BUSINESS & CORPORATE LAW

THE LAWS OF GHANA

 Article 11(1) of the Constitution of the Republic of Ghana, 1992 enumerates the laws of
Ghana as:
 (a) this Constitution;
 (b) enactments made by or under the authority of the Parliament established by this
Constitution- Acts of Parliament since 1992
 (c) any Orders, Rules and Regulations made by any person or authority under a power
conferred by this Constitution-Delegated legislation
 (d) the existing law – laws in existence prior to the 1992 Constitution and
 (e) the common law- the common law, doctrines of equity and customary law.

STRUCTURE AND HIERARCHY OF THE COURTS

 Justice from the people and administered in the name of the Republic by the Judiciary
 Judiciary independent and subject only to the 1992 Constitution
 The judicial power of Ghana shall be vested in the Judiciary.

INDEPENDENCE OF THE JUDICIARY

 The Judiciary, in the exercise of the judicial power of Ghana, is subject only to the
Constitution and not to the control or direction of any person or authority.
 The President, Parliament or any person acting under the authority of the President or
Parliament or any other person whatsoever shall not interfere with Judges or judicial
officers or other persons exercising judicial power, in the exercise of their judicial
functions.
 Judicial Immunity - A Justice of a Superior Court, or any person exercising judicial
power, not be liable to any action or suit for any act or omission by him in the exercise of
the judicial power.
 The administrative expenses of the judiciary, including all salaries, allowances, gratuities
and pensions payable to or in respect of, persons serving in the judiciary, shall be charged
on the Consolidated Fund.
 Financial Security - The salary, allowances, privileges and rights in respect of leave of
absence, gratuity, pension and other conditions of service of a Justice of the superior
court or any judicial officer or other person exercising judicial power, shall not be varied
to his disadvantage.
 Funds voted by parliament, or charged on the Consolidated Fund by this Constitution for
the Judiciary, shall be released to the Judiciary, in quarterly instalments.
 Financial administration - operation of banking facilities by the Judiciary without the
interference of any person or authority, except for the purposes of audit by the Auditor-
General
 Security of Tenure – Mode of appointment and removal spelt out. Retiring age for
Superior Court Judges 65 to 70 years.
 Liability for contempt of court or interference with court decision making;

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 THE COURTS OF GHANA
 2 Groups - The Superior Courts of Judicature and the Lower Courts

The Superior Courts of Judicature –

 The Supreme Court,
 the Court of Appeal
 the High Court or Regional Tribunal.

The Lower Courts –

 the Circuit Court,
 the District Court,
 the National House of Chiefs,
 the Regional Houses of Chiefs
 every Traditional Council in respect of the jurisdiction of any such House or Council to
adjudicate over any cause or matter affecting chieftaincy and
 such other lower courts as Parliament may by law establish.

 The qualification for appointment as a Judge of all the Courts in Ghana is high moral
character, proven integrity. In addition there is a number of years standing for each of the
 Courts.
 For the Supreme Court it is and not less than fifteen years standing as a lawyer. It
 Not less than twelve years for the Court of Appeal
 Not less than ten years for the High Court and Regional Tribunal.
 Not less than five years for the Circuit Court and
 Not less than three years standing as a lawyer for the District Court.

Supreme Court -
 The highest court of Ghana.
 Chief Justice and not less than nine other Justices of the Supreme Court.
 It is duly constituted for its work by not less than five Justices of the Supreme Court and
for the purpose of reviewing its own decision by not less than seven Justices of the Court.
 The Supreme Court has original, appellate, supervisory, review and special jurisdiction.

Court of Appeal -
 It has only appellate jurisdiction and no original jurisdiction.
 The Court of Appeal consists of the Chief Justice and not less than ten Justices of the
Court of Appeal.
 The Court of Appeal is duly constituted by any three of its Judges.

High Court –
 Chief Justice and not less than twenty Justices of the High Court
 The High Court has jurisdiction in all matters and in particular in civil and criminal
matters and such original, appellate and other jurisdiction conferred on it by the
Constitution or any other law.

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 In addition the High Court has jurisdiction to enforce the fundamental human rights and
freedoms guaranteed by the Constitution.

Regional Tribunal -
 A Regional Tribunal consists of the Chief Justice, one Chairman and such members who
may not be lawyers as shall be designated by the Chief Justice to sit as panel members.
 A Regional Tribunal has concurrent original jurisdiction with the High Court in all
criminal matters.
 It shall in particular try the special offences of causing loss, damage or injury to public
property; import of explosives and using public office for profit.
 Any other offence involving serious economic fraud and loss of state funds or property.
 A Regional Tribunal shall have appellate jurisdiction to hear and determine appeals from
the judgment or order of a Circuit Court or District Court in any criminal trial.

Circuit Court -
 The civil jurisdiction of a Circuit Court consists of original jurisdiction in civil matters in
personal actions arising under contract or tort where the amount involved is not more
than ten thousand Ghana cedis.
 A Circuit Court has original jurisdiction in all criminal matters other than treason,
offences triable on indictment and offences punishable by death.

District Court -
 The District Court has jurisdiction in personal actions arising under contract or tort for
the recovery of any liquidated sum where the amount claimed does not exceed five
thousand Ghana cedis.
 In criminal matters a District Court has jurisdiction to try summarily an offence
punishable by a fine not exceeding 500 penalty units or imprisonment for a term not
exceeding 2 years or both

HUMAN RIGHTS
 Human rights are claims or entitlements by virtue of being human beings.
 They are the birth right of all human beings
 They are inherent and inalienable
 Human rights define man’s humanity.
 Realization of human personality on three factors:
 The security of his or her person, His or her dignity and His or her development

 Universal declaration of human rights under the auspices of the United Nations on 10th
December 1948
 The Office of the United Nations High Commissioner for Human Rights (OHCHR)
 There are nine core international human rights treaties which set international standards
for the protection and promotion of human rights to which States can subscribe by
becoming a party.

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  International Convention on the Elimination of All Forms of Racial
Discrimination (1965)
 International Covenant on Economic, Social and Cultural Rights (1966)
 International Covenant on Civil and Political Rights (1966)
 Convention on the Elimination of All Forms of Discrimination against Women (1979)
 Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or
Punishment (1984)
 Convention on the Rights of the Child (1989)
 International Convention on the Protection of the Rights of All Migrant Workers and
Members of their Families (1990)
 Convention on the Rights of Persons with Disabilities (2006)
 International Convention for the Protection of All Persons from Enforced Disappearance
(2006)
 There are Committees to monitor each one of them.
 The African Charter of Human and Peoples' Rights was adopted in 1981.
 Part 1 is on Rights and Duties
 Chapter 1 is Human and Peoples' Rights and covers 26 Articles.
 Chapter 2 is on duties.
 In Ghana, there is Constitutional Guarantee of Fundamental Human Rights and Freedoms
in Chapter 5, Articles 12 -33 of the 1992 Constitution.
 Article 12(1) states that the fundamental human rights and freedoms enshrined in this
Chapter shall be respected and upheld by the Executive, Legislature and Judiciary and all
other organs of government and its agencies and where applicable to them, all natural and
legal persons in Ghana and shall be enforceable by the courts as provided for in this
Constitution.
 The basic human rights discussed in the 1992 Constitution are
 Article 13, Right to Life;
 Article 14, Personal Liberty;
 Article 15, Respect for Human Dignity;
 Article 16, Protection from Slavery and Forced Labour;
 Article 17, Equality and Freedom from Discrimination;
 Article 18, Protection of Privacy of the Home and Other Property;
 Article 19, Fair Trial; and
 Article 20, Protection of Deprivation of Property.

Other rights highlighted in the Constitution:

 The property rights of spouses in Article 22.
 Economic rights under Article 24
 Educational rights are under Article 25
 Cultural Rights and Practices are under Article 26
 Women’s rights are under Article 27
 Children’s rights are under Article 28.
 The rights of the disabled person are under Article 29
 The rights of the sick is under Article 30

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Article 21 spells out the general fundamental freedoms.
 All persons shall have the right to freedom of speech and expression which shall include
freedom of the press and other media.
 freedom of thought, conscience and belief which shall include academic freedom;
 freedom to practise any religion and to manifest such practice;
 freedom of assembly including freedom to take part in processions and demonstrations;
 freedom of association include freedom to form or join trade unions or other associations,
national or international, for the protection of their interest; information, subject to such
qualifications and laws as are necessary in a democratic society;
 freedom of movement which means the right to move freely in Ghana, the right to leave
and to enter Ghana and immunity from expulsion from Ghana.
 A restriction on a person's freedom of movement by his lawful detention and restrictions
or detentions under emergency powers exercised by the President under Article 32 are
not inconsistent with or in contravention of this article.

Human Rights violations

 Domestic violence and workplace violations
 Domestic violence may be threat or harm, or physical, sexual, economic or emotional
abuse.
 It includes sexual harassment and any behaviour or conduct that endangers or undermines
a person’s safety, integrity, dignity etc.
 Specific acts, threats to commit, acts likely to result in physical abuse, sexual abuse,
economic abuse and emotional, verbal or psychological abuse.
 A person who engages in domestic violence commits an offence and is liable on
summary conviction to a fine of not more than 500 penalty units or to a term of
imprisonment of not more than two years or to both.
 In addition to imposing a fine or prison term the court may order the offender to pay
compensation it may determine to the victim.
 In the workplace some of the human rights issues relate to the right to life, respect for
human dignity, freedom of speech and expression and freedom of association.
 Economic rights in terms of the right to work under satisfactory, safe and healthy
conditions and equal pay for equal work together with the assurance for rest, leisure and
reasonable limitation of working hours and periods for holidays are of special
importance.

Reducing or eradicating violations

 One way of reducing or eradicating human rights violations is education.
 Continuous education is indeed a prerequisite.
 Resort to the Commission on Human Rights and Administrative Justice or the courts to
seek redress.
 Under Article 23, Administrative bodies and administrative officials shall act fairly and
reasonably and comply with the requirements imposed on them by law and persons
aggrieved by the exercise of such acts and decisions shall have the right to seek redress
before a court or other tribunal.

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  Under Article 33, where a person alleges that a provision of this Constitution on the
fundamental human rights and freedoms has been, or is being or likely to be contravened
in relation to him, then, without prejudice to any other action that is lawfully available,
that person may apply to the High Court for redress.

DUTIES OF THE CITIZEN

 Article 41 spells out the duties of a citizen.

 It shall be the duty of every citizen to promote the prestige and good name of Ghana and
respect the symbols of the nation;
 to uphold and defend this Constitution and the law;
 to foster national unity and live in harmony with others;
 to respect the rights, freedoms and legitimate interests of others, and generally to refrain
from doing acts detrimental to the welfare of other persons.
 A citizen is to work conscientiously in his lawfully chosen occupation and to protect and
preserve public property and expose and combat misuse and waste of public funds and
property.
 He is to contribute to the well-being of the community where he lives and to defend
Ghana and render national service when necessary.
 A citizen is to co-operate with lawful agencies in the maintenance of law and order;
 to declare his income honestly to the appropriate and lawful agencies;
 to satisfy all tax obligations; and
 to protect and safeguard the environment.

THE LAW OF CONTRACT

 A contract is a promise or set of promises which the law will enforce.
 An agreement between or among parties.
 The bargain of the parties in fact as found in their language or by implication from other
circumstances including the course of dealing or usage of trade or course of performance.
 These agreements give rise to obligations which are enforced or recognised by law.

The essential elements of a valid contract are:

 Agreement (offer and acceptance)
 Intention to create legal relations
 Consideration
 Capacity
 Form and
 Legality.

Invitation to Treat
 It is an invitation to the recipient to make an offer.
 An invitation to treat is a preliminary communication.

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 It does not constitute an offer and is not capable of maturing into a contract upon
acceptance.
 It is an offer to negotiate, an offer to receive an offer or an offer to chaffer.
 Examples of invitations to treat are display of goods for sale, auctions and tenders.

Offer
 An expression of willingness to contract on certain terms made with the intention that it
shall become binding as soon as it is accepted by the person to whom it is addressed.
 A definite undertaking or promise made by one party with the intention that it shall
become binding on the party making it as soon as it is accepted by the party to whom it is
addressed.
 An offer may be made to an individual, or to a group of persons or to the world at large.
 It may be made expressly by words in a written or oral form or it may be implied from
the conduct of the offeror.

Termination of Offer
 Revocation by the offeror
 Rejection by the offeree
 Acceptance
 Lapse of time
 Death
 Offer subject to a terminating condition no power to accept after the occurrence of
that condition.
 Insanity, incapacity, insolvency and impossibility may stultify the power to make an
offer

Cross Offer, Counter offer and Request for information

 Two similar offers cross each other in a mail and cannot amount to a contract since
they are two independent offers none a reaction to the other.
 A counter offer - a reply by a party that he is willing to be bound on terms which
differ materially from those contained in the offer.
 A final rejection of original offer.
 Usually puts an end to the previous offer.
 A request for information - an enquiry for more details about the terms of an offer
 Does not introduce new terms and is not a counter offer and, therefore, does not
destroy the original offer.

Acceptance
 A final and unqualified expression of assent to the terms of an offer.
 It is an indication, express or implied by the offeree made whilst the offer remains
open and in the manner requested in that offer of the offeree’s willingness to be
bound unconditionally to a contract with the offeror on the terms stated in the offer.
 Acceptance by a return promise communicated to the offeror before it will amount to
a binding acceptance giving rise to a bilateral contract.

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 Acceptance by an act not a promise and its performance is said to make a unilateral
contract.
 An acceptance is deemed not communicated until it is actually brought to the notice
of the offeror.
 Acceptance by post is regulated by the postal rule.
 The postal rule is that, where an acceptance is communicated by letter sent through
the post, the acceptance is complete and takes effect at the time when the letter of
acceptance, properly addressed, is posted.

Intention to create legal relations

 An agreement will not be enforced unless there is an intention to create legal
relations.
 If the parties indicate expressly or impliedly that they do not wish their agreement to
be binding on them, the law will accept and respect their intention.
 In commercial or business agreements there is a presumption of intention to create
legal relations.
 In family, domestic or social agreements there is a presumption notwithstanding the
presence of consideration that the parties do not intend to create legal relations in the
arrangements made between them.
 Both presumptions are rebuttable.

Consideration
 Something of value in the eyes of the law must be given for a promise in order to
make it enforceable as a contract.
 It is the price which need not be monetary paid by each party for the promise of the
other.
 “A valuable consideration, in the sense of the law, may consist either in some right,
interest, profit or benefit accruing to the one party or some forbearance, detriment,
loss or responsibility, given, suffered or undertaken by the other.” Lush J in Currie v
Misa, (1875) LR 10 Ex 153
 Consideration may be executory, executed and past.
 Executory consideration consists of a promise to do or forbear from doing some act in
the future.
 Executed consideration arises in unilateral contracts, which are formed by the
exchange of a promise for the actual performance of an act.
 Past consideration is something done by the promisee before the promise was made.
 The promise is subsequent to and independent of the act and therefore the promise
and the act do not constitute one and the same transaction.

Common law principles of consideration

 Consideration need not be adequate but it must be sufficient.
 A promise to keep an offer open for acceptance for a specified period of time is
binding on the promisor only when it is supported by consideration.
 A person who promises to do what in law he is already bound to do does not furnish
any consideration.

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 If a person promises an act in excess of his duty under the law it will constitute
consideration.
 A promise to waive or forgo a debt or part payment of a debt is not binding on the
promisor unless there is some fresh consideration flowing from the promisee.
(Pinnel’s case).
 Consideration must move from the promisee.

Consideration under the Contracts Act

 A promise to keep an offer open for acceptance for a specified time shall be valid
even in the absence of any consideration.
 A promise to waive the payment of a debt or part of a debt shall be valid even in the
absence of any consideration.
 A promise to forgo the performance of some other contractual or legal obligation
shall be valid in the absence of any consideration
 The performance of an act or the promise to perform an act may be a sufficient
consideration for another promise notwithstanding that the performance of that act
may already be enjoined by some legal duty, whether enforceable by the other party
or not.
 Consideration need not move from the promisee.
 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.
 A contract or other transaction entered into on behalf of a corporation may be made,
varied or discharged by the corporation's duly authorized representative.

Privity of contract
 The doctrine of privity of contract stipulates that only persons who are parties to a
contract are entitled to take action to enforce it.
 A contract cannot confer rights or impose obligations on strangers to it, i.e. persons
who are not parties to it.
 A provision in a contract which confers a benefit on a person who is not a party to the
contract may be enforced or relied upon by that person as though he were a party to
the contract.
 Many exceptions at common law in terms of the Trust Device, Land, Agency,
Assignment and Insurance.

 Where a person who is not a party to a contract is entitled to enforce or rely on a

provision in the contract, and he has done so, no variation or rescission of the contract
can be made, unless he consents to the variation or rescission; and any party against
whom the provision is sought to be enforced or relied on shall be entitled to rely on or
to plead by way of defence, set-off, counterclaim or otherwise any matter relating to
the contract which he could have so relied on or pleaded if the provision were sought
to be enforced or relied upon by the other party to the contract.
 The third party has enforceable rights and can benefit from a contract when the third
party must have been within the contemplation of the parties to the contract.

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 Capacity to contract
 It means the parties must be legally competent to enter into a contract.
 A valid contract may be made by any person recognised by law as having legal
personality.
 Those incompetent to contract or with limited competence.
 Bankrupts, minors, persons of unsound mind, alien enemies, drunkards, corporations,
companies, partnerships, and receivers of companies.

Contracts that bind Minors

 Contracts can be enforced against minors where they relate to
 Contracts for necessaries –food, clothing necessary for station in life and necessary to
requirements at the time of delivery.
 Beneficial contracts of service – training and education
 Voidable contracts of a permanent nature - leases, purchase of shares and land.

Form of Contract

 The general common law rule is that a contract may be in any form whatsoever.
 Therefore most contracts are valid whether they are made orally, in writing or even
by conduct.
 In some cases certain formalities like writing must be observed.
 A contract in a deed is a contract which is in writing.
 The document must make it clear on the face of it that it is intended to be a deed by
the person making it.
 The person making it must sign in the presence of someone who attests to his
signature.
 Simple contracts include contracts which require a writing either for their validity or
as evidence and oral contracts which can be made by word of mouth.
 Examples of contracts in writing are contracts of guarantee, bills of exchange,
contracts for the conveyance of land etc.

Unlawful Contracts
 An agreement which is illegal or contrary to public policy.
 A contract will be illegal where it involves some kind of moral wrongdoing
 A court may object to an agreement either because of a rule of common law or
because it is contrary to statute.
 Contracts illegal at common law include the following:
 a contract to commit a crime,
 a tort or fraud on a third party;
 a contract that is sexually immoral;
 a contract to the prejudice of public safety;
 a contract prejudicial to the administration of justice;
 a contract that tends to corruption in public life and
 a contract to defraud the revenue.

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Representation
 A representation is a statement which induces a contract but does not form part of it

Term
 A term is a promise or undertaking that is part of the contract itself.
 The terms of a contract are its very essence.
 They define or determine the extent or scope of each party’s rights and obligations
and the remedies available if the terms are broken.
 The various statements, promises, assurances, undertakings, etc. which form part of
the contract.
 Contracts are express to the extent that their terms are set out distinctly either by
mouth or in writing.
 The terms which the parties themselves state are to be in the contract are express
terms.
 Express terms may be written or oral or partly written and partly oral.
o Contracts are implied to the extent to which their terms are a necessary
inference from the words or conduct of the parties.
 They are other terms imported into the contract.
 Terms may be implied by the courts, by custom and by statute.

Parol Evidence Rule

 The Parol Evidence Rule is that where a contract is recorded in a deed or written
document, then extrinsic or extraneous or parol evidence cannot be admitted to add
to, vary, subtract from or contradict the terms of the written agreement.
 The parol evidence rule does not apply where the written contract does not agree with
the subject of an antecedent expressed accord between the two parties.
 It calls for rectification.
 The written agreement is not the whole agreement.
 Evidence of matters outside the writing can be given to show some invalidating cause
such as misrepresentation, mistake, incapacity or absence of consideration.
 The evidence may be admitted to prove a custom or trade usage
 It may be admitted to show that even though on the face of the document it purports
to record a valid and immediately enforceable contract the parties have previously
agreed to suspend its operation until the occurrence of some event such as the
approval of a third party.
 It may be admissible to show the evidence of a collateral contract.
 Where the contract is silent on a matter on which a term is normally implied by law,
parol evidence may be used to support or rebut the usual implication.

Conditions and Warranties

 A condition is a fundamental term which goes to the root of the contract.
 Its breach will entitle the injured party to treat himself as discharged from the contract
as well as giving himself the right to sue for damages.

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 The injured party is entitled to treat the contract as repudiated and terminate
performance of the contract and claim damages for the termination or to affirm the
contract and claim damages for the breach.
 A warranty is used to denote a contractual term of lesser importance the breach of
which gives the injured party the right to claim damages only and not to treat himself
or herself as discharged from the contract.

