BUSINESS LAW

THE KENYAN LEGAL SYSTEM

THE NATURE OF LAW

There are various definitions of law but none has been generally
accepted to be the most accurate or complete definition of law. The
following are some of the definitions:
1. The law may be defined as the body of principles recognized and
applied by the state in the administration of justice.(salmond)
2. A law is a rule of conduct imposed and enforced by the
sovereign.(Austin).meaning ,a rule enforced by a court of law in a
given territory.
3. Whatever law may not be.it may be roughly defined as a body of
rules for the guidance of human conduct which are imposed upon and
enforced among the members of a given state. (Philip S.James)
4. Law consists of a body of rules which are seen to operate as
binding rules into that community by means of which sufficient
compliance with the rules may be secured to enable the set of rules to
be seen binding.
5. A collection of rules of a human conduct prescribed by human beings
for the obedience of human beings

Purpose of law

The main purpose of law is for the maintenance of peace and order. It
is also a device for social control i.e. a device for getting people
to do things they would be unlikely to do if left to personal
inclination alone.
The purpose of commercial or business law is to enable business
students to understand the legal principles relevant to business and
acknowledge of the basic principles of law.

CLASSIFICATION OF LAW

In any given state law may be classified as follows:

1. Public law: it is the branch of law which regulates the relations

between citizens and the state. It also regulates the operations of
various organs of the state. This includes constitutional law,
administrative law and criminal law.
2. Private law: it is a branch of law that is concerned with the right
and duties of one person to another person. It covers the law of
contract, tort, succession, agency, insurance and property.
3. Public international law: this consists of that body of law which
regulates the relations between states. It is on based on custom,
treaties and conventions.
4. Private international law (conflict of laws) this branch of the law
is mainly concerned with the determination of what system of law is
applicable in a case where foreign element are involved. For example X
orders a motor vehicle from Tanzania before the vehicle is delivered
to him. Where does he file suit for the refund of his money if the
vehicle is not delivered?
5. Criminal law: this is a branch of the law which defines the things
every person must do or must not do and defines the type of punishment
applicable for non-compliance. The bulk of criminal law in Kenya is
contained in the penal code.
6. Civil law: this is the branch of the law which regulates relations
between private individuals by enforcing obligations or compensating
injury parties. It is defined by customary law, common law and some
Acts of parliament. This are of law is covered in contracts,
succession, employment and sales of goods.
7. Substantive law: this is a body of legal rules which defines or
specifies what is lawful and or unlawful to do. For example under
Kenyan law marriage is between man and woman above the age of 18 years
and should not be between people who have the same sex or related in
blood.
8. Procedural law: this is a body of rules which define of specify the
steps to be taken or the procedure to be followed, by a person who
intends to do an act. The bulk of these rules are found in the civil
procedure and criminal procedure codes.

SOURCES OF KENYA LAW

The phrase source of Kenya law means the means the origin of the
legal rules which constitute the law of Kenya. The sources Kenya law
are set out in the judicature act 1967 section 3 (1) as follows:

1. The Constitution Of Kenya.

A constitution is a formal document with comprehensive frame- work of
rules and principles through which a state operates. The rules in the
constitution define the composition and powers of different organs/
branches of the state and their relationship to each other and to private
citizen.
A constitution of Kenya establishes the major organs of the government
of Kenya as well as their powers. It is divided into eleven chapters,
which deal with various matters. There are three major organs of the
government viz:

a) The legislature is the parliament if Kenya which, by virtue of

article 93 of the constitution is composed of both the national
assembly (a membership of 349 persons, excluding the speaker who is
the ex-officio member article 97. of the 349 members, 290 are
elected members representing constituencies and 47 are women each
elected from each county and 12 being nominated members who are
nominated by political parties on the strength of their representing
in the national assembly),
and the senate (a membership of 67
excluding the speaker, members of whom shall be 47 senators each
elected from each county, sixteen women who shall be nominated by
political parties on the strength of their proportion of members in
the senate, two members representing the youth and two members
representing persons with disability): but under the formal
constitution period up to 2012, they are the elected members/
persons who from parliament or the national assembly (222).
b) The executive under article 152 it consists of the president, the
deputy president the A G, and not fewer than 14 and not more than 22
cabinet secretaries, but under the formal constitution, it is the
president, prime minister, vice president, deputy prime ministers and
the ministers i.e. the cabinet.
c) The judiciary i.e. the officers who are vested with judicial
authority as envisaged under article 159 i.e. the judges and the
magistrate. They are judges of the supreme court, the court of appeal,
the high court, and the magistrates who run the subordinate court and
the kadhis who man the kadhis courts and other officers who exercise
judicial authority in tribunals. Under the formal constitution there
is no supreme court.
Some constitutions like that of Kenya are written i.e. a formal
document has been drawn up containing all fundamental laws. Other
constitutions are unwritten as in the UK where there is no single code
of laws or written document containing all the constitutional laws.

The constitution is supreme and takes precedence over all other forms
of law; written or unwritten. Under the former constitution, section 3
was the section which gave it supremacy but now article 2 of the
constitution it is stated at clause 1 that

This constitution is the supreme law of the republic and binds all
persons and state organs at both levels of government.
And clause 4 state further that any law, including customary law,
that is inconsistent with this constitution is void to the extent of
its inconsistency, and any act or omission in contravention of this
constitution is invalid.
To amend the constitution may take either of the two ways depending on
whether the amendment is meant to affect articles which are to be
subject to a referendum of otherwise. The thresholds are given therein
(articles 255,256 and 257). Amendment may be initiated by either
parliament known as parliamentary initiative, or by the people
known as the popular initiative.
Under the former constitution, to amend any section of if, it requires
a vote of 65% of all the members of the national assembly is required.

The constitution provides for:

a) The power to create cabinet secretaries and gives power to the

president appoint with the approval of parliament cabinet secretaries,
who are not members of parliament.
b) The power to make law by parliament is given by the constitution
(article 94) and may be exercised either directly or indirectly.

c) Protection of fundamental rights and freedoms is given in the

chapter of the bill of rights chapter 4 which contains articles 19
to 58 which touches on among others the area of life, personal
liberty, equality, privacy, fair hearing, family, environment,
movement and residence, access to information, slavery and forced
labour, inhuman treatment, deprivation of property, conscience,
expression, association and discrimination.

Any law other must comply with these minimum requirements of the
constitution, otherwise it shall be void. Thus the constitution forms
the background against which all laws in Kenya operate.

2. Statutory laws/legislation

These are laws made or passed by parliament in a form of acts. The

legislative power of parliament is exercised by way of bills passed by
parliament/ national assembly.

A Bill is a draft of a proposed act of parliament. There are two types of bills:

i. Public bills: are those affecting the general public and are
introduced by a minister.

ii. Private bills: are those which cover the interests of a specific
section of the community. They are also introduced by a minister but
is also possible for a private member of parliament (MP) o introduce A
bill on a meter of importance to him which is not taken up by the
government.

Stages of a Bill

a) First reading: this is a stage where the formal introduction of the

bill is done to parliament by the minister or a private member. A
suitable date for debate is fixed and once the bill is approved, it is
printed and copies given to the MPs for preparation.
b) Second reading at this stage the mover of the bill explains its
purpose and the main policy issues involved. Every member is allowed
to participate in the debate but can speak only once. At the end of
the debate a vote on the bill takes place and if the majority votes
for it, the bill passes to the next stage.
c) The committee stage: a committee of the entire house or a small
considers the details of the thoroughly and clause by clause.
d) The reporting stage: here the chairman of the committee presents
the bill back to the House where the house can be given the
opportunity to debate the amendments proposed by the committee
e) Third reading: at this stage, the details of the bill are not
debated and only minor drafting changes are permitted.
f) Presidents assent: the bill becomes law when the president signs
it. But the president can refuse to sign it if in his judgment; the
bills do not serve the interests of the people. In this case he has a
duty to send it back to parliament giving reasons for his refusal to
sign.

Once assent is given the bill is then entered in the statute book and
becomes part of the statute law of the land , but it only becomes
operational on a day published in the gazette or specified , which is
known as the date of commencement.

Apart from the laws enacted by the Kenya government, several British
and Indian acts apply in Kenya under certain specific legislative
provisions, for example, the Indian transfer of property act 1882 and
the married womens property act 1882 of England

3. Subsidiary /delegated legislation

Due to the volume of work it becomes necessary for parliament to

delegate its powers of legislation to subordinate competent bodies
such as state , state officers or persons in authority (under article
94(5) and (6) of the constitution , but under the former constitution
the ministers or local authorities.
Even so that authority shall have to expressly specify the purpose and
objectives for which the authority is conferred, the limits of the
authority, the nature and of the law which may be made, and the
principles and standards applicable to the law under authority.
Nevertheless the rules, regulations, orders and or by-laws made by
such bodies come under delegated, indirect or subsidiary legislation
a court has no power to invalidate an act of parliament (except when
it is inconsistent with the constitution) it may declare delegated
legislation invalid/void on the ground that they are ultra vires i.e.
beyond the powers contained in the statute , which gave them authority
to make such rules or by-laws.

Advantages of delegated legislation.

1. Lack of parliamentary time: parliament does not have enough time to

enact all laws and rules affecting all internal issues. by delegating
some of its law-making authority ,parliament can save time to solve
much more possessing problems.

2. Urgency: the procedure of making laws by parliament may not be in

session to attend to all emergencies. it therefore becomes necessary
to delegate.
3. Technicality of subject- matter. Sometimes the proposed legislation
may be so technical in nature that it will demand an expert to handle
yet parliament may not have such experts. A minister assisted with
experts in his ministry can easily make such legislation.

4. Flexibility: parliament is generally inflexible in its procedure

and in case of immediate repeal or amendment of an act, it has to
follow the laid down procedure. A quicker way would be to have the
ministerial rule or regulation in question withdrawn or amended by the
minister who issued it.

5. Delegated legislation may provide an opportunity to experiment a

particular rule.

6. Parliament may find it impossible to see contingencies in the

initial or enabling statute

Disadvantages of Delegated Legislation.

1. Legislation is passed in skeleton from, leaving matters of
principles to be decided by the court.

2. There is inadequate parliament control of the bodies or authorities

that have been given the powers to make the delegated legislation.

3. Delegated powers may be so wide, thus increasing uncertainty of the law.

4. Delegated powers had been loosely defined, thus detracting from

judicial controls, but now they have been expressly limited under the
constitution (article 94(5) and (6) and may have less looseness.

5. There is always lack of publicity and advance consultation with

interest affected.

6. The courts do not find it easy to control the making of delegated

legislation.

7. To some extent, delegated legislation lacks the democratic spirit

that usually inspires and manifests itself in parliamentary
legislation,

8. The ultimate makers of delegated legislation are technical officers

in a ministry or local authority who are not elected and are not
accountable to people affected by the rules. To that extent delegated
legislation lacks the documentary spirit that usually inspires and
manifests itself in parliamentary legislation.
Advantages of acts of parliament.

1. It is democratic in the sense that it reflects the wishes of

Kenyans as to what the law should be as parliament consists of
representatives of people who are elected.

2. It enables parliament to find legal solutions to any problem that

country may fall by passing new acts or amending existing acts.

3. It is usually a statement of general principles and rules and can

therefore be applied to different situation in a flexible manner as
determined by the court in a particular situation.

4. It is dynamic since it can be changed as the needs of the Kenyans

society change.

5. It gives Kenyans an opportunity to debate the proposed law from the

moment they become aware of it after its publication in the Kenyan
gazette.

Disadvantages of acts of parliament.

1. Technical bills are passed into law without sufficient debate

because the majority of parliamentarians are not technically competent
to appreciate all issues involved.

2. Acts of parliament do not reflect the wishes of the people (voters)

but the wishes of the individuals who constitute at any given time.
MPs express their personal views as they do not consult the views of
the voters.

3. The process of passing an Act that would substantially confirm

to the wishes of the people affected by it is likely to be very slow.
This is because very many public meetings must be held before a
consensus on the proposed law can be reached e.g. the review of the
constitution and the referendum.

4. Some Acts imposed on the people and reflect the views of the
executive or pundits in the ruling political party.

4. The English common law.

Common law consists of the ancient customs and usages of England,

which have been recognized and given the force of the law. This law
does not include legislation. It was developed by judges on the
principle of stare decisis which means that it is not the result of
legislation i.e. the law created by custom of the people and decisions
of the judges.

Common law courts include:

a) The court exchequer it was the first to be established in the

12th century to deal with disputes concerning the payment of royal
revenues.
b) The court of common pleas it was the second court to be
established in the 13th century to deal with all civil cases and
matters relating to land.
c) The court of kings bench this was the last to be established or
set up in the 13th century. It is called Kings Bench because
occasionally the king used to preside over this court. It mainly dealt
with criminal matters and civil actions in which the crown was a
party.

The judicature act, cap 8 of the laws of Kenya does not make any
reference to the common law of Kenya as a source of law. However such
body of law exists based on the reported decision of the east African
courts and it is a source of law in Kenya.

5. The doctrines of equity.

Equity is a set of rules formulated and administered by the court of

chancery before 1873 to supplement the rules of common law. This court
dealt only those cases where common law either provided no remedy or
provided a remedy which was not adequate. Equity therefore is a body
of principles constituting what is fair and right.

Origins of equity.

Citizens dissatisfied with the decision of the judges of common law

often made petitions to the kings in council. The petitions were
decided by the king himself or by his council. Due to much work, the
king later delegated his function to his lord chancellor (advisor to
the king) a clergyman to decide the appeals applying the rules of
natural justice and morality.

The petitions to the Lord Chancellor were made on the following grounds:-

1. The common law courts provided no remedy for certain wrongs e.g.
trusts were not recognized.
2. The remedies provided in certain situations were not satisfactory
e.g. in case of breach of contract, the only remedy available was
damages, and specific performances injunctions were not recognized.
3. The common law courts sometimes acted under pressure or influence
or bribes of the other party.
The remedies granted by equity courts become known as equitable remedies.

Principles of Equity
During the early development of equity the early chancellors acted at
their own discretion, but eventually they did follow the decisions of
early chancellors. But the 8th century, some firm rules of equity were
established which guided later chancellor in deciding disputes. These
rules are known as equitable maxims which are propositions or
statement of equitable rules.

Some of these maxims include the following:

1. Whoever seeks equity must do equity i.e. anyone who wishes to be

treated fairly must treat others fairly.
2. When the is equal equity, the law must prevail (the law will
determine the outcome of a controversy in which the merits of both
sides are equal)
3. He who comes to equity must come with clean hands i.e. the
plaintiffs must have acted fairly and honestly.
4. Equity will not suffer a wrong without a remedy (equitable relief
will be awarded when there is a right relief and there is no adequate
remedy at law.)
5. Equity regards substance rather than forms i.e. equity is more
concerned with fairness and justice than with legal technicalities.
6. Equity aids the vigilant, and no those who rest on their rights
i.e. equity will not help those neglect their rights for an
unreasonable period of time (delay defeats equity)

The distinction between legal and equitable remedies remains relevant

to students of business law; however, because these remedies differ to
seek the proper remedy for a wrong one must know that remedies are
available.

6. Statutes of General Application in Force in England on 12th

August, 1897

The phrase refer to those statutes that applied to the inhabitants of

England generally for example the married womens property act 1882 is
an English statute of general application that applicable in Kenya.

These laws are applicable only if:

a) They do not conflict with either constitution or any other written

laws applicable constitution or any other written laws applicable in
Kenya.
b) And must have been passed before 12th august, 1897.
c) The circumstances of Kenya and its inhabitants permit. In the case
of I. v. I. (high court of Kenya at Kisii) a husband made an
application to court after divorcing his wife for adultery and
thereafter applied for determination of the partys interest in the
house. The husband argued that the wife was not entitled to any
interest in the house they owned jointly as she had not contributed to
its purchase. He contended that that the married womens property act
1882 of England was not a statute of general application and in the
circumstances of Kenya and its inhabitants do not require that married
women should not be able to hold property and the fact that the
majority of the subject to any written law.

7. African Customary Law.

African customary law may be described as the law based on the customs
of the ethnic groups which constitute Kenyas indigenous or Africa
population.

Section 3(2) of the judicature act provides as follows:

The high court and all subordinate court shall be guided by African
customary in civil cases in which one or more of the parties is
subject to it, or affected by it, so far is applicable and is not
repugnant to justice and morality or inconsistent with any written
law, and shall decide all such cases according to substantial justice
without undue regard to technicalities of procedure and without any
delay.

The application of African customary is however limited as follows:

a) The courts are to be guided by African customary law.

This provision gives judge/magistrate discretion whether to

allow a particular rule of customary law to operate or not. The judge
is not bound to apply any rule of customary law and there refuse to
apply it if, for example if is repugnant to justice.

In the case of Wambui Otieno Vs Joash Ougo and Umira Kager Clan
the court of appeal stated that the provision that courts are to be
guided by African by African customary law means that courts must have
in mind African customary (unless it is repugnant to justice and
morality or inconsistent with a written law)

b) The law is applicable only in civil cases

The district magistrates court act 1967 sec 2 restricts cases to

which African customary law may be applied to claims involving any of
the following:

I) Land held under customary law

II) Marriage, divorce, maintenance or payment of dowry.
III) Seduction or pregnancy of an unmarried woman or girl
IV) Enticement of or adultery with, a married woman
V) Matters affecting status, particularly the status of women, widows
and children, including guardianship, custody, adoption and
legitimacy.
VI) Intestate succession and administration of intestate, so far as it
is not governed by any written law.

d) One of the parties must be subject to it or affected by it.

