OLW 123: Law of Contract

KA06: Contemporary Issues in Law of

Contract

Tutor: Eliud Kitime

 Introduction

• Development of science and technology, globalisation, international trades have shaped the way of
life of many people.

• As a result, nature, functioning and regulation of contractual relationships have evolved in

consonance with particular developments.

• There are current issues that have evolved and touch the nature and functioning of the law of
contract.
• electronic contracts.
• consumer contracts.
• international contracts.
 Preview
• In this lecture, we are going to acquaint ourselves with contemporary issues of law of contract but
specifically on: -

• Electronic contracts;

• Consumer contracts; and

• International contracts
 Electronic Contracts

• They are contracts made through internet.

• They are not paper based contracts, they are made online.

• They are called cyber contracts, online contracts, and e-contracts

• They are born out of the need for speed, convenience and efficiency in exchanges.
 Essentials of Electronic Contracts

• Electronic contracts are governed by the same legal requirements that govern normal contracts e.g.
offer, acceptance, free consent, consideration, capacity, legality – s 10 of the LCA, Cap 345 RE
2019

• Parties may agree to form their contract electronically - s 21(1) of ETA, 2015

• Electronic contract becomes effective even made with interactive computer systems – s 26 of the
ETA, 2015

• Contract enforcement cannot be denied just because there was electronic record for the formation
of such contract – s 21(2) of ETA, 2015
 Formation of Electronic Contract

• Electronic contract passes through several phases such as conception, preparation, negotiation,
agreement and performance.

• Electronic contracts can be formed through e-mails, website forms and online agreements.

• Online agreements are in varieties such as click wrap, shrink wrap, sign in wrap, browse wrap and
electronic data interchange.
 Circumstances of Electronic Contract

• The interaction of two or more individuals using electronic means, such as e-mail

• The interaction of an individual with an electronic agent, such as a computer program such as click
wrap agreements

• The interaction of at least two electronic agents that are programmed to recognize the existence of
a contract such as electronic data interchange – computer to computer exchange of standard
business documents such as purchase orders, bills, invoices etc.
 Time and Place of Electronic Contract

• Electronic contract is formed at the time and place where acceptance of the offer becomes
effective – s 25(1) of the ETA, 2015

• Electronic offer becomes effective at the time it is received by offeree - s 25(2) of the ETA, 2015
 Consumer Contracts

• These are contracts concluded between a producer of goods or services and a consumer.

• Producers are manufacturers, suppliers, sellers, service providers and operators.

• Consumer is any person who purchases or offers to purchase goods or services otherwise
than for the purpose of resale.

• Reg. 3 of the Standard Form (Consumer Contracts) Regulations of 2014.

 Features of Consumer Contracts

• They are standard form contracts – reg. 16(1) of the Standard Form (Consumer Contracts)
Regulations of 2014.

• They have standard business terms – reg. 4 of the Standard Form (Consumer Contracts)
Regulations of 2014.

• They are registrable to respective authority – reg. 20 of the Standard Form (Consumer Contracts)
Regulations of 2014.

• They are strictly regulated by consumer protection laws such as Fair Competition Act and the
Standard Form (Consumer Contracts) Regulations of 2014.
 Regulation of Consumer Contracts

• Consumer contracts in Tanzania are standardised and regulated by several laws: -

• The Fair Competition Act of 2003

• The Standard Form (Consumer Contracts) Regulations of 2014

 Why Regulation?
• To introduce the notion of good faith in contractual transactions – reg. 24(1)(b) of the Standard
Form (Consumer Contracts) Regulations of 2014.

• To prevent imbalances in the rights and obligations of consumers on the one hand and sellers and
suppliers on the other hand – reg. 24(1)(a) of the Standard Form (Consumer Contracts)
Regulations of 2014.

• To ensure contract terms in consumer contracts to be drafted in plain and intelligible language –
reg. 26(1) of the Standard Form (Consumer Contracts) Regulations of 2014.

• To interpret ambiguities in favour of consumers – reg. 24(1)(c) of the Standard Form (Consumer
Contracts) Regulations of 2014.
 Effects of non-compliance

• Void contracts may result in the contract being cancelled and rewritten in whole or in part – reg.
36 of the Standard Form (Consumer Contracts) Regulations of 2014.

• Producer may be required to reimburse the consumer for any losses or injuries stemming from the
contract violation – reg. 27(2) of the Standard Form (Consumer Contracts) Regulations of 2014.

• Consumers may be held liable for providing producers with fraudulent information in the contract
– reg. 39 of the Standard Form (Consumer Contracts) Regulations of 2014.

• Criminal consequences may also result if either party acted with criminal or illegal intent – reg.
39 of the Standard Form (Consumer Contracts) Regulations of 2014.
 International Contracts
• International contracts are contracts which have been entered between the parties of different
states and or jurisdictions.

• They are essential means of guaranteeing compliance with obligations and ensuring acceptance of
them by both parties.
 What makes a contract international?

• Parties are based on different jurisdictions.

• Subject matter of contract is in different jurisdictions.

• Place of contractual performance is in different jurisdictions.

 Considerations when drafting international
contract
• Choice of Jurisdiction – which courts or tribunal may entertain the matter

• Choice of law – which law is applicable to the matter

• Formalities – writings, signature, prescribed forms, deeds etc.

• Insurance – insurance of goods or services

• Transport – carriage of goods

• Security -
 International Contract Law

• Parties sometimes conclude an international agreement without including a choice of law.

• If no general conditions apply, the law applicable to the agreement is determined on the basis of
international treaties.

• The treaties are applicable when states of the parties to contract have ratified those treaties.
 International Contract Law
• United Nations Convention on Contracts for the International Sale of Goods (CISG) of 1980.

• UNDROIT principles.
• They are made by International Institute for the Unification of Private Law.
• They set forth general rules for international commercial contracts.

• The Hague Principles on Choice of Law in International Commercial Contracts.

• These are the first non-binding instrument sponsored by the Hague Conference on Private
International Law
 International Contract Law
• Incoterms
• Incoterms are a set of rules which define the responsibilities of sellers and buyers for the
delivery of goods under sales contracts.
• They are protected by International Chamber of Commerce e.g FOB, CIF

• Lex Mercatoria
• Lex mercatoria refers to a body of oral, customary mercantile law which developed in
medieval Europe and was administered quite uniformly across Europe by merchant judges,
adjudicating disputes between merchants.
 Revision

• Electronic contracts are made online. They are born out of the need for speed, convenience and
efficiency in exchanges.

• Consumer contracts concluded between a producer of goods or services and a consumer. They are
strictly regulated by the laws.

• International contracts are entered between the parties of different countries.

 References

• Kopel, S., Guide to Business Law, Fifth Edition, Oxford University Press Higher Education
Division, United Kingdom, (2012)

• Cartwright, J., Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer,
Hart Publishing (1656), (2013).

• Bradgate, R., Commercial Law, 3rd Edition, Oxford University Press, United States, (2005).