Innominate Terms
 Terms which cannot be pre-classified either as conditions or warranties.
 It is the consequences of the breach that matter.
 Innominate or intermediate terms combine the nature of a condition and a warranty in
so far as in some events the breach of such undertaking may entitle the innocent party
to rescind the contract and in other events the breach entitles him only to claim
damages but does not entitle him to rescind the contract.
 These terms produce in some events the effect of a broken condition and in others
that of a broken warranty.

Exemption or Exclusion Clauses

 They are terms of the contract which attempt to exclude or restrict one party’s
liability which he would otherwise owe to the other.
 In order to be valid the exclusion clause must pass two separate tests namely the
common law test and the statutory tests.
 Under the common law it must be shown that the exemption clause was a term of the
contract. The clause must be clear and precise.
 It must be shown that the party who is to be bound by the clause did in fact agree to
it.
 It becomes a term of the contract:
 By signature I
 By notice
 Previous course of dealing

The Contra Proferentem Rule

 In the inclusion of an exemption clause in a contract, any vagueness will be construed
against the party who is attempting to rely on it.
 If there is any doubt as to the meaning and scope of the clause the ambiguity will be
resolved by interpreting the clause in a manner restricting the interests of the party
who inserted it into the contract and who is now seeking to rely on it as a protection
against his legal liability.

Vitiating Factors
 Mistakes
 Misrepresentation
 Undue influence
 Duress

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Mistakes
 Three types of mistakes namely common mistake, mutual mistake and unilateral
mistake.
 In common mistake both parties share the same error about the circumstances
surrounding the transaction.
 In mutual mistake, the parties misunderstand each other and are fundamentally at
cross-purposes.
 Unilateral mistake occurs where only one of the parties to the agreement is mistaken
as to the circumstances of the contract and the other party is aware of that fact.
 Rectification and Non est factum are two ways of dealing with mistakes in documents
 Rectification is an equitable doctrine which allows documents to be altered where
they do not reflect the actual intentions of the parties.
 Non est factum means ‘it is not my deed’.
 Three elements must be present if the contract is to be avoided: the signature must
have been induced by fraud, the document signed must be fundamentally different
from that thought to be signed and the person signing the document must not have
been careless.

Misrepresentation
 Three types of misrepresentation namely fraudulent, negligent and innocent.
 In fraudulent misrepresentation the statement must be “made (1) knowingly, or (2)
without belief in its truth or (3) recklessly, careless whether it be true or false.”
 A misrepresentation is negligent if it is made carelessly and in breach of a duty owed
by the representor to the representee to take reasonable care that the representation is
accurate.
 In negligent misrepresentation the false statement is made in the belief that it is true,
but without reasonable grounds for that belief.
 Innocent misrepresentation occurs where the false statement is made by a person who
not only believes it to be true, but also has reasonable grounds for that belief.

Undue Influence
 Where there is a special relationship between the parties, and an agreement has been
obtained by certain kinds of improper pressure, there is a presumption that the
transaction is the consequence of undue influence.
 Examples of such special relationships are parent and minor child, guardian and ward,
religious leader and follower, doctor and patient and solicitor and client.
 The effect of undue influence is to make a contract voidable, but delay may bar the
right to avoid the agreement.

Duress
 Duress is some element of force used to override a party’s freedom to choose whether
or not to enter into a particular contract.
 Duress renders a contract voidable at the instance of the innocent party.

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Discharge of Contracts
 Contracts are discharged through Performance, Agreement, Breach and Frustration

Performance
 Complete and exact performance of the obligations in the contract.
 Substantial performance
 Acceptance of partial performance
 Divisible Contracts
 Prevention by the promise
 Tender of performance
 Time of performance

Agreement
 Release
 New agreement
 Accord and satisfaction
 Provision for discharge contained in the contract itself.

Breach
 Anticipatory breach
 Non performance
 Performance in a defective manner

Frustration
 Frustration occurs where after the parties have made the contract it is established that
due to subsequent change in circumstances the contract is rendered impossible to
perform or it has become commercially sterile.
 An event occurs which was outside the contemplation of the parties
 The contract if performed would thereby be made a different contract from that
entered into
 The event is one for which neither party was responsible.
 Where destruction of the subject matter of the contract has occurred
 Government interference
 Supervening illegality
 Personal incapacity - in the case of a contract of personal service where the party dies
or becomes otherwise incapacitated.
 Delay
 A particular event which is the sole reason for the contract fails to take place.
 Where the commercial purpose of the contract is defeated
 Where a contract has become impossible of performance or been frustrated
 The parties would have been discharged from the further performance of the contract
 All sums paid before the discharge shall be recoverable.
 All sums payable cease to be so payable.
 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

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 retain out of any sum received by him under the contract, such amount (if any), not
exceeding 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.
 In estimating the amount of any expenses incurred by any party to the contract, the
Court may, without prejudice to the generality of those provisions, include such sums
as appear
 If a part of any contract can properly be severed from the remainder of the contract,
being a part wholly performed before the time of discharge shall treat that part of the
contract as if it were a separate contract and had not been frustrated and shall treat
only the remainder of that contract as frustrated.
 Provision for frustration in the contract shall operate.

Remedies for Breach of Contract

 Rescission
 Restitution
 Damages
 Specific Performance
 Quantum meruit
 Injunction.

Rescission
 Rescission can mean the order of a court cancelling a contract and can also mean the
party’s act of cancellation without going to court or before going to court.
 An action to undo the contract.

Restitution
 A giving back and taking back on both sides.
 The principle is to put the parties back into their former positions as though the contract
had never been made.

Damages
 Damages is the monetary compensation for breach of contract.
 Damages are the primary or common law remedy or relief for breach of contract.
 The purpose of damage is to compensate the injured party rather than to punish the wrong
doer.
 The injured party is to be placed in the same financial position as if the contract had been
performed.
 Damages may be calculated based on expectation loss or reliance loss.
 Damages to which parties to a contract agree in advance if the contract is breached.
 Damage – a genuine pre-estimate.
 Penalty – intention of compelling performance.
 Penalty if extravagant and unconscionable.

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 Damages are unliquidated when they are not assessed by agreement of the parties and a
party seeks to recover such an amount as the court may hold is the proper measure of
damages.

Specific Performance
 Through an order for specific performance, the party in breach may be instructed to
complete their part of the contract.
 Specific performance is an equitable remedy which the court grants at its discretion.
 An order of specific performance will only be granted in cases where the common law
remedy of damages is inadequate.
 Specific performance will be granted based on mutuality, it will not be ordered where
there is lack of it.
 The remedy will be available to a plaintiff only if it could be awarded against him.
 It will generally not be granted to a minor since the remedy does not lie against a minor.
 Specific performance will not be granted if it would be impossible for the defendant to
comply with the order - an order in a contract for the sale of land by a vendor who does
not own land.
 Specific performance will be granted based on the conduct of the claimant.
 It will generally be refused if the plaintiff has acted unfairly or dishonestly.

Quantum Meruit
 This means that a party should be awarded as much as he had earned.
 It is thus a claim for remuneration as much as the claimant deserves.
 Payment may also be claimed on the basis of quantum meruit where a party has carried

Injunction
 An order of the court to a party to a contract to do or refrain from doing a specified act.
 It restrains the commission or continuance of some wrongful act.
 An injunction may be prohibitory or mandatory.
 In terms of the period of operation, an injunction may be interlocutory or interim and
perpetual or permanent.
 This is also an equitable order of the court which directs a person not to break their
contract.
 It is only granted if in all the circumstances it is just and equitable to do so.
 An injunction will only be granted to enforce negative covenants within the agreement
and cannot be used to enforce positive obligations.

AGENCY
 Agency deals with the relationship that arises when one person is used by another to
perform certain tasks on his behalf.
 The relation arises wherever one person called the agent has authority to act on behalf of
another called the principal and consents so to act.
 ‘Qui facit per alium, facit per se’, i.e. the one who acts through another, acts in his or her
own interests. "He who does an act through another is deemed in law to do it himself."

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 The three features of agency are service, representation and power to affect the legal
position of the principal.
 He can acquire rights for his principal and subject his principal to liabilities.

Types of Agents
 General and Special Agents
 Professional agents specialised in particular business, trade or profession.
 Examples are mercantile agents and solicitors.
 Mercantile agents - factors, brokers, auctioneers and del credere agents

Creation of Agency
 Agency may arise by consent, operation of law or ratification

Consent
 Expressly by contract or implied from a contractual relationship.
Express Agency
 The agent’s authority is created normally by contract.
 The principal or some person authorised by him expressly appoints the agent whether by
deed, by writing under hand or orally.
 Creation may be by a power of attorney – the instrument which confers the agency.
Implied Agency.
 Agency arises by implication.
 Parties have conducted themselves towards each other in such a way that they can
reasonably be taken as having agreed or consented to the relationship.
 Apparent authority or ostensible authority
 Apparent authority is a form of estoppel.
 proof of a representation
 reliance on the representation and
 an alteration of one’s position due to such reliance.

Authority of Agents
 The authority of an agent is the act(s) and thing(s) which he is permitted or is
authorised to do by his principal, and which will bind the principal.
 The principal will be bound by an act only if that act is within the authority of the agent
to do on the principal's behalf.
 The different types of authority, some express, some implied are:
 Actual authority
 Usual authority
 Customary authority
 Apparent or ostensible authority.
 Incidental authority
 Presumed authority

Agency by operation of law

 No prior agreement between the parties to create an agency and no such representation.

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 Imposition of the consequences of agency on their actions.
 Agency of necessity
 Agency of co-habitation

Agency of Necessity
 There must be an existing contract.
 Impossibility to communicate with the owners to take instructions.
 Acting in good faith.
 Existence of a real emergency.
 The act must be done for the benefit of the owner and not merely for the convenience of
the agent.

Agency of Cohabitation
 At common law married couple cohabiting, presumption of wife having the
husband’s authority to pledge his credit for necessaries.
 The requirements for such agency are cohabitation and domestic establishment.
 Goods or services ordered must be necessaries suitable to the style and standard of
living of the couple, otherwise the husband will not be liable to pay.
 Evidence of adequate provision by him he will not be liable.
 Wife already sufficiently supplied with goods of the kind in question or wife
supplied with a sufficient allowance or sufficient means for the purpose of buying
such goods without pledging the husband’s credit.
 Where the order, though for necessaries, was excessive in extent or, having regard to
the husband’s income, extravagant then the husband shall not be liable.
 No liability if he expressly forbade his wife to pledge his credit or he expressly
warned the supplier not to supply his wife with goods on credit.
 If the husband has been in the habit of paying his wife’s bills with a particular
supplier, his wife’s agency will be presumed and he can only escape liability by
expressly informing the supplier that his wife’s authority is revoked.

Agency by Ratification
 A person acts without authorization but the person on whose behalf the act was
purported to have been carried out subsequently adopts the act.
 It is a retrospective constitution of agency.
 The agent in fact, has no authority to do what he does at the time he does it and the
principal on whose behalf and without whose authority the agent has acted,
subsequently accepts the agent’s act and adopts it just as if there had been a prior
authorization by the principal to do exactly what the agent has done.

 The agent whose act is sought to be ratified must have purported to act on behalf of
the principal.
 The contract can only be ratified by the principal who was named or ascertainable
when the contract was made.
 The agent must have a principal who was in actual existence at the time of the
contract.

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 The principal must have had contractual capacity at the date of the contract and have
it at the date of ratification.
 The contract itself must be valid not void.
 The principal must at the time of ratification have full knowledge of all the material
facts.
 The ratification must apply to the entire act of the agent.
 Finally the principal must ratify within the time set or within a reasonable time.
 The unauthorized act becomes valid and the authority to act is restored
retrospectively.

The duties of a principal

 Duty to pay the agent the commission or other remuneration agreed for his service.
 Duty to indemnify the agent for all acts lawfully done and liabilities legitimately
incurred in the performance of his service.

The duties of an agent

 comply with the contractual obligations: the duty of performance,
 loyalty or obedience,
 care and skill,
 non-delegation (delegatus non potest delagare)
 respect for the principal’s title,
 duty to account,
 not to permit a conflict of interest to arise: act in good faith
 not to disclose confidential information or documents entrusted to him by his
principal
 not to misuse confidential information,
 not to make a secret profit
 not to take a bribe.

Remedies of the principal

 action for damages,
 action for account
 payment of interest.
 The principal may recover any amount of secret profit from the agent.
 He may refuse to pay the agent his commission or other remuneration.
 The principal may refuse to indemnify the agent if he acts beyond his authority or
performs his duty negligently.
 The principal may dismiss the agent without notice.
 The principal may also repudiate the contract.

Remedies of the agent

 He can claim remuneration for services provided claim indemnity against all
liabilities incurred in the performance of his services.
 He can exercise a lien over property owned by the principal in respect of claims
against the principal.

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 He can renounce the agency.

Undisclosed Agency
 Once the principal remains undisclosed the agent may sue and be sued on the
contract.
 The agent can enforce the contract against the third party.
 The principal can intervene and enforce the contract against the third party.
 The agent’s right of action is lost when the principal decides to intervene.
 When the third party becomes aware that there is a principal he may act in a
manner as to indicate that he has elected to deal with the principal.
 He has a right of election as to whom to proceed against once the existence of the
principal is made known to him.
 The third party can choose to enforce the contract against the agent or the principal.
 Where the third party has settled with the agent in a situation of undisclosed principal,
such settlement may be a complete defence to the principal’s action to recover
payments due from the third party.
 Where the third party had a special reason to contract with the agent the principal
may be excluded from the contract.
 An undisclosed principal cannot ratify any contract made outside of the agent’s actual
authority.

Disclosed Agency
 An agent acting within the scope of his authority who contracts with a third party by
disclosing his agency establishes a direct contractual tie between the principal and the
third party.
 Where the agent indicates that he is acting as an agent, the general rule is that only the
principal and the third party exert any authority over the legal relations of the
principal and the third party.
 The principal and the third party can sue and be sued by each other.

Termination of agency
 An agency may be terminated by the act of the parties or by operation of law.

Act of the Parties

 The parties by agreement between them bring the agency to an end.
 Revocation by the principal by notice or summarily.
 Renunciation of the agency by the agent.

Operation of Law
 Expiration of the time agreed upon for the duration of the agency
 Completion or performance of the undertaking.
 Frustration of the contract or the happening of an event rendering the continuance of
the agency unlawful.
 Either party becomes incapable of continuing the contract by reason of death, insanity
or bankruptcy.

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 SALE OF GOODS
Goods
 Goods are movable property of every description, and
 includes growing crops or plants and other things attached to or forming part of the land
which are agreed to be severed before sale by or under the contract of sale.

A contract of sale of goods

 A contact of sale of goods is where the seller agrees to transfer the property in the goods
to the buyer for a consideration called the price.

Price
 This is the consideration for the sale.
 The price consists wholly or partly of money.
 Consideration must be money otherwise the contract is one of barter or exchange
 The price may be fixed by the contract or may be determined by the course of dealing
between the parties.
 In the absence of either of these the buyer must pay a reasonable price, the amount of
which is determined by the circumstances of each particular case.

Making a contract of sale of goods

 A contract of sale of goods may be made in writing
 or by word of mouth
 or partly in writing and partly by word of mouth,
 or may be implied from the conduct of the parties.

Main essence of a sale of goods transaction

 The main essence of the sale of goods is the transfer of property i.e. ownership in the
goods from the seller to the buyer.

A sale and an agreement to sell

 Where the property in the goods is transferred at the same time as the contract of sale is
concluded, the contract is called a sale.
 Where the property is to be transferred after the conclusion of the contract of sale the
contract is called an agreement to sell.

Types of goods in a sale of goods transaction

 Goods may be specific, ascertained, unascertained or future goods.
 Specific goods - goods identified and agreed upon before or at the time of the contract
 Ascertained goods - goods identified and agreed upon after the making of the contract.
 Unascertained goods - goods which have not been identified and agreed upon.
 Future goods - goods to be manufactured or acquired by the seller after the making of the
contract of sale. As a general rule future goods will be unascertained.

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Fundamental duties of the seller
 The fundamental obligation of the seller is to deliver those goods to the buyer.
 The fundamental obligation of the seller in a sale of unascertained goods, is to deliver
to the buyer goods substantially corresponding to the description or sample by which
they were sold.
 The seller in a contract for the sale of specific goods, implies a condition that the
goods are in existence at the time when the contract is made
 The seller in an agreement to sell implies a warranty that he will have a right to sell
the goods at the time when the property is to pass.

Delivery
 Delivery means the voluntary transfer of possession from one person to another.
 The delivery may consist of-
 physically handing over the goods
 handing over the means of controlling the goods
 transferring documents of title
 where the goods are in possession of a third party, on acknowledgement by the third
party that he is holding the goods on behalf of the buyer.

Fundamental obligations of the buyer

 The fundamental obligations of the buyer in a contract of sale are to pay the price
 and accept delivery of the goods.

Transfer of property and transfer of risk

 It is important to ascertain exactly when the property in goods passes from the seller
to the buyer because risk normally passes with ownership.
 Rules relating to the transfer of ownership depend on the type of goods.
 In a contract for the sale of unascertained goods no property in the goods is
transferred to the buyer unless and until the goods are ascertained.
 The property in goods passes under a contract of sale when the parties intend it to
pass - Section 26(1) of Act 137
 Unless a different intention appears the property in the goods passes under a contract
of sale when they are delivered to the buyer - Section 26(2) of Act 137
 Where goods are delivered to the buyer on approval then in the absence of a contrary
intention the property passes to the buyer when he signifies his approval or
acceptance to the seller or does any other act adopting the transaction.
 The property still passes if the buyer does not signify approval or acceptance to the
seller but retains the goods without giving notice of rejection on the expiration of a
fixed time or if no time is fixed on the expiration of a reasonable time.
 The risk in the goods in a contract of sale is transferred to the buyer when the parties
intend it to be transferred.
 In the absence of other intention, the goods are at the seller’s risk until the property in
them passes to the buyer after which the goods are at the risk of the buyer.

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 Where there is any loss, damage or deterioration due to a delay caused by either the
buyer or seller the party at fault will bear the risk.
 The duties or liabilities of either seller or buyer as a bailee of the goods of the other
party or any destruction or loss or deterioration of or damage to the goods which is
caused by the fault of either party are not affected by anything in this section.

The ‘nemo dat quod non habet rule’ and the exceptions
 The ‘nemo dat quod non habet’ rule means that a person cannot give what he or she has
not got.
 The buyer will be obliged to give the article up to the true owner generally without any
recompense from him.
 An innocent purchaser will be entitled to be recompensed to the extent that he spent
money improving the goods before he discovered they were not his.
 Where goods are sold by a person who is not the owner and who does not sell them
under the authority or with the consent of the owner the buyer acquires no better title
than the seller had.
 Exceptions are –
 Sale on a market overt
 Disposition by a mercantile agent in possession of the goods or its title with the consent
of the owner is a valid transfer.
 By estoppel if the true owner stands by and allows an innocent buyer to pay over money
to a third party, who professes to have the right to sell an article.
 Seller with a voidable title to goods and title not avoided at the time of the sale
 Authorized sale by the courts
 Seller in possession
 Buyer in possession.

Remedies of the unpaid seller

 Personal remedies against the buyer himself and real remedies against the goods.

Personal remedies
 Action for price
 Damages for non acceptance.

Real remedies
 Lien
 Stoppage in transit
 right of re sale
 recovery of possession of the goods.

Lien
 A lien is a right to retain possession of goods but not to resell them until the contract
price has been paid.
 It is available in any of the following circumstances:
 Where the seller has not agreed to deliver the goods before payment of the price;

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  where the goods have been sold on credit but the period of credit has expired and
 where the buyer has become insolvent.
 The seller will lose his right of lien if the price is paid or tendered or
 the buyer obtains possession of the goods.
 The seller cannot exercise this right if he has handed the goods to a carrier for
transportation to the buyer without reserving the right of disposal
 or where he has given up the right (waiver)

The remedies of the buyer

 The buyer is entitled to repudiate the contract and
 Reject the goods where the seller is in breach of a condition of the contract.
 The personal rights of the buyer include action for damages for breach of contract.
 It may be an action for damages for non-delivery or it may be an action for damages
for breach of a term in respect of goods which have been delivered.
 If the buyer has paid in advance and the goods are not delivered, he can recover the
amount paid because there has been a total failure of consideration.
 The buyer may sue for specific performance but only in cases where the goods are
specific or ascertained and where monetary damages would not be an adequate
remedy

HIRE PURCHASE
Hire purchase agreement
 Hire-purchase agreement" means an agreement for the bailment of goods under which
the bailee may buy the goods or under which the property in the goods will or may
pass to the bailee;
 and where by virtue of two or more agreements, none of which by itself constitutes a
hire-purchase agreement there is a bailment of goods and either the bailee may buy
the goods or the property in them will or may pass to the bailee the agreements shall
be treated for the purpose of this Decree as a single hire-purchase agreement made at
the time when the last of the agreements was made;

Requirements for a Hire purchase agreement

 The owner or seller in a hire-purchase agreement shall not be entitled to enforce the
agreement unless the agreement is in writing and signed by the hirer or buyer and by
or on behalf of all other parties to the agreement; and
 Before any agreement is made the seller or owner shall state orally and in writing to
the prospective buyer or hirer the price at which the goods may be purchased by him
for cash (cash price) and the hire-purchase price or total purchase price, as the case
may be.

