PRESENTED BY STEPHEN, JOHN

(stephenjohn230@gmail.com)
WHAT IS CONTRACT?
A contract may be simply defined to mean an
agreement between two or more parties intended to
have legal consequences or an agreement supported
by consideration.
It is an agreement which is enforceable by law.
A contract must be an agreement. However, to
qualify as a contract, an agreement must meet a
number of tests. The main test you should look for is
whether or not the agreement is enforceable by law.
Not all agreements are enforceable by law.
 A contract is an agreement between two or
more persons and the agreement must contain
promise(s) which can be enforced or backed up
by law.
 It implies that there must be two or more parties
to the agreement.
 One party must make a proposal to which the
other party must assent or agree to. This is an
agreement. The ingredients of an agreement are
therefore offer and acceptance.
 Offer is invariably known as a proposal.
THE NATURE OF THE CONTRACT
Any valid contract is composed of six (6) elements, short
of which that contract becomes invalid. The elements of
a valid contract are as follows:
 Parties
 Offer and acceptance
 Consideration
 Intention to create legal relations
 Capacity
 Free consent
NOTE: These elements have been provided for under Section
10 of the Law of Contract Act (Cap 345 RE 2002)
 PARTIES
 The term contact presupposes the existence of two
sides. These are technically termed as parties to
contract.
 This implies that one side will be proposing something
to the other side for the purposes of acceptance.
 It will be surprising if one will talk to himself and then
later on claim to have formed a contract.
 Any contract or even an agreement requires two or
more parties in order to exist. The parties in question
could be in the form of either natural person or legal
person.
How Contract is Formed?
Contract is formed when one party makes offer to
another party and, that other party accepts that offer.

When the offer is made by the offeror/proposer and it

is accepted by the offeree, then the offer change its
name and it becomes agreement/promise/contract.

This agreement is also known as the promise.

Therefore when the offer is made and acceptance
is obtained parties to that offer and acceptance
are parties to the agreementparties
- to the
promise .
Once the promise is made both parties are bound
to implement the terms of that promise.
Any party who fails to implement/fulfill the terms
of the promise is said to have breached the
contractthe
- promise.
Such party may be punished by the court for
breach of the promise-may be liable under the
law of contract.
Offer
Definition of Offer:-
Section 2(1)(a) of the Law of Contract Act, CAP 345 RE
2002, defines the term offer as follows:-
Offer means signification(implication) of one person his
willingness to do or to abstain(withhold/refrain )
from doing anything, with the view of obtaining the
assent(consent ) of that other to such act or
abstinence.
Offer may be made is writing or orally.
Characteristics of Offer
i. Must be made willingly. No one should be forced
to make offer/proposal.
ii. The terms of the offer must be clear and certain.
Those terms must not be ambiguous and must
no change.
iii. Offer must be a final expression of the mind of
the offeror/proposer. Terms of the offer should
not change once they are made.
Types…
Types of Offer
i. Specific offer
This is the offer which is made to a specific known
person/offeree.
This type of offer shall be accepted by only that
person to whom it is made.

