By robertsmith

• Apr 28, 2020
• 0 Comments

Kwabena Frimpong Mensah Esq. and Enyimnyam Paintsil Esq.

1. INTRODUCTION

With the onset of the novel Coronavirus (Covid-19) pandemic[1] across the world, life as we know it has come to a virtual standstill.  Every sector of the global economy has been hit, international trade has been stalled and industries crashed; across the world, there is a genuine sense of despair. The most affected by this are the employers who for the next couple of weeks will have to decide the best way to save their businesses and the livelihoods of their employees.

In the capitalist world we find ourselves in, saving the business seems to be the alternative the greater majority will take. In doing so, workers will either be put on unpaid leave or be laid off and for those who are lucky, said workers would receive their monthly salaries with or without salary reductions for the period.

As at Friday 17^th April, 2020, 22 million Americans had filed for unemployment relief after being laid off due to the continued spread of COVID-19.[2]

Ghana, like most countries, is also suffering from the pandemic, with casual and permanent workers sitting on tenterhooks over their employment situation during and post COVID-19.

The purpose of this article will be to spell out the legal framework in place for employer and employees in such a situation, the protection the law provides each party and also the doctrines of frustration of contracts, Force Majeure, redundancy and leave without pay.

2. EMPLOYMENT CONTRACTS IN GHANA

In Ghana, employment relations are governed by the provisions of the Labour Act 2003 (Act 651)[3]; the Contracts Act 1960 (Act 25), the principles of common law[4] and the various judicial decisions on employment issues delivered by the courts.

The employment relationship, like all other legal relationships is created by a contract between the employer[5] and the employee. In Ghana, employment contracts are to be in writing except where the tenure of the employment does not exceed a period of six months.[6]  Section 12 of the Labour Act[7], which is headed “Contract of Employment” states,

“(1) The employment of a worker by an employer for a period of six months or more or for a number of working days equivalent to six months or more within a year shall be secured by a written contract of employment.

(2) A contract of employment shall express in clear terms the rights and obligations of the parties.”

However, the absence of a written contract does not invalidate an employment contract. Per Section 11 of the Contracts Act[8], a contract shall not be made void or unenforceable simply because it is not in writing. In a similar vein, Section 175 of the Labour Act[9], defines the term “contract of employment” as a contract of service whether express or implied, and if express whether oral or in writing.

The common terms of an employment contracts are;

1. 1. The rights[10] and duties[11] of the employer and the employee;
   2. The employee’s leave entitlements (sick leave, annual leave, unpaid leave, maternity leave)[12]
   3. Maximum hours of work[13]
   4. Remuneration payable to the employee[14]
   5. Termination of the employment contract[15]

3. DEALING WITH LEAVE SITUATIONS

As indicated earlier, most conditions of service would include leave entitlements/periods. Under said periods, the employee/worker is permitted to be absent from his place of work and duties under the contract of employment. These periods could be annual leave, maternity leave, sick leave, or unpaid leave.

Due to the spread of the coronavirus the parliament of Ghana on Friday 20^th March, 2020 passed the Imposition of Restrictions Act, 2020 (Act 1012),  to provide for the imposition of restrictions in accordance with paragraphs (c), (d) and (e) of Article 21 of the Constitution and for other related matters.[16]

In accordance with Act 1012, The President by two Executive Instruments, enacted the Imposition of Restrictions (Coronavirus Disease (Covid-19) Pandemic) Instrument 2020 (EI 64)  and the  Imposition of Restrictions (Coronavirus Disease (Covid-19) Pandemic) (No.2) Instrument 2020  (EI 65).

