Q&A – 21 January 2013
Contract on restaurant menu card
I am the assistant of a leading businessman in town. We went out to lunch one day and he said that I deserved a bonus. He took the menu card of the restaurant and behind it wrote down how the bonus would apply and what targets I needed to meet. I beat all the targets and now he has turned around to say that the contract cannot bind him as it is not on legal paper. Is that true? Why do rich people breach contracts?
IR, Dar
It is quite interesting to note that you have a contract on the back of a menu card of a restaurant. Some important contracts have been made in weird places around the world- we have heard of contracts being written on the bark of a tree, contracts on the seashore, contracts on tissue paper signed in the bathroom and contracts entered into when people are sky diving (we are not sure how they signed this).
The key contents of a contract are that there must be an offer, acceptance, intention to create legal relations, consideration and the contents of the contract must be legal. It seems to us that all these are present in your contract and thus your contract is binding on your boss. There is no mandatory requirement for the contract to be on legal paper.
Your last question on why the rich breach their contracts more often is not a legal question and we are unable to answer it.
However, a quote by well-known German inventor Robert Bosch comes to our mind and it says “I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.
Failure of birth control
I got a copper device inserted in me to avoid getting pregnant as I already have five children. Unfortunately I am pregnant yet again and am sure that it is because the device was not properly inserted.
Can I sue the manufacturer of the device? Can I abort since I cannot take of all the children?
LR, Tabora
Generally, the manufacturer can only be liable if one can prove that the device itself had some defect. From the above facts, it seems that the problem was with the insertion which led to this unplanned pregnancy. The best cause of action will be to proceed under tortuous liability and sue the medical practitioner and perhaps hospital, which may be liable under the employer’s liability.
You must however remember that such type of contraceptive is not 100% effective and there have been many cases around the world where women have gotten pregnant with this copper device. Your doctor should have explicitly explained this to you and if he did not, that is a good ground for you to sue him.
Usually the quantum of damages in such cases, if at all, is not very high. You also cannot sue the doctor and make a prayer for abortion as in your case abortion is illegal. Abortion in Tanzania is only allowed if it is certified by a medical practitioner as being necessary to protect the health of the mother. Your ground of aborting as you already have 5 children will not hold any strength in a Court of law. Before you take any action, please consult your lawyer.
Pay as you earn for allowances
If I am earning a salary of Tsh 4M but which excludes my lunch allowance of Tsh 300,000, my transport allowance of Tsh 600,000 and my child’s additional tuition fee allowance of Tsh 250,000 all monthly, how much pay as you earn should I be paying? Are allowances included in the calculation?
IT, Mwanza
All benefits, whether in cash or kind paid by an employer to employee are subject to Pay As You Earn (PAYE).
Section 7 of the Income Tax Act, 2004 provides that all individual’s income from an employment for a year of income shall be the individual’s gains and profits from the employment of the individual for the year of income. There are certain exclusions provided in this section.
The Act further states that in calculating an individual’s gains or profits from an employment for a year of income the following payments made to or on behalf of the individual by the employer or an associate of the employer during that year of income shall be included:
(a) payments of wages, salary, payment in lieu of leave, fees, commissions, bonuses gratuity or any subsistence, travelling entertainment or other allowance received in respect of employment or service rendered; (b) payments providing any discharge or reimbursement of expenditure incurred by the individual or an associate of the individual; (c) payments for the individual’s agreement to any conditions of the employment; (d) retirement contributions and retirement payments;
The Act further provides the following exclusion when calculating an individual’s gains or profits from an employment: on premises cafeteria services that are available on a nondiscriminatory basis; any subsistence, travelling, entertainment or other allowance that represents solely the reimbursement to the recipient of any amount expended by him wholly and exclusively in the production of his income from his employment or services rendered; benefits derived from the use of motor vehicle where the employer does not claim any deduction or relief in relation to the ownership, maintenance or operation of the vehicle.
Whilst your accountant can guide you further by understanding each allowance more closely, we opine that these allowances including the food allowance are taxable. You might be able to get away with the motor vehicle allowance but it depends who owns the vehicle and whether your employer is claiming deduction for such allowance.
We will not do the math here. Consult your accountant for further guidance.