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WHEN A CONTRACT IS VOID AB INITIO

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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

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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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ONLY WHERE THERE IS A CONSENSUS AD IDEM THERE IS A CONTRACT

It is trite that a valid contract can exist only when there is a “consensus ad idem” i.e., when there is a meeting of mind of the parties showing that the parties are bound by a specific term. This meeting of mind is, expressed in the form of “an offer” and “an acceptance” of that offer. It is only where they exist that there is a valid contract.

– Amaizu, J.C.A. Adeniran v. Olagunju (2001)

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CONSTITUTING A BINDING CONTRACT: OFFER, ACCEPTANCE, CONSENSUS AD IDEM

In law, to constitute a binding contract between parties, there must be a meeting of the mind often referred to as consensus ad idem. The mutual consent relates to offer and acceptance. While an offer is the expression by a party of readiness to contract on the terms specified by him by which if accepted by the offeree gives rise to a binding contract, the offer only matures into a contract where the offeree signifies a clear and unequivocal intention to accept the offer. An offer can be accepted in such a manner as may be implied, such as doing an act which the person expecting acceptance wants done. On the other hand, an invitation to treat is simply the first step in negotiations between the parties to a contract. It may or may not lead to a definite offer being made by one of the parties to the other in the negotiation. In law therefore, an invitation to treat is thus not an agreement or contract. See Meka BAB Manufacturing Co. Ltd v. ACB Ltd (2004) 2 NWLR (PT. 858) 521. See also Unitab Nigeria Ltd v. Engr. Oyelola and Anor (2005) All FWLR (Pt. 286) 824 @ pp. 829-830; Okugbule and Anor v. Oyegbola and Ors (1990) 4 NWLR (pt. 147) 723; See also Afolabi v. Polymera Industries Ltd (1967) 1 All NLR 144; Nneji v. Zakhem Construction Nig. Ltd (2006) 12 NWLR (Pt. 994) 297; BFI Group Corporation v. Bureau of Public Enterprises (2012) LPELR-9339 (SC).

— B.A. Georgewill JCA. Stanbic IBTC Bank Plc V. Longterm Global Capital Limited & Ors. (CA/L/427/2016, 9 Mar 2018)

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NATURE OF A BREACH OF CONTRACT

It is clear to me that a contract between parties may be discharged by breach of a fundamental term by any of the parties. There is no gain-saying the point that a breach of contract is committed when a party to the contract without lawful excuse fails, neglects or refuses to perform an obligation he undertook in the contract or incapacitates himself from performing same or in a way back down from carrying out a material term. See: Adeoti & Anr. v. Ayofinde & Anr. (2001) 6 NWLR (Pt.709) 336 … Where a party to a contract is in breach of a material term of same, the breach gives the aggrieved party a lee-way or an excuse for non-performance of its own side of the bargain. Such a party is at liberty to treat the contract as extinguished or at an end. See: Yadis (Nig.) Ltd. v. G.N.I.C. Ltd. (2007) 14 NWLR (Pt.1055) 584 at 609.

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

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SEVERAL PERSONS – ONLY THOSE WHO ENTER CONTRACT ARE LIABLE

In the case of Chief Olowofoyeku v. The Attorney-General of Oyo State (1990) 2 NWLR (Pt. 132) 369, cited by learned Senior Advocate for the appellants, the Court of Appeal correctly held that where an agreement is intended to be made by several persons jointly, if any of those persons failed to enter into the agreement, there is no contract, and liability is incurred by such of them as have entered into the agreement.

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COURT SHOULD TREAT AS SACROSANCT TERMS OF AGREEMENT BY PARTIES

It must be reiterated here that the court must treat as sacrosanct the terms of an agreement freely entered into by the parties. This is because parties to a contract enjoy their freedom to contact on their own terms so long as same is lawful. The terms of a contract between parties are clothed with some degree of sanctity and if any question should arise with regard to the contract, the terms in any document which constitute the contract are invariably the guide to its interpretation when parties enter into a contract, they are bound by the terms of the contract as set out by them. It is not the business of the court to rewrite a contract for the parties. See Afrotech Services Nig Ltd. v. M.A. & Sons Ltd. (2002) 15 NWLR (pt. 692) 730 at 788.

— J.A. Fabiyi, JSC. BFI v. Bureau PE (2012) – SC.12/2008

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