DEFINITION OF CONTRACT

There is no satisfactory definition of contract. Just as there are many writers

who have written about the nature of contract so there are many definitions or
description of what contract is.

However, there is a common thread which runs through the various definitions
of contract.

These common threads are:

Agreement thus a contract has been defined as an agreement between two or

more people which the Law will enforce. Stated differently
A contract is an agreement between two people or more which create binding
obligation enforceable by Law.

MEANING OF CONTRACT

First it is to be noted that the word contract contains an element of ambiguity.

Secondly, Lawyers usually use the word contract to refer to an agreement to
which the Law will give effect.
Thirdly, Lay people or known Lawyers frequently use the word contract to
mean a document in which the agreement is contained, so a lay man/woman
who enters a super store to purchase provisions for cash might say I bought a
create of Fanta but there was no contract” by which will mean that there is no
written records of the transaction, by contrast a Lawyer will not describe an
informal transaction which took place in the super store the reason being that
he will by virtue of his profession know that in general there is no need in the
Ghanaian Law for an agreement to be in writing.

1
In fact section 11 of the Ghanaian Act 1960 (Act 25) says so. It provides that
writing is not essential to the creation of simple contract.

SCOPE OF CONTRACT LAW

The scope of the Law is vast. It embraces simple daily transactions like buying
food from a shopping mall, having a hair cut or a hair do in a salon. Buying a
cup of cocoa or coffee or tea from an internet café catching a bus or trotro or
train; important family transactions such as buying a piece of land or taking
out a life insurance policy as well as major commercial enterprises like merger
and acquisitions.

Is there a Law of contract/contracts?

There is division of opinions as whether there is a Law of contract or contracts
that is whether there is a single set of rules or sets of rules ”we start from the
position that in principle the Law of contract is the same for all contract” so in
the Hansa Nord, Roskil Lord Justice (LJ) said in principle it is not easy to see
why the law in relating to contract or the sale of goods should be different
from the law relating to the performance of other contractual obligations,
whether charter parties or other types of contract.

Sale of goods Law is part one branch of the general law of contract.
It is desirable that the same legal principles should apply to law of contract as
a whole and that different legal principles should not apply to different
branches of that law.
Both ordinary and special types of contract are subject to much the same
governing principles so it can confidently be accepted that there are certain
questions how contract are made which receive the same answer for virtually
all. Contracts are therefore part of the general law of contract. On the other
hand there are other matters such as the content of the obligation of the

2
parties which turns to develop special rules on the contract by contract basis in
the light of the foregoing, we can say that when Lawyers and students of
contract law talk about the law of contract they usually refer to that body of
general principles which applies to all or at least most contracts.

Why should the state enforce contract. There are many reasons why the state
enforce contract.
 A common answer is that contracts are enforced because
promises are morally binding. To make a serious promise involves a
moral duty to keep it. It is part of what the law calls a contract the moral
will be reinforced by a legal sanction.

 Secondly promises form the basis of worth creation and so there

is a practical reason for the enforcement of promises.
In fact it will be very different if not impossible to run and develop
modern capitalize economy in which promises were not binding.

 Thirdly there is a will or consensus theory which access that the

contractual obligation are by definition self-imposed in other words
voluntary.

CONTRACTUAL BEHAVIOUR
Writers of contract text book tend to talk as if real life agreements are
effectively controlled by the Law as stated in their books. One might think that
things will be different in the cold world of business but it seems that this is
probably not so. There is a wide range of transactions where the amounts
involved are so small that the parties will not contemplate litigation. There are
those large transactions involving huge sums of money that litigation between
the contracting parties is most likely in exceptional case regardless of the sum

3
involved the parties choose not to insist on the strict legal rights. As a matter
of fact informal transactions like those already referred to are usually
accompanied by a minimum of negotiation. Take for instance an informal
transaction such as having a hair cut the parties may not even speak. They
may probably indicate their consent by gestures. This may at first site create
the misleading impression that legal enforceability is irrelevant.
Why?
Simply because agreement is immediately followed by performance. However,
if things go wrong such as non-payment of the price or that the item is
defective, the law of contract will come in to play.

