
ti
onasi
twasbef
oreandsi
ncei
tscondi
ti
onhadchanged,
hisof
ferhadl
apsed.
ACCEPTANCE

Thi
sist
heext
ernalmani
fest
ati
onofassentbyt
heof
fer
ee.I
tgi
vesr
iset
oanagr
eement
bet
weenpar
ti
es.I
nlegalt
heor
y,anagr
eementcomesi
ntoexi
stenceatt
hesubj
ect
ive
momentwhent
hemi
ndsoft
hepar
ti
esmeet
.Thi
smomenti
sref
err oasConsensus
edt
adi
dem (
meet
ingofmi
nds)
.

Howev
er,t
his subj
ect
ivi
ty mustbe ext
ernal
l
y mani
fest
ed by t
he of
fer
ee f
ort
he
agr
eementt
oar
ise.Accept
ancemaybeor
al,wr
it
tenori
mpl
i
edf
rom t
heconductoft
he
of
fer
ee.

RULESOFACCEPTANCE

1.Accept
ancemaybeor
al,wr
it
tenori
mpl
iedf
rom t
heconductoft
heof
fer
ee.I
n
Car
li
llv
.Car
bol
i
cSmokeBal
lCo,accept
ancebyMr
s.Car
li
llt
ookt
hef
orm ofher
conduct by pur
chasi
ng and consumi
ng t
he smoke bal
l
s.n Br
I ogden v
.
Met
ropol
i
tanRai
l
wayCo,wher
eitwashel
dt he1stl
hatt oadofcoalsuppl
i
edby
Br
ogdenconst
it
utedaccept
anceoft
hedef
endant
sof
fert
osuppl
ythecoaland
hencet
her
ewasanagr
eementbet
weent
hepar
ti
es.

2.Theof
fer
eemusthav
ebeenawar
eofandi
ntendedt
oacceptt
heof
fer
:A
per
soncannotacceptanof
ferwhoseexi
stencehei
sunawar
eof
.InCr
own-
v-
Cl
arke,t
heAust
ral
i
angov
ernmentof
fer
ed£1,
000t
oanyper
sonwhov
olunt
eer
ed
i
nfor
mat
ionl
eadi
ngt
othear
restandconv
ict
ionoft
heki
l
ler
sof2pol
i
ceof
fi
cer
s.
Anyaccompl
i
cewhogav
einf
ormat
ionwoul
dbepar
doned.Cl
arke,whowas
awar
eoft
hemur
dergav
ethei
nfor
mat
ionandt
heki
l
ler
swer
ear
rest
edand
conv
ict
ed.Howev
er,hemadei
tcl
eart
hathehadgi
vent
hei
nfor
mat
iont
ocl
ear
hi
sname.I
twashel
dthathewasnotent
it
led t
other
ewar
dashehadgi
vent
he
i
nfor
mat
ionf
oradi
ff
erentpur
poseandt
her
efor
ehadnotaccept
edt
heof
fer
.

3.Accept
ancemustbeuncondi
ti
onalandunqual
if
ied:Theof
fer
eemustacceptt
he
of
feri
nit
ster
ms,anyv
ari
ati
on ormodi
fi
cat
ion oft
he of
feramount
stoa
condi
ti
onalaccept
ancewhi
chi
snotanaccept
anceaswast nHy
hecasei dev
.
Wr
enchwher
ethepl
aint
if
fmodi
fi
edt
hedef
endant
’sof
ferof£1,
000t
o£950.

4.An of
fermustbe accept
ed wi
thi
nthe st
ipul
ated t
ime i
fanyorwi
thi
na
r
easonabl
eti
mef
ail
ingwhi
chi
tlapses.Aswast nRamsgat
hecasei eVi
ctor
ia
Hot
elv
.Mont
efoi
re,wher
ethedef
endant
’sof
fermadei
nJunewasnotaccept
ed
 unt
ilNov
emberbywhi
cht
imehadel
apsed.Asi
mil
arhol
di nE.
ngwasmadei A
I
ndust
ri
esLt
dv.Powy
slands.

5.Accept
ancemustbecommuni
cat
edt
otheof
fer
ori
nthepr
escr
ibedmet
hodi
f
anyoranequal
lyexpedi
ti
onsmet
hod.Wher
enomet
hodofcommuni
cat
ioni
s
pr
escr
ibed,t
he met
hod t
o appl
y depends on t
he t
ype ofof
ferand t
he
ci
rcumst
ancesi
nwhi
cht
heof
feri
smade.

6.Asagener
alr
ule,si
lencebyt
heof
fer
eddoesnotamountt
oaccept
ance,
itwas
sohel
dinFel
thousev
.Bi
ndl
ey.Thepl
aint
if
fint
endedt
obuyahor
seownedbya
nephewnamedJohnwhohadnoobj
ect
ion.Thepl
aint
if
fint
endedt
obuyi
tor£30
15p.Hewr
otet
oJonst
ati
ng‘
i
fIhearnomor
eabouthi
m,Iconsi
dert
hehor
se
mi
neatt
hatpr
ice.
’

Johndi
dnotr
espondbut6weeksl
aterhegav
ethehor
set
othedef
endantf
or
sal
ebuti
nst
ruct
edhi
m nott
osel
lthepar
ti
cul
arhor
se.I
twassol
dbymi
stake.
Thepl
aint
if
fsued t
heauct
ioneeri
n damagesf
orconv
ersi
on.Quest
ion was
whet
hert
her
ewasacont
ractofsal
ebet
weent
hepl
aint
if
fandJohn.I
twashel
d
t
hatt
her
ewasnocont
ractasJohnhadnotcommuni
cat
edhi
saccept
anceoft
he
of
fer
.

7.Wher
epar
ti
esnegot
iat
ebywor
dofmout
hineachot
her
spr
esence,
accept
ance
i
sdeemedcompl
etewhent
heof
fer
orhear
stheof
fer
ee’
swor
dsofaccept
ance.
I
twassohel
dinEnt
oresLt
dv.Mi
l
esFarEastCor
por
ati
on,wher
eLor
dDenni
ng
obser
vedt
hatt
her
ewasnocont
ractbet
weent
hepar
ti
esunt
ilt
heof
fer
orhear
s
t
hewor
ds.

8. Wher
epar
ti
esnegot
iat
ebyt
elephone,
accept
ancei
sdeemedcompl
etewhent
he
of
fer
orhear
stheof
fer
ee’
swor
dsofaccept
ance.I
twassohel
dinEnt
oresLt
dv.
Mi
l
esFarEastCor
por
ati
on.

9. Wher
epar
ti
esnegot
iat
ebyt
elexaccept
ancei
sdeemedcompl
etewhent
he
of
fer
ee’
swor
dsofaccept
ancear
erecei
vedbyt
heof
fer
or.I
twassohel
din
Ent
oresv
.Mi
l
esFarEastCor
por
ati
on.

10.I
nuni
lat
eralof
fer
s,commencementandcont
inuat
ionofper
for
manceconst
ri
cts
accept
ance.Dur
ingper
for
mance,
theof
fer
orcannotr
evoket
heof
ferbutt
odoso
i
fper
for
mancei
sdi
scont
inuedaswast nEr
hecasei ri
ngt
onv
.Er
ri
ngt
onand
 Woods.

Af
atherboughtahousewher
ethesonanddaught
eri
n-l
aw l
i
vedbypay
inga
deposi
tof£250andr
aisi
ngt
hebal
ancebyal
oanf
rom aBui
l
dingsoci
ety
.He
pr
omi
sedt
otr
ansf
ert
hehouset
othem i
ftheypai
dal
linst
all
ment
sasandwhen
t
heyf
all
due.The£250woul
dbeagi
ftt
othem.

Theycommencedpay
mentoft
hei
nst
all
ment
sbutst
oppedbef
oret
heent
ir
esum
hadbeenpai
d.Thef
atherwascompel
l
edt
opayt
her
emai
ningi
nst
all
ment
s.He
decl
i
nedt
het
ransf
eroft
hehouset
othem.I
twashel
dthathewasnotboundt
o
dosoast
heyhaddi
scont
inuedpay
ment
s’oft
hei
nst
all
ment
s.

11.I
nst
andi
ngof
fer
s,aspeci
fi
cor
derorr
equi
sit
ionbyt
heof
fer
eeconst
it
utes
accept
anceandt
heof
fer
eri
sboundaswast nGr
hecasei eatNor
ther
nRai
l
way
Co.v
.Wi
tham.

12.Anof
fert
oapar
ti
cul
ar/
speci
fi
cper
soncanonl
ybeaccept
edbyt
hatper
sonf
or
anagr
eementt
oar
ise.I
twassohel
dinBoul
tonv
.James.

13.Anof
fert
oacl
assofper
sonscanonl
ybeaccept
edbyamemberoft
hatcl
ass
f
oranagr
eementt
oar
ise.I
twassohel
dinWoodv
.Leckt
ri
ck.

14.Anof
fert
othegener
alpubl
icmaybeaccept
edbyanyper
sonwhof
ulf
il
lsi
ts
condi
ti
ons.Aswast nCar
hecasei li
llv
.Car
bol
i
cSmokeBal
lCo.

15.
Thepost
alr
uleofaccept
ance:

Wher
etheof
fer
orexpr
essl
yori
mpl
i
edl
yaut
hor
izest
heof
fer
eet
ocommuni
cat
e
accept
ancebypost
,accept
ancei
sdeemedcompl
etewhent
hel
ett
eri
spost
ed
whet
heri
treachesi
tsdest
inat
ionornot
.Itwassohel
dinBy
rnev
.VanTi
enhov
en
andCoLt
d.

a)Expr
essaut
hor
izat
ion:

Thesear
eci
rcumst
ancesi
nwhi
cht
heof
fer
orexpr
essl
yper
mit
stheof
fer
eet
o
communi
cat
eaccept
ancebypost
.Aswast nAdamsv
hecasei .Li
ndsel
l
,on
2/
9/1817,t
hedef
endantof
fer
edt
osel
ltoet
hpl
aint
if
faquant
it
yofwoodon
cer
tai
nter
msandr
equi
redar
esponse‘
i
nthecour
seofpost
.’Thepl
aint
if
f
r
ecei
vedt
hel
ett
eron5/
9/1817andpost
edanaccept
ance.On8/
9/1817t
he
def
endantpost
edal
ett
err
evoki
ngt
heof
fer
.Thepl
aint
if
f’
slet
terofaccept
ance
 wasr
ecei
vedon9/
9/1817.I
twashel
dthatt
her
ewasacont
ractbet
weent
he
par
ti
esast
hepl
aint
if
fhadpost
edt
hel
ett
erofaccept
ancebyt
het
imet
he
def
endantpur
por
tedt
orev
oket
heof
fer
.Hence,
ther
evocat
ionwasi
nef
fect
ive.

b)I
mpl
iedaut
hor
izat
ion:

Ther
ear
eci
rcumst
ancesi
n whi
ch t
heof
fer
orbyi
mpl
i
cat
ion aut
hor
ized t
he
of
fer
eet
ocommuni
cat
eaccept
ancebypost
.

nHousehol
I dFi
reI
nsur
anceCo.
-v-
Grant
,thedef
endantof
fer
edt
obuy100shar
es
t
othepl
aint
if
fcompany
.Theof
ferwascommuni
cat
edbypost
.TheCompany
al
l
ott
edt
heshar
est
ohi
m andt
hecompanysecr
etar
ymadeoutt
hel
ett
erof
al
l
otmentwhi
ch was post
ed butnev
err
eached t
he def
endantwho was
subsequent
lysuedf
ort
heamountdueont
heshar
es.Hedeni
edl
i
abi
l
ityont
he
gr
oundt
hatt
hecompanyhadnotcommuni
cat
edi
tsaccept
ance.Howev
er,
itwas
hel
dthatsi
ncet
hecompanyhadpost
edt
hel
ett
erofaccept
ance,t
her
ewasa
cont
ractandt
hedef
endantwasl
i
abl nHent
e.I hor
nv.Fr
aser
,Xmadeanof
fert
o
Yt
otakeupal
ease.Ont
hef
oll
owi
ngdaybet
weennoonand1pm,Xpost
eda
l
ett
erwi
thdr
awi
ngt
heof
ferwhi
chwasr
ecei
vedbyYat5pm.At3.
50pm ont
he
sameday
,Yhadpost
edal
ett
eraccept
ingt
heof
fer
.Thel
ett
erwasr
eadbyXon
t
hef
oll
owi
ngday
.Itwashel
dthatt
her
ewasacont
ractbet
weenpar
ti
eswhi
ch
camei
ntoexi
stenceat3.
50pm whenYpost
edt
hel
ett
erofaccept
ance.

Thepur
por
tedr
evocat
ionat5pm hadnoef
fect
.

nBy
I rnev
.VanTi
enhov
enandCoLt
don1/
10t
hedef
endantmadeanof
fert
osel
l
t
oet
hpl
aint
if
f1000boxesoft
inpl
atesbuton8/
10t
hedef
endantpost
edl
ett
er
r
evoki
ngt
heof
fer
.Thesamewasr
ecei
vedon15/
10.On11/
10t
hepl
aint
if
f
t
elegr
aphedt
hedef
endantanaccept
ancewhi
chheconf
ir
medbyal
ett
erpost
ed
on15/
10.I
twashel
dthatt
her
ewasacont
ractbet
weent
hepar
ti
eswhi
chcome
i
ntoexi
stenceon15/
10whent
hel
ett
erofaccept
ancewaspost
ed.

c)Noaut
hor
ozat
ion:

I
ftheof
fer
ordoesnotexpr
essl
yori
mpl
i
edaut
hor
izest
heof
fer
eet
ouset
hepost
butt
heof
fer
orusest
hepost
,accept
ancei
sdeemedcompl
etewhent
hel
ett
erof
accept
ancei
srecei
vedbyt
heof
fer
or.

16.I
ftheof
fer
ori
nst
ruct
shi
smessengert
odel
i
vert
ohi
mthel
ett
erofaccept
ancei
n
 anyf
rom t
heof
fer
ee,accept
ancei
sdeemedcompl
etewhent
hel
ett
eri
shanded
ov
ert
othemessenger
.

17.Accept
ance need not be communi
cat
ed t
o t
he of
fer
or wher
e such
communi
cat
ioni
sexpr
essl
yori
mpl
i
edl
ywai
ved.Thi
swast nCar
hecasei li
llv
.
Car
bol
i
cSmokeBal
l
sCo,
wher
eMr
s.Car
li
llwasnotr
equi
redt
ocommuni
cat
ethe
f
actofpur
chaseandconsumpt
ionoft
heSmokebal
l
s.

18.
Accept
anceneednotbecommuni
cat
edt
otheof
fer
orwher
eitmakest
hef
orm of
conduct
.Thi
swast nBr
hecasei ogdenv
.Met
ropol
i
tanRai
l
waycoLt
d.

Once an of
feri
s accept
ed,an agr
eementar
ises bet
ween t
he par
ti
es as t
her
eis
consensus bet
ween t
hem.Of
ferand accept
ance const
it
utes t
he f
oundat
ion ofa
cont
ract
ualr
elat
ionshi
p.Theydo notconst
it
uteacont
ractasacont
ractmustbe
char
act
eri
zedbyot
herel
ement
s.

I
NTENTI
ONTOCREATELEGALRELATI
ONS

I
naddi
ti
ont
oof
ferandaccept
ance,anagr
eementmustbechar
act
eri
zedbyi
ntent
ion.
Thepar
ti
esmusthav
eint
endedt
ocr
eat
elegalr
elat
ions.I
ntent
ioni
soneoft
hebasi
c
el
ement
sofacont
ractascommonl
aw.Anagr
eementi
sunenf
orceabl
eunl
esst
he
par
ti
est
her
etoi
ntendedsuchaconsequence.

Ascer
tai
nmentofi
ntent
ion:

Todet
ermi
newhet
herpar
ti
esi
ntendedt
ocr
eat
elegal
rel
ati
ons,
cour
tsconsi
der
;

1.Nat
ureort
ypeofagr
eementi
.e.whet
hercommer
cialorbusi
nessanddomest
ic
orsoci
al.

2.Theci
rcumst
ancesi
nwhi
cht
heagr
eementwasent
eredi
nto.Theset
wof
act
ors
demonst
rat
ewhet
hert
hepar
ti
esi
ntendedt
ocont
ract
.

a)Busi
nessorcommer
cialagr
eement
s;

I
nconsi
der
ingsuchagr
eement
s,cour
tspr
oceedf
rom t
hepr
esumpt
iont
hatt
hepar
ti
es
i
ntendedt
ocr
eat
elegal
rel
ati
ons.

1.Adv
ert
isement
s
Thesear
eint
ended t
o pr
omot
esal
esoft
headv
ert
iser
. Theyhav
eacommer
cial
obj
ect
iv nCar
e.I li
llv
.Car
bol
i
cSmokeBal
lCo.Lt
d,t
hecompanyhadmani
fest
edan
i
ntent
iont
ocr
eat
elegal
;rel
ati
onsbyst
ati
ngt
hati
thaddeposi
ted£1,
000wi
thAl
l
iance
BankRegentSt
reet
.HenceMr
sCar
li
llwasent
it
ledt
othe£100asshehadcont
ract
ed
wi
tht
hecompany
.

2.Empl
oymentagr
eement
s.

Thesear
ecommer
cialagr
eement
sint
endedt
oimposel
egalobl
i
gat
ionsont
hepar
ti
es
t
her
eto.

n Edwar
I dsv
.Sky
way
sLt
d,t
hepl
aint
if
fwasaf
ormerempl
oyeeoft
hedef
endant
companyasapi
l
otandwasdecl
aredr
edundantbutpr sedonex-
omi grat
iasum.He
pr
ovi
dedconsi
der
ati
onf
ort
hepr
omi
se.

Byr
easonofmanyot
herr
edundanci
es,t
hecompanywasunabl
etomakegoodt
he
pr
omi
set
oEdwar
dswhosued.I
twashel
dthathewasent
it
ledt
othesum ast
hiswasa
busi
nessagr
eementi
ntendedt
ocr
eat
elegal
rel
ati
ons.

Thecour
twasemphat
ict
hatt
hiswasnotadomest
icagr
eement
.

Howev
er,t
heci
rcumst
ancesi
nwhi
chacommer
cialorbusi
nessagr
eementi
sent
ered
i
ntomayshowt
hatt
hepar
ti
esdi
dnoti
ntendt
ocr
eat
elegalr
elat
ionsandt
hiswoul
dbe
t
hecasewher
ehonourcl
ausesorhonour
abl
epl
edgecl
ausesar
eused.

Thi
sisacl
ausei
nagr
eementt
otheef
fectt
hatt
hepar
ti
esdonoti
ntendt
ocr
eat
elegal
r
elat
ions.

I
tdeni
est
heagr
eementl
egali
ntent
iont
her
ebyconv
ert
ingi
ttoagent
leman’
sagr
eement
bi
ndi
ngi
nhonouronl
y.

Suchanagr
eementi
sunenf
orceabl
einl
awaswast nRose&Fr
hecasei ankv
.Cr
ompt
on
Br
other
swher
etheagr
eementbet
weent
het
wocompani
escont
ainedanhonourcl
ause,
butoneoft
hem pur
por
tedt
oenf
orcet
heagr
eement
.

Thecour
tofAppealhel
dthati
twasunenf
orceabl
east
hehonourcl
ausehaddeni
edi
t
l
egal
int
ent
ion.

Asi
mil
arhol
di nJones-
ngwasmadei v-Ver
nonPool
sLt
dwher
etheagr
eementhadan
honourcl
ause.

I
twasobser
vedt
hatwhenev
eranagr
eementcont
ainedanhonourcl
ause,t
hepl
aint
if
f
wasobl
i
gedt
otr
ustt
hedef
endantast
heagr
eementcannotbeenf
orcedbycour
tofl
aw.

b)Domest
icorsoci
alagr
eement
s

Cour
tspr
oceedont
hepr
esumpt
iont
hatt
hepar
ti
esdi
dnoti
ntendt
ocr
eat
elegal
r
elat
ions.

1.Agr
eementbet
weenhusbandandwi
fe

Such agr
eement
sar
egener
all
ynoti
ntended t
oimposeupon t
hepar
ti
esanyr
igi
d
obl
i
gat
ions.

nBal
I fourvBal
four
,thedef
endantwasaci
vi
lser
vanti
nSr
iLanka.Att
het
ime,
heandhi
s
wi
fewer
einBr
it
ainonhol
i
day
.

Hi
swi
fef
ell
il
landi
tbecamecl
eart
hatshewasnoti
naposi
ti
ont
oaccompanyhi
m back
t
oSr
iLanka.

Hepr
omi
sedt
osendher30poundspermont
hfort
hedur
ati
ont
heywoul
dremai
napar
t.
Hedi
dnotandt
hewi
fesued.

I
twashel
dthatheract
ionwasnotsust
ainabl
east
hepar
ti
eshadnoti
ntendedt
ocr
eat
e
al
egal
rel
ati
onshi
p.Asi
mil
arhol
di nGoul
ngwasmadei dvGoul
d.

2.Agr
eement
sbet
weenPar
entandChi
ld

Suchanagr
eementi
sor
dinar
il
ynoti
ntendedt
obeacont
ractbutawor
kingr
elat
ionshi
p.

nJonesv
I .Pander
vat
ton,t
hepl
aint
if
fper
suadedherdaught
ert
oleav
eawel
lpay
ingj
ob
t
ost
udyLawi
nBr
it
ain,
shewaspr
omi
sedamai
ntenanceal
l
owanceasshest
udi
ed.She
r
eluct
ant
lyagr
eed.I
nthemeant
ime,t
hepl
aint
if
fboughtahousewher
ethedef
endant
l
i
vedaspar
toft
hemai
ntenance.Bef
oret
hedaught
ercompl
etedherst
udi
es,t
he2
quar
rel
edandt
hemot
hersoughtt
oev
ictherf
rom t
hehouse.Shear
guedt
hatt
her
ewas
acont
ractbet
weent
hem.

Howev
eri
twashel
dthatt
hepar
ti
eshadnoti
ntendedt
ocr
eat
elegalr
elat
ionsandt
he
mot
herwasent
it
ledt
oev
icther
.

Howev
ert
heci
rcumst
ancesi
nwhi
chadomest
icorsoci
alagr
eementi
sent
eredi
ntomay
showt
hatt
hepar
ti
esi
ntendedt
ocr
eat
elegal
rel
ati
ons.
Suchi
ntent
ionsmaybecol
l
ect
edf
rom t
hewor
dsusedbyt
hepar
ti
es,t
hei
rconductand
t
heci
rcumst
ancesoft
heagr
eement
;

1.Agr
eementbet
weenhusbandandwi
fe

Suchanagr
eementmaybef
orcedi
fthepar
ti
eshav
emani
fest
edani
ntent
iont
ocont
ract
.
E. nMcGr
g.i egorvMcGr
egor
,ahusbandandwi
fesuedeachot
herf
orassaul
tbutl
ater
r
esol
vedt
owi
thdr
awt
hecasesbutl
i
veapar
t.Thehusbandpr
omi
sedt
opayaweekl
y
sum asmai
ntenancewhi
l
ethewi
fepr
omi
sedt
omai
ntai
nthechi
l
dren.

Thehusbandwasi
nar
rear
sfor6weeksandt
hewi
fesued.I
twashel
dthatheract
ion
wassust
ainabl
east
hepar
ti
eshadmani
fest
edani
ntent
iont
ocont
ract
.Asi
mil
arhol
ding
nMer
wasmadei ri
tvMer
ri
t.

2.Ot
herSoci
alAgr
eement
s

Suchagr
eement
smaybeenf
orcedi
fthepar
ti
esi
fthepar
ti
eshav
emani
fest
edan
i
ntent
iont
ocont
ract
.InSi
mpki
nsv
.Pay
s,t
hedef
endantownedahousewher
eshel
i
ved
wi
thagr
anddaught
er;
thepl
aint
if
fwasapay
ingboar
der(
alodger
).

Thet
hreet
ookpar
tinaSundaynewspapercompet
it
ion.Al
lent
ri
eswer
emadei
nthe
def
endant
’sname.Howev
er,t
her
ewer
enor
ulesonpay
mentofpost
age.
Oneweek’
s
ent
rywon£750.

Thepl
aint
if
fcl
aimed1/
3oft
hesum.Thedef
endantar
guedt
hatt
hiswasapast
ime
act
ivi
tynoti
ntendedt
ocr
eat
elegal
rel
ati
ons.

Howev
ert
hecour
thel
dthatt
hepl
aint
if
fwasent
it
ledt
o1/
3oft
hesum ast
hepar
ti
eshad
mani
fest
edani
ntent
iont
ocont
ract
.

Asi
mil
arhol
di nPar
ngwasmadei kerv
.Cl
ark.

Casel
awdemonst
rat
est
hatanagr
eementi
slegal
l
yunenf
orceabl
eunl
esst
hepar
ti
est
o
i
tint
endsuchaconsequence.

CAPACI
TY

I
naddi
ti
ont
oconsensusandi
ntent
ion,acont
ractmustbechar
act
eri
zedbycapaci
ty.
Thi
sist
hel
egalabi
l
ityofapar
tyt
o ent
eri
nto acont
ract
ualr
elat
ionshi
p.Foran
agr
eementt
obeenf
orceabl
easacont
ractt
hepar
ti
esmusthav
ehadt
her
equi
sit
e
capaci
ty.
Asagener
alr
ule,
ever
yper
sonhasacapaci
tyt
oent
eri
ntoanycont
ract
ual
rel
ati
onshi
p.

Howev
er,i
npr
act
ice,t
hel
aw ofcont
ractr
est
ri
ctsorl
i
mit
sthecont
ract
ualcapaci
tyof
cer
tai
ncl
assesofper
sonsnamel
y;

1.I
nfant
sormi
nor
s.

2.Dr
unkenper
sons.

3.Per
sonsofunsoundmi
nd.

4.Cor
por
ati
ons.

5.Undi
schar
gedbankr
upt
s.

1.CONTRACTUALCAPACI
TYOFI
NFANTSORMI
NORS
1
UnderSect
ion2oft
heAgeofMaj
ori
tyAct,ani
nfantormi
nori
sanyper
sonwhohasnot
at
tai
nedt
heageof18.

Cont
ract
sent
eredi
ntobyani
nfantar
ebi
ndi
ng,v
oidabl
eorv
oiddependi
ngont
hei
r
nat
ureandpur
pose.

1.
BINDI
NGCONTRACTS

Thesear
elegal
l
yenf
orceabl
econt
ract
s;t
hei
nfantcansueorbesuedont
hem.Bot
h
par
ti
esar
eboundt
ohonourt
hei
robl
i
gat
ions.

Thesecont
ract
sfal
li
nto4cat
egor
ies;

1.Cont
ract
sfort
heSuppl
yof“
Necessar
ies”

Undersect
ion4(
2)oft
heSal
eofGoodsActnecessar
iesmeangoodssui
tabl
etot
he
condi
ti
oni
nli
feofsuchani
nfantormi
norandt
ohi
sact
ualr
equi
rementatt
het
imeof
sal
eanddel
i
ver
y.

nNashv
I .Inman,t
hedef
endantwasani
nfantcol
l
egest
udent
.Bef
orepr
oceedi
ngt
o
col
l
ege,
hisf
atherboughthi
m al
lthenecessar
ycl
othi
ngmat
eri
al.

Howev
er,whi
l
eincol
l
ege,heboughtaddi
ti
onalcl
othi
ngmat
eri
alf
rom t
hepl
aint
if
fbut
di
dnotpayf
ort
hem andwassued.

