ATTENTION!

THESE ARE only SUGGESTED ANSWERS in summary (NOT

EXHAUSTIVE)––Read and discuss more

QUESTION: 1

Qn a. Definition. According to Section 2 (1) (a) of Law of Contract Act Cap 345 an offer means
signification by one person to another of his willingness to do or to abstain from doing anything
with a view to obtaining the assent of that other to such act or abstinence. One making an offer is
called offeror and the one to whom the offer is made is called offeree

Features of offer
1. Offer is effective only when it is made willingly by the offeror
2. The terms of an offer must be clear and certain so that the offeree can know what the offer is.
Thus where the terms of the offer are not certain and yet the offeree accepts the offer, in the
eyes of the law the agreement reached will be void (of no legal effect). In Alfi E. A Ltd v
Themi Industries and Distributors Agency Ltd 1 the sale agreement of machinery was
concluded but the price was not stated. The Court of Appeal of Tanzania held that since price
is a fundamental term in a sale agreement if it is not mentioned the agreement becomes
uncertain. Likewise in Nitin Coffee Estates Ltd and others v United Engineering Works Ltd
and another2the sale agreement of shares did not state price. The Court of Appeal of
Tanzania held that the agreement was void for lack of certainty.
3. Final expression. An offer must be a firm and final expression by the offeror of his
willingness to be bound should his offer be accepted.

Invitation to treat is when a person invites people to make an offer.

Therefore while an offer is a final, firm and clear expression of the offerror’s willingness to be
bound in case his offer is accepted , an invitation to treat does not express final willingness by
the one who invites to be bound in those terms. The invitor merely proposes certain terms on
1
[1984] T.L.R 256
2
[1988] T.L.R 203
which he is willing to negotiate. He invites any person to make a proposal in the terms he has
intimated. He may accept or reject the offer.

It was held in Fisher v Bell that the display of an article with a price on it in a shop window is
merely an invitation to treat; in this case Bell was charged with offering for sale of a flick knife.
Likewise in Pharmaceutical Society of Great Britain v Boots Cash Chemists Southern Ltd 3 the
court held that the self-service system of purchasing goods did not amount to an offer by the
defendant company to sell but merely an invitation to the customer to offer in case of a drug to
buy.

Why the distinction important

Essentially the distinction is important on the basis of freedom of an individual to deal with
his property in the manner he likes. He may dispose of it by way of sale or as a gift to a
person of his choice.
Also consider bindingness of offer in case offeree accepts.

Qn b.
Issues
1. Whether there is offer
2. Whether there is acceptance
3. If the answer to issue 1 and 2 are in affirmative thus whether there was a binding contract.
4. Whether Tom can succeed
As regards issue one a contact must be preceded by an offer. The issue is whether an offer was
made in this case. An offer is defined as ………In this case there was a unilateral offer. A
unilateral offer is one made to the public. It is a one sided contract in the sense that only one
party assumes an obligation. Only one party promises to do something. The other doesn’t make
any promise at all. Thus the Vee Ltd advert amounted to an offer.

The next issue whether there was acceptance. Acceptance is defined under section 2 (1) (b) of
the LCA to mean a signification of assent to the proposal (offer) to whom it is made. The major
condition for conclusion of any contract is acceptance and it is effective when it is

3
[1953] 1 Q.B 401
communicated to the offeror. Therefore communication is an important aspect in acceptance.
However unilateral offers need no communication of acceptance. It is only done by conduct/
performance. In this case therefore there was an acceptance.
The next issue is whether a contract was formed. The conclusion of a contract is when an offer
is accepted and the acceptance is brought to the knowledge of the offeror. But in unilateral offer
the offeree need not communicate his acceptance. Tom by purchasing the software from Vee Ltd
and installed it in his computer amounted to acceptance of offer and the contract was thereby
concluded.
In Carlil v Carbolic Smoke Ball Co.4 an advert by the Company was to the effect that £100
reward would paid by the Company to any person who contracted the increasing epidemic
influenza, colds or any disese caused by taking cold, after having used the ball three times daily
for two weeks according to the printed directions supplied with each ball. The plaintiff used it as
instructed but still contracted the disease. She sued the company to recover £100 as advertised.
The company contended that the advert was a mere puff and it did not amount to a proposal or a
promise. The court held that the advert was intended to be understood by the public as a proposal
which was to be acted upon.

