COMMERCIAL LAW 1
2011/2012 ACADEMIC YEAR
LECTURE 1
UGBS, 20th SEPT 2011
Rowland Atta-Kesson Esq.
FORM OF CONTRACT
• English law recognizes only 2 kinds of
contract,
– The contract by deed
• A contract made by deed derives its validity
neither from the fact of the agreement nor
because it is an exchange but solely from the
form in which it is expressed.
– The simple contract
• A simple contract as a general rule need not be
made in any special form, but requires
considerations
Merit of Form
• Evidential function
– Writing facilitates and renders certain the
existence of a transaction and its terms as well as
identifying the intention of the parties
• Paternalistic and cautionary function
– It helps to ensure that a party deliberately
considers whether to contract and to prevent
people accidentally binding themselves on
impulse or because of improper pressure
• Eg classes of contractors considered to be weaker,
such as tenants, employees, borrowers, and
consumers may be protected by requiring a written
agreement and clear language; there may be a
statutory ‘cooling off’ period in some of these cases.
Demerits of Form
• If the form is complex, it can be inconvenient,
mysterious, and inaccessible to ordinary
people
• Formal requirements may also affront social
and commercial attitudes to promises (‘my
word is my bond’) since requiring, for
instance, a deed or writing implies mistrust.
• The result of either or both of these may be
that the required form is not used, whether
deliberately or by accident, and thus the
requirement can have the effect of reducing
the security of transactions.
• Contracts may be oral
• CHATLANI v HAROUTUNIAN-
– Defendant employed the plaintiff as storekeeper
and later manager of his retail store in 1959. The
contract of employment was oral. He was entitled
to monthly salary and leave. No term about
termination of the contract. He was dismissed in
1969 for shortages in stock and he sued.
– HELD since there was no express term dealing
with the conditions under which the services of
the plaintiff could be terminated, his employment
was, in the absence of misconduct, determinable
at any time by either party on giving reasonable
notice.
• HAMMOND v. AINOOSON
– The defendant’s fishing boat was damaged at sea and was
rendered unserviceable in 1965
– The defendant verbally agreed with the plaintiff for the
boat to be sent to the Boatyard Corporation, Tema, for
repairs.
– The defendant also requested the plaintiff to supervise the
repairs for a fee of ¢3.00 a day. She was to be present at
the Boatyard during the repairs
– An attempt was made to draw up a written contract but the
defendant promised to abide by the terms whether they
were reduced into writing or not.
– After the repairs, the parties also agreed that the plaintiff
was to sell the fish that was to be caught.
– When, later defendant gave that right to another woman,
the plaintiff sued
– HELD there was a contract between the parties resulting in
legal obligations which could be enforced. Even in the
absence of such a contract the plaintiff would have been
able to recover in quantum meruit.
• Domins Fisheries Ltd v. BremenVegesacker Fisheries
– The defendants, the owners of a foreign
fishing vessel, The Paderborn, offered to sell
the vessel to the plaintiffs, a fishing company,
for ¢30,000.00 after a lengthy discussion at a
meeting held between the solicitors of both
parties.
– The terms of the sale were verbally agreed
upon at the meeting where the plaintiffs, to
whom the vessel was of special interest and
value, accepted the offer through M., their
solicitor.
• NOTE
• It is advisable to have the K in writing.
Why?
• In case of dispute, one has to prove
existence of the K and the contents of the
K
• Some Ks are required by law to be in
writing
Contract for with which writing is
required
• In some simple contracts, statute imposes
(in addition to the requirement of
consideration) the necessity of some kind
of form, such as writing either as condition
for their existence or for proving the
contract.
1. The Bills of Exchange Act requires that a
bill of exchange or promissory note must
be in writing
2. Contract of marine insurance are void
unless made in writing
3. Consumer credit agreements, e.g. hirepurchase or loan agreement must be in
writing and be signed by the hirer or
debtor
4. Contract for the sale of land must be in
writing
5. Electronic contracts
– Where contracts are made by e-mail or by trading
on a website, any requirement of writing will
normally be satisfied
– So long as it satisfies the standard common law
test of authenticity, the requirement of a signature
can be satisfied, by e.g. a digital signature or by
typing a name into an electronic document
• PEREIRA FERNADES SA v MEHTA [2006] 1WLR1543
– The decision in this case was that the automatic insertion of
the name of the person from whom an e-mail has been sent
does not constitute a signature.
