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Title: Business law in human resource management
Description: Quality study notes for a human resource student
Description: Quality study notes for a human resource student
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BBM 121: BUSINESS LAW I
1
...
(ii) Law of Social Sciences – These laws establish the relationship between the cause
and effect of certain facts, but are true under certain given conditions, for
example, Laws of Economics, Laws of Sociology, Moral Laws, and so on
...
It is the duty
of the citizens to obey these laws
...
Meaning and Definitions of Law
The word law usually implies a rule which is enforceable by a court of law
...
Although
there is no consensus, the objective is the same; to maintain peace and order
...
A law is a general rule of external human action enforced by a sovereign political
body (Holland)
2
...
1
3
...
4
...
Thus, law is a rule of human conduct, imposed and enforced among members of a given
state
...
From the above definitions, the following can be said about law:
(i)
Law is a set of rules
...
Enforcement is by punishment (for criminal
cases) and/or order to pay damages or deliver property (in civil cases)
...
(iii)
It is applicable to a community
...
(iv)
The laws or rules change over a period of time, hence they are not static
...
Law enforcing
agencies include the police and courts of law
...
The distinction between law and morality is that law may be enforced by an action in
courts whereas morality does not attract the sanction of court for its enforcement, unless
it forms a part of the law
...
The rules of
2
morality are defined by the law itself and can therefore be ascertained in a given
circumstance without being confused with rules of morality
...
The law is a guideline for
minimally acceptable behavior in society and regulates the mutual relations and conduct
of its members
...
Therefore, the purposes of law are
follows:
(i) To establish standards and regulate the conduct of behavior of persons in the
society
(ii) To maintain peace, order and security in the country
(iii) To protect fundamental rights, freedoms and rights of individuals
(iv) To resolve disputes among individuals by establishing the procedures and
regulations in which such disputes can be resolved
(v) To provide justice to the members of the society
(vi) To maintain political and economic stability in a country
...
It governs the relations
between the state and its citizens
...
Constitutional Law consists of those rules which regulate the different
organs of the state, namely, Legislature, Judiciary and Executive
...
Criminal Law consists of wrongs committed against the state
...
In other words, it is that law which
governs the relations of the citizen among themselves
...
Therefore, in general, individual interactions are guided by civil law such
that any person aggrieved by an act of another person may seek the assistance of the civil
law of the land
...
g
...
In this case, civil wrongs are instituted by the plaintiff and not the state prosecutor
...
Civil law includes the law of contract, the law of agency, law of succession, the law of
torts, the law of property, etc
...
It falls within the purview of public law
...
A crime is a public wrong the commission
of which may result in the prosecution and punishment (by a term of imprisonment or
imposition of a fine) of the wrong doer
...
4
The state prosecutes the criminal on behalf of the citizenry as a whole; the victim of
criminal conduct himself/herself has no direct interest in the case apart from being a
witness
...
xxx (name of
the Accused)
...
Distinctions between Crime and Civil Wrong
Crime
Civil Wrong
(i) It is a private wrong against an
(i) It is a public wrong against the state
individual
(ii) The parties are the Prosecutor (who
(ii) The parties are the Plaintiff (the
represents the state) and the
aggrieved party) and the
Accused (the offender)
...
comprised by the parties unless
(iii) The parties are free to compromise
only on exceptional cases where
any action brought by any of
the Public Prosecutor may
them and the plaintiff may
withdraw a prosecution against
choose to withdraw his action
a particular accused
...
(iv) The prosecution must prove its case
beyond reasonable doubt, as
every person is presumed
innocent until proved guilty
...
(iv) The plaintiff needs only to prove
his case on a balance of
probabilities
not
beyond
reasonable doubt
...
(iii) Procedural Law and Substantive Law
Procedural Law consists of the rules which determine the manner in which the court
proceedings are required to be conducted in civil and criminal cases
...
This law guides on how a
right is enforced under civil law or a crime is prosecuted under the criminal law
...
It mainly defines civil and criminal wrongs and provides remedies for any type of
offence or civil wrong
...
Public International Law consists of those rules which regulate the relations between
states or countries
...
Disputes
between states can be settled by the International Court of Justice, though this court does
not have any authority to enforce its judgements
...
Meaning of Business Law or Commercial Law
Business Law, also known as Commercial Law or corporate law, is the body of law that
applies to the rights, relations, and conduct of persons and businesses engaged in
commerce, merchandising, trade, sales, and other consumer transactions
...
It is the body of rules, whether by convention, agreement, or national or international
legislation, governing the dealings between persons in commercial matters
...
It can also be
understood to regulate corporate contracts, hiring practices, and the manufacture and
6
sales of consumer goods
...
Business law also encompasses all of the laws that dictate how to form and run a
business
...
Business laws establish the rules that all businesses should
follow
...
Governments make laws, and different countries have different structures as
well as laws varying from county to county
...
The law which applies in any business situation
will depend upon what governing body has authority, both with respect to the location of
the business (the country or county where business is being carried out) and the area of
activity
...
Therefore, business law is an important topic to understand due to how intertwined
business transactions are with society
...
SOURCES OF LAW IN KENYA
The phrase source of law literally means where rules of law are found
...
The origins of the rules and principles which constitute the law applicable in a
country at a given time
...
The source of force or validity of the various rules or principles applicable as law
in a country
...
The materials from which rules of law developed
...
The factors which influence the development of the rules of law
...
It describes the origins of the rules and principles which
constitute the law applicable in a country at a given time
...
The following are the Sources of Laws of Kenya:
1
...
Legislation
3
...
Statutes of General Application in force in England on 12th August 1897
5
...
Judicial Precedent (Case Laws)
7
...
Islamic Law
9
...
Judicature Act
2
...
Hindu Marriage and Divorce Act
4
...
Kadhi’s Courts Act
...
The Constitution
2
...
Delegated Legislation
4
...
Common Law
6
...
Case Laws or (Judge – Made laws/Judicial Precedents)
8
...
10
The various Sources of Law in Kenya are explained as follows:
1
...
It contains the agreed contents of the political system
...
Constitutions may be classified in various ways:1
...
Republican and Monarchical
3
...
Rigid and Flexible
The Kenyan Constitution is written
...
It was amended many times until a new
constitution; The Kenya Constitution 2010 was promulgated in October 2010
...
It is the fundamental law of the land and prevails over all other laws
...
Supremacy of the Constitution:
The supremacy of the Constitution as source of law is manifested in various ways:(a) All other laws derive their validity from the Constitution
(b) It proclaims its supremacy
...
The Legislature, Executive and the Judiciary owe their existence
11
to the Constitution
...
Independent Electoral and Boundaries Commission (IEBC)
ii
...
Judicial Service Commission
iv
...
Offices of the Attorney General, Auditor General and the Inspector General of
Police are created by the Constitution
(d) Fundamental Rights and Freedoms: - The Constitution of Kenya guarantees the
fundamental rights and freedoms of the individual
...
The rights and freedoms of others
ii
...
Right to life
2
...
Right to property
4
...
Freedom of conscience e
...
freedom of thought and of religion
2
...
g
...
Freedom of expression
4
...
Freedom from slavery and servitude
6
...
Freedom of movement
8
...
LEGISLATION (STATUTES LAW /ACTS OF PARLIAMENT)
This is law made by parliament directly in exercise of the legislative power conferred
upon it by the Constitution
...
The product
of parliament’s legislative process is an Act of Parliament e
...
The Hire Purchase Act
...
These words encompass:
i
...
Certain Acts of the Indian Parliament applicable in Kenya
iii
...
Acts of the Parliament of Kenya
The Law Making Process
Under Section 93 of the Constitution, the legislative power of the republic is vested in the
parliament of Kenya which consists of the National Assembly and Senate
...
13
Membership of the Senate under Section 98 consists of:
(i) Forty seven members each elected by the registered voters of the counties, each
county constituting a single member constituency;
(ii) Sixteen women members who shall be nominated by political parties according to
their proportion of members of the Senate elected under clause (a) in
accordance with Article 90;
(iii) Two members, being one man and one woman, representing the youth;
(iv) Two members, being one man and one woman, representing persons with
disabilities; and
(v) The Speaker, who shall be an ex officio member
...
BILLS:
A bill is draft law or a statute in draft
...
All government bills are drafted by
the office of the Attorney General
...
b) Private Members Bill:
This is a Bill mooted by a member of parliament in his capacity as such which he
introduces to the National Assembly for debate and passage to law e
...
The Hire
Purchase Bill, 1968
...
It may
be government or private members
14
d) Private Bill:
This is a Bill that seeks to introduce or amend law applicable in some parts of Kenya or it
regulates a specific group of persons
...
LAW MAKING PROCEDURE
The procedure of law-making in Kenya is contained in the Constitution and the National
Assembly Standing Orders
...
1
...
P’s of the
intended law
...
However, the National Assembly is empowered
to reduce the number of days
...
Readings:
a)
1st Reading
The Bill is read out to members for the first time
...
This reading is a
mere formality
...
This is the debating stage
...
Amendments or alterations
may be proposed
...
c)
Committee Stage
The bill is committed either to a select committee of members or to the entire National
Assembly as a committee for a critical analysis
...
In the case of a select committee, it makes a report for submission in the
National Assembly
...
If
the report is adopted, the bill proceeds to the third reading
...
Generally no debate takes place
...
3
...
The president must within 21 days of presentation of the bill signify to the speaker
of the National Assembly his assent or refusal
...
The National Assembly must reconsider the bill taking into account the president’s
recommendations and must either:
(i) Approve the recommendations with or without any amendments and re-submit the
bill to the president for assent; or
(ii) Ignore the president’s recommendations and re-pass the Bill in its original state
...
4) Publication of Law in the Kenya Gazette:
A law passed by the National Assembly must be published in the Kenya Gazette before it
comes into operation
...
However, Parliament is empowered to make
16
law with retrospective effects
...
”
Advantages of Statutes Law
1
...
This is because parliaments the world over consists of representatives of the
people they consult regularly
...
