i) Success of Legal Action:
The rule is that for a party to succeed in the tort of negligent misstatement there must be a relationship. That relationship must be a professional or special relationship between the person making the statement and the party receiving it. This relationship is the means of establishing to whom a duty is owed. The maker of the statement should know the purpose for which it is to be used and that the recipient/party will rely on the statement and act upon it without making any other inquiries.

In the present case, in preparing the financial statement for Dr. Kwesi Antwi, the firm of chartered accountants of Highskies knew that Dr. Antwi would rely on it, and he indeed did rely on it. The resulting effect was financial loss to Dr. Kwesi Antwi. Thus, Highskies Ltd owed a duty of care to Dr. Antwi. Dr. Antwi therefore succeeds in his legal action. (3 marks)

ii) Effects of an Agent Acting Without Authority:

• The alleged principal will not be bound by the contract unless the principal ratifies it, either expressly or implied through his conduct.
• There is no contract between the agent and the third party because the third party did not intend to deal with the agent personally.
• The agent will have impliedly guaranteed or warranted to the third party that:
  1. The principal exists
  2. The principal has the contractual capacity to make the contract
  3. He has the authority to make the contract.
• If the agent is acting outside his authority, he will be liable to the third party for breach of warranty of authority. (6 marks)

iii) Explanation of “Term of Contract”:
The terms of a contract define the scope and extent of the obligations undertaken by the parties to the contract. After a contract has been made, it is necessary to examine the contents of the contract to determine what the terms of the contract are. Generally, a contract may be wholly oral, wholly in writing, or partly oral and partly in writing. In exceptional circumstances, a statute may demand that a particular kind of contract must be in writing to be enforceable. A statement made in the negotiations leading up to the making of a contract, which does not qualify as a contractual term, is said to be a mere representation.

A mere representation is one which induces the other party to enter into the contract but does not form part of the contract itself. The terms of a contract, therefore, are the statements, promises, or propositions that form part of the contract and which define the respective rights and obligations assumed by the parties under the contract.

Even though all terms of a contract have to be performed, they do not have equal significance. Some terms are of more significance than others, especially when it comes to the consequences of their breach. Some terms are considered to be of major significance to the contract, such that when they are breached by one party, the innocent party is entitled to terminate the contract altogether. Thus, after ascertaining the terms of the contract, there is a need to consider their relative importance, and in this regard, the law classifies the terms of the contract into conditions, warranties, and innominate terms. (3 marks)