BATTLE OF FORMS

OFFER

What is an offer?

Communication, whether orally or in writing, which contains terms made with an intention to be
bound by the terms if accepted by the offeree as heralded in NTHC v Antwi.

 The communication must contain words which possess the element of certainty and finality.
 The terms must contain the consideration, whether specifically or one which can be
ascertained in the future. For immovable property, the terms must specifically describe the
subject matter but for movables, it is sufficient if the subject matter is unascertained but
described with samples as seen in sec 5 and 25 of the Sale of Goods Act 1962 and the
decision of Asare v Antwi.

I have a car. I may be prepared to sell it to you at 50000 usd. - I.T.T

R= I want that car. I may be prepared to pay 50000. - I.T.T

I have a car. If God permits and I get my visa, I will sell it at 50000 usd. Will you buy?

I have a car. I am prepared to sell it to you at 50000 usd.

I have a car. I am selling it. Will you buy?

What if the statement is not final due to lack of certainty, description or a price?

There is an invitation to treat if a communication is not final due to the absence of certainty,
description or a price. An invitation to treat invites an offer. It does not invite acceptance as held in
Gibson v Manchester City Council.

From judicial decision, some business situations have been classified as invitation to treats:

 An advertisement as held in Dormenya v Johnson Motors Limited.

 Situations where goods are displayed to attract customers as seen in Fisher v Bell

 The circulation of price lists to possible customers.

 The invitation for the submission of tenders.

Tenders are different from Standing Offers which is statement of certainty requesting for
performance at agreed times. Such statements are valid offers according to Perby v AG.

What are the kinds of offers?

An offer can be bilateral, multilateral or unilateral.

What is a unilateral offer?

o A unilateral offer, also known as a general offer, is a communication made to the whole world
or a defined group with terms which requires performance of the terms as acceptance as held
in Carlill v Carbolic Smokeball Company.

Anybody who finds my missing bag will be given 5000 cedis.

 Like any offer, the words must be final and certain as held in Weeks v Tybald.
 For there to be acceptance by performance, the offeree must know of the existence of the offer
before the performance as held in Gibbons v Proctor.

How can an offer be terminated?

o An offer can be terminated either expressly or by conduct before a valid acceptance is made.
Through conduct, there is authority that unreasonable delay of time can constitute termination
as held in Aning v Kingful.

Termination is different from Revocation.

o Revocation constitutes withdrawal of an offer. It normally has no legal repercussions but it

must be made before acceptance as held in Bryne v Leo Van Tiehoven.
Communication of withdrawal is validly made from the offeror or a credible source to the
offeree as held in Dickinson v Dodds.

For unilateral offers, communication must be made before performance and through the same or
similar medium to meet the same or similar audience as the offer as held in Shuey v US and
Errington v Errington.

ACCEPTANCE

o Acceptance is a communication, made through words or conduct, which wholly and

unconditionally affirms and assents an offer with an intention to be bound by the terms of the
offer as held in Fofie v Zanyo.
 o The communication should be made to the offeror or his duly authorized representative
except in the light of 3 exceptions.

I have a car . I am prepared to sell to you as 50000 usd.

I will pay 50000 usd but I want a bus.

I want the car but I will pay 30000 usd.

I want the car. Can you reduce the price for me?

It is okay. When can I make payment?

What are the three exceptions?

The three exceptions are:

 Express waiver of the requirement by the offeror as in Felthouse v Bindley

 Implied waiver of the requirement in the case of general offers as Carlill v Carbolic
Smokeball.

 The application of the postal rule for acceptance.

What is the scope of the postal acceptance rule?

o A letter of acceptance PROPERLY ADDRESSED constitutes a valid acceptance ON THE

DATE the letter was delivered to the postman. It only deals with the TIME FOR
ACCEPTANCE and not the determination of a VALID ACCEPTANCE.

Date for acceptance

The letter was written

The letter was posted. XXX

The letter was delivered

The letter was read.

 The rule does not apply to instantaneous mode of communication and it only applies to
acceptance as held in Adams v Lindsell.

There are 4 cardinal governing principles for the application of the postal rule:

o The rule only applies if delivered to the post man as held in Re London and Northern Bank.

o The rule only applies if usage of the post is reasonable.

o The rule will apply even if delivery is delayed or the letter gets missing.
o The rule will not apply if the offeror specifically exempts the usage of the post as held in
Henthorn v Fraser.

The postal rule in Ghana’s modern world

o According to sec 23 of the Electronic Transactions Act, electronically executed contracts

are valid contracts.

Per the combination of sec 18 and 19 of the Act, the postal rule applies to emails. The rule will
read as follows:

o An email of acceptance CORRECTLY PROPERLY is delivered on the DATE and TIME the
email enters the INFORMATION PROCESSING SYSTEM. Outlook, gmail, yahoomail

What if the offeror prescribes a specific mode for communication?

 Where the offeror uses specific words which defines the mode for acceptance, using another
mode is equal to not accepting the offer wholly because the definition of a mode is part of the
offer as held in Financing Limited v Simpson.
 Where the language is merely advisory, using a more suitable mode will be accepted as held
in Tinn v Hoffman.

You can only accept by post

You may accept this offer by post or any other method

Silence however cannot be prescribed as a mode of acceptance because silence is vague and
ambiguous as held in Felthouse v Bindley.

What is the required quality for the communication?

o Communication is be unconditional and must adopt words which wholly accepts the terms of
the offer as held in Degbe v Nsiah.
 If the offeree makes words of contradictions or variations to the offer, there is no acceptance
but rather a counter offer.
o A counter offer/cross offer erases the offer and steps in as the substantive offer therefore after
making a counter offer, an offeree cannot revert to accepting the previous offer as held in Hyde v
Wrench.

Offeror – offer

Offeree – counter offer

Offeree becomes the offeror – offer

Offeror becomes the offeree – accept or not?

o If the words from the offeree are made for further information, that constitutes a mere
enquiry. It does not erase the offer. The offer still exists for acceptance as held in Domins Fisheries
Co v Bremen Vegesacker Fisheries.

INTENTION TO CREATE LEGAL RELATIONSHIP

o The law examines the circumstances prevailing during negotiations or at the time a promise is
made.

o In the examination, the court adopts the reasonable man’s assessment of the nature of the
contract, the prevailing contractual situation and the language used as held in Esso Petroleum
Limited v Commissioner of Customs and Excise.

What is the General Rule of Law?

 Generally, there is a presumption that parties intend to be bound by their words contained in
their promises as held in Edwards v Skyways Limited.

How is this general rule displaced?

The rule is displaced through evidence establishing any of three situations:

 Express agreement on the non-binding nature of promises

 Express exclusion of a contractual intention by a statute.

 Existence of prima facie evidence to trigger presumptions adopted by the court for social and
domestic relationships.
 1. The exception of express agreement:

Parties are allowed to agree that their promises should not be legally binding. In the absence of
vitiating factor, the court will respect such agreements as held in Rose and Frank Co v Crompton
Brothers – ‘binding in their honor only’.

2. The exception of statutory exclusions:

Where a contract is governed by a statute which prescribes that no legal obligation should be attached
to promises, the court will enforce the statute. An example is sec 2 of the Football Pools Authority
Law 1975.

3. The exception based on presumptions:

Where promises are made in a domestic or social setting, there is a presumption that parties do not
intend to be bound by their promises if accepted as held in Coward v Motor Insurers Bureau and
Balfuor v Balfuor.

o A domestic or social setting is a setting maintained by love, neighbourliness and trust as held
in Lens v Devonshire Club.

The presumption will not apply if the promise was made in three situations which are;

1. A situation of disunity or the expiration of love as held in Meritt v Meritt

2. A situation which entails forgoing a right which a person has become entitled to as held
in Tanner v Tanner and Aning v Kingful. Jones v Paddavaton.

