CONTRACT LAW NOTES

A contract according to section 10 of the contract Act is an agreement entered with consent of parties with capacity to contract, with a lawful consideration, lawful object and with intention to be legally bound. Contract law in Uganda is governed by the contract Act (2010)

Before the contract law in its present form there were two types of court action under the writ system.

The Writ of debt- this is where a claim could be brought to court for payment of money or delivery of goods

Initially in the 14th century the writ of debt was only available for claims of money. Claims for goods could only be brought to court in Tort under the writ of Detinue.

The Writ of Covenant- Where a person under took to offer services but later failed to fulfill his promise he would be sued under this writ. Initially the writ of covenant was available to only promises under a deed (informal promises could not be enforced.)

Later the writ of ASSUMPSIT was developed – Writ of ASUMPSIT- Where a person promised to offer services and failed to do so he would be sued under this writ whether the promise was formal or informal. In HUMBER FERRY’s MAN CASE. He undertook to carry horses across the river and negligently overloaded the boat which sunk. He was successfully sued.

FORM OF A CONTRACT

A contract according to section 1 can be in writing, oral, partly written or oral or implied from the conduct of parties.

SIMPLE CONTRACT- is a contract entered in either orally or implied by conduct.

CONTRACT WHICH MUST BE IN WRITING

There are contracts which are required to be in writing, these are referred to as special contracts.

•A contract whose subject matter exceeds 25 currency points.

•A contract of guarantee or indemnity

According to the Hire purchase Act section 4-a hire purchase contract must be in writing

Section 101 of Registration of titles Act transfer agreement must be in writing.

CONRTACTS WHICH MUST BE EVIDENCED IN WRITING

°Receipts

°Invoices

°Bill of lending

°A cheque

°A Promissory Note

TYPES OF CONTRACTS

Void contract- This is a contract which cannot be enforced because it lacks some of the essential elements of a valid contract eg consideration, consensus ad idem, lack of contractual capacity, voidable contract. This is a contract that can be made void by one party at his option. One party has a right to repudiate the contract eg where there is misrepresentation the innocent party has an option to repudiate the contract.

UNENFORCEABLE CONTRACT- This is a contract that cannot be enforced by court even if all the elements of a contract are present because it is prohibited by law.

CLASSIFICATION OF CONRTACTS

Contract of record. This is a contract created by courts of law. Obligations of the parties arise independently of the agreement of the parties.

These take two forms.

-Judgment

-Recognizances

Contracts under seal – (contracts under a deed. ) Contracts in writing, signed and sealed.

Simple contracts- Contracts made orally or implied from the conduct of parties.

Special contracts. These are contracts required by the contracts Act to be in writing.

FORMATION OF A CONTRACT

There are essential elements of a valid contract and these include

« Consensus ad Idem

« Offer

« Acceptance

« Capacity to contract

« Consideration

« Intention to be legally bound

CONSENSUS AD IDEM

This is the first essential ingredient of a valid contract. This means meeting of the minds of the parties (consensus ad idem)

Thus the parties must have agreed all the terms of the contract and understood them.

OFFER

This is an expression of willingness to contract on valid terms whose acceptance gives rise to a binding contract or willingness to do an act or abstain from doing something signified by one party to the other with a view of obtaining assent of the other.

RULES GOVERNING OFFER

It must be communicated to the offeree – A contract will not be valid if the offer is not communicated and accepted by the offeree. Communication of an offer is by an act or omission intended to communicate the offer. Communication is valid if it comes to the knowledge of the offeree.

It must be an offer as opposed to an invitation to treat.

Offer give rise to a valid contract whereas an invitation to treat invites a party to make an offer and this does not give rise to a valid contract

An invitation to treat can be by;

-Displaying of goods in a shop eg in FISHER V BELL display of flick knive was an invitation to treat and not an offer.

-Advertisement

-Invitation to bid/ auction

An offer must be certain. An offer must be clear and unambiguous.

TYPES OF OFFER

Specific offer- this is an offer made to a particular person or group of persons.

General offer- This is an offer made to the world at large. This offer will give rise to a valid contract if a member of the public performs the terms of the offer. This type of offer is illustrated in CARLILL V CARBOLIC SMOKE BALL where the defendants advertised that they would pay 100 pounds to anyone who used their product according to instructions and still suffered from the influenza and that they deposited 1000 pounds in a bank to show their commitment. The plaintiff bought the smoke ball and used it according to the instructions but still caught the flue, her request for the 100 pounds was denied.

