UNIVERSITY OF NAIROBI

SCHOOL OF BUSINESS
ASSIGNMENT
COURSE: BUSINESS LAW
COURSE CODE: DBA 323
LECTURER: FELIX ODIMMASI
REG NO: D33/43537/2017
Abstract

Many individuals and companies enter into contracts without fully understanding the terms. In
general , a contract may be defined as the bargained for exchange .The typical contract
formation process involves an offer ,acceptance ,mutual assent and consideration for a promise
to do or not do a particular thing that may be done or omitted .In general an acceptance needs to
unambiguously accept the terms and conditions of an offer in order for a contract to arise .The
mutual assent is often called a “meeting of the minds .” If the parties did not agree to same
essential concepts of a deal, then there was no mutual assent because no meeting of the minds
occurred .While a tort is a civil breach committed against another in which the injured party can
sue for damages.in personal injury cases , the injured party will attempt to receive compensation
with the representation of a personal injury lawyer in order to recover from damages incurred.
The law of contract

Introduction

A contract can either be an implied contract or an express contract. An implied

contract is where some of the terms are not expressed in actual words.
Contrastingly an express contract is one in which can be either communicated
orally or in writing. An implied contract can be either implied in law or implied in
fact.

Treitel states

In deciding whether to imply a term in law, the courts are guided by general policy
considerations affecting the type of contract in question; and to this extent
considerations of reasonableness and fairness may enter into the implication of
such terms.

Simplistically it is a means for which a party would not be required to compensate

the other. The test for a contract implied by law is one of necessity. In the case of
Liverpool City Council v Irwin it was held that it was an implied term of a lease of
a maisonette in a Council block that the landlord should take reasonable care to
keep the common parts of the block in a reasonable state of repair. The term was
clearly not implied in fact: the "officious bystander" test was not satisfied; nor was
the implication necessary to give business efficacy to the contract. Therefore on the
facts there had been no breach of the obligation.

Terms implied by fact happen where the courts will imply a term if it is thought
necessary to implement the parties presumed intention. There have been two tests
developed. Firstly the business efficacy test and secondly the officious bystander
test. The business efficacy test asks whether the term was necessary to give the
contract business efficacy, in other words, would the contract make business sense
without it. The courts will therefore only imply a term if and where it is necessary
to do so. An example of this is shown in the case of The Moorcock. The court held
in this case that the honesty of a business required an implied undertaking on the
part of the wharf owner that it was a reasonably safe place to moor a ship. The
wharf owner had broken his implied undertaking and was, therefore, liable in
damages to the ship owner.
This has later been confirmed in Wilson v Best Travel where it was held since the
glass used in the patio doors met with Greek safety standards, the defendants had
acted with reasonable care and skill for the purposes of the standard set in S 13
Sale and Supply Goods Act 1982.

Elements of a contract

A contract is much more than an agreement between two people. There must be an
offer and acceptance, intention to create a legally binding agreement, a price paid
with a legal capacity to enter a contract of your own free will, and proper
understanding and consent of what is involved. Any duress, false statements,
unconscionable dealings could make a contract illegal and void.

In order for a contract to be enforceable, it must contain:

An offer that specifically details exactly what will be provided

Acceptance, which is the agreement by the other party to the offer presented
Consideration, money or something of interest being exchanged between the
parties
Capacity of the parties in terms of age and mental ability
The intent of both parties to carry out their promise

Legally enforceable terms and conditions, also called object of the contract

We can also say that a contract is enforceable when both parties agree to
something, back the promise up with money or something of value, both are in
sound mind and intend to carry out their promise and what they promise to do is
within the law.

Most commonly, a contract is written and signed by the parties. However, there are
several other types of contracts that are considered enforceable. There are even
some that are not considered enforceable and serve only as a way for a court to
determine the obligation on the part of either party.

Express Contract

An express contract is the most common contract type. In this type of contract, all
elements are specifically stated. This can be written or done orally. Either way,
offer, acceptance and consideration must bind the parties together legally. And
both parties must clearly understand the terms and conditions each is agreeing to.

