Atswa Business Law

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NOTE : This is a work in progress. All topics in the syllabus are covered butediting for necessary corrections is in progress.

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BUSINESS LAW

FOR

ACCOUNTING TECHNICIANS SCHEMEWEST AFRICA

(ATSWA)

STUDY PACK


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Copy (c) 2009 by Association of Accountancy bodies in West Africa (ABWA). No rights

reserved. No part of this publication may be reproduced or distributed in any form or by

any means, or stored in a database or retrieval system, without the prior written consent of

the copyright owner. Including, but not limited to, in any network or other electronicstorage or transaction or broadcast for distance learning.

Published by

ABWA PUBLISHERS

Akintola Williams House

Plot 2048, Michael Okpara Street

Off Olusegun Obasanjo WayZone 7, P. O. Box 7726

Wuse District, Abuja, FCT

Nigeria.

DISCLAIMER

The book is published by ABWA, however, the views are entirely that of the writers.


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PREFACEINTRODUCTION

The Council of the Association of Accountancy Bodies in West Africa (ABWA)

recognized the difficulty of students when preparing for the Accounting Technicians

Scheme West Africa examinations. One of the major difficulties has been the non-

availability of study materials purposely written for the Scheme. Consequently, students

relied on text books written in economic and socio-cultural environments quite different

from the West African environment.

AIM OF THE STUDY PACK

In view of the above, the quest for good study materials for the subjects of the

examinations and the committee of the ABWA Council to bridge the gap in technicalaccounting training in West Africa led to the production of this Study Pack.

The Study Pack assumes a minimum prior knowledge and every chapter reappraises basic

methods and ideas in line with the syllabus.

READERSHIP

The Study Pack is primarily intended to provide comprehensive study materials for

students preparing to write the ATSWA examination.

Other beneficiaries of the Study Pack include candidates of other Professional Institutes,

students of Universities and Polytechnics pursuing first degree and post graduate studies in

Accounting, advanced degrees in Accounting as well as Professional Accountants who

may use the Study Pack as reference materials.

APPROACH

The Study Pack has been designed for independent study by students and as concepts have been developed methodically or as a text to be used in conjunction with tuition at schools

and colleges. The Study Pack can effectively be used as course text and for revision. It is

recommended that readers have their own copies.


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STRUCTURE OF THE STUDY PACK

The layout of the chapters has been standardised so as to present information in a simple

form that is easy to assimilate.

The Study Pack is organised into chapters. Each chapter deals with a particular area of the

subject, starting with learning objective and a summary of sections contained therein.

The introduction also gives specific guidance to the reader based on the contents of the

current syllabus and the current trends in examinations. The main body of the chapter is

subdivided into sections to make for easy and coherent reading. However, in some

chapters, the emphasis is on the principles or applications while others emphasise methods

and procedures.

At the end of each chapter is found the following

Summary Points to note (these are used for purpose of emphasis or clarification) Examination type questions and; Suggested answers

HOW TO USE THE STUDY PACK

Students are advised to read the Study Pack and attempt the questions before checking the

suggested answers.


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FOREWORD

The ABWA Council, in order to actualise its desire and ensure the success of students atthe examinations of the Accounting Technicians Scheme West Africa (ATSWA), put in

place a Harmonisation Committee, to among other things, facilitate the production of Study Packs for student. Hitherto, the major obstacle faced by students was the dearth of study text which they needed to prepare for the examinations.

The Committee took up the challenge and commenced the task in earnest. To start off the process, the existing syllabus in use by some member Institute were harmonised andreviewed. Renowned professionals in private and public sectors, the academia, as well aseminent scholars who had previously written books on the relevant subjects anddistinguished themselves in the profession, were commissioned to produce Study packsfor the twelve subjects of the examination.

A minimum of two Writers and a Reviewer were tasked with the preparation of a StudyPack for each subject. Their output was subjected to a comprehensive review by

experienced imprimaturs. The Study Packs cover the following subjects:

PART I1. Basic Accounting Processes and Systems2. Economics3. Business Law4. Communication Skills

PART II1. Principles and Practice of Financial Accounting2. Public Sector Accounting3. Quantitative Analysis4. Information Technology

PART III1. Principles of Auditing2. Cost Accounting3. Preparing Tax Computation and Returns4. Management

Although, these Study packs have been specially designed to assist candidates preparingfor the technicians examinations of ABWA, they should be used in conjunction with other materials listed in the bibliography and recommended text.

PRESIDENT, ABWA


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PAPER 3: BUSINESS LAW

AIMS:

To examine candidates knowledge and understanding of:

the legal environment in which organisations in general and the accountancy

profession in particular operate; and

the legal implications of business relationships and the relevance of legal rules to

business sector, commerce and industry.

OBJECTIVES :

On completion of this paper, candidates should:

a. know the structure, jurisdiction and functions of the legal systems and the rules

applicable to them;

b. have a working knowledge of the general principles of contract to aid their daily

accounting activities;

c. be familiar with the legal rules governing specific contracts;

d. be able to distinguish between the various forms of business associations and be

conversant with the main rules governing their operations;

e. be able to identify and appreciate the respective duties of bankers and customers and

recognise the nature of negotiable instruments as may be suitable for use asappropriate in their daily activities as Accounting Technicians; and

f. be able to apply the principles of law to simple case studies.

STRUCTURE OF THE PAPER

The paper will be a three-hour paper divided into two sections:

Section A (50 Marks): This shall consist of 50 compulsory questions made

up of 30 multiple-choice questions and 20 short

answer questions covering the entire syllabus.

Section B (50 Marks): Six questions, out of which, candidates are expected

to answer any four, at 12 marks each.

1. The Legal System 15%


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(a) Sources of Law: Common law, equity and statutes of general application; JudicialPrecedent, Legislation, Customary Law and International treaties.

(b) The Court System: An outline of the structure and hierarchy of courts;Qualification of judges; composition and jurisdiction of the various courts. Special

courts.(c) Forms of Legal Liability: Distinction between criminal and civil liability

(d) Professional Ethics: Negligent misstatements

2. Law of Contract 20% Nature and essential elements of a valid contract: offer, acceptance, consideration,intention to create legal relations, capacity and consent.Conditions, warranties and exemption clauses.Illegal contracts and contracts in restraint of trade, vitiating factors.

Discharge of contracts and remedies for breach of contract.3. Special Contracts 30%

(a) Agency:Creation and types; authority of agents; rights and duties of principals andagents and termination of agency

(b) Sales of GoodsMeaning and Types of goods. Implied terms. The Caveat Emptor Doctrine.Transfer of title, passing of risk and the Nemo Dat Quod Non Habet rule.Breach of contract for sale of goods and remedies of the parties.

(c) Hire Purchase and Equipment LeasingMeaning Formalities under the Common Law and the Hire Purchase Act.Implied and Void terms. Rights and Obligations of the parties. Termination.Operating and Finance Leasing.

(d) Contract of Employment Nature and formation. Rights and Duties of the parties. Termination andDismissal. Remedies for breach of contract. Redundancy.

(e) Insurance:Meaning and Classification. Share capital. Meaning and features of thefollowing concepts and principles insurable interest, premium, indemnity,utmost good faith, conditions and warranties, subrogation and contribution.

4. Law of Business Associations 20%

(a) Partnership


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Types and determination of existence. Authority of partners. Rights and duties of partners inter se. Partners and third parties. Dissolution of partnership.

(a) Companies: Nature and functions of the Corporate Affairs Commission. Types of

companies. Process of incorporation. Company securities (shares anddebentures), directors, company meetings. Majority Rule and Minority protection. Winding-up or liquidation.

(a) Others:Business Names, Incorporated Trustees and Unit trusts.

5. Banking and Negotiable Instruments 15%

(a) The legal relationship between banker and customer and their respective duties.

(b) Meaning and characteristics of Negotiable Instruments. Bills of exchange,

Cheques and Promissory notes. Crossing of cheques.(c) Holder, Holder for value and holder-in- due-course.

(d) Rights and Duties of the parties.