CONCEPT OF FREEDOM OF CONTRACT AND SANCTITY OF CONTRACT

Freedom of contract and sanctity means - Freedom of parties of sound
mind and competent understanding. Wherever they are to enter any type
of contact that they so wish and provided the contract makers do so with the
shadow of the law the court will recognize and uphold their agreement. During
the classical era of English contract law this two concepts were the necessary
instruments of the laissezafair and it was the function of the court to foster one
and vindicate the other in works of Cheshire, fifgot and furmtors “where a man
sowed there he should be able to reap” this is captured in the off-quoted
diction of Sir Jessel MR (Master of the Roll); now if there is one thing which
more than another public policy requires it is that men of full age and
competent understanding shall have the apt most liberty of contract and that
their contract act when entered into freely and voluntary shall be held sacred
and shall be enforced by courts of Justice”

INEQUALITY OF BARGAINING POWER

Notwithstanding the suggestion that contracts entered into freely and
voluntary will be sanctioned by the court yet where the bargaining arms of the

4
parties are not equal, this inequality will be a ground or an excuse for the court
to invalidate the contract. The inequality may arise from factors such as the
relatives of the parties, the fact that one is in the superior or dominant position
as against the other in weaker position, illiteracy, some disability such as
visual impediment, deafness.

STANDARD FROM CONTRACT

The process of mass production and distribution of goods and services was the
result of the industrial revolution before the industrial revolution the main
method of production of goods and services was manual labour. Following the
industrial revolution. However, there was a shift from manual to scientific
production through the needs of equipment and machinery. In other words
there was a shift from individual effort to technological effort. It also effected
the distribution of goods and services one such effect or introduction for
standard contract.

Large cooperation’s and monopoly now designed and printed contractual forms
which became stereotyped. These standard form contract contained terms and
conditions not the result of negotiations between the large companies and
monopoles on the one hand and the consumer on the other hand.
The terms and conditions embodied in the standard form contract were
incorporated by the large companies into the contract without any reference to
the consumer. Those terms and conditions spelt out the contractual
relationship with the other party. It follows that the clauses in standard form
contract were not the outcome of any negotiations they a just the inserted and
the consumer was expected to take it or leave it. In most cases the consumer
has no choice. The French call it contract d’adleson.

5
GOOD FAITH IN CONTRACT LAW
The question that needs to be addressed is this, do the parties owe each other
to negotiate in good faith or do the parties, once the contract is made, owe
each other a duty to perform the contract in good faith? For answers you need
to make an excursion to the English law. It is generally thought that until
recently, English Lawyers would not have asked themselves this question, if
asked would have dismissed them with a short reply of cause not. Not so
today. A thoughtful English lawyer may now respond by suggestion that
parties to a contract do owe each other a duty to negotiate in good faith. In
other words the literature of English contract law has begun to consider much
more carefully the penetration of ideas and notions of good faith. The notion of
good faith in contract can be traced to the continent. It is referred to as culpa
in contrahendo as it has just been stated the concept of good faith has now
been incorporated into English contract law.
Other law systems have also move in this direction for instance the Uniform
Commercial Code (UCC) of USA provide that “every contract or duty within this
act imposes an obligation of good faith in the performance or enforcement.
Section 205 of the American law institute. The statement of contract states the
following: “every contact imposes upon each party a duty of good faith and fair
dealing in its performance and its enforcement. This notion of good faith in
contract is also in Australian law so in the Austrian case of

Renaid Construction Ltd. v Minister of Public Works

” People generally, including judges and other lawyers from all strands of the
community, have grown used to the court applying standards of fairness to
contracts which are wholly consistent with the existents in all contract of a
duty upon the parties of good faith and fair dealings in its performance. In my
view this is in this days the expected standard and anything less is
contractually to prevailing community expectation.

6
CAVEAT EMPTOR
 See section 13, 27 & 28 of the sale of goods act.

ANOTHER CONCEPT

OFFER
The concept of offer in the law of contract is central to the study of contract
law. There is a lot of learning about the word offer. Various reasons account
for this. In ordinary language offer means to give.
By contract an offer refers to a proposal containing terms and condition which
when accepted by the offeree creates a binding contract.

ACCEPTANCE
Is another concept received by English Contract Law. As a common concept,
acceptance simply means assenting exactly to the terms and conditions
contained in the offer or proposal in assenting the proposal. Therefore the
offeree should not make any attempt to vary or contradict or add to or
subtract from the term and conditions of the offer.

