BUSINESS LAW 1BUSINESS LAW 1BY GEORGE A. AMAGYEI BY GEORGE A. AMAGYEI (Barrister & Solicitor) (Barrister & Solicitor)

MBA,BA(Hons)MBA,BA(Hons) g.amagyei@yahoo.comg.amagyei@yahoo.com 0246- 0246-

937403/020-8160264 937403/020-8160264

LAW AND LEGAL SOURCESLAW AND LEGAL SOURCES The Nature of Law:The Nature of Law: In our society law plays an important part in the In our society law plays an important part in the

creation and maintenance of social order.creation and maintenance of social order. The most obvious way in which law contributes The most obvious way in which law contributes

to the maintenance of social order is the way in to the maintenance of social order is the way in which it deals with disorder or conflict.which it deals with disorder or conflict.

Law is a formal mechanism of social control and Law is a formal mechanism of social control and it is important that the student of law is fully it is important that the student of law is fully aware of the nature of the formal structure.aware of the nature of the formal structure.

Categories of LawCategories of Law Law can be categorised in a number of Law can be categorised in a number of

ways,although the various categories are ways,although the various categories are not mutually exclusive.not mutually exclusive.

(i) Common law and civil law-the use of the (i) Common law and civil law-the use of the term “common law” in this context refers term “common law” in this context refers to all those legal systems which have to all those legal systems which have adopted the historic English legal adopted the historic English legal system,such countries include US,many system,such countries include US,many other Commonwealth and former other Commonwealth and former Commonwealth countries including Ghana. Commonwealth countries including Ghana.

The term ‘civil law’ refers to those jurisdictions The term ‘civil law’ refers to those jurisdictions which have adopted the European continental which have adopted the European continental system of law, which is derived essentially system of law, which is derived essentially from ancient Roman law but owes much to the from ancient Roman law but owes much to the Germanic tradition.Germanic tradition.

The usual distinction to be made between the The usual distinction to be made between the two systems is that the former,the common two systems is that the former,the common law system, tends to be case centred and, law system, tends to be case centred and, hence,judge centred, allowing scope for d hence,judge centred, allowing scope for d discretionary, ad-hoc, pragmatic approach to discretionary, ad-hoc, pragmatic approach to thethe

particular problems that appear before the particular problems that appear before the courts; whereas the latter,the civil law system, courts; whereas the latter,the civil law system, tends to be a codified body of general abstract tends to be a codified body of general abstract principles which control the exercise of judicial principles which control the exercise of judicial discretion.discretion.

In reality,both of these views are extremes,with In reality,both of these views are extremes,with the former overemphasising the extent to the former overemphasising the extent to which the common law judge can impose his which the common law judge can impose his discretion and the latter underestimating the discretion and the latter underestimating the extent to which continental judges have the extent to which continental judges have the power to exercise judicial discretion.power to exercise judicial discretion.

Common law and equityCommon law and equity In this particular juxtaposition,these In this particular juxtaposition,these

terms refer to a particular division terms refer to a particular division within the English legal system.within the English legal system.

The common law has been romantically The common law has been romantically and inaccurately described as ‘the law and inaccurately described as ‘the law of the common people of England’.of the common people of England’.

Common law and equity distinguish the Common law and equity distinguish the two historical sources and systems of two historical sources and systems of English law.English law.

Common law emerged in the process Common law emerged in the process of establishing a single legal system of establishing a single legal system throughout the country.throughout the country.

Equity was developed later to soften Equity was developed later to soften the formal rigour of the common law.the formal rigour of the common law.

Common law remedies are available Common law remedies are available as of right; whereas remedies in as of right; whereas remedies in equity are discretionary.equity are discretionary.

In other words,they are awarded at the will In other words,they are awarded at the will of the court and depend on the behaviour of the court and depend on the behaviour and situation of the party claiming such and situation of the party claiming such remedies.remedies.

This means that, in effect the court does This means that, in effect the court does not have to reward an equitable remedy not have to reward an equitable remedy where it considers that the conduct of the where it considers that the conduct of the party seeking such an award does not party seeking such an award does not deserve such an award(D&C Builders Ltd v deserve such an award(D&C Builders Ltd v Rees [1965] 3 All E.R.837Rees [1965] 3 All E.R.837

The usual equitable remedies are as The usual equitable remedies are as follows:follows:

(i) injunction(i) injunction (i) specific performance(i) specific performance (iii) rectification(iii) rectification (iv) rescission(iv) rescission

Common law and statute Common law and statute lawlaw

Common law here refers to the Common law here refers to the substantive law and procedural rules substantive law and procedural rules that have been created by the that have been created by the judiciary, through their decisions in judiciary, through their decisions in the cases they have heard.the cases they have heard.

Statute law, on the other hand, refers Statute law, on the other hand, refers to law that has been created by to law that has been created by Parliament in the form of legislation.Parliament in the form of legislation.

Private law and public lawPrivate law and public law There are two different ways of There are two different ways of

understanding the division between understanding the division between private and public law:private and public law:

(i) at one level, the division relates (i) at one level, the division relates specifically to actions of the State and specifically to actions of the State and its functionaries vis a vis the its functionaries vis a vis the individual citizen and the legal individual citizen and the legal manner in which, and form of law manner in which, and form of law through which, such relationships are through which, such relationships are regulated; that is public law.regulated; that is public law.

(ii) one corollary of the divide is that (ii) one corollary of the divide is that matters located within the private matters located within the private sphere are seen sa purely a matter for sphere are seen sa purely a matter for individuals themselves to regulate, individuals themselves to regulate, without interference of the without interference of the State,whose only role is limited to the State,whose only role is limited to the provision of the forum for deciding provision of the forum for deciding contentious issues and mechanisms for contentious issues and mechanisms for the enforcement of such decisions.the enforcement of such decisions.

Matters within the public sphere, Matters within the public sphere, however, are seen as issues relating to however, are seen as issues relating to the interest of the State and the general the interest of the State and the general public and are, as such,to be protected public and are, as such,to be protected by the State.by the State.

In other words,private law and public law In other words,private law and public law relate to whom the law is addressed to.relate to whom the law is addressed to.

Private law relates to individual citizens, Private law relates to individual citizens, whereas public law relates to institutions whereas public law relates to institutions of government.of government.

Civil law and criminal lawCivil law and criminal law Civil law is a form of private law and involves Civil law is a form of private law and involves

the relationships between individual citizens.the relationships between individual citizens. It is the legal mechanism through which It is the legal mechanism through which

individuals can assert claims against others individuals can assert claims against others and have those rights adjudicated and and have those rights adjudicated and enforced.enforced.

The purpose of civil law is to settle disputes The purpose of civil law is to settle disputes between individuals and to provide remedies; between individuals and to provide remedies; it is not concerned with punishment as such.it is not concerned with punishment as such.

The role of the State in relation to civil The role of the State in relation to civil law is to establish the general law is to establish the general framework of legal rules and to framework of legal rules and to provide legal institutions for operating provide legal institutions for operating those rights, but the activation of the those rights, but the activation of the civil law is strictly a matter for the civil law is strictly a matter for the individuals concerned.individuals concerned.

Contract, tort and property law are Contract, tort and property law are generally aspects of civil law.generally aspects of civil law.

Criminal law, on the other hand is an Criminal law, on the other hand is an aspect of public law and relates to aspect of public law and relates to conduct which the State considers conduct which the State considers with disapproval and which it seeks to with disapproval and which it seeks to control and /or eradicate.control and /or eradicate.

Criminal law involves the enforcement Criminal law involves the enforcement of particular forms of behaviour, and of particular forms of behaviour, and the State as the representative of the State as the representative of society, acts positively to ensure society, acts positively to ensure compliance.compliance.

