SR Ee Eee REC TEL ERR an oe aN ne eae TROT ke eR ee IR eT ae ees the shares. The courtheld that-the action could notbe maintained since he was notan original-subscriber in: andu-v Waite, Mrs Waita sued in her name- on: account of a transaction that had been commenced: by her deceased husband, which transaction was yetto be-completed.-In-an action-im-the suit, the:court held:her-unfirto:sue-on the contract as‘she-was not party toit, her busband-was.] 1 Doctrine of privity-of contract, As-a-general-principle-of law, -only-parties to the-contract, (as-a-rule- of thumb, one who: gave-consideration)-can obtain rights: or-ineur-any-liabiliry-over the-comtract. There are however some: exceptions to the dootine,-as follows 4 q Exceptionto-the-doctrine-of privity® a}eln the-case-of-an-agent { ‘b}+Negotiable instruments § c}+Third parry insurance € I . Classification of consideration® a}*Executory-consideration. This is-where-a promise is: made and the contract is- to be performed in furnre § bys Executed consideration. Thisis where an acthas been performed pursuant to-2 promise made. 4 Past consideration. This: is- not: sufficient: to- support: a- contractual: claim.- Roscoriavs Thomas § 5 The Doctrine-ofequitable-or promissory estoppel The doctrine of consideration -is-rather harsh, as-can be appreciated. ‘Thus, the-courts have developedarule, the doctrine of promissory estoppel_as-can-be seen in the case of Cenmal London-Propery -IrustLid-vs-High Trees HonseLid--where atandlord had ceeineenneeree ey {iKenyaLaw Repons419% Ein England, the Cormacts (Rigstsof Thard Pamies) Act 1999warp2ssedto grams some (:lbat bmited)Equity is so called because it was derived from notions of fairness, equality and good conscience. It developed in the court of Chancery; that was administered by the King’s Chancellor. The basis for equity was to ask the king to ‘do right for the love of God and by way of charity’; given the common Iaw’s strict adherence to technical procedures that led to severe miscarriages of justice. Equity sought to lessen the harsh effects of the common law and developed some principles. or mecims that guide courts. The maxims of equity He who seeks equity must do equity. . He who colaes to equity must come with clean hands. . Equality is equity. . Equity looks to the intent rather than to the form. Equity acts i personam - that is, it is directed at an individual. (The opposite of this is i rem — against the whole world.) Equity will not suffer a wrong to be without a remedy. . Delay defeats equity. Equity follows the law> Maun rNThe maxims of equity Awe 6. 7. Delay defeats equity. 8. . He who seeks equity must do equity. . He who comes to equity must come with clean hands, . Equality is equity. . Equity looks to the intent rather than to the form. . Equity acts in personam — that is, it is directed at an individual. (The opposite of this is i rem ~ against the whole world.) Equity will not suffer a wrong to be without a remedy. Equity follows the law. I d) Customary law. This is however not a serious contender as a source of law in Kenya. For instance, Section 3(2) of the Judicature Act ousts customary law jurisdiction from criminal cases and limits its application in civil cases conceming personal law in so far as it is not repugnant to justice and morality. e) Another source of law is subsidiary legislation, (although not provided for in the Judicature Act; it is therefore normally regarded as an informalPavagraph = — hat ie Jom or destruction results in direct loss suffered by him as opposed to loss by nother person. Where there is no insurable interest. one cannot claim because the very cegr of insurance is that one would suffer some loss or prejudice if the loss occurred Tnsurable interest means 2 property right in something, ad not merely some anxiety about a loss. Types of imsurance . | n) Indenmnity insurance, under which an indemnity is provided against loss. the measure of Joss being the quantum of payment which shall not exceed the sum insured. b) Contingent insurance, unde which the sum assured is paid on a contingent event, The sum piid is not measured by the loss but is stated in the policy. eg., in the case of life assurance The insurer undertakes to pay the money on the happening of an event. which is certain to happen, but the time of its happening in unknown. Where the event fails to happen, eg., if the person does not die within a specified period, the consideration fails angthe premiums are recoverable. Principles of insurance a) Insurable interest, Re: introductory note above. This is generally an actual and legal interest, financial or otherwise, in the subject matter of a contract which provides the person insured with the right to enforce the contract, A person for instance, has an insurable interest in his property and in his own life and that of his wife but not in the life ‘of property of another: Macaura v Northern Assurance Macaura insured against fire some timber to be sold in his name_ Later almost the timber was gutted by fire, and he daimed against the insurer. The court held that he was not the owner of the timber, the company was, andhe didnot have an insurable interest in the company. b) Good faith, ie, uberrmae fis The concept of nberrimae fidei means that a contract of insurance is based on utmost good faith. That is the insured is bound to disclose all material facts to an insurer. Material facts are those which have a bearing on the insurer's decision on whether to offer insurance or not. Failure to disclose may render the contract voidable at the optionTypes of insurance a) Indemnity insurance, under which an indemnity © tee ng hc quam ops ch haf sa ecdaeies been ‘ontingent insurance, undex which the sum assured is paid on 2 contingent event The um paid is not measured by the loss but it stated in the police. eg. in the case of life assurance. The insurer undertakes to pay the money o” the happening of an event, which is certain to happen, but the time of its happening in known. Where the event ‘hls to happen. ¢ ¢. if the person does not die within 2 specified pesiod the considsanion fat and the premiums are recoverable. Principles of insurance a) Tnsurable #nerest, Re: introduytory note above: This is SemeDy 2 actual and legal ae jinancial or otherwite. ia the wubject matter of = contract wich provides the inert ian the right to enforce the contract. A person for inmanes, 1 Porrable interest in his property and in his own life and thay of his wife but not in the ife oe property of another: Macaura ¥ Northen desvare ‘Macaum. insured against fre oF prePraber