If the plaintiff and the defendant belong to the some ethnic group
they are said to be subject to the customs of the ethnic group which
could then be applied to settle the dispute e.g. a dispute between
luos cannot be settled under kikuyu customs.

d) The customary law will only be applied if it is not to repugnant

to justice and morality.

In the case of Maria Gisese Angoi Vs Marcella Nyomenda Civil

Appeal No. 1 of 1981 at Kisii the high court held that:

The kisii customary law which allows a widow has no children or who
has only female children to enter into an arrangement with a girls
parents and take the girl to be her wife and then choose a man from
amongst her late husbands clan who will be fathering children for her
(i.e. the widow) was repugnant to justice because it denied the
alleged wife the opportunity of freely choosing her partner.

e) The customary law will be applied only if it is not inconsistent

with any written law.

This is because of the constitution of parliamentary supremacy and the

fact that written laws are made by parliament either directly or
indirectly.
If any unwritten law e.g. African customary is in conflict with a
clause in a written law, the unwritten law will cease the force of law
from the moment the written law comes into effect.

8. Islamic Law

This is the law based on the holy Koran and the teaching of the
prophet Mohammed. This law is applicable in Kenya under article 170,
clause 5 of the constitution and then section 5 of the Kadhis court
act 1967 when it is necessary to determine question of Muslims law
relating to
Personal status, Divorce
Marriage and Inheritance
And the parties in the case profess the Muslim religion and submit to
the jurisdiction of the kadhis courts.
9. Hindu customs

It is applicable under section 5 of Hindu marriage and divorce act,

1960. section 2 of the act defines a custom as a rule which, having
been continuously observed for a long time, has attained the force of
law among a community group or family being a rule that is certain and
not unreasonable, or opposed public policy, and in the case of a rule
applicable only to a family, has not been discontinued by the family.

10. Case law and judicial precedent

In deciding cases or disputes, judges of lower courts follow the

decision of higher court if cases involving similar facts and points
of law comes before them.

The principle of stare decisis (Latin meaning to stand on decided

cases) or judicial precedent is a legal rule that inquires a judge
hearing a case to refer to earlier cases decided by his predecessors
in order to find out if the material facts of any of those cases
before him and, in the event of such finding, to decide the case
before him in the same way as the earlier case had been decided.

Thus principle was developed by the English courts as a mechanism for

the administration of justice which will enable judges to make
decisions in an objective or standard manner instead of subjectively
and in a personalized manner.
The material facts of a case and the decision made by the judge on the
basis of those facts are known as ratio decidendi of the case.

The ratio decidendi of a decided case constitutes the legal rule or

principle for the future case with similar material facts i.e. the
decision is precedent to be followed when deciding such cases (We
shall come to this aspect at a later stage the Administration of the
Law)

FUNDAMENTAL PRINCIPLES OR CONCEPTS

These are concepts or principles which permeate or transcend any law,

including constitutions of states. They are meant to govern the
conduct of any civil and democratic society irrespective of its laws
or circumstances.

A). RULE OF LAW

This is a constitutional principle upon which constitution is founded.
It generally implies a system of government which is founded on
generally accepted legal rules. It means that the government should
run according to the legal rules which have been made by the majority
of elected members.
This means further that the government must run on laws which are
made, communicated in advance to and known by the citizens, meaning
run on predetermined rules. Herein it implies that there should be no
arbitrariness in the way decision/ or actions in government are made
or done. Prof Wade says that the rule of law requires that the
government should be subject to the law rather than the law subject to
the government he further says that the rule of law proper legal
limits on the exercise of power. He says that power should be approved
by parliament, within definable limits. It imports the idea of the
limits being consistent with natural justice i.e. the standard is
imposed on the administration which commends itself to the public
conscience.
Thus the rule of law contrast itself from the rule of men. Herein the
sovereign is the one who determines what the law is and what is to be
applied or done any time he decides. There are no legal limits to his
actions or decisions.

B) SEPARATION OF POWERS.
The government is an all-powerful entity. The execution of these
powers need to be checked or controlled or else they be exercised
arbitrarily by those in power, otherwise there would be despotic
regimes or authoritarian governments. This concepts was first
promulgated by the French philosopher Montesquieu in 1748 in his book
LEspirit Des Lois. In essence he visualized a government in which
political powers inherent in the state were distributed among the
organs of the state in such a way that no organ had a preponderance of
power as compared to the other organs. He envisaged three main organs
in which these powers would reside and still have the state operate
harmoniously: the executive, parliament and judiciary.
His vision was, in a nutshell, that political power would be wielded
in such a manner that parliament would make laws, which would be
executed by the executive, and interpreted by the judiciary.

i. Legislative powers:
Herein his was that the laws which govern people should be made by
their representatives who must be duly elected, not rigged-in, i.e.
in free and fair elections. These people from the national assembly.
Thus the sovereign would not rule using arbitrary rules.

Article 94 gives parliament, which consists of both the senate and the
national assembly there powers, while articles 97 and 98, 99 and 101
deal with the election of the persons who are to be members of
parliament.
Under the former dispensation, section 30 of our then constitution
provided for these powers by saying that they reside in the national
assembly, while section 31 said that the members of the national
assembly would be elected in according with the provisions of section
32.
ii. Executive powers
It is the executive who should execute or bring into operation the
laws which have been promulgated. They are the policy-makers, upon
which policies law are made and finally applied. In our former
constitutional dispensation (and up to 2012) it was and is the
president, who may delegate these powers to minister to ministers. The
national accord and reconciliation act, act no.4 of 2008 does include
the prime minister in this axis of power by calling for consultation
between him and the president, in exercise of the powers. They
constitute/form the cabinet. Section 23 of that constitution provided
for the exercise of these powers.
But under the new constitution, after 2012, it shall be the president,
the deputy president, the attorney-general, and not fewer than 14 and
not more than22 cabinet secretaries.

iii. Judicial powers

These are those powers which entail interpreting the laws which have
been made and considering whether they are being applied or executed
in accordance with the laid down procedure/principles. These powers
are exercised by the judges/courts.
The judges and magistrates are supposed to exercise those powers
without fear or favour or undue influence. Thus they are supposed to
be independent in their decision. The executive and parliament should
not interfere with the exercise of these powers. So the judiciary is
called upon to be independent and impartial.

C) FUNDAMENTAL RIGHTS OF AN INDIVIDUAL

These rights are those from which none, including the state should not
derogate, i.e. they should not under any circumstances be taken away
from an individual, only subject to certain conditions laid in the law
itself. It is important to note that these rights and freedom as given
in the constitution have taken effect immediately from the time of
promulgation of the same on 27th august 2010 at 10.23am. Therefore it
is not important to dwell on what the former constitution provided for
but rather what the new document gives the citizens. All that is
contained in articles 19 to 58 of the said law. They include, but are
limited to life, personal liberty, equality, privacy, fair hearing,
family, environment, movement and residence, access to information,
slavery and forced labour, inhuman treatment, deprivation of property,
conscience, expression, association, and discrimination.

Article 19 provides that these rights are of the individual and are
not given/ granted by the state. They may extend to other not
mentioned in the constitution but are recognized by other laws as long
as they are not inconsistent to the ones in the chapter containing
them.
They are not supposed to be limited except where the constitution has
expressly stated so. The state is enjoined to observed, respect,
promote and fulfil these rights and freedoms. It includes making
laws, take measures and make policies which will enhance these rights.
Article 22 permits anyone, including a person who is not directly
affected, whether by denial, infringement or violation of the rights,
to seek redress in court.
The state or any other person shall not limit the following rights, -
but not freedom from torture and cruel, inhuman or degrading
treatment, freedom from slavery or servitude, right to a fair trial,
and the right to an order of habeas corpus meaning produce the body
of.
However, the other rights may be limited but in exceptional
circumstances, to wit,
i. If it is reasonable and justifiable,
ii. In an open and democratic society
iii. Based on human dignity, equality and freedom,
iv. And must take into account all relevant factors, which should include
- The nature of the right/freedom
- Importance of the purpose of the limitation
- The need to enjoy the right or freedom does not prejudice the rights
and fundamental freedoms of others
- The relation between the limitation and purpose and whether there
are other less restrictive means of achieving the purpose.
Thus the freedoms granted to the individual are almost endless in so
far as they meet the above criteria.

Types of precedents

1. Binding precedent: is one which a judge must follow whether he

approves it or not. It is binding upon him and excludes his judicial
discretion. This includes decisions of higher courts.

2. Persuasive precedent: is one which a judge is under no obligation

to follow but may however take into consideration or follow, in the
course of considering his intended decision. These include courts of
the lower court, courts of the same level and decision of superior
courts of commonwealth.
Obiter dicta
This is in contrast with ratio decidendi which is a mere saying by the
way a chance remarks which is not binding upon future courts, though
it may be respected according to the reputation of the judge, the
eminence of the court and the circumstances in which it came to be
pronounced.
It may also be described as a by the way statement made by a judge
before delivering his judgment with a view to re-enforcing his reason
for the decision that he will make.
The reason for not regarding an obiter dictum as binding is that it
was probably made without a full consideration of the cases on the
point and if every board in terms, it was probably made without a full
consideration of the consequences that may follow from it concluded
opinion.
Advantages of stare decision (judicial precedents)

1. It introduces certainty in the administration of justice by

avoiding subjective decisions.
2. Flexibility in the administration of justice is achieved through
the final court of appeals freedom to change or depart from its
earlier decisions if it appears rights to do so, mainly due to changed
social and economic conditions.
3. The process of distinguishing cases leads to the development
(growth) of detailed legal principles.
4. Rich in detail: each principles of law of or equity is supported by
elaborate judgments of distinguishing judges. These are of tremendous
value to other judges, lawyers and students of law to understand,
appreciate and apply to practical problems facing them.

Disadvantages

1. Rigidity: since judges in courts below the final court of appeal

are allowed to depart from their earlier decisions.
2. Over subtlety (fine differences) occasioned by artificial
distinguishing of similar cases as judges try to avoid following
earlier decisions which they consider to be unjust or wrong.
3. Bulk and complexity many cases are being decided every day in
Kenya by different court and it is therefore impossible to know if a
relevant cases has been decided.

Departure from precedent

Although courts are obliged to follow precedent, sometimes a court

will depart from the rule of precedent if it decides that the
precedent should no longer be followed. If a court decides that a
ruling precedent is simply incorrect or that technology or social
changes have rendered the precedent inapplicable, the court might rule
contrary to the precedent.

When there is no precedent.

Occasionally in deciding cases of first impression court may consider

a number of factors, including legal first impression often result
when new practices or technological development in society create new
types of legal disputes. In such case, the courts have to decide on a
case by case basis what rules should be applied.

Generally in deciding cases of first impression courts may consider a

number of factors, including legal principles an policies underlying
previous court decision or existing statutes, fairness, social values
and customs, public policy and data and concepts drawn from the social
sciences.
Note that judges are not free to decide cases on the basis of their
own personal views. In case of the first impression, as in al cases,
judges must have legal reasons for deciding as they do on particular
issues. When a court issues a written opinion on a case, the opinion
normally contains a carefully reasoned argument justifying the
decision.

ADMINISTRATION OF THE LAW

Hereunder we examine the way the law is applied, in the quest have
justice meted out or realized. The law is ordinarily administered
through courts and other quasi-judicial bodies which have been clothed
with the authority to so do. We will thus look into the ay courts
interrelate and other bodies too relate to the courts as they apply
the law.

THE KENYAN COURTS

The Kenyan court relate to each other in an organized and designed
hierarchy, which is easily shown diagrammatically as hereunder (at
page 21a)
1. The constitution has established a new tier of the court which s
the highest in the republic the Supreme Court. This is established
under article 163 thereof. It is the final judicial authority in the
republic. It is to take effect as soon as a new supporting law is
implemented, but in any event a period of not more than a year from
the 27th august 2010.

It shall be composed of the chief justice the deputy chief justice and
five other judges.
Its sitting shall be in an odd number of five.

It shall hear cases involving disputes relating to the election of the

president, appeals from the court of appeal, and appeals from any
other court or tribunal which the law will prescribe. This means that
the court has original jurisdiction limited only to presidential
election disputes

2. The court of appeal

This is the second highest court in the hierarchy of Kenyan courts (as
soon as article 163 of the constitution is effected), as per the
current constitution. This means that in case anyone has a case for
decision, as long as the court is seized of authority to handle it ,a
final decision will be made in this court.
This court was established on 28th October 1997(after the break-up of
the east African community), under sec.64 (1) of the constitution, but
under the new constitution it is new established under article 164.
The judges of the CA should be the chief justice and other judges
whose minimum number is twelve. It has jurisdiction to handle appeals
from the high court, in cases where an appeal lies (where the law
provides for it), and appeals from any other court or tribunal as any
act of parliament will prescribe. It has no original jurisdiction.
Thus in Leonard Esbon Omolo V. Republic, the appellant field an appeal
in the high court from a court martial. Being aggrieved by the
decision of the high court, he appealed further to the court of appeal
.it was held that he had no right of appeal to the court of appeal
because there was no statutory provision for it.
The procedure followed by this court is laid down in the appellate
act (cap 9, laws of Kenya)
In all cases with the exception of some applications, the court is
constituted by an uneven number of judges and in these circumstances
the decision of the court is by majority.
It shall be headed by a president elected by the judges of appeal from
amongst themselves

3. The high court

This is established under article 165 of the constitution. It is a
superior court of record. Its composition is the principle judge who
shall head it and shall be elected by the judges of the high court
from amongst themselves and such number of judges as parliament may
prescribe.

The court has unlimited original jurisdiction in civil and criminal

matters, a question of infringement, violation, denial of or threat to
any right or fundamental freedom in the bill of rights, appeals from a
tribunal dealing with the removal of a person from office,
jurisdiction regarding the interpretation of the constitution, and
such other jurisdiction (original, or appellate) and powers as may be
conferred by any other law. In case any court refers a matter to the
high court for determination, the decision of the high court binds
that other court.

Its jurisdiction has been specifically excluded from matters which are
the preserve of the Supreme Court under the constitution, and those
matters which fall within the jurisdiction of the courts specifically
set up by law to deal with employment and labour relations, and the
environment and use and use and occupation of, and title to, land.
At the same time the high court has jurisdiction, under article 165
(6) and (7) of the constitution to supervise any or criminal
proceeding before any magistrates court or court martial and make
such orders or issue such writs or give such directions as may be
appropriate to ensure that justice is administered by that other
court.

Similarly the court can act as court of admiralty by s. 4 of the

judicature act for purposed of exercising admiralty jurisdiction in
all matters arising in the high seas or territorial waters or upon any
lake or other navigable inland waters in Kenya. Under this
jurisdiction it will apply the Admiralty Law of England as well as
international laws and comity of nations.

4. The Resident Magistrates Court

These are court established under the magistrates courts act (cap
10, laws Kenya).
The said law provides that these courts are subordinate to the high
court. This court is held by a chief magistrate, a. senior principle
magistrate, principle magistrate, a senior resident magistrate or a
resident magistrate.
The court handles such civil matters as is proved by the stature law
(miscellaneous amendment) act, 1993 or as shall be given or extended
by the chief justice notice in the gazette.
With regard to criminal matters the court is empowered to pass any
sentence as authorized by law for an offence triable by that court.

5. The district magistrates court.

These are established under the magistrates court act, S.7 (1). Such
court is held by a district magistrate who has been assigned to the
district in question by the judicial service commission. They were
divided into three classes, based on seniority, as follows: in
practice these (senior-most), second class (intermediate) and third
class (least in seniority). In practice these court are rare. That
used to exist when there were few trained personnel (lawyers) who
could be eligible to be appointed to serve as magistrates. With the
avalanche of trained/ skilled they are being phased out.

Their territorial jurisdiction was limited to the specific district

assigned to each, but it could be extended by notice in the gazette,
by the chief justice.

With regard to criminal an appeals, an appeal would lie to the

resident magistrates court within 14 days of the decision being made
in case one was convicted by a DM III, all other cases would be
appealed be appealed to the high court. In civil matters, an appeal
would lie to the magistrates court of the class from a DM III within
28 days from the date the decision.

6. Kadhis courts. These are courts established under article 170 of

the constitution. Their civil jurisdiction relates to determining
questions of Muslim law relating to:
i. Personal status
ii. Marriage
iii. Divorce
iv. Or inheritance,
And the parties in the case profess the Muslim religion and submit to
the jurisdiction of the kadhis courts.
These courts do not have criminal jurisdiction.
Appeals from these courts lie to the high court.
7. Courts martial

These courts deal with matters relating to the disciplined forces.

They are established under the armed force act, S. 85(1). It is not a
permanent court. It is set up as and when issues arise. It deals with
trying persons in the forces, who are alleged to have committed an
offence. Once the trial is over, the court is dissolved.

The persons presiding over this court should be at least three, of

whom one should be a judge-advocate, unless the attorney-general
directs otherwise. The judge-advocate shall be a magistrate or an
advocate who shall advise the court on the relevant law and procedure.
The AfA provides that a conviction by Court Martial must be reviewed
and confirmed by a confirming officer.
An appeal from the court shall lie to the high court, whose decision
shall be final, meaning there shall be no further appeal there-from.

