CLASSES OF CONTRACTS

● .
 1. FORMAL & INFORMAL CONTRACTS
[Form]
Formal: Require certain formalities to be complied
with.
Examples:
a. Contracts made under seal or deed
b. Contracts of Record
i. Enforcement of court judgment
ii. Recognizance: promise to appear in court / keep the
peace / be on good behaviour (or pay up).
Informal / Simple / Parol : Can be written or unwritten.
No formalities need to be complied with
 WRITING REQUIREMENT
Must be in writing:
Law of Contract Act, Cap 23
S.3(1): Guarantees
S.3(2): Reference regarding character, conduct, credit, trade, dealings of
another person
S.3(3): Land (written, signed and attested)
EXCEPTIONS
S.3(4): Public auctions per the Auctioneer’s Act (Cap 526)
S.3(4): Creation of an implied or resulting trust
S.3(7): Contracts made before S.3(3) came into effect.
S.6 Hire Purchase Act, Cap 507 : Hire Purchase agreements

Must be evidenced in Writing:

S.6 Sale of Goods Act, Cap 31: Contracts for sale of goods valued at more than
£10 (Kes. 200).
 2. EXPRESS, IMPLIED & QUASI
CONTRACTS [expression, explicitness]
Express: All the terms have been agreed on by the
parties.
They can be oral or written
Implied: These arise out of implication or
inference. K arises from the conduct of the parties
Terms implied either by facts or in law
Quasi-Contracts: Not real contracts but are treated
as such by courts. ( usually to prevent unjust
enrichment)
 3. UNILATERAL & BILATERAL
CONTRACTS

Unilateral: promise for an act (e.g. reward)

Form : [If……], [promise]
Bilateral: Parties exchange promises
Example: promising to sell a car to someone who
promises to pay for it
The distinction is important for determining the rules
regarding offer and acceptance.
NB: In Civil law systems, a unilateral contract is one
in which only one party is bound to the other.
4. VOID & VOIDABLE CONTRACTS [Enforceability]

Valid contract: has all the elements of a contract and can be

enforced in court
Void: one of the requirements/elements for the formation of a
valid contract is lacking**
It cannot be enforced – void ab initio
Voidable: All the elements for forming a valid contract are
present
However, one party was induced into it by a factor that
might have prevented him from contracting
Injured party can elect to either affirm or avoid

Unenforceable:
Limitation of Actions Act, Cap 22, S.4(1)(a).
 5. EXECUTORY & EXECUTED
CONTRACTS [ time of performance, degree
of performance]

Executed : Transaction is concluded at the same time

that the agreement is made
Example: Purchasing goods from a shop
Executory: performance is yet to be done by one or
both parties
Example: Contract for the sale of land in which the
buyer promises to pay, and the seller promises to
transfer the land to the buyer.
Partially Executed:
 OVERVIEW

● ELEMENTS OF A CONTRACT

Principles of Contract Law

 ELEMENTS
Agreement is based on a mutuality of the parties
– consensus ad idem
** subjective from Civilian law.
● One party makes an Offer
● The other party indicates his Acceptance
● Each side gives Consideration as proof of the
bargain – quid pro quo (or the SEAL)
● Intention to Create Legal Relations
 VITIATING FACTORS
several factors which can vitiate a contract
(make it ineffective)
● Misrepresentation
● Mistake
● Duress, Undue Influence, Unconscionability
● Frustration
● Illegality
● Capacity
 New Zealand Shipping Company Ltd v AM
Satterthwaite (The Eurymedon)

Lord Wilberforce :
● English law, having committed itself to a
rather technical and schematic doctrine of
contract, in application takes a practical
approach, often at the cost of forcing the
facts to fit uneasily into the marked slots of
offer, acceptance and consideration.”
 THE AGREEMENT
There are two approaches to determining
whether or not an agreement exists:
● The Subjective Approach
● The Objective Approach
 SUBJECTIVE APPROACH
● Consensus ad idem.
● The intention of the parties is examined.
Challenges:
● Establishing evidence: Difficult to prove claims
since the evidence resides in the parties’ mind
● Can create uncertainty since a party can deny that he
intended to be bound
Brian CJ 1478: “the intent of man cannot be tried, for
the devil himself knows not the intent of man”
 OBJECTIVE APPROACH

● The determination of whether an agreement

exists is NOT done on the basis of what the
parties thought or intended
● It is done on the basis of external evidence
which objectively points to the parties
intentions
Note: emphasis on communication, NOT
cognition.
 Storer v Manchester City Council
[1974] 1 WLR 1403
Lord Denning: “In contracts, you do not look
at the internal intent in a man’s mind. A
contract is formed when there is to all
outward appearances, a contract. A man
cannot get out of a contract by saying: 'I did
not contract', if by his words he has done so”
Oliver Wendell Holmes,. Jr:
[t]he law has nothing to do with the actual state
of the parties’ minds. In contract, as elsewhere,
it must go by externals, and judge parties by
their conduct.”
● NOTE
● Objectivity is determined on the basis of the
reasonable man’s standard.
● Objective theory also is used to determine the
meaning of specific terms in the contract
 Justification
• Enhances certainty and predictability
• Manage risk (merchants and markets)