LAW OF CONTRACT 2.

LLB CLASS NOTES BY Dr. Benson Tusasiirwe

Ampa Ed
This semester we're expected to read ahead, the workload is smaller than last semesters
We’ll deal with three broad areas
vitiating factors, these render it unenforceable even with the usual elements

-discharge, how the contract comes to an end (prof shokolo)

-Law of agency, shokolo

VITIATING FACTORS.
In recap, in order to have a contract we need the elements, and then we have a contract, it should be
enforced. However there are things that may make it impossible to enforce the contract, these
vitiate/nullify/negative it even with the elements. Introduced by Section 10 and expounded in
section 13 of the Contracts Act.
from definition, there should be free consent, if there is coercion then.
sec13, Presumption of consent, unless it's obtained through the vitiating factors,
13. Free consent of parties to a contract.
Consent of parties to a contract is taken to be free where it is not caused by—
(a) coercion;
(b) undue influence, as defined in section 14;
(c) fraud, as defined in section 15;
(d) misrepresentation; or
(e) mistake, subject to sections 17 and 18
vitiating factors operate because there is no free consent i.e against section 10 (1)
Section 10(1)
Agreement that amounts to a contract.
(1) A contract is an agreement made with the free consent of parties with capacity to contract, for a
lawful consideration and with a lawful object, with the intention to be legally bound.
for example coercion/threat/force the proof of lack of consent is not read out of the contract.

MISTAKE
A mistake is an erroneous belief in a given state of affairs, it should be mistaken and not voluntary,
as soon as it is discovered it'll be set aside. b'se of the rule of caveat emptor, unilateral mistake, one
party, both parties, common or mutual mistake, main thing is that it must be an operative mistake,
which has had the effect of making someone accept what s/he would not have otherwise accepted.
some mistakes are not operative and don't affect the validity of the contract.
Black’s Law Dictionary defines mistake, An error, misconception, or misunderstanding; an
erroneous belief.in Contracts. The situation in which either
(1) the parties to a contract did not mean the same thing, or
(2) at least one party had a belief that did not correspond to the facts or law.
As a result, the contract may be voidable
Types of mistakes.
a) Mistake of fact.
Black’s Law Dictionary mistake of fact. A mistake about a fact that is material to a
transaction.
section 17 of the Contracts Act. Which provides inter alia
(1) Where both parties to an agreement are under a mistake as to a matter of fact which is essential
to the agreement, consent is obtained by mistake of fact and the agreement is void.
(2) A contract is void where one of the parties to it operates under a mistake as to a matter of fact
essential to the contract.
(3) An erroneous opinion as to the value of the things which form the subject matter of an
agreement shall not be deemed a mistake as to a matter of fact.
b) Mistake of law.
Black’s Law Dictionary.
A mistake about the legal effect of a known fact or situation
section18, of the Contracts Act provides,
Where a contract is entered into by mistake in respect of any law, in force in Uganda, the contract is
void. issue is that ignorance of the law is no defence, however this seems to counter that argument,
in a society of ignorant people, can we still argue that ignorance of the law is no defence?

Mistake of fact.
General law of mistake. A mistake does not generally affect the validity of a contract.
rationale, modern contract law operates on the basis of caveat emptor, i.e it is up to the
contracting party to take the necessary precautions, you're expected to consult in addition is the
doctrine of freedom of contract.

in the case of Tamplin v James.(general rule)

This is an example of unilateral mistake. The defendant attended an auction in which The Ship
Inn was for sale. The particulars of the sale were set out in the auction particulars, which the
defendant had failed to examine. The property was not sold at the auction but afterwards the
defendant and plaintiff came to an agreement. Before exchanging money the defendant becomes
aware of his mistake, he had assumed that the property included two additional plots of land when
this was not actually the case. The auctioneers had previously made the boundaries of the property
clear at auction. The plaintiffs subsequently sought a specific performance order.

It was held that the defendant would have to go through with purchasing the property despite the
fact that there was no consensus ad idem. This illustrates the ‘general rule’ that a party responsible
for making an unreasonable mistake will be held to their contractual obligations. Both in first
instance and at the Court of Appeal it was held that the vendors were entitled to a specific
performance order, as unlike in the case of Denny v Hancock, they were not responsible for
inducing the defendant’s mistake in any form.

see; Solle v Butcher.

The landlord (D) purported to increase rent from £140 to £250, However, the parties had not
abided by the required procedure to vary rent under the Rent Acts, as such the actual rent payable by
the tenant (C) was fixed at £140. C sued D for restitution of overpaid rent while D made a
counterclaim for rescission of the lease on the ground of common mistake so as to avoid paying
restitution for rent that was already paid.
Court of Appeal held that the lease contract was voidable and was set aside.
Denning LJ Held;
Cases of common mistake (mistake as to existence, title) are contracts not void for mistake but void
by reason of implied condition that it was capable of performance. Equity has taken over common
law such that common mistake and unilateral mistake render a contract voidable not void. Unilateral
mistake as to terms or identity does not void the contract, merely renders it voidable. Where there is
common mistake as to the facts or rights that is fundamental and the party seeking to set aside
contract is not at fault, the contract is voidable The court can set aside a contract on equitable
grounds whenever it was unconscientious for the other party to avail himself of the legal advantage
he had obtained.
There are exceptions where a mistake is considered operational, these exceptions depend on the type
of mistake.
types of mistakes.
a)common
b)mutual
c)unilateral

Common mistake, covered under section 17(1), where both parties are mistaken as to a matter of
fact, that is essential and not periphery or minor, it must be on a matter of fact which is vital to the
contract. the section doesn't say what is essential, case law might show this. There are two types of
common mistakes that have this effect of rendering the contract void,

a)Res extincta
where the subject matter at the time of the contract has ceased to exist and both parties are of
mistaken belief that it exists. Court can't force a buyer to pay or a seller to handover what doesn't
exist,
Couturier v Hastie (1856) 5 HLC 673
A cargo of corn was in transit being shipped from the Mediterranean to England. The owner of the
cargo sold the corn to a buyer in London. The cargo had however, perished and been disposed of
before the contract was made. The seller sought to enforce payment for the goods on the grounds
that the purchaser had attained title to the goods and therefore bore the risk of the goods being
damaged, lost or stolen.
The court held that the contract was void because the subject matter of the contract did not exist at
the time the contract was made.
Strickland vs Turner,
held that there was no contract because the beneficiary was already dead.
outside commercial
Galloway v Galloway.
The two thought they were married, they entered into a separation agreement, yet they were never
married.

b)Res Sua.
Entering a contract of something you already own. say buying land where the deceased left a will
with your name. see; Hudderfield Banking Co ltd v Henry Lister & Son ltd
Issue: terms of the martgage, that if mortagor wound up business, the machinery would become the
property of the mortgagor. it already automatically belonged to the mortagor
The court held that plaintiff’s consent order should be set aside as they were mistaken as to their
true right in relation to that machinery

B)Mutual mistake, regulated by section17, unlike a common one, the two parties are at cross-
purposes.
Black’s Law Dictionary mutual mistake. (I8c) 1. A mistake in which each party
misunderstands the other's intent. Also termed bilateral mistake. mistake that is shared and
relied on by both parties relates to the subject matter as well, but to a contract. A court will
often revise or nullify a contract based on a mutual mistake about a material term.(Dr.
Benson seems to distinguish a mutual mistake and a common one, this is not so with
Black’s Law Dictionary)
a)Mutual mistake relating to identity of the subject matter. this kind occurs if the parties are at
cross purposes in that at the time of contract, party A thinks he's selling x, while B thinks he's selling
y. e'g a Dell and Apple Laptop, see;Raffles v Wichelhaus 1864.
In a mutual mistake, both parties operate under a misunderstanding as to each other’s intentions.
They are said to be at cross-purposes with one another.
The mutual mistake negates consent and therefore no agreement is said to have been formed at all.
Mutual mistake as to the identity of the subject matter where there is some ambiguity as to the
understanding of the agreement.
To assess whether a mutual mistake has taken place, the court asks what one party thought it meant,
as opposed to what the other party thought it meant.

The classic case is Raffles v Wichelhaus (1864). The defendant agreed to purchase Surat cotton to
be delivered by the vessel named “Peerless”, which was due to arrive from Bombay. There were in
fact two vessels fitting that description at the relevant time. The claimant was referring to one of the
ships named Peerless; the defendant was referring to the other ship named Peerless.
There was a latent ambiguity in the contract - the parties were actually referring to different ships.
They were at cross-purposes with one another, and had not reached agreement at all.
b)relating to possibility of perfomance. where it's impossible to perform. sec25(1)CA, an
agreement to perfome an impossible Act is void, if you can prove to the court, e.g under case law
there are three type viz;legal impossibility, physical impossibility, commercial impossibility.
i) legal,where it's impossible to perform w/o contravening the law. say you contract to import
grains of kenya, and by the time you signed it turns out Kenya was trying to avert a famine
network off

Bell v Lever Bros (1932) AC 161

study on unilateral mistake in preparation for the next lecture.

Unilateral mistake.
Revision.
under mistake, here the contract is void, unlike misrepresentation where the contract is voidable.
Bell v Lever Bros.
is an English contract law case decided by the House of Lords. Within the field of mistake in
English law, it holds that common mistake does not lead to a void contract unless the mistake is
fundamental to the identity of the contract.
Contents
Mr. Bell was made managing director, at a company owned by the defendants, Lever Bros. and then
was later laid off and given a redundancy package, worth pound sterling 30,000 unbeknownst to the
defendants, Mr. Bell had traded for personal profit during his employment contrary to his
employment contract
ISSUE
The main issue in this case was whether the redundancy contract that was created and accepted by
Mr Bell, could be void by common mistake, due to later finding out about his personal trading.
Defendants argued that by concealing his misconduct, he was in breach of his duty that was set out
in his employment act
HELD
Contract was not void as the mistake was not an 'essential and integral' part of the
contract,(retirement payments) and paled in comparison to the profits that Mr. Bell had made for
Lever Bros. the fact the company got rid of Bell at a price they didn't want to pay.
From the facts the Court found that the mistake was not sufficiently close to the actual subject-
matter of the agreement. The parties got exactly what they had bargained for.
Unilateral Mistake.
Black’s Law Dictionary
unilateral mistake. (1885) A mistake by only one party to a contract. A unilateral mistake is
generally not as likely to be a ground for Voiding the contract as is a mutual mistake
section 17(2) contract will be voided, and the statute overrides the general rule, from cases like Solle
and Butcher, or Tamplin, a Unilateral mistake doesn't invalidate a contract, as a general rule it is
subject to exceptions.
Operates where only one party to the contract is mistaken as to part of the contract, although its
operation is limited, it'll operate where the party other than the mistaken one, is aware of this but
decides to take advantage of it.

For an action to succeed under unilateral mistake, the following must be proved;
-One party is mistaken and wouldn't have entered into it
-it's known by the other party
-the mistaken party isn't at fault
Where a mistake is unilateral, it doesn't render a contract void, however subsection 2 gives the
exception, if it is on a matter essential to the contract.
A contract is void where one of the parties to it operates under a mistake as to a matter of
fact essential to the contract. Section 17(2)
For example
1. Mistake relating to identity of a contracting party.
2. Where documents are mistakenly signed,

1. where identity is concerned,

The general rule is that identity is immaterial, law assumes you're interested in what you're
buying(subject matter) and not the contracting party in addition is the doctrine of caveat emptor,
why didn't you take care to make sure you dealt with the person that you intended to contract with.
The onus is on the party claiming mistaken identity that it was important, prove
i- that you intended to deal with someone else and not this person say a service, or on
credit, say marriage and false identification papers
ii- that you took reasonable steps to verify the identity, see Cundy v Lindsay, nemodat rule,
youu can't sell what you u didn't have. court
Facts
The claimant received an order for sale of handkerchiefs from a person named Blenkarn, who
signed in his name in a manner resembling “Blenkiron & Co.”- a reputed firm located at “123,
Wood Street”. The purchaser further mentioned his address to be at “37, Wood Street, Cheapside”,
to which the claimant sent the goods. Although no payment was made by Blenkarn, he sold the
goods to a third person- the defendants.
Later, the claimants alleged that, as they sold the goods to Blenkarn under the mistaken assumption
that they were selling it to Blenkiron & Co., there was no real consent to the contract of sale.
Consequently, there was no valid transfer of title, which remained with the claimants, and
accordingly, they sued the defendants for conversion of goods.
Issues
The case concerned whether a mistake as to the identity of a contracting party was so fundamental
so as to negate the consent of the other party, and thereby, causing the contract to be void. In other
words, the question was whether there was any contract between the claimant and Blenkarn at the
first place, and if not, could the third party defendants procure a valid title to the goods.
Ruling
It was held that, as the claimant did not intend to sell the handkerchiefs to Blenkarn but to
Blenkiron & Co., there was no consent of the claimant to the contract with the former. Accordingly,
as no contract was concluded between the claimant and Blenkarn so as to constitute a valid transfer
of title which the latter could rightfully convey to the defendants, the title remained with the
claimant. Hence, the defendants, being in possession without a good title over such goods, were
held liable for conversion.