COUNTER OFFER
As we have just observed acceptance means assenting to the exact terms in
the offer. Therefore, if why the purporting to accept the offer the offeree
introduces a new term aimed at varying the original terms he has made a
counter offer. In other words he has himself made a fresh offer. There
are therefore two (2) offers the original offer made by the offeror and the
counter offer made by the offeree. It is to be noted that the offerors
original offer supersedes the offerees counter offer. The indication then is that
the original offer prevails, that be the case it is clear law that a counter offer

7
destroys the original offer. The original offer is therefore no longer available
and cannot therefore be reactivated or revived.

MERE REQUEST FOR INFORMATION

Often times in negotiations, the parties may wish to have certain matters
clarified. Usually it will be in the form of a request for further information or an
enquiry where an offer has been accepted by the offeree desires an
explanation of clarification, this request or enquiry is different from a counter
offer. Where as in a counter offer the offeree proposes his own fresh offer
while at the same time considering the offerors offer, in the case of a mere
request for information or enquiry the offeree has not rejected the offer; rather
he has accepted it what it means therefore is that the offerors response or
reply to the offerees inocus/harmless request for information has no effect on
the offer that the offeree accepted.
It follows that in situation of this nature there is always a binding contract. The
concepts of counter offer and a mere request for information therefore be
distinguished. The distinction can be found in the following Ghanaian cases:

(a) Counter Offer

Hyde v wrench (1840)
Nsiah v Deogbe

(b) Request for Information

Stevenson v Maclean
Dormins v Brenen Vege Sacker Fishers

8
OFFER AND ACCEPTANCE
How a contract is made
We start from the position that WRITING is not necessary/essential to the
creation of a simple contract.
Section 11 of contract act.

FORMATION OF CONTRACT
 Verbal – by word of mouth
 By Writing or written
 By Conduct
 Partly oral and or partly written
 Or by a combination of any of the above

Simple contracts don’t deal with deeds

Relevant materials
 The 1992 constitution
 Contracts act, 1960 (act 24)
 Sale of goods act
 Convincing act
 Mortgages act
 Hire purchase act

If it’s not in the law then use the following:

Case laws
Text books
Journals

9
Section 2(3) under the Ghana Sale of Goods act defines the term necessaries
as:
 Necessaries in this section means goods suitable to the
condition in life of the person to whom they are delivered and to
his actual requirements at the time of delivery.
It is a statuary adoption of the definition of common law.
Pg 69-70 of contract book.

Compus Mentie - A person of sound mind and competent understanding

Section 1 of the children’s act under Ghanaian law.
Toga virils – cloth of man (Roman Books)

OFFER AND ACCEPTANCE

Essential Ingredients
They are essential because they have to go together
 Agreement – offer and acceptance (1818 Adams v Lindsell)
 Consideration(Cheshirea Fifoot 5th Edition)
 Intention to create legal relation 1918 in (Balfour v Balfour)

OFFER
It is simply a proposal specifying the terms and conditions upon which the
offeror will be bound upon acceptance.
It is an expression made by the offeror to the offeree. It initiates the formation
contract process.
Authorities:
 Case Law NTAC Ltd. V Entwi
 Text book pg. 18
 Date Baah - extra judicial writing

10
HOW MADE?
 Verbal – by word of mouth
 By Writing or written
 By Conduct
 Partly oral and or partly written
 Or by a combination of any of the above

TO WHOM MADE

 Individual – when made to an individual only he may accept,

the reason is that the other person cannot accept because the offer has
not been made to him/her (the other person is not aware or has no
knowledge of it).
 Group of persons – an offer may be made to group of persons
because they have a knowledge of it.
Carlill v Carbolic Smoke Ball

 World at large - Whole world or indefinite

Republic v Thabo meli (1954) 1 WLR 228
Republic v Dr. I. S. Ohene Djan

CHARACTERISTICS OF AN OFFER

11
Constitute vital components of an offer.
An offer has a finality. Proposal is an offer when it’s clear.
1. It must be Clear/Explicit
2. Definite
3. Firm
4. Final and
5. Must not leave any room for further negotiations.
NTHC Ltd. V Antwi

Duration of an offer.
Every offer has a life span (Time).
1. There may be a deadline – fixed – 14 days (must be accepted
within a specified period)

2. Will lapse if not accepted within the conception

Fofie v Zanyoh 1992 date Bah
Carlill v Carbolic Smoke Ball
LJ Lindley
Offeror is the master so he can recall or withdraw the offer. He may exercise
a controlling power over the offer by revoking the offer

