CAPACITY TO CONTRACT

The parties who enter into a contract must have the capacity to do so.
Capacity here means competence of the parties to enter into a valid contract.

An agreement becomes a contract if it is entered into between the parties who are
competent to contract.
Every person is competent to contract who is of:
(a) The age of majority,
b) Soundness of mind and
(c) Is not disqualified from contracting by any law to which he is subject.

1. MINORS

A minor is a person who has not completed eighteen years of age.

In the following two cases, he attains majority after twenty one years of age:
1.Where a guardian of a minor ‘s person or property has been appointed under the
guardians and wards Act 90, or
2.Where the superintendence of a minor‘s property is assumed by courts of wards.

The rules governing minor’s agreements are based on two fundamental rules:

1. The law protects minors against their own inexperience and against the possible
improper designs of those more experienced.

It has been rightly observed, in support of these arguments that “the law
protects their (minor’s) persons, preserves their rights and estates, excuses their
laches (negligence or undue delay in enforcing a right such as to disentitle a person
to a certain remedy) and assists them in their pleadings;

2. The law should not (in the cause of protecting minors) cause unnecessary
hardship to those who deal with minors:

POSITION OF THE MINOR’S AGREEMENT:

(a)An agreement with or by a minor is void and inoperative ab initio.

(b)He can be a promise or a beneficiary. Incapacity of a minor to enter into a
contract means incapacity to bind himself by a contract.

There is nothing which debars him becoming a beneficiary, such contracts may be
enforced at his option.

Example ‘A’, a minor, under a contract of sale delivered goods to the buyer. Held,
he was entitled to maintain suit for the recovery of price.

(3) His agreement can be ratified by him on attaining the age of majority.
“Consideration passed under the earlier contract cannot be implied into the
contract which the minor enters on attaining majority.

(4)If he has received any benefit under a void agreement he cannot be asked to
compensate or pay for it.

(5) He can always plead minority. Even if he has by misrepresenting his age,
induced the other party to contract with him, he cannot be sued either in contract
or in tort for fraud because if the injured party were allowed to sue for fraud, it
would be giving him an indirect means of enforcing the void agreement.

(6) There can be no specific performance of the agreements entered into by him
as they are void ab initio.

(7)He cannot enter into a contract of partnership. But he may be admitted to

the benefits of an already existing partnership with the consent of the other
partners.

(8) He cannot be adjudged insolvent. This is because he is incapable of

contracting debts

(10) He can be an agent. An agent is merely a connecting link between his principle
and a third party. As soon as the principle and the third party are brought
together, the agent drops out.

(11)His parents/guardian are/is not liable for the contract entered into by him,
even though the contract is for the supply of necessaries to the minor.
(12)A minor is liable in tort (a civil wrong), but where a tort arises out of a
contract a minor is not liable in tort as an indirect way of enforcing an invalid
contract.

PERSONS OF UNSOUND MIND

One of the essential conditions of competency of parties to a contract is that they

should be of sound mind.

A person is said to be of sound mind for the purpose of making a contract if, at the
time when he makes it, he is capable of understanding it and of forming a rational
judgment as to its effect upon his interests.

A person, who is usually of sound mind, but occasionally of unsound mind, may make
a contract when he is of sound mind.’’

Soundness of mind of a person depends on two facts:

(i) His capacity to understand the contents of the business concerned, and

(ii) his ability to form a rational judgment as to effect upon his interests.

CONTRACTS OF PERSONS OF UNSOUND MIND

Lunatics: A lunatic is a person who is mentally deranged due to some mental strain
or other personal experience.

He suffers from intermitted intervals of sanity and insanity.

He can enter into contracts during the period when he is of sound mind.

Idiots: An idiot is a person who has completely lost his mental powers. He does not
exhibit understanding of even ordinary matters.

Idiocy is permanent whereas lunacy denotes periodical insanity with lucid intervals.

An agreement of an idiot, like that of a minor, is void.

Drunken or intoxicated persons: A drunken or intoxicated persons suffers from

temporary incapacity to contract, i.e. at the time when he is so drunk or
intoxicated that he is incapable of forming a rational judgement.
Agreements entered into by persons of unsound mind are void.

However, persons of unsound mind are liable for necessities supplied to them or to
anyone whom they are legally bound to support.

But even in such cases, no personal liability attaches to them.

It is only their estate which is liable.

OTHER PERSONS

Alien enemies: An alien (the subject of a foreign state) is a person who is not a
subject of the Republic of Kenya.

He may be:

(i) An alien friend, or

(ii)an alien enemy

Contracts with an alien friend (subject to certain restrictions, are valid.

Contracts with an alien enemy (an alien whose state is at war with the Republic of
Kenya) may be studied under two heads, namely:

(a)Contracts during the war, and

(b)Contracts made before war.

Contracts made before the war will either be suspended or dissolved.

Foreign sovereign, their diplomatic staff and accredited representatives of

foreign states: They have some special privileges and generally cannot be sued
unless they of their own submit to the jurisdiction of our law courts. They can
enter into contracts and enforce those contracts in our courts.

Corporations: A corporation is an artificial person created by law, having a legal

existence a part from its members. It may come into existence by a special Act of
the legislature or by registration under the companies Act.
Insolvents: When a debtor is adjudged insolvent, his property vests in the official
Receive or official assignee’s. As such that the insolvent is deprived of his power
to deal in that property, It is only the official Receiver or official Assignee who
can enter into contracts relating to his property, and sue and be sued on his behalf.

Convicts: A convict when undergoing imprisonment is not capable of entering into a

contract. He can, however, enter into, or sue on a contract if he is lawfully at large
under a license called “bail or bond”. His period of sentence expires or when he is
pardoned.

FREE CONSENT

It is essential to the creation of a contract that the parties are ad idem, i.e. They
agree upon the same thing in the same sense at the same time and that their
consent is free and real. “All agreements are contracts if they are made by the
free consent of parties”.

Consent means acquiescence or act of assenting to an offer.

Free consent: Consent is said to be free when it is not caused by:

(1) Coercion or (2) Under influence, or (3) Fraud, or (4) Misrepresentation, or (5)
Mistake,

When there is no consent, there is no contract:

Example: An illiterate woman executed a deed of gift in favour of her nephew

under the impression that she was executing a deed authorizing her nephew to
manage her lands. The evidence showed that the woman never intended to execute
such a deed of gift nor was the deed ever read or explained to her. Held, the deed
was void and inoperative.

It is clear that the consent of the woman is altogether absent. Had she known the
true position, she would not have signed the documents thus a nullity.

