Feature Article of Thursday, 5 January 2012
Columnist: The OmanbaPa Research Group
...The Attorney-General Faults on the out-of-court settlement? A Review of Breach of Contract, Rule of Proportionality and Legal Floodgates
The OmanbaPa Research Group
MEMO: STATE CRIME
Modern nation-states, in the words of Green and Ward (2004), are best understood as the creations of coercive and ‘self-seeking entrepreneurs’. But, over a long historical period (16th to 20th century), the most successful states, as the writers put it, have been those that ‘developed a durable interest in promoting the accumulation of capital’ and accepted certain restrictions on their power as the price of organising their populations efficiently. In 2007; a chief executive allegedly, embezzlement some 3.8 billion cedis- this escaped the memory of the then government’s legal advisors. In 2011, Ghana is grumbling over default judgement which an Attorney- General is alleged to have faulted the rules of the courts. Yes, Jessop (1982) argues that the state does not always or even in the majority of cases act as a unitary force but rather a band of institutions which do not necessarily share a single set of interest and goals. So a soldier in war may commit rape purely for reasons of personal gratification. Yet, it is argued that this could contribute to organisational goals such as demoralising the enemy or promoting ethnic cleansing. Thus the organisational goal may be of little importance to the soldier himself, but may be an important reason for his comrades and superiors to turn a blind eye to his action. If, on the other hand, the soldier is promptly court-martialled, it may be inferred that he acted contrary to an important organisational goal- perhaps, the army’s goal of presenting itself as the liberator of the local population?
The fundamental rule in the breach of contract is that if a party to a contract had suffered loss as a consequence of the other contractual party’s failure to honour his/her part in the terms so freely agreed in the contract, then the injured party could be able to enforce his rights arising under the contract in the competent court of jurisdiction. If the court finds merit in the claims being sought, then it could order the same to commensurate to the legitimate expectation of the legally enforceable contract, had it not been breached. Accordingly; if Mr Woyome and or his agents, on the reliance and or promise of the State, expended time and money in a bid to secure a tender which his or agents won but only to be ditched in a probable inside dealing or trading, then he has every legal right to sue for damages and cost. The question that the court might consider is the proportionality of the quantum of the damages being sought. In all fairness, the courts had always looked at the bargaining powers of the contracting parties. Who then, wields the power in this contract?
Principles of Contract Creation
A contract is defined as an agreement that can be enforced by law. Anything agreed between the two sides is binding unless it can be proved to be an unfair contract term. For example, in consumer contracts the terms in the contract can give the consumer contractual rights which will be in addition to his/her statutory consumer rights. The parties to a contract have a right to enforce what had originally been agreed if the contract is subsequently broken. For there to be an enforceable contract there should be an offer and acceptance, which should be followed by a consideration. This means that both sides must give something of benefit to the other, which can be money or an exchange of promises.
In contracts for the sale of goods or services, the seller's consideration is the goods or services and the buyer's consideration is the payment. The payment does not have to be made at the time the offer is accepted- that is, when the contract is made, but there must be a promise to pay later. For the purpose of promises, reliance, expectation and doubts, it would have been advisable that contract dealing with the sales and purchases of land or offering the services such construction of stadia as in the case of the alleged contract between the Republic of Ghana and Alfred Agbesi Woyome[Waterbill company] on the other part, should have been in writing because some documents may look like a formal contract when in reality they are only proposals or offers which have to be accepted before either side is bound by them. An example of a proposal or offer is an insurance quotation.