The defendants argued that;

(1) there was no offer, the advert was a mere Puff

(2) Even if there was an offer she had not communicated her acceptance.

It was held that depositing money in the bank went beyond a mere puff, an offer made to whole world can be enforced by the member of public who performs its conditions. There was no need to communicate the acceptance, the plaintiff performed the conditions of the advert. Thus there was a valid contract.

ACCEPTANCE

A contract is only valid if the offer is accepted by the offeree.

Acceptance must be from the offeree to the offerer.

Any conduct of the offeree or omission intended to communicate acceptance amounts to acceptance.

Acceptance complete when it comes to the knowledge of the offerer.

RULES GOVERNING ACCEPTANCE

An offer must be accepted in its form. If it’s not accepted in its form it will amount to a counter offer.

Acceptance of an offer must be communicated to the offerer

Mere silence doesn’t amount to acceptance of an offer.

POSTAL RULE

The general rule is that communication of acceptance is complete when it comes to the knowledge of the offerer. However the postal rule is an exception to this rule.

According to the postal rule communication of acceptance is complete where the offeree puts a letter in means of transmission he has no control over. Once a letter addressed to the correct address is stamped and posted communication of acceptance is deemed to be complete.

ADAM V LINDSELL it involved sale of wool, because parties were not in close contact the seller asked for an acceptance by post. The plaintiff replied the same day that the offer was received and the acceptance letter was posted as required. However the letter wasn’t received for a long time. By the time it was received the wool had already been sold. It was held that the letter of acceptance was effective from the day it was posted.

HENSON V FRASER

NOTE. this rule doesn’t apply where the offerer specifies the means of communication of acceptance.

In auction accepted is communicated when the auctioneer drops the hammer

TERMINATION OF OFFER

An offer can be terminated by;

• Revocation

• Lapse of time

• Counter offer

• Rejection

• Failure of condition precedent

• Winding up or death.

REVOCATION: An offer can be revoked however this must be before the offeree communicates his or her acceptance and it must be communicated to the offeree.

LAPSE OF TIME: If time within which the offer is to be accepted is fixed, the lapse of that time terminates the offer and if it’s not fixed then within a reasonable time.

CONSIDERATION

Consideration according to section 2 is the right, profit, interest accruing to one party or loss, injury or responsibility suffered or undertaken by the other.

According to Hodgen it is the value made in exchange of a promise received.

DUNLOP V SELFRIDGE defined it as what you pay for the promise you receive.

There is no valid contract if there is no consideration.

TYPES OF CONSIDERATION

Executed consideration. This is the value already received by the promisor from the promise. This is where one party has already fulfilled his obligation eg sale of goods on credit the seller does his part by delivering goods and the buyer will fulfill his offer by paying later.

Executory consideration. This is a promise to do something for a promise ie a promise in exchange of a promise. Eg promise to deliver goods on promise of payment after derivery.

RULES GOVERNING CONSIDERATION

Consideration must flow from the promise to the promise.

~It must be lawful (section 19)

~It must be sufficient but need not be adequate

~Past consideration does not sustain a contract

MUST FLOW FROM THE PROMISEE TO THE PROMISOR

There is no valid contract if there was no consideration.

Only a person who provides consideration can enforce a contract.

DOCTRINE OF PRIVITY OF CONRTACT – Only a party to a contract can enforce or sue or be sued on that contract. DUNLOP V SELFRIDGE

Exceptions to this doctrine include;

√Bill of exchange

√Agency- principal can sue or be sued on a contract entered by his agent.

√Assignment

√Trust. A beneficiary can sue a trustee although he wasn’t a party to the trust agreement.

√Statutory exceptions

PAST CONSIDERATION

This is a consideration provided before a contract.

The general rule is that passed consideration does not sustain a contract, however there exceptions.

Bills of exchange

Where the promisor requests for an act which amounts to a past consideration

A debt burred by limitation Act can be revived by a fresh agreement.

CIRCUMSTANCES THAT DO NOT CONSTITUTE VALID CONSIDERATION

1. Carrying out an already existing obligation

2. If an obligation existing to a person is done for a 3rd party.

3. Payment of a lesser amount than Owed.

RULE IN PINNEL’S CASE

This is to the effect that payment of a lesser amount than owed does not constitute a valid consideration.

