QUESTION 5

Contracts of utmost good faith or uberrimae fidei are those that purport that a party
should act in honesty and disclose all material facts that would influence the other
party’s decision to enter into the contract. This principle is fundamental in certain
type of contracts for example insurance contracts. For example, in a health
insurance, the party seeking insurance must in all honesty disclose any medical
conditions they might be dealing with so that the one providing the insurance can
price the insurance policy accordingly. Failure to do so would then mean that the
contract is void due to omission of material facts.
In the case of Locker and Woolf Ltd v Western Australian Insurance Co Ltd1
the insured party had not revealed to the insurer when entering the contract that
another company had refused him insurance. This was clearly material to the
contract.
An anticipatory breach is one that occurs before the date of the performance of a
contract where one party states that they will not be able to perform their
contractual obligations. This can take place either expressly or impliedly.
Expressly where the party gives notice to the other party and impliedly through his
conduct that suggest he will not complete his contractual obligations. This
premature notice gives the wronged party to sue for damages immediately rather
than wait for the contract to be breached by nonperformance on the due date. For
instance, party A contracts with party B to deliver 150 pieces of hardwood timber
on 1st June. On 29th May, party B communicates to party A that the contract has
been cancelled. In this scenario, A can successfully sue B for damages because he
may have already prepared the 150 pieces of hardwood timber ready for
transportation to B on 1st June.
In the case of Hochster v De la Tour2, the claimant was hired to begin work as a
courier two months after the contract date. One month later, the defendants wrote
to him and cancelled the contract. The defendants then tried to answer his claim by
arguing that he could not sue unless he could actually show that on the due date he
was ready to perform. The court would not accept this defence. The court held that
there was no requirement that the victim of a breach of contract should be obliged
to wait until the contract was in fact breached before being able to sue. It was

1
[1936] 1 KB 408
2
(1853), 2 E & B 678
sufficient that the claimant was aware that a breach would occur and he could sue
accordingly.
Restitutio in Integrum is a legal principle that seeks to return parties to their pre
contractual position or before a breach of contract occurred. Mostly used in
rescission of contracts. For example, a seller selling an item to a buyer for example
a dress claiming that is it very new but the buyer later finds out that the dress had
already been worn because it has food stains and the scent of a perfume. In this
case, the buyer can return the dress and demand that he gets refunded.
In the case of Salt v Stratstone Specialist Ltd 3Salt purchased a car from Stratstone
Specialist Ltd, believing it to be brand new based on the dealer's representations. It
was later discovered that the car had been previously repaired after an accident.
Salt sought rescission of the contract and the return of his money.The court granted
rescission and ordered restitutio in integrum, allowing Salt to return the car and
recover the purchase price. This decision reinforced the principle that where a
party has been misled, they should be restored to their original position, undoing
the effects of the misrepresentation.
Quantum meruit is a legal principle that translates to ‘for as much as he has earned’
and it allows a party to provide payment for services rendered where there is no
contractual payment but the other party has received a service and it would them
seem unfair not to offer compensation. For instance, party A hires party B to make
her her wedding dress. Halfway through the dress making, Party B decides to
terminate the agreement without any cause. In this case, party B may sue under
quantum meruit basis to recover reasonable payment for the work already
completed and cost of purchase of materials.
In the case of Planche v Colburn4 a publisher was planning to produce a series of
books on a particular theme. The publisher then hired an author, the claimant, to
write one of the books in the series. When the publisher decided to abandon the
whole series, the author was prevented from completing the work through no fault
of his own and despite the fact that he had already done a lot of work for the book.
The court held that the author was entitled to recover half his fee for his wasted
work, on a quantum meruit basis.

