Fraud, Discharge, Remedies - PowerPoint Presentation

Slide1

Fraud, Discharge, RemediesSlide2

fraud

Fraud

omnia

vitiate

– fraud vitiates everything

Must be specifically pleaded and strictly proven

It can be presumed when consideration is woefully and shockingly inadequate

Can be rebutted by evidence

Makes a contract voidable – party must act timeously upon discovering it Slide3

Discharge of Contractual obligations and RemediesSlide4

Where a party is freed from performing his obligations under a contract

Hence there are no outstanding obligations under the contract.

There are 4 ways in which a contract can be discharged or terminated:Slide5

Discharge by agreement

Discharge by performance

Discharge by frustration

Discharge by breachSlide6

Discharge by Agreement

Contracts may be discharged/terminated by agreement just as they are created by agreement

This may be provided for by a termination clause in the contract

If the performance of the obligations under the contract are in the future and neither party has performed his obligations then the parties may agree that each be released from his obligations

Can also apply where parties are replacing an existing contract with a new one, or varying the terms of an existing oneSlide7

Fish & Meat Co Ltd v Ichnusa Ltd –

pg

98

Novation – agreement to substitute one of the parties or the terms of the contract.

Obligations under the old contract are discharged.

Japan Motors v Randolph Motors –

pg

99Slide8

To successfully plead

it:

Intention to substitute, which may be by words or conduct. Conduct must be clear and unambiguous

There must, in fact, be a substitution of the old with the new

Mutual consent – express or by conductSlide9

Discharge by Performance

Performance is where one or both parties have fulfilled their obligations under the contract in accordance with the terms of the contract.

General rule is that performance must be exact and complete. Partial performance is no performance. E.g.:

Goods to be supplied under a contract must be of the right kind and of the right quantity. If it is not, the goods could be rejected

Money to be paid in cash must be in cash and not cheque. It will only be exact when the cheque is honoured

The effect of this (exact and complete performance) is to discharge a party/parties from any or further obligations under the contract Slide10

Time

Generally time is not an issue unless the parties expressly state so,

Or where the nature of the contract makes time of the essence, e.g., the supply of perishable goodsSlide11

Exceptions

If the contract can be divided into several parts, complete performance of each part constitutes performance in respect of those parts, but the obligation to perform the rest remains.

Where party who is to benefit accepts part performance

Where the party who is to benefit prevents the other party from performing his obligations

Where there is substantial performance of the entire obligation, this can arise in situations where hardship would be occasioned otherwise. E.g., a carpenter contracted to produce 4 chairs, but who is able to produce 3. He will be paid for the 3 and discharged. Slide12

Discharge by Frustration

Frustration is where the performance of obligations under the contract becomes impossible as a result of events beyond the power and control of either party

Effect is to discharge the parties from the contract. No legal action can be taken against either.Slide13

Frustration can occur in the following ways:

Death of a party to the contract

Destruction of the subject matter,

Taylor v. Caldwell:

a contract to hire a hall for a musical show was frustrated because the hall was destroyed by fire through no the fault of the owner.

non occurrence of an event – where the performance is dependent on an event,

Krell v. Henry:

held that a contract to hire a room overlooking the proposed route of the coronation procession of King Edward VII was frustrated when the procession was cancelled due to the king’s illness. Purpose of the contract was to view the coronation, not just to hire a room.Slide14

Commercial purpose defeated

Government intervention, e.g. compulsory acquisition, change in law has made performance illegal

Where frustration will not apply:

Self induced events –

Afrifa

v Class Peters –

pg

102

Where parties foresaw the frustration and made provision for it Slide15

Effects of frustration under the Contracts Act

All monies paid would be recovered, and all monies payable would cease to be payable

Where a party has incurred expenses, he may be allowed to recover or retain

If there is part performance, courts may sever parts of the contract as if it were a separate contract Slide16

Discharge by Breach

Where a party, without lawful reasons, and without consent of the other party fails to perform his side of the contract

Types of breach:

Total failure to perform

Anticipatory – where before the date of performance, party indicates his intention not to perform

Incomplete or defective performanceSlide17

Effects of Breach:

Not all breaches will warrant discharge from the contract. Mostly fundamental and serious conditions will lead to a discharge

Where the other party has put himself in a position which makes it impossible to perform then the innocent party may be discharged and may sue for damages Slide18

Exercise

Red Army

is a carpenter. He contracted with Early Steps Pre-School to construct tables and

chairs

for use of the toddlers of the school.