Hi
sfat
hergav
eev
idencet
hathehadboughthi
m al
lthenecessar
ycl
othi
ngmat
eri
al.I
t
washel
dthathewasnotl
i
abl
east
hegoodswer
enotnecessar
ieswhensuppl
i
ed.

1
Cap33LawsofKeny
a
2.Cont
ract
sfort
heSuppl
yof“
OtherNecessar
ies”

Thesear
enecessar
iesot
hert
hant
hosecov
eredbySect
ion4(
2)oft
heSal
eofGoods
Act
.E.
g.Legal
ser
vices,
transpor
ttoandf
rom wor
k,l
odgi
ngf
aci
l
iti
eset
c.

Ani
nfanti
sboundbyanycont
ractf
ort
hesuppl
yofsuchnecessar
ies.Undert
heSal
eof
GoodsAct
,whenev
erani
nfanti
ssuppl
i
edwi
thnecessar
ies,hei
sli
abl
etopaynott
he
agr
eedpr
icebutwhatt
hecour
tconsi
der
sasr
easonabl
e.

3.Educat
ionalCont
ract
s

An i
nfanti
sbound bya cont
ractwhose pur
pose i
sto pr
omot
e hi
s educat
ion or
i
nst
ruct
ion.

4.Cont
ract
sforBenef
ici
alSer
vice

Thesear
ebenef
ici
alcont
ract
sofser
vice.Casel
awdemonst
rat
est
hatani
nfantcansue
orbesuedandi
sboundbycont
ract
swhoseobj
ecti
stobenef
ithi
m asaper
son.

nDoy
I lev
.Whi
teCi
tySt
adi
um,t
hepl
aint
if
fwasaqual
i
fiedi
nfantboxer
.Heappl
i
edt
o
j
oint
heBr
it
ishBoxi
ngBoar
dandwasgr
ant
edal
i
cense.

Oneoft
her
ulesoft
hebodyempower
edi
ttowi
thhol
dpay
mentofanypr
icemoneywon
i
fabox
erwasdi
squal
i
fiedi
nacompet
it
ion.

Thepl
aint
if
fwasdi
squal
i
fiedononeoccasi
onandt
heBoar
dwi
thhel
dpay
ment
.The
pl
aint
if
fsued.Quest
ionwaswhet
hert
hepl
aint
if
fwasboundbyt
hecont
ractbet
ween
hi
m andt
heBoar
d.I
twashel
dthathewasasi
nsubst
ancei
twasi
ntendedt
obenef
it
hi
m hencet
hemoneywasi
rr
ecov
erabl
e.

A si
mil
arhol
di nChapl
ngwasmadei i
nV.Lesl
i
eFr
emi
n(Publ
i
sher
s)Lt
d.Wher
ethe
pl
aint
if
f,ani
nfanthadengagedt
hedef
endantt
owr
it
eabookf
orhi
m.Hesubsequent
ly
di
scont
inued t
het
ransact
ion.I
twashel
dthatt
hecont
ractwasbi
ndi
ng asi
twas
i
ntendedt
obenef
ithi
m.

Asi
mil
arhol
di nCl
ngwasmadei ement
sv.LondonandNor
thWest
ernRai
l
wayCo.

2.VOI
DABLECONTRACTS

Cer
tai
ncont
ract
sent
eredi
ntobyani
nfantar
evoi
dabl
ei.
e.t
hei
nfanti
sent
it
ledt
o
r
epudi
atet
hecont
ractdur
ingi
nfancyorwi
thi
nar
easonabl
eti
meaf
terat
tai
ningt
heage
ofmaj
ori
ty.

Byav
oidi
ngt
hecont
ract
,thei
nfantescapesl
i
abi
l
ityoni
t.Thei
nfantcannotbesuedon
t
hecont
ractdur
ingi
nfancy
.Thesecont
ract
sconf
erupont
hei
nfantal
ongt
erm benef
it
.
Exampl
esi
ncl
ude:Par
tner
shi
pagr
eement
s,l
easeort
enancyagr
eementandcont
ractf
or
t
hepur
chaseofshar
es.

UnderSect
ion12oft
hePar
tner
shi
pAct
,ani
nfantpar
tneri
snotl
i
abl
efordebt
sand
ot
herl
i
abi
l
iti
esoft
hepar
tner
shi
pdur
ingi
nfancysi
ncet
hecont
racti
svoi
dabl
eathi
s
opt
ion.

Howev
erunderSect
ion13oft
heAct
,ift
hei
nfantdoesnotav
oidt
hecont
ractdur
ing
i
nfancy
,orwi
thi
nar
easonabl
eti
meaf
terat
tai
ningt
heageofmaj
ori
ty,hei
sli
abl
efor
debt
sandot
herobl
i
gat
ionsoft
hef
ir
mfr
om t
hedebthebecamepar
tner
.

nDav
I isv
.Bey
non-
Har
ri
swher
eani
nfanthadt
akenupal
easebutf
ail
edt
orepudi
atet
he
cont
ractdur
ingi
nfancyorwi
thi
nar
easonabl
eti
met
her
eaf
ter
,itwashel
dthathewas
l
i
abl
eundert
hecont
ract
.

3.VOI
DCONTRACTS

Undert
hepr
ovi
sionsoft
heI
nfant
sRel
i
efAct(
1874)whi
chappl
i
esi
nKeny
aasast
atut
e
ofgener
alappl
i
cat
ion,cer
tai
ncont
ract
sent
eredi
ntobyi
nfant
sar
evoi
d.Thesear
e
cont
ract
swhi
cht
hel
aw t
reat
sasnonexi
stent
.Theyconf
ernor
ight
sandi
mposeno
obl
i
gat
ionsont
hepar
ti
es.

Thesescont
ract
sar
e;

1.Al
laccount
sst
atedwi
thi
nfant
s:Thesear
edebt
sadmi
tt
edbyani
nfant
.
Thei
nfantcannotbesuedonsuchadmi
ssi
on.

2.Cont
ract
sfort
hesuppl
yofgoodsot
hert
hannecessar
ies.

3.Moneyl
endi
ngcont
ract
s:Ani
nfanti
snotboundt
orepayanymoni
es
bor
rowedf
rom a3rd par
tyast
hecont
racti
svoi
d.Howev
eri
fthei
nfant
r
epay
s,t
heamounti
sir
recov
erabl
e.

nLesl
I i
eLt
d.V.Shei
l
,thedef
endant
,ani
nfantbor
rowed£400f
rom t
hepl
aint
if
f,amoney
l
endi
ngf
ir
min2l
otsof£200eachandwasl
i
abl
etopay£475i
ncl
usi
veoft
hei
nter
est
butf
ail
edt
odosoandwassued.

Thepl
aint
if
far
gued t
hati
twasent
it
led t
o damagesf
ormi
srepr
esent
ati
on ast
he
def
endanthadf
raudul
ent
lymi
srepr
esent
edhi
sage.

I
tfur
therar
guedt
hatt
hedef
endanthadr
ecei
vedt
hemoneyoni
tsbehal
f.I
twashel
d
t
hatt
heamountwasi
rr
ecov
erabl
east
hecont
ractwasv
oidbyr
easonoft
heI
nfant
s
Rel
iefAct1874.

Si
nceamoneyl
endi
ngcont
ractwasv
oid,anysecur
it
ygi
venbyt
hei
nfanti
sal
sov
oid
andt
her
efor
eunenf
orceabl
ebyt
hel
endi
ngpar
ty.I
twassohel
dinVal
ent
iniv
.Canal
i
.

I
fani
nfantusesmoni
esbor
rowedunderav
oidcont
ractt
opur
chasenecessar
ies,t
he
l
endi
ngpar
tyi
sinEqui
typuti
ntot
heshoesoft
hepar
tysuppl
yi
ngt
henecessar
iesand
cansuet
hei
nfantf
ort
her
ecov
eryoft
heamountbor
rowedaswasusedt
opur
chaset
he
necessar
ies.

Thi
sist
hepr
inci
pleofsubr
ogat
ionaswasexpl
ai nI
nedi nr
e:Nat
ionalPer
manent
Benef
it
sBui
l
dingSoci
etyLt
d.

Quest
ionhasar
isenast
owhet
herani
nfantcanr
ati
fycont
ract
smadedur
ingi
nfancy
af
terhehasat
tai
nedt
heageofmaj
ori
ty.Anysuchpur
por
tedr
ati
fi
cat
ionoradopt
ionhas
nol
egal
eff
ect
.

2.CONTRACTUALCAPACI
TYOFDRUNKENPERSONS

Acont
ractent
eredbyadr
unkenper
soni
svoi
dabl
eathi
sopt
ionbyest
abl
i
shi
ngt
hat
:

1.Hewast
oodr
unkt
ounder
standhi
sact
s.

2.Theot
herpar
tywasawar
eofhi
scondi
ti
on.

Byav
oidi
ngt
hecont
ract
,theper
sonescapesl
i
abi
l
ityoni
t n Gor
.I ev.Gi
bson,t
he
def
endantwassuedonabi
l
lofex
changehehadsi
gnedandendor
sed.Hepl
eadedt
hat
whenhedi
dsohewast
oodr
unkt
ounder
standwhathewasdoi
ngandt
hatt
hepl
aint
if
f
wasawar
eofhi
scondi
ti
on.

I
twashel
dthathewasnotl
i
abl
east
hecont
ractwasv
oidabl
eathi
sopt
ionbyr
easonof
t
hedr
unkenness.

I
facont
ractent
eredi
ntobyaper
sonwhendr
unki
srat
if
iedbyhi
m whensoberi
tisno
l
ongerv
oidabl
e as was t n Mat
he case i hews vBaxt
erwher
ethe def
endanthad
cont
ract
edt
osel
lahouset
othepl
aint
if
f.Whensuedhepl
eadeddr
unkenness.

Howev
eri
twashel
dthathewasl
i
abl
east
hepl
aint
if
fpr
ovedt
hathehadsubsequent
ly
r
ati
fi
edt
het
ransact
ionwhi
l
esober
.

UnderSect
ion4(
2)oft
heSal
eofGoodsAct
,ifadr
unkenper
soni
ssuppl
i
edwi
th
necessar
ieshei
sli
abl
etopayar
easonabl
epr
ice.

3.CONTRACTUALCAPACI
TYOFPERSONSOFUNSOUNDMI
ND

A cont
ractent
eredi
ntobyaper
sonofunsoundmi
ndi
svoi
dabl
eathi
sopt
ionby
est
abl
i
shi
ngt
hat
:

1.Hewast
ooi
nsanet
ounder
standhi
sact
s.

2.Theot
herpar
tywasawar
eofhi
sment
alcondi
ti
on.

Byav
oidi
ngt
hecont
ractt
hepar
tyescapesl
i
abi
l
ityoni
t nI
.I mper
ialLoanCo.Lt
dvSt
one,
t
hedef
endantwassuedonapr
omi
ssor
ynot
ehehadsi
gned.Hear
guedt
hatatt
het
ime,
hewasi
nsaneandt
her
efor
eincapabl
eofcompr
ehendi
ngt
henat
ureoref
fect
sofhi
s
act
sandt
hathewasnotl
i
abl
eont
hepr
omi
ssor
ynot
east
hecont
ractwasv
oidabl
eby
r
easonofi
nsani
ty.

I
nthewor
dsofLopesL.
J.“
Inor
dert
oav
oidaf
aircont
ractont
hegr
oundofi
nsani
ty,
the
ment
alcapaci
tyoft
heonecont
ract
ingmustbeknownt
otheot
hercont
ract
ingpar
ty.
Thedef
endantmustpl
eadandpr
ovenotmer
elyhi
sinsani
tybutt
hepl
aint
if
f’
sknowl
edge
oft
hatf
actandunl
esshepr
ovest
hese2t
hingshecannotsucceed.
”

I
facont
ractent
eredi
ntobyaper
sonofunsoundmi
ndi
srat
if
iedbyhi
m whenhei
sof
soundmi
ndi
tceasest
obev
oidabl
e.

UnderSect
ion4(
2)oft
heSal
eofGoodsAct
,ifaper
sonofunsoundmi
ndi
ssuppl
i
ed
wi
thnecessar
ies,
hei
sli
abl
etopayar
easonabl
eamount
.

4.CONTRACTUALCAPACI
TYOFUNDI
SCHARGEDBANKRUPTS

These ar
e per
sons who hav
e been decl
ared bankr
uptby a cour
tofcompet
ent
j
uri
sdi
cti
on.Ther
ecapaci
tyt
ocont
racti
srest
ri
ctedbyt
hepr
ovi
sionsoft
heBankr
upt
cy
2
Act.

5.CONTRACTUALCAPACI
TYOFCORPORATI
ONS

Thesear
ear
ti
fi
cialper
sonscr
eat
edbyl
aw,ei
therbyt
hepr
ocessofr
egi
str
ati
onorby

2
Cap53LawsofKeny
a
st
atut
e.Thecapaci
tyoft
hecor
por
ati
onst
ocont
racti
sdef
inedbyl
aw e.
g.ast
atut
ory
cor
por
ati
onhascapaci
tyt
oent
eri
ntr
ansact
ionssetouti
nthest
atut
easwel
last
hose
r
easonabl
yinci
dent
alt
her
eto.

Ot
hert
ransact
ionsar
eul
tr
avi
resandt
her
efor
enul
landv
oid.Thecont
ract
ual
capaci
tyof
ar
egi
ster
edcompanyi
sdef
inedbyt
heobj
ectcl
auseoft
hememor
andum.Atcommon
l
awar
egi
ster
edcompanyhascapaci
tyt
oent
eri
ntot
ransact
ionssetf
ort
hint
heobj
ect
s
andt
hoset
hatar
ereasonabl
yinci
dent
alt
otheat
tai
nmentorpur
sui
tofsuchobj
ect
s.

I
twassohel
dinAshbur
yRai
l
wayCar
ri
ageandI
ronCo.v
.Ri
cheaswel nAt
lasi tor
ney
Gener
alv
.Gr
eatEast
ernRai
l
wayCo

Ot
hert
ransact
i e ul
ons ar tr
avi
res (
bey
ond t
he power
s of
)the companyand v
oid.
Tr
ansact
ionswi
thi
nthepower
sofacompanyar
esai
dtobei
ntr
avi
resacompany
.

Anul
tr
avi
rest
ransact
ioncannotber
ati
fi
edandanypur
por
tedr
ati
fi
cat
ionhasnol
egal
ef
fect
.Itwassohel
dinAshbur
y’sCase.

5.CONSI
DERATI
ON

I
naddi
ti
ont
oconsensus,
capaci
tyandi
ntent
ion,
anagr
eementmustbechar
act
eri
zedby
consi
der
ati
ont
obeenf
orceabl
easacont
ract
.AtCommonLaw,asi
mpl
econt
racti
s
unenf
orceabl
eunl
esssuppor
tedbysomeconsi
der
ati
on.Consi
der
ati
oni
sthebar
gai
n
el
ementofacont
ract
.

I
tisnot
hingbutmut
ual
i
ty.I
thasbeendef
inedas“
anactorpr
omi
seof
fer
edbyt
heone
par
tyandaccept
edbyt
heot
herpar
tyaspr
icef
ort
hatot
her
spr
omi
se.
”

Judi
cialDef
ini
ti
ons

I
nthewor nCur
dsofLushJ.i ri
ev.Mi
sa,“
avar
iabl
econsi
der
ati
onmayconsi
stofsome
r
ight
,int
erest
,pr
ofi
torbenef
itaccr
uingt
otheonepar
tyorsomel
oss,f
orbear
ance,
det
ri
mentorr
esponsi
bil
i
tygi
ven,
suf
fer
edorbor
nebyt
heot
her
.”

I
nthewor
dsofPat
ter nThomasv
sonJi .Thomas“
consi
der
ati
onmeanssomet
hing
whi
chi
sofsomev
aluei
ntheey
eoft
hel
awmov
ingf
rom t
hepl
aint
if
f.I
tmaybesome
benef
itt
othedef
endantordet
ri
mentt
othepl
aint
if
fbutatal
lev
ent
sitmustbemov
ing
f
rom t
hepl
aint
if
f.
”

Consi
der
ati
oni
swhat
evert
hepr
omi
seegi
vesorpr
ovi
dest
obuyt
hepr
omi
sor
spr
omi
ses.
Bysodoi
ngt
hepr
omi
seebecomespar
tyt
othecont
ract
.Consi
der
ati
ont
akesv
ari
ous
f
or nCar
ms.I ll
ilv
.Car
bol
i
cSmokeBal
lCo,
itt
ookt
hef
orm ofdet
ri
menti
.e.swal
l
owi
ngof
t
hesmokebal
l
sbyMr
s.Car
ll
il
.InPat
elv
.Hasmani
,itt
ookt
hef
orm off
orebear
ancet
o
sue.

TYPESOFCONSI
DERATI
ONS

Consi
der
ati
onmaybeexecut
oryorexecut
edbutmustnotbepast
.Howev
eri
ncer
tai
n
ci
rcumst
ancepastconsi
der
ati
onmaysuppor
tacont
ract
ual
clai
m.

1.Execut
oryConsi
der
ati
on

Consi
der
ati
oni
sexecut
orywher
ethepar
ti
esexchangemut
ualpr
omi
ses.Nei
theroft
he
par
ti
eshasper
for
medi
tspar
toft
hecont
ract
.Thewhol
etr
ansact
ioni
sinf
utur
e.

Execut
oryconsi
der
ati
oni
sgoodt
osuppor
tacont
ract
ualcl
aim.E.
g.pur
chaseofgoods
oncr
edi
tforf
utur
edel
i
ver
y.

2.Execut
edConsi
der
ati
on

Consi
der
ati
oni
sexecut
edwher
eapar
tydoesanactt
opur
chaset
heot
her
spr
omi
se.
Theactmaybepar
ti
alort
otalper
for
manceoft
hepar
ty’
scont
ract
ualobl
i
gat
ion.I
tis
goodconsi
der
ati
ont
osuppor
tacont
ract
ual
clai
m.

3.PastConsi
der
ati
on

Consi
der
ati
oni
spastwher
eapr
omi
sei
smadeaf
terser
viceshav
ebeenr
ender
ed.Ther
e
i
snomut
ual
i
tybet
weent
hepar
ti
es.Pastconsi
der
ati
oni
sgener
all
ynotgoodt
osuppor
t
acont
ract
ual
clai
m.

nRoscor
I lav
.Thomas,t
hepl
aint
if
fhadj
ustboughtahor
sef
rom t
hedef
endantandas
hewasl
eadi
ngi
taway
,thedef
endantassur
edhi
mthati
twasagoodhor
sef
reef
rom
anyv
ice.

Thest
atementt
urnedoutt
obeunt
rueandt
hepl
aint
if
fsuedf
ordamages.I
twashel
d
t
hatt
hedef
endant
spr
omi
sewasunenf
orceabl
ebyt
hepl
aint
if
fasconsi
der
ati
onwas
whol
l
ypast
.

Asi
mil
arhol
dingwashel
dinI
nreMcAr
dlesCasewher
eMr
s.McAr
dlesspent£488
i
mpr
ovi
ng and decor
ati
ng t
hehouse t
heyl
i
ved i
n atno onesr
equest
.Thehouse
bel
ongedt
oMr
s.McAr
dleshusband’
sfat
herandwast
obesol
daf
terhermot
her
-i
n-
l
aw’
sdeat
h.Thebenef
ici
ari
esoft
heest
atesi
gnedadocumentpr
omi
singMr
s.McAr
dle
£488whent
heest
atewasdi
str
ibut
ed.

Howev
ernopay
mentwasmadeandMr
s.McAr
dlesued.I
twashel
dthatt
hepr
omi
se
wasunenf
orceabl
easconsi
der
ati
onwaspast
.

I
ncer
tai
nci
rcumst
ances,
pastconsi
der
ati
oni
ssuf
fi
cientt
osuppor
tacont
ract
ual
clai
m.

Thesear
eexcept
ionst
othegener
alr
ule:

1.Acknowl
edgementofast
atut
ebar
reddebt

Undert
heLi
mit
ati
onofAct
ionsAct
,Cap32LawsofKeny
a,adebtbecomesst
atut
e
bar
redaf
ter6y
ear
s.I
nsuchacase,
thedebt
ori
snotboundt
orepay
.Howev
er,
awr
it
ten
acknowl
edgementoft
hedebtbyt
hedebt
ori
senf
orceabl
ebyt
hecr
edi
tort
hough
consi
der
ati
oni
spast
.Itwassohel
dinBal
lv.Hasket
handHey
li
ngv
.Hast
ing.

2.Negot
iabl
eInst
rument
s

Oneoft
hechar
act
eri
sti
csofnegot
iabl
einst
rument
se.
g.cheques,bi
l
lsofexchange,
pr
omi
ssor
ynot
es,
shar
ewar
rant
se.
t.
c.i
sthatpastconsi
der
ati
oni
sgoodt
osuppor
tany
act
ionont
hei
nst
rument
.

A hol
derofanegot
iabl
einst
rumentcan sueon i
tev
en t
hough hehasnotgi
ven
consi
der
ati
onpr
ovi
dedapr
evi
oushol
dergav
esomeconsi
der
ati
on.
3
Thi
sexcept
ioni
scont
ainedi
nSec27(
1)oft
heBi
l
lsofExchangeAct,andwasr
eli
ed
upont
oenf
orceanact
i nLombar
oni dBanki
ngCo.Lt
dv.GandhiandPat
el.

3.Render
ingofSer
vicesonr
equest

Wher
eser
vicesar
erender
edbyapar
ty,att
heexpr
essori
mpl
i
edr
equestofanot
heri
n
ci
rcumst
ancest
hatgi
ver
iset
oani
mpl
i
edpr
omi
set
opay
,asubsequentpr
omi
set
opay
f
ort
heser
vicesi
senf
orceabl
e.

Thel
awt
akest
hev
iewt
hatt
her
ender
ingoft
heser
vicesandt
hepr
omi
set
opayar
ean
i
ntegr
alpar
toft
hesamet
ransact
ion.

nLampl
I eighv
.Br
athwai
tthedef
endanthadki
l
ledamannamedPat
ri
ck.Her
equest
ed
t
hepl
aint
if
ftosecur
epar
donf
orhi
mfr
om t
heki
ng.Thepl
aint
if
fexer
tedhi
msel
fand
made a numberoft
ri
pst
o see t
he ki
ng and ul
ti
mat
elysecur
ed t
he par
don.The
def
endantpr
omi
sedt
opayhi
m £100f
ort
het
roubl
e,apr
omi
sehedi
dnothonourand

3
Cap27LawsofKeny
a
wassued.

Hear
guedt
hatt
hepl
aint
if
fhadnotpr
ovi
dedconsi
der
ati
onf
orhi
spr
omi
set
opay
.
Howev
eri
twashel
dthatt
hepr
omi
sewasenf
orceabl
easi
twasi
nsepar
abl
efr
om t
he
r
equestf
ort
heser
vices.Asi
mil
arhol
di nReCaseyPat
ngwasmadei ent
sLt
d.

RULESOFCONSI
DERATI
ON

1.Mut
uall
oveandaf
fect
ioni
snotsuf
fi
cientconsi
der
ati
on:

I
twassohel
dinThomasv
.Thomas.Mr
.Thomashadexpr
essl
yst
atedt
hati
fhedi
ed
bef
orehi
swi
fe,shewasf
reet
ousehi
shouseasl
ongassher
emai
nsunmar
ri
ed.Hi
s
br
other
swhol
aterbecameexecut
orsofhi
sest
ateknewoft
hiswi
sh.

Af
terhi
sdeat
h,Mr
s.Thomasr
emai
nedi
nhi
shouseandunmar
ri
ed.Af
tert
hedeat
hof
oneoft
heexecut
ors,t
heot
hersoughtt
oev
ictMr
s.Thomasf
rom t
hehouse.Shesued
t
hel
atehusband’
sest
ate.I
twashel
dthatt
hehusbandspr
omi
sewasenf
orceabl
eas
shehadpr
ovi
dedconsi
der
ati
onbywayoft
he£1shepai
dforev
eryy
earshel
i
vedi
nthe
house.

Thel
oveshehadf
ort
hel
atehusbandwasnotsuf
fi
cientconsi
der
ati
onbutt
he£1she
pai
dev
eryy
earwas.
.

2.Consi
der
ati
onmustbel
egal

Theactorpr
omi
seof
fer
edbyt
hepr
omi
semustbel
awf
ulasi
l
legalconsi
der
ati
on
i
nval
i
dat
est
hecont
ract
.

3.Consi
der
ati
onmustnotbepast

Asagener
alr
ule,pastconsi
der
ati
oni
snotgoodt
osuppor
tacont
ract
ualcl
aim as
exempl
i
fiedbyt
hedeci
si nReMcAr
onsi dlescaseandRoscor
lav
.Thomas.

Howev
er,i
n cer
tai
n ci
rcumst
ances,pastconsi
der
ati
on i
s suf
fi
cientt
o suppor
ta
cont
ract
ual
clai
m,asi
ndi
cat
edabov
e.

4.Consi
der
ati
onmustber
eal
.

Thi
srul
emeanst
hatconsi
der
ati
onmustbesomet
hingofv
aluei
ntheey
esoft
hel
aw.I
t
meanst
hatconsi
der
ati
onmustbesuf
fi
cientt
houghi
tneednotbeadequat
e.

Thi
srul
emeanst
hatasl
ongassomet
hingv
aluabl
einl
aw passes,t
hepr
omi
sei
s
enf
orceabl
e.I
tmeanst
hatt
hel
aw doesnotconcer
nit
sel
fwi
tht
heeconomi
csofa
t
ransact
ion.

I
tmeanst
hatt
hecour
tsofl
aw donotexi
stt
ocor
rectbadbar
gai nThomasv
ns.I .
Thomas,
the£1Mr
s.Thomaspai
dpery
earwassuf
fi
cientconsi
der
ati
on.

Howev
eri
ftheconsi
der
ati
oni
stool
owi
ncompar
isonandt
her
eisev
idenceofami
stake,
mi
srepr
esent
ati
on,
dur
essorunduei
nfl
uence,
thecour
tsmayi
nter
vene.

5.Consi
der
ati
onmustf
lowf
rom t
hepl
aint
if
f/pr
omi
se.

Thi
srul
emeanst
hatt
heper
sont
owhom t
hepr
omi
sei
smadepr
ovi
desconsi
der
ati
on
andbysodoi
ngt
her
eisabar
gai
nbet
weent
hepar
ti
esormut
ual
i
ty.

Bypr
ovi
dingconsi
der
ati
on,t
hepr
omi
sebecomespar
tyt
othet
ransact
i nThomasv
on.I .
Thomas,Pat
ter
sonJwasemphat
ict
hat“
consi
der
ati
onmustatal
lti
mesf
lowf
rom t
he
pl
aint
if
f.
”

Ther
ulet
hatconsi
der
ati
onmustf
lowf
rom t
hepl
aint
if
fisr
efer
redt
oasTheDoct
ri
neof
Pr
ivi
tyofCont
ract
s.

THEDOCTRI
NEOFPRI
VITYOFCONTRACTS

Thi
sdoct
ri
nei
stot
heef
fectt
hatonl
yaper
sonwhoi
spar
tyt
oacont
ractcansueorbe
sudoni
t.I
tmeanst
hatonl
yaper
sonwhohaspr
ovi
dedconsi
der
ati
ont
oapr
omi
secan
sueorbesuedoni
t.

I
tmeanst
hatast
rangert
oconsi
der
ati
oncannotsueorbesuedev
eni
fthecont
ractwas
i
ntendedt
obenef
ithi
m.I
twassohel
dinScr
utt
onsLt
dv.Mi
dlandSi
l
li
conesLt
d.I
nPr
ice
East
on,Xagr
eedt
opayt
hepl
aint
if
fasum ofmoneyi
fYdi
dsomewor
kforhi
m.Y
r
ender
edt
heser
vicest
oXbutXdi
dnothonourt
hepr
omi
set
opay
.