To the same effect is the case at hand, the advert by Vee Ltd amounted to a proposal/
promise. There was thus a binding contract between Tom and the company.
Therefore by virtue of Carlil case Tom is likely to succeed in his case. He is entitled to recover
5,000,000 compensation from Vee Ltd.

Qn c.
Issues
1. Whteher there was contract between
2. Whether there was breach
3. Whether he can succeed
Contract is formed by offer followed by acceptance of the offer.
Vikram made a valid offer in his advert to sell. Likewise Jash offered to buy the car. An
offer is followed by acceptance which must be communicated to the offferor.

4
[1892] 2 QB 484
 Communication is complete when it comes to the knowledge of the offeror (section 4
LCA). In case at hand the message was delivered but it wasn’t read, this means Vikram
knew nothing about the message thus there was no communication of acceptance. Thus
no contract was concluded for lack of acceptance.

As there was no contract concluded between the two no breach of contract. Jash did not
conclude contract and Vikram has no any contractual liability against Jash . Jash is
unlikely to succeed.

QUESTION: 2

a. ‘Acceptance’= Section 2(1) (b) acceptance is defined to mean a signification of assent to

the proposal by the one to whom it is made. Acceptance forms an important component
in formation of a contract. It shows that the offeree has agreed to the terms of the offer
proposed by the offeror. this expressed as ,consensus ad idem (a meeting of the mind)
Conditions of acceptance
1. it must be absolute and unqualified(Section 7(a) )
2. It must exactly match the terms of the proposal. (The mirror mirage rule) That is it
must be in response to the terms of the offer. One must be aware of the proposal
otherwise he is not said to respond to it.
Read case of R. v Clarke5
Carlill vs carbolic smoke balls co.
b. Issue
1. Whether there was contract between Julia and Lily
2. If yes, what are the potential contractual liability between Julia against them
The contract is formed by acceptance and acceptance must be communicated and communication
is effective when it comes to the knowledge of the offeror. Section4 (2)(b) is to the effect that
communication through post become effective/ complete when it is placed in the post(doctrine of
postal rule) . This is exceptional to the general rule of the communication of the acceptance. At

5
(1927) 40 C.L.R 227
the time Lily posted his letter of acceptance the communication was complete. This is to the
effect therefore that the contract was concluded.
As regards the other Asif and Cassie there was no contract. First for Asif there was counter offer
of which he did not communicate it. There was no binding contract. For Cassie there was no
contract at all. July is liable to Lily
Case: Hethorn vs Fraser(1892)

QUESTION: 3

a. ‘consideration’ = a price for the promise

Consideration also is taken as a payment for performance of omission of a certain act by
one party for the benefit of the other party.

Consideration is right, interest, profit or benefit accruing to one party, or some

forbearance, detriment, loss or responsibility given, suffered or undertaken by the other
party to agreement. Curriae v. Misa (1875) L.R.10 Ex.153

Under the law of Contract Act section 2(1) (d) consideration is construed as
performance or abstinence to act or promise to act or abstain from doing an action by the
promise at the desire and profit of the promisor.
Case
Dunlop v.Pneumatic Tyre Co.Ltd v.Selfridge Ltd [1915] A.C.847