3. Where there is no fixed time- it must be accepted within a

reasonable time
Question
Who determines the reasonable time
Answer
The court, by looking at the nature of the subject matter of the offer

12
 Reasonable time
What constitutes a reasonable time will depend upon the contractual subject
matter or nature of the contractual subject matter.
The court will decide on:
1.The nature of the goods e.g. Perishable goods like Vegetables must be a
day or two.
2. Iron rods can be years
Carlill v Carbolic Smoke Ball

INVITATION TO TREAT
Offeror has completed his share in the formation
1. Communication
2. Supply of information
This two invites customers or consumers to come and make offers.

 Textbooks – chitty on contract

NTHC Ltd. V Antwi
Treitel – decision depends upon intention of the parties
Christine
Chesshire

Many writers or some writers including Christine Dowuna Hamond, Treitel etc.
defined invitation to treat as an offer to make an offer.

 Case law Carile V Carbol describe an invitation to treat as an

offer to make an offer to chatter
The distinction between an offer and an invitation to treat can be found in
line with cases NTHC Ltd. V Antwi, Carlill v Carbolic Smoke Ball

13
Instances of Invitation to Treat

Davies on con
Concrete examples
Illustrations
For example

1. Display of goods with or without a price tag

2. Auction sales
3. Tenders
4. Negotiations
5. Advertisement
6. Circulation of price list of catalogs
7. Carriage or goods and services
8. Automatic vending machine

The distinguishing element will come under the characteristics

AUTHORITIES
Statutes
Sale of goods act section 4
Auction sales act - section 17
Cases
Textbooks

14
As a general rule the display of goods with or without a price tag
constitutes an invitation to treat. It is not an offer the acceptance of which
will constitutes the contract.

This general rule was laid down in the leading English case of
Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern)
Ltd.

Fisher v Bell
Partridge v Crittenden
Timothy v Simpson (1867)
Crawlley v R (1909) read
Windfeild some aspect of offer and acceptance (1939) 55 QR 449

Obiter dictum (remarks made by the judge) – is lane or weak because it

was obiter dictum.

American cases
1. Lasky v Economy Grocer Stores
2. Sancho – Lopez V Fedes Foods Inc.
3. Letkowitz v A
4. NTHC V Antwi
Display of goods is an offer which is accepted by the acceptance of the
price.
This general rules has been analysed by some writers and use textbooks

15
AUCTION SALE

1. A bid is the offer - payne v cane (1789)

2. Accepted when the hammer falls or in such customary manner.
There will be no acceptance if the auctioneer doesn’t hit the table with his
hammer.
Routledge v Grant
3. An advertisement in respect of a forth coming auction is a mere
invitation to treat.
Harris v Ivickerson
4. Warlow v Harrison – what the judges said in this case was obiter
Section 4(1) Sale of Goods act

TENDER
Similarly a tender is an invitation to treat. It is not an offer
Spencer v Hardy
Great Northern Railway
Pervy v AG
Where there is a promise then there is a standing offer

NEGOTIATIONS FOR SALE OF LAND

It is an invitation to treat and not an offer
1. Gibson v Manchester city council
2. Storer v Manchester City Council
3. Aidoo & 11083 V AG
4. Sam Bannaman & 7 others v AG
5. Clarre v Dunraven the satanit
Section 7 Sale of Goods act
panoply

16
Lord Denny described the court as Bold spirits & Timorous souls
Clarke v Durisaven (The Satanita)
Harvey v Facey
Clifton v Palumbo

 Distinguish Between Offer and Invitation To Treat

 Why is the distinction necessary? Find answer in
Windfield article some aspect of offer and acceptance (1939)
 Alision Khan 72 SALT209

17
In Wilkie v London P & T passenger Lord green master of the roads thought
that a contract is made when an intending passenger put himself either on a
platform or inside a business.
The opinion was obiter but it is generally said that if it represents the law it
will be such that the STC makes an offer of carriage by running a business
and that the passenger accepts the offer when he gets properly on board.
The contract will then be complete even if no fare is yet paid or ticket given.

