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JUDGMENT
DR. DATE-BAH JSC:
This case calls for resort to
the basic analytical tools for
determining the formation of
contracts, including offer,
invitation to treat, acceptance
and intention to create legal
relations, which are to be found
set out in the earlier chapters
of textbooks, and practice
books, on the law of contract.
To our mind, the outcome from
the application of those tools
is clear and self-evident. We
are, thus, surprised that this
case has had to travel this far
for its resolution.
The plaintiff at one time worked
for the defendant as head of its
Legal Department. Whilst still
in its employment, she received
the following letter from the
defendant.
“17 January 2005
Ms. Yaa Antwi
NTHC Limited
ACCRA
Dear Madam
OFFER FOR SALE – HOUSE NO. 4
PLATEAU CLOSE
EAST LEGON EXTENSION
The Board of Directors at the
emergency Board meeting held on
Friday, 31 December 2004
proposed to sell the Company’s
houses being occupied by the
Management Staff.
In this regard, you are being
given the first offer to
purchase the above-mentioned
house at the cost price of US
$70,307 or its Cedi equivalent.
Payment shall be within 6
months.
If you are interested, you are
to indicate, in writing, to the
undersigned by Monday, 31
January 2005.
Yours faithfully
Gladys A. Odoi (Ms)
Board Secretary
Cc Managing Director”
The plaintiff, in reply to this
letter, stated in a letter dated
31st January, 2005
that:
“I refer to the offer by the
Board to sell the
above-referenced house to me as
contained in your letter of
January 17, 2005 referenced
NTHC/ADMI/GEN/.
I accept the offer to purchase
House No. 4 Plateau Close at the
cost price of US $ 70,307 or its
cedis equivalent and to make
payment within the stipulated 6
months.
It would be greatly appreciated
if details of bank accounts into
which payment may be made are
provided for the benefit of the
house loan company.”
There was no further
correspondence between the
parties until the dispatch of
the following letter, dated 7th
November, 2005 by the defendant
to the plaintiff:
“Dear Ms. Antwi
RE: OFFER FOR SALE – HOUSE NO 4
PLATEAU CLOSE, EAST LEGON
I am directed by the Board
Chairman to inform you that, as
was previously communicated to
you following extensive
deliberations on the above
matter, the Board of Directors
have decided to withdraw the
offer for sale of the said
property to enable the Company
house its new management staff.
Any inconvenience is very much
regretted.”
This letter was signed on behalf
of the defendant by its Deputy
Managing Director.
In the meantime, the plaintiff
had left the employment of the
defendant and had begun working
for a different employer from 8th
August, 2005. This fact was
relied upon by the defendant in
its next letter to the
plaintiff, dated 10th
November, 2005, which sought to
require the plaintiff to vacate
the house in dispute. The
letter advised the plaintiff to
vacate the house, following her
resignation from the employment
of the defendant.
On these facts, the plaintiff
brought action against the
defendant, claiming that the
exchange of letters in January
2005 resulted in an agreement
that the defendant would sell to
the plaintiff House No. 4
Plateau Close, East Legon
Extension for the sum of US $
70,307 or its equivalent in
cedis and that the plaintiff
would pay the purchase price
within 6 months of the offer.
She averred that though she had
requested of the defendant the
particulars of the bank account
into which to pay the purchase
price of the property, the
defendant had neglected to
furnish such particulars. The
plaintiff sought specific
performance of the agreement
made in January 2005 and a
perpetual injunction to restrain
the defendant from ejecting the
plaintiff from the property.
The defence proferred by the
defendant was that its letter of
17th January 2005 was
not an offer, but, according to
its statement of defence, “only
an invitation to staff to make
offers to purchase the premises,
the final decisions on the
matter rested with Defendant”.
The defendant thus denied the
existence of any enforceable
agreement between the parties.
The main issue in this case,
therefore, hinges on the
interpretation to be put on the
letter of 17th
January, in its context. Was
the letter an offer or a mere
invitation to treat? The
learned trial judge, Ofoe J., as
he then was, considered the
letter to be a mere invitation
to treat. In his judgment, he
laid emphasis on the use of the
word “proposed” in relation to
“sell” and thus persuaded
himself that the company’s
proposal to sell was not a
definite enough offer of the
property to the plaintiff. He
therefore dismissed the
plaintiff’s action, holding that
no contract had been formed.