Under the contract, he was to build a 100

chairs and

tables over a period of 7 days. At

a point when

RA

had constructed 80 chairs and 83 tables, he received an urgent message from his village that his

relative had passed

away. As the oldest son, he immediately left for the village, after advising the school proprietor of his predicament. He did not return till two weeks

later and was

told that someone else

had completed the contract

and

the school intends

to sue him for breach.

Advise the parties?Slide19

breakSlide20

Remedies for breach of contract

Once a breach has occurred, the innocent party may seek redress in accordance with the terms of the contract.

This may be by initiating a court action or arbitration. Slide21

There are several means of

redress:

Damages

Specific performance

Injunction

Rescission

RectificationSlide22

Damages

Awarded to compensate the innocent party for the breach

basis is to put the injured party in a position he would have been in, as far as money can, if the other party had performed his obligations

Case:

J

uxon-Smith v KLM Dutch Airlines- 110

Losses which are remote or cannot reasonably be linked to the breach cannot be paid for.Slide23

Damages may be general or special

General flows from the breach

Special –

liquidated, verifiable

and provable

sums, e.g., lost income, expenses incurred etc

In determining damages, the court considers two things

Remoteness

Measure of damages Slide24

Remoteness of damages

Damages must not be remote –

they must be proximate to the breach

Hadley v Baxendale – 111

2 tests established under this case:

Do the damages arise naturally from the breach?

Was it in the reasonable contemplation of both parties as being a probable result of the breach?

If the answer is yes, then damage is not remote and therefore recoverableSlide25

Horne v Midland Railway – 115

Note also page 116 on the essential principlesSlide26

Measure of damages

This is the computation of how much money must be paid by the party in breach to the party suffering from the breach.

Arkoful v State Fishing Corp

– 117

Note: An aggrieved party is required to mitigate his damages by taking reasonable steps

Attitsogbe v Posts and Telecommunications - 118Slide27

Societe Generale de Compensation v Ackerman – 118

Loss incurred

Wages due and payable

Value of any other benefit [one] is entitled to

Kisco Products (

Gh

) Ltd v

Delmas

America

America

Africa lines -119 to 120 Slide28

Quantum Meruit

An equitable remedy meaning “how much it is worth”.

Absent express terms the courts will assess an amount which is fair and reasonable

Skanska v Klimatechnik Engineering Ltd

– “reasonable, ..just right; not too little or too much” Slide29

Applies where

Party is precluded from completing a contract

No concluded contract

122Slide30

Money had and Received

Frafra v Boakye – 123

An order compelling a defendant to refund monies paid by or on behalf of the plaintiff to the defendant, the ground being that the defendant has not at all performed his contractual obligations.Slide31

Specific Performance

An equitable and discretionary remedy

It is not automatically available to a party who prays for it

An order of the court directing a party to perform his contractual obligations

It will be available if damages will be inadequate, where the subject matter is of special interest and value to the plaintiff, where time is of the essence etcSlide32

The one seeking the remedy must come with clean hands and must not himself be tainted by fraud or crookedness.

IBM World Trade Corporation v Hasnem Enterprises Ltd – 127

Addo v Ghana Co-operative Marketing Association Ltd

Koglex v Field

–

“the relief of SP lies whenever agreement between parties have got to a stage that it would amount to fraud on the part of the other party to refuse to perform his side of the bargain”Slide33

Redco Ltd v Sarpong

– 129

Where a third party has provided valuable consideration, and acquired an interest in the subject matter, and has no notice of the rights and interests of the plaintiff, then SP would not lie, but rather damages

Basare v Sakyi & Another - 131Slide34

Summary

The courts will therefore consider the following for the grant of SP:

Whether there is a contract

Where damages will not be an adequate remedy

Where the subject matter is unique and special

Whether

time is of the essence

Part performance and clean hands

Is Remedy sought

in a timely manner

Where conduct of Plaintiff makes it fair and equitable

Whether there is a

bona fide purchaser for value without notice of any prior interest Slide35

Injunction

An equitable remedy directed at a party to refrain from doing a specified Act

Fish & Meat Co Ltd v Ichnusa Ltd

- 132Slide36

Rescission

Remedy granted to one party to set aside a contract on grounds of fraud, misrepresentation, mistake.

Car & Universal Finance Co. Ltd v Caldwell – 135

SA Turqui & Bros v Lamptey – 136

Restoration of both parties to their original positions must be possible for this remedy to lieSlide37

Rectification

An equitable remedy where the court corrects or amends an error in a written contract to bring it into conformity with the actual agreement reached between the parties

it ensures that the written contract is in consonance with the oral or prior agreement

It is to restore the instrument to the true intention of the parties

Walker Property Investment (Brighton) Ltd v Walker -

137Slide38

Questions?