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FORMING A CONTRACT – MUTUAL ASSENT

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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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WHAT IS A FUNDAMENTAL TERM OF A CONTRACT

Niger Insurance Company Ltd v Abed Brothers Ltd & Anor (1976) LPELR-1995 (SC), thus:- “A fundamental term of a contract is a stipulation which the parties have agreed either expressly or by necessary implication or which the general law regards as a condition which goes to the root of the contract so that any breach of that term may at once and without further reference to the fact and circumstances be regarded by the innocent party as a fundamental breach and thus is conferred on him the alternative remedies at his option”.

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A FAILED CONTRACT – BREACHED CONTRACT

A contract can be discharged by breach. A breach of contract means that the party in breach has acted contrary to the terms of the contract either by non-performance or by performing the contract not in accordance with its terms or by a wrongful repudiation of the contract. A party who has paid money to another person for a consideration that has totally failed under a contract is entitled to claim the money back from the other.

– Adekeye JSC. Nwaolisah v. Nwabufoh (2011)

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CONTRACT OF SERVICE AT COMMON LAW VS IN STATUTORY FLAVOUR

It is important to recognise the distinction between a contract of personal service and a contract of service. There is also the distinction between a contract of service at common law, and a contract with statutory favour. Whereas at common law a contract of personal service is determinable by the master at will without cause a contract of service is determinable by the master on reasonable notice or on the notice stipulated in the contract of the parties. A strict compliance with the statutory requirements for determination is required in contracts re-enforced by Statute or created by statute.

— A.G. Karibe-Whyte, JSC. Olaniyan & Ors. v. University of Lagos (1985) – SC.53/1985

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CONTRACT CREATES RECIPROCAL OBLIGATIONS

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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COURTS DO NOT MAKE CONTRACT FOR THE PARTIES

It is not the function of the court to make contracts between the parties. The courts duty is to construe the surrounding circumstances including written or oral statements so as attest the intention of the parties. Where the correspondence exchanged between the parties are read together, it can be assumed that the parties have come to an agreement.

– Adekeye JSC. Nwaolisah v. Nwabufoh (2011)

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PARTIES BOUND BY CONTRACTUAL TERMS IN ABSENCE OF FRAUD

The well laid down position of the law is that Courts do not rewrite contact for the parties where the terms of the contract are clear. In the absence of fraud, duress and undue influence, misrepresentation, the parties are bound by their contract. It is only parties to a contract that can sue and be sued on it.

– Rhodes-Vivour JSC. Alade v. Alic (2010)

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