COERCION

When a person is compelled to enter into a contract by the use of force by the
other party or under a threat, “Coercion” is said to be employed.

Coercion is the committing, or threatening to commit, any act forbidden by the

penal code, or the unlawful detaining, or threatening to detain, any property, to the
prejudice of any person whatever, with the intention of causing any person to enter
into an agreement.

Coercion includes fear, physical compulsion and menace to goods.

Example: ‘A’ threatens to kill ‘B’ if he does not lend Kshs. 1,000 to ‘C’.’B’ agrees to
lend the amount to ‘C’. The agreement is entered into under coercion.

Consent is said to be caused by coercion when it is obtain by:

1. Committing, or threatening to commit, any act forbidden by the penal code, or.
2. Unlawful detaining or threatening to detain any property.
Effect of coercion
When consent to an agreement is caused by coercion, fraud or mispresentation,
the agreement is a contract voidable at the option of the party whose consent was
so caused.

The onus of proving that the consent of a party to a contract was caused by
coercion and that he would not have entered into it had coercion not been
employed, lies on the party who wants to relieve himself of the consequences of
coercion.

Duress

In the English law, the near equivalent of the term coercion is duress. Duress
involves actual or threatened violence over the person of another 9or his wife,
parent or child) with a view to obtaining his consent to the agreement.

If the threat is with regard to the goods or property of the other party, it is not
duress.

UNDUE INFLUENCE

Sometimes a party is compelled to enter into an agreement against his will as a

result of unfair persuasion by the other party.

This happens when a special kind of relationship exists between the parties such
that one party is in a position to exercise undue influence over the other.

Definition

“A contract is said to be induced by undue influence where the relations subsisting

between the parties are such that one of the parties is in a position to dominate
the will of the other and uses that position to obtain an unfair advantage over the
other.

A person is deemed to be in a position to dominate the will of another;

(a)Where he holds a real or apparent authority over the other i.e. relation between
master and servant, Doctor and patient.
(b) Where he stands in a fiduciary (relation of trust and confidence) to the other
i.e. father & son
(C) Where he makes a contract with a person whose capacity is temporally or
permanently affected by a reason of age, illness or mental or bodily distress.

Undue influence is sometimes called Moral Coercion.

Effect of undue influence

When consent to an agreement is obtain by undue influence, the agreement is a
contract voidable at the option of the party whose consent was so obtained.

Any such contract may be set aside either absolutely or if the party who is
entitled to avoid it has received any benefit thereunder, upon such terms and
conditions as to the courts may seem just and equitable.

The granting of relief on account of undue influence is founded on the principle of

correcting abuses of confidence.

Relationships which raise presumption of undue influence

The following relationships usually raise a presumptions of undue influence, viz. (i)
parent and child, (ii)guardian and ward,(iii) trustee and beneficiary, (iv)religious
adviser and disciple, (v) doctor and patient

Burden of proof

In an action to avoid a contract on the ground of undue influence, the plaintiff has
to establish that-

(i) The other party was in a position to dominate his will. Mere proof of nearness of
relationship is not sufficient for the court to assume that one relation was in a
position to dominate the will of the other.

(ii) The other party actually used his influence to obtain the plaintiff‘s consent to
the contract; and
(iii) The transaction is unconscionable (unreasonable)

Rebutting the presumption.

The presumption of undue influence can be rebutted by showing that-

(a)Full disclosure of facts was made by the influencing party to the party alleged
to have been influenced at the time of entering into the contract.

(b) The price was adequate; Inadequate of consideration is only an evidence of

undue influence, it is however not conclusive.

(c)That the weaker party was in receipt of independent advice, before making the
promise; The mere fact that independent advice was received will not necessarily
save the transaction .It must be shown that the advice was competent and based
on knowledge of all relevant facts.

MISREPRESENTATION AND FRAUD

A statement of fact which one party makes in course of negotiations with a view to
inducing the other party to enter into a contract is known as a representation. It
must relate to some facts which is material to the contract. The same may be
expressed by words spoken or written or implied from the acts and conduct of the
parties.

A representation, when wrongly made, either innocently or intentionally, is a

misrepresentation.

Misrepresentation may be:

(i) An innocent or unintentionally misrepresentation, or
(ii) An intentionally, deliberate or willful misrepresentation with an intent to
deceive or defraud other party.
The former is called “misrepresentation” and the latter “fraud”
MISREPRESENTATION

Misrepresentation is a false statement which the person making it honestly

believes to be true or which he does not know to be false.

It also includes non-disclosure of a material fact or facts without any intent to

deceive the other party.

Example; A, while selling his horse to B, tells him that the horse is thoroughly
sound. A genuinely believes the horse to be sound although he has no sufficient
ground for the belief. Later on B finds the horse to be unsound. The
representation made by A is a misrepresentation.

Requirements of misrepresentation

Misrepresentation is relevant if it satisfies the following requirements:

(1)It must be a representation of a material fact: Mere expression of opinion does

not amount to misrepresentation even if it turns out to be wrong.

2. It must be made before the conclusion of the contract with a view to inducing
the other party to enter into the contract.

(3)It must be made with the intention that it should be acted upon by the person
to whom it is addressed.

(4)It must actually have been acted upon and must have induced the contract.

(5) It must be wrong but the person who made it honestly believed it to be true.

(6)It must be made without any intention to deceive the other party.

(7) It need not be made directly to the plaintiff. A wrong statement of facts made
to a third person with intention of communicating it to the plaintiff, also amount to
misrepresentation.

Consequences of misrepresentation

The aggrieved party, in case of misrepresentation by the other party, can-

1. Avoid or rescind the contract; or

2. Accept the contract but insist that he shall be placed in the position in which he
would have been if the representation made had been true.

FRAUD

Fraud exists when it is shown that-

(1)a false representation has been made (a) knowningly,or(b)without belief in its
truth, or(c)recklessly, not caring whether it is true or false, and the maker
intended the other party to act upon it, or
(2) There is concealment of material fact or that there is a partial statement of a
fact in such a manner that the withholding of what is not stated makes that which
is stated false.

The intention of the party making fraudulent misrepresentation must be to deceive

the other party to the contract or to induce him to enter into a contract.

Fraud according to the law includes and of the following act committed by a party
to the contract:

1. The suggestion that a fact is true when it is not and the person making the
suggestion does not believe it to be true;
2. The active concealment of a fact by a person having knowledge or belief of the
fact;
3. a promise made without any intention of performing it:
4. Any other act fitted to deceive
5. Any such act or omission as the law specially declares to be fraudulent.