ii. Unilateral offer

This is the offer which is made to the general public-it
is not made to specific person. Any person who
sees it may accept that offer.
Unilateral offer normally is accepted by doing or fulfill
or implement what is required in the offer.
Case
Carlil vs. Carbolic Smoke Ball Co . (1892)2 QB 484
There was an advertisement on the newspaper that
whoever would buy and use smoke balls, which
were contraceptive against flue and influenza,
and yet contract such disease would be paid 100
pounds.
This is the offer which is made to the general
public-to no specific person. Any one who sees
that offer may accept it.
iii. Cross Offer
This is the type of offer in which the offeror and the
offeree exchange offer without them to know it. They
are the offer which changes directions, from one
person to another without knowing it, at that time
each makes the offer.
Example of cross offer:-
A intends to sell his car at Tshs. 5 million to X. So on
23/4/09 A writes a letter to X to inform X his intention
to sell him his car. At the same time X wishes to buy
the car of A and so without knowing the offer made to
him X writes a letter to A requesting him to sale his car.
iv. Counter Offer
This is the offer which comes from the offeree to
rectify the terms of the offer made to him by
the offeror.
Example of the Counter offer
P wants to build a residential house at Nzovwe. So
P writes a letter to TCB Co. Ltd, and asked the
company to build him that house, at Tshs. 59
million. The company after receiving the letter
of offer, replies by saying it would build the
house at Tshs. 90 million.
This reply of the company is counter offer to the
first offer.
 COMMUNICATION OF
OFFER
 Offer must be communicated. One cannot agree to
something or proposal which has not brought to his
knowledge. Therefore there cannot be acceptance
without offer.
 The communication of a proposal is provided for under
Section 4(1) of the Law of Contract Act.
 The communication of proposals are deemed to be
made by any act or omission of the party proposing, by
which he intends to communicate such proposal, and
which has the effect of communicating it.
 Communication of a proposal is complete when it comes
to the knowledge of the person to whom it is made.
 OFFER AND INVITATION TO
TREAT
An offer must be carefully distinguished from
an invitation to treat, which is an invitation to
another person to make an offer.
The main distinction between the two is that
an offer can be converted into a contract by
acceptance, provided the other requirements
of a valid contract are present, whereas an
invitation to treat cannot be “accepted”.
 TYPES OF INVITATION TO TREAT
(a) Goods displayed for sale in a shop.
The law says that display of goods in shop
windows or on shelves I‟m a self-service
store even with the price marked, does not
amount to a proposal. Rather the intention is
to invite persons to come forward and make
offers to buy. In Fisher v. Bell (1961) 1 QB
394,
 a shopkeeper displayed in his shop
window a knife with a price ticket bend it.
He was charged with offering for sale a
flick knife (a knife which opens by
pressing a button) in violation of section 1
(i) of the Restriction of offensive weapon
Act, 1959. The relevant provision reads in
“Any person who manufacture, sells
party:
r hires or offers for sale or binds or gives
any person... a flick knife shall be guilty
an offence.”
Bell had displayed a flick knife for sale.
The trial court decided that there had not
been an “offer for sale” of the flick knife.
On appeal to Queens Bench it was held
that in the absence of a definition of “offer
for sale” in the Act, the words were to be
construed as they are, in the law of
contract.
 The court observed:“It is clear that according
to the ordinary law of contract, the display of
an article with a price on it in a shop window
is merely an invitation to treat. It is in no sense
the acceptance of which constitutes a
contract.”
In short, display of goods with a price ticket
attached in a shop window or on a
supermarket shelf is not an offer to sell but an
invitation for customers to make an offer to
buy.
(b) General advertisement of goods
A unilateral contract is one sided contact.
A unilateral contract is a contract where only
one person makes a promise. A unilateral
contract is distinguished from a bilateral
contract; where there is a mutual exchange
of promises (each party to the contract
makes a promise).
(c) An invitation for tenders
Where goods are advertised for sale by tender,
the statement is not an offer, but an invitation to
treat; that is, it is a request by the owner of the
goods for offers to purchase them.
(d) An Auctioneer’s request for bids
An advertisement stabling that an action is so
be held, or a request for bids is an invitation to
treat, and not an offer to sell to the highest price.
The bid is the offer, and the fall of the
auctioneer‟s hummers is the acceptance. Until
this happens the bidder may retract his bid.
(e) A company prospectus
A prospectus or advertisement inviting the
public to subscribe for shakes or debentures is
an invitation to treat. The member of the public
makes the offer by completing and sending in
an application form. The company may accept
or reject.
In order for a unilateral contract to be
considered legally enforceable, the
promise must be considered an offer and
it must be accepted.
There are many different examples of
unilateral contracts. One common type is
the offer of a reward. An offeror might, for
instance, offer a T.shs 200,000/- reward if
his lost dog is returned safely. No one is
obligated to return his dog, so no contract
is created by the making of this offer.
However, it is an express promise and it is
clear how someone can accept to create a
binding contract: someone can bring back
the dog. If someone does indeed return the
dog, then the offer has been accepted and
a legally binding contract is created.
The dog owner thus has the obligation to
pay the T.shs 200,000/- reward and the
finder of the dog could file a lawsuit if the
dog owner failed to do so.
Acceptance
Definition of Acceptance
Section 2(1)(b) of the Law of Contract Act, defines the
term acceptance to mean:-
signification of assent to the proposal/offer by the
person to whom it was made.
From this definition we learn that acceptance should
only be made by the person to who the offer was made.
If the offer was made to a specific person then that only
may make acceptance.
If the offer was made to the general public then any
person may make acceptance.
Characteristics of Acceptance
i. Acceptance must be absolute and unqualified.
The offeree/proposee/aceptor is required to
accept the offer as it is, without adding
anything and without reducing anything from
the offer.
ii. Acceptance must be firm and final expression
of the mind/intention of the offeree.
iii. Acceptance must be made in response to /
exchange for the ooffer/propsal. The offer
must be made first, then acceptance of that
offer comes later/second.
If there was no offer made there will be no
acceptance.
Communication of
Acceptance
Normally each offer carries with it the mode of
communication of the acceptance. If the offer
does not state out the mode of communication of
the acceptance then the offerree/proposee may
communicate his acceptance in any reasonable
ways.
In any case communication of acceptance will be
regard as acceptance after that acceptance
becomes complete.
Completeness of the acceptance differs from one
from one mode of communication to another.
But what is important is for acceptance to be known
that acceptance must complete.
At what Time Communication is said to be
Complete?
i. Communication to the Agent.
If there is authorized agent to receive acceptance,
then once that agent receives that acceptance
communication is complete.
ii. Communication by telephone This may be made
to the offeror directly or to the agent/secretary
of the offeror.
This communication of Acceptance becomes
complete when it comes to the knowledge of
the offeror.
Communication…
iii. Communication by telex or fax
Communication by telex or fax comes to be
complete when the offeror receives
notification of the acceptance.
iv. Communication by Post (Letter)
This include registered mail or by normal mail.
It becomes complete at the time when the
letter is delivered to the post office for
transmission.
v. Communication by E-mail
This comes to be complete when the offeror
notification of the acceptance i.e when the
offeror sign in the inter-net and preview his mail
in-box.
But where the offeror has said that communication
of acceptance may be made by e-mail, then the
moment the offeree sends the mail, it becomes
complete even if the offeror does not see it.
Termination of the Offer
Termination of Offer
Termination of the offer means cancellation of the
offer. It is the way to bring the offer to and end -
to stop the offer.

