UNIVERSITY OF GHANA BUSINESS SCHOOL

COMMERCIAL LAW 1
LECTURER
DR, ALEXANDER AMANKWAA.
[email protected]
1. WHAT IS LAW?
There is no single definition of what is Law
The system of rules which a particular country or community recognizes as regulating the actions of its members
and which it may enforce by the imposition of penalties.
“The body of principles recognized and applied by the state in the administration of justice” – Salmond
“Rules forbidding or enjoining certain types of behaviour under penalty”
“Rules specifying what must be done to achieve certain legal effects”
“Rules conferring rights and creating obligations and providing remedies for breach of duties and obligations”
Some have even extended the definition to cover the institutions associated with the law in one way or another.
“Courts and other judicial or administrative bodies to determine what the rules are (interpretation), breaches thereof,
remedies thereof, and enforcement of decisions and orders”
“ A Legislature to make new rules or abolish old ones”
- H.L.A Hart, The Concept of Law
2. CLASSIFICATION OF LAW
Law can be classified into different categories depending on the basis of classification such as effect, source and
nature. For purposes of this course we will look at law under the following broad classification
(a) Public Law (b) Private Law

PUBLIC LAW PRIVATE LAW

Deals with the legal issues between the state and the Deals with the rights and duties of individuals towards each
citizenry such as the following… other. It includes the following branches…

Constitutional Law:- it deals with the constitution of the Law of Tort

state, arms of state, powers and limitations, rights and
obligations of the citizen.
Administrative Law:- deals with organs of state and Property Law
provides an avenue for the lodgment of complaints.

Criminal Law:- it deals with conduct of the society as a Law of Trust

whole and prescribes sanctions for offenders.
DISTINCTION BETWEEN CRIMINAL LAW AND CIVIL LAW

The difference between civil law and criminal law turns on the difference between two different

objects which law seeks to pursue - redress or punishment.

The object of civil law is the redress of wrongs by compelling compensation or restitution: the

wrongdoer is not punished; he only suffers so much harm as is necessary to make good the wrong he

has done. The person who has suffered gets a definite benefit from the law, or at least he avoids a loss.

On the other hand, in the case of crimes, the main object of the law is to punish the wrongdoer; to give

him and others a strong inducement not to commit same or similar crimes, to reform him if possible

and perhaps to satisfy the public sense that wrongdoing ought to meet with retribution.”
Criminal Law Civil Law
Definition Deals with offences against the State Deals with disputes between private individuals

Purpose Purpose is to maintain order in Purpose is to remedy the wrong which has been
society by punishing offenders to suffered
deter others
Case filed by A Prosecutor brings an action A Plaintiff brings an action against the
against the Accused Defendant
Jury opinion Criminal cases are handled by Civil cases are handled by civil courts
criminal courts or tribunals
Standard of proof Standard of proof is beyond Standard of proof is on the balance of
reasonable doubt probabilities
Decision Accused may be convicted if found Defendant may be found liable or not liable for
guilty or acquitted if found innocent the claim
Type of Punishment sanctions are Punishment or sanctions are damages,
punishment imprisonment and/or fine injunction, restitution, and specific
performance.
THE LEGAL SYSTEM OF GHANA
- The Structures and processes by which the legal machinery of a country is operated.

- It encompasses the legal tradition, the sources of law, the court structure and operations among others.

- There are several legal traditions :- common law, civil law etc.

- Ghana’s legal system is based on the Common Law Tradition.

- The Tradition is based on Judicial Precedence

- The Court Structure:- Superior Courts and lower Courts

SOURCES OF LAW

By sources of law we are looking at how we get our laws in Ghana.

Article 11 of the 1992 Constitution enumerates the sources of law in Ghana as follows;
1. 1992 Constitution

2. Enactments made by or under the authority the parliament established by the 1992
Constitution – eg. Banking Act,2004 (Act 673)

3. Orders, Rules and Regulations made under a power conferred by the Constitution – eg.
Bye laws of the Assemblies.

4. Existing Law:- both written and unwritten laws before the coming into force of the
1992 Constitution –eg. Contracts Act, 1960 (Act 25)

5. Common Law – the common law, equity and customary law.

THE COMMON LAW AND EQUITY
The term common law is confusing as it has different meanings depending on the context.
So it could be used to refer to law crafted by judges when they decide cases, this is what we
refer to as “case law” and this is in contrast to law established by legislation, by the
legislature enacting legislation, also known as “statutory law”. It can also be used to refer to
law that is not equity. And, finally, it can be used to describe the law of countries which
follow the common law, like the United States and England as opposed to countries that
follow Roman law or French law or the civil law tradition.

Equity is the name that we give to the set of rules that traditionally supplemented the
common law where the application of the common law would have operated too harshly.
This was done to achieve what is sometimes referred to as natural justice, or more simply
speaking, fairness.
Maxims of Equity
1. Equity will not suffer a wrong to be without a remedy.
2. Equity follows the law.
3. Where the equities are equal, the law prevails.
4. Where the equities are equal, the first in time shall prevail.
5. He who seeks equity must do equity.
6. He who comes to equity must come with clean hands.
7. Delay defeats equity; equity aids the vigilant but not the
indolent.
8. Equality is equity.
9. Equity looks to the intent and not to the form.
10. Equity looks on as done that which ought to be done.
11. Equity imputes an intention to fulfill an obligation.
12. Equity acts in personam.
THE SCOPE OF COMMERCIAL LAW
WHAT IS COMMERCIAL LAW?
The body of laws that deal with the rules and institutions of commercial transactions, including banking,
commerce, contracts etc.

GENERAL CHARACTERISTICS
1. Based on contract

2. The main sources of law are statutory and case law

3. It combines both civil remedies and criminal sanction eg. Sale of unwholesome goods for human
consumption is a criminal offence – Food & Drugs Law, 1992 s.1(1)(a)

4. It is both enabling and regulatory

RELEVANCE OF LAW IN COMMERCIAL ACTIVITIES
1. Facilitates business planning through improved understanding of rights and obligations.

2. Facilitates assessments of legal and commercial roles and the allocation of protection against risk.

3. Ensures businesses operate within regulatory requirements – failure to comply comes with cost.

4. Avoids unnecessary and costly business transactions and unenforceable contracts.

WHY REGULATE?
1. Consumer protection

2. Public interest

3. Information inadequacies

4. Settlement of disputes
LAW OF CONTRACT
 INTRODUCTION

 TYPES OF CONTRACT

 ELEMENTS OF A VALID CONTRACT

 VITIATING FACTORS

 TERMS OF CONTRACT

 MISTAKES

 TERMINATION OR DISCHARGE OF A CONTRACT

LAW OF CONTRACT - INTRODUCTION

Human interactions and co-existence necessarily requires that

we engage one another for one reason or another. In the course
of these engagements, there are bound to be trade-offs of wants
and needs.
Each might require something that the other possesses. In order
to gain access to what others posses, there is a trade-off of
promises; one to provide or perform what is needed in exchange
for something.
 Thus one promises to do an act or refrain from doing an
act in exchange for a promise from the other to do an
act or equally refrain from doing an act.
 In effect there is an Agreement based on the respective
promises. People may for their own good honour
choose to fulfill their promises or perform acts they
have agreed to, conversely people may for reasons best
known to themselves refuse or fail to fulfill promises or
perform acts they promised.
It is undoubted that social cohesion would be greatly affected
if society allowed people to make promises for the sake of
making them. This gives birth to the Law of Contract which
is simply that branch of the law that governs the effort to
achieve and carry out voluntary agreements.

The term “Contract” is often used to refer to an Agreement,

consisting of the exchange of promises which is recognized
by law as giving rise to enforceable rights and obligations.
SOURCES OF THE LAW OF CONTRACT
English Law of Contract;
Common Law Principles;
Doctrines of Equity; and
English Statutes of general application.
Legislation;
Contracts Act, 1960

DOCTRINES THAT HAVE SHAPED THE LAW OF CONTRACT

Certain theoretical foundations have influenced the law of contract
whether same is expressed in decisions of the courts or in statutes.
These are;
Freedom of Contract: this Doctrine recognizes the liberty of people to
enter into Agreements without interference or limitation from any
court since individuals are deemed to be the best of judges of their
own interest.

Vitiating Factors: these are factors that emanate from mistake,

misrepresentation, illegality, duress and generally any conduct that
would render a contract unenforceable.

Sanctity of Contract: this Doctrine seeks to emphasize that obligations

agreed upon must be adhered to by all parties.
DEFINITION OF CONTRACT

Sir Frederick Pollock defined Contract as “a promise or set of

promises which the law will enforce”

The American Restatement (second) of Contract (1982) defines a

Contract as “a promise or set of promises for the breach of which
the law gives a remedy or the performance of which the law in
some way recognizes a duty”.
The above definition emphasizes three (3) important
aspects of a Contract, namely;

The concept of a promise;

Legal duty; and

Legal remedy.
In effect, for every case therefore, the courts concern
themselves with three (3) issues, that is;

a. What is the promise or promises that have been made

by the parties;

b. Does the promise or do the promises create any legal

duty;

c. Upon determination of a promise and a duty, what kind

of remedy is available for any breach?
1. FORM OF CONTRACT
a. It could be Oral

b. It could be Written

c. It could be implied
ELEMENTS OF A VALID CONTRACT
A Contract must have the following elements to be valid
and thus enforceable;

Offer and Acceptance (Agreement)

Intention to Create a Legal Relationship

Capacity to Contract

Consideration
It is important to emphasize that though a contract may
seem to be valid because of the apparent presence of these
elements, the law would in certain instance refuse to deem
a contract enforceable where the Contract is affected by a
vitiating factor.
TYPES OF CONTRACT
Contracts can exist in many forms and thus there could be as many
types of contracts as may exist depending on the mode of classification
being employed. We shall however for our purposes limit ourselves to
the following types of contract…

I. UNILATERAL and BILATERAL CONTRACTS

II. FORMAL and INFORMAL CONTRACTS

III. EXPRESS and IMPLIED CONTRACT

IV. EXECUTED and EXECUTORY CONTRACT

V. VOIDABLE, VOID and UNENFORCEABLE CONTRACTS

VI. QUASI CONTRACT

I. UNILATERAL OR BILATERAL CONTRACTS:-
a. UNILATERAL CONTRACTS: These are contracts that require a party to
perform an act in exchange for the promise of the other.
b. BILATERAL CONTRACTS: These are contracts where the parties give
promises in exchange for promises. Thus one party promises to
perform an act in exchange for the promises to perform an act by the
other.
II.FORMAL AND INFORMAL CONTRACTS:- the criterion here is
the mode of formation.

FORMAL CONTRACTS: These are Contracts that require

following a specified mode in order to be deemed valid and
enforceable. Contracts under seal are an example.

INFORMAL CONTRACTS: These are Contracts that do not

follow any formal pattern or mode.
III. EXPRESS AND IMPLIED CONTRACT:- the criterion here is
whether the Contract and its terms are spelt out or they are
inferred.