to be sold in his name. Later simost the mbe T ‘gutced by fire, and be soa cd agains: the iamurer, The court eld that be TAs NU the owner of the timber the didnochave an insurable interest in the compsay company was. and he b) Good fait, ie, nperrimae fide mera fie, means that « contrac CF IETS based on ubnost 5 the insured Joe all material facts 19 am invutey i te rich ave @ bearing 00 the inne dessin om stk 0 fer instara Shute to disclose may render the COMES! Yt le at the Stine ‘suet OF ot material that the insured does 99° Sppreciare the matenaliy’ of *Be eng as the inmurer requies tit ASST ‘Material facts are cof the 2 hich misht ansthing %material facts avoids the contract: House of Manji Ltd v Liverpool Marine Insurance Co Lid! where the plaintiffs failed to disclose to their insurers breach of a statutory requirement on the part of unlicensed transporters employed by the plaintiffs, a fact of which they were aware, entitled the insurers in principle to repudiate the policy in principle. (It was, however, on the insurers to prove that such employment increased the risk substantially which the insurers failed to establish, thus the court refused to allow them to repudiate the policy.) This principle serves to promote good faith and to prevent fraud. The test of disclosure is both objective and subjective: Lambert v Co-operative Insurance Society Led where Mr Justice McKenna stated the possible extent of the duty: it is to disclose such facts - 1. Only as the particular assured believes to be material; 2. Asareasonable man would believe to be material; 3. As the particular insurer would regard as material: 4. Asareasonable or prudent insur might have treated as material An insured is not under any obligation to disclose 1. What the underwriter knows or ought to know; 2. What he takes upon himself knowledge of, 3. What he waives being informed of, <) Subrogation. The rule of subrogation provides the means and entitles the insurer to recover moneys compensated to an insured from a third party as long as the third party is the first and foremost liable to the insured for the loss in question. The insurer is allowed to ‘step into the shoes’ of andmaterial facts avoids the contract: House of Manji Lid v Liverpool Marine Instance Co Lid! where the plaintiffs failed to disclose to their insurers breach of a statutory requirement on the part of unlicensed transporters employed by the plaintiffs, a fact of which they were aware, catitled the insurers in principle to repudiate the policy in Principle. (It was, however, on the insurers to prove that such employment increased the isk substantially which the insurers failed to establish, thus the court refused to allow them to repudiate the policy.) This principle serves to promote good faith and to prevent fraud. The test of disclosure is both objective and subjective: Lambert v Co-operative Insurance Society Lid where Mr Justice McK enna stated the possible extent of the duty; it is to disclose such facts - 1. Only as the particular assured believes to be material; 2. As areasonable man would believe to be material; 3. As the particular insurer would regard as material; 4. As azeasonable or prudent insurer might have treated as material An insured is not under any obligation to disclose: 1. What the underwriter knows or ought to know: 2. What he takes upon himself knowledge of, 3. What he waives being informed of, ¢) Subrogation. The mule of subrogation provi compensated to an insured from 2 liable to the insured for the loss in question. stands in the place of the insured and is subrogated ; Of one persot! for another so that the person substituted succeeds to snd assumes the rights of snother If the insured renounces or compromises any right of action he bas against 2 34 party he je in fundamental breach of the contract of insurance and must repay theinsurers des the means and entitles the insurer to recover moneys third party as long as the third party is the first and foremost ‘The insurer is allowed to ‘step into the shoes’ of and to his rights. Subrogation is the substitution —— eeCourse Outline for: FME 344: Law for Engineers (45 hours) and FPE 344: Law for Engineers (45 hours) Prerequisites: None Purpose of the Course Uni The purpose of this course is to equip learners with legal knowledge relevant to engineers, including intellectual property, torts, and contracts. Expected Learning Outcomes At the end of the course a learner will be able to”Judicature Act, 1967, Chapter 8 of the Laws of Kenya. and are: a) The Constitution — Art 2 declares it the supreme law of the land, and any law in conflict with it is void to the extent of that inconsistency. b) Acts of Parliament, below the Constitution the next source of law is Acts of Parliament, also known as statutes or primary legislation e.g.. the Sale of Goods Act, 1931, governs specifie contracts. c) Common law, rules of equity and statutes of general application in force in England on August 12, 1897 rank just below statutory law such as sources of law. Examples of such statutes of general application are The Foreign Law Ascertainment Act 1890. Common law is so called because it derives from common custom of the people; it has been defined as ‘.,.that branch of the law of Englandb) Acts of Parliament, below the Constitution the next source of lawis Acts of Parliament, also known as statutes or primary legislation e.g., the Sale of Goods Act. 1931. governs specific contracts. Common law, rules of equity and statutes of general application in force in England om August 12, 1897 rank just below statuiory law such as sources of law. Examples of such statutes of general application are The Foreign Law Ascertainment Act 1890. °) Common law is so called because it derives from common custom of the people; it ins been defined as *...that branch of the law of England formulated, developed and administered by the courts on the basis of the common custom of the country. Common law is therefore English judge-made law. It developed in England over several centuries through the principles of stare decisis! and preceden. ie., a decision of superior courts binds lower courts. 