3. A situation which has a commercial and profit making flavour as emphasized in Parker v
Clarke and Simpkins v Pays.

o Where there is proof that the contract was made in a commercial setting, the court will apply
the presumption that parties intend to be bound by their words if accepted as held in Edwards
v Skyways Limited.
This is based on the background that such settings are made in pursuit of profits therefore
there is seriousness on the negotiation table.
o The presumption will not be applied if parties expressly or impliedly agree that their words
should be non-binding as held in Jones v Vernon Pools and Weeks v Tybalds and Milner v
Percy Bilton.- ‘letter of comfort or intent’
PRIVITY OF CONTRACT

o Rules governing privity determines parties who can sue or be sued for the enforcement of
promises made under a contract.

The general common law rule:

o Only parties to a contract can sue to enforce an obligation or be sued for a liability under the
contract as held in Tweedle v Atkinson and Langridge v Levy.
This rule is against the background that at common law, only parties to a contract can
provide consideration. Since a third party cannot provide consideration, that party cannot be
bound by the contract.
o The common law rule has some exceptions. The most popular exceptions are the law of trust
and agency.

The Ghanaian Position:

The general rule is the same as the common law rule as emphasized in Baidoo v Sam.

There are two known exceptions to this rule in Ghana which are:

1. Situations where a contract confers a specific or direct benefit on a third party.

2. Situations where a third party was within the reasonable contemplation of the agreement as
stated in sec 5 of the Contract Act 1960 and Harley v Ejura Farms and Koah v Royal
Exchange Assurance.

o Even in situations where a party is obtaining a direct benefit or that party is within the
reasonable contemplation, the party will not be allowed to sue if there is the presence of 2 situations:

1. The conferment of vicarious immunity which is a situation where a party is alleging, he is not
liable for a breach based on a contract he did not execute.
2. The conferment of a resale price maintenance agreement which is a situation where a
wholesaler seeks to impose a minimum or maximum price to govern sale on the retail market
as in sec 5 of the Contract Act 1960 and Dunlop Pneumatic Tyre co v Selfridge.

o Where a person who is within the reasonable contemplation of an agreement has acted
pursuant to the terms of the agreement, that agreement cannot be terminated without his consent as
seen in sec 6 of the Contract Act and sec 26 of the Evidence Act 1975.
o It goes to say therefore that any defence that can be raised under the contract can also be
raised by or against the third party.

o The Ghanaian position is more flexible because in Ghana, consideration must not necessarily
be provided by parties to an agreement. A third party can provide consideration to bind an agreement
as in sec 10 of the Contract Act 1960.

PRIVITY, PRE-INCORPORATED CONTRACTS AND PROMOTERS

1. A promoter is a person responsible for the establishment of a company. He engages in all

contracts which will successfully lead to the birth of the company. However, a person delivering
professional services is not a promoter as in sec 10 of the Companies Act 2019 and Kumi v New
World Investment.

2. The promoter is a fiduciary so he must act in the best interest of the company.

3. Generally, a company is not bound by contracts executed by promoters because at the time of
execution, the company was not in existence and therefore there was no privity of contract as held in
Kelner v Baxter.

4. For the company to assume liability, the promoter must give full disclosure of all of such
contracts to either the board of directors or members at a general meeting for ratification within 18
months of incorporation as in sec 11 of the Companies Act 2019 and Politics v Plastic.

5. Ratification can be made expressly or through implied conduct, but the promoter does not
have a voting right as held Jadbranska v Oysa.

6. If the promoter conceals secret profits, the company can set aside the contract or seek an order
of account even after ratification as in sec 10 of the Companies Act and Samdy Metal v Alhaji
Kadiri

‘the company or its officers are not liable for any breach whatsoever’
CAPACITY TO CONTRACT

The law on capacity defines rules governing the quality of parties in a contract.

o Generally, all parties are presumed to possess the requisite legal capacity as in sec 42 of the
Evidence Act 1975 and sec 38 of the Land Act 2020.

This presumption can be rebutted in three situations:

 Contracts involving minors

 Contracts involving intoxicated persons
 Contracts involving mentally incapacitated persons.

What is the law involving minors?

o At common a minor is a person below the age of 21 years and this position is still the
Ghanaian position as in Lartey v Bannerman.
o A minor is presumed to lack full legal capacity to execute and engage in a contract as seen in
De Francesco v Barnum.

For the minor to earn the legal quality of being a party to a valid contract, the contract must be for
three purposes:

 Necessities of life
 Beneficial contracts of service
 Contracts with voidable obligations.

What is the law governing necessities of life?

o Necessities of life are provisions which are relevant for the survival of a minor and in
addition, provisions which fit the status of the minor as held in Chapple v Cooper as sec 2 of
the Sale of Goods Act 1962.
 o A provision is not considered as a necessity if adequate supply has been made to the minor or
the terms are unjust and onerous as held in Nash v Inman.

Where a provision meets the test for necessity, a minor is bound to pay a reasonable amount as in sec
2 of the Sale of Goods Act.

What is the law on beneficial contract of service?

o This is a contract executed for the purpose of training, educating, or impacting skills for the
betterment of the minor’s future as held in De Francesco v Barnum.
o A contract meets the test if it is set up to wholly benefit the minor and terms are not onerous
as held by Doyle v White City Stadium Limited.

To that extent, a contract for trading is not a beneficial contract of service because it exposes the
minor to losses as held in Union Guarantee Corporation v Bell

What about voidable contracts?

These are contracts with recurrent obligations to the extent that the minor will grow to be an adult and
still have the contract in force. Therefore, the minor will one day have the option to affirm or rescind
from the contract. For example, a lease, and marriage.

o A minor can repudiate the contract at a reasonable time after attaining majority as held in
Edwards v Carter.
o Even before that, if the terms are onerous, the court can set aside the contract.

4 important questions governing the capacity of minors

1. Is a minor bound by a loan contract?

A minor is only bound if the loan was used to purchase necessities of life. In that case equity will
order restitution as in Re National Benefit Society.

2. Is a minor liable for tortious actions?

A minor will not be liable if the tort has a direct connection with a contract and the other party is
using the tort to circumvent the rules of capacity as Fawcett v Smethurst.

3. Is a minor still liable if he misrepresents his age?

The law will not change its position but if the other party can prove that the minor is still in
possession of the exact subject matter, the court will order restitution as held in Leslie Limited v
Sheill.

4. Can the minor sue an adult?

The minor can only sue an adult if he is able to demonstrate that he has performed all his obligations
under a contract to the extent that the adult will not find fault to sue the minor as held in Lartey v
Bannerman. The minor must sue with an adult guardian also known as guardian ad litem as held in
Kumakye v GWSC.

The case of intoxicated and mentally incapacitated persons

o A contract with an intoxicated or mentally incapacitated person is voidable if the intoxicated

or mentally incapacitated person can prove that at the time of contract, he was not lucid and
the other party was aware.
o Within a reasonable time after gaining consciousness, he can revoke the contract. As held in
Imperial Loan v Stone.
o Where the contract was for necessities of life, it cannot be set aside. The intoxicated or
mentally incapacitated person must pay a reasonable amount for it as held in Mathews v
Baxter.

THE CAPACITY OF COMPANIES TO CONTRACT

o After incorporation, a company obtains a separate legal entity status therefore a company,
duly incorporated, has the capacity to engage in contracts as in sec 18 of the Companies Act
2019 and Salomon v Salomon.
o In cases of breach, the company is liable as an entity and not the officers who represented the
company except where there is evidence of fraud, illegality or a statutory breach committed
by the officer. In that situation, the court will lift the corporate veil as held in Morkor v
Kuma.
THE LAW GOVERNING CONSIDERATION

General Rule – there is no binding contract in the absence of consideration or a contract made like a
deed as held in Marfo v Adusei.