For example Anthony decided to rent an apartment from landlord Evans, he signed
a lease. In the lease, it stated the amount of the rent, the length of the lease and
what amenities are included in the rent. Anthony gave Evans a down payment
equal to one month's rent to secure the apartment, signed the agreement and Evans
handed over the keys and rights to occupy the place for a period of time written
into the lease agreement. Anthony and Evans entered into an expressed contract for
the rental of an apartment.

An oral contract works the same way. In an oral contract, like negotiating the price
of a new motor cycle, the parties agree on a set price, a monthly payment schedule
if applicable and any warranties or guaranties included in the offer. Once
acceptance is made and consideration is exchanged, the contract for the motor
cycle is binding and enforceable. As long as both parties uphold their promise, the
motor cycle cannot be returned at a later date, nor can the salesman request the
motor cycle back from the new owner.

Implied In-Fact Contract

An implied in-fact contract binds parties together through a mutual agreement and
intent, but there are no expressed terms of the agreement. The agreement holds
mutual intention based on facts and circumstances and a reasonable assumption
from the circumstances and relations between the parties. For an implied in-fact
contract to be enforceable, there are three elements that must be considered:

An unambiguous offer and acceptance; the contract should be easy and simple to
be understood well.

Mutuality of both parties to be bound to the contract; the two parties must come
into agreement.

Consideration; both parties should be handled equally without lying on one side
than the other.

The elements can be determined by the behaviors of the parties. For example,
when a guest orders a steak at a restaurant, it is assumed that the steak will be
cooked and served to the guest's liking and the guest has every intention of paying
for the meal.

Implied In-Law Contract

An implied in-law contract, works differently from the other. In this type of
contract, the elements are not specifically written or expressed. In fact, this type of
contract is used as a remedy in a situation when one party to the implied-agreement
received unjust enrichment resulting from not paying for a product or service
rendered. This sounds confusing but it really boils down to this - if a product or
service is rendered to a party without paying, it becomes inequitable for the
rendering party.

An example will help to explain how a implied in-law contract works. Kevin took
her car into the shop to have her tires rotated. As the mechanic performed the
agreed upon service, he noticed that there were a few questionable lug nuts. If he
leaves the existing lug nuts, it could cause a tire to fall off while Kevin is driving.
The mechanic changes the cracked lug nuts for a few new ones and completes the
job. When Kevin returns, she learns that the bill is higher than she originally
agreed upon because of the extra charge for the parts. While Kevin never agreed to
the additional repair, it was necessary and needed to be done at the time of the
repair to prevent a driving disaster.

If Kevin does not pay for the lug nuts, it is unjust enrichment under the law. She is
unfairly receiving a benefit from the repair shop that she did not pay for. This is
not equitable for the repair shop because they paid for the lug nuts in their
inventory.

There are certain elements that must be present:

One party was enriched or received a product or service for which they did not pay

One party was impoverished because they provided a product or service and
received no compensation

A connection between the two parties exists

There was no justification for the enrichment

No remedy was provided

Important To Understand Contract Law Basic Principles

In order to understand meaning of sale of goods and or service agreements, it is

also important to understand the basic principles of contract law. Contract law is
about keep in force promises and also making them legally binding without
considering whether there is something in writing to this effect. Despite the word
‘contract’ and contrary people belief that a written contract is not needed in order
for obligations to exist in law.

A contract can also be formed by orally or by connections, or one party making an

offer to the other party and the other party accepting the offer. When purchasing
something item in shop or taking a taxi are all examples of this offer and accepting
the offer. Of course it must be confirm that both offer and acceptance were
understood and communicated were by both parties and that both parties were
legally capable of making promises, and also something was being offered in
exchange for the promise that the other party made, for example money. And while
‘putting it in writing’ or not it is required for the legally binding contract to exist.
An offer can be defined as a statement of willingness to contract on detail terms
made with the intention that if the contract is accepted it shall become a binding
contract. An offer can be an express or implied from conduct.

Acceptance of an offer also creates a legally binding contract provided that any
persisting prerequisites are satisfied. An offer can be accepted different means, also
if offer specifies the means by which it must be accepted, then only that method
will suffice to perfect the formation of the contract.