EXPRESS CONTRACTS: These are Contracts where the Contracts

and their terms are expressly stated and agreed to by the parties.
This could be oral or written.

IMPLIED CONTRACTS: These are Contracts that come into

existence not by express agreement but rather inferred from the
conduct of the parties.
IV. EXECUTED AND EXECUTORY CONTRACT:-the criterion here
is the state of performance of the Contract.

a. EXECUTED CONTRACT: These are Contracts that have been

fully performed by the parties.

b. EXECUTORY CONTRACT:- These are contracts that have not

been fully performed either by both parties or by one party
after the other has performed his part of the obligations.
V.VOIDABLE, VOID AND UNENFORCEABLE CONTRACTS:-
the criterion here is the enforceability of the Contract.

VOIDABLE CONTRACT: These are contracts that are valid

but can be avoided or ratified at the option of either or both
parties.

VOID CONTRACT: These are contracts that are deemed by

the law as not having been made at all in spite of the
seeming existence of the elements of validity.
.
UNENFORCEABLE CONTRACT: These are contracts that cannot
be enforced even though all the elements of validity are
present. Such contracts though legal are unenforceable
because of failure to satisfy a legal requirement

VI. QUASI CONTRACT: this is a type of contract that is a

variant of implied contract except that in this instance the
inference is not based on the conduct solely but is imputed by
law based on conduct. They are more of equitable contracts
than legal.
ELEMENTS OF A VALID CONTRACT
An agreement must contain the following essential elements to be
regarded as a contract. If any one of them is missing, the agreement
will not be legally binding.

1. OFFER

2. ACCEPTANCE

3. CONSIDERATION
4. INTENTION TO CREATE A LEGAL RELATIONS

5. CAPACITY TO CONTRACT
ELEMENTS OF A VALID CONTRACT
OFFER
An Offer may be defined as “ a statement or conduct indicating a
willingness to contract on terms stated or on terms which can
reasonably be inferred from conduct and made with the intention that it
will become binding as soon as it is accepted” – Treitel, the law of
contract.

An offer is an expression of readiness to do something which, if followed

by the unconditional acceptance of another person results in a contract.
For example, if a company tells you that it will sell you 100 boxes of red
wine at the price of $100,000, that company is making you an offer
FORMS OF AN OFFER
An Offer may be made Orally, in Writing or Inferred from
conduct.
1.2 TYPES OF OFFERS
1. Specific Offer: An Offer made to a specific person or to a
group of persons in which case it can be said to be a specific
offer;
2. General Offer: An Offer made to the whole world and any
one can accept and perform the acts specified therein. CARLILL
V CARBOLIC SMOKE BALL CO.
1.3 RULES GOVERNING OFFER
1. An Offer becomes binding as soon as it is accepted by the
person or persons to whom it is made.
2. An Offer must be communicated to the person or persons
to whom it is made to be valid.
3. A person who knows the reward of an offer is entitled to it
if he performs the act prescribed in the offer, though his
motivation for performing the act was something other than
the reward. – WILLIAMS V COWARDINE
4. An Offer once made remains open until it lapses, accepted,
rejected or revoked.
TERMINATION OF OFFERS
An Offer can be terminated in any of the following ways;
1. Revocation:- This is where the Offeror withdraws the Offer .
An Offer can be revoked at anytime before it is accepted by the
Offeree. – DICKINSON V DODDS
(a) Revocation can only be valid or effective when it is actually
received by the Offeree. - BYRNE V VAN TIENHOVEN
(b) Communication of a revocation though must reach the
Offeree needs not necessarily come from the Offeror. It
suffices if same is received by the Offeree through a reliable
third party. – Dickinson V Dodds
(c) In Unilateral Contracts the offer cannot be revoked where

the Offeree has started to perform the act that constitutes

acceptance – Errington V Errington

(d) A promise to keep an Offer open for a specified period of

time is not binding on the Promisor or Offeror in the absence
of consideration from the Promisee or Offeree. –Routledge v
Grant
TERMINATION OF OFFERS

It is important to emphasise that this common law position

has been reversed by Section 8 of the Contracts Act, 1960
which provides that “the promise to keep an offer open for
acceptance for a specified time shall not be invalid as a
contract by reason only of the absence of any consideration”.

2. Rejection:- This is where the Offeree declines to accept the

Offer . This can happen in one of two ways;
(a) Outright Rejection: By this the Offeree simply refuses to
accept the Offer being made by the Offeror.

(b) Counter Offer: By this the Offeree instead of accepting or

rejecting the offer made, rather makes another offer in return as
in whilst not rejecting the price offered, the Offeree then quotes
another price, invariably lower than the one contained in the
original offer. This subsequent offer operates to cancel the
original offer. – Hyde v Wrench
3. Lapse of Time:- This is where a time limit is set for the
offer to be accepted and when the offer is not accepted
within the time limit, the offer would lapse upon the
expiration of the time.

Where no time limit is fixed, the offer lapses after a

reasonable time. What constitutes a reasonable time is
dependent on surrounding factors.
DISTINCTION BETWEEN OFFER AND INVITATION TO TREAT
There are instances where the conduct of a party in a bid to
procure a promise from the other is confused with an offer, when
in essence all that the party is doing is to solicit an Offer.

Such preliminary activities, which usually are only intended to

solicit offers from potential customers are not deemed by the law
as contractual offers in themselves, capable of being converted
into a contract upon acceptance but rather mere invitations to the
public to make offers, and are thus referred to as “invitations to
treat”
Common examples of Invitations to treat include;
(a) Tender Notice – SPENCER V HARDING
(b) Display of goods in a shop window with prices attached –
FISHER V BELL
(c) Advertisement of goods or services in the newspaper –
PATRIDGE V CRITTENDON.
(d) Circulation of Catalogues and Price Lists –
GRAINGER & SON V GOUGH.
(e) Auction Sales – HARRIS V NICKERSON
2. ACCEPTANCE
It is the final and unqualified expression of assent to the terms of
an offer.
Acceptance may be by Words, Conduct or in Writing.
Rules governing acceptance
1. Communication of Acceptance:
1. Acceptance is not effective unless and until it is
communicated to the Offeror. – Entores Limited v Miles Far East
Corp.
2. For Acceptance to be effective, it must come from the Offeree
himself or his authorized agent – Powell V Lee
2. The Postal Rule:
 The Postal Rule states that an acceptance communicated by post is
complete and effective when the letter is posted or placed in the
hands of the relevant postal authorities – Adams v Lindsell
 For the Postal Rule to apply, the letter of acceptance must have
been posted and for this purpose a letter is deemed to have been
posted when it is in the control of the Post Office.
The Rule applies only when it is reasonable to use the post as a
means of communicating acceptance-HENTHORN V FRASER

The Rule applies even if the letter of acceptance is delayed or

wholly lost in the post and never reached the Offeree –
HOUSEHOLD FIRE AND CARRIAGE ACCIDENT INSURANCE CO. V
GRANT

The Rule can be excluded by the terms of the Offer, as where it

states that acceptance is effective only when actually received –
HOLWELL SECURITIES LTD V HUGHES
Prescribed method of acceptance:

 Generally, where a mode of acceptance has been indicated by the

Offeror, the Offeree has to communicate the acceptance in the
prescribed mode.
 Where the Offeror prescribes silence as the mode of acceptance,
the silence of the Offeree would not amount to acceptance –
Felthouse V Bindley
CONSIDERATION

Consideration is the price paid for the promise of the other

party. The price must be something of value, although it need
not be money.

Consideration may be some right, interest or benefit going to

one party or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other party.
1. Types of Consideration

Consideration can generally be categorised into three types;

(a) Executory Consideration:- it refers to a Promise given

exchange for a promise to be performed or redeemed at a
future time, such as a bilateral contract to be performed in
future.
(b) Executed Consideration:- it refers to an act done in
exchange for the promise of the other party as in unilateral
contracts where one party performs an act prescribed by the
offeror.

(c) Past Consideration:- this type of Consideration consists in

an act that was completely done or the forbearance had
already been suffered before the promise was made.

Past Consideration is not sufficient consideration and therefore

cannot support a promise to create a contract – Re Mcardle;
EASTWOOD V KENYON.
 There are however instances where Consideration though past, is
still sufficient to support a contract;
(i) Acts specifically requested by the Promisor: if at the onset
the promisor did not make any promise to pay, but after the
service had been done he promises to pay for the service,
such a promise is enforceable although the consideration is
past – LAMPLEIGH V BRATHWAITE
(ii) Acts done by way of business:- where the act was done by
way of business and both parties understood at the time of
performance that the act was one to be paid for – Re Casey’s
Patent.
Rules governing Consideration

(a) Consideration must be sufficient

 By sufficiency of consideration, the standard is whether the act

performed is recognized by law.
 The common law over the years has recognized certain acts
which do not suffice as consideration, some of which have been
modified by Statute in Ghana, and include the following;
(i) Performance of an existing legal obligation:- this may arise in
one of two (2) ways;

(a) Where a public duty is imposed by law: under Common Law

where the law imposes a public duty, its performance cannot
be deemed as consideration – COLINS V GODEFROY

(b) Performance of a contractual duty owed to the other party:-

under common law where a person was under a contractual
obligation to do something for the other party, and does it, it
would not be deemed sufficient consideration for any promise
made for its performance. – STYLK V MYRICK
• It is important to note that this position has been changed by S.9 of
the Contracts Act, 1960.

• Thus under Ghanaian law where a public duty is imposed by

law, performance of that duty would suffice as consideration –
Kessie V Charmant.

• Similarly performance of an existing contractual obligation

would suffice as consideration.
• (ii) Part payment of a Debt (the Rule in Pinnel’s Case)
• At Common Law a promise to waive or forego a debt or part
payment of a debt is not enforceable against the promisor unless
there is a fresh consideration from the Promisee – Pinnel’s Case;
Foakes v Beer
• This position has been altered by S.8(2) of the Contracts Act, 1960
which provides that “a promise to waive the payment of a debt or
part of the debt or the performance of some other contractual or
legal obligation shall not be invalid as a contract by reason only of the
absence of any consideration therefor”
(iii) Promise to keep an Offer open for a specified period of time

 At Common Law a promise to keep an Offer open for acceptance

for a specified period of time is not binding on the promisor in the
absence of consideration.

 This position has been altered by S.8(1) of the Contracts Act, 1960
(b) Consideration needs not be Adequate
This means that Consideration does need to be of the same value as
the promise, and the Courts would not undertake an inquiry into its
adequacy. It suffices if it has some economic value, and the
promisor gets what he asked for in return for his promise.