What is consideration?

Consideration is a benefit, forbearance or promise which a party relies on for the execution of a
contract as held in Dunlop Pneumatic Tyres v Selfridge.

When is forbearance good consideration?

Forbearance is good consideration only if there is an accrued right to a benefit which has not been
enjoyed because of a specific request from a party as held in Kwaddey v Okantey and Hamer v
Sidway.

What are the kinds or forms of consideration?

There are three forms or three ways for the creation of the three types of consideration which are the
executed, executory and past consideration.

o Executed consideration is consideration produced or exchanged at the time the contract was
formed.
o Executory consideration is consideration which will be exchanged after the formation of the
contract at a later date.
o Past consideration is consideration which is produced for an earlier event which did not
indeed qualify as a contract.
When is past consideration good consideration?

Generally past consideration is not good consideration because the consideration was not anticipated
at the time the contract was formed as held in Roscorla v Thomas and Eastwood v Kenyon.

There are however two situations where past consideration will be good considered. There are
situations where:

1. A specific request was made for the activity which is the basis for the past consideration as
held in Lampleigh v Braithwaite.
2. The relationship between the parties is a commercial relationship so it will unconscionable
for the court to ignore the past consideration as held in Pao On v Lau You Long.

How is consideration measured?

Consideration must be sufficient and not adequate.

o Sufficiency means that there must be the presence of consideration.

o Adequacy means that the consideration must be proportional to work done under the
contract.

It is the position of the law that the court is not concerned with the value of consideration but rather
the presence of consideration as held in Adjabeng v Kwabla and Chapple and Co Limited v
Nestle Co Limited.

The power of consideration under a contract—effect of the absence of consideration

o At common law, without the existence of consideration, a contract was considered invalid as
held in Chapple and Co Limited v Nestle Company Limited.
o Equity created an inroad in situations where the application of the common law rule will lead
in justice called the doctrine of promissory estoppel.
o This estoppel operates if a person relies on a promise to his detriment and the maker seek to
rescind or retract the promise as held in the High Trees case.

Since equity follows the law, promissory estoppel only applied where the common law led to
injustice. There should have been four prevailing factors:

1. An existing contract between the promisor and promise

2. Unequivocal promise to suspend a right under that existing contract
3. Reliance of the promise which leads to detriment
4. The absence of fairness if the promise is not enforced. These factors are found in the
decisions of TB Serbah v Mensah and DC Builders v Rees.
 The doctrine only applies to suspension of rights so therefore if the party communicates the
termination of the suspension, the original contract will bind both parties from the time of
communication as held in Kaas Fisheries v Barclays Bank.

The doctrine only applies to future events.

A person is bound to make performance for events which pre dates the promise.

It is settled that the promise can be used as the basis for suit or a defence in a suit. It can be used
as both a sword or shield as held in Tsede v Nubuasa and Adjaye v Briscoe.

Does promissory estoppel apply in Ghana?

Common Law and Equity are part of the laws of Ghana under Article 11 therefore promissory
estoppel applies in Ghana but due to the operations of sec 26 of the Evidence Act 1975 which creates
estoppel by conduct, the impact of promissory estoppel is not so profound in Ghana.

THE POSITION AT COMMON LAW FROM THE PERSPECTIVE OF THE CONTRACT

ACT 1960 – MODIFICATIONS MADE BY THE CONTRACT ACT

1. A promise to keep an offer open.

There is a promise to keep an offer open if a seller indicates to a buyer the intention not to sell or
dispose off an item for a specific period of time to enable the buyer to make a decision whether or not
to proceed with the transaction.

There are two promises in this situation, the promise in the main contract and the promise to keep
the offer open for consideration of the promise in the main contract.

 At common law, a seller was not bound by a promise to keep an offer open because there was
no consideration from the buyer to create a valid contract to keep the offer open. The seller
could sell any other party within that period. The authority is the case of Routledge v Grant.
 Under Ghanaian law, such promises are binding even if the buyer fails to provide fresh
consideration to create a contract to keep the offer open as in sec 8 (1) of the Contract Act.
2. A promise to waive payment of a debt

This is a promise made by a creditor to a debtor forfeiting an obligation owed to the creditor whether
in full or in part. Usually, this promise is made to compel debtors to make some payments.

There are two promises in this situation. The first is the original promise based on payment or
fulfilment of the debt and the second is the independent promise to waive or forfeit the obligation.
  At common law, such promises were not enforceable unless the debtor can prove that he
provided fresh consideration to create a binding contract for the waiver of the debt as held in
the cases of Pinnel v Cole and Foakes v Beer.
 Under Ghanaian law, sec 8(2) of the Contract Act 1960 makes such promises enforceable
even if the debtor has not provided any consideration to bind the promise.
3. . A promise for the performance of a pre-existing statutory or contractual duty

There is a pre-existing statutory duty if a person already possesses an obligation under the law to
perform a role. The person is already bound to perform that role by law.

There is a preexisting contractual duty if a person already possesses an obligation under a binding
contract to perform a duty. There is no need for an additional promise to compel the person to perform
that duty.

 Under common law, an additional promise to perform a pre existing contractual or statutory
duty is not enforceable because the promisee is already bound to perform the duty. Any action
taken by the promisee for the enforcement of an additional promise will fail. The court will
only enforce that promise if the promise required performance outside the scope of the pre
existing legal or contractual duty as held in Glasbrook Brothers v Glamorgan County
Council and Williams v Roffery Brothers.
 Under Ghanaian law, a promise for the performance of a pre existing statutory or contractual
duty is enforceable even if the promisee is already bound to perform such roles under sec 9 of
the Contract Act 1960 and Kessie v Charmant.
4. The source of consideration from either party to the contract or a third party

This is an analysis on the proper party to provide consideration under a contract, whether the
promisors or a third party who is not part of negotiations.

 Under common law, a party cannot enforce a contract unless he can demonstrate that he has
personally provided consideration as held in Tweedle v Atkinson.
 Under Ghanaian law, the mere presence of consideration is sufficient to create an
enforceable contract as long as there is privity of contract. The fact that a person did not
personally provide consideration is immaterial because consideration must not necessarily
move from the promisee under sec 10 of the Contract Act.

THE CONSISTENT POSITION IN THE MIDST OF THE MODIFICATIONS

A promise for the performance of a duty owed to a third party

This is a promises made to a person to compel the person to perform a duty towards a third party
when he is already bound to perform that duty to the third party.

 Under common law, the promise is enforceable because the performance of the promise will
constitute good consideration even though there is already a pre existing duty. The case is
point is the decision of Shadwell v Shadwell.
 The Ghanaian position under sec 9 of the Contract Act is consistent with the common law
position. A promise to perform a duty owed to a third party is enforceable in Ghana.

VITIATING FACTORS

PUBLIC POLICY

1. The concept does not accommodate an exhaustive definition. It rather focuses on the basic
behavioural standards expected from parties to a transaction to appraise the interest of the public as
held in Richardson v Mellish.

From judicial decisions, some contracts have been held to offend public policy due to the subject
matter of the transaction. Some of which are:

 A contract for the commission of a crime or a tort as held in the Highwayman Robbery case.
 A contract for the promotion of immorality as held in Pearce v Brooks and Deborah
Adablah v Ernest Nimako.
 A contract which promotes the breach of a foreign law as held in Regazzonia v Sethia.
 A contract which seeks to deceive public authorities as held in Street v Mountford.
 A contract which promotes corruption by encouraging bribery or the usage of a public office
for private benefits as held in Kwarteng v Donkor, Kessi v Charmant and Ampofo v
Fiorini.
  A contract which is set to oust the jurisdiction of the court by taking away the power of the
court to deal with breaches under the contract as held in In Re GPRTU case.