Ofoe J. explained his decision
thus (at p. 86 of the Record):
“The letter provides that at the
Board Meeting the Board
“proposed to sell the company’s
houses”. I have no reason for
interpreting the word proposed
other than what it is and what
it means. The last paragraph
also provides:
“If you are interested, you are
to indicate in writing to the
undersigned by Monday 31st
January, 2005.”
Can it be said that this last
paragraph read together with
other paragraphs in Exhibit A,
Exhibit A was a firm offer of
the property to the plaintiff?
I think not. It is my view that
Exhibit A even though the word
“offer” is used, was initiating
negotiations with the staff on
the proposal of the defendant to
dispose of their properties.
The request for plaintiff to
show interest in the property I
see it as asking the plaintiff
rather to make the offer. It is
my view that plaintiff’s
response declaring her interest
as she did in Exhibit B cannot
be an acceptance of an offer by
the defendant but rather
offering for the defendant’s
acceptance her interest in the
purchase of the property.”
On appeal by the plaintiff to
the Court of Appeal, the
judgment of the trial court was
reversed. The Court of Appeal,
in a judgment written by
Marful-Sau JA, arrived at the
conclusion that the letter of 17th
January contained an offer. The
learned judge expressed himself
thus (at p. 129 of the Record):
“From the way Exhibit A is
written and its content as a
whole, I am satisfied that it
qualifies to be an offer
properly called in contract.
The letter was not conducting
any enquiry. It is clear from
the body that a specific house,
House No. 4 Plateau Close, East
Legon Extension was offered to
Appellant to purchase at a
quoted price and to be paid
within six months. The letter
only requested the Appellant to
indicate her interest as to
whether she accept the terms
offered in Exhibit A or not.”
We are, in this court, called
upon to determine which of the
two lower courts was right in
its interpretation of the letter
of 17th January. The
grounds of appeal filed by the
defendant in this court against
the Court of Appeal’s decision
are as follows:
“a. The Court of Appeal
erred when it held that Exhibit
A and Exhibit B amounted to a
contract.
b.
The Court of Appeal erred when
it decreed an Order of Specific
Performance in the circumstances
of this case.
c.
The Court of Appeal erred when
it ordered Appellant to refund
to Respondent all rents paid by
the Respondent to Appellant.
d.
Further and/or in the
alternative the Court of Appeal
erred when it retrospectively
decreed specific performance of
the contract without awarding
Plaintiff interest on the
purchase price of $70,307.00”
Before resolving the issue of
interpretation raised in ground
(a), however, it would be useful
to remind ourselves, in outline,
of the principles to be applied
in distinguishing between offers
and invitations to treat.
Basically, an offer is an
indication in words or by
conduct by an offeror that he or
she is prepared to be bound by a
contract in the terms expressed
in the offer, if the offeree
communicates to the offeror his
or her acceptance of those
terms. Accordingly, the offer
has to be definite and final and
must not leave significant terms
open for further negotiation.
By significant, we here mean
terms that are essential to the
bargain contemplated. It is
important to emphasise the
proposition that the mere
acceptance of an offer is
sufficient to turn the offer
into a contract, if there is
consideration for it, together
with an intention to create
legal relations.
It is this need for finality and
definiteness which leads to the
analytical need for the concept
of invitation to treat. If a
communication during
negotiations is not the final
expression of an alleged
offeror’s willingness to be
bound, it may be interpreted as
an invitation to the other party
to use it as a basis for
formulating a proposal emanating
from him or her that is definite
enough to qualify as an offer.
Thus the indefinite
communication may be what
generates an offer from the
other side. An invitation to
treat is thus to be
distinguished from an offer on
the basis of the proposal’s lack
of an essential characteristic
of an offer, namely, its
finality which gives a capacity
to the offeree to transform the
offer into a contract by the
mere communication of his or her
assent to its terms. Thus
Chitty on Contracts (28th
Edition, 1999) Vol. 1 para.
2-007 at p. 93 states that:
“A communication by which a
party is invited to make an
offer is commonly called an
invitation to treat. It is
distinguishable from an offer
primarily on the ground that it
is not made with the intention
that it is to become binding as
soon as the person to whom it is
addressed simply communicates
his assent to its terms.”
