INSTITUTE OF DISTANCE LEARNINGdocshare01.docshare.tips/files/20549/205492049.pdf · Law of contract & arbitration institute of distance learning Course Author DICKSON OSEI-ASIBEY,

Law of contract & arbitration institute of distance learning

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY, KUMASI

INSTITUTE OF DISTANCE LEARNING

DEPARTMENT OF BUILDING TECHNOLOGY

BT 361 – LAW OF CONTRACT AND ARBITRATION [Credit 2]

DICKSON OSEI-ASIBEY, ESQ

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Publisher Information

©IDL, 2011All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieved system, without the permission from the copyright holders.

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http://www.kvcit.org/

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mailto:[email protected]





Course Author

DICKSON OSEI-ASIBEY, is Lecturer in the Department of Building Technology of College of Architecture and Planning of Kwame Nkrumah University of Science and Technology, Kumasi in the Republic of Ghana.

He holds BSc (Hons) Building Technology, MSc. Construction Management and Bachelor of Laws (LL.B) Degree from the Kwame Nkrumah University of Science and Technology and Barrister-at-Law (B.L) Certificate from the Ghana School of Law, Accra.

Dickson Osei-Asibey is professional Quantity Surveyor and Legal Practitioner. He is also member of Ghana Institution of Surveyors (GhIS) and Ghana Bar Association (GBA). He is the Chief Executive of OCADS Consult Limited (Project Management and Construction Cost Consultants) in Kumasi. He is member of Adansiman Chambers (Barristers and Solicitors of Supreme Court of Ghana) also in Kumasi. Osei-Asibey is member of Board of Directors of Nwabiagya Community Bank and currently, the National Vice President of the Association of Rural Banks (ARB).

He was appointed Lecturer to the Kwame Nkrumah University of Science and Technology in May, 2009 and teaches Principles of Law, Constitutional law and Company Law and Law of Contract, Tort and Construction Dispute Resolution at the Department of Building Technology.

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COURSE INTRODUCTION

Construction is a complex industry with interrelated processes of conception, planning design and associated activities on projects that are carried out in the industry. These processes are constrained by time, resources (labour, land, money, materials and equipment) and quality performance. It also involves a wide range of individuals with practical and professional skills. The stakeholders in the industry include the government, statutory bodies, general public, client, workers, suppliers, manufacturers, sub contractors, professionals, guarantors, financiers, etc.

The Construction Industry has therefore been one of the commercial entities characterized with disputes. Study of law is an indispensable subject in the curriculum for the training of professionals in the construction industry. Law, as a subject equips the student to provide analytical and logical thinking in solving practical problems and also to be armed with principles of law to reduce the occurrence of disputes that have characterized the industry. As future Quantity Surveyors, Project/construction managers, Consultants, Building and Civil Engineering Contractors etc, the third year students of Quantity Surveying and Construction Economics and Construction Technology and Management are to have the general knowledge of legal principles of tort, contract and dispute resolution mechanisms and how they affect the construction industry.

Course Description

The Course is entitled, BT 361 LAW OF CONTRACT AND ARBITRATION and constitutes 2 credits.

The Law of Contract and Arbitration therefore covers;

• Principles of the law of tort – deals with prevention of harm, injury and damage to life and property. It covers objectives of law of tort, trepass, negligence including concept of duty of care, occupiers liability, employer’s liability, professional negligence, doctrine of res ipsa loquitor, negligent misstatement, vicarious liability and breach of statutory duties, rule in Rylands and Fletcher and nuisance,

• Principles of law of contractit identifies principles underlying formation of contract, contents of contract, unenforceable contracts, discharge of contract and special contracts affecting the construction industry

• Dispute resolution in construction industry - it identifies the methods for settlement of disputes in contracts- traditional litigation in courts, and alternative dispute resolution (ADR) methods including arbitration covering customary arbitration, formal arbitration and other non-arbitral mechanisms such as Negotiation, Mediation etc under the Alternative Dispute Resolution Act,

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2010 (Act 798). It also covers the procedure in construction dispute settlement both in local and international contracts.

Course objectivesAfter reading this course, you should be able to:

1. Explain the fundamental legal principles governing: the elements of contract and arbitration; rules and defences available to actions in contract and arbitration

2. Apply these principles to hypothetical and real situations3. Outline the basic historical development and growth of the law of contract and

arbitration4. Appreciate and criticize the operation of the law of contract and arbitration in

practice

Course Outline

Unit 1: Law of TortUnit 2: Formation of Contract Unit 3: Vitiation, Discharge and RemediesUnit 4: Dispute Resolution

Teaching and AssessmentThe course is taught by lecture and seminar session in which students undertake case studies. Assessment is in the form of an end-of-semester examination, counting towards 70% of a student’s grade and a group presentation counting towards 30% of a student’s grade. The examination questions reflect broadly the content of the lecture and seminars. The purpose of the examination is primarily to test students’ ability to think independently and engage in analysis of legal issues from Contract and Arbitration perspectives.

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TABLE OF CONTENTPublisher Information iiCourse Authors iiiCourse Introduction ivTable of Content vReference vi

TABLE OF CONTENT

1-1.2 TRESPASS............................................................................................................31-1.3 NEGLIGENCE.......................................................................................................7

Session 2-4 ADR Mechanisms

2-4.1: Forms of Arbitration

2-4.2: Non Arbitral Mechanisms

2-4.3: Dispute Resolution in Ghanaian Construction Industry

REFERENCE

1. Curson, L. B., 1998, Dictionary of Law, Fifth Edition, Financial Times Pitman Publishing,

2. Bradgate R, 2000. Commercial Law, Third Edition, Antony Rowe Ltd.

3. Brazier, M. et al, Street on Tort, 10th Edition

4. Hodgson, J. et al, Blackstone’s Law of Torts

5. Rogers, W. V. H., Winfield and Jolowicz on Tort, 14th Edition

6. Lewis, J. R., 1976. Law for the Construction Industry, The Macmillan Press Limited

7. Uff, J. 1999. Construction Law, 7th Edition, Sweet & Maxwell Limited

8. Bondzi-Simpson, P. E. 2002. Law of Contract, Excellent Publishing and Printing

9. Furmson, M. P. 2001. Cheshire & Fifoot’s Law of Contract; 14th Edition;

10. Bradgate R, 2000. Commercial Law, Third Edition, Antony Rowe Ltd.

11. Willis, C. J. et al. Practice and Procedure for the Quantity Surveyor- 10th Edition, Oxford Blackwell Scientific Publications

12. Brobbey, S. A. 2008. The law of Chieftancy in Ghana, Advanced Legal Publication,

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13. Coe, J. J. Jr. 1997. International Commercial Arbitration: American Principles and Practice in a Global Context

Table of Cases

Page

RE CASEY’S PATENTS (1892) 1 CH 104

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TABLE OF STATUTES

PROFESSIONAL BODIES REGISTRATION ACT, 1973 (NRCD 143)

INSURANCE ACT, 2006 (ACT 724),

FACTORIES, OFFICES AND SHOPS ACT, 1970, (ACT 328),

WORKMEN’S COMPENSATION LAW, 1987 (PNDCL 187), 1987,

LABOUR ACT, 2003, (ACT 651)

TOWN (COLONY), 1951 (CAP 86)

CONTRACTS ACT 1960 (ACT 25),

MORTGAGES DECREE1972 (NRCD 96),

CONVEYANCING DECREE, 1973 (NRCD 195),

BILLS OF EXCHANGE ACT, 1961 (ACT 53),

HIRE PURCHASE ACT, 1974 (NRCD 292),

SALES OF GOODS ACT, 1962 (ACT 137),

ILLITERATE PROTECTION ORDINANCES, CAP 262 (195) REV;

AUCTIONS SALES LAW (PNDC LAW 230),

INSURANCE LAW, 1989 (PNDC LAW 227)

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Unit 1

LAW OF TORT

Introduction

This unit provides the essential basic materials concerning the tortuous liability of parties of a construction contract. The principles of the law of tort governing the subject have been highlighted.

Learning objectives After readings this unit, you should be able to:

1. Define and describe the nature of law of tort2. Explain the basic elements of a negligence affecting construction

activities 3. Explain the underlining principles of Ryland v Fletcher4. Identify the other areas of tortuous liability affecting construction

activities5. Apply the principles of law of tort to hypothetical and real

solutions

Unit outline

Session 1-1 Nature of Tort1-1.1 Definition of Tort1-1.2 Trespass1-1.3 Negligence

Session 2-1 Statutory Duty , Ryland v Fletcher Rule and Nuisance 2-1.1 Industrial Safety Legislation s 2-1.2 Ryland v Fletcher Rule2-1.3 Nuisance2-1.4 General Defences and Remedies

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SESSION 1-1 NATURE OF TORT

1-1.1 Definition of Tort: It is not easy to give a satisfactory definition of a tort. The word ‘tort’ is derived from the Latin “tortus” meaning crooked or twisted. It s also derived from French “tort” meaning wrong. In English law, tort denotes certain civil wrongs (a private offence against individuals) as distinct from criminal wrong (public offence against the state). Tort may be defined as a civil wrong independent of contract, or as a liability arising from breach of a legal duty owed to persons generally.

The aims of the law of tort are principally to protect interests in the person, land, chattels and reputation of another and to award damages for invasion of these interests. There are other interests of lesser importance which may not be protected and these include interests in economic and family relations.The main remedy for tort is compensatory damages to compensate the victim of the wrong. The courts, however, have power to award punitive or exemplary damages in special circumstances.

• Distinctions Between Tort and other legal actions A CrimeThe object of criminal proceedings is primarily punishment. The police are the principal agents to enforce the criminal law which invariably is a piece of statute. A private person may also prosecute a criminal offence. The same facts of a case may disclose a crime and a tort. Thus, if a worker at a construction site steals the contractor’s material at site, there is (i) a crime of theft, and (ii) trespass to goods (a tort) and conversion (also a tort).

A Breach of ContractIn contract the duties are fixed by the parties themselves. They impose terms and conditions themselves by their agreement. In tort, on the other hand, the duties are fixed by lay down rules (common law or statute) and arise by the operation of the law itself.Here, too, the same circumstances may give rise to a breach of contract and a tort.

Batty v Metropolitan Property Realisation [1978] 2 WLR 500A purchaser of a defective house brought an action against a developer for breach of a warranty that the house was fit for habitation and for negligence in having the house constructed on unsuitable ground. It was held that an action by the client against his Architect or engineer will generally be brought in contract. However, professionals and others in the construction industry owe parallel duties in tort both to the client and others who may be injured by their negligence. Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd [1972] 3 All ER 557The defendants’ negligence caused the cable carrying electricity to the plaintiff’s factory to be cut through interrupting the supply for 14.5 hours. The Plaintiff avoided the molten metal solidifying in the furnaces, and used oxygen to melt it. This reduced the value of



the metal and cost the plaintiffs the 400 pounds profit they would have expected to make on that melt. The plaintiff also lost a further 1,767 pounds on the other four melts which they would normally have completed in the time that the electricity was cut off. The majority of the Court of Appeal held that they could recover only the loss in value of the metal actually in the furnaces and the loss of profit on that melt. The remaining loss was pecuniary loss unrelated to any physical damage and irrecoverable.

The law of tort is important in the Construction Industry due to the fact that the operations within the industry involve great risk of dangerous situations. The major areas of tort that affect the industry include Trespass, Negligence, Strict Liability Rule under the doctrine of Rylands v Fletcher, Breach of Statutory Duty and Nuisance,

1-1.2 TRESPASSTrespass may be defined as an act affecting one’s personal liberty or property without any invitation of any sort or if aware, is objected to. It may be to Person (workers in the industry), land including building (real property) or goods (personal property) including materials and equipment use in the construction of infrastructural works. Trespass is actionable per se.

1-1.2.1 Trespass to the Person The usual topics treated under this heading are battery, assault and false imprisonment. However, here we will treat also the subject of malicious prosecution because although it is not a direct act to the plaintiff it affects the liberty of the person.

• Battery:According to Street, battery is any act of the defendant which directly and either intentionally or negligently causes some physical contact with the person of the plaintiff without the plaintiffs consent. Winfield, however states that “battery is the intentional and direct application of force to another person. The essential points to note are that;

- the act must be applied directly to the body of the plaintiff and that it must be intentional.

- If the contact or force is not direct from the defendant at all, there is no battery; for example, if A pushes B whose head hits C, A is not guilty of battery against C, neither is B because he did no intentional act.

As to whether when the act is not intentional but merely negligent and it is battery is not quite certain.

- The act need not result in any injury at all to the plaintiff because the tort being trespass is actionable per se that is without proof of any damage.

- The act should be without the express or implied consent of the plaintiff. Thus to

throw water upon, touch, slap, kiss, perform surgical operation upon a person without his consent is battery.



- Unlike assault the act need not cause any apprehension of contact to the plaintiff, so that a blow to the plaintiff from behind constitutes battery.

However, it is not every application of force to or contact with the body which is battery that is some applications of force are permitted.

• Assault: Street defines assault as any act of the defendant which directly and either intentionally or negligently causes the plaintiff immediately to apprehend a contact with his person. According to Winfield “assault” is an act of the defendant which causes to the plaintiff reasonable apprehension of the infliction of a battery on him by the defendant.

• Intentional Physical Harm: The offence of intentionally causing physical harm is the willful act or statement of the defendant calculated to cause physical harm to the plaintiff and which in fact causes physical harm to him is a tort.

Wilkinson v Downton (1897) 2 QB 57In that case the defendant by way of a practical joke falsely told the plaintiff that her husband had been involved in an accident by which both legs had been broken. Believing the story to be true the woman suffered nervous shock resulting in serious physical illness. An attempt by plaintiff’s counsel to base the claim on deceit required that the plaintiff should be intended to act on the false statement which did not apply in the present case because the plaintiff could not be said to have acted on the statement, she only believed it. Nevertheless Wright, J held that the defendant was liable for the consequences suffered by the plaintiff. Held; “The defendant has willfully done an act calculated to cause harm to the plaintiff-that is to say to infringe her legal right to personal safety, and has thereby caused physical harm to her. That proposition without more appears to me to state a good cause of action there being no justification for the act.” This tort is however normally treated along with trespass to the person because physical harm is caused to the person.

• False Imprisonment: The tort of false imprisonment consists in the act of arresting or deprivation of freedom of movement and need not involve actual incarceration. If a person is deprived of his personal liberty for any time, however short, that is false imprisonment. It will also be false imprisonment if a person is prevented from leaving the place in which he is. If a person is stopped in the street and told he is under arrest and the arrest happens to be unlawful that would be false imprisonment. To constitute imprisonment however the restriction of the plaintiff must be complete; that is, there must be on every side a boundary drawn beyond which he cannot pass. However, the means of escape must be reasonable, that is, it should not involve exposure to damage or extreme inconvenience. ‘dosei-asibey, esq 4 09/09


It should be remembered that false imprisonment being a trespass to the person is actionable per se.

AHEVI v AKOTO IV [1993-94] 1 GLR 512—538All the parties in the suit were citizens of the Dodome Traditional Area (DTA) in the Volta Region. The first and second respondents were the chief of Dodome-Awiasu and the regent of the paramount chief of Dodome, respectively. Following a complaint to the first defendant and his elders by one E that one K had used juju to kill a fetish priestess in the town and that the plaintiff was also using juju to render the hospital mortuary where her corpse was being kept ineffective so as to deny the deceased a decent burial, the first defendant called a town meeting to go into the matter. At the meeting K admitted his guilt and he was duly sanctioned. The plaintiff however denied the accusation against him. In keeping with the custom and tradition of the DTA, the plaintiff was sent in the company of some relatives and the chief's linguist to a fetish priest at Ada Junction where he underwent a trial by ordeal to vindicate his name. Although he was found not guilty at the trial, on their return the meeting rejected the verdict of the trial and E again made further accusations against the plaintiff for having used juju to kill some members of his (the plaintiff's) family. Aggrieved by those accusations, the plaintiff initially lodged a complaint against her with the chief and his elders. However, as a result of their inaction, he summoned her before a fetish cult. Subsequently, the defendants called another town meeting to resolve the dispute between the plaintiff and E but the plaintiff refused to attend the meeting. However, claiming that he had learnt that at that meeting the defendants had portrayed him as a murderer and a juju man unfit to live in their society and had then ostracised him by banning all interactions between him and the other citizens of the town, and that those words spoken of him were defamatory, and furthermore, the whole process of trial by ordeal that he was compelled by the defendants to undergo constituted false imprisonment and malicious prosecution, he brought an action against the defendants jointly and severally for ¢10 million damages for defamation; an order directing them to have gong-gong beaten in the DTA to retract the defamatory words; perpetual injunction restraining the defendants from uttering those words; and ¢5 million for false imprisonment and malicious prosecution. Although the defendants denied uttering the alleged defamatory words, they admitted having stated that the plaintiff had no moral right to interact with the youth. The court found on the evidence that (i) the citizens of the DTA believed in the efficacy of juju; (ii) the plaintiff had participated in and had a reputation for participating in juju and fetish activities; and (iii) the plaintiff himself undertook to clear his name by submitting to the trial by ordeal.Held: A claim of false imprisonment implied total restraint of one's liberty without his consent. Since on the evidence, it was the plaintiff who, in accordance with the custom of their traditional area, voluntarily offered to undergo the trial by ordeal in order to vindicate his name, after he had denied the accusation made against him, and willingly participated in all the processes and rites at the fetish which culminated in his exoneration, a result which he duly celebrated, it could not be said that his personal liberty was in any way restrained by the defendants before, at or after the trial by ordeal.



Accordingly, the plaintiff's claim against the defendants for false imprisonment would fail.

• Malicious Prosecution This is where a person, A prosecutes the other, B without a just cause and the defendant B is acquitted. The defendant, if he can prove that A brought the prosecution out of private spite (desired to hurt, annoy or offend), then B may sue A for the offence of malicious prosecution. This tort also is not trespass to the person as the action itself constituting the wrong does not directly affect the person of the plaintiff; the effect on the plaintiff is only consequential. However, it is discussed under the trespass to person because it affects the liberty of the plaintiff. Since it is not direct trespass, damage is required to be proved.

In an action for malicious prosecution, the plaintiff had the onus of proving that (a) he was accused of or charged with a criminal offence or both; and (b) the proceedings terminated in his favour before a court of competent jurisdiction.

1-1.2.2 Trespass to LandA trespasser to land has been defined as one who goes on to the land of another without any invitation of any sort and whose presence is either unknown to the proprietor, or, if known, is objected to practically. The question, whether or not a person is a trespasser or is there by permission is not always easily decided.Trespass to land is however committed in three forms:Whenever a person intentionally or negligently;

(i) Enters upon the land of another

(ii) remains on the land of another;

(iii) causes to be placed or thrown any material object upon the land of

another, e.g. debris from demolished building

Gregory v Piper (1829), 9B &C 591 The Plaintiff brought an action against the defendant when rubbish was placed on the defendant’s land but was rolled on to the Plaintiff’s land as a result of natural causes. Held; Defendant was liable.

Mere trespass on land is not a crime and no prosecution for it may be brought, though a civil action may be. However a crime is committed if the trespass is accompanied by damage e.g breaking fences or trading down growing corn, an offence of willful damage is committed.

In the construction industry, a contractor may trespass if he remains on the site of the client after the contract has ended or license is up.

A trespass may be on the surface of the land, or underneath it (where excavations are being carried out) or in the airspace above it (where materials project over the property).



Mistake is no defense in such circumstances and provided that the plaintiff has legal estate and exclusive possession, he may sue and full restitution for the loss suffered may be claimed. Moreover a person may be sued even though he did not know he was trespassing for mistake is no defense.

• Remedies for Trespass to LandDamages: this is in general the amount by which the value of the property is diminished as a result of the trespass, not the cost of reinstatement. Injunction: This may be used to prevent the continuance or repetition of the act of trespass. The Plaintiff may apply to the court for both damages and an injunction.Ejection: The occupier of the land may eject a trespasser after first requesting him to leave and allowing him peaceably to do so. No more force may be used than is reasonable in the circumstances; otherwise the occupier may be sued for assault.An Action for Recovery: May be brought for recovery of land.

1-1.2.3 Trespass to GoodsThe trespass to goods is the intentional or negligent interference with the possession of another person’s goods. The interference must be direct and forcible (though a mere touching may be trespass).

1-1.3 NEGLIGENCE

1-1.3.1 Concept of Duty of CareNegligence may arise where the plaintiff establishes that there is duty by the defendant to take care of the plaintiff. Thus, there is duty held by the defendant to protect the injured party from the kind of harm suffered due to the careless act of the defendant. It can therefore be established that there is a breach of such duty which was found to be the cause of the harm suffered by the plaintiff.

In Lochgelly Iron & Coal Co v McMullan [1934] AC 1 @ 25 Lord Wright held among other things that negligence means more than heedless or careless conduct, whether in omission or commission. It connotes the complex concept of duty, breach and damage suffered by the person to whom the duty is owe.

Negligence therefore may be defined as an act, heedlessly or carelessly omitted or committed to a person whom a duty of care is owed.

Thus for there to be negligence, there must be in existence DUTY, BREACH and CAUSATION. The courts however recognize these elements as one.

• There is a duty of the defendant to take care of the plaintiff



• There is a breach of duty to take care

• The breach resulted from a careless act or omission for which reason a harm has

been suffered by the plaintiff.

The plaintiff in any particular circumstances, established that the defendant owe a duty at least to somebody to act or refrain from acting and that the defendant had conducted himself a manner that, that duty is owed to the plaintiff personally. A person does not owe a stranger any duty.

Langbrook Properties Ltd v Surrey County Council [1969] 3 All ER 1424The Defendant carelessly excavated his land where he could foresee that by abstracting percolating water from below, the adjoining property of the Plaintiff would be caused to settle. The Plaintiff brought an action against the defendant but was held that the defendant is not liable because he owes no duty of care in respect of percolating water to the plaintiff personally.

Whether or not a duty exists has always been a matter of law not fact. Sometimes the existence of duty is very clear e.g, the builder owes duty to the public that may use the site and the road contractor, similarly owe a duty to all other users of the road. A building inspector owes a duty of care, in the inspection of foundations for compliance with the building regulations to the purchaser who eventually buys the house and this makes authority responsible (employer of the building inspector, Metropolitan, Municipal or District Assembly), vicariously liable under the duty. Where a person is found to be under duty, the extent of recoverable loss does not include economic loss. See; Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd

The trend to raise economic loss to the level of recoverable loss in negligence was however halted in the case of Murphy v Brentwood District Council [1990]2 All ER 908@935. In that case the plaintiff was the purchaser of a house the foundation was defective. However the plans and calculations on which the foundation was based had been passed by due to the carelessness of their engineers when submitted for building regulation approval prior to construction. The plaintiff lost a substantial sum in selling the house on account of the defect. He therefore sued the council in negligence for damages of the house on account of the defect. The House of Lords unanimously held that the loss claimed was purely economic loss and as such was not recoverable in an action in negligence against the local authority. Their Lordships declared that the council owed no duty to protect building owners or occupiers against such loss. This decision was described as a return to orthodoxy. It was emphasized that plaintiffs could recover such purely economic loss only through contracts and that the law of negligence would be permitted to be a substitute for the assistance of third parties or those whose contract did not provide for recovery.



A defendant may be liable to the plaintiff including a person with a current proprietary interest in a damaged property for personal injury or damage to property but not economic loss occasioned to the plaintiff. Thus in some circumstances such as economic loss the law may deny duty.

Electrocheme Ltd v Walsh Plastics Ltd, [1968] 2 All ER 205The lorry driver negligently knocked down a fire hydrant which caused the water supply to the plaintiff’s factory to be cut off. There was no physical damage to any of the plaintiff’s property. The Plaintiff brought an action for recovery of loss of production. Held; the plaintiff could not recover for loss of production, for the damage received was purely economic in nature. 1-1.3.2 FORESEABILITY AND OMISSIONSEven though a person may foresee that if he omits i.e. fail to act or take something and slap another the victim may suffer damage or harm yet generally the law does not hold such a person liable if the victim in fact suffers harm due to his failure to prevent such harm. It is said that one must take care not to cause injury to others, but then there is no general duty to act for the benefit of others; in other words, the rule is that you must not harm your neighbour, not that you are required to save your neighbour. Junior Books Ltd v Veitchi Co. Ltd [1983] 2 All ER301 HL. In that case the plaintiff had a contract with some main contractors to build a factory for them. The main contractors entered into a contract and the Plaintiff found the floor to be defective which they had to spend extra money to remedy the defect. They sued the defendants in negligence of damages. The House of Lords held that there was a sufficient degree of proximity to give rise to a duty of care, and that duty of care was not limited to a duty to avoid causing foreseeable harm to persons or property.

