The Law of Contract (Amendment) Bill, 2025
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Executive
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Final
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Absolute Ban on Excluding Liability for Negligent Death
Under the proposed Section 3A, a person cannot use a contract term to exclude or restrict liability for death resulting from negligence. For other forms of loss or damage, exclusions or restrictions are invalid unless they meet a new "requirement of reasonableness" based on circumstances known when the contract was signed.
Restricting Unreasonable Performance Limits in Consumer Contracts
The proposed Section 3B prevents a supplier from using contract terms to exclude or restrict liability for breach of contract when dealing with a consumer. It also bans terms allowing the supplier to render performance substantially different from what was expected, or to provide no performance at all, unless the term satisfies the requirement of reasonableness.
Guarantees Cannot Waive Liability for Defective Consumer Goods
Section 3C establishes that liability for loss or damage caused by goods proving defective while in consumer use, due to the negligence of a manufacturer or distributor, cannot be excluded or restricted by any contract term contained in a guarantee.
Alignment with Sale of Goods and Hire-Purchase Acts
Section 3E prevents the exclusion or restriction of liability for statutory conditions or warranties under section 14 of the Sale of Goods Act (Cap. 31) or section 8(1) of the Hire-Purchase Act (Cap. 507). For consumer transactions, liability under sections 15, 16, or 17 of the Sale of Goods Act, or section 8(2) of the Hire-Purchase Act, cannot be excluded under any circumstances.
Bill No.
No. 49 of 2025
Gazette No.
Supplement No. 185 of 2025
Sponsor
Aden Daud Mohamed
Background
The principal object of the Law of Contract (Amendment) Bill, 2025 is to amend the Law of Contract Act (Cap. 23) to protect parties to a contract against unfair and unconscionable terms. Currently, the application of English common law principles in Kenyan contract law has allowed parties to utilize unfair exclusion clauses. This Bill seeks to prevent parties from relying on such unconscionable terms to escape basic liabilities.
Key Amendments
The Bill introduces several new sections to the Law of Contract Act (Cap. 23):
- Section 2A (Interpretation): Defines "negligence" as a breach of an obligation arising from express or implied terms to take reasonable care or exercise reasonable skill. It also defines "requirement of reasonableness" as a term that is fair and reasonable to include having regard to circumstances known or contemplated when the contract was made.
- Section 3A (Prohibition against exclusion of liability arising out of negligence): Completely bars the exclusion of liability for death resulting from negligence. For other losses or damages, exclusion clauses must satisfy the requirement of reasonableness. Signing a contract containing such terms does not constitute voluntary acceptance of risk.
- Section 3B (Prohibition against exclusion of liability arising out of breach of contract): Restricts suppliers from using terms that waive liability for breach of contract or allow them to provide substantially different or zero performance against consumers, unless the term is proven to be reasonable.
- Section 3C (Prohibition against exclusion of liability arising from sale of defective goods): Invalidates any clauses in guarantees that attempt to exclude or restrict liability for loss or damage arising from goods proving defective while in consumer use due to the negligence of a manufacturer or distributor.
- Section 3E (Prohibition against exclusion of liability in sale of goods or hire-purchase agreements): Prohibits the exclusion of statutory undertakings as to title and quiet possession under section 14 of the Sale of Goods Act (Cap. 31) and section 8(1) of the Hire-Purchase Act (Cap. 507). In consumer contracts, exclusions of implied conditions regarding quality and fitness under sections 15, 16, and 17 of the Sale of Goods Act and section 8(2) of the Hire-Purchase Act are absolutely void. For non-consumers, such exclusions must satisfy the requirement of reasonableness.
New Obligations
- Contract Drafting Adjustments: Businesses, manufacturers, and distributors must review standard form contracts and product guarantees to remove blanket liability waivers for death or personal injury resulting from negligence.
- Reasonableness Compliance: Any remaining exclusion or restriction of liability clauses for other losses must be demonstrably fair and reasonable under Section 2A to be legally enforceable.
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