With the passage of these Executive Instruments, movement of persons within Ghana have been severely curtailed. Persons in certain areas were under a duty not to move outside their abode of residence except in certain situations or otherwise exempted.[17]

The object of EI 64 was to restrict  movement of  Ghanaians within the Greater Accra Region, and Greater Kumasi Metropolitan District  for a two-week period and which period was extended for one week under EI 65. Movement  within the two metropolitan areas was only allowed for the following purposes:

1. 1. to obtain food, medicine and water;
   2. to undertake banking transactions;
   3. to use public toilet facilities; or
   4. to pay for utility services

Under the EIs, the following persons were exempted from restrictions on movement,

1. 1. Members of the Executive
   2. Members of the Legislature
   3. Members of the Judiciary:
   4. Chief Executives of Metropolitan, Municipal and District Assemblies, and Regional and District Coordinating Directors;
   5. Staff of VALCO, Tema Oil Refinery, Petroleum Commission, and Ghana Cocoa Board (COCOBOD) and its affiliate corporate bodies;
   6. Road and railway construction workers;
   7. Mining workers;
   8. Fisherfolk and farmers;
   9. Members of the security services assigned lawful duties;
   10. Staff of electricity, water, telecommunications, e-commerce and digital service providers;
   11. Staff of fuel stations;
   12. Members of the Media;
   13. Staff of the Bank of Ghana, banks and specialized deposit-taking institutions; and
   14. Licensed private security personnel.
   15. Persons providing the following services,
       • Services for the production, distribution and marketing of food, beverages, pharmaceuticals, medicine, paper and plastic packages;
       • Food delivery;
       • Essential services;
       • Environmental and sanitation activities;
       • Hoteliers; and
       • Cargo supply and distribution services.

Section 5 of  EI 64 imposed a restriction on all public gatherings, closed down all the borders of the country and closed downed all educational institutions. EI 64, not only placed restrictions on movement within the country, but also closed the country’s borders.[18] As such, for all employees who at the time that EI 64 was passed, were outside the jurisdiction of Ghana, return to Ghana would be impossible until such time that the borders were opened. Such employees would undoubtedly remain in whichever country they had travelled to; this would certainly affect the performance of their contractual obligations, especially for employees whose obligations require physical presence within the country. By virtue of these restrictions, a large percentage of Ghanaian employees were expected to be absent from their work posts and  unable to discharge their contractual obligations to their employers.

In such a scenario, the Employer may, with the permission of the Employee, request that the Employee go on special leave. This type of leave, however, would not constitute the worker’s annual leave days.[19]

This type of leave is provided for under Section 23 of the Labour Act, which provides,

“A period during which a worker is absent from his or her normal duties with the permission of the employer on account of the worker’s participation in voluntary communal work, the discharge of civic duties or the granting of special leave with or without pay, shall not be counted as part of the worker’s annual leave.”

The special leave indicated above may be with or without pay, but ultimately, would require the consent of the employee, especially in the event that said leave is granted without pay. In contrast, the principle of Furlough, permits Employers to put workers/employees on a mandatory leave without their permission. [20] Though not working, furloughed workers however, are still gainfully employed and not been made redundant and are still entitled to all emoluments and benefits on resuming work. To furlough a worker however, does not affect the right of the employer to lay workers off, or terminate the employment contract.

The U.S Office of Personnel Management mentions two types of furlough: (a) administrative furloughs[21] and (b) shutdown furloughs.[22] An administrative furlough as defined by the U.S Office of Personnel Management is a planned event by an agency which is designed to absorb reductions necessitated by downsizing, reduced funding, lack of work; a shutdown furlough (emergency furlough) on the other hand occurs where there is a lapse in appropriations.

With the type of scenario presented by Covid-19, an administrative furlough seems a better alternative for Employers when placed side by side with the option to request that the Employees go on special leave; while the former needs no permission, the latter needs the prior consent of the employees.

4. TERMINATION OF EMPLOYMENT RELATIONSHIPS

The employer-employee relationship is not one of servitude nor is it one set in perpetuity, as such the employment may be ended at any time through dismissal, termination or redundancy.[23]

In the words of Dr. Twum JSC in KOBEA & ORS V. TEMA OIL REFINERY [2003-2004] SCGLR 1033,

“At common law, an employer and employee are free and equal parties to the contract of employment. Hence either party has the right to bring the contract to an end in accordance with his terms. Thus, an employer is legally entitled to terminate an employee’s contract of employment whenever he wishes and for whatever reasons, provided only that he gives due notice to the employee or pay him his wages in lieu of the notice. He does not even have to reveal his reasons much less to justify the termination.”

