In this case, Per Niki Tobi J.C.A., as he then was, defined a contract as "An agreement between two or more parties which creates reciprocal legal obligations to do or not to do particular things. For a contract to be valid there must be mutuality of purpose and intention". The basic principle that contracts consist of are Offer, Acceptance and Consideration. Some would add a forth element; that there has to be that understanding by the parties that what they are entering into would have legal implications. However, this matter of the legal implication is always assumed to be so understood by the parties. This last element is hardly mentioned either in their oral discussions or stated in writing but it always exists.

In this case, the court observed that previously delivery was only effective if the deed was actually handed over by the party executing it to the other party or a stranger for the latter's benefit. But now a deed may be effectively delivered, even though retained in the custody of the grantor. Any acts or words showing that it is intended to be executed by the grantor as his deed, binding on him, will suffice.

In this case, the court distinguished between simple/parol contracts and contracts under seal, for in the latter case, there must be a seal which is not present in simple contracts. As was remarked by Per Skynner, C.B., "...all contracts are by the laws of England distinguished into agreements by speciality [contracts under seal] and agreements by parol [simple contracts]; nor is there any such third class... as contracts in writing. If they be merely written and not specialities, they are parol, and a consideration must be proved". The statement was the repel the earlier notion that proof of consideration was unnecessary in the presence of writing. However, as was stated above, only if the writing was contained in a deed (contract under seal) could consideration be dispensed with.

In implied contracts, the terms are not expressly stated. The court, in such circumstances, will normally construe the existence of a contract from the conduct of the parties rather than from their words or correspondence. In this case, the defendant was held bound by a contract between it and the plaintiff, in spite of the fact that the defendant failed to sign the document containing the contract. It was established in evidence that both parties had been acting on the terms of the unsigned contract over a reasonable period of time. The court held that the conduct of the parties was explicable only on the assumption that both parties mutually approved the terms of the unsigned document. See also Attorney General of Kaduna State & Ors. v. Victor Bassey Atta & ors. (1986) 4 NWLR (pt. 38) 785. C.A. The court further held that the test of the existence of a contract in such cases is an objective one. In other words, it is not the subjective intentions of the parties, but what a reasonable person will infer from their conduct, that counts.

In implied contracts, the terms are not expressly stated. The court, in such circumstances, will normally construe the existence of a contract from the conduct of the parties rather than from their words or correspondence. In this case, the High Court granted the architects' claim for professional fees, and the ministry appealed on the ground that there was no valid contract between them and the respondents. In dismissing the appeal, the Court of Appeal held that an acceptance of an offer can be demonstrated by conduct of the parties as well as by words and documents. See also Brogden v. Metropolitan Railway Co. (1877) 2 A.C. 666.

In unilateral contract a party offers a consideration for the performance of an act stated by the offeror in return for a promise. By its nature, there is no limit to the number of people the offer is made to. But a contract comes into existence only between the offeror and the person or persons responding to the offer and accepting it. Such a contract is made to the whole world. In this case, the defendant company advertised in the newspapers to the effect that it would pay 100 pounds to any person who used a smoke ball manufactured by it for a minimum period of two weeks, and still caught the influenza. The plaintiff bought one smoke ball and used it as specified and still caught influenza. The company was held liable to the plaintiff for the 100 pounds.

The court held that by the terms of the contract, there was no need to notify the defendant company of the fact of the acceptance. Acceptance took the form of performance (using the smoke ball for two weeks). Performance in this case, also constituted the consideration.

In this case, the court observed that where parties do not conclude clear-cut agreements, it is left to the court in such cases to construe from the correspondence and conduct of the parties whether there is a contract, and if so what exact terms of the contract are. See also David Ejinyi v. Amusa Adio (1993) 7 NWLR (Pt. 305) 320 C.A.

In this case, the court observed that where parties do not conclude clear-cut agreements, it is left to the court in such cases to construe from the correspondence and conduct of the parties whether there is a contract, and if so what exact terms of the contract are. See also Balonwu v. Odumuko (1971) 2 A.L.R. 388.

Where parties do not conclude clear-cut agreements, it is left to the court in such cases to construe from the correspondence and conduct of the parties whether there is a contract, and if so what exact terms of the contract are.

In this case, the university had some landed property at Ibadan which it wanted to put to profitable commercial use. It invited the appellant, an architect, to a meeting at which the development of the property for various commercial purposes (e.g.. guest houses, blocks of flat) was discussed. The study of the commercial development of the property, and the survey plan of the property were sent to the appellant, but there was no specific request for any sketch or design which was made to him by the university. On this basis, the appellant prepared designs and sketch drawings which he forwarded to the university. This was followed by a bill for N159,875.00 as the appellant's fees for the work done. The university refused to pay for the work, and the appellant sued it to recover his fees. The issue of the case was whether there was a contract on which the appellant could sue.

The Supreme Court held that there was no contract between the parties, because there was no offer from the university which the appellant was capable of accepting. There was nothing in all the evidence which could be construed as an offer from the respondent appointing the appellant to design the proposed buildings for the development of the alleged five acres of land.

In this case, the court defined offer as a definite undertaking or promise made by one party with the intention that is shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed. An offer must be precise and unequivocal, leaving no room for speculation or conjecture as to its real content in the mind of the offeree. Per Niki Tobi was of the view that, "the offeror must place at the doorsteps of the offeree, a clear intention and desire to enter into a contract with the offeree on clearly defined terms".

In this case, the plaintiff made an offer to let his flats to the defendants. The latter modified the terms of the offer by including the installation of air-conditioners. The plaintiff immediately installed the air-conditioners. The court held that this brought a contract into existence between the two parties. The court did not consider the subjective intentions of the parties but what a reasonable person would infer from the conduct of the parties. The test of the existence of a contract in such cases is an objective one.

In this case, the court held that although the general principle of law of contract is that an acceptance must be communicated to the offeror, there are exceptions to that rule. Where an offer to buy goods is made by ordering them, the offer may be accepted by merely dispatching them. Generally, it has been accepted that once the required act of the contract is performed, it is sufficient to form a binding agreement between the parties without actual intimation of the acceptance. In the instant case, the giving of the Central Bank Form 'M' to the respondent's authorized agent by the NNSC constituted an order or offer to buy the rice from the respondents. The acceptance of the offer was the actual delivery of the rice to the NNSC. See also Alfotrin v. Attorney-General of the Federation (1996) 9 NWLR (Pt. 475) 634.

It is settled that the performance of a condition is sufficient acceptance without the notification of it under circumstances where an offeror in his offer impliedly indicates that he does not require the notification of the acceptance of the offer. The court further held that a valid acceptance can be made by conduct even in the absence of words or writing. See also Nigerian National Supply Company Ltd. (NNSC) v. Agricor Incorporation of USA (1994) 3 NWLR (Pt. 332) P. 339 C.A.

In this case, the court observed that an invitation to treat is not an offer; rather it is merely a preliminary move in negotiations which may lead to a contract. It is important to note that an invitation to treat is not an offer, but a phenomenon preliminary to the offer. It is not capable of an acceptance which will result in a contract. here, the respondent who was the Benin City branch manager of the appellant company, received a letter from the Managing Director of the company in Lagos informing that in line with the policy of the company that 10% of all company shares should be owned by workers, the respondent and other Benin branch staff were invited to buy shares in the company. The respondent applied for N2,500 shares at N2 per share, paid for the shares and was issued a receipt for the N5,000 he had paid. The shares were not allotted to him and he sued the company for specific performance. Reversing the decision of the High Court, the Court of Appeal held that the managing director's letter to the respondent was not an offer but an Invitation to treat and the respondent's reply and payment of N5,000 was the original offer.

In this case, the court observed that an auctioneer's request for a bid is not an offer but an invitation to treat. The bid itself is the offer, and acceptance occurs when the auctioneer's hammer falls. See section 58(2) of the Sale of Goods Act 1893. In Harris v. Nickerson (1873) 28 L.T. 410 Law, cap. 126, 1973, the court held that an advertisement that an auction sale will be held at a certain venue does not amount to an offer to hold it. Thus, an auctioneer is under no liability to anyone who comes to bid for the sale if the sale is cancelled or a particular lot is withdrawn.

In this case, the court held that an advertisement that an auction sale will be held at a certain venue does not amount to an offer to hold it. Thus, an auctioneer is under no liability to anyone who comes to bid for the sale if the sale is cancelled or a particular lot is withdrawn. See section 58(2) of the Sale of Goods Act 1893. See also Payne v. Cave (1789) 3 Term. Rep. 148.

In this case, the court observed that where a sale is stated to be without reserve the lot concerned must be sold to the highest bidder. The court further held that even where a reserve price has been fixed by the vendor, as long as the purchaser has no notice of this, and since the auctioneer has implied authority to sell without reserve, then a sale below the reserve price in such a circumstance is binding on the vendor, and the latter cannot, as against the buyer, enforce a limitation of the auctioneer's ostensible authority not made known to the buyer.

A bidder makes a referential bid when he makes a bid of a specific sum and adds that, alternatively, he bids a certain sum above any other bid that is higher than his. In this case, the court observed that referential bids are not valid bids because they are inconsistent with an obligation to accept the highest bids.

In this case, the court held that the display of goods in shelves in a shop, supermarket, etc, and similar instances and situations, constitutes an invitation to treat, not an offer. In such a situation it is the customer or client who makes the offer by picking up the objects, or collecting the items in basket and taking them to the sales clerk. The latter accepts on behalf of the proprietor of the establishment by accepting money from the customer. Before money is accepted, any of the parties to the transaction can refuse to carry on with it since there is yet no contract and no liability. In other words, the display on the shelves constitutes an invitation to treat, the customer makes the offer by selecting particular goods, and the shopkeeper accepts by receiving payment from the customer. See also Fisher v. Bell (1961) 1 Q.B. 394; Patridge v. Crittenden (1968) ALL E.R. 421, D.C.

In this case, the court held that the display of goods in shelves in a shop, supermarket, etc, and similar instances and situations, constitutes an invitation to treat, not an offer. In such a situation it is the customer or client who makes the offer by picking up the objects, or collecting the items in basket and taking them to the sales clerk. The latter accepts on behalf of the proprietor of the establishment by accepting money from the customer. Before money is accepted, any of the parties to the transaction can refuse to carry on with it since there is yet no contract and no liability. In other words, the display on the shelves constitutes an invitation to treat, the customer makes the offer by selecting particular goods, and the shopkeeper accepts by receiving payment from the customer. See also Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953) 1 Q.B. 401; Patridge v. Crittenden (1968) ALL E.R. 421, D.C.

In this case, the court held that the display of goods in shelves in a shop, supermarket, etc, and similar instances and situations, constitutes an invitation to treat, not an offer. In such a situation it is the customer or client who makes the offer by picking up the objects, or collecting the items in basket and taking them to the sales clerk. The latter accepts on behalf of the proprietor of the establishment by accepting money from the customer. Before money is accepted, any of the parties to the transaction can refuse to carry on with it since there is yet no contract and no liability. In other words, the display on the shelves constitutes an invitation to treat, the customer makes the offer by selecting particular goods, and the shopkeeper accepts by receiving payment from the customer. See also Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953) 1 Q.B. 401; Fisher v. Bell (1961) 1 Q.B. 394.

In this case, the plaintiff picked a bottle in a self-service grocery store owned by the defendant. Whilst placing it in the carrier basket provided, it exploded and severely injured her. She brought an action for breach of an implied warranty of merchantability under contracts of sale of goods. The action was dismissed by the court on the ground that there was neither a sale nor an agreement to sell at the time the bottle exploded.

In this case, the court held that an invitation to tender is merely an invitation for offers from interested parties and is not itself an offer. Since the invitation is no more than an invitation to treat, the bid or tender is merely an offer which may or may not be accepted by the advertiser. Only on acceptance of the offer by him does a contract come into existence between the parties.

In this case, Per Niki Tobi gave a comprehensive definition of acceptance as follows:

"An acceptance of an offer is the reciprocal act or action of the offeree to the offer in which he indicates his agreement to the terms of the offer as conveyed to him by the offeror. Putting it in another language, acceptance is the act of compliance on the part of the offeree with the terms of the offer. It is the element of acceptance that underscores the bilateral nature of a contract".

The court went on to describe the various ways in which acceptance may be manifested, namely;

a) By the conduct of the parties.

b) By the words

c) By documents passing between them.

But an acceptance by conduct would amount to proper acceptance only if it was clear that the offeree did the act with the intention of accepting the offer. See also Okubule v. Oyagbola (1990) 4 NWLR (Pt. 147) 723.

It is settled that the various ways in which acceptance may be manifested are;

a) By the conduct of the parties.

b) By the words

c) By documents passing between them.

But an acceptance by conduct would amount to proper acceptance only if it was clear that the offeree did the act with the intention of accepting the offer. See also Orient Bank (Nig.) Plc. v. Bilante International Ltd. (1997) 8 NWLR (Pt. 515) p. 37.

In this case, the court observed that acceptance is either indicated by words, in writing or by conduct. For an acceptance to be valid, there must be an external manifestation of assent, some words spoken or acts done by the offeree or his authorized agent which the law can regard as the communication of the acceptance from the offeree to the offeror. Thus, acceptance must be notified to the offeror. Mental or internal acceptance is not enough neither is it a valid acceptance. Here, the offeror's subjective intention and more specifically his silence, did not constitute acceptance. To be effective, acceptance must be communicated. In Orient Bank (Nig.) Plc. v. Bilante International Ltd. (1997) 8 NWLR (Pt. 515) p. 37 at 100, per Achike, J.C.A. as he then was explained this rule as follows:

"The reason for this stipulation is that if acceptance were to be based on silence or mental assent, then its ascertainment is bound to be illusory and at best, a guess work, unless the Judge was a Super human who would be bound to unfold the innermost recesses of the heart of the party making the mental assent. That obviously is an invidious exercise; consequently, mental assent is inoperative."

A counter-offer is any qualification or amendment of the offer which cancels the original offer. The purported acceptance thus becomes a fresh offer which is open to the original offeror, now the offeree, to accept or reject. In this case, the defendant on June 6 made an offer to sell an estate to the plaintiff for 1,000 pounds. On June 8, the plaintiff replied with an offer to buy the estate for 950 pounds. This offer was rejected by the defendant on June 27. On June 29, the plaintiff purported to accept the defendant's original offer of the estate for 1,000 pounds. This was rejected by the defendant and the plaintiff brought an action for specific performance.

The court held that the original offer was no longer open to the plaintiff to accept. By amending the original offer, the plaintiff rejected the original offer and was in effect making a counter-offer. Therefore, there was no obligation whatsoever between the parties.

In this case, the court held that for an acceptance to valid it must be plain, unequivocal, unconditional and without variance of any sort between it and the offer whereas a counter-offer has none of these features. Any qualification or amendment of the offer will constitute a counter-offer which cancels the original offer. Unlike a counter-offer, for acceptance the offeree must unreservedly assent to the exact terms proposed by the offeror. In other words, a valid acceptance must fulfil the following conditions:

(a) It must be plain

(b) It must be unequivocal

(c) It must be unconditional

(d) It must be without variance of any sort between it and the offer

(e) It must be communicated to the offeror without unreasonable delay.

In this case, the acceptance was not operative due to its failure to fulfill all the essential components of an acceptance. See also Chief S.A. Okubule and Anor. v. Thomas A. Oyagbola and Ors. (1990) 4 NWLR (Pt. 147), p. 723.

In this case, the court observed that in order for an action of a party to constitute an acceptance, the assent to the terms of an offer must be absolute and unqualified. If the acceptance is conditional or any fresh term is introduced by the person to whom the offer is made, his expression of assent amounts to a counter-offer which in turn requires to be accepted by the person who made the original offer. The court further observed that there can be series of counter-offer between parties when variations are made to offer and counter-offers which did not generate any valid acceptance.

In this case, the court observed that counter-offers, like offers, creates a binding obligation once accepted by the offeree. In addition, where an offeree makes a counter-offer, the offeror's acceptance of it may be express or by conduct. Here, the offeror accepted the offeree's counter-offer by conduct when it carried out the works requested by the offeree. See Oni v. Communications Associates (Nig.) Ltd. (unreported) High Court of Lagos, Suit No. Ld/625/ 71.

In this case, the court observed that a counter-offer like normal offer can be accepted by conduct. Importantly, where an offeree makes a counter-offer to an offeror and the offeror decides to be silent about the counter-offer but conduct itself with the mindset that a contract subsist, the offeror would be held to have accepted the counter-offer by conduct.

In this case, the court stated that a conditional acceptance is not a valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or fulfilled. The defendant here agreed to take a lease of a house "subject to the preparation and approval of a formal contract." The court held that in the absence of a formal contract the agreement was not binding. See also Chillingworth v. Esche (1924) 1 Ch.97; Lockett v. Norman-Wright (1925) Ch. 56; Von Hatz-felt-Wildenburg v. Alexander (1912) 1 Ch. 284. As a contrasting position to this long-lasting rule, the court in Law v. Jones (1974) Ch. 112 held that an agreement could be binding in spite of the use of the term "subject to contract".

In this case, the court stated that a conditional acceptance is not a valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or fulfilled. The defendant here agreed to purchase freehold land "subject to a proper contract to be prepared by the vendor's solicitor." The court held that in the absence of a formal contract the agreement was not binding. See also Winn v. Bull (1877) 7 Ch.D 29; Lockett v. Norman-Wright (1925) Ch. 56; Von Hatz-felt-Wildenburg v. Alexander (1912) 1 Ch. 284. As a contrasting position to this long-lasting rule, the court in Law v. Jones (1974) Ch. 112 held that an agreement could be binding in spite of the use of the term "subject to contract".

In this case, the court stated that a conditional acceptance is not a valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or fulfilled. The defendant here agreed to take a flat "subject to suitable agreements being arranged between your solicitors and mine." The court held that in the absence of a formal contract the agreement was not binding. See also Winn v. Bull (1877) 7 Ch.D 29; Chillingworth v. Esche (1924) 1 Ch.97; Von Hatz-felt-Wildenburg v. Alexander (1912) 1 Ch. 284. As a contrasting position to this long-lasting rule, the court in Law v. Jones (1974) Ch. 112 held that an agreement could be binding in spite of the use of the term "subject to contract".

In this case, the court stated that a conditional acceptance is not a valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or fulfilled. The defendant here agreed to take a flat "subject to suitable agreements being arranged between your solicitors and mine." The court held that in the absence of a formal contract the agreement was not binding. See also Winn v. Bull (1877) 7 Ch.D 29; Chillingworth v. Esche (1924) 1 Ch.97; Lockett v. Norman-Wright (1925) Ch. 56. As a contrasting position to this long-lasting rule, the court in Law v. Jones (1974) Ch. 112 held that an agreement could be binding in spite of the use of the term "subject to contract".

In this case, the court held that an agreement could be binding in spite of the use of the term "subject to contract". It is important to note that this is not the current position of the law as it pertains to conditional acceptance. The settled position of the law is that a conditional acceptance is not a valid or binding acceptance. Any acceptance which is made subject to a condition cannot create a binding contract until that condition has been met or fulfilled. See Winn v. Bull (1877) 7 Ch.D 29; Chillingworth v. Esche (1924) 1 Ch.97; Lockett v. Norman-Wright (1925) Ch. 56; Von Hatz-felt-Wildenburg v. Alexander (1912) 1 Ch. 284.

In this case, the plaintiff relying on the case of Law v. Jones alleged that the defendant was bound by an agreement under which he agreed to sell leasehold property to the plaintiff subject to contract, it was held by the court (overruling Law v. Jones) that the agreement was not binding since there was a condition attached to the contract which must be fulfilled for the agreement to be binding.

In this case, the court held that a lease agreement made subject to contract was not binding on the vendor in spite of the fact that the purchaser had paid a ground rent of 50 pounds in respect of the flat whose purchase price was 20,000 pounds. This also is the same position where the full purchase price has been paid. Whether half or full payments, it does not negate the effect of the use of the term 'subject to contract'. See Maja Junior v. U.A.C. (unreported) High Court of Lagos State, Suit No. LD/1426/1970.

In this case, the court held that an agreement subject to contract was not binding in spite of the full payment of the contract price. The plaintiff here offered to buy the defendants' port of Burutu. The defendants accepted the offer "subject to contract" and to a federal government decree in which the federal government declared its intention of acquiring the port. In spite of the fact that the plaintiff had paid the full purchase price of 350,000 pounds for the port, the defendants later withdrew their acceptance and the plaintiff brought this action to recover damages for breach of contract. It was held that there was no contract between the parties and that the offer had been validly withdrawn. See Cohen v. Nessdale (1981) 3 All E.R. 118.

The long established principle on conditional acceptance was upheld in this case when the court held that once the term "subject to contract" is used in an agreement, the incidence of liability is postponed until a formal document is drawn up and signed by both parties. In other words, an agreement "subject to contract" is not binding. Hon. Justice Obaseki, held that the term "subject to contract" means that until a formal contract is drawn up and executed, everything is still in the negotiation stage. See Winn v. Bull (1877) 7 Ch. 8. 29; Rossdale v. Denny (1921) 1 Ch. 52. C.A.; Chilling-worth v. Esche (1924) 1 Ch. 97 C.A. Nonetheless, Per Nnaemeka-Agu agreed with this view but added that this general principle:

"...admits one important exception in a transaction such as the instant, if from the tender or other documents exchanged by the parties, it could be said that the vendor's Offer has been accepted by the purchaser, that is, that all the essentials enumerated in Harry v. Pratt have been agreed upon. In other words, that agreement has been reached as to the parties, the property, the length of the term, the rent and the date of commencement. Once agreement has been reached on all these, the addition of the term "Subject to Contract" becomes a cosmetic surplusage."

In simple term, what my Lord said is that if the parties were agreed on all the essential terms, the presence of the term "subject to contract" would not affect the validity of the contract. His Lordship relied on Michael Richards Properties Ltd. v. St. Saviours Parish Southwork (1975) 3 All E.R. 416; Nicolene v. Simmond (1953) 1 All. E.R. 822 and Storer v. Manchester City Council (1974) 3 All E.R. 824.

In this case, the court held that if there appears to be an agreement on all essential matters, the court will ignore a subsidiary and meaningless addendum. Here, the defendant added that: "I assume that we are in agreement that the usual conditions of acceptance will apply".

In this case, the court observed that other terms may be used to convey the meaning presently attached to the term "subject to contract" with the same effect at law provided the intention of the parties is clear enough from the transaction. The court held that the term "tentative agreement without engagement" postponed liability or legal relationship between the parties until an enforceable contract came into existence and that the defendant was within his rights to revoke the engagement. Both "subject to contract" and "tentative agreement without engagement" have the same effect.

In this case, the court observed that the use of the term "provisional" indicates that the agreement is binding on the parties from the beginning. The agreement here was held binding in spite of the use of the term, because of other words used in the agreement and other extrinsic factors which pointed in the direction of a binding agreement. The term "provisional" is not a magic tern which automatically invests binding quality on an agreement. Indeed, prima facie, it indicates that the agreement has not yet ripened into a contract. It is, therefore, a term whose effect can only be determined from the context of its usage. In this case, the context emphatically negated the existence of a binding agreement between the parties. See also Att. Gen. of the Federation v. Awojoodu (1973) 3 U.I.L.R. 4.

A cross offer occur when two offers, identical in terms, are sent by two parties to each other, by post or by any other means, and the offers "cross" in the post or en route. The court held that where cross offers occur no contract had been validly executed. The reason is well put by per Blackburn, J thus:

"When a contract is made between two parties there is a promise by one, in consideration of the promise made by the other, there are two assenting minds, the parties agreeing in opinion, and one having promised in consideration of the promised of the other- here is an exchange of promises; but I do not thinking exchanging offers would, upon principle, be at all the same thing."

In this case, the court observed that in a reward case, an offer can be accepted in ignorance of such an offer. That means a person can accept to do an act without knowing that such offer existed initially. Here, the defendant published a handbill offering a reward of 35 pounds to anyone giving to a Superintendent Penn, information that would lead to the arrest of a person who had assaulted a young girl. The plaintiff supplied the information before the handbill was published and, therefore, in ignorance of the offer of reward. Nevertheless, he was held entitled to the reward. This decision has been subjected to severe criticism and it is generally agreed that it was wrong. See Hudson (1968) 84 L.Q.R. 503; R v. Clarke (1927-28) 40, Com. Law Rep. 227. At p. 240. The court in R v. Clarke had this to say:

"This (the decision) would seem to mean that a man can accept an offered contract before he knows that there is an offer- that knowledge of the offer before the informer supplies the information is immaterial to the existence of the contract. Anson on Contract thinks it is wrong. I venture to think so too."

The trite law as settled by this case as regards to acceptance in ignorance of offer is that a reward could not be claimed by one who did not know that it had been offered. In this case, Per Woodruff J. asked, "How can there be consent to that of which the party has never asked?". See also R v. Clarke (1927) 40, Com. Law Rep. 227. At p. 240.

The court in this case went to the other extreme when compared with the decision in Gibbons v. Proctor (1891) L.T. 594. In this case the police issued a notice offering a reward of 1,000 pounds for information leading to the arrest and conviction of the murderers of two policemen, and a pardon to such an informant if he was merely an accomplice. The plaintiff was arrested in connection with the murders, and gave information whilst in custody, leading to the arrest of the murderers. He also gave evidence at the trial which led to their conviction. He brought an action to claim the reward, when the police authorities refused to give it to him. It was held that he was not entitled to the reward. Although he had full knowledge of the offer of reward at the time he gave the information, he gave the information in order to clear himself from a charge of murder and not to earn the reward. His mind was not directed to reward. He was, therefore, no better than a person who was ignorant of the reward. See the contradicting position in Williams v. Carwardine (1833) 5 C. & P. 566; (1833) 4 B. & Ad. 621.

Here, the defendant offered a reward of 30 pounds to anyone who gave information leading to the conviction of the murderers of Walter Carwardine. The plaintiff knew of the offers, and thinking that she had not long to live made a voluntary statement to ease her conscience and to obtain forgiveness in heaven. The statement resulted in the conviction of the murderers. The court held that she was entitled to the reward. Her motive was irrelevant. What was important was that she was aware of the offer of reward when she gave the information.

In this case it was held that the supplier was bound to honour any order made by the plaintiff company whilst the agreement was in force. The court did not decide the question of whether the defendant supplier could absolve himself from further performance of the agreement by giving notice. It has, however, been suggested that the tender by the defendant was a standing offer to be converted into a series of contracts by the subsequent orders of the plaintiff company. "An order prevented pro tanto the possibility of revocation, and the defendant, though he might regain his liberty of action for the future, was meanwhile bound to supply goods ordered." This means that the standing offer to supply goods up to certain quantity can be revoked at any time provided there is no existing requisition for the goods under the terms of the tender.

It is trite that acceptance must be communicated by the accepting party to the party that made the offer; otherwise it will not be valid. Not only that, the communication must be in such a form that it can be objectively determined. In other words, acceptance must be externally manifested, either by words, conduct, writing, or by one of the modern modes such as telex, telegram, fax or e-mail. See also Felthouse v. Bindley (1862) 7 L.T. 835; 142 E.R. 1037.

In this case, the court held that an offeror may dispense with notice to himself if he thinks it desirable to do so. This happens mainly in unilateral contracts, particularly in the reward cases. Here the company had indicated that it would be sufficient for anyone to act on the proposal without communicating acceptance of it, and it was, therefore, bound when such offer is acted upon.

The law is that acceptance must be communicated to be valid. In this case, Per Buckley J, held that cases of advertisement carry implication that notification of acceptance is not required.

In this case an offer was made by telex. When a dispute arose, the plaintiffs brought an action in England and the defendants challenged the jurisdiction of the English court. The question of jurisdiction devolved on where acceptance actually took place. The court held that it was in England. The acceptance was sent by telex from Amsterdam but was not effective until received in England. Thus, the acceptance occurred in England and, therefore, the contract was concluded in England. This gave the English courts jurisdiction. See also Anon Lodge Ltd. v. Mercantile Bank (1993) 3 NWLR (Pt. 284) 721. Where two parties contract face to face, acceptance occurs when offeror hears the reply of the offeree. In a contract by telephone, it is only when the offeror hears the offeree's acceptance. In other words, generally, acceptance becomes effective not merely when communicated, but when actually received by the offeror. It is important to note that acceptance by post is radically different from the general principle. For post acceptance occurs when the offeree mails the acceptance letter.