Generally, if someone is not a party to the contract, legally, she or he has no rights or responsibilities under the agreement, unless the contract specifically states that a person; who is not a party to the agreement, known as a third party, may enforce a term of the contract. Any one of us capable of entering into a contract may be authorised to negotiate a contract on behalf of somebody else. If you are asked to negotiate a contract on behalf a an individual or a judicial person such as a company then you may be seen as an agent and the natural person or firm on whose behalf you are so acting, is called the principal. When this happens, then any contract so entered into is made between the principal, rather than yourself- the agent, and the other party. For example, a contract made between you and Ghana Airways ticket seller, is usually between you and the Ghana Airways, rather than with the agent. Thus, if the flight is indefinitely cancelled, your claim will be against the airline. For example, if Waterville agrees to build/renovate stadia for the Republic of Ghana but sub-contracts the installation of a sink and bath to a Mr Agbesi Woyome- a sole trading plumbing business and the pipes to the bath develop a leak, the government of Ghana’s claim would be against Waterviille, with whom she had made the original contract, and not with Mr Woyome. If a trader makes a contract to provide a service, s/he is responsible to the buyer for all the work under the contract, even if s/he sub-contracts some of the work to another trader. The details of contractual agreement are called the terms- which may either be express or implied. Whereas expressed terms are clearly stated and understood by the parties and agreed to when the contract is made, implied terms may include usual custom and practice, and the statutory rights of the parties. If any of the terms of a contract are broken by either party, the other party may be able to take legal action for breach of contract. Our primary concern then should be what were the main terms in this contract?
In the Kingdom of Great Britain, the terms of a contract fall into two main categories - conditions (in Scotland, 'material terms'), and warranties (in Scotland, 'non-material terms'). A condition is a vital term of a contract. It is so fundamental to the main purpose of the contract that if the term is broken, the whole contract is affected and cannot be carried out. Express terms are terms that are clearly stated and agreed when the contract is made. They may be written down or agreed verbally, and can be displayed on shop notices, on a receipt, in a guarantee, or on a ticket. The terms may be included in full or refer the buyer to another document. Express terms may not be binding in every situation. For example, if it excludes or limits the trader's liability, it may be construed as unfair and will have no effect.
From the Attorney-General’s letter dated 01 August 2006 as confirmed by verbal representation of an authority who so matters in this case- Mr Kwadwo Mpiani, the former Chief of Staff of Kufuor’s administration, there had never been any contract between the Republic of Ghana and Mr Woyome but rather with the Waterville Holding Limited for the renovation of Ohene Djan and Baba Yara stadia. The purported contract said to have been signed on 26th day of April 2006; was entered on condition that Waterville will provide among others, the initial financial inputs which pursuance to Clause 17 of the cited contract, should have been deposited at a nominated Bank at a given time. But which according to the notice of severance from then Attorney-General Joe Ghartey; Waterville Holdings (BVI) Ltd, failed to honour and accordingly, discharged the Republic of its contractual obligations?
Case Commentary and Analysis
When we enter into any form of contract- being it a marriage, business/employment or educational, we have some sort of expectations from our contractual parties and in the context of the businessperson and here, Waterville/Woyome, the drive was to make profit on the service provision. Indeed the courts in the UK have found that contracts are made not only with the sole goal of making financial gains but rather to acquire some level of personal leisure. Ewan McKendrick offers the following illustrations: Suppose that a house owner enters into a contract with a builder to have a swimming pool built in a garden and that she stipulates that it must be built to a depth of seven feet six inches. Or suppose that a son enters into a contract under which the builder agrees to repair the roof of his parent’s house. Whereas the first case is an example of contract to enhance leisure time, the latter example of contract is entered into for the purpose of providing a service to a third party.
This means that in considering the quantum of Mr Woyome’s loss of profit if there had been indeed breach of contract, we may also be looking at the government’s pleasure in having had that stadia built. It is suggested that a legal system which focuses only upon the profit motive to the exclusion of the values of leisure and community services fails to reflect the values of the modern world. As Lord Mustill stated in Ruxley Electronics and Construction Ltd v. Forsyth  AC 344, ‘the law must cater for those occasions where the value of the promise to the promise exceeds the financial enhanced of his position which full performance will secure’. Professor Treitel(1999) states: ‘a breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under the contract, or performs defectively or incapacitates himself from performing’.
Thus where the contract has been frustrated there is no liability for breach of contract because both parties have been provided with a ‘lawful excuse’ for their non performance. Similarly, where one party has breached the contract and the breach has given to the other party the right to terminate performance of the contract, that party is not in breach of contract in refusing to continue with performance because he is given a ‘lawful excuse’ for his non-performance. In the word of McKendrick, the question of whether or not a particular contract has been breached depends upon the precise construction of the terms of the contract. The decision in Decro-Wall International SA v Practitioners in Marketing Ltd  1 WLR 361 states that a breach of contract does not automatically bring a contract to an end but rather, gives various options to party who is not in breach (‘the innocent party’).