Example : A sells to B a horse which A knows to be unsound. A says to B that the

horse is his best and in fact it is sound. This is fraud.

Essential elements of fraud

1. There must be representation or assertion and it must be false: without a

representation or assertion, there can be no fraud except in cases where silence
may itself amount to fraud or where there is an effective concealment of fact.

2. The representation must relate to material fact which exists now or existed in
the past: a mere opinion, commendatory or puffing is not regarded as
representation of fact

3. The representation must have been made before the conclusion of the contract
with the intention of inducing the other party to act upon it: not only must the
representation be false and made with the knowledge of its falsity, but it must also
be made with an intent to deceive the other party.

4. The representation or statement must have been made with a knowledge of its
falsity or without belief in its truth or recklessly, not caring whether it is true or
false.
5. The other party must have been induced to act upon the representation or
assertion. A mere falsehood is not enough to give a right of action.

6. The other party must have relied on the representation and must have been
deceive.

7. The other party, acting on the representation or assertion, must have

subsequently suffered some loss. It is a common rule of law “that there is no fraud
without damage”.

Consequences of fraud

A contract induced by fraud is voidable at the option of the party defrauded. Until
it is avoided, it is valid, the party defrauded has, however, the following remedies:

1. He can rescind the contract;Where he does so, he must act within a reasonable
time. If in the interval, while he is deliberating, an innocent third party has
acquitted an interest in the property for value, he cannot rescind the contract.

2. He can insist on the performance of the contract on the condition that he shall
be put in the position in which he would have been if the representation made had
been true.

3. He can sue for damages

Distinction between fraud and misrepresentation

(1) Intention: In misrepresentation, there is misstatement or concealment of a

material fact or facts essential to the contract without any intention to
deceive the other party whereas in fraud, the intention is to deceive the
other party.
Misrepresentation is innocent, fraud is deliberate or willful.

(2) Belief; In case of misrepsentation, the person making the suggestion s

believes it to be true.
(3) Rescission and damages; In misrepresentation, the aggrieved party can
rescind the contract or sue for restitution. There can be no suit for
damages. In fraud, the remedy available to the aggrieved party is not limited
to rescission alone. He can also claim damages.

(4) Discovery of truth. In case of misrepresentation, the aggrieved party can

discover the truth with ordinary diligence. But in the case of fraud, where
 there is active concealment, the contract is voidable even though the
aggrieved party had the means of discovering the truth with ordinary
diligence.

MISTAKE

Mistake may be defined as an erroneous belief about something. It may be a

mistake of fact or a mistake of law.

Mistake of law may be – Mistake of law of the country or mistake of law of a

foreign country.

(1)Mistake of law of the country: Ignorantia juris non excusat,I,e ignorance of

law is no excuse, is a well settle rule of law. A party cannot be allowed to get any
relief on the ground that it had done a particular act in ignorance of law hence the
contract cannot be avoided in such circumstance.

(2)Mistake of law of a foreign country: Such a mistake is treated as mistake of

fact and the agreement in such a case is void.

Mistake of fact

Mistake of fact may be (1)a bilateral mistake, or unilateral mistake.

Bilateral mistake

Where both the parties to an agreement are under a mistaken belief as to a

matter of fact essential to the agreement.In such a case, the agreement is void.

Conditions to be fulfilled:

(i)The mistake must be mutual: both the parties should misunderstand each other
and should be at cross purposes.
(ii)The mistake must relate to a matter of fact essential to the agreement; As to
what facts are essential in an agreement will depend upon the promise in each case.

Unilateral mistake

When in a contract only one of the parties is mistaken regarding the subject-
matter or in expressing or understanding the terms or the legal effect of the
agreement, the mistake is a unilateral mistake.

A contract is not voidable merely because it was caused by one of the parties to it
being under a mistake as to a mistake as to a matter of fact.
A unilateral mistake is not allowed as a defence in avoiding a contract unless the
mistake is brought about by the other party’s fraud or misrepresentation.

LEGALITY OF OBJECT

A contract must not only be based upon mutual assent of competent parties but
must also have a lawful object. If the object of an agreement is the performance
of an unlawful act, the agreement is unenforceable.

The word “Object” means purpose or design.

In some cases, consideration for an agreement may be lawful but the purpose for
which the agreement is entered into may be unlawful, in such cases the agreement
is void. As such, both the object and the consideration of an agreement must be
lawful, otherwise the agreement is void.

When consideration or object is unlawful

The consideration or object of an agreement is unlawful

1. If it is forbidden by law: If the object or the consideration of an agreement is

the doing of an act forbidden by law, the agreement is void. An act is forbidden by
law when it is punishable by the criminal law of the country or when it is prohibited
by special legislation or regulations made by competent authority under power
derived from the legislature

Examples:’ A’ promise ‘B’ to drop a prosecution which he has instituted against ‘B’
for robbery and ‘B’ promises to restore the value of the things taken. The
agreement is void as its object is unlawful

2. If it is of such a nature that, if permitted, it would defeat the provisions

of any law: If the object or consideration of an agreement is that which, though
not directly forbidden by law, it would defeat the provisions of any law, the
agreement is void.

Example: ‘A’ was licensed under an Excise Act to run a liquor shop. The Act forbade
the sale, transfer or sub-lease of the licence or the creation of a partnership to
the shop. A took ‘B’ into a partnership. Held, the agreement was void (Nandlal v.
Thomas 171 1. C.948).

(3) If it is fraudulent; an agreement which is made for a fraudulent purpose is

void. Thus an agreement in fraud of creditors with a view to defeating their rights
is void.

Example. ‘A’,’B’ and ‘C’. Entered into an agreement for the division among them of
gains acquired, or to be acquired by them through fraud. The agreement is void, as
its object is unlawful.

4. If it involves, or implies injury to the person or property of another; Injury

means wrong, harm or damages; Person ‘means one’s body, Property includes both
movable and immovable property.

Example; The proprietor of a newspaper agreed with the printers to indemnify the
latter against consequences arising from libels printed in the newspaper. Held the
agreement was void.

5. If the court regards it as immoral: An agreement, the consideration or object

of which is immoral, e.g. an agreement between a husband and wife for future
separation ,is unlawful[ sumitra Devi v. sulenka kundu,

An agreement is unlawful for immorality in the following cases;

a). Where the consideration is an act of sexual immorality e.g. illicit cohabitation or
prostitution

b). Where the object of the agreement is the furtherance of sexual immorality e.g.
lending money to a prostitute to help her in her trade.