RECOMMENDED TEXTS

1. ATSWA Study Pack on Business Law

2. Obilade, A.O. - The Nigerian Legal System, Spectrum Books.

3. Bondzi-Simpson, P.E. - Company Law in Ghana, Methodist Book Depot,Accra

OTHER REFERENCE BOOK Atiyah, P. S. - Sales of Goods, Pitman, London


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TABLE OF CONTENTSPREFACE .. iiiFOREWORD ........ vACKNOWLEDGMENT .......... vii

CHAPTER 1 - SOURCES OF LAW1.0 - Learning Objectives ......... 191.1 - Introduction ......... 191.2 - Law and its S ources.......... 19

1.2.1 - Meaning of Law............ 191.2.2 - Sources of Laws............ 19

1.3 - The Common Law . .......... 201.3.1 - Meaning Of Common Law........... 201.3.2 - Nature and Development of The Common Law ......... 201.3.3 - Meaning, Nature and Development of Equity.............. 20

1.4 - Customary Law........ 21

1.4.1 - The Meaning and Development of Customary Law.........21 1.4.2 - Examples of Customary Law........21 1.5 - Legislatio n.........22

1.5.1 - Sources of L egislation.......... 221.5.2 - Interpretation of Statutes........ .. 23

1.6 - Case Law, Precedent and Law Reporting....... ............. 251.6.2 - Law Re porting.......... 26

1.7 - Summary and Conclusion........ 261.8 - Revision Questions....... 26

CHAPTER 2 - THE COURTS SYSTEM2.0 - Learning Objectives......... 272.1 - Introduction...... 272.2 - The Courts- Hierarchy and Structure......... 272.3 - The S uperior Courts......... 27

2.3.1 - The Supre me Court.......... 272.3.2 - The Court Of Appeal........ 282.3.3 - The High Court and others of coordinate jurisdicti on...... .29

2.4 - The Inferior Courts........... 302.4.1 - The Circuit Court 302.4.2 - The District Court 302.4.3 - Other Lower Courts. 30

2.5 - Important Judicial Processes 302.5.1 - Writ of Summons. 302.5.2 - Writ of Execution 30

2.6 - Criminal and Civil Liability.. 312.6.1 - Criminal Liability 312.6.2 - Civil Liability. 31

2.7 - Basic Tortious Liability. 322.7.1 - Defamation.. 32


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2.7.2 - Negligent Misstatements. 322.7.3 - Passing Off.. 33

2.8 - Summary and Conclusion. 332.9 - Revision Questions.... 33

CHAPTER 3 - LAW OF CONTRACT 13.0 - Learning Objectives.. 353.1 - Introduction... 353.2 - Definition and Elements of Contract 35

3.2.1 - Definition of Contract.. 353.2.2 - The Elements of Contract. 35

3.3 - Offer and Acceptance.... 363.3.1 - Offer... 363.3.2 - Invitation to Treat.... 363.3.3 - Acceptance.. 38

3.4 - Consideration... 38

3.4.1 - Definition.... 383.4.2 - Types... 393.4.3 - General Rules.. 393.4.4 - Modifications.. 40

3.5 - Intent ion to Create Legal Relations...... 413.5.1 - Domestic and Social Agreements.... 413.5.2 - Commercial Agreements..... 42

3.6 - Capacity..... 433.7 - Summary and Conclusion..... 453.8 - Revision Questions.... 45

CHAPTER 4 - LAW OF CONTRACT II4.0 - Learning Objectives.......... 474.1 - Form and Contents o f a Contract.............. 47

4.1.1 - Form of a Con tract.......... 474.1.2 - Contents (or terms) of a Contract............ .. 48

4.2 - Vitiating Elements of Contract............. 524.2.1 - Mis take......... 534.2.2 - Misrepresentation........ 554.2.3 - Duress......... 574.2.4 - Undue Influence......... 574.2.5 - Illegality......... 584.2.6 - Termination or discharge of Contract.......... 62

4.3 - Summary and Conclusions ......... 664.4 - Revision Questions ....... 67

CHAPTER 5 - AGENCY5.0 - Learning Objec tives................. 695.1 - Introduction.......... 695.2 - Definition a nd Types......... 69


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5.2.1 - Definition of Agency.......... 695.2.2 - Types of Agency......... 70

5.3 - Creation of Agency 1- Consent......... 715.3.1 - Express Agency.......... 715.3.2 - Implied Agency.......... 71

5.4 - Creation of Agency 11- Operation of Law............ 735.4.1 - Agency of Necessity......... 735.4.2 - Agency of Cohabitation....... 73

5.5 - Creation of Agency 111- Ratification........ 745.6 - Obligations of Agency......... 74

5.6.1 - The Duties of the Agent....... 745.6.2 - The Duties of the principal and the rights of the principal and

the agent5.7 - The Effects of Agency....... 75

5.7.1 - Where the agent contracts as an agent for a named principal... 755.7.2 - Where th e agent contracts for an unnamed principal........ 76

5.7.3 - Where the agent contracts for an undisclosed principal....... 765.8 - Terminatio n of Agency...... 775.8.1 - Act of the Par ties...... 77

5.8.2 - Operation of Law. 775.9 - Summary and Conclusions 77

5.10 - Revision Questions. 78

CHAPTER 6 - SALES OF GOODS6.0 - Introduction... 796.1 - Classificati on of Goods..... 806.2 - Form of the Contract..... 826.3 - The terms of the contract of sale of goods..... 83

6.3.1 - Title.. 846.3.2 - Description.. 856.3.3 - Merchantable Quality.......... 866.3.4 - Sales by sample........ 88

6.4 - Other Terms....... 886.4.1 - Implied terms as to time....... 896.4.2 - Implied terms as to price........ 896.4.3 - Transfer of property between seller and buyer...... 896.4.4 - Passing of Risk...... 92

6.5 - Transfer of a title by a Non- owner....... 956.5.1 - The exceptions......... 95

6.6 - Breach of Sale of Goods Contract and the Remedies of theParties

6.6.1 - Buyers' Rights........ 986.6.2 - Sellers' Ri ghts........ 99

CHAPTER 7 - HIRE PURCHASE


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7.0 - Introduction............... 1037.1 - Definition of Hi re Purchase....... 103

7.1.1 - A Credit Sale Agreement........ 1047.1.2 - A Condi tional Sale Agreement......... 104

7.2 - Obligations of the Parties to a Hire Purchase........... 104

7.2.1 - Reasons for the adoption of the Hire Purchase System ..1057.3 - Obligations and Rights of the Parties. ....... 1067.3.1 - Obligations of the Parties at Common Law...106 7.3.2 - Rights of the Parties at Common Law...108

7.4 - The Hire- Purchase Act 1965......108 7.4.1 - The Purpose of the Act..108

7.4.2 - The Contents of th e Act............. 1097.4.3 - Effect of Non- compliance................ ............. 1107.4.4 - Void Provisions.... 1107.5 - Obligations and Rights of the Parties under the Hire Purchase Act

7.5.1 - Implied Terms Under the Hire Pur chase Act............ 1117.5.2 - Exclusion of the Terms Implied by the Ac t........... 1127.5.3 - Hirer's right to terminate agr eement.............. 1127.5.4 - Re covery of Goods................ 1137.6 - Summary and Conclusio ns .................. 125

7.7 - Revision Questions .................... 126

CHAPTER 8 - CONTRACT OF EMPLOYMENT8.0 - Learning Objectives..... 1178.1 - Introduction..... 1178.2 - The Nature and formation of the Contract of Employment... 118

8.2.1 - Formation of the Contract of Emp loyment..... . 1188.2.2 - Approaches to determining the nature of the Contract of

Employment8.2.3 - Incidents of the Contract of Service and Contract for Service.. 119

8.3 - The Rights of the Emp loyer and the Worker......... 1208.3.1 - The Rights of the Employer...... 1208.3.2 - The Rights of the Worker..... 120

8.4 - The Duties of the Employer and the Worker.... 1208.4.1 - Duties o f the Employer.. 1208.4.2 - Duties of the Worker....... 122

8.5 - Contracts in Restraint of trade..... 1228.6 - Te rmination of Employment.... 123

8.6.1 - General grounds for termination..... 1238.6.2 - Fair termination...... 1238.6.3 - Unfair termination ..... 124

8.7 - Redundancy ........... 1248.8 - Remedies . ........... 1258.9 - Summary and Conclusions ............. ........... 125


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8.10 - Revision Questions ... ......... 126