In this case, Per Uwaifo J.C.A. held:

"It is the law that an offeror may prescribe and direct the method by which an acceptance of an offer may be communicated. Whether some particular mode has been proposed depends upon the inference to be drawn from the circumstances"

In this case, Per Honeyman, J., observed in his dissenting judgment that "that does not mean exclusively a reply by letter by return post, but that you may reply by telegram or by verbal message or by any means not later than a letter written by return of post". It is safe to say that any mode either as fast or faster to that prescribed by the offeror is sufficient to create contract. See also Manchester Diocesan Council of Education v. Commercial and General Investments Ltd. (1969) 3 All E.R. 1593; (1970) 1 W.L.R. 241.

In this case the plaintiff invited tenders from interested parties for the sale of one of its properties. It also stated in the advertisement that the successful tenderer would be informed by a letter of acceptance sent to an address which every tender should contain. In the event, the plaintiff first notified the defendant of its acceptance of the defendant's tender, not through the address given by the defendant as stipulated in the advertisement but through the defendant's solicitor. The defendant argued that the acceptance was invalid for failure to comply with the terms of the plaintiff's own requirements, i.e., for not being posted to the defendant through the address stated in the tender.

The court held that the acceptance was not invalid simply because it did not follow the mode stipulated in the advertisement. The court further held that; "Where...the offeror has prescribed a particular mode of acceptance, but not in terms insisting that only acceptance in the mode shall be binding, I am of the opinion that acceptance communicated to the offeror by any other mode which is no less advantageous to him will conclude the contract." In Orient Bank v. Bilante Intl. (1997) 8 NWLR (Pt. 515) 37, the court observed that where a Law provides that the method of acceptance prescribed by an offeror must be strictly adhered to, the offeree has not choice than to adhere to such method. Where the offeree fails to adhere to the prescribed method, the acceptance will be held as ineffective by the court.

In this case, the court held that by section 109(1) Contract Law, Chapter 30, Laws of Anambra State, where an offeror prescribes a method by which acceptance of his offer is to be communicated to him, that method shall be adopted by the offeree, and acceptance which fails to comply with such requirement shall be ineffective. Where any subsisting Law mandates the strict compliance of the mode of acceptance prescribed by the offeror, the offeree must adhere to that mode, failure of which will make the acceptance ineffective. The general rule of accepting by any faster mode will not apply in such situation.

Apart from the provision of the law which compels strict adherence, where the offeror prescribes a mode of acceptance on the terms of the agreement and that that mode only is acceptable to him, this makes such mode a part of the offer and must also be strictly followed to the latter. See Manchester Diocesan Council for Education v. Commercial and General Investments (1970) W.L.R. 241.

In this case, the court observed that where an offeror prescribes a mode of acceptance of his offer and the offeree decides to adopt another mode of acceptance, the risk of his acceptance not arriving as fast as it would have done if he had followed the mode stipulated by the offeror, is to be borne by the offeree. The court held that the offeror was entitled to reject the acceptance. Also the prerogative to reject an acceptance for failure to comply with a stipulated mode of acceptance lies exclusively with the party prescribing the mode, and not with the other party.

It is settled that in a contract concluded by post, the contract comes into existence the moment the letter of acceptance is posted. The reason for this as held by the court is that:

"If that were so, no contract could ever be completed by post. For if the defendants were not bound by their offer when accepted by the plaintiffs, until the answer was received, then the plaintiffs ought not to be bound until after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad infinitum."

In Bryne v. Van Tien Hoven (1880) 5 C.P.D. 344, the court held that a letter of revocation of an offer sent by post does not take effect until it is received by the offeree.

In this case, the court gave its reasons of accepting the decision of the court in Adams v. Lindsell (1818) 1 B. & A 681, where it was held that in a contract concluded by post, the contract comes into existence the moment the letter of acceptance is posted. See also Dunlop v. Higgins (1848) 1 H.L.C. 381; Directors of Metropolitan Railway v. Brodgen (1876) 2 A.C. 666. These reasons are as follows:

a. The post office is the common agent of both parties. So a letter put in the post is technically acceptance communicated to the offeror.

b. With the posting of the letter of acceptance, a contract is complete in that no other act is necessary to bring it into existence. The acceptor has merely assented to the offeror's very proposals.

c. An offeror is free to make it a term of his offer that there can be no valid acceptance until he receives the letter of acceptance.

d. Any rule would lead to fraud and delay in commercial transactions, for the offeree must now wait to hear from the offeror that he has received the acceptance.

e. The rule is most convenient of all possible alternatives.

The plaintiffs in this case made an offer by post to supply bolts to the defendants. The defendants posted an acceptance. The plaintiffs then discovered that owing to a miscalculation they had quoted too low a price, and sent a telegram withdrawing their offer which reached the defendants before the letter of acceptance reached the plaintiffs. The court held that the offer had been withdrawn before acceptance became effective. Acceptance was only completer when received by the offeror through delivery by the posting agency. Same was the position of the court in Dick v. U.S. F Supp. 417 (1949) with similar facts.

The defendant here granted a six-month option to the plaintiffs to purchase certain property. The offer stipulated that the option was to be accepted "by notice in writing" to the defendant. The plaintiff sent a written acceptance by ordinary post but this was never received by the defendant. The plaintiff claimed that he had made a valid acceptance as soon as the letter exercising the option was posted.

The court held that the option had not been validly exercised. Acceptance was to take effect from the time the letter exercising the option reached the defendant and not at the time of posting. According to Per Lawton L.J.:

"...the rule (acceptance by post) does not apply if having regards to all the circumstances including the nature of the subject matter under consideration, the negotiating parties cannot have intended that there should be a binding agreement until the party accepting an offer or exercising the option had in fact communicated the acceptance...to the other."

The rule is Adam v. Lindsell can be displaced by any offeror who indicates that acceptance is to take effect from only the time of delivery of the letter of acceptance to him. See Afolabi v. Polymera Industries (1967) 1 All N.L.R. 144. Also the rule will not apply where the application of the rule would produce manifest inconvenience and absurdity.

Here, the bank wrote a letter accepting Dr. Jones' application for shares and handed it to one of its employees for posting early on October 27, 1900. The employee took the letter to the G.P.O. at about 7.00 a.m. that morning, but instead of posting it himself, handed it over to a postman. The postman took the letter to a district office where he posted the letter and it was not delivered until 7.30 p.m. Meanwhile, Jones had earlier written a letter withdrawing his offer. The letter was received at the bank at 8.30a.m. and opened at 9.30 a.m.

The court held that the rule of Adams v. Lindsell will not apply to make the acceptance by the Bank made by posting valid because the letter was not properly posted.

Note: This Scottish case serves as a mere persuasive effect to the position of the court held hereunder. In this case, Alexander through one Lady Agnew made an offer to the countess to enter her service. The countess, on November 5, wrote to Lady Agnew accepting the offer, and the latter forwarded the letter to Alexander. On November 6, the countess wrote another letter to Lady Agnew cancelling the acceptance and she forwarded this second letter by express mail. Alexander received both letters together.

It was held by the court that the acceptance had been effectively withdrawn (revoked) since the letter cancelling the acceptance did not arrive later than the letter of acceptance.

The defendant offered to buy a house from the plaintiff and he gave the latter six weeks in which to accept. The defendant withdrew the offer three weeks later whilst the plaintiff purported to accept it at the end of six weeks. The court held that there was no contract because the offer having been effectively withdrawn after three weeks, the subsequent purported acceptance was invalid. There was nothing to accept.

The court observed that an offer may be revoked at any time before acceptance. The revocation of an offer before acceptance involves no liability of the part of the offeror and this is so even if he promises to keep the offer before the expiration of that period of time. For such a promise, not being supported by any consideration from the offeree, is not binding.

In this case, Scott granted Mountford an option to purchase his (Scott's) house for 10,000 pounds, exercisable within six months, in return for a payment of 1 pound to him by Mountford. Within the six months period, and before the option was exercised, Scott purported to withdraw the option. Mountford then exercised the option.

It was held that Scott's purported withdrawal was void and that Mountford had validly exercised his option. Even though the consideration (1 pound) was small, the offer was irrevocable. In fact, there was a separate binding contract to keep the offer open for six months.

It is trite that in order to be valid, revocation must be communicated to the offeree. In other words, notice of the revocation must reach the offeree before he accepts the offer. Once acceptance has occurred, any purported revocation would be invalid. It is important to note that a letter of revocation does not take effect from the moment of posting but from the moment of delivery.

In this case the court observed that whilst it is desirable that the offeror should himself communicate his revocation to the offeree, revocation would nevertheless be valid if notice of it reaches the offeree through a reliable third party before acceptance. The court held that once a person to whom an offer to sell property is made knows that the property has been sold to someone else, it is too late to accept the offer insofar as there was no consideration given for the offer to be kept open for a specific period of time.

In this case, the court held that where the offeror revokes a unilateral contract after the offeree has commenced performance, the latter is entitled to a quantum meruit, i.e., a reward based on the stage of performance already reached. That once performance commences, acceptance is taken to have been made, and although the offeree is not entitled to the reward until he completes the performance, the offeror no longer has power to revoke. See Errington v. Errington (1952) 1 K.B. 290; Luxor (Eastbourne) Ltd. v. Cooper (1941) A.C. 108.

In this case, the court held that that once performance of a unilateral contract commences, acceptance is taken to have been made, and although the offeree is not entitled to the reward until he completes the performance, also the offeror no longer has power to revoke. See also Luxor (Eastbourne) Ltd. v. Cooper (1941) A.C. 108.

In this case, the court held that that once performance of a unilateral contract commences, acceptance is taken to have been made, and although the offeree is not entitled to the reward until he completes the performance, also the offeror no longer has power to revoke. See also Errington v. Errington (1952) 1 K.B. 290.

In this case, the court observed that an offer may be terminated if there is no acceptance after an appropriate lapse of time. Where the offeror states that the offer is open for a specific period of time then the offer will be terminated after the passage of that period of time. If no specific period is prescribed by the offeror the offer will nevertheless terminate after a reasonable lapse of time. What constitutes a reasonable lapse of time will depend on the nature of the offer, the subject-matter of the contract and the peculiar circumstances of each case. See also Loring v. City of Boston (1844) 7 Metcalf 409. For instance, here, the defendant by letter offered to buy shares in the plaintiff's company on June 8. He received no answer until November 23 when he was informed that shares had been allotted to him. He rejected them. It was held that the defendant's offer had lapsed by reason of company's delay in accepting it.

In this case, the court observed that an offer may be terminated if there is no acceptance after an appropriate lapse of time. Where the offeror states that the offer is open for a specific period of time then the offer will be terminated after the passage of that period of time. If no specific period is prescribed by the offeror the offer will nevertheless terminate after a reasonable lapse of time. What constitutes a reasonable lapse of time will depend on the nature of the offer, the subject-matter of the contract and the peculiar circumstances of each case. See also Ramsgate Victoria Hotel v. Montifiore (1866) L.RL. 1 Exch. 109. For instance, here, an offer of reward for information leading to the arrest and conviction of incendiaries published in a newspaper was held to have lapsed after a period of three years.

In this case the court held that where the offeree has notice of the death of an offeror before acceptance, he cannot validly accept the offer. Where, however, the offeree accepts without notice of the offeror's death, whether the acceptance will lead to a contract depends on the nature of the contract itself. If the contract is such that can be performed from the offeror's estate, the offer will not lapse.

In this case the court held that where the offeree has notice of the death of an offeror before acceptance, he cannot validly accept the offer. Where, however, the offeree accepts without notice of the offeror's death, whether the acceptance will lead to a contract depends on the nature of the contract itself. If the contract is such that can be performed from the offeror's estate, the offer will not lapse.

Here, J.M. Leigh wrote to the plaintiffs requesting them to give credit to a third party, promising to guarantee the repayment of credit given in this way. After Leigh died, the plaintiffs, who were ignorant of this development, continued to give credit to the third party. The executors of Leigh's estate refused to repay any debts resulting from credits given to the third party after Leigh's death. The court further held that since this was not a contract requiring personal performance from Leigh, it could be performed from his estate.

In this case, the court held that an offer lapses if the offeree dies before he accepts it. Per Warrington L.J. observed that:

"I think...that the offer having been made to a living person who ceases to be a living person before the offer is accepted, there is no longer an offer afterall. The offer is not intended to be made to a dead person, or to his executors, and the offer ceases to be offer capable of acceptance."

This rule only applies where the offeree dies before accepting the offer. But if the offer was accepted before the offeree dies, the continuance of the contract will depend on whether personal performance is required.

In this case an offer to buy annuities was accepted by the solicitors of the annuitant in ignorance of the fact that the annuitant had died. The court held that the acceptance was invalid on the ground that the solicitors' authority was terminated by their client's death since a dead offeree cannot accept an offer.

In this case per Lush, J., defined consideration as:

"A valuable consideration in the eye of the law may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other. Thus, consideration does not only consist of profit by one party but also exists where the other party abandons some legal right in the present, or limits his legal freedom of action in the future as an inducement for the promise of first. So it is irrelevant whether one party benefits but enough that he accepts the consideration and that the party giving it does thereby undertake some burden, or lose something which in contemplation of law may be of value."

In this case the court observed that moral obligation does not constitute consideration. Moral obligation can be defined as the requirement to pursue what we believe is right and act accordingly. Here, Eastwood who was guardian of Mrs. Kenyon whilst she was an infant, had spent a considerable amount of his own money in improving her estate and in bringing her up. When she reached maturity, she promised to reimburse him for his expenses. Her husband also promised to do so independently. When they failed to carry out their promises, he sued them. The plaintiff relied on the defendants' moral obligation to him to fulfill their promises.

The court dismissed the suit, and moral obligation was rejected as the basis of an action. The law requires an additional factor to the defendant's promise. The factor is consideration, not mere moral obligation, which was already inherent in every promise. See Faloughi v. Faloughi (1995) 3 NWLR (Pt. 384) p. 343. Also see the contrasting case of Barclays Bank D.C.O. v. Sulaiman (1970) 1 A.L.R. 415.

In this case, a dying father executed an instrument transferring his shares in Excelsior Hotel Limited to his second son. After the father's death, this transfer was challenged by some of his other surviving children. They successfully convinced the court that if it was a gift, then it was an imperfect gift because the father, a foreigner, had not obtained the consent and approval of the Securities and Exchange Commission to the transaction, as required by law. The court then considered whether the father's estate was bound to execute the transfer on the basis of love and affection which the late father had for his son.

The court held that natural love and affection was not a true or real consideration. No valuable consideration was given for the transfer and since love and affection cannot be quantified in terms of money value, it has no value in the eyes of the law.

In this case the court held that natural love and affection between an uncle and his nephew was sufficient consideration to give the nephew a good title to property transferred by the uncle to the nephew without any other consideration on the part of the nephew. The nephew's interest was, therefore, held strong enough to defeat the claims of the plaintiff, a judgment creditor of the uncle, who having recovered judgment against the uncle, put the properties of the latter up for sale in execution of the judgment.

The court's view that natural love and affection could be equated to consideration has been repealed in the light of developments in the law of contract since 1840 and recent authorities like Faloughi v. Faloughi (1995) 3 NWLR (Pt. 384) p. 343 and others.

In this case, the plaintiff had mortgaged his properties to the late Doherty in consideration of various loans. On his failure to repay the loans, the ownership of the properties passed to Doherty, who proceeded to sell them. But he did not sell the one in which the plaintiff was living, promising to allow the plaintiff to live in it during his lifetime. This promise was repeated by the executors of Doherty's estate after the latter's death. When contrary to their undertaking the executors subsequently tried to sell the property, the plaintiff sought a declaration that he was entitled to live on the property for the rest of his life, and an injunction restraining the defendants from selling it.

The court held inter alia by the W.A.C.A (reversing a judgment of the lower court) that the declaration and injunction would be refused on the ground that the plaintiff furnished no consideration for the promise that he could reside in the property for life.

In this case, the court observed that there may be a contract between two parties which on closer examination is no contract at all because one of the parties has either undertaken no obligations or has not performed his own part of the agreement. In such a situation, the second party's (defendant) liability can only arise after such performance by the first party. Where the first party brings an action to enforce the promise of the second party, such action will fail for want of consideration. See also Bank of West Africa v. Fagboyegun (1961) W.N.L.R. 227.

Here the defendant had signed a contract of guarantee under which he agreed to guarantee a debt of 3,354 pounds 13 shillings owed by one Jalade to the bank. After the defendant had repaid part of the debt to the bank, the latter now brought this action to recover the balance from him. Evidence disclosed that apart from the original debt owed by Jalade, the bank did not at any time after the guarantee was executed, advance any further money to Jalade, nor did it give him any further overdraft. In applying the principle in Miles v. New Zealand Alford Estate Co. (1886) 32 Ch.D. 267 and relying in the case of Westhead v. Sproson & Piper (1861) 6 H. & N. 729, the court held that the defendant was not liable to pay off the overdraft, since the plaintiff furnished no consideration for the guarantee. See also Barclays Bank of Nigeria Ltd. v. Okotie-Eboh (unreported) High Court of Lagos, Taylor, C.J., Suit No.LD/1233/71.

The position of the court in this case is that where a party belongs to an organization that furnished the consideration, then for such a party to sue for breach of contract, he must sue in a representative capacity and not in his own name or on his own behalf. This goes to say that only a party to a contract can bring an action to enforce it. This underlies the whole doctrine of privity of contract. Therefore, any action based on consideration furnished by another party will necessarily fail.

In this case the court answered the question on: "What is the effect of a promise by one of the parties to confer an extra reward or benefit on the other party after the main contract itself has been concluded?" the law as upheld here is that at best, the promise is not actionable because there is no consideration for it. The fact of this case is: the plaintiffs brought an action to enforce an undertaking by the defendant not to set up a motor workshop in competition with the workshop of the plaintiffs, his former employers. It emerged from the evidence that this undertaking was obtained from him under duress after the termination of his employment with the plaintiffs. The latter simply withheld the defendant's salary and other benefits until he signed the undertaking. Apart from the undertaking being voidable for duress, the agreement was held unenforceable at the instance of the plaintiffs because they did not furnish any consideration in return for the promise. See also Egware v. Shell BP Petrol Development Company of Nigeria (Unreported) Midwestern High Court, Ugbobine, J., continued VHC/36/70 delivered on April, 30, 1971.

It is trite law as upheld in this case that past consideration is not actionable against the promisor. Past consideration is a further promise made subsequently by any of the two parties without fresh consideration from the other party. Such a promise is given upon past consideration.

To better understand what past consideration, let's see what happened in this case and what the court decided. A testator left a house jointly to his children. The Wife of one of the children, who was living in the house with her husband. Spent a lot of money making improvements and carrying out alterations to the house. Later on, the other children jointly signed a document agreeing to pay her 488 pounds for expenses in improvising the house. The court held that the promise was not binding on the children. The plaintiff had completed the works on the building before the promise to repay her was made. Her consideration was therefore past. See also Akenzua II, Oba of Benin v. Benin Divisional Council (1959) W.R.N.L.R. 1.

The defendant whilst in the United States was offered an appointment as an executive officer (accounts) by the Bendel State Government (then Midwest-State) on terms that each party could terminate the contract by tendering a month's notice. On that basis, his passage and that of his family was paid by the Bendel State Government. Shortly after arriving, he was made to sign a written undertaking on April 29, 1974, to refund the cost of the passages, should he leave the service of the Bendel State Government within three years. He resigned his appointment in September 1974 and entered the service of Auchi Polytechnic, a statutory corporation. The plaintiff then brought an action claiming a refund of N1,250 as the cost of the passages already referred to.

The court held that the defendant's subsequent undertaking to refund the cost of the passages was not binding, since there was no consideration for it. In dismissing this suit, Per Uwaifo, J., stated as follows:

The best that can be said of the so-called undertaking given by the defendant in reply to the request (for it) is that it was a subsequent promise. The question is, as regards this promise, what was the consideration for it to make it a binding contract? In my view, there was no consideration; if it was intended to be related back to the contract of employment, then the consideration for that contract will be past consideration in regard to this promise.

In this case the court held that a mere prior request cannot cure the defect of past consideration. It cannot be taken together with the subsequent promise as one transaction.

This position is well-illustrated by the decision in Re Casey's Patents, Stewart v. Casey (1892) 1 Ch. 104. There, the owners of certain patent rights on transit by steamer and on land, wrote to the defendant who had been engaged by them as the practical manager for working the patents, that in consideration for the defendant's services in working the patents they had agreed to give him one-third share in the patents. Subsequently, the successors in title to the original owners claimed that the defendant was not entitled to the one-third share because he furnished no consideration for the promise to give him the one-third share and that his consideration, if any, was past, i.e., past services in working the patents. It was held that the consideration was not past, because at the time the defendant rendered his service to the owners of the patent, it was understood that it would be paid for. The subsequent promise was, therefore, the affirmation of an already existing obligation.

Also in Pau On v. Lau Yiu Long (1979) 3 All E.R. 65 at p. 74, the Privy Council, Lord Scarman stated the correct position as follows:

"An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. (1) The act must have been done at the promisor's request; (2) the parties must have understood that the act was to be remunerated whether by payment or the conferment of some other benefit; (3) and payment, or the conferment of a benefit must have been legally enforceable, had it been promised in advance."

In this case the court observed that in the absence of fraud, duress or misrepresentation, the courts will not question the adequacy of consideration. This means that they do not measure the comparative values of the considerations furnished by the plaintiff and the defendant respectively, nor will they declare a contract to be invalid simply because one party has got a much better bargain that the other party.

In this case, the court emphasized that it is within the exclusive domain of the parties to a contract to determine the consideration for the contract. "And once the consideration is of some value in the eye of the law, even the courts have no jurisdiction to determine whether it is adequate or inadequate." In principle, therefore, no consideration is too small or too much or unfair provided that there is no element of fraud, duress or misrepresentation in such. The reason for this principle lies in the doctrine of freedom of contract. See the decision of Per Nnaemeka --Agu, J.S.C., in African Petroleum Ltd. v. Owodunni (1991) 8 NWLR (Pt. 210) 351.

In the words of Per Onalaja, J.C.A. as held in this case: "...inadequacy of consideration does not ordinarily vitiate the essentials of a contract once there is valuable or sufficient consideration. It is for this reason that the court from time immemorial does not inquire into the adequacy of consideration". In addition, when two parties of full capacity enter into an agreement of their own free will, the courts will not interfere except in very compelling reasons. See Thomas v. Thomas (1842) 2 Q.B. 851.

The law is settled that consideration must be real but need not be adequate, although a patently or grossly inadequate consideration may in an appropriate case amount to strong evidence of fraud. The fact that a consideration is too small or too much may be evidence of duress, fraud, mistake or misrepresentation; and it may alert the court to consider these possibilities.

Bainbridge, one of the parties in this case owned two boilers, and at the request of Firmstone allowed him to weigh them on condition that they were restored in as good a condition as they were lent. Firmstone took the boilers to pieces in order to weigh them and returned them in this state. Bainbridge sued him for breach of his undertaking. Firmstone argued that Bainbridge furnished no consideration for his promise to return the boilers intact. The court rejected this contention. According to Patterson, J.:

"The Consideration is that the plaintiff, at the defendant's request, had consented to allow the defendant to weigh the boilers. I suppose the defendant thought he had some benefit; at any rate, there is a detriment to the plaintiff from his parting with the possession for even so short a time".

Also in De la Bere v. Pearson (1908) 1 K.B. 280, the defendants advertised in their newspaper offering to give financial advice to readers. The plaintiff wrote, asking for the name of a good stockbroker. The editor negligently recommended someone who was an undischarged bankrupt. Relying on this advice, the plaintiff sent some money to the broker, who misappropriated it. The plaintiff now sought to recover his money from the newspaper. The question arose whether the plaintiff furnished any consideration. It was held that there was consideration in that such publications had a tendency to increase the circulation of the defendants' newspaper. Thus, the defendants could benefit from the plaintiff's act. Also, the plaintiff consented to the publication of his question in the defendant's newspaper if the defendants chose.

The fact of this case is: a man promised his former wife, from whom he had just been divorced, an allowance of 6 pounds monthly, provided she "shall conduct herself with sobriety and in a respectable, orderly and virtuous manner". It was held that she had furnished sufficient consideration for his promise because she no longer owed him any duty to observe those stipulations. However, the dissenting views of Hood, J., were much more preferable. According to Hood, J.:

"...a promise, in order to be good consideration must be such as may be enforced. It must therefore not only be lawful and in itself possible, but it must also be reasonably definite. Now a promise by a woman, that she will conduct herself with sobriety and in a respectable, orderly and virtuous manner seems to me about as vague a promise as can be imagined."

Generally, a party cannot enforce a promise made to him in return for his performance of, or promise to perform, a public duty. Since the promise is already under the public duty to perform the act, his actual performance or promise to do so does not constitute consideration. Moreover, to enforce such a promise would be contrary to public policy since it might encourage extortion by public officers or persons under a public duty.

In this case the plaintiff was subpoenaed to give evidence in a case on behalf of the defendant. The defendant promised to pay the plaintiff for the work days lost in the process. It was held that the promise had been made without consideration from the plaintiff, for by law, the plaintiff was already bound to attend the court and give evidence.

NOTE: It should be noted, however, that in modern practice, a witness under subpoena is entitled to recover all reasonable expenses for attending the case and the applicant for the subpoena will be required to tender such money beforehand.

In this case the court observed that where the plaintiff acts or promises to act in excess of his public duty under the law, then this would constitute consideration. For instance, the plaintiffs as experts had thought that a mobile patrol team was sufficient to carry out their duty, but at the request of the proprietors, they had gone beyond what duty demanded by stationing men at the mine site of the defendant. This was sufficient consideration for the promise to pay for the service. See also Ward v. Byham (1956) 1 W.L.R. 496.

If a party to a contract simply promises to carry out or carries out an already existing contractual duty to the defendant, he has offered no consideration for any fresh promise that might have been made by the defendant. The rule here is that there is no consideration, for all that the plaintiff has done is to perform an obligation already imposed on him by a previous contract between him and the defendant.

However, if the plaintiff acts or promises to act in excess of his contractual obligation to the defendant, such act or promise would constitute consideration. See Hartley v. Ponsonby (1857) 7 E. & B. 872.

The principle in this case as observed by the court is that in a situation in which a party (X), who is already bound by a contract to do something for party (Y), relies on the performance of that act as consideration for a fresh promise made to him by third party (Z). In this third party situation the courts will hold that in relation to the new promise by Z, X's performance of his already existing obligation to Y is good consideration. See also Shadwell v. Shadwell (1860) 9 C.B. (N.S.) 159; 30 L.J. C.P. 145; New Zealand Shipping Co. v. A.M. Satterthwaite & Co. (1975) A.C. 154. (1974) 1 All E.R. 1015; N.B.N. v. Savol W.A. Ltd. (1994) 3 NWLR (Pt. 333) 435.

In this case the Court of Common Pleas held that the doing of an act lesser than the contracted act could not discharge a defendant from the obligation to fulfill his full obligation, the consent of the plaintiff notwithstanding.

As an exception to the principle, the court held that the introduction of some new element at the plaintiff's request was good satisfaction for the whole obligation of the defendant. See Sibree v. Tripp (1846) 15 M. & W. 23; Goddard v. O'brien (1882) Q. B. D. 37; Foakes v. Beer (1884) 9 App. Cas. 605.

In this case it was held that estoppel was only applicable to a representation of fact and not to a statement of intention. The words of the plaintiff were no more than a promise not to enforce the payment of the debt, i.e., a statement of intention. Estoppel was, therefore, not applicable.

In Hughes v. Metropolitan Ry. Co. (1877) 2 App. Cas. 439; 36 L.T. 932, H.L., the court provided a remedy in equity for a promise in the position of Money in the above-captioned case. For whereas it was held in Money's case that estoppel was only applicable to representations about facts, the court in this case employed equity to cover representations about intention and the future. Hence, the doctrine became known as Equitable estoppel or Promissory estoppel. See also Birmingham & District Land Co. v. L. & N.W.Ry (1888) 40 Ch.D. 268; Central London Property Trust, Ltd. v. High Trees House Ltd. (1947) K.B. 130.