This rule is subjected to exceptions;

Ø Payment made earlier at the request of the creditor

Ø Payment in a different place at the request of the creditor.

Ø Payment to a third party at the request of the creditor

Ø Introduction of new elements in to an agreement.

CIRCUMSTANCES THAT DO NOT REQUIRE CONSIDERATION

Agreement under a deed or registered.

Promissory estoppel – HIGH TREES CASE- if a party makes a representation of facts to the other and the other person acts on it to his detriment than the party is estopped from denying such facts.

CAPACITY TO CONRTACT

People with capacity to contract include;

· Persons of 18years and above

· Persons of sound mind

· Persons not disqualified from contracting by law

· Persons of 16 years can contract in line with Article 34 of the constitution.

MINORS

Minors have no capacity to contract.

However in contracts of supply of necessities minors are liable to pay reasonable fees. The party to such a contract has to prove that the contract was of necessities and were sufficiently supplied to the minor.

SERVCIES

Under article 34 of the constitution children of 16 years can enter employment contract if it’s in their interest or not exploitation.

There are contracts which are void if entered by minors.

a) Trading contracts

b) Contracts for supply of unnecessary things

c) Payment of loan

VOIDABLE CONTRACTS

There are contracts which are voidable at the option of minor

Contract for shares in a company

Lease contract

NB. When considering whether goods are necessities

Court will look at

Social status of a minor

Infants actual stock of the articles at time of delivery

Contracts for the benefit of a minor are binding on him.

SOUND MIND

A person is of sound mind if at the time of contracting he understood the terms of the contract.

A person of unsound mind who occasionally is of sound mind may contract in this period when he is of sound mind.

DRUNK PERSON

If a person is drunk at the time of contracting so as not to understand the terms of the contract and the other party knows that the is drunk, the contract is voidable at the drunk person’s option.

CORPORATIONS

A company is a legal person with capacity to contract.

INTENTION TO CREATE LEGAL RELATIONS/ TO BE LEGALLY BOUND

For a contract to be enforceable parties must have the intention to be legally bound by the contract.

There is a common law presumption that domestic agreements are not intended to create legal relation or there is no intention to be legally bound. Thus an agreement between a husband and a wife is not enforceable. Courts are reluctant to enforce such agreements. BALFOUR V BALFOUR.

However where

The agreement is of business nature court will presume an intention to be legally bound.

Where the agreement is made when the husband and wife have separated court will also presume intention to be legally bound MERRIT V MERRIT

TERMS OF A CONTRACT

A term: is a statement made by parties to the contract which are intended to form part of the contract and bind them.

Failure to comply with the terms of a contract leads to breach of the contract.

A representation: is a statement made by a party to a contract to induce the other party to enter into a contract. Such statements are not intended to form part of the contract.

If a representation is false it’s a misrepresentation.

MERE PUFF/ TRADE PUFFS are statements exaggerated that they cannot be considered to be true. However mere puffs with a specific promise attached are binding e.g in CARLILL.

For a statement to be a term it must be incorporated in the contract.

FACTORS CONSIDERED IN DETERMINING WHETHER A STATEMENT IS A TERM OR A REPRESENTATION

Importance of the statement. The more important a statement is to a contract the more likelihood of it being considered a term.

Special knowledge or skill. If it’s made by a person with special knowledge or skill it will be considered a term. DICK BENLEY LTD V HEROLD SMITH LTD.

Time between making the statement and the formation of the contract. The shorter the time the more likelihood of it being considered a term. ROUTLEDGE V MCKEY

When its incorporate iofto the contract Knowledge of the statement

CONDITIONS & WARRANTIES

A condition is a fundamental term of a contract. If a condition is breached the aggrieved party has a right to repudiate the contract and also sue for damages.

A Warranty- This is a minor term of a contract. when breached the contract cannot be repudiated but the innocent party sues for damages.

TYPES OF TERMS

Express term- These are terms which are in writing.

PAROLE Evidence Rule- Prohibits parties from adducing oral evidence to add, Vary or alter the terms expressed in writing.

Implied terms- terms which are not in writing but implied to the contract

I. Implied by facts

II. Implied by law

III. Implied by custom / trade usage

IMPLIED BY FACTS

These are implied basing on the circumstances around the contract.

Courts will not imply terms if doing so will be inconsistent with terms in writing.

Court will imply terms if they give business efficacy to the contract.

