Tanzania Legal Management of Contracts

From the very beginning of the human being, mankind has been in contractual relationship of one sort or another. When one enters into marriage that is contract. Selling and buying of commodities is another form of contract, when one buys a ticket for transport, he is engaging in contractual relationship. Partnership, lease, trade agreement are some of the many forms of the contract. In fact, there is no final list of the contracts.

As time passes, more and more complicated contracts have been entered between parties concerned. These contracts involve individuals or individual and the Government institutions or Non- Government organizations. Emerging of different contracts with their complications requires definite contracts well organized legal structures and working judicial institutions to interpret the law and give right to the parties deserving.

In line with that, this work will be focusing on following areas;

Position and management of contracts in the United Kingdom and Tanzania as well as comparison of legal framework of these two countries.

The benefit of CISG when both parties to the contract are signatories of the United Nations agreement.

To describe the goods the seller purveys and the reasons the buyer is prepared to enter into a contract to buy such goods. To outline the differences sale of goods and supply of services.

To give highlight of case law applicable to the provision of software.

To provide comparison between the contracts of employment in Tanzania and the contract of employment in United Kingdom.

This work will discuss briefly the creation of the contracts, rights and liabilities of the parties in the contract. It will highlight the remedies in case there is a breach of the contract. Eventually, the development and advantages of CISG membership will be

Discussed in brief.

DEFINITION OF THE TERM CONTRACT

One Legal Dictionary defined contract as ‘A legally binding agreement creating enforceable obligations” (Curdozon L.B (2002) [1]

According to Sir William Salmond, a contract is an agreement creating and defining the obligation between two or more parties. [2]

An agreement does not necessarily to mean a contract as the former does not invite legal enforcement while the latter calls for the legal measures and the parties intend enforcement of the law for the their entered agreement.

In English law contract is a bargain, each party gives something to the other and gets something in return under mutual promise, therefore the contract should be carried out, under obligation theory a party is obliged to carry out promise. (Wright, D (2004) [3]

ESSENTIAL ELEMENTS OF CONTRACTS

However for a contract to be valid, it must contain the following essential elements. Namely; there must be a Consideration, parties must have a capacity to contract, parties must have free will (consent)to contract, parties must have intended to create a legal relationship, and words must be certain.

In all circumstances, a valid contract requires an offer from one part and unconditional acceptance by the other party and the acceptance should be communicated to the one who made the offer (Venkatesa T.S (2004) [4] . The contracting parties should agree about the subject matter at the same time and in the same sense (Venkatesa, T.S (2004) [5]

SHORT HISTORICAL BACKGROUND OF ENGLISH LAW

It should be noted from the very beginning that Tanzania was the English colony hence most of her laws were imported from United Kingdom via India. Law of contract is not exceptional.

In giving short historical background of English law, the prominent book says: [6]

“English contract law as we know it today developed around a form of action known as the action of assumpsit, which came into prominence in the early sixteenth century as a remedy for the breach of informal agreements reached by word of mouth-by ‘parol’.

The early common law was largely concerned with serous crime and land tenure, and Glanvill, writing in about 1180, tells us that in his time, ‘it is not the custom of the court of the Lord King to protect private agreements’. Three centuries were to pass before the common law courts acquired a general jurisdiction over both formal and informal contracts. But the limitations upon the scope of the common law of contract at any given time did not mean that there then existed no forum for contractual business, but merely that remedies had to be sought elsewhere. For the common law evolved in a society served by a bewildering diversity of courts outside the common law system, enforcing a variety of bodies of law. Thus there were county courts, borough courts, courts of markets and fairs, courts of universities, courts of the Church, courts of manors, and courts of privileged paces such as the Cinque Ports. Many such courts handled contractual business.