The pl
aint
if
fsued t
o enf
orce t
he pr
omi
se.I
twas hel
dthatt
he pr
omi
se was
unenf
orceabl
east
hepl
aint
if
fwasnotapar
tyt
othet
ransact
ion.Hehadpr
ovi
dedno
consi
der
ati
on.

Asi
mil
arhol
di nDunl
ngwasmadei opv
.Sel
fr
idgeaswel
l nTweddl
asi ev.At
kinson.

Howev
eri
ncer
tai
nci
rcumst
ances,per
sonswhoar
enotpar
tyt
oacont
ractorwhohav
e
notpr
ovi
dedconsi
der
ati
onmaysueorbesuedoni
t.

Thesear
eexcept
ionst
otheDoct
ri
neofPr
ivi
tyofCont
ract
s:
i
).Agency

I
nanagencyr
elat
ionshi
p,t
heagentcont
ract
sonbehal
foft
hepr
inci
pal
.Thepr
inci
pali
s
notdi
rect
lyi
nvol
vedi
nthet
ransact
ion.Howev
ert
hepr
inci
palmaysueorbesuedona
cont
ractent
eredi
ntobyt
heagent
.Thi
sexcept
ioni
smor
eappar
entt
hanr
ealasi
nlaw
t
heagentr
epr
esent
sthepr
inci
pal
.

i
i)
LegalAssi
gnment
4
Undert
hepr
ovi
sionsoft
heI
TPA i
facr
edi
torassi
gnshi
sdebtt
oanot
herper
soni
na
l
egalassi
gnmentt
heassi
gneebecomesent
it
ledt
osuet
hedebt
orasi
fhewer
ethe
or
igi
nal
credi
tor
.

i
ii
)Negot
iabl
eInst
rument
s

Ahol
derofanegot
iabl
einst
rumentcansueoni
tini
tsownnamenotwi
thst
andi
ngt
he
absenceofconsi
der
ati
onpr
ovi
dedapr
evi
oushol
deroft
hei
nst
rumentgav
esome
consi
der
ati
on.

i
v)Tr
ust

Thi
sisanequi
tabl
erel
ati
onshi
pwher
ebyapar
tyexpr
essl
yimpl
i
edl
yorconst
ruct
ivel
y
hol
dspr
oper
tyonbehal
fofanot
herknownast
hebenef
ici
ary
.Incer
tai
nci
rcumst
ances,
t
hebenef
ici
arycansueorbesuedunderat
rust
.

v
)Thi
rdPar
tyI
nsur
ance
5
Undert
hepr
ovi
sionsoft
heI
nsur
ance(
Mot
orVehi
clesThi
rdPar
tyRi
sks)Act,,v
ict
ims
ofmot
orv
ehi
cleacci
dent
sar
eent
it
ledt
ocompensat
ionbyI
nsur
ancecompani
esf
or
i
njur
iessust
ainedf
rom t
heuseofmot
orv
ehi
clesont
her
oad.

Howev
ert
hei
nsur
eri
sonl
yli
abl
eift
hemot
orv
ehi
clewasi
nthehandsoft
hei
nsur
edor
someaut
hor
izeddr
iver
.

I
ftheaut
hor
izeddr
iverpay
stheamountduet
othev
ict
imf
ort
hei
njur
y,suchamounti
s
r
ecov
erabl
efr
om t
hei
nsur
erbutt
hrought
hei
nsur
edaswast nKay
hecasei anj
av.New
I
ndi
aInsur
anceCo.Lt
d.

v
i)Rest
ri
cti
veCov
enant
s(Cont
ract
srunni
ngwi
thl
and)

4
TheI
ndianTr
ansf
erofProper
tyAct(
1882)
5
Cap405LawsofKenya
I
ncer
tai
nci
rcumst
ances,
cer
tai
nri
ght
sandl
i
abi
l
iti
esat
tachedt
olandar
eenf
orceabl
eby
oragai
nstsubsequenthol
der
soft
hel
and.Thi
sispar
ti
cul
arl
ythecasei
nthel
aw of
l
eases.

6.Consi
der
ati
onmustbesomet
hingi
nexcessofapubl
icdut
yowedbyt
hepl
aint
if
f

Thi
srul
emeanst
hatper
for
mancebyt
hepl
aint
if
fofapubl
i
cdut
yowedbyhi
misnot
suf
fi
cientconsi
der
ati
onf
orapr
omi
set
opay
.

nCol
I l
insv
.Godef
roy
,thedef
endantwasi
nvol
vedi
naci
vi
lcaseandt
hepl
aint
if
fhad
gi
venev
idencei
nthemat
terbutwasr
eluct
antt
o do so i
nfut
ure.Thedef
endant
pr
omi
sedhi
m 6poundsi
fhecont
inuedgi
vi
ngev
idencewhi
chhedi
d.

Thedef
endantdi
dnothonourhi
spr
omi
seandwassued.Quest
ionwaswhet
hert
he
pl
aint
if
fhadpr
ovi
dedconsi
der
ati
onf
ort
hedef
endant
spr
omi
set
opay
.

I
twashel
dthatt
hepr
omi
sewasunenf
orceabl
east
hepl
aint
if
fhad notpr
ovi
ded
consi
der
ati
onbuthadmer
elyper
for
medapubl
i
cdut
y.

Howev
erany
thi
ngi
nexcessofapubl
i
cdut
yamount
stoconsi
der
ati nGl
on.I assbr
ook
Br
other
sv.Gl
amor
ganCount
yCounci
l
,thedef
endantownedami
neandatt
hemat
eri
al
t
imet
hewor
ker
swer
eonst
ri
ke.Thedef
endantr
equest
edt
hepl
aint
if
ftopr
ovi
dea
st
ati
onar
yguar
dtopr
otectt
hemi
neandpr
omi
sedt
opayf
ort
heser
vices.Thepl
aint
if
fs
whoar
enotboundt
opr
ovi
deast
ati
onar
yguar
dpr
ovi
dedt
heser
vicebutwer
enotpai
d.

I
nanact
iont
oenf
orcet
hepr
omi
se,i
twashel
dthatt
hepl
aint
if
fswer
eent
it
ledt
o
pay
mentast
heyhaddonemor
ethant
hedut
yrequi
redandhadt
her
efor
epr
ovi
ded
consi
der
ati
on.

7.Consi
der
ati
onmustbesomet
hingi
nexcessofanexi
sti
ngcont
ract
ualobl
igat
ion

Thi
srul
emeanst
hatper
for
mancebyt
hepl
aint
if
fofanexi
sti
ngcont
ract
ualobl
i
gat
ioni
s
notsuf
fi
cientconsi
der
ati
onf
orapr
omi nSt
se.I il
kv.My
rik,
thedef
endantwhowasashi
p
capt
ainent
eredi
ntoacont
ractwi
thhi
scr
ewmember
stoassi
sthi
m onaj
our
neyf
rom
Br
it
aint
otheBal
ti
cSeaandback.I
nthecour
seoft
hej
our
ney
,2sai
l
orsdeser
ted.

Thecapt
ainpr
omi
sedt
oshar
ethei
rwagesbet
weent
her
emai
ningcr
ew member
sa
pr
omi
sehedi
dnothonourandwassued.I
twashel
dthatt
hecr
ewmember
swer
enot
ent
it
ledt
otheext
rapayast
heyhadnotpr
ovi
dedconsi
der
ati
on.

They had mer

ely per
for
med an exi
sti
ng cont
ract
ualobl
i
gat
ion.Howev
er,doi
ng
somet
hingi
nexcessofacont
ract
ual
obl
i
gat
ionconst
it
utesconsi
der
ati
on.

nHar
I tl
eyv
.Ponsonbywher
eint
hecour
seofaj
our
ney
,asubst
ant
ialnumberofcr
ew
member
sdeser
tedandapr
omi
sef
orext
rapaywasmade,i
twashel
dthatt
heywer
e
ent
it
ledt
othepayast
heyhaddonemor
ethanacont
ract
ual
obl
i
gat
ion.

The wi
l
li
ngness t
o expose t
hemsel
ves t
o danger f
or l
onger hour
s const
it
uted
consi
der
ati
onf
ort
hepr
omi
se.

8.Pay
mentofal
essersum ont
hedayi
nsat
isf
act
ionofal
argersum i
snotsuf
fi
cient
consi
der
ati
onf
ort
hecr
edi
tor
spr
omi
set
oacceptsuchsum i
nful
lset
tl
ementf
ort
he
debt
.

Thi
sisr
efer
redast
he“
Rul
einPi
nnel
sCase(
1602)
”.Col
eowedPi
nnel
8poundspay
abl
e
on11th Nov eron1stOct
ember1600.Howev ober1600,Pi
nnelr
equest
edCol
etopay5
poundswhi
chheagr
eedt
oaccepti
nful
lset
tl
ementoft
hedebt
.Subsequent
ly,Pi
nnel
suedCol
efort
hebal
ance.Thecasewasdeci
dedonat
echni
calpoi
ntofpl
eadi
ngand
Col
ewashel
dli
abl
efort
hebal
ance.

Thi
srul
ewasappl
i n Foakesv
edi .Beer(
1884)
.Howev
eri
ncer
tai
nci
rcumst
ances,
pay
mentofasmal
l
ersum ext
ingui
shest
heent
ir
edebt
.

Thesear
eexcept
ionst
other
ulei
nPi
nnel
’
sCase:

1.I
fthel
essersum i
spai
dinadv
anceandt
hecr
edi
toraccept
sthesamei
nful
l
set
tl
ementoft
hedebt
.

2.I
fthel
essersum i
spai
dint
hef
orm ofanobj
ectwhi
cht
hecr
edi
toraccept
sin
set
tl
ementt
her
eof
.InPi
nnel
’
sCase,
Bri
anC.
J.obser
ved,
“butt
hegi
ftofahor
se,
hawkorr
obe,
issuf
fi
cientconsi
der
ati
on.

3.I
fthel
essersum i
spai
dinaddi
ti
ont
oanobj
ectwhi
cht
hecr
edi
toraccept
s.

4.I
fthel
essersum i
satt
hecr
edi
tor
’sr
equestpai
datadi
ff
erentpl
ace.

5.Wher
ethel
essersum i
spai
dinadi
ff
erentcur
rencyandt
hecr
edi
toraccept
sthe
samei
nful
lset
tl
ementt
her
eof
.

6.Wher
ethel
essersum i
spai
dbyat
hir
dpar
ty nWel
.I byv
.Dr
ake,t
hedef
endant
owedt
hepl
aint
if
f18poundsandwasunabl
etopay
.Thedef
endant
’sf
atherpai
d
t
hepl
aint
if
f9poundswhi
chheaccept
edi
nful
lset
tl
ementoft
hedebtbut
subsequent
lysuedf
ort
hebal
ance.I
twashel
dthatt
hepr
omi
sewasenf
orceabl
e
 asi
twasmadet
oa3r
dpar
ty.

7.I
fadebt
orent
ersi
ntoanar
rangementwi
thhi
scr
edi
tor
stocompoundhi
sdebt
s,
wher
ebyhepr
omi
sest
opaypar
toft
heamountduet
oeachoft
hecr
edi
tor
swho
i
ntur
npr
omi
semott
osuet
hedebt
orori
nsi
stonf
ullpay
ment
,thel
essersum
pai
dbyt
hedebt
orext
ingui
shest
heent
ir
edebt
.

Themut
ual
promi
sesbyt
hepar
ti
esconst
it
uteconsi
der
ati
on.

DOCTRI
NEOFPROMI
SSORYOREQUI
TABLEESTOPPEL

Thi
sdoct
ri
newasdev
elopedbyequi
tyt
omi
ti
gat
ethehar
shnessoft
hecommonl
awr
ule
ofconsi
der
ati
on.I
tisanequi
tabl
eint
erv
ent
ionwhi
chmodi
fi
est
her
uleofconsi
der
ati
on.

TheDoct
ri
newasexpl
ainedbyLor
dDenni nCombev
ngi .Combe.I
tist
otheef
fectt
hat
wher
epar
ti
eshav
eal
egalr
elat
ionshi
pandoneoft
hem makesanew pr
omi
seor
r
epr
esent
ati
oni
ntendedt
oaf
fectt
hei
rlegalr
elat
ionsandt
ober
eli
eduponbyt
heot
her
,
oncet
heot
herhasr
eli
eduponi
tandchangedhi
slegalposi
ti
on,t
heot
herpar
tycannot
behear
dtosayt
hatt
hei
rlegalr
elat
ionshi
pwasdi
ff
erent
.Thepar
tyi
sest
oppedf
rom
deny
ingi
tspr
omi
se.

Fort
hedoct
ri
neofest
oppel
toappl
ythef
oll
owi
ngcondi
ti
onsar
enecessar
y:

1.Al
egal
rel
ati
onshi
pbet
weent
hepar
ti
es.

2.Anewpr
omi
seorr
epr
esent
ati
oni
nint
endedt
ober
eli
edupon.

3.Rel
i
anceupont
her
epr
esent
ati
on.

4.Changei
nlegal
posi
ti
onasar
esul
toft
her
eli
ance.

5.I
twoul
dbeunf
airnott
oest
opt
hemakeroft
her
epr
esent
ati
on.

TheDoct
ri
neofPr
omi
ssor
yEst
oppeli
sof
tenr
efer
redt
oas“
TheRul
eint
heHi
ghTr
ees
Case.
”

nCent
I ralLondonPr
oper
tyTr
ustv
.Hi
ghTr
eesHouseLt
d,t
hepl
aint
if
fownedabl
ockof
f
lat
swhi
chi
tleasedt
othedef
endantf
or99y
ear
sat2500poundspery
ear
.Af
tert
he
out
br he2ndwor
eakoft ldwar
,itbecamecl
eart
hatt
hedef
endantwasnoti
naposi
ti
ont
o
payt
heagr
eedr
entasmostoft
hef
lat
swer
eunoccupi
ed.Thepl
aint
if
fpr
omi
sedt
o
accepthal
foft
her
entasl
ongast
hewarcont
inued.

Byt
heendof1945,
allt
hef
lat
swer
eoccupi
ed.Thepl
aint
if
fsuedf
ort
hedef
endantt
obe
compel
l
edt
opay
:

1.Thef
ull
rent
.

2.Thear
rear
s.

Thedef
endantar
guedt
hati
twasi
nequi
tabl
e(unf
air
)fort
hepl
aint
if
ftocl
aimt
hear
rear
s.
I
twashel
dthatwher
easi
twasf
airf
ort
hedef
endantt
opayt
hef
ullr
ent
,itwasunf
airt
o
cl
aimt
hear
rear
sast
hepl
aint
if
fhadmadeapr
omi
sewhi
cht
hedef
endanthadr
eli
ede
uponandchangedi
tsl
egal
posi
ti
on.

Thepl
aint
if
fwasest
oppedf
rom i
nsi
sti
ngont
hear
rear
s.

Thedoct
ri
neofequi
tabl
eest
oppel
appl
i
esi
nEastAf
ri
ca.

n Cent
I uryAut
omobi
l
ev.Hut
chi
ngsBi
emerLt
d,t
hedef
endantt
ookal
easeoft
he
pl
aint
if
f’
spr
emi
seswhi
chwast
ermi
nabl
ebya3mont
hnot
iceofei
therpar
ty.The
def
endanti
ntendedt
omakeal
ter
ati
onst
othebui
l
dingbutf
ear
eddoi
ngsoonl
yfort
he
l
easet
obet
ermi
nat
ed.Thepl
aint
if
fpr
omi
sednott
oter
minat
ethel
easei
n4y
ear
sti
me.

Asaconsequence,t
hedef
endantspent800poundsont
heal
ter
ati
onsbut8mont
hs
l
atert
hedef
endantr
ecei
vedt
hepl
aint
if
f’
snot
iceoft
ermi
nat
ionbutr
efusedt
ohonouri
t
andwassued.

Thedef
endantpl
eadedest
oppel
.Thepl
aint
if
fwasest
oppedf
rom ev
ict
ingt
hedef
endant
asi
thadmadeapr
omi
sewhi
cht
hedef
endanthadr
eli
eduponandchangedi
tsl
egal
posi
ti
on.

Asi
mil
arhol
di nCommi
ngwasmadei ssi
onerofLandsv
.Hussei
n.

EFFECTSOFESTOPPEL

TheDoct
ri
neofPr
omi
ssor
yest
oppel
est
oppeli
samodi
fi
cat
ionoft
heCommonLawr
ule
ofconsi
der
ati
oni
nthati
tenabl
esaper
sonwhohasnotpr
ovi
dedconsi
der
ati
ont
oa
pr
omi
set
oenf
orcei
tifhehasr
eli
eduponi
tandchangedhi
slegal
posi
ti
on.

I
tisar
guedt
hatt
hepr
inci
palweaknessoft
heDoct
ri
neofPr
omi
ssor
yEst
oppeli
sthati
t
i
sdef
ensi
veandnotof
fensi
ve.I
tcanonl
yber
eli
eduponbyt
hedef
endantasadef
ence.
Howev
er,t
hesocal
l
edDoct
ri
neofPr
opr
iet
aryEst
oppelwhi
chi
sbasedonowner
shi
p
canbeusedbot
hasashi
eldandasaswor
d.Cour
tshowev
erhav
eobser
vedt
hatt
her
e
i
snodi
sti
nct
ionbet
weenpr
omi
ssor
yandpr
opr
iet
aryest
oppel
.

TERMS/CONTENTSOFACONTRACT

Par
ti
esnegot
iat
ingacont
ractmakemanyst
atement
ssomeofwhi
char
eint
endedt
obe
t
ermswhi
l
etheot
her
sar
emer
erepr
esent
ati
ons.Wher
east
ermsf
ormt
hecont
entoft
he
cont
ract
,repr
esent
ati
onsar
emer
einducement
sandi
ffal
set
heyar
eref
err
edt
oas
mi
srepr
esent
ati
onsandmayaf
fectt
hecont
ract
.

Whet
herast
atementwasi
ntendedt
obeat
erm orr
epr
esent
ati
oni
saquest
ionoff
act
andcour
tsar
egui
dedbyt
hef
oll
owi
ngr
ulesorpr
esumpt
ionsi
nsoascer
tai
ning:

1.Ti
meGap:I
fthedur
ati
onbet
weenmaki
ngt
hest
atementandt
heconcl
usi
onof
t
hecont
racti
slong,i
tispr
esumedt
obear
epr
esent
ati
onandi
fshor
titi
s
deemedt
obeat
erm.

2.Guar
ant
ee:I
fapar
tyt
othenegot
iat
ionsappear
stoguar
ant
eei
tsst
atement
s,
t
heyar
epr
esumedt
obet
erms.

3.Speci
alKnowl
edge:I
fei
theroft
hepar
ti
eshasspeci
alknowl
edgei
nrel
ati
ont
o
t
hesubj
ectmat
teroft
hecont
ract
,it
sst
atement
sar
epr
esumedt
obet
erms.I
n
OscarChessLt
dv.Wi
l
li
ams,Wi
l
li da2nd handcart
amssol othepl
aint
if
f.The
r
egi
str
ati
onbookshowedt
hati
twasa1948model
whi
l
einf
acti
twasa1939car
.
Wi
l
li
amshadnomeansofascer
tai
ningt
het
rut
h.Thepl
aint
if
fsuedi
ndamages
f
ort
heunt
ruest
atement
.Howev
eri
twashel
dthatsi
ncet
hest
atementwas
i
nnocent
lymi
srepr
esent
ed,
thepl
aint
if
fhadnoact
ioni
ndamages.

Howev nDi
eri ckBent
lyPr
oduct
ionsLt
dv.Har
oldSmi
thmot
orsLt
d,t
hepl
aint
if
fint
ended
t
obuyamot
orv
ehi
clef
rom t
hedef
endantandwasi
nfor
medt
hatt
hev
ehi
clei
nquest
ion
hadhadar
epl
acementengi
neandgear
boxandhadonl
ydone20,
000mi
l
es.I
nfact
not
hinghadbeenr
epl
acedandi
thaddoneov
er100,
000mi
l
es.

Thepl
aint
if
fsuedi
ndamagesf
ort
heunt
ruest
atement
.Itwashel
dthatt
heunt
rue
st
atementwasat
erm oft
hecont
ractast
hedef
endantwasamot
ordeal
erandwas
t
her
efor
eli
abl
eindamagesf
ort
hemi
srepr
esent
ati
on.

Ter
msofacont
ractmaybe:

1.Expr
essor

2.I
mpl
i
ed
1.EXPRESSTERMS

Thesear
etheor
alandwr
it
tent
ermsagr
eeduponbyt
hepar
ti
es.Wr
it
tent
ermspr
evai
l
ov
eror
alt
erms.I
fcont
ract
ualt
erms ar
e wr
it
ten,or
alev
idence i
s gener
all
y not
admi
ssi
blet
ovar
yorexpl
aint
hewr
it
tent
erms.

Howev
er,
suchev
idencei
sadmi
ssi
blet
opr
ovet
hat
:

1.Thecont
ractwassubj
ectt
oapar
ti
cul
art
radeusageorcust
om.

2.Thepar
ti
eshadnoti
ncor
por
atedal
lthet
ermsi
ntot
hedocument
.

3.Thepar
ti
eshadagr
eedt
osuspendt
heagr
eementunt
ilsomeev
entoccur
red

I
fhandwr
it
ten,
pri
ntedandt
ypedt
ermscont
radi
ct,
thehandwr
it
tent
ermspr
evai
last
hey
ar
eabet
termani
fest
ati
onoft
hepar
ti
es’
int
ent
ions.I
twassohel
dinGl
ynnv
.Mar
get
son.

2.I
MPLI
EDTERMS

Thesear
eter
mswhi
cht
houghnotagr
eedt
obyt
hepar
ti
es,ar
eani
ntegr
alpar
toft
he
cont
ract
.Thesest
ermsmaybei
mpl
i
edbyst
atut
esorbyacour
tofl
aw.

A.Ter
msi
mpl
iedBySt
atut
es.

Cer
tai
nst
atut
esi
mpl
yter
msi
ncont
ract
sent
eredi
ntopur
suantt
othei
rpr
ovi
sions.
Theset
ermsbecomepar
toft
hecont
ract
.

1.Ter
msi
mpl
iedi
nSal
eofGoodscont
ract
sbyt
heSal
eofGoodsAct
.

TheSal
eofGoodsActi
mpl
i
esbot
hcondi
ti
onsandwar
rant
iesi
ncont
ract
sofSal
eof
goodsunl
essadi
ff
erenti
ntent
ionappear
s.

CONDI
TIONS

a)Ri
ghtt
osel
l.

UnderSect
ion4(
a)oft
heActt
her
eisani
mpl
i
edcondi
ti
ont
hatt
hesel
l
erof
goodsshal
lhav
ether
ightt
osel
lwhenpr
oper
tyi
nthegoodsi
stopass.

b)Cor
respondt
odescr
ipt
ion.

UnderSect
ion5oft
heAct
,inasal
ebydescr
ipt
iont
her
eisani
mpl
i
edcondi
ti
on
t
hatt
hegoodsshal
lcor
respondt
othedescr
ipt
ion.
 c) Fi
tnessf
orpur
pose.

UnderSect
ion16(
a)oft
heAct
,wher
ethebuy
erexpr
essl
yorbyi
mpl
i
cat
ion
makesknown t
othesel
l
ert
hepar
ti
cul
arpur
posef
orwhi
ch t
hegoodsar
e
r
equi
redsoast
orel
yont
hesel
l
ersski
l
landj
udgement
,ther
eisani
mpl
i
ed
condi
ti
ont
hatt
hegoodsshal
lber
easonabl
yfi
tfort
hatpur
pose.

d)Mer
chant
abl
eQual
it
y.

UnderSect
ion16(
b)oft
heAct
,wher
egoodsar
eboughtbydescr
ipt
ionf
rom a
per
sonwhodeal
sinsuchgoodsi
ntheor
dinar
ycour
seofbusi
nesswhet
hera
sel
l
erormanuf
act
urer
,ther
eisani
mpl
i
edcondi
ti
ont
hatt
hegoodswi
l
lbeof
mer
chant
abl
equal
i
ty.

e)Sal
ebySampl
e.

UnderSect
ion17(
1)oft
heAct
,inasal
ebysampl
e,t
hef
oll
owi
ngcondi
ti
onsar
e
i
mpl
i
ed:

1)Thebul
kshal
lcor
respondwi
tht
hesampl
einqual
i
ty.

2)Thebuy
ershal
lbeaf
for
dedar
easonabl
eoppor
tuni
tyt
ocompar
ethebul
kwi
th
t
hesampl
e.

3)Thatt
hegoodsshal
lbef
reef
rom anydef
ect
srender
ingt
hem unmer
chant
abl
e.

WARRANTI
ES

1)Qui
etPossessi
on

UnderSect
ion14(
b)oft
heActt
her
eisani
mpl
i
edwar
rant
ythatt
hebuy
ershal
lhav
eand
enj
oyqui
etpossessi
onoft
hegoods.

2)Fr
eef
rom Char
georencumbr
ance

UnderSect
ion14(
c)oft
heActt
her
eisani
mpl
i
edwar
rant
ythatt
hegoodsshal
lbef
ree
f
rom anychar
georencumbr
ancenotmadeknownt
othebuy
erwhent
hecont
ractwas
made.

2.Ter
msI
mpl
iedByCour
tsofLaw

Cour
tsofl
awr
eluct
ant
lyi
mpl
yter
msi
ncont
ract
sasi
tist
hedut
yoft
hepar
ti
est
oagr
ee
ast
owhatt
hecont
ract
ual
ter
msshal
lbe.

Howev
eri
ncer
tai
nci
rcumst
ances,cour
tsar
ecal
l
edupont
oimpl
yter
msi
ncont
ract
s
anddosof
or2r
easons:

a)Togi
veef
fectt
othei
ntent
ionsoft
hepar
ti
es.

b)Tof
aci
l
itat
ecommer
cial
transact
ionsorgi
vebusi
nessef
fi
ciency
.

Cour
tsofl
awi
mpl
yter
msi
ncont
ract
sont
hebasi
sof
:

1.Ther
easonabl
ebyst
andert
est
.

2.Tr
adeusagesandcust
oms.

1.Reasonabl
eBy
-St
anderTest

Undert
hist
estacour
twi
l
limpl
yint
oacont
ractanyt
erm whi
char
easonabl
eper
son
ov
erhear
ingt
hecont
ractbei
ngmadewoul
dhav
eimpl
i
ed.

nHassanAl
I iIssav
.Jer
ajPr
oduceShop,t
hepl
aint
if
frepai
redt
hedef
endant
’smot
or
cy
cle.Howev
er,t
hedef
endantdi
dnotcol
l
ectt
her
epai
redi
tem unt
ilaf
ter1y
ear
.The
pl
aint
if
fdemandedr
epai
randst
oragechar
ges.

Thedef
endantr
efusedt
opayst
oragechar
gesont
hegr
oundt
hati
thadnotbeenagr
eed.
Thepl
aint
if
fthr
eat
enedt
osuet
hedef
endant
.Asaconsequence,t
hedef
endantwr
otea
chequef
orbot
hamount
sbuti
twasdi
shonour
ed.Thepl
aint
if
fsued.

I
twashel
dthatt
hedef
endantwasl
i
abl
etom payst
oragechar
ges.Thecour
timpl
i
ed
i
ntot
hecont
ractat
ermt
hati
far
epai
redi
tem i
snotcol
l
ect
edwi
thi
nar
easonabl
eti
me,
Thepar
tyunder
taki
ngst
oragei
sent
it
ledt
oreasonabl
est
oragechar
ges.

