Basis and Theories of Contract under Kenya Contract Law

Will theory
The will theory of contract postulates an extremely subjective approach to contract, whereby consensus is the only basis for contractual liability. The upshot is that, if there is no genuine concurrence of wills, there can be no contract. It is generally agreed, though, that unqualified adherence tothis theory would produce results both unfair and economically disastrous.

Declaration theory
The declaration theory, in contrast, stipulatesthat the only important consideration is the external manifestation of the parties' wills. The true basis of contract, then, is to be found in the concurring declarations of the parties, not in what they actually think or intend. This extremely objective approach has also generally been found to be unacceptable in practice, unless it is qualified.

Reliance theory
In terms of the compromise reliance theory, the basis of contract is to be found in a reasonable belief, induced by the conduct of the other party, in the existence of consensus. This protects a party's reasonable expectation of a contract. The reliance theory should be seen as a supplement to the will theory, affording an alternative basis for contract in circumstances where the minds of the parties have not truly met.