The Labour Act in Section 15 provides the grounds on which an employment relation may be terminated. These are;

1. 1. by mutual agreement between the employer and the worker;
   2. by the worker on grounds of ill-treatment or sexual harassment;
   3. by the employer on the death of the worker before the expiration of the period of employment;
   4. by the employer if the worker is found on medical examination to be unfit for employment;
   5. by the employer because of the inability of the worker to carry out his or her work due to
      • sickness or accident; or
      • the incompetence of the worker; or
      • proven misconduct of the worker

Section 62 of the Labour Act further permits employers to terminate a worker’s employment provided,

“(a) that the worker is incompetent or lacks the qualification in relation to the work for which the worker is employed;

(b) the proven misconduct of the worker;

(c) redundancy under section 65;

(d) due to legal restriction imposed on the worker prohibiting the worker from performing the work for which he or she is employed.”

Per the provisions of the Labour Act, the termination of an employment relationship that falls short of any of the requirements above is contrary to the law and the employee is entitled to some damages/compensation. Disgruntled employees under Section 64 of the Labour Act may present a complaint to the National Labour Commission.[24] The Commission, if it finds that the termination is unlawful, may either order the re-instatement of the employee, order the employer to re-employ the worker (either in the work for which the worker was employed before the termination or in other reasonably suitable work on the same terms and conditions enjoyed by the worker before the termination); or order the employer to pay compensation to the worker.

Nonetheless, a cursory look at the existing statute and its provisions on termination shows that there are no direct provisions on termination that cater for the current predicament. What remedies, then, are available to employers who have to lay-off some workers due to the economic standstill without falling short of the law? In answering this question recourse be made to two principles of contracts: Force Majeure and Frustration.

4.1. FORCE MAJEURE

The phrase Force Majeure, borrowed from the French library is directly translated as “a superior force”. Force Majeure as defined by the Black’s Law Dictionary 8^th Edition, refers to any “event or effect that can be neither anticipated nor controlled”.

It is a legal concept that excuses non-performance of the contractual obligations of a party on the basis that the non-performance is due to unforeseen circumstances which are reasonably beyond his control, circumstances which may include, but are not limited to wars, terrorist attacks, political revolutions, and acts of God.[25] The principle is based on the maxim, impossibilium nulla obligatio est, meaning, there is no obligation to do the impossible.

The doctrine of force majeure originated from civil law systems and where application of force majeure to the non‑performance of a contract, is automatic and need not be in the contract.[26]

Ghana however, belongs to a common law jurisdiction; and which jurisdiction only makes force majeure applicable where the parties to the contract consent to its use, i.e. the force majeure clause has to be included in the contract in order to be applicable.

Force Majeure clauses are interpreted narrowly by the courts and for one to succeed in invoking this principle, the onus is on the relying party to prove that,

• the event relied on was not reasonably foreseen at the time of entry in to the contract and,
• his contractual obligations thereunder have been made impracticable despite all reasonable efforts to perform them.

Aside these two conditions, it is imperative that the force majeure clause contains a list of triggering events which would trigger application of force majeure, and that the event relied on is included in said list. The force majeure clause cannot be vague.[27]

In the wake of COVID-19, employers may rely on force majeure to lay off employees. However, this is highly dependent whether or not the employment contract contains a force majeure clause as indicated earlier, and an objective analysis of the effect of the virus on the business. That a business has become unprofitable or that there are mere inconveniences in the contractual obligations of a business is not sufficient reason to terminate a labour contract on grounds of force majeure. Contractual obligations but be impossible not simply arduous.

