ACCRA - A.D 2016

DATE:  21ST MARCH, 2016
SUIT NO:  RPC/249/2014

The liability of the first three defendants in this suit has already been settled by the court upon an application for judgment in default of defence mounted by the Plaintiff. The court differently constituted granted the prayer of the Plaintiff in terms of the following reliefs endorsed on the Plaintiff’s writ of summons:

a. Payment of the sum of Twenty Four Thousand, Five Hundred and Fifty Nine Ghana Cedis (Gh¢24.559.00) being sum outstanding on the loan as at 31st May, 2014 on loan granted to the 1st defendant repayment of which was guaranteed by the 2nd and 3rd defendants.

b. Payment of the sum of Gh¢24.899.00 being sum outstanding on the second loan as at 6th June, 2014 on loan granted the 1st defendant repayment of which was guaranteed by the 2nd and 3rd defendants.

e. Interest on the 1st loan at the contractual rate of ten percent (10%) per month from 1st June, 2014 to date of final payment

f. Interest on the second loan at the contractual rate of ten percent (10%) per month from 7th of June, 2014 to date of final payment.

g. Cost of a full recovery basis.


What is left in this suit for determination is relief c. on the endorsement on the writ of summons and which is stated as follows:

“A declaration that the Plaintiff relied on the undertaking of the 4th defendant to pay the contract sum in joint names of the Plaintiff and the 1st defendant in taking a decision to grant the loan to the 1st defendant”.


The background to the claim of the Plaintiff can be discerned from the 22 paragraph statement of claim that accompanied the issuance of the writ. Plaintiff claims that per a facility letter of 21st of August, 2012 it advanced a loan of Gh¢25.000.00 to the 1st defendant for the purposes of executing a contract awarded by the 4th defendant to the 1st defendant with the repayment period being three months. According to the Plaintiff the loan should have been repaid by 20th of November, 2012.


The 4th defendant undertook to pay the contract sum in the joint names of 1st defendant and the Plaintiff and it was that undertaking relied on by the Plaintiff that informed its decision to award the contract to the 1st defendant.


To plaintiff, 1st defendant later requested for a further loan to enable it complete the contract 4th defendant awarded it and it did accede to that request and made a further advancement of Gh¢15.000.00 to the 1st defendant. In Plaintiff’s reckoning the 1st defendant has failed to make good its repayment terms and it has come to its notice that 4th defendant has gone ahead to make payments not in terms of the undertaking it gave to make payment in the joint names but has reneged and made it to the 1st defendant. And having breached the terms of its undertaking the Plaintiff is of the opinion that 4th defendant is liable to pay the sums of monies together with the interest claimed by the Plaintiff.


4th defendant has vehemently resisted and denied the claim of the Plaintiff as not disclosing any reasonable cause of action against it claiming that it is neither a party to the contract between Plaintiff and 1st defendant nor did it guarantee to assume the debt of 1st defendant. To 4th defendant it is a total stranger to the contract and therefore does not owe any legal obligation to the plaintiff.


4th defendant then proceeded to set out the level of its involvement in the transaction between the Plaintiff and the 1st defendant that by a letter dated 31st of October, 2012; the 1st defendant instructed the 4th defendant to make payments regarding the award of its contract for the renovation of its property in the joint names of 1st defendant and the Plaintiff. And it subsequently communicated the payment instructions given it to the Plaintiff. 4th defendant further claims that before the completion of the contract it awarded the 1st defendant could be completed, the 1st defendant per another letter revoked the payment instructions and ordered it to make payment in the joint names of the 1st defendant and Zenith Bank. And as there was no privity of contract between it and Plaintiff, it dutifully carried out the last payment instructions of the 1st defendant and paid the contract sum in the joint names of 1st defendant and Zenith Bank. And accordingly Plaintiff has no claim against it in the absence of any contractual obligations between the two.


As the pre trial conference failed to settle the issues between the parties the following three issues were agreed for determination before the court and they were:

1. Whether or not the 4th defendant’s letter of undertaking to pay the contract sum in the joint names of Plaintiff and the 1st defendant is binding on 4th Defendant.