Contents of the agreement

 Every agreement shall contain –
 a statement of the cash price and the hire-purchase price or total purchase price;

24
  the amount of each instalment by which the price is to be paid and the date or the mode
of determining the date upon which each instalment is payable;
 a description or list of the goods to which the agreement relates sufficient to identify
them;
 a notice on the right of the hirer to terminate the agreement and restriction on the
owner’s right to recover goods.
 A copy of the agreement shall be delivered or sent to the hirer or buyer within 14 days
after the making of the agreement.

The right of the hirer to terminate

 At any time before the final payment under a hire-purchase agreement the hirer shall be
entitled to terminate the agreement by giving written notice of termination to any
person entitled to receive payments under the agreement.
 The hirer may put an end to this agreement either by giving notice of termination in
writing to any person who is entitled to collect or receive the hire-rent or in accordance
with the terms of the agreement where they are more favourable to him.
 He must then pay any instalments which are in arrears at the time when he gives
notice. If, when he has paid those instalments, the total amount which he has paid
under the agreement is less than the minimum amount which the hirer is required to pay
he must also pay enough to make up that sum.
 If the hirer fails to take reasonable care of the goods he may be liable to compensate the
owner for any loss or damage caused by such failure.

The restriction of the owner’s right to recover goods

 After the goods have become protected, unless the hirer has himself put an end to the
agreement, the owner of the goods shall not be entitled to take them back from the hirer
without a court order or the consent of the hirer.
 If the owner applies to the court for such an order, the court may, if the court thinks it
just to do so, allow the hirer to keep either the whole of the goods, on condition that the
hirer pays the balance of the price in the manner ordered by the court;
 Or a fair proportion of the goods having regard to what the hirer has already paid.

Provisions to be avoided
 Any provision in a hire-purchase or conditional sale agreement shall be void if it
authorizes an owner or seller or any person acting on his behalf to enter upon any
private land or premises for the purpose of taking possession of goods which have been
let under the agreement or is relieved from liability for such an entry;
 Or excludes or restricts the hirer’s right to terminate the hire-purchase agreement, or
any liability beyond that imposed on a hirer by reason of the termination of the hire-
purchase agreement by him
 Or a hirer, after the termination of the hire-purchase agreement or the bailment in any
manner whatsoever, is subject to a liability which exceeds the liability to which he
would have been subject if the agreement had been terminated by him under this
Decree; or
 any person acting on behalf of an owner or seller in connection with a hire-purchase or
conditional sale agreement is treated as or deemed to be the agent of the hirer or buyer;
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 or an owner or seller is relieved from liability for the acts or defaults of any person
acting on his behalf in connection with a hire-purchase or conditional sale agreement

The liabilities of the hirer after notice of termination

 The hirer on such termination is, without prejudice to any liability which has accrued
before the termination, liable to pay the difference between the total of the sums paid
and one half of the hire-purchase or total purchase price, or if the agreement specifies a
lesser amount, he shall be liable to pay the amount so specified.
 On such termination the hirer or buyer shall return the goods at his own expense to the
premises from which they were originally supplied to him or to such other place as the
owner or seller may direct, provided that the owner or seller shall at his own expense
provide for any additional expense incurred in returning the goods to premises other
than those from which they were originally supplied.
 Where an agreement has been so terminated the hirer or buyer, if he has failed to take
reasonable care of the goods shall be liable to compensate the owner or seller for any
loss or damage caused by such failure.
 Where a hirer or buyer, having so terminated an agreement, wrongfully retains
possession of the goods, then, in any action brought by the owner or seller to recover
possession of the goods from the hirer or buyer the court, unless it is satisfied that
having regard to the circumstances it would not be just and equitable to do so, shall
order the goods to be delivered to the owner or seller without giving the hirer or buyer
an option to pay for the goods.

How may the hirer complete the agreement?

 The hirer under a hire-purchase agreement or the buyer under a conditional sale
agreement may give notice in writing to the owner or seller of his intention to complete
the purchase of the goods by paying or tendering to the owner or seller on a specified
day the net balance due under the agreement, and having given such notice may
complete the purchase accordingly on the day specified.
 The net balance due is the hire-purchase price or the total purchase price, as the case
may be, originally payable under the agreement less any amounts paid or provided,
whether by cash or by other consideration, by or on behalf of the hirer or buyer under
the agreement.
 The rights conferred on the hirer or buyer by this section may be exercised by him at
any time during the continuance of the agreement; or within twenty-eight days after the
owner has taken possession of the goods (during which period the owner shall not be
entitled to dispose of the goods) upon paying or tendering to the owner in addition to
the net balance due the reasonable costs incurred by the owner in and incidental to
taking possession of the goods; and any amount properly expended by the owner on the
storage, repair or maintenance of the goods.

Protected goods
 Protected goods" are goods in relation to which the following conditions are fulfilled—
 that the goods have been let under a hire-purchase agreement or sold under a
conditional sale agreement;

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 that one-half of the hire-purchase price or total purchase price has been paid (whether
in pursuance of a judgment or otherwise) or tendered by or on behalf of the hirer or
buyer or a guarantor; and
 that the hirer or buyer has not terminated the hire-purchase agreement or conditional
sale agreement, or (in the case of a hire-purchase agreement) the bailment, by virtue of
any right vested in him.

The owner’s rightful recovery of protected goods

 The owner or seller shall not enforce any right to recover possession of protected goods
from the hirer or buyer otherwise than by action.
 Action includes every judicial proceeding instituted in any court in Ghana;
 Wrongful recovery and the consequences for it
 If the owner or seller wrongfully recovers possession of protected goods, the
agreement, if not previously terminated, shall be terminated, and
 the hirer or buyer shall be released from all liability under the agreement, and
 shall be entitled to recover from the owner or seller, in an action for money had and
received, all sums paid by the hirer or buyer and any security given by him in respect
thereof; and
 any guarantor shall be entitled to recover from the owner or seller, in an action for
money had and received, all sums paid by him under the contract of guarantee or under
any security given by him in that respect.
 The court may, however, upon application by the hirer or buyer, make an order for the
return of the goods to the hirer or buyer and for the re-scheduling of payments due
under the agreement.

Action for the recovery of protected goods.

 Where an owner or seller brings an action to recover possession of protected goods, the
following provisions shall apply:—
 pending the hearing of the action, the court may, upon its own motion or upon
application, make such orders as it thinks just for the purpose of protecting the goods
from damage or depreciation;
 on the hearing of the action, the court may without prejudice to any other power—
make an order for the specific delivery of all the goods to the owner or seller subject if
necessary to the condition that the owner or seller refunds to the hirer or buyer such
part of the sums paid as the court may direct; or
 make an order for the specific delivery of all the goods to the owner or seller and
postpone the operation of the order on condition that the hirer or buyer or any guarantor
pays the unpaid balance of the hire-purchase price or total purchase price at such times
and in such amounts as the court, having regard to the means of the hirer or buyer and
of any guarantor, thinks just, and subject to the fulfilment by the hirer or buyer or a
guarantor, of such other conditions as the court thinks just; or
 make an order for the specific delivery of a part of the goods to the owner or seller and
for the transfer to the hirer or buyer of the owner's or seller's title to the remainder of
the goods.

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  any reference to an order for the specific delivery of goods is a reference to an order for
the delivery of those goods without giving the hirer or buyer an option to pay their
value.
 the liability of the hirer or buyer to the owner or seller for harm done to the goods
intentionally or negligently is not affected.

NEGOTIABLE INSTRUMENTS

Negotiable instruments
 Negotiable Instruments are contracts in writing
 that are transferable
 by endorsement or
 by delivery and
 to which the holder takes title free from any defences or objections to their validity that
might have been good against the transferor.

A promissory note
 A promissory note is an unconditional promise in writing
 made by one person to another
 signed by the maker,
 engaging to pay,
 on demand or at a fixed or determinable future time,
 a sum certain in money,
 to, or to the order of, a specified person or to bearer.

A bill of exchange
 A bill of exchange is an unconditional order in writing,
 addressed by one person to another,
 signed by the person giving it,
 requiring the person to whom it is addressed
 to pay on demand or at a fixed or determinable future time
 a sum certain in money
 to or to the order of a specified person, or to bearer.
 A Cheque
 A cheque is a bill of exchange drawn on banker payable on demand
 The issuer of the cheque is the drawer who
 orders the bank at which he has an account referred to as the drawee to
 pay a named individual or entity or the bearer of the cheque, the payee
 a specified sum of money upon presentation of the cheque.

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  A general and special crossing

General Crossing
 Where a cheque bears across its face an addition of the words "and company" or any
abbreviation thereof between two parallel transverse lines, either with or without the
words "not negotiable"; or two parallel transverse lines simply, either with or without
the words "not negotiable,"that addition constitutes a crossing, and the cheque is
crossed generally.

Special Crossing
 Where a cheque bears across its face an addition of the name of a banker, either with or
without the words "not negotiable," that addition constitutes a crossing, and the cheque
is crossed specially, and to that banker.

Privity and assignment in negotiable instruments

 A negotiable instrument is an exception to the doctrine of privity.
If Joyce sells goods to Maggie and Maggie gives Joyce a cheque for their value and Joyce
then endorses the cheque in favour of Grace who has supplied goods to Joyce and the
cheque is dishonoured, Grace may sue Maggie for the value of the cheque even though
Grace was not a party to the contract between Joyce and Maggie
 Crossing a cheque with the words ‘account payee only’ renders the cheque non-
negotiable.
The vast majority of cheques issued will not be negotiable instruments since it is the
general practice nowadays to issue cheques bearing such a crossing.
 The holder of a negotiable instrument can sue in his own name.
 A negotiable instrument is not transferred subject to equities.
 No notice of the transfer of a negotiable instrument need be given to the person who is
liable on the instrument.
 An assignee can acquire no better title to the assignment than his assignor.
 However this is not the case in respect of negotiable instruments.
 For example, if A draws a cheque in favour of B and the cheque is stolen by C and
negotiated to D who takes it in good faith and for value, without any notice of the defect
in C’s title, D will be entitled to the amount of the cheque.

Negotiability
 The negotiability of an instrument is its capability of being transferred.
 It is also known as its transferability.
 For an instrument to be negotiable it must
 Be in writing - hand-written, typed, or printed is considered to be in writing.
 It must be signed by the person undertaking to pay
 It must contain a promise to pay or it cannot be negotiable. “pay to the order of”
 The promise or order must be unconditional.
 The instrument must call for payment of a fixed amount of money. The principal sum
must be ascertainable from the face of the instrument.
 The order for payment must be payable in money.

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  The instrument must be payable on demand or at a definite time. A promise or order is
payable on demand if: it states that it is payable on demand or sight, or does not state
any time for payment but may be post-dated or ante dated.
 An instrument generally must be payable to bearer or to order.
The words “to order of” or “to bearer” show that the drawer of the draft or the maker of
the note intends to issue a negotiable instrument.

Endorsement and the types

 A valid endorsement must be written on the bill itself and signed by the endorser,
 it must be an endorsement of the entire bill and
 where it is payable to the order of two or more payees or endorsees who are not
partners all must endorse.
 An endorsement may be special, blank, restrictive or conditional.
 A special endorsement specifies the person to whom or to whose order the bill is to be
payable.
 An endorsement in blank specifies no endorsee and a bill so endorsed becomes payable
to bearer. Any holder may convert the blank endorsement into a special endorsement
by writing above the endorser’s signature a direction to pay the bill to, or to the order
of, himself or some other person.
 A restrictive endorsement prohibits the further negotiation of the bill or expresses that it
is a mere authority to deal with the bill as directed and not a transfer of property.
 Conditional Endorsement - Where a bill purports to be endorsed conditionally the
condition may be disregarded by the payer, and payment to the endorsee is valid
whether the condition has been fulfilled or not.

A holder
 A person is a holder if he is either
 a payee in possession,
 or an endorsee in possession or
 a person in possession of a bearer bill.

A holder for value

 A holder for value is a person in possession of a bill for which at any time value has
been given.
 He is a holder for value as regards all parties prior to himself.
 A holder in due course
 A holder in due course is a holder who is in possession of the instrument complete and
regular on the face of it
 before it was overdue for value and
 in good faith without notice of any defect in the title of his transferor and
 if it has been dishonoured then without notice of dishonour.

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 Evidence to show that a holder of a bill is not a holder in due course
 Every holder of a bill was to be deemed to be a holder in due course
 unless evidence was given to show that there was fraud,
 duress,
 or force and
 fear or
 illegality in the negotiation of the bill.

Termination of the Banker’s duty to pay his client

 The banker should not honour a cheque countermanded or stopped by the customer.
 Notice of the customer’s death. Payment to personal representatives only on the
authority of Probate or Letters of Administration.
 Notice of the customer’s mental disorder. The bank can deal with an appointed
Receiver.
 Notice of bankruptcy or receiving order.
 Service of a garnishee order. The service of a garnishee order stays the hand of the bank
from effecting payment out of the customer’s account. Payments will be effected from
it to the creditor on a court order to the bank obtained by the creditor.
 Forged and altered cheques. Forged and altered cheques are obviously not genuine and
cannot be honoured.

EMPLOYMENT
A contract of service and a contract for services
 An employee is employed under a contract of employment or contract of service whereas
an independent contractor is employed under a contract for services.

Rights that accrue to the parties

 Those employed to perform services in connection with the affairs of the employer, and
over whom the employer has control in the performance of those services have been in
law styled servants.
 In modern times they are called employees since the term servants has come to be
identified with domestic helps.
 Independent contractors are those who do work for another, but are not controlled by that
other in their conduct in the performance of that work.
 Such work is carried out in pursuance of a contract and the persons doing it are therefore
called independent contractors.
o If an employee commits a tort in the course of his employment, then the employer
is vicariously liable.
 An employee is not liable for the torts of an independent contractor.
 Again the rights and remedies provided by employment legislation like social security
contributions are available to the employee but not the independent contractor.

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The contents of a contract of employment
 A written statement of employment must contain:-
 the name of the employer and the name of the employee.
 The date of first appointment,
 the job title or grade of the employee,
 the rate, method and intervals of pay,
 the hours of work and the period of holidays and the details of holiday pay shall all be
included.
 The conditions relating to incapacity to work due to sickness or injury and the details of
sick pay if any must be indicated.
 The details of social security or pension scheme must be included.
 The amount of notice to terminate employment to be given by the employer and also by
the employee must be shown.
 The applicable disciplinary rules have to be stated.
 The procedure for dealing with any grievances or dispute must be included.
 In addition if there is any overtime payment it has to be indicated.

The rights and duties of employers

 The rights of an employer include the right to employ a worker, discipline, transfer,
promote and terminate the employment of the worker.
 The employer has the prerogative to formulate policies, execute plans and programmes
and to set targets.
 The right to modify, extend or cease operations and to determine the type of products to
make or sell and the prices of its goods and services are all vested in the employer.
 In any contract of employment or collective agreement, the duties of an employer include
the duty to provide work and appropriate raw materials, machinery, equipment and tools.
 For whatever position a worker is given he is to be given the appropriate work to enable
him or her put into use the requisite skills.
 The employer must fulfil his obligations of payments under the contract.
 He must therefore pay the agreed remuneration at the time and place agreed on in the
contract of employment or collective agreement or by custom without any deduction
except deduction permitted by law or agreed between the employer and the worker.
 The employer must 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.
 He must develop the human resources by way of training and retraining of the workers.
 Another duty is to provide and ensure the operation of an adequate procedure for the
discipline of the workers.
 He also has to furnish the worker with a copy of the worker’s contract of employment.
 An essential duty is to keep open the channels of communication with the workers.
 Protection of the interests of the workers is another important duty of the employer.

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 The rights and duties of the employee
 The rights of the worker include the right to work under satisfactory, safe and healthy
conditions.
 Receive equal pay for equal work without distinction of any kind.
 Have rest, leisure and reasonable limitation of working hours and period of holidays with
pay as well as remuneration for public holidays.
 The worker is entitled to form or join a trade union.
 He has the right to be trained and retrained for the development of his or her skills.
 He must in addition receive information relevant to his or her work.
 The duties of a worker in any contract of employment or collective agreement include the
duty to work conscientiously in the lawfully chosen occupation.
 He must report for work not only regularly but also punctually.
 A worker has a duty to enhance productivity.
 He has to exercise due care and skill in the execution of any assigned work.
 He must obey lawful instructions regarding the organisation and execution of his or her
work.
 A worker has to take all reasonable care for the safety and health of fellow workers and
to protect the interests of the employer.
 A worker therefore has to take proper care of the property of the employer entrusted to
him or under his immediate control.

The schemes for the settlement of labour disputes

 Negotiation
 Mediation
 Voluntary Arbitration and
 Compulsory Arbitration.

Negotiation
 Negotiation is a process by which parties to a dispute or their representatives discuss the
issues with the intention to settle or agree to settle the dispute without the intervention of
a third person.

Mediation
 Mediation is a process by which a neutral third person, a mediator, facilitates
communication between the parties to assist the parties to reach a mutually acceptable
settlement.
 Where the Commission is satisfied that the parties have exhausted the procedures
established in the collective agreement; the parties have failed to settle the dispute; and
none of the parties has sought the assistance of the Commission to appoint a mediator
 the Commission shall request the parties to settle the dispute by mediation.
 The settlement agreement shall be binding on all the parties.

Voluntary Arbitration
 Voluntary Arbitration is the process of voluntary submission of a dispute to one or more
neutral persons for a final and binding determination.

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  When mediation fails and the dispute is referred to the Commission, the Commission
shall with the consent of the parties refer the dispute to an arbitrator or an arbitration
panel.
 The arbitrator shall as soon as possible appoint a time and place for the hearing and notify
the parties.
 The decision of the arbitrator or a majority of the arbitrators shall constitute the award
and shall be binding on all the parties.
 The arbitrator shall communicate the award in writing to the parties and the Commission
within seventy-two hours after the award has been made except where the Commission is
the arbitrator.
 The voluntary arbitration process shall be concluded within fourteen working days after
the date of appointment of the arbitrator or arbitration panel or within the extra time
determined by the Commission.

Compulsory Arbitration
 If a dispute remains unresolved within seven working days after the commencement of a
strike or lockout, the dispute shall be settled by compulsory arbitration by the
Commission.
 Where a dispute is referred to the Commission in this way, the Commission shall serve
notice on the parties stating what in its opinion the unresolved issues are between the
parties and asking the parties whether they agree to those issues.
 The parties shall respond within three working days.
 A compulsory arbitration shall comprise three members of the Commission, one member
each representing Government, Organised Labour and Employers Organisation.
 A compulsory arbitration process shall be concluded within fourteen working days after
service of the notice.
 The award of the majority of the arbitrators in a compulsory arbitration shall be binding
on the parties.
 A compulsory arbitration award shall immediately on completion be published in the
Gazette and other State media by the Commission and copies shall be given to the parties
to the dispute.
 Appeals against a compulsory arbitration shall lie to the Court of Appeal on questions of
law only, within seven days after the publication of the award.

Summary Settlement of Dispute by the Commission

 After the receipt of a complaint and a response in accordance with the regulation, the
Commission may, after giving the parties to the dispute the right to be heard, settle the
dispute summarily without recourse to mediation or arbitration.
 Where a party to a dispute fails to respond to a complaint in accordance with the
regulation, the Commission may determine the complaint without recourse to that party
and the decision of the Commission shall be binding on the parties to the dispute.
 The Commission may re-open a dispute which has been determined summarily if a party
to the dispute on application within fourteen working days after the determination of the
case provides reasonable explanation for the failure to respond to the complaint.

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Strikes and Lock outs
 Where the parties fail to agree to refer a dispute to voluntary arbitration; or a dispute
remains unresolved at the end of the arbitration proceedings, either party intending to
take strike action or institute lockout, shall give written notice of this to the other party.
 The Commission shall, within seven days after the failure of the parties to agree to refer
the dispute to arbitration, terminate the arbitration proceedings.
 A party to an industrial dispute who has given notice of intention to resort to a strike or
lockout may do so only after the expiration of seven days from the date of the notice and
not at any time before the expiration of that period.
 Lockout means the closing of a workplace, the suspension of work by an employer or
refusal by an employer to employ or re-engage any number of his or her workers in
consequence of an industrial dispute.
 A strike is any action by two or more workers acting in concert which is intended by
them to restrict in any way the service they normally provide to the employer or diminish
the output of such service with a view to applying coercive pressure upon the employer
and includes sympathy strike and those activities commonly called a work-to-rule, a go
slow or a sit down strike.
 If the dispute remains unresolved within seven days from the commencement of the
strike or lockout, the dispute shall be settled by compulsory arbitration.
 A party to an industrial dispute shall not resort to a strike or lockout during the period
when negotiation, mediation or arbitration proceedings are in progress.