Thus,criminal cases are brought by the Thus,criminal cases are brought by the State in the name of the “Republic”,in State in the name of the “Republic”,in the case of Ghana;and in the case of the case of Ghana;and in the case of Britain in the name of the Crown, and Britain in the name of the Crown, and cases are reported in the form of cases are reported in the form of Regina v-----.Regina v-----.

However, civil cases are referred to by However, civil cases are referred to by the names of the parties involved in the names of the parties involved in the dispute, for example,Smith v Jones. the dispute, for example,Smith v Jones.

A crucial distinction between criminal A crucial distinction between criminal and civil law is the level of proof and civil law is the level of proof required in the different types of cases. required in the different types of cases.

In a criminal case, the prosecution is In a criminal case, the prosecution is required to prove that the defendant is required to prove that the defendant is guilty beyond reasonable guilty beyond reasonable doubt,whereas, in a civil case, the doubt,whereas, in a civil case, the degree of proof is much lower and has degree of proof is much lower and has only to be on the balance of only to be on the balance of probabilities.probabilities.

This difference in the level of proof This difference in the level of proof raises the possibility of someone raises the possibility of someone being able to succeed in a civil case, being able to succeed in a civil case, although there may not be sufficient although there may not be sufficient evidence for a criminal prosecution.evidence for a criminal prosecution.

THE LEGAL SYSTEM-The THE LEGAL SYSTEM-The Structure of the CourtsStructure of the Courts

In Ghana,Article 125 of the 1992 In Ghana,Article 125 of the 1992 Constitution,judicial power is vested in Constitution,judicial power is vested in the Judiciary.the Judiciary.

Clause (4) of Article 125 of the Clause (4) of Article 125 of the Constitution indicate that the Chief Constitution indicate that the Chief Justice shall be the Head of the Justice shall be the Head of the Judiciary.Judiciary.

Article 126 of the Constitution outlines Article 126 of the Constitution outlines the composition and mode or exercise the composition and mode or exercise of power of the judiciary.of power of the judiciary.

The Judiciary consists of (a) the Superior The Judiciary consists of (a) the Superior Courts of Judicature comprising--- Courts of Judicature comprising---

(i) the Supreme Court;(i) the Supreme Court; (ii) the Court of Appeal;and(ii) the Court of Appeal;and (iii) the High Court and Regional (iii) the High Court and Regional

Tribunals.Tribunals. (b) such lower courts or tribunals as (b) such lower courts or tribunals as

Parliament may by law establish.Parliament may by law establish.

The Courts (Amendment) Act, 2002, The Courts (Amendment) Act, 2002, Act 620,section 5 gives the Act 620,section 5 gives the composition of the lower courts as-composition of the lower courts as-

(a) Circuit Courts(a) Circuit Courts (b)District Courts;(b)District Courts; (c)Juvenile Courts(c)Juvenile Courts (d)the National House of (d)the National House of

Chiefs,Regional Houses of Chiefs and Chiefs,Regional Houses of Chiefs and every Traditional Councilevery Traditional Council

The hierarchy of the courts and The hierarchy of the courts and the setting of precedentthe setting of precedent

The Supreme Court stands at the The Supreme Court stands at the summit of the court structure in summit of the court structure in Ghana and its decisions are binding Ghana and its decisions are binding on all courts below it in the hierarchy.on all courts below it in the hierarchy.

The Supreme Court is the final court The Supreme Court is the final court of appeal (Art.129(1);and it shall not of appeal (Art.129(1);and it shall not be bound to follow the decisions of be bound to follow the decisions of any other court(Art.129(2).any other court(Art.129(2).

The Supreme Court may, while The Supreme Court may, while treating its own previous decisions as treating its own previous decisions as normally binding, depart from a normally binding, depart from a previous decision when it appears to previous decision when it appears to it right to do so; and all other courts it right to do so; and all other courts shall be bound to follow the decision shall be bound to follow the decision of the Supreme Court on questions of of the Supreme Court on questions of law(Art.129(3)law(Art.129(3)

The nature of precedentThe nature of precedent Previous cases establish legal Previous cases establish legal

precedents which later courts must precedents which later courts must either follow or,if the decision was made either follow or,if the decision was made by a court lower in the hierarchy, at by a court lower in the hierarchy, at least consider.least consider.

It must be noted however,that it is not It must be noted however,that it is not every part of the case as reported in the every part of the case as reported in the law reports that is part of the precedent.law reports that is part of the precedent.

It is possible to divide cases into two-It is possible to divide cases into two-ratio decidendi and obiter dicta. ratio decidendi and obiter dicta.

Ratio decidendiRatio decidendi The ratio decidendi of a case may be The ratio decidendi of a case may be

understood as the statement of the law understood as the statement of the law applied in deciding the legal problem raised by applied in deciding the legal problem raised by the concrete facts of the case.the concrete facts of the case.

It is essential to establish that it is not the It is essential to establish that it is not the actual decision in a case that sets the actual decision in a case that sets the precedent-it is the rule of law on which that precedent-it is the rule of law on which that decision is founded that does this.This rule decision is founded that does this.This rule which is an abstraction from the facts of the which is an abstraction from the facts of the case, is known as the ratio decidendi of the case, is known as the ratio decidendi of the case.case.

Obiter dictaObiter dicta Any statement of the law that is not an Any statement of the law that is not an

essential part of the ratio decidendi is, essential part of the ratio decidendi is, strictly speaking, superfluous; and any strictly speaking, superfluous; and any such statement is referred to as obiter such statement is referred to as obiter dictum,that is ‘said by the way’.dictum,that is ‘said by the way’.

Although obiter dicta statements do not Although obiter dicta statements do not form part of the binding precedent,they form part of the binding precedent,they are of persuasive authority and can be are of persuasive authority and can be taken into consideration in later cases.taken into consideration in later cases.

INTRODUCTION TO THE LAW INTRODUCTION TO THE LAW OF CONTRACTOF CONTRACT

A contract is an agreement that is A contract is an agreement that is enforceable at law.enforceable at law.

Contract may be written or Contract may be written or oral,however there are oral,however there are exceptions;section 14,Contract Act, exceptions;section 14,Contract Act, 1960 says that a guarantee 1960 says that a guarantee agreement/loan agreement must be agreement/loan agreement must be in writing.in writing.

Essential Elements of a Essential Elements of a ContractContract

(i)Offer-is a legal commitment, a proposal (i)Offer-is a legal commitment, a proposal which invites, indeed presupposes, eventual which invites, indeed presupposes, eventual acceptance.acceptance.

At its simplest, an offer is a proposal of such At its simplest, an offer is a proposal of such a kind that it can be converted into a binding a kind that it can be converted into a binding contract by the simple response ‘I accept’. contract by the simple response ‘I accept’.

From this it follows that offers should be From this it follows that offers should be unconditional and unqualified,not requiring unconditional and unqualified,not requiring further discussion or negotiation to establishfurther discussion or negotiation to establish

What degree of commitment is being What degree of commitment is being given.given.

Equally,the proposal must be made Equally,the proposal must be made with (objectively determined) legal with (objectively determined) legal intent. Carlill v Carbolic Smoke Ball intent. Carlill v Carbolic Smoke Ball Co Ltd [1893] 1QB 256,CA is one of the Co Ltd [1893] 1QB 256,CA is one of the famous examples of the position of the famous examples of the position of the law.law.

The facts of the case-The facts of the case-

There are clearly many statements or There are clearly many statements or undertakings which although presupposing an undertakings which although presupposing an eventual contractural ‘tie’, fall short of the eventual contractural ‘tie’, fall short of the necessary requirement of legal intent and necessary requirement of legal intent and unconditionality to constitute an offer in the unconditionality to constitute an offer in the above sense.above sense.