C).Where the courts regard it as opposed to public policy.

UNLAWFUL AND ILLEGAL AGREEMENT

An unlawful agreement is one which, like a void agreement, is not enforceable by

law. It is destitute of legal effect altogether. It affects only the immediate
parties and has no further consequences.
An illegal agreement on the other hand is not only void as between immediate
parties but has further effect that the collateral transactions to it also become
tainted with illegality.

An agreement to commit a crime or tort,e.g. an agreement to assault is illegal.

Illegal agreements are those which involve the commission of a crime whereas
unlawful acts are those that which are non-criminal breach of the law.

Effects of illegality
The general rule of law is that no action is allowed on an illegal agreement. This is
based on the following two maxims:
1. Exturpi causa non oritur action;No action arises from a base cause.

The effect of this is that the law discourages people from entering into illegal
agreements which arise from base cause.

2. In part decicto, potior est conditor defendents; In cases of the equal guilt, the
defendant is in better position.

AGREEMENTS OPPOSED TO PUBLIC POLICY

An agreement is said to be opposed to public policy when it is harmful to the public

welfare.

Public policy is that principle of law which holds that no subject can lawfully do
that which has a mischievous tendency to be injurious to the interest of the public
or which is against public good or public welfare.

Some of the agreements which are, or which have been held to be opposed to
public policy and are unlawful are as follows:

1. Agreements to commit a crime; Where the consideration in an agreement is to

commit a crime, the agreement is opposed to public policy. The court will not
enforce such agreement. Example; A promises to indemnify B in consideration of
his beating C. the agreement is opposed to public policy.

2. A agreement of trading with enemy; An agreement made with an alien enemy in

time of war is illegal on the ground of public policy.
3. Agreements which interferes with the administration of justice; An
agreement the object of which is to interfere with the administration of justice is
unlawful, being opposed to public policy. It may take any of the following forms:

(a)Interference with the courts of justice; An agreement which obstructs the

ordinary process of justice is unlawful.

(b)Stifling prosecution; It is in public interest that if a person has committed a

crime, he must be prosecuted and punished.

(c)Maintenance and champerty;Maintenance ‘is an agreement to give assistance,

financial or otherwise, to another to enable him to bring or defend legal
proceedings when the person giving assistance has got no legal interests of his own
in the subject –matter

4).Agreements in restraint of legal proceeding: Agreements restricting

enforcements of rights;An agreement which wholly or partially prohibits any party
from enforcing his rights under or in any contracts is void to that extent.
Agreement curtailing period of limitation; agreements which curtail the period of
limitation as prescribed by the law of limitation are void because their object is to
defeat the provisions of the law.

5) Trafficking in public offices and titles; Agreements for the sale or transfer
of public offices and titles or for the procurement of public recognition for
monetary consideration are unlawful, being opposed to public policy.such
agreements, if enforced, would lead to inefficiency and corruption in public life.

6) Agreement tending to create interest opposed to duty; If a person enters

into an agreement whereby he is bound to do something which is against his public
or professional duty, the agreement is void on the ground of public policy.

(7) Agreements in restraint of parental rights; A father is entitled by law to

custody of his legitimate child. He cannot enter into an agreement which is
inconsistent with his duties arising out of such custody. If he enters into any such
agreement, it shall be void on the ground of public policy.
(8)Agreement in restraint of marriage; Every agreement in restraint of the
marriage of any person, other than a minor, is void.

(10) Marriage brokerage agreements; An agreement by which a person, for a

monetary consideration, promises in return to procure the marriage of another is
void, being opposed to public policy.

(11)Agreements interfering with marital duties; Any agreement which interferes

with the performance of marital duties is void.

(12)Agreements to defraud creditors or revenue authorities: An agreement the

object of which is to defraud the creditors or the revenue authorities is not
enforceable, being opposed to public policy.

(13)Agreements in restraint of trade: An agreement which interferes with the

liberty of a person to engage himself in any lawful trade, profession or vocation is
called an agreement in restraint of trade hence opposed to public policy.

Exceptions.

The following are the exceptions to the rule that an agreement in restraint of
trade is void’’:

(i)Sale of goodwill. A seller of goodwill of a business may be restraint from

carrying on (i)a similar business,(ii)within specified local limits,(iii) so long as the
buyer or any person deriving title to the goodwill from him carries on a like
business: provided (iv) that such limits appear to the court reasonable being had to
the nature of the business.

(2)Partners’ agreements. (a) A partner shall not carry on any business other than
that of the firm he is a partner.

VOID AGREEMENTS

An agreement, though it might posses all the essential elements of a valid contract,
must not have been expressly declared as void by any law in force in the country.

The contract Act specifically declares certain agreements to be void.

A void agreement is one which is not enforceable by law, such an agreement does
not give rise to any legal consequences and is void ab initio.

The following agreements have been expressly declared to be void by the contract
Act:

1. Agreements by incompetent parties;

2. Agreements made under a mutual mistake of fact;
3. Agreements the consideration or object of which is unlawful;
4. Agreements the consideration or object of which is unlawful in part;
5. Agreements made without consideration
6. Agreements in restraint of marriage
7. Agreements in restraint of legal proceedings
8. Agreements in restraint of trade
9. Agreements of meaning of which is uncertain
10. Agreements by way of wager)
11. Agreements contingent on impossible events
12. Agreements to impossible acts
13. In case of reciprocal promise to do things legal and also other things illegal,
the second set of reciprocal promises is a void agreement.

Agreements the meaning of which is uncertain

Agreements, the meaning of which is not certain, or capable of being made certain,
are void.

The uncertainty may be as to (i) existence of,(ii) quality of, (iii)price of, (v)title to,
the subject –matter.

Example ‘A’ agrees to sell to ‘B’ his white horse for Kshs. 5,000 or 8,000.There is
nothing to show which of the two prices was to be given. The agreement is void.

Wagering agreements or wager

A wager is an agreement between two parties by which one promises to pay

money or money‘s worth on the happening of some uncertain event in consideration
of the other party’s promise to pay if the event does not happen.
Thus if ‘A’ and ‘B’ enter into an agreement that ‘A’ shall pay ‘B’ Kshs.100 if
Manchester united won a match on Monday, and that ‘B’ shall pay ‘A’ the same
amount if they loose, it is a wagering agreement.

“It is essential to a wagering contract that each party under it either win or lose,
whether he will win or lose being dependent on the issue of the event, and
therefore remaining uncertain until that issue is known. If either of the parties
may win but cannot lose or may lose but cannot win, it is not a wagering contract.