CONTRACTS IN RESTRAINT OF TRADE, BUSINESS AND EMPLOYMENT AND PUBLIC

POLICY

1. Generally, agreement which restrains the trade, business and employment rights are contrary
to public policy because they offend the constitutional economic rights of persons under Article 21.

2. However, since rights are enjoyed by balancing them against the rights of other persons and
the interest of the society under Article 12 clause 2, some exceptions have been made.

3. Such contracts are enforceable if the terms are reasonable between the parties and in the
interest of the society.

4. With respect to provisions which restrain trade or business, the court will consider the area
covered by the clause, the duration of the restraint and the activities being restrained before
concluding on reasonability as held in Nordenfelt v Maxim Nordenfelt Guns and Ammunition
Company.

5. With respect to employment, the court will consider the role played by the employee,
exposure to production secrets and the probability that the employee can use the secrets to negatively
affect the interest of the employer as held in Herbert Morris v Saxelby and Kores Manufacturing
Co v Kolok Manufacturing Co.

EFFECT OF A CONTRACT WHICH OFFENDS PUBLIC POLICY:

The Contract Is Void and Unenforceable as held In Deborah Adablah v Ernest Nimako.

FRAUD AND ILLEGALITY

The court will not make orders which will promote a breach of the law or the usage of a law
as a tool for fraud as a Zagloul Real Estate v BA.

What is the effect of illegality?

The effect of illegality is determined from the timing of the illegality. An illegality from the inception
of the contract has a different effect from an illegality based on the performance of the contract as
held in Schandorf v Zeini.

 An illegality from the inception means that the contract itself at the point of
formation was illegality and therefore void whereas an illegality based on
performance means that the contract was valid from the point of formation but at a
party is performing his obligations in an illegality manner in which case the innocent
party can sue to enforce the contract as held in Olatiboye v Captan.

Can a party sue for a benefit accrued or granted under a contract which contravenes public
policy, or one which is tainted by fraud or illegality?

Generally, no person can accrue a benefit or obtain a gain from a court order under such contracts as
held in the Highwayman Robbery Case.

 In 4 situations however, the court will make orders concerning benefits accrued or granted
under such contract. There are:
i. Where parties are not pari delicto that is where one party can prove his innocence
under the contract as stated in Kwarteng v Donkor.
ii. Where a party can establish protection under the statute which enables that party to
recover benefits even in the event of illegality, fraud or acts contrary to public policy
as held in City and Country Waste v AMA. This is also called CLASS
PROTECTION STATUTES.
iii. Where a party is able to demonstrate that he repented from the illegality and
communicated the repentance before performance commenced as held in Kearley v
Thompson.
iv. Where a party can establish his case using other legal principles without relying on
the contract. Most parties are able to meet this threshold by establishing the existence
of a constructive trust as held in Tingsley v Milligan.
 Where the party fails to do so, there is a procedural bar against the prosecution of the matter.
In Patel v Mirza, the court have softened its stance. Where a party relies on the illegal
contract and that party is able to establish that without making orders for refund of benefits, it
will lead to unjust enrichment, the court will construct a trust or make orders for refunding of
benefits as held in Serwaa v Gariba Hashimu.

DURESS, UNDUE INFLUENCE AND UNCONSCIONABILITY

What is duress?
 The usage of force or threat of force to procure consent for the execution of a contract as held in
Kaufman v Gerson.

It is not necessary for duress to be the sole reason for the agreement. Duress may vitiate a contract if it
lies as one of the reasons as held in Barton v Amstrong.

Where there is evidence of economic difficulty and a party relies on that to compel another into
execution of a contract that is equal to economic duress where it is clear that the party sought to take
advantage of the vulnerable economic situation as seen in DC Builders v Rees and Pao On v Lau
You Long.

What is the effect of duress?

Duress renders a contract voidable therefore the affected party must sue within a reasonable time
to set aside the contract. If the time is unreasonable or the object is sold to an innocent third party,
the affected party may not be able to recover as held in Hemans v Cofie.

UNDUE INFLUENCE

What is undue influence?

Less direct actions or omissions which unjustly operate on the mind of a contracting party in order
to procure consent as held in Allcard v Skinner.

 Undue influence can be established through express usage of influence or through implied
inference based on the relationships of the parties as seen in Morley v Loughman. Where the
relationship is a fiduciary one, there is always a presumption that contracts are executed
through the usage of influence as seen in Wright v Carter.
 The presumption is displaced if a party is able to demonstrate that contractual
decisions were made independently. The easiest is to establish that the party sought
independent advice as seen in Mercer v Brempong.

What is the effect of undue influence?

 Undue influence renders a contract voidable therefore a party must sue within a reasonable
time to set aside the transaction or risk losing the property due to inordinate delay or even a
sale to an innocent third party.

UNCONSCIONABILITY

What is unconscionability?
 Situation where due to the vulnerability of a party, terms of contract are set out in an unfair
manner which defeats ordinary human reason. Some situations of vulnerability are sickness, old
age, intoxication, illiteracy, poverty and so on.

In this situation, the court will be concerned about the adequacy of damages and move to set aside the
contract as held in Rita Read v Attitsogbe and Dikyi v Ameen Sanghari

 In order to displace the curiosity of the court, a party must show that contractual decisions
were made independently. At best, third party advice was rendered before the execution of the
contract as held in Mercer v Brempong II.

What is the effect of findings under unconscionability?

It renders the contract voidable.

MISTAKE

What is mistake?

1. Wrongful understanding of the nature, ambit and effect of a contract before or at the time the
contract was executed. That understanding contributed to the grant of consent under the
contract as held in Amalgamated Properties Limited v Johnny Walker.

There are three types of mistake:

i. Mutual mistake
ii. Unilateral mistake
iii. Common mistake

What is a mutual mistake?

This is a mistake which is determined from applying the contractual terms to the circumstance. On the
face of the contract, there seem to be an agreement but in reality, the terms are understood differently
by the parties.

It occurs in two situations,

i. Where words used in negotiation are ambiguous and therefore capable of different meanings
as seen in Smith v Hughes.

ii. Where a party shown have known that the other contracting party acted under a mistake but
he innocently thought there was no mistake as seen in Hartog v Colins and Shields.
 o The test for determining the absence of an agreement is the reasonable man’s approach. If a
reasonable man after studying the circumstance will conclude that parties are ad idem, there
will be no mistake as seen in Tamplin v James.

What is unilateral mistake?

It is a situation where a party knows that his other contracting party is under a mistaken belief and he
takes advantage of that belief to procure consent. There must be a show of fraud.

Unilateral mistake of identity:

 There can only be a mistake of identity if an offer is addressed to the affected party and that
party accepts the fraudulent party. If the offer is addressed to a different party, the affected
party will be considered as a busy-body as held in Boulton v Jones.
 Where the fraudulent representation of identity is made to the affected party, that affected
party must prove that he intended to deal with another person other than the fraudulent
person, the identity of that presumed person was important for the grant of consent and lastly,
he took reasonable steps to confirm the identity as seen in Cundy v Lindsay.
 Where it is clear that the fraudulent person used a fictitious unidentifiable name, the affected
party will not be heard to be saying that he thought he was dealing with a different person as
held in King Norton Metal v Edridge.
 Where the contract is made face to face , also known as contract inter praesentes, there is a
presumption that the affected party was dealing with the party physically before him and no
other different person therefore there is no mistake of identity as held in Phillips v Brooks,
Lewis v Averay and Shogun Finance Limited v Hudson.