It is important here to distinguish between It is important here to distinguish between ‘offers’ and ‘invitation to treat’(invitations to ‘offers’ and ‘invitation to treat’(invitations to offers to negotiate or make offers in their turn offers to negotiate or make offers in their turn and so incapable of acceptance in themselves)and so incapable of acceptance in themselves)

The four most widely accepted The four most widely accepted examples of this are:displays of goods examples of this are:displays of goods in stores, advertisements, auction sales in stores, advertisements, auction sales and invitations to tender.and invitations to tender.

Displays of goods- Displays of goods- the classic authority is that of the classic authority is that of Pharmaceutical Society of Great Britain Pharmaceutical Society of Great Britain v Boots Cash Chemists[1953] 1QB 401v Boots Cash Chemists[1953] 1QB 401

The defendants were charged with The defendants were charged with breaking a law which provided that breaking a law which provided that certain drugs could only be sold under certain drugs could only be sold under the supervision of a qualified the supervision of a qualified pharmacist.They had placed the drugs pharmacist.They had placed the drugs on open display in their self-service on open display in their self-service store and,although a qualified person store and,although a qualified person was stationed at the cash desk, it was was stationed at the cash desk, it was alleged that the contract of sale had alleged that the contract of sale had been formed when the customer been formed when the customer removed the goods from the shelf.removed the goods from the shelf.

It was held that Boots were not guilty. The It was held that Boots were not guilty. The display of goods on the shelf was only an display of goods on the shelf was only an invitation to treat.In law, the customer invitation to treat.In law, the customer offered to buy the goods at the cash desk offered to buy the goods at the cash desk where the pharmacist was stationed.where the pharmacist was stationed.

The display of goods in a shop: The display of goods in a shop: the classic case in area is Fisher vBell the classic case in area is Fisher vBell [1961]1[1961]1 QB 394 in which a shopkeeper QB 394 in which a shopkeeper was prosecuted for offering offensive was prosecuted for offering offensive weapons for sale, by having weapons for sale, by having

Flick-knives on display in his window.It was Flick-knives on display in his window.It was held that the shopkeeper was not guilty, as held that the shopkeeper was not guilty, as the display in the shop window was not an the display in the shop window was not an offer for sale; it was only an invitation to treat.offer for sale; it was only an invitation to treat.

A public advertisement does not amount to an A public advertisement does not amount to an offer.This can be seen from Partridge v offer.This can be seen from Partridge v Crittenden [1968] 1WLR 1204 in which a Crittenden [1968] 1WLR 1204 in which a person was charged with offering a wild bird person was charged with offering a wild bird for sale, contrary to the Protection of Birds Act for sale, contrary to the Protection of Birds Act 1954,1954,

After he had placed an advertisement After he had placed an advertisement relating to the sale of such birds in a relating to the sale of such birds in a magazine.It was held that he could not be magazine.It was held that he could not be guilty of offering the bird for sale, as the guilty of offering the bird for sale, as the advertisement amounted to no more than advertisement amounted to no more than an invitation to treat.an invitation to treat.

Also in Harris v Nickerson[1873]LR 8 QB Also in Harris v Nickerson[1873]LR 8 QB 286, the claimant failed to recover 286, the claimant failed to recover damages for his costs in attending a damages for his costs in attending a cancelled auction.cancelled auction.

In deciding against him,the court stated In deciding against him,the court stated that he was attempting ‘to make a mere that he was attempting ‘to make a mere declaration of intention a binding contract’declaration of intention a binding contract’

Rejection of offers Rejection of offers express rejection of an offer has the effect express rejection of an offer has the effect of terminating the offer.The offeree cannot of terminating the offer.The offeree cannot subsequently accept the original offer.A subsequently accept the original offer.A counter-offer, where the offeree tries to counter-offer, where the offeree tries to change the terms of the offer has the change the terms of the offer has the same effect.same effect.

In Hyde v Wrench (1840)49 ER 132, In Hyde v Wrench (1840)49 ER 132, Wrench offered to sell his farm for 1000 Wrench offered to sell his farm for 1000 pounds. Hyde offered 950 pounds,which pounds. Hyde offered 950 pounds,which Wrench rejected.Hyde then informed Wrench rejected.Hyde then informed Wrench that he accepted the original Wrench that he accepted the original offer It was held that there was no offer It was held that there was no contract. Hyde’s counter-offer had contract. Hyde’s counter-offer had effectively ended the original offer and it effectively ended the original offer and it was no longer open to him to accept it.was no longer open to him to accept it.

A counter offer must not be confused with a A counter offer must not be confused with a request for information.Such a request does request for information.Such a request does not end the offer, which can still be accepted not end the offer, which can still be accepted after the new information has been elicited.after the new information has been elicited.

In Stevenson v McLean (1880) 5 QBD 346 it In Stevenson v McLean (1880) 5 QBD 346 it was held that a request by the offeree as to was held that a request by the offeree as to the length of time that the offeror would give the length of time that the offeror would give for payment did not terminate the original for payment did not terminate the original offer, which he was entitled to accept prior offer, which he was entitled to accept prior to revocationto revocation

Revocation of offersRevocation of offers Revocation occurs when the offeror Revocation occurs when the offeror

withdraws their offer.There are a withdraws their offer.There are a number of points that have to be borne number of points that have to be borne in mind in relation to revocation.in mind in relation to revocation.

i.an offer may be revoked at any time i.an offer may be revoked at any time before acceptance: before acceptance: Once revoked, it is no longer open to Once revoked, it is no longer open to the offeree to accept the original offer.the offeree to accept the original offer.

In Routledge v Grant (1828) 4 Bing 653, In Routledge v Grant (1828) 4 Bing 653, Grant offered to buy Routledge’s house Grant offered to buy Routledge’s house and gave him six weeks to accept the and gave him six weeks to accept the offer.Within that period, however, he offer.Within that period, however, he withdrew the offer.withdrew the offer.

It was held that Grant was entitled to It was held that Grant was entitled to withdraw the offer at any time before withdraw the offer at any time before acceptance and,upon withdrawal, acceptance and,upon withdrawal, Routledge could no longer create a Routledge could no longer create a contract by purporting to accept it.contract by purporting to accept it.

Ii.Revocation is not effective until it is Ii.Revocation is not effective until it is actually received by the offeree: actually received by the offeree: this means that the offeror must make sure this means that the offeror must make sure that the offeree is made aware of the that the offeree is made aware of the withdrawal of the offer,otherwise it might still withdrawal of the offer,otherwise it might still be open to the offeree to accept the offer.be open to the offeree to accept the offer.

In Byrne v Van Tienhoven(1880) 5 CPD 344, In Byrne v Van Tienhoven(1880) 5 CPD 344, the defendant offerors carried out their the defendant offerors carried out their business in Cardiff and the plaintiff offerees business in Cardiff and the plaintiff offerees based in New York.based in New York.

On October 1,an offer was made by post. On On October 1,an offer was made by post. On October 8, a letter of revocation was posted, October 8, a letter of revocation was posted, seeking to withdraw the offer. On October 11, seeking to withdraw the offer. On October 11, the plaintiffs telegraphed their acceptance of the plaintiffs telegraphed their acceptance of the offer.On October 20 the letter of the offer.On October 20 the letter of revocation was received by the plaintffs.revocation was received by the plaintffs.

It was held that the revocation did not take It was held that the revocation did not take effect until it arrived and the defendants effect until it arrived and the defendants were bound by the contract,which had been were bound by the contract,which had been formed by the plaintiffs’ acceptance.formed by the plaintiffs’ acceptance.

Iii. Communication of revocation may be made Iii. Communication of revocation may be made through a reliable third party: where through a reliable third party: where the offeree finds out about the withdrawal of the offeree finds out about the withdrawal of the offer from a reliable third party, the the offer from a reliable third party, the revocation is effective and the offeree can no revocation is effective and the offeree can no longer seek to accept the original offer.longer seek to accept the original offer.