QN. b. applying appropriate case law, advice:

i. Amar as to whether he would be legally entitled to claim the other 50,000
from Sumeet at a later date.
Amar would be able to legally claim that other amount since he has performed
beyond what he is bound to perform by the contract. The rule is; where a
promisee has done or promises to do more than he is contractually bound to
perform, that performance is a sufficient consideration for any promise the
promisor in turn makes.
 In Turner v. Owen (1862)3 F & F 176,a promise for an extra reward to a sea
man fro him to navigate the vessel which was unseaworthy back home was a
sufficient consideration and thus the promise binding. Also the case of Lisbon
v.Owners of S.S.Carpathian[1952]2 K.B.42
ii. Georgina as to whether she has provided sufficient consideration to support
Sumeet’s promise to pay her an extra 150,000 if she helped out with the cleaning.

Georgina has not provided a sufficient consideration to support the promise by

Sumeet to pay her extra 150,000 for helping to clean because, Consider;
Cleaning was part of her contractual duty. Performance of an existing contractual
duty does not form a consideration for a new promise by the promisor. In the case
Stilk v. Myrick(1809) 170 E.R. 94,in which the crew of the accident ship were
promised an extra payment when they can work out to bring the ship safely to the
destiny, the court held that the promise had no consideration since bringing the
ship safely to destination was their binding contractual duty.

QUESTION: 4

Issues

1. Whether Helen was competent to conclude a contract

2. Whether there was intention to create legal relation

As per section 11LCA a party is incompetent to conclude a contact if he is of unsound

mind, or a minor. In this case Helen is said to have bipolar disorder [ psychiatric illness] and
has a history of depression and intoxication. But according to section 12(1) on is of unsound mind for the
purpose of making a contract if at the time when he makes it he is capable of understanding it and able to
form a rational judgments as to its effect. Thus he becomes a competent party. The issue therefore is
whether Helen was a competent to make a contact. Though Helen was clearly intoxicated by the time
he was congratulating Adam, the contract was concluded when he was of sound mind thus she
understood what she was doing. This is evidenced by the letter she wrote to Adam before. Thus
the argument that Helen has history of depression and intoxication is irrelevant so long as at the
time of the contract she was of sound mind capable of making rational judgment. Section12 (2)
is to the effect that a person of unsound mind may make a contract when he is of sound mind.

The next issue is whether Helen intended that the legal consequences should result in their
contractual dealing. The LCA is silent on the aspect of intention to create legal relation.
Under the Common law the general presumption is that social or domestic arrangements
don’t give rise to legally enforceable contract. In Balfour v Balfour the husband left for
England for health reasons and promised his wife to pay some money for her maintenance.
This was not honoured , the wife sued. It was held that the arrangements did not result in a
contract at all; the parties did not intend that they shall be attended by legal consequences.

In Jones v Padavatton as the case was of the family arrangements which depend on the good
faith which were made and ar3e not intended to be rigid, binding contract. The other Lord in this
case opine d that the agreement was a contract as the parties intended that legal consequences
shall follow.

In Gould v Gould the court stated that the words must be clear in order for the
presumption to be invoked. Thus the words like “as long as he had it” or “as long as
business was ok” or “as long as I can manage it” were held to be uncertain hence there was
no intention to create legal relation.

In the case at hand though it is a domestic arrangement it can be argued that there was
intention to create legal relation. Helen insisted that Mark is a good-for-nothing, and that
Adam brought her joy in her life. Also as Adam informed Helen his mission to join the Police
Force Helen repeatedly told him that she was happy her money would enable him to serve the
public interest. This suggests that the contract was concluded.