The requirements for the notice of termination of employment

 A contract of employment may be terminated at anytime by either party giving to the
other party, in the case of a contract of three years or more, one month’s notice or one
month’s pay in lieu of notice; in the case of a contract of less than three years, two
weeks’ notice or two weeks’ pay in lieu of notice; or in the case of contract from week
to week, seven days’ notice.
 A contract of employment determinable at will by either party may be terminated at the
close of any day without notice.
 A notice required to be given under this section shall be in writing.
 The day on which the notice is given shall be included in the period of the notice.
 Grounds for the fair termination of employment
 Mutual agreement between the employer and the worker;
 the worker on grounds of ill-treatment or sexual harassment;
 the employer on the death of the worker before the expiration of the period of
employment;
 the employer if the worker is found on medical examination to be unfit for employment;
 the employer because of the inability of the worker to carry out his or her work due to
sickness or accident or
 lacks the qualification in relation to the work for which the worker is employed or
 the incompetence of the worker or
 proven misconduct of the worker.
 Redundancy is a basis for fair termination.

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  Where due to legal restriction imposed on the worker prohibiting the worker from
performing the work for which he or she is employed he is terminated the termination is
fair.

Grounds for unfair termination of employment

 A worker’s employment shall not be unfairly terminated by his employer.
 A worker’s employment is terminated unfairly if the termination is due to his joining or
intention to join or ceasing to join or taking part in the activities of a trade union.
 where the grounds are that the worker seeks office as or is acting or has acted as a
workers’ representative.
 when the ground is that the worker has filed a complaint or participated in proceedings
against the employer for alleged violations.
 on grounds of the worker’s gender, race, colour, ethnicity, origin, religion, creed, social,
political or economic status is also unfair.
 in the case of a woman worker, may be due to the pregnancy of the worker or the
absence of the worker from work during maternity leave.
 In the case of a worker with a disability, if the termination is due to the worker’s
disability then it is unfair.
 Where the worker is temporarily ill or injured and has been certified by a recognised
medical practitioner.
 That the worker does not have the level of qualification now required for his work which
is different from the one required at the commencement of his employment.
 if it is based on the refusal or intention to refuse to work because the worker was taking
part in a lawful strike unless the work was necessary to prevent actual danger to life,
personal safety or health or the maintenance of plant and equipment.

Remedies for unfair termination

 A worker who claims that the employment of the worker has been unfairly terminated by
the worker’s employer may present a complaint to the National Labour Commission.
 If upon investigation of the complaint the Commission finds that the termination is
unfair, it may order the employer to re-instate the worker from the date of the termination
of employment.
 Alternatively it may order the employer to re-employ the worker either in the work for
which the worker was employed before the termination or in other reasonably suitable
work on the same terms and conditions enjoyed by the worker before the termination.
 It may also order the employer to pay compensation to the worker.

Redundancy
 Redundancy implies the severance of the legal relationship of worker and employer due
to the close down, arrangement or amalgamation and the worker becoming unemployed
or suffering a diminution in the terms and conditions of employment.

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The procedures for redundancy
 When an employer contemplates that the introduction of major changes in production,
programme, organisation, structure or technology of an undertaking are likely to entail
terminations of employment of workers in the undertaking, the employer will be
expected to provide in writing to the Chief Labour Officer and the trade union
concerned, not later than three months before the contemplated changes all relevant
information including the reasons for the termination, the number and categories of
workers likely to be affected and the period within which any terminations are to be
carried out.
 He is also to consult the trade union concerned on measures to be taken to avert or
minimize the termination as well as measures to mitigate the adverse effects of any
terminations on the workers concerned such as finding alternative employment.
 Payment to the worker by the undertaking at which he was immediately employed
before the close down, arrangement or amalgamation as a form of compensation is what
is known as redundancy pay.
 The amount of redundancy pay and the terms and conditions of payment are subject to
negotiations between the employer and the worker or their representatives.
 Any dispute that concerns the redundancy pay and the terms and conditions of payment
may be referred to the Commission by the aggrieved party for settlement.
 The decision of the Commission shall subject to any other law be final.

The functions and powers of the National Labour Commission

 The functions of the Commission are essentially to create a harmonious industrial
relations atmosphere.
 To facilitate the settlement of industrial disputes.
 To create an enabling environment for the parties to settle the dispute without
necessarily being the one settling the dispute.
 Actual settlement of the industrial disputes.
 Investigate labour related complaints, in particular unfair labour practices and take such
steps as it considers necessary to prevent labour disputes.
 To maintain a data base of qualified persons to serve as mediators and arbitrators.
 To promote effective labour co-operation between labour and management and to
perform any other function conferred on it under the Labour Act or any other enactment.
 In the exercise of its adjudicating and dispute settlement function, the Commission shall
not be subject to the control or direction of any person or authority.

 The powers that the Commission shall exercise include receiving complaints from
workers, trade unions, and employers, or employers’ organisations on industrial
disagreement; and allegation of infringement of any requirements of this Act and
Regulations made under this Act.
 The Commission shall require an employer to furnish information and statistics
concerning the employment of its workers and the terms and conditions of their
employment in a form and manner the Commission considers necessary; and require a

37
 trade union or any workers’ organisation to provide such information as the Commission
considers necessary.
 It shall notify employers and employers’ organisations or workers and trade unions in
cases of contravention of this Act and Regulations made under this Act and direct them
to rectify any default or irregularities.
 Without prejudice the Commission shall in settling industrial dispute, have the powers
of the High Court in respect of enforcing the attendance of witnesses and examining
them on oath, affirmation or otherwise; compelling the production of documents; and
the issue of a commission or request to examine witnesses abroad.
 The Commission shall in respect of its proceedings enjoy the same privileges and
immunities pertaining to proceedings in the High Court.
 Where any person fails or refuses to comply with a direction or an order issued by the
Commission under this act the Commission shall make an application to the High Court
for an order to compel that person to comply with the direction or order.

TORTS
Meaning of torts

 Tort is a branch of the civil law based on the claim that the defendant has caused injury
or loss to the claimant by breaking a relevant obligation imposed by the general law.
 Legally a tort is a civil wrong other than a breach of contract.
 They are actions which seek civil redress for injuries not arising out of contractual
relations
 Most torts involve injuries to persons or property.
 A tort is also a private civil wrong as distinct from a crime which is a public wrong
committed against society as a whole.
 A tort is prosecuted by the individual or entity that was wronged against the wrongdoer
or tortfeasor.
 One aim of tort law is to provide compensation for injuries.
 The goal of the compensation award or damages in tort is to restore, through the award
of money, the injured parties to their condition before the injury.
 Tort law is also an allocation of risks and losses between those who cause the harm and
those who must incur it.

The protectable interests under tort law

 Trespass to the person: Assault, battery and false imprisonment.
 Property interests: Personal property is protected by the torts of trespass to goods and
conversion. Real property is protected by a number of torts, including trespass to land,
nuisance and the rule in Rylands v Fletcher.
 Harm to Reputation: Reputation is protected by the tort of defamation.
 Economic or financial interests: The tort of deceit, torts of intentional intereference with
contractual relations, conspiracy to injure, or use of unlawful means intentionally to
injure another, intimidation and passing off one’s goods as those of the claimant
 Harm to the due process of law: Malicious prosecution
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Trespass to the person
 Trespass to the person is a wrong committed against the personal security or personal
liberty of one man by another.
 There are three varieties of trespass to the person, namely assault, battery and false
imprisonment.
 A person commits an assault if he intentionally causes another reasonably to apprehend
the application of immediate unlawful force on his person.
 It is an intentional offer of force or violence to the person of another.
 There must be a menace of violence with a present ability to commit the violence.
 Where the claimant has no reasonable belief that the defendant has the present ability to
effect his purpose, there will be no assault.
 Battery is an act of the defendant which directly and either intentionally or negligently
causes some physical contact with the person of the plaintiff without the plaintiff's
consent.
 Even if the force used is trivial, the least touching of a person in anger is a battery.
 An action of false imprisonment lies at the suit of a person unlawfully imprisoned against
the person who caused the imprisonment.
 Any total restraint of the liberty of a person, for however short a time, by the use of threat
or force or by confinement is an imprisonment.
 To compel a person to remain in a given place is an imprisonment.

Negligence
 Liability imposed on persons who deviate from a certain standard or care.
 Conduct that falls below the level necessary to protect others against unreasonable risks
of harm.
 It is the omission to do something which a reasonable man guided upon those
considerations which ordinarily regulate the conduct of human affairs would do, or
doing something which a reasonable and prudent man would not do.
 Negligence means more than heedless or careless conduct whether in omission or
commission.
 It properly connotes the complex concept of duty, breach and damages thereby suffered
by the person to whom the duty was owed.

The elements required to establish negligence

 The three elements of tort which must be established by the plaintiff are:
 A duty to take care owed by the defendant to the plaintiff.
 A breach of duty to take care by a failure to attain the standard of care required by the
law
 Damage suffered by the plaintiff as a result of the breach of the duty to take care.

Professional negligence
 A professional who injures a client by providing care that is below the standard for that
profession commits the tort of professional negligence.
 Professionals are required to act based on their skill and knowledge necessary for their
profession.

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  They are not assessed by the rather typical reasonable and prudent standard applied in
general negligence cases.

Nervous shock
 There is recognition of liability for nervous shock also known as post-traumatic stress
disorder.
 The plaintiff must show that he or she has suffered a recognised medical condition which
goes beyond grief and distress.
 The test for liability for nervous shock is foreseeability of injury by shock.
 The requirements for establishing a duty of care in cases of nervous shock are a close and
loving relationship with the victim if reasonable foresight is to be established
 proximity in time and space to the event or its aftermath and
 nervous shock resulting from seeing or hearing the accident and its immediate aftermath.

Rescuers
 This is a duty owed in respect of physical and emotional injury to rescuers.
 A defendant who owes a duty not to injure another also owes a duty to those whom he
should foresee might attempt to rescue that other from the acute peril in which the
defendant's negligence has placed him.
 A duty may be owed to a rescuer even though no duty is owed to the person rescued.
 There is happily in all men of goodwill an urge to save those who are in peril.
 Those who put men in peril can hardly be heard to say that they never thought that recue
might be attempted was not caused by the creation of the peril.

Pure and consequential economic loss

 Pure economic loss is also known as financial or pecuniary loss.
 It is to be distinguished from consequential economic loss.
 It is loss that is unconnected with physical damage.
 Where the loss is remote it is not recoverable.
 Consequential economic loss is recoverable and arises where a claimant suffers personal
injuries.
 It is economic loss arising out of physical injury or damage to property.
 The damage is consequent upon injury to a person or his property.
 Damages are recoverable for the economic consequences of the personal injuries, such
as lost wages or salary if the claimant is unable to work because of the injuries.
 The general rule is that liability in negligence is restricted to physical injury to a person
or property.
 A plaintiff may recover for economic loss but the law imposed restrictions upon liability
where the claim was for pure economic loss unaccompanied by physical damage.
 An action lies in negligence for damages in respect of purely economic loss provided
that it was a reasonably foreseeable and direct consequence of the failure in a duty of
care.

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Vicarious liability
 Vicarious liability addresses the extent to which a business or an entity may be held
liable for the negligent acts of its employees while they are working for the business.
 The defendant will be vicariously liable to the plaintiff for the acts of another person if
only the plaintiff can establish that, that other person has committed a wrongful act
which has caused the plaintiff damage;
 that there exists a special relationship recognised by law between the defendant and the
other person like a contract of employment or the delegation of the driving of a motor
vehicle for the owner’s purposes; and some connection that exists between the act of the
other person and his special relationship with the defendant.
 It may be an act in the course of the other’s employment or what amounts to the same
thing.
 The distinction between employees and independent contractors is vital as the employer
will have vicarious liability for the acts of employees but not his contractors.

Economic torts
 Where one person by unlawful means intentionally induces a second person to commit a
breach of contract against a third person or prevents or hinders the performance of that
contract, so that the third person suffers damage, the first commits a wrong actionable at
the suit of the third, unless the inducement is justifiable.
 A person may be liable for procuring a breach of contract not only where he directly
persuades a party to the contract to break it, but also if he commits a wrongful act so as to
prevent the party from performing the contract, or persuades a third party to do an act in
itself wrongful or not legitimate which renders performance of the contract impossible.
 He is not liable if he persuades a third person to perform an act which is in itself lawful
even if the result is to induce a breach of the contract by the party to it.
 Intentionally damaging a plaintiff's business is not tortious merely because the act is
prohibited by statute.
 It is tortious where an obligation or prohibition was imposed for the benefit or protection
of a particular class of individuals of whom the plaintiff is one.
 And where the statute creates a public right, a particular member of the public suffers
particular direct and substantial damage other than and different from that suffered by the
rest of the public.
 A case of conspiracy is made out if the plaintiff can establish an agreement between two
or more persons for the purpose of injuring the plaintiff and the acts done in execution of
that agreement resulted in damage to the plaintiff.
 A person is liable in tort if in the course of a business transaction relating to his goods or
services he represents them as being those of the plaintiff in a manner calculated to
deceive members of the public into thinking that the goods or services are those of the
plaintiff or of a group to which the plaintiff belongs.
 This is the tort of passing off which has the elements of misrepresentations aimed at
customers, calculated to damage the claimant’s trade or goodwill and with the
defendant’s conduct calculated to deceive.
 In the tort of deceit there is false representation made knowingly to the claimant or a class
of people including the claimant.

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  The false representation is made knowingly, without belief in its truth, recklessly careless
whether it be true or false with the intention that the claimant should act on reliance upon
the misrepresentation and which causes damage to the claimant to the claimant as a
consequence of his reliance.
 In malicious falsehood, a false statement is maliciously published which is calculated to
produce damage to the reputation and goodwill of the claimant’s business.
 Infringements of copyright are actionable at the suit of either the owner or the exclusive
licensee of the copyright.
 The registered proprietor of a patent or his exclusive licensee may sue anyone who
infringes that patent.
 Infringements of registered trade marks are actionable at the suit of the registered
proprietor or any registered user of the trade mark.

Wrongful interference with goods

 Wrongful interference with goods means conversion of goods, trespass to goods,
negligence so far as it results in damage to goods or loan interest in goods.
 Conversion exists in three forms
 There must be a positive wrongful act of dealing with the goods in a manner inconsistent
with them.
 Another form of conversion is committed where the goods are wrongfully detained by the
defendant.
 The other form of conversion lies for loss or destruction of goods which a bailee has
allowed to happen in breach of his duty to his bailor.
 A wrongful sale of goods of another person, if accompanied by delivery of the goods or
documents of title amounts to conversion and both the seller and the buyer are liable to be
sued except in the case of a sale in market overt or in other cases where the buyer obtains
a good title despite the wrongful sale when the seller alone is liable.
 Trespass to goods is an unlawful disturbance of the possession of goods by seizure or
removal or by a direct act causing damage to the goods.

Defences in tort
 Consent – volenti non fit injuria
 Act of God - working of natural forces which is beyond human control
 Truth – honest opinion
 Privilege – granted to certain participants in the judicial process, most notably to judges,
jurors, witnesses and prosecutors
 Immunity – Judicial staff, foreign states, diplomats
 Necessity - Use of the plaintiff’s property in order to prevent greater harm to the
defendant, the community, or the defendant’s property.
 Self defence - Every person is justified in using reasonable force to defend himself and
those under his care and to resist a person seeking to take his goods by force or
coming to his land by force.
 Waiver by the plaintiff - Where there has been a breach of duty which the plaintiff waives
 Contributory negligence - If a plaintiff’s own conduct creates an unreasonable risk that
leads to his injury, the plaintiff may be totally barred from recovering damage

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  Comparative negligence - each party's negligence for a given injury is weighed when
determining damages
 Illegality - No action may be founded on illegal or immoral conduct -ex turpi causa
non oritur actio

Remedies in tort
 Damages-monetary compensation
 Replevin- allows the victim to recover personal property that they may have lost due
to the tort.
 Ejectment- is where the court ejects a person who is wrongfully staying on real
property owned by the plaintiff.This is common in instances of continuing trespass.
 Lien - If the defendant cannot afford to pay damages, a judge may place a lien on
their real property, sell the property, and forward the proceeds to the tort victim.
 Restraining order - Equitable remedies include temporary restraining order where
victims of physical harm or harassment may obtain a restraining order, which
prevents the defendant from making contact with or coming near to the plaintiff.
 Injunction - An injunction may either prohibit unlawful activity by the defendant or it
may order them to take affirmative steps.
Injunctions are common in trespassing and nuisance tort claims.
There is discretion in the Court to grant injunctions compelling persons to do or
restraining them from doing acts where otherwise the plaintiff will suffer, or continue
to suffer wrongful injury for which an award of damages would not adequately
compensate him.
 Right to redress for wrongs done without recourse to the courts;
Self help - Rights to use force within the limits allowed for the defence of persons or
of property or to take steps for the protection of property are rights of self help, but
are also of the nature of defences against wrongs in course of commission.
 Abatement - Although the remedy of abatement of a private nuisance is not one
which is favoured by the law, a person who is damaged by a private nuisance is in
general, entitled to abate it and for this purpose to enter, after notice on the land of
another person, provided that a breach of the peace is not caused.

Payment of compensation to the employee by the employer in case of accidents

 An employer is liable for compensation for the death or incapacity of an employee
resulting from an accident in the course of his employment in accordance with the
Law.
 It covers where a workman sustains personal injury by accident arising out of and in
the course of his employment.
 Such an injured workman is not to suffer any diminution in his earnings whiles he
undergoes treatment for his injuries.
 The employer is to pay compensation commensurate with the incapacity of an injured
workman assessed by an attending Medical Officer.
 Where the injury results in death or serious and permanent incapacity the Court having
considered the entire circumstances award the compensation it deems fit under the Law.

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  An accident resulting in the death or serious incapacity of a workman shall be deemed to
arise out of and in the course of his employment even though at the time of the accident
he was acting against any statutory or other regulation relating to his employment or was
acting without his employer’s instructions for as long as such act was done by the
workman for the purposes of and in connection with his employer’s trade or business.

Employer not liable to pay compensation to an employee even when the employee got
injured in the course of his employment?
 The employer shall however not be liable to pay compensation where the injury to the
workman arose from the workman having been at the time of the accident under the
influence of drink or drugs.
 No compensation shall be payable where any incapacity or death resulted from a
deliberate self-injury.
 No compensation shall be payable in respect of any incapacity or death resulting from
personal injury where the workman has falsely made a representation that he was not
suffering or had not previously suffered from that or similar injury.

The procedure for the processing and payment of compensation under the Workmen’s
Compensation Law.
 If an accident happens during and in the course of one’s employment, the injured person
should report to the immediate Supervisor in the company.
 The Supervisor shall submit the injured worker to the nearest clinic/ hospital for
treatment.
 The Supervisor shall inform the Human Resource Department / Personnel Department of
the injury.
 The Human Resource Department/ Personnel Department shall report to the nearest
Labour Officer in accordance with the law.
 The Labour Officer shall provide the Human Resource/ Personnel Department with the
Workmen’s Compensation Forms for completion and also by the Attending Medical
Officer stating the cause and circumstances of the injury.

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 PARTNERSHIP

Partnership
 An association of two and not more than twenty persons carrying on business for the
purpose of making profits.

Bodies not considered as partnerships under the Incorporated Private Partnership Act
 A company registered under the Companies Ordinance or any statutory re-enactment of
it.
 A company, a body corporate or unincorporated association formed under any other
enactment.
 A body corporate formed in accordance with the law of any foreign country
 A joint venture without a firm name for one or more specific operations.
 Family ownership or co-ownership of property shall not of itself create a partnership
whether or not the family or co-owners share any profits made by the use of that
property.

Requirements for the registration of a partnership

 A partnership shall lawfully carry on business only when it has been duly registered.
 Registration involves delivery to the Registrar a copy of the partnership agreement and a
statement in a prescribed form signed by all partners.

Contents of the statement in the prescribed form

 The statement shall contain:
 The firm name of the partnership.
 The general nature of business.
 The address and post office number of the principal place of business of the partnership
and all other places in Ghana at which the business is carried on.
 The names, former names, residential addresses and business occupations of the partners.
 The date of commencement of the partnership.
 The particulars of any charge that requires registration.