• Section 10 of the Electronic Transactions Act, 2008
(Act 772)
– Where a law requires the signature of a person, that
requirement is deemed to be satisfied in relation to an
electronic record if a digital signature is used
• ELLUAH v ANKUMAH
– K of guarantee held void for want of writing
• BOOHENE FOODS LTD
– Held that though writing is necessary no particular
form needed
• DEEGBE v NSIAH
– Section 2 of Conveyancing Act, provides that no
contract for the transfer of an interest in land shall be
enforceable unless it is in writing
– Held that oral agreement to sell house not
enforceable
• DJAN v. OWOO-Edusei J said;
– K in writing must
•
•
•
•
Name parties
Property transferred
Purchase P
Signature by Dff
CONTRACTUAL TERMS
• By terms, means the obligations
undertaken, and representations made in
respect of discharging the obligations
• Distinguish this from mere puffing or sales
talk
• K terms may be conditions or warranties
• Condition is a central, fundamental term of
the K
• Warranties creates minor obligations
• FRAFRA v BOAKYE
– tractor could haul 30 to 40 logs of timber a
day.
– Held breach of warranty
• Subject matter of a K is a condition but the
combined effects of the common law and
equity is that quality, quantity and time for
performance are warranties
• Parties may however elect to make any
term a condition
Express and Implied terms
• Expressly agreed by the parties
– Terms are clearly discussed and agreed to by
the parties either orally or in writing
• Implied by the parties
– Terms not expressly agreed to but which if
brought to the parties’ attention they would
have agreed to the Moorcock
– Frafra v Boakye, CA implied a warranty of
fitness
• Parties to the contract may choose to make
– Express terms prevail over the implied terms
– Express terms exclude implied termed
• BARTHOLOMEW & CO LTD v ADUGYAMFI, Korsah CJ
– “all the implied terms however are subject to the
express terms of the agreement and within limits
they may therefore be excluded or modified if apt
words are used provided the party relying on
such exempting clause carries out his contract in
its essential respect, in other words, he does not
commit a breach fundamental to the terms of the
contract”
• Implied by courts
– BUTT v CHAPEL HILL PROPERTIES
• SC held that there was, from the conduct of the
parties, an implied loan transaction between the
plaintiff and the 1st def
– CHANTLANI v HAROUTUNAIN
• Absence express agreement, notice of termination
of employment of managerial rank was 3 months
– SOWAH v BHC
• SC noted that in construction contracts in Ghana,
prices of materials were so unstable that the
building trade had adopted a practice of varying
the contract price to reflect current market prices
• Implied by statutes
– Sale of Goods Act,
• Sections 9, 13, 15 etc
– Conveyancing Act
• Sections 22, 23
• Implied by customs
– SOWAH v BHC
PAROL EVIDENCE
• Where the parties put their agreement in a written document,
the question arises whether extrinsic evidence may be led to
established the existence of a term.
• That barring fraud, parties to a K cannot lead oral evidence to
contradict, vary, add to or subtract from the terms of their
written K
• WILSON V. BROBBEY
– Dff admitted signing invoice but that he was signing as guarantor
for some one else
– Oral evidence is admitted to explain but not to contradict the
circumstance and terms of a document-the ct is to consider the
totality of the evidence, both oral and documentary before
deciding
• ADDISON v. A/S NORWAY, Annan JA
– “oral evidence in the case has to be viewed against the
background of the documentary evidence so copiously provided
by both parties”
Exception to the Parol Evidence
• PETERS v PETERS, Crabbe JSC
– “to this principle or doctrine certain exceptions
are well recognized. It only applies to clear
and unambiguous statements and does not
debar a party from setting up fraud or
illegality. It only applies between parties tot eh
deed and their privies. Finally it only applies to
actions on the deed and not on a collateral
transactions”
EXEMPTION CLAUSES
• Contracting parties may incorporate terms to
abridge their rights and/or limit their liabilities
to each other, or one party may agree to
accept a reduction in liability by the other
party.
– INUSAH v DHL WORLDWIDE EXPRESS
• Absent fraud, a signed document containing
contractual terms is binding on the party of full age and
understanding
• Out of $6000 worth of travellers cheques only $1500
delivered to bankers in abroad
• Meanwhile, airbill limited DHL liability to only $100
which pff signed.
