Business Law 1

COURSE MANUAL
INTRODUCTION TO LAW
BUSINES LAW 1
DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY

SCHOOL OF BUSINESS
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Copyright © 2013 by DeKUT
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http://dkut.ac.ke/elearning/
DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY

SCHOOL OF BUSINESS
Dedan Kimathi University of Technology

P.0. Box 657
Code 10100
Nyeri Kenya
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Website: www.www.dkut.ac.ke
Acknowledgements
The DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS wishes to
thank those below for their contribution to this Course Manual
INTRODUCTION TO LAW
Contents
About this Course Manual 1
How this Course Manual is structured............................................................................. 1
Course overview 3
Welcome to [Business law 1] [Course sub-title] .............................................................. 3
[Add course title here] [Course sub-title]—is this course for you? .................................. 3
Course outcomes............................................................................................................... 3
Timeframe......................................................................................................................... 4
Study skills........................................................................................................................ 4
Need help? ........................................................................................................................ 5
Tasks ................................................................................................................................. 6
Self-Assessments .............................................................................................................. 6
Getting around this Course Manual 7

Margin icons ..................................................................................................................... 7
Topic 1 9
THE NATURE AND SOURCES OF LAW AND IT’S ADMINISTRATION ............... 9
Introduction:Law concerns people.It is an everyday activity .indeed law is alive.. 9
Law and Morality .................................................................................................. 11
Purposes or Functions of Law ............................................................................... 11
Types and Classification of Law ........................................................................... 12
Unit summary ................................................................................................................. 14
Task................................................................................................................................. 15
Self-Assessment.............................................................................................................. 15
Unit 2 17
SOURCE OF KENYA LAW AND ADMINISTRATION OF THE LAW ................... 17
Introduction ........................................................................................................... 17
SOURCES OF KENYA LAW.............................................................................. 18
The Judicature Act Cap 8, Laws of Kenya............................................................ 18
The Kadhi's Courts Act 1967 ................................................................................ 19
The Legal Pyramid ................................................................................................ 19
STATUTE LAW ................................................................................................... 20
ADVANTAGES AND DISADVANTAGES OF ACTS OF PARLIAMENT ..... 22
DISADVANTAGES OF STATUTE LAW .......................................................... 23
SUBSIDIARY LEGISLATION (delegated)......................................................... 25
JUDICIAL CONTROL ......................................................................................... 27
TYPES OF SUBSIDIARY LEGISLATION ........................................................ 28
APPLICATION OF THE UNWRITTEN SOURCES OF KENYA LAW........... 29
ii Contents
THE UNWRITTEN SOURCES OF KENYA LAW ............................................ 30

AFRICAN CUSTOMARY LAW ......................................................................... 33
HINDU LAW ........................................................................................................ 35
ADMINISTRATION OF THE LAW ................................................................... 36
STARE DECISIS AND ITS APPLICATION BY THE KENYA COURTS ....... 40
Unit summary ................................................................................................................. 43
Task................................................................................................................................. 43
Self-Assessment.............................................................................................................. 43
Unit 3 45
LAW OF PERSON......................................................................................................... 45
Introduction ........................................................................................................... 45
NATURAL PERSON............................................................................................ 46
NATIONALITY OR CITIZENSHIP.................................................................... 46
INCORPORATED AND UNINCORPORATED ASSOCIATIONS................... 47
Natural Persons 47
TYPES OF CORPORTATIONS........................................................................... 49
UNINCORPORATED ASSOCIATIONS ............................................................ 50
Unit summary ................................................................................................................. 52
Task................................................................................................................................. 53
Self-Assessment.............................................................................................................. 53
Unit 4 55
LAW OF CONTRACT................................................................................................... 55
Introduction ........................................................................................................... 55
SOURCES OF THE KENYA LAW OF CONTRACT ........................................ 56
Types of Contract .................................................................................................. 56
Definition 56
ELEMENTS OF A CONTRACT.......................................................................... 57
2. ACCEPTANCE................................................................................................. 61
3. CAPACITY ....................................................................................................... 66
4. Consideration..................................................................................................... 74
Exception ..................................................................................................... 75
5. FORMALITIES................................................................................................. 95
6. ILLEGALITY ................................................................................................... 98
VOID CONTRACTS .......................................................................................... 100
7. INTENTION ................................................................................................... 104
8. TERMS OF A CONTRACT ........................................................................... 106
9. VITIATING ELEMENTS IN A CONTRACT ............................................... 110
10. DISCHARGE OF CONTRACT ................................................................... 125
EXPRESS AGREEMENT .................................................................................. 126
11. REMEDIES FOR BREACH OF CONTRACT ............................................ 129
INTRODUCTION TO LAW
Unit summary ............................................................................................................... 135

Task............................................................................................................................... 135
Self-Assessment............................................................................................................ 136
Unit 5 137
CONTRACTS IN RESTRAINT OF TRADE .............................................................. 137
Introduction ......................................................................................................... 137
Voluntary restraints ............................................................................................. 138
Involuntary restraints........................................................................................... 140
Unit summary ............................................................................................................... 141
Task............................................................................................................................... 141
Self-Assessment............................................................................................................ 141
Unit 6 142
AGENCY...................................................................................................................... 142
Introduction ......................................................................................................... 142
SOURCES OF AGENCY LAW ......................................................................... 143
FORMATION OF AGENCY: ............................................................................ 144
TYPES OF AGENTS.......................................................................................... 147
DUTIES BETWEEN PRINCIPAL AND AGENT............................................. 149
(d). Obedience 149

DUTIES OF THE PRINCIPAL: ......................................................................... 150
CONCEPT OF AUTHORITY ............................................................................ 150
Unit summary ............................................................................................................... 152
Task............................................................................................................................... 153
‘‘the law of agency has accorded greater protection to the agent than to the principle
and third party’ citing from relevant case-laws and by examining the law of Agency ,
analyse this statement. .................................................................................................. 153
Self-Assessment............................................................................................................ 153
Unit 8 154
LAW OF NEGOTIABLE INSTRUMENTS................................................................ 154
Introduction ......................................................................................................... 154
EXAMPLES OF NEGOTIABLE INSTRUMENTS .......................................... 155
3. ADVANTAGES OF NEGOTIABLE INSTRUMENTS: ............................... 155
4. CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS: ...................... 155
5. BILLS OF EXCHANGE................................................................................. 156
6. PARTIES TO A BILL..................................................................................... 157
REQUISITES IN FORM..................................................................................... 157
8. THE PAYEE ................................................................................................... 158
9. THE DRAWEE ............................................................................................... 159
ACCEPTANCE................................................................................................... 159
TRANSFER OF BILLS OF EXCHANGE (NEGOTIATION) .......................... 164
12. INLAND AND FOREIGN BILLS................................................................ 167
13.BILLS IN A SET............................................................................................ 168
iv Contents
14. DISCHARGE OF BILL ................................................................................ 168

15. ACCOMMODATION BILLS ...................................................................... 169
16. NOTING AND PROTESTING..................................................................... 169
17. REFEREE IN CASE OF NEED ................................................................... 170
MEASURE OF DAMAGES ............................................................................... 171
19. LOST BILLS ................................................................................................. 171
20. OVERDUE BILLS........................................................................................ 172
CHEQUES........................................................................................................... 173
Collecting Banker................................................................................................ 187
PROMISSORY NOTES...................................................................................... 188
Task............................................................................................................................... 189
Self-Assessment............................................................................................................ 190
Unit 8 190
THE LAW OF TORTS................................................................................................. 190
Introduction ......................................................................................................... 190
NATURE OF TORTIOUS LIABILITY ............................................................. 191
Tort and Contract distinguished 191

Difference in terms .................................................................................... 192
THE PARTIES TO A SUIT (CAPACITY) ........................................................ 192
Section 4(2) provides; ......................................................................................... 192
Robbers v Ramsbottom (1980)............................................................................ 194
Husbands and Wives 194

(i) Partners ...................................................................................................... 195
(j) Aliens.............................................................................................................. 195
GENERAL CHARACTERISTICS OF TORTIOUS LIABILITY ..................... 195
Forms of Liability 195
There are different ways in which liability in tort may arise; 195
Intention or negligence or the breach of statutory 196

Intention............................................................................................................... 196
Negligence ........................................................................................................... 196
Breach of strict duty ............................................................................................ 196
‘Reasonable’ and ‘Reasonable man’ ................................................................. 197
Motive and Malice ..................................................................................... 197
GENERAL DEFENCES IN THE LAW OF TORT ........................................... 197
Requirements....................................................................................................... 198
Harry v Dyke (1979) R T R 265.......................................................................... 198
E. NECESSITY AND PRIVATE DEFENCE .................................................... 199
NEGLIGENCE.................................................................................................... 199
INTRODUCTION TO LAW
SPECIFIC TORTS 201

Meaning of Force ................................................................................................ 202
Any physical contact with the body of the plaintiff or with his clothing is
sufficient to amount to force. There is battery where the defendant shoots the
plaintiff from a distance just as much as when he strikes him with his fist. Mere
passive obstruction is however not battery. If however there is force in the
technical sense, no physical hurt is necessary, for all forms of trespass are
actionable per se i.e. without prove of damage. .................................................. 202
CONVERSION ................................................................................................... 214
Ashby –v- Tolhurst ....................................................................................................... 220
Qualification 228
DEFAMATION................................................................................................... 229
vi Contents
Differences between Slander and Libel 229
The exceptions of Slander actionable per se 230
In Jackson –v- Adams (1835) 2 Bing N.C. 402 230
Essentials of defamation generally 231
Held: - that the caricature, as explained by the evidence, was capable of being thus constructed; for
golfers testified that any amateur golfer who assented to such advertisement may be called upon to
resign his membership of any reputable club. 233
In Cassidy –v- Dally Mirror Newspapers Ltd (1929) 21 K.B. 331 233
On appeal to the House of Lords .................................................................................. 234
In Newsteads Case ........................................................................................................ 235
Defamation of a class 235
In JÀnson –v- Stuart 9787) 1 7. R 748 236
In Huth –v- Huth (1915) 3 K.B 32 237

However, per Lord Reading C.J. at P. 40 .................................................................... 237
Repetition of a statement 238

DEFENCES TO DEFAMATION ....................................................................... 238
In Cookson –v- Harewood (1932) 2 K.B 4 239

Was this a comment or an allegation of fact.............................................. 242
The court of appeal held that a book reviewer for punch magazine was
hostilely motivated against the plaintiffs` Books which was evident not
only by the review he wrote but also by his behaviour in the witness
box. His behaviour displayed malice which negated the plea of fair
comment. ........................................................................................... 242
STRICT LIABILITY: THE RULE IN RYLANDS-v- FLETCHER .................. 246
VICARIOUS LIABILITY .................................................................................. 252
OCCUPIERS LIABILITY .................................................................................. 261
Unit summary ............................................................................................................... 261
Task............................................................................................................................... 261
Self-Assessment............................................................................................................ 261
INTRODUCTION TO LAW
About this Course Manual Course Manual

INTRODUCTION TO LAW BUSINES LAW 1 has been produced by
DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY. All Course
Manual Course Manuals produced by DEDAN KIMATHI UNIVERSITY
OF TECHNOLOGY are structured in the same way, as outlined below.
How this Course Manual Course

Manual is structured
The course overview
The course overview gives you a general introduction to the course.
Information contained in the course overview will help you determine:
 If the course is suitable for you.
 What you will already need to know.
 What you can expect from the course.
 How much time you will need to invest to complete the course.
The overview also provides guidance on:
 Study skills.
 Where to get help.
 Course Tasks and Self-Assessments.
 Activity icons.
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We strongly recommend that you read the overview carefully before

starting your study.
The course content

The course is broken down into units. Each unit comprises:
 An introduction to the unit content.
 Unit outcomes.
1
About this Course Manual Course Manual THE NATURE AND SOURCES OF LAW AND IT’S ADMINISTRATION
 New terminology.
 Core content of the unit with a variety of learning activities.
 A unit summary.
 Tasks and/or Self-Assessments, as applicable.
Resources
For those interested in learning more on this subject, we provide you with
a list of additional resources at the end of this Course Manual Course
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Your comments
After completing INTRODUCTION TO LAW we would appreciate it if
you would take a few moments to give us your feedback on any aspect of
this course. Your feedback might include comments on:
 Course content and structure.
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Your constructive feedback will help us to improve and enhance this

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2
INTRODUCTION TO LAW
Course overview
Welcome to INTRODUCTION TO
LAW BUSINES LAW 1
The course is organized into (8) major section that is; Introduction to law;
source sof law, classification of law; law of persons ,law of contract;
Agency; Law of Tort. Law of negotiable
INTRODUCTION TO LAW
BUSINES LAW 1—is this course
for you?
This course is intended for people who are Studying for a business course
i.e Bachelor of commerce,Bachelor of Business administration , Bachelor
of purchasing and supplies among others.
Law in contrast to mainstream business courses require an indepth and

wide reading.it also requires capacity to understand ordinary experiences
from a legalistic perspective.The study materials are no more than a
guide and much more reading is needed..
Course outcomes
Upon completion of Business law 1 you will be able to:
3
Course overview THE NATURE AND SOURCES OF LAW AND IT’S ADMINISTRATION
 To gain insight in the meaning of the term law a nd its funtions in

business world
 To extend your knowledge of Law

Outcomes  To give an introduction of legal principles governing the legal
system within corporate business operation.
 [verb] [complete the sentence].
Timeframe
[What is the expected duration of this course?]
[How much formal study time is required?]
[How much self-study time is expected/recommended?]

How long?
Study skills
As an adult learner your approach to learning will be different to that
from your school days: you will choose what you want to study, you will
have professional and/or personal motivation for doing so and you will
most likely be fitting your study activities around other professional or
domestic responsibilities.
Essentially you will be taking control of your learning environment. As a

consequence, you will need to consider performance issues related to
time management, goal setting, stress management, etc. Perhaps you will
also need to reacquaint yourself in areas such as essay planning, coping
with exams and using the web as a learning resource.
Your most significant considerations will be time and space i.e. the time
you dedicate to your learning and the environment in which you engage
in that learning.
We recommend that you take time now—before starting your self-

study—to familiarize yourself with these issues. There are a number of
excellent resources on the web. A few suggested links are:
4
INTRODUCTION TO LAW
 http://www.how-to-study.com/
The “How to study” web site is dedicated to study skills resources.
You will find links to study preparation (a list of nine essentials for a
good study place), taking notes, strategies for reading text books,
using reference sources, test anxiety.
 http://www.ucc.vt.edu/stdysk/stdyhlp.html
This is the web site of the Virginia Tech, Division of Student Affairs.
You will find links to time scheduling (including a “where does time
go?” link), a study skill checklist, basic concentration techniques,
control of the study environment, note taking, how to read essays for
analysis, memory skills (“remembering”).
 http://www.howtostudy.org/resources.php
Another “How to study” web site with useful links to time
management, efficient reading, questioning/listening/observing skills,
getting the most out of doing (“hands-on” learning), memory building,
tips for staying motivated, developing a learning plan.
The above links are our suggestions to start you on your way. At the time
of writing these web links were active. If you want to look for more go to
www.google.com and type “self-study basics”, “self-study tips”, “self-
study skills” or similar.
Need help?
Is there a course web site address?
What is the course instructor's name? Where can s/he be located (office
location and hours, telephone/fax number, e-mail address)?
Help
Is there a teaching assistant for routine enquiries? Where can s/he be
located (office location and hours, telephone/fax number, e-mail
address)?
Is there a librarian/research assistant available? Where can s/he be located

(office location and hours, telephone/fax number, e-mail address)?
Is there a learners' resource centre? Where is it located? What are the

opening hours, telephone number, who is the resource centre manager,
what is the manager's e-mail address)?
Who do learners contact for technical issues (computer problems, website

access, etc.)
5
Course overview THE NATURE AND SOURCES OF LAW AND IT’S ADMINISTRATION
Tasks
[How many Tasks are there for this course?]
[How are the Tasks are to be submitted?]
[To whom should the Tasks be submitted?]

Tasks
[What is the schedule for submitting Tasks? End of each unit? Specific
dates?]
[What is the order of the Tasks? Must they be completed in the order in
which they are set?]
Self-Assessments
How many Self-Assessments will there be in this course?
Are they self-Self-Assessments or teacher-marked Self-Assessments?
When will the Self-Assessments take place?

Self-Assessments
How long will the Self-Assessments be?
How long will learners be allowed to complete the Self-Assessment(s)?
How long will it take a teacher to mark the Self-Assessment(s)?
6
Getting around this Course Manual Course
Manual
Margin icons
While working through this Course Manual Course Manual you will
notice the frequent use of margin icons. These icons serve to “signpost” a
particular piece of text, a new task or change in activity; they have been
included to help you to find your way around this Course ManualCourse
Manual.
A complete icon set is shown below. We suggest that you familiarize

yourself with the icons and their meaning before starting your study.
Outcomes Reflection Reading Study skills
Discussion Help Group activity Note it!
Summary Time Terminology Tip
Activity Task Self- Case study

Assessment
7
Topic 1
THE NATURE AND SOURCES OF

LAW AND IT’S ADMINISTRATION
Introduction:Law concerns people. It is an everyday activity and hence is is alive.The

regulation of people and institutions depend upon a framework Without rules which
the society would be chaotic.Hence there is need to promulgate laws and regulations
which are binding to regulate social order
Upon completion of this unit you will be able to:

 Have a positive perception about the scope, extent and
extent of law in business.
 Acquire knowledge on the origin sources and classification
of law
Outcomes
.
Morality: Morality consists of prescriptions of the society and

is not enforceable, however, rules of law are
enforceable.
Terminology
Adding extra rows to the
Table graphicRemoving
rows from the table graphic
9
Definition
The term “law” has no assigned meaning. It is used in a variety of

senses. Though different writers have attempted to explain the term, no
generally acceptable explanation has been given. Different writers
explain the term law from different points of view.
According to Hart Law is a coercive instrument for regulating social

behaviour. Law has also been defined as a command backed by
sanctions. These two explanations of the term law presuppose the
existence of a sovereign, which prescribes or formulates the commands
and enforces sanctions, which is not necessarily the case.
According to Salmond, law consists of a body of principles recognised and

applied by the state in the administration of justice. Law has also been
defined as a collection of binding rules of human conduct prescribed by
human beings for obedience of human beings. Inevitably, therefore law
implies rules or principles enforced by courts of law. Rules of law are
binding hence differ from other rules or regulations. Rules of law are
certain.
In summary therefore, law is an aggregate of conglomeration of rules

enforced by courts of law at a given time.
Rules of law originate from acts of parliament, customary and religious

practises of the people, they may also be borrowed from other countries.
10
Law and Morality
Morality consists of prescriptions of the society and is not enforceable,
however, rules of law are enforceable. Wrongs in society are
contraventions of either law or morality or both.
However, law incorporates a significant proportion of morality and to that

extent morality is enforceable.
However, such rules/contraventions are contraventions of law for example

murder, rape theft by servant or agent.
Purposes or Functions of Law

(i) Rules of law facilitate administration of justice. It is an instrument
used by human beings to achieve justice.
(ii) Law assists in the maintenance of peace and order. Law promotes
peaceful co-existence, that is, prevents anarchy.
(iii) Law promotes good governance.
(iv) Law is a standard setting and control mechanism.
(v) Provision of legal remedies, protection of rights and duties.
11
Types and Classification of Law
Rules of law may be classified as:
 Written
 National and International
 Public and Private
 Substantive and Procedural
 Criminal and Civil
Written Law These are rules of law that have been reduced into a written
form. They are embodied in a formal document for example The
Constitution of Kenya, laws made by parliament (statutes). Such laws
prevail over unwritten Law.
Unwritten Law These are rules of law that have not been reduced into
written form. They are not embodied in any single document for example
African Customary Law, Islamic Law, Hindu Law, Common Law, Equity.
Their existence must be proved.
National or Municipal Law These are rules of law operational within the
boundaries of a country. It regulates the relation between citizens and
between citizens and the state. It is based on Acts of Parliament,
customary and religious practices of the people.
International
It is a body of rules that regulates relations between countries/states and

other international persons eg United Nations. It is based on international
agreements of treaties and customary practices of states and general
principles
Public Law
It consists of those fields or branches of law in which the state has an

interest as the sovereign egg criminal law, constitutional law,
administrative law.
Public law is concerned with the constitution and functions of the various
organs of government including local authorities, their relations with each
other and with the citizens. Public law asserts state sovereignty/power
Private law
It consists of those fields or branches of law in which the state has no direct
interest as the sovereign egg law of contracts, law of tout, law of property,
law of succession.
Private law is concerned with day to day transactions of legal relationships

between persons. It defines the rights and duties of parties.
Substantive Law
12
It is concerned with the rules themselves as opposed to the procedure on
how to apply them. It defines the rights and duties of parties and provides
remedies when those rights are violated e.g. law of contract, negligence,
and defamation. It defines offences and prescribes punishment e.g. Penal
Code Cap 63.
Procedural Law It consists of the steps or guiding principles or rules of

practice to be complied with or followed in the administration of justice or
in the application of substantive law.
It is also referred to as adjective law e.g. Criminal Procedure code Cap 75,
civil procedure Act Cap 21.
Criminal Law Criminal law has been defined as the law of crimes. A
crime has been defined as an act or omission, committed or omitted in
violation of public law eg murder, manslaughter, robbery, burglary, rape,
stealing, theft by servant or agent.
All crimes or offences in Kenya are created by parliament through

statutes. Suspects are arrested by the state through the police. However,
individuals have the liberty to arrest suspects. Offences are generally
prosecuted by the state through the office of the Attorney General.
When charged with a particular offence the suspect becomes an accused

hence criminal cases are styled as R V Accused. Under sec 77 of the
constitution the person cannot generally be prosecuted for an act or
omission which was not defined by law as a crime when committed or
omitted. Under section 77 (2) (a) of the constitution an accused person is
presumed innocent until proven or has pleaded guilty. It is the duty of the
prosecution to prove its case against the accused. The burden of proof
rests on the prosecution.
The standard of proof in criminal cases is beyond any reasonable doubt.

In the event of any reasonable doubt the accused is set free (acquitted).
The court must be satisfied that the accused committed offence as
charged. If the prosecution discharges the burden of proof the accused is
convicted and sentenced which could take any of the following forms.
(a) Imprisonment term
(b) Capital punishment
(c) Corporal punishment
(d) Community service
(e) Fine
(f) Conditional discharge
(g) Unconditional discharge
The purpose of criminal is;
 To ascertain whether or not the crime has been committed.
 To punish the crime where one has been committed.
13
Civil Law Civil law is concerned with violations of private rights in their
individual or corporate capacity eg breach of contract, negligence,
defamation, nuisance, passing off trespass to the person or goods.
If a person’s private rights are violated, the person has a cause of action.
Causes of action are recognized by statutes and by the common law. The
person whose rights have been allegedly violated sues the alleged wrong
doer. Hence civil cases are styled as Plaintiff v Defendant. It is his duty
of the plaintiff to adduce evidence to prove his case the burden of proof
lies on the plaintiff.
The standard of proof in civil cases is on a balance of probabilities or on a
preponderance of probabilities. It must be more probable than
improbable that the plaintiff’s allegations are true. If the plaintiff
discharges the burden of proof then he wins the case and is awarded
judgement which could take any of the following forms:
(a) Damage, i.e. monetary compensation

(b) Injunction
(c) Specific performance
(d) Tracing
(e) Accounts
(f) Rescission
(g) Winding up/liquidation
Purpose of civil laws
(i) Protection of rights and enforcement of duties.
(ii) Provision of legal remedies as and when a persons rights have

been violate
Unit summary
In this topic you learned that law does not have definite meaning .
Summary
14
Task
I. Law to some extent incorporates significant
proportion of morality. By observing your
community , list and briefly discuss some moral
precepts which are also incorporated in law and
Task hence they are enforceable
Self-Assessment
Examine and fully discuss functions of law in business
Self-Assessment
15
Unit 2
SOURCE OF KENYA LAW AND

ADMINISTRATION OF THE LAW
Introduction
This unit looks at the origin of legal principles which constitute law in
kenya
 To understand the meaning of the term source
 To comprehend the various sources of law in kenya
Outcomes
Sources of law : A source of law is the origin of the rule
Municipal law: National law or laws of a country
Terminology
17
SOURCES OF KENYA LAW
A source of law is the origin of the rule, which constitutes a law, or legal
principle. The phrase `sources of Kenya law' therefore means the origin of
the legal rules which constitute the law of Kenya.
The various sources of law of Kenya are identified by the

Judicature Act, as the Kadhis Court Act, the Constitution,
Hindu Marriage and divorce Act and the Hindu Succession Act.
The Judicature Act Cap 8, Laws of Kenya

The sources of Kenya law are specified in the Judicature Act 1967, S.3(1)
of which states that the jurisdiction of the High Court, the Court of Appeal
and all subordinate courts shall be exercised in
accordance with:
(i) the constitution;
(ii) subject thereto, "all other written laws", (including certain Acts of
Parliament of the United Kingdom which are cited in Part I of the Schedule
to the Act), and
(iii) subject thereto and so far as the (aforesaid) written laws do not
extend or apply:
(a) the substance of the common law;
(b) the doctrines of equity, and
(c) statutes of general application in force in England

on 12th August 1897.
S.3 (2) states that "the High Court, the Court of Appeal and all subordinate
courts shall be guided by African customary law in civil cases in which
one or more of the parties is subject to or affected by it, so far .as it is
applicable and is not repugnant to justice and morality or inconsistent with
any written law".
18
The Kadhi's Courts Act 1967
Section 5 of the Kadhi's Courts Act provides that a Kadhi's Court shall
have and exercise jurisdiction in matters involving the determination of
Muslim Law relating to personal status, marriage, divorce or inheritance in
proceedings in which all the parties profess the Muslim religion. This
provision constitutes Muslim Law a source of Kenya law for the specified
purposes.
1.4 The Hindu Marriage and Divorce Act 1960, S.5 (1) provides that a
marriage between Hindus may be solemnized in accordance with the
customary rites and ceremonies of either party thereto.
The provision constitutes Hindu custom a source of Kenya law for the
specified purposes.
The Legal Pyramid

The sources of Kenya law mentioned above may be summarised
with the aid of the following diagram or "legal pyramid":
19
The sources of Kenya law consist of
(a)written laws, and
(b)un-written laws.
1.The unwritten laws are derived, generally speaking, from the customs of
the ethnic groups which constitute Kenya's indigenous population and the
rules or rites of Islam and Hinduism.
There is nothing strange or peculiar about this situation. In England, for

example, the general customs of the English people constitute a major
source of English law which is known as the common law. The principles
of Christianity have also made some contribution to the development of
English law, especially family law.
2. A written law is defined by the Interpretation and General

provisions Act as:
(a) an Act of Parliament for the time being in force (other than the
Constitution);
(b) an applied law; or
(c) any subsidiary legislation for the time being in force.
STATUTE LAW
This is an Act of Parliament. This is law made by parliament directly in
exercise of legislative power conferred upon it by the constitution.this is a
supereme legislation and it is biding on the courts and cannot question its
validity.
20
Section 46(5) of the Kenya Constitution states that "a law made by
Parliament shall be styled an Act of Parliament".
1.7 Bills
An Act of Parliament begins as a Bill, which is the draft of law that

Parliament intends to make. Section 46(1) of the constitution states that
"the legislative power of Parliament shall be exercisable by Bills passed by
the National Assembly".
Types of Bills
A Bill may be:
(i)A Government Bill, if it is presented to Parliament by the Government

with a view to its becoming a law if approved by Parliament.
(ii)A Private Members' Bill if it is presented to Parliament by some

members, in a private capacity and not on behalf of the Government.
Bills may also be divided into Public Bills and Private Bills.
(a)A Bill, whether a Government Bill or a Private Members' Bill, is a

Public Bill if it seeks to alter the law throughout Kenya. An example is the
abortive Marriage Bill, 1979, whose aim was to introduce a uniform
marriage law for all Kenyans irrespective of their racial, religious or ethnic
differences.
(b)A Private Bill if it does not seek to alter the general law but rather to
confer special local powers. An example is where a local authority such as
a Municipal Council requires power to purchase land compulsorily.
21
ADVANTAGES AND DISADVANTAGES OF ACTS OF PARLIAMENT
An Act of Parliament may be said to possess the following advantages:
(i) Democratic in nature
It is democratic in the sense that it reflects the wishes of Kenyans as to
what the law should be. This is because it is made by a Parliament
which consists of representatives of the people who are elected at
intervals of not more than five years.
(ii) Resolution of Legal Problems
It enables Parliament to find legal solutions to any problem that the

country may face. An English judge once stated that an Act of
Parliament can in theory deal with any problem except that it cannot
change man to woman, (although it may provide that reference therein
to `man' shall include 'woman'.)
(iii) Dynamic
It enables new challenges that emerge in the course of social

development to be legally dealt with by the passing of new Acts of
Parliament, or amending some of the existing Acts.
(iv)General Application
It is usually a statement of general principles and rules and can therefore be

applied to different situations in a flexible manner as determined by the
court in a particular situation.
(i) Uniformly Applied.
It applies indiscriminately.
(ii) Publicity
Statute law is the most widely published source of law.
22
DISADVANTAGES OF STATUTE LAW
Imposition of law
Acts are imposed on the people and reflect the views of the Executive, or
pundits in the ruling political party.
Having observed the working of the British Parliament over a period of

forty five years James Margach has stated in his book, `The Anatomy of
Power', that "the reality is that the modern Parliament has become in
practice a central registry for recording votes and giving effect to decisions
taken elsewhere in the Cabinet and in Government Departments.
Parliament now governs only in the technical formal sense", and largely
rubber-stamps what is put before it by the Executive.
Although it is rather early to precisely state what the position of the Kenya
Parliament is, some recent events indicate that during the one-party era its
role in crucial or sensitive political issues corresponded to that of the
British Parliament as stated above by Mr. Margach, namely, to rubber-
stamp what is put before it by the Executive, at the behest of some
politically powerful individuals who held key administrative positions in
the ruling political party, KANU.
(ii) Wishes of members of parliament
Acts of Parliament do not reflect the wishes of the people (voters) but the
wishes of the individuals who constitute Parliament at any given time.
During debates on Bills, Members of Parliament express their personal
views and finally enact laws on the basis of those views. They do not hold
meetings in their constituencies to ascertain what the people's views on
Bills are so that they may eventually report back to Parliament what those
views are and then vote on the Bills in accordance with those views.
(iii) Bulky and technical Bills
Some Bills are so bulky and technical that they are passed without
sufficient debate because Parliament lacks the time and knowledge to
consider them in detail.
Examples are Finance Bills.\
(iv) FormalitiesThe process of enacting a statute that would substantially

conform to the wishes of the people affected by it would be very slow.
This is because very many public meetings must be held before a
consensus on the proposed law can be reached. The delay in re-introducing
the abortive Marriage Bill, 1979 illustrates this point.
"I approach the matter by considering what is the mischief aimed at by this
Act. Everybody knows that this was an Act intended to clean up the
streets, to enable people to walk along the streets without being molested or
solicited by common prostitutes".
23
Viewed in that way, the actual place from which a prostitute attracted the
attention of somebody walking in the street did not matter, and she will be
deemed to have solicited in the street
24
SUBSIDIARY LEGISLATION (delegated)
This is subordinate or delegated indirect legislation.
Section 2 of the Interpretation and General Provisions Act defines
subsidiary legislation as 'any legislative provision (including a transfer or
delegation of powers or duties) made in exercise of any power in that
behalf conferred by any written law by way of by-law, notice, order,
proclamation, regulation, rule of court or other instrument'. The by-laws,
notices, orders, regulations, rules and other 'instruments' constitute the
body of the laws known as subsidiary legislation
Although chapter 4 of the new Constitution provides that 'the legislative

power of the Republic (of Kenya) shall vest in the Parliament', it is not
possible for Parliament itself to enact all the laws that are required to run
all the affairs of this country. Many Acts of Parliament require much
detailed work to implement and operate them. In such a case the Act is
drafted so as to provide a broad framework which will be filled in later by
subsidiary legislation made by Government Ministers or other persons
under powers conferred on them by the Act.
ADVANTAGES
Some of the advantages of delegated legislation are:
(a) Compensation of lost Parliamentary time
Parliamentarians are politicians who have to spend much of their time in

their constituencies in order to initiative various harambee projects, explain
relevant party or government programmes to the people and listen to the
problems of their electors. The time so spent constitutes a significant
reduction of the time required by Parliament for legislation and this
reduction can only be compensated for by delegating some of Parliament's
legislative powers.
(b) Speed
Sometimes an urgent law may be needed. Parliament may not respond to

this need, first, because of the slow and elaborate nature of Parliamentary
legislative procedure and second, because it is not in session at the material
time.
A Government Minister with relevant powers can respond more effectively

through subsidiary legislation which can be enacted in one day, if
necessary.
(c)Technicality of subject matter
25
Parliamentarians are not experts on all matters that may require legislation.
It may therefore be advisable, if not inevitable, for Parliament at times to
delegate the enactment of laws of a technical nature to Government
Ministers who will be assisted by the technical officers in Government
Ministries and the Attorney-general's chambers.
(d) Flexibility
The procedure adopted by Ministers to enact laws are flexible and, as

stated above, responsive to urgent needs. The flexibility is a consequence
of the fact that they are not governed by the elaborate Standing orders that
are an essential feature of parliamentary legislative procedure.
A Minister is free to discuss with his officers, and adopt, the procedure that
appears most appropriate in the circumstances.
DISADVANTAGES
Subsidiary or delegated legislation has been criticised for a variety of

reasons, the main ones being that it is:(a) Less democratic
The real or ultimate makers of subsidiary legislation are the technical

officers in the various government ministries. These officers have not been
elected by the people affected by the laws they make and cannot therefore
be made accountable for any undesirable law they make. To that extent,
delegated legislation lacks the democratic spirit that usually inspires, and
manifests itself in, parliamentary legislation. The people of Kenya can
always refuse to re-elect parliamentarians who enacted a law that they feel
should not have been enacted but they cannot dismiss the civil servants.
Lord Hewart has called this situation "the new despotism".
(b) Difficult to Control
Although Parliament is theoretically supposed to control subsidiary

legislation this is not so in practice. The various rules or regulations made
by government ministries are so numerous that Parliament cannot check
whether their makers conformed to its intentions or objectives. The
question that usually comes to the mind is that, if Parliament is too busy to
make the law, how can it have the time to scrutinize it?
 Inadequate publicity
 Sub-delegation and abuse
 Detail and complexity
26
JUDICIAL CONTROL
The courts can declare any law made as subsidiary legislation to be invalid
under the ultra vires doctrine. The law may be declared either substantively
or procedurally ultra vires.
(a) Substantive Ultra Vires
A law may be declared substantively ultra vires if the maker had no

powers to make it. This may occur in a number of ways. For
example, the Minister or Authority may have:
(i) exceeded the powers given by the Act;
(ii) exercised the power for another purpose rather than the particular
purpose for which it was given, or
(iii) acted unreasonably, in the sense explained by Greene, M.R. in

Associated Provincial Picture Houses Ltd v Wednesbury Corporation
(b) Procedural Ultra Vires
A law will be declared procedurally ultra vires if the mandatory procedures

prescribed in the enabling Act for its enactment are not followed, such as
failure to publish it in the Gazette. An example is the case of Mwangi V.R.
in which Mwangi and another person were prosecuted and convicted in the
Special Magistrate's Court, Nairobi, for charging one shilling instead of
fifty cents for a haircut, contrary to Price Controller's Order No.20 of 1948
which had been made pursuant to Regulation 11(1) of the Defence (Control
of Prices) Regulations, 1945.
On appeal, the convictions were set aside when the court's attention was
drawn to the fact that the Order had not been published in the Gazette as
should have been done. The order was therefore void and nobody could be
charged for allegedly violating its provisions.
LEGISLATIVE OR PARLIAMENTARY CONTROL
(i) Parliamentary approval
(ii) Ministerial approval
(iii) Publication in the Kenya Gazette
(iv) Circulation of draft rules to interested parties.
(v) Delegation of legislative power to selected persons and bodies
(vi) Prescribes the scope and procedure of law making.
27
TYPES OF SUBSIDIARY LEGISLATION
The definition of subsidiary legislation in s.2 of the Interpretation and
General Provisions Act reflects the great variety of nomenclature used by
lawyers in relation to delegated legislation. However, the following are the
two major groups into which they fall:
(i) By-Laws
By-Laws are usually made by Local Authorities, such as the Mombasa

Municipal Council, under the Local Government Regulations Act, 1963.
Another example are the by-laws made by the members of co-operative
societies under Rule 7 of the Cooperative Societies Rules 1969.
(ii) Rules
Rules are usually made by Government Ministers with the assistance of

technical officers employed by their Ministries. An example are the
Cooperative Societies Rules, 1969 which were made by the Minister for
Co-operative Development under powers conferred on him by s.84 of the
Co-operative Societies Act, 1966.
Rules made by Government Ministers may also be called Regulations,

Orders, Notices or Proclamations.
(iii) Statutes of General Application
Although there is no authoritative definition of a "statute of general

application" the phrase is presumed to refer to those statutes that applied, or
apply, to the inhabitants of England generally. In the case of I v I the High
Court held that the Married Women's Property Act 1882 is an English
statute of general application that is applicable in Kenya.
These laws are applicable only if:
(a) They do not conflict either with the constitution or any of the other
written laws applicable in Kenya, and
(b) The circumstances of Kenya and its inhabitants permit. In I v I

the High Court held that the English Married Women's Property Act 1882
was applicable in Kenya because, in the court's view, the circumstances of
Kenya and its inhabitants do not generally require that a woman should not
be able to own property.
A statute of general application which was in force in England on 12th

August, 1897 but has been repealed by an English statute enacted after that
date presumably remains a prima facie source of Kenya Law unless the
repealing statute has been specifically incorporated into Kenya Law. An
example is the Infants Relief Act 1874 .
28
APPLICATION OF THE UNWRITTEN SOURCES OF KENYA LAW
It is a rule of Kenya Law that unwritten laws are to be applied subject to
the provisions of any applicable written law. This is a consequence of the
constitutional doctrine of parliamentary supremacy and the fact that written
laws are made by parliament, either directly or indirectly.
When it is said that an unwritten law is applied subject to a written law it

does not mean that a written law is more important than an unwritten law.
It only means that if any rule of unwritten law (for example, a rule of
African customary law) is in conflict with a clause in a written law, the
unwritten law will cease to have the force of law from the moment the
written law comes into effect.
This rule enables Parliament to make new laws to replace existing customs
as social conditions change. It also obviates the possibility of having two
conflicting rules of law regarding one factual situation.
An unwritten law that is not in conflict with a written.. law is as binding as

any written law and a breach of it renders what has been done as illegal as
if the law broken was a written law.
29
THE UNWRITTEN SOURCES OF KENYA LAW
COMMON LAW
Common law may be described as that branch of the law of England which
was developed by the English courts on the basis of the ancient customs of
the English people. Osborn's law dictionary defines the common law as
"that branch of the law of England formulated, developed and administered
by the old common law courts on the basis of the common custom of the
country".
It is not the entire common law that is a source of Kenya law but only that
portion which the Judicature Act describes as "the substance of the
common law". This presumably means that the writ system and its
complex rules of procedure that were developed by the old common law
courts for the administration of the common law do not apply to Kenya.
EQUITY
The word "equity" ordinarily means "fairness" or "justice". As a source of

Kenya law, the phrase "doctrines of equity" means the body of English law
that was developed by the various Lord Chancellors in the Court of
Chancery to supplement the rules and procedure of the common law. The
Lord Chancellors developed equity mainly according to the effect produced
on their own individual conscience by the facts of the particular case before
them.
Equity was developed as a result of the defects of the common law. The
following are some of those defects:
(a) The Writ SystemA person intending to commence an action at

common law had to obtain a 'writ' from the government department that
was authorized to issue writs. A writ was a document in the King's name
and under the Seal of Crown commanding the person to whom it was
addressed to appear in a specified court to answer the claim made against
him by the person at whose request the writ had been issued. However,
there were some injuries for which no writs were available at common
law owing to the fact that, at that particular time of the common law's
growth, writs could only be issued in a limited number of cases. An
example is the tort of nuisance affecting one's enjoyment of land for
which no writ existed at the time. In such cases the injured person could
not take the wrongdoer to any of the common law courts and was, as a
consequence, left without a remedy for a wrong inflicted. The Lord
Chancellor, in the King's name, intervened and developed remedies for
such injuries.
(b) Procedural Technicalities
The procedure in the common law courts was highly technical and many
good causes of action were lost due to procedural technicalities. For
example, if A sued B because of the tresspass of B's mare and in his writ A
described the mare as a stallion, the action would be automatically
dismissed. This led to the urgent craving for a new system of procedure
that would dispense justice without undue regard to technicalities.
30
(c) Delays
Certain standard defences known as "essoins" caused considerable delay

before a case could be heard. For example, the hearing of a case could be
automatically postponed for a year and a day if the defendant pleaded
sickness as a defence even though the court had not verified the truth of the
defence. The Lord Chancellor generally disallowed these defences and
adopted the maxim "delay defeats equity"
(d) Inadequate remedies
The only remedy available at common law for a civil wrong was financial
compensation called damages. This might not be adequate compensation
in such cases as breach of contract to sell a piece of land. However, a
common law court could not order the defendant to convey the land to the
plaintiff. The Lord Chancellor intervened and developed the remedy of
"specific performance" for such cases. The Chancellor, in the King's name
would order the defendant to convey the land to the plaintiff.
(e) Non-recognition of trusts
The common law did not recognize "trusts". For example if A conveyed
property to B "on trust" for C the common law courts could not compel B
to use the income from the property for the benefit of C. The Lord
Chancellor intervened in such cases and the overall effect of the
intervention was the development of the body of principles and rules
which constitute the basis of the current Law of Trusts. In particular, the
Court of Chancery would compel B to use the income from the "trust
property" for the benefit of C.
It should be noted that equity is "a gloss upon the common law". It was
developed to supplement the common law but not to supplant it. It does
this by, as it were, filling in the gaps left by the common law and, where
appropriate, providing alternative remedies to litigants for whom the
remedies available at common law are inadequate.
However, the substance of common law and the doctrines of equity are
applicable in Kenya only if the circumstances of Kenya and its inhabitants
permit and subject to such qualifications or modifications as those
circumstances may render necessary.
31
The English Judicature Act 1873 provided that if there is any conflict
between common law and equity, equity is to prevail. However, there is no
Kenya statute to that effect. But since the Act appears to be a statute of
general application which was in force in England on 12th August, 1897 it
is prima facie applicable to Kenya. If so, any conflict between a rule of
common law and a doctrine of equity that arises in a Kenya Court would be
resolved by applying the doctrines of equity.
Inadequate protection of borrowers
Rigidity or inflexibility
Contributions of Equity
(i) Developed the so called maxims of equity
(ii) Provided additional remedies
(iii) Provided for the discovery of documents
(iv) Enhanced the protection of borrowers.
(v) Recognized the trust relationship
32
AFRICAN CUSTOMARY LAW
African customary law may be described as the law based on the customs
of the ethnic groups which constitute Kenya's indigenous population.
Section 3(2) of the Judicature Act 1967 provides that the High Court, the
Court of Appeal and all subordinate courts shall be guided by African
customary law in civil cases in which one or more of the parties is subject
to it or affected by it, so far as it is applicable and is not repugnant to justice
and morality or inconsistent with any written law.
These provisions of the Judicature Act may be explained as follows:
(a) Guide
The courts are to be "guided" by African customary law. This

provision gives a judge discretion whether to allow a particular rule of
customary law to operate or not. The judge is not bound by any rule
of customary law and may therefore refuse to apply it if, for example,
he feels that it is repugnant to justice or morality.
(b) Civil Case
Customary law is applicable only in civil cases. The District

Magistrate's Court's Act 1967, S.2 restricts the civil cases to which
African customary law may be applied to claims involving any of the
following matters only:
(i) land held under customary tenure;
(ii) marriage, divorce, maintenance or dowry;
(iii) seduction or pregnancy of an unmarried woman or girl;
(iv) enticement of, or adultery with, a married woman;
(v) matters affecting status, particularly the status of women, widows

and children, including guardian-ship, custody, adoption and legitimacy;
(vi) intestate succession and administration of intestate estates, so far as

it is not governed by any written law.
In KAMANZA CHIWAYA v TSUMA (unreported High Court Civil