Grounds on which the Registrar may refuse to register a partnership

 The Registrar may refuse to register the partnership on the following grounds:
 The partnership is not registrable under the Act.
 Any of the businesses the partnership has been carrying on or is to carry on is unlawful.
 The name of the firm is misleading or undesirable.
 A partner is an infant, or of unsound mind, or a person who within the past five years
been guilty of fraud or dishonesty connected with any trade or business whether
convicted or not or an undischarged bankrupt.
 The statement is incomplete, illegible, inaccurate, irregular or paper insufficiently durable
to be suitable for registration.

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The requirements on the Registrar upon registration
 Upon registration the Registrar shall certify under his seal that the firm has been
registered and is incorporated.
 Such certificate shall state the names of the partners and that their liability is unlimited.
 The Registrar shall insert a notice in the Gazette stating the issue of the certificate and
under what terms.
 The certificate or a copy of it certified as correct under the hand of the Registrar or the
Gazette containing the notice as indicated shall be conclusive evidence that the firm has
been duly incorporated under this Act.

Penalties and disabilities for breach of registration

 Failure to register or renew it will make every partner liable to a fine and rights of the
firm and of the partners are not enforceable by action or other legal proceedings.
 The firm may apply to the Court for relief against the disability and the Court if it is
satisfied that it is just and equitable to do so may grant the relief.
 The rights of any other parties against the firm or the partners or any other person in
respect of such contract shall not be prejudiced by the disability.
 In any action commenced against the firm or the partners, nothing shall preclude the firm
or the partners from a counter claim, set off or otherwise rights it or they may have
against that party in respect of that contract.
 Every partner in the firm shall be liable to a fine for any error or omission in any
statement or notice delivered to the Registrar.

Nature of the partnership formed under the Partnership Act

 From the date of registration as indicated in the certificate of registration, the firm shall
be a body corporate under the firm name, distinct from the partners of whom it is
composed.
 It is capable forthwith of exercising all the powers of a natural person of full capacity in
so far as such powers can be exercised by a body corporate.
 Notwithstanding any changes in the constitution of the partnership, the firm shall
continue to exist as a corporate body until dissolved in accordance with the Act.
 Notwithstanding that the firm is a body corporate, each partner shall be liable without
limitation for the debts and obligations of the firm.
 Every partner in a firm shall be jointly and severally liable with the firm and the other
partners for all debts and obligations of the firm incurred while he is a partner.
 Each partner shall be entitled to an indemnity from the firm and to contribution from his
co-partners in accordance with his rights under the partnership agreement.

The requirements for publicity

 Every firm shall carry on business only under the registered firm name, and shall paint or
affix and keep painted or affixed the registered firm name on the outside of every office
or place in which its business is carried on in a conspicuous position in letters easily
legible.

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  Have the registered firm name and the present forenames or the initials and any former
forenames or surnames of all the partners in the firm accurately mentioned in legible
characters at the head of all trade circulars and business letters of the firm.
 Keep exhibited in a conspicuous position at the principal place of business of the firm the
firm’s latest certificate of registration.

The relations of the firm and partners to persons dealing with them
 Every partner shall be an agent of the firm for the purpose of the business of the firm.
 The acts of every partner shall bind the firm:
 If such acts were authorised, expressly or impliedly, by his other partners or were
subsequently ratified by them.
 If such acts were done for carrying on in the usual way business of the kind carried on by
the firm, unless the partner so acting has in fact no authority to act for the firm in the
particular matter and the person with whom he is dealing knows that he has no authority.
 Where the acts of a partner are for a purpose apparently not connected with the firm’s
ordinary course of business, the firm shall not be bound unless he is in fact authorised by
his other partners or his act is subsequently ratified by them.
 If it has been agreed between the partners that any restriction shall be placed on the
power of any one or more of them to bind the firm, no act done in contravention of the
agreement shall be binding on the firm with respect to persons having notice of the
agreement.
 However an agreement purporting to limit the extent of the liability of the firm or the
partners in respect of any act binding the firm shall not be effective except as between the
actual parties to the agreement.

The liabilities of in-coming and out-going partners

 A person who is admitted as a partner into an existing firm shall not become liable to the
creditors of the firm for anything done before he became a partner.
 A partner who retires from a firm shall not cease to be liable for the debts or obligations
of the firm incurred before his retirement.
 A retiring partner may be discharged from any existing liability by an agreement to that
effect between himself and the firm and the creditor, and this agreement may be either
express or inferred as a fact from the course of dealing between the creditor and the firm
as newly constituted.
 Where a person deals with a firm after the retirement of any partner whom he knew to be
a partner in the firm, he shall be entitled to treat the retired partner as still being a partner
until he has notice of the retirement and the retired partner shall be liable accordingly.
 If any such person had dealings with the firm prior to the retirement he shall not be
deemed to have notice of the retirement unless he has actual knowledge, but an
advertisement in a daily newspaper circulating in the district in which is situated the
principal place of business of the firm shall be notice to persons who have not had
dealings with the firm prior to the retirement.
 The estate of a partner who dies or has an insolvency order made against him under the
Insolvency Act, 1962 (Act 153) or a partner who retires, shall not be liable for any debts

47
 or obligations of the firm contracted or incurred after the date of the death, insolvency
order, or retirement respectively.

Persons liable by holding out

 Every person who by words spoken or written or by conduct represents himself, or who
knowingly suffers himself to be represented, as a partner in a particular firm shall be
liable as a partner to any other person who has, on the faith of any such representation,
allowed the firm to incur debts or obligations to him whether the representation has or
has not been made or communicated to such other person by or with the knowledge of the
apparent partner making the representation or suffering it to be made:
 where after a partner's death or retirement the firm continues to do business in the same
firm name, the continued use of that name or of the former partner's name, shall not of
itself make his estate or him liable for any debts or obligations of the firm contracted or
incurred after his death or retirement.

Fiduciary relationships of partners

 Partners shall stand in a fiduciary relationship towards the firm and their co-partners.
 Every partner shall be bound to render to every other partner full information of all things
affecting the firm;
 Every partner shall account to the firm for any benefit derived by him without the consent
of the other partners from any transaction concerning the firm or from any use by him of
the firm's property, name or business connection;
 If a partner, without the consent of the other partners, directly or indirectly carries on any
business of the same nature as, and competing with, that of the firm, he shall account for,
and pay over to the firm, all profits made by him in that business.

The applicable rules in the absence of a contrary agreement

 All partners shall be entitled to share equally in the capital and profits of the firm and
shall contribute equally towards the losses sustained by the firm.
 The firm shall indemnify every partner in respect of payments made and personal
liabilities incurred by him in the ordinary and proper conduct of the business of the firm
or in or about anything necessarily done for the preservation of the business or property
of the firm.
 Any actual payment or advance beyond the amount of capital which he has agreed to
subscribe shall be entitled to interest at the rate of five per centum per annum from the
date of payment or advance.
 Even though a partnership agreement may make provision for the payment of interest on
capital subscribed by a partner, such a partner shall not be entitled to payment of such
interest before the ascertainment of the profits of the firm.
 Every partner may take part in the management of the business of the firm.
 No partner shall be entitled to remuneration for acting in the firm’s business.
 No person shall be introduced as a partner without his consent and the consent of all the
existing partners.
 Ordinary matters connected with the firm’s business may be decided by a majority of the
partners.

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  No change may be made in the nature of the firm’s business without the consent of all the
existing partners.
 The partnership books and accounts shall be kept at the place of business of the firm or
the principal place of business if there is more than one.

Cessation of membership of the firm

 A partner ceasing to be a partner.
 A partner shall cease to be a partner in the firm in the event of his death.
 His becoming an alien enemy during time of war.
 An insolvency order being made against him.
 If the other partners so elect in writing, a partner shall cease to be a partner in the firm if
he suffers his interest in the partnership to be charged for his separate debt.
 A partnership agreement may validly provide that on the occurrence of any of the
specified events, any partner shall cease to be a partner either automatically or at the
option of the other partners.

Grounds on which a court will order that a partner ceases to be a partner

 On application by any partner the Court may order that any partner shall cease to be a
partner in the firm in any of the following ways:
 When such partner is shown to the satisfaction of the court to have become permanently
of unsound mind or
 Have become in any other way permanently incapable of performing his part of the
partnership agreement,
 when such a partner has been guilty of conduct that is calculated prejudicially to affect
the carrying on of the business.
 when such a partner wilfully or persistently commits a breach of the partnership
agreement or
 conducts himself in matters relating to the firm’s business that it is reasonably
impracticable for the other partners to carry on the business in the partnership with him.
 Any circumstances that in the opinion of the court render it just and equitable that such
partner should cease to be a partner of the firm.

The procedures for winding up

 The winding up of a firm may be either as result of
 insolvency proceedings under the Insolvency Act or
 under an order of the court or
 by voluntary liquidation by the partners.

Insolvency proceeding
 Any one or more of the creditors of the firm may institute insolvency proceedings against
all partners jointly.
 If an insolvency order is made against the partners jointly all the assets of the firm shall
be administered by the Official Trustee.
 A court order will not be granted once an insolvency proceeding has been commenced.

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Voluntary liquidation
 A firm may be wound up by way of voluntary liquidation by the partners on the
agreement of all the partners and notification sent in the prescribed form to the Registrar
for registration.
 The winding up shall be deemed to commence at the date of the registration by the
Registrar of such notification and notice thereof shall be published by him in the Gazette.
 If at any time a partner is of the opinion that the firm shall not be able to pay its debts in
full within six months from the commencement of the winding up, he shall forthwith give
notice in the prescribed form to the Registrar who shall register such notice and cause a
copy thereof to be published in the Gazette.
 Within twenty-one days from the expiration of six months from the commencement of
the winding up, the partners shall send to the Registrar a statement in the prescribed form
stating whether or not all the debts of the firm have been paid in full, and the Registrar
shall register such statement and cause a copy thereof to be published in the Gazette.

Those who may apply to a court for a firm to be wound up

 A firm may be wound up under an order of the court on the application of
 any partner of the firm,
 any former partner owed by the firm or his representative and
 the Registrar.
 This shall not be granted after the commencement of insolvency proceedings.

The grounds on which the court will order such winding up

 The court may order the winding up if the firm does not commence business within a
year from its registration or
 suspends its business for a whole year or
 the firm carries on business for more than six months with fewer than two partners or
 the firm is unable to pay its dues as they fall due or
 the court is of the opinion that it is just and equitable to wind up the firm.

Application of the firm’s property

 On the winding up of a firm partners who have not been paid the amount due on their
interest in the firm shall be entitled as against the others in having the undertaking and
assets of the firm sold and the proceeds applied in the payment of the debts and liabilities
of the firm and the surplus in payment of what may be due to the partners after deducting
what may be due to them as partners of the firm.

The rules for settling accounts among partners

 The rules that may be used in settling accounts between the partners are that losses shall
first be paid out of profits,
 then out of capital and
 lastly by the partners individually in the proportion of profit sharing.
 Deficiencies of capital shall not be made up but shall be borne by the partners in the
proportion in which they are entitled to capital.
 The assets shall be applied in the following manner and order;-

50
 First in paying the debts and liabilities of the firm to non-partners and then
 To each partner rateably what is due from the firm to him for advances as opposed to his
agreed share of the capital.
 Payment to each partner rateably what is due from the firm to him in respect of capital
follows
 the residue if any is divided among the partners in the proportion in which profits are
divisible.

Dissolution after winding up

 When the Registrar is satisfied that the winding up of the affairs of the firm is complete,
the Registrar shall strike the firm off the register and give notification in the Gazette.
 The firm shall therefore be deemed to be dissolved as at the date of the publication in the
Gazette.
 Where the Registrar has reasonable cause to believe that a firm is not carrying on
business he may by notice require an answer from it within two months from that date
otherwise a notice will be published in the Gazette with a view to striking the firm off the
register.
 The Registrar may also strike a firm off the register if in his opinion the business of the
firm is unlawful or the firm is being operated for any illegal purpose or the firm has
committed a breach of any of the provisions of this Act.
 Any firm struck off the register has a right of appeal to the court.

The distinctive features between a partnership and a limited liability company

 Legislations – Partnership under Incorporated Private Partnership Act, 1962 (Act 152)
but Companies under the Companies Act, 1963 (Act 179)
 Size – Partnership from 2-20 but Companies from 1 -50 or infinity
 Separate Corporate Personality – Partners and firm jointly and severally liable
Companies solely liable unless veil is lifted
 Liability- Partnership has unlimited liability but companies have limited liability
 Management – Partners manage the partnership (all may take part) but Shareholders do
not take part in management only Directors do. Death of partners may end the
partnership but death of shareholders may not
 Capitalisation – Partners raise funds through restricted borrowing but Companies float
shares to get more shareholders and do more borrowing through debentures
 Membership – New partners must give their consent and require the consent of all
partners but Companies is through floating of shares
 Public Inspection – Partnership has limited public scrutiny but Companies are more
open for public scrutiny.

COMPANIES
A company
 A body corporate formed under the Companies Act
 An association of a number of individuals for a common purpose.

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  An individual may form a company.
 The purpose may be to undertake business with a view to making profits or to undertake
other activities of a social, educational, religious, sporting or charitable nature and not
with a view of profit making.
 Companies are regulated by the Companies Act, 1963 (Act 179).

Types of companies
 Company limited by shares,
 Company limited by guarantee
 Unlimited company.

Company Limited by Shares

 A company limited by shares is where the liability of its members is limited to the
amount, if any, unpaid on the shares respectively held by them.
 If the shareholder has fully paid the company for the shares issued him he cannot be
called upon to make any further payment in respect of the shares held but if the
shareholder has not paid anything at all or has only made part payment, he may be called
upon to pay the amount remaining as determined at the date of the issuance of the shares.

Company limited by guarantee

 A company limited by guarantee may not lawfully be incorporated with the object of
carrying on business for the purpose of making profits.
 If any company limited by guarantee shall carry on business for the purpose of making
profits, all officers and members cognisant of the fact that it is so carrying on business
shall be jointly and severally liable for the payment and discharge of all the debts and
liabilities of the company incurred in carrying on such business, and the company and
every such officer and member shall be liable to a fine for every day during which it shall
carry on such business.
 A company limited by guarantee is where the liability of its members is limited to the
amount the members may respectively undertake to contribute to the assets of the
company in the event of it being wound up.
 The total liability of the members of a company limited by guarantee to contribute to the
assets of the company in the event of its being wound up shall not at any time be less than
a given sum.
 the Regulations of a company limited by guarantee may provide that members can retire
or be excluded from membership.


Conversion of a Company Limited by Shares to a Company Limited by Guarantee

 A company limited by shares may be converted into a company limited by guarantee if,
there is no unpaid liability on any of its shares;
 all its members agree in writing to such conversion and to the voluntary surrender to the
company for cancellation of all the shares held by them immediately prior to the
conversion;

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  new Regulations, appropriate to a company limited by guarantee, are adopted by the
company;
 a member or members agree in writing to contribute to the assets of the company, in the
event of its being wound up, to an extent not less than that prescribed by the Code.
 Upon delivery to the Registrar for registration of,
 a copy of the said new Regulations and of the special resolution adopting the same, and
 a statutory declaration by a director and the secretary of the company confirming that the
required conditions have been complied with,
 the Registrar shall issue a new certificate of incorporation altered to meet the
circumstances of the case;
 and as from the date mentioned in such certificate the company shall be converted into a
company limited by guarantee, the shares therein shall be validly surrendered and
cancelled and
 any members of the company who have not agreed to contribute to the assets of the
company in the event of its being wound up shall cease to be members:
 The company may not change the name under which it was registered prior to the
conversion; but the omission of the word "Limited" as the last word of the name of the
company after conversion shall not be regarded as a change of name.

An Unlimited Company
 An unlimited company is where there is no limit on the liability of its members.
 They can be called upon to satisfy personally the whole of its liabilities.

A Private Company
 A private company restricts the right to transfer its share,
 limits the total number of its members and debenture holders to fifty,
 prohibits the company from making an invitation to the public to acquire any shares or
debentures of the company and
 prohibits the company from making any invitation to the public to deposit money for
fixed periods or payable at call.
 Any other company shall be a public company.

A Promoter and his obligations

 Any person who concerns himself with the bringing about of the company and its
registration is a promoter.
 Any person deemed to be a promoter of a company is one who is or has been engaged or
interested in the formation of a company.

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 A person who in his professional capacity helps to set up a company is not a promoter.
 The promoter decides the type of company to be formed, the objects of the company and
other things needed to be done before the company comes into existence, for example,
the need for a licence or permit as the case might be.
 The promoter may think of the capital requirements especially where it is not to get
income immediately.
 He may consider a suitable name and a registered office for the company.
 He may also think of the Directors of the company – the first Directors must be named in
the Regulations.
 He may also decide on the appointment of a Secretary, Auditor or a Solicitor.
 The promoter’s work ceases after the Board of Directors has taken over.
 The promoter has a fiduciary relationship with the company.
 He has to place the interest of the company above his personal interest.
 He is also to observe utmost good faith toward the company.
 The Promoter has to account for profits.
 The Promoter is under obligation to disclose any material or property interest he acquires
in his duties as the promoter.
 Unless he gives full disclosure and account to the company, the company may rescind
any decision taken by him.
 The promoter has to compensate the organisation for any loss suffered by the company
by reason of the promoter’s failure.

Pre-incorporation contracts and their effects

 Pre-incorporation contracts are contracts that the organisation enters into before
incorporation is effected.
 Normally promoters go into contract for or on behalf of companies not yet formed.
 Under the common law, since the company is the principal for whom the promoter acts,
but it is not existence, there cannot be any contract for which the company is liable or
from which the company can benefit.
 However even though the company is not a legal person yet, the law permits it to enter
into transactions in anticipation of incorporation.
 A company has to consider the propriety of contracts entered into before its incorporation
and has the option to rescind or ratify the pre-incorporation contracts.
 Until and unless there is ratification the risks associated with pre-incorporation contracts
are borne by the parties themselves.
 Where there is full disclosure by the promoter of all material facts known to him, or
where the contract is entered into or ratified by the Board of Directors if all the
company’s directors are independent of the promoter, or is entered into or ratified by all
members of the company there will be non-rescission.
 Upon ratification the company becomes bound and entitled to the benefits and liabilities
of the contract.
 Before ratification is effected the person who entered into the transactions shall be
personally liable on it.

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  When the company has grounds to take any action against the promoter it may seek the
permission of the court for the promoter to account, sue for rescission or damages for
breach of fiduciary duties.

The procedures for incorporation

 Delivery to the Registrar for registration, a copy of its proposed Regulations.
 When the Registrar is satisfied that the Regulations comply with the Act he shall register
the Regulations.
 Upon registration of the Regulations, the Registrar shall certify under his seal that the
company is incorporated.
 From the date of registration mentioned in the certificate of incorporation, the company
shall be a body corporate by the name contained in the Regulations and shall be capable
of exercising all the functions of an incorporated company.
 The Registrar shall insert a notice in the Gazette stating the issue of the certificate and on
what terms.
 Conclusive evidence that the company has been duly registered shall be provided by the
certificate of incorporation or a copy of it certified by the Registrar or the Gazette
containing the notice.

Effects of incorporation
 A company formally comes into existence upon the issue of a certificate of incorporation
to it by the Registrar.
 Incorporation confers certain attributes on the company namely a corporate entity –
distinct, separate and artificial legal person and therefore separate from its members who
may be shareholders. Salomon v Salomon
 Being vested with power. Has all the powers of a natural person and can do anything
allowed by the objects but if it does anything outside the objects it becomes void because
it is beyond its powers.
 It also has its own rights and liabilities. Its liabilities are not that of the members except if
it is an unlimited company.
 It may own its own property and the property of the company is not the property of
members.
 It can sue and be sued. It can bring actions in its legal capacity and actions can be
instituted against it in that same capacity.
 It has a common seal and
 It has perpetual succession. Members will come and go but the company will continue to
be in existence unless there is a formal procedure to dissolve it.

Regulations
 The Regulations constitute the most important document of the company.
 It is the Constitution or Charter of the company.
 It sets out the authorised business and powers of the company.

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 The Regulations may contain any lawful provision relating to the Constitution and
administration of the company.
 It defines and regulates how a company’s affairs are managed.

Contents of Regulations
 Name of the company, with the word limited if it is limited by shares.
 The nature of the business the company is authorised to carry on, or if the company is not
formed for the purpose of carrying on a business, the nature of the object or objects for
which it is established.
 The fact that the company has all the powers of a natural person of full capacity.
 The names of the first directors of the company. These must be two since the Act
prescribes the minimum of two.
 A statement that the powers of the directors are limited in accordance with section 202 of
the Act.
 Treatment of property after winding up, membership, subscriptions, accounts, auditing,
meetings and resolutions and the role of the governing council are among other areas
covered

Alteration of Regulations
 From time to time, it may become necessary for companies to alter their Regulations.
 A special Resolution of the company is always required as a minimum and necessary
condition for the alteration of the company’s Regulations.
 It is however not necessarily a sufficient condition for the alteration of company’s
Regulations.
 There are several instances when other requirements such as the approval of the Registrar
or the court, have to be met to validly alter a company’s Regulations.
 This may include changing the company’s name and changing the company’s business or
objects.
 There are also instances where there are limitations on the power of alteration.
 No alteration shall have effects of converting an unlimited company to a limited company
or a company limited by guarantee to a company limited by shares.
 The court can restrain or cancel an alteration in the event of illegal or irregular activity.
 The court can again restrain or cancel an alteration to provide a remedy against
oppression.

