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    SLS 1103 - Law of Contracts - October 2012

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    SLS 1103 - Law of Contracts - October 2012

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    SLS 1103 - Law of Contracts - October 2012

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    BACHELOR OF LAWS

    SLS 1103: LAW OF CONTRACTS


    END OF SEMESTER EXAMINATION

    DATE: 15THOCTOBER 2012 TIME: 2 HOURS


    INSTRUCTIONS
    Answer question ONE and ANY other TWO questions. You may also answer the BONUS
    QUESTION should you wish to garner extra points.

    COMPULSORY QUESTION

    QUESTION 1 (30 marks)


    A piece of legislation (“the Act”) provides as follows:
    Section 1 (1) A person who is not a party to a contract (a “third party”) may in his own right
    enforce a term of the contract if—
    (a) the contract expressly provides that he may, or
    (b) subject to subsection (2), the term purports to confer a benefit on him.
    Section 1(2) Subsection (1)(b) does not apply if on a proper construction of the contract it
    appears that the parties did not intend the term to be enforceable by the third party.
    Section 1(3) The third party must be expressly identified in the contract by name, as a member of
    a class or as answering a particular description but need not be in existence when the contract is
    entered into.
    Section 2 (1) Where a third party has a right under section 1 to enforce a term of the contract,
    the parties to the contract may not, by agreement, cancel the contract, or vary it in such a way as
    to extinguish or alter his entitlement under that right, without his consent if—
    (a) …;
    (b) the promisor is aware that the third party has relied on the term, or (c) the promisor can
    reasonably be expected to have foreseen that the third party would rely on the term and the third
    party has in fact relied on it.

    1
    Consider the application of the Act to each of the following alternative circumstances. In doing
    so, you can assume that a contract exists where two (or more) parties enter into an agreement in
    which they intend to be legally bound, and that a contract need not be in writing.
    (i) G and H are friends. In the pub one night they decide to play the National Lottery each
    week. Each is to contribute KES.500 and they would each choose three sets of numbers
    every other week, with H choosing three sets of numbers one week and G three sets of
    numbers the other week. They agree that any winnings are to be divided equally between
    the two of them and J, a friend. In the sixth week, when G has chosen the numbers, one of
    the combinations won a prize of KES. 500,000. G, in whose name the ticket was registered,
    wishes to keep the prize. Can J sue G under the Act? Give reasons for your answer.
    (ii) On Mr. and Mrs. C’s marriage, their wealthy relative B buys an expensive 3 piece suite as a
    wedding gift from A Ltd, a well known department store. B makes it clear when purchasing
    the 3 piece suite that it is a gift for friends. The contract includes a term to the effect that the
    goods are of satisfactory quality. After 2 weeks of wear the fabric on the suite wears thin
    and frays, and after 3 weeks, two castors collapse. Can Mr. and Mrs. C sue A Ltd under the
    Act? Give reasons for your answer.
    (iii) X promises Y to pay Z KES. 50,000 and Z, on hearing of this and because of it,
    immediately pays some outstanding bills. Before any money is handed over to Z, X and Y
    change their mind and agree to cancel their contract. Can Z sue X under the Act? Give
    reasons for your answer.

    Choose TWO questions out of the following four.


    QUESTION 2
    Kotut made the following promises shown below: Advise Kotut to what extent, if at all, the
    above promises are legally binding on him.
    a) To give his daughter, Wanjiru, Kshs. 50,000.00 if she will abandon her career as a
    photographic model and become a social worker. (5 marks)
    b) To pay his secretary, Mwatela, Kshs. 30,000 for having been willing to give up her lunch
    hour when necessary during the previous three months. (10 marks)
    c) To give his old tractor to Saitoti, a neighbour, if Saitoti collects it from the garden shed.
    (5 marks)

    QUESTION 3
    a) What are the exceptions to the rule that silence is not misrepresentation? (6 marks)
    b) In the context of misrepresentation distinguish between fraudulent, negligent and innocent.
    (6 marks)
    c) On what basis are damages awarded for: (6 marks)

    2
    (i) Fraudulent misrepresentation, and
    (ii)Negligent misrepresentation?
    The plaintiff may elect to claim damages under Hedley Byrne provided the ingredients of the tort
    are established. The measure of damages here will be on the same basis as deceit (i.e. the “out of
    pocket” rule discussed above), however the remoteness test will be one of reasonable
    foreseeability.
    d) How does the award of damages for breach of contract differ from the above? (2 marks)

    QUESTION 4
    Wafula, a wealthy car enthusiast, decided to look for a pre-owned Range Rover Sport. He went
    to Onyango's showroom. Wafula was examining a smart looking Range Rover Sport which had
    the odometer turned back to naught when he was approached by Onyango, who said, “No need
    to examine that one, it is as good as they come- top of the range. Don't take my word for it, look
    at the mechanic’s report in my office. I think I'm right in saying she's done about 50,000
    kilometers or so.”
    Wafula declined the invitation to look at the engineer's report. If he had done so he would have
    seen that the bodywork, although appearing sound on a superficial examination, was very badly
    rusted in certain places. Also, the report stated that the car had done 50,000 kilometers since the
    engine had been overhauled. Prior to that, the vehicle's mileage was 200,000 kilometers.
    Three days later Wafula called at Onyango's showroom to buy the car. The written contract made
    no reference to the statements made during negotiations, but contained a term that the dealers
    were not to be held liable for any false statements made in the course of negotiations.
    Some months after delivery, Wafula discovers the true position as to the engine. The bodywork
    is now so badly rusted that the car has fallen completely apart.
    Advise Dick on the ingredients of the problem he finds himself in and possible remedies
    (20 marks)
    QUESTION 5
    a) What is the scope of duress? (5 marks)
    b) What are the ingredients of “economic duress” and what factual indicators are likely to be
    used by the court in deciding whether it has occurred? (5 marks)
    c) What is undue influence and why was it developed? When will the presumption of undue
    influence arise and can it be rebutted? (10 marks)

    BONUS QUESTION
    a) Clearly explain how one goes about getting an internship at the United Nations
    Environmental Programme in Nairobi. (3 marks)
    b) How long does this internship last? (2 marks)
    3

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