1 "This simply means let the decision stond.is voluntary in the sense that states — which are the subject of international law. accede fo or ratify treaties as they deem fit, and cannot be compelled to enter treaties. Sources of law in Kenya These are spelt out in Art 2 of the Constitution of Kenya 2010 and Section 3 of the Judicature Act, 1967. Chapigr 8 of the Laws of Kenya. and are: a) The Constitution ~ Art 2 declares it the supreme law of the and. and any Jnvv in conflict with it is void to the extent of that inconsistency. b) Acts of Parliament, below the Constitution the next source of law is Acts, of Parliament, also known as statutes or primary legislation e.g., the Sale of Goods Act, 1931, governs specific contracts. ©) Common law, rules of equity and statutes of general apy force in England on August 12, 1897 rank just below statutory law stich as sources of law. Examples of such statutes of general application are The Foreign Law Ascertainment Act 1890, ‘Cemmon law is 50 called because it derives from common custom of the41. Lecture room with white board. 2. Handouts: soft and hard copies 3. PC's for Power point presentations 4. LCD projector 5. Audio-visual aides Course Assessment The course shall be examined as follows: ‘* Anend of semester written examination constituting of 70%. © Coursework: Continuous assessment tests (20%) tutorials, quizzes, assignments, etc. (10%). & Core Reading Materials 4. Gayton. Cynthia M. Legal Aspects of Engineering Kendall-Hunt Publishing.1. Lecture room with white board. 2. Handouts: soft and hard copies 3. PC's for Power point presentations 4. LCD projector 5. Audio-visual aides Course Assessment The course shall be examined as follows: + Anend of semester written examination constituting of 70%. ‘+ Coursework: Continuous assessment tests (20%) tutorials, quizzes, assignments, ete. (10%). Core Reading Materials 4. Gavton. Cynthia M. Lega! Aspects of Engineering Kendall-Hunt PublishingMode of Delivery: A combination of lectures, tutorial sessions, case studies and guided self-study. Instruction materials and equipment: 1. Lecture room with white board. 2. Handouts: soft and hard copies 3. PC's for Power point presentations 4. LCD projector 5. Audio-visual aides Course Assessment Tha cei eas ak a eerie eo OeEEE The nature and sources of law, an outline of the law of tort and product liability Laws of contract in project management and intellectual property The factories Act. (Cap. 514): main provision as to health, safety and welfare, offences, penalties and legal proceedings; Trade Unions Act. (Cap 233): legal status of Trade Unions, registration, figures and liabilities, Trade Disputes Act (Cap. 234) — with particular reference to the jurisdiction of the Industrial Court and the protection of essential services, life and property; Occupational health and Safety Act Environmental laws, NEMA act, regulations and statutory institutions, ‘occupational health and safety: Insurance law Laws related to industrial accidents, industrial pollution etc., accident reporting;9. UISCUSS BIIVIIUIINe tal, WISUTENCe aU MIGUSUTa! ALCIUENC AWS TT eraAULY WU engineering Course Content + The nature and sources of law, an outline of the law of tort and product liability; + Laws of contract in project management and intellectual property The factories Act. (Cap. 514): main provision as to health, safety and welfare, offences, penaities and legal proceedings; * Trade Unions Act. (Cap 233): legal status of Trade Unions, registration, figures and liabilities. * Trade Disputes Act (Cap. 234) - with particular reference to the jurisdiction of the Industrial Court and the protection of essential services, life and property; © Occupational health and Safety Act . =) * Environmental laws, NEMA act, regulations and statutory institutions, occupational health and safety:Identify various legal acts relevant to engineering Relate the law of tort and product liability in engineering Discuss laws of contract in project management and intellectual property Discuss environmental, insurance and industrial accident laws in relation to engineering, oPReNn Course Content The nature and sources of law, an outline of the law of tort and product liability; Laws of contract in project management and intellectual property. The factories Act. (Cap. 514): main provision as to health, safety and welfare, offences, penalties and legal proceedings; Trade Unions Act. (Cap 233): legal status of Trade Unions, registration, figures and liabilities Trade Disputes Act (Cap. 234) — with particular reference to the jurisdiction of thePrerequisites: None Purpose of the Course Un The purpose of this course is to equip learners with legal knowledge relevant to engineers, including intellectual property, torts, and contracts. Expected Learning Outcomes At the end of the course, a learner will be able to: 1 aRON Identity the nature and sources of law Identity various legal acts relevant to engineering Relate the law of tort and product liability in engineering Discuss laws of contract in project management and intellectual property Discuss environmental, insurance and industrial accident laws in relation to engineeringEquity is so called because it was denved from notions of faimess. equality and good conscience. It developed in the court of Chancery: that was administered by the King’s Chancellor. The basis for equity was to ask the king to ‘do right for the love of God and by way of charity’; given the common law's stnet adherence to technical procedures that led to severe miscarriages of justice. Equity sought to lessen the harsh effects of the common law and developed some principles, or mavims that guide courts. The maxims of equity He who seeks equity must do equity. ‘He who comes to equity must come with clean hands. Equality is equity. Equity lodks to the intent rather than to the form. Equity acts in persona — that is, it is directed at an individual. (The opposite of this is i rem — against the whole world.) Equity will not suffer a wrong to be without a remedy. Delay defeats equity. 8. Equity follows the law.* pepe xoInsurance was defined in Lucena 1” Cranford as’ a contract by which the one party in consideration of a price paid to him adequate to the risk becomes security to the ether that he shall not suffer loss, damage or prejudice by the happening of the fied to certain things which may be exposed to them.” =e For the contract of insurance to be enforceable, there must be: 1. Some element of uncortamy about the event causing the risk in question, then the contract is not one of insurance. 