NB: If however the rogue represents himself as an agent for another person who is not physically
before the affected party, there can be mistake of identity as held in Lake v Simmons.

What is a common mistake?

In this situation, the parties are indeed ad idem but they jointly share a false belief on the nature,
character and effect of the contract. For common law to respect this mistake, the false belief must be
fundamental to the roots of the contract as held in Leaf v International Galleries.

This mistake may occur in three situations;

i. A false belief as to the existence of the subject matter if there is no prior guarantee that the
subject matter is indeed in existence as held in Couturier v Hastie
 ii. A false belief that the seller had title to sell but unknowingly the product already belonged to
the buyer as held in Cooper v Phibbs
iii. A false belief that the subject matter possessed a certain quality which renders it completely
different from the true subject matter as held in Nicholson v Smith and Bell v Lever
Brothers.

Effect of mistake:

 According to the decision of Associated Japanese Bank v Credit Du Nord, mistake has
both common law and equity effects.
o If a person is able to establish the strict ingredients for mistake, common law holds that the
contract is void but if a person is unable to prove the strict requirement but still able to prove
injustice, at common the contract will be valid but at equity the contract will be voidable. At
equity the party will be entitled to an order of rescission, rectification or even the usage of the
mistake as a defence in an action for specific performance.

A party may choose to sue under either common law or equity based on the reliefs he seeks.

MISREPRESENTATION

What is misrepresentation?

False statements made to induce a party to engage in contractual arrangement.

o To establish misrepresentation, there must be a false statement addressed to an aggrieved

party which induces the aggrieved party to execute a contract leading to his detriment as held
in Edgington v Fitzmaurice.

False statement?

o The false statement must be one of facts communicated through words or conduct. If the
statement is an opinion, the opinion will be considered as one of facts if the maker possessed
the skills and technique to make his words believable by a reasonable man as held in Bisset v
Wilkinson.
o If the statement is a futuristic prediction or an expression of future intention, it will be
considered factual if there is deliberate falsehood as held in Edgington v Fitzmaurice.
o A statement of misrepresentation must be reasonably believable therefore clear statements
evincing bragging or mere puffs will not suffice as held in Dimmock v Hallet.
 o Silence cannot constitute a false statement unless a party is under a duty to tell the truth as a
fiduciary, a party gains knowledge that his previous statement is actually false or the party
gives a partial truth as held in With v O’flanagan and Curtis v Chemical Clothing.

Addressed to an aggrieved party?

 The communication should be made specifically to an aggrieved or a class of persons in

which the aggrieved party is a member as held in Peek v Gurney.
 If there is evidence to show that, the maker knew or should have reasonably known that a
third party will rely on the statement, the maker must either issue a disclaimer or suffer for the
reliance as held in Hedley Bryne v Heller and Partners.

Inducement?

o The statement must be influenced the aggrieved party before executing the contract. If the
aggrieved party knew of the falsity or even conducted independent verification, there will be
no misrepresentation. He must rather sue the person who did the verification as held in
Atwood v Small.
o Verification is not compulsory but a party risks losing a case if he conducts verification as
held in Redgrave v Hurd.

Damage?

o There must be evidence of physical, material, financial or even reputational damage to be

successful because the law does not deal with trifles as held in Doyle v Olby.

Effect of misrepresentation:

o Misrepresentation renders a contract voidable as held in Leaf v International Galleries and

Kpeglo v Scoa Motors.

The remedies available are however dependent on the type of misrepresentation.

Misrepresentation can be fraudulent, negligent or innocent.

o For fraudulent, the statement of inducement was made by one who knew of its falsity or
should have known of its falsity. It entitles a party to damages, rescission or even repudiation
as held in Derry v Peek.
o For negligent misrep, the statement of inducement was made without exercising the requisite
standard of care. It entitles a party to damages, rescission or even repudiation.
o For innocent misrep, the statement of inducement is made honestly but that statement turns
out to be false. It entitles a party to indemnity and not damages, rescission or even repudiation
as held in Whittington v Seale Hayne and Guardian Assurance v Appiah.
What must a party do if a contract is rendered voidable?

o The party must quickly notify the other contracting party of the intentions to set aside the
contract. If that party is unavailable, he must notify the police or use the media. This
notification must be made before the object is sold to an innocent third party. If made after,
the innocent third party who purchased for value will be protected by equity. Therefore, there
will be no rescission. The court can only award damages as held in Car and Universal
Finance Co v Caldwell.

TERMS OF CONTRACT

3 types of statements are made during negotiations:

i. Representations – statement of inducement.

ii. Mere puffs - extravagant statement of inducement
iii. Terms – obligations of parties under a contract

How are terms identified?

The court uses the objective test to determine whether a reasonable man privy to the circumstance
will expect a party to perform obligations in a statement as held in Ecay v Godfrey.

The law has provided some factors to govern the operations of the reasonability test. Some of which
are

i. Reduction in writing
Where some statements are reduced into writing, those statements are considered as
terms and the omitted statements are generally not considered so as held in Routledge v
Mckay.
ii. The importance attached to a statement:
Where a party emphatically prescribes a need under a contract, that statement is likely to be a
term as seen in Bannerman v White. However, where there is evidence of an independent
investigation, it takes away the importance element of a statement, that statement made not be
considered as a term as seen in Ecay v Godfrey.
iii. The status of the maker:
Where a statement is made by a known expert, a reasonable man is likely to rely on that
statement as a contractual obligation as seen in Dick Bentley Production v Harold Smith.
 However, if all parties are at arm’s length in terms of expertise, the statement will lose its
importance to a reasonable man as seen in Oscar Chess v Williams. If the statement is made
to discourage independent investigation, a reasonable man will attach importance to the
statement irrespective of the expertise of the recipient as seen in Schawel v Reade and Esso
Petroleum v Mardon
iv. Time lapse:
Where a statement was made at a time which can be severed from the time of contractual
terms negotiation, that statement will not be considered as a term. That statement should be
incidental to negotiations but rather an integral part of negotiations as seen in Bannerman v
White.

The requirement for writing under Ghanaian Law?

An oral contract is enforceable in Ghana unless there is a specific statutory requirement for writing
under sec 11 of the Contract Act 1960.

Under the Contract Act, there are two main exceptions to this rule:

 A contract which guarantees the payment of debt between a debtor and creditor under sec 14
of the Contract Act 1960.
 A contract which requires a party to give goods, money or credit to a third party in the form
of a loan or credit under sec 14 of the Contract Act 1960.

Collateral Contracts and the requirement for writing?

A buys a car from B.

A says that I will not buy this car until you assure me that it is german made. B assures A but the
model is not reduced into writing.

A goes for a loan from B. B says that I will not give you the loan until you provide collateral. A
provides the collateral and B gives the loan.

A goes to B’s shop to buy rice. B tells A that his rice is Taiwan made. A engages a cook and adds that
the cook must always buy his rice from B.

 This is a contract which has independent existence but serves as the basis for a main contract.
It answers the question, ‘why did you execute the main contract?’ In the decision of Heilbut
Simons Co v Buckleton, the court held that two contract are created, the main bilateral
contract and the unilateral collateral contract which serves as the consideration for the main
bilateral contract.
  The collateral contract exists side by side with the main contract. The nullity of the main
contract does not affect the enforceability of the collateral contract as seen in De Lassale v
Guildford.
 The collateral contract is enforceable even if it contradicts the main contract as long as there
is an unequivocal assurance as seen in City and Westminster Council v Mudd and CAST v
Nketiah.
 A collateral contract is still valid even if it involves a contract with a third party as seen in
Shaklin Piers Limited v Detel Products Limited and Wells Limited v Buckland Sand and
Silica Limited.