I
ntheMoor
cockCase,t
hepar
ti
eshadagr
eedt
hatt
hepl
aint
if
fsshi
pcoul
dunl
oadatt
he
def
endant
’sj
ett
ysi
tuat
edupst
ream t
heRi
verThames.Dur
ingl
owt
ideast
heshi
psai
l
ed
t
owar
dst
hej
ett
yitgr
oundedandwasdamaged.Thej
ett
yownerwashel
dli
abl
efor
damage.

Thecour
timpl
i
edt
het
ermt
hatt
hepassaget
othej
ett
ywasr
easonabl
ysaf
efort
heshi
p.

2.Tr
adeUsages&Cust
oms.

Acour
tofl
awmayi
mpl
yat
radeusageorcust
om i
ntoacont
racti
fiti
spr
ovedt
hatt
he
t
ransact
ionwassubj
ectt
oit
.Thepar
tyr
ely
ingont
het
radecust
om mustpr
ovet
hat
:
 1.Thecust
om exi
sts.

2.I
scer
tai
n.

3.I
sreasonabl
e.

4.I
sknownt
othepar
ti
es.

5.Thepar
ti
eshadnotexempt
edt
hecust
om f
rom t
hei
rtr
ansact
ion.I
twassohel
d
nHal
i i
lalShahandChampi
onShahv
.St
andar
dBankCo.Lt
d.

nFl
I uer
yandKi
ngv
.MohamedWal
i&Anot
her
,thepl
aint
if
fbought1000handker
chi
efs
f
rom t
hedef
endant
sandt
hesamewer
edel
i
ver
edi
nbat
chesof30.Thepl
aint
if
ftook
del
i
ver
ybutsuedt
hedef
endantf
orar
educt
ioni
nthepur
chasepr
ice.I
twaspr
ovedt
hat
i
nZanzi
bart
her
ewasat
radeusaget
hathandker
chi
efsboughti
nbul
kwer
esuppl
i
edi
n
dozens.

Thecour
timpl
i
edt
hecust
om i
ntot
hecont
ractandhel
dthatt
hepl
aint
if
fwasent
it
ledt
o
t
her
educt
ioni
nthepr
iceashehadt
ounpackandr
epackt
hepi
ecesi
ndozens.

Cont
ract
ual
ter
msmaybecondi
ti
ons,
war
rant
iesori
nnomi
nat
eter
ms.

1.CONDI
TIONS

Thi
sisat
erm ofmaj
orst
ipul
ati
oni
nacont
ract
.Itr
unst
other
ootoft
hecont
ract
.Iti
s
par
toft
hecent
ralt
hemeoft
hecont
ract
.Ifacondi
ti
oni
sbr
eached,i
tent
it
lest
he
i
nnocentpar
tyt
otr
eatt
hecont
ractasr
epudi
atedandt
osuei
ndamagesAswast
he
nPoussar
casei dv.Spi
ersandPond.Asi
ngerwasengagedt
opl
ayt
hel
eadi
ngr
olei
na
Fr
enchOper
afr
om t
hebegi
nni
ngoft
heseasonbutowi
ngt
oil
l
nessshewasunabl
eto
t
akeupherr
oledur
ingt
hef
ir
st1weekf
orci
ngt
heor
gani
zer
stoengageasubst
it
uteand
consequent
lyr
eject
edt
hesi
nger
’sser
viceswhosued.

I
twashel
dthatt
heor
gani
zer
swer
eent
it
ledt
otr
eatt
hecont
ractasr
epudi
atedast
he
si
ngerhadbr
okenamaj
ort
erm oft
hecont
ract
.

Acondi
ti
onmaybeexpr
essori
mpl
i
edi
nacont
ract
.

2.WARRANTI
ES

Thi
sisami
nort
erm ofacont
ractorat
erm ofmi
norst
ipul
ati
on.I
tisaper
ipher
alor
col
l
ater
alt
ermt
hatdoesnotr
uni
ntot
her
ootoft
hecont
ract
.Ifbr
eached,i
tent
it
lest
he
i
nnocentpar
tyt
osuei
ndamagesonl
yast
hecont
ractr
emai
nsenf
orceabl
eandbot
h
par
ti
esar
eboundt
ohonourt
hei
rpar
toft
hebar
gai
n.

nBet
I ti
niv
.Gy
e,anact
resswasengagedt
oper
for
minconcer
tsandt
heat
resf
rom t
he
begi
nni
ngofper
for
mances.Howev
ersheaddi
ti
onal
l
yagr
eedt
oappearf
or6day
sin
adv
ancef
orr
ehear
sal
butappear
edf
oronl
y3day
s.

Theor
gani
zer
spur
por
tedt
otr
eatt
hecont
ractasr
epudi
ated.I
twashel
dthatt
he
cont
ractwassubsi
sti
ngast
heagr
eementt
oappearf
orr
ehear
sal
swasacol
l
ater
alt
erm.

Asi
mil
arhol
di nKampal
ngwasmadei aGener
alagencyLt
d.V.Mody
s(EA)Lt
dwher
e
t
hepar
ti
eshadagr
eedt
obuyal
argequant
it
yofcot
tondel
i
ver
abl
eatSar
oti
.

Howev
ert
hesel
l
ert
ookt
hecot
tont
oanot
hert
ownnamedAl
oiwher
ethebuy
erhada
cot
tongi
nner
y.Thebuy
err
efusedt
otakedel
i
ver
yont
hegr
oundt
hatt
hemi
sdel
i
ver
ywas
abr
eachofacondi
ti
on.Howev
er,i
twashel
dthati
twasabr
eachofawar
rant
yandt
he
buy
erwasonl
yent
it
ledt
odamages.

3.I
NNOMI
NATETERMS

Thesear
eter
msofacont
ractcat
egor
izedasnei
thercondi
ti
onsnorwar
rant
ies.The
br
eachofsucht
ermsmaybeat
tendedbyt
ri
vi
alorgr
aveconsequences.

Ther
emedyav
ail
abl
edependsont
henat
ure,
eff
ectandconsequenceoft
hebr
each.

I
twassohel
dinHongKongFurShi
ppi
ngCo.vKawasakiKi
senKai
shawher
eashi
pwas
char
ter
edf
or24mont
hsbutwasunav
ail
abl
eforusedur
i he1st 20weeks.The
ngt
char
ter
ersuedal
l
egi
ngt
hatt
heunav
ail
abi
l
ityoft
hev
esselwasbr
eachofacondi
ti
on.
Howev
eri
twashel
dnott
obe.

EXEMPTI
ONOREXCLUSI
ONCLAUSES(
Limi
ti
ngorExcl
udi
ngcl
auses)

Thet
heor
yoff
reedom ofcont
ractassumest
hatpar
ti
esar
efr
eet
ocont
ractwi
thone
anot
herandcanpr
otectt
hei
rowni
nter
est
s.

I
tassumespar
it
yincont
ract
ualbar
gai
nswhi
chi
snotnecessar
il
ythecase.Thest
ronger
par
tymayi
nser
tter
msf
avour
abl
etoi
t.Thi
sist
hegenesi
sofexempt
ioncl
auses.

Anexempt
ioncl
ausei
sacl
ausei
nser
tedi
nacont
ractbyt
hest
rongerpar
tyexempt
ing,
i
tsel
ffr
om l
i
abi
l
ityorl
i
mit
ingt
heext
entofanyl
i
abi
l
ityar
isi
ngundert
hecont
ract
.

t
hesecl
ausesar
ecommoni
nst
andar
dfor
m cont
ract
se.
g.conv
eyanceofgoods,hi
re
pur
chaseagr
eement
scont
ract
sofi
nsur
anceet
c.
Thesecl
ausesar
ejust
if
iedont
het
heor
yoff
reedom ofcont
ract
.

Fr
om anexampl
ecl
auset
obegi
venef
fect
,thecour
tmustbesat
isf
iedt
hati
twasan
i
ntegr
alpar
toft
hecont
ract
.

I
tmusthav
ebeeni
ncor
por
atedi
ntot
hecont
ract
.InL’
est
rangeV.Gr
aucob(
1934)t
he
pl
aint
if
fboughtanaut
omat
icci
gar
ett
evendi
ngmachi
nef
rom t
hedef
endant
.

Thet
ermsoft
heagr
eementwer
ewr
it
teni
nadocumentent
it
ledsal
eagr
eement
.

Someoft
hecl
auseswer
einav
erysmal
lpr
intandt
hepl
aint
if
fsi
gnedt
hedocument
wi
thoutr
eadi
ng.

Onecl
auseexempt
edt
hedef
endantf
rom l
i
abi
l
ityi
fthemachi
net
urnedoutt
obe
def
ect
ive.

I
twor
kedf
oronl
yaf
ew day
s.Thepl
aint
if
fsuedandt
hedef
endantr
eli
edont
he
exempt
ioncl
ausei
ntheagr
eement
.

I
twashel
dthatt
hedef
endantwasnotl
i
abl
east
hedocumentcont
ainedt
het
ermsoft
he
cont
ractandt
hepl
aint
if
fhadsi
gnedt
hesameandwast
her
efor
ebound.

I
NCORPORATI
ONOFEXEMPTI
ONCLAUSESI
NCONTRACTS

Anexempt
ioncl
ausemaybemadepar
tofacont
ract
:-

a.Bysi
gnat
ure

b.Bynot
ice

1.I
NCORPORATI
ONBYSI
GNATURE.

I
fadocumentsi
gnedbyt
hepar
ti
est
oacont
ractcont
ainsanexempt
ioncl
ause,t
he
cour
tmustbesat
isf
iedt
hat
:-

a.Thedocumentcont
ainedt
het
ermsoft
hecont
ractbet
weent
hepar
ti
es

b.I
twassi
gnedbyt
hepar
tyaf
fect
edv
olunt
ari
l
y

Si
gnat
urepr
imaf
aci
emeansaccept
ance.Apar
tycannotaf
tersi
gni
ngadocumentar
gue
t
hati
tdi
dnotr
ead,under
standort
hatt
hepr
intwast
oosmal
l
.Itwassohel
din
L’
Est
rangeV.Gr
aucob.
Howev
er i
fther
eis ev
idence t
hat t
he si
gnat
ure was pr
ocur
ed by f
raud or
mi
srepr
esent
ati
onoft
hecont
ent
soft
hedocumentt
hesi
gnat
urei
svoi
dabl
eatt
he
opt
ionoft
hei
nnocentpar
ty.

hecaseofCur
Aswast ti
sv.Chemi
calCl
eani
ng&Dy
eingCo.t
hepl
aint
if
ftookaweddi
ng
dr
esst
othedef
endantshopf
orcl
eani
ngandwasgi
venadocumentt
osi
gn.She
r
equest
edt
heshopassi
stantt
oexpl
aint
ohert
hecont
ent
sandwasi
nfor
medt
hatt
he
documentexempt
ed t
he company f
rom l
i
abi
l
ityf
orany damage caused t
othe
decor
ati
onsoft
hedr
ess.

Shesi
gnedt
hedocumentwi
thoutr
eadi
ng.Herdr
esswasdamagedandst
ained.She
suedt
hecompanywhi
chr
eli
edont
heexempt
ioncl
ausewhi
chexcl
udedi
tfr
om l
i
abi
l
ity
f
oranydamage.

Thepl
aint
if
fpl
eadedt
hatt
hecont
ent
soft
hedocumenthadbeenmi
srepr
esent
edt
oher
andhencet
hesi
gnat
ure,i
twashel
dthatt
hesi
gnat
urewasv
oidabl
eatheropt
ionand
t
hecompanywasl
i
abl
e.

2.I
NCORPORATI
ONBYNOTI
CE.

Whatt
heexempt
ioncl
ausei
snotcont
ainedi
nadocumentr
equi
ri
nganysi
gnat
ure,t
he
cour
tmustbesat
isf
iedt
hatt
hepar
tyaf
fect
edbyt
hecl
ausewasawar
eofi
tsexi
stence
whent
hecont
ractwasent
eredi
nto.

Aswast nPar
hecasei kerv
.Sout
hEast
ernRai
l
wayCo.Thepl
aint
if
fhadl
efti
nluggage
atar
ail
wayst
ati
onl
uggageof
fi
ceandwasgi
venat
icketcont
aini
ngt
hewor
ds“
see
back”
.

Att
hebackwasacl
auseexempt
ingt
hecompanyf
rom l
i
abi
l
ityf
orl
ostl
uggage.

Thepl
aint
if
f’
sluggagewasl
ostandhesued.Thecompanyr
eli
edont
heexempt
ion
cl
ause.

I
twashel
dthatt
hecompanywasnotl
i
abl
easi
thadbr
oughtt
heexempt
ioncl
auset
o
t
hepl
aint
if
f’
snot
icewhowast
her
efor
ebound.

Howev
er,abel
atednot
iceofanexempt
ioncl
ausehasnoef
fectont
hecont
ractasi
tis
notpar
tofi
t nOl
.I l
eyv
.Mal
bor
oughCour
tthepl
aint
if
fhadbookedi
nahot
elandpai
dfor
aweeksboar
d,shewasgi
venakeyt
oherr
oom wher
ether
ewasanot
iceexempt
ingt
he
hot
elf
rom l
i
abi
l
ityf
orl
osti
tems.Thenot
icewasbehi
ndt
hedoor
.

Guest
swer
erequest
edt
odeposi
tval
uabl
ewi
tht
hemanager
essoft
hehot
el.Dur
ingher
absenceast
rangeropenedt
her
oom andst
oleherexpensi
vecl
othi
ng.Shesued.The
hot
elr
eli
edont
heexempt
ioncl
ausei
nther
oom.

I
twashel
dthatt
hehot
elwasl
i
abl
east
heexempt
ioncl
ausewasbr
oughtt
othe
pl
aint
if
fsnot
iceaf
tert
hecont
racthadbeenconcl
uded.

Asi
mil
arhol
di nLougherv
ngwasmadei .Keny
aSaf
ariLodgesandHot
elsLt
d.Wher
ethe
pl
aint
if
fwhowasaguesti
nahot
elwasi
njur
edneart
heswi
mmi
ngpoolnextt
owhi
ch
wasanot
iceexempt
ingt
hehot
elf
rom l
i
abi
l
ityf
ori
njur
iessust
ainedbyper
sonsneart
he
swi
mmi
ngpool
.

I
twashel
dthatt
hehot
elwasl
i
abl
east
heexempt
ioncl
ausewasnotpar
toft
hecont
ract
.

I
tshoul
dbenot
edt
hatatcommonl
aw exempt
ioncl
ausescont
ainedi
nti
cket
sor
r
ecei
ptsi
ssuedof
ferpay
mentofasum ofmoneyar
enotdeemedt
obepar
toft
he
cont
ractast
het
icketorr
ecei
ptsi
sev
idenceofpay
mentandnott
hebasi
soft
he
cont
ract
.

nThomt
I onv
.ShoehanePar
kingCo.Lt
d.Thedef
endantoper
atedanaut
omat
edpar
king
l
ot.Mot
ori
stshadt
oinser
tcoi
nst
oobt
ainar
ecei
ptsoast
oaccesst
hepar
kingl
ot.

Behi
ndt
her
ecei
ptwasanot
iceexempt
ingt
hedef
endantf
rom l
i
abi
l
ityf
ori
njur
ies
sust
ainedwi
thi
nthepar
kingl
ot.

Thepl
aint
if
fwhohadaccessedt
hepar
kingl
oti
ntheor
dinar
ymannerwasi
njur
edand
sued.

Thedef
endantr
eli
edont
heexempt
ioncl
auseont
het
icket
.Howev
eri
twashel
dthatt
he
def
endantwasl
i
abl
east
hecl
ausehadnotbeeni
ncor
por
atedi
ntot
hecont
ract
.

Asi
mil
arhol
dingwasmadei
nthecaseofChappl
ett
onv
.Bar
ryUDC

RULESRELATI
NGTOENFORCEMENTOFEXCLUSI
ON/
EXEMPTI
ONCLAUSES

Foracour
tofl
awt
ogi
veef
fectorconsi
dert
heef
fectofanexempt
ioncl
ausei
tmustbe
sat
isf
iedt
hatt
heexempt
ioncl
ausewasani
ntegr
alpar
toft
hecont
ract
.Si
nceexempt
ion
cl
ausesar
egener
all
yunf
airt
otheweakerpar
ty,Cour
tshav
eev
olv
edr
uleswhi
cht
o
someext
entensur
ethatt
heunf
air
nessi
smi
ti
gat
ed.
1.Anexempt
ioncl
ausemusthav
ebeeni
ncor
por
atedi
ntot
hecont
ractei
therby
not
iceorsi
gnat
ure.Thepar
tyaf
fect
edmusthav
ebeenawar
eoft
heexempt
ion
cl
ausewhent
hecont
ractwasent
eredi
nto.

2.I
fcont
ract
ualt
ermsar
econt
ainedi
nadocument
,itmustbeev
idencet
hatt
he
documentwast
hebasi
soft
hecont
ractandwassi
gnedbyt
hepar
ti
esv
olunt
ari
l
y
hecaseofL’
aswast Est
rangev
.Gr
aucob.

3.Foranexempt
ioncl
auset
obegi
venef
fecti
tmustbecl
earanddef
ini
ti
onf
ree
f
rom v
aguenessorambi
gui
ty.I
ntheev
entofanyambi
gui
tyt
hecl
ausei
s
i
nter
pr ed cont
et ra pr
ofer
ent
es. Thi
si he Cont
st ra Pr
ofer
ent
em Rul
e of
i
nter
pret
ati
onunderwhi
chcl
ausesar
eint
erpr
etedr
est
ri
cti
vel
yagai
nstt
hepar
ty
r
ely
ingont
hem.Aswast nOmarSal
hecasei ev.BesseandCo.Lt
d.Wher
eina
cont
ractofsal
esofgoods,t
hesel
l
erexempt
edi
tsel
ffr
om l
i
abi
l
ityf
orbr
eachof
‘
war
rant
ies’
.I
tbr
eachedani
mpl
i
edcondi
ti
oni
ntheSal
eofGoodsAct
.

Aquest
ionwaswhet
hert
het
erm war
rant
iesi
ncl
udedcondi
ti
ons.I
twashel
dthat
si
ncet
het
erm war
rant
ieswer
evague.I
thad t
o bei
nter
pret
ed r
est
ri
cti
vel
y
agai
nstt
hesel
l
erandt
her
efor
edi
dnoti
ncl
udecondi
ti
ons.Hencet
hesel
l
erwas
l
i
abl
e.

4.Asagener
alr
ule,onl
yper
son’
spr
ivyt
oacont
ractcant
akeadv
ant
ageofan
exempt
ioncl
ausei
nthecont
ract
.Itwassohel
dinScr
utt
onsLt
d.v
.Mi
dland
Si
l
iconesl
td.

nHal
I alShi
ppi
ngCo.v
.SBAandAnot
her
,acont
ractofcar
ri
ageofgoodsbysea
exempt
edt
hecar
ri
erf
rom l
i
abi
l
ityf
oranydamaget
othegoodi
nthecour
seof
t
ransi
t.Thegoodwer
edamagedi
nthecour
seofunl
oadi
ngf
rom t
heshi
pandt
he
pl
aint
if
fsued.Thecar
ri
err
eli
edont
heexempt
ioncl
auseandescapedl
i
abi
l
ity
.
Theunl
oadi
ngcompanypur
por
tedt
orel
yont
hesamecl
ause.I
twashel
dthati
t
coul
dnotdosoasi
twasnotpar
tyt
othatcont
ractandwast
her
efor
eli
abl
e.

5.Acour
tofl
aw woul
dgener
all
ynotgi
veanexempt
ioncl
auseef
fecti
fdoi
ngso
enabl
ethepar
tyev
adewhatamount
stobet
hef
undament
alobl
i
gat
ionoft
he
cont
ractoraf
undament
albr
each.Thi
srul
eisbasedont
hepr
emi
set
hatev
ery
cont
racthasaf
undament
alobl
i
gat
iont
obedi
schar
gedandapar
tymustnotuse
anexempt
ioncl
auset
oev
adesuchobl
i
gat
ion.
 nKar
I sal
es(
Har
row)Lt
dv.Wal
l
ist
hedef
endanti
nspect
edav
ehi
cleanddeci
ded
t
otakei
tonHi
rePur
chaset
erms.Tof
aci
l
itat
ethet
ransact
ion,t
hev
ehi
clewas
sol
dtot
hepl
aint
if
fforhi
ri
ngt
othedef
endant
.Thedef
endantcompl
etedt
heHi
re
pur
chaseappl
i
cat
ionf
orm andpai
dadeposi
t.Thef
orm cont
ainedacl
auset
o
t
heef
fectt
hat“
nocondi
ti
onorwar
rant
ythatt
hev
ehi
clei
sroadwor
thyorf
itf
or
anypur
posei
simpl
i
edher
ein”
.

Oneday
,thedef
endantsaw av
ehi
cleout
sidehi
shousewhi
chr
esembl
edt
he
v
ehi
clei
nquest
ion.Howev
eronscr
uti
nyhedi
scov
eredi
twasamer
eshel
li
nthat
t
hecy
li
nderheadwasbr
oken,al
lval
veswer
ebur
ntand2pi
stonswer
ebr
oken.
Thev
ehi
clecoul
dnotmov
e.Thedef
endantr
efusedt
otakedel
i
ver
yorpay
i
nst
all
ment
sandwassued.Hepl
eadedt
hecondi
ti
onoft
hev
ehi
cle.Thepl
aint
if
f
r
eli
edont
hecl
auseexempt
ingi
tfr
om l
i
abi
l
ity
.Itwashel
dthatt
hought
he
exempt
ioncl
ausewaspar
toft
hecont
ract
.Itcoul
dnotbegi
venef
fectast
odo
so woul
d hav
eenabl
ed t
he pl
aint
if
fev
ade a f
undament
alobl
i
gat
ion oft
he
cont
ract
,asi
thadcont
ract
edt
osel
lav
ehi
cle.Butexempt
edi
tsel
ffr
om l
i
abi
l
ityi
f
t
hesubj
ectmat
tert
urnedoutnott
obeav
ehi
cleatal
l
.

Thepar
tyar
gui
ngt
hataf
undament
albr
eachhasbeencommi
tt
edmustpr
ovei
t
andmustseekj
udi
cial
redr
esswi
thi
nar
easonabl
eti
me.

VI
TIATI
NGELEMENTS(
FACTORSAFFECTI
NGCONTRACTS)

Thesear
eci
rcumst
anceswhi
chi
nter
fer
ewi
tht
heenf
orceabi
l
ityofacont
ract
.Theyhav
e
anegat
iveef
fectoncont
ract
s.

Theymayr
enderacont
ractv
oidorav
oidabl
e.Av
oidcont
racti
sunenf
orceabl
ewhi
l
e
av
oidabl
econt
racti
senf
orceabl
eunl
essav
oided.

Thesef
act
orsi
ncl
ude:
-

1.Mi
srepr
esent
ati
on

2.Mi
stake

3.Dur
ess

4.Unduei
nfl
uence

1.MI
SREPRESENTATI
ON.
Thi
sisaf
alser
epr
esent
ati
on.I
tisaf
alsest
atementmadebyapar
tyt
oinduceanot
her
t
oent
eri
ntoacont
ract
ual
rel
ati
onshi
p.

I
trender
sthecont
ractav
oidabl
eatt
heopt
ionoft
hei
nnocentpar
ty.

Howev
erf
ort
hei
nnocentpar
tyt
oav
oidt
hecont
ract
,itmustbepr
ovedt
hat
:-

1.Thest
atementi
nquest
ionwasf
alsei
nanat
uralpar
ti
cul
ari
.e.i
twasunt
ruei
n
what
everi
tref
err
edt
o.

2.Thest
atementwasmor
ethanamer
epuf
forsal
est
alk.Whet
herast
atementi
sa
puf
forami
srepr
esent
ati
ondependsonwhatar
easonabl
eper
soncoul
ddeem i
t
t
obe.

3.Thest
atementwasoneoff
actnotopi
nion.Asagener
alr
uleopi
niondoesnot
amountt
omi
srepr
esent
ati
on.I
twassohel
dinEdi
ngt
onv
.Fi
tzmaur
ice.Howev
er
anopi
nionmayamountt
omi
srepr
esent
ati
oni
f:-

a.Themakerdoesnothonest
lyhol
dthatopi
nion

b.Theopi
nionpur
por
tst
obebasedoncer
tai
nfact
swi
thi
nthemaker
’s
knowl
edgebutwhoset
rut
hful
nesshedoesnotv
eri
fy.

4.Thef
alsest
atementwasi
ntendedt
ober
eli
eduponbyt
her
epr
esent
er(
reci
pient
).

5.Thef
alsest
atementwasi
nfactmadebyt
heot
herpar
tyt
othecont
ract
.Asa
gener
al r
ule,omi
ssi
on,si
l
ence or non-
discl
osur
e does not amount t
o
mi
srepr
esent
ati
on.Howev
eri
tmay
:-

a.I
ncont
ract
sofut
mostgoodf
ait
he.
g.i
nsur
ance

b.I
nconf
ident
ial
rel
ati
onshi
ps

c. Wher
edi
scl
osur
eisast
atut
oryr
equi
rement

d.Wher
ethest
atementmadei
shal
ftr
ue

e. I
fthest
atementwast
ruewhenmadebutt
urnsf
alseduet
ochangesi
n
ci
rcumst
ancesbef
oret
hecont
racti
sconcl
udedbutt
hemakerdoesnot
di
scl
osei
tsf
alsi
tyaswast nWi
hecasei thv
.O’
fl
anagan.

6.Thef
alsest
atementi
nfl
uencedt
hepar
ty’
sdeci
siont
oent
eri
ntot
hecont
ract
.
Thepar
tymustshow t
hatt
hef
alsest
atementwasmadebef
oreorwhent
he
cont
ractwasconcl
uded.Howev
ert
hef
alsest
atementneednothav
ebeent
he
 onl
yfact
ort
hepar
tyi
sconsi
der
ed.

nAndr
I ewsv
.Mockf
ord;wher
ethepl
aint
if
fhadr
eli
edonunt
ruest
atementi
na
company
’spr
ospect
us,
issuedbyt
hedef
endant
sitwashel
dthatt
hedef
endant
s
wer
eli
abl
eindamagesf
ort
hest
atement
sast
hepl
aint
if
fhadr
eli
edont
hem.

7.Thef
alsest
atementwasi
nnocent
ly,
fraudul
ent
lyornegl
i
gent
lymade.

A)I
NNOCENTMI
SREPRESENTATI
ON

Ast
atementi
sdeemedt
obei
nnocent
lymi
srepr
esent
edi
fthemakerhonest
lybel
i
eved
i
nit
str
utht
houghi
twasf
alseandhadnomeansofascer
tai
ningt
hati
twasf
alseaswas
t nOscarChessv
hecasei .Wi
l
li
amswher
ethedef
endanthadnomeansofascer
tai
ning
t
hatt
hey
earofr
egi
str
ati
onoft
hev
ehi
clewasi
ncor
rect
.

tAl
I ker
hiel
mv.DeMar
ewher
ethedef
endant
swhower
edi
rect
orsofacompanyi
ssued
apr
ospect
usst
ati
ngt
hat1/
3oft
hecompanyshar
eshadbeent
akenupi
nDenmar
k
whi
chwasnott
rueatt
het
ime.

I
twashel
dthatt
heshar
eswoul
dbet
akenupi
nDenmar
k.Asi
mil
arhol
dingwasmadei
n
Der
ryv
.Peek.

