CHAPTER 345
LAW OF CONTRACT ACT

[PRINCIPAL LEGISLATION]

ARRANGEMENT OF SECTIONS

   Section

Title

PART I
PRELIMINARY PROVISIONS

   1.   Short title.

   2.   Construction.

PART II
COMMUNICATION, ACCEPTANCE, AND REVOCATION OF PROPOSALS

   3.   Communication, acceptance and revocation of proposals.

   4.   Communication, when complete.

   5.   Revocation of proposals and acceptances.

   6.   Revocation, how made.

   7.   Acceptance must be absolute.

   8.   Acceptance by performing conditions, or receiving consideration.

   9.   Promises, express and implied.

PART III
VOIDABLE CONTRACTS AND VOID AGREEMENTS

   10.   What agreements are contracts.

   11.   Persons competent to contract.

   12.   What is a sound mind for the purposes of contracting.

   13.   "Consent" defined.

   14.   "Free consent" defined.

   15.   "Coercion" defined.

   16.   "Undue influence" defined.

   17.   "Fraud" defined.

   18.   "Misrepresentation" defined.

   19.   Effect of agreements induced by coercion, fraud, misrepresentation or undue influence.

   20.   Agreement void where both parties are under a mistake as to matter of fact.

   21.   Effect of mistakes as to law.

   22.   Unilateral mistake.

   23.   What considerations and objects are lawful and what are not.

   24.   Agreements void if considerations and objects are unlawful in part.

   25.   Agreement without consideration, is void, unless it is in writing and registered; or is a promise to compensate for something done; or is a promise to pay a debt barred by limitation of law.

   26.   Agreement in restraint of marriage void.

   27.   Agreement in restraint of trade void.

   28.   Agreement in restraint of legal proceedings void.

   29.   Agreement void for uncertainty.

   30.   Agreement by way of wager void.

PART IV
CONTINGENT CONTRACTS

   31.   "Contingent contract" defined.

   32.   Enforcement of contract contingent on an event happening.

   33.   Enforcement of contract contingent on an event not happening.

   34.   When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person.

   35.   A contingent contract.

   36.   Agreement contingent on impossible events void.

PART V
PERFORMANCE OF CONTRACTS

Contracts which must be Performed

   37.   Obligations of parties to contracts.

   38.   Effect of refusal to accept offer of performance.

   39.   Effect of refusal of party to perform promise wholly.

   40.   Persons by whom promise is to be performed.

   41.   Effect of accepting performance from third person.

Joint Liabilities and Rights

   42.   Devolution of joint liabilities.

   43.   Obligations and liabilities of joint promisors.

   44.   Effect of release of one joint promisors.

   45.   Devolution of joint rights.

Time and Place for Performance

   46.   Time for performance of promise where no application is to be made and no time is specified.

   47.   Time and place for performance of promise where time is specified and no application is to be made.

   48.   Application for performance on certain day to be at proper time and place.

   49.   Place for performance of promise where no application to be made and no place fixed for performance.

   50.   Performance in manner or at time prescribed or sanctioned by promisee.

Performance of Reciprocal Promises

   51.   Promisor not bound to perform unless reciprocal promisee ready and willing to perform.

   52.   Order of performance of reciprocal promises.

   53.   Liability of party preventing event on which contract is to take effect.

   54.   Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.

