Wednesday 1 June 2016

the law on formation of contract in uganda by kamarabe john



THE BRIEF ANALYSIS OF THE LAW OF FORMATION OF CONTRACT.
Read disclaimer at the end of the last page.














Prepared by;
Kamarabe John,2013/2017
Student,
Uganda Christian University Law School.



THE ANALYSIS OF THE LAW ON FORMATION OF A CONTRACT

EDITORIAL NOTE
CHAPTER ONE
1.      INTRODUCTION
2.      BACKGROUND
CHAPTER TWO
1.      INTRODUCTION
2.      CONTRACT
3.      OFFER
4.      ACCEPTANCE
5.      CONSIDERATION
6.      CONCLUSION











EDITORIAL NOTE
Omitted 

CHAPTER ONE
INTRODUCTION
This literature, geared towards examining the law on the formation of a contract, will give a brief history of contracts. It will describe the meaning of a contract and examine the elements required by law to make a contract binding on all parties to it.
BACKGORUND
Brief examination of contracts in the ancient societies
In the primitive societies, an individual did not have such rights to create for himself rights[1]. Where such a right existed, then he created a few rights. This therefore meant that an individual would not enter into a contract by himself.
The rational for this conclusion was because an individual was subject to the rules of the place he was born and to the commands of the chiefs of the area he was situated. This therefore left him with no room for contracting[2].
Accordingly, it is notable that Maine[3] refers to a contract as a legal institution in the primitive society and not an agreement as a social institution. This means that individuals in the ancient period would come into agreements but would not enter into contracts. Agreements were prevalent but contracts were not[4]. Consequently, the only enforceable agreement was a “contract under seal”
Before the development of assumpsit (which will be looked at afterwards), there were two recognized forms of action for enforcing rights: (1) Action of debt and (2) Action by writ of covenant

1.      Action of debt
      This was an action available to a plaintiff who claimed that the defendant had promised him a sum of money or a quantity of goods and chattels[5]. However in the fourteenth century, debt action was for recovery of money and a new action called detinue was developed for recovery of chattel.
2.      Action on covenant.
           This was an action available to a plaintiff against a defendant based on an undertaking charged had been given or performed by in the manner recognized in law by the defendant. This action led to the development of the action of assumpsit. this was an action available for enforcement of informal promise.
The reception of the Law of contract in Uganda
Before the enactment of the current Contract Act, 2010, the Law of contract was largely based on English principles of the law of contract. Thus Section 3 of the then Contract Act Cap 75 Laws of Uganda Vol.11 provided that “subject to any written law for the time being in force,…the common law of England relating to contracts as modified by:
a.       the doctrines of equity
b.      the public general statutes in force in England on 11 August 1902
c.       the Acts of Parliament of United Kingdom mentioned in the schedule in the Act shall extend and apply to Uganda.
To that end, it was necessary while examining the law of contract in Uganda to examine the rules of contract and the effects, if any, of modifications of such rules by native law, custom or statute[6].
However, upon the enactment of the Contracts Act, 2010 by the Parliament of Uganda, the entire Law of contract was codified in the Act. Indeed, the long title of Act provides “an act to codify the law relating to contracts and to provide for other related matters
The codification of the law of contract in the act does not I my opinion mean that the entire common law was codified in the Act. The courts can still apply principles of common law not provided in the Act. Indeed, Section 14(2) of  the Judicature Act cap 13 provides “Subject to the Constitution and this Act, the jurisdiction of the High Court shall be exercised subject to any written law and insofar as the written law does not extend or apply, in conformity with,
(i) the common law and the doctrines of equity;” this therefore means that courts can still enforce the common law principles of the law of contract amidst the codification of the entire law of contract by the Contracts Act 2010. However, the application of such common law in Uganda is subject to the circumstances existing in Uganda and the permission of the people of Uganda. This is because  Section 14(3) of  the Judicature Act cap 13 providesThe applied law, the common law and the doctrines of equity shall be in force only insofar as the circumstances of Uganda and of its peoples permit, and subject to such qualifications as circumstances may render necessary.” See also. Uganda Motors V Wavah Holdings Limited Civil Appeal No.19/92.