TERMS IMPLIED BY LAW

Some laws such as the sale of goods Act imply terms to the contracts ogf sale of goods in sections 11-16. eg

Implied term as to fitness of purpose

Who goods are sold by sample the bulk will correspond with the sample

Where they are sold by description the goods will correspond with the description.

TERMS IMPLIED BY TRADE / CUSTOMS

Some practices that govern trade become wide spread and are presumed to be known by every person in that trade thus will be implied in any contract related to a such trade.

EXCLUSION CLAUSE

This is a clause which limits or excludes the rights or liability of a party to a contract, which rights or liability the party would ordinarily be entitled to or suffer.

Exclusion clauses have their basis from the doctrine of freedom of contract, parties to a contract have a right to contract the way they desire. Court will not ordinary interfere with the terms of contract because parties under freedom of contract have a right to contract on terms of their choice.

RULES GOVERNING EXCLUSION CLAUSES

It must be brought to the notice of the party to the contract. This is to enable the party to understand the clause and agree to be bound by it.

A party must be given a chance to reject it.

Where there is misrepresentation the clause is invalid. If a party misrepresents to the other about the effect of an exclusion clause, that clause is invalid.

It must be incorporated in the contract. An exclusion clause must be expressed in the contract and not made orally.

If a party signs a contract he is bound by exclusion clause in the contract even if he did not read it. This illustrated in L’ESTRANGE V GRACOUBA, where a party signed a contract for the sale of a cigarette vending machine without reading it and court held that he was bound by the exclusion clause that was contained therein.

VITIATING FACTORS

Where there are all elements of a valid contract the contract is enforceable ie offer, acceptance capacity to contract, consideration, intention to be legally bound. However there are some instances where a contract will be rendered unenforceable even if all these elements are available.

Vitiating factors are factors which negative the free consent to contract. They vitiate a contact and affect its enforceability. They affect consent of a party to a contract.

Under section 13 vitiating factors include;

Ø Duress

Ø Undue influence

Ø Mistake

Ø Misrepresentation.

Note: These factors are found outside the contract forexample facts showing duress are not within a contract but outside it.

MISTAKE

This is the erroneous belief of facts or law.

Under common law mistake of law does not affect the validity of a contract because of the doctrine ignorance of the law is not an excuse (Ignorantia juris non execusta).

However under section 18 mistake of law in force in Uganda renders a contract void.

The general rule is that mistake of facts does not affect the validity of a contract however this has exceptions depending on the type of mistake. Mistake of fact to affect the contract depends on the nature of mistake.

The general rule that mistake of fact doesn’t affect the validity of a contract is based on freedom of contract and caveate empta (Buyer be aware).

TYPE OF MISTAKE

COMMON MISTAKE- This is where both parties to the contract are mistaken as to matter of facts.

It includes

Mistake as to existence of subject matter (rex extincta) – this occurs where at the time of contracting the subject matter is no longer in existence but both parties have no knowledge of this fact.

Rex Sua- this is where at the time of contracting the subject matter already belongs to the buyer but both parties have no knowledge of this. For example A agrees to buy land yet that land was actually bequeathed to him in a will.

MUTUAL MISTAKE- Both parties are mistaken as to a matter of fact. It includes:-

Impossibility of performance- parties enter in to a contract not knowing that it’s impossible to perform such contract.

Identification of subject matter. Parties are mistaken as to which item was identified as subject matter e.g X owns A and B, Y agrees to buy A from X but X thinks Y actually what’s to buy B.

UNILATERAL MISTAKE – This is where only one party to the contract is mistaken.

The general rule is that unilateral mistake does not affect the validity of a contract.

However under section 17 mistake of one party of essential matters of a contract renders it invalid.

At common law there are two grounds on which unilateral mistake may render a contract iinvalid.

Mistake as to identify of the party (contracting party.).

Mistake of document mistakenly signed (Non est functun.)

Identify of a party is immaterial. The burden is on the party to prove that the party contracted with was not the one intended to be contracted with.

The party mistakenly contracted with knew he was not the one intended to be contracted with.

Identify of the party was crucial

Party took steps to verify the identity of the party.

CANDY V LINDSEL

INGRAM V LITTLE

NON EST FACTUM

It means (not my deed)

The general rule is that a party is bound by his signature on a document.

The exception to this rule is where the party has been misled as to the contents of the document. He may plead NON EST FACTUM (not my deed).

