Formation of Contract in Ghana, by Seth Doe Esq.

1. Offer
   An offer is a clear statement by one person (the offeror) that they are willing to be bound on specific terms once the other person (the offeree) accepts. It must be definite and communicated to the offeree.
   The key distinction for students is between an offer and an invitation to treat. An invitation to treat only invites people to make offers.

• Goods on display in a shop are an invitation to treat. The customer makes the offer at the till. See Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) and Fisher v Bell (1961).
• Advertisements are usually invitations to treat (Partridge v Crittenden, 1968), unless they make a clear promise to anyone who performs a stated act.
• Unilateral offers to the whole world can be accepted by performing the act. In Carlill v Carbolic Smoke Ball Co (1893), a company promised £100 to anyone who caught flu after using its smoke ball. Mrs Carlill used it, caught flu, and won.
• Auctions: the auctioneer’s call for bids is an invitation to treat; each bid is an offer (Payne v Cave, 1789).
  How an offer ends. An offer can be revoked before acceptance, but the revocation must reach the offeree (Byrne v Van Tienhoven, 1880). It also ends on rejection, a counter-offer, lapse of time, or the death of a party.

2. Acceptance
   Acceptance is the offeree’s unconditional agreement to all the terms of the offer.

• It must mirror the offer. A reply that changes the terms is a counter-offer that destroys the original offer (Hyde v Wrench, 1840). A request for information is not a counter-offer (Stevenson v McLean, 1880).
• It must be communicated. Silence is not acceptance (Felthouse v Bindley, 1862).
• The postal rule. A posted acceptance takes effect when posted, not when received (Adams v Lindsell, 1818).
• Instant communication. For telephone, telex and similar instant methods, acceptance takes effect when received (Entores v Miles Far East Corporation, 1955). This principle now guides email and online contracting, discussed in Article 2.

3. Consideration
   Consideration is what each party gives in exchange for the other’s promise. The classic definition from Currie v Misa (1875) describes it as some benefit to one party or some detriment suffered by the other.
   Common law rules students must know:

• It must be sufficient but need not be adequate. The court does not weigh value. Chocolate wrappers were enough in Chappell & Co v Nestlé (1960).
• Past consideration is no consideration (Re McArdle, 1951), unless the act was done at the promisor’s request with payment understood (Lampleigh v Brathwait, 1615).
• Performing an existing duty is not consideration (Stilk v Myrick, 1809).
• Part payment of a debt cannot discharge the whole debt (Pinnel’s Case, 1602; Foakes v Beer, 1884).
• Consideration must move from the promisee (Tweddle v Atkinson, 1861).
  How the Contracts Act, 1960 (Act 25) changes the rules
  This is the part examiners love. Act 25 relaxes several strict common law rules:
  Common law rule

Position under Act 25

A promise to keep an offer open needs consideration

Section 8(1): binding without consideration if open for a specified time

Part payment cannot discharge a whole debt (Foakes v Beer)

Section 8(2): a promise to waive all or part of a debt is binding without consideration

Performing an existing duty is not consideration (Stilk v Myrick)

Section 9: performing, or promising to perform, an existing duty can be sufficient consideration

Consideration must move from the promisee (Tweddle v Atkinson)

Section 10: a promise is not invalid only because someone else supplied the consideration

Only parties can enforce a contract (Dunlop v Selfridge, 1915)

Section 5: a third party can enforce a contract term that confers a benefit on them

The practical result is that Ghanaian law enforces more commercial promises than English law does. A creditor in Ghana who agrees to accept less in full settlement is generally bound by that promise.
4. Intention to create legal relations
Courts presume that domestic and social agreements are not meant to be legally binding. In Balfour v Balfour (1919), a husband’s promise of a monthly allowance to his wife was not enforceable. The presumption can be rebutted, for example where spouses have separated (Merritt v Merritt, 1970).
For commercial agreements, the presumption runs the other way: the parties are presumed to intend legal consequences. Clear words such as “binding in honour only” can rebut it (Rose and Frank Co v JR Crompton, 1925).
5. Capacity
The parties must have legal capacity. Contracts with minors (under 18) are generally not enforceable against the minor, except contracts for necessaries and beneficial contracts of service. People who lack mental capacity, or who were drunk to the point of not understanding the transaction when the other party knew it, may avoid the contract. Companies contract through their officers under the Companies Act, 2019 (Act 992).
Formalities
Most contracts can be oral. Some must be in writing to be enforceable. Act 25 replaced the old English Statute of Frauds and requires contracts of guarantee to be evidenced in writing. Contracts for the transfer of land must also meet the writing and registration requirements of the Land Act, 2020 (Act 1036).
Exam tips

1. Always identify each element in order: offer, acceptance, consideration, intention, capacity.
2. Separate offers from invitations to treat early in your answer.
3. When a question touches consideration or third parties, state the common law rule, then show how Act 25 changes it in Ghana.
4. Cite the case, state its rule in one line, then apply it to the facts.
   Key takeaway
   A contract in Ghana is formed when a definite offer is unconditionally accepted, supported by consideration, made with an intention to be bound, between parties with capacity. The Contracts Act, 1960 (Act 25) makes Ghana more flexible than England on consideration and privity, so always check the Act before relying on an English case.