A case relied on by the
appellant, Gibson v
Manchester City Council
[1979] 1 All ER 972, is
illustrative of a communication
during “negotiations” which was
not definite and final enough to
be treated as an offer and
therefore was rightly
categorized as an invitation to
treat. The case involved the
tenant of a council house in
Manchester, England, who wanted
to buy the house from the
council. In the middle of the
process for the purchase of the
property, following local
government elections in May
1971, the local council changed
its policy and decided not to
proceed with the sale of any
house in respect of which there
had not yet been an exchange of
contracts. The correspondence
between the tenant and the
council before this reversal of
policy was as follows:
After the city council had
adopted a policy of selling
houses to its tenants, the City
Treasurer, following a request
made by the tenant in this case
for details of the price of the
house he was renting and the
mortgage terms available, had
written on 10th
February 1971 to the tenant
stating that the council “may be
prepared to sell the house to
you at the purchase price 2,725
pounds less 20% - 2,180 pounds
(freehold).” The letter then
set out the mortgage terms
likely to be made available and
continued:
“If you would like to make
formal application to buy your
Council house please complete
the enclosed application form
and return it to me as soon as
possible.”
Accordingly, the tenant duly
completed an application form
with the heading “Application to
buy a council house”, except
that he did not fill in the
purchase price, and returned it
to the council. The form
concluded with the statement:
“I…now wish to purchase my
Council house. The above
answers are correct and I agree
that they shall be the basis of
the arrangements regarding the
purchase…” The tenant followed
up his application form a few
days later with a letter dated
18th March 1971 in which he
said: “I would be obliged if
you will carry on with the
purchase as per my application
already in your possession.”
Before contracts for the house
could be exchanged, the May
elections intervened which led
to the reversal of the council’s
policy on sales of houses to
tenants, to which we have
already alluded. The council
subsequently wrote to the tenant
to advise him that his
application for a purchase of a
council house could not be
processed any further. When the
tenant contended that the City
Treasurer’s letter of February
1971 was an offer and that his
completed application form of
March 1971 was an acceptance and
he therefore brought action for
specific performance of the
contract, the House of Lords
held that the City Treasurer’s
letter was at most an invitation
to treat and that it was the
tenant’s application form which
was rather the offer. Lord
Russell of Killowen declared (at
p. 980) that:
“My Lords, I cannot bring myself
to accept that a letter which
says that the possible vendor
‘May be prepared to sell the
house to you’ can be regarded as
an offer to sell capable of
acceptance so as to constitute a
contract. The language simply
does not permit such a
construction.”
We do not agree with the
defendant/respondent/appellant
in this case when it asserts in
its Statement of Case (paragraph
10) that its case is on all
fours with the Gibson
case. There is no question that
the City Treasurer’s letter
lacked finality. It could not
be turned into a contract by
mere acceptance. There were
still significant terms which
needed to be agreed upon. This
is in marked contrast with the
facts of this case where the
letter from the
defendant/respondent/appellant
proposed the sale to the
plaintiff of an identified
property at a price certain.
What was left to be communicated
were the details of the bank
account into which the price was
to be paid. This was a
subsidiary question which did
not affect the finality of what
we construe to be the offer
contained in the letter.
The appellant also strenuously
sought to make a distinction
between the language construed
to be an offer in Fofie v
Zanyo [1992] 2 GLR 475 and
the language in the present
case. This contention was in
rebuttal of the view taken by
the Court of Appeal that the
decision in the Fofie
case should lead to the letter
of 17 th January 2005 being
construed as an offer.
Marful-Sau JA had said in the
court below, after quoting the
text of the offer in the
Fofie case, that:
“Indeed comparing the above
letter which was held to be a
valid offer to Exhibit A in the
instant appeal it will be
untenable to hold that Exhibit A
is not a valid offer. The above
letter suggested that should the
offeree indicate his acceptance,
a further meeting was to be
held, yet the Supreme Court
affirmed the holding by both the
trial High Court and the Court
of Appeal that it was a valid
offer.”
In the Fofie case, what
the plaintiff contended was an
offer was in the following
terms:
“…I am prepared to offer the
house to you for sale. The
selling price is c75,000. If
this is acceptable to you,
please confirm to enable us hold
a meeting with your solicitor on
the matter. Hoping to hear from
you soon.”
