Introduction
This essay provides legal advice to Akua regarding the potential formation of a contract with City Developers for the purchase of a two-bedroom house, No. GX 5, at Amasaman. The situation involves issues of offer, acceptance, and communication under common law principles and the Contract Act of Ghana (Act 25 of 1961). Using the IRAC (Issue, Rule, Application, Conclusion) method, this essay examines whether a binding contract was formed between Akua and City Developers before the property was sold to Naadei. The analysis will focus on the area of contract law, identify the legal issues, outline the relevant rules, and provide a reasoned conclusion.
Area of Law: Contract Law
The central area of law in this case is contract law, specifically the principles governing the formation of a contract. Under both common law and the Contract Act of Ghana, a valid contract requires an offer, acceptance, consideration, and an intention to create legal relations. This case hinges on whether an enforceable agreement was established between Akua and City Developers before the house was sold to a third party, Naadei.
Legal Issues
Several legal issues arise from the scenario. First, does City Developers’ letter dated 3rd October constitute a valid offer capable of acceptance? Second, does Akua’s response on an unspecified date (received on 6th May, likely a typographical error for October given the timeline) amount to an acceptance or a counter-offer? Third, does Akua’s fax on 14th October constitute a valid acceptance of the original offer? Finally, was the offer revoked by City Developers before Akua’s acceptance, particularly given the sale to Naadei on 13th October?
Rule of Law
Under common law, an offer is a clear, definite, and unequivocal expression of willingness by one party to be bound on specified terms, as seen in cases like *Carlill v Carbolic Smoke Ball Co* (1893). Acceptance must be a mirror image of the offer, communicated to the offeror, and cannot introduce new terms, which would constitute a counter-offer (*Hyde v Wrench*, 1840). Furthermore, an offer can be revoked at any time before acceptance, provided the revocation is communicated to the offeree (*Byrne v Van Tienhoven*, 1880). Under the Contract Act of Ghana, similar principles apply, with Section 1 affirming that contracts are based on agreement and consideration, mirroring common law essentials.
Regarding communication, the ‘postal rule’ states that acceptance is effective upon posting, provided it is properly addressed and stamped (Adams v Lindsell, 1818). However, this rule does not apply to faxes or instantaneous methods, where acceptance is generally effective upon receipt. Importantly, an offeror is not bound if the offeree’s communication is not received due to no fault of the offeror.
Application of Law to Facts
Applying these rules, City Developers’ letter on 3rd October, specifying the house, price (GHC 300,000), and payment terms with a deadline of 15th October, constitutes a valid offer. Akua’s first letter, received on 6th May (assumed to be October), does not unequivocally accept the offer; instead, it seeks clarification on payment methods and dates. This response is likely a request for information rather than a counter-offer, thus not rejecting the original offer (*Stevenson v McLean*, 1880). However, it does not constitute acceptance.
Akua’s second letter on 10th October, requesting a price reduction of 20%, arguably operates as a counter-offer, rejecting the original terms. Generally, this would terminate the initial offer. However, her fax on 14th October, stating she accepts the terms “unreservedly,” attempts to revive the original offer. Since the fax is an instantaneous method of communication, acceptance is effective only upon receipt by City Developers. Assuming receipt on 14th October, this would precede the deadline of 15th October. Nevertheless, a critical issue arises: City Developers had already contracted with Naadei on 13th October. Under common law, entering a contract with a third party can impliedly revoke an offer, especially if the subject matter is unique, like a specific house (Dickinson v Dodds, 1876). Unfortunately, there is no clear evidence that revocation was communicated to Akua before her faxed acceptance.
Under Ghanaian law, while the Contract Act does not explicitly address revocation through third-party contracts, the common law principle likely applies, given the legal system’s reliance on English law precedents. Therefore, the sale to Naadei on 13th October arguably revoked the offer to Akua, rendering her subsequent acceptance ineffective. Furthermore, Akua’s counter-offer on 10th October may have terminated the original offer, complicating her claim.
Conclusion
In conclusion, Akua is unlikely to have a binding contract with City Developers for the purchase of House No. GX 5. The sale to Naadei on 13th October likely revoked the offer before Akua’s acceptance on 14th October, and her earlier counter-offer may have already terminated the original terms. Advising Akua, there appears to be no enforceable agreement under either common law or Ghanaian contract law. She may explore whether City Developers failed to communicate revocation, but this argument seems weak given the unique nature of the property and the third-party sale. This case highlights the importance of clear communication and prompt acceptance in contract formation.
References
- Adams v Lindsell (1818) 106 ER 250.
- Byrne v Van Tienhoven (1880) 5 CPD 344.
- Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256.
- Dickinson v Dodds (1876) 2 Ch D 463.
- Hyde v Wrench (1840) 49 ER 132.
- Stevenson v McLean (1880) 5 QBD 346.
- Contract Act of Ghana (Act 25 of 1961).