ILLUSTRATION
NO. KEY CASE HOW TO USE RELATED TOPICS

1 Carlill v Carbolic To explain that Invitation to treat

Smokeball unilateral offers can be
made to the world at
large

To show to whom an
offer may be made

To show that
acceptance need not be
communicated

2 Boulton v Jones To illustrate the legal Offer

preposition that an offer
can be accepted by a
person to who it was
made and to no one
else

3 Partriage v C As the general rule to Offer

show that an
advertisement is an
invitation to treat

4 Pharmaceutical To support the legal Invitation to treat or

Society of GB V Boots opposition that the distinction between
display of goods in a offer and invitation to

18
 cell service shop is an treat
invitation to treat

5 Harvey v Facey To show that a Offer and acceptance

statement of price is
not an offer capable of
acceptance

6 NTHC v Antwi To show the Offer, acceptance and

characteristics of an invitation to treat
offer

To distinguish between
offer, invitation to teat
and acceptance

7 Fisher v Belt To show that the Offer and invitation to

display of goods in a treat
shop window is an
invitation to treat

8 Harris v Negors To show that the Offer, acceptance and

advertisement of an invitation to treat
auction sale is not an
offer. The acceptance of
what will constitute a
contract but a mere
invitation to treat.

9 Dormenyo v Johnson To illustrate the Offer and acceptance

Motors application of the mirror
image rule

10 Fofie v Zango To demonstrate the Offer and acceptance

general rule that the
acceptance must be
communicated

11 Hyde v Wrench To show that a counter Offer and acceptance

offer will destroy an
initial offer such that it
may no longer be
accepted

19
 12 Deagbe v Nsiah Reasserted the principle offer
in Hyde and Wrench

13 Stevenson v Maclean To show that a mere Offer and acceptance

request for information
does not destroy an
initial offer

14 Felt house v B To establish that silence Offer and acceptance

can never constitute
acceptance

15 Brogden v To show that an Offer and acceptance

Metropolitan Co. acceptance can be
inferred by conduct

16 Adams v Lindsey 1818 To show that it was the Offer and acceptance
first truly offer and
acceptance case in
English contract law

To set out the postal

rule

To show at acceptance
by post is made at the
time the letter is posted

17 Byine v Lea 1880 To show that Offer and revocation

communication of
revocation have been
received

This is intended to make you know your cases. The objective is to ensure that
you know how to use relevant case in you private conversations and answers.

ACCEPTANCE
1. Counter offer brings an offer to an end
2. If there is time it should be accepted within the specified time

20
3. If no time is given it should be accepted within a reasonable
time. Reasonable time depends on the nature of the product.
4. No further room for negotiation

HOW IS AN OFFER MADE

Boulton v Jones
Carlill v Carbolic Smoke Ball

Acceptance means asserting exactly to the terms and conditions in the offer

CHARACTERISTICS OF ACCEPTANCE
1. It must be unqualified
2. It must be unconditional
3. It must be absolute

FACT OF ACCEPTANCE
1. Writing – external manifestation of agreement
2. Oral
3. Conduct

GOVERNING RULE
1. Fact of acceptance – spoken, interference – conduct
2. Communication – acceptance must be communicated
(writing/oral/conduct)
Adomako v Ent.
NTHC

COUNTER OFFER
Hyde v Wrench

21
When acceptance is qualified it becomes a counter offer

CONTRACT OF CARRIAGE
Wilkie v London P & T
Lord Greene MR

Where there is room for negotiation is an invitation to treat

Bilateral is an invitation to treat

REQUEST FOR INFORMATION

In request for information the offeree has accepted the offer but making an
inquiry. Inquiry will not affect the acceptance.

EFFECT OF SILENCE
When the offeree has accepted but has not communicated there is no contract.

POSTAL CONTRACTS
A contract is made the moment the acceptance letter is posted.
They are made through the post
Adams v Lindsey is historically the first reported English case on offer and
acceptance although it was considered in the contest of postal contracts.

1. In-course of post
2. Mail box rules

GOVERNING RULE
1. Where – in the box

22
2. When – the letter is posted
3. What – if it got lost or missing – acceptance has taken place
4. What if it never reached its destination
APPLICATION OF THE RULE IN PRACTICE
Posting amounts to properly putting the letter in the post box and not handing
it to anyone. It can be given to someone authorized at the post office.
Re London & Northern

EXCEPTIONS
Holwel securities
Henthorn v Fraser
Afolabi v Polyne
Pages 44-46, Dowuona Hammond
Pages 66, 64 footnote 100 cherisher

INSTANTANEOUS COMMUNICATION
Entores v Miles Far East
Acceptance must be communicated
Offeror must describe the mode of acceptance
Eliason v Henshan

If the offeror can describe the acceptance. May an acceptance be recalled

before it reaches the offeror
Pages 69 cherisher
Counters of Dunmore v Alexander
1. A rigorous application of the in-course of post acceptance rule
will forbid the offeree from recalling a posted acceptance letter.
2. Because a contract would already have being formed from the
moment that the offerees letter of acceptance was posted.