In Dickinson v Dodds (1876) 2 Ch D In Dickinson v Dodds (1876) 2 Ch D 463,Dodds offered to sell property to 463,Dodds offered to sell property to Dickinson and told him that the offer would be Dickinson and told him that the offer would be left open until Fridayleft open until Friday

On the Thursday,the plaintiff was informed On the Thursday,the plaintiff was informed by a reliable third party, who was acting as by a reliable third party, who was acting as an intermediary, that Dodds intended to sell an intermediary, that Dodds intended to sell the property to someone else.Dickinson still the property to someone else.Dickinson still attempted to accept the offer on Friday, by attempted to accept the offer on Friday, by which time the property had already been which time the property had already been sold.sold.

It was held that the sale of the property It was held that the sale of the property amounted to revocation,which had been amounted to revocation,which had been effectively communicated by the third party.effectively communicated by the third party.

Iv. In relation to unilateral contracts, Iv. In relation to unilateral contracts, revocation is not permissible once the offeree revocation is not permissible once the offeree has started performing the task requested: has started performing the task requested: A unilateral A unilateral contract is one where one party promises contract is one where one party promises something in return for some action on the something in return for some action on the part of another party. Reward cases are part of another party. Reward cases are examples of such unilateral promises.There is examples of such unilateral promises.There is no compulsion placed on the party no compulsion placed on the party undertaking the action, but it would still seem undertaking the action, but it would still seem unfair if the promisor were entitled to revoke unfair if the promisor were entitled to revoke their offer just before the offeree was about their offer just before the offeree was about to complete their part of the contract.to complete their part of the contract.

In Errington v Errington and Woods [1952] In Errington v Errington and Woods [1952] 1 KB 290, a father promised his son and 1 KB 290, a father promised his son and daughter-in –law that he would convey a daughter-in –law that he would convey a house to them when they had paid off the house to them when they had paid off the outstanding mortgage.After the father’s outstanding mortgage.After the father’s death, his widow sought to revoke the death, his widow sought to revoke the promise.promise.

It was held that the promise could not be It was held that the promise could not be withdrawn as long as the mortgage withdrawn as long as the mortgage payments continued to be met.payments continued to be met.

Lapsing of offersLapsing of offers Offers will lapse and will no longer be Offers will lapse and will no longer be

capable of acceptance in the following capable of acceptance in the following circumstances: circumstances: a.) at the end of a stated period-it a.) at the end of a stated period-it is possible for the parties to agree, or is possible for the parties to agree, or the offeror to set, a time limit within the offeror to set, a time limit within which acceptance has to take place.If which acceptance has to take place.If the offeree has not accepted the offer the offeree has not accepted the offer within that period, the offer lapses within that period, the offer lapses and no longer be accepted.and no longer be accepted.

B) after a reasonable time-where no set B) after a reasonable time-where no set time limit is set,then an offer will lapse time limit is set,then an offer will lapse after the passage of a reasonable time. after the passage of a reasonable time. What amounts to a reasonable time is, What amounts to a reasonable time is, of course,dependent upon the particular of course,dependent upon the particular circumstances of each case.circumstances of each case.

C) where the offeree dies-this C) where the offeree dies-this automatically brings the offer to a close.automatically brings the offer to a close.

D) where the offeror dies and the contract D) where the offeror dies and the contract was one of a personal nature-in such was one of a personal nature-in such circumstances, the offer automatically circumstances, the offer automatically comes to an end, but the outcome is less comes to an end, but the outcome is less certain in relation to contracts that are not certain in relation to contracts that are not of a personal nature.of a personal nature.

In Bradbury v Morgan(1862)1 H & C 249 In Bradbury v Morgan(1862)1 H & C 249 it was held that the death of an offeror did it was held that the death of an offeror did not invalidate the offeree’s acceptance.not invalidate the offeree’s acceptance.

ACCEPTANCEACCEPTANCE Acceptance is necessary for the Acceptance is necessary for the

formation of a contract.Once the formation of a contract.Once the offeree has assented to the terms offeree has assented to the terms offered,a contract comes into effect.offered,a contract comes into effect.

Both parties are bound: the offeror Both parties are bound: the offeror can no longer withdraw his offer and can no longer withdraw his offer and the offeree cannot withdraw his the offeree cannot withdraw his acceptance.acceptance.

In order to form a binding agreement,the In order to form a binding agreement,the acceptance must correspond with the terms acceptance must correspond with the terms of the offer.Thus, the offeree must not seek of the offer.Thus, the offeree must not seek to introduce new contractual terms into their to introduce new contractual terms into their acceptance.acceptance.

In Neale v Merrit [1930] W N 189,one party In Neale v Merrit [1930] W N 189,one party offered to sell some property for 280 offered to sell some property for 280 pounds.The other party purported to accept pounds.The other party purported to accept the offer by sending 80pounds and promising the offer by sending 80pounds and promising to pay the remainder by monthly instalments.to pay the remainder by monthly instalments.

It was held that this purported acceptance It was held that this purported acceptance was ineffective, as the offeree had not was ineffective, as the offeree had not accepted the original offer as stated. accepted the original offer as stated. Note that a counter-offer does not Note that a counter-offer does not constitute an offer(Hyde v Wrench).constitute an offer(Hyde v Wrench).

Acceptance may be in the in the form of Acceptance may be in the in the form of express words, either oral or written;or it express words, either oral or written;or it may be implied from conduct.Thus in may be implied from conduct.Thus in Brogden v Metropolitan Rly Co (1877) 2 AC Brogden v Metropolitan Rly Co (1877) 2 AC 666, the plaintiff, having supplied the 666, the plaintiff, having supplied the company with coal for a number of years company with coal for a number of years suggested that they should enter into a suggested that they should enter into a written contract.written contract.

The company agreed and sent Brogden a The company agreed and sent Brogden a draft contract.He altered some points and draft contract.He altered some points and returned it marked ‘approved’. The company returned it marked ‘approved’. The company did nothing further about the document,but did nothing further about the document,but Brogden continued to deliver coal on the Brogden continued to deliver coal on the terms included in the draft contract.When a terms included in the draft contract.When a dispute arose, Brogden denied the existence dispute arose, Brogden denied the existence of any contract. It was held that the draft of any contract. It was held that the draft became a full contract when both parties became a full contract when both parties acted on it.acted on it.

Communication of Communication of acceptanceacceptance

The general rule is that acceptance must be The general rule is that acceptance must be communicated to the offeror.As a communicated to the offeror.As a consequence of this rule, silence cannot consequence of this rule, silence cannot amount to acceptance.The classic case in this amount to acceptance.The classic case in this regard is Felthouse v Bindley (1862) 6 LT regard is Felthouse v Bindley (1862) 6 LT 157, where an uncle had been negotiating 157, where an uncle had been negotiating the purchase of his nephew’s horse.He the purchase of his nephew’s horse.He eventually wrote to the nephew, offering to eventually wrote to the nephew, offering to buy it at a particular price, stating;’if I hear buy it at a particular price, stating;’if I hear no more about him I shall consider the horse no more about him I shall consider the horse mine’.mine’.

When the horse was mistakenly sold by an When the horse was mistakenly sold by an auctioneer, the uncle sued the auctioneer in auctioneer, the uncle sued the auctioneer in conversion. It was held that the uncle had no conversion. It was held that the uncle had no cause of action, as the horse did not belong cause of action, as the horse did not belong to him.Acceptance could not be imposed on to him.Acceptance could not be imposed on the offeree on the basis of his silence.the offeree on the basis of his silence.