Ingram v Little
Facts
The Plaintiffs were joint owners of a car. A fraudster attempted to purchase the car by cheque,
which they initially refused. He pretended to be a reputable business man and the Plaintiffs then
accepted payment by cheque. The cheque was dishonoured the next day. By then, the fraudster had
sold the car to the defendants who were the bona fide purchasers of the car. The Plaintiffs sought to
recover the car or the value of the car from the defendants.
Issues
The issue here was whether the defendants could claim possessory title over the vehicle based on a
contract made by mistaken identity.
Decision / Outcome
The Plaintiffs claim was successful. The court applied the general principle of the process of
forming a binding contract to the current facts. Where an offeror makes an offer to the promisee,
the offeror is making such an offer only with the person identified and no one else. The fraudster
pretended to be a well-known businessman and that was the only reason why the Plaintiffs accepted
payment by cheque, as initially they had refused. The contract for sale was therefore only made with
the wealthy businessman and not the fraudster in his personal capacity. Thus, the fact that the
fraudster used someone else’s identity to make the contract prevented a contract from being formed.
It also prevented the possessory title from being passed to the fraudster and then on to the
defendant.(note that the identity of the contracting party, as with the previous case was essential)

Phillips v Brooks Ltd you can't claim to have wanted to deal with a person you'd never met, at
most he could sue for misrepresentation.
s17(1 and 2), under mistake it's voidable, under misrepresentation it's only voidable

see; Ingram v Little, called himself Hutchinson, and offered to pay by cheque held that the offer
was meant for the real Hutchinson, why was it decided differently from
professional jewelers in the first, in the second it was just a family doing a one-time transaction.
see;Lewis v Avery. held as in Philips and Brooks, it was not voidable for mistake, but for
misrepresentation and that they hadn't done enough to verify identity.
see; Mamjee Bros v Awadh, fraudster forged a delivery note and presented it to the defendant, it was
written ..defendant parted with goods, which were then sold to a third party, a suite ensued,
ii)documents which are mistakenly signed(plea of non-est factum)
in L'Estrange v Graucob, that you're bound by the terms, even if you don't read through them and
yet you sign, even if you can't read, that is the general rule. in the case of illeterate people if the
document was wrongly read to them, see Thoroughgood’s Case, 1584, bse the document he signed
was not what he expected to sign.
read remaining cases, on non-est factum, section 26 Employment Act, and the whole Illiterates
Act.
Black’s Law Dictionary defines a deed as At common law, any written instrument that is
Signed, sealed, and delivered and that conveys some interest in property.
Promissory estoppel and where the promise is contained in a deed (exception to the rule of
consideration).
in the case of Thoroughgoods 1854.
originally Non-est fatum only applied to deeds, however it has been extended to cover other
documents, vouchers, invoices
you could only plead the defence if you were illiterate, it has been extended,
Foster v Mackinnon 1869. A person that signed a document when not aware of its contents was
not bound by the document because his mind didn't accompany his signature. Same principle was
held in
Lewis v Clay 1897, a man called Lord Neville introduced a document to Clay, he had completely
covered it with a blotting paper, and had only left a space for the signature, Clay asked what it was
about, Lord Neville told him it was a family will, being a will, it wasn't unusual to cover it, it later
turned out to be a promissory note, which has the effect of promising to pay, Clay was effectively
promising to pay 11,113 pounds, thus Clay pleaded non-est factum, since the document he signed,
he was convinced it was different from the one he believed he was signing. This is different if it's a
different sum where you have to be bound by Caveat emptor

more recently, 1971(defence of non-est factum).

misled aunt to signing a gift deed, yet the documrnt was transferring the house to him, he then used
it to borrow from the Anglia building society, and because of failure to pay, her estate pleaded non-
est factum, the court wasn't convinced that the document wasn't of a different character, but we
see that she signed a similar document from what she intended to sign.
To succeed the documents must be radically, fundamentally and totally different from what she
thought she was signing.
In this decision, we conclude that courts are reluctant to allow people from signing their own
signatures, cavaet emptor applies where a person wasn't careful, and it's in limited situations where
this plea works

it works subject to
1-only available to a limited class of persons, those w/o any fault on their part are unable to read and
understand, persons of advanced age, blind, illiterate, intoxicated, minors etc
2-mere ignorance as opposed to inability/incapacity to read may/ will not help
3-if u were careless, and had the services of a lawyer and didn't use them, see. Kakande v Nsimbi
1984,

see Employment Act 2006,and Illiterates Protection Act, to see this principle
illiterate, unable to read and understand the language in which the document is written.
read the Illiterate Protection Act about reading or writing an illiterates name.
date blah blah

see kakande case.

a co-owner of land sold part of the land, the agreement was prepared by his own lawyer and the two
parties signed it be4 the lawyer, ....
court held that the document wasn't different and that Kakande was careless, and even if it wasn't
the case, non-compliance with the IPA doesn't make it void this decision has been overturned
recently
see; Nakiwala v Rwekibira 2014, repeated this year(election petition) Hon Genensio Tumuramye v
Tayebwa Herbert, court struck down affidavits b'se they were thumb-marked by illiterate persons,
where the person who translated even put
see;Owakubariho Anatoli v Mushemeza Ismail.
Employment Act sec 26
deals with situations where an employee is illiterate and signs a contract, it must be attested,
Attestation means, the document must be signed by a labour officer,
1-the
2-document complies with the empt act
3-employee understood the contents
QN

Assess the adequacy of the laws of Uganda relating to protection of illiterate persons in
respect of documents written or signed on their behalf. RESEARCH.. FOR EXAMS
Effect of mistake on the validity of a contact
Section 17,
Effect is that the document is void, and at law, neither party can enforce and money paid, property
transferred can't be recovered.
section 16 and 17 Contracts Act.
it's also the current legal position
it was felt that that position was hard, and equity came in to change that position, and under equity
some exceptions are allowed,
see; Webster v Cecil
unilateral mistake, so court refused to order specific performance even though a unilateral contract
renders the contract voidable
and Cooper v Phibbs
there was a contract for the lease of a fish farm, and buyer realised he already owned the fish farm,
under res sua, the contract was void, it so happened that the lessor had already spent money to
improve the fish ponds. Court held that he should be paid the expenses....

MISPREPRESENTATION.
READ THE CASES UNDER MISPREPRESENTATION AND THE PROVISON,
SECTION 2 AND NATURE UNDER SECTION 15, FRAUD, SECTION 16 DISTINGUISH
FRAUD AND MISREPRESENTATION.
TUESDAY MORNING, THURSDAY AFTERNOON
RESEACRH FROM PAUL RICHARDS LAW OF CONTRACT.
PAGE217
Section 2 of the contracts Act; “misrepresentation” means—
(a) a positive assertion made in a manner which is not warranted by the information of the person
who makes it or an assertion which is not true, though the person who makes it believes it to be
true;
(b) any breach of duty which without an intent to deceive, gains an advantage to the person who
commits it or anyone who claims under that person by misleading another person to his or her
prejudice or to the prejudice of any one claiming under that other person; or
(c) causing, however innocently, a party to an agreement, to make a mistake as to the substance of
the thing which is subject of the agreement;
A misrepresentation may be defined then as a false statement of fact that induces
another to enter into a contract. Paul Richards
Black’s Law Dictionary. "A misrepresentation, being a false assertion of fact, commonly
takes the form of spoken or written words. Whether a statement is false depends on the
meaning of
the words in all the circumstances, including what may fairly be inferred from them. An
assertion may also be inferred from conduct other than words, Concealment or even non-
disclosure may have the effect of a misrepresentation.
[AJn assertion need not be fraudulent to be a misrepresentation. Thus a statement intended
to be truthful may be a misrepresentation because of ignorance or carelessness, as when the
word 'not' is inadvertently omitted or when inaccurate language is used. But a
misrepresentation that is not fraudulent has no consequences ...unless it is material."

setion 2 of the Contracts Act 2010

“misrepresentation” means— see also numagaba v musana.
(a) a positive assertion made in a manner which is not warranted by the information of the person
who makes it or an assertion which is not true, though the person who makes it believes it to be true
Free consent of parties to contract section 13
Fraud(Section 15)
Where a party to a contract with intent of deceiving the other party to the contract, or to induce
them to enter into the contract through a suggestion to a fact which is not true, made by a person
who does not believe it to be true.(this only describe fraudulent misrepresentation)
check (b), (c).
DIFFERENCE BETWEEN FRAUD AND MISREPRESENTATION
If the offender knew that the representation was false, especially if he had malicious intent, then the
offense is most likely a fraudulent misrepresentation.
Black’s Law Dictionary. fraudulent misrepresentation. (18c) A false statement that is known
to be false or is made recklessly without knowing or caring whether it is true or false and
that is intended to induce a party to detrimentally rely on it. Also termed fraudulent
representation; deceit.
"A misrepresentation is fraudulent if the maker intends his assertion to induce a party to
manifest his assent and the maker
(a) Knows or believes that the assertion is not in accord with the facts, or
(b) Does not have the confidence that he states or implies in the truth of the assertion, or
(c) knows that he does not have the basis that he states or implies for the assertion."
innocent misrepresentation. A false statement that the speaker or writer does not know is
false; a misrepresentation that, though false, was not made fraudulently.

On the other hand, if the offender was unaware that the representation was false, even if he should
have known it was false, then the offense is most likely negligent misrepresentation.
Black’s Law Dictionary negligent misrepresentation. A careless or inadvertent false
statement in circumstances where care should have been taken.
SECTION 16(1)
In the event that consent is obtained by Fraud or misrepresentation, it's voidable at the option of the
aggrieved party, however,
16(2) where consent is obtained by misrepresentation/silence that is fraudulent, is not voidable if the
aggrieved party had means of discovering the truth with ordinary diligence.
16(3) if a party does not act on the fraud or misrepresentation to consent to the contract does not
render it voidable
16(4), the aggrieved party can choose to ratify the contract.
CASE LAW
Bisset v Wilkinson
The claimant purchased a piece of farm land to use as a sheep farm. He asked the seller how many
sheep the land would hold. The seller had not used it as a sheep farm but estimated that it would
carry 2,000 sheep. In reliance of this statement the claimant purchased the land. The estimate turned
out to be wrong and the claimant brought an action for misrepresentation.
The Privy Council held that the statement was only a statement of opinion and not a statement of
fact and therefore not an actionable misrepresentation. The claimant's action was therefore
unsuccessful.
Dimmock v Hallet
In selling some farm land, the defendant told the claimant that all of the farms were under tenancy,
which was factually true the defendant failed to mention that all of the tenants had given notice to
vacate their land.
issue; Could the contract of sale be rescinded?
Court held that it could be rescinded because the defendant omitted vital information, where the
reason for the question was clear.
Edgington v Fitzmaurice
The claimant purchased some shares in the defendant company. The company prospectus stated the
shares were being offered in order to raise money to expand the company. In fact the company was
experiencing financial difficulty and the money raised from the sale of the shares was going to be
used to pay the company debts.
Held: Despite the fact that the statement related to a statement of future intent, it was an actionable
misrepresentation as the defendant had no intention of using the money to expand the company.
Esso Petroleum v Mardon
The plaintiff, Mr Mardon, entered into a tenancy agreement with the defendant, Esso Petroleum, in
respect of a petrol station owned by the latter. During the course of the negotiation of the
agreement, ‘expert’ advisers employed by the defendant had provided an estimate of the sales which
the petrol station could expect which was based on inaccurate information and consequently was
significantly inflated. The value of the rent on the agreement had been calculated based on this
inflated figure. As a result, it was impossible for the plaintiff to operate the petrol station profitably.

issue; The issues were: firstly, whether the plaintiff could have any action for misrepresentation
given that the figure purported to be an ‘estimate’ rather than a statement of fact; secondly, whether
the defendant owed any duty of care to the plaintiff so that he could bring his claim in the tort of
negligence.

Held;
The Court of Appeal held that the contract could not be voided for misrepresentation as the
defendants presented the inflated figure as an estimate rather than as a hard fact. On the other hand,
as the defendant had taken it upon themselves to employ experts for the purpose of providing an
estimate of sales, they owed a duty of care to the plaintiff to ensure that this was done on the basis
of accurate information. The plaintiff was therefore able to recover the losses which he had suffered
as a result of the defendant’s negligent misstatement.

