The law of contract versesThe Political Parties Act

MFALME DAVIS

The Law of Contract Verses The Political Parties Act

UPON reading the representations adduced hereunder, keen students of Jurisprudence and Legal Theory will be able to discern the intricacies and complexities that goes into compiling and objective thesis in determining the following queries:

        (i)    Are political party primaries lawful means of earning unjust benefits? (ii) Are indirect party-tickets nomination polls supposed to be dutifully supervised by the Independent Electoral and Boundaries Commission (IEBC) in toto under the provisions of Article 88(4) of The constitution of Kenya, respecting the regulation of the process by which political parties select or elect nominees for elective posts and eventual nomination certificates that would enable them to participate as candidates in the forthcoming general election?

(iii) Are political parties constitutional organs for reason that their role and functions are enshrined in the constitution under Article 92 (c) of the Constitution of Kenya, such that the provisions of Article 165(3)(d) in regard to the hearing and determination and respecting the interpretation of the constitution including the determination of;

(iv) The question whether any law is inconsistent with or in contravention of the constitution[….] read full comments!

Fundamentals of the Law of Contract:

Definition of a contract:

A contract is an agreement between two or more parties which may be legally enforced if the law is properly invoked. An agreement between parties to it is the basis of a binding contract. Thus, contracts which are expressly stated give rise to legal relationship where rights, duties accrue to either parties, or consequences, for breaches thereof –are to be inferred from the surrounding circumstances of the transaction in question.

What Constitutes a Valid contract?

A simple contract is an agreement, express or implied, which give rise to legal obligation. It need not have special form i.e. it may be in writing or agreed orally, or even implied from the conduct of the parties. However, there are certain contracts which, to be binding, must be in writing and others which must be supported by written evidence. Suffice to say here that there are many and varied types of contracts. It is imperative to state here that in every valid contract, some right is acquired by one party and correlative obligation or liability is undertaken by the other party, breach of which will give rise to legal remedy, and regardless of whether or not it was a formal or informal agreement.

Another relevant point here is that a contract may arise by implication where either there is no express contract in existence but some right and correlative obligation are inferred by reason of the circumstances, or collateral terms are to be inferred therefrom .

One acceptable instance of such a contract is where a party indicates his intention by mere act, e.g. boarding a bus.

This contract arises by implication with the use of public transport and the contract is made when the commuter boards a bus and pays the fare for the journey to his destination. In this one instance, the Public Service Vehicle (PSV) offers to undertake commuter services, and the passenger accepts a standing offer as soon as he boards the bus. This can clearly be distinguished from an invitation to treat which factually is mere invitation to a person to make an offer or to negotiate. Here, the acceptance of an invitation to treat will not create a contract. Example of an offer that is an invitation to treat can be given here such as display of the goods in the shop, or requests for an expression of interest (EOI) calling for bids. One more compiling point of fact to add here is that in certain cases, the law imposes an obligation, analogous of a contractual obligation of a contractual obligation on a person who has not agreed, expressly or impliedly, to be bound thereby.

We shall later on examine the role and functions of political parties and particularly whether or not they are private enterprises formed by few influential individuals as vehicles for attaining political power. And whether they enjoy special privileges and elevated status as unincorporated associations when it comes to civil actions for inducing breach of contract and torts of deceit and negligence.   

Moreover, in certain circumstances where there is special relationship between two persons, analogous of a contract, the law imposes upon one person a liability to pay money to the other on the ground of unjust benefits. An example of such an obligation is where a person is enjoined to repay judgment debt or in breach of contract relief for a contact which has wholly failed.

These cases are known as quasi-contracts; of special mention here is that the money paid under mistake of fact, and money so paid by an action in quasi-contract under failure of consideration. Failure of consideration may imply the failure by one party to perform his part of the contract.

Where there is a total failure of consideration by one party, the other party has the option of either treating the contract as discharged, in which case the may sue in quasi-contract for money he has paid, or he may treat the contract as still subsisting and seek damages for its breach.

Where an action is based on fraud or mistake, or a right of action is concealed by fraud, the limitation period does not begin to run until the plaintiff has discovered the fraud or mistake, or could with reasonable due diligence have discovered it.

Fraud, in this context, is not restricted to its common law meaning but includes equitable fraud i.e. conduct which having regard to some special relationship between the two parties concerned, is an unconscionable thing to do to the other.  