2. The insured must have had an insurable inerest im the subject matter of the contract so that its loss or destruction results in direct loss suffered by him as opposed to loss by another person, Where there is no insurable interest, one cannot claim because the v basis of insurance is that one would suffer some loss or prejudice if the loss occured. Insurable interest means a property right in something, and not merely some anxiety about a loss ‘Types of insurance 'a) Indemnity insurance, under which an indemnity is provided against loss, the measure of loss being the quantum of payment which phall not exceed the sum insured b) Contingent insurance, under which the sum assured is paid on contingent event. The sum paid is not measured by the loss but is stated in the policy. e-g.. in the case of life assurance. The insurer undertakes to pay the money on the happening of an event, which is certain to happen, but the time of its happening in unknown. Where the event fails to happen, eg. if the person doet not die within a specified period, the consideration fails and the premiums are recoverable. Principles of imsurance a) hiswable interest, Re: introductory note above. This is generally an actual and legal interest, financial or otherwise, in the subject matter of a contract which provides the person insured with the right to enforce the contract. A person for instance, has an Peeve totereat in hisrmanertx and in his own life and that of his wife hnt not in the life.opposite of This ts 17 rem — against the whole world.) 6. Equity will not suffer a wrong to be without a remedy. 7. Delay deteats equity. 8. Equity follows the law. d) Customary law. This is however not a serious contender as a source of law in Kenya. For instance, Section 3(2) of the Judicature Act ousts tomary law jurisdiction from criminal cases and limits its application in civil cases concerning persoual law in so far as it is uot repugnant 10 justice and morality, €) Another source of law is subsidiary legislation, (although not provided for in the Judicature Act: it is therefore nonnally regarded as an informal source of Inw.) These are niles made under an existing statute: for instance, the famous ‘Michuki rules’ governing PSVs were made under the Traffic Act. The Public Health Act, Cap 242, empowers the Minister in charge of public health to make rules under that law for the better protection of public health, e.g., the Tobaceo Control Rules were made by * Damages simply means a sum of money to compensate onc for som loss.e) 1. He who secks equity must do equity. 2. He who comes to equity must come with clean hands. 3. Equality is equity. 4. Equity looks to the intont rathor than to the form. 5. Equity acts in personam — that is, it is directed at an individual. (The opposite of this is iu rem — against the whole world.) Equity will not suffer a wrong to be without a remedy. 6. 7. Delay defeats equity. 8. Equity follows the law:? rT Customary law. This is however uot a serious contender as a source of law in Kenya. For instance, Section 3(2) of the Judicature Act ousts customary law jurisdiction from criminal cases and limits its application in civil eases concerning personal law in so far as it is not repugnant to justice and morality. Another source of law is subsidiary legislation, (although not provided for in the Judicature Act: it 1s therefore normally regarded as au informalEmployment-Contracts{ At-common-law,-the-contract-of employment-was-a-contract like: any -other: it-was-assumed-to-have-been-entered into-on the basis: of: mutual: agreement, -and- was- between-two- parties: with -equal- bargaining: power.- However, with: changes: in- the- economic: structure: of: many- countries, the- rise- of- the- huge.- impersonal: company: with: massive: bargaining’ power- over- individual employees: and-technological: advances: have- seen: governments: intervening: at both: legislative-and- policy: levels-to-address: this: imbalance.4 The-chief-source-of-employment law-is:‘the-Employ ment: Act: 2007- which was:passed-to-strengthen these: protections. ‘The: Act{ is-the: central: statute- governing: contracts: of employment.- The: Act’ is concerned: with: contracts: of service;: therefore, independent: contractors: are-not-caught-within-the: ambit: of the: Act?-The-contract-of‘employment is therefore-a highly regulated ‘LUnder the law, chert in a difference bereeen-a-'contrct of-sersice"-and a ‘contesdl for tarcice’ This iment Gifficult to define thus 10 haart, stus-a:cheulfour Ie-anemplesee-and-omployed-uaderacomrset of serciee but a taxi dower in an independemr comtracror-wbo vem ployedundera'commrnetfarserviee The approach oned by the cours to dimingyish-beroeen these feo concepts in that ax employee ss under the-directiser of his-emmployertt niet i tha = artes tana 3 Som A tev AS URNA “Aen hse ans hate Noes rhea Woe-enfryee sabempier oe enter suet a eee bona et ara'g ve ition retrace ne trmglej' tar carve fornerin, ihe pee pte remure hewgtan hrsean son ton Sener ime om sages ee Be rien Pk mage soatiact with terms either imposed: or: implied: by: Pashamemt: S26: of the Act-cleatly: stipulates: that the: Acts: provisions: are- jninimmen-conditions that -arc implica iu-each and every coulmmet oenployment ' ‘The tights and-dulies set-oul dn-the Act are-as:lollows- 1 -Cuder $27. each enuployee is: culitled to at beast -ome pest ra petiod-of seven-days,-This-section similarly binds: re: not-to-depan from its provisions notwithstanding acontract: with: terms: either imposed: or: implied: by: Parliament: $26-of- the- Act-clearly- snpulates-that-the- Act's: provisions: are- nen conditions that are mmplied mm each and every couttact afemploywent, ' The rights-and duties set out in the Actare-as follows] 1-Under- $27. each employee is eantled: to: at- least: one: rest day-in-#-penod- of seven-days.-This-acction-stmilarly-binds- employer not to-depart:- from-tls-provisions-nolvd lhalanding- an-employer’ s-rightto-fix-an-employee’ s-working hours.* 2 Under: $28; euch: employee: is-eutilled:to- al: lent 21 days anual: leave: with: full: pay: for every: twelve: months: of service. Where: this: heave: is: broken, -at- least fourteen: days- must: be: taken: at: once.- Where- employment: is: terminated: after two: or mote months: of service, an employee: is: entifled-te-at least: one-and -three-quarter-days-of-leave-with: full pay-for-each month-worked. ©Cu its prOvisrons notwithstanding: arvetuployer's right to-fix-an-employee's-working-hours 2-Under $28; -e0ck: employee: is entitled-to- at-least 21: days: anoual- leave: with: full: pay: for: every: nwelve: months: of: services. Where: this: leave: is: broken, -al-least-fourtcen-days- oust be: taken: al-once.- Where: cry] uyaaecnt: ia: lerminuted: after: two: or more- months of: service.: an employee- is- entitied tocal Teast ou and thoee-quarter-days-ofleave-with- full pay foreach month worked. © 3.-Under-‘$29, ‘the principle-of non-—discn mination in respect of-women is-explicit. “The Act-increases:the maternity leave period from: two: to: Hee: months under: the old: Act. Similarly.