QESTION: 5

(a) Explain the essential elements which must be present in a valid contract.
A contract is a binding agreement
Essential elements (Section 10)
 Free consent
 Competent parties =not minor, not a person of unsound mind
  Lawful consideration
 Lawful object

Short of these elements the contract is void

(b) Explain the remedies available to aggrieved party for breach of contract.
 Damages =compensation in money to cover the damage suffered. The object is to put the
injured party as near as possible in the same position
 Restitution= the innocent party may have performed part of the contract, the breaching
party has not. The innocent party may claim back his performance or its reasonable
value- restitution in intergrum
 Equitable remedies
o Specific performance
o Injunction
 Rescission
 Quantum meruit

(c)What are the agreements declared as void under the Law of Contract Act?
All contracts are agreements but not all agreements are contract. Under the Law of
Contract Act the agreements are declared as void if
 The agreement is not enforceable by law (s. 2(1)(g))
 the agreement ceases to be enforceable by law (s. 2(1)(j))
 the agreement is made by incompetent parties=a person of unsound mind,
minor etc(s. 11(2)
 the agreement is made when both parties are under a mistake as to matter of
fact(s. 20 )
 the agreement made by unlawful object (s. 23(2))
 the agreement made by consideration and unlawful objects in part (s. 24)
 the agreement is made without consideration (s.25)—see exception
 the agreement is by way of wager (s.30)
 read more s. 26,27,28,29,32,35,36,56,57
QUESTION: 6

a.

Issues

Whether the contract was really discharged by frustration

The doctrine of frustration provides to the effect that contract is rendered impossible to
perform because of change in law or when the performance of it becomes commercially
useless or for other supervening events beyond the parties’ control. Thus following the
supervening events which are beyond the parties control the contract is said to be
discharged by frustration.

S. 56 LCA clearly provides that a contract becomes void if by reason of some event
beyond the control of the promisor, or it is rendered unlawful becomes impossible to
perform.

In this case Harset contends that there had been an unexpected increase in the price of
bricks so that Hasret would make no profit on the contract. This indeed is frustration
because its performance would become commercially useless.
Discuss also an intervention by the local authority-BANNING OF BUILDING
WORK. In Asha Soud Salim v Tanzania Housing Bank there was Government
intervention
Taylor v Caldwell- the subject matter was destroyed
b. FOR THIS QN PLEASE Refer QN 7(b)

QUESTION: 7

a. The rule in Harley v. Baxendale (1854)

The rule is on remoteness of damages and it states,
“Where two parties have made a contract which one of them has broken, the damages which the
other party ought to receive in respect of such breach of contract should be such as may
according to the usual course of things, from such breach of contract it self”.
 Parts of the rule on the test of remoteness of damage
i. Loss or damage which may fairly and reasonably be considered arising naturally from the
breach
ii. Loss or damage such as may reasonably be supposed to have been in contemplation of
both parties at the time they made the contract as the probable breach of the contract.
In Victoria Laundry (Windsor) Ltd v Newmana Industries Ltd 6 the court reformulated the
rule in Hadley case. It stated that the aggrieved party is only entitled to recover such part
of the loss actually resulting from the breach at the time of the contract reasonably
foreseeable as liable to result from the breach. The time reasonably so foreseeable
depends upon the knowledge then possessed by the parties or at all events, by the
breaching party.

b. ANSWER

Issues

1. Whether the loss suffered arises naturally from the breach

2. Whether the parties knew the loss would arise at the time of the contract as likely to
result from the breach
3. Whether its claim can succeed [ie whether it can be compensated]
As regards issue one the Ovens Ltd contractor damaged the old ovens while removing them, this
amounted to breach of contract given their professional competence [that means they did not act
within their profession] as result and the installation of the new ovens was delayed by five
months from the original contract resulting to loss of profit the Fresh Foods Ltd would have
obtained had the new ovens been installed on time (the demand for its bread loaves and cakes
being particularly high during that period).
Thus, as loss suffered arises naturally from the breach of the contract the first claim is
maintainable.

In Hadley case ………… (Discuss)

6
[1949] 2 K.B 428
The next issue, whether the parties knew the loss would arise at the time of the contract as likely
to result from the breach………….. (Discuss)

Section 73(1) is to the effect that compensation for any loss suffered as a result of breach is that
which naturally arises in the usual course of things from such breach, or which parties knew,
when they made a contract, to be likely to result from the breach of that contract.

