FORMS OF CONTACT

Contract may be in writing, or oral, or inferred from conduct, or a combination of any of these. The reason for written documents its easy to prove the contents of the contract

A conveyance or transfer of a legal estate in land or the grant of a lease for three or more years must be by deed. Note: Conveyance is a document which transfers the title of unregistered land. Note: a transfer is the document which transfers registered land A consideration is not necessary for a deed.

Writing Signature Witness and attestation- attestation is a statement that the deed has been signed in the presence of a witness. Delivery- intention to be bound by the deed. No physical delivery is necessary. Intention to create a deed. The effect of non-compliance with the above is that the deed is void. Void contacts where money was paid or property transferred it can be recovered.

Sale of disposition of land or an interest in land. It has to include all terms agreed. Consumer credit agreement (including hire purchase agreements). With specific amounts as stated in the act. Bills of exchange and cheques. The transfer of shares in limited companies. Policies of marine insurance. Non-compliance with above depends on the type of contract It could be void.

A contract of guarantee must be evidenced in writing to be legally enforceable. Nature of the contract e.g. Guarantor Written Evidence- any material terms of a contact is sufficient

No Act in Malawi but, There is Legal recognition signatures

of

electronic

THE CONTENTS OF A CONTACT

Express terms (other than exemption clause), Implied terms, and Exemption clauses.

Contract terms and representation Conditions and warranties

Two types of express terms: Conditions are vital as they go to the root of the contract breach of which entitles the innocent party to repudiate and to claim damages. A warranty its a term which is subsidiary to the main purpose of the contract. Breach of a warranty entitle the innocent party to damages.

The use by the parties of condition or warranty is not conclusive. If a breach of a term expressed to be a condition it can only produce a very small loss it may be justified that the breach will not justify rescission. Parties classify terms as conditions, which in the absence of agreement would be treated as warranties.

Incomplete contracts are not binding as contracts are to be complete. If parties used non-essential words e.g. Standard printed conditions, such word may be disregarded. Standard contracts. Used by big organisations e.g. Banks insurance companies, difficult to negotiate as parties. Problem with standard forms: inconsistency when filling forms but written word override printed and where both parties have their own standard terms.

Implied by custom, the courts or by statute

Custom

Parties presumed to have contracted by reference to the customs prevailing in that trade or locality unless they have shown contrary intention. BRITISH CRANE HIRE V IPSWICH PLANT HIRE

The Courts

Court will imply two types of terms of contract.

A. Terms that parties must have intended to be included (terms implied in fact). Test officious bystander....yes to the terms. B. Terms implied to maintain a standard behaviour, even though the parties may not have intended. E.g. Contract of employment: Employee impliedly undertakes to faithfully serve the employer and that he is reasonably skilled.

Statute Sale of goods= seller right to sell. Sale by description that the goods will correspond the description. Goods supplied are of satisfactory quality. Goods sold by sample the bulky will correspond the sample.

An exemption clause is a term in a contract which seeks to exempt one of the parties from liability or seeks to limit liability, to a certain sum if specific acts are committed. A person who signs a document is bound by it even they dont read. A person may not be bound by a signed document if the other party misrepresented its terms. Document not signed no application of exemption clauses. Court will not enforce an exemption clause unless the party affected by it was adequately informed of it when he accepted it. Clause may apply to certain transactions if the parties have had a long dealing incorporating exemption clauses.

In considering validity of exemption clauses courts strike the balance between: Principle that parties should have the freedom to contract on whatever terms they wish. And, The need to protect the public from unfair exemption clauses in standard form contracts used by large business enterprises.

VITIATING FACTORS

Vitiating factors affect the validity of an otherwise effective contract. Mistake, Misrep, Duress and undue influence, Illegality.

Contracts are void if there is a mistake Contract are voidable if there is a misrepresentation. Common law Contracts are void so long as the mistake induced the contract. mistake as to the existence of the subject matter. GALLOWAY V GALLOWAY. Mistake as to the identity of the subject matter e.g. A wants to buy product Y, but B intends selling product X.

 Mistake

as to the possibility of performing the contract. Mistake as to the identity of the other party. Can only be done if parties are not dealing face to face. Mistake as to the terms of the contract of which the other party is aware. Unilateral mistake one party mistaken as to the fundamentals of the contract Bilateral mistake both parties make the same mistake e.g. Existence of the subject matter.

