BCL – L1 – Q14 – Contract Law

A Company known as PrimeRock Ltd, invited tenders for the supply of 2000 bulldozers to be delivered within seven months. Daniel put in a tender stating that he is prepared to supply the bulldozers at fifty thousand Ghana Cedis (GHS $50,000.00). The company accepted the tender by a letter, and subsequently gave various orders which were executed by Daniel. The Director of Finance claims there is no valid agreement to support the payments.

Required:

(a) State briefly the legal effect of the company’s actions.

(b) State THREE (3) things that are required of a wary contracting party.

(a). Acceptance in the Law of Contract follows an offer, which is a proposal by one party to the other by which he/she promises or undertakes to do or give (or forbid from doing or giving something if the other party also does or gives a specific thing). Acceptance, therefore, is assenting to the offeror’s proposal. In the instant case, PrimeRock Ltd, invited tenders, which are valid and sufficient offer of performance, for the supply of a specific quantity of bulldozers to be delivered within seven (7) months. The issue that ought to be determined is whether the acceptance of PrimeRock Ltd, is an acceptance in the legal sense to produce a binding contract. There is no doubt that the tender is an offer. The Company stated that it would specifically require 2000 bulldozers, and these are to be delivered in seven (7) months. Therefore, PrimeRock Ltd.’s acceptance of the tender is an acceptance in law, and, therefore, creates an obligation for the company. Daniel is, therefore, bound to deliver, while PrimeRock Ltd, is bound to accept any quantities delivered by Daniel in any manner in seven (7) months. That acceptance of PrimeRock Ltd, to the offer in its legal sense is complete as soon as requisition for a definite quantity of bulldozers is made. The contract is sufficiently certain to be enforced.

(b). Caveat Emptor means “let the buyer beware”. It is applied to resolve disputes related to goods, services and property. According to this principle, onus is placed on the consumers to carry out due diligence and the seller is not liable for any product which is damaged, defective or does not meet the expectations of the buyer. Mensah JSC in Ansah v Joe (1961) GLR 395 – 401 explained the maxim as follows: “A purchaser must look out for himself: caveat Emptor. He must take precautions for his own protection – if he does not, he ‘asks for it’ and cannot complain if he ‘gets it’.” Caveat Venditor means “let the seller beware”, which imposes a greater responsibility on the sellers themselves for the goods and services that they sell. It suggests that there is an implied warranty existing in each product against defect and the buyer need not perform due diligence to check the quality of such products. The onus is now on the sellers to make sure the buyer makes a reasonably informed choice and to compensate for defective products. This maxim has been modified by statute: Section 13 of the Sale of Goods Act, 1962, Act 137. The law brings in contrast the maxim; Caveat Venditor which is ‘Let the Seller Beware’. Here, the duty is cast on both the seller and the buyer to be cautious or careful. Section 13 provides that the law does not provide any implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied. However, there is an implied condition in a particular contract that the goods are free from defects which are not declared or known to the buyer before or at the time when the contract is made or that the seller expressly provides for a warranty or condition. The import is that buyers would always have to be on the lookout because the law does not provide automatic protection. The buyer has to make known everything he/she requires in clear terms before the conclusion of the contract. Also, the buyer must make sure he/she is making the purchase from the right source, especially where it is verifiable.