KYAMBOGO UNIVERSITY

SCHOOL OF BUILT ENVIRONMENT

DEPARTMENT OF QUANTITY SURVEYING AND
PROPERTY VALUATION

BACHELORS OF SCIENCE IN LAND ECONOMICS

TASK : COURSEWORK (GROUP 7)
COURSE UNIT : LAW OF CONTRACT
COURSE CODE : LE 221
COURSE LECTURER : MR. ELAU EMMANUEL

NAME REG. NO. SIGNATURE

AHAISIBWE EMMANUEL 23/U/BLE/1700/PE
KIBUGA DIANA 23/U/BLD/1483/GV
OGWANG PHILEMON 23/U/BLD/14841/PD
Question;

Annet is married to Okello, a hard-working young man she met while a student at Kyambogo
University. They have been married for three years now. The marriage has since experienced a
major turbulence owing to certain promises from Okello to Annet.

Okello in year two of their marriage promised to buy for Annet a Mercedes Benz during a
dinner which they had on a Valentines Day at Serena hotel in 2023. Okello has since then failed
to buy the Mercedes Benz. Annet feels she no longer likes Okello and calls him a liar. She has
heard that you have studied the law of contract and wants your advice on whether she can sue
Okello.

Okello on the other hand blames his woes on a deal that he expected to make money from. He
claims that he had anticipated to sell his car to Mohammed and make a lot of money. He claims
that Mohammed had agreed to pay UGX 250,000,000 for the car and yet Mohammed on the
other hand claims that Okello probably did not hear his offer of UGX 25,000,000 for the car
since a helicopter was flying overhead at the time. Okello is now wondering whether
Mohammed can change his mind from UGX 25 million to UGX 250 million.

Mohammed in further defence says that in fact he did not understand anything because he is a
person of unsound mind occasionally. He also says that he did not intend to enter a binding
agreement. However, Mohammed in light of those facts wants to do Okello a favour and pay
only UGX 15million because to him money is money.

Okello owing to the frustrations from Mohammed is asking his wife for patience that he has
now got another deal to sell cocaine from where he expects to earn $1,000,000 and buy for her
a Range Rover instead.

In light of the facts above and the knowledge you have acquired as a student of contract law,
advice all the above parties on the specific issues raised and the other remaining ingredients of
a valid contract.
ISSUE 1

Whether there is a binding contract between Okello and Annet.

Considering this issue, we need to first establish whether the promise made by Okello to buy
Annet a Mercedes Benz constituted a legally binding agreement. To determine this, we need to
assess the essential elements of a valid contract.

S10(1) of the Contracts Act 2010 defines a contract as an agreement made with the free consent
of the parties with capacity to contract, for a lawful consideration and with a lawful object,
with the intention to be legally bound. Some of the essential elements of a valid contract are
discussed below in relation to the case;

➢ Agreement which consists of offer and acceptance

• Okello made a promise to buy Annette a Mercedes Benz. This could be
construed as an offer.
• Annette presumably accepted the offer by acknowledging it during their
conversation or conduct.

➢ Consideration

Lush J. In Currie v Misa (1875) LR 10 Exch 153 defined consideration as some right,
interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other.

Consideration must move from the promisee. The person who wishes to enforce the
contract must show that they provided consideration. Annet who is the promisee in this
case did not provide valuable consideration except for the natural love and affection she
had for Okello.

S20(1)(a) of the Contracts Act 2010 provides that an agreement made without
consideration is void except where the agreement is expressed in writing under the
Registration of Documents Act and is made on account of natural love and affection
between parties standing in near relation to each other.
 ➢ Intention to create legal relations.

For a contract to be valid, the parties must have intended to be legally bound by their promises.
The question is whether Okello did intend for his promise to be legally binding. This can be
subjective and depends on the various factors, including the circumstances surrounding the
promise and the relationship between the parties, and any explicit statements made regarding
the legal enforceability of the promise.

From the facts, Okello and Annet have been married for three years now and Okello made his
promise to Annet in the second year of their marriage during a dinner on Valentine’s Day at a
prestigious hotel (Serena hotel).

