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How much do you really know about contracts? What are they? Can you just land in the middle of one without knowing it? Contracts are the closest relationship bond that we have whenever we deal with people that are not previously known to us. Like any other relationship, details such as duration, limitations, entitlements etc. need to be understood by all the parties otherwise there will be trouble (and losses) in the future.

This catalogue will help you understand what a contract is, when you need one and what to do when you find that you need to have one but you do not know where to begin.


Whenever someone mentions the word contract, it common for people to start thinking that the other person is trying to trap or cheat them. Some people even think that a contract is only made when you are rich so some people cannot afford to make one. We are here to change your mind on that in this section.

1. Is there a difference between a contract and an agreement?
Yes, there is a difference.

A contract is a written or spoken understanding between two or more parties involved which creates a legally binding obligation (one that is enforceable by a court of law). On the other hand, an agreement is a mutual understanding between two or more people to do or not to do something with each of them getting rights and responsibilities.

2. Is every agreement a contract?
No, not every agreement is a contract. However, if when two people make that agreement they agree that the obligations in that agreement will be enforced by the law, then that agreement has become a contract. The main difference between any agreement and a contract is therefore the intention by the parties to have that agreement to be enforceable by law.

3. What is the difference between an MOU and a contract?

An M.O.U (Memorandum of Understanding) is a document which outlines the terms and details of a mutual understanding between two or more people that states what is required of each party to achieve a certain common goal. (it states the intents of the parties to perform certain things without being held responsible by the law if they fail). This is an example of an agreement. A contract as we have said has legally binding terms and conditions for all the parties to it. If a person fails or refuses to perform his/her part in a contract, the law can come in to enforce it or ‘punish’ that person.

4. Is it a contract if we did not write anywhere?

Yes, it is. A contract can either be in writing or in verbal form. However, there are some contracts that the law requires to be in writing. For example, contracts of employment must be in writing, as well as contracts for buying things above UGX. 200,000. If this is not done, then the person at fault may be ‘punished’ with a fine by the law.
if the law requires such a contract to be in writing for it to be valid or enforceable then it is not a contract unless its written

5. Can married people also have contracts between them?

Yes, married people can have contracts with each other. However, these contracts must be clearly stated as contracts and they must fulfil the requirements of a valid contract. For example, if a spouse asks another for some help with work, they must both agree whether this help is because it is one spouse helping another or it is contractual work that must be paid. If it is paid work, then they must intend that these terms are enforceable by a court of law if one does not follow through.

6. Can two thieves agree on how they will share their loot using a contract? What happens if they disagree?

No, they cannot. This is because a contract must be enforced by the law and the law cannot enforce illegal things. Theft is a criminal act and therefore entering a contract to sharing proceeds (fruits) of theft is also illegal. Any contract, that involves doing something that is a criminal act, a civil wrong, something against public policy or good or something not allowed by law and is unenforceable by the law. This is called an illegal contract. It is never enforceable in law, and it is taken as having never existed.

7. Are there contracts that we are not allowed to make even when they are legal?

Yes, even if some contracts are not for criminal acts, the courts may refuse to enforce them because they go against the welfare, interests and good morals of a given society. If a contract is against public policy, then it is considered void (non-enforceable) and the law will not honour it.

8. Can I sell my contract to someone else?

Yes, you can. This is because a contract has both rights (benefits) and responsibilities (obligations). It is therefore possible to make a transfer of a right or responsibility to someone else. (This is called assignment). This gives you the opportunity to pass on benefit to another person under a contract and may also be a way to sell a contract to another person who was not a part of the initial contract. However, this possibility of transferring the contract must have been agreed to in the initial contract. If it is allowed in your contract; you must communicate to the other party in the contract. If a person did not plan for the transfer of contract, then you cannot do this.

9. If a relative or my friend has a contract, is there any way I can join the contract to help them? (KENNEDY)

As a general principle, Contract law says that only parties or individuals that are in a legally binding agreement may enjoy benefits to a contract as well as face liability to fulfil obligations under the contract. In law, this is called Privy of Contract. Only a person who was a part of the contract can contest it or benefit from its terms and conditions.