 

     CHAPTER TWO
1.      INTRODUCTION
Quite often, we make undertakings, promises, agree to act for others and indeed we act for others. Little do we know the legality of what we are doing. Are we bound by what we promise to do? Are we bound by our undertakings? Here, I will examine the meaning of a contract, give types of contracts and explain the requirements of a valid contract.
2.      CONTRACT
The meaning of a contract
A contract is an agreement between two or more people with the capacity to contract with a lawful consideration and with a lawful object and with an intention to be legally bound[7]. From the general reading of the definition of what amounts to a contract, it must be deduced that for there to be a valid contract, it must be between two or more people. The people must have the capacity to contract; they must contract for a lawful consideration, with a lawful object and must have intended to be legally bound by the contract.
Types of contracts.
Generally, people make contracts. They will all lead to the same event and are all governed by the law relation to the validity of a contract. But the question to he answered is what type of contracts have you made with your colleague. Here, I will show the types of contracts that people make day after day.
Contingent contract.
This is a contract to do something or not to do something where an event collateral to the contract does or does not happen[8].


Bilateral contract.
This is a contract for exchange of promises. In other words, all the parties make a promise to the other to do or not to do something. One makes a promise to do or not to do something for the other’s promise to do or not to do something. For example, Bridget promises to wash John’s clothes and John promises to do Bridget’s course work. This is a bilateral contract. The word “bi” stands for two parties. In other words, two parties make promises to each other.
Unilateral Contract.
This is a contract where only one party to the contract makes a promise to the other party. Unlike a bilateral contract, a unilateral contract involves only one party making a promise, which the other party will accept or reject. It is only one party having an obligation to act and the other party does not have. For example, all advertisements are said to be unilateral contracts because, the advertiser only makes a promise and any person is called on to willingly act upon the advertisement. One of the classical illustration of this type of contract is that in the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, CA This is a case that involved a company, the one Carbolic Smoke Ball Company making a promise to anyone who would use their smoke ball vaccine and catches influenza. This was a unilateral contract in that it is only the company that made a promise for any person to perform. You will come across this case during your contract law 1 lectures. You are advised to read this case exhaustively for it is a landmark case on offer and acceptance. A landmark case is a case that stands out from other less remarkable cases[9]. It is a case that marks the end or the beginning of the course of a legal development
Collateral contract
This is a subsidiary contract that induces a party to enter into the main or principle contract.
Simple agreement.
This is an agreement for which the law requires for its enforcement except the parties’ consent.
Contract of guarantee: this is  a contract to perform  a promise or discharge the liability of a third party in case of the default of the third party
Contract of indemnity: this is a contract by which one party promises to save the other party from the loss caused by the conduct of the person making the promise or by the conduct of any other person.
Solus agreement
This is an agreement whereby a gagrage owner binds himself to buy petrol from one oil company.
Honour clause.
This is a statement or statements in an agreement that limit the intention to be bound by the terms of the agreement.
Ex gratia compromise. This is a payment made by a person to another person where there exists no legal obligation to make such payment.
Comendatio  non obligat. This is a simple recommendation that does not bind.
CONSENT:
For a contract to be valid and bind the parties to it, it must be shown that they all consented to the contract. Consent is an agreement between two or more persons obtained freely, upon the same thing in the same sense[10]. The parties must freely consent to the contract to be bound. Accordingly, consent is deemed freely obtained if it is not caused by coercion, undue influence, fraud, misrepresentation, and mistake[11]. The parties must have been at the meeting of the mind while contracting. ie, they must be ad idem. One of the classic examples of luck of consent was illustrated in the case of Cundy v Lindsay (1878) 3 App Cas c.f. in this case, the plaintiffs  received an order for handkerchiefs from a dishonest person, a one Blenkarn, who gave his address as 37,wood street, cheap side. He signed his name to make it look like Blenkiron &co, a reasonable firm known by reputation to the plaintiffs and carrying on business at 123 wood street. The plaintiff sent the goods to “Blenkiron & co.” where Blenkarn took possession of them. He did not pay for the goods. He sold them to the defendants. It was held that there was no contract between blenkarn and the plaintiffs on grounds that there was no meeting of the mind between the parties. The plaintiffs were not at the meeting of the mind with blenkarn and so blenkarn did not transfer title to the defendants.
OFFER
One of the ingredients of  a valid contract is an offer. An offer is the willingness to do or abstain from doing anything signified by a person to another, with a view to obtaining the assent of that other person o the act or abstinence[12]. An offer is an expression of readiness to contract on the terms set by the offeror which ounce accepted will give rise to a binding contract. An offer may be made in writing or expressed by conduct or words.
What amounts to an offer and what does not amount to an offer
Not everything offered for acceptance amounts to an offer as recognized by law. It is therefore prudent to examine herein what may and may not amount to an offer. Whatever does not amount to an offer is an invitation to treat.
Invitation to treat
This is an undertaking made by one party to the other made without the intention of being legally bound and does not give rise to a valid contract. An offer is made with the intention of creating contractual obligations and with an intention of being legally bound. However, with an invitation to treat, there is no intention to be legally bound and not contractual obligations due arise. In Grainger V Gough [1896] A.C.325 it was held that the issue of a catalogue containing the description of goods to be sold was not an offer but an invitation to treat.
Goods displayed on shelves.
Where a person displays goods in shop shelves, this does not automatically mean that he has made an offer. In Pharmaceutical Society of Great Britain v Boots Cash Chemists (southern) Ltd. [1952] 2 ALL E.R.459. The defendants, a chemist shop had displayed dangerous chemicals in its shelves. The type of service was that of self-service. The plaintiffs accused it of offering to sell chemicals without the presence of a chemist contrary to the law. Court held that a display of such articles was not an offer but an invitation to treat.
Goods displayed in shop window.
A display of goods in shop windows is not an offer but rather an invitation to treat. In Fisher v Bell [1960] 3 ALL E.R.731 The defendant was accused of offering a knife for sell by displaying it in a shop window. Court held that the display of a knife was not an offer but rather an invitation to treat. Whether or not this case is applicable in Uganda is a question you are advised to ask your lecturers. This is because Section 2 of the Interpretation Act defines a sell as, a sell includes barter, exchange, offer for sale and expose for sale. This section therefore means that any person who exposes to sell any illegal item will be deemed to have sold that item.