Essentials of a wagering agreement

1. Promise to pay money or money’s worth; The wagering agreement must

contain a promise to pay money or money’s worth.
2. Uncertain event; The promise must be conditional on an event happening or
not happening. a wager generally contemplates a future event, but it may also
relate to a past event provided the parties are not aware of its result or the
time of its happening.
3. Each party must stand to win or lose; Upon the determination of the
contemplated event, each party should stand to win or lose. An agreement is
not a wager if either of the parties may win but cannot lose or may lose but
cannot win
4. No control over the event; neither party should have control over the
happening of the event one way or the other. If one of the parties has the
event in his own hands, the transaction lacks an essential ingredient of a
wager.
5. No other interest in the event; Lastly, neither partly should have any
interest in the happening or non-happening of the event other the sum or
stake he will win or lose. Thus an agreement is not a wager if the party to
whom money is promised on the occurrence of an event has an interest in its
non- occurrence. That is why a contract of insurance is not a wagering
agreement.
RESTITUTION
When a contract becomes void, the party who has received any benefit under it
must restore it to the other party or must compensate the other party by the
value of the benefit.

This restoration of the benefit is called restitution.

The principle of restitution is that a person who has been unjustly enriched at the
expense of another is required to make restitution to that other. In essence,
restitution is not based on loss to the plaintiff but on benefit which is enjoyed by
the defendant at the cost of the plaintiff which is unjust for the defendant to
retain.

Consequences of rescission of voidable contract:

When a person at whose option a contract is voidable rescinds it, the other party
thereto need not perform any promise therein contained in which he is promisor.
PERFORMANCE OF CONTRACT

Performance of a contract takes place when the parties to the contract fulfill
their obligations arising under the contract within the time and the manner
prescribed.

OFFER TO PERFORM

Sometimes it so happens that the promisor offer to perform his obligation under
the contract at the proper time and place but the promisee does not accept the
performance. This is known as “attempted performance” or tender” Thus, a tender
of performance is equivalent to actual performance.

It excuses the promisor from further performance and entitles him to sue the
promisee for the breach of contract.

Requisites of a valid tender

1. It must be unconditional; It becomes conditional when it is not in accordance

with the terms of the contract. Example ‘D’, a debtor offers to pay to’ C’ , his
creditor ,the amount due to him on the condition that ‘C’ sell to him certain shares
at cost. This is not valid tender.

2. It must be of the whole quantity contracted for or of the whole obligation;

A tender of an installment when the contract stipulates payment in full is not a
valid tender. Examples. ‘D’, a debtor, offers to pay ‘C’ his creditor, the amount due,
in installments and tenders the first installment. The tender is not of the whole
amount due and hence it is not a valid tender

3. It must be by a person who is in a position, and is willing to perform the promise.

4. It must be made at the proper time and place: A tender of goods after the
business hours or goods or money before the due date is not a valid tender.
5. It must be made to the proper person and form; i.e. the promise or his duly
authorized agent. It must also be in proper form.

6. It may be made to one of several joint promisee’:. In such a case it has the
same effect as a tender to all of them.

7. In case of tender of goods, it must give a reasonable opportunity to the

promisee for inspection of the goods: A tender of goods at such time when the
other party cannot inspect the goods is not a valid tender.

8. In case of tender of money, the debtor must make a valid tender in the legal
tender money. If the creditor refuses to accept it, the debtor is not discharged
from making the payment. Tender, in this case, does not discharge the debt.

CONTRACTS WHICH NEED NOT BE PERFOMED

A contract need not be performed-

1. When its performance becomes impossible

2. When the parties to it agree to substitute a new contract for it or to
rescind or alter it
3. When the promise dispenses with or remits, wholly or in part, the
performance of the promise made to him or extends the time for such
performance or accepts any satisfaction for it.
4. When the person at whose option it is voidable, rescinds it
5. When the promise neglects or refuses to afford the promisor reasonable
facilities for the performance of his promise.
6. When it is illegal

BY WHOM MUST CONTRACTS BE PERFORMED

1. Promisor himself; If there is something in the contract to show that it was the
intention of the parties that the promise should be performed by the promisor
himself, such promise must be performed by the promisor.

This means contracts which involve the exercise of personal skill, volition, or
diligence of the promisor (for instance, a contract to paint a picture or sing), or
which are founded on personal confidence between the parties (for instances a
contract to marry) must be performed by the promisor himself.

2. Agent: Where personal consideration is not the foundation of a contract, the

promisor or his representatives may employ a competent person to perform it.
Example.’ A’ promises to pay ‘B’ some money.’A’ may perform this promise , either
by personally paying the money to B or by causing it to be paid to B by another.

3. Legal representatives: A contract which involves the use of personal skill or is

founded on personal consideration comes to an end on the death of the promisor.
The rule of law is: action personalis moritur cum persona, i.e. a personal action dies
with the person.

As regards any other contract, the legal representatives of the deceased promisor
are bound to perform it unless a contrary intention appears from the contract.

But their liability under a contract is limited to the value of the property they
inherit from the deceased.

4. Third persons: When a promisor accepts performance of the promise from a

third person, he cannot afterwards enforce it against the promisor

5. Joint promisor; when two or more persons have made a joint promise, they are
known as joint promisors. Unless a contrary intention appears from the contract, all
of them must jointly fulfill the promise.

WHO CAN DEMAND PERFOMANCE

It is only promisee who can demand performance of the promise under a contract.
It makes no differences whether the promise is for the benefit of the promisee or
the benefit of any other person.

Death of promisee: In case of death of the promisee, his legal representatives can
demand performance.

DISCHARGE OF CONTRACT

Discharged of contract means termination of the contractual relationship between

the parties. A contract is said to be discharged when it ceases to operate, i.e
when the rights and obligation created by it come to an end. In some cases, other
rights & obligations may arise as a result of discharge of contract, but they are
altogether independent of the original contract.

A contract may be discharged –

1. By performance
2. By agreement or consent.
3. By impossibility.
4. By lapse of time.
5. By operation of law
6. By breach of contract.

DISCHARGED BY PERFORMANCE

Performance means the doing of that which is required by a contract. It takes

place when the parties to the contract fulfill their obligations arising under the
contract within the time and in the manner prescribed. In such a case, the parties
are discharged and the contract comes to an end.

But if only one party performs the promise, he alone is discharged, such a party
gets a right of action against the other party who is guilty of breach.

