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Contract Law II

this work is an assignment given to enhance the ability to do research...
Course

Contract (GPR 112)

83 Documents
Students shared 83 documents in this course
Academic year: 2020/2021
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Jomo Kenyatta University of Agriculture and Technology

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QUESTION ONE

Using suitable authorities, explain the difference between agreements which are binding in honour and those that are legally binding 1 An express statement in a contract that an agreement is intended to be binding in honour only. The courts will usually allow it to take effect and so will not enforce the agreement. Case : Rose and Frank v Crompton [1925] AC 445 (HL Honour clauses In Rose & Frank Co v Crompton Bros (1923) Scrutton LJ commented: ‘I can see no reason why, even in business matters, the parties should not intend to rely on each other’s good faith and honour, and to exclude all idea of settling disputes by an outside intervention.. .’Agreement ‘subject to contract’ Use of these words on an agreement is usually (though not always) taken to mean that the parties do not intend to be legally bound until formal contracts are exchanged. A legally binding agreement is any contract with agreed upon terms which include actions that are required or prohibited. Traditionally, contracts address providing goods and services in exchange for payment, although they can also reflect barter situations that trade services or goods. When done correctly, a legally binding agreement is enforceable in a court of law. Parties may collect damages if one of the parties fails to meet the requirements in the contract. An agreement will only be legally binding if the parties intend it to be so. The courts assess the parties’ intentions objectively. As far as intent to be legally bound is concerned, contracts can be divided into domestic and social agreements on the one hand and commercial transactions on the other. Where an agreement falls into the domestic and social category, there is a rebuttable presumption that the parties do not intend to create legal relations. The reverse applies in commercial agreements, where it is presumed that the 1 htps:termsfeed/blog/legally-binding-agreement/

2 parties do intend such agreements to be legally binding.

Agreements between husband and wife Where a husband and wife who are living together as one household make an agreement, courts will assume that they do not intend to be legally bound, unless there is evidence to the contrary : Balfour v Balfour (1919). Agreements between parent and child Agreements of a domestic nature between parents and children are also presumed not to be intended to be binding, though again the presumption can be rebutted : Jones v Padavatton (1969). Social agreements The presumption that an agreement is not intended to be legally binding is also applied to social relationships between people who are not related. Commercial agreements There is a strong presumption in commercial agreements that the parties intend to be legally bound, and, unless there is very clear contrary evidence, this presumption will not be rebutted. Exceptions to the commercial agreements presumption There are three main situations where this presumption will be rebutted. ‘Mere puffs’ Where an offer is extremely vague, or clearly not intended to be taken seriously, the law will not give its acceptance contractual effect. 3 Ambiguity 2 Lawnotes-131117151458-phpapp023 htps:legalmatch/law-library/aricle/legally-binding-contracts.html

4 Freedom of contract is the freedom of private or public individuals and groups (of any legal entity) to form nonviolent contracts without government restrictions. ... The freedom to contract is the underpinning of laissez-faire economics and is a cornerstone of free-market libertarianism. Through freedom of contract, individuals possess a general freedom to choose with whom to contract, whether to contract or not, and on which terms to contract. Freedom of contract is a judicial concept which holds that contracts are based on mutual agreement and free choice. Therefore, contracts are not be hampered by external control such as governmental interference. LIMITATIONS 5 The legal environment of a host country is likely to contain a number of restrictions on the parties' ability to contract freely and may also imply a number of provisions into the agreement. Civil law jurisdictions have a number of doctrines that will be implied into the relationship between the parties. Highlighted below are three limitations on freedom of contract that are commonly found in a number of common law as well as civil law jurisdictions; Allowed Level of Damages That Can Be Awarded to Injured Party The laws of some countries, such as England, require that any damages that may be recovered for breach of the contract or other obligations should be limited to the level of damage or loss actually suffered. Any provision in a contract, such as a liquidated damages clause in a construction contract, seeking to set damage levels in certain situations, will be void if it exceeds what would be a genuine pre-estimate of damage. It would then be for the court to determine the appropriate level of damages. 6 Duration of Agreement 4 The law of contract act chapter 23 of laws of Kenya, 5 The Judicature Act Cap 8 of 1989(revised ediion 2018), secion 3(1)(b)secion 2(2)