(c) Forbearance is Consideration

It means refraining from doing what one has the right to do, and if
a person refrains from doing what he has a right to do and on the
promise of another, it amounts to good consideration – HAMMER V
SIDWAY
(d) Consideration must move from the Promisee
 At Common Law the person to whom a promise is made must be
the one to provide the Consideration before the promise would be
binding on the promissor or be enforceable against him. Thus
where the Consideration was provided by a third party, other than
the Promisee, the promise cannot enforce the contract against the
promissor – TWEDDLE V ATKINSON

 The Common Law position has been changed by S.10 of the

Contracts Act as “No contract shall be invalid as a contract by reason
only that the consideration for it was supplied by someone other
than the promise”
Doctrine of Privity of Contract
It is to the effect that a contract creates a contractual relationship
between the parties and no other. Thus only the contracting parties
acquire enforceable rights – DUNLOP PNEUMATIC TYRE V
SELFRIDGE.
Exceptions to the Doctrine

i. Statutory Exceptions
Motor Vehicles (3rd Party) Insurance Act.
Conveyancing Act, 1975 – S.15
Contracts Act, 1960 – S.5
Common Law Exceptions

 Agency Relationship

 Privity of Estate

Equitable Exception

 Trust Arrangements
Doctrine of Promissory Estoppel
It is an equitable intervention to the effect that a promise to
not enforce a contractual right is given effect even in the
absence of consideration, particularly where allowing the
promisor to enforce that promise would be inequitable –
CENTRAL LONDON PROPERTY TRUST V HIGH TREES HOUSE
LIMITED.
“the promise as I understand it, is that where one party has, by his
words or conduct, made to the other a promise or assurance that
affects the legal relationship between them and to be acted on
accordingly, then once the other party has taken him at his word
and acted on it, the one who gave the promise or assurance
cannot afterwards be allowed to the revert to the previous legal
relations as if no such promise or assurance has been made by
him, but he must accept the legal relations subject to the
qualification which he himself has so introduced, even though it
is not supported in point of law by any consideration, but only his
word” – per Lord Denning in Combe v Combe.
• Requirements of the Doctrine
• Existing contractual relationship between the parties
• Clear unequivocal promise not to insist on strict legal
rights for the period
• The promisee must show that his position was altered in
reliance on the promise
• It must be inequitable to resile.
• INTENTION TO CREATE A LEGAL RELATIONSHIP
• A contract does not exist simply because there is an agreement
between people. The parties to the agreement must intend to enter
into a legally binding agreement. This will rarely be stated
explicitly but will usually be able to be inferred from the
circumstances in which the agreement was made.
• For example, offering a friend a ride in your car is not usually
intended to create a legally binding relation. You may, however,
have agreed with your friend to share the costs of travelling to
work on a regular basis and agree that each Friday your friend will
pay you GHC 20.00 for the running costs of the car. Here, the law
is more likely to recognize that a contract was entered into.
(a) Commercial Agreements
The general position is that with Commercial Agreements, the
parties are presumed to have the intention to create a legal
relationship – EDWARDS V SKYWAYS LIMITED.

(b) Domestic Agreements and Social Arrangements

The general position is that Domestic Agreements or Social
Arrangements are not made with the intention to create a legal
relationship – COWARD V MOTOR INSURERS BUREAU
(i) Agreements between husband and wife: Agreements made
between husband and wife are presumed to be made not with
an intention to create a legal relationship between them –
BALFOUR V BALFOUR
(ii) Agreements between parent and child: Agreements entered
between parent and child within the domestic setting are not
intended to create a legal relationship – JONES V PADAVATTON
(iii)Other domestic arrangements:- where the Agreement is made in
a domestic setting but not between spouses or parent and child,
the court would look at the terms of the Agreement and the
circumstances under which it was made to determine whether
there was an intention to create a legal relationship.
The Courts will thus infer an intention to create a legal
relationship where the Agreement has a commercial effect –
SIMPKINS V PAYS

or one party has taken a drastic action in reliance on the

promise as in disposing of one’s property – PARKER V CLARKE
or refraining from doing an act which he or she has the right
to do – HAMER V SIDWAY
CAPACITY TO CONTRACT
Not all people are completely free to enter into a valid contract. The
contracts of the groups of people listed below involve problematic
consent, and are dealt with separately, as follows:
• People Who Have A Mental Impairment;
• Young People (Minors);
• Bankrupts; Drunken or Intoxicated persons
(a) Minors
The contractual age in Ghana is 21 years but there are other
legislation which puts the age of majority at 18 years, e.g. The
Children’s Act, 1998. The Constitution also sets the age of maturity
for voting at 18 years.

The general rule is that contracts entered into between a minor and
an adult are not binding on the minor but binding on the adult.

There are however certain contracts that are deemed by the

common law to be binding on the minor;
(i) Contracts for “Necessaries”
 Contracts for “Necessaries” are binding on the minor or infant.

 “Necessaries” has been defined by S.2(3) of the Sale of Goods Act

of Ghana, 1962 (Act 137) as goods suitable to the condition in
life of the person to whom they are delivered, and to his actual
requirements at the time of the delivery.

 It generally refers to the things without which a person cannot

reasonably exist and may include food, clothing, education,
training in a trade, and essential services like medical care.
 To qualify as “Necessaries” the goods or services must be;

(a) one that is suitable for the minor’s position in life –

CHAPPLE V COOPER;

(b) one that is suitable according to his actual requirement

at the time of sale and delivery – NASH V INMAN
The law would not recognize a contract as binding on a minor
where the terms are prejudicial to the interest of the minor or are
harsh and onerous, even if the contract is valid and enforceable –
FAWCETT V SMETHURST
(ii) Beneficial Contracts of Service

Where a minor enters into a contract of apprenticeship, or a

contract of service by which he receives instruction or training,
such contract is binding on him to the extent that the terms are
beneficial to the infant – CLEMENS V LONDON &
NORTHWESTERN RAILWAY, De FRANCESCO V BARNUM

Trading Contracts entered into by a minor are not deemed as

necessaries and therefore not binding on him, even if the terms are
beneficial to him – COWERN V NIELD
(iii) Voidable Contracts

These are Contracts which are binding on the minor until he takes
steps to repudiates them whilst still a minor or within a reasonable
time of attaining majority.

Under Ghanaian Law the following are voidable contracts that the
minor can repudiate;

(a) Lease Contracts

(b) Contracts affecting land or immovable property
(c) Contract for the acquisition of Shares in a Company
 Where a minor misrepresents his age and thereby induces another
to enter into a contract with him, which contract is ordinarily
unenforceable against a minor, the contract would still not be
enforceable notwithstanding the fraud – LESLIE LTD V SHEIL
 (b) Mentally Incompetent Persons
 Generally a person of unsound mind is not bound by a contract he
enters into with a person who knew at the time of the contract that
the he was of unsound mind, and the person of unsound mind did
not understand or appreciate the effect of the contract by virtue of
the insanity – IMPERIAL LOAN COMPANY V STONE
(c) Drunken or Intoxicated Persons

 A drunk or intoxicated person is not bound by a contract in much

the same terms as one who is mentally incompetent.

 The intoxicated person can however ratify a contract made in a

state of intoxication in his sober moments and it shall be binding

on him – MATHEWS V BAXTER

TERMS OF CONTRACT
They define the scope and extent of the obligations undertaken by
the parties to the Contract the breach of which entitles the other
party to some enforceable legal right or remedy.

 They could be wholly oral, wholly written, or partly oral and

partly written.

 Though all terms of the Contract need to be performed, they all do

not have equal significance when it comes to the consequences for
their breach.
Terms can thus be classified into three (3) categories;

(i) Conditions;

(ii) Warranties;

(iii) Innominate Terms.

(i)Conditions:- A Condition is a term of a Contract which is so
essential that its breach entitles the injured party to withdraw
the Contract and sue for damages. In effect, a Condition goes to
the very roots of the Contract such that its non performance
may fairly be considered by the other party as substantial
failure to perform the Contract at all – WALLIS V PRATT
(ii) Warranties:- A Warranty, as compared to a Condition, is a
subsidiary term the breach of which does not go to the roots of the
Contract and therefore the innocent party cannot repudiate or
rescind the Contract, but can sue for damages only – BETTINI V
GYE, POUSSARD V SPIERS

(iii) Innominate or Intermediate Terms:- They are terms that are not
pre-classified as Conditions or Warranties but could be treated as
either a Condition or a Warranty depending on the nature of
breach and the extent of its consequence – HONG KONG FIR
SHIPPING CO. LTD V KAWASAKI KISEN KAISHA LTD
 Express Terms:- they are terms that have been explicitly stated or
indicated in the Contract whether orally or written or a
combination of both.
 Implied Terms:- they are terms which though not explicitly
provided in the Contract are agreed to by the parties, would
nevertheless be deemed to be a term of the Contract. The terms of a
Contract may be implied by;
• (a) The Court:- to ensure business efficacy where implying
the term would achieve the objective of the business – THE
MOORCOCK

• (b) Custom and Usage of the business or trade – HUTTON

V WARREN

• (c) Statute:- A Statute implies the term – Sale of Goods Act,

Conveyancing Act, Hire Purchase Act.
• Exemption / Exclusion Clauses
• they are terms of a Contract that seek to limit or totally exclude the
liability of a party to a Contract as against the other.
• They are prevalent with standard form Contracts where a Company
which has to deal with various people in respect of the same subject
matter prints it terms in a wholesale manner and applicable to all, on
receipts, tickets, cards etc.
• To a very large extent, the Courts try to limit the extent to which a
party can rely on exemption clauses and have provided certain
conditions that would have to be met before a party can rely on
exemption clauses. These conditions are;
The exemption clause must be proven to be properly
incorporated into the Contract for it to have effect, and this
can be done by way of;

(a) Signature of the other party

(b) Notice to the other party

(c) Previous course of dealing

VITIATING FACTORS
They are factors or errors that affect the validity or enforceability of
a Contract.

The Vitiating Factors can be classified into three (3);

(i) Mistake

(ii) Misrepresentation

(iii) Undue Influence or Duress

(i) Mistake:- an error or being wrong as to a matter of fact that
influences the making of a Contract.
 For a Mistake to have effect, it must exist at the time of the Contract
was concluded.
 The legal effect of Mistake is that it renders a Contract void ab initio.