23
AUTHORITIES
1. Cases – English law, Scottish law, South Africa Law
2. Text books – cherisher
3. Articles – from journals

CASES
1. There is no authority directly upon the point under Ghanaian Law
Anglo – Ghanaian Law
2. However there is a slender steam of authority in source law. It is
the often or much quoted case of counters of Dunmore v Alexander
3. Scottish case of Dunmore v Alexander is authority for the legal
preposition that an offeree can recall a posted acceptance letter he has
posted but before reaches the offeror.
However, this case does not provide a health authority for two reasons
First the opinion was obiter
Secondly it concerned the simultaneous receipt of messages

4. Again scope of this decision is not clear. It involves a question of

agency, to which perhaps it is exclusively relevant and the court were
concerned to determine the effect not of a telegram recalling a letter but on
a simultaneous receipt of 2 letters.

5. Wenkheion v arnet (1861)

In New Zeeland Chapman J denied the possibility of altering the effect of a
letter of acceptance once it has been put in to the post.

24
6. And the same view as been taken in South African case A to Z
Bazaar’s property Ltd. V Minister of Agriculture (1974)
7. We can choose between the above and their choice rest on
expediency

Must the accepter has knowledge of the offer

Gibbons v Proctor
Page 35, Dowuona Hammond

Unilateral contract – A contract where only one or a single person promises

to pay something.

CONDITIONS OF UNILATERAL CONTRACT

1. Knowledge
2. Motive is irrelevant
3. Performance – complete, incomplete

Routtede v Grant 1828

An offer can be withdrawn at any time before acceptance.

CROSS OFFERS
Tinn v Hoffman
There must be correspondence between offer and acceptance in other to
amount to or constitute a binding contract.
Cross Offer does not result in a binding contract.

TERMINATION OF OFFER

25
1. When an offer will come to an end or cease
An offer may come to an end by the act of either the offeror or offeree

ACT OF OFFEROR
1. The offeror can withdraw or revoke
Routledge v Grant (1828)
Payne v Cave (1789

ACT OF OFFEREE
2. The offeree can expressly reject or refuse
Therefore its either rejection or refusal thus may be express or implied
Express means No
Implied is when he introduces a new term eg. Counter offer which varies
the contract
Hyde v Wrench
Deegbe
The above cases distinguish between an offer and invitation to treat
Say it is important to note that some counter offers
Just draw attention that the 2 cases are not the same

3. Acceptance – fixed – compliance with deadlines

Offord v Davies

4. Lapse of time – within a reasonable time, if no time is fixed then

it will lapse or a fluxions of time or by operation. Case No. 14 p. 9
5. By statute
6. Death of either Offeror or offree my bring the contract to an end
Brivery v Morgan

26
7. Occur of a specified event
Pym v Campbell

In bilateral contract withdrawal poses no unsemanticable problem but in

unilateral there is a problem which relates to what constitutes performance
(either full performance or nothing)

CERTAINTY OF TERMS
1. Clarity
2. Terms must be clear
3. Certain
4. To avoid any ambiguities
5. Parties to a contract must write their own contract and it is not
the function of the court to write or re-write the contract
Ghanaian cases
Addison v A/S Norway cement export (1973) 2 GLR 151
In re Tetteh, Mireku v Tetteh & others (2008) GLR 268
English cases
Sammel & Other v Oustion
Nicolene v simonds
Hillas & co v Artos Ltd.
R ay v May& Butcher
Shogun Finance v Hudson

Esson V Attah (1976) 1 GLR 1967 : 1976 Trade usage

27
INTENTION TO CREATE LEGAL RELATIONS
Function
In a contract case the function of the judge is to discover the intention of
the parties and give effect to it.

What is the test of ascertainment of agreement?