Curtis v Chemical Cleaning [1951] 1 KB 805 Court of Appeal

The claimant took her wedding dress to the cleaners. She was asked to sign a form. She asked the
assistant what she was signing and the assistant told her that it excluded liability for any damage to
the beads. The form in fact contained a clause excluding all liability for any damage howsoever
caused. The dress was returned badly stained.
Held:
The assistant had misrepresented the effect of the clause and therefore could not rely on the clause
in the form even though the claimant had signed it.
Lecture.
defined a representation,
misrepresentation, may be made, innocently, fraudulently
for a statemnet to amount to a misrepresentation
a) It must be a statement of fact, i.e it must be an assertion of fact as opposed to a statement of
opinion, e.g, in my view, you can build a 5bedroom house here, you cannot sue anyone because they
gave an opinion.
based on the words, "it seems, I think"
in Bisset v Wilkinson. opinion and not fact. If u assert an opinion categorically, not a statement of
future promise.
b) it must not be a puff, an exaggeration that is obviously mere sales talk.
c) not a promise of a future thing. Edgington v Fitzmaurice,
see, Peek v Gurney.
d) statement must've induced the representee to enter into the contract, by applying the "but for"
test. if it wasn't for the statement, he wouldn't have entered into the contract, it must have come to
their notice, they also must've believed it to be true, if you doubted the truth of the statement but
decided to take the risk, then you cant's sue, also if youu've considered other factors.
If fraud or misrepresentation doesn't cause them to consent, it can't amount to fraudulent
misrepresentation.
Silence as misrepresentation.
If he doesn't correct you when you're misled or misinformed, his silence doesn’t amount to a
misrepresentation, mere silence ordinarily doesn't amount to misrepresentation, mere silence isn't
fraud.
section 15(2) for general rule,
(2) For the purposes of this Act, mere silence as to facts likely to affect the willingness of a
person to enter into a contract is not fraud, unless the circumstances of the case are such
that, it is the duty of the person keeping silence to speak, or unless the silence is, in itself,
equivalent to speech.
however there are exceptional situations, unless the circumstances of the case are such that silence
amounts to misrepresentation, where the contract is one of Uberimae fides, a contract founded on
utmost good faith. A contract uberimma fides,e.g a contract of Insurance,
second example under, where there exists a fiduciary relationship, or special/professional
relationship, a relationship between parties that are not of equal stature in that one party puts herself
to the mercy of the other party, section 14 on undue influence talks of where one party is in place to
dominate the other party
14(5), In this section, a party is said to stand in a fiduciary relationship to another party if the party
has duties involving good faith, trust, special confidence and candor towards that other party, such
as a relationship between an attorney and a client, a guardian and a ward, a principal and an agent, an
executor and an heir, a trustee and a beneficiary or a landlord and tenant. if s/he has duties ... lawyer,
guardian...etc,
e.g family arrangements. Gordon v Gordon. a man died, and his family property was being
distributed, he died intestate,
third exception section15(3), where silence distorts a positive assertion earlier made, where facts are
changed and you don't disclose them. see; With v O'Flanagan.
Types of misrepresentation and their remedies.
fraudulent misrepresentation,
Under Section 15(1), a Fraudeulent Misrepresentation is a statement made by a party that knows it
to be untrue, or who has no reason to believe the statement to be true, or makes the statement in
reckless regard of whether it's true or false, given by the House Of Lords in Derry v Peek 1889.i.e a
tort of Deceit. Held, the directors had acted innocently by believing they'd be allowed to operate
steam powered trams.
see, Friedman v Njoro Industries, p was induced to buy shares by claiming they already had offers
from a different buyers, this turned out to be untrue, with knowledge it was false. Fraud is covered
under Section15(1), it's where the following Acts are committed with intent to defraud, ii, concealing
a fact that you know of or believe, iii) w/o any promise of performing it. iv)

negligent misrepresentation. made by a party that has a duty of care and makes the statement
w/o taking the duty of care.you must be having a duty of care. in 1914, see; Nocton v Lord
Ashbutton the law changed a bit, Court held that where there's a professional relationship you have
a duty to take care when giving technical advice.
until 1964 when Lord Denning Clarified the law in the case of Hedley Byrne v Heller &
Partners(serious case), you could be held liable for a negligent relationship, so long as you knew the
other party might act on it and indeed he went ahead and acted on it and suffered loss, regardless of
whether there was a contractual or professional relationship. probably read the full case. In his
dissenting judgement, lord Denning held as above if
i, statement made with intention to induce a party to act on it
ii, representee acted on statement
iii, representee suffered loss

This case was used in Kirima Estates (U) ltd v Korde

P lent out 60,000shs, and as security was given land, they consulted the defendant an advocate, to
find out whether the land was enough to cocerthe loan amt. D w/o consulting land valuers or even
inquiring from neighbours told them it was worth 120,000.. so they lent out, borrower failed to pay
and on putting it on he market it only fetched 45,000/. the lawyer was then sued for negligent
statements, sir, Udo Udhoma hld that the D was Perfunctory n reckless when he gave them the
figure w/o any basis.look also at see; Winther v Arbon Langrish & Southern Ltd, a man had taken a
life assurance policy, his wife Marion approached them and asked what she needed to do so as to
benefit from hubby's accidental insurance, they misadvised her, and it amounted to negligent misr
wc they were required of as experts
innocent misrepresentation.
by a party who makes a statement in the innicet but innocent belief that it is true, and the court is
satisfued that s/he did not act carelessly. see Section.(third definition),
Next week, remedies for misrepresentation. Thursday,7.30, also start on duress and/or coercion an

REMEDIES/
See section 16 CA,
Agreement is voidable in misrepresentation as opposed to mistake which voids it.
reading it together with subsection 4, Party may choose to void, or go on and perform it, or right to
i.exercise recession,
ii.claim damages
iii.right of indemnity

DAMAGES.
Ordinarily damages signify an injury, but in law it means what you get as compensation for injuries
suffered compensation in monetary terms for loss made or injury suffered, in the event that you
were misled to purchase a Laptop worth 2m after paying 3m. damage is the loss of 1m suffered.
monetary compensation for misrepresentation suffered.
Black’s Law Dictionary, Money claimed by, or ordered to be paid to, a person as compensation for
loss or injury.
HOW DO U QUANTIFY LOSS SUFFERED.
-In case it's a house, leg vehicle, get a valuer,

COURTS HAVE DEVELOPED RULES IN CASE OF MISREPRESENTATION

a.Restitutio In Integram. restored to your full rights or integrity,as if the breaching party had not
done so. had performed it the person in wc u Kilima Estates v Korde. you recover difference btn
total debt, and what u got, compensation to cover the loss suffered.

b.Test of remoteness of damages.Thyssen v Wakisu Estates

Damages that you'll recover are those which r the direct result of the other party. see; driver was
driving n the truck got a
it appears from Case Law when it's Fraud, you sue in the tort, tort for deceit. Derry and Peek,
court was

Misrepresentation complained of was innocent, you can't recover damages, instead they'll give
the party right to rescind the contract, or the misrepresenting party may give indemnity. a party that
has caused you to enter, may refund expenses, not losses/compensation. see the case; Whittington v
Seale-Hyne
Court in this case differentiated damages from indemnity, D owned a chicken farm, and through
innocent misrepresentation caused P to lease land, telling him, yadayada, although the birds died,
even manager, P sued for medical expenses, birds, etc, court said he could recover rent(rate) and
repair expenses, not profits-direct expenses incurred are recovered
Rescission.
To cancel/nullify or set aside, see sec16, as opposed to affirmation, after discovering you were
misled,you choose to continue with the contract.
What mode does affirmation take?
affirmation may be express or implied, say, you buy a house, and find it was freehold, when in fact it
was on a lease, and then you transfer title into your names, by so doing, you've impliedly affirmed
the contract.
Rescission means the C is brought to an end for all intents and purposes, i.e return what you took,
receive what you had given i.e Status quo ante.
Mode of rescission.
Assuming goods supplied are not fit for intended purpose, see sec15SOGA, how do u reject them?,
or do u call him to collect his trash? see section 55 CA, it can be rescinded informally, by way of
notice, see relevant section.
sec 6(a) by communicating a notice of revocation. in the event that representor cannot be found,
notice may be given, by any reasonable act that puts on record intention of revocation will be
sufficient, see; Car & Universal Co Ltd v Caldwell, on discovering he had sold to a rogue, he
informed police to impound the car, Court held that informing police was enough where rogue
could not be found, or even publish a notice in a newspaper.
Rescission is an equitable remedy, under Common Law, if there was misrepresentation, u would
only sue for damages, because of chancery, remedy of rescission was introduced, initially it was only
available in fraud, and rescission is available for all types of misrepresentation, because rescission is
an equitable remedy, you only get it after satisfying canons of equity.
LIMITS OF RIGHT TO RESCIND.
a. Where the contract is affirmed, affirmation of contract takes away right to rescind.
b. Doctrine of laches(lapse of time), delay defeats equity, therefore you lose the right to rescind,
what then is a reasonable time?, each case is decided on it's merits, say you're selling milk, tomatoes,
house, what is reasonable varies from case to case. this also depends on type of misrepresentation, if
it's fraudulent court will use it to nullify the contract. Delay however can be taken as impliedly
affirming, see; Leaf v International galleries
c.Where restitutio in integram is nolonger possible, you also lose right to rescind, you can only claim
damages
situations.
i, if representee has fundamentally changed nature of subject matter, e.g where cotton has already
been turned into cloth
ii,if the representee has already consumed subject matter of the contract.
iii,where goods have been passed on to an innocent third-party.
equity acts in personum not in rem, they can only be enforced against contracting party and not
other parties. if third party has acquired interest in
Why is Fraud differentiated from other forms of misrepresentation?

COERSION/DURESS
From section10, from the definition of a contract, as an agreement made with the free consent of
parties with capacity to contract, for a lawful consideration and with a lawful object, with the
intention to be legally bound we see that consent is the basis of agreement.
section13a, Consent of parties to a contract is taken to be free where it is not caused by coercion.
Duress is a common law doctrine, where a contract could only be vitiated in case of an act, or threat
of force of a physical nature, it operated on very limited principles, i.e one amounting to a crime or a
tort, e.g threat of lawful arrest, or lawful rights to protect property. see; Hassanali Isa v Jeraj. Garage
owner repaired defendants Bike, and defendant didn't pick it for almost a year, garage owner
presented a bill with cost of repair and storage, refusing to release bike, D issued a cheque, and got
the bike, but countermanded the cheque, which was then bounced, he said he signed the cheque
because of duress, Court disagreed saying repairer is entitled to repairer's lien, and so Bike owner
could not claim it was an illegal threat.
secondly, under common law, it had to be a threat to a person, not goods or property. see; Skeate v
Beale
Third, it had to be a threat to inflict physical violence. , e.g a threat to blackmail. see; Latter v
Brandel, a housemaid was forced by her mistress to undergo a medical test, under an unfounded
suspicion that she was pregnant, or she would be sacked she was opposed, but then submitted, later
she claimed damages, because consent was not vitiated by duress because no physical violence was
threatened.
It has moved to recognise that other threats e.g economic coersion or threats. read cases, north
ocean, hyundai, liberty construction, bonnie katatumba, read cases on economic duress in reading
list, and read on undue influence

new lecture.
recap, read The Siboen and the Sibotre
see, The Universe Sentinel (1983), in view of the disastrous conequences, the threat not to sail the
ship amounted to economic duress.
North Ocean Shipping Company v Hyundai Construction Company 1979
Mocatta J held that it amounted to economic duress, he went on to add that duress only renders a
contract void and not voidable,
Right to rescind-doctrine of laches.
read; Burton v Armstrong, Pao Ong v lau Yiu Long. not every small threat made amounts to
economic duress, it must be one a person is capable of carrying out, secondly, a party pleading
duress must've had no viable options or remedies, e.g if they could have got other workers or
another ship, you must show that you had no alternatives but to succumb,
see UG cases, Boney Mwebesa Katatumba v Shumuk Springs (Int) Hotel Ltd. Court found that this
was duress, albeit, take it with caution because it's on appeal.
Liberty Construction Company v Lamba Enterprises.
Doctrine of Economic Duress.
Section 2 of the CA defines coercion, "coercion, commission or threatening to commit any act,
forbidden under any law, or unlawful detaining, to the prejudice of any person, with the intention of
causing any person to enter into a contract/ compel them to enter an agreement, it amounts to
duress. It defines it in wide terms and an improvement.
effect of duress on a contract,
section 16(1), the agreement is a contract voidable and not void, like misrepresentation and not
mistake which renders it void

Undue Influence
Black’s Law Dictionary. undue influence, the improper use of power or trust in a way that
deprives a person of free will and substitutes another's objective . Consent to a contract,
transaction, or relationship or to conduct is voidable if the consent is obtained through
undue influence
The introduction of the concept of economic duress improved things a lot, while some things didn't
amount to economic duress, but the parties were at different bargaining power, consider an
arrangement between an employer and an employee, e.g employer restricting employees, or
employer who asks women not to get pregnant.
Definition of undue influence, Justice Lindley, "unfair or improper conduct, some coercion,
overreaching, some advantage. Some unfair or improper conduct, some coercion from outside,
some overreaching, some form of cheating, some personal advantage gained by the guilty party
Andes AES v Akong Wat Mulik Systems ltd
class one
where there is actual pressure, i.e agreement voidable for undue influence. u have to prove that w/o
the pressure, u wdnt have entered into that contract. prove allegations
Class two,
where there is a fiduciary/special/confidential relationship. in such a case, all you need to prove is
the existence of such a relationship, the burden then shifts to te apatry in a stronger position to
prove that they didn't use it to influence, section14(1). covers type 2. e.g where there's apparent
authority over the other party, employer-employee, ii, where he is in a fiduciary relationship, iii,
where the mental capacity is temporarly diminished, by age, mental etc, S14(5), in case of good faith,
trust, confidence, etc,examples of fiduciary relationship
Presumption sec14(3),
under common law, once established that a perty is in position to dominate, there will be presumed
undue influence, even if the party in a superior position disn't take advatage of it. see; Allcard v
Skinner.note. she had taken about 6years although there was undue influence bse of the doctrine of
lacches, she cdnt recovr

EFFECT OF UNDUE INFLUENCE.s16(1), and when it is lost.