The learned trial judge,
Lutterodt J, as she then was,
and the Court of Appeal
construed this language to be a
valid offer. The disagreement
in that case between the Court
of Appeal and the trial judge
was as to whether there had been
any acceptance of this offer.
The appellant in the present
case in its Statement of Case
argues that the distinction
between what was construed to be
an offer in the Fofie
case and the alleged offer in
this case lies in the fact that
the parties in the Fofie
case had had an earlier
discussion and the quotation set
out above was from a
confirmatory letter. The
appellant’s argument is set out
as follows in its Statement of
Case (para. 14):
“The said Exhibit B was thus
written in furtherance of the
earlier discussions between the
parties and was only to
formalize the earlier
discussion. It is on this basis
that all the Courts from the
High Court through to the
Supreme Court, took the position
that Exhibit B, the confirmation
letter, was an offer. This is
clearly distinguishable from
this case where there is no
evidence on record that the
Parties had had any initial
discussion on the subject and
that Exhibit A herein was a
confirmation of any such
previous discussion. My Lords,
being “prepared to offer … for
sale” is very different from
“proposing to sell!! It is
therefore faltering, with
respect, to say that the instant
case is on all fours with the
Fofie case, for the
Fofie case to be
used as a measuring rod for the
fortunes of the instant suit.”
The respondent answers the
appellant’s point on the
Fofie case as follows (in
para.27 of its Statement of
Case):
“…As regards the argument that
the Fofie case is
distinguishable from the instant
case because there had been
previous discussions between the
parties in that case, it is our
submission that whether or not
there had been previous
discussions is quite irrelevant
to the interpretation of Exhibit
A and that what is important is
that the language of that letter
expresses and conveys an
intention to contract.”
We find this riposte by the
respondent persuasive. Whilst
recognising that the decision as
to whether any particular set of
language and context amounts to
an offer or an invitation to
treat depends on the detailed
facts of specific cases, we also
consider that the Fofie
case provides a useful pointer
regarding how to interpret the
alleged offer in this case. In
our view, the statement that:
“The Board of Directors at the
emergency Board meeting held on
Friday, 31 December 2004
proposed to sell the Company’s
houses being occupied by the
Management Staff,” when read
together with the two sentences
that follow it that: “In this
regard, you are being given the
first offer to purchase the
above-mentioned house at the
cost price of US $70,307 or its
Cedi equivalent. Payment shall
be within 6 months.” and the
totality of the context within
which the transaction took
place, can hardly be given any
other interpretation than that
it was an offer by the
defendant/respondent/appellant
company. The appellant’s
argument that the use of the
word “proposed” in the text
quoted above robbed the alleged
offer of “definitiveness” and
therefore rendered it an
invitation to treat is weak,
because of the existence in that
same text of the next two
sentences. In those sentences,
as will have been noted, the
appellant itself characterises
its proposal as an “offer”.
Although this is not a
determinative factor, it is an
important indication of what the
appellant intended.
The first sentence was, in any
case, merely introductory to the
next two sentences, which
contain the substantive offer.
The use of the expression
“proposed to sell” in the
introductory sentence does not,
therefore, detract from the
definiteness of the offer
contained in the next two
sentences. In any case, the
expression “proposed to sell”,
in its context, does not
necessarily indicate an absence
of an intention to make a final
proposal capable of being turned
into a contract, or, in other
words, an offer. We are thus
somewhat mystified by the
decision of the learned trial
judge. We do not agree with
him that the letter of 17th
January was an invitation to
treat. The
defendant/respondent/appellant
clearly gives to the plaintiff
‘the first offer’ to purchase
its house. We thus hold that
the letter of 17th
January constituted an offer,
and not an invitation to treat,
and that this offer was
converted into a contract by the
respondent’s acceptance letter
of 31st January
2005. From the facts set out
above, there was clearly an
intention to create legal
relations and the respondent’s
undertaking to pay the purchase
price was consideration enough
to result in the formation of a
contract.
Next, we will quickly and easily
dispose of ground (b) of the
grounds of appeal. The
appellant’s grievance expressed
there was that the Court of
Appeal erred in decreeing an
order of specific performance in
the circumstances of this case.
