(GENERAL LAW OF CONTRACT
Introduction
Meaning of the term contract:
It is an agreement enforceable by law,
section. 2(1)(h) of the Law of Contract Act
CAP 345 (LCA) .i.e. an agreement between
two or more parties intended to have legal
consequences.
An agreement is defined under 2(1)(e) to
mean every promise and every set of
promises forming the consideration for each
other.
Elements of a valid Contract
Parties
Offer
Acceptance
Free consent
Consideration
Intention to create legal relations
Capacity
Legality
Parties
The term contract presupposes the existence
of two sides/parties, one proposing the other
accepting:
Commonly referred as offeree and offeror
Therefore any contract requires two or more
parties in order to exist (natural or legal
persons)
Offer
Meaning of an offer:
It is a set of terms moving from one party to
another with intention of the former to be
bound by them. See section 2 (1) (a) of the
Contract Act.
It states that; it is a signification to another
person of ones willingness to do or not do
something with a view of obtaining assent (or
refusal) of that other person
Characteristic of an offer
The terms of an offer are usually Clear and
certain, definite and capable of acceptance.
They must constitute final and firm
expression by the proposer of his willingness
to be bound should the offer be accepted.
Read: Alfi Estates Africa Ltd V Themi Industries
and Distibutors Agency Ltd. [1984] TLR 362/256
agreement void for uncertainty under section 29 of
the LCA
Nittin coffee estate vs United Engineering Works
(1988)TLR203 in this case the agreement to sell
land was uncertain and hence does not constitute a
valid offer.
Offer & Invitation to treat contrasted
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.
Common example here include the
following
examples of invitations to treat;
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
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.
It was 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.
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
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'.
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'.
"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."
PSGB v Boots (1953)1QB401
The defendants' shop was adapted to the
"self-service" system. The question for the
Court of Appeal was whether the sales of
certain drugs were effected by or under the
supervision of a registered pharmacist.
The question was answered in the
affirmative. Somervell LJ stated that "in the
case of an ordinary shop, although goods are
displayed and it is intended that customers
should go and choose what they want, the
contract is not completed until, the customer
having indicated the articles which he needs,
the shopkeeper, or someone on his behalf,
accepts that offer. Then the contract is
completed
ADVERTISEMENTS
Advertisements of goods for sale are normally
interpreted as invitations to treat
Partridge v Crittenden (1968)AllER421
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'
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.
However, advertisements may be construed
as offers if they are unilateral, ie, open to all
the world to accept .
Carlill v Carbolic Smoke Ball Co
(1893)1QB256
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;
(a) the deposit of money showed an intention
to be bound, therefore the advert was an
offer;
(b) it was possible to make an offer to the
world at large, which is accepted by anyone
who buys a smokeball;
(c) the offer of protection would cover the
period of use; and
(d) the buying and using of the smokeball
amounted to acceptance.
TENDERS
Where goods are advertised for sale by
tender, the statement is not an offer, but an
invitation to treat; that is, it is a request by
the owner of the goods for offers to purchase
them. The process of competitive tendering
came under scrutiny in the following cases:
Offer in advertisement
Proposal or offer can be made under various
circumstances, which include the following.
Carlill v Carbolic smoke Ball Co (1893) 1 Q.B.
256.
Simple facts of the case
A reward of 100 pounds was advertised to
anyone who contracts the increasing
epidemic influenza after having used their
balls three times daily for two weeks as per
the printed directions supplied with each
ball.
That 1000 pounds was deposited with the
Alliance Bank to show their sincerity in the
matter
Mrs Carlill, on the faith of the
advertisement bought and used one ball as
directed but contracted influenza
Continuation
She sued the Company to recover the 100
pounds as advertised.
One argument in favor of the defendant was
that the advertisement was a mere puff and it
was unreasonable to suppose it to be a
definite offer
It was held that they were intended to be
understood by the public as an offer which
was to be acted upon and not a mere puff.