-maternity-leave:is:in-addition te-annual-lcave-as opposed-to-in-fiew-of annual lenve-as-under-the old: Act - A woman: is: however required: to: give: at least- seven: days: 1 nofice- in: writing: before-taking- such: leave.: ‘wor weeks palemily leave for inc is aalsoprovided for. 4-Under-$30;-employees-are-entitled-to-sick leave-of-at Least: seven days: with: fall ‘pay: after-two consecutive inonths-of at caaan{ler caves dave-sack leave with half pay.‘The-employee can only-exercise such rights ifthe has taken: steps to inform his-employer-of lis indisposition.4 $-Under-$31;'an-employer-istequited te provide employees: with-housing gear his: place: ol! work,-or- pay: such: sum ol money: ns: will-enable-the: employee: obtain: housing.- 'he- Minister: may exclude: this: provision: for: any: category: off employees 6-Uindor $32; :the employer: is-required-to- provide: water: for the: use- of: his: employees: at- the- place: ef work- and- accommodation provided by the emplover. Under 833; a1-employer shall where agreed im the contract: of emyployment.- provide: food: and: vnwure:the-cmphoyee" is well-fed-at-his-expense.4 ; $«Under S34;° an- employer: is: required: to- provide bis employees with. proper medicine during ilaesy and medical: attendance: during: illness. However, the: section: puts: the- onus: on: the: employer: to- be- notified: of: an: employee's illness. This: section however wall not apply: where. ‘anSuus’ ou: the employer to: be: noufied: of am employee's illness. ‘This: section: however: will: nat: apply-whare- an ‘emiplayee-was-absent-from his-place-of wnrk-withant-lawfal ‘excuse. or where the injury is-self: inflicted or where there is: any: imwuramec: sehetne- established: under: any: law. or- whero-the Government provides freg healll-servicen 4 4 Under- commoa: law, in: addition-to- the- above- generally, an- cuployerisalsa-required to provide work-or aaa a cuployee: with work, and: to- indemnify: an’ employee: forvany extra: costs: incurred in the course of executing the employer's business. 4 The: employees: duties: are-not-expressly-provided for. but at common law they are: 1-Duty: of chedienee:: An: employen: is: supposed: to be obedient to his: employer, or other person: placed im12001 COM & & Prem eee € hsg-ickq-vys> © & a Er Alice is presenting @ ot oe a © PYYewhere- withoul- leave: or other lawl yause,: an employee abseuls-iusel! from is place ef work: hy becoming intoxicated uring working hours-such that an: employee is unable ta perform his work properly: vowhere ax-employer Fails to: perform his work, or: fails: to. perfornehix work: property svhich-was- his: dury-to- perform: uncdor the contract;* Yan émployee-nses insulting or abusive: lanpiiage of: belive’ in a manner insubting to his employer o¢-any- other-perse: placed au authority: <éhe-employee-refises to obey-a-lavefl-or proper: command which it-was-within his-duty to-obey* Yowhere: ait euuplayee: ts arrested: for a eoguisable: offeuee punishable by imprisoument and vs uot within fourteen days released om til or-set-at-libecty;or4 Yan employee’ commily of 1s reasonably: suspected of -commutling a’ cruminal: offence: to- the detrumeut of: hesvawhere a employer: fals-to- perfom lus work, or tails-to perform: bis: work-properly- which: was-bis-duty-to- perform under the coulract:) ~an-employee-uses-insulting-or- abusive: language or beliave- in-@ manner: insnlting-to- lis: employer: or any- other: person- placed in authority © ¥ the employee: refuses -to-ohey-a-lawful-or-proper command: which itwas-within-his-dnty to-obey;4 “where au employee: is amrested: for: a: coemisable- offence: punishable -by-imprisomment and is not-within fourteen days: relcascd on-bail-or-xet-at liberty: orf “an: employee: commits: or is reasonably suspected of committing a- criminal: offence to the- detriment: of hus: eauployer's property. ' Introduction to-hire purchase AD lire: purchase: agreement may be: defined as: 4: contract whereby the owner of goods lures them out to another person for ar-agreed periodic-rent payable by instalments-and gives him-the- option: of purchase, Hire- purchase agreements: in KenAPU Ay idemaity:- An- omployee- is- under a- duty- 10 indemaify an: employee for any- losses caused by’ the employee’s-neglizence:-Lister- v-Ronzford-ice-Coid Storage Co Lid -wheve an-cmplayes injured -a-Tellow-cumployee-md: the: employer: was: find: figarieuialy” liahle*the: employer could recover this sum-fiom the offending employee.“ . Under $44, au employee cam be diisnissed summarily —-without notice ewhere-withomt: leave: or oth absents-himsetf from hisplace-of work, oa SS a ee age car watever Term DEY SA 2 Hee can emty oF comurac T er arrelteciye of ee Setrines form-of-wcontiactt act cement made between 10 9 OKs PAT — the’ Wp Thg-ensential elements fOr-* WhatisarContr Wirt isa legally enforceable wh Fifer: amat-totond to-entor itera egal: relationst ewtrmel ks he-valid are o There must be-an offer and'an acceptance, to constitute an agreement There Py an ulcntionttorereate legal relations Se pop oegh Tor Cotsen Communit Law 11998)44 Monash ase Review, 33"3."The parties rst have capacity to contract ® 4 ‘When is w contract formed? A: contact is: formed whew there ie-"w mvocting of the minds’, thet is consensus ad fdem,: This is wher there is a defiaate offer. which is unconditionally accepted and the transaction is sipported by consideration § 1. + The-Offer-ane-acceptanced ‘Aw offer way stotewmeut, whether made by Words or conduct, which iadicate that the [party making’itts-walling to-be-bound/-by its terms ifthe-other-party accepts thom Tegal rules utornffer’ 1. Te must-bedefinite:-ic. 3 ange. Case-example:-Carlifv5-Carbolte-Smoke-Balf-Compamy [1 893]-1 QB 256, tier ‘the Carbolic‘Smoke-Ball-Company:advertised its smoke balls-as-anveffective cure- esa aa quuat-be-nddrs9e o-aspecilic penn ar world: al ESR ht pepe TL NED ORR RR1223600 &G9 2 ee ee Se (le a) SP REO) Ke Alice is presenting @ ot oe a © <12230 && Pree ele © € hsg-ickq-vys» 2 # Alice is presenting @ ot oe a © <12270 S&S Se (le a) SP REO) Alice is presenting @ Ct oe a © <122830 S&S ee (len) Sf REO) Alice is presenting @ ot oe a © <and: this: imeludes: the: making- af: a: counter: offer and: nom-— acceptance: within: a reasonable time. The questiou-as to -what-a teasounble times is:one of fact. Case: example: Virti-Khimir ve Chutrerback, where the defendant purported -to-accept: an-offer-oF-a-timber-sale-several-months-down-the line. The cout-beld that-the-affer had lapsed due 1onon—avecplance within-a reasonable time -f A-revoeation: of an: offer-can-only-be:effecuve-if:commmnicated and-received.