Acceptance of an offer is a positive act

Acceptance can either be expressed or implied

Implied-behavior
Post; in today’s life post is still the mote of acceptance. Post is governed by the postal rule, the
postal rule dictates that acceptance of an offer by the offeree is deemed on the posting of the
letter, it is assumed that the offer has been accepted once the offeree post the letter, the date
the letter is posted is said to be the acceptance date.
Risks associated with the use of post; e.g. there could be the delay in receipt of the letter, the
letter could be lost
Immediately after posting the letter, the offeree cannot use the speedier mode of
communication to revoke it, because after acceptance it’s a contract.
Exceptions to the postal rule

 Where the offer is not by post the postal rule does not apply
 When the normal postal operations are affected by what is called vis major , which is
referred to as acts of [Link] lightening
 Where the offeror never authorized the offeree to accept the offer through post( where
there is no authority to use post.
Silence –AS a general rule silence is not an acceptable mode of communication, meaning the
offeree cannot accept the offer by keeping quite
In felthouse vs Bindlay the offeror had told the offeree that if he hears nothing from him, he
would consider the horse his, that is to say the offeror directed the offeree to keep quite if he
accepted the offer. Indeed the offeror kept quiet and told his own auctioneer not to sell the
horse, by mistake the horse was sold at an auction
It was held by the court that despite the Fact that the offeror had directed the offeree to accept
the offer by keeping quiet, communication of the offer cannot be by keeping quite.
Where the body language of the offeree is positive towards the request of the offeror he is
taken to have accepted the offer and there will be a contract between the parties.
Had the offeree kept the horse aside, his conduct would have amounted into acceptance of an
offer, even though there was no communication between the offeree and himself.
Read consideration
PRESCRIBED MODE OF ACCEPTANCE
It is not unusual for the offeror to prescribe the mode of acceptance of the offer to the offeree,
and when he does so it has to be very clear and convenient to the offeree. The offeree is also
free to use the faster, speedier and expeditious mode of acceptance to the offeror.
UNILATERAL CONTRACTS
It is also common for the offeror to waive communication on acceptance of and offer by the
offeree
An offer which is a reward and is open to any body the offeror waives his
Waiver where one had rights and such rights have extinguished
Case Cahli vrs [Link] ball the defendant waived his right to be notified on acceptance of the
offer by the claimant which is carhli.

INTENTION TO BE BOUND - means the aggrieved party is free to sue the defaulting party should
he fail to comply per the agreement. Because they are deemed to have created the agreement
to have binding relationships between them
Commercial agreements are taken to have the seriousness, while social agreements in their
nature luck the seriousness
Domestic agreements lack seriousness (agreements with relatives, couples, parents, siblings
etc)
Balfour vs Balfour at the time of a contract the relationship was romatic, that is, they were in
good terms.
Merritt VS Merritt
The courts look at the relationship between the parties before the agreement
The courts take property as serious.
Look at the types of consideration. Take consideration as a self study.

CONTENTS OF CONTARACT
A contract - entails terms (a term is a statement which binds the parties to the contract)
A representation is a statement that induces (seduces) the parties to have a contract and does
not bind such parties to the contract
THE DIFFERENCE BETWEEN TERMS AND REPRESENTATION

TERMS REPRESENTATION
 Statement that is vital or essential, The  Not necessarily vital or important
offeree relied on such statement to  A statement that is made way before
enter into a contract parties enter into a contract is
Bennerman vs White decision, the regarded as a representation
content of Sulphur in hops was vital Routledge v Mckay it was a
 Where the statement is made representation because it was made
immediately before parties enter into a way before they could decide
contract it is regarded as a term  Not written
 Written  A statement from and expert to and
 A statement made by and expert to a expert
layman is a term