Discuss the law relating to undue influence, dictum of lord denning in D&C builders, in relation to
undue influence.
Discuss the dictum of Lord Denning in D & C in relation to undue influence

we shall look at illegal and void contracts,

ILLEGALITY
It is both an element and a vitiating factor, see sec10,
Agreement that amounts to a contract
A contract is an agreement made with the free consent of parties with capacity to contract, for a
lawful
consideration and with a lawful object, with the intention to be legally bound.
sec26,
Reciprocal promise to do legal and illegal acts
Where a person makes a reciprocal promise, firstly to do a certain thing which is legal, and, secondly,
under
specified circumstances, to do a certain thing which is illegal, the promise to do the legal thing shall
be a contract
but the promise to do an illegal thing shall be a void agreement.
to deal with lawful consideration there's a presumption of legality unless forbidden by law or if
permitted would defeat the law,

If the object is fraudulent. see s19,illegality renders contract void, sec26 renders is voidable, 16(1)
renders it voidable,
Where consent to an agreement is obtained by coercion, undue influence, fraud or
misrepresentation, the
agreement is a contract voidable at the option of the party whose consent was obtained by coercion,
undue influence, fraud or misrepresentation.

while in the other place it renders it void. Section 19, if a contract involves or implies inflicting injury
on a person or property, it'll be declared illegal or against public morals, this particular provision is
quite problematic seeing as immorality is a subjective standard

CONTRACTS WC ARE ILLEGAL BY STATUTE.

sec24(1),
Agreement by way of wager
An agreement made by way of an unlicensed wager is void.
For the purposes of this section, “wager” means a promise to pay money or other consideration on
the
occurrence of an uncertain event.
sec43(3) employment act,
An employer shall not impose in any contract of service, any agreement, or condition, as to the place
where, or the manner in which, or the person with whom, any wages paid to an employee shall be
expended and an agreement or condition which contravenes his section shall be invalid.

sec41, Employment Act provides for modes of payment, It must be paid in legal tender.

Tier 4 Microfinance Institutions and Moneylenders Act 2016, sec84, A person who carries on
business as a money lender without a money lending license, commits an offence,
see land act sec39,
sale of family land w/o spousal support
No person shall—
sell, exchange, transfer, pledge, mortgage or lease any land; enter into any contract for the sale,
exchange, transfer, pledging, mortgage or lease of any land; or give away any land inter vivos, or
enter into any other transaction
in respect of land in the case of land on which the person ordinarily resides with his or her spouse
and from which they derive their sustenance, except with the prior written consent of the spouse.

ILLEGAL AT COMMON LAW, ON GROUNDS OF PUBLIC POLICY

Though not illegal, they are regarded to be against public policy, this begs a question, what is public
policy? A court is not obligated to enforce tranactions which are injurious to the public. This
practise arose out of the old link between law and morality, , the first courts were Eclessiastical
courts, legal education was also run by churches.
see :Oloka Onyango (ed) Politics Democratization and the Academy in Uganda: The case of
Makerere University, see chapter 2 by benson tusaasirwe. Christ for all nations v Apollo Insurance
co, was quoted in NSSF v Alcon International, Christ for All Nations v Apollo Insurance Co. Ltd
[2002] 2 E.A 366, in which it was held inter alia:

“Public policy is a broad concept incapable of precise definition. a contract can be viewed as being
inconsistent with the public policy of Kenya if it is shown that it was either
(a) inconsistent with the Constitution or any other law, whether written or unwritten, or
(b) inimical(unfriendly) to the national interest of Kenya, or
(c) contrary to justice and morality.”

In NSSF v Alcon International

For something to constitute fraud, the act must be wilful. A representation is said to be fraudulent
not only when the person making it knows it to be false, but also when he ought to have known that
it was false. In the instant case when the Applicant advertised for tenders, both the Alcons and
others bided. The Applicant wanted a Contractor with experience in high rise buildings. On
evaluation of the bids, the Respondent was found devoid of experience and was rejected. Alcon
International (Kenya) was found to have the necessary experience and was successful. Incidentally
the two companies were run by the Hanspal family. The two knowing very well that the
Respondent had been rejected, their directors and managers, passed on the construction works to
her in a secretive manner. The Applicant was not informed, It was a deliberate concealment which
induced the Applicant to rely on it and transact business with it. This was fraud.

Lady Justice Kitumba observed, “the proceedings in this case were tainted with fraud and illegalities
and cannot stand.”

Examples of such contracts include

1,CONTRACT TO COMMIT A CRIME.
An agreement is void if made, directly or indirectly for the purpose of breaking the law e.g, contracts
to smuggle, a court of law being a court of justice, cannot assist a person to benefit from illegal
contracts, also applies in family law in the law of succession.
see;Re Giles 1972. where a widow could not benefit from her husband's will, after she killed him,
albeit being convicted of manslaughter, but with diminished responsibility The principle is, to use a
summary expression of Lord Atkin in the Beresford case [1938] AC 586, 599 that the ‘courts will not
recognise a benefit accruing to a criminal from his crime’. It is accepted that a person convicted of
manslaughter by reason of diminished responsibility has indeed been convicted of a crime.
see; Beresford v Royal Insurance.
Major Rowlandson took out five assurance policies with the defendants, Royal Insurance Co Ltd,
amounting to 50,000Pounds. in 1934 before the assurance policies expired He shot himself, the
claimant Major Rowlandson's administratrix then sued Royal Insurance Co Ltd claiming the amount
of the insurance, Issue was whether the policies had become void because of Mr. Rowlandson's act
of suicide. In relying on Crippen's case, where it was held that the estate of a man that murdered his
wife could not benefit from his crime.Lord Atkin observed a man can not get recourse to the courts
to claim a benefit from committing a crime, because o do so would remove a restraint to crime.
consequently the courts barred the administratrix from claiming the insurance on grounds that it
violated Public Policy.

Supposing the goods they plan to smuggle go to Rwanda. courts held, even if the law is of another
country, unless at war, you can't be assisted to break it.

see; Foster v Driscoll 1929. during prohibition period, a group in England and Scotland, agreed to
smuggle liquor into the USA, and that way they could make abnormal profits, however before they
could execute said plan, they got misunderstandings and sought litigation between themselves. court
couldnt enforce it because such a contract was means to undermine the laws of a friendly country, it
undermined the principle of comity. Sankey LJ observed that the courts could not sanction an
agreement that was meant to undermine the laws of a friendly country, if it was illegal in that
country.

see also;Regazzoni v Sethia, SA was put under sanctions gainst apertheid, the parties entered a
contract to transport jute from India, to Italy, seeing as Italy wasn't a commonwealth country, they
appeared in an English court, that had no connection to England, an english court cdnt enforce a
contract to circumvent national interests or policy.

case brief, Regazzoni entered an agreement for the purchase of jute bags from India, these were to
be shipped to Genoa and their final destination would be the Republic of south africa, the parties
did this to circumvent the fact that export of the same from India to South Africa was prohibited.
The central Govt of india prohibited sale of certain goods to SA.(seeing as it was a Commonwealth
memeber) Held; the contract was held to be unenforceable, it was against public policy and
international comity.(India in this case was regarded a friendly country)

2.CONTRACT TO COMMIT A TORT.

A tort is a civil wrong against a person. torts include nuisance, et al, look at the case of; H W Smith
& Son v Clinton (1908).
in this, there was a promise to indemnify a firm of printers and publishers against consequences of
libel, that it might publish in a newspaper. the said promise could not be enforced in a court of law,
because it was a contract to compel the firm to pay damages for a libellous publication

3.Contract to promote corruption in public life

NOT ILLEGAL BUT VOID(I think it shd be "not void but illegal)
Benson Lecture(later to introduce consequences of illegality) 2/11/2021
S19. From that we see;
3 types of illegality,
ILLEGAL ON PUBLIC POLICY,
Under this we can talk of Corruption. The anti-corruption act section 2(a) defines corruption as
solicitation or acceptamce by a public official of any goods, benefits, favours or promises, or
advantage for himself/herself in exchange for an act or omission in the performance of his/her
public function.

a promise to perfrom a service for a bribe can't be enforced, because the law will not enforce
arrangements which involve paying illegal gratification see; Parkinson v college of Ambulance,
The defendant, Harrison, was secretary of the College of Ambulance, a charity. He told the plaintiff,
Colonel Parkinson, that he could procure a knighthood for him in exchange for a donation to the
College. He told the Colonel the College had already done this on a number of occasions. They
plaintiff and defendant agreed that the Colonel should donate £3,000 to the College and make
further donations in return for a knighthood. Subsequently, the Colonel never received his
knighthood and sued the defendant and the College for fraudulent misrepresentation or breach of
contract.
Issues

The plaintiff argued that he was entitled to reclaim the money he had paid as he had been induced
by fraud to enter the contract. The College argued that the contract was illegal as it was against
public policy. Harrison argued that a man cannot bring an action for fraudulent misrepresentation if
the contract was illegal.
held;
the arrangement was derogatory to the dignity of the crown, and against public policy thus
unenforceable. the honours are not for sale.

During elections, suing for a return

Tekele Gebrasellasie v Sebhatu Woldemariam. about casting lots before an election, where loser had
to stand down, failure to do so, he would forfeit 5000pounds, defendant lost lots but refused to
stand down, consequently he sued? held; that the transaction was tainted with corruption and thus
unenforceabe
"every citizaen has both the right and full freedom guarantedd by the law to stand for election, and
that right can't be sold. furthermore, one can't acquire the ryt to be the representative of the people
through money or deceit"

even arrangements to pay a commission in return for a fee.

see; John Kaggwa v Koln Insaat, was it even a legal contract? it was essentially a contract to pay a
bribe. the plaintiff promised to get the defendant contacts by organizing a meeting between the
defendant and the presidnt of Uganda but wasn't paid any commission for the services renderd. the
court held that the contrct was unenforceable on the ground that contracts above 25currency points
must be in writing(see Contracts Act Section10(5)
see; Lemenda v African Middle East Petroleum Co Ltd.
Lemenda trading Co. ltd. v. African Middle East petroleum ltd. (African Middle East petroleum ltd.,
1988) in 1988. The primary obligation was that the intermediary was obliged to use his personal
influence to sign the contract in Qatar (the use of such influence, whether it was bribery, threats or
other methods of influence, was not mentioned). Arbitral decision, held outside the UK, was
executed in the UK, where the defendant’s assets turned out to remain. The judge Phillips, who
resolved this case, refused to execute a contract based on the principles of morality, because the
identical contract violated public policy in the country of execution.
The decision says;
"...In this case, Qatar, a country in which the agreement was to be executed and with which, in my
opinion, the agreement has the closest connection, has the same public policy that prevails in the
UK. In accordance with this procedure, the courts of Qatar will not carry the agreement into
execution (Illegal transactions: the effect of Contracts and Torts, 1999). In my judgment, the UK
courts could not execute a contract prepared in accordance with UK law that cannot be performed
abroad where:
a) it relates to a risky enterprise, which is contrary to principles of English public policy founded on
the principles of morality;
b) the same public policy applies to the execution country, i.e., the agreement cannot be executed in
accordance with the laws of this country"

4. CONTRACT PREJUDICIAL TO PUBLIC POLICY(Section 19(1)e

a contract that undermines state security is illegal and against public policy. consider a situation,
where a contract is signed that involves the supplying of weapons to rebles, or to injure the
president, commonest of these are contracts which involve commercial relations with enemy aliens,
a country that is declared at war.
Daimler v Continental Tyre & Rubber Company.
Facts:

In the case of Daimler Co Ltd v Continental Tyre and Rubber Co Ltd [1916],
The respondent company was incorporated in England in order to sell tyres made by a German
company. It had 25,000 shares issued. A non-German national held only one share. The company’s
directors were German.

During the First World War against Germany, the appellant company, Daimler Ltd, claimed that it
did not have to pay the money it owed to the respondent company. The appellant company argued
that such payment would constitute ‘trading with the enemy’.

Issue:

Whether Daimler Ltd was entitled to refuse the payment because the respondent company was
controlled by the enemy?

Held:

The House of Lords reiterated the basic principle that the identity of a company’s shareholders was
immaterial to the company’s separate legal personality. However, they allowed the possibility there
will be occasions when the shareholders’ identity does affect the corporate personality. This may
occur in times of war, as in the present case. The respondent company was in de facto control of the
company since all of its directors were German and most of its shareholders were also German.

In these circumstances, the House of Lords allowed the appeal.

