BREACH OF SALES CONTRACT AND REMEDIES UNDER THE OHADA COMMERCIAL LAW

ABSTRACT

The aim of this study was to examine the breach of sales contract and remedies under the OHADA commercial law. A contract between buyers and sellers must be signed in order for a transaction to take place, and legislation must be enacted to provide a specific level or degree of legal certainty. A breach of the law necessitates the need for reparation; therefore, whenever there is a wrong, there should be a remedy. In carrying out this research, the methodology applied is the qualitative approach engulfing an in-depth exploration of facts. The method of data analysis adopted is legal reasoning which include deductive reasoning, inductive reasoning and reasoning by analogy. Deductive reasoning constructs or evaluates deductive arguments. The findings revealed that there is a law governing sale of goods in Cameroon, with the main law being the OHADA. However, these laws are not unanimously applied. A key aspect of legality is that legislation or laws should be unanimously applied by all the jurisdictions. The study further reveals breach of the rights of parties to a sales contract which is both the breach of the contract terms on the buyer’s side and the breach of the contract on the seller’s side. As a recommendation to the available remedies, access to court remains a serious huddle in case of breach of COSG. This research has demonstrated that the Uniform Act on General Commercial Law has some implications for the Contract of Sale of Goods since it regulates the business relationship between the seller and the commercial buyer, which has implications for the Contract of Sale of Goods. Various aspects of the Act, particularly Article 255, make major inroads in terms of protecting both the buyer and the seller’s interests. With no doubt, sellers are faced with a difficult challenge in order to satisfy, and finally seek to satisfy, the needs of the buyer via the course of their business relationship and the terms of the contract.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 BACKGROUND TO THE STUDY

In a free market system the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market. The laws and forces of supply and demand are free from any intervention by a government or other authority, and from all forms of economic privilege, monopolies and artificial scarcities.[1] Scholars contrast the concept of a free market with the concept of a coordinated market[2] which emphasize the importance in currently existing market systems of rule-making institutions external to the simple forces of supply and demand which create space for those forces to operate to control productive output and distribution. 

In such a market, breach of contracts for sale and remedies were almost not pre-determined meaning that no rules were made in such a market. If a party felt he was cheated in one way or the other he could only file a suit and wait for the outcome as a typical common law system of no written laws except the rule of judicial precedent.[3]Criticism of the theoretical concept may regard systems with significant market power, inequality of bargaining power, or information asymmetry as less than free, with regulation being necessary to control those imbalances in order to allow markets to function more efficiently as well as produce more desirable social outcomes. In a wide market space such as the OHADA zone[4] the need to control the market against desirable social outcomes was the driving force for legislation. Buyers and sellers must contract for sales to happen and the law must be put in place to create a certain level or degree of legal certainty. If a breach occurs, there must be reparation hence, where there is a wrong, there should be a remedy.[5]

By virtue of article 10 of the OHADA Treaty, its Uniform Acts automatically and directly repeal all existing legislation and supersede any future legislation on the same subject matter. OHADA lawsare essentially civil law based since they originated in countries witha civil law tradition. There are nine Uniform Acts presently in force and The UA regulating commercial sales is the OHADA UA on General Commercial Law. The first three uniform acts (General Commercial Law, Commercial Companies and Economic Interest Groups, and Secured Transactions) were adopted on April 17, 1997, and entered into force on January 1, 1998. Amendments to the acts on Secured Transactions and General Commercial Law were adopted on December 15, 2010, and entered into force on May 15, 2011. At that same meeting, a draft dealing with employment law was submitted for adoption but did not manage to secure a unanimous vote of the states present.

Breach of contract is a legal cause of action and a type of civil wrong in the OHADA UA on General commercial Law, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party’s performance. Breach occurs when a party to a contract fails to fulfill its(s), whether partially or wholly, as described in the contract, or communicates intent to fail the obligation or otherwise appears not to be able to perform its obligation under the contract. Where there is breach of contract, the resulting damages will have to be paid by the party breaching the contract to the aggrieved party.

Undoubtedly, there is a paternalistic ground for legal rules to regulate and protect the very interest of the contracting parties.[6]This concept of legal paternalism is influential to this research in that under a contract of sale, the sellers and buyers duty are embodied in a magnitude of express and implied rules contained in the Uniform Act on General Commercial Law to ascertain the breach which can attract penalties. To determine whether or not a contract has been breached, a judge needs to examine the contract. To do so, they must examine: the existence of a contract as contained in the OHADA UA on General Commercial law, the requirements of the contract, and if any modifications were made to the contract. Only then can the judge make a ruling on the existence and classifications of a breach. Additionally, for the contract to be breached and the judge to deem it worthy of a breach, the plaintiff must prove that there was a breach in the first place and that the plaintiff held up its side of the contract by completing everything required. Additionally, the plaintiff must notify the defendant of the breach prior to filing the lawsuit. A breach of contract may take place when a party to the contract: fails to perform their obligations under the contract in whole or in part; behaves in a manner which shows an intention not to perform their obligations under contract in the future or; the contract becomes impossible to perform as a result of the defaulting party’s own act. These classifications describe only how a contract can be breached, not how serious the breach is. A judge will make a decision on whether a contract was breached based on the claims of both parties.[7]