Express terms – a term is express if it is written of verbal, they should be clear, certain and
easily understood by the parties. If the terms between the parties are vague then the courts of
law would not be able to interpret them.
Implied terms, terms could be implied by courts, custom, or statute
Custom is a practice that is uniform and that has existed long time ago, and is long established,
when an agreement is implied by the parties, customs differ from society to society
Where you have both express and customary terms the express terms overrides the express
terms
Courts as courts of law interpret the terms between the parties, the do so to give meaning to
the contract, known as efficacy
Distinction between warranties and
Exclusion clauses/Exemptions/ Disclaimer – is a term in a contract which absolves the maker
or service provider from liability which results from negligence, misrepresentation, breach of
contract,. Exclusion clauses form an integral part of the contract and the courts of law interpret
them strictly
Rules that govern exclusion clauses

 Should be found in the contractual document (a document which a reasonable man

would assume form part of an integral agreement a receipt, ticket)
Chapelton v Barry UDC 1940 the plaintiff hired two deck chairs, one of the chairs broke
and she was injured he claimed compensation from the dependent who refused to pay
 on the ground that he had issued the receipt which had exclusion clauses that absorbed
him from liability
The court held that a receipt was not a contractual document, because it was less
valuable and no reasonable man would have thought a receipt would contain exclusion
clauses.
SIGNED DOCUMENTS - A party that signs a document with exclusion clauses is bound by
his own signature irrespective of whether he read, understood or agreed with the terms
to it.
L’Estrange v Graucob 1934 – the court held that the customer had signed the document
that had exclusion clauses, and was bound by his signature, even though the exclusion
clauses were written is very small print and the seller did not notify the customer about
the terms.
Exception where the party has a contract with exclusion clauses but is induced into
signing
Curtis v Chemical Cleaning Co 1951 –

 UNSIGNED DOCS – where exclusion clauses are on unsigned documents, the maker of
the clauses should notify the customer of the existence of exclusion clause prior to
getting into a contract, so that he decides whether to proceed with a contract or not.
Exclusion clauses on unsigned documents should be very clear.

Olly v Marlborough Court 1949 – the court held that the contract was concluded at the
reception, therefore exclusion clauses that was in their room came in too late

Thornton v Shoe Lane Parking Ltd 1971 – the court held that you cannot have
exclusion clauses that exclude personality. Exclusion clauses were written obscurely at
the entrance therefore it was not visible.
 PREVIOUS or consistent DEALINGS where a customer is consistent with the same
service provider he does not require any notice of exclusion clauses because it is
understood that he has familiarized himself with the operations of the service provider.
J Spurling Ltd vs Bradshaw 1956 – the court held that the same service provider with
the same customer does not require the notification of exclusion clauses. The service
provider does not have the duty to notify the same customer of the existence of the
exclusion clauses because of the long relationship.

Hollier v Rambler Motors 1972 – when the courts of law make law they interpret
clauses against the maker
There was no evidence that the customer was notified by the existence of the
exclusion clauses
Contra proferentum rule - exclusion clauses should be interpreted against the maker

REMEDIES FOR BREACH OF CONTRACT

A remedy is a relief available to the plaintiff against the defendant for failure to comply or
honor the contractual obligations
Breach a party that does not comply per the agreement is said to be in breach( failure to
comply) failure to comply brings end to the contract, where contract comes to and end is said
to have discharged.
HOW A CONTRACT CAN BE DISCHARGED
Agreement between the parties, AGREEMENT is a voluntary act that parties are no longer
willing to be bound by the agreement.
Frustration: where performance is not possible, the contract will be discharged
Performance, where all the parties have played their role or obligations in a contract it
becomes to an end
Rescission means to restore, where possible parties should be restored in a positon they were
before the contract. The contract is said to have been cancelled.
Breach, is failure to comply
Two types of breach

 Repudiatory breach (means to reject, deny) on the Date of the performance the
defendant either by words or conduct notifies the plaintiff that he is not bound by the
performance. E.g
i) Incapacitation
ii) Failure to perform
 Anticipatory breach (to look forward to something) in anticipatory breach, before the
date of the performance the defendant notifies the plaintiff that he would not perform
his obligations under the contract. It can be by words or conduct. The plaintiff does not
have to wait for the date of performance to sue the defendant, he can sue him and
claim damages.

