What is a Contract?

A contract may be an agreement between two parties that creates legal obligations for each side to perform certain acts. Once the agreement is formalised, each party becomes legally bound to fulfil its contractual obligations, such as paying or providing goods; thus, our contract lawyers in Kenya are available to assist you.

For any contract to be enforceable under the law, each party needs to exchange something of value known as “consideration” (in most cases, this is payment for goods or services by the buyer and then provision of the goods or services by the seller). Consideration in a contract helps ensure a bargain is involved, not just a gift being given.

Contracts provide the parties involved with various rights. When forming a contract, the sides usually negotiate for multiple terms and provisions in their favour. For instance, they may negotiate regarding the quality of materials used, delivery date, payment amounts, and other contractual rights. Offering and accepting a contract are also important matters.

Forming a contract can often be complex, even for seemingly minor transactions. Standard clauses in a contract may include:

• Payment amounts;
• When payment must be delivered;
• The types of goods or services being sold;
• When the goods or services must be delivered or performed;
• Whether the contract can be assigned to another party
• Remedies in the event of a breach

Thus, special care should be taken when creating a contract, especially during the drafting and reviewing. This can help prevent a contract dispute or a contract violation.

Oral contracts can also be legally binding, depending on how they were formed and the subject matter of the contract. However, as a general rule of thumb, it’s always better to formalise an agreement in writing for future reference.

Each party has a general duty to read a contract so they understand its terms and responsibilities. A contract lawyer’s guidance and services can be constructive when negotiating, forming, drafting, and reviewing a contract.

How Can a Contract be Broken?

Contracts may be broken or “breached” by either party after signing and agreeing to fulfil their contract duties. This can occur in many ways, such as failing to meet or violating the terms. A breach of contract or contract violation may require legal action to make the non-breaching party whole if the breach has caused them any losses.

Some common ways a breach of contract can occur may include:

• Non-payment for goods or services delivered;
• Failure to deliver goods or services;
• Providing services or goods that are of substandard quality;
• Providing the wrong goods or services;
• Not paying the entire amount for goods or services;
• Paying the wrong party or delivering to the wrong party;
• Various other breaches of duties.

A breach of contract can either be minor or material. A minor breach is relatively insignificant and allows the rest of the contract to be completed. In contrast, material breaches are more severe and make it difficult or impossible to complete the contract terms.

Some other issues involved in a breach of contract situation may include:

• Lack of consideration in the contract
• Disputes over the length of the contract offer period
• A mistake of fact in the contract performance (for instance, if a company delivers dinner “plates” as opposed to brake “plates”)
• No substantial performance of the contract terms;
• Issues related to contract interpretation;
• One of the parties was minor or could not legally form a contract agreement;
• Breaches caused by the existence of fraud about the contract;
• Breaches related to the assigning of duties in a contract (some duties cannot be assigned to other parties to be performed);
• Instances where a contract term is vague, ambiguous, or has multiple meanings;
• The contract was unconscionable (i.e., so one-sided that it would be considered unfair to one party); it may also be used as a defence to breach of contract;
• Non-disclosure violations in a contract.

There may be various other ways to breach a contract. These may depend on several factors, including county and national contract laws and the exact terms contained in an agreement. Since each party is free to negotiate terms in the contract, breaches can also occur in different ways.

What are Some Common Contract Remedies?

Resolving contract conflicts is among the most complex areas of law. It depends on many factors, including the type of contract involved, the interpretation of the contract, and the kind of remedy the non-breaching party is seeking.

When determining contract remedies, courts will examine various forms of evidence, including witness testimony, payment and delivery receipts, the history of dealings between the parties, and the contract itself.

Two primary divisions of contract remedies are equitable remedies and monetary damages. Equitable remedies require the court to take action, such as cancelling a contract or allowing the parties to rewrite it. Economic damages provide the non-breaching party with financial payment for losses they received.

Equitable remedies for breach of contract may include:

• Contract Modification: In some cases, courts may allow a contract modification, such as when a term needs extended. This may help save the parties time and resources that they may have already expended;
• Contract Reformation: In some cases, courts may allow the parties to “reform” or change the contract. Reformation of a contract may be available in cases involving misrepresentation or mistaken terms in the contract;
• Contract Rescission: This is where the court cancels a contract. This must be done entirely (i.e., they can’t cancel only part of the agreement). This is available in various situations, including those involving a lack of consideration, issues with the formation of the contract, and in cases where the parties agree to it;
• Contract Revocation (Revoking a Contract): This is where a contract is voided, usually due to some mutual mistake in interpreting the contract;
• Contract Termination occurs when performance is impossible (one party cannot perform their part of the contract, for example, if an injury renders an athlete unable to play a game they contracted to participate in).
• Voiding a Contract: This can happen in cases where misrepresentation was used or where one party was a minor.

Damages in a contract case may include:

• Compensatory Damages are general damages intended to compensate the non-breaching party for their losses. For instance, if a party paid for goods, but the goods were never delivered, the court might issue compensatory damages that are worth the value of the goods paid for;
• Foreseeable Contract Damages: These are damages related to losses that “arise naturally” from the breach of contract;
• Nominal Damages: This is a less common damages award issued in cases where wrongdoing has occurred, but no actual financial losses have resulted. Often, the amount of these damages is $1 or $2. However, they are essential because they show that the plaintiff had a right to file the lawsuit and that the defendant was in the wrong;
• Punitive Damages: These damages punish the breaching party for intentional, egregious, or unacceptable conduct. Courts may limit the amount of punitive damages, and they aren’t available in every case;
• Special Damages: These damages don’t necessarily “arise naturally” from the breach, such as when a party claims business losses.

There may be some overlap between contract and tort law remedies, especially in cases involving fraud or misrepresentation. Damages are often calculated according to the fair market value of the loss at the time of the breach (though this may vary).

Are There Defenses to Breaching a Contract?

As with any legal violation, there may be some defences to breaking or breaching a contract. A party that has violated a contract may provide some justification as to why they breached the agreement.

These may include defences such as:

• The contract was abusive or illegal;
• The contract was fraudulent, or the other party engaged in fraud during the contract formation and negotiation stage;
• One party failed to exercise good faith and fair dealing;
• There was a waiver in place that affected the parties’ contractual obligations;
• The contract did not meet the contract writing requirement (for instance, contracts for the sale of land must be in writing);
• The defence of laches (basically, the other party waited too long to file a lawsuit);
• Existence of coercion during contract formation (for instance, if one party uses a threat of harm or even economic pressure to get the other party to agree to a specific term or sign the contract).

Contract defences may sometimes depend on whether the non-breaching party seeks equitable remedies or monetary damages. Defences for a breach of contract may differ from those available when the person seeks damages.

Do You Need a Lawyer’s Help for an Issue with a Contract?

Contract issues can be very complex. Many requirements must be met, from creating to signing and enforcing a contract. Legal repercussions can be faced if an agreement is void, unenforceable, or unconscionable.

It may be in your best interests if you need help at any stage of a contract situation. Your lawyer can help with negotiating, drafting, and reviewing a contract. They can also represent you in court if you need to file a lawsuit for breach of contract.

Remote Contract Lawyers in Kenya

Our lawyers work remotely, which not only helps to reduce costs but also provides us with the flexibility to engage with businesses from anywhere in the world. Rayness Analytica has years of experience in remote engagements, supporting onboarding and managing thousands of remote relationships.

If you have further questions or concerns, please contact us through our Contact Us page. We aim to become your preferred choice for contract lawyers in Nairobi, Kenya.