The fact that Okello and Annet are husband and wife makes their agreement amount to a
domestic agreement. Domestic agreements, which typically involve promises made within a
family or personal relationship are often not considered to be legally binding due to several
reasons;

1. Social and Domestic arrangements

The law generally presumes that agreements made between husband and wife living together
as one household are not intended to be legally binding, unless the agreement states to the
contrary.

This principle was stated in the case of Balfour v Balfour (1919) K.B. 571, a husband who
worked in Ceylon promised to pay an allowance of 30 pounds per month to his wife who had
to stay in London for medical reasons. The husband later declined to pay the promised
allowance and the plaintiff sued on this promise. The issue was whether the agreement to pay
the 30 pounds was legally binding. Court held that there was no enforceable contract because
the parties did not intend to create a legal relationship since agreements between husbands and
wives are not intended to be legally binding.

2. Preservation of the institution of marriage

The law exempts cases between husband and wife because it seeks to protect the sanctity of
marriage.
 3. Presumption against legal relations

There’s a legal presumption against intending to create legal relations in domestic agreements.
This means that unless parties explicitly state otherwise, courts assume that agreements made
in domestic contexts are not meant to be legally binding.

4. Difficulty of enforcement

Domestic agreements often lack the clarity and specificity required for enforcement by a court.
Additionally, it may be challenging to determine the terms of the agreement or prove its
existence in a legal context.

In conclusion about Annet’s issue on whether to sue Okello, we advise that she cannot enforce
the promise because their agreement was a domestic one of which the law presumes such
agreements are not intended to be legally binding unless the parties explicitly state otherwise
and given the fact that the law seeks to uphold and preserve the institution of marriage.

Also given the romantic setting of valentine’s Day and the context of the promise, it is possible
that Okello did not intend for his promise to be legally binding.

ISSUE 2

Whether there is a binding contract between Okello and Mohammed.

• According to the facts, Okello claims that he had anticipated to sell his car to
Mohammed and make a lot of money. He claims that Mohammed had agreed to pay
UGX 250,000,000 for the car and yet Mohammed on the other hand claims that Okello
probably did not hear his offer of UGX 25,000,000 for the car since a helicopter was
flying over head at the time. Okello is now wondering whether Mohammed can change
his mind from UGX 25,000,000 to UGX 250,000,000.

The following ingredients of a valid contract are discussed in relation to Okello and
Mohammed’s deal;

1. Agreement which constitutes of offer and acceptance.

➢ An offer is willingness to contract on terms specified by the offeror, acceptance of
which by the offeree will lead to a binding agreement. Okello presumably made an offer
to sell his car to Mohammed at UGX 250,000,000.
 ➢ Acceptance means assent to an offer made by the offeree.

Mohammed on receipt of Okello’s offer was supposed to communicate his acceptance to

Okello. Some rules regarding acceptance are discussed below;

a. Acceptance must be communicated by the offeree to the offeror.

It is clear from the facts that Mohammed did not communicate his acceptance to Okello
because of the disruption by the helicopter that was flying overhead.

Lord Denning LJ in Entores v. Miles Far East Corporation [1955] 2 QB 327 stated that
“suppose, for instance, that I shout an offer to a man across a river or a courtyard but I
do not hear his reply because it is drowned by an aircraft flying overhead. There is no
contract at that moment. If he wishes to make a contract, he must wait until the aircraft
is gone and then shout back his acceptance so that I can hear what he says. Not until I
have his answer am I bound.....”.

There was therefore no communication of acceptance by Mohammed to Okello because

Mohammed’s reply was disrupted by the helicopter flying over head and hence no
contract was made between the parties.

b. Acceptance of the offer must be absolute and unqualified.

The offeree must accept the terms of the offer as made to him. He must not change
them. Any change of the terms creates a counter offer hence no contract was made
between Okello and Mohammed. This was illustrated in Hyde v Wrench (1840) 49 ER
132 in which the court dismissed the plaintiffs claims of breach of contract and held
that there was no binding contract for the farm between Mr Hyde and Mr Wrench. It
was stated that when a counter offer is made, this supersedes and destroys the original
offer. The original offer is no longer available and, in this case, when Mr Hyde offered
950 pounds, he cancelled the 1000-pound offer and could not back track and accept.
(Teacher, Law. , 2013)
 2. Capacity to contract

According to section 11(1) of the Contracts Act, 2010, a person has capacity to contract where
that person is;

✓ Eighteen years or above

✓ Of sound mind
✓ Not disqualified from contracting by any law to which he or she is subject

• Mohammed in further defence said that he did not understand anything because he is
a person of unsound mind occasionally and that he did not intend to enter a binding
agreement.