DAMAGES nothing other than compensation in a form of money that would be claimed by the
plaintiff. The plaintiff should be put in a position he would be should the contract have
materialized, damages are governed by the remoteness principle
Remoteness principle means the damages claimed by the plaintiff should not be too far from
the conduct of the defendant, it means there should be a link between the conduct of the
defendant and the loss suffered.
In Hadley v Baxendate 1854, the miller called the courier ti take his broken crankshaft for
repairs, unfortunately the courier took an unreasonable time to return the crankshaft to the
miller. The miller sued the courier claiming damages for breach of contract arising from delay.
The courier’s defense was that the miller never notified him to bring the crankshaft
immediately after repairs, he thought he had the spare crankshaft. On the other hand the miller
thought the courier would bring the crankshaft quickly because it does not take time to repair.
The court laid down two rules

 The laws on the part of the plaintiff should flow naturally from the breach, means there
has to be a link between the conduct of the defendant and the loss suffered by the
plaintiff.
 The law suffered by the plaintiff should have been within the reasonable contemplation
of the parties at the time of contract

MEASURE FOR THE DAMAGES

Expectation interest
Reliance interest
Any expenses that the plaintiff incurred for relying on the contract should be paid.
C&P Hulage v middletn 1983
Market price rule if the contract is on the sale of goods, where the buyer fails to buy the goods
from the seller as agreed from the seller, the seller is free to sell the same goods to another
buyer and he can claim the difference from the buyer if the goods are sold at a lower price .
Where the seller refuses to sell the goods to the buyer the buyer is free to buy from any other
seller, and can claim the difference from the original seller if he paid more.
Cost of cure - the defendant is liable to compensate the plaintiff any costs that are associated
with curing breach of contract but where the expense is purely disproportionate from the
breach such a claim would not succeed.
Financial loss under the law of contract, the plaintiff is only entitled to the damages that results
from the breach of contract, and with personal damages the courts are very reluctant to order
such because they are too remote, unless in exceptional circumstances where the courts will
find it Fair and equitable. They are only covered in tort not contract, e.g emotional shock, pain
and suffering, loss of enjoyment
Mitigation of loss (means to reduce) where there is a breach of contract the plaintiff cannot
just seat and wait to claim the loss, he has to try and reduce the loss that he is suffering.

OTHER REMEDIES
Quantum merit - (means work done) where the defendant has partly performed under the
contract, he is entitled to compensation of the work done, the “all or nothing rule” does not
apply.
Specific performance - This is a remedy available to the plaintiff requiring the court to order the
defendant to comply per the agreement. Where the nature of the contract requires the skills or
experience of the defendant the court will be reluctant to order such performance because the
trust and confidence would be shattered among the parties.
Where the contract is impossible to perform the court would also be reluctant to order specific
performance. It is the last option resort of remedy
Injunction - Is a remedy available to the plaintiff requesting the court to order the defendant to
stop the alleged breach of contract (An opposite of specific performance).
DISTICTION BETWEEN LIQUIDATED AND PERNALITY DAMAGES
DISTINCTION BETWEEN CONDITIONS AND WARRANTIES

THE LAW OF TORTS

TORT- is a civil wrong by the defendant which causes harm (harm can be in a form of injuries,
loss, loss of enjoyment, amenities) to the plaintiff.
Types of tort

 Passing off - in the commercial world, if the business of the defendant is similar to that
of the plaintiff and misleads the public and such public is confused into believing that
the 2 businesses are related then the defendant should be liable if his conduct causes
harm to the plaintiff
 Negligence – (is carelessness) the conduct of the defendant which is careless and
causing harm to the plaintiff he owes him the duty of care.
The difference between Tort and contract