Effects of Regulations
 The Regulations when registered shall have the effect of a contract under seal between
the company and its members and officers and between the members and the officers
themselves.
 They are bound by it and so agree to observe and to perform their duties according to the
provisions of the Regulations.
 The Regulations vest power in any person stated by it whether or not the person is a
member or officer, to appoint or remove any director or officer of the company.

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 Finally any suit by a member or officer for breach of the Regulations shall be brought in
a representative capacity on behalf of oneself and the members or officers who may be
affected.

Requirements for obtaining a certificate to commence business

 A registered company shall not transact any business, exercise any borrowing powers, or
incur any indebtedness, except those incidental to its incorporation or to obtaining
subscriptions to or payment for its shares, until it has delivered to the Registrar a return in
duplicate in the prescribed form giving certain particulars.
 These are its name;
 its authorised business, or, if the company is not formed for the purpose of carrying on a
business, the nature of its objects;
 the names and any former names, addresses and business occupations of its directors and
secretary, and particulars of any other directorships held by them,
 the name and address of its auditor;
 the addresses of its registered office and principal place of business in Ghana and the
number of the post office Box of its registered office;
 if its register of members is kept and maintained elsewhere than at the registered office of
the company, the address at which it is kept;
 if the company has shares, (i) the amount of its stated capital (ii) the number of its
authorised shares of each class; (iii) the number of its issued shares of each class and the
amount paid thereon distinguishing between the amount paid in cash and the amount paid
otherwise than in cash and, in the case of a company limited by shares, the amount, if
any, remaining payable thereon distinguishing between the amount presently due for
payment and the amount not yet due for payment.
 If the company is limited by shares the return shall further state that the declaration has
been delivered to the Registrar for registration.
 The return shall be signed by two directors and by the secretary of the company.
 The Registrar shall register the said return and cause a copy thereof to be published in the
Gazette.

The statutory books, records and returns companies must keep.

 Certificate of incorporation
 Certificate to commence business
 Copy of Regulations
 Register of members
 Register of Directors
 Register of Secretaries
 Register of charges
 Minutes Books including Board and General Meetings
 Letters to Shareholders
 Insurance Policies
 A copy of Directors Report and Accounts for each year.
 Stock Transfer forms
 Cancelled Share Certificates

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 Company Seal

Ultra vires under the common law and under the Companies Act
 A company’s Regulations sets out its authorised business and powers.
 A company is therefore limited to conduct the business authorised by the Regulations and
to exercise the powers conferred by the Regulations and nothing more.
 Any purported conduct of unauthorised business and exercise of excess power is
considered ultra vires.
 The Act specifies that: “A company shall not carry on any business not authorised by its
Regulations and shall not exceed the powers conferred upon it by its Regulations or this
Act.”
 The company has no capacity to act outside its Regulations except for implied acts.
 This is the traditional common law position and any contract entered into by a company
which is not within its objects was said to be ultra vires and therefore void ab initio.
 It created neither rights nor liabilities for the parties involved. Thus any such contract
could not be ratified or made effective even by the unanimous agreement of the members
of the company.
 The doctrine prevents a company from doing what is not in its Regulations and also
Directors from doing what they do not have powers to do.
 If a Director does what is not within his powers (ie ultra vires the Director) but within the
powers of the company then the company may ratify it.
 If the Director acts beyond the powers of the company then the company cannot ratify it.
The doctrine in its unadulterated form may have very harsh effects on third parties.
 In Ghana however an ultra vires act, conveyance or transfer is not necessarily invalid
simply because it is ultra vires.
 The Act shows that no act of a company and no conveyance or transfer of property to or
by a company shall be invalid by reason of the fact that such act, conveyance or transfer
was done ultra vires.
 This modification reduces the harsh effects of the doctrine on third parties. This means
that a third party is not without a remedy.
 However if the third party had knowledge of the absence of power or the irregularity of it
then the company shall not incur any liability.

Who can apply to the court on grounds of ultra vires acts and what orders the court
may give
 Any member of the company or a debenture holder can apply to the court
 for an order of injunction to prohibit the performance of an ultra vires act being done or
about to be done.
 The court may also set aside the performance of a contract and
 pay compensation for the loss or damage from it but not for anticipated profits.
 An action can also be brought for breach of duty.
 Also the fact that the company had been engaged in an ultra vires act may be relied upon
by a member of the company to call for the winding up of the company.

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Lifting the veil and the circumstances for it.
 On incorporation, a company becomes an artificial legal person separate and distinct
from the persons who may be behind it or who may control it.
 It becomes clothed with a “corporate veil.”
 The idea of corporate personality can lead to abuse and where it has been used to avoid
legal obligations the courts have been prepared to ignore the separate legal personality of
the company.
 Whenever the separate legal status of a company is ignored and liability is ascribed to
various individuals and corporations in it, the corporate veil is said to have been lifted or
pierced.
 The corporate veil may be lifted by the Companies Act, 1963 (Act 179),
 by other legislations like the Bodies Corporate (Official Liquidation) Act, 1963 (Act 180)
 and by the courts when it is just and in the public interest to do so.
 Whenever the corporate veil is lifted the consequences attendant may include civil
liability of individuals,
 penal liability of individuals usually by way of fines or / and
 the ascription of tax liability on others.
 There may also be disregard of transactions apparently entered into by the company.

Circumstances
 There are many circumstances under which the veil may be lifted under the Act.
 If a company ceases to have members or carries on business for more than six months
without at least one member
 Where a company carries on business for more than four weeks after the number of its
directors falls below two
 If a company limited by guarantee carries on business for the purpose of making profits
 Failure to identify the company outside its registered office, or to have name engraved in
legible characters on its seal or have name accurately mentioned in legible characters at
the head of all business letters, invoices, receipts and other publications of the company
 Failure to file annual returns places liability on the company and its officers and so does
the protection of creditors.
 Under the Bodies Corporate Act any fraudulent trading with the intention to defraud
creditors in the course of winding up may call for personal liability on all persons
involved or in the know.
 Where a wholly owned subsidiary company is being used by its holding company to
avoid taxes under the Internal Revenue Act, 2000 (Act 592) liability may be placed on the
holding company.
 Finally the courts may lift the veil to avoid trading with the enemy in times of war, to
avoid fraud and to avoid a scheme to evade contractual obligations.

Shares and debentures

 Shares and debentures are instruments by which business companies raise funds.
 They are securities.
 Shares mean the interests of members of a body corporate who are entitled to share in the
capital or income of such body corporate.

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 The shares of any member in a company shall be personal estate and shall not be in the
nature of real estate or immovable property.
 Shares are purchased to attain membership or shareholder status.
 Shares are issued by
 public invitation which is open to the public at large
 secondary trading also known as public placing where the whole bulk is allotted to a
recognised stock exchange
 private placing where the company negotiates with individuals to pick up shares and
 offering shares to existing members of the company.
 A share is the interest of the member in the company measured by a sum of money for
the purposes of liability in the first place and of interest in the second place and may
include other mutual covenants.
 Two main types of shares namely preference shares and equity shares.
 Preference shares do not entitle the holder to any right to participate beyond a certain
amount in any distribution by way of dividend, or redemption or winding up.
 Any other share is equity share.
 Preference shares have a right to a fixed dividend before any dividend is paid on the other
shares.
 Preference shares may be cumulative or non-cumulative.
 Preferential shareholders do not have the right to speak and vote in a general meeting on
every item on the agenda except resolutions that affect them or resolutions to remove the
Auditor or wind up the company.
 Equity shares rank for dividend after the preference shares.
 Nothing may be left for them after Preference shareholders have taken their share of the
profits.
 They receive fluctuating dividend and therefore carry most risk.
 However they have most of the voting rights in general meetings and therefore control
the company.
 Issued shares require corresponding valuable consideration which has to be paid or be
payable to the company.
 The payment invariably has to be in cash.
 Shareholders have to be issued with share certificates.
 A debenture is a written acknowledgement of the indebtedness of a company setting out
the terms and conditions of the loan.
 A single debenture evidences a loan from a person where the lender is in privity of
contract with the company and is a creditor of it.
 Debenture stock may be created for which debenture stock certificates may be issued to
separate holders.
 A debenture holder is not a member of the company.
 Debentures may either be unsecured by any charge or may be secured by a charge over
the company’s property.
 Debentures without security are simple or naked.
 Holders of such debentures are always at a disadvantage for in the event of winding up
they rank with unsecured creditors.

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  They cannot have any redress in court since a receiver or manager shall not be appointed
as a means of enforcing debentures not secured by any charge.
 Debentures may be secured by a fixed charge on certain of the company’s property or a
floating charge over the whole or a specified part of the company’s undertaking and
assets or by both a fixed charge on certain property and a floating charge.
 A fixed charge is created on one or more specific assets of the company.
 The assets must be clearly identifiable.
 The company cannot freely deal with the property so charged.
 A fixed charge on any property has priority over a floating charge affecting that property
unless the earlier floating charge prohibited a further charge and the person granted the
latter charge had actual knowledge of such prohibition.
 A floating charge is an equitable charge over the whole or a specified part of the
company’s undertaking and assets both present and future.
 The charge shall not preclude a company from dealing with such assets.
 The charge is deemed to crystallize on the appointment of a receiver or manager or when
the company goes into liquidation.
 All charges both fixed and floating have to be registered with the Registrar.

22. Write short notes on i) Rights issue ii) Treasury shares iii) Bonus shares

RIGHTS ISSUE
 On issue of any new shares except treasury shares, members of the company are to be
offered the shares first.
 It is when members fail to take them up before the company may look elsewhere for the
disposal of the shares.
 A company’s failure to observe the rules shall render issue to outsiders ineffective.

TREASURY SHARES

 Where a company’s Regulations allow, a company may forfeit any shares issued with an
unpaid liability for non-payment of any sum due and payable to the company.
 The shares when forfeited may be cancelled or re-issued but until cancelled or re-issued
the shares shall be referred to as treasury shares.
 Forfeiture or purchase by the company of its own shares shall not reduce the stated
capital.
 No voting rights shall be exercised on treasury shares and no dividend paid on them
because they are not considered as issued shares.

BONUS SHARES
 Upon recommendation by Directors, a company may resolve to transfer money from
surplus and income surplus accounts to stated capital.
 These must be monies due to shareholders and should have been distributed to them by
way of dividends.

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  But by a subsequent special resolution, the company may resolve that unissued shares of
the company be issued and credited to members as fully paid.
 The sum transferred shall be deemed to be paid otherwise than in cash.
 The shares for which the number covers shall be bonus shares to members and the issue
shall be referred to as capitalisation issue.

Share Certificates and their effects

 Every company shall, within two months after the issue of any of its shares or after the
registration of the transfer of any share, deliver to the registered holder thereof a
certificate under the common seal of the company stating,
 the number and class of shares held by him, and the definitive numbers thereof, if any;
 the amount paid on such shares and the amount, if any, remaining unpaid;
 the name and address of the registered holder.
 If a share certificate is defaced, lost or destroyed the company, at the request of the
registered holder of the shares, shall renew the same on payment of a fee.
 If default is made in complying with this section the company and any officer of the
company who is in default shall be liable to a fine, and, on application being made by any
person entitled to have the certificate delivered to him, the Court may order the company
to deliver the certificate and may require the company and any such officer to bear all the
costs of, and incidental to, the application.
 Statements made in a share certificate under the common seal of the company shall be
prima facie evidence of the title to the shares of the person named therein as the
registered holder and of the amounts paid and payable thereon.
 If any person shall change his position to his detriment in reliance in good faith on the
continued accuracy of the statements made in such certificate the company shall be
estopped in favour of such person from denying the continued accuracy of such
statements and shall compensate such person for any loss suffered by him in reliance
thereon and which he would not have suffered had the statement been or continued to be
accurate.

The prohibited transactions in shares

 A company shall not alter the number of its shares or the amount remaining payable on it.
 A company shall not release any shareholder or former shareholder from any liability on
the shares
 A company shall not provide any assistance directly or indirectly for the subscription or
purchase of its shares.
 A company shall not acquire by way of purchase or otherwise any of its issued shares.

Dividends and the rules for their payment

 A dividend is a payout that some companies make to shareholders that reflects the
company's earnings.
 Dividends are recommended by the Directors and declared by the general meeting of its
members.
 The dividend declared by the meeting shall not be more than what the Directors
recommend.

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  A company shall not pay a dividend to its shareholders or make any return or distribution
of any of its assets to its shareholders with a few exceptions, unless the company is able
after such payment return or distribution, to pay its debts as they fall due or
 Or the amount or value of such payment, return or distribution does not exceed its income
surplus immediately prior to the making of such payment, return or distribution.
 Payments of dividends are normally by dividend warrants.
 A dividend warrant is a piece of paper printed by the company as the company warrants.
 They operate as cheques and the company may draw it on its bankers or direct the
shareholders where to cash.
 If any payment of dividend is made in contravention of the rules, then every director in
default may be liable severally and jointly to restore to the company the dividend paid at
the rate of five per cent.
 If the money is not restored to the company within twelve months, every shareholder to
whom dividend has been paid shall restore it to the company at an interest rate of five per
cent.

Persons through whom the company shall act

 A company shall act through
 its members in general meeting or
 board or directors or
 through officers and agents appointed by or under the authority derived from either the
members in general meeting or the board of directors.

Members, their rights and obligations

 The membership of a company comprises the subscribers to the Regulations,
 persons who agree to be members of the company and whose names are entered in the
register of members and
 shareholders in the case of companies limited by shares.
 Every company is mandated to keep a register of members at its registered office or any
other place and is required to notify the Registrar.
 The members in a general meeting are the supreme authorities of the company.
 They however are not responsible for the day to day administration of the company.
 They may in a general meeting act in any matter if the board of directors are disqualified
or unable to act by reason of a deadlock on the board or otherwise.
 Members have rights and responsibilities associated with their membership.
 A member’s rights may be personal or collective.
 The personal rights of members are distinguishable from their statutory collective rights.
 Personal rights are individually enjoyed.
 Collective rights belong to members, or the class of members as a group.
 There are also the company’s rights which belong to the company and are exercised on
the company’s behalf generally by the directors.
 The members may institute legal proceedings in the name and on behalf of the company
if the board of directors refuse or neglect to do so.
 They may also ratify or confirm any action taken by the board of directors.

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  If the board of directors exceeds its powers, members in the general meeting can call the
board to order and refuse to ratify their acts which are in excess of their powers.
 Members cannot interfere with the board once it is acting within its powers.
 Members take decisions through resolutions which may be ordinary or special.
 Fully paid up members have various individual rights.
 Members’ rights are enjoyable and enforceable by the members in their personal
capacities.
 They have the right to receive proper notice of general meetings and various statutory
reports like the directors’ and auditors’ reports and financial statements.
 They have a right to attend general meetings or to appoint a proxy, to speak at the
meetings and to vote on any resolution.
 They receive dividends which have been duly declared.
 They have a right to transfer their shares.
 In addition they can make various kinds of applications to court to determine who should
manage the affairs of the company.
 Prior to winding up, members are liable to contribute the balance of the amount payable
in respect of shares.
 Membership may be terminated through a valid transfer of shares which is registered by
the company or forfeiture of shares for non-payment of call or due to the death of the
member.
 It may also be through operation of law by way of nationalisation or bankruptcy.

Who may convene general meetings? How?

 General meetings may be convened by Directors, Members, the Registrar or the Court.
 Meetings shall be convened by written notices.
 Notice shall be given generally for not less than twenty one days except a special
resolution for voluntary liquidation which requires seven day’s notice in writing.

People entitled to attend a general meeting

 The people entitled to attend a general meeting are
 every member,
 every director,
 the secretary and
 every auditor of the company who shall be given the notice of meeting.

The contents of the notice of meetings

 The place, date and hour of the meeting.
 Sufficient detail of the general nature of the business to be transacted.
 The terms of any special resolution to be considered.
 Statement about the appointment of a proxy.
 A company meeting shall not proceed unless there is a quorum.

The ordinary business of an annual general meeting (AGM)

 Declaration of dividends
 Considering the companies’ accounts and the directors‘ and auditor’s reports

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  Electing directors to replace those retiring
 Removal of directors if any
 Fixing the remuneration of the auditor
 Removing and electing the auditor and directors in accordance with the provisions of the
Act.

Types of resolutions
 The decisions of a company taken at general meetings are described as resolutions.
 Resolutions have the effect of binding decisions on the company and its members.
 There are two main types of resolutions namely ordinary and special.
 An ordinary resolution is one passed by simple majority of votes of members present in
person or by proxy at a general meeting.
 A special resolution is passed by not less than three fourths of votes cast by the members
of the company in person or by proxy at a general meeting of which notice specifying the
intention to propose the special resolution has been given.
 Another type of resolution is written resolution
 A company may be permitted by its Regulations to circulate resolutions in writing to all
directors for signature in lieu of attendance at a board meeting.
 Such resolutions, if signed by all the directors, will be as valid as if passed at board
meetings – this may be useful in circumstances where a board meeting cannot be held.
 The written resolution can either be circulated to all directors in turn for signature on one
document, or be copied individually to each director, so that there are a number of signed
copies.
 Each resolution should have the date of the signatory as it is effective at the date that the
last director signs.
 The signed copies of the written resolution must be placed in the company’s minute
book.
 The resolution(s) will take effect on the date of the last signature on the document(s).

A Director
 The management of a company is entrusted to a small group of persons called directors.
 They are appointed to direct and administer the business of a company.
 They may not necessarily be called directors but if they have been appointed to direct and
administer the business of a company then they are the company’s directors.
 Any person who is not duly appointed a director of a company but who holds himself out
or knowingly allows himself to be held out as a director of that company or
 on whose directions or instructions duly appointed directors are accustomed to act is
considered a director in fact

Qualifications of a director
 A person’s prior consent in writing is required before his appointment as director.
 It is not everybody who may be appointed a director.
 An infant, a person of unsound mind, an auditor of a company, a body corporate
 Dishonest or fraudulent persons in connection with the formation or promotion of a
company and

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  persons adjudged to be bankrupt.

The fiduciary duties of Directors

 The powers of directors are derived from the Regulations and the Act.
 All powers necessary and incidental to the managing, directing and having
superintendence over the affairs and business of a company.
 Directors have powers to manage the company as a going concern.
 They thus have power to borrow, to start litigation, to protect the property and interest of
the company.
 In exercising their powers and discharging their duties, directors are to act in the best
interest of the company as a whole.
 They are in a fiduciary relationship with the company.
 They shall at all times do what they believe to be in the best interest of the company as a
whole.
 They shall do acts that will preserve the assets of the company to further its business and
promote the purpose for which the company was formed.
 They shall do so in such a manner as any faithful, diligent, careful and ordinarily skilful
person would act in the circumstance.
 They are to avoid conflict of interest,
 not to make secret profits or
 take bribes,
 to keep proper accounts and
 to take reasonable care in the management of the company’s affairs.

The statutory duties of Directors

 Preparing or causing to be prepared a return in duplicate setting out certain particulars for
filing with the Registrar before a company commences business.
 Preparation of declaration that company has fulfilled minimum capital requirements
before commencement of business
 Convene the first Annual General Meeting
 May convene the first Extraordinary General Meeting whenever they deem fit.
 Circulation of documents like financial statement, director's report and auditor's report.
 Keeping of proper books of account
 Deliver and make available to the company's auditors the books, accounts, vouchers and
other information.
 Fill a casual vacancy on the Board of Directors.
 File or ensure filing with the Registrar various documents including register of members,
shares, stated capital, annual return etc.
 Maintain or cause to be maintained at the registered office various accounts including a
share deals account.
 Every director or former director shall provide the company with notice of matters
relating to himself to enable the company prepare particulars of directors emoluments and
pensions among others.
 Provide information in the event of an arrangement or amalgamation.

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  Directors in public companies shall sign and deliver a prospectus in triplicate before
making an invitation to the public.
 Shall execute an affidavit of solvency on winding up by private liquidation.
 Institute various court proceedings on behalf of the company.

The checks on Directors

 They cannot breach their duties.
 Directors are not to sell, lease or otherwise dispose of the whole or substantially the
whole of a company’s undertaking or assets.

