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

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

COURT DOES NOT SET CONTRACT FOR PARTIES – IT ENFORCES THE AGREEMENT

No court ever makes a contract for any party or group once the plaintiffs and their followers have agreed to be bound by the constitution of the Movement exhibit 1, they must be prepared to act within its provisions and cannot expect any help from the court to act ultra vires the provisions of what they have agreed to be bound sic. This is precisely the position of the court in this case. The plaintiffs and their followers agreed to give overall control to the executive committee as the government of the Movement as well as power to amend the said constitution … Whilst the court concedes to any body or group be it domestic or otherwise the right to have access to the court for the redress of any wrong no remedy will be available to an applicant where the act complained of is in accordance with the agreement between the body or group.

– Obaseki, JSC. Shodeinde v. Ahmadiyya (1983) – SC.64/1982

PLEADED OR NOT, COURT WILL NOT CLOSE ITS EYES TO ILLEGAL CONTRACT

The attitude of the Courts to the issue of apparent or ex-facie illegality is certainly well settled. When a contract is ex-facie illegal, whether the alleged illegality has been pleaded or not, the Court would not close its eyes against illegality, as it is the duty of every Court to refuse to enforce such a transaction. In other words once illegality has been brought to the attention of the Court, it must be considered and resolved. See Gedge v. Royal Exchange Assurance Corporation (1900) 2 Q.B. 214 at 220; Akagbue and Ors. v. Romaine (1982) 5 S.C. 133; Nasr v. Berini (Betrut-riyad (Nigeria) Bank Ltd. (1968) 1 All N.L.R. 274 and Sodipo v. Lemminkainen (1986) 1 N.W.L.R. (Pt. 15) 220.

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

TERMINATION OF CONTRACT OF SERVICE BRINGS TO AN END MASTER-SERVANT RELATIONSHIP

Chukuma v. Shell Petroleum Development Company (1993) 4 NWLR (Pt. 289) 512 at 560 where Karibi-Whyte JSC said: “In the ordinary case and following the common law principle,termination of a contract of service even if unlawful brings to an end the relationship of master and servant, employer and employee. This rule is based on the principle of the confidential relationship between master and servant which cannot continue in the absence of mutuality.”