There are,however,exceptions to the general There are,however,exceptions to the general rule that acceptance must be rule that acceptance must be communicated,which arise in the following communicated,which arise in the following casescases

Where the offeror has waived the right to Where the offeror has waived the right to receive communication- receive communication- in unilateral contracts,such as in Carlill v in unilateral contracts,such as in Carlill v Carbolic Smoke Ball Co.,or general Carbolic Smoke Ball Co.,or general reward cases, acceptance occurs when reward cases, acceptance occurs when the offeree performs the required the offeree performs the required act.Thus in the Carlill case, Mrs Carlill did act.Thus in the Carlill case, Mrs Carlill did not have to inform the Smoke Ball Co not have to inform the Smoke Ball Co that she had used their treatment.that she had used their treatment.

Nor , in the reward cases,do those seeking to Nor , in the reward cases,do those seeking to benefit have to inform the person offering the benefit have to inform the person offering the reward that they have begun to perform the reward that they have begun to perform the task that will lead to the reward.task that will lead to the reward.

B) where the acceptance is through the postal B) where the acceptance is through the postal service: in such service: in such circumstances,acceptance is complete as soon circumstances,acceptance is complete as soon as the letter,properly addressed and stamped as the letter,properly addressed and stamped is posted.The contract is concluded, even if is posted.The contract is concluded, even if the letter subsequently fails to reach the the letter subsequently fails to reach the offeror.offeror.

In Adams v Lindsell(1818) 106 ER 250,the In Adams v Lindsell(1818) 106 ER 250,the defendant made an offer to the plaintiff on 2 defendant made an offer to the plaintiff on 2 September.Due to misdirection,the letter September.Due to misdirection,the letter was delayed. It arrived on 5 September and was delayed. It arrived on 5 September and Adams immediately posted an acceptance. Adams immediately posted an acceptance. On 8 September,Lindsell sold the On 8 September,Lindsell sold the merchandise to a third party.On Sept 9,the merchandise to a third party.On Sept 9,the letter of acceptance from Adams arrived.It letter of acceptance from Adams arrived.It was held that a valid acceptance took place was held that a valid acceptance took place when Adams posted the letter.Lindsell was, when Adams posted the letter.Lindsell was, therefore liable for breach of contract.therefore liable for breach of contract.

The postal rule applies equally to telegrams It The postal rule applies equally to telegrams It does not apply,however, when means of does not apply,however, when means of instantaneous communication are used(see instantaneous communication are used(see Entores v Far East Corp(1955).It follows that, Entores v Far East Corp(1955).It follows that, when acceptance is made by means of when acceptance is made by means of telephone, fax, or telex, the offeror must telephone, fax, or telex, the offeror must actually receive the acceptance.actually receive the acceptance.

Note that the postal rule will only apply where Note that the postal rule will only apply where it is in the contemplation of the parties that the it is in the contemplation of the parties that the post will be used as the means of acceptance.post will be used as the means of acceptance.

If the parties have negotiated either face to If the parties have negotiated either face to face, for example in a shop, or over the face, for example in a shop, or over the telephone, then it might not be reasonable telephone, then it might not be reasonable for the offeree to use the post as a means of for the offeree to use the post as a means of communicating their acceptance and they communicating their acceptance and they would not gain the benefit of the postal rule.would not gain the benefit of the postal rule.

In order to expressly exclude the operation In order to expressly exclude the operation of the postal rule, the offeror can insist that of the postal rule, the offeror can insist that acceptance is only to be effective upon acceptance is only to be effective upon receipt(Holwell Securities v Hughes (1974).receipt(Holwell Securities v Hughes (1974).

The offeror can also rquire that The offeror can also rquire that acceptance be communicated in a acceptance be communicated in a particular manner.particular manner.

Where the offeror does not actually Where the offeror does not actually insist that acceptance can only be insist that acceptance can only be made in the stated manner, then made in the stated manner, then acceptance is effective if it is acceptance is effective if it is communicated in a way that is no less communicated in a way that is no less advantageous to the offeroradvantageous to the offeror

CONSIDERATIONCONSIDERATION Consideration can be understood as the Consideration can be understood as the

price paid for a promise. price paid for a promise. Currie v Misa [1875] LR 10 Ex. Provided Currie v Misa [1875] LR 10 Ex. Provided the classical definition of the classical definition of consideration-----”a valuable consideration-----”a valuable consideration,in the sense of the law, consideration,in the sense of the law, may consist either of some may consist either of some right,interest,profit, or benefit accruing to right,interest,profit, or benefit accruing to the one party, or some forbearance, the one party, or some forbearance, detriment, loss or responsibility,given, detriment, loss or responsibility,given, suffered or undertaken by the other” suffered or undertaken by the other”

Consideration may be expressly stated Consideration may be expressly stated or implied.Consideration may be by: or implied.Consideration may be by: i) an act-ie doing something that the i) an act-ie doing something that the other party has specifically requested, or other party has specifically requested, or ii) forbearance to act-ie not ii) forbearance to act-ie not acting or exercising one’s rights at the acting or exercising one’s rights at the instance of the other party; or instance of the other party; or iii) the exchange of promises; iii) the exchange of promises; or iv) acting on the basis of or iv) acting on the basis of another’s unilateral offer(Carlill’s case)another’s unilateral offer(Carlill’s case)

V) relying on another’s promise and acting to V) relying on another’s promise and acting to one’s detriment-ie equitable estoppel ( see one’s detriment-ie equitable estoppel ( see Atta& Another v Adu[1987-8]1 GLR 223,SCAtta& Another v Adu[1987-8]1 GLR 223,SC

There is a distinction between executory, There is a distinction between executory, executed and past consideration.executed and past consideration.

Executory consideration-this is the promise to Executory consideration-this is the promise to perform an action at some future time.A perform an action at some future time.A contract can be made on the basis of an contract can be made on the basis of an exchange of promises as to future action;sch exchange of promises as to future action;sch a contract is known as an executory contract.a contract is known as an executory contract.

Executed consideration-in the case of Executed consideration-in the case of unilateral contracts, where the offeror unilateral contracts, where the offeror promises something in return for the promises something in return for the offeree’s doing something,the promise only offeree’s doing something,the promise only becomes enforceable when the offeree has becomes enforceable when the offeree has actually performed the required act. actually performed the required act.

If A offers a reward for the return of a lost If A offers a reward for the return of a lost watch,the reward only becomes watch,the reward only becomes enforceableonce it has been found and enforceableonce it has been found and returned.returned.

Past consideration-this category does not Past consideration-this category does not actually count as valid consideration ; that is actually count as valid consideration ; that is insufficient to make any agreement which is insufficient to make any agreement which is based on it a binding contract. Normally, based on it a binding contract. Normally, consideration is provided either at the time of consideration is provided either at the time of the creation of a contract or at a later date. the creation of a contract or at a later date.

In the case of past consideration, however, In the case of past consideration, however, the action is performed before the promise the action is performed before the promise that it is supposed to be the consideration that it is supposed to be the consideration for. for.

Such action is not sufficient to support a Such action is not sufficient to support a promise, as consideration cannot consist promise, as consideration cannot consist of any action already wholly performed of any action already wholly performed before the promise was made.before the promise was made.

In Re McArdle(1951) a number of children In Re McArdle(1951) a number of children were entitled to a house on the death of were entitled to a house on the death of their mother.While the mother was still their mother.While the mother was still alive, her son and his wife had lived with alive, her son and his wife had lived with with her,and the wife had made various with her,and the wife had made various improvements to the house.improvements to the house.

The children later promised that they The children later promised that they would pay the wife 488pounds for would pay the wife 488pounds for the work she had done.the work she had done.

It was held that,as the work was It was held that,as the work was completed when the promise was completed when the promise was given, it was past consideration and given, it was past consideration and the later promise could not be the later promise could not be enforced.enforced.