CHAPTER 9 - LAW OF INSURANCE9.0 - Learning Objectives . 127

9.1 - Introduction 1279.2 - Formation of Contract of Insurance 1289.2.1 - Temporary Cover. 1319.2.2 - Insurable Interest.. 131

9.3 - Types of Policy 1329.3.1 - Life Insurance 1329.3.2 - Personal Accident Insurance.. 1339.3.3 - Fire Insura nce 1339.3.4 - Liability Insurance. 1339.3.5 - Motor Vehicle Insurance. 1339.3.6 - Marine Insurance.. 134

9.3.7 - Burglary Insurance... 1349.3.8 - All Risks Insurance.. 1349.4 - The Concepts of Indemnity and Subrogation 134

9.4.1 - Indemnity 1349.4.2 - Subrogation. 1359.4.3 - Contribution 135

9.5 - Re- insurance. 1369.6 - Summary and Conclusions 1369.7 - Revision Questions 137

CHAPTER 10 - LAW OF BUSINESS ASSOCIATIONS 1- COMPANIES10.0 - Learning O bjectives 13910.1 - Introduction. 13910.2 - Definition and Types of Companies.. 139

10.2.1 - Definition 13910.2.2 - Types of Companies 140

10.3 - Incorporation and Effects. 14010.3.1 - Promoters.. 14010.3.2 - Pre- Incorporation Contracts. 14010.3.3 - Registration 14110.3.4 - Effects of Incorporation 141

10.4 - General Principles.. 14210.4.1 - Regulation of the Company... 14210.4.2 - The Ultra vires principle 14310.4.3 - Lifting the Corporate veil.. 144

10.5 - Company S ecurities.......... 14610.5.1 - Shares... 14610.5.2 - Debentures.... 147

10.6 - The Securities and Exchange Commission.... 14810.7 - Notices, Meeting s and Resolutions 149


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10.7.1 - N otices...... 14910.7.2 - Meetings... 14910.7.3 - Resolutions... 150

10.8 - Liquidation...... 15010.8.1 - Private liquidation.... 150

10.8.2 - Official liquidation............151 10.9 - Summary and Conclusion.......... 15210.10 - Revision Questions... .......... 153

CHAPTER 11 - PARTNERSHIPS11.0 - Introduction Learning Objectives............... 15511.1 - Types of Partnership................. 155

11.1.1 - General/Limited Partnership... .......... 15511.1.2 - Features of Limited Part nership........... 15611.1.3 - Dormant or Sleeping P artner............ 15611.1.4 - Partner by Estop pel........... 156

11.2.0 - Formation of Partnership......... 15611.3.0 - Determining the Existence of Partnership............ 15711.3.1 - Joint Tenancy and Tenan cy in Common...... 15711.3.2 - The Sharing of Gross Returns...... 15811.3.3 - Receipt of a Share of t he Profits....... 15911.4.0 - Examples of Relationships where Persons carry on Business

but Are not Partners .............................................................. ........ 15911.4.1 - Legality of Partn erships........ 16011.4.2 - Relationship betwe en Partners...... 16011.4.3 - Remedy for Breach of Partnership Agr eement..... 16211.5.0 - Relations of Partners and Third Parties............ 16211.5.1 - Partners' Po wers........ 16211.5.2 - Extent of Power.... 16211.5.3 - Partner's Liabilities...... . 16311.6.0 - Dissolution of Pa rtnership........ 16511.6.1 - On Application by Partner the Court may decree Dissolution..... 16511.6.2 - The Effect of a Dissolution....... 16611.6.3 - Application of Partnership Property on Dissolution......... 166

11.7 - Summary and Con clusions ...... 16711.8 - Revision Ques tions .... .. 167

CHAPTER 12 - NEGOTIABLE INSTRUMENTS AND BANKING12.0 - Learning Objectives............. 16912.1 - Introduction................. 16912.2 - Meaning, Types and Characteristics of Negotiable Instruments

12.2.1 - Negotiable Instrument s................ 16912.2.2 - Promissory Notes.................. 17012.2.3 - Certificates of Deposit.................. 17012.2.4 - Bill of Exchange.................... 170


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12.2.5 - Cheques................ 17012.2.6 - Negotiability................. 17112.2.7 - Order Paper and Bearer Pap er.................. 17112.2.8 - Endorsement................. 171

12.3 - Rights and Duties of Parties to a Bill of Exchange..................... . 172

12.3.1 - Holders.................. 17212.3.2 - Dishonour................. 17212.3.3 - Discharge.............. 173

12.4 - Rig hts and Duties Bankers and Customers................. 17312.4.1 - Banking............. 17312.4.2 - Relationship of Banker and Customer.............. 17412.4.3 - Termination of Duty to pay.............. 174

12.5 - Unit Trusts................ 17512.6 - Summary and Conclusion............ 17512.7 - Revision Ques tions........... 176

APPENDIX ........177 APPENDIX II ........... 195

SAMPLE QUESTION 2 ...........197

SAMPLE II ........205

BIBLIOGRAPHY ...... ..209


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TABLE OF CASES

AAngu v Atta (1916) PC '24-28

Ashbury Railway Carriage Co v Riche (1875) L R 7 H L 653BBuama v Oppong, [1992] 2 GLR 213

CCarlill v Carbolic Smoke Ball Company [1893] 1 QB 256Curie v Misa (1875) LR 10 Ex 153

DDe Francesco v Barnum [1890] 45 Ch.D. 430, Ch.D

Diab v Quansah [1974] 1GLR 101Doyle v White City Stadium Ltd [1935] 1 KB 110 CADunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] A C 847, H L

EEdwards v Skyways Ltd [1964]1 WLR 349

GGordon v Essien, [1992] 1 GLR 232

HHughes v Metropolitan Railway Co. (1877) 2 App Cas 439 H.LHyde v Wrench (1840) 3 Beav 334

IIn Cohen (WA) Ltd v Comet Construction Co Ltd; Ghana Commercial Bank (Claimants)[1966] GLR 777In Re McArdle [1951] Ch 669In Republic v James Town Circuit Judge Ex parte Annor [1978] GLR 453

JJones v Padavatton [1969] 1WLR 328

K Kessie v Charmant [1973] 2 GLR 194

MMerritt v Merritt [1970] 1 WLR 1121, CA


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N Nash v Inman [1908] 2 K B 1

OOrthodox School of Peki v Tawlma Abels [1974] GLR 421

PPartridge v Crittenden [1968] WLR 204Payne v Cave (1789) 3 Term Rep. 148Pharmaceutical Society v Boots Cash Chemists Ltd [1953] QB 40Pinnel's case (1602) 5 Co Rep 117Pioneer Construction Products Ltd v Faddool [1974] 1 GLR 76

R Rose and Frank Co. v Crompton Brothers [1925] AC 445 HL

SSalomon v Salomon [1897] AC 22Spencer v Harding (1870) L.R.5.C.P. 561


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CHAPTER 1

SOURCES OF LAW

1.0 LEARNING OBJECTIVES

Upon completion of this chapter, readers should be able to: Define law. Explain the purpose of law. identify the laws of Ghana as Ghanaian candidates and the laws of Nigeria as

Nigerian candidates discuss the scope of each of the laws of Ghana and Nigeria mention and explain the forms of legislation in Ghana and Nigeria differentiate the approaches to legal interpretation

1.1 INTRODUCTION

Legal issues confront us all the time. Some legal knowledge is therefore important

for everybody. Laws ensure orderliness in society and every human activity is

regulated by law. To be very functional persons we need to appreciate the laws

that regulate the various activities we are engaged in. The purpose of this chapter

is to explain what the law is and its role in society. The chapter is also to identify

all the laws of Ghana and Nigeria and where they are derived from. To avoid

chaos and ensure orderliness every human grouping must have rules and

regulations that guide behaviour. The development of the law and how the laws

are applied are also discussed. Finally the chapter examines the various ways by

which the laws are interpreted to give meaning to them.

1.2 LAW AND ITS SOURCES1.2.1 Meaning of Law

The primary area of interest is the law and where it is derived from. It is

important to know that the law basically is the rules and regulations by

which a society is governed. All human behaviour is shaped in one way or

the other by various laws. People may not voluntarily want to meet the


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expectations of the law. However they may conform because of the

realisation that failure to do so will attract sanctions.

