UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA

(UPSA)

FACULTY OF LAW
LLB

The Law of Contract II

2023/2024 ACADEMIC YEAR

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 Law of
Contract II
Introduction Elements of a Vitiating
contract Factors Discharge Remedies
and
theoretical (contract
foundation formation) Mistake
Misrepresentation Agreement, Damages,
Offer, Acceptance, Undue Influence Frustration, Specific
Consideration, Duress Performance Performance
Intention, Illegality
Capacity & & Breach of & Injunction
& Unconscionability
Implied Terms Contract

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 Mistake

Misrepresentation

Undue Influence
Vitiating
Factors
Duress

Unconscionability

Illegality
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 Di d the person claiming to be coerced protest?

Actua l or threatened vi olence to the person, threats

of i mprisonment or prosecution to a person’s fa mily
Contra ct obtained by illegitimate forms of pressure
or i ntimidation

Duress Di d that person have any alternative available course

of a cti on?

Economic duress (duress by threatened breach of

contra ct)

Were they i ndependently a dvised?

After entering into the contract, did they take steps

to a voi d it?

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 Undue Influence

Express Use of Influence or Presumption of Undue Influence – Rebuttal of

Domination of the Other Party Fiduciary Relationship between Parties presumed undue
influence –
independent
advice was made
Parent: child available

Solicitor: Client

Religious advisor:
disciple

Doctor: Patient

Trustee: beneficiary 5
 Poverty or need of any
kind,

Sickness, infirmity of
body or mind,
drunkenness,

Party with special Illiteracy or lack of

disabilities education

Age & sex

Unconscionable
contracts Lack of assistance or
explanation where
assistance or
explanation is necessary

That contract is fair, just

Duty of dominant party
and reasonable 6
 Tutorial Two
In 2007, Joanna was negotiating with Karl for the sale
of her farm. Karl asked her about the possibilities of
sheep farming. She replied orally “I have always farmed
at least 1,000 sheep there, and I am sure that there will
also be room for 10 wind turbines”. In fact she had
never farmed any sheep at all and had no experience of
wind turbines; her view of the capacity of the land was
simply a guess. After purchasing the land and
discovering that neither estimate was accurate, Karl
seeks a legal remedy from Joanna.

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 Illegality
Concept of illegality is derived from two sources

1. A contract may be illegal because it involves

the doing of something which is unlawful
because it is prohibited by statute.
2. A contract may be unenforceable because it
is contrary to public policy.

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 Illegality
• Contracts which are illegal on grounds of public
policy
• Contracts in restraint of trade
• Effects and consequences of illegality
• Illegality in performance
• Recovery of money or property transferred under
an illegal contract

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 Illegality – Public policy
1. Contracts to commit a crime, tort or fraud on another party
• Berg & Saddler v. Moore (1937) 2 KB 158
• Brown Jenkinson & Co v Percy Dalton (1957) 2 QB 621; (1957) 2
ALL ER 846

2. Contracts which promote sexual immorality

• Pearce v. Brooks 14 WR 614; (1866) LR 1 Ex 213, 14 LT 288

3. Contracts which interfere with regulations of foreign

countries
• Foster v Driscoll (1929) 1 KB 470
• Regazzania v Sethia (1958) AC 301

4. Contracts prejudicial to the administration of justice

• Keir v Leeman (1946) 9 QB 371
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 Illegality – Public policy cont’d
5. Contracts leading to inefficiency and corruption in public life
• Parkinson v College of Ambulance Ltd (1925) 1; 133 LT 135
• Kwarteng v. Donkor [1962] 1 G.L.R 20
• Okantey v. Kwaddey [1975] 1 G.L.R. 193

6. Contract to deceive public authorities

• Alexander v Rayson (1939) 1 KB 169

7. Contracts to oust the jurisdiction of the courts

• Lee v. The Showmen’s Guild of Great Britain [1952] 2 Q.B. 329
• Ghana Private Road Transport Union (GPRTU); Tetteh v. Essilfie [2001-
2002] SCGLR 786

8. Contracts to use official positions or public office to secure

private reward
• Ampofo v. Fiorini [1981] 1 GL.R. 829
• Kessie v. Charmant [1973] 2 G.L.R 194
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 Illegality- Contracts in Restraint of
Trade
A contract in restraint of trade is one by which a party restricts his freedom to
carry on his trade, business or profession in the future.