In addition the Court of Chancery in the fifteenth century developed an extensive contractual jurisdiction. The story of the growth of the common law in contract law and elsewhere is the story of the expansion of the common law courts’ jurisdiction at the expense of other jurisdictions, and the consequential development- whether by invention or reception- of common law with which to regulate the newly acquired business”

FORMATION OF CONTRACTS IN ENGLAND

Currently, many of the principles of English contract law are the developments of the law as were developed from 18th and 19th centuries. By then government or Court paid little attention to the formation of the contract as it was presumed that the parties could eater into any agreement they wished under the doctrine of freedom of contract. Intervention of law could take place in case of illegality, found mistake or legal wrongdoing. Today courts interprets the law and parliament passes legislation to intervene and protect parties such as tenants, employees, consumers who eventually turn out to be in disadvantage side or weaker parties (Duxbury, R (2006) [7]

CONTRACT CLASSIFICATIONS

Formerly contract were classified into deeds, simple contracts, bilateral and unilateral contracts (Duxbury, R.(2006)6. Simple contracts may be made orally or in writing without complex terms and conditions. A deed must be in writing and signed by parties. Currently contracts are grouped in bilateral and unilateral contracts. (Professor Mellor, D. 2010) [8] .

7.0 UNILATERAL AND BILATERAL CONTRACTS

Bilateral contract does involve parties to the contract who fulfill elements of the contract. For example in a contract for the sale of goods, the buyer promises to pay the price and the seller promises to deliver the goods. However in unilateral contracts, one promise to do something in return of an act of the other party as opposed to mere exchange of promises. In unilateral contract only one party is bound to do something. For example, no one is bound to search for the lost item but if any person being aware of the offer, recovers the lost item and returns it to the owner, and then he is entitled to the reward. Unilateral contract when made are open to the whole world. Any one interested can act be party to the contract and becomes party of it.

8.0 OFFER

An offer which also known as proposal ma be defined as ‘statement of willingness to contract on specified terms made with the intention that, if unconditionally accepted, it will create a binding contract’. (Nditi, NNN (1995) [9] an offer may be express or implied from conduct. It may be addressed to one particular person, a group of person, or the world at large. This was said in the case of Garlil V. Carbolic Smoke Ball Co, CA [10] where the Court made precedence that and offer may be made to the whole world. This decision was adopted in Bowerman V. Association of British Travel Agents Ltd. [11]

9.0 ACCEPTANCE

Acceptance may be defined as an unconditional assent, communicated by the offeree to the offeror, to all terms of the offer, made with the intention of accepting. Whether an acceptance has in fact occurred is ascertained objectively from the behavior of the parties including any correspondence that has passed between them [12]

10.0 CONSIDERATION:

Something, which is actually given or accepted in return for a promise it is some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. Currie v Misa [13] consideration must be communicated to the offeror.

Generall, past consideration are not acceptable as consideration save for a few exceptions, in Tanzania past consideration could amount to consideration. The quoted Section 2(d) of the Act, reads; has done or abstain from doing…’

The offeree must accept the exact terms proposed by the offeror unconditionally; that is without introducing any new terms which the offeror has not had the opportunity to consider. The introduction of new terms is referred to as a counter offer and its effect in law is to bring to an end the original offer and make in its place, a new offer. This principle was highlighted in the case of Hyde v. Wrench, 1840 [14] defendant offered to sell a farm to the claimant for pound 1,000. In reply, the claimant offered Pound 950 . this was rejected by the defendant. Later, the claimant purported to accept the original offer of Pound 1,000. It was held there was no contract; the counter offer of Pound 950 had impliedly rejected the original offer which was no longer capable of acceptance.

11.0 SETTLEMENT OF THE CONTRACTS

Section 10 and 11 of the Sale of Goods Act [15] , deals with the ascertainment of price. Section of 10 of the Ac [16] t deals with the both sales and agreement to sell while section 11 applies only to agreement to sell.

Section 10 (1) of the Act [17] provides as follows:

“The price in the contract of sale may be fixed by the contract or may be left to be fixed in a manner thereby agreed, or may be determined by the course of dealing between the parties”

Only if the methods in section 10 (1) of the Sales of Goods Act [18] do not result in a price being determined does Section 10 (2) of the Sales of Goods Act come into play and provides that the buyer must pay a reasonable price.