2. Whether or not the Plaintiff relied on this undertaking to advance loans to 1st defendant.

3. Whether or not the Plaintiff has a cause of action against the 4th Defendant



Plaintiff who bore the burden of proof testified through Sylvester Inkoom. From the evidence of Plaintiff’s representative he noted that the two loans of Gh¢25.000.00 and the Gh¢15.000.00 were disbursed to the 1st defendant only after it had received a letter of undertaking from the 4th defendant. In support of Plaintiff’s case is Ex ‘A’ which is a letter from the 4th defendant to Plaintiff that the 4th defendant was going to comply with instructions from the 1st defendant to pay the contract sum in the joint names of Plaintiff and the 1st defendant. Exhibit ‘A’ is dated the 6th of November, 2012. There is also Ex ‘B’ being an internal memo from 4th defendant’s Town Manager to its Area Finance Manager regarding instructions of 1st defendant to pay the contract sum in joint names.


Could it be said that the Plaintiff discharged its burden of proving its case on the balance of probabilities for the burden to have shifted to the 4th defendant? Plaintiff’s representative had indicated that the two loans had been disbursed based on Ex ‘A’ written by the 4th defendant and without it the loans would not have been given to the 1st defendant as it claimed to have relied on what 4th defendant gave it to approve the loans. However, in paragraph 4 of the witness statement of Plaintiff’s representative he states that the first loan of Gh¢25.000, the contract or facility letter to the 1st defendant was on the 21st of August, 2012. He also conceded under cross examination that the cheque for the first loan, which was admitted as Ex ‘7’ was paid to the 1st defendant on 23rd August, 2012. But Ex ‘A’ which seems to be the trump card of the Plaintiff was written by the 4th defendant on

November 6, 2012. Counsel for 4th defendant was accordingly spot on in his cross examination of Sylvester Nkoom when he pointed out that Ex ‘A’ could not have been the reason for the payment of the money of Gh¢25.000 in the following:

“Q: Did you look at the contract letter from the 4th defendant to the 1st defendant?

A: My lord I looked at it

Q. Now the contract letter is dated the 24th of October, 2012 and you paid a cheque on the 23rd of August 2012, is that true

A: Yes my Lord ...

Q. I put it to you that you did not rely on any undertaking from the 4th defendant to pay this cheque to the 1st defendant

A: No my Lord ...”


With the 4th defendant’s letter having been written in November, 2012 and the facility agreement for Gh¢25.000 having been made in August 2012 followed by the cheque to the 1st defendant in August 23, 2012; it cannot be correct that the disbursement of the first loan of Gh¢25.000 to the 1st defendant was in anyway influenced by Ex ‘A”. Sylvester Nkoom himself made a volte face when confronted with this issue in the following:

“Q: I still want to suggest to you that you did not rely on any undertaking by the 4th defendant to pay the first loan of Gh¢25.000 to the 1st defendant

A: We didn’t”


This is a complete departure from the allegations made in the pleadings of the Plaintiff that Plaintiff relied on an undertaking from 4th defendant for the approval of the two loans. I accordingly find as a fact that it is not true that a letter of 4th defendant that came after a loan had been disbursed became the assurance upon which the first loan was disbursed. Plaintiff therefore failed to prove that 4th defendant should be held liable for the loan of Gh¢25.000 together with the interest on it.


What then of the second loan of Gh¢15.000?


Plaintiff claims that the loan of Gh¢15.000 could not have been disbursed without what 4th defendant told them that it was going to do. That is to pay the contract sum due the 1st defendant in the joint names of Plaintiff and 1st defendant. For Plaintiff’s representative confirmed this whiles under cross examination in the following exchanges:

“Q: Are you telling this court that there was then a contract of undertaking between the Plaintiff and the 4th defendant

A: Yes My Lord

Q. Did he give you any document covering this contract of undertaking between the Plaintiff and the 4th defendant, yes or no

A: Per Ex ‘A’ it is what we dwelt on to make our decision ...”


It is therefore necessary to reproduce in full the contents of Ex ‘A’ as way of determining if it is capable of amounting to a legal undertaking which might have informed the decision of Plaintiff to grant the loan of Gh¢15.000 to the 1st defendant.


“Re: issuance of Cheque in a Joint Name Freeman GT and Forms Capital


We wish to advise that Freeman GT Company is one of our contractors who has been awarded contract to renovate and make extension works ...