8. The industrial court

This is not part of the judicial system of Kenya. It exercises

quasi-judicial powers hence its name court. It handles trade
disputes (between employees and employers and trade unions, etc). Its
decisions are final. If was established under the trade disputes act
(cap234 l.o.k, now, repealed). It is now operating under the labour
relations act; no. 14 of 2007 and labour institutions act (2007). It
consists of judges, not less than two in number and least eight other
persons appointed for terms of not less than three years by the
ministry of labour in consultation with the central organization of
trade unions and federation of Kenya employers.

A judge may appoint two assessors if he considers it fit. Once the

court makes a decision (called an award) ,it notifies the parties, and
publishes the award in the gazette . The effective date of the award
is the date of publication unless otherwise expressly stating it is
retrospective. The terms of the award are incorporated as terms of
the agreement between the parties to the dispute.

The award of the industrial court is final, meaning it cannot be

appealed from or reviewed or be restrained or removed by a
prohibition, injunction or certiorari.
9. Tribunals

These are other special courts established by various acts of

parliament to deal with various disputes. They include

i. The rent tribunal

Established under the Rent Restriction Act to

- Asses the standard rent of any premises either on application of any
persons interested or suo motto(on their own motion)
- Make an order for recovery of possession of premises
- Make an order for recovery of arrears of rent , mesne profits and
services charges.
- Where a landlord fails to carry out repairs, to order the landlord
to do so and deduct the cost thereof from the rent.
- Permit the levy of distress for rent
- On an application by the tenant, to order a reduction of the
standard rent or rent recoverable if satisfied that the landlord has
failed to carry out repairs as required
- Investigate any complaint relating to the tenancy made by either the
tenant or landlord and make such an order as will be just.
The order of the tribunal shall be final and no appeal shall lie
there from to any court except in
a) Where there is a point of law in question
b) The case of an order made under s.6 (5) after investigating a
complaint or other matter
c) Where the rent exceeds ksh.1000 pm, on any point of mixed law and fact

ii. The business tribunal

It was established under the landlord and tenant (shops, hotels and
catering establishments) act. This deals with determining whether or
not a tenancy is a controlled one or not and the rent payable
there-under. A controlled tenancy is one in which the premises are
used for a shop, hotel or catering established which has not been
reduced into writing, or if reduced into writing it does not exceed
five years. In such tenancies neither the government nor the local
authority should be a party an order from this tribunal once filed in
the subordinate court of the first class becomes an enforceable decree
of the court.
An appeal from this tribunal lies to the high court within thirty
days, and the decision of the high court shall be final.

iii. The co-operative tribunal: established under the co-operative

societies act. it deals with disputes between

- Members of a co-operative society

- A co-operative society and another
- Members of the co-operative society and the society.
iv. The land disputes tribunal: established under the land disputes
tribunal, act 10 of 1990 .deal with issues of boundary disputes in
land matters.

10. Arbitration:
An arbitrator is an umpire. He hears and determines a dispute between
the parties, in case he is called upon. Ordinarily an agreement to a
dispute makes it compulsory to seek an arbitrators decision, which is
then is adopted by the court. The effect of a arbitration clause is to
prevent parties from going to court in respect of any dispute covered
by the clause.
This means settlement of any commercial dispute between two by one
people called arbitrators. If any of the parties disregards the
agreement and commences legal proceeding, the conditions are
fulfilled.
The person appointed to determine differences and disputes is called
the arbitrator, the proceeding before him is called arbitration and
his decision is called an award.

Arbitration Agreement

Arbitration agreement is a written agreement to refer present or

future differences to arbitration whether an arbitrator is named or
not.
When parties hence entered into an agreement to refer all disputes
between them either in present or future, they cannot bring an action
in a court of law relating to the same subject matter. If any of the
parties disregards the agreement and commences legal proceedings, the
other party may apply to the same court for stay of the proceedings
provided the following conditions are fulfilled.

1. The proceeding relate to the same matter as that covered by the

arbitration agreement.
2. The applicant who has applied for stay and is still ready willing
to proceed with arbitration and to do everything necessary for the
purpose.
3. That there is no sufficient reason why the matter should not be
referred in accordance with the arbitration agreement.
4. The party asking for stay must not have delivered his pleading or
taken any other steps in the proceedings.

Ways of making a reference to arbitration

1. By order of the court: the court may refer any specified issue or
the whole of the case against the consent of the parties.
2. By certain statutes: under certain act, the parties are given
rights to refer their disputes arising under statutes to arbitration.
3. By consent of the parties: where parties to commercial agreement
have agreed in writing to submit their disputes for settlement to
arbitration, they are under legal duty to do so if any dispute arises
relating to this matter.

Powers of the Court to Appoint Arbitrator

1. Where an arbitration agreement provides for the appointment of a
single arbitration, and the parties have failed to appoint one.
2. If an appointed arbitrator refuses to act or is incapable of action
or dies and the vacancy so caused is not filled.
3. Where the reference is to two arbitrators and one is not appointed.
4. Where the parties or two arbitrators are to appoint umpire or
thrall arbitrator and fail to appoint one
5. Where appointed umpire or arbitrator refuses to act or is incapable
of acting or dies and the parties or arbitrators do not appoint one.

Advantages of arbitration
1. Avoidance of publicity, for the proceeding are held in camera.
2. Simplicity of procedure, as proceeding are more informal.
3. Avoidance of delay and uncertainty involved in appeals as the
award, assuming to be valid, is final.
4. Reduction of expenses in most cases.
5. saving of time as proceeding are quicker than a trial court.
6. Appointment of a person having the required technical qualification
as arbitrator, should the matter be of a technical nature.
7. Social efficacy (parties end-up as friends while courts make them
enemies), the award of the arbitrator being the decision by the
consent of the parties.
8. Condor in presenting figures, knowing that trade competitors are
not present to gain knowledge to the detriment of the person giving
the evidence.
9. The parties can fix a convenient time and place for hearing the
proceedings.

Disadvantages of arbitration
1. The arbitrator may be incompetent (both in trade and in the legal
aspect of the matter) or biases.
2. Injustice may result from the informality of the procedure.
3. Arbitration does not crate uniform and well-settled rules of law.

INTERPRETATION OF WRITTEN LAWS

The actual meaning of a written law, rule or any other subordinate

legislation may be a cause of a legal dispute. The words used may have
different meaning to different people.
The following rules are used to interpret any written law:

1. The literal rule: this rule requires that the primary meaning of
the statute be given to the words i.e. it requires that the judges to
interpret the written law according to their grammatical or dictionary
meaning.

Examples: R v Harris (1836)

A bite would was not considered as a stab, cut or would as the law
required, hence the accused was acquitted, in this case.

2. The golden rule: this is used in order to avoid arriving at an

absurd decision under the literal rule of construction in Becke Vs
Smith, justice parker said that under the
This rule the court is ordinary to adhere to the ordinary meaning of
words used, and to the grammatical construction, unless that is at
variance with the intention of the legislature, to be collected from
the statute it self, or leads to any manifest absurdity or repugnance,
in which case the language may be varied or modified.

3. The Mischief Rule: this rule allows the court to examine the
purpose of the statute in order to discover the mischief or defect in
the existing law which this particular statute was passed to remedy.
The judge should then adopt a construction which will remove the
mischief to be cured and then provide an appropriate remedy.

4. The Ejusdem Generis Rule: is a rule which states that where

general words of an Act or rule follow particular words, the general
words, are to be construed as being limited to the persons or things
within the class designated by the particular words. For example in
reference to cows, goats, donkeys, and other animal the general words
other animals would be construed to mean animal of the some genus or
species as cows, and would not include wild animals such as elephants,
buffaloes lions etc.

Example: Evans V Cross

The accused was charged with ignoring a traffic sign when he overtook
on a road on which was painted a white line. It was held that he was
not guilty because the white painted line was not a sign in the
meaning of the words all signals, warning signposts, signs, or other
devices since the words other devices must be construed Ejusdem
generic rule is related to the context rule: wherein the entire
context of the statute is looked at when ascertaining the meaning of
certain words.
LAW OF PERSONS

A person may be defined as an entity or being which is recognized by

law having certain defined rights and obligations. there are two types
of persons:
a) Natural person: these are human beings who are capable of rights
and are subject to obligation The legal personality of natural person
or human beings starts at birth and end at death.
b) Corporations: a part from human beings, the law also accords legal
personality to certain offices and groups of persons known as
corporations. A corporation is an association of persons bound
together for some particular object, mostly to carry on business with
a view of profit. It is an artificial person created by law with
capital divided into transferable shares and with limited or unlimited
liability possessing a common seal and perpetual succession. A
corporation is regarded as a person because it has legal rights and
obligations of the individual who constitute it. A corporation may be
composed of one or several or legal persons.

It has a legal personality of its own distinct from that of its

members. The individual members have rights and liabilities of their
own apart from those of the corporation. The corporate body is
different in that it has perpetual succession, it never dies and has a
common seal by which to authenticate its acts. The members may change,
but the corporate body does not.

Salomon vs. Salomon & co. ltd 1897 ac 22

S incorporated a company and sold his sold his boot business to it for
30,000. His wife one daughter and four sons took up one share of 1
each. S took 20,000shares of 1 each and 10,000 debentures in the
company. The debentures gave S a charge over the assets of the company
as the consideration for the transfer of the business. Subsequently
when the company was wound up, its assets were found to be worth 6,000
and its liabilities amounted to 17,000 of which 10,000 were due to S
(secured claimed that S and the company was one and the same person,
and that the company was a mere agent for S and hence they should be
paid in priority to S.

Held: that as soon as the company was duly incorporated it became, a

separate person in the eyes law, independent from S and was not his
agent. Although S was virtually the holder of the shares in the
company yet he was also a creditor secured by its debentures and was
therefore entitled to repayment in priority to the unsecured
creditors.

Types of corporations.

a) Corporation sole: is one which consists of one human member at a

time, such a member being the holder of an office which is held in
succession by one person at a time some corporations sole are creature
of the common law e.g. the office of a bishop. There cannot be more
than one bishop in a diocese at the same time. The living official
comes and goes out but the offspring of the law remains forever. Other
corporation sole are created by the constitution or an act of
parliament e.g. the office of the president, office of the public
trustee.

These corporation are not common in the business world.

b) Corporation aggregate: most corporation are corporations aggregate.

These types of corporations consist of two or more members at the same
time. Example includes public and private companies. These are also
statutory corporations and registered companies under the co-operative
societies act.
c) Statutory corporation has various names.

1. Statutory company or corporation it is a company that he come to

existence through an enabling statute hence statutory company.

2. Parastatal corporation intended to meaning that the state is

involved in its making i.e. state.

3. Public corporation used to denote that this is an enterprise in

which members of public have an interest hence public corporation.

d) The Chartered Company/ corporation

This form of a company is a very old type which does not exist today
because businessmen prefer to trade through modern companies e.g.
registered company and not through this old archaic type.

This company is a feature of 16th, 17th and 18th Cs it existed during

the colonial period. The English practice was as follows if the people
wanted to create such a company.

1. A group of people had to come together and to carry out business.

2. To raise capital for intended business.
3. To draw the business objects and detail
4. To petition the crown to grant them a charter or a letter patent
that legally will bind them in the name they have chosen
5. The crown either granted or rejected the petition for charters. If
it granted, then from the date as indicated in the charter, the
company was deemed to have been formed to engage in business ex.

The British east India company was incorporated by the grant of a

charter granted by queen Elizabeth 1 on 31- 12 1600 A.D. it was made
of 127 shareholders an among them they had contributed 72,000 as
capital and their main object was to engage in business of gold and
spices from the east as the charter indicated, be engaged in spice
business with any country the East Of Cape Of Good Hope.
The Queen granted them the charter to last for 15 years from the time
of formation and she outlawed any other British company from rivaling
the BEI Co. in the designated territory. So the BEI Co. had exclusive
business.

CREATION OF CORPORATIONS

A corporation can be created in the following way

a) Through other Acts of Parliament

Corporation can be created by acts of parliament in Kenya. This

includes state corporations. Examples include Kenya meat commission,
pyrethrum board of Kenya, Kenya airways etc.
The power of these corporation are defined by the incorporating Act
and they cannot do any activity which is not expressly or implied
authorized by the Act. A statute creating the corporation gives it a
name stipulates its composition, principles its powers and duties.

B) By Registration under the Companies Act

registered companies are created by registration under the companies
act cap 486 laws of Kenya companies can be public or private.

How to register a company.

The three main stages.-

- Promotion
- Registration reservation of name ,presentation of documents (all
documents),payment of stamp duty,
- Issue of certificate
- If private start business,
- If public issue a prospectus then get certificate of commencement
:the process (in brief)

Promotion
The steps involved in the promotion of a company are stated as follows:-
1. Discovery of idea-it involves a preliminary analysis and
verification of the proposed idea to find out whether the business
would be profitable or not
2. Detailed investigation-intensive investigation with a view to
ascertaining the soundness of the proposition in terms of probable
cost of production, the estimated selling price of the goods or
services proposed to be made available

And amount of profit .study market demand.

3. Assembling the promoter arranges for the acquisition of necessary

men, materials, machinery, money, and managerial ability.
4. Financing of proposition-through public financing by issuing a
document known as prospectus
5. Registration or incorporation-the promoters take the following
steps for registration or incorporation of a company
- Name of the company
- Presentation of documents to the registrar of companies, and these
are the documents to present:
- The memorandum of association
- Articles of association
- Statement of companys nominal capital/authorized capital
- Declaration compliance
- A list of directors

When the requisite documents are filed with the registrar shall
satisfy himself that the statutory requirements regarding registration
have been duly complied will he then issue a certificate of
incorporation.

Commencement of business stage

If it is a public company, it has to undergo a further stage, the

capital subscription stage:

In the capital subscription stage, the company arrangements for

raising the capital of the company . After incorporation the affairs
of the company are taken over by the directors. Usually the promoters
are the first directors of the company. in order to make necessary
arrangements for raising the capital of the company a meeting of the
board of directors will be convened to deal with the following
business:

1. Appointment of secretary and fixing the terms and conditions of his

appointments
2. Appointment of bankers, brokers, solicitors and auditors
3. Adoption of preliminary contracts entered by the promoters on
behalf of the company in reincorporation stage.
4. Adoption of underwriting contracts in order to secure minimum subscription
5. Adoption of the draft prospectus or statement in lieu of prospectus
6. Appointment of managing director or manager and other responsible
officers of the company
7. Approval of the design of the common seal of the company and
authorizing custody thereof
8. Listing of shares on the stock exchange
Thus a public company can start business only after it obtains a
certificate of commencement of business.
SOME ADVANTAGES / CONSEQUENCES OF INCORPORATION.

1. Limited liability

The liability of the members of a limited company is limited to the

amount of their shares therein. This enables even not too enterprising
people to invest part of their money in industrial ventures carried on
by limited companies because they know beforehand that their liability
is limited.

2. Transferability of shares

Shares in a company can be transferred (subject to any restrictions in

the article of association) from one person to another without the
consent of the other members.

3. Separate legal entity

A company as is already illustrated both by the act and the case law,
has separate legal entity from its members and its existence is not
affected by death, insanity or bankruptcy of a member i.e. a company
has perpetual succession but the members will always come and go but
the company will continue to exist.

4. Control

The control of accompany can be secured by the acquisition of the

majority of the companys shares hence carry the voting powers.

5. Permanent existence/ perpetual succession

The life of the company is permanent. The company act creates the
company and dissolves it. The death, insolvency or the transfer of the
shares of the members does not affect the existence of the company. It
may stated that members may come, members may go, but the company
goes for ever.

6. Separation of ownership and management

The shareholders who are the owners of the company cannot participate
in the management of the companys business. They can elect their
representatives to the board of directors, which manages the affaire
of the company. This has led to the recognition of the fact that
ownership and management of business are specialized functions.

7. Expert management

Since a company carries a business on a large scale and has financial

resources, it can afford the services of the experts. This will lead
towards professionalism in management which is necessary for efficient
management of the business.

8. Public confidence
The formation and running a company is regulated by the provisions of
companies act and various acts. Provisions regarding appointment and
remuneration of directors, compulsory audit and publication of
accounts, protection of minority shareholders and so have created
greater public confidence in companies.

9. Social advantages

A company is also beneficial from the societys point of view. It

mobilizes the scattered savings of public and invests them in sound
industrial and commercial ventures. It provides employment to a large
number of people. Economics of large-scale operation lad to economic
use of national resources and provisions of goods and services to the
public at cheaper prices.

10. Suing or being sued:

The entity is capable of suing or being sued it its own name.

These advantages apply in respect of a registered co-operative
society; with or two minor differences.

UNINCORPORATED ASSOCIATIONS

An incorporated association is one which has no corporate status i.e.

it has no legal personality and cannot therefore own property or
enter into contracts or sue or be sued in its own name. Such
associations include clubs, societies, trade unions, partnerships etc.
These associations consist of groups of individuals is regarded as the
joint property is held on behalf of all the members trustees. The
members are individually responsible for their own torts or the torts
authorized by them. For example in case of Brown Vs- Lewis 1896 the
committee of a football club authorized the repair of a football stand
for use by the public. The repair was faultily done and a member of
the public injured. When the collapsed, it was held that the committee
authorizing the repair was liable for the injuries by member of the
public
THE LAW OF CONTRACT

Nature of contract

The law of contract is that branch of the law which determines the
circumstances in which promises made by parties to a contract shall be
legally binding on them. Its rules define the remedies that are
available in a court of law against a person who fails to perform his
contract, and the conditions under the remedies are available. It is
the most important branch of business law. It is in particular
important to people engaged in trade, commerce and industry as bulk of
their business transactions based on contracts.