Respondent was an English company of which all the shareholders were German and all directors
save for one were German, under the MoA, the object clause stated that the company was formed
to market in England tyres made by Germany, in 1914 World War 1 broke out and the countries
declared war on eachother, so Plaintiff sued Defendant to recover a trade debt. Defendant company
argued that, in order to pay the debt it would be to assist the enemy, and the court agreed.
a court of law can't recognise a transaction that involves intercourse with the enemy.
5,THE CONTRACT TO DEFRAUD THE REVENUE.
Tax avoidance is defined as legal measures to use the tax regime to find ways to pay the lowest rate
of tax, e.g putting savings in the name of your partner to take advantage of their lower tax band. Tax
evasion is taking illegal steps to avoid paying tax, e.g. not declaring income to the taxman.

see; Miller v Karlinski, The Plaintiff entered into a contract of service (employment) with the
defendant to be paid a weekly salary, he was also to be paid refund if he travelled, or bought
materials, one of the expenses he was allowed to recover was amount deducted from salary as
PAYE, which is personal income tax, later he sued for salary arrears and refund of expenses, held;
the provision for refund of income tax, meant that he'd earn a tax-free salary wc was against public
policy, held that he cdn't even recover arrears, because they weren't severable from the tax refund.

see; Samuel Kizito Mubiru v Byensiba, meaning of ad valorem-as a proportion, e.g stamp duty is
1.5% on land transactions. so in the instant case, P bought land at a public auction, it belonged to
defendnt who was a judgement debtor, whose land was being auctioned to recover the sum. in the
contract btn Mubiru and Byensiba. it stated that the land was bought at 500,000 when in fact it was
2.4million, to enable him pay less stamp duty, when D discovered this, he sought to recover the
land, contending that sale and transfer was void, justice karokora agreed that it was contrived to
deny state of revenue(intent to defraud the govt of its revenue by paying less stamp duty), which is
against public policy, thus illegal.
see; Margaret Namatovu v Tom Kaaya and Stanley Ndyabahika(continue)
The plaintiff Namatovu was the registered proprietor of the land. she pledged the title to the land as
security for a loan to the defendant, the defendant then also sold it. Plaintiff instituted proceedings
against defendant citing fraud in the transfers
issues for determination from the scheduling conference, inter alia.
-whether the purpoted sale from Plaintiff to defendant 1 was valid (in looking at the case, defendant
presented the transaction as a sale of land transaction rather than a money lending transaction)
-whether the transfer of land from defendant 1 to defendant 2 was valid
(when in practise, a witness that'll only give an answer after continuous prodding, comes off as
untruthful, the judges do more than just listen to words.
they also cited a case to define fraud, vide Zaabwe vs Orient Bank & 5 Others Civil Appeal No. 4 of
2006
Fraud was defined as a generic term embracig all multifarious(multi-faceted) means that human
ingenuity can devise, that an individual may employ in order to get an advantage over another by
false suggestions or concealing of the truth, or use of any trickery by which another person is
cheated. vide Chao & Others (Trading as Zung Fu Co.) case (supra) that forgery of a signature,
when proved, renders a document null and void.
Held; that the first transfer was fraudulent.
second transfer btn first defendant and second defendant was equally fraudulent because of an
under-declaration of consideration-illegal because of intention to defraud the government of its
revenue.
qui facit per alium facit per se, is a Latin legal term that means, "He who acts through another does
the act himself." It is a fundamental legal maxim of the law of agency. It is a maxim often stated in
discussing the liability of employer for the act of employee in terms of vicarious liability

6. A CONTRACT WHICH PROMOTES SEXUAL IMMORALITY.

such a contract is said to be contra bonos mores i.e, harmful to the moral welfare of society an act
contra bonos mores, and since under sec19(1)e a contract declared immoral is an illegal contract and
thus can't be enforced, historically a prostitute could not recover for services rendered, a landlord
could not recover rent for premises which he knew were to be used, wholly or partly, and again
courts have always been reluctant to enforce payment for illicit cohabitation,

Vide Pearce v Brooks.

Facts

The defendant was a prostitute who hired a carriage from the plaintiff, who was a coachbuilder, on
hire purchase terms to be paid for in instalments. She wanted the carriage to attract customers. The
defendant did not pay the second instalment on the carriage and returned it in a damaged condition,
in breach of the agreement. At first instance the jury found on the evidence that the coachbuilder
knew that she was a prostitute at the time the contract was made. The coachbuilder sued for non-
payment and for the damage.
Issues

It was argued that, as the coachbuilder knew the defendant was a prostitute, he expected to be paid
out of the profits of prostitution. He, therefore, knew of the immoral purpose to which the carriage
was to be put and should not be allowed to recover on the contract.

Decision / Outcome

The court found for the defendant. It was immaterial that the immoral purpose was not part of the
contract or whether the claimant was to be paid out of the proceeds. Bramwell B distinguished
between a contract to supply a prostitute with a carriage to be used to attract customers and a
contract to supply her a pair of shoes, as shoes were one of the necessities of life. It was part of the
principle ex turpi causa non oritur actio that anyone who supplies something for the performance an
illegal act with knowledge that it was to be used for that purpose cannot sue for the price of it. An
immoral purpose was the same thing as an illegal purpose. Therefore, the plaintiff could not recover.
Note; A court may refuse to enforce a contract involving prostitution even if prostitution is not
illegal because it's a question of morality not illegality.

7. CONTRACT OF MAINTENANCE & CHAMPARTEY(TRAFFICKING IN LITIGATION)

This arises when you finance a suit that doesn't concern you, e.g someone is injured in an accident
and you facilitate him for legal services, trafficking in litigation is forbidden bse it reduces justice to a
commodity, such trafficking may arise where an outsider agrees to finence a party, hoping that when
the suit is successful they'll share the proceeds in the form of damages.
In a book by Edmund Snell, maintenance is defined as giving of pecuniary assistance to the plaintiff
or defendant in a case by a third-party without just cause. The same book defines champerty as
maintenance, with an agreement to share the spoils, both are against Public policy. see Trendtex
Trading Corp v Credit Suisse. where the Principle of law enunciated is that; "Assignment of a cause
of action will be void as against Public policy, where the assignee does not have a sufficient interest
to justify pursuit of the proceedings for his own benefit. vide Sam Kawamara v Richard Jjuko; where
Court found that Jjuko by engaging Sam Kawamara to act on his behalf in all matters related to the
case; Richard Jjuko v AG, was well within the meaning of a Charmperty contract whose object was
contrary to Public Policy and therefore illegal. This position of Law must however be distinguished
or atleast clarified by the case of Martell v Consett Iron Ltd. In this, the action of a fishing Club in
supporting a riparian owner against the pollution of a river was held not to be a contract of
maintenance; and since that time, the grounds of justification have progressively improved.

DISCUSS THE PRINCIPLE OF LAW ENUNCIATED IN TRENDTEX TRADING CORP V

CREDIT SUISSE ON 4PAGES. ANALYSE THE JUDGEMENTS AS WELL(cOURSEWORK
QUESTION)

CONSEQUENCES OF ILLEGALITY.
S19(2) Illegality renders the contract wholly void and wholly unenforceable.
consequences
-No suit can be brought to recover money paid under an illegal contract
-Property delivered can't be recovered under the illegal Contract.
-compensation for services rendered can't be claimed through Court.

This however is only a general rule, effect of tht general rule is that a court can't interfere in a
transaction meaning the loss lies where it falls. Fortunately over the years courts have permitted
some exemptions to the general rule, notwithstandig the supervening illegality,
exception 1
where the court is satisfied that at the time the Plaintiff paid the money, delivered goods, or
performed a service, the Plaintiff was ignorant of the illegality, then he can recover,
This is now contained in section 19(2)a,
An agreement whose object or consideration is unlawful is void and a suit shall not be brought for
the
recovery of any money paid or thing delivered or for compensation for anything done under the
agreement, unless—
the court is satisfied that the plaintiff was ignorant of the illegality of the consideration or object of
the agreement at the time the plaintiff paid the money or delivered the thing sought to be
recovered or did the thing in respect of which compensation is sought
the issue here is that ignorance of the law can be a defence. i.e illegality(ignorance of the law)(I guess
in this case we could apply Pearce v Brooks, in the sense that had Pearce been oblivious that the
carriage he was designing was to reel in clients, he would've recovered through damages)

exception 2
where one party to the contract repents and withdraws from the contract before it is performed.
rather than force the party to remain in the illegal contract, the court can allow him to repudiate the
contract and restore the Status Quo Ante, however court must be convinced that the repentance is
genuine.(not withdrawing after someone hasn't paid you),
see 19(2) b,
An agreement whose object or consideration is unlawful is void and a suit shall not be brought for
the
recovery of any money paid or thing delivered or for compensation for anything done under the
agreement, unless—the court is satisfied that the illegal consideration or object had not been
effected at the time the plaintiff became aware of the illegality and repudiated the agreement;

Burden is on party withdrawing from the contract to prove repentance.

see; Bigos-v-Boustead,
The defendant sought to send his family abroad for his daughter’s health, but wanted to provide
more money than would be allowed under exchange controls. He entered into an unlawful
arrangement with the plaintiff an Italian national to get around the controls, providing security for
his repayment. The plaintiff sought to enforce the security, but abandoned that claim for its illegality.
The defendant sought the return of his security saying that since the contract was yet executory, it
was not yet illegal.
Held: The reason it had not gone ahead was not due to any repentance of its illegality, but rather
frustration by the plaintiff. The parties were in pari delicto, and the court would not come to his aid
to recover the security deposited.
Pritchard J said: ‘If a particular case may be held to fall within the category of repentance cases, I
think the law is that the court will help a person who repents, provided his repentance comes before
the illegal purpose has been substantially performed. If I were able, in this case, to take the view that
the defendant had brought himself within that sphere of the authorities, it might well be that I
would have been able to help him by saying that his repentance had come before the illegal purpose
had been substantially performed, but I do not take that view. I think, however, that this case falls
within the category of cases which I call the frustration cases whereby the plaintiff’s refusal to carry
it out. Consequently, Bousted could not recover his share certificate under the contract.

see; Ailion v Spekerman(no such case on the internet)

exception3
where court is satisfied that party was induced to enter into cntrct through, Fraud, misrepresentation
section 19(2)c An agreement whose object or consideration is unlawful is void and a suit shall not be
brought for the
recovery of any money paid or thing delivered or for compensation for anything done under the
agreement, unless—the court is satisfied that the consent of the plaintiff to the agreement was
induced by fraud,
misrepresentation, coercion or undue influence

exception 4
where parties are not in Pari Delicto(not at equal fault) this arises where the law rendering the
contract illegal imposes on one party the duty to ensure that the contract is complied with. When it
isn't complied with, that party is more guilty than the other, in such a situation, the less guilty party
can recover.
sec19(2)d,
An agreement whose object or consideration is unlawful is void and a suit shall not be brought for
the
recovery of any money paid or thing delivered or for compensation for anything done under the
agreement, unless—
the agreement is declared illegal by any written law, with the object of protecting a particular class
of persons of which the plaintiff is one.

see; sec26 Empt Act 2006, A contract of service made with an illeterate employee must be attested
to, subsection(4) provides that a contract which chould have been attested to but wasn't may be
enforced at the instance of the employee and the absence of attestation shall not prejudice in any
way the rights of the employee.
see; Kiriri Cotton Co v Dewani.
This case considered the issue of illegal contracts and whether or not a tenant could recover all of
the rent paid to a landlord under a lease that was in violation of legislation in relation to excessive
rent.
Lord Denning held that in the instant case, the parties were not in Pari Delicto, because the duty of
observing the law was placed on the shoulders of the Landlord and not the tenant. this appears a
modification on the rule that says that money paid under a mistake of law, by itself and without
more can never be recovered,...If there is something more in addition to a mistake of law-something
in the defendant's conduct which shows that, of the two of thm, he is the one primarily responsible
for the mistake, then it may be recovered back. then they are not in pari delicto and the money can
be recovered back.
we shall contiue. read sec21 and 22 of the cA, read on contracts in restaraint of trade, read Giella v
cassman,... esso petroleum v Harper's garage, Nordenfelt v Nordnfelt Maxim gun and ammunition,
read A+wood v Lamont, Lee v Showmen's guild of GB, hamman v Charlesworth

PRE-CLASS RESEARCH.
Paul Richards, A contract in restraint of trade is one by which a party restricts his future liberty to
carry on his trade, business or profession in such manner and with such persons as he chooses.

section 21, basically an excerpt of Nordenfelt v Maxim Nordenfelt Guns and ammunition co, In this
the Contracts Act is to the effect that generally speaking,
Contracts in restraint of trade are unenforceable, except if the retraint is reasonable to the parties to
the contract or public interest. it follows;
Subsection 2 that such an agreement shouldn't exceed what is reasonably necessary to protect the
interests of the promisee(e.g Employer). the burden of proving that the contract of restraint of trade
is unreasonable or unfair to public interests lies on the promisor/employee, while the one to prove
that the said contract is reasonable lies on the promisee or in some cases employer. thus the burden
of proving that the restraint is reasonable or isn't lies on the party alleging it to be so.
employer-employee contract.
-solus agreements.
-sale of business goodwill
CASE LAW
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co.
A machine-gun manufacturer sold his business and agreed in the contract of sale to restrict his
future activities in that business worldwide for 25 years. The covenant was held to be valid and
binding
In assessing whether the restraint on trade is enforceable, the courts will focus on whether the
contract between the two parties is reasonable, and if the limitation would not be in the public’s
interest.

