Law of Contract

Extent of deviation between Ghana Contract Act 1960 (Act 25) and English Common Law

Principles and Judicial Precedence

Presented by Group 6

Group 6 Members

1 APPAU DOUGLAS OWUSU - FINANCE 2 AFESI DOMINIC YAO - 10391906 3 KUBLENU EDNA OGBOO - 10361734 4 BAKA JOHN FINANCE - 10392095 5 BEDZRAH ELI TETTEH - 1022344 6 AFARI-MINTA EMMANUEL - 10361729 7 OPARE-TWUM ESTHER F - 10391960 8 BOATENG EUGENE NIMAKO - FINANCE 9 BINKA EVELYN - 10391916 10 ADDY FRANK KPANIE - 10391872 11 KWADAMAH FORGIVE - FINANCE 12 LOMOFIO GILBERT ADJETEY - 10066081

Roadmap

1. Origini. English Common Law and Judicial Precedenceii. Ghana Contract Act

2. Provisions• Frustration of contract• Third party rights• Consideration• Formalities

3. Conclusion

Origini. English Common Law and Judicial Precedence• Common Law is a system of law in place in England and its

colonies. Originally, Common Law (Law common to all England) was based on the principle that the rulings made by the King's courts were made according to the common custom of the England, as opposed to decisions made in local and manorial courts which judged by provincial laws and customs.

• Over the years, Common Law is also been understood to be “law by precedent”,.

• Law by Precedent or Judicial Precedence is based on the principle that the courts are bound (within prescribed limits) by prior decisions of superior courts. Common law, (case law or precedent) is law developed by judges through decisions of courts and similar tribunals (Stare decisis), as opposed to statutes adopted through the legislative process or regulations issued by the executive branch of government.

Origin• English Common law and Judicial precedence is therefore

not based on any system of codified legislations governing contract actions and inactions

ii. The Ghana Contract Act • The Ghana Contract Act 1960 (Act 25) is a codified

legislation enacted by the parliament of Ghana to amend the law of contract and to replace certain Imperial enactments in 1960. It consists of Common Law principles of Contract applied and developed by the English Courts over the years.

• While the Contract Act of Ghana is largely based on the English Common Law, it seeks to make certain provisions which vary from the common law applications, but are specific to the Ghanaian situation.

Provisions1. Frustration of contract• The Ghana Contract Act 1960 (Act 25) does not make

explicit provisions of circumstances under which a contract may become frustrated. The courts will normally apply the common law rules on determining whether a circumstance giving rise to frustration has occurred.

• The Act however adopts a position of equity in the apportionment of losses and recovery of payments under a frustrated contract.

• Section 1 subsections 2 and 3 are to the effect that a contracting party shall recover all sums paid or cease the payment of sums payable after taking account of expenses incurred before the contract becomes frustrated or performance becomes impossible.

Provisions1. Frustration of contract• Under the English Common Law rules on the other hand, such

payments may not be recovered. The case of Chandler v Webster

demonstrates a classical establishment of this, where recovery of a pre-payment for the hiring of a flat under contract (which was subsequently deemed impossible) was unrecoverable. It was also decided in the case that as a further obligation to pay the entire balance had occurred prior to the frustrating event, this was also due.

• The rule of non-recoverability was however overturned in the case of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, where the House of Lords ruled that payments made in return for no consideration should be recoverable.

• It was reconsidered again in the case of Whincup v Hughes, where none of the £25 paid for a watch after the death of the watch maker could be recovered, despite just a small portion of the contractual obligations being fulfilled

Provisions2. Third party rights• A contract made in favor of a third party is known as a

third-party contract or contract for the benefit of a third party (stipulatio alteri), and any action to enforce a ius quaesitum tertio is known as a third party action.

• Section 5, subsection 1 and 2 of the Ghana Contract Act 1960 (Act 25) provides that any provision in a contract which purports to confer a benefit on a person who is not a party to the contract, whether as a designated person or as a member of a class of persons, may, be enforced or relied upon by that person as though he were a party to the contract unless there is a provision in a contract purporting to exclude or restrict any liability of a person who is not a party thereto or designed for the purpose of resale price maintenance

Provisions2. Third party rights• Under traditional common law, the ius quaesitum tertio

principle was not recognized, instead relying on the doctrine of privity of contract, which restricts the rights, obligations, and liabilities arising from a contract to the contracting parties (said to be privy to the contract).

3. Consideration• It is a fundamental principle of contract law that in

order to create a binding contract which the law will recognize and enforce, there must be an exchange of consideration between the parties.

• If there is no consideration there is no contract; and if there is no contract, there is nothing upon or from which to found or create liability.

Provisions3. Consideration • Further under common law, a party which already has a legal duty

to provide money, an object, a service, or a forbearance, does not provide consideration when promising merely to uphold that duty. That legal duty can arise from law, or obligation under a previous contract.

• Section 8 of the Ghana Contract Act 1960 (Act 25) however provides that a promise to keep an offer open for acceptance for a specified time or to waive the payment of a debt or part of a 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.

• Section 9 of the Ghana Contract Act 1960 (Act 25) also provides that The performance of an act or the promise to perform an act may be a sufficient consideration for another promise notwithstanding that the performance of that act may already be enjoined by some legal duty, whether enforceable by the other party or not.

Provisions3. Consideration • Again under the common rules Consideration must

move from the promisee. For instance, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees.

• Section 10 of the Ghana Contract Act 1960 (Act 25) however provides that no promise shall be invalid as a contract by reason only that the consideration is supplied by someone other than the promisee.

Provisions4. Formalities• Under common law, an enforceable contracts may be written or oral.

The contract, irrespective of type need not be in writing.

• Section 11 of the Ghana Contract Act provides that no contract whether made before or after the commencement of this Act, shall be void or unenforceable by reason only that it is not in writing or that there is no memorandum or note thereof in writing.

• The Act however identifies that certain contracts must be in writing before they can become enforceable. Section 14 for instance provides that any agreement whereby a person guarantees the due payment of a debt or the due performance of any other obligation by a third party shall be void unless it is in writing and is signed by the guarantor or his agent, or is entered into in a form recognized by customary law.

Conclusion

• The Ghana Contract Act does not entirely repeal the application of the principles of common law and judicial precedence of England. However, from the discussion so far held, it goes without saying that some provisions of the English common law and judicial precedence may not apply in adjudicating contract cases in Ghana.