Advertisements
Advertisements to sell goods do not amount to offers but invitation to treat. In Partridge –v- Crittenden [1968] the defendants made an advert to sell hens as follows “Bramblefinch cocks and hens 25s each” it was held that this did not amount to an offer but rather an invitation to treat.
Lack of objectivity
Where a party does not show interest is selling his item, there is no offer made. His happens when for example a friend of yours says, “I might sell this phone anytime, I need to buy a new model”. Then you reply, “Just sell it to me” and then he replies. “mmmhh, I think so, let me see” sincerely speaking, he has not accepted to sell the phone to you. You cannot sue him for selling the phone to any other person under breach of contract. For example in Gibson –v- Manchester City Council [1979] G invited to buy house. M invited application on “may be prepared to sell” basis. It was held that it was not an offer.
Mere statement of price.
A mere statement of price is not an offer but an invitation to treat. In Harvey v Facey (1893) the plaintiff wanted to buy an item from the defendant. The defendant replied, “lowest price acceptable is 900” it was held that this was not an offer but an invitation to treat.
                                                       Commnunication of an offer
For an offer to be valid, it must be communicated by the offeror or his agent to the offeree. S.3 of the Contract Act states “the communication of an offer is made by an act or omission of a party who proposes the offer, by which that party intends to communicate the offer or which has an effect of communicating the offer.” The communication of an offer is deemed complete ounce it has come to the knowledge of the person to whom it is made[13]. The general rule is that an offer becomes effective ounce it has been communicated to the offeree and a person cannot claim to have accepted an offer if it was not communicated to him and was not aware that it was an offer.  Thus, in Fitch v Snedakar [1838] 38 NY248. The defendants offered a reward for apprehending a criminal, the plaintiff not aware of the reward apprehended him. He claimed for the reward. Court held that a person can only act on an offer if he was aware of the same. His action had to fail.
                                                Termination of an offer
Termination of an offer is the process by which the period of which an offer is to remain effective is brought to an end. An offer can be terminated in the following ways;
Revocation:
This is the process by which an offer is withdrawn by the offeror[14]. It is an act or omission by the offerer which has an effect of withdrawing an offer. The general rule is that an offer can be revoked anytime before the communication of its acceptance is complete[15]. see Routledge v Grant (1828) 4 Bing.653. and that a promise to keep an offer open is not binding unless there has been provided consideration to the offeror. See Routledge[supra]
The communication of revocation is complete as against the person who makes it when it is put in course of transmission to the person to whom it is made, so as to be out of the power of the person who made it[16]. This means that any person who revokes an offer, the revocation becomes effective against him ounce he puts the revocation in the means of transmission to the person to whom he intends to make it. The revocation of an offer against the offeree becomes effective when it comes to his knowledge.
An offer becomes irrevocable as soon as the offeree starts performing the offer.
When the revocation is given orally, it becomes effective as soon as the offoree hears it.
Where it is given by letter, it becomes effective when the offeree receives the letter. It is immaterial whether he reads it or not as long as he receives it and you can prove he received it. see Bryne V Van Tienhoven (1880) C.P.D