Essential of a Valid Contract:

The essentials of a valid contracts are namely; Offer, Acceptance, Legal Intention, Consideration, Capacity and Legality. We shall now examine their main elements.

To begin with, a contract comes into existence when a define offer has been communicated to the offeree and unconditionally accepted. An offer can be made to any person, or to a particular class of persons or to the world at large.

An offer will mature into Valid contract when a person who has complied with the terms of the offer and who is aware of its existence, accepts it. An offer, to be capable of acceptance, must be definite in its terms, not leaving matters to be agreed or settled in the future.

Acceptance of an offer must be communicated to the offeror i.e. the person  making the offer. And as soon as acceptance is received by the offerer, there is a valid contract.

The contract will be complete when all essential terms has been agreed upon. If such terms remain to be settled in future, or if there is uncertainty about the agreed terms so that consensus ad idem (or agreement as to the same thing or a meeting of the mind), is lacking, there is no valid contract. 

Consideration:

Consideration is essential to the validity of every contract not under seal. In other words, all simple contracts whether in writing or made by word of mouth, required consideration to support them. By consideration, the law implies valuable consideration, which must consist of something capable of being estimated in money or that has money’s worth.

In Currie V. Misa, (1875) L.R.W Exch. 153, valuable consideration was defined as: ‘some rights, interest, profit or benefit accruing to the party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other’.

Here, it is instructive that, the benefit is given or some detriment is incurred or suffered in return for a promise of the other party. The authorities in Dunlop Pneumatic Tyre Co. Ltd. V. Selfridge & Co. Ltd. (1915) A.C, at page 855 expounded thus: ‘An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable’.

Although an agreement not supported by consideration is not enforceable, it is true that a mere promise is not entirely devoid of legal effect. This is to say one can sue on a mere promise such as an offered reward for return of a chattel that has been lost to its rightful lower who had communicated such an offered reward. 
LEGAL INTENTION, LEGALITY AND CAPACITY

We noted at the outset that every valid contract must have legal implication unlike is with the case with the domestic arrangements or gentlemen’s arrangements. Courts of law do not enforce honor clauses of an agreement.

The effects of illegality upon a contract are as follows:

1.      If the object of a contract is to perform an illegal act, the contract is void i.e. there can be no cause of action upon a wrongful ground.

2.      Where the contract is lawful in its inception, but one of the parties, unknown to the other, has an illegal intent e.g. where a lease is taken of a premises, the lease intending to use them for immoral purpose, the rights of an innocent party are unaffected by the illegality, and he is entitled to recover under contract.

3.      All contract founded on an illegal contracts are themselves devoid of legal effect. Where a contract is void at common law, but not illegal, money paid under it is recoverable. Examples here are that of pyramid schemes, gaming and wagering contracts. While wagering upon the result of some uncertain event, like the final results of a horse race or a football match, are examples of wagering contracts declared void by the Gaming Act, such wagers are not prohibited by the law, nor do they constitute a criminal offence, however, they cannot be enforced at law. And neither can the doctrine of equity be invoked for the recovery of any prize or valuable that alleged to be won upon any wager.

Wagering is the staking of something of value upon the ascertainment of the truth concerning some past or future event. Here, each party must stand either to win or lose upon the determination of the event. It is not a wagering contract if one party may win but not lose, or may lose but not win, or if he can neither win or lose.

The stake must be the only interest of the parties in the contract. Therefore, a contract of insurance is not a wagering contract so long as the insured has an insurable interest in the subject matter of insurance cover.

We shall later on discuss whether party tickets nomination polls are wagering contracts upon agreement to void and oust the jurisdiction of the courts, and that cannot be enforced upon the agreement. For now, we shall examine the element of the capacity to contract. 
Capacity to Contract

Certain classes of persons are by law incapable, wholly or in part, of entering into a binding contract, either arising from their promise, or enforcing a promise made to them. The main classes of persons so affected are as follows: Aliens, Infants and Persons of unsound mind.

An alien must seek and secure permission to enter into contracts with persons in the host country. An infant is a person who has not yet attained the age of majority. But infancy does not entirely preclude an infant from entering into contract for necessaries and beneficial contract of service, or continuous, or voidable contract during infancy i.e. valid until such time as they are repudiated or that can be ratified upon attaining his majority age.