Types of Mistake

 There are three types of Mistakes; (a) Common Mistake, (b) Mutual
Mistake, (c) Unilateral Mistake
MISTAKES
(a) Common Mistake:- with this kind of Mistake, both parties agree
but in the mistaken belief that some fact which forms the basis
of the Contract exists when in actual fact, that fact does not
exist – COURTURIER V HASTIE

(b) Mutual Mistake: - with this kind of Mistake one party enters
into the Contract believing the subject matter to be one thing,
and the other party also understands it to be another. In essence
there is no agreement – RAFFLES V WICHELHAUS/ ADDAI V
PIONEER TOBACCO CO.
(c) Unilateral Mistake: - this is where only one party to the

Contract is mistaken, and the other party knows of the

mistake of the other such as mistake as to the identity of a

contracting party – PHILIP V BROOKS

DOCUMENTS MISTAKENLY SIGNED – NON EST FACTUM

• The general principle is that where a party signs a document,

he is bound by it irrespective of the fact that it was not the type
of document he intended to sign, or that he failed to read it.
• Where however the document is radically different or
fundamentally different form what he thought he was signing
and
• was not careless, he may plead non est factum – it is not my
deed or document. – Saunders v Anglia/Quao v Squire
• MISREPRESENTATION
• This is a false statement of material fact made by one of the
parties, before, or at the time of entering into the Contract which
was intended to, and actually did influence the other party to
enter into the Contract.
• Types of Misrepresentations
• (a) Fraudulent Misrepresentation:- a statement made, which the
person making it did not honestly believe it to be true, either
because he knew it to be false or he made it recklessly without
caring whether it was true or not – DERRY V PEEK
Remedies:
(i) Rescission of the Contract
(ii) Claim for damages,
(iii) Claim for damages for deceit
(b) Negligent Misrepresentation:- a representation made carelessly
and in breach of a duty owed by the person making it to the
person he is making it to, to take reasonable care that the
representation is accurate – NOCTON V BURN
(c) Innocent Misrepresentation:- the representor made his
statement with the honest belief that it was true, although in fact,
his representations were not true – NEWBIGGING V ADAM
Duress and Undue Influence
(a) Duress:- it is the use or threatened use of illegitimate forms of
pressure or intimidation to procure a party to enter into a
contract – KAUFMAN V GERSON/ HEMANS V COFFIE

Economic Duress: the law recognizes this form of Duress as where a

party threatens to break an existing Contract as a means to induce
the other party to enter into another contract – D&C BUILDERS LTD
V REES

The conduct must always amount to a coercion of will which will

vitiate consent
(b) Undue Influence: it refers to the equitable doctrine of coercion
which deals with forms of pressure that are usually less direct as
what pertains under Duress, and may take one of two forms;
 Express use of Influence or Domination of the other party: where it can
be shown that one party exercised such domination over the mind
and will of the other such that his consent to contract cannot be said
to have been given independently, the party who was so dominated
can rescind the contract – MORLEY V LOUGHMAN
 Presumption of undue influence when there is a fiduciary relationship:
this is where parties stand in a relationship of confidence to one
another, which puts one party in a position to exercise over the other
an influence which is capable of being abused such as;
(a) Parent and Child

(b) Guardian and Ward

(c) Solicitor and Client

(d) Physician and Patient

(e) Trustee and Beneficiary

(f) Religious/Spiritual Advisor and follower

 Any contract procured by Duress or Undue Influence can be
rescinded at the option of the person on whom same was applied.
 The right to rescission would however be barred under the
following circumstances;
(a) Affirmation – where after Duress or Undue Influence the party
affirms the Contract – NORTH OCEAN SHIPPING CO V HYUNDAI
CONSTRUCTION CO. LTD.
(b) Lapse of time
(c) where party recognizing that he/she might have rights, yet
failed to find out or exercise same.
• Generally, undue influence may not apply if the other party is able
to prove that;
• 1. there was full disclosure of all material facts to the person
claiming undue influence
• consideration was given which was adequate and fair
• the person claiming undue influence received independent advice
• The effect of undue influence is to render the contract voidable.
ILLEGAL AND UNCONSCIONABLE CONTRACTS

Unconscionable Contracts are contracts that equity views as being

excessively harsh, where on the account of the special disability of
one party, he or she is placed at a serious disadvantage in relation
to the other. The Courts would not enforce any such contract –
CFC CONSTRUCTION CO (W/A) LTD, RITA READ V ATTITSOGBE.
Illegal Contracts are Contracts whose formation is prohibited by law
or its performance is prohibited by law, and involves an element
which is unlawful, immoral or prejudicial to the interest of the
public or state.
Among the contracts which are deemed illegal and unenforceable
on grounds of public policy are;

(a) Contracts to commit a crime, tort, or fraud on another party –

BERG & SADLER V MOORE

(b) Contracts which promote sexual immorality – PEARCE V

BROOKS
• (c) Contracts which interfere with Regulations of Foreign
Countries – REGAZZONIA V SETHIA

• (d) Contracts prejudicial to the administration of Justice – KEIR V

LEEMAN
• (e) Contracts leading to inefficiency and corruption in public life

• (f) Contracts to deceive public authorities – ALEXANDER V

RAYSON
• (g) Contracts to oust the jurisdiction of the Courts – LEE V
THE SHOWMEN’S GUILD OF GREAT BRITAIN

• (h) Contracts to use official position or public office to

secure private reward – AMPOFO V FIORINI/KESSIE V
CHARMANT - REVISITED
• DISCHARGE OF CONTRACT
• A Contract is discharged when it ceases to operate and the parties
thereto become relieved of their obligations under the Contract.
• A Contract can be discharged in the following ways:
• (a) Agreement
• (b) Performance
• (c) Breach
• 1. Total failure, 2. Anticipatory, 3. Incomplete or Defective
d. Frustration
It describes the situation where there has been a change in an
obligation to be performed by a party that is fundamentally
different from what he undertook to perform.
Contracts for personal service;
Non-occurrence of an event – Taylor v Caldwell
Commercial purpose defeated – Krell v Henry
Government intervention
Frustration will not apply in the self induced events – Barclays Bank
v Sakari
REMEDIES FOR BREACH OF CONTRACT

1. Damages
1. Based on loss to innocent party and not gain to the guilty party
2. Loss must be due to breach
3. Mitigation
2. Injunction
3. Specific Performance – Redco v Sarpong
4. Action for price
5. Rescission
END OF LECTURE
SALE OF GOODS
SALE OF GOODS
It is a contract whereby the Seller transfers or agrees to transfer the
property in goods to the Buyer for a Consideration called Price consisting
wholly or partly of money – S.1, Sale of Goods Act, 1962 (Act 137) (SOGA)
FORM OF CONTRACT OF SALE
A contract of sale of goods may be made in writing or by word of mouth,
or partly in writing, and partly by word of mouth or may be implied from
the conduct of the parties – S.3 SOGA
GOODS
The term “Good” has been defined to include movable property and
growing crops or plants and any other things attached to or forming part
of land which are agreed to be severed before sale by or under the
contract of sale – S.81
Types of Goods
• The Act identifies two (2) types of goods; (a) Specific
Goods and (b) Unascertained Goods.
• (a) Specific Goods: they are goods identified and agreed
upon at the time a contract for sale is made. Such goods
exist and are identifiable from other goods at the time of
the contract.
• (b) Unascertained Goods: they are goods not identified or
agreed upon at the time of the contract. They may or
may not be in existence at the time of the contract.
PRICE – S.6
Price refers to that which must be given as consideration in a contract of
sale. It may consist wholly or partly of money – ALDRIDGE V JOHNSON
Price may be determined in any of the following manners;
(i) Expressly fixed by the contract
(ii) In a manner agreed between the parties
(iii) Course of dealing between the parties
(iv) Where price is not determined under any of the above, the buyer
must pay a reasonable price which is a question of fact dependent on
circumstances.
FORMS OF SALE
(i) Sale in Market Overt:
Market Overt means an open, public and legally constituted
market. Where a person buys goods in a market overt in
good faith without any notice of defect or lack of title and in
accordance with the usage of the market, the sale is valid.
(ii) Sale to a part owner:
This is where goods are sold by one person to another who
is a part owner of the same goods. Under the common law, a
sale to a part owner was null and void, but under Ghanaian
law, a sale to part owner is valid – S.1(3)
(iii) Sale or Return Contracts:
It is one where goods are delivered to the buyer with an
option that the goods may be purchased or returned.
Ownership under this type of sale is transferred to the
buyer when;
(a) he communicates his acceptance to the buyer or does
an act adopting the transaction, eg, reselling or pledging
the goods.
(b) he does not communicate acceptance but retains the
goods without giving notice of rejection within the time
fixed for rejection, or if no time is fixed, within a
If goods are damaged or lost while in the buyer’s possession,
he cannot be held liable unless the loss or damage was due to
his negligence.
If the buyer sells or pledges the goods to a third party and
there is default in payment, the seller cannot recover the
goods from the third party – KIRKHAM V ATTENBOROUGH,
POOLE V SMITH’S CAR SALES (BALHAM) LTD
(iv) Sale by Sample:

This is where a contract is based on sample of goods given or shown

to the buyer. In a sale by sample, the goods must correspond exactly
with the sample.

(v) Sale by Description:

The buyer in this instance dose not or has not seen the goods but
enters into the contract of sale based on a description of the goods.
The goods must correspond with the description.
• (vi) Auction Sales:
• This is where goods are entrusted into the hands of an
auctioneer for purposes of sale by putting up the goods
for auction and inviting offers through a bidding
process.

An Auction Sale can either be with a reserved price or

without a reserved price.
The bidders are the offerors, and every bid is therefore
an offer.
The sale is complete when the auctioneer announces
its completion with the fall of the hammer or any other
customary manner.
Auction Sales can be undertaken subject to a reserved
price or without a reserved price.
(a) Auction Sales without Reserved Price:
The Auctioneer is enjoined to sell the goods to the
highest bidder irrespective of the bidding price, and a
bidder can sue for the refusal of the Auctioneer to
accept the bid or complete the sale.
A bidder may retract the bid before the completion of
the sale.
• (b) Auction Sale subject to Reserved Price:
With this type of auction, there is a minimum price below
which a bid would not be entertained.
The Seller or his Agent or anyone acting on his behalf can
participate in the bid, but can only bid once, which shall be
openly declared at the auction before any other bid is
received. – McMANUS V FORTESCUE
TERMS UNDER A CONTRACT OF SALE; CONDITIONS AND WARRANTIES

CONDITIONS: it is a stipulation in a contract that goes to the root of the

contract.

 Its breach gives the other party a right to repudiate the contract.

WARRANTY: it is a stipulation a contract which is not of such importance as

to go to the root of the contract, but is collateral to the main purpose of the
contract, such that its breach would give rise to a claim of damages by the
other party, but not a repudiation of the contract.
TRANSFER OF PROPERTY IN GOODS

It refers to the transfer of title or ownership in the goods from the

seller to the buyer.

The issue of importance is “at what point in time does the title or
ownership in goods move form the seller to the buyer?”
The transfer of property from the seller to the buyer is dependent
on the form of sale;
(i) Specific Goods:-

(a) Where the contract is for specific goods in a

deliverable state, property passes the moment the contract
is made – TARLING V BAXTER

Any subsequent agreement that property will pass at a

certain time will be inoperative – DENNANT V SKINNER &
COLLOM
• (b) Where the contract is for specific goods and the seller is
bound to do something to put the goods in a deliverable state,
property does not pass until this has been done – UNDERWOOD
V BURGH CASTLE BRICK & CEMENT SYNDICATE

• (c) Where the goods are in a deliverable state but the seller is
required to do other things like packaging, weighing, etc,
property does not pass until it has been done and the buyer
notified.
(ii) Unascertained Goods:-

Property passes when goods which fit the description in a

deliverable state are unconditionally appropriated to the contract
by one party with the assent of the other – PIGNATARO V GILROY

(iii) Sale or Return Goods:-

(Already treated under “Forms of Sale” on slides 6 & 7. Please

refer)
TRANSFER OF RISK IN GOODS

RISK refers to the loss, damage or deterioration of the goods

that form the subject matter of the sale.