This case is the leading authority for the assessment of restrictions in the sales of businesses. In this
case, Nordenfelt, an arms manufacturer, sold his business to Maxim. The contract included a term
preventing Nordenfelt from selling guns or ammunition anywhere in the world for twenty-five years,
and to not compete with Maxim in anyway.

The court held that this clause was partially valid. The part preventing competition ‘in any way’ was
not valid due to its complete restriction on trade. However, the rest of the clause was valid due to
these reasons:

-A substantial fee had been paid which reflects the fact he could not compete for 25 years
-The amount of customers willing to buy arms and ammunition was limited, therefore the restriction
not to sell ammunition anywhere in the world was valid because it was no wider than necessary to
protect Maxim.
-The restriction was not damaging to the public interest

Is the contract reasonable?

The case of Herbert Morris Ltd v Saxelby [1916] AC 688 is the leading authority for the assessment
of reasonableness in this area of law. This case involved an employment contract that included a
term that restricted the defendant from carrying on any related trade for seven years in the event he
left the plaintiff’s employment. The defendant left the job and the plaintiff attempted to enforce this
term. The courts held that this term was not enforceable. In this House of Lord judgment, the
courts identified general presumptions for deciding whether or not a contract may be illegal due to a
disproportionate restraint on trade.

-Employment contracts that restrict former employees from being employed by competitors would
not normally be valid.
-Employment contracts that prevent the loss of trade secrets or stealing of custom would normally
be valid
-Terms in a contract for the sale of a business preventing the seller setting up another business in
competition with the purchaser’s business are normally valid

Once one of these presumptions has been identified, the duration and the geographical extent of the
limitations made by the contract will be considered, even activities. These limitations should not be
disproportionate. For example, a contract which prevents the seller of a business setting up a
competing business in the same area would likely be valid, but not one preventing the seller setting
up a similar business anywhere in the world. Some further case examples can be found below.

Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269

Tie in agreement for 21 years was an unreasonable restraint on trade

Facts

The appellant entered into two agreements for the supply of motor fuel to the respondents. The
respondents agreed to a tie-in agreement not to resell motor fuels except in accordance with the
appellants’ retail schedule prices, not to operate any discount scheme and to keep their garages open
for reasonable hours. The period of agreement at one garage was 4 years and 5 months and at the
other garage there was a solus agreement for 21 years and a mortgage with a tie covenant which
forbade redemption for 21 years.
Issues
Thereafter, the appellants wrote to the respondents stating that they would not insist on the
implementation of the resale price maintenance clauses in the contracts. The respondents replied
that they deemed the agreements null and void by virtue of the removal of these clauses. The
respondents began to sell another brand of petrol. The appellants sought injunctions. At first
instance, judgment was given for the appellants. The respondents were successful in the Court of
Appeal.
Decision/Outcome

The House of Lords held that the doctrine of restraint of trade applied to both garages. It was noted
that the existence of a mortgage did not exclude the doctrine of restraint of trade. The shorter
period of 4 years and 5 months was valid, so that the tie-in agreement. However, the longer period
of 21 years went beyond any period for which developments were reasonably foreseeable and in the
absence of evidence of some advantage to the appellants for which a shorter period would not be
adequate, the agreement was void.

Lord Reid said he ‘would not attempt to define the dividing line between contracts which are and
contracts which are not in restraint of trade’. It was preferable ‘to ascertain what were the legitimate
interests of the [suppliers] which they were entitled to protect and then to see whether these
restraints were more than adequate for that purpose.’

GIELLA V CASSMAN
lays down conditions that have to be met before can grant an interlocutory injunction.
An interlocutory injunction is a court order to compel or prevent a party from doing certain acts
pending the final determination of the case. It is an order made at an interim stage during the trial,
and is usually issued to maintain the status quo until judgment can be made.

CONTRACTS PREJUDICIAL TO THE INSTITUTION OF MARRIAGE

The law considers that the family is the basis of civilsed society and marriage is the core of family
life.
e.g An undertaking to marry a given person limits freedom of choice of spouse see; Lowe v Peers
1768(under seal) enforceable w/o consideration. I promise miss. Catherine Lowe that I shall not
marry with anybody else besides herself.

If I do, i agree to pay Catherine Lowe 1000pounds w/i 3mths from the date when i shall marry
anybody else, she then sued for the 1000pounds, it was held that the problem was against public
policy. the law protects your rights until you marry,
2.MARRIAGE BROKERAGE CONTRACT.
hiring someone to help you get someone to marry, upon payt, they don't get you the partner, see;
Herman v Charlesworth, P askd the defendant to get for her a suitor, who'd hopefully marry her and
she agreed to pay him a brokerage fee if he agreed, and even paid a deposit, he didn't bring anybody
n she sued held; that the arrangement was contracry to public policy, it cheapened the institution of
marriage by reducing it to a mkt cdt and no court of law cd give force to such an arrangement.
3.Where a married person promises another person that when his/her spouse dies, s/he will marry
the promisee, you can't sue on it, the fear is that people might hasten the death of their spouse. see;
Spiers v Hunt

CONTRACTS IN RESTRAINT OF TRADE.

you practise a profession-qualification and carry out a trade-skills.
is an undertaking, it's not an entire contract but a paragraph, it's a provision by wc a contracting
party restricts his/her future freedom to enter a contract, carry on business or practise trade or
profession. say x enters a cntrct of svc with y that when u leave our svc you won't teach at another
university,
generally such an arrangement is considered to be against public policy bse the law considers that it
is desirable to have free movt of labour, n that cntrcts in restraint of trade tend to undermine
competition-which creates monopolies, and lowers quality, thus the law tends to be reluctant to
enforce these. these contracts may arise in 3types of arrangements
1.Employer-Employee relationships or master-servant agreements
in an empt cntrct, employer may insert a clause, by wc the employee undertakes not to set up a
competing business, or to work for a rival company upon the termination of the current cotract, this
is comon where the employee is going to be exposed to important infmn or business secrets.
example of coca cola
this arose in the case of Aniello Giella v Cussman Brown n Co Ltd p entered into a cntrct of svc
with the co, and the cntrct contained a provision stating "the employee undertakes upon the
determination of the cntrct nt to set up or engage in a similar undertakng wi a radious of 10miles,
from the centre of the post-offices in Nairobi, Mombasa, Kla, Jnja, Arush and Dar, for a period of
3yrs, from the determination of the cntrct, when he left the svc of the roof and flooring business, he
set up a similar business on the same street. the company sued and sought an injuction to stop him
carrying on the business held; that the restraint clause was unreasonable and void. an injuction cd
not issue.

2.solus agreements. an arrangement where you're appointed as a sole agent, usually btn large
corporations and those manning their retail outlets, they may be in the form of sole distibutorships
i.e depots, or the form of franchises, the main thing is you're given exclusive control, the large corp
will have invested in the retailers business, say marketing, paying for premises, painting, machinery,
fridges, et al. and in return for these benefits, retailer the undertakes not to staock the gds of rival
Cos. see; Esso petroleum v harper's Garage.(read it)

3. Sale of business goodwill. where a business is sold as a going concern i,e you take premises, stock
as well as customers, here the purchaser in such an arrangement will insist on a clause restricting
seller from doing a similar business, goodwill is the name or customers accumulated. see Nordenfelt
v maxim Nordenfelt guns and ammunition.

in general the law on cntrcts in restarint of tracde can be summarised thus;

-it's generally against public policy and void, contained in section 21(1) cA
-A cntrct in restraint of trade can however be alld n upheld if it is reasonable, how do we test the
reasonableness?
-a restraint of trade cntrct is reasonable if it is fair as btn the parties and isn't injurious to the public.
21(1 and 2) -in determining whthr a restaint is fair as btn the parties and not injurious tothe public,
the court considers,
a)Geographical coverage of the restraint,
b)the duration for wc it is meant to operate
c)the scope of activities wc are restricted i.e may not deal in coca cola, but waragi

conclusively therefore, a person is entitled to protect his business secrets, but is not entitled to
protect himself from competition per se,

Article 25 of the constn, 25(1) no persons shall be held in slavery or servitude, clause 2 no person
shall be compelled to perform forced labour article 40, see maj Gen David Tinyefuza, how far can
one enforce a restraint of trade w/o contravening the constitution
SEE; attwood and lamont,
consider Mobile Money, Nile breweries and fridges
No.3CONTRACTS WHICH OUST THE JURISDICTION OF COURTS.
is a provision of a cntrct by wc a party undertakes not to refer any dispute arising in the contract to a
court of law, it is considered that an arrangement wc closes the doors of justice is void, it tis
contained in s22(1) it provides that a cntrct wc prohibits a party ABSOLUTELY from
seeking/taking legal proceedings in the event of breach or wc limits the time in wc he can do so is to
that extent void.
difficulties arise where the cntrct wc proibits going to court provides ADR i.e labour officer, where
disputes arising shall be refer to a mediator, or arbitrator, is that valid? sec22(2), where it prohibits
court but provides an alternative, the D can strike down the suit bse of that provision, sec3,4,5 of
Arbitration oand concilliation act, when a cntrct conntiains an arbitratuon clause, sec 4 empt act,
any provision in a contract of svc by wc isnt allowed from refering a dispite to a labour office is
valide,remaining qn is where a cntrct contains an arbitration clause, and the cntrct says the decision
of the arbitrator shall be final and shall not be appealable. such a provision is nott valid in particular
where it prohibits/prevents appeals to the court on questions of law, however a provisionwc makes
arbiter onmatters of fact has been held final (facts and not law), this was enunciated by Lord.
Denning in lee v showmen's Guild of Great Britain. 'parties cannot by their cntrct oust the ordinary
courts from their jurisdiction, they can indeed make the tribunal final arbiter on qns of fact but they
cannot make the tribunal the final arbiter on questions of law, they cannot prevent its decision being
examined by the courts. if the parties shd by their agreement take the law out of the hands of the
courts, and vest it in the hands of a private tribunal w/o recourse at all to the courts of law, in cases
of error of law then the agreement is to that extent void" agreement can name who the arbitrator
would be, how s/he would be chosen,

CONSEQUENCES OF A VOID CONTRACT. (Not illegal)

unlike illegality where a cntrct is only void, the courts r more lenient, the whole cntrct will not be
struck down, only the provision affected will be rendered void, but the rest of the cntrct shall be
rendered valid

subsequent transactions arising may not themselves be void, e.g

unlike an illegal agreement, money paid under a void agreement is more easily recoverable, e.g
Herman v Charlesworth, although the cnrct was declared void, court ordered a refund of the
deposit she'd already paid.

finally the principle of severance wc applies to illegal cntrcts applies to void cntrcts as well, if it's
made of different units, it can still enforce the units untouched by the illegality. e'g a cntrct to
deliver, guns, smuggled goods, furniture. they'll sever off what is valid Attwood v lamont.
READ.
shell & Ors v Mwema & Co Advocates. see Mansell v Robinson, Modern Interpretation on
4principles..whether cntrct will interfere with justice or not, bevran ashford v geoffe.
in mansell, underhill J,
2nd. whether maintainer is subject to professional regulation or not. see, Mkono & co adv v jw land
war,
3rd, whether remuneration is in whole or in part a reference to the proceeds. see shell and ors v
Mwema, r(factortame ltd v Sec of State for transport local govt and the regions
4th whether the involvement is voluntary or not. trendtex.
muhammed v Alaga & Co ask nobert to send it. champerty,
south african, pricewater house corps v national potato cooperative ltd. found that champerty and m
are not relevant....read it.
exceptions
-bankruptcy-where you need a lawyer from the uganda law commission, guy v churchil,
-assignment of future proceeds of litigation, glegg v bromleg
-kinship or charity and donations. hurtley v hurtley
-s19(2)

Professor Ben Shokolo

Shokolo Notes
When reading, students should note a few salient points.

Performance. The general rule is that performance must be exact and precise. However, over the
years, this harsh and strict rule has been relaxed to create exceptions, including substantial
performance; partial performance; and prevention of performance.

Agreement. The general rule is that what has been created by agreement can be
dissolved/extinguished by agreement. Discharge by agreement takes a number of forms: accord and
satisfaction; novation; waiver and variation.

Breach: Revisit the first semester discussion of breach of condition; fundamental term. Repudiation.

Frustration: This is where a contract is brought to an end due to circumstances beyond the control
of either party. Distinguish common mistake from frustration. With common mistake, there is initial
impossibility to perform. Assuming X contracted to sell a live cow to Y at UGX 3 million. An
agreement of sale is signed on 15 November. Unknown to both parties, the cow was killed by
lightning on 14 November. That contract may be void due to common mistake. At the time of
signing the agreement, the subject matter didn't exist.
Assuming the cow was killed on 17 November, that would be subsequent impossibility to perform
the contract. The contract is said to have been frustrated.

Pay attention to all the circumstances under which a contract may be frustrated.

Pay attention to the effects of frustration on a contract. Section 66 of the Contracts Act.

You must cite relevant provisions of the Contracts Act, 2019; Sale of Goods and Supply of Services
Act, 2017; and case law. Check ulii for recent Ugandan cases.