Appeal No.6 of 1970) the High Court held that the above list of claims
under customary law was exhaustive and excludes claims in tort or
contract.
(c) Subject to it or affected it
One of the parties must be subject to it or affected by it. If the plaintiff and
the defendant belong to the same ethnic group, they may be said to be
"subject" to the customs of that ethnic group which could then be applied
to settle the dispute. For example, a dispute between Kikuyus relating to
any of the matters listed in (b) above cannot be settled under Kamba, Luo
or any other customary law except Kikuyu customary law.
33
However, if there is a dispute involving parties from different ethnic groups
it may be determined according to the customs of either party, since the
other party would be "affected" by the custom.a good example is the
famous wambui otieno case..
(d) Repugnance to justice and morality
The customary law will be applied only if it is not repugnant to justice and
morality.
Although the Act uses the phrase "and" in relation to "justice and
morality", it appears that "or", rather than "and", was intended.
In MARIA GISESE ANGOI v MACELLA NYOMENDA (see Civil

Appeal No.1 of 1981 being the judgement of Aganyanya J. delivered at
Kisii on 24-5-1982) the High Court held that Kisii customary law which
allows a widow who has no children or who only has female children to
enter into an arrangement with a girl's parents and take the girl to be her
wife and then to choose a man from amongst her late husband's clan who
will be fathering children for her (i.e. the widow), was repugnant to justice
because it denied the alleged wife the opportunity of freely choosing her
partner.
The Court refused to follow the custom and declared that there had been no
marriage between the appellant and the respondent.
A rule of customary law that might be declared to be repugnant to morality

is the Masai custom that a husband returning home and finding an age-
mate's spear stuck at the entrance to his hut, as a means of informing him
that the owner of the spear is at the moment having an affair with his wife
and he should not interrupt. The husband cannot take divorce proceedings
under Masai customs against his wife for adultery. In the event of such a
declaration, a Masai man would be able to petition the court for divorce on
the ground of the wife's adultery at common law.
Consistent with the written Law
Islamic law is the law based on the Holy Koran and the teachings of the
Prophet Mohammed as explained in his Sayings called "Hadith".
Islamic law is applicable in Kenya under section 5 of the Kadhi's Courts

Act 1967 when it is necessary to determine questions of Muslim Law
relating to personal status, marriage, divorce or inheritance in proceedings
in which all the parties profess the muslim religion.
34
HINDU LAW
Hindu customary rites are applicable under S.5 of the Hindu Marriage and
Divorce Act, 1960. S.2 of the Act defines a "custom" as "a rule which,
having been continuously observed for a long time, has attained the force
of law among a community, group or family, being a rule that is certain
and not unreasonable, or opposed to public policy; and, in the case of a rule
applicable only to a family, has not been discontinued by the family".
Hindu customary rites are a source of Kenya law only for purposes of
solemnizing Hindu marriages.
35
ADMINISTRATION OF THE LAW
THE KENYA JUDICIAL SYSTEM
The current Kenya judicial system is organized in the form of a pyramid,

with the SUPREME COURT at the Apex , followed by Court of Appeal ,
the High Court immediately below it and then the subordinate courts
consisting of the Kadhi's Court, Resident Magistrate's Court, District
Magistrate's Court and the Court Martial. This structure of the courts is
based on the current Constitution, the Magistrate's Courts Act 1967 and
the Kadhi's Courts Act 1967.
The structure of the Kenya courts may be explained with the aid of the
following diagram:
The arrows point at the court to which an appeal lies from a lower court.
The Supereme court
The new constitution in artical 163 establishes the supreme court which
consists of the chief justice who is the president of the court , a deputy
chief justice and five other judges.This court has exclusive original
jurisdiction to hear and determine disputes relating to election of the
president among other disputes
THE COURT OF APPEAL
The Court of Appeal is established under article 164 of the new

constitution Composition
36
Article 164 (a) of the Constitution states that 'the judges of the Court of
Appeal shall be not less than 12 as may be prescribed by an act of
parliament
Jurisdiction
Arc.164 (3) of the Constitution provides that the Court of Appeal

a. 'shall have such jurisdiction to hear appeals from the high
court.
b. Any other court or tribunal as prescribed by an act of
parliament
THE HIGH COURT
Establishment
The be a High Court is established by art.165 (1) of the Constitution which

states that 'there shall be a High Court, Surbodinate courts
 MAGISTRATE'S COURT
 Art. 170. KADHI'S COURT
CASE LAW AND JUDICIAL PRECEDENT
"Case law" may be described as the method or way of learning law

"through the cases". By studying a particular case and the decision therein,
we get to know the legal rules relating to the factual situation of the case.
The more cases we learn the more we are "learning the law".
THE DOCTRINE OF "STARE DECISIS" OR JUDICIAL

PRECEDENT
The doctrine of "stare decisis" or "judicial precedent" is a legal rule that

requires a judge to refer to earlier cases decided by his predecessors in
order to find out if the material facts of any of those cases are similar to
the material facts of the case before him and, in the event of such a finding,
to decide the case before him in the same way as the earlier case had been
decided. In this way, the earlier decision "stays" or "stands" as it was made.
The doctrine has been described as the "sacred principle" of English law. It
was developed by the English courts as a mechanism for the administration
of justice which would enable judges to make decisions in an objective or
standard manner instead of subjectively and in a personalised manner.
“RATIO DECIDENDI”
37
The “ratio decidendi” of a case consists of the material facts of the case
and the decision made by the judge on the basis of those facts. The
material facts become, as it were, the basis or "rationale" (ratio) upon
which the judge is to decide (decidendi) the case. They constitute, in
ordinary parlance, the reason, or ground, of the judge's decision and ensure
that the decision-making process is a rational one.
The ratio decidendi of a decided case constitutes the legal rule, or

principle, for the decision of future cases with similar material facts. In
other words, the decision is a precedent to be followed when deciding such
cases.
TYPES OF PRECEDENTS
A precedent may be:
(a) An binding precedent the judge must follow whether he approves of

it or not. It is binding upon him and excludes his judicial discretion
for the future. These, generally speaking, are decisions of higher
courts.
(b) A persuasive precedent if it is one which the judge is under no

obligation to follow but may however take into consideration, or follow, in
the course of considering his intended decision. These, generally speaking,
are decisions of lower courts and the decisions of superior courts in the
Commonwealth.
A precedent may also be classified as:
(i) An original precedent if it is one which creates and applies a new

legal rule; or
(ii) A declaratory precedent if it is one which does not create a new

legal rule but merely applies an existing legal principle.
The latter classification is a technical one which does not fall within Hale's
definition of a "declaratory precedent". According to Hale, "the decisions
of courts of justice (in England)... do not make a law properly so-called: for
that only the King and Parliament can do; yet they have a great weight and
authority in expounding, declaring, and publishing what the law is".
Salmond however contends that "both at law and in equity, however, the
declaratory theory (as formulated by Hale) must be totally rejected if we
are to attain to any sound analysis and explanation of the true operation of
judicial decisions. We must admit openly that precedents make law as
well as declare it. We must admit further that this effect is not merely
accidental and indirect, the result of judicial error in the interpretation and
authoritative declaration of the law. Doubtless judges have many times
altered the law while endeavouring in good faith to declare it. But we
must recognise a distinct law-creating power vested in them and openly
and lawfully exercised. Original precedents are the outcome of the
intentional exercise by the courts of their priviledge of developing the law
at the same time that they administer it".
OBITER DICTUM
38
A "by the way" statement made by a judge before delivering his judgement
with a view to re-enforcing or strengthening his reasons for the decision
that he will make is known as "the obiter dictum" of the case. If more
than one such statements are made, they are known as obiter dicta. An
obiter dictum is defined by Osborne's Concise Law Dictionary as "an
observation by a judge on a legal question suggested by a case before him,
but not arising in such a manner as to require decision".Although an obiter
dictum does not constitute a legal rule for the decision of future cases it
may constitute a "persuasive precedent" for a relevant later case. In other
words, it may be used by an advocate to "persuade" a judge hearing a case
to accept as a legal rule the view it expresses.
39
STARE DECISIS AND ITS APPLICATION BY THE KENYA COURTS
There is so far no case decided by the Kenya Court of Appeal regarding the
application of "stare decisis" by Kenya Courts. What we have are the rules
which were formulated in 1970 by the then Court of Appeal for East Africa
at the time that it was also the Court of Appeal for Kenya. However, it can
be assumed that the rules which the Court of Appeal for East Africa laid
down for Kenya Courts in Dodhia v. National & Grindlays Bank are still
binding on the Kenya Courts (with the probable exception of the Kenya
Court of Appeal)
These rules are:
(i) Subordinate courts are bound by the decisions of superior courts.
To understand the full implications of this statement you should have the
diagram of the Kenya courts in front of you.
(ii) A subordinate court of appeal should be bound by a previous

decision of its own.
Subordinate courts of appeal are the High Court, Resident Magistrate's

Court, Senior Resident Magistrate's Court, Principal Magistrate's Court,
Senior Principal Magistrate's Court, the Chief Magistrate's Court and the
First Class District Magistrate's Court. These courts are "subordinate"
because they have higher courts above them. However, they are "courts of
appeal" because they hear appeals from the courts below them.
(iii) As a matter of judicial policy, the final court of appeal, while it

would normally regard a previous decision of its own as binding, should be
free in both civil and criminal cases to depart from such a previous decision
when it appears right to do so.
Regarding point (i) above, the court did not clarify whether a subordinate
court would be free to depart from a decision of a higher court because it
appeared to be in conflict with a decision of a still higher court. For
example, can a Resident Magistrate's Court refuse to follow a decision of
the High Court because it appears to be in conflict with a decision of the
Court of Appeal? However, in MILIANGOS v GEORGE FRANK
(TEXTILES) LTD, the House of Lords stated that 'it is the duty of a
subordinate court to give credence and effect to the decision of the
immediately higher court, notwithstanding that it may appear to conflict
with a decision of a still higher court. The decision of the still higher court
must be assumed to have been correctly distinguished (or otherwise
interpreted) in the decision of the immediately higher court'. The Kenya
Court of Appeal might adopt this rule when it ultimately becomes
necessary to decide the point.
Regarding point (iii) above, the Court of Appeal for East Africa explained
in Dodhia's case that a final court of appeal (such as the Kenya Court of
Appeal) should be free to depart from an earlier decision of its own:
a. Distinguishing the earlier decision
40
(b) Ratio decidendi of earlier decision is too wide or obscure.
(f) Earlier decision has been overruled by statute
(i) Ratio decidendi is in conflict with a fundamental principle of
law.
(h) Ratio decidendi is one of the many conflicting decision of a
court of Co-ordinate jurisdiction.
AND DISADVANTAGES OF STARE DECISIS
The main advantages and disadvantages of the doctrine of stare decisis are:
1. Advantages
(i) Certainty and Predictability
The doctrine of stare decisis introduces an element of certainty and

uniformity in the administration of justice. In DODHIA V NATIONAL
AND GRINDLAYS BANK the then Court of Appeal for East Africa
expressed the view that the administration of justice requires an element of
certainty and uniformity which would not be possible if judges were free to
make decisions without regard to earlier decisions.(ii)
ii. Flexibility
Because of the freedom that the final Court of Appeal usually has to depart
from a previous decision of its own if the social conditions that necessitated
such decision no longer exist, there is flexibility in the administration of the
law as human societies grow and become more complex. This point was
particularly emphasized by the then Court of Appeal for East Africa in
Dodhia v National and Grindlays Bank.
(iii) Aptitude for growth
The process of 'distinguishing' cases facilitates the growth of detailed legal

principles to deal with different factual situations. This would probably not
be possible in a purely enacted system of law.
A case is 'distinguished' if a judge points out the difference in the material

facts of an earlier case and the case before him for decision, as the basis for
arriving at a different decision.
(iv) Practicality
41
The case law method has enabled judges to adopt a practical approach to
legal problems since such problems have arisen from the practical
situations in which the litigants have found themselves. This practical
approach has also enabled judges to make decisions only after being
satisfied that the particular decision would not create practical problems for
the people subject to the law. An example is the refusal of the court in
Pharmaceutical Society v Boots to regard the display of goods in a shop-
window as an offer to sell them at the indicated prices. Such a decision
would have had the inconvenient consequence that customers would
henceforth lose freedom to pick and replace various items before ultimately
presenting them to the cashier, contrary to what was actually happening in
practice.
v. Rich in detail
vi.Consistency and uniformity
2. Disadvantages
(i) Rigidity
The case law method of administration of justice has been criticized on the
grounds that it leads to rigidity, since the discretion of a judge is usually
restricted by the rule that he must follow the decision of his predecessors if
the material facts of the case to be decided are the same as those of an
earlier case.
(ii) Over-subtlety/Artificiality
Because a judge is forced, as it were, to follow an earlier case which his
conscience may preclude him from following, he might be inclined to
'distinguish' the present case from the earlier case. This artificial
'distinguishing' sometimes creates artificial differences which make case
law over-subtle.
(iii) Bulk and Complexity
Because so many cases are being decided everyday by courts all over the
country, case law has become bulky and complex and it is doubtful
whether judges would really know if a relevant earlier case had been
decided, say some ten years ago.
(iv) Piece-meal
Rules of law are made in bits and pieces1.
42
Unit summary
In this unit you learned [Add summary text here - you may wish to use
the unit outcomes to write this text]
Summary
Task
1. In your own opinion ,should the statute of general
application continue to be a source of law in Kenya.
Task
2. Does Kenya still need substance of common law and Equity as a

source of law in Kenya?
3. Is the Doctrine of stare decisis still relevant in Kenya today?
Self-Assessment
1.Briefly discuss the following sources of the Kenya law
 Legislation
 Delegated legislation
Self-Assessment
 African customary law.
43
Unit 3
LAW OF PERSON
Introduction
This unit introduces you to both legal and natural person and their legal
standing
 To differentiate between a legal person and a natural person
 To gain insight on the formation of various corporations
Outcomes  To understand the attributes of a legal person .
Locus standi: capacity that has a bearing on ones rights and

freedom e.g a wife
Domicile: that country in which one either has or is deemed by

law to have, his permanent home. It is the country
Terminology of permanent residence.
45
NATURAL PERSON
Natural person are Human beings who generally have legal capacity. They
are potentially subject to rules of law depending on their status and factual
situation that in turn affect their rights and capacities. The term status refers
to a person legal standing or locus standi capacity that has a bearing on his
rights and freedom eg wife, husband ,father, guardian, infant and
employers.
NATIONALITY OR CITIZENSHIP
Nationality is the legal and political relationship between a person and a
particular state which arises from what may loosely be described as that
person's membership of the state. It depends almost exclusively on the
state's domestic law and generally determines the political status and
allegiance of the person concerned. Citizens enjoy certain rights and are
subject to various obligations. The law relating to nationality in Kenya is
contained in the Constitution and Citizenship Act under the provisions of
the constitution a person ay become a citizen of Kenya by birth, descent,
registration or naturalization.
(i) Birth
A person may become a national of Kenya by birth in two different ways:
(a) Birth in Kenya before 11-12-1963
Under s.87 (1) of the constitution any person who, having been born in
Kenya, was on the 11th December, 1963 a citizen of the United Kingdom
and colonies or a British Protected person, became a Kenya citizen on 12th
December, 1963 if either of his parents was born in Kenya. If neither of
the parents was born in Kenya the person concerned must apply for
registration as a Kenya citizen if he wishes to become one.
(b) Birth in Kenya after 11-12-1963
The Constitution of Kenya (Amendment) Act 1985 deleted S.89 of the

Kenya Constitution and inserted a new section with effect from 19th July
1985 which provides that 'every person born in Kenya after 11th
December, 1963 shall become a citizen of Kenya if at the date of his birth
one of his parents is a citizen of Kenya'. However, such a person shall not
become a citizen of Kenya if at the date of his birth:
1. his father possesses immunity from suit and legal process as is

accorded to the envoy of a foreign state accredited to Kenya,or
2. his father is a citizen of a country with which Kenya is at war and

the birth occurs in a place then under occupation by that country.
(ii) Descent
46
A person may become a national of Kenya by descent as follows:
DOMICILE
A person's domicile is that country in which he either has or is deemed by

law to have, his permanent home. It is the country of permanent residence.
The Kenya law relating to domicil is contained in the Law of Domicil Act,
Cap 3. The Act codifies the common law rules relating to domicil with
some amendments. Under the provisions of this Act these are the types of
domicil, namely:
INCORPORATED AND UNINCORPORATED ASSOCIATIONS

Legal Personality
From a legal point of view, a person is anything, which the laws of a

particular country recognize as having a bundle of legal rights and
obligations. Persons in this legal sense are of two types, namely, natural
persons and legal persons, and they are said to possess "legal personality".
Natural Persons
Natural persons or human beings now have legal personality under the laws
of probably all nations of the world. However, this was not so during the
days of slave trade. A slave, though a human being, had no legal rights or
obligations under the laws of those countries that recognized slavery.
Legal Persons
A legal person is known as a corporation, or a 'body corporate'. It has legal

rights and obligations of its own which are distinct from those of the
individuals who either constitute its membership or management. This
attribute of legal personality has received considerable judicial exposition
in relation to registered companies and the overall practical effects of the
decided cases may be summarized as follows:
(i) Limited Liability
The debts of the corporation are its own and a member of manager of the
corporation cannot be sued on order to recover the debts. If a corporation
such as a registered company is unable to pay its debts it may be wound-
up and during the winding-up its members will be asked to 'contribute'
47
what is required to pay the debts but a member cannot be asked to pay
more than the amount , if any, that is unpaid on the shares held by him (or
the amount he guaranteed if it is a company limited by guarantee).
This was explained by the House of Lords in the case of Salomon v A.

Salomon & Co. Ltd
(ii) Perpetual Succession
The death of a member or members of the corporation does not result in the
death of the corporation. Members come and go and are merely succeeded
by other persons who become new members. The corporation 'dies' only
when its legal life is brought to an end by a legal process known as
liquidation. This is illustrated by the case of Lee v Lee's Air Farming Co.
Ltd in which the company's existence was not terminated by the death of
Lee, who held all its shares.
(iii) Owning of Property
The property of a body corporate such as a registered cooperative society

or a registered company does not belong to its members. Consequently, a
member cannot insure the property since he does not have insurable
interest therein. This can be illustrated by the case of Macaura v
Northern Assurance Co. Ltd. (see (1925) A.C. 619) in which Macaura,
the majority shareholder in a 'one-man company,' insured the company's
timber against fire. The insurance policy was effected in his name and
not the company's name. When the timber was destroyed by fire, he
made a claim but the insurance company refused to pay and contended
that the policy was void because he had no insurable interest in the
timber. The contention was upheld by the court. A person cannot,
generally speaking, have insurable interest in the property of another
person. The law regards a corporation and its member as separate
persons for this purpose.
(iv)Suing or being sued
Because of the legal separation between a corporation and its members, it

follows that a wrong to, or by , the corporation is not a wrong to, or by, its
members. It was therefore held in FOSS V HARBOTTLE (see (1843) 2
Hare 461) that the proper plaintiff to sue or the defendant to be sued in
such cases is the corporation itself. In that case two of the company's
members instituted proceedings against the directors and others, alleging
that the company's property had been misapplied by them. However, the
court dismissed the suit, holding that the company itself was the proper
plaintiff to sue the defendants.
Capacity to contract
Lee v. Lees Air Farming Co Ltd
FORMATION OF CORPORATONS
A corporation may be brought into existence by

(a) Registration
(b) Statute
48
(c) Charter
TYPES OF CORPORTATIONS
There are four types of corporation which are recognized by the Kenya
Law.
(a) Corporation Sole
This is a legal office that is occupied by one human being only at any one
time. If the person ceases to occupy the office, he is succeeded by another
person who will then discharge the duties and exercise the powers of the
office. It is a legal person with peretual succession capacity to sue or be
sued. Example are owning of property and limited liability.
Examples are:
(i) The Public Trustee
The Public Trustee Act, S.27(1) states that 'the Public Trustee shall be a
corporation sole by the name of Public Trustee'.
(ii) The Permanent Secretary to the Treasury of Kenya.
Section 2(1) of the Permanent Secretary to the Treasury (Incorporation)

Act states that "the officer for the time being discharging the duties of the
Permanent Secretary to the Treasury of Kenya and his successors in office,
shall be a body corporate". It should be noted that the Constitution of
Kenya which created the office of the President of Kenya does not have a
provision that the office of President shall be a body corporate.
(b) Corporation Aggregate
This is a legal entity formed by at least two people and whose
membership at any one time legally consists of at least two people.
Examples are private and public companies registered under the
Companies Act, and co-operative societies registered under the co-
operative societies Act 1966 (cap.490). It has a legal personality with
perpetual succession, capacity to contract, own property and sue or be
sued.
The company acquires legal personality from the date of its registration by
the registrar of companies. The Companies Act, S. 16 (2) provides that "
49
from the date of incorporation ... the subscribers to the memorandum ...
shall be a body corporate by the name contained in the memorandum".
S.28 of the Co-operative Societies Act provides that "a society, on
registration, shall be a body corporate".
(c) Statutory Corporation
This is created by an Act of Parliament and comes into existence from the
date of commencement of the Act. An example of a statutory corporation
is the Agricultural Finance Corporation".
Section 3(1) of the Act states that "there is hereby established a corporation
to be known as the Agricultural Finance Corporation".
Section 3(3) of the Act states that "the corporation shall be a body
corporate with perpetual succession and a common seal".
(d) Chartered Corporation
A chartered corporation may be created under Section 14 of the

Universities Act, 1985. Section 12 of the Act empowers the President of
Kenya to grant a charter to any private university intended to be set up in
Kenya if, in his opinion, the grant of the charter to the Institution concerned
may be of benefit to the future development of university education in
Kenya.S.14 of the Act provides for the publication of the charter in the
Gazette and also states that 'with effect from the day of publication of the
charter the Institute established by the charter shall be a body corporate by
the name cited in the charter'.
Examples are :
i. Baratton University, and
ii.Catholic University of Eastern Africa.
UNINCORPORATED ASSOCIATIONS
Characteristics of Unincorporated Associations
These are associations of persons who associate to promote a common

and lawful purpose. They have no legal existence of their own and
property if any is jointly held or is held by trustees for the benefit of all
members. The rights of the members are enshrined in the constitution of
the association. Members are liable for debts and other obligations of the
associations and in the event of dissolution, members are entitled to share
in whatever remains. As a general rule it can only sue or be sued through
its principal officers. The law governing these associations is the law
which regulates the activities they engage in.
In the FORT-HALL BAKERY SUPPLY CO. v WANGOE (un

unreported High Court case) a group of forty-five people had carried on a
bakery business under the name of 'Fort-Hall Bakery Supply Co'. The
assumed business employed Wangoe as its manager but later on dismissed
him. In proceedings brought in the High Court to recover a certain amount
50
of money alleged to be owed by him to the business the court terminated
the proceedings as soon as its attention was drawn to the fact that the
association had not been registered under the Companies Act and had not
been formed under any Act of Parliament. The court held that the
association must be treated as non-existent from a legal point of view and
could not therefore be allowed to sue.
The commonest examples of unincorporated associations are trade unions,

societies and partnerships.
(a) Trade Unions
These are registered under S.11 of the Trade Unions Act 1952 with the
primary object of regulating the relations between employees and
employers. Section 27(1) of the Act provides that a registered trade
union may sue or be sued under its registered name. However, S.23
provides that no suit or other legal proceedings shall be maintainable in
any civil court against any registered trade union or an officer or member
thereof in respect of any act done in contemplation or furtherance of a
trade dispute. S.24 bars any such suits in respect of any tortious act
alleged to have been committed by or on behalf of the trade union. Under
S.25, a trade union is liable on any contract entered into by it or by an
agent acting on its behalf.
Because a trade union is not a body corporate, the reference to suits by or

against it, and the word "agent" used in relation to it, are used by way of
analogy only.
Under S.41 of the Act, all property of a registered trade union are vested in
its trustees for the use and benefit of the union and its members, and is
under the control of the trustees. The property is vested in trustees because
the union, being non-existent legally (i.e it being not a body corporate)
cannot hold or own property in its name.
(b) Societies
These are associations registered under the Societies Act 1968. Section
2(1) of the Act defines a society very broadly as including any club,
company, partnership or other association of ten or more persons, other
than a registered company, corporation, trade union, co-operative society,
registered school, bank or partnership of more than twenty persons.
Examples of such societies are political associations such as K.A.N.U.,
welfare societies and football clubs.
Although registration under the Act does not confer corporate personality
on the association it provides a legal framework for proper management of
what is colloquially called the association's affairs and the machinery for
bringing those affairs to an orderly end.
(c) Partnerships
51
Partnership is defined by S.3(1) of the Partnership Act as "the relation
which subsists between persons carrying on a business in common with a
view of profit". It should be noted that this is a definition of the
relationship that exists between the individual persons who are trading as
partners rather than a definition of the apparent entity called a "
partnership". A partnership is not a body corporate because it has no legal
personality and does not exist as a as a legal entity. It cannot therefore,
carry on a business. However, S.6 of the Act states that persons who have
entered into partnership with one another are called collectively a firm, and
the name under which their business is carried on is called the firm name.
The following are the practical consequences of the fact that a firm is not a
body corporate:
(i) The debts of the firm are the debts of the individuals who are
carrying on the business. S.11 of the Act states that: "every partner in a
firm is liable jointly with the other partners for all debts and obligations of
the firm incurred while he is a partner."
In the case of registered companies the company's debts are not the debts of
members.
(ii) Section 37(1) of the Act provides that the death of any partner in a
firm results in dissolution of the firm unless the partnership agreement, if
any, provides otherwise. In the case of registered companies the death of a
member does not cause the dissolution of the company.
(iii) Because it is legally non-existent, a partnership cannot own property.

In effect, the partnership property is the joint property of the partners who
can therefore insure it individually.
In the case of registered companies, members have no insurable interest in

the company's property.
(iv) Partners may sue or be sued in the firm's name for the firm's debts.
v. In the case of registered companies, a member or members cannot be

sued for the company's debts
Unit summary
In this unit you have learned legal and natural persons. Emphasis was
placed on legal persons or corporations, their formation as well as their
rights and obligations
Summary
52
Task
In your own opinion and with examples is business better protected in
 Corporations or in
 Un-incorporated associations
Task
Self-Assessment
Examine the concept of ‘legal personality’ and describe the
various types of corporations giving examples of each
Self-Assessment
53
Unit 4
LAW OF CONTRACT
Introduction
This unit introduces you legal contracts .Contracts are the heartbeat of
business and therefore an in-depth understanding of this topic is
paramount. You shall be introduced to the formation of the contracts;
elements of the contracts; vitiating elements as well as discharge of
contract
 Gain capacity to understand and recognize legal contracts and

their discharge in business environment
Outcomes
Offeror: The party manifesting intention to contract
offeree: The party to whom the intention to contract is

being manifested to
Terminology Invitation to treat: This is a mere invitation by a party to another or
others to make offers.
Consensus ad The very subjective moment when the minds of the

idem: parties meet
55
SOURCES OF THE KENYA LAW OF CONTRACT
The Law of Contract Act 1961, S. 2(2) provides that, except as may be
provided by any written law for the time being in force, the common
law of England relating to contract, as modified by doctrines of
equity and by the Acts of the United Kingdom Parliament specified
in the schedule to the Act, to the extent and subject to modifications
in the said schedule, shall extend and apply to Kenya. The U.K.
Acts specified in the schedule are:
(i) The Law Reform (Married Women and Tortfeasors) Act,

1935.
(ii) The Law Reform (Frustrated Contracts) Act, 1943.
(iii) The Disposal of Uncollected Goods Act, 1952. (This Act is

no longer applicable, having been rendered inapplicable by S.
10 of the Kenya Disposal of Uncollected Goods Act, 1987).
Types of Contract
The common law of England relating to contract classifies contracts into
the following categories:
(i) Specialty Contracts - which are executed in a special

way (i.e. written, signed and sealed). The Kenya Law
of Contract Act, S. 2(1) provides that no contract in
writing shall be void or enforceable by reason only
that is not under seal. This provision constitutes a
significant statutory departure from the English law
relating to specialty contracts.
(ii) Contracts of record e.g. court orders.
(iii) Simple contracts - i.e. agreements that are enforceable

by the courts.
For the purpose of Business law 1 "the law of contract" means

the law relating to "simple contracts".
Definition
This is a legally binding agreement made between two or more parties or
persons. It has also been defined as a promise or set of promises for the
breach of which the law provides a remedy and the performance of which
the law recognizes as an obligation.
All contracts are agreements, but all agreements are not contracts. This is
because a contract imposes upon the parties legally binding obligations.
56
Formation of Contract
A contract comes into existence when an offer by one party is

unequivocally accepted by another, both parties must have the requisite
capacity and some consideration must pass between them. The parties
must have intended to create legal relations and the purpose of the
agreement must have been legal. Any requisite legal formalities must have
been complied with.
The above passage summarises the so-called elements of a

contract. In order to constitute a contact and agreement must
be attended by the basic elements.
ELEMENTS OF A CONTRACT
1. OFFER
This is an unequivocal manifestation by one party of its intention to

contract with another. It is a clear intimation of intention to contract. The
party manifesting the intention is the offeror and the one to whom it is
made is the offeree.2.2
Nature of An Offer
An offer may take many forms - written, verbal or merely implied from
conduct. The cases which will be referred to in these notes will illustrate
this point. But whatever be the manner of its manifestation, an offer is
either a promise made or something done by a person from which the law
will deduce his intention to enter into a contract with another person if that
other person does or promises to do, something required. It must be
distinguished from other acts which resemble it, such as:
(i) Invitation to treat
This is a mere invitation by a party to another or others to make offers.

Again the offeror becomes offeree and invitee the offeror. A positive
response to an invitation to treat is an offer.
(a) A registered company issues a prospectus inviting the public to

apply for its shares. This is an invitation to treat (i.e. an attempt to
"attract" offers) and not an offer. It is not regarded as an offer because of
practical reasons: If it was an offer, every application made pursuant
thereto would constitute an acceptance and the company would be
contractually bound to allot all the shares applied for. If the issue were
oversubscribed, the company would be sued by some of the applicants for
breach of contract. As this appears to be unjust, the courts have avoided
57
the eventuality by regarding the issue of the prospectus merely as an
invitation to treat. When applications are made, they will constitute the
offers. The company then finds out how many shares have been applied
for and, if the issue is oversubscribed, accepts applications which equal the
shares available and "rejects" the others. The company cannot be sued by
those to whom shares have not been allotted since there is no contract
between them and the company: they made an offer which was not
accepted by the company - and the company could not accept the offer
because it did not have shares to sell.
(b) The display of goods in a shop or supermarket with price labels

attached thereon. The reasons why the courts decided not to regard this as
an offer was explained by Lord Goddard in Pharmaceutical Society v.
Boots. Cash Chemists (Southern) Ltd. Fisher v Bells.
C. A government ministry puts an advertisement in the

newspapers asking for tenders for the supply of a specified
quantity of goods during a specified period of time. The
advert constitutes an invitation to treat and a trader's response
thereto is the offer which the ministry may accept or reject.
D. Advertisement of sale by auction
Harris v Nickerson
(ii) Declaration of Intention
A person may do something which, on the face of it, appears to be an offer.

An example is the case of Harris v. Nickerson where it was held that an
advertisement about an intended auction was a declaration of intention
(i.e. a public manifestation of an intended act) but not an offer. Travelling
to the advertised venue does not constitute an acceptance of an offer and
the traveller cannot sue the advertiser for breach of contract if the auction is
cancelled, or some of the goods to be auctioned are withdrawn.
2.3 Rules Relating to an Offer
The case law relating to an offer has established the following rules:
(i) The offer may be oral, written or may be implicated
from the conditions of the offer.
(ii) An offer must be specific or definite (so that the offeree may truly
understand the intention of the offeror and consider his response thereto):
Scammel and Nephew Ltd. v. Ouston in which an offer that referred to
"hire purchase terms” over a period of two years was declared "void" due
to uncertainty over the meaning of "hire purchase terms"
58
A person cannot be said to have accepted an offer with such conditions: he
would not have understood what he was purporting to
accept. However, in Stevens v. Mclean the court
explained that, an offeror must explain a vague offer if
asked to do so.
(ii) An offer may be conditional or unconditional.
(iv) An offer can be made to:
(a) The general public, as in Carlill v. Carbolic

Smoke Ball Co. Ltd.;
(b) A class of persons, as in Wood v. Lektric Ltd -

where an offer was made to "hair sufferers"—a
class of persons to whom the court held that the
plaintiff, -Mr. Wood, a young man whose hair
was prematurely turning grey and was, as a
consequence, a "hair sufferer" within the offer,
belonged. Mr Wood had properly accepted the
offer although it was not addressed to him
personally, or
(c) A particular person, as in Boulton v. Jones
(v) The offer may prescribe the duration the offer is to

remain open for acceptance as Dicknson v Dodds and
Routledge v Grant.
2.4 Termination of an Offer
An offer may come to an end by:

- Insanity
- Revocation
- Lapsing of time
- Counter-offer.
- Death
- Rejection
- Failure of a condition subject to which the offer was
made.
(a) Revocation
An offer is "revoked" if the offeror changes his mind and withdraws it

(expressly or impliedly). To be valid, the revocation must have been:
(i)Made before acceptance: Byrne v. Van Tien Hoven - in which it was

held that a letter of revocation posted after a letter of acceptance had been
posted was ineffective (although the offeror did not know that the offeree
had posted the letter of acceptance).
59
(ii)Communicated (i.e. made known) to the offeree - expressly or
impliedly. An example of the implied revocation is the case of Dickinson
v. Dodds (study the judgment of James, L.J.)
Provided the aforesaid rules are complied with, an offer can also be
revoked even though it was declared to be open for a given period. The
offeror can change his mind at any time before the period expires:
Dickinson v. Dodds
Exceptions
(i) Consideration was given for keeping the offer open. Such an offer
constitutes an "Option". An example is a hire purchase agreement. The
owner of goods cannot tell the hirer that he will not, after all, sell the goods
to him.
(ii) An application for shares in a company made in response to a

prospectus cannot be withdrawn until after the expiration of the third day
after the time of opening of the subscription lists. This is provided by the
Companies Act, S.
52.
(b) Lapse of time
An offer "lapses" (i.e. comes to an end automatically by operation of law)

if:
(i) It is not accepted within the stipulated time if

any.
(ii) It is not accepted within what appears to the

court to be the reasonable time during which it
should have been accepted, e.g. Ramsgate
Victoria Hotel Co. v. Montefiove - an offeto
buy shares in a company could not be accepted
at the end of the fifth month after the offer was
made. (June - November)
(iii) Virji Khinji v Chutterback
(iv) It is an offer to sell property, and the property is

sold to another party before the offeree accepts
the offer: Dickinson v. Dodds (in which Mellish
L.J. regarded the sale as equivalent to the
offeror's death because it renders performance of
the offer impossible)
(c) Counter - offer
A counter - offer is constituted by the offeree's qualified acceptance which,

in itself, becomes the fresh offer and cancels the original offer, e.g. Hyde v.
60
Wrench - in which the "acceptance" to buy the house for £950 was held to
have cancelled the offer to sell if at £1,000.
(d) Death
The death of either party before acceptance terminates a specific offer.

However, the offer only lapses when notice of death of the one is given to
the other. As was the case in Bradbury v Morgan Mellish Js dictum in
Dickinson V Dodds is emphatic that after an offeror dies his offer cannot
be accepted.
(e) Insanity
Additionally, the unsoundness of mind of either party before acceptance

terminates the offerHowever, the offer only lapses when notice of the
insanity of the one is communicated to the other.
(f) Rejection
This is the refusal by the offeree to accept the offer. The refusal may be
express or by implication. Silence on the party of the offeree amounts to
rejection. As was the case in Felthous v Bindles.
(g) Failure of a condition subject to which the offer was made
An offer made on the basis of a condition or state of affairs existing lapses

if the condition or state of affairs fails to materialize. These are referred to
as conditional offers as was the case in Financings Ltd v Stimson since
the conditions of the motor vehicle in question had changed the dependants
offer to take the same on hire purchase terms lapsed and he was under duty
to take delivery or pay instalments.
2. ACCEPTANCE
This is the external manifestation of assent by the offeree. By
acceptance an agreement comes into existence between the
parties. Acceptance takes place at a very subjective moment
when the minds of the parties meet, i.e. Consensus ad idem.
This is the moment at which an agreement comes into
existence. However, this subjectivity must be “externalised”.
This is what is referred to as acceptance.
This offer and acceptance give rise to consensus, hence

agreement. These two elements constitute the foundation of
every contractual relationship but cannot by themselves
constitute a contract.
(a) The offeree must have been aware of, and must have
intended to accept the offer, when he did what is
alleged to be the acceptance: The Crown v. Clarke
(Australian case and a persuasive precedent in
Kenya). Clarke had made his statement to the police in
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order to save himself from the unfounded charge of
murder. He had not made the statement in order to
accept the offer which he had forgotten about at the
material time. His statement was not therefore, an
acceptance of the offer to pay the reward.
(b) The offeree's assent must be notified, or made known,

to the offeror: Household Fire Insurance C. Ltd. V.
Grant.
This can be illustrated by the case of Felthouse v.

Bindely in which it was held that the nephew's
information to the auctioneer that the horse had been
sold could not constitute an acceptance of the plaintiff's
offer because he (the plaintiff) had not been told
anything by the nephew.
Exception
An uncommunicated acceptance will be effective if,

from the words of the offer, the offeror can be regarded
as having waived the right to be informed of the
acceptance: Carlill v. Carbolic Smoke Ball Co. in
which Mrs. Carlill was regarded as having accepted the
defendant company's offer although she had not told
them that she would buy and use the carbolic smoke
balls.
(c) An offer made to the general public can be accepted by

anybody who fulfils, or performs, the conditions stated
therein. Carlill v. Carbolic Smoke Ball Co. - in which
Mrs Carlill was held to have accepted the offer
although it had not been made to her personally.
(d) An offer made to a class of persons can be accepted

only by a person of that class: Wood v. Lectrik Ltd. -
in which an offer to "hair sufferers" was held to have
been properly accepted by Mr. Wood - a young man
whose hair was prematurely turning grey and was
regarded by the court as a "hair sufferer" within the
terms of the offer.
(e) An offer made to a particular person can be accepted

only by the particular person: Boulton v. Jones - in
which it was held that an offer made by Jones to
Brocklehurst could not be accepted by Boulton.
(f) The acceptance of an offer must be unconditional:

Hyde v. Wrench -in which it was held that the
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"acceptance" to buy the house at £950 destroyed the
offer to sell the house of £1,000. Neale v Merrett.
An offer terminated by a counter - offer cannot be

revived by a subsequent tender of performance thereof.
(g) An acceptance of an offer communicated to the offeror

verbally by the offeree is effective from the moment the
offeror hears the offeree's words: Entores Ltd. v.
Miles Far East Corporation (obiter dictum by Lord
Denning)
(h) If the offeror and offeree negotiate by telephone the

acceptance is complete the moment the offeror hears
the offeree's words of acceptance: Entores Ltd. v.
Miles Far East Corporation (obiter dictum by Lord
Denning).
(i) If the offeror and offeree negotiate by telex the

acceptance will be effective from the moment that the
telex message is received by the offeror: Entores Ltd.
v. Miles Far East Corporation - in which it was held
that the contract was formed in London when the
offeror received the telex message from Amsterdam.
(j) If the offeror expressly or impliedly authorised the

offeree to transmit his acceptance by post the
acceptance will be effective at the moment the letter of
acceptance is posted: Byrne v. Van Tien Hoven - in
which it was held that the acceptance was effective
when the plaintiffs posted their letter on October 11th
in New York (although the defendants in Cardiff were
not aware of the posting)
Implied Authorization to accept by post occurs if:
(i) The offeror posted his offer but did not tell the
offeree not to use the post, as happened in
Byrne's case above.
(ii) The offer was not posted but the court, as a

practical matter, regards the post office as the
medium of communication that the parties
themselves contemplated, as happened in
Household Fire Insurance Co. v. Grant - in
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which the company's letter to Grant by post was
held to have been valid acceptance of Grant's
offer although Grant's letter of offer had not been
posted but sent to the company by hand.
Express authorization to accept by post occurs if the

offerer tells the offeree to reply by post, as happened in
Adams v. Lindsell in which the offeree was told to
"answer in course of post"
Post office is an agent:
In the cases where the offeror expressly or impliedly

authorises the offeree to accept by post, the law regards
the post office as the offeror's agent to transmit the
acceptance. Consequently, as soon an the letter is
"handed over" to the post office (or merely dropped in
the letter box) the law regards it as having been
"handed over" to the offeror personally - in accordance
with the principles of the law of agency.
If the letter of acceptance is in fact lost or delayed in

transit, the law disregards that fact: after all, the letter
was already received by the offeror - how can he claim
that it was lost or delayed in transit? Legally, it was not
lost or delayed in transit. This is illustrated by the case
of Household Fire Insurance Co. v. Grant in which
the fact that the company's allotment letter never
reached Grant was disregarded by the court and Grant
ordered to perform his part of the contract.
(k) An acceptance by post which is neither expressly
nor impliedly authorised by the offeror becomes effective only from
the moment the offeror receives the letter of acceptance. In such cases
the post office would be the offeree's agent to transmit his acceptance
to the offeror, and the acceptance would be effective only if the agent
actually delivers the message. This rule appears to be a logical
deduction from the explanation given by the court in Byrne's case
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(l) If the offeror gives a letter containing an
offer to a messenger and instructs the messenger to wait
for, and receive, the acceptance thereof, the acceptance
will be effective from the moment the offeree put his
letter of acceptance into the messenger's hands:
Household Fire Insurance Co. v. Grant (obiter
dictum of Thesinger, L. J.)
(m) An acceptance, once posted, cannot be withdrawn:

Household Fire Insurance Co. v. Grant (Statement of
Thesinger, L. J.). This is definitely so when the
acceptance was posted pursuant to an express or
implied authorization by the offeror. The legal position
regarding unauthorized acceptance by post is not clear
because there is no decided case on the point.
Examination questions sometimes test candidates'

awareness of the uncertainty by asking, for example,
whether an offeree who has posted a letter of
acceptance can telephone the offeror and tell him to
disregard the letter of acceptance - the examination
question being so drafted as to raise doubts whether the
offer was posted or made by other means.
(n) Unless there are specific reasons to the contrary, the

mode in which the acceptance was transmitted does not
matter if the offeror actually received it: Yates
Building Co. Ltd. v. Pulleyn & Sons Ltd. - in which
it was held that an acceptance by ordinary post was
valid although the offeror had stated that it had to be by
"registered post"
The prescribed mode of acceptance was regarded by

the court as "permissive" or optional. The court's
decision might probably have been different if the
offeror had told the offeree to reply by "registered post
only", or if the offeror had prescribed any other
mandatory mode of communication.
2.6 Provisional Contracts
Occasionally, an agreement may be described by the parties

thereto as being "a provisional agreement" until a legally
binding agreement is prepared by their advocates and signed
by them. In Branca v. Cobarro the court held that the
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agreement, though described as provisional, was legally
binding already.
The Companies Act, S. 111 uses the word 'provisional' in a

very special way and it was held in Re: 'Otto' Electrical
Manufacturing Co. (1905) Ltd. that a 'provisional contract'
there under does not bind a company if the company had not
received a trading certificate.
2.7 Agreement "Subject to Contract"
An agreement described as being "subject to contract" is not

legally binding and merely serves as a written record of what
the parties are negotiating about.
3. CAPACITY
Capacity to Contract
`Capacity' may be described as the legally recognized right of

a person to enter into a legally binding agreement. The law of
contract limits in varying degrees the contractual capacity of
the following persons:
(i) Infants or minors,
(ii) Drunken persons and persons of unsound mind,

(i) Corporations.
(ii) undischarged bankrupts.
3.1.1 Ractral capacity of Infants or minors
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An infant or a minor is any person who has not
attained the age of eighteen years: Age of Majority Act 1974, S. 2. An
agreement entered into by an infant may constitute a binding, voidable
or void contract - depending on the object of the agreement.
3.1.2 Binding Contracts
Contracts which are binding on an infant are contracts

for:
(i) Necessaries,
(ii) Education, and
(iii) Beneficial service.
(a) Necessaries
'Necessaries' are defined by S. 4(2) of the Sale of

