BLE-013 ELEMENTS OF LAW NATURE AND SOURCES OF LAW IN KENYA Odimmasi Felix What is Law? What is Law? No assigned meaning Different writers with different points-of-view What is your definition? Nature of Law According to Hart Law is a coercive instrument for regulating social behaviour. Law has also been defined as a command backed by sanctions. NB: Existence of a sovereign, to prescribe or formulates the commands and enforces sanctions Nature of Law Salmond, law consists of a body of principles recognised and applied by the state in the administration of justice. Law = a collection of binding rules of human conduct prescribed by human beings for obedience of human beings. Inevitably, therefore law implies rules or principles enforced by courts of law. Rules of law are binding hence differ from other rules or regulations. Rules of law are predictable and certain. What then is LAW?? Law is an aggregate of conglomeration of rules enforced by courts of law at a given time. What is the relationship between Law and Morality? Functions of Law Facilitate administration of justice. It is an instrument used by human beings to achieve justice. Law assists in the maintenance of peace and order. Law promotes peaceful co-existence, that is, prevents anarchy. Law promotes good governance. Law is a standard setting and control mechanism. Provision of legal remedies, protection of rights and duties. Classification of Law • Written / Unwritten • National and International • Public and Private • Substantive and Procedural • Criminal and Civil Hierarchy of Sources of Law 1 The Constitution 2 All Other Written Laws 3 Statutes of General Application in England by August 21st 1897 4 5 African Substance Customary of Law Common Law Doctrines of Equity Islamic/ Muslim Law Hindu Customary Law Delegated Legislation Hierarchy of Kenyan Laws Contents of the Constitution • The structure of the government • Methods of choosing leaders and their powers and prerogatives • Appointment of public officials • Composition of parliament and county assemblies • Protection of fundamental rights • Citizenship; Land, Finance, etc. Process of Legislation / Enactment of Laws Notice of Bill Drafting of Bill First Reading Second Reading Committee Stage Reporting Stage Third Reading Presidential Assent ?? Advantages of Acts of Parliament Democratic in Nature Resolution of Legal Problems Dynamic General Application Uniformly Applied Publicity Disadvantages of Statutes Imposition of Law Wishes of Parliamentarians Bulky and Technical Bills Formalities Time-consuming processes Borrowed Legislation English Law Reform (Frustrated Contracts) Act 1943 The Law Reform (Married Women and Tortfeasors’) Act 1935 The Disposal of Uncollected Goods Act 1952 The Indian Succession Act 1865 The Indian Transfer of Property Act 1882 The Admiralty Offences (Colonial) Act 1849 The Evidence Act 1851 sections 7 and 11 SUBSIDIARY LEGISLATION Subordinate or delegated indirect legislation Section 2 of the Interpretation and General Provisions Act : 'any legislative provision (including a transfer or delegation of powers or duties) made in exercise of any power in that behalf conferred by any written law by way of by-law, notice, order, proclamation, regulation, rule of court or other instrument'. Subsidiary legislation: The by-laws, notices, orders, regulations, rules and other 'instruments' constitute the body of the laws known as. SUBSIDIARY LEGISLATION Section 30 of the Constitution provides that 'the legislative power of the Republic (of Kenya) shall vest in the Parliament', it is not possible for Parliament itself to enact all the laws that are required to run all the affairs of this country. Many Acts of Parliament require much detailed work to implement and operate them. The Act is drafted so as to provide a broad framework which will be filled in later by subsidiary legislation made by Government Ministers or other persons under powers conferred on them by the Act ADVANTAGES OF SUBORDINATE LEGISLATION (a) Compensation of lost Parliamentary time (b) Speed (c) Technicality of subject matter (d) Flexibility DISADVANTAGES OF SUBORDINATE LEGISLATION (a) (b) (c) (d) (e) Less democratic Difficult to Control Inadequate Publicity Sub-delegation and Abuse Detail and Complexity STATUTES OF GENERAL APPLICATION no authoritative definition of a "statute of general application" the phrase is presumed to refer to those statutes that applied, or apply, to the inhabitants of England generally. In the case of I v I the High Court held that the Married Women's Property Act 1882 is an English statute of general application that is applicable in Kenya. STATUTES OF GENERAL APPLICATION These laws are applicable only if: (a) They do not conflict either with the constitution or any of the other written laws applicable in Kenya, and (b) The circumstances of Kenya and its inhabitants permit. In I v I the High Court held that the English Married Women's Property Act 1882 was applicable in Kenya because, in the court's view, the circumstances of Kenya and its inhabitants do not generally require that a woman should not be able to own property. STATUTES OF GENERAL APPLICATION • A statute of general application which was in force in England on 12th August, 1897 but has been repealed by an English statute enacted after that date presumably remains a prima facie source of Kenya Law unless the repealing statute has been specifically incorporated into Kenya Law. • An example is the Infants Relief Act 1874 APPLICATION OF THE UNWRITTEN SOURCES OF KENYA LAW • It is a rule of Kenya Law that unwritten laws are to be applied subject to the provisions of any applicable written law. • This is a consequence of the constitutional doctrine of parliamentary supremacy and the fact that written laws are made by parliament, either directly or indirectly. APPLICATION OF THE UNWRITTEN SOURCES OF KENYA LAW This rule enables Parliament to make new laws to replace existing customs as social conditions change. It also obviates the possibility of having two conflicting rules of law regarding one factual situation. An unwritten law that is not in conflict with a written law is as binding as any written law and a breach of it renders what has been done as illegal as if the law broken was a written law. THE UNWRITTEN SOURCES SUBSTANCE COMMON LAW DOCTRINES OF EQUITY AFRICAN CUSTOMARY LAW ISLAMIC / MUSLIM LAW HINDU CUSTOMARY LAW ADMINISTRATION OF THE LAW AND ADMINISTRATIVE LAW IN KENYA Felix Odimmasi Present day Legal and Judicial System •Acts as an intermediary between the legislature, which writes statutory law, and the executive, which is responsible for enforcing the law: May also involve ADRM – legally recognised out of court dispute settlements available for civil disputes •Based on and modelled on the English Common Law arising from historical events •System of litigation in courts is adversarial •It still relies heavily on English law and in particular, the English case law. Present day Legal and Judicial System It is important to realise that the law of persons is essential to determining locus standi, the ability to sue and be sued LAW OF PERSONS Kenyan law recognizes two persons upon whom it confers rights and imposes obligations. These persons are: Natural person Artificial person LAW OF PERSONS Natural person: this is the human being who is recognized as a person by law by reason of his characteristics. Artificial person: This is an abstraction of law often described as a juristic person. It is a metaphysical entity created in contemplation of the law. This person is referred to as a corporation or incorporated Association. CORPORATION OR INCORPORATED ASSOCIATION This is an association of persons recognized as a legal entity. It is an independent legal existence. It has own rights and is subject to obligations. It has capacity to own property, contract, sue or be sued and perpetual succession. CORPORATION OR INCORPORATED ASSOCIATION CREATION / FORMATION OF CORPORATIONS An incorporated association may be brought into existence in any of the following ways: Registration: This is a process if incorporation provided by the Companies Act. It is evidenced by a certificate if Incorporation which is the ‘birth certificate’ of the corporation. Corporations created by registration are Public and Private Companies. Statute: Acts of parliament often create incorporated associations. The corporation owes its existence to the Act of Parliament. Charter: Under the Universities Act, when a private university is granted by charter, by the relevant authority it becomes a legal person of discharging its powers and obligations. TYPES OF CORPORATIONS 1. Corporations Sole. This is a legally established office distinct from the holder and can only be occupied by one person after which he is succeeded by another. It is a legal person in its own right with limited liability, perpetual succession, capacity to contract, own property and sue or be sued. Examples include: Office of the public trustee Office of the Permanent Secretary to the Treasury TYPES OF CORPORATIONS • 2. Corporations Aggregate • This is a legal entity formed by two or more persons for a lawful purpose and whose membership consists of at least two persons. It has an independent legal existence with limited liability, capacity to contract, own property, sue or be sued and perpetual succession. Examples include: public and private companies. TYPES OF CORPORATIONS 3. Registered Corporations These are corporations created in accordance with the provisions of Companies Act. Certain documents must be delivered to the Registrar of companies to facilitate registration of the company. E.g. memorandum of association, articles of association, statement of nominal capital. Examples of registered corporations are; public and private companies TYPES OF CORPORATIONS • 4. Statutory Corporations • These are corporations created by Acts of Parliament. The Act creates the association, gives it a name and prescribes the objects. Examples: Kenya Wildlife Services, Agricultural Finance Corporation, Public Universities, Central Bank etc. TYPES OF CORPORATIONS 5.Chartered Corporations These are corporations created by a charter granted by the relevant authority. The charter constitutes the association a corporation by the name of the charter. e.g. Private universities. FEATURES OF CORPORATIONS Legal personality: A corporation is a legal person distinct and separate from its members and managers. It has an independent legal personality. It is a body corporate with rights and subject to obligations. In Salomon v. Salomon & Co Ltd (1897), the House of Lords stated that “…the company is at law a different person altogether from the subscribers to the memorandum”. The ratio decidendi of this case is that when a company is formed, it becomes a legal person, distinct and separate from its members and managers. FEATURES OF CORPORATIONS Limited liability: The liability of a corporation is limited and as such members cannot be called upon to contribute to the assets of a corporation beyond a specified sum. In registered companies liability of members is limited by shares or guarantee. Members can only be called to contribute the amount, if any, unpaid on their shares or the amount they undertook to contribute in the event of winding up. This is liability limited by shares and by guarantee respectively. FEATURES OF CORPORATIONS Owning the property: a corporation has the capacity to own property. The property of a corporation belongs to it and not to the members. The corporation alone has an insurable interest in such property and can therefore insure it as was in the case of Macaura v. Northern Assurance Co Ltd (1925). In this case the plaintiff was the principal shareholder and the company owed him £19,000. The Company had bought an estate of trees from him and later converted them to timber. The plaintiff subsequently insured the timber with the defendant company but in his own name. The timber was destroyed by fire two weeks thereafter. The Insurance Company refused to compensate the plaintiff for the loss and he sued. It was held that he wasn’t entitled to compensation he had no insurable interest in the timber. FEATURES OF CORPORATIONS Sue or be sued: Since a corporation is a legal person, with rights and subject to obligations, it has the capacity to enforce its rights by action and it maybe sued on its obligations e.g. when a wrong is done to a company, the company is the prima facie plaintiff. It was held in Foss v Harbottle, where some directors had defrauded their company but members had resolved in a general meeting not to take any action against them. However, two minority shareholders sued the directors for the loss suffered by the company. The action was struck off the ground that the plaintiff had no locus standi as the wrong in question had been committed against the company. FEATURES OF CORPORATIONS Capacity to contract: A corporation has capacity to enter into