Performance of a contract is the most usual mode of its discharged it may be:
(1) Actual performance, or (2)attempted performance
I) Actual performance is when both the parties perform their promise and
the contract is thus discharged. Performance should be complete, precise
and according to the terms of the agreement.
II) Attempted performance or tender is where an offer to perform the
obligation under the contract is made by the promisor but the promisee
refuses to accept the performance. A contract is deemed to be
performed in case of a valid tender and the tenderer is thus discharged
from the responsibility for non- performance.

DISCHARGE BY AGREEMENT OR CONSENT

As it is the agreement of the parties which binds them, so by their further
agreement or consent the contracts may be terminated.

The rule of law in this regard is as follows:Eodem modo quo quid, constituitur
eodem modo destruitur i.e a thing may be destroyed in the same manner in which it
is constituted.

This means a contractual obligation may be discharged by agreement which may be

express or implied. Example. ‘A’ sells a car to ‘B’ on approval with the condition that
it should be returned within seven days if it is found wanting. Consent to return
the car is given to B at the time of the formation of a contract.

Cases of discharge by mutual agreement are as follows:

(a)Novation; takes place when:

(i) A new contract is substituted for an existing one between the same parties. or
(ii)a contract between two parties is rescinded in consideration of a new contract
being entered into on the same terms between one of the parties and a third party.

(b)Rescission; takes place when all or some of the terms of the contract are
cancelled. It may occur

(i) By mutual consent of the parties or

(ii) Where one party fails in the performance of his obligation. In such a case, the
other party may rescinds the contract without prejudice to his rights to claim
compensation for the breach of contract. Example: A promises to supply certain
goods to B six months after date. By that date, the goods go out of fashion. A and
B may rescind the contract.
(c) Alteration: may take place when one or more of the terms of the contract
is/are altered by the mutual consent of the parties to the contract. In such a case,
the old contract is discharged.

(d)Remission: means acceptance of a lesser fulfillment of the promise made, e.g.

acceptance of a leaser sum than what is contracted for, in discharged of the whole
of the debt.
(e) Waiver; takes place when the parties to a contract agree that they shall no
longer be bound by the contract. This amounts to mutual abandonment of rights by
the parties to a contract.

(f) Merger: takes place when an inferior right accruing to a party under a contract
merges into a superior right accruing to the same party under the same or some
other contract. Example;P holds property under a lease. He later buys the
property. His rights as a lessee merge into his right as an owner.

DISCHARGE BY IMPOSSIBILITY OF PERFOMANCE

If an agreement contains an undertaking to perform impossibility, it is void ab

initio. Impossibility of performance may fall into either of the following categories:

a)Impossibility existing at the time of agreement: An agreement to do act

impossible in itself is void.. The fact of impossibility may be.

i) Known to the parties: This is known as absolute impossibility. In case of

absolute impossibility, the agreement is void ab initio. For example, when
‘A’ agrees with ‘B’ to discover treasure by magic, or undertake to put life
into the dead wife of ‘B’ the agreement is void.
ii) Unknown to the parties: Where at the time of making the contract both
the parties are ignorant of the impossibility, as in the case of destruction
of subject-matter to the ignorance of both the parties,
The contract is void on the ground of mutual mistake. If, however, the
promisor alone knows of the impossibility of performance at the time of
making the contract, he shall have to compensate the promisee for any
loss which such promisee sustains through the non-performance of the
promise.

Example, (a) A sold to B certain goods supposed to be on a voyage. The goods had
ceased to exist due to the perils of the sea. Held, the contract was void [couturier
v. Hastlie, (1856) 5 H.C. L.673].
b)Impossibility arising subsequent to the formation of contract: Impossibility
which arises subsequent to the formation of a contract. Is called post-contractual
or supervening impossibility. In such a case, the contract becomes void when the
act becomes impossible or unlawful].
Impossibility of performance of a contract as a general rule, is no excuse for non –
performance of a contract; but one which is out of control of the parties, the
parties are discharge from further performance of the obligation under the
contract.

DISCHARGE BY SUPERVENING IMPOSSIBILITY

A contract is discharge by supervising impossibility in the following case:
a)Destruction of subject-matter of contract: When the subject- matter of a
contract, subsequent to its formation, is destroyed without any fault of the
parties to the contract, the contract is discharge.
Example, ‘C’ let a music hall to’ T’ for a series of concerts for certain days. The hall
was accidentally burnt down before the date of the first concert. Held, the
contract was void [Taylor v. Caldwell,(1863) 3 B. & S. 826]

b)Non-existence or non-occurrence of a particular state of things: Sometimes,

a contract is entered into between two parties on the basis of a continued
existence or occurrence of particular state of things. If there is any change in the
state of things which formed the basis of the contract, or if the state of things
which ought to have occurred does not occur the contract is discharged.
Example. ‘A’ and ‘B’ contract to marry each other. Before the time fixed for the
marriage, ‘A’ goes mad. The contract becomes void.

This kind of failure of the object of a contract is often called “frustration of the
contract”.

c)Death or incapacity for personal service: Where the performance of a contract

depends on the personal skill or qualification of a party, the contract is discharge
on the illness or incapacity or death of that party. The man’s life is an implied
condition of the contract. Example: An artist undertook to perform at a concert
for a certain price. Before she could do so, she died hence the contract was
discharged.

d)Change of law or stepping in of a person with statutory authority: When,

subsequent to the formation of a contract, change of law take place or the
government takes some power under some ordinance so that the performance of
the contract becomes impossible, the contract is discharged. Example: ’D’ enters
into a contract with ‘P’ on 1st march for the supply of certain imported goods in the
month of September of the same year. In June by an Act of parliament, the import
of such goods is banned. The contract is discharge.

e)Outbreak of war: A contract entered into with an alien enemy during war is
unlawful and therefore impossible of performance. Contracts entered into before
the outbreak of war are suspended during the war and may be revived after the
war is over. Example. ‘A’ contracts to take in cargo for ‘B’ at a foreign port.’ A’s
Government afterwards declares war against the county in which the port is
situated. The contract becomes void when war is declared.

IMPOSSIBILITY OF PERFORMANCE- NOT AN EXUSE

“Impossibility of performance is, as a rule, not an excuse of non-performance,”

Ordinarily when a person undertakes to do something, he must do it unless its
performance becomes absolutely Impossible due to any of the circumstances
already discussed.