Where an Employer is able to rely on force majeure, he is not excused from the principles of dismissal, laying off and/or termination; procedural impropriety would make the employer liable for illegal/unfair dismissal. The Supreme Court of Ghana, in NARTEY-TOKOLI & OTHERS V. VOLTA ALUMINIUM CO LTD (NO. 3) [1989-90] 2 GLR 513-531, held that where a company would have to downsize due to force majeure, it would still have to follow due process. In NARTEY-TOKOLI & OTHERS V. VOLTA ALUMINIUM CO LTD (supra) the Defendant Employer, following a period of drought was unable to operate its business as it used to. As a result, it had to downsize on its staff. This is did by declaring a force majeure.[28] After reaching an agreement with the Local Union of its workers in respect of laying-off/disengaging its staff, the Defendant Employer failed to follow the agreed procedure for laying off/disengaging its staff thereunder. The laid-off employees then instituted a class action against the Defendant Employer for illegal dismissal. The Supreme Court stated as follows,

“In the situation where the defendants were hit by a force majeure and were under a constraint to embark on a redundancy exercise the plaintiffs could not have sued either for an injunction to restrain the defendant from dismissing them or for specific performance. The remedy for their "illegal" dismissal truly lay in damages.” 

For an employer who wishes to disengage staff on grounds of force majeure, he would have to establish the following, that;

1. 1. The employment contract contains a force majeure clause providing a list of events which would trigger the application of force majeure;
   2. The event causing the force majeure was unforeseen and could not have been reasonably anticipated by either party at the time the contract was concluded;
   3. The Employer’s contractual obligations have been made impracticable in spite of all reasonable efforts to perform them or that he/it is unable to carry on operations, not that performance has simply become harder or more onerous;
   4. The Employer has followed the rules of dismissal/laying-off/termination provided for in the contract of employment, the procedure cannot be arbitrary.

4.2. FRUSTRATION OF CONTRACTS

Frustration occurs where an external event of some kind, which is not the responsibility of either party, renders further performance of a contract impossible (See TAYLOR V CALDWELL (1863) 122 ER 309), or radically different from what had been contracted for (See DAVIS CONTRACT­ORS V FAREHAM UDC [1956] 2 ALL ER 145, HL). Frustration of a contract discharges the parties from all contractual obligations and duly terminates the contract between the parties. Frustration like force majeure, is equally difficult to prove as inconveniences or mere delays in performance would not suffice.[29]

Frustration would occur where contractual obligations have been made illegal, impossible or radically different from what the parties intended, due to unforeseen circumstances.[30] Nonetheless, there is no frustration if it is found that the event that triggered the frustration was the fault of one party[31]; if there were multiple ways for performance and only one of those ways was curtailed [32]; if there was a force majeure clause[33] which adequately captured the event as a trigger; or if only a part of the contract was frustrated.[34]

The Supreme Court of Ghana in the case of BARCLAYS BANK V SAKARI[35] held that in any particular situation, whether frustration has occurred or not, is a question for the court to determine; and which question would necessitate construing the contract to determine the nature of the obligation created on the parties to ascertain if the event in question did render impossible or radically different, the performance of the contract. The other factors the Court would take into consideration are,

• • What would be the new nature of the obligations under the contract after the external obligation
  • Would this new obligation, when compared with the original obligation be radically different from the latter.

Unlike force majeure, an employment contract need not contain a clause for frustration before same can be applied, it is a common law doctrine applicable to, implied and recognized in all contracts. In Ghana the doctrine involves a mixture of common law rules and statute (i.e. the Contracts Act, 1960 (Act 25)). The common law rules determine when frustration can be said to have occurred, while Part One of Act 25 deals with the consequences of frustration.

