Corporate Governance has been defined as a set of systems, processes and principles which ensure that a company is governed in the best interest of all stake holders.
Required:
List SIX principles of corporate governance. (6 marks)
Capare Industries Ltd, which already held shares in a company known as Logotex Co, later made a takeover bid on the strength of its accounts prepared by Dickman Ltd. a firm of auditors. Capare Industries Ltd realized that the accounts were inaccurate in that they showed a pre-tax profit of GHs1.3million when in actual fact there had been a loss of GHs400, 000. It was the case of Capare Industries Ltd that if they had known the true situation, they would not have made a bid at the price they did or may not have made a bid at all. They argued that they were owed a duty of care by the creditors as new investors and as existing shareholders who in reliance on the accounts had bought more shares.
Required:
Explain whether Capare Ltd would be justified in taking action against the firm of auditors. (6 marks)
b) Briefly explain what is meant by professional negligence. (4 marks)
Professional negligence has to do with a situation where someone or a group of people professing to have special skills and training, applies the skills for the assistance of another person who relies on such skill or skills to act, a resulting in a financial loss. The person or group of persons must exhibit the degree of skill which a member of the public would expect from a person in his or her position. The person or group of persons with the special skill or skills, owes a duty of care not only to his client, but also to all those whom he/it knows will rely on their statements, information and advice, in a transaction for which the statements, information or advice are provided.
Practitioners of professions such as lawyers, accountants and auditors, valuers and surveyors, medical doctors make statements, provide information and give advice, that are relied upon by their clients, and that where the reliance on advice of these practitioners occasion financial loss, they could be sued for professional negligence, because they owe their clients a duty of care. These practitioners are supposed to render their respective professional services with the skill, prudence and diligence by reason of the duty of care owed their clients.
State the liability of a member of a company prior to the winding up of the company. (4 marks)
a) Share certificates are required to be issued to shareholders by a company.
List the particulars that are required, by law, to be on the certificate. (6 marks)
b) Certain transactions in shares are statutorily prohibited by the provisions of the Companies Act, 1963, Act 179, List FOUR of the said transactions. (4 marks)
c) State TWO effects of a breach of the provisions prohibiting these transactions. (4 marks)
a) By a letter dated 18th February, 2014, addressed to the Manager of their partnership firm, Kofi Nti informed the Management of his and Mrs Obeng’s immediate retirement as partners. The Manager replied that their application was under consideration. However, by another letter dated 12thJanuary, 2015, Mr. Kofi Nti and Mrs. Obeng withdrew their letter dated 18th February, 2014. The conduct of the remaining partners, however, showed that they considered the letter of 18th February, 2014 to be of no effect, and continued the partnership accordingly. A dispute later arose and Jeff, one of the partners, obtained an order of the High Court directing Mr. Kofi Nti and Mr. Obeng to submit themselves to arbitration in accordance with the partnership agreement. The arbitrator submitted to the court that by their letter dated 18th February, 2014, Mr. Kofi Nti and Mr. Obeng ceased as from that date to be partners as the said letter could not be recalled.
Required:
Explain whether by the provisions of the Incorporated Private Partnership , Act, 1962, Act 152), Mr. Kofi Nti and Mr. Obeng, remain partners in the firm after their letters of 18th February, 2014 and 12th January, 2015. (15 marks)
See Section 39(7) of the Incorporated Private Partnership Act, 1962., Act 152
b) List FIVE applicable rules in a Partnership in the absence of a contrary agreement. (5 marks)
a) The Contracts Act, 1960, Act 25, has modified the common law doctrine of consideration. List FOUR of the modifications. (4 marks)
b) Explain the following terms as used in the legal business environment: (12 marks)
i) Capacity
Capacity: a person is said to have capacity when he is of sound mind and has attained the age of majority (i.e. 18 years in Ghana). In order to form a wholly valid contract, parties must be over 18 years of age and be of sound mind. Under the section 2 of the Sale of Goods Act, capacity to buy and sell is regulated by this general law concerning capacity to contract and to transfer and acquire property.
ii) Acceptance
Acceptance: In order to constitute a valid contract, there must be an offer and an unqualified acceptance. Acceptance may be oral, written or implied from conduct. Under Section 52 of the Sale of Goods Act, 1962 (Act 137), the buyer is deemed to have accepted the goods when-
iii) Misrepresentation
Misrepresentation: A misrepresentation is (a) a false statement (b) of material fact (c) made by a party to a contract or his agent (d) inducing the other to enter into the contract.
iv) Goods
Goods: means “ movable property of every description, and includes growing crops or plants and other things attached to or forming part of the land which are agreed to be severed before sale by or under the contract of sale”- Section 81 of Sale of Goods Act, 1962 (Act 37).
v) Quantum meruit
Quantum Meruit: Where there is a breach of an essential condition in a contact, the injured may either (a) seek to enforce the contract and sue for damages; or (b) treat the contract as discharged in which case he cannot sue for damages for its breach. However, where he adopts course (b) above, and treats the contract as discharged, he is entitled to bring a quasi-contractual action for compensation for work done or services rendered, etc. This is called a Quantum Meruit action (literally “how much is it worth?)
