Ghana

The Ghanaian legal system è is mixed in character, in that on the one hand it can be traced back to the Common Law system of predominantly British influence, and on the other hand it is supplemented by local custom. Indeed, custom è is expressly mentioned by the Ghanaian Constitution as a source of law applicable to certain communities where it has become firmly established. Moreover, it incorporates within it the guidelines and pronouncements of the Ghanaian Supreme Court of Justice. Indeed, in the Ghanaian legal system, “judicial precedents” enjoy a significant degree of binding force.

The two main pieces of legislation governing business relationships are the “Contract Act of 1960 (Act 25)” and the “Companies Act of 1963” however, neither of the aforementioned pieces of legislation provides specific regulation of the ’institution of agency. This is by virtue of the fact that the early Europeans who established trade relations with Ghana in the 19th century cultivated their economic interests through other forms of contracts.

Nevertheless, the historical legacy has not conditioned the structure of modern trade relations, where the preferred channels of business and access to the Ghanaian market for foreign operators are mainly represented by the agency or distribution contract with reference to both forms of retail sales (the so-called “retail”) and wholesale sales. Widespread practice in the country denotes how foreign business operators cooperate indiscriminately with both state agencies and private entities.

With specific reference to the agency contract in Ghana, it is pointed out that such a bond consists of an agreement whereby one party (“the’agent”) undertakes to act on behalf of another party (“the principal”). According to Ghanaian law, the essential prerequisite of the agency contract is voluntariness, meaning that both parties must be consenting and knowing, this in light of the circumstance that the legal effects of the activity carried out by the agent are produced in the legal sphere of the principal.

It should be noted that the Ghanaian legal system is extremely protectionist towards the figure of the agent, considering that this role can only be assumed by Ghanaian citizens or by companies with total Ghanaian participation.

Agency contact requires the written form, although the same is not its essential requirement. However, if such a contract is drawn up in writing, at the same time the obligation arises to register the agent’s name in an appropriate register kept by the Ministry of Economy. Depending on the type of activities or goods covered by the contract, the activity may be carried out by a single agent who operates over the entire Ghanaian territory, or by several individuals who are consequently assigned different territories with respect to which they must operate.

The agent’s compensation is determined by a commission calculated with respect to the turnover produced.

The peculiarity of the agent – principal relationship is to be found in the special form of control exercised by one party over the other, whereby the former agrees to act under the direction of the latter.

The parties may agree on a time limit within which the contractual relationship ends. However, in order for an early termination to take place, è the express consent of the agent is required; otherwise, the agent shall be entitled to compensation for any damages derived from the termination of the contractual relationship.

The agent shall be entitled to compensation for any damages derived from the termination of the contractual relationship.

Circumstances determining the termination of the agency contract include: death, supervening inability to act of the principal and bankruptcy of the principal.

The Distribution Contract in Ghana falls within the group of so-called “atypical contracts” entered into between the manufacturer and/or supplier of goods and a distributor whose primary task is to promote such goods relatively to a given territory or through particular commercial channels with direct consumers. The determination of the contractual content è left to the autonomy of the parties, who may therefore provide or not the exclusivity clause, establish the duration of the contract, identify the causes of its termination, the minimum purchase quantity for each order and other elements.

The termination clause of the contract must be defined in detail by the parties, this is to avoid disputes arising. Ghanaian law does not provide for any obligation to pay the distributor a’termination indemnity. There’nevertheless, in the event of early termination by one of the parties, in the head of the contractor who does not è release from the contract arises the right to obtain payment of damages suffered as a result of the premature termination of the contractual relationship.

The parties are free to choose the applicable law, however, if at trial the court finds that the contract exhibits characteristics more attributable to Ghanaian law, the latter will be applied, regardless of the choice made by the contractors.

In addition, in order to institute a lawsuit having as its object the protection of rights arising from a distribution contract, the law requires the prior registration of the same.

The Distribution Contract in Ghana falls within the group of so-called “atypical contracts” entered into between the manufacturer and/or supplier of goods and a distributor whose primary task is to promote such goods relatively to a given territory or through particular commercial channels with direct consumers. The determination of the contractual content è left to the autonomy of the parties, who may therefore provide or not the exclusivity clause, establish the duration of the contract, identify the causes of its termination, the minimum purchase quantity for each order and other elements.

The termination clause of the contract must be defined in detail by the parties, this is to avoid disputes arising. Ghanaian law does not provide for any obligation to pay the distributor a’termination indemnity. There’nevertheless, in the event of early termination by one of the parties, in the head of the contractor who does not è release from the contract arises the right to obtain payment of damages suffered as a result of the premature termination of the contractual relationship.

The parties are free to choose the applicable law, however, if at trial the court finds that the contract exhibits characteristics more attributable to Ghanaian law, the latter will be applied, regardless of the choice made by the contractors.

In addition, in order to institute a lawsuit having as its object the protection of rights arising from a distribution contract, the law requires the prior registration of the same.

The mining sector

The extractive sector è one of the dominant productive sectors, as Ghana has several deposits of gold, diamonds and bauxite, crude oil and natural gas. The country’s oil & gas industry has developed preponderantly in recent years, as a result, the Ghanaian legislature, in order to promote better regulation of the subject, has intensified legislation in the sector. Specifically, to complement the already existing regulatory framework, the “The Petroleum (Exploration and Production) Act 2016 (Act 919)” was enacted in 2016, which replaced the “Petroleum (Exploration and Production) Law 1984 (PNDCL 84)”. A number of regulations were already in place on the subject, including “the National Petroleum Authority Act 2005 (Act 691)” “the Petroleum Income Tax Act 1987 (PNDC Law 188)” and “the Ghana National Petroleum Corporation Act (PNDC Law 64)”. In July 2011 è a’special Commission-the so-called “Petroleum Commission”-was established with the specific functions of regulating and administering the country's petroleum resources, whose composition and other duties are identified in detail by “the Petroleum Commission Act 2011 (Act 821)”.

The Agribusiness Sector

Ghana is also a particular business attraction in the agribusiness sector. This is because the country has vast crops of cocoa trees, cashew nuts, sugarcane plantations and hectares of mango trees. Due to the richness of the land and favorable climate, the agribusiness and fruit and vegetable sectors rank among the best performing sectors of local product exports. In fact, over the past decade the Ghanaian government has put a lot of effort into boosting fresh fruit exports. An initial slowdown in the sector è however, has been detected as a result of the EU’s imposition on Ghanaian partners of compliance with the quality criteriaà required by European law and regulations.

The’export of timber

This sector is complemented by massive timber exports. Indeed, one-third of the entire national territory è covered by forests exploited to produce timber for trade. The largest consignments of timber have as their destination the old continent; in fact, to date, Europe è the largest buyer of timber imported from Ghana. Unfortunately, the enormous economic potential of this country è extremely underestimated. Since 1995, the country è has been a member of the World Trade Organization, a circumstance that undoubtedly favors trade relations with other countries.

Studio Legale de Capoa & Partners, thanks to its more than thirty years of experience in the field of international law as well as to the close collaborative relationships it maintains with qualified local professionals and native-speaking in-house associates, can offer interested entrepreneurs quick, efficient advice that is fully aware of the complexity of the Ghanaian legal-economic reality.