The law relating to contract is contained in the contract act, cap 23

laws of Kenya. The act deals with the general principles of the law of
contract. The act does not profess to be complete and exhaustive code.
Some of the contracts not dealt with by the act are those relating to
partnership, sale goods, negotiable instrument, and insurance.

The law of contract differs from other branches of law in an important

respect. It does not lay down a number of rights and duties, which the
law will enforce. It consists rather of a number of limiting
principles, subject to which the parties may create rights and duties
for themselves which the law will uphold. The parties to a contract,
in a sense, make the law for themselves. So long as they do not
infringe some legal prohibition, they can make what rules they like in
respect of the subject matter of their agreement and the law will give
effect to their decisions.

Definition of contract

A contract is an agreement between two or more parties which is

intended to create legally binding obligations. This definition shows
that a contract essentially consists of two elements;

a)An agreement: which is a promise made by one party and is accepted

by anther. A promise is an assurance that one will or will not do
something in future.

Obligation: for an agreement to become a contract, it must give rise

to a legal obligation or duty i.e. a legal tie which imposes upon a
party the necessity of doing or abstaining from a definite act (s).

The essence of an agreement is the meeting of the minds of the parties

in full and final agreement, there must, in fact be consensus ad idem.
This means that the parties to the agreement must have agreed about
the subject matter of the agreement in the same sense and at the same
time. Unless there is consensus ad idem, there can be no contract.
Example;

A, who own two houses one in Nairobi and another in Nakuru intends to
sell to B a house in Nakuru. B thinks he is purchasing the house in
Nairobi. There is no consensus ad idem and consequently no contract.

In order to determine whether, in any agreement, there is the

existence of consensus ad idem, it is usual to employ the language of
offer and acceptance. For example if A says to B will you purchase my
car for Kshs.100, 000/=? And B says, Yes to it, there is consensus
ad idem and an agreement comes into existence.
An agreement which gives rise to a social obligation is not a contract
because it does not give rise to contractual obligations and hence is
not enforceable in a court of law.

For example:

a) Domestic arrangements, engagements of purely domestic nature are

often not intended to be binding in law but are intended to rely on
bonds of mutual trust and affection.

Case: Balfour vs.-(1919) 2KB 571 in which a husband who was a civil
servant in Sri Lanka went to England with his wife. When his leave
was nearing its end and he hat to return to home, he promised his wife
who, on the doctors advice had to remain in England, a household
allowance of 30 pounds a month till she joined him. Later the parties
separated and the realm of contract altogether.

b) A gentlemans promise in which A promises to lend his bicycle to B

on a weekend but subsequently refuses to do so B cannot enforce this
before a court of law

c) Social invitation: in which C invites friend D to a party at his

house and when D arrives he finds C is not at home.

The word binding is used in the definition of a contract for there

are some contracts which are valid (e.g. social agreements0but are not
enforceable

Example of a binding obligation: A agrees to sell his car to B for

ksh.100000 this agreement gives rise to an obligation on the part of A
deliver the car to B and on the part of B to pay ksh.100000 to A.
this agreement is a contract.

An agreement therefore may be a social agreement or a legal agreement.

However a social agreement does not give rise to contractual
obligations and is not enforceable in a court of law. It is only those
agreements which are enforceable in a court of law which are contracts

Note: a contract =agreement +enforceability at law. Thus all

contracts are agreements but all agreements are not necessarily
contracts

ESSENTIALS OF A VALID CONTRACT

1. Agreement: there must be an agreement between two or more parties.

One party making the offer i.e. proposal and the other accepting it.
Note that nobody can agree with himself, thou he may resolve to do an
act hence essence of at least two parties. When an offer and
acceptance correspond in every respect, there is an agreement between
two parties.

2. Intention to create legal relationship: when two parties enter into

an agreement, their intention must be to create legal relationship
between then. if there is no such intention on the part of the parties
, there is no contract between them. Intention to create legal
relationship therefore means that the parties must intend that if one
of them fails to fulfil a promise undertaken by the agreement he
shall be answerable for that failure in law. Social agreement does not
contemplate legal relationship.
3.Lawful consideration; for an agreement to be enforceable by law it
must be supported by consideration i.e. an advantage or benefit moving
from one party to another or something in return or something in value
shift or promised ,such as money to convince a person to make a deal.
The agreement is enforceable only when both parties give something and
get something in return a promise to do something getting nothing in
return, is usually not enforceable by law.

4. Capacity of the parties (competency): both parties entering into the

contract must have the contractual capacity to do so; the law must
recognize them as possessing characteristics that qualify them as
competent parties. Every person is competent to contract if he is of
the age of majority and sound mind

5. Free and genuine consent: there must be a free and genuine consent
of the parties to the agreement. Consent is said to be free when they
are of the same mind, when they agree about the subject matter of the
contact in the same sense and at the same time. There is absence of
free consent if the agreement is induced by coercion, undue influence
.fraud, mistake or duress.

6.Lawful object: the object of the agreement must be lawful i.e. the
object must not be illegal , immoral or opposed to public policy, if
an agreement suffers from any legal flow, it would not be enforceable
by law.
7. Agreement should not be declared void: the agreement should not
have been expressly declared void by any law in force in Kenya.

8. Certainty and possibility of performance: the agreement must be

certain and not vague or indefinite. if it is vague and it is not
possible to ascertain its meaning it cannot be enforced .e.g. A agrees
to sell to B a hundred tonnes of oil . There is nothing whatsoever to
show what kind of oil is intended. The agreement is void for
uncertainty.

9. Legal formalities: a contract may be made by words spoken or

written. As regards legal effects there is no difference between a
contract in writing, and one made by word of mouth. However, for the
interest of parties it is important that the contract be in writing,
signed, stamped and registered so as to comply with statutory
requirements .for example a contract for sale and purchase of land
must be evidenced in writing.

CLASSIFICATION OF CONTRACTS

Contract may be classified according to their:

1. Enforceability

a) Validity: a contract becomes valid when all the essential elements

are available. if one or more elements is /are missing the contract is
said to be void, avoidable, illegal or unenforceable.
b) Void contract: is not a contract at all .it produces no legal
obligations on the part of any of the parties for example :a contract
can be void because the purpose of the contract is illegal . it is
void ab initial i.e. from the very beginning. It is a nullity

c) Voidable contract: this is an agreement which is enforceable by law

at the option of one or more of the parties thereto but not at the
option of the other(s). The contract is valid but can be avoidable at
the option of one or both of the parties. The party having the option
can elect either to avoid any duty to perform or to ratify (make
valid0 the contract.

If the contract is avoided, both parties are released from it. If it

is ratified, both parties must full perform their respective legal
obligation.

The contract may be avoided when an essential element of free consent

in a contract is missing, the contract is avoidable at the option of a
party who did not genuinely consent, he may rescind the contract or
elect to be bound by it.
For example, Aq promise to sell his car to B for kshs. 200,000/=. His
consent is obtained by force. The contract is void able at the option
of A. he may avoid the contract or elect to be bound by it
.
d) Illegal agreement: is one which goes contrary to some rules of
basic public policy, immoral or criminal in nature.

Example B borrows kshs .10,000 from A and enters into a contract with
an alien to import prohibited goods. A knows of the purpose of the
loan. The transaction between Aand B is collateral to the main
agreement. It is illegal since the main agreement is illegal.

e) Unenforceable contract: is one which cannot be enforced in a court

of law because of some technical defects such as absence of writing or
where the remedy has been barred by lapse of time. The contract cannot
be enforceable because of certain legal defences against it. It is not
enforceable because a party failed to satisfy a legal requirement of
the contract, rather, it is valid contract rendered unenforceable by
some stature or law.

1. Formation: contract may be classified according to the mode of

their formation as follows:

a) Express contract: is one whose terms are expressly agreed upon

whether orally or in writing at the time of formation. Where the offer
or acceptance of any promise is made in words, the promise is said to
be express. Any express promise result in an express contract.
b)Implied contract: is one which is inferred from the acts or conduct
of the parties in the of course of dealing between the parties. It is
not the results of express promise(s) by the parties e.g. there is an
implied contract that if you enter into a bus, you are to pay a bus
fare.
c) Quasi contracts: these are fictional contract created by the courts
and imposed on parties in the interest of fairness and justice. Quasi
contracts are therefore equitable, rather than contractual in nature.
They are imposed by law to prevent unjust enrichment. They rest on the
ground of equity that a person shall not be allowed to enrich himself
unjustly at the expense of another.
Example: T, a businessman, leaves his goods at Cs house by mistake. C
treats the goods as his. C is bound to pay for the goods.

Case: brooks wharf vs. Goodman bros (1937) 1 KB 534

G imported skins from Russia and stored them in Ws bonded warehouse.

The skins were stolen without any negligence on W.s part. After the
theft, the customs demanded duty from W, which W were bound to pay. W
paid and sued G for what had paid: G was liable.

2 Performance: that is, the extent to which the contract has been performed.
a) Executed contract: executed contract means that which is already
done. An executed contract is one which both parties have already
performed their respective obligations.
Example: A agrees to paint a picture for B for kshs. 2,000/= when A
paint the picture and B pays the price i.e. when both parties perform
their obligations, the contract is said to be executed.

b) Executory contract: executory means that which remain to be carried

into effect. Hence, an executory contract is one which both parties
have yet to perform their obligations. In the above example, the
contract is executory A has yet painted the pictures and B has not
paid the price .

c) Bilateral contract: This is a contract which is a promise for a

promise. It is one in which the obligation on the part of both
parties to the contract are outstanding at the time of formation of
contract. No performance, such as payment of money or delivery of the
goods, need take place for a bilateral contract to be formed. The
contract comes into existence at the moment the promises are
exchanged. In this sense, bilateral contracts are similar to executory
contracts are also known as contracts with executory consideration.

d) Unilateral contract: is one which only one party has to fulfil

his obligation at the time of the formation of the contract, the other
party having fulfilled his obligation at the time of the contract or
before the contract comes into existence. It is a one-sided contract.
It could be promise for an act.

Example: A permits a railway coolie to carry his luggage and place it

in a carriage. A contract comes into existence as soon as the luggage
is placed in the carriage. But by the time the coolie has already
performed his obligation. Now only A has to fulfil his obligation
i.e. pay the reasonable charges to the the coolie.
4. Contracts of record: A contract on record is a judgment of court
i.e. an obligation imposed by a court upon one or more persons in
favour of another or others. These contracts derive their binding
powers force from authority of the court. They are not
Real contracts as such as there is no consensus. They are enforced
compulsorily by the court, for example, when a person is arrested, he
may be released on a promise to appear in court or to be of good
behaviour, subject to a money penalty, if the obligation is broken .The
obligation is a recognisance
.
5 Contracts under a seal (specialty contracts) or Deed: This is a
contract which derives its binding force from its from alone. It is
formalized by way of writing with a special seal attached. The seal
may be actual (made of wax or some other durable substance) or
impressed on the paper or indicated simply by the word seal or the
letters L.S at the end of the document.L.S stands for locus sigili and
means the place for seal
The contracts made under a seal include contracts made without
consideration, made by corporations and conveyances of a legal estate
in land
6. Simple contracts: these are contracts which are not made under a
seal or deed. They are also known as parole contracts. They do not need
to satisfy any special form. They may be in writing, oral or partly
oral and written.

OFFER

An offer is a promise or commitment to do or refrain from doing some

specified thing in the future. it is it is a proposal by one party to
another to enter into a legally binding agreement with him. A person
is said to have made a proposal when he signifies to another his
willingness to do or abstain from doing anything with a view to
obtaining the assent of that other person to such act or abstinence.

Example: A says to B will you purchase my car for Kshs. 5,000/=?

Here A is making an offer to B as he signifies to Bs assent to
purchase the car.
The person making the offer is known as the offeror/promisor. The
person to whom the offer is made is called the offeree/promise.

Rules of Making an Offer.

1. An offer may be made to a specific person or to the world at

large. It is specific if it is made to a specific person or group and
it is general when made to the whole world.

Case: Carlill-Vs-Carbolic Smoke Ball Co.1893B256

Carbonic smoke ball co. offered by way of reward 100 to anyone who
contracted influenza after using their smoke ball as prescribed. The
offer stated that they had lodged 1000 with a bank to show their
sincerity in the matter. Mrs.carlill used smoke ball as prescribed
but not withstanding, contracted influenza. She claimed 100 the
company refused to and raised the following defences;

1. This was an offer made to the public at large and not to Mrs.
Carlill as an individual, and therefore could not stand.
2. That the promise of 100 was merely an advertising puff not intended
to create legal relations.
3. Mrs. Carlill had not notified the company of her acceptance.
4. The promise to pay100 was not supported by consideration.

The court held the company liable to pay on the basis of the following reasons:

a) The offer made to the whole world ripens into a contract with
anybody who comes forward and performs the condition as Mrs.carlil
did.
b) The advertisement was not a mere puff as the company had declared
that it had lodged 1000 with the bank to meet the obligations
c) On notification of the acceptance of the offer, the court rejected
this argument on the ground that if the offer expressly or implied
intimated in his offer that it could be sufficient to act on his offer
without condition was a sufficient acceptance without notification.
d) On the issue of consideration, the argument failed because, the
inconvenience of applying the smoke ball to ones nostrils as
prescribed was sufficient consideration.
2. The offer must be such as in law is capable of accepted and giving
rise to legal relationship. A social invitation, even if it is
accepted, does not create legal relations because it is not intended.
An offer, therefore, must be such as would result in a valid contract
when accepted.

A partys words and conduct are held to mean whatever a reasonable

person in the offerees position would think they meant. The court
will give words their usual meaning even it it was proved by twenty
bishops that the party intended something else.

Offers made in obvious anger, jest, or undue excitement do not meet

the intended test, because a reasonable person would realized that a
serious offer was being made.

Example: suppose you and three classmates are riding in your friends
vehicle. All over a sudden the vehicle fails to start. Your friend
yells in anger, Ill sell this car to anyone pays kshs. 10,000/= you
drop kshs 10,000 on the spot. The car is worth kshs 1,500,000/=. Given
those facts is there an intention to enter legal relations?

3. The terms of the offer must be certain and free from vagueness,
must be definite and unambiguous and not loose. If the terms of the
offer are vague or indefinite, its acceptance cannot create any
contractual relationship.
Example: a offered to take a house on lease for three years at 285 per
annum if the house was put into thorough repair and drawing rooms
handsomely decorated according to the present style. Held, the offer
was too vague to result in a contractual relation. (Taylor Vs-
Portington 1855 ALL ER128).

A says to B I will sell you a car. A owns three different cars. The
offer is not definite.

In Gould Vs Gould (1970) 1QB275) A husband on leaving his wife

promised to pay her 15 a week so long as I can manage it. Held,
although the husband and wife who lived apart because of break-up of
their marriage could enter into a legally binding agreement, the vague
or discretionary terms of the arrangement indicated an intention not
to create legal relations

4. The offer must be communicated for it to be complete to the person

it is made otherwise there will be no acceptance. Communication is
important so that the parties to the contract can have the same mind,
as it cannot be accepted by a person who does not know that an offer
has been made. This applies to both specific and general offers.

The offeree cannot accept an offer unless he knows of its existence,

because he cannot intend to accept an offer of which he is ignorant.

Example: if A offers by advertisement a reward of 5000 to anyone who

returns his transistor radio, and B finding the radio brings it A,
without having heard of the offer of the reward, he is not entitled to
the ksh.5000.
.
In R. V Clarke 1927 a reward was advertised for information leading to
the arrest of the murderers of two police officers and a free pardon
if the person giving the information was an accomplice. C gave the
information. Held; C was not entitled to a government reward because
at the time the information was given by him he had forgotten all
about the reward.

5. The offer must be made with a view of obtaining assent.

The offer to do or not to do something must be made with view to

obtaining the assent of the other party addressed and not merely with
view of disclosing of the intention of making an offer. A party can
therefore not be bound to honour part of the contract if he had not
given his consent in form of acceptance.

6. The offer should not contain a term the non- compliance of which
may be assumed to amount to acceptance.
Thus a man cannot say that if acceptance is not communicated by
certain time, the offer will not be considered accepted, for example,
A writes to B I will sell you my dog for Kshs. 2,000/= and if you
do not reply I shall assume that you have accepted the offer.
There is no contract if B does not reply.

However, if B is in possession of As dog at the time of the offer

the offer is made and continues to use it thereafter, Bs silence and
his continued use of the dog amount to acceptance on his part of the
terms As offer.

7. A statement of price is not an offer. A mere statement of price is

not construed as an offer to sell.

8. An offer may be made by word of mouth, in conduct or by conduct. A

common example of an offer by conduct is where a passenger enters a
bus. It is implied that he will pay the fare.