According to Street, exactly what constitutes the ‘necessary proximity’ to give rise to a duty-situation is difficult to define precisely. Foresee ability of harm to the plaintiff remains a necessary pre-condition of liability. There can be no proximity without forseability. But additionally the plaintiff must establish grounds on which it is proper to impose on the defendant responsibility for that harm, reasons why it is fair to expect the defendant to safeguard the plaintiff’s interests rather than expecting the plaintiff to expect the defendant to look after himself.



1-1.3.3 ASPECTS OF NEGLIGENCEAspects of Negligence affecting the Construction Industry include;

a. PROFESSIONAL NEGLIGENCEGenerally, consultants and other professionals are expected by law to display reasonable competence in the delivery of their services. The duty of care required by the professional is normally based on the contractual arrangement between the two. However, the duty of care may arise concurrently in tort and contract (Professional Bodies Registration Act, 1973 (NRCD 143)).The standard of reasonableness depends on the competency of the professional. Thus, less is expected from a young professional than experience consultant. However where an unqualified person or young professional holds himself as an experience consultant in his deliveries, the law would not excuse his negligence. He is deemed to be what he says he is and adjudged by that standard.The law would excuse the negligence of the professional or consultant if he applies methods and practices that are commonly accepted within the profession notwithstanding the fact that many of the professions see the practice as unwise. The court however has the discretion to determine whether or not the practice is general standard of the reasonable man.

Cavanagh v Ulster Weaving Co. Ltd [1959] 2All ER745 The arrangement made by the defendants in providing a roof ladder was in accordance with the established practice. The plaintiff slipped coming down the roof ladder and injured himself. The Plaintiff sued the defendants for negligence.Held; the defendants were negligent and therefore liable.

The professional may be found liable to a third party ie, someone other than the client. According to Street, for a duty to arise to a third party the professional;

• Must be aware that his advice will be transmitted to the plaintiff or to an identifiable class of persons of whom the plaintiff is one

• Advice must be transmitted in order to forward a specific purpose of transaction of the plaintiffs, and

• Must be reasonable in all the circumstances for the plaintiff to rely on that advice, rather than to seek independent advice of his own, and the professional must be well aware that the plaintiff will so rely on his advice.

In Smith v Bush [1989] 2 All ER 514 HL, the defendants were surveyors who provided a survey report based on which the plaintiff mortgagees relied on when submitted by the mortgagor as assurances that the properties which they wished to buy were structurally sound and worth more or less the agreed purchase price.Held; the House of Lords held that it was well known that over 90% of house-buyers relied on the building society survey report for which they ultimately paid. The defendant should have appreciated that the plaintiffs reasonably entrusted them with responsibilities for safeguarding their interests and therefore liable to the plaintiff.



The law expects the Professional to display the average amount of competence associated with the proper discharge of the duties of their profession. It is not the highest degree of skill shown by persons in the profession but the reasonable competence that is required.However, the law also requires the Professional to update himself reasonably. An unqualified person would not be excused of his Negligence.

Section 20 of NRCD 143 provides that ‘Any person who—(a) not being registered …. as a member of a professional body registered under this Act represents himself or holds himself out as so registered, or(b) not having the qualification for admission to or enrolment in or for being accepted as a member of, such a body knowingly represents that he has such qualification, or(c) otherwise contravenes any of the provisions of this Act,shall be guilty of an offence and liable on summary conviction to a term of imprisonment not exceeding five years or to a fine not exceeding ¢1,000.00 or to both; and where the offence is of a continuing nature the offender shall be liable to a further fine not exceeding ¢50.00 in respect of each day on which the offence continues.

The qualified person will not be regarded as Negligent if he uses practices which are commonly accepted within his profession as acceptable even if a large number of his colleagues feel that the practice are not wise.The key issue is whether or not the duty of care exercised by the professional was reasonable. A higher standard is required from an experienced Consultant than a young surveyor

B. DOCTRINE OF RES IPSA LOQUITUR (THE FACTS SPEAK FOR THEMSELVES): It is the general rule that the plaintiff should prove the negligence of the defendant by specific acts or omissions, for example, that a defendant driver failed to look forward while driving, or that he drove at an excessive speed. But sometimes it is not possible for the plaintiff to detail the specific conduct of the defendant resulting in the accident. This could work hardship for the plaintiff. This hardship was avoided by the development of the doctrine of Res Ipsa Loquitur.

The doctrine applies in those situations where the harm is of the kind that does not just happen but was caused by something in control of the defendant, and therefore must prima facie (on the face of it) be regarded as having been the result of the defendant’s negligence. For example, if the carcassing of an interior ceiling is being carried out and someone below is injured by a piece of falling wood, res ipsa loquitur, the defendant will have to show that he was not negligent in handling the wood. This applies particularly to things falling from buildings, any accident arising from defective machinery, apparatus or vehicles.

Three conditions must be fulfilled before the principle or maxim can be upheld, namely



• The thing causing the accident must be under the control or management of the defendant or his servants.

• The accident must be such as ordinarily cannot occur without negligence. • There must be absence of explanation of the cause of the accident by the

defendant. The effect of a plea of res ipsa loquitur is that if no evidence by the defendant that the accident could not be due to want of care then there must be a verdict for the plaintiff. In other words, a plea of the maxim casts a burden on the defendant to disprove negligence, for the plea of the maxim gives rise to a prima facie evidence of negligence on the part of the plaintiff.

c. OCCUPIERS’ LIABILITY

An occupier may be defined as anyone who owes sufficient degree of physical control and possession over property. This includes possession of construction site by a contractor and all those who exercise control over fixed or movable structures such as lifts, scaffolding etc The general rule is that an occupier of premises owes no active duty to trespasser if he is known to be present, and occupier may not inflict damage on him recklessly or intentionally. An occupier may not create dangers intentionally to injure a trespasser. Thus, he may not set spring guns (Bird v Holbrook, 1828) though it is possible to take defensive measures, such as covering the tops of high walls with broken glass.

i. Duty to VisitorIn a case (Wheat v Lacon), a landlord and a tenant were held liable for the injury of a guest on a stair case.At common law liability is owned to a visitor, i.e. an invitee or a contractual visitor, a licensee and a trespasser.The highest degree of care is owe by the occupier to one who enters in pursuance of a contract with him (e.g. a guest in an hotel), in that case there is an implied warranty that the premises were reasonably safe in using the premises for the purpose for which the person is invited, contracted or permitted by the occupier to be there.

A lower duty was owed to an “invitee”, that is to say, a person who (without any contract) entered on business of interest both to himself and the occupier (e.g. a customer coming into a shop in view to view the wares): he was entitled to expect that the occupier’s express or implied permission suggest that the occupier’s duty towards him was to warn him of any concealed danger or trap of which he actually knew. In the case of Cunningham v Reading Football Club [1992] PIQR 141 the plaintiff recovered from the defendant when loose concrete slab fell and injured him in a stadium. It was foreseeable that the slabs may fall when violent supporters rioted.

A licensee may be a person who is on the occupier’s premises either by an express or implied consent of the occupier.



It must however be noted that according to Street on Tort the distinction is not necessary in terms of duty of care owed to these people.

To a licensee, permission should not be implied only because the occupier had failed to take necessary steps to prevent his entry rather there should be evidence of an express permission or that the land-owner has so conducted himself in a manner that he cannot be heard to have said he didn’t give it. For example, where signage for vacancy is placed in an unfenced construction site, the contractor may be liable.

In the case of Edwards v Railway Executives [1952] 2 All ER 430 @ 437; House of Lords held that the duty of an occupier is to warn the licensee of any concealed danger known to him and which is not known to the licensee. Warning however does not discharge the defendant of his liability unless it can be proved that the warning was sufficient with regard to the danger.

ii. Duty of Common HumanityAt common law the occupier owes the trespasser no duty of care. There however exists the duty of common humanity. This duty may arise when it can be shown that the occupier is aware of the danger or has reasonable grounds to believe that it exist, and he knows that or has reasonable grounds to believe that the trespasser is in the vicinity of the danger or that he is likely to come into the vicinity and that the danger is one against which he can reasonably offer the trespasser some protection.Thus if a building materials are placed precariously on the site, in such a manner that they are likely to collapse, and injure a passer-by, and the occupier knows that members of the public use the site as a short cut when walking to the main road, according to Lewis, the fact that the person injured was a trespasser will not save the occupier from liability for the injuries caused by the collapsing materials.

Southern Portland Cement v Cooper [1974] 2 WLR 152 A child wandered onto the site and was injured by the cable within reach of the mound of waste material. The children were playing near the quarry and had been warned off several times. The defendant had inspected a dump of waste material and agreed with the local authority for removal of the cable.Held; it was an easy task for the defendant to have taken steps to prevent the danger arising and also owed a duty to the plaintiff to take those steps. The defendant was liable to the plaintiff.In such cases the occupier owes a duty of care towards trespassers, to take such steps as are dictated by common sense and humanity, to reduce or avert the danger.

iii. ChildrenThe general rules as to trespassers apply to children. There are, however some special points which should be noted;

• An occupier must be prepared for the fact that children are less careful than adults.



• what may be a warning to an adult may not be so to a child

- If with the knowledge of child trespassers on his land, and the occupier makes no attempt to prevent recurrence of the trespass, e.g by repairing his fences,

his inactivity might be evidence of implied permission, in which case the child may qualify as a ‘visitor’. Eg construction of septic tank

- Where a child is unlawfully on land and there is something on the land which acts as an ‘allurement’ to a child, e.g machinery or attractive poisonous fruits, the occupier may be liable even though the child is a trespasser so far as the allurement itself is concerned.

- As (iv) above, an occupier of land is entitled to assume that young children will be in the charge of competent adults. In Phipps v Rochester Corporation [1955] 1 All ER 129, where a boy aged five, who was accompanied by his sister aged eleven, fell into a hole and broke his leg, it was held that the responsibility for the safety of young children rests primary with their parents.

There may however arise special consideration for children. Permission may be implied on the basis of an allurement that would present no temptation to an adult.

British Railway Board v Herrington [1972]1 All ER 757, H, aged 6, trespassed through a defective fence adjoining an electrified railway line and was badly injured. H sued the Board in negligence for permitting the fence to be in a dilapidated condition. The Board knew previous trespassers had occurred. Held: (House of Lords): The Board was liable. An occupier’s liability to a child trespasser depends on what a conscientious, human man (with his knowledge, skill, and resources) could reasonably have avoided the accident. A poor person would often be excused where a large organization would not. (per Lord Reid)

Cook v. Midland Great Western Railway, Ireland [1909] AC 229, Defendants kept a turntable on their land near a public road. To the knowledge of defendant children habitually came on to the land and played with the turntable. Defendants took effective steps to prevent them doing so, a child aged four, injured himself on the turntable. Held: that there was sufficient evidence to find the defendants liable. As they had acquiesced in the trespasses by the children, the particular child was in the position of a visitor, and to him the turntable was an allurement.

Glasgow Corporation v Talor [1922] 1 AC 44. A child, seven years of age pick some attractive, but poisonous, berries growing on a shrub in a public park controlled by Glasgow Corporation. The child died after eating the berries. Defendants (the corporation) knew the berries were poisonous and that children went to the park, but they had done nothing to give effective warning, intelligible to children, of their danger. Held: that the corporation was liable in an action by the child’s parent; the berries constituted an allurement.



iv. Independent ContractorsWhere a danger is caused to a visitor as a result of danger due to the faulty execution of a work of construction or of maintenance by an independent contractor employed by the occupier, the occupier shall not be answerable for the danger if in all circumstances he acted reasonably in entrusting the work to an independent contractor and took such steps as are necessary to satisfy himself that the contractor was competent and the work was properly done.The court therefore has to look at these areas i.e. whether it was reasonable for the occupier to engage the independent contractor (the work involved is specialized or involves the use of special skill or equipment) and whether the occupier checked the competence of the independent contractor.

Haseldine v Daw & Son Ltd [1941] 2KB 343The occupier had neither the skill nor the equipment to repair the lift so he delegated th task to a properly skilled independent contractor. Held; the occupier was not liable for defects in the lift having delegated the duty to the

independent contractor and having behaved reasonably in so doing.

v. Limitation of Occupier’s of Liability

• Assumption of RiskThe common duty of care does not impose on an occupier an obligation to a visitor in respect of risk that was willingly accepted by the visitor. The defendant therefore brings no duty of care owed to the plaintiff upon the assumption of risk. Volenti non fit injuria.

• Contributing NegligenceContributory negligence is to the effect that a plaintiff cannot enlarge to an extent the duty of care owed to him by the defendant by negligent acts on his part. Damages are therefore reduced when it is proved that the plaintiff failed to take reasonable care of himself.

• Exclusion of LiabilityThe occupier may exclude liability by way of contract to the other party in so far as he is free to do so. He however cannot exclude liability for death or personal injury or injury to property arising through his own negligence.

d. EMPLOYERS' LIABILITY The employer's common law duties to his employees are commonly dealt with in four headings, the provision of: (a) competent staff; (b) a safe place of work; (c) proper plant and equipment; and (d) a safe system of work. These are simply aspects of the broader



duty to see that reasonable care for the safety of employees is taken.

Wilsons and Clyde Coal Ltd v English [1937] 3 All ER 628It was held by the House of Lords that (1) the employers were not absolved from their duty to take due care in the provision of a reasonably safe system of working by the appointment of a competent person to perform that duty. Although the employers might, and in some events were bound to, appoint someone as their agent in the discharge of their duty, the employers remained responsible. (2) the doctrine of common employment does not apply where it is proved that a defective system of working has been provided. To provide a proper system of working is a paramount duty, and, if it is delegated by a master to another, the master still remains liable.

i. Competent StaffThe employer has an obligation to select competent fellow employees, and a correlative duty to give them proper instruction in the use of equipment.

If an employer knows or can foresee that acts being done by employees might cause physical or psychiatric harm to a fellow employee, it is arguable that the employer could be in breach of duty to that employee if he did nothing to prevent those acts when it was in his power to do so.

ii. Safe Place of WorkAn employer must take such steps as are reasonable to see that the premises are safe.

Latimer v AEC Ltd [1953] 2 All ER 449Owing to an exceptionally heavy storm of rain, a factory was flooded with surface water which became mixed with an oily liquid used as a cooling agent for the machines which was normally collected in channels in the floor. When the water drained away from the floor, which was level and structurally perfect, it left an oily film on the surface which was slippery. The defendants spread sawdust on the floor, but owing to the unprecedented force of the storm and the consequently large area to be covered, there was insufficient sawdust to cover the whole floor. In the course of his duty the plaintiff slipped on a portion of the floor not covered with sawdust, fell, and was injured.It was held by the House of Lords, inter alia, that on the facts the defendants had taken every step which an ordinarily prudent employer would have taken in the circumstances to secure the safety of the plaintiff, and so they were not liable to the plaintiff for negligence at common law.

The employer is also under a duty with respect to the premises of a third party even though he has no control over the premises, but the steps required to discharge this duty will vary with the circumstances.

A master's duty to his servant to take reasonable care so to carry out his operations as not to subject his servant unnecessary is one single duty applicable in all circumstances. The question whether the master was in control of the premises, or whether the premises were



those of a stranger, becomes merely one of the ingredients, albeit an important one, in considering the question of fact whether, in all the circumstances, the master took reasonable care.

Wilson v Tyneside Window Cleaning Co [1958] 2 All ER 265A skilled and experienced window cleaner, who knew that he should not trust the handles on windows without first testing them, was frequently sent by his employers to clean the windows of a particular customer. The employers did not inspect the customer's premises each time when they sent the window cleaners there, nor did they specifically warn the window cleaner of particular dangers; but they did instruct him to leave uncleaned any window which presented unusual difficulty and which he was in doubt whether he could clean safely, to report the fact to them and to ask for further instructions. There was no evidence of any practice in the trade either of inspecting premises for safety before work or of repeatedly warning workmen of the dangers. While cleaning the outside of a kitchen window, the woodwork of which appeared to the window cleaner to be rotten, of which he knew the sash to be stiff and of which one of the two handles was missing, the window cleaner attempted to pull the window down by the remaining handle. The handle came away in his hand, causing him to lose his balance, fall and sustain severe injuries.In an action by the window cleaner against the employers for alleged negligence exposing him to unnecessary risk, it was held by the Court of Appeal that the employers had taken reasonable care not to subject the plaintiff to unnecessary risk, because the danger was an apparent danger, the plaintiff was very experienced at the work, and they had instructed him not to clean windows which it might not be safe to clean; the employers, therefore, were not liable.

iii. Adequate Plant and EquipmentAn employer has a 'duty of taking reasonable care to provide proper appliances, and to maintain them in a proper condition' (per Lord Herschell, Smith v Baker [1891] AC 325, 362). If necessary equipment is unavailable and this leads to an accident he will be liable, although he is not necessarily bound to adopt the latest improvements and equipment

If the employee would not have used the safety equipment if it had been supplied the employer's breach of duty is not the cause of injury. An employer is liable if an employee suffers personal injury in the course of his employment in consequence of a defect in equipment provided by the employer, and the defect is attributable wholly or partly to the fault of a third party, whether identifiable or not.

An employer will not be liable if a worker fails to make proper use of the equipment supplied, nor where the employee acted foolishly in choosing the wrong tool for the job, assuming that, where necessary, the employee has been given adequate instruction in the use of the equipment.

iv. Safe System of WorkingIt is a question of fact whether a particular operation requires a system of work in the



interests of safety, or whether it can reasonably be left to the employee charged with the task. It is usually applied to work of a regular type where the proper exercise of managerial control would specify the method of working, give instruction on safety and encourage the use of safety devices.

In some cases a warning of the danger to a skilled employee will be sufficient to discharge the employer's duty, and in others it may be reasonable to expect experienced workers to guard against obvious dangers. See: Wilson v Tyneside Window Cleaning Co. [1958] 2 All ER 265 (above)There are two aspects to the provision of a safe system of work:

(i) the devising of a system; and (ii) its operation.

Even if the system itself is safe a negligent failure to operate the system, whether by another employee or an independent contractor, will render the employer liable.

General Cleaning Contractors v Christmas [1952] 2 All ER 1110The plaintiff, a window cleaner, was employed by the defendants, a firm of contractors, to clean the windows of a club. While, following the practice usually adopted by employees of the defendants, he was standing on the sill of one of the windows to clean the outside of the window and was holding one sash of the window for support, the other sash came down on his fingers, causing him to let go and fall to the ground, suffering injury.On a claim by him against the defendants for damages, it was held by the House of Lords that even assuming that other systems of carrying out the work, eg, by the use of safety belts or ladders, were impracticable, the defendants were still under an obligation to ensure that the system that was adopted was as reasonably safe as it could be made and that their employees were instructed as to the steps to be taken to avoid accidents; the defendants had not discharged their duty in this respect towards the plaintiff; and, therefore, they were liable to him in respect of his injury.Per Lord Reid; Where a practice of ignoring an obvious danger has grown up it is not reasonable to expect an individual workman to take the initiative in devising and using precautions. It is the duty of the employer to consider the situation, to devise a suitable system, to instruct his men what they must do, and to supply any implements that may be required.

e. VICARIOUS LIABILITY

This is liability which arises because of one person’s relationship to another. Thus a master or principal is generally liable for the acts of his servant or agent where he performs negligently in the course of his employment.

Harrison v Michelin Tyre Co [1985] 1 All ER 919The plaintiff, a tool grinder employed by the defendants, was injured in the course of employment while standing on the duck-board of his machine talking to a fellow employee. The injury occurred when S, another employee, while pushing a truck along a



passageway (indicated by chalk lines) in front of the plaintiff, decided to indulge in some horseplay by suddenly turning the truck two inches outside the chalk lines and pushing the edge of it under the plaintiff's duck-board. The duck-board tipped up and the plaintiff fell off it and was injured. He brought an action for damages for personal injuries against the defendants, claiming that S had been acting in the course of his employment, and that therefore they were vicariously liable for his negligence. The defendants denied liability, contending that at the time of the incident S had embarked on a frolic of his own.

It was held in the QBD that for the purposes of vicarious liability, the test whether an employee was acting in the course of his employment was whether a reasonable man would say either that the employee's act was part and parcel of his employment (in the sense of being incidental to it) even though it was unauthorised or prohibited by the employer, in which case the employer was liable, or that it was so divergent from his employment as to be plainly alien to his employment, and wholly distinguishable from it, in which case the employer was not liable. Applying that test, a reasonable man would say that, even though S's act was of a kind which would never have been countenanced by the defendants, it was none the less part and parcel of his employment. Accordingly the defendants were vicariously liable.

The principle, ‘frolic of his own’ is commonly the defence of the master or principal where the servant or the agent does not perform his negligent act in the course of his employment. Thus where a tipper truck driver of a construction company, has been tasked to win gravel from the gravel pit but he decides to pick the wife to the house which is situated in an opposite direction of the gravel pit first and negligently knock down a school girl on his way to the house, the Company will certainly plead frolic of his own as its defence against the vicarious liability..

f. LIABILTY FOR PRODUCTS The normal liability for products was in respect of a contract between a seller and buyer. That is to say under a contract of sale of goods, the seller was liable for defects in goods for which the buyer was not aware. Subsequently, however a liability on the part of a producer who was not a contracting party at all to the plaintiff was recoginised in relation to things of which the defendant was aware was likely to cause danger.

The liability in the construction industry arises in relation to the materials used or tools supplied in the course of the works.

Donoghue v Stevenson [1932] A.C. 562 Where the defendant was not aware that the thing was dangerous in itself or was likely to cause harm, no liability was recognized on the part of a non-contracting third party. However, in Donoghue v Stevenson, such liability was recognized for the first time. In that case the plaintiff in 1928 entered a café with a friend who bought for her bottle of ginger beer manufactured by the defendant, Stevenson, from whom it was bought by the retailer. The beer was contained in an opaque bottle. It was alleged that the bottle contained the decomposed remains of a snail which could not be detected until the greater



part of the contents of the bottle were consumed. She alleged that as a result of the nauseating sight of the snail and the impurities in the ginger beer which she had already consumed, she had suffered shock and severe gastric complaints. A majority of the House of Lords held, when the plaintiff sued the manufacturer that, the plaintiff’s allegations disclosed a cause of action against the manufacturers. Lord Atkin observed: “A manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care”.

g. NEGLIGENT MISSTATEMENTNegligent Misstatement arises where a statement of a professional which is being relied on by the plaintiff causes an injury to him as a result of negligence of the professional during the course of his work. Professionals such as Quantity Surveyors, Engineers, Architects etc can be held liable to persons other than their employers who suffer loss in the form of financial or physical through reliance on their statements. However where the professional provides a disclaimer of responsibility to the notice of the person who is relying on the statement or advise of the professional the professional can have a defence.

Clay v A. J. Crump Ltd [1964] 1 QB 533 An Architect was sued because of his negligent supervision on a site which was being developed. He was held to have a duty of care and he was held liable for injuries suffered by the party injured by the falling wall. Negligent Misstatement may include a wrong diversion sign that may cause accident to road users.Brett M.R. in Heaven v Pender (1883), 11 QBD 503 held ‘whenever one person is by circumstances placed in such a position with regard to another that everyone of ordinary sense who did think would at once recognize that if he did not use ordinary care and skill would cause danger or injury to the person or property of another, a duty arises to use ordinary care and skill to avoid such danger.’

Self-Assessment 1 – 11. Explain the statement,”to constitute false imprisonment the restriction of

the plaintiff must be complete”.

2. Trespass to land is committed in three forms; state one of such forms.

3. A Contractor at the construction of a pool site at KNUST carelessly excavated his trench but could foresee that by abstracting percolating water from below, the adjoining mast which has been erected by the MTN Company on the adjoining property of a private developer would be caused to settle. The MTN Company has brought an action against the Contractor.



Will the Contractor be liable?

SESSION 2-1 STATUTORY DUTY, RYLAND V FLETCHER RULE AND NUISANCE

2-1.1. Industrial Safety LegislationsBreach of statutory duty arises where a statute provides certain thing to be done and the default results in injury to another person, the person on whom the duty was imposed can be sued for damages by the injured person. It is a separate tort because there have been cases in which the defendant has been acquitted of negligence but held liable on the same facts for breach of statutory duty. There have also been cases in which the defendant fulfilled his statutory duty but was nevertheless held liable for negligence. The principle is that Duty must be owed to the Plaintiff and the Defendant must in fact be guilty of his statutory duty or obligation.

