HIGH COURT, ACCRA
Date: 4 DECEMBER 1973
HAYFRON-BENJAMIN J
CASES REFERRED TO
(1) Great Northern Railway Co. v. Witham (1873) L.R. 9 C.P. 16; 43 L.J.C.P. 1; 29 L.T. 471; 22 W.R. 48.
(2) Percival Ltd. v. London County Council Asylums and Mental Deficiency Committee (1918) 87 L.J.K.B. 677; 82 J.P. 157; 16 L.G.R. 367.
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NATURE OF PROCEEDINGS
ACTION by the plaintiff for breach of contract. The facts are adequately set out in the judgment. COUNSEL
Ohene-Ampofo for the plaintiff.
N. M. C. Dodoo, Chief State Attorney, for the defendant.
JUDGMENT OF HAYFRON-BENJAMIN J
The plaintiff by his writ of summons claims against the defendant the sum of 08,000.00 damages for breach of a contract dated 11 February 1967 to supply food items to the Tetteh Quarshie Memorial Hospital. Four thousand four hundred and fifty-one cedis of the sum claimed is said to represent special damages.
The plaintiff is a food and meat contractor, who by the contract above-referred to, agreed to supply meat and other items for five months to the said hospital, which is under the control and management of the Ministry of Health. The agreement provides that each party could determine it by giving a month’s notice in writing. The breach complained of consists of the defendant giving only two days’ notice.
The main ground of defence as to liability is set out in paragraph (3) of the defendant’s statement of defence where it is stated, inter alia:
“(3) The defendant contends that the said agreement was merely an agreement whereby the plaintiff undertook to supply such food items as the defendant would order from time to time to meet the particular requirements of the defendant’s institution. The defendant denies that the contract stipulated one month’s written notice for termination, and says that the plaintiff was informed that the agreement would be terminated at short notice. The defendant denies that the plaintiff has suffered any special damages.”
The defence by an amendment, further pleaded that the letter terminating the agreement was issued on the express instruction of the National Liberation Council (N.L.C.) following gross misappropriation and forgeries in the tender system and that:
“Accordingly the defendant contends that by virtue of section 13 (3) of the Constitution (Consequential and Transitional Provisions) Decree, 1969 (N.L.C.D. 406), the action cannot be sustained as the termination of the alleged agreement arose from the directions of the N.L.C. aimed at a general political clean-up of the food tender system.”
I do not think it is necessary to consider in any detail this last contention. It was not seriously pressed by the learned chief state attorney.
The main issue, apart from the question of damages, is whether the agreement of 11 February 1967 is a binding agreement giving rise to enforceable rights or a mere standing offer capable of acceptance. The agreement in issue is a standard contract used by the government, especially the Medical, Health and Prison Departments, for the purchase and supply of essential food items required for the feeding of the inmates of their institutions. Its proper construction is a matter of some public interest
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and importance. The contract itself is a short one and I set out in full its text:
“ARTICLES OF AGREEMENT.
Articles of Agreement made the 11th day of February 1967, between Dr. A. A. Darkwa, Senior Medical Officer, Eastern Region, Koforidua for and on behalf of the Government of Ghana, (hereinafter called the government) of the one part and Robert Brafo Perbi, house No. WN 59, Mampong-Akwapim (hereinafter called the contractor) of the other part.
1. The contractor agrees to supply to the government before eight o’clock a.m. from day to day as may be ordered beginning on the 11th day of February, 1967 for the use of the government medical institution named in the first schedule hereto and on the order in writing of or on behalf of the officer-in-charge of that institution any of the articles mentioned in the second schedule hereto of good marketable quality and of the rates specified in the said schedule. The said order shall give a reasonable time for delivery.
2. The government agrees to purchase all of the said articles that may be required for the use of the institution named in the said first schedule from the contractor under and in accordance with article 1 hereof.
3. The government agrees to pay for all such articles so purchased during the month succeeding the month in which delivery was made and after presentation to the Accountant-General by the contractor of duly certified vouchers.
4. If the contractor shall fail to supply any article within the specified time or shall supply any article of a quality unfit for the required use the government may purchase such article elsewhere provided that such purchase shall not constitute a waiver by the government of any breach of this agreement by the contractor.
5. If either party commits any breach of this agreement the other party may without prejudice to the other rights which such party may possess determine the said agreement by giving seven days of such notice of determination to the party committing the breach.
