BT 305: LAW OF CONTRACT - Study Notes

SUNYANI TECHNICAL UNIVERSITY (STU)

FACULTY OF BUILT ENVIRONMENT & APPLIED ARTS

  • Department of Building Technology
      - End of First Semester Examination, 2023/2024
      - Programme & Year: B-TECHI 3 CONSTRUCTION TECH. 3
      - Course Code & Title: BT 305: LAW OF CONTRACT
      - Examiner: AMOAKO FRIMPONG
      - Time Allowed: 2 HOURS
      - Instructions: Answer any three (3) questions

Exam Questions

Question 1

  1. (a) Briefly explain the common law position and the Contracts Act position on the principle of the Part Payment of a debt.
       - Common Law Position: Part payment of a debt is generally not valid as a consideration for a promise to discharge a debt. The principle is that payment of a lesser sum than is owed cannot satisfy the whole debt.
       - Contracts Act Position (Ghana): Under Ghana’s Contracts Act (Act 25), there may be specific provisions that allow for part payment to discharge obligations under certain conditions.

  2. (b) Briefly discuss why past Consideration cannot support a valid contract and the exceptions to the rule.
       - Why Past Consideration is Invalid: Past consideration refers to an act or benefit that has already been done before the promise is made. Common law does not recognize past consideration as valid because consideration must be contemporaneous with the promise.
       - Exceptions:
           - A subsequent promise to pay for a benefit already conferred can be enforceable if it was intended to create a legal obligation.
           - If there is a written document in which the promise is explicitly stated.

  3. (c) Briefly discuss the principle of sufficiency of consideration under the common law and the position of the Contracts Act of Ghana.
       - Common Law: Consideration must be sufficient but need not be adequate; it must have some value, even if it is nominal.
       - Contracts Act Position (Act 25): Similar principles apply, indicating that sufficient consideration supports the legality of a contract.

Question 2

  1. (a) Distinguish, with the aid of a decided case, the difference between conditions and warranties.
       - Conditions: Essential terms which affect the very foundation of the contract. For example, in the case of Poussard v. Spiers & Pond, failure to perform a condition gives the other party the right to terminate the contract.
       - Warranties: Less critical terms; breaches result in a claim for damages but not termination. An example is the case Breach of Warranty Case.

  2. (b) Briefly discuss any three circumstances in which an offer can be terminated.
       - Circumstances for Termination:
           - Revocation by the offeror before acceptance.
           - Counteroffer by the offeree, which negates the original offer.
           - Expiration of time set for acceptance or reasonable time if no time specified.

  3. (c) Ama knew of the offer of the reward of GH 1000 to anyone who would give information leading to the arrest of some criminals but she admitted that she did so mainly to ease her conscience hoping for forgiveness in heaven. Is she entitled to the reward?
       - Entitlement to Reward: Ama is likely not entitled to the reward because her motivation for providing information was not to create a contractual relationship but rather a moral obligation. Thus, no valid consideration exists for her entitlement.

Question 3

  1. (a) What are exemption clauses and how do the courts limit the use of exemption clauses?
       - Exemption Clauses: Clauses in contracts that seek to limit or exclude liability from certain breaches.
       - Court Limitations: Courts require clarity in how exemption clauses are drafted and often apply strict scrutiny to ensure fairness, especially in consumer contracts.

  2. (b) What are the Essentials of a valid contract?
       - Essentials include:
           - Offer: A clear proposal by one party.
           - Acceptance: Unconditional agreement to the terms of the offer.
           - Consideration: Something of value exchanged.
           - Intention to Create Legal Relations: Parties must intend for the contract to be legally binding.
           - Capacity: Parties must have legal capacity to enter into a contract.
           - Legality: The purpose of the contract must be lawful.

  3. (c) Briefly discuss any three circumstances in which a contract can be discharged.
       - Circumstances for Discharge:
           - Performance: Fulfillment of contractual obligations.
           - Agreement: Mutual consent to terminate the contract.
           - Frustration: Event that makes contract performance impossible or radically different from what was agreed.

Question 4

  1. (a) Differentiate between the following:**
    (i) An offer and invitation to treat.
       - Offer: A proposal with the intent to create a contractual obligation upon acceptance.
       - Invitation to Treat: An indication that one party is willing to negotiate; not binding until accepted, e.g., advertising goods.

    (ii) Acceptance and counter offer.
       - Acceptance: Unconditional agreement to an offer’s terms.
       - Counter Offer: A response that alters the original terms, thus rejecting the initial offer.

    (iii) Void contract and voidable contract.
       - Void Contract: A contract that has no legal effect from the beginning.
       - Voidable Contract: A valid contract that can be enforced or nullified at the discretion of one party.

    (iv) Bilateral and Unilateral Contracts.
       - Bilateral Contracts: Contracts with mutual obligations; both parties exchange promises.
       - Unilateral Contracts: One party makes a promise contingent upon the performance of a specific act by another party.

  2. (b) Briefly discuss the principle of the communication of acceptance and its exceptions.
       - Principle of Communication of Acceptance: Acceptance must be communicated to the offeror to be effective, typically through the method specified in the offer.
       - Exceptions Include:
           - Acceptance by conduct (non-verbal).
           - If the offer specifies that acceptance does not require communication.

  3. (c) Some people have limited capacity to enter into a contract; briefly discuss.
       - Limited Capacity: This may include minors, persons with mental incapacity, or intoxicated individuals. Contracts made by such parties may be voidable at their discretion based on their ability to understand the nature and consequences of the contract.