Indeed, industrial safety legislations, which is penal in nature, is one area where the courts have consistently allowed such common law actions. Some Regulations which governed specific areas in construction are the Insurance Act, 2006 (Act 724), Factories, Offices and Shops Act, 1970, (Act 328), Workmen’s Compensation Law, 1987 (PNDCL 187), 1987, Labour Act, 2003, (Act 651), Environmental Protection Act, Building Regulations and Disability ActThe amount of protection given by an action for breach of statutory duty depends, not only on the wording of the statute, but more importantly on the interpretation of the courts.

a. The Insurance ActThe Insurance Act, 2006 Act 724 requires an owner of a commercial building under construction to insure the liability(ies) in respect of constructional risk arising out of negligence of servants, agents or supervisors which may result in the following;

1. (i) bodily injury to any workman on the site or any member of the public (ii) loss of life to any workman on the site or any member of the public (iii) damage of property of any workman on the site or any member of the public

2. (i) the Insurance Act also requires the owner of a commercial building to insure the building against collapse, fire, earthquake, storm and flood.

(ii) The insurance policy obtained from the insurer shall cover the legal obligations of the owner or occupier of such building in respect of loss or damage to property, bodily injury or death suffered by any user of the building and third parties.

The Insurance Act defines commercial building as a privately owned building where members of the public enter and leave for the purpose of (a) obtaining educational or medical services or (b) engaging in commercial activity for the purposes of the recreation ‘dosei-asibey, esq 21 09/09


or transaction of business.

b. The Factory, Offices and Shops Act, The Factories, Offices and Shops Act, 1970 (Act 328) has the following provisions;

(i) Every factory, office and shop shall be provided with such adequate means of escape in case of fire for the persons employed there as may be reasonable required (S.3). (ii) Where any person has to work at a place from which he will be liable to fall a distance more than eight feet (2.5metres), means shall be provided, so far as is reasonable to ensure his safety (S. 34 (2)).

(iii) All floors, steps, stairs, passages, gangways shall be of strong construction and properly maintained and shall so far as is reasonably practicable be kept free form any obstruction and from any substance likely to cause any person to slip (S 35 (1).

(iv) For every staircase in a building or affording a means of exit from a building, a substantial handrail shall be provided and maintained (S35 (2)) Any employee injured as a result of a breach by the employer of any of the above provisions is entitled to recover damages for breach of statutory duty.

c. The workmen’s compensation law, PNDC Law 187, 1987Another statute which has made the rights of employees against their employers under common law less significant is the workman’s compensation Act1963 (Act 174), now PNDC Law 187, 1987. The principle of compulsory payment of compensation by the employer is in respect of the death or disablement of a workman as a result of accident occurring in the course of his employment, independently of negligence not provided for by the Factory Act.

d. The Labour ActThe Act provides that in any contract of employment or collective agreement, the duties of the employer include to;

• Provide work and appropriate raw materials, machinery, equipment and tools;• Take all practicable steps to ensure that the worker is free from risk of personal

injury or damage to his or her health during and in the course of the worker’s employment or while lawfully on the employer’s premises.

The duty of the worker also include to;• Work conscientiously in the lawfully chosen occupation,• Exercise due care in the execution of assigned work• Obey lawful instructions regarding the organization and execution of his or her

work• Take all reasonable care for the safety and health of fellow workers



• Take proper care of the property entrusted to the worker or under the immediate control of the worker

The right of worker as provided in the Act also include;• To work under satisfactory, safe and healthy conditions,• To be trained and retained for the development of the workers skills; and• To receive information relevant to his or her work

e. Environmental Protection Act, The Environmental Protection Agency has been mandated under the Act 490;

• to make recommendations for the protection of the environment;• to co-ordinate the activities appropriate for the purposes of controlling the

generation, treatment, storage, transportation and disposal of industrial waste;• to secure the control and prevention of discharge of waste into the environment

and the protection and improvement of the quality of the environment;• to issue environmental permits and pollution abatement notices for controlling the

volume, types, constituents and effects of waste discharges, emissions, deposits or other source of pollutants and of substances which are hazardous or potentially dangerous to the quality of the environment or any segment of the environment;

• to issue notice in the form of directives, procedures or warnings for the purpose of controlling the volume, intensity and quality of noise in the environment;

• to prescribe standards and guidelines relating to the pollution of air, water, land and other forms of environmental pollution including the discharge of wastes and the control of toxic substances;

• to ensure compliance with any laid down environmental impact assessment procedures in the planning and execution of development projects, including compliance in respect of existing projects;

• to control pollution and generally protect the environment;• to conduct investigations into environmental issues • to promote studies, research, surveys and analysis for the improvement and

protection of the environment and the maintenance of sound ecological systems in Ghana;

• to impose and collect environmental protection levies

f. Building Regulation Chipchase v British Titan Products Co. (1956) I Q B. 545, A workman was injured when he fell from a platform nine inches wide and six feet above the ground. The statutory regulation required that “every working platform from which a person is liable to fall more than six feet six inches shall be at least 34 inches wide”. It was held that the defendants were not liable on the ground that they were not in breach of the regulation because the distance from the ground was less than six feet six inches.

g. Disability ActDesign of public buildings should accommodate the needs of disable persons to make it



accessible to them. All existing structures should ensure compliance within ten years of the Act coming into force. Defences in Breach of Statutory Duty

(a) Volenti Non Fit Injuria: Consent or voluntary assumption of the risk resulting in the injury is a defence except that if the defence is raised by an employer against his employee it will not be upheld.

(b) Contributory Negligence: At common law when the plaintiff was guilty of contributory negligence that was a complete defence to the action and the defendant was not liable.

2-1.2 RYLANDS v FLETCHER RULE2-1.2.1 Facts of caseIn Rylands v Fletcher (1868) LR 3 HL 330, the defendants employed independent contractors to construct a reservoir on their land. The contractors found disused mines when digging but failed to seal them properly. They filled the reservoir with water and as a result, water flooded through the mineshafts into the plaintiff's mines on the adjoining property. The plaintiff was held not liable at Liverpool Assizes. The Court of Exchequer Chamber held the defendant liable and the House of Lords affirmed their decision. The principle here has then become what is known as the Rylands v Fletcher Rule or the Doctrine of Rylands v Fletcher.

2-1.2.2 RequirementsIt was decided by Blackburn J, who delivered the judgment of the Court of Exchequer Chamber, and the House of Lords, that to succeed in this tort the claimant must show:1.That the defendant brought something onto his land;2.That the defendant made a "non-natural use" of his land (per Lord Cairns, LC);3.The thing was something likely to do mischief if it escaped;4. The thing did escape and cause damage.Foreseeability is now a further requirement,

1. The defendant brought something onto his landIn law, there is a difference between things that grow or occur naturally on the land, and those that are accumulated there artificially by the defendant. For example, rocks and thistles naturally occur on land. However, the defendants in Rylands v Fletcher brought water onto the land.

2. Non-natural use of the landIn the House of Lords, Lord Cairns LC, laid down the requirement that there must be a non-natural use of the land. An example is:Mason v Levy Auto Parts Ltd [1967] 2 All ER 62.The Ds stored flammable material on their land. It ignited and fire spread to neighbouring



property. The Ds were held liable as the storage of the materials amounted to a non-natural use of the land.

3. Something likely to do mischiefThe thing brought onto the land must be something likely to do mischief if it escapes. In such a situation the defendant keeps it in at his peril.

4. EscapeThere must be an escape of the dangerous substance from the defendant's land. Read v Lyons Ltd [1946] 2 All ER 471. The P worked in a munitions factory. There was an explosion and she was injured. There was no evidence of negligence by the employers. As the explosion occurred on the Ds premises, there was no escape from their property and therefore no liability in Rylands v Fletcher.

5. ForeseeabilityAccording to the House of Lords in Cambridge Water Co Ltd v Eastern Counties Leather plc [1994] 1 All ER 53, that harm of the relevant type must have been foreseeable.

2.1.2.3 Remedies

The owner of land close to the escape can recover damages for:1. Physical harm to the land itself (as in Rylands v Fletcher) and to other property. See, for example: Halsey v Esso Petrol [1961] 2 All ER 145, where the owner of a car recovered compensation for damage to its paintwork by acid smuts.

2. It is no longer clear if a claimant can recover for personal injury, as in: Hale v Jennings [1938] 1 All ER 579. P was injured when a chair-o-plane escaped from the D's fairground machine onto his property. The trial judge awarded damages for personal injury.

Non-occupiersIt is not clear if a person who is not an occupier of land close to the escape can obtain damages for personal injuries, under this tort.Cambridge Water v Eastern Counties - it was said that the rule in Rylands v Fletcher is an offshoot or variety of nuisance. Therefore, according to Hunter v Canary Wharf [1997] 2 All ER 426, an interest in land is a prerequisite for bringing a claim.However, there may be other causes of action, for example, negligence.

2-1.2.4 Defences A number of defences have been developed to the rule in Rylands v Fletcher.

1. ConsentThe express or implied consent of the claimant to the presence of source of the danger,



provided there has been no negligence by the defendant, will be a defence.

2. Common BenefitIf the source of the danger was maintained for the benefit of both the claimant and defendant, the defendant will not be liable for its escape. This defence is either related to the defence of consent or the same thing. According to Winfield & Jolowicz, p551, "common benefit seems redundant (and indeed misleading) as an independent defence".

3. Act of a strangerThe defendant will not be liable if a stranger was responsible for the escape.

Rickards v Lothian [1913] AC 263. The D was not liable when an unknown person blocked a basin on his property and caused a flood, which damaged a flat below.

4. Statutory authorityA statute may require a person or body to carry out a particular activity. Liability under Rylands v Fletcher may be excluded upon the interpretation of the statute.

5. Act of GodAn act of God is an event which 'no human foresight can provide against, and of which human prudence is not bound to recognise the possibility' (per Lord Westbury, Tennent v Earl of Glasgow (1864)2 M (HL) 22 at 26-27).

6. Default of the claimantIf the escape is the fault of the claimant there will be no liability. Alternatively, there may be contributory negligence on the part of the claimant.

2-1.3 NUISANCE Nuisance, according to the dictionary definition is a thing, person or act that causes trouble or annoyance, in law nuisance is of two types, namely private nuisance and public nuisance. There are two main types of Nuisance; Private and Public Nuisance

2-1.3.1 Private Nuisance: Private nuisance may be defined as an act which causes physical injury to the land or interferes with use and enjoyment of land or an interest in land. Generally nuisance is a state of affairs that is either continuous or recurrent. It is not every slight annoyance that is actionable nuisance. Many different things may amount to nuisance, for example, water, smoke, gas, smell, fumes, noise, heat, vibrations, vegetation etc. but whether they constitute actionable per se, nuisance, unlike Trespass is not actionable per se. There must be proof of damage before a plaintiff can succeed in his action. There must be a substantial interference.



2-1.3.2 Public Nuisance: Public nuisance also known as common nuisance is a nuisance which materially affects the reasonable comfort and convenience of life of a class or the people of a community. Generally, public nuisance is a crime, examples include carrying on an offensive trade, keeping a brothel, selling unwholesome food, throwing fireworks about, or obstructing the public highway. It is only the public as a whole who are affected by it. A private individual cannot take an action. It is the Attorney General who can sue for an injunction to restrain it. In the case where an individual is injured in some way which is peculiar to him by the public nuisance (one has suffered some special loss over and above the ordinary inconvenience suffered by the public at large, the individual can sue in nuisance for a remedy. For example, where one falls into a trench unlawfully or negligently exposed by contractor in a street and suffers an injury.

2-1.3.3 Damage caused by NuisanceAs noted nuisance causes two forms of damage, physical injury to the land or property on the land, and substantial interference with the enjoyment of the land, that is discomfort.

a. Physical Injury to the Land: If vibrations set up by the defendant cause the building of the plaintiff to collapse, or fumes emitted from his factory destroyed vegetation of the plaintiff there is said to be sufficient invasion of the interest of the plaintiff.

b. Substantial Interference with Enjoyment: Whereas already noted, interference of enjoyment is the cause of action the substantial interference must be proved.

2-1.3.4 Reasonableness in NuisanceReasonableness here does not mean taking due to care, as in negligence, but means whether the act done is rational or expected within the particular society. Thus whether an act is reasonable or not depends on the time and place of its commission, the seriousness of the harm done and the manner of doing the act, that is whether it was done maliciously or in reasonable exercise of rights and the effects of its commission, that is whether it was transitory or permanent, occasional or continues. In all case therefore it is a matter of fact taking all circumstances into account, whether a nuisance has been committed of not.The modern attitude is that the question whether a nuisance is committed is to be decided by reference to the operations carried out in the light of modern building techniques.

Andrea v Selfridge & Co Ltd [1938] Ch 1. 109



Building demolishing operations causing noise, dust and vibrations interfered with a neighbouring hotel where no steps were taken by the defendant to minimize noise and dust. An actionable nuisance was created for which the employer was liable.Held: a certain amount of the work was carried on with reasonable care and to this extent no damages for loss of custom was payable, but an assessment was made as to what proportion of business loss could be attributed to the excess of noise and dust, which alone was actionable, and damages to the assessed amount were payable. In all the case where the defendant’s act is held to be a nuisance because it is considered unreasonable, malice is the most obvious. That is, it is where malice is detected that the act is most often held to be unreasonable and therefore constitutes a nuisance. In considering what is reasonable the law does not take account of abnormal sensitivity in other persons or things.

2-1.3.5 Nuisance Distinguished from other Torts

(a) Negligence: (i) Nuisance generally arises from intentional acts but negligence is not invoked where conduct is intentional(ii) Negligence protects interests in person and chattels as well as in land, while nuisance is confined to interest in land.(iii) However, in both negligence and nuisance it has been held that foreseeability of harm is required

(b) Rylands v Fletcher: Nuisance seems to overlap with the rule in Rylands v Fletcher in that sometimes the liability in nuisance is strict. However, differences exist for example, while in Rylands v Fletcher the thing causing the harm must be accumulated on or brought upon his land by the defendant in nuisance the defendant need not bring the cause of the damage from any where even though in each of them the cause of the damage must escape onto the plaintiff’s land.

(c) Trespass:In both trespass and nuisance the act is or may be intentional, however, whereas in trespass the harm must be a direct consequence of the defendant’s act, in nuisance the harm could be and generally is an indirect result of the defendant’s conduct.

2-1.3.6 Parties Involved in NuisanceNuisance is said to be a remedy available to a person who can prove that he has an interest in the land affected. “It is clear that to give a cause of action for private nuisance the matter complained of must affect the property of the plaintiff, he alone has a lawful claim who has suffered an invasion of some proprietary or other interest in land.

Southpart Corp v Esso Petroleum Co. (1953) 3 WLR 773)



“Generally the right to sue rests in the person who is in possession of the land. Thus, a tenant or a licensee with a right to possess the land is entitled to sue. A person who has merely the use of land without either the possession of it or any other proprietary interest in it, such as a license without possession or a lodger cannot sue. For the same reason the members of the occupiers family cannot maintain an action in nuisance. A landlord who is not in possession can sue only if he can prove that there is likelihood that permanent injury will be caused to the property.

The following may take action against as defendants;

(a) The creator of Nuisance: The person who creates the nuisance by some act on his part is liable to be sued in respect of it whether or not he is in occupation of the land from which it originates.

(b) The Occupier: If the occupier of the land commits the act complained of himself, or if he authorizes it to be done, or the act is done by a trespasser or an act of God, if he (occupier) knows or ought to know of the existence of the nuisance and he does not take steps to remove it he is liable. Where the cause of the nuisance is created by a trespasser or act of God and the occupier fails to remove it, he is said to continue the nuisance.

Source of the InterferenceThough there does not seem to be any necessity that nuisance should emanate from land occupied by the defendant it has traditionally been regarded as of the essence of nuisance that the interference must emanate from outside the plaintiff’s land. If the act causing the injury or discomfort occurs on the plaintiff own land it can not constitute nuisance.

2-1.3.7 Remedies: There are two remedies available to the plaintiff in nuisance as with most other torts, namely, injunction and damages.

The victim of a nuisance may sue for injunction to restrain the defendant from continuing what causes the injury or discomfort. Here the courts do not take much account of whether the act is reasonable or not, injunction will be granted once it is established that the plaintiff is in fact being inconvenienced. In this connection it is often said that liability is strict since the court does not consider the probability of the defendant.

It is when damages are claimed that a lot of investigation has to be made as to the circumstances. However as noted earlier where actual injury to the plaintiff’s land occurs the defendant will always be liable. It is where damages are claimed for interference with personal comfort or convenience that the court must be satisfied that the defendant’s act was unreasonable.

2-1.3.8 Ghanaian Law Position



TOWN (COLONY), 1951 (CAP 86) Part 10For the purposes of this Ordinance the following are nuisances liable to be dealt with in the manner herein provided;

(1) any animal so kept as to be a nuisance or injurious to health;

(2) any growth of weeds, prickly pear, long grass, or wild bush of any sort;Animals kept in premises.

(3) the keeping or harbouring of any animal in any premises in such a manner, or in any premises so constructed or so situated, as to cause or to be likely to cause such keeping or harbouring to be a nuisance or injurious to health;

(4) any house or part of a house so overcrowded as to be dangerous or injurious to the health of the inmates;

(5) any pool, ditch, gutter, eaves-gutter, watercourse, well, pond, tank, privy, urinal, cesspool, drain, or ashpit, which is, or is in such a state as to be, offensive, or injurious or dangerous to health, or likely to be so;

(6) any accumulation or deposit of articles or things which is detrimental to the amenities of the place, or in respect of which it is certified by a health officer that by reason of its character or situation it is or is likely to be injurious or dangerous to health;

(7) any street, house, or premises in such a state as to be a nuisance or injurious to health;

(8) any work, manufactory, trade, or business, injurious to the health of the neighbours, or dangerous, or so conducted as to be dangerous or injurious to health;

(9) any well, pond, or tank, the water of which is so tainted with impurities or otherwise unwholesome as to be injurious to the health of persons using it;

(10) any rat-infested house or premises, or any rat-infested part of any house or premises, or any rat-hole in any part of any house or premises;

(11) the keeping of swine:Provided that as regards swine, the provisions of this part of this Ordinance as to nuisances shall apply only to the towns and within the limits prescribed by order



2-1.4 GENERAL DEFENCES AND REMEDIES IN TORT

2-1.4.1 General DefencesThe following general defences are available to a defendant in every action for tort where they are appropriate.

• “Volenti Non Fit Injuria” (no injury can be done to a willing person) This means that a person who has voluntarily consented to the commission of a tort may not sue on it. Obvious examples occur in Sport. A boxer voluntarily runs the risk of being punched on the nose by his opponent, and cannot complain if he being injured.

Hall v Brooklands Auto – Racing Club (1933) 1 KB 205H. paid to watch car races organized by the defendants. During one race defendants’ car shot over one of the railings and killed two spectators. H sued the defendants for negligence. Held, Court found that adequate precautions had been taken by the provision of railings. That type of damage suffered by those killed was inherent in the sport, and the plaintiff, H must be taken to have assented to the risk of such an accident. The consent of the Plaintiff must be a true consent, to both physical and legal risks, must be expressed (orally or in writing) or may be implied from the circumstances of the case. Mere knowledge of a risk is not usually sufficient. There must be consent to the risk for the maxim is ‘volenti non fit injuria’ (consent is not injury).

• MistakeThe general rule is that mistake, either of law or of fact, is no defence in tort. As to mistake of law, the maxim “ignorantia juris neminem excusat)” or “ignorantia legis non excusat” (ignorance of the law is not excuse) applies. To allow a defendant to say that he mistook, or did not know there was a particular law, would bring the whole of the administration of justice to a standstill. Many defendants would avail themselves of such a loophole.As to mistake of fact, there are exceptions to the rule that it is no defence. For example, in actions such as malicious prosecution or false imprisonment, a reasonable mistake may afford a defence. Thus where a police constable is not liable. The test is: had the constable who made the mistake reasonable ground for his belief?

• NecessariesIn some cases damage done intentionally may be excused if done from necessity. The defence is a rare one and is available only when the defendant was compelled by the circumstance to prevent a greater evil. Necessaries includes food, water, air and shelterLeigh v Gladstone (1909). A suffragette ( person with right or privilege to vote in an election) in prison went on hunger strike. She was forcibly fed by the wadens. The ‘dosei-asibey, esq 31 09/09


suffragette later sued the prison staff for assault and battery. Held, the defence of necessity was good. Had the prison staff not fed the plaintiff she would have died.

• Inevitable Accident This means some happening which cannot be avoided by the taking of ordinary precautions. Stanley v Powell (1891) P, a member of a shooting party, fired a shotgun and a pellet hit a tree and ricocheted into the eye of a beater, S, who was working with the shooting party. HELD: that P was not liable to S for trespass; S. had failed to establish that P had been negligent.

• Statutory Authority:It is a defence to an action in tort to show that a statute (or subordinate legislation) authourised the alleged wrong. The authority given by statute may be either (i) absolute or (ii) conditional. Absolute authority allows the act even though, it may cause harm to other persons; conditional authority, on other hand, merely allows the act provided that it causes no harm to others. Where the authority is imperative it is absolute; where the authority is permissive, it is conditional only.

Metropolitan District Asylum Board v Hill (1881) A hospital authority (appellants) were empowered by statute to erect a smallpox hospital. The hospital was erected in a residential district where it caused danger of infection to residents near by. HELD: that the erection of the hospital was a nuisance. The statute gave the hospital authority general power to erect such hospitals but did not sanction the erection in places where this would constitute danger. An injunctions was granted. The statutory authority was conditional.

• Self-Defence A person may use reasonable force to defend himself (or any other person) against unlawful force. A defendant will not be liable provided that the amount of force used is reasonable and proportionate to the harm threatened. It appears that a person may also use reasonable force in the defect of his goods.

• Contributory NegligenceContributory negligence is a defence both to an action in negligence and breach of statutory duty. In general, however, the carelessness of employees as claimants is treated more leniently than the negligence of employers, even where liability rests upon the vicarious responsibility of the employer for the negligence of another employee. See:

Staveley Iron & Chemical Co v Jones [1956] 1 All ER 403The plaintiff, who was employed by the defendant company as a core-maker, was at work in the company's foundry on the lifting of a load in an iron pan by an overhead crane. It was the plaintiff's duty to assist the crane-driver to lower the hook as nearly as possible over the centre of the pan, but, as the plaintiff was standing at the side of the pan, his ‘dosei-asibey, esq 32 09/09


centering could only be approximate. The crane-driver, who was also employed by the defendant company, should have paused, but did not pause, before beginning the lift to see that the load was centred and hanging vertically. The load swung out and the plaintiff was injured. The plaintiff claimed damages for negligence against the defendant company. The company denied negligence and pleaded contributory negligence on the part of the plaintiff.

It was held by the House of Lords that on the facts (a) the crane was negligently handled by the crane-driver, and (b) contributory negligence was not proved against the plaintiff, because it was not shown that his conduct fell below the standard required from a reasonably careful workman assisting in such an operation; and, therefore, the plaintiff was entitled to damages in full against the defendant company.

In Ghana the defence of contributory negligence was revised by S. 1. of the Civil Liability Act 1963, Act 176. Under the section in case of contributory negligence on the part of an employee, the liability of the employee is to be reduced by the proportion of the negligence or contribution on the part of the injured employee.

2-1.4.2 General Remedies

1 InjunctionThere may be prohibitory, or restrictive or mandatory injunction when it requires the performance of a positive act such as the destruction of a building. If no wrong has been committed, but is merely threatened, a quia timet injunction may be asked for, but in these circumstances an injunction will be granted only where there is extreme probability of irreparable injury. An injunction is of particular application in question of trespass or restraint of nuisance committed by building operations.

2 DamagesThe injunction will not be granted where damages would be an adequate remedy; it is discretionary, but it will not be withheld merely because the loss suffered is small or because compliance would be inconvenient or expensive eg where the outfall from larg sewers is polluting a river. Damages may also be preferable to injunction where a merely equitable right has been infringed eg breach of restrictive covenant against building on certain lands, the covenant being binding only in equity, not at law.

Self-Assessment 2 – 1

1. Discuss the various statutory duties affecting construction activities.2. Explain the doctrine of Rylands v Fletcher and its application to construction

activities.



3. What are the necessary requirements for the application of doctrine of Rylands v Fletcher?

4. Distinguish between Private Nuisance and Public Nuisance5. State and explain the remedies available in an action for tort

Learning Track Activities

Summary

Unit Summary

1. The basis of a contract is agreement between parties2. The constituent parts of a contract are agreement, consideration, capacity and

intention to create legal relations3. The underlying principles of a contract are that individuals should be the best

judges of their own interest to ensure genuiness of the bargain.