Communication of Offer
Communication is deemed to be made by
any act or omission of the party proposing
section 3 of the LCA
Expressly offer is said to be communicated
expressly when it is made in writing or
orally (verbally)
Impliedly – when made by conduct
example:
stepping into an omnibus (daladala) and
consuming eatables at a self service
restaurant, both create an implied promises
to pay for the benefits enjoyed.
continuation
Offer is effectively communicated (or
communication of offer is complete) when it
comes to the knowledge of the person to
whom it was made s4(1) LCA
Types of offers are:
specific offer- made to a definite person or
definite class of persons and
General offer- when made to the world at
large.
Termination of an offer/proposal S. 6(1) of the LCA
Means by which offer can be
terminated:
Rejection
Counter offer; See for Hyde v Wrench
(1840).
Revocation before acceptance ; Byrne v Van
Tienhoven (1880
Failure of a condition subject to which the
offer was made
Lapse of time
Death of offeror
Hyde v Wrench (1840)
6 June W offered to sell his estate to H for
£1000; H offered £950
27 June W rejected H's offer
29 June H offered £1000. W refused to sell
and H sued for breach of contract
Lord Langdale MR held that if the
defendant's offer to sell for £1,000 had been
unconditionally accepted, there would have
been a binding contract; instead the plaintiff
made an offer of his own of £950, and thereby
rejected the offer previously made by the
defendant.
REVOCATION
The offer may be revoked by the offeror at
any time until it is accepted. However, the
revocation of the offer must be communicated
to the offeree(s). Unless and until the
revocation is so communicated, it is
ineffective.
Byrne v Van Tienhoven (1880)5 CPD334
1 Oct. D posted a letter offering goods for
sale.
8 Oct. D revoked the offer; which arrived on
20 Oct.
11 Oct. P accepted by telegram
15 Oct. P posted a letter confirming
acceptance.
It was held that the defendant's revocation
was not effective until it was received on 20
Oct. This was too late as the contract was
made on the 11th when the plaintiff sent a
telegram. Judgment was given for the
plaintiffs.
. LAPSE OF TIME
Where an offer is stated to be open for a
specific length of time, then the offer
automatically terminates when that time limit
expires. Where there is no express time limit,
an offer is normally open only for a
reasonable time. See
Ramsgate v Montefiore (1866)
On 8 June, the defendant offered to buy
shares in the plaintiff company. On 23 Nov,
the plaintiff accepted but the defendant no
longer wanted them and refused to pay.
It was held that the six-month delay between
the offer in June and the acceptance in
November was unreasonable and so the offer
had 'lapsed', ie it could no longer be accepted
and the defendant was not liable for the price
of the shares.
FAILURE OF A CONDITION
An offer may be made subject to conditions.
Such a condition may be stated expressly by
the offeror or implied by the courts from the
circumstances. If the condition is not satisfied
the offer is not capable of being accepted.
See
Financings Ltd v Stimson (1962)
Mr. Stimson (the defendant) signed a hire-
purchase agreement at a car dealership to
acquire a motor car.
The agreement was not immediately binding; it
was subject to approval by Financings Ltd (the
finance company).
Before the finance company approved the
agreement, the car was stolen and damaged
while in the dealer's possession.
When Financings Ltd later approved the
agreement and sought to enforce it, Mr.
Was there a valid contract between Mr. Stimson and
Financings Ltd, considering the car was damaged before the
company's approval?
Reasoning of the court: The hire-purchase agreement
required acceptance by the finance company to become
binding.
Implicit in the agreement was a condition that the car would
remain in the same condition between the offer (signing) and
acceptance.
Since the car had been materially damaged before Financings
Ltd accepted the agreement, the offer had lapsed, and there
was no contract to enforce.
DEATH
The offeree cannot accept an offer after
notice of the offeror's death. However, if the
offeree does not know of the offeror's death,
and there is no personal element involved,
then he may accept the offer. See:
Bradbury v Morgan (1862)
JM Leigh requested Bradbury & Co to give
credit to HJ Leigh, his brother. JM Leigh
guaranteed his brother's account to the
extent of £100. Bradbury thereafter credited
HJ Leigh in the usual way of their business..
JM Leigh died but Bradbury, having no notice
or knowledge of his death, continued to
supply HJ Leigh with goods on credit.
JM Leigh's executors (Morgan) refused to
pay, arguing that they were not liable as the
debts were contracted and incurred after the
death of JM Leigh and not in his lifetime.
Judgment was given for the plaintiffs,
Bradbury