1.2.2 Sources of LawsThese laws may originate from several sources. Article 11 of the

Constitution of the Republic of Ghana, 1992 enumerates the laws of Ghana.

Article 11. (1) States:

The laws of Ghana shall comprise - (a) this Constitution; (b) enactments

made by or under the authority of the Parliament established by this

Constitution; (c) any Orders, Rules and Regulations made by any person or

authority under a power conferred by this Constitution; (d) the existing law;

and (e) the common law.'

1.3 THE COMMON LAW

1.3.1 Meaning of Common Law

Article 11(2) of the 1992 Constitution defines the common law of Ghana

as the rules of law generally referred to as the common law, the rules

generally known as the doctrines of equity and the rules of customary law.

The general concept of common law therefore has three components

namely the rules of common law, the principles of equity and customary

law. Sometimes common law refers to both the rules of common law and

the principles of equity which were received from England and other times

only to the rules of common law developed in England.

1.3.2 Nature and development of the common law

The rules of common law are the body of laws which were developed inEngland in the 12th Century. They emerged out of the mass of customary

law of the English. After the Norman Conquest, a body of important and

powerful men known as the Curia Regis (Kings Council) assisted the

Norman Kings to rule. They performed many functions. It eventually led

to the development of courts to hear cases of a particular kind. By the 13th


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members of a particular community as binding upon them. The Constitution,

however, prohibits all customary practices which dehumanize or are injurious to

the physical and mental well-being of a person.

Under the Supreme Court Ordinance of 1876, customary laws were applied and

enforced if they were not repugnant to natural justice, equity and good conscience.

Under the High Court (Civil Procedure) Rules, 1954, the content and existence of

customary law was regarded by the court as question of fact in much the same way

as English courts treat foreign laws as facts. A further indication of the direction of

development of customary law is stated in Angu v Atta (1916) PC '24-28, 43 thus:

As is the case of all customary law, it has to be proved in the first instance by

calling witnesses acquainted with the native customs until the particular customs

have, by frequent proof in the Courts, become so notorious that the Courts take

judicial notice of them.

The situation in Ghana is almost the same in Nigeria. Customary Law is one of the

sources of Nigerian Law. Under the received clause, Customary laws and practices

that are repugnant to natural justice and good conscience are not recognised as part

of the Nigerian legal system.

1.4.2 Examples of customary law

Customary law continues to be the major law that regulates matters relating to

chieftaincy, family relationships and property rights. Customary rules and

practices regulate the institution of chieftaincy in terms of enstoolment or

enskinment, operation and removal. Acquisition of rights in land especially family

or stool ones is also based on customary practices. The whole spectrum of family

relationships covering marriage, birth, adultery, divorce, death, succession andinheritance among others are mainly on customary law. Generally there is

patrilineal and matrilineal inheritance and succession and different communities

are regulated by one or the other. There are also a variety of customary practices

that regulate various economic activities in different communities. There is,

therefore, a multiplicity of customary laws. Due to the impact of political and


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socio-economic changes in society existing customary laws are increasingly

ceasing to be applied in their traditional forms.

In Nigeria, the 1999 Constitution recognises the supremacy of the constitution, andalso the principle of federalism which devolves power between the Federal

Government and the federating 36 States and the Federal Capital Territory, Abuja.

1.5 LEGISLATION

1.5.1 Sources of legislation

Legislation is law passed by Parliament in the form of Acts of Parliament or

Statutes. Legislation may also be exemplified by the Constitution, Acts, Decrees,

Edicts and Subsidiary legislation.

A body usually set up to draft a constitution for a country is known as a

Constituent Assembly. The body that was formed to draw up the 1992 Constitution

was called the Consultative Assembly. The Constitution is the highest and

fundamental law of any country. The 1992 Constitution is therefore the supreme

law of Ghana and as indicated in Article 1(2) of the Constitution any law that is

inconsistent with any provision of the Constitution is to the extent of the

inconsistency void. This is also applicable n Nigeria. Sect of 1999 Constitution

marks the constitution as the grand norm. The Constitution determines the kind of

government suitable for the country and in the preamble identifies it as that

ensuring liberty, equality of opportunity and prosperity. Other principles are

universal adult suffrage, the rule of law and the protection and preservation of

fundamental human rights and freedoms. Article 4(1) of the 1992 Constitution

shows Ghana as a sovereign state which is a unitary republic. Under Article 3(1) of the Constitution, Parliament has no power to pass a law to make Ghana a one-party

state. The Constitution regulates many aspects of the country. It creates and

defines the scope and powers of the three organs of state namely the Executive, the

Legislature and the Judiciary. It also touches on citizenship, fundamental human


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rights, chieftaincy and the code of conduct for Public Officers among others. This

provision is also applicable to Nigeria.

Statutes cover a very broad scope. They may be received English Statutes,colonial ordinances, Acts of Parliament and Decrees made under military regimes.

It is important to note that some statutes of England apply in Ghana as statutes of

general application by virtue of S 119 of the Courts Act, 1993 (Act 459). They are

however subject to the statutes of Ghana and so where there is a conflict the laws

of Ghana will prevail. Laws passed by military governments are known as

Decrees. They constitute an important part of the existing written laws. The

National Liberation Council Decrees, (NLCDs) National Redemption Council

Decrees, (NRCDs) the Supreme Military Council Decrees (SMCDs), The Armed

Forces Revolutionary Council Decrees (AFRCDs) and the Provisional National

Defence Council Laws (PNDCLs) are still part of our statutes. In Nigeria, the 1 st

day of January 1900 is the bench mark. Any law that was in force as at 1 st January

1900 is a statute of General Application.

Since the coming into force of the Constitution, 1992 many Acts of Parliament

have been passed. These are the enactments made by or under the authority of the

Parliament established by the Constitution. Their numbers are growing by the day

and it is expected that the dire need for law reforms in many areas will continue to

increase their scope.

Finally there are the body of laws referred to as delegated or subsidiary legislation.

These are Orders, Rules and Regulations made by any person or authority under a

power conferred by the Constitution or any other law. Parliament confers this power by an Act of Parliament. They may come by way of constitutional

instruments, executive instruments or legislative instruments. They are subsidiary

laws because they are subject to being published in the Gazette and also being laid

before Parliament before they come into effect.


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Legislation constitutes today the most widespread of the laws and will continue to

be so because the law has to respond to changes taking place in society and

therefore the necessary laws will have to be passed to meet that need. In addition

the need to keep the law effective and up to date will call for reforms and newlegislations.

Edicts are proclamations of laws made. Historically, they could be royal

pronouncements from the King or the Queen or commands from the Chiefs and

their council of elders.

The situation in Ghana is almost the same with that of Nigeria, except for the

federal constitution operating in Nigeria while Ghana has a unitary constitution. In

Nigeria, the military Decrees are now part of the Laws of the federation, with each

codified as an Act of the Parliament; while military Edicts at the State level are

being referred to as the Laws of the various component States.

1.5.2 Interpretation of statutes

The courts are responsible for analysing, interpreting and construing the language

of Acts of Parliament in order to determine the intention of the Legislature. To

enable judges interpret statutes properly, they are guided by statutory rules or

common law rules. Among the statutory rules are reference to the interpretation

section of any Statute, the Interpretation Act, 1960 (CA 4) and the common law

rules on statutory interpretation. Among the common law rules are the literal rule,

the Golden rule, the Mischief rule, the Ejusdem generis rule, the Expressio unius

est exclusio alterius rule, the Noscitor a sociis rule and the various presumptions.

Acts usually have an interpretation section which contains definitions of certain

key words used in that Act. These are of immense help to not only judges but all

who require the understanding of such Acts. In Ghana, the Interpretation Act,

1960(CA 4) is the major guide to statutory interpretation. It lays down certain

basic rules of interpretation for all Acts. The internal aids include the long title of


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the Act and its preamble. Headings, side notes and punctuation may also be

looked at to bring out the meaning of ambiguous words. There is also the use of

extrinsic material. These are the sources of information about a legislation apart

from the Act itself. There was a severe restriction on their use but this is nowrelaxed. Reference may be made to international conventions and treaties which

form the basis of the legislation, reports to the Law Reform Commission and the

Hansard.