Key terms

1. Trespass, Duty of care, Negligence, Occupiers Liability2. Statutory Duty, Ryland v Fletcher, Nuisance

Review Question

1. What is tort? Discuss the concept of duty of care2. Discuss the principles of nuisance and distinguish it from other forms of tort.3. State the conditions that the Court would look out for before the Doctrine of Res

Ipsa Loquitor can be upheld.

Unit assessment 11. Discuss the employers’ common law duties to his employees in

construction contracts

2. State one of the requirements of a claimant in the application of the doctrine of Rylands v Fletcher (1868) LR 3 HL330.

3. Miss Yaa Asirifuah of Ladies Care International has bought a land adjacent to Ahinsan Gate of the KNUST Campus. She has observed with astonishment that ABILITY Hostel Investments, a developer has commenced a 10-storey hostel



block on her property. Miss Asirifuah has decided to take a court action against the developer. What remedies are available to Miss Asirifuah if she wins this case?

Unit 2

FORMATION OF CONTRACT

Introduction

This unit provides the essential basic legal elements for the Formation of Contract. The key elements of Contract have been highlighted to include, Offer and Acceptance to foster an appreciation of the concepts and principles governing the subject.

Learning objectives \After readings this unit, you should be able to:

6. Explain the basic elements of a contract7. Define and describe the underlining principles of a contract 8. Identify the operation of the elements in application to contract

formation

Unit outline

Unit 2 Formaion of Contract

Session 1–2: Elements of valid Contract

1– 2.1: Nature of Contract

1–2.2: Agreement – Offer and Acceptance

Session 2 – 2: Other Elements of Contract

2 – 2.1: Consensus ad idem, Consideration and Intention to create Legal Relation

2 – 2.2: Consent, Capacity and Legality of Object

2- 2.3: Performance and Certainty of Terms of Contract



Session 1-2 Elements of Contract

1-2.1 Nature of Contract1-2.1.1 Definition of ContractWilliam Hanson has defined contract as a legally binding agreement made between two or more parties by which rights are acquired by one or more to act or forbear (omissions, not doing something) on the part of other(s).In short it is an agreement between two or more parties which is intended to have legal consequences. Thus, a contract is a legally binding agreement.

Pollock, in his book Principles of Contract (1876) also defines contract as a statement or set of promises which the law will enforce.The key issues of what a contract is may be looked at as;

1. Whether or not there exist a promise or a statement2. Whether or not there are two or more parties3. Whether or not promise or statement is enforceable in the court of competent

jurisdiction and4. Whether or not rights to acts or forbearance have been acquired

1-2.1. 2 Principles of Law of Contract The principles supporting the Law of Contract include;

• Sanctity of ContractsParties are free to determine the terms of their contract. The contractual obligations voluntarily undertaken under a contract are therefore sacred and should be observed by all parties as such.Printing and Numerical Registering Co. v Sampson [1875] LR 19 Eg 462Held: Contract when entered into freely and when trading shall be held sacred and shall be enforced by courts of justice.

• Freedom of Contracts Parties are at liberty to enter into any kind of agreement that they so desire to unless they do not have capacity to undertake the transaction, there is no legal basis of the agreement or the performance of it is impossible. A person may not be under compulsion to enter into a contract

• Contracting Party beware



The principle of caveat emptor (let the buyer beware) applies to contracting party. A contracting party is to ensure that a due diligence is undertaken, warranties and undertakings are taken were necessary, and must seek professional advice where necessary.

• ReasonablenessThe court considers the reasonable man’s test in considering what is reasonable in contracts. The reasonable man is the person ordinary layman or on technical issues, the ordinary technical person reasoning.

• Intolerance of FraudGenerally, law does not tolerate fraud, fraud omnia vitiate, (fraud vitiates everything) Fraud in the law of contract is actionable.

• Protection of Innocent Third Party Purchaser The law of contract protects the third party who without fraud or deficiency obtains a contractual benefit.

1-2.1.3 Sources of Law of Contract in Ghana The modern law of contract developed from what was known as the "law of merchant", ie. the customs and rules established over the centuries which were observed by the early traders. In view of expansion of the trading activities in the latter part of the 18th century and in the 19th centuries, the rules of contract were developed.

Contract law in Ghana comprises the English law of contract which includes the common law principles of contract, doctrines of equity and English statutes of general application (i.e. English statutes in force before July 24,1874) and all current legislation affecting contracts in Ghana such as;

CONTRACTS ACT 1960 (ACT 25),MORTGAGES DECREE1972 (NRCD 96), CONVEYANCING DECREE, 1973 (NRCD 292), BILLS OF EXCHANGE ACT, 1961 (ACT 53), HIRE PURCHASE ACT, 1974 (NRCD 292), SALES OF GOODS ACT, 1962 (ACT 137), ILLITERATE PROTECTION ORDINANCES, CAP 262 (195) REV;AUCTIONS SALES LAW PNDC LAW 230, INSURANCE LAW, 1989 (PNDC LAW 227) etc

1-2.1.4 Classification and Types of Contract

1-2.3.1 ClassificationContract may be classified into;

1. Deeds or specialty Contracts and Simple Contracts‘dosei-asibey, esq 37 09/09


Deed Contract is a contract under seal. It must be in writing

Simple Contracts This includes oral contracts and contracts which require some writing.

2. Implied Contracts and Contracts of RecordImplied Contract arises from the assumed intentions of the parties

Contracts of Record arises from obligation imposed by a Court of record

3. Bilateral Contract and Unilateral ContractBilateral Contract is a contract in which the parties must fulfill reciprocal obligations

Unilateral Contract – Contract arising where an offer is made in the form of a promise to pay in return for the performance of an act, so that the performance of the act is taken to imply an assent eg – Police advertising for a suspect for a price. (Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256)

1-2.1.5 Types of ContractTypes of Contract are basically, Oral and Written ContractsSection 11 of Contract Act 1960, Act 25 provides that, unless legislation requires, a contract need not be written. It may be oral. “Subject to the provisions of any enactment, and to the provisions of this Act, 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.”

Hammond v Ainooson [1974] 1GLR176There was an oral contract for the Plaintiff to supervise repair works of the defendant’s boat. The court upheld the oral contract.

Although contract may be oral it is advisable for it to be written because writing facilitates proof of contractual terms. In the event of a dispute if the alleged contract is oral the party relying on it has to

• proof its existence ie there was a contract and• proof its content or terms of contract

1-2.1.6 Parol Evidence RuleThe rule states that, barring fraud, parties to a contract cannot lead oral evidence to contradicts, varies, add to or subtract from terms of their written contract.

Wilson v Brobbey [1974] 1GLR 250Plaintiff, a retailer, sued the defendant to recover the value of goods he credited the defendant. The Plaintiff tendered as an exhibit an invoice signed by the defendant. The



defendant, a literate, claimed that he was a guarantor for someone else and not a purchaser in his own right. The Court rejected the defendant’s contentions holding that oral evidence could not be led to contradict the terms of a written document. Appeal was dismissed.

Oral evidence is however, admissible to explain the circumstances and terms of a document. It may also explain unclear and ambiguous statements in the contractual document. The court considers the total evidence –oral and written documents before judgment.

Exceptions to Parol Evidence Rule• Contract induced by fraud• Written contract tainted with illegality• Written contract binding strangers• Matters related but not directly and immediately covered by the written contract• Other exceptions in Evidence Act, 1975 NRCD 32 - Purpose of explanation or

supplementary to final written document shall not admit any subsequent intentions or previous agreements even if their effects are to contradict the final document.

1.2.2 ELEMENTS OF VALID CONTRACT

The general requirements for the formation of a valid contract include the following;

1. Offer 2. Unqualified acceptance3. Consensus ad idem4. Valuable Consideration5. Intention to create legal relations6. Genuineness of consent 7. Contractual capacity of parties8. Legality of object9. Possibility of performance10. Certainty of terms

1-2.2.1 Offer

• DefinitionAn offer is a definite promise to be bound or expression of willingness to contract on specified terms and be made to a particular person or class of persons or public at large. A person making the offer/promise/statement is offeror and the person to whom it is directed is the offeree.



NTHC Ltd v Antwi [2009] SCGLR 117 per Dr Date-Bah JSC;“Basically, an offer is an indication in words or by conduct by an offeror that he or she is prepared to be bound by a contract in the terms expressed in the offer,…………. Accordingly, the offer has to be definite and final and must not leave significant terms open for further negotiation. Accordingly, the offer has to be definite and final and must not leave significant terms open for further negotiation.’

The characteristic of an offer lies in its finality and definiteness. Thus;- An offer must be clear and unambiguous - An offer may be made to a specific/particular person or group of or to the

world at large - An offer is a statement/promise or undertaking which the person making it

is prepared to enter into a legal relationship along the terms stated, - An offer must be firm and complete proposal to another leaving him or

her to accept or reject.- An offer must be effective without being a reply to a request for

information or an advertisement or invitation to treat.

• Statements/Promise not binding or not constituting an offer

a. Intention to make an offer: An intention to make an offer is also described as invitation to treat and

Chitty on Contracts, 28th Edition 1999 at page 93 states that;“A communication by which a party is invited to make an offer is commonly called an invitation to treat. It is distinguishable from an offer primarily on the ground that it is not made with the intention that it is to become binding as soon as the person to whom it is addressed simply communicates his assent to the terms.’’

Invitiation to treat or intention to make an offer includes the following;- Exhibition or display of goods for sale, Fisher v Bell- An advertisement that an auction sale is to be held- Invitation to tender for the construction of building or engineering

works- the circulation of a price list- invitation to bid or submit a proposal

NTHC Ltd v Antwi [2009] SCGLR 117, The plaintiff-respondent was formerly in the employment of the defendant–appellant company as head of its legal department. The company wrote to her whilst in its employment, the proposal of the company to sell the house being occupied by the management staff at a stated price and period for payment of amount. The plaintiff responded by a letter accepting the offer to purchase the said house at the stated price and also requested for details of the bank account. There was no further



correspondence until when the plaintiff had left the employment of the defendant when the defendant wrote to withdraw the offer for sale of the said property to enable the company house its management staff. The company subsequently requested the plaintiff to vacate the house following her resignation from the employment of the defendant company. The plaintiff subsequently sued in the High Court claiming that the exchange of letters initially had resulted in an agreement and sought for specific performance of the agreement among others.The defendant however averred that its first letter was not an offer but only an invitation to staff to make offers to purchase the premises.The trial court held that the defendant’s letter was a mere invitation to treat. The Court of Appeal however reversed the trial court decision holding that the letter constituted an offer and therefore ordered specific performance of the contract. The defendant therefore appealed at the Supreme Court.Held, unanimously dismissing the appeal and allowing for payment of interest ………An invitation to treat is to be distinguished from an offer on the basis of proposal’s lack of an essential characteristic of an offer, namely, its finality which gives a capacity to the offeree to transform the offer into a contract by the mere communication of his or her assent to its terms.’’

Carlill v Carbolic Smoke Ball Co. Ltd (1893)The payment of 1000pounds which had been deposited at a Bank to demonstrate a good faith was a promise by a Defendant Company to anyone who contracted influenza after using the smoke ball as directed in an advertisement. The plaintiff bought the smoke ball and used it as advertised and yet contracted influenza. The Company said it was a mere puff and the plaintiff sued for the 1000pounds.Held; The good faith which was demonstrated by the company by depositing the money at Bank was the companies willingness to pay anyone who accepts the offer and was not satisfied. The news paper advertisement cannot be considered a mere puff or intention to make an offer but an offer to the whole world which was accepted by the plaintiff, Mrs Carlill.

William Lacey Ltd (Hounslow) v Dan’s [1957] 1 WLR 932A contractor was led to believe he would get the work. The Contractor submitted a tender which was not accepted but, believing that the contract would be given to him, he prepared further estimates, schedules etc. which the employer used for obtaining a war damage claim. No contract was placed with the contractor.Held: the Contractor was entitled to a reasonable sum for the work done subsequent to the tender. Where a tenderer at the employer’s request does work outside the normal scope of tendering eg. designs there may be an implied promise to pay a reasonable sum for such workThe Contractor’s tender constitutes an offer which the client may accept or not. Similarly an invitation for the buyer to make an offer to buy, the invitation is not an offer.This is a request made by a party to another to make a proposal for consideration. Thus, where a client identifies some works to be executed and ask particular contractors to



make a proposal to be considered by the client, it does not constitute an offer but an invitation to make an offer.

Gibson v Manchester City Council [1979] 1 All ER 972Advertisement about auction sales and tenderers are intentions to treat or intention to make an offer yet to be considered by the employer or clients for its suitability

b. Request for information. This is an inquiry to the offeree to supply information. A tenderer may request for information in the cause of preparation for a bid/tender, the request does not constitute an offer.

Dormins Fisheries Ltd v Bremen–Vegesacke Fischerei [1973] 2 GLR 490In a response to the defendant’s written offer to the plaintiff, the plaintiff requested a three months moratorium. Held: request was not a Counter offer but a request for information.

c. Expression of good intentionsThis is a statement to another signifying that declarant is serious about the Transaction.

Okai v Ocansey [1992-93] 3 GBLR 1047 CAHeld: an intention to grant a lease was not the same as an agreement for a lease, notwithstanding taking possession, the making of advance payments and understanding some renovation. After all, there had been no agreement between the parties as to rent to be paid, duration and commencement. It is rather an expression of good intentions to grant a lease and not agreement for lease.

• Variation of Terms of Offer or Counter OfferWhere a term in an offer is waived by the offeree, the offeree’s document results in rejection of the offeror’s proposal or the offeree’s document now forms basis for a fresh contract or agreement not one initiated by the offeror. This new offer is best described as a Counter Offer to the original offer.

NTHC Ltd v Antwi [2009] SCGLR 117, “If a communication during negotiations is not the final expression of an alleged offeror’s willingness to be bound, it may be interpreted as an invitation to the other party to use it as a basis for formulating a proposal emanating from him or her that is definite enough to qualify as an offer.’’

Deegbe v Nsiah & Another [1984-6]1 GLR 545The plaintiff tenant in the 1st defendants house claims having orally been offered to purchase the house which he had written to accept but asked for reduction in price. He later received a letter from the 2nd Defendants lawyer giving his notice to vacate the house. High Court dismissed this action.



Court of Appeal held inter alia that acceptance must be absolute and unqualified of all terms of the offer and therefore request for reduction in price renders letter a counter offer. A qualified acceptance amounts to rejection. e.g Request by tenderer to change the Bid Security period or non submission of required information intends to change or vary the terms of an offer.

• Withdrawal of OfferSection 8(1) of the Contracts Act 1960, Act 25 – “A 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 thereof.

- Until the offeree accepts the offer, the offeror may withdraw his offer at any time. The fall of hammer of an auctioneer shows the acceptance of an offer until then any offer made may be withdrawn.

- the withdrawal must be communicated to the offeror

Domins Fisheries Ltd. V Bremen Vegesaker Fischerei [1973] 2 GLR 490Held: The offeror is at liberty to withdraw his offer at anytime without obligation except where the offer has been accepted or the offeree has paid the offeror to keep it open.Abban J held that the purported withdrawal was invalid coming after acceptance the previous day.

- The offer cannot be withdrawn when the offeree has initiated an act which forms part of the process of acceptance (part performanpce).

Erringhton v Erringhton & Woods (1952)A father bought a house for his daughter and the son-in-law to live in upon marriage. The father asked the young couple to pay the remaining mortgage instalment for him to give them the house. The couple duly commenced payment of the mortgage instalment but the father sought to revoke the offer.Held; The father could not revoke the offer once the couple had commenced performance as specified.

A Contractor may withdraw his bid at any time before the employer’s letter of acceptance is received by the Contractor.However, there is usually sum of money that a Contractor may forfeit when such withdrawal is made hence tender security guarantee required by the employer as one of the requirements for eligibility to make an offer.

- Withdrawal of offer through postWithdrawal of an offer by post is complete upon receipt by offeree.

• Termination of offer



An offer may be terminated where o There is a lapse of time

Instructions to tenderer included in the tender documents always must specify time that the offer of the Contractor shall be valid.

o The offeree fails to satisfy pre offer conditions such as, failure to supply required information

o Death of offeror

o Rejection of offer by the offeree

• Standing Offer:Where the advertisement or invitation to tender states that the Company may require some work to be done if and when demanded. The tender that Contractor made is called a standing offer. It may be revoked at any time provided it has not been accepted in legal sense. The tender is accepted in legal sense as soon as a requisition for a definite work is made each requisition by the offeree is an individual act of acceptance which creates a separate contract.The Acceptance of Standing Offer or tender does not convert the offer into binding contract.

Great Northern Rly Co. v Witham [1873] LR9Defendant refused to supply goods written a schedule in a contract which specified that company may order from time to time. Held: Breach of contract for tender was standing offer to be converted to services.

1.2.2 ACCEPTANCEAcceptance is the assent of all the terms of the offer.

NTHC Ltd v Antwi [2009] SCGLR 117 @ 125 per Dr Date-Bah JSC;“……….the mere acceptance of an offer is sufficient to turn the offer into a contract, if there is consideration for it, together with an intention to create legal relations.’’

• Essentials of Acceptance

1. Acceptance must in all cases be unqualified –

Deegbe v Nsiah & Another [1984-6]1 GLR 545The plaintiff tenant in the 1st defendants house claims having orally been offered to purchase the house which he had written to accept but asked for reduction in price. He later received a letter from the 2nd Defendants lawyer giving his notice to vacate the house.High Court dismissed this action. ‘dosei-asibey, esq 44 09/09


Court of Appeal held inter alia that acceptance must be absolute and unqualified of all terms of the offer and therefore request for reduction in price renders letter a counter offer. A qualified acceptance amounts to rejection.

Tinn v Hoffman [1873]An offer to sell 1200 tons of iron was met with a reply asking for 800 tons.Held: this amounted to a qualification of an offer and doesnot constitute an acceptance. No contract came into being.

The unqualified acceptance means;a) Acceptance must be precise b) Insertion of a new term into the agreement by the acceptance really amounts to

a counter offer rather than acceptancec) Where words such as “subject to” are added the effect is to prevent the

agreement from becoming binding until what “subject to” refers is made complete

d) Addition of meaningless terms such as “subject to the usual terms of acceptance” (where there are no such usual terms) will not prevent a legal objection arising immediately.

2. Silence in Contract does not always amount to acceptanceAn offeree may decide within himself that he has accepted the offer but this may not constitute an acceptance. For acceptance to be valid it must be communicated to the offeror in an express or implied terms in a manner that the offeror understands. It must be demonstrated in some acts such as spoken or written.In Powell v Lee (1908) it was held that absence of communication invalidates the contract.

3. Acceptance of a Contract may have a retroactive effect if it is shown that this was the intention of the parties.

Trollope & Colls v Atomic Power Construction [1963] 1 WLR 333A contractor was instructed to proceed and start work while the contract for the works was still under negotiationHeld: parties had intended such works to be governed by the contract as eventually made of an acceptance will not be necessary

4. Acceptance must normally be properly communicated to the offeror. Exceptions Include;

a. Where acceptance is given to an agent of the party (the post office, messenger courier etc. acts as agent of offeror if he elects this mode of response).

b. Where the offeror has intimated that communication of contracts by the subsequent acts of the company.



Trollope & Colls v Atomic Power Construction [1963] 1 WLR 333c. where the agreement has been concluded through the post eg. where the

letter is lost in the post

5. Offeree can revoke his acceptance before the offeror actually receives the earlier Communication of acceptance - Dormis

• Valid Acceptance It is that:

1. Offeree must show that he knows of the offer, intend to accept it, actually accepts it and communicated the acceptance to the offeror or offeror’s agent This means that;

- Where there is no offer there could not be effective communication to the offeree and the offeree could not subsequently make an acceptance.

- The offeror or his agent must actually receive the acceptance, the offeror is not bound to use the same mode of communication if not expressly stated.

Dormins Fisheries Ltd. V Bremen Vegesaker Fischerei [1973] 2 GLR 490

• Effect of Acceptance of TendersWhen company invites tenders for execution of some works, the contractor who puts in a tender intimating that he is prepared to do the work over a period of time at a certain price when the client accepts the tender, there is a binding contract.

• Acceptance by PostAcceptance is complete upon posting. This is the ‘Postal Rule". The word “posted” connotes putting into the control of the Post Office, or his agent, employees authorized to receive letters. An e-mail system may be described as posting. Posting must be reasonable to do so eg. Posting responses to e-mail messages may not be reasonable unless access to the internet is not available. A posted acceptance is effective even if it was never received as a result of accident through the post.

Self-Assessment 1 –2

1. “Sanctity of Contracts” is one of the principles of contract. Explain 2. Distinguish Bilateral contract from unilateral contract.3. What is “Parol Evidence Rule” ?4. State the principles in contract established by the case of Deegbe v Nsiah and

Another [1984-86] 1 GLR 5455. At what stage can an offer be withdrawn?

State circumstances under which an offer could be terminated.6. What constitute a valid acceptance of an offer in a contract



Session 2-2 OTHER ELEMENTS OF CONTRACT

2-2.1 CONSENSUS AD IDEM, CONSIDERATION AND INTENTION TO CREATE LEGAL RELATIONS

2-2.1.1 Consensus ad idem (meeting of the minds)where the parties agree on contractual terms there is the meeting of the minds or consensus ad idem.

1) Where there is absent of consensus there is no contract Anin JA – Addition v A/S Norway Cement Expert Ltd [1973] GLR 151Ollenu J – SA Turgenia & Bros v Lamptey

“The minds of the parties were not ad idem …there is therefore no binding contract between the parties.’’

2) There must be certainty as to the terms offered and accepted. However the courts look to the substance of the agreement not the firm and will not permit mere technicality or formalities to destroy a contract. The court has a duty to protect the substance of the parties’ agreement and not to destroy it. British Steel Corp v Cleveland Bridge & Engineering Co. Ltd. [1984] 1 A11 ER 504 – Letter of the intent (Cheshire & Fifore)

3) Parties to a contract must agree on all material terms. Where there is absence of certainty on material terms, there is no contract.

Asare v Antwi [1975] 1 GLR 16 CACourt of Appeal held that there was no contract when the purchased price of land was not finalized, nor was specific land identified.

4) Agreement may be inferred from conduct words or documents that have passed between parties.

2-2.1.2 CONSIDERATION

A binding contract must be backed by consideration except in contract under seal. Viscount Haldame LC in Dunlop Pneumatic Tyre Co. Ltd. V Sclfridge & Co. Ltd:

If a person with whom a contract not under seal has been made is to be able to enforce it consideration must have been given by limits, the permission or to some other person. At ‘dosei-asibey, esq 47 09/09


the promisor’s request consideration is required for all simple contracts. Consideration is that which is actually given or accepted in return for a promise.Sir Frederick Pollock – Eastwood v Keryon [1842] 3 QB 234 an act or forbearance of one party or the promise therefore, is the price for which the promise of the other is brought, and the promise thus given for valuable consideration is enforceable

Nature of ConsiderationAn act i.e. doing something that one has specifically requested. Kessie v Charmant & Anor (Plaintiff Service)

Some right, interest, profit or benefit accruing to one party or – payment of money. Japan Motors v Randolph Motors Co. Ltd. Promise to sell one’s property at a specified price by certain duties

Forbearance, detriment, loss or responsibility given (Bank of West Africa Ltd v Apenteng & Anor) suffered or undertaken by the others

Exchange of promises (Afrifa v Class Peters)

Acting on the basis of another’s unilateral offer- Carlill v Carbolic Smoke Ball e.g. payment of money, provision of goods, performance of work, any benefit accruing to one party or detriment to the other

Relying on another’s promise and acting to ones detriment – Atta & Another v Adu [1987/8] 1 GLR 233.Not Binding Consideration; Anything which has already been donePromise to do nothing more than what the promisee is already bound to doMust be legalMust not be in the pastMust move from the promisee {Ghana – need not (510)}Must not necessarily be adequate but sufficientAgreement may be inferred from observation of written terms

Types of Considerations

a. Good ConsiderationIt is consideration founded on generosity, natural affection or normal duty. It is described as voluntary and a person who provides good consideration is called a volunteer. A good consideration without valuable consideration is no consideration e.g. promise to create a trust

b. Valuable Consideration Consideration which is of some value in the eye of the law- Currie v Misa [1875] LR 10



A consideration is described as valuable when it consists of either or some rights, interest, profits or benefits accruing to the one party, or some forbearance, detriments, loss or responsibility, given, suffered or undertaken by the other. Valuable consideration and the promisor’s promise must constitute one single transaction and are causally related.

c. Executory ConsiderationPromise is made in return for a counter promise. It is consideration in the form of promises to be performed at a future date

d. Executed Consideration Consideration is executed when the act constituting the promise is performed. It is made in return for the performance of an act. E.g. offer of a reward for an act.

e. Past ConsiderationConsideration which is wholly executed and finished before a promise is made. Breach of such promise is not enforceable.