This doctrine was laid down in THOROUGH GOOD’S CASE/ CHICKEN CASE

Non est factum is available to people who cannot read or understand the contents of the document e.g illiterates, people of unsound mind, the blind, intoxicated.

For this to succeed

The document signed and one intended to be signed must be fundamentally different SAUNDER V ANGILIA BUILDING SOCIETY

If a party signs without reading he cannot plead non east factum.

If a party negligently fails to ascertain the contents of the contract he cannot successfully plead non eat factum.

EFFECT OF MISTAKE

Mistake renders the contract void.

Note mistake as to quality or quantity does not affect the validity of a contract.

MISREPRESENTATION

Misrepresentation is a statement made by a party to induce another party in to a contract which turns out to be false.

For a misrepresentation to vitiate a contract

It must be a statement of existing fact and not a statement of law, opinion or puff. However if an opinion is by a professional it will vitiate it.

It must be intended to induce the party to a contract

It must have induced that party. Party must have relied on it.

SILENCE AS MISREPRESENTATION

The general rule is that silence does not amount to misrepresentation.

Exceptions to this rule include

Contracts based on utmost good faith. In such contracts silence on facts within the knowledge of a party will amount to misrepresentation.

Where there is a fudiciary relationship e.g. Doctor- patient relationship. Silence of a doctor on facts within his knowledge will be considered misrepresentation.

Where silence is equivalent to speech.

TYPES OF MISREPRESENTATION

Fraudulent misrepresentation- statements made by a party knowing that they are not true, without reason to believe that they are true or made recklessly.

Innocent misrepresentation- statements made by a party honestly believing they are true when actually they are false.

Negligent misrepresentation- Statement made in breach of duty of care. For this to occur there must be duty of care. HEADLY BYRNE V HELLE & PARTNERS.

Effect of misrepresentation: it renders a contract voidable at the option of the representee.

DURESS

Duress is one of the factors that vitiate a contract because it affects the consent of a party to the contract.

This occurs where a party threatens or uses pressure to secure the consent of the other party.

The burden is on the party alleging duress to prove that his consent was secured by duress.

Duress may be

Actual threat to a person ( threat to injure him)

Threat to goods

Economic threat e.g threat to stop people from buying his goods.

A person has to prove that

There was no option to change his mind

There was no option of refusing

NOTE Duress renders the contract voidable at the option of the innocent party.

UNDUE INFLUENCE

This occurs where a person is in a dominate position and he uses his position to get unfair advantage of a person lower than him.

Such person should have actual authority over the other.

Undue influence includes;

§ Actual undue influence

§ Presumed

§ Constructive

ILLEGAL CONTRACTS

Illegal contract’s are contract’s which are prohibited the law.

Even if all elements of a contract are available such a contract is unenforceable.

According to section 19 such contracts include

ü Contract involving breaking the law

ü Contract with a fraudulent consideration

ü Contract to injure a third party

ü Contract against morality or public policy

ü Contract forbidden by law.

These are divided in to 3 categories

§ Contracts rendered illegal by statute

§ Contracts illegal at common law on grounds of public policy.

§ Contracts void at common law on grounds of public policy.

CONTRACTS RENDERED ILLEGAL BY STATUTE

There are some contracts prohibited by statutes eg a contract by unlicenced money lender is prohibited by the Money lenders Act.

CONTRACTS ILLEGAL AT COMMON LAW ON GROUNDS OF PUBLIC POLICY

These include

1. Contracts to commit a crime- A contract to commit a crime eg to steal is illegal

2. Contract to commit a tort- contract to commit a civil wrong eg battery is illegal and unenforceable.

3. Contract to promote corruption in public life.

4. Contract to promote immorality

5. Contract for maintenance and champarty- this is where a person who has no interest in a case invests in it on ground that he will share on the court proceeds

6. Contract to defraud revenue.

CONTRACTS VOID AT COMMON LAW ON GROUNDS OF PUBLIC POLICY

These include

Contract against the institution of marriage- this is aimed at protecting the marriage institution.

These contracts include

a. Contract for marriage brokerage

b. Mere promise to marry

c. Contract to marry when a spouse dies

Contract of restraint of trade- such contracts are not enforceable except where the restraint is reasonable.

Contracts that oust jurisdiction of court

EFFECT OF ILLEGALITY

It renders a contract unenforceable.