Sanctions that can be imposed on a director for breach of his duties

 If a director commits any breach of his duties under the Act, the director and any other
person who knowingly participated in the breach shall be
 liable to compensate the company for any loss due to the breach.
 The director shall account to the company for any profit made by him due to the breach
and
 any contract or other transactions entered into between the director and the company in
breach of the duties may be rescinded by the company.

The handling of contracts in which Directors are interested

 A director shall be entitled to enter into a contract with a company and such contract or
any other contract by the company in which any director is in any way interested shall
not be liable to be avoided nor shall any director be liable to account for any profit made
 Every director who is in any way, whether directly or indirectly, materially interested in
any contract or proposed contract entered into or to be entered into by or on behalf of the
company shall declare the nature and extent of his interest at a meeting of the directors of
the company.
 In the case of a proposed contract the declaration shall be made at the meeting of the
directors at which the question of entering into the contract is first taken into
consideration or, if the director was not at the date of that meeting interested in the
proposed contract, at the next meeting after he became so interested, and in a case where
the director becomes interested in a contract after it is made the said declaration shall be
made at the first meeting of the directors held after the director becomes so interested.
 A general notice in writing given to the directors of the company by a director to the
effect that he is a member of a specified company or firm and is to be regarded as
interested in any contract which may, after the date of the notice, be made with that
company or firm, shall be deemed to be a sufficient declaration of interest in relation to
any contract or proposed contract so made or to be made.
 It must be stated in the said notice the nature and extent of the interest of the director in
such company or firm;
 That at the time the question of confirming or entering into any contract is first taken into
consideration the extent of his interest in such company or firm is not greater than is
stated in the notice;

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  That no such general notice shall be of any effect unless either it is given at a meeting of
the directors, or the director giving the notice takes all reasonable steps to secure that it is
brought up and read at the next meeting of directors after it is given;
 That such a general notice shall not be effective for more than twelve months but may
from time to time be renewed.
 A director of the company shall not enter into any contract on its behalf in which he or,
to his knowledge, any director of the company or any associated company is in any way
materially interested, whether directly or indirectly, until a resolution has been passed by
the directors approving thereof.
 In the case of any proposed contract in which such officer is himself interested he shall,
prior to the passing of the approving resolution, declare the nature and extent of his
interest therein at a meeting of directors or by written notice given to the directors.
 A director shall not vote in respect of any contract or arrangement in which he is
materially interested and if he shall do so his vote shall not be counted, nor shall he be
counted in the quorum required for that business.
 These prohibitions shall not apply to, any arrangement for giving any director any
security and indemnity in respect of money lent by him to or obligations undertaken by
him for the benefit of the company; or
 any arrangement for the giving by the company of any security to a third party in respect
of a debt or obligation of the company for which the director himself has assumed
responsibility in whole or in part under a guarantee or indemnity or by the deposit of a
security; or
 any contract by a director to subscribe for or underwrite shares or debentures of the
company.
 A copy of every declaration made and notice given in pursuance of this section shall,
within three days after the making or giving thereof, be entered in a book kept for this
purpose which shall be open for inspection without charge by any director, secretary,
auditor or member of the company at the registered office of the company and shall be
produced at every general meeting of the company, and at any meeting of the directors if
any director so requests in sufficient time to enable the book to be available at the
meeting.

40. How a Director (Auditor) is removed from office

 A company may by ordinary resolution at any general meeting remove from office all or
any of the directors notwithstanding anything in its Regulations or in any agreement with
any director.
 A resolution to remove any director shall not be moved at any general meeting unless
notice of the intention to move it has been given to the company not less than thirty-five
days before the meeting at which it is to be moved:
 Provided that if after notice of the intention to move the resolution is given to the
company, a meeting is called for a date thirty-five days or less after the notice has been
given, the notice shall be deemed to have been properly given for that purpose.
 The company shall give its members notice of such resolution at the same time and in the
same manner as it gives notice of the meeting or, if that is not practicable, shall give them
notice thereof in the same manner as notices of meetings are required to be given not less
than twenty-one days before the meeting.

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  On receipt of notice of an intended resolution to remove a director, the company shall
forthwith send a copy thereof to the director concerned and such director, whether or not
he is a member of the company, shall be entitled,
 (a) to be heard on the resolution at the meeting; and
 (b) to send to the company a written statement, copies of which the company shall send
with every notice of the general meeting or, if the statement is received too late, shall
forthwith circulate to every person entitled to notice of the meeting in the same manner as
notices of meetings are required to be given:
 Provided that the company need not send or circulate such statement,
 (a) if it is received by the company less than seven days before the meeting, or
 (b) if the Court, on application by the company or any other person who claims to be
aggrieved, so orders upon being satisfied that the statement is unreasonably long or that
the rights conferred by this section are being abused to secure needless publicity for
defamatory matter; and the Court may order the costs of the applicant to be paid in whole
or in part by the director notwithstanding that he is not a party to the application.
 Without prejudice to the director's right to be heard orally on such resolution, he may,
unless the Court shall have made the said order, also require that the written statement by
him be read to the meeting.
 A vacancy created by the removal of any director if not filled at the meeting at which he
is removed, may be filled as a casual vacancy.
 Nothing in this section shall be taken as depriving any director who has a service
agreement with the company of any right to compensation to which he may lawfully be
entitled under such agreement on the termination of his directorship or of any right to
damages if his removal from his directorship constitutes a breach of such service
agreement.

Presumption of regularity
 Any person dealing with the company is entitled to assume that the company’s
Regulations have been duly complied with.
 Such a person is also entitled to assume that every officer whose particulars are filed with
the Registrar has been duly appointed and have authority to exercise the powers
customarily exercised by such officers.
 A person is equally entitled to assume that officers of the company authorised to issue
documents have authority to warrant the genuineness of the document.
 It can also be assumed that any sealed document signed by two persons can be assumed
to be the director and the secretary.
 The company shall not be entitled to deny these assumptions except when a person had
actual knowledge to the contrary or if having regard to his position with or relationship to
the company he ought to have known the contrary.

The rule in Foss v Harbottle

 Individual members of a company do not have the right to sue to compel a company to
conform to its Regulations or to enforce a claim belonging to the company.

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  Even if there has been an irregularity or breach of the Regulation so long as it can be
remedied by the passing of an ordinary resolution, the aggrieved member is potentially if
not in fact deprived of the right to successfully sue.
 The limitation on the members or minority’s right to sue is known as the rule in Foss v
Harbottle
 The justification for the rule is the corporate status argument that the company alone
should have locus.
 There is also the majority rule justification.
 In addition there is judicial reluctance in making business decisions or interfering with
business policies.

When individuals may bring legal proceedings

 It may be resorted to when the company is undertaking an illegal or ultra vires activity or
 where personal rights of plaintiffs are invaded like where on the declaration of profit
plaintiffs are not paid a share proportionate to investment, or
 the deprivation of the right to vote or not recording vote at general meeting.
 The right also accrues when those in control engage in unconscionable conduct ie
oppression or fraud at the expense of the minority.

Personal action and representative action.

 Personal action is the remedy for enforcing a personal right.
 Representative action is for a class or enforcing compliance with the Regulations.
 Representative suits may be brought by members, officers and creditors.

Bringing of proceedings to enforce liabilities on behalf of the company

 Proceedings instituted by the company may be on the authority of the board of directors,
any receiver or manager, any liquidator,
 by the Registrar after an investigation into the affairs of the company or
 by the members of the company after passing an ordinary resolution.

Application to the court for an order against oppression

 Any member or
 debenture holder of a company or
 the Registrar in proceedings after investigations may apply to the court for an order
against oppression.

Grounds for the application against oppression to be made

 The grounds may be that the affairs of the company are being conducted or
 the powers of the directors are being exercised in a manner oppressive to one or more of
the members or debenture holders or
 in disregard of their proper interests.
 It may also be that some act of the company has been done or is threatened or
 that some resolution of the members, debenture holders or any class of them has been
passed or is proposed which unfairly discriminates against or
 is otherwise unfairly prejudicial to one or more of the members or debenture holders.

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Orders the court will give if it is of the opinion that the grounds have been established
 the court may with a view to end or remedy the matters complained of, make such order
as it thinks fit to
 direct or prohibit any act or cancel or vary any transaction or resolution.
 It may also be to regulate the conduct of the company’s affairs in future or
 provide for the purchase of the shares or debentures of any members or debenture holders
of the company by other members or debenture holders.

The requirements for the filing of Annual returns

 Every company shall, once at least in every year, deliver to the Registrar for registration
an annual return including particulars of every member of the company
 Provided that a company need not make a return in the year of its incorporation; or in any
year ending less than eighteen months after the date of its incorporation, so long as it
makes a return within forty-two days after the first despatch to its members and
debentureholders of the statements, accounts, and reports.
 The annual return shall be completed and made within forty-two days of the date on
which the statements, accounts, and reports of the company are sent to the members and
debentureholders and shall be signed by a director and the secretary of the company.
 The return shall state the position as at the date of the annual general meeting of the
company or, if the holding of an annual general meeting is waived in accordance with it.
 The Registrar, after registering the annual return, shall cause to be published in the
Gazette a notice that the annual return in respect of the company has been registered.
 In the case of a private company the annual return shall be accompanied by a certificate
that the company has not, since the date of the last return, or, in the case of the first
return, since the date of incorporation of the company, issued any invitation to the public
to acquire any shares or debentures of the company
 or to deposit money with the company; and
 a certificate that the number of members and debentureholders of the company does not
exceed fifty or that any excess over fifty consists solely of persons who are bona fide in
the employment of the company and persons who, having been formerly bona fide in the
employment of the company were, while in that employment, and have continued after
the determination of that employment to be, members or debentureholders of the
company; and either
 a copy of every profit and loss account, balance sheet, and group accounts circulated to
the members and debentureholders and a copy of the report of the directors and of the
report of the auditors accompanying such accounts; or
 a written statement by the auditors of the company that, to the best of their knowledge
and belief the accounts and reports have been sent to the members and debentureholders
accordingly and
 a copy of the auditors' report so sent; and
 except in the case of a company limited by guarantee, a certificate that, to the best of the
knowledge and belief of the persons signing the certificate, no body corporate is or has
been at any time beneficially interested, otherwise than by way of security, in any issued

71
 shares of the company, or that if any body corporate is or has been so interested it is an
exempted body corporate.
 The certificates shall be signed by a director and by the secretary of the company.
 The annual return of every public company shall be accompanied by a copy, certified
both by a director and the secretary of the company to be a true copy, of every balance
sheet, profit and loss account, group accounts, directors' report and auditors' report sent to
members and debentureholders of the company accordingly and during the period to
which the return relates.
 If a company makes default in complying with this section, the company and every
officer of the company who is in default shall be liable to a fine

Grounds on which the Registrar may by a written order call for the inspection of any or
all the books of the company
 To ensure compliance of the provisions relating to maintenance and auditing of accounts,
the Registrar may by written order call on any company to produce for his inspection all
or any of the books of the company.
 The grounds may be non compliance with any provisions of the Act or
 sending a document required but which does not disclose a fair or full statement of the
matters it relates to.
 It may also be that the business of the company is conducted with the intent to defraud
creditors or for a fraudulent or unlawful purpose or
 that the powers of directors are exercised in an oppressive manner.
 Other grounds may be that persons concerned with the formation or the management of a
company’s affairs have been guilty of a breach of duty towards it or members and
 that members of the company have not been given all the information they might
reasonably expect with respect to its affairs.
 The company shall comply as any default will make the company and all officers in the
know liable to a fine.
 On need for further action, the Registrar may report in writing to the court or proceed to
refer the matter to the Attorney General where there is an appearance of criminal liability
 or make an application to the court for a remedy against oppression or a winding up if
he thinks it is just and equitable to do so.
 The court may order the Registrar to appoint one or more competent inspectors to
investigate the affairs of a company upon a report by the Registrar after enquiries by him
or upon his application or upon the application of some members.
 Inspectors may also be appointed by the Registrar if the company by a special resolution
declares that its affairs ought to be investigated by an inspector appointed by the
Registrar.

Arrangements, Amalgamations and Take overs

 An arrangement is any change in the rights or liabilities of members, debentureholders or
creditors of a company or any class of them or in the Regulations of a company, other
than a change effected under a provision of this Act or by the unanimous agreement of all
the parties affected by the arrangement.

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  There are three types of arrangements namely simple arrangements, arrangements by sale
of undertaking for securities to be distributed and arrangements with the sanction of the
court.
 The simple arrangement is one where shareholders’ or creditors’ rights are varied not
under the provisions dealing with a variation of class rights of members but pursuant to
the consent of the holders for at least 75% of the shareholding of a company and the
persons to who at least 75% of the company’s debts are owed.
 In an arrangement by sale of undertaking for securities to be distributed, members pass a
special resolution for the voluntary liquidation of a company. The liquidator is then
authorised to sell the assets and undertakings of the liquidated company and obtain shares
or other securities in another company which are then distributed proportionally to the
persons who were the then shareholders of the liquidated company.
 In an arrangement that requires court approval, members, creditors, the Registrar and
fairness reporters are involved.
 The company, or a member, creditor, or liquidator in the event of the company being
wound up may make an application to the court for an order that meetings of the various
classes of members and creditors be summoned.
 After several meetings for the various classes of members and the various classes of
creditors if a majority of 75% of each class of members and each class of creditors
concerned approve the arrangement, the arrangement shall be referred to the Registrar
who shall appoint one or more competent reporters to investigate the fairness of the
proposed arrangement and report to the court.
 After considering the fairness report and hearing any representations by any member or
creditor of the company, the court may confirm the arrangement with or without
modification.
 The court order shall bind the company and all members and creditors.
 A court order confirming an arrangement shall have no effect until an office copy of the
order has been delivered to the Registrar who shall register the order and cause the same
to be published in the Gazette.

AMALGAMATION
 An amalgamation is any merger of the undertakings or any part of two or more
companies or of the undertakings or part of the undertakings of one or more companies
and one or more bodies corporate.
 There are three types of amalgamations namely simple amalgamations, amalgamations
by sale of undertaking for securities to be distributed and amalgamations with the
sanction of the court.
 The simple amalgamation is a merger of two companies or their undertakings without
court approval and without the involvement of a transferee company.
 The amalgamations by sale of undertaking for securities to be distributed is a merger of
two companies or their undertakings without court approval but invariably with the
involvement of a transferee company. The third type entails the involvement of the court
to approve the merger.

TAKEOVERS

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 Where a body corporate has made an offer to the holders of shares in a company referred
to as the transferor company, then, provided that some specified conditions are duly
fulfilled, the transferee company may compulsorily acquire the shares in the transferor
company in the manner specified.
 the offer by the transferee company is made to the holders of the whole of the shares in
the transferor company, other than those already held by the transferee company or any
of its associated companies or by nominees for the transferee company or any of its
associated companies;
 the consideration for the acquisition is either, the allotment of shares in the transferee
company, or, at the option of the holders, a payment of cash;
 the same terms are offered to all the holders of the shares to whom the offer is made or,
where there are different classes of shares, to all the holders of shares of the same class;
 within four months after the making of the offer it has been accepted in respect of not less
than nine-tenths of the whole of the shares and of not less than nine-tenths of the shares
of each class, other than shares already held and the holders of such shares are not less
than three-fourths in number of the holders of those shares and of each class.
 Where these conditions are fulfilled, the transferee company may, within two months
thereafter, give notice in the prescribed form to any shareholder who has not accepted the
offer in respect of all his shares that it desires to acquire his shares and when such notice
is given the transferee company shall, unless on an application made by the shareholder
the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on
the terms of the offer.
 At any time within a period of two months from the service of the notice any shareholder
to whom notice has been given may apply to the Court; and the Court may order that the
transferee company shall not be entitled to acquire the share of such holder or that the
transferee company shall be bound to acquire those shares upon such other terms as the
Court may order.
 On any application to the Court, the Court, before making any order may, if it thinks fit,
refer the matter to the Registrar who shall appoint one or more competent reporters to
investigate the fairness of the offer and to report to the Court.
 The remuneration of the reporters shall be fixed by the Registrar and it and the proper
expenses of the investigation shall be borne by the transferee company or by the applicant
or both as the Court shall order.
 Where the Court makes an order that the transferee company shall be bound to acquire
the shares concerned upon terms different from those of the original offer then, unless the
Court shall otherwise order, the transferee company shall give notice in the prescribed
form, of such amended terms, to all other holders of shares of the same class and to all
former holders of shares of the same class who accepted the original offer.
 At any time within two months of the giving of such notice any shareholder shall be
entitled to require the transferee company to acquire his shares upon the same terms as
those ordered by the Court and any such former holder shall be entitled to require the
transferee company to pay or transfer to him any additional consideration to which he
would have been entitled had his shares been acquired on the terms ordered by the Court.
 Where a notice has been given by the transferee company and the Court has not, on an
application by the shareholder ordered to the contrary, the transferee company shall,
 on the expiration of two months from the date on which notice has been given, or

74
  if an application by the shareholder is then pending after that application has been
disposed of,
 transmit a copy of the notice to the transferor company together with an instrument of
transfer executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferee company, and transfer to the transferor
company the shares, or if the shareholder has exercised the cash option, if any, pay to the
transferor company the cash, representing the consideration payable by the transferee
company for the shares which the transferee company is entitled to acquire, and the
transferor company shall thereupon register the transferee company as the holder of those
shares,
 Any sums received by the transferor company shall be paid into a separate bank account
and any such sums and all shares so received shall be held by the transferor company on
trust for the several persons entitled to the shares in respect of which the said sums and
shares were received.
 Where, as a result of an offer to the shareholders of a company or any of them, shares in
that company are transferred to another body corporate or its nominee and those shares,
together with any other shares in the first mentioned company held by, or by a nominee
for, the transferee company, or by, or by a nominee for, any of its associated companies
at the date of the transfer, comprise or include three-fourths of the shares in the first
named company or any class of those shares, then,
 the transferee company shall within one month from the date of the transfer, unless on a
previous transfer it has already complied with this requirement, give notice of that fact in
the prescribed form to the holders of the remaining shares or of the remaining shares of
that class, as the case may be; and
 any such holder may within three months from the giving of the notice to him require the
transferee company to acquire all or any of his shares.
 Where a shareholder requires the transferee company to acquire any shares, the transferee
company shall be entitled and bound to acquire those shares on the terms of the offer or
on such other terms as may be agreed or as the Court, on the application of either the
transferee company or the shareholder, thinks fit to order.
 On any application to the Court, the Court may, if it thinks fit, refer the matter to the
Registrar who shall appoint one or more competent reporters to investigate the fairness of
the offer before its order.

Powers of the court for facilitating arrangements or amalgamations

 Where an application is made to the Court, and it is shown to the Court that under the
arrangement or amalgamation the whole or any part of the undertaking or assets of any
company, referred to as a transferor company, is to be transferred to another company,
referred to as the transferee company, the Court may, either by the order sanctioning the
arrangement or amalgamation or by any subsequent order, make provision for all or any
of the following matters:
 the transfer to the transferee company of the whole or any part of the undertaking, assets
and liabilities of any transferor company;
 the allotting or appropriation by the transferee company of any shares, debentures or
other like interests in that company which, under the arrangement or amalgamation, are
to be allotted or appropriated by that company to or for any person;

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  the continuation by or against the transferee company of any legal proceedings pending
by or against any transferor company;
 the dissolution, without winding up, of any transferor company;
 the provision to be made for any persons who, within such time and in such manner as
the Court directs, dissent from the arrangement or amalgamation;
 such incidental, consequential and supplemental matters as are necessary to secure that
the arrangement or amalgamation shall be fully and effectively carried out.
 Where an order provides for the transfer of property or liabilities, that property shall, by
virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the
order, be transferred to and become liabilities of, the transferee company, and in the case
of any property, if the order so directs, freed from any charge which is, by virtue of the
arrangement or amalgamation, to cease to have effect.
 Where such an order is made every company in relation to which the order is made shall
cause an office copy to be delivered to the Registrar for registration within twenty-eight
days after the making of the order; failure to comply shall make the company and every
officer of the company liable to a fine for each day during which the default continues.

The procedure for private liquidation

 Private liquidation shall commence when the company resolves by a special resolution
for a private winding up.
 The liquidation starts from the date of resolution.
 Within fourteen days, a copy of the resolution shall be sent to the Registrar for
registration and publication in the Gazette.
 Five weeks before the passing of the resolution an affidavit must be made or sworn by the
directors or the majority of them that upon full enquiry into the affairs of the company
they have formed the opinion that the company will be able to pay its debts in full within
twelve months from the start of the winding up.
 The affidavit shall be delivered to the Registrar for registration. It shall embody the assets
and liabilities of the company at the latest day before making the application.
 A resolution for a private winding up shall appoint a liquidator.
 The liquidator shall consent in writing.

Commencement of official liquidation

 Official liquidation is carried out by the Official liquidator under the Bodies Corporate
(Official Liquidation Act).
 An official liquidation may be commenced by
 a special resolution of the company,
 a petition addressed to the Registrar,
 a petition addressed to the court or
 by a conversion of a private liquidation.