Contracts in restraint of trade are prima facie void and contrary to public policy
unless it is shown that:
- The contract is reasonable between the parties
- The contract is not unreasonable in the public interest

1. Restraint clauses in contracts for the sale of business (vendor & purchaser)
• Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Company, Limited
(1894) AC 535
For such an agreement to be enforceable the restraint must be reasonable in
terms of the area covered, the duration of the restraint and the activities covered

The restraint must also generally be limited to the business activity in respect of
which the goodwill has been built.
• Vancouver Malt Co. v. Vancouver Breweries [1934] A.C.181 12
 Illegality- Contracts in Restraint of
Trade
2. Restraint clauses in employment contracts (employee & employer)

Generally enforceable if it protects the proprietary right of the employer

in the nature of trade connections or trade secrets.
• Herbert Morris v. Saxelby (1916) 1 AC 688

For the restraint to be reasonable, it must afford no more than adequate

protection of the party in whose favour it is imposed.
• Kores Manufacturing Ltd v. Kolok Manufacturing Ltd (1958) 2 WLR 858;
(1958) 2 ALL ER 65

Invalidity of a particular provision or a part of the contract does not nullify

the whole contract if the valid parts of the contract or the valid terms are
severable.
• Goldsoll v. Goldman [1915] 1 Ch. 292

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 Effects and consequences of illegality
The principle is that no person can claim any right or
remedy whatsoever under an illegal contract in which he
has participated (illegal contract at its inception on
grounds of public policy or prohibition by statute).

• In Re Mahmoud & Ispahani (1921) 2 KB 716

• Olatiboye v. Captan [1968] G.L.R. 146

• Holman v. Johnson (1775) 1 Cowp. 341; (1775-1802)

ALL ER 98

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 Illegality in Performance
1. Legal contract performed illegally – generally not
enforceable by party that acted illegally
• Anderson v Daniel (1924) 1 KB 138

2. Legal contract performed illegally –enforceable by

innocent party if illegality was not condoned & no
participation
• Archibold v. Spanglett (1961) 2 WLR 170; (1961) 1 ALL ER 417
• Schandorf v. Zeini [1976] 2 G.L.R. 418 C.A.

3. Legal contract performed illegally – other party condoned

or participated = enforcement not possible by neither party
• Ashmore & Ors v Dawson Ltd (1973) 1 WLR 828; (1973) 2 ALL
ER 856 15
 Recovery of money or property transferred
under an illegal contract
The general principle is that where a contract is found to be illegal, monies paid or property
transferred under such a contract are generally not recoverable, especially if the plaintiff
has to rely on or disclose the illegality in order to establish his claim.

• Parkinson v College of Ambulance Ltd (1925) 1; 133 LT 135

• Taylor v. Chester, 21 LT 359; (1869) LR 4 QB 309; 33 JP 709

Exceptions
1. A party can recover money or property transferred to the other party if he can
establish his claim without reliance on the illegal contract

• Amar Singh v Kulubya (1964) AC 142

2. Where the parties are not in pari delicto (equally guilty) the court in certain
circumstances will allow the innocent party to recover any monies or property that he has
transferred to the other party under the contract. Plaintiff has to prove that he was induced
to enter into the contract by fraud or duress or oppression at the hands of the defendant.

• Hughes v. Liverpool Victoria friendly Society (1966) KB 482

• Kwarteng v. Donkor [1962] 1 G.L.R 20
• Addy v. Irani [1991] 2 G.L.R 30 16
 Recovery of money or property
transferred under an illegal contract
3. Class protecting statutes
Where a contract is made in violation of a provision in a class protecting
statute, the party who is a member of the protected class is not considered to
be in pari delicto with the other party.
• Conveyancing Decree, 1971 (NRCD 175)*
• Hire Purchase Decree, 1972 ( NRCD 292)
• Kiriri Cotton co. Ltd v. Dewani (1960) AC 192; (1960) 1 ALL ER 177
• City & Country Waste Ltd v. Accra Metropolitan Assembly [2007-2008]
SCGLR 409
-seriousness of the illegality involved.
-whether the plaintiff was aware of the illegality.
-the purpose of the rule which made the contract illegal.

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 Recovery of money or property
transferred under an illegal contract
4. Locus Poenitentiae : where one party to an executory contract
repents before performance.
• Kearley v. Thomson (1890) 24 QBD 742; 38 WR 614
It must be shown that the plaintiff repented and not merely that
the defendant deliberately failed or was unable to perform his
side of the contract
• Bigos v. Boustead [1951] 1 All E.R. 92
• Kwarteng v. Donkor [1962] 1 G.L.R 20

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 Mistake

Misrepresentation

Undue Influence
Vitiating
Factors
Duress

Unconscionability

Illegality (public
policy)
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