Goods Act as "goods suitable to the condition in
life of such infant or minor... and to his actual
requirements at the time of sale and delivery".
This provision is explained by Nash v. Inman in
which an infant agreed to buy "an extravagant
number of waistcoats" but failed to pay for them.
He was sued for the price but the court held that
he was not liable since the goods supplied did
not fall within the statutory definition of
necessaries.
To constitute necessaries, the goods:
(i) Must be suitable to the condition in life of

the infant, and
(ii) Must be suitable to the infant's actual

requirement at the time of sale and
delivery, i.e. the existing stock of goods (if
any) was not adequate for the infant's
needs.
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Other necessaries include things like lodging,
transport to the place of work, legal advice, etc.
Liability for Necessaries
S. 4(1) of the Sale of Goods Act provides that

the infant is liable to pay "a reasonable price" for
necessaries supplied to him. He is not liable for
the agreed price. This provision raises the
question whether the infant's liability is
contractual or quasi-contractual.
(b) Education
An infant may legally enter into a contract for

educational instruction. Some textbooks regard
education as part of 'necessaries'.
(c) Beneficial Service
A contract of service or apprenticeship is binding

on an infant - provided it is substantially for his
benefit.
In Doyle v. White City Stadium it was held that

an infant boxer was bound by one of the rules
and regulations of the British Boxing Board of
Control, which was not beneficial to him
because the rules and regulations, viewed as a
whole, were beneficial to him.
In Clemens v. London and North Western

Rail Co. it was held that the infant plaintiff was
bound by the defendant railway company's
railway scheme which fixed a lower rate of
compensation for injuries than the rate fixed by
the Employer's Liability Act because the
company's scheme covered a wider range of
injuries than the Act.
In De Francesco v. Barnum the court held that

an infant dancer was not bound by a contract of
service whose terms were so bad as to literally
put the infant at the disposal of the employer. In
Roberts v. Gray the infant defendant was held
liable for breach of contract by his failure to
accompany the plaintiff on a European tour to
play billiards since the contract was substantially
for his benefit.
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3.1.3 Voidable Contracts
The following contracts are valid and binding upon an

infant unless he repudiates them during infancy or
within a reasonable time after attaining the age of
eighteen:
- A lease,
- A partnership agreement,
- A contract to purchase a company's shares.
(a) Leases
A lease granted to an infant is binding on him

unless he repudiates it within a reasonable time
after attaining the age of eighteen. In Davies v.
Beynon - Harris the court held that an infant
tenant was liable for the rent of a flat which had
accrued before he repudiated the lease. In
Valentini v. Canali the plaintiff, an infant, had
agreed to become the tenant of the defendant's
house and to buy the furniture therein at £102.
He paid £68 on account for the furniture, and
after, occupying the house and using the
furniture for some months he repudiated the
tenancy agreement and sued to recover the £68.
It was held that he could not recover the money
because he could neither give back the benefit
derived from the use of the furniture nor place
the defendant in the position in which he was
before the contract.
(b) Partnership Agreement
An infant is bound at common law by a

partnership agreement but he is free to repudiate
it at any time during infancy or within a
reasonable time after attaining his majority.
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In Bennion v. Harrison the court held that Bennin, an infant who had been
a partner and had held himself out as such to many persons, was liable for
the price of goods which had been sold to the firm because when he
became of age, he had not informed "the world" (i.e. the persons who knew
him to be a partner or had dealt with him as such) that he was no longer a
partner. He had in fact ceased to act as a partner during his infancy.
S. 12 of the Partnership Act provides that a person who is under the age of
majority may be admitted to the benefits of partnership but he cannot be
made personally liable for any of the firm’s obligations. S.13 of the Act
provides that an infant partner becomes liable, attaining the age of majority,
for all obligations of the firm incurred since he was admitted - unless he
gives public notice within a reasonable time of his repudiation of the
partnership.
(c) Purchase of Shares
An infant who applies for, and is allotted, a company's shares

becomes a member of the company under S.28 (2) of the
Companies Act from the moment that his name is entered in the
register of members. He then acquires membership rights and
becomes subject to membership obligations like any other
member. However, he has a legal right to rescind the contract if
there has been a total failure of consideration for which he paid
the money (i.e. the shares have become worthless).
In Steinberg v. Scala (Leeds) Ltd. the plaintiff,

an infant shareholder, instituted rectification
proceedings with a view to:
(i) Being relieved from liability on calls, and
(ii) Recovery of money she had already paid.
The court held that she should not recover the money
already paid because the shares had some value although she (the plaintiff) had not received any
dividends from the company. She was however entitled to have her name removed from the
members' register (as the company had agreed to do).
70
3.1.4 Void Contracts
If the Infant's Relief Act 1874 of England applies
to Kenya as a statute of general application which was in force in
England on 12 August, 1897 then the following contracts which it
renders "absolutely void" in England would also be void if entered
into by an infant in Kenya:
- 'Contracts’ for repayment of money lent or to be

lent;
- 'Contracts’ for goods supplied or to be supplied

(other than contracts for necessaries),
- All "accounts stated" with infants.
(i) Loans
All loans made to an infant are void and

irrevocable. In Leslie Ltd. v. Sheill the infant
defendant had obtained two advances of two
hundred pounds each from the plaintiffs after
cheating them that he was an adult. The plaintiff
sued him to recover £475 (the amount of the
advances and accrued interest) for:
(a) Breach of contract, or alternatively,
(b) Fraudulent misrepresentation (i.e. deceit)
It was held that the infant was not liable because:
(a) There could not be any breach of a void contract, and
(b) The Infants' Relief Act renders loans to infants "absolutely void"
without any exception (cheating by an infant notwithstanding). The court
was also of the view that making the infant liable in tort (i.e. deceit) would
71
have amounted to an indirect enforcement of a contract rendered void by
statute.
(ii) Loans given for necessaries
It may happen that an infant asks someone for a loan to buy

necessaries such as school uniforms or textbooks. The person, not being
aware of the legal prohibition, agrees to lend the money and eventually
does so. What is the legal position? The loan is irrecoverable and the
lender cannot sue, as lender, to recover the money. This is so because the
Act does not contain any exception to the prohibition.
(iii) Subrogation
In Re National Permanent Benefit Building Society the court stated that

if an infant obtains a loan for necessaries and actually spends it in paying
for necessaries the lender could sue in equity and would be allowed to
stand in the place of those who had sold the necessaries and would have
had at common law a right to sue him if he had not been paid. This remedy
is known as "subrogation" and the lender is said to subrogated to the rights
of the seller and sues as if he were the seller and had not been paid.
Ratification
If an adult person makes a promise to pay a debt contracted during
infancy or perform a void contract made during infancy, the promise is
void and unenforceable against the promisor: Infants' Relief Act, S. 2.
Although the Infants Relief Act has been repealed in England by the
Minor's Contracts Act, 1987, it appears that it is still a prima facie source
of Kenya Law since the repealing Act has not been made part of the Kenya
Law.
3.1.5 Contractual Capacity of Drunken Persons
If a person purported to enter into a contract at a time

when he was too drunk to understand what he was
doing and the other party was aware of his mental
condition, the contract will be voidable at his option:
Gore v. Gibson in which the court held that the
defendant was not liable on a bill of exchange which he
had indorsed at a time when he was, to the knowledge
of the plaintiff, so drunk that he could not appreciate
the meaning, nature or effect of the endorsement.
72
The basis of the court's decision is not the defendant's
intoxication but the plaintiff's inequitable attempt to
take advantage of a person in a weaker position. It
would therefore appear that if both parties were
materially intoxicated at the time of contracting they
would be bound by the contract since none of them
could take advantage of the other.
The following points should be noted:
(a) Ratification
A drunken man who enters into a voidable

contract may affirm or ratify it when he is sober:
Matthews v. Baxter in which the defendant was
held liable for breach of contract to buy some
houses from the plaintiff which he had made
when he was drunk but had nevertheless
confirmed after he became sober.
(b) Necessaries
A drunken person is liable to pay for necessaries supplied to him pursuant

to a contract which he entered into when too drunk to know what he was
doing: Gore v. Gibson in which Alderson, B. stated that the ground of
liability is an implied contract to pay for the goods which arose from his
conduct when sober.
(c) The drunken person is liable to pay "a reasonable price" under S.4 of
the Sale of Goods Act. He is not liable for the agreed price - apparently
because, being drunk, he could not know the correct or fair price of the
goods.
3.1.6 Contractual Capacity of Persons of Unsound Mind
A contract entered into by a person of unsound mind is voidable at his

option if it is proved that the other party was aware of his mental
condition: Imperial Loan Co. Ltd. v. Stone, in which Lopes, L. J. stated
that "a contract made by a person of unsound mind in not voidable at that
person's option if the other party to the contract believed at the same time
he made the contract that the person with whom he was dealing was of
sound mind". The following points should also be noted:
(a) Ratification
73
A contract entered into by a person when he is insane can be ratified by
him when he becomes of sound mind.
(b) Necessaries
A person of unsound mind, like a drunken person, is liable to pay for

necessaries supplied to him. However, he is only liable to pay reasonable
prices for the necessaries under S. 4 of the Sale of Goods Act.
3.1.7 Contractual Capacity of Corporations
The courts have developed what is known as the doctrine of "ultra vires" in
order to determine the contractual capacity of legal persons or corporations.
The gist of the doctrine is that a body corporate's contractual capacity is

limited to the attainment of objects or purposes for which it was created. If
the corporation purports to enter into a contract to undertake a transaction
which is neither expressly nor impliedly within its objects. The contract is
"ultra vires" (i.e. "beyond the powers of") the corporation and is void,
illegal and incapable of ratification.
This rule applies to statutory corporations, co-operative societies and

registered companies. This can be illustrated by the case of Ashbury
Railway Carriage and Iron Co. Ltd v. Riche in which the House of
Lords held that a company whose object was, inter-alia, to make railway
carriages could not contract to build a railway line and Riche could not sue
the company for refusing to pay for the expenses incurred toward the
construction of the railway line.
3.1.8 Married Women
At common law, married women have no contractual capacity because

they are presumed to be non-existent (i.e. they are "part" of their
husbands—the two constituting one person who is the husband.)
This common law rule was changed by the Law Reform (Married Women
and Tortfeasors) Act 1935 of England which is applicable to Kenya under
the Law of Contract Act 1961. The Act gives married women full
contractual capacity as if they were " femme sole".
4. Consideration
For an agreement to constitute a contract the common law of
England, as adopted in Kenya, requires that it must be supported by
consideration.
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Exception
A "specialty contract" need not be supported by consideration. Such

a contract is written, signed by one party, sealed and then delivered
to the other party.
4.1 Definition
There are many definitions of consideration that have been

given by various judges in various cases. The following are
some of the definitions:
(i) "... Some right, interest, profit, or benefit accruing to

the one party, or some forbearance, detriment, loss, or
responsibility, given, suffered or undertaken by the
other", (per Lush, J., in Currie v Misa, (1875) L. R. 10
Ex. 153, at p. 162).
An example of consideration which is constituted by a

benefit accruing to one party and a detriment suffered
by the other is to be found in Carlill's case
(ii) "Consideration means something which is of some

value in the eye of the law, moving from the plaintiff:
It may be some benefit to the defendant, or some
detriment to the plaintiff, but at all events it must be
moving from the plaintiff”, (per Patteson. J in Thomas
v Thomas.
(iii) " I am content to adopt from a work of Sir Frederick

Pollock, to which I have often been under obligation,
the following words as to consideration. '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," (per
Dunedin, L.J. in Dunlop Pneumatic Tyre Co. Ltd. v.
Selfridge & Co Ltd.
75
According to Sir Frederick Pollock, consideration is
simply the price paid by a party to a contract for the
promise of the other party. Ultimately it is evident
that consideration is nothing but mutuality.
"Detriment" as consideration
An example of a 'detriment' that will legally suffice as

the consideration for a promise is provided by the case
of Carlill v. Carbolic Smoke Ball Co. When Mrs
Carlill acted upon the advertisement by buying and
using the carbolic smoke balls as directed she put
herself to some inconvenience at the advertising
company's request. The inconvenience she suffered by
having to swallow so many balls for so many days was
the 'detriment' which constituted the consideration for
the defendant company's promise to pay the £100
reward.
4.2 TYPES OF/OR CLASSIFICATION OF CONSIDERATION
Consideration may be executory or executed or past in certain

circumstances.
(a) Executory Consideration
Executory consideration consists of a promise
made by one party and a promise made by the other party to the
contract. The party exchange mutual promises. Performance of the
obligations remain in futura. It is good considerations to support a
claim.
Examples
i an unmarried man and a lady agree to be married

in the near future. Although nothing has been
done yet, there is a contract to marry between
them from the moment they exchange their
promises.
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The lady's promise is the price, which she pays
for the man's promise, and the man's promise is
the price he pays for the lady's promise.
ii Onyango goes to Munene's shop on the tenth day

of the month and asks Munene, a tailor, to make
a suit for him. He promises to pay for the suit at
the end of the month. Munene takes Onyango's
measurements and promises to have the suit
ready on the last day of the month.
Here, Onyango's promise is the consideration or

price for Munene's promise, and Munene's
promise is the consideration or price for
Onyango's promise.
(b) Executed Consideration
Executed consideration is constituted by something

done by the plaintiff because of a promise made by the
defendant. It is good consideration to support a
contractual claim.
Examples
1. If in example (2) above Onyango had paid for

the suit in advance, the payment would be the
executed consideration for Munene's promise.
2. Mutiso puts an advertisement in the newspapers

that he has lost his goat of a certain description
and promises to pay Shs200 to anybody who
returns it. Onyango reads the advertisement,
goes to look for the goat, finds it in the bushes
near the Bomas of Kenya and returns it to
Mutiso.
77
Here, what Onyango has done is what constitutes
the executed consideration required to make
Mutiso's promise binding on him.
4.3 Rules relating to consideration
The following are the rules which the English courts

have developed in relation to consideration:
i Consideration must be sufficient (real) but it need not

be adequate.
What the judge had in mind when formulating this rule

could be better understood after studying the decision
in the following three cases:
ST LK V. MYRICK (1809)ILK V. MYRICK (1809)
In the course of the voyage from London to the
Baltic, two seamen deserted and a captain, having unsuccessfully
attempted to find replacements at the Croneladt, entered into an
agreement with the rest of the crew under which they would be paid
the wages of the two seamen who had deserted if they worked the ship
back to London. The crew worked the ship back to London as agreed
but the captain refused to pay whereupon one of them, the plaintiff,
sued to recover his part of the wages. Lord Ellenborough stated:
"Here, I think, the agreement is void for want of

consideration. ... the desertion of a part of the crew is
to considered an emergency of the voyage as much as
their death; and those who remain are bound by the
78
terms of their original contract to exert themselves to
the utmost to bring the ship in safety to her destined
port".
Foakes v Beer (1884)
On the 11th of August, 1875 Mrs Beer recovered

judgment against Dr. Foakes for £2,077 17s 2d for debt
and £13 ls 10d for costs. On the 21st of December
1876 a memorandum of agreement was made and
signed by Dr Foakes and Mrs Beer that, if Dr Foakes
paid £500 at once and the balance in instalments of
£150 on the first day of July and January or within one
calendar month after each of the said days respectively
in every year until the whole of the £2,090 19s Od was
paid, Mrs Beer would not "take any proceedings
whatever on the judgment". Dr Foakes paid the whole
sum of £2090 19s Od as had been agreed whereupon
Mrs Beer asked him to pay the interest accrued on the
judgement. He refused to do so, relying on the
agreement between him and Mrs Beer. Mrs Beer
successfully sued for the interest after contending that
the agreement between her and Dr Foakes was
unsupported by consideration. Dr Foakes' appeal to the
House of Lords was dismissed with costs.
Lord Selborne stated:
"No doubt if the appellant had been under no

antecedent obligation to pay the whole debt, his
fulfilment of the condition might have imported some
consideration on his part for that promise. But he was
under that antecedent obligation; and payment at those
deferred dates, by the forbearance and indulgence of
the creditor, of the residue of the principal debt and
costs, could not (in my opinion) be a consideration for
relinquishment of interest and discharge of the
judgement"
Collins v. Godefroy
In this case the plaintiff sued to recover six guineas,

being the amount of the money he had been promised
79
as payment for giving evidence in an earlier case to
which the defendant was a party. He told the court that
he had agreed to give evidence after being promised the
money. It was held that there was no consideration for
the promise to pay. When he gave evidence, the
plaintiff was merely performing an existing legal duty
imposed on him by the law.
Looking at the case of Stilk v Myrick, it will be noted

that the sailors were merely doing what they were
already legally bound to do, as an implied term of
their contract of employment as sailors, when they put
extra effort to sail the ship back to London. As their
normal salary included payment for working in such
contingencies, the captain would have got nothing for
paying the money that he had promised to pay. He was
therefore free not to pay it, "nothing for nothing,
something for something" being the basic rule
underlying the common law conception of
consideration.
Regarding the case of Foakes v Beer, it should be

noted that when Dr Foakes paid the initial £500 he was
merely doing part of something he was already legally
bound to do by the court order of 11th August, 1875.
When he completed paying the agreed instalment, he
merely completed doing what he was already bound to
do on 11th August, 1875. Mrs Beer therefore got
nothing for her promise not to ask for interest that
would accrue on the judgement date after 11th August,
1875. She was, as a consequence, free to break the
promise.
These cases illustrate the situations which the courts

have dealt with and decided on the basis that what was
done and relied upon by the plaintiff as the
consideration for the defendant's promise was not
"sufficient consideration". They are instances in which
the plaintiff had merely performed an existing legal
duty. Such performance, per se, does not constitute
consideration for the promise that induced it. For an
act to constitute "sufficient consideration" it must be
real (i.e. something which the plaintiff was not already
bound to do).
4.4 EXCEPTIONS TO THE RULE IN PINNELS CASE
80
The decision in Pinnels Case that payment of a smaller
amount of money cannot constitute consideration for a
promise to accept it in settlement of a debt of a larger amount
does not apply in the following situations:
(a) Payment of a smaller sum at an earlier date

(b) Payment of a smaller sum in kind
(c) Payment of a smaller sum at a different place or venue.
(d) Payment of a smaller sum by a third party
(e) Payment of a smaller sum in addition to an object
(f) Payment of a smaller sum in a different currency
(g) Payment of a lesser sum by a debtor when he has
entered into an arrangement with his creditors to
compound his debtor.
In Pinnel's Case (1602), Pinnel sued Cole for a debt of

£8 which was due for repayment on 11th November
1600. Cole's defence was that, at Pinnel's request, he
had paid him £5 on a 1 October and that Pinnel had
accepted this payment in full settlement of the debt.
Pinnel won the case on a technical point of pleading but
the court explained that, except for the technical point,
he would have lost the case.
Brian C. J. stated that "payment of a lesser sum on the

day in satisfaction of a greater cannot be any
satisfaction (i.e. consideration) for the whole", but that
it could be consideration if paid:
(b) The rule in Welby v Drake is the principle that if the

smaller amount is paid by a third party, at the creditor's
request or with his consent, the payment would be
sufficient consideration for the promise to accept it in
full settlement.
In Welby v Drake (1825) the plaintiff sued the

defendant for the sum of £9 on a debt which had
originally been for £18. The defendant's father had
paid the plaintiff £9 after the plaintiff had agreed to
take that sum in full discharge of the debt. It was held
that the payment of the £9 by the defendant's father
operated to discharge the debt of £18.
81
The judge stated that, if the plaintiff were allowed to
recover the balance, he would also have been allowed
to commit "a fraud on the (debtor's) father, whom he
induced to advance his money on the faith of such
advance being a discharge of his son from further
liability".
(c) The rule in Good v Cheesman
If a debtor makes an arrangement with his creditors to

compound his debts, the payment of a smaller amount
would discharge a debt of a larger amount.
In such a case, although the creditor is satisfying a debt

of a larger sum by the payment of a smaller, the
consideration is the agreement by the creditors with
each other and with the debtor, not to insist upon their
full claims.
In Good v Cheesman (1831) the defendant had

accepted two bills of exchange of which the plaintiff
was the drawer. After the bills became due and before
this action was brought, the plaintiff suggested that the
defendant meet his creditors with a view to reaching an
agreement. The meeting was duly held and the
defendant entered into an agreement with his creditors
whereby he was to pay one-third of his income to a
trustee to be named by the creditors, and that this was
to be the method by which the defendant's debts were
to be paid. It was not clear from the evidence whether
the plaintiff attended the meeting though he certainly
did not sign the agreement. There was, however,
evidence that the agreement had been in his possession
for some time and it was duly stamped before the trial.
No trustee was in fact appointed, though the defendant
was willing to go on with the agreement.
It was held that the agreement bound the plaintiff and

the action was dismissed. The consideration, though
not supplied to the plaintiff direct, existed in the
forbearance of the other creditors. Each was bound
in consequence of the agreement of the rest.
THE DOCTRINE OF EQUITABLE OR PROMISSORY ESTOPPEL
82
(d) (The rule in the "High Trees" Case)
In the Central London Property Trust Ltd. v. High

Trees House Ltd it was held that a landlord who had
promised to accept £1,250 instead of the contractual
£2,500 as rent was bound by the promise - even though,
at a common law, there was no consideration for the
promise. This decision is variously referred to as
"waiver" or "equitable estoppel". Its basis was
explained by Lord Denning as follows:
83
"If I were to consider this matter without regard to
recent developments in the law, there is no doubt that
had the plaintiffs claimed it, they would have been
entitled to recover ground rent at the rate of £2,500 a
year from the beginning of the term ... because the
variation here might be said to have been made without
consideration ... But what is the position in the view of
developments in the law in recent years? The law has
not been standing still since Jorden v Money. There
has been a series of decisions over the last fifty years
which, although they are said to be cases of estoppel,
are not really such. They are cases in which a
promise was made which was intended to create
legal relations and which, to the knowledge of the
person making the promise, was going to be acted
on by the person to whom it was made, and which
was in fact so acted on. In such cases the courts have
said that the promise must be honoured ... As I have
said, they are not cases of estoppel in the strict sense.
They are really promises - promises intended to be
binding, intended to be acted on and in fact acted on.
Jorden v. Money can be distinguished, because there
the promisor made it clear that she did not intend to be
legally bound, whereas in cases to which I refer the
proper inference was that the promisor did intend
to be bound. In each case the court held the promise to
be binding on the party making it even though under
the old common law it might be difficult to find any
consideration for it. The courts have not gone so far
as to give a cause of action in damages for the breach
of such a promise but they have refused to allow the
party making it to act inconsistently with it. It is in
that sense, and that sense only, that such a promise
gives rise to an estoppel. The decisions are a natural
result of the fusion of law and equity ... The logical
consequence, no doubt, is that a promise to accept a
smaller sum in discharge of a larger sum, if acted upon,
is binding notwithstanding the absence of
consideration, and if the fusion of law and equity leads
to this result, so much the better. That aspect was not
considered in Foakes v. Beer".
On the other hand, in the circumstances postulated by

Lord Denning, the creditor is not bound by his
acceptance of the smaller sum if his promise was
obtained in a manner which a court of equity would
regard as "inequitable". This can be illustrated by the
case of D & C Builders Ltd. v. Rees (1965) in which
the facts were as follows.
84
D & C Builders, a small company, did work for Rees
for which he owed £482 l3s ld. There was at first no
dispute as to the work done but Rees did not pay. In
August and October, 1964, the wife of Rees (who was
then ill) telephoned the plaintiffs, complained about the
work, and said, "My husband will offer you £300 in
settlement. That is all you will get. It is to be in
satisfaction." D & C Builders, being in desperate straits
and faced with bankruptcy without the money, offered
to take the £300 and allow a year to Rees to find the
balance. Mrs Rees replied: "No, we will never have
enough money to pay the balance. £300 is better than
nothing." The plaintiffs then said: " We have no choice
but to accept." Mrs Rees gave the plaintiffs a cheque
and insisted on a receipt worded "in completion of the
account." The plaintiffs later brought an action for the
balance. The defence was bad workmanship and also
that there was a binding settlement. The question of
settlement was tried as a preliminary issue and the
judge, following Goddard v. O'Brien (1880), decided
that a cheque for a smaller amount was a good
discharge of the debt, this being the generally
accepted view of the law since the decision of that case.
On appeal it was held that Goddard v, O'Brien was
wrongly decided and that the payment by a debtor,
whether in cash or by cheque, of a lesser sum than the
amount of the debt was not a settlement of the debt
which was binding at law on the creditor.
In the course of his judgement Lord Denning stated:
"This case is of some consequence: for it is a daily

occurrence that a merchant or a tradesman, who is
owed a sum of money is asked to take less. The debtor
says he is in difficulties. He offers a lesser sum in
settlement, cash down. He says he cannot pay more.
The creditor is considerate. He accepts the proffered
sum and forgives him the rest of the debt. The question
arises: Is the settlement binding on the creditor? The
answer is that, in point of law, the creditor is not bound
by the settlement. He can the next day sue the debtor
for the balance, and get judgement. The law was so
stated in 1602 by Lord Coke in Pinnel's Case and
accepted in 1889 by the House of Lords in Foakes v.
Beer.
Now, suppose that the debtor, instead of paying the

lesser sum in cash, pays it by cheque. He makes out a
cheque for the amount. The creditor accepts the cheque
and cashes it. Is the position any different? I think not.
No sensible distinction can be taken between payment
of a lesser sum by cash and payment of it by cheque ...
This doctrine of the common law has come under
85
heavy fire. But a remedy has been found. The
harshness of the common law has been relieved.
Equity has stretched out a merciful hand to help the
debtor ... We can now say that when a creditor and a
debtor enter on a course of negotiation which leads the
debtor to suppose that, on payment of the lesser sum,
the creditor will not enforce payment of the balance,
and on the faith thereof the debtor pays the lesser sum
and the creditor accepts it as satisfaction, then the
creditor will not be allowed to enforce payment of the
balance, when it would be inequitable to do so ... In
applying this principle, however , we must note the
qualification: The creditor is only barred from his legal
rights when it would be inequitable for him to insist
upon them. Where there had been a true accord, under
which the creditor voluntarily agrees to accept a
lesser sum in satisfaction, and the debtor acts upon
that accord by paying the lesser sum and the creditor
accepts then it is inequitable for the creditor afterwards
to insist on the balance. But he is not bound unless
there has been truly an accord between them. In the
present case, on the facts as found by the judge, it
seems to me that there was no true accord. The debtor's
wife held the creditor to ransom ... No person can insist
on a settlement procured by intimidation".
4.5 1. Adequacy of consideration
Provided that consideration is sufficient, or real,

it need not be adequate. The court will not
compare the value of the defendant's promise
with the value of the plaintiff's act or promise in
order to determine the fairness of the
transaction. The parties are presumed to have
concluded a fair bargain and the court will not
assist any one of them who alleges that he made
a bad bargain. This is illustrated by Thomas v.
Thomas in which it was held that a payment of
£1 per year for the use of a house was binding on
the executors of the deceased owner (Thomas)
who had promised to accept the payment.
2. Consideration must move from the promisee
The rule that "consideration must move from the

promisee" means that only a person who has
personally given consideration for a promise can
86
sue for breach of the promise. A person who has
not given consideration for a promise cannot sue
the promisor for the simple reason that he
cannot expect to get something for nothing. The
common law regards a contract as a bargain
between the parties to a commercial transaction,
each of whom has bought the promise of the
other with his own promise or act.
This is illustrated by the case of Dunlop v

Selfridge in which the appellants were motor
tyre manufacturers and sold tyres to Messrs Dew
& Co. who were motor accessory dealers. Under
the terms of the contract Dew & Co. agreed not
to sell the tyres below Dunlop's list prices, and as
Dunlop's agents, to obtain from other retailers a
similar undertaking. In return for this
undertaking Dew & Co. were to receive
discounts, some of which they could pass on to
retailers who bought tyres. Selfridge & Co.
accepted two orders from customers for Dunlop
covers at a lower price. They obtained the
covers through Dew & Co. and signed an
agreement not to sell or offer the tyres below list
price. It was further agreed that £5 per tyre so
sold should be paid to Dunlop by way of
liquidated damages. Selfridge's supplied one of
the two tyres ordered below list price. They
did not actually supply the other, but informed
the customer that they could only supply it at list
price. The appellants claimed an injunction and
damages against the respondents for breach of
the agreement made with Dew & Co., claiming
that Dew & Co. were their agents in the matter.
It was held that there was no contract made
between the parties. Dunlop could not enforce
the contract made between the respondents and
Dew & Co. because they had not supplied the
consideration. Even if Dunlop were
undisclosed principals, there was no
consideration moving between them and the
respondents. The discount received by Selfridge
was part of that given by Dunlop to Dew & Co.
since Dew & Co. were not bound to give any
part of their discount to retailers the discount
received by Selfridge operated only as
consideration between themselves and Dew &
Co. and could not be claimed by Dunlop as
consideration to support a promise not to sell
below list price.
87
Viscount Haldane stated:
"My Lords, in the law of England certain

principles are fundamental. One is that only a
person who is a party to a contract can sue on
it....A second principle is that if a person with
whom a contract not under seal has been
made is to be able to enforce it consideration
must have been given by him to the promisor
or to some other person at the promisor's
request....I am of opinion that the consideration,
the allowance of what was in reality part of the
discount to which Messrs. Dew, the promisees,
were entitled as between themselves and the
appellants, was to be given by Messrs Dew on
their own account, and was not in substance
any more than in form, an allowance made by
the appellants".
Although Viscount Haldane spoke of "a second

principle" it would appear that there is no
"second principle" as such. What appears to be a
"second principle" is merely a verbal variation of
the basic rule that consideration must move from
the promisee - for only then can he say that he is
"a party to the contract " and be entitled to sue on
it as such.
This rule that consideration must move from the

promisee is also known as the "privity of
contract" rule and the effect of it is that an
agreement between A and B for the benefit of C,
if broken, cannot, generally speaking, be
enforced by C.
Exceptions to the doctrine of Privity of

contract
There are a number of exceptions to the privity

of contract rule of which the following may be
stated:
(a) Agency
88
A principal may sue on a contract made
by an agent.
This exception is perhaps more apparent

than real because the principal rather than
the agent is regarded as the contracting
party.
(b) Negotiable instruments
A holder in due course of a bill of

exchange can sue prior parties thereto
although there is no privity of contract
between him and any of them.
This is a statutory exception under the

Bills of Exchange Act.
(c) Third party insurance
A person injured in a car accident can sue

the insurance company which insured the
car against such risks although he is not a
party to the contract between the owner of
the car and the insurance company.
This is an exception under the Motor

Insurance (Third Party Risks) Act.
(d) Legal Task
89
The assignee of a debt may sue the debtor
in his own name under the Indian Transfer
of Property Act, 1882.
(e) Covenants running with land
The plaintiff, in order to succeed in the case,

must prove to the court that he was induced to
do what he did by the promise which the
defendant made and that he would not have done
what he did if the defendant had not made the
promise. In such a case the plaintiff's act and the
defendant's promise constitute a single
transaction or bargain. If the plaintiff performed
the act before the defendant made the promise,
the performance of the act would not constitute
consideration for the defendant's promise.
This may be illustrated by the case of Re

McArdle. in which the facts were as follows:
McArdle, his wife and his mother lived in a

dwelling-house forming part of the estate of his
father. He and his brothers and sister were to
inherit the house under their father's will after
their mother's death. In 1943 and 1944 Mrs
McArdle carried out certain improvements and
decorations in and on the house, the cost of
which amounted to £488. In April, 1945
McArdle and his brothers and sister signed a
document addressed to Mrs. McArdle which
provided: "In consideration of your carrying out
certain alterations and improvements to the
dwelling-house at present occupied by you, we
the beneficiaries under the will of our father
hereby agree that the executors... shall repay to
you from the said estate when so distributed the
sum of £488 in settlement of the amount spent
on such improvements. Dated April 30, 1945".
In 1948 the children's mother (the tenant for life)
died, and Mrs. McArdle claimed payment of
£488 which was refused and she sued for the
money.
90
It was held that the consideration for the
execution of the document of April 30, 1945,
being past, the document was a nudum Pactum
and was unenforceable against the authors.
Jenkins, L.J. stated:
"No question of conscience enters into the matter

for there is no consideration and there is nothing
dishonest on the part of an intending donor if he
chooses to change his mind at any time before
the gift is complete ... as the work had all been
done and nothing remained to be done by Mrs
McArdle at all, the consideration was wholly
past, and, therefore, the beneficiaries' agreement
for the repayment to her of the £488 out of the
estate was nudum pactum - a promise with no
consideration to support it. That being so, it is
impossible for Mrs. McArdle to rely on this
document as constituting an equitable Task for
valuable consideration". A similar policy was
made in Roscorla v Thomas.
Exceptions
A plaintiff may rely on past consideration in the

following instances:
(a) Where services are rendered at the express

or implied request of the defendant in
circumstances which raise an implication
of a promise to pay. This may be
illustrated by the following cases:
(i) Lampleigh v Brathwait
The defendant who had killed a Mr.

Patrick Mahume asked the plaintiff
to endeavour to obtain a pardon for
him from the King. The plaintiff
thereafter exerted himself to this
end, "riding and journeying at his
own charges from London to
Royston, when the King was there,
and to London and back, and so to
91
and from Newmarket to obtain
pardon for the defendant for the
said felony". After the pardon was
granted by the King the defendant
promised to pay the plaintiff £100
for his endeavours but failed to
honour the promise.
When sued for the £100 the

defendant pleaded past
consideration but the court held
him liable.
(ii) Re Casey's patents (1892)
Patents were granted to Stewart and

another in respect of an invention
concerning appliances and vessels
for transporting and storing
inflammable liquids. Stewart
entered into an arrangement, with
Casey whereby Casey was to
introduce the patents. Casey spent
two years "pushing" the invention
and then the joint owners of the
patent rights wrote to him as
follows:
"In consideration of your service as

the practical manager in working
both patents we hereby agree to
give you one-third share of the
patents".
Casey also received the letters

patent. Some time later Stewart
died and his executors claimed the
letters patent from Casey, alleging
that he had no interest in them
because the consideration for the
promise to give him a one-third
share was past.
92
It was held that the agreement was
binding.
These two cases may be explained

as follows.
If you ask someone to do

something for you and doing it will
make him spend some money, you
are under an implied legal
obligation to pay a reasonable
amount as compensation for the
anticipated expenses. When you
later on promise to pay some
money after the thing has been
done, you are merely fixing the
reasonable amount which the law
all along expected you to pay. The
service rendered is not past
consideration.
(b) Negotiable Instruments
Past services may constitute valuable

consideration for a bill of exchange under
s.27 of the Bills of Exchange Act which
provides that valuable consideration for a
bill may be constituted by "an antecedent
debt or liability".
If the brothers-in-law in Re McArdle,

above had given Mrs. McArdle a bill of
exchange or promissory note for £488
payable after their mother's death they
would have been liable on it even though
the work on the house had been completed
by the time of drawing the bill or
promissory note.
(c) Acknowledgement of statute barred

debt
93
An acknowledgement of a statute-barred
debt is binding under Limitation of
Actions Act 1968 even though it is made
in respect of a past debt.
(c) Consideration must be legal
The act or promise offered by the offeree as

consideration for the other parties. Promise
must be one permitted by law. Illegal
consideration invalidates the contract.
(d) Consideration must be something in

excess of a public duty
Performance by the plaintiff or a public

duty imposed upon him by law is not
sufficient consideration for the defendants
promise. This is because the plaintiff is
already legally bound to do so as was the
case in Collins v Godefroy. However in
England v Davidson and Glassbook
Brothers v Glamorgan country Council
consideration was sufficient since the
parties had done more that duty required.
(f) Considerations must be something in

excess of an existing contractual
obligation
Performance by the plaintiff of an existing

contractual obligation is not sufficient
consideration for the defendants promise.
This is because the plaintiff is already
legally bound to do so as was the casein
Stilk v Myrrick. However , if the plaintiff
does something of excess of an existing
contractual obligation such a thing
constitute good consideration. As was in
the case in Hartley v Ponsonby.
94
5. FORMALITIES
For an agreement to constitute a valid and enforceable contract it must have
been entered into in the form, or manner, if any, prescribed by
law. The general rule at common law is that a contract can be
entered into orally, in writing, partly orally and partly in writing, or
may be merely implied from conduct:
Requirements of writing
5.1 BILLS OF EXCHANGE AND PROMISSORY NOTES:
The Bills of Exchange Act defines a bill of exchange as

follows:
"A bill of exchange is an unconditional order in writing ...."

The Act further states that an instrument which does not
comply with these conditions ... is not a bill of exchange. To
be valid, therefore, a bill of exchange must be made in
writing. This requirement also applies to Promissory Notes
under S. 84(1) of the Bills of Exchange Act.
5.2 REPRESENTATIONS REGARDING CHARACTER OR

CREDIT:
Statements relating to a person's credit-worthiness will only

be actionable if made in pursuance of a contract which was in
writing. The Law of Contract Act, S.3(2) states as follows:
"No suit shall be brought whereby to charge any person upon

or by reason of any representation or assurance made or given
concerning or relating to the character, conduct, credit, ability
or dealings of any other person to the intent or purpose that
such other may obtain credit, money or goods, unless such
representation or assurance is made in writing, signed by the
party to be charged therewith".
95
5.3 TRANSFER OF SHARES IN A COMPANY
REGISTERED UNDER THE COMPANIES ACT:
Section 77 of the Companies Act prohibits an incorporated

company from registering any transfer of shares or debentures
of the company unless a proper instrument of transfer has
been delivered to the company.
5.4 ACKNOWLEDGEMENT OF STATUTE BARRED

DEBTS:
If an action for a simple contract debt has been barred by the

limitation period of six years, it is possible for the right of
action to be revived by an acknowledgement or part payment.
S.24 of the Limitation of Actions Act, 1968 provides that for
such an acknowledgement to be effective it must be in
writing and signed by the person making it, or his agent.
5.5 TRANSFER OF IMMOVABLE PROPERTY:
S.54 of the Indian Transfer of Property Act, 1882 (Note: This

Act is applicable in Kenya) requires that a transfer of
immovable property worth over 100 rupees must be by a
registered instrument. The requirement of registration
makes a written document necessary.
The above contracts are void unless they are made in writing.
(b) Requirement of written evidence
These contracts must be evidenced by some note or

memorandum.
(i) CONTRACTS OF GUARANTEE:
The Law of Contract Act, 1961, S.3 (1) provides:
96
"No suit shall be brought whereby to charge the
defendant upon any special promise to answer for the
debt, default or miscarriage of another person unless
the agreement upon which such suit is brought, or
some memorandum or note thereof, is in writing and
signed by the party to be charged therewith, or other
persons thereunto by him lawfully authorized."
(ii) CONTRACTS FOR THE SALE OF AN

INTEREST IN LAND:
The Law of Contract (Amendment) Act, 1968,
provides:
"No suit shall be brought upon a contract for the

disposition of an interest in land unless the agreement
upon which the suit is founded, or some memorandum
or note thereof is in writing and is signed by the party
to be charged or by some person authorised by him to
sign it. Provided that such a suit shall not be prevented
by reason only of the absence of writing, where an
intending purchase or lessee who has performed or is
willing to perform his part of a contract-
(i) has in part performance of the contract taken

possession of the property or any part thereof; or
(ii) being already in possession, continues in

possession in part performance of the contract
and has done some other act in furtherance of the
contract.
NOTE:
(a) The agreement itself need not be in writing, so

long as a "note or memorandum" is in existence.
Such note or memorandum must contain the
essential terms of contract - e.g.
97
(i) the names of the parties:
(ii) description of the property;
(iii) the nature of the consideration.
This evidence could be contained in two

documents, provided that the documents could
be connected, as it was in one case where an
address on an envelope was connected with the
letter contained therein.
The signature to be attached to such a document

must be that of the person against whom the
contract is to be enforced or a person authorised
on his behalf. The term "signature" includes a
rubber stamp.
(b) If there is evidence of part performance in the

form of possession by the purchaser or a lessee
the Court will permit oral evidence of a contract
for the sale of land to be given, and the Court
will award an order of specific performance.
(iii) EMPLOYMENT CONTRACTS FOR OVER

ONE MONTH, UNDER S.5 OF THE
EMPLOYMENT ACT.
6. ILLEGALITY
For an agreement to constitute a legally enforceable contract, it must have
been entered into for a lawful purpose. An agreement to do
something which is prohibited by statute or the common law
is not a contract - although such agreements are generally
called "illegal contracts"
6.2 ILLEGAL CONTRACTS
There are numerous examples of "illegal contracts" of which

the following may be mentioned:
a. Contracts illegal by statute
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Whether a particular contract is prohibited by a
particular statute depends on the wording of the statute.
For example, employment act, contracts for the
payment of wages or salaries in kind are illegal.
b. Contracts illegal at the common law
A contract which is prohibited by the common law is

usually described as being "contrary to public policy"
(i.e. the court is of the view that it is in the public
interest that the contract should not be enforced). Such
a contract may be one which:
(i) Tends to promote corruption in the public

service, as illustrated by Parkinson v. College
of Ambulance Ltd. (1925),
(ii) Tends to promote sexual immorality, such as in

Pearce v. Brooks (1866)
(iii) Tends to interfere with the sanctity of marriage,

such as Wilson v. Carnley (1908).However, in
Fender v. St. John - Mildmay (1938) the House
of Lords held that a contract made between
decree nisi and decree absolute, for marriage
after the dissolution of the existing marriage is
valid (despite the fact that it rendered
reconciliation between parties to the divorce
proceedings almost impossible).
(iv) Tends to fetter the freedom of marriage.
(v) Tends to prejudice the administration of justice,

such as -
(a) Champerty: Trendex Trading

Corporation v. Credit Suisse (1982), or
(b) Maintenance.
(iii) Tends to prejudice the administration of justice.
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(a) champerty agreement
(b) maintenance: Trendex Trading
Corporation v Credit suise.
Effects or Consequences of Illegality
Illegality renders a contract unenforceable. The contract

creates no rights and imposes no obligations on the parties.
This is because the contract is beyond the pale of law hence
neither party has a legal remedy. As a general rule money or
goods changing lands under an illegal contract are
irrecoverable. This is because gains and losses remain where
they have fallen. A court of law cannot assist parties to adjust
their rights if the contract is tainted with illegality. However
money or goods changing hands under an illegal contract may
be recoverable where
(a) a party repents or regrets the illegality before the

contract is substantially performed.
(b) The parties are not in pari delicto i.e. not equally to
blame.
(c) The owner of the goods or money establishes title
thereto without relying upon the illegal contract as was
the case in Amar Single Kulubya.
VOID CONTRACTS
These are contracts which the law treats as non-existent. As a general rule
illegal contract is only void but not certain rights may be salvaged by the
innocent party. A contract may be rendered by statute or at common law
i.e. courts of law.
Contracts void by the statute.
Wagering contract.
This is a contract whereby two persons or groups of persons with

different views on the outcome of an uncertain future event agree that
some consideration is to pass depending on the outcome.
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Contracts void at common law
These are contracts declared void by courts of law for being contrary to
public policy namely
I. Contract of the courts

II. Contract prejudicial to the statute of marriage
III. Contracts in restraint of trade
CONTRACTS IN RESTRAINT OF TRADE
This is a contract by which a person voluntarily or involuntarily restricts

his future liberty to carry on his trader business or profession in such
manner or with such persons as he chooses e.g. an employer restraining
an employee from working for a business rival. At common law
contracts in restraint of trade are prima facie void for being contrary to
public policy. However such a contract may be enforced it is proved that;
a) The restraint was reasonably necessary to protect the restraining

party’s interest
b) The restraint was reasonable to affected party
c) The restraint was not injurious to the public.
Contracts in restraint of trade are both voluntary and involuntary
Voluntary restraints
These are contracts where by a party consents to be restrained by the other

for example
Restraint accepted by an employee
The employer restraints the employee from working for a business rival or
setting up a similar business. Such a restraint may be enforced if
reasonable to both parties and is not injurious to the public.
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In Automan v Taylor the defendant who was an employee of the plaintiff
covenanted not to work in a tailoring business within 3 years of quitting
employment. However he worked in one of the areas before the 3 years
expired, the plaintiff sued for an injunction was granted.
However in Attwood v Lamont where the defendant as the head of the

cutting department in a tailoring business covenanted not to engage in
tailoring business within a radius of l0 miles and the plaintiff applied for an
injunction. It was held that the restraint was too wide and hence
unreasonable to be enforced.
A similar holding was made in Kores Manufacturing co v Kolok

