CONTACT LAW (COURSE WORK)

LAW APPLICABLE
1. The Constitution of the Republic of Uganda 1995.
2. The Contracts Act, 2010
3. Case law
LEGAL ISSUES
1. Whether there was valid Consideration in the contract between Beatrice and Norman?
2. Whether Beatrice can be legally bound by her promise?
3. Whether Norman has any defence in the dispute?
RESOLUTION OF ISSUES
ISSUE 1: Whether there was valid Consideration in the contract between Beatrice and Norman?
Section 10(1) of the Contracts Act, 2010 defines a ‘Contract’ to mean 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.
From the definition about, the essentials of a valid contract are clearly brought out. For there to
be a valid contract, the following should be in place; there should be Offer and Acceptance;
Lawful Consideration and Objects; Free Consent, Intention to create legal relations and
Contractual capacity.
Consideration is defined under Section 2 of the Contracts Act, 2010, to mean a right, interest,
profit or benefit accruing to one party or forbearance, detriment, loss or responsibility given,
suffered or undertaken by the other party.
There are 3 main types of Consideration;
1. Executed Consideration
This consideration given where a promise is made in return for the promise is made in return for
the performance of an act.
2. Executory Consideration
This is given where there is an exchange of promises to do something in the future.
3. Past consideration
This is where the act constituting the consideration is in respect of something in the past. This
widely discussed in the case of Lanyero v Okene & Anor CA 29 of 2018.
The General Rule governing consideration is provided under Section 20(1) of the Contracts,
2010, and it is that, an agreement made without consideration is void.
However there are certain exceptions as provided under the same section, these include the
following;
i) Where the agreement is expressed in writing and registered under the
Registration of Documents Act and is made on account of natural love and
affection between parties standing in a near relation to each other;
ii) Where it is a promise to compensate, wholly or in part, a person who has
already voluntarily done something for the promisor or something which the
promisor was legally compellable to do;
iii) Where the agreement is a promise, made in writing and signed by the person
responsible for it or by the agent of that person, to pay wholly or in part a debt
for which a creditor may have enforced payment but is restricted by the
Limitation Act.
Basic Rules Governing Consideration
a) Consideration must be legal and for lawful object (section 19 of the
Contracts Act, 2010)
b) Consideration must be sufficient but not necessarily adequate. (Section
20(3) of the Contracts Act, 2010)
c) Consideration must move from the promise.
d) Consideration must be valuable. (Thomas v Thomas 1842 VL2 QB
page 851(
e) Consideration must not be past.
From the above discussion, it can be concluded that there was valid Consideration in the contract
between Beatrice and Norman.
ISSUE 2: Whether Beatrice can be legally bound by her promise ?
Lord Dunedin, in Dunlop v Selfridge Ltd [1915] AC 847 stated that “An act or forbearance of
one party, or the promise thereof, is the price for which the promise of the other is bought, and
the promise thus given for value is enforceable “
In the case of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, The
facts are as follows

1. Party A leased some properties from Party B, at the cost of £2,500 a year. This lease was
signed in September 1937
2. Following the outbreak of World War 2, Party B agreed to reduce the rental cost to
£1,250 due to the difficulty in letting all of the flats out.
3. Following the end of World War 2, Party B attempted to re-assert the £2,500 a year cost,
not only for the future payments, but for the rent in arrears.
 Lord Denning explained that where a promise is made which is intended to be binding, intended
to be acted upon, and is also acted upon , it becomes binding, notwithstanding any limitations of
Consideration. Therefore, in the case, as Party A had been paying £1,250 rent instead of £2,500,
they had acted upon that promise, and therefore Party B would be estopped from going back on
the promise.
This principle of promissory estoppel may be seen to operate as a way in which the requirement
of consideration is removed altogether and instead as long as there in reliance on a promise, the
agreement can be binding.
Therefore, In relation to the hypothetical scenario at hand, Beatrice can be legally bound, by her
promise of relieving Norman of the remaining 25% if he paid 75%, under the principle of
promissory estoppel.
ISSUE 3: Whether Norman has any defence in the dispute?
There are certain restrictions to the principle of promissory estoppel as discussed hereunder;
1. Need for an existing legal relationship between the parties.
Generally, promissory estoppel can only operate when there is a pre-existing legal relationship,
and will not create new ones. Lord Denning, in the case of Combe v Combe [1951]2 KB,
confirmed this.
2. There must have been a detrimental reliance on the promise
The promisee must rely on the promisor’s promise in order for promissory estoppel to operate.
The test for reliance has an extremely low threshold, all one party must do it act differently to
what they would have otherwise done based on the promise. It has also been suggested the
reliance must be detrimental, but there is clearly no detriment in High Trees
3. It must be inequitable to allow the promisor to go back on the promise
The courts of equity are remedies which attempt to ‘fill the gap’ where the common law
produces unfair results. Therefore, it would be illogical to not allow the promisor to go back on
the promise where it is in fact equitable. The law of equity, unlike the common law, affords
discretion to the courts to decide whether it is fair or not to impose the principles of equity. In the
case of The Post Chaser [1982] 1 All ER 19, in which the promise was revoked within a few
days, due to this small lapse in time, the promise would not have relied upon their promise or
changed their position, therefore, it was equitable to allow the promisor to go back on the
promise.
4. The doctrine is generally suspensory and does not extinguish rights.
A contractual modification supported by consideration will create the effect of a permanent set of
obligations for the duration of the contract. Promissory estoppel operates slightly differently,
only suspending the rights where relevant.
5. Promissory estoppel can only be used as a defence.
This means promissory estoppel can only be used as a defence in an action, not be the cause of
an action.
In the case of Akkermans Industries Engineering V A.G Civil Appeal No. 88 Of 2009 [2019]
Ugca 2019 In The Court Of Appeal Of Uganda, the justices of the Court of Appeal in
dismissing this Appeal unanimously held that the equitable doctrine of estoppel should only be
invoked as a shield and not a sword.
In the case of Combe v Combe it was stated that promissory estoppel can only operate as a
‘shield not a sword’.
In conclusion therefore, there are many circumstances in which the common law might produce
unfair results. However Norman can run to Equity for a remedy for those unfair circumstances,
in the form of Promissory estoppel.