   55.   Effect of failure to perform at fixed time in contract.

   56.   Agreement to do impossible act, subsequent impossibility or unlawfulness and related compensation.

   57.   Reciprocal promise to do things legal, and also other things illegal.

   58.   Alternative promise, one branch being illegal.

Appropriation of Payments

   59.   Application of payment where debt to be discharged is indicated.

   60.   Application of payment where debt to be discharged is not indicated.

   61.   Application of payment where neither party appropriates.

Contracts Which Need Not Be Performed

   62.   Effect of novation, rescission and alteration of contract.

   63.   Promisee may dispense with or remit performance of promise.

   64.   Consequences of rescission of voidable contract.

   65.   Obligation of person who has received advantage under void agreement or contract that becomes void.

   66.   Mode of communicating or revoking rescission of voidable contract.

   67.   Effect of neglect of promisee.

PART VI
CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT

   68.   Claim for necessaries supplied to person incapable of contracting, or on his account.

   69.   Reimbursement of person paying money due by another, in payment of which he is interested.

   70.   Obligation of person enjoying benefit of non-gratuitous act.

   71.   Responsibility of finder of goods.

   72.   Liability of person to whom money is paid or thing delivered by mistake or under coercion.

PART VII
CONSEQUENCES OF BREACH OF CONTRACT

   73.   Compensation for loss or damage caused by breach of contract, etc.

   74.   Compensation for breach of contract where penalty stipulated.

   75.   Party rightfully rescinding contract entitled to compensation.

PART VIII
INDEMNITY AND GUARANTEE

   76.   "Contract of indemnity" defined.

   77.   Rights of indemnity-holder when sued, etc.

   78.   "Contract of guarantee", "surety", "principal debtor", and "creditor" defined.

   79.   Consideration for guarantee.

   80.   Surety's liability.

   81.   "Continuing guarantee" defined.

   82.   Revocation of continuing guarantee.

   83.   Revocation of continuing guarantee by surety's death.

   84.   Liability of two persons, primarily liable, not affected by arrangements between them that one shall be surety on another's default.

   85.   Discharge of surety by variance in terms of contract.

   86.   Discharge of surety by release or discharge of principal debtor.

   87.   Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.

   88.   Surety not discharged when agreement made with third person to give time to principal debtor.

   89.   Creditor's forbearance to sue does not discharge surety.

   90.   Release of one co-surety does not discharge others.

   91.   Discharge of surety by creditor's act or omission impairing surety's eventual remedy.

   92.   Rights of surety on payment or performance.

   93.   Surety's right to benefit of creditor's securities.

   94.   Guarantee obtained by misrepresentation invalid.

   95.   Guarantee obtained by concealment invalid.

   96.   Guarantee on contract that creditor shall not act on it until co-surety joins.

   97.   Implied promise to indemnify surety.

   98.   Co-sureties liable to contribute equally.

   99.   Liability of co-sureties bound in different sums.

PART IX
BAILMENT

   100.   "Bailment", "bailor" and "bailee" defined.

   101.   Delivery to bailee, how made.

   102.   Bailor's duty to disclose faults in goods bailed.

   103.   Care to be taken by bailee.

   104.   When bailee not liable for loss, etc., of thing bailed.

   105.   Termination of bailment by bailee's act inconsistent with conditions.

   106.   Liability of bailee making unauthorised use of goods bailed.

   107.   Effect of mixture, with bailor's consent, of his goods with bailee's.

   108.   Effect of mixture, without bailor's consent, when the goods can be separated.

   109.   Effect of mixture, without bailor's consent, when the goods cannot be separated.

   110.   Repayment by bailor of necessary expenses.

   111.   Restoration of goods lent gratuitously.

   112.   Return of goods bailed, on expiration of time or accomplishment of purpose.

   113.   Bailee's responsibility when goods are not duly returned.

   114.   Termination of gratuitous bailment by death.

   115.   Bailor entitled to increase or profit from goods bailed.

   116.   Bailor's responsibility to bailee.

   117.   Bailment by several joint owners.

   118.   Bailee not responsible on redelivery to bailor without title.

   119.   Right of third person claiming goods bailed.

   120.   Right of finder of goods.

   121.   When finder of thing commonly on sale may sell it.

   122.   Bailee's particular lien.

   123.   General lien of bankers, factors, wharfingers, advocates, and policy-brokers.

Bailments of Pledges

   124.   "Pledge", "pawnor", and "pawnee" defined.

   125.   Pawnee's right of retainer.

   126.   Pawnee not to retain for debt or promise other than that for which goods pledged.

Presumption in Case of Subsequent Advances

   127.   Pawnee's right as to extraordinary expenses incurred.

   128.   Pawnor's right where pawnor makes default.

   129.   Defaulting pawnor's right to redeem.

   130.   Pledges by mercantile agents and persons in possession under voidable contracts.

   131.   Pledge where pawnor has only a limited interest.

Suits by Bailees or Bailors against Wrongdoers

   132.   Suit by bailor or bailee against wrongdoer.

   133.   Apportionment of relief or compensation obtained by such suits.

PART X
AGENCY

Appointment and Authority of Agents

   134.   "Agent" and "principal" defined.