9. An offer may be distinguished from:

a) An invitation to an offer
A display of goods in a shop with marked prices is not an offer but
merely an invitation to the public to make an offer to buy the goods
at a marked price. Likewise, quotations, catalogues, advertisements
for sale of an article do not constitute an offer. They are
invitations to the public to make an offer.

a) Pharmaceuticals society of Great Britain-vs.- Boots Cash chemists

(1953) IQB 401
In this case goods were sold in Bs shop under the self- service
system. Customers selected their purchases from the shelves, put them
into baskets supplied by B and took them to the cash desk where the
paid the price. Held: the customer cash desk and not when he removed
them from the shelves.

b) A declaration of Intention: a declaration by a persons that he

intends to do something gives no right of action to another. Such a
declaration only means than offer will be made or invited in future
and not that an offer is made now. Harris-vs-Nickerson 1873 8QB 286.
An auctioneer advertised that there would be a sale of office
furniture and prospective buyer travelled from London to attend the
sale. He found that all the furniture had been withdrawn and sued for
the auctioneer for the loss of time and travelling expenses. Held; the
auctioneer was not bound to sell the furniture as he was starting the
furniture as he was merely his intention to sell, not making an offer
which by acceptance would turn into a contract.
c) Mere supply of information: The mere statement of the lowest price
at which a person will sell property or goods contains no implied
condition to sell at the price to the person making such inquiry.
d) Expression of opinion: an expression of opinion is not an offer. It
does not evidence an intention to enter into a binding agreement;
Case: Hawkins-vs-Mc Gee, 84NH 114 1N which Hawkins took his son to
McGee, a doctor and asked McGee to operate on the sons hand.. McGee
said that the boy would be in the hospital three to four days and that
the hand would probably heal a few days later. The sons hand did not
heal for a month, but the father did not win a suit for breach to
contract. The court held that McGee had not made an offer to heal the
son in three to four days. He had merely expressed an opinion as to
when the hand would heal.

Cross offers
when two parties make identical offers to each other in ignorance of
each others offer, the offers are cross-offers. In such a case the
court will not construe one offer as the offer and the other as the
acceptance and there cannot be a concluded construct.
Termination of an offer
An offer can be terminated using the following ways.

1. Revocation: the offerors act of withdrawing an offer is called

revocation. This has to be done before the offer is accepted. For
example a bind for an auction is revocable until the hammer falls
downs

However, the revocation to the offeree directly or even through the

authorized agent. The revocation by post does not take effect until it
is actually received by the offeree.
For example, a letter of revocation mailed on April 1 and delivered at
the offerees residence or place of business on April 3 becomes
effective April 3.

An offer to the general public can be revoked in the same manner the
offer was originally communicated.

2. Lapse of time: An offer can come to an end if it is not accepted

within the specified period or if no time period of acceptance is
stated, the offer terminates at the end of a reasonable time.
3. Conditional Offer: X might say to Y will sell you my car for
Kshs 500,000/= if I get a new one this month. The offer is
conditional .i.e. if X does not obtain a new car this month, the offer
will terminate.
4. Death/Insanity/Incompetence: Death or in compensate of either party
terminates an offer, unless the offer is irrevocable.
5. Illegality: supervening illegality terminates an offer for example
when a statute or court decision makes an offer illegal the offer
is automatically terminated by change of the law e.g. X offers a
loan of Kshs 100,000/= to Y at the annual interest of 15% . Before Y
can accept the offer, a law is enacted that prohibits interest rates
higher than 10%. Xs offer is automatically terminated.
6. Counter- offer by the offeree: A rejection of the original offer
and the simultaneous making of a new offer is called counter- offer.
For example A offers to sell her home to B for Kshs 2,000,000/= Bs
response is a counter offer because it terminates As original offer.
7. Destructions of the subject matter: An offer is automatically
terminated in a specific subject matter if the offer is destroyed
before the offer is accepted.
8. Rejection: The offer may be rejected by the offerees, in which case
the offer is terminated. Rejection of an offer is accomplished by
words or actions that demonstrate a clear intent not to accept the
offer or consider the offer further. Inquiries about an offer do not
constitute a rejection. A rejection is not effective until received by
the offeror or an authorized agent of the offeror.
9. Change of the mode of acceptance: An offer lapses but not being
accepted in the manner prescribed or in the usual mode implied by the
nature of the offer i.e. if an offer is made by post acceptance is
implied by post well.

ACCEPTANCE

This is the act of assenting by the offeree to an offer. It is the

manifestation of the offeree
of his willingness to be bound by the terms of the offer. It produces
something which cannot be recalled or undone. This means when the
offeree signifies this assent to the offeror, the offer is seen to be
accepted. When an offer has been accepted it becomes a promise.
Acceptance may be express or implied. It is express when it is
communicated by words spoken or written or doing some required act. It
is implied when it is not to be gathered from the surrounding
circumstances of the conduct of the parties.

Rules relating to acceptance

1. It must be absolute and unqualified. I.e. it must confirm to the
offer. If the parties are not at idem (consensus) on all matters
concerning the offer and acceptance, there is no contract.
Example: M offered to sell a piece of land to N for kshs. 500,000/= N
accepted and enclosed kshs. 200,000/= with a promise to pay the
balance by monthly instalment of kshs. 20,000/=. There was a contract
between M and n as the acceptance was not qualified.
2. It must be communicated to the offereor and not any other person:
for example A tells B that he intendeds to marry C but tells C nothing
of his intention. There is no contract, even if C is willing to marry
A.
3. It must be according to the mode prescribed or usual and or
reasonable mode: if the acceptance is not according to the prescribed
mode or reasonable (where no mode is prescribed) the acceptance could
be rejected.
4. It must be given a reasonable time: if a time limit is not given,
it must be within a reasonable time.
5. It cannot precede an offer: if the acceptance precedes an offer, it
will not be valid and cannot result into a contract.
6. It must show an intention on the part of the acceptor to fulfil
terms of the acceptance. If no such intention is present, the
acceptance will not be valid.
7. It must be given by the party or parties to whom the offer is made.
8. It must be given before the offer lapses or before the offer is withdrawn.
9. It cannot be implied from silence: on the part of the offeree or
his failure to answer unless by his previous conduct that his silence
means that he accepts.

Acceptance in Contracts by Post

where contract are made by letter, telegram or cable, they are said to
be made by post. In such a case it depends on the intention of the
parties whether the general rules for communication of a statement
shall apply i.e. whether the postal acceptance, not its arrival at the
address of the offeror, will be sufficient.

The general rule is that an acceptance must be communicated to the

offeror to be effective.

However, the postal rule is an exception to this rule. The postal rule
is that where the post is reasonably to be expected as the means of
communication, then the acceptance takes effect upon posting.

But this exceptional rule does not apply to a revocation of an offer.

Case: Henthom Vs Fraser (1892) 2 Ch. 27

F handed to H a written offer. The next day F posted a withdrawal of

the offer. This was posted between 12 noon and 1 P.M and it did not
reach H until after 5PM. In the meantime H at 3.50 PM and posted an
acceptance. Held:
i. Although the offer was not made by post, yet the parties have
contemplated the post as a mode of communication the acceptance.
ii. Fs revocation was of no effect until it actually reached H and
did not operate from the time of posting it.
iii. A binding contract was made on the posting of Hs acceptance.

When the postal rule applies acceptance is complete as soon as letter

of acceptance is posted, prepaid and properly addressed, whether it
reaches the offrer or not; if the letter is lost or delayed in the
post the contract is nevertheless made although the offeror may be
quite ignorant of the fact.
NB: unless the offeror provides otherwise, an acceptance made in a
manner and by a medium invited by an offer is operative and completes
the manifestation of mutual assent as soon as put out of the offerees
possession, without regards to whether it ever reaches the offeror.
This rule is known as the Mailbox Rule because once an acceptance has
been deposited into a mailbox, it is out of the offerees possession.

Faxed Offers and Acceptances

Offers and acceptance are commonly communicated via fax courts have
held that signatures on faxed documents are legally binding unless the
original signature is specifically required.

The question is what happens when acceptance is faxed to the offers

office but for some reason it is not received by the offeror in a
timely fashion or is lost? In such a situation, the mailbox rule that
acceptance is effective on dispatch does not apply and the acceptance
will not be effective until received by the offeror. Very likely, if a
fax transmitted to the offeror failed to reach the offeror for some
reason, a court will look closely at the circumstances.
As noted earlier, acceptance can be made either expressively or by
conduct. one of the legal issues concerning contract formed online is
whether clicking yes or agreed on a computer screen constitutes a
valid acceptance of a contractual offer. But it is possible to cluck a
box on a computer screen accidentally, in which situation it would be
unfair to hold that the action bound the offeree in contract.

Consideration
Consideration is a technical term used in the sense of quit pro quo
i.e. something in return. It is the price for which the promise of the
other is bought.

Consideration may be broken into two parts.

I) something of legal value must be given in exchange for the promise.
The something of legal value may consist of a return promise that is
bargained for. If it consists of performance, that performance may
be:
a) An act (other than a promise)
b) A forbearance ( a refraining from action).
c) The creation medication, or destruction of legal relation.

II) There must be a bargained-for exchange.

In this case Currie-Vs- Misa 1875,LR 10 EXCH.. 153 the court defined
consideration as follows:-
Some right, interest, profit or benefit accruing to the one party, or
some forbearance, detriment, loss or responsibility, given or
suffered or undertaken by the other.
For example X says to her son When you finish painting the garage, I
will pay you Kshs. 2000/=. Xs son paints the garage. The act of
painting the garage is the consideration that creates the contract
obligation of X to pay Her son Kshs. 2000/=.

Need for consideration:

The reason why the law enforces only those promises which are made for
consideration is that a gratuitous or voluntary promises are made
rashly and without due deliberations. The law looks with disfavor upon
an exchange of promises which will result in one of the parties
obtaining something for nothing. If a promise to pay B Kshs. 2000/=
for nothing. As promise has no force in law.

Rules Relating To Consideration

1. It must move at the desire of promisor: An act constituting
consideration must have been done at the desire or request of the
promisor. If it is done at the instance of a third party or without
the promisor, it will not be good consideration.
2. Example: A saves Bs goods from fire without being asked to do so,
A cannot demand payment for services. It may move from the promise or
any other person: Under the English law, consideration must move from
the promise. Under Indian Law, consideration may move from the promise
or any other person i.e. even a stranger. This means that along as
there is consideration for a promise it is immaterial who has furnished
it. But the stranger to consideration will be able to sue only if he
is a party to the contract.
3. It may be an act, absence of forbearance or a return promise. This
has already been explained. But note the following:-
a) Forbearance to sue- If a person could sue another for enforcement
of a right agrees not to pursue his claim, this constitutes a good
consideration for a promise by the other person. This results in a
benefit to the person not sued and a detriment to the person who could
sue.
b) Compromises of a dispute claim. A compromise is a kind of a
forbearance. As such the same principle, as discussed above, applies
to the bona fide compromise of a disputed claim even though ultimately
it might appear that the claim was wholly unfounded. But originally,
the claim should be reasonable and the person claiming should honestly
believe that it was valid. He should also act bona fide.
c) Composition with creditors-A debtor who is financially embarrassed
may call a meeting of his creditors and request them to accept a
lesser sum in satisfaction of their debt. If the creditors agree to
it, the agreement is binding both upon the debtor and the creditors as
this amount to a compromise of the claims of the creditors. This is
also known as accord and satisfaction.

The accord is defined as the agreement under which one of the parties
undertakes to give or perform, and the other to accept, in
satisfaction of a claim, something other than that which was
originally agreed on. Satisfaction takes place when the accord is
executed. The basic rule is that there can be no satisfaction unless
there is first an accord.

4. It may be past, present or future.

a) Past consideration: when consideration by a party for a present
promise was given in the past i.e. before the date of the promise, it
is to be past consideration.
Example A render services to B at the latters desire. After a month
B promises to compensate A for the services rendered to him, it is
past consideration. A can recover the promised amount.
b) Present/ executed consideration: when consideration is given
simultaneously with promise i.e. At the time of the promise, it is
said to be consideration. In a cash sale for example, consideration is
present or executed.
c) Future/ executory consideration: when consideration from one party
to the other is to pass subsequently to the making of the contract, it
is future or executory consideration.
Example: D promise to deliver certain goods to P after a week. P
promises to pay the price after a fortnight. The promise of D is
supported by the promise of P. consideration in this case is future or
executory.

5. Consideration need not be adequate: adequacy of consideration

refers to the fairness of the bargain in general; a court will not
question the adequacy of consideration if the consideration is legally
sufficient. Under the doctrine of freedom of contract, parties are
normally free to bargain as they wish. If people could sue merely
because they had entered unwise contract the courts would be
overloaded with frivolous suits.
6. It must be real and not illusory: though it need not be adequate,
it must be real, competent and of some value in the eyes of law. There
is no real consideration if A promises to put life into Bs dead wife
should B pay him 100,000. This promise is physically impossible.

7.It must not be something the promisor is already bound to do: a

promise to do what one is already bound to do, under law or existed
contract is not good consideration for anew promise since it adds
nothing to the pre-existing legal or contract obligation likewise, a
promise to perform a public servant is not consideration. For example
a police officer cannot collect a reward for providing information
leading to the capture of a criminal if the police office has a legal
duty to capture the criminal.

1. It must not be illegal, immoral or opposed public policy: the

consideration given for an agreement must not be unlawful and where it
is unlawful, the courts do not allow an action on the agreement.
2. It must be legally sufficient. To be legally sufficient
consideration for a promise must either legally detrimental to the
promise (the one receiving the promise) or legally beneficial to the
promisor (the one making the promise).

Note that legal detriment is not synonymous with actual (economic)

detriment. A person can incur legal detriment in either of two ways.
By doing or promising to do something that he or she had no prior
legal duty to do or by refraining from promising to refrain from doing
that he or she had no prior legal duty to refrain from doing i.e. by
forbearance.

A contract without consideration I void exceptions

1. A promise to pay a time barred debt A promise by debtor to pay a
time- barred debt is enforceable provided it is made in writing and
signed by the debtor or by his agent. The promise may be to pay the
whole debt or part of it. The debt must be such of which the creditor
might have enforced payment but of the law for the limitation of
suits.

A debt is barred by limitation if it remains unpaid or unclaimed for

a period of 6 years. Such debt becomes legally irrevocable.

Example: D owes C kshs. 10,000 /= but the debt is barred by the

limitations act. D signs a written promise to pay C kshs 5000 on
account of the debt. This is a contract A debtor who promises to pay
previous debt even though recovery is barred by the statute of
limitation makes an enforceable promise. The promise needs no
consideration.

2. Charitable subscriptions: subscription to religious, educational,

and charitable institutions are promises to make gifts and are
enforceable on traditional contract grounds because they are not
supported by legally sufficient consideration. A gift, after all, is
the opposite of bargained for consideration.

The view to enforce these promises under the doctrine of promissory

estoppels or to find consideration simply as a matter of the policy.
The premise for enforcement is that a promise is made on an
institution changes its position because of reliance on that promise.

For example, suppose a church solicits and receives donative

subscriptions to erect a new church building. On the basis of these
pledges, the church purchases land, employs architects, and makes
other contracts that change its position. Courts may enforce the
pledges under promissory estoppel.

3. Detrimental Reliance or Promissory Estoppel: A person who has

reasonably and substantially relied on the promise of another may be
able to obtain some measure of recovery. This doctrine is applied in a
wide variety of contexts in which a promise is otherwise
unenforceable, including that of a promise not supported by
consideration.

Under this doctrine, a court may enforce an otherwise unenforcement

promise to avoid the injustice that would otherwise result, for the
doctrine to be applied the following elements are required:-

CAPACITY TO CONTRACT
By capacity is meant competency or the legal ability of a party to
enter into valid contractual relationship. Every person is presumed by
law to have capacity to enter into a contract but there are some
situations in which capacity is lacking or may be questionable. The
law requires that neither party should be allowed to benefit from the
other partys lack of contractual capacity.
1. Minors: according to the age of majority act cap 33 laws of Kenya a
minor is a person who has not completed 18 years of age. As a general
rule a minor is not bound by any contract made during his minority.
The rules governing minors agreements are based on two fundamental rules;-
1. First, the law protects minors against their own inexperience and
against the possible improper designs of those experienced.
2. Secondly, in pursuing the above object , the law should not cause
unnecessary hardship to persons who deal with minors.
The position of a minor as regards his contractual agreements may be
summed up as follows:-
1. An agreement with or by a minor is void and inoperative abinitio.
2. He can be a promise or a beneficiary. Incapacity of a minor to
enter into a contract means incapacity to bind himself by a contract.
There is nothing which debars him from becoming a beneficiary e.g. a
payee, endorsee in a contract. Such contracts may be enforced at his
option, but not at the option of the other party. The law does not
regard him as incapable of accepting a benefit.
3. If he has received any benefit under a void agreement, he cannot be
asked to compensate or pay for it. For example, a minor obtains a loan
by mortgaging his property. He is not liable to refund the loan not
only this, even his mortgaged property cannot be made liable to pay
the debt.
4. He can always plead minority. even if he has , by misrepresenting
his age, induced the other party to contract with him , he cannot be
sued either in contract or in tort for fraud because if the injured
party were allowed to sue for fraud , it will be giving him an
indirect means of enforcing the void agreement.

However, the court may, where a loan or some property is obtained by

the minor by some fraudulent representation and the agreement and the
agreement is set aside, direct him, on equitable considerations,
to restore the money or property to the other party. Whereas the law
gives protection to the minors, it does not give them liberty to
cheat.