Petition to the Registrar

 Any creditor or member of the company may present a petition to the Registrar for
official winding up of the company.

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 Petition to the Court
 A creditor of the company,
 a member or contributory of the company or
 the Attorney General on specified grounds.

Grounds upon which the court may order an official winding up

 The court may order an official winding up of a company on a petition if
 the company does not within a year from its incorporation commence to carry on all the
businesses which it is authorised by its Regulations to carry on or
 suspends any of such businesses for a whole year.
 that the company has no members or
 that the business or objects of the company are unlawful or
 the business that the company is carrying out are not authorised by its regulations.
 the company is unable to pay its debts or
 the court is of the opinion that it is just and equitable that the company be wound up.

58.What are the qualifications of a Liquidator?

 An infant, person of unsound mind adjudged so by a court of competent jurisdiction and a
corporate body shall not be competent to be appointed as liquidators.
 Any person convicted of an offence involving fraud or dishonesty within Ghana or
elsewhere, any offence in connection with the promotion, formation or management of a
corporate body,
 an undischarged bankrupt and a director or auditor of the company.

59. Examine the powers and duties of a Liquidator

 A liquidator stands in a fiduciary relationship to the company as if he were a director.
 All rights due to and responsibilities of a director are applicable to him for all the powers
of directors cease on winding up and vests in the liquidator.
 The liquidator is an agent and trustee of the company.
 He has to exercise his powers for the smooth running of the winding up of the company.
 His powers among others include the bringing or defending of any legal action in the
name of or on behalf of the company.
 He invites creditors to prove their debts and to pay any class of creditors in full. He
invites debtors to pay their debts.
 He can sell the real and personal assets of the company by public auction or by private
contract.
 He can apply to the courts for assistance.
 He has to open a liquidation account with regards to receipts and payments and keep
proper accounts of them and render it.
 He pays off creditors when he finishes with his work.
 He prepares a final account which is audited and then put before the members.
 When these have been done he informs the Registrar who when satisfied that the winding
up is complete strikes off the name of the company from the register.
 The company is then deemed to be dissolved but at the date of publication of the Gazette.

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 On the commencement of official liquidation the powers of directors cease and they are
vested in the liquidator.
 The company shall not carry on any business except those relating to the beneficial
winding up of the company.
 The corporate status of the company remains until the company is dissolved so the
property of the company remains vested in the company.
 The liquidator in an official winding up under Act 180 shall have power,
 to bring or defend any action or other legal proceedings in the name and on behalf of the
company;
 to carry on the business of the company so far as may be necessary for the beneficial
winding up;
 to appoint a legal practitioner to assist him in the performance of his duties;
 to pay any classes of creditors in full;
 to make any compromise or arrangement with creditors or persons claiming to be
creditors or being or alleging themselves to have any claims, present or future, certain or
contingent, ascertained or sounding only in damages against the company or whereby the
company may be rendered liable;
 to compromise all calls and liabilities to calls, debts and liabilities capable of resulting in
debts, and all claims, present or future, certain or contingent, ascertained or sounding
only in damages, subsisting or supposed to subsist between the company and a
contributory or alleged contributory or other debtor or person apprehending liability to
the company, and all questions in any way relating to or affecting the assets or the
winding up of the company, on such terms as may be agreed, and take any security for
the discharge of any such call, debt, liability or claim and give a complete discharge in
respect thereof;
 to sell the real and personal property and things in action of the company by public
auction or private contract, with power to transfer the whole thereof to any person or
company or to sell the same in parcels;
 to do all acts and to execute, in the name and on behalf of the company, all deeds,
receipts and other documents and for that purpose to use when necessary, the company's
seal;
 to prove and rank the claims in the bankruptcy, insolvency or sequestration of any
contributory for any balance against his estate, and to receive dividends in the
bankruptcy, insolvency or sequestration in respect of that balance, as a separate debt due
from the bankrupt or insolvent and rateably with the other separate creditors;
 to draw, accept, make and endorse any bill of exchange or promissory note in the name
and on behalf of the company, with the same effect with respect to the liability of the
company as if the bill or note had been drawn, accepted, made or endorsed by or on
behalf of the company in the course of its business;
 to raise on the security of the assets of the company any money requisite;
 to take out in his official name letters of administration to any deceased contributory and
to do in his official name any other act necessary for obtaining payment for any money
due from the contributory or his estate which cannot be conveniently done in the name of
the company, and in all such cases the money due shall, for the purposes of enabling the

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 liquidator to take out the letters of administration or recover the money, be deemed to be
due to the liquidator himself;
 to do all such other things as may be necessary for winding up the affairs of the company
and the distribution of its assets.
 The liquidator has to continue any on going business to its completion but shall not start
any new business.
 No action or civil proceeding shall be started against the company except with the leave
of court and subject to such terms as the court may impose.

The general duties of Liquidator in the administration of Company's Property

 Duty to Collect Debts
 Duty to Vest Property in Liquidator.
 Duty to Realise Assets.
 Duty to Verify Debts Ranking for Dividends.
 Duty to Amend Admitted Proofs.
 Duty to Ascertain Priority of Debt.
 Duty to Consult Creditors and Members.

The order in which company debts will be paid off on liquidation

 After gathering in the assets, the liquidator shall distribute them.

 The Liquidator may disclaim any asset which in his opinion is not beneficial to the
creditors.
 The Liquidator has to pay according to the following order.
 He has to pay Class A in full.
 Class A debts comprise the remuneration of the employees of the company during the
whole or part of the four months preceding the commencement of the winding up and the
rates, taxes or similar payments owed to the Republic or Local Authority which have
become due and payable within one year preceding the commencement of the winding
up.
 Class B debts are those other than A debts and may be secured or unsecured.
 Class C debts are owed to Directors and former Directors and their near relatives incurred
within one year before the commencement of the winding up.
 Class D debts are created as a result of restoration to the Liquidator, excess benefits given
to any person by the company

62. What are the qualifications for Managers and Receivers?

 an infant;
 any one found by a competent court to be a person of unsound mind;
 a body corporate;
 anyone in respect of whom an order shall have been made under section 186 of this Code,
so long as such order remains in force unless leave to act as receiver or manager of the
property or undertaking of the company concerned has been given by the court in
accordance with that section;

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  an undischarged bankrupt, unless he shall have been granted leave to act as receiver or
manager of the property or undertaking of the company concerned by the Court by which
he was adjudged bankrupt.
 A director or auditor of a company shall not be qualified for appointment as a receiver or
manager of any property or undertaking of that company.

63. Explain the roles of Receivers and Managers

 A person appointed receiver of any property of a company shall, subject to the rights of
any prior incumbrances, take possession of and protect the property, receive the rents and
profits and discharge all outgoings in respect them and realise the security of those on
whose behalf he is appointed.
 A person appointed manager of the whole or any part of the undertaking of a company
shall manage the same with a view to the beneficial realisation of the security of those on
whose behalf he is appointed.
 As from the date of appointment of a receiver or manager the powers of the directors or
liquidators in a members' voluntary liquidation to deal with the property or undertaking
over which he is appointed shall cease unless and until the receiver or manager is
discharged.
 If, on the appointment of a receiver or manager, the company is being wound up under
the provisions of the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), or the
property concerned is in the hands of some other officer of the Court, the liquidator or
officer shall not be bound to relinquish control of such property to the receiver or
manager except under an order of the Court.

Proof of debt
 During the continuance in force of a winding up order any creditor of a company may
lodge with the liquidator a statement, to be known as a proof of debt.
 The proof of debt shall be in two parts,
 the first part containing brief particulars of,
 the values and due dates of provable debts alleged by the creditor to be outstanding in his
favour against the company and the nature and value of any securities held by the creditor
in respect of such debts;
 the values and due dates of any obligations outstanding in the company's favour against
the creditor on the date on which the winding up order was made against the company;
 the nature and value of securities of any description held by the company in respect of
such obligations
 the total values of the aforesaid debts, obligations and securities;
 the second part containing details of the transactions from which such debts and
obligations arose.
 A copy of the first part of any proof lodged shall be given by the liquidator to the
company and to each creditor mentioned in the company's statement of affairs or who,
not being so mentioned, himself lodges a proof; and if the company knows or believes
that the proof is false in any material particular, it shall be the duty of the company to
inform the liquidator as soon as may be practicable.

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  The liquidator shall examine every proof of debt lodged with him and if, after
considering any representations made by the company or any other creditor, it appears to
him that any item is improperly included or any value incorrectly stated or that the proof
is otherwise incorrect he shall give notice of the objection to the creditor who may lodge
an amended proof within the period specified in the notice or such period as the
liquidator may allow.
 Where the liquidator is satisfied with a proof of debt he shall give notice to the creditor
that he admits the proof of debt subject to verifications.
 Where a creditor fails to lodge an amended proof of debt or a further amended proof of
debt, as the case may be, within the period allowed under the provisions and the
liquidator is still of the opinion that the previous proof of debt is incorrect he shall give
notice to the creditor that he rejects the proof of debt.
 The liquidator may by notice in the Gazette fix a time within which creditors are to prove
their debts or claims or to be excluded from the benefits of any distribution made before
those debts are proved.

CORPORATE GOVERNANCE
THE CONCEPT OF CORPORATE GOVERNANCE
 It is the system by which companies are directed and controlled.
 It describes how companies ought to be run, directed and controlled.
 It is about supervising and holding to account those who direct and control the
management.
 It embodies legitimate lines of accountability by defining the nature of the relationship
between the company and key corporate constituencies.
 The structures, processes, cultures and systems that engender the successful operation of
organizations. Keasey et al:
 The Organization for Economic Co-operation and Development (OECD) defines
corporate governance as the system by which business corporations are directed and
controlled.
 The Corporate Governance structure specifies the distribution of rights and
responsibilities among different participants in the corporation, such as the board,
managers, shareholders and other stakeholders and spells out the rules and procedures for
making decisions in corporate affairs.
 By doing this, it also provides the structure by which the company objectives are set and
the means of attaining those objectives and monitoring performance.
 Corporate Governance, in sum, may be defined as a set of systems, processes and
principles which ensure that a company is governed in the best interest of all
stakeholders.
 The mechanisms by which companies and those in control are held to account.
 The framework of rules and practices by which a board of directors ensures
accountability, fairness, and transparency in a company's relationship with its all

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 stakeholders (financiers, customers, management, employees, government, and the
community)
 It is about promoting corporate fairness, transparency and accountability.
 In other words, good corporate governance is simply good business.
 The aim of Good Corporate Governance is to ensure commitment of the board in
managing the company in a transparent manner for maximizing long-term value of the
company for its shareholders and all other partners.
 Corporate Governance requires that companies should be run in an efficient, transparent,
responsible, profitable and fair manner.
 Transactions should be captured and recorded as true and fair record of trading and as
much as possible, no window dressing, creative accounting or doctoring and massaging
the figures or cooking them up.
 It requires that there should be no secret or off balance book accounts and that accounting
records should be kept according to international financial standards or best practice.
 It ensures adequate disclosures and effective decision making to achieve corporate
objectives, transparency in business transactions, statutory and legal compliances,
protection of shareholder interests and commitment to values and ethical conduct of
business.

KEY CONSTITUENTS
 The three key constituents of corporate governance are the Board of Directors, the
Shareholders and the Management.
 The pivotal role in any system of corporate governance is performed by the board of
directors.
 It is accountable to the stakeholders and directs and controls the management.
 It stewards the company, sets its strategic aim and financial goals and oversees their
implementation, puts in place adequate internal controls and periodically reports the
activities and progress of the company in a transparent manner to all the stakeholders.
 The shareholders' role in corporate governance is to appoint the directors and the auditors
and to hold the board accountable for the proper governance of the company by requiring
the board to provide them periodically with the requisite information in a transparent
fashion, of the activities and progress of the company.
 The responsibility of the management is to undertake the management of the company in
terms of the direction provided by the board, to put in place adequate control systems and
to ensure their operation and to provide information to the board on a timely basis and in
a transparent manner to enable the board to monitor the accountability of management to
it.

ETHICS
 Ethics may be defined as a system of moral principles.
 It may also be viewed as a branch of philosophy dealing with right and wrong and the
morality of motives and ethos.
 Moral principles differ from person to person so are the notion of what is right or wrong,
belief systems and motives.
 Our ethics is shaped by everything.

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  Our experiences, peers, religious beliefs, edicts from a power we deem higher than
ourselves (e.g. International laws, Pope, Supreme Consciousness), people to whom we
are exposed and even our decision to seek out models of ethical behavior.
 Ethics is concerned with what we are and not just what we do.
 It is obedience to the unenforceable.
 Dr. Elmer Hess, President of the American Medical Association, has observed: “If a man
is good in his heart, then he is an ethical member of any group in society. If he is bad in
his heart, he is an unethical member”.
 Four cardinal virtues for ethical behaviour are prudence (good judgment, competence,
practical reasoning), justice (fairness), courage (fortitude) – not foolhardiness or
recklessness and self-mastery (discipline or temperance).

THE BASIC PRINCIPLES OF CORPORATE GOVERNANCE

 The principles are Leadership, Capability, Accountability, Sustainability and Integrity.
 Leadership: An effective board should head each company.
 The Board should steer the company to meet its business purpose in both the short and
long term.
 Capability: The Board should have an appropriate mix of skills, experience and
independence to enable its members to discharge their duties and responsibilities
effectively.
 Accountability: The Board should communicate to the company’s shareholders and other
stakeholders, at regular intervals, a fair, balanced and understandable assessment of how
the company is achieving its business purpose and meeting its other responsibilities.
 Sustainability: The Board should guide the business to create value and allocate it fairly
and sustainably to reinvestment and distributions to stakeholders, including shareholders,
directors, employees and customers.
 Integrity: The Board should lead the company to conduct its business in a fair and
transparent manner that can withstand scrutiny by stakeholders.

The Main Constituents of Good Corporate Governance

 Role and powers of Board
 Legislation
 Code of Conduct
 Board Independence:
 Board Skills
 Management Environment:
 Board Appointments:
 Board Induction and Training:
 Board Meetings:
 Strategy Setting:
 Business and Community Obligations:
 Financial and Operational Reporting:

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  Monitoring the Board Performance:
 Audit Committee:
 Risk Management:

FRAUDULENT AND CRIMINAL BEHAVIOUR

INSIDER TRADING

 An insider is any person who has inside information as a result of his or her membership
of the administrative, management or supervisory body of an issuer of qualifying
investments; as a result of holding capital of an issuer of prescribed investments; as a
result of having access to the information through their employment, profession or duties;
as a result of criminal activities; or which they have obtained by other means, eg a tip-off
from a friend, and which they know, or could be reasonably expected to know, is inside
information.
 The buying or selling of a security by someone who has access to material, nonpublic
information about the security.
 Insider trading can be illegal or legal depending on when the insider makes the trade.
 It is illegal when the material information is still nonpublic--trading while having special
knowledge is unfair to other investors who don't have access to such knowledge.
 Illegal insider trading therefore includes tipping others when you have any sort of
nonpublic information.
 Directors are not the only ones who have the potential to be convicted of insider trading.
 People such as brokers and even family members can be guilty.
 Insider trading is defined as a malpractice wherein trade of a company's securities is
undertaken by people who by virtue of their work have access to the otherwise non public
information which can be crucial for making investment decisions.
 Illegal insider trading refers generally to buying or selling a security, in breach of a
fiduciary duty or other relationship of trust and confidence, while in possession of
material, nonpublic information about the security.
 Insider trading is legal once the material information has been made public, at which time
the insider has no direct advantage over other investors.

MARKET ABUSE

 Market abuse may arise in circumstances where financial investors have been
unreasonably disadvantaged, directly or indirectly, by others who have used information
which is not publicly available (insider dealing); have distorted the price-setting
mechanism of financial instruments have disseminated false or misleading information
 Market Abuse is split into two different aspects (Under EU definitions).
 These are Insider dealing: Where a person who has information not available to other
investors (e.g. a Director with knowledge of a takeover bid) makes use of that
information for personal gain and

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  Market manipulation :Where a person knowingly gives out false or misleading
information (For instance about a company's financial circumstances) in order to
influence the price of a share for personal gain.
 This category of securities law violations can cover a wide range of bad behaviour.
 One of the most common violations is insider trading or also known as insider dealing,
which is defined in the UK as selling or buying securities, such as shares or bonds, based
on non-public market moving information.

MONEY LAUNDERING

 Money laundering is regulated by the Anti-Money Laundering Act, 2008 (Act 749) and
the Anti-Money Laundering Regulations, 2011( L.I. 1987).
 There is also the Anti Money Laundering /Combating the Financing of Terrorism
(AML/CFT) Guidelines under the Bank of Ghana and the Financial Intelligence Centre.
 The Anti-Money Laundering Act, 2008 (Act 749) is an Act to prohibit money laundering,
establish a Financial Intelligence Centre and to provide for related matters.
 The objects of the Financial Intelligence Centre are to (a) assist in the identification of
proceeds of unlawful activity and the combat of money laundering activities; (b) make
information available to investigating authorities, the intelligence agencies and the
revenue agencies to facilitate the administration and enforcement of the laws of the
Republic; and (c) exchange information with similar bodies in other countries as regards
money laundering activities and similar offences.
 A person commits an offence of money laundering if the person knows or ought to have
known that property is or forms part of the proceeds of unlawful activity and the person
(a) converts, conceals, disguises or transfers the property, (b) conceals or disguises the
unlawful origin of the property, or (c)acquires, uses or takes possession of the property.
 Unlawful activity means conduct which constitutes a serious offence, financing of a
terrorist act or contravention of a law which occurs after the commencement of this Act
whether the conduct occurs in this country or elsewhere.
 Money laundering occurs when proceeds of crime or fraud are concealed through series
of processes, mostly through financial institutions, to look genuine.
 Terrorist financing, on the other hand, is when individuals and/or institutions fund the
activities and operations of groups listed by the United States of America as terrorists.
 Participation in an organized criminal group and racketeering;
 Terrorism, including terrorist financing;
 Trafficking in human beings and migrant smuggling;
 Sexual exploitation, including sexual exploitation of children;
 Illicit trafficking in narcotic drugs and psychotropic substances;
 Illicit arms trafficking; Illicit trafficking in stolen and other goods;
 Corruption and bribery;
 Fraud;
 Counterfeiting currency;
 Counterfeiting and piracy of products;

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  Environmental crime;
 Murder,
 grievous bodily injury;
 Kidnapping, illegal restraint and hostage taking;
 Robbery or theft; Smuggling;
 Extortion; Forgery; Piracy; and
 Insider trading and market manipulation.
 Each accountable institution shall make and implement internal rules and other
procedures to combat money laundering and terrorist financing.
 Each accountable institution shall make internal rules related to reporting of suspicious or
unusual transactions.
 Each accountable institution shall appoint a person of senior status as an anti-money
laundering reporting officer who shall receive suspicious or unusual transaction reports
from persons handling transactions for the accountable institution.
 Information to identify proceeds of unlawful activity.
 A person who contravenes section 1 or 2 commits an offence and is liable on summary
conviction to a fine of not more than five thousand penalty units or to a term of
imprisonment of not less than twelve months and not more than ten years or to both.

BRIBERY
 Corruption is the misuse of a public or private position for direct or indirect personal gain
 Corruption in Ghana is seen as Bribery in a narrow way.
 It is captured more in terms of public officers.
 If, after a person has done any act as a public officer, juror, or voter, he secretly accepts,
or agrees or offers secretly to accept for himself or for any other person, any valuable
consideration on account of such act, he shall be presumed, until the contrary is shown, to
have been guilty of corruption, within the meaning of this Chapter, in respect of that act
before the doing thereof.
 If, after a public officer, juror, or voter has done any act as such officer, juror, or voter,
any other person secretly agrees or offers to give to or procure for him or any other
person any valuable consideration on account of such act, the person so agreeing or
offering shall be presumed, until the contrary is shown, to have been guilty of having,
before the doing of such act, corrupted such public officer, juror, or voter, in respect of
such act.
 Corruption has a strong potential to steal the wealth of a nation and impoverish its people.
 Corrupt practices approved and adopted by the National Anti-Corruption Action Plan
(NACAP) included bribery, embezzlement, misappropriation, trading in influence, abuse
of office, abuse of power, illicit enrichment, laundering of proceeds of crime,
concealment, obstruction of justice, patronage, nepotism and conflict of interest.

CRIMINAL ACTIVITY IN THE OPERATION, MANAGEMENT AND LIQUIDATION

OF COMPANIES.
 Failure to file accounts or annual returns

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 Provision of misleading information to the Auditor
 Transactions at undervalue
 Transactions by giving preference
 Fraudulent trading – intent to defraud creditors or fraudulent purpose.
Dishonest intent criminal offence
 Wrongful trading – no reasonable prospect of avoiding insolvent liquidation.

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