I
finnocentmi
srepr
esent
ati
oni
spr
oved,
thei
nnocentpar
tymayei
ther
:-

1.Appl
yforr
esci
ssi
onoft
hecont
ract

2.Suef
ori
ndemni
tyf
oranydi
rectf
inanci
all
ossoccasi
onedbyt
her
epr
esent
ati
on
as was t n Whi
he case i tt
ingt
on v
.Seal
e-Hay
ne wher
ethe def
endanthad
i
nnocent
lymi
srepr
esent
edt
hesani
tar
ycondi
ti
onandhabi
tat
ionofhi
spr
emi
ses
t
othepl
aint
if
fwhoasaconsequencet
ookal
easet
ocar
ryont
hebusi
nessof
poul
tr
ybr
eedi
ng.Thepr
emi
seswer
enoti
nasani
tar
ycondi
ti
onandmer
eunf
it
f
orhumanhabi
tat
ion.Someoft
hedef
endant
’spoul
tr
ydi
edwhi
l
eot
her
slost
v
aluet
hisf
arm managerwast
akeni
l
landt
hepr
emi
seswer
edecl
aredunf
itf
or
habi
tat
ion.Thedef
endantspentmoneyput
ti
ngi
tinahabi
tabl
econdi
ti
on,and
pai
dout
standi
ngr
ates.I
twashel
dthatwecoul
donl
yrecov
ert
hedi
rectf
inanci
al
l
osssuf
fer
ed.

B)FRAUDULENTMI
SREPRESENTATI
ON.

Ast
atementi
sdeemedt
obef
raudul
ent
lymi
srepr
esent
edi
fthemaker
:-
 a)Hasknowl
edget
hati
tisf
alse

b)Makesi
tcar
elessl
yandr
eckl
essl
y

c) Doesnotbel
i
evei
nit
str
uth

Thi
stestoff
raudwasf
ormul
at nDer
edi ryv
.Peek.I
nAndr
ew v
.Mockf
ordwher
ethe
def
endant
shadi
ssuedapr
ospect
uscont
aini
ngunt
ruest
atement
sandt
hepl
aint
if
f
appl
i
edf
or50shar
esandwasal
l
owedt
hesamebutsubsequent
lysuedt
hedef
endant
s
i
ndamagesf
orf
raudul
entmi
srepr
esent
ati
on.I
twashel
dthatt
hedef
endant
swer
eli
abl
e
ast
heywer
eawar
eoft
hef
alsi
tyoft
hest
atement
s

Asi
mil
arhol
di nBar
ngwasmadei thol
omewv
.Pet
roni
l
la.

Remedi
esf
orf
raudul
entmi
srepr
esent
ati
onar
eei
ther
:-

i
. Act
ionf
orr
esci
ssi
onofcont
ract
.

i
i
. Damagesf
ort
hef
ortofdecei
t.

C)NEGLI
GENTMI
SREPRESENTATI
ON.

Ast
atementi
sdeemedt
obenegl
i
gent
lymi
srepr
esent
edi
fthemakerhasbot
hmeansof
capaci
tyofascer
tai
ningi
tsf
alsi
tybutf
ail
stodoso.

Themakeri
sdeemednegl
i
gentasar
easonabl
eper
soni
nsuchci
rcumst
anceswoul
d
hav
esoascer
tai
ned.

Howev
er,
fornegl
i
gentmi
srepr
esent
ati
ont
ober
eli
edupon,
itmustbepr
ovedt
hat
:-

1.Ther
ewasaspeci
alr
elat
ionshi
pbet
weent
hemakerandr
eci
pientoft
hest
atement
s
hencet
hemakerowedt
her
eci
piental
egaldut
yofcar
e.

I
twassohel
dinHedl
eyBy
reneandCo.l
td.V.Hel
l
erandPar
tner
sLt
d.Acust
omeroft
he
def
endantbankappr
oachedt
hepl
aint
if
fbankf
orsomeguar
ant
ees.Thepl
aint
if
fbank
wr
otet
othe def
endantseeki
ng t
o show t
he cr
edi
twor
thi
ness oft
he def
endant
cust
omer
s.

Thedef
endantbanki
n2l
ett
erswr
it
tenona‘
wit
houtr
esponsi
bil
i
tybasi
s’conf
ir
medt
hat
t
hei
rcust
omerwascr
edi
twor
thy
.

Thepl
aint
if
fext
endedt
heguar
ant
eebutduet
othecust
omer
’suncr
edi
twor
thi
ness,t
he
pl
aint
if
fsuf
fer
edl
ossof£19,
000.

Thepl
aint
if
fsued.I
twashel
dthatt
hought
hedef
endantbankwasnegl
i
genti
twasnot
l
i
abl
east
hei
nfor
mat
ionhadbeengi
venona‘
wit
houtpr
ejudi
ce/r
esponsi
bil
i
tybasi
s”.

3.2.Thatt
hepar
tysuf
fer
edl
ossofaf
inanci
alnat
ure.

nKi
I ri
muEst
ate(
UG)Lt
d.v
.K.
G.Kor
det
hepl
aint
if
fcompanyi
nst
ruct
edt
hedef
endanta
l
awy
ert
oval
ueapi
eceofl
andf
ori
t.

Thedef
endantgav
eaf
igur
ewi
thoutt
heassi
stanceofapr
operv
aluat
ionoft
heest
ate.
Thef
igur
ewasf
arabov
ethemar
ketv
alueandt
hecompanysuedi
ndamagesf
or
negl
i
gentmi
srepr
esent
ati
on.

I
twashel
dthatt
hedef
endantwasl
i
abl
etopayt
hedi
ff
erencei
nval
uebyr
easonof
negl
i
gence.

MI
STAKE

Ther
ear
etwot
ypesofmi
stakesv
iz:
-Mi
stakeofl
aw

-
Mist
akeoff
act

Asagener
alr
uleami
stakeofl
aw doesnotaf
fectacont
racthowev
er,ami
stakeof
f
orei
gnl
awmayaf
fectacont
ract
.Mi
stakesoff
act
saf
fect
edcont
ract
ual
rel
ati
onshi
ps.

Ami
stakei
ssai
dtobemi
sappr
ehensi
onofaf
actorf
act
ualsi
tuat
ion.I
tisaner
roneous
assumpt
ion.

Mi
stakeoff
actt
hatef
fectcont
ract
sar
egener
all
yref
err
edt
oasoper
ati
vemi
stakesand
t
hel
awr
ecogni
zesv
ari
oust
ypesofoper
ati
vemi
stakes:

a)Common

b)Mut
ual

c) Uni
l
ater
al

d)Mi
stakenl
ysi
gneddocument
s

e) Mi
stakeast
oqual
i
tyofsubj
ectmat
ter
1.COMMONMI
STAKE.

Thi
sisami
stakeast
otheexi
stenceorowner
shi
poft
hesubj
ectmat
ter
.Bot
hpar
ti
es
maket
hesamemi
stakes. Eachpar
tyunder
standst
heot
her
sint
ent
ionbutbot
har
e
mi
stakenaboutsomeunder
lyi
ngf
undament
alf
act
.Commonmi
staker
ender
edv
oidi
n
t
woci
rcumst
ances:

CasesofResExi
nta:Thesear
eci
rcumst
ancesi
nwhi
chpar
ti
esaboutt
hesubj
ectmat
ter
.
Thi
sci
rcumst
ancei
scont
ainedi
nsec8oft
hesal
eofgoodsActwhi
chpr
ovi
deswher
e
t
her
eisacont
ractf
ort
hesal
eofspeci
fi
cgoodswhi
chwi
thoutt
hesel
l
er’
sknowl
edge
hav
eper
ishedt
hecont
racti
svoi
d.

nCout
I uri
erV.Hast
let
hepar
ti
esent
eredi
ntoacont
ractf
ort
hesal
eofal
argequant
it
y
ofcor
nwhi
chatt
het
imewassupposedt
obeont
ransi
ttoBr
it
ainf
rom Gr
eecebut
unknownt
othe par
ti
est
heshi
pcapt
ainhadsol
dthecor
ninTuni
siaduet
oov
erheat
ing
andf
erment
ati
on.

I
twashel
dthatt
hebuy
erwasnotl
i
abl
etopayt
hepr
iceast
hecont
ractwasv
oidf
or
commonmi
stakeast
hesubj
ectmat
terdi
dnotexi
st.

Asi
mil
arhol
di nLessi
ngwasmadei eAnder
sonV.Val
l
abdosKhal
i
dasCompanywher
e
par
ti
eshadcont
ract
edt
obuyandsel
laqual
i
tyofgunnybagsbutunknownt
othem t
he
bagshadbeendest
roy
edbyf
ir
.

I
twashel
dthatt
hecont
ractwasv
oidf
orcommonmi
stake.

CaseofResSua:Thesear
eci
rcumst
ancesi
nwhi
chpar
ti
esar
emi
stakenaboutt
he
owner
shi
poft
hesubj
ectmat
ter
.Thepar
typur
por
ti
ngt
obuyi
sthel
egalownerbutbot
h
ar
eunawar
eoft
hef
act
.Thepur
por
tedsel
l
erhasnot
it
let
opasshencet
hepur
por
ted
cont
racti
svoi
d.I
twassohel
dinBi
ngham V.Bi
ngham.

2.MUTUALMI
STAKE.

Thi
sis a mi
stake t
othe subj
ectmat
terofcont
ract
. I
tar
ises when par
ti
es
mi
sunder
standeachot
heroratcr
osspur
poses.Noagr
eementar
isesbet
weent
hem f
or
l
ackofconsensusadi
dem.

Howev
er,
notv
erymi
sunder
standi
ngconst
it
utesamut
ualmi
stake;
itdependsonwhata
r
easonabl
eper
sonwoul
ddeem t
heci
rcumst
ancest
obe.
nRaf
I fl
eV.Wi
chel
hauset
hepar
ti
esent
eri
nint
oacont
ractf
ort
hesel
lofcot
tont
obe
shi
ppedt
otheU.
K.onboar
dthepeer
lessf
rom t
hepor
tofBombay
.Unknownt
othe
par
ti
est
her
ewer
etwoshi
psbyt
henamepeer
lessatt
hepor
tofBombay
.Onesai
l
edi
n
Oct
oberandt
heot
heri
nDecember
.

Whi
l
ethebuy
ermeantt
heOct
obershi
pthesel
l
err
efer
redt
otheDecemberone.The
cot
tonwasshi
ppedbyt
heDecemberv
essel
andt
hebuy
err
efusedt
otakedel
i
ver
y.

I
twashel
dthathewasnotboundast
hecont
ractwasv
oidf
ormut
ual
mist
ake.

3.UNI
LATERALMI
STAKE.

Thi
sisami
stakeast
othei
dent
it
yofoneoft
hepar
ti
est
othecont
ract
.Onl
yonepar
tyi
s
mi
stakenandt
hemi
stakei
sinducedbyt
heot
herpar
ty.

Uni
l
ater
almi
stakear
iseswher
eaf
raudul
entper
sonmi
srepr
esenthi
sident
it
ytoanot
her
soast
oobt
aingoodsoncr
edi
torot
herf
avour
abl
eter
mswhi
chhet
hensel
l
stoabona
f
ide3rdpar
tywhot
akeswi
thoutnot
iceoft
hef
raud.

Thedi
sput
eisusual
l
ybet
ween t
heor
igi
nalowneroft
hegoodsand t
hebonaf
ide
pur
chaser
.

Theor
igi
nalowneri
sent
it
ledt
othegoodsort
hei
rval
uebyest
abl
i
shi
ngt
hatt
hecont
ract
bet
weenhi
m andt
hef
raudul
entper
sonwasv
oidf
oruni
l
ater
almi
stake.

Thepar
tymustpr
ovet
hat
:-

i
. I
tdeal
twi
thaper
sonot
hert
hant
heonei
tint
endedt
odeal
wit
h.

i
i
. Theper
soni
tdeal
twi
thwasawar
eoft
hatf
act
.

i
i
i. Thei
dent
it
yoft
heper
son,
thepar
tyi
ntendedt
odeal
wit
hwasf
undament
alt
othe
cont
ract
.

Bypr
ovi
ngt
hesef
act
sthepar
tyest
abl
i
shest
hatt
hecont
ractwasv
oid.

nCundyv
I .Li
ndsayandCo.Lt
d.Af
raudul
entper
sonknownasBl
enkar
nor
der
edgoods
f
rom Li
ndsayandCo.Lt
dhi
ssi
gnat
urer
esembl
edt
hatofacompanynamedBl
enki
ron
andCo.Li
ndsayandCo.hadhear
dofBl
enki
nronandCobuthadnotdeal
twi
tht
hem.
Bl
enkar
nhadquot
edanaddr
essont
hesamest
reetasBl
enki
ronandCo.Thi
nki
ngt
hat
t
heywer
edeal
i
ngwi
thBl
enki
ronandCo.Li
ndsayandCo.di
spat
chedt
hegoodst
othe
addr
ess.Bl
enkar
ntookdel
i
ver
yandsol
dthem t
ocundy
.Li
ndsayandCo.suedCundyi
n
damager
sofconv
ersi
on.I
twashel
dthatt
heywer
eent
it
ledt
odamagesasCundyhad
not
it
let
othegoodsl
i
keBl
enkar
nbef
orehi
m ast
hecont
ractwasv
oid.

Asi
mil
arhol
di nI
ngwasmadei ngr
am andot
herv
.Li
tt
lewher
ethr
eesi
ster
sadv
ert
ised
t
hesal
eofav
ehi
cle.

Af
raudul
entper
soni
ntr
oduci
nghi
msel
fasMr
.Hut
chi
nsonf
orof
fer
edt
otakei
tfor£717
butpai
dbychequewhi
cht
hesi
ster
sini
ti
all
yref
used.

Hei
ntr
oducedhi
msel
ftoP.
G.M Hut
chi
nsonandgav
eanaddr
esswhi
choneoft
he
si
ster
sconf
ir
medwi
thal
ocal
postof
fi
ce.

Theyaccept
edt
hechequewhi
chwassubsequent
lydi
shonour
edbywhi
cht
imet
hecar
hadbeensol
dtot
hedef
endant
.

Thepl
aint
if
fssuedt
hedef
endantf
ort
hecar
.Itwashel
dthatt
heywer
eent
it
ledt
oitas
t
hecont
ractbet
weent
hem andt
hef
raudul
entper
sonwasv
oidf
oruni
l
ater
almi
stake.

Thi
sdeci
sioncont
rast
swi
tht nPhi
hati l
li
psv
.Br
ooksLt
d.Wher
eaf
raudul
entper
son
knownasNor
thent
eredPhi
l
li
psshopandsel
ect
edgoodsv
aluedat₤3,
000i
ncl
udi
nga
r
ing.

Heof
fer
edt
opaybychequewhi
chPhi
l
li
psr
efused.Het
heni
ntr
oducedhi
msel
fasSi
r
Geor
geBul
l
oughandgav
eaLondonaddr
esswhi
chPhi
l
li
pconf
ir
medwi
tht
hedi
rect
ory
.

Hav
ingsat
isf
iedhi
msel
f,Phi
l
li
psl
etMr
.Nor
thhav
ether
ingi
nret
urnf
ort
hecheque
whi
chwasdi
shonour
edbywhi
cht
imet
her
inghadbeenpl
edgedwi
thBr
ooksLt
dfora
l
oan.Phi
l
li
pssuedf
ort
her
etur
noft
her
ing.I
twashel
dthathewasnotent
it
ledt
oitas
t
her
ewasnomi
stake.

Thecour
twasoft
hev
iewt
hathehaddeal
twi
tht
heper
sonhei
ntendedt
odeal
wit
h.

4.DOCUMENTSMI
STAKENLYSI
GNED

Thi
sisami
stakeast
othenat
ureoft
hecont
ract
;itar
iseswhenapar
tyt
oacont
ract
si
gnst
hewr
ongdocument
.

Suchami
stakedoesnotr
endert
hecont
ractv
oidbutav
oidabl
eatt
heopt
ionoft
hepar
ty.

Toav
oidt
hecont
ract
,thepar
tymustpr
ovet
hat
:-

a.The documentsi
gned was f
undament
all
ydi
ff
erentf
rom t
he one t
he par
ty
 t
houghti
twassi
gni
ng.

b.Thepar
tywasnei
thercar
elessnornegl
i
gentwheni
tsi
gnedt
hedocument
.

Bypr
ovi
ngt
hesef
act
s,t
hepar
tyest
abl
i
shest eaofnon-
hepl estf
act
um whi
chl
i
ter
all
y
meanst
hisi
snotmydeed.Unl
esst
hesef
act
sar
epr
oved,t
hecont
ractcannotbe
av
oidedaswast
hecasei
nGal
li
eV.
LeeandAnor
..

5.MI
STAKEASTOQUALI
TYOFSUBJECTMATTER

Thi
smi
stakear
iseswhenoneoft
hepar
ti
est
othecont
racti
smi
stakenaboutt
hequal
i
ty
oft
hesubj
ectmat
teroft
hecont
ract
.

Suchami
staker
ender
sthecont
ractv
oidabl
eatt
heopt
ionoft
hei
nnocentpar
ty.

3.DURESS

Atcommonl
awdur
essmeansact
ual
viol
enceort
hreat
sther
eof
.

I
texi
stswher
eacont
ract
ualr
elat
ionshi
pispr
ocur
edbyact
ualv
iol
enceont
heper
sonor
t
hreat
sther
eof
.

Thepar
tyi
scompel
l
edorcoer
cedt
ocont
ract
.Fort
hemostpar
t,dur
essconsi
stsof
t
hreat
s.

Dur
esswasdev
elopedbyt
hecommonl
aw wi
thav
erynar
row scope.I
trender
sa
cont
ractv
oidabl
eatt
heopt
ionoft
hei
nnocentpar
ty.

Fort
hecont
ractt
obeav
oided,
thei
nnocentpar
tymustpr
ovet
hat
:-

 Thet
hreatwasi
ntendedt
ocausef
ear
,inj
uryorl
ossofl
i
fe

 Thet
hreatwasdi
rect
edt
ohi
sper
sonorbodyasopposedt
ohi
spr
oper
ty.I
twas
sohel
dinAl
teev
.Backhouse.At
hreatdi
rect
edatt
hebodyofamemberoft
he
par
ty’
shousehol
damount
stodur
ess

 Thet
hreatwasi
l
legale.
g.at
hreatt
osue,pr
osecut
eorcausei
mpr
isonmentf
or
nor
easonabl
ecause.At
hreatt
oenf
orceoncel
egalr
ight
sdoesnotamountt
o
dur
ess.I
twassohel
din HassanAl
iIssav
.Jer
ajPr
oduceShop wher
ethe
def
endanthadal
l
egedt
hatt
hechequehadbeenwr
it
tenunderdur
essi
nthatt
he
 pl
aint
if
fhadt
hreat
enedt
osuei
frepai
randst
oragechar
geswer
enotpai
d.I
twas
hel
dthatt
het
hreatdi
dnotamountt
odur
ess.

nFr
I iedber
gSeel
ayv
.Kl
asst
hedef
endant
sgai
nedaccesst
othepl
aint
if
f’
shouse
andt
hreat
enednott
oleav
eunl
essshesol
dherj
ewel
stot
hem.

4.UNDUEI
NFLUENCE

I
tissai
dtoexi
stwher
eapar
tydomi
nat
est
heot
her
swi
l
lther
ebyi
nhi
bit
ingi
tsexer
ciseof
ani
ndependentj
udgementont
hecont
ract
.

Onepar
tyt
husexer
cisesov
erwhel
mingi
nfl
uenceov
ert
heot
her
.Unduei
nfl
uencewas
dev
elopedbyequi
tywi
thaf
air
lywi
descope.

I
trender
sacont
ractv
oidabl
eatt
heopt
ionoft
hei
nnocentpar
ty.Unduei
nfl
uence
r
ender
sacont
ractv
oidabl
eint
hef
oll
owi
ngci
rcumst
ances;

1.Wher
epar
ti
eshav
easpeci
alr
elat
ionshi
p.

E.
g.par
ent
-chi
l
d,adv
ocat
e-cl
i
ent
,doct
or-
pat
ient
,tr
ust
ee-
benef
ici
ary
,rel
i
giousl
eader
-
di
sci
ple;unduei
nfl
uencei
spr
esumedi
nfav
ouroft
heweakerpar
ty.I
tist
hedut
yoft
he
st
rongerpar
tyt
oshow t
hatt
heweakerpar
tymadeani
ndependentdeci
sionont
he
cont
ract
.e.
g.hehadanadv
ocat
eofhi
sown.

nOt
I tomanBankCo.Lt
d.v
.Mawani
,thepl
aint
if
fbankext
endedal
oant
oabusi
ness
ownedbyt
hedef
endant
’sf
atherandt
hedef
endantguar
ant
eedt
heamount
.Thef
ather
s
busi
nesswasunabl
etopayt
hel
oanandt
hebanksuedsot
oenf
orcet
heguar
ant
ee.
Ev
idencet
hatt
hedef
endantwasst
il
lundert
hecont
roloft
hef
ather
.Hewor
kedi
nthe
f
ather
sfi
rm andhadnoi
ndependentsour
ceofi
ncome.I
twashel
dthathewasn’
tli
abl
e
ont
heguar
ant
eeasi
twasv
oidabl
eathi
sopt
ionf
ort
hef
ather
’sunduei
nfl
uence.

2.Whenpar
ti
eshav
enospeci
alr
elat
ionshi
p.

Thepar
typl
eadi
ngunduei
nfl
uencemustpr
ovei
tbyev
idence.Theci
rcumst
ancesmust
besucht
hatt
hepar
tydi
dnotmakeani
ndependentj
udgementont
het
ransact
ion,as
was t n Wi
he case i l
li
ams v
.Bay
ley
,wher
ethe def
endantent
ered i
nto a cont
ract
pr
omi
singt
opaymoni
eswi
thdr
awnf
rom abankbyt
heson.Thebankerhadmadei
t
cl
eart
hati
fnoar
rangementwasar
ri
vedat
,thedef
endant
’ssonwoul
dbepr
osecut
edf
or
t
heof
fence.Whensuedt
hedef
endantpl
eadedt
hebanker
’sunduei
nfl
uence.I
twashel
d
t
hathewasnotl
i
abl
east
hecont
ractwasv
oibal
eathi
sopt
ion.

3.Unconsci
onabl
ebar
gai
ns.

Thesear
eunf
airbar
gai
ns.Theyar
etr
ansact
ionsent
eredi
ntoi
nci
rcumst
ancesi
nwhi
ch
onepar
tyt
akesadv
ant
ageofi
tsposi
ti
ont
opr
ocur
ethedeal
.Sucht
ransact
ionsar
e
v
oidabl
eatt
heopt
ionoft
hei
nnocentpar
ty.Theconceptofunconsci
onabl
ebar
gai
ns
wasdev
elopedbyequi
tycour
tsasanext
ensi
onoft
hedoct
ri
neofunduei
nfl
uenceand
wasexpl
ainedbyLor
dDeni nDav
ngi idC.Bui
l
derl
td.v
.Rees.

nLl
I oydsBankCo.Lt
dv.Bundy
,thepl
aint
if
fbankext
endedal
oant
oabusi
nessowned
byt
hedef
endant
’sson.Thedef
endantguar
ant
eedt
hel
oant
othet
uneof₤1,
000butt
he
bankr
equi
redf
urt
herguar
ant
ee.Heext
endedi
tto₤6,
000.Hi
slawy
eri
nfor
medhi
mthat
i
twoul
dbeunwi
set
oext
endt
heguar
ant
eef
urt
her
.Thedef
endantownedahousewi
th
₤10,
000.Anof
fi
cialoft
hepl
aint
if
fbankv
isi
tedt
hedef
endantandpr
ocur
edaf
urt
her
guar
ant
eeofupt
o₤11,
000.Thesonsbusi
nesscol
l
apsedandt
hebanksoughtt
o
enf
orcet
heguar
ant
eeagai
nstt
hef
atherwhopl
eadedt
hati
twasunconsci
onabl
e.I
twas
hel
dthatt
heguar
ant
eewasv
oidabl
eatt
heopt
ionoft
hedef
endantasi
twasunf
air
.

RESCI
SSI
ON

Theessenceoft
hisr
emedyi
stor
est
oret
hepar
ti
est
otheposi
ti
ont
heywer
ebef
oret
he
cont
ract
.

I
tisanequi
tabl
eremedywhoseawar
disdi
scr
eti
onal
.

Ther
emedymaybeav
ail
edwhenev
eracont
racti
svi
ti
atedbymi
srepr
esent
ati
on.

Howev
ert
her
ightt
oresci
ndacont
racti
slosti
nvar
iousway
s:-

1.Del
ay:Acont
ractcannotber
esci
ndedi
fapar
tyhassl
eptoni
tsr
ightf
ort
ool
ong
as“
del
aydef
eat
sequi
ty”
.InLeafv
.Int
ernat
ionalGal
l
eri
esLt
d.,
wher
ethepl
aint
if
f
pur
por
tedt
oresci
ndacont
ractaf
ter5y
ear
s.I
twashel
dthatt
her
emedywasnot
av
ail
abl
eonaccountofdel
ay.

2.Af
fi
rmat
ion:Apar
tyl
osest
her
ightt
oresci
ndacont
racti
fitexpr
essl
yorby
i
mpl
i
cat
ionaccept
sthecont
ract
.

3.Thi
rdpar
tyr
ight
s:Acont
ractcannotber
esci
ndedaf
ter3r
dpar
tyr
ight
shav
e
ar
isenunderi
t,ast
hiswoul
dint
erf
erewi
tht
her
ight
sofaper
sonwhowasnot
 pr
ivyt
otheor
igi
nal
cont
ract
.

4. Rest
it
uti
oini
ntegr
um notpossi
ble: Resci
ssi
oni
snotav
ail
abl
eift
hepar
ti
es
cannotber
est
oredt
otheposi
ti
ont
heywer
ebef
oret
hecont
ract
.E.
g.i
foneof
t
hepar
ti
esi
sacompanyandi
thasgonei
ntol
i
qui
dat
ion.

I
LLEGALI
TY

Thet
ermi
l
legal
i
tydoesnotnecessar
il
ymeant
hatacr
imi
nal
off
encei
sinv
olv
ed.

I
tmeanst
hatt
hecont
racti
nquest
ioni
sunenf
orceabl
easi
tisi
njur
ioust
othepubl
i
cor
i
sinconsi
stentwi
tht
hepubl
i
cgood.

Ani
l
legal
cont
racti
sun-
enf
orceabl
e.Thi
sisbecausef
oranagr
eementt
obeenf
orceabl
e,
i
tmusthav
ebeenent
eredi
ntof
oral
awf
ulpur
pose.

Acont
ractmaybedecl
ared,
il
legal
byst
atut
esoracour
tofl
aw.

a)Cont
ract
sdecl
aredi
ll
egalbySt
atut
es.

Undert
heempl
oymentact
,wagesorsal
ari
esar
epay
abl
einmoneyormoney
swor
th.A
cont
actt
opaywagesorsal
aryi
nki
ndi
sil
l
egalandv
oid.Suchacont
racti
ssai
dtobe
i
l
legal
asf
ormedandi
sunenf
orceabl
e.

b)Cont
ract
sdecl
aredi
ll
egalbycour
tsofl
aw(
cont
ract
sil
legalatcommonl
aw)

Longbef
orest
atut
oryi
nter
vent
ion,
cour
tshaddecl
aredmoneycont
ract
sil
l
egalf
orbei
ng
cont
rar
ytopubl
i
cpol
i
cye.
g.

i
)Acont
ractt
ocommi
tacr
ime,
tor
torf
raud.