contracts; be they employment or to promote the purposes for which they were created. For example; a company has capacity to hire and fire. It was so held in Lee v. Lees Air farming Co. Ltd (1961) Perpetual Succession: Since a corporation is created by law, its life lies in the intendment of law. It has capacity to exist in perpetuity. It has no body, mind or soul. For example, the death of directors or members of a company cannot determine a company’s life. It can only be brought to an end through the legal process of winding up. UNINCORPORATED ASSOCIATIONS These are associations of persons who come together to promote a common and lawful purpose. They have no independent legal existence and property if any is jointly owned or is held in trust for the benefit of all members. The rights of individual members are contained in the Constitution of the association. Members are personally liable for debts and other liabilities of the association and are liable to lose personal assets if the association is unable to pay its debts (insolvent). The associations can sue or be sued through their principal officers (chairman, secretary, treasurer). The law which regulates those associations is the law which regulates the activities they engage in. e.g. Partnerships, Trade Unions, clubs, Welfare Associations, Staff Unions, political parties. UNINCORPORATED ASSOCIATIONS INCORPORATION This is a legal process by which a partnership or other form of unincorporated association is converted to a registered company. It thereupon becomes a legal person in its own right. The most fundamental attribute of incorporation from which all other consequences flow is that when an association is incorporated it becomes a legal person, separate and distinct from its members and managers. It acquires an independent legal existence. It becomes a body corporate. This was the rule in Salomon-v- Salomon & co Ltd. Cap 486 Laws of Kenya Cap 210B Laws of Kenya The Judiciary CONSTITUTIONAL CONCEPTS These form the basis for the operation of the Dispute resolution systems: SEPARATION OF POWERS INDEPENDENCE OF THE JUDICIARY 1. SEPARATION OF POWERS A legal framework developed by a French jurist named Montesquieu whose concern to contain the over-concentration of governmental powers in the hands of one person or a body. It is a characteristic of Constitutionalism which is the theory of limited government. According to Montesquieu the only way to create a system of checks and balances was to ensure that governmental powers were devolved. He developed the so called classical doctrine of separation of powers. He suggested that: 1. SEPARATION OF POWERS There should be different organs of government i.e. executive, legislature and judiciary. These organs must exercise different functions. The legislature makes the law, the judiciary interprets it and the executive administers. No person should be a member of more than one organ. According to Montesquieu, such an arrangement would ensure that no single organ exercises unchecked power, however, this framework cannot operate in any country in its pure state, as government does not operate in water-tight compartments. Montesquieu is credited for having suggested that these ought to be an independent judiciary. 2. INDEPENDENCE OF THE JUDICIARY The principle of independence of the judiciary is an integral part of the doctrine of separation of powers. It means that: There should be a distinct organ of government whose function is to administer justice The organ must operate impartially and in an unbiased manner. It must be disinterested as possible in the proceedings. The organ must administer justice on the basis of fats and law without fear or favour and without eternal influence. 2. INDEPENDENCE OF THE JUDICIARY Independence of the judiciary may be actualized in various ways: By providing security of tenure for judicial officers. Economic independence i.e adequate financial provisions to judicial officers. Immunity from court action for actions taking place in the course of judicial proceedings. Appointment of persons of unquestionable professional and moral integrity Independence of the judiciary is critical in that: It promotes the liberty of human beings by checking on the excesses of the state. It promotes the rule of law. THE KENYAN JUDICIARY SYSTEM JURISDICTION “POWERS” to entertain / Competence Original / Appellate Territorial Pecuniary Criminal / Civil ??? Investigate and write about jurisdictions of various courts ADMINISTRATIVE LAW in Kenya ADMINISTRATIVE LAW OBJECTIVE: To provide a broad understanding of the following aspects: • Separation of powers. • Natural justice. • Judicial control of the executive. • Administrative Legislation. • Arbitration and other ADRM. What, then, is Administrative Law? Administrative Law refers to the law relating to public administration. It is the law relating to the performance, management and execution of public affairs and duties. Administrative law is concerned with the way in which the Government carries out its functions. Key Terms in Admin Law Judicial Review: It is the process through which a party aggrieved by an administrative body can find redress in a Court of Law. Ultra Vires: It simply means “beyond the powers”. The courts will intervene on matters of public administration if the administrative bodies have acted beyond the powers that have been conferred on them. Principles of natural justice: These are rules governing procedure and conduct of administrative bodies. They were developed by the courts in England and imported into Kenya as part of common law principles. Purpose of Administrative Law The primary purpose of administrative law, therefore, is to keep the powers of government within their legal bounds, so as to protect the citizen against their abuse. Administrative law is also concerned with the administration and dispensation of delivery of public services. What are Government Tasks? Include delivery of public services eg: Health Security, Facilitation of Trade, Arbitration in disputes, Collection of Revenue etc Executive Branch of Government Administrative law is the law relating to the executive branch of government. The law deals with a variety of things e.g. i. The establishment of public authorities e.g. the city council, establishment of public bodies and organs. ii. The nature of the tasks given to various public organs and public agencies. iii. The legal relationship between the public bodies themselves and also between the public agencies and the public and between public agencies and the citizens. Categories of Government Functions 1. Ministerial Functions: Examples of Ministerial Functions are those functions carried out or performed by Government Ministers in their implementation of governmental policies and programs. Examples include appointment of public officials by Ministers and the grant of ministerial approvals and consents. 2. Administrative Functions - these are the functions carried out by public officials and public bodies in their management of various governmental bodies in their provision of services for example educational services and in their administration of various social services as in the case of social security services. Please note that management of public schools and universities provide yet another example of administrative functions of governmental bodies. 3. Legislative Functions: These include the function of making or creating subsidiary legislation. The responsibility of legislative functions is on the respective Ministers’. The duty of making by-laws is also the respective minister’s. 4. Judicial Functions: These primarily involve the functions of determining claims or disputes between individuals and other bodies. A good example of administrative body that performs judicial functions is the Industrial Court which functions as a court of law. 5. Quasi Judicial Functions: These involve the exercise of powers which are fundamentally judicial but without the usual trappings of a court of law for example without strict requirement of rules of evidence or the observance of rules of evidence, without strict requirements of examination of witnesses and without other legal technicalities a good example being the Liquor Licensing Court, the Land Control Boards and the Motor Vehicle Licensing Authorities. FUNCTIONS/PURPOSES OF ADMINISTRATIVE LAW 1. It ensures proper dispensation of services. 2. It seeks to protect citizens from abuse of power. 3. To keep the powers of government i.e. powers of various public bodies within their legal bounds, so as to protect citizens from their abuse. Abuse of power can arise either from malice, bad faith or even from the complexities of the law. 4. There are duties placed in public bodies (public institutions) such that another function of the law is to see that the duties are performed and that the public agencies can be compelled to perform their duties where there is laxity or where they refuse or otherwise fail to do so. JUDICIAL REVIEW Judicial Review is the process through which an aggrieved person can find redress in a Court of Law. Judicial Review forms part of administrative law because it is the most appropriate way that a party aggrieved by an administrative body can find redress. Judicial Review refers to the examination of the actions or inactions of public bodies by the High Court. Judicial Review is an examination of the manner in which a decision was made or an act done or not done. This definition is found in Chief Constable of North Water Police V. Evans The purposes of Judicial Review from that definition are as follows: 1. To prevent excessive exercise of powers by administrative bodies and officials; 2. To ensure that an individual is given fair treatment by Administrative authorities; 3. To keep Administrative excesses in check and also to provide a remedy to those aggrieved as a result of excessive exercise of power by administrative bodies. The primary legal basis of Judicial Review is the Law Reform Act. From the wording of Section 8 of the Law Reform Act, one can only apply for Judicial Review in the High Court and not the Magistrates Courts. GROUNDS OF JUDICIAL REVIEW Courts of Law (High Court) will intervene in public administration in one or more of the following circumstances i.e. courts of law will review actions of administrative bodies in one or more of the following circumstances: 1. When a body acts ultra vires; 2. Unreasonableness; 3. When there is jurisdictional error; 4. When there is an error of law; 5. When there is an error of fact; 6. When there is an abuse of power; 7. When irrelevant considerations governed the making of a decision; 8. When there is bias; 9. When there is unfair hearing; 10. When there is procedural flaw; 11. When there is irrationality 12. When a public official or body acts in bad faith; 13. When there is breach of the principles of natural justice. DOCTRINE OF ULTRA VIRES The doctrine of ultra vires is a legal doctrine. In the English Legal System judicial control of administrative agencies is based on the doctrine of ultra vires. This is the doctrine on the basis of which the courts will interfere or intervene in matters of public administration. Ordinarily courts would not interfere. WHAT, THEN, IS ULTRA VIRES? It simply means “beyond the powers” so that if ultra vires is the basis in which courts will interfere or intervene on matters of public administration then the point is that courts will intervene on matters of public administration if the administrative bodies have acted beyond the powers that have been conferred on them. The essence of this doctrine is that administrative bodies must act within the powers granted them by statutes. They must also act within the requirements of common law. TYPES OF ULTRA VIRES 1. Substantive Ultra Vires. 