Types of Exemption Clause
• Litigation-limiting clauses
– Eg arbitration clauses or other grievance
procedures
• Liability limiting clauses
– Used in storage (bailment) carriage eg Inusah
case
• Implied-term-modifying clauses; and
– Eg “subject to any agreement to the contrary by
the parties, the following provisions shall apply”
• Restrictive covenants
– Typical of contract of employment; not to operate
in the same industry for say 5 years
Construction of Exemption
Clauses
•
•
•
•
The reasonable clause rule
The four corners rule
The repugnancy rule; and
Contra proferentem rule
– PRAAH & ORS v ANANE
VITIATING FACTORS
• A void contract has no binding effect at all
and in reality the expression is a
contradiction terms.
• A voidable contract is binding but one party
has the right, at his option, to set it aside.
• An unenforceable contract is valid in all
respects except that it cannot be enforced
in a court of law by one or both of the
parties should the other refuse to carry out
his obligations under it. E.g. Contracts of
guarantee are unenforceable unless
evidenced in writing.
• A contract may be vitiated by
–Mistake (including non est factum)
–Undue influence
–Duress
–Public policy or illegality
• Mistake may be
–Unilateral
–Cross-purpose
–Common
MISTAKE AS A VITIATING
FACTOR
• As Francois JSC said in ADDAI v
PIONEER TOBACCO LTD
–“a successful plea of mistake
wipe[s] out any view of consensus
and destroy[s] the foundation of an
agreement”
• Unilateral mistake
– One party (A) is wrong about an aspect of
the K and the party (B) is aware that (A) is
mistaken
– Passive acquiescence of one party in the
self deception of the other party doe not
entitle the self-deceived party to avoid the
k
• In SMITH v HUGHES, the pff sued the dff to apy
for the price of oats because the dff had refused to
pay. The dff had before him a sample of oats
which he had the opportunity to inspect.
• The dff wanted old oats, not new, which the
sample was.
• The pff, on the other hand, was interested in
selling the oats which he had-which happened to
be new oats.
• Blackburn J in his judgment drew the distinction
between agreeing to the oats under the belief that
they were old, and agreeing to take the oats under
the belief that the pff contracted that they were old.
• Cockburn CJ of the QB said:
– “it only remains to deal with an argument which was
pressed upon us, that dff in the present case intended
to buy old oats, and the pff to sell new, so the two
minds were not ad idem; and that consequently there
was no contract. this argument proceeds on the
fallacy of confounding what was merely a motive
operating on the buyer to induce him to buy with one
of the essential conditions of the contract. Both
parties were agreed as to the sale and purchase of
this particular parcel of oats. The dff believed the oats
to be old, and was thus induced to agree to buy them,
but he omitted to make their age a condition of the
contract. All that can be said is, that the two minds
were not ad idem as to the age of the oats; there were
certainly ad idem as to the sale and purchase of
them”
• In other words, if one contracting party enters into a
contract in a self-induced mistaken belief, and the
other contracting party is unaware of the error made
by the the mistaken contacting party, there is no
mistake in law. However, even if B is aware, it does
not follow that in law, there is mistake in law, for as
Cokburn CJ said in Smith v. Hughes
– “The question is not what a man of scrupulous morality or
nice honour would do under the circumstances. The case
put of the purchase of an estate, in which there is a mine
under the surface, but the fact is unknown to seller, is one
in which a a man of tender conscience or high honour
would be unwilling to take advantage of the ignorance of
the seller; but there can be no doubt that the contract for
the sale of the estate will be binding”
• Merchants are naturally more disposed to grant
credit to reputable and creditworthy persons than to
unknown quantities.
• If due to similarity in looks or name, a merchant
thinks that she is dealing with a creditworthy person
and therefore grants credit, but it turns out that the
one she is dealing with was an impoverished or
roguish look-alike, a case of unilateral mistake may
be made out. But it depends. It depends on
whether the parties dealt with each other face to
face. If so, the transaction is not likely to be held
void for mistake (although it may be voidable for
fraud). Lewis v. Averay; Phillips v. Book Ltd. cf
Ingram & other v Little where a face-to-face
transaction was nevertheless held to be void.
• Cross-purpose mistake
– Where parties are thinking about different
things but both are unaware that they are on
different wavelengths. Suppose A offers to
sell a house and B accepts.
– They reach agreement on price, payment
terms, delivery date and the like. But which A
was thinking of selling house X, B was
thinking of buying house Z, the parties are not
at ad idem; there is no consensus; there is no
contract.
• ADDAI V PIONEER TOBACCO CO. LTD.
• The Dff advertize in the Ghanaian Times for
tender offers for the public to buy a number of
vehicles which it wanted to sell on an “as is where
is” basis.