A contract may be frustrated by illegality due to changes in laws and regulations. If the illegality existed at the time of the contract, the entire contract is void ab initio and there would be no room for frustration. Frustration can only set in after the formation of the contract.[36] In like manner, a contract would be frustrated by impossibility, when it is no longer possible for either party to perform their obligations for reasons outside their control. The impossibility may arise due to personal incapacity, death of either party, destruction of the subject matter or an outbreak of war. Nonetheless, there is no frustration it is found that the event that triggered the frustration was the fault of one party[37] or if there were multiple ways for performance and only one of those ways was curtailed  or if there was a force majeure clause which adequately captured the event as a trigger.[38]

Section 62(d) of the Labour Act provides that a termination due to legal restriction imposed on the worker prohibiting the worker from performing the work for which he or she is employed is a fair one.

Would a termination based on a lockdown be one that section 62(d) will cover? Would the duration of the restrictions continue for such time so as to make future performance of the Employee’s obligations radically different or impossible? Objectively it would depend on the length of the lockdown and the type of the work the employee is engaged in. In the Irish case of HARE v MURPHY BROTHERS Ltd[39], the Court held that continued absence due to legally imposed restrictions could frustrate an employment contract. The Plaintiff in that case, Hare, was imprisoned[40] for 12 months following a fight in a public house. The Court of Appeal held that the conviction for fighting in itself did not frustrate the contract, what did was the term of imprisonment imposed on Hare.

The restrictions imposed on the  Greater Accra and Kumasi districts (supra) would most likely be considered an inconvenience in the performance of contractual obligations rather than a frustrating event.  These restrictions, lasted for less than a month and reliance on same as basis for termination would be a herculean task for the Employer.

Per Part One of Act 25, frustration would have the following effect on the contract. Firstly, the Parties would be discharged from further performance of the contract as indicated earlier.[41] Secondly, all monies paid or payable to a party, in the case, the employee, at the time the parties were discharged from their obligations under the contract of employment, shall be recoverable by the employee.[42] Affirming this principle is Section 18 of the Labour Act which stipulates that on termination, an employee is entitled to all deferred payments and remuneration due the worker at the time of the termination and compensation benefits where applicable.

In light of the recent happenings concerning COVID-19, employers who would have to lay-off workers, may find some respite in the principle of frustration. However, as stated earlier, an objective analysis of the effect of the virus on business operations is needed; that a business has become unprofitable or that there are mere inconveniences in the contractual obligations of a business would not be sufficient reason to end a labour contract on grounds of frustration.

4.3 REDUNDANCY

Due to the lockdown restrictions and border closures, businesses are unable to make profits. Some have incurred huge losses and barely staying afloat. For Employers in this predicament may elect to call for a redundancy and either restructure their operations or shut down all operations.

According to Section 65 of the Labour Act, a redundancy[43] may arise where a business is closed down or there are major changes in the production, programme, organisation, structure or technology of the business which causes severance of the legal relationship of a worker and employer as it existed immediately before the close down or arrangement. Additionally, the close down or arrangement should be one that would either in unemployment or a diminution in the terms and conditions of employment. In determining whether a worker has suffered any diminution in his or her terms and conditions of employment, account must be taken of the past services and accumulated benefits, if any, of the worker in respect of the employment with the undertaking before the redundancy.

According to the Labour Act, an employer who anticipates the probability of redundancy is mandated to submit in writing to the Chief Labour Officer, all relevant information including the reasons for any termination, the number and categories of workers likely to be affected and the period within which any termination is to be carried out at least 3 months prior to the contemplated changes. The employer must also consult the trade union concerned, where applicable, on measures to be taken to avert or minimize the termination as well as measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment. On the occurrence of a redundancy situation, the Employer is obliged to pay to the Employee made redundant, compensation or redundancy pay. The amount to be paid is subject to negotiation between the employer and the employee or between the employer and the trade union concerned.

These conditions, may make redundancy a difficult option to choose for the simple reason that the Employer may not have sufficient funds to pay employees their redundancy packages. Not to mention that, Covid-19 was an unanticipated event that would require swift action; given the three month notice rule, taking the road of redundancy would result in tardiness and more losses for the employer.