Rejection.
This is the person’s unwillingness to do or abstain from doing anything signified by another. It is the refusal to accept an offer. The general rule is that rejection of an offer becomes effective ounce it has been communicated to the offeror by the offeree.[17] Rejection takes form in two ways. Rejection by a counter offer and express rejection. A counter offer is the variation of the terms of an offer set by the offeror by the offeree, which will terminate and offer. It simply means that when a person is willing to sell his item at 2000, then you who is willing to buy insist that you will pay 1500, unless the seller accepts the 1500, you are deemed to have rejected to buy the item.  The general rule is that a counter offer will terminate an offer. see Hyde v hyde(1840) 3Beave.334; However, when the offeror accepts the counter offer, there is a valid contract. see Khaled V Athanas Bros(Aden) Ltd [1968] E.A.31
Lapse of time.
This is the expiration of the period an offer remains effective. It is the termination of an offer due to failure to accept it within a prescribed period or a reasonable period[18]. Where the period by which an offer remains effective is prescribed, the offer will terminate at the expiration of the period. But where the period by which an offer is not prescribed, it will terminate at an expiration of a reasonable period depending on the circumstances of the case. See Ramsgate Victoria hotel co v Montefiore (1866) L.R.1 Exch.109.
Death of the offeror.
Section 6(d) of the Contract Act provides, the death or insanity of the offeror terminates the offer where the death or insanity of the offeror comes to the knowledge of the acceptor before acceptance. The death of the offeree terminates an offer. See Reynolds v Atheston (1921) 125 L.T.690. In addition, the death of the offeror terminates the offer if the offeree is aware of it. 

                                                            ACCEPTANCE
Acceptance is the assent to an offer by a person to whom an offer is made[19]. This means it is only a person to whom an offer is made that can accept an offer. For acceptance of an offer to be effective, it must be communicated by the offeree to the offeror. Communication of acceptance is made by an act or omission of a party who accepts an offer, by which that party intends to communicate the acceptance or which has an effect of communicating the acceptance[20]. 
When communication of acceptance is deemed complete.
The communication of acceptance of an offer becomes complete against the offeror when it is put in a course of transmission to him or her so as to be out of the power of the acceptor[21]. This means that when you make an offer, its acceptance by the acceptor is deemed complete against you immediately the acceptor puts its acceptance in a course of transmission so as the acceptance to be out of his power.
 The acceptance of the offer must be expressed in the usual and reasonable manner, except where the offer prescribes the manner in which it is to be accepted[22]. This means that the means by which the offeree accepts an offer must be usual means and reasonable if the means are not prescribed in the offer.
However, when an offer is accepted through means which are not as prescribed by the offer, then, the offeror must within a reasonable time send notice to the acceptor to accept the offer in the means prescribed in the offer. see Section 7(2) Contract Act. If the offeror does not send the notice within a reasonable time as required by the section, then he shall be deemed to have accepted the means used by the acceptor to accept the offer. See Section 7(3) Contract Act. It therefore means that prescribing means by which an offer is to be accepted will only bind the acceptor if the offeror demands that the acceptance be made in the means prescribed in the offer. Otherwise, pursuant to section 7(1) (b), the acceptor must use any reasonable means not delaying the acceptance in the circumstances.