Suchacont
racti
sil
l
egalandunenf
orceabl
easi
tisacont
rar
ytopubl
i
cpol
i
cyt
ocommi
t
cr
imes,t
ort
sorf
r nBi
audi gosv
.Boust
eadwher
etheobj
ectoft
hecont
ractwast
o
v
iol
atet
heEngl
i
shExchangecont
rolr
egul
ati
ons;
itwashel
dthatt
hecont
ractwasi
l
legal
andunenf
orceabl
e.

i
i)Cont
ract
spr
ejudi
cialt
opubl
icsaf
ety
.

Thesear
econt
ract
swhi
chpr
omot
ehar
mfulact
ivi
ti
esi
nacount
ryori
tsnei
ghbour
s.E.
g.
acont
ractt
ofi
nancer
ebel
sinacount
ryorcouppl
ott
ers,
assi
sti
ngal
i
enenemi
es.

i
ii
)Cont
ract
spr
ejudi
cialt
otheadmi
nist
rat
ionofj
ust
ice.
Thesear
econt
ract
swhi
chi
nter
fer
ewi
tht
hej
udi
cial
processe.
g.

a.Acont
ractt
ost
if
lepr
osecut
ionofanal
l
egedcr
ime.

b.Champer
tyagr
eement
s:Thi
sisacont
ractwher
ebyapar
typr
ovi
desf
inanci
al
assi
stancet
oanot
heri
nvol
vedi
naci
vi
lcasesoast
oshar
etheamountawar
ded
byt
hecour
t.Suchacont
racti
sil
l
egal
andunenf
orceabl
e.

c. Mai
ntenance:t
hisi
sacont
ractwher
ebyapar
typr
ovi
desf
inanci
alassi
stancet
o
r
d
anot
hert
oenabl
ehi
m suea3 par
tyf
ornor
easonabl
ecour
se.Suchacont
ract
f
aci
l
itat
est
hehar
assmentofapar
tybyanot
hert
hrought
hecour
ts.I
tisi
l
legal
andunenf
orceabl
e.

i
v)Cont
ract
stodef
raudst
ater
evenue.

A cont
ractwhoseobj
ecti
sto denyt
hest
atewhet
hercent
ralgov
ernmentorl
ocal
gov
ernmentr
evenuebywayofev
adi
ngt
axi
sil
l
egal
andunenf
orceabl
e.

nMi
I l
lerv
.Kar
lnskit
hepl
aint
if
fwhowasanempl
oyeeoft
hedef
endanta₤10perweek
hadagr
eedt
hatt
heamountdeduct
edf
rom t
hesal
aryast
axwasr
efundabl
easan
al
l
owance.I
nanact
iont
orecov
ert
her
efund,
itwashel
dthati
twasi
rr
ecov
erabl
east
he
obj
ectoft
hecont
ractwast
odef
raudt
hest
ater
evenue.

v
)Cont
ract
sli
abl
etopr
omot
ecor
rupt
ioni
npubl
ic.

Suchacont
racti
sunenf
orceabl
eascor
rupt
ioni
scont
rar
ytopubl
i
cpol
i
cy nPar
.I kinson
v
.Col
l
ege ofAmbul
ance and Anot
her
,the secr
etar
y ofa char
it
abl
e or
gani
zat
ion
i
nfor
medt
hatpl
aint
if
fthati
twasont
oit
.Thepl
aint
if
fgav
e₤3,
000butwasnotkni
ght
ed
asonl
ytheKi
ngcoul
dbest
owt
het
it
le.I
nanact
iont
orecov
ert
hesum,
itwashel
dthati
t
wasi
rr
ecov
erabl
east
hecont
ractwasi
l
legal
.

v
i)Cont
ract
sli
abl
etopr
omot
esexuali
mmor
ali
ty

Thesear
econt
r scont
act rabonosmor
es(
cont
rar
ytogoodmor
als)
.Suchacont
racti
s
unenf
orceabl
eonaccountofi
l
legal
i
ty.Thecont
ractmaybei
l
legalasper
for
med.I
n
Pear
cev
.Br
ookst
hepl
aint
if
fownedabeaut
if
ulhor
sedr
awncar
ri
agewhi
chhet
entt
o
t
hedef
endantf
or12mont
hsatst
atedchar
ges.Thepl
aint
if
fknew t
hatt
hedef
endant
wasapr
ost
it
uteandi
ntendedt
ouset
hecar
ri
aget
osol
i
citi
nfl
uent
ialcust
omer
s.I
nan
act
iont
oenf
orcepay
mentoft
hehi
ri
ngchar
ges,i
twashel
dthatt
hatcont
ractwas
unenf
orceabl
easi
twasi
l
legalasper
for
medasi
tspur
posewast
opr
omot
esexual
i
mmor
ali
ty.

v
ii
)Acont
ractbasedonani
l
legal
cont
racti
sal
soani
l
legal
i
tyoft
heot
hercont
ract
.

EFFECTSOFI
LLEGALI
TY

An i
l
legalcont
racti
s sai
dto be ‘
bey
ond t
he pal
e ofl
aw’
.Such a cont
racti
s
unenf
orceabl
eitcr
eat
esnor
ight
sandi
mposesnoobl
i
gat
ionsont
hepar
ti
es.Nei
ther
par
tyi
sboundt
oper
for
m.Moneyorasset
schangi
nghandsunderani
l
legalcont
racti
s
i
rr
ecov
erabl
easgai
nsandl
ossesr
emai
nwher
etheyhav
efal
l
en.

Howev
ersuchmoneyorasset
smayber
ecov
eredi
ncer
tai
nci
rcumst
ances;

i
. Wher
e ei
ther par
tyr
epent
s/ r
egr
etst
he i
l
legal
i
ty bef
oret
he cont
ract i
s
subst
ant
ial
l
yper
for
med.

i
i
. Wher
ethepar
ti
esar npar
enoti idel
ict
o(notequal
l
ytobl
amef
ort
hei
l
legal
i
ty)
,
t
hel
essbl
amewor
thypar
tymayr
ecov
er.

i
i
i. I
ftheowneroft
hemoneyorassetest
abl
i
shest
it
let
her
etowi
thoutr
ely
ingupon
t
hei
l
legalcont
ract
.Aswast nAmarSi
hecasei nghv
.Kul
uby
a,wher
eapi
eceof
l
andhadchangedhandsunderani
l
legal
;cont
ractbutt
hepl
aint
if
fest
abl
i
shedhi
s
t
it
le.

VOI
DCONTRACTS

These ar
e cont
ract
s whi
ch t
he l
aw t
reat
s as non exi
stent
,they ar
e gener
all
y
unenf
orceabl
e.Howev
er,i
facont
racti
sonl
yvoi
dbutnoti
l
legalsomer
ight
smaybe
enf
orcedbyexcept
ion.Acont
ractmaybedecl
aredv
oidbyst
atut
eoracour
tofl
aw.

1.Cont
ract
svoi
dbySt
atut
e.

Undert
heEmpl
oymentAct
,acont
ractt
opaywagesorsal
aryi
nki
ndi
snul
landv
oid.
Undert
heGami
ngAct
,1845,
wager
ingcont
ract
sar
evoi
d.Awageri
sacont
ractwher
eby
2per
sonsorgr
oupsofper
sonswi
thdi
ff
erentv
iewsont
heout
comeofsomeuncer
tai
n
ev
entagr
eet
hatsomeconsi
der
ati
on i
sto p[
assbet
ween t
hem dependi
ng on t
he
out
come.Suchacont
racti
svoi
d.

2.Cont
ract
svoi
datCommonLaw(
Cour
tsofLaw)
.

Thesear
econt
ract
sdecl
aredv
oidbycour
tsofl
awf
orbei
ngcont
rar
ytopubl
i
cpol
i
cye.
g.
a)Cont
ractt
ooustt
hej
uri
sdi
cti
onoft
hecour
t.

Thi
sisacont
ractwhi
chpur
por
tst
odenyt
hepar
ti
est
her
ightt
oseekj
udi
cial
redr
ess.

b)Cont
ract
spr
ejudi
cialt
othest
atusofmar
ri
age.

Thi
sisacont
ractwhi
chi
nter
fer
eswi
tht
hemar
ri
agei
nst
it
uti
on.E.
g.

a.Mar
ri
agebr
oker
agecont
ract
s.

b.Cont
ract
swhoset
endencyi
stoencour
agesepar
ati
on.

c)CONTRACTSI
NRESTRAI
NTOFTRADE.

Thi
sisacont
ractbywhi
chaper
sonsf
utur
eli
ber
tyt
oengagei
napr
ofessi
onort
radei
n
apar
ti
cul
armannerorwi
thpar
ti
cul
arper
sonsi
svol
unt
ari
l
yori
nvol
unt
ari
l
yrest
ri
ctede.
g.
Anempl
oyeecov
enantnott
owor
kforabusi
nessr
ivalorsetupasi
mil
arbusi
nessaf
ter
l
eav
ingempl
oyment
.AtCommonLaw,
acont
racti
nrest
rai
ntoft
r spr
adei imaf
aci
evoi
d
f
orbei
ngcont
rar
ytopubl
i
cpol
i
cy.

Howev
er,
suchacont
ractmaybeenf
orcedi
fiti
spr
ovedt
hat
;

1.Ther
est
rai
ntwasr
easonabl
ynecessar
ytopr
otectt
hei
nter
est
soft
her
est
rai
ning
par
ty.

2.Ther
est
rai
ntwasr
easonabl
etot
hepar
tybei
ngr
est
rai
ned.

3.Ther
est
rai
ntwasnoti
njur
ioust
othepubl
i
c.

Cont
ract
sinr
est
rai
ntoft
rademaybev
olunt
aryori
nvol
unt
ary
.

a)Vol
unt
aryRest
rai
nts.

Thesear
erest
rai
ntsagr
eedt
obyt
hepar
ti
est
othecont
racte.
g.

1.Rest
rai
ntsaccept
edbyempl
oyee.

2.Rest
rai
ntsaccept
edbyt
hesel
l
erofbusi
ness.

3.Rest
rai
ntsaccept
edbyasel
l
erordi
str
ibut
orofgoods.

1.RESTRAI
NTSACCEPTEDBYEMPLOYEE.

Theempl
oyeecov
enant
snott
owor
kforabusi
nessr
ivalaf
terl
eav
ingempl
oymentor
nott
oset
upasi
mil
arbusi
nessnextdoor
.Suchar
est
rai s pr
nti imaf
aci
evoi
d.I
n
Put
sman v
.Tay
lor
,the def
endantwho was an empl
oyee i
nat
ail
ori
ng busi
ness,
cov
enant
ednott
owor
kfort
hepl
aint
if
fsbusi
nessr
ivali
nsome3def
inedar
easoft
he
ci
tyofBi
rmi
ngham wi
thi
n3y
ear
sofl
eav
ingempl
oyment
.

Hewor
kedi
noneoft
hem wi
thi
nthe3y
ear
sandt
hepl
aint
if
fappl
i
edf
orani
njunct
iont
o
r
etr
ainhi
mfr
om doi
ngsoandt
hecour
tgr
ant
edt
hesameont
hegr
oundt
hatt
he
r
est
rai
ntwasr
easonabl
etot
hepar
ti
es.

nAt
I twoodV.Lamont
,thedef
endantwasempl
oyedi
nat
ail
ori
ngbusi
nessasheadof
t
hecut
ti
ngdepar
tment
;hecov
enant
ednott
osetupat
ail
ori
ngbusi
nesswi
thi
nar
adi
us
of10mi
l
esf
rom t
heempl
oyer
sbusi
ness.

Heest
abl
i
shedabusi
nessout
sidet
he10mi
l
esbutal
lhi
scust
omer
swer
efr
om wi
thi
n
t
he10mi
l
es.

Thef
ormerempl
oyer
ssuedf
orani
njunct
iont
orest
rai
nhi
mfr
om doi
ngso.I
twashel
d
t
hatt
her
est
rai
ntwasunenf
orceabl
easi
twast
oowor
dedandhenceunr
easonabl
eto
t
hedef
endant
.

Awor
ldwi
der
est
rai
ntt
oanempl
oyedmaybeenf
orcedi
treasonabl
etot
hepar
ti
esand
canonl
ybeef
fect
ivei
fenf
orcedonawor
ld-
widebasi
s.

Aswast nNor
hecasei denf
eltv
.Maxi
m Nor
denf
eltGunsandAmmuni
ti
on(
1984)Mr
.
Nor
denf
eltwast
heonl
ymanuf
act
urerofaspeci
algunandammuni
ti
on.Hesol
dthe
busi
nesst
ocompanyf
or£287.
500.

2y
ear
slat
ert
hecompanymer
gedwi
thanot
hert
ofr
om t
hedef
endantcompanywhi
ch
empl
oyedMr
.Nor
def
eltatasal
aryof£2,
000pery
ear
.

Thecont
ractofempl
oymentpr
ovi
dedt
hatMr
.Nor
denf
eltwasnott
oengagei
ngunor
ammuni
ti
onbusi
nessany
wher
eint
hewor
ldf
or25y
ear
sandwoul
dnotcompet
ewi
th
t
hecompanyi
nanymayf
or25y
ear
s.

TheHouseofLor
dshel
dthatwher
east
her
est
rai
ntnott
oengagei
nthei
ntheGun
busi
nesswasr
easonabl
eandt
her
efor
eenf
orceabl
e;t
her
est
rai
ntsnotcompet
ewi
tht
he
companyf
or25y
ear
swasunr
easonabl
eandcoul
dnotbeenf
orced.

nKor
I esManuf
act
uri
ngCo.v
.Kol
okManuf
act
uri
ngCo.t
wocompani
esdeal
i
ngi
nsi
mil
ar
pr
oduct
scov
enant
ednott
oempl
oyf
ormerdef
endantengagedaf
ormerempl
oyeeoft
he
pl
aint
if
fwi
thi
nthe5hour
s.

Thepl
aint
if
fsuedf
orani
njunct
iont
orest
rai
ntt
hedef
endant
.Itwashel
dthatt
he
r
est
rai
nti
nenf
orceabl
easi
twasunr
easonabl
etot
hepar
ti
es.

2.RESTRAI
NTACCEPTEDBYVENDORSOFBUSI
NESS

Thesel
l
erofabusi
nessmaycov
enantnott
osetupasi
mil
arbusi
nessnextdoor
,thi
s
maybenecessar
ytopr
otectt
hebuy
er’
sbusi
ness.

Suchar
est
rai
nti
svoi
dcommonl
aw.

Howev
er,i
tmaybeenf
orcedi
fthecosti
ssat
isf
ied t
hathav
ingr
egar
dtot
het
ypeor
nat
ureofbusi
ness,
dur
ati
onoft
her
est
rai
nt,
areacov
eredandot
herci
rcumst
ances,
the
r
est
rai
nti
sreasonabl
etot
hepar
ti
es.

nDi
I asv
.Sout
o,t
hedef
endantsol
dabusi
nesssi
tuat
eont
heI
slandofZanzi
bar
,it
speci
ali
zedi
nmer
chandi
sef
ort
heexpat
ri
atecommuni
ty.

Hecov
enant
ednott
osetupsi
mil
arbusi
nesswi
thi
ntheZanzi
barpr
otect
orat
e. He
est
abl
i
shedasi
mil
arbusi
nessont
heI
slandofPemba.

Thepl
aint
if
fappl
i
edf
orani
njunct
iont
orest
rai
nhi
mfr
om doi
ngso.Thecour
tenf
orced
t
her
est
rai
ntont
hegr
oundt
hati
twasr
easonabl
e.

Thi
sdeci
sionwasbasedont
hespeci
ali
zednat
ureoft
hepl
aint
if
fbusi
ness.

3.RESTRAI
NTACCEPTED BYTHESELLERSORDI
STRI
BUTORSOFGOODS(
SOLUS
AGREEMENT)

Asel
l
erordi
str
ibut
ormayent
eri
ntoacont
ractwi
thawhol
esal
erormanuf
act
urerwhi
ch
r
est
ri
ctshi
sacqui
sit
ionofgoods,
tradi
nghour
set
c.Ther
est
rai
nti
sof
tenr
efer
redt
oas
Sol
usAgr
eement
sanst
heyi
ncl
ude:
.

1.Ty
ingCov
enant
.

Thesel
l
erunder
takest
opur
chaseal
lhi
spr
oduct
sfr
om apar
ti
cul
arwhol
esal
eror
manuf
act
urer
;thi
sisi
nret
urnf
orcer
tai
ndi
scount
s.

2.Compul
sor
yTr
adi
ngCov
enant
.

Thesel
l
ercov
enant
stokeephi
sbusi
nessopenf
orr
easonabl
ehour
sev
ery
day
.

3.Cont
inui
tyCov
enant
s.

Thesel
l
ert
akest
o ext
ractsi
mil
arcov
enant
sfor
m t
heper
son who pur
chasest
he
busi
nessf
rom hi
m.

Suchr
est
rai
nt ePr
sar imaFaci
evoi
dbutmaybeenf
orcedbyacour
tofl
awi
freasonabl
e
t
othepar
ti
esandnoti
njur
ioust
othepubl
i
c.

b)I
nvol
unt
aryr
est
rai
nts.

Thesear
erest
rai
ntsi
mposedbyt
radeassoci
ati
onsandpr
ofessi
onalbodi
esont
hei
r
member
s.Theyar
einv
olunt
aryi
nchar
act
er.

Suchr
est
rai
nt ePr
sar imaFaci
evoi
dbutmaybeenf
orcedi
freasonabl
etot
hepar
ti
es
andar
enoti
njur
ioust
othepubl
i
c.

KENYANPOSI
TION

I
nKeny
acont
ract
sinr
est
rai
ntoft
radear
egov
ernedbyt
heCont
ract
sInRest
rai
ntof
6
Tr
adeAct,Undersec.2oft
heAct
,acont
racti
nrest
rai
ntoft
radei
sbi
ndi
ngand
enf
orceabl
einl
aw.

Howev
er,t
heHi
ghCour
tmayonappl
i
cat
ionbyt
heaf
fect
edpar
tydecl
aret
hecont
ract
v
oidi
fiti
ssat
isf
iedt
hathav
ingr
egar
dto:
-

1.Nat
ureort
ypeofbusi
ness

2.Dur
ati
onoft
her
est
rai
nt

3.Ar
eacov
eredbyt
her
est
rai
nt

4.Al
ltheci
rcumst
ancesoft
hecase,t
her
est
rai
nti
sunr
easonabl
eint
hati
taf
for
ds
mor
epr
otect
iont
hani
snecessar
ytopr
otectt
hepar
ty’
sint
erest
sori
sinj
uri
ous
t
othepubl
i
c.

CONTRACTSUBERRI
MAFI
DEI

Thesear
econt
ract
soft
he“
utmostgoodf
ait
h”.I
nthecont
ractofsal
eofgoods,t
he
sel
l
eri
snotboundt
odi
scl
oseany
thi
ngt
othebuy
eri
nrel
ati
ont
othesubj
ectmat
ter
.The
oper
ati
vepr
inci
plei
scav
eatempt
orwhi
chl
i
ter
all
ymeans“
Buy
erbewar
e”.

Abuy
ert
akest
hegoodsast
heyar
e,howev
er,i
ncont
ract
soft
heut
mostgoodf
ait
h,
bot
hpar
ti
esar
ebound t
odi
scl
osemat
eri
alf
act
s wi
thi
nit
s act
ualandpr
esumed

6
Cap24LawsofKeny
a
knowl
edgef
ail
i
ng whi
cht
hecont
racti
svoi
dabl
e att
heopt
ionoft
hei
nnocentpar
ty.
E.
g.

1)I
nsur
anceCont
ract
s

2)Par
tner
shi
pAgr
eement
s

FORMALI
TIES

I
naddi
ti
ont
othebasi
cel
ement
sofacont
ractcer
tai
ncont
ract
sar
esubj
ectt
ocer
tai
n
f
ormal
i
tieswhi
chmustbecompl
i
edwi
thf
ort
heagr
eementt
obel
egal
l
yenf
orceabl
e.
Thef
ormal
i
tiesi
ncl
udes:
-

1.REQUI
REMENTOFWRI
TING

Somecont
ract
smustbeembodi
edi
naf
ormaldocumente.
g.Hi
rePur
chaseAgr
eement
,
cont
ractofMar
ineI
nsur
ance

2.REQUI
REMENTFORWRI
TTENEVI
DENCE

Somecont
ract
smustbeev
idencedbysomenot
eormemor
andum whi
chmustcont
ain:
-

a.Descr
ipt
ionoft
hepar
ti
es

b.Descr
ipt
ionoft
hepar
ti
es

c. TheConsi
der
ati
on

d.Si
gnat
ureoft
hepar
ti
es

E.
g.Cont
ract
sofGuar
ant
ee,
Cont
ract
sofI
nsur
anceot
hert
hanMar
ine.

3.REQUI
REMENTOFCONSENT.
7
Undersec.6oft
heLandCont
rolAct,acont
ractf
ort
hesal
eofagr
icul
tur
all
andmustbe
consent
edt
obyt
heLandCont
rolBoar
doft
hedi
str
icti
nwhi
cht
hel
andi
slocat
edf
ail
i
ng
whi
cht
hecont
racti
sunenf
orceabl
e.

Theconsentmustbeappl
i
edf
orwi
thi
n6mont
hsoft
heagr
eementf
ail
i
ngwhi
cht
he
cont
racti
svoi
d.

Howev
er,t
hepr
esi
denti
sempower
edt
oexemptat
ransact
ionf
rom t
her
equi
rementof
consentonappl
i
cat
ionbyt
hepar
ti
es.

7
Cap302LawsofKeny
a
4.REQUI
REMENTOFSI
GNATURE.

Acont
ractent
eredi
ntowi
tht
hegov
ernmentmustbesi
gnedbyt
heRev
enueOf
fi
cerof
t
he mi
nist
ry orsome ot
herdut
y aut
hor
ized per
son f
ail
i
ng whi
ch t
he cont
racti
s
enf
orceabl
e.

Thesest
atut
oryf
ormal
i
tiesmaybej
ust
if
iedonv
ari
ouspol
i
cygr
ounds;

a.Theypr
omot
ecer
tai
nlyi
ntr
ansact
ions

b.Ot
her
senhancegenui
nessandaccept
abi
l
ityofcont
ract
s.

c. Somef
ormal
i
tiesper
for
m educat
ivef
unct
ionsE.
g.Cont
ent
sofaHi
rePur
chase
Agr
eement
.

d.Ot
her f
ormal
i
ties f
aci
l
iti
es st
ate i
nter
vent
ion pr
ivat
e t
ransact
ions e.
g.
r
equi
rementofconsentoft
heLandCont
rol
Boar
d.

Thef
ormal
i
tiesofwr
it
ingandr
equi
rementofwr
it
tenev
idencear
eint
endedt
opr
event
f
ound,
howev
er,
iti
spossi
blef
orapar
tyt
oper
pet
rat
efr
audbyi
nsi
sti
ngt
hatt
her
equi
sit
e
f
ormal
i
tieshav
enotbeencompl
i
edwi
th.
.

Topr
eventsuchi
njust
ice,
equi
tydev
elopedt
hedoct
ri
neofPar
tPer
for
mance.

THEDOCTRI
NEOFPARTPERFORMANCE

Thedoct
ri
nei
stot
heef
fectt
hatwher
e par
ti
eshav
eent
ered i
ntoan or
alagr
eement
andbef
ore t
hef
ormal
i
ties ofwr
it
ing ar
ecompl
i
edwi
thoneoft
hepar
ti
esdoes
somet
hing i
nfur
ther
anceoft
he agr
eement,t
heot
herpar
ty cannotbehear
dtosay
t
hatt
her
ewasnoagr
eementbet
weent
hem.

Thi
sdoct
ri
newasdev
elopedbyequi
tyandi
snowcont
ainedi
nthepr
ovi
sot
osec.3of
t
heLawofCont
ractAct
. hepr
Undert ovi
so,
Par
tper
for
mancemayconsi
stof
:-

a) Ent
ryi
ntoapar
ty’
spr
emi
sesbef
oret
hef
ormal
i
tiesi
scompl
i
edwi
th.

b) Cont
inuat
ionofpossessi
onbef
oret
hef
ormal
i
tiesi
scompl
i
edwi
th.

nCr
I edi
tFi
nanceCor
por
ati
onv
.Al
iMwakasanga,
thedef
endantopt
edt
otakeat
ruckon
Hi
rePur
chaset
erms;
hecompl
etedt
heappl
i
cat
ionf
orm,
pai
dadeposi
tandt
ookdel
i
ver
y
oft
het
ruck.Subsequent
ly,
thepl
aint
if
fal
l
egedt
hatt
her
ewasnocont
ractbet
weent
hem
asi
thadnotsi
gnedi
tspar
toft
hecont
ract
.Howev
er,i
twashel
dthatt
hedef
endant
’s
conductamount
edt
opar
tper
for
manceandhencet
her
ewasacont
ractbet
weent
hem.
DI
SCHARGEOFCONTRACT

Acont
racti
ssai
dtobedi
schar
ged,
whent
heobl
i
gat
ioncr
eat
edbyi
tceasest
obi
ndt
he
par
ti
eswhoar
enowf
reedf
rom per
for
mance.

Howev
er,whet
herapar
tyi
sli
abl
eornotaf
terdi
schar
ge,dependsont
hemet
hodof
di
schar
ge.

Acont
ractmaybedi
schar
gedi
nthef
oll
owi
ngway
s:-

1.Expr
essagr
eement

2.Per
for
mance

3.Br
each

4.I
mpossi
bil
i
tyorDoct
ri
neofFr
ust
rat
ion

5.Oper
ati
onofLaw.

1.DI
SCHARGEBYEXPRESSAGREEMENT

Acont
ractmaybedi
schar
gedbyagr
eementi
fthepar
ti
est
her
etoexpr
essl
yagr
eet
o
di
schar
get
hecont
ract
.Themut
ualpr
omi
sesconst
it
uteconsi
der
ati
ont
osuppor
tthe
di
schar
ge.

Di
schar
gebyagr
eementj
ust
if
iedont
hepr
emi
set
hatwhat
everi
scr
eat
edbyagr
eement
maybeext
ingui
shedbyagr
eement
.

Di
schar
gebyagr
eementmaybebi
l
ater
aloruni
l
ater
al

a)Bi
lat
eralDi
schar
ge

I
fnei
therper
for
msi
tspar
toft
hecont
ract
,theobl
i
gat
ionar
esai
dtobeexecut
oryand
t
hedi
schar
gei
sbi
l
ater
alasbot
hpar
ti
esagr
eenott
oper
for
m.Themut
ualpr
omi
ses
const
it
uteconsi
der
ati
on.

b)Uni
lat
eralDi
schar
ge

I
fei
theroft
hepar
ti
eshaswhol
l
yorpar
ti
all
yper
for
medi
tspar
toft
hecont
ract
,the
obl
i
gat
ionsar
esai
dtobeexecut
edandt
hedi
schar
gei
suni
l
ater
al.

Thepar
tyt
hathasper
for
meddi
schar
gest
heot
herf
rom per
for
mance.
Uni
l
ater
aldi
schar
gemayt
akeanyoft
hef
oll
owi
ng3f
orms:
-

1.Cont
ractunderSeal
;Suchacont
ractbi
ndst
hepar
ti
esanddoesnot
grequi
re
consi
der
ati
on.

2.Nov
ati
on;Thi
sist
hesubst
it
uti
onoft
heol
dcont
ractwi
thanew one.Theol
d
cont
racti
sther
ebydi
schar
ged.