2. Procedural Ultra Vires. Courts are mandated to use or to apply ultra vires doctrine to invalidate actions of public bodies. If a body has done something that amounts to procedural ultra vires, the court will be prepared to apply the doctrine of ultra vires to invalidate that action. TYPES OF ULTRA VIRES 1. SUBSTANTIVE ULTRA VIRES Substantive ultra vires is acting in excess of powers with regard to matters of substance. This would include for example administrative body acting beyond what is authorized to do. Substantive ultra vires includes the following cases: a) Exercising power in excess of statutory limits; b) Acting in excess of jurisdiction; c) Breach of the principles of natural justice; in this case failure to give notice of hearing to a concerned party for example would amount to breach of principles of natural justice and that falls under substantive ultra vires TYPES OF ULTRA VIRES 2. PROCEDURAL ULTRA VIRES These are cases where admin bodies fail to follow prescribed procedure. They also include cases where an error occurs in following the procedure. Whereas we do have procedure prescribed in statutes, there are also matters of procedure that are not in the statutes but they are applicable under common law and this is where we find the procedural requirements that fall under the principles of natural justice. A person has to be given notice of a hearing of their case; this is one of principles of natural justice. This is in order that the person affected must be made aware of what is going on and be given an opportunity to raise any objection that they might have. They must also have the chance to defend themselves. Principles of Natural Justice Broadly the principles are two: 1. Nemo Judex in causa sua – which means that procedures must be free from bias. 2. Audi Alteram Partem – which means that no person should be condemned unheard i.e. a person should not be denied an opportunity to be heard. These two principles have been broken down into a number of principles or rules which are as follows: 1. Rule against Bias 2. The right to be heard 3. Prior Notice 4. Opportunity to be heard 5. Disclosure of information 6. Adjournment 7. Cross examination 8. Giving reasons 9. Legal Representation JUDICIAL REVIEW REMEDIES There are only three remedies that the courts can grant for judicial review: • • • Certiorari Prohibition Mandamus Whether the courts will grant one of these rules depends on the circumstances. JUDICIAL REVIEW REMEDIES 1. CERTIORARI The word Certiorari is a Latin word which simply means ‘to be informed’. Historically - a royal command or demand for information. Traditionally by the sovereign who was the king or the queen upon a petition on some injustice A wish to be certified of the matter; an order that the matter to be brought up to him. JUDICIAL REVIEW REMEDIES 1. CERTIORARI Include ordering that the records of the proceedings be brought up to the sovereign (But in our modern case a higher court!) The purpose of calling up the records was in order for the sovereign to quash any unfair decision that has been made after acquainting himself of the matter. Currently, certiorari is an order to remove proceedings from an administrative body or an inferior court to the High Court in order to be investigated and if found wanting on any one of the grounds we studied including ultra vires, be quashed. JUDICIAL REVIEW REMEDIES 1. CERTIORARI The order can issue against: Administrative tribunals. Inferior courts such as the industrial courts. Local authorities. Ministers of Government. Miscellaneous public bodies exercising public functions. For Certiorari to be issued, indeed for any one of the 3 orders to be issued, a person must be having Locus Standi which is crucial as you must have the capacity to sue. A person has capacity to sue by having a sufficient interest in the matter. If you don’t have sufficient interest in the matter, the court will not grant you any of the orders. JUDICIAL REVIEW REMEDIES 2. PROHIBITION The order of Prohibition is an order issued by the High Court which prohibits a body (administrative bodies) from continuing proceedings. It will also prohibit a body from continuing to carry out decisions wrongly or wrongfully made. This order may be issued against:…….. JUDICIAL REVIEW REMEDIES 2. PROHIBITION This order may be issued against: A judicial body acting in an administrative capacity i.e. Industrial Court. An administrative body performing administrative duties or against the government officials. It can be issued to stop a public body from continuing proceedings that are ultra vires. It can also be issued to stop an administrative body from continuing to do something in excess of jurisdiction. It can also be used to stop an administration body from abusing their powers. JUDICIAL REVIEW REMEDIES 3. MANDAMUS The order of Mandamus is derived from the Latin word “Mandare” meaning “to command”. It is a court order issued to compel the performance of a public duty where a public body or official has unlawfully refused, declined or otherwise failed to undertake the duty. Mandamus issues where there is a duty imposed by statute or common law. The duty must be a public duty. Mandamus will not issue in respect of a duty that is of a private nature even if the body in question is a public body. JUDICIAL REVIEW REMEDIES 3. MANDAMUS For example where two construction companies agree to undertake some work who agree to resolve any dispute between them by arbitration through the industrial court, the industrial court will be performing a private function and thus the order of Mandamus cannot issue. For Mandamus to issue, the Applicant must have made a request for the performance of a public duty which has been refused, declined or ignored. This means that if a public admin body refused to do something, you must approach it and request it to perform the function or the courts will not hear you. Unreasonable delay on the part of the public body will be treated as refusal. The duty must be a specific duty. You cannot apply for the order of Mandamus for a duty that is general, it must be specific. JUDICIAL REVIEW REMEDIES 3. MANDAMUS Mandamus is used to enforce performance of specific duties and not the exercise of mere powers. In Daniel Nyongesa & Others v. Egerton University College (1989), Nyongesa’s exam results were held by the university and when he went to court, the court issued an order of mandamus for the court to release the results. Nyongesa had requested the University for his results and they had refused so he applied for an order of mandamus to the court and he was granted. There was a specific duty for the university to release the results. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS ALTERNATIVE DISPUTE RESOLUTION MECHANISMS ARBITRATION This is an out of court method of settlement of civil disputes by arbitral tribunals which make arbitral wards as opposed to judgments. The law relating to arbitration in Kenya is contained in the Arbitration Act ,. Under the Act, an arbitration agreement is an agreement between parties to refer to arbitration all or certain disputes arising between them. ADVANTAGES OF ARBITRATION Cheap: It is relatively to see a dispute through arbitration hence a saving on cost on the part of the parties. 2. Speed: It is a faster method of dispute resolution in that the diaries of arbitrators are generally accommodative. 3. Convenience: Arbitral proceedings are conducted at the convenience of the parties in terms of venue, time, the law and language applicable. 4. Informality: Arbitral tribunals are generally free from technicalities which characterize ordinary courts. 1. ADVANTAGES OF ARBITRATION 5. Expertise, knowledge and specialization: Parties are free to refer their dispute to the most specialized arbitrator in that field. 6. Privacy / confidentiality: Arbitral proceedings are conducted in private free from public scrutiny. The parties enjoy the requisite confidentiality. 7. Flexibility: Arbitral tribunals are not bound by previous decisions. This affords them the necessary room to explore. 8. It tones down acrimony: Arbitral proceedings are less acrimonious and parties generally leave the proceedings closer than they would have been in the case of a court of law. DISADVANTAGES OF ARBITRATION 1. Likelihood of miscarriage of justice: Arbitral proceedings may at times not guarantee justice, particularly if the question is complex and the arbitrator is not well versed in law. 2. Arbitral awards have no precedential value i.e. cannot be relied upon in other disputes. 3. Arbitral tribunals exercise unregulated discretion. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS NEGOTIATION. “meet and sit down and try and arrive at a conflict resolution without help of a third party” Negotiation is any form of communication between two or more people for the purpose of arriving at a mutually agreeable solution. In a negotiation the disputants may represent themselves or they may be represented by agents and whatever the case, whether they are represented or not represented, they have control over the negotiation process. It is basically talking or communicating. It is the two parties alone, without a neutral third party. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS NEGOTIATION. There are two extreme styles of negotiating. There is what is referred to as the competitive bargaining style and there is the co-operative bargaining style or hard bargaining and soft negotiating. • Competitive/ Hard Negotiation The competitive negotiators are concerned with the substantive results. They advocate extreme positions. They create false issues, they mislead the other negotiator and they even bluff to gain advantage. It is rare that they make concessions and if they do, they do so arguably. They may even intimidate the other negotiator. Hard Negotiation Advantages of competitive negotiation: 1. Likely to get a better substantive award, 2. Develops a reputation 3. Not open to easy manipulation; 4. A negotiator of that style is also likely to take initiative and to take a lead role in negotiations; Hard Negotiation Disadvantages: 1. The solution is likely to be a fragile one and therefore not long lasting; 2. May create ill feelings in some of the parties; 3. The negotiator may fail to take an opportunity to reach a good deal because of the attitude that he must have his way; 4. It may harm the relationship between the disputants; 5. It may also create misunderstanding by the fact that the interests of the party maybe compromised; 6. The competitive bargainer or negotiator is unlikely to be aligned to the concerns of the other party because the emphasis is no compromise. Cooperative / Soft Negotiation Cooperative negotiators are more interested in developing a relationship based on trust and cooperation. They are therefore more prepared to make concessions on substantive issues in order to preserve that relationship. Cooperative / Soft Negotiation Advantages: 1. Sustaining relationships or good long term relationships; 2. A deal or compromise will be reached when there is a deal to be made; 3. From the perspective of a professional negotiator, it is more likely that people will want to deal with you. 4. A compromise is likely to be reached sooner and to work quickly either to agree or disagree. Cooperative / Soft Negotiation Disadvantages: 1. A good deal may be lost or the opportunity for a good deal may be lost because the negotiator by the end of the process may feel that they give more than they should have; 2. There is the possibility of manipulation by the other party. 3. The negotiator may be taken advantage of by the other party; 4. In the case of a professional negotiator, a cooperative negotiator may not get a very good name e.g. compromises too much which may not be good for business. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS MEDIATION Mediation is a non-binding process in which an impartial third party facilitates the negotiations process between the disputants and it is that impartial third party who is called the mediator. The mediator has no decision making power and the parties maintain the control over the substantive outcome of the mediation. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS OMBUDSMAN An ombudsman is a person who investigates complaints and attempts to assist the disputants to reach a decision. Usually this is an independent officer of the government or a public or quasi-public body. An ombudsman can be classified as an alternative dispute resolution mechanism. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS EARLY NEUTRAL EVALUATION This is where the parties to the dispute consult a 3rd party with regard to the dispute. The 3rd party then advises them on the likely outcome of the conflict should it be referred either to the Courts or to other formal means of dispute resolution. Most Advocates usually carry out ENE. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS MINI TRIAL Can either be judicial or private, and is similar to ENE above. In a Judicial Mini Trial, the parties are already in Court and they go before a Judge. The synopses of their cases are presented and the judge advises on the likely outcome if the matter was to go to trial. Private Mini Trials mostly occur in large organizations where the members (Senior Managers of the Enterprise) receive a summary of the dispute and essentially suggest ways of resolving them. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS EXPERT DETERMINATION This is where the parties to the dispute appoint a third party who makes a binding decision upon hearing the parties. He must be an expert and makes his decision based on such expertise. His decision is binding. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS ADJUDICATION This is where an adjudicator is appointed to settle disputes. He is appointed as a neutral third party entrusted to take initiative in ascertaining the facts and the law relating to the subject matter in question. His decision is binding and should be made within a short time. He should also be suitably qualified to deal with the subject matter. