ARNOLD MWALIMU

17/KE/004/BIBA-S
LAW ASSIGNMENT 1

ESLSCA INTERNATIONAL
BUSINESS SCHOOL

NAME: ARNOLD MWALIMU

REG No: 17/KE/004/BIBA-S

LECTURER: MWESIGWA HENRY

COURSE: BUSINESS LAW/2019

ASSIGNMENT 1
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QUESTION ONE

a) Acceptance is unconditional agreement to the terms of the offer and it can only be done
by a person or persons to whom the offer was made, but if the offer was made to the
whole world, it may be accepted by any one person

b) MODES OF ACCEPTANCE
I. ACCEPTANCE SUBJECT TO A CONTRACT

This means that the offeror and the offeree have agreed on the terms of the offer but
they propose to negotiate a formal contract on the basis of the offer. On such
circumstances, neither party is bound by the terms of offer until formal contract is
signed. Similarly, agreements to agree in future are not binding because the parties
did not intend to be bound by the terms. However, provisional agreements are binding
on the parties.

II. COMMUNICATION OF ACCEPTANCE BY POST

Where the offeror expressly or by implication indicates that he expects a letter of

acceptance by post, then the acceptance is complete and effective as soon as the letter
is posted even though it may be delayed or even lost in the past provided that it was
correctly addressed, stamped and posted.

III. ACCEPTANCE VIA ORAL AGREEEMENT

An offer may be accepted orally, in writing or by conduct depending on the

circumstances of each case. An oral acceptance should in normal circumstances have
evidence of the event.
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IV. CONDITIONAL ACCEPTANCE

Conditional acceptance places an expectation on how the offer is accepted. The most
common example of conditional acceptance is placing a time condition on the
agreement. For instance, “I accept your offer to buy my TV that I placed on
Craigslist, as long as you pick it up within the next hour.” You are placing a condition
on the sale. If the person does not come within the next hour, under conditional
acceptance, the offer is no longer valid.

C) In the case of Florence the Vendor of a fruit farm regarding provisional

Agreements, she signed a contract which was a binding provisional agreement in the
place of waiting for a fully legalized agreement to be drafted. Her eventual refusal to
sell after signing said provisional agreement represents a breach of terms and supports
the buyers’ decision to sue.

QUESTION TWO

A) Consideration in contract law is simply the exchange of one thing of value for another. It
was defined in the case of Curie V Misa as a right, interest, profit, detriment, loss,
forbearance or responsibility given, suffered or undertaken by the other.
Consideration must be of value (at least to the parties), and is exchanged for the
performance or promise of performance by the other party (such performance itself
is consideration). In a contract, one consideration (thing given) is exchanged for
another consideration.

B) TYPES OF CONSIDERATION
1. PAST CONSIDERATION: This is consideration which is given after an
activity has taken place; in other words, the contracting parties provide for
consideration after the contact has been entered into. As a general rule,
this is bad consideration and renders a contract unenforceable. However,
there is an exception and this arises where there is use of bills of
exchange.
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2. EXECUTED CONSIDERATION: This is where consideration is given

at the time of entering into the contract. It therefore, means that with
signing of the contract, there is no obligation remaining to be performed in
relation to consideration.
3. EXECUTORY CONSIDERATION: This is where consideration has not
been paid at the time of entering into the contract but would be paid on a
subsequent date.

C) RULES OF |CONSIDERATION

1. It must not be past.

Consideration of contract must not occur in the past. The rule of law in this instance
dictates that the event must be in the future, as defined by Business Law: Principles and
Cases ‘a promise looks to the future, and the person to whom it is made is justified in
expecting that it will be fulfilled.

2. It must be sufficient, but need not be adequate.

Consideration is concerned with the ‘deal’ or ‘bargain’ portion of the contract.

Consideration must be sufficient, but need not be adequate. In their wisdom the Courts
have left it to the parties to the contract to determine the worth or value of a contract, with
the exception of fraud. Therefore, the parties are responsible for assigning the value to the
contract.

3. It must not be in respect of an existing contract or duty.

The third rule of consideration of contract states that consideration must not be in respect
of an existing contract or duty – where a party has a public duty to act, this cannot be used
as consideration for a new promise or contract.

D) Privity of contract is a common law principle which provides that a contract cannot confer
rights or impose obligations upon any person who is not a party to the contract. The premise
is that only parties to contracts should be able to sue to enforce their rights or claim
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damages as such. However, there are exceptions to the rule in that, in some contracts,
nonparties can sue them. These include:

 Insurance contracts
 Agency contracts
 The law of trust and succession
 Negotiable instruments