Difference between Sufficiency and Adequacy of ConsiderationConsideration is described as sufficient or insufficient accordingly as the judges allow or disallow the validity of particular acts or promises

Kessie v Charmant & Another [1973] 2 GLR 194 Consideration is adequate when it is procured by the offer of some return capable of being expressed in terms of value. The court held that the ambassador’s performance although he was legally bound to perform legal duty to be sufficient consideration.

A consideration may have sufficient consideration and yet not enforceable. In all circumstances the court looks for the presence of consideration no matter how insignificant it may be. The courts are not interested however in determine the adequacy of consideration

Consideration as applied to the Contracts Act 1960 Act 251. S. 8(1)

Where a promisor promises to keep his offer open for a specified period, the offer cannot be withdrawn before the specified date only because of lack of consideration for the offer in view of the fact that the promisee may provide the consideration at a later date before the expiry of the date

2. S. 8(2)Promise to waive a debt or part of it or the performance of some other contractual or legal obligation is binding for lack of consideration.

3. Kessie v Charmant



Although a party may be legally bound to perform a legal duty, the performance or promise to perform act may be sufficient consideration.

4. S.10 and S.5(1)Consideration need not come from the promisee. It may come from a beneficiary who need not be the promise.

S.10 – “No promise shall be invalid as a contract by reason only that the consideration therefore is supplied by someone other than the promisee.

Consideration in Building Contracts.The employer through the invitation of tender make promises to the effect that the successful bidder will be paid for the works that will be executed.The Contractor in his bid to submit his offer or tender also promise the employer quality work or goods to be delivered and on time.

The acceptance of the offer confirms the promise to make payment on performance. The payments of money, delivery of quality goods or work are examples of consideration attached to the contract. It is executory consideration i.e. In future.The promise to make payment of money must also relate to the promise to deliver on time and quality product must relate with one another.

Where the consideration is in the past the promisor may be entitled to quantum meriut. Re Casey’s Patents (1892) 1 Ch 104Held: The manager was entitled to a quantum meriut since the services had been rendered before the promise to pay sum of money.

2-2.1.3 Intention to create Legal relationIn Dalrymple v Dalrymple, Lord Stowell said contract must not be the sports of an idle hour, mere matters of pleasantry and badinage, never intended by the parties to have any serious effect whatever. Thus, where in a contract there is offer and acceptance and consideration and it is established that the parties do not have the intention to create legal relations the contract could not be enforced. In domestic agreements such as family agreements and other social agreements the presumption is that no legal relation is established.In marriage or family agreements where relationship is cordial, the agreement may be considered not to create legal relations.

Balfour v Balfour [1919] 2 KB 571, CAThe Court of Appeal held that no legal relations had been contemplated and that the wife’s action must fail because while consideration was present, the evidence showed that the parties had not designed a binding contract.



However, where the family members are not living in harmony the presumption that there is a legal relation may exist.

Meritt v Meritt [1970] 2 AllER 760An arrangement between separated spouses for the conveyance of a house as part of a marriage settlement, it was held by the Court of Appeal that the parties had intended to affect their legal relations and that an action for breach of contract could be sustained.In a situation where there is no enforceable contract at law, equity may affect the situation

Hussey v Palmer [1972] 1 WLR 1286A mother in law lived with the family and paid for some building work on the house. He later claimed the amount in court. The Court held that though there was no enforceable loan, in equity the value of the work done was held on trust for her. In commercial agreements, such as construction contracts, there is the presumption of the existence of legal relation, however the presumption may be rebutted.

Carlill and Carbolic Smoke Ball CompanyThe company advertised their preparation to pay £1000 to any purchaser of their roduct Smoke ball and use it for the treatment of the influenza disease and never had the cure for that and went ahead to deposit £1000 with their bankers.The plaintiff used the product and yet had influenza and brought an action against the company for the £1000. The defendant company claimed that they never had the intention to enter into a legal relations with the Plaintiff and that the payment of £1000at the banker was a mere bluff. It was held that the fact of the deposit was cogent evidence that the defendants had contemplated legal liability.Parties may however make an agreement but may include in the terms expressly that it is not to be binding in law. In such situation the court shall respect the views of the parties.

SESSION 2 – 2.2: CONSENT, CAPACITY AND LEGALITY OF

OBJECT

2-2.2.1 Genuine ConsentThe intentions of the parties must be well understood when agreements are being entered into. In a situation where one party (A) is does not actually intend to enter into contract or the consent is not genuine then there cannot be a contract.The effect of lack of genuine consent is that the contract is voidable.



2-2.2.2 LegalityA contract is valid if the subject matter or the object of the contract is legal. A contract is said to be illegal when it is expressly or impliedly prohibited by law. A contract to deal in narcotic drugs is illegal. Where, the object of the contract is illegal the contract is void. An example is a contract to construct an underground trench that will lead to the vault of a banker.

2-2.2.3 CapacityThe ability of a person whether artificial or natural to enter into a contract is referred to as capacity in contract

a. General ruleThe general rule is that Parties are at liberty to enter into any kind of agreement that they so desire to unless they do not have capacity to undertake the transaction.

Exceptions to the general ruleChildren, lunatics or drunkards are excepted from the general rule as person who do not have capacity or may have a limited capacity to enter into a contract.

ChildrenChildren are also called minor or infants. Various legislation has defined children with different age. The constitution define children under the age of 18 but the Children Act, 1998 (Act 560), Wills Act 1971 (Act 360) place the age at 18 whilst the Common law and Companies Code, 1963 (Act 179) has the age limit for maturity as 21 years. In contracts, the age 18 has often been the maturity age for a person to enter into. Generally a child or infant cannot be sued or sue to enforce contract.However, infants can sue or be sued to enforce the following contracts;

Exceptions to childreni. Contract of Necessaries

Things necessaries are articles necessary to the support of life such as food, clothes, housing etc and services fit to maintain a person in life such as intellectual, moral and religious information, assistance and attendance of others. Articles of mere luxury are excluded.

ii. Beneficial Contract of serviceEg Contract of apprenticeship or of service

iii. Voidable contractsContracts of benefits during an infancy which may be repudiated on maturity. Eg Lease may be sued for non payment of rent, Acquisition of shares

iv. Part performance



An infant may sue to enforce a contract in which the infant has perform his obligation

DrunkardsA drunkard is a person who has lost control of his senses as a result a substance he has taken in. A contract with such a person is voidable.The drunkenness exist at the time of contractIt must be obvious and known to the other party.The drunkard may ratify the contract upon gaining his sobriety.

LunaticsA lunatic may be described as a person of unsound mind, a person mentally incompetent or an insane person. A contract with such a person is voidable.The insanity must exist at the time of contractIt must be obvious and known to the other party.The insane person may ratify the contract upon gaining his sanity.

b. Third party (Privity of Contract)The Common law rule of privity is that a contract cannot be enforced by or against who is not a party to the contract. With a few exceptions, no one will be entitled to the benefit or bound by the obligations of a contract to which he is not a party.Exceptions to the rule;

i. Under the law of guarantee or indeminity, the insurance company granting the guarantee may be sued.

ii. The Principle of Assignment, where in the Construction contract, a contractor enters into a contract and directs payment in joint names of the contracting party and a financier eg a bank, The interest of the company is assigned to the bank.

Again where a Contractor directs payment to be made to the subcontractor, the subcontractor assumes the interest owe by the main contractor as far as the payment of the money is concerned.

iii. Law of Agency is allows an agent to assume the interest of the principal.

In Ghana, Section 5 (1) of the Contracts Act, 1960 (Act 25), provides that,‘Any provision in a contract made after the commencement of this Act 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, subject to the provisions of this part, be enforced or relied upon by that person as though he were a party to the contract.’

This provision extends the benefits of contracts to a wilder group of third parties than the common law. Here the qualified third party is one the contracting parties so contemplates. Baidoo v Sam [1987-88] GLR 666 @679, Taylor JSC, sitting as an Appeal Court Judge said: where there is no provision whatsoever reserved in the contract for the benefit of the plaintiff his action in suing to have the contract to which he is a perfect stranger set aside is quite wrong.’



A third party or the Attorney General, under the Public Policy principle may intervene to have a contract declared void or unenforceable.In Ghana the Common law position on doctrine of privity of contract has been modified by legislation -the contracts law, and case law in public policy (Accra Brewery Co Ltd v Guinness Ghana Ltd, 1999), principles of agency and equitable principles of trust. (Halley v Ejura Farms [1977] 2 GLR 179 CA)

c. A body Corporate The High Court (Civil Procedure) Rules, 2004 (CI 47) Order 4 rule 1(2) provides that ‘A body corporate shall not begin or carry on proceedings except by a lawyer, unless permitted to do so by an express provision of any enactment’.

A body corporate such as institutions and companies, have the general capacity to take action against others but through a lawyer.

SESSION 2- 2.3: Performance and Certainty of Terms of Contract

2-2.3.1 PerformanceA valid contract is enforceable if it is capable of being performed. If a party enters into a contract that cannot be performed by the reasonable, the court may not enforce it. If a party undertakes to jump 10 storey building but rescinds the decision the contract cannot be enforced at a court because the performance is not possible. cannot see adjuge

2-2.3.2 Certainty of Terms of Contract Terms of a contract are obligations that each party undertakes and the representations made in respect of discharging the contractual obligations.A term of a contract must be clear and certain but not ambiquousCarlill v Carbolic Smoke Ball

Types of TermsThere are 2 types of contractual terms

• Conditions• Warranties

A term is either condition or warranty depending on the expression or the intentions of the contracting parties.

Conditions



• They create the fundamental obligations of the contracting parties• Breach of conditions entitles the other party to repudiate the contract• It is the central, fundamental or important term of a contract

Warranties• Warranties create minor obligations• They are also called minor terms• They may be a representation that induces the contract or collateral term of the

contract• Breach of warranties entitle the other party to damages only• Warranties normally covers quantity, quality and time for performance of the

contract.Parties may however make any term a condition

Contents of ContractThe content of a contract is basically the terms that the contract contents. In most of construction contracts, these include;

The terms in the offer (Form of Tender or Bid Form)The statement of acceptance (Award Letter or Letter of Acceptance)Data and information relied on for acceptance (Submitted Tender Document) Conditions of ContractSpecifications, if anyPrice, time and other agreed terms (Agreement form) Drawings, if anyBasis for price (Bill of Quantities)Securities etc

However in construction contracts other sources of information may constitute additional terms of the contract. These may include Minutes of site meetings, Instructions of the Engineer or the Client to the Contractor, Correspondence which has the effect of giving information to the parties. An example is a letter from a Contractor for submission of Revised Work Programme to the Engineer or the Client.

Classification of Terms of ContractContractual terms may be classified as

• Express Terms and• Implied Terms

Express TermsThey are terms that parties intentionally discuss and agreed on to be part of the contract eg Price Adjustment clause.

Implied Terms



Lord Reid in the English case of Sterling Engineering Co., Ltd. v. Patchett [1955] A.C. 534 at p. 547, H.L. said:" . . . an implied term is something which . . . the law may read into the contract if the parties are silent and it would be reasonable to do so: it is something over and above the ordinary incidents of the particular type of contract . . . But the phrase `implied term' can be used to denote a term inherent in the nature of the contract which the law will imply in every case unless the parties agree to vary or exclude it."

They are terms may not have been discussed and agreed on but are • implied by the Parties• implied by Statutes• Implied by Customs or • Implied by the court

Terms Implied by PartiesThe terms may not have been categorically discussed by all parties however, if brought to their attention the parties would have all agreed to the termsThere may be no provision unless on evidence but may be intended by the partiesBritish Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1974]1 AllER 1059, CA The defendants were carrying out drainage works and urgently needed a dragline crane. Plaintiff hired one to the defendant before paper work was completed. The crane got damaged and Plaintiff successfully sued to recover the cost of repairs and argued that printed conditions were incorporated into the contract. Both parties were in the business of hiring and have similar terms in their own written standard form contracts. The court inferred that recovery for the cost of repairs are deemed to implied by the parties without a written agreement.

Terms Implied by StatutesAlthough the parties may not have discussed and agreed on the provision it may be expressed or implied in the statutes eg.Sale of Goods Act, 1962, Act 137, Conveyancing Decree, 1973, NRCD 175Contract Act, 1960 (Act 25)

Terms Implied by CustomsA course of dealing between 2 parties establishes a pattern of consistent arrangements which can be deemed to apply to their continued dealings

HASNEM ENTERPRISES LTD v IBM WORLD TRADE CORPORATION [1993-94] 1 GLR 172—192Any contract, written or oral, might be deemed to incorporate any relevant custom of the market or locality in which it was made unless the custom was not consistent with the express terms or nature of the contract.



Practice in the industry is to incorporate various well-known terms in their business transactions eg British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1974]1 All ER 1059, CA

Sowah v Bank for Housing and Another [1982-83] GLR1324In 1974, S, the proprietor of a building construction firm, entered into a contract, exhibit B, for the construction of a building for T at a cost of ¢12,400. The contract provided that S was to provide building materials for the works. The construction was divided into six phases and provision was made for the payment of specific sums upon completion of each phase of construction. The contract further provided that the payments were to be made by T or his agent, the Bank for Housing and Construction (BHC). Clauses 3 and 4 provided that in the event of a breach of the contract, T was under an obligation to pay S the value of work properly done but not paid for. S began work in December 1974. Subsequently, by an oral agreement, T ordered certain extra works outside the original contract drawings. After S had completed the third phase of the works, i.e. up to roofing stage and had been paid for the work done, BHC in 1975 entered into another agreement, exhibit D, with both S and T based on the same contract drawings and specifications contained in exhibit B.The 1975 contract provided, inter alia, that the building was to be financed by a loan of ¢16,575 from BHC to T and that any deviation from the contract drawings or any additional or other works on the project should be with the prior approval of BHC. It also provided that S was to be reimbursed for any increase in the cost of the works brought about by price fluctuations in the cost of building materials. However, the bank retained a discretion to undertake a revaluation of the works and reserved the right to approve or disallow any price increases. A total of ¢11,036 was eventually paid by BHC on T's account to S. On completion of the fourth phase of the works, S submitted a claim for ¢8,690 in respect of the third and fourth phases and the extra works requested by T under the oral agreement. S also requested BHC to revalue the contract in the light of increases in the prices of building materials.Although BHC requested and was supplied with a breakdown of the claim, BHC ignored the call for revaluation and refused to honour the claim on the ground, inter alia, that its approval had not been obtained in accordance with the provisions of exhibit D before the extra works were executed. An action brought by S claiming an amount of ¢22,753 representing the outstanding balance and cost of the extra works was dismissed by the High Court on the grounds, inter alia, that exhibit D superseded exhibit B and therefore the prior approval of BHC should have been sought before the extra works were made. S's appeal to the Court of Appeal was also dismissed. In the instant appeal to the Supreme Court against the decision of the Court of Appeal, the court found, inter alia, that BHC was aware of the extra works ordered by T before the 1975 tripartite agreement was executed by the parties. On the issue as to whether the claim of S was properly dismissed,Held, allowing the appeal (Adade J.S.C. dissenting): There was to be implied in the 1974 agreement a term that price fluctuations would necessitate variation in the contract price



—a provision which was specifically spelled out in the 1975 agreement and invariably accepted in the building trade.

Per Taylor, JSCWhatever the position may be in other jurisdictions, I am satisfied that in a building contract in Ghana whether price fluctuations are adverted to or not in such a written contract, nonetheless, due to the unprecedented inflationary forces in our system, natural justice and fairness demand that an owner of a house under construction, should reimburse a contractor if the unpredictable and uncontrollable market forces push the agreed prices up in the usual distressing way they have been doing for the past disastrous years, unless such an implication is specifically repudiated in the contract.And whenever the contract is silent on this matter good business sense, commonsense and economic and social considerations necessitate that this should be an implied term of the contract otherwise a contractor would be totally ruined by his inability to forecast price trends which are so unstable and uncontrollable that no state or other institutions are insulated from their pernicious effect.

Terms Implied by the Court

Chantlani v HaroutunianIn the absence of express agreement, the Court implied that notice period to terminate employment of person of managerial rank was 3 months.

Arkhurst v Ghana Museum and Monument Board [1971] 2 GLR 1 @10, Abban J held that in a contract of service there is an implied term imposing an obligation on an employee to serve his employer with good, faith and fidelity, breach of which constitutes a grave misconduct.

Exemption Clause TermThere are terms that are incorporated to abridge the rights and or limitation to each party or one party agreeing to accept a reduction in liability by the other party.Inusah v DHL Worldwide Express [1992]1GLR 267There was an operative disclaimer clause that limited the defendant’s liability to $100, when the plaintiff losses his parcel (regardless of the cost of the item(s) in the parcel).

4 Types of Exemption Clauses• Litigation-Limiting Clause eg. Arbitration Clause in Conditions of Contract• Liability Limiting Clause eg. Inusah’s case• Implied-term-modifying clause • Restrictive Covenant

Variation of Terms of ContractA Variation of Contract refers to variation of the terms of a contract and not to variations made pursuant to an express part in the contract. It may be to replace a term by a new contract or even its complete discharge. If the employer, without express power, wishes ‘dosei-asibey, esq 58 09/09


to omit a piece of work and the Contractor agrees to the omission the variation is binding and no action will lie for breach of contract by either party.


i. What is implied term of a contract?ii. Discuss the importance of express term of a contractiii. Enumerate the various documents the forms a construction contract Iv Generally, infants cannot be sued or sue to enforce contract. State the exception to this general rule.


Summary

Unit Summary

Key terms

Implied Term, Express Term, Certainty of Term, Performance

Review Question

1. Comment on four (4) elements of contract with the exception of offer and acceptance.

2. What does consensus ad idem in Contract mean?

Unit Assignment 2The Buildtech Education Complex has made an advertisement in the “Ghanaian Times” asking for Contractors to submit offers for the construction of 3-Storey Lecture Theatre Block. Explain the term “offer” to a group of Contractors who have attended the pre-tender conference and distinguish this offer from;

i. a mere indication of good intentionsii. an invitation to make an offer and

iii. a mere request for information



UNIT 3 VITIATION, DISCHARGE AND REMEDIES

Introduction

This unit provides the essential basic legal elements for the Formation of Contract. The key elements of Contract have been highlighted to include, Offer and Acceptance to foster an appreciation of the concepts and principles governing the subject.


1. Identify factors of vitiation of a contract2. Define and describe the underlining principles of discharge of a

contract 3. Identify the remedies of breach of a contract

Unit 3: Vitiation, Discharge and Remedies

Session 1 - 3: Factors of Vitiation of Contract

1 – 3.1: Mistake of Fact, Misrepresentation and Fraud

1- 3.2: Incapacity, Duress and Undue Influence

1- 3.3: Public Policy, Illegality and Unconscionability

Session 2 – 3: Discharge

2 – 3.1: Performance

2 – 3.2: Agreement

2- 3.3: Frustration



2- 3.4: Remedies and Special Contracts

SESSION 1-3: FACTORS OF VITIATION OF CONTRACT

Factors that invalidate an apparent or purported contract are called vitiating factors. These include;

1 Mistake of Fact2 Misrepresentation3 Fraud4 Incapacity5 Duress6 Undue Influence7 Public Policy8 Illegality9 Unconscionability

A contract may be declared void or voidable if found by the court to be vitiated. A void contract does not have, and never had any force or effect. A voidable contract is valid until steps are taken to set it aside by the court of law. Public Policy and illegality makes contract unenforceable and therefore void. Most mistakes, and other vitiating factors make contracts voidable. Absence of consensus makes contract void.

1.3.1 Mistake of Fact, Misrepresentation and Fraud

1.3.1.1 Mistake of FactThere are 3 types of Mistake

• Unilateral Mistake – It occurs when one party (A) is wrong about an aspect of the contract and the other party (B) is aware that A is mistaken. If B is not aware that A is prevailing under a wrong perception, the law does not consider that there is a mistake.The effect of unilateral mistake in contract is that it has no consequence.

• Cross – Purpose Mistake - where the parties are thinking of different things, and yet both are unaware that they are on different wavelengths. Eg A describe two



storey building and B is seeing two floors (three storey) building. The parties are not ad idem, there is no consensus and no contract. The contract is void.

• Common Mistake –where the contracting parties made an identical error about the same subject matter. This type of mistake makes the contract void.

Mistake generally makes a contract voidable but not void.Mistake relates to a fact not to the legal effect of a document or transaction.

Buaful v Construction Pioneers [1982-83] 2 GLR 1058Under a written agreement, the defendants, a road construction firm, agreed to pay ¢2,000 for 6,000 cubic yards of gravel to be dug from the plaintiff's land. Subsequently, the defendants paid the sum of ¢2,000 for the 6,000 cubic yards of gravel dug and removed by them from the land. But they refused to pay for the gravel dug in excess of the 6,000 cubic yards because they contended that what they [p.1059] dug from the plaintiff's land was not gravel as agreed upon but minerals which were vested in the Ghana Government. The plaintiff therefore sued for payment of the excess gravel dug by the defendants. And the defendants also counterclaimed for the refund of the sum of ¢2,000 — alleging that they had paid it under a mistake of law and fact.Held:The defendants did not pay the money under a mistake of fact or law. There was no mistake of fact because the defendants bargained to dig for gravel and they succeeded in doing so. Even if the payment was made under a mistake of law, it was not recoverable because a voluntary payment under a mistake of law could not be recovered.

Non est Factum – This is a special type of mistake over documents. It protects particularly the blind and the illiterate. Eg where one is misled into signing a document that was completely different from that which he was made to believe he was signing.There are four features

i. There must have been a mistakeii. the one who made the mistake was misled into making itiii. the mistake relates to a document radically different from what one thought he was signingiv. the one seeking to rely on the plea shall not have been guilty of careless ness negligence. That is, if the mistake would have been detected had he been careful, he may not succeed in the plea of non est factum.

1-3.1.2 MisrepresentationIt is a false statement of fact that is intended to induce and in fact induces another to enter into the contract. In Japan Motors Trading Company Limited v Randolph Motors Limited, it was held that Misrepresentation is a false statement of fact that is intended to induce and in fact induces another to enter into a contract.It is untrue representation. Thus, a statement of fact made by one party to the contract which is not true but had the intention to and did induce the other party to enter into the contract.



Misrerepresentation is legally harmless if the plaintiff;• Never knew of its existence• did not allow it to affect his judgement or• was not aware of its untruth

Three facts about Misrerepresentation If statement is one of opinion only and not a statement of fact even if false,

there is no misrepresentation.

If statement relates to laws or legal effects, rather than it being a statement fact there is no contract.

If even the statement was false, but the one alleging misrepresentation was not aware of the statement or did not rely on it, then there is no misrepresentation because there was no inducement.

Esso Petroleum Company Limited v Mardon (1976) 2 All ER 5A false fact made by a person who possessed special knowledge and skill was not a statement of opinion but a statement of fact.Misrepresentation may be innocent, negligent or fraudulent.

Innocent misrepresentation – it is one that contains falsehood that was unknown to the declarant or that the declarant believed to be true. There is no moral blame ascribed to the declarant

A negligent misrepresentation is a false statement made by a person who had a duty of care towards the other.

A fraudulent misrepresentation is one made by a person to induce another into a contract knowing very well that the statement he is making is false or recklessly making a statement not caring that it is true or false.

Esso Petroleum Company Limited v MadamA fraudulent misrepresentation is one made by a person to induce another into a contract knowing very well that the statement he is making is false or reckless.

Derry v Peek (1989) 14 App Cas 337 @ 374Knowing and fraudulently stating a matter untruth which brings about wholly or partially the contract.Kpeglo v SCOA Motors (1962) 2 GLR 82 @ 85A fraudulent misrepresentation makes a contract voidable, not void.

Two options in realizing MISREPRESENTATION Japan Motors Trading Company Limited v Randolph Motors Limited, per Abban J



• Abide by the contract and then bring action to recover damages.• May rescind the contract, return the property if already accepted,

recover the purchase price if already paidIf a statement is mere advertising, it cannot amount to an actionable misrepresentation.

