This is a slide show on the rudimentary elements of contract law.

1. Contract Law
Dr Joy Malala-Scholz
jmalala@strathmore.edu
Documents
• Course Outline
• Seminar Workbook
Advice and feedback hours:
Mondays 11am-12pm & Wednesday 11am-
During reading week – by appointment

2. Housekeeping
Lectures: There shall be 12 lectures throughout the whole
Semester.
Seminars – start week 3 (any problems please email Cynthia
Amutete ahead of week 3)
Any permanent change needs to be officially agreed by Cynthia
Amutete
Please keep to Lecture groups. Absences – please inform Cynthia
Amutete
Module website –Materials shall be posted onto the E-Learning
Website.
Assessments
60% Final Exam
40% (20% Seat in CAT, 20% Seminar Work)

3. Course texts
A sufficiently detailed Contract law textbook (personal choice)
Ewan McKendrick, Contract Law Palgrave book – new edition 2013)
OR
Jill Poole, Textbook on Contract Law – new edition 2014
Others available on Reading list
Cases & Materials
Beale Bishop and Furmston
More recent cases online via course pages
Unit Handbook.
Other materials
Downloadable via “Lecture notes and Information”
E.g. Chitty (main practitioner text) – accessible via Westlaw
Morgan, Great Debates: Contract Law
Online links (see e-learning)

4. What to expect…
Case heavy
Contract in context
Will make many references to UK cases (but always be aware
of which jurisdiction the case comes from).
Some links with other modules (see course notes for details of
reading on tort – property – equity)
Skills
Analyse how the judges approach the decision-making
Backward reasoning/forward reasoning (Atiyah)
Policies pursued by the different principles
Problem-solving – backing up with legal authorities
Essay writing – seeing how the topics link together (some
economic analysis)

5. Sources of Law of Contract
• Under Section 2(1) of the Law of Contract Act CAP 23 the
sources of law of contract are;
1. Substance of Common Law
2. Doctrines of Equity
3. Certain Statutes of General Application
4. Other Acts of the Kenyan Parliament

6. What is a contract?
Promises?
Agreements?
Can it exist without the law to support it?

7. Elements of Contract
• Offer
• Acceptance
• Capacity
• Intention
• Consideration
• Legality
• Formalities if any.

8. Varied types of contract
Sale of Goods (discrete contract in shop)
Raw materials
Transport (may be relational)
Employment (relational) Packaging
Production
Advertising
Infrastructure
Intellectual property (trade
marks, copyright etc)
Franchises
Leases on shops
Construction
Consumer protection
legislation
Insurance

9. Formation
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Privity?
Consideration
CONTRACT

10. Formation
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Privity?
Consideration
CONTRACT
AGREEMENT
MISTAKE –
e.g. mistake
about the
price

11. Formation
Privity?
Grounds for
avoiding contract
Misrepresentation –
Duress
Undue influence
Unconscionability
Procedural issues affecting validity of
otherwise valid contract
CONTRACT
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

12. Formation
Privity?
CONTRACT
Impossibility:
Common mistake
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

13. Formation
Privity?
CONTRACT
Impossibility:
Frustration
Parties are no
longer obliged
to fulfil their
obligations
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

14. Formation
Privity?
CONTRACT
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

15. Formation
Privity?
CONTRACT
TERMS OF THE
CONTRACT
Incorporation
- Express
- Implied
Interpretation
BREACH
of terms
Caused Loss
[Controls]
Remedies
Withhold performance
Termination
Damages
-Rules on limits on recovery
Specific performance
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

16. Formation
Privity?
CONTRACT
TERMS OF THE
CONTRACT
Incorporation
- Express
- Implied
Interpretation
BREACH
of terms
Caused Loss
[Controls]
Remedies
Withhold performance
Termination
Damages
-Rules on limits on recovery
Specific performance
Grounds for
avoiding contract
Misrepresentation –
Duress
Undue influence
Unconscionability
Procedural issues affecting validity of
otherwise valid contract
Impossibility
(frustration/
Common
mistake
Intention
to create
legal
relations
Agreement
[offer &
acceptance]
Consideration

17. What is the function of contract
law?
Economic function?
Difficulty of simultaneous exchange
Certainty/trust & confidence
English law – frequently the preferred option (choice of law
clauses)
BUT
Social or moral function?
Consumer protection (influence of EU law? Perhaps )
Employment law (Labour law module)

18. Formation of Contracts
• A contract comes into existence when an offer by one party is
unequivocally accepted by another and both parties have the
requisite capacity. Some consideration must pass and the
parties must have intended their dealings to give rise to a legally
binding agreement. The purpose of the agreement must be
legal and any necessary formalities must have been complied
with.