2
...
3
...
g
...
Parliament enacts statutes to create the
necessary policies and the regulatory framework
...
Durability: Statute Law consists of general principles applicable at different times
in different circumstances
...
5
...
e
...
6
...
Additionally, it attracts media attention
...
It is a superior source of law in that only the Constitution prevails over it
...
Imposition of Law: Statute Law may be imposed on the people by the dominant
classes in society
...
17
2
...
Ps: Statute Law may at times manifest the wishes and aspirations of
M
...
3
...
The Law making process is slow and
therefore unresponsive to urgent needs
...
Bulk and technical Bills: Since parliament is not made up of experts in all fields,
bulky and technical Bills rarely receive sufficient treatment in the national
assembly, their full implications are not appreciated at the debating stage
...
Controls government spending
2
...
Legislative functions
How to make the Law Making Process effective:
1
...
Ps should consult constituents on a regular basis
...
Subdivision of large constituencies
...
Establishment of offices in constituencies for M
...
Enhance civil education
5
...
6
...
g
...
Bills must be published in newspapers
...
DELEGATED LEGISLATION
Delegated legislation is also referred to as subsidiary (subordinate legislation)
...
Although the Constitution vests the legislative power of
18
the republic in parliament, parliament may delegate its legislative power to other persons
and bodies
...
Characteristics of Delegated Legislation
1
...
2
...
3
...
This is because it interferes with the doctrine of separation of powers which provides that
the Law-making is a function of the legislature
...
Parliament is not always in session
2
...
Inadequate parliamentary time
19
4
...
5
...
Increase in social legislation
Advantages of Delegated Legislation
1
...
2
...
3
...
g
...
The
Minister enjoys the requisite flexibility in the Law-making process
...
4
...
g
...
Disadvantages of Delegated Legislation
1
...
E
...
rules drafted by technical staff in a government ministry
...
Difficult to control: In the words of Professor William Wade, the greatest
challenges posed by delegated legislation is not that it exists but that it’s
enormous growth has made it impossible for parliament to watch over it
...
20
3
...
This law is to a large extent unknown
...
Sub-delegation and abuse of power: Delegates upon whom law making has been
delegated by parliament often sub-delegate to other persons who make the law
...
5
...
Control of Delegated Legislation
Both parliament and courts of law have attempted to control delegated legislation,
however neither can effectively do so
...
Parliament delegates law making power to specific persons and bodies e
...
government ministries, local authorities, professional bodies, chief justice
ii
...
The delegates can only make law as defined by the scope and must comply with
the procedures prescribed
...
The Enabling or Parent Act may require the draft rules to be circulated to
interested parties for comments e
...
By-law
...
The Enabling or Parent Act may provide that the delegated legislation made be
laid before the concerned minister for approval e
...
By-laws made by local
authorities
...
21
v
...
vi
...
34 (i) of the Interpretation and General Provisions Act, unless
otherwise provided, delegated legislation must be laid before parliament for
approval and parliament is empowered to pass a resolution declaring the Law null
and void where upon it becomes inoperative
...
(b) Judicial Control:
This is control of delegated legislation by courts of law
...
A court of
law declares delegated legislation ultra vires thereby rendering it null and void
...
(i) Substantive Ultra Vires
A court of law on application by a party declares delegated legislation substantively ultra
vires if satisfied that:
a
...
b
...
This is abuse of power
...
The delegate acted unreasonably
...
(ii) Procedural Ultra Vires
A court of law may declare delegated legislation procedurally ultra vires on application
if satisfied that the Law-making procedure prescribed by the Enabling or Parent Act was
not complied with by the delegate in the law-making process
...
In Mwangi and Maina v
...
(1950) the appellants were convicted
and sentenced by the Resident magistrate’s court in Nairobi for overcharging a haircut
contrary to the defense (control of Prices) Regulations 1945
...
He
had fixed the price at 50 cents but the appellants had charged 1 shilling
...
As this had not been done, the court declared
the rules procedurally ultra vires thereby setting aside the conviction and sentence of the
appellants
...
A court of law will only act when a case is
brought before it
...
4
...
However, the
phrase is used to describe certain Statutes enacted by the UK parliament to regulate the
inhabitants of UK generally
...
However, their application is restricted in that
they can only be relied upon:
i
...
If consistent with the provisions of the Constitution
iii
...
If the circumstances of Kenya and its inhabitants permit
Examples include:
1
...
Married Women Property Act 1882
3
...
5
...
Common Law consisted of decisions handed down by courts of law on the basis
of customs and usages and may be described as the English Customary Law
...
The court of Kings Bench, Court Exchequer and the court of
common pleas are credited for having developed common law
...
At first, common law was a complete system of rules both criminal and civil
...
The Romans are credited for having laid the foundation for the development of
the common law
...
The Writ System
At common law, actions or cases were commenced by a writ
...
A Writ stated the
nature of the compliant and commanded the police officer of the country in which the
defendant resided to ensure that the he appeared in court on the mentioned date
...
The writ system did not recognize all possible complains and many would be plaintiffs
could not access the courts
...
(ii)
...
” This is a
system of administration of justice whereby previous decisions are applied in subsequent
similar cases
...
This made the common Law
system rigid
...
Writ System: Cases at common Law were commenced by a writ issued by the
Royal office and there were separate writs for different complaints
...
This system did not recognize all possible complaints and many would be
plaintiffs had no access to the courts
ii
...
It lengthened the course of justice
b
...
This practice rendered the legal system rigid and hence unresponsive to
changes
...
Procedural Technicalities: The common Law procedure of administration of
justice was highly technical
...
d
...
Defendants often relied on standard defenses to delay the course of justice
...
Non-recognition of trusts: Common Law did not recognize the trust relationship
...
At common Law beneficiaries had no remedies against errant
trustees and trustees had no enforceable rights against beneficiaries
...
Inadequate remedies: Common Law courts had only one remedy to offer namely
monetary compensation or damages
...
g
...
(b) Doctrine of Equity
This may be described as that branch of the law of England which was developed by the
various Lord Chancellor’s courts to supplement the common Law
...
The development of equity is traceable to the
early petitions to the king by persons dissatisfied with the common Law
...
However, he was overwhelmed by the petitions whereupon he
established the office of the Lord Chancellor who would now hear the petitions
...
The Lord Chancellor decided all petitions on the basis of the principle of fairness
...
However, the
decisions handed down by the Lord Chancellor were not legally binding as the Lord
Chancellor was not legally trained
...
These
decisions are what are referred to as the Doctrines of Equity
...
26
The Lord Chancellors offices had now become courts
...
The courts had
more remedies to offer and had no technicalities of procedure
...
There were no other guiding principles and as a consequence many inconsistent decisions
were made; hence “Equity varied with the length of the foot of the chancellor”
...
These were the so called Maxims of
Equity
(ii) Adopted the Doctrine of Stare Decisis
Contribution of Equity
Equity developed to supplement, not to supplant the common Law
...
Equity has an ordinary, legal and a technical meaning
...
It
is talking about doing good, doing what is morally right
...
A litigant
asserting some equitable right or remedy must show that his claim has “an ancestry
founded in history and in the practice and precedents of the court administering equity
jurisdiction”
...
They distinguish equity from the common
law
...
The contribution of Equity may be classified as exclusive, concurrent and ancillary
...
These maxims of equity are
statements which embody rules of equity
...
They are not applied
strictly in every case
...
They
27
have no logical sequence as they often overlap
...
The Maxims of Equity include:
1
...
He who comes to equity must come with clean hands
3
...
Equity looks to the intent or substance rather than the form
5
...
Equity imputes an intent to fulfill an obligation
7
...
Equity will not assist a volunteer (Equity favour’s a purchaser for value without
notice)
9
...
Equity does not act in vain
11
...
Equity aids the vigilant and not the indolent
These maxims are explained as follows:
1
...
And this is most
commonly applied in injunctions
...
2
...
Lenthal (1669) as “He who has committed inequity shall not
28
have equity”
...
In some cases the court has the discretion
whether to apply this maxim or not
...
The
conduct must be relevant to the relief being sought
...
Loughran (1934), Justice Brandeis said equity does not demand that its
suitors shall have lead blameless lives
...
If
the breach is a trifle, a small matter, a minor breach, then that in itself should not deny the
plaintiff the remedy
...
3
...
For example husband and wife who operate a joint bank account; each
spouse may deposit or take out money
...
They share 5050
...
Another example relates to trusts
...
Then one of the beneficiaries passes away, i
...
one of the shares fails to
vest
...
4
...
Equity will give priority
to substance (intention) as opposed to form, if there is a contradiction
...
There have been cases where the court has inferred a trust
even where the word trust does not appear
...
29
This maxim lies at the root of the equitable doctrines governing mortgages, penalties and
forfeitures
...
Courts of Equity make a distinction in all cases between that which is a matter of
substance and that which is a matter of form; and if it finds that by insisting on the form,
the substance will be defeated, it holds it to be inequitable to allow a person to insist on
such form, and thereby defeat substance
...
g
...
Yet in equity it will usually suffice if he is ready to complete within a reasonable
period thereafter, and thus the other party will not be able to avoid performance
...
Equity regards as done that which ought to be done: - This maxim has its most
frequent application in the case of contracts
...
Agreements for value are thus often treated as if they had been performed at the time
when they ought to have been performed
...
In Walsh v
...
An equitable lease
is as good as a legal lease
...
In Souza Figuerido v
...
However, it
operates as a contract inter-parties; it is valid between the parties and can be specifically
enforced
...
30
6
...
7
...
It is the foundation of all equitable jurisdictions
...
This was so
held in Penn v
...
However there must be some equitable right arising out of contract,
trust or fraud
...
Equity will not assist a Volunteer: - Equity favours a purchaser for value without
notice
...
The exception to the application of this maxim is in Trust
...
Lock (1865) it was
stated that the court is prevented from assisting a volunteer regardless of how undesirable
the outcome might appear
...
9
...