In construction contracts, the courts have held that the inclusion of Bill of Quantities, Specification or even plans in the invitation to tender, or even in schedules to the contract, does not amount to a collateral warranty that they are accurate. It lies at the door of the Contractor to ascertain theses facts to himself.(Construction Law by John Uff, 3rd Edition page )1-3.1.3 FraudA contract induced by fraud is not void but only voidable at the election of the party defrauded, and once the party has elected to abide by the contract, being aware of the fraud, he cannot afterwards rescind it.Fraud is defined as a false statement made knowing, or without belief in its truth or recklessly.

Fraud ommia vitiate: Fraud vitiate everything.• Fraud must be specifically pleaded and strictly proven.• Fraud can sometimes be presumed when consideration is woefully and

shockingly be inadequate. It can however be rebutted by evidence.• Fraud makes a contract voidable, not void.• One seeking to avoid the contract must act timely upon discovering it.

Fraud is dishonest and for one to rely on it there must be proved of reliance. It is also importance for one to mention the suffering as a result of the reliance.

SESSION 1- 3.2: Incapacity, Duress and Undue Influence

1-3.2.1 IncapacitySee Capacity above

1-3.2.2 DuressIt is actual or threatened physical violence to unlawful constraint of a contracting party which will suffice for the purpose. It is available to nullify the consent and thereby nullify the contract where there has been coercion of will.

Hemans v Cofie [1996-97] SCGLR 596



Mr Cofie was incarcerated by the Police in cells for 8 weeks in attempt to recover debt allegedly payable by Mr Cofie to someone else. Prior to that, the son of Mr Coffie had been detained for 4 days when the father could not be located. The Police coerced him to sell his house. The Police found a buyer Ms Hemans. After his release, he sued. Held, Acquah JSC, To be capable of giving rise to duress the threat must be illegitimate either because what is threatened is a legal wrong or wrongfulIt must be established whether the person relying on the plea had acted voluntarily or not by considering;

• whether the person alleged to have been coerced did or did not protest• whether at the time he was allegedly coerced into making the contract, he had no

reasonable alternative but to agree• Whether he was independently advised• Whether after entering into the contract he took steps to avoid it

Duress must actually exist at the time of making contract.

1-3.2.3 Undue InfluenceInfluence connotes the power to affect another’s character, beliefs or action through admiration, exceptional fiduciary relationship, fear etc.Influence is ‘undue’ if it is improper or more than is right.Undue influence is an equitable defence to avoid a contract where the relationship between the contracting parties is such that one party, being the dominant party, will presumably or in fact have taken advantage of his dominant position over the subservient party. Whereas duress deals with the coercion of the will, notably threats and force, Undue influence deals with the improper manipulation of a contracting party.

Mercer v Brempong II [1975] 2 GLR 376, per Edusei J. said.Undue influence means any influence by which the exercise of free and deliberate judgment is excluded at a time when some interest or benefit is given to another by someone over whom such influence was exercised.

There are two options available when undue influence is detected; 1. Repudiate the contract at once (or soon after) - the undue influence then ceases to

operate on him. 2. Affirm the contract by express words or unequivocal acts.

Types of Undue InfluenceThere may be actual or presumed Undue Influence.

A. Presumed Undue InfluenceIt arises by operation of law once certain facts are established.

Hemans v Cofie, per Acquah JSC‘dosei-asibey, esq 65 09/09


….in a plea of presumed undue influence, the unfairness of the transaction is a pre requisite for a successful action.There is usually a subsisting trust, confidential or fiduciary relationship between parties, of one party being dominant and the other being subservient.Examples; The Protected Class Lawyers and Clients

Trustees and Beneficiaries Doctors and Patients

Priests and Disciples Parents and Children Guardians and wards School masters and students

Where an undue influence is presumed, the dominant party may rebut the presumption.

Dabu v Anobah [1965] GLR 38 The appellant sought to repudiate a document he had signed admitting his liability to the respondent. The document was prepared by the respondent lawyer and was signed by the appellant.

Once the relation exists the transaction is presumed and it will be up to the party seeking to uphold the transaction to reduce the presumption by showing that the other party was independently and competently advised before entry.

To belong to the protected class does not mean that the contract will be set aside.

• Certain relationships presume undue influence but evidence may be led to rebut the presumption.

• Undue influence makes contract voidable not void and by words and deeds, the servient party may affirm the contract once those influences cease.

Mercer v Brempong IIIf the terms of the contract are so overwhelmingly tilted in favor of one party and against the other that the court’s first reaction is to presume that the bargain was not between approximately equal parties exercising their free wills but some overriding influence was brought to bear by a dominant party over a subservient party.

The party alleging undue influence must plead Must set out the facts in sufficient much detail The bargain can be rebutted by evidence to the contrary.

B. Actual Undue InfluenceIt occurs when a party claims and proves that he entered into a contract of the other contracting party against his free will and under the direction and dominance of another person.



There’s no presumed dominant – subservient relation between parties.

The contract on its face does not have to look overwhelmingly topsided.

Contract may be fair or have generous terms but may be tainted with undue influence.

One contracting party prevailed under the improper force or influence of another.

The party alleged undue influence ought to plead it.

Particulars of the alleged undue influence must be given so that the other party becomes aware of the facts constituting the undue influence.


1. Discuss the importance of the decision in Hemans v Cofie [1996-97] SCGLR 596

2. With an example state the circumstance under which presumed undue influence in contract may arise?

SESSION 1- 3.3: Public Policy, Illegality and Unconscionability

1-3.3.1 Public Policy A contract is contrary to public policy if it offends against the public interest. They include;

Contracts to oust the jurisdiction of the courtsContracts that tends to prejudice the status of marriageContracts restraining a party’s future liberty to carry on his trade, business or profession in such a manner and with such persons as he chooses

Accra Brewery Company Limited v Guinness Ghana Limited

Eastham v Newcastle United Football Club Limited and Others (1964) 1 CH 413Plaintiff sued the defendants who were all employers belonging to various employers’ associations for making certain rules and regulations that curtained his freedom of movement to another club and therefore his right to seek employment at another club. The Chancery court agreed with his contention.



Nagle v Feilden and others [1966] 2 QB 633 (CA)The plaintiff, a woman sued the defendants for a declaration that a practice of refusing training licenses to women for horse– racing was contrary to public policy. Her plea against the defendants was successful on appeal.A contract that is contrary to public policy is unenforceable.

1-3.3.2 IllegalityA contract is illegal if what it intends to achieve or the means to achieve its objects are contrary to statute or judicial precedent.This involves doing something that is a criminal act or a civil wrong, or against the public good. There are 6 types of contracts that may constitute illegal contracts;

• A Contract to commit a crime, a tort or a fraud on a third party• A contract that is sexually immoral• A contract to the prejudice of the public safety• A contract prejudicial to the administration of justice• A contract that tends to corrupt a public officer• A contract to defraud the revenue of the state

Illegal contracts are unenforceable at the law courts. Thus past performance such as money paid, property transferred are irrecoverable.

Zagloul Real Estates Co Ltd (No. 2) v British Airways [1998-99] SCGLR 378A contract breaching the mandatory provisions of a statute was illegal and void.An illegal contract is therefore void ab initioThis is a common law position subject to the following exceptions

1. Where the parties were not in pari delicto (or equally at fault)2. Where a party to an executed contract repented before performance

Under such exceptions, the party whose property has passed or had performed services may be awarded some compensation (at a rate below the contract rate). City & Country Waste Ltd v Accra Metropolitan Assembly [2007-08] SCGLR 409The AMA failed to follow the due process for the award of contract to the Plaintiff. However, the Plaintiff had performed part of the contract for which no payment has been made. The defendant however terminated the contract. The plaintiff sued for breach of contract to recover claim for his service but was denied by the trial court and the Court of Appeal on the grounds of illegality.The Supreme Court held that; express statutory prohibition of a contract was different from implied statutory prohibition of a contract. The court however held that since the parties were not in pari delicto (only AMA was at fault but not the contractor), the contractor must be paid not the actual contract rate but a compensatory amount.



A contract could still be impliedly prohibited by statute even though the prohibition contained in the statute was unilateral only ie, that the prohibition contained in the statute was binding upon only one party to the contract yet the other party may be bound by it eg provisions in the Public Procurement Act directing entities on procurement process and yet may have the effect of binding any other party. The general public especially Contractors must therefore be abreast with the provisions therein.

A contract may be illegal as formed or performed. A contract is illegal as formed if its’ very creation is prohibited. For example if a contractor has no Classification Certificate from the appropriate Ministry but enters into a contract with public institution.

A contract is illegal as performed if, though lawful in its formation, it is performed by a party in a manner prohibited by statute. For example where the law requires a contractor to request for certification of test of electrical installation from Electricity Company of Ghana or any other body and the contractor fails to have such a certificate he may lose all his rights even though the contract is valid as formed. Baidoo v Sam (1987-88) 2 GLR 666 @ 679The appellant was a police officer who undertook business together with another using the other as a front man.

Kwarteng v DonkorThe plaintiff intended to recover from the defendant of his debt owe her as a result of loan given him if the defendant would assist a relation of plaintiff to be enstooled as Agogohene. The defendant couldn’t nor was he able to repay the loan.Apaloo J, dismiss action describing the plaintiff action as corruption and illegal.

1-3.3.3 UnconscionabilityAn unconscionable contract is a transaction that is oppressive, grossly unfair or partially unreasonable. Eg, typical transaction where the powerful parties are on one hand and poor and ignorant parties are on the other hand.

• The hallmark of unconscionability is its one-sidedness. The relief to an unconscionable transaction lies in equity and in legislation.Equity relieves the oppression by refusing an order of specific performance which may be sought by the oppressor. Legislation may protect the illiterate eg Illiterate Protection Act, CAP 262 (195) REV;Legislation may provide relief against transaction that offends against a reasonable person’s sense of good conscience.

Section 18 of the Conveyance Act, 1973 (NRCD 175).The court may set aside or modify an agreement to convey or a conveyance of an interest in land on the ground of unconscionability where it is satisfied that the transaction is unconscionable, after considering the circumstances, including;



• the bargaining conduct of the parties, • their relative bargaining positions, • the value to each party of the agreement reached, and• evidence as to the commercial setting, purpose and effect to their agreement,


1. Under what circumstances is a contract described as illegal?

2. With the aid of decided cases discuss public policy as a factor for the vitiation a contract

SESSION 2-3 DISCHARGE OF CONTRACT

Discharge of Contract is a general term for the release of contractual obligations to do anything further under the contract thus, when the parties become freed from obligation.A contract is discharged when a party is lawfully free from obligations under the contract. Thus when the obligations under the contract are in one way or the other extinguished by lawful means a contract is said to be discharged.

The general rule subject to exception is that literal compliance with the terms of a contract will operate to discharge a contract.The lawful means by which one of the parties would be free from obligations are:

Performance

Agreement

Frustration

Unlawful means

Breach of a condition

2-3.1 PerformanceBoth parties must carry out fully all their contractual obligations and subsequently become free from each other.Performance must be complete, precise and exact of entire contract terms. There may be defences for non performance including;

Agreement Impossibility of performance and frustration events after contract. Impossibility of performance falling short of discharging frustration: eg

due to unforeseeable events.



Contractual excuses for non – performance.All the standard conditions of construction contracts contains provisions which may entitle the contractor to extension of time for performance where there has been a delay by such matters eg. adverse weather conditions.

Limitation.If A, one party to a contract, cannot complete performance without the concurrence of the other party B, it is obvious that an offer by him to perform and a rejection of that offer by B entitles him to a discharge from further liability. His readiness to perform has been nullified solely by the conduct of the other party. The rule is that a tender of performance is equivalent to performance.

Under the common law principle, time is essential in contract even though it has not been expressly made so by the parties. Performance must be completed upon the precise date specified, otherwise the contract must be brought to an end. Performance however should be within a reasonable time.

Doctrine of Substantial PerformanceSubstantial Performance is where a party executes a contract to a state where fundamental requirements of the contract have been completed. For example, where a the construction of a road has been completed leaving out the planting of grass to check erosion at one end. Again, where a building has been completed leaving out minor works such as cleaning of site to be executed.The doctrine of substantial performance leads to substantial completion or practical completion which may prevail to discharge a contract. This is mostly found in the construction contracts.

The discharge of a contract based upon a reason that the reason for the discharge is in fact inadequate, may nevertheless be supported if there are at the time, facts in existence which would have provided a good reason.

2-3.2 AgreementThe obligations that come about by agreement can also be varied or terminated by agreement. Bilateral Contracts In Bilateral contracts, for discharge by agreement to be effective, the variation must be by mutual agreement.Discharge by Agreement means that the parties intend to free each other from their contractual obligations, or one party intends to free the other from the latter’s contractual obligations.This intention to relieve each other or to relieve one party is then manifested in a subsequent agreement therefore merges as the latter agreement; the subsequent agreement super cedes the former. a. The intention of Agreement may be merely to vary or modify the terms of the prior contract without altering them in substance.



b. The agreement may also intend to extinguish the original contract completely and put an end to the contractual relations.

c. The agreement may also extinguish the original contract and substitute with a new agreement.

d. There could also be an agreement to waive of a contractual term by one party at the request of the other.

NovationA novation is a special form of discharge of contract by agreement to substitute at least one of the parties or the contractual terms.

JAPAN MOTORS v RANDOLPH MOTORSNovation is a transaction by which the consent of all the parties involved a new contract is adopted in place of another which is already in existence.Novation involves the discharge of the original obligation under an existing contract and the creation of a new one in its place.For novation to be successfully pleaded

• There must be an intention to substitute.• There must be a substitution of the original obligation with a new one.• The substituted arrangement must have been mutually agreed to.

Unilateral ContractUnder a Unilateral Contract, there could be a unilateral discharge of the contract.

2.3.3 Frustration and Breach of Contract2-3.3.1 Frustration L. B. Curson (Dictionary of Law) defines frustration as a situation where there is an event or change of circumstances so fundamental as to strike at the roots of a contract as a whole and beyond what was contemplated by the parties. Such a contract is considered frustrated. A frustration may be caused by;

• ones’s own conduct or to the conduct of those to whom one is responsible. However a party cannot rely on a self induced frustration.

• a thing or person essential to the attainment of the fundamental object which the parties had in view is no longer available owing to extraneous cause.

• The non-occurrence of some event which must reasonably be regarded as the basis of the contract.eg non availability of land for the construction works.

• Interference by the government in the activities of one or both of the parties Section 1 of the Act 25 provides;



Where a contract has become impossible of performance or been otherwise frustrated and the parties thereto have for that reason been discharged from the further performance of the contract following provisions shall, effect;

i. all sums paid or payable to any party in pursuance of the contract before the time when the parties were so discharged shall, in the case of sums so paid, be recoverable from him, and in the case of sums so payable, cease to be so payable.

ii. Where a party has incurred expenses before the time of discharge in, or for the purpose of, the performance of the contract, the Court may allow him to recover or to retain out of any sum received by him under the contract, The said amount (if any), shall not exceed the expenses so incurred or the total sum payable to him under the contract, as the Court may consider just having regard to all the circumstances of the case.

2-3.3.2 Breach of ContractIt is the refusal or failure by a party to contract to fulfil an obligation imposed on him under that contract. This may result from e.g repudiation of liability before completion, or conduct preventing proper performance. In construction contracts, a breach may arise if the contractor refused to obey a proper instruction, eg to remove defective work or if work were not completed according to the contract.

2.3.4 Remedies and Special Contracts 2-3.4.1 Remedies

1 DamagesDamages is the court’s estimated compensation in money for the detriment or injury sustained by a claimer. It is a means of monetary award to place a party of a contract in the position he would have occupied if he had not suffered the wrong complained of.Damage is recoverable if it results either;

• From the natural consequences of the breach or• From special circumstances of which the parties had actual knowledge and which

caused the breach to result in exceptional loss.Not every loss arising out of a breach of contract is recoverable in damages. Thus a claim can be made for most, but not all, losses which stems from breach of contract. Damages for breach of contract are recoverable only if a cause between the breach and loss claimed is established. The courts consider two principles in assessment of damages;

1. those losses which may arise naturally out of the breach 2. those losses which may reasonably be supposed to have been within the

contemplation of the parties at the time of the making of the contract.



However, the payment of damages under these principles is not automatic as the court ensures that the claimer has taken all possible steps to mitigate the losses.The measure of damages may be;

• The difference between the contract price and the price actually paid• Full cost of re building where there is no other alternative of re-building• Actual or estimated cost of re-instatement of defective work• Extra cost for completion of work that a party has failed to do at the earliest

reasonable time• The additional payments of losses such as rents and profits depends on the rules

of remoteness• Where the cost of remedial work is disproportionate or where other circumstances

dictate that remedial cost is not the true measure of loss, the party may be compensated for the loss in value to the property

• Inflation or fluctuation in building cost is recoverable

Dodd Properties (Kent) v Canterbury City Council [1980] 1 WLR 433The defendants were liable for damaging the plaintiff’s garage premises in 1968. There was delay in carrying out repairs until 1978, which resulted in a considerable increase in cost, for which the defendants disputed liability. The plaintiffs delayed doing the work because the cost would have resulted in financial stringency, and they were reluctant to lay out money before being sure of recovering it. It was held that the plaintiffs could recover the 1978 price of work.…….In a case in which a plaintiff has reinstated his property before hearing, the costs prevailing at the date of that operation which were reasonably incurred by him are prima facie those which are relevant. Equally in the case in which a plaintiff has not effected reinstatement by the time of hearing, there is a prima facie presumption that the cost, then prevailing, are those which should be adopted in ascertaining the cost of reinstatement. There may indeed be cases in which the court has to estimate costs at some future time as being the reasonable time at which to reinstate.

Remoteness of DamageAll losses falling outside the two principles above can be regarded as too remote to be compensated for. A claim can succeed only in respect of damage which is in law not too remote. Damage is too remote if the parties must not reasonably have contemplated it at the time the contract was entered into. The rules of remoteness have no application to a claim under a contract as opposed to a claim for breach. Thus if a dealer warrants that a vehicle is in good condition and it breaks down, the purchaser may recover as damages for breach of contract the cost of repairs and the cost of hiring an alternative vehicle. If, however the dealer promises only to replace defective parts, the purchaser’s entitlement under the contract is to the cost of repairs, and no question of consequential damage arises. Thus the cost of hiring an alternative vehicle cannot be recovered.



The situation is different in construction contracts. In the construction contracts, defect liability clauses which oblige the contractor to put right defects, do not normally prevent the contractor also being in breach so that consequential loss may be recoverable even though the contractor has repaired the work

Types of damagesi. Liquidated damages

It is pre estimated compensation in money for anticipated breach of contract. Thus, party to a contract may agree beforehand what sum shall be payable by way of damages in the event of breach, this sum is referred to as liquidated damages.The courts will only enforce the pre stated sum if it is a genuine pre-estimate of the loss that will be caused to one party, .if the contract is breached by the other party. If the court feels that the sum was inserted was not genuine eg stated in interrorem, (as a security to the promise that the contract will be performed), the said liquidated damages may not be enforced. It is rather referred to as penalty not liquidated damages.

Liquidated damages and penalty • If the parties have made a genuine attempt to pre estimate the loss likely to be

suffered, the sum stated will be liquidated damages and not a penalty, irrespective of the actual loss.

• The sum will be a penalty if the amount is extravagant having regard to the greatest possible loss which could be caused by the breach.

• If the sum is to be payable on the happening of any one of a number of breaches that are likely to give rise to a different amount of damages, it will be a penalty.

In construction contracts, emphasize is on the ‘pre estimated sum’ and hence the term ascertained liquidated damages (LAD). An unascertained liquidated damages therefore becomes penalty.

ii. Unliquidated damagesDamages that are not pre estimated but dependent on the circumstances of the case are referred to as Unliquidated Damages.

iii. Exemplary damagesExemplary damages is also called Punitive damages or Vindictive damages. It is damages awarded by Court so as to punish defendant or to serve as deterrent mechanism and prevent others from committing such wrong. This type of damages is not applicable in contract.

iv. Contemptuos DamagesThis is damages awarded with the sum considered as derisory, ie ridiculously inadequate

v. Substantial Damages‘dosei-asibey, esq 75 09/09


This sum awarded is adequate and represents compensation for the actual loss suffered.

vi. Nominal DamagesThis is where no actual damage has been suffered yet a party is made to pay an amount of money to the other person.

2. Specific PerformanceIt is an equitable remedy and discretionary. It is an order of the court compelling a party to a contract to perform exactly what he had promised to do. It thrives on the basis that in some circumstances the payment of damages would not provide an adequate remedy. For example a contractor who fails to build after payment of advance may be compelled to perform instead of only claim of damages. Specific performance may be ordered if the following conditions are satisfied;

• The claimer has a substantial interest such that damages would not compensate him

• The defendant is in possession of the land so that the claimer cannot do the work • There is no consideration, even if the contract is under seal• Contract for the sale of goodwill of a business without the premises• Contracts in which only one side can enforce the agreement eg a minor’s contract

In construction contracts, Specific Performance will be granted to enforce a contract but only in those circumstances where;

• The construction work to be done is clearly defined in the contract• The plaintiff has a special interest in having the work done (where damages may

be inadequate) • The defendant is in possession of the land so that no other contractor could be

employed to carry out the works.(Construction law (1976) -John Uff; 3rd Edition)

3. Limitation PeriodsEquity always suggests that a suit must be brought ‘within a reasonable time’ otherwise the claim is barred for laches (delay). The law provides various limitation period for various contracts Eg;

• Claims on a contract under seal eg. Land -12 years• Claims in simple contract eg Construction Contract – 6 years• Insurance claim – 3 years etc

The exception to this principle is that where the right of action is concealed by fraud, the period of limitation does not begin to run until the plaintiff discovers or should discover it.

4. InjunctionIt is a court order directing a person to refrain from doing or continuing to do an act complained of, or restraining him from continuing an omission. ‘dosei-asibey, esq 76 09/09


Types of Injunctiona. Prohibitory Injunction– forbidden continuation or omission of a wrongful act. In contract law it is granted only in the case of negative promise ie what a party has promise not to do. A contractor who has promise not to deposit gravels at particular spot but continue to deposit them there may be forbidden from continuing such negative act. It is sometimes equivalent to specific performance.

b. Mandatory Injunction– Restraining continuation of omission by direct performance of positive act. This is restorative in its effect, not merely preventive. It directs the party to take positive steps to undo what he has already done in breach of the contract. Eg asking a contractor to remove gravels deposited at a particular which is in contrary to agreement.

c. Interlocutory Injunction – Temporary injunction intended to maintain the status quo until trial. It is granted where there is a serious, not frivolous, for trial or unless granted something disastrous may be caused. A contractor building on a disputed land may be asked to suspend works until trial of the action. d. Pepertual Injunction – Injunction granted after the hearing of an action

e. Interim Injunction – Restraining a party until some specific date

f. Quia timet Injunction- Restraining a person for wrong not yet committed but for fear or threatened situation

5. Quantum MeruitQuantum meruit means ‘as much as he has earned’. An injured party in contract may be entitled to claim for work done and services performed on breach of contract. A claim of quantum meruit can be made in any contract where there is no express agreement as how much the contractor is to be paid for his services or his remuneration is not fully provided for. Thus, where there is an express stipulation as to payment a claim on a quantum meruit will not lie except;

• Where the other party has prevented him from completing • Where the claimant has conferred a benefit upon the other and the benefit

has been accepted• Where work has been done under void contract• Where work is outside the original contract that binds the parties ( if work

cannot be treated as variation to the original contract)Quantum meruit operates as a legimate remedy in contract and sometimes as a quasi-contractual remedy.

Under a purely contractual arrangement quantum meruit may be used to recover ‘dosei-asibey, esq 77 09/09


a. a reasonable price or remuneration where a contract has been made for the supply of goods or services and no precise sum has been fixed by the agreementb. serve the plaintiff where an original contract to which he was a party has been replaced by a new one, and he now seeks payment for work done or goods supplied under this substituted agreement If a plaintiff has made an agreement to do work for the defendant in return for a specified fee or amount and now sues on a quantum meruit for extra work done, he must satisfy the court that the original agreement has been discharged. He must be off with the old contract before he can be on with the new one.

In a quasi contract the plaintiff may seek to, a. recover reasonable remuneration for work done in pursuance of a contract which has been discharged by the default of the defendant. Thus it serves as an alternative for claim in damages for breach of contract. b. where the plaintiff has rendered services in pursuance of a transaction supposed by him to be a contract but which in truth is without legal validity.

6. RescissionIt is remedy for inducing a contract by innocent or fraudulent misrepresentation whereby the contract is abrogated. A party intending to rescind must notify the other party. A rescission ab initio results in the contract being treated as though it had never existed.

