The implications of Ghana's broader approach to consideration in contract law
Ghana's legal system is built on the principles of common law and customary law. These ideals are meant to establish a fair and just society where justice is done and the law is upheld. Ghana's legal system encourages the idea of thoughtfulness. Ghana's more permissive approach to contract creation, particularly regarding consideration in contract law, has a significant impact on contract enforcement and validity.
Consideration, which refers to an exchange of something of value between the parties to the contract, is a crucial feature of contract formation. Consideration is commonly understood as the "price" paid for a promise, making sure that both sides stood to gain from the deal.
Cases like Currie v. Misa, Thomas v. Thomas, Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd., Marfo v. Adusei, etc. illustrate how consideration is defined.
However, under Section 71 of the American Restatement Second Contracts, a consideration is clearly described as follows:
“(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
(3) The performance may consist of
(a) an act other than a promise, or
(b) a forbearance, or
(c) the creation, modification, or destruction of a legal relation.
(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.”
According to common law general concept, a pre-existing legal obligation placed on the promisor that is fulfilled or is expected to be fulfilled does not qualify as sufficient consideration for another promise.
This suggests that consideration for the pre-existing legal responsibilities owed to the promisee is insufficient. This indicates that if the promisor is already legally obligated to perform a specific act, such an act cannot be considered a valid consideration for the purpose of initiating a contract under common law.
However, if the promisor promised or agreed to do more than he was legally required to, such performance would be sufficient consideration.
For instance, A may offer a reward to whoever gives evidence leading to the arrest and conviction of B's murderer. C provides such proof while performing his duties as a police officer. C's performance according to common law has no bearing on A's promise.
But if C's duties as a police officer are limited to crimes committed in a particular region, and he acquires evidence for a crime committed elsewhere while on vacation. C's performance will amount to sufficient consideration.
Meanwhile, under Section 9 of the Contracts Act, 1960 (Act 25), Ghana's position differs from the common law approach when pre-existing legal duties owing to the promisee constitutes a valid consideration. Ghana takes a broader perspective of the matter and recognizes such pre-existing commitments as valid consideration for a contract. While this divergence from common law may be viewed as more flexible and pragmatic, it nonetheless poses significant difficulties and criticisms.
The possibility of ambiguity and uncertainty in contractual agreements as a result of this departure is a challenge. Ghana opens the way for parties to claim consideration even where there is only a moral or existing legal duty by considering pre-existing legal requirements as valid consideration.
For instance, A's wife, B, leaves him without reasonable cause in a situation where contracts between husband and wife are enforced and spouses are obligated to stay together. A promises B GHC10, 000 in exchange for her coming back. As a result, B returns. Should her return be considered as a sufficient considerations? This may lead to disagreements over the enforceability of some promises and confusion about what constitutes valid consideration. The predictability and dependability of commercial agreements may be hampered by the absence of a clear criteria or guideline for assessing the sufficiency of earlier legal commitments as consideration.
Another argument against Ghana's modification is that it would downplay the importance of consideration as a fundamental component of contract creation. The difference between legally enforceable agreements and simple promise is determined by consideration. It guarantees that a contract is voluntarily entered into and that something of value is being exchanged by both parties. This fundamental principle is undermined and the distinction between enforceable contracts and unenforceable promises may be blurred if pre-existing legal duties are permitted to be taken into account as valid consideration. This could compromise contract law's general reliability and integrity.
Ghana's position on taking into account pre-existing legal obligations could be detrimental to business deals and overall contractual partnerships. Ghana may unintentionally encourage parties to depend on their current legal responsibilities as the basis for contractual obligations rather than participating in new conversations and exchanges by recognizing pre-existing legal obligations as consideration. This can stifle the spirit of cooperation and innovation in contractual interactions and deter parties from aggressively pursuing mutually advantageous agreements.
It is also important to note that Ghana is out of step with many international jurisdictions that follow the classic common law norm due to its deviation from the common law approach regarding pre-existing legal duties being seen as valid consideration. This may pose difficulties for international business dealings and make it more difficult to enforce contracts between parties from various legal systems.
In conclusion, Ghana's departure from the common law approach to pre-existing legal obligations may provide some flexibility and practicability. It also raises worries about ambiguity and diminution of the importance of consideration. This could have a negative impact on commercial transactions and cause a misalignment with international legal standards. The possible disadvantages and uncertainties associated with Ghana's position should be carefully evaluated, and a balance between flexibility and the need for clear principles in contract law should be achieved.
The position of Ghana on pre-existing legal responsibilities owing to the promisor is complex and multifaceted. While the country's legal system gives some direction, many questions remain unsolved, particularly those relating to the concepts of pre-existing contractual duty and pre-existing public duties. As a result, more research and debate are required to guarantee that Ghana's legal system is fair, efficient, and equitable for all parties involved in contractual transactions.
Evans Mawunyo Tsikata
BBA, LLB, MEd, LLM