Acceptance is sometime communicated either orally or in writing. It may also be

understood by the conduct of the parties. It is not open for the offer or to say that
the offer will be treated as accepted by the offered unless he hears differently from
them. Mere silence and inaction is inadequate to constitute an acceptance.

Although it is usually the wisest option, legally binding contracts do not just apply
to contracts set out in writing. Under the eyes of the law verbal contracts are just as
legally binding as written contracts. A contract is basically an agreement between
two parties, for example, one party supplies a service and the other pays for it.
Regardless of whether this contract is set down in writing or verbally it is still a
binding contract under law.

Example legally binding contract of different side

This is an example of Rowland v Divall [1923]. The claimant, a car dealer, bought
a car from the defendant for £334. He painted the car and put it in his showroom
and sold it to a customer for £400. Two months later the car was impounded by the
police as it had been stolen. It was then returned to the original owner. Both the
claimant and defendant were unaware that the car had been stolen. The claimant
returned the £400 to the customer and brought a claim against the defendant under
the Sale of Goods Act.

The defendant did not have the right to sell the goods as he did not obtain good
title from the thief. Ownership remained with the original owner. The defendant
had 2 months use of the car which he did not have to pay for and the claimant was
not entitled to any compensation for the work carried out on the car.

A Crime

A crime is an offence that merits community condemnation and punishment,

usually by way of fine or imprisonment. This is different from a civil wrong (a
tort), which is an action against an individual that requires compensation.

Criminal offences are normally prosecuted by the State or the Commonwealth,

whereas it is usually up to an individual to take a civil action to court. It is also
possible for an individual to begin criminal proceedings, but this is very rare.

Some matters, such as assault, can be both crimes and civil wrongs at the same
time. The police can prosecute for assault and the victim can take civil action to
recover money (or some other kind of compensation) for any injury suffered.

There are a range of sources of law which establish the existence of crimes.

Some crimes exist under Commonwealth Acts, such as the Crimes Act 1914 and
the Customs Act 1901 Some crimes exist only at common law (judge made law,
not found in legislation). Most criminal offences have been codified (put into
legislation) but some common law criminal offences still exist in jurisdictions such
as South Australia. Types of Crimes and Courts
There are three types of criminal offences:

 Summary or simple offences;

 Minor indictable offences
 Major indictable offences.

The category into which an offence falls can determine which court will deal with
the matter.

A hearing or trial takes place only when a defendant pleads not guilty to the
charge.

After a plea of guilty, the court deals with the defendant by doing such things as:

 imposing a fine
 a sentence or suspended sentence of imprisonment
 recording or not recording a conviction (with or without penalty)
 imposing a good behavior bond
 ordering home detention
 ordering community service be undertaken

General Principles in Criminal Law

Legality; Law exists making this action illegal

Actus Reus; Human conduct (theft or murder IS, being a drug addict or prostitute
is not) conduct must be voluntary may include failure to act.

Men’s rhea; State of mind intent - acted with purpose or was practically certain.
Reckless –aware of new, conduct unreasonable/risky
negligent -should realize or should have known exception - strict liability crime

Harm; Harm to some other/thing

Causation; If act directly caused (homeowner shot accidentally by cops while

robber is running is not caused by robber)

Concurrence; Conduct and mental state must occur at same time

(Edwin wants to kill Joe, but accidentally hits him when Joe darts across road. this
is not concurrence)
Punishment; This is where the actual consequence of the crime is given to the
prosecutor.

Elements of a Criminal Offence

The two elements of a criminal offence

For a criminal offence to occur there must be two main elements - the prohibited
conduct and the mental element of a guilty mind or intention. Unless an offence
falls into the unusual category of a liability offence, the prosecution must, in order
to prove that a person has committed an offence, show that both these elements
were present.

For example, if a person intentionally and without lawful excuse strikes another
without that person's consent, an assault has been committed. The prohibited
conduct is the striking and the mental element, or guilty mind, is the intention to
strike.