The contracts of persons of unsound mind are voidable, but not void if the other party was unaware of the insanity, the contract will hold good. A contract is capable of being made or ratified by a person of unsound mind during a lucid interval.
Principles and Doctrines of the Law of Contract

Genuineness of Consent:

It may happen that an apparent contract, valid in all other essentials, the consent to the agreement may have been so given or obtained by fraud or in circumstances that did not express the true intention of the consenting party. This may arise from mistake, fraudulent misrepresentation of fact, duress or undue influence. Mistake maybe either of fact or mistake of law.

Money paid under mistake of fact or law is recoverable in equity. This can also avail both parties the opportunity to rectify the agreement to accord with the terms of the contract if the mistake was not so fundamental as to nullify that contract. Mistake as to the nature of document signed and not its content may nullify and make the transaction void.

A representation is a statement of fact made by one person in order to induce another person to enter into a contract. If the statement is untrue but the person making it believes it to be true, it is known as innocent misrepresentation.

A fraudulent misrepresentation is an untrue statement made knowingly or without belief in its truth, or recklessly, carelessly whether it is true or false. If, however, the fraudulent misrepresentation involves an operative mistake making one to enter into a contract, though it need not be the only factors which influence him, then the contract can be voided at the option of the injured party.

The injured party can also sue for damages for the tort of deceit. He can also make an application for an order of recission. As regard innocent misrepresentation, it must be proved that the misrepresentation was one of fact, made with the intention that it be acted upon to the detriment of the plaintiff.

Duress and Undue Influence

Duress consists in actual or threatened violence, or imprisonment or threat of criminal proceedings against a contracting party. Undue influence is a form of moral pressure or coercision or an abuse of privileged position, whereby one party obtained an unfair advantage over another.

The court will presume that such undue influence has been exercised, unless it can be shown to the contrary that the other party has been placed in such a position as would have enabled him to form an entirely free and unfettered judgment, independent altogether of any sort of control – upon full disclosure of all material facts.

Where there is no such presumption, undue influence may nevertheless be proved to exist and the contract thereby voidable at the option of the injured party.

Disclosure of Material Facts

Disclosure of material facts is essential in making the other party to decide whether or not to enter into the contract. Complete disclosure is also to be of utmost good faith (uberrimae fidei), such as contract of insurance, contract to subscribe for shares in companies, contracts for sale of land in which the vendor is under legal duty to disclose any defect in his title.

A fact is material if it would influence the judgment of the other party in determining whether or not to enter into contract. In contracts where utmost good faith is required between parties, there is a duty of full disclosure even after the contract has been made.

Where a special relationship exist between the persons, equity requires full disclosure of all material facts by the person in whom informed opinion is sought. The non-disclosure of material facts makes the contract voidable at the option of the other party and a liability for non- disclosure placed on the defaulting party.

We shall now examine briefly, the doctrine of equitable estoppels, the doctrine of frustration the doctrine of privity of contract and the doctrine of laches.

Doctrine of Equitable Estoppels

The doctrine of equitable estoppels, sometimes referred to as promissory estoppel, was expounded in Bandali V. Lombark Tanganyika Ltd (1963) E.A 304, Newbold J.A said in that case: the precise limits of an equitable estoppel are, however, by no means clear. It is clear, however, that before it can arise, one party must have made to another party, a clear and unequivocal representation which may relate to the enforcement of legal rights, with the intention that it should be acted, and the other party, in the belief of the truth of the representation, indeed acted upon it.

In century Automobiles Ltd. V. Hutchings Biemer Ltd. (1965) E.A. 304, Spry, J.A. made it clear that the doctrine of equitable estoppel applied in Kenya, and the jurisprudence in Tanganyika’s Bandali case was invoked in the latter Kenyan Century Automobile Ltd. Case.

In the latter case, the court of Appeal held that the facts of the case disclosed an equitable estoppel and that where the doctrine applies, the promisor will be estopped from acting inconsistently with the promise he has made.

Form

It can rightly be adduced here that either ‘form’ or ‘consideration’ is necessary in every valid contract as evidence of the intention of the parties to create a legally binding obligation. By ‘form’ is meant some solemnity attaching to the expression of the agreement, as in the execution of a deed. It is sometimes stated that a deed imports consideration, which means that the ‘form’ is sufficient of itself to give effect to contract.