-and olice wmaceUplaee lay been pasted. cnmmel be-revoked tlie-comtract is complete, * Acceptance] An-acceptance is-an-anconé has been-accepted.€ Legal-rules-as-to-neceptancey 1+ Ie tmust-be-absolute-and-unqualified. Case -example-ix Hyde-vv Wrench where it was: held that a commmmcauen purporting to accept to buy: a house-for-£-950 where the offer had stated thar the ;house was poine-for £ jena] ‘statement-either-express-or-implied, thar the-offera 3.-Avageneralrul +3i 1000. was: not-an- offer,:It- mnst-also- be- noted: thar- the: offeree: cannot purport tovaccept the previous offer: itis no longer in-existence | nce duet’ mat’ amount: to: acceplince.” The general cule: is- thal ‘coumunivation amu! seach the oflerer Cane-example:-Hefthonge: vs Bindley,-chere-the: plaintiff F offered to: buy his nephew's boise for £-30, and au lus acceptance said. “If Thear no more from you. T shall consides him mine.’ The wephew did uot reply, and at an sanction, the defendant auctionest-s0ldthe-horse. The court held that F-had ho canse-of nction-ngninst-the-muctisnicer asm acceptances Tad: not-been* made. No-commmnication is necessary if an offer is:octed upon Eg. i" Corti -an-acceptance-camnorberevaked. 4] Le. coude: within: the: Um: prescribed: or- within: appliport 16 accept the previous offer: at iste louger an existence lence: does: not amount: ta acceptance The- general rule: is: thal: communication must teach-the-o fferet.§ (Case exaniple:-Fethonse:vs-Bindley. where-the-plauntifF offered-to-buy nephew’ x hurwu-for-£-30.andtrr-his aceeplance vowed, “IE acar ne t10re- frum you. T-shull consi der-hiin tive.” The-nephew did mot reply, atu at aa auction. the defendantauctioneer sold the horse “the court held that F had no-camse of action-against the auctioneer as an: acceptance had-not-been: made. No communication 15 wecessary if an offer is wcted upon E.g., im Corll § 4+ Asa general rule, an neceptancecangotbe revoked. 4.--Acceptumes: must: he: made: within: the: time- prese reasonabletime.-E.g. Firjicve Clutter oak 5+ In the-case-of postal: acceptance the-acceptince is-complete 15-000 4" the: letter-is: posted ‘Casd example: Byrne: vs: Trenlover! [1880] where ar party:A-un Cardiff.in- Wales offered to sell-eoods-to another party Bin: New- York its 4 leUier- dusted October: |: B- received: dhe- Jeiter am: 115, aud immediately: accepted: the: offer, A however, revokud: his: offer on oa avhich-was-rece ied -by' Bon 20-The court held that a contract was made drt Sriny ped or: within: a-1234 O SSS Pre ce € hsg-ickq-vys>> (2 & ~~ Ke Alice is presenting @ ot oe a © <an-arcompany.-An‘allotmenr letter was posted but never reached him. The ‘Cour held-+hat G-wasa-shareholder in the-company Considerati ‘Whar is-consideration? It of accepting an offer. Ta the cave of Cirerie vs Aisa [1878] 31 was defined us “some right, interest, profil or benefit-accruing:10 one: parry, or-some-forbearance.-detriment.:losn-or tesponsabi lity riven. suffered ar undertaken by the other. 4 Legal Rulevas-to Comideration 1. -Femust- be: sufficient Bur sot adequate. Thin male tx-based: on tho-doetrinc-of- freedom of contract.-a court will not ty to weigh what a plaintiff is foregoing aninis what-the- defeudant: is: ofTering. Just: cuough: to- uperl #- simple promise. Solk- es Murick.« where: wller- some: crew: deserted a slip: at- am intermediate dock. the captaun entered inte a-contract with the rest of the sew: that they-would-be-paid the-wages-of the two setmen-who-had-deserted. I captain refused to:pay onsetum to'London. aud one of the crew filed suit. The court rejected-this-claim.-since it was nat sufficient: the-remaining-erew. by’ xc a atte nae th Beene benefit received-by-the-maker of a-promise. or the costSR Ee Eee REC TEL ERR an oe aN ne eae TROT ke eR ee IR eT ae ees the shares. The courtheld that-the action could notbe maintained since he was notan original-subscriber in: andu-v Waite, Mrs Waita sued in her name- on: account of a transaction that had been commenced: by her deceased husband, which transaction was yetto be-completed.-In-an action-im-the suit, the:court held:her-unfirto:sue-on the contract as‘she-was not party toit, her busband-was.] 1 Doctrine of privity-of contract, As-a-general-principle-of law, -only-parties to the-contract, (as-a-rule- of thumb, one who: gave-consideration)-can obtain rights: or-ineur-any-liabiliry-over the-comtract. There are however some: exceptions to the dootine,-as follows 4 q Exceptionto-the-doctrine-of privity® a}eln the-case-of-an-agent { ‘b}+Negotiable instruments § c}+Third parry insurance € I . Classification of consideration® a}*Executory-consideration. This is-where-a promise is: made and the contract is- to be performed in furnre § bys Executed consideration. Thisis where an acthas been performed pursuant to-2 promise made. 4 Past consideration. This: is- not: sufficient: to- support: a- contractual: claim.- Roscoriavs Thomas § 5 The Doctrine-ofequitable-or promissory estoppel The doctrine of consideration -is-rather harsh, as-can be appreciated. ‘Thus, the-courts have developedarule, the doctrine of promissory estoppel_as-can-be seen in the case of Cenmal London-Propery -IrustLid-vs-High Trees HonseLid--where atandlord had ceeineenneeree ey {iKenyaLaw Repons419% Ein England, the Cormacts (Rigstsof Thard Pamies) Act 1999warp2ssedto grams some (:lbat bmited)lice is presenting © o on ee a @ 4the Sale of Goods-Act the-price to: be:paid is-a reasonable rather than the market price. What are-necessaries?- Section-4{2)-of the Sale-of Goods Act-defines them as *...goods: suitable: to: the: condition on-life-of-the-infant or minor-or-other person, and-to-his actual requirements at-the-time-of the-sale-and-delivery.” Thusin the case of Nasitvs brman-where an infant bought 12 wimter jackets he was not liable to-pay-for-them. ‘4 > Drunken: persons-or-persons-of-unsound: mind. Such contracts will not nomnally-be enforced. ‘The rationale for this is:not-to protect the drunk -or- | insane person, rather -it-is-to-prevent-the-sober party-from. taking undue- advantage of the-person not able to-understand what he is doing Like an. infant, such persons are required to pay-ateasonable price rather than the- market or agreed price § | TT iii) + Corporations. .A-person-contracting -with-a-corporation-must-now-that— the corporation is amhorised to-do that which it is purporting to do:-and— that the person contractingon its behalfihas the authority todoso. ‘This can- be done by checking the Companies