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS TRADITIONAL / CUSTOMARY DISPUTE RESOLUTION Each Community has its own e.g. Njuri Ncheke of the Ameru, Abagaka B’egesaku of the Kisii, Kiama of the Kikuyu and ODM Council of Elders for ODM They are recognized by Kenyan Courts just as African Customary Law. The Bomas Draft Constitution recognized them. Our Legal System & the Professional • Distinction of civil or criminal law matters • Operation and limitations of the Customary and Unwritten Laws • Legal Representation • Limitations of Actions • Judicial Review & Precedence End of the Section Questions and Clarifications? Assignment 1 • Discuss in detail the provisions of the CoK2010, delving into the implications for engineering professional in Kenya. THE STRUCTURE OF GOVERNMENT IN THE CONSTITUTION OF KENYA 2010 University of Nairobi ISO 9001:2008 1 Certified http://www.uonbi.ac.ke INTRODUCTION Kenya - A Sovereign Republic (Art 4 (1) A multi-party democratic state (Art 4 (2) Two levels of government i.e. National Government and County Government The two levels of government are inter-dependent and distinct (Art 6 (2) Fourth schedule specifies functions of the National Government and those of the County Governments University of Nairobi ISO 9001:2008 2 Certified http://www.uonbi.ac.ke ARCHITECTURE OF GOVERNMENT Two tier Government that are distinctive and interdependent National Government and 47 County governments Separation of powers between the three arms of government and between the two levels Doctrine of mutual control and accountability Bicameral legislature National Judiciary University of Nairobi ISO 9001:2008 3 Certified http://www.uonbi.ac.ke ORGANS OF GOVERNMENT Kenya - A pure presidential system Not stated whether Kenya - Unitary or semi-federal Three Arms of Government Executive Legislature Judiciary In addition you have independent Constitutional commissions Functions that are not devolved include National Security Education National Assets University of Nairobi ISO 9001:2008 4 Certified http://www.uonbi.ac.ke EXECUTIVE The arm of government that implements Government Laws and Policies The executive exists at both the National Government and County Government levels The National Executive shall comprise of the President, the Deputy President, the A.G., Cabinet Secretaries, Principal Secretaries and the entire National Civil Service At the county level, it shall comprise of the Governor, Deputy Governor and the entire Public Service The cabinet size is limited for both National Government and County Government Executive distinct from the legislature Presidents power as Chief Executive limited and “checked” University of Nairobi ISO 9001:2008 5 Certified http://www.uonbi.ac.ke LEGISLATURE The Constitution of Kenya 2010 establishes a legislature that is fundamentally different (in terms of structure, membership and powers) The legislature exists at both the national and county level At the national level, there is established a two-chamber Parliament consisting of the National Assembly and the Senate Members of the Cabinet are now to be drawn from outside the legislature Significant increase in the total number of legislators Introduction of special seats for women, persons with disabilities and the youth Increased powers to approve key appointments to state offices The provision for the impeachment of the President New unencumbered role in legislation University of Nairobi ISO 9001:2008 6 Certified http://www.uonbi.ac.ke JUDICIARY The Judiciary is not devolved i.e. the County Governments do not have a distinct judiciary A four tier structure is created at the top of which is the Supreme Court A Judicial Service Commission has been created and is key to most judicial appointments Serving judicial officers are being vetted University of Nairobi ISO 9001:2008 7 Certified http://www.uonbi.ac.ke CONSTITUTIONAL COMMISSIONS AND INDEPENDENT OFFICES The Constitution of Kenya 2010 has established ten Constitutional Commissions and two independent offices (Art 248) Constitutional Commissions are independent bodies which are subject only to the Constitution and National Legislation and are independent and not subject to direction or control by any person or authority (Art 249) University of Nairobi ISO 9001:2008 8 Certified http://www.uonbi.ac.ke RECENT CONSTITUTIONAL LEGAL REFORMS & HOW THEY ARE LIKELY TO AFFECT THE BUSINESS ENVIRONMENT IN KENYA Felix Odimmasi February, 2015 Background Where have we come from? • Kenya’s 1st constitution was the 1963 independence constitution • There were several drafts i.e. the 2004 Bomas draft, the 2005 Wako draft and the 2004 referendum draft • The harmonized draft constitution, proposed by the committee of experts was voted by Kenyans in August 2010 So… • Why did Kenya want the constitution amended in the first place? • Are these reforms likely to affect the business environment in Kenya today? Objectives for constitutional legal reforms The committee of experts (COE) on constitution review identified key issues in the old constitution that needed amendments. They included; • One central national government based in Nairobi • Clipping of Executive powers - a lot of powers that were not effectively controlled (vested in the president) • Resources – old constitution did not provide for a means of equitable distribution of resources • Rights – There was need to provide for socio-economic and development rights • Old constitution did not adequately address the relationship between the people, the government and the state • Discrimination – on matters of citizenship, burial, adoption, marriage, divorce and property inheritance • Does not provide for group rights and social, economic and cultural rights Devolution and access to services - 1 Chapter 2 article 6 & Chapter 11 article 174 • Provision for county governments and co-operation between county and national government • This provides for reasonable access to resources in the entire republic Impact to business • Opens up more avenues for businesses to be established and to thrive at the different county levels Devolution and access to services - 2 Chapter 2 article 10 (2) •Provides for sharing & devolution of power •Equity and inclusiveness, good governance, integrity, transparency & accountability •Open democracy that encourages people to participate Impact to business • Lack of accountability, bad governance and poor leadership is bad for business • Addressing these issues provides a favorable environment for businesses to operate • Good businesses are a result of economic growth that is driven by an empowered citizenry Bill of Rights: Chapter 4 article 20 (5) (b) • Right to allocation of available resources by the state to ensure that the citizens enjoy their rights to freedom, equity, equality and human dignity • Aimed to address the marginalized groups such as youth, women & people with disability Impact to business • Equal opportunity and support by government through legislation and setting standards will creates opportunities for SMEs, youth programmes, women groups/chamas – These improve the economy Bill of Rights: Chapter 4 article 37 – Right to assembly, demonstration, picketing & petition •Old constitution gave state sweeping powers to break up such demonstrations in the pretext that they threated national security •This meant that little room existed for concerned parties to present their petitions to the relevant authorities Impact to business •Opportunity for aggrieved employees or citizens to petition or raise concerns such as taxation, pay, minimum wage etc •Common among unions (bulk of work force in both public and private sector) Bill of Rights Cont… Chapter 4 article 40 (2) – Protection of right to Property • Citizens have a right to be protected so that they can enjoy their property • Previous regime allowed the president so much power and this made it possible to violate this right • Examples: Matiba business (This entrepreneur was tortured and frustrated). In other cases the government simply repossessed the property and sold to selected few Impact to business • Assurance that this right is respected give investors the confidence to set up businesses and expand them Bill of Rights : Protection of Consumer Rights..… Ch 4 Art 46(1) •New constitution protects consumers by insuring that the consume quality products that are healthy and safe •Compensation entitlement to the consumer for loss as a result of consuming poor products & services Impact to business • Fair competition (no cheating by business to make more money by compromising product quality). Competition good for business • Consumer protection bill – Consumers awareness limits use of counterfeits goods. This in turn improves revenue generated by businesses Intellectual property & indigenous knowledge protection and enhancement Chapter 5 Part 2, Article 69 (c) • Intellectual property includes but is not limited to; patents, copyrights, trademarks and trade secrets • Entrepreneurships and businesses thrive on creative and unique ideas • Protecting such knowledge is critical in ensuring that those who come up with such knowledge are not exploited by those privileged in society Impact to business • Entrepreneurship and innovations, if well managed drive the growth of the economy Leadership and Integrity Chapter 6 article 73 (2) • Leaders must have integrity, must be competent and objective in everything they do • They should avoid nepotism & favoritism • Must shun corruption Impact to business • A corrupt nation suffers from poor services because issues like award of contract is not based on qualification but favoritism • A country with leaders of integrity ensures that all businesses get equal opportunities which in turn stimulates economic growth • Confidence by businesses (SMEs) to set up new ventures even without sufficient capital for those with unique ideas (Their ideas will not be ‘stolen’ or exploited by those who are privilege to invest) Urban areas and cities Chapter 11 article 184 (1) • Guide how classification of urban areas & cities will be done • Management of these urban areas and cities • How the residents participate in governance Impact to business • Well managed cities are good back drops for business to thrive. Basic services such as water and power are essential for business • Urban areas and cities are generally more densely populated and are considered ‘green pastures’ for businesses Public Finance Chapter 12 Part 1 article 210 and Part 3 article 209 (1) & (2) • Openness & accountability in financial matters • Lessening taxation burden (Income tax, VAT, excise duty, customs tax and other tax) • Equitable sharing of revenue generated both at national & county level • Responsible use of public money Impact to business • Tax evasion increases the price of goods & services which may impact on consumer purchasing power leading to decline in economic growth • Businesses that evade tax enjoy an unfair advantage of those that pay. The most efficient businesses are locked out and this can be very detrimental to the economy • Too much tax inhibits business The Central Bank Chapter 12 Part 6 article 231 •Control and regulate monitory policy, price stability and currency •Sets the base lending rate for financial institutions Impact to business •Versatility of FOREX affects businesses e.g. high cost of importing raw materials •High interest rates affect the cost of business (borrowing and lending rates) Public Procurement of goods & services Chapter 12 Part 5 article 227 (1) • Fairness and equity in procurement of goods and services. Provides for sanctions to be issued against: • Unfair competition • Breach of contract (no performance) • Tax evasion/ corruption Impact to business • Accountability improves efficiency in delivery of goods and services which improves trade and leads to economic growth Conclusion • Recent constitutional reforms affect business more positively than negatively • Key issues addressed that affect the daily running of businesses • In summary, Kenyan businesses will benefit more by the reforms in the following areas: 1.Legislation and standards that guide how to conduct business competitively but fairly; Conclusion 2. Lessened tax burden allows for competitive pricing of product and services which improves consumer purchasing power 3. More innovation opportunity that will open ‘blue oceans’ for businesses Conclusion 4. Increased markets by opening up regional avenues (counties, urban areas and cities) 5. Protection of both physical and intellectual properties – Gives businesses confidence to operate 6. Empowerment of marginalized groups a great avenue for new business eg youth enterprise, SMEs etc NB: A lot remain great on paper… Thank you Any questions? THE LAW OF CONTRACT Felix Odimmasi INTRODUCTION THE LAW OF CONTRACT • A contract is an agreement between two parties which is enforceable by law. • An agreement is made when a person signifies his willingness to