In relation to the determination of the price under Section 10 of the Sales of Goods Act [19] , most of the problems have concerned transactions where the price has not been specifically agreed but is left for determination at some later time. In Tanzanian case of Alfi East Africa Ltd v. Themi Industries & Distributors Agency Ltd. [20] the Court of Appeal annulled the decision of the trial Court and held that price is a fundamental matter in an agreement of sale, and as there was no agreed price there was no agreement; and hence in terms of section 29 of the Law of Contract Act [21] the agreement was void for uncertainty.

Section 10 of the Sale of Good Act allows prices to be fixed by the contract or later i.e after conclusion of the contract either by a manner agreed by the parties or by the course of dealing between the parties. In the Alfi’s case (above), however, while paragraph (e) of the agreement provided for the mode of payment of the price, the price itself had not been fixed nor had the parties agreed.

On the manner of fixing the price in future and no course of dealing between the parties which could determine the price in future.

12.0 THE LIABILITY OF EACH PARTY TO THE CONTRACT

A well drafted contract must contain provisions providing for both right and liabilities of the parties. The contract should further provide remedies to the innocent part in case of breach by the other party. Where a contract does not provide for remedies in cases of breach, recourse will be had to the provisions of the law on the subject.(Luoga, & as all (1996) [22]

Even where a contract has limitation clause, the same doe not completely absolve a party from liability but instead it place a limit, a ceiling, on the maximum liability. For example, in Ailsa Craig Fishing v. Malvern Fishing [23] (another spectacular Securicor case) a limitation clause limited liability to Pound 1.000, so that the damages could be less than but not more than Pound 1.000 (even though the actual loss caused was assessed at Pound 55,000). Care and scrutiny is much required on contracts which purport to exclude a party from liability arising from fraud or negligence in the cause of execution of the agreement.

In the case of Canada Steamship Lines Vs. The King [24] the Court set up criteria to be observed when confronted with the applicability of an exclusive clause in a contract. The test includes;

Does the clause expressly exempt from negligence, in which case it is effective or

Are the words wide enough in their ordinary meaning to cover negligence, in which case the clause may still be effective, unless

There is some head of damaged other negligence (not fanciful or remote) which the words could be construed as applying to rather than to negligence.

Contractor carries unlimited liability for negligence (causing death to another person, or damage to another’s property)

Exclusion clauses are not permitted in some laws like the Health and Safety at Work Act, Employers Liability Act, Occupiers Liability Act and the Visitors Act.

13.0 RESOLUTION OF CONTRACT BREACHES

Some terms are so fundamental to the purpose of the contract that it is almost inconceivable that the parties could have agreed to exclude liability for their breach [25] . Lord Roskill in The TFL Prosperity [26] confirmed that the courts will rarely conclude that the parties intended to exclude liability for a fundamental breach, he said that the charter in that case virtually ceases to be a contract for the letting of the vessel ‘ if the exclusion clause is interpreted so that fundamental terms could be breached without financial redress.

Several remedies area available when a contract is breached, as discussed below

The first common remedy is to seek specific performance; Where the innocent party is of the view that the breach of the contract by the other party cannot be atoned by monetary compensations, he may seek specific performance of the contract. If a party is not interested to compel the other to adhere to the terms of the contract by the specific performance, he may file a suit for damages for breach of contract. [27]

The others celebrated remedy is quantum meruit; where a party is paid as per amount of the contract performed before its termination by breach.

14.0 ACCEPTANCE OF GOODS (SALE OF GOODS ACT)

Section 37 of the Sale of Goods Act [28] provides for circumstances where property does not pass under section 18 to21 of the Sale of Goods Act, it must finally pass on ‘acceptance’ of the goods by the buyer within the meaning of section 37. In which the buyer is deemed to have accepted the goods when, after he initiates to the seller tat he has accepted them or when the goods have been delivered to him and he has had reasonable opportunity to examine the goods, either he does any act in relation to the goods which is inconsistent with the ownership of the seller; or after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them.

The buyer loses his right to reject the goods when the accepts them. If the goods delivered in fact are of the wrong quantity description or quantity conditions stipulated in sections 15-17 of the Sale of Goods Act, property in the goods will revert to the seller [29]

15.0 THE LEGAL INFRACTURE OF CONTRACTS IN TANZANIA AND UNITED KINGDOM

The sale and supply of good in Tanzania is governed by the Sale of Goods Act.22 it was adopted from India on 15th May 1931 as the sale of Goods Ordinance. The major amendments to the Act were done in 1963 through the Ordinance No. 55 of 1963.

