104-106 Part I, Ch. 1, Formation 104. If an email or chain of emails clearly states an offer for entering into a transaction and the other party responds by email accepting the terms, then the courts are likely to find that a valid contract has been formed. Thus, itis important for contracting patties to carefully negotiate the terms of their proposed agreements via email. They should take appropriate precautions to avoid entering unintended or unwanted legally binding arrangements. It is important to include phrases such as “this email is not an offer capable of acceptance’; or “this email does not indicate an intention to enter into an agreement’; or a statement to the effect that they are still negotiating and shall not be bound until a written agreement is signed by the par- ties. The latter is known as an ‘agreement subject to contract’ and is not legally binding. The mere fact that an actual signature has not accompanied the email does not matter provided the circumstances lead to an inference that there was a firm offer by one person, which was accepted by the other, 105. Like the postal mail, one cannot recall or influence the transmission of email once sent. A critical question that arises in respect of email acceptance is whether the postal acceptance rule applies to emails, so that acceptance by email is effective as soon as the same is sent and not necessarily when the offeror receives or opens it. The Contracts Act is silent on the question whether an acceptance by email becomes valid when successfully sent, The courts in Uganda and many other jurisdictions have also not clearly decided this question. Some commentators have argued that email is a digital version of the normal post, and thus the postal accep- tance rule should apply to contracting through use of email.” However, others are of the view that the general rule which governs acceptance of offers will apply, and acceptance which is sent by email will not be effective until it is communicated to the offeror." Given the controversy surrounding acceptance by email, it may be safer for the offeror to clearly use words in the offer that leave no doubt that the acceptance will not be complete unless he or she receives it and notifies the offeree. Il. Intention to Create Legal Relations 106. People make all manner of promises or even enter into agreements daily. But the question is: does the mere presence of an agreement and consideration result into a contract? In addition to an agreement — offer and acceptance ~ and consid- eration, there must be a third essential element: ‘the intention to be legally bound’."* The parties must have an intention to cteate legal relations. Some prom- ises may be binding as a matter of honour, but may not amount to a cause of action 127. See, for example, Marwan Al Ibrahim et al, The Postal Acceprance Rule in the Digital Age. 2J Incl Com. L. Tech. 1, hp:/wwuejict com/index php/jcUarticletviewfle8/17 (accessed 22 Aug, 2018), 128. See, for example, Kathryn O'Shea & Kylie Skeahan, Acceptance of Offers by E-mail ~ How Far ‘Should the Postal Acceptance Extend?, 13 Queensland UW. Tech, LI (1997), hipssirlaw.qut edu av Jartcleview/446 (accessed 22 Aug. 2016). 129. Section 10(1). See also Pal Agencies (U) Lid v. Soroti Municipal Council and Another HCC. No. 351 of 2009; Begumisa Enterprises Lid v: Maersk HLC.CS. No. 83 of 2008, 48 —Uganda Contras - Supp. 124 (2020)Part I, Ch. 1, Formation 107-108 in the eyes of the law. In Brooker v. Palmer, Lord Greene MR stated that, ‘[t}he law does not impute intention to enter into legal relationships where the circum- stances and the conduct of the parties negate any intention of any kind’."*" A. Domestic or Social Agreements 107. Although agreements of a domestic or social nature may have an outward appearance of a contract, no such presumption is made. However, the intention of the parties is largely obtained from the language used and the circumstances in which they use it. Regarding social and domestic agreements, the leading case in this area is Balfour v. Balfour," where a husband who was a civil servant based in Sti Lanka took his wife to England, Eventually he had to return to Sri Lanka, but his wife had to stay in England for medical reasons. He agreed to pay her GBP 30 per month for maintenance during his absence. When he failed to pay the allow- ance, she sued. The court held that her action would fail because the parties had no intention of creating a legally binding agreement. The court held that where the pat- ties were husband and wife, the presumption was that there was no intention to cre ale a contract, and the burden was on the wife to rebut such presumption. 