do or to abstain from doing anything with a view of obtaining the assent of the other party. • Such act or abstinence is said to make a proposal. • The person making the proposal is called the promisor and the person accepting the proposal is called the promisee. To make an agreement into a contract, the following has to happen. - Agreement between the parties. - Creation of responsibilities between the parties. - Enforceability by law. Anson, thus defines a contact as “An agreement enforceable by law made between two or more persons by which rights are acquired by one or more to act or forbearance on the part of the other or others”. TYPES OF CONTRACTS: Contracts may be classified into: -Written (Specialty Contracts) - Contracts requiring written evidence - Simple contracts. Written Contracts These are contracts which the law insists must be written. There must be embodied in a formal document e.g. - Under Sec. 6(2) of the Hire Purchase Act; Cap 507, a hire purchase agreement must be written. - Under Sec. 2(1) of Marine Insurance Act, a contract of Marine Insurance must be written. - Contracts of sale of land are equally required to be written. Simple Contracts These are contracts whose formation is not subject to any legal formalities. The contract may be oral, written or implied from the conduct of the parties e.g. - Contract of sale of goods - Partnership agreements etc. SOURCES OF LAW OF CONTRACT • Under Section 2(1) of the Law of Contract Act, Cap. 21 Laws of Kenya, the sources of the law in Kenya are: - Substance of Common law - Doctrines of Equity - Other statutes. ELEMENTS OF A CONTRACT • All agreements are contract when made out of free consent of parties competent to contract, with lawful consideration, lawful object and which are not thereby declared void. • The following are elements of a contract: I. II. III. IV. V. VI. VII. VIII. IX. X. Offer Acceptance Intention to create a legal relationship. Lawful consideration. Capacity to contract. Free consent. Lawful object. Legal formalities. Possibility of performance. Not expressly declared void. OFFER A contact comes into existence when a definite offer has been unconditionally accepted. Mode: Definition: The person proposing is also called an offeror or a promissor. NB: Distinguish between an invitation to treat and an offer Following are examples of invitation to treat: 1/3 a.A registered company issues a prospectus pursuant to provisions of the companies Act, asking the public to subscribe for the company’s shares. If a person applies for any shares in response to the prospectus, the application will be the offer. The issue of the prospectus was legally an invitation to treat, although it appeared to be an offer of the specified shares to the public for acceptance. Following are examples of invitation to treat: 2/3 b. A government ministry puts an advertisement in the newspaper for tenders for the supply of a specified quantity of goods during a certain period of time the advertisement constitutes an invitation to treat. A Trader’s response to the invitation will be the offer. Following are examples of invitation to treat: 3/3 c. A trader displays goods in his shop window with a price label on each of them. The display is another species of invitation to treat. 1/3: Characteristics / Requirements / Legal Rules regarding offer – May be express or implied. – Offer must give rise to a legal obligation. – Terms of offer must be definite and certain i.e. should not be vague, uncertain or ambiguous – An offer must be distinguished from an invitation to offer/treat, or declaration of intention e.g. an advertisement. 2/3: Characteristics / Requirements / Legal Rules regarding offer – The offer must be communicated. – An offer may prescribe the method of communication of acceptance thus becomes a conditional offer. – An Offer must be made with a view of obtaining the consent of the other party to do so or abstain from doing the particular act. 3/3: Characteristics / Requirements / Legal Rules regarding offer – Offer should not impose an unnecessary obligation to communicate non-acceptance e.g. “If acceptance is not communicated by next Sunday, I shall presume that you have accepted”. – May be specified or general i.e. can be made to a particular person hence no other person regardless of his merit can be tolerated, or can even be general in that any person who meets the conditions can signify his assent. CROSS OFFER • Occasionally two parties make similar offer to each other without knowing that same offer has been made by the other party. • In such a case no binding contract will have been created since none has specified has acceptance to another. COUNTER OFFER • This is a change, variation or modification of the terms of the offer by the offeree. It is a conditional acceptance and therefore not an acceptance in law. • It is an offer in its own right and if accepted, an agreement arises between the parties. COUNTER OFFER • The legal effect of making a counter-offer is that it terminates the original offer which thereby becomes incapable of acceptance unless revived. • A counter offer differs from a request for information or an inquiry. • An inquiry does not change the terms of the offer and the offeree is free to accept the offer before or after the inquiry is responded to. TENDER • A continuous offer is called a standing offer or a tender. • When a tender is for supply of goods for example; acceptance. • A standing offer does not become a contract until when an order according to terms of the tender is placed. • Sometimes tenders are invited to the supply of a specific quantity of goods or services. AUCTION At auction sale, the auctioneer invites offers. The offer is made by the bidder and the auctioneer accepts the offer on the fall of the hammer. 2. ACCEPTANCE 1/3 • Essentials of a legal acceptance: - Acceptance should be by the person to whom the offer is made. - Acceptance may be express or implied i.e. express by word spoken or written or implied by an act in line or in compliance. - Must be absolute or unqualified i.e. acceptance in full. It would otherwise be a counter offer. - 2. ACCEPTANCE 2/3 Essentials of a legal acceptance (cont’d): - Must be in the mode prescribed. If reply is required by a telegram and offeree accepts replies by fax, it amounts to non-compliance. contract being signed by all the parties. - Acceptance must be for an offer communicated. - Must be accepted within the time fixed. - 2. ACCEPTANCE 3/3 • Essentials of a legal acceptance cont’d: - Acceptance must be made before the offer lapses or is revoked. - Acceptance must be made with the intention to fulfill the terms. - Acceptance subject to a specialty contract would be valid only on the formal REVOCATION OF OFFER AND ACCEPTANCE Revocation means withdrawal or taking back the offer or acceptance. When is communication of revocation complete? - As against the person who makes it when it is put into the course of transmission - As against the person to whom it is made when it comes to his knowledge. How does an offer come to an end ? An offer comes to an end by revocation which may happen in various ways briefly explained below: a. b. c. d. e. f. g. • etc By notice. b. By lapse of time. By the failure of the acceptor to fulfill a condition precedent By death of the proposer. By insanity of the proposer By not accepting the offer in the mode prescribed e.g. By sending message to that effect in reasonable time. 3. CONSIDERATION 1/3 • The existence of consideration in a promise signifies the commitment of parties to create a legal relationship. Further more; the law does not recognize an agreement to do something without anything in return. 3. CONSIDERATION 2/3 • . • According to Pollock “Consideration is the price for which the promised of the other is bought” Hence no consideration no contract. 3. CONSIDERATION 1/3 • Worth to note that consideration is something in return. It can take the form of loss, or responsibility given, suffered or undertaken by the other. CLASSIFICATION OF CONSIDERATION Consideration may be executory or executed. a.Executory Consideration This consists of a promise made by one party and promise made by the other party to the contract. b. Executed Consideration Executed consideration is constituted by something done by the plaintiff because of a promise made by the defendant. What are the Legal rules regarding consideration?? PRIVITY OF CONTRACT • A stranger to contract cannot sue because it is a cardinal principle of law that only a party to contract can sue. • To crate a legal relationship, privity of contract (contractual relationship) is necessary. However, if this were strict position of law some considerable havoc would result. Difference between stranger to consideration and stranger to contract It ‘s observed that a third party on behalf of the promisee may perform consideration. This is contrary to the general rule of privity of contract meaning: a contract can only be enforced by the parties directly related by the contract Every other person lacks regal relationship (locus standi) to the contract. 4. INTENTION TO CREATE LEGAL RELATIONS • The parties thereto must have intended it to have legal consequences. • Presumptions / principles or presumptions –Business agreements –Agreements between husband and wife; –Agreements between close relatives – Social agreements (not enforceable unless under seal). 5. CAPACITY Consider the following: • A minor or an infant. • A person of unsound mind. • Married women. • Alien or non-citizens. • Corporations. • Trade unions. • Foreign sovereign. • An insolvent or bankrupt. Minors & Infants parties entering the contract must be capable of understanding it and forming a rational judgment A MINOR Age of Majority Act (Laws of Kenya Cap. 33), in the 5th Amendment in 1974 made the age of majority to be 18 years – Section 2. Binding Contracts: An infant may only be bound by agreement the object of which is to enable him obtain necessities. Minors and Infants VOIDABLE CONTRACTS • Infants cannot be held liable against these contracts. • Such contracts include: - Lease agreements. - Purchase of company shares. - Partnership agreements. • VOID CONTRACTS: Position of a Minor at Law PERSONS OF UNSOUND MIND Two things are necessary: 1. Capacity to understand the contract. 2. Ability to make rational judgments OTHER PERSONS DISQUALIFIED BY LAW FROM CONTRACTING • An alien enemy • Foreign sovereign • An insolvent • Corporations • Married women??? LEGALITY OF CONSENT Duress Undue influence Misrepresentation Mistake Also known as VITIATING FACTORS or elements that may erode the validity of a contract LEGALITY OF OBJECT • State and explain when consideration and object are unlawful? • Agreements opposed to public policy • ‘An agreement in restraint of trade is void’ Explain this statement giving exceptions to this rule. QUASI - CONTRACTS Examples or quasi contracts are found in the following cases: • Supply of necessaries • Responsibility of finder or goods • Payment made by mistake DISCHARGE OF CONTRACT Act of the parties or by Operation of Law Discharge by operation of Law: oBy performance. oBy impossibility. oBy death. oBy insolvency. oBy agreement or consent or waiver. oBy merger. oBy lapse of time. oBy frustration. oBy Breach FRUSTRATION • Frustrated Contract) Act 1943 • A contract is said to be frustrated when performance of the obligations is rendered impossible. • A contract is not frustrated if: – The event in questing is provided for by the contract. • One of the parties is to blame. Effects or Consequences of Frustration • Under this Act, when a contract is frustrated, the rights of the parties are adjusted as follows: o The contract is terminated. o Money paid is recoverable. o Money payable ceases to be payable o If a party suffers loss, o If at party derives a benefit other than financial REMEDIES / CONSEQUENCES FOR BREACH OF CONTRACT A Contract is entered into so as to enable its performance. When breached, the affected party becomes entitled to one or more or the following remedies: 1. Right to claim compensation and damages Damages are classified as follows Ordinary or General Damages Special or particular damages Vindictive or Exemplary damages Nominal damages REMEDIES / CONSEQUENCES FOR BREACH OF CONTRACT 2. Right of rescission: 3. Quantum Meruit: 4. Specific performance 5. Injunction order: 6. Restitution 7. Cancellation or rectification FINAL NOTE This part outlined the underlying general principles of the Law of Contract; there are, however, derivative statutes and principles that regulate specific contracts such as Partnership, Insurance, Sale / Supply of Goods and services, Agency, Hire Purchase, Banking, Suretyship, Carriage of Goods, etc. Some of these are mentioned later in this course, but it is not possible to mention all laws pertinent to contract. END OF SECTION ? ? ? ? ? ? QUESTIONS ? ? ? ? ? ? ? Law Felix of Odimmasi Torts Nature of Tort A tort is derived from the Latin term tortum meaning to twist and implies conduct which is not justified by the law of the land. It is a non-contractual interaction in which the defendant wrongfully harms the plaintiff Nature of Tort = civil wrong, independent of contract for which the remedy is common law action for unliquidated damages. Unliquidated damages are those which the court has power to fix, exercisable in its discretion. The reverse is a fixed amount claimed by the plaintiff. The person committing a tort is called a tortfeasor or a wrong-doer * A civil injury for which an action for damages will not arise is not a tort, e.g public nuisance. Distinction between a Tort and a contract Tort Contract 1 Duties are imposed by law, Duties fixed by the parties e.g. we must not be negligent themselves to others. 