Unlike in the United Kingdom where there are two pieces of legislation namely, the Sale of Goods Act, and Supply of Service Act, Tanzania has only the Sale of Goods Act. And the Law of Contract Act. Contracts for supply of goods in Tanzania are dealt with under the provisions of the Law of Contract Act guides the sale agreement, by providing potential elements, for sale contract to succeed.

In the United Kingdom, the sale of goods is regulated by the Sale of Goods Act of 1979.

Other laws on the sale of good and supply of services in the United Kingdom includes;

Supply of Goods & Services Act 1982; Consumer Protection Act 1987 based on EC Directive 85/374; Sale & Supply of Goods Act 1994; Enterprise Act 2002.

In Tanzania, the law regulating the buyers and sellers visa is the consumer is not adequate enough. Other than the sale of Goods Act the other law regulating sale of goods and services are the Fair Competition Act [30] which prohibits unfair trade practices and consumer protection, Energy and Water Utility Act (EWURA) [31] which regulates Energy and Water sector and the Tanzania Communications companies. Most of the consumers are not aware of the existence of these laws and no sufficient effort is being made to import awareness to people.

In case of lacuna in Tanzania laws, recourse is being made to common law. For instance, in the case of Tanganyika Garage Ltd v Marceli G Mafuruki 23 the Court held;

Common low is to be used.

16.0 ADVANTAGES OF THE CISG CONTRACTS.

CISG stands for Contracts on International Sale of Goods. It is the creature of international trade agreement adopted in 1980 at the Vienna Convention for the International Sale of Goods. Its aim is to eliminate any ambiguity resulting from various domestic laws related to the international sales of goods. The Convention remained inoperative until 1988 when the tenth member ratified the convention.

Under Article 99 of the Convention, it could not become operational unless a minimum of 10 members stated ratified. Currently there are 73 signatory countries to this convention; however, United Kingdom and Tanzania are not signatories to this convention. Some of the signatories countries are: Germany, Japan, Switzerland and Uganda

The Convention for the contracts on International Sale of Goods does bring in many benefits such as:

Firstly, through this agreement, international trade becomes increasingly Hassle-free, and the possibilities for dispute to occurrence lowered, on the bases that it is the uniform sale of goods law which cut across the globe, as it applies to contracts between companies located in different countries [32] ,

Secondly, CISG is noted for its simplicity CISG proclaims a practical approach that recognizes freedom of contract: “A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

Thirdly, The CISG law is superior to domestic commercial laws, notwithstanding the fact that, CISG is not mentioned specifically within a contract made between two companies of different states that ratified the convention, the companies are legal bound. However in order to have the parts of the convention excluded, the contract has to explicitly mention the convention or the parts of it that parties have adopted this agreement. [33]

Fourthly, The CISG can be both a discretional as well as mandatory set of rules. It is discretionary when both parties agree to be bound by its rules; it has mandatory application when the parties do not choose to use it but become bound to it by virtue of its automatic application. As a result of the mandatory application of the CISG, most international sale of goods contracts with parties in western countries will be subject to the CISG, unless specifically excluded in accordance with the CISG’s terms. [34]

Fifthly, CISG has a unified code of rules and regulations, making importing and exporting and other facets of international trade easier. Instead of dealing with the domestic laws for international trade in several foreign countries, companies can readily apply CISG. [35]

The convention is also a great way to build trust. Domestic laws within a foreign country can be interpreted in different ways, while the interpretations of CISG are static.

Litigation, arbitration and mediation are some of the methods used for resolving disputes relating to CISG. But the most preferred method is Arbitration.

Under the CISG, the buyer must examine the goods as soon as practicable and notify the seller of any lack of conformity within a reasonable time after a defect has been discovered, or at the latest, within 2 years of delivery. Failure to conduct this examination or make the complaint forfeits the buyer’s right to reject the goods and, more significantly, the right to claim damages or a price reduction. The notice must be sufficient to specify the nature of the defects. The provisions that allow the buyer to refuse deliveries of nonconforming or defective goods. Entitles the innocent party to remedies known as “avoidance of the contract” under the CISG. These terms refer to a party’s right to cancel contract.