Risk is usually initially with the seller but is transferred at a

point in time to the buyer – HEALEY V HEWLETT & SONS
As a general rule, risk is transferred from the seller to the
buyer at the time the parties intended it to be transferred.
Unless otherwise agreed to the contrary, risk passes to
the buyer at the same time that property in goods pass.
Where there is a delay in delivery attributable to either
party, the party responsible for the delay will be liable
for any loss, damage or deterioration caused by the
delay – STERN LTD V VICKERS
TRANSFER OF PROPERTY IN GOODS BY NON-OWNER – S.28
(NEMO DAT QUOD NON HABEIT)
The general rule is that a person who is not the owner of goods
cannot transfer the property in the goods to a third party.
This is generally known as the principle of Nemo Dat Quod
Non Habeit
EXCEPTIONS TO THE NEMO DAT QUOD NON HABEIT
PRINCIPLE
(i) Doctrine of Estoppel: this operates where the real owner of the
goods, by his words or conduct misleads the buyer into thinking
that the seller is the owner of the goods – PICKARD V SEARS,
EASTERN DISTRIBUTORS V GOLDBERG
(ii) Power of Sale conferred by Statute: this is where even
though the seller is not vested with title, the provisions of
an enactment, empowers the person in possession of the
goods to sell them, eg. Pawn brokers ordinance, 1959.
(iii) Sale by Merchantile Agent: A Merchantile Agent in
possession of goods, or the documents of title to goods with
the consent of the owner, may sell, pledge or dispose of the
goods in the ordinary course of business and bind the
owner thereby, whether the owner authorized it or not –
FOLKES V KING, LLOYDS BANK V BANK OF AMERICA
ASSOCIATION
To suffice, a sale by the Merchantile Agent must
be under the following conditions;
(a) the Agent was in possession of the goods or
document of title with the consent of the owner;
(b) in selling, the Agent was acting in the
ordinary course of business of a Merchantile
Agent;
(c) the purchaser did not at the time of sale
have notice that the Agent had no authority.
(iv) Sale under a voidable contract –A Voidable Contract is
one which is valid until terminated at the instance of one
party. Any sale under a voidable contract to a person who
buys in good faith is valid.
(v) Disposition by a buyer in possession of goods or
documents of title –when a buyer who has bought or agreed
to buy goods obtains, with the seller’s consent, possession of
the goods, or the documents of title to them, any sale by such
a buyer to a third party who takes it in good faith, without
notice, the third party acquires good title – CAHN V
POCKETT’S BRISTOL CHANNEL CO.
(vi) Disposition by seller in possession –: where property in
goods has passed to the buyer but the seller is in possession of
the goods, he may pass good title to a third party who buys the
goods in good faith for value without notice of the default in
title of the seller.
(vii) Sale in Market Overt: where goods are sold in a market
overt according to the custom of the market, the buyer acquires
good title to the goods in so far as he buys them in good faith
and for value and without notice of the defect in title of the
seller. It is important to note that this position has been
amended by the Sale of Goods (Amendment) Act, 1994 in the
DUTIES OF THE SELLER
(i)Deliver the goods to the buyer – Fundamental Obligation. Where
sale is by sample or description, goods delivered must correspond to
the sample or description.
(ii) Supply goods of merchantable quality
(iii) Supply goods fit for the purpose for which they are intended
(iv) Supply goods of the right quantity
(v) Supply goods within the stipulated time, or a reasonable time.
DUTIES OF A BUYER
(i) To pay the price
(ii) Accept delivery of the goods
REMEDIES OF AN UNPAID SELLER
An unpaid seller is a seller of goods for which the whole of
the price has not been paid or tendered – S.34
The unpaid seller has two (2) main categories of rights or
remedies; Real Rights and Personal Rights
(i) Real Rights: these are rights that are exercisable on the
goods that form the subject matter of the transaction;
(a) Lien on the goods
(b) Stoppage in transit
(c) Resale of the goods
(d) Recovery of possession
• (ii) Personal Rights: these are rights that
the seller has against the buyer himself;

• (a) Sue for the price of the goods

• (b) Damages for non acceptance.
RIGHTS OF THE BUYER
(i) Real Rights:
(a) Reject the goods where;
1. Seller is in breach of a fundamental obligation
2. Seller is in serious breach of a condition of the
contract.
3.The buyer entered into the contract as a result of
an innocent or fraudulent misrepresentation.
INTERNATIONAL TRADE CONTRACTS
(i) FREE ON BOARD CONTRACTS (F.O.B)
It is the type of international contract where the seller undertakes to
supply the goods by arranging to have the goods delivered over the
ship’s rail, and to deposit them on board the ship.
The price quoted for the goods covers the actual price of the goods,
as well as all charges incurred up to the time the goods are placed
on the ship.
In an F.O.B contract, the seller’s obligation ends immediately the
goods are placed on board the ship.
Both property and risk pass to the buyer when the goods are put on
board the ship named by the buyer – CARLOS FEDERSPIEL&CO SA V
DUTIES OF THE SELLER IN A F.O.B CONTRACT
(i) To place the goods on board the ship named by the buyer.
(ii)To be responsible for all charges incurred up to, and
including the delivery of the goods on the ship.
(iii) To complete declaration required by custom officials.
(iv)Immediately inform the buyer that the goods have been
placed on board the ship. Failure to do so will leave the risk
on the seller.
(v) Forward all relevant documents to the buyer.
DUTIES OF THE BUYER IN A F.O.B CONTRACT

(i) To nominate a ship and communicate same to the

seller

(ii) To procure space in the ship for the goods

(iii) To arrange and pay for freight and insurance of

the goods.
(ii) COST, INSURANCE FREIGHT CONTRACT (C.I.F)

Under this type of contract, the seller agrees to

deliver goods at a price which comprises the cost of
the goods, the cost of freight, and insurance.
The characteristic feature of this type of contract is
that performance by the seller is by delivering the
shipping documents to the buyer, and not by
delivering the goods.
It is usually said that, a C.I.F contract is not a sale of
goods but a sale of the documents relating to the
goods.
The relevant shipping documents are;
(a) The bill of lading – represents the contract of
carriage by sea
(b) Insurance Policy or Certificate – represents the
contract of insurance
(c) Invoice – represents the contract of sale
• If goods are lost in transit, the seller is
obliged to deliver the documents to the
buyer and claim payment for the price.
• If the price has already been paid, the
buyer cannot ask for a refund, but to
claim against the insurer or the owner of
the carrier.
DUTIES OF A SELLER UNDER A C.I.F CONTRACT
(i) To ship at the port of shipment, goods of the description
contained in the contract.
(ii) To procure a contract of carriage under which the goods
will be delivered at the port of destination.
(iii) To arrange for an insurance of the goods
(iv) To prepare an invoice of the goods
(v) To tender, within a reasonable time after shipment, the
shipping documents to the buyer, to enable delivery of the
goods to the buyer.
• Under a C.I.F contract, a buyer has the right to
reject both the documents and the goods – KWEI
TEK CHAO V BRITISH TRADERS AND SHIPPERS
LTD
• If a buyer accepts the documents, knowing that
they are not in order, he is stopped from trying
to reject it later – PANCHAUD FRERES S.A. v
ESTABLISSEMENT GENERAL GRAIN CO. LTD
DUTIES OF A BUYER IN A C.I.F CONTRACT

(i) To pay the contract price upon receipt of the

shipping documents.

(ii) To pay the cost of unloading, and landing at the

port of destination.

(iii) To pay all import duties and wharfage charges.

HIRE PURCHASE
AND
CONDITIONAL SALE AGREEMENTS
HIRE PURCHASE

A Hire Purchase contract is a contract by which goods are

delivered to a person who agrees to make periodical payments
by way of hire, with an option of buying the goods after the
stated hire installments have been paid. Until the option is
exercised, there is no agreement to buy the goods.

A Hire Purchase contract has three (3) main components;

• (a) Contract of bailment: the hirer obtains possession of the
goods but ownership vests in the owner.

• (b) Option: this entitles the hirer ownership after payment of

the periodic installments, and for nominal consideration to
purchase the goods.

• (c) Contract of sale: this makes the hirer the owner of goods
already in his possession in the course of installment
payments.
CONDITIONAL SALE AGREEMENT
• It is an agreement for the sale of goods under
which the purchase price or part of it is
payable by installments and the property in the
goods remain with the seller notwithstanding
that the buyer is to be in possession of the
goods and under which certain conditions in
the agreement are to be fulfilled by the buyer.
Differences between Conditional Sale and Credit Sale

• In a Credit Sale property in the goods pass immediately to

the buyer, in a Conditional Sale property passes in the
future but under conditions;
• In a Credit Sale price needs not be paid in installment;
payment by installments is a requirement for a Conditional
Sale;
• In a Credit Sale the cash price and total purchase price
may be the same; in a Conditional Sale the total purchase
price is higher than the cash price.
FORMAL REQUIREMENTS OF A HIRE PURCHASE /CONDITIONAL SALE AGREEMENT

The Hire Purchase Act, 1974 (NRCD 292), which governs

Hire Purchase transactions in Ghana provides two (2)
formal requirements;

(i) Requirements before Agreement, and

(ii) Requirements of the Agreement itself.

• Requirements before the Agreement
• The seller or owner needs to tell the buyer both
orally and in writing, the cash price, or the hire
purchase price, or the total purchase price of the
goods.
Requirements of the Agreement

The Agreement must state;

(a) The Cash Price and the Hire Purchase Price, or the Total
purchase price of the goods.

(b) The amount of each installment and the date of payment of each
installment.

(c) A description of the goods or list of the goods to which the

agreement relates.
• (d) A notice indicating the rights of the hirer or buyer to
terminate the agreement; restricting the owner’s right to
repossess the goods after payment by the hirer beyond a
certain percentage; buyer to pay installment arrears upon
termination at his instance.

• A copy of the Agreement must be delivered to the hirer or

buyer within fourteen (14) days.
AVOIDABLE PROVISIONS IN A HIRE PURCHASE AGREEMENT

The Hire Purchase Act excludes certain provisions from being

included in a hire purchase agreement. The following provisions are
deemed void when put in an Agreement; a provision

(a) which gives an owner or any person acting on his behalf to enter
onto a premises or private land to take possession of goods let under
a hire purchase agreement.

(b) restricts or excludes a hirer’s right to terminate the agreement,

or imposes a liability beyond that prescribed by the Act – S.6
• (c) which seeks to treat a person who acts on behalf of
the owner or seller as an Agent of the owner or seller.

