PARTIES BOUND BY AGREEMENT

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)

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”.

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

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

COURT OF LAW WILL NOT ENFORCE AN ILLEGAL CONTRACT OR ALLOW ITSELF TO BE USED AS AN INSTRUMENT OF FRAUD

As at 1981 when he commenced negotiation to purchase the land, he held no title, customary or statutory which he could validly pass to the respondent. Any agreement reached between the appellant and the respondent which enabled the latter to hold the legal estate in the land for the benefit of the appellant would be unenforceable since the appellant could not pass any title to the respondent. A Court should not enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal provided the illegality is brought to the notice of the Court and the person invoking the aid of the Court is himself implicated in the illegality. The illegality disclosed here is the attempt by the appellant to circumvent the provisions of the Land Use Act and this is against public policy and a contract may be against public policy either from the nature of the acts to be performed or from the nature of the consideration. Where a transaction is on the face of it, or from the facts adduced in evidence or the surrounding circumstances, apparently illegal, the Court must act to enforce and protect the law of the land. See: Sodipo v. Lemminkainen OY (1985) 2 NWLR (Pt. 8) 547.

— K.B. Aka’ahs, JSC. Huebner v Aeronautical Ind. Eng. (2017) – SC.198/2006