He who seeks solace in the
arms of equity will not go away broken hearted
...
However, not all moral wrongs
can be redressed by equity
...
31
10
...
11
...
e
...
Nothing can call forth this court into activity,
but conscience, good faith, and reasonable diligence
...
Delay which is sufficient to prevent a party from obtaining an equitable remedy is
technically called “laches”
...
There are thus three cases to consider(a)
Equitable claims to which the statute applies expressly;
(b)
Equitable claims to which the statute is applied by analogy; and
(c)
Equitable claims to which no statute applies and which are therefore covered by
the ordinary rules of laches
...
Equity follows the Law: - The Court of Chancery never claimed to override the
courts of common law
...
It is only when there is some important circumstance disregarded by the common law
rules that equity interferes
...
”
If Common law and Equity conflict, Equity prevails
...
However, only the substance of common Law and the doctrines of equity are recognized
...
A court of law can only rely on
Common law or equity as a source of Law:
i
...
ii
...
iii
...
iv
...
v
...
6
...
Judges make law when they formulate (enunciate) principles
or propositions where none existed or in doubtful situations, which are relied upon as law
in subsequent similar cases
...
An earlier decision of a court is referred to as a precedent if it contains a principle of law
...
’
It is a principle or proposition of law based on the material facts of the case
...
It is the binding part in a precedent or earlier decision
...
Obiter dicta: These are by the way statements of law or facts made by a judge in the
course of judgment
...
They have no
binding force; however they may be relied upon by advocates in subsequent cases as
persuasive authority in subsequent cases
...
Binding and persuasive precedents
2
...
Distinguishing precedents
33
(i) Original Precedents - This is a principle or proposition of law as formulated by
the court
...
(ii) Declaratory Precedent - This is the application of an existing principle of law in a
subsequent similar case
...
E
...
a precedent of the Court of Appeal used in the High
Court
...
g
...
(v) Distinguishing Precedent - This is a subsequent decision of a court which
effectively distinguishes the earlier precedents
...
To what extent is Case Law a Source of Law?
Judicial Precedent (Stare Decisis):
Stare decisis literally means ‘decision stands’
...
It is to the effect that each court in the Judicial Hierarchy is bound by principles
established by decisions of courts above it in the Hierarchy and courts of co-ordinate
jurisdiction are bound by their own previous decisions if the two cases have similar
material facts
...
The doctrine
of judicial precedent applies both horizontally and vertically
...
2) Subordinate courts of appeal are bound by their own previous decision
...
However, in certain circumstances, a court may refrain from a binding precedent
...
Distinguishing: This is the art of showing that the earlier decision and the
subsequent case relate to different material facts
...
b
...
e the decision no longer reflects the prevailing circumstances
...
Per incurium: It literally means ignorance or forgetfulness
...
e the court did not consider all the law as it
existed at the time
...
Over-rule by statures: If a precedent has been over-ruled by an Act of Parliament
...
e
...
If the ratio decidendi of the previous decision is too wide or obscure
...
If the ratio decidendi relied upon is one of the many conflicting decisions of a
court of co-ordinate jurisdiction
...
Improper Conviction: In Kagwe v R
...
Advantages of Case Law (Importance of Stare Decisis):
1
...
InDodhia’s Case 1970, the Court of Appeal was
emphatic that ‘a system of law requires a considerable degree of certainty
...
Uniformity and consistency: Case law enhances uniformity in the administration
of justice as like cases are decided alike
...
Rich in detail: stare decisis is rich in detail in that many decisions which are
precedents have been made by courts of law
...
Practical: Principles or propositions of law are formulated by superior courts on
the basis of prevailing circumstances hence the law manifests such circumstances
...
Convenience: Case law is convenient in application in that judges in subsequent
cases are not obliged to formulate the law but to apply the established principles
...
Flexibility: It is contended that when judges in subsequent cases attempt to
distinguish earlier decisions as to justify departing from them, this in itself renders
the legal system flexible
...
Rigidity: Strict application of stare decisis renders a legal system inflexible or
rigid and this generally interferes with the development of law
...
Bulk and complexity: Since stare decisis is based on judicial decisions and many
decisions have been made, it tends to be bulky and there is no index as to which
of these decisions are precedent
...
3
...
It is incidental
...
4
...
This makes law artificial and renders the legal
system uncertain
...
Backward looking: Judges or courts are persuaded / urged to decide all cases
before them in a manner similar to past decisions
...
36
7
...
A custom embodies a principle of utility or justice
...
Not every rule of local customs is relied upon by a court of law in
the settlement of a dispute
...
Reasonableness: A good local custom must be reasonable, that is, it must be
consistent with the principle of justice
...
ii
...
This is because parliament is the principle law-making
body and has constitutional power to disqualify the application of any rule of
custom
...
Observation as of right: A good local custom is that which a society has observed
openly and as of right i
...
not by force or by stealth nor at will
...
Immemorial antiquity: A custom must have been observed since time
immemorial
...
Section 3(2) of the
Judicature Act, is the basic statutory provision regarding the application of African
Customary Law in civil cases in which one or more of the parties is subject to it or
affected by it, so far it is applicable and is not repugnant to justice and morality or
inconsistent with any written law
...
Courts are not bound to rely on any rule of custom
...
37
(b) Determination of Civil Cases: - African customary law can only be relied upon by a
court of law in the determination of civil cases
...
This section provides that the phrase ‘claim under customary
law’ means:
i
...
Marriage, divorce, maintenance or dowry
iii
...
Enticement of or adultery with a married woman
...
Matters affecting personal status and in particular the status of women, widows,
and children including custody, adoption, legitimacy etc
...
Intestate succession and the administration of intestate estates not governed by
written law
...
(d) Repugnant to justice and morality
African customary law can only be relied upon if it is not repugnant to justice and
morality
...
(e) Consistency with written law: - For a rule of custom to be relied upon in the
settlement of a civil dispute, it must be consistent with written law as parliament is the
supreme law-making body
...
The scope of application
of African customary law as a source of law diminishes as the legal system develops
...
ISLAMIC LAW
This is also a subsidiary source of law of Kenya
...
It is recognized as a source of law by the Constitution and Section 5 of the
Kadhi’s Court Act
...
9
...
It is a subsidiary source of law of Kenya
...
It only applies in the determination of civil cases relating to marriage,
divorce, succession or personal status in proceedings in which all parties profess Hindu
faith
...
0 STRUCTURE OF KENYAN COURTS, PRINCIPLES AND CONCEPTS
System of courts in Kenya
The superior courts are the Supreme Court, the Court of Appeal, the High Court and the
courts referred to in clause (2)
...
Parliament shall determine the jurisdiction and functions of the courts contemplated in
clause (2)
...
39
The Constitution
The Constitution of a country is considered the fundamental or basic law of land
...
It expresses the
agreed content of the political system by prescribing the principles and the basic structure
upon which the system is founded and setting out the rules and procedures for settling
differences without recourse to force or violence”
...
The organization of the state:
ii
...
The organs of
the state are:
iii
...
The constitution ensures the rule of law in a country and it also provides some
fundamental rights to the individuals
...
The
concept of rule of law was first presented by Professor A
...
“That no man is punishable or can be lawfully made to suffer in body or in goods
except for distinct breach of law established in the ordinary legal manner before
ordinary courts of the land”
...
And that no person may be arbitrarily deprived of life, liberty, poverty or arrested
except for a definite breach of law which must be proved in a duly constituted
open court of law
...
The two
implications embodied herein are first, equality of every citizen, irrespective of
his official or social or social status, before the law; second, there is only one kind
of law to which all citizens are amenable
...
“The general principles of the Constitution are the result of judicial decisions
determining the rights of private persons in particular cases brought before the
courts”
...
It means the law of the Constitution is the result of the ordinary law
of the land
...
Every person should be responsible to the ordinary law whether he be a private
citizen or public officer
...
The rule of law prevails in Kenya because the ordinary law of Kenya is supreme
...
All persons are tried by the ordinary courts
...
The laws of Kenya
also consider that all persons including Government officials as equal before the law
...
(b) Doctrine of the Separation of Powers
The Doctrine of the Separation of Powers means that the powers of the three organs of
the state must be clearly described in the Constitution and these powers must be exercised
by the different persons as laid down in the constitution
...
The Constitution of
Kenya empowers the National Assembly to make laws of the land
...
The Executive consists of the President, the Deputy President, Cabinet
Secretaries and civil servants
...
Judiciary is the other organ of state and is
responsible for the administration of justice in the country
...
Judiciary consists of
Supreme Court, Court of Appeal, the High Court of Kenya, Magistrates Courts and other
courts
...
If the functions of legislative, executive
and judiciary are performed by the same persons then the individuals cannot get proper
justice and their rights cannot be protected
...
The laws are made by the members of the National
Assembly who are elected by the people after every five years
...
The Judicial services are provided by the judges and
magistrates
...
It
is argued that the concentration of these three powers in the same hands results in the
abuse of authority and tyranny over the people
...
The complete separation of the organs is therefore; practically impossible
...
Such a situation can lead to frequent disputes, deadlocks and
inefficiencies
...
The
separation of powers is necessary only to the extent that it promotes specialization
of functions and efficiency
...
This assumption is incorrect
...
It can be concluded that the absolute separation of powers is not practicable
...
This system retains separation of powers
but at the same time each organ of the government checks the other organs and maintains
the balance or equilibrium of the governmental machinery
...
For practical purposes, the President can dissolve
the National Assembly before the expiry of its term
...
An Act of parliament
44
cannot become law without the assent of the President
...
This shows that separation of powers is limited
...
The Constitution of a
country establishes the relationships between the Legislature, Executive and the
Judiciary
...
The supremacy of the constitution means that the constitution is the main source and
force of the law in the country
...
No law can be passed if it is inconsistent with the constitution
...
Similarly, the Executive must exercise its powers within the limits as
specified in the Constitution
...
The
jurisdiction of the Supreme Court, Court of Appeal and the High Court of Kenya is
determined by the Constitution of Kenya
...