2 Privity is not needed to maintain an action in tort Necessitates privity between the parties. i.e. only the parties to the contract can sue each other 3 Duty is owed to the community at large Damages are always unliquidated Duty is owed to definite person(s) Damages may be liquidated or unliquidated. 4 Distinction between a Tort and a Crime Tort Crime 1 Infringement of the Breach of public rights and civil rights belonging to duties which affect the whole individuals. community. 2 Tort feasor has to compensate the injured party. Wrong doer is punished by the state in the interest of society. * Sometimes the same act may amount to either two or all three of the above. 3 Suit is filed by the The case is brought by the injured person himself. state. Elements of Tort To constitute a tort, three things must occur: 1) Some wrongful act or omission by the defendant. 2) Legal damage to the plaintiff 3) The wrongful act must be of such a nature as to give rise to a legal remedy in the form of an action for damages. Legal Damage • Every infringement of plf. private right or unauthorized interference with his property gives rise to legal damage. • In all cases of tort there must be violation of a legal right, and this is expressed by saying that injuria sine damnum is actionable, while damnum sine injuria is not. Injuria Sine Damnum • Infringement of a legal right of the plf. Without any actual loss or damage sustained by him/her. The rule is based on the old maxim of law, “ ubi jus ibi remedium”, i.e. where there is a right there is a remedy. • It is not essential for plf. to prove actual damages suffered in order to obtain damages. • Certain acts are actionable per se, i.e without proof of damage e.g. assault, battery, false imprisonment, libel or trespass on land. ( ASHBY v WHITE,1703 – returning officer) Damnum Sine Injuria • Actual and substantial loss without infringement of any legal right. Not actionable in court. MOGUL STEAMSHIP CO v MC GREGOR, 1982 Ordinary trade competition. CHASEMORE v RICHARDS, 1859 – lawful use of ones own property. Malice in Tort • Malice in layman’s take means ill-will against another. In legal sense it means a wrongful act, done purposely without having any lawful excuse • M. is an important element in determining the gravity of the crime, but is NOT a necessary ingredient to the maintenance of an action for tort. • A bad intention will not necessarily render a lawful action unlawful, and similarly an innocent intention is no defense to an action which is otherwise a tort. WILKINSON v DOWNTON, 1897 - practical joke gone sour.. BRAFORD CORP v PICKLES, 1895 – bad intentions…. Malice ….Contd ▪ Though malice is not generally relevant in tort, it may be taken into account by the courts in the following cases: ▪ Malicious prosecution: - where an innocent person is involved in criminal proceedings out of malice by a police officer, he/she can bring an action against the p.o. for malicious prosecution on his acquittal. ▪ Malicious Falsehood: - where a person makes a deliberate lie about another causing him financial loss. Capacity of Parties There are certain persons who cannot sue, while there others who cannot be sued in tort. The Government : Govt. proceedings Act (Cap40) provides that the govt. is s.t all those liabilities in tort to which, if it were a person of full age and capacity, it would be subject Foreign Sovereigns and Diplomats : ???? Capacity of Parties Corporations: Can Sue or be sued. Corp. is also liable for torts committed by its servants and agents, provided a tort is committed in the course of doing an act which is within the scope of powers of the corporation. (unless the act is ultra vires * POULTON v L & S.W. RAILWAY, 1867 – unlawful detention.) Trade Unions: Enjoy special protection. According to section 23 Trade Union Act (Cap233), no action shall be brought against a T.U. for torts committed by their members or officials acting in furtherance of a trade dispute , e.g. strike. Personal liability of an individual who commits a tort obo a T.U. is actinable.* (ROOKES v BENARD, 1964. – CONSPIRACY) Capacity of Parties… Contd Married Women: At common law a married woman is answerable for her wrongful acts and may be sued jointly with her husband, or separately if she survives him. Infants or Minors: Infancy not a defence to an action of tort. However where intention, malice, or negligence of the wrongdoer form an essential ingredient of the tort, the age of the infant is relevant. Capacity of Parties… Contd • An infant cannot be liable in tort for what is, in substance, a breach of contract. Similarly an infant cannot be made liable for fraud in procuring a contract. (JENNINGS v RUNDALL,1799. – injured horse.). • Liability of parents: A father is not liable for torts committed by his children unless he authorized the tort or if the tort was occasioned by his negligence. • Judges & Magistrates: - Under section 6 of Judicature act 1967 action lies for acts done or words spoken by a judge or a magistrate in the exercise of his judicial duties, even if the acts or words are not done or spoken in the honest exercise of his duties. Capacity of Parties… Contd • Persons of Unsound mind: - Generally liable for his torts e.g. trespass. Not liable for torts such as fraud unless seen otherwise by the court.( MORRIS v MARSDEN, 1952 – hotel battery ; it was immaterial that he did not know that what he was doing was wrong). • Unincorporated Associations: - Cannot sue or be sued for torts committed but they can institute a representative suit. The members of the association are not liable for the torts of the association but the individual members are liable for their own torts. Capacity of Parties… Contd • Partners: - They are personally liable for their own torts. They can sue and be sued by writing down all the names of the partners and of that partnership. Each and every partner is liable for a tort committed in the course of the business. It was so held in Hamlyn v. Houston (1903). • Aliens: - A friendly alien has no disability and has no immunity. An alien enemy is one whose state or sovereign is in war with the sovereign of the state in question. As thus defined an alien enemy unless he is within the realm of license of the sovereign cannot sue in the sovereign’s courts. • He can however be sued and can defend an action and if the decision goes against him, he can appeal. General Defences 1) Volenti non fit injuria (Voluntary assumption of risk) • Person cannot complain of damages resulting from a risk he /she voluntarily consented to run. Rule protects footballer, boxer, surgeon etc. The defendant must prove : *That the plaintiff had actual knowledge of nature and extent of the risk. *Appreciated it in all respect *That the plaintiff agreed to incur the risk voluntarily as was the case in Tugwell V Burnett. General Defences 1. 2. 3. 4. Exceptions to volenti defense Rescue cases: - where plf. Was under legal or moral obligation to save life he will succeed in damages. Haynes vs Hardwood bolted horse A person can’t be reference to any contractual term exclude or restrict his liability for death or personal injury resulting from negligence. Under road traffic act, in the case of third party motor insurance, any agreement between a driver and passengers whereby the passengers travel in the vehicle at their own risk is void since the act makes passenger insurance compulsory. Consent given unwillingly is no consent e.g. employee having a choice btw incurring a risk or giving up a job… General Defences • • • • • • • 2. PLAINTIFF’S DEFAULT/CONTRIBUTORY NEGLIGENCE This defence may be relied upon if the plaintiff is also to blame for his suffering. The defendant must prove that: The plaintiff exposed himself to the danger/risk by act or omission The plaintiff was at fault or negligent The plaintiff’s negligence or fault contributed to his suffering This defence doesn’t absolve the defendant from liability. It merely reduces the amount of damages payable by the defendant to the extent of the plaintiff’s contribution. This defence is unavailable if the plaintiff is a child of tender years. General Defences ………Contributory Negligence Cont’d… • If the plaintiffs were to sue and the defendant proved that the plaintiff was on the wrong, that can constitute a defense. Under Common Law, if a person contributed to a tort, that prevented him from suing. It was a complete defence. • The law was however changed by statute under the Common Law Reform Act of 1945. A plaintiff on the wrong can recover as long as he has not contributed to 100% to the tort. Thus if he has contributed 40% he can recover 60%. General Defences • 3. ACTS OF GOD • Where damage is caused directly by natural circumstances which no human foresight can provide against and of which human prudence is not bound to recognize the possibility, the defense of act of God applies. • For this defense to succeed it must be shown that the act was not foreseeable and that it was unusual. General Defences • 4. NECCESSITY • It may be relied upon if the tort complained of was necessary to protect the society. It is usually relied upon by the state for acts taken to protect the society at large as the interest of the public prevail. (solus populi suprema lex) • The critical thing is that the act done has to be reasonable. Necessity is limited to cases involving an urgent situation or imminent peril. The measures taken must be reasonable and this will depend on whether there is human life or merely property in danger. General Defences • 5. STATUTORY AUTHORITY • This defense may be relied upon by the defendant (usually the State or its agents) if the nuisance is authorized by statute. The defendant has a complete defense only if he can prove that he acted in accordance with the provisions of the Act. Whether the defence succeeds or not depends on the interpretation of the Statute Vicarious liability • Liability of one person (A) for the wrongs committed by another person (B) against another (C). • Founded on two principles: a) Let the superior or master be responsible. b) He who acts through another does act. • *As a master benefits from his servants so at times must also take liability. Master is also financially healthier than servant. Vicarious liability • Vic. Liab. arises subject to the following; • a) R/ship of m/s must have existed at the time offence was committed. • b) Must have been empl. Who committed the offence. • c) Wrong must have been committed during scope of duty. • (Lister V Romford Ice Co. lorry driver) Vicarious liability • Master liable even if he had warned the servant. (Limpus vs London – bus driver) • Servant and Independent Contractor • Servant: - employee takes all lawful orders of the master. Where a master lends his employee to a new master, the latter becomes liable for acts of such an employee. • Independent Contractor: - uses own initiative and discretion. Employer not liable for torts committed by in the course of performance of his work. Exceptions ….I.C • a) Where employer retains control over contractor, personally interferes and makes him/herself party to act causing damage. • b) Where the thing contracted is itself a tort. (Ellis vs Shefield Gas - ) • c) Where i.c is contracted to perform a duty that is hazardous. • d) Where the thing contracted is likely in ordinary course of events to do damage to other ppls. property or cause nuisance. Exceptions – I.C • e) Strict liability..Liability without fault. Rule in Rylands Vs Fletcher R. employed an ind. Cont. to construct a reservoir on his land next to that of Fletcher. Due to cont. negligence, old mine shafts leading from R’s land to F’s land were not blocked and consequently when reservoir was filled with water F’s mine was flooded. R was held liable. Rule provides that anyone who brings or collects anything on his land which is likely to do mischief if it escapes should keep it at his own risk o/wise he becomes liable for the consequence of such an escape. Things likely to escape include animals, vegetation, water, smoke, electricity etc. Rule in Rylands Vs Fletcher • For rule to apply: • a) Use of land must be normal • b) There must be an escape