Read the relevant chapter in texts, including Ben Kiromba Twinomugisha, Principles of the
Law of Contract in Uganda.
Discharge of a contract relates to circumstances under which a contract is brought to an end.
parties to the contract are therefore freed from their continuing obligations under it.
agreement
performance,
frustration.
repudiatory breach
Agreement; a contract may be discharged where both parties agree to come to an end and therefore
release each other from the contract. For parties to discharge themselves from the contract, there
must be accord and satisfaction; agreement in that each party freely agrees, and there's giving away
consideration, i.e both parties give up their rights under the contract. it's essentially a contract to end
a contract.
performance-where both parties have fully performed their contractual obligations. performance
must match what was agreed.
.
sec33 of CA, Contracts which have to be performed
33. Obligation of parties.
(1) The parties to a contract shall perform or offer to perform, their respective promises, unless the
performance is dispensed with or excused under this Act or
any other law.
sec13 SOGA
The rule in Cutter v powell, obligations under the contract must be absolutely completed in order
for the contract to be discharged by performance, each party must finish its obligations. The sailor
died on the way and didn’t finish his promise to sail the ship, widow was entitled to nothing bse he
hadn't executed his obligations
see tender performance,

Due to the harshness in the rule, courts have come up with some exceptions;
1.Divisibility/divisible contract/severable, it may mitigate the harshness.
If the obligations under a contract can be sensibly divided, a party might be paid for the work they
did, even if the contract was not completed exactly, say someone agreeing to be paid per hour, or
weekly, courts can award parts of the contract have been completed.
Ritchie v Atkinson (1808) 10 East 295
By contract the claimant agreed to carry a cargo of specified quantity of hemp and iron. The price
agreed was £5 per ton for the hemp and 5 shillings per ton of iron. The claimant only carried part of
the agreed quantity. The defendant argued the contract had not been fully performed and therefore
no payment was due.

Held:

The contract could be divided into separate parts as the parties had agreed a price per ton. The
claimant was thus entitled to payment for the amount carried although the defendant was entitled to
damages for non-performance in relation to the amount not carried.

2.Substantial performance. If the court is satisfied that substantial performance is present, then it
might also help to mitigate the harshness of the rule in Cutter v Powell.. If a contract has been
substantially performed, some trifling failing cannot justify a refusal to pay. Founded on the maxim-
de minimus non curat lex-the law does not care about trifling things.
if it is stated in the contract. Bolton v Mahadeva
Court of Appeal

Citations: [1972] 1 WLR 1009; [1972] 2 All ER 1322; (1972) 116 SJ 564; [1972] CLY 502.
Facts
The claimant agreed to install a heating and hot water system into the defendant’s house for £560.
He then claimed that he had completed the work, but the defendant refused to pay. The defendant
argued that the claimant had not completed the work because there were numerous defects in the
system. For example, the system did not properly heat the house and let off fumes.

The claimant sued the defendant for the contract price. The defendant counterclaimed for the cost
of fixing the defects (around £174.50).
Issue(s)

Was the claimant entitled to the contract price, given that he had rendered defective performance?

Decision

The Court of Appeal held in favour of the defendant. The contract was a lump-sum contract. This
meant that it required the entirety of the contract to be performed before the obligation to pay
became due.
consider also;
Hoenig v Isaacs [1952] 2 All ER 176
Facts

A contract was concluded for the redecoration of a one-room flat for the lump sum of £750. Upon
completion, there remained an outstanding of balance of £350 for the contractor’s work and labour.
There were certain defects in the bookcase and wardrobe, the cost of repair of which was £55. The
employer refused payment of the outstanding balance, claiming a repudiatory breach of the contract
due to a failure to perform the contract.

Issues
The question arose as to whether the entire performance of the contract was a condition precedent
to payment.

Decision / Outcome
As a matter of law, the Court held that whether the entire performance of a contract is a condition
precedent to payment depends on the construction of the specific contract. In the case of a contract
for work and labour for a lump sum payable upon completion, the Court held that a contractual
promise to complete the work is an innominate term of the contract and not a condition precedent
to payment. In such contracts, an employer cannot deprive the contractor of any payment for
completed work due to the presence of some defects. Only breaches that ‘go to the root of the
contract’ entitles the employer to repudiate liability and refuse payment. On the facts, the work
under the contract had been completed and the defects did not go to the root of the contract. As the
employer is taking the benefit of the completed work under the contract, the entire performance of
the works is not construed as importing a condition precedent to the stipulated payment, but solely
as an innominate term giving rise to damages for defects. Thus, the employer was bound to pay the
contract price, yet entitled to deductions for the defects.

DOCTRINE OF PART PERFORMANCE.

If a party freely accepts part performance of an obligation, they cannot then rely on the Rule in
Cutter v Powell.similar to estoppel-ish, emphasis on free acceptance.
Sumpter v Hedges (1898)
The claimant agreed to build two houses and stables for the defendant. It was agreed that £565
would be payable on completion. The claimant commenced performance and then ran out of money
and was unable to complete. He had performed just over half of the contract. The defendant
completed the work himself. The claimant sought to recover £333 representing the value of the
work he had completed. He argued that in completing the work himself, the defendant had thereby
accepted partial performance and prevented the claimant from completing the contract.
Held:
The claimant’s action failed. The court held that the defendant had no choice but to accept partial
performance as he was left with a half completed house on his land.(again, emphasis on free
consent)

DISCHARGE BY AGREEMENT
-SEE; commonwealth v Amann Aviation(as in mutual consent)
CONDITION PRECEDENT(failure of a condition precedent)-If a condition precedent fails, then
the contract never commences at all. The condition must be met for the contract to begin. SEE;
Perri v Coolangatta Investments, a contract that relies on Finance, e.g if u don't get the loan, you
don't get to buy the house.
A CONDITION SUBSEQUENT.
if i get a weekend job, or better offer, the contract will be terminated
SEE; GEIPEL V SMITH.
If a condition subsequent occurs, then this ends the contract
a condition precedent must happen for the contract to continue,
a condition subsequent is something that must not happen, for the contract to continue.

Termination by accord or release.

TERMINATION BY FRUSTRATION
When an external event(notthe fault of either party) occurs, which changes the nature of the
obligations under the contract
see; Codelfa v State Rail Authority.
destruction of the subject matter, see Taylor and Caldwell, cntrct for hire of an amusememt park,
plaintiff hired it to do a musical, but for no fault of Cauldwell, the music venue burned to the
ground a week before the event, and Taylor sued for failure by defendant to avail the venue.
court found that the contract was frustrated
SEE; Morgan and Manser
where a musical performer agreed to a contract to performe, but was enlisted into the second world
war and had to go and serve in the war, and as a result the contract was frustrated, it was neither
party's fault, thus making the contract impossible to performe.
SEE; Krell and Henry
Henry leased two rooms with balconies from wc someone could watch the king's coronation
procession. unfortunately the procession was cancelled bse the king got sick.
the renter or lessee could still have used the balconies, but the whol purpose of leasing them was
destroyed and it was neither party's fault
NOTE,
A contract doesn't become frustrated, just bse it becomes more difficult or expensive to complete,
frustration only affects future obligations(those occuring after the frustrating event), any obligations
wc failed you before the frustrating event are still enforceable, consider Morgan v Manser, if Manser
had received the call up, after the third concert, and had initially signed for ten concerns, he'd still be
obliged to perform the three before the call up came up.
CONSEQUENCES OF FRUSTRATION.
Total failure of consideration, where either party has given full consideration but gotten nothing in
return-recission can be obtained
No total failure of consideration-losses lie where they fall-parties walk away from the contract in
whatever state they find themselves in at that time.

BREACH.
when a party to a contract doesn't performe its obligations/promises under the contract.
if it's a condition breached, if these aren't satisfied, there might as well not be a contract at all. this
gives the innocent party a right to repudiate the contract-that is to bring the contract to an end.
If it's a warranty, the contract will continue, but another remedy like damages might apply.
Anticipatory breach, where a party indicates their intention not to perform their contratual
obligations, the innocent party doesn't have to wait for the breach to actually occur before they
bring an action for breach.
Hochster v De la Tour (1853)
facts;
Claimant agreed to be a courier for the defendant for 3mths, from june, but on 11may defendant
wrote Claimant stating that he didn't need his services anymore, refusing to pay compensation,
claimant got another service contract that was to start on 4th July. the claimant brought an action on
27May for breach of contract. but defendant said there was no breach since contract was due to start
on 1st June. Court held, that where one party communicates their intention not to perform the
contract, innocent party doesn't have to wait for the breach to occur before they can bring their
claim.

start at 1:45
damages, financial compensation for breach of a contract.

remedies when there's a breach

PROF BEN LECTURE.

fundamental breach(object of contract) dilapidated piece of iron mongery. as opposed to breach of
contract.
see, forssad v Piers.
bettini v Guy-differentiating case, it was a breach of warranty.
see,Kyarimpa v Nassozi.
use both local and international cases,
future stars investment U Ltd v Nassur

anticipatory breach. where a party fails or is unable or unwilling to performe his/her contractual
obligation, it's also called anticipatory repudiation and in such a case the other party may affirm the
contract by ignoring the anticipatory breach and hold the other party to his/her obligation. s/he may
accept the repudiation as communicated to him or her to terminate the contract and sue for
damages.
see section35CA, refusal of party to performe a promise.

DISCHARGE BY AGREEMENT

SUMMARY FROM PROF BEN

When reading, students should note a few salient points.

Performance. The general rule is that performance must be exact and precise. However, over the
years, this harsh and strict rule has been relaxed to create exceptions, including substantial
performance; partial performance; and prevention of performance.

Agreement. The general rule is that what has been created by agreement can be
dissolved/extinguished by agreement.(look for the latin maxim)- Discharge by agreement takes a
number of forms:unilateral i.e accord and satisfaction;
novation, Black's Law dictionary defines a novation as novation, The act of substituting for an old
obligation a new one that either replaces an existing obligation with a new obligation or replaces an
original party with a new party.

Discharge by waiver and variation see section 67CA- the parties can agree to vary the terms of the
contract, see; Rickards v Oppenheimer, check the Tanganyika case
novation-section 51CA-parties agree o substitute terms.

Breach: Revisit the first semester discussion of breach of condition; fundamental term. Repudiation.

Frustration: This is where a contract is brought to an end due to circumstances beyond the control
of either party. Distinguish common mistake from frustration. With common mistake, there is
initial impossibility to perform. Assuming X contracted to sell a live cow to Y at UGX 3 million. An
agreement of sale is signed on 15 November. Unknown to both parties, the cow was killed by
lightning on 14 November. That contract may be void due to common mistake. At the time of
signing the agreement, the subject matter didn't exist.
Assuming the cow was killed on 17 November, that would be subsequent impossibility to perform
the contract. The contract is said to have been frustrated.

Pay attention to all the circumstances under which a contract may be frustrated.

Pay attention to the effects of frustration on a contract. Section 66 of the Contracts Act.

You must cite relevant provisions of the Contracts Act, 2019; Sale of Goods and Supply of Services
Act, 2017; and case law. Check ulii for recent Ugandan cases.

Read the relevant chapter in texts, including Ben Kiromba Twinomugisha, Principles of the Law of
Contract in Uganda. Nagooya v Trustees

LOOK AT LOCAL CASES IN ADDITION TO THE ENGLISH CASES.

frustration, from the general rule, parties must perform in accordance with the obligations of the
contract, howvr a party might be unable to performe because of an "act of god", factor beyond the
parties control.

using destruction of the subject matter

distinguish common mistake-where both parties are mistaken about the same thing existence of the
subject matter, that is res extincta where parties signed a contract for sale and purchase of a house,
however unknown to both of them, the house had been burned before they signed the contract,

SEE; coutrier v Hastie i.e. it is therefore void ab initio bse there's no subject matter i.e initial
impossibility to perform.

FRUSTRTION.
Without fault of either party
An obligation has become incapable of being performed.
Because the circumstances have rendered performance radically different.
(Codelfa Construction v State Rail Authority of NSW. Good authority.. the one of the
costruction site and an injunction)
Categories of frustration.
Destruction of the subject matter.
See, Taylor v Caldwell in Frustration, destruction of the music hall. there's subsequent impossibility
to perform, at common law, in case of a frustrating event, the contract was void. (it must become
impossible and not more difficult) see Morgan and Manser. (the law changed the circumstances,
and incapacitated the party to frustrate the contract)

Death or incapacity of a party. Although the plumber can’t complete the work, perhaps his
apprentice can, even legally, debts can be paid in execution of a will. The estate of the deceased
might meet the obligation.