(d) Independency of the Judiciary
The independence of the judiciary means that judges and magistrates can decide the legal
cases without any fear or under any pressure from members of legislature or executive
...
The judiciary is responsible for the effective administration of justice in the country
...
The Judiciary tries criminal cases where the
state prosecutes persons for some alleged crimes
...
Constitution
...
The law courts must be open to all
persons, rich or poor, citizens or non-citizens
...
The Judiciary in Kenya is independent of both the Executive and the Legislature
...
The
judges and magistrates sometimes make decisions which might embarrass the
Government
...
The Chief Justice and Judges are appointed by the President on the advice of the Judicial
Service Commission and once appointed; it is not easy to remove a judge
...
The security of job of
46
a judge is an important factor to endure the independence of the judiciary
...
It is therefore said that, “No Judge magistrate and no other person acting
judicially, shall be liable to be sued in any civil court for any act or ordered by him in the
discharge of his judicial duty, whether or not within the limits of his jurisdiction,
provided he, at the time, in good faith believed himself to have jurisdiction to do or order
the act complained of”
...
The office of a judge of a superior court shall not be
abolished while there is a substantive holder of the office
...
Subject to Article 168(6), the remuneration and benefits payable to, or in respect of, a
judge shall not be varied to the disadvantage of that judge, and the retirement benefits of
a retired judge shall not be varied to the disadvantage of the retired judge during the
lifetime of that retired judge
...
(e) Fundamental Rights and Freedoms of the Individuals (Bill f Rights)
Like other democratic constitutions, the Kenya Constitution also provides the
fundamentals rights and freedoms of the individuals
...
It is also known as the “Bill of rights”
47
The Constitution of Kenya provides the following fundamental rights and freedoms to the
individuals:(i) Every person, whatever his race, or tribe, political affiliation, color, creed or sex,
has the right to each of the following:
a) Life, liberty, security of the person and the protection of the law
b) Freedom of conscience, of expression and of assembly and association;
and
c) Protection for the privacy of his home and other property and from
deprivation of property without compensation
...
(ii) No person shall be deprived of his right of life except in execution of the sentence
of a court in respect of a criminal offence under the laws of Kenya of which he
has been convicted
...
(iii)
Every person has the right to personal liberty
...
The exceptions to the right of personal liberty are:a) The court of law can order the imprisonment of a person on various grounds
of criminal nature
...
(iv)
No person shall be held in slavery and no person shall be required to
perform forced labour
...
2
...
The word ‘binding’ is used as
there are some contracts that are valid but not enforceable in a court of law
...
Contract law is based on the Latin phrase pacta sunt servanda (pacts must be kept)
...
Contracts
which are not intended to create a legally binding relationship are treated as:1
...
g
...
2
...
g
...
3
...
g
...
Essentials of a Valid Contract
1
...
There must be an intention to create legal relationships
3
...
There must be contractual capacity
49
5
...
e
...
The object of the contract must be lawful
...
These may be classified as under;1
...
There is then said to be an express agreement
...
10, 000/= and B agrees to buy
the goods at that price, there is said to be an express contract for the sale of goods
at an agreed price
...
Thus, where A boards a bus, there is
an implied contract that the bus conductor shall take him his destination and that
A shall pay such fare as is usually paid for that trip
...
Unilateral and Bilateral Contracts
A unilateral Contract is one in which only one part is bound
...
Thus, if
‘A’ offers a reward to anyone who will recover his lost property, no one is bound
to recover lost property but ‘A’ himself is bound to give the promised reward to
anyone who might recover the property
...
Most contracts are
bilateral
...
50
3
...
An agreement becomes
enforceable by law when all the essentials of a valid contract discussed above are
present
...
This is because it has no legal effect at all and is, therefore, not binding on
any of parties
...
A voidable contract is one which is enforceable by law at the option of one of the
parties
...
Such a contract is voidable at the option of the aggrieved party, i
...
the party
whose consent was so caused
...
4
...
It is an instrument in
writing signed and sealed by the party to be bound by it and delivered by him to
the person for whose benefit it was made
...
g a Deed of Conveyance under which property is
transferred by one person to another)
...
The delivery of such a contract may be actual or constructive
...
If the delivery is to take place at a future date, it is called
‘Escrow’
...
A simple agreement may be in writing or agreed orally, or even be
implied from the conduct of parties
...
51
5
...
Where both parties
are guilty of the illegality they are said to be in pari delicto and one of them can
enforce the contract
...
Thus
an agreement to commit murder or assault or robbery would be illegal
...
All illegal agreements are void but all void agreements are not
necessarily illegal
...
Similarly, when an agreement is illegal, other agreements
which are incidental or collateral to it are also considered illegal, provided the
third parties have the knowledge of the illegal or immoral design of the main
transaction
...
Contracts Uberrimae Fidei
A contract uberrimae fidei is one in which only one of the parties has full
knowledge of all material facts, which he is under a duty to disclose
...
The insured is in possession of all the facts
which are material to the contract; but the insurer has no possession of these facts
and the insured is under a duty to disclose them to him
...
Any failure to exhibit good faith, or
any show of outright bad faith, amounts to a breach of the contract entitling the
other party to be relieved from his own obligation under the contract
...
Family settlements(Where full disclosure is required);
52
ii
...
Contracts of partnership ( where every partner must exhibit utmost good
faith in his dealings with the other partner(s)
7
...
Such contracts are formed
by an entry on the court records
...
These contracts include:
i
...
This judgment constitutes a contract of record between the parties
of the contract
...
‘Y’ sues
‘X’ sh
...
In this case, the previous rights become merged in the
judgment of the court
...
Recognizance;
In the criminal cases, the court may bind the accused to be of good
behavior and keep peace
...
In the contracts of record, the element of consent of both parties is absent
...
8
...
For example, when a bookseller sells a book on
cash payment it is an executed contract because both the parties have done what
they were to do under the contract
...
In other words, a contract is said to be executor when either both the
parties to a contract have still to perform their share of obligation or there remains
something to be done under the contract on both sides
...
Quasi-Contracts
This type of contracts has little or no affinity with contract
...
For example,
obligation of finder of lost goods to return them to the true owner or liability of
person to whom money is paid under mistake to repay it back cannot be said
to arise out of a contract, as there is neither offer and acceptance nor consent,
but these are very much covered under quasi contracts
...
A quasi contract is based upon the equitable principle that a person shall
not be allowed to retain unjust benefit at the expense of another
...
All contracts that require to be stamped e
...
bill of exchange, promissory notes,
transfer of shares in a limited company
...
Acknowledgement of a statute-barred debt
...
c
...
The law requires that transfer of immovable
property must be by registered instrument
...
Representation of character or credit worthiness
...
54
Contracts that must not be in writing but must be supported by written evidence
a
...
b
...
c
...
200 or over (requirement of the Sale of
Goods Act)
d
...
e
...
f
...
It thus, must contain the following information:
1
...
The subject matter of the contract with sufficient clarity
...
The signature of the party to be charged or his agent
4
...
The memorandum in writing may consist of more than one document, provided
they could be inter-related expressly or by implication
...
In
certain cases the court will allow a contract to be proved by verbal evidence,
55
notwithstanding that a particular kind of evidence required by the statute is missing
...
The acts of part-performance must be capable of referring solely to the contract
sought to be enforced
2
...
Case law: Rawlinson Vs Ames 1925
A agreed to take lease of a flat, and required the plaintiff to carryout substantial
alterations, which the defendant frequently inspected when the work was in
progress
...
It was held that A’s visits to the flat
when the work was in progress were solely referable to the contract, that he had
agreed to take the flat and so he was liable to take the flat on lease as originally
was agreed
...
The contract to which the alleged act of part-performance refers must itself be
capable of specific performance by the court and damages are not adequate
remedy
...
4
...
Intention to Create Legal Relations
In order for a contract to be enforced there has to be an intention to create a legal
relationship
...
Case law: Balfour Vs Balfour 1919
The defendant was a civil servant in Cylon
...
The husband promised to pay her thirty pounds a month whilst forced to
56
live apart
...
It was held that the
husband was not liable because there was no necessary implication from the
circumstances of the parties that they intended to make a legally binding contract
...
In some cases the courts can, on examining the facts of the agreement, decide to conclude
that there was intention to create a legal relation
Case law: Parker Vs Clark 1960
The defendant, an aged couple, arranged by correspondence with her niece and husband
to share a house and promised to make a will of it
...
It was held that the contract was more
than a family agreement; there was an intention to create legal relations, and damages
were awarded to the plaintiffs
...
FORMATION OF A CONTRACT
A contract is formed by an offer by one person and the acceptance of this offer by
another person
...
There must be some
consideration against the contract between the two parties
...
The person
making the offer is called the offeror while the person to whom the offer is made is called
the offeree
...
The offer has the following rules;
1
...
2
...
(e
...
a
passenger entering a passenger service vehicle plying through a certain route
assumes the owner has made an offer by conduct and he is bound to pay the
advertised fares)
3
...
4
...
5
...
6
...
7
...
An offer is different from:
a
...
A mere declaration of an intention
c
...
Marked prices of goods displayed in
shop windows, or catalogues mentioning prices, do not as a rule constitute an offer as to
compel the shopkeeper to sell those goods at the marked prices
...
Case law: Fisher V
...
He
was charged with the offence of offering a flick-knife for sale
...
It was held by
Lord Parker C
...
It
is in so sense an offer for sale, the acceptance of which constitutes a contract
...
Declaration of intention
When a person declares or expresses his intention to do a thing or an act, it does not bind
him to another person who offers damage because he fails to carry out his intention
despite the fact that someone relied on his declaration
...
Types of Offer
(a) Counter Offer – This is a reply to an offer whose effect is to vary the terms of
the original offer
...
A counter offer therefore extinguishes the original offer
...
59
(b) Cross Offer – This is where for example, A offers his property for sale to B, and
B without being aware of A’s offer, simultaneously offers to buy the same
property from A
...
