WEEK 3.

The Law of Contract

Outcomes :
After studying this topic, the learner should understand
the following main points:
The distinction between a contract and other types of
non-binding contract;
The essential elements of a binding contract;
The factors which may affect the validity of a contract;
The ways in which the obligations under a contract may
be discharged;
The remedies available for breach of contract.
contract
A contract is a legally binding agreement made between
two or more parties. However the fact that the parties are
in agreement with respect to a certain course of action
does not necessarily mean that they have a legal contract.
The law requires that the parties meet certain
requirements before the courts will enforce the agreement.
In Kenya the Law of Contract Act, 1961, s. 2(1) provides that
the common law principles of the U.K. shall apply in Kenya
Some contracts must be in writing e.g.: Contracts for the
sale of land;
Other contracts need no written form to be enforceable,
and because of the lack of such formality they are
commonly referred to as simple contracts.


Classification of Contracts

Contracts are classified according to their enforceability as valid, void and voidable.

Valid Contract:
This is an agreement that is binding an enforceable and has all the essential
elements of a contract.
Voidable Contract:
This is an agreement that is binding and enforceable due to the absence of one of
the essential elements of a valid contract, it may be set-aside at the option of the
aggrieved party. If the party down not exercise this right within a reasonable
period the contract is binding, e.g. where there is fraud, duress or undue
influence.
Void Contract:
This is a contract that has no legal effect because of lack of an essential element
such as offer, acceptance, consideration, and intention to create legal relations.
Contracts made under mistake of fact, certain contracts made with infants and
persons of unsound mind fall in this category

Formation of the contract

Consensus:
Consideration
Intention to create legal relations
Contractual Capacity
Consent
Legality


Contents of a contract

Representation
Contractual Terms
Conditions
Warranties


Discharge of the contract

Performance
Agreement
Impossibility or frustration
Breach

Remedies of the contract


Damages
Specific performance
Injunction