TERMS OF CONTRACT

Classification of terms

There are three classifications:

a. Conditions
b. Warranties
c. Intermediate or innominate terms

Conditions:

NB: Conditions are essential to a contract because they determine the nature and scope of obligations.
They are ascertained from three sources:

I. An obligation which goes into the root of a contract.

II. An obligation which serves as the pivot of the contract.
III. An obligation which substantially reflect the needs of parties.
 Upon breach, an innocent party is entitled to repudiation, termination and damages as seen in
SSB v CBAM Services.

Warranties:

These are auxiliary terms which reflects the wants of parties as against their needs. They enhance
performance but they do not go into the root of the contract as held in Neoplan Ghana Limited v
Harmony Construction Limited.

A breach of the warranty does not make performance impossible. It therefore entitles a person to
damages and not repudiation or termination as seen in Poussard v Spiers and Bettini v Gye.

Innominate or Intermediate terms:

The courts have moved from pre classifying terms. The test now is to assess the nature of the breach
and its effect on rights and obligations. The court will determine whether a breach should suffer
consequences like a breach of condition if the breach goes into the root. If any other case, the court
will only award damages as held in Hong Kong Fir Shipping Company v Kawasaki Kissen and the
decision of the Hansa Nord.

A orders for rice for his wedding on Thursday at 5 pm.

The cook arrives at 5 : 05 pm.

The cook arrives the following day.

Implied terms

What are the sources for implication?

There are three sources:

a) The power of the court

b) Customs and usages
c) Statutory provisions

When can the court imply a term using its power?

The court can imply a term if it falls within the reasonable intentions of parties and it is necessary to
enhance business efficacy as seen in the Moorcock, Atuwo v Agip Ghana and Thome v Barclays
Bank.

When will the court imply a term from customs?

The court can imply a term from a custom if the custom is so notorious and attached to this subject
matter as long as it meets the objective intentions of the parties as seen in Quartey v Norgah and
Hutton v Warren

When will the court imply a term from a statute? - The court will imply a term if the statute clearly
deals with the subject matter as seen in Farah v Robin Hood.

Important Implied terms in the Sale of Goods Act 1962:

1. Fundamental obligation of the seller: the seller must deliver specific and identifiable goods
and where goods are unascertained, the seller must deliver goods which substantially corresponds to
samples or descriptions as seen in sec 8.
2. Fundamental obligation of buyer: buyer must pay consideration and accept delivery under
sec 21. Payment must be made at the point of exchange unless otherwise agreed but the time for
payment is not impliedly a condition as seen in sec 22 and 23.

3. The existence of goods: there is an implied condition under sec 9.

4. The existence of title: this is an implied warranty under sec 10

5. Implied term of quality in sec 13

There is generally no implied term that goods are of certain quality for specific purposes.

There are three exceptions to this rule:

i. Undeclared defects to buyer unless there was an independent investigation which could
have exposed the defects, or the seller could not have known of the defects as seen in
Spencer Trading v Devon and Wren v Holt
ii. Where the use was specifically declared to the seller who is known to ordinary deal in
such goods.
iii. Where there is a prevailing custom or usage dealing with quality.

In all three exceptions, there is an implied condition of quality.

o Where a person buys a second-hand product, it is assumed that he appreciates that the product
comes with defects therefore there will no right of termination if the product is reasonably
defective as seen in Rockson v Armah.

1. Implied term of quantity:

Under sec 14,

i. If less than contract quantity is delivered, a buyer may accept the less and pay the value of the
accepted quantity or reject the whole.
ii. If more than contract quantity, the buyer may accept all and pay for all or accept the contract
quantity and pay the contract value, but the buyer may demand the cost of separating the
goods.
iii. Where there is a mixture with non-contract goods, the buyer can accept all and pay for all,
reject if the contract goods are less than the contract quantity or accept the contract goods and
pay for them.

Stipulations as to time of delivery are impliedly conditions under sec 16.

WRITTEN CONTRACTS AND THE EFFECTS

THE LAW ON WRITTEN CONTRACTS AND SIGNATURES:

A written contract serves as evidence of the totality of the obligations of parties and the court may not
entertain contradictory extrinsic evidence as seen in sections 25 and 177 of the Evidence Act 1975
and Wilson v Brobbey and Motor Parts Trading Co v Nunoo

This is called the PAROLE EVIDENCE RULE. The rule has several exceptions;

i. Collateral contracts
ii. Proof of vitiating factors
iii. Evidence introduced to explain terms
iv. Evidence introduced to fill in gaps
v. Implied terms
vi. Plea of non est factum
vii. Equitable orders like rectification

What is the effect of signing a document?

A party is bound by his signature on a document since it constitutes communication of a conduct

which will be relied upon as seen in sec 26 of the Evidence Act and the decision of Inusah v DHL
Express.

A party can only escape this effect by pleading a vitiating factor or non est factum as was the case in
Curtis v Chemical Cleaning and Dyeing Co.

What is non est factum?

Non est factum is an allegation that a party thought he was signing to a document of different nature
and scope. To be successful the party must establish three elements:

i. He was defrauded into signing

ii. He intended to sign to a completely different document
iii. He is not guilty of contributory negligence

As seen in Lestrange v Graucob, Lewis v Clay, Gallie v Lee and Quao v Squire and Nkrumah
v Serwaa
Non est factum is different from the vitiating factors esp undue influence as held in Board of
Directors Orthodox Secondary School v Tawlma Abels

Signed documents and the presumption of non-knowledge by illiterates:

o For illiterates, there is a presumption that they do not appreciate the terms of signed
documents as held in Waya v Byrouthy
o An illiterate is a person who cannot appreciate a document considering the circumstances of a
case but not necessarily a person who hails from a place with a different language. The
decision of Kwamin v Kuffour which used the root test has been abandoned for the objective
identification in Zabrama v Segbedzi.
o To bind an illiterate, a person must prove that he READ, INTERPRETED AND
EXPLAINED to the understanding of the illiterate and that fact has been evidenced through a
jurat clause as in sec 4 of the Illiteracy Protection Ordinance.
o The presence or absence of a jurat is presumptive evidence of compliance or non-compliance
so the court will still entertain proof of compliance in cases of doubt as seen in UTC v
Tetteh. If there is no compliance, an illiterate will not be bound even if there was no duress or
undue influence.

‘I, …………… of …………….(address) on the ………………… read, interpreted and explained this
contract to Kofi in the Akuapem language and he seemed to have understood the content of the
contract’

………………….

STANDARD FORM CONTRACTS AND EXCLUSION TERMS/CLAUSES:

Standard form contracts are contracts made for parties with little or no variation and they operate on
‘take it or leave it’ basis.

Exclusion term is a term which enables a party to escape liability as seen in White v Blackmore and
Inusah v DHL Express.

When will the court respect an exclusion term on a standard form contract?

The exclusion term should be properly incorporated such that sufficient notice must be given to the
party who signed the standard form contract as seen in Parker v South Eastern Railway.
Proper incorporation is determined using the reasonable man’s test. The law considers the following
factors:

i. If the clause is positioned at the back page of the contract, reference to the clause should be
made at the front page as held in Richardson v Rowtree.
ii. If the clause is positioned at an unreasonable portion, extra steps is required to fulfil the notice
standard as seen in Thornton v Shoe Parking Lane.
iii. Where notice is given after the execution of a contract, a reasonable man will not consider
that to be proper incorporation as seen in Olley v Malborough Court.
iv. Where the clause has been omitted from the contract document but rather placed on a non-
contractual document, a reasonable man will not take notice of it.

As seen in Chapleton v Barry UDC.

o If there is consistency of dealings between parties and the standard form contract has been
used severally, a reasonable man will be considered to have obtained notice of the clause as
seen in Hollier v Rambler Motors.