5. He cannot be adjudged insolvent. This is because he is incapable of

contracting debts.
6. He cannot enter into a contract of partnership. But he may be
admitted to the benefits of an already existing partnership with the
consent of the partners.
7. There can be no specific performance of the agreements entered into
by him as they are void ab initio. A contract entered into on his
behalf by his parent/guardian or the manager of his estate can be
specifically enforced by or against the provided the contract is:-
a) within the scope of the parent /guardian/manager.
b) For the benefit of the minor.
8. His parent guardian are / is not liable for the contract entered
into by him, even though the contract is for the supply of
necessities to the minor. But if the is acting as an agent for the
parents/ guardian, the parent or guardian shall be liable under the
contract.
9. A minor is liable in tort (a civil wrong ).but where the tort
arises from out of a contract a minor is not liable in tort as an
indirect way of enforcing an invalid contract .
10. He is liable for necessities supplied or necessary services
rendered to him or anyone whom he is legally bound to support.
The claim arises not out of contract but of what are called
quasi-contracts. The term necessary means goods suitable to the
condition in life of such infant or other person and to his actual
requirement at the time of sale and delivery.
Such goods need not necessarily belong to a class of goods, but they must be:-
I) Suitable to the position and financial status of the minor and
II) Necessaries both at the time of sale and at the time of delivery.
Necessaries goods are not restricted to articles which are required to
maintain a bare existence , as such bread and clothes , but include
articles which are reasonably necessary to the minor having regards to
his station in life . in the Case Nash V Inman 1908 2KB 1, 1, minor
who was an undergraduate at Cambridge , bought eleven fancy waistcoats
from N. he was at the time adequately provided with clothes. Held: the
waistcoats were not necessaries, and I was not liable to pay for
them.

Services render to a minor including education, training for a trade

and medical advice are necessaries.
2. Persons of unsound mind: one of the essential conditions of
competence of parties to a contract is that they should be of sound
mind. A person is said to be of sound mind for purpose of making a
contract if, at the when he makes it , he is capable of understanding
it and of forming a rational judgement as to its effect upon his
interest.
A person who is usually of sound mind, but occasionally of unsound
mind, may not make a contract when he is unsound mind. A person who is
usually of unsound mind, but occasionally of sound mind makes a
contract when he is of sound mind.

Soundness of mind depends on two facts;

i. His capability to understand the content of the business concerned and

ii. His ability to form rational judgement as to its effect upon his interest.
a) Lunatics: a lunatic is a person who is mentally deranged due to some
mental strain or other personal experience. He suffers from
intermittent intervals of sanity and insanity. He can enter into a
contract during the lucid interval i.e. a temporary restoration of
sufficient intelligence judgement and will enter into a contract
without disqualification
b) Drunken /intoxicated persons: intoxication is a condition which a
persons normal capacity to act or think is inhibited by alcohol or
some other drugs. a contract entered by an intoxicated person can be
either avoidable at the option of the drunkard if he was sufficiently
drunk to lack mental competency or valid if the person intoxicated
could still make a rational judgment or after ratification.
In the case of:
Mathews v Baxter 1873 l. R. 8EC 132 B agrees to buy some houses from
M at the time he was too drunk to know what he was doing , but he
ratified the contract when he became sober . Held, the contract was
binding.
c) Idiots: an idiot is a person who his completely lost his mental
powers .he does not exhibit understanding of even ordinary matters
.idiocy is permanent whereas lunacy denotes periodical insanity with
lucid intervals. An agreement with an idiot is void.
Agreements entered into by persons of unsound mind are void but are
liable for necessaries supplied to them .but even in such case they
are not personally liable, only their estate which is liable

3) Corporation: a corporation is an artificial person created by law,

having a legal existence apart from its members it may come to
existence by a special act of parliament (a statutory corporation) and
its capacity to contract is governed by the act itself.
A corporation may also be formed under the companies act cap 486 laws
of Kenya ,and such a company derives its power to contract from its
memorandum of association , if it exceed its power , the contract
becomes ultra vires or void and cannot be valid or ratified even if all
members of the corporation agree to making the contract.
In the case of: Att Gen V- Fulham Corporation 1929 1 CH 440 a
municipal council was authorized by certain acts to establish baths,
washhouses and bathing places .it established a municipal laundry. a
rate payer objected and applied for an injunction . Held: the
injunction had to be granted as the council had acted ultravires.
Since a corporation is not a natural person, it can only contract
through an agent, and therefore it cannot enter into any contact of
strictly personal nature
3. Insolvents: when a debtor is adjudged bankrupt, his property vests
in the official receiver and as such the insolvent is deprived of his
power to deal in that property. It is only the official receiver who
can enter into contracts relating to his property, and sue and be sued
on his behalf.

FREE CONSENT

It is essential to the creation of a contract that the parties are ad

idem, i.e. they agree upon the same thing in the same sense. When
there is no consent, there is no contract.
A contract which is regular in all respects may be rendered void or
voidable due to certain factors. These factors are also known as
vitiating factors which include the following:-
1. Coercion/duress: when a person is compelled to enter into a
contract by the use of force by the other party under a threat,
coercion is said to be employed. Coercion involves actual or
threatened violence over the person of another or his family member
with a view of obtaining his consent to the agreement. Coercion
includes threatened imprisonment, criminal prosecution or dishonour of
a member of his family. Coercion renders the contract voidable at the
option of the innocent party, if however, he affirms the contract,
the innocent party losses his right to set aside the contract.
Generally the threatened act must be wrongful or illegal. Threatening
to exercise a legal right is not illegal and does not amount to
duress.
2. Undue influence: a contract is said to be induced by undue
influence where the relation subsisting between the parties are such
that one of the parties is in a position to dominate the will of the
other, and ensures that position to obtain an unfair advantage over
the other. Most instances of undue influence involve the elderly,
minors or spouses i.e. those whose wills are particularly subject to
being overcome by a dominant party in a relationship of trust.
A consent to contract obtained by undue influence makes the contract
voidable at the option of the other party whose consent has been
obtained. The person can avoid the contract if he can prove that:
i. The other party has dominated his will
ii. The transaction is substantially unfair.
Illustration
As son has forged Bs name to a promissory note. B under threat of
prosecuting As son obtains a bond from A for the amount of the forged
note. If B sues on this bond the court may set the bond aside.
The presumption of undue influence can be rebutted by showing that
full disclosure of facts was made by the influencing party to the
party alleged to have been influenced at the time of entering into the
contract and that the weaker party was in receipt of independent
advice, before making the promise.
3. Mistake:
Mistake means an erroneous belief about something. Mistakes are of two types:-
a) Mistake of law: ignoratia juris non excusat i.e. ignorance of law
is no excuse, is a well settled rule of law. A party cannot be
allowed to get any relief on the ground that it had done a particular
act in ignorance of law. A mistake of law is, therefore, no excuse,
and the contract cannot be avoided.

b) Mistake of fact: are of two types

1. Bilateral or mutual mistake: this is a situation where both parties

to the agreement are under a mistake as to a matter of fact essential
to the agreement. In such a case the agreement is void. Note that for
bilateral mistake to occur both parties should misunderstand each
other and should at cross-purposes and the mistake must relate to a
matter of fact to the agreement. The following cases fall under
bilateral mistake.

DISCHARGE /TERMINATION OF A CONTRACT

1. By performance: performance means the doing of that which is
required by a contract. Discharge by performance takes place when the
parties to the contract fulfil their obligations arising under the
contract within the time and in the manner prescribed. In such case,
the parties are discharged and the contract comes to an end.
2. By agreement or consent: as it is the agreement of the parties
which bids them, so by their further agreement or consent the contract
may be terminated i.e. the contract may be terminated in the same
manner it was created.
3. By lapse of time: a contract formed for a specified time is
discharged when the period of time has lapsed. Where no lapse of time
is laid down, the lapse of reasonable time may render the contract
unenforceable in the court of law, under the limitations of actions
act the limitation period for contract claim is six months.
4. By operation of law: a contract may be discharged independently of
the wishes of the parties i.e. operation of law. This includes
discharge.
a) By death :the death of either party will discharge a contract for
personal service but other contractual rights and obligations are not
affected and survive for the benefit of or against the estate of the
deceased.
b) By merger: this takes place when the parties embody the simple
contract into a contract under deed and in such circumstances an
action lies only to the deed
c) By bankruptcy: when a person becomes bankruptcy all his rights and
obligations pass to the official receiver who is not liable on
contracts of personal services
d) By unauthorized material alteration: where a party to contract
without the consent of the other party, the other party can avoid the
contract.
5. By Breach Of Contract: breach of contract means breaking of the
obligation which a contract imposes it occurs when a party to the
contract without lawful excuse does not fulfil his contractual
obligation or by his own act makes it impossible, that he should
perform his obligation under it confers a right of action for damages
on the injured party.
6. By impossibility or frustration: if an agreement contains an
undertaking to perform a impossibility it is void ab
initio.frustration will discharge the contract in the following ways:-
a) Destruction of subject matter, e.g. where a hall is rented for
performances /concerts on certain of the subject matter, e.g. where a
hall is rented for performances /concerts on days but it is later
destroyed by fire (give example of college building).
b) If the even stated does not occur: A and B contract to many each
other before the time fixed for marriage A goes mad. The contract
becomes void.
c) Death or personal incapacity: especially for personal service
contracts, reference concerts.
d) Change of Law: a contract legal at the time of the formation may
become illegal due to change of law.
e) Government interference: a contract is discharged by unexpected
government interference causing a fundamental change of circumstances
from that contemplated by the parties when the contract was made.
REMEDIES FOR BREACH OF CONTRACT
A remedy is the means given by law for the enforcement of a right.
When a contract is broken the injured party has one or any of the
following remedies.
1. Rescission of the contract: occurs where a party sues to treat the
contract as rescinded and refuses further performances. Where a party
treats the contract as rescinded he makes himself liable to restore
any benefits ha has received under the contract to the party from whom
such benefits were received.
But if a person rightfully rescinds he is entitled to compensation for
any damage, which he has sustained through non-fulfilment of the
contract. By the other party
2. Damages: this is a monitory compensation allowed to the injured
party by the court for the loss or injury suffered by him by the
breach of conctact.the purpose of awarding damages for the breach of a
contract is to put the injured party in the same position, so far as
money can do it, as if he had not been injured.
Classification of damages:
1. Damages arising naturally-(ordinary damages)they are recovered
which are as naturally and directly arose in the usual course of
things form the break. They must be proximate consequences of the
breach of contract.
2. Special damages: are those which do not arise naturally from the
breach of contract, but result from some peculiar circumstances. They
must be specifically proved.
3. Exemplary damages: are meant to punish the promise breaker and to
deter others from committing similar breaches.
4. Nominal damages: are awarded where the plaintiff has proved a
breach of contract without suffering actual loss. The sum awarded is
usually very normal.
5. Contemptuous damages: are awarded by the court when satisfied that
the action should not have been bought by the plaintiff. The court may
award five cents to the plaintiff as damages to express its contempt
of his conduct in bringing the action
6. Unliquidated damages: are damages assessed by courts when breach of
contract takes place and the innocent party sues the defendant. the
onus lies on the plaintiff to produce documentary proof/evidence of
the loss he has incurred.
7. Liquidated damages: is the amount fixed by the parties as damages
to be paid in case either party commits the breach of contract.
8. Penalty clause a sum agreed in a contract to be forfeited on a
breach of contract if a security for the performance of the contract.
3. Specific performance: this is an order of the court requiring a
party to carry out a contractual obligation. It is usually granted in
the following cases:-

i. Where a contract is for sale of land.

ii. Where the contract is for taking debentures in a country.
iii. Where the contract is for sale of rare goods which are not easily
available in the market or the value of such could not be measured in
money.
Specific performance is not granted in the following cases:-
i. Where damages could provide an adequate remedy.
ii. Where the contract is to render personal services.

iii. Where one party to the contract is an infant/minor where the

contract is to lend money.
4. Injunction; this is an order of the court restraining the doing
continuance or repetition of a wrongful act. It may be obtained to
enforce a negative contractual term where an order of specific
performance would not be available.
The grant of an injunction by the court is normally discretionary.
5. Quantum meruit
A right to sue on quantum meruit (as much as earned) arises where a
contract, partly performed by one party has become discharged by the
breach of the contract by the other party. This right is founded on
implied promise by the other party arising from the acceptance of a
benefit by that party. In the case Of Planche V Colbun 1969 the
plaintiff agreed to write an article for which he was to receive 100.
The publishers then abandoned the idea when the work was partly
finished. The plaintiff was awarded 50 for his half finished work.

LAW OF TORT
definition of a Tort
the word tort is derived from the Latin term tortum which means to
twist. It therefore includes that conduct which is not straight or
lawful , but on the other hand , twisted, crooked or unlawful. It is
equivalent to the English term wrong

A tort may be defined as a civil wrong which is redressible by an

action for unliquidated damages, and which is other than a mere breach
of contract or breach of trust. It may therefore be observed that;-
a) a tort is a civil wrong where the injured party i.e. the plaintiff
institutes civil proceedings against the wrong doer i.e. the defendant
. in such a case the remedy is damages
b) tort is other than a mere breach of contract or breach of trust. A
tort is that civil wrong which is not exclusively any other kind of
civil wrong. If the civil wrong is found to be neither a mere breach
of a contract nor any other civil wrong then it is likely to be a
tort.
c) Tort is redressible by an action for unliquidated damages. Damages
are the most important remedy for a tort. After the wrong has been
committed it is the money compensation which may satisfy the injured
party.

Essentials of a tort
To constitute a tort, it is essential that the following two
conditions are satisfied:-
1. There must be some act or omission on the part of the defendant
i.e. the defendant must have done some act which he was not expected
to do or , he must have omitted to do something which he was supposed
to do. Either a positive wrongful act or an omission which is
illegally made will make a person liable.
2. The act or omission should result in legal damage (injuria) i.e.
violation of a legal right vested in the plaintiff. Unless there has
been violation of a legal right there can be no action under law of
torts. Damage without the violation of a legal right is not actionable
in a court of law
Winfield defined tortuous liability in the following words:-
Tortuous liability arises from the breach of a duty primarily fixed
by law, this duty is towards persons generally and its breach is
redressible by an action for unliquidated damages.
This definition can be explained as follows:-
1. In tort duties are primarily fixed by the law in tort duties are
mainly fixed by law
2. The duty is towards persons generally, that is towards the law
recognizes that where a person owes a duty to another to exercise
reasonable care and skill in some activity; a breach of that duty
gives rise to a claim in tort.
3. The breach of the duty is redressible by an action for unliquidated
damages. The claim is for unliquidated damages, that are a sum of money
which is elastic and not predetermined. The plaintiff can recover such
an amount as the court, in its discretion, decides to award.
Distinction between a tort and a contract
1. Like a tort a breach of a contract is also a civil wrong giving
rise to an action for damages. But the duty in tort is mainly fixed by
law while in contract it is fixed by the parties themselves.
2. In a tort the duty is towards persons generally but in a contract
it is towards a specific person or persons.
3. A tort is redressible by an action for unliquidated damages: in
contract damages awarded are liquidated.
4. Damages in tort put the plaintiff in the position he would have
been in had the tort not been committed, whereas damages in contract
put him in the position he would have been in had the contract been
performed.
5. In relation to the running of time under limitation of action, cap
22, in the tort, time runs from the occurrence of the damages, in
contract from the date of the breach.

Specific torts
Negligence
Negligence as a tort is the breach of a legal duty to take care which
results in damage, undesired by the defendant, to the plaintiff.
Negligence occurs when the defendant:-
i. Owes a duty of care to the plaintiff. A person may not be
responsible for every careless act or even for every careless act that
causes damages. He will only be liable in negligence if he is under a
legal duty to take care. In the case of donoghue v- Stevenson 1932. a
friend of Mrs. .donoghue handled to her a bottle of ginger beer which
had been manufactured by the defendant and passed on to a retailer who
sold it to Mrs.donghues friend . Mrs. Donghue alleged that the bottle
contained remains of a snail and that she suffered injuries as a
result of drinking and seeing the contaminated contents of the bottle
. it was held that the facts disclosed a duty of care in the defendant
towards her.
ii. Breaches that duty by failing to come up to the standard of care
required by law. The law imposes on all persons the duty to exercise
the care, skill and foresight of a reasonable man or an average person
of prudence and competence. Therefore a person cannot be made liable
on the ground that he failed to take extraordinary care and on the
other hand it is no defence for a person whose conduct falls short of
that standard that he acted to the best of his judgment or ability.
Note: negligence can be defined as an omission to do something which a
reasonable man guided upon those considerations which ordinarily
regulate the conduct of human affairs , would do, or doing something
which a prudent and reasonable man would not do. the standard of care
demanded by the law of negligence is that of the hypothetical
reasonable man in that situation. The question to be asked in each
case is whether the defendant has acted as a reasonable man would have
acted in the situation in which he found himself. If the defendants
conduct fails to pass this test, he is said to be in breach of duty of
care.
iii. Thereby causes some legally recognized damage to the plaintiff .
actual damage or injury is a necessary element of tort liability for
negligence. Not only must there be damage; it must have been caused
the defendants negligence and must not be too remote a consequence.
Defamation
This is a tort which protects a persons interests in his reputation.
Defamation can be defined as the publication of a statement which
reflects on a persons reputation and tends to lower him in the
estimation of right thinking members of the society generally or tends
to make them shun or avoid him.