The
law states that cross offers are not mutually acceptance of one another and no
valid contract can result from them alone
...
Such conditions may be imposed by the offer,
e
...
where the offer is required to be accepted within a stated time or they may be
implied by law
...
A standing offer is constituted where it is stated that the tenderer
may be required to supply within a specified period goods in a quantity not
exceeding a specified limit, e
...
where the tenderer is required to supply not more
than 1000 units during the year
...
Termination of an offer
1
...
Reasonable time depends on the nature
of the contract
...
An offer lapses if not accepted in the manner prescribed, or if no manner is
prescribed, in some usual manner implied by the nature of offer e
...
offer made
by post, the acceptance is implied by post as well
...
By death or insanity of either the offeror or offeree before acceptance
...
60
4
...
5
...
e
...
However;
a
...
b
...
NB: It must be noted that acceptance by post takes effect when the acceptance
is posted and not when received
...
Where offeror promises orally or in writing (not under deed) to keep his offer
open for a specified time, he is not bound by it i
...
he can still revoke it at any
time before the expiry of the time given unless:
i
...
The promise to keep offer is supported by consideration i
...
the offeree has
paid some money
iii
...
(b) ACCEPTANCE
An acceptance is an assent to the terms of an offer
...
Modes of acceptance
1
...
Acceptance must be communicated and mere intention to accept it is not
sufficient
...
Acceptance must be absolute and unqualified
...
61
4
...
5
...
6
...
7
...
Exceptions to the communication of acceptance
1
...
2
...
Acceptance subject to contract
The words ‘subject to contract’ usually mean that the parties don not intend to be bound
until a formal contract has been agreed upon and signed
...
They must be supported by consideration, otherwise the contract is void
...
In the past, consideration was defined as a valuable consideration in the sense of the law
that may consist either in some right, interest, profit or benefit accruing to one party or
some forbearance, detriment, loss or responsibility given, suffered or undertaken by the
other
...
Consideration must be something of value e
...
money, a reciprocal promise, the
performance of an act or supply of goods or services
...
It can also be an act or forbearance of one party or
62
a promise thereof, is the price for which the promise of the other is bought, and the
promise thus given for value is enforceable
...
Other examples include; in a contract of employment, worker’s
services are consideration on the part of employee whereas salaries paid is consideration
on the part of employer
...
Although consideration is required in every simple contract, it need not be adequate as
long as it has some economic value
...
g
...
The seller has performed his side of the
obligation in delivering the goods to the purchaser
...
g
...
The distinction between executed and executor consideration is particularly important
while considering performance of the contract by the parties and the remedies available
to the innocent party in the event of breach of contract by the other party
...
The law states that for a
promise to constitute a valid consideration, it must be made during negotiation
...
63
Consideration must move from the promise to the promisor
...
Rules of Consideration
1
...
e
...
2
...
e
...
g
...
On
passing the exam B promises A Ksh
...
A cannot enforce B’s promise because
it is founded on past consideration
...
Consideration must move from the promisee i
...
no one can enforce another’s
promise even if it is made for is benefit unless he is party to the
contract
...
Consideration must be in excess of an already existing obligation i
...
a person
who in contractual or legal obligation to do an act cannot give consideration for
doing that act
...
Consideration must be legal i
...
should not be prohibited by the law or against
public policy
...
Every person who is of the age of maturity and
who is of sound mind and is not disqualified from contracting by any law is competent to
contract
...
Lack of capacity on either party may render the contract
void, voidable or unenforceable
...
1
...
Contracts made by infants and minors may be
binding, voidable, void or unenforceable contracts
...
Under the Sale of Goods Act, necessaries are defined as
goods suitable to the condition in life of a particular infant or minor, and
to his actual requirement at the time of sale or delivery
...
Necessaries may include services as well e
...
education, legal services etc
...
Inman (1908)
The plaintiff a tailor, in the course of three months sold eleven fancy
waistcoats of £145 to the defendant who was an infant and undergraduate
at Cambridge
...
The defendant’s father proved that his son was an infant and stated that
going up to the university he was sufficiently supplied with proper clothes
according to his position
...
(ii)
Contracts for the Infants’ benefit – Anything that is intended for his
benefit
...
An infant is liable on such contracts, but only if the
contract, considered as a whole, is beneficial to him
...
But trading (commercial) contracts are not
binding to the infant even if they are for his benefit
...
g
...
These
contracts are binding to the infant unless he avoids them during his infancy or
after a reasonable time after attaining the age of majority
...
(ii) Any contract for the goods supplied or to be supplied other than necessaries
...
g
...
It should be noted that no one should upon attaining the age of majority be allowed to
ratify contracts entered during infancy
...
The Infants Relief Act stipulates that the infant cannot ratify a void contract made during
infancy even though there is a fresh consideration given to him by the promisee
...
2
...
Contracts entered by an insane person other than for the
supply of necessaries are voidable, but he is bound by a contract of necessaries and he
must pay a reasonable price for them
...
At the time of entering into the contract he was suffering from mental disability
b
...
As for a drunken, his contractual capacity is generally the same as that of an insane
person
...
But he will be liable to
pay a reasonable price for necessaries as per Sale of Goods Act
...
Married Women
At common law, a married woman could not enter into a contract
...
If contracts are entered into on behalf
of the husband by the wife or at his request, the husband is liable
...
However, where the wife and husband are living together, it is
presumed that the wife is authorized by her husband to pledge his credit for necessaries
...
4
...
Registered companies – a company registered in the Companies Act (Cap 386,
Laws of Kenya) derives it powers from its Memorandum of Association
...
b
...
Any act done outside the Act is
ultra vires and thus void
...
Aliens or Non-citizens
An alien (non-citizen) can sue and be sued
...
e
...
67
6
...
490)
...
Trade Unions
Section 25(1) of the Trade Unions Act (Cap
...
”
(e) INTENTION TO CREATE A LEGAL RELATIONSHIP
A Contract should be aimed at creating a legal relationship between the contracting
parties
...
TERMS OF CONTRACT/CONTENTS OF A CONTRACT
In the course of negotiations, a number of statements may be made by each of the parties
...
Statements
which form part of the contract are known as terms of the contract
...
Thus, a representation is a statement that is not within the contract
...
It is
therefore important to determine whether a particular statement is a term or a
representation
...
It is thus assumed that the parties have clearly
negotiated the rights and obligations in their contract
...
To implement their presumed intention to give business efficacy to the contract
existing between the parties
...
The terms may also be implied by local custom e
...
in hire-purchase agreement,
the terms are implied unless made express
...
Conditions
b
...
Breach of a condition entitles the aggrieved party to avoid the contract and
claim damages
...
Breach of a warranty entitles the innocent party to claim damages but has no right to
repudiate the contract
...
A condition may be a condition precedent or subsequent
A condition precedent is an express term that must be fulfilled for the contract to be
binding e
...
A agrees to buy B’s house provided the Surveyor’s report is satisfactory
...
g
...
Exemption Clauses
A term may be inserted into a contract with the aim of limiting the liability of one of the
parties
...
These are aimed at limiting the
liability of one of the parties to which he would otherwise be liable in law
...
g
...
The clause will only be enforced in law if the document containing it was an integral part
of the contract and reasonable care was taken to bring it to the attention of the other party
...
Where a person puts his
signature on a contractual document, he is bound by any exemption clauses contained in
it, unless he was induced by fraud or misrepresentation to sign it
...
All illegal
contracts are void but not all void contracts are illegal
...
Contrary to positive law
...
Contrary to the rules of morality as recognized by law
c
...
e
...
Public policy
An act which violates the recognised limits of morality in which the everyday business of
the state is conducted is considered to be against the public policy
...
Contracts opposed to public policy
1
...
g
...
2
...
g
...
Contracts in restraint of marriage e
...
an agreement imposing an absolute restraint
of marriage is void, but partial restraint is acceptable
...
Marriage brokage contracts, contracts to introduce persons to others of opposite
sex for marriage are void
...
Contracts to commit crime or fraud
6
...
Contracts to commit fraud in public revenue
8
...
Contracts oust the jurisdiction of the courts
10
...
Wagering contracts
A wager is a promise to pay money or transfer property upon the happening of an
uncertain event in which neither party has interest except to win or lose eg the result of a
match in Nairobi
...
There must be a promise to pay money or money’s worth
b
...
The event must be an uncertain, either because it has to happen in future, or it has
taken place and the result is not known to the contracting parties
...
This undermines the freedom of choice
and/or freedom to compete
...
But
whether a contract is reasonable or not, it is the courts to decide
...
Exceptions
i
...
g
...
ii
...
iii
...
VITIATING FACTORS OF A CONTRACT
A contract supported by consideration in which there is an intention to enter into legal
relation, may still be of no legal effect where it is affected by a vitiating factor
...
This is setting
aside of a contract
...
The vitiating factors consist
of the following:
72
(1) Mistake
(2) Misrepresentation
(3) Duress or Coercion
(4) Undue Influence
(5) Illegality
These are explained as follows:
1
...
Mistakes are of two different kinds
a
...
b
...
However, mistake of
foreign law and mistake of private rights are treated as mistake of fact
...
Common mistake – both parties make exactly the same mistake e
...
A sells his car
to B which both of them believe to be parked at A’s house, but in actual fact is
stolen before the contract is entered into
...
Mutual mistake – where both parties makes different mistakes as pertaining the
subject matter e
...
A has two houses X and Y and sells X to B but B believes
that it was house Y that he bought
...
Unilateral mistake – only one of the parties is mistaken and the other party is
aware of that fact but keeps quiet
...
Illiteracy or ignorance of the terms does not release the party of the consequences of
signing such document
...
Plea non est factum does not apply to negotiable instruments
...
2
...
Those which become part of the contract (the terms of the contract), and
b
...
Such terms are called mere
representation
...
A representation means a statement of fact made by one party to the other either before or
at the time of contract, relating to some matter essential to the formation of a contract,
with an intention to induce the other party to enter into a contract
...