5. NOVATION

Another possibility worth exploring is novation of the employment contract. Novation is act of substituting for an old obligation a new one that either replaces an existing obligation with a new obligation or replaces an original party with a new party.[44] A novation would also describe scenarios where a  new contract is introduced to immediately discharge either a previous contractual duty or create a new contractual duty. In explaining what a novation was, Justice Abban, in JAPAN MOTORS TRADING CO. LTD. v. RANDOLPH MOTORS LTD. [1982-83] GLR 536, stated,

“What took place looked like a kind of novation.  That is, a transaction by which, with the consent of all the parties involved, a new contract is adopted in place of another which is already in existence: see Scarf v. Jardine (1882) 7 App. Cas. 345. At p. 351 Lord Selborne explained novation as follows:

‘In the Court of first instance the case was treated really as one of what is called `novation,' which as I understand it means this - the term being derived from the Civil Law - that there being a contract in existence, some new contract is substituted for it, either between the same parties (for that might be) or between different parties; the consideration mutually being the discharge of the old contract.’

So that novation primarily involves the discharge of the original obligation under an existing contract and the creation of a new one in its place.”

A novation would make it easy for the Employer power to renegotiate the terms of the employment contract with his workers, without necessarily having to declare a redundancy or let them go. Under a novation, an Employer may not only reduce the working hours of employees, he/it may also renegotiate the terms of remuneration such that the company would pay salaried workers less until such time that the company is able to resume full business operations or start making profits. This would be a win-win for both parties.

6. CONCLUSION

The outbreak of the novel Covid-19 virus is one that has shaken many nations to the core. International and domestic trade have been severely impacted by the virus, sadly, not in a positive manner. Many businesses thus, have been faced with difficult decisions to make in order to stay afloat. Some would have to downsize their staff while some would keep on their staff but would have to take other measures such as furloughs, novation or the grants of special leave in order to keep operating.

All over the world, Employers are in a dilemma over what course of action to take next. It is the authors’ hope that this article helps in the decision makers of Employers as the world recovers from the toll that Covid-19 has taken on it.

Photo Credit: Google Images

FOOTNOTES

* The Authors are associates at Smith and Adelaide Law, a boutique law firm in Accra

[1] The WHO declared Covid-19 a pandemic on 11^th March 2020

[2] https://www.washingtonpost.com/business/2020/04/16/unemployment-claims-coronavirus/

Accessed on 17^th April, 2020

[3] The Labour Act 2003, Act 651 has as its long title, “AN ACT to amend and consolidate the laws relating to labour, employers, trade unions and industrial relations; to establish a National Labour Commission and to provide for matters related to these.”

[4] As provided for in Article 11 of the 1992 Constitution

[5] Section 175 of the Labour Act defines an Employer as “any person who employs a worker under a contract of employment”

[6] Persons employed for periods under 6 months are deemed temporary workers

[7] 2003, Act 651

[8] 1960, Act 25

[9] 2003, Act 651

[10] Sections 8 and 10 of the Labour Act

[11] Sections 9 and 11 of the Labour Act

[12] Sections 20, 24, and 57 of the Labour Act

[13] Section 33 of the Labour Act

[14] Section 67 of the Labour Act

[15] Part VIII of the Labour Act

[16] Long Title of the Imposition of Restrictions Act.

Section 2 of Act 1012 provides that the President may by an Executive Instrument impose restrictions on the movement of persons in the country.

[17] In a televised address on the 19^th of April 2020, the President lifted these restrictions but indicated his resolve to impose similar or harsher restrictions if there is scientific basis for that.

[18] The Borders are yet to be open

[19] According to the Labour Act, annual leave must be a minimum of 15 days

[20] An employee furlough is a mandatory suspension from work without pay.

See https://www.thestreet.com/politics/what-is-a-furlough-14832476 last accessed on 6/04/2020

[21] See Guidance for Administrative Furloughs, March 2017

[22] See Guidance for Shutdown and Furloughs, September 2015

[23] Justice Date-Bah JSC in BANI V. MAERSK GHANA LIMITED (2011) 2 SCGLR 796 stated;

“It would not be wise to compel an employee to work for an employer he does not want to work for, nor conversely to compel an employer to employ an employee it does not want to.”