Under the postal rule, acceptance of an offer becomes effective immediately the letter of acceptance is posted. see Adams v Lindsell (1818) .This means that when a person sends a letter accepting your offer, that acceptance becomes effective immediately the letter is put in the post office box or in any form of transaction as long as it goes out of the hands of the person who wrote it. Whether its lost or not is immaterial in this case. see Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3. But this rule does not apply to contracts made by telex or mobile phones. In these types of contract, the contract is complete only if the acceptance has been received by the Offeror. See Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3. This means, when you offer to sell your item on whatsapp, and a person sends a message accepting to buy your item; the contract will be completed immediately you receive the message. As long as the acceptor sees the two ticks, the contract is complete whether you read it or not.
The justification for the postal rule is that when parties make post as the means of acceptance, it becomes difficult for the parties to contemplate the precise time at which the communication of acceptance was made. This is because also, acceptance by post is subject to delay[23].
Another justification for the rule is that, if the defendants are not bound by the letter of acceptance posted by the plaintiffs immediately its posted, then the plaintiffs would not also be bound until they receive a notification from the defendants that they have received the letter of acceptance. This would go on and on and no contract would be reached.
                       Challenges of the postal rule.
The postal rule tends to create post offices as agents of the offeror, however, we all know that post offices are governmental agents for public service.
Another justification for the rule is that when an offer is made by post, the offeror is deemed to have made his offer thought the whole time his offer remains in the post, and therefore the communication of acceptance is deemed complete immediately the letter of acceptance is posted[24].
The communication of acceptance of an offer becomes effective as against the offeree immediately it comes to the knowledge of the offeror.
                                               
      Revocation of acceptance.
Communication of revocation of acceptance of an offer is made by an act or omission of a person who revokes the acceptance of the offer by which that party intends to communicate the revocation of the acceptance or which has an effect of communicating the revocation of the acceptance of an offer[25].  The general rule is that an acceptance can be revoked anytime before the communication of acceptance is complete[26]. When it comes to postal acceptance, it is to be recalled that acceptance by post becomes effective immediately the letter of acceptance is posted. However, the same is not true with revocation of acceptance by post. Under the postal rule, revocation of an offer becomes effective only if the letter of revocation has been communicated to the offeree.  See Bayern V Van Tienhoven (1888)  
Acceptance of an offer can be expressed by conduct[27].see Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
Acceptance must be absolute and unqualified[28]. To this end, acceptance subject to conditions is not valid acceptance but a counter offer, which will terminate the offer. See Hyde Case [supr
CONSIDERATION
Consideration is a right, interest, profit or benefit accruing to one party or forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party[29]. Consideration is therefore a benefit or profit accruing to one party or detriment, loss suffered by the other party. see Currie V Misa (1875) L.R.10 Ex.153, 162. Consideration for a promise means where at the desire of the promisor, a promisee or any other person does or abstains from doing or promises to do or abstain from doing something[30]. An example of a consideration for a promise in ‘you sell me your car but we agree I pay your money tomorrow. Much as I have not furnished consideration, there is a valid contract on consideration. Your consideration is “selling” your car and my consideration is receiving your car.
Executory consideration. This is an exchange of promises to perform an act in the future.
Executed consideration. This consideration has been wholly given at the time of making the contract
Fair Consideration. Consideration that is roughly equal in value to the thing being exchanged;