In the following cases, a contract is not discharged on the ground of supervening

impossibility:

1. Difficulty of performance: a contract is not discharge by the mere fact that it

has become more difficult of performance due to some un-contemplated events or
delays. Example. (a)’ ‘A sold a certain quantity of Finland timber to ‘B’ to be
supplied between July and September. Before any timber was supplied, war broke
out in the month of August and transport was disorganized so that ‘A’ could not
bring any timber from Finland. Held, the difficulty in getting the timber from
Finland did not discharge ‘A’ from performance.
2. Commercial impossibility: A contract is not discharge merely because
expectation of higher profits is not realized, or the necessary raw material is
available at a higher price because of the outbreak of war, or there is a sudden
depreciation of currency. Example. ‘A’ promised to send certain goods from South
Sudan to Kenya in September. Before the goods were sent, war broke out and
there was a sharp increase in shipping rates. Held, the contract was not discharge.

3. Impossibility due to failure of third person: Where a contract could not be

performed because of the default by a third person on whose work]

the promisor relied, it is not discharge. Example: ‘A’, a wholesaler, entered into a
contract with ‘B’ for the sale of a certain type of cloth to be produced by ‘C’, a
manufacturer of that cloth. ‘C’ did not manufacture that cloth. Held, ‘A’ was liable
to ‘B’ for damages.

4. Strikes, lock-outs and civil disturbances: Events such as these do not

discharge a contract unless the parties have specifically agreed in this regard at
the time of formation of the contract. Example: The unloading of a ship was
delayed beyond the date agreed with the ship owners owing to a strike of dock
workers. Held, the ship-owners were entitled to damages, the impossibility of
performance being no excuse.

5. Failure of one of the objects: When a contract is entered into for several
objects, the failure of one of them does not discharge the contract.

DISCHARGE BY LAPSE OF TIME

The Limitation Act, lays down that a contract should be performed within a
specified period, called period of limitation. If it is not performed, and if no action
is taken by the promisee within the period of limitation, he is deprived of his
remedy at law. For example, the price of goods sold without any stipulation as to
credit should be paid within three years of the delivery of the goods. Where goods
are sold on credit to be paid for after expiry of a fixed period of credit, the price
should be paid within three years of expiry of period of credit. If the price is not
paid and the creditor does not file a suit against the buyer for the recovery of
price within three years, the debt becomes time barred and hence irrecoverable.
DISCHARGE BY OPERATION OF LAW

A contract may be discharge independent of the wishes of the parties, i.e. By

operation of law. This includes discharge-

(a) By death: in contracts involving personal skill or ability, the contract is

terminated on the death of a promisor. In other contracts, the rights and
liabilities of a deceased person pass on to the legal representatives of the
deceased person.
(b) By merger.
(c) By insolvency: When a person is adjudging insolvent, he is discharge from all
liabilities incurred prior to his adjudication.
(d) By unauthorized alteration of the terms of a written agreement: Where a
party to a contract makes any material alteration in the contract without the
consent of the other party. The other party can avoid the contract.
(e) By rights and liabilities becoming vested in the same person: Where the
rights and liabilities under a contract vested in the same person. Example:
when a bill gets into the hands of the acceptor, the other parties are
discharge.

DISCHARGE BY BREACH OF CONTRACT

Breach of contract means a breaking of the obligation which a contract imposes. It
occurs when a party to the contract without lawful excuse does not fulfill his
contractual obligation or by his own act makes it impossible that he should
performed his obligation under it. It confers right of action for damages on the
injured party-
Breach of contract may be-
a)Actual breach of contract, or b)Anticipatory or constructive breach of contract
ACTUAL BREACH OF CONTRACT
It may take place:
a)At the time when the performance is due: Actual breach of contract occurs,
when at the time when the performance is due, one party fails or refuses to
perform his obligation under the contract. Example. A agrees to deliver to B 5 bags
of wheat on 1st January .He does not deliver the wheat on that day. There is a
breach of contract.
b)During the performance of the contract: Actual breach of contract also occurs
when during the performance of the contract, one party fails or refuses to
perform his obligation under the contract.
This refusal to perform may be by-
1)Express repudiation (by word or act): Where there has been some performance
of the contract and one party by his word or act refuses to continue to perform
his obligation in some essential respect, the other party can treat the contract as
no longer binding on him and sue for breach of contract.
2)Implied repudiation (impossibility created by the act of a party to the contract):
If a party, During the performance, makes by his own act the complete
performance of the contract impossible, the effect is as if he has breached the
contract, and the other party is discharged from the further performance of the
contract.

ANTICIPATORY BREACH OF CONTRACT

It occurs when a party to an executory contract declares his intention of not
performing the contract before the performance is due. He may do so-
a)By expressly renouncing his obligation under the contract. Example. A undertakes
to supply certain goods to B on 1st January. Before this date, he informs B that he
is not going to supply the goods. This is anticipatory breach of contract by express
repudiation.

b)By doing some act so that the performance of his promise becomes impossible.

REMEDIES FOR BREACH OF CONTRACT

Where there is a right, there is a remedy. A contract gives rise to correlative

rights and obligation. A right accruing to a party under a contract would be of no
value if there were no remedy to enforce that right in a court of law in the event
of its infringement or breach of contract. A remedy is the means given by law for
the enforcement of a right.
When a contract is broken, the injured party ( i.e. the party who is not in breach)
has one or more of the following remedies:

(1) Rescission of the contract.

(2) Suit for damages.
(3) Suit upon quantum meruit.
(4) Suit for specific performance of the contract
(5) Suit for injunction.

RESCISSION

When a contract is broken by one party, the other party may sue to treat the
contract as rescinded and refuse further performance. In such a case, he is
absolved of all obligation under the contract. Example. A promises B to supply 10
bags of cement on a certain day. B agrees to pay the price after the receipt of the
goods. A does not supply the goods. B is discharge from liability that is to pay the
price.

DAMAGES

Damages are a monetary compensation allowed to the injured party by the Court
for the loss or injury suffered by him by the breach of contract. The object of
awarding damages for the breach of contract is to put the injured party in the
position in which he would have been had there been performance and not breach.
This is called “doctrine of restitution”

The foundation of awarding damages is compensation for the pecuniary loss which
naturally flows from the breach.

When a contract has been broken, the injured is entitled to-DAMAGES ARISING
NATURALLY-ORDINARY DAMAGES

When a contract has been broken, the injured party can recover from the other
party such damages as naturally and directly arose in the usual course of things
from the breach. This means that the damages must be the proximate consequence
of the breach of contract. These damages are known as ordinary damages.
Example: A contract to buy of B at kshs.950 per quintal of rice, no time being
fixed for delivery. A afterwards informs B that he will not accept the rice if
tendered to him. The market price of rice on that day is Kshs. 930 per quintal. B is
entitled to receive from A compensation at the rate of Kshs. 20 per quintal.