c) State FOUR means by which a contract, lawfully entered by parties, may be discharged. (4 marks)
Mr. Bossman bought a Nissan diesel vehicle from Trans Africa Engineering and Motor Co. Ltd. However, when the vehicle broke down, Mr, Bossman did not go to the dealers for spare parts, but rather went to Messrs Jones Williams &Co, and through one of its directors, placed an order for the spare parts from Japan. The order was placed for the spare parts with TSS Co. Ltd, and by Telex, headed “we quote for Japan”, TSS Co Ltd, supplied Jones Williams & Co. with the requisite quotation, and that the spare parts would be delivered in three (3) months’ time. Mr. Bossman then got his foreign bankers to transfer the amount, being the cost of the spare parts to the bankers of Messrs Jones Williams & Co. Ltd, who in turn, paid the amount to the suppliers. When the spare parts were not forthcoming, Mr. Bossman sued Messrs Jones Williams & Co for the return of his money, interest and damages. Before the court case started, Mr. Bossman received the spare parts, and therefore had to abandon his claims.
Required:
a) Explain the following in terms of the provisions of the Sale of Goods Act, 1962 (Act 137):
i) The relationship between Mr. Bossman and Messrs Jones Williams & co. Ltd. (3 marks)
one of agency and not of sale of goods.
In the instant case Messrs Jones Williams &Co Ltd never delivered to Mr. Bossman a pro-forma invoice of its own stating the price at which it would sell the spare parts to Mr. Bossman or the time it would deliver the goods.
All that Messrs Jones Williams & Co, Ltd did was to give Mr. Bossman a copy of the telex from the suppliers, and asked him to pay for the cost of the spare parts calculated from the unit prices.
The obligation that Messrs Jones Williams & Co Ltd assumed towards, Mr. Bossman was that of using its best endeavors to procure the goods for him on the most favourable terms, and was not responsible for the delay.
ii) The relationship between TSS Co. Ltd and Messrs Jones Williams &CO. Ltd. (3 marks)
when the TSS Company Ltd agreed to procure the goods for Messrs Jones Williams and Co. Ltd, TSS Co. Ltd did that as the agent of Messrs Jones Williams Co. Ltd, or as a principal party standing towards Messrs Jones Williams Co. Ltd in the relationship of a seller.
The contract between the supplier TSS Co. Ltd and Jones Williams and Co. Ltd was of the type in commercial circles knows as Free on Board(FOB) contract. By the rules of FOB Contracts, the supplier assumed the responsibility for shipping the goods to the buyer. In this case TSS Co Ltd, the supplier was to ship the spare parts to James Williams and Co. Ltd. (See section 62 of Act 137).
The seller TSS Co. Ltd, assumed no responsibility for insurance or freight nor did it give guarantees as to the time of the arrival of the ship at its destination.
The only representation which TSS Co. Ltd made was that it was ready and willing and able to deliver the goods (spare parts within three(3) months to any part in Japan nominated by James Williams and CO. Ltd and load them at their own expense on the ship designated by them ( Messrs Jones Williams & Co. Ltd).
b) Identify FOUR differences each between Free On board (FOB) contracts and Cost, Insurance, Freight (CIF) contracts.
(8 marks)
The rule of FOB contract in section 62 of Act 137 states as follows:
Cost, Insurance and Freight (CIF) contracts.
c) Orlando Motors, an American Automobile Company, paid for three (3) cars and consigned them to Mr. Kobby Ayensu in Ghana by a bill of lading; vehicle No. GTB 7084 was one of the three (3) cars, Mr. Kobby Ayensu, as the consignee, took delivery of the vehicles and registered vehicle No. GTB 7084. He later sold the vehicle he registered to Tracy Achiaa. The appropriate change of ownership was then effected. Later, one Mr. Oko Lartey who was claiming interest in the cars, sued Mr. Kobby Ayensu in respect of the cars and immediately went to court and obtained an order resulting in the impounding of the vehicle from Tracy Achiaa.
Required:
Explain whether there is any legal basis for Tracy Achiaa to take action to recover the impounded vehicle. (6 marks)
Ezra was arrested by the Police for allegedly assaulting an unarmed beggar. Upon his arrest, the Police handcuffed him and also tied a rope around his waist, and dragged him on the ground to the Police Station, which was about fifty (50) metres from where Ezra allegedly committed the offence. At the Police Station, Ezra was kept in the Police cells for three (3) days without food, apart from the fact that he was not allowed to have his bath. On the fourth day, Ezra was rushed to a District magistrate Court, and without being allowed to state his side of the story, he was sentenced to six (6) months imprisonment without the option of a fine.
Required:
State, any THREE human rights of Ezra which have been violated by the Police. (6 marks)
List, in an ascending order, the Superior Courts of Ghana, as stated in the 1992 Constitution of Ghana. (6 marks)
“The 1992 Constitution is the Supreme Law of the Republic of Ghana”..Explain the above Statement. (8 marks)
Constitution is the basic law or the grundnorm