What is the standard for construing the scope of the clause?

‘I am not liable for any stolen fried meat’

Grilled meat is missing.

‘I am not liable for deliberate wrongs’

The wrong was caused through negligence.

‘I may not be liable for any wrong’

o The court adopts a strict approach for terms which truncate human rights and access to
justice. The court therefore adopts a defensive approach. If the clause is vague, the court will
conclude that it is unenforceable. Also, the court will not extend the limits of clear terms as
held in Andrews Brothers v Singer Co Limited. The defensive approach is called the
CONTRA PROFERENTEM RULE. This rule means that a document is construed against the
maker of the document or a person benefiting from the document in cases of vagueness or
ambiguity.

Can a person exclude liability for negligence?

A person can if the words used as so clear to exclude liability for negligence. If cases of doubt , the
contra proferentem rule will be applied as held in Canada Steamship v the King - ‘negligence’ and
‘any form of damage’ and White v John Warwick and Alderslade v Hendon Laundry Limited.
Can a person escape liability for a fundamental breach?

The contract- tomatoes

‘I am not liable for non-delivery of the tomatoes’

The contract - Shatta Wale

‘I am not liable if I fail to show up at the event’

o Previously, it was not possible to escape liability for fundamental breaches using a standard
form contract because the terms represented the essence of the contract as seen in Nicols v
Godts.
 Currently, the law will enforce the clause if it meets the reasonability test. The court will
consider some factors like:
i. Where parties are at arm’s length, a reasonable man will consider himself bound.
ii. Where the suffering party took insurance for the breach, a reasonable man will consider
himself bound.
iii. Where the suffering party has accrued substantial benefit from the contract, a reasonable man
will consider himself bound.
iv. Where the party relying on the clause bears the most risk, a reasonable man will consider
himself bound.
v. Where the contract is efficiently arranged to cater for losses, a reasonable man will consider
himself bound.

As held in; Photo Production v Securicor Transport and George Mitchel v Finney Lock Seeds

Can a party who is not a signatory to a standard form contract rely on an exclusion clause in the
standard form contract?

‘A Limited and their workers are not liable for any breach’

Kofi, a worker, steals a purse. Kofi has been sued. Kofi wants to rely on the clause.

‘Abena Adansi and her three sisters are not liable’

Adwoa Adansi commits a breach. She wants to rely on the clause.

 At common law, the concept of vicarious immunity gained grounds until it concerned a
fundamental breach as held in Scruttons Limited v Midland Silicones Limited.
o In Ghana however, the concept of vicarious immunity has been abolished therefore a third
party to a contract cannot obtain immunity from a contract as in sec 5 (2) of the Contract Act
1960.
DISCHARGE OF CONTRACT

A party can be relieved from performing contractual obligations in 4 situations which are
through a breach, by agreement, from performance and through frustration.

Discharge by agreement:

o Parties can be discharged through a separately binding contract bereft of any vitiating factor.
The contract may be in the form of a mutual release clause, an expressly executed contract or
an implication borne from contradictions in a latter executed contract as held in Fish and
Meat co Limited v Ichnusa and Japan Motors Trading Co Limited v Randolf Motors
Limited.

Discharge by performance

A person can be relieved form contractual obligations through performance of his duties. The general
principle is that the performance must be precise, exact and complete as seen in Cutter v Powell and
Bolton v Mahadeva.

There are four exceptions to the rule which are:

i. Where there is proof that considering the circumstances in the light of the contractual terms,
performance has been substantially made and defects are nearly trivial and seen in Hoenig v
Isaacs. The party will be paid the full amount minus the cost of completing or repairing the
defects.
ii. Where there is proof that performance was partially made but the innocent party accepted the
partial performance either expressly or through his conduct. The innocent party will be bound
by such decision as seen in Mabsout v Fara Brothers and stated in sec 14 of the Sale of
Goods Act 1962. The person must be paid a reasonable amount assessed either the contract or
the circumstances if there is no contract for the part performance.
iii. Where the failure to perform fully was due to the actions of the supposed innocent party or
due to a mitigating circumstance surrounding the supposed innocent party as seen in Planche
v Colburn, Appleby v Myers and Skanska Jensen Limited v Klimatechnik Engineering.
The party is entitled to a reasonable amount for work done assessed either from the contract
 or from the circumstance if no contract. If the actions of the supposed innocent party fall into
breach, the party will be entitled to additional compensation or damages.
iv. Where obligations under the contract are clearly divisible and it is obvious that some clear
phases under the contract have been performed as seen in Sumpter v Hedges. The person
must pay a reasonable sum for the phases completed.

The reasonable payment in a contract for services is called the quantum merit. In a contract for
goods, that payment is called quantum valebat. It is assessed from the contract or the circumstance if
there is no prevailing contract.

Discharge by Breach:

A person can be relieved from his obligations as a result of a fundamental breach which goes into the
root of the contract.

There are two classifications of breach for the purpose of discharge which are breach on the date of
performance and breach before the date of performance also known as anticipatory breach.

o In breach on the date of performance, the innocent party is entitled to rescission and an order
for damages as seen in SSB v CBAM Services Limited.
o For anticipatory breach, the legal effect is determined from the choice of the innocent party.
Legally, the innocent party has three choices as seen in Frost v Knight.

The three choices are:

i. The innocent party can accept the breach, and sue for damages. In this situation, both parties
are discharged from their obligations as seen in Hochester v De La Tour and Zastava v
Bonsu.
ii. The innocent party can reject the breach and affirm the contract. Parties are not discharged to
the extent that the contract may even suffer frustration before the date of performance as seen
in Avery v Bowden and Hasnem Enterprises Limited v IBM World Trade Corporation.
iii. The innocent party can reject the breach, affirm the contract and perform his or her side of the
obligations if the obligations can be independently performed and there was a legitimate
interest to protect. An act taken to increase possible damages does not constitute a legitimate
interest as held in White and Carter Limited v McGregor.
Discharge by Frustration

Parties will be relieved from their obligations upon the occurrence of an unexpected event through no
fault of a party which makes performance impossible as seen in Taylor v Caldwell

 Previously, the concept was considered as an implied condition for the smooth performance
of obligations but recently the court has developed principles under discharge by frustration.
This has been adopted in the case of Afordi v Ghana Publishing Corporation as a situation
of factual and commercial impracticability.
 For the court to conclude on the factual and commercial impracticability, the court will
compare the obligation in the situation prevailing before the supposed frustration event to the
circumstances prevailing after the frustration event. This is to determine whether performance
is still possible as seen in Morgan v Manser.

There is authority to the effect that mere hardship or difficulty cannot constitute frustration because it
makes performance hectic but not impossible as seen in Staffordshire Area Authority v South
Staffordshire Waterworks.

It is possible for a law to constitute the basis for discharge as long as the practical impracticability test
is met as seen in RT Briscoe v Essien.

Where obligations are recurrent over a period of time like a lease, the court will assess the effect of
the event on the enjoyment of the recurrent obligations as seen in National Carriers v Panalpina and
the Cricklewood Property Investment Limited case.

Discharge by frustration deals with unexpected event and not self-induced situations. Where the
circumstances of impracticability are caused through the actions of a party, that party will suffer from
his own actions as seen in Barclays Bank v Sakari.

