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Can an unsigned document give rise to legal consequences?

Posted in Case Summaries, Commercial Law, Employment Law1 week ago • Written by Samuel Alesu-DordziNo Comments

UnknownThe Supreme Court in the case of John Affuah & Another v General Developments Company Limited[1] has held that an unsigned document may give rise to legal consequences. The Court stated that the common law has always recognized the principle that the signature of parties to an agreement was not a prerequisite to the presence or existence of contractual relations.

The Plaintiffs, in this case, were ex-employees of the Defendant. When their employment was terminated, the Defendant calculated and paid them various sums of sums of money. The Plaintiffs signed the relevant documents and received the benefits.

The Plaintiffs later asked their lawyers to write to the Defendant to complain about the amounts given them which they believed were inadequate, in the light of the terms of their conditions of service.

The Defendant resisted the attempt and insisted that the document containing the conditions of service was not signed by both parties and as a result was not binding on it. The Defendant also argued that the document containing the conditions of service came from the workers but was not accepted by the management of the Defendant company.

The Plaintiffs, therefore, brought an action for an order compelling the Defendant to pay their entitlements in line with the terms of their conditions of service. In order to deal with the main issue, the High Court had to determine whether the unsigned document was valid.

The High Court concluded that the unsigned conditions of service did not constitute a contract and was therefore not operational. The Court of Appeal differed. The Court of Appeal, in examining the circumstances of the case, held that there was a binding agreement between the parties – even though the document had not been signed. The Defendant appealed to the Supreme Court.

The Supreme Court’s duty, amongst others, was to examine the circumstances in which an unsigned document will give rise to legal consequences.

In doing so, the Supreme Court affirmed the decision of the Court of Appeal. The Court found, as a matter of fact, that the signature page of the conditions of service was not signed. The Court, however, stated that (a) the parties had acted in accordance with the draft conditions of service; and (b) the conduct of the parties showed their intention to be bound by it, even if it was not signed. There was, for instance, evidence that the Defendant paid funeral grants to the First Plaintiff (as stated in the conditions of service) when he lost his wife.

According to Benin JSC “…At the time of making payment of the funeral grant to the Second Plaintiff, the Defendant did not enter any reservation nor did they say they were paying it on compassionate grounds…”

The court also found that reference was made to the conditions of service in the employment contract of the Second Plaintiff; a fact which made the Learned Judge ask: “So was the Defendant deceiving the Second Plaintiff when they issued him the letter of appointment?”

The Court concluded that the parties by their conduct had exhibited an intention to be bound by the terms of the draft or proposed contract, contained in the conditions of service.

This decision is consistent with the reasoning of the Supreme Court in the recent case of Oppong Banahene v Shell Ghana Limited[2] where the Court held that it is not in every case that the absence of a signature renders an agreement invalid.

[1] Civil Appeal No. J4/28/2015 (29 November 2017)

[2] Civil Appeal No. J4/34/2016 (6 April 2017)

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