[24] The Labour Act in Section 135, establishes a Labour Commission to deal with labour related disputes

[25] See Atlantic Paper Stock Ltd v. St. Anne-Nackawic (1976] I S.C.R. S80 at S83, “An act of God clause or a force majeure clause ... generally operates to discharge a contracting party when a supervening, sometimes supernatural, event, beyond control of either party, makes performance impossible. The common thread is that of the unexpected, something beyond reasonable human foresight and skill”

[26] Paris Energy Series No. 9: Expecting the Unexpected: The Force Majeure Clause- White and Case Law dated February 2015

[27] See ICC Case No. 9978/1999 (Extract), 11 ICC Bull. 2000, 117, where the tribunal noted that the practice of ICC arbitrators was to uphold the force majeure defense only in “extreme cases such as war, strikes, riots, embargoes or other incidences listed”

See also Force Majeure - Beyond Boilerplate Joni R. Paulus & Dirk J. Meeuwig, Alberta Law Review Vol 37 (2) 1999 “The list of triggering events should be sufficiently specific so as to permit parties to avoid obligations that cannot be satisfied for reasons which legitimately could not be prevented by forethought and planning on the part of the party claiming force majeure; but not so broad as to allow a party to escape those obligations for which it should be reasonably held accountable”

[28] See also NARTEY-TOKOLI AND OTHERS v. VOLTA ALUMINIUM CO. LTD. (NO. 2) [1989-90] 2 GLR 341

[29] See Davis Contractors v Fareham UDC [1956] AC 696

[30] National Carriers Ltd v. Panalpina (Northern) Ltd: HL 11 Dec 1980, “…Frustration of a contract takes place where there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance…”

[31] See Maritime National Fish Ltd v. Ocean Trawlers Ltd [1935] AC 524, the court stated, “The essence of " frustration" is that it should not be due to the act or election of the party… it should be without any default of either party…”

[32] The “un-curtailed’ parts would still be valid due to the doctrine of severability.

[33] Jackson v. Union Marine insurance Co. Ltd (1874) LR 10 CP 125.

[34] Section 2, Act 25

[35] 1996-97 SCGLR 639

[36] See Fibrosa Spolke Ackyna v. Fairbarin Lawson Combe Barbour [1943] AC, the court held that the declaration of war between Germany and Poland made the contract between the parties illegal and as such the contract had been frustrated

See also Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93

[37] See Maritime National Fish Ltd v. Ocean Trawlers Ltd [1935] AC 524, the court stated, “The essence of " frustration" is that it should not be due to the act or election of the party… t should be without any default of either party”

[38] Jackson v. Union Marine insurance Co. Ltd (1874) LR 10 CP 125

[39] [1974] IRLR 342.

[40] See also GALLAGHER v EIRCOM (UD955/2004), an employee was sentenced to 8 years imprisonment. Seven days to his release, his employer sought to terminate his employment. The employer argued that the employee had not been dismissed but his contract frustrated and his contract was terminated on operation of law when he received the 8 year sentence. The Tribunal found in favour of the employer on the legal point that the employee’s contract terminated by operation of law when it was frustrated by a custodial prison sentence.

[41] Section 1 (1), Act 25

[42] Section 1(2), Act 25

[43] See also KWAPONG AND OTHERS v GHANA COCOA MARKETING BOARD AND OTHERS AMOH v GHANA COCOA MARKETING BOARD AND OTHERS (CONSOLIDATED) [1984-86] 1 GLR 74, “An employer could not declare an employee redundant unless any one of the following situations existed: (a) where the business has ceased; (b) where the place of business has been moved; and (c) where the business no longer required the same number of employees to carry out work of a particular kind”

[44] Black’s Law Dictionary 8^th Edition