• (d) which seeks to relieve the owner or seller of

liability for the acts or defaults of a person acting on
behalf of the owner or seller.
TERMINATION OF HIRE PURCHASE AGREEMENT – S.6

The hirer or buyer is entitled to terminate the Agreement at anytime

before the final payment by giving written notice to the person
entitled to payment.

When the hirer terminates the Agreement, he is liable to pay the

difference between the total of money paid, and one half of the hire
purchase or the total purchase price, or a lesser amount specified by
the Agreement.
Where an Agreement is terminated by the hirer, the goods
shall be returned to the premises from where they were
taken at the expense of the buyer.
A hirer who fails to take reasonable care of the goods shall
compensate the owner upon termination.
A hirer who retains possession of the goods after
termination shall be denied the option to buy the goods if
the owner brings an action for recovery of possession
COMPLETION

Completion is effected by the hirer giving notice to the

owner of his intention to complete the purchase by
tendering or paying the balance due on a specified date
and tendering or effecting payment on the specified date.
The balance payable is the net balance, that is, the
difference between the amounts paid and the total
purchase price.
The hirer’s right can be exercised at anytime during the
subsistence of the Agreement, or within twenty-eight (28)
days after the owner has taken possession of the goods, in
which case he would have to pay for the owner’s expense in
taking possession of the goods as well as cost of maintaining
the goods.

• An owner who takes possession of goods cannot resell them

until after twenty-eight (28) days.
PROTECTED GOODS

A Protected Good is one which;

(i) has been let under a hire purchase agreement, or a conditional sale
agreement;

(ii) for which one half of the price or total purchase price has been paid,
whether pursuant to a judgment, or otherwise, tendered by or on behalf of the
hirer or buyer, or a guarantor, and

(iii) in relation to which the hirer or buyer has not terminated the hire
purchase or conditional sale agreement or the bailment.
Recovery of Protected Goods:

An Owner or seller can only recover possession of a

protected good through a court action.
Where an owner or seller recovers possession of protected
goods, not through a court action, the agreement is
deemed terminated and the hirer or buyer is released from
any liability and can sue the owner or seller for money
paid by the hirer and any security given.
The Court may however on an application by the hirer or
buyer, order the return of the goods to the hirer or buyer
and a rescheduling of payments.
TERMS OF A HIRE PURCHASE AGREEMENT – S.13

The following terms are implied in every hire purchase

agreement;
(i) that the hirer shall have and enjoy quiet possession of
the goods;
(ii) that goods are free from any charge or encumbrance;
(iii) that the owner has the right to sell the goods;
(iv) that the goods are reasonably fit for the purposes for
which the hirer requires them
• (v) that the goods are of merchantable quality. This term as
to merchantable quality will not be implied in the following
instances;
• (a) where the goods were examined by the hirer and the
defect should have been seen by the examination.
• (b) where the goods are sold as second hand goods and
there is a statement in the Agreement to the effect that the
term does not apply
• (c) where the goods are sold subsequent to a defect which is
specified in the Agreement, with a statement that the term
as to merchantable quality shall not apply.
A seller or owner can only rely on a clause excluding or
modifying this term unless.
The owner or seller brought the statement to the notice of
the hirer and made its effect clear to him;
 and That the defect was brought to the attention of the
hirer or buyer
A breach entitles the hirer or buyer to rescind the contract.
(vi) where goods are let or sold by reference to a sample, it is
implied that the bulk shall correspond exactly with the
sample; and that the hirer will have the opportunity of
comparing the bulk with the sample – S.15
• vii) where goods are let or sold by description, there
is the implied term that the goods correspond with
the description.
• (viii) where the goods let or sold were by sample and
description, there is the implied term that the goods
correspond with the sample and the description.
A breach by the owner or seller will entitle the hirer
or buyer to rescind the Agreement
SALE OF HIRE PURCHASE GOODS TO A THIRD PARTY – S.16
Where a hirer or buyer sells, pledges or otherwise
disposes of hire purchase goods for value to a third
party, the following occur;
(i) the third party may retain the goods for sixty (60)
days;
(ii) if the goods are repossessed by the owner or seller,
the third party is entitled to recover possession after
giving notice to the owner or seller who has
repossessed, and the third party pays or tenders to the
owner or seller either,
• (a) all amounts due and unpaid from the
hirer or buyer to the owner or seller;
• (b) the total due under any three (3)
installments due or unpaid from the hirer or
buyer to the owner or seller, whichever is less,
the rights and obligations of the hirer or buyer
is transferred to the third party who is then
treated as the hirer or buyer for purposes of
the Agreement.
Where the third party pays or tenders the total
due under any three (3) installments, then the
following will occur;
(a) the third party is not bound to pay any
outstanding installments in excess of three (3)
installments
(b) the third party is entitled to recover from the
hirer or buyer the said three (3) installments
which he has paid to the owner or seller.
• (c) the owner or seller may recover from the
original hirer or buyer amounts outstanding in
excess of the said three (3) installments.
• (d) the contract between the third party and the
hirer or buyer is terminated and a direct
relationship is established between the third party
and the owner or seller.
LIMITATION ON ENFORCEMENT OF AGREEMENTS – S.17

An owner or seller cannot enforce the provisions of a

hire purchase or conditional sale agreement;
(a) for the payment of an amount of damages or
forfeiture or penalty;
(b) for the acceleration of the payment of an
installment
• (c) for termination of the agreement
• (d) for repossession
• Unless the owner or seller has served a notice
on the hirer or buyer to perform the
obligations for a period of fourteen (14) days
DUTIES OF THE HIRER

1. Duty to give information: upon a request from the

owner or seller. Failure to give information within
14 days would make the hirer guilty of an offence,
and liable to a fine.
2. Duty not to remove goods from the jurisdiction:
cannot be done without the written consent of the
owner or seller. Failure to comply is an offence
and liable on conviction to a fine or prison term
• 3. Duty to pay minimum price
• RIGHTS OF THE HIRER
• 1. The right to terminate
REMEDIES OF THE OWNER
1. To sue for damages
2. To repudiate the Agreement
3. To exercise lien over goods or to seize the goods
Seizure of goods can be done in two (2) ways;
(a) where there is a breach of the Agreement by the
hirer or buyer
(b) where there is no breach but due to death of the
hirer or buyer.
AGENCY
DR. ALEXANDER AMANKWAA
Introduction
• Agency deals with the relationship that arises when one person is used
by another to perform certain tasks on his behalf
• The relation exists where one person has an authority or capacity to
create legal relations between a person occupying the position of
principal and 3rd parties.
• The relation arises wherever one person called the agent has authority to
act on behalf of another called the principal and consents so to act
• It is the relationship that exists between two persons, one of whom
expressly or impliedly consents that the other should represent him or act
on his behalf, and the other of whom similarly consents to represent the
former so to act.
Introduction Cont
• Simply put an agent is a person who affects the legal position of
another, called a principal, in dealings with third parties
• The common law principle in operation is usually represented in the
Latin phrase, qui facit per alium, facit per se, i.e. the one who acts
through another, acts in his or her own interests
• The principal is bound by the contract entered into by the agent, so
long as the agent performs within the scope of the agency.
• A third party may rely in good faith on the representation by a person
who identifies himself as an agent for another.
Introduction
• Agency is a triangular relationship.
• They are Principal/Agent relationship, Agent/Third Party relationship
and Principal/Third Party relationship.
• The essence of agency is the power to affect the principal’s legal
relations with the outside world.
• The three features of agency are service, representation and power to
affect the legal position of the principal. He can acquire rights for his
principal and subject his principal to liabilities.
Types of Agents
• General and special agents may arise due to the authority granted
them.
• The authority of a general agent covers doing some act in the ordinary
course of his business, trade or profession on behalf of his principal.
• He may also be an agent who acts on behalf of his principal in all
matters.
• The special agent has authority to act for some special occasion or
purpose which is not within the ordinary course of his business, trade
or profession
Types of Agents Cont.
• Professional agents are agents specialised in particular business, trade
or profession.
• Examples are mercantile agents and solicitors.
• Mercantile agents are agents who in the customary course of business
have authority to sell goods or to consign goods for the purpose of sale
or to buy goods or to raise money on the security of goods.
• The term covers factors, brokers, auctioneers and del credere agents.
Types of Agents Cont.
• A factor is an agent entrusted with possession of goods or of the
documents of title thereto.
• He normally sells in his own name without disclosing that of his
principal.
• A broker is a go between, a negotiator.
• He makes contracts for the purchase or sale of property or goods such
as stocks and shares of which he is not entrusted with the possession
or documents of title.
Types of Agents cont.
• An auctinnener is an agnent whi is nempliyned ti snell at a public auctin.
Hne is an agnent fir thne snellner.
• Hne may nit bne nentrustned with thne pissnessiin if thne giids ti bne sild
ir thne dicumnents thnernein.
• A dnel crnednerne agnent is an agnent whi usually fir nextra rnemunneratin
undnertaknes ti indnemnify his nempliyner against liss arising frim thne
failurne if pnersins with whim hne cintracts ti carry iut thneir cintracts
Types of Agents cont.
• . Hne is an agnent charging additinal cimmissiin fir risk. Othner agnents
includne insurancne agnents ir brikners whi nnegitatne and nefnect pilicines
if insurancne and nestatne agnents whi arrangne fir thne salne, acquisitin
ir lneasing if rneal nestatne.
Creation of Agency
• Agnency may arisne by cinsnent, ipneratin if law ir ratfcatin

• Cinsnensual authirity can bne grantned nexprnessly by cintract ir may bne

implined frim a cintractual rnelatinship.
Express Agency
• The agent’s authority is created normally by contract.
• The principal or some person authorised by him expressly appoints the
agent whether by deed, by writing under hand or orally.
• Since an agent does not make contracts on his on his own behalf, it is not
necessary that he should have contractual capacity.
• A minor or a bankrupt may be an agent. A principal, however, must have
full contractual capacity.
• principal’s incapacity cannot be cured by acting through an agent who has
capacity in law.
•.
Express Agency cont.
• Thus whatever a person has power to do himself he may do by means
of an agent, but what a person cannot do himself, he cannot do by
means of an agent.
• Creation may be by a power of attorney – the instrument which
confers the agency. Its proof is by means of a copy.
• The purpose of the contract must be lawful and possible.
Implied Agency
• Agnency arisnes by implicatin.
• Partnes havne cinductned thnemsnelvnes tiwards neach ithner in such a way
that thney can rneasinably bne taknen as having agrnened ir cinsnentned ti
thne rnelatinship.
Authority of Agents
• Thnerne arne a numbner if difnernent typnes if authirity, dnerivned frim
difnernent siurcnes, which an agnent may pissness.
• It may arisne thriugh actual authirity, usual authirity, custimary
authirity and apparnent ir istnensiblne authirity.
Actual Authority
• This is the actual authority given by the principal to the agent. It may
be express or implied, that is, given by express words or implied from
conduct or the circumstances of the case.
• The capacity of an agent to act is the same as the capacity of his/her
principal.
• Subject to exceptions already mentioned, anything the principal can
lawfully do can be done for him/her by an agent.
Actual Authority cont.
• Hnencne, thne nexprness actual authirity if an agnent can bneci-nextnensivne
with thne piwners if thne principal.
• Exprness actual authirity can bne cinfnerrned by dnened, in writng, ir
irally. Authirity by dnened is, usually, callned "a piwner if atirnney" and
as such, it is a firmal dicumnent and cinstruned mirne strictly than
ithner typnes if nexprness authirity.
Usual authority

• Agents in particular trades or professions usually carry out certain set

of duties e.g. insurance brokers, stockbrokers, solicitors.
• Hence, if a person in one of these trades or professions is employed in
respect of that business as an agent, then he/she is presumed to have
the authority to do whatever is usually done by agents in that
particular business.
• The kind of authority that an agent in a trade, business and profession
or at his place of employment would usually need and does have, if he
is to discharge his commission..
Usual authority cont.