The Literal rule, is for giving words their ordinary and plain meaning if they are

clear and unambiguous. Under this rule it is argued that even if the interpretation

produces an absurd or perverse decision it was up to Parliament to put matters right

and not judges.

Under the Golden rule the judge adopts the interpretation which produces the least

absurd result. This is adopted especially where the words of a statute are

capable of two or more meanings. It is even argued that it can be resorted to where

the words have only one meaning but a literal interpretation would lead to an

absurdity.

The Mischief rule is based on looking at what mischief or defect in the common

law the Act was passed to remedy and do the interpretation on that basis. It is

associated with the modern purposive approach to interpretation on that basis. It is

associated with the modern purposive approach to interpretation where the

construction which will promote the aims and purposes underlying the provision is

what is adopted by the judge. Under the Ejusdem generis rule where general words

follow particular words the general words should be construed as meaning personsor things of the same class or genus. For example if the Act referred to 'lions,

tigers and other animals', the general words 'other animals', should be interpreted in

terms of the particular words, lions, tigers to mean other kinds of wild animals and

not domesticated animals.


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The expressio unius est exclusio alterius rule means that the express mention of

one or more things implies the exclusion of others. For example if the Act simply

mentioned 'lions and tigers' other kinds of wild animals are excluded.

The Noscitur a sociis rule is where the meaning of a word is derived from the

context in which it is found.

All these collectively facilitate statutory interpretation and thereby make for the

understanding of the Acts.

1.6 CASE LAW, PRECEDENT AND LAW REPORTING

1.6.1 Case law and Precedent

Decisions of judges constitute a large part of the laws. The existing unwritten law

is the decisions of the Superior Courts of Ghana. The doctrine of stare decisis et

non quieta movere is followed both in Ghana and Nigeria. It simply means stand

by past decisions and do not disturb things at rest. This is also known as the

doctrine of binding judicial precedent. The principle is that a c ourts decision

based on a particular set of circumstances is binding on other courts in later cases n

situations where the relevant facts are the same or similar. In simple terms it

means judges make use of previously decided cases. This is however within

certain limits since it is linked with the succession of Courts. Courts are bound by

the decisions of courts superior in the judicial hierarchy. This however is not

applicable to inferior courts since higher inferior courts do not bind lower inferior

courts. The High Courts and Regional Tribunals are not bound by their own

decisions but their decisions bind all lower courts. The Court of Appeal is bound

by its own previous decisions which also bind all Courts lower than it. Thedecisions of the Supreme Court bind all other courts. All those constitute

authoritative precedent which is generally binding and must be followed. The

Courts of Ghana also respect the decisions of the Superior Courts of other common

law jurisdictions. They may be referred to and relied upon but only of persuasive

authority. Judicial precedent brings out rules of law which help to ensure


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uniformity, consistency and certainty. This is also applicable in the Nigerian

judicial system

1.6.2 Law ReportingThe most meaningful way of showing the application of the doctrine of judicial

precedent is the reporting of such cases. The reporting of a series of cases on a

matter or issue will help to illustrate the relevant rule of law running through it.

Precedents have to be reported and available. Law Reports are the repository of the

precedents. In Ghana the Council for Law Reporting has the responsibility for the

preparation and publication of the Ghana Law Reports which contain the

judgments, rulings and opinions of the Superior Courts of the country. The

Council for Law Reporting also publishes the Review of Ghana Law which is

made up of legal articles, opinions, critiques and general expositions on various

aspects of the Law.

In Nigeria, there are different Law Reports, which also contain judgements of the

superior courts. These include the Supreme Court Law Report, Nigerian weekly

Law Report, Nigerian Monthly Law Report etc.

1.7 SUMMARY AND CONCLUSIONS

The chapter surveyed the concept of law and its role in society. Then followed an

identification of the various sources of law. It also delved into the scope of each of

the sources. There was also a look at the law in practice by the use of case law and

judicial precedent and the keeping of records by way of law reporting.

1.8 REVISION QUESTIONS1. Explain what you understand by law.

2. What purpose do laws serve?

3. Make a list of the laws of Ghana / Nigeria.

4. Discuss the scope of the common law.

5. Explain what you understand by equity.


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6. What is customary law and what is its scope today?

7. Make a list of the various sources of legislation.

8. Describe three common approaches to the interpretation of statutes.

9. What do you understand by judicial precedent?10. Describe the scope and purpose of law reporting.

MULTIPLE CHOICE QUESTIONS

1. Which of these statements is true on the meaning of Customary Law?

A. Customary Law is used as an instrument by the rulers to fix the power sector.

B. The Customary Law is not required to pass validity test because it isderived from the culture and customs of the people.

C. Customary Law deals with customs accepted by members of a particular community as binding upon them

D. Customary Law is a written law.

E. Customary law is rigid and not flexible.

2. Which of these statements is true?

A. The rules of English Common Law are the body of laws which weredeveloped in England in the 12 th century.

B. The rules of English Common Law and the doctrine of Equity have their origin in African Customary Law.

C. The English Common Law is not rigid but finds its adaptation in our legalsystem very cumbersome.

D. The Status of General Application is a law only applicable to England.

E. The English Common Law is a written Law.

3. Which of these statements is true concerning the literal rule?

A. It is very absurd.B. It is a rule manufactured by the judges for the courts convenience.C. It is for giving words their ordinary meaning.


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D. It is a rule that developed from long usage of cannon of interpretation bythe lawyers.

E. It is a rule developed from the Customary Law usage and practice.

4. The doctrine of stare decisions is basically onA. Decision of customary court.B. The decision of superior court as binding on the lower courts.C. Decision of the Chancery court.D. Decisions only emanating from tribunal.E. Decision of a Chief Judge of a State.

5. The Supreme Court of Nigeria is composed of how many justices ?A. 22B. 21C. 23D. 26E. 19

SHORT ANSWER QUESTIONS1. Common Law has its origin in. 2. The Doctrine of Equity emanat ed from 3. The bench mark for the statute of General application as one of the sources of

Nigerian Law is . 4. The concept of stare decisis in the Nigerian Legal system means 5. The appointment of a justice to the Supreme Court in Nigeria requires


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CHAPTER TWO

THE COURTS SYSTEM

2.0 LEARNING OBJECTIVESUpon completion of this chapter, readers should be able to:

explain the role of courts in the administration of justice identify the two broad groups of Courts and list the courts under

them explain the composition of each of the courts discuss the scope of the jurisdiction of each of the courts explain the process of initiating and enforcing an action distinguish between criminal and civil liabilities explain defamation, misstatement and passing off

2.1 INTRODUCTION

The courts are the major places for conflict resolution and the interpretation

of laws. Courts are institutions designed for settling disputes. They are

concerned with the administration of justice. The processes within these

courts and the ease or difficulty with which justice may be obtained all

have a strong impact on business.

2.2 THE COURTS HIERARCHY AND STRUCTURE

The Courts for a long time have been divided into two main groups namely the

Superior Courts of Judicature and the inferior or lower courts. The Superior Courts

of Judicature consist of the Supreme Court, the Court of Appeal and the High

Court or Regional Tribunal. The inferior courts are made up of the MagistrateCourts (Nigeria), Circuit Court, the District Court, the Juvenile Court, the National

House of Chiefs, the Regional House of Chiefs and every Traditional Council in

respect of the jurisdiction of any such House or Council to adjudicate over any

cause or matter affecting chieftaincy (all in Ghana); Customary/Area Courts

(Nigeria); and such other lower courts as Parliament may by law establish.


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2.3 THE SUPERIOR COURTS

2.3.1 The Supreme Court

The Supreme Court is the highest court of the land. It consists of the Chief Justice as the head, and not less than nine (not more than 21 in Nigeria)

other Justices of the Supreme Court. In both Ghana and Nigeria, the

Supreme Court is duly constituted(quorum) 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 qualification for

appointment as a Justice of the Supreme Court is high moral character,

proven integrity and not less than fifteen years standing as a qualified legal

practitioner.

The Supreme Court in Nigeria has the same status with the Supreme Court

of Ghana in terms of composition, powers and requirement for

appointment. The Supreme Court in Nigeria is created under S. 230 of the

1999 Constitution of the Federal Republic, as amended. S.232 gives

original jurisdiction to the Supreme Court in any matter between the

Federal Government and the States, or between any two or more States, or

the National Assembly and the Federation, or State Houses of Assembly

and the Federation.