In a contract for the sale of goods, the measure of damages on the breach of a
contract is the difference between the contract price and the market price of
such goods on the date of the breach. The price of the nearest and best available
substitute may be taken into account in calculating damages.

DAMAGES IN CONTEMPLATION OF THE PARTIES-SPECIAL DAMAGES

Damages other than those arising from the breach of a contract may be recovered
if such damages may reasonably be supposed to have been in the contemplation of
both parties as the probable result of the breach of the contract, such damages,
known as special damages, cannot be claimed as a matter of right. These can be
claimed only if the special circumstances which would result in a loss in the case of
breach of a contract, are brought to the notice of the other party. Example; S
sent some specimen of his goods for exhibition at an agricultural show. After the
show he entrusted some of his samples to an agent of a railway company for
carriage to another show ground at New Castle. On the consignment note he wrote
“Must be at a New Castle Monday certain”. Owing to default on the part of the
railway company, the sample arrived late for the show. Held, S could claim damages
for the loss of profit at the show.

VINDICTIVE OR EXEMPLARY DAMAGES

Damages for the breach of a contract are given by way of compensation for loss
suffered, and not by way of punishment for wrong inflicted. Hence,’ vindictive’ or
‘exemplary’ damages have no place in the law of contract because they are punitive
(involving punishment) by nature. But in case of (a) breach of a promise to marry,
and (b) dishonor of a cheque by a banker wrongfully when he possesses sufficient
funds to the credit of the customer, the Court may award exemplary damages.

NOMINAL DAMAGE

Where the injured party has not in fact suffered any loss by reason of the breach
of a contract, the damages recoverable by him are nominal, i.e. very small, for
example, Kshs.5/=. These damages merely acknowledge that the plaintiff has
proved his case and won. Example: A firm consisting of four partners employed B
for a period of two years. After six months two partners retired, the business
being carried on by the other two. B declined to be employed under the continuing
partners. Held, he was only entitled to nominal damages as he had suffered no loss
[Brace v. Calder, (1895)2 O.B253].

DAMAGES FOR LOSS OF REPUTATION

Damages for loss of reputation in case of breach of a contract are generally not
recoverable. An exception to this rule exists in the case of a banker who wrongly
refuses to honor a customer’s cheque. And the rule of law is: the smaller the
amount of the cheque dishonored, the larger the amount of damages awarded.

DAMAGES FOR INCONVENIENCE AND DISCOMFORT

Damages can be recovered for physical inconvenience and discomfort. The general
rule in this connection is that the measure of damages is not affected by the
motive or the manner of the breach. Example. A was wrongfully dismissed in a
harsh and humiliating manner by G from his employment. Held, (a) A could recover a
sum representing his wages for the period of notice and the commission which he
would have earned during that period: but (b) he could not recover anything for his
injured feelings or for loss sustained from the fact that his dismissal made it more
difficult for him to obtain employment.

If, however, the inconvenience or discomfort caused by breach is substantial, the

damages can be recovered on the ground of fairness.

MITIGATION OF DAMAGES

It is the duty of the injured party to take all reasonable steps to mitigate the loss
caused by the breach. He cannot claim to be compensated by the party in default
for loss which he ought reasonably to have avoided.

DIFFICULTY OF ASSESSEMENT

Although damages which are incapable of assessment cannot be recovered, the

fact that they are difficult to asses with certainty or precision does not prevent
the aggrieved party from recovering them. The Court must do its best to estimate
the loss and a contingency may be taken into account.

COST OF DECREE

The aggrieved party is entitled, in addition to damages, to get the cost of getting
the decree for damages. The cost of suit for damages is in the discretion of the
court.

DAMAGES AGREED UPON IN ADVANCE IN CASE OF BREACH

If a sum is named in a contract as the amount to be paid in case of its breach, or if

the contract contains any other stipulation by way of a penalty for failure to
perform the obligations, the aggrieved party is entitled to receive from the party
who has broken the contract a reasonable compensation not exceeding the amount
so named. Example. A contracts with B to pay B kshs.10, 000 if he fails to pay B
Kshs.5,000 on a given day. B is entitled to recover from A such compensation not
exceeding Kshs. 10,000 as the court considers reasonable.

QUANTUM MERUIT

The phrase’quantum meruit’ literally means ‘as much as earned’. A right to sue on a
quantum meruit arises where a contract, partly performed by one party, has
become discharged by the breach of the contract by the other party. The right is
founded not on the original contract which is discharged or is void but on an implied
promise by the other party to pay for what has been done.

SPECIFIC PERFORMANCE

In certain cases of breach of a contract, damages are not an adequate remedy.

The court may, in such cases, direct the party in breach to carry out his promise
according to the terms of the contract. This is a direction by the court for
specific performance of the contract at the suit of the party not in breach.

Some cases in which specific performance of a contract may, in the discretion of

the court, be enforced are as follows:
(a) when the act agreed to be done is such that compensation is money for its non-
performance is not an adequate relief.

(b)When there exists no standard for ascertaining the actual damage caused by
the non-performance of the act agreed to be done

(c)When it is probable that the compensation in money cannot be got for the non-
performance of the act agreed to be done.

SPECIFIC PERFORMANCE WILL NOT BE GRANTED WHERE-

(a) Damages are an adequate remedy;

(b) The contract is not certain, or is inequitable to either party;
(c) The contract is in its nature revocable;
(d) The contract is made by trustee in breach of their trust;
(e) The contract is of a personal nature,.e,g a contract to marry;
(f) The contract is made by a company in excess of its powers as laid down in its
Memorandum of Association;
(g) The court cannot supervise its carrying out, e.g. a building contract.

INJUNCTION
Where a party is in breach of negative term of a contract (i.e., where he is doing
something which he promised not to do), the court may, by issuing an order,
restrain him from doing what he promised not to do. Such an order of the court is
known as injunction. Example: N, a film actress, agreed to act exclusively for W for
a year and for no one else. During the year she contract to act for Z .Held, she
could be restrained by injunction from doing so (Warner Bros. V. Nelson,(1937) 1
K.B 209).

RECTIFICATION OR CANCELLATION
When through fraud or a mutual mistake of the parties, a contract or other
instrument does not express their real intention, either party may institute a suit
to have the instrument rectified.
A written document which is void or voidable against a person may cause him in
some cases serious injury, if it is left outstanding. In such a case, if he has any
such apprehension, he may file a suit to have the document adjudged void or
voidable. The court may, in its discretion, adjudge such a document void or voidable
and order it to be delivered up and cancelled.