3
[2015] EWCA Civ 745; [2015] 2 CLC 269; [2016] RTR 17; [2015] CLY 529.
4
(1831) 8 Bing 14
QUESTION 3
James, a long distance truck driver, was to be paid in three installments by
Roadmaster Trucks Limited to transport a container of cargo from the Port of
Mombasa to Kigali in Rwanda. Kshs 50,000 upon departure from the Port of
Mombasa. Kshs 50,000 upon successful delivery of the cargo to Kigali. Kshs
50,000 upon returning the empty container to the Port of Mombasa. James received
the first installment but was unable to fulfill the subsequent terms due to the loss of
the truck and cargo in the flash floods. Roadmaster Trucks Limited have refused to
pay him the remaining Kshs. 100,000.
The issues at hand are;
Whether James fulfilled his contractual obligations sufficiently to warrant payment
of the remaining Kshs 100,000.
Whether the contract between James and Roadmaster Trucks Limited included a
force majeure clause that covers natural disasters like floods.
Whether the doctrine of frustration will apply to this situation where an unforeseen
natural disaster (flash floods) made the performance of the contract impossible.
Whether James is entitled to compensation based on the principle of quantum
meruit for the part of the journey he successfully completed.
Whether Roadmaster Trucks Limited acted in good faith by refusing to pay the
remaining balance, considering the circumstances.
In regards to the first issue, on whether James fulfilled his contractual obligations
sufficiently to warrant payment of the remaining Kshs 100,000, the strict answer
based on the interpretation of the contract would be no. He was to strictly deliver
the cargo to Rwanda and then deliver the empty container back to Mombasa. The
fact that he was paid the first installment of Kshs. 50,000 for departure from
Mombasa would suggest the commitment of Roadmaster Trucks Limited to uphold
their part of the contract. In the case of Arcos Ltd v Ronaasen & Sons5 Arcos
agreed to supply wooden staves to Ronaasen. The contract specified staves of a
certain thickness. The staves delivered were slightly thicker but still fit for purpose.
The House of Lords held that the buyer was entitled to reject the goods because
they did not conform exactly to the contract specifications, even though they were
fit for purpose. In this case, it was explicitly stated when and how James would be
5
(1933) AC 470
paid and the fact that he failed delivering the goods and the empty container meant
that he is not entitled to the remaining Kshs 100,000.
In regards to the second issue, on whether the contract between James and
Roadmaster Trucks Limited included a force majeure clause which means ‘greater
force’ that covers natural disasters like floods, there is no mention of that in the
facts of the case. However, if the clause was indeed present, James could argue that
the floods were an unforeseeable event that prevented him from performing his
contractual obligations. In the case of Taylor v Caldwell6 Caldwell had agreed to
rent the Surrey Garden and Music Hall to Taylor for four days for a series of
concerts and fêtes. After the contract date, but before the concerts were due to start,
the music hall burnt to the ground and performance of the contract was there-fore
impossible. The contract contained no stipulations as to what should happen in the
event of fire. Since Taylor had spent money on advertising the concerts and other
general preparations, he sued Caldwell for damages under the principle in
Paradine v Jane. The court held, however, that the commercial purpose of the
contract had ceased to exist, performance was impossible, and so both sides were
excused from further performance of their obligations under the contract. In this
case, James can be relieved from his contractual obligations but he will not be
entitled to the remaining Kshs 100,000 unless the clause explicitly provides
compensation for such.
In regards to the third issue, on whether the doctrine of frustration will apply to this
situation where an unforeseen natural disaster (flash floods) made the performance
of the contract impossible, it can apply. Doctrine of frustration suggests that when
an unforeseen event occurs, without fault of either party, which render
performance impossible, parties may be released from their contractual obligations.
The flash floods around Jinja Town were an unforeseen event beyond James’
control. The loss of the truck and cargo in the floods rendered it impossible to
deliver the cargo to Rwanda and empty container to Mombasa. James could argue
that as a result of the event, performance of the contract was rendered impossible
hence, he should be released from any further contractual obligations. In the case
of Taylor v Caldwell7 Caldwell had agreed to rent the Surrey Garden and Music
Hall to Taylor for four days for a series of concerts and fêtes. After the contract
date, but before the concerts were due to start, the music hall burnt to the ground
and performance of the contract was there-fore impossible. The contract contained
no stipulations as to what should happen in the event of fire. Since Taylor had
spent money on advertising the concerts and other general preparations, he sued
6
(1863) 32 LJ QB 164
7
(1863) 32 LJ QB 164
Caldwell for damages under the principle in Paradine v Jane. The court held,
however, that the commercial purpose of the contract had ceased to exist,
performance was impossible, and so both sides were excused from further
performance of their obligations under the contract. James can be relieved from his
contractual obligations but he does not have entitlement over the remaining Kshs
100,000. Because the Kshs 100,000 emanated from completion of the contract
which did not happen due to the frustrating event. However, he can bring a claim
for compensation for the value of services rendered up to the frustrating event.
In regards to the fourth issue, on whether James is entitled to compensation based
on the principle of quantum meruit for the part of the journey he successfully
completed, yes he is entitled. Quantum meruit is a legal principle that translates to
‘for as much as he has earned’ and it allows a party to provide payment for
services rendered where there is no contractual payment but the other party has
received a service and it would them seem unfair not to offer compensation. In this
case, Planche v Colburn8 a publisher was planning to produce a series of books on