A
misrepresentation therefore is a representation or a statement of fact which is false
...
The false representation is not restricted to words, and may be made by the
conduct of the parties e
...
where a person wears the gowns of clergymen and obtains
goods from another by inducing him to believe that he is a clergyman
...
But for misrepresentation to be operative, it must have the
following characteristics:
(i) It must be a representation of fact, not of law or opinion
...
Therefore, misrepresentation
must have;
a
...
b
...
74
c
...
d
...
e
...
e
...
f
...
Types of Misrepresentations
There are three as follows:
(i) Fraudulent Misrepresentation - A statement is assumed fraudulent if it is made
knowing that it is untrue, or without having belief in its truth, or recklessly
without caring whether it is true or false
...
It does not give rise to an action of damages
...
Also referred to as a negligent misstatement
...
If he does not make the changes known to the other party,
the contract is voidable at his discretion
Remedies of Misrepresentation
1
...
2
...
3
...
Disclosure of material facts
While a person should not misrepresent information, there is no duty upon him to
disclose all material facts
...
They not only require a party not to
misrepresent but also to disclose all material facts, suppressing nothing when making the
contract
...
Insurance
b
...
Contracts for sale of land (disclosure in defects in title)
d
...
Partnership agreements
f
...
3
...
It also includes threatened
imprisonment, or criminal prosecution or dishonor of a member of the family
...
It must also relate to an
unlawful thing, as a threat to do a lawful thing is immaterial, subject only to the
requirement of public policy
...
Contract entered into by duress or coercion is voidable at the instance of the party
coerced
...
Undue influence
A contract is said to be induced by undue influence where the relation subsisting between
the parties is such that one of the parties is in a position to dominate the will of another
which prevents him from making his judgment freely, and he uses his position to obtain
an unfair advantage over the other
...
Undue influence makes the contract voidable at the option of the aggrieved party, but his
right to avoid the contract is lost if a third party has obtained rights under such contract
...
Trustee and beneficiary
b
...
Doctor and his patient
d
...
Teacher and his pupil
f
...
Guardian and ward
5
...
ASSIGNMENT OF CONTRACTUAL OBLIGATIONS
Rights and benefits under a contract may be assigned and the assignee can demand
performance from the other party
...
Assignment may take place in one of the three ways:
a
...
Equitable assignment
c
...
In writing, signed by the assignor,
b
...
Written notice of assignment must be given to the debtor and the assignee right
dates from the date of such a notice
...
A statutory or equitable assignment properly made binds the
debtor and his consent therefore is not relevant
...
In equitable
assignment, the assignee cannot sue the debtor in his own name but must join the
assignor in any action he takes against the debtor
...
(c) Assignment by operation of the law
Death of a contracting party does not discharge the contract; though he himself is not
available to sue or to be sued, all his rights and liabilities are vested in his personal
representatives
...
78
TRANSFER OF LIABILITIES
Generally, an obligation under a contract cannot be assigned without the consent of the
other contracting party
...
By Novation – this is the rescission of the original contract and the substitution of
a new one in which the obligations under the original contract are undertaken by
the new parties voluntarily
...
By vicarious performance – it is open to the parties to have their contract
performed vicariously by another person, provided the contract does not expressly
or implicitly insist on the performance of the contract by the promisor himself
...
In truth, it is not a contract at all and it is an
obligation which the law creates in any of the following circumstances
...
Claims on quantum merruit – generally where a person has done part of the
contract and not finished, he should not receive anything for part-performance
...
The court will value the work already done which is called quantum
merruit
...
Action for money paid to the use of another – A pays money to prevent a city
council from confiscating B’s goods, B must pay A the money paid for that
purpose
...
Action for money had and received – this is where the defendant has received
money for the use of another by fraudulent means
...
Money paid for a total failure of consideration – if money is already paid and the
contract is not enforced, the money can e recovered
...
Money paid under a mistake of fact
79
6
...
DISCHARGE OF CONTRACT
A Contract is said to be discharged (or terminated) when the parties to it are freed from
their mutual obligations; when the rights and obligations arising out of a contract are
extinguished, the contract is said to be discharged or terminated
...
Performance
b
...
Breach
d
...
Operation of the law
...
A contract
is discharged by performance when both parties fulfill their obligations and nothing
remains to be completed
...
(b) Attempted Performance or Tender – When the promisor offers to perform his
obligation under the contract, but is unable to do so because the promise does not
accept the performance
...
A valid tender of performance
is equivalent to performance
...
Substantial performance – The general rule is that if a contractor gives up work
when only part of it is done, he is not entitled to any sum of the work completed
...
b
...
NB: this does not apply to partial payment of debt
...
Divisible contract – where a contract is divisible or by installment, the contractor
is entitled to claim money for the part or installment completed unless there is an
express stipulation that the money can only be paid upon completion of all the
installments or all the work
...
Prevention of performance – if a party is prevented from completing a whole
contract, he can claim the money on the part already done on quantum merruit
basis or damages for breach of contract
...
Tender of performance – if one party is willing to perform the contract under the
terms specified in the contract and the other party refuses his performance, the
contract is discharged and the aggrieved party can sue for damages for breach of
contract
...
Tender of payment – if a valid tender is made and refused, the obligation to pay
the debt still remains as long as it is made in the currency acceptable in that
country
...
This can be
done orally even if the original contract was in writing or under seal
...
By Novation – Novation occurs when a new contract is substituted for an existing
one, either between the same parties or between different parties, the
consideration mutually being the discharge of the old contract
...
b
...
That is, if a
lesser sum is actually paid on an earlier date at the request of the payee, or
something different in kind has been accepted, there is a good discharge and thus
the contract is discharged by accord and satisfaction
...
By waiver – This is a deliberate abandonment or giving up of a right which the
party is entitled to under a contract, whereupon the other party to the contract is
released from his obligation
...
If one of the parties has done his part and the other party agrees to release him of his
obligations, it still amounts to a waiver, but he can still demand for the performance of
the contract if he so wishes later
...
Breach
however discharges the contract if a condition is breached and not a warranty
...
Failure to perform – where one of the parties in a contract fails to perform his
obligations in a contract
...
Renunciation – if before the time of performance arrives, one of the parties may
repudiate his liabilities
...
82
c
...
(d) IMPOSSIBILITY OR FRUSTRATION
This is where a supervening event beyond the contemplation of the parties occurs and
destroys the very foundation of the contract e
...
bombing of the world trade center
...
Destruction of the subject matter
b
...
c
...
Change in law
e
...
g
...
The limitation of action is six years from the
time a breach is done
(e) OPERATION OF THE LAW
The operation of the law can take place as follows:
a
...
b
...
Action can only be
brought in a contract under deed thus the simple contract is discharged by law
...
By bankruptcy – a bankrupt person’s obligations pass to the trustee but trustees
cannot be liable in contracts of personal service
...
By death – this only discharges contracts of personal service but the others remain
and the obligations pass to the trustees to enforce
...
Unauthorized material alteration – if a party in a contract under seal makes any
material alteration without the knowledge and consent of the other party, it is
voidable at the discretion of the innocent party
...
Substitution – If a contract is substituted with another contract then the first
contract is discharged
...
The fundamental principle underlying damages is not punishment but
compensation
...
As a general rule, ‘’compensation must be
commensurate with the injury or loss sustained, arising naturally from the breach
...
Damages can only be paid
if the loss is mitigated i
...
the party suffering from breach must take all reasonable efforts
to minimize his loss and he is not entitled to recover those damages which he could easily
have eliminated had he tried
...
Ordinary damages – these are restricted to proximate consequences of the breach
of contract i
...
the measure of damages is the estimated loss directly and naturally
resulting in the ordinary course of events from breach of contract
...
Special damages – they do not arise naturally from the breach of contract but
from peculiar circumstances
...
c
...
d
...
e
...
g
...
f
...
g
...
(b) QUANTUM MERUIT
Quantum merruit literally mean “as much as earned” or “in proportion to the work done
...
The court must then determine a reasonable
sum to be paid for those goods or services
...
What is a reasonable price is a
question of fact dependent on the circumstances on each particular case
...
A claim of quantum merruit does not apply however, where the contract requires
complete performance as a condition for payment, for example, a contract to do one piece
of work in its entirety in consideration for a lump sum payment
...
This is
an order requiring a person to carry out a contractual obligation
...
Under certain circumstances, an aggrieved party may file a suit
for specific performance, i
...
for a decree by the court directing the defendant to actually
perform the promise that he had made
...
Where a contract is for sale of land,
b
...
Where contract is for sale of rare goods not easily available in market or the value
cannot be measure in terms of money
...
Where damages or monetary compensation would provide an adequate remedy
...
Where the court cannot supervise the actual performance of the contract, e
...
a
building construction contract
...
Where contract is to render personal services, e
...
a contract to marry or paint a
picture
...
Where one of the parties in a contract does not possess the competency to
contract, hence cannot be sued for breach of contract
...
e
...
86
(d) INJUNCTION
This is an order by the court restraining the doing, continuance or repetition of a wrongful
act
...
e
...
It may be obtained to enforce a negative
term where an order for specific performance is not possible e
...
an injunction to a singer
from singing for a rival company after contracting to sing for a particular company
...
(e) RESCISSION
Where there is a breach of contract by one party, the other party may rescind the contract
and need not perform his part of the obligation under the contract
...
Thus, applying to the court for rescission of
the contract is necessary for claiming damages for the breach or for availing any other
remedy
...
3
...
In French tort is a word meaning wrong
...
Tort is defined as “An act which causes harm to a determinate person, whether
intentionally or not, not being a breach of duty arising out of a personal relation or
contract, and which is either contrary to law or an omission of a specific legal duty or a
violation of absolute right”
...
It includes duty not to defame, injure or damage
the property of any person
...
The duty in tort is also owed to every person
...
e
...
A
person who commits a tort is called a “tort-feasor”
...
Functions of the Law of Torts
1
...
2
...
3
...
g
...
4
...
g
...
5
...
Malice is the desire to cause damage to another person or his property
...