The court held that the plaintiffs were bound by their promise: "...consideration is scarcely relevant, since the agreement to accept a lesser sum, in full and final settlement, concerns the modification or discharge of the contract, not its formation." The court then applied promissory estoppel as defined in the High Trees case. See also Combe v. Combe (1964) 2 All N.L.R. 75.

In this case the court held that promissory estoppel is not a new cause of action, and it can only be used in defence to an action brought by the promisor or as a subsidiary ground in support of the major cause of action. This is expressed by the saying that promissory estoppel can only be used as a shield and not as a sword. Lord Denning L.J., further stated:

"It (the doctrine of Promissory estoppel) does not create new causes of action where none existed before. It only prevents a party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them having regard to the dealings which have taken place between the parties.

Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity for consideration when that is an essential part of the cause of action. The doctrine of consideration is too firmly fixed to be overthrown by a side wind. Its ill effects have been largely mitigated of late, but it still remains a cardinal necessity of the formation of a contract though not of its modification and discharge."

In this case the court, Goff J. held that to establish promissory estoppel it is not necessary to show detriment and that it is sufficient for a party to conduct his affairs on the basis of a representation made by the other party. See also W.J. Alan & Co. Ltd. v. El Nasr Export & Co. (1972) 2 All E.R. 127.

However, in the Nigerian case of Temco Engineering Co. Ltd. v. Savannah Bank Ltd. (1995) 5 NWLR (pt. 397) 607, the Court of Appeal, Uwaifo, J.C.A. stated that the requirement of prejudice or detriment remained part of the substantive law in matters of promissory or equitable estoppel, although this might be a matter of inference from the facts of the case. Thus, in some cases the issue of detriment was not considered essential. See Joe Iga v. Amakiri (1978) 4 S.C. 9; Ashigwu v. A.G. Bendel State (1988) 1 NWLR (pt. 69) 138.

In this case the House of Lords confirmed that in some cases the promisor's rights would be merely suspended, but that in such a case, reasonable notice must be given by the promisor to the promise to enable the latter to re-adjust to the original situation. Lord Cohen added that in some cases the suspension of the right might "cease automatically on the occurrence of a particular event". In such a situation, notice could be dispensed with.

However, under certain circumstances, the rights are permanently abrogated and irrevocable. This occurs when the recovery of the rights will do injustice to the promisee or when it will be too late to withdraw from the promise.

Promissory estoppel will not operate unless it will be inequitable for the promisor to go back on his word. According to Lord Denning:

"In applying the principle (promissory estoppel), however, we must note one qualification. The creditor is barred from his legal rights only when it would be inequitable for him to insist on them. Where there has been a true accord under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts on the accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance. But he is not bound unless there has been a true accord between them. In these circumstances there was no true accord...There is also no equity in the defendant to warrant any departure from the due course of law. No person can insist on a settlement procured by intimidation."

However, in Societe Italo-Belge Pour Le Commerce et L'Idustrie S.A. v. Palm and Vegetable Oils (Malaysia) SDN BHD (supra), Goff, J. considerably increased the scope of the circumstances in which it would not be inequitable for the promisor to go back on his words by holding that this was so as long as the position of the promise would not be prejudiced by such withdrawal of the promise.

Goff, J., at the High Court level identified three species of estoppel in equity, they are:

a. The doctrine of acquiescence; see Ramsden v. Dyson (1866) L.R. 1 HL 129 at 140-141.

b. The doctrine of encouragement; see Ramsden v. Dyson (supra)

c. Promissory estoppel; see Central London Property Trust v. High Trees House Ltd. (1946) 1 All E.R. 256 at 258.

In this case the court observed that in a situation where debt is owed to an individual, and the debtor being unable to repay it, a third party offers to pay a smaller sum in discharge of the whole of the debt. Once the creditor accepts this money proffered by the third party, he cannot sue the debtor for the balance of the debt. He is bound by the agreement under which he accepted a smaller amount from the third party. See also Welby v. Drake (1825) I.C. & P.557, N.P.

Here, a Briton was employed by the Government of Ceylon. He returned home on leave with his wife, but the latter was unable to go back Ceylon with him because of ill-health. He then promised to make her an allowance of 30 pounds a month until she joined him. When he failed to make payments, she sued him to enforce the promise.

The Court of Appeal held that there was no contract between the parties because the contractual intention is absent in cases between husbands and wives. As a natural consequence of their relationship, spouses make numerous agreements involving payment of money and its application to the household, themselves and their children; there is offer, acceptance and consideration nevertheless, such agreements are not contracts because the parties did not intend that they should be attended by legal consequences. See also Spellman v. Spellman (1961) 1 W.L.R. 921.

In this case a husband promised to buy a car for his wife in order to improve their strained relations. He then entered into a hire-purchase agreement in respect of the car which was delivered to their home. When he refused to transfer the care to his wife, she sued him to enforce the agreement.

It was held that such agreement was purely a domestic arrangement not intended to create any legal relations and accordingly the wife acquired no legal rights in the car. In Jones v. Padavatton (1969) 2 All E.R. 616, the court observed that family relations are based on good faith, not on law.

It is well established that the rule that social and domestic agreements are not legally binding is based on a presumption. Consequently, the presumption can be rebutted and when this happens, such an agreement will be held binding. A typical example is when spouses are not living in amity, particularly when their relationship has degenerated to the level of mutual hostility and distrust, an agreement between them would be binding. See also Merrit v. Merrit (1970) 1 W.L.R. 1211; Pellet v. Pellet (1970) A.C. 777.

The parties in this case, a husband and his wife had taken out cross-summonses against each other for assault, it was agreed in settlement that each should withdraw his or her action, the parties should live apart and that the husband should pay the wife a weekly sum for the maintenance of herself and the children. This agreement was held binding on the husband. The presumption of absence of the contractual intention was rebutted by the hostile relations between the parties.

In this case, the court held that the presumption that agreements between husband and wife are not intended to create legal relations does not apply when the couples are not living in amity, but are separated or are about to separate. The court granted the relief of specific performance claimed from the husband by the wife and held that the agreement was binding.

It is trite that where the performance of a domestic or social engagement involves great sacrifices on the part of one or both parties, the presumption against the presence of contractual intention may be rebutted, particularly where the plaintiff has performed his own part of the agreement.

The facts of this case are: On the invitation of the defendant who was the plaintiff's uncle, the plaintiff and his wife sold their house and moved into the defendant's house. It was agreed that the Parkers would share the living expenses with the Clarks and that Clark would leave the house to Parker in his will. After a quarrel between the couples, the Clarks attempted to evict the Parkers on the ground that the agreement was not a binding one.

It was held to be binding. The presumption against the existence of the contractual intention in a contract between relations did not apply in this case because of the extremely onerous nature of the steps Clark had taken- the drastic and irrevocable act of disposing of his own house in pursuance of the agreement.

The law presumes the presence of the contractual intention in commercial agreements. Nonetheless, in certain circumstances a party may assert that its promise was a mere puff, which was not intended to be taken seriously or literally. The test carried out by the court in such circumstance is known as the test of a reasonable man. In this case, the defendant said in conversation with the plaintiff that he would give 100 pounds to anyone who married his daughter with his consent.

The plaintiff married the defendant's daughter with his consent, and afterwards sued to claim the 100 pounds when the defendant failed to pay it to him. The action failed and it was held that it is not reasonable that the defendant should be bound by such general words spoken to excite suitors. The statement of the defendant was held to be a mere puff which was not meant to be taken serious. This case is in contrast to the principle held in the case of Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q. B. 256.

The contractual intention of parties may be excluded by the provision of a clause in the agreement between parties. Here, the plaintiff staked the sum of 1 pound 16 shillings in a football pool and claimed that on the basis of his correct entry he had won 50,009 pounds 12 shillings. The second defendants claimed that the plaintiff's coupon was never received by them even though their agents, the first defendant, claimed that they forwarded the coupon to the second defendants. The latter denied any liability by reliance on the "honour" clause above.

The court held that the "honour" clause operated to exclude any contractual liability. In Lee v. Sherman's Pools (1951) W.N. 70, the court held that the action was not maintainable because the rule governing the entry, which contained an "honour" clause, negatived a contractual intention. Thus, anyone who signed the coupon was bound by the condition and there was, therefore, no arguable point for decision. See also Jones v. Vernon's Pools Ltd. (1938) 2 All E.R. 626.

In this case, the Supreme Court did not uphold the Honour clause as seen in several English cases but had to distinguish the English pools circumstances and agreements from that obtainable in Nigeria. According to the court, in England the stake money is not forwarded with the coupon, but only sometime after the week's matches, whilst in Nigeria the money is paid and forwarded along with the coupon. Consequently, the English pool cases constitute executor contracts, to which the Honour clauses could apply, whereas the Nigeria cases constitute executed contracts to which the clause cannot apply. See also Denemu v. Mak-Bob (Fixed Odds) Pool Ltd. and Tijani (1973) E.C.S.L.R. 307.

In this case, there was a major contract clearly divisible into smaller units. The major contract was one for the supply of foods over a period of seven years. A particular order placed by the plaintiffs, therefore, constituted a small contract within the major one. The major contract contained a clause similar to the honour clause in the football pool cases. When the defendant terminated the contract, the court held that they were not liable for breach of contract because of the honour clause provided for in the contract signed by both parties.

In this case, the court looked into the popular situation of "schools run" arrangements, in which one parent "runs" his children and the children of other parties in the agreement to and from schools, to determine its legality. This arrangement is done in turns.

The court held that in the absence of evidence that the parties intended to be bound contractually, the courts should be reluctant to conclude that the "school runs" arrangement does not involve the parties in any legal contractual relationship. This also is the case notwithstanding whether it is a case of money obligation. See also Albert v. Motor Insurers Bureau (1972) A.C. 301.

It is well settled that collective agreements between employers and employees are binding in honour and not legally enforceable since it is presumed that the parties do not intend to enter into legal relations. Nevertheless, where the evidence clearly shows that the parties intended to conclude a binding agreement, then such constitutes a legally binding contract. See Edwards v. Skyways (1964) 1 W.L.R. 349; (1964) 1 All E.R. 494.

It is important to note that by sections 13 and 15 of the Wages Board and Industrial Council Act 1973, a wages agreement is binding on the employers and workers to whom they relate on the order of the Minister of Labour. Also by Section 2(3) of the Trade Dispute Act 1976, a collective agreement deposited with the Minister of Labour becomes binding on the employers and workers to whom they relate once the Minister makes the appropriate order.

In this case, the court held that the contractual effect of a collective bargaining agreement depends on a number of factors such as: incorporation into the contract f employment, the pleadings by the parties to a case, evidence before the court and the conduct of the parties.

The court further held that on the issue of incorporation of the collective bargaining agreement into the contract of service, some questions are raised whether such incorporation could be regarded as having been effected by any of some various circumstances. These included,

(a) References by one document to the other,

(b) The lifting of portions of one document into the other, or

(c) By incorporation.

The court held itself and other courts duty-bound to search for the real intention of the parties and to find out whether in case of dispute, they had intended that two documents be read together.

The court finally held that the collective bargaining agreement in this case was binding because the appellant bank had relied on it in an earlier case and indeed in this case, one of the appellant's witnesses had also admitted that it was binding on the parties.

In this case, the court observed that statements made at the preliminary stages of the negotiations would not be regarded as terms of the contract, but mere representations. Theoretically, the longer the time lag between the time the statement was made, and the time the contract was concluded, the more likely would it be regarded as a mere representation, and vice versa. In contrast to this position, the court held in the case of Shawel v. Reade (1913) 2 I.R. 81, that where the lapse between the statement and the date of contract was three weeks, it was held that the statement constituted a term of the contract. Whereas in Routledge v. Mckay (1954) 1 W.L.R. 615; (1954) 1 All E.R. 855, the lapse was only one week, it was held that the statement was a mere representation.

In this case, the court held that where an oral agreement is made which was subsequently reduced into writing, any term contained in the oral agreement, not contained in the later document, will be treated as being part of the agreement and not as a mere representation. The parties will be held bound by such oral agreement. See also Esso Petroleum Ltd. v. Mardon (1976) 2 I.R. 81. A different position was held by the court in the case of Heibut v. Buckleton (1913) A.C. 30, where the court held that an oral agreement which was not part of the subsequently writing agreement amounts to a mere representation.

In this case, the court held that if a party who makes a statement had special or superior knowledge or skill with regards to the subject matter, as compared to the other party, then the statement is taken to be a term of the contract and not a mere representation. See also Esso Petroleum Ltd. v. Mardon (1976) Q.B. 801; Dick Bentley Production Ltd. v. Harold Smith Motors (1965) 2 All E.R. 65. On the other hand if the statement is made by the person who is less knowledgeable about the subject-matter of the contract, it is regarded as a mere representation. See Oscar Chess Ltd. v. Williams (1957) 1 W.L.R. 370; (1957) 1 All E.R. 325.

In this case, the court held that a statement will not be regarded as a term of the contract if the person making it, whether or not knowledgeable, expressly asks the other party to verify the truth of it. The fact of this case is that the seller of a boat said it was sound, but advised the buyer to have it examined. It was held that this advice negated any intention to warrant the soundness of the boat. On the other hand, a statement is likely to be a term of the contract if it is intended to prevent the other party from finding out the truth and induces him to contract in reliance on it. See Shawel v. Reade (1913) 2 I.R. 81.

This doctrine was applied in this case by the Honourable Court. According to this doctrine, if the representor makes a statement or promise, which is intended to induce the representee to enter into a contract, then the representee enters into the contract in reliance on that promise, the representor will be held bound by his promise. In this case the defendant's lease of the plaintiff's property came up for renewal. The plaintiffs inserted a clause restricting the use of the premises to showrooms, workrooms and offices only, thereby prohibiting the defendant from sleeping on the premises.

The defendant, who, to the plaintiff's knowledge, had been sleeping on the premises, objected to this clause and was assured by the plaintiff's agent that if he signed the lease, he would be allowed to continue sleeping on the premises. The plaintiffs now brought an action for forfeiture against him on the ground that he had broken the covenant restricting the use of the premises.

The court held that although he had broken the terms of the lease, he was entitled to sleep on the premises on the basis of the collateral contract in which the plaintiffs promised to allow him to do so. See also Wells (Mersham) Ltd. v. Buckland Sand & Silica Co. Ltd. (1965) 2 Q.B. 170; (1964) 1 All E.R. 41. It is imperative to note that a principal is liable for any action or statement made by its agent to a third party. This was what played out in this case.

In this case, the court held that conditions may be precedent, subsequent or inherent. A condition is precedent when, unless it is complied with, the estate does not arise. It is subsequent when if broken, the estate is defeated. It is inherent when the estate is qualified restrained or charged by it. For instance, an agreement subject to the preparation of a formal contract is one subjected to a condition precedent. For that agreement is not binding until a formal contract has been drawn up and signed. Thus, there is a condition precedent when rights or obligations under an agreement are suspended until the happening of a stated event.

In the case of Pym v. Campbell (1856) 6 E. & B. 370; 25 L.J. Q.B. 277, an agreement by the defendant to buy the plaintiff's invention was made subject to the approval of a third party, an engineer. It was held that there was no binding contract until the engineer's approval was obtained. See also Pickard v. Innes, Gold Coast F.Ct. (1919) 2; Aberfoyle Plantations v. Cheng (1960) A.C. 115; (1959) 3 All E.R. 910.

In this case, an actress was engaged to play a leading part in a French operetta as from the beginning of its run. As a result of illness she was unable to take up her role until a week after the performances had started. In the meantime, the producers, who had engaged a substitute to replace her, refused to have her back. She instituted an action for breach of contract. The court held that her failure to appear for final rehearsals and the early performances of the operetta constituted a breach of condition and that the defendants were entitled to treat the contract as discharged.

By contrast, in Bettini v. Gye (1876) 1 Q.B.D. 183, the defendant entered into a contract to engage the plaintiff as a singer in operas and concerts into a period of three months. The plaintiff undertook to be in London at least six days before the commencement of his engagements for rehearsals. He, however, only arrived two days before the engagement commenced and the defendant thereupon repudiated the contract. It was held that the term as to rehearsals thereupon was a warranty, and whilst the defendant could have sued for damages for the plaintiff's lateness in showing up, he could not repudiate the contract.

In distinguishing both terms with the above cases, the case of breach of contract shows a grave enough breach which resulted to the decision of the court whilst for the case of warranty, it was classified as a mere breach, that is not grave enough.

Unlike conditions and warranties, this term has such a complex character. The cases under this characterized by this term of contract apply the test of substantial benefit. In this case, the court, Per Diplock, L.J., stated the test thus:

"...does the occurrence of the event [breach] deprive the party who has further undertakings still to perform [the injured party] of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?"

If it does, then the injured party can repudiate the contract, otherwise he can only obtain damages for the breach.

In this case, the court held that apart from conditions and warranties, there was a third type of term, the intermediate term, the effect of which depended on the gravity of the breach. If the breach goes to the root of the contract, the injured party is entitled to treat himself as discharged; if not, he is not entitled to do so. He can only institute an action for damages. See also Bunge Corporation, New York v. Tradax Export S.A., Panama (1981) 1 W.L.R. 711; (1981) 2 All E.R. 513.

It should be noted that when a court decided that a breached term is either a condition or a warranty, the court is examining the quality of the term broken, and is basing its judgment on this, whereas when it holds that a term is an intermediate term, the court then considers the effect of the breach and bases its judgment on this factor.

In this case, the court observed that where parties stipulate in advance what the consequence of a breach of a particular clause in a contract is to be, this will be accepted and enforced by the court. For instance, if the parties stipulate that breach of clause "A" is to result in damages and breach of clause "B" is to result in repudiation, this must be respected and enforced by the court. However, it is not sufficient to call a clause "condition" and another "warranty". It is for the court to classify terms in this manner. Parties may find that a clause referred to as a "condition" may on examination be classified by the court as a warranty or any other class of terms.

In this case, the court defined fundamental terms of a contract as something which underlies the whole contract so that if not complied with, the performance becomes totally different from that which the contract contemplates.

In Chanter v. Hopkins (1838) 4 M. & W. 399 at P. 404; 150 E.R. 1484, Lord Abinger stated thus:

"If a man offers to buy peas of another, and he sends him beans, he does not perform his contract; but that is not a warranty; there is not warranty that he should sell him peas; the contract is to sell peas and if he sends him anything else in their stead, it is a non-performance of it."

Thus, a fundamental term is a term of even greater importance than a condition. It is a term which constitutes the main purpose of the contract, and failure to comply with it is equivalent to not performing the contract. Just as in the case of conditions, the breach of a fundamental term will entitle the injured party to repudiate the contract. See Karsales (Harrow) v. Wallis (1956) 1 W.L.R. 936; (1956) 2 All E.R. 866, C.A.

In this case, the court, Per Park B., stated thus:

"It has long been settled, that, in commercial transactions extrinsic evidence of custom and usage is admissible to annex incidents to written contracts, in matters with respect to which they are silent. The same rule has been applied to contracts in other transactions of life, in which known usages have been established and prevailed; and this has been done upon the principle of presumption that in such transactions the parties did not mean to express in writing the whole of the contract by which they intended to be bound, but to contract with reference to those known usages"

In simpler terms, a contract is subject to terms that are sanctioned by custom, whether commercial or otherwise, notwithstanding that such terms have not been expressly mentioned in the contract. Also, in British Crane Corporation v. Ipswich Plant Hire Ltd. (1975) Q.B. 303; (1974) 1 All E.R. 1059, C.A., the court, Per Lord Denning, that:

"...it is clear both parties know quite well that conditions were habitually imposed by the supplier of these machines: and both parties knew the substance of these conditions. In particular that if the crane sank in soft ground it was the hirer's job to recover it."

In this case, the court observed that it is clear that a custom is implied only when it has not been expressly or implicitly excluded by the contract and where the usage is well-established and notorious, that both parties to the contract are familiar with it or must be presumed to be familiar with it. See Bank of the North v. Poland (1969) 3 A.L.R. 217. To better buttress this point, Lord Jenkins in London Export Corporation v. Jubilee Coffee Roasting Co. held that:

"An alleged custom can be incorporated into a contract only if there is nothing in the express or necessarily implied terms of the contract to prevent such inclusion and, further, a custom will only be imported into a contract where it can be so imported consistently with the tenor of the document as a whole."

The fact of this case is that under a contract for the carriage of goods by sea, the terms of which were contained in a bill of lading, the defendant undertook to consign some packages from Liverpool to the plaintiffs in Lagos. Although the defendants safely delivered the packages in the customs shed on arrival, one of them was missing when the plaintiffs finally took delivery.

The plaintiffs sued the defendants for the loss. Although the defendants' liability under the bill of lading ceased as soon as the goods were discharged, the plaintiffs sought to introduce and rely on a custom of the port according to which the defendants' liability would have continued even after the discharge of the goods.

The Full Court held, affirming the decision of the Divisional Court that "no evidence of custom can override the terms of written contract". In Leyland (Nig.) Ltd. v. Dizengoff (1990) 2 NWLR (Pt. 134) 610 C.A., the court held that if an alleged custom is not sufficiently well-established so as to be known or presumed known to all engaged in the relevant trade, then it cannot be applied to a contract in which notice of it has not been given to one of the parties. See also Bank of the North v. Poland (1969) 3 A.L.R. 217.

In this case, the defendant who had earlier bought a car from a European for 335 Pounds sold it to the plaintiff for 340 pounds. Subsequently, the European was convicted of stealing the car, and the latter was, therefore, removed from the plaintiff's possession by the Police. The plaintiff now brought an action for the recovery of the 340 pounds purchase prize from the defendant. The defendant relied on the doctrine of Caveat emptor.

However, this defence was rejected as being inapplicable and the plaintiff was held to be entitled to the refund sought. According to Reece, J.:

"...the doctrine of caveat emptor it seems to me has no application in the present case since it relates to merchantableness of goods sold. Here there is no question of the motor car being fit or suitable for the purpose for which he had no title to sell and consequently had no title to convey to the plaintiff. It is not disputed that the Sale of Goods Act is applicable and in view of the decision of the judges in the case of Roland v. Dival,... it does not seem to me to admit of any argument that the plaintiff is entitled to recover the price he paid to the defendant..."

The case of Roland v. Dival (1923) 2 K.B. 500 referred to in the above quote was similar both in facts and decision.

In this case, the court held that the breach of the condition as to title was extended to cover a situation in which the purchaser of goods was prevented from re-selling them as a result of a successful action brought against the seller by a third party for the infringement of a trade mark.

In this case, the court held that by section 13 of the Sale of Goods Act, when goods are sold by description, there is an implied condition that they shall correspond with the description and if the sale is by sample as well as by description they must still correspond with the description as well as the sample. It is important to note that this condition usually applies where the buyer has not seen the goods and relies on the seller's description and/or sample as the case may be. In some circumstances, this condition will applies even where the purchaser has seen the goods, in so far as he relied on the seller description of the goods to make the purchase.

The fact of this case is that an old reaping machine was described by the seller as new. The buyer who relied on this description and bought the machine without first seeing it was allowed by the court to rescind the contract and recover his money.

Here a car sold by the defendant to the plaintiff which was described as a 1961 Triumph Herald turned out to be the front of a 1948 Triumph Herald, welded to the rear of a 1961 model. Although the plaintiff saw the car before the sale, he was allowed to rescind the contract for a breach of condition.

The court observed that it does not matter that a purchaser saw the goods before he made the purchase, what matter is that the purchaser relied on the description of the goods by the seller. This usually occurs where the description of the goods requires technical knowledge, or where the material facts relevant to the description are peculiarly within the seller's knowledge. See also Ogwu v. Leventis Motors (1963) N.R.N.L.R. 115; Nicholson and Venn v. Smith-Marriott (1947) 177 L.T. 189.

In this case the appellants in Nigeria contracted to buy clothing material from the respondents in England. Although it was a contract of sale by description (the material was described as "36 inch dyed crepe quality AS1000 grey cloth foreign origin"), the description was followed by a sample labeled and identified as the goods earlier described. When subsequently a sample taken from the bulk actually shipped was found inferior to the first sample, it was held that this constituted a breach of the condition as to description.

The court further observed that where in a sale by description a sample of the goods is provided, the sample could be regarded as a description of the bulk of the goods. The first sample would be regarded as evidence of the description of the goods.

It is trite that the condition as to fitness of goods for a particular purpose will not apply unless the buyer makes known to the seller the purpose for which he wants it. As a proviso to the above rule, a buyer is not required by law to inform a seller the particular purpose he need the goods, if the goods can only be used for one purpose. Such information will not be necessary.

In this case the buyer went to a shop and asked for a hot-water bottle. It was held that since the hot-water bottle so described is used for only one purpose, the provision on making the purpose of requirement known to the seller was satisfied. See also Grant v. Australian Knitting Mills Ltd. (1936) A.C. 85; (1935) All E.R. Rep. 209.

In Ijoma v. Mid Motors Co. Ltd. (1974) 9 C.C.H.C.J. 1325, High Court of Lagos, the court took a contrary position. Here the plaintiff bought a Nysa Zuk truck from the defendant for the purpose of carrying passengers. He found very serious defects when he commenced operating it. Each time it was in use the petrol and engine oil would dry up quickly, and normal functioning was rendered impossible. The plaintiff brought an action for breach of contract on the ground that the truck was not fit for the purpose for which it was purchased. The suit was dismissed on the ground that there was no evidence that the plaintiff made known to the defendant the purpose for which the truck was required at the time of sale so as to say he was relying on the defendant's skill and judgment.

In this case, the court observed that where goods can be used for various purposes, the buyer is obliged to indicate the particular purpose for which he needs the goods.

Here the plaintiff supplied wire coils to the defendant, these wire coils are capable of being used for variety of purposes, and it was held that the condition as to fitness for purpose did not apply because the defendant did not tell the plaintiff the particular purpose for which he needed the goods.

A purchaser has a burden to notify the vendor the purpose for which he intends to use the purchased item. That's the only requirement which must be accomplished before the purchaser may be able to claim damages for breach of contract as to fitness of purpose. The exception to this rule as stated in cases above is where such item has only one purpose which it can be used for, and then the purchaser has no implied duty to inform the vendor the purpose he plans to use the item.

It is trite law that where a buyer examines the goods before the contract is made as regards defects which the examination ought to reveal, the implied condition as to their being of merchantable quality will no longer apply and the buyer takes away the goods to his own detriment.

In accordance to section 15 of the 1893 Act which provides that in a contract of sale of goods by sample:

(a) There is an implied condition that the bulk shall correspond with the sample in quality.

(b) There is an implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with sample.

(c) There is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

In this case, the court observed that for a sale to be by sample, it must be expressly stated in the contract or can be easily implied. Where not stated and cannot be implied, such sale is likely not to be held as been by sample.

The controlling test was stated by Mackinnon, L.J. thus:

"Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would easily suppress him with a common, 'Oh, of course'".

It is noteworthy to say that courts do not have unfettered power to imply terms in contracts and impose terms arbitrarily. Their power to imply terms is only exercisable within the above guidelines and more. See also Okotete v. Electricity Corporation of Nigeria (unreported) High Court of Midwest (Bendel).

Also in Moorcock case (1889) 14 P.D. 64 at p. 68, Bowen, L.J. stated thus:

"I believe if one were to take all the cases, and they are many, of implied warranties and covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have intended that at all events, it should have."

Here, Lord Denning was of the opinion that the court can imply terms of a contract on the basis of reason and justice. In his view, terms are implied by courts because they are just and reasonable, not because the parties had agreed to them, either expressly or impliedly.

In this case, Lord Wilberforce stated that terms can be implied if they are of the custom of the trade or on the ground that without them the contract will not work. But terms cannot be implied simply on the ground that they are reasonable. Lord Wilberforce further held that the following terms must be implied into tenancy agreement:

(a) A grant of exclusive possession to the tenants;

(b) A covenant of quiet enjoyment as a necessary incident of letting;

(c) The rights in (a) and (b) are useless unless access is gained to the staircase;

(d) Having regard to the height of the building, the demise is useless without access to the lifts;

(e) The same applied to the rubbish chutes.

The test of necessity was implied in this case by putting the landlord of the building in the position to maintain the property. The standard of this test must not exceed what was necessary in regard to the circumstances.

Lord Salmon also had this to say as regards this case:

"I find it difficult to think of any term which it could be more necessary to imply than one without which the whole transaction would become futile, inefficacious and absurd, as it would be if in a fifteen storey block of flats or maisonettes, such as the present, the landlords were under no legal duty to take reasonable care to keep the lifts in working order and the staircases lit."