108. In spite of the decision in Balfour v. Balfour, agreements between husband and wife may result in legally binding relations depending on factors such as the conduct of the parties and the circumstances of each case, For example, in Merritt v. Merritt, the husband left the matrimonial home, which was in the joint names of husband and wife and subject to a mortgage, to live with another Woman. The husband and wife met and had a discussion in the former's car where he agreed to pay the latter GBP 40 a month out of which she had to discharge the outstanding mortgage payments on the house. The wife refused to leave the car unless the hus- band reduced the agreement in writing. The husband wrote and signed a note which stated: “In consideration of the fact that you will pay all charges in connection with the house ... until such time as the mortgage repayment has been completed I will agree to transfer the property into your sole ownership.’ After the wife had paid off the mortgage, the husband refused to transfer the house to her. The court held that the agreement was binding, since the parties intended to create legally binding rela- tions. The court distinguished the case of Balfour v. Balfour on the grounds that the parties were separated. That where they have separated, it is generally considered that they intended to be bound by their agreements. In any case, the written agree- ment was further evidence of an intention to be bound. 130, [1942] 2 AILER 674 BBL, Mid, p. 677 132, [1919] 2 KB, $71, For social agreements not concerning husband and wife or parents and chil dren, see, for example, Simpkins v. Pays (1955] 3 All ER 10. 133, [1970] 2 All ER 760. Conese - Sup 124 m0) Uganda —49109-111 Part I, Ch. 1, Formation 109. In Pettitt v. Petttt,"** Mrs Pettitt inherited a house in which she and her husband lived. The husband spent GBP 800 on improvement of the property. She sold the house in 1961 and purchased another property which was transferred into her name alone. There was some money left from the sale which she gave to her husband to purchase a car. They lived in the house for four years and then divorced He claimed that he had a beneficial interest in the property based on the improve- ‘ments made to the new house. He estimated that he had spent GBP 723 and claimed to be entitled to GBP 1,000 from the proceeds of the sale. It was held that the improvements allegedly made by Mr Pettitt were insufficient to create an interest in the property. The court accepted the principle enunciated in Balfour v. Balfour, but observed that although many agreements between husband and wife are not intended to be legally binding, performance of such agreements may give rise to legal consequences. 110, Challenges of ascertaining contractual intention in social or domestic agree- ments may also occur in relations between parents and children. For example, in Jones v. Padavatton,!*> a mother promised to pay her daughter 200 per dollars month if she gave up her job in the USA and went to London to study for the Bar. ‘The daughter was reluctant to do so as she had a well-paying job with the Indian embassy in Washington. However, the mother persuaded her that it would be in her interest to leave the job and join her in Trinidad as a lawyer. This initial agreement was not working, since the daughter believed that 200 dollars was in USD whereas the mother meant Trinidad dollars, which was about half of what she was expect- ing. This meant the daughter could only afford to rent one room for herself and her son to live in. With a second agreement, the mother purchased a large house so that the daughter could rent out other rooms and use the income as her maintenance. The daughter then married and did not complete her studies. The mother sought posses- sion of the house. 11. The issue before the court was whether there was a legally binding agree- ment between the mother and the daughter. The court held that there was no inten- tion to create a legal relationship between the parties and gave the mother possession of the house. Lord Salmon agreed with the majority decision but on dif- ferent grounds, He argued that the initial agreement was a binding contract that was intended to last for a reasonable time in order to allow the daughter to pass her Bar examinations. The judge based his decision on the fact that he thought it inconceiv- able for the daughter (o give up a lucrative job without an existing enforceable promise for financial support. However, with the lapse of five years and given that she had still not passed the examinations, he maintained that the contract had come to end. His Lordship observed that the second agreement was so ambiguous and uncertain that it could not be described as a contract, There was nothing in the sec- ond agreement nor was there available evidence to suggest that the mother intended to renounce her right to possess her house and use it as she pleased 134. [1970] A.C. 777, 135. [1969] 1 WLR. 328 50 -Uganda Cones Sup 124 m0)Part I, Ch. 1, Formation 12-113 B. Commercial Agreements 112, In commercial agreements, there is a presumption that there is an intention to create a legally binding relationship, which may of course be rebutted with strong evidence. One of the ways of rebutting this presumption is by including an express statement indicating that the agreement is not (o be binding in law. For example, in Jones v. Vernom’s Pools Lid,’ the plaintiff attempted to claim money which he alleged had been won in a football pool, Each coupon contained words, "Binding in honour only.’ The court held that the words were sufficient to rebut the presump- tion, and the plaintiff's action would fail 113, Another case involving a clause expressly ruling out contractual intention is Rose and Frank Co. v. J R Crompton and Bros,*" where an English company agreed to sell certain carbon copy materials in the USA through a New York based firm, The transaction, which was made in writing, gave the plaintiff the sole rights to market and sell the products in the USA and Canada for a period of three years with an option to extend the period. The document contained a clause that was described as an ‘Honourable Pledge Clause’, and which provided: “This arrange- ment is not entered into ... as a formal or legal agreement and shall not be subject (o legal jurisdiction to the law courts either of the United States or of England.” The original agreement began in July 1913, but at the end of the three-year period the option to extend was exercised and as a result, the agreement was to last until March 1920. In 1919, the defendants terminated the agreement and failed to give appro- priate notice as required by the agreement, and also refused to fulfil orders received by them prior to their decision to terminate the agreement. It was held that with regard to the orders already received there was a separate and binding contract which the defendants were bound (o fulfil. With regard (o the grant of selling rights, the court held that since the parties had specifically declared that the document was not to give rise to legally binding relations, then none could exist, Consequently, there was an obligation to give orders or to receive them, but once they were given and accepted, the defendants were bound to execute the order. Scrutton LJ stated: I is quite possible for parties to come to an agreement by accepting a proposal with the result that the agreement does not give rise to legal relations. The rea- son of this is that the parties do not intend that their agreement shall give rise to legal relations. This intention may be implied from the subject matter of the agreement, but it may also be expressed by the parties. In social and family relations such an intention is readily implied, while in business matters the opposite result would ordinarily follow. But I can see no reason why, even in business matters, the parties should not intend to rely on each other’s good. faith and honour, and to exclude all idea of settling disputes by any outside 136, [1938] 2 AML ER 626, See also Appleton x. H Litlewood Lid (1939] 1 AL ER 628. 137. [1923] 2 KB. 261 Conese - Sup 124 m0) Uganda -S14-417 Part I, Ch. 1, Formation intervention, with the accompanying necessity of expressing themselves so precisely that outsiders may have no difficulty in understanding what they mean, 114, Thus, in commercial agreements, there is a presumption that the parties intended to create legally binding relations. This can be attained by inserting a state- ‘ment to that effect in their agreement. However, the statement to exclude legal rela- tions should be unequivocal. Where the statement is ambiguous, the burden of proving the contractual intention lies heavily on the party who asserts it IL. Consideration A. Consideration in Uganda's Legal System 1. Nature of Consideration 11S, Consideration is part of the legal system in Uganda. Although offer, accep- tance and intention to be legally bound may connote the existence of an agreement, in Uganda, these elements alone are not sufficient in the formation of a valid con- tract. There should be consideration, which largely refers to a mutual exchange of promises. There should be quid pro quo. Consideration denotes the ‘bargain’ ele- ‘ment of a contract, The Contracts Act codifies the definition of valuable consider- ation in Currie v. Misa,"** and defines consideration as ‘a right, interest, profit or benefit accruing to one party or forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party’, 116. The Contracts Act also defines a ‘consideration for a promise’ as ‘where at the desire of a promisor, a promisee or any other person does or abstains from doing or promises to do of to abstain from doing something’ "' From the foregoing, it can be seen that consideration is the price for which the promise of another person is bought or received. It signifies some benefit or advantage going to one party or some loss ot detriment suffered by the other party. In order to enforce a promise, the promisee must show what he or she did for the promisor or suffered at the latter's request. The definition of consideration is an embodiment of principles, which are examined below. 117. There are two types of consideration: executed and executory. Executed consideration occurs when one of the parties does whatever he or she is required to do under the contract. In this situation, he or she is said to have executed his or her side of the bargain. Executory consideration is where one or both parties promise(s) 138 Ibid, 288, 139. (1875) LR, 10 Ex. 153, 140. Section 2 141. Bid, 52—Uganda Contras - Supp. 124 (2020)