from the defendant land to a place outside his occupation. • c) The pln. Must have suffered damage. Exceptions • a) Where the escape is due to the pln. Own contribution e.g. provoking a dog. • b) Acts of God • c) Where the escape was due to the act of a stranger. • d) Where’s there’s artificial work maintained for pln &dfn. Liability of damage Tort of Negligence • Breach of duty caused by omission to do something which a reasonable man would do or doing something which a prudent or reasonable person would not do. • • • • ELEMENTS OF NEGLIGENCE The tort of negligence consists of three elements which a plaintiff must prove in any action based on negligence. a) Legal duty of care. b) Breach of duty. c) Loss or damage ….Duty of Care Negligence…. contd • It is a precaution expected of a person as to avoid acts or omissions which are likely to injure another. • Professionals and skilled persons have a higher duty of care than ordinary persons. • (Donoghue vs Stevenson – snail in opaque beer bottle). • For dfn. To ne liable in negligence, they ought to have foreseen that their action or omission would injure the plnt. Where he could not be expected to have foreseen any injury as a reasonable person, he/she cannot be liable. (Bourhill vs Young – pregnant woman witnesses a motorcycle accident.) Negligence …contd • Proof of Negligence – Res ipsa loquitor – “the thing speaks for itself” • Burden of proving negligence normally lies on the party alleging it. • Plnt. May argue the rule of Res ipsa loquitor applies and then the burden lies on the dfn. To rebut the presumption of negligence by showing that the accident might still have occurred without negligence on his part. • Before the rule of Res ipsa loquitor can be invoked the following conditions must be fulfilled: • a) The thing inflicting injury must have been under the dfn.’s control. Negligence…contd • b) There must be reasonable evidene of negligence on the part of the defendant. • c) That the accident is such as in the ordinary course of things does not happen if those who have the duty, use proper care. • (Bryne v Boadle, 1863 – barrel of flour). Res Ipsa Loquitur Occupiers liability • This is the liability of an occupier of premises for damage done to visitors to the premises. • At common law the duties of an occupier were cast in a descending scale to four different kinds of persons. For example: »Pursuance of a Contract »Invitee »Licencee »trespasser Extent of Occupier’s Liability • Occupiers liability deals with the liability of an occupier of premises and extends to immovable property as open land house, railway stations and bridges as well as movable structures like ships, gangways or even vehicles although lawyers prefer to treat injury in the latter as falling with common law negligence Tort of Defamation • Publication of a false statement regarding another person without lawful justification. It tends to injure the reputation of a person in the eyes of right thinking members of society. • A defamatory statement may either be slander or libel. • Slander: Publication of a false defamatory verbal statement tending to injure the reputation of another n the eyes of right thinking members of the society. Plnt. Must prove actual damage. • a) Imputation of a criminal offence punishable with imprisonment. • b) Imputation of a contagious or infectious disease likely to prevent other persons from associating with the pln. • c) Imputation of adultery to any woman or girl. • d) Imputation of dishonest, incompetence in any profession. Libel: • Defamation in a permanent form made through • writing, • printing, • effigy • radio or • TV broadcast. Distinction between Slander and Libel Slander Libel 1 Always a civil wrong Both Civil and Criminal 2 Temporary and can be conveyed by speech or gestures. Permanent and done through writing cinema or cartoons. 3 May be uttered in the heat of the moment and hence sometimes may be unintentional. Shows greater deliberation and raises presumption of malice. 4 Plnf. Must prove actual damage. It is actionable per se i.e. plnf. Need not prove actual damage. 5 Publisher of slander acts in person and is thus personally The actual publisher may be an innocent person. Ingredients of defamtion • a) Falsity of the statement: untrue. Plf. Is not required to prove that it is false but it is the burden of the df. To prove that it is true. • b) Defamatory: If it exposes plf. To hatred, contempt, ridicule or injure him in his profession or trade among people known to him. (Cassidy v Daily mirror – mistaken engagement.) • c) Statement referable to plf: plf. Must show that the defamatory statement refers to him/her directly or by implications (innuendo). *A defamatory statement against a lrge grp e.g lawyers or bankers is not actionable unless a particular individual proves that the statement referred to him/her. • d) Publication: Making the matter known to other persons other than the defamed person…even when sent through telegram or postal card. Defences for defamation • a) Truth or justification; • b) Fair comment; on a matter of public interest e.g the conduct of politicians is not libel unless it is written maliciously. Such comments may be made in: • -Affairs of the state and the conduct of its officials • -Affairs of public institutions and some ministries • -Theatres, concerts and other public entertainment. • c) Privilege; When a person is justified in saying or writing what would be slanderous or libelous without any action being taken. Defences to Defamation…contd • In case of absolute privilege, every communication irrespective of it being false or malicious is protected. Such occasions include: • - Statements made in parliament by legislators. • - Statements made in court arising out of judicial proceedings • - Comm. Btw. Husband & wife. • - Comm. Btw. Advocate and client. Defences for defamation…contd • Qualified privilege is when a person is entitled to communicate a defamatory statement so long a s no malice is proved on his part e.g. • - Comm. Made to persons in public positions • - Fair and impartial reports of parliamentary and judicial proceedings. • Reports on meetings of certain public bodies e.g local authorities. • d) Apology Remedies to Defamation • - May be substantial damages depending nature, extent of circulation and status of the plf. • -Injunction issued by the court restraining publication of libel. Tort of Nuisance • Committed when a person is wrongfully disturbed in the use of his land or some right over it or in connection with it. Generally it ariss from the duties owed to the neighboring occupiers of land. There are two types: Private & Public nuisance. • Private Nuisance: Committed when a person’s rights on his land are wrongfully disturbed whether physically or allowing noxious things e.g smoke. (dfns use of the house was reasonable Robinson V Kilvert – sensitive paper • Public Nuisance: Act that interferes with the enjoyment of public rights which members of the public are entitled to. (Soltau v De Held – chapel bell.) Tort of trespass • Unlawful interference with a person his property or goods without any lawful justification. Includes ; assault, battery and false imprisonment (trespass to persons). • Assault: This is an act of the defendant which causes the plaintiff reasonable apprehension of the infliction of a battery on him by the defendant. It is an act of the defendant which directly and either intentionally or negligently causes the plaintiff immediately to apprehend a contact with the body of the defendant .This tort protects a person from mental anxiety. Tort of Trespass • • • • • • Defences to Assault; a) Volenti non fit injuria b) Forcible ejection c) Legal/statutory authority d) Legitimate disciplinary action Battery: This is the intentional and direct application of force to another person. It has been defined as any act of the defendant which directly and either intentionally or negligently causes some physical contact with the person or body of the plaintiff without his consent. • As a general rule battery is based on an intentional act and is both a crime and a tort. Others • Trespass on Land: • Trespass by animals: • Trespass to goods: This is the intentional or negligent interference of goods in possession of the plaintiff. This tort protects a party interest in goods with regard to retention their physical condition and invariability. • • Types/Forms of Trespass • Taking a chattel out of the possession of another • Moving a chattel • Contact with a chattel • Directing a missile to a chattel • Trespass to Personal Property – Damages are equal to • difference in fair market value before and after the trespass--often not much • more recently trespass to personal property has been used against various interference that occurs in cyberspace – Aggregators interfere with online auctions and have been successfully sued – So far suits against Internet reporting of sports contests have not been successful Trespass to Real Property – Trespass to real property • Takes place when a person goes onto the land of another without permission or justification – Applies to intrusions that occur above and below the surface – Landowners are entitled to airspace over their land to a reasonable level • Defenses – Emergency – Recovery of personal property • Detinue: Wrongful withholding of goods of another. • Conversion: Occurs where a person acts inconsistently with the right of another person’s ownership of the goods. It is said to be committed when: • - the goods are wrongfully taken • - the goods are wrongfully sold..even if sold in good faith. • - the goods are wrongfully detained or destroyed. • - the goods are wrongfully parted with. Tort of Passing off • Involves damaging the business interest of another person by doing an act which is to deceive the general public into believing that one’s goods are of another reputable organization. E.g use of similar trademark, wrapping or description of goods. • Remedies • a) Injunction • b) Action for Damages • c) Court order requiring the defendant to account for all profits made by him and return it to the plaintiff. Limitations of Actions in Tort under Actions Act. • • • • • • Refers to the period within which legal action can be instituted against wrong doers for damages. As a general rule it starts running from the date a cause of action arises e.g the date of a breach of contract or the date when the accident occurred. However, the running of time may be postponed in certain circumstances: i) When the prospective defendant is the president or is exercising the functions of the office of the president, time starts running when he ceases to hold office or stops exercising the functions or dies, whichever comes first. ii) If the prospective defendant or plaintiff is an infant/ minor, time starts running when he attains the age of majority (18 years) or dies, whichever comes first iii) If the prospective plaintiff is a person of unsound mind, time starts running when he becomes of sound mind or dies, whichever comes first. iv) If the prospective plaintiff is laboring under mistake, fraud or ignorance of material facts, time starts running when he ascertains the true position or when a reasonable person would have so ascertained. Law of Torts Questions???? Thank You LAW OF AGENCY AGENCY • It is a relationship that exists btw two persons when one, called the agent, is considered to represent the other called the principal, in such way to be able to affect the principal’s legal position in respect of strangers to their relationship by making of contracts of the disposition of property. • An agent is one who brings his Principal into a contractual relationship with third parties. What are the essential or the basic features of agency? • It is the power of one person called the agent to alter the legal position of another called the principal, by making contracts on his behalf or disposing of his property. • i. ii. iii. HOW CAN THIS POWERS ARISE: By mutual consent of parties. Operation of law Doctrine of parent authority Classes of agents: • Universal agent: has power of attorney must be in writing principal appoint agent to handle all his affairs. • Special agent: employed to make only a particular contract or does work which is not in the ordinary cause of his business or profession i.e. an estate agent told to sell a car, or a bank manager selling a house. • General agent: authority out of his ordinary cause of business i.e. branch manager of a company represents the company in all transactions. General agent In Watteau v Fenwick (1893) an undisclosed principal must not be allowed to absorb the profit and escape responsibility on the grounds that there were secret arrangements between him and his agent. Kinds of agents • • • • • Mercantile agent Insurance agent Estate agent Forwarding agent Del credare agent Del Credare Agent He is employed to sell goods.He also promises to make sure that clients introduced by him to the principal will pay for the goods sold in return to a commission he agrees to guarantee to indemnify his principal, or employer against loss arising from the failure of customers to carry out there part of the bargain. They are usually brokers and has implied authority to make contracts on behalf of the principal. They guarantee the pay and not the performance of other obligations. Estate Agent He is a person who in connection with the acquisition or disposal of any land or premises brings together or takes step to bring together the person who wishes to dispose of the land and the person who wishes to buy such land or property. Has extremely limited powers. May only negotiate the terms of such transaction May also make representation about the property. Has no power to make contract between the client and the purchaser. Mercantile Agent He undertakes the shipment or transmission of goods. He incurs personal liability for freight charges, whether transmission is by sea or air and according to custom of his trade. He is expected to facilitate safe arrival of goods. Insurance Agent He is also called a broker. He is employed to negotiate and effect policy of insurance. Usually they are agents of the insured. Forwarding / Shipping Agent This is one who in the customary cause of his business as such agent, authority either to sell or to consign goods for the purpose of sale or to buy goods or to raise money on the security of goods. A broker or auctioneer. FORMATION OF AGENCY • • • Express agreement. Implied agreement. Operation of law. i. Necessity ii. Cohabitation iii. statute EXPRESS AGREEMENT • Person can be expressly appointed. • Verbally or in writing.