19. Carlill v Carbolic Smokeball Co
£100 REWARD
To anyone who contracts flu, colds etc
after having used the smoke ball 3 x
daily for 2 weeks
£1000 was deposited at the bank to
demonstrate the company’s “sincerity”
in the matter

20. • £100 reward will be paid by the Carbolic Smoke Ball Company to
any person who contracts the increasing epidemic influenza
colds, or any disease caused by taking cold, after having used the
ball three times daily for two weeks, according to the printed
directions supplied with each ball.£1000 is deposited with the
Alliance Bank, Regent Street, showing our sincerity in the matter.
• During the last epidemic of influenza many thousand carbolic
smoke balls were sold as preventives against this disease, and in
no ascertained case was the disease contracted by those using
the carbolic smoke ball.
• One carbolic smoke ball will last a family several months, making
it the cheapest remedy in the world at the price, 10s. post free.
The ball can be refilled at a cost of 5s. Address: “Carbolic Smoke
Ball Company”, 27, Princes Street, Hanover Square, London.

21. The Company Argued
• The company argued that the advertisement;
• Was nothing but mere sales talk
• Was not an offer to the whole world
• Was not intended to create legal relations

22. The Judgement
• The Court of Appeal unanimously rejected the company's arguments and
held that there was a fully binding contract for £100 with Mrs Carlill.
• that the advertisement was not a unilateral offer to all the world but an
offer restricted to those who acted upon the terms contained in the
advertisement
• that satisfying conditions for using the smoke ball constituted
acceptance of the offer
• that purchasing or merely using the smoke ball constituted good
consideration, because it was a distinct detriment incurred at the behest
of the company and, furthermore, more people buying smoke balls by
relying on the advertisement was a clear benefit to Carbolic
• that the company's claim that £1000 was deposited at the Alliance Bank
showed the serious intention to be legally bound.

23. • An offer has been defined as: an unequivocal manifestation by
one party of its intention to contract with another. The party
manifesting the intention is the offeror and the party to
whom it is manifested is the offeree.

24. Characteristics of an Offer
• An offer may be oral, written or implied from the conduct of
the offeror.
• An offer must be communicated to the intended offeree or
offerees. An offer remains ineffective until it is received by the
offeree.
• An offer must be clear and definite i.e. it must be certain and
free from vagueness and ambiguity. In Sands v. Mutual
Benefits as well as in Scammell and Nephew Ltd v. Ouston, it
was held that words used were too vague and uncertain to
amount to an offer.
• An offer may be conditional or absolute. The offeror may
prescribe conditions to be fulfilled by the offerer for an
agreement to arise between them.

25. • The offeror may prescribe the duration the offer is to remain
open for acceptance. However, the offeror is free to revoke or
withdraw his offer at any time before such duration lapses e.g

26. • in Dickinson v. Dodds, the defendant offered to sell a house to
the plaintiff on Wednesday 10/06/1874 and the offer was to
remain open up to Friday 12th at 9.00 am. However on the 11th
of June, the defendant sold the house to a 3rd party. The
plaintiff purported to accept the offer of Friday morning
before 9.00 am. It was held that there was no agreement
between the parties as the defendant had revoked his offer by
selling the house to a 3rd party on June 11th. A similar holding
was made in Ruoutledge v. Grant, where the defendant’s offer
was to remain open for 6 weeks but he revoked or withdrew it
after 4 weeks. It was held that there was no agreement
between the parties.

27. • The offeror may prescribe the method of communication of
acceptance by the offeree. If he insists on a particular method,
it becomes a condition.

28. Examples of Offers
• Public transport: as was the case in Wilkie v. London Passenger
Transport Board.
• Bidding at an auction as was the case in Harris v. Nickerson.
• Submission of a tender
• Application for employment

29. Summary
• A Contract begins with an offer
• The offer is an expression of willingness to contract on certain
terms
• It allows the other party to accept the offer and provides the
basis of the agreement.