1. GENERAL LAW OF CONTRACT By I.L.Mgeta 1

2. Introduction A contract is an agreement with legal force. – It should be noted that not all agreements amount to a contract; – It is only those agreement which have legal binding nature. – Hence s.2(1)(h) of the Law of Contract Act, Cap 345 defines the term contract to mean an agreement enforceable by law An agreement with legal force is concluded where an offer made by one person is accepted by the person to whom the offer is made. – S. 2 (1) (e) Law of Contract Act. 2

3. Classification of contracts Contracts may be classified into the following broad classes: – Classification depending on the simplicity of the contract Contracts by deed-A deed is a formal legal document signed, witnessed and delivered to effect a conveyance or transfer of property or to create a legal obligation or contract. Simple contracts-These are informal contracts and may be made in any way - in writing, orally or they may be implied from conduct. 3

4. Continue Classification depending on exchange of promises Bilateral contracts-A bilateral contract is one where a promise by one party is exchanged for a promise by the other. The exchange of promises is enough to render them both enforceable. Thus in a contract for the sale of goods, the buyer promises to pay the price and the seller promises to deliver the goods. Unilateral contracts-A unilateral contract is one where one party promises to do something in return for an act of the other party. 4

5. Continue eg, where X promises a reward to anyone who will find his lost wallet. The essence of the unilateral contract is that only one party, X, is bound to do anything. No one is bound to search for the lost wallet, but if Y, having seen the offer, recovers the wallet and returns it, he/she is entitled to the reward. A good illustration of a unilateral contract is seen in the case of Carlill v Carbolic Smoke Ball Co (1893)1QB256 5

6. Continue – In this case an advert was placed for 'smoke balls' to prevent influenza. The advert offered to pay £100 if anyone contracted influenza after using the ball. The company deposited £1,000 with the Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but contracted influenza. It was held that she was entitled to recover the £100. – The Court of Appeal held that: The deposit of money showed an intention to be bound, therefore the advert was an offer; 6

7. Continue It was possible to make an offer to the world at large, which is accepted by anyone who buys a smokeball; The offer of protection would cover the period of use; and The buying and using of the smokeball amounted to acceptance 7

8. Kinds of Contract The following are types of contracts; – Valid contract Is that contract which has fulfilled all the requirements as per S.10 L.C.A. It is a contract which is enforceable by law. It is a contract which meets all the essential elements of a contract. – Voidable contract As per S. 2(i) of Cap 345 states that an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others is a voidable Contract.. 8

9. Continue In a voidable contract that party who has the option can either avoid or decide to the proceed with it. Normally a contract become voidable when consent of one of the parties to the Contract is obtained by Coercion, Undue Influence, Misrepresentations or fraud. – Void contract The word void means not binding in law. Void contract therefore implies a useless contract which has no legal effect at all. It is a nullity. As per S. 2 ( j). A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. 9

10. Continue – Unenforceable contract It is the one which is valid in itself but is not capable of being enforced in the court of law because of some technical defects. e.g. -absence of writing where that type of contract requires writing, or not registered while the law so requires. For instance all transactions relating to mortgage must be registered as per the Land Act and Village Land Act. 10

11. Continue – Express and implied contracts Express contracts are contracts where both the offer and acceptance constituting an agreement are made in words, spoken or written. Man agrees to one another in words either spoken or written. Implied contracts occur where both offer and Acceptance are made otherwise than is words. i.e by acts and conducts of parties. e.g. where J. a professional shoeshiner starts polishing the shoes of N without being requested to do so and N stands mute and allow J to polish, there comes into existence an implied Contract hence N must pay. 11

12. Continue Executed and executory contracts – An Executed Contract is a contract which is said to be executed where both parties to a contract have completely performed their shares of obligations and nothing remain to be done by the parties in a contract. For example, when a bookseller sells a book to a buyer and a buyer pays the amount. – An Executory contract is a Contract in which both obligations are outstanding on either party to the contract either wholly or in party at the time of the formation of a contract. 12

13. Essentials of a Valid Contract These include; – Parties – Offer – Acceptance – Free consent – Consideration – Intention to create legal relations – Capacity – Legality 13

14. Parties The term contract presupposes the existence of two sides/parties, one proposing the other accepting. These parties are commonly referred as offeree and offeror – a person proposing is called offeror – A person accepting is called offeree Therefore any contract requires two or more parties in order to exist (natural or legal persons) 14

15. Offer S.2 (1) (a) of Cap 345 defines an offer as; – a signification by one person to another of his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence. A proposal is made up of a term or terms. Terms moves from a buyer to a seller or vice versa. 15

16. Continue One will be bound only if he accept the proposal or offer without alteration. – If he changes the price or description or quantity suggested by the buyer then the seller will be making a counter offer. – The effect of counter offer is that parties change their status i.e the offeror become the acceptor and vice versa. 16

17. Characteristics of an offer A good offer has the following features; – It must be made willingly – The terms must be clear and certain- Section. 29 of Cap 345 provides for the relevancy of certainty, lack of it renders the contract void. – Must be firm and final expression by the proposer of his willingness to be bound should his offer be accepted. Should be constant without alteration Communicated to intended person 17

18. Continue Offer must be distinguished from Invitation to treat. Invitation to treat are terms which aim at inviting people to approach the owners of the goods or to respond to the advertisements by making an offer. – Its terms are usually uncertain, ambiguous such that it is not known exactly as to whether the proposer intends to be bound by them and they tend to beg for further questions i.e. not capable of acceptance. 18

19. Continue Common examples of invitation to treat include the following; AUCTIONS – In an auction, the auctioneer's call for bids is an invitation to treat, a request for offers. – The bids made by persons at the auction are offers, which the auctioneer can accept or reject as he chooses. – Similarly, the bidder may retract his bid before it is accepted 19

20. Continue In the case of Payne v Cave (1789) – The defendant made the highest bid for the plaintiff's goods at an auction sale, but he withdrew his bid before the fall of the auctioneer's hammer. – The Court held that the defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer. 20

21. Continue DISPLAY OF GOODS – The display of goods with a price ticket attached in a shop window or on a supermarket shelf is not an offer to sell but an invitation for customers to make an offer to buy In the case of Fisher v Bell (1960)3 All ER 713 – A shopkeeper displayed a flick knife with a price tag in the window. The Restriction of Offensive Weapons Act 1959 made it an offence to 'offer for sale' a 'flick knife'. 21

22. Continue – The shopkeeper was prosecuted in the magistrates' court but the Justices declined to convict on the basis that the knife had not, in law, been 'offered for sale'. – The Court stated "It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract." 22

23. Continue ADVERTISEMENTS – Advertisements of goods for sale are normally interpreted as invitations to treat In the case of Partridge v Crittenden (1968)All ER 421 – It was an offence to offer for sale certain wild birds. The defendant had advertised in a periodical 'Quality Bramblefinch cocks, Bramblefinch hens, 25s each' 23

24. Continue – The defendant was convicted in the lower court but his conviction was quashed by the High Court. Lord Parker CJ stated that when one is dealing with advertisements and circulars, unless they indeed come from manufacturers, there is business sense in their being construed as invitations to treat and not offers for sale. 24

25. Acceptance It is defined under S.2(1)(b) of Cap 345 to mean signification of assent to the proposal by a person to whom it was made. Acceptance must be absolute and unqualified i.e. final and conclusive (S.7 Cap345 ). – That is acceptance must conform to the terms of an offer. 25