 At common law, parties obtained no right under a frustrated contract and due to the failure of
consideration, monies paid were recoverable as held in the Fibrosa Case and Taylor v
Caldwell.
 In Ghana, except for a charterparty which is not a time charter party , a contract for carriage
of goods by sea or an insurance contract, under sections 1, 2 and 3 of the Contract Act 1960,

Parties are discharged from future obligations but liable for accrued obligations therefore parties must
be paid for accrued obligations. If any payment is made, that payment is recoverable subject to a
deduction for just expenses. If the contract is severable, the unperformed portions will be considered
discharged. The court will however respect the previous agreement of parties concerning the rights in
the event of frustration. This is held in RT Briscoe v Essien.
REMEDIES UNDER CONTRACT LAW

Damages:

Damages exist at common law with the purpose of placing parties in the position they would have
been but for the breach as held in KLM v Farmex Limited.

To compute the damages, the court considers the elements of materiality, remoteness and mitigation.

i. Materiality deals with matters other than trifles because the law does not deal with trivial
situations. If a party seeks damages for injured feelings, he must prove that the scope of the
contract was to ensure enjoyment, love and recreation to be successful as held in Javis v
Swan Tours Limited and Addis v Gramophone Co Limited.
ii. Remoteness speaks to foreseeability. The court uses the reasonable man’s approach. A
reasonable man will consider two main factors:
 Damages which are naturally occurring to the breach to meet the element of reasonable
foreseeability. A reasonable man is expected to have knowledge of such damages so
knowledge will be imputed on the defendant. This is called general damages as held in
Hadley v Baxendale.

 Damages for which actual knowledge has been communicated because they are not naturally
occurring. There must be proof that the injury was within the contemplation of parties due to
the level of their knowledge. This is called special damages as emphasized in Victoria
Laundry Limited v Newman Industries.

These two legs were considered and affirmed in the decision of Juxon Smith v KLM Dutch
Airlines.

 These tests are applicable for expenses incurred in preparation for contract also known as
wasted expenses as seen in Anglia TV v Reed.
 The application of general damages in a contract for sale of goods is the difference between
the contract amount and the market value of the goods as seen in sec 54 of the Sale of Goods
Act 1962.
iii. For mitigation, a party must prove that he took reasonable steps to reduce his liability or save
the situation if possible. The steps in contention must be normal and reasonable steps. No
party is expected to take complicated unforeseeable steps for the purpose of mitigation. If
mitigation settles the injury, no damages will be awarded. If it reduces the court will award
damages to the difference. If a party unreasonably fails to mitigate his loss, the court will
award damages subject to a deduction based on the reduction expected from mitigation as
seen in SG Compensation v Moshie Ackerman, Attitsogbe v Post Telecommunication Co
and Delmas Agency Ghana v Food Distributors Limited.
A party can claim the cost for mitigation as seen in Bank of Portugal v Waterlow.

Can Parties predetermine their damages?

 Such determinations are contrary to public policy because they seem to oust the jurisdiction
of the court. However, if the court is satisfied that the figure or effect is a genuine pre
estimate of likely losses considering the contract, circumstances and the breach, the court will
respect the clause. Such clauses are termed as liquidated clauses.
 If, however, it is obvious that the clause was introduced to penalize a party, the court will not
respect the clause. Such clauses are called penalty clauses.

The court will ascertain whether there is a genuine pre estimate using the reasonable man’s test.
The court will consider factors like

i. Quantum of the value and its extravagance

ii. Fixing a fixed sum for all types of breach irrespective of their nature
iii. Language adopted in contract whether they create the understanding of penalties
iv. A comparison between the figure quoted and the value of the breach as seen in Dunlop
Pneumatic Tyre Co v Motor Garage Co

SPECIFIC PERFORMANCE

This is an equitable remedy granted to compel a party to perform obligations under a contract.

o There must be an enforceable contract and damages must be insufficient to deal with the
breach due to the absence of substitute or the specific nature of the contract as held in Asare v
Antwi, Redco v Sarpong and Domins Fisheries Limited v Bremen Vegesacker.

The court will not award the remedy if

i. There is a mitigating maxim of equity leading to unfairness.

ii. The award will require supervision of the court before compliance
iii. The award will not force a person to utilize his personal skill or employment leading to
slavery
iv. There is no mutuality of suits such that the person seeking the remedy cannot be sued for
specific performance as seen in Lumley v Wagner and Lartey v Bannerman.

REMEDIES

INJUNCTION
 o It is a discretionary equitable remedy who is granted to restore a status quo ante by
prohibiting a person from acting or compelling a person to act. The prohibition order is called
the prohibitory injunction and the compelling order is called the mandatory injunction as
held in Vanderpuye v Nartey.
o For the court to grant the order a person must establish the existence of a serious case to be
tried to enforce a legal or equitable remedy and the insufficiency of damages as a remedy and
therefore serious inconvenience will be caused if the order is not granted as held in 18th July
Limited v Yehans Company Limited.
o An injunction granted to collect and seize property is called an anton pillar injunction and
the injunction granted to freeze an activity is called a Mareva injunction.

RECTIFICATION

o This is an equitable remedy which is granted to correct a writing which does not reflect the
true intentions of parties. It is usually granted where there is a common mistake. If the
mistake is unilateral, a person must prove misrepresentation, fraud or unfairness to obtain the
order as held in Jocelyn v Nissen.
o In Riverplate Properties v Paul and PY Atta v Kingsman, it was held that the order will be
granted if there is a prior legal relationship commenced through communication but the
reduction of the communication into writing did not reflect the content of the oral
communication through no fault of the claimant.

RESCISSION

o This is an equitable remedy which discharges a person from obligations under a contract in
the light of a fundamental misapprehension. For rescission to lie, proper notice should be
given to the other contracting party with a valid or voidable before the property is sold to an
equities darling as held in Car and Universal Financing Co v Caldwell. For fairness,
rescission moves with restitution therefore if restitution is not possible, rescission may not be
granted as held in Erlanger v New Sombrero Phosphate and Clark v Dickson.
o The right to rescission is subject to the maxims of equity therefore conduct showing waiver or
lapse of time will affect the right as held in Long v Lloyd and Leaf v International
Galleries.

MARRIAGE AS A CONTRACT: - BREACH OF PROMISE TO MARRIAGE

Offer – proposal of the man:

 Precise, without leaving room for further negotiation and

 Intention to be bound.
  Terms including consideration as held in Djarbeng v Tagoe.

Acceptance – acceptance of the proposal

 Communicated to offeror
 Assenting to the terms wholly and unconditionally
 Finality as in Djarbeng v Tagoe.

Consideration – forbearance – abstaining from other persons.

 Aning v Kingful – 6 and half years.

Intention to create legal relationship – deduced from the seriousness of the promise and the
circumstance as in Kofi v Agbotse.

Capacity – the parties should have no legal restriction against the ability to engage in marriage as held
in Asamoah Gyan v Gifty Gyan and Kpofor v Sosu.

Breach is in two types: date of performance and anticipatory breach

A postponement constitutes a fresh contract. Where a party engages in another form of marriage
which takes away capacity, it can constitute anticipatory breach as held in Afrifa v Classpeters and
Ayer v Kumodzi.

Remedies.

 There can be no specific performance as held in Baker v Smith.

 The court can award damages, whether general or special and even award punitive damages if
there is proof of malice. The special damages require specific proof of injuries which a
reasonable man cannot foresee like loss of womb through an abortion as held in Aning v
Kingful and Tramel v Vaughan.
 The court will award property sharing if a person can make a claim under equity by invoking
either resulting trust or constructive trust, but the party must prove contribution as held in
Serwaa v Gariba Hashimu.

Defences

 Discharge by frustration as held in Afrifa v Class Peters.

 Discharge by agreement as held in Afrifa v Class Peters.

 Unchastity which is unknown to a party as held in Serwaa v Gariba Hashimu

 Illness which will affect marital consortium

 Bad behavior which cannot be condoned by any reasonable person.

The terms of the offer are strictly construed. A party will be bound by a promise to engage in a
specific form of marriage as held in Aning v Kingful.