Expatiating on this in its
Statement of Case, the appellant
argued that the doctrine of part
performance could not avail the
respondent to warrant specific
performance. We agree with the
reply of the respondent that the
doctrine of part-performance is
irrelevant, on the facts of this
case. We have held that a
contract was formed by the
exchange of letters in January
2005. This contract relating to
land is evidenced in writing.
Therefore, there is no need to
resort to a doctrine of
part-performance. Contracts for
the sale of land are
preeminently those in relation
to which the remedy of specific
performance is appropriate and
typically applied by the
courts. As Chitty on
Contracts (28th
Edition) puts it (in para
28-007):
“The law takes the view that the
purchaser of a particular piece
of land or of a particular house
(however ordinary) cannot, on
the vendor’s breach, obtain a
satisfactory substitute, so that
specific performance is
available to him.”
It is trite law that the
equitable remedy of specific
performance will be granted,
where damages are not an
adequate remedy. More recent
case-law has tended to state the
law in terms of whether it is
just in all the circumstances of
a particular case for the
aggrieved party to be confined
to a remedy of damages. However
the question is framed, though,
there is little doubt that
contracts for the sale of land
qualify for the remedy,
ceteris paribus. We
therefore think there is no
merit in this ground of appeal
and it is dismissed.
Finally, we will consider
grounds (c) and (d) of the
grounds of appeal. It will be
recalled that these complained
that the Court of Appeal’s order
to the appellant to refund to
the respondent all rents paid by
the respondent to the appellant
was in error and, further, that
the Court of Appeal erred when
it retrospectively decreed
specific performance of the
contract without awarding the
plaintiff interest on the
purchase price. The appellant
contends, in its Statement of
Case, that if the respondent had
paid the consideration for the
contract, which we have found to
exist, when it was due, or even
at the commencement of the suit,
the appellant could have
invested that price. The
appellant further argues that
judicial notice should be taken
of the notorious fact that in
Ghana property values
appreciate. It would thus be
unfair for the respondent to pay
what is in effect a 2005 price
for the property today without
the payment of interest to
compensate the appellant for the
difference in the value of the
property between 2005 and
currently. The appellant argues
that since the price of US $
70,307 should have been paid in
August 2005, “By denying the
Appellant interest on the
purchase price (and assuming
there was a binding contract
which is denied), the Respondent
had been unjustly enriched
thereby.” (Para. 18 of the
Statement of Case.)
In reply, the respondent
maintains in her Statement of
Case that the Court of Appeal
was not in error in making the
consequential order, after
delivering its judgment, that
any rents paid by the respondent
after November 2005 should be
refunded to her, after she had
paid the purchase price. She
explains that the circumstances
that had led to that order were
the need to reverse the High
Court’s order, made after its
judgment, which required the
respondent, as part of the terms
on which the High Court judgment
was stayed, to pay c1,500,000
(GHc150) monthly to the
appellant. She argued that since
the Court of Appeal had found
that she was the equitable owner
of the property from January
2005, there was no obligation on
her part to pay any rent to the
appellant. The reversal of the
High Court’s order was thus
necessary to reflect the Court
of Appeal’s reversal of the High
Court’s decision that there was
no contract between the
parties. We have no difficulty
in agreeing with this view and
we thus affirm the Court of
Appeal’s order that any rents
paid to appellant after the High
Court’s judgment should be
refunded after the order of
specific performance has been
executed.
Regarding the distinct issue of
the payment of interest on the
purchase price, which had been
computed with a completion date
in 2005 in mind, the
counter-argument put up by the
respondent is that the appellant
failed to provide the respondent
with the bank particulars that
she had requested to enable her
to make payment of the purchase
price. Further, she argued that
in none of the papers filed
before the Court of Appeal was
there a claim of interest on the
basis of which the Court would
have had jurisdiction to award
interest in the appellant’s
favour.