Thus the company’s claim for profits which it could have made from the lucrative contract for
the supply of steak pies to a national supermarket chain for which it would have been able to bid
is indirect and remote thus not maintainable.

QUESTION: 8

Very direct read section 190, 191 etc Law of contract Act

a. DIRECT
b. DIRECT
c. In the absence of a provision to the contrary in a firm’s partnership agreement, all
partners have apparent authority to act as agents for their firm and to bind it for their acts.
Explain briefly.
ANSWER
This means every partner is an agent of the firm, [every partner represents the firm
an his other partner] for the purpose of their business of that partnership thus acts
of one partner so long as carried out in the due course of business of that
partnership then binds all of them(read s. 201(1)
d. Even if there is nothing on this matter, either express or implied, in a firm’s partnership
agreement, one party may apply to the court for a dissolution order under part XI of the
Contract Act. Explain
ANSWER
According to section 215 the court may dissolve a partnership upon application by
one partner for a number of reasons. One of these cases may…
 When a partner becomes of unsound mind
 When a partner becomes incapable of performing his part of partnership
contract
  Read the entire s.215

e. Personal personality =
1. it can sue and be sued
2. enter into contract
3. Etc
4. Case Salmon v Salmon and Macaura’s case

QUESTION: 9

Difference between partnership and private company

While a Partnership is a relationship which subsists btn persons carrying on business in

common with a view of profit (s.190 the Law of Contract Act). The relationship of
partnership arises from a contract and not from status (s. 191 (1))

Advantages and disadvantages (mixed)

 Limited Liability. In company owner liability is limited to the loss of the value of
shares held if the corporation goes bankrupt or ceases operation but the owners of sole
proprietors and partnerships can lose more than just the value of the business. Their
entire wealth is on the line.
 Permanency. In company when owners die, shares of the corporation can be willed to
family members or other entities just like any other asset. A corporation can
theoretically live forever as long as it remains profitable.
 Transferability of Ownership. In company selling ownership of a corporation is
simply a matter of selling shares to a buyer willing to pay the price of the shares but
partnership is a far more involved process which usually necessitates legal
representation, contracts, and valuation procedures.
 Access to Capital. The permanent nature of corporations makes capital easier to
acquire as lenders do not have to worry about the death of its owners. Corporations are
far more flexible in their ability to take on debt.
 Personality. Company is a legal person capable of suing, sued etc.
 Formation. Company must be registered(incorporated), all requirement must be
adhered
 Agency. One partner is an agency of the firm and his fellow agent and not in a
company.
 Etc
QUESTION: 10

(a) Under what circumstances a person automatically vacates his office as a Director?

Section 83 of the Company Act a person automatically vacates his office as a Director if
(a) he ceases to be a director by virtue of any provision of the Act or he becomes
prohibited by law from being a director; or
(b) if he becomes bankrupt or makes any arrangement or composition with his creditors
generally; or
(c) if he becomes of unsound mind; or
(d) if resigns his office by notice in writing to the company; or
(c) if shall for more than six consecutive months have been absent without permission of
the directors from meetings of the directors held during that period and the directors
resolve that his office be vacated.

(b) Requirement of board meeting

Quoiram must be there 3 directors

Consequences

 .Decision will be null and void –can not be enforced.

Damages

(c)Distinguish between Winding up and Dissolution of company.

(d)
1. Objective clause can not be altered
2. AA CAN be altered by special resolutions only
(e) Mention the circumstances in which a company may be wound up by the Court.
According to s. 279.-(I) of the Companies Act Cap 12 of 2002 A company may
be wound up by the court if
(a) the company has by special resolution resolved that the company be wound
up by the court;
(b) the company does not commence its business within a year from its
incorporation or suspends its business for a whole year;
(c) the number of members falls below two;
(d) the company is unable to pay its debts;
(e) the court is of the opinion that it is just and equitable that the company
should be wound up;