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CONTRACT CREATES RECIPROCAL OBLIGATIONS

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A contract is an agreement between two or more parties which creates reciprocal obligations to do or not to do a particular thing. Thus, for a valid contract to be formed, there must be mutuality of purpose and intention. In other words, the two or more minds must meet at the same point, event, or incident. They must not meet at different points, events or incidents. They must be saying the same thing at the same time. See ORIENT BANK (NIG) PLC V BILANTE INTERNATIONAL LTD (1997) 8 NWLR (pt. 515) 37.

— M.L. Shuaibu, JCA. Ekpo v GTB (2018) – CA/C/324/2013

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OFFER & A COUNTEROFFER

An offer must be unconditionally and unqualified by accepted. Any addition to or subtraction from the terms of the offer is an alteration to the terms and amounts to a total rejection of the offer by the offeree. The terms embedded in the rejection may form the basis for the formation of a new agreement. This is what amounts to a counter-offer. An offer is impliedly rejected if the offeree instead of accepting the original offer makes a counter-offer which varies the terms proposed by the offeror. Hyde v. Wrench (1840) 3 Kear. 334.

— Adekeye, JSC. Best Ltd. v. Blackwood Hodge (2011) – SC

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FORMING A CONTRACT – MUTUAL ASSENT

The nature of the plaintiffs/appellants’ claim, as averred in their amended Statement of Claim, which of course they failed to prove, was that there was a subsisting contract between the parties. Whether or not there is a semblance of a legally binding agreement between the parties, that is, a situation where the parties to the contract confer rights and impose liabilities on themselves, will largely depend on whether there exists a mutual assent between them. Where there is doubt on whether the parties have concluded a legally binding agreement, the court has the responsibility to analyse the circumstances surrounding the alleged agreement and determine whether the traditional notion of ‘offer’ and “acceptance” can be distilled from the purported agreement. The mutual assent must be outwardly manifested. The test of the existence of such mutuality is objective. See Norwich Union Fire Insurance Society v Price (1943) AC 455 at 463. When there is mutual assent, the parties are said to be ad idem. Now the two items, “offer” and “acceptance”, earlier referred to, call for some explanation in order to recognise whether or not the parties are ad idem. An ‘offer’ is an expression of readiness to contract on the terms specified by the offeror (i.e. the person making the offer) which if accepted by the offeree (i.e. the person to whom the offer is made) will give rise to a binding contract. In other words, it is by acceptance that the offer is converted into a contract.

— Achike, JSC. Sparkling Breweries v Union Bank (SC 113/1996, 13 July 2001)

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ILLEGALITY OF A CONTRACT VIS-À-VIS PLEADINGS

In Northern Salt Co. v. Electroytic Alkaki Co. (1914) A.C. 461, Viscount Haldane, L.C., stated this rule at page 469, thus: “My lords, it is no doubt true that where on the plaintiff’s case it appears to the court that the claim is illegal, and that it would be contrary to public policy to entertain it, the court may and ought to refuse to do so. But this must only be when either the agreement relied on is on the face of it illegal, or where, if facts relating to such an agreement are relied on, the plaintiff’s case has been completely presented. If the point has not been raised on the pleadings so as to warn the plaintiff to produce evidence which he may be able to bring forward rebutting any presumption of illegality which might be based on some isolated fact, then the court ought not to take a course which may easily lead to a miscarriage of justice. On the other hand, if the action really rests on a contract which on the face of it ought not to be enforced, then, as I have already said, the Court ought to dismiss the claim, irrespective of whether the pleadings of the defendant raise the question of illegality.”

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WHEN INTERPRETING A CONTRACTUAL DOCUMENT THE WHOLE DOCUMENT SHOULD BE TAKEN CONSIDERATION OF

I am in full support of the submission of appellant’s counsel that it was a misdirection for the lower court in consideration of whether the land, the subject matter in controversy, was bare land or included the structures thereon to have relied on only clauses 3 and 6 in the entire lease agreement to arrive at its conclusion. The learned Justices of the lower court were clearly in error because it is a fundamental rule of construction of instruments that its several clauses, must be interpreted harmoniously so that the various parts of the instrument are not brought in conflict to their natural meaning. Emphasising the same point, the learned authors of Halsbury’s Laws of England. Vo1.12, (4th ed.) para. 1469) stated tersely but pointedly: “The best construction of deeds is to make one part of the deed expound the other, and so make all the parts agree. Effect must, so far as possible, be given to every word and every clause.” The same principle was approved by this Court in Lamikoro Ojokolobo & Ors. v. Lapade Alamu & Anor. (1987) 7 SCNJ 98, (1987) 3 NWLR (pt.61) 339. Surely, a fragmentary interpretation of the various clause of the lease agreement without recourse to the entire Lease Agreement would do violence to the content in which the controversial terms “premises” and “land” were employed and therefore the ascertainment of the parties’ intention in relation to these two terms was bound to be distorted and erroneous and consequently unacceptable.

— Achike, JSC. Unilife v. Adeshigbin (2001) 4 NWLR (Pt.704) 609

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PARTY LIABLE OF A FUNDAMENTAL TERM WILL NOT BE GRANTED RELIEF IN EXCLUSION CLAUSES

It is settled from a number of decisions that a party in breach of a fundamental term of his contract with a third party will not be allowed to benefit from or resort to exclusion clauses: PINNOCK BROTHERS v. LEWIS & PEAT LTD (1956) 2 ALL E.R. 866; ADEL BOSHALLI v. ALLIED COMMERCIAL EXPORTERS LTD (1961) ALL NLR 917 at 922; OWNERS OF NV GONGOLA HOPE v. S.C. (NIG). LTD. The rationale for the principle is that a party who is guilty of breach of a fundamental term of contract could/should not benefit from his own wrong doing by resorting to exclusionary clauses in order to limit his liability. This is moreso, when a contract of carriage by air is brazenly breached and no explanation is offered, as in the instant case. In which case there is a total failure of consideration and the central purpose or essence of the contract has wholly disappeared.

– Ejembi Eko, J.S.C. Mekwunye v. Emirates (2018) – SC.488/2014

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TO DETERMINE RIGHTS IN A CONTRACT, COURT MUST RESPECT CONTRACT MADE BY PARTIES

The position of the law is that in determining the rights and obligations of parties to a contract, the court must respect the sanctity of the contract made by them. They are bound by the terms thereof and the court will not allow any extraneous term to be read into it. See Adams O. Idufueko v Pfizer Products Limited & Anor. (2014) LPELR-22999 (SC).

— Adewemimo J. Afariogun v FUTA (2020) – NICN/AK/41/2017

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