Contracts are a part of everyday life — from employment agreements and mobile service contracts to land transactions and business deals. But before you put pen to paper, it’s important to understand what the Law of Contract entails and how it protects both parties involved. This guide breaks down everything you need to know about the Law of Contract in Kenya, based on both legal principles and practical examples.
What is the Law of Contract?
The Law of Contract refers to the legal framework that governs agreements between parties. In simple terms, a contract is a legally binding agreement that creates mutual obligations enforceable by law. In Kenya, the law of contract is primarily derived from English common law and governed by the Law of Contract Act (Cap 23).
Elements of a Valid Contract
For any contract to be enforceable, it must contain these five essential elements:
- Offer and Acceptance
One party makes an offer, and the other accepts it. Acceptance must mirror the offer (no changes) for it to be valid. - Intention to Create Legal Relations
Both parties must intend for the agreement to be legally binding. Social or domestic arrangements typically don’t count. - Consideration
Something of value must be exchanged — money, goods, services, or a promise. - Capacity to Contract
Parties must have the legal ability (age, mental capacity) to enter into a contract. - Legality of Purpose
The contract’s objective must be legal and not go against public policy.
Types of Contracts in Kenya
Understanding the nature of contracts can also help you navigate them better:
- Written Contracts – Formal documents, often required in business, employment, or property dealings.
- Oral Contracts – Agreements made through spoken word; enforceable, but harder to prove.
- Express Contracts – Terms are clearly stated (written or spoken).
- Implied Contracts – Formed through the actions or conduct of the parties.
- Unilateral vs Bilateral Contracts – Unilateral involves one party making a promise; bilateral involves mutual promises.
Examples of Common Contracts
- Employment contracts
- Land sale agreements
- Loan agreements
- Service contracts (e.g, construction, internet)
- Insurance policies
- Tenancy agreements
Legal Consequences of a Contract
Once you sign a valid contract:
- You are legally obligated to fulfill your part.
- Breaching the contract can lead to legal action, such as:
- Damages (financial compensation)
- Specific performance (being forced to perform)
- Injunctions (court orders to stop certain actions)
What to Check Before Signing Any Contract
- Read the Fine Print – Don’t skip the terms and conditions.
- Seek Clarification – Ask for explanations on unclear clauses.
- Check for Exit Clauses – Know how to terminate or cancel.
- Understand Your Rights and Duties – Ignorance isn’t a defense.
- Get Legal Advice – Especially for high-stakes agreements.
Tips to Protect Yourself
- Always ask for a written contract for significant deals.
- Keep copies of signed documents.
- Avoid signing contracts under pressure or coercion.
- Do not sign blank or incomplete forms.
- Cross-check names, dates, and financial figures.
Law of Contract and Kenyan Courts
Kenyan courts have consistently emphasized the sanctity of contracts. In disputes, courts will interpret the terms based on:
- Clear wording of the contract
- Conduct of the parties
- Relevant statutes and legal principles
Once a valid contract is made, courts rarely allow one party to back out without a valid reason.
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