                                                             Rules governing consideration
The common law an statutes have developed certain rules that are to govern consideration. Unless the rules are conformed to, there will in most case be no consideration and hence no promises.
1)      .Consideration need not be adequate.
Courts throughout the world are not willing to enforce a contract unless there is a valuable consideration. Section 20(3) of The Contracts Act states “an agreement to which consent of the promisor has been given freely is not void merely because the consideration is inadequate”. The courts will in most cases not inquire into the adequacy of such value. It was held in G M Combined V AK Detergents And Ors Uganda Supreme Court Civil Appeal No.7 Of 1998It is well established that the courts will not inquire into the sufficiency or adequacy of the consideration as long as there is some consideration. Whether it is harsh, cruel or in adequate will not affect the fact that it is a valid consideration. As long as the parties agreed that, it forms part of consideration. Indeed, in the Pinnel’s Case (1602) 5 Co Rep.117a ,it was held that chattel, such as a horse, hawk or robe instead of money may be good consideration provided that the promisor considered it beneficial to him and agreed it forms part of consideration for his promise. Lord Somervell of Harrow in Chappell and Company v. Nestle Company Ltd. 1960 AC 87, said:
“A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn” it therefore means that courts will not inquire into the adequacy of consideration.
However, where it appears that the consent of the promisor was not obtained freely and the consideration was not adequate, courts will inquire into the adequacy of the consideration. see S.20(4) Contracts Act.
For more cases, see Thomas v Thomas [1842) 2 Q.B.851, Lloyd’s Bank V Bundy [1975] Q.B.326. Bainbridge v Firmstone (1839)
2)      Consideration must not be past
Consideration for a promise must be given in return for that promise. If a party makes a promise subsequent to some act carried out by another party, then that is past consideration and does not amount to valid consideration. It does not bind the party that made the promise. It may be considered as gratitude or a gift. This simply means that you cannot perform an act for someone who did not ask you of it. Ounce you do that, you cannot claim a reward from the person. Even if the person later promises to pay you, he is not bound to do so and you cannot sue him if he refuses.
An example of past consideration may be seen where A paints the outside of B’s house as a voluntary act while B is on holiday. When B returns from holiday B is pleasantly surprised by A’s kindness and promises to pay A £50. If B refuses to pay, can A claim his £50? The answer here must be that A’s action will fail since A’s consideration of painting the house is past in relation to the promise to pay made by B and, of course, past consideration is no consideration.

 Past consideration is past in relation to the promise that the promisee wishes to enforce and not in relation to the time the plaintif is wishing to enforce the defendant’s promise. Roscorla v Thomas (1842) 3 QB 234 In this case the plaintiff had negotiated the purchase of a particular horse from the defendant for a certain price. Subsequent to the agreement the defendant promised the plaintiff that ‘the said horse was sound and free from vice’. In fact the horse proved to be particularly vicious and the plaintiff sued for breach of the promise. It was held that his action would fail since the consideration provided by the plaintiff was already past when the promise of the defendant that the horse was sound and free from vice was made. In truth, the warranty as regards the horse was not induced by the payment made for the horse and was, as such, purely gratuitous. Also see Re McArdle [1951] Ch 669
Exceptions to the rule.
1)      The act done which would have amounted to past consideration must have been done at the request of the promisor.
2)      It must have been understood at the time of making the promise that payment would be made
3)      Payment if it had been promised, it must have been legally recoverable.
4)      Past consideration for a bill of exchange. see S26(b) of the Bill Of Exchange Act Cap 68
See   Pao On v Lau Yiu Long [1979] 3 All ER 65, Lampleigh v Braithwait (1615) Hob 105, Re Casey’s Patents [1892]1 Ch 104,

3)      Consideration must move from the promisee
This simply means that a person can only enforce a promise if it was he that provided consideration for it or through his agent. Consideration must have moved from him or through his agents and not from a third party. See Dunlop v Selfridge 1915 AC 847.
4)      Consideration must be of some value.
the courts will only enforce a contract if the consideration given for it is of value. This is irrespective of whether the value can be ascertained or not as long as the law recognizes that the act, omission, detriment etc is of some value. Natural affection of itself is not consideration, sentiment motives for promising do not in law amount to valuable consideration.
What amounts to valuable consideration?
a.       Promise to pay less than the amount owed is sufficient consideration.
Generally, payment of a lesser sum than owed is not satisfaction of the whole and the creditor is still entitled to the whole sum amidst the less sum paid. This is because there is not consideration made by the debtor for the promise of the creditor to accept a lesser sum. However, in Pinnel’s case [supra] it was stated, “payment of a lesser sum on an earlier day than the day on which the debt was due, if accepted by the plaintiff in full satisfaction of a greater amount would be sufficient to relieve the defendant from liability”. This is because the benefit to the creditor is, “payment at the earlier date than the date the debt was due” this is subject to his acceptance. see also Sibre v Tripp (1846) 15 M & W 23.

