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In the contemporary commercial environment, the enforceability of agreements is not merely a procedural concern but a fundamental legal safeguard. At Onyino & Associates Advocates, we consistently encounter disputes that arise not from the absence of goodwill, but from the absence of clarity. This article examines the core principles governing contract formation under Kenyan law and highlights why businesses must adopt a meticulous approach when negotiating and drafting agreements.


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1. The Legal Foundations of a Valid Contract

The starting point is the classical doctrine of contract law, rooted in common law and consistently affirmed by Kenyan courts. For a contract to be enforceable, it must satisfy four essential elements:

a. Offer

An offer must be clear, unequivocal, and communicated. In Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, the Court held that an offer may be made to the world at large, provided it is sufficiently precise. Kenyan courts have adopted this position, emphasising that vagueness can nullify intent.

b. Acceptance

Acceptance must correspond exactly with the terms of the offer—the mirror image rule. Any deviation constitutes a counter-offer. In National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd [2001] eKLR, the Court of Appeal reinforced that parties are bound by the terms they freely agree to, and cannot later escape obligations by alleging misunderstanding.

c. Consideration

Consideration represents the value exchanged between parties. Kenyan jurisprudence has recognised the doctrine that consideration need not be adequate, but must be sufficient in law. This is articulated in common-law authority Thomas v Thomas (1842), adopted in numerous local decisions.

d. Intention to Create Legal Relations

Commercial agreements carry a presumption of legal enforceability, unless expressly rebutted. Social or domestic arrangements do not ordinarily create contractual obligations.


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2. The Myth of “Gentleman’s Agreements” in Business

Many businesses in Kenya still operate on informal arrangements, expecting mutual trust to suffice. However, courts have repeatedly declined to enforce vague promises lacking definite terms. In Sila Munyao v Motorola Kenya Ltd [2008] eKLR, the High Court stressed that the absence of clear contractual terms renders enforcement nearly impossible.

Contracts must therefore be reduced into writing, signed, dated, and properly witnessed. Oral agreements, though not unlawful, are inherently risky and difficult to prove under the Evidence Act (Cap 80).


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3. Key Risk Areas in Commercial Contracts

a. Ambiguous Clauses

Unclear provisions often invite litigation. Courts adopt the literal interpretation rule, and where ambiguity persists, the rule of contra proferentem may apply—interpreting terms against the drafter.

b. Absence of Dispute Resolution Mechanisms

Including arbitration, mediation, or negotiation clauses protects parties from costly and protracted litigation.

c. Undefined Deliverables and Timelines

Failure to specify what must be done, by whom, and by when, may render a contract void for uncertainty or result in breach-related claims.

d. Failure to Address Termination

The Court of Appeal has emphasised that termination clauses must be clear and fair. In Kenya Ports Authority v Kuston (Kenya) Limited [2009] eKLR, the Court noted that termination exercised contrary to contractual provisions constitutes breach.


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4. Drafting Contracts: A Matter of Legal Compliance and Commercial Prudence

Contracts are not mere formalities; they are instruments that allocate risk, define obligations, and protect commercial interests. Proper drafting ensures:

Compliance with statutory requirements such as the Law of Contract Act (Cap 23);

Protection against unpredictable contingencies;

Clear remedies in the event of breach;

A legally defensible position before regulators and courts.


Our firm advocates for early legal involvement at the negotiation stage, not merely at the point of dispute. Preventive legal advice significantly reduces exposure to liability.


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5. Why Engage a Law Firm?

Contractual disputes often stem from avoidable oversights:

Missing clauses,

Incorrect interpretation of obligations,

Inadequate compliance with sector-specific regulations, and

Use of generic templates that do not reflect Kenya’s regulatory environment.


At Onyino & Associates Advocates, we provide bespoke drafting, negotiation support, risk assessment, and contract audits to ensure every agreement aligns with Kenyan legal standards and protects our clients’ commercial objectives.


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Conclusion

Contracts are the backbone of commerce. Their validity and enforceability depend on the precision with which they are drafted and executed. Kenyan jurisprudence underscores that parties are bound by their formal undertakings, and courts will not rewrite agreements retroactively.

Businesses that invest in properly structured contracts significantly reduce disputes and strengthen their operational certainty. As your trusted legal advisers, Onyino & Associates Advocates stands ready to safeguard your interests through meticulous contract formulation, review, and enforcement.

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