The loss lies where it falls, in such contracts party cannot recover expenses

However there are exceptions where court may order recovery of expenses.

o Where one party is ignorant about the illegality

o Where parties are not at equal fault

o Where initially the contract was legal but later became illegal.

o Where party withdraws before performance

o Where some parts of the contract are not illegal

ILLEGALITY Vs VOID CONRTACTS

Illegal contracts are prohibited by law however void contracts lack one of the elements of a valid contract.

Both contracts are unenforceable however in illegal contracts the loss lies where it falls and in void contracts court can intervene and award damages.

DISCHARGE OF A CONRTACT

This is the fulfillment of obligations under a contract discharge of a contract may be by:

a. Performance

b. Breach

c. Agreement

d. Frustration

PERFORMANCE- This is carrying out the obligation under the contract. General rule is that performance should be in accordance with the terms of a contract. However this has exceptions.

Substantial performance- where a party does a substantial part of his obligation he may be held to have performed his obligations

PARTIAL PERFORMANCE- if a party has partially fulfilled his part and the other party agrees to pay for that part done. The party will be paid for the partial work under the QUNTUM MERUT rule which means:( Pay him for what he has done.)

DIVISIBLE CONTRACT- These are contracts where performance is to be in installments and each installment is paid for eg contract to supply 1,00kg of posho in two installments of 500kgs and each installment is to be paid for.

Where a party fails to do his part because of the fault of the other party he will be deemed to have performed his part.

BREACH

If a party fails to carry out his obligations under the contract he is in breach of contract, this attracts damages to the innocent party.

AGREEMENT

This is were parties agree to discharge their obligations under the contract. This may be

Bilateral- Both parties agree to discharge obligations of the other

Unilateral- a party who has already performed his part discharges the other party of his obligations

Bilateral discharge includes

ACCORD & SATISFACTION- Where parties who have wholly or partially not fulfilled their obligations under a contract agree to discharge their obligations they must provide consideration to validate or give effect to such discharge.

Accord is the agreement to discharge obligation under a contract.

Satisfaction is the consideration provided for the discharge of obligations under a contract. it makes the accord (agreement) operational.

Waiver. Parties may waiver their rights under a contract.

FRUSTRATION

This is where a party fails to perform his obligations under a contract due to an unforeseen event.

At common law a party is bound by the contract even if he is unable to perform his part due to unforeseen event. Such events must be included in the contract to avoid liability.

Parties may include a FORCE MAJEURE CLAUSE excluding liability of parties for acts caused by unforeseen events.

However section 66 of the contracts Act recognizes frustration.

Where there is frustration a party may claim refund.

REMEDIES FOR BREACH

At common law damages where the only remedy.

Damages- this is the monetary compensation for loss or injury suffered.

Nominal damages- small sums of money awarded which recognizes that the plaintiff suffered loss but there was no substantial financial loss.

Substantial damages- Awarded where there is substantial financial loss.

REMEDIES

EQUITABLE REMEDIES

Some times damages would not be appropriate thus courts of chancery introduced equitable damages. These include

Specific performance- an order compelling the defendant to comply or fulfill his obligations under a contract. This is awarded where damages are not appropriate and it must not cause hardship on a party.

Injunction- Order to the defendant to restrain from breaching the contract

Damages- These are monetary consideration for the injury suffered or loss incurred.

These damages may be:-

Specific damages- these must be alleged and proved they are awarded were the value of the loss can be ascertained.

General damages- These are for the loss whose value cannot be easily ascertained eg mental suffering

Punitive / exemplary damages- Awarded as an example to other people to cater them from doing the same thing.

Rules governing damages

Restitution in integram- This means putting parties in a position where they would be if there had been no breach of contract.

Rule against remoteness of damages- Rule in HARDY V BEXENDALE. it is to the effect that damages payable must be for the loss directly resulting from the conduct of the defendant. Damages awarded must be directly linked to the acts of the defendant.

Indemnity- this is the refund of the expenses incurred by a party.

Recession- this is setting aside a contract to restore the status quo before the contract.

Party may rescind through any act which indicates that he is nolonger bound by the contract.

The right to rescind may be lost where there is;-

Affirmation- if a party discovers misrepresentation but expresses willingness to continue with the contract.

Lapse of time- if reasonable time passes

If restitution is impossible due to ;

(1) subject matter is nolonger in existence

(ii) subject matter has been irreversible passed on to a third party

(iii) where it is irreversibly distorted