b.      Whether performance of existing contractual duty amounts to consideration
Where a party performs an act that it was contractually bound to perform, then that does not amount to consideration. However, where the act exceeds what he was bound to perform in the contract, then that might amount to valid consideration. See Stilk v Myrick (1809) 1 Camp 317

c.       Promise to perform existing contractual duty to a third party
Performing an existing contractual duty to a third party is consideration if the promisor benefits and the promise suffers a detriment. See Shadwell v Shadwell (1860) 3 L.T.628.
d.      Promise to perform existing public duty amounting to consideration
Persons employed by the government to perform public duty are to do those duties for free at the remuneration by the government. To this end, police officers are generally not supposed to ask for payment for rendering services to the public. The general rule is that performance of an existing public duty does not amount to consideration. However, where a public officer performs a duty for a private person exceeding what he is bound to perform under his duties as a public officer, then, he will be entitled to payment. See Glassbrook Bros.LTD v Glamorgan CC [1925] A.C. 270.
e.       Payment of a lesser sum than amount due by a third party.
Payment of a lesser sum than amount due by a third party will amount to consideration as satisfaction for the amount due provided the creditor accepted that it extinguishes the debt. see Welby V Drake (1825) 1 C & P 227
ESTOPPEL
This is a representation by either conduct or word made by one party to the other intending that the other party acts upon it and infact the other party acts upon it at his detriment hence barring the representor from denying the existence of the act. It is bar which prevents a party from asserting a claim or right that contradicts what one asserted or did before or what has been legally established as true[31]. It is a doctrine under common law which bar a party from denying an earlier fact it represented as true to the other party who acted upon it. So if a party does not provide consideration to the either party but never the less the party represents himself in such a way that he foregoes consideration to the other party, the representor shall in law be stopped from asking for consideration. in Central London Property Trust Ltd V High Trees House [1947] K.B.130 Denning stated “.The logical consequence, no doubt, is that a promise to accept a smaller sum in discharge of a larger sum, if acted on, is binding, Notwithstanding the absence of consideration, and if the fusion of law and equity leads to that result, so much the better. At this time of day it is not helpful to try to draw a distinction between law and equity”
The Evidence Act Cap 6 states under section 114.
“When one person has, by his or her declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon that belief, neither he or she nor his or her representative shall be allowed, in any suit or proceeding between himself or herself and that person or his or her representative, to deny the truth of that thing”.
From this section, for estoppels to arise, the following must be proved,
1.      There was a representation of an act, declaration or omission to act.
2.      The representation must be made by the party on whom the estoppel is raised against.
3.      The representation must have been made intentionally for the other party to rely of it.
4.      The party raising the representation must have acted on it.
5.      The representation must be of fact and not of future. See High Trees case [supra]
Lord Denning put it in this way in the case of Combe V Combe [1951] ALL ER
The principle, as I understand it, is that where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word.
1.      It should be noted that estoppel is a rule of evidence and does not arising from contract as waiver. Under waiver, a party foregoes a right stipulated in a contract. This foregoing is not to be regarded as estoppel but rather waiver. See Nurdin Bandali V Lombark Tanganyika Limited [1963] EA 305.
2.      It should be noted to that estoppel can only be used as a shield and not as a sword. This means that estoppel will only be raised by a party to protect itself and not to found a cause of action. One cannot raise a cause of action founded on estoppel. See Combe case [supra],
3.      Estoppel cannot act against the law. This simply means that where a statute imposes a duty upon a person or body, where the person or body fails to comply with such a duty, the person or body cannot raise estoppel against those accusing it of defaulting. This will amount to estoppel operating against the law. See Marine Electric Company Limited v General Diaries Limited [1937] A.C. 610 at 620.
The definition of a contract as par Section 10 of the Contracts Act is, a contract is an agreement made with free consent of the parties with capacity to contract, for a lawful consideration and with a lawful object, with intention to be legally bound. From this definition, it should be noted that to amount to consideration, the thing amounting to consideration must be lawful.
What amounts to unlawful consideration?
Section 19 of the Contacts Act states that an object or consideration is lawful unless if consideration is forbidden by law, e.g sale of public offices. See The Sale of Offices Act. is of such a nature that if permitted would defeat the provision of any law, is fraudulent, involves or implies to a person or property of another person or is declared immoral or against public policy by a court. For example, a contract to restrain a person from serving in military service is unlawful as against public policy. See Re Beard [1908] 1 Ch.383. Parkinson v College of Ambulance LTD [1925] 2 K.B.1.
The effect of an unlawful consideration in an agreement is that such agreement is void and no claim can be brought to recover any property delivered, money paid, or compensation for anything done under such. See.  s19 (2) Contracts Act. However, a person can recover such thing, be compensated for such thing, or bring an action under such agreement if at the time he delivered the thing or paid such money,
1.      He can satisfy court the he was ignorant of the illegality of the consideration or of the object.
2.      If he can satisfy court that the illegal consideration or object had not been effected at the time the plaintiff became aware of the illegality and repudiated the contract. See s19 Contract Act.
3.      If the court is satisfied that the consent of the plaintiff to the agreement was induced by fraud, misrepresentation, coercion or undue influence.
4.      Where the agreement is declared illegal by any written law, with the object of protecting a particular class of persons to which the plaintiff is one.
What will happen to any agreement that lacks consideration?
Generally, any agreement lacking in consideration is void. See s.20 Contract Act. The importance of consideration was stressed in the case of Combe [supra] by Lord Denning when he said
The doctrine of consideration is too firmly fixed to be overthrown by a side-wind. Its ill effects have been largely mitigated of late, but it still remains a cardinal necessity of the formation of a contract, although not of its modification or discharge.”
However, other than estoppel, a court can nevertheless enforce an agreement lacking consideration under the following circumstance,
1.      Where the agreement is expressed in writing and registered under the registration of documents act and is mad out of natural love of affection.
2.      Where the promise is to compensate wholly or in part a person who has already voluntarily done work for the promisor or any work the promisor was compellable to do. This means that when you do work for another person without his request, then he later on promises to pay you, he will have to pay you.
3.      Where the agreement is made in writing and signed by a person responsible for it to pay a debt to a creditor which debt would be legally enforceable but is restricted by the Limitation Act. See Section 20 Contract Act, 2010.
4.      Where it is a gift given by a donor to a done.