On the other hand, if a person accidentally strikes another, no criminal offence

occurs because the mental element, or guilty mind, is absent. However, sometimes
a person may commit an offence by acting recklessly, that is, without a specific
intent but disregarding or not caring about the consequences of their actions.

Strict liability offences

Strict liability offences are the exception to this rule and require only the
commission of the prohibited conduct for an offence to arise. That is, no mental
element is required. Strict liability offences are usually offences of a relatively
minor regulatory nature.

For example, if a driver is speeding, the prosecution does not need to show that the
driver also had a guilty mind or intended to travel at that speed. As this is a strict
liability offence, the mere fact of travelling at a prohibited speed is enough to make
it an offence. It is not a defense that the vehicle's speedometer was faulty or that
the driver thought she or he was driving within the speed limit.

Ancillary criminal responsibility

Most people charged with offences are principal offenders. In general terms, a
principal offender is a person who performs prohibited conduct, but a person who
is less directly involved with that conduct can also have criminal responsibility on
the basis of a joint enterprise. For example, the person who drives the getaway car
is in a joint enterprise with those who hold up the bank; or the person who keeps a
lookout is in a joint enterprise with those who break into the house and steal
property as long as that person is aware of the offence that the offender is
committing.

An offence can be committed by a person who promotes aids and abets, or

conspires to commit, an offence. Those who encourage or give aid for the offence
are known as accessories to the crime. It is also an offence to comfort or assist a
person after an offence has been committed [Criminal Law Consolidation Act
1935 (SA) ss 241, 267].

Attempts

A person who does not manage to complete the offence can still be found guilty of
attempting to commit the offence [Criminal Law Consolidation Act 1935 (SA) s
270A(1)]. A person can be charged with attempting to commit an offence or may
be found guilty of attempt as a result of a case in which the person was charged
with a completed offence but where, according to the evidence, she or he failed to
complete the offence.

Conspiracy

People who plan to commit a crime can be found guilty of conspiracy even where
there has been no attempt made. People may be charged with this offence if there
is evidence that more than one person planned a crime and there was an agreement
to commit a particular crime. For example, if more than one person planned to rob
a bank, they can be charged with conspiracy even if the bank had not been
selected.
Tort Law
INTRODUCTION

Every person in our country is entitled to some legal right. Law imposes a duty on
every individual to respect the legal right bestowed on others and any person
interfering with someone else’s enjoyment of their legal right is said to have
committed a tort. The underlying principle of the law of tort is that every person
has certain interests which are protected by law. Any act of omission or
commission which causes damage to the legally protected interest of an individual
shall be considered to be a tort, the remedy for which is an action for unliquidated
damages.A.

Principles of tort law

1. PRINCIPLE OF DAMNUM SINE INJURIA AND INJURIA SINE DAMNUM

Damnum sine injuria is a Latin maxim which means damage without legal injury.
When there is an actual damage caused to the plaintiff without an infringement of
his legal right, no action lies against the defendant. In order to make someone
liable in tort, plaintiff must prove that he has sustained legal injury. Damage
without injury is not actionable in the law of torts.

Example: A sets up a rival school opposite to B’s school with a low fee structure as
a result of which students from B’s school flocked to A’s school thereby causing a
huge financial loss to A. This act of A is not actionable in law of torts since it did
not lead to the violation of any legal right of the plaintiff although he has sustained
financial loss.

Injuria sine damnum is a Latin term which means legal injury without any damage.
This implies an infringement of the legal rights of a person without any actual loss.
Loss in this sense could mean loss of health, monetary loss etc. Since there is an
infringement of legal right of a person, right to sue for a remedy is available
against the wrongdoer regardless of the fact whether any actual loss is sustained or
not.

In the leading case of David v Hyline the defendant, a returning officer at a voting
booth refused to allow the plaintiff, a duly qualified voter from voting. The
candidate for whom the plaintiff was voting got elected and therefore no loss was
suffered by him. The court held that although the plaintiff did not sustain any
actual loss, but his legal right to vote was violated for which he was granted a
remedy.

2. PRINCIPLE OF VICARIOUS LIABILITY

It is a general rule that a person is responsible for his own act of omission and
commission but in certain cases a person is liable for the act of others. This is
known as vicarious liability. The essential elements of vicarious liability are as
follows:

There must be a relationship of a certain kind.