The general rule that a bad intention or
malice, does not amount to tort, the act complained of must be lawful
...
Elements of Tort
(i) Wrong act or omission by defendant
(ii) Legal damage to plaintiff (i
...
legal right violated)
(iii) Wrongful act should be that it can give legal remedy in form of damage
NATURE OF TORTUOUS LIABILITY
Tort arises from breach of a duty primarily fixed by law
...
Breach is redeemable by an award in
damages
...
The plaintiff must, however, prove that:
i)
He suffered harm (i
...
legal harm)
ii)
There has been violation of his legal right
...
a
...
This is actual and substantial loss without
violation of a legal right
...
It
follows from this rule that where an act is lawful or legally done without
negligence, and in the exercise of a legal right some damage is caused to another,
it is not actionable in court
...
–Vs- McGregor, Gow & Co
...
Held: The plaintiff had no remedy; a trader ruined by the legitimate
competition of his rival could have no redress in tort
...
Injuria sine dumno– This refers to a situation where a person suffers a violation
of his right without any loss or damages sustained by him
...
g
...
The court can award the damages to the plaintiff in
such cases
...
Held that even though the person he wanted to vote for won and thus no
harm was suffered, the plaintiff had been denied his legal right to vote and thus was
entitled to damages in tort
...
Tortuous liability can also be determined on
this principle
...
89
Under this principle, it is necessary to establish some fault on the part of the wrongdoer
before he can be made liable in tort
...
Intentional – knowingly
b
...
Negligence – without taking precaution to avoid the consequence, which he
should have foreseen
...
Contract
1
...
3
...
Duties fixed by parties
Duties owed to parties
There is Privity of contract
Award of either liquidated or
un-liquidated damages
Tort
Fixed by Law
Duty owed to all people
No privity of contract
Duty owed to community at charge
...
The general defences are;
1
...
Act of God
3
...
Necessity
90
5
...
Mistake
7
...
Exemption clauses/disclaimers
1
...
Complainant is deemed to have
consented to act being complained of
...
It is based on the theory that no injury can be done to a willing person
Case law: Khimji – vs- Tanga Mbsa transport Co Ltd (1962)
Plaintiffs were the personal representatives of a deceased who died when a bus was swept
away in floods
...
Court held that the deceased knew the
risk and assumed it
...
Other instances where defence of volenti may be applied are:(i) Patient injured by act of surgeon where patient consents
(ii) Passengers injured by act driver whom he knew to be drunk
(iii)
Spectator injured at a match
...
Each circumstance of the case is
looked at, and if negligence is proved, volenti can’t apply
...
Inevitable Accident
An inevitable accident is one which cannot be prevented by the exercise of ordinary care,
caution or skill
...
Case law: Stanley – vs- Powell (1891)
P who was a member of a shooting party, fired at a pheasant
...
Held: P was not liable and that it was an inevitable accident
...
Act of God
It is also an inevitable accident but caused by natural forces e
...
hurricanes, typhoons,
earthquakes, lightening etc
...
4
...
e
...
This is when one is forced to interfere with another person’s
right to prevent injury or harm to another
...
Normally used as last alternative e
...
digging a trench across a road prevent a
fire
5
...
The right must however, be exercised within the following limits:
i
...
ii
...
For example, do not use a gun on street boy with a penknife
...
g
...
6
...
It is used in exceptional cases
e
...
wrong arrest, where police in a case of mistaken identity arrest a wrong person
...
Statutory authority
If a person is authorized by statute to perform a particular act, he is not liable in tort as
long as;
i
...
He acts within the scope of the conferred powers by the statute
92
If he exceeds the power, the compensation if any, must not exceed such sum as is stated
in the statute/or the statute may give power to certain officials to asses the loss suffered
by the injured party
Case law: Vaughan – vs- Taff Vale railway Co
...
Sparks from the engine set the plaintiff’s woods on fire
...
8
...
They,
however, cannot cover negligence; one cannot exempt himself from liability for acts
arising from his own negligence
...
Special rules, however, apply to the categories of person’s and bodies below;
a
...
The Government is liable
...
For torts committed by its servants or agents
...
For breach of duty to its employees
...
For breach of duty related to the ownership, occupation, possession or control of
property
...
For breach of duty imposed by statute
...
The government is also not liable for actions of officials for local authorities
and parastatals since they are bodies corporate and liable for own actions
...
Infants and minors
As a general rule, age is not a defense in tort i
...
Minors can sue and be sued in tort
...
Infants may not have mental ability to be responsible for negligent acts
...
Husband and Wife
At common law as a general rule, a married woman is answerable for her wrongful acts,
including fraud, and she may be sued in respect of such acts jointly with her husband
...
In Kenya a husband is liable for his wife’s torts but a husband cannot sue his wife in tort
...
The President
The constitution provides that the president is not liable to any proceedings whatsoever in
any court
...
e
...
f
...
They are liable for torts committed
by their servants and agents
...
A corporation is not liable for torts of a personal nature such as defamation and battery
g
...
g
...
94
h
...
i
...
An alien from an enemy state cannot sue
...
j
...
VICARIOUS LIABILITY
A person can be held responsible and/or liable for the actions for another person
...
Instances of vicarious liability are in relationships between
an employer and employee, a principal and an agent
...
If an employee is authorized to do a particular act in a manner, but does
it in the wrongful and unauthorized manner, the employer is still liable
...
The person was an employee or agent of the other
ii
...
Even if the employer had prohibited a particular action and yet it is an act expected to be
performed as part of the duty of that employee, the employer is still liable
...
The employer retains his control on the contractor
...
The subject matter of contract is what is complained of e
...
digging trenches
across the road, noise etc
iii
...
iv
...
95
STRICT LIABILITY
This is where fault need not be proven
...
All that must be proved is that one party has suffered harm from the other party’s
wrongful act
...
Fletcher is defined as:“The person who for his own purposes, bring on his land and collects and keeps there
anything likely to do mischief if it escapes, must keep it at his peril (own risk) and if he
does not do so, is prima facie liable for all the damages which is the natural consequence
of its escape
...
g
...
Case Law: Rylands V
...
The site chosen had a disused coal mine, with passages connecting to
the adjoining mine that belonged to the plaintiff
...
Held: It was held that the defendants were liable and was immaterial that there was no
fault of their part
...
There was a non-natural use of land
...
bees from a bee farm
ii
...
Non – natural use – the land must have been put to a non natural use
...
have been an artificial accumulation of things not naturally found on that land
ii
...
Defences to the Rule in Rylands –vs- Fletcher
Plaintiff’s Fault – If the escape in question was occasioned by the fault of the
i
...
ii
...
iii
...
SPECIFIC TORTS
They include;
i
...
Nuisance
iii
...
Defamation
1
...
There are 3 types of trespass;
a
...
trespass to a person, and
c
...
Trespass to Land
This is where the plaintiff’s possession of land is wrongfully interfered with
...
It can be by;
(a) Wrongful entry including walking without authority, sitting on the plaintiff’s fence,
etc
...
(c) Place things on the land
...
(ii)
In trespass possession is at stake, in nuisance it is the use and
enjoyment of the land that is at stake
...
(d) Doing something Ultra Vires to authority initially allowed/given on the land
Trespass can be a continuing nature, where the act constituting the trespass remains and
continues
...
This is referred to as trespass by relation, because it relates to the time when
ownership became legal
...
The Kenya Trespass Act (cap 294), declares the following acts to be
prosecuted criminally;
a
...
b
...
A person who trespasses with the intention of committing an offence, or to
intimidate or to annoy the occupier
...
A person who enters with the intention to steal stock or agricultural product
...
Defences in Trespass to Land
(i)
Prescription – when you can claim a legal right to same property
...
This is known as
prescription
...
g
...
(iii)
Statutory Authority -
Where authority to enter land is conferred by law,
whether by statute or court order
...
g
...
Remedies
(i)
Damages (monetary compensation)
(ii)
Ejection, usually in a continuing trespass
...
(iv)
Injunction to prevent a further or threatened trespass
...
(Detaining to discourage further
trespass – open negotiation between two parties)
...
Trespass to the Person
...
Assault – mere threat
ii
...
False imprisonment
99
Assault – is committed by a person when he threatens to use force against the other
person and thus putting the other person in fear of immediate danger e
...
waving a gun in
one’s face or holding knife to one’s neck
...
It must be intentional and voluntary
...
The length of time is immaterial but relevant in determining quantum
...
Parental Authority – a parent has a right to reasonably chastise or discipline his
children
...
NB: A husband has no right to chastise a wife
...
Judicial Authority – an action done by order of court is not actionable in tort e
...
corporal punishment
...
General defences like self defence, statutory authority and volenti may be pleaded
...
Damages – monetary compensation
ii
...
This is an order from high court
directing that the detained person be brought to court
...
Trespass to Goods and Detinue
Trespass to Goods is the act of directly and intentionally interfering with goods in the
possession of another without lawful justification
...
removing/taking a way the goods from one place to another – trespass
ii
...
Destroying or damaging the goods – trespass
...
Sale of goods to a third party – conversion
100
The main elements in trespass on goods are:
(i) The act complained of must be direct
...
(iii) The offending act must be deliberate or intentional
It should be noted that a finder of lost property is not liable in trespass where the owner
of the property is not known to him and cannot be easily ascertained
...
Defendant’s act must be intentional ands interfere with title of goods to rightful
possessor
...
- Committed by a person in possession
- committed against a person in
possession
- Damage equal value of converted goods
- damages assessed by court against loss of
goods
Detinue – this is where goods are wrongfully withheld or detained from a person entitled
to their immediate possession
...
In conversion the goods will have been disposed off and cannot be recovered by the
plaintiff
...
Not many defences are available to the defendant in an action brought in respect
of a wrong to goods
...
General defences like statutory or judicial authority may be relied on
...
Recover of goods or their value - detinue
ii
...
NUISANCE
Nuisance is committed whenever a person is wrongfully disturbed in the use of and
enjoyment of his land
...