   135.   Who may employ agent.

   136.   Who may be an agent.

   137.   Consideration not necessary.

   138.   Agent's authority may be express or implied.

   139.   Definitions of express and implied authority.

   140.   Extent of agent's authority.

   141.   Agent's authority in an emergency.

Sub-Agents

   142.   When agent cannot delegate.

   143.   "Sub-agent" defined.

   144.   Representation of principal by sub-agent properly appointed.

   145.   Agent's responsibility for sub-agent appointed without authority.

   146.   Relation between principal and person duly appointed by agent to act in business of agency.

   147.   Agent's duty in naming such person.

Ratification

   148.   Right of person as to acts done for him without his authority and effect of ratification.

   149.   Ratification may be express or implied.

   150.   Knowledge requisite for valid ratification.

   151.   Effect of ratifying unauthorised act forming part of a transaction.

   152.   Ratification of unauthorised act cannot injure third person.

Revocation of Agency

   153.   Termination of agency.

   154.   Termination of agency, where agent has an interest in subject-matter.

   155.   When principal may revoke agent's authority.

   156.   Revocation where authority has been partly exercised.

   157.   Compensation for revocation by principal or renunciation by agent.

   158.   Notice of revocation or renunciation.

   159.   Revocation and renunciation may be express or implied.

   160.   When termination of agent's authority takes effect as to agent, and as to third persons.

   161.   Agent's duty on termination of agency by principal's death or insanity.

   162.   Termination of sub-agent's authority.

Agent's Duty to Principal

   163.   Agent's duty in conducting principal's business.

   164.   Skill and diligence required from agent.

   165.   Agent's accounts.

   166.   Agent's duty to communicate with principal.

   167.   Right of principal when agent deals, on his own account, in business of agency without principal's consent.

   168.   Principal's right to benefit gained by agent dealing on his own account in business of agency.

   169.   Agent's right of retainer out of sums received on principal's account.

   170.   Agent's duty to pay sums received for principal.

   171.   When agent's remuneration becomes due.

   172.   Agent not entitled to remuneration for business misconducted.

   173.   Agent's lien on principal's property.

Principal's Duty to Agent

   174.   Agent to be indemnified against consequences of lawful acts.

   175.   Agent to be indemnified against consequences of acts done in good faith.

   176.   Non-liability of employer of agent to do a criminal act.

   177.   Compensation to agent for injury caused by principal's neglect.

Effect of Agency on Contracts with Third Persons

   178.   Enforcement and consequences of agent's contracts.

   179.   Principal how far bound when agent exceeds authority.

   180.   Principal not bound when excess of agent's authority is not separable.

   181.   Consequences of notice given to agent.

   182.   Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.

   183.   Rights of parties to a contract made by agent not disclosed.

   184.   Right of person dealing with agent personally liable.

   185.   Consequence of inducing agent or principal.

   186.   Liability of pretended agent.

   187.   Person falsely contracting as agent not entitled to performance.

   188.   Liability of principal inducing belief that agent's unauthorised acts were authorised.

   189.   Effect, on agreement, of misrepresentation or fraud by agent.

PART XI
PARTNERSHIP

Nature of Partnership

   190.   "Partnership" and "firm" defined.