It was held that a court can imply into a contract a term or terms, which, had the parties adverted their minds to the situation, they would have intended to incorporate it into their agreement. See also Ghandi v. Pfizer (Unreported).

If the reaction to the officious bystander's enquiry would have been uncertainty, disagreement or a clear "I don't know" by any of the two parties to the contract, then the court cannot imply such a term. Here, the court stated the rule thus:

"A term can only be implied if it is necessary in the business sense to give efficacy to the contract; that is, if it is such a term that it can confidently be said if at the time the contract was being negotiated someone had said to the parties, 'What will happen in such a case?'. They would have replied: 'Of course, so and so will happen; we did not trouble to say that; it is too clear'."

See also Spring v. National Amalgamated Stevedores and Dockers Society (1956) 1 W.L.R. 585; (1956) 2 All E.R. 221.

Standard form contracts are contracts whose terms are contained in previous forms to be used for all contracts of the same kind. Lord Diplock mentioned two kinds of standard form contract when it stated thus:

"Standard forms of contracts are of two kinds. The first which are of very ancient origin are those which set out the terms on which mercantile transactions of common occurrence are to be carried out. Examples are bills of lading, charter parties, policies of insurance, contracts of sale in the commodity markets."

The standard clauses in these contracts have been settled over the years by negotiation by representatives of the commercial interests involved, and have been widely adopted because experience has shown that they facilitate the conduct of trade. Contracts of these kinds affect not only the actual parties to them but also others who may have a commercial interest in the transactions to which they relate, as, buyers or sellers, charterers or ship-owners, insurers or bankers. He then proceeded to state that if fairness or reasonableness were relevant to their enforceability, the fact that they are widely used by parties whose bargaining power is fairly matched would raise a strong presumption that their terms are fair and reasonable. Lord Diplock observed:

"The same presumption, however, does not apply to the other kind of standard form of contract. This is of comparatively modern origin. It is the result of the concentration of particular kind of business in relatively few hands. The ticket cases in the 19th century provide what are probably the first examples. The terms of this kind of standard form of contract have not been the subject of negotiation between the parties to it, or approved by any organization representing the interests of the weaker party."

In this case, the Court of Appeal laid down the guidelines for determining liability in the case of unsigned documents as follows:

a. If the person receiving the ticket did not see or know that there was any writing on the ticket, he is not bound by the conditions.

b. If he knew that there was writing on the ticket, and knew or believed that the writing contained conditions, then he is bound by the conditions.

c. If he knew that there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound if the party delivering the ticket to him had done all that was reasonably sufficient to give him notice that the writing contained conditions.

The court further stated that whether or not a person who knows there is writing on a document but does not know that it contains conditions will be bound by an exemption clause in the document depends very much on the type of contract and document. See also Odeniyi v. Zard & co. (1972) 2 U.I.L.R. 34, Western State High Court, Ibadan.

In this case, the court held that for an innocent or injured party to be bound by exemption clause contained in a document not signed by him, the document must be a contractual document. It must be admitted by the court as a document containing the whole contract or some terms of the contract. General nature receipts and tickets are not contractual documents because by their nature, they merely acknowledge the payment of money and act as a pass for the enjoyment of a service. Any person wishing to rely on an exemption clause in such a document has to take extra steps to bring it to the notice of the other party. See also Thornton v. Shoe Lane Parking (1971) 2 Q.B. 163; (1971) 1 All E.R. 686.

It has been held in several cases that a bill of lading is a contractual document. See Parker v. South Eastern Railway (1877) 2 C.P.D. 416. In this case, the Supreme Court held that the Waybill was a contractual document and that parties are bound by its contents. Furthermore, that the conditions contained in document which referred to a law, incorporated the said law into the contract of carriage of goods between the parties.

This case involves the loss of the respondent's car in the appellant's car park. Edozie J.C.A. stated that where the duty of the car park owner would have existed, it could be excluded by the occupier by the exhibiting of the appropriate notice to that effect. A typical notice here is that of "Car is parked at owner's risk" posted in top establishments.

Where there has been a course of dealing between parties, the injured party could be held bound by an exemption clause, even though on the particular occasion, he only received notice of it after the conclusion of the contract. He would be imputed with notice as a result of his previous dealings with the party relying on the exemption clause.

It should be noted, however, that for the injured party to be bound on the basis of a previous course of dealings, it must be established that he had knowledge of the actual terms, not merely that he knew that there were conditions if he never bothered to read them and, therefore, had no actual knowledge of their contents. See McCutcheon v. MacBrayne (1964) 1 W.L.R. 125; (1964) 1 All E.R. 430, H.L.

The plaintiff shipped his cargo of kolanuts from the Gold Coast (now Ghana) to Lagos in the defendant's ship. On arrival in the Lagos area, the goods were lost when the light boat into which they were transferred capsized. The plaintiff sued to recover the value of the nuts from the defendants. The latter pleaded that they were not liable by reliance on a receipt they had given to the plaintiff containing the following clause "The Company shall not be liable for any damage however caused on kola shipments or loss in transshipments."

The court held that the defendants had not done all that was necessary to give the plaintiff notice of the existence of the condition, the court considered the standard of literacy of the plaintiff. Same was the position of the court in the English case of Richardson, Spence & Co. v. Rowntree (1894) A.C. 217.

The position with regard to documents signed by the injured party containing or incorporating excluding or limiting terms is simple and straightforward. In the absence of fraud, duress or misrepresentation, the person signing is bound by the excluding or limiting term whether or not he reads it. In such cases, the person signing is bound, not because he has read, understood and consciously assented to the document, but because by signing he has signified his assent. See the contrasting position in the Nigerian case of DHL International (Nig.) Ltd. v. Mr. Udechukwu Chidi (1994) 2 NWLR (Pt. 329) 720.

Here, Onalaja JCA held that the receipt containing the clause was regarded by the parties as a mere receipt. Since the parties regarded the document as a mere receipt, the appellant had failed to establish the document as a contractual document to the respondent at the formation of the contract. The court further observed that any Nigerian would see the document as a mere receipt and as nothing else, and the exemption clause contained in it would not avail the appellant against the respondent's claim.

With due respect, the learned justice of the Court of Appeal appeared to have wrongly applied the law regarding unsigned documents to a situation involving a signed document.

A party signing a document is liable if he signed a document incorporating by reference another document containing the exemption clause. To better buttress this point, the court in this case observed that where a party accepting an offer and signs a document which forms part of the contract and contains or refers to conditions, he will be bound by those conditions whether he reads them or not, unless he has been induced to sign the document by fraud or misrepresentation. See the opposite decision of Hon. Justice Oputa, J., (as he then was) in Chike Atu v. Face to Face Million Dollar Fixed Odd Pools Ltd. (unreported).

The court had this to say about Misrepresentation in this case:

"...any behavior, by words or conduct, is sufficient to be a misrepresentation if it is such as to mislead the other party as to the existence or extent of the exemption. If it conveys a false impression that is enough."

Where a party is induced by misrepresentation to sign a contract, the exemption clause in the contract will not be able to exclude or limit the party on the wrong from liability.

The plaintiff in this case bought a car from the defendants in a contract containing a term excluding "any other guarantee or warranty, express or otherwise". The car turned out not to be suitable for the purpose for which the buyer needed it. This constituted a breach of the implied condition in section 14(1) of the Sale of Goods Act 1893.

Using the strict interpretation rule, the court held that the exemption clause did not apply since it covered only breaches of guarantees and warranties. The breach in question was one of condition. The defendants were, therefore, liable. See also Andrews v. Singer (1934) 1 K.B. 17; Houghton v. Trafalgar (1954) 1 Q.B. 247; (1953) 2 All E.R. 1409.

Where a party's contractual liability could arise both from negligence and any other cause of action, unless an exemption clause specifically refers to negligence, it will not be construed to cover it. This is because the court regard it as inherently improbable that one party to a contract could intend to absolve the other party from the consequences of the latter's own negligence. See also White v. Warrick (1953) 2 All E.R. 1021, C.A.

Same decision as was observed in Gillespie Bros. Ltd. v. Bowles Transport (supra).

Where a party's contractual liability could arise both from negligence and any other cause of action, unless an exemption clause specifically refers to negligence, it will not be construed to cover it. This is because the court regard it as inherently improbable that one party to a contract could intend to absolve the other party from the consequences of the latter's own negligence.

Where the law casts on the defendant not only a duty of care but also some form of strict liability, unless the language of an exemption clause manifestly covers both types of obligation, he will be taken only to have excluded the strict liability. Even where the only type of liability possible in a situation is negligence, the court have held and will hold that in the absence of the express mention of that word in the exemption clause, the latter may not cover negligence. See also the dictum of Lord Denning in Lee v. Showmen's Guild of Great Britain (1952) 2 Q.B. 329; (1952) 1 All E.R. 1175.

By the doctrine of privity of contract, a contract cannot confer any rights on one who is not a party to the contract. Thus, an exclusion clause will not as a rule, protect against someone who is not a party to the contract in which it is contained.

In this case, the plaintiff who was a passenger in a ship fell from the gangway. Thereupon he sued the captain of the ship. The latter sought protection in a clause contained in the ticket for the voyage which provided "the company will not be responsible for any injury whatsoever to the person of any passenger arising or occasioned by the negligence of the company's servants."

It was held by the Court of Appeal that the clause only protected the company, that in any case if it had been extended to include the servants of the company, it is invalid since the latter were not parties to the contract. See also Cosgrove v. Horsfall (1945) 62 T.L.R. 140; confirmed in Scruttons v. Midlands Silicones Ltd. (1962) A.C. 446; (1962) 1 All E.R. 1.

The court defined a fundamental breach of contract as an event resulting from the failure by one party to perform a primary obligation which has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract.

In past times, it was generally believed that a party guilty of a fundamental breach of contract could not avoid liability by reliance on an exemption clause inserted into the contract for his benefit. In Karsales (Harrow) Ltd. v. Wallis (1956) 2 All E.R. 866 at p. 868, Lord Denning declared thus:

"It is now settled that exempting clauses, of this kind, no matter how widely they are expressed, only avail the party when he is carrying out the contract in its essential respects. He is not allowed to use them as a cover for misconduct or indifference or to enable him to turn a blind eye to his obligations. They do not avail him when he is guilty of a breach which goes to the root of the contract. It is necessary to look at the contract apart from the exempting clauses and see what are the terms, express or implied, which impose an obligation on the party. If he has been guilty of a breach of those obligations in a respect which goes to the very root of the contract, then he cannot rely on the exemption clause".

See also Adel Boshalli v. Allied Commercial Exporters Ltd. (1961) 1 All N.L.R. 917.

The fact of the case is that; W agreed to buy a buick car under a hire-purchase agreement which included the clause "No condition or fitness for any purpose is given by the owner or implied therein". One night the car was towed to W's house by the agent of the finance company and when W. found in the next morning, parts of the car were missing, others were broken, and it is incapable of self-propulsion. W refused to pay the instalments and was sued by the plaintiffs who relied on the exclusion clause to protect them from their liability.

It was held by the Court of Appeal that the exclusion clause could not protect them from a breach of the degree and gravity of a fundamental breach.

The fact of this bailment case is: The plaintiff deposited his trunk boxes at the defendants' "left luggage" office. In the plaintiff's absence, the defendants permitted another person to have access to the luggage who unlawfully removed some items from them, in spite of an exemption clause excluding the defendants from liability for loss or damage to any articles exceeding 5 pounds.

The defendants were held liable for the fundamental breach of the term in the bailment agreement. See also the case of Sze Hai Tong Bank v. Rambler Cycle Co. (1959) A.C. 576, where the court held that an exemption clause cannot protect a carrier against a deliberate misperformance of the agreement.

Here the appellant agreed to buy a year old second-hand lorry with registration number BYA648 from the respondents. The Lorry actually delivered was a four-year-old one. In answer to the appellant's action for breach of contract, the respondents pleaded that they were exempted from liability by an exemption clause which expressly excluded any warranty or otherwise as to description, state, quality, fitness, roadworthiness or otherwise of the lorry.

The court held that an exemption clause in a contract only avails a party when that party is carrying out the contract in its essential respects. As held by Lord Abinger in Chanter v. Hopkins (1838) 2 Mt.W. 399, if a man supplies beans when he is supposed to supply peas, this is not a breach of condition, but non-performance.

It has been held in several cases that a ship-owner who departs from the agreed route without justification would lose the benefit of any exemption clause inserted into the carriage contract.

The court observed in this case that by the ship-owner's act of deviating from the agreed route, he has stepped out of the contract and cannot rely on any exemption clause in it. And this is so even if the injury suffered by the consignor or consignee did not arise out of the deviation. See also Hain SS. C. ltd. v. Tate & Lyle (1936) 2 All E.R. 597, where Lord Atkin stated that a deviation is a breach of such a serious character that no matter how slight it is, the other party to the contract is entitled to treat it as going to the root of the contract and to declare himself as no longer bound by the terms. See also Gunyon v. South Eastern and Chatham Ry. Co.'s Managing Committee (1915) 2 K.B. 370; 84 L.J.K.B. 1212; Lilley v. Doubleday (1881) 7 Q.B.D. 510.

Lord Viscount Dilhorne held that effect of a fundamental breach on an exemption clause:

"...there are judicial observations to the effect that exemption clauses, no matter how widely they are drawn, only avail a party when he is carrying out a contract in its essential respects. In my view, it is not right to say that the law prohibits and nullifies a clause exempting or limiting liability for a fundamental breach or a breach of fundamental term. Such a rule of law would involve a restriction on the freedom of contract, and in the older cases, I see no trace of it."

In this case, Lord Denning, M.R., made reference to the judgment of the House of Lords in Suisse Atlantique case and purporting to apply the rule of construction approved by the House in that case stated as follows:

"The rule of construction applies here. It means we must see if there was a fundamental breach of contract. If there was, then the exempting condition should not be construed as applying to it. We look therefore at the terms of the contract, express or implied, (apart from the exception clauses) and see which of them were broken. If they were broken in a fundamental respect, the finance company cannot rely on the exception clauses."

In this case, the plaintiffs, a company which owned a factory, entered into a contract with the defendants, a security company, by which the defendants were to provide security services at the factory, including night patrols. While carrying out a night visit to the factory, an employee of the defendants deliberately started a small fire which got out of control and destroyed the factory and stock valued together at 615,000 pounds. There was no evidence that the defendants were negligent in employing Musgrove, the man who started the fire. The plaintiffs sued the defendants on the ground that they were liable for the acts of their employee.

The defendants pleaded the exemption clause in the contract signed by party. The court held that the act of the defendants' employee was a fundamental breach of the contract, and consequently, the exemption clause could not avail the defendant s.

On further appeal, the House of Lords reversed the decision of the Court of Appeal and held that there is no rule of the law by which an exemption clause could be eliminated or rendered ineffective as a result of a breach of contract whether fundamental or not. Parties are free to agree to whatever exclusion or modification of their obligations they choose and, therefore, the question whether an exemption clause applies when there is a fundamental breach, breach of fundamental term or any other breach turns on the construction of the whole contract, including the exemption clause.

Therefore, although the defendants were in breach of their implied obligation to operate their service with due and proper regard to the safety and security of the plaintiffs' premises, the exemption clause was clear and unambiguous and protected the defendants from liability. See George Mitchell (Chesterhall) Ltd. v. Finney Lock Seeds Ltd. (1981) 1 Lloyd's Rep. 476; Niger Insurance Ltd. v. Abed Brothers (1976) 6 U.I.L.R. (Pt. 1) 61.

Here, a bank which had undertaken to prepare documentary credit on behalf of its customer, with regard to an order for cement from Switzerland, wrongly released funds on presentation of forged bills of laden and then debited the customer's account. When the customer sued to recover the sum involved, the bank relied on an exemption clause which inter alia provided as follows:

"We (the customer) agree to hold you (the bank) and your correspondents harmless and indemnified in respect of any loss or damage that may arise in consequence of error or delay in transmission of your correspondents' messages or misinterpretation thereof or from any cause beyond you or your control."

The Supreme Court held that the bank could rely on this clause in spite of its negligence, because on the proper construction of the exemption clause, this level of malperformance was covered. The court relied for its stand on Photo Production v. Securicor Transport Ltd. (1980) A.C. 827, where it was held that in so far as an exclusion clause is concerned, all that has to be done is now construction of the clause, that is, following the interpretation Theory, as against the Rule of Law Theory, which was developed as far back as 1956.

In this case, the court held that even if the bank had been guilty of negligence (which was not the case), it would still not have been liable because by the rule of construction, a party guilty of a fundamental breach of contract can still be protected from liability if an exclusion clause is appropriately worded to cover such an eventuality.

The court, Per Ejiwunmi, J.C.A., further held, with recourse to the principle in Akinsanya v. U.B.A. (Supra), that it is the construction theory that must be applied in the instant case to determine whether any of the exemption clauses or the totality of them afford total indemnity to the appellant. See the contrasting view held by Per Edozie, J.C.A. in DHL v. Chidi (1994) 2 NWLR (Pt. 329) 720 at 742. Here, the court held that non-delivery of the respondent's parcel by the appellant constituted a fundamental breach of their contract, an exemption clause relied on by the appellant to protect it against liability was therefore "inoperative to absolve the appellant from liability".

By section 4 of the Statute of Frauds, and similar sections in some state Laws, no action shall be brought whereby to charge the defendant upon any special promise to answer for the debt default or miscarriage of another person unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some person lawfully authorized by him.

A typical example of such a contract is illustrated when a person promises to repay a debt to a lender of money if the borrower fails to pay. This is a very common feature of bank loans in modern times.

The contract of guarantee is not purely limited to contractual situations. It has been applied and is continuously applied to a guarantee of tortious liability as well. In this case, the defendant's son rode and killed the plaintiff's horse without his permission. The defendant orally promised to pay the agreed value of the horse. On failing to pay, the plaintiff sued him on the agreement. His defence that the agreement was not enforceable for not being in writing was disputed by the plaintiff on the ground that the statute only covered a promise to answer for contractual liabilities and not tortious liabilities.

The court held that the word "miscarriage" showed that tortious liability was within the scope of the act and since the defendant's promise was not in writing, it could not be enforced against him. See also Agbahowe v. Osayiobosa (1966) N.M.L.R. 360.

In this case Per Salami, JCA, described a contract of guarantee as an assurance to the creditor that if the principal debtor fails to pay, the guarantor or surety would repay the debt.

It also follows, therefore, that where there is any alteration of the contract of guarantee between the creditor and the debtor, without the knowledge and consent of the guarantor, the guarantor is discharged from the contract, unless the alteration is neither substantial nor prejudicial to him. The guarantor is thus released from this obligation under the contract.

In this case, the defendant signed an "indemnity agreement" in respect of a contract of hire-purchase of a lorry between the plaintiff and a company known as Inaolaji Trading and Transport Services, whereby he undertook to pay any outstanding installments in case of default by the company. He failed to fulfill this obligation when the occasion arose and the plaintiffs sued him. It was argued in his defense that since this action was based on a contract of indemnity, there must be three parties, namely, the creditor, the debtor and the surety, but in this case the surety was the same person as the Inaolaji Trading and Transport Service (the debtor) which was not a legal entity and therefore had no legal existence at law apart from the defendant.

It was held that this was not a contract of guarantee but one of indemnity and that while a contract of guarantee requires the existence of three parties, a contract of indemnity did not. The defendant was, therefore, liable.

If the effect of the guarantor's assumption of liability is to determine the principal debtor's liability, then what we have is not a contract of guarantee but a substitution of debtor, otherwise referred to as a contract of indemnity. In such a situation, the undertaking or indemnity is enforceable in the absence of writing. In other words, a contract of indemnity, as distinct from a contract of guarantee, is not covered by the Statute. See also Yeoman Credit v. Latter (1961) 1 W.L.R. 828; (1961) 2 All E.R. 294.

It is trite law that for a contract of guarantee to be valid, it must be in writing. Same is not the position of an indemnity agreement. An indemnity agreement entered into orally is valid as if it was written.

Another distinguishing factor considered in this case is the issue of parties involved in both agreements. In a contract of guarantee, there must be three parties whereas in an indemnity agreement, two parties can effectively and legally execute it.

Here, the defendants entered into an oral agreement with a stockbroker to introduce business to him on the terms that they were to receive half the commissions earned and to pay half the losses in the event of a client introduced by them failing to pay.

It was held that their promise to answer for the debt of such a client did not come within the scope of the statute. It was merely part of the wider brokerage contract and did not have to be evidenced in writing. Example of such a situation is that of a Del Credere Agency.

A Del Credere agent is an agent who in consideration of extra remuneration called a del credere commission, guarantees to his principal that third persons with whom he enters into contracts on behalf of the principal shall duly pay any sums becoming due under the contract. See also Ijeboi v. Epokai (Unreported).

In this case, the court observed that where a party enjoys legal rights over property, which is subject to an outstanding liability due to a third party, a guarantee given by the said party to the third party in order to relieve the property of this liability or encumbrance is not covered by the Statute of Fraud.

In this case, the court observed that a contract in writing which is required by law to be in writing, can be rescinded by oral agreement, but it can only be varied by an agreement in writing. See also Goss v. Nugent (1833) 5 B. & Ad. 58; Vezey v. Rashleigh (1904) 1 Ch. 634.

It is trite law that any transaction involving the sale of land or the transfer of an interest in land should be in writing; or a note or memorandum of it should be in writing. Thus, an oral agreement involving the transfer of an interest in land is not enforceable. The legal position can be seen in plethora of cases, Statute of Fraud and other Statutes. It is important to note that land subject to customary law does not necessarily need the requirement of being in writing in other to transfer valid interest to another party.

In this case, the court held that in a lease agreement, the date of commencement is a major term and failure to put it in a memorandum would mean non-compliance with the Statute of Fraud. See also U.B.A. V. Tejumola & Sons Ltd. (1988) 2 NWLR (Pt. 79) 662.

In a sale of Land transaction, for a memorandum to be accepted by the court as a sufficient memorandum it must contain the names of the parties. Furthermore, it must identify the parties and the capacity in which each of them is taking part in the contract. For instance, it must be clear that Jackson is the vendor and that George is the purchaser. Nonetheless, in this case the court held that descriptions such as "proprietor" or "trustee" selling under a trust for sale are equally acceptable. NOTE: it is much better to stick to the universally recognized and accepted terms like "vendor" and "purchaser", in order to avoid ambiguity and confusion.

In Higgins v. Senior (1841) 8 M. & W. 834, the court held if any of the two parties under the memorandum of sale of land is acting as an agent for someone else, this should be so stated. But failure to disclose this fact, and the name of the principal, does not affect the validity of the document as a sufficient memorandum. See also Calder v. Dobell (1871) L.R. 6 C.P. 486. The Privy Council held in Abdul Karim Basma v. Weekes that even where an agent enters into contract in his own name, if the other party is aware of the fact that he is merely acting as an agent, the Statute would still have been satisfied.

In this case, the court observed that as an important requirement, the identity and description of the land must be contained in the agreement. Absolute precision is not essential though. All that is necessary is sufficient information to enable the parties identify the subject-matter.

It is trite that a memorandum or note of an agreement must contain a statement of the consideration. There is no requirement that the sum of money or other type of consideration must be referred to in exactly those terms. Any form of words indicating that a stated sum of money is the consideration will be adequate.

There are other numerous material terms aside terms of parties, consideration and subject matter, which vary according to the type of contract. For instance, the material terms for lease, e.g., commencement, duration and vacant possession.

Here, the court held that where a material term is inserted for the benefit of one party, he may waive it if it is not of major importance and enforce the contract without the term in question. See also Scott v. Bradley (1971) 1 Ch. 850. This does not include the three major terms; the parties, the subject matter and the consideration.

In this case the court held that the form of the document for sale of land need not have been prepared as a note or memorandum. Any writing which contains the requisite material terms will be sufficient. In Rosenje v. Bakare (Supra), the court accepted a receipt as sufficient memorandum, for it contained all the material terms. Other examples are; Letter written to a third party, see Gibson v. Holland (1865) L.R. 1 C.P. 1; 13 l.t. 293; the minutes of meeting of the board of directors of a company, see Jones v. Victoria Graving Dock Co. (1877) 2 Q.B.D. 314; a letter written by the defendant's solicitor to the plaintiff's solicitor, see Law v. Jones (1974) Ch. 112; (1973) 2 W.L.R. 994.

In accordance with the general rule of procedure, a memorandum should come into existence before an action can be commenced to enforce the contract. Nonetheless, in the case of Hardy v. Elphick (1974) Ch. 65, the court accepted as a sufficient memorandum the document that emerged as a memorandum after the commencement of the action.

The signatory requirement as to signature is satisfied by any representation of the party's name on the alleged memorandum which clearly intends to authenticate the document as recording his undertaking. The court in this case held that a signature need not be at the foot of the document, but may be either in the body or at the beginning.

In Chichester v. Cobb (1866) 14 L.T. 433, the court accepted the initials of parties as sufficient signature. Also a signature made using a pencil or a mark has been held to be a sufficient signature. See Hill v. Hill (1947) Ch. 231 at p. 240. If a party draws up an agreement in his own handwriting stating: "I, Ola Maduku" that is sufficient signature. See Knight v. Crockford (1794) 1 Esp. 190; 5 R.R. 729. In Leeman v. Stocks (1951) Ch. 941, an agent's insertion of his principal's name was accepted as the principal's signature.

Here, the name of the vendor was printed in the heading of an invoice sent by him to the buyer, and this also contained the particulars, qualities and prices of the goods sold. The printed name was held to be sufficient signature to bind the vendor.

An agent may sign for his principal if he is authorized and his authority to act as agent need not be in writing. See Herd v. Pilley (1869) 4 Ch. App. 548. Furthermore, the principal may be undisclosed. See Garaghan v. Edwards (1961) 2 Q.B. 220.

Under specified conditions, several documents containing different parts of an agreement can be joined together to constitute a sufficient memorandum. This can be done where the document signed by the party to be charged, i.e., the defendant, expressly or by implication refers to another document or documents. If the contents of these documents when added together contain all the major items of the contract, i.e. parties, subject-matter and consideration, the documents could be joined together and would constitute a sufficient memorandum.

The court in this case held that where a signed document does not contain the terms of the agreement, but refers to another document which is unsigned, but which contains the terms of the contract, oral evidence may be given for the purpose of identifying the latter as being the document referred to by the former. See also Long v. Millar (1879) 48 L.J. Q.B. 596; Shittu v. Mbonu (1995) 4 NWLR (Pt. 389) p. 341; Ali Sage v. Northern States Marketing Board (1973) 3 U.I.L.R. 119.

However, in some cases where the document signed by the defendant made no reference to the other document or documents, the courts have refused the joinder of the documents even though the connection between them could have been established by oral evidence. See Timmins v. Moreland Street Property Co. Ltd. (1958) Ch. 110; (1957) 3 All E.R. 265. It should be noted that oral evidence cannot be given to amplify an incomplete memorandum, although it may be given to identify the subject-matter of a promise. See Fitzmaurice v. Bayly (1860) 9 H.L.C. 78; Apara v. U.A.C. (1951) 20 N.L.R. 17.

In this case, the court held that in order for a memorandum to be of sufficient compliance with the Statute, it must not only contain all the essential terms of the contract, but must also show that the parties have agreed to those terms.

By oral agreement, the first defendant in this case agreed to sell eight plots of land to the plaintiff. On the plaintiff failing to pay the purchase price, the first defendant proceeded to sell the plots of the land to the second defendant without first obtaining recession of the contract. The plaintiff now sued the defendants claiming damages for breach of contract and alternatively for specific performance.

The court considered the absence of any written contract or memorandum on the agreement. After stating the principle of law that no action may be brought upon any contract for the sale of land or any interest in land unless the agreement upon which such action is brought or a memorandum of it is in writing. The court held that since the defendant did not specifically plead the requirements of the Statute, oral evidence was admissible to establish the existence of a contract of sale.

In this case, the court observed that although a party to an unenforceable contract may not be able to sue on it, even indirectly, he could successfully rely on it as a defence if sued in certain circumstances.