Rules relating to Rules relating to considerationconsideration

i) performance must be legal-the courts i) performance must be legal-the courts will not countenance a claim to enforce will not countenance a claim to enforce a promise to pay for any criminal act. a promise to pay for any criminal act. II) performance must be possible-it II) performance must be possible-it is generally accepted that a promise to is generally accepted that a promise to perform an impossible act cannot form perform an impossible act cannot form the basis of a binding contractual the basis of a binding contractual agreement iii) consideration must agreement iii) consideration must move from the promisee-move from the promisee-

But this Common Law position does not But this Common Law position does not reflect the situation in Ghana-section 5 of reflect the situation in Ghana-section 5 of The Contracts Act, 1960The Contracts Act, 1960

Iv) consideration must be sufficient but Iv) consideration must be sufficient but need not be adequate-it is up to the need not be adequate-it is up to the parties themselves to decide the terms of parties themselves to decide the terms of their contract. The courts will not their contract. The courts will not intervene to require equality in the value intervene to require equality in the value exchanged, as long as the agreement has exchanged, as long as the agreement has been freely entered into.been freely entered into.

In Thomas v Thomas(1842) 2 QB 851, In Thomas v Thomas(1842) 2 QB 851, the executors of a man’s will promised the executors of a man’s will promised to let his widow live in the house, in to let his widow live in the house, in return for rent of 1pound per year.return for rent of 1pound per year.

It was held that the amount was It was held that the amount was sufficient consideration to validate the sufficient consideration to validate the contract, although it did not represent contract, although it did not represent an adequate rent in economic terms.an adequate rent in economic terms.

Performance of existing Performance of existing dutiesduties

Although it has generally been accepted that Although it has generally been accepted that performance of an existing duty does not performance of an existing duty does not provide valid consideration,the authority of provide valid consideration,the authority of Williams v Roffey Bros [1990] 1 All ER 512, Williams v Roffey Bros [1990] 1 All ER 512, has indicated a contrary possibilty.The rules has indicated a contrary possibilty.The rules relating to existing duty are as follows:relating to existing duty are as follows:

(i) the discharge of a public duty-as a matter (i) the discharge of a public duty-as a matter of public policy,in order to forestall the of public policy,in order to forestall the possibility of corruption and extortion,it has possibility of corruption and extortion,it has been held thatbeen held that

That those who are required to perform That those who are required to perform certain public duties cannot claim the certain public duties cannot claim the performance of those duties as consideration performance of those duties as consideration for a promised reward. In Collins v for a promised reward. In Collins v Godefroy (1831) 120 ER 241, the plaintiff Godefroy (1831) 120 ER 241, the plaintiff was served with a subpoena, which meant was served with a subpoena, which meant that he was legally required to give evidence that he was legally required to give evidence in the court case in question.Additionally, in the court case in question.Additionally, however, the defendant to pay him for giving however, the defendant to pay him for giving his evidence.his evidence.

When the plaintiff tried to enforce the When the plaintiff tried to enforce the promised payment, it was held that there was promised payment, it was held that there was no binding agreement, as he had provided no no binding agreement, as he had provided no consideration by simply fulfilling his existing consideration by simply fulfilling his existing duty.duty.

Where however, a promisee does more than Where however, a promisee does more than his duty,he is entitled to claim on the his duty,he is entitled to claim on the promise.In Glassbrook v Glamorgan CC [1925] promise.In Glassbrook v Glamorgan CC [1925] AC 270,HL, where the police authority AC 270,HL, where the police authority provided more protection than their duty provided more protection than their duty required, and the similar case of required, and the similar case of

Harris v Sheffield United FC[1987]2 All ER Harris v Sheffield United FC[1987]2 All ER 838,where the defendant football club 838,where the defendant football club was held liable to pay costs for controlling was held liable to pay costs for controlling crowds at their matches. crowds at their matches. (ii) the performance of a contractual (ii) the performance of a contractual duty-the long established rule was that duty-the long established rule was that the mere performance of a contractual the mere performance of a contractual duty already owed to the promisor could duty already owed to the promisor could not be the consideration for a new not be the consideration for a new promise.promise.

In Stilk v Myrick (1809) ER 1168, when two In Stilk v Myrick (1809) ER 1168, when two members of his crew deserted,a shpi’s members of his crew deserted,a shpi’s captain promised the remaining members of captain promised the remaining members of the crew that they would share the deserters’ the crew that they would share the deserters’ wages if they completed the voyage,.When wages if they completed the voyage,.When the ship was returned to London, the owners the ship was returned to London, the owners refused to honour the promise and it was refused to honour the promise and it was held that it could not be legally enforced, held that it could not be legally enforced, since the sailors had only done what they since the sailors had only done what they were already obliged to do by their contracts were already obliged to do by their contracts of employment.of employment.

As in the case of a public duty, so performance As in the case of a public duty, so performance of more than the existing contractual duty will of more than the existing contractual duty will be valid consideration for a new promise.be valid consideration for a new promise.

Thus in Harley v Ponsonby (1857) 7 E&B Thus in Harley v Ponsonby (1857) 7 E&B 872,the facts of which were somewhat similar 872,the facts of which were somewhat similar those in Stilk v Myrick, it was decided that the those in Stilk v Myrick, it was decided that the crew had done more than they previously had crew had done more than they previously had agreed to do, because the number of agreed to do, because the number of deserters had been so great as to make the deserters had been so great as to make the return of the ship unusually hazardous.return of the ship unusually hazardous.

On that basis,they were entitled to On that basis,they were entitled to enforce the agreement to their wages.enforce the agreement to their wages.

The legal situation would now seem to The legal situation would now seem to be that the performance of an existing be that the performance of an existing contractual duty can amount to contractual duty can amount to consideration for a new promise in consideration for a new promise in circumstances where there is no circumstances where there is no question of fraud or duress, and where question of fraud or duress, and where practical benefits accrue to the practical benefits accrue to the promisor.promisor.

PRIVITY OF CONTRACTPRIVITY OF CONTRACT The general rule is that a contract can only The general rule is that a contract can only

impose rights and obligations on persons who impose rights and obligations on persons who are parties to it.are parties to it.

The locus classicus for the doctrine of privity The locus classicus for the doctrine of privity is Dunlop Pneumatic Tyre Co Ltd v Selfridge & is Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847@853. In this Co Ltd [1915] AC 847@853. In this case,Dunlop sold tyres to a distributor,Dew & case,Dunlop sold tyres to a distributor,Dew & Co,on terms that the distributor would not sell Co,on terms that the distributor would not sell them at a less than the manufacturer’s list them at a less than the manufacturer’s list price and that they would extract a similar price and that they would extract a similar undertaking from anyone whom they supplied undertaking from anyone whom they supplied with tyres.with tyres.

Dew & Co resold the tyres to Selfridge, Dew & Co resold the tyres to Selfridge, who agreed to abide by the restrictions who agreed to abide by the restrictions and to pay Dunlop 5 pounds for each tyre and to pay Dunlop 5 pounds for each tyre they sold in breach of them.When they sold in breach of them.When Selfridge sold tyres at below Dunlop’s list Selfridge sold tyres at below Dunlop’s list price,Dunlop sought to recover the price,Dunlop sought to recover the promised 5 pounds per tyre.It was held promised 5 pounds per tyre.It was held that Dunlop could not recover damages on that Dunlop could not recover damages on the basis of the contract between Dew and the basis of the contract between Dew and Selfridge, to which they were not a party.Selfridge, to which they were not a party.

There are however, a number in which There are however, a number in which consequences of the application of strict consequences of the application of strict rule of privity may be avoided to allow a rule of privity may be avoided to allow a third party to enforce a contract.These third party to enforce a contract.These occur in the following circumstances:occur in the following circumstances:

(i)the beneficiary sues in another capacity (i)the beneficiary sues in another capacity Although an individual may not originally Although an individual may not originally be party to a particular contract,they may be party to a particular contract,they may nonetheless,acquire the power to enforce nonetheless,acquire the power to enforce the contract where they are legally the contract where they are legally appointed to administer the affairs of one appointed to administer the affairs of one of the original parties. of the original parties.