Nuisance may, however, be committed in public places like a highway or river, where
none of the parties is an owner or occupier of the land
...
Private Nuisance, and
b
...
It is committed by a neighbour e
...
i
...
ii
...
Permitting a leaf tree to overhang a neighbour’s land thereby causing a nuisance
by shading leaves
iv
...
102
The plaintiff must have title to or interest in the damaged property
...
Public Nuisance is also known as common nuisance
...
g
...
Parking truck to block a highway
ii
...
Making noise in a move hall
A public nuisance is generally a crime
...
Generally nuisance is only actionable if it is a continuing wrong
...
Defences
a
...
The harm
is minimal, and no reasonable person has cause to complain
...
b
...
The plaintiff had
stock of some very delicate paper which he used in his business
...
The defendant was involved in the
business of paper manufacture, and the machine produced immense heat
...
There was no malice in the defendant’s actions
...
Prescription - This is right acquired over years
...
103
d
...
g
...
Remedies
a
...
A person aggrieved by a nuisance is at liberty to abate it peacefully, and where feasible
after notice to the tort-feasor
...
b
...
It is granted to stop an impending or existing nuisance
c
...
3
...
”
It has three elements
1
...
breach of the Duty of Care
3
...
The duty of care
This is defined in Donoghue –vs- Stevenson (1932) as the duty to take reasonable care to
avoid acts or omissions, reasonably foreseeable as likely to cause injury to your
104
neighbour
...
g
...
to a driver, every other road user is his neighbour in law
ii
...
doctor to his patient
iv
...
The standard of care
required is that of reasonable man/ordinary man
2
...
A reasonable man is a man of ordinary prudence
...
g
...
3
...
Damages are only recoverable for the injuries suffered if a reasonable man in the
defendant’s position ought to have foreseen that his act or omission would result in injury
to the plaintiff
...
Later discovered there was a snail in the bottle that was not visible due to the opaque
nature of the bottle
...
The sight caused her to
suffer nervous shock
...
Case Law: Dulieu –vs- white & son (1901)
A man drove a horse to a bar counter and the pregnant woman suffered nervous shock
and gave birth prematurely
...
The plaintiff’s wife who had
left her children at the bottom of the hill suffered severe shock, fearing for the safety of
her children and died
...
Proof of Negligence
The burden of proof is on the plaintiff
...
2) The defendant has breached that duty
...
The plaintiff’s burden of proof can, however, be discharged under the maxin “res ipsa
loquitor” which means that ‘the facts speak for themselves’ e
...
(i)
A crane collapsing
...
(iii)
Object falling from one vehicle causing damaging to another
...
The burden of proof shifts to the defendant
...
2) The event must be such that is could not have happened without negligence
...
Case Law: Msuri Muhhidin –vs- Nazzor Bin Seif (1960)
A bus in which the plaintiff was traveling overturned when both the offside rear tires
burst, and as a result the plaintiff suffered personal injuries
...
Held:a
...
b
...
Case Law: Embu public Road Servises –vs- Riimi (1968)
...
The accident was a caused by breakage of the main springs of the bus, which put the
driver into a position of emergency
...
Held:
107
a
...
b
...
Contributory Negligence
This is where the defendant claims that the plaintiff also contributed to harm or injury by
or conducting himself in a manner that also amounted to negligence
...
Contributory negligence does not apply to young children as they do not have
the mental capacity to asses right or wrong
...
Failure to comply with any of these
provision amounts to breach of statutory duty of care, and is deemed negligent
...
g
...
Statements on parties credit worthiness
b
...
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OCCPIERS LIABILITY
The Occupiers Liability Act clarifies the duties of an occupier of premises towards
person who are lawfully on his premises
...
The Act provides that:a
...
e
...
b
...
c
...
g
...
The occupier is not liable for the negligence of an independent contractor
...
The duty does not extend to a visitor who has willingly accepted a risk
...
f
...
A child visitor is however not capable of reasonable and prudent judgment
...
Warning was given
...
Volenti non fit injuria
c
...
4
...
The main elements of
defamation include:
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a
...
b
...
e
...
c
...
The plaintiff need not to be specifically named, it is sufficient that right thinking
members of society understands the statement to refer to him
...
The test is whether the words when read by reasonable people would be
understood to be defamatory to the plaintiff
...
The defamatory statement must be published to a third party
...
Slander
2
...
SLANDER
This is a non-permanent form of defamation, and is mainly committed by way of
speaking
...
Exceptions to the need to prove damage
1
...
2
...
Where the statement accuses un-chastity on a woman
4
...
2
...
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Libel in actionable per se (without need to prove damage)
...
Defamation of a large group of people is not actionable e
...
lawyers are thieves cannot be
sued by any lawyer
...
Defences in defamation
1
...
Small inaccuracies do not defeat this defence
...
2
...
The statement must be one of option and not of fact
...
e
...
3
...
Qualified privilege – this can be pleaded where the person making the
communication has moral duty to make it to the person he does make it and the person
who received it has an interested in hearing in
...
g
...
This defence cannot
be used where the statement is motivated by malice
...
An Unintentional defamation – Applies to words published innocently
...
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b) The words were not prima-facie defamatory and publisher didn’t know of any
possible innuendo
...
If offer is refused, the publisher has a defence if he can prove that:i
...
ii
...
The author wrote them without malice
...
Damages – for injury to reputation and feelings or for mental pain suffering and
anxiety
...
2
...
3
...
The plaintiff
must first prove that the statement is untrue and that its publication, will cause
irreparable damages
...
An action in tort must
be brought within three (3) years of the action arising
...
g
...
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Where the tort is a continuing wrong, a new course of action arises with each new act and
limitation period accrues for each action from the date of each tort
...
Limitation period for defamation is twelve (12) months
...
Actions can survive even after a person is dead
...
Legal administrator may institute proceedings within the limitation period, on
behalf of the dead person’s dependants
...
0 ARBITRATION
The law relating to arbitration is contained in “The arbitration Act (Cap
...
Arbitration may be defined “as the settlement of disputes and differences relating to civil
matters (e
...
money, property or breach of contract) between one party and another in
quasi judicial manner, by the decision of one or more persons, called arbitrators,
appointed by the contending parties, without having recourse to court of law”
...
Arbitration Agreement
Section 2 of the Act defines an arbitration agreement as “a written agreement to refer
present or future differences to arbitration, whether an arbitrator is named in it or not
...
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(b) The agreement must refer to a specific dispute to arbitration
...
(c) An arbitrator should be named in the arbitration agreement
...
Thus, if a
party to arbitration agreement disregards the agreement and files a suit in a Court of law
with respect to the subject matter of such agreement, the other party to the agreement has
a right to file an application for staying the suit so as to enable arbitration to proceed in
terms of the agreement
...
(ii) The applicant for stay was and is till ready and willing to do all things necessary
to the proper conduct of the arbitration
...
Reference to Arbitration:
The capacity to make a submission for arbitration is associated with a capacity to
contract
...
A minor or lunatic is not competent to enter into a contract so
there cannot be a valid submission to arbitration by him
...
g
...
A dispute may be referred to arbitration in the following three ways:(a) By Order of Court
The court has the powers to refer some specific issues or cases to the arbitration
...
The consent of parties is necessary in this
regard
...
(c) By Consent of Parties
The matters relating to civil cases can be referred to the arbitration by the mutual
consent of the parties
...
It is less costly
...
It saves time and quick settlements are made
...
The procedure is simpler
...
The arbitrators have technical knowledge of matters in dispute
...
The ‘award’ of the arbitrator, once approved is final and no appeal lies from it
...
The arbitrators may not have sound knowledge of law in most of the cases
...
The arbitrators’ decisions are not uniform in similar matters
...
The arbitrators may be biased in some cases
...
Implied Provisions of Arbitration Agreement:
Every arbitration agreement includes the following provisions, unless expressly excluded
by the parties:
(i) Unless contrary intention is expressed in it, the reference is to a single arbitrator
(Section 8);
(ii) If the reference is to two arbitrators then these two arbitrators must appoint an
umpire immediately after they themselves are appointed (Section 10);
(iii)An arbitrator or an umpire can make an interim award, if necessary, (Section 15
(1);
(iv) An arbitrator or umpire has the direction to direct who should pay the costs of
reference and award and the manner in which those costs should be paid,
(Section 19(1);
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(v) The arbitrator or umpire has the same power as the High Court to order specific
performance of a contract other than a contract relating to immovable
property, (Section 16);
(vi) The arbitrator or umpire has the power to correct an error arising from an
accidental slip or omission, or clerical mistake in an award, (Section 18);
(vii)
An arbitrator or umpire may make an award at any time (Section 14(1)
...
Thus, the Umpire’s
authority commences when arbitrators are unable to agree (i
...
when there is a tie
between an even number of arbitrators)
...
REMOVAL OF ARBITRATOR OR UMPIRE
Section 14(3) of the Act provides that on the application of any party to a reference, the
High Court may remove an arbitrator or Umpire who fails to use all reasonable dispatch
in entering on and proceeding with the reference and making an award, and an arbitrator
or umpire so removed is not entitled to receive any remuneration in respect of his service
...
g
...
g
...
Section 26 of the Act deals with the power of the Court in case of removal of an arbitrator
or umpire
...
AWARD
A judgment or final decision of an arbitrator or arbitrators or an umpire on all matters
referred to arbitration is called the ‘award’
...
No particular form or word is requisite for the validity of an award
...
However, the High Court may
remit the award for reconsideration to the same arbitrators or umpires
...
The court is empowered to remit an award for reconsideration upon grounds specified
below but upon no others:
(a) Where the award has left undetermined any of the matters referred to arbitration,
and such matter cannot be separated without affecting the determination of the
matters referred; or
(b) Where the award is so indefinite as to be incapable of execution; or
(c) Where an objection as to the legality of the award is apparent on the face of it
...
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Title: Business law in human resource management
Description: Quality study notes for a human resource student
Description: Quality study notes for a human resource student