After the offer to have been made, it may be

terminated. But termination of offer is possible
only if it is done before acceptance is complete.
After acceptance to be complete, offer can not be
terminated.
This is because after acceptance to be complete
the contract is formed and both parties are
under obligation to implement the requirements
of the contract.

Ways to Terminate Offer

There are four ways for which to terminate the
offer.
Those ways are:-
i. By Lapse of time
ii. By Revocation.
iii. By Death of the Party.
iv. By Failure of the Offeree to Fulfill Condition of
Offer.
i. Lapse of time
The offer may be for specific period of time. If it is open for
a specific period of time, then once that specified time
lapses (expires) the offer automatically terminates.
No one is allowed to accept the offer after its period/
duration has expired, unless it is made again. Section
6(b) of LCA

ii. Revocation
Revocation means withdrawal or invalidation of the offer.
Before acceptance is complete, the offeroris allowed
to revoke his offer, even before the period/duration for
that offer lapse.
Bu the |Offeror may do so only if the acceptance is not
complete.
When the offeror wishes to revoke his offer then he is
required to give notice of revocation to the offeree.

iii. Death of the Party

Where the offeror or the oferree dies the offer may
terminate. This is because no one may form the
contract with a dead person.

iv. Failure to Comply with the Condition of the Offer

Some offer may have condition which the offeree is
required to fulfill before accepting the offer.
In case the offeree fails to fulfill such condition then the
offer terminates.
Termination of Acceptance
Definition of termination of Acceptance
This means to bring the acceptance to an end. It is the
withdrawal of the acceptance by the offeree.

This happens where the offeree is no longer interested to

make contract with the offeror.

The offeree may terminate his acceptance at any time but

before the acceptance is complete.

Once acceptance is complete the offeror is not allowed

to terminate his acceptance.
Once the Offeree receives the offer and he accept
that offer and the acceptance becomes complete,
then that offeee can not terminate his acceptance.
So termination of acceptance is only possible before
the acceptance becomes complete.
The offoree who wishes to terminate his acceptance,
is required to give notice of termination of the
acceptance to the offeror. That notice of
termination is required to reach the offeror before
acceptance is complete.
Normally the offeree may succeed to terminate his
acceptance if he uses speedier means the - method
that is quicker than that one used to send the
acceptance.