An example of this can be seen in Beswick v An example of this can be seen in Beswick v Beswick [1967]2 All ER 1197 where a coal Beswick [1967]2 All ER 1197 where a coal merchant sold his business to his nephew in merchant sold his business to his nephew in return for a consultancy fee of 6pounds return for a consultancy fee of 6pounds during his lifetime, and thereafter an annuity during his lifetime, and thereafter an annuity of 5pounds per week,payable to his of 5pounds per week,payable to his widow.When she became administratix of widow.When she became administratix of her husband’s estate the nephew for specific her husband’s estate the nephew for specific performance of the agreement in that performance of the agreement in that capacity, as well as in her personal capacity.capacity, as well as in her personal capacity.

It was held that,although she was not a party It was held that,although she was not a party to the contract and,therefore, could not be to the contract and,therefore, could not be granted specific performance in her personal granted specific performance in her personal capacity,such an order could be awarded to capacity,such an order could be awarded to her as the administratix of the deceased her as the administratix of the deceased estate. estate.

(ii)the situation involves a collateral contract-a (ii)the situation involves a collateral contract-a collateral contract arises where one party collateral contract arises where one party promises something to another party if that promises something to another party if that other party enters into a contract with a third other party enters into a contract with a third paryty; for example A promises to give B paryty; for example A promises to give B something if B enters into a contract with C.something if B enters into a contract with C.

In such a situation, the second party In such a situation, the second party can enforce the original promise,that can enforce the original promise,that is B can insist that A complies with is B can insist that A complies with the original promise.the original promise.

(iii) there is a valid assignment of the (iii) there is a valid assignment of the benefit of the contract-a party to a benefit of the contract-a party to a contract can transfer the benefit of contract can transfer the benefit of that contract to a third party through that contract to a third party through the formal process of assignment.the formal process of assignment.

The assignment must be in writing and the The assignment must be in writing and the assignee receives no better rights under assignee receives no better rights under the contract than those which the assignor the contract than those which the assignor possessed. The burden of a contract possessed. The burden of a contract cannot be assigned without the consent of cannot be assigned without the consent of the other party to the contract.the other party to the contract.

(iv)one of the parties has entered the (iv)one of the parties has entered the contract as a tustee for a third party-ther contract as a tustee for a third party-ther exists the possibility that a party to a exists the possibility that a party to a contract can create a contract specifically contract can create a contract specifically for the benefit of a third party.for the benefit of a third party.

In such limited circumstances,the In such limited circumstances,the promisee is considered as a trustee promisee is considered as a trustee of the contractural promise for the of the contractural promise for the benefit of the third party. In order to benefit of the third party. In order to enforce the contract the third party enforce the contract the third party must act through the promisee by must act through the promisee by making them a party to any action.making them a party to any action.

In Ghana,two categories of persons may In Ghana,two categories of persons may sue to enforce a contract,namely (i)a sue to enforce a contract,namely (i)a party to a contract; and (ii) a person, on party to a contract; and (ii) a person, on whom a contract expressly reserves a whom a contract expressly reserves a benefit.The is a third category-a person benefit.The is a third category-a person who is directly affected by a who is directly affected by a contract,although not a party to it may contract,although not a party to it may rely on grounds of public policy to have rely on grounds of public policy to have the contract declared void or unforceable.the contract declared void or unforceable.

CAPACITYCAPACITY Capacity refers to a person’s ability to enter Capacity refers to a person’s ability to enter

into a contract.Contracting parties may be into a contract.Contracting parties may be natural persons(ie human beings) or artificial natural persons(ie human beings) or artificial persons(ie corporate bodies,governments persons(ie corporate bodies,governments and international bodies)and international bodies)

In general, all adults have full capacity. In general, all adults have full capacity. The capacity of certain individuals, however The capacity of certain individuals, however is limited,and they include infants,lunatics, is limited,and they include infants,lunatics, drunkards and enemy aliens.drunkards and enemy aliens.

INFANTS-under the common law,an INFANTS-under the common law,an infant, also known as a minor or child infant, also known as a minor or child is a person under the age of 21.is a person under the age of 21.

The Companies Code also provides The Companies Code also provides that an infant means any natural that an infant means any natural person under the age of twenty years person under the age of twenty years or such other age as may from time to or such other age as may from time to time be declared by any enactment to time be declared by any enactment to be full age for legal purposes”be full age for legal purposes”

But the Children’s Act 1998 Act 560 But the Children’s Act 1998 Act 560 provides that for the purposes of that provides that for the purposes of that Act “a child is a person below age of Act “a child is a person below age of eighteen years”eighteen years”

The Wills Act,1971 Act 360 provides The Wills Act,1971 Act 360 provides that any Ghanaian of or above that any Ghanaian of or above eighteen years make a will disposing eighteen years make a will disposing of his property in accordance with of his property in accordance with the provisions of the said Act.the provisions of the said Act.

The 1992 Constitution however The 1992 Constitution however permits one to vote at eighteen; to be permits one to vote at eighteen; to be a Member of Parliament at twenty-a Member of Parliament at twenty-five; and to be President at forty.five; and to be President at forty.

Arguably therefore,unless one Arguably therefore,unless one reaches these increasing ages, one is reaches these increasing ages, one is not of full age for their respective not of full age for their respective legal purposes.legal purposes.

The classical common law position is The classical common law position is that an infant cannot enter into a that an infant cannot enter into a contract; more precisely, an infant contract; more precisely, an infant cannot be sued, nor can he sue,to cannot be sued, nor can he sue,to enforce a contract.enforce a contract.

However,it is not an absolute rule that However,it is not an absolute rule that infants can neither sue, nor be sued. infants can neither sue, nor be sued. Infants can sue or be sued to enforce Infants can sue or be sued to enforce the following types of contracts:the following types of contracts:

1.contracts for necessaries 1.contracts for necessaries A minor is bound to pay for necessaries, A minor is bound to pay for necessaries,

that is things that are necessary to maintain that is things that are necessary to maintain the minor,and therefore it excludes luxuries the minor,and therefore it excludes luxuries and opulence.This principle is demonstrated and opulence.This principle is demonstrated in Nash v Inman [1908] 2 KB 1,where a tailor in Nash v Inman [1908] 2 KB 1,where a tailor sued a minor to whom he had supplied sued a minor to whom he had supplied clothes including 11 fancy waistcoats.The clothes including 11 fancy waistcoats.The minor was an undergraduate at Cambridge minor was an undergraduate at Cambridge University at that time.University at that time.

It was held that although the clothes were It was held that although the clothes were suitable according to the minor’s station in suitable according to the minor’s station in life,they were not necessary,as he already life,they were not necessary,as he already had sufficient clothing.had sufficient clothing.

However,it also establishes that if the However,it also establishes that if the subject of the contract is a necessary item subject of the contract is a necessary item the infant can be successfully sued.What is the infant can be successfully sued.What is a necessary is a question of fact to be a necessary is a question of fact to be determined after considering all the determined after considering all the circumstnces.circumstnces.

2.beneficial contract of service2.beneficial contract of service A minor is bound by a contract of A minor is bound by a contract of

apprenticeship or employment ,as long as it apprenticeship or employment ,as long as it is, on the whole, for their benefit. In is, on the whole, for their benefit. In Roberts v Gray [1913] 1 KB 520 the Roberts v Gray [1913] 1 KB 520 the defendant wished to become a professional defendant wished to become a professional billiards player.He entered into an agreement billiards player.He entered into an agreement with the plaintiff,a leading professional, to go with the plaintiff,a leading professional, to go on a joint tour.The plaintiff put in some time on a joint tour.The plaintiff put in some time to organize the tour.to organize the tour.