Failure of the basis of the contract. Krell and Henry. The balcony was hired to see the coronation
parade, (take this with a pinch of salt, frustration in the Krell and Henry case doesn’t amount to a
party entering a contract with hopes that turn out to be in vain)
See, Herne Bay Steamboat Case contrast with the above
Government Intervention/Supervening Illegality. The contract is lawful at the time it’s made, but
later becomes illegal because of a change in the law.
What doesn’t amount to Frustration?
Inconvenience, where the obligation becomes harder, or more expensive, or just plain inconvenient,
but not radically different, then there is no frustration Cooper and Sons v Nilson and Maxwell.
(from Austarlia)
Self-induced frustration
Where Frustration is provided for in the contract, if in Taylor and Caldwell the owner of the music
hall had lit the fair, it’s amount to frustration, or for example, did he have enough in place firefighting
equipment? Consider it, but the argument is, can a party have taken more responsibility, both moral
and practical-level of care must be exercised.
Effects/Results of frustration.
Where there’s a partial failure of consideration, he contract will be void in future and the losses will
fall where thy lie(From Any Marinac)
see; Fibrosa. in the event of partial failure of consideration, in 1943, an act was developed where
expenses and damages would be claimed, even when there's a frustrating event, se section66 of the
CA.
-death
-destruction of subject matter
unavailabity of suject matter
-govt intervention or illegality.
-Non occurence of an event page 193-194 See, Krell v Henry and Herne Bay Steamboat

SELF-INDUCED FRUSTRATION.
WHERE PARTIES PROVIDE EXPRESSLY FOR THE FRUSTRATING EVENT-FORCE
MAJEURE CLAUSE. sec 66.

REMEDIES. Chapter 12
Remedies for breach of contract. he'll go straight to the questions.
see; section 64(1) and (2)
Quantum meirut
REMEDIES FOR BREACH OF A CONTRACT.
Damages, Black’s Law gave the definition. To compensate the injured party rather than to punish
the breaching party.(case), purpose is restitution in integram. The injured see; Addis v Gramophone
1909. Lord Atkins Speech on damages.
Liquidated-
Unliquidated-
Dunlop Pneumatic Tyre case
Repudiation,
Rescission, seeks to place the parties back in their pre-contractual position. Leaf v International
Galleries
Specific performance, an order by the court which requires a party to the contract to perform their
contractual obligations. Courts are however reluctant to enforce this remedy and will usually
consider whether damages would be adequate, and also the type of contract. Basic v basic, contracts
of service tantamount to slavery and so courts can’t enforce it.
Injunction, the court order stops a party to the contract from doing something
Restitution. The return of the property which was transferred from one party to another. This is
the case where there’s been a total failure of consideration.
The methods which limit damages
The remoteness rule. Hadley v Baxendale, A claimant may only recover losses which may be
reasonably be considered as naturally arising from the breach, or those which may reasonably be
supposed, to be in the contemplation of both the parties at the time the contract was made.
Victoria Laundry case
Pilkington v Wood,
Parsons v Ingham 1978.
The causation rules. The loss must be because of the breach, Monarch steamship Company v
Carlson. See the case again
Mitigation. Plaintiff has a duty to take reasonable steps to mitigate or reduce his loss. A claimant
isn’t allowed to sit back and allow his losses to mount up.
In Payzu v Sonders 1919. Also consider
Pilkington v Wood.
Heads of damages.
Anglia Television v Reed.

Prof Ben notes start here.

Sec61, where there's a breach, party incurring the loss is entitled to damages
Robinson v Harman-Restitution Integram
see. Gullabhai ushillingi v kla pharmaceutical Ltd, Ahmed Ibrahim v Car and General
Ltd.

Quantum meirut, Manyindo DCJ. in Alfa Insurance Consultants Ltd v Empire Insurance Group.
appd as a measure of restoration, or measure of payt. when the contract has no fixed px.
nominal-didnt suffer any economic loss or that it can't be calculated, i.e that the plaintiff was right.
special-awarded at the discretion of the court, although party claiming them must prove them.
kyambadde v Mpigi district admin

general-see; Musisi Edward v Babihuga, for a party to be entitled to damages, s/he must've incurred
loss or incovenience.
calculated after assessment to re-imburse the plaintiff
aggravated damages-are compensatory but enhanced bse of the conduct of the defendant,
URA v Wanume David Kitamirike reflect exceptional harm done to the plaintiff by actions of the
defendant.

exemplary or punitive damages; awarded to punish and deter the defendant.

see; esso standard (u) ltd v semu opio, these are rarely awarded, but awarded in a few cases, see;
Obongo v Kisumu Municipal Council.

REMEDIES FOR BREACH OF A CONTRACT

At common law, only damages were available to satisfy breach, however where not appropriate,
court of chancery, to alleviate the burden/ loss if we were to stick to damages.

so,why an award of damages, s66(1), where there's a breach, the party suffering is entitle to receive
compansation of loss/damaged caused to him or her, thus to compensate injured party for breach of
contract. to reinstate the plaitiff to the position s/he wd have been if he had not suffered i.e
restitution in integram. see cases.

injured might decide not to sue for damages, but claim any expenses that s/he has incurred, in the
performance of the cntrct, anglia tele ltd v reed, 1972 vol 1 QB 60.

quantum meirut, alpha insurance at page 202.

types of damages.
nominal, see law of torts Njereketa although consent wasn't well handled, he was given nominal
damages, court recognises the breach, but there's no financil loss.

see sec 61 general and special damages, reflect financial loss, directly or naturally from breach of
contract, see cases here in book, e.g musisi and babihuga.
special,
aggravated damages, that breach moves beyond the ordinary nd deserves additional compensation,
see ura v wanume david, to reflect excptional harm done to the plaintiff.

court may award interest on amt of damages awarded section 66 sog, buyer or seller has right to
recover interest, see BM technical svcs case

see Ahmad Ibrahim v car and General ltd, where court awarded punitive damages.

damages for discomfort, but damages claimed must be commensurate with loss suffered, see 101
Evidence Act
see s61(2) compensation isn't to be given through indirect or remote loss, lossed sustained must be
directly connected to the breach suffered.
see Hardley v baxendale, see extract judgement from Baron...
must be reasonably contemplated,

see page 205, Victoria Laundry v

at page 206, see Justin Olijo v ...Katutsi restated the principles and further restated the example laid
down in the earlier cases
conc.
based on the above cases, damages claimed must be.... and in fact Katutsi J citing earlier cases
restated the principle.

ASSESMENT OF DAMAGES
Burden lied on Plaintiff, damages mustn't be too remote, s101 EA. they shd compensate innocent
party, i.e Restitution In Integram, seller may sue for non-acceptance according to SOGA, see s62,
where seller/supplier.. buyer may claim damages for non-delivery of goods or failure to supplu
services
page 209
buyer shd also try and mitigate his/her loss. meaning, buyer shd go to makt
and look for alternatives.
seller shd also reject, or sell the goods and claim difference and damages.
once there's a breach of warranty, sue for breach of warranty.
see, case 0n page 211-212, just see book.

before 2010 CA,

freedom of contract in early parts of the book, was criticized.
see sec 62,
page 213, specific performance.
see sec65

injunction, prohibitory or mandatory, say court making a prohibitory injunction

all of you must read Bakibinga Law of contract agency, and latest cases on Agency and Ulii,

read on quasi contracts in the 2010 edition. and agency in the current book

Agency.(from Shaveen)
An agency relationship is established between, a principal, agent and a third party, it’s a mechanism
by which a multiplicity, can occur with the principal. The principal divests authority, either special
or general who in turn can contract on behalf of the principal with a third-party.
The principal rests on authority.
It can be for a single transaction or a series of transactions. There exists a fiduciary relationship
between the principal and the agent. Remember a company can’t operate on its own.
Secret Profit, when either the Principal or Agent makes a profit without either party’s consent. If
authority is to only sell cars, selling trucks goes beyond the authority, likewise, in the business of
selling cars, if the agent keeps a profit without declaring it to the principal, this vitiates the authority.
Supposing the third party suffers loss, he can sue the principal. Also if agent goes beyond authority
and caused a loss for a third party, the principal can sue the agent to recover loss paid to third party
by principal.
Note; If agent was acting within the confines of the authority divested by the principal, the third
party can then sue the principal and the principal will thus not be able to recover from the agent.
Types of Principals
Disclosed, third party knows exactly who principal is can therefore sue agent or principal
Undisclosed, Third party doesn’t know of Principal, can therefore sue the agent.
Partially disclosed. Third party knows of P, and can sue either Agent or Principal depending on
the elements of the contract itself. The agent communicates that s/he is working for someone else,
although he hasn’t disclosed who the principal is.
Types of Agents.
General agent, s/he looks after all the interests of the principal, and in the example of the car
salesman, has authority to sell any type of car.
Special agent, has few or specific powers of authority, say to sell only jeeps.
Mercantile.
Factor agent. Keeps the goods and sells on behalf of principal, third-party pays to principal
directly.
Forwarding, takes from Principal and delivers, e.g DHL
Broker. Pseudo or quasi, although there’s no agreement or contract, thee broker gets a commission.
Agency by Estoppel. Principal makes a representation/statement to a third party and to an agent
Requirements.
There must’ve been a representation (by word or action), third party must have relied on it, third
party must’ve suffered loss.
See Lintern v Spiro
Facts:
In the case of Spiro v Lintern (1973), the first defendant, Mr Lintern, wished to sell his house. So, he
asked his wife, Mrs Lintern, the second defendant, to instruct an estate agent to find a buyer.
Unknown to Mr Lintern, with the purpose to sell the property, his wife entered into an agreement
with the plaintiff, Mr Spiro. Mrs Lintern introduced herself as principal, real owner of the property.
So, so there was no question regarding the apparent authority. When Mr Lintern discovered the
truth, he did not inform Mr Spiro. On the contrary, Mr Lintern allowed Mr Spiro to continue the
agreement and even incur expenses with architects and builders on the property. Before the
finalization of the sale of the property, Mr Lintern attempted to sell the property to another buyer
for a higher price. As a result, Mr Spiro brought an action claiming against the defendants. Mr
Lintern claimed that: (i) his wife had no authority to sell the property on his behalf; and (ii) his wife
made the contract as principal and since she did not own the house the action for specific
performance against her must fail.
Issue:
Whether the first defendant was estopped from contending that the contract was made without his
authority?
Held:
The Court of Appeal, dismissing the appeal, found that the plaintiff, Mr Spiro, acted under a
mistaken belief that Mrs Lintern, was under a duty to sell the property to him. In the circumstances
of the present case, the real owner of the house, Mr Lintern, was under a duty to disclose to the
plaintiff that his wife had acted without his authority. His failure to do so amounted to a
representation by conduct that she had his authority. So, the Court of Appeal concluded that the
plaintiff had acted on the Mr Lintern’s representation and had suffered damage. Mr Lintern was
estopped from claiming that the contract on selling the property was entered into force without his
authority.
Agency by Ratification.
Agent contracts without authority, when the principal gives authority retrospectively, and therefore
the agency relationship becomes effective from the day of the act itself,
Note;
The act done w/o authority must be legal,
Requirements
At the time of the transaction, the agent should have acted on behalf of the principal, and for the
benefit of the principal. National Oilwell v Davy Offshore

The agent must have disclosed to the third party that he’s an agent
The third party must have believed that the agent has the required authority to contract on behalf of
the principal.
Pricipal must be competent at the time of the contract itself as well as ratification. i.e not be
bankrupt, or an enemy of state and of sound mind at ratification
Ratification must be within a reasonable time.
Even if the requirements are fulfilled, ratification is at the discretion of the principal, the third party
can’t.
Facts:
In the case of Bolton Partners v Lambert [1889], a third party offered to sell the property to the
managing director of a company. The latter accepted the offer without authority on behalf of the
company. After some correspondence, the defendant withdrew his offer stating that he had been
misled regarding the value of the property.
The plaintiff company claimed specific performance of the agreement. In response, the defendant
denied the existence of any complete contract.
Issue:
Whether there was a valid contract for the sale of the property?
Held:
The Court of Appeal held that the defendant was prevented from withdrawing the offer as the
contract was timely ratified. In particular, according to the court, the contract, once ratified, should
be treated as if it had been made with proper authority from the start. In the present case, the
contract for the purchase of the property was valid. Protects the principal and agent.
Effects of ratification.
Makes an agency relationship between Principal and Agent retrospectively applicable. It means an
automatic contract has been established between the principal and the third-party, thereby the
Principal is liable for any remedy if the third party has suffered a loss, likewise the agent is
indemnified from anything that occurs thereafter since the principal has taken full control of the
contract, the third party can then directly sue the principal in case of breach or any remedy required.

page 20, page 221

shokolo book
agency defn page 217.
Creation of an agency 218
Actual authority 219
Apparent authority/agent by estoppel. 220
Necessity or emergency 222 section 124 sachs v miklos
Ratification-224.sec130(1)
express or implied, that a
read woto, skenwick, nick v nkumba university.. bamwine case.

agency by necessity/emergency, page 222.

the argos, 222,223
presumed(a type of implied agency)

section122

Gratuitous agents aren't entitled to remuneration, see page 231-232

From the online lecture
Fiduciary relationship, it shows that a party owes a special duty of care and responsibility of
putting another’s interests before e your own interests and that you’re going to carry out faithfully
and confidentially the actions of someone else, examples, attorney-client relationship.
How agency relationships are formed, consensual, no consideration required, principal must have
contractual capacity, agent does not(at the time of making the agency), and can be for any legal
purpose.
Agency by agreement. Formed through express consent(oral or written) or implied by conduct.
Agency by ratification, when they did it they weren’t an agent but that we kinda like what they did.
And so we ratify their actions retroactively. After the fact.
Agency by estoppel, assumes the person isn’t your agent and that you didn’t agree with them, but
there were circumstances that existed that caused a third-party to think that they were your agent,
you knew about it, but didn’t do anything to clear up the situation. The best buy example.