The Characteristics of a Deed are:

1. Estoppel operates, unless the deed was obtained by fraud or duress or is tainted with illegality.

2.  It merges into itself any simple contract dealing with the same matter.

3. The right of action is barred at the expiration of twelve years from the time the cause of action first accrued instead of six years as is with the case of all simple contracts.

4.       It requires no consideration to support it. Here the absence of consideration cannot be pleaded as a defense since the execution of a document under seal is prima facie evidence of a solemn act whereby the parties are precluded from denying what they have stated in the instrument in the above case the doctrine of estoppel operates against the parties.

The form is adopted to prevent denial of other matters. Thus, estoppel is a rule of evidence by which, if a man has by his words or conduct induced the other to believe in the existence of certain facts, knowing that they might act on this belief, he is prevented from denying the existence of such facts.

The Three main Kinds of Estoppel are:

i)   Estoppel by record, indisputable against all parties.

ii)  Estoppel by deed, indisputable against parties to the deed, and

iii) Estoppel by contract e.g. holding out as in partnership or agency business.

DOCTRINE OF PRIVITY OF CONTRACT:

This refers to the general rule that the only persons who have any rights or obligations under a contract are those who are privy to the contract. In other words, a contract cannot confer rights or impose liabilities on any other persons other than the parties to it.

The only exception to this rule is to be found in land laws and creation of trusts. It has been observed that the concept of constructive trust can give rise and confer rights to a stranger to the parties as beneficiary.

Doctrine of Fundamental Obligation:

This doctrine refers to the general rule where a person cannot avail himself the liabilities of breach of contract unless he has satisfactorily performed his fundamental part of the contract. Thus, a person can only rely upon an exemption clause if he carried out the basic obligations imposed by the contract.

It has been observed that two main elements of this doctrine are:

i)                    Negligent performance of the contract

ii)                  Deliberate disregard of one the fundamental obligations of the contract, so that, in effect, the defaulting party has not performed the contract at all.

Doctrine of Frustration

It is now settled that a contract is void if performance is impossible at the date when it was entered into; but the impossibility must be complete, and not merely in relation to the capacity of the promisor, for what one person cannot do, another may be able to do.

It is also settled that impossibility of performance arising after a contract has been entered in to does not prima facie excuse a party from his obligations under the contract; if he cannot perform what he has promised, he must pay damages, even though the impossibility has arisen through no fault of his own.

In Cricklewood Property and Investment Trust Ltd. V. Leighton’s Investment Trust, Ltd. (1945) A.C. 221, Viscount Simon L.C. ,observed that “frustration may be defined as the premature determination of an agreement between parties, lawfully entered into and in course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstance so fundamental as to be regarded by the law both as striking at the root of the agreement, and as entirely beyond what was contempted by the parties when they entered into the agreement. If, therefore, the intervening circumstances is one which law would not regard as so fundamental as to destroy the basis of the agreement, there is no frustration. Equally, if the terms of the agreement show that the parties contemplated the possibility of such an intervening circumstances arising, frustration does not occur. Neither, of course, does it arise where one of parties has deliberately brought about the supervening event by his own choice. But where it does arise, it operates to bring the agreement to an end as regards both parties forthwith and quite apart from their own volition”.

This rule only applies to contracts which require personal performances; in other cases, illness is no excuse, and in the case of death, the personal representatives of the deceased will be liable for the performance of the contract.

The Remedies For Breach of Contract:

The remedies for breach of contract are:

a)      Damages

b)      Quantum meruit

c)      Specific performance

d)     Injunction

Damages are common law remedy, and are claimed by the injured party as of right. Damages may be either nominal or substantial. Whether or not the actual loss has been occasioned by breaches thereof, a breach of contract is itself actionable for an infringement of a legal right by breach. The rules of the remoteness of damages has it that losses arising from circumstances which are not within the reasonable contemplation of the parties may be regarded as too remote.

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be as may fairly and reasonably adequate to be considered either arising naturally, i.e. according to the usual cause of things, from such breach of contract itself or such as may be reasonably supposed to have been in the contemplation of both parties at the time made the contract as a probable result of the breach of it.

Another point to note here is that a reasonable man would have foreseen, at the time of entering into contract, as a probable consequences of the breach. And that a party who claims damages should take reasonable steps to mitigate his losses. It is settled that a defaulting party will be responsible for all such losses arising reasonably and naturally from the breach of contract in special circumstances.