Defamation is of two kinds, namely:-

a) Libel which consists of a defamatory statement or representation in
a permanent form. Statements or representations in books, articles.
Newspapers, letters or in a photo form, cartoon or effigy are libels.
b) Slander which consists of a defamatory statement in a temporary and
transient form spoken word, gestures or matriculate but significant
sounds by themselves constitute slander.
Broadcasting, radio, television and theatrical performances are
publication in permanent form and are therefore libels.
Other differences between libel and slander are that libel is both a
tort and a crime, whereas slander is only a tort.
Second, libel is actionable per se, whereas slander requires proof of
special damage. Special damage here means material loss capable of
estimation in money.
Ingredients of liability
whether defamation consists of libel or slander the following
ingredients or requisites are common to both, and must be proved by
the plaintiff.

1. The statement or words complained of must be defamatory.

A defamatory statement is one which has a tendency to injure the
reputation of the person to whom it refers. Which tends to lower him
in the estimation of right thinking members of society generally or
must tend to cause him to be shunned or avoided. The statement is
judged by the standard of an ordinary right-thinking member of
society.
Words may be defamatory in their ordinary and natural meaning.
However, some words are not defamatory in their natural and ordinary
meaning, but may be so because of a hidden meaning or innuendo.
2. The statement must make reference to the plaintiff.
There must be a sufficient reference to the plaintiff in the
defendants statement. The identification of the plaintiff depends
upon whether a reasonable person would believe that the words
complained or referred to him. Note that there is no requirement that
the defendant should have intended to refer to the plaintiff.
Where the defendants statement is directed to a class of persons , no
individual belonging to the class is entitled to say that the
statement was written or spoken of himself. For example if one wrote
that all lawyers are thieves, particular lawyer could sue him unless
there was something to point to the individual.
3. There must be publication of the defamatory statement.
Publication means communication of the statement at least to one
person other than the person defamed. It is an essential requirement
of defamation. A private and confidential communication to a single
individual is sufficient. Communication to a person defamed himself is
not sufficient publication. Nor does communication between husband and
wife amount to publication.

Defences to defamation.
1. Un-intentional defamation: under section13 of defamation act cap 36
laws of Kenya, it is a defence to a publisher who did not intend to
refer to the plaintiff and that the words are not defamatory on the
face them and the publisher did not know of the circumstances which
made them defamatory.
Under the terms of this section the publisher may make an offer of
amends to the aggrieved party i.e. publishing a suitable correction
and apology. If the offer of amends is accepted by aggrieved party and
duly performed, no proceedings for libel or slander may be taken
against the party making the offer.
2. Justification of truth: this is the primary defence to defamation.
Defamation cannot be committed by telling the truth. Truth is a
defence because the law will not permit a person to recover damages in
respect of an injury to a character which he does not or might not
possess. The burden is on the defendant to establish the truth of what
he said.
3. Fair comment: this is a defence to an action for defamation that
the statement is a fair comment on a matter of public interest. The
defence stems from the belief that fair and honest criticism in
indispensable in every freedom-living society. The requisites of this
defence are as follows:-
i. The matter commented on must be of public interest.
ii. The comment must be an option and not ascertain of facts.
iii. Comment must be fairthat is based on facts and not false statement.
iv. There must be absence of malice i.e. evil motive.
4. Privilege: this is used in the sense of an excuse or immunity
conferred by law on statements or communications made on certain
occasions called privileged occasions. Absolute privilege affords
complete protection to the maker of a statement even if it is untrue
and the defendant was motivated by malice. It is for the plaintiff to
prove malice. Qualified privilege may arise when a statement is made
for the protection of the public interest or for the protection of
private interest of one or more persons. General defences.
When the plaintiff brings an action against the defendant for a
particular tort proving the existence of all the essentials of that
tort, the defendant may avoid liability by raising some defences which
include the following:-
5. Volenti non fit injuria: when a person consents to the infliction
of some harm upon himself, he has no remedy for that tort. In case
the plaintiff voluntarily agrees to suffer some harm, he is not
allowed to complain for that and his consent serves as a good defence
against him. No man can enforce a right which he has voluntarily
waived or abandoned e.g. If you invite somebody to your house you
cannot sue him for trespass.
6. Inevitable accident: inevitable accident means an unexpected
injury, and if the same could not have been foreseen and avoided
in spite of reasonable care on the part of the defendant, it is
inevitable accident. It is a defence if the defendant can show that he
neither intended to injure the plaintiff nor could he avoid the injury
by taking reasonable care.

THE LAW OF SUCCESSION

- The law of succession deals with the ways /manner in which the
property of a deceased person devolves/passes on to his heirs.
- A person may die before writing a will or after doing one .if he
dies before doing a will he is said to have died intestate while if he
passes away after doing a will, he is said to have died testate.
- The law governing these issues is known as the law of succession , cap 160(k)
- Section 4 states that
Except as otherwise expressly provided in this act or by any other written law-
a) Succession to immovable property in Kenya of deceased person shall
be regulated by the law Kenya, whatever the domicile of that person at
the time of his death;
b) Succession to the movable property of a deceased person shall be
regulated by the law of the country of the domicile of that person at
the time of his death.
- A male person who is of sound mind, female person, whether married
or unmarried provided he/shes not a minor may dispose of all or any
of his free property by will and may thereby make any disposition by
reference to any secular or religious law that he chooses.
- A will means the legal declaration by a person of wishes or
intentions regarding the disposition of his property after his death
,duly made and executed according to the provisions of part 11 of the
Act, and includes a codicil (a codicil is an addendum or addition to a
will, which may be modifying the will or annulling it.
- A will may be either orally or in writing.
- An oral will shall be invalid unless-
a) It is made before two or more competent witnesses; and
b) The testator dies within a period three months from the time of
making the will:
- Provided that an oral will made by a member of the armed forces or
merchant marine during a period of active service shall be valid if
the testator dies during the same period of active service
notwithstanding the fact that he died more than three months after the
date of making the will.
- (2) An oral will shall be invalid if, and so far as, it is contrary
to any written will which the testator has made whether before or
after the date of the date of the date of the oral will and which has
no been revoked as provided by the act.
- No written will shall be valid unless-
a) The testator has signed or affixed his mark to the will, or it has
been signed by some other person in the presence and by the direction
of the testator;
b) The signature or mark of the testator, or the signature of the
person signing for him, is so placed that shall appear that it was
intended thereby to give effect to the writing as a will;
c) The will is attested by two or more competent witness, each of whom
must have seen the testator sign or affix his mark to the will, or
have seen some other person sign the will, in the presence and by the
direction of the testator , or have received from the testator a
personal acknowledgement of his signature or mark, or of the signature
of that other person ;and each of the witness must sign the will in
the presence of the testator , but it shall not be necessary that more
than one witness be present at the same time and no particular form of
attestation shall be necessary.
- No will or codicil, or any part thereof, shall be revoked otherwise
than by another will or codicil declaring an intention to revoke it,
or by the burning, tearing or otherwise destroying of the will with
the intention of revoking it by the testator, or by some other person
at his direction.

(2) A written will shall not be revoked by an oral will.

- However, a will shall be revoked by the marriage of the maker; but
where a will is expressed to be made in contemplation of marriage with
a specified person, it shall not be revoked by the marriage so
contemplated.
- A dependant means-
a) The wife or wives, or former wife or wives, and the children of the
deceased whether or not maintained by the deceased immediately prior
to his death;

b) Such of the deceaseds parents, step-parents, grand-parents,

grandchildren, step-children, children whom the deceased had taken
into his family as his own, brothers and sisters , and half-brother
and half-sisters, as were being maintained by the deceased immediately
prior to his death; and
c) Where the deceased was a woman , her husband if he was being
maintained by her immediately prior to the date of her death.
- A court may make provision for dependants other than the way
provided by the will. In making provision for a dependant the court
shall have complete discretion to order a specific share of the estate
to be given to the dependant, or to make such other provision for him
by way of periodical payments or a lump sum, and to impose such
conditions ,as it thinks fit

INTESTACY

- A person is deemed to die intestate in respect of all his free

property of which he has not made will which is capable of taking
effect.
- Where an intestate has left one surviving spouse and a child or
children, the surviving spouse shall be entitled to-
a) The personal and household effects of the deceased absolutely; and
b) A life interest in the whole residue of the net intestate estate:
- Provided that, if the surviving spouse is a widow, that interest
shall determine upon her re-marriage to any person.
- A surviving spouse shall, during the continuation of the life
interest so provided, have a power of appointment of all or any part
of the capital of the net intestate estate by way of gift taking
immediate effect among the surviving child or children, but that power
shall not be exercised by will nor in such manner as to take effect at
any future date.
- Where any child considers that the power of appointment under the
above provision has been unreasonably exercised or withheld, he or,
if a minor, his representative may apply to the court for the
appointment of his share, with or without variation of any appointment
already made.
- Where an application is made as is provided immediately above, the
court may award the applicant a share of the capital of the net
intestate estate with or without variation of any appointment already
made, and in determining whether an order shall be made, and if so
what order, shall have regard to-
 a) The nature and amount of the deceaseds property;
b) Any past, present or future capital or income from any source of
the applicant and of the surviving spouse;
c) The existing and future means and needs of the applicant and the
surviving spouse;
d) Whether the deceased had made any advancement or other gift to the
applicant during his lifetime or by will;
e) The conduct of the applicant in relation to the deceased and to the
surviving spouse;
f) The situation and circumstances of any other person who has any
vested or contingent interest in the net intestate estate of the
deceased or as a beneficiary under his will. If any; and
g) The general circumstances of the case including the surviving
spouses reasons for withholding or exercising the power in the manner
in which he or she did, and any other application made under this
section.
- Subject to the provisions of the act and subject to any appointment
or award made under this section. The whole residue of the net
intestate estate shall on the death, or, in the case of a widow,
re-marriage , of the surviving spouse, devolve upon the surviving
child, if there be only one, or be equally divided among the surviving
children.
- Where the intestate has left one surviving spouse but no child or
children, the surviving spouse shall be entitled out of the net
intestate estate to-
a) The personal and household effects of the deceased absolutely ;and
b) The first ten thousand shillings out of the residue of the net
intestate estate, or twenty per centum thereof. Whichever is the
greater; and
c) A life interest in the whole of the remainder:
- Provided that if the surviving is a widow that life interest shall
be determined upon her re-marriage to any person.
- The minister may, however, vary the amount specified above.
- Upon the determination of a life interest as created above, the
property subject to that interest shall devolve in the order of
priority set out in the act.
- Where an intestate has left a surviving child or children but no
spouse, the net intestate estate shall , subject to the provisions of
that the property devolving upon a child be held in trust and that any
previous benefits be brought into account ,devolve upon the surviving
child , if there be only one, or be equally divided among the
surviving children ,

Where an intestate has left no surviving spouse or children, the net intestate estate shall
devolve upon the kindred of the intestate in the following order of priority
a) Father; or if dead
b) Mother; or if dead
c) Brothers and sisters ,and child or children of deceased brothers
and sisters, in equal shares; or if none
d) Half brothers and half sisters and any child or children of
deceased half-brothers and half-sisters, in equal shares; or if none
e) The relatives who are in the nearest degree of consanguinity up to
and including the sixth degree, in equal shares.
- Failing survival by any of the persons mentioned in paragraphs (a)
to (e) above, the net intestate estate shall devolve upon the state ,
and be paid into the consolidated fund .
- Where an intestate has married more than once under any system of
law permitting polygamy, his personal and household effects and the
residue of the net intestate estate shall , in the first instance, be
divided among the houses according to the number of children in each
house, but also adding any wife surviving him as an additional unit to
the number of children.
- The distribution of the personal and household effects and the
residue of the net intestate estate within each house shall then be in
accordance with the rules set out herein above.
- A court may
a) Where a deceased person is proved(whether by production of a will
or an authenticated copy thereof or by oral evidence of its
contents)to have left a valid will, grant, in respect of all property
to which the will applies, either
i. Probate of the will to one or more of the executors named therein; or
ii. If there is no proving executor, letters of administration with
the will annexed;
- (b)If and so far as there may be intestacy, grant, letters of
administration in respect of the intestate estate.
- Court may according to the circumstances of each case, limit a grant
of representation which it has jurisdiction to make.

CONTRACT OF EMPLOYMENT
The ordinary principle of the law of contract applies in a contract of
employment.
A contract of employment to be legally binding must fulfil all the
normal contractual requirements viz:-
1. Offer and acceptance the offer must contain the terms of the
contract or indicate where they may be found. No particular form is
required, the contract may be oral or in writing.
2. Consideration the consideration is the employees promise to pay
the agreed wages in return for the employees promise to perform a
particular task. Courts will not be concerned with the adequacy of the
consideration, although there is legislation aimed at protecting
certain classes of low paid workers.
3. Capacity: there is some restriction on the contractual capacity of
minors. Protection is given to women and children.
4. Legality a contract of employment must not be tainted with
illegality e.g. a contract which deliberately seeks to defraud the
government revenue.
Distinguish between the contract of employment and an independent contractor.
Where there is a contract of employment, there is the relationship of
employer and employee. This relationship imposes certain rights and
duties on each party.
To determine the nature of the relationship courts will ask the
following questions:-
1. What does the contract say? Does the contract call the worker an
employee? if the employer does not want it to be construed as a
contract of service he should state in the contract that it is a
contract for services or that the worker is an independent contractor
and shall be personally liable to third parties for any damage or
injury arising out of work.
2. Does the contract read like a contract of employment? if the
contract includes not only wages, but other details regarding
holidays, superannuation, pension, sick benefits, injury benefits and
hours of work, then contract is to undertake sound particular task,
then prima facie it is a contract for service.
3. What measure of contract is exercised over the work? The greater
the amount of direct control exercised over the person rendering the
services by the person contracting them,
The stronger the probability that the services rendered are of a
professional nature and that the contract is not one of personal
service. However, control in itself can never be the sole deciding
factor.
Importance of the relationship between employer and employee.
An employer is usually responsible for the wrongful acts of his
employees, committed in the course of the employment. He is not
usually responsible for the wrongful acts committed by independent
contractors but is liable for damage to third parties in the following
circumstances:-
1. Negligent selection where the employer is negligent in selecting
the contractor , i.e. he does not ascertain the contractors
competence to do that particular job.
2. Negligently: gives instruction where an employer issues,
authorizes or reties a negligent order or instruction, the third party
has a good claim against the employer.
3. Strict liability: this usually refers to the employers statutory
duty in relation to the fencing of machinery under the facilities act.
other instances where the employer is liable for the wrongful acts of
independent contractors and cannot use the defence that he did not
perform the himself are as follows:-
a) Withdrawal of support from a neighbours land. Where the activities
of a contractor working on the employers land does something so as to
cause subsidence on a neighbours land.
b) Work carried out on or near to a highway. Because of the obvious
danger to members of the public using the highway.
c) The rule of Raylands v pitcher, where dangerous or unpleasant
substance escapes onto a neighbours land or property. In this case
water seeped onto Raylands land through a mineshaft and caused
damage.
d) Nuisance where dust and noise inevitable from an extensive building
or construction operation affect neighbouring property or persons.
e) Acts causing fire or explosion: extra hazardous acts which by their
very nature involve, in the eyes of the law, danger to others, e.g.
where implements such as flame bearing equipment or explosives are
incidental to the work being performed.
f) Contractor breaks the law: if the employer engages a contractor to
perform an unlawful task he cannot evade liability for any resultant
damages.
g) Safety of employees: an employer cannot escape liability for breach
of his duty to provide safe working conditions etc by delegating this
duty to an independent contractor.

Contents of a contract of employment.

It may be written or oral. However, it has to contain the following

information:-
- The names of the employer and employee.
- The date when the employment began.
- Whether the employment counts as a period of continuous employment
with a previous employment, where this is so . this is important
because the rights of an employee to complain of unfair dismissal or
to claim redundancy payment depend upon whether that employee has
served the necessary period of continuous employment.
Contents terms of the employment.
The written particulars then go on to set out the terms of the
employment. The terms which must be given are:-
1. The scale or rate of pay and the method of calculating pay where
the employee is paid by commission or bonus.
2. When payment is made-weekly, monthly..
3. Hours to be worked.
4. Holiday entitlement and provision relating to holiday pay.
5. Sick pay and injury arrangement must be set out.
6. Whether or not there is a pension scheme.
7. The length of notice which the employee must give and the length of
notice the employee is entitled to receive.
8. The job title, which is important in dealing with redundancy cases
where to justify that a dismissal is because of redundancy and is not
an unfair dismissal, the employer may show that there has been a
reduction in work of a particular type. The job title indicates what
type of work the employee does.

Duties of an employer
- To provide work to be done.
- To provide remuneration.
- To provide sick pay.
- To provide pay during suspension.
- To provide maternity leave.
- To make payments during leave-off.
- To allow time off for carrying out union duties to trade union officials
- To provide itemized pay-slips (statements)
- To indemnify any expenses, losses and liabilities incurred by an
employee while carrying out duties.
- Non-contractual duties include regard to health, safety and welfare
of his employee.

Duties of an employee
- To use reasonable skill and care in his work.
- To carry out lawful reasonable instructions.
- The duty to give faithful service (or the duty of fidelity).
- To keep confidential information of his employer secret e.g. trade secrets

Termination of the contract of employment.