Freeman GT Company has requested that payment to him in respect of renovation of house N. C1 Community 1 should be made in the joint names of Freeman GT Co/Forms Capital.


We therefore undertake to issue the cheque in the joint names of Freeman GT/Forms Capital”.


From the clear reading of Ex ‘A’ quoted supra, the letter was written based on the promptings of 1st defendant. And it is even clearer when regard is had at Ex ‘1’ tendered by the 4th defendant which shows why Ex ‘A’ was written. 1st defendant requested 4th defendant to make payments to it in the joint names of Plaintiff and 1st defendant and further requested that the reply to Ex ‘1’ should be copied the Plaintiff as well. It is true that in Ex ‘A’ 4th Defendant went to extent of even using the word ‘undertake’ but does it necessarily mean then that the whole letter was in the nature of an undertaking in law.


According to the 8th edition of the Black’s Law Dictionary, to undertake mean, among others, to give a formal promise; guarantee , To act as surety for another; to make oneself responsible for a person, fact, or the like whiles undertaking is defined as a promise or a pledge. Such a promise or a pledge should be one that is binding in the law of contract. Classic examples of an undertaking could be a unilateral contract where a person promise another to do an act if the offeree will do or refrain from doing an act. It is worthy of note that a unilateral contract such as an undertaking is one of the few exceptions to the general rule of contract that there must be a consideration. For indeed section 5 of the Contracts Act, Act 25 states as follows:


“(1) Any provision in a contract made after the commencement of this Act which purports to confer a benefit on a person who is not a party to the contract, whether as a designated person or as a member of a class of persons, may, subject to the provisions of this Part, be enforced or relied upon by that person as though he were a party to the contract”.


It is the law then that consideration need not move from the promisee to validate the contract as section 10 of the Contracts Act, Act 25 states as follows:


“No promise shall be invalid as a contract by reason only that the consideration therefor is supplied by someone other than the promisee”.


The English case of DAULIA LTD v FOUR MILLBANK NOMINEES LTD [1978] CH 231 an undertaking in the form of a unilateral contract was explained by the court in the following terms:


“ whilst I think the true view of a unilateral contract must be in general be that the offeror is entitled to require full performance of the condition which has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeror starts to perform”.


See also the case of LUXOR (EAST – BOURNE) LTD v COOPER [1941] AC 108.


It is therefore the position of the law that an undertaking as far as the law is concerned is a binding contract on the party that provided the undertaking.


But the question in this suit is can Ex ‘A’ or does Ex ‘A’ amount to an undertaking to have the legal effect of binding 4th defendant? Plaintiff’s representative claimed under cross examination that:

Q: What security did you take for this loan of Gh¢15.000

A... Joint and several guarantees of the two directors of 1st defendant company and assignment of VRA receivables” ...

Q. Did you inform the 4th defendant company of its obligations under the loan of Gh¢15.000

A. No My Lord

Q. Why

A. Because we already had undertaking from them.


This latter answer cannot be correct as there had been no word or any communication between the Plaintiff and the 4th defendant and the only time Ex ‘A’ was written was when 1st defendant was sourcing for the loan of Gh¢15.000. Plaintiff has indicated that beyond Ex ‘A’ the 4th defendant assured it by word of mouth that it would pay the contract sum in the joint names of Plaintiff and the 1st defendant in the following exchanges during cross examination:

“Q: Are you telling the court that when you had your alleged meetings with the Town Manager, the Area Finance Manager you did not send any writing to that effect to the 4th defendant

A: No because they assured me that payment will come

Q: Who assured you

A. Both the Town Manager and the Area Finance manager

Q. In writing or by word of mouth

A. By word of mouth.


The 4th defendant denied the taking place of any meeting where verbal assurances were given by the

4th defendant to be bound in making payments in joint names and as it is trite that when an averment of a party is denied the party whose allegation has been denied is obliged to prove his claim by some corroborative evidence. Ollenu JSC in MAJOLAGBE v LARBI [1959] GLR 190 relying on a dictum in KHOURY v RICHTER that:


“Proof in law is the establishment of facts by proper legal means. Where a party makes an averment capable of proof in some positive way, e.g. by producing documents, description of things, reference to other facts, instances, or circumstances, and his averment is denied, he does not prove it by merely going into the witness-box and repeating that averment on oath, or having it repeated on oath by his witness. He proves it by producing other evidence of facts and circumstances, from which the Court can be satisfied that what he avers is true”


With the attempt to rely on a verbal assurance by the Plaintiff having been denied by the 4th defendant, what comes close to the provision of any corroborative evidence would be Ex ‘A’.