7 RectificationIt is the power of the court to alter a contract document if by mistake the document does not record the true agreement so as to effect the true agreement between the parties.There can be no rectification of a mistake in the transaction but only of the way in which the transaction was put into writing

Roberts & Co v Leicestershire City Council [1961] Ch 555A building Contractor tendered to build a school in 18months, the employer after accepting the tender inserted a period of 30 months into the formal contract without the contractor’s knowledge.Held; the employer knew of the contractor’s mistaken belief as to the term and that the contractor was entitled to have the contract rectified by insertion of completion period of 18 months.

Usually, the mistake to be rectified is one of fact, but it may also be as to the legal effect of the words used.

2.3.4.2 SPECIAL CONTRACTS



There are some special contracts besides Client–Contractor Contract that affects the Construction Industry and which are governed by their own special rule and statutes in addition to the general principles governing contract in general.

1. Sale of GoodsContracts for sale of goods are governed by the Sale of Goods Act, 1962. This field covers transactions ranging from retail purchases in shops to the sale of items of great volume and value. The act also covers hire purchase but not sale of land (real property). It provides the regulation for the purchase and supply of construction materials and equipment necessary for construction works.

2. AgencyAgency describes the relation between two parties whereby one , the agent , acts on behalf of the other, the principal. Law of Agency also regulates the relations between Consultants and other professional who may be engaged by the employer or the contractor (not as employees) but to provide some services on their behalf and thereby act as agents in the delivery of their services.

3. Contract of EmploymentContract of employment is also called Contract of Service. This involves the provision of services to an employer. Statutes and case law sets out rights and duties of the parties beyond their express agreement. Under Contract of Employment one person places his service at the disposal of another. A person who is contracted to carry a specific works is an independent contractor as opposed to an employee or servant. The Labour Act governs the relationship between the workers and employers. The collective bargaining agreements between the workers and employers in the Construction Industry also serve as a guide in this relation.

4. Contract for ServiceThis is the contract for the engagement of experts or independent contractors who may be providing services for the contractor or the employer. These include surveyors, architects, accountants etc

5. Insurance ContractThe nature of contract of insurance is that one party (the insurer) undertakes to make payments to or for the benefit of the other party (the insured) on the happening of some event. The contract may generally be in any form even oral but it is usually contained in a document called policy. Eg All Risk Policy for Contractors, Performance Bond , Tender Security Bond Advance Payment guarantee or bond, Vehicle Insurance bond ( third party or comprehensive) etc. These undertakings are usually by financial institutions such as Banks, Insurance Companies etc

6. Real Estate Contracts



These are contracts entered into between real estate developers and people offering to purchase some of the properties.

7. Contract of GuaranteeIt is a collateral agreement for engagement to answer for the debt or non performance, default or miscarriage of another person.

8. International Contracts

The applicable laws under international contracts depends upon the nature of the contract. The parties to the contract are generally free to choose as to the proper law, the law of any nation. The international Conditions of Contract for civil engineering work regulates the international contracts for civil engineering works. The International Federation of Consulting Engineers (FIDIC) is the current international conditions of contract for civil engineering works regulating the relations between the employer and contractor of different nationality.In Ghana all World Bank and other donor funded projects prescribe to the use of FIDIC.


1. Distinguish between “good consideration” and “valuable consideration” 2. Explain the statement of section 10 and section 5(1) of Contracts Act, 1960 (Act

25) that, Consideration needs not come from the promisee.

3. Generally, infants cannot be sued or sue to enforce contract. State the exception(s) to this general rule.

4. “Consensus ad idem” is one of the elements of a contract. What is the meaning of this element of contract?

5. State two sources of an implied term of a contract. 6. What do you understand by the term “Unilateral Mistake”


Summary

Unit Summary

Key terms

Consideration, Consensus ad idem, quantum meruit, special contract



Review Question

1. Under what circumstances is a contract described as illegal?

2. Under what circumstances is a contract described as discharged?

3. What do you understand by Liquidated damages?

Unit Assignment a. What is quantum meruit?

b. You are the Project Manager of ABC Construction Limited. The Managing Director of the Company has decided to take James Town District Assembly to Court for non-payment of Interim Payment Certificate (IPC) No. 5. Your Managing Director has invited you for discussion on whether or not the Court will enforce the Contract. Advise him by stating the grounds under which the court may not enforce the contract and briefly comment on two of them.

UNIT 4

DISPUTE RESOLUTION

Introduction

This unit identifies mechanisms of dispute resolution as applicable to the Ghanaian legal System. The major mechanisms of Dispute Resolution have been highlighted to include, Litigation and Alternative Dispute Resolution such as Arbitration, Negotiation and mediation.


12. Explain the basic mechanisms of a dispute resolutions affecting construction activities13. Define and describe the underlining principles of a arbitration 14, Identify the operation of the forms of non arbitral dispute resolution



1-1.2 TRESPASS............................................................................................................31-1.3 NEGLIGENCE.......................................................................................................7

Session 2-4 ADR Mechanisms

2-4.1: Forms of Arbitration

2-4.2: Non Arbitral Mechanisms

2-4.3: Dispute Resolution in Ghanaian Construction Industry

SESSION 1-4 Dispute Resolution Mechanisms

The complex nature of construction process requires that disputes will inevitable arise. There are two main methods of resolving construction disputes in Ghana. These are;

• Litigation

• Alternative Dispute Resolution (ADR)

1-4.1 LitigationBefore the middle of the 19th century, disputes in the construction industry were tried in the courts by process of litigation. The basic steps involved in such civil action in the courts are in three main stages;

1-4.1.1 Stage 1 – Pleading Stagei. The issuance and serving of writ by the Plaintiffii. Entry of appearance to the writ by the defendantiii. Filing of statement of Claim by the Plaintiffiv. Filing of Statement of Defence with or without Counter Claim by the

Defendantv. Filing of Reply to the Statement of Defence by the Plaintiffvi. Filing of Summons for Direction by the Plaintiffvii. Response to Summons for Direction by the Defendantviii. Exchange and inspection of documents by parties

1-4.1.2 Stage 2 - Hearing Stage Opening and Closing of case by Plaintiff

ix. Evidence on oath by the Plaintiff (Chief Examination by the Plaintiff’s counsel)

x. Cross Examination by the Defendant or Defendant’s Counsel



xi. Re- Examination by the Plaintiff or Plaintiff’s Counselxii. Evidence on oath by Witness(es) (Chief Examination by the Plaintiff’s

counsel)xiii. Cross Examination by the Defendant or Defendant’s Counsel xiv. Re- Examination by the Plaintiff’s Counsel

Opening and Closing of Case by the Defendantxv. Evidence on oath by the Defendant (Examination-In-Chief by the Defendant’s

Counsel)xvi. Cross Examination by the Plaintiff or Plaintiff’s Counsel xvii. Re- Examination by the Defendant Counselxviii. Evidence on oath by Defendant’s Witness(es) (Examination-In-Chief by the

Plaintiff’s counsel)xix. Cross Examination by the Plaintiff or Defendant’s Counsel xx. Re- Examination by the Defendant’s Counselxxi Address by both Counsels

1-4.1.3 Stage 3- Ruling Stagexxii Judgmentxxiii Enforcement and Execution of Judgment if no appeal is made

The procedure seems to be straightforward but it is more complex than this since at each stage there are alternatives and possible actions and objections that can be taken or raised. Litigation therefore had been seen as doing more harm to the industry than good due to the following reasons;

• The place of hearing and conducting the trial has always been unilaterally been initiated

• It is always held at public courts given no privacy to the business partners• The invitation to appear at this place is made compulsory • It is normally held before a Judge who may by his training knows a little about the

construction profession or industry as whole. And may therefore give a fair judgment

• The representation of parties by legal professionals (lawyers) who may also know little about the industry had always prolong and influence the settlement

• The decision of the Judge had always been binding with limited right of appeal as by law

• The process has always ended in separating the once business parties as it is either win or lose situation.

• The process had always been time consuming and uneconomical The process of litigation is confrontational, expensive, time consuming and not non-satisfactory to parties.

1.4.2 ALTERNATIVE DISPUTE RESOLUTION



ALTERNATIVE DISPUTE RESOLUTION is a collective description of methods of resolving disputes, otherwise than through the normal trial process. The dispute or difference is referred to a neutral person (s) specially appointed. The selected person (s) hears evidence from both parties to the dispute and settles the disputes in amicable environment.

1.4.2.1 DEFINITION OF TERMS

These notes are to be read in conjunction with the ALTERNATIVE DISPUTE RESOLUTION ACT, 2010 (Act 798). The Act 798 has repealed the traditional Arbitration Act, 1961 (Act 38). All referenced clauses are from the Act 798.

ARBITRATION: It is the voluntary submission of a dispute to one or more impartial persons for a final and binding determination.

CUSTOMARY ARBITRATION: The voluntary submission of a dispute whether or not relating to a written agreement for a final binding determination. It is reference to one or more impartial persons. CONCILIATION: it is the submission of a dispute which is the subject of an arbitration during the cause of the arbitration to an impartial person who is not the arbitrator to facilitate the resolution of the dispute between the parties. ARBITRATOR: It is one or more impartial persons appointed or who can be appointed to offer a final and binding resolution to a dispute. The person to whom the dispute is referred.

CONCILIATOR: It is an impartial person appointed to preside over a conciliation conference.

CUSTOMARY ARBITRATOR: It is an impartial person appointed or qualified to be appointed as an arbitrator in customary arbitration.

MEDIATION: It is a nonbinding process in which the parties discuss their dispute with an impartial person who assists them to reach a resolution.



MEDIATOR: It includes an impartial person appointed or qualified to be appointed to assist the parties to satisfactorily resolve their dispute and employees and persons hired by that person

UMPIRE: When two arbitrators are appointed they select a third person (umpire) who will take over the proceedings when disagreement arises between the arbitrators.

THE PARTIES: Are the persons who either agree to refer their differences to arbitration or are compelled to do so by statute or order of court. Those who agree to submit their differences to arbitration must be legally capable of entering into a binding contract. The parties are referred to as the ‘Claimant’ and ‘Respondent’ respectively.

THE ARBITRATION AGREEMENT: It is an agreement to submit to arbitration present or future dispute. It is the written (actual) agreement made by the parties to submit their present or future differences to arbitration. The Agreement should preferably be in writing. It would appear necessary to name the arbitrator in the agreement. The agreement is sometimes referred to as “The Submission”.

THE PLEADINGS: Comprise the ‘Points of claim’ and ‘Points of Defence’. These are statements of each party’s case drawn up before the hearing to enable each party to be fully aware of the case he/she has to meet at the reference.

THE REFERENCE: Is actual hearing i.e. when the arbitrator carries out the judicial enquiry.

PARTICULARS: Are further details given in explanation of statements made in the Points of Claim’ and or ‘Points of Defence’.

INTERROGATORIES: Are questions in writing on point’s material to the arbitration, addressed by one party to the other with a request that they be answered.



THE AWARD: is the decision of the arbitrator (s) or umpire.


1. What is are the stages involve in litigation?2. What is Statement of claim in litigation?3. What is the difference between Alternative Dispute Resolution and Litigation? 4. Discuss the procedure involve in the Hearing stage of litigation

SESSION 2-4 Alternative Dispute Resolution (ADR) Mechanisms

2-4.1 Forms of ArbitrationIn Ghana, there are two forms of Arbitration recognized in the ADR Act 2010 (Act 798);

• Customary Arbitration• Formal Arbitration

International Arbitration Rules may be applied on special contracts including international contracts.The legal structure allows litigants to opt for arbitration proceedings whilst the matters is pending in courts. The legal system in recent times has enrolled into the formal judicial process for settlement of commercial disputes a pre-trial session which takes form of Arbitration by Commercial Court action.

2-4.1.1 Formal ArbitrationArbitration is a method of settling disputes which involves technical or commercial elements between two or more persons other than court procedure through an independent binding equitable decision by a neutral person(s) rather than a lay down rules.It is a process whereby parties agree to submit the matter in dispute to the decision of a person or persons in whom they have confidence and trust and undertake to abide by that decision. It is a dispute technique with a legal backing. Thus parties are bound to accept the arbitration award as final and binding on them.



In commercial law, arbitration is defined as a process subject to statutory support by which formal disputes may be determined in a binding manner by a tribunal of the parties’ own choosing.

The Prerequisites to a valid arbitration are;

The existence of a disputeThere must be a right that has been abused, interest or claim that has been denied. Thus where none has express concerned of a right, interest or claim or where there is no solution to a problem there could not be arbitration.

Reference of dispute to arbitrationA party must take the initiative to give a notice of an abused right, or denied interest and claim by the other party(ies). This set the opening of the arbitration process. However, arbitration under some construction contract standard forms cannot usually be opened until after completion of works. This is to avoid suspension or slow down of works. Generally arbitration may commence at any time even in the Construction contracts but the process must be managed not to have negative impact on the success of the work.

Mutual submission to arbitration process by partiesGenerally parties in dispute must either agree or have already agreed to refer the dispute to a neutral person(s) or a specified institution for determination. In construction contracts, the conditions of contract have usually included the prior agreement to mutually submit dispute to arbitration. The extent of this mutual agreement must however be defined, thus whether or not all disputes or specific disputes are to go for arbitration. With such clause in the conditions of contract, the parties can only by pass the arbitration process to court when the clause is abrogated or cancel with the intention of permitting the parties to go to court. Where the parties agree to take a dispute to court then the court may be ceased with the powers of an arbitrator.The agreement to submit to arbitration process includes the fact that the parties have also agreed to be bound by the independent fair or equitable decision of the neutral person(s).

Advantage of Arbitration(a) The arbitrator may be selected from specialists having expert knowledge of

the subject matter of the dispute. An Architect, quantity Surveyor or engineer will usually be appointed arbitration for a dispute arising between parties to a building contract.

(b) The dispute can be brought to a hearing and settled more speedily than by action at law.

(c) It will usually be less costly than an action at law.

(d) There need not be any publicity



(e) The time and place of hearing can be arranged to suit the parties

(f) The arbitration process flexible and adaptable to suit the dispute. The arbitrator can be expressly required to visit the site, inspect works etc.

(g) It depends on the applicable contract law

(h) The process may be informal without abandoning courtesy.

Disadvantages of Arbitration Although Arbitration is a private alternative to litigation, the proceedings are

closely connected with that of the courts. The connection takes various forms. For instance arbitrator follows the ordinary law in ensuring natural justice not his own concept of fairness and rules of justice.

The three stages of litigation; pleading, hearing and ruling (award) are usually followed in arbitration.

The representation of professional lawyers in recent times influence the settlement and the issue of win or lose keep on pulling the parties apart.

Arbitration is gradually becoming confrontational and no longer more economical in terms of time and cost and satisfactory option as expected.

APPOINTMENT OF ARBITRATORThe appointment of the arbitrator should be dealt with in the agreement. The parties are at liberty to determine the number of arbitrators except that the number must be an uneven number (Section 13(1)).

APPOINTING AUTHORITYThe parties may vest power in any person or authority including the Ghana Arbitration Centre described as the “appointing authority” to take any action for or on behalf of the parties, in relation to the arbitration.

A SINGLE ARBITRATORIn an arbitration which requires the appointment of a sole arbitrator, if the parties fail to agree on the arbitrator within 14 days after receipt of a request for arbitration by one party from the other party, the appointment shall be made by the appointing authority upon a request by a party (Section 14(4)).

THREE ARBITRATORS• if no mention is made to the number(s) of arbitrators it is implied that the

reference shall be to three arbitrators (section 13(2)). • If parties fail to agree on a procedure for the appointment of the three arbitrators

and the agreement does not provide for the settling of the disagreement, each party shall appoint one arbitrator and the two arbitrators shall appoint the third arbitrator who shall be the chairperson.



• Where the two appointed arbitrators fail to agree on the third arbitrator within 14 days from the date of their appointment, appointment shall be made by the appointing authority upon request by a party.In such a reference, the award of any two arbitrators shall be binding.

UMPIREWhere the arbitration agreement provides for the appointment of an even number of arbitrators, the arbitrators shall within 14 days of their appointment appoint an additional arbitrator to be an umpire (Rule 10 (2) of the Alternative Dispute Resolution Centre Arbitration Rules)If the arbitrators are unable to appoint the additional arbitrator within the specified time the Alternative Dispute Resolution Centre (or any other appointing Authority) shall appoint the additional arbitrator to be an umpire (Rules 10 (2) and 11(5) of the Alternative Dispute Resolution Centre Arbitration Rules)

DISTINCTION BETWEEN IN UMPIRE AND THIRD ARBITRATORThe third arbitrator is in the hearing from the beginning and a 2 to 1 decision holds. An umpire is only called when the arbitrators cannot agree. He then takes charge of proceedings. He may sit in from the beginning to save repetition – but he takes no active part in the proceedings (Rule 22).Note: The arbitration agreement can provide for reference to be made to an official referee who is an officer of the High Court called “SCOUT”.

DUTIES OF AN ARBITRATOR –section 311. be fair and impartial2. expedite resolution of the dispute3. decide on matters of procedure and evidence

ROLE OF THE COURT IN ARBITRATION PROCEEDINGS• Reference of an action by court with the consent of parties – section 7• Application to the court to refer a matter to which there is arbitration agreement to

arbitration – section 6• Application to the court for the determination of challenge of appointment

procedure- section 16(3)• Application for the revocation of arbitrator’s authority –section 18• Order of court for payment of fees and expenses of the arbitrator or repayment by

the arbitrator of any fees or expenses already paid to him/her on revocation-section 18(6)

• Application to court by arbitrator for granting of relief from any liability incurred – section 19 (2)

• Application by a party to resolve issues on fees of arbitrator- section 22• Application on jurisdiction – section 26• Application on non notification on



o Validity of arbitration agreemento Proper constitution of panelo Matters submitted are in accordance with the arbitration agreemento Lack of jurisdiction in relation of that party therefore challenging the

award o Serious irregularity that affects that party therefore challenging the award

• Support the arbitral proceedings by making an order;o For taking of evidence of witnesso For the preservation of evidenceo For inspection, photographing, preservation, custody or detention of

propertyo For taking samples from or the observation of an experiment conducted

upon a propertyo For the sale of any goods the subject of the proceedingso For authorizing any person to enter any premises in the possession or

control of a party to the arbitration o For the granting of an interim injunction or the appointment of a receiver

• The court shall act where the arbitrator or institution or person in charge are unable to for the time being to act effectively

• Application on notice for the determination of any question of law that arises in the course of the proceedings if the question affects the right of the other party

• Application for the delivery of award • Application for leave to enforce an award• Application for setting aside award• Application to enforce foreign awards• Registration of arbitral award

Qualification of arbitrator• Appointed by parties, a person or institution acting under a power conferred by

the parties• A person with qualification or experience that the parties may agree on• Parties may agree to appoint an arbitrator even without qualification or experience

relevant to the subject of dispute• A person of any nationality may be appointed unless otherwise determined by the

parties

The Arbitrator can be disqualified, if he; (1) Has personal , proprietary, fiduciary or financial interest in the matter to which

the arbitration relates

(2) Has a relationship with a party or counsel of a party to the arbitration

(3) Possess the nationality the parties agreed to disqualified‘dosei-asibey, esq 90 09/09


(4) Disqualified from whatever qualification or experience agreed by the parties

INITIAL TASK OF ARBITRATOR (1) As soon as possible after appointment the arbitrator(s) must familiarize himself

with the Arbitration Agreement which is his terms of reference. He must be absolutely clear about:-

(a) The nature of the dispute

(b) The powers and duties of the arbitrator

(c) The scope of the agreement. (Is agreement limited to a special matter or all disputes between parties).

(2) He should then engage a meeting with the parties to the agreement to determine:

(a) Time and place for the hearing

(b) Whether the parties are to conduct their own defence, brief counsel, or have a solicitor in attendance. It is imperative that each party be aware of the other’s intention in this regard. The arbitrator should state what king of evidence the parties are to present.

REVOCATION OF ARBITRATOR’S AUTHORITY (Sections 17 and 18)The authority of the arbitrator or umpire is irrevocable except by

• The circumstances under which the parties have agreed that an arbitrator may be revoked

• Application on notice by a party to an arbitration to High Court where- Impartiality of the arbitrator- Lack of qualifications or experience under the arbitration agreement or agreed

by the parties- Physical or mental incapability or justification to doubt capability of arbitrator

to conduct the proceedings- Refusal or failure of arbitrator to conduct proceedings properly or to use

reasonable dispatch in conducting the proceedings or making awardAnd substantial injustice has or will be caused to the applicant.

• Appointing authority where power to revoke has been invested in the authority • Resignation of an arbitrator (Section 19)

• Death of arbitrator unless agreed by Parties (Section 20)

Lack of impartiality means bias (a) ill feeling on the part of the arbitrator towards one of the parties



(b) If the arbitrator shows any prejudice against any of the parties

(c) If there are circumstances which suggest a strained relationship between the arbitrator from any of the parties (litigation)

(d) Corrupt receipt of money by the arbitrator from any of the parties

MISCONDUCT BY THE ARBITRATOR(a) Mistaken Conduct e.g. errors on points of law and reception of inadmissible

evidence (e.g. hearsay).

(b) Willful Wrong doing

- Acceptance of bribes

- Holding private audience - Calling witness without consent of parties- Improper admission or rejection of evidence etc.

ARBITRAL PROCESS 1. Arbitration management conference - section 29Within 14 days of being appointed and upon 7 days written notice to the parties with the parties, or representatives in person or through electronic or telecommunication media to discuss preliminary matters including issues, dates, venue, time, rules, form of award fees etc.

2. Conciliation conference – section 30Any appointing authority or any institution or individual but not an arbitrator in the dispute, may with the consent of the parties at any time during the arbitration process arrange conciliation conference to facilitate the resolution of the dispute.

3. Statement of claim and defence –section 33The claimant shall state the claim and the facts that support the claim, the points in issue and the relief sought. This is the statement of claimThe respondent shall state in the defence the particulars of its case with or without a counterclaim.

4. The Arbitration Hearing – section 34-38The Arbitration Hearing unless otherwise stated shall be private and confidentiala. Hearing notice is served on each party by the arbitrator.b. Submission of particulars of witness before hearing beginsc. hearing begins

o recording of date, time, venue, arbitrator presence, the parties, representatives (if any), and receiving into the record the statements of claim and defence



o opening statements from parties to clarify issues before arbitrationo unless otherwise stated hearing may be oral o evidence shall be taken in the presence of partieso documents and other evidence may be filed after hearingo arbitrator shall give notice to the parties if so wish to have an inspection or

investigation in connection with arbitration stating the date and time of the inspection or investigation

i. hearing may be postponed at the request of a party or by the arbitrator – section 44

ii. a party may apply for interim relief and the arbitrator may grant such reliefs at a cost to the party – section 38

iii. an arbitrator may appoint an independent expert to report in writing on issues specified by the arbitrator – section43

iv. a party may be represented by counsel or any other person – section 42v. An arbitrator may declare a hearing closed after; - section 45

a. Parties have responded negative to specific question as to whether a party has any further evidence to give

b. Submission of closing statementsvi. On agreement of parties and application by aparty hearing may be re-opened –

section 46

THE AWARDa. Awards to be Final and Binding

Section 52 states that, every arbitration award is final and binding on the parties or any person claiming through them. This means that:-

(i) The same questions cannot be litigated again

(ii) There can be no appeal against its findings

b. Correction of SlipsSection 53 enables clerical mistakes in the award to be corrected or additional award omitted upon 14 days notice to the parties by the arbitrator

c. Publication of AwardThe arbitrator notifies the parties that the award is ready and can be taken up on payment of his fee – unless some other procedure is laid down in the agreement. The arbitrator may withhold the publication for non-payment of fees.

c. Time for making awardIf a time for making the award is stated in the agreement it can only be enlarged by agreement of the parties–(section 53). When no specific time is stated, then the arbitrator or umpire has power to make the award at any time within 28 days. (section 53).



f. Essentials of a valid AwardParties are free to agree on the form of the award and in the absence the following shall apply –section 49;

i. Should be in writing.

ii. Arbitrator must sign, state date and place where the award was made and state in writing the reason for the award

iii. Signatures of majority of the arbitrators shall be sufficient and the reason for the omitted signature stated.

iv. A copy of signed document shall be delivered to each party

v. Determination of rate of interest and mode of payment of any sum where applicable shall be made

vi. Award shall not be made in public without the parties consent

vii. Must be certain in meaning. Parties must be left in no doubt as to how they are affected by the award especially with regard to payment of money, performance of any conditions etc.