The Effect of an agreement which fails to comply with the Statute of Frauds and similar Statutes in Nigeria is that such an agreement becomes unenforceable but nor void or voidable. As an unenforceable contract is not a void contract, money or property transferred under it cannot be recovered back. Thus, a purchaser who pays a deposit under an oral contract to buy land or lease or rent property cannot recover his money if he repudiates the contract.

Where it is the vendor who repudiates the oral contract, however, the purchaser will be entitled to recover the deposit for total failure of consideration.

This doctrine is of the view that where a party to an oral contract has performed his own part of the contract, in the expectation that the other party would perform the rest of the contract, the court will not allow the latter to escape his contractual liability by pleading non-compliance with the Statute, but will order specific performance. The principle is that one party may not set up the Statute where the other has been induced to act to his detriment on the strength of the oral contract.

In this case, the court held that such an oral agreement is not only enforceable in equity under the rule in Walsh v. Londale (1882) 21 Ch.D. 9, but was also enforceable on the ground that there had been part-performance on the part of the one party. See also Maddison v. Alderson (1883) 8 A.C. 467; Obijiaku v. Offiah (1995) 7 NWLR (Pt. 409) p. 510 at 520; Mba-Ede v. Okafor (1990) 2 NWLR (Pt. 135) p. 787.

The doctrine is not applicable to a situation unless there has been a prior oral agreement to which the alleged acts of part-performance are directly referable. Thus, the acts of part-performance must constitute the implementation of a prior oral agreement.

In this case the court observed that where the plaintiff carries out his acts of performance unilaterally, out of kindness, charity, in hope of a complementary response from the defendant, or for any other motive, the courts will not apply the doctrine, even if subsequently the defendant, either expressly or implicitly, promise some reward or consideration in return for the plaintiff's performance.

In this case the court held that if the acts of part-performance were referable to some and are consistent with the contract alleged, that is sufficient to establish part-performance. It is not necessary for such acts to be referable or be consistent solely and exclusively with the contract alleged. The fact that they could also be consistent with other agreements is immaterial. See also Wakeham v. Mackenzie (1968) 1 W.L.R. 1175; (1968) 2 All E.R. 783.

The court held in this case that the acts of part-performance must be such as to render it a fraud in the defendant to take advantage of contract not being in writing.

The contract to which the acts of part-performance refer must be such as in its own nature is enforceable by the court, i.e., it must be of a nature that attracts the remedy of specific performance. In this case, the court held that the remedy of specific performance is not applicable when the constant supervision of the court would be necessary to ensure compliance with the decree. Other circumstances which the remedy may not be applicable are: (i) when damages would be an adequate remedy; (ii) in respect of contracts of personal service; and (iii) if the obligations of both parties are not equally enforceable, e.g., if the plaintiff is an infant.

The court observed that part payment of purchase price is not part-performance. For payment of money is an equivocal act not by itself indicative of a contract concerning land. Nor is payment of rent in advance accepted as an act of pert-performance. In such cases, injustice is prevented by allowing the plaintiff to recover his payment as money received without consideration.

At common law, proof of mistake makes the contract void ab initio. Thus, a party who had paid money under such a contract may recover it under action for money paid and received to his use. The result could, therefore, be very devastating to innocent third parties who have paid money towards the acquisition of the subject matter of the contract.

In recent times, suggestion have been made that any loss arising out of mistake should be apportioned between the two victims, viz, the party originally defrauded and the innocent third party buying from the rogue in ignorance of the fraud. See Lord Devlin's judgment in Ingram v. Little (1961) 1 Q.B. 31; (1960) 3 All E.R. 332.

In this case the court observed that when it is alleged that there has been a common mistake, what is meant is that both parties to the contract concluded it under the same (common) mistake or misapprehension about some fact which lies at the basis of the agreement. Both parties acted in the erroneous belief that a certain state of facts was in existence at the time the agreement was reached. Their mistake was, there, "common" in a double sense: (i) they were both mistaken, (ii) about the same thing.

It is trite that a mistake as to the existence of the subject-matter of a contract renders such a contract void. This view was followed in section 6 of the Sale of Goods Act 1893 which provided as follows:

"Where there is a contract for the sale of specific goods and the goods without the knowledge of the seller, have perished at the time the contract is made, the contract is void."

In Barrow, Lane v. Philips & Co. Ltd. (1929) 1 K.B. 574., the court observed that the contract will equally be void if in addition to the seller, the buyer was also ignorant of the fact that the goods were no longer in existence at the time of the conclusion of the contract. See also Strickland v. Turner (1852) 7 Exch. 208.

A separation deed between a husband and wife was declared void when it was discovered that their marriage was void.

In this case, the contract was entered into by both parties on the belief that there was a valid marriage between the parties. Also in Griffin v. Brymer (1930) 19 T.L.R. 434, an agreement to hire a room for the purpose of watching the coronation ceremony of King Edward the seventh was held to be void, when unknown to the parties, the ceremony had been cancelled at the time the contract was concluded.

Where in a contract of sale, the seller is unable to transfer the title and property in the subject-matter because the latter, unknown to both parties already belongs to the purchaser or a third party, the contract would be void for mistake.

In this case where party A agreed to take a lease of a fishery from party B, though contrary to the belief of both parties at that time A was the real owner of the fishery, and B had no title to it at all, it was held by the House of Lords that the agreement should be set aside for having been concluded on the basis of a common mistake. See also the case of Abraham v. Chief Oluwa 17 N.L.R. 123.

Here, the court observed that if parties enter into an agreement with reference to a supposed state of things and it turns out that by mutual mistake of the parties the supposed actual state of things does not in fact subsist, the consideration for the agreement fails and the agreement is consequently void.

Criticizing this view, the High Court of Australia in McRae v. Commonwealth Disposals Commission (1951) 84 C.L.R. 377, held that it is a matter of construction whether an agreement is such circumstances is void or valid.

The court in this case observed that whilst a mistake as to the substance of the subject-matter of the contract could give rise to mistake in law, a mere mistake as to the quality of the subject-matter cannot invalidate a contract.

The fact of this case is that the defendants agreed to sell to the plaintiff a cow, known as "Rose 2nd of Aberlone", for 80 dollars. The defendants believed the cow to be barren, but before she was delivered to the plaintiff they discovered that she was carrying a calf. As a breeding cow, she was now worth 750-1,000 dollars and the defendants refused to deliver her.

The majority of the court held that the parties contracted on the understanding and belief that the cow was incapable of breeding and of no use as a cow; that the mistake of the parties was not of the mere quality of the animal "but went to the very nature of the thing". There being as much difference between them as between an ox and a cow. The action, therefore, failed.

In several more cases, the court has held that mistakes as to quality invalidates the contracts. Cases like Durham v. Legard (1865) 34 Beav. 611; Bell v. Lever Bros. Ltd. (1931) 1 K.B. 557 at p. 597; Nicholson v. Smith-Marriot (1947) 177 L.T. 189.

In determining whether there is mutual mistake rendering the contract void, the court adopts an objective test. It considers the statements and conduct of the parties and all relevant documents and transactions. If all these, taken together, point to the existence of a contract as alleged by one of the parties, the court will enforce the contract on those terms irrespective of the motive or subjective intention of the parties.

In other-words, the court bases its decision on the external appearance of things, and ignores all subjective factors. If on the other hand all these external factors do not point to the existence of one contract, but to two or more possible interpretations of what transpired between the parties, then there can be no contract. The agreement will be void for mutual mistake. See Riverlate Properties v. Paul (1975) Ch. 133; (1974) 2 All E.R. 656, C.A.

The burden of proving mistake is on the person alleging it, and inconsistency or equivocation is fatal to such a person's case.

Where, however, the parties are genuinely at cross-purposes about the subject-matter of the contract and terms of the offer and acceptance are so ambiguous that it is not possible to point to the one or the other of the conflicting assertions of the two parties as the more probable, the court will hold that the contract is void for mistake. See also Danny v. Hancock (1870) L.R. 6 Ch. App. 1; 23 L.T. 686.

In a unilateral mistake only one party is enters into the contract under a mistake and the other party either knows or is presumed to know that the first party is indeed laboring under a mistake. With regard to the person making the mistake, the test of mistake is subjective. In other words, what the law takes into consideration is his actual belief and intention, not what a reasonable man in his position would have thought or believed.

However, with regard to the other party, where he himself did not induce the mistake of the first party, he is nevertheless presumed to be aware of the mistake if it would have been obvious to a reasonable man in the circumstances. See also Abdul Yusuf v. Nigerian Tobacco Company (Suit No. CAS/39/34) Western State Court of Appeal.

The presumes that a person intends to contract with the party with whom he has apparently contracted, and the burden is on the party alleging mistake to establish that there was indeed a mistake of identity of such a nature as to nullify the contract. Where the contract is made orally inter praesentes, the position of the party alleging mistake is even more difficult.

In this case, Pearce, L.J., put it thus:

"The offer is apparently addressed to the physical person present. Prima facie, he, by whatever name he is called, is the person to whom the offer is made. His physical presence identified by sight and hearing preponderates over vagaries of nomenclature."

It is trite that for a plea of unilateral mistake as to identity to succeed, the mistaking party must establish that he intended to contract with someone other than the person he apparently contracted with, otherwise he cannot complain of mistaken identity. It is important to note that issues may still arise in some unexpected circumstances affecting this principle.

Here, a rogue, by the name Wallis, used a fictitious name, Hallam & Co., to order goods from the plaintiff company. The plaintiffs sent him the goods, and he promptly sold them to the defendants without first paying for them. The defendants bought the goods without knowledge of Wallis' fraud. When Wallis could not be traced, the plaintiffs brought an action to recover the goods from the defendants, claiming that their contract with Wallis was void for mistake as to identity. They had intended to contract with Hallam & Co. not with Wallis.

The court held that since Wallis and Hallam & Co. were one and the same person, the plaintiffs could not plead that they intended contracting with someone other than the rogue.

In such circumstance, the law is that a person cannot constitute himself a contracting party with one whom he knows or ought to know has no intention of contracting with him. An offer can only be accepted by the person to whom it is addressed.

However, what happens in a situation where a party is unaware that an offer is not directed to him?. In Upton-on-Severn R.D.C. v. Powell (1942) 1 All E.R. 220, the court held the defendant liable, where the defendant intending to summon a particular fire brigade mistakenly summoned another, and the latter in accepting to act, acted reasonably and in ignorance of the defendant's true intention.

In this case, Pearce L.J., stated thus:

"If a man orally commissions a portrait from some unknown artist who had deliberately passed himself off, whether by disguise or merely verbal cosmetics, as a famous painted, the impostor could not accept the offer. For though the offer is made to him physically, it is obviously, as he knows, addressed to the famous painter. The mistake in identity on such facts is clear and the nature of the contract makes it obvious that identity was of vital importance to the offeror. At the other end of the scale, if a shopkeeper sells goods in a normal cash transaction to a man misrepresents himself as a well-known figure, the transaction will normally be valid. For the shopkeeper was ready to sell good for cash to the world at large and the particular identity of the purchaser in such a contract was not of sufficient importance to override the physical presence identified by sight and hearing. Thus the nature of the proposed contract must have a strong bearing a hearing the question of whether the intention of the offeror (as understood by his offeree) was to make his offer to some other particular identity rather than to physical to whom it was orally offer."

According to this case, the circumstances in which courts will grant equitable relief in cases of mistake in contracts are:

a. Where the mistake is common or mutual, then it must be of a material nature, i.e., not flimsy or minor;

b. Where the mistake is unilateral, then it must have been induced by the misrepresentation of the other party or the latter must have constructive knowledge of the mistake;

c. It must be inequitable for the party seeking to uphold the contract to rely on his strict rights at common law.

Although a mistake may not be void at common law because it is not sufficiently fundamental, the court will nevertheless set is aside if it will be unfair, or create undue hardship, or if one of the parties (the party requesting enforcement of the contract) ought to have known the other was mistaken.

Here the Court of Appeal set aside a contract for mistake even though the mistake was not one as to the subject-matter of the contract. In Solle v. Butcher (1950) 1 K. 671 at p. 692, it was evident that in setting aside such contracts, the courts quite often attached to the rescission such terms as justice may require in order to put the respective parties back in as good a position as each of them was before entering into the defective agreement.

Another form of equitable relief is the courts' refusal to grant specific performance. Where a mistake is not sufficiently fundamental to render a contract void at common law, the court may nevertheless refuse to grant specific performance of the agreement in the interest of justice, or in order to mitigate the hardship which the party resisting specific performance will suffer.

Specific performance will also be refused where one party, to the knowledge of the other, makes a mistake as to the terms of the contract, and the other takes advantage of the mistake by accepting the offer. See Abdul Yussuf v. Nigerian Tobacco Company (CAS/39/74) Western State Court of Appeal.

The Power to grant or not grant specific performance of a contract is a matter for the court's discretion. In exercising this discretion, however, the court weigh the hardships caused by granting specific performance against the uncertainty caused by refusing it. In Tamplin v. James (1880) 15 Ch. D. 215 at p. 217, Baggallay, L.J. stated a circumstance under which a court of equity should refuse specific performance of an agreement entered into by the defendant under a mistake, thus, "where injustice would be done to him were performance to be enforced".

In this case, Cecil, who had already refused to sell his land to Webster for 2,000 Pounds, mistakenly wrote to the latter offering to sell it for 1,500 pounds, instead of 2,500 pounds which he had intended. The plaintiff now sought specific performance of the contract. This was refused because since Webster was presumed to have known of the mistake, it was unconscionable of him to seek to enforce the contract against Cecil. See also Malins v. Freeman (1837) 2 Keen 25.

The court in its equitable jurisdiction may allow a written agreement to be rectified either to exclude a term wrongly or mistakenly included or to include a term wrongly left out. It may also order the specific performance of the agreement as rectified. The essence of such rectification is to bring the written agreement in harmony with the prior oral agreement. See also Craddock Bros. v. Hunt (1923) 2 ch. 136.

It is important to note that before rectification can be obtained; there must have been a prior and complete agreement which had been incorrectly put down in writing. Thus, if the written agreement accurately records the terms of the prior oral agreement, there can be no rectification merely because the prior oral agreement was mad under a mistake. This is expressed by stating that the court will only rectify an instrument, and not an agreement. See Riverlate Properties Ltd. v. Paul (1975) Ch. 133; (1974) 2 All E.R. 656, C.A.; Frederick Rose v. William Pim (1953) 2 Q.B. 450.

It is not necessary that the prior oral agreement should have been a legally binding one. It is sufficient if it was complete even though it was not legally binding. In this case, the court held that an initialed slip, prepared by an underwriter getting out a summary of the essential terms of an insurance policy could be rectified, when the subsequently executed policy was at variance with the slip. See also Joscelyne v. Nissen (1970) 2 Q.B. 86.

It is trite law that a person is bound by the contents of a document signed by him. Whether he read it or not, unless it is procured by fraud or misrepresentation. See also George Chagoury v. Adebayo 3 U.I.L.R. 532.

In this case the court observed that where a person is induced by fraud to sign a document containing a contract radically different from that which he contemplated, he is allowed to deny liability of the contract by pleading "non est factum" in any action brought against him to enforce the contract. Lord Byles stated that such a contract is invalid. He further held thus:

"...not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign, and therefore in the contemplation of the law never did sign the contract to which his name is appended".

From the decision of the court in this case, it is clear that a person making a plea of non est factum must fulfill two essential conditions:

i. The document which he actually signed must be of a different class or nature from the one he had intended to sign, and

ii. He must not have been negligent in signing the document. This means that where the person signing was misled, merely as to the contents of the document signed and not as to its character, class, or nature, a plea of non est factum would fail. See also Howatson v. Webb (1907) 1 Ch. 537.

In this case, the court observed that where the person signing was misled, merely as to the contents of the document signed and not as to its character, class, or nature, a plea of non est factum would fail. See also Oluwo v. Adewale (1964) N.M.L.R. 17, S.C.

It is important to note that the distinction between character and class on the one hand and contents on the other hand no longer represents the law on this aspect of non est factum.

The court stated the new test for the applicability of the rule of non est factum. For non est factum to be successfully pleaded, the mistake must be of radical, fundamental or serious or very substantial difference between what he signed and what he thought he signed. See also Awosile v. Sotunbo (1992) 5 NWLR (Pt. 243) 514.

The modern rules of non est factum was laid down by the House of Lords in the case of Gallie v. Lee (1969) 2 Ch. 31-32. It has been followed in several decision ever since as in this case. See also United Dominion's Trust Ltd. v. Western (1976) Q.B. 513; (1976) 2 W.L.R. 64.

The other condition which must necessarily be shown for a successful plea of non est factum is the absence of negligence of the part of the party pleading it. Any evidence of negligence on the part of the person signing the document is fatal to his plea.

For instance, in this case the plaintiff brought a claim for ownership of a piece of land, and sought for an order of injunction to restrain the defendant from trespassing on the land. The plaintiff claimed that he had bought the land from one Williams in 1957 and had obtained a deed of conveyance for it. The defendant, who was the building on the land, claimed that Williams was at the relevant time (1957) his caretaker in respect of the land. He denied conveying the land to Williams, arguing that he had merely signed a document represented to him by Williams as an acknowledgment of the loan of 100 pounds which he had earlier received from the said Williams.

Apart from disbelieving the defendant's story, the court held that even if this account had been true, his plea of non est factum would still have failed because of his negligence. Since he did not take the trouble to read the document placed before him by Williams before signing it, he could not be heard to say that it was not his document.

In this case, the House of Lords held thus:

"...whenever a man of full age and understanding, who can read and write, signs a legal document, which is put before him for signature- by which I mean a document which, it is apparent on the fact of it, is intended to have legal consequences- then, if he does not take the trouble to read it but signs it as it is, relying on the word of another as to its character or contents or effect, he cannot be heard to say it is not his document. By his conduct in signing it, he has represented to all those into whose hand it may come, that it is his document; and once they act upon it as being his document, he cannot go back upon it, and say it was a nullity from beginning."

Lord Pearson liberalized the rule prescribed by Lord Denning by adding that the plea should be available for the relief of a person:

"...who for permanent or temporary reasons (not limited to blindness and illiteracy) is not capable of both reading and sufficiently understanding the deed or other document to be signed. By sufficiently understanding I mean understanding at least to the point of detecting a fundamental difference between the actual document and the document as the signer had believed it to be."

A misrepresentation is an untrue statement made by one party (to a contract) to the other before or at the time of contracting, with regard to some existing fact or to some past event which is one of the causes that induced the contract.

According to the court in this case, if two people enter into a contract if one of them for the purpose of inducing the other to enter with him, states that which is not true, in point of fact which he knew at the time to be untrue, and if upon the false statement the contract is entered into by the other party, then generally an action at law is open to the latter for damages upon the deceit and there will be a relief in equity to the same party to escape from the contract.

Where a representor uses the words, "I think", or "I believe", or "I plan to", these constitute statements of either opinion or intention and cannot be liable for misrepresentation if his belief or opinion or intention turns out to be wrong or if for some unseen reasons he fails to carry out his intentions.

However, in certain circumstances, a statement of opinion or intention can constitute misrepresentation. For instance, where it is established that the person expressing the opinion (the representor) did not honestly hold it or could not as a reasonable man have honestly held it. See also Smith v. Land and House Property Corporation (1884) 28 Ch.D. 7. In the words of Bowen, L.J., thus:

"The state of a man's mind is as much a fact as the state of his digestion. It is true that it is very difficult to proves what the state of a man's mind at a particular time is, but. If it can be ascertained, it is as much a fact as anything else. A misrepresentation as to the state of a man's mind is, therefore, a misstatement of fact".

As in the case of a statement of opinion, a statement of intention will constitute a misrepresentation if at the time of making it the representor had no intention of putting it into effect; for the representor's state of mind was not what he led the other party to believe it to be.

In this case, the court observed that where a statement of opinion is made in good faith, the representor cannot be liable for misrepresentation merely because the statement turns out to be incorrect.

It is trite that a statement of law cannot constitute a misrepresentation. But as in the case of opinion, a willful misstatement of law will constitute misrepresentation. Where law is stated in the abstract it cannot as a general rule constitute misrepresentation if the statement is wrong. But where it is both stated and applied to fact, it would constitute misrepresentation if it is wrongly applied.

Whereas a false statement of fact inducing the representee to enter into a contract constitutes a misrepresentation, the position is entirely different if the representator was merely silent whilst the representee was acting on a wrong assumption. This is expressed by stating that a contracting party is under no duty to disclose material facts known to him, but not to the other party.

Here the plaintiff agreed to sell his shares in a company to three directors of that company. After the sale, he then discovered that at the time he agreed to sell his shares to the directors, there was a standing offer by a third party to buy the company's shares at a much higher rate than he got from the directors and that the latter had intended selling the shares they bought from him to that third party. In an action for rescission brought by the plaintiff on the ground of misrepresentation (i.e., failure on the part of the directors to disclose the favourable offer made by the third party).

The court held that there was no fiduciary relationship between the directors and the plaintiff and there was, therefore, no duty to disclose. See also Fletcher v. Krell (1872) 42 L.J. Q.B. 55, where an applicant for the post of governess was held not obliged to disclose that she was a divorcee, and her failure to so disclose did not constitute a misrepresentation. This position was also held in the cases of Moriamo Ode v. J.F. Sick & Co. (1939) 15 N.L.R. 4; U.A.C. v. Paul Jazzar (1940) 6 W.A.C.A. 208.

In this case, the court observed that a tacit acquiescence in another's self-deception does not constitute misrepresentation, provided it was not caused by a positive misrepresentation; for a positive assertion which turns out to be false will immediately destroy the party's entitlement not to disclose.

Apart from the question of positive misrepresentation, there are various other exceptions to the rule that non-disclosure cannot constitute misrepresentation. These include:

a. Contracts uberrimae fidei (contracts in which only one party possesses full knowledge of the material facts. e.g., a contract of insurance);

b. Fiduciary relationships (e.g., solicitors and client, parent and child);

c. Family settlements;

d. Where failure to disclose distorts a positive representation.

Although complete silence about a matter which might have influenced the decision of the representee whether to enter into the contract or not, does not amount to a misrepresentation, a partial disclosure will. If what the representor holds back or fails to disclose has the effect of distorting the part disclosed.

For instance, in this case the defendant who was negotiating with the plaintiff to sell his (defendant's) medical practice to the plaintiff, informed the latter in January 1934 that the practice was worth 2,000 pounds per annum. By May of the same year when the contract was signed, the defendant was seriously ill and the receipts had fallen considerably, and he was now earning only 5 pounds per week. He did not inform the plaintiff of this change in the practice. The court held that the defendant ought to have communicated the change in his circumstances to the plaintiff. See also Curtis v. Chemical Cleaning & Dyeing Co. Ltd. (1951) 1 K.B. 805; (1951) 1 All E.R. 631. A statement will constitute a misrepresentation even if though literally true, implies certain additional facts which are themselves false. See Notts Patent Brick and Tile Co. v. Butler (1886) 16 Q.B.D. 778.

Although silence does not constitute misrepresentation, if a person, though not speaking, conducts himself in a manner which suggest that a particular state of affairs exists, that person would be guilty of misrepresentation if the conduct turns out to be misleading. In other words, conduct may be intended to convey information precisely in the same way as the written or spoken word.

In D.P.P. v. Ray (Ray v. Sempres) (1974) A.C. 370, the court held that a person who sits in a restaurant and orders a meal impliedly represents that he has the means to pay. Furthermore, the doctrine of misrepresentation by conduct has in current times been extended to the use of cheques and credit cards. In R. v. Lambie (1981) 1 W.L.R. 78, the court held that use of credit card to purchase goods amounts to a representation that the user has the authority of the credit card company to use the card.

Contracts Uberrimae fidei (of utmost good faith) are those in which one party of necessity possesses full knowledge of the material facts.

As an exception to the non-disclosure rule, there is a duty to disclose in family arrangements, for example, in matters of inheritance and succession. For instance, in this case which involved the division of property, based on the assumption that the eldest son was illegitimate, was set aside after nineteen years on proof that the younger son had withheld knowledge of a marriage ceremony that had taken place between his parents before the birth of the eldest son; which meant that the eldest son had been legitimate all along.

In this case, the court observed that because of the laws on partnership which make the partners severally and jointly liable for all the debts and obligations of the partnership, it is the fundamental duty of all partners to show the utmost good faith in their dealings with each other.

Here, the court held that a partner must account for any private profit made by him from the joint venture.

The duty to disclose arises between persons within a fiduciary relationship in all cases of fiduciary relationship, the law assumes that one person is in a superior position to the other and the trust and confidence of that other reposed in him.

The party in the superior position is, therefore, in a position to take advantage of the other party in a contract between the two, the court will declare the contract voidable and, therefore, susceptible to rescission by the other party if the terms are regarded by the court as being unfair to him. Thus, an absence of honesty is not essential. Failure to disclose a material fact which would have been favourable to the second party is sufficient.

In this case the court held that there are three classes of representees, namely;

a. A person to whom the representation is made and his authorized agents;

b. Persons to whom the representor intended the representation to be passed on; and

c. Members of a class at which the representation is directed, e.g., the public at large or a particular class.

In order to succeed in an action for misrepresentation, the plaintiff must establish that the statement was made by the defendant or his authorized agent. Here the plaintiff bought a company's shares in the market (i.e., from existing shareholders) in reliance on the terms of a fraudulent advertisement by the promoters of the company.

In an action brought by the plaintiff for misrepresentation, the House of Lords held that the plaintiff could not recover his money from the promoters. According to the court, the purpose of issuing a prospectus (the advertisement) was to induce people to apply for new shares being issued by the company and not to induce them to buy shares from existing shareholders. Therefore, since the plaintiff did not apply for shares directly from the company, he could not show that he came within the class of persons at whom the advertisement was directed. Nevertheless, where the representor is fully aware that the message is being passed from a representee to a third party, the representor will be held liable for misrepresentation. See Pilmore v. Hood (1838) 5 Bing. N.C. 97. It would have been different if the defendant was unaware that the representation was passed on or was going to be passed on to a third party. The misrepresentation would have been regarded as spent. See Gross v. Lewis Hillman Ltd. (1970) Ch. 445 at p. 461.

In this case, the court held that a misrepresentation does not become a ground for rescission unless it is intended to cause and in fact causes the representee to enter into the contract. It is the said representee that bears the burden of proving the alleged lies of the representor. The court further held that a misrepresentation cannot be said to have affected the mind of the representee because he was unaware that such misrepresentation had been made in the first instance. Other circumstances in which a misrepresentation may not be held to have induced the representee are:

i. Where the representee was fully aware of the misrepresentation but he had not been influenced by it. See Smith v. Chadwick (1884) 9 App.Cas. 187; Attwood v. Small (1838) 6 Cl. & F.232

ii. Where the representee knew that the representation was false.

In this case, the court held that in attempting to prove misrepresentation, it is essential to establish that the representation induced the party to whom it is made to enter into the contract.

The court further held that where a representee continues with the contract after becoming aware of the misrepresentation, he would be held to have waived the misrepresentation. Thus, where the representee having discovered the misrepresentation, either expressly or by conduct, proceeds with the contract for which he has suffered such misrepresentation, he is deemed to have waived his right to resile from it and is bound by it.

Where the representee was aware of the representation, it cannot afford him a ground for relief if he was in no way influenced by it.

In this case, the prospectus of a company contained a false statement to the effect that an important person was on the board of directors of the company. The plaintiff in action for misrepresentation admitted under cross-examination that he had in no way been influenced by the false statement. It was held that in the absence of inducement, he could not succeed in action for misrepresentation.

In this case, the court held that a person cannot succeed in an action for misrepresentation where he or his agent, acting within the scope of his authority, knew the true facts and must, therefore, have been aware that the representation was false.

In this case, the court observed that the misrepresentation which induced the representee to enter into the contract need not be the sole factor. It may very well be that several factors were responsible for inducing the representee into the contract. Provided the representation is one of these factors, the representee has a good cause of action if the statement turns out to be false.

A misrepresentation has no effect unless it is material, in the sense that it must be one that would affect the judgment of a reasonable man in deciding whether, or on what terms, to enter into the contract.

In this case the court observed that in a contract of insurance, whether the subject-matter has been grossly overvalued is a material term. Other circumstances which been decided by court as material terms are:

i. In a contract of loan, whether the lender is a notoriously ruthless money-lender; see Gordon v. Street (1899) 2 Q.B. 641.

ii. In a contract of insurance, whether a previous proposal has been turned down. See Locker & Woolf Ltd. v. Australian Insurance Co. Ltd. (1936) 1 K.B. 408.