The Supreme Court has original, appellate, supervisory, review and special

jurisdiction. The Supreme Court has exclusive original jurisdiction in all

matters relating to the enforcement or interpretation of the Constitution and

all matters arising as to whether an enactment was made in excess of the

powers conferred on Parliament or any other authority or person by l aw or

under the Constitution.However, by S.233 of the Constitution, the Supreme Court shall not have

original jurisdiction in respect of criminal matters.

The Supreme Court is the final appellate court. In Ghana, the Supreme

Court shall have appellate jurisdiction to the exclusion of the Court of


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Appeal to determine matters relating to the conviction or otherwise of a

person for high treason or treason by the High Court. An appeal from a

decision of the Judicial Committee of the National House of Chiefs shall lie

to the Supreme Court with the leave of that Judicial Committee or theSupreme Court.

The Supreme Court has supervisory jurisdiction over all courts and over

any adjudicating authority and may in the exercise of that supervisory

jurisdiction, issue orders and directions including orders in the nature of

habeas corpus, certiorari, mandamus, prohibition and quo warranto for the

purpose of enforcing or securing the enforcement of its supervisory power.

The Supreme Court may also review any decision made or given by it.

The Supreme Court has special jurisdiction which it exercises in three

ways. It has the exclusive jurisdiction to determine whether an official

document should not be produced in Court because its contents will be

prejudicial to the security of the state or will be injurious to the public

interest. In Ghana, the Supreme Court has the jurisdiction to entertain a

petition challenging the validity of the election of a person as President of

Ghana. It also has the jurisdiction for the removal of the President on

stated grounds.

In both countries, only the Supreme Court can entertain appeals from the

Court of Appeal.

2.3.2 The Court of Appeal

The Court of Appeal is the next most senior court to the Supreme Court. In

Ghana, it has only appellate jurisdiction and no original jurisdiction; andconsists of the Chief Justice and not less than ten Justices of the Court of

Appeal. The Chief Justice is however empowered to request other Judges

of the Superior Courts of Judicature to sit in the Court of Appeal to hear

and determine a particular cause or matter. The Court of Appeal is duly


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constituted by any three of its Judges and when so constituted the most

senior of the Judges presides.

In Nigeria however, the Court of Appeal is presided over by the Presidentof the Court of Appeal; and in addition to being an appellate court, by

virtue of S, 239 of the 1999 Constitution, has original jurisdiction to hear

and determine any question as to whether any person has been validly

elected into the office of the President or Vice President; or whether their

terms of office have ceased, or their office have become vacant.

The qualification for appointment to the Court of Appeal is high moral

character, proven integrity and not less than twelve years standing as a

lawyer. A single Judge of the Court of Appeal is empowered to sit alone to

deal with applications to the Court which do not involve the decision of a

cause or matter before the Court of Appeal.

2.3.3 The High Court and others of Co-ordinate jurisdiction

In Ghana, the High Court is made up of the Chief Justice and not less than twenty

Justices of the High Court and such other Justices of the Superior Court of

Judicature as the Chief Justice may by writing signed by him request to sit as High

Court Justices.

In Nigeria, the High Court is known as the State High Court, created under S.270

of the 1999 Constitution, headed by a Chief Judge, consisting of as many Judges as

there are Courts. The State High Courts have unlimited jurisdiction in both civil

and criminal matters.

The High Court has jurisdiction in all matters and in particular in civil and criminalmatters and such original, appellate and other jurisdiction conferred on it by the

Constitution or any other law. In addition the High Court has jurisdiction to

enforce the fundamental human rights and freedoms guaranteed by the

Constitution. The High Court has appellate jurisdiction in the judgment of the

Circuit Court in the trial of a criminal case. It also has appellate jurisdiction in any


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judgment of a District Court or Juvenile Court. The High Court has supervisory

jurisdiction over all lower courts and any lower adjudicating body and may issue

orders and directions including orders in the nature of habeas corpus, certiorari,

mandamus, prohibition and quo warranto for the purpose of enforcing or securingthe enforcement of its supervisory powers.

2.3.4 Federal High Court

S.251 of the Constitution provides for the creation of the Federal High Court with

jurisdiction to entertain matters relating to the revenue of Government, taxation,

customs and excise, banking, banks and other financial institutions, Companies and

Allied Matters, aviation, arms, drugs and poison, explosives, diplomatic and

consular matters etc. The Federal High Court has both civil and criminal

jurisdictions.

2.3.5 . Regional Tribunal

This is applicable only in Ghana. Each region in Ghana is expected to have a

Regional Tribunal established in it. 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 shall

have concurrent original jurisdiction with the High Court in all criminal matters

and 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.

In addition, it tries offences arising under Customs, Excise and Preventive Services

Management Law, Income Tax Decree Narcotic Drugs (Control, Enforcement and

Sanctions) Law and any other offence involving serious economic fraud and loss

of state funds or property. A Regional Tribunal shall have appellate jurisdiction tohear and determine appeals from the judgment or order of a Circuit Court or

District Court in any criminal trial.


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2.4 THE INFERIOR COURTS

2.4.1 The Circuit Court

In Ghana, the civil jurisdiction of a Circuit Court consists of original jurisdiction in

civil matters in personal actions arising under contract or tort where the amountinvolved is not more than100 million cedis. It includes cases or matters involving

the ownership, possession and occupation or title to land. The Circuit Court may

grant injunctions or orders in any action to stay waste or alienation or for the

detention or preservation of any property which is the subject matter of that action

or restrain breaches of contract or the commission of any tort. There is jurisdiction

for the Circuit Court in claims for relief by way of inter pleader for land or

property attached by order of a Circuit Court.

There is no equivalent of Circuit Court in Nigeria.

2.4.2 The District / Magistrate Courts

In Ghana, the District Court has jurisdiction in virtually all the areas identified for

the Circuit Courts with the exception that the value must not exceed 50 million

cedis.

In Nigeria, the Magistrate Courts are the equivalent of the District Court in Ghana;

they are not mentioned in the Constitution, but are the creation of various states

and governed by the various States Magistrate Courts Laws. Magistrate Courts,

like the High Courts, have jurisdiction in civil and criminal matters in most

southern states. They also administer both common law and equity, with powers to

grant virtually all legal and equitable remedies, up to certain prescribed limits

specified by the law setting them up in each instance.

In addition, both the Magistrate and District Courts act as Juvenile Court by

hearing and determining matters affecting juveniles and also function as familytribunal.

2.4.3 Other lower Courts

In Ghana, these include the National House of Chiefs, the Regional Houses of

Chiefs and every Traditional Council in respect of the jurisdiction of any such


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House or Council to adjudicate over any cause or matter affecting chieftaincy and

such other lower courts as Parliament may by law establish. In Nigeria, the lower

courts include Customary Courts, Sharia Court, Area Courts in the Northern States.

The Customary Court is presided over by a President, while the Alkali presidesover Area Court.

In Nigeria, Tribunals (especially under the military), are inferior courts exercising

judicial or quassi-judicial functions, complimentary to the regular courts in the

judicial system. Tribunals, in most cases, handle specialised matters or cases which

require specialised experience and expertise.

2.5 IMPORTANT JUDICIAL PROCESSES

2.5.1 Writ Of Summons

Civil proceedings are generally commenced by the filing of a writ of summons.

The writ is prepared by the plaintiff or claimants, his solicitor, the Registrar of the

court or a letter writer. Every writ shall be endorsed with a statement of the nature

of the claim, relief or remedy sought in the action.

2.5.2 Writ of Execution

There are various modes of execution of a judgment based on the relief claimed

and granted. A judgment for the payment of money can be enforced through a writ

of fiera facias (fi fa ), garnishee order and summons to show cause among others.

Judgment for the delivery of property other than land may be enforced by a writ of

sequestration, writ of attachment and writ of delivery. If the judgment is for the

recovery of possession of land then the mode of execution is by a writ of

possession. The writ of fi fa and the garnishee order will receive attention by way

of example in this text.Writ of Fieri FaciasA writ of fi fa commands the sheriff to cause to be made out a writ of attachment

on the property of the judgment debtor and by it the property is sold in satisfaction

of the judgment debt and costs and immediately after such sale the sheriff should

bring the money realised into court to be paid to the judgment creditor. The

principle is that if the judgment debtor has sufficient immovable property which


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when sold will satisfy the judgment debt and cost then his movable property must

not be attached.