Manufacturing Co where two competing companies had covenanted not
to employee each other’s employee within a duration of 5 years. The
defendant company employed a former employee of the plaintiff with 5
years. It was held that the restraint was unreasonable to both companies.
Worldwide restraint may be enforced if reasonable and can only be

effective if enforced on a worldwide basis. It was so held in Norclenfelf v
Maxim Nordenfelt Guns and Ammunition Company (1984).
Nordenfelt was the manufacturer of a quick firing and loading gun and
ammunition. He sold his business to a company for 287 500, 2 years later
the company merged with another and employed Nordenfelt as the
Managing Director at a salary of 2,000 per year. The contract of
employment restrained Nordenfelt from;
1) Carrying on or engaging in the business of manufacturing explosives

or ammunition in any part of the world for 25 years.
2) Competing with the business of the company for 25 years.
The House of Lords held that where as the covenant not to engage in gun
trade was reasonable and enforceable but the covenant not to compete
with the company for 25 years was unreasonable.
Restraint accepted by a seller of a business
Under this contract the buyer of the business restraints the seller from
setting up a similar business door, this may be necessary to protect good
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will. Such a restraint is prima facie void. In enforcing such a restraint the
court considers;
a. The area covered by the restraint

b. Its duration and other relevant circumstances
c. Nature or character of the business
In Dias v Souto (1960) the defendant sold a shop situated on the island of
Zanzibar. It is specialized in goods for expatriate community. He sold the
shop to the plaintiff and covenanted not to set up a similar business within
the Zanzibar protectorate. He established a similar business on the island
of Pemba, the plaintiff sued for an injunction. An injunction was granted
on the ground that the defendant was likely to injure the plaintiff’s
commercial position by rescission of the specialized nature of the business.
Restraints Restraint accepted by distributors or sellers of goods (sole

agreement)
The seller or distributor agrees to purchase all his goods from a particular
manufacturer or wholesaler in return for a specified discount. The purpose
of the restraint is to prevent the seller from distributing the products of a
competitor. Sales agreements take any of the following forms;
(a) Tying covenant

This is a contract by which a seller agrees to purchase all his goods
from a particular manufacturer or wholesaler.
(b) Compulsory trading covenant:

This is a contract by which a seller covenants to keep his business
open for reasonable hours everyday.
(c) Continuity covenant

This is a contract by which the seller agrees to extract similar
covenants from the person who purchases the business from him.
Solus agreements are prima facie void unless reasonable and not
injurious to the public.
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A partial restraint may be enforced by a court of law to protect clients,
trade secrets etc. However a restraint whose purpose is to keep off
competition is unenforceable.
Involuntary restraints
These are restraints imposed by professional bodies and trade

associations on their members for certain purposes e.g. enhancement of
standards of conduct. At common law such restraints are prima facie
void but may be enforced if it is proved that they are reasonable and are
not injurious to the public.
Contracts in Restraints of Trade in Kenya
The principles or rules governing contracts in restraint of trade in Kenya

are contained in the Contracts in Restraint of trade Act under sec.2 of the
act contracts in restraint of trade in Kenya are legally binding, however the
High court is empowered to declare such a contract void if it is satisfied
that the restraint is unreasonable in that it affords more protection than
necessary or is injurious to the public. To make its decision the court must
have regard to
a. The nature of trade, business, occupation or professional

b. Area covered by the restraint
c. Duration of the restraint
d. Other circumstances of the case
7. INTENTION
For an agreement to constitute a contract, the parties thereto must have
intended it to have legal consequences. Consequently, an agreement
that contains an express declaration that it is NOT intended to have
legal consequences (e.g. the "Honourable Pledge Clause" in ROSE
AND FRANK v. CROMPTON BROS) will not be enforced by the
courts despite its embodying all the other elements of a valid
contract.
In practice, however, parties do not direct their attention to this point

when negotiating with each other, with the consequence that the
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courts have, as it were, been called upon to "fill the gaps". This they
have done by formulating certain principles or "presumptions" that
will apply in the absence of an express declaration to the contrary.
These presumptions are as follows:
7.1 BUSINESS AGREEMENTS;

There is a rebuttable presumption that parties intended create
a legally enforceable agreement for example in Crlills case,
Edwards v Skyways Ltd. However legal intention may be
expressly negative by the use of honour clauses as was the
case in Rose and Frank V Crompton Brothers.
7.2 DOMESTIC OR FAMILY AGREEMENTS
There is a rebuttable presumption that the parties did not

intend to create legal relations.
(a) Agreements between husband and wife:
(i) Where the husband and wife are living together

amicably, there is a legal presumption that any
agreement they enter into is NOT legally
binding: BALFOUR v. BALFOUR. This
principle appears to be a consequence of a legal
apprehension that ill-advised litigation will
destroy the domestic tranquillity generally
prevailing in the home, or the love between the
parties.
(ii) Where the husband and wife have separated, or

are about to separate, so that the marriage is
practically over, any agreement entered into by
the spouses is presumed to have been intended to
be legally binding e.g. MERRIT v. MERRIT.
In such a case, there is no love between the
parties which litigation might destroy.
(b) Agreement between Parent and Child:
It was held in JONES v. PADAVATTON that an

agreement between a parent and a child (in that case,
between mother and daughter) is presumed NOT to
105
have been intended to be legally binding. The court
added that such agreements depend entirely on the
goodwill of the parties thereto.
(c) Agreement between Uncle and Niece or Nephew:
In Jones v. Padavatton, Salmon L.J. stated: "As a rule

when arrangements are made between close relations,
for example between husband and wife, parent and
child or uncle and nephew in relation to an allowance,
there is a presumption against an intention of creating
any legal relationship".
7.3 SOCIAL AGREEMENTS
Professors Chesire and Fifoot have expressed the view that "to
invite a friend for dinner is not to invite litigation" and it is
generally stated that social agreements between friends are
presumed NOT to have been intended to be legally binding.
8. TERMS OF A CONTRACT
The promises which the parties to a contract make to each other are known
as the "terms" of the contract. They are graded by the law into the
following categories:
(a) Conditions
This is a term of major stipulation in a contract. It is part of

the central themes. It runs to the part of the contract.
consequently, if it is broken, the injured party may -
(i) treat the contract as repudiated and sue the party at fault
for damages,
(ii) affirm the contract and sue for damages.
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As was the case in Poussard v Spiers and Pond
When it is said that a term which is a condition "goes to the

root of the contract" it merely means that the aggrieved party
attached so much importance to the term that, if he had known
that there would be a breach of it, he would not have entered
into the contract. For example, there is an (implied) condition
under s.14(2) of the Sale of Goods Act that the seller has "a
right to sell" (i.e. he is the owner of) the goods. If the goods
are stolen goods, and the buyer had been aware of this fact, he
would not have entered into the contract. This is a minor
term, or a term of minor stipulation. It is a collateral or
peripheral term of a contract. It is not part of the contral
theme.
(b) Warranties
There is no precise legal definition of a "warranty" which, in

legal nomenclature, is susceptible to a variety of
interpretations. However, for the purposes of the law of
contract, it is generally contrasted with a condition. It is
generally described as a stipulation which does not go to the
root of the contract and breach of which does not entitle the
aggrieved party to treat the contract as at an end, but entitles
him only to sue for damages. Warranty of quiet possession
of goods each of warranty entitles the innocent party to sue
for damages but the contract remains enforceable. As was the
case in Beffini v Gye and in Kampala General Agency v
Modys (EA) Ltd This is a rather lofty or vague phraseology
but a more useful approach is to divert to the examples of
warranties implied, or given, in s.14 of the Sale of Goods
Act, namely:
- the warranty of "quiet possession", and
- the warranty that the goods shall be free from

undisclosed encumbrances.
8.1 Purpose of Categorization
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As might have been implicit from their descriptions, the
purpose of the legal categorization of contractual terms is to
assist in the determination of the legal consequences of their
breach. For the party contemplating a breach, it is very
important to be aware of the legal consequences that will
ensue from implementing his decision.
8.2 Express terms
The terms of a contract are said to be "express terms" if the

parties themselves adverted to them at the time of negotiations
and actually agreed upon them (i.e. incorporated them into the
contract, either verbally or in writing). Written terms prevail
over unwritten terms. Handwritten terms prevail over others.
8.3 Implied terms
A term which the parties did not expressly incorporate into

the contract may nevertheless be deemed to be one of the
terms of the contract by implication. This may be necessary
in order to "give business efficacy to the contract", as
explained in The Moorcock. Alternatively, the term may be
implied by an Act of Parliament, such as the implied
conditions and warranties implied by the Sale of Goods Act.
8.4 Exemption or exclusion clauses
A party to a contract may seek to avoid legal consequences of

a breach of a term thereof by inserting therein a paragraph or
sentence to that effect. Alternatively, the clause may be
intended to limit the legal consequences of the breach rather
than avoidance thereof. Such sentences or paragraphs are
known as "exemption clauses". They are founded on the
theory of freedom of contract and are common in standard
form contracts.
8.5 Judicial attitude
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The English judges believed that a contract is an agreement
which is freely entered into by parties who are "sui juris" (i.e.
legally at par). Consequently, a party to a contract which
contained an exemption clause was bound by it. After all,
why did he agree to enter into the contract despite the clause?
As a consequence of numerous cases that were brought before

them, the English courts formulated the following rules
regarding exemption clauses:
i. An exemption clause must be an integral part of

the contract. A clause contained in a document
which is essentially a receipt for money paid will
not be regarded as an exemption clause, as
illustrated by: Chapleton v. Barry Urban
District Council.
ii. The particular clause in the document must have
been brought to the attention of the party affected
by it before he entered into the contract. A
purported notification after the conclusion of the
contract is not effective: Olley v. Marlborough
Court. However, the party seeking to enforce the
clause may succeed if he proves that he had dealt
with the other party on previous occasions, and
had given him similar documents: Spurling v.
Bradshaw.
iii. If the party affected by the exemption clause had
signed it, he will be bound by it, whether he did
not read its contents before signing it: L'Estrange
v. Graucob. Exceptionally he may evade some
of the clause if, before signing the document, he
had enquired as to what it meant and was given
verbal representations which modified the effect
of some of the written words: Curtis v. Chemical
Cleaning & Dyeing Co.
iv. If the clause is ambiguous, it will be interpreted
against the party who inserted it and who is now
relying on it. This is known as the "contra
preferentem rule" and is illustrated by: White v.
John Warrick & Co. Ltd.
v. As a general rule, an exemption clause cannot be
relied upon by a third party: Adler v. Dickson.
This is due to the privity of contract rule.
vi. An exemption clause cannot be relied upon to
exonerate a party from the consequences of a
fundamental breach of contract: Nichol v. Godts.
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9. VITIATING ELEMENTS IN A CONTRACT
The validity of a contract may be vitiated in the following factors:
9.1 MISTAKE
This is a misapprehension of a tact or fact situation.
The general rule is that mistake is legally irrelevant: Bell v.

Lever Bros.
9.1.2 Exceptions:
Mistake is legally relevant in cases of "operative mistake" (i.e.

the mistake operates to destroy the consensus that it is the
basis of a contract and the parties are deemed not to have
agreed on anything).
A mistake may be -
i. Common Mistake: This may occur as follows:
(a) "Res extincta" - an agreement to sell goods

which, unknown to buyer and seller, have ceased
to exist, e.g. Couturier v. Hastie - Contract
void.
NOTE: In McRae v. Commonwealth Disposals

Commission (Australian case which is "persuasive
authority" in Kenya) it was held that the "seller" who
had agreed to sell goods which never existed at all was
liable for breach of contract: breach of the implied
warranty that the goods actually exist.
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(b) "Res sua" - an agreement to buy some property
which, unknown to both parties, already belong
to buyer.
Examples - Cooper v. Phibbs - an agreement

to lease a fishery which, unknown
to the parties, was the property of
the "lessee".
- Cochrane v. Willis.
2. Mutual Mistake:
This occurs if the parties misunderstood each other on a

fundamental fact so that there is actually no true
agreement between them.
Example: Raffles v. Wichelhaus in which an offer

was made in relation to some property but
misunderstood to refer to other property.
Contract void.
ii. Unilateral Mistake:
This is called "unilateral" because only one of the

parties is mistaken. The other party is aware of the
mistake because he has fraudulently induced it. This
may occur as follows:
(a) Mistaken Identity:
The English cases relating to mistaken identity

appear to be in conflict regarding the effect of
the mistake on the contract. These cases are:
111
(i) Ingram v. Little:
The English Court of Appeal held that the

mistake rendered the contract void - the
court's reasoning being that the offer to
sell the car had been made to the person
the seller believed he was dealing with,
but purportedly "accepted" by the rogue
personally present in front of the seller.
So, in accordance with the rule in
Boulton v. Jones that an offer to A
cannot be accepted by B, the contract was
void.
(ii) (a) Phillips v. Brooks)
The Court of Exchequer and the

Court of Appeal held, respectively,
that the mistake rendered the
contract voidable (and not void).
(b) Lewis v. Avery
The court's reasoning in these latter cases

was that the offer had been made to, and
accepted by, the same person who was
physically present before the offeror. The
rule in Boulton v. Jones was therefore in
applicable and a contract of sale had been
formed between the parties.
However, since the buyer had fraudulently

misled the seller into believing him to be
a credit-worthy person whose cheque
would not bounce, the deception rendered
the contract voidable at the option of the
seller.
However, the contract could not be

avoided because an innocent third party
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(the defendant) would be adversely
affected by the avoidance.
NOTE: Technically, Kenyan Courts are not bound

by any of these English decisions.
Consequently, if the issue of the effect of
unilateral mistake pertaining to identity
were to arise in a Kenya Court, the court
might:
(i) follow Ingram v. Little and declare

the contract to be void; or
(ii) follow Phillips v. Brooks or Lewis

v. Avery and declare the contract to
be voidable.
Mistaken identity may also occur where the parties are

not in each other's presence.
A leading example is Cundy v. Lindsay. - in which the

contract was held by the House of Lords to be void as
an instance of an offer meant for A being accepted by
B.
(iv) Documents Signed By Mistake
A person who has signed a document by mistake

may escape liability under the document if he
can establish the defence of "NON EST
FACTUM". (it is not my deed). However, for
this defence to succeed the document signed
must have been "radically", "totally", "basically",
"fundamentally" or "essentially" different from
that which he believed it to be: Saunders v.
Anglia building Society.
Examples:
113
(i) Saunders v. Anglia Building Society
The defence of "non est factum' failed

because the document signed was a
Transfer Deed and the document the lady
thought she was signing was also a
Transfer Deed. The document signed
was therefore not "radically" or
"fundamentally" different from that she
thought she was signing.
The signatory had made a mistake - i.e. a

mistake as to the contents of the
document signed. The signatory thought
that the transferee named in the document
was her nephew while in fact it was
another person altogether i.e. the nephew's
dishonest friend. A mistake as to the
contents of a document is legally
irrelevant.
(ii) Foster v. Mackinnon
The defence of "non est factum"

succeeded because the document signed -
a bill of exchange - was radically or
fundamentally different from that which
the defendant thought he was signing - an
insurance document.
9.2 MISREPRESENTATION
A misrepresentation is a false statement of fact which was

made by one party to a contract to the other, at or before the
time the contract was made, which induced the other to enter
into the contract. Where an agreement has been made on the
basis of a misrepresentation the law will sometimes grant
relief. The relief obtainable depends on whether the
misrepresentation was innocent or fraudulent.
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9.2.1 Elements of Definition
(a) A misrepresentation is a statement of fact. A

statement of law, a statement of opinion, such as
an advertiser's 'puff' or a statement of intention,
is therefore not covered.
(b) The statement must be false. Clearly if the

statement is true the contracting party has no
claim for redress.
(c) The representation must be made by one

party to the contract to the other. The essence
of the complaint is that one party misled the
other, where the plaintiff has relied on false
information from another source, he cannot
blame the contracting party.
(d) The representation must have induced the

other party to enter the contract. If he did not
make the contract, or did not rely on the
representation. the plaintiff has no cause for
complaint. Thus he cannot plead that he relied
on the misrepresentation if he did not know of
it, or if he knew it to be untrue.
(e) As a general rule silence does not amount to

misrepresentation.
Silence
There are the following exceptions. Silence may

amount to misrepresentation where:
1. There is a positive duty to disclose, e.g. in fiduciary

relationships and contracts of insurance;
2. Where what has been said is true, but it amounts to a
115
half-truth (e.g. Dimmock v. Hallent where a vendor
accurately reported that certain farms were let but
omitted to say that the tenants had given notice).
3. Where disclosure is a statutory requirement
4. Where the original statement was true when

made but had subsequently become untrue (e.g.
in With v. O'Fanagan the vendor of a doctor's
practice failed to disclose the fall in the receipts
of the practice since the original valuation).
Misrepresentation renders a contract void at the

opportunity of the innocent party.
9.2.2 Remedies
Where there had been a misrepresentation which has

been acted upon, the nature of the remedy will depend
on whether it was made innocently or fraudulently.
a) INNOCENT MISREPRESENTATION
An innocent misrepresentation is an untrue

statement made in the honest belief that it is
actually true: Derry v. Peek. It is irrelevant that
the maker had no reasonable ground for his
belief.
There is no remedy at common law for an

innocent misrepresentation. However, equity
developed the remedy of rescission which will
be available to an aggrieved plaintiff unless it is
rendered unavailable by the circumstances listed
below (under remedies for fraudulent
misrepresentation). Akerhielm v De mare.
Indemnity for any direct financial loss
occasioned by the untrue statement. As was the
case in Whittington v Seale-Hayne.
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b) FRAUDULENT MISREPRESENTATION
A fraudulent misrepresentation is an untrue

statement which is made:
(a) knowingly, or
(b) recklessly, careless whether it be true or

false, or
(c) without belief in its truth: Derry v. Peek.
In Derry v. Peek (1839): A company was

formed which according to its prospectus was to
undertake the operation of steam trams in
Plymouth. The directors when they issued the
prospectus honestly believed that they would
have no difficulty in obtaining the necessary
authority from the Board of Trade to run the
trams. However, authority was not given and
the company was wound up. The plaintiff
brought an action against the directors for fraud.
It was held by the House of Lords that the
directors honestly believed the truth of the
statements they had made therefore no action
could lie for fraud. (The Directors' Liability Act
1890 was passed to reverse this decision with
respect to directors. This Act is now s.45 of the
Kenya Companies Act. However, the principle
of the case still applies in their situations).
The party injured by a fraudulent

misrepresentation in a contract must prove that
the following elements were present in the
misrepresentation:
(i) There was a false representation of fact.
A statement of fact must be distinguished from a

statement of opinion. A statement "This car is a
fantastic car!" is merely an opinion and not a
117
fact, and does not constitute a fraudulent
misrepresentation.
There may, however, be fraud through a

"suppressio veri", that is, a suppression of the
truth.
As Lord Cairns said in Peek v. Gurney (1873),

"There must in my opinion be some active mis-
statement of the fact or at all events such a partial
and fragmentary statement of fact as that the
withholding of that which is not stated makes
that which is stated absolutely false."
(ii) The statement was made deliberately with the

intention of deceiving or recklessly without
caring whether it was false or true."
We have already seen above in the case of Derry

v. Peek (1889) THAT UNLESS AN
ADMITTEDLY FALSE statement is made with
the knowledge that it is false, there is not
fraudulent misrepresentation.
(iii) The false representation must actually deceive

the injured party and cause him to enter into the
contract.
Horsfall v. Thomas (1862): The vendor of a

cannon in which there was a flaw, filled the flaw
with some metal. The purchaser, who had not
inspected the article, burst the cannon upon its
first discharge. It was pointed out that as the
purchaser had never inspected the cannon he had
not been deceived. "Deceit which does not
deceive is not fraud."
(iv) The person making the misrepresentation must

have intended that it should be acted upon by the
118
party who was actually misled by it. This
essential factor precludes a third party who, not
being a party to the contract, could not have been
deceived, from making a claim. The following
case illustrates this.
In Peek v. Gurney (1873): A fraudulent

statement had been made in the prospectus
issued by a company. The plaintiff, however, had
not purchased his shares direct from the
company on the faith of the prospectus but from
a former shareholder. He therefore had no claim,
because he himself had not been misled by the
fraudulent statement.
(v) The injured party must actually have suffered

some damage.
9.2.3 Remedies for fraudulent Misrepresentation
(a) The injured party may enforce the contract in

spite of the fraud. It should be noted that he
himself is, of course, bound by the contract until
he takes steps to set it aside.
(b) If he does not wish to be bound by the contract,

he may take steps to rescind the contract. If he
applies to the Court for an order of rescission he
must show that after discovering the fraud, he
did nothing which would show the intention of
continuing with the contract. He must, however,
take his action to avoid the contract within a
reasonable time, otherwise as a result of his
delay, an innocent third party may acquire an
interest in the property or the person uttering the
fraudulent misrepresentation may himself
change his position vis-à-vis the injured party,
thereby precluding any possible rescission.
In the following circumstances, however, there can be

no rescission:
119
(a) Delay
If third parties have already taken rights under

the contract, bona fide and for value, without
notice of the fraud.
Kings Norton Metal Company v. Edridge

(1897): W fraudulently represented himself as
being connected with a company "Hallam &
Co." which did not exist. He bought goods from
the plaintiffs and sold them to the defendant
company. It was held that the original contract
between W and the plaintiffs was not vitiated by
fraudulent misrepresentation and the defendants
had acquired a good title to the goods.
(b) Affirmation
If the injured party after discovering the fraud
takes any benefit under the contract or in any
other way affirms it, or is deemed to have
affirmed it.
(c) Restitution in integrum not possible

If it is not possible for the court to order a
"restitutio in integrum", that is, to order the
parties to be placed in the position that they were
in before the contract was made. For example, A
fraudulently misrepresents a cheap watch to be
one made of gold. B. relying on the
representation buys it, but on the way home the
watch drops accidentally and is destroyed. He is
later told by a friend that the watch is not made
of gold. He is not able to rescind the contract
since he is not in a position to put things back to
the original position. He may, of course, still
claim for the damages.
(d) Third party rights

It should be pointed out that naturally the guilty
party may not plead his own wrongful action as
grounds for rescinding the contract.
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(e) The injured party may bring a court action for
the return of any property which the fraudulent
party obtained from him. If a person brings an
action for the return of any property, he must
himself be ready to restore any property which
he may himself have obtained under the contract.
(f) He may refuse further performance and should

he thereupon be sued by the other party for not
carrying out the contract, he may defend the
action on the ground of the other party's fraud
(g) In any case, whether the injured party elects to

affirm or rescind the contract, he nonetheless has
a right to sue in damages for the tort of deceit.
Any person who makes a false statement
dishonestly commits the civil wrong or tort of
deceit and is liable if sued to pay damages to the
person he has deceived.
9.2.4 Silence as Misrepresentation
It is possible for a party who does not actually make a

false statement nevertheless to give a
misrepresentation. The general rule is that he who
keeps silent makes no misrepresentation. As Lord
Atkin said in Bell v. Lever Bros. Ltd. (1932):
"The failure to disclose a material fact which might

influence the mind of a prudent contractor does not
give the right to avoid the contract".
There are three sets of circumstances, however, in

which a person who is silent may incur legal liability,
because he has failed to disclose a material fact:
(a) Where his silence affects the accuracy of any

previous representation.
(b) Where a confidential or fiduciary relationship

exists between the parties, the person in the
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position of trust is required to make full
disclosure of all the facts in making any contract
with the other party who relies on his advice.
(c) Where the contract requires the utmost good

faith or, as the lawyers say, in "contracts
uberrimae fidei" e.g. contracts of insurance.
If full disclosure of the facts is not made, the other

party has the right to rescind the contract, e.g. London
Assurance Co. v. Mansel.
9.2.5 DURESS
Duress is the use, or the threat to use, physical
violence against the contracting party himself or against near relations,
such as wife, parent or child. Duress may be exerted either by the
other contracting party or by a third person acting at his instigation or
with his knowledge. The threat or actual use of violence, or wrongful
imprisonment, the wrongful threat to seize or the actual seizure of
property, and the threat to take criminal proceedings can all constitute
duress.
The threat must be illegal i.e. relate to a crime or tort.
In Cumming v. Ince (1847): A woman was a mental

patient in a hospital pending an enquiry. It was agreed
that the woman should be released and that at the same
time she would give up certain deeds in her possession.
The agreement to give up the deeds was made under
the fear of confinement in the asylum and so it was not
binding upon her.
The threat must be directed to the persons body
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In Kaufman v. Gerson (1904): Kaufman coerced
Gerson into making a contract by threatening to
prosecute Gerson's husband for a criminal offence
which he had committed. Gerson was held not liable
upon the contract, as her consent was obtained through
duress.
It renders the contract voidable at the option of the

innocent party.
In Maskell v. Horner (1915): Honer, the owner of a

market, claimed tolls from Maskell, a produce dealer.
At first Maskell refused to pay, but he did pay when
Horner seized his goods, and continued to pay in the
future, under protest. Horner's right to tolls was
subsequently declared illegal, and Maskell recovered
the payments made.
9.2.6 UNDUE INFLUENCE
"Undue Influence" is a technical phrase which denotes

pressure exerted by one person who has a moral
superiority over another. Where such conditions
obtain, as for example, between solicitor and client, or
trustee and beneficiary, any contracts involving both
parties to the relationship may show signs of a stronger
character influencing the weaker. It is said to exist
where a party terminates the others will thereby
prohibiting his exercise of independent judgement on
the contract.
Undue influence usually arises where one party has

contracted without exercising his own judgement and
free will, relying upon the advice of the other party. It
renders the contact voidable.
Where there is no fiduciary relationship between the

parties, there is no presumption of undue influence. In
such a case, should it be claimed that moral pressure
has been brought to bear, the burden of proof is upon
the party who alleges that he acted under the undue
influence of the other. As was the case in Williams v
Bayley.
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Where parties have a special relationship e.g. parent/childhood ,
guardian/ward, advocate/client doctor/patient, religious
leader/disciple, undue influence presumed in favour of the weaker
party. The stronger party can disprove this presumption by evidence.
.
In Smith v. Kay (1859): A young man who had just

inherited a fortune was introduced to a man several
years his senior, who suggested that they should tour
Europe together, the older man acting as the guide.
After a long tour, much of the younger man's fortune
had disappeared or had been appropriated by the older
man. It was held that on the facts the elder man had
exercised undue influence.
The influence must have been exerted by the other

party
The modern tendency is to consider duress and undue

influence as the same, and to define it as any moral or
physical compulsion which influences the decision of
one party to a contract.
The party seeking to set aside a transaction on the

grounds of duress or undue influence cannot do so in
the following circumstances.
(a) If third parties have acquired rights thereunder

bona fide and for value.
(b) If there has been unreasonable delay. "Delay

defeats Equity". The facts of each case must
determine what constitutes reasonable delay.
In Allcard v. Skinner (1887): A young lady

entering the convent made over her property to
the convent. However, after a year she left the
convent but delayed for five years before
applying to Court to rescind her gift. It was held
that she was defeated because of the
unreasonable delay. Once she had left the
convent, any undue influence had ceased and she
should have taken prompt action in the matter.
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Relief is afforded by Equity in cases where undue influence is claimed over
blind and illiterate persons.
10. DISCHARGE OF CONTRACT

A contract is said to be discharged when the obligations created by cease
to bind the parties that who area now freed from performance. It may be
discharged .
10.1.1 BREACH, which occurs if there is a failure to perform it strictly as

was agreed. This is non-performance or tendering a defective. It is either
anticipatory or actual.
Example:
The Sale of Goods Act, s.13 provides that where a seller delivers less, or
more, than the quantity of goods agreed to be bought, the buyer may
reject what is delivered and sue for damages for breach. This is a
codification of the common law rule of strict performance. Breach does
not discharge a contract but entitles the other party to treat it as
repudiated.
10.1.2 PERFORMANCE as agreed under the contract.
.A contract is discharged by performance if both parties have dutifully

performed their obligations. Originally , at common law, a party could
only be discharged by performance if every part of the contract was
performed. Contractual obligations had to be observed to the letter. This is
the so called doctrine of “precise and exact” as exemplified by the decision
in Cutter v Powell where Mrs Cutter was denied compensation since her
husband had not performed his obligations precisely and exactly.
However, the harshness of this common law principle led to the admission
of a number of exceptions where in parties are discharged without
performing precisely and exactly, namely
(a) Substantial performance Marshides Mehta and

Co ltd v Barron Verhegen
(b) Partial performance If accepted by the other
party. Sumper v Hedges
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(c) Separable/divisible contracts Ritchie v
Atkinson
(d) Prevented Performance Planche v Colburn
(e) Tender of performance
(f) Frustration of contract
EXPRESS AGREEMENT
Discharge of contract by agreement justified on the premise hat whatever is
created by agreement may be extinguished by agreement. Discharge by
agreement may be executory or executed. Where contractual obligations
are executory a in either party has performed discharge is bilateral where
each party charges the other from performance. Their mutual promises
constitute consideration where contractual obligations are executed i.e. one
party has performed discharge is unilateral where the party that has not
performed is discharged by the other from performance. Unilateral
discharge may take any of the following terms;
(i) Waiver:
This may occur where the contract is still executory and one
party is unable to perform his part. The other party may
release him from the obligations under the contract by a deed
(i.e. he waives his right to performance of the contract). A
deed is required in order to make the agreement binding,
since there is no consideration given by the released party.
(ii) Accord and satisfaction:
This occurs where the contract is discharged by a new

contract between parties. An example would be where A.
agreed to sell a white Toyota vitz to B. He is now unable to
procure one and persuades B to accept a white Toyota Allex,
and B. agrees to this.
(iii) Task:
This occurs where the rights of a contract are transferred to

another party, as where A lends B money to be repaid at the
end of the month. Before the end of the month A. tells B. to
pay the money to C. when the time to pay comes. Tasks are
not recognized by the common law but may be effected under
the Indian Transfer of Property Act 1882 which is applicable
in Kenya.
(iv) Novation:
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This occurs where the OBLIGATIONS or duties under a
contract are transferred from one party to another, as where A
lends money to B to be repaid at the end of the month. Before
that time arrives, it is agreed that B's father (C) will repay the
loan.
10.1.4(v) Frustration:
contract charged by frustration then performance f obligation

is considered impossible, illegal or commercially futile by
reason of foreseen or extraneous circumstances for which
other party is to blame.
According to Professors Chesire and Fifoot, frustration is a relatively new

legal concept which the courts have yet to develop fully. It is therefore not
possible to tabulate or classify all the circumstances in which a contract may be
discharged by frustration. However, the decided cases illustrate that the contract
may be discharged by frustration in one of the following ways:
(a) Destruction of subject matter of the contract before the

time of performance arrives,
Example: TAYLOR v. CALDWELL
(b) Non-occurrence of an event i.e. a new situation has

arisen which renders it impossible to perform the
contract as originally anticipated.
Example: KRELL v. HENRY
(c) supervening illegality caused by a change in the law, or

government interference, so that it becomes illegal to
perform the contract.
Example: METROPOLITAN WATER BOARD v.

DICK, KERR & Co.
(d) Death or permanent incapacitation which renders it

impossible for a party to a contract to perform it
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because of unexpected or sudden illness.
(e) government intervention Where government acts or

steps render performance impossible
Metropolitan Water Board v Dick Kerr and Co.
(ADJUSTMENTOF THE RIGHTS OF THE

PARTIES)
Example: CONDOR v. THE BARRON KNIGHTS

BAND
10.1.5 EFFECT OF FRUSTRATION
The effects of frustration on a contract are detailed in

the Law Reform (Frustrated Contracts) Act 1943 of
England which is applicable in Kenya under the Law of
Contract Act 1961.
The Act provides that when a contract is frustrated –
(a) The contract is terminated

(b) Money paid is recoverable.
(c) Money payable ceases to be payable.
(d) The parties may recover expenses incurred under

the contract, or retain the relevant sum from
money received if any.
(e) If any party to the contract has incurred expenses

in part performance of the contract which has
conferred "a valuable benefit" on the other party,
he is entitled to payment of a reasonable
compensation on a quantum merit.
The doctrine of frustration does not apply:
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i. Where the parties anticipated the would-be
frustrating event and made express provision for it in
the contract, as in Clark v. Lindsay (1903).
ii. Where the frustrating event is self-induced, as

illustrated by Maritime National Fish Ltd. v.
Ocean Trawlers Ltd. (1935).
iii. Where the contract is a lease or one for the sale of

land - but there is some doubt regarding this:
Cricklewood Property and Investments Trust v.
Leighton's Investments Trust Ltd. (1945).
11. REMEDIES FOR BREACH OF CONTRACT

The remedies available to a party who sues for a breach of contract are
divisible into:
(a) Common law remedies, and,
(b) Equitable remedies.
11.1 COMMON LAW REMEDIES
The only remedy available at common law for breach of

contract is financial compensation known as "damages".
11.2 Types of damages
Damages are classified into the following categories:
(a) Nominal damages which are awarded to a plaintiff to

vindicate his right to the performance of the contract.
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This occurs if the plaintiff has not suffered any actual
financial loss as a result of the breach of the contract.
(b) Actual or substantial damages which are awarded to

the plaintiff as compensation for actual loss occasioned
by the breach. They are calculated, generally speaking,
in accordance with the rule in Hadley v. Baxendale.
It should however be noted that:
(i) punitive or exemplary damages are not awarded

by the court: Addie v. Gramophone Co., and
(ii) damages cannot exceed the loss suffered by the

plaintiff so that the plaintiff finds himself in a
better financial position than if the contract had
been properly performed: C. & P. Haulage v.
Middleton.
(c) Liquidated damages which are provided for by the

contract. But a sum provided for by the contract will
not be recoverable if it is "a penalty".
RULES THAT GOVERN THE MEASURE OF DAMAGES

FOR BREACH OF CONTRACT
(a) The purpose of a monetary award in damages for breach of

contract is to compensate the innocent party for the loss
suffered. The essence is to put that party where it would
otherwise have been if the contractual obligations had been
performed
(b) The loss of damage suffered by the innocent party must be

proved. It is the duty of the plaintiff to prove loss.
(c) The plaintiff must prove that he suffered loss or damage by

reason of the defendant to breach of contract. The plaintiffs
loss must be traceable to the defendant in breach there must
be a nexus between the two failing which damages are said
130
to be too remote and therefore irrecoverable as was the case
in Hadley v Baxendale. This case is authority for the
proposition whenever a breach of contract occurs, the
plaintiff can only recover such loss as is reasonably
foreseeable as likely result from the breach. In this case the
profits lost by reason of closure of the mill were too remote
and therefore irrecoverable.
(d) Where a party is in possession of special information about

the contract but fails to act on it whereupon the other party
suffers loss, such party is liable for the loss. It was sol held
in Victoria Laundry (Windsor) Ltd v Newman
Industries. In the Heron II where the plaintiff suffered a
loss of 4,011 by reason of a delay delivery of a consignment
of sugar by the defendant (appellant) who was aware that the
respondent was a sugar merchant. It was held that the
appellant was liable for the loss as the same was traceable to
the detour he made resulting in the delay.
(e) Where parties to a contract have already fixed the amount

payable to the innocent party in the event of breach, and a
breach of contract occurs it is for the court to determine
whether the sum so fixed is payable as damages or is a
penalty in which case it is not enforceable. In Dunlop
Pheumatic Tyre co v New Garage and Motor co Lord
Dunedin formulated the presumption, courts of law rely on
in determining whether the sum fixed is liquidated damages
or a penalty.
(f) Whenever a breach of contract occurs it is the duty of the

innocent party to take such reasonable steps as are necessary
in the circumstances to reduce the loss it would otherwise
have suffered from the breach. The law imposes a duty on
the innocent party to act reasonably. However, whether he
has so acted is a question of fact as illustrated by the
decision in Musa Hassan v Hunt and Another. In assessing
damages the amount by which loss ought to have been
reduced by the acts of the innocent party is not reasonable
from the defendant.
(g) As a general rule, courts of law do not award punitive

damages for breach of contract.
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The loss of damage
11.3 Distinction between liquidated damages and penalty.
Liquidated damages were defined by Lord Dunedin in

Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and
Motor Co. Ltd. as "a genuine covenanted pre-estimate of
damages" for an anticipated breach of contract. A penalty
was defined in the same case as "a stipulation in terrorem of
the offending party".
The rules by which the courts distinguish liquidated damages

from penalties were formulated by Lord Dunedin in the above
case as follows:
(i) Though the parties to a contract who use the words

'penalty' or 'liquidated damages' may prima facie be
supposed to mean what they say, yet the expression
used is not conclusive. The Court must find out
whether the payment stipulated is in truth a penalty or
liquidated damages. This is illustrated by Elphinstone
v. The Monland Iron and Coal Co. Ltd.; Cellulose
Acetate Silk Co. v. Widnes Foundry.
(ii) "The essence of a penalty is a payment of money

stipulated as in terrorem of the offending party; the
essence of liquidated damages is a genuine covenanted
pre-estimate of damage.
(iii) The question whether a sum stipulated is penalty or

liquidated damages is a question of construction to be
decided upon the terms and inherit circumstances of
each particular contract, judged at the time of making
the contract, not as at the time of the breach.
(iv) To assist this task of construction various tests have

been suggested, which, if applicable to the case under
consideration, may prove helpful or even conclusive.
Such are:
132
(a) It will be held to be a penalty if the sum
stipulated for is extravagant and unconscionable
in amount in comparison with the greatest loss
that could conceivably be proved to have
followed from the breach.
(b) It will be held to be a penalty if the breach

consists only in not paying a sum of money, and
the sum stipulated is a sum greater than the sum
which ought to have been paid.
(c) There is a presumption (but no more) that it is a

penalty when a single lump sum is made payable
by way of compensation, on the occurrence of
one or more or all of several events, some of
which may occasion serious and others but
trifling damage.
(d) It is no obstacle to the sum stipulated being a

genuine pre-estimate of damage, that the
consequences of the breach are such as to make
precise pre-estimation almost an impossibility.
On the contrary, that is just the situation when it
is probable that pre-estimated damage was the
true bargain between parties.
11.5 Equitable remedies
The equitable remedies for breach of contract are:
(a) Injunction
This is an order of the court which restrains (i.e.

prevents) a party to a contract from doing something
which, if done, will occasion a breach of the contract.
For example, if Onyango has agreed to sell some
unique goods to Kamau and promised to deliver them
at end of the two weeks. On the third day after the
contract was formed, Kamau learns that Onyango has
133
entered into another contract with Abdullah and intends
to deliver the goods to Abdullah within two days.
Kamau may institute legal proceedings in the High
Court with a view to restraining Onyango from
delivering the goods to Abdullah.
An injunction may also be issued in order to restrain a

breach of a negative stipulation in a contract. For
example, if a tenancy agreement contains a clause
prohibiting the tenant from using charcoal for cooking
in the rented premise, an injunction may be issued to
prevent him from doing so.
An injunction, being an equitable remedy, is not

automatically available but is issued at the discretion of
the court. A common ground for the exercise of the
court’s discretion is the court's belief that it is "just and
equitable " to do so.
(b) Specific performance
As can be deduced from its name, specific performance

is an order of the court which orders the defendant to
perform the contract precisely (i.e. specifically) as he
had promised to do. It is decreed at the discretion of
the court but will not be decreed in the following cases:
(i) Where damages would be adequate

compensation for the plaintiff.
(ii) Where the court cannot supervise performance

of the contract, such as a building contract.
(iii) Where the contract is one of personal services:

Warner Bros v. Nelson. However, the court
may grant an injunction restraining the defendant
from doing something inconsistent with the
contract, as in Warner Bros v. Nelson, above.
(iv) Where the contract is a money-lending contract.
(v) Where one of the parties is an infant.
(c) Recession
(d) Trading
134
(e) account
(f) winding up
Unit summary
In this unit you learned on the formation of a contract ;the elements of a
valid contract; vitiating elements of a contract as well as the discharge of
a contract. You have also learned that all contracts are agreements but not
all agreements are contracts
Summary
Task
I. ‘All contracts are agreements but not all agreements
are contracts’. using relevant case-laws,Discuss this
statement
Examine the Application of law of contract in the field of

Task Business
135
Self-Assessment
1. Kevin found puppy- a German shepherd at Kamakwa and took
it home .The following morning he saw an advert ’A german
shephered puppy lost in Nyeri town. A reward of Ksh. 10000 for
the safe return of the puppy’. He called the advertiser who was
very happy to be reunited with the puppy and forgot the
Self-Assessment reward. Kevin now wishes to claim the reward. He is seeking
legal advice from you. Advise him
2. Mpendapesa offered his house on sale to Mtafuti for 5

millions. Mtafuti replied accepting the offer that he will pay
ksh. 4.5 millions. Mpendapesa refused to sell the house.
Thereupon mtafuti replied I accept your offer and I shall buy
the house for 5millions but mpendapesa still refused. Discuss
the legal position
3. Msufferer an insane man ordered two bottles of john walker
blue label whisky from Mdosi whole sellers on credit promising
to pay the following day after cashing his tea bonus. He later
refused to pay. What is the legal position?
136
Unit 5
CONTRACTS IN RESTRAINT OF
TRADE
Introduction
This is a contract by which a person voluntarily or involuntarily
restricts his future liberty to carry on his trader business or
profession in such manner or with such persons as he chooses e.g.
an employer restraining an employee from working for a business
rival. At common law contracts in restraint of trade are prima facie
void for being contrary to public policy. However such a contract
may be enforced it is proved that;
a)The restraint was reasonably necessary to protect the
restraining party’s interest
b)The restraint was reasonable to affected party
c)The restraint was not injurious to the public.
Contracts in restraint of trade are both voluntary and involuntary
 To Understand the two types restraints of trade
 To comprehend the importance of restraining trade .
Outcomes  To gain insight on circumstances under which contracts in restraints of

trade will be enforced even though at common law such contracts are prima
facie void
Restraint of trade : voluntarily or involuntarily restricting future

liberty to carry on trader business or
profession
Terminology
137
Voluntary restraints
These are contracts where by a party consents to be restrained by the
other for example
Restraint accepted by an employee
The employer restraints the employee from working for a business

rival or setting up a similar business. Such a restraint may be
enforced if reasonable to both parties and is not injurious to the
public.
In Automan v Taylor the defendant who was an employee of the

plaintiff covenanted not to work in a tailoring business within 3
years of quitting employment. However he worked in one of the
areas before the 3 years expired, the plaintiff sued for an injunction
was granted.
However in Attwood v Lamont where the defendant as the head of

the cutting department in a tailoring business covenanted not to
engage in tailoring business within a radius of l0 miles and the
plaintiff applied for an injunction. It was held that the restraint was
too wide and hence unreasonable to be enforced.
A similar holding was made in Kores Manufacturing co v Kolok

Manufacturing Co where two competing companies had
covenanted not to employee each other’s employee within a duration
of 5 years. The defendant company employed a former employee of
the plaintiff with 5 years. It was held that the restraint was
unreasonable to both companies.
Worldwide restraint may be enforced if reasonable and can only be

effective if enforced on a worldwide basis. It was so held in
Norclenfelf v Maxim Nordenfelt Guns and Ammunition
Company (1984). Nordenfelt was the manufacturer of a quick
firing and loading gun and ammunition. He sold his business to a
company for 287 500, 2 years later the company merged with
another and employed Nordenfelt as the Managing Director at a
138
salary of 2,000 per year. The contract of employment restrained
Nordenfelt from;
1) Carrying on or engaging in the business of manufacturing

explosives or ammunition in any part of the world for 25 years.
2) Competing with the business of the company for 25 years.
The House of Lords held that where as the covenant not to engage
in gun trade was reasonable and enforceable but the covenant not to
compete with the company for 25 years was unreasonable.
Restraint accepted by a seller of a business
Under this contract the buyer of the business restraints the seller
from setting up a similar business door, this may be necessary to
protect good will. Such a restraint is prima facie void. In enforcing
such a restraint the court considers;
a. The area covered by the restraint

b. Its duration and other relevant circumstances
c. Nature or character of the business
In Dias v Souto (1960) the defendant sold a shop situated on the

island of Zanzibar. It is specialized in goods for expatriate
community. He sold the shop to the plaintiff and covenanted not to
set up a similar business within the Zanzibar protectorate. He
established a similar business on the island of Pemba, the plaintiff
sued for an injunction. An injunction was granted on the ground that
the defendant was likely to injure the plaintiff’s commercial position
by rescission of the specialized nature of the business.
Restraints Restraint accepted by distributors or sellers of goods (sole

agreement)
The seller or distributor agrees to purchase all his goods from a

particular manufacturer or wholesaler in return for a specified
discount. The purpose of the restraint is to prevent the seller from
distributing the products of a competitor. Sales agreements take any
of the following forms;
(a) Tying covenant
This is a contract by which a seller agrees to purchase all his
goods from a particular manufacturer or wholesaler.
139
(b) Compulsory trading covenant:
This is a contract by which a seller covenants to keep his
business open for reasonable hours everyday.
(c) Continuity covenant
This is a contract by which the seller agrees to extract similar
covenants from the person who purchases the business from
him. Solus agreements are prima facie void unless reasonable
and not injurious to the public
A partial restraint may be enforced by a court of law to protect

clients, trade secrets etc. However a restraint whose purpose is to
keep off competition is unenforceable.
Involuntary restraints
These are restraints imposed by professional bodies and trade
associations on their members for certain purposes e.g.
enhancement of standards of conduct. At common law such
restraints are prima facie void but may be enforced if it is proved
that they are reasonable and are not injurious to the public.
Contracts in Restraints of Trade in Kenya
The principles or rules governing contracts in restraint of trade in