Under contract there should have been the No contract is required

relationship between the parties
The duty to act is imposed by the contract to The duty arises as a result of the obligation
the parties law
You cannot cause harm to a stranger One can cause harm to a complete structure

One can be held liable for failure to act when there was duty to act
Liability for failure to act (omission - means there is an obligation to act positively and the
defendant fails on such a duty)

 Where one is in possession of a dangerous thing or animal and that causes harm to the
plaintiff
 Situation - where one creates a dangerous situation and fails to stop the danger from
recurring.
 Law – a statute could impose the duty to act and failure to act could cause harm.
 The relationship between the parties could impose the duty to act. Relationships that
are protective in their own nature. (Client-lawyer, client-auditor, student-teacher, and
public-police relationships).
Duty of care - the defendant is liable where there was a duty of care and failed to care

 The harm should have been foreseeable

 There should be a proximity – it should be close. There should be a relationship
between the injury and the conduct of the defendant
 The defendant should have taken steps to avoid the danger from happening

Donoghue v Stevenson 1932 the court said that if the conduct of the defendant causes
harm to the plaintiff, such defendant owes the plaintiff duty of care.
Requirements for

 Probability of the injury - where the probability of the injury occurring is high the
defendant is expected to apply greater precautions to avert the injury. The higher
the risk the higher the precautions
Glasgow corporation v Taylor 1992 -The court said that he did not apply the greater
precautions to stop the injury.
  Seriousness of the risk - where there is the higher risk of the injury occurring any
vulnerable person ( e.g disabled, pregnant woman, old person)is exposed to more
injury.
Paris v Stepney Borough Council 1951 – the court held that the employer should
have provided safety googles.

 Practicability of the cost - Where the cost of averting the injury outweighs the injury
itself there is no duty of care owed
Latimer vs AEC Ltd 1952 – if the cost of the injury outweighs the injury there is no duty of care.

 Common practice – no duty of care is owed to the defendant if it’s clear that the
risk is part of the customs
Professional - Where one is professional he needs to conduct himself with ….the higher standard of care
is expected from one who is a professional.

A professional is compared with a highly skilled reasonable man.

Res ipsa loquitur (means facts speak for themselves) where the conduct of the defendant is so clear and
obvious that on the face it he has caused the injury to the plaintiff he negligence will be assumed.

The plaintiff has to prove that the defendant was in control and management of the injury and be had
he excised proper care, the injury would have been avoided.

CASUALITY AND REMOTENESS OF DAMAGE

Damage for the plaintiff to succeed in his claim he should prove what he lost. E.g pure financial loss
economic loss, property and personality loss

Cause on causation to determine the loss the courts are governed by the two

 But for tests simply means that the claimant alleges that he would have not suffered any
loss had it not been for the conduct of the defendant. He alleges that the defendant is the
cause of the injury or the loss. Meaning the chain of events is straight. where it’s very clear
that the plaintiff would still have incurred the loss despite the behavior of the defendant
then the line is broken

In Barnett v Chelsea and Kensington the court held that despite the Dr being negligent the patient could
still have died any way. It gets very difficult for the courts to determine the cause where the causes are
multiple

 Novus actus intervenes means a factor intervening, where the chain of events or the line of
causality is intervened by another factors. Where the chain gets broken the defendant
should be absorbed to the liability only to the extent of intervention
Intervention could come as the result of the act of the claimant
 Act of the plaintiff
Act of a third party where the third party intervenes the chain of causality gets broken, the
defendant is only liable until intervention.
In Lamb v Camden The court held that the defendant should not be liable for the additional
damage caused by the squatters
Natural events

Remoteness of damage even if the defendant were to be negligent but once his conduct is
too far from the loss or damage suffered by the plaintiff he has to be absorbed by liability.
Would a reasonable man foresee? Primary question is did the defendant foresee that there
was possibly that they could harm such a person.
Wagon Mound 1961
In Jolley vs London Borough of Sutton 2000