In this case the court observed that once a representation is directed at the representee or at a group or class to which he belongs, it is no defence that the representor never in fact intended that he should act on it. The subjective intention of the representor is irrelevant once all the conditions constituting misrepresentation exist.

Also the court held that issues of materiality cannot arise in cases of fraudulent misrepresentation. See also Smith v. Kay (1859) 7 H.L.C. 750; 11 E.R. 299.

It has been a reoccurring question to know how long a misrepresentation remains potent and also, at what stage can it be regarded as spent, so as to disentitle anyone from further bringing an action on it.

The court answered these questions when it held that misrepresentation is a continuing phenomenon. In Lord Cranworth words; "The representation does not end forever when (it) is made; it continues on." See also Oluwo v. Adewale (1964) N.M.L.R. 17 S.C.

The Supreme Court, Lord Tucker, stated the principle to be applied in deciphering when a mispresentation is spent. According to the Law Lord, misrepresentation is spent:

"Where there is an appreciable interval between the date when the misrepresentation is made and the date when it is acted upon, and representation relates to an existing state of things the representor is deemed to be repeating his representation at every successive moment during the interval, unless he withdraws or modifies it by timely notice to the representee in the meantime".

In this case, Lord Herschell defined fraudulent misrepresentation as a false statement made knowingly, or without belief in its truth, or recklessly, careless whether it is true or false. Once fraud is established, the motive of the person guilty of it is immaterial. The statement constitutes fraudulent misrepresentation whether or not there was an intention to cheat or injure the person to whom the statement was made.

In further elaboration of the definition of fraudulent misrepresentation, Lord Omololu J., stated that mere non-belief in the truth of a representation was as indicative of fraud as positive dishonesty. He continued by adopting a passage from Halsbury's Laws of England, thus:

"...It may now be taken as established beyond all question that, whenever a man makes a false statement which he does not actually and honestly believe to be true, that statement is, for purpose of civil liability, as fraudulent as if he had stated that which he did not know to be true, or knew or believed to be false. Proof of absence of actual and honest belief is necessary to satisfy the requirements of the law, whether the representation has been made recklessly or deliberately; indifference or recklessness on the part of the representor as to truth or falsity of the representation affords merely an instance of absence of such a belief."

In Reese Silver Mining Co. v. Smith (1869) L.R. 4 H.L. 64, the court observed that mere suspicion that a representation might be inaccurate, or neglect to inquire into its accuracy, is sufficient to establish liability for fraudulent misrepresentation.

Once it is established that the representor is guilty of a fraudulent misrepresentation, it is no defence that the representee could have discovered the fraud if he had been more diligent. See also Sule v. Aromire (1951) 20 N.L.R. 20.

A negligent misrepresentation is one made carelessly, or without reasonable grounds for believing it to be true. As observed in this case, misrepresentation cannot be regarded as negligent and, therefore, giving rise to liability on the part of the representor, unless he owes a duty of care to the representee. Such a duty of care has long been recognized as existing between two people in a fiduciary relationship, i.e., moving from the person in whom trust is reposed to the person who is reposing the trust.

Here, Lord Denning held that negligent misstatement as an actionable wrong in the common law. The class of persons on who lay a duty of care with regard to statements issued by them as experts is:

"...accountants, surveyors, valuers and analysts, whose profession and occupation it is to examine books of accounts and other things and to make reports on which people, other than their clients, rely in the ordinary course of the business".

To whom this duty is owned, Lord Denning further held that apart from the person employing them with whom they have direct contractual relationship, others are:

i. Any third persons to whom they themselves (the maker of the statement or report) show the report or account; and

ii. Any persons whom they know their employer is going to show the accounts so as to induce them to invest money or take some other action on them.

According to the court, the test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him?.

The House of Lords in arriving at the conclusion in this case that there was a duty of care flowing from Heller & Partners to Hedley Bryne & Co., the court laid down the general principle in all cases of negligent misstatement thus:

"If in the ordinary course of business of professional affairs a person seeks advice or information from another, who is not under contractual or fiduciary obligation to give the advice or information in circumstances in which a reasonable man so asked would know that he was being trusted, or that his skill or judgment was being relied on and the person asked chooses to give the information or advice without clearly so qualifying his answer as to show that he does not accept responsibility, then the person replying accepts a legal duty to exercise such care as the circumstances require in making his reply; and for a failure to exercise that care, an action for negligence will lie if damages result."

Further on this principle see the Nigerian case of Imarsel Chemical Co. Ltd. v. National Bank of Nigeria (1974) 4 E. C. S. L. R. 355.

It was previously believed that the principle in Hedley Bryne's case was limited to the tort situations alone, but in this case the Court of Appeal per Denning, M.R. applied the principle to pre-contractual negligent misstatements, holding that a special relationship, giving rise to a duty of care, may subsist between the parties negotiating a contract.

The effect of misrepresentation on a transaction is that it entitles the injured person to avoid the transaction induced by the misrepresentation, for example, in the case of a contract, to have it rescinded or to recover damages for injury. It also gives rise to a defence to any action brought by the fraudulent party to enforce the contract or other transaction, but it does not make it void. It only makes it voidable.

The general rule is that the plaintiff should be restored to the position he would have been in if the misrepresentation had not been made. The presumption, therefore, seems to be that if the misrepresentation had not been made, the plaintiff would not have entered into the contract. In this case, the Court of Appeal held that the defendant, who was found liable for fraudulent misrepresentation, was bound to make reparation for all the "actual damages directly flowing from the fraudulent inducement... it does not lie in the mouth of the fraudulent person too say that the damage could not reasonably have been foreseen".

In this case the court observed that whereas a person bringing an action for fraudulent or negligent misrepresentation can sue for damages, his counterpart bringing an action for innocent misrepresentation cannot. The nearest thing to the remedy of damages for which this latter complainant can make a claim for, is an indemnity. Unlike damages, indemnity does not entail the restoration of the plaintiff to the position he would have been if the misrepresentation had not been made. This remedy is rarely available, if available it is far less satisfactory than damages; for its scope is extremely limited.

It was observed in this case that where a person is induced to enter a contract as a result of misrepresentation (not being a term of the contract), the representee is entitled to bring an action for the rescission of the contract. This is so in all cases of misrepresentation, whether fraudulent, negligent or innocent. See also Sule v. Aromire (1951) 20 N.L.R. 20; Alhaja Moriamo Are v. S.O. Idris (Unreported) Suit No. 1/124/68.

It is well-settled that the circumstance in which a transaction involving land can be rescinded, is the presence of fraud. In this case the defendant induced the plaintiff's predecessor in title to sign a document described as a deed of mortgage whereas it was a deed of an out sale of the property to the defendant.

In order to rescind, without going to court, the representee must convey the intention to the representor. The representee may either affirm or disaffirm the contract and if he adopts the latter course, give notice to the representor of repudiation and demand from him a complete restoration of the status quo.

There may, however, be circumstances in which it is either impossible or undesirable to reach the representor. In such a case, provided the representee has taken all reasonable steps to repudiate the contract, his action will be valid, in spite of the failure to notify the representee.

In this case the Court of Exchequer Chamber observed that the requirement of notice of intention to rescind to the representor is only applicable when the injured party wants to rescind extra judicially. Where he decides to take the matter to court for an order setting the contract aside, he need not first inform the representor of his intention to rescind. The latter will know about this when he is served with the writ of summons. The view that a prior notice of intention to rescind is required, even when the representee is suing in court was rejected by the court in this case. See also the decision of the Supreme Court in Oluwo v. Adewale (1964) N.M.L.R. 17 S.C. The action in court is by itself a sufficient indication of the representee's unequivocal determination to rescind the contract.

The purpose of rescission is to restore the status quo ante. There ought to be a going back and a taking back on all sides. There can, therefore, be no remedy if restitution in integrum is impossible.

In Compagnie Chemin de Fer Paris Orleans v. Leeston Shipping Co. Ltd. (1919) 36 T.L.R. 68, the court per Roche J. stated that equity does not require restitution to be complete or precise. It merely strives to achieve practical justice. Its machinery is very flexible and permits accounts to be taken, balances to be struck and adjustments to be made. Thus, in its operation of restitution in integrum, equity aims at achieving substantial, not precise, restitution. It attempts to put the parties back, not necessarily in the position they were in formerly, but in a position as good as they were in.

In this case the court observed that no matter the degree of flexibility exercisable by a court in its equitable jurisdiction, restitution in integrum would be impossible where the subject-matter of the contract had undergone a change in character. For instance, is a case of flour and bread. Here, the plaintiff was induced by misrepresentation to take shares in a partnership. On the partnership being converted into a limited liability company, it was held that rescission had become impossible. The new shares were wholly different from the original ones. See also Oakes v. Turguand (1867) L.R. 2 H.L. 325; 36 L.J. Ch. 949. What is contemplated is a change in character of the subject matter and not some form of deterioration or depreciation.

In this case the court observed that if after having discovered the misrepresentation, a representee either expressly accepts the contract or does some act inconsistent with an intention to rescind, he is bound by his affirmation. See also Western Bank of Scotland v. Adate (1867) L.R. 1 Sc. & Div. 145; Exp. Briggs (1866) L.R. 1 Eq. 483. This also applies to a person who, having been induced to take a lease of premises by misrepresentation, nevertheless continues to pay the rent on the premises after discovering the truth. See Kennard v. Ashman (1894) 10 T.L.R. 213.

But where rescission cannot be made without the co-operation of the representor, affirmation cannot be presumed merely because the representee of necessity continues to manage the business which is the subject-matter of the misrepresentation. See Kupchak v. Dayson Holdings Co. Ltd. (1965) 53 D.L.R. 2d. 482.

In this case the court held that the affirmation of a contract after misrepresentation requires full knowledge of the true facts; and in that case the subsequent signing of an agreement earlier procured by fraudulent misrepresentation was held not to constitute affirmation because the signor still did not know the true facts when he signed.

Hence, where the representee suspects that he has been the victim of a misrepresentation, he does not lose the right to rescind merely because he carries on with the contract pending the outcome of steps taken by him to verify his suspicions. See Senanayake v. Cheng (1966) A.C. 63.

In this case the court held that in contracts for the sale of goods, the right to rescind for innocent misrepresentation is lost in circumstances where the right to reject for breach of condition would have been lost due to lapse of time.

In a situation where there has been a considerable lapse of time between the date of the conclusion of the contract and the date of the commencement of the action for rescission, the latter will not be granted. Great lapse of time is at times treated as evidence of affirmation. This is particularly so in cases of sale and allotment of shares in a company, where the utmost promptness is said to be essential.

Nevertheless, where the plaintiff is ignorant of the misrepresentation, time does not begin to run until he discovers the truth. See Gillet v. Peppercorn (1840) 3 Beav. 78. But where the lapse of time is considerable, it may bar rescission in cases of innocent misrepresentation even though action for rescission is commenced immediately after the discovery of the truth, as seen in Leaf v. International Galleries (Supra). This does not apply to cases of fraud or breach of fiduciary duty.

The right to rescind a contract for misrepresentation may be barred by the intervention of third party rights. If a third party acquires an interest in the subject-matter of the contract before it is rescinded, a claim for rescission will not succeed provided the third party gave consideration for his interest and had no notice of the misrepresentation.

On the same principle, a person cannot rescind an allotment of shares in a company after the company has gone into liquidation. At that point, the rights of third parties intervene in that the assets of the company have to be collected for distribution amongst the company's creditors. See Re Scottish Petroleum Co. (1883) 23 Ch. D. 413; Oakes v. Turquand (1867) L.R. 2 H.L. 325.

It should be noted that the third party rights rule does not apply to void contracts since the transferee has no title to pass in such cases. It only applies to voidable contracts, for in such cases the transferee has a valid title until the contract is avoided.

It was held that an innocent misrepresentation as to title affords no ground for the rescission of an executed contract of freehold land. Generally, where there is innocent misrepresentation in executed contracts, there can be no rescission after the contract has been performed or executed. See also Angel v. Jay (1911) 1 K.B. 666.

Duress at common law meant actual violence or threats of violence to the person, or to his personal freedom, i.e., threats calculated to produce fear of loss of life or bodily harm, or fear of imprisonment. The subjects of such threats must be either the plaintiff himself, or his wife, parent, child (or children) or other near relatives. See Williams v. Bayley (1866) L.R. 1 H.L. 200; Sear v. Cohen (1881) 45 L.T. 589.

This concept of duress was very narrow that duress of goods. i.e., a threat to seize a person's goods unless he paid a sum of money or conferred some other benefit on the person issuing the threat, was regarded as not constituting duress at common law. See Skeate v. Beale (1840) 11 A. & E. 983.

In this case the court held that threat is unlawful, therefore an agreement obtained under a threat to seize goods would be set aside for duress. In Maskell v. Horner (1915) 3 K.B. 106, the court observed that payment made in order to get possession of goods wrongfully detained or to avoid their wrongful detention, may be recovered in an action for money had and received.

Also in Occidental Worldwide Investment Corp. v. Skibs A/S Avanti (The Siboen and the Sibotre) (1976) Lloyd's Rep. 293, the court held that a plea of compulsion or coercion would be available where a person was forced to enter into a contract under an imminent threat of having his house burnt down or a valuable picture slashed. The common law duress has now extended beyond just duress to the person; a threat to his freedom was recognized by Isaacs, J., in Smith v. Charlick (1924) 34 C.L.R. 38.

In this case the defendant ship builders forced the plaintiffs for whom they were building a ship to pay an extra 10 per cent over and above the agreed cost of the ship by threatening to abandon the construction of the ship midway, knowing that the plaintiffs had already concluded a lucrative contract to lease the ship to a third party on completion of the construction. Mocatta, J., held that the action of the defendants constituted economic duress. His Lordship added that the recovery of money paid under duress other than to the person is not limited to duress to goods falling within one of the categories hitherto established by English cases and that compulsion may take the form of economic duress if the necessary facts are proved.

A threat to break a contract may, according to him, amount to economic duress. Such a contract is voidable and can be avoided and the excess money paid recovered. On the facts of this case, the court held that there had indeed been economic duress. See also Pao On v. Lau Yiu Long (1979) 3 All E.R. 65 at p. 78.

The court per Lindley, L.J., defined undue influence as some unfair and improper conduct, some coercion from outside, some over-reaching, some form of cheating and generally, though not always, some personal advantage obtained by the guilty party.

Inequality of bargaining power presupposes that one party has a greater bargaining power. Where inequality of bargaining power is applied in a contract to the detriment of a party, the contract is liable to be invalidated. Lord Denning classified the doctrine of inequality of bargaining power into five categories. These were:

a. Duress of goods, e.g., bailor holding on to goods, when the bailee urgently needs them;

b. Unconscionable transaction -- a money lender or supplier of goods taking advantages of a hard-pressed expectant heir;

c. Undue Influence -- someone in a position of trust or confidence in relation to another, using his position to obtain an advantage or an unfair bargain over the other;

d. Undue pressure -- putting a pressure on someone in a relatively weak position (whether due to financial, educational, intellectual, physical or legal causes) in order to obtain an unfair advantage over that person;

e. Salvage cases, e.g., when a ship is in danger of sinking, and a rescuer uses his strong bargaining position to obtain an unfair advantage from the parties in the ship.

In this case the court observed that where there is no special relationship between the parties, undue influence has to be proved by the party alleging that he entered into the bargain as a result of it. This he can do by either showing that there was actual coercion by the defendant or that the defendant exercised such a degree of domination and control over the plaintiff that his independence of decision was substantially undermined.

Where a special relationship exists between the parties, equity will presume the existence of undue influence, and will set aside any contract advantageous to the party in a superior position to the other. The onus is on that party to establish that the agreement was free from undue influence. The fact that confidence is reposed in him, endows the defendant with exceptional authority over the plaintiff and imposes on him a duty to give disinterested advice.

The relationship in which undue influence is implied include, parent and child, guardian and ward, doctor and patient, religious adviser and discipline, solicitor and client, and teacher and student. See Powell v. Powell (1900) 1 Ch. 243; Radcliffe v. Price (1902) 18 T.L.R. 466. The rule does not, however, apply to a husband and his wife.

In order to rebut the presumption of undue influence, the defendant must prove that the plaintiff was acting independently of his influence. This can be established by showing, for example, that the plaintiff had competent and independent advice. In Lloyd's Bank v. Bundy (supra), the absence of such independent advice was probably the most fatal flaw in the transaction leading to the signing of the 11,000 pounds guarantee.

However, as was established in the Privy Council case of Inche Noriah v. Shaik Allie Bin Omar (1929) A.C. 127, independent advice is not the only way in which the presumption can be rebutted. The defendant is entitled to show by other means that the contract was made in the exercise of the free will of the other party. Moreover, where the independent advice has been given, the failure of the plaintiff to take it does not affect the validity of the agreement. The important factor is that the advice was indeed given. See Williams v. Franklin (1961) 1 All N.L.R. 218.

In this case the Supreme Court citing the case of McMaster v. Byrne (1952) 1 All E.R. 1362, a Privy Council case, and Allison v. Clayhills (1907) 97 L.T. 709 at p. 711, held that independent advice was not indispensable in all cases, and that it depended on the nature of the individual case.

The right to rescind may be lost either by express affirmation of transaction or by delay amounting to acquiescence. In either case, affirmation can only occur after the influence has ceased. Where there was undue influence which was thereafter affirmed, the affirming cannot contend that it was invalid.

In this type of relationship between artistes, particularly composers and musicians, on the one side, and their business managers, recording companies or publishing houses on the other side, the courts have refused to enforce the strict terms of the contracts involved on the ground that they were contrary to public policy because of the employers' superior knowledge and ability, and the inequality of the parties' bargaining power. The court held that the terms of the contracts in relation to the artistes were restrictive of trade and were onerous, unfair and unreasonable, and were only capable of being enforced in an oppressive manner. They were therefore void and unenforceable. See also Instone v. Schroeder (A) Music Publishing Co. (1974) 1 All E.R. 174 C.A.; Clifford Davis Management v. W.E.A. Records (1975) 1 W.L.R. 61.

Public policy requires in the interest of the public and the parties that everyone should as far as practicable be free to earn a living and give the public the fruits of his abilities and talents. The terms of these contracts are often in conflict with this principle.

In this case the court per Akanbi, J.C.A. (as he then was), explained the distinction between illegal and void contracts thus:

"...the law recognizes and draws a distinction between a contract declared void by statute and an illegal contract in which the parties have purported to do what the law prohibits. Certainly the law will not lend its aid to the perpetrators of any illegality and will therefore not permit the enforcement of a contract on illegality, save in certain exceptional circumstances. On the contrary, a contract declared void by statute may not be an illegal contract unless in relation thereto, there is also a penalty imposed by law. The penalty it is said, makes it illegal."

The Supreme Court per Karibi-whyte, J.S.C. held in this case that a contract that is expressly or implicitly prohibited by statute is illegal. Where the contract made by the parties is expressly forbidden by statute, its illegality is undoubted.

This is even more so where the act prohibited is made a criminal offence. In such a situation, no matter how more culpable one party is than the other, both are equally unable to sue upon the contract. And this is so even where the party who seeks to enforce the agreement was ignorant of the fact that the act was prohibited. See Melwani v. Chandra Corp. (1995) 6 NWLR (pt. 402) 438, at 460.

In A.C.B. v. Alao (1994) 7 NWLR (Pt 358) p. 614 at 634, per Pats- Acholonu, J.C.A. quoted the decision of the court in Cope v. Rowlands (1836) 2 N & W, 149 as followed:

"It is perfectly settled, that where the contract which the plaintiff seeks to enforce, be it express or implied is expressly or by implication forbidden by the common law or statute law, no court will lend its assistance to give it effect."

The Court of Appeal held that the transaction that took place in this case was in breach of the Exchange Control Act 1962 in that except with the permission of the minister, no person in Nigeria shall make a payment whatsoever in respect of any loan, bank draft or credit facilities outside Nigeria. Once illegality is committed under the Act, such transaction was not spared because the plaintiff who relies on it is not a Nigerian. For by virtue of section 2 (2) of the Act, it applies to Nigerians and non-Nigerians. In this case, the transactions constituting the cause of action were tainted with illegality and, therefore, no action was available to any of the parties -- exturpi causa oritur non actio.

In this case the plaintiff brought a claim of 1,100 pounds against the defendant, being the purchase price of a car he had sold to the defendant in "Biafra" in 1969. The price of the car was 1,250 pounds, and the defendant had paid 250 pounds. This was a claim for the balance of 1,000 pounds.

The defendant admitted these facts, but alleged that the transaction was entered into with Biafra during the civil war and that the car was to have been paid for in Biafran currency. He then pleaded that since the Biafran currency had ceased to be legal tender, the contract was frustrated and both parties were discharged from further performance.

It was held that the transaction between the parties was an illegal contract which could, therefore, not be enforced because it was based on an illegal currency. See also Chief A.N. Onyuike III v. G.F.Okeke (Unreported) Suit No. SC 430/ 74.

In this case the plaintiff was in breach of the Accra Building Regulations of 1930 which states thus; "no person shall erect any building or execute any work except under and in accordance with the terms of a permit". The plaintiff neglected to follows the dictates of the permit which led to the refusal of the defendant to pay him and the latter sued.

The court held that the contract was in breach of the building regulations; it was, therefore, illegal and the builder could not bring an action either to enforce it or to make a claim under it. See also Sam Warri Esi v. Moruku (1940) 15 N.L.R. 116.

In this case the Supreme Court modified the applicability of section 22 Land Use Act when it held that in land transaction, it is the responsibility of the holder of the right of occupancy to obtain the governor's consent as well as to register the deed in the land registry. This is because it would be unconscionable for the person who is to obtain the governor's consent to turn around and contend that as the consent of the governor was not obtained, the transaction was void and unenforceable.

Based on the principles of equity, such an otherwise valid and binding agreement would not be vitiated at the instance of the party whose duty it was to obtain consent but who failed to do so. In other words, a party would not be allowed to benefit from his own wrong. See also Anaeze v. Ayanso (1993) 5 NWLR (Pt. 291) P. 1 at 39.

The purport of this case is that where a contract is not ex facie illegal, but is merely being performed illegally, it is only the party guilty of the illegal mode of performance who cannot enforce the contract. The innocent party will be allowed to enforce the contract.

NOTE: This decision ameliorated the hardship caused by the decision of the Supreme Court in the earlier case of Savannah Bank Ltd. v. Ajilo & Anor. (1989) 1 NWLR (pt. 97) p. 305, where the Court held that any transaction involving the transfer of an interest in a right of occupancy granted under the Land Use Act 1978 requires the consent of the governor under section 22 of the Act, otherwise the purported transaction would be null and void.

The facts of this case is that the master of a ship so loaded the ship with goods that the load line became submerged. By the Merchant Shipping Act 1932, no ship should load to the extent of the load line becoming submerged. A penalty was imposed for a breach of the statute. One of the owners of goods in the ship refused to pay for the freight contending that the ship owners could not enforce the contract because they had performed it in an illegal manner. It was held that what the act complained of was peripheral to the main contract for the carriage of goods by sea and that the validity of the latter was not affected by the captain's lapse.

Where a statute is enacted specifically for the protection of a class of citizens or the public in general, any contract in breach of such a statute would be illegal and void. Although in certain cases, the party for whose protection the statute was enacted may be allowed to enforce the contract. As Uwaifo, JCA, put it in this case:

"When the policy of the Act in question is to protect the general public or a class of persons requiring that the contract shall be accompanied by certain formalities and conditions, and a penalty is imposed on the person omitting these formalities and conditions, the contract is illegal and cannot be sued upon by the person liable to the penalties."

The Illiterate Protection Act is a typical example of where a party for whose protection a statute was enacted is allowed to enforce to enforce the contract. In U.A.C. v. Edems and Ajayi (1958) N.R.L.R. 3, the court observed that one dramatic result of this statute has been that contracts with illiterate persons which fail to comply with it have been held to be void at the instance of the illiterate persons.

In this case, the borrower subsequent to the loan contract mortgaged his property to the lender as security for the loan, it was held be the Privy Council that the mortgage transaction, not having been recorded in a book as required by section 19 of the Money Lenders Act, was, therefore, unenforceable. The court, therefore, ordered the cancellation of the mortgage and the delivery of the cancelled deeds and title to the administrators of the borrower's estate. According to the court:

"When the governing statute enacts that no loan which fails to satisfy any of these requirements is to be enforceable it must be taken to mean what it says, that no court of law is to recognize the lender as having a right at law to get his money back. That is part of the penalty which the law imposes...The provisions of section 19 are not purposeless: they seems to assume that no loan that is not contemporaneously recorded can be established with sufficient certainty to be recognized at law."

Once it has been established that the lender has failed to comply with the requirements of the statute, he cannot escape the consequences of illegality by bringing an action to recover the bare capital without interest and by claiming that the transaction was not a loan under the Money Lenders Act but a friendly loan. See Akinola v. Ogbesedanunsi (Unreported), Suit No. AK/21/66, where Coker, J., that a money-lender could not circumvent the sanction attached to an illegal transaction by framing his claim for recovery of money lent as quasi-contract. Since it was an amount due upon a usurious contract, it was unenforceable under the statute: "Such transactions in violation of the law are illegal and the money-lender acquires no rights under them and...cannot sue the borrower for repayment."

In this case the court observed that it is clear that a money-lender cannot escape the rigours of the Statute by changing the status of the transaction from a loan under the Money-Lenders Act to a friendly loan without interest. As Onyeama, Ag. C.J., (as he then was) said:

"In my judgment a money-lender does not escape the net of the Money Lenders Ordinance by calling a loan a friendly loan or be saying it was made without interest..."

The law is trite that where the words of a statute are merely directory and not mandatory, failure to comply with it will not render the contract illegal.

In this case the court held that where a statute does not expressly prohibit a contract, its effect on that contract can only be determined by examining its object and purpose. If it appears that the object of the statute is to forbid the contract, then it is illegal and void, even though this is not expressly stated by the Act.

In this case the court observed that where the object of a statute is merely to increase the revenue, for example, by payment of a fee or a licence or for stamping, such contracts are not usually illegal merely because of the licence or stamp was not obtained by the party required to do so.

A contract to commit a tort is illegal. In this case, one of the parties agreed to beat up a third party at the behest of the other for a consideration, it was held that the agreement was void and unlawful. See Clay v. Yates (1856) 1 H. & N. 73 where the court held that an agreement involving the publication of a libel is illegal.

In Mallalieu v. Hodgson (1851) 16 Q.B. 689, a debtor made a composition with his creditors to pay 6 shillings 8 pence for every pound owed. He then entered into a separate agreement with the plaintiff, one of the creditors, to pay him of his debt in full. This agreement was declared void as a fraud on all other creditors. This goes to say that any agreement for the perpetration of a fraud is illegal.

In this case the court held that contracts which indemnify the party guilty of an illegal act against the financial consequences of his illegal act are void. The court further held that such guilty parties cannot enforce the contract of indemnity since it was intended to protect the plaintiffs against the consequences of their(guilty parties) wrongful act. See also Haseldine v. Hoskin (1933) 1 K.B. 822; Gary v. Barr (1971) 2 Q.B. 554.

As an exception to the rule that a person cannot claim an indemnity against the consequences of his crime, when a crime is committed as a result of negligence rather than deliberately, the person can claim indemnity.

It has also been suggested that a person can recover an indemnity from civil liability arising out of the commission of a crime where the crime is one of strict liability, or is committed without mens rea.

In this case the court held that a contract which is prejudicial to the status of marriage is illegal and therefore void. In a similar case of Spiers v. Hunt (1908) 1 K.B. 720, a promise by a man to marry the plaintiff after his wife's death was held illegal as it had a tendency to break up the marriage, encourage sexual immorality and even lead to crime.

In line with the principle, agreements between spouses for future separation are illegal and void. Thus, a husband cannot, during cohabitation on or before marriage, make a binding promise to provide for his wife in the event of separation.

It is contrary to public policy to engage in commercial relationship with an enemy country. Such contracts are illegal because they tend to aid the economy of the enemy country. An enemy in this special sense includes not only the enemy state itself and its institutions, but also persons residing in enemy controlled territory. A typical instance is during the Nigeria -- Biafra war. Any person resident in Biafran-controlled territory would be an enemy person for this purpose and any existing contract between someone resident in Nigeria and anyone in Biafran-controlled territory came to an immediate end with the commencement of the war. See also United Cinema and films Distributing Co. v. Shell B.P. Petroleum Dev. Ltd. (1973) 3 U.I.L.R. 439.