Quantum Meruit

A claim on a quantum meruit is a claim for the value of work done by a party to a contract. There is no remedy for a person who has partly performed a contractual obligation and then repudiates the contract.

Remedy of quantum meruit is largely available for independent contractors for value of work done at the time of breach. Where complete performance has been prevented by the wrongful act of other party, claim on a quantum meruit is alternative to a claim for damages for breach of contract.

Specific Performance:

This is a decree of the court ordering a party to carry out his part of the contract. Such an order is made where the usual remedy of damages would not sufficiently compensate the injured party whose rights can only be satisfied by the performance of the contract in its exert terms.

The best example here is that of a contract for the sale of land, wherefore, the purchaser thereof will hardly be compensated by an award of damages as he specifically requires the land.

Injunction:

An order of injunction is another equitable remedy, and as such is only granted at the discretion of the court. It restrains the defendant from breaking his contract. It will be granted if damages is an inadequate remedy.

Remedies Against Third Party Procuring Breach  

For a person to induce another to break a contact already entered into is an actionable wrong. If the object of the party inducing the breach was either to injure the person who suffers by the breach, or to obtain a benefit for himself, award of damages can be granted.

The underlying principle here is that a contract is sacred to the parties to it and that no third party must intervene to the detriment of either of them.

A threat to procure or commit a breach of contract is not however, actionable if made in contemplation of furtherance of a trade dispute. This provision is only available to a registered Trade Union, and only after due notice has been given and duly received by the labour authorities.

Otherwise any civil wrong for inducement of breach of contract will give rise to an action at common law. It is a tort to knowingly and without any justification to induce a person to commit a breach of contract.

The inducement usually takes the form of money, but any other form of injustiable interference with the contract of another would suffice under the law of Torts. The purpose of the law of Torts is to compensate a person for the damage which he has suffered as the result of the wrongful act of another person.

The award of damages will put him in the position he would have been in if he had not suffered any damages. This is referred to as restitutio in integrum (or restoration of a party to his original position). Damages, as a legal remedy, are claimed as of right.

Doctrine of Laches (Delay)

It is settled that rights of action cannot endure forever. It is a fact that most civil actions are founded on the legal maxim of locus standi (legal standing or lawful grounds). However, your claim may be founded on lawful grounds, but the provisions of Limitations of Actions Acts, Cap.22 Laws of Kenya, may declare it statute - barred for want of prosecution within the stipulated period.

The period of limitation begins to run as from the time the right of action arose. In actions for breach of contract, the limitation period will begin to run as from the time of the breach thereof.

The limitation period for an action for breach of contract is six years. There is no distinction between simple contracts and contracts under seal. After the expiry of the limitation period, the claims for damages are extinguished by lapse of time.

Footnotes:

We inherited our law of contract from the fused doctrines of equity and substance of the English Common Law and Indian Statutes, as way back in 1897. The Law of Contract (Cap. 23) which came into operation on 1^st January 1961, provides in section 2 that, the common law of England relating to contract, as modified by the doctrines of equity shall extend to Kenya’.

The date of reception is important in that it then saw the Law of Contract as a source of law in Kenya. As years went by, judicial system saw the departure from referring the English Common Law cases and gradually developed their own doctrines of precedents and stare decisis (decision stands).

The doctrine of stare decisis requires that once a court of law decided a case in a particular manner, all subsequent cases involving similar legal issues must & strictly follow that previous decision. However, it must be noted here that there are two categories of precedents i.e. binding (which must be followed) and persuasive precedent (which the court is not bound to follow).

Again, there emerges here two legal principles in the making of the judicial decision, i.e. the ratio decidendi (the reason for the decision) and the obita dicta (things said by the way). Statement of law enables judges to make a sound statement of principle which can be discerned in subsequent cases.

However, a discerning judge can divert from the operation of the doctrine of precedent upon drawing a fine distinction between statement of law and statement of principle that can bind him or ascribe it as only persuasive but not binding in his present case.

For keen students of jurisprudence & Legal Theory, jurisprudence involves critical assessment of the nature of law and its application in resolving conflict of facts and adduced evidence. This is what justice and equity as matters of fairness are all about:
 Mfalme Davis.  http://authordavis.globalmoneyline.com