S12(3) of the Contracts Act 2010 provides that a person who is usually of sound mind but
occasionally of unsound mind may not enter into a contract during periods when he or she
is of unsound mind. A contract entered into by an insane person is not binding unless if at
the time of forming the contract, such person was capable of understanding the contract
and the obligations imposed. Owing to the fact that Mohammed wants to do Okello a favour
and pay only UGX 15 million because to him money is money and that he did not intend
to enter a binding contract shows that he must have not been in his right state of mind at
the time of formation of the contract.

3. Consideration

Lush J. In Currie v Misa (1875) LR 10 Exch 153 defined consideration as some right, interest,
profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other.

Consideration must be sufficient but need not be adequate. From the facts Okello is now
wondering whether Mohammed can change his mind from UGX 25,000,000 to UGX
250,000,000. The court will not have to establish whether the consideration given is of equal
value with the Mercedez Benz. Provided Okello accepts to receive the UGX 25 million, it will
be considered as sufficient consideration because it has some element of value.
ISSUE 3

Whether Okello’s deal to sell cocaine from where he expects to earn USD 1,000,000 and
buy a range rover for Annet constitutes a valid contract.

The major ingredient of a valid contract discussed here is legality of purpose

The purpose of the agreement must not be illegal or contrary to public policy. This position of
the law derives its basis from the case of Foster v Driscoll (1992) in which a contract was
entered into for the shipment Whisky from England to USA during the time when a prohibition
was in force. The plaintiff sued when the contract was breached. It was held that the contract
couldn’t be enforced owing to its illegal nature.

Okello is advised not to proceed with his deal to sell cocaine as the subject matter of the deal
is illegal, i.e., the sale of cocaine. A contract which involves the commission of a legal wrong
or a crime is void ab initio. It will be impossible for Okello to enforce the deal in case of breach.

Other ingredients of a valid contract.

The following are the ingredients of a valid contract in addition to those mentioned above as
stated in Green boat Entertainment v Kampala City Council;

1) Free consent

The parties to the contract must have entered it freely without any form of coercion or
influence. Section 13 of the Contracts Act, 2010 provides that consent of the parties is taken to
be free where it is not caused by;

✓ Coercion
✓ Undue influence
✓ Fraud
✓ Misrepresentation
✓ Mistake.
 2) Sufficient certainty of terms

Once there is a valid offer and acceptance, an agreement is formed. However, in order for such
an agreement to be enforceable as a legally binding contract, there must be sufficient certainty
of the terms. This was upheld in the early decision in Guthing v Lynn, (1831) 2 B7 Ad 232.
The buyer of a horse, who was the plaintiff in this case, promised the seller that they would pay
5 pounds more for the horse, or buy another horse from the seller if the horse was lucky. The
horse was not in the condition that the plaintiff believed and a dispute arose between the parties
as to whether the seller was owed the conditional payment mentioned by the buyer.

The issue was whether the offer from the buyer, to pay more for the horse if it was lucky, could
be considered a valid offer for the purposes of the sale. The court held that the condition to pay
5 pounds extra for the horse if it was lucky, was deemed to be vague to create a binding contract
between the parties. The words contained in an agreement must be clear so that parties can be
sure of the terms upon which they are contracting. (Teacher, Law., 2018)

3) Form

In some cases, certain formalities must be observed. Section 10(5) of the Contracts Act, 2010
provides that a contract the subject matter of which exceeds twenty-five currency points shall
be in writing. For example, in the above case scenario, Okello and Mohammed should have
considered putting their agreement into writing since the subject matter exceeded twenty-five
currency points.
REFERENCES

1. Teacher, Law. . (2013, November). Hyde v Wrench - 1840. Retrieved from

lawteacher.net: https://www.lawteacher.net/cases/hyde-v-wrench.php?vref=1

2. Teacher, Law. (2018, November). lawteacher.net. Retrieved from

https://www.lawteacher.net/lectures/contract-law/formation/certainty/?vref=1