2.5.3. Garnishee Orders

When the judgment creditor knows that a third party has money due to the judgment debtor he can apply for a garnishee order by which the court may order

the third party called the garnishee to appear before the court to show cause why he

should not pay to the judgment creditor the debt due him to the judgment debtor in

satisfaction of the judgment debts and costs.

2.5.4. Others

In Nigeria, there are other means of civil proceedings e.g. originating summons

which is used for declarative reliefs; and undefended list procedure which is for

action in recovery of money owed under liquidated sum.

2.6 CRIMINAL AND CIVIL LIABILITY

2.6.1 Criminal liability

A crime is an unlawful act or default which is an offence against the public and

renders the person who is guilty of the act or default liable to legal punishment. It

is an offence against the state. The sanctions are so severe that the criminal law

requires an element of moral fault on the part of the offender.The prosecution must

establish two essential requirements; actus reus (prohibited act) and mens rea

(guilty mind). For most criminal offences both elements must be present to create

criminal liability. There are however the crimes of strict liability where no proof

of mens rea is required. The standard of proof in a criminal matter is beyond

reasonable doubt.

2.6.2 Civil liability

The civil law deals with the private rights and obligations which arise between

individuals. The purpose of the action is to remedy the wrong that has been

suffered. Two great areas of civil liability are in contract and tort. The plaintiff

sues the defendant and will be successful if he can prove his case on a balance of


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probabilities. The distinction between the criminal and civil law is not based on

the nature of the wrongful act because the same act may give rise to both civil and

criminal proceedings.

2.7 BASIC TORTIOUS LIABILITY

2.7.1 Defamation

Every man is entitled to his good name and to the esteem in which he is held by

others, and has a right to claim that his reputation will not be disparaged by

defamatory statements made about him to a third person without lawful

justification or excuse. Defamation in an oral or some other transient form

constitutes the tort of slander. Defamatory statements made in writing or some

other permanent form constitutes libel for which the law presumes damage.

In order to establish a prima facie case in an action for libel or slander it is

necessary for the plaintiff to prove that the words complained of were published

against him, that the words were defamatory to him and that the words were

published by the defendant in circumstances in which the defendant is responsible

for the publication. The main defences to an action for libel or slander are

justification that is the words are true; fair comment on a matter of public interest;

absolute privilege; qualified privilege; apology and payment into court.

The Freedom of Information Act has created a paradigm shift in our jurisprudence,

in that the Act makes it possible as of right for the ordinary citizen to obtain

information from and in respect of government functionaries.

2.7.2 Negligent misstatements

Tort of negligent misstatement arises where there is a false statement of fact madeknowing it to be false, or be covering it to be false, or recklessly not caring

whether it is true or false. It is made with the intention that it should be acted upon

by another, and if so acted upon it can then constitute a ground for an action

against the maker. The principle is that if someone possessed of a special skill

undertakes, quite irrespective of contract to apply that skill for the assistance of


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another person who relies upon such skills, a duty of care will arise. The duty of

care with regard to negligent misstatement was limited to cases where a special

relationship existed. Four requirements for the existence of a special relationship

have been laid down by the judicial authorities.They are:

i) there must be an inquirer who consults another with special

knowledge,

ii) reliance by the inquirer,

iii) Such reliance is reasonable and the person of whom the inquiry was

made knows reliance is likely and

Iv) the person relying on the representation suffers loss.

Thus a duty of care exists where one party seeking information and advice was

trusting the other to exercise such a degree of care as the circumstances required

where it was reasonable for him to do that and where the other party gave the

information or advice when he knew or ought to have known the enquirer was

relying on him.

2.7.3 Passing off

The tort of passing off occurs/arises whenever a person, company or other business

organisation carries on or proposes to carry on business under a name, trademark

or appearance calculated to deceive the public or where a person in a manner

calculated to deceive in the course of trade, passes off his goods or business as

those of another. It may be done by imitating their appearance or selling them

under a similar name or trademark Its essence is deceit practiced on the public. The

purpose of an action for passing off is to prevent one trade from damaging or exploiting the goodwill and reputation built up by another. The principle is that no

man is entitled to represent that his goods or his business are that of another.

A valid course of action for passing off may be granted on a misrepresentation,

made by a trader in the course of a trade to prospective customers of his or ultimate

consumers of goods and services he supplies, calculated to injure the business or


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goodness of another trader and which causes actual damage to the business or

goodwill of the trader who brought the action.

2.8 SUMMARY AND CONCLUSIONSCourts are important institutions within the legal environment. A general study of

the courts in terms of the hierarchy and their general jurisdictions is required for a

proper appreciation of their role. The introduction to the basic judicial processes

by which an action may be initiated and the various forms of enforcement will

further expose the candidate to other aspects of the legal system. Attention was

also placed on the critical distinction between criminal and civil liability. The

chapter also introduced candidates to tort which in no small measure will

contribute to their understanding of the law.

2.9 REVISION QUESTIONS

1. Identify the two main groups of Courts in Ghana or Nigeria and list the

Courts under them.

2. What jurisdiction has the Supreme Court of Ghana or Nigeria?

3. Explain the qualifications for appointment as a judge to the courts of Ghana

or Nigeria.

4. Describe the jurisdiction of the Court of Appeal.

5. Identify and describe the jurisdiction of the High Court.

6. What is the jurisdiction of the Regional Tribunal?

7. Compare the jurisdictions of the Circuit and District

Courts.

8. Write brief notes on each of the following:

a) Writ of Summons b) Writ of Fifa

c) Garnishee order

9. Distinguish between criminal and civil liability.

10. Define defamation and describe the main types.


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MULTIPLE CHOICE QUESTIONS

1. The highest court in Nigeria or Ghana isA. Court of Appeal.B. Federal High Court.C. National Industrial Court.D. The Supreme Court.E. Customary Court of Appeal.

2. The Supreme Court in Nigeria or Ghana is headed byA. The Deputy Chairman National Judicial Council.B. The Chief Justice of Nigeria.C. The President Court of Appeal (PCA)D. The Minister of Justice and Attorney General of the Federation.E. The President of the Nigerian Bar Association.

3. The fastest means of resolving dispute in Nigeria Ghana isA. Litigation.B. Arbitration.C. Adjudication.D. Self help.E. Petition to the National Judicial Council (NJC).

4. The major disadvantage of Arbitration isA. PrivacyB. ConfidentialityC. High costD. Publication in the Newspaper E. Swearing of oath in the Court.

5. Civil Law is associated with one of the followingA. Punishment to the litigants.B. Award of damages to the claimants.C. Imprisonment.D. Death sentence,E. Arraignment.

6. The Customary Court of Appeal has appellate and Supervisory Jurisdiction over proceedings coming on appeal from.. A. Magistrate CourtB. Customary CourtC. Industrial CourtD. National Judicial Council (NJC)E. Rent Tribunal


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7. Civil Law is associated with one of the followingA. Punishment to the litigantsB. Award of damages to the claimantsC. ImprisonmentD. Death sentenceE. Arraignment

SHORT ANSWER QUESTIONS1. The Justices of the Supreme Court of Nigeria Ghana including the Chief Justice are

to be appointed by the President on the recommendation of 2. The Supreme Court of Nigeria or Ghana when it is exercising its original

jurisdiction or when matter before it involves questions as to the interpretation of the Constitution would sit as a panel of .justices.

3. A person is not qualified for appointment as a Justice of the Court of Appealexcept he has been qualified to practice as a legal practitioner in Nigeria for at leastyears.


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3.2 DEFINITION AND ELEMENTS OF CONTRACT

3.2.1 Definition of contract

Whenever two or more people undertake to engage in an activity for which either of them may resort to the law for it to be enforced if a party fails to perform, a

contract is said to have been formed. A contract has therefore been simply referred

to as a promise or set of promises which the law will enforce.