Equity it relieves a party from the effects of a mistake. Rescission only granted when the party seeking it is not at fault. Rectification where there is a mistake not in the agreement but in its reduction into writing equity rectifies it. E.g. Terms were agreed by the parties Agreement continued up until it was put into writing The writing fails to express the agreement of the parties. Defence of Non est Factum (it is not my act) occurs where: Signature induced by fraud. Document different from that thought to have been signed The party avoiding liability must prove that he acted with reasonable care.

It is untrue statement of fact which is one of the causes which induces the contract. A. statement of fact A statement of opinion goods represent good value= not misrep unless made expert or some with special knowledge. A statement of intention. Not a misrep unless proved that the allege intention existed. B. Silence not misrep except When made in the course of negotiations and becomes false and is not corrected. When silence distorts a true statement. Where the contract is of utmost good faith. C. Misrep must induce the ct,c plaintiff cannot avoid contract if: Knowledge of statement being false. Would made the ctc despite misrep No knowledge of misrep

Fraudulent Misrep A statement which is known to be false, or made without the belief in its truth, not caring whether it is true or false. Remedies: Innocent party may claim damages based on the tort of deceit. Refuse to perfom the ctc. Claim rescission of ctc.

An innocent Misrep is a statement which the maker honestly and reasonably believe to be true. Law strikes a balance between innocent parties, the maker of the statement and the person who has been induced to make the a contract in reliance of the statement. Remedies: innocent party has no right to damages but may ask the court to grant equitable remedy of rescission( restoration to pre-state before contract. The innocent party may choose to affirm ctc.

Negligent Misrep This is false statement made by a person who had no reasonable grounds for believing it to be true. The innocent party has a right to damages for misrep if he has suffered loss. But, If he maker can prove that he had reasonable grounds for believing , up to the time the contract was made that facts represented were true, then he has a defence. Measure of damage=as in tort of deceit. To be put in a position he would have been, if the representation had been true. Negligence Misrep may brings about possibility of a negligence action .

If innocent party affirms the contract. Lapse of time Restitutio in intergrum is impossiblerestoration to pre-contractual position impossible e.g. Where the product is consumed. Award rescission even though parties cannot be restored to their prior position.

Duress Illegal violence or threats of violence to the person of contracting party. If proved the ctc is voidable. Not required to be the only factor inducing the contract, as long as it is one of the reasons. Undue Influence Contect of a ctc may affected by influences other than physical ones. Burden of proof depend on the relationship of the parties. If there is no special relationship the party seeking to avoid must prove that he was influenced which excluded consent. Confidential relationship=party in whom confidence is placed to show undue influence was not used

Transaction not to be set aside on the ground of undue influence unless it can be shown that the transaction is to the disadvantage of the person subjected to undue influence. Commercial relationship the courts will recognise the existence of economic duress as undue influence.

Ctcs involving the commission of a legal wrong. Ctcs illegal by statute. Contracts in contravention of public policy e.g. Ctcs made with an enemy in wartime. Restraint of trade Consequences of illegality Illegal as formed Ctc is void and unenforceable. Illegal as performed: guilty party has no remedies. Innocent party has normal contractual remedies. Ctcs in contravention with public policy not void but void insofar as public policy is concerned. E.g. Restraint of trade for a whole geographic area.

DISCHARGE OF CONTRACTS

There are four ways in which rights and obligations of the parties may come to an end: Performance, Agreement, Frustration, and Breach.

General Rule Performance of the contract in accordance with its terms is discharged from the contract. In case of payments, full amount must be tendered and if its a cheque payment is effective when the cheque is honoured. If its delivery of good, goods must be tendered at a reasonable hour. The goods must also comply exactly with the contract terms. E.g. Not too few, or too much or right amount plus other goods, the buyer may reject all of them because performance is not exact. Ctc may state the order in which parties must perform their obligation.

There are exceptions to the general rule: Severable contracts: where contract may be divided into parts, payments for parts that have been completed can be claimed. Acceptance of part performance: where there is acceptance of partial performance with the option of rejecting it, a promise to pay is implied and a quantum meruit can be claimed. Quantum meruit=a claim for the percentage of the contract price in direct proportion to the percentage of work done.

Prevention of performance:

Where a party is prevented by the other from completely performing the contract, he may bring a quantum meruit action to claim for the work done. Substantial performance: where a contract has been substantially performed an action lies for the contract price less a reduction for the deficiencies. The exception only applies to the quality of goods but if it concern quantity the general rule applies.

Time of performance: At common law a party who failed to perform his obligations within a given time was in breach of contract. Equitable rule which prevails is that time is only of essence if: Parties expressly state, or A party who is guilty of undue delay is notified by the other party that unless he performs within a reasonable time, the contract will be regarded as broken.