Kenya are contained in the Contracts in Restraint of trade Act under
sec.2 of the act contracts in restraint of trade in Kenya are legally
binding, however the High court is empowered to declare such a
contract void if it is satisfied that the restraint is unreasonable in that
it affords more protection than necessary or is injurious to the public.
To make its decision the court must have regard to
a. The nature of trade, business, occupation or professional

b. Area covered by the restraint
c. Duration of the restraint
d. Other circumstances of the case
140
Unit summary
In this unit you learned how law restraints trade both voluntarily and
involuntarily.
Summary
Task
 Citing from relevant case-laws Make a critical analysis of
contracts in restraint of trade
Task
Self-Assessment
 Discuss fully the circumstances under which the courts will
enforce contracts in restraints of trade
 Examine the two types of contracts in restrains of trade and

explain their relevance in the business field.
Self-Assessment
141
Unit 6
AGENCY
Introduction
[Add introductory text here]The law of Agency is an outgrowth of law of
contract. Therefore for purpose of continuity, it is important that you are
properly grounded in the law of contract. Law of Agency based on the
common law rules and therefore your earlier knowledge of common law
cannot be wished away.
 To define the term agency.
 To understand types and formation of agency
Outcomes  To appreciate the duties and obligations of both the agent and the principle
 To gain insight on discharge of an agency
Estopel: Stopped from denying a fact
Ratification: This is the adoption or confirmation by a person of

a contract previously entered into by another.
Terminology
142
SOURCES OF AGENCY LAW
The law of agency in Kenya is based on the common law rules which
have been developed by the English courts and the Factory’s Act
1989. The decisions of English courts are the primary reference
material for Kenyan courts, and law teachers in Kenya, regarding the
principles and rules which constitute the law of agency in Kenya.
1.2 DEFINITION OF AGENCY
There is no statutory definition of agency. However,

"agency" may be described as the legal relationship that arises
when a person, called agent, is appointed or entitled to
represent another, called the principal, in a transaction with
some other person(s). According to I Halsbury's Laws of
England, 3rd Edition, "an agent primarily means a person
employed for the purpose of placing the principal in
contractual or other relations with a third party and it is
essential to an agency of this character that a third party
should be in existence or contemplated".
Agency has been defined as a legal relationship that exists

between two persons where one called the agent is
considered in law to represent the other called the principal
in such a way as to affect the principals legal position in
relation to their parties.
In the Canadian case of Timmins (Town) v Brewers'

Warehousing Co. Ltd (1962) Schroeder, J.A. stated, inter
alia, that "the outstanding feature of an agent's employment in
a legal sense is that he is employed primarily to bring about
business relations between the principal and third persons, and
this characteristic is perhaps the most distinctive mark of the
agent as contrasted with others not agents who act in
representative capacities".
The agent acts in such a way that a contract is created between

the principal and the third party who is usually a buyer or
seller.
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1.3 The law of agency prescribes the legal rules for determining-
(a) How a person may become an agent;
(b) The rights and duties between the agent and the
principal;
(c) The relations between the agent and the third party; and
(d) The manner in which the relationship between the

agent and the principal may be brought to an end.
It should be noted that the relations between the principal and

the third party are governed by the ordinary principles of the
law of contract.
FORMATION OF AGENCY:
An agency may arise in the following ways:
1. Appointment (Contract) or agreement
This can be done in any way: orally, in writing or partly

orally and partly in writing.
Characteristics of Agency
i. The agent performs a service for the principal
ii. He represents the principal
iii. Acts of the agent affect the legal position of the
principal
Exception
An agent with authority to execute a deed on behalf of the

principal must be appointed by a deed called POWER OF
ATTORNEY.
Note
A deed is usually required for transactions relating to sale or

lease of land.
b. Estoppel
The basis of estoppel was explained by the court in

Spiro v. Lintern as follows:
144
"Where a man is under a duty - that is, a legal duty - to
disclose some fact to another and he does not do so the
other is entitled to assume the non-existence of the
fact". In the context of the law of agency, a person who
is under a legal duty to inform a third party that the
person purporting to act for him as his agent is in fact
not his agent but fails to do so may be "stopped" from
denying that the apparent agent is actually his agent, as
in Spiro v. Lintern.
Elements of estoppel
Presentation needed to be acted on reliance upon the

presentation
Change in the legal position as a result of the reliance
It would be inequitable to a 3rd party if the agency is not

presumed.
Another example of agency by estoppel is the liability

of a partner for the debts incurred by the firm after
leaving the firm if the parties who knew him to be a
partner dealt with the firm without being made aware
that he had left it.
c. Ratification
This is the adoption or confirmation by a person of a
contract previously entered into by another.
"Ratification" is the legal term which denotes the

agency which arises if a person adopts a transaction
which someone had concluded for him as his agent but
without his express authority. The person who adopts
the transaction becomes a principal as if he had initially
authorised it (i.e. the ratification is said to be
retrospective) P: Bolton Partners v. Lambert.
Agency by ratification can only arise if;-

1. The agent purported to act for a principal
2. The alleged principal was in existence at the time
the contract was formed: Natal Land Co. Ltd.
v. Pauline Colliery Syndicate in which it was
held that the purported ratification was
ineffective since the company "ratifying" had not
been incorporated at the time the contract was
formed.
3. The principal had capacity to enter into the
contract.
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4. The contract to be ratified is lawful. For
example, a company cannot ratify a contract
which is beyond the objects in its memorandum
of association: Ashbury Rail Co. Ltd. v. Riche
(orbiter dictum by Lord Cairns).
5. The person whose act is to be ratified professed
to be the agent of the person seeking to adopt the
contract. In other words, an undisclosed
principal cannot ratify a contract:
6. The alleged principal must have been made
aware of all the material facts of the relevant
transaction before he decided to adopt the
contract. An apparent ratification which is
induced by a partial disclosure of relevant facts is
of no legal effect.
7. The contract must be ratified within a reasonable
time
d. Necessity
An agency of necessity may be either commercial or

domestic:
(i) Commercial Agency of Necessity:
At common law, a person who is entrusted with

"perishable" goods of another is entitled, in
certain circumstances, to do certain things in
relation to the goods as if he had been expressly
authorised to do so by the owner. This will be so
if:
(a) A genuine emergency arises and
the goods are in danger of perishing or being destroyed completely
unless the contemplated action is taken.
146
Examples
In Couturier v. Hast
The captain of the ship had to sell the corn which had become over-heated
while the ship was in transit. The corn would have been destroyed or
become commercially useless if not sold immediately.
In G.N. Railway v. Swaffield
The horse might have died from hunger or exposure to extremely cold
weather at night if the railway company did not make arrangements for
stabling it for the night.
Accordingly, no "necessity" arises if there is no emergency.
In Prager v. Blatspiel Ltd. the defendants were held liable for conversion
because there was no "emergency" to warrant the sale of the skins. Skins
do not get destroyed if well kept.
(b) Impossible to communicate with the owner of the goods.
In Springer v. G. W. Railway the defendants were liable for conversion

by selling the tomatoes without the owner's instructions. The railway
company could have communicated with the owner of the tomatoes ad
informed him of what was happening so as to obtain instructions on what
was to be done, but they did not do so. No "agency of necessity" therefore
arose.
(c) Good faith
It was actually necessary to do what was done and the action taken was
prompted by a desire to prevent the owner of the goods from incurring a
financial loss as a consequence of an imminent perishing of deterioration of
the goods.
(ii) Domestic Agency of Necessity
A married woman who has been constructively or actually deserted by her

husband has authority at common law to take necessities on credit for her
personal use but as her husband's agent. The husband will have to pay for
the goods as if he had expressly told her to take them on credit.
She also has authority in equity to borrow money for the purchase of
necessaries. Her husband will be ordered to pay the loan. However, she
can only take necessaries on credit or borrow money for that purpose if she
does not have adequate means of her own.
TYPES OF AGENTS
Broadly agents are either general or special depending on the scope of
their authority. An agent engaged to perform a task in the ordinary
147
course of his business as an agent is deemed general. An agent is special
if engaged to perform a task outside his ordinary course of business as an
agent. However specific agents include:
 Factors
 Brokers
 Auctioneers
 Del credere agent
 Advocates
 Ship captain or master
e. Presumed Agency or from Cohabitation
A woman who is living with a man is deemed to be his agent for purposes
of obtaining necessaries for the family; marriage is not essential.
"Necessaries" will depend on the standard of living set by the husband and
not on the family's actual income. An example is Nanyuki General
Stores v. Mrs Peterson in which the plaintiffs failed to recover the price of
the goods they had sold to the defendant. They thought that she was
contracting with them personally but the court held that she was, in law,
contracting for her husband even though she did not tell them so expressly.
They should have implied this from the fact that she was a "Mrs".
Requirements
Rehabilitation domestic establishment necessaries
This authority is also possessed by a woman who is living with a man

ostensible as his wife but is in fact his mistress, because it is practically
impossible for the businessman to differentiate a wife from a mistress - that
being largely a legal question.
The authority will cease if:
(i) The husband has forbidden the wife to take goods on credit. It does
not matter that the seller was not aware of the prohibition.
(ii) The husband had expressly told the supplier not to supply goods on
credit to the wife.
(iii) The wife had been given adequate allowance for necessaries or
clothing. An example is Miss Gray Ltd. v. Cathcart.
(iv) The goods fall outside the technical definition of "necessaries" and
are legally regarded as luxuries.
148
DUTIES BETWEEN PRINCIPAL AND AGENT
OBLIGATIONS OF THE AGENT
The duties of an agent to the principal are:
(a) Care and skill
.To exercise due diligence in the performance of his duties and to apply
any special skill which he professes to have.
"Diligence' primarily means that the agent, when working for the principal,
must exert the same effort, or show the same enthusiasm, as he would have
exerted or shown when acting in his own affairs
An agent appointed to sell must endeavour to obtain the highest price

possible, while an agent appointed to buy must endeavour to buy at the
lowest price possible. For an illustration, read: Kepple v. Wheeler.
(b). Account
To render an account when required in those cases where the agency

entails keeping of an account by the agent.
(c). Estoppel/respect for principals’ title
Not to become principal as against his employer or principal. In particular,

an agent appointed to buy property must not sell his own property to the
principal and an agent appointed to sell must not buy the property:
Armstrong v. Jackson.
(d). Obedience
(e). Bonafide
(f). Separate accounts
(g) Keep the principal informed
A breach of the duty renders the contract voidable at the option of the
principal.
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(h). Not to make any secret profit :If he does: The principal may recover
the amount of the secret profit from him
(i) The principal may refuse to pay him the agreed commission e.g.
Andrews v. Ramsay & Co.
(iii) The principal may dismiss him without notice, if notice is required
to terminate his agency.
(iv) The principal may sue the agent receiving and the third party giving
the secret payment for damages suffered.
(v) The principal may repudiate the contract, whether or not the secret
payment had effect on the agent.
i. Personal performance of non-delegation
Not to delegate his authority, unless the delegation is in the ordinary way of
business or is authorised by the principal. This rule is expressed in the
Latin maxim "delegatus non potest delegare"
j Confidentiality
k. Not to disclose any confidential information or document entrusted

to him by the principal.Performance
DUTIES OF THE PRINCIPAL:

The duties of the principal to the agent are:
a Remuneration
To pay the agreed commission when it becomes due, strictly in accordance

with the terms of the contract of agency. (An agent in possession of the
principal's goods may retain the goods as security for payment of
outstanding commission. This is called a lien (general or particular) but it
does not confer power of sale of the goods in question).
b Indemnity
To indemnify the agent by refunding to him any out of pocket expenses

personally incurred in the bona fide execution of his mandate. e.g. Great
Northern Railway v. Swafield.
CONCEPT OF AUTHORITY
This is the oral or written permission conferred upon a person by another to
do a particular thin. It is a factual concept and may create power. Power
on the other hand is the ability of the agent to affect the legal position of
150
the principal in relation 3rd parties. It is a legal concept and exists
independent of authority. However, in agency law, the terms ‘authority’
and ‘power’ are sometimes used synonymously particularly with regard to
the scope of the agency relationship.
There are three types of authority namely;

(a) Real or factual
This is the authority, which in fact is given to the agent by the
principal. It may be by word of mouth or in written. This authority
may be:
(i) express
(ii) implied
(iii) customary or usual
(b) Ostensible or apparent

This is the authority which in fact the agent has not been given by the
principal but which he appears to have by reason of the principal’s conduct.
It is based on the conditions of the principal such that conduct determines
scope. It is the authority exercised by an agent creates by estoppel.
(c) Presumed authority
This is the authority which the law deems the agent to have. It is
conferred upon the agent by law. It is not given by the principal nor
is it based on the principals’ conduct. It is the authority exercised by
agents of necessity and for cohabitation.
1.7 Relations between agent and the third party.
The legal effects of agency depend on whether or not the agent acted for a
"disclosed principal".
1. If the agent acted for a disclosed principal by informing the
third party that he was an agent acting for a principal
(whether named or unnamed) the general rule is that he
drops out of the transaction as soon as his offer has been
accepted or conversely, he has accepted the third party's
offer.
He is not personally liable under the contract and cannot
personally enforce it in the event of its breach. Only the
principal can sue or be sued thereunder.
Exceptions
1. An agent would be personally liable if:
(a) He executes a deed in his own name: Appleton v. Binks (1804)

principal does not exist or has no capacity.
(b) He signs a bill of exchange in his own name without indicating that
he is acting as an agent.
(c) He contracts as agent but is in fact a principal.
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(d) If the custom of particular trade makes him liable.
If an agent lacks authority or exceeds his authority (express or implied) he

will be liable to the third party for "breach of warranty of authority":
Yonge v. Toynbee (1910).
2. If the agent acted for an undisclosed principal (i.e. a principal

whose existence the third party was unaware of because the agent did not
say that he was contracting as agent):
(a) If the third party fails to perform the contract he may be sued
by either the agent or the principal (but not both).
(b) If the contract is breached by the principal the third party may:
(i) sue the principal, or
(ii) sue the agent. He cannot sue both, and cannot abandon
proceedings against one in order to sue the other.
1.8 Termination of agency
An agency relationship may come to an end by:

I. Mutual agreement, or consent
II. withdrawal of consent
III. Performance,
IV. Bankrupcy of the principal
V. Frustration
VI. Death of the principal (it being irrelevant that the agent
was unaware of the death): Kennedy v. Thomassen.
VII. Insanity of the principal: Yonge v. Toynbee.
VIII. Lapse of time
Unit summary
In this unit you learned about the formation of an agency; duties and
obligations of an agent and the principle; their relationship with the third
party as well discharge of an agency
Summary
152
Task
‘‘the law of agency has accorded

greater protection to the agent than to the principle and
third party’ citing from relevant case-laws and by examining
the law of Agency , analyse this statement.
Task
Self-Assessment
1. Nyangau was contracted by Mlajasho to transport his avocados
from laikipia to mwebetayari market in Mombasa.While at
Mtido Adei the Bridge collapsed due to heavy rains . He was
also informed that the bridge at Machakos had also collapsed.
The repair work was to take about a week.The avocados were
Self-Assessment starting to perish and Nyang’au decided to sell them to the local
community at a low price.Mla jasho has threatened to sue him
for the loss. GIVE A LEGAL ADVISE
2. What is Agency of ratification?
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Unit 8
LAW OF NEGOTIABLE
INSTRUMENTS
Introduction
NEGOTIABLE INSTRUMENTS
1 Definition: A negotiable instrument cannot be defined with precision,

but can be described as a commercial document which
represents money. It passes to a bonafide transferee free
from any defect.
 To define negotiable instruments
 To differentiate different types of negotiable instruments
Outcomes  To appreciate the importance of negotiable instruments
 To define bills of exchange and understand their negotiability
 To define cheque and promissory notes
Holder in Due Holder in Due Course "a holder who has taken a bill,
Course: complete and regular on the face of it
Acceptance: Acceptance of a bill of exchange is the signification by

the drawee that he accepts the order of the drawer to pay
Terminology over the sum stated to the payee
154
EXAMPLES OF NEGOTIABLE INSTRUMENTS
The common examples of negotiable instruments are:
(a) Cheques—Read S.73 of the Bills of Exchange Act.
(b) Bills of Exchange—Read S.3 of the Bills of Exchange Act, Bearer

debentures
(c) Promissory Notes—Read S.84 of the Bills of Exchange Act.
(d) Share warrant, dividend warrant.
The above documents acquired their negotiability by commercial usage in
England, which was codified in 1882 in the Bills of Exchange Act 1882.
This Act was introduced in Kenya on 14th May, 1927, and is the current
law relating to negotiable instruments. There are other negotiable
instruments in commercial use but they are irrelevant for the purposes of
these notes.
3. ADVANTAGES OF NEGOTIABLE INSTRUMENTS:

i. A negotiable instrument provides a creditor with a better remedy,
because,once it has been issued (or accepted where applicable) it
settles the amount of the debt owing and makes a legal remedy easier
to obtain than would have been the case under an ordinary contract.
For example, there is no need to explain the terms of the contract
which creates the debt.
(ii) A negotiable instrument may be discounted. Thus

anybody who holds the instrument, and is entitled to claim the money
on due date, can discount it by taking it to a bank or discounting
house. The bank will in many cases, be willing to take the instrument
off the holder's hands, pay him the agreed value and collect the money
when due.
(iii) A negotiable instrument can be negotiated. Anyone who holds a

negotiable instrument, such as a bill of exchange, can transfer it to a
creditor in payment and the payee could, if he chose, use it in this
manner to settle his debt with another party.
4. CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS:

If made payable to bearer, the title to it is negotiable by delivery. If made payable
to order, the title to it passes by endorsement and delivery. Read
Sec.31 (2) and 31 (3) of the Bills of Exchange Act.
155
(ii) No notice of the transfer is required to be given to the person liable
on the instrument.
(iii) The holder in due course may sue on the document in his own
name if it becomes necessary, and is not affected by the privity of
contract rule.
(iv) Valuable consideration for it may be constituted by "an antecedent

debt or liability" and the common law rule against past consideration
does not apply. Read Sec. 27 (1) of the Act.
NOTE: If the brothers-in-law in Re McArdle had given their sister-

in-law a promissory note or bill of exchange payable after the
death of their mother, they would have been liable to her and
ordered to pay the £488.
(v) A bona fide transferee of a negotiable instrument takes it free from

any defects in the title of the transferor, and the common law rule
"nemo dat quod non habet" does not apply to negotiable
instruments, unless the instrument is a cheque crossed "not
negotiable".
5. BILLS OF EXCHANGE
A bill of exchange is defined by Section 3 of the Bills of Exchange Act as:
"an unconditional order in writing, addressed by one person to another,

signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time a
sum certain in money to or to the order of a specific person or to bearer".
ksh.100 Nairobi, 1st November 1993
Sixty days after date pay to the order of Tom Ochieng the sum of one hundred shillings for value received.
To: Paul Kamau Signed:
P O Box 595758
NAIROBI John Onyango
156
6. PARTIES TO A BILL
The various parties to a bill are:
(a) The drawer (John Onyango)
(b) The drawee (Paul Kamau)
He becomes the acceptor by writing his name across it.
(c) The payee (Tom Ochieng).
REQUISITES IN FORM
To conform to the statutory definition the document alleged to be a bill of
exchange must be:
(a) Unconditional. For example, if the drawer stipulates 'provided that

the receipt form at the foot hereof is duly signed', this is not a bill of
exchange since there is a condition imposed: Bavins, Junior and
Sims v London and South Western Bank Limited.
(b) An "order". To say "I shall be pleased if you will pay .... " is not an
order but a mere request, but the expression "please pay..." is a
polite order.
(c) "In writing". This includes print and typewriting.
(d) "Signed" by the drawer. However, a person's signature can be put

to a bill by his agent.
(e) An order "to pay". S.3(2) provides that "which orders any act to be
done in addition to the payment of money is not a bill of exchange."
157
(f) An order to pay a sum "certain in money". S.9 provides that pay a
sum is certain within the meaning of the Act, although it is required
to be paid:
(i) with interest;
(ii) by stated instalments;
(iii) by stated instalments, with a provision that upon default;
(iv) according to an indicated rate of exchange or according to a

rate of exchange to be ascertained as directed by the bill.
S10(1) provides that a bill is payable on demand, or at sight,
or "on presentation"; or
(v) in which no time for payment is expressed.
(h) Payable "at a fixed or determinable future time; if it is not payable

on "3 months after the date" (i.e. after the date of the bill) or "30
days after.
This maturity date of the bill may be fixed by reference to the

occurrence of some event and this will be valid, provided the event
is something that is "certain to happen" e.g. 3 months after my
death". If the event is not certain to happen (e.g. "3 months after I
marry") the document will not be a bill of exchange, and the
occurrence of the event will not make it valid.(S. 11 (2))
(j) Expressed to be made "to bearer", (payable to order). This means

that the holder of the bill when it is duly presented for payment i.e.
the bill specifies no particular payee, or the only or last endorsement
thereon is "in blank" (s.7).
(k) Payable "to or to the order of" a named payee.
8. THE PAYEE
Section 7(1) provides that where a bill is not payable to the bearer, the payee must
be named otherwise indicated therein with reasonable certainty.
(ii) Section 7(3) provides that where the payee is a fictitious

or non existent person, the bill may be treated as payable to bearer.
158
(iii) Section 7(2) provides that a bill may be drawn payable to two or
more payees jointly, or be drawn payable to one of two (or several)
payees.
(iv) Section 7(2) also provides that a bill may be drawn payable to the
holder of an office.
9. THE DRAWEE
The following points about the drawee should be noted. S.4(2) (a) provides that:
(i) Where the drawee is dead or bankrupt, or is a fictitious

person, or a person not having the capacity to contract, the holder may
treat it as dishonoured by non-acceptance.
(ii) Where the drawee is not indicated with reasonable certainty, but
someone "accepts" it, the instrument may be treated as a promissory
note Mason v Lack
(iii) S.6(2) provides that a bill may be addressed to two or more drawees,
whether they are partners or not but an order addressed to two
drawees in the alternative, or to two or more drawees in succession,
is not a bill of exchange.
ACCEPTANCE
Meaning
The term "acceptance" used in relation to bills of exchange has a

special meaning.
Acceptance of a bill of exchange is the signification by the drawee

that he accepts the order of the drawer to pay over the sum stated to
the payee. A bill of exchange is used by a debtor to settle his account
with his creditor but, being an order to someone else to pay the sum
stated (as opposed to a promise by the drawer to pay), the creditor is
not normally going to take the bill in settlement unless the drawee
acknowledges that he will meet the bill (and, in addition, is a person
of substance); until he does make such acknowledgement, the
drawee is under no liability on the bill.
In practice, the bill is normally handed to the payee to present it to

the drawee for acceptance. If the drawee agrees to pay the bill, he
will sign his name across it, and by that act he accepts the liability to
meet the bill when it is duly presented for payment.
159
2. Rules Relating To Acceptance
(a) Presentment for Acceptance
Although a bill must be presented for acceptance and be

accepted by the drawee in order to render him liable on the
bill, it is not in fact necessary, as a general rule, for the
holder of a bill to present it for acceptance. He can hold on to
it, unaccepted, until maturity or he can negotiate to a third
party, although a bill that has not been accepted will in
practice be much harder to pass on for value.
The only occasions when the Act actually stipulates that a

bill must be presented for acceptance are :
(i) Where the bill is payable at a certain period "after

sight". In this case, the bill must be presented for
acceptance in order to fix the maturity date.
(ii) Where the bill expressly stipulates that is shall be

presented for acceptance.
(iii) Where the bill is drawn payable elsewhere than at the

residence or place of business of the drawee. (Section
39).
In the case of (i) above, section 40 of the Act qualifies the

above, in that the holder of a bill payable "after sight" need
not present it for acceptance if he is able to negotiate it to a
third party within a reasonable time of it coming into his
hands. But if he fails either to present the bill for acceptance
or to negotiate it within a reasonable time, then the drawer
and all endorsers prior to the holder will be discharged from
liability.
S.41 (1) provides that a bill is presented for acceptance which

is presented in accordance with the following rules-
(i) the presentment must be made by or on behalf of the

holder to the drawee or to some person authorised to
accept or refuse acceptance on his behalf at a
160
reasonable hour on a business day and before the bill
is overdue;
(ii) Where a bill is addressed to two or more drawees,

who are not partners, presentment must be made to
them all, unless one has authority to accept for all,
then presentment may be made to him only;
(iii) Where the drawee is dead, presentment may be made

to his personal representative;
(iv) Where the drawee is bankrupt, presentment may be

made to him or to his trustee;
(v) Where authorised by agreement or usage, a

presentment through the post office is sufficient.
(b) Requisites of Acceptance
S.17 (2) provides that an acceptance is invalid unless it

complies with the following conditions:
(i) It must be written on the bill and be signed by the

drawee; the mere signature of the drawee without
further words is sufficient.
(ii) It must not express that the drawee will perform his
promise by any other means than the payment of
money.
Acceptance is incomplete and revocable and does not bind

the acceptor, until the bill has been delivered—that is to say,
handed back to the person presenting it.
161
In Baxendale v Bennett: The defendant received from H a
draft in blank as to the drawer's name, writtten in H's
handwritting. The defendant wrote his name across the draft
as acceptor and sent it to H who, finding he did not need it,
returned it to the defendant. The defendant placed it in an
unlocked drawer in his chambers in the Temple, from which
it was taken. When it came into the hands of the plaintiff, a
bona fide holder for value, the document had been completed
by the insertion of the name of W. Cartwright as the drawer.
No such person as Cartwright was known to the defendant,
and the name was inserted without his knowledge or consent.
It was held that the defendant was not liable on the
document, as, although he had accepted it, he had not
delivered it.
3. Dishonour by Non-Acceptance
If the drawee is not prepared to meet the bill, he will return it to the
holder with a note to this effect, and the bill is then said to be
dishonoured by non-acceptance. The holder then knows that the
debtor has given him a valueless scrap of paper, and will commence
proceedings against him (the debtor, the drawer of the bill, not the
drawee) to recover his debt. Technically, such action is not an action
on the debt but an action on the bill, for in drawing the bill the
drawer "engages that in due presentment it will be accepted and paid
according to its tenor and that if it is dishonoured he will
compensate the holder..." (Section 55(1ances, the bill can be treated
as dishonoured by non-acceptance without ever having been
presented for acceptance. These circumstances are:
(a) Where the drawee is dead or bankrupt.
(b) Where the drawee is a fictitious person.
(c) Where the drawee is a person not having the capacity to

contract.
(d) Where, after the exercise of reasonable diligence, such

presentment cannot be effected.
(e) Where, although the presentment has been
irregular, acceptance has been refused on some other ground.
4. Qualified Acceptance
162
It may be that the drawee is prepared to accept the bill but only
subject to some modification. Any acceptance that varies the effect
of a bill as originally drawn is termed as a qualified acceptance. A
qualified acceptance may be any of the following:
(a) Partial
An acceptance to pay only part of a bill; e.g. a bill drawn for

the amount of £5,000 may be accepted for £4,000 only.
(b) Local
An acceptance to pay the bill only at a certain place; or if the

acceptor stipulates that he will pay the bill at this place only,
and nowhere else.
(c) Conditional
An acceptance to pay the bill only at a certain place; the
acceptor stipulates that he will pay the bill on delivery of the
bills of landing.
(d) Qualified as to time

An acceptance to pay a bill drawn payable after one month,
only after six months.
(e) Acceptance by some only of several drawees

An acceptance will be construed as general unless clearly
qualified, the acceptance being construed most strongly
against the acceptor (Smith v Vertue).
If the holder of the bill takes such a qualified acceptance, this

has the effect in most cases of discharging from liability all
prior parties to the ball except in so far as any prior party
does not object. In the case of a partial acceptance, prior
parties are only discharged if the holder fails to give notice
that he has taken the qualified acceptance. They have no right
to object thereto. On the other hand, the holder of a bill who
is offered only a qualified acceptance is entitled to reject it
and to treat the bill as dishonoured by non-acceptance.
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TRANSFER OF BILLS OF EXCHANGE (NEGOTIATION)
Manner of Transfer
One of the features of bills of exchange is that where A

gives B a bill accepted by X in settlement of his debt, this same
instrument may be passed on by B to C in settlement of a debt
between them—both B and C relying on the credit of X. The transfer
of a negotiable instrument is termed as "negotiation", and Section 31
of the Act provides as follows:
(a) A bill is negotiated when it is transferred from one person to

another in such a manner as to make the transferee the holder
of the bill.
(b) A bill payable to order is negotiated by the
endorsement of the holder completed by delivery.
Transfer of the instrument in this way is enough to vest the property

represented thereby in the transferee and no further formality is
required.
Where an order bill is transferred without the endorsement of the

transferrer, the transferee is entitled to call for the missing
endorsement to complete this title.
Until this is done, he holds the bill subject to any defence that could
be raised against the transferor's and the endorsement will not have
any defect in the transferor's title of which the transferee had notice
before the endorsement was obtained (Whistler v Forster).
The following points should be noted on the question of

endorsement:
(a) The endorsement must be written on the bill itself (usually on

the back) and signed by the endorser (Section 32). It usually
consists of the words "Please Pay ..." (then the name of the
164
endorsee) followed by the signature of the endorser. The
simple signature of the endorser on the bill, without
additional words is sufficient and is called endorsement "in
blank".
(b) An endorsement should always correspond with the drawing.

In Slingsby v District Bank Limited it was held that a bill
payable to "AB per X" must be endorsed "AB per X" and not
"X". (Where the endorsee's name is incorrectly spelt, he
should endorse in the incorrect spelling.)
(c) An endorsement cannot purport to split the bill. If the

endorser directs that only part of the bill is to be payable to
the endorsee, or that the bill is to be paid to two or more
endorsees severally, the endorsement is inoperative.
(d) Where the bill is payable to two or more payees
or endorsees not being partners, all must join in the endorsement.
(e) No endorsee is specified in an endorsement in blank, and a

bill so endorsed becomes payable to bearer (Section 34 (1)).
(f) A "special" endorsement specifies to whom, or to whose

order, the bill is to be payable (Section 34 (2)).
It is however, important to note that a bill
payable to order can be changed into a bearer bill by the holder's
endorsing it "in blank" can be converted back to an order bill by the
holder adding the name of a particular person to the blank
endorsement.
(g) A "restrictive" endorsement is one which prohibits further

negotiation of the bill. If a holder endorses a bill "pay AB
only", this operates to destroy the negotiability of the bill, so
that no person taking the bill thereafter can be "a holder" in
165
due course. Such endorsement, as it appears, operates to
prohibit further transfer of the bill, so that no person taking
a bill so endorsed will obtain a title to it even if the
transferor's title was perfectly in order.
(h) Conditional endorsement.
2. Transferor's Title (Holder in Due Course)
The position of the transferee of a bill of exchange depends to a

large extent on whether or not he is 'holder in due course'.
(a) Holder in Due Course
Section 29 of the Act defines "a holder in due course" as "a

holder who has taken a bill, complete and regular on the face
of it, under the following conditions:
(i) That he became the holder of it before it was overdue

and without notice that it had been previously
dishonoured, if such was the fact.
(ii) That he took the bill in good faith and for value and
that at the time the bill was negotiated to him, he had
no notice of any defect in the title of the person who
negotiated it.
(b) holder for value
This is a holder of a bill of exchange who has actually

provided or who is deemed to have provided consideration
on it.
(c) Rights of Holder in Due Course
A holder in due course enjoys the following privileges:
166
(i) He holds the bill free of prior defects.
(ii) He can pass on this perfect title to a subsequent

transferee.
(iii) He can sue on the bill in his own name.
(c) Holder or Other Holder in Due Course
The holder of a bill of exchange who does not come within

the statutory definition of a holder in due course holds the bill
subject to prior equities and his title may be upset if the title
of prior holder was defective; he does have remedies against
intervening parties, but the general rule of "nemo dat quod
not habet" applies.
Where the bill has been endorsed by a holder in
due course after the defect of title arose, any person holding the bill
thereafter will not be affected by the defect and will enjoy a perfect
title to the bill.
12. INLAND AND FOREIGN BILLS

Distinction between Inland and Foreign Bills
An "inland" bill is defined by S.A(1) as "a bill which is or on the

face of it purports to be:
(a) both drawn and payable within East Africa or
(b) drawn within East Africa upon some person resident therein.
The section further provides that "any other bill is a foreign bill".
S.4 (2) provides that "unless the contrary appear on the face of the
bill the holder may treat it as an inland bill". S. 4(3) defines "East
Africa" as Kenya, Tanganyika, Uganda and Zanzibar.
167
13.BILLS IN A SET
In order to facilitate the international use of bills of exchange, the bill may be
drawn in a set of two or more parts. Each part appears as a bill, but is
numbered and contains a reference to the other parts and the whole of the
parts constitutes the whole bill. The different parts of the bill are sent to the
drawee by different posts so as to ensure safe arrival of at least one part.
The first part to arrive is accepted, and the other parts when they arrive in
due course are attached to the first part.
There are obvious dangers in this practice, and S.71 makes a number of
provisions to deal with the situation:
(a) Acceptance should be written on one part only, and if the drawee
accepts more than one part and various accepted parts get into the
hands of different holders in due course, the acceptor will, be liable
on each such part as if it were a separate bill.
(b) When the acceptor of a bill drawn in a set pays it without requiring
the part bearing his acceptance to be delivered up to him, and that
part at maturity is outstanding in the hands of a holder in due course,
he is liable to the holder thereof.
(c) Where the holder of a bill drawn in a set endorses two or more parts
to separate persons, he is liable on every such part, and every
endorser subsequent to such holder is liable on the part he has
endorsed.
(d) Where two or, more parts of a set are negotiated to different holders
in due course, the holder whose title first accrues is, as between such
holder, deemed the true owner of the bill. This provision, however,
is not to affect the rights of a person who in due course accepts or
pays the part first presented to him.
14. DISCHARGE OF BILL

A bill is said to be discharged when all rights of action on it are extinguished.
A bill may be discharged in any of the following ways:
(a) "Payment in due course", (S.5 (a)). This means "payment made at or
after the maturity of the bill to the holder thereof in good faith and
without notice that his title to the bill is defective" (S.59 (1)(b)).
(b) Acceptor the holder at maturity
168
When the holder of a bill is or becomes the holder of it at or after
maturity in his own right. This is known as a merger.
(c) Non-presentation for payment
(d) Renunciation or waiver
When the holder of bill at or after its maturity, absolutely and

unconditionally renounces his rights against the acceptor. (S. 62 (1)).
This is known as "waiver".
(e) Cancellation
Where a bill is intentionally cancelled by the holder or his agent, and

the cancellation is apparent thereon (S.63 (1)). S. 64 (1) provides
that where a bill or acceptance is materially altered without the
assent of all parties liable on the bill, the bill is avoided, except
against a party who has himself made, authorised or assented to the
alteration, and subsequent endorsers.
(f) Material alteration – Section 64(1) of the Act.
15. ACCOMMODATION BILLS

An accommodation bill is a bill drawn, accepted, and put in to circulation
without any consideration passing.
An accommodation party to a bill is a person who has signed a bill as a

drawer, acceptor or endorser without receiving value therefore, and for the
purpose of lending his name to some person.
An accommodation party is liable on the bill to a holder for value; and it is

immaterial whether, when such holder took the bill, he knew such party to
be an accommodation party or not.
16. NOTING AND PROTESTING

Noting" or "protesting" of a bill occurs in the event of a bill of exchange being
dishonoured.
169
(i) Noting the bill is making of a minute by a Notary Public, who has to
present the bill either at the acceptor's office if it is made payable
there, and if made payable at a bank then to that bank, and gets the
answer given for non-payment of the bill. Then he affixes to the bill
a slip of paper which has briefly typed (or written) on it the fact that
he presented this bill to "......" and that it was dishonoured by non-
payment with answer (specified). He then appends his signature and
affixes a stamp, this being the stamp required on a legal document.
(ii) "Protest" is a more formal form of noting. Sections 51 (7) provides

that a protest must contain a copy of the bill, and must be signed by
the notary making it, and must specify:
(a) the person at whose request the bill is protested;
(b) the place and date of protest, the cause or reason for
protesting the bill, the demand made, and the answer given, if
any, or the fact that drawee or acceptor could not be found.
17. REFEREE IN CASE OF NEED

The drawer of a bill and any endorser may insert the name of a person on the bill to
whom the holder of the bill may resort in the event of a bill being
dishonoured. The holder has the option whether or not he will obtain
payment from the referee in the case of need, but if he does so the bill must
be noted before the action is taken.
When the drawee of a bill refuses to accept a bill of exchange, some other
person may step in and offer to accept the bill in his place for the honour of
the drawer or an endorser. This can only be done if the following conditions
are satisfied.
(a) The holder agrees to such acceptance.
(b) The bill is not overdue.
(c) The person accepting "for honour" must not already be a party to the
bill.
(d) The bill must first be noted or protested.
The acceptance must show clearly that it is an acceptance for honour and
should indicate the person for whose honour he accepts. If no person is
named, it is presumed to be for the drawer's honour.
170
The acceptor for honour engages that he will, on due presentment, pay the
bill according to the tenor of his acceptance if it is not paid by the drawee,
provided that it has been duly presented for payment, and protested for non-
payment, and that he receives notice of these facts. He is liable to the holder
of the bill and to all parties to the bill subsequent to the party for whose
honour he has accepted.
If an acceptor honour pays, his rights are those of a payer for honour.
When a bill is dishonoured by non-payment, any person may intervene and

pay it supra protest for the honour of any party liable thereon. Before such
payment is made, the bill must be noted and protested and the protest must
be attended by a declaration on the part of the person making payment that
he is paying the bill for honour and for whose honour he is paying.
Where the bill is paid for honour in this way, all parties subsequent to the
party for whose honour the bill is paid are discharged, but the person
making payment for honour is subrogated to the holder (stands in his place,
with the same rights and duties) as regards the party for whose honour he
has paid and all prior parties liable to that party.
MEASURE OF DAMAGES
In the event of a bill being dishonoured, the holder and, in turn, every other party to
the bill who is compelled to pay it, may recover from any proceeding party
liable:
(a) The amount of the bill.
(b) Interest by way of damages, such interest to be calculated from the

date of presentment for payment if the bill is payable on demand,
and from the date of maturity of the bill in any other case.
(c) The expenses of noting and (if necessary) protesting the bill.
19. LOST BILLS

Section 6a provides:
(1) "Where a bill has been lost before it is overdue, the

person who was the holder of it may apply to the drawer to give him
another bill of the same tenor, giving security to the drawer, if
required, to indemnify him against all persons whatever in case the
bill alleged to have been lost is found again.
171
(2) If the drawer on request as aforesaid refuses to give such duplicate
bill, he may be compelled to do so." As it is possible that the lost bill
may get into the hands of some person who takes it innocently, it is
possible under certain circumstances for the drawer to be called
upon to pay both the original and the duplicate instrument. It
behoves him, therefore, to satisfy himself before he issues a
duplicate that the original is in fact lost or destroyed and, in addition,
to see that adequate security is granted to him against the
eventuality.
20. OVERDUE BILLS

A bill is overdue:
(a) In the case of a bill payable 'on demand', when it has been in
circulation for more than a reasonable length of time. What is a
reasonable time is a question of fact to be determined in each case.
(b) In the case of a bill payable on a fixed or determinable

future date, prima facie on that date. However, three "days of grace"
are always added (unless the bill is drawn 'without grace'), so that a
bill prima facie payable on 24th February will not in fact be deemed to
be overdue until 28th February. In this connection:
(i) If the last day of grace is a Sunday, Good Friday, Christmas

Day or a Day of Public Thanksgiving, the bill is due on the
preceding day at the latest.
(ii) If the last day of grace is a Bank Holiday, then
the bill is due on the next succeeding day at the latest.
In calculating days, the day from which the time starts to run is
excluded but the day of payment is included, so, "10 days after
date", the bill being dated on Ist July, plus 3 days of grace, i.e. to
14th July. If the period for maturity is expressed in months, this
means calender months. A bill dated 31st January due one month
after date will fall due on 28th or 29th February; as the case may be,
but adding days of grace on, the 3rd of March in either case. A bill
dated 31st January and payable "30 days after date" will be due on
172
2nd March in an ordinary year and Ist March in a leap year, again,
with three days of grace to be added.
CHEQUES
DEFINITION
S.73 of the Bills of Exchange Act defines a cheque as follows:
"A cheque is a bill of exchange drawn on a banker payable on demand"
2.3 REQUISITES IN FORM
A cheque, being a bill of exchange, must conform to the requisites

prescribed by the Bills of Exchange Act as necessary to constitute a bill,
namely:
It must be unconditional.
Instruments which require as a condition of payment the signing of a

particular form of receipt are not cheques: Bavins, Junior and Sims
v London and South Western Bank.
However, where the condition is not imposed on the drawee or

banker but is addressed to and affects only the payee or holder, this
does not make the cheque conditional.
In Bavins, Junior and Sims v London and South Western Bank

Limited the Court of Appeal (England) had to deal with an
instrument in the form of a cheque given to the plaintiffs by the
Great Northern Railway Company for work done. The instrument
read as follows:
173
"The Great Northern Railway Company No.1 Accountants drawing
account London, 7 July 1898, the Union Bank of London Limited ...
Pay to J. Bavins Jnr and Sims the sum of sixty-nine pounds seven
shillings, provided the receipt form at the foot hereof is duly
signed, stamped and dated £69 7s".
It was held that the instrument was not a cheque within the
definition given by the Bills of Exchange Act, 1882 (which is the
identical with the Kenya Bills of Exchange Act) because it was not
an unconditional order. The bank was not to pay the instrument
unless the receipt was signed.
The bank lost its protection because the instrument was not a
cheque and had been collected by the bank for a person who had
stolen it. The bank was liable in conversion to the true owner,
Bavins.
NOTE:
(i) Bankers usually obtain an indemnity from customers having

receipt forms on their cheques. This indemnity protects the
bank if it incorrectly treats an instrument requiring a receipt
as a cheque, although the bank should be protected by the
Cheques Act, 1968.
(ii) Receipts on the backs of cheques are not common now

because of S.4(2) of the Cheques Act 1968 which provides
that a prescribed instrument which is not endorsed but which
appears to have been paid by the banker on whom it is drawn
is evidence that the payee has been paid by the banker the
sum of money specified in the instrument.
(iii) Where receipts are used they must, by reason of banking

practise, carry a large "R" on the face because bankers are
not required to look for endorsements on cheques under the
Cheques Act 1968. Furthermore, if an unconditional
instrument was not regarded as a cheque a banker should still
174
be protected by the Cheques Act, 1968 since it protects a
banker who collects an instrument which is not a cheque or
pays an instrument which is not.
In Nathan v Ogdens Limited (1906) the instrument had printed on

its face the words "The receipt at the back hereof must be signed,
which signature will be taken as an endorsement of the cheque".
It was held that the order to pay was unconditional and therefore the
cheque was valid. The words could be taken as addressed to the
payee and not to the bank.
It must be an order.
A cheque must be an order; it must be imperative in its terms, not

precative, though the insertion of mere terms of courtesy will not
make it precative.
It must be addressed by one person to another
A cheque must be addressed by one person to another. There must

be one person as drawer, another, a bank, as drawee.
The head office and branches of a bank constitute for this purposes
only one legal entity. It is for this reason that drafts by one branch
of a bank on another branch or head office are not cheques or bills
so far as the bank is concerned. This was explained in London City
and Midland Bank Limited v Gordon.
. It must be signed by the person giving it
Under S.23 of the B.E.A. "no person is liable as drawer, endorser or

acceptor of a bill who has not signed it as such". Section 24 of the
Act further provides that a forged signature on a bill is "wholly
inoperative": unless the party against whom it is sought to retain or
enforce payment of the bill is precluded from setting up the forgery.
175
If must be payable "on demand"
S.10 of the Bills of Bills of Exchange Act provides that a bill is

payable on demand:
(a) which is expressed to be payable on demand or at sight or on

presentation; or
(b) in which no time for payment is expressed. Because a cheque

is payable on demand, it cannot be "accepted": Punjab
National Bank v Bank of Baroda.
The sum payable must be a sum "certain in money"
Section 9 provides that the sum payable by a bill of exchange is a

sum certain within the meaning of the Act although it is required to
be paid:
(a) with interest;
(b) by stated instalments;
(c) by stated instalments, with a provision that upon default in

payment of any instalment the whole shall become due;
(d) according to an indicated rate of exchange or according to a

rate of exchange to be ascertained as directed by the bill.
S.9 (2) also provides that where the sum payable is expressed in
words and also in figures, and there is a discrepancy between the
two, the sum denoted by the words is the amount payable.
It must be payable to, or to the order of, a specified person.
176
This provision is already explained in paragraph 6.1.8. However,
cheques are sometimes drawn "pay cash". "Cash" cannot be a payee
but bankers generally treat cheques so drawn as payable to bearer
after the holder has endorsed it in blank.
2.3 DIFFERENCES BETWEEN CHEQUES AND OTHER BILLS OF