   191.   Rules for determining the existence of partnership.

Relationship of Partners to One Another

   192.   General duties of partners.

   193.   Variation by consent of terms of partnership.

   194.   Conduct of business and mutual rights and liabilities.

   195.   Partnership property.

   196.   Accountability of partners for private profits and competing businesses.

   197.   When a term for partnership expires.

   198.   Introduction of new partners.

   199.   Expulsion.

   200.   Retirement.

Relationship of Partners to Persons dealing with them

   201.   Power of partner to bind the firm.

   202.   Partners bound by acts on behalf of the firm.

   203.   Liability of partners for debts.

   204.   Liability for wrongs and misapplication.

   205.   Improper employment of trust property for partnership purposes.

   206.   Persons liable by holding out.

   207.   Notice to partner to be notice to firm.

   208.   Liabilities of incoming and outgoing partners.

   209.   Revocation of continuing guarantee by change in firm.

   210.   Rights of assignee of share in partnership.

   211.   Minors not competent to be partners.

Dissolution of Partnership and its Consequences

   212.   Dissolution by expiration or notice.

   213.   Dissolution by death, bankruptcy or charge.

   214.   Dissolution by illegality of partnership.

   215.   Dissolution by court.

   216.   Rights of persons against apparent members of the firm.

   217.   Partner's right to notice of dissolution.

   218.   Continuance of rights and liabilities of partners after dissolution.

   219.   Rights of partners as to application of partnership property.

   220.   Apportionment of premium where partnership prematurely dissolved.

   221.   Rights where partnership dissolved for fraud or misrepresentation.

   222.   Right of outgoing partner in certain cases to share profits made after dissolution.

   223.   Retiring or deceased partner's share to be a debt.

   224.   Rule for distribution of assets on final settlement of accounts.

   225.   Payment of firm debts and of separate debts.

   226.   Incorporated partnerships and joint-stock companies.

PART XII
REPEAL AND TRANSITIONAL PROVISIONS

   227.   [Disapplication of the Indian Contract Act and amendment of R.L. Cap. 2.]

   228.   [Transitional provisions.]

CHAPTER 345
THE LAW OF CONTRACT ACT

An Act to provide for the law relating to contracts.

[3rd March, 1961]

Ord. No. 1 of 1961
[R.L. Cap. 433]
Act No. 55 of 1963

PART I
PRELIMINARY PROVISIONS (ss 1-2)

1.   Short title

   (1) This Act may be cited as the Law of Contract Act.

   (2) Nothing contained in this Act shall this Act effect the provisions of any written law heretofore in force in Tanzania and not hereby expressly disapplied or repealed, nor any usage or custom of trade, nor any incident of any contract not inconsistent with the provisions of this Act.

2.   Construction Act No. 55 of 1963 Sch.">

   (1) In this Act, unless the context otherwise requires–

   (a)   when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;

   (b)   when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted, and a proposal, when accepted, becomes a promise;

   (c)   the person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee";

   (d)   when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

   (e)   every promise and every set of promises, forming the consideration for each other, is an agreement;

   (f)   promises which form the consideration or part of the consideration for each other, are called reciprocal promises;

   (g)   an agreement not enforceable by law is said to be void;

   (h)   an agreement enforceable by law is a contract;

   (i)   an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;

   (j)   a contract which ceases to be enforceable by law becomes void.

   (2) Notwithstanding the provisions of paragraphs (g) or (j) of subsection (1) of this section, where any written law in force in Tanzania on the date on which this Act comes into operation provides that an agreement (howsoever described), of the kind specified therein, shall not be enforceable by action unless or until certain requirements therein specified are complied with, or certain consents are obtained, no such agreement shall be void by reason only that it is not enforceable by action under the provisions of that law for want of compliance with any such requirement or of the obtaining of any such consent.

   (3) Nothing in this Act, other than section 23, shall affect any customary law; and in relation to any matter in which the law applicable is customary law, the provisions of the said section 23 shall be in addition to any relevant rule of customary law and the references to a law in the said section 23 shall be deemed to be references to the Acts of Tanzania.

PART II
COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS (ss 3-9)

3.   Communication, acceptance, and revocation of proposals

   The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, and which has the effect of communicating it.

4.   Communication, when complete

   (1) The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

   (2) The communication of an acceptance is complete–

   (a)   as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;

   (b)   as against the acceptor, when it comes to the knowledge of the proposer.

   (3) The communication of a revocation is complete–

   (a)   as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;

   (b)   as against the person to whom it is made, when it comes to his knowledge.

5.   Revocation of proposals and acceptances

   (1) A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

   (2) An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

6.   Revocation, how made

   A proposal is revoked–

   (a)   by the communication of notice of revocation by the proposer to the other party;

   (b)   by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

   (c)   by the failure of the acceptor to fulfil a condition precedent to acceptance; or

   (d)   by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

7.   Acceptance must be absolute

   In order to convert a proposal into a promise, the acceptance must–

   (a)   be absolute and unqualified;

   (b)   be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted; and if the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise, but if he fails to do so he accepts the acceptance.

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