Where there is breach of a valid and enforceable contract as Woyome/Waterville asserts, it gives to the innocent party a right to recover damages in respect of the loss suffered as a result of the breach of Ghana Government, unless the liability for breach has been effectively excluded by an appropriately drafted exclusion clause. The starting point must be that the aim of an award of damages is to compensate the claimant for the loss which he has suffered as a result of the defendant’s breach of contract. For the businessperson- being it judicial (company) or as an individual [sole trader]; as in Re Woyome and the Republic of Ghana, was expectation of interest or profit on his investment. The general rule is that an award of damages for breach of contract seeks to protect the claimant’s expectation.
In the United Kingdom, this general principle can be found in the judgement of Parke B in Robinson v. Harman (1848) 1 Ex 850, 855: ‘the rule of the common law is, that where a party sustains loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.’ The justification for the award of the expectation measure is that a binding promise creates in the promise an expectation of performance and the remedy granted for the breach of such a binding promise seeks to fulfil or to protect that expectation. But there is an element of ambiguity in the proposition that damages seek to put the claimant in the position he would have been in had the contract been performed. The first ambiguity relates to the identification of the loss and the second is on the measurement of that loss.
In White Arrow Express Ltd v. Lamey’s Distribution Ltd  Trading Law Reports 69, 73, Lord Bingham MR stated that the Robinson v. Harman ‘formulation assumes that the breach has injured [the claimant’s] financial position: if he cannot show that it has, he will recover nominal damages only’. The important question to ask is whether the Attorney-General(s) and indeed the trial judge in Re Woyome/Waterville were satisfied with everything in the claimant’s Particulars of Claim. Traditionally; a civil claim begins with an informal letter from the claimant or his agents, addressed to the Defendant, setting out the claimant’s alleged claims in which the claimant asks the defendant to respond to the claim by a specific time.
Discussions on the procedural issues are not within the scope of this article. But it is worth saying that if this was done then the Claimant will approach the court with his Particulars of Claim. Usually, this will be followed by Counterclaims and Allocation Questionnaire and sometimes, out-of-court-offers or settlement. Various Protocols/Case Management encounters run into civil actions- all in attempt to get to the root of the matter and to avoid unnecessary exaggerations and claims. In our judgement the principle of proportionality and floodgate should have been the watchdog of the court and the Attorney-General. Reasoning that Ghana is poor and cannot afford to pay similar successful claims in foreseeable future?
The Rule of Proportionality
In normal rule of practice the courts will not meddle in what the parties to a contract have mutually agreed to unless there’re appears to be undue influence or coercion of the will from a dominant party. In attempt to frustrate the quantum of the damages, most prudent defence lawyers will legally, bring heavens on earth by asking the court /judge to strike out all unsubstantiated claims. Judges are always minded by the law and the prevailing policy considerations in their decisions. For example, if the judge has the reason to believe that awarding claim against a small and impoverish business might lead to its liquidation and eventual loss of employment then the court might narrow the ratio of his/her decision.
Proportionality is a general legal principle for avoiding excess and “reviewing the conformity to the law of any public discretionary action.” According to Tracy A. Thomas, it is a “yardstick for measuring the appropriate relationship between the ends and the means of discretionary action.” The context here is: was it proportionate for Ghana to bow to $42,000.00? Yes US legal scholars have not embraced the advent of this new test because it “sounds unfamiliar, dangerous for the protection of civil rights, and illustrative of the conservatism of the Court.” But Thomas admits that these fears appear well-founded as the Supreme Court has co-opted proportionality as its own standard for protecting governmental and corporate interests against the individual plaintiff such as Mr Woyome?
In this article we have attempted to show that the sword of justice must strike on equal terms and also against the injustices of the robotic State and its treacherous institutions and apparatuses- which have led to immeasurable loss of lives and properties which far outweighs the speculated $42 million judgement debt. Yet in any legally binding contract, if a claimant fails to show evidence to his claims and the court acting as an “intelligent bystander” is with the opinion that a judgement might wind up a viable business or expose many workers to redundancy or open itself to much litigation, then the court will use it discretion to seal the floodgate. Here is where the Court and the Attorney-General(s) failed.
Credit JusticeGhana/TheOmanbaPa Research Group