EXCHANGE
The following are some of the differences between cheques and other bills
of exchange:
(a) A cheque is drawn on a drawee called "banker" and cannot be drawn

on any other drawee.
A bill of exchange which is not a cheque can be drawn on anybody,

whether an individual, a firm or a body corporate.
(b) A cheque is payable on demand and cannot be paid at a fixed or

determinable future time.
A bill of exchange which is not a cheque can be drawn payable at a

fixed or determinable future time.
(c) Because it is payable on demand, a cheque cannot legally be

accepted by the drawee: Bank of Baroda v Punjab National Bank.
A bill of exchange other than a cheque can be accepted if it is not

drawn payable on demand but is payable at a fixed or determinable
future time.
(d) A cheque can be crossed while other bills of exchange are not
legally crossed.
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2.4 NON-PAYMENT OF CHEQUES:
A banker's authority to pay a cheque will be determined or terminated by:
(a) Countermand of payment, under s.75 (a).
The Act does not prescribe the mode in which the countermand is to
be effected. It may therefore be done orally or in writing. However,
as a means of obtaining the evidence of the countermand, bankers
usually require a written notice.
A cheque is countermanded when the drawer instructs the bank not

to honour the cheque when presented for payment. To be effective,
therefore, the notice must be given to the banker before the cheque is
paid. If, despite the countermand, the bank pays the cheque, it will
be liable to refund the money to the drawer: Burnett v Westminster
Bank Limited.
(b) Notice of the customer's death
Cheques drawn by a customer before his death are valid but as a

precaution the banker will not honour them.
(c) the customer’s account has insufficient funds
(d) Notice of the presentation of a bankruptcy petition against the

customer.
This terminates a banker's authority because of technical reasons

under the Bankruptcy Act.
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(e) Where the cheque has been altered.
(f) Where the cheque is irregular
(g) Garnishee Order
A Garnishee Order is an order of the Court to a bank manager

freezing the account of a customer till further notice from the court.
(h) Insanity of the drawer.
2.5 RELATIONSHIP BETWEEN BANKER AND CUSTOMER:
The relationship between a banker and the customer is a debtor-creditor

relationship which was articulated in the leading case of Joachimson v
Swiss Bank Corporation and may be summarised as follows:
(i) If the account reflects a credit balance, the banker is a debtor and the
customer a creditor of the bank.
(ii) If the account reflects a debit balance, the customer is the debtor and
the banker a creditor of the customer.
The banker as a debtor is not under any legal obligation to repay the "loan"
unless and until an effective demand for repayment is made by the
customer.
2.6 CROSSED CHEQUES
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A crossing on a cheque may be general or special.
(a) General Crossing
S.76 (1) provides that where a cheque bears across its face an
addition of:
(a) The words "and company" or any abbreviation thereof

between two parallel transverse lines, either with or without
the words "not negotiable", or ;
(b) two parallel transverse lines simply, either with or without

the words "not negotiable", that addition constitutes a
crossing, and the cheque is crossed generally"
The following are the general crossings provided for by this

provision:
Special Crossing
S.76 (2) provides that "where a cheque bears across its face an
addition of the name of a banker, either with or without the words
"not negotiable", that addition constitutes a crossing, and the cheque
is crossed specially and to that banker".
180
The following are examples of Special Crossing:
S.77 provides that:
(a) A cheque may be crossed generally or specially by the

drawer.
(b) Where a cheque is uncrossed, the holder may cross it

generally or specially.
(c) Where a cheque is crossed generally, the holder may cross it

specially.
(d) Where a cheque is crossed generally or specially the holder

may add the words "not negotiable".
(e) Where a cheque is crossed specially, the banker to whom it is

crossed may again cross it specially to another banker for
collection.
(f) Where an uncrossed cheque, or a cheque crossed generally, is

sent to a banker for collection, he may cross it specially to
himself.
The essence of a general crossing are the two parallel transverse

lines while the essence of a special crossing is the addition of the
name of a banker.
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2.7 EFFECT OF A CROSSING
The effect of the various crossings are as follows:
(i) The "Not Negotiable" Crossing
"The "not negotiable" crossing is often misunderstood, many people

believing that a cheque so crossed is not transferable, but payable
only to the payee through his banker. Even Lindley L. J., in
National Bank v Silke (1891), uses words which might be so
interpreted. "Not negotiable" is often intended to mean not
transferable, and it is only by reference to S.81 (of the Bills of
Exchange Act) that the true effect of the crossing is arrived at. The
effect is that the cheque remains transferable, but is deprived of
the full character of negotiability. However honestly and for value
a transferee may take it, he cannot acquire any better title to the
cheque or its proceeds, or any better right against any prior party to
it, than his transferor had. So long as there is no defect of title, or
failure of consideration the cheque may pass from hand to hand just
as if it was an open cheque or a simply crossed cheque, and each
successive holder acquires full rights and title thereon". (Paget's Law
of Banking, 8th Edition, pp:250 - 251).
In Great Western Railway Company v London and County Banking

Company (1900) Lord Lindley stated:
"Everyone who takes a cheque marked 'not negotiable' takes it at his

own risk, and his title to the money got by its means is a defective as
his title to the cheque itself... Whether the (title to) cheque was void
or only voidable ... appears to me really immaterial. Be it void or be
it voidable, it was not negotiable; and by s.81 of the Bills of
Exchange Act Higgins (the holder) was not capable of giving a
better title to the cheque than he had himself."
However, it should be noted that the words "not negotiable" have no

statutory effect unless combined with one of the regular crossings. A
cheque bearing these words without one of the regular crossings is
not a crossed cheque.
In Wilson and Meeson v Pickering the plaintiffs drew a cheque in

blank after crossing it 'not negotiable'. They told the secretary to
182
write in X's name as payee and a specific amount. The secretary
dishonestly wrote in the defendant's name and a larger amount and
gave it to him in settlement of her personal debt. It was held that, as
the Secretary had no title to the cheque, the defendant had also no
title to the cheque and, despite his innocence, he must refund to the
plaintiff the money which he had been paid by the plaintiff's
bankers.
(ii) The "Account Payee" Crossing
"Words such as 'account payee', 'account of A.B' are frequently

added to the crossing of a cheque. They are in no way authorised or
recognised by the Bills of Exchange Act... National Bank v Silke
(1891) shows that such an addition to the crossing does not prevent
the cheque from being transferable ... It may, however, be briefly
stated here that, apart from the possible question of the duty of the
paying banker where these words are found together with
endorsements—an obviously inconsistent combination—the words
only constitute a direction to the collecting banker, signifying the
account to which the proceeds of the cheque when received are
to be placed, which he disregards at his peril. If received by that
banker for anyone other than the customer indicated, such receipt is
not 'without negligence', and excludes the banker from the
protection of S.82 (of the bills of Exchange ... even though the
crossed cheque be payable to 'A.B. or bearer'. (Paget's Law of
Banking, 8th Edition, p.256 - 257).
In Bevan v National Bank, Limited it was held that it would be

negligence to take a cheque marked 'account payee' for an account
other than that of the payee.
In Morison v London County and Westminster Bank Limited

Lord Reading stated:
"The words 'account payee' ... are only to be found on the crossed
cheques made payable to Abbot or Order or Abbott or bearer,
defendants or bearer and defendants or order. The words
'account payee' are a direction to the bankers collecting payment that
the proceeds when collected are to be applied to the credit of the
account of the payee designated on the face of the cheque".
183
The now general practice of bankers, except where the customer is
undoubted, is to collect crossed cheques marked 'account payee' for
the account of the payee designated on the face of the cheque and
not for any other account.
(iii) "Account 'Payee' Only" Crossing
"It would seem to follow, ... that the only meaning which can be
given to the word 'only' is that it requires the paying banker to pay
the payee only, in account, which would mean that the collecting
banker must indemnify the paying banker either specifically or
pursuant to the general agency arrangements between the banks. The
same effect could, of course, be reached by drawing the cheque in
favour of the payee 'only'. On the whole, it would seem wise for
banks to discourage the use of the word "only" and for the drawer to
be content with the protection afforded by the use of "account
payee" simply. In no sense is he justified in placing an extra burden
on the banks". (Paget's Law of Banking, 8th Edition, pp.259 - 260).
2.9 CROSSING A MATERIAL PART OF A CHEQUE
S.78 provides that "a crossing authorised by this Act is a material part of the
cheque; it shall not be lawful for any person to obliterate or, to add or to
alter the crossing".
2.10 LEGAL PROTECTION OF BANKERS
1. Paying Banker
A paying banker is protected by the following:
(i) Bills of Exchange Act, S.60
(a) Subsection (1)
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(i) This subsection is concerned only with indorsement
and affords no protection to the banker where the
customer's signature as Drawer is forged. An
instrument purporting to be a cheque, but to which
the drawer's signature is forged, is not a cheque at
all, is not drawn on a banker and is outside the
subsection altogether.
(ii) The protection conferred by the subsection is limited

to "bills" and does not extend to a banker's draft:
London City and Midland Bank Limited v
Gordon.
(iii) The words "deemed to have paid the bill in due

course" are intended to equate the person in
possession of a cheque under a forged indorsement
with a holder in due course, and to protect the banker
accordingly. This is a purely technical provision
since, as a matter of substantive law, a person in
possession of a cheque under a forged indorsement is,
UNDER s.24 of the Bills of Exchange Act, neither
payee, indorsee nor bearer to whom a payment can
ever be a payment in due course within S.59(1).
Section 24 declares total inefficacy of a forged
indorsement to convey any title or the right to give a
discharge.
(b) Subsection (2)
(i) This subsection incorporates S.19 of the U.K. Stamp

Act 1853 into the Bills of Exchange Act and regulates
the protection of the banker with regard to drafts or
orders which are not cheques or bills within the
definition in the Bills of Exchange Act.
(ii) It does not expressly require the payment to be made

"in good faith" and in the ordinary course of
business".
185
2. (ii) Bills of Exchange, Act S.80
A banker paying a crossed cheque bearing a forged

indorsement is protected against his own customer and
against the true owner of the cheque provided that he paid
the cheque IN GOOD FAITH AND WITHOUT
NEGLIGENCE.
(iii) The Cheques Act 1968, S.3
The protection which this section offers is additional to that

given by ss.60 and 80 of the Bills of Exchange Act and,
therefore, the banker is entitled to whatever advantage he can
gain from all or any. It specifically protects the banker in
cases where the indorsement is irregular or absent.
186
Collecting Banker
A collecting banker is protected by the following provisions:
(i) Bills of Exchange Act.
S.82 (1) provides that where a banker in good faith and

without negligence receives payment for a customer of a
cheque crossed generally or specially to himself, and the
customer has no title or a defective title thereto, the banker
shall not incur any liability to the true owner of the cheque by
reason only of having received such payment.
(ii) The Cheques Act, S.32 (2).
In Capital and Counties Bank Limited v Gordon the legal

conception of the collecting banker was that of a mere
conduit pipe, receiving the cheque from the customer and
then, and not till then, placing it to the customer's credit,
exercising function strictly analoguous to those of a clerk
of the customer sent to a bank to cash an open cheque for
his employer.
In that case the House of Lords held that the bank had not
acted as such conduit pipe, had not received payment for the
customer but for itself and so lost the protection of S.82 of
the Bills of Exchange Act 1882, because it had credited the
customer with the face value as cash on receipt for
collection and before clearing. This has been changed by
S.82 (2) of the Kenya Act.
(iii) The Cheques Act 1968 S.4
Unless the banker can bring himself within the conditions

formulated by the section, he is left with his common law
liability for conversion or money had and received, in the
event of the person from whom he takes the cheque for
collection having no title or a defective title thereto.
187
In Turner v London and Provincial Bank Limited (1903)
evidence was admitted, as proof of negligence, that the
customer had given a reference on opening the account and
that this was not followed up.
In Ladbroke & Company v Todd the bank was held

negligent because they did not make enquiries about a
proposing customer. This was described as an ordinary
precaution other banks took—bankers or bank officials
having given evidence that they made enquiries in such
cases.
PROMISSORY NOTES
Defination
S.84 (1) defines a promissory note as "an unconditional promise in writing

made by one person to another signed by the maker engaging to pay, on
demand or at a fixed or determinable future time, a sum certain in money,
to, or to the order of a specified person or to bearer". S.84 (2) provides that
an instrument in the form of a note payable to maker's order is not a note
within the meaning of S.84 (1) unless and until it is endorsed by the
maker.
3.2 Specimen
The following is one form of promissory note:
Liability of maker
S.89 provides that the maker of a promissory note by making it:
(a) Engages that he will pay it according to its tenor; and
188
(b) Is precluded from denying to a holder in due course the existence of
a payee and his then capacity to endorse.
S.90(3) provides that the following provisions as to bills do not apply to

notes namely, provisions relating to:
(a) Presentment for acceptance;
(b) Acceptance;
(c) Acceptance supra protest;
(d) Bills in a set.
Where a foreign note is dishonoured, protest thereof is unnecessary.Unit

summary
References
Refernec 1
In this unit you learned about the various types of negotiable instruments,
their negotiability and their advantages in commercial transactions
Summary
Task
1.Discuss the importance of negotiable instruments in commercial
transactions
Task
189
Self-Assessment
1. In the event of dishonour of a cheq ,what rights accrue to the
payee?
2. . What are the general duties of a customer and a banker
Self-Assessment 3. . Discuss the circumstances under which a banker who receives

payments on an instrument to which its customer has no valid
tittle can be held liable for negligence as set out in S3 of the
cheques act.
Unit 8
THE LAW OF TORTS
Introduction
This unit introduces you to the law of Tort which is basically a civil
wrong or a conduct that is not justified by the laws of the land of which
the remedy is common law action for un-liquidated damages.
190
 To define tort and differentiate it from crime
 To distinguish between different forms of Tort
Outcomes  To appreciate various defences of tort
Res ipsa loquitur: Facts speak for themselves
Detinue: Retention of another’s goods
Volenti non fit Consenting to Risk

Terminology injuria:
NATURE OF TORTIOUS LIABILITY

A tort is a civil wrong (not every wrong is a tort)
Tortious liability arises from the breach of a duty primarily fixed by law;
this duty is towards persons generally and its breach is redressible by and
action for unliquidated damages.
Tort and Contract distinguished
TORT CONTRACT
-The duty is fixed by law -The duty is fixed by the parties
-The duty is owed to persons -The duty is owed to the parties

to the contract.
generally
191
-The remedies are few -The remedies are far much
wider.
(restricted)
Tort And Crime Distinguished
TORT CRIME
-Is a wrong redressible by an - Is a wrong the
action of which involves
action for unliquidated punishment
damages
-The party suing is an individual -Almost always party

suing is the state
or private person
Difference in terms
-A person sued -A person charged.
-A person is found liable -A person is found

guilty
-An act may both be a tort or a crime e.g. Libel
THE PARTIES TO A SUIT (CAPACITY)

(a)The Government
At common law no action in tort lay against the state (crown) for wrongs
expressly authorised by the crown or for wrongs committed by its
servants in the course of their employment. Under the Government
Proceedings Act, Cap 40 Laws of Kenya the Government is Liable for
tortious acts.
Section 4(2) provides;
“Subject to the provisions of this act, the government shall be subject to

all those liabilities in tort to which if it were a full person of full age and
capacity it would be subject;
 In respect of torts committed by its servants or
agents.
 In respect of any breach of those duties which a
person owes to his servants or agents at common law
by reason of being their employer.
 In respect of any breach of duties attaching at
192
common law to the ownership occupation,
possession or control of property.
However, SECTION 13A provides that before one can sue the
government he must given a 30 days notice.
(a) Liability Of The Government
Facts; An action was brought by owner of property against the home

office in respect of damage to his property done by runaway Borstal boys.
Seven borstal boys ran away one night when the three officers in charge
of them were, contrary to instructions, all in bed. They boarded one of
the many vessels in the harbour, started it and collided with the plaintiff’s
yatch, which they then boarded and damaged further.
Held ;the defendant (Home Office) was held liable for not protecting the
plaintiff from the ravage of the boys
(b) Foreign Governments/Sovereigns
Diplomats and foreign sovereign states enjoy absolute immunity
to criminal and civil liability before a Kenyan Court unless the
immunity had been waived by submission to Kenyan Jurisdiction
(under the Vienna Convention on Diplomatic Relations, 1961)
This applies only where the act was done in the exercise of the
sovereignty of the state.
Immunity ceases when one engages in private and commercial

ventures. Immunity can be waived leading to a person being
charged.
(c) Bankrupts
May sue or be sued for torts committed
(d) Minors.
After an early period of uncertainty the common law adopted 21 years as

the age of majority for most purposes and it remained at this until1970
when it was reduced by statute to 18 (Family Law Reform Act 1969)
Minority is not a defence in tort. A minor can sue and be sued for tort. A
minor can sue and be sued for tort. A minor can however not sue or be
sued in his own name but by his “next friend” (guardian ad Litem)
In the law of tort there is generally no defence of minority and a minor is

as much liable to be sued for his tort as is an adult. In Gorely v Codd
(1967 w.c.r
The defendant a 161/2 year old boy was held liable when he accidentally
shot the plaintiff with an air rifle in the course of ‘larking about.
Minority however be it a defence in an action for the tort of negligence or

malice. This is to be inferred from the fact that a young child may well
be incapable of the necessary mental state for liability in such torts. In an
action for negligence against a young child, therefore, it is insufficient to
show that he behaved in a way which would amount to negligence on the
193
part of an adult. It must be shown that his behaviour was unreasonable
for a child o his age. Parents are not liable for the torts o their children,
but in situations where it is established that the child was under control of
the parent the commission of the tort by the child will result to liability of
the parent.
Persons of unsound mind.

Liability depends on whether the person knew what he was doing when
he committed the tort. This can be proven by a psychiatrist. Morris v
Mardsen (1952) 1 All E.R 925
Facts; The defendant rented a room at a hotel while there he attacked the
manager of a hotel. At that time he was suffering from a disease of the
mind. It was established that he knew the nature and quality of his act,
but he did not know that it was wrong.
Held: As the defendant knew the nature and quality of his act, he was
liable in tort for assault and battery. It was immaterial that he did not
know that what he was doing was wrong.
Unsoundness of mind is thus certainly not itself a ground of immunity

from liability in tort, and it is submitted that the true question in each case
is whether the defendant was possessed of the requisite state of mind for
liability in the particular tort in which he is charged.
Robbers v Ramsbottom (1980)
One morning a 73-year-old accountant was about to drive his wife to the
office when he suffered a quite unheralded stroke that impaired his
consciousness considerably. He forgot all about his wife and drove off.
He managed to negotiate a few corners but then struck a parked van. He
told the van driver that he felt alright and continued driving. Next he
knocked a boy off his bike and finally rammed the plaintiffs stationary
car and injured the family by it.
Held; The defendant was liable despite his curious condition since it fell
short of automatism and complete loss of consciousness and because after
striking the van he should have realized (though he could not) that he was
unfit to continue driving.
Husbands and Wives
Married women can sue and be sued for torts committed ( According to
the 1935
Law Reform (Married women and tort features) Act.
The Law recognizes women as Femme Sole (having legal capacity to sue
and be sued).
Under common law the wife was never liable for her torts but the
husband was liable for both his torts and those of his wife.
194
(g) Corporations
A Corporation can sue and be sued in its own name for torts committed,
but ther eare some torts which, by their very nature, it is impossible to
commit against a corporation, such as assault or false imprisonment.
A Corporation can sue for the malicious presentation of a
winding-up petition or defamation, though the precise limits of the latter
are unclear.
Liability of Corporations is however Limited. Thus if a servant commits

a tort
that is ultra vires the corporation then the corporation is not liable.
(h) Unincorporated Associations
Cannot sue or be sued for torts committed but they can institute a
representative suit. The members of the association are not liable for the
torts of the association but the individual members are liable for their
own torts.
(i) Partners
They are personally liable for their own torts. They can sue and be sued
by writing down all the names of the partners and that of the partnership.
Each and every partner is liable for a tort committed in the course of
business.
(j) Aliens
A friendly alien is under no disability and has no immunity. An alien

enemy is one whose state or sovereign is in war with the sovereign of the
state in question or one who, whatever his nationality, is voluntarily
resident or carries on business in an enemy country. As thus defined, an
alien enemy, unless he be within the realm of license of the sovereign,
cannot sue in the sovereign’s courts. He can however be sued and can
defend an action and if the decision goes against him, he can appeal.
GENERAL CHARACTERISTICS OF TORTIOUS LIABILITY

Forms of Liability
There are different ways in which liability in tort may arise;
 Liability may be imposed as a legal consequence of a

person’s act, or of his omission if he is under a legal duty to
act.
195
 Liability may also be imposed upon one person as a legal
consequence of the act or omission of another person with
whom he stands in some special relationship such as that of a
master and servant (vicarious liability)
In some cases liability is based upon fault; sometimes an intention to
injure is required but more often negligence is sufficient. In cases of
strict liability however liability is in varying degrees independent of
fault.
Most torts require damage resulting to the plaintiff as a consequence

of the defendants conduct. However in some cases as trespass and
label proof of actual damage is not required.
Intention or negligence or the breach of statutory
Intention
Some torts require intention on the part of the wrong doer. Intention can
be inferred from the conduct of the wrong doer. Whatever a man thinks
must be deduced from what he says and does. A person intents a
consequence if it is his desire or motive to bring it about.
Negligence
‘Negligence’ may signify full advertence to ones conduct and its

consequences. More usually, however, it signifies inadvertence by the
defendant, but the defendant cannot escape liability because he adverted
to the risk if the case is one where even inadvertence would saddle him
with liability. An illustration of full advertence is the case of
Vaughan – v – (Menlove 1937) 3 Bing N.C. 468
Facts The defendant had been warned that this was likely to overheat
and catch fire, which might spread to the land of his neighbour. He said
he would chance it and the stack actually caught fire.
Held That the defendant w
Breach of strict duty
In some torts, the defendant is liable even though the harm to the plaintiff
occurred without intention or negligence on the defendant’s part. This it
was laid down in the famous case of Rylands v Fletcher (1868) : R 3 H
L 330 340 that “if a person brings or accumulates on his land anything
which , it should escape may cause damage to his neighbours, he does so
at his own perk. If it does escape and cause damage, he is responsible,
however careful he may have been and whatever precautions he may
have taken to prevent damage.”
196
Liability in nuisance may be strict where the defendant himself or
someone for whom he is responsible has created the nuisance.
‘Reasonable’ and ‘Reasonable man’
It is important to explain the terms ‘reasonable’ and ‘reasonable man’ as

they recur frequently in the law of tort. ‘Reasonable conduct’ may be
described as the behaviour of the ordinary man in any particular event or
transaction, including in such behaviour obedience to the special
direction (if any) which the law gives him for his guidance in that
connection. Lord Bowen visualized the reasonable man as ‘the man on
the clapham omnibus.
Where a person exercises any calling, the law requires him, in dealing
with other people in the course of that calling to exhibit the degree of
skill or competence which is usually associated with its efficient
discharge. Nobody expects the man on the clapham omnibus to have any
skill as a surgeon, lawyer, doctor etc, unless he is one; but if he professes
to be one then the law requires him to show such skill as any ordinary
member of the profession or calling to which be belongs, or claims to
belong would display.
The judge has to decide what ‘reasonable’ means, and it is inevitable that
different fudges may take variant views on the same question.
Motive and Malice
Motive signifies the reason for conduct. Malice may mean ‘evil motive’
or it may signify doing an act willfully without just cause or excuse.
As motive, the general rule is that if conduct is presumptively unlawful, a

good motive will not exonerate the defendant, and that, if conduct is
lawful apart from motive, a bad motive will not make him liable.
To the first part however, defenses like necessity and private defense are
exceptions for they depend to a certain extent on a good motive on the
part of the defendant.
GENERAL DEFENCES IN THE LAW OF TORT

Plaintiff’s default
If the plaintiff were to sue, and the defendant would prove that the
plaintiff was on the wrong, that can constitute a defence. under common
law, if one contributed to a tort that barred him from suing. B
B.CONTRIBUTORY NEGLIGENCE
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The law was however changed by statute under the law reform
(Contributory negligence) act 1945 . A plaintiff on the wrong can
recover for as long as he has not contributed 100% to the tort. Thus if he
contributed 40% he can recover 60%.
C. ACT OF GOD
Where damage is cause directly by natural circumstances which no

human foresight can provide against and of which human prudence is not
bound to recognize the possibility, the defence of act of god applies. For
this defence to succeed, it must be shown that the act was not foreseeable.
D. VOLENYL NON FIT INJURIEA (VOLUNTARY

ASSUMPTION OF RISK)
There are some occasions when harm – sometimes even grievous harm –
may be inflicted on a person for which he has no remedy in tort because
he consented or at least assented to the doing of the act which caused his
harm. Simple examples are the injuries received in the course of a lawful
game or sport or in a lawful surgical operation.
If the defendant desires to succeed on the ground that the maxim violent
non fit injuria is applicable, he must obtain a finding of fact that the
plaintiff freely and voluntarily with full knowledge of the nature and
extend of the risk had impliedly agreed to incur it.
Requirements.
 There must be consent
 There must be voluntariliness and knowledge.
Harry v Dyke (1979) R T R 265
X sold a car ‘as seen with faults’ to Y. Y sold the car to a third
party. It crashed and injured the third party who sued X.
Held: X was not liable because he had indicated that the car was faulty.
The knowledge must be full and complete i.e. the full extent of the risk
must be known
198
E. NECESSITY AND PRIVATE DEFENCE
The critical thing is that the act done has to be reasonable. Necessity is
limited to cases involving an urgent situation or imminent peril.
Examples include pulling down a house on fire to prevent its spread to
other property, throwing goods overboard to lighten a boat in a storm and
medical assistance rendered to an unconscious person. The measures
taken must be reasonable and this will depend on whether there is human
life or merely property in danger.
NEGLIGENCE
In DONOGHUE v STEVENSON, Lord Macmillan stated:"The law takes no
cognizance of carelessness in the abstract. It concerns itself with carelessness only
where there is a duty to take care and where failure in that duty has caused
damage. In such circumstances carelessness assumes the legal quality of
negligence and entails the consequences in law of negligence...
The cardinal principle of liability is that the party complained of should

owe to the party complaining a duty to take care and that the party
complaining should be able to prove that he has suffered damage in
consequence of a breach of that duty".
The ingredients of negligence are:
(a)A legal duty on the part of the defendant toward the plaintiff to exercise
care in such conduct of the defendant as falls within the scope of the duty
Such duty will exist if the plaintiff and defendant are neighbours
within Donoghue v Stevenson.
(b) Breach of that duty.
The breach will occur if the defendant caused injuries or losses which
he could have avoided by using reasonable care.
(c) Consequential damage to the plaintiff (i.e. negligence is not actionable

per se).
These ingredients cannot always be kept apart, and it has been said that they
are simply three different ways of looking at one and the same problem.
In DONOGHUE v STEVENSON, the appellant's friend purchased a bottle

of ginger beer from a retailer in Paisley and gave it to her. The respondents
were the manufacturers of the ginger beer. The appellant consumed some of
the ginger beer and her friend was replenishing the glass, when, according
to the appellant, the decomposed remains of a dead snail came out of the
bottle. The bottle was made of dark glass so that the snail could not be seen
until most of the contents had been consumed.
The appellant became ill and sued the manufacturers claiming damages.
The question before the House of Lords was whether the facts outlined
above constituted a cause of action in negligence.
199
The House of Lords held by a majority of three to two that they did.
Delivering his judgment, Lord Atkin stated, inter alia:
"...... A manufacturer of products which he sells in such a form to show that he

intends them to reach the ultimate consumer in the form in which they
left him with no reasonable possibility of intermediate examination, and
with the knowledge that the absence of reasonable care in the preparation or
putting up of the products is likely to result in injury to the consumer's life
or property, owes a DUTY to the consumer to take that reasonable care.
"Damnum sine injuria"
Although a plaintiff who has suffered damage as a consequence of the careless act
of another may sue that other for the loss he has suffered, this may not be so in
some cases, as illustrated by BOURHILL v YOUNG. The plaintiff, a pregnant
Edinburgh fishwife, alighted from a tramcar. While she was removing her fish-
basket from the tram, Young, a motor cyclist, driving carelessly but unseen by her,
passed the tram and collided with a motorcar some fifteen yards away. Young was
killed. The plaintiff heard the collision, and after Young's body had been removed,
she approached the scene of the accident and saw a pool of blood on the road. She
suffered a nervous shock and later gave birth to a stillborn child.
The House of Lords held that her action against Young's personal representative
failed, because Young owed no duty of care to persons whom he could not
reasonably anticipate would suffer injuries as a result of his conduct on the
highway. A person is under a duty to guard against reasonable probabilities, not
fantastic possibilities. Such situations are known as "damnum sine injuria".
"Res ipsa loquitor"
A plaintiff may be relieved of the legal duty of proving the defendant's

negligence where the maxim "res ipsa loquitor" ("the thing speaks for
itself") applies. In such cases the negligence of the defendant is presumed
and he must successfully rebut it in order to escape liability for
negligence.`
10 Contributory negligence
There may be negligence on the part of the plaintiff and also on the part of the
defendant with the result that the liability is divided according to the proportion of
fault attributed to each one of them. This "proportion fault" is known as
contributory negligence.
11 The "Neighbour principle"For purposes of the law of negligence, a

person's neighbour is determined by the activity that he engages in at a
given moment, because it is the activity in question that is likely to cause
damages if done carelessly.
200
Examples:
1. A motorist's neighbours are other users of the road he is
travelling on.
2. A manufacturer's neighbour is the consumer for whom
the product is intended.
2. An auditor certifying the correctness of the accounts he has
audited may be sued by people who relied on the accounts to
buy the company's shares or lend it money
SPECIFIC TORTS
Trespass
There are 3 classes/categories of trespass.
 Trespass to the person
 Trespass to land
 Trespass to goods
Trespass to the person
May be committed negligently (i.e. inadvertently) as well as by intention.

There are 3 main forms of trespass to person.
 Assault
 Battery
 False imprisonment; and their common element is that the
wrong must be committed by ‘direct means’. Where
however physical harm is inflicted by indirect means there
may be liability under the so-called “rule in Wilkinson v
Downtown” (discussed later).
Battery: It is the intentional and direct application of force to another

person. Where the defendant intentionally does an act which directly and
physically affects the person of the plaintiff he commits battery. Battery
like other form s of trespass does not require an intention to commit the
requisite interference with the plaintiff the plaintiff the plaintiff’s person..
Mistake of fact is no defence in trespass however reasonable the mistake.
201
Meaning of Force
Any physical contact with the body of the plaintiff or with his clothing is
sufficient to amount to force. There is battery where the defendant shoots
the plaintiff from a distance just as much as when he strikes him with his
fist. Mere passive obstruction is however not battery. If however there is
force in the technical sense, no physical hurt is necessary, for all forms of
trespass are actionable per se i.e. without prove of damage.
Where there is express or implied consent to contact the plaintiff cant sue.
Life would be difficult if all bodily contact were actionable and courts
have struggled to find some further ingredient to distinguish battery from
legally unobsectionable conduct.
Touching another person in the course of a conversation in or to draw his

attention to something is no battery but ‘an unwanted kiss is as much
actionable as a
For battery there must be a voluntary act by the defendant intended to

bring about the contact with the plaintiff. The battery need not be
committed with the person of the person of the defendant. It is battery to
strike the plaintiff by throwing a stone at him. Provided the force used
has its effect on the person of the plaintiff’s person must be intended by
the defendant e.g. it is battery to remove a chair on which the plaintiff is
about to sit as a result of which he falls on the ground.
Stephens v Myers (1840) 4 C & P 349
The plaintiff was chairing a parish meeting. The defendant, who sat at
the same table some six or seven places away from then plaintiff became
voiciferous and by a large majority it was resolved that he be expelled.
He said that he would rather pull the plaintiff out of the chair than be
ejected and he advanced with clenched fist upon the plaintiff but one to
the plaintiff.
Held: The defendant was liable for assault.
1. Ingredients of assault
Can assault be committed verbally?
Though assault involves no contact it is often said that some bodily

movement is required and that threatening words alone are not therefore
actionable. Authorities on this point are divided and go both ways.
202
In Meades’s case (1823) Law C.C 184 which was a criminal prosecution
for murder, the court said no words or singing are equivalent to assault.
The basis of this obiter dictum has however been discounted and the
position now is that whether or not a verbal threat will be held to be an
assault will depend on the facts of each case and whether or not it can be
said that the defendant intended to implement his threats.
What must the plaintiff apprehend
Suppose the plaintiff is an unusually fearful person in whom the

defendant can induce the fear of an imminent battery though a reasonable
man would not have fear in those circumstances, does the defendant
commit assault? The better view is that the test is based upon the
subjective intention of both parties thus there is battery if the defendant
intends to create fear of commission of a battery whether or not he knows
the plaintiff to be a fearful person and the plaintiff actually has this fear.
In Smith vs Superintendent of Working Police Station (1983) Crim.

L R 323:
The defendant was convicted of criminal assault when he entered the

grounds of a private house and stood at the window s eriously frightening
its occupant who was getting ready for bed.
The plaintiff must however apprehend a battery thus it is not assault to

stand still at the door of a room barring the plaintiff’s entry. It would also
not be assault to falsely cry ‘fire’ in a crowded place.
Must damages be proved?

Both torts of assault and battery are actionable per se. Where the
defendants act has caused no damage the courts may award only nominal
damages but the court may also award aggravated damages because of
the injury to the feelings of the plaintiff arising from the circumstances of
the commission of the tort.
False Imprisonment
Committed by a person who unlawfully intentionally and directly places
a total restraint on the liberty of the plaintiff. It is actionable per se.
‘False’ is used to imply erroneous or wrong. It is possible to commit the
tort without imprisonment of a person in the common acceptance of that
tort in fact neither physical conduct nor anything resembling prison is
necessary. If a lecturer locks his students in a lecture room after the usual
time of dismissal that is false imprisonment. So also is the case where a
person is restrained from leaving his own house or part of it or even
forcibly detained in a public street. A person is said to be a prisoner if he
has no liberty to go freely at all times to all places that he would like to
go.
It has been held in Grainger v Hill (1838) 4 Bing N.C 212 that
imprisonment is possible even if the plaintiff is too ill to move in the
absence of restraint.
Ingredients of the tort.
203
 Knowledge of the plaintiff
Knowledge of the restraint is not necessary but may affect the quantum of
damages.
 Intention and directness

The tort is defined to exclude negligent imprisonment of another person.
The tort must be intentional and should be committed directly. Where for
reason of lack of intention or directness the plaintiff cannot establish false
imprisonment an action in negligence may still be available.
The restraint must be complete
There must be a total restraint placed upon the plaintiffs freedom of

action
In Bird v Jones
The defendant closed off the public footpath over one side of a bridge.
The plaintiff wishing to use the footpath was prevented by the defendant.
In the plaintiffs action one of the questions that was necessary to decide
was whether the defendant’s act amounted to false imprisonment.
Held: It did not since the defendant has not placed a total restraint on the
plaintiff. The blocking of a part of a public highway might be a public
nuisance for which the plaintiff could bring an action in tort. if he could
show special damage arising from.
Provided the area of restraint is total it does not seem to matter that it is
very large. There has been a difference of opinion between the court of
appeal and the lower court son the circumstances in which a person
already the lawfully imprisoned in a prison may be regarded as falsely
imprisoned.
In R v Deputy Governor of Prison, there was an agreement that

imprisonment under intolerable conditions would amount to false
imprisonment. The C.O.A however required knowledge of those
conditions by the defendant but the lower courts thought that a defence
would exist here under the provisions of the prisons Act.
There is of course false imprisonment where a prisoner is detained

beyond the legal date of his release. (Cowell v Corrective Services
Commissioner)
204
 Reasonable escape
There is no false imprisonment if a reasonable escape
route is available.
In Wright v Wilson, false imprisonment was not committed where the

plaintiff could escape by trespassing on the land of a third party. What is
a reasonable escape route depends on the circumstances of the case. The
mere fact that the plaintiff is able to take advantage of an escape route
does not mean that he should do so. As expert swimmer might be
justified in not taking advantage of an escape route offered by swimming
if he thought that release by other means would soon become available.
An escape route which involves a risk of injury to the plaintiff may be
regarded as unreasonable.
Trespass to land
It is constituted by unjustifiable interference with the possession of land.

Trespass to land is not criminal in the absence of some special statute,
which makes it so.
Possession: Since trespass to land involves interference with possession

it is necessary that the plaintiff proves possession to the land. Mere
physical presence on the land or the user or de facto control of it does not
amount to possession sufficient to bring an action of trespass
Interference: The plaintiff must prove that the possession has been
disturbed or interfered with by the defendant. The most obvious example
is unauthorized walking upon the plaintiff’s land or going into the
buildings upon it but it is equally trespass to throw things on the plaintiffs
land or allow cattle to stray on it. If the defendant has been given
permission to enter into the plaintiff’s land but acts in excess of the
permission or remains on the land after the permission has expired, he
commits trespass.
Ingredients
i. There should be intention
Tortuous liability for trespass to land requires proof of intention or
negligence on the part of the defendant. Intention or negligence in this
tort must however be defined carefully for it is clear law that envy upon
another’s land is tortuous whether or not the entrant knows he is
trespassing. Thus there is no defence that the only reason for his entry
upon another’s land was that he had lost his way or even that he
205
genuinely but erroneously believed that the land was his. Majority of
trespasses to land are for legal purposes, self evidently intentional – I
intend to enter upon your land if I consciously place myself upon what
proves to be your land even though I neither knew nor could reasonably
have known that it was not mine.
ii. There must be entry.

May constitute either physical entry by the defendant into the defendants
land or permitting entry of any substance or thing into the land e.g. waster
or animals.
However in Perera v Vandiya the defendant – landlord quarrelled with

the plaintiff – tenant. He turned off the electricity and gas main sockets
which were in his land – the defendant without entering the rented
premises. The tenant sued for trespass.
Held: There was no trespass to the land as the landlord had neither
entered the land in the tenants possession nor permitted entry into it.
Whether entry/invasion to the airspace above a man’s land amounts to
trespass depends on the height of entry. Although intrusion into air space
at a relatively low height constitutes trespass it is now settled law that the
land owners’ rights in airspace extent only to such height as may be
necessary for the ordinary use and enjoyment of the land and structures
on it so that the flight of an aircraft ‘several hundred feet’ above a house
is not a trespass at common law. But if an aircraft, or anything from it
falls upon the land or comes into contact with a structure on it that might
be trespass no matter the height from which it fell.
The entry must be voluntary

Where entry is involuntary there is no liability.
In Smith v Stone
The defendant was thrown into the plaintiff’s land by a gang. The
plaintiff sued him for trespass.
Held Defendant not liable as the entry was not voluntary.
In Gilbert v Stone
The defendant was confronted by robbers. He ran into the plaintiffs land
to take shelter.
Held: The entry was voluntary and thus the defendant was liable for
trespass to land.
iii. The act must be direct
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For trespass to land to occur the injury or act must be direct and
immediate. If it is indirect or consequential there may be a remedy in
nuisance or negligence but not in trespass. If A plants a tree on B land
that is trespass but if the roots or branches of a tree on A’s land project
into or over B’s land that is a nuisance not trespass.
In Lemmon v Webb
The roots of a tree on the defendants land get engrossed on the plaintiffs
land.
Held: The act was not direct hence the defendant was not liable for
trespass.
In Mann v Saulnier the defendant fenced his land properly. The fence
eventually leaned onto the plaintiffs land. The plaintiff sued for trespass.
Held: The act was not direct but consequential hence the defendant was
not liable.
In Gregory v Piper
The defendant put rubbish near the plaintiffs wall. The rubbish rolled
into the plaintiffs land.
Held: The defendant was liable for trespass.
In South Port Corp v Esso Petroleum Co
A ship belonging to the defendant co came to harbour. They dropped

some fuel oil onto the water to lighten the weight of the ship. The oil
drifted to the shore belonging to the plaintiff. The plaintiff sued for
trespass.
Held: The act was not direct but consequential hence no liability for
trespass.
iv. Trespass ab initio
If a person enters land by authorization but once inside the land he does
an act contrary to the authority he commits trespass ab initio. There must
be a positive act of misfeasance.
The six carpenters case
Six carpenters entered into a restaurant – ate, drunk and refused to pay.
The owner of the restaurant sued them for trespass ab initio.
Held this was a negative act of omission (non feasance) hence the
carpenters were not liable for trespass ab initio
Continuing trespass
207
The plaintiff can sue day by day. The defendant pays
damages for each day. There can also be the remedy of
injunction.
Trespass to goods (chattels)

It is the intentional or negligent interference with a chattel in the
possession of the plaintiff. The interference must be direct. This
tort protects several interests.
The plaintiffs interest in the retention of possession of his

chattels.
His interest in the physical condition of his chattel
His interest in the inviolability of his chattel ie protection
against intermeddling
Forms of trespass to goods.
Trespass to goods assumes various forms. Examples are
Taking a chattel out of the possession of another – Brewer v

Dew (1843) in M & W 625
Moving a chattel from one place to another – Kirk v Gregory

(1876) 1 EX D 55
Bringing ones person into contact with another chattel –

Fouldes v Willoughby (1841) M & W 040
Directing a missile at someone’s chattel – Hamps v Darby

(1948) 2 K B 311
Requirements
The act must be direct

There cannot be trespass to goods if interference is indirect. In
Hartley v Moxham – 1842 – it was held that to lock the room
in which the plaintiff has his goods is not a trespass to the
goods
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The act must be intentional or negligent
There is no liability where the trespass is neither
intentional nor negligent.
In National Coal Board v Evans J E & Co Ltd (1951)

2 K B 861
The court of appeal held that a contractor whose servant while

excavating damaged the cable of the plaintiff and whose act
was not liable in trespass to goods.
The court stated – Cohen L J
‘He willed the operation of the machine which was excavating

the earth but he neither desired nor ought to have foreseen that
damage to the cable which constituted the tortuous invasion of
the plaintiffs interest would occur – his act therefore was
neither intentional nor negligent.
But if the defendant intended to interfere his trespass is

intentional even though he did not know that his act amounted
to trespass. If for example he believed that the goods interfered
with were his own
The plaintiff must be in possession of the goods at the time of

interference
Possession connotes the power (factum) of exercising physical control
and the intention to exercise such control on his own behalf. Whether or
not the plaintiff is the owner is immaterial, provided he has possession.
Thus in a simple bailment determinable at will the bailor does not lose
possession and can sue any wrongdoer for trespass. The bailee though
not the owner of the goods has sufficient possession and can also sue for
trespass. But apart from simple bailment determinable at will a bailer
does not have possession of the chattels and therefore cannot ordinarily
sue in trespass for an act done to the goods balled. Possession may either
be actual or constructive trustees are in constructive. Trustees are in
constructive possession of chattels in the hands on the beneficiary on the
basis that they share possession with them trustees can sue for trespass to
chattels in actual possession of a beneficiary.
In White v Morris (1852) 11 C B 1015 it was held that where goods

were assigned as security for a loan upon trust to permit the assignor to
209
remain in possession until default in payment, the assignee could sue in
trespass while the goods were still in the assignor’s possession.
In Johnson v Diprose (1873) 1 512 R P 515 Lord Esher said ‘’the

plaintiff in an action of trespass must at the time of the trespass have the
present possession of the goods either actual or constructive, or a legal
right to the immediate possession.
The rule in Wilkinson v Downtown (intentional physical harm to

another person or damage to his property other than trespass to the
person or property)
Involves as situation where physical harm is inflicted by indirect means.