The wrongful act must be related to the relationship in a certain way.
The wrongful act must be done within the course of employment.
Most common example of vicarious liability include:

1. Employers liability for the act of his servant during the course of
employment: This liability is based on the principle of “respondent superior”
whereby a person is responsible for the act. This means he who does an act through
another is deemed in law to do it himself.

2. Principal’s liability for the act of his agent: When an agent performs an act
which is authorized by the principle, the latter becomes liable for such an act of the
agent provided the act is done within the course of employment.

3. Liability of partners for each other’s torts: When a partner in the normal
course of business of a partnership firm commits a tort, all the other partners are
equally responsible for the tort as the guilty partner.

3. PRINCIPLE OF VOLENTI NON FIT INJURIA

The Latin maxim volent non fit injuria literally means “to one who volunteers, no
harm is done”. A person who after knowing the risks and circumstances willingly
and voluntarily consents to take the risk cannot ask for compensation for the injury
resulting from it. A person who voluntarily abandons his rights cannot sue for any
damage caused to him. The essentials are as follows;

 Agreement (express or implied)

  Knowledge of the risk

4.PRINCIPLE OF NEGLIGENCE

Negligence is said to have been committed when a person owes a duty of care
towards someone and commits a breach of duty by failing to perform it resulting in
a legal damage caused to the complainant. In other words, a tort of negligence is
committed when a person is injured due to the irresponsibility of another. The
damage so caused must be an immediate cause of the act of negligence and not a
remote cause.

Essential elements of negligence are as follows:

 Duty to take care

 Beach of such a duty
 Legal damage caused to the complainant due to a breach of duty

The burden of proof falls on the plaintiff that he has sustained legal damage due to
a breach of duty on the part of the defendant. However, in certain cases the
plaintiff doesn’t have to prove negligence on the defendant’s part. Such cases fall
under the principle of res ipsa loquitor which means “things speak for itself” where
it is evident from the facts of the case that there has been negligence on the side of
the defendant.

5. PRINCIPLES OF PERSONAL SECURITY

Principles of personal security are as follows:

ASSAULT

Assault is an act which creates in the mind of a person reasonable apprehension of

a physical threat or a harm accompanied by a capacity to carry out such a threat.
Essential elements of assault are as follows:

Apprehension of harm
Intention to use force
Capacity to use force
 BATTERY

Battery refers to a harmful, offensive and unlawful touching of a person against his
will. It is an application of force to the body of another in an offensive manner.
Battery is an accomplished assault. Essential elements:

Intention to use physical force

Actual physical contact
FALSE IMPRISONMENT

Unlawful restraining a person without his will by someone who does not have any
legal authority to do so amounts to false imprisonment. A person may also be made
liable for false imprisonment if he intentionally restricts another person’s freedom
of movement without any lawful justification. Arrest of a person without any legal
warrant and authority also amounts to false imprisonment. Essential elements:

Willful detention
Detention without consent
Detention is unlawful

Example: A person locking another person in a room without the consent of the
person being locked.

6. PRINCIPLE OF NUISANCE

The word nuisance is derived from the French word ‘nurie’ which means ‘to hurt’
or ‘to annoy’. Nuisance is an unlawful interference with a person’s enjoyment of
land or some rights over or in connection with it. Example: Destruction of crops of
an individual, a poisonous dog of a person enters into the neighbor’s premises and
causes destruction.

7. PRINCIPLE OF TRESPASS TO PROPERTY

Trespass to property refers to an unjustifiable physical encroachment of land of

one person by another. If a person directly enters upon another person’s land
without permission or remains upon the land or places any object upon the land, he
is said to have committed the tort of trespass to land. One of the categories of
trespass is;
CONTINUING TRESPASS: Continuing trespass occurs when there is a
continuation of the presence after the permission has been withdrawn or when the
offending object remains on the property of the person entitled to possession. For
example continuing to keep an object on someone’s land even after the permission
has been withdrawn.