However, as an exception, if that person (your friend or relative) has a skill that is needed to fulfil that contract, then you (who is a part of the contract) can assign (transfer your benefit or responsibility) to them so that they become a part of the contract.

Now that we know what a contract is, let’s determine what you want yours to be about. You do not need to be a lawyer to know what you want and what you do not want and to put this down in a contract. Here are few guidelines on what your contract can be about:

10. Is a contract only about things we are going to do?

No, it is not.

A contract can be about things that have not yet been done for example the delivery of goods. (This is called an executory contract because someone still has their duty to perform). Some contracts can also be about things that have already been done or performed. For example, when you sell a shirt and you are paid immediately, this is a contract for things that have been already completed. (Executed contract). The contract is proof that all of you have performed your duties and the contract is finalised. On the other hand, if one of you has not yet delivered on your promise such as if you are paid and you have not yet transferred the land title to land you have been paid for, then this is an executory contract (for things yet to happen).

11. If I already did work for someone, can we sign an agreement after the work is done?

Yes, you can. This would be a contract to acknowledge that you have performed your part in the contract and that you are waiting for the other individual to perform their part (paying you for the work done).

It is however advisable that you sign a contract before you do any work so that you have a reference for terms and conditions and clarity on when all payments are due.

12. Can I still enter into a contract if I am not getting any benefit from the transaction?

No, you cannot. For a contract to exist, there must be value exchanged for each person preforming something in the contract whether it is in monetary form (money) or some act, omission or item or service. It is either the payment or the reward in a contract. You do not need to be the direct recipient of this payment or reward, but it must exist. This is called consideration.

13. Can I be required to do something in someone’s contract when I did not sign that contract?

No, you should not. This is because only those people who are part of the contract should be required to fulfil the obligations in the contract. For example, if your friend signs a contract to sell a Subaru, then you cannot be required to give your subaru while your friend receives the money. This is because you have no part in the contract.

To be required to do something, you must also be entitled to something in the contract. An example is a beneficiary of a deceased person’s life insurance benefits may be legally required to identify themselves as the rightful person entitled to claim the benefits of a policy as well as present some other forms of documentation agreed to under an insurance policy and contract between a deceased person and the insurance company.

14. If I have two contracts with the same person, does it cancel out the original one?

No, it does not necessarily cancel the original or initial contract unless it is expressly stated that the new contract cancels any obligations and responsibilities in the original/ initial contract.



15. Can a contract stop me from entering other contracts?

Yes, the original contract can stop (bar) you from entering contracts if the other contracts you wish to enter will compromise/contradict the obligations, rights and interests in the existing contract. For example, if you sign a contract to only drink and promote Cocacola products, then you cannot sign a contract to start drinking and promoting Riham products.





16. If I am a ‘rich 12-year-old’, can I sign a contract to buy things like cars? (can someone of any age enter a contract?)

No, you cannot. This is because a person who is below the age of 18 years of age is considered a minor who does not have the legal capacity to enter contracts except those contracts that are for services and goods that are necessary to the safety and health of minors. (These are called contracts for necessities). Other examples of these necessities include shelter or lodging, clothing, and food necessities you may not have the capacity to sign onto such contracts. However, if the ‘rich 12-year-old child can prove that the car is necessary for his health and safety, then he/she can enter a contract for cars.

Now we know what a contract is, and what it is about. Let us talk about a few basics to consider as you put pen to paper on your new contract. Remember it is not about finding the most legal words, it is about writing what you mean as clearly as possible. This section will tell you what mistakes to avoid when you decide to make a contract and also what you do not need to worry about when making a contract.


17. Who is supposed to write and prepare the contract we are making?

Both parties or any one of the parties with the consent of the other party can write and prepare the contract. They can also ask someone else like a lawyer to do it on their behalf, but both parties to the contract must fully understand and agree to the contents of the contract. In this case, both parties must have look and agree to the contents of the contract before signing.

18. What happens if we write a contract and we forget to include something, does it mean it cannot be considered?

If you both realise that you have forgotten an important thing, then it is ok to agree to amend (change) the contract to reflect what was left out. What is important here is both parties consenting to the changes/additions in the contract.