The following are the instances where the CISG provisions apply:-

According to art.1,

(1): “This Convention applies to contracts of sale of goods between parties whose places of business are in different States;

(a) when the States are Contracting States; or

(b) when the rules of private international law lead to the application of the law of a Contracting State”

Before they conclude the contract, the parties must be aware of the fact that the headquarters are in different states. Contracting states, in the sense of the CISG, means the signatory states (Art.91). [36]

According to Article 11 of CISG:

“A contract of sale need not be concluded in or evidenced in writing and is not subject to any other requirement as to form. It may be proved by any means, including witness.”

However it is highly recommended, even more than in the case of a domestic contract that is included in the contract.

The provisions in the CISG attempt to facilitate the successful completion of an exchange of international goods by discouraging contractual breakdowns, even when events go awry. In this respect, the CISG goes far beyond the legal architecture of the Universal Commercial Code (UCC). Many provisions encourage, or even require, communication and reasonable conduct between the parties to resolve problems before a total contractual breakdown. In this respect, the CISG promotes freedom of contract over the regulation of private international behaviour. In doing so, it allows businesspersons to operate more efficiently in the growing international marketplace by replacing potentially litigious legal regimes, such as the UCC, with a set of laws that allows for self-regulation

If parties wish their contract to be guided by CISG they must clearly stat that in the pleading otherwise the local laws of the jurisdiction will apply. The principle was laid in the case of Attorney Trust and CM Magnetics Corporation Vs Videotape Computer Product, Inc, and Videotape Products, Inc. [37] In the case the buyer originated from United States and the Seller from the Republic of China. Both countries are signatories of CISG. The federal Court held that the District Court was right to use the local law of California because parties did not stat in their pleadings that they wanted CISG to be used and only cited the California law.

Where CISG apply between parties, a dispute may be referred in any local Court for determination. The Complainant is only required to cite in the pleadings that he/she would prefer the use of CISG in determining the dispute. A good example where CISG was employed is N.V.A.R (Seller) from Germany Vs N.V.I (Seller from France), [38] the Court of first instance desisted to determine the matter on reasons that it was incompetent to acknowledge an international dispute between parties, Nullifying the decision of the lower Court, the Appellate Court held the lower Court ad jurisdiction to determine a dispute arising from CISG.

The following areas are covered by the CISG contract namely, The obligation of the buyer and seller, Delivery, Risk and payment, Delivery of goods, Conformity of goods, Damages and Reclamation of goods, (professor Mellor(2010) [39]

The CISG sets forth rules of contract law in many respects namely, the CISG has a mirror-image rule for the battle of the forms; it has no parole evidence rule; it has no statute of frauds; it has no perfect tender rule; and there is a greater availability of specific performance under the CISG than there is under the common law.

16.0 COMPARISONS BETWEEN CONTRACTS OF EMPLOYMENT IN TANZANIA AND CONTRACTS OF EMPLOYMENT IN THE UNITED KINGDOM

The legal principles and policies in East Africa are somehow similar because they were under the British protectorate and as a result they all use the same Common law legal system in their jurisdictions.

This part however will concentrate to show the comparisons between the two countries that is United Republic of Tanzania and United Kingdom.

In both countries the law requires the employer to do inter alia the following things; –

Keep the written record of the employee even when an employee is engaged on an oral contract. In the United Kingdom the employer must keep the following records of the employee. [40]

The identity of the parties

The date on which the employees period of continuous employment began (taking into account any employment with a previous employer which counts towards that period)

The scale or rate of remuneration, or the method of calculating remuneration is not defined in the statute and ought to be regarded as including all financial benefits.

Any terms and conditions relating to hours of work and normal working hours.

The place of work, or if employee is required or permitted to work at various places and indication of the employers address.

The title of the job or a brief description of the employees work.

The same applies to Tanzania; the Act [41] provides the same that subject to section 19(2), an employer shall supply to employee,