Nevertheless, where rights to such contracts have already accrued, and a liquidated sum has become outstanding in favour of one party, the outbreak of war does not discharge the debt, but merely suspends payment until the war is over. See Daimler Co. Ltd. v. Continental Tyre and Rubber Co. (Great Britain) (1916) 2 A.C. 307 at p. 348.

Also, in the interest of good relationship between states, an agreement which contemplates hostile action against a friendly state, or which involves doing an act which is illegal under the law of a friendly state, is illegal. An obvious example is an agreement to obtain arms and other materials in Nigeria to overthrown a friendly government. Even a loan meant to be used in supporting an armed attack on such a country is illegal. See De Wutz v. Hendricks (1824) 2 Bing. 314; Foster v. Driscoll (1929) 1 KB 470.

A contract which has the effect of impeding or preventing the course of justice, or of stifling prosecution, is contrary to public policy and there illegal. The court further held in this case that to produce false evidence with a view to misleading the court and preventing the course of justice is a substantive offence. See also R. v. Panayiotou (1973) 3 All E.R. 112.

In none of the cases under this heading would either party have been able to bring an action to enforce the contract or to recover any money or property transferred in performance of the agreement. For the contracts were illegal and void. However, where the offence for which the defendant is prosecuted is essentially civil in nature, even though it could also be criminal, an agreement to settle it out of court would be valid and enforceable. See McGregor v. McGregor (1888) 21 Q.B.D. 424.

There are offences which parties can enter into an agreement to settle it out of court, such as libel and assault. Such an agreement is valid and enforceable. The proper test for determining which type of offence can be the subject of a private agreement was laid down by Lord Denman, C.J., in this case:

"We shall probably be safe in laying it down that the law will permit a compromise of all offences, though made the subject of a criminal prosecution for which offences the injured party might sue and recover damages in an action. It is often the only manner in which he can obtain redress. But, if the offence is of a public nature, no agreement can be valid that is founded on the consideration of stifling a prosecution for it."

In this case the court observed that any contract whereby a person is to be appointed into a public office for a private consideration or gratification received by those in a position to make or influence such an appointment is contrary to public policy, and void. Sharman, J. held thus:

"In my judgment, it is contrary to public policy that a person should be hired for money or valuable consideration when he has access to persons of influence to use his position and interest to procure a benefit from the Government."

In Golden Okoronkwo v. P.O. Nwoga (1972) 2 E.C.S.L.R. 615, the court held that the act of bribing a public officer for a contract is a criminal act, illegal and contrary to public policy, and therefore void. See also Temple Koko v. Page Communications Eng. Inc. & Edward G. French (Unreported) Suit No. LD/936/73.

The law is settled that any contract deliberately entered into by the parties, with the intention of depriving the state of revenue it is lawfully entitled to, is contrary to public policy and, therefore, illegal and void. See also Miller v. Karlinski (1945) 62 T.L.R. 85. This law is based on the principle: ex dolo malo non oritur action, which means No court will lend its aids to a man who founds his cause of action upon an immoral and illegal act.

It is trite that where a contract is ex facie illegal, once a court becomes aware of this, it is the duty of the court to stop the case and dismiss the claim for being void and unenforceable. Similarly, in Scott v. Brown (1892) 2 Q. B. 724, Lindley, C.J., observed as follows:

"No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract on transaction which is illegal, if the person invoking the aid of the court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality, or whether he has not. If the evidence adduced by the plaintiff proves the illegality, the court ought not to assist him."

So totally flawed is any contract that is ex facie illegal, that even if such illegality is not pleaded, a court is duty bound to take cognizance of such illegality, suo motu and then refuse to enforce any agreement based on it. See Sodipo v. Lemminkainen (1986) 1 NWLR (pt. 15) 220 at 238.

In this case the court observed that one direct consequence of an illegal contract which is illegal at its inception, therefore, is that no party can bring an action to make any claim whatsoever under the contract. This means that if any of the parties has performed his own side of the illegal agreement either by passing money or some other type of property to the other party or by rendering service to the latter, the court will not only refuse to order the party receiving the benefit to fulfill his own part of the bargain, but will also refuse to order him to return any money or property received by him from the first party.

This is expressed by the maxim, in pari delicio, potior est condition possidetis, that is, where both parties are equally guilty, the condition of the party in possession (of money or other property) is the better one. For such money or property will remain with the party to whom it has been passed, since the court will not assist either party to the contract in any way. See also Ramekhal Singh v. Harihar Singh A.I.R. 1962 Patina, 343; Alhaji Rabiu Busari v. Olabisi Williams (1973) 3 E.C.S.L.R. 518.

NOTE: In some cases like Singh v. Ali (1960) A.C. 167 at p. 176; Belvoir Finance Co. Ltd. v. Stapleton (1838) 4 M. & W. 270; and more, the courts decided on illegal contracts entered into by the parties in complete disregard of the rules of ex turpi causa and in pari delicto because of the unconscionable attitude of the defendants. The inference, or perhaps a tentative conclusion, can be drawn that where the conduct of the defendant reveals a high degree of culpability or immorality, in contrast with a plaintiff whose conduct has been relatively blameless, and if the law violated is either not important or is low in the normative hierarchy, the courts will be flexible in their application of the ex turpi causa principle and may grant to the plaintiff the relief prayed for.

The court observed in this case that courts will assist a plaintiff and grant him the relief sought, in spite of his participation in an illegal contract if the plaintiff can satisfy the court that he and the defendant are not in pari delicto, and that the defendant only was the guilty party. This the plaintiff may achieve by showing that he was a victim of the defendant's fraud, duress, undue pressure, or that he was ignorant of the illegal aspect of the contract.

In this case the court suggested that where the plaintiff has been induced by fraud, duress or undue pressure to enter into the illegal contract, he will be allowed to recover any property transferred under the contract. A plaintiff can also recover any property transferred in a case of fraudulent misrepresentation. See Hughes v. Liverpool Victoria Legal Friendly Society (1916) 2 K.B. 482. It should be noted that the decisive factor in these cases is the fraud of the defendants and not merely the innocence of the plaintiffs. See Parkinson v. College of Ambulance Ltd. (1925) 2 K.B. 1.

In this case the court suggested that where the plaintiff is ignorant of the facts making the contract illegal, he will be allowed to recover any property transferred to the defendant under the contract, provided he repudiated the contract on becoming aware of the facts making the contract illegal.

In this case the court held that where there is fiduciary relationship between the parties and the plaintiff is the beneficiary, that is, the party reposing trust and confidence in the defendant, the former will be allowed to recover property transferred under an illegal contract between them.

This case has been mentioned earlier but it had to also be brought down here to show its importance. The court was of the reasoned opinion that where a contract is in violation of the relevant money-lenders statute, the money-lender will recover neither the interest nor the loan capital, and where relevant, the court will also order the re-transfer of the security given for the loan to the borrower. See also cases of illiterate persons aforementioned, e.g.: U.A.C. v. Edems (1958) N.R.N.L.R. 33 at p. 34.

In this case the court observed that where a plaintiff can frame his cause of action on a ground entirely independent of the illegal contract, he may recover money or other property transferred to the defendant under an illegal contract. See also Ogwuru v. Coop Bank of E/N Ltd. (1994) 8 NWLR (pt. 365), at p. 685.

In this case the court suggested that where the contract is still executory, a party who repudiates it may recover money paid or property transferred under the contract. In this way, the law encourages the parties to give up their illegal purpose by giving them a locus poenitentiae, an opportunity to repent. However, for repudiation to be effective in preserving the plaintiff's right to recover his property, it must take place before there has been substantial performance of the illegal agreement. Where there has been substantial performance, he cannot recover.

For a party to be allowed a locus poenitentiae, repentance must be genuine and voluntary. It must not be forced on the party claiming recovery by frustration, either because of the intervention of the police, a third party or by breach of the illegal agreement by the other party to it. See Bigos v. Bousted (1951) 1 All E.R. 92.

In this case the court held that where a contract is not ex facie illegal, and the question of illegality depends upon the surrounding circumstances, as a general rule, the court will not will not entertain the question unless the matter is raised by pleadings.

In this case the court suggested that where the contract is lawful at its inception, but is performed in an illegal manner, or is exploited for illegal purposes, the guilty party (i.e., the party performing it in an illegal manner) can have no remedy in the courts. He will be treated in the same way as a participant in a contract illegal at its inception. But if the innocent party is unaffected by his partner's illegal intention, unless he himself acts after he becomes aware of the illegal purpose, he is entitled to all the normal remedies. He can sue for damages for the recovery of property transferred by him, and in quantum meruit.

Any provision in any agreement which purports to deprive the parties of their rights to resort to the courts for the settlement of any dispute arising out of the agreement, is void on the grounds of public policy. In considering this principle, Denning, L.J., referred to:

"...the well-known principle that the parties cannot contract to oust the ordinary courts from their jurisdiction... They can, of course, agree to leave questions of law, as well as questions of fact to the decision of the domestic tribunal. They can, indeed, make the tribunal the final arbiter on questions of law. They cannot prevent its decisions being examined by the courts. If parties should seek by agreement, to take the law out of the hands of the courts, and put it in the hands of a private tribunal, without any recourse at all to the courts in case of error, then the agreement is to that extent contrary to public policy and void."

In Bello and Dairo v. Alowonle (1968) 2 A.L.R. 118, the court held that the ouster clause in the agreement between parties was contrary to public policy in that it purported to remove the court's jurisdiction to adjudicate over the rights and liabilities of the parties arising out of contracts. The relevant paragraph in the dissolution agreement was, therefore, held to be void. See also Bennett v. Bennett (1952) 1 K.B. 249; Hyman v. Hyman (1929) A.C. 601; Goodinson v. Goodinson (1954) 2 Q.B. 118.

In this case the court observed that an agreement which contains a provision that disputes should first be referred to an arbitral tribunal or some other private body for settlement, but which does not prevent a dissatisfied party from appealing to a court against the tribunal's decision, is valid and enforceable. Thus, if a party to such an agreement should institute proceedings in a court without first resorting to the tribunal, it is a good defence to argue that the plaintiff cannot bring the judicial proceedings without first going to the tribunal. The court will invariably stay the proceedings until the arbitration process has been completed. See also Scott v. Avery (1856) 5 H.L.C. 811.

The question of what constitutes sexual immorality will to some extent differ from society and from generation to generation. However, there has been some fairly consistent social attitudes to some aspects of sexual conduct and transaction. Thus, a prostitute cannot sue for her fees, neither is any action maintainable to recover lodgings knowingly let for prostitution.

In this case the court suggested that contracts that are sexually immoral are void and unenforceable by any of the parties since it is against public policy. In Bowry v. Bennet (1808) 1 Camp. 348; 10 E.R. 697, it was held that the prices of clothes specifically furnished to enable a prostitute to carry on her trade were not recoverable. See also Pearce v. Brooks (1866) L.R. 1 Ex. 213.

A contract in restraint of trade is one in which a party covenants to restraint his future liberty to exercise his trade, business or profession in such a manner and with such persons as he chooses. Prima facie, such contracts are void. But where it can be established that such restrictions are justifiable in the circumstances as being reasonable from the points of view of the parties and the public, they are valid and binding. These were identified by Lord Pearce and Wilberforce in the House of Lords in this case as follows:

i. The brewery cases: Contractual clauses tying a leased public house to the lessor's beers such that the person who leases the public house or bar or restaurant, is bound to see only the stipulated brand of beer exclusively. See Catt v. Tourle (1869) LL.R 4 Ch. App. 654.

ii. Covenants restricting trade in leases generally: Thus, a lessor or even outright seller of property may obtain a covenant from the lessee or purchaser, as the case may be, not to trade at all or carry on particular trades or activities on the property leased or sold. See Thompson v. Harvey (1688) Comb. 121 at p. 122.

iii. Contracts for sole agency and contracts by which persons bind themselves for good consideration to supply their customers with goods obtained from a particular merchant exclusively. See Lamber & Sons v. Goring Brick Co. LTD. (1932) 1 K.B. 710.

Lord Wilberforce added a fourth category in his list of restraint agreements which are valid without proof of reasonableness, namely, "certain contracts of employment, with restrictions appropriate to their character against undertaking work during their currency".

NOTE: In the case of Clifford Davis Management v. W.E.A. Records Ltd. (1975) 1 W.L.R. 61, the court subjected contracts in the above-mentioned fourth category to the rules of restraint of trade, unless they are proved to be reasonable in the interest of the parties, and in particular of the artistes, such contracts are void. It was held that where the terms of the contracts in relation to the artistes are restrictive of trade and are onerous, unfair and unreasonable and are only capable of being enforced in an oppressive manner, they are void.

In this case the court held that a bond by one party to restrain himself from trading in a particular place was valid if made on reasonable consideration. It was further held that contracts in general restraint of trade (e.g., not to exercise a trade throughout the United Kingdom) were void, but that contracts in partial restraint of trade (limited to a particular locality) were valid. Said Lord Macclesfield: "What does it signify to a tradesman in London what another does in Newcastle?"

In this case, the House of Lord established that a covenant in general restraint of trade could be valid, provided it was reasonable in the interest of the parties and of the public. In Leontaritis v. Nigerian Textile Mills Ltd. (1967) N.C.L.R. 114, Alexander, J., stated that a contract in a restraint of trade is valid if:

i. It is reasonably necessary to protect the interests of the person in whose favour it is imposed;

ii. It is not unreasonable as regards the person restrained; and

iii. It is not injurious to the public.

In this case the court observed that the onus of showing that the restraint is reasonable between the parties rests upon the covenantee, i.e., the party trying to enforce the restraint. On the other hand, once this onus is discharged, the onus of showing that notwithstanding the fact that the covenant is reasonable as between the parties, it is injurious to the public interest and, therefore void rests upon the party alleging it.

In Campagnie Francaise de L'Afrique Occidentale v. George E. Leuba (1918) 3 N.L.R. 67, Webber, J., echoed these views when he said that in all cases of restraint of trade, the onus of establishing facts and circumstances which show that the restraint is reasonable rests upon the person alleging that it is of that character, and in order to ascertain whether the restrictions imposed upon the covenantor are reasonably necessary for the protection of the plaintiff's interest, the court must have regard to the nature of the business carried on by the employers, the nature of the employment and the opportunities afforded to the covenantor by the employment to acquire trade secrets and influence with customers, and special knowledge which may be used to the prejudice of the employers in the event of the employee leaving the service of the employers.

The courts are more readily inclined to uphold restraints imposed on a vendor of business in the interest of the purchaser, than a restraint upon a servant in the interest of the master or employer.

The impression seems to be that once it is satisfactorily established that the restraint is reasonable in the interest of both parties, then it must of necessity be reasonable in the interest of the public also, or at least, it could not be injurious to the public. Where it is injurious to the public, such agreement will be declared as void.

In the more recent case of Bull v. Pitney-Bowes Ltd. (1967) 1 W.L.R. 273, Thesiger, J., expressly recognized the head of public interest as an independent ground for invalidating a covenant in restraint of trade; but unlike Wyatt's case, this time the principle was applied in favour of the employee.

In this case the court suggested that a vendor cannot be restrained, unless the business or industry or manufacturing concern sold is actually in physical (not merely legal existence and has as a result of its operations acquired some goodwill. In British Reinforced Concrete Engineering Co. Ltd. v. Schelf (1921) 2 Ch. 563, the defendants sold their small business for the sale of "loop", a variety of road reinforcement, to the plaintiffs. They agreed under a covenant not to compete with the plaintiff in the manufacture or sale of road reinforcements. This covenant was held to be void because it purported to restrain the defendant from dealing in any type of road reinforcement, whereas the business that was sold was of only one variety of it. See also Goldsoll v. Goldman (1915) 1 Ch. 292.

A restraint imposed on an employee is never reasonable unless there is some proprietary interest owned by the master which requires protections against the activities of the employee. See also Attwood v. Lamont (1920) 3 K.B. 571. The first task of the court is to ascertain the nature of the master's business and the servant's employment. The servant must be in a position in which his competitive activities would injure the business of the master, otherwise the restraint will be declared void.

However, where the restraint covers only the business carried on by the employer, and the servant was employed in such a capacity that he had access to trade secrets, customers and other information which could injure the employer's business if the servant uses this information in a rival organization, the restraint will be upheld and enforced by the court. See Foster v. Suggett (1918) 35 T.L.R. 87.

In this case the court held that the restraint must not be more extensive in area than the master's proprietary interests require. Where this happens, the restraint will either be void or that part of it extending its area of operation illegitimately will be excised. See also Green v. Sketchley (1978) C.A.T. 148.

A restraint clause will be invalid if the duration of the restraint is excessive. The test of validity in this case was the duration of the restraint reasonable for the legitimate protection of the covenantee? As Lord Shaw declared in Morris v. Saxelby (supra), "as the time of restriction lengthens, or the space of its operation extends, the weight of the onus (of reasonableness) grows".

The duration of the restraint is not considered in isolation of other factors. The court will take into consideration the nature of the covenantee's business and the status and role of the covenantor/employee in the company or firm. A restraint imposed for a very long period would be held valid, if in all the circumstances of the case it is reasonably necessary for the protection of the covenantor's legitimate proprietary interests. See Fitch v. Dewes (1921) 2 A.C. 158.

In this case the court held that leases and outright sale of land per se are not affected by the principles of restraint of trade. A person who leases or sells his land could introduce covenants restricting the use of the land by the lessee or buyer. This may take the form of an undertaking not to use the land for a particular trade, or for any type of trade whatsoever. No court will question this covenant as being in restraint of trade. The lessor or owner does not have to prove the restriction was reasonable in the interest of the parties.

However, where the main transaction does not involve merely the transfer of property per se but the latter is merely incidental to a commercial or other agreement containing various restraints on one party, the principles of restraint of trade will be applied and such an agreement would only be valid if necessary conditions of reasonableness are satisfied.

Where the whole of the agreement is void, the contract as a whole cannot be enforced. But if the void part is merely part of a larger contract, the remaining part of the contract could be valid and enforceable. For example, where in a contract of employment there is an unreasonable covenant restraining the employee's future activities, though such a covenant may be void, the rest of the contract remains valid and enforceable. Thus, the employee would be able to sue for his wages and for wrongful dismissal.

In this case the court observed that where a contract contains partly valid terms and partly void terms, the void terms in certain circumstances can be excised from the contract, and the valid terms enforced. The court further observed that this is only possible when part of the contract is void, not when it is illegal. In contracts held to be illegal as being contrary to public policy, severance is not permissible. In Adesanya v. Otuewu (1993) 1 NWLR (Pt. 270) P. 414 at 456-457 where this doctrine was upheld, Nnaemeka-Agu, JSC, held thus:

"...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 invalid. 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 court 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 strike down the offending part without re-writing or remarking 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 valid contract."

In this case the court observed that where a promise in a contract is completely void, the possibility of severing it from the rest of the contract and enforcing the latter minus the severed promise, depends on whether the void promise forms the whole consideration of the contract or is only a part of it. If it is substantially the only consideration given by the promise, then there can be no severance. The whole of the contract will be void. But if the void promise is only part of the consideration and is merely subsidiary to the main purpose of the contract, severance is permissible. See Bennett v. Bennett (1950) 1 K.B. 249; Amoco Australian Pty Ltd. v. Rocca Bros. Motor Engineering Co. Pty (1975) AC 561.

In this case the court held that where there is no such separateness or independence between the various parts of a promise, or where the promise is in effect a single one without sub-promises within it, there can be no severance; the contract will be totally void, and the whole promise will be struck out.

Normally, the writer is the person in whose hand the document was written, but such is not the position in law. In this case the plaintiff's manager who filled in the second defendant's name and address in the blank spaces on the guarantee document, he, the manager, was the writer of the document. In confirming this position, the Supreme Court, per Taylor, F.J., stated as follows:

"As for the contention that the typist was the writer of the guarantee and not the manager of the respondent of the respondent company, there is no substance in this point and I need say no more than that the fact that the typist who typed the guarantee was working in the office of the respondent company of which the first witness was the manager, coupled with the fact that on his evidence, the latter made manuscript insertions on the document, brings him within the definition "Writer" as contained in...the Ordinace."

In this case the court held that ex post facto (meaning retroactively or affecting something that's already happened) compliance with section 3 of the Illiterate Protection Act was not contrary to its purpose. Therefore, it was held sufficient in this case when the writer, who was the manager for the plaintiff, only entered his name and address on the document on the day of hearing of the case which was way past the day the contract was executed.

However, in Igbadume v. Benworth Finance (Nig.) Ltd. (1965/66) M.W.N.L.R. 122 it was held that the statute could not be satisfied ex post facto, on the ground that it was fraught with the risk of fraud, and apt to give rise to ridiculous situations.

In this case the court observed that where the writer puts down any information which will enable him to be identified, the document is not rendered invalid merely because the information does not contain his real name and address.

Here, the clerk of the Native Court as the writer of the contract simply wrote "C.N.C." in the place his name and address ought to have been written. The Supreme Court held that this was a sufficient compliance with the requirements of section 3 as to the name and address of the writer. For "C.N.C." meant "Clerk of the Native Court", which post the writer held at the relevant time.

In this case the court held that where a letter or document is prepared by a legal practitioner at the request or on behalf of his client who is an illiterate, the provisions of the Illiterates Protection Laws will not apply and the legal practitioner need not interpret and explain the meaning of the contents of the letter or document to the client prior to the latter's signing or thumb-printing the document.

An illiterate person, according to Oputa, J., as he then was:

"...is a person who is unable to read with understanding, the document made or prepared on his behalf...Illiteracy is thus purely comparative. A graduate in English may well be an illiterate in German."

In S.C.O.A. Zaria v. Okon (1960) N.R.N.L.R. 34, the Supreme Court held that although a person may be sufficiently literate to sign his name and read figures, he may not be sufficiently literate to understand the meaning and effect of the document he is signing, and in such a case the provisions of section 3 of the Illiterate Protection Act must be complied with. In other words, the test of Illiteracy is a functional one. See also Lawal v. G.B. Olivant (Nigeria) Ltd. (1970) 2 A.L.R. 208

The simplified approach to the definition of an illiterate person is given by Lord Charles, J., (as he then was) in D.O. Ntiachagwo v. Emmanuel Amodu (1959) W.R.N.L.R. 273, as "...a person who is unable to read with understanding, and to express his thoughts by writing in the language used in the document made or prepared on his behalf". See Otitoju v. Governor of Ondo State (1994) 4 NWLR (Pt. 340) 518 at 529.

The question: whether a person is an illiterate or not cannot be presumed by a court. It is a matter to be established by evidence of circumstances surrounding the act and the burden is on the party objecting to the enforceability of a document, to establish that it does not comply with the Illiterates Protection Act or Law, on the ground that one of the signatories to that document is an illiterate person.

Also, where there is a factual situation which raises the presumption of literacy, the onus of rebuttal of such presumption rests on he who asserts his illiteracy. Thus, there is a presumption that the maker of a signature is literate, whilst the maker of a thumb impression is an illiterate person. See Anaeze v. Ayanso (1993) 5 NWLR (Pt. 291) 1 at p. 33. However, there is nothing in law which prevents a literate person from affixing his thumb impression to a document and the mere fact that one is able to write or sign one's name on a document does not mean that one is literate.

In this case the court observed that it is possible for a person who is technically illiterate to be denied the protection of law if it appears that he understood the purport of a bargain, even though the other party failed to comply fully with the provisions of the law.

In Anaeze v. Anyaso (supra), Karibi-Whyte, JSC, made it clear that mere technical non-compliance would not avail even an illiterate person the opportunity to escape from his liability in a document signed or thumb-printed by him. He must additionally show that he did not understand the content of the document or that he would not have signed if he had understood the contents.

In this case the court suggested that where a document/contract is wrongly interpreted, the illiterate person cannot be said to have understood the content of the document. According to Sulu Gambari, J.C.A., the appellant, being an illiterate person should have been told the true content of the document. He went further to state, thus:

"If in an attempt to explain the content to him the writer or preparer presented the content wrongly or misrepresented same, then the illiterate cannot be said to have understood the document. The illiterate must not only be informed of the content of the document before he signed it; the explanation must also be correct; it must not be extraneous, misconceived so as to convey a different meaning of the undertaking than was intended by the parties."

The court held in this case that a contract which does not comply with the Illiterate Laws as it pertains to a write could be enforced at the instance of a third party, if he can establish that the document contains the true intent of the illiterate person. A third party can also enforce the document if it creates legal rights between the third party and the illiterate person, notwithstanding non-compliance, if there is evidence to show that the illiterate understood the contents and had derived benefits from the transaction.

In this case the court held that it is certainly not the purpose of the law to penalize illiterate persons and the fact that the writer of a letter or document at the request or on behalf or in the name of an illiterate person does not carry out the provisions of the law, does not mean that such letter or document is for that reason alone void and of no effect. See Djukpan v. Orovuyovbe (1967) N.M.L.R. 287.

The right of the illiterate person to enforce such a contract appears to be unimpaired, provided he can adduce evidence to establish what happened when the contract was prepared.

In this case the court observed that in any contractual transaction governed by English Law, whether statutory, common law, received or local, the age of majority is twenty-one. This means that for all practical purposes, this is the contractual age in Nigeria.

In this case the court held that an infant is liable on an executory contract for necessaries, for example; education and training.

In this case the court observed that for an infant to be held liable in a contract, the necessary goods must be suitable to the condition in life of the infant and his actual requirements at the time of sale and delivery. This means that goods sold to infants must be necessary goods not only at the time of sale, but also at the time of delivery.

The court, per Alderson, B., gave the best and most comprehensive definition of necessaries when it held thus:

"Things necessary are those without which an individual cannot reasonably exist. In the first place, food, raiment, lodging and the like. About these there is no doubt. Again, as the proper cultivation of the mind is an expedient as the support of the body, instruction in art or trade, or intellectual, moral and religious information may be necessary also... But in all these cases it must first be made out that the class itself is one in which the things furnished are essential to the existence and reasonable advantage and comfort of the infant contractor. Thus, articles of mere luxury are always excluded, though luxurious articles of utility are in some cases allowed"

In Peters v. Fleming (1840) 6 M. & W. 42, the court suggested that the term necessaries also includes articles purchased for real use, like a watch, as long as they are not merely ornamental or luxuries or for convenience only. Also what is necessary for a rich and well-to-do infant, will not necessarily be a necessary to an infant from a poor family.

It is well-settled that a contract under which goods are supplied to an infant for the purposes of trading is not a contract for necessaries and the infant is, therefore, not bound to pay for such goods. This also applies to any agreement for work or labour to enable the infant carry on his trade. See also Cowern v. Nield (1912) 2 K.B. 419.

The court observed in this case that since it is of obvious advantage to an infant that he should be trained for his future trade or profession and to obtain a livelihood, he may enter into contracts of apprenticeship, service, education and instruction. Such a contract, however, when construed as a whole, must be substantially for the benefit of the infant or to his advantage. Otherwise he would be free to repudiate it. See De Francesco v. Barnum (1890) 45 Ch. D. 430.

The court observed in this case that since it is of obvious advantage to an infant that he should be trained for his future trade or profession and to obtain a livelihood, he may enter into contracts of apprenticeship, service, education and instruction. Such a contract, however, when construed as a whole, must be substantially for the benefit of the infant or to his advantage. Otherwise he would be free to repudiate it. See De Francesco v. Barnum (1890) 45 Ch. D. 430.

There are contract in which an infant acquires an interest in property of a permanent nature, with continuing obligations attached to it. These contracts include: contracts to lease or purchase land, marriage, settlements, shares in companies, partnership, etc. These contracts are binding on him until repudiated, and he can repudiate either during infancy or within a reasonable period of the attainment of majority. Until he avoids the contract, the infant is bound to fulfill the obligation under it as they fall due. See North Western Ry. V. M'Michael (1850) 5 Exch., 114.

On the other hand, in all contracts of this class, the effect of avoidance or repudiation by the infant is that he escapes from liability to perform obligations which have not accrued at the time of repudiation. He must, however, meet all obligations which have already accrued. Moreover, he cannot recover any money paid or property transferred under such a contract unless there has been total failure of consideration. See Steinburg v. Scala (Leeds) Ltd. (1923) 2 Ch. 451.