19. Must every little thing be included in a contract?

No, not necessarily but what you would like the other person to do and what you have both agreed upon must be included in the contract as terms and conditions. For example, the price of what you have agreed to, the time for performance, who does what and where, and what law and language the contract is based on. We suggest that you avoid situations where a party can deny a certain obligation just because it was put into writing when the contract was made. Remember even if you agree in words but do not include it when you are making the contract written, the courts of law will only use what they can see on paper.

However, there are terms that the law expects to be in every contract, and these need not be written. For example, the fact that the goods you sell to another person must be of good quality and fit for his/her purpose. The fact that if you are selling land to someone you must give them a good title free from disturbances from other people. Such terms are called implied because the law considers them good and fair practice to include in every contract even if they are not expressly written down in the contract.

20. If I do not want other people to know about the things mentioned in the contract, what should I do?

If you do not want what is contained in the contract disclosed to other people outside the contract, then you must clearly state this in the contract. This is known as the ‘confidentiality principle’ in the contract. The Confidentiality principle simply means that the parties to the contract are precluded (prohibited) from sharing the contents of the contract with other people who are not part of the contract unless they have consent of the other party to the contract.

21. If we are 3 different people and want different things from each other, does that mean we should have 3 contracts?

If these terms are all connected, then you can have one contract that clearly spells out the terms and obligations for each party. For example, if you are getting a loan but your friend is providing the security for the loan, you can have a contract that involves the lender, borrower and the one providing his car as security for the loan.

However, if one of the individuals is not interested in one of the transactions, then it is suggested that you have two separate agreements to clearly separate the transactions. For example, if you are getting a loan because you want to start construction of a house, you do not need one contract between yourself, the bank, and the builder. This is because the builder is not interested in your loan agreement, and neither is the bank interested in who your builder is and what you agree with the builder.

22. Which language should a contract be written in?

A contract can be written in any language which the people entering the contract both understand. If the individuals understand different languages, then the contract can be translated for one of the individuals, or a copy of the contract can be written in both languages so that both parties understand. Where any party cannot read or write, a translator can be used to explain what is contained in the contract so that there is a written document with the terms and conditions.

23. Can a drunkard make a contract?

No, a drunk person cannot make a contract. This is because a drunk (intoxicated) person has diminished (reduced) mental capacity and they are unfit to understand what the contract is and what they are doing. However, it is important not to also get drunk so that you can survive a contract, if you do this, it is upon you to prove that you were so drunk at the time of making the contract that you did not understand the implications of the contract otherwise, it is valid.

24. What if I cannot read and write in any language, does it mean I cannot make contracts?

The inability to read or write does not mean you do not understand what you are doing. A contract requires that a person has an intention to enter an agreement that is legally binding. If a person has this intention, accepts an offer and is mentally fit, then this person has the right to enter the contract. However, if you are entering this contract with that person, you must ensure that the terms of the contract are translated and explained to that person in a language they can understand. The person who explains this contract must also sign and declare that they explained to the person. In addition, that person (who cannot read or write) can put a thumb print instead of a signature on the contract.



25. What if I am blind or deaf, can I still make contracts?

Yes, a blind or deaf person can enter a valid contract. What is important is that this person can understand the terms of the contract, their obligations, and the legal implications of signing the contract. What can be done in this situation is to have someone read it to you (this person signs that they have explained everything to you and you have understood) or use another form of writing suitable for those without sight such as braille.

26. Can a sick person or one who has a mental illness enter a contract?

One of the legal requirements for entering a contract is having a fit mental state. This simply means that that a person entering a contract should be able to understand what they are doing including the contents of the contract and the legal implications of what they are doing. Therefore, a person who is incapable of understanding what they are doing, and its implications cannot enter a contract. If a person under such a condition enters a contact, that contract is not valid under the law.

However, if at the time of entering the contract, that person was lucid (able to comprehend what they were doing), then that person can enter a valid into a valid contract at the time when they are mentally well.

Similarly, a physically sick person can still enter in a contract if they are able to understand what they are doing. This also means that an extremely sick person (one who is bed ridden and unable to understand what is happening) cannot make a valid contract. Therefore, before you enter a contract with people under such conditions, you should first assess if they are mentally fit to comprehend their actions and what they mean.