In considering what merit there
is in this latter argument
against the payment of interest,
we consider it helpful to refer
to the following passage from
the judgment of the Supreme
Court in Butt v Chapel Hill
Properties & Anor
[2003-2004] SCGLR 636 at p. 652:
“Once this Court holds that
there was, in effect, an implied
loan transaction between the
Plaintiff and the first
Defendant or the Defendants, the
Court is obliged to exercise its
statutory power to award
interest on the loan implied in
order to preserve the value of
the capital originally
borrowed. Justice requires that
on the facts of this case
interest be awarded to the
Plaintiff, even if not expressly
claimed. The High Court, under
Order 63 rule 6 of the High
Court (Civil Procedure) Rules
1954 LN140A, has authority to
make any order which it
considers necessary for doing
justice, whether such order has
been expressly asked for by the
person entitled to the benefit
of the order or not. This is an
appropriate case for the Supreme
Court to exercise this power of
the High Court, pursuant to
section 2(4) of the Courts Act
1993 under which the Supreme
Court has all the powers,
authority and jurisdiction
vested in any court established
by the Constitution or any other
law.”
Although the Order 63 rule 6 of
the repealed High Court Rules
referred to in the passage
quoted above appears not to have
been re-enacted in the High
Court (Civil Procedure) Rules
2004 (CI 47), we believe that
the High Court has an inherent
jurisdiction to make such
consequential orders as are
necessary for doing justice,
even if the beneficiary of such
order has not expressly
requested it. The Supreme Court
would thus vicariously also have
this power.
In our view, the effect of
ordering specific performance of
the contract is that the
purchaser becomes liable to pay
the price at the contractually
stipulated due date. On the
facts of this case, the price
was to be paid within 6 months.
Since the acceptance letter was
dated 31st January,
the due date was no later than
the end of July 2005.
Correspondingly, the vendor is
obliged to convey its interest
to the purchaser with effect
from the same date. Prior to
conveyance and after the
conclusion of the contract, the
purchaser is the owner of the
property in equity. It follows
from the analysis above that the
purchaser should be liable to
pay interest on the purchase
price from the date it was due
until the date of judgment in
order to preserve the economic
value of the purchase price.
This Court has power under Rule
1 of the Court (Award of
Interest and Post Judgment
Interest) Rules 2005 (CI 52) to
award interest “on a sum of
money due to a party” in an
action and we consider that this
case is an appropriate one in
which to exercise the power in
order to avoid a miscarriage of
justice. As the appellant
points out, there is danger of
unjust enrichment on the part of
the purchaser (i.e., the
respondent) if the power to
award interest is not
exercised. Accordingly, whilst
confirming the Court of Appeal’s
order of specific performance,
we also order, pursuant to Rule
1 of CI 52, that the respondent
should pay interest to the
appellant on the cedi equivalent
of the price of US $ 70,307 from
1st August 2005 till
today at the bank rate
prevailing today. We do not
consider that the neglect of the
appellant to furnish the
respondent with the particulars
of the bank account into which
the price should be paid is
sufficient reason for the
appellant to forfeit its
entitlement to interest. That
neglect was in the heat of a
legal dispute which has only now
been finally settled. Since
specific performance is an
equitable remedy, its
enforcement should not lead to
the inflicting of hardship on
the appellant. As Lord Parker
has said:
“Indeed, the dominant principle
has always been that equity will
only grant specific performance
if, under all the circumstances,
it is just and equitable so to
do.” (See Stickney v Keeble
[1915] AC 386 at p. 419).
It is our considered view that
in the circumstances of this
case, it would only be just and
equitable for the contract of
January 2005 to be specifically
enforced if the value of the
purchase price under it is
preserved through the payment of
interest by the respondent to
the appellant, along the lines
already explained. Accordingly,
ground (d) of the appellant’s
grounds of appeal is upheld and
the respondent is to pay
interest on the purchase price
to the appellant at the bank
rate prevailing today, as
already indicated, on the
purchase price from 1st
August 2005 till today. After
judgment, interest will remain
payable, by operation of law,
till date of final payment,
pursuant to Rule 2 of CI 52.
Subject to this, the appeal is
dismissed.
DR. S. K. DATE-BAH
(JUSTICE OF THE SUPREME COURT)
I agree
S. A. B AKUFFO (MS)
(JUSTICE OF THE SUPREME COURT)
I agree
S.O.A. ADINYIRA (MRS)
(JUSTICE OF THE SUPREME COURT)
I agree
R.C. OWUSU (MS)
(JUSTICE OF THE SUPREME COURT)
I agree
J. V. M. DOTSE
(JUSTICE OF THE SUPREME COURT)
COUNSEL:
BRIGHT OKYERE-AGYEKU FOR THE
APPELLANT
DOE TSIKATA FOR THE APPELLANT
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