Registry at the: AG's-office.4 © Terms: ofa Contractrr iii} + Corporations. A person contracting with a-corporation must know that— the-corporation-is-authorised-to-do-that which it'is purporting to-do; and— that the person contracting on its behalf has the authority to do'so. This can be-done-by checking the-Companies-Registry atthe-AG's office © Terms-of'a-Contract® A contract's terms.can be classified into:§ Conditions-and-warrannes Express and implied © © (Conditions -and-WarrantiesS i)}-Conditiens..A-condition is described. as -that-which-goes to the root ofa contract. without it, there is technically-no contract. It was: defined: in: Wallts-vs-Praw-by Fletcher Moulton LS-as-an-obligatioy “which goes-so directly to the substance-of the contract, or in other words, is-40 essential to its very nature, that its non-performance may: fairly-be- considered by the other-party-as-a-substantial-failure-to-perform-the contracts well." Case example: Lombard North Centai-p J.c. vs Butterworth, where an agreement for the hire-of computers stated that prompt payment of all payments ducunder the agreementwas“‘of the-essence.’-The courtheld-that-on-constuction of:iii)-+ Corporations. A pers on-contracting-with a corporation ‘must know that— the corporation is authorised to-do that-which it-is-purporting to do;-and— that the person contracting on its behalf-has the authority to- doo. ‘This can be-done by checking the Companies Registry atthe AG's office § Avcontract’s terms can be classified into] iitons and warranties {| press-and-implied.© Conditions-and-Warranties€ ’)- Conditions. -A-condition is described-as that-which-goes-to the root-of-a-contact; without it,-there-is-technically-no-contract -It-was- defined: in- Wallts-vs- Pratt- by Fetcher- Moulton LI-as-an obligation~‘which-goes so-directly to the substance-of the contract, orin other words, is-so-essential to its very nature, that its ‘non-performance. may’ fairly -be-considered by the other party-as-a substantial: failure-to-perform the contract as well.’-Case example: Lombard North Central p_|.c,-vs Butterworth, where an-agreement for the hire-of-computers stated that prompt payment of all payments duc under the agreement was of the essence.” -The-court held that-on-constmuction of. the terms, the parties intended to male time of payment 4 condition. The-owner-could- thus treat the contract as repudiated, retake possession thereof and-claim-damages-for- repudiation, 5 ii); Warranties. A- warranty is- described in: the-Sale- of Goods: Act, 1931-as- an: agreement that“is:collateralto:the main purpose-of the contract, the breach of which:Review = view 3 BT omc AaBbC i AaBbCel AaBbCcl Emphasis Heading} | THommi Strong Subtitte _ Puagiaphy Styles i)-Comditions. -A-condition is-described-as that which-gocs tothe root of-a- contract; without it, there-is- technically-no- contract - It was- defined- in- Walits- vs- Pram by- Fletcher Moulton-L¥-as-an-obligation ‘which goes-so- directly 10 the substance-of the conwact, orin other words, is-so essential to its-very nature, that its non-performance may: faitly-be considered by- the other party-as-a-substantial-failure-to perform the conwactas well.’ Case example: Lombard North-Central p,j.¢ vs Butterworth, where an- agreement: for-the hire-of computers stated that prompt payment-of all payments due under the agreement was~of the essence.’ The-court held that on-construction-of the terms, the parties intended to make time of payment condition. The-owner-could. thus treat the conmractas repudiated, retake possession thereof-and claim damages for Tepudiation 4 ii); Warranties. A- warranty is: described -in- the- Sale of Goods: Act, 1931- as: an agreement that “is-collateral to the main puspose-of the-conwact, the breach of-which. Bves-rise-to-a-claim-for damages, but not to-a right to reject the goods-and treat the: contract: as: repudiated.” Fletcher: Moulton-LJ-termed-a: warranty:as:an “obligation which, though itmust be performed, is not so vital that-a failure -to-pesform it goes to the-substance:of the contract '¢ 1 Case example: Beitint vs Gre where B agreed to sing for G, the director of-an-Iulian: operain England, B-was-required to arrive-in-London-six-days-before,-but he amived. only-two-dhys-before-and -G-atempted-to-trear the-contract as-tepudiated.-The-court- rejected this attempt at repudiation, holding thatit-was-a warranty and nota condition. q Express-and-sinplied-termet i)-Express-terms.-These-are-terms that have ‘beem-expressed-either-In-writing or-by: word of mouth. 4 id): Implied-terms.-These-are- terms that are imputed on-to- contracting: parties. An. implied term-cannot-overtide-an-express-term.-This is known. as the-parole evidence rule -In- Muthwart-v NIC-Bank Led, the plaintiff. alleged: that-he had-been-informed: orally thatan express term thathe-was liable to-summary dismissal in his employment. contractwas a~ standard term inall such conwacts with the bank and nothing mnch-be-conmaet, orin-other words : sirty: i by-the other Party are = be conde eagle S gmbared North Cantal D Le. a ent for the hive treated tat OTP etrocnce oF dneunder the agreemcnt was of the essence. “The court i vnake tmeoFpayrenta-condit eon the par ne ee retake posscssiomtbered| f-and-claim-damages-for dips trearthe contra ny is described in the Sale of Goods Act, 1931 a8 4% A Ghaeral to ae tanin paxpose af the COnEESE the breach of which ALES for damages, bat notto-a right To rejectthe goods and teat the contract as: repudiated.” Fletcher Ly vermed a- warranty af 35 ‘obligation Shick. though itmastbe performed, if not so vital thata failure to perform it goes t the-substance-of the contact f * Case-example. Bamini»7 xe, Sporn England B-vaszequited to wrive in dhys-before and-G antempted to treat the ¢ Yyrempt at repadiation, holding that it was a wat Jhere-B agreed to sing-for G, the director of-an-halian: ‘London six-days-before, bute anived: ontract at repudiated. The court rranty and nota condigon. © Exprers-and implied terms z chat have been expressed either in writing-or by word of mou. ii): Implied-terms. These’ are terms that are-imputed-om to-comtacting partes. “An iplind term cynsotoveande aa express term. This is kmoymn asthe pare/e-evislene 4 ide In Mufhauri-v-NIC Bank Lid, the plaintiff atieged dat he-had been informed Crally that express tenn thathe was liable te summary dismissal in his employment: contact was.