This falls short of trespass because of the requirement in all terms of
trespass that ‘the act must be direct’ but there may be liability under the
so called ‘rule v downtown’
In Wilkinson v Downtown (1897) 2 QB 57A by way of a practical

joke, falsely told the plaintiff a married woman that her husband had met
with an accident whereby both his legs were broken. She believed this
and was so violently upset by the consequent nervous shock that she had
a serious illness. A was held liable. Some attempt was made by counsel
to base the claim on deceit as a tort but the learned judge indicated that
this would have been an extension of that tort presumably because it is
necessary that in deceit, the injured party should have been intended to
act upon the false statement and should have acted upon it and here the
plaintiff could scarcely be said to have acted in any way by falling ill.
Wright J preferred the following ground;
‘The defendant has …. wilfully done an act calculated to cause harm to

the plaintiff – that is to say to infringe her legal right to personal safety,
and has in fact thereby caused physical harm to her. That proposition
without more appears to me state a good cause of action there being no
justification alleged for the act’
Thus a person can recover under this rule for physical harm done. This
however cannot be placed under any specific tort. This principle is not
limited to harm arising from a statement. It can also arise from an act e.g.
where the defendant scares the plaintiff into nervous shock by dressing up
as a ghost.
In Blackeley v Shortal’s Estate (1945) 20 N W 28
The defendant was held liable under this rule when he cut his throat in the
plaintiff’s kitchen scaring her into nervous shock. The principle also
extents to damage to property for instance if A suddenly shouts at a child
who is descending a narrow staircase, intending the child to fall, A is
210
liable if the child falls and breaks its neck. A is also liable for the child’s
clothing damaged in the all although this would not amount the trespass
to goods or person because there is no ‘direct’ injury. The principle
would also extent to intentional infection of another person with disease.
Defences to trespass
License
A license has been defined as that consent, which without passing any
interest in the property to which it relates, merely prevents the act for
which consent is given from being wrongful. A man is not a trespasser if
he is on the land or premises with permission express or implied of the
possessor.
A bare license i.e. one granted otherwise than for valuable consideration
may be revoked at any time and thus once revoked the licensee becomes
a trespasser but he must be allowed a reasonable time in which to leave
and to remove his goods. Some contractual licenses on the other hand are
irrevocable because revocation in breach of contract would be prevented
by the grant of an equitable remedy to the licensee. A license coupled
with an interest is irrevocable because although the license itself – the
bare permission to enter is only a right in personam it confers a right in
rem to something when you have entered.
In B Thomas v Sorrel (1672) Vaughan 330 at 351 Vaughan

C J stated ‘a license to hunt a man’s park and carry away the
deer killed, to cut down a tree in a man’s ground and carry it
away the next day; are licenses as to the acts of hunting and
cutting down the tree but as to the carrying away of the deer
killed and the tree cut down they are grants.
Thus until the tree or deer is carried away the license is

irrevocable. Once a license has been executed it cannot be
revoked in the sense that the licensee can be compelled to undo
what he has lawfully done.
In Leggins v Inge (1831) 682 where an oral license had been

given to lower a riverbank and make a weir above the licensors
mill it was held that the licensor could not sue the licensee for
continuing existence of the weir which the licensee had erected.
Justification by law
Acts which would otherwise be trespasses whether to land
goods or the person are frequently prevented from being so by
211
existence of some justification provided by the law. For
example
A landlord commits no trespass if he distrains for rent.
In cases where officers of the law are authorized to enter land

to take goods or to arrest or restrain a person, no trespass is
committed.
A bailiff who enters private premises on civil process eg to

seize property in execution commits no trespass provided that
he does not gain entry by breaking in.
A private person may in certain circumstances arrest a criminal

and I t is no trespass if he breaks into a house of another person
in order to prevent him from murdering his wife or from
committing other serious offences.
Self defence
Use reasonable force I defence of ones person is a defence to trespass to
person. See Cockcroft v Smith (1705) Sald 642 – discussed in general
defences
What is reasonable force’ is a question of fact in each case
Defence to the person of another

A servant may justify battery in defence of his master and a master and a
master may lawfully strike someone in defence of his servant. A wife
may defend his husband and vice versa and a man may defend any
member of his family without committing trespass. The question always
is ‘was it reasonable for the defendant to protect the other person in this
way’
212
The relevant factors are
a. Reasonableness in all the circumstances.

b. Relationship between the defendant and the person whom
he defended eg one may use greater force in defence of a
spouse than of a stranger.
Defence of ones property

One may use reasonable force to defend land or chattels in ones
possession against any person threatening to commit or
committing a trespass to the property. The defendant must
have such possession as would enable him to sue the plaintiff
in trespass thus in Holmes v Bagge (1853) it was held that a
captain of a cricket club who removed the plaintiff from the
field would not plead that he had ejected a trespasser because
the captain had to possession of the field.
As with defence to person the defendant may use reasonable

force and what is reasonable force depends on the facts.
In Tullay v Reed (1823) 1 C and P 6 Park J Stated ‘if a

person enters another’s house with force and violence, the
owner of the house may justify turning him out, using n more
force than is necessary without a previous request to depart; but
if the person enters quietly the other party cannot justify
turning him out, without a previous request to depart.
As the law does not value interests in property quite so highly

as those in the person the use of force in defence of property is
harder to justify that in the ease of self defence. Less force it at
all must be used in the former.
Necessity
One may lawfully protect one’s person and property against
threat or harm even though the consequence is that an innocent
person suffers a loss e.g. pulling down a burning house to
prevent spread of fire to the premises.
See discussion in general defences.
Abatement of nuisance
It is a defence to trespass to land that the act was done to end a
nuisance to the defendant for which the plaintiff was
responsible. In
Lemmon vs Webb (1895) A C 1
213
The House of Lords held that an occupier could lawfully
remove those branches of his neighbours tree which projected
above his own land and interfered with the growth of his own
trees. Similarly he may remove an obstruction to his right f
light or to the flow of a natural stream.
In abatement of the nuisance unnecessary damage must not be

done. Where there are two ways of abating a nuisance the less
mischievous is to be followed unless it would inflict some
wrong on an innocent third party or the public. Previous notice
should be given where necessary notice need not precede the
abatement if no entry on the land of the plaintiff is made or if
the matter is so urgent that it is reasonable for the defendant to
enter without notice. Notice is however required where the
plaintiff has not himself created the nuisance on his land but
derives the title to the land from the creator.
CONVERSION
Conversion may be defined as an intentional dealing with a chattel, which
is seriously inconsistent with the possession or right to immediate
possession of another person. In the words conversion is committed
when one deals with the goods of another person in a manner that
constitutes an unjustifiable denial of that person rights in the goods,
which are inconsistent with the other persons rights. The tort protects the
plaintiff’s rights in the dominion and control of his goods. The tort may
be committed by wrongfully taking possession of the plaintiff’s goods
destroying them disposing of them or simply refusing to give them up
when demanded.
A. Interest of the plaintiff

In order for interference or dealing to amount to conversion the
plaintiff must either have;
 Ownership and possession of the goods
 Possession of the goods
 A right to the immediate possession of the goods, but
without either ownership or actual possession of
them
Examples of right to possess
A servant in custody of the masters gods has not possession of

them for possession is constructively in the master but if the master
214
makes the servants a bailee of the goods so as to rest him with
exclusive possession then the master has possession and the master
has only the right to possess.
Categories of interest in goods
(i) Bailment
A bailee of goods can sue third parties in conversion. If the
bailment is at will then bailor may also sue because he is then
deemed to have an immediate right to possession. If the
bailment is for a fixed term, the bailor cannot sue for
conversion during that bailment since he has no immediate
right to possession.
In the Winkfield (1902) p 42
The postmaster general as the bailee was able to recover the

full value of mails lost through the wrongdoing of the
defendant even though the bailee was not liable for the loss.
A bailment which originally gave the bailor no immediate right

to possess may become a bailment at will.
In Manders v Williams (1849) 4 exch. 339
The plaintiff brewer supplied porter casks to a publican on

condition that he was to return empty casks within six months.
A sheriff seized within six months of their being supplied some
empty casks in execution of a debt of the publican.
Held: The sheriff was liable to the plaintiff bailer because once
the casks were empty the effect of the contract was to make the
publican a bailee at will whereupon the plaintiff was entitled to
immediate possession.
Similarly, if a bailee in a fixed term bailment does a wrongful

act which may be deemed to terminate the bailment the bailor
may sue. Sale of the chattel by the bailee will ordinarily
terminate the bailment and the bailor can then sue either the
bailee or the third party – purchaser- for conversion.
215
(ii) Lien and pledge
The holder of a lien too may sue in conversion but if he
wrongfully parts with the possession of the goods he loses his
lien and his act is a conversion which entitles the owner to sue
him. A pledge however confers something more than the
personal right of retention given by a lien – for there is in
addition a power to sell it in default of payment on the agreed
date.
In Donald v Suckling (1866) 1 585
It was held that a re-pledge by the pledgee did not end the
pledge and the original pledgor could not sue the second
pledgee without tendering the sum owing. Thus until the
pledgor tenders the sum owing he cannot sue for conversion
because until then he has no immediate right to possession.
The pledge can sue for conversion since he has actual
possession of goods.
(iii) Sale
The right to sue for conversion depends on the terms of
the contract of sale.
In Blomax-v- Sanders(1825) 4 BDC 941
It was held that, where goods were sold on credit, the buyer
could see the seller in conversion if he wrongfully sold them to
a third party.
It was further held that in absence of credit terms the buyer

although he may have the property in the goods has no right to
immediate possession until he pays the price.
In Wood v Bell (1856) E & B 772
A was building a ship for B and before its completion

A’s assignees in bankruptcy seized it.
Held: That supervision by B of the construction and the

punching of his name on the keel evidenced the intention of the
216
parties to pass the property to B as the work progressed so that
B could sue the assignees in conversion.
In the above case B had the immediate right to

possession.
(iv) Licensee
Sometimes a licensee may be able to sue in conversion.
In Northam v Bowden (1855) 11 EXCH 70
The plaintiff had a licence to prospect certain land for tin. The
defendant, without permission carted away some f the soil on
this land.
Held per Martin B
‘If the plaintiff had a right to the gravel and soil for the
purposes of getting any mineral that could be found in it he had
such possession of the whole as entitled him to maintain an
action for its conversion against a wrongdoers.’
(v) Finder
In classic case of Armory v Delamirie
A chimney sweeper’s boy found a jewel and handed it to an

apprentice of a goldsmith to be valued. The goldsmith declined
to return the jewel. The court finding for the boy against the
blacksmith held ‘that the finder has such a property as will
enable him to keep it against all but the rightful owner’
According to this maxim which restates the law on the point

the finder if he appropriates the chattel not only commits the
tort of conversion but is also guilty of the crime of theft unless
he appropriates the chattel in the belief that the owner cannot
be found by taking reasonable steps. It follows that the
occupier of land on which a chattel is found may in sometimes
have superior title to that of the finder. This includes cases
where
The finder is a trespasser on the land
217
The property is attached to the land as in South Staffordshire
water co v Shaaiman (1896) 2 QB 44
The plaintiff’s owners of land covered by a pool employed the

defendant to clean out the pool. His workmen found two gold
rings in the mud at the bottom of the pool.
Held The plaintiffs were entitled to the rings.
Lord Russec C J stated ‘the possession of land carries with it

in general by our law possession of everything which is
attached to r under that land and in the absence of a better title
elsewhere the right to possess it also’
The difficulty however arises where chattels are found on

the land but are not attached to it.
Bridges v Hawkesworth (1856) 21 L J QB 75
A finder of a packet of bank notes lying on the floor of the

public park of a shop was held entitled to them as against the
owner of the shop.
This authority was approved 95 years later in Hanna v Peel

(1945) DK B 509:
A soldier billeted in a house found a breech loose in crevice on

top of a window frame and was held to be entitled to it. Birket
J added that on the authority of Bridges v Hawkersworth ‘a
man does not necessarily possess a thing which is lying
unattached on the surface of his land even though the thing is
not possessed by someone else’.
It therefore seems best to state that whether or not the owner of

land possesses things found on the land depends on whether he
intents and he has power to exercise physical control of them.
If they are under or attached to the land this is presumed. If
however they are unattached to the land the nature of the
chattel the extent of public access to the land whether the
owner occupies the land and other such factors will be
218
considered in deciding whether or not the owner of the land has
the necessary animus and factum.
Conclusion
As regards the interest of the plaintiff to the goods for purposes

of maintaining an action for conversion the law in this respect
favours possession at the expense of ownership and thus
ownership of chattels/goods must either be coupled with actual
possession of the goods or a right to the immediate possession
of the goods.
B. The subject matter of conversion

Any chattel can be the subject matter of conversion including
money identifiable in specie i.e. money in a bag.
In Taylor v Plumer (1815) M & S 562
Where the defendant had been stealing the plaintiff’s goods from a
warehouse over the years and the plaintiff could not particularize
beyond giving their total value the court held that an action lay in
conversion.
Although cheques are of value only as chooses in action, the courts

have satisfied the demands of commercial convenience by allowing
the full value represented by them to be recovered in actions for
conversion.
So where a banker has not handled actual cash or notes but has
merely made appropriate entries by way of credit or debit balances
the court will treat the conversion as being of chattel i.e. of the
piece of paper the cheque under which the money was transferred
and the value of the chattel converted as being the sum represented
by the cheque. This doctrine is applicable to all negotiable
instruments. But this is not the limit of the doctrine.
In Vavins Junr and Sims v London and South Western Bank

(1900) I Q B 270
All the judges in the court of appeal thought that the full value of a
non-negotiable instrument evidencing a debt could be recovered in
action for conversion
219
C. The state of mind of the defendant
Ashby –v- Tolhurst
A third party had driven away the plaintiff’s car, which he had left
in the car park of the defendants. The car park attendant told the
plaintiff that he had ‘given’ the car to the third party. In a suit
against the defendants (owner of the car park) for conversion.
Held:- The attendants act did not amount to conversion by the

defendants.
If the defendant intends some dealing with the chatter, which in

fact interferes with the control of the plaintiff, that act will be
conversion, though the doer may not have known of or intended to
challenge the property of the true owner.
i.e. so long as he intended the conduct that led to challenge the title.
Mistake and good faith are irrelevant
Fowler –v- Hollins (1827) L.R 7QB 616 at p. 639 per

CHEASBY, B.
“The Liability…… is founded upon what has been regarded as a

salutary rule for the protection of property, namely, that persons
deal with the property in chatters or exercise acts of ownership
over them at their own peril.
D. What constitutes conversion (acts of conversion)

Taking possession of another’s goods
Taking possession of another’s goods is conversion as well as
trespass, but there is no conversion where the interference is
merely temporary and is unaccompanied by any intention to
exercise any rights over the goods.
To steal or to seize under legal process without justification is

conversion. Merely to remove goods from one place to another
is not conversion.
In Bushel –v- Miller (1718) 1 stra. 128
Where a porter moved goods of another in order to reach his

own, and negligently failed to replace them, he was held not
liable in conversion for their subsequent loss.
220
Where A, without lawful authority transfers B’s goods to C, the mere
voluntary reception of them by C is in general conversion, however
innocent C may be.
Involuntary reception of goods is however not conversion eg in a case

of an innocent person into whose pocket a thief, in order to escape
detection, inserts a purse which he has stolen from a third person.
Even where the receiver knows that the thing belongs to another
person, he incurs no liability by having it thrust upon him.
Destroying or altering
To destroy a chatter internationally is to convert
it. A change of identity not amounting to destruction is
however not enough, for example, to draw out part of a vessel
of liquor and fill it up with water is conversion.
(Richardson –v- Atkinson (1723) 1 stra 576) but to merely cut a log
of wood into two is not conversion. (Simpson –v- Lillystone (1853)
8 exch.431)
If the chatter is used for a purpose which

eliminates its utility as a chatter in its original form eg to make
wine from grapes or a dress from a roll of cloth, is conversion.
In Hollins –v- Fowler (1875) L.R 7 H.L 757 al p. 768
BlackBurn J. stated ‘That a miller innocently grinding another’s com

commits conversion.
Using
To use goods of another as your own is ordinarily to
convert them.
In Lancashire –v- MaeNicoll (1918) 88 L.J K.B 601
It was held that it was conversion for a person, to

whom carbolic acid drums were delivered by mistake, to deal
with them as his own by pouring the contents into his tank.
In Mulgrave –vs- Ogden (1591) cro Eliz 219
It was said:
221
“no law compelleth him that finds a thing to keep
it safely; as if a man finds a garment, and suffers it to be moth-
eaten; or if one finds a horse, and giveth it no sustenance: but if
a man finds a thing and useth it; he is answerable for it in
conversion: so if he misuseth it, as if one finds a paper, and
puts it into the water, etc, but for negligent keeping no law
punisheth him”.
Abusing possession
Abuse of possession that the defendant already
has may take many forms, such as sale accompanied by
delivery of the plaintiff’s goods or their documents of title to
another, pawning them or otherwise disposing them.
Whether or not unauthorised use by a bailee

amounts to conversion depends on the degree of departure from
the terms of the bailment. E.g. use of a borrowed car or a car
the subject of a bailment for the transport of uncustomed
watches is a conversion of the car for if such conduct is
discovered it leads to the forfeiture of the car under the English
customs and Excise Act 1952 and its subsequent loss to the
owner.
In Moorgate Mercantile Co Ltd –vs- Finch (1962) 1 Q.B 701
The court of Appeal held that it was at least the probable

result of such use of the car that the car would be forfeited and
therefore that the defendant must be taken to have intended this
result even though, no doubt, he hoped that it would not
happen.
A mere bargain and sale or the attempted disposition of goods by a

person without a transfer of possession i.e. delivery, on the other
hand, is not conversion; the act is void and does not change the
property or the possession.
Refusal to Surrender goods on demand

A refusal to surrender a chatter upon lawful and reasonable
demand is a conversion.
This usually covers the situation where the possession of

the chatter by the defendant was originally lawful.
222
Proof of demand by the plaintiff for the return of the
goods met by a refusal of the defendant is one of the common
ways of producing evidence of conversion for it tends to show
that the defendants detention of them is wrongful. The refusal
must, however, be unconditional or, if it is conditional, the
condition must be an unreasonable one.
In Howard –v- B.R.B (1980) 1 WLR 1875
It was held that the defendants’ refusal to allow the

plaintiffs to enter their premises to collect their goods which
belonged to them could not be justified by their fear of
intensified industrial action.
Reasonableness is a question of fact and many factors may be

relevant e.g. the time of the demand, the expense and
inconvenience of immediate compliance, etc.
E. Conversion as between co-owners

As between co-owners, there is unity of possession. Each is
entitled to possession and use of the chatter, and the mere enjoyment
in one way or another by a co-owner cannot amount to conversion as
against the other.
If a co-owner of a chatter makes lawful use of it even if he changes

its form, this is not a conversion actionable by another co-owner.
In Fennings –v- Grenville (1808) 1 Taunt. 42
The defendant cut up a whale, and converted its fat and blubber
into oil. It was held that his co-owner could not succeed in an action
for conversion as the use made by the defendant was a proper one.
No doubt the co-owner could have sued for an account of profits.
Where a co-owner deprives the other of the use of a chatter by

selsling it or completely destroying it, this is conversion.
Putting a chatter into legitimate use is not conversion.
223
Jacobs –v- Seward (1873) L.R 5 H.L 464
The House of Lords held that it was not conversion for a tenant in
common of a field to make hay from the grass on it.
Per Lord HAtherley
“As long as the tenant in common is confining his use of that

property to its legitimate purpose trover will not lie against him”.
F. Measure of damage
The plaintiff in conversion is entitled to be compensated to the extent of
the value of the goods which he has been deprived.
Where goods are of a kind which can be readily bought in the

market , the market value will be the appropriate measure of damages;
otherwise the replacement value in a comparable state, or the original
cost minus depreciation will be the standard.
Where a negotiable instrument or other document ordinarily

representing a chose in action is converted, the value, which the
document represents, and not merely its value as a piece of paper, is
the basis of the quantum of damages.
The time at which the value of the goods is to be determined is

ordinarily, the date of conversion. Once a claim for conversion has
accrued to the plaintiff it is not open to him to delay the instituting of
his claim – The duty to mitigate damages operates.
If goods decrease in value between the date of the conversion and

the date of judgement the plaintiff may still recover the value at the
date of conversion.
In Sollaway v Mchaughlin (1938) A C 24
The defendant broker fraudulently and contrary to instructors sold

shares of the plaintiff deposited with him. By the time of the trial the
defendants had bought in replacements at an equivalent number of
shares at a greatly reduced market value. Although the net result was
224
to put the plaintiff in a better position than if his instructions had been
obeyed he was held entitled to recover the difference between the
value of the shares at the time of the conversion and the value of the
shares since bought in replacement.
Nevertheless, the market value at conversion will not necessarily

mark the top limit of damages recoverable in conversion in the
following instances.
(a) Where the market value of the goods rises between the date of
conversion and the date of trial. If the act of conversion s sale
and the value of the goods increase by the time judgement is
given the plaintiff can recover the higher value.
Greening v Wilkinson (1825) I C & P 625
The defendant refused to hand over to the

plaintiff the plaintiff’s warrants for cotton and relying on this
demand and refusal the plaintiff sued in conversion. At the
date of refusal the warrants were worth 6d per 1b and at trial
they were worth 10 1/2d per 1b.
Damages were awarded on the basis of 10 1/2d per 1b.
As per Abboc C J
The jury may in awarding damages may give the value at the
time of conversion or at any subsequent time at their discretion
because the plaintiff might have had a good opportunity of
selling the goods if they had not been detained.
(b) If the defendant converts the plaintiffs goods and he then

increases its value the plaintiff cannot ordinarily recover that
increased valued
In Reds v Fairbanks (1853) 13 C B 692
Where the defendant converted a partially built

ship which he then completed at his own expense the courts
view was that the plaintiff was entitled to recover the market
value of the completed ship less the expense incurred by the
defendant in completing it.
225
(c) If the plaintiff incurs pecuniary loss as a direct consequence of
the conversion he may recover this loss as a special damage in
addition to the market value of the chattel.
In Bodley v Reynolds (1846) 2 Q B 779
A workman deprived of his tools recovered lost wages in

addition to the value of the tools.
In Davis v Oswell (1837) 7 C & P 804 the court held that the
owner of a converted pony could claim the cost of hiring
another.
(d) The effect as between the parties of judgment for damages in

conversion is to transfer the title in the goods to the defendant.
It follows that the court will not award damages for loss of use
as well as the value of the chattel where the effect would be to
doubly compensate the plaintiff e.g. where the plaintiff buys or
ought to have bought a replacement in order to mitigate his
loss.
In Ressimms Ex paire Trestee (1934) ch 1 it

was held that where the defendant wrongfully detained goods
and later sold them the plaintiff could recover in addition to the
value of the goods the loss of use from the date of unlawful
detention until sale and indeed until the plaintiff had a
reasonable opportunity to buy a replacement after learning of
that sale but not for loss of use until trial.
The plaintiff is under a duty to mitigate his losses arising from

conversion of his goods.
G. Defences to conversion
The exercise of a right of distress
A person who takes and even sells the goods of
another in lawful exercise of a right of distress is not liable in
action for conversion of the goods.
Mistake
226
Mistake does not generally provide a defence for liability
in conversion is strict.
In Martani & Co Ltd v Midland Bank Ltd (1968) 1 W

L R 956 at 971 per Diplock L J
‘At common law one’s duty to one’s neighbour

who is the owner of any goods is to refrain from doing any
voluntary act in relation to his goods which is a usurpation of
his proprietary or possessor rights in them. Subject to some
exception it matters not that the doer of the act of usurpation
did not know and could not by the exercise of any reasonable
care have know and could not by the exercise of any reasonable
care have known of his neighbours interest in the goods. This
duty is absolute he acts at his peril.
There are however exceptions to the rule that

innocent mistake is no defence to the tort of conversion.
This exceptions consist of what is known as

exceptions to the rule nemo dat quod non habitat
Whereby a bonafide purchaser of goods from A

commits no conversion but actually obtains a good title tot hem
even though the goods belonged to B and B never intended to
allow A to sell them. B’s remedy is against A alone. The
principle exceptions under this rule are the subject of a large
and detailed topic in sale of goods law but are briefly as
follows.
a. Sale in market overt
b. Estoppel by representation or by negligence
c. Sale under avoidable title
d. Disposition in the ordinary course of business by a
mercantile agent in possession of the goods or documents of
title with the owners consent
e. Second sale by seller in possession
f. Sale by buyer in possession
Private sale of a chattel subject to a hire purchase agreement
Retaking of goods
This is a species of self-help. If A’s goods are
wrongfully in B’s possession or control there is no need for A
to go to the expense of litigation to recover them. He can
retake them peace by if he can and in any event with no more
227
force than is commensurate with the violence of B’s resistance.
Indeed retaking may be his only opportunity of doing himself
justice for delay may mean destruction or conveying away of
the goods by B who may be quite incapable of paying the
value. A must use no more force than is necessary and as this
necessity varies with the facts of each case. Retaking is a
remedy as well as a defence. If A takes B’s goods B can retake
them from A as a remedy. If A unlawfully although mistakenly
obtained the goods from C, B can plead the defence of retaking
in an action.
For conversion brought against him by C.
For the defence to succeed, C must have obtained the goods outside
the exceptions under mistake above i.e. He must not have acquired a
good title to the goods.
The right to retake goods thus has qualifications.
Qualification
(i) With respect to persons
A can retake goods not only from B, the original tortfeasor but
also from a third party subject to the exceptions which arise
where that third person has acquired a good title even against
A. In such cases, A having lost the right to the property, has
got nothing which he can retake.
(ii) With respect to place
The person entitled to goods may enter and take them from the
land of the first taker if the taker himself wrongfully put them
there. But it is by no means certain what the law is when the
goods are on the premises of a third party who has committed
no tort with respect to them. Authorities have been divided on
this point.
It is not clear under what circumstances the owner of goods can

retake them from a third party without committing a trespass. One
thing is however clear; The retaker, before he attempts to retake,
must, if required to do so, explain to the occupier of the land, or the
person in possession of the goods the facts upon which his proposed
action is based. A mere allegation that the goods are his, without any
attempt to show how they came on the premises will not do, for,
according to Tindal C.J. in Anthony –v- Haney (1832 Bing 186, at
192
228
“to allow such a statement to be a justification for entering the soil of
another, would be opening too wide a door to parties to attempt
righting themselves without resorting to law, and would necessarily
tend to be a breach of the peace.”
DEFAMATION
Defamation is the publication of a statement which reflects on a person`s
reputation and tends to lower him in the estimation of right-thinking members of
the society generally or tends to make them shun or avoid him.
Defamation is sometimes defined simply as the publication of a statement which

tends to bring a person “into hatred, contempt or ridicule; but this is not quite
exact, for a statement may possibly be defamatory even if it does not excite in
reasonable people feelings quite so strong as hatred, contempt or ridicule and the
definition is defective in omitting any reference to the alternative of “tending to
shun or avoid him”.
This addition is necessary, for falsely imputing insolvency or insanity to a man is

unquestionably defamation, although, far from tending to excite hatred, contempt
or ridicule, it would rouse only pity and sympathy in the minds of reasonable
people, who would nevertheless be inclined to shun his society.
The Lort of defamation is of 2 kinds;

 Libel
 Slander
In Libel - The defamatory statement is made in some permanent form such as

writing, printing, pictures.
In Slander - The statement is made in spoken words or in some other transient

form whether visible or audible such as gestures or inarticulate but significant
sounds.
In Youssoupoff –v- M.G.M. Pictures Ltd (1934) so T.L.K. & 81
The Court of Appeal held that defamatory matter in a “talking” film was a Libel.
Differences between Slander and Libel
It has been stated that Slander is addressed to the ear while Libel is addressed to
the eye.. This distinction is however not accurate because Slander can as well be
addressed to the eye as in the case of defamatory gestures whereas Libel can be
addressed to the ear as in the above case of Youssoupoff –v- Man Pictured
where Slesser L.J. stated:
“There can be no doubt that so far as the photographic part of the exhibition is
concerned, that is a permanent matter to be seen by the eye, and is proper subject
of an action eye, and is the proper subject of an action for Libel”
Thus the `talking` film, though generally addressed to the ear, was in permanent form thus making it
a Libel.
229
There are however clear differences between Libel & Slander
Libel is defamation in permanent form whereas Slander is
defamation in transient form.
Libel is not merely actionable as a tort but is also a criminal
offence whereas Slander is a civil wrong only
All cases of Libel are actionable per se but Slander is only
actionable on prove of actual damage with 4 exceptions
under the Defamation Act, which are actionable per se
The exceptions of Slander actionable per se
Imputation of a criminal offence

Where the defendant makes a statement, which imputes a criminal offence
punishable with imprisonment under the penal code, then such Slander will be
actionable per se.
There must be a direct imputation of the offence and not merely a suspicion of it
and the offence must be punishable by imprisonment in the first instance.
If the Slander goes into details of the offence, it is not actionable per se if the
details are inconsistent with one another.
In Jackson –v- Adams (1835) 2 Bing N.C. 402
The defendant said to the plaintiff a churchwarden, “who stole the parish bell
ropes, you scamping rascal.” As the possession of the ropes was vested in the
Churchwarden theft of them by him was impossible. This slander was thus not
actionable per se.
Imputation of a contagious or infectious disease.
This is actionable per se as it is likely to make other people to shun associating

with the plaintiff.
This exception always includes sexually transmitted diseases and in olden times
the diseases of plague and leprosy.
Imputation of unfitness, dishonesty or incompetence in any office, profession,

calling, trade or Business held or carried on by the plaintiff at the time when
the Slander was published.
This is the most important exception under the Defamation Act, 1952 (English)
S. 2 provides (similar to S. 3 of 1972, Defamation/Act, chapter 36, Laws of
Kenya.)
“In an action for Slander in respect of words calculated to disparage the plaintiff
in any office, profession, calling, trade or business held or carried on by him at
the time of publication, it shall not be necessary to allege or prove special
damage whether or not the words are spoken of the plaintiff in the way of his
office, profession, calling, trade or business.
It follows that any words spoken of a man which are reasonably likely to injure
him in his office, profession, calling, trade or business will be actionable per se.
It matters not how humble the office may be, so long as it is lawful.
230
Imputation of unchastity or adultery of any woman or girl
Words spoken and published which impute unchastity or adultery to any

woman or girl, shall not require prove of special damage to render them
actionable.
In Kerr –v- Kennedy (1942) 1 K.B. 409
The court was of the opinion that the term “unchastity” includes
Lesbianism.
Essentials of defamation generally
Whether defamation consists of Libel or Slander the following requisites are

common to both, and must be proved by the plaintiff.
(i) The words must be defamatory
(ii) They must refer to the plaintiff
(iii) They must be maliciously published.
The words must be defamatory

A defamatory statement is one which has a tendency to injure the reputation of
the person to which it refers.
The statement is judged by the standards of the ordinary right thinking members
of the society and the test is an objective one. It is no defence to say that the
statement was not intended to be defamatory, a tendency to injure or lower the
reputation of the plaintiff is enough and a statement may be defamatory although
no one to whom it is published believes it to be true.
Abuse – Mere insult or vulgar abuse does not amount to defamation.
The manner in which the words were spoken and the meaning attributed to them
by the hearers is however important in determining whether the words are
defamatory or simply abusive.
In Penfold –v- West Cote (1806) 2 B & P (W.R.) 335
Where the defendant called out “why don’t you come out you blackguard,
rascal, scoundrel, pen-fold, you are a thief”, it was left to the jury to
decide whether the general abusive words accompanying `thief` reduced
`thief` itself to a mere abuse. The jury gave a verdict that the term `you
are a thief` was not a mere abuse but was defamatory.
The speaker of words must thus take the risk of his hearers construing
them as defamatory and not simply abusive and the burden is upon him to
show that a reasonable man would not have understood them as
defamatory.
Interpretation
231
In interpreting a defamatory statement, the meaning attached to it is not
necessarily the meaning with which the defendant published it but that which is
or may be reasonably given by the person to whom it is published.
The fact that the defendant did not intend to lower the reputation of the plaintiff
is immaterial, so long as the statement has a defamatory meaning to those whom
he makes it. On the other hand, a defamatory purpose will not render the
defendant liable if the statement has not defamatory significance to those it is
published.
A statement is prima facie defamatory when its natural obvious and primary
meaning is defamatory. Such a statement is actionable unless its defamatory
significance is explained away successfully. The burden of such an explanation
rests upon the defendant.Innuendo - The words which the plaintiff complains
may be defamatory in the light of facts and circumstances known to persons to
whom they were published.
An innuendo may thus make words, which are not otherwise defamatory in the
natural and ordinary meaning, to be defamatory. The burden is on the plaintiff to
prove the meaning, which he understood by persons having knowledge of
particular facts.
In Tolley –v- Fry and Sons Ltd (1931) A.C. 333
The plaintiff a famous amateur golfer, was caricatured by the defendant,

without his knowledge or consent, in an advertisement of their chocolate
bar which depicted him with a packet of it protruding from his pocket, the
excellence of which, was likened in some doggerel verse, to the
excellence of the plaintiff`s drive. The plaintiff had let his portrait
exhibited for advertisement, that he had thus prostituted his reputation as a
famous amateur golfer.
232
Held: - that the caricature, as
explained by the evidence, was
capable of being thus
constructed; for golfers testified
that any amateur golfer who
assented to such advertisement
may be called upon to resign his
membership of any reputable
club.
Knowledge of the innuendo by the defendant is immaterial and the

defendant is nevertheless liable for a statement he believes to be innocent
but is in fact defamatory by reason of facts unknown to him but known to
the persons to whom he makes it.
In Cassidy –v- Dally Mirror Newspapers Ltd

(1929) 21 K.B. 331
The defendants published in their newspaper a photograph of one Cassidy
and Miss X together with the words “Mr. Cassidy, the race-horse owner,
and Miss X, whose engagement has been announced.”
Mrs Cassidy was, and was known among her acquaintances, as the lawful
wife of Mr Cassidy although she and Cassidy were not living together.
The information on which the defendants based their statement was
derived from Cassidy alone and they made no effort to verify it from other
sources Mrs Cassidy sued for Libel, the innuendo being that Cassidy was
not her husband but lived with her in immoral cohabitation.
Held: - That the innuendo was established and that as the publication
conveyed to reasonable persons an aspersion on the plaintiff’s moral
character, she was entitled to damages.
233
The words must refer to plaintiff
The defamatory statement must be shown to refer to the plaintiff. A court has power to
dismiss an action on the ground that no reasonable person could conclude that the plaintiff
should be identified with the person mentioned in the statement complained of as
defamatory. If the plaintiff is mentioned by name, there is usually no difficult. It is never
necessary however that the reference to the plaintiff should be express. The reference may
be latent and it is sufficient in such a case the statement was understood, even by one person,
to refer to the plaintiff, even though it remained hidden to all others.
The question is not whether the defendant intended to refer to the plaintiff
but is whether any person to whom the statement was published might
reasonably think that the plaintiff was referred to in Hulton –v- Jones
(1910 J.A.C. 20)
A newspaper published a humorous account of a motor festival at Dieppe

in which one Artemus Jones displayed as a churchwarden at Peckham was
accused of living with a mistress in France. The writer of the article was
ignorant of the existence of any person by the name as that of a fictitious
character in the article. However, there was in fact a barrister named
Artemus Jones, who was not a church warden did not live at Pekcham and
had not taken part in the Dieppe festival. He sued for Libel. His friends
swore that they believed the article to refer to him.
Held: - That the newspaper was responsible for Libel.
On appeal to the House of

Lords
The decision was unanimously affirmed by the House of Lords who held
further that if reasonable people would think the language to be
defamatory of the plaintiff it was immaterial that the defendants did not
intend to defame himIn Newstead –v- London Express Newspapers
Ltd (1940) I K.B. 377
The Court of Appeal carried Hulton –v- Jones further in two dimensions.
The held that;
(a) The principle applies where the statement truly relates to a real
person A, and is mistakenly but
reasonably thought to refer to another real person B.
(b) Absence of negligence on the defendant`s part is relevant only in
the sense that it may be considered by the jury in determining
whether reasonable people would regard the statement as referring
to the plaintiff; otherwise it is no defence
234
In Newsteads Case
The defendant published an account of a trial for bigamy of Harold

Newstead a 30 year old comber well barman but it was untrue of the
plaintiff, Harold Newstead, aged about 30 years, who was a hairdresser in
Camberwell.
Held: The defendants were liable as reasonable persons would have

understood the words to refer to the plaintiff.
Defamation of a class
A problem arises where a defamatory statement refers to a class of people
to which the plaintiff belongs. The test is the same i.e. would a sensible
ordinary person identify the plaintiff as the person defamed?
In Eastwood –v- Holmes (1858) 1 F & F 347 at 3349 Willes J stated
“If a man wrote that all lawyers were thieves, no particular lawyer could
sue him unless there was something to point to the particular individual.”
The question of whether an individual can sue in respect of words, which

are directed against a group, or body or class of persons generally was
considered by the House of Lords
In Knuppfer –v- London Express Newspaper Ltd 1944 A.C. 116 and
the law may be summarised as follows: -
The question is whether the words are published “of the plaintiff”
in the sense that he can be said t be personally pointed at.
Normally where the defamatory statement is directed to a class of

people no individual belonging to the class is entitled to say that the words
were spoken of him. Per Lord Porter,
“no doubt it is true to say that a class cannot be defamed as a class,
nor can an individual be defamed by a general reference to the class
to which he belongs.”
Words which appear to apply to a class may be actionable if there

is something in words, or the circumstances under which they were published
which indicates a particular plaintiff or plaintiffs.
235
If the reference is to a Limited class or group e.g. trustees, members
of a firm, tenants of a particular building, so that the words can be said to
refer to each member, all will be able to sue
Whether there is any evidence on which the words can be regarded

as capable of referring to the plaintiff is a matter of law for the Judge. If
there is such evidence then it is a question of fact whether the words lead
reasonable people who know the plaintiff to the conclusion that they do refer
to him.
In JÀnson –v- Stuart 9787) 1 7. R 748

A newspaper paragraph stated, “This diabolical character, like
Polyphemus the man eater, has but one eye, and is well known to all
persons acquainted with the name of a certain noble circumnavigator.” It
was clear that the plaintiff was the person indicated on his giving proof
that he had one eye and bore a name similar to that of Anson, the famous
admiral.
The words must be `maliciously` published

Publication is communication of the words to at least one person other
than the person defamed.
Communication to the plaintiff himself is not enough for defamation

constitutes injury to ones reputation, and reputation is what other people
think of a man, not his own opinion of himself.
It is normally said that the words must be published maliciously but this is
purely formal, and is usually inserted in the plaintiff’s statement of claim
for the purpose of inflating damages where there has been spite or
deliberateness
Express make in the sense of spite or ill motive will usually defeat the
defences of fair comment and qualified privilege.
Communication between spouses about a 3rd party is not publication. This

is explained by the fiction of unity between husband and wife. A
236
communication by a third party to one spouse about the other is however
publication.
By dictating a defamatory letter to his secretary, an employer commits

Slander. If the secretary reads it back to him or hands over the typed
copy, she is not making a fresh publication.
A statement not heard by the recipient because e.g. he is deaf or he does

not understand the language is not treated as having been published nor is
a person liable if a 3rd party on his own initiative hears or sees the
defamatory matter. However he will be liable for the statement which he
intended a 3rd party to know or should have foreseen might come to his
attention.
In Huth –v- Huth (1915) 3 K.B 32

Opening a letter sent through by a butler out of curiosity and in breach of
his duties was held not to amount to publication by the defendant.
However, per Lord Reading

C.J. at P. 40
There would have been publication by the defendant if the letter, whether
sealed or unsealed, had not been marked “private” and had been opened
and read by the plaintiff`s correspondence clerk in the course of his duty.
A defendant should anticipate that a husband might open his wife`s letters
and equally a letter addressed to a businessman may be opened by a
secretary and therefore the defendant will be responsible for the resulting
publication unless the letter was clearly marked “personal” or “private”
The burden of prove of publication is on the plaintiff but in many

circumstances this burden is eased by certain rebuttable presumptions of
fact, e.g. An open postcard or a telegram message is deemed to have been
published to those who would, in the ordinary course of transmission,
normally see it.
Spoken words are deemed to have been published to people within earshot
237
Repetition of a statement
One who respects a defamatory statement made by another person is
liable for the repetition and this constitutes a fresh publication even
though the person and not know that the statement is defamatory.
However, the original maker of the statement is liable for such re-
publication if he has authorised it or if it seems reasonably foreseeable.
In Eglantine Inn Ltd. –v- Smith (1948) N.I 29.
The printers were held liable on this principle because they clearly
envisaged the distribution of the defamatory matter among the public and
could, therefore, be deemed to have authorised it.
Every repetition is a fresh publication that gives rise to a fresh cause of

action against each successive publisher.
In Vizentally –v- Mudle`s select Library Ltd.
The owners of a circulating Library were held liable for allowing people
to read some books which the publisher had asked them to return as they
might contain defamatory matter.
DEFENCES TO DEFAMATION
Unintentional Defamation
Under common Law, the fact that the maker of a statement was unaware
of the circumstances making it defamatory does not absolve him from
liability
The Defamation Act seeks to redress this situation by enabling the

defendant to make an òffer of amends` for an innocent defamation
Under the Act, words shall be treated as innocently published in relation

to another person if and only if: -
(a) The publisher did not intend to publish them of and concerning that
other person, and did not know of circumstances by virtue of which
they might be understood to refer to him; or
(b) The words were not defamatory on the face of them, and the
publisher did not know of circumstances by virtue of which they
might be understood to be defamatory of that person, in either case,
the publisher has exercised all necessary care in relation to the
publication.
The Defamation Act provides further that an offer of amends is an offer

In any case to publish or join in the publication a suitable
correction and apology; and
Where copies of a document or record containing the words have
been distributed by or with the knowledge of the person making the
offer, to take such steps as are reasonably practicable on his part to
notifying persons to whom copies have been so distributed that the
words are alleged to be defamatory of the party aggrieved
238
If the offer of amends is acceptable by the party aggrieved, and
duly performed, no proceedings for Libel or Slander may be taken
or continued by that party making the offer in respect of the
publication in question.
If the offer of amends is not accepted by the party aggrieved, then it

is a defence in any proceedings by him. For the Libel or Slander to
prove that;
(a) The words were published innocently in relation to the
plaintiff
(b) The offer was made as soon as it practicable after the
defendant received notice that they were or might be
defamatory of the plaintiff; and
(c) The words were published without malice.
This provision of the Defamation Act is said to have mitigated the rigidity
of Common Law only partially as an offer of amends has so many
qualifications and technical requirements that it is unlikely that it will
avail many defendants.
Consent and assumption of risk

If the plaintiff expressly or impliedly assents to the publication of the
matter which is true on the face of it, the defendant is not liable; and this
is so even if it appears that some persons may interpret the statement in a
sense much more prejudicial to the plaintiff than is warranted by the plain
meaning of the words
In Cookson –v- Harewood (1932) 2 K.B 4

Scrulton L.J. said
“if you get a true statement and an authority to publish the true statement,
it does not matter in the least what people will understand it to mean.”
The defence of consent has been regarded as an instance of voluntary

assumption of risk (volentinon fit injuria). This defence was upheld in
Chapman –v- Elsemele (discussed in gen. Defences) where the plaintiff
by being a member of the Jockey Club was deemed to have consented to
publication of a report in the Jockeys Journal.
Justification or truth
239
The plaintiff does not have to prove that the statement complained of was
false. On the contrary the burden is on the defendant to prove that the
statement was true. Truth is a defence because the law will not permit a
person to recover damages in respect of an injury to a character, which he
either does not have or ought not to posses. The defendant must establish
the truth of the precise charge that has been made which is ultimately a
matter of interpretation of the facts.
In Wakley –v- Cooke (1849) 4 exch. 511
The defendant called the plaintiff a “Libellous Journalist”. He

proved that the plaintiff had been found liable for Libel once. The
court took the view that this words did not mean that the plaintiff
was held liable on one occasion but meant that the Journalist
habitually libelled people. The defence of truth accordingly failed.
The defendant must justify the statement by showing that it was

substantially accurate. The standard of proof of justification is the normal
civil one of balance of probabilities, but as is other civil cases, the
seriousness of the defendant’s allegation may be taken into account in
determining whether he has discharged that burden.
The defence will not fail if the truth of several charges is not established
provided that having regard of the truth of the remaining charges, the
charge not proved does not materially injure the plaintiffs reputation.
In Alexander –v- North Eastern railway (1865) 6 B & S 340
The defendants published a statement that the plaintiff had been sentenced
to a fine of 1 or 3 weeks imprisonment. They justified this by proving that
he had actually been sentenced to a fine of 1 or 2 weeds imprisonment.
The statement was held to be substantially true.
One difference between the defence of justification and the defences of

fair comment and qualified privilege is that even malice on the part of the
defendants does not deprive him of the defence of justification.
The defence of justification is a dangerous defence because if the

defendant fails to prove the truth of the statement he has made he may end
up paying aggravated damages as insisting that a statement is true without
proving amounts to fresh publication hence fresh defamation.
In Broadway Approvals Ltd –v- Odhams press Ltd. (No.2) (1965) 1.