A contract of employment may be terminated in any of the following ways:-
1. Dismissal occurs where an employee is compelled to do so by the
conduct of the employer

Reasons for dismissal

- Lack of capability may be due to lack of skill or mental or physical health.
- Misconduct on the part of the employee.
- Redundancy.
- Failure to comply with the terms of employment
- Commission of a crime by the employee.
Remedies for unfair dismissal
- Conciliation between the parties.
- Seek reinstatement or re-engagement or
- Claim compensation
2. Redundancy occurs when the services of employees are dispensed
with because the employer ceases, intends to cease carrying on the
business or to carry on business at the place where the employee was
employed or does not require so many employees to do work of a certain
kind.
3. By notice a contract of service can be brought to an end by
either party giving notice to the other or payment of salary in lieu
of notice
4. By agreement as other contract, the parties to a contract of
employment may end the contract by agreement
5. By passage of time in case of a fixed term contract, say for three
years, the contract will terminate at the end of three years.
6. By frustration a contract of service can be discharged by
frustration which would be incapacity such as illness, death.
7. Dissolution of partnership a person employed by a partnership
which is dissolved is regarded as dismissed on dissolution of the
firm.
8. Bankruptcy of the employer or employee may lead to termination of
the contract because either party will lack the capacity to contract.
9. Retirement takes place when an employee attains the retirement
age agreed between the parties .in most situations it falls between 55
65 years.

The law relating to trade disputes in Kenya is found in Kenya is found

in an act of parliament known as the labor relations act, no. 14 of
2007, laws of Kenya. It came into operation on the 26th October 2008.
the act replaced the trade disputes act, cap 234 (now repealed)

The functions of the act are set out by the preamble to the acts as follows:

1. To consolidate the law relating to trade unions and trade disputes,

2. To make provision for settlement of trade disputes generally.
3. To provide for the regulations and democratization of trade unions
and employers organizations or federations
4. To promote sound labor relations through the protection and
promotion of freedom of association , the encouragement of effective
collective bargaining.
5. To promote orderly and expeditions dispute settlement , conducive
to social justice and economic development.
6. To provide for the establishment of the national labour board and a
standing industrial court.
7. To control and regulate strikes and lock-outs.
8. To make provision regarding the collection of union dues.
9. To make provision for matters incidental thereto i.e. (subordinate
to something of greater importance) minor issues related to the above.

Key Terms in the Act

1. Collective bargaining.
This means an agreement made between a trade union and an employer or
organization of employers which relates to terms and conditions of
employment whether or not enforceable in law and whether or not
concluded under machinery for negotiation.

2. Trade Dispute
This means a dispute or difference between
a) Employers and employees
b) Employees and employees
c) Employee and trade unions
d) Trade unions and trade unions
Connected with the employment or non-employment or with the terms of
employment or with conditions of labour, of any person and includes
disputes regarding
i. Dismissal or suspension of employees
ii. The redundancy of employees
iii. Allocation of work or
iv. Recognition agreements and also includes
v. An apprehended trade dispute.

This definition is very wide and is designed to encompass all

possible areas of conflict between trade union, employers with the
intention of subjecting them to the provisions of the labor relations
act.
A trade dispute is an occasion which gives rise to a difference
between one and either of the above-mentioned parties. This is an
essential feature of a trade dispute and should concern the employment
or non-employment, the terms of employment, or the conditions of labor
of any person.

3. Strike
This means the cessation of work by a body of persons employed in any
trade or industry acting in combination or a concerted refusal , or a
refusal under a common understanding of any number of persons who are
or have been so employed , to continue to work or to accept employment
and includes any interruption or slowing down of work by any number of
persons employed in a trade or industry acting in, concert or concert
or under a common understanding (including any action commonly known
as a sit down strike or go slow).
It is a withdrawal of labour by employees. It is a situation where, as
a consequence of a dispute, the employees decide that they shall not
work until the dispute is resolved to their satisfaction .
4. Lock-out
this means the closing of a place of employment or the suspension of
work , or the refusal by an employer to continue to employ any number
of persons employed by him in consequence of a dispute , done with a
view to compelling persons employed by him, to accept terms or
conditions of or affecting employment .

5. Recognition Agreement
This means agreement in writing made between a trade union and an
employer or organization of employers which provides for recognition
of the trade union as the body entitled to represent the interests of
those of its members who are specified in the agreement and who are or
have been employed by the employer or any of the employers comprising
that organization.

General Provisions of The Labour Relations Act.

The act generally provides for:
1. The settlement of trade disputes
2. Establishment of procedures of settling disputes in essential services.
3. Establishment of boards of inquiry to investigate special disputes
by the minister for labour.
4. Establishment of the industrial court.
5. Control and regulation of strikes and lock-outs
6. Provision for collection of union dues.
7. Regulation of negotiation procedures for both trade unions and employees.

CAUSES OF DISPUTES.
It is important to note that the act does not state any or some of the
causes of disputes. They may thus be wide and varied. A dispute can be
defined as a disagreement / grieved between the employer and workers
which is connected with employment or the terms and conditions of
about any person.
A grievance is a work related complaint, discontent or dissatisfaction
expressed openly or otherwise by a worker or group of workers. It can
be valid or invalid.
Misunderstanding refers to those types of disputes which occur when
clauses of the labour contract are understood differently by the
management (employers) on one hand and employee(s) on the other hand.
Causes of Disputes
1. Personal problems of employees or employers; here under one would
find a plethora or issues, as seen above in regard to strained
employer-employee relationship.
2. Internal union problems issues
3. Unfavourable labour contract language.

Signs of Potential Labour Contract Language

1. Decrease of interest in work.
2. Negative statement about the job, colleague, supervisors or management.
3. Unwillingness to co-operate job employer/employees
4. Poor job performance.
5. Being away from job without reason.
6. Slowing down on the job.

Minimizing Disputes
1. Treating workers with dignity.
2. Recognizing and appreciating the good performed by workers,
3. Seeing issues from workers point of view.
4. Identifying and eliminating sources of imitating to workers promptly
5. Giving clear orders and explaining policies
6. Being objective for and consistent in disciplinary action against workers
7. Knowing the labour contract terms and applying them accordingly.
8. Resolving problems through the employer, FKE, unions etc

STRIKES
The strike is a weapon in the harmony of working class to fight
collectively and to pressure on the employer. It is a weapon which is
made use of by the labour class to safeguard their interests both
economic and cultural.

The act defines a strike as follows;

the cessation of work by a body of persons employed in any trade or

industry acting in combination or a concerted refusal, or a refusal
under a common understanding of any number of persons who are or have
been employed, to continue to work or to accept employed in any trade
or industry acting in concert or under a common understanding
(including any action commonly known as a sit down strike or a go
slow

Essential ingredients of a strike

1. There must be people employed in a industry or trade.

2. The cessation of work, refusal to work or discontinuance of work in
combination is essential to constitute a strike (can one person go on
strike?)
3. A concerted action: the cessation of work must be a concerted
action for the enforcement of an industrial demand supported with a
common intention on a number of employees.
4. The relationship of employment: there should be a relationship or
contract of employment between the striking employees.

The Industrial Court

The industrial court which is one of the control organs in trade

dispute resolution was established in 1964. its establishment was as a
result of a consultations and negotiations between the government ,
Kenya federation of labour (COTU) and FKE

Its existence was sanctified by Sec.14 (1) of the trade dispute act
(now repealed)

Composition
1. Such number of judges, but not less than two as may be determined
by the president. The appointment of a judge lasts for 5 years.
Anybody appointed to be a judge in this court should be an advocate of
the high court of Kenya of not less than 7 years standing.
2. Eight other members appointed for terms of not less than three
years by the minister for labour after consultation with COTU and FKE.
3. When it appears expedient a judge may appoint two assessors, one to
represent employees, from the panel of assessors appointed by the
minister to assist in the determination of any trade dispute before
the court.
Some of the members appointed must be learned in economics and
accounting hence the need to consult the minister of finance
Every appointment made shall be notified in the Kenya gazette-
The industrial court carries out judicial functions on all matters
pertaining to labour disputes between employers and employees. The
main objective of the industrial court is settlement of trade disputes
which are referred to it by either party where other producers have
failed.

Powers of the industrial court (sec.12)

1. To accept a CBA for registration.

2. With the consent of all parties accept a CBA for registration with
such amendment & modification, as the court may consider necessary or
desirable.
3. Refuse to accept a CA for registration and refer the agreement back
to the parties for further negotiation.
OTHER METHODS OF SOLVING DISPUTES.
ARBITRATION
This means settlement of any commercial dispute between two by one or
more persons called arbitrators. The labour relations act does not
specifically mention arbitration as one of the ways of resolving an
industrial dispute. However, since it permits CBA provisions to bind
parties thereto, it would appear that of the CBA does provide for
arbitration, and then the dispute would be resolved through that process.
Needless to say that once a matter is before the industrial court,
then by virtue of the arbitration
procedure is ousted . When parties have entered into an agreement to
refer all disputes between them either in present or future, they
cannot bring an action in a court of law relating to the same subject
matter. If any of the parties disregards the agreement and commences
legal proceedings, the other party may apply to the same court for
stay of the proceedings provided the following conditions are
fulfilled .the person appointed to determine differences and disputes
is called the arbitrator, the proceedings before him are called
arbitration and his decision is called an award.

Arbitration Agreement
Arbitration agreement is a written agreement to refer present or
future differences to arbitration whether an arbitrator is named or
not.
When parties have entered into an agreement to refer all disputes
between them either in present or future, they cannot bring an action
in a court of law relating to the same subject matter. If any of the
parties disregards the agreement and commences legal proceedings, the
other party may apply to the same court for stay of the proceedings
provided the following conditions are fulfilled.

5. The proceedings relate to the same mater as that covered by the

arbitration agreement.
6. The applicant who has applied for stay was and is still ready and
willing to proceed with arbitration and to do everything necessary for
the purpose.
7. That there is no sufficient reason why the matter should not be
referred in accordance with the arbitration agreement.
8. The party asking for stay must not have delivered his pleading or
taken any other steps in the proceedings.

MEDIATION (the labour relations act does not specifically provide for
this procedure)
It is a process whereby a third party helps a trade union and the
management (employer) to reach an agreement. The third party is known
as a mediator. Mediators are generally experienced professionals who
are deemed suitable for such situations.
The role of the mediator is to assist the two parties to indemnify the
causes and the extent of their differences. He assists in settling a
dispute arising from the administration of the labour contract
resulting from the collective bargaining agreement and avoids work
stoppages or other labour unrests.
He must be accepted by both parties. The process of mediation may be
initiated by either party or by the ministry of labour.
Note that the mediator does not have powers to make final decisions
but rather to assist the parties to reach an agreement (CBA) with
terms acceptable to both parties.

CONCILIATION SEC 65
This is a voluntary process in which parties to a dispute invite a
third party where they have failed to agree. It is a process which
requires the consent of both parties.
The role of a conciliator is:-
- To listen to both parties.
- To identify the cause of the differences.
- To establish alternative solution and their various implications
- To clarify advise information and the way forward
- To influence positively the outcome of negotiations.

The advantages of conciliation are that parties may have options they
would not have or get a second thought. It can also be a face saving
act
Conciliation is normally voluntary, impartial, confidential, free of
charge and independent from the tribunals or the industrial court.

What is a trade union? sec. 2 of cap 14

It is an association or combination whether temporary or permanent of

more than six persons, other than staff association, employees
association or employees organization not deemed to be a trade union.
Note: unionsable employees definition

It is an organization of workers who have joined together so as to try

to improve their working conditions and protect their interests. It
includes employers associations
In order to maintain sound industrial relations, the government of
Kenya has allowed the formation of trade unions both for the workers
and employers under the labour relations act act 14 of 2007, laws of
Kenya.
The act provides for:
a) Conditions under which trade unions can be registered
b) Conditions under which registration may be refused by the register
of trade unions
c) It also regulates membership of the unions
d) It also regulates the appointment of their officials.
Functions of Trade Unions

1. To organize workers in a particular industry so that they can

exercise collective strength
2. Fight for the improvement of terms and conditions of employment so
that the employees can get more benefits from the employers
3. Protect the rights which the employees have fought for and achieved
4. Engage in educating the members for purpose they have better
knowledge of their social rights and obligations and their employment
situation in particular
5. Carry out research in order to obtain more information and
available to the members.
6. Investigating so that the income they receive may benefit the members
7. Represent workers in grievance handling
8. Represent workers at the industrial court
9. Organize and handle strikes and boycotts
10. To lobby for favourable legislation affecting workers
11. Representing members in discussions with the ministry of labour officials
12. generally take care of the welfare of the member

NEGOTIABLE INSTRUMENTS
- a negotiable instrument is a document which entitles a person to a
sum of money and which is transferable from one person to another by
mere delivery or by endorsement and delivery e.g. a cheque, bills of
exchange, promissory note.
- The word negotiable means transferable from one person to another in
return for consideration
- An instrument means a written document by which a right is created
in favour of some persons.

Characteristics of Negotiable Instrument

- It must be negotiable i.e. freely transferable from one person to another.
- The title to the instrument must be able to pass immediately upon
delivery and free from all defects
- It should be possible for the holder of the instrument to sue on the
instrument in his or her name and hence recover the amount of the
instrument from any party liable
- Certain presumptions apply to all negotiable instruments unless the
contrary is proved e.g.
- Every negotiable instrument is presumed to be made, drawn, accepted,
endorsed, negotiated or transferred for consideration . every
negotiable instrument bearing a date is presumed to have been made or
drawn on such a date.
- Every holder of a negotiable instrument is presumed to be a holder
in due course

Promissory Notes
- It is an instrument in writing containing an unconditional
undertaking , signed by the maker, to pay a certain sum of money only
to or to the order of a certain person or to the bearer of the
instrument.
Essentials of a Promissory Note
- It should be in writing
- It must contain a promise to pay
- The promise to pay must be definite and unconditional.
- It must be signed by the maker otherwise it will be incomplete and
of no effect
- It must point out with certainty as to who the maker is and the payee is
- The sum payable must be certain(specific)
- The promise must be to pay money and nothing else
- It must be payable on demand (immediately) or after a definite time
- Formalities like number, date, place and consideration are usually
found on the instrument although they are not essential in law.

Cheque
- A cheque is an unconditional order by a customer directed at his
bank requiring the bank to pay either to the customer or a third party
on demand a specific amount of money out of a customers account in
the same bank.

Essentials of a cheque
- It must be an order to the banker to pay
- The order must be unconditional
- It must be in writing like all negotiable instruments
- Drawer-drawee it must be drawn by one person upon another who must
be a banker
- It must have a specified both in figures and in words
- It must be dated
- It is payable on demand i.e. upon presentation

Crossed Cheques
- Crossing is an instruction given to the paying banker to pay the
amount of the cheque through the bank only and not directly to the
person presenting it to the counter.
- A cheque is crossed by drawing two parallel lines across the cheque
and in addition to that, words like not negotiable:, account payee
only may be added.
- Special crossing: on the cheque is a direction to the paying banker
to honour the cheque only when it is presented through the bank
mentioned in the crossing and no other bank.
- General crossing: is the drawing of two parallel transverse lines on
the face of the cheque.
- When a cheque has been presented for payment , the bank should take
precaution , while making payment and ensure that:
- The cheque presented is a proper form, is correctly dated, the
amount stated is certain, the place of payment is known and note the
time of payment.

Endorsement and Negotiation

- Endorsement of a cheque consists of the signature of the maker(or
drawer) of a cheque or any holder thereof for the purposes of
negotiation
- Negotiation means the transfer of an instrument from one person to
another. This can be done either by physical delivery or by
endorsement.

Rules Regarding Endorsement

- It must be regular and valid in order to be effective
- The signature on the cheque for the purpose of endorsement must be
that of the endorser or his agent duly authorized
- The endorser should spell his name in the same way as his name
appears on the cheque at its payee/endorser

Bills Of Exchange
- This is an unconditional order in writing , addressed by one person
to another, signed by the person giving it, requiring the person to
whom it is addressed to pay on demand or at a fixed or determinable
future time a sum certain in money to or to the order of a specified
person or to bearer.
- There are three parties to the bill of exchange:-
1. The person who gives the order to pay (drawer)
2. The person who is directed to pay (drawee)
3. The person to whom payment is to be made(payee)

Essential Elements of A Bill

- It must contain an order to pay and not a request
- The order must be unconditional
- It must be addressed from one person to another i.e. the payee and
the drawer must be named
- Payment must be on demand or at a definite time in future
- The sum payable must be certain
- It must contain the words the bearer i.e. the person to be paid
- It must be in writing i.e. on a piece of paper

Noting
- A bill of exchange or a promissory note may be dishonoured. Once
this happens, the holder should have it noted by a notary public.
- Noting means the fact that the bill has been dishonoured is recorded on it.
- The notary formally makes a demand for acceptance or payment upon
the drawee or acceptor and on his refusal to do so notes the same on
the bill
- Noting should be done within a reasonable time after dishonour and
the note must specify the following :-
1. Date of dishonour
2. The reason, if any, assigned for such dishonour
3. The notarys charges
4. If the instrument has not been expressly dishonoured, the reasons
why the holder treats it as dishonoured

Protesting
After recording a note of dishonour on the dishonoured instrument, the
notary public issues a certificate to this effect called protest
A protest is a certificate issued by the notary public attesting that
the bill or the note has been dishonoured
The protest issued should contain the following particulars:-
Either the instrument itself or a literal transcript of the instrument
The name of the person for whom and against whom the instrument has
been protested
Statement that payment or acceptance of better security has been
demanded of such person by the notary public, the terms of his answer
,if any, or a statement that he gave no answer, or that he could not
be found
When the note or bill has been dishonoured, the place and time of dishonour .
The signature of the notary public
Incase of an acceptance for honour or of a payment for honour, the
names of the person by whom and for whom it is accepted or paid.