Any breach of contract (warranty, condition or in nominate term) gives rise to a right in the hands of the innocent party to recover their damage suffered which caused by the breach of contract by the defaulting party.[8] Punitive damages are given to “Punish or make an example of a wrongdoer who has acted willfully, maliciously or fraudulently.”[9]A party in breach of contract may have the right to remedy their breach, for example if the breach itself is remediable and a provision for remedy or a time period for exercising such as right is included within the contract.[10] 

While confirming that the idea behind the creation of OHADA sprang from a political will to strengthen the African legal systems by enacting a secure legal framework for the conduct of business in Africa, which is viewed as essential to the development of the continent, has it really achieved its goal in securing and guaranteeing legal certainty in the contract of sales of goods and in the event of a breach and remedy?, the tenet of this research. Since we cannot answer the question with an all yes or no, it is imperative to research on the breach of sales of goods contract and remedy in the OAHADA commercial law.

1.2 RESEARCH PROBLEM

In spite of the existence of the Uniform Act on General commercial law designed to regulate sales contract, parties to a sales contract are not aware of the law and its applicable use. This is attributed to language barrier based on the fact that the law is in French language.

The cost of appeal is too high for parties of a sale of good contract. This is because the appeals of the parties to a sale of goods contract are being taken to the Common Court of Justice and Arbitration. It should also be noted that the cost of an appeal depends on four major factors: the complexity of the issues, the number of issues, the length of litigation and trial proceedings, and the rate charged

1.3 RESEARCH HYPOTHESIS

This research is premised on the view that the OHADA UA on commercial law does not guarantee sufficient protection against breach of contracts of sales and consequently in its available remedies.

1.4 RESEARCH QUESTION

Our research question is studied under main and specific research questions

1.4.1 MAIN RESEARCH QUESTION

How effective is the OHADA Uniform Act on Commercial Law in protecting parties in a contract of sale of good against breach of contract and in the event of remedy?

1.4.2 SPECIFIC RESEARCH QUESTIONS

• What are the instances of breach

• What are the measures put in place by the OHADA commercial law to ensure compliance against breach of contract of sale of goods?

• How effective are the remedies? And

• What possible policy recommendation can be made?

1.5 RESEARCH OBJECTIVE

This is divided into main and specific research objective:

1.5.1 MAIN RESEARCH OBJECTIVE

The main research objective of this work is to investigate on the effectiveness of the OHADA Uniform Act on Commercial Law in protecting parties in a contract of sale of good against breach of contract and in the event of remedy

1.5.2 SPECIFIC RESEARCH OBJECTIVES

• To investigate on the instances of breach
• To look at the measures put in place by the OHADA commercial law to ensure compliance against breach of contract of sale of goods;
• Thirdly to investigate on the effectiveness of available remedies; and
• Lastly, to proffer recommendations.

[1] Popper, Karl (1994). The open society and its Enemies. Routledge Classics. ISBN 978-0-415 page 6.

[2]Petter A. Hall and Davis Soskice (2001). Varieties of capitalism the institutional Foundation of Comparative advantage. Vol. 1 Oxford University Press, coordinated market referes to the manner in which firms coordinate with different others.

[3] GC Cheshire and FHS Fifoot, Law of Contract (1972) 8^ThEdn, 281. PP 283-287.

[4] The harmonization of business law in Cameroon was done through OHADA. The question is: What is OHADA? OHADA is an international organization that was created by a Treaty signed in 1993 by fourteen African states. As previously noted, the acronym “OHADA” stands for “Organisation pour l’HarmonisationenAfrique du Droit des Affaires.” At present, OHADA has sixteen member states, namely, Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, the Federal Islamic Republic of the Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea-Bissau, Guinea Conakry, Mali, Niger, Senegal, and Togo.In February 2006, the Democratic Republic of Congo (DRC) expressed its intention to join the Organization and, although in a less formal manner to date, other States such as Angola, Ghana and Liberia have also expressed a certain interest in OHADA.

The idea behind the creation of OHADA sprang from a political will to strengthen the African legal systems by enacting a secure legal framework for the conduct of business in Africa,which is viewed as essential to the development of the continent.

[5] An Equity Maxim

[6] Michael J. Trebilock,(1993). The Limits of Freedom of Contract,Harvard University Press, 1993, pp.149-151.

[7]“Breach of Contract — Judicial Education Center”. jec.unm.edu. Access 10 Feb 2022.