Intention – it is done objectively so it’s known as objective test
Adomako v Enterprise Insurance

1. What is the meaning of intention to create legal relations? Is at

the inception that when there is a problem it can be litigated at the
court. They must have in mind to create enforceable right at the
inception of the contract.
2. Agreement results in enforceability of right
3. whether or not the parties have affected their legal rights will
depend largely on their intentions at the making of the contract
4. How do the court ascertain the intention- by way of
presumptions
5. The court have developed guidelines by categorizing it into 2
broad categories.
The 2 categories are:
1. Domestic/Social/Act of Friendship
i. Husband and Wife (Couple) – House keeping allowance when the
couple are happily marriage they do not intend to create legal
relation however when the relationship is hostile
Balfour v Balfour it states the general rule of the common law

28
 Spellman v Spellman (the marriage is on the rock)
Or where the couple have taken out cross summons – McGregor
v McGregor, Achampong v Achampong [1961) GLR
WHERE THE parties are contempreating divorce or separation
Merrit v merrit
pettitt v pettitt
Achampong v Achampong

ii. Parent & Child – Maintenance & advancement. The rebuttable

presumption is that an agreement reached between a parent
and a child is not intended to create legal relations.
Jones v Padavatton
iii. Relatives – Household arrangement. When they exchange
promises they do not intend to create legal relations
Parker v Clark
Haggar v de Placido
Simkins v Pays
iv. Friends – Coward v Motor Insurers Bureau
v. Clergy – Haggar v de Placido

2. Commercial & Business

The parties in a commercial business intend to create legal relation
Rose and Frank Ltd. v Crompton Brothers
Hammond v Ainooson
Schandorf v Zeini (1976) 2 GLR 418 CA
Holman v Johnson

29
ELEMENTS OF CONTRACT
Offer
Acceptance

30
Consideration
Capacity
Intention to create legal relations
Possibility of performance
Legality of object
Genuine consent
Privity

31
CONSIDERATION
Anglo- Ghanaian Law consideration
Land owner - Detriment and buyer benefits

1. Meaning and consideration

Three categories of consideration
A promise in return for a promise bilateral. In unilateral no promise is
made. Performance is based on the reward. When an act is performed
then there is consideration.

1. Four different approaches to Delimiting consideration: 4

differing approaches.

i. Judicial definition because it was arrived from Lush J’s statement

in the 1875 English case of Urrie v misa
Thomas v Thomas (1842)
Balfour v Balfour per Lord Atkin. It is referred as classical or
traditional (thus First in time).

ii. Sir Frederick - It can also be defined by the use of language and
sale of purchase. Tag or Price of the promise. Adopted in 1915 on
Dunlop v Selfridge – Lord Dunedin

iii. Cause or motive or reason for the promise cause

iv. American Restatement second

32
 1. Consideration is a common law doctorate in the sense that
it was developed and continues to be refined by the
judges.

2. There are various rules which the court apply to enforce

the consideration in reality.
v. These rules are sometimes referred to us the technical rules or
judicial rules.

vi. Function of cons….To distinguish between enforceable agreement

from those that will of be recognized by the court
which promises will the court recognize and enforce – those
promises that can be barging for therefore it is to provide a bodge.
vii. For consideration to be enforced it must be valuable

There are three types of consideration

i. Executor – performance is in future e.g. credit sale
ii. Executed – consideration is wholly or partially performed (co-
extension)
iii. Past – No consideration at all – any promise not in a bargain is
past consideration

Technical or judicial rules of consideration

There are a number of technical rules which the courts have developed for the
operation of consideration.
The main technical rules include:
i. Consideration must be real – what this means is that it must be
something which the promise is not already legally bound to do for the
other party.
Shadwell v shadwell
33
 Scorttson v pegg
ii. consideration must move from the promisee – this technical rule
of consideration and the common law rule on primitive of contract are
two fundamental rules of Anglo Ghanaian Contract Law. The rules can be
seen in Lord Hauging’s passage in Dunlop v Selfridge. Means that a
person to whom a promise was made can only enforce that promise if he
has himself provided the consideration for it. The promise cannot be
enforced if the consideration moves from a third party. An excellent
illustrative case is Tweddle and Atkinson.
Price v Easton (1833)

iii. consideration must be sufficient but need not be adequate

iv. It must not be past
v. Consideration must be valuable

Sections 5,6,8,9 &10 of the contracts act 1960

34
35