3.Accor
dandsat
isf
act
ion;Thi
sist
hepur
chaseofar
eleasef
rom anobl
i
gat
ion
whet
hercont
ract
ualorot
her
wisenotbyper
for
mancebutt
hepr
ovi
sionofnewor
ext
raconsi
der
ati
onwhi
chi
sconsi
der
ati
onwhi
chi
saccept
edbyt
heot
herpar
ty
t
odi
schar
get
hecont
ract
.Thepar
tyt
hathasnotper
for
medpr
ovi
dest
henew
consi
der
ati
onwhi
chi
saccept
edbyt
heot
herpar
ty.Thenewconsi
der
ati
oni
sthe
sat
isf
act
ionandi
tsaccept
ancebyt
heot
herpar
tyi
saccor
d.

2.DI
SCHARGEBYPERFORMANCE.

Acont
racti
sdi
schar
gedbyper
for
mancei
fbot
hpar
ti
esper
for
mthei
rmut
ualobl
i
gat
ions
asagr
eed.Eachpar
tymusthav
eper
for
medi
tspar
ty.

Medi
evalcommonl
aw i
nsi
stedt
hatdi
schar
gebyper
for
mancewasonl
ypossi
blei
f
par
ti
eshadper
for
medt
hei
robl
i
gat
ionspr
eci
sel
yandexact
ly.

Thi
sist
hecommonl
aw Doct
ri
neofPr
eci
seand Exactwhi
chi
stot
heef
fect t
hat
par
ti
esmusthowev
ert
hei
rcont
ract
ual
obl
i
gat
ionst
othel
ett
er.

Ev
eryaspectoft
hecont
ractmustbeper
for
med.I
thasbeent
oobser
vedt
hati
tisa
f
undament
alpr
inci
pleofl
aw t
hatcont
ract
ualobl
i
gat
ionsbeper
for
medpr
eci
sel
yand
exact
ly.

TheDoct
ri
neofpr
eci
sel
yandexacti
sexempl
i
fiedbyt
hedeci
si nCut
oni terV.Powel
l
.

Mr
.Cut
teragr
eedt
oassi
stPowel
l
,ashi
pcapt
ainasasecondmat
teronaj
our
neyf
rom
Jamai
cat
oLi
ver
pool
,theshi edonAugust2nd,
p sai
l andCut
terdi ember20th,
ed onSept
19day
s bef
oret
heshi
pwasdueatLi
ver
pool
.Mr
s.Cut
tersuedf
orcompensat
ionf
or
t
hewor
kdonebyMr
.Cut
ter
,itwashel
dthatnot
hingwaspay
abl
ebyt
hedef
endantas
Mr
.Cut
terhadnotper
for
medt
hecont
ractpr
eci
sel
yandexact
ly.
Thi
scasedemonst
rat
es
t
hatst
ri
ctappl
i
cat
ionoft
hedoct
ri
neofpr
eci
seandexactoccasi
on’
sunj
ustenr
ichment
.

CommonLaw admi
tt
edex
cept
ionst
othedoct
ri
neofpr
eci
seandexactt
omi
ti
gat
eit
s
har
shness. Thesear
eci
rcumst
ancesi
nwhi
chpar
ti
eswi
l
lbecompensat
edf
orwor
k
quant
done( um mer
uit
)ordi
schar
gedev
ent
hought
heyhav
enotper
for
medpr
eci
sel
y
andexact
ly.

EXCEPTI
ONS:

Thesear
ethecasesf
orgr
ant
ing quant
um mer
uitwhi
char
etheexcept
ionst
othe
doct
ri
neofpr
eci
seandexact

1.Di
vi
sibl
econt
ract
s.

Al
thought
her
eisapr
esumpt
iont
hatt
hecont
ractoughtt
obev
iewedi
nit
sent
ir
ety
,
somecont
ract
sar
ebyt
hei
rmat
uredi
vi
sibl
eandper
for
manceofpar
tther
eofent
it
lest
he
par
tyt
opay
mentf
orwor
kdone.E.
g.Cont
ractofcar
ri
ageofgoodspay
abl
epert
onne.
Thecar
ri
eri
sent
it
ledt
opay
mentf
ort
hequant
it
ycar
ri
edbutmaybesuedf
ornot
car
ryi
ngt
heent
ir
equant
it
yaswast nRi
hecasei tchi
ev.At
kinsonwher
eacont
ractof
car
ri
ageofgoods,
theshi
ppercar
ri
edl
esst
hant
heagr
eedquant
it
y.I
twashel
dthatt
he
shi
pperwasent
it
ledt mentonQuant
opay um Mer
uit(
forwor
kdone)
.

2.Subst
ant
ialper
for
mance.

I
fapar
tyhassubst
ant
ial
l
yper
for
medi
tspar
toft
hecont
ract
,iti
sent
it
ledt
opay
mentf
or
wor
kdone.Whet
heracont
racti
ssubst
ant
ial
l
yper
for
medi
saquest
ioni
saquest
ionof
f
act
.

nMer
I shi
desMeht
aandCo.v
.Bar
onVer
hegen,t
hedef
endantengagedt
hepl
aint
if
fto
const
ructahousef
orhi
m andt
hecont
ract
ual
pri
cewaspay
abl
ebyi
nst
all
ment
s.

Af
tercompl
eti
onoft
hehouse,t
hedef
endantr
efusedt
opayt
hel
asti
nst
almentont
he
gr
oundt
hatt
hehousehassomest
ruct
ural
def
ect
s.

Thepl
aint
if
fsued.I
twashel
dthatt
hepl
aint
if
fwasent
it
ledt
othei
nst
all
mentl
esst
he
amountduedef
endantmayl
i
kel
ytospendt
ocor
rectt
hedef
ect
.

Thi
sdeci
sionwasbasedont
hef
actt
hepl
aint
if
fhadsubst
ant
ial
l
yper
for
medi
tspar
tof
t
hecont
ract

3.Par
ti
alPer
for
manceI
fAccept
ed

I
fapar
tyt
oacont
racthasexpr
essl
yorbyi
mpl
i
cat
ionagr
eementt
opayf
orpar
ti
al
per
for
mance,
thepar
typer
for
mingi
sent
it
ledt
opay
mentf
orwor
kdone.
nSumpt
I erv
.Hedges,
def
endantengagedt
hepl
aint
if
ftoconst
ruct2housesandst
abl
es
atcostof£565.

Thepl
aint
if
fabandoned t
hehouseaf
terput
ti
ng up st
ruct
uresv
alued at£333,t
he
def
endantwascompel
l
edt
ocompl
etet
hehouses,subsequent
ly,t
hepl
aint
if
fsuedf
or
compensat
ionwor
kdone.

I
twashel
dthathewasnotent
it
ledt
opay
mentast
hedef
endanthadnotexpr
essl
yorby
i
mpl
i
cat
ionagr
eedt
opayf
orpar
ti
alper
for
mance.

4.Pr
event
edPer
for
mance.

I
fapar
tyi
sreadyandwi
l
li
ngt
oper
for
mit
spar
toft
hecont
racti
spr
event
edf
rom doi
ng
soorbyt
heot
herort
heot
her
sfaul
t,suchpar
tyi
sent
it
ledt mentonquant
opay um
mer
uit
.

nPl
I anchev
.Col
bur
n,t
hedef
endantengagedt
hepl
aint
if
ftowr
it
eabookf
orhi
m about
hi
msel
ffor£100.

Af
tert
he pl
aint
if
fhad done t
he i
nit
ialr
esear
ch and wr
it
ten par
toft
he book,t
he
def
endantdi
scont
inuedt
hewr
it
ing,
thepl
aint
if
fsued.

I
twashel
dthathewasent
it
ledt
o£50f
orwor
kdone.

5.Fr
ust
rat
ionofCont
ract
s

A cont
racti
ssai
dto bef
rust
rat
edwhenper
for
manceoft
heobl
i
gat
ionsbecomes
i
mpossi
ble,i
l
legalorcommer
cial
l
yusel
essbyr
easonofext
raneousci
rcumst
ancesf
or
whi
chnei
therpar
tyi
stobl
ame.

Fr
ust
rat
ionofcont
ractt
ermi
nat
esi
tanddi
schar
gest
hepar
ti
esf
rom per
for
mance.

6.
TimeOfPer
for
mance

Cont
ract
ualobl
i
gat
ionsmustbeper
for
medwi
thi
nthepr
escr
ibedt
imei
fanyorwi
thi
na
r
easonabl
eti
me.

I
fthecont
ractspeci
fi
est
hedat
eofper
for
mance,
timei
ssai
dtobeoft
heessenceoft
he
cont
ractandnon-
per
for
mancet
her
eofdamagest
hecont
ract
.

Thi
swast nPanesarv
hecasei .Popatt
hedef
endantor
der
edf
urni
tur
etobedel
i
ver
edon
Apr
il30th.Howev
er,i
twasnotr
eadybyt
hisdat
e,t
hedef
endantext
endedt
hedel
i
ver
y
dat
etoMay10thbutt
hef
urni
tur
ewasnotr
eadywher
euponhecancel
l
edt
het
ransact
ion.
Thef
urni
tur
ewasnotr
eadywher
euponhecancel
l
edt
het
ransact
ion.Thef
urni
tur
ewas
del
i
v edonMay12th;t
er hedef
endantef
fusedt
otakedel
i
ver
yandwassued.I
twashel
d
t
hathewasnotboundt
odosoast
imewasoft
heessenceoft
hecont
ractandt
he
pl
aint
if
fhadf
ail
edt
oper
for
m.

3.DI
SCHARGEBYI
MPOSSI
BILI
TYORDOCTRI
NEOFFRUSTRATI
ON

Medi
evalcommonl
aw wasbasedont
hepr
inci
pleofabsol
utecont
ract
ualobl
i
gat
ions.
Undert
hispr
inci
ple,par
ti
est
oacont
ractmustper
for
mthei
robl
i
gat
ionsf
ail
i
ngwhi
ch
damagesar
epay
abl
ebyt
hepar
tyi
nthedef
aul
t.

nPar
I adi
nev
.Janet
hepl
aint
if
fleasedapi
eceofl
andt
othedef
endantf
orpur
posesof
f
armi
ng,howev
er,af
tert
hecont
ract
,ahost
il
eGer
manar
myi
nvadedt
hecount
ryand
occupi
edt
her
egi
oni
nwhi
cht
hel
andwassi
tuat
e.

Thedef
endantcoul
dnotacr
osst
hel
andorputi
tint
oanyeconomi
cuse.Whensuedf
or
t
hel
easechar
ges,
thedef
endantpl
eadedhi
sinabi
l
ityt
ouset
hel
and.

Howev
er,hewashel
dli
abl
esi
ncet
hecont
racthadnotpr
ovi
dedt
hathewoul
dbe
di
schar
gedi
fitbecamei
mpossi
blet
ouset
hel
and.

Thi
scasedemonst
rat
est
hatt
heCommonLawdi
dnotor
igi
nal
l
yrecogni
zet
hedoct
ri
ne
off
rust
rat
ion.

TheDoct
ri
nei
sanexcept
iont
othepr
inci
pleofabsol
utecont
ract
ual
obl
i
gat
ions.

FRUSTRATI
ONOFCONTRACT

A cont
racti
s sai
dto be f
rust
rat
ed i
fper
for
mance oft
he obl
i
gat
ion i
srender
ed
i
mpossi
ble,i
l
legalorcommer
cial
l
yusel
essbyunf
oreseenorext
raneousci
rcumst
ances
f
orwhi
chnei
therpar
tyi
stobl
ame.Whenacont
racti
sfr
ust
rat
ed,i
tter
minat
esandt
he
par
ti
esar
edi
schar
ged

TheDoct
ri
neofFr
ust
rat
ionmaybej
ust
if
iedonv
ari
ousgr
ounds:
-

1.I
mpl
iedTer
m Theor
y.

I
tisar
guedt
hati
nev
erycont
ract
,ther
eisani
mpl
i
edt
ermt
hatshoul
dsuchan
ev
entoccurt
hepar
ti
eswi
l
lbedi
schar
ged

2.JustandReasonabl
esol
uti
onTheor
y.
 I
tisonl
yfai
rthatt
hepar
ti
eswi
l
lbedi
schar
ged.

3.Di
sappear
anceofFoundat
ionTheor
y

I
tisar
guedt
hatwhenacont
racti
sfr
ust
rat
ed,
itsf
oundat
iondi
sappear
s.

4.ChangeofObl
igat
ionTheor
y

I
t’
sar
guedt
hatwhenacont
racti
sfr
ust
rat
ed,t
heobl
i
gat
ionsoft
hepar
ti
es
changehencet
heneedt
odi
schar
get
hecont
ract
.

CI
RCUMSTANCESI
NWHI
CHACONTRACTMAYBEFRUSTRATED

1.Dest
ruct
ionofSubj
ectMat
ter
.

I
fthesubj
ectmat
teroft
hecont
racti
sdest
roy
edbef
oreper
for
manceandnei
theroft
he
par
ti
esi
stobl
ame,
thecont
racti
sfr
ust
rat
ed.

I
fmustbeev
identt
hatt
hesubj
ectmat
terwast
hef
oundat
ionoft
hecont
ract
.

Thedest
ruct
ionneednotbet
otalbutmustaf
fectt
hecommer
cialchar
act
eri
sti
csoft
he
subj
ectmat
ter
.

nTay
I lorv
.Cal
dwel
l
,thedef
endanthadhi
redt
hepl
aint
if
f’
shal
ltoconductamusi
cal
concer
tatspeci
fi
edchar
ges,bef
oret
hedayoft
hef
ir
stconcer
t,t
hehal
lwasdest
roy
ed
byf
ir
eandnei
theroft
hepar
ti
eswast
obl
ame.

I
nan act
ionbyt
hepl
aint
if
ftor
ecov
erhi
ri
ng char
ges,i
twashel
dthatt
heywer
e
i
rr
ecov
erabl
e as t
he dest
ruct
ion oft
he hal
lfr
ust
rat
ed t
he cont
ractand t
her
eby
di
schar
gedt
hepar
ti
es.

2.Non-
occur
renceofanev
ent
.

I
facont
racti
sbasedonapar
ti
cul
arev
entorst
ateofaf
fai
rst
oobt
ainatapar
ti
cul
ar
t
ime,
itsnon-
occur
rencef
rust
rat
ingt
hecont
ractanddi
schar
gest
hepar
ti
es.

Howev
er,f
ort
hecont
ractt
obef
rust
rat
ed,i
tmustbeev
identt
hatt
heev
entorst
ateof
af
fai
rswast
heonl
yfoundat
ionoft
hecont
ract
.

nKr
I ellv
.Henr
y(1903)
,thedef
endanthadhi
redar
oom i
nthepl
aint
if
fhouset
oenabl
e
hi
mvi
ewRoy
alPr
ocessi
onoft
hecor
onat
ionofKi
ngEdwar
dVI
I.Howev
er,
theki
ngwas
t
akeni
l
lbef
oret
hecor
onat
ionandt
hecer
emonywascancel
l
ed.

I
twas hel
dthatt
he hi
ri
ng char
ges wer
eir
recov
erabl
e as t
he cancel
l
ati
on oft
he
cer
emonyf
rust
rat
edt
hecont
ractanddi
schar
gedt
hepar
ti
es.

Howev
er,
ifacont
racthasmor
ethanonef
oundat
iont
hedi
sappear
anceofonedoesnot
f
rust
rat
eitast
heot
heri
scapabl
eofper
for
mance.Aswast n Her
hecasei neBay
St
eamboatCo.v
.Hut
ton

3.I
ll
egal
it
y.

I
fper
for
mance ofcont
ract
ualobl
i
gat
ions becomes i
l
legalbyr
easonofchangeofl
aw
orot
her
wiset
hepar
ti
esar
edi
schar
ged ast
her
eisnoobl
i
gat
iont
oper
for
m t
hatwhi
ch
hasbecomei
l
legal
.

4.Deat
horPer
manentI
ncapaci
tat
ion.

I
n cont
ract
s ofper
sonalser
vice orper
for
mance e.
g. empl
oyment
,the deat
h or
per
manenti
ncapaci
tat
ionofapar
tyf
rust
rat
est
hecont
ractanddi
schar
gest
hepar
ti
es
ast
heobl
i
gat
ionsar
enotgener
all
ytr
ansf
erabl
e.

5.Gov
ernmentI
nter
vent
ion.

I
fapol
i
cyactorr
egul
ati
onmakei
timpossi
blef
orapar
tyt
ocompl
etei
tscont
ract
ual
under
taki
ngt
hecont
racti
sfr
ust
rat
edandt
hepar
ti
esdi
schar
gede.
g.r
efusalt
ogr
anta
l
i
cenceaswast nKar
hecasei achiGasCompanyv
.Isaaqwher
ethegov
ernmentr
efused
t
ogr
antanexpor
tli
cencei
nrespectofcer
tai
npi
pest
obeexpor
tedt
oKar
achi
.When
sued,t
hedef
endantr
eli
edont
hegov
ernmentr
efusalt
ogr
antt
hel
i
cence.Howev
er,i
t
washel
dthatt
hecont
racthadnotbeenmadet
oobt
aint
hel
i
cence

Acont
ractwoul
dbef
rust
rat
ed i
fagov
ernmentt
akespossessi
onoft
hesubj
ectmat
ter
orst
opst
het
ransact
ion,aswast nMet
hecasei ropol
i
tanWat
erBoar
dV.Di
ckKer
rand
Co. I
nJul
y1914,t
her
espondentent
eredi
ntoacont
ractt
oconst
ructadam f
ort
he
appel
l
antwi
thi
n6y
ear
ssubj
ectt
oanext
ensi
on.Howev
er,somet
imesi
near
ly1916,a
gov
ernmentmi
nist
eror
der
edt
her
espondentt
ost
opt
hecont
ractanddi
sposeofi
ts
equi
pmentandt
her
espondentcompl
i
ed.I
twashel
dthatt
hemi
nist
er’
sactf
rust
rat
ed
t
hecont
ractandt
her
ebydi
schar
gedt
her
espondent
.

6.Super
vev
ingEv
ent
s.

These ar
e ev
ent
sthatdel
ay per
for
mance and t
her
eby change t
he commer
cial
char
act
eri
sti
csoft
hecont
ract
.Thechangemustbef
undament
al.Asagener
alr
ule,
addi
ti
onalexpensesdonotf
rust
rat
eacont
ract
;howev
er,t
heymayi
ftheyr
endert
he
t
ransact
ioncommer
cial
l
yusel
ess.

nTsaki
I roql
ouandCo.Lt
dv.Nobl
eThor
lGMBH,t
hepar
ti
esent
eredi
ntoacont
ractf
or
t
he pur
chaseofal
argequant
it
yofGr
oundnut
stobeshi
pped f
rom Por
tSudant
o
Humbur
g,t
hesuppl
i
ercont
empl
atedusi
ngt
he SuezCanalbutwhi
ch byt
het
ime of
per
for
mancehadbeencl
osedasaconsequencet
hegr
oundnut
swer
enotsuppl
i
ed.
Whensued,t
hesuppl
i
erar
guedt
hatt
heal
ter
nat
iver
out
ewast
ooexpensi
veandhence
t
hecont
racthadbeenf
rust
rat
ed.I
twashel
dthecont
racthadnotbeenf
rust
rat
edas;
-

1.Theaddi
ti
onal
expenseswer
erecov
erabl
efr
om t
hebuy
er

2.Thecont
racthadnot
imel
i
mit
.

3.The l
ongerr
out
e coul
d notdamaged t
he commer
cialchar
act
eri
zes oft
he
gr
oundnut
s

Thesuppl
i
erwasl
i
abl
ei nVi
ndamagesI ctor
iaI
ndust
ri
esLt
dV.LamanbhaiBr
other
s,t
he
par
ti
escont
ract
edt
obuyandsel
laquant
it
yofcor
nmai
zet
obeshi
ppedf
rom Ji
njat
o
Mwanz
aandt
ranspor
tedbyr
ail
toDar
-es-
sal
am f
orexpor
t.

TheEastAf
ri
caRai
l
way
sandHar
bour
sCor
por
ati
onhadagr
eedt
oshi
pandr
ailt
he
mai
zet
oDar
.

Howev
er,subsequent
ly,t
hecor
por
ati
ondecl
i
net
odosoandt
hesel
l
erwasunabl
eto
suppl
i
ert
hemai
ze.

Whensued,t
hesel
l
erpl
eadedt
hatt
hecont
racthadbeenf
rust
rat
edbyt
hechangeof
hear
toft
hecor
por
ati
onast
her
ewasnoal
ter
nat
iver
out
etot
hecoast
.

I
twashel
dthatt
hesuppl
i
erwasnotl
i
abl
east
hecont
racthadbeenf
rust
rat
ed.

Howev
er,
acont
racti
snotf
rust
rat
edi
f:
-

1.Ei
theroft
hepar
ti
esi
stobl
amef
ort
heoccur
renceornon-
occur
renceofanev
ent

2.Theev
enti
sexpr
essl
ypr
ovi
dedf
ori
nthecont
ract
.

EFFECTS/
CONSEQUENCESOFFRUSTRATI
ON (
ADJUSTMENMTOFTHERI
GHTSOF
PARTI
ESONFRUSTRATI
ON)

Fr
ust
rat
edcont
ract
sinKeny
aaegov
ernedbyt
heLawRef
orm(
Frust
rat
edCont
ract
s)Act
,
1943whi
chappl
i
esi
nKeny
aasast
atut
eof gener
alappl
i
cat
ionbyr
easonoft
he
schedul
etot
heLaw ofCont
ractAct
.
Undert
hisAct
,whenacont
racti
sfr
ust
rat
ed:
-

1.I
tist
ermi
nat
ed

2.Moneypadi
srecov
erabl
e

3.Moneypay
abl
eceasest
obepay
abl
e

4.I
fapar
tyhassuf
fer
edl
ossbyr
easonofper
for
mance,t
hecour
tmayor
dert
he
ot
hert
opayt
osuchpar
tyasum ofmoney

5.I
fapar
tyhasder
ivedbenef
itot
hert
hanf
inanci
al,
thecour
tmayor
dersuchpar
ty
t
opayt
otheor
derasum ofmoneywhi
chmustbel
esst
hant
hebenef
iti
tso
der
ived.

4.DI
SCHARGEBYBREACHOFCONTRACT.

Br
eachofacont
ractdoesnotdi
schar
gei
t;i
tgi
vest
hei
nnocentpar
tyanoppor
tuni
tyt
o
t
reatt
hecont
ractasr
epudi
atedorasexi
sti
ng.

I
fitt
reat
sthecont
ractasexi
sti
ng,i
tisboundt
ohonouri
tspar
thowev
er,i
ftr
eat
sitas
r
epudi
atedi
tisnotboundt
odoso.

Br
eachofcont
ractmaybe:
-

a) Ant
ici
pat
ory

b) Act
ual

1)ANTI
CIPATORYBREACHOFCONTRACT.

Thi
sisasi
tuat
ionwher
eapar
tyt
oacont
ractexpr
essl
yorbyi
mpl
i
cat
ioni
nti
mat
est
othe
ot
heri
nadv
ancei
tsi
ntent
ionnott
oper
for
m ont
hedat
eofper
for
mance.Ev
idencemust
cl
ear
lysuggestbr
eachofcont
ract
.

Thei
nnocentpar
ti
est
akeanyoft
hef
oll
owi
ngst
eps:
-

a)Suei
nDamages.

Thepar
tymustpr
ovet
heant
ici
pat
orybr
eachoft
hecont
ract
swel
lasi
tswi
l
li
ngnesst
o
per
for
mit
spar
toft
hecont
ract
.

nFr
I ostV.Kni
ghtwher
ethedef
endanthadcont
ract
edt
omar
ryt
hepl
aint
if
faf
terhi
s
f
ather
’sdeat
hbutmar
ri
edanot
herper
sondur
ingt
hel
i
fet
imeoft
hepl
aint
if
f‘sf
ather
,it
washel
dthatt
hedef
endantwasl
i
abl
eindamagesf
orant
ici
pat
orybr
eachoft
he
cont
ract
.

b)Wai
tfort
hepar
tyt
oper
for
m byt
heduedat
e.

Thei
nnocentpar
tymayoptt
oaf
for
dtheot
herpar
tyachancet
oper
for
mit
spar
toft
he
cont
ract
,howev
er,
ift
hecont
racti
sint
hemeant
imef
rust
rat
ed,
thei
nnocentpar
tyl
oses
al
lremedi
esaswast nAv
hecasei eryV.Bowden.

c) Suef
ort
heDecr
eeofSpeci
fi
cPer
for
mance.

Thei
nnocent par
tymayappl
yfort
he equi
tabl
eremedyofspeci
fi
cper
for
mancet
o
compelt
heot
herpar
tyt
ofort
he equi
tabl
eremedyofspeci
fi
cper
for
mancet
ocompel
t
heot
herpar
tyt
oper
for
mit
spar
toft
hecont
ractandt
hesamemaybegr
ant
edi
f
ci
rcumst
ancesj
ust
if
yaswast nHasham Ji
hecasei waV.Zenabwher
epar
ti
esent
red
i
ntoacont
ractf
ort
hesal
eofapi
eceofl
andbutt
hedef
endantr
epudi
atedt
hesame
bef
oret
hedat
e ofcompl
eti
onandt
hepl
aint
if
fappl
i
edf
orspeci
fi
cper
for
mance.The
cour
tgr
ant
edt
heor
derandt
hedef
endantwer
ecompel
l
edt
oper
for
m.

Wher
eacont
racti
sbr
eachi
nant
ici
pat
ion,t
hei
nnocentper
soni
snotboundt
omi
ti
gat
e
i
tsl
oss.

2.ACTUALBREACHOFCONTRACT.

Thi
sent
ail
sthenon-
per
for
manceofapar
ty’
sobl
i
gat
ionont
heduedat
eort
ender
ing
def
ect
iveper
for
mance.

Thei
nnocentpar
tymayt
reatt
hecont
ractasr
epudi
atedi
fthebr
eachi
sfundament
alt
o
t
hecont
r hecasei
actaswast nPoussar
dV.Spi
ersandPondwher
ethepl
aint
if
f’
snon-
appear
ancef
rom t
hebegi
nni
ngoft
heseasonent
it
ledt
hedef
endantt
otr
eatt
hecont
act
ashav
ingcomet
oanend.

5.DI
SCHARGEBYOPERATI
ONOFLAW.

Di
schar
geoft
heoper
ati
onofl
awent
ail
sthedi
schar
geofpar
ti
esf
ormt
hei
rcont
ract
ual
obl
i
gat
ionsatt
hei
nst
anceoft
hel
aw.Thepar
ti
esar
efr
eedbyl
aw.

Suchadi
schar
gemayt
akepl
acei
ntheev
entof
:-

1.Mer
ger

Thi
sist
hei
ncor
por
ati
onoft
hei
temsofasi
mpl
econt
racti
ntoasubsequent
 wr
it
tenagr
eementbet
weent
hepar
ti
es.Thesi
mpl
econt
racti
sdi
schar
gedbyt
he
oper
ati
onot
hel
aw.

2.Deat
h

I
ncont
ractofper
sonalser
viceorper
for
mance,t
hedeat
hofapar
tydi
schar
ges
t
hecont
ract
.

3.LapseofTi
me

I
fti
mei
soft
heessenceoft
hecont
ractandapar
tyf
ail
stoper
for
m wi
thi
nthe
pr
escr
ibedt
ime,
thecont
racti
ster
minat
edaswast nPanesarV.Popat
hecasei

REMEDI
ESFORBREACHOFCONTRACT

Whenacont
racti
sbr
eached,
thei
nnocentpar
tyi
scont
ract
ualr
ight
sar
evi
olat
edandt
he
par
tyhasacauseofact
ionknownasbr
eachofcont
ractwhi
chent
it
lesi
ttoar
emedy
.