Conclusion.
The ingredients of a valid contract as you have learnt from the definition of the contract have not been exhausted by my analysis. You realise that I have not analyzed the law in respect to consent and capacity to contract.










Disclaimer:
  Take note that the information I have given is not the absolute truth of the law on formation of contract. It is simply my own understanding and does not exhaustively examine my understanding of that law. I therefore inform those that may read this work not to cite my name as authority but to cite the cases I have cited. You should also read the authorities I have consulted in addition to your own personal authorities and compare. I am welcome to criticisms if any in good faith. My contact email has been given on the first page of this document. Thank you, and may GOD BLESS YOU;


[1] Cheshire Fifoot and Furmston’s law of contract (Butterworth’s’ 12th Ed 1991), Chapter 1
[2] David J. Bakibinga law of contract in Uganda (2001),p.1
[3] Maine, H. Ancient Law  
[4] Bakibinga, supra n. 2
[5] ibid
[6] Bakibinga, supra p.3
[7] Section 10 of the Contracts Act,2010
[8] Ibid section 2
[9]Landmark Cases in the Law of Restitution  (Hart Publishing, 2006)
[10] The Contract Act,2010.s.2
[11] Ibid s.13
[12] Contract act supra s.2
[13] The contract act s.4
[14] The Black’s Law Dictionary, 8th Edition p.4116
[15] Contract act s.5
[16] Ibid. S.4(3)(a)
[17] Bakibinga, p9
[18] Contract Act s6(b)
[19] Contract act s.2
[20] Ibid.s.3
[21] Ibid. s.4(2)(a)
[22] S.7(1)b
[23] Yamaguchi, Mikio, (2004)‘The Problem of Delay in the Contract Formation Process: A Comparative
Study of Contract Law’ 37 Cornell International Law Journal.357
[24] (Henthorn V. Fraser [1892] 2Ch.27, 31)
[25] Contract act s3ss3
[26] Ibid. S5(2)
[27] Ibid. s8
[28] Ibid. s7(1)b
[29] S.2 Contract act
[30] ibid
[31] The Black’s Law Dictionary,8th edition, P1662

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