However,in due course,the parties had a However,in due course,the parties had a dispute and the defendant refused to go. dispute and the defendant refused to go. The plaintiff sued for damages of 6000 The plaintiff sued for damages of 6000 pounds.The court held that the contract pounds.The court held that the contract was for the minor’s benefit being in was for the minor’s benefit being in effect, for his instruction as a billiards effect, for his instruction as a billiards player. The defendant had broken the player. The defendant had broken the agreement and was liable in damages agreement and was liable in damages which were assessed at 1500 pounds.which were assessed at 1500 pounds.

3.voidable contracts-are binding on the 3.voidable contracts-are binding on the minor, unless they are repudiated minor, unless they are repudiated during the period of minority or within a during the period of minority or within a reasonable time after reaching the age reasonable time after reaching the age of majority.These are generally of majority.These are generally transactions in which the minor acquires transactions in which the minor acquires an interes of a permanent nature with an interes of a permanent nature with continuing obligations.Examples are continuing obligations.Examples are contracts for shares,leases of property contracts for shares,leases of property and partnership agreements.and partnership agreements.

If the minor has made payments prior to If the minor has made payments prior to repudiation of the contract,such payment repudiation of the contract,such payment cannot be recovered unless there is a total cannot be recovered unless there is a total failure of consideration and the minor has failure of consideration and the minor has received no benefit whatsoever. An example received no benefit whatsoever. An example is the case of Steinberg v Scala (Leeds) Ltd is the case of Steinberg v Scala (Leeds) Ltd [1923]2 Ch 452.Miss Steinberg,while still a [1923]2 Ch 452.Miss Steinberg,while still a minor applied for , and was alloted, shares in minor applied for , and was alloted, shares in the defendant company.After paying some the defendant company.After paying some money on the shares, she defaulted on money on the shares, she defaulted on payment and repudiated the contract.payment and repudiated the contract.

The company agreed that her name be The company agreed that her name be removed from its register of members removed from its register of members but refused to return the money she but refused to return the money she had already paid.It was held that Miss had already paid.It was held that Miss Steinberg was not entitled to the Steinberg was not entitled to the return of the money paid.She had return of the money paid.She had benefited from membership benefited from membership rights;thus,there had not been a rights;thus,there had not been a complete failure of consideration.complete failure of consideration.

Mental incapacity and Mental incapacity and intoxicationintoxication

A contract made by a party who is of A contract made by a party who is of unsound mind or under the influence of unsound mind or under the influence of alcohol or drugs is prima facie valid.In order alcohol or drugs is prima facie valid.In order to avoid a contract,such a person must show:to avoid a contract,such a person must show:

That their mind was so affected at the time That their mind was so affected at the time that they were incapable of understanding that they were incapable of understanding the nature of their actions; and the nature of their actions; and

That the other party either knew or ought to That the other party either knew or ought to have known of their disability.have known of their disability.

INTENTION TO CREATE LEGAL INTENTION TO CREATE LEGAL RELATIONSRELATIONS

All of the aspects considered previously All of the aspects considered previously may well be present in a particular may well be present in a particular agreement,and yet there still may not be a agreement,and yet there still may not be a contract.contract.

The courts will only enforce those The courts will only enforce those agreements which the parties intended to agreements which the parties intended to have legal effect.have legal effect.

For the purposes of this topic agreements For the purposes of this topic agreements can be divided into three categories in can be divided into three categories in which different presumptions apply.which different presumptions apply.

Domestic and social Domestic and social agreementsagreements

In this type of agreement, there is a In this type of agreement, there is a presumption that the parties do not intend presumption that the parties do not intend to create legal relations.to create legal relations.

In Balfour v Balfour [1919] 2 KB 571,CA, a In Balfour v Balfour [1919] 2 KB 571,CA, a husband returned to Ceylon to take up husband returned to Ceylon to take up employment and he promised his wife, who employment and he promised his wife, who could not return with him due to health could not return with him due to health problems, that he would pay her 30pounds problems, that he would pay her 30pounds per month as maintenance.When the per month as maintenance.When the marriage later ended in divorce, the wife marriage later ended in divorce, the wife sued for the promised maintenance.sued for the promised maintenance.

It was held that the parties had not It was held that the parties had not intended the original promise to be intended the original promise to be binding and, therefore,it was not legally binding and, therefore,it was not legally enforceable.enforceable.

It is essential to realise that the intention It is essential to realise that the intention not to create legal relations in such not to create legal relations in such relationships is only a presumption and relationships is only a presumption and that as with all presumptions,it may be that as with all presumptions,it may be rebutted by the actual facts and rebutted by the actual facts and circumstances of a particular case.circumstances of a particular case.

A case in point is Merritt v Merritt [1970] A case in point is Merritt v Merritt [1970] 2 All ER 760.After husband had left the 2 All ER 760.After husband had left the matrimonial home,he met his and matrimonial home,he met his and promised to pay her 40pounds per promised to pay her 40pounds per month,from which she undertook to pay month,from which she undertook to pay the outstanding mortgage on their the outstanding mortgage on their house.The husband, at the wife’s house.The husband, at the wife’s insistence, signed a note,agreeing to insistence, signed a note,agreeing to transfer the house into the sole name of transfer the house into the sole name of the wife when the mortgage was paid the wife when the mortgage was paid off.off.

The wife paid off the mortgage but The wife paid off the mortgage but the husband refused to transfer the the husband refused to transfer the house. It was held that the house. It was held that the agreement was enforceable, as in agreement was enforceable, as in the circumstances, the parties had the circumstances, the parties had clearly intended to enter into a clearly intended to enter into a legally enforceable agreement.legally enforceable agreement.

Commercial agreementsCommercial agreements In commercial situations,the strong In commercial situations,the strong

presumption is that the parties intend to enter presumption is that the parties intend to enter into a legally binding relationship in into a legally binding relationship in consequence of their dealings.consequence of their dealings.

In Edwards v Skyways[1964] 1 WLR In Edwards v Skyways[1964] 1 WLR 349,employers undertook to make an ex gratia 349,employers undertook to make an ex gratia payments to an employee whom they had payments to an employee whom they had made redundant.It was held that,in such a made redundant.It was held that,in such a situation, the use of the term ‘ex gratia’ was situation, the use of the term ‘ex gratia’ was not sufficient to rebut the presumption that not sufficient to rebut the presumption that the establishment the establishment

Of legal relations had been intended. The Of legal relations had been intended. The former employee was therefore, entitled to former employee was therefore, entitled to the promised payment.the promised payment.

In commercial situations, however, the In commercial situations, however, the presumption is so strong that it will usually presumption is so strong that it will usually take express wording to the contrary to avoid take express wording to the contrary to avoid its operation.An example can be found in its operation.An example can be found in Rose & Frank Co v Crompton Bros[1925]AC Rose & Frank Co v Crompton Bros[1925]AC 445, in which it was held that an express 445, in which it was held that an express clause which had stated that no legal clause which had stated that no legal relations were to be created by a business relations were to be created by a business transaction was effective.transaction was effective.

Collective agreementsCollective agreements Agreements between employers and trade Agreements between employers and trade

unions may be considered as a distinct unions may be considered as a distinct category of agreement,for, although they are category of agreement,for, although they are commercial agreements, they are presumed commercial agreements, they are presumed not to give rise to legal relations and, not to give rise to legal relations and, therefore are not normally enforceable in the therefore are not normally enforceable in the courts.Such was the outcome of Ford Motor courts.Such was the outcome of Ford Motor Co v AUEFW [1969]2 All ER 481,in which it Co v AUEFW [1969]2 All ER 481,in which it was held that Ford could not take legal action was held that Ford could not take legal action against the defendant trade union, which had against the defendant trade union, which had ignored previously negotiated terms of a ignored previously negotiated terms of a collective agreement.collective agreement.