(no particular form) • Chapter 23 of law of contract all agreements involving disposal of land must be in writing dully signed. • appointment can still be done orally. • If contract is required to be under seal then appointment is in writing and also under seal. IMPLIED AGREEMENT • Arises out of conduct or situation of the parties. • Term is used to contra-distinction to express agency. • Where A usually pays goods ordered by B the latter becomes the former’s agent. • Case: Ryan.vs.Pilkinton (1959) Ryan vs Pilkinton(1959) • An estate agent was instructed by the owner to find a purchaser for a private hotel. The estate agent found one and received a small deposit from the prospective purchaser, which he did “as agent” He was however not authorized to accept such deposits. • It was held that the agent had acted within the ostensible scope of his authority. In other words estate agent had implied authority to accept the deposit from a potential purchaser. OPERATION OF LAW • For reason of policy the law may presume an agency relationship,btw pple who have not agreed to create such relationship. • They may not have presented to anyone that they are in the relationship of Agency – principal relationship. NECESSITY • Occurs when a person is entrusted with another's property and it becomes necessary to preserve it. • “Agent” has no express authority to do the act necessary to preserve it but has implied authority. • NECESSITY means the force of circumstance. NECESSITY: 4 CONDITIONS MUST BE FULFILLED 1) There must be a genuine emergency: Prager vs Blatspiel stamp & Heacock Ltd.(1924)Held dry skin were not likely to deteroriate in value if properly stored and therefor there was no necessity for there sale,simply because they could not be sent or exported to another country because of the prevailing war situation. 4 conditions must be met: 2) It must be impossible to obtain the principals instruction. Where Tomato were consigned from one port to another, and when they were unloaded they were found to be bad and the railway company at the other port decided to sell them locally without attempting to reach the owners, the railway company was found to be liable to the exporter. Springer vs Great Western Railway(1921) 4 CONDITIONS MUST BE MET 3) The agent of necessity must act bonafide in the interest of those constant. 4) The act must be done for the benefit of the principal and not for the convenience of the agent. (B)COHABITATION • • • A wife leaving with her husband has her husbands authority to pledge his credit for necessaries of life. What is necessaries depend on the couples joint style or standard of leaving. The husband can escape liability if he can prove that: i. ii. He has expressly forbidden his wife to pledge his credits. If he expressly warns the supplier not to supply his wife with any goods on credit. iii. If his wife is already sufficiently supplied with goods in question. iv. If his wife was supplied with the sufficient allowance or means for the purpose of buying such goods without resorting to the husbands credit. v. If the order for necessaries was excessive. (C)STATUTES • A number of statutes stipulates that certain persons shall be deemed to be agents in certain situations.The person who impounds animals become the agent of the owner of the animal,and is bound to provide the animals either food and water.A partner is by law an agent of the firm and is responsible to the firm and to each other partner in the ordinary business of that particular firm. Duties of an agent to his principal • The duties of an agent to his principal can be either contractual or fiduciary.Contractual duties arise specifically out of the agreement between the agent and the Principal.They can be expressly stated in the agreement or implied.Fiduciary duties on the other hand are uberimae fidei in nature;and will be imported into the relationship whether expressly stated or not. DUTIES OF AN AGENT TO HIS PRINCIPAL 1. To carry out the work with reasonable care,skill and diligence. 2. Must perform his work personally. 3. Duty to act in good faith 4. Duty to account 5. Duty of obedient To carry out the work with reasonable care,skill and diligence. • In Uttamchand & Co.Ltd.v F.J.Hawkes & Co.Ltd.[1954]EALR 197,the appellant company commissioned the respondent company to purchase a certain quantity (48 pieces)of textile goods. The textile pieces were to be purchased from England and shipped out to Mombasa. Owing to a shortage of shipping space, there was a delay of about seven months before the goods were shipped out. When the textile pieces were shipped out, it was also found that49 pieces and not 48 had been delivered. The appellant company contended that the respondent company, as its agent, ought to have rejected the goods owing to the extra piece delivered as well as the delay in shipping. By accepting the goods, the respondent company had acted outside the scope of its authority. It was held that the real issue between the parties was whether the respondents, as agents, had acted with reasonable skill and diligence having regards to all prevailing factors at the time. It was found that they had done so; (perhaps more so because the contract between the parties specifically excluded liability for delays in shipping and incorrect out-turns.). Must perform his work personally • • An agent must also personally perform the duties assigned to him by the principal.Personal performance is central to the agency relationship and as such,the agent must not delegate this task. “Delegatus non potest delegare”A person to whom authority has been given,cannot delegate that authority to another. Exceptions to this rule: i. ii. iii. iv. v. Incase of necessity. Where it is customary to delegate If the principal expressly authorises agent to delegate Where powers to delegate can be infered from the circumstances of the case. Routine administrative acts. Duty to act in good faith i. An agent has a duty to act in good faith.This fiduciary duty encompasses various aspects.for instance,The Agent must promptly Disclose any Material information that he may have,or come by in the course of carrying out his duties. In Allarakhia Janmohammed &co. v Jethalal Valabhdas & co.[1958]EALR 419,the appellants had engaged the respondent as a broker to sell eleven tonnes of cloves.The respondent obtained an offer of pounds 910 per tonne which the appellant refused. Subsequently,the respondent sold the cloves through his agent for pounds 930 per tonne,without disclosing this to the appellant.The respondent then asked his agent to send a cable to the appellant stating that the best price obtainable was pounds 830 per tonne.The appellant finally agreed to sell the cloves at pounds 830 per tonne. It was held by the court that since the respondent had already sold the consignment at pounds 930, per tonne,his representation to the appelant that the best price was pounds 830 per tonne was false and fraudulent. The respondent was also in breach of his duty as an agent to his principal. DUTY OF GOOD FAITH • The duty of good faith also requires that an agent must not disclose to a third party any confidential information which has been entrusted to him by his principal.However information which is already in the public domain is excluded from this requirement as the agent has no control over it. • Good faith also requires that an agent must not allow personal interests to conflict with his duties.Thus,in Boardman v.Phipps (1967)2 AC 46, A solicitor to a trust fund who had some shareholdings in a private company used his position as agent of the trust fund to receive shares in the company.It was held that the solicitor should have been free to advice the trust whether it would have been advantageous to buy further shares on its own behalf.However,since he was negotiating to buy them himself,he would have been unable,if consulted,to give unprejudiced advice.Thus,there was a conflict between his interest and his duty DUTY OF GOOD FAITH • Another aspect of the duty of faith is that the agent must not make secret profits out of his relationship with the principal.An agent occupies fiduciary position.He must not,except with knowledge and assent of the principal,make any profit beyond the agreed commission or remuneration.Where,an auctioneer receieved from the buyer commission in addition to what his principal paid him as commission,it was held that he was bound to hand over the total commission to the principal [Andrews v.Ramsay & Co.,(1903)2 K.B. 635] Implied duty to account • The agent also has an implied duty to account to his principal for all sum received by him arising out of the agency relationship.Thus,he must keep proper books of accounts of all transactions relating to the principal.These must be up to date and must be produced on demand.Books relating to the principal must also be kept separate from his own. DUTY OF OBEDIENCE • The duty of obedience is also one that is usually implied into the Agency relationship.The Agent must keep within the boundaries of his express or implied authority,and must not go on a “fro lick of his own”.He must take care not to jeopardize the principal’s relationship with third parties.To this extent,this duty is closely related to the duty of due skill,care and attention as well as the duty of good faith. DUTIES OF THE PRINCIPAL TO HIS AGENT ARE GENERALLY TWO. 1) The principal should pay his Agent his commission or other remuneration agreed.The case of Uttamchand &Co Ltd v.F.J. Haukes Ltd [1954]EALR 197 illustrates this point.Once the Agent has performed his part of the bargain,in this particular instance,procuring and shipping some textiles,the principal should pay the remuneration due,without,as was attempted here,refusing to pay for the services rendered. 2) The second broad duty of a principal to his agent is to provide indemnity for acts lawfully done which may give rise to liability against the Agent.Provided the Agent has acted within the scope of his actual or implied authority,the principal should indemnify him Remedies available to an agent for breach of duty • The remedies available to an agent for breach of duty are damages in contract as well as in tort.To the Principal whose agent has committed a breach of his contractual or fiduciary duties,damages in contract or in tort are available,as well as suing for money had and received.The Principal could also dismiss,without notice,an agent for breach.Despite the fact that a principal should indemnify an agent acting within his authority for acts that could give rise to liability against the Agent,this remedy is lost to the Agent should he breach his duty.A principal can also refuse to pay commission for breach.Other remedies available to the Principal are Prosecution incase of a criminal offence such as fraud,as well as damages for the same. TERMINATION OF AGENCY 1.Act of parties. 2.By law. ACT OF PARTIES. 1. Mutual agreement. 2. Revocation by principal i. Authority capled with interest.(gift) ii. Executed authority. iii. Statutory authority.(bankruptcy sec 50,bonafide transaction without notice. 3. performance Operation of law • • Death. Bankruptcy i. ii. • • • • Principal (terminated) Agent(unfit to act) Insanity of the principal. Enemy of the state. Agency created on a limited period(contract) Frustration.