W. L. R. 805, at P. 825 Per Davis L. J. – A plea of justification should
240
not, of course be made unless the defendant has evidence of the truth of
the statement
Fair Comment
This defence stems from the belief that hones and fair criticism is
indispensable in every freedom loving society. The law weighs the
interest of the plaintiff against the freedom of speech and it is for the
judge to rule whether any comment was called for in a particular situation
and to say whether the statements are of facts or opinions, and if they are
opinions, whether they are honest and fair.
The requirements of this defence are as follows: -

(i) Public Interest
The matter commented on must be of public interest.
In London Artist Ltd –v- Litler (1969) 2 QB 375, at P.391, per Lord Denning
M. R.
“Whenever a matter is such as to affect people at Large so that they may be

legitimately interested in or concerned at what is going on or what may happen
to them or to others then it is a matter of public interest on which everyone is
entitled to make fair comments. The reference to people at large should not be
taken to suggest that if the statement complained of refers to one person or a few
persons it can never be of public interest.”
Matters of government, National and Local Management of public and religious

institutions, the conduct of foreign policy and even the behaviour of holders of
public office are matters of public interest.
(ii) The comment must an opinion on true facts
Fair comment is available only in respect of expressions of opinion. In fair

comment it is not necessary to prove the truth of the comment, but that the
opinion was honestly held
The defence of fair comment only lies on facts which are proved to be true, and
on statements of fact not proved to be true but which were made on a privileged
occasion.
The comment itself need not be true, though. It must be honestly made, but the
facts upon which the comment is made must be true unless they are privileged.
If the facts are untrue, the defendant will not succeed in fair comment merely by
proving that his comment is honestly made.
In Merivale –v- Carson (1887) 220. Q. B. D. 275
It was held that a defendant who implied that a play was adulterous could not
rely on this as a fair comment where the court found as a fact that adultery was
not dealt with in the play.
Sometimes it is difficult to differentiate a statement of facts and a comment e.g. a

statement that X was drunk last night and his behaviour was disgraceful – such a
statement of opinion. If X`s behaviour after drinking was in fact disgraceful,
241
then it is a statement of fact. If however, the second statement is a statement of
opinion, then it is the subject of a fair comment.
Every statement must be taken on its merits. The same words may be a
statement of facts or an opinion depending on the context. To say that “A is a
disgrace to human nature” is an allegation of fact. But to say, “A murdered his
father and is therefore a disgrace to human nature,” the latter words are plainly a
comment on the former.
In Dakhyl –v- Labouchere (1908) 2 K. B. 325
The plaintiff described himself as “a quack of the rankest species.”
Was this a comment or an allegation of fact

It was held by the House of Lords that it was a comment.
The comment must be fair – The comment must be honest and not actuated by
malice. For comment to be fair it must first of all be based upon true facts in
existence when the comment was made. One cannot invent untrue facts about
another then comment about them. To this however there is one necessary
exception, namely, a fair comment may be based on an untrue statement which is
made by some person upon a privileged occasion e.g. a statement of a witness in
the course of judicial proceedings, and properly attributed to him. (NB. The
comment here should however be based on the untrue statement of another
person, not the person making the comment.)
In assessing fairness, it is important that the defendant honestly holds is opinion.

It is not for the court to substitute its own judgement as to what is fair. The test
given by Lord Esher M. R. in Merivale –v- Carson (1887) 20 Q. B. D. 275 at
281 was;
“Would any fair man, however prejudiced he may be, however exaggerated or
obstinate his views, have said that which this criticism said of the work which is
criticised.”
Absence of Malice - The defence will be defeated by prove of malice, which

here means èvil motive` or `spite`
In Thomas –v- Bradbury, Agnew & Co Ltd. (1906) 2 K.B. 627
The court of appeal held that a book reviewer for punch magazine was hostilely
motivated against the plaintiffs` Books which was evident not only by the review he
wrote but also by his behaviour in the witness box. His behaviour displayed malice
which negated the plea of fair comment.
Privilege
There are two categories of privilege
 Absolute privilege
 Qualified privilege
Absolute privilege
242
A privileged statement may be defined as one which is made in such
circumstances as to exempt one from the rule that a person attacks the
reputation of another at his own risk.
A statement is said to be absolutely privileged when it is of such a nature that no

action will lie for it, however false or defamatory it may be and even though it is
made maliciously.
The defence is available in the following cases;
Any statement made in the course of and with reference to Judicial proceedings
by an judge, jury, party, witness or advocate.
Fair and accurate report in any newspaper of proceedings heard before any court.
Any statement made in parliament by a member of parliament
Reports, papers, votes and proceedings published by the order and/or under the
authority of the National Assembly.
Communication made by one officer of state to another in the course of his
official duty.
Communication between an advocate and his client in connection with litigation.
Communication between husband and wife.
Qualified Privilege
It is limited in scope.
When an occasion of qualified privilege exists, a person provided he is not

actuated by malice is entitled make defamatory statements about another. Like
absolute privilege, here the right to freedom of speech prevails over the right of
reputation but only to a limited extend.
The statement must be made honestly and without any indirect or improper
motives. Qualified privilege is thus an intermediate case between absolute
privilege and absence of privilege.
The General principle is that the statement is protected if it is fairly made by a

person in discharge of some public or private duty whether legal or moral or in
the conduct of his own affairs in matters where his interest is concerned.
No complete list of such occassions is possible but it generally agreed

that the main instances are: -
Statement made in the performance of a duty
A statement is conditionally privileged if this is made in the performance of any

legal, social or moral duty. Imposed upon the person making it.
The privilege is that of the publisher, the person to whom the statement is
published needs no privilege because he commits no tort. Never the less it is
essential that the person to whom the statement is made has a corresponding
243
interest or duty to receive it. This is not to say that both parties must have a duty
or both an interest; one may have an interest and the others a duty.
The duty need not be one enforceable by law, it is sufficient that by the moral
standards of right conduct prevalent in the community, the defendant lay under
an obligation to say what he did. It is not enough that he believed himself to be
under such duty/obligation, it is for the judge to decide whether on facts such a
duty existed.
A father or a near relative may warn a lady as to the character of the man whom
she proposes to marry (Todd-v- Hawkins)
In Watt-v- Longsdon (1930) I. K. B. 130
The defendant, a company director, informed the chairman of the board of

directors of his suspicion that the plaintiff, an employee of the company, was
misbehaving with women. He also informed the plaintiff’s wife.
Held: That the communication to the Chairman was privileged but not to the
wife for although she had an interest in hearing about the allegation, the
defendant had no moral or social duty to inform her.
(a) Statement made in protection of an interest\
Even where there is no duty to make the statement, it is
nevertheless privileged if it is made in the protection of some
lawful interest of the person making it e.g. If it is made in the
defence of his own property or reputation but here also there
must be a reciprocity i.e. there must be an interest to be
protected on one side and a duty to protect that interest on the
other.
In Adam-v- Ward
The plaintiff made a complaint in the house of commons against the

general scobell containing charges of wounding character. The General
Scobell, as he was compelled to do by regulations referred the matter to
the Army council which after investigations found that the the attack was
unjustifiable. The army council ordered the defendant to publish in the
newspaper a letter to the General Scobell vindicating him and also
containing statements defamatory of the plaintiff. The plaintiff sued.
Held: The occasion of publication was privileged and that the privilege was
not destroyed either by the number of people whom the publication might reach
or by reason of the fact that the publication contained matter defamatory of the
plaintiff had publicity attacked the character of the defendant.
In Osborn-v- Boulter
Where some brewers answered a complain by a publican of the poor quality of

their beer by voicing a suspicion that the publican had watered the beer, it was
held that the latter publication was covered by privilege.
The same principle is applicable even when the interest of the defendant is
merely the general interest which he possesses in common with all the others in
244
the honest and efficient exercise by public officials of duties entrusted to them.
Thus any member of public may make charges of misconduct against any public
servant and the communication may be privileged, but the charge must be made
to the proper person i.e. those who have a corresponding interest.
A communication to the wrong person e.g. a publication to the world at large in a

newspaper or otherwise is an excess of privilege and the privilege will thereby be
cost
(b) Fair and accurate reports of parliamentary proceedings
This qualified privileged protects the advantage of publicity
against any private injury resulting from the publication. It is
not limited to newspaper reports and covers other reports e.g.
Broadcast reports. In order to qualify as fair and accurate the
report does not have to be a full precis of the debate: a
“parliamentary sketch” may properly select those portions of
the debate, which will be of public interest. What matters is
whether the report is fair and accurate in so far as the debate
concerned the plaintiff’s reputation.
(c) Communication between advocate and client
This is covered by both qualified and absolute privilege.
Professional communication between an advocate and client in
connection with litigation is absolutely privileged as was held
in More-v-Weaver 91928) 2 K. B. 520
Other communications which have nothing to do with

litigation e.g. the drawing of a clients will are covered by
qualified privilege
The general restriction is that the communication has to be a

professional one for it to be privileged and also that the
relationship of advocate – client must be proved. What passes
between an advocate and a client if the relationship has been
established is privileged if, within a very wide and generous
ambit of interpretation, it is fairly referable to the relationship,
or, put in another way, per Lord Atkin in Minter-v- priest
(1930) A. C. 558 at 581 “if it consist of professional
communications passing for the purpose of getting or giving
professional advice.”
This would exclude a piece of gossip intersected by the client

in a conversation on, say, land registration e.g. “Have you
heard that Jones has run off with Mrs Brown?”
In Minter-v- Priest
The house of Lords held that conversation relating to the

business of obtaining a loan for the deposit sum to be paid on
the purchase of Land fall under the professional work of a
solicitor, but that conversations about speculation in land to
enable the solicitor to share the profit do not and that slanders
of a third party uttered by the solicitor in the course thereof are
not privileged.
Malice
245
The defence of a qualified privilege is negativated by malice.
Malice means the presence of improper motive or even gross and

unreasoning prejudice. A statement is malicious if it is made for some
other purpose other than the purpose for which the law confers the
privilege.
In Horrocks-v- Lowe (1975) A. C. 135
The court stated that malice destroys the privilege and leaves the
defendant subject to the ordinary law by which a mistake, however
reasonable, is no defence.
The law requires that a privilege shall be used honestly, but not that it
should be used carefully.
STRICT LIABILITY: THE RULE IN RYLANDS-v- FLETCHER

Anyone who in the course of non-natural user of his land, accumulates thereon
for his own purposes anything likely to do mischief if it escapes is answerable
for all direct damage thereby caused.
This is the rule in Rylands-v- Fletcher 1866 L. R. I. Ext. 265
Facts: - The defendant employed independent contractors to construct a

reservoir on the land, which was separated from the plaintiffs land by adjoining
land. In the course the works the contractors came upon some old shafts and
passages on filled with earth. The contractors did not block them up. Unknown
to them, the shafts connected their land with the plaintiff’s mines. When the old
shafts into the plaintiffs mines and flooded the mines. It was found as a fact that
the defendant was not negligent, although the contractors had been.
However, although the defendant was neither negligent nor vicariously

liable in the tort of negligent for the negligence of his independent
contractors, he was held liable by thoth the court of exchequer chamber
and the House of Lords.
The judgement of the Court of Exchequer chamber was delivered by Blackburn

J. at P. 279-280 and it has become a classical exposition of doctrine.
“We think that the true rule of law is, that the person who for his own purpose
brings on his land and collects and keeps there anything likely to do mischief if it
escapes, must keep it in a his peril, and, if he does not do so, is prima facie
answerable for all the damage which is the natural consequence of its escape.”
This may be regarded as the “rule in Rylands-v- Fletcher,”
But what follows is equally important. The court further said;
“He can excuse himself by showing that the escape was owing to the plaintiffs default;… or the act
of God; It is unnecessary to inquire what excuse would be sufficient. The general rule, as above
246
stated, seems to be in principle just. The person whose grass or corn is eaten down by the escaping
cattle of his neighbour or whose mine is flooded by the water from neighbour`s reservoir, whose
cellar is invaded by filth of his neighbours privy, or whose habitation is made unhealthy by the fumes
and noiseme vapours of his neighbours alkali works, is damnified without any fault of his own; and it
seems but reasonable and just that the neighbour, who has brought something on his own property
which was not naturally there harmless to others so long as it is confined to his own property, but
which he knows to be mischievous if it gets on his neighbours should be obliged to make good the
damage which ensues if he does not succeed in confining it to his own property. But for his act in
bringing it there no mischief could have accrued, and it seems but just that he should at his peril keep
it there so that no mischief may accrue, or answer for the natural and anticipated consequences and
upon authority, this we think is established to be the law whether the things so brought be beasts, or
water, or filth, or stenches.”
Lord Cairns in the House of Lords upheld this judgement but restricted the scope
of the rule to where the defendant made a “non-natural use” of the Land.
This decision makes it clear that liability was strict in the sense that the
defendant’s liability was neither personal nor based on a mere vicarious liability
for the negligence of his independent contractors.
Requirements of the Rule in Rylands-v-

Fletcher
1. The thing
The rule does not require that the thing should be both likely to escape
and likely to do mischief on escaping. If this were the case, there would
be little difference between the rule in Rylands-v- Fletcher and
negligence. Furthermore, in Rylands-v- Fletcher, the thing need not be
dangerous in itself. The most harmless objects may cause damage on
escape from a person land.
The rule has been applied to a large number of objects including water,
gas, electricity, explosives, oil, vibrations, poisonous leaves of trees, a
flagpist, a revolving chair at a fair ground, acid smuts from a factory, a
car, fire and even at one time gypsies.
In Musgrove-v- Pandelis (1919) 2 K. B. 43
Here the court applied Blackburn J. test Literally where the collected thing
did not itself escape but caused the escape of something else. In this case,
the defendant was held liable under Rylands-v- Fletcher for the escape of
a fire which started in the engine of his car was found to be an object
likely to do mischief if it escaped.
The artificiality of this approach was however rejected in Mason-v- Levy

Autoparts (1967) 2 Q.B. 530.
In relation to a fire which began in wooden-packing cases stored in the

defendants Land.
The test applied was whether the objects were likely to catch fire and the
fire spread outside the defendants premises. The liability was a strict one
if this occurred.
In A. G.-vs- Corke (1933) Ch 89
A landowner was held liable under Rylands-v- Fletcher for permitting the
camping on his land of gypsies (cavaran-dwellers) who trespassed and
committed damage on neighbouring land.
247
This case has however received general disapproval in applying the rule in
Rylands-v- Fletcher to human beings. The objection has been that “things”
does not include human beings and that liability in the above case should have
been based on nuisance or negligence. (Smith-v-Scott (1973) Ch. 314)
2. Accumulation
The thing must be brought into the land for the defendant’s purposes. The
defendant need not own the land into which the thing is brought. A
temporary occupier of land such as a lesee or a person physically present
on the land but not in legal occupation of it such as a licensee is equally
within the scope of the rule and is liable for damage caused upon escape
or a thing he has brought onto the land.
In Charing Cross Electricity Supply Co. –v - Hydraulic
Power Company (1914) 3 K. B. 772
The rule applied to one who had statutory poser to lay electricity
cables under the highway.
In Rigby-v- Chief Constable of North-Amptonshire (1985) I.W.L.R.

1241
The court stated that the rule applied to cases were the defendant was in
no sense in occupation of the land; in this case by firing a canister of gas
into the plaintiffs
The requirement that the thing should be on the land for the purpose of
the defendant does not mean that it must benefit the defendant.
In Smeaton-v-Ilford Corporation (1954)

I ch,450
It was stated that a local authority which was under a statutory duty to
collect sewage collected it for its own purposes within the rule in
Rylands-v-Fletcher.
Where the thing is naturally present on the defendant cannot be liable for
its escape under Rylands-v-Fletcher. The escape of weeds, rocks and
floodwater is thus outside the scope of the rule but recent decisions have
established possibility of an action in nuisance for such escape.
The accumulation must thus be voluntary.

3. Non-Natural User of Land
This is the most flexible and elusive ingredient of liability.
Blackburn J. Understood `natural` to mean things naturally on the

land and not artificially created however uncertainty crept in as a
result of Lord Cairns qualification that there must be à non-natural
user` of the land.
248
Through a series of cases, court have come to look upon `natural` as
signifying something which is ordinary and usual even though it might be
artificially instead of non-artificial
Non-natural use of land was explained by the privy council in Richard-v-

Lothian (1913) A. C. 263 at 279 per Lord Moulton.
“It must be some special use bringing with it increased danger to

others and must not merely be the ordinary use of the land or such a
use as is proper for the general benefit of the community.”
What is natural is now viewed differently in different cases. Non-natural

use of land is generally constituted by certain activities as the storage on
the land in bulk of water, electricity, gas and the collection of sewage by
local authorities. It is however, arguable that many of the above example
should be held to be natural use according to the privy council`s definition
as being for the general benefit of the community. In British celenese
Ltd.-v-A. H. Hunt Ltd. (1969) I. W. L. R. 959
It was held that the benefit derived by the community from the
manufacturing of electrical and electronic components made the use of
land for such purpose and the storing of strips of metal foil thereon a
natural use of the land.
It is thus to be noted that the scope of `non-natural user` of land has

narrowed over the years. The decision will now depend on the facts of
each case. It has been held that generating steam or electricity is not
“nonn natural” But that the storing of industrial water under pressure, or
gas and electricity in bulk is a non-natural use.
4. Escape
There is no liability under the rule unless there is an escape of the
substance from the land where it is kept.
In Read-v-Lyons &Co. Ltd.
The defendants operated on ammunition Factory as agents of the ministry

of supply. The plaintiff was an appointed inspector for the ministry. In
course of carrying out her duties in the factory an explosion occurred
causing her injuries. She based her claim against the defendants on
Rylands-v-Fletcher making no assertion that the defendants had been
negligent.
Held: That Ryland-v-Fletcher was inapplicable because there had been

no escape of the thing that inflicted the injury
The House of Lords defined escape as;
Escape from a place where the defendant had occupation and control over
land to a place which is outside his occupation or control.
It was stated further in this case that Rylands and Fletcher is conditioned
by 2 elements:-
The condition of escape from the land of something likely to do mischief it is

escaped.
249
The condition of non-natural user of the land.
The house of Lords emphasized that the absence of an escape was the basis of
their decision in this case.
5. Damage
Rylands-v-Fletcher is not actionable per se and therefore there must be
prove of actual damage. This appears to mean actual damage to person or
property and it excludes a mere interference with the plaintiff’s enjoyment
of this land, such as would be a ground in an action in nuisance.
Damage recoverable under the rule is limited to damage to person or

property.
In Hale-v-Jennings Bros
The court held that an occupier of land was entitled to damages for
personal injury under the Rule in Rylands-v-Fletcher.
In Cattle-v-Stockter Waterworks Co.
It was held that purely economic loss was not recoverable.
Defences of the rule

1. Consent of the Plaintiff
If the plaintiff has permitted the defendant to accumulate the thing the
escape of is complained of, then he cannot sue if it escapes. Implied
consent will also be a defence; thus a person becoming a tenant of
business or domestic premises at the time when the condition of the
adjoining premises occupied by the landlord is such that the happening of
the Ryland-v-Fletcher type is likely to ensue, is deemed to have
consented to take the risk of such an event occurring.
In Kiddle-v-City Business Properties Ltd (1942) I K.B. 269
The plaintiff became a tenant of the defendant in a house below the house
occupied by the defendant (Landlord). The gutter of the Landlords house
was blocked and when it rained, an overflow of rainwater from the
blocked gutter at the bottom of a sloping roof in possession of the
Landlord and above the tenant’s premises, damaged the stock in the
tenants premises. It was held that the Landlord has a defence as the tenant
impliedly consented to the risk of rainwater overflowing into his premises.
If the accumulation benefits both the plaintiff and the defendant, the
plaintiff may be deemed to have consented to its accumulation e.g. where
for the benefit of several occupants’ rainwater is accumulated on the roof
or a water closet installed or water pipes fitted, the several occupants are
deemed to have consented. On the other hand, the defence is not available
as between a commercial supplier of gas in respect of gas mains under the
highway. In any event an occupier will not be presumed to have
consented to installations being left in a dangerously unsafe state.
2. Contributory Negligence (Plaintiffs own default)
If the damage is caused solely by the act or default of the plaintiff himself
or where the plaintiff is contributory negligent, he has no remedy.
If for instance a person knows that there is danger of his mine being
flooded by his neighbours operations on adjacent lands and courts the
250
danger by doing some act which renders the flooding probable, he cannot
complain (as stated in Miles-v-Forest Rock Granite Co. Ltd (1918) 34
T. L. R. 500)
In Dunn-v-Birmingham Canal & Co (1872) L. R. T. QB 244
Where the plaintiffs worked a mine under the canal of the defendant and
had good reason to know that they would thereby cause the water from the
canal to escape into this mine, it was held that they could not sue in
Rylands-v-Fletcher when the water actually escaped and damaged their
mine.
COCKBURN C. J. said; at p. 260
“The plaintiffs saw the danger, and may be said to have courted it.”
3. Act of third Parties (Act of a Stranger)
Where the occupier of land accumulates things on his land, the rule will
not apply if the escape of the thing is caused by the unforeseeable act of a
stranger.
In Rickards-v-Lothian (1913) A. C. 263
The plaintiff failed in his claim against the defendant where a third party
had deliberately blocked up the waste pipe of a lavatory basin in the
defendants premises, thereby flooding the plaintiff`s premises.
The basis of the defence is the absence of any nature of control by the
defendant. Over the acts of a stranger on his land and thus the burden is
on him to show that the escape was due to the unforeseen act of a stranger
without any negligence on his own part.
If on the other hand, the act of the stranger could reasonably have been
anticipated or its consequences prevented, the defendant will still be
liable. While it is clear that a trespasser is a `stranger` for this purpose,
other persons included in this term depend on circumstances.
The occupier is of course liable for the defaults of his servants in the
course of an independent contractor unless it is entirely collateral. He is
also liable for the folly of a lawful visitor as well as misconduct of any
member of his family on his premises for he has control over them.
It has also been argued that he ought to be responsible for guests and
licensees on his land but a distinction ought to be taken here for it would
be harsh to hold an occupier liable for the act of every casual visitor who
has bare permission to enter his land and of whose propensities to evil he
may know nothing of e.g. an afternoon caller who leaves the garden gate
open or a tramp who asks for a can of water and leaves the tap on.
Possibly the test is, “can it be inferred from the facts of the particular case
that the occupier had such control over the licensee or over circumstances
which made his act possible that he ought to have prevented it? If so, the
occupier is liable, otherwise not.”
As regards the escape of dangerous elements brought on the owners land

by another person, the owner is not liable under the Rule. (Whitmores-v-
Stanford (1904) Ich 427)
4. Act of God
251
Where escape is caused directly by natural causes without human
intervention in “circumstances which not human foresight can provide
against and of which human prudence is not bound to recognize
possibility” the defence of act of God applies and the occupier is thus not
liable. (See Nicholas-v-Maisland – Discussed in gen. Defences.)
5. Statutory Authority
Sometimes, public bodies storing water, gas, electricity and the like are by
statute exempted from liability so long as they have taken reasonable care.
It is a question of statutory interpretation whether, and, if so, to what
extent liability under Ryland-v-Fletcher has been excluded.
In Green-v-Chelsea Waterworks Coo. (1984) 70 L.

T. 547
A main belonging to a waterworks company which was authorised by

parliament to lay the main, burst without any negligence on the part of the
company and the plaintiffs premises were flooded; the company was held
not liable
On the other hand, In Charing Cross Electricity Co-v-Hydraulic Power

co (1914) K. B. 772
Where the facts were similar, the defendants were held liable. The
defendants had no exemption upon the interpretation of their statute. The
distinction between the cases of is that the Hydraulic Power Company
were empowered by statute to supply water for industrial purposes, that is,
they had permissive power but not a mandatory authority, and they were
under no obligation to keep their mains charged with water at high
pressure, or at all. On the other hand, the Chelsea water works Company
were authorized by statute to lay mains and were under a statutory duty to
maintain a continuous supply of water; it was an inevitable consequence
that damage would be caused by occasional bursts and so by necessary
implication the statute exempted them from liability where there was no
`negligence`.
The question whether the rule in Rylands-v-Fletcher applies in all its

strictness to local authorities has been considered but not decided.
VICARIOUS LIABILITY
The expression “vicarious liability” signifies liability which A may incur to C for
damage caused to C by the negligence or other tort of B. It is not necessary that
A should have participated in any way in the commission of the tort nor that a
duty owed in Law by A to C shall have been broken. What is required is that A
should stand in a particular relationship to B and that B`s tort should be referable
in a certain manner to that relationship.
The commonest instance in Law is the liability of a master for the torts of his
vicarious liability generally arises from a contract of service.
Master-Servant Relationship
Who is a servant?
252
Since vicarious liability generally arises from a contract of service (“servant”) not a contract of
services (“independent contractor”) it is important to determine the indicia of a contract of service.
In an often cited statement in Short-v-J & W Henderson Ltd (1946) 62 T. L.

R. at 429, Lord Thankerton said that there are four indicia of a contract of
service;
(a) The master`s power of selection of is servant
(b) The payment of wages or other remuneration
(c) The master`s right to control the method of doing the work, and
(d) The master`s right of suspension or dismissal.
This list has been found helpful in determining whether a master-servant
relationship exists but it is not conclusive. It is not possible to compile an
exhaustive list of all the relevant considerations. The court stated in Market
Investigations Ltd.-v-Minister of Social Security (1969) 2 QB. 173 p. 185 per
Cooke J:
“The most that can be said is that control will no doubt always have to be
considered, although it can no longer be regarded as the sole determining factor;
and that factors which may be of importance are such matters as whether he hires
his own equipment, whether he his own helpers, what degree of financial risk he
takes, what degree of responsibility for investment and management he has, and
whether and how far he has an opportunity of profiting from sound management
in the performance of his task.”
The control test is however not conclusively determinant of master-servant relationship especially
when dealing with professionals or men of particular skill.
In Morren-v-Swinton (1965) W. L. R. 576
The defendants engaged a firm of consultant engineers to supervise the construction of certain
sewage works. Under the contract, the defendants were supposed to appoint a resident engineer (to
be approved by the consultants) to supervise the works under the general supervision and control of
the consultants.
The plaintiff was appointed as a resident engineer by the defendant and approved
by the consultants pursuant to the terms of the contract. He was paid by the
defendant and was entitled to holidays with pay and was liable to be dismissed
by the defendants. He was however delegated to the consultants and was under
their general supervision and control.
Held: Absence of control by the defendant was not necessarily the most
important test. The other factors were enough to show that the plaintiff was
clearly employed by the defendant under a contract of service.
It is thus important to state that whether or not a contract of service exists will
depend on the general nature of the contract and no complete general test exists.
More helpful is the well-known statement of Denning L. J. in Stevens-v-
Brodribb Sawmilling Co. Pty Ltd. (1986) 63 A. L. R. 573
“It is often easy to recognize a contract of service when you see it, but difficult to say wherein the
distinction lies… One feature which seems to run through the instances is that, under a contract of
service, a man is employed as part of a business, and his work is done as an integral part of the
business; whereas under a contract of services, his work, although done for the business, is not
integrated into it but is only an accessory to it.”
An independent contractor will commonly be paid “by the job” whereas a

servant will generally receive remuneration based upon time worked. But a
253
piece worker will still be a servant; and a building contractor is a contract of
services notwithstanding that it may contain provisions for payment by time.
Once the Master-servant relationship is established, the master will be liable for
all torts committed by the servant in the course of the employment.
Hospitals
It has been held that radiographers, house surgeons, whole time-assistant
medical officers and probably staff anaesthetics are employees of the
hospital authority for purposes of vicarious liability.
But visiting consultants and surgeons are not employees of the hospital and thus
the hospital is not liable.
In Hillyer-v- St-Bartholomew`s Hospital (1909) 2 K. B. 820
The plaintiff bought an action against the governor of an hospital for injuries
allegedly caused to him by negligence of an operating surgeon. The hospital was
a charitable body.
Held: -That the action was not maintainable. The court further stated that the
only duty undertaken by the governors of public hospitals towards a patient who
is treated in the hospital is to use due care and skill in selecting their medical
staff. The relationship of master and servant does not exist between the
governors and the physicians and surgeons who give their services at the
hospitals (i.e. who are not servants of the hospital.)
The court further stated that the nurses and other attendants assisting at the
operation cease, for the time being, to be the servants of the governors, in as
much as they take their orders during that period from the operating surgeon
alone and not from the hospital authorities.
Where there is a contract between the doctor and the patient, the hospital is not
liable.
A hospital is thus liable for negligence of doctors and surgeons employed by the
hospital authority under a contract of service arising in the course of the
performance of their professional duties. The hospital owes a duty to give
proper treatment to its patients.
In Cassidy-v-Minister of Health 91951) 2 K. B. 343 The plaintiff entered a

hospital for a operation of his left hand, which necessitated post-operational
treatment. While undergoing the treatment he was under the care of a surgeon
who performed the operation and who was a whole-time assistant medical officer
of the hospital, the house surgeon and members of the nursing staff, all of whom
were employed under a contract of service. At the end of the treatment it was
found that his hand had been rendered useless.
Held: - The hospital was liable as the owners lay on it to prove that there had
been no negligence on its part or on the part of anyone for whose acts or
omissions, it was liable and that the owners had not been discharged.
A hospital may also be liable for breach of duty to patients to provide proper
medical services although it may have delegated the performance of that duty to
persons who are not its servants and its duty is improperly or inadequately
performed by its delegate. An example is where the hospital authority is
254
negligent in failing to secure adequate staffing as where a delegate is given a
task, which is beyond the competence of a doctor holding a post of his seniority.
Hired servants A difficult case arises where A is the general employer of B but
C, by an agreement with A (whether contractual or otherwise) is making
temporary use of B`s services. If B, in the course of his employment commits a
tort against X, is it A or C who is vicariously liable to X? It seems that it must be
one or the other but not both A&C.
In Mersoy Docks and Harbour Board-v-Coggins and Griffith (Liverpool)
Ltd. (1947) A. C. I
A employed B as the driver of a mobile crane. A let the crane to C together with
B as driver to C. The contract between A and C provided that B should be the
servant of C but was paid by A and A alone had the power to dismiss him. In the
course of loading a ship, X was injured by the negligent way in which B worked
the crane. At the time of the accident C had the immediate direction and control
of the operations to be executed by B and the crane e.g. to pick up and move a
piece of cargo, but he had no power to direct how B should work the crane and
manipulate its controls.
Held: - That A as the general or permanent employer of B was liable to X. The

court stated that there is a very strong presumption that a servant remains to be
the servant of the permanent employer although he may be the servant of the
hirer.
The question whether A or C is liable depends on how many factors; e.g. who is
the paymaster, who can dismiss, how long does the alternative service last, what
machinery is employed etc. The courts have however generally adhered to the
view that the most satisfactory test is, who at the particular time has authority to
tell B not only what he is to do, but how he is to do it. This is a question of fact
involving all the circumstances of the case.
Loan of Chattels
In Omrod-v-Crosville Motor Services Ltd. (1953) I W. L. R. 1120 The
owner of a car was attending the Monte Carlo motor rally. He asked a
friend to drive his car from Birkenhead to Monte Carlo where they were
to have a holiday together. Where they were to have a holiday together.
During the journey, on a diverted route, the car was involved in an
accident.
Held: - At the time of the accident, the car was being used wholly or partially for
the owners purposes and thus the friend was an agent of the owner and in so far
as the friend was liable of negligence, the owner was vicariously liable for his
negligence.
Liability in respect f an independent contractor
The employer is generally not liable for torts committed by an independent contractor. The employer
is however liable if he is deemed to have committed the tort. This may occur in the following
instances.
1. Whether the employer has authorized the commission of the tort

In many circumstances, the law will attribute to a man the conduct of
another being, whether human or animal, if he has instigated that conduct.
255
He who instigates or procures another to commit a tort is deemed to have
committed the tort himself.In Ellis-v-Sheffield gas Consumers Co. Ltd. (1853) 2
EL & BL 767
The defendants who had no authority to dig up the streets employed a contractor
to open trenches and lay gas pipes along a street. The contractor carelessly left a
heap of stones on the footpath, the plaintiff fell over them and was injured.
Held: - The defendants were liable since the contract was to do an illegal act, a
public nuisance.
The decision would have been different had it been lawful for the
defendants to dig up the streets.
2. Torts of Strict Liability
The employer is liable in those circumstances e.g. in Rylands-v-Fletcher
the employer was held liable for the acts of his independent contractors as
this was a case of strict liability.
This in torts of strict liability, the employer will be liable even where the tort e.g.
the escape is caused by the negligence of an independent contractor.
In Tarry-v-Aston (1876) I Q. B. D. 314
The defendant employed an independent contractor to repair a lamp attached to

his house and overhanging the footway. As it was not security fastened, the
lamp fell on the plaintiff, a passer-by and the defendant was held liable, because
“it was the defendant`s duty to make the lamp reasonably safe, the contractor had
failed to do that. Therefore, the defendant has not done his duty and is liable to
the plaintiff for the consequences.
Here liability was strict.

3. Negligence
Where there is an element of personal negligence on the part of the
employer as to make him liable for the acts of an independent contractor.
E.g. where the employer is negligent or careless in employing an

independent contractor for instance, where the contractor is incompetent.
Failure to provide precautions in a contract where there is risk of harm

unless precautions are taken can make the employer liable for the tort of
the contractor.
In Robinson-v-Beaconsfield Rural Council (1911) 2

ch 188
The defendant employed an independent contractor, one hook, to clean

out cesspools in their district. No arrangements were made for the
disposal of the deposits of sewage upon being taken from the cesspools by
hook. Hooks men deposited the sewage on the plaintiffs land.
Held: - The defendants had a duty to dispose the sewage and, on

construction of the contract, they had not contracted with hook for the
discharge of this duty (disposing of the sewage) hence they were liable for
the acts of the hook`s men in disposing it on to the plaintiffs land.
4. Where the duty of care is wide
256
An example is where the independent contractor is dealing with hazardous
circumstances, or work which from its very nature, poses danger to other
persons.
In Holiday-v-National Telephone Co (1899) 2 Q B 392
The defendant, a Telephone Company, was lawfully engaged in laying

telephone wires along a street. They passed the wires through tubes,
which they laid in a trench under the level of the pavement. The
defendants contracted with a plumber to connect these tubes at the joints
with lead and solder to the satisfaction of the defendants foreman. In
order to make the connections between the tubes, it was necessary to
obtain a flare from a benzoline lamb of applying heat to the lamb. The
lamb was provided with a safety valve.
The plumber dipped the lamp into a caldron of melted solder, which was
placed over a fire on the footway. The safety valve not being in working
order caused the lamb to explore. The plaintiff, who was passing on the
highway was splashed by the molten solder and injured.
Held: - The defendant were liable because having authorized the

performance of work which from its nature was likely to involve danger to
persons using the highway were bound to take care that those who
executed the work for them did not negligently cause injury to such
persons.
Liability of a master-essentials
For a master to be liable for his servant`s torts the tort must have been committed
“in the course of employment.”
An act is done in the course of employment if;

(a) It was a wrongful act authorized by the master
(b) It was a wrongful and unauthorized mode of doing some act authorized by
the master.
In London County Council-v-Caltermoles (Garages) Ltd. (1953) Ltd (1953) I

W. L. R. 997
The defendant employed a general garage hank, part of whose job involved
moving vehicles around the garage. He was only supposed to push the vehicles
and not to drive them. On one occasion, he drove a vehicle in order to make
room for other vehicles. Whilst doing so, he negligently damaged a vehicle
belonging to the plaintiff.
Held: - That the negligent act was within the course of the garage hand`s
employment although he had carried his duties in an unauthorized manner. His
master was thus vicariously liable.
In Muwonge-v-Attorney-General of Uganda (1967) E. A. 17
The appellant’s father was killed during a riot. The shot which killed him was
fired by a policeman who had seen the appellant’s father ran towards a house and
had concluded that the appellants father was a rioter.
257
Held: - The firing of the shot was an act done within the exercise of the
policeman`s duty in which the government of Uganda was liable as a master
even though the act was wanton, unlawful and unjustified.
If the act is not done within the course of employment, the master is not liable.
In Twine-v-Beans Express. A van driver employed by the defendant had been
expressly forbidden to give lifts to unauthorized persons and a notice to this
effect was displayed on the dashboard. The van driver gave a left to a person
who was killed in a subsequent accident due to the negligence of the van driver.
The windows of the deceased brought an action against the defendant.
Held: - The action by the widows failed because the driver was acting outside
the course of his employment.
In this case the act was expressly unauthorized.
General guidelines in determining whether an act was committed during the

course of employment
1. Look at the mode of doing the work the servant is employed to do.
In Century Insurance Co-v-Northern Ireland Road Transport Board
(1942) A. C. 509
One of the respondent’s employee was delivering petrol to a garage.

While the petrol was flowing from the lorry to the tank, he lit a cigarette
and negligently threw away the lighted match which caused an explosion
damages the appellants property. The action of the employee was treated
as being within the course of employment.
On appeal
Held: - The respondents were liable for the damage caused for such an
action, whilst for the comfort and convenience of the employee could not
be treated as an isolated act as it was a negligent method of conducting his
work.
In Bayley-v-Manchester Sheffield and Lincolnshire Railway W.
The plaintiff was in a train travelling to Macclesfield and he explained this

to the mistakenly believed that the plaintiff was in the wrong train (that
the train was not travelling to Macclesfield) and violently ejected the
plaintiff who suffered injuries.
Held: The defendants were liable because the porter was acting
within the cause of employment.
2. Whether the act was authorized within the limits of time and space e.g. if
one is employed to work between 8.00 a.m. and 5.00 p.m., the master is
only liable for torts committed within that time frame.
Ruddiman & Company-v-Smith (1989) 60 L. T. 709
The plaintiff was using the lower room of the defendant’s house while the
defendant used the upper room for carrying on business. In the upper
258
room there was a lavatory. The clerk, after duty, went to the lavatory to
wash his hands but on turning on the tap and finding no water, went away
without turning the tap off. When water turned on the next morning, it
overflew into the lower room and damaged the plaintiff’s goods.
Held: - The employer was liable for whether or not the use of the lavatory
Within the scope of the clerks employment, it was an event incidental to

his employment.
Storey-v-Ashton (1869) L. R. 4 Q B 476
The defendant, a wine merchant, sent his car man and clerk to deliver
wine and pick up empty bottles. On their way back, they diverted to visit
the clerks house in the course of which they negligently knocked down the
plaintiff and injured him.
Held: - The defendant was not liable for the injury caused by the
negligent driving of the car man for he was, at that time, engaged in a new
and completely unauthorized journey.
3. Whether the act was the initiative of the servant or the master had a
certain control.
In Warren-v-Henlys Ltd (1948) 2 All E. R. 935
Erroneously believing that the plaintiff had tried to drive away from the
garage without paying or surrendering coupons for petrol which had been
put in the tank of his car, a petrol pump attendant used violent language to
him. The plaintiff paid his bill and gave up the necessary coupons and
after calling the police, told the attendant that he would report him to his
employers. The pump attendant then assaulted and injured him. In an
action for personal injuries against his employers.
Held: - That the defendants were not liable for the wrongful act of their
employee. Since the act was one of personal vengeance and was not done
in the course of employment; it not being an act of a class which the
employee was authorized to do or a mode of doing an act within that
class.
In Poland-v-John Parr and Sons
Arthur Hall, a carter was employed by John Parr. Parr and his son were
conveying a wagon with bags of sugar. Arthur, on his way home for
dinner was walking else to the wagon. The plaintiff, a schoolboy, was
walking home in the same direction with his hand upon one of the bags of
sugar.
259
Honestly and reasonably thinking that the boy was stealing sugar, Arthur
gave him a blow on the back of his neck as a result whereof he fell and the
wheel of the wagon injured his foot which was amputated.
Held: - In the circumstance, the carter had implied authority to make

reasonable efforts to protect and preserve the defendants property; that the
violence exerted was not so excessive as to take his act outside the scope
of authority and that the defendants were liable.
4. Where there is an express prohibition: -
An express prohibition does not negate liability i.e. a master does not
escape liability simply because he had an express prohibition. For
liability to be determined, two factors are considered:
Whether the prohibition limits the sphere of employment. If it
does, the master is not liable for an act done outside the sphere.
(Sphere)
Where the prohibition deals with the contract within the sphere of
employment. If it does, the employer will be liable. (Mode)
In Canadian Pacific Ry. Co.-v-Lockhart (1942) A.C. 591 (mode)
A servant of the appellant Company in disregard of written notices

prohibiting employers from using private cars for the purpose of the
company’s business unless adequately insured, used his uninsured
motorcar as a means of execution of work which he was ordinarily
employed to do in the course of which he injured the respondent.
Held: The means of transport was incidental to the execution of

work, which the servant was employed to do and that the prohibitions of
the use of an uninsured motor car merely limited the mode of executing
the work, breach of the prohibition did not exclude the liability of the
company to the respondent.
In Rand-v-Craig (1919) I ch. I (Sphere)
Carters were employed by a contractor to take rubbish from certain works

to his dump and were strictly forbidden not to hip it anywhere else. Some
of the carters, without knowledge of the contractor, and in contravention
of their orders took the rubbish to a piece of unfenced land belonging to
the plaintiff as it was nearer the works that the dump of contractor.
Held: The illegal acts complained of where not within the sphere of
the carter’s employment and consequently the contractor was not liable
for the
5. Whether the act was a deliberate criminal act
In Lloyd-v-Grace Smith & Co (1912) A. C. 716
The plaintiff had sought advice from the defendants, a firm of solicitors,
whose managing clerk conducted conveyancing work without supervision.
He advised the plaintiff to sell some property, fraudulently persuading her
to sign certain documents that transferred the property to him. He
disposed of it and kept the proceeds.
Held: - Even though the fraud had not been committed for the benefit of
the employers, nevertheless they were liable, for the clerk had been placed
260
in a position to carry over such work and had acted throughout in the
course of his employment.
OCCUPIERS LIABILITY
This is the liability of an occupier of premises for damage a done to visitors to
the premises
Unit summary
In this unit you learned about the law of tort ,the definition; the different
forms of tort and the defences available for the injured parties
Summary
Task
What is the relevance and application of the Law of Tort in commercial
transactions?
Task
Self-Assessment
1. Discuss the elements of a tort of
 negligence
 nuisance
Self-Assessment
 malicious prosecution,
2. What are the ingredients of defamation
261

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COURSE MANUAL

DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY

DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY

Dedan Kimathi University of Technology

Fax: +254 - 0708803849

Getting around this Course Manual 7

THE UNWRITTEN SOURCES OF KENYA LAW ............................................ 30

Unit summary ............................................................................................................... 135

(d). Obedience 149

14. DISCHARGE OF BILL ................................................................................ 168

Tort and Contract distinguished 191

Husbands and Wives 194

Forms of Liability 195

Intention or negligence or the breach of statutory 196

SPECIFIC TORTS 201

Differences between Slander and Libel 229

The exceptions of Slander actionable per se 230

In Jackson –v- Adams (1835) 2 Bing N.C. 402 230

Essentials of defamation generally 231

Defamation of a class 235

In J`Anson –v- Stuart 9787) 1 7. R 748 236

In Huth –v- Huth (1915) 3 K.B 32 237

Repetition of a statement 238

In Cookson –v- Harewood (1932) 2 K.B 4 239

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