• A principal’s restriction on his agent’s usual authority will have no effect

on a third party whose attention has not been drawn to the restrictions and
who continues to deal with the agent on the basis of his usual authority.
• In Watteau v Fenwick [1893] 1Q.B. 346, the defendant had employed H as
a hotel manager with H’s name alone appearing over the bar as licensee.
• The defendant limited H’s actual authority by forbidding him to buy
cigars. H, however did order cigars from W. who knew nothing of the
existence of the defendant.
Usual authority cont.

• It was hneld that thne dnefnendant was liablne ti pay fir thne cigars as such
purchasnes wnerne within thne usual authirity if a hitnel managner
Customary authority

• This is similar to usual authority, but it is applied to the customs or usages of

a particular place, as opposed to a particular business.
• An agent must impliedly act according to the usages and customs of the
place, market or business in which he is appointed to serve his principal.
Such customary authority must either be known to the principal or must be
so notorious that the principal cannot deny knowledge of it.
• In Akosah v Owusu [1963] 2 GLR 277, the plaintiff a storekeeper at CTL,
Koforidua, alleged that the defendant owed him a sum of money which he
had paid to CTL at the request of the defendant for goods sold and delivered
to the defendant.
Cuatomary Authority cont.
• It was hneld that as agnent if CTL, thne plaintf was nenttlned ti sune in his
iwn namne as hne had bnennefcial intnernest in thne pnerfirmancne if thne
cintract fir thne salne if thne giids ti thne dnefnendant.
Apparent authority, or ostensible authority

• These are two terms for the same thing. Apparent authority is the
authority the agent has as it appears to others.
• An agent can plainly appear to have a certain authority which he/she
does not actually possess.
• This occurs where a person is allowed to appear as if he is the
principal’s agent when in fact he is not or where the principal permits
his agent to give the impression that he has more authority than he
actually possesses or where the principal allows his agent to appear as
an agent where actually the relationship has been terminated.
• Apparnent authirity is a firm if nestippnel.
• Estippnel mneans that a pnersin whi has alliwned anithner ti bnelinevne that a
cnertain statne if afairs nexists, with thne rnesult that thnerne is rneliancne upin such
bnelinef cannit afnerwards bne hneard ti say that thne trune statne was far
difnernent, if ti di si wiuld invilvne thne ithner pnersin in sufnering simne kind
if dnetrimnent.
• Thne principal is said ti hild iut as his agnent thne pnersin rneprnesnentned as
having authirity ti act in his bnehalf.
• Thnerne must bne simne statnemnent ir cinduct in thne part if thne principal which
can amiunt ti a rneprnesnentatin that thne agnent has authirity ti act in his
bnehalf in thne way hne is actng.
Apparent Authority cont.
• It can bne nestablishned with thne priif if thne filliwing nelnemnents: a
rneprnesnentatin, rneliancne in thne rneprnesnentatin and an altneratin if
inne’s pisitin dune ti such rneliancne
• In Ada Ci-ipneratvne Fiid Farmners Uniin Ltd. v Abidnei and Othners
[1982-83] G.L.R. 1144, thne plaintf uniin biught simne tractirs and
nequipmnent with a lian frim thne Agricultural Dnevnelipmnent Bank.
• Thne tractirs wnerne rnegistnerned in thne namne if thne uniin and thne bank.
Latner thne ifcners if thne uniin fiund thne dnefnendants in pissnessiin if
thne tractirs and nequipmnent.
Apparent Authority Cont.
• They made several attempts to retrieve them but failed because the
defendants asserted a claim of right on the basis that they had bought the
tractors and the attachments from one A, an officer of the Department of
Co-operatives which had guaranteed the loan from the bank.
• In the instant action by the plaintiff union for, inter alia, recovery of
possession of the tractors and their attachments, it was held that agency
by estoppel would arise where one person had so acted as to lead another
to believe that he had authorized a third person to act on his behalf and
that other, in such belief, entered into transactions with the third person
within the scope of such ostensible authority
Apparent Authority cont.
• If it were established that the plaintiff union by its conduct enabled A
to hold himself out as owner or as one entitled to sell, then the plaintiff
union would be precluded from denying his authority to sell. But on
the facts, A had no authority to sell.
• The onus lay on the person dealing with the agent to prove either real
or ostensible authority and it was a matter of fact whether the agent
had ostensible authority for the particular act.
Apparent Authority cont.
• In Buama v Opping [1992] 2 GLR 213, thne dnefnendant was thne
iwnner/drivner if a cimmnercial vnehiclne.
• Thne plaintf whi paid a farne ti travnel in thne vnehiclne ciuld nit fnd his
bag in rneaching his dnestnatin.
• Hne had paid frneight fir thne bag ti a biikman whi tiik thne bag frim
him and knept it in thne biit if thne vnehiclne.
• Thne plaintf suned fir thne valune if thne bag and thne itnems in it,
cinsnequnental liss and damagnes.
Apparent Authority cont.
• In his dnefnencne thne dnefnendant cintnendned intner alia that thne biikman
was nit his agnent.
• It was fiund that thne biikman gavne thne minney hne had rnecneivned as
frneight frim thne plaintf ti thne dnefnendant and that nevnen thiugh thne
biikmnen wnerne nempliynenes if thne GPRTU thney wnerne thne innes whi
dnealt with thne passnengners by cillnectng thne farnes and frneight frim
thnem.
Apparent Authority cont.
• The defendant was vicariously liable for the loss of the plaintiff’s bag by the
bookman because if a person represented or permitted it to be represented that
another had authority to act on his behalf he would be bound in the same way as
he would be if that other had in fact authority to act.
• The defendant was present when the fee was charged and it was also clear that the
defendant had given ostensible or apparent authority to the bookman to act on his
behalf.
• Accordingly, there was an agent and principal relationship between the bookman
and the driver. Again in law the usage of the trade or business in which an agent
was employed would in the absence of express direction frequently determine the
liability of the principal.
Incidental /presumed Aunthority
• Incidental authority :The authority given to an agent will normally be
in respect of his/her primary tasks. However, it is implied that he/she
also has authority to do all such things as are necessarily incidental to
the performance of the duties given by his/her actual authority.

• Presumed authority:certain relationships inevitably involve one person

acting as agent for another e.g. husband and wife. In such cases, the
agent is presumed to have a certain authority.
Agency by operation of law

• There is no prior agreement between the parties to create an agency

relationship and there is no representation to each other or others that
one of them was acting as an agent of the other.
• The law imposes the consequences of agency on their actions.
• They may arise as agency of necessity or agency of co-habitation.
Agency of Necessity

• The need to act on behalf of another is unforeseen but arises out of

sudden danger to property or some interest of the person on whose
behalf the intervention is made.
• A master of a ship’s exercise of authority to safeguard a vessel or
cargo in danger of perishing is an example.
• There is the shipmaster’s presumed authority to do what is reasonably
necessary taking into account the danger, distance, accommodation,
expense and such like factors.
• It is especially so when it is impossible to communicate with the
owners to take instructions. He is expected to act in good faith.
Agency of Necessity cont.
• Agnency if nnecnessity can arisne as ling as thnerne nexists a rneal nemnergnency.
Thne act must bne dinne fir thne bnenneft if thne iwnner and nit mnernely fir
thne cinvneninencne if thne agnent. In Springner v G.W. Ry [1921] 1 K.B. 257,
timatines wnerne cinsignned by S. frim Jnersney ti Lindin.
• Thne ship dnelivnerned thnem ti Wneymiuth thrnene days latne and, iwing ti a
railway strikne, thne timatines ciuld nit bne unliadned untl twi days
latner.
• Whnen unliadned thney wnerne fiund ti bne bad and thne railway cimpany
dnecidned ti snell thnem lically. Ni cimmunicatin was madne ti S.
Agency of Necessity cont.
• It was hneld that thne railway cimpany was liablne in damagnes ti S., as it
shiuld havne cimmunicatned with him and askned fir instructins as
siin as thne ship arrivned.
Agency by cohabitation cont.

