AWARD OF DAMAGES FOLLOWS BREACH OF CONTRACT

PARTIES BOUND BY AGREEMENT

It is trite law that persons of full age and sound mind are bound by any agreement lawfully entered into by them. – Kutigi JSC. Okonkwo v. Cooperative Bank (2003)

THE ILLEGAL PART OF A CONTRACT CAN BE SEVERED FROM THE OTHER LEGAL PART

This is because it is a recognized principle of law that a contract will rarely be totally illegal or void: certain parts may be entirely lawful in themselves, while others are valid. Where the illegal or void parts can be “severed” from the rest of the contract on the well-known principles of severance such will be done and the rest of the contract enforced without the void part. It is permissible for courts to adopt this course where the objectionable part of the contract involves merely a void step or promise and is not fundamental, and it is possible to simply strike down the offending part without re-writing or remaking the contract for the parties and without altering the scope and intention of the agreement; and lastly, the contract, shorn of the offending parts, retains the characteristics of a valid contract. See on these Vol. 9 Hals. Laws of England (4th Edn.) p.297 in paragraph 430. See also Commercial Plastics Ltd. v. Vincent (1964) 3 All E.R. 546, C.A.

— Nnaemeka-Agu, JSC. Adesanya v Otuewu (1993) – SC.217/1989

WHEN A CONTRACT IS VOID AB INITIO

The position of the law is that where a statute declares a contract or transaction between parties not only void but also imposes a penalty for violation, that contract or transaction is illegal ab initio. However where the legal sanction is merely to prevent abuse or fraud and no penalty is imposed for the violation of the provision of the statute, the violation is merely voidable and not illegal. See Solanke v. Abed (supra); Oil-field Supply Centre Ltd. v. Johnson (1987) 2 N.W.L.R. (Pt. 58) 265 and Ibrahim v. Osim (1988) 3 N.W.L.R. (Pt. 82) 257 and Pan Bishbilder (Nigeria) Ltd. v. First Bank of Nigeria Ltd (2000) 1 N.W.L.R. (Pt. 642) 684 at 693 where Achike JSC (of blessed memory) clearly stated the position of the law:- “Permit me to digress generally on illegality. It is common ground that illegality and voidness of the loan contract between the parties is the main subject matter of controversy in this appeal. Definition of the term illegal contract has been elusive. The production of clarity of the classification of illegality appears to be almost confounded and rendered intractable primarily because – writers and the Judges have continued to use the terms ‘void’ and ‘illegal’ interchangeably. Halsbury’s Laws of England (3rd ed. vol. 8 p. 126 para. 218) states that – ‘A contract is illegal where the subject matter of the promise is illegal or where the consideration or any part of it is illegal.’ Without getting unduly enmeshed in the controversy regarding the definition or classification of that term, it will be enough to say that contracts which are prohibited by statute or at common law, coupled with provisions for sanction (such as fine or imprisonment) in the event of its contravention are said to be illegal. There is however the need to make a distinction between contracts that are merely declared void and those declared illegal. For instance, if the provisions of the law require certain formalities to be performed as conditions precedent for the validity of the transaction without however imposing any penalty for non-compliance, the result of failure to comply with the formalities merely renders the transaction void, but if a penalty is imposed, the transaction is not only void but illegal, unless the circumstances are such that the provisions of the statute stipulate otherwise. See Solanke v. Abed & Anor. (1962) N.R.N .L.R. 92, (1962) 1 S.C.N.L.R. 371 and P. Kasumu & Ors. v. Baba-Egbe 14 WACA 444.”

— Mohammed, JSC. Fasel v NPA (2009) – SC.88/2003