The willingness to obtain a loan when people need one is often unmistakable. Whatever the reason for the borrowing, there is usually no shortage of explanations about why the money is needed and how it will be repaid. It is when the repayment falls due that the energy can sometimes change. Explanations upon explanations begin to emerge. Some may be genuine. Others may simply be calculated attempts to buy more time or, in some cases, to avoid the obligation altogether.
Loan recovery disputes are therefore not unusual before the courts. Indeed, matters involving unpaid loans and other credit facilities find their way onto the cause lists of the courts more often than one might imagine. One such dispute eventually came before the High Court in Accra in Sikapress Micro-Credit Ltd v Charles Oppong Asare & Another, Suit No. GJ/1417/2020. The case raised a deceptively simple question with significant consequences as to who had actually borrowed the money when it was advanced.
Factual Background: The loan and the Default
In August 2019, Sikapress Microcredit Ltd granted a loan facility of GH¢400,000. The lender, a company licensed by the Bank of Ghana to provide micro-credit services, said the facility was granted to Charles Oppong Asare to enable him clear goods from the port. The loan was for six months and carried interest at 4% per month, with repayment expected to begin in September 2019. There was also a penal fee of 1% per month in the event of default.
By February 2020, the lender said the amount expected to be repaid had reached GH¢448,000, comprising the principal and agreed interest. Despite demands and default notices, the money remained unpaid. Sikapress therefore went to court seeking recovery of the GH¢448,000, together with continuing interest, the agreed penal fee and its costs.
Rather unexpectedly, one main question the Court had to answer was about the identity of the borrower. Charles Oppong Asare did not accept that he had borrowed the money personally. He said the loan was really for Foresight International Company Ltd, a company of which he was a director. According to him, the company had been a customer of Sikapress for about ten years and it was the company that applied for the facility. He had merely acted in the company’s interest and provided security for the loan.
There was also evidence that Foresight had made some payments. GH¢48,000 had been paid as monthly interest of GH¢16,000 for September, October and November 2019. The defendants also pointed to the emergence of COVID-19 and the restrictions that followed as having disrupted the company’s import business. The company, they said, was making efforts to settle what was outstanding.
Decision of the Court
In its ruling delivered on Wednesday, 24 June 2026, the High Court, presided over by Addo J, found that the GH¢400,000 loan had been granted to Charles Oppong Asare personally and not to Foresight International Company Ltd. The Court therefore held Asare liable as the principal borrower, while the second defendant was liable under the guarantee given for the repayment of the facility. Judgment was accordingly entered in favour of Sikapress against the defendants jointly and severally.
The Court’s conclusion rested on three main aspects of the transaction.
- The loan agreement and the surrounding documents
The first was the way the loan agreement itself had been framed. The agreement had described the borrower as “CHARLES OPPONG ASARE (Trading as FORESIGHT INTERNATIONAL COMPANY LTD)”. For the Court, those words mattered.
The expression “trading as” indicated that Asare was the person contracting under the business name Foresight International Company Ltd. If Foresight itself was intended to be the borrower, the company could have been named directly as the borrower in the agreement.
The way the document was signed reinforced that conclusion. Asare signed simply as Charles Oppong Asare. He did not sign “for and on behalf of Foresight International Company Ltd”. By contrast, Sikapress’s Chief Executive Officer expressly signed on behalf of the lender. The difference, in the Court’s view, showed that the parties knew how to indicate when a person was signing in a representative capacity.
The documents surrounding the loan pointed in the same direction. In a letter dated 7 June 2019 requesting a repayment schedule and restructuring of the loan, Asare used the first person singular and referred to the obligation as his own. Sikapress subsequently restructured the loan in his name. The statutory declaration, guarantor undertaking, Declaration of Full Understanding and pledge agreements also supported the lender’s position that it was dealing with Asare personally.
- The Company’s Cheques
The second aspect concerned the fact that some of the payments made towards the loan came from Foresight International Company Ltd. The defendants relied on this to support their position that the company was the real borrower. But the Court did not see the use of company cheques as changing the underlying obligation.
A person’s debt can be paid by another person. The fact that Foresight issued cheques towards repayment therefore did not mean that Foresight had become the borrower. The cheques were simply a means of making payment.
The Court consequently distinguished between the source of the money used to make a payment and the person who was legally responsible for the debt. The use of company funds could not, without more, rewrite the terms of the loan agreement.
- The Guarantee Arrangement
The third aspect was the undertaking given by the second defendant. The Court found significance not merely in the existence of the guarantee, but in the way the guarantor herself described the transaction.
In the undertaking, the second defendant expressly identified Charles Oppong Asare as the person indebted to Sikapress. She stated that she was willing to assume liability for “CHARLES OPPONG ASARE’s indebtedness” if he failed to pay within the loan tenure. She also described him as “the borrower” and offered her personal or company cheques as collateral in the event of his default.
That was significant because her own description of Asare as the person indebted to the lender was consistent with Sikapress’s position that the facility had been granted to him personally.With Asare established as the principal debtor, his failure to repay the loan triggered the undertaking of the second defendant. The Court consequently found both defendants liable to the lender and entered judgment against them jointly and severally.
Lessons from the Case
Put the right borrower on the document.
Where a loan is intended for a company, the company should be clearly identified as the borrower. If a director or other officer is signing for the company, that capacity should also be expressly stated. A person’s involvement in the affairs of a company does not by itself make him personally liable for the company’s debts, but a person who signs a loan agreement in his own name may find it difficult to later argue that he was only acting for the company.
The source of loan repayment and the borrower need not be the same.
A loan may be used entirely for the benefit of a company, and the company may even make repayments on it, without becoming the legal borrower. What matters is the obligation created by the transaction. The source of repayment and the person legally responsible for the debt are not necessarily the same.
Let supporting documents tell a consistent story.
Loan agreements, declarations, guarantees and other documents connected to the facility should be consistent about who the borrower is and who is guaranteeing the obligation. In this case, the guarantor’s own undertaking describing Asare as the person indebted to Sikapress and as the borrower provided further support for the Court’s conclusion.
Be clear about capacity when signing commercial documents.
One of the simplest ways to avoid a dispute of this kind is to make the capacity in which a person signs unmistakable. “Charles Oppong Asare” and “Charles Oppong Asare for and on behalf of Foresight International Company Ltd” do not necessarily carry the same legal consequences. A few additional words at the time of signing may prevent a much longer argument in court years later.