In this case the court observed that under the Infant Relief Acts, contracts other than non-necessary contracts are no longer capable of ratification by the infant after majority. Consequently, contracts for goods other than necessary goods are now void as against the infant. However, a fresh promise (not mere ratification) made after majority will be binding and enforceable.

Under the Infant Relief Act, there are three types of contract that are absolutely void. These are contracts (a) of loan, (b) contracts for goods other than necessary goods, and (c) accounts stated. In this case the court held that money paid by an infant for goods in an absolutely void contract is recoverable by him as being money had and received for his use. On the other hand, money or property paid or transferred to him under a void contract, are nor recoverable from him, neither are debts incurred by him as a result of such contracts. See also Re Jones (1881) 18 Ch. D. 109; R. v. Wilson (1879) 5 Q.B.D. 28.

In this case the court held that whilst an infant is normally liable in tort, if the claim in tort arises out of a contract upon which the infant would not be lie, the court will not permit the other party to treat the contract as a tort. See also Johnson v. Pye (1665) 1 Sid. 258; Fawcett v. Smethurst (1914) 84 L.J.K.B. 473.

But in Burnard v. Haggis (1863) 14 C.B.N.S. 45; 8 L.T. 320, it held that if, contrary to the instructions of the owner accepted by the infant, he jumps, and consequently injures a hired horse, he can successfully be sued in tort.

It is generally assumed that an infant who buys non-necessary goods cannot be sued for conversion or detinue even where he fails to pay the price and keeps the goods. But an infant bailee who refuses to return goods delivered to him by the bailor may be sued in detinue.

If an infant fraudulently misrepresents his age by deceiving the other party that he is over twenty-one, and if on that basis the other party contracts with the infant, the plea of infancy and all the privileges associated with it are still open to the dishonest infant. In some circumstances the equitable doctrine of restitution may be applied to restore the ill-gotten gains to the owner. One of those circumstances is where an infant obtains a loan by fraud, that money cannot be recovered, for the essence of a loan of money is that the borrower shall repay the equivalent sum, and this is what the Act expressly declares void with respect to the infant.

A contract involving a lunatic is valid when such is a contract for necessaries; means goods suitable to the condition in life of the lunatic concerned and his usual requirements at the time of sale and delivery. The mentally disordered person's liability, therefore, arises quasi-excontractu, but the obligation does not arise unless it was the intention of the person supplying the necessary goods that he should be repaid. He must not have intended to play the role of benefactor but that of a creditor.

It must however be inferred that some element of consent on the part of the lunatic person or his agent is necessary for liability to arise, for a person can hardly force goods (even necessaries) on mentally disordered person and then claim payment.

In this case the court held that where the goods are not necessary goods, the mentally disordered person is also bound by his contracts, unless he can show that (1) owing to his mental condition, he did not understand what he was doing, and that (2) the other party was aware of his incapacity. See also Brown v. Jodrell (1827) M. & M. 105. Even where a person is suffering from a mental disorder, contracts made by him during lucid intervals are binding on him.

In this case the court held if a person in a state of drunkenness or intoxication enters into a contract with another person in such a state of intoxication that he did not know what he was doing, and the other party was aware of this fact, then the contract is voidable at his option. This means the drunken person can ratify the contract when the effect of the drink wears off.

A contract cannot confer enforceable rights or impose obligations arising under it on any person, except parties to it. Thus, only parties to a contract can sue on it. It also follows that only those who have furnished consideration towards the formation of the contract can bring an action on it. In this case Lord Haldane stated thus:

"My Lords, in the Law of England, certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio arisiong by way of contract. Such a right may be conferred by way of property, as for example, under a trust, but it cannot be conferred on a stranger to a contract as a right in personam to enforce the contract."

See also Price v. Easton (1833) 4 B. & Ad. 433; Tweddle v. Atkinson (1861) 1 B. & S. 393.

In the Nigerian case of Chuba Ikpeazu v. African Continental Bank (1965) N.M.L.R. 374, the court held that generally a contract cannot be enforced by a person who is not a party, even if the contract is made for his benefit and purports to give him a right to sue upon it. See also Etco (Nig.) Ltd. v. Western Nigeria Development Corporation (WNDC) (Unreported) Suit No. 1/30/69, Ibadan Judicial Division; Union Bank of Nigeria (UBN) Plc. v. Sparkling Breweries Ltd. & Ors. (1997) 5 NWLR (Pt. 505) 344 at 363.

In this case the court emphasized that since a person who is not a party to a contract cannot bring an action to enforce it, so too can he not be made liable under that contract. See also Mercantile Bank v. Abusonwan (1986) 2 NWLR (Pt. 22) 270.

The doctrine of privity was so inconvenient in the case of contracts affecting land that special exceptions were created by the courts in this regard. Thus, in this case the court held that a restrictive covenant voluntarily accepted by a purchaser of land as part of a contract of sale will in certain circumstances bind persons who subsequently acquire the land.

In recent times, mere notice by the third party of the restrictive covenant is no longer sufficient to activate the rule. In additions, the covenantee, i.e., the original vendor, must have retained some other land in the neighbourhood for the benefit and protection of which the restrictive covenant was taken. See Formby v. Barker (1903) 2 Ch. 539. It is a totally different issue if this was a covenant running with the land, in which case it would have passed by the assignment of the land, and would have been binding on any purchaser.

In the case, the court, Somervell, L.J. stated that covenants which run with the land must have the following characteristics:

i. They must be made with a covenantee who has an interest in land to which they refer, and

ii. They must concern or touch the land.

Tucker, L.J., took the same view because the covenant:

i. Affected the value of the land per se and converted it from flooded meadows to land suitable for agriculture, and

ii. It showed an intention that the benefit of the obligations to maintain "shall attach thereto into whatsoever hand the land shall come".

In this case the court observed that members of the family were entitled to bring an action to set aside conveyance (to which they were not parties) which had been made without their consent. The reason for this is well articulated by Karibi-Whyte, J.S.C., in Adejumo v. Ayantegbe (1989) 3 NWLR (Pt. 110) P. 417, where he stated that at customary law, ownership of family land is vested in the past, existing and future members of the family.

In this case the court, Knight Bruce, L.J., tried to evolve a principle to govern all such situations when he held thus:

"Reason and Justice seem to prescribe that, at least as a general rule, when a man by gift or purchase acquires property from another with knowledge of a previous contract lawfully and for valuable consideration made by him with a third person to use and employ the property for a particular purpose in a specified manner, the acquirer shall not, to the material damage of the third person, in opposition to the contract and inconsistently with it, use and employ the property in a manner not allowable to the giver or the seller."

See also Lord Strathcona Steamship Co. v. Dominion Coal Co. (1926) A.C. 108; Swiss Bank Corporation v. Lloyd's Bank Ltd. (1979) Ch. 548; (1979) 2 All E.R. 853.

In this case the court held that at common law it is a legal wrong (a tort) for someone to knowingly interfere with the contractual right of others. See also **British Motor Trade Association v. Salvador (1949) Ch. 556.

In this case the court held that a contract cannot exist between parties which one of the, parties could enforce and that conditions could not be attached to goods so as to bind all purchasers with notice. Conditions do not run with goods as they could with land, and prior notice has no effect in respect of resale prices of goods, as it has in the case of ships subject to a subsisting charterparty. See also McGruthur v. Pitcher (1904) 2 Ch. 306.

In this case the court held that the beneficiary/third party in an insurance contract derived the right to claim directly against the insurance company even though he was not in a strict sense a party to the contract. A codified statutory provision which adds this rule is Section 11 of the Married Women's Property Act; which provides that where a man insures his life for the benefit of his wife or children or where a woman insures her life for the benefit of her husband or children, the policy shall create a trust in favour of the objects therein named. See Akene v. British American Insurance Co. (Nig.) Ltd. (Unreported) Suit. No. UHC/37/71.

In the absence of clear statutory provisions like those above, even in insurance matters generally, the strict doctrine of privity is applicable, and a person, regardless of the legal or other interest he may have in a matter involving insurance, will not be able to bring a claim against an insurance company, unless he is a party to the insurance contract on which his claim is based.

In this case the Court of Appeal held that it is trite law that a third party cannot sue an insurer of a risk either at common law or in equity for the wrong done by the insured tortfeasor.

There is, however, one major exception to the privity principle as seen in J.E. Oshivere Ltd. v. Tripoli Motors (1997) 5 NWLR (Pt. 503) 1 at pp. 15 and 18. This is a situation involving a tripartite agreement. The Supreme Court stated that in a situation where the owner of a vehicle takes it to a repairer for repairs and indicates that the cost of repairs would be borne by his insurers, and introduces the said insurers to the repairers, and his insurers expressly agree to settle the cost of repairs, there exists a tripartite contract involving the owner of the vehicle, the repairers and the insurers. Each acquires rights and comes under obligations thereunder.

In this case the court held that privity of contract can be exempted where two parties enter into a contract in trust for the benefit of a third party. This person, as cestuis que trust could call upon the trustee to enforce the contract entered into for its benefit.

No special form is regarded as necessary for the creation of a trust. The court, North, J., stated that in cases of this nature, the court is to regard the substance and effect and "not the mere form of the instrument" and that "a trust may well be created although there may be an absence of any expression in terms of importing confidence".

In this case the court held that the intention to constitute a trust must be affirmatively proved: the intention cannot necessarily be inferred from the mere general words of the policy.

In this case the court held that the intention to constitute a trust must be affirmatively proved: the intention cannot necessarily be inferred from the mere general words of the policy.

Assignment of choses in action is a process where the owner of a contractual right transfers it to a third party without the consent of the debtor, thereby enabling the third party to enforce the right against the debtor or obligator. There are certain properties that are susceptible this type of transfer. This is a legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession. These includes debts, shares, negotiable instruments, policies of insurance, bills of lading, patents, copyrights, right under a trust, legacies, etc.

The order in which the parties should perform their obligations in bilateral contract depends on whether a party has an obligation to perform a condition precedent, whether the mutual obligations are concurrent, or whether they are independent of each other.

In this case the court observed that where the promises are independent, each party can enforce the other's promise irrespective of the fact that he has not yet performed his own. The person sued, however, is entitled to make a counter-claim for the enforcement of the other party's promise. For instance, a landlord cannot refuse to perform his duty to repair, simply because his tenant has failed to pay his rent; nor can the directors of a company withhold the dividends due to a shareholder who failed to pay a call on his shares.

The basic common law rule is that with regard to contracts to do an entire job for a specific sum of money or other form of remuneration, unless the contracting party has performed the whole of the contract he is not entitled to claim any remuneration. In other words, performance must be bother precise and complete before any claim can be made. In Sumpter v. Hedges (1898) 1 Q.B. 673, the court held that where there is a contract to do work for a lump sum, until the work is completed, the price for it cannot be recovered.

The doctrine of substantial performance was lucidly and elaborately stated by per Nnaemeka, J.S.C., in this case. The court observed that the rule that the entire performance of a contract was a condition precedent to payment, was subject to the qualification that if the contract had been substantially performed, even though some small part of the work had been badly done, or not done at all, the contractor is entitled to the stipulated price less deductions to remedy the minor defects or lapses. The injured party will also have an action for any damages he may have sustained. See also Dakin & Co. Ltd. v. Lee (1916) 1 K.B. 566; Hoenig v. Isaacs (1952) 2 All E.R. 176.

In this case the court suggested that the doctrine of substantial performances is merely a qualification and not an exception of the basic rule in Cutter v. Powell (supra). Thus, where a contractor fails to meet the standard of substantial performance, he will, even in modern times, not be entitled to claim anything for what he has done.

Although the general rule is that a party whose performance falls below the substantial performance level cannot claim any remuneration for his labours, or even materials used in processing the uncompleted contract, the position is different if the injured party accepts the partial performance. In that case, the contractor can sue on a quantum meruit and recover remuneration that is proportionate to the benefit conferred upon the defendants. Acceptance of the partial performance could also be implicit, but in every case there must be, in addition to the benefit conferred on the defendant, an express or implicit promise by him to pay the plaintiff.

It should, however, be noted that the party in default can only claim where the other party has the option whether to accept or reject the partial performance, and he exercises it in favour of acceptance. Acceptance cannot be forced on him.

In this case the court held that where a party to a contract performs part of his obligation under the contract, but is prevented from completing his performance by the other party, he is entitled to recover damages for the work already done, or to claim reasonable remuneration on a quantum meruit. In De Bernardy v. Harding (1853) 8 Exch. 822 at p. 824, Alderson, B., stated thus:

"...where one party has absolutely refused to perform, or has rendered himself incapable of performing his part of the contract, he puts it in the power of the other party to sue for a breach of it, or to rescind the contract and sue on a quantum meruit to the work actually done."

The rule as was upheld in this case is that if in a contract between two parties, party A cannot perform his own part without the concurrence or co-operation of party B, an offer by party A to perform which is rejected by party B, will discharge A from further liabilities under the contract. Thus, where in a contract for the sale of goods, the vendor satisfies all the requirements of the contract as to delivery, and the purchaser nevertheless refuses to accept the goods, the vendor is discharged by such a tender of performance. He can therefore sue the other party for breach of contract.

It is trite law that where the performance of a contractual term relates not to goods, but to money i.e., where the person tendering is tendering money in payment of debt, or for services or goods, the rejection of the money by the other party does not discharge the debt or monetary obligation. However, the tender of the money will constitute a good defence to an action by the creditor.

Payment must be offered in legal currency, referred to as "legal tender", this in Nigeria will be constituted by any denomination of the naira and Nigerian coins. The debtor must tender the full amount of the debt, since a creditor is not bound to accept less than the whole sum due to him. Hence, a tender of part of an entire debt is invalid. But where there are separate items on a claim, the debtor may make a valid tender in respect of particular items, if he appropriates his tender to such items.

A tender of more money than the debt is a valid tender of the amount due if the debtor does not require change. But if the debtor asks for change out of the larger sum, then his would not be valid tender since a creditor is not obliged to give change. However, a creditor can waive his right to object and accept the money and the obligation to give change, in with which case the tender would be valid. See James v. Vane (1860) 29 L.J.Q.B. 169; Berrerbee v. Davis (1811) 3 Camp. 70; Bevans v. Rees (1839) 5 M. & W. 306 at p. 308.

Where time was fixed for the performance of an undertaking by a party to a contract, under the common law, this was considered as being as being of the 'essence of the contract' and, therefore, enabling the other party to repudiate the contract or claim damages, in case of failure on the part of his contracting party to perform within the stipulated period.

In equity, however, a less rigid approach was adopted towards a solution of the problem. Equity enquired whether the parties when they fixed a date, meant anything more than to secure performance within a reasonable time. If this was found to be their intention the contract was not held to be broken, if the other party, though performing outside the stipulated period, performed within a reasonable time. "The Court of Equity was accustomed to relieve against a failure to keep the date ... if it could do justice between the parties."

Since passing of the Judicature Act of 1873, the rule of equity has become the rule of law. By section 41 of the English Law of Property Act 1925 (re-enacting section 25(7) of the Judicature Act 1873).

The operation of equity does not extend to where the agreement expressly states that time is of the essence of the contract. See also Leyland Nigeria Ltd. v. Dizengoff (1990) 2 NWLR (pt. 134) 610 at 623.

In this case the court held that operation of equity does not extend to where time was not originally of the essence of the contract, but has been made so by a party giving reasonable notice to the other who has failed to perform the contract with sufficient promptitude. See also Stickney v. Keeble (1915) A.C. 386.

In this case the court held that the operation of equity does not extend to where from the nature of the contract or from its subject-matter, time must be taken to be of the essence of the agreement. For instance, time will not be extended where a house is required for immediate occupation. See Lock v. Bell (1931) 1 Ch. 35; Harold Wood Brick Co. v. Ferris (1935) 3 K.B. 198; Newman v. Rogers (1935) 4 Bro. C.C. 391.

In this case the court per Wali, J.S.C., listed the circumstances in which time could be taken to be of essence in a contract as follows:

i. Where the parties expressly stipulated it to be so in the contract

ii. Where one of the parties to the contract has been guilty of undue delay in performing his own part and is notified by the other that unless performance is completed within a reasonable time, the contract will be regarded as breached.

iii. Where by nature of the surrounding circumstances or subject-matter it is necessary that the agreed date be strictly adhered to.

Time will be regarded as being of the essence in a building contract in the following circumstances:

i. Where the contract expressly makes it so;

ii. Where there are clauses in the contract which show that the parties intend time to be of the essence;

iii. If after delay by one party or the other party gives a notice making time of the essence.

As the court observed in this case, under the old common law rule, a contract under seal could only be rescinded by another contract under seal. In recent times, with the intervention of equity, a contract under seal could be rescinded by a simple contract, whether oral or in writing. See Berry v. Berry (1929) 2 K.B. 316; Plymouth Co. v. Harvey (1971) 1 W.L.R. 549. Since the Judicature Act of 1973, the equitable rule has prevailed, so that now a contract under seal can be rescinded by a written or oral agreement.

In this case the court held that contracts which are required to be in or evidenced by writing can be rescinded by written or oral agreement. For example, a contract for the disposition of an interest in land can be rescinded orally. In U.A.C. v. John Argo (1958) 14 N.L.R. 105, the court affirmed this position when it observed that written contract can be validly rescinded by a subsequent oral agreement.

It is trite law that where a contract is by law required to be in, or evidenced by writing, while it can be rescinded by oral agreement, it cannot be varied by an oral agreement. Variation must be by agreement in writing.

In this case the Court of Appeal held that the exceptional circumstances in which an oral agreement can vary, rescind or modify a written contract are three in number as stated in section 131 (1)(b)(c) and (d) of the Evidence Act. The court further held that the provision in section 131(1) of the Evidence Act is an expression given to the position of equity that a contract in writing and by law required to be in writing, may in equity be rescinded by parol and that an oral agreement of new terms may put an end to the old contract in writing between the parties. See also Ekwurife v. Wayne (W/A) Ltd. (1989) 5 NWLR (Pt. 122) 422 at 440.

A waiver occurs when one party to a contract voluntarily accedes, at the request of the other party to the contract, to forgo some of his rights under the contract. Waiver involves the renunciation, abandonment or surrender of some claim, privilege, or of the opportunity to take advantage of some equitable principles. Thus, typical instances of the application of waiver involve a promise by (a) a purchaser of goods, to extend the time for delivery of the goods, or (b) the owner of the building under construction, agreeing to extend the time of completion of the building, or (c) a creditor giving more time to a debtor to pay off the debt, i.e., forbearance to sue.

In this case the court, Ogbobine, J., elaborated further on the conditions that must be fulfilled before a waiver can be established:

"A waiver must be an intentional act with knowledge and for it to discharge a contract it is important that the following conditions must be present, namely, (a) a distinct act, (b) must be intentional, i.e., such as either expressly or by imputation of law indicates an intention to treat the matter as if the condition did not exist and (c) with knowledge, that is, there must be the knowledge of the circumstances of the breach. It is a conclusion of law when the necessary facts are established, looking chiefly to the conduct and position of the person who is said to have waived the condition in order to see whether he has approbated so as to prevent him from reprobating."

In this case the court defined accord and satisfaction as the purchase of a release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative. See also Ude v. Osuji (1990) 5 NWLR (Pt. 151) 488 at 508.

The court observed that where a claim is asserted by one party and is disputed by the other, they may reach a compromise on mutually agreeable terms. Once this happens, the parties have abandoned their original positions and can only bring claims within the compromise, or agreement. Such an agreement is an accord and satisfaction.

In this case the court suggested that for an accord and satisfaction to be established there has to be a true agreement, the accord, between the parties, followed by the satisfaction, which is the consideration. In the absence of any one of these, there can be no true accord and satisfaction. See D. & C. Builders Ltd. v. Rees (1966) 2 Q.B. 617 at 625; Graham & Gillies (W.A.) Ltd. v. West African Automobile and Engineering Co. (WAATECO) Ltd. (Unreported) Suit No. LD/244/74.

In a situation where there is a contract between two parties to be performed at a future date, and one party declares his intention not to perform his own side of it, this act is known as repudiation or renunciation. It is obtainable where the guilty party shows either by words or conduct that he has no intention of performing his own part of the contract whenever the time of performance arrives. In this case, Coker, J., stated thus:

"It is open to a party to a contract to sue the other party for breach of same even in anticipation of the time agreed upon for performance, if it is manifest by conduct and his acts that the defaulting party had made himself unable to fulfill his part of the contract at the agreed time."

In this case the court, Somolu, C.J., framed the principles of law applicable in cases of breach of contract thus:

"It is an indisputable point of law, that the breach of an agreement entitles the other party who is damnified by it to bring an action on it. Such breach may take place before the time fixed for performance or of completing the performance of the contract has arrived. Thus, where a promisor by his own act or default disables himself from performing his promise, the other party is entitled to treat the contract as at an end and to sue him for damages for a breach of it without waiting for the time fixed for performance, and without further performing his part of the contract."

Such repudiation may be express or implied, or be in words or by conduct. See Hochester v. De la Tour (1853) 2 E. & B. 678.

In this case the court held that repudiation may be implicit. According to the court, where there is reasonable inference that the defendant no longer intends to perform his own part of the contract, the plaintiff is entitled to treat the contract as discharged, and to sue for breach.

The facts of this case: the defendant having agreed to marry the plaintiff on the death of his father broke off the engagement during the father's lifetime. It was held that the plaintiff was immediately entitled to sue for breach of contract. The basis of the plaintiff's right to action was stated by Cockburn, C.J., thus:

"The promise has an inchoate right to the performance of the bargain, which becomes complete when the time of performance has arrived. In the meantime, he has a right to have the contract kept open as a subsisting and effective contract. It's Unimpaired and unimpeached efficacy may be essential to his interests"

Where the defendant's refusal to perform is the result of a bonafide, though erroneous, belief that he was justified to withhold performance, his act may not amount to repudiation. This would be the case, for example, where there is a genuine dispute as to the construction of the contract. See Federal Commerce Navigation Co. Ltd. v. Molena Alpha Inc. (1979) A.C. 757; Merry steel and Iron Co. v. Naylor Benzon & Co. (1884) 9 A.C. 434.

In this case the court held that where the refusal to perform is not express but is by conduct, the test is to ascertain whether the action or omission of the party in default is such as to lead a reasonable person to conclude that he no longer intends to be bound by the provisions of the contract. This would be the case where one party in default, thought intending some form of performance, determined to do so "only in a manner substantially inconsistent with his obligations".

Thus, where the repudiation does not have such a profound effect, such as depriving the innocent of substantially the whole benefit that he was intended to enjoy under the contract, the latter will only be entitled to claim damages, but not to treat himself as discharged. But where the defendant, though willing to perform, is clearly incapable of doing so, except in manner substantially inconsistent with his obligations, this will also constitute repudiation. See Universal Cargo Carriers Co. v. Citati (1957) 2 Q.B. 401 at p. 437.

In cases involving contracts for goods to be delivered or paid for by instalments, it is a question of fact whether failure to deliver one or more instalments, or pay for one or more deliveries, constitutes repudiation. Whether a default of either kind is to be treated as a repudiation, depends in each case upon its particular circumstances. In this case the court, Ogbobine, J., listed the factors which every court should consider in attempting to resolve this issue as follows:

i. The breach may extend to all or some of the promises of the party at fault;

ii. The breach may affect an important or an unimportant clause of the contract;

iii. The breach of any particular undertaking may be substantial or trivial.

From this analysis, it is clear that breaches of the type in emphasis will give rise to a right on the part of the innocent party to terminate the contract, whilst those of the type not in emphasis will only give rise to a claim in damages. Thus, in the Australian case of Ebbw Vale Steel Iron & Co. v. Blaina Iron (1901) 6 Comm. Cas. 33, where an agreement to deliver at least a ton of coal every week was expressed to be of the essence of the contract, it was held that failure to deliver a complete ton any week would justify the repudiation of the contract by the innocent party, notwithstanding the fact that the supplier was evidently straining every nerve to perform the contract and even though there was no reason to suppose that the breach would be repeated.

In this case the court observed that the breach of a fundamental term will give rise to the innocent party's right to terminate the contract. The tendency, however, is that with a few exceptions, a breach of a fundamental term will itself be a fundamental breach. See Alexander v. Railway Executive (1951) 2 K.B. 882; Photo Production Ltd. v. Securicor Transport Ltd. (1980) A.C. 827; (1978) 1 W.L.R. 856.

When as a consequence of repudiation or fundamental breach by one party, the other party is said to be entitled to treat himself as discharged from the contract, what is really meant is that such a party is discharged from the performance of all future obligations. The contract as such is not rescinded ab initio but only discharged as regards obligations that were not already due to be performed at the time of discharge.

In this case the court observed that where the innocent party treats the contract as still in force, the status quo ante is maintained and the contract remains in being for the future on bother sides. Each party is entitled to sue for both past and future breaches. The parties thus remain subject to all their rights and obligations.

Also in Modern Publications Ltd. v. Academy Press Ltd. (1968) 2 A.L.R. 336, the court, Adedipe, J., held that when one party is in breach of a condition contained in a contract, as it was in this case, the other party is not compelled to accept the breach as a repudiation of the agreement. He may waive the breach of condition if he so wishes and elect to sue for damages for the breach. See also Bayo Kuku v. Permaroof Contractors Ltd. (1971) 1 U.I.L.R. 161.

In this case the court held that where one party repudiate the contract and the other party refuses to treat the contract as discharged, he can bring an action seeking specific performance. See also Hasham v. Zenab (1960) A.C. 316.

It was observed by the court in this case that where the innocent party in an agreement, treats the contract as discharged, the party in default is liable for all breaches committed before the discharge, including the one leading to the discharge. But he is executed from further performance of the contract. However, the obligations falling due after the election to terminate the contract are still relevant for purposes of damages.

It is important to note that once the injured party has decided to accept the repudiation as terminating the contract, he cannot later change his mind and treat it as still subsisting, and once he had decided to treat it as subsisting in spite of the breach, he cannot later decide to treat it as terminated, unless of course there are further breaches. It ample terms it means that the innocent party cannot approbate and reprobate.

It is trite law as upheld by the Supreme Court that if a party to a contract terminates it for inadequate reasons, the action would nevertheless be valid if at the time it took lace, facts existed which would have provided a good reason. The existence of such facts, must be contemporaneous with the repudiation. See also Xerox v. Centrex (Nig.) Ltd. (1995) 1 NWLR (Pt. 374) 703 at 718.

In Panchaud Freres SA v. Etablissment General Grain Co. Ltd. (1970) 1 Lloyd's Rep. 53, the court restricted the right to rely on a good cause for termination after initially terminating for an inadequate reason. The Court of Appeal held that delay in exercising the right could be fatal, even in a situation when the injured party was unaware until much later, that he in fact had a good reason to repudiate.

The doctrine of frustration makes provision for the discharge of a contract where subsequent to its formation, a change of circumstances makes it legally, physically or commercially impossible to fulfill the contract. As the court, Lord Radcliffe, put it in this case:

"...frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from what was undertaken by the contract."

The rule of absolute contract existed before the doctrine of frustration and other mitigating laws. By the rule of absolute contract, a man was strictly bound by his contract and in the absence of express limitation of his liability, he must take the consequences of being unable to perform his obligation in changed circumstances. The rationale for this rather harsh rule was that a contracting party can always provide for unforeseen contingencies in his contract, and if he fails to do so, then he must be taken to have assumed the risks entailed in such a situation.

In this case the court, Blackburn, J., stated the basis of the doctrine thus:

"...Where from the nature of the contract, it appears that the parties must from the beginning have known that it could not be fulfilled unless, when the time for fulfillment of the contract arrived, some particular specified thing continued to exist, so that when entering into the contract they must have contemplated such continued existence as the foundation of what was to be done, there, in the absence of any express or implied warranty that the thing shall exist, the contract is not to be construed as a positive contract but as subject to an implied condition that the parties shall be excused in case, before breach, performance becomes impossible from the perishing of the thing without default of the contractor."

In this case the court observed that frustration occurs under conditions that are totally out of the control of both parties. And it is the court, not the parties that can determine whether an event constitutes a frustrating event. See also Davis Contractors Ltd. v. Fareham U.D.C. (supra).

In this case the Supreme Court, Wali, J.S.C., adopted Viscount Simon's definition of frustration