• The Pff put in a tender for one of the Land Rovers
which the Dff accepted.
• Unknown to Dff, however, Leyland Motors had
installed new motor, thereby substantially
enhancing the value of the Land Rover.
• The dff asked the pff to pay for the new engine;
the pff insisted on the new Land Rover with its
new engine at the contact price. In light of the
impasse, the pff sued.
• The dff pleaded mistake.
• Francois JSC ruled that the plea of mistake had
clearly been made out and that there was never an
intention for the dff to fit the vehicle with a new engine;
that it did not make commercial sense to install a new
engine on a used vehicle only to offer it to tender or
accept a bid that took no account whatsoever of the
enhanced value of the refitted engine.
• As His Lordship explained: “[W]here what is offered
was fundamentally different from what was sold, a
plea of mistake would however succeed. The mistake
that would annul a contact must however be
fundamental and basic and must affirmatively exclude
an intention. That principle of the law ran with an
equally important principle that there should not be a
fundamental difference in the bargaining knowledge of
the parties to erode the viability of the agreement.”
• Common mistake
– This arises where the parties make an
identical error about the same subject matter.
There are two species of the common mistake
that result in void transactions; res sua and
res extincta.
– An example of res sua is Cooper v. Phibbs,
Cochrane v Willis where unbeknown to both
purchaser and vendor, one purports to buy
something that he already owns.
• An example of res extincta is Couterier v. Hastie
where unbeknown to parties, one purports to buy
something that is already totally destroyed.
• If however, the common mistake only affects the
quality of the subject matter, the contract is not void.
Leaf v Int. Galleries
• If, however, the common mistake only affects the
quality of the subject matter, the contract is not void.
• Thus in Smith v. Hughes the purchaseas a result of
self-deception of new oats instead of old was of no
consequence.
• In Leaf v International Galleries, the pff bought an oil
painting from the dff in 1944. A label on the back of
the painting represented that the paingting was made
by Constable, a famous artist.
• The pff discovered that this was not so when, 5
years later, he tried to sell the painting. He sued to
rescind the contract. It was held, among other
things, that there was here only a mistake as to
quality. Denning LJ in the CA said
– “This was a contact for the sale of goods. There was
a mistake about the quality of the subject-matter,
because both parties believed the picture to be a
Constable; and that mistake was in one sense
essential or fundamental. But such a mistake does
not avoid the contract; there was no mistake at all
about the subject matter of the sale. It was a specific
picture, ‘Salisbury Cathedral’. The parties were
agreed on the same terms on the same subjectmatter, and that is sufficient to make a contract.”
• To sum up on the legal effects of the 3 types of mistakes. At worst,
mistake generally makes a contract voidable, not void. Nevertheless,
– a unilateral mistake has no consequence.
– A cross-purpose mistake makes a contract void because there is no
consensus.
– A common mistake which is either res sua or res extincta makes the contract
void; but a common mistake affecting the quality of the subject matter does
not affect the contract but entitles the affected party to damages.
• Mistake must relate to facts and not legal effect of a document or
transaction. In Buaful v. Construction Pioneer a voluntary payment
under a mistake of law was not recoverable. In Peters v Peters
Crabbe JSC (dissenting) said:
– “The reason which is now being advanced to justify the admission of parol
evidence is that the recitals were made in ingorance of the legal rights of the
dff. This ignorance or mistake of legal rights was not pleaded, and in my
view it is not every kind of mistake that entitles a party to a contract to
repudiate his obligation under it. Where a party has entered into an
agreement he cannot evade the performance of it by simply saying that he
has made a mistake”
Non est factum
• This is a special type of mistake. It is amistake made
over documents. One may rely on the plea of non est
factum to claim that a document bearing her signature
is in fact not one’s document, in that one was mislead
into signing a document that was completely different
from that which she was made to believe she was
signing.
• It protects the blind and the illetrate. Illiterates
Protection Ordinance; Ansah v. Kofi and as a general
rule, it is limited to a mistake as to the essential nature
or character of a signed document Orhodox Sch of
Peki v. Tawlma-Abels. Non est factum therefore is
both a specie of misrepresentation and as it is also a
specie of mistake.
• As a specie of mistake, Non est Factum has four (4)
features namely:
1. There must have been a mistake
2. The one who made the mistake was misled into making it.
•
In Nkrumah v. Serwah & others the CA alludes to being coerced or
pressurized. However, this passing reference must not be interpreted as
an element of the plea. Coercion and pressure are more relevant
considerations for duress and undue influence.
