Law of Contract

Question 1

What is writ of Assumpsit ?

Answer 1

It is a Latin word that the defendant has undertaken an obligation that by his misconduct,damages had been caused to the plaintiff.

Question 2

When did the writ of Assumpsit become obsolete?

Answer 2

When the Judicature Act of 1873 was passed

Question 3

When was the period of the Laissez-Faire (Free Market Economy)

Answer 3

18th and 19th Centuries

Question 4

What is Freedom of Contract?

Answer 4

It is the belief that the law should not interfere with people’s activities. People are at liberty to make their own contract and terms.

Question 5

Freedom of contract principles :

Answer 5

1. Permission of parties to a contract to make their own bargain and terms of the contract
2. Courts adopted a hard-nose attitude that as long as a person has voluntarily entered into a contract,the court would generally enforce it, even if the results were grossly unfair
3. It was not uncommon for the courts to say such things as “It’s not the business of the courts to relieve fools of the consequences of their folly”

Question 6

When was the writ of Assumpsit invented

Answer 6

14th Century

Question 7

What is a contract?

Answer 7

A promise or set of rules for the breach of which the law gives a remedy or the performance of which the law, in some way recognizes as a duty.

Question 8

What is Law of Contract about?

Answer 8

Agreements and promises

Question 9

What is a “consideration”?

Answer 9

It is the money realized from a contract

Question 10

What are the sources of Law?

Answer 10

1. The English legal system( Common Law and Equity)
2. Statutes :
   a. The 1992 constitution
   b. Contract Act of 1960 (ACT 25)
3. Customary Laws
4. English statutes of General application

Question 11

What is the hierarchy of our contract law?

Answer 11

1. The 1992 Constitution
2. The Contract Act of 1960 ACT 25
3. Common Law
4. Equity
5. Common Law itself
6. Customary Laws

Question 12

Restrictions to Freedom of Contract:

Answer 12

1. Standard form contracts (a contract where the terms are fixed by one party, usually the one in bigger bargaining position )
2. Implied terms (where the terms have not been agreed on by parties)
3. Judicial intervention (where terms are unreasonable , the court comes in to modify the contract)

Question 13

Sanctity of Contract

Answer 13

a. Once parties to a contract have made an agreement, they must abide by it.
b. nobody can interfere or undermine it. Not even the courts, the parties themselves or a 3rd party.
c. If a party makes a bad bargain,it is not the duty of the court to renegotiate the terms.
d. The fact that a party is not in any way at fault, does not exempt the person from performing his obligation under the contract

Question 14

What are the restriction to the sanctity of the contract?

Answer 14

• Clauses ( a term inserted in a contract to exclude one person from bearing the liability) will be subject to statutory interpretation
• The law recognizes certain reasons for non-performance like death,non- occurance of an event, etc.

Question 15

Simple or Specialty Contracts

Characteristics:

Answer 15

• its in writing
• signed by both party and witnesses
• both parties’ signatures are witnessed
• sealed
• delivered

Question 16

Simple Contract

Characteristics:

Answer 16

• not in writing
• not signed
• not sealed
• not delivered
• • some contracts are required to be in writing. Examples:
    a. Conveyancing Act,1973 (NRCD 175) : transfer of immovable property for more than two years

b. Hire Purchasing Act 1974 (NRCD 292)
c. Mortgages Act 1972 (NRCD 96)
d. Money Lending Contract 1941 (CAP 176 [1951])

Question 17

Types of simple contract:

Answer 17

1. Chartering a taxi

2. Buying groceries at the store

Question 18

Distinction between Simple & specialty Contracts

Answer 18

1. CONSIDERATION:
   Simple Contract must be supported by a consideration in order to be valid

Specialty Contract does not always have to have a consideration eg. Contract for the transfer of land

2.TIME LIMIT FOR SUING/TAKING ACTION:
Simple Contract : 6 years

Specialty Contract : 12 years

Question 19

Bilateral Contract:

Answer 19

A contract involving two parties

Question 20

Characteristics of a bilateral contract:

Answer 20

It is the usual form of contract

Both parties make a corresponding promises to be bound

Question 21

What is a unilateral contract?

Answer 21

Only party makes a promise

Other party is not bound to perform

Question 22

Example of unilateral contract

Answer 22

Carlill v Carbolic Smoke Ball co.

** Unilateral Contracts can become bilateral in the course of performance.

Question 23

What is a Valid Contract?

Answer 23

One which the courts freely enforce because all legal requirements are present

Question 24

What is a Void Contract?

Answer 24

One which lacks legal basis by courts. Any property transferred is recoverable. It is normally described as “void ab initio”. Eg. A contract to kill a business partner or a contract to supply narcotics.

Question 25

What is a Voidable Contract?

Answer 25

A valid contract in which steps can be taken to bring it to an end . Property transferred under the contract is valid till otherwise (rescinded) set aside .
Eg Ahenfie Cloth Sellers Case)

Question 26

What is an Unenforceable Contract?

Answer 26

Contract that the court will not enforce. It could be that a legal requirement was not met.

Question 27

What is an offer?

Answer 27

Is a statement by one party of a willingness to enter into a contract on stated terms provided that the terms are accepted by the party

Question 28

What is an invitation to treat?

Answer 28

It is simply an expression of willingness to enter into negotiations which it is hoped that it will lead to a contract.

Question 29

What are the elements of a valid contract?

Answer 29

• Offer and accept
• Intention to create Legal Relations
• Capacity to Contract
• Consideration

Question 30

Examples of invitation to treats:

Answer 30

• Tender notices
• Display of goods in a shop window with prices attached
• Advertisement of goods or services in newspaper
• Auction notices
• Circulation of catalogues or prices lists

Question 31

What are tender notices?

Answer 31

A notice stating that goods are to be sold by tender and inviting people to submit tenders for their purchase.