3.2.2 The elements of contract

For a valid contract to be in place there must be some essential elements. These

are agreement, consideration, intention to create legal relations, form, capacity and

legality. There is the requirement that there must be two or more parties to the

contract who have agreed to it. Such agreement must have been entered into freely.

The parties must also give promises which are supported by consideration. It

means each party must give or do something for the other. The intention to create

legal relations means that each party is ready to have his or her promise enforced

by the law. Some contracts must also meet a certain form; they will only be valid

when they are in writing. Again only persons who are legally competent or have

capacity can enter into a contract. Finally the agreement must not be for an illegal

purpose and also not contrary to public policy.

3.3 OFFER AND ACCEPTANCE

3.3.1 Offer

Whenever a person proposes terms to another person and shows willingness that if

that person accepts those terms he is ready to contract with him, then those terms

constitute an offer. For example if Kofi tells Adenuga that he will sell his house to

him at a certain price, that constitutes an offer which will bind him shouldAdenuga agree to buy the house on the same terms. An offer is thus a definite

promise made by one party with the intention that it shall be binding on him

once it is accepted by the party to whom it is addressed. Generally an offer may be

made expressly by words but may also be implied from the conduct of the person

making the offer (the offeror). An offer may be directed to an individual, a group


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of persons or the world at large. It means an offer has to be communicated to the

person intended for (the offeree). It is said that if one is ignorant of an offer he

cannot accept it. There are a number of ways by which an offer may be

terminated. These include the offer or withdrawing the offer before it isaccepted which amounts to a revocation and the offeree not accepting the terms of

the offer which is a rejection. Where an offer is made and it is to be accepted by a

particular time failure to do so terminates the offer by lapse of times. The death of

the offeror or offeree before acceptance terminates the offer. Even death after

acceptance where personal service is involved terminates the contract.

3.3.2 Invitation to treat

This precedes an offer. It is thus a preliminary communication which indicates a

willingness to enter into negotiations. It is an invitation to the person to whom it is

directed (the recipient) to make an offer. It is therefore described as an offer to

negotiate or an offer to receive an offer. An invitation to treat cannot be accepted

to bring a contract into being. Circumstances which amount to invitation to treat

include advertisements, display of goods for sale, auctions and tenders. When there

is an advertisement it is only intended to be an invitation to treat ie. to negotiate. In

Partridge v Crittenden [1968] (WLR) 204 where an advertisement was put in the

periodical 'Case and Aviary Birds' which stated 'Bramble finch cocks, bramble

finch hens, 25 shillings each, a reader wrote in for a hen which Partridge sent to

him. The appellant was charged with unlawfully offering for sale a wild live bird

contrary to the Protection of Birds Act. His conviction was quashed by the

Divisional Court on the ground that he had made no offer for sale, merely an

invitation to treat.

Goods on display with price tickets attached in a self service store exemplify an

invitation to treat. Any potential customer who enters the shop is invited to makean offer. The picking of the goods by the customer and the presentation to the

cashier constitute the offer. The cashier then has an option to either accept the

offer or reject it. If he accepts the offer a contract comes into being but if he rejects

it no contractual obligation would be imposed. In Pharmaceutical Society v Boots

Cash Chemists Ltd [1953] (QB 40) , the defendants, Boots, operated a self-


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service supermarket with a pharmacist on hand, to supervise the sale of specified

drugs which could only be lawfully sold under him. Two customers selected such

drugs from the shelves and put them in a wire basket provided by the defendants.

The Pharmaceutical Society brought an action alleging an infringement of the Act.The Court of Appeal held that the display was merely an invitation to treat. The

customer by presenting the goods at the cash desk, made an offer to buy which the

cashier under the pharmacists supervision could accept or reject.

When an auctioneer makes a request for bids it amounts to an invitation to treat.

The bids that are made in response to the request constitute offers. It is when a bid

is accepted that a contract is made. In Payne v Cave (1789) 3 Term Rep. 148,

KB , Cave withdrew his bid at an auction before the fall of the auctioneer's

hammer. It was held that the bid was the offer, the auctioneer only made an

invitation to bid. As Cave's offer had been withdrawn before the auctioneer had

accepted it, there was no contract.

Invitations for tender are also invitations to treat. The tender is the offer and it may

be accepted or rejected. In Spencer v Harding (1870) L.R.5.C.P. 561 , the

defendants sent out a circular inviting tenders for the purchase of certain stock-in-

trade. The plaintiff's tender proved to be the highest submitted but the defendants

refused to sell to them. Judgment was given to the defendants because a tender

itself is an offer, which the party who invited it may or may not accept. The

defendants could only have been bound if they had promised to sell to the highest

bidder.

3.3.3 Acceptance

It is the expression of assent to the terms of the offer made by the person to whom

the offer was made (the offeree). In the example where John offered his house toAdenuga at a certain price, the agreement by Adenuga to buy the house on those

terms constituted acceptance. An offer is not accepted by mere silence on the part

of the offeree. Acceptance has to be communicated to the offeror. It is not

deemed to be communicated until it is actually brought to the notice of the offeror.

When acceptance is by a return promise its performance leads to a unilateral


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Executed consideration is an act by one party in exchange for a promise made or

an act done by the other. A promise for an act gives rise to a unilateral contract as

in Carlill vs. Carbolic Smoke Ball Company [1893] 1 QB 256 . An

advertisement by the company promised to pay one hundred pounds to anyonewho caught influenza after using the carbolic smoke ball as directed. Mrs Carlill

purchased the ball and used it as directed but contracted influenza. She therefore

sued for the one hundred pounds. The Court of Appeal decided that the Company

had made an offer to the whole world which would ripen into a contract with

anybody who bought and used the ball in the specified way.

3.4.3 General rules

Past consideration is no consideration. It is a promise which follows a completed

act. Such a promise is independent of the act or service performed. It is therefore

not enforceable. In Re McArdle [1951] Ch 669 , on the death of McArdle his

widow under his will obtained a bungalow for her lifetime and their children were

to become owners after that. Monty McArdle and his wife, Majorie who lived

there made extensive repairs to the bungalow after which all the children wrote to

Majorie promising to pay her 'in consideration of your carrying out certain

alterations and improvements'. The money was not paid and the widow died. The

Court of Appeal held that, as all the work had been finished before the promise

was made, the work was past consideration and so there was no obligation to pay.

A promise to perform an existing obligation is not good consideration but a

promise to do something different is good consideration. Thus if a creditor agrees

to take a smaller sum of money in full satisfaction its payment is not a satisfaction

of an agreement to pay a larger sum. In Pinnel's case (1602) 5 Co Rep 117 it was

stated that 'payment of a lesser sum on the day it is due in satisfaction of a greater

cannot be a ny satisfaction for the whole The payment and acceptance beforethe day in satisfaction of the whole would be good satisfaction'.

The doctrine of promissory estoppel adds a new dimension to consideration. It

applies only to a promise made between parties who are already in a contractual

relationship. Where one of the parties makes a promise which is intended to be


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binding and is relied on and acted upon, the promissor would be prevented from

enforcing his original rights since it will amount to his going back on his promise.

In Hughes v Metropolitan Railway Co. (1877) 2 AppCas 439 H.L ., the appellant

landlord gave the respondents six months in which to repair some houses as theywere expected to do under their lease. They later started negotiations to purchase

the freehold and based on that did nothing about the repairs. The negotiations

however failed two months after commencement and the appellant when the

original six months were up brought an action to eject the respondents for their

failure to repair. The House of Lords held that the appellant must fail since the

respondents had relied on the negotiations as being in effect, a promise that the

appellant landlord would not enforce his demands while the negotiations

continued. The six months notice must run from the failure of the negotiations.

Consideration must move from the promisee. Its import is that the promisee must

provide the consideration. It is based on the principle that a stranger to a contract

cannot sue on it. This is the doctrine of priority of contract. In Dunlop

Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] A C 847, H L , the

appellants sold some of their tyres to Dew & Co. under a contract whereby they

undertook not to sell the tyres below Dunlop's hit prices and agreed, as Dunlop's

agent to obtain a similar undertaking from other traders. Dew & Co sold some of

the tyres to the respondents who agreed not to sell below Dunlop's list prices.

They broke this contract and Dunlop sued for its breach. They failed. Dunlop

could not enforce the contract because no consideration moved from

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Atswa Business Law