When engaging in business negotiations, it is important to keep some legal and cultural factors in mind. By doing so, you can reduce risks and make sure your agreements are strong and legally binding in Ghana.
Here are seven (7) important legal considerations businesses must make:
- Contract Law
In Ghana, contracts are governed by the Contracts Act, 1960 (Act 25). For a contract to be valid, it needs to meet certain rules like having an offer, acceptance of the offer, value exchanged, and the intention to make it legally binding. When negotiating, it’s important to make sure the agreement follows these rules and includes all the necessary details.
- Due Diligence
Before starting any deal, entrepreneurs need to do their homework. This means checking out the other party’s legal status, business background, finances, and any rules they must follow. In Ghana, it’s especially important to confirm land ownership and business licenses to avoid scams or false claims.
- Regulatory Compliance
Aside from generally complying with the Companies Act 2019 (Act 992), businesses, depending on the sector, must comply with various laws and regulations. Foreign businesses for example, must ensure compliance with Ghana Investment Promotion Centre (GIPC) guidelines for foreign investments. Companies must incorporate these guidelines and laws in their negotiations to prevent legal penalties when a contract is finally created.
- Cultural Sensitivity
While it’s not a legal rule, understanding local business customs is key in negotiations. In Ghana, businesses often focus on building relationships and respecting the chain of command within organizations. This can affect how long negotiations take and how decisions are made.
- Dispute Resolution Clause
It is important to determine dispute resolution mechanisms while businesses negotiate. Ghana’s laws recognize Alternative Dispute Resolution (ADR) mechanisms, such as arbitration, mediation, and negotiation, as a quicker and more efficient method of resolution compared to the traditional court system.
- Governing Law and Jurisdiction
It is important to clearly define the governing law of the contract while engaging in business negotiations. If the parties are from different countries, specifying an internationally recognized neutral location may be advisable to avoid local bias.
- Tax Implications
When making a business deal, negotiators need to think about how taxes will affect the arrangement. In Ghana, things like corporate tax, value-added tax, and withholding tax should be considered, especially for joint ventures, foreign investments, or complicated financial deals.
Our take-home note is that, when negotiating a business deal in Ghana, it’s crucial to consider legal, cultural, and financial factors. By understanding the laws, respecting local customs, and factoring in taxes, businesses can set themselves up for success and avoid potential issues down the road. Taking these steps ensures smoother negotiations and stronger, more reliable agreements.
