Introduction
A fintech founder came to us in distress. His startup had entered a high-value partnership with a payments aggregator using a contract template he downloaded from a legal blog. He hadn't reviewed it with a lawyer. "It looked legit," he said. "It had all the legal terms — confidentiality, termination, governing law."
Six months later, the aggregator pulled out abruptly. No notice. No penalties. Worse still, they took client data with them. When the founder tried to enforce the contract, he discovered that the dispute resolution clause wasn't valid under Kenyan law, the data protection clause was non-compliant with local regulations, and the contract didn't reflect any actual commercial realities.
His final words?
"I thought a contract was a contract. I didn't know a bad one could hurt more than having none."
Our Perspective
Under Kenyan law, a valid contract must contain the following six elements:
- Offer and Acceptance – A clear offer by one party and an unequivocal acceptance by the other.
- Consideration – Something of value must be exchanged between the parties (money, goods, services, etc.).
- Intention to Create Legal Relations – Both parties must intend to be legally bound by the agreement.
- Capacity to Contract – Both parties must have the legal capacity to enter into a contract (they must be of sound mind and of legal age).
- Legality of Purpose – The contract's objective must not be illegal or against public policy.
- Certainty and Clarity of Terms – The terms of the contract must be clear and capable of being understood by the courts.
Additionally, certain contracts such as those related to the sale of land or the creation of a company must be in writing to be enforceable under the Law of Contract Act and Land Act.
Online templates, while often appearing comprehensive, rarely align with Kenyan commercial law, employment law, or regulatory frameworks. Many are governed by foreign laws that have little to no relevance to Kenyan jurisdiction, making enforcement difficult or impossible in local courts.
What We See
We've had to assist multiple clients who faced significant legal and financial risks due to copy-paste contracts:
- An NGO that reused a UK employment contract only to discover later that it didn't comply with Kenya's Employment Act.
- A SaaS startup that entered into a venture agreement governed by California law, even though both parties were based in Nairobi.
- A creative agency that downloaded a contract with a non-compete clause so broad it was unenforceable under Kenyan law.
In each case, the client had good intentions, thinking they were saving time and money. Unfortunately, they discovered the hard way that not all contracts are created equal. A contract that works for one business may not be appropriate for yours, especially when it fails to comply with local legal requirements.
Mistakes Clients Make Before They Speak to Us
- Using Foreign Templates Without Adaptation – Many clients download contracts from foreign jurisdictions without adapting them to Kenyan law. This is risky because Kenyan courts will not enforce clauses that violate local laws.
- Focusing on Aesthetics Over Substance – Clients often assume that just because a contract looks professional or includes legal-sounding terms, it is enforceable.
- Assuming One Contract Fits All Deals – Every deal is unique, and contracts must reflect the specific business relationship and legal requirements.
- Skipping Legal Review – Clients often forgo legal review to save costs, not realising that this can lead to far more expensive disputes down the line.
Ethical Grey Zones
There are many grey areas in contract law that clients frequently navigate, including:
- Can you use an old contract from a previous client or employer as a template for a new deal?
- If a contract isn't signed but both parties behave as if it is, is it enforceable?
- Are electronic contracts valid in Kenya, and what are the requirements for them?
The Law of Contract (Amendment) Act, 2019 and the Kenya Information and Communications Act (KICA) recognise electronic contracts and electronic signatures. However, while these contracts are valid, they must meet the necessary requirements for consent and authenticity. The lack of clarity on these issues often creates confusion and legal uncertainty.
Systemic Problems in Contracting Culture
In Kenya, many businesses particularly SMEs and freelancers rely heavily on informal agreements, sealing deals through verbal promises or handshakes. This informal approach often continues when contracts are used. Many contracts are hastily copied from online sources without proper consideration of the legal implications.
This creates a systemic vulnerability where businesses operate under the illusion of legal protection without actually securing that protection. Worse still, bad contracts can expose businesses to liabilities they didn't foresee.
What We Tell Our Clients
To entrepreneurs and business owners:
- Use contracts, but use the right ones. Every contract should be tailored to your unique deal and compliant with Kenyan law.
- Don't assume a template is neutral. Most online templates are drafted to favour one side often the side that created the template.
- Invest in proper review now to avoid costly litigation later. The cost of a professional legal review is far lower than the cost of a dispute.
To freelancers and service providers:
- Protect your work. Define the scope, timelines, payments, and IP ownership clearly in writing.
- Don't rely on verbal promises. A court will look to written evidence if a dispute arises, and vague verbal agreements won't hold up.
- Know your legal rights and obligations—they're not always obvious from a quick Google search.
Reflective Conclusion: You Don't Need a Contract That Looks Good—You Need One That Works
The real risk isn't having no contract; it's having one that gives you a false sense of security. In business, clarity in your agreements is just as important as the deal itself. A contract should protect you, reflect the real terms of your business relationship, and comply with local laws.
So next time you're tempted to download a contract from the internet, ask yourself:
Would you download a random prescription from the internet and take it without a doctor's review?
Then don't do the same with contracts.
MEN Advocates LLP
We help startups, SMEs, and creatives draft enforceable, localised contracts that match their needs and reflect their values.
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