General features of valid Award;

o Must not be ambiguous or contradictory.

o Must not exceed the scope of the agreement unless the latter has been extended by

consent of all parties.

o Should comply with any special directions in the agreement.

o Must legal and capable of being performed.

o Must be properly executed i.e. signed by arbitrator(s) or umpire.

o All matters referred must be incorporated. If any matter (s) has been withheld by a

party(s) the award will be valid in respect to those matters of which the arbitrator had knowledge.

o Should contain clear directions necessary for proper performance.

2-4.1.2. Customary Arbitration



The conduct of this form is usually by oral submission. However there may be written submission.

Pre-requisites of valid customary arbitration. The Supreme Court in Dzasimatu v Dokosi [1993-94] 1 GLR 463, and also Budu II v Ceasar [1959] GLR 470Five essentials are required for valid customary arbitration. These include

• Voluntary submission of dispute for settlement

• Prior agreement to be bound by the outcome of the settlement

• Due observance of the rules of natural justice

• Compliance with rules on jurisdiction; and

• Publication of the award

Voluntary submission:Yaw v Amobie (1958) 3 WALR 406, CA; Paul v Kokoo [1962] 2 GLR 213; Supreme Court held that the only solid foundation of a valid customary arbitration of a binding award is the voluntary submission of their dispute to a relatively disinterested third party to make a fair investigation into it and give a decision on it.

Care should be taken to scrutinize evidence led in support of what is alleged to be “Arbitration”.

Nyame v Yeboah [1961] GLR 281, SC Chief voluntarily apportioning land between parties held not to constitute an arbitration.

Foli v Akese (1930)1 WACA 1 Arbitration found no evidence upon which to adjudicate between the parties, drew an arbitration with the view of bringing peace between them.Held, Arbitrator’s award is set aside.In arbitration, full explanation must be given to the person complained against and that proposal must be accepted by him.

Asare v Donkor and Serwah II [1962] 2 GLR 176 SCIt was held that merely attending to the call of a chief out of respect due to a stool but definitely not agreeing to submit a dispute for determination by that chief did not amount to consent to the arbitration.

Dompreh v Pong [1965] 1965] GLR 126To amount to arbitration it must be shown that the person complained against agreed to submit to the arbitration after it had been explained to him that his opponent had made a request that the dispute be determined at arbitration and that the person to whom the complaint was lodge should preside over the dispute as the arbitrator.



Merely consenting to or voluntarily submitting a dispute to an arbitrator is however not conclusive to final arbitration.

It is rather seeking a negotiated settlement thus, no obligation to accept the decision of the third party which becomes binding only if accepted by the parties.

Manu v Kontre [1965] GLR 373, SCMensah v Essah [1976] 1GLR 424, CAHeld: proceeding whereby one party requests a chief or an elder to settle a dispute can only be described as negotiation for a settlement.Settlement is the presence or otherwise of a prior agreement to be bound by the decision of the arbitrator.

Prior agreement to accept the award i. Consent or agreement should be given in advance

Vado v Sampede (1957) 3 WALR 35Held: The essence of a valid binding arbitration is consent in advance by the parties to be bound by the Arbitration award.

Akunor v Okan [1977] 1 GLR 173, CACA forcefully held that ingredient of customary arbitration is satisfied not at the time of the award when an adverse decision might cause one of the parties to reconsider his participation in the proceedings but at the beginning of the proceedings.It is an agreement to be bound by the decision made as a precondition for the Arbitration taking place.

ii. A prior agreement to be bound by an arbitration cannot be displaced by a subsequent act.

iii. Payment of a fee is not even conclusive evidence of a binding arbitration since it could be equally consistent of the giving of a present, according to customs, to those who attempt reconciliation.

iv. Whether the prior agreement exists or not is a question of fact to be determined by the evidence.Zogli v Ganyo [1977]2 GLR 297, CACA held that….. the result of negotiated settlement is not binding until it was accepted by both parties.

v. The subject matter should be certain.Fordjour v Nimo [1962] 1 GLR 305An award statement was that some properties of the plaintiff’s father should be given to the plaintiffs but the identities of the properties were unknown. The award was held not to be a final one and it had no binding effect on the parties.



vi. For an arbitration to be effective and binding on the parties it should be a final one in the sense that the subject matter is certain.There must be some overt act to evidence the fact that a party in arbitration has made up his mind, after which he becomes funtus officio:

PublicationThe find decision or award should be brought to the notice of the parties involved.This may be done orally or by writing informing the parties what the find award is.

ProcedureCustomary Arbitration need not follow any formal procedure.

There must be a hearing of both sides in a judicial manner.Both sides must be given the fullest opportunity to present their caseMensah v Essah [1976] 1GLR 424A purported arbitration was declared invalid for, inter alia failure to hear both sides in a judicial manner.

Taking of evidenceAsano v Taku [1973]2 GLR 312Held: Although the law requested that the decision of arbitration must be arrived at on merits, no formal procedure was requested at the proceedings and it was also not on all occasions that the taking of evidence would be requested to enable the arbitrator to arrive at a fair decision on the merits.

There are circumstances in which the matter in issue is of such public notoriety that no evidence of witnesses, in addition to the case put forward by the parties themselves, is necessary to decide which version of the story is correct.

Onus of proofThe onus of establishing that there has been a valid customary arbitration is on the person relying on the arbitration.

Effect of a valid customary arbitration

There is no right in the parties to arbitration or a negotiation settlement to rescind from the award once this has been made and accepted.

Oyete and Ntim v Edumawu and Aduo (1956) 1 WALR 278Held: parties who had consented to an arbitration fixing the boundaries to a piece of land could not rescind from the arbitration.

Akunor v Okran [1977] 1 GLR 173



Held: the plaintiff was stopped from bringing fresh action in court claiming the same property from the defendant when the same issue had been disposed of in a customary arbitration.

Parties cannot reopen the arbitration issue by initiating fresh arbitration or by initiating court action except where this is done by consent.

Vado v SempedeHeld: once an arbitration award exists, it operates as estoppel per rem judicature.

Akwei v Akwei [1961] GLR 212A dispute relating to title to a house was settled by the high court. The same dispute was later submitted to an arbitrator whose award was embodied in a subsequent consent judgment.Held: that the arbitration award was binding on the parties and they could not claim their rights under the original judgment.

Where a dispute has been decided upon and award given, if subsequently another dispute arises, the parties may:

Apply to enforce award Submit the dispute to further arbitration or Waive the award and have the dispute settle in court.

The judgment of the court will then supersede the award; and the award cannot thereafter be removed or enforced by application in court.

Notwithstanding a judgment, parties can subject the subject matter of the judgment to arbitration and the award of the arbitration will supersede the judgment.

Judgment which is a nullity cannot be converted into a binding lawful judgment by agreement of the parties.

Parties or PriviesA person who is neither a party nor privy to a party to an arbitration is not bound by the arbitration award.

Crimes No criminal case can be disposed of by settlement out of court or by

customary arbitration except as provided in Act 459, 573 Customary arbitration has no jurisdiction in criminal matters.

The finding of arbitration that the plaintiff had stolen from his concubine was held to be ultra vires.

Enforcement of Awards There’s no machinery



The only method of enforcing such an award is by an action in a court of competent jurisdiction.

A person who desires to enforce a customary award has to file a writ of summons for;

Declaration that that particular award was actually made A declaration that that award was valid An order for the enforcement of the award

The determination of the validity will involve consideration of whether or not there was a mere negotiation for settlement or proper arbitration.

Consent to the arbitration Prior agreement to be bound by the award The composition of the arbitration The terms of reference of the arbitration Other relevant matters The court may conform that award may then be enforced by the

appropriate execution process. There is no machinery by which arbitration can enforce an award they

make. The only method of enforcing such an award is by an action in a court if competent jurisdiction.

Setting aside an award An award cannot be set aside on the ground that the decision of the arbitration

cannot be justified by the evidence or even that the decision is wrong in law.

Foli v Akese (1930) 1WACA 1“Parties take their arbitrations for better or for worse, both as to decision of fact and decisions of law.”

Customary arbitration award may however be set aside where it is proved that the award was as the result of;

Corruption Fraud Arbitrator completely ignored the ordinary rules for the proper

administration of justice.Adisi v Construction and Furniture (W.A) Company Limited [1962] 1 GLR 30The recorder was a servant of the defendant who was likely to record the proceedings in a manner prejudicial to the plaintiff but favorable to the defendant.Held: even if the allegations were true the defendant had waived his right to object by taking part in the proceedings of full knowledge of the alleged improprieties without protest. Arbitration award was impeached on the above grounds.

Akakyire II v Ediyie [ 1977] 2 GLR 70, CA‘dosei-asibey, esq 99 09/09


A plaintiff regarded an arbitrator as his grantor who had earlier litigated with the defendant on the land in dispute.Held: the choice of such arbitrator offended agreement natural justice and the concept of reasonableness was disqualified

Conflict of interestIn Paul v Kokoo [1962] 2 GLR 213, SC, it was held: arbitration by a person who is himself involved in the dispute is not reasonable.

2-4.2 Non Arbitral Mechanisms (NAM)

2-4.2.1 IntroductionAlternative Dispute Resolution (ADR) Act, 2010 (Act 798) also make provision for other ADR mechanism also called Non-Arbitral Mechanisms (NAM). Non Arbitral Mechanism (NAM) originated in the USA, adopted in Britain in the 1980’s and is now practiced worldwide. It is a non-confrontational technique that may resolve disputes without resorting to traditional litigation or Arbitration. NAM provides disputants the chance to participate in the process without interference. It empowers them to be creative in solving their own conflicts and disputes. In this respect NAM is not new in the construction industry as consultants and other professionals in the industry have over the years traditionally settled disputes through non binding approaches without any formal procedures. NAM processes are however formal ADR methods involve a process where parties themselves attempts to settle their disputes through negotiation or a third party (referee) is simply invited to assist in the settlement by issuing a non-binding evaluation of the dispute and sometimes make recommendation of how the dispute could be resolved.

2.4.2.2 Characteristics of NAMThe main characteristics of NAM include;

Preparedness to settleThere must be goodwill of compromise and win-win attitude on both sides to settle the matter on a commercial rather than a litigious basis. Disputants should be genuinely prepared to settle their difference(s) without litigation or arbitration. Non-binding ProceedingsParties come to the table of settlement with the understanding that until both parties are satisfied, any of them has the right to withdraw and result to arbitration or even litigation. Thus in NAM settlement is entered as judgment and becomes binding only when parties are in agreement of the decision.

Role of managementIn NAM, like arbitration and litigation, legal representation is allowed. However taking of decisions is a preserve of management. This leads to amicable settlement.



Business InterestThe major objective of parties in NAM technique is to sustain their business relations. This commercial interest has always influence the techniques in ADR in the settlement of disputes rather than law.

Role of neutral Adviser or RefereeThe referees in the NAM called neutral advisers plays the key role of guiding and assisting parties to achieve their goal of achieving amicable settlement for the maintenance of commercial relations.

Non ConfrontationalProceedings in the NAM approach have always been characterised with friendliness and relaxed environment with the sole intention of achieving their goal of achieving amicable settlement for the maintenance of commercial relations.

2-4.2.2 NAM TechniquesThere are many techniques of resolving disputes. The most practical techniques of NAM in relation to construction disputes are as follows:

Negotiation Mediation Conciliation Mini-trial Claims Review Board (CRB) Hybrid Processes Pre- trial Conference

a. NegotiationThe Negotiation may be with or without neutral adviser. Thus it may be direct or indirect. In a Direct Negotiation the parties appoints a member of their team to lead and both parties do their negotiation with or without a neutral adviser. In some Negotiations (Indirect) the process involves a neutral adviser who sits in the cause of deliberations without taking active part whilst the parties engage themselves in the art of negotiation.

b. MediationA third party known as Mediator is called upon to assist in finding common ground for compromise when negotiations fail between the parties. The mediator may be the neutral adviser during the negotiation or new person altogether. Agreement on mediation may be made at the contract stage prior to any dispute arising.Mediation is marginally more expensive than negotiation. However the advantages of mediation include informality, speed and economy and often lead to an agreed settlement between parties.The process of mediation;

preliminary meeting by the mediator to find out the substance of the disputeand to decide how to proceed with the parties



Parties make a formal presentation in joint session (all parties present)with probing and interrogations.

Series of private meetings or caucuses are held between the mediator and each party.

Mediator moves from one caucus to the other reporting with agreement, the views of each party in turn.

Mediator finally comes out with agreed proposal that leads to amicable settlement.

The role of the mediator in mediation • Helps to gain access to necessary factual and legal information having an

important bearing on the dispute.• Makes sure that each party understands what the other is saying and increases

perception and empathy between parties• Puts into writing any agreement reached by the parties for signature even though

decision is non-binding

c. ConciliationConciliation process is similar to mediation except that the conciliator draws up and proposes a solution himself, which represents what in his view, is a fair and reasonable compromise of the dispute. This is done after the conciliator has had discussions with the parties. Conciliation is more formal process than the both negotiation and mediation. It sometimes involves the employment of legal representatives, thus making it a more expensive process than the others. It is more regulated and a number of institutional rules are available for its administration.

d. Mini-trialUnder the mini-trial procedure, top management officials of each party voluntarily may present their best case and negotiate an expedited resolution to a pending board of Contract Appeals Case. The Mini-trial is designed to resolve disputes arising from matters of fact rather than matters of law and to take no longer than three or four days. The process also provides a neutral advisor who can assist the negotiators in understanding matters of law and assessing the merits of the claim.The role of neutral adviser in mini-trial includes;

• Controlling the proceedings• Acting as adviser to the parties in dispute• Interrogates witnesses• Providing explanation and comments when required by parties• Enforcing time limits• Acting as chairman to two assistants who may be selected from among the senior

corporate officers of both parties and who are expected to make independent assessment of the issues in dispute.



The parties, after the initial presentation, comments from the experts and witnesses of fact have given evidence, may enter into negotiation to achieve an amicable settlement.

e. The Claims Review BoardA Claims Review Board (CRB) is an additional ADR method in Construction Contracts. The Board consists of three member committee formed at the commencement of a construction project. Each party appoints one member and the third member is appointed by the two members. Each member is issued with a complete set of contract documents including schedules, work drawings, minutes of meetings and other documents such as progress reports. Within the CRB procedure, the Board members visit the site periodically but at least three times annually, to keep informed of the construction activities, challenges and any development likely to lead to potential claim. At the end of each visit a report is submitted to both parties.As a rule a claim is only referred to the Board after the engineers decision when either of the parties has expressed its objection of the engineer’s decision. The first submission of claim to the Board is in a written statement of claim by the appellant’s party complete with relevant correspondence and other documentation of the appellant’s choice. A copy is provided for each board member and for the other party.The respondent also, in writing submits his defence and reasons for the rejection of the claim. The appellant replies to the respondent in a written rebuttal and the respondent again submit his reply to the rebuttal in a written form. This ends the submission of written representations to the Board. The Board then studies the documents and finally sends its decisions to the parties. The ultimate solution is non-binding on the parties and therefore if any do not accept the CRB’s decision has the option of seeking redress at court or under arbitration clause in the contract should that be the case.

f. Hybrid Processes Hybrid Process is the combination of other NAM techniques.

g. Pre trial ConferenceIn Ghana, the Commercial Court Rules, Order 58 of CI 47, does incorporate Court oriented ADR as part of the adjudicating process of the Court. The prê-trial session arises when a suit of commercial nature is brought before the court. The administrator place it before a pre-trial Judge who invites the parties and their legal representatives and in non confrontational atmosphere attempts to settle the disputes without necessary going through the trial. Here the judge with or without assessors resolves disputes arising from matters of fact rather than matters of law. He however advises on the questions of law and advises parties.

The pre-trial settlement conference is a forum where the parties are given the opportunity to resolve their differences through the use of NAM techniques and sometimes Arbitration. The venue of the pre-trial conference is at the commercial Court or any other place at the request of the parties. The cost of external venue is borne by the parties.



An order for cost is made against the party who fails to attend pre-trial, This makes the conference mandatory.

Pre trial Procedure Within 3 days after the pleadings stage of litigation, the Administrator assigns the

case to a pre-trial judge or mediator for settlement. The pre-trial Judge or mediator shall cause hearing notice to be issued inviting the

parties and attempt settlement of the dispute. The Parties may however opt to refer the matter to an external body or person to

serve as a neutral for the settlement. The Judge/Neutral /Mediator after open presentation by parties may invite either

party to a caucus to discuss some issues arising out of the pre- trial session. The outcome of the discussion may not be disclosed to the other party without the consent of the party who provided the information.

The period of settlement may be extended by further 30 days but in the case of referral the extended time is 15 days.

Settlements made at the pre-trial conference are entered as judgment of the Court. Any unsettled issues shall be remitted to the Administrator of the Court who shall place the suit before a different Judge of the Court for the trial.There may be full settlement or partial settlement with outstanding issues referred for trial.

2-4.2.4 Advantages of NAM No structured or rigid procedure characterized the ceremony and

confrontation associated of courtroom litigation. Provides more acceptable methods of settling disputes. It creates greater participation of the disputants in the settlement process. Quicker, less expensive and healthier. It provides opportunity for emotional needs to be impressed and addressed. Meaningfully contributes to the decongestion of the courts. Private Confidentiality is retained. Lack of interference

2-4.2.5 Disadvantages of NAMThe adoption of NAM route has the following set backs;

• In the event of making compromises for amicable settlement parties are likely to make financial losses

• Delays in settlement in view of the fact that the decision is non-binding, party take ADR route with the intention to delay settlement under arbitration or the court.

2-4.3 Dispute Resolution in Construction Industry in Ghana



Construction contracts have been one of the commercial activities characterized with disputes due to its complexities. Arbitration has been the commonest technique for the resolution of disputes in the Construction Industry. Arbitration to resolve disputes in the construction industry arises from the agreement of parties, either when disputes arise, or more often as a term of the conditions of contract.

2-4.3.1 Local ContractsIn Ghana’s local or national construction contracts, the formal agreement for dispute resolution is found in the Conditions of Contract accompanied the Public Procurement Act, 2003, Act663. Clauses 24, 25 and 26 of the Conditions of Contract provides that;

24.1 If the Contractor believes that a decision taken by the Project Manager was either outside the authority given to the Project Manager by the Contract or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Project Manager’s decision.

25.1 The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.

25.2 The Adjudicator shall be paid by the hour at the rate specified in the Tender Data and Contract Data, together with reimbursable expenses of the types specified in the Contract Data, and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator’s written decision. If neither party refers the dispute to arbitration within the above 28 days, the Adjudicator’s decision will be final and binding.

25.3 The arbitration shall be conducted in accordance with the arbitration procedure published by the institution named and in the place shown in the Contract Data.

26.1 Should the Adjudicator resign or die, or should the Employer and the Contractor agree that the Adjudicator is not functioning in accordance with the provisions of the Contract, a new Adjudicator will be jointly appointed by the Employer and the Contractor. In case of disagreement between the Employer and the Contractor, within 30 days, the Adjudicator shall be designated by the Appointing Authority designated in the Contract Data at the request of either party, within 14 days of receipt of such request.

2-4.3.2 International ContractsIn International Construction Contracts including donor funded projects and other special contracts such as Road construction the FEDERATION INTERNATIONALE DES INGENIEURS-CONSCILS (FIDIC) meaning Federation of International Council of Engineers, Conditions of Contract for Works of Civil Engineering Construction is in use. Currently the fourth edition is applicable.



The terms of the Fourth Edition of the Conditions of Contract for Works of Civil Engineering Construction have been prepared by the FIDIC and are recommended for general use for the purpose of construction of such works where tenders are invited on an international basis. The Conditions, subject to minor modifications. are also suitable for use on domestic contracts.The version in English of the Conditions is considered by FIDIC as the official and authentic text for the purpose of translation.

In the preparation of the Conditions it was recognized that while there are numerous Clauses, which will be generally applicable, there are some Clauses, which must necessarily vary to take account of the circumstances and locality of the Works. The Clauses of general application have been grouped together in this document and are referred to as Part I - General Conditions. They have been printed in a form, which will facilitate their inclusion as printed in the contract documents normally prepared.

The General Conditions are linked with the Conditions of Particular Application, referred to as Part II, by the corresponding numbering of the Clauses, so that Parts I and II together comprise the Conditions governing the rights and obligations of the parties,

Part II must be specially drafted to suit each individual Contract.To assist in the preparation of Part II explanatory material and example clauses are published with the Conditions in a separately bound document entitled "Conditions of Contract for Works of Civil Engineering Construction, Part II - Conditions of Particular Application, with Guidelines for preparation of Part II Clauses, Fourth Edition".

FIDIC has published a ''Guide to the Use of FIDIC Conditions of Contract for Works of Civil Engineering Construction" which includes comments on the provisions of the Fourth Edition of the Conditions. Users of the Fourth Edition may find it helpful to refer to this Guide. It may also be helpful for users to refer to other FIDIC publications, such as: Tendering Procedure (First Edition 1982) and Construction, Insurance and Law (1986) and in 1998.

Provision for dispute resolution in Clause 20 provides that;




1 If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of, the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract, including any dispute as to any opinion. Instruction, determination, certificate or valuation of the Engineer, the matter in dispute shall, in the first place, be referred in writing to the Engineer- with a copy to the other party. Such reference shall stale that it is made pursuant to this Clause. No later than the eight-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to this Clause.

Unless the Contract has already been repudiated or terminated, the Contractor shall- in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the Engineer unless and until the same shall be revised, as hereinafter provided, in an amicable settlement or an arbitral award.

If either the Employer or the Contractor be dissatisfied with any decision of the Engineer. or if the Engineer fails to give notice of his decision on or before the eight-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which he received notice such decision, or on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be, give notice to the other party, with a copy for information to the Engineer, of his intention to commence arbitration, as hereinafter provided, as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration, as hereinafter provided, as to such dispute and- subject to Sub-Clause 4: no arbitration in respect thereof may be commenced unless such notice is given,If the Engineer has given notice of his decision as to a manner in dispute to the Employer and the Contractor and no notice of intention to commence arbitration as to such dispute has been by cither the Employer or (lie Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer, the said decision shall become final and binding upon the Employer and the Contractor.

Where notice of intention to commence arbitration as to a dispute has been given in accordance with Sub-Clause 1, the parties shall attempt to settle such dispute amicably before the commencement of arbitration. Provided that unless the parties otherwise agree, arbitration may be commenced on or after the fifty-sixth day after the day on which notice of intention to commence arbitration of such disputer was given, even if no attempt at amicable settlement thereof has been made.Any dispute in respect of which

(a) the decision, if any of the Engineer has not become final and binding pursuant to Sub-Clause 1. and(b) amicable settlement has Not been released within the period stated in Sub-Clause 2, shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commence by one or more arbitrators appointed under such Rules. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion- instruction, determination, certificate or valuation of the Engineer related to the dispute,Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to Sub-Clause 1. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the


Both the local and international clauses provides for NAM techniques for amicable settlement as a first step in dispute resolution in construction contracts. It is only when the NAM fails that Arbitration is resulted to. This method is sometimes referred to as Med-Arb, Thus Mediation before Arbitration. It is important to note that the traditional litigation has not been recommended in the dispute resolution of the construction contracts. It is therefore invoked on as a last option. ADR provides a dispute resolution mechanism that concentrates on resolving disputes by consensus rather than by law. As a non-confrontational technique that may resolve disputes without resorting to traditional litigation, ADR is welcome in the period where time and cost is described as an ingredient for development.

Abraham Lincoln once said, “Discourage litigation, persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often a real loser in fees, expenses and waste of time.”


1. What does it mean to say that an arbitrator has misconducted himself?

2. State two essentials of a valid Award

3. State two of the initial tasks of an arbitrator?4. Under what conditions will the authority of an arbitrator revoked?5. Under what circumstances may the court remove an arbitrator?


Summary

Unit Summary

Key terms

Alternative Dispute Resolution, Arbitration, Mediation, Negotiation

Review Question



1. What is Arbitration? Emunerate the pre-requisites of Arbitration2. What is Alternative Dispute Resolution? Enumerate some of the mechanisms in the Alternative Dispute Resolution.

Unit Assignment 4

The Conditions of Contract of most construction Contracts has recommended Alternative Dispute Resolution as the mode of dispute settlement before proceeding to Court. In a presentation of a paper to convince your Client to include this clause in an impending contract, discuss the advantages and disadvantages of the Arbitration Clause as against litigation. Inform your discussion with the aid of illustrations, examples or decided cases.


Documents

INSTITUTE OF DISTANCE LEARNINGdocshare01.docshare.tips/files/20549/205492049.pdf · Law of contract & arbitration institute of distance learning Course Author DICKSON OSEI-ASIBEY,