6. The contractor will give within seven days of the date of this agreement to the District Administrative Officer, Koforidua, a bond in the sum of 0480.00 with two obligors approved by the government for terms of this agreement.
7. This agreement shall be in force for a period of five months from the date hereof and if the contractor shall continue after the expiration of the said five months to supply the government as aforesaid then this agreement shall continue in force until such time as either party shall determine it by giving one month’s notice in writing of such determi- nation to the other party.”
The salient and important features of this agreement are:
(a) The agreement by the contractor to supply food items from day to day as may be ordered;
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(b) The food items are for the use of the institution, i.e. the Tetteh Quarshie Memorial Hospital;
(c) Agreement by the government to purchase all of the said articles that may be required for the use of the institution from the contractor;
(d) The agreement of the government to pay on a monthly basis after the presentation and certification of the contractor’s voucher;
(e) Liberty of the government to purchase elsewhere if articles not supplied within time or articles of bad quality. Exercise of this right not to be construed as a waiver of any breach of the agreement by the contractor;
(f) Right of either party to determine the agreement on breach by giving notice of the said breach within a stipulated time; and this without prejudice to any other rights;
(g) Provision of a bond by the contractor with two guarantors for the due performance of the terms of the agreement; and
(h) A fixed period for five months with the right of either party, if the contract is continued after the five months, to determine it by giving one month’s notice in writing.
The second schedule to the contract stipulated the agreed prices per pound or per dozen at which each item was to be purchased. The contractor provided the required security bond with the two joint obligors.
The defendant seriously contends that this is not an agreement capable of being enforced and that it is merely a standing offer capable of being accepted when and if the authorised officer places a specific order. Reliance is placed on a long line of judicial decisions of which the case of Great Northern Railway Co. v. Witham (1873) L.R. 9 C.P. 16 is the leading one. However as Anson remarked in his classic book on Principles of the English Law of Contract (8th ed.), p. 32:
“In this class of case much turns on the forms of invitation, tender, and acceptance actually adopted by the parties, and for that reason the decisions of the Courts upon them appear sometimes difficult to reconcile.”
The legal relations that usually result from the acceptance of a tender are well classified in the statement of Atkin J. (as he then was) in the case of Percival Ltd. v. London County Council Asylums and Mental Deficiency Committee (1918) 87 L.J.K.B. 677 at pp. 677-678. The learned judge said:
“It is quite common for large bodies that require supplies over a year to ask for tenders and to obtain them, and it sometimes happens that the effect of the form of the tender with an acceptance is to make a firm contract by which the purchasing body undertakes to buy all the specified material from the contractor. On the other hand, one knows that these tenders are very often in a form under which the purchasing body is not bound to give the tenderer any order at all; in other words the contractor offers to supply goods at a price,
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and if the purchasing body chooses to give him an order for goods during the stipulated time, then he is under an obligation to supply the goods in accordance with the order; but apart from that nobody is bound. There is also an intermediate contract that can be made, in which, although the parties are not bound to any specified quantity, yet they bind themselves to buy and to pay for all the goods that are in fact needed by them. Of course, if there is a contract such as that, then there is a binding contract which will be broken if the purchasing body in fact do need some of the articles the subject of the tender, and do not take them from the tenderer.”
In this case I am of the view that the agreement is of the intermediate type mentioned by Atkin J. (as he then was) above. The items are constantly required by the Tetteh Quarshie Hospital, and the government had agreed to purchase all the said requirements from the plaintiff. The government was only free to purchase elsewhere if the contractor failed to supply within time or where the articles supplied were of a bad quality. The agreement contemplated the possibility of a breach, and gave the right to terminate it on breach or on notice. If the parties did not contemplate a binding agreement but merely an offer capable of acceptance, I do not see why it should contain stipulations in respect of breach, and notice of termination. There can be no breach of mere offer. In the circumstances I hold that there was a complete and valid contract between the parties.
Learned counsel for the defendant conceded during the trial that if the court holds that there was a valid and binding contract between the parties, then clearly the defendant was in breach of its terms. It is therefore only the question of damages that remains to be considered. I have examined the monthly volume of supplies, and their value, and it seems that they range from about 0550.00 to 01,800.00 per
month. The contract had only one month to run, and I think damages of 0650.00 would be an adequate compensation. The plaintiff will also have his costs which I assess at 0250.00.
DECISION
Judgment for the plaintiff with costs.
S.E.K.