Defenses to negligence

Defense is a justification (meaning they are legal reasons why the defendant conducted himself in such a
manner) or legal reasons why the defendant was negligent

Contributory negligence - Both the plaintiff and defendant would have played a role towards the
negligence on the part of the defendant

Participation of both parties and the damages there to are apportioned in a proportion that is just and
equitable

Sayers vs Harlow UDC 1958

Volenti non fit injuria (means voluntary assumption of the risk to injury)the defendant consents to the
risk of the injury only related to such a risk

Vicarious liability – the employer is held liable of the employee within the scope of employment
furthering interests of the employer

Professional advice

Where a professional gives an advice to anybody, he should do so in the capacity as an expert in that
field, because the recipient of the advice would rely on the advice. Because of the relationship between
the expert and the recipient the duty of care is owed by such an expert

Auditor client relationship (To whom do auditors owe a duty of care) they owe a duty of care to the
group of shareholders as a whole, and not an individual shareholder.

Where the duty of care extends to third parties

Under what circumstances do auditors owe a duty of care to the third parties and which third parties?

Which body regulates auditors and which regulate accountants.

EMPLOYMENT LAW
A contact between the employer and the employee, wherein the employee renders his
personal service to the employer in return of remuneration, which could be in a form of
salaries, wages.
Contract of employment is a contract of service
A contract with an independent contractor is a contract for services. E.g. plumber, mechanic,
artist
To distinguish whether on is an employee of individual contractor the courts of law have
applied 3 tests
Control test, if a party is provided with tools, machinery and is told how to perform the duties
such a party is an employee not independent contractor
The court said that such a soccer player was an employee because he was controlled by the
company.
Sometimes the control test is very tricky when the employer is not skilled enough as he can not
dictate the employee how to perform the task, that’s why the courts of law came up with
integration test.
Integration test - The employee should be part and parcel of the company. What the employee
does on daily basis should form the core/gist of the company.
Sometimes what you do may not be core to the organization, therefore the 2 tests fail.
Multiple tests the conclusion of whether one is an employee or independent conclusion is drawn on all
the characteristics or factors in the case.

Common law duties of employment

Nature of the contract between employer and employee - the employee has a duty of faithful service
and to exercise care and skill in performance of their duties.

 Obey lawful instructions - The employee has a duty to obey lawful instructions. It would not
be a defense for an employee to obey instructions that are unlawful.
 Reasonable skill – exercise reasonable care and skill where the employee is employed on
the basis of skill…..
 Account for monies and property which arose from the contract of employment
 The employee has to exercise reasonable competence in the exercise of his duties. He will
be…
 The employee should provide personal service while exercicing his duties the employee
should do so by himself because he would be delaegated to do that, he cannot further
delegate his duties to other parties.
Duties of the employer

 mutual trust and confidence - Contract of employment is a contract build on trust and
confidence
 The employer should provide work to the employee, where the employer does not provide work
to the employee his conduct goes to the roots of the contract of employment. The employee is
free to resign and claim constructive dismissal.
 The employer should provide reasonable remuneration to the employee – parliament would
provide for minimum wages in terms of the categories of work. Parliament enacts statutes
known as minimum wages
 Indemnify the employer has an obligation to indemnify the employee on any expenses incurred
on the basis of employment
 The employer has no obligation to provide a reference but once he provides a reference it has to
be true and fair

STATUTORY DUTIES

COMPANY LAW

Characteristics of a company, sole trader and partnership

COMPANY PARTNERSHIP SOLETRADER

 Characteristics of a
company that
distinguishes it from a
partnership and sole
trader. company is able
to acquire property in
its own name
 Share in a company are
either transferable or
transmitted and this
allows for its
continuiability ( it has
perpetual succession)
 The shareholders
appoint directors
 The company holds
meetings for
administration
purposes
 Generally a company is
nonliving thing but
should have an identity.
Nationality of the
company is important
  It should have a
business place
(domicile)
 Formal requirements-
there are formal
requirements that have
to be followed in
registration of the
company with the
registrar of companies
in the UK, LESOTHO is
not an exception
In law with have two types of persons