a particular theme. The publisher then hired an author, the claimant, to write one of
the books in the series. When the publisher decided to abandon the whole series,
the author was prevented from completing the work through no fault of his own
and despite the fact that he had already done a lot of work for the book. The court
held that the author was entitled to recover half his fee for his wasted work, on a
quantum meruit basis. In this case, James could argue that, he should be
compensated for the services he rendered Roadmaster Trucks Limited. The
unfortunate loss of the truck and lorry took place on his journey to Rwanda at Jinja
town in Uganda from Mombasa. He should be compensated for the journey he
covered.
In regards to the fifth issue, on whether Roadmaster Trucks Limited acted in good
faith by refusing to pay the remaining balance considering the circumstances, the
answer would be no. The fact that they chose to disregard the unfortunate events
which were clearly beyond the James ‘control, that may have caused the death of
James who was working under them, portrays their lack of good faith to their
employees. They chose to adhere to the strictness of the contract. Moreover, the
refusal to pay the remaining Kshs 100,000 by Roadmaster Trucks Limited seems
unfair and unequitable regarding the circumstances. Additionally, the lack of
contractual risk allocation in the form of force majeure clauses, indeed portrays
how Roadmaster Trucks Limited failed to act in good faith. Due to the lack of this
8
(1831) 8 Bing 14
clause, James implicitly assumed the risk of events as the contract did not provide
for such circumstances.
In conclusion, James has a strong basis to claim quantum meruit and frustration of
contract due to unforeseen events. However, it will be upon the court in its
wisdom, to assess whether a claim for entitlement of the remaining money is fair
and equitable.
QUESTION 1
Kevin Kimaiyo, a jewelry store owner in Eldoret Town, mistook a smartly dressed
visitor for Cloud Kipjogging, a local athlete. The visitor, claiming to be Cloud,
selected ten expensive wristwatches worth Kshs 30,000 each, promising payment
via cheque. Kevin accepted, and the visitor handed him a Kshs 300,000 cheque,
which Kevin deposited. The visitor also took a photo with Kevin and asked him to
hang the photo in his shop as a free endorsement. However, the cheque was
dishonored due to insufficient funds in the drawer’s bank account. Kevin later
discovered that Cloud had been out of the country for three weeks, realizing the
visitor was an impostor.
The issues at hand are;
Whether the contract formed between Kevin and the imposter is legally
enforceable given the fraudulent misrepresentation.
Whether the individual's misrepresentation of identity as Cloud Kipjogging
constitutes fraud.
Whether the dishonored cheque provided by the imposter raises liability issues and
if Kevin can seek redress for the insufficient funds.
In regards to issue one, on whether the contract formed between Kevin and the
imposter is legally enforceable given the fraudulent misrepresentation, the answer
would depend on principles of misrepresentation and contract law. According to
contract law, where there is an offer, acceptance ad consideration, a contract has
been formed. In this case the offer and acceptance manifested themselves when the
imposter of Cloud requested ten wristwatches and offered to pay via a cheque. The
consideration in this case would be Kevin exchanges the wristwatches for the
cheque. According to the principles of misrepresentation, there has to be a
statement of material facts that was intended to operate as an inducement of a party
to a contract and was false. In this case, Cloud’s imposter affirming that he was
indeed Cloud, was false and it was intended by the visitor to induce Kevin to enter
into a contract with him. Contracts entered into as a result of fraudulent
misrepresentation are voidable at the option of the innocent party in this case,
Kevin. Therefore, Kevin can choose to disaffirm and use the misrepresentation as a
defence to a claim of breach of contract. This way he will be able to unwind the
transaction and recover any losses suffered. In the case of Derry v Peek (1889)9
the directors of a tramway company made fraudulent misrepresentations regarding
the company's ability to operate steam-powered tramcars on its lines. The company
issued a prospectus containing false statements about the viability of steam power,
inducing investors to purchase shares. Subsequently, the company was unable to
operate steam-powered tramcars due to legal restrictions, leading to financial
losses for the investors. The House of Lords held that the directors' fraudulent
misrepresentations rendered the contract formed between the company and the
investors voidable at the option of the investors. The investors had the right to
rescind the contract and seek restitution for any losses suffered as a result of the
misrepresentations.
In regards to issue two, on whether the individual's misrepresentation of identity as
Cloud Kipjogging constitutes fraud, the answer is yes. Fraudulent
misrepresentation is said to have occurred when the statement made is deliberately,
without belief and carelessly. In this case, the imposter affirming that he was Cloud
was a deliberate falsehood. Moreover, the impostor made the statement without
actually believing that it was true in other words, it was also falsely made. The
statement was also made carelessly as the impostor did not know whether it was
true or false. Fraudulent misrepresentation also seeks to induce the other party to
enter into a contract that would end up causing him harm or detriment. In this case
when Kevin sold his wristwatches, he may have incurred some detriment. In the
case of Derry v Peek (1889)10 the directors of a tramway company made
fraudulent misrepresentations regarding the company's ability to operate steam-
powered tramcars on its lines. The company issued a prospectus containing false
statements about the viability of steam power, inducing investors to purchase
shares. Subsequently, the company was unable to operate steam-powered tramcars
due to legal restrictions, leading to financial losses for the investors. The House of
Lords held that the directors' fraudulent misrepresentations rendered the contract
formed between the company and the investors voidable at the option of the