3. The mistake relates to a document radically dffierent from
what one though he was signing
4. The one seeking to rely on the plea shoul not have been
guilty of carelessness or negligence
• All four elements must exist for there to be a
successful plea of non est factum. Non est factum
must specfically be pleaded and particulars proved,
Mercer v Brempong II.
• To specifically plead a matter such as non est factum-means
that the papers that are filed in court to initiate or defend suit
must expressly state so in her statement of claim; or a
defendant who wish to rely on non est factum must expressly
state so in her statement of defence.
• To prove particulars that have been pleaded means that during
the trial process, when the parties are litigating the isseus
before the court, the party who relies on the plea of non est
factum must adduce sufficient and compelling evidence to
persuade the court, on the balance of probabilities, that the
purported deed is in fact not her deed, in that;
– There was a mistake
– She was misled into making the mistake
– The mistake related to a document radically different from what she
thought she was signing;
– She was not guilty of carelessness or negligence in making the mistake.
The evidence may be adduced by sworn testimony given in the witness
box and/or by tendering documents or other exhibits.
• The one who seeks to rely on non est factum must specifically
plead it, Nkrumah v Serwah.
• Furthermore, the plea, if and when made, must be supported by
evidence. In Wilson v. Brobbey the pff brought an action against
the defendant to recover the value of goods credited to the defendant by the
plaintiff. The plaintiff tendered in evidence an invoice, exhibit A, signed by
the defendant. Although the defendant, who was literate, admitted signing
the document he contended that he did so as a guarantor on behalf of one
A. to whom the goods were supplied and not as a purchaser and that he in
fact did not read the document. He accordingly sought to join A. as a codefendant. The trial magistrate rejected the defendant’s contention and
found for the plaintiff on the strength of the “oral testimony coupled with
exhibit A.” The defendant appealed and the main issue was how far the
defendant could be allowed to lead parol evidence to contradict the terms of
the invoice. On the matter of non est factum Osei-Hwere J said
– “The general rule….is that a man is estopped by his deed, and although there is
not such estoppel in the case of an ordinary signed document, a party of full age
and understanding is normally bound by his signature to a document, whether he
reads or understands it or not. If, however, a party has been misled into
executing a deed or signing a document of a class and character different from
that which he intended to execute or sign, he can plead non est factum in an
action against him.
• It was previously considered in Ghana,
Nkrumah v. Serwah, and in England that the
plea of non est factum affected documents of
a radically different class, character and
substance from that signed. But in Quao v
Squire Taylor J debunked this view in the
following words:
– “The argument seeks to draw a sharp distinction between the contents of a
document and the character of the document. On the argument if a man
intends to enter into a contract of guarantee but he is misled into executing a
conveyance then it is not his deed and non est factum succeeds; if,
however, he intends to execute a deed conveying his landed property say
Whiteacre worth ¢200.00 but he is misled into executing a deed conveying
his property Blackacre worth ¢20,000.00 then the plea of non est factum
fails. Clearly a number of the English authorities do draw the distinction but it
is drawn in so unsatisfactory a manner that in my opinion the distinction is
illusory and unsatisfactory and should be rejected.”
•
In Quao v Squire The plaintiff, an educated man, alleged that he intended to convey
a parcel of land at B. to the wife of his eldest son. For this purpose he gave the title
deeds to a surveyor who prepared the document which he duly signed. Some time
later the surveyor accompanied by the plaintiff’s younger son called on him and
falsely represented to him that some mistake had been detected in the document he
signed and a new one had therefore been prepared. He was asked to sign the new
document which he did without reading it. In fact this new document was a
conveyance of his plot of land at C. to his younger son who in turn conveyed it to the
defendant. When the defendant began to develop the plot, the plaintiff brought an
action against the defendant for, inter alia, a declaration of title to the land and then
applied for an order of interim injunction to restrain the defendant from continuing the
development of the land pending the hearing of the substantive action. The question
arose as to which of the parties-the innocent original owner or the innocent third
party, i.e. the defendant-had a better title . Taylor J held for the defendant and
reasoned thus:
– “If the matter is as between the victim and the fraudulent party, there can be no question as
to the course indicated by the demands of justice. As between two innocent parties I think
the law ought to take such a stand so that the party, who by his conduct has any material
way made it easy for the rogue to succeed in his designs, is not allowed to benefit by his
conduct even though he is himself in no way dishonest in his actions.”