• At common law as long as a married couple lives together, it is presumed that

the wife has the husband’s authority to pledge his credit for necessaries
judged according to his style and standard of living.
• The requirements for such agency are cohabitation and domestic
establishment. The goods or services ordered must be necessaries suitable to
the style in which the couple customarily lives, otherwise the husband will
not be liable to pay.
• Where the husband shows evidence of adequate provision by him he will not
be liable.
Agency by cohabitation cont.
• This may bne bnecausne his wifne was alrneady sufcinently supplined with
giids if thne kind in qunestin, ir his wifne was supplined with a
sufcinent alliwancne ir sufcinent mneans fir thne purpisne if buying
such giids withiut plnedging thne husband’s crnedit.
• Whnerne thne irdner, thiugh fir nnecnessarines, was nexcnessivne in nextnent ir,
having rnegard ti thne husband’s incimne, nextravagant thnen thne husband
shall nit bne liablne
Agency by cohabitation
• This may bne bnecausne his wifne was alrneady sufcinently supplined with
giids if thne kind in qunestin ir his wifne was supplined with a sufcinent
alliwancne ir sufcinent mneans fir thne purpisne if buying such giids
withiut plnedging thne husband’s crnedit.
• Whnerne thne irdner, thiugh fir nnecnessarines, was nexcnessivne in nextnent ir,
having rnegard ti thne husband’s incimne, nextravagant thnen thne husband
shall nit bne liablne
Agency by cohabitation cont.
• There will also be no liability if he expressly forbade his wife to pledge his credit
or he expressly warned the supplier not to supply his wife with goods on credit.
• If the husband has been in the habit of paying his wife’s bills with a particular
supplier, his wife’s agency will be presumed and he can only escape liability by
expressly informing the supplier that his wife’s authority is revoked.
• In Miss Gray Ltd. v Cathcart (1922) 38T.L.R. 562, a wife was supplied with
clothes to the value of £215 and the husband refused to pay for them.
• On his being sued by the tradesman, the husband proved that he paid his wife
£960 a year as an allowance.
• It was held that the husband was not liable.
Agency by cohabitation cont.
• In midnern tmnes thneir applicatin may bne simnewhat diubtul, and it
may wnell bne that in appripriatne casnes thne ciurt may hild that it is in
thne intnentin if thne wifne and thne cintractng party that thne wifne has
nit actned as agnent if hner husband and has madne hnersnelf liablne ti thne
third party as principal.
Agency by Ratifcation.
• A pnersin acts withiut authirizatin but thne pnersin in whisne bnehalf
thne act was purpirtned ti havne bnenen carrined iut subsnequnently adipts
thne act. It is a rnetrispnectvne cinsttutin if agnency.
• What it mneans is that thne agnent in fact, has ni authirity ti di what
hne dines at thne tmne hne dines it and thne principal in whisne bnehalf and
withiut whisne authirity thne agnent has actned, subsnequnently accnepts
thne agnent’s act and adipts it just as if thnerne had bnenen a priir
authirizatin by thne principal ti di nexactly what thne agnent has dinne.
Agency by Ratifcation cont.
• A cintract can inly bne ratfned undner thne filliwing cinditins: First
thne agnent whisne act is siught ti bne ratfned must havne purpirtned ti
act in bnehalf if thne principal.
• It mneans thne cintract has bnenen madne in bnehalf if thne principal and si
thne agnent had nexprnessly cintractned as an agnent.
• Snecindly thne cintract can inly bne ratfned by thne principal whi was
namned ir ascnertainablne whnen thne cintract was madne.
• Thirdly thne agnent must havne a principal whi was in actual nexistnencne at
thne tmne if thne cintract.
Agency by Ratifcation cont.
• Fourthly, the principal must have had contractual capacity at the date
of the contract and have it at the date of ratification.
• That means the principal’s competence must be intact at the time he
seeks to ratify.
• The contract itself must be valid not void.
• The principal must at the time of ratification have full knowledge of
all the material facts.
Agency by Ratifcation cont.
• The ratification must apply to the entire act of the agent.
• Finally the principal must ratify within the time set or within a
reasonable time.
• The ratification must occur before the third party withdraws.
• Upon ratification two things happen.
• The unauthorized act becomes valid and the authority to act is
restored retrospectively.
Obligations of Agency
• Agnency impisnes dutnes in bith thne agnent and thne principal.
• Thne dutnes if thne agnent includne thne duty if pnerfirmancne, liyalty ir
ibnedinencne, carne and skill and nin-dnelnegatin.
• Othners arne rnespnect fir thne principal’s ttlne, duty ti acciunt, nit ti
pnermit a cinfict if intnernest ti arisne, misusne cinfdnental infirmatin
and nit ti makne a snecrnet prift ir takne a bribne.
Obligations of Agency
• The agent owes a fiduciary duty to the Principal.
• The agent engaged under a contract must comply with the contractual
obligations.
• Even when acting gratuitously he must perform the tasks requested. The agent
must obey all lawful instructions of the principal.
• The agent must show loyalty to the principal.
• The agent has a duty to exercise due diligence in the performance of his duties
and to apply special skills which he professes to have. Where the agency is
based on contract, the court will normally imply a term requiring reasonable
care and skill.
Obligations of Agency cont.
• If hne is nempliyned ti snell, it is his duty ti ibtain thne bnest pricne
rneasinably ibtainablne.
• Thnerne is alsi thne duty if nin-dnelnegatin.
• Thne agnent is nit ti dnelnegatne his authirity.
• An agnent cannit, withiut thne nexprness authirity if his principal,
dnelnegatne his authirity ti anithner ir appiint a sub-agnent ti act fir
him in thne whilne ir in part if his dutnes.
• Thne Latn maxim is "dnelnegatus nin pitnest dnelnegarne": simneinne ti
whim simnething is dnelnegatned cannit sub-dnelnegatne.
Obligations of Agency cont.
• Thne rnelatinship bnetwnenen thne principal and his agnent is a pnersinal and
cinfdnental inne.
• Excneptins ti thne dnelnegatus nin pitnest dnelnegarne duty (a dnelnegatne
must nit dnelnegatne) arne whnerne thne principal nexprnessly cinsnents, whnerne
thne principal implinedly cinsnents and whnerne unfirnesnenen circumstancnes
makne it nnecnessary ti dnelnegatne.
• Othner nexcneptins includne purnely administratvne tasks and alsi whnerne it
is pnermitned by statutne.
Duties of Principal

• The Principal has the duty to pay the agent the commission or other remuneration agreed
for his service.
• The amount of the commission and the terms under which it is payable depend entirely
on the terms of the contract between the parties.
• The Principal has a duty to reimburse the agent for any expenses incurred in the course
of acting for the principal.
• The other duty of the principal is to indemnify the agent for all acts lawfully done and
liabilities legitimately incurred in the performance of his service.
• The agent loses his right to an indemnity if he acts beyond his authority or performs his
duty negligently.
Rights of the Agent

• The Agent has the following rights against the Principal.

• He can claim remuneration for services provided, claim
reimbursement for all expenses and claim indemnity against all
liabilities incurred in the performance of his services.
• He can exercise a lien over property owned by the principal in respect
of claims against the principal.
Rights of the Principal

• Thne rnemnedines availablne ti thne Principal fir thne dnefault if thne agnent
arne actin fir damagnes, actin fir acciunt and paymnent if intnernest.
• Thne principal may rnecivner any amiunt if snecrnet prift frim thne
agnent. Hne may rnefusne ti pay thne agnent his cimmissiin ir ithner
rnemunneratin.
• Thne principal may dismiss thne agnent withiut nitcne. Thne principal may
alsi rnepudiatne thne cintract.
The Efects of Agency

• Thne agnent is ablne ti afnect thne lnegal rnelatinship if his principal in thne
making if cintracts and in thne dispisitin if authirity.
• Thne rnelatinship has a fduciary naturne.
• Thne spnecifc rights and liabilitnes dnepnend in cintract.
• Twi briad griups arne idnentfablne.
• Thnesne arne thisne cintracts whnerne thne agnent disclisnes his agnency and
thisne hne dines nit disclisne his agnency.
Disclosed Agency

• An agent acting within the scope of his authority who contracts with a
third party by disclosing his agency establishes a direct contractual tie
between the principal and the third party.
• Where the agent indicates that he is acting as an agent, the general rule
is that only the principal and the third party exert any authority over
the legal relations of the principal and the third party.
• The principal and the third party can sue and be sued by each other.
Disclosed Agency cont.
• In Arhin v Kisiwaa [1979] G.L.R. 311, it was held that the legal
relationship of an accredited seller or receiver with the Director of the
Department of Lotteries was that of an agent and a principal and as to
the relationship with the public treating with such agent, the receiver
warranted that she had authority of the director to conduct the business
of a lotto receiver.
• On purchasing the tickets in issue therefore A, the lotto staker
contracted with the director as a disclosed principal of (K the lotto
receiver).
Disclosed Agency cont.
• Any breach of the contract by K therefore raised a liability directly against
the director, for an agent of a disclosed principal acting within the scope of
his authority generally never incurred upon a contract.
• However, in the instant case, since the tickets sold to A had not been
lawfully allotted to K by the director, K acted outside the scope and in
breach of her agency.
• Consequently, when the director declared A’s winnings void on the ground
that the sale of the tickets was irregular K became directly liable to A not
on the basis of the contract with the director but on the basis of breach of
warranty of authority.
Diclosed Agency cont.
• Exceptions can occur where the agent may also sue on behalf of his
principal.
• An agent is entitled to maintain an action for money had and received.
• An agent may sue or be sued when he endorses a bill of lading, the
third party still insists on dealing with him after disclosing the fact of
his agency, in relation to deeds, where he does not operate within the
scope of his authority and by implication.
Undisclosed Agency

• Oncne thne principal rnemains undisclisned thne agnent may sune and bne suned
in thne cintract.
• Thne agnent can nenfircne thne cintract against thne third party.
• Thne principal can nenfircne thne cintract against thne third party.
• Thne agnent’s right if actin is list whnen thne principal dnecidnes ti intnervnenne.
Whnen thne third party bnecimnes awarne that thnerne is a principal hne may act
in a mannner as ti indicatne that hne has nelnectned ti dneal with thne principal.
• Hne has a right if nelnectin as ti whim ti pricnened against incne thne
nexistnencne if thne principal is madne kniwn ti him.
Undisclosed Agency
• The third party can choose to enforce the contract against the agent or
the principal.
• Where the third party has settled with the agent in a situation of
undisclosed principal, such settlement may be a complete defence to
the principal’s action to recover payments due from the third party.
• Where the third party had a special reason to contract with the agent
the principal may be excluded from the contract.
• An undisclosed principal cannot ratify any contract made outside of
the agent’s actual authority.
Termination of Agency
• An agnency may bne tnerminatned by thne act if thne partnes ir by
ipneratin if law.
• Acts if thne partnes:Thne partnes by agrnenemnent bnetwnenen thnem bring thne
agnency ti an nend. Thne tnerminatin may alsi bne thriugh rnevicatin by
thne principal by nitcne ir summarily. It may alsi bne thriugh
rnenunciatin if thne agnency by thne agnent.
Termination of Agency-operation of
law

• An agnency bnecimnes tnerminatned at thne nexpiratin if thne tmne agrnened

upin fir thne duratin if thne agnency, ir in thne cimplnetne pnerfirmancne
if thne undnertaking.
• It may alsi bne dune ti thne frustratin if thne cintract ir thne happnening
if an nevnent rnendnering thne cintnuancne if thne agnency unlawful.
• Thne agnency may alsi cimne ti an nend whnerne neithner party bnecimnes
incapablne if cintnuing thne cintract by rneasin if dneath, insanity ir
bankruptcy.
Termination of Agency-operation of
law
• In Gordon v Essien [1992] 1 GLR 232, where the principal had died
and the daughter of the agent she had earlier appointed continued to
collect rents on her behalf it was stated that “It was trite law that death
was one of the events which automatically determined an agency; the
conception of authority demanded a continuing consent of the
principal to the agent’s act on his behalf and with the death of the
principal the consent would not continue because the mind from which
it issued had ceased to exist.’
• In Girdin v Essinen [1992] 1 GLR 232, whnerne thne principal had dined
and thne daughtner if thne agnent shne had nearliner appiintned cintnuned ti
cillnect rnents in hner bnehalf it was statned that “It was tritne law that
dneath was inne if thne nevnents which autimatcally dnetnerminned an
agnency; thne cincneptin if authirity dnemandned a cintnuing cinsnent
if thne principal ti thne agnent’s act in his bnehalf and with thne dneath if
thne principal thne cinsnent wiuld nit cintnune bnecausne thne mind frim
which it issuned had cneasned ti nexist.’