6 htps:ppp.worldbank/public-private-partnershienvironment/contract-law p/legislaion-regulaion/framework-assessment/legal- htps:en.m.wikipedia/wiki/Freedom_of_contracthtps:google/search?rlz=1C1CHBF_enKE875KE875&sxsrf=ACYBGNTUY_5BZnhLlVcFW72penbqeUX5Hw %3A1574169463327&ei=d-vTXZjEE56DjLsPw6Or4AQ&q=how+freedom+of+contract+is+limited+in+the+law+of+contract+in+kenya&oq=how+f

When considering whether the enabling environment is consistent with the infrastructure project, existing laws that prescribe the length of a contract or the period that public assets can be let to a private entity need to be considered. A host country may also wish to enact such limitations to create boundaries for projects. Other issues that need to be considered in this respect are:  Does the law contain constraints on the parties’ freedom to agree on termination rights and procedures?  Does the law allow the term of the agreement to be extended in specific instances?  Are there constraints on the ability of the parties to a contact to agree compensation payments in the event of termination? Constraints on Exclusion/ Limitation of Liability Many jurisdictions have express provisions at law limiting the extent to which a party to a contract can limit its liability for death, injury and damage to property. These provisions are seen as protecting the general public, in particular. Care needs to be taken when drafting project agreements that these constraints are understood as an agreement that seeks to go beyond the permitted limits may result in the whole agreement being void. There may also be provisions that prohibit parties from seeking indemnities from other parties against certain liabilities, particularly criminal liability.

reedom+of+contract+is+limited+in+the+law+of+contract+ab.12...34899.88330..92642...2.2..4.344.17003.0j10j52j10......0....1.-in+kenya&gs_l=psy- wiz.....10..0i71j35i39j35i362i39j0i273j0i131j0j0i670&ved=0ahUKEwjY27WdrvblAhWeAWMBHcPRCkwQj0i20i263j0i22i30j0i333j0i22i10i30j33i22i29i30j33i14dUDCAs 60j33i21j33i

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Contract Law II

Course: Contract (GPR 112)

83 Documents
Students shared 83 documents in this course

University: University of Nairobi

Was this document helpful?
QUESTION ONE
Using suitable authorities, explain the difference between agreements which are binding in
honour and those that are legally binding
1An express statement in a contract that an agreement is intended to be binding in honour only.
The courts will usually allow it to take effect and so will not enforce the agreement. Case: Rose
and Frank v Crompton [1925] AC 445 (HL
Honour clauses
In Rose & Frank Co v Crompton Bros (1923) Scrutton LJ commented: ‘I can see no
reason why, even in business matters, the parties should not intend to rely on each
other’s good faith and honour, and to exclude all idea of settling disputes by an outside
intervention . . .’Agreement ‘subject to contract’
Use of these words on an agreement is usually (though not always) taken to mean that
the parties do not intend to be legally bound until formal contracts are exchanged.
A legally binding agreement is any contract with agreed upon terms which include actions that
are required or prohibited. Traditionally, contracts address providing goods and services in
exchange for payment, although they can also reflect barter situations that trade services or
goods. When done correctly, a legally binding agreement is enforceable in a court of law. Parties
may collect damages if one of the parties fails to meet the requirements in the contract.
An agreement will only be legally binding if the parties intend it to be so. The courts
assess the parties’ intentions objectively. As far as intent to be legally bound is concerned,
contracts can be divided into domestic and social agreements on the one hand and commercial
transactions on the other. Where an agreement falls into the domestic and social
category, there is a rebuttable presumption that the parties do not intend to create legal
relations. The reverse applies in commercial agreements, where it is presumed that the
1 https://www.termsfeed.com/blog/legally-binding-agreement/
1 | P a g e

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