Tender of performance Where an obligation under the contract is to tender goods or render services, tender of the goods and services which is refused, discharges the party tendering from further obligation and entitles him to damage for breach. Where money is tendered it must be legal and it must be exact sum. If a debtor sends money in the post and it is lost he will have to pay again unless: The mode of delivery was requested by the creditor and the debtor took reasonable care.

Appropriation of payments When a debtor makes a payment to his creditor which is insufficient to discharge all amounts outstanding, the payment is appropriate as follows: The debtor may tell the creditor which debt should be discharged. If debtor does not state the creditor may appropriate the payments to the debt as he chooses. If debtor pays exact amount of a debt, it presumed that payment discharges the debt of that amount. If its a current account it is presumed that the payments are appropriated to the oldest debt first.

An agreement to discharge a contact is binding only if it is by deed, or supported by consideration. Legal position depends on whether the discharge is bilateral or unilateral. Bilateral Discharge: contract is executory or partly executory on both sides. Consideration is present as both parties will surrender something of value. Unilateral discharge: only one party has rights to surrender.

The general rule is that, if a person contracts to something he is not discharged if performance proves to be impossible. The above rule is mitigated by the doctrine of frustration, which, if it applies discharges the contract. Events that frustrates a contract. Not contemplated by the parties when the contract was formed. One which makes the contract fundamentally different from the original contract. One which neither party was responsible One which result in a situation to which the parties did not intend originally to be bound.

Application of the Doctrine: frustration occurs The whole basis of the contract is the continued existence of a specific thing which is destroyed. If a party to the contract of service dies or becomes seriously ill. If the basis of the contract is the occurrence of an event which does not occur. If performance of the main object becomes illegal.

Limits to the doctrine A contract is not frustrated if it becomes expensive or burdensome to one of the parties. No dependence on frustration if a party induced the frustration: e.g. Breach of a party is the frustrating event and Negligence prevents a party to claim frustration. Frustration does not apply where the parties have expressly provided for a contingency which has occurred. E.g. If risk is allocated and risk apportioned in circumstances which neither party has foreseen.

Effects of frustration Contract is discharged automatically as to the future but not void from the beginning. CL: loss lay where it fell, money paid before frustration cannot be recovered but money payable before the frustration remained payable unless there is total failure of consideration.

Party fails to perform one of the obligations under contract e.g. Not performing on agreed date or delivery of low quality goods. Party before the fixed date for performance indicates that he will not perform on the agreed date (anticipatory breach). Breach of warranty and condition entitles innocent party to damages and for condition can also treat contract as discharged.

Termination Innocent party terminates contract, not bound to accept further performance and may sue for damages Anticipatory breach Innocent party treat ctc as discharged and sue for damages. Innocent party elects to treat ctc as still subsisting for the benefit of both parties, frustration may intervene to release party at fault from further liability. Importance of doctrine of anticipatory breach: It helps to minimise total loss, party could not sue will keep himself available for performance and also protects person who has paid in advance for future performance.

Instalment contracts If there is a breach in an instalment contract wrt one of the instalments the main tests as to whether the breach entitles the innocent party to treat the contract as at an end are: Ratio that breach bears to the contract as a whole, and Degree of probability that the breach will be repeated.

REMEDIES FOR BREACH OF CONTRACT

Remoteness of damage

Measure of damage

For what kind of damage should What monetary compensation the plaintiff be compensated? should the plaintiff receive in respect of damage which is not too remote? Damage not too remote if: reasonably considered either as arising naturally or such as may have been contemplated by both parties at the time they made the contract, as probable result of breach. Real damage or serious possibility rather than the probable result of the breach. Breach of contract: failure to pay money, the GR is only the sum of money and not interest and damages can be recovered. Measure of Damages GR plaintiff recovers actual loss. Placing the plaintiff in the same position as if the contract had been performed. Assessing damage courts take into account inconvinience and annoyance.

Mitigation Rules subject to the limitation that the plaintiff must do what is reasonable to mitigate his loss. May not be able recover what the defendant can prove that has resulted from failure to mitigate. Should avoid the loss. Mitigation is only relevant to a claim for damages and not to a claim for an agreed sum.

Liquidated damages and Penalties No provision for damages made in ctc, court will assess the damage payable. Parties agree in ctc how to be payable on a breach, sum is recoverable if it liquidated damages not too remote If its penalty plaintiff recovers actual loss.

Other CL remedies Action for agreed sum: innocent party may sue Quantum meruit: payment of performance rendered. Equitable remedies Specific performance Not awarded if damages would be adequate remedy. Must be available to both parties. Not available for other contracts e.g. Requiring personal service or extensive supervision.