However, a clearer picture of what Ex ‘A’ amounts to will be made out when the court proceeds to examine the case of the 4th defendant. 4th defendant in its attempt to avoid a ruling against it in resisting the claim testified by calling its representative Henry Tetteh Ahorlu and Dw1 Edwin Aryittey, the two being the Area Finance Manager and Town Manager respectively of the 4th defendant. According to Tetteh Ahorlu Ex ‘A’ is nothing but payment instructions from one of their contractors they had awarded a contract to and the 4th defendant had not been privy to any contract between Plaintiff and 1st defendant. 4th defendant tendered Exhibits 1 to 8 and includes the payment instructions of 1st defendant which is Ex ‘1’and Ex ‘2’ which is the same as Ex ‘A’, a further payment instructions that changed the payment of the contract sum in the joint names of 1st defendant and Plaintiff to 1st defendant and Zenith Bank, Ex ‘4’ a letter from 4th defendant to Zenith Bank and Ex ‘8’ the facility letter of the loan of Gh¢15.000 to 1st defendant.


I had throughout the trial been convinced that this was a case that was on all fours with the decision of the Supreme Court in the case of NDK FINANCIAL SERVICES LTD v AHAMAN & OTHERS

Unreported Suit No. J4/23/2013 dated 28th November, 2014. But I think there are a number of distinguishable differences between the NDK case and the present one.




First it must be noted that in the NDK case there had been an MOU between Ahaman and the Ministry of Energy to make payments due Ahaman in the joint names of Ahaman and NDK. I do not find on the evidence before me that there had been a specific agreement between 1st defendant and 4th defendant to that effect. As it was a mere payment instructions communicated from 1st defendant to 4th defendant, such instructions could be changed at any time.


Second, in the NDK case there had been previous cheques that had been paid by the Ministry of Energy in the joint names of NDK and Ahaman and the Ministry had become fully aware of the binding obligations that had been imposed on them to pay monies in the joint names of NDK and Ahaman. With the case before me there had been no such previous payments made by the 4th defendant.


Third, whiles in the NDK case it was found as a fact that the Ministry of Energy was fully aware that the loan advanced to Ahaman was contingent upon the Ministry making payments in joint names, that is not what I find here. There seems to have been a communication of the mode by which 1st defendant wanted to be paid and 1st defendant was at liberty to change same. It is true that Plaintiff was notified of the instructions of 1st defendant but that was done simply because 1st defendant requested that to be done as it was done with Ex ‘4’ as well.


Again whiles in NDK case the words and the nature of the communication from the Energy Ministry to NDK was clear and unequivocal to the extent of even stating that the mode of payment would not be revoked or waived or varied without prior written notice to NDK, that is not the situation on the facts of this case. As Exhibit A seems only to convey to Plaintiff what 1st defendant had instructed it to do


One could see that Ex ‘A’ and its language is not different from Ex ‘4’ which 4th defendant wrote to Zenith Bank that it would pay the contract sum in the joint names of 1st defendant and the Zenith. And Ex ‘4’ was written based on a similar letter to Ex ‘1’ from 1st defendant. I find that there is no evidence on record that show that Plaintiff communicated to the 4th defendant the liability it assumes and the need to undertake or promise to pay the contract sum in the joint names of Plaintiff and 1st defendant.


Exhibit ‘A’ or Ex ‘1’ does not come within the scope of that kind of unilateral undertaking contemplated under section 10 of the Contracts Act to make the 4th defendant bound. If Plaintiff had in mind to bind the 4th defendant to the payment of the receivables then it had been tardy as Ex ‘A’ alone seems not to be enough to create the nature of legal relations that a contract of such nature requires.


Plaintiff fails in his quest to recover both the first loan of Gh¢25.000 and the second loan of Gh¢15.000 together with their respective interest from the 4th defendant. The action of the Plaintiff against the 4th defendant is dismissed in its entirety for the reasons and findings made supra.


I will award cost of Gh¢7.000.00 in favour of the 4th defendant against the Plaintiff.