 Natural person – is a human being

 Artificial person - A nonliving thing that has the characteristics of a living thing, it’s a body
corporate or a company. Artificial thing is made by a natural person. A company is a legal
persona

THE VEIL OF INCORPORATION – this is what legally separates the shareholder from the company

LIFTING THE VEIL – the process upon which the distinct legal personae falls away, and the directors and
shareholder are personally held liable for the acts of the company. We have grounds under which the
veil of incorporation are lifted

 Statute /common law

Act
Fraudulent trading, when the company is insolvent and continues to enter into transactions
with companies, it commits crime. The company cannot commit crime on its own as it’s a
nonliving thing.
Trading license – after registration of the company, for it to be able to trade it should have
trading license. Where a company trades without a trading license that is the ground upon
which the veil has to be removed
Names – historically when the company was liquidated back then, when the assets of such
company are sold, the same directors of the same company would be seen buying the assets of
the company and registering it with a different name that would be seen as misleading the
public
Disqualification of directors – once the directors of the company have been disqualified from
holding the position of the director due to breach of trust, and they continue to act as directors
of the company, that would be in breach of the act of disqualification of directors, and that is
regarded as crime, and the veil of incorporation is lifted.

 Grounds of the courts /common law

Evasion of obligations – where the directors of the company use the name of the company to
avoid the contractual obligations
Evasion of identity –
Administration of the company
A company has 3 important officers for the management and administration of the company.
Thet are

 Company directors
 The auditors And
 Secretary
Directors are appointed by shareholders to make decisions, attend meeting and report to the
board of directors
Types of directors

 De jure (law) is the director who has been expressly appointed by the company
 A de facto director is the director who holds himself to the public and performs that
duties of directors. He is not expressly appointed.
 A shadow director is a director who has not been appointed and avoids legal
responsibilities and abuses his power as a major shareholder and such acts as a director.
he acts as .there is no public that is aware
 Alternative director is the one who stands on behalf of the other director who is not
present
 Executive director is the director who is given different roles on the day to day
management of the business
 Non-executive director is the one who plays no role in the day to day administration of
the company. He is just there for proper corporate governance. In terms of the UK
corporate governance guidelines, a proper company should have non-executive
director. They contribute towards their expertise and independent view to the board of
directors, they provide an effective leadership into the organization
 Chief executive officer is the head of administration, generally a PLC is required to have
a minimum of 2 directors while a PTY is a minimum of [Link] minimum age for one to be
a director in the UK is 16 years.
Duties of the director

 The director has to act within the powers bestowed to him, he has to act in good faith
(bona fide) and in the interest of the company. He has to exercise his powers in proper
purpose.
Howard smith vs ….The court held that allotment of the new shares was held to invalid
because it was held to be against the major shareholders
 To promote the success of the company….
Factors that directors need to consider to promote the business.
1. They should avoid abuse of power
 2. Develop good working relations with employees, suppliers
3. The effect that the company has on the community, corporate social responsibility
4. They should exercise an independent judgement in their decisions. They should not
delegate the decision making power because sub-delegation is prohibited
 Directors have a duty to exercise reasonable care and skill
 Duty to Avoid conflict of interest, personal and professional interest conflicting, or
where there is a purported personal advantage that is about to gain from his position as
a director
 A duty not to accept any benefits from third parties, as such benefits are seen as crime,
they look like bribery. Once there is property involved…
 Duty to declare any interest in the proposed transactions. A director has a duty to
declare the nature and extent of his interest to other directors. The interest could e
direct or indirect.
Remedies

 damages
 restoration of property
 recession of the contracts if the director failed to disclose thee interest either on the
contract or transaction
 repayment of any profits made by the director
Company Secretary
Company auditor