Remedi
esf
orbr
eachofcont
ract
sar
e:-

 CommonLawand

 Equi
tabl
e

Wher
easCommonLawr
emedi
escompr
isedamagesonl
y,Equi
tabl
eremedi
esi
ncl
ude;

 I
njunct
ion

 Resci
ssi
on

 Speci
fi
cper
for
mance

 Account

 Tr
aci
ng

 Quant
um Mer
nit

 Wi
ndi
ngUp

 Appoi
ntmentofRecei
ver

Bef
ore1873,CommonLawr
emedi
escoul
donl
ybeav
ail
edbyt
heCommonLawCour
ts
whi
l
eequi
tabl
eremedi
eswer
eonl
yav
ail
abl
eint
heLor
dChancel
l
orsCour
ts. The2
cat
egor
iesofr
emedi
esdi
ff
eri
nthatwher
eascommonl
aw r
emedi
esar
eawar
ded“
as
r
ight
”equi
tabl
eremedi
esar
eawar
dedasdi
scr
eti
onal
.
I
tisf
ort
heCour
ttodeci
dewhet
hert
heci
rcumst
ancesj
ust
if
yther
emedy
.

DAMAGES(
monet
arycompensat
ion)

Thi
sist
he basi
c Common Law r
emedy
;iti
s a monet
aryawar
d byt
he cour
tto
compensat
ethepl
aint
if
ffort
hel
ossoccasi
onedbyt
hebr
each.

I
tsobj
ect
ivei
stopl
acet
hepl
aint
if
ftot
heposi
ti
onhewoul
dhav
ebeenhadt
hecont
ract
beenper
for
med.

Damagesf
orbr
eachofcont
ractmaynomi
nal
orsubst
ant
ial
.

1.Nomi
nalDamages

Thi
sisanamountawar
dedbyt
hecour
ttoshowt
hatapar
ty’
sri
ght
shav
ebeenv
iol
ated
butnol
osswasoccasi
onedort
hepar
tywasunabl
etopr
ovel
oss.

2.Subst
ant
ialDamages

Thi
sisanamountbyt
hecour
tast
heact
uall
osssuf
fer
edorast
heamountt
hecour
tis
wi
l
li
ngt
orecogni
zeasdi
rectconsequencesoft
hebr
eachft
hecont
ract
.

RULESONTHEASSESSMENTANDPAYMENTOFDAMAGES

1.Thepur
poseofamonet
aryawar
dindamagesi
stocompensat
ethepl
aint
if
ffor
t
hel
osssuf
fer
ed.Damagesasar
emedyar
ecompensat
oryi
nnat
ure.

2.Thel
ossordamagesuf
fer
edbyt
hepl
aint
if
fmustbepr
oved,t
hepl
aint
if
fmust
show t
hatbutf
ort
he def
endant
’s br
each t
he l
oss woul
d nothav
e been
occasi emustbeanexusorl
oned.Ther i
nkbet
weent
hebr
eachofcont
ractand
t
hepl
aint
if
f’
slossf
ail
i
ngwhi
cht
hedamagesar
esai
dtobet
oor
emot
eand
t
her
efor
eir
recov
erabl
e.

nHadl
I eyV.Baxendal
e,t
hepl
aint
if
fownedami
l
lwhosecr
ankshaf
twasbr
oken
andr
equi
redr
epl
acementt
hef
oll
owi
ngday
,howev
ert
her
ewasunduedel
ayby
t
hedef
endantdur
ingwhi
cht
imet
hemi
l
lremai
nedcl
osed.Thepl
aint
if
fsuedf
or
l
ossofpr
ofi
t.I
twashel
dthatt
hedef
endantwasnotl
i
abl
efort
hel
ostpr
ofi
tas
t
hesamecoul
dnotbet
racedt
othedel
ayi
nthedel
i
ver
yoft
hecr
ankshaf
t..
The
pl
aint
if
f’
slosswast
oor
emot
eandi
rr
ecov
erabl
e.

Thi
scasei
saut
hor
it
ytot
hepr
oposi
ti
ont
hatt
hedef
endanti
sonl
yli
abl
eforsuch
l
ossordamageasi
sreasonabl
yfor
eseeabl
eint
heor
dinar
ycour
seofev
ent
s.
3.I
fapar
tyhasspeci
alknowl
edgei
nrel
ati
ont
othecont
ractbutf
ail
stoactoni
t
andt
heot
herpar
tysuf
fer
sloss,
thepar
tyi
sli
abl
efort
hel
oss,
aswast
hecasei
n
Vi
ctor
ia Laundr
y(Wi
ndsor
)Lt
d.V.NewmanI
ndust
ri
esLt
d,wher
ethepl
aint
if
f
Companywant
edt
oexpandi
t’
sbusi
nessaswel
last
akeadv
ant
ageofcer
tai
n
l
ucr
ati
ve. Todosoi
trequi
redal
argeboi
l
erwhi
cht
hedef
endantcompany
agr
eedt
odel
i
veri
nJune.Thepl
aint
if
fhadbyl
ett
ernot
if
iedt
hedef
endantt
he
ur
gencywi
thwhi
cht
heboi
l
erwasr
equi
red.Theboi
l
erwasnotdel
i
ver
edunt
il
Nov
emberbywhi
cht
imet
hepl
aint
if
fcompanyl
ostmoneyf
rom t
hecont
ract
.In
anact
ionagai
nstt
hedef
endantf
ort
hel
oss,i
twashel
dthatt
hedef
endantwas
l
i
abl
e.

Asi
mil
arhol
di nTheHer
ngwasmadei onI
I.Theappel
l
ant
,ashi
powneragr
eed
t
oshi
pther
espondent
‘ssugarf
rom Const
anzat
oBasr
a.Theappel
l
ateknewt
hat
r
espondentwasasugarmer
chantandt
hatt
her
ewasasugarmar
ketatBasr
a.
Byr
easonofadet
our
,theshi
par
ri
ved9day
slat
eratBasr
a,bywhi
cht
imet
he
pr
iceofsugarhaddr
oppedandt
her
espondentmadeal
ossof£4,
011.I
nan
act
iont
orecov
ert
hesame,
itwashel
dthatt
heappel
l
antwasl
i
abl
e.

4.Mi
ti
gat
ionofLoss:Thi
spr
inci
plei
stot
heef
fectt
hatwhenabr
eachofacont
ract
occur
s,i
tist
hedut
yoft
hei
nnocentpar
tyt
otaker
easonabl
est
epst
oreducet
he
l
ossi
tisl
i
kel
ytosuf
ferf
rom t
hebr
each.
Thi
sdut
yisi
mposedupont
hei
nnocent
par
tybyl
aw.

I
fthepar
tyf
ail
stomi
ti
gat
eit
slosst
heamountbywhi
chl
ossoughtt
ohav
ebeen
r
educed i
sir
recov
erabl n Har
e.I ri
s V.
Edmonds,i
twas hel
dthatwher
ethe
char
ter
erofashi
pfai
l
edt
opr
ovi
decar
goi
nbr
eachofcont
ract
,theshi
pcapt
ain
wasboundt
oacceptcar
gof
rom ot
herper
son’
satcompet
it
iver
ates.

Whet
herornott
hei
nnocentpar
tyhasact
edr
easonabl
yinmi
ti
gat
ingi
tsl
ossi
sa
quest
ion off
act
.In Musa Hassan V.Huntand Anot
her
,the appel
l
anthad
cont
ract
edt
obuyal
lthemi
l
kpr
oducedbyt
her
espondentf
oroney
ear
.Onone
occasi
on,t
heappel
l
ater
efusedt
otakedel
i
ver
yoft
hemi
l
kont
hegr
oundt
hati
t
wasunf
itf
orhumanconsumpt
ion;t
her
espondentpr
ovedt
hati
twasf
itf
or
humanconsumpt
ion.

Af
tert
her
efusalt
her
espondentconv
ert
edt
hemi
l
ktogheeandcasei
nwhi
ch
f
etchedal
owerpr
icet
hanmi
l
k.Theappel
l
antar
guedt
hatt
her
espondenthad
 notact
edr
easonabl
yinmi
ti
gat
ingt
hel
oss.
Itwashel
dthatt
her
espondenthad
r
easonabl
y.

5.Li
qui
dat
eddamagesandpenal
ti
es:Par
ti
est
oacont
ractmaybef
orehandspeci
fy
t
heamountpay
abl
etot
hei
nnocentpar
tyi
ntheev
entofabr
each.
Thesum
speci
fi
edmaybe:
Liqui
dat
eddamagesoraPenal
ty

I
fthesum i
sagenui
nepr
e–est
imat
eoft
hel
ossl
i
kel
ytobesuf
fer
edbyt
he
i
nnocentpar
ty,
iti
sawar
dedbyt
hecour
twi
thoutpr
oofoft
heact
uall
ossandi
tis
r
efer
redt
oasl
iqui
dat
eddamages

nWal
I l
isv
.Smi
th,i
twashel
dthatl
i
qui
dat
eddamagesar
eanamountwhi
ch
r
epr
esent
sal
mostt
heact
uall
ossoccasi
onedandi
sawar
dedi
rr
espect
iveoft
he
act
ual
loss.

I
fthe sum has no r
elat
ion t
othe act
uall
oss,buti
sint
ent
ed t
o compel
per
for
manceori
tisasum t
obef
orf
eit
edbyt
hepar
tyi
ndef
aul
titi
sregar
dedas
apenal
ty.
Apenal
tyi
sgener
all
yext
rav
aganti
tcov
ersbutdoesnotaccessl
oss.

Penal
ti
escannotbeawar
dedbyt
hecour
t,t
hecour
tassesst
heamountpay
abl
e
byappl
yi
ngt
her
ulesofassessmentofdamages.

Whet
hert
hesum i
sli
qui
dat
eddamagesorpenal
ti
esdependsont
hei
ntent
ionof
t
he par
ti
es .
In maki
ng t
he det
ermi
nat
ion,cour
t ar
e gui
ded by cer
tai
n
pr
esumpt
ionsandr
ules.

Pr
esumpt
ionsorr
ulesf
ordi
sti
ngui
shi
ngl
iqui
dat
eddamagesandpenal
ti
es

Accor
dingt
oLor
dDunedi
ninDunl
opPneumat
icTy
reCo.
Ltdv
.NewGar
ageandMot
or
Co.Thef
oll
owi
ngpr
esumpt
ionsassi
sti
nthedet
ermi
nat
ion:

1.I
fthesum speci
fi
ed byt
hepar
ti
esi
sext
rav
agantand unconsci
onabl
eiti
s
deemedt
obeapenal
ty.

2.I
fthesum pay
abl
efort
henon-
pay
mentofanot
heri
sgr
eat
eri
tisdeemedt
obea
penal
ty.

3.I
fasi
ngl
elumpsum i
spay
abl
eont
heoccur
renceofoneorsev
eraloral
lev
ent
s,
someofwhi
choccasi
onser
iousormi
norl
ossi
tisdeemedt
obeapenal
ty.
 4.I
fthesum i
spay
abl
eont
heoccur
renceofonl
yoneev
enti
tisdeemedt
obe
l
i
qui
dat
eddamages.

5.Thecat
egor
izat
ionoft
hesum byt
hepar
ti
esas“
li
qui
dat
eddamages”or“
Penal
ty”
‘
i
snotbi
ndi
ngt
hecour
t.

6.Thef
actt
hatapr
eci
sepr
e-est
imat
ionofl
ossi
spr
obl
emat
icdoesnotnecessar
il
y
meant
hatt
hesum speci
fi
edi
sapenal
ty

7.Asagener
alr
ule,exempl
aryorpuni
ti
vedamagesar
enotawar
dedf
orbr
eachof
cont
ract
s.

EQUI
TABLEREMEDI
ES(
DISCRETI
ONAL)

1.SPECI
FICPERFORMANCE

Thedecr
eeofspeci
fi
cper
for
mancei
sacour
tor
derwhi
chcompel
sapar
tyt
oper
for
mit
s
cont
ract
ual
obl
i
gat
ionsaspr
evi
ousl
yagr
eed.

I
tcompel
sapar
tyt
odi
schar
gei
tscont
ract
ual
obl
i
gat
ion.

I
tor
der
sper
for
mancewi
thoutanopt
iont
opaydamages. I
tisanequi
tabl
eremedy
mani
fest
ingt
heequi
tabl
emaxi
mthatequi
tyact
si sonam8.
nper

Speci
fi
cper
for
mancemaybegr
ant
edi
nci
rcumst
ancei
nwhi
ch

1.Monet
arycompensat
ioni
nadequat
e

2.Thesubj
ectmat
teri
suni
queorhasr
arechar
act
eri
sti
cse.
g.l
and

Theawar
dofspeci
fi
cper
for
mancei
sdi
scr
eti
onalont
hebasi
sofest
abl
i
shedpr
inci
ples
ofequi
ty:
-

a)Del
ay

Thei
nnocentpar
tymustseekj
udi
cialr
edr
essatt
heear
li
estpossi
blei
nst
anceasdel
ay
def
ect
sequi
ty.Ther
emedyi
snotav
ail
abl
eift
hei
nnocentpar
tyhassl
eptoni
tsr
ight
s
f
ort
ool
ong.

b)Cl
eanHands

Thei
nnocentPar
tymustappr
oacht
hecour
tfr
eef
rom bl
ameashewhocomest
oequi
ty

8
Agai
nstt
heper
son.Thi
sisascompar
edt
oanact
i nr
oni em whi
chi
sasagai
nstat
hingor
pr
opert
y
mustdo so wi
th cl
an hands. Ev
idence ofmi
stake mi
srepr
esent
ati
on ordur
ess
di
sent
it
lest
hepar
tyt
her
emedy

c)Har
dshi
ptot
hedependent

Speci
fi
cper
for
mancewi
l
lnotbedecr
eedi
fiti
sli
kel
ytosubj
ectt
hedef
endantt
oundue
har
dshi
pashewhoseeksequi
tymustdoequi
tyandequal
i
tyi
sequi
ty.

d)Per
for
manceandSuper
visi
on

Speci
fi
cper
for
mancecannotbedecr
eedi
fisi
mpossi
blef
ort
hedef
endantt
oper
for
m or
wher
eper
for
mancer
equi
rescont
ractsuper
visi
on. Thi
sisbecausecour
tofl
aw ar
e
r
eluct
antt
omakei
nef
fect
ualor
der
sanddonothav
ethemechani
sm t
osuper
vise
per
for
mance.

e)Mut
ual
it
y.

Asagener
alr
ule,speci
fi
cper
for
mancewi
l
lnotbegr
ant
edi
fitwoul
dnothav
ebeen
gr
ant
edwer
etheposi
ti
onsoft
hepar
ti
esi
nter
changed. Thi
sisbecauseequal
i
tyi
s
equal
i
ty

f
)Nat
ureofCont
ract
.

Speci
fi
cper
for
mancewi
l
lnotbegr
ant
edi
ncont
ract
sofper
sonal
ser
viceorper
for
mance
e.
g.empl
oymentast
hisi
sli
kel
ytoper
pet
rat
einj
ust
ice.Howev
er,t
her
emedymaybe
gr
ant
edwher
eacont
racti
sbr
eachedi
nant
ici
pat
ionaswast nJi
hecasei waV.Zenab.

Acour
tofl
awmaydecl
i
net
odecr
eeSpeci
fi
cPer
for
mancei
f;

1.Thecont
racti
soneofper
sonal
ser
vicee.
g.empl
oyment
.

2.The cont
racti
srev
ocabl
e byt
he par
tyagai
nstwhom an or
derofspeci
fi
c
per
for
mancei
ssought
.

3.Thecont
racti
sspeci
fi
cal
l
yenf
orceabl
einpar
tonl
y.Wher
ethecour
tcannotgr
ant
speci
fi
cper
for
manceoft
hecont
ractasawhol
e,i
twi
l
lnoti
nter
fer
e.

4.The cont
racti
sincapabl
e ofbei
ng per
for
med i
.e.i
mpossi
bil
i
ty.Cour
ts ar
e
r
eluct
antt
omakei
nef
fect
ual
order
s.

5.Per
for
manceoft
hecont
ractr
equi
resconst
antsuper
visi
on.

6.Thedecr
eei
sli
kel
ytosubj
ectt
hedef
endantt
osev
ereorunduehar
dshi
p.
 7.Thecont
racti
nquest
ionwasobt
ainedbyunf
airmeans.

2.I
NJUCTI
ON

Thi
sisacour
tor
derwhi
chei
therr
est
rai
nsapar
tyf
rom doi
ngorcont
inui
ngt
odoa
par
ti
cul
art
hingorcompel
sitt
oundowhati
thaswr
ongf
ull
ydone.I
tisanequi
tabl
e
r
emedywhoseawar
disdi
scr
eti
onal
andmaybegr
ant
edi
nci
rcumst
ancei
nwhi
ch:
-

1. Monet
arycompensat
ioni
sinadequat
e

2. I
tisnecessar
ytomai
ntai
nthest
atusquo

TYPESOFI
NJUNCTI
ON

Theymaybecl
assi
fi
edas:
-

i
. Pr
ohi
bit
oryandMandat
ory

i
i
. I
nter
im ort
empor
aryandper
manent

1.Pr
ohi
bit
oryi
njunct
ion.

Thi
sisacour
tor
derwhi
chr
est
rai
nsapar
tyf
rom doi
ngorcont
inui
ngt
odoapar
ti
cul
ar
t
hing.

2.Mandat
oryi
njunct
ion.

I
tisacour
tor
derwhi
chcompel
sapar
tyt
oputr
ightwhati
thaswr
ongl
ydone.I
tis
r
est
orat
ivei
nchar
act
er.

3.Tempor
alorI
nter
imI
njunct
ion

I
tiscour
tor
derwhosel
egalef
fecti
srest
ri
ctedt
oaspeci
fi
eddur
ati
onont
heexpi
rat
ion
ofwhi
chi
tlapses. Howev
er,i
tmaybeext
endedbyt
hecour
tonappl
i
cat
ionbyt
he
pl
aint
if
fbutcanal
sobel
i
ftedonappl
i
cat
ionoft
hedef
endant
.

4.Per
manentorPer
pet
ualI
njunct
ion

Thi
sisacour
tor
derwhosel
egal
eff
ecti
sper
manent
.

Whet
herornotani
njunct
ioni
sawar
dedi
sthecour
t’
sdi
scr
eti
on,i
nli
ghtofwhi
cht
he
cour
ttakesi
ntoconsi
der
ati
oncer
tai
npr
inci
plese.
g.del
ay,cl
eanhands,har
dshi
pto
def
endantet
c.
Howev
erf
ort
heor
dert
obegr
ant
ed,
thepl
aint
if
fmustpr
ovet
hat
:-

thasaPr
a.I imaFaci
ecasewi
thahi
ghpr
obabi
l
ityofsuccess

b.I
ftheor
deri
snotgr
ant
edt
hepl
aint
if
fisl
i
kel
ytosuf
feri
rr
epar
abl
einj
ury
.

I
fthecour
tisi
ndoubti
tmustdeci
det
hecaseon“
abal
anceofconv
eni
ence.
”Itwasso
hel
dinAnni
eloGi
ell
aV.CasmanBr
ownCo.Lt
d.

3.RESCI
SSI
ON.

Theessenceoft
hisr
emedyi
stor
est
oret
hepar
ti
est
otheposi
ti
ont
heywer
ebef
oret
he
cont
ract
.

I
tisanequi
tabl
eremedywhoseawar
disdi
scr
eti
onal
.

Ther
emedymaybeav
ail
edwhenev
eracont
racti
svi
ti
atedbymi
srepr
esent
ati
on.

Howev
ert
her
ightt
oresci
ndacont
racti
slosti
nvar
iousway
s:-

1.Del
ay:Acont
ractcannotber
esci
ndedi
fapar
tyhassl
eptoni
tsr
ightf
ort
ool
ong
as“
del
aydef
eat
sequi
ty”
.InLeafV.I
nter
nat
ionalGal
l
eri
esLt
d.,
wher
ethepl
aint
if
f
pur
por
tedt
oresci
ndacont
ractaf
ter5y
ear
s,I
twashel
dthatt
her
emedywasnot
av
ail
abl
eonaccountofdel
ay.

2.Af
fi
rmat
ion:Apar
tyl
osest
her
ightt
oresci
ndacont
racti
fitexpr
essl
yorby
i
mpl
i
cat
ionaccept
sthecont
ract
.

3.Thi
rdpar
tyr
ight
s:Acont
ractcannotber
esci
ndedaf
ter3r
spar
tyr
ight
shav
e
ar
isenunderi
t,ast
hiswoul
dint
erf
ereswi
tht
her
ight
sofaper
sonwhowasnot
pr
ivyt
otheor
igi
nal
cont
ract
.

4.Rest
it
uti
oni
nint
egr
um notpossi
ble:Resci
ssi
oni
snotav
ail
abl
eift
hepar
ti
es
cannotber
est
oredt
otheposi
ti
ont
heywer
ebef
oret
hecont
ract
.E.
g.i
foneof
t
hepar
ti
esi
sacompanyandi
thasgonei
ntol
i
qui
dat
ion.

4.QUANTUM MERUI
T

Thi
sli
ter
all
ymeans“
asmuchasi
sear
nedordeser
ved”

Thi
siscompensat
ionf
orwor
kdone.Thepl
aint
if
fispai
dfort
hepr
opor
ti
onoft
het
ask
compl
eted.

Ther
emedyhasi
tsor
igi
nsi
nequi
tyandi
tsawar
disdi
scr
eti
onal
.Itmaybegr
ant
ed
wher
e:-

1.Thecont
ractdoesnotspeci
fyt
heamountpay
abl
e.

2.Thecont
racti
sdi
vi
sibl
e

3.Thecont
racti
ssubst
ant
ial
l
yper
for
med

4.Par
ti
alper
for
mancei
saccept
ed

5.Apar
tyi
spr
event
edf
rom compl
eti
ngi
tunder
taki
ng.

LOSSOFREMEDY(
LIMI
TATI
ONOFACTI
ON)

Whenaper
son’
slegalorequi
tabl
eri
ght
sar
evi
olat
ed,hei
ssai
dtomakeacauseof
act
ione.
g.br
eachofcont
ract
,negl
i
gence,
nui
sanceet
c.

Causesofact
ionsar
enotenf
orceabl
einper
pet
uit
y.

Thel
awpr
escr
ibest
hedur
ati
onwi
thi
nwhi
chcausesofact
ionmustbeenf
orced.

TheLi
mit
ati
onofAct
ionActpr
escr
ibest
hedur
ati
onwi
thi
nwhi
chcausesofact
ionmust
beenf
orced. I
fnotenf
orcedwi
thi
nthepr
escr
ibedt
imet
heact
ionbecomesst
atut
e
bar
redandi
sunenf
orceabl
e.

E.
g.abr
eachofcont
ractmustbeenf
orcedwi
thi
n6y
ear
s.

Negl
i
gence 3y
ear
s Assaul
t 3y
ear
s

Nui
sance 3y
ear
s Bat
ter
y 3y
ear
s

Def
amat
ion 1y
ear Fal
seI
mpr
isonment 3y
ear
s

Recov
ery ofr
ent 6y
ear
s

Recov
eryofl
and 12y
ear
s

Enf
orci
nganar
bit
ral
awar
dorcour
tor
der6y
ear
s

Thepr
escr
ipt
ionoft
hedur
ati
onwi
thi
nwhi
chacauseofact
ionmustbeenf
orcedmaybe
t
hedur
ati
onwi
thi
nwhi
chacauseofact
ionmustbeenf
orcedmaybej
ust
if
iedonpol
i
cy
gr
ounds.

I
tensur
est
hatj
ust
icei
sadmi
nist
eredont
hebasi
coft
hebestav
ail
abl
eev
idence.I
t
ensur
est
hatdi
sput
esar
eset
tl
edasandwhent
heyoccur
.
WHENDOESTI
MESTARTI
NGRUNNI
NG.

Asagener
alr
ule,
timest
art
srunni
ngont
hedat
ethecauseofact
ionaccr
uesorar
ises.

Howev
ert
her
unni
ngoft
imemaybepost
ponedi
ncer
tai
nci
rcumst
ancese.
g

1.I
fthepr
ospect
ivepl
aint
if
fisani
nfantormi
nor
,ti
mest
art
srunni
ngwheni
t
at
tai
nst
heageoft
hemaj
ori
tyordi
eswhi
chev
eroccur
sfi
rst
.

2.I
fthepr
ospect
ivepl
aint
if
fisofunsoundmi
nd,t
imest
art
srunni
ngwhenhe
becomesofunsoundmi
ndordi
eswhi
chev
ercomesf
ir
st.

3.I
fthepr
ospect
ivepl
aint
if
fisl
abour
ingunderi
gnor
ance,f
raudormi
staket
ime
st
art
srunni
ngwhenheascer
tai
nst
hef
actorwhenar
easonabl
eper
sonwoul
d
hav
eascer
tai
ned.

4.I
fthepr
ospect
ivedef
endanti
sthepr
esi
dent
,ti
mest
art
srunni
ngwhenhel
eav
es
of
fi
ceordi
eswhi
chev
eroccur
sfi
rst
.

Whent
imest
art
srunni
ng,i
tgener
all
yrunst
hroughandt
heact
ionbecomesst
atut
e
bar
red.Howev
er,ast
atut
ebar
redact
ionmaybeenf
orcedwi
thl
eav
eoft
hecour
tifi
tis
pr
ovedt
hatt
hef
ail
uret
osuewasj
ust
if
ied.

CHAPTERSUMMARY

Cont
ractmaybedef
inedasal
egal
l
ybi
ndi
ngagr
eementmadebet
weent
woormor
e
par
ti
es.

TheEngl
i
shcommonl
awcl
assi
fi
escont
ract
sint
o:

I
.Wr
it
tencont
ract
s/speci
alt
ycont
ract
s

I
I.Cont
ract
srequi
ri
ngwr
it
tenev
idence

I
II
.Si
mpl
econt
ract

Ther
ear
ecer
tai
npr
ocedur
esputi
npl
acef
oracont
ractt
obef
ormed.Thesepr
ocedur
es
enabl
eenf
orceabi
l
ityoft
hecont
ract
.

Theseel
ement
sar
e:-

 Of
fer
  Accept
ance

 Capaci
ty

 I
ntent
ion

 Consi
der
ati
on

 Legal
i
ty

 For
mal
i
tiesi
fany

I
mpl
i
edt
erms:
-Thesear
eter
mst
hatt
houghnotagr
eedt
obyt
hepar
ti
esar
eani
ntegr
al
par
toft
hecont
ract
.Theset
ermsmaybei
mpl
i
edbyst
atut
eorbyacour
tofl
aw.

Av
oidcont
racti
sunenf
orceabl
ewhi
l
eav
oidabl
econt
racti
senf
orceabl
eunl
essav
oided.

Thesef
act
orsi
ncl
ude:

1.Mi
srepr
esent
ati
on

2.Mi
stake

3.Dur
ess

4.Unduei
nfl
uence

1.Mi
srepr
esent
ati
on

Acont
ractmaybedi
schar
gedont
hef
oll
owi
ngway
s:

a)Expr
essagr
eement

b)Per
for
mance

c) Br
each

d)I
mpossi
bil
i
tyordoct
ri
neoff
rust
rat
ion

e) Oper
ati
onofl
aw

Remedi
esf
orbr
eachofcont
ractar
ecommonl
awandequi
tabl
ewher
eascommonl
aw
r
emedi
escompr
isedamagesonl
y,equi
tabl
eremedi
esi
ncl
ude:

a)I
njunct
ion

b)Tr
aci
ng

c) Account
d)Speci
fi
cPer
for
mance

e) Resci
ssi
on

f
) Wi
ndi
ngupf
orCos

g)Quant
um Mer
it

h)Appoi
ntmentofr
ecei
vere.
t.
c.