9
(1889) 14 App Cas 337
10
(1889) 14 App Cas 337
investors. The investors had the right to rescind the contract and seek restitution for
any losses suffered as a result of the misrepresentations.
In regards to issue three, on whether the dishonored cheque provided by the
imposter raises liability issues and if Kevin can seek redress for the insufficient
funds, depends on several factors. For example, when the impostor issued the
cheque, he represented that he indeed had sufficient funds in their account t cover
the Kshs 300,000. Now that the cheque was dishonored, issues on liability may
arise for the impostor. Another example is, the jurisdiction of the court that will
handle this case may suggest that dishonoring of a cheque due to insufficient funds
constitutes a criminal offence such as cheque fraud. Kevin, may also seek redress
for the amount owed and additional damages as a result of the dishonor for he sold
ten wristwatches. The dishonored cheque by the impostor may also constitute a
breach of contract and Kevin may be entitled to seek remedies for this breach.
The remedies available for Kevin are;
Rescission of contract. This legal principle aims at returning parties to their pre
contractual position or before a breach of contract occurred. Kevin can seek to
cancel the contract due to fraudulent misrepresentation. In the case of Leaf v
International Galleries11, the court allowed the rescission of a contract due to
misrepresentation, allowing the innocent party to cancel the contract and restore
the parties to their original positions.
Restitution. It suggests that innocent party should recover any benefits or property
conferred under a contract that is subsequently found to be void or rescinded. It
seeks to compensate the innocent party or the payment of damages incurred. In this
case, Kevin is the innocent party and is entitled to compensation of any kind or
return of the wristwatches or their value. The case of Fibrosa Spolka Akcyjna v
Fairbairn Lawson Combe Barbour Ltd 12 established the principle of restitution,
where the innocent party is entitled to recover any benefits conferred under a
voidable contract that is rescinded.

Damages. The purpose of awarding damages is to provide the injured party with
financial compensation that aims to restore them to the position they would have
been in had the wrongful act or breach not occurred. In this case, Kevin may also

11
[1950] 2 KB 86
12
[1942] AC 32
be entitled to claim damages for any losses suffered as a result of the fraudulent
misrepresentation. This could include any financial losses incurred due to the
dishonored cheque or other expenses related to the transaction. The case of Doyle
v Olby (Ironmongers) Ltd 13exemplifies the awarding of damages for fraudulent
misrepresentation, where the innocent party was compensated for financial losses
incurred due to the misrepresentation.
Legal Action for Fraud. Fraud occurred when the imposter provided Kevin a
cheque with insufficient funds. Kevin may choose to pursue legal action against
the imposter for fraud. This could involve seeking compensation for any harm or
losses suffered as a result of the fraudulent misrepresentation, as well as punitive
damages to deter future misconduct. The case of Derry v Peek14 this case
established the principle that fraudulent misrepresentation renders a contract
voidable and may entitle the innocent party to claim damages for any harm
suffered.
In conlusion,

13
[1969] 2 QB 158
14
(1889) 14 App Cas 337