•
Concerning the plaintiff’s plea of non est factum he said that
– “I think it is really unrealistic to suggest that a plea of non est factum is available to a
person who has actually signed a document when he signed it deliberately and
consciously. The law however is not necessarily realistic and logical. If a man signs a blank
paper and later someone writes on it, it makes sense if he says he did not sign the
document since no document was in existence when he signed it. When however he
signed the document in the form in which it ultimately reaches the court, the plea is
illogical. ”
• Courts are slow to grant the plea of non-est
factum since
– Nemo contra factum suum proprium venire potest
– Non one can go against his own deed
• Mere reluctance in signing a document does
not constitute the non est factum, nor does a
mistake in the legal effect of the document
signed.
• The plea of non est factum is distinguishable
from the common law defense of duress, and
the equitable defense of undue influence.
Orthodox School of Peki v. Tawlma-Abels
• In Wilson v. Brobbey the plea of non est factum did not
avail the dff for the following reasons: the dff had been
tricked; he was literate; the document bore his signature;
he signed voluntarily; and it was he, the dff, who failed to
to read and understand the document signed.
• In Nkrumah v Serwah & Others was not upheld by the CA
because, among other circumstances, the person
asserting it was educated, was represented by counsel in
the preparation of the document and the court was
satisfied that the party knew the nature and effect of the
document he was signing. The court would have none of
the appellant’s attempt, under the guise fot eh plea of non
est factum to read the sale document as a mortgage
document. Suffice it to say that non est factum is not
readily decreed by the courts to vitiate a deed or other
document.
Duress
• Duress is a common law defense available to a
contracting party to nullify the consent and thereby
nullify the contract where there has been coercion of
will.
• In Orthodox School of Peki a person must establish
“actual or threatened physical violence to, or unlawful
constraints of, the person of the contracting party. But
in Hemans v. Coffie the SC considered the above
formulation too narrow. According to the SC, the
question now to ask is whether there has been coercion
of the will which vitiates consent.
•
Per Acquah JSC,
– The present position therefore is that to be capable of giving rise to duress, the threat
must be illegitimate either because what is threatened is a legal wrong, or because
the threat itself is wrongful (though what is to be done is lawful) or because it is
contrary to public policy….
– Now, in determining whether there was a coercion of will such that there was no true
consent, it is necessary to inquire whether the person alleged to have been coerced
did or did not protest; whether at the time he was allegedly coerced into making the
contract, he had no reasonable alternative but to agree.. whether he was
independently advised; and whether after entering the contract he took steps to avoid
it. All these matters are..relevant in determining whether he acted voluntarily or not.
– It is also important to point out that the duress must be actually existing at the time of
the making of the contract. For, in duress, the court is concerned with the procedural
impropriety rather than the issue of substantive fairness. Thus a contract which
results from duress does not have to be to the “manifest disadvantage” of the person
who is persuaded to enter into it. Indeed, a contract which is substantively fair can be
struck down simply because it was made under duress. It is rather in a plea of
presumed undue influence that the unfairness of the transaction is a prerequisite for a
successful action.
– Where the duress is by a third party and not the other contracting party, it must be
established that the other contracting party who is seeking to enforce the contract,
knew at the time of making the contract, of the threat, or the compulsion or the
constraint on the party pleading duress
Undue Influence
• Influence connotes the power or ability to
affect another’s character, beliefs or action
through admiration, example, relationship,
office, fear etc
• Influence is undue, if it is improper or more
than is right
• Undue influence is equitable defense to avoid
a contract where the relationshi between the
contracting parties is such that one party,
being the dominant party will presumably or in
fact have taken advantage of his dominant
position over the servient party
• Whereas, duress in essence deals with
coercion of will, notably threats and force,
undue influence, deals with the improper
manipulation of a contracting party
• In Mercer v. Brempong Edusei J. said
• “Undue influence means any influence by
which the exercise of free and deliberate
judgment is excluded at a time when some
interest or benefit is given to another by
someone over whom such influence was
exercised.”
• UI makes makes a K voidable not void ab
initio
• Therefore if UI is established, the pff has 2
options
– The pff may repudiate the K once the IU cease to
operate on him
– The pff may affirm the K by express words or
unequivocal acts
– In Hemans v. Coffie Acquah JSC alluded to
presume UI, and so we may distinguish btn
presume UI and actual UI
Presumed UI
• This arises by operation of law once
certain facts are established.
• There are 2 instances when the law will
presume UI
– Where there is a subsisting trust, confidential
or fiducial or fiduciary relationship between
parties with one party being the dominant
party whereas the other is a servient party