8. PRINCIPLES OF REPUTATION AND PRIVACY

The principles of reputation and privacy are as follows:

DEFAMATION

Defamation means publishing false and defamatory statement about someone

without any lawful justification which lowers his reputation in the eyes of the right
thinking members of the society. In other words, defamation means intentional
false communication either written or spoken which harms a person’s reputation.

Essential elements of defamation are as follows:

Statement must be published

It must be defamatory
It must be false
It must refer to the plaintiff

9. PRINCIPLE OF STRICT LIABILITY AND ABSOLUTE LIABILITY

STRICT LIABILITY: At times a person may be held responsible for doing a

wrong even though there had been no negligence on his part or no intention to do
such wrong or even if he had taken necessary steps to prevent such a wrong from
happening. This is known as the principle of strict liability and is based on a no
fault theory. The principle of strict liability was first laid down in the landmark
case of Ryland’s v. Fletcher. The essential elements of strict liability are as
follows:

There has to be some hazardous thing brought by the defendant on his land.
Escape of the hazardous thing from the territory of the defendant.
There must be a non-natural use of land.
ABSOLUTE LIABILITY: Absolute liability is a stricter form of strict liability. It
refers to the no fault theory liability in which the wrongdoer is held absolutely
liable for the act of omission or commission without any defenses which are
available to the rule of strict liability. It is applicable only to those people who are
involved in hazardous or inherently dangerous activity whereby they become
absolutely liable to full compensation for the harm caused to anyone resulting from
the operation of such hazardous activity. The rule of absolute liability was first laid
down in M.C Mehta v. Union of India.

10. POSITION OF MINORS IN LAW OF TORT

In India, a minor is a person who is below the age of 18 years. They can sue just
like adults but through their parents and can also be sued like adults if they are old
enough to form an intention to commit a tort.

CAPACITY TO SUE

A minor can sue for any wrong done to him through his ‘litigation friend’ who
usually is his father. A minor may even sue his parents for a negligent act. A child
who sustained injury while in the mother’s womb can also sue the guilty after
coming to the world.

CAPACITY TO BE SUED

A minor is generally not capable of being sued if he commits a tort since he is

incapable of reimbursing damages, but in most of the cases he can be sued just like
an adult. Also, a minor can be sued for contributory negligence.

PARENTS LIABILITY FOR A MINORS TORT

Parents could be held liable for the tort committed by their children if they owed a
direct duty of care towards their child while he committed the tort. They are
responsible for their children’s action the same way as the employers are
responsible for the harmful action of their employees.
Conclusion
There may be an extensive negotiation between the parties leading to a conclusion of
contract .This maybe in a form of an oral or written communications such as letters ,price lists
,advertising as well as formal contract documents .If a dispute arises ,it has to be decided what
exactly has been said or written and what is the effects of it .Certain problems can arise when
both parties agree that a certain statement was made ,although they disagree on whether that
statement was part of a contract and therefore intended to be binding.

Protection of human rights has got wide recognition in the present day world of human
rights revolution .human rights jurisprudence gets power only if the concepts of social justice is
promoted according to the social economic development of the state .The change in the
administration of a state from laissez faire to welfare system and inclusion of the declaration of
rights in the constitutions of most of the countries after the second world war increased .the
responsibility of the states in protecting the human rights of the people .But when it comes to
enforcing these rights against the state for its violation the principles and procedures seems to be
inadequate.
References

 Jill Poole, (2006) Casebook on Contract Law (8th Ed) UK, Oxford University
Press
 P.s Atnah, J.N Adams (2005) The sale of goods (11th Ed) Great Britain,
Cavendish publishing limited
 www.e-lawresources.co.uk/Statutory-implied-terms.php
 whatconsumer.co.uk/is-it-a-legally-binding-contract
 The Modern Law of Contract - Richard Stone
 Law of Contract - Paul Richards
 Better Routes to Redress, Cabinet Office Publications. Lewis, R., Morris, A.
and Oliphant, K. (2006)
 Law Commission Report No 266 (2000)
 www.westlaw.co.uk
 www.articlesbase.com/law-articles/contract-law-summarised-explanations-
definitions-cases-201057.html