-standand tem in all such contacts wih the bank-and nothing much be fead.inte-it’-Hig-centeation-was- dismissed on-the-basis-that- an-oral-term cannot verde am expres term # A-term to give reasonable notice to terminate a-contract W be implied, for instance,-where parties have been engaged in-wade for a longTerms may be implied by 1. -» Custom-or-trade-usage, and 2. + Stanute.§ 5 ‘Terms-implied-by-custom-andtrade-usage® ‘The-test-for-implying-of-a-term-into-a-contract is this: Has-the -term-been-so-widely used, that the parties: must-be held to-be aware-of their existence?-As Lord-Campbell - in-Brandao-vs-Barnert- stated,“ when-a-general-usage has-been judicially-ascertained - and-established, it becomes a-part of the law mezchant,-which courts of justice are: bound to-know and recognise.’ -It-must-be-noted however, that an implied term must- notbe-contrary to:statute and to-the written terms-of-a-contract 5 This-is because if parties have-been transacting for ong.in-a specific manner, courts will -not-disturb-this-course-of dealing. unless-a-contrary intention: is shown in-the: contract.- Fleury: ws: IFailt- and: Co. -where-there-was-a-contract-for the: delivery-of: handkerchiefs. The buyer-claimed that-a-contract-had-been-repudiated-as-they-had- been packed -in-sets-of 30,-as-opposed to-dozens-as was customary in Zanzibar The courtaccepted the argument § In: Harilal- vs Standard: Bank, ‘the: Bank-had- granted: Harilal: an- overdraft, but-the agreement -did-not-imclude: agreement as-to interest. The-bank-charged-compound interest. ‘The: question: before: the: court: was:: Is: there-a-term: allowing: the: bank-to- charge: compound interest?-It-was trade-usage for-banks to charge compound interest 4compound interest?-It-was trade-usage-for-banks-to-charge-compound interest © Terms-imptied-by statutes The-Sale-of- Goods: Act, 1931- is: an-example-of-a- starute-that-implies- terms. into conuacts: for-instance, section: 14-of the Sale-of-Goods-Act provides tharf In- contract of sale,-unless-the: circumstances -of the contract-are-such-as-to show a-different intention, there isf a}+an-implied-condition-on-the-part-of the seller tharin the case of-asale-he has the-right-1o sell the goods, and that in the case of an agreement to sale he-will-have-a-right to-sell-the goods-at the time-when-the-property is-to passy ‘b}ean implied warranty that the-buyershall have and enjoy quiet possession of- the goods ¢}+am- implied-warranty- that: the goods: shall: be-free- from: any charge-or- encumbrance in-favour of-any-third party, not-declared-orimown-tothe: buyer before or-at-the time-when the contract is made. © Standard-Form-Contracts-and-Exclusion Clauses® Standard: fonn- contacts: are: increasingly- in- use: today, especially: in: cases: of- insurance, banking. transportation: and: international: sales. They reduce: costs- of negotiation, and increase certainty and-allocation of risks § The: problem: with these contracts, from: a: legal: standpoint. is-that-terms:are-not bargained: take-it,-or-leave-it. For the most-part, makers of standard form contracts will: try- to: limit-their-Liability.-Courts- have developed: two: interpretative-rales-to mitigate the potential for unfair bargains against weaker parties, such as-consumers.§ ‘The legal rules. for interpreting standard -form contracts and-exchusion clauses are 1s Comma proferentem rule -A-standard form contract will always-be interpreted: as-against-the maker. ¢2+ Docirine- of sivict construction. A-clause-limiting-a-party’s-liability-will-be- construed: very: strictly,-e.g.,-in-shipping cases, -the doctrine-of-fundamental- obligation, -is-to-the: effect-that- where: a-carrier will-not-be-allowed to-hide- under an exclusion clause if goods are damaged if the ship-used-another route- other than the-one-stated in-the contract of camiage In: England, the- Unfair-Contract-Temms- Act,- 1977, made illegal-the-use-of-unfair- contract: terms: and- in: particular.. where- the- contract: involves: large- sellers. and. individual-consumers § « Validity-and-IMegality-of- Contract Even-if-all-the-other legal zequirements-are met, there-are-some instances in-which-a: contractmay be vitiated.-§ © ‘Vitiating-elements-of-a contract mit fact. Amistake may be§ Acommeon-mistake, Thisis where, 4 + a) The-goods-have ceased to exist,-res-exiincta, Case examples: Courturter-vs Haste where there was a contract for the sale of maize in England -from- the Middle-East ‘The maize started to rotin-transit-and the captain of the ship soldit at: a-throwaway price to-mitigate-any further losses.- The: contract-was-held-void-as the: subject matter-had-ceased-to-exist.| ‘Similarly,-in-dnderson-vs-Kalidas-d&- Co, where there-was-a-contract-forthe-sale-of- gunny bags. Unknown to both parties, they were destroyed by fire. The court held the contract-void. 4 NBV-A-‘void-contract’ is-a-contradiction-in-terms: the-contractis deemed not-to-have.other than the one stated in the-contact of carriage.) In England, the- Unfair-Contract- Terms: Act, 1977, ‘made- illegal-the-use of-unfair- contact: terms: and: in: particular, where: the: contract: involves: large: sellers- and. individual consumers. © Validity -and-Ilegality-of Contract Even if-all-the-other legal requirements-are met, there are-some instances in which a contract may be vitiated. © Vitiating-elements-of-a-contract€ i) Mistake. “Mistake is-a-misapprehension-of a-fact. Amisuke may be$ Acommon-mistake, This is where, | + a)-The-goods have-ceased.to exist,-res-exiincta.-Case-examples:4 Courturter-vs Hastie-where there was.a contract for the sale of maize in England from the Middle-East The maize started to rot in transit and the captain of the ship sold it-at a throwaway price -to-mitigate-any-further losses. The contract was held-void.as the subject matter-had-ceased to-exist.§ Similarly, in-Anderson vs Kalidas & Co,-where there-was:a-contract for the sale-of: gunny bags. Unknown to both partes, they were destroyed by fire. ‘The court held the. contract void. NB-A-void-contract’ is }-contradiction in-terms:-the contractis-deemed not to-have into place inthe firstplace.{ + b)- There- is- a- mistake about: the- subject- matter- of- the- coutract.-Case- example; Sheikh: Brothers: Limited: ys: Arnold. Julius: Oschner- where: there was x contract whereby the owner of a piece of land granted alicense to-another to-go tothe: farm;and.cut sisal, take it to the-owner who would-process:and:sell it and the parties: would:share the-profit A term: of the contract~was that the licensee would-deliver'a minimum of 5 0tof sisal per month. It tumed-our thatthe farm could not produce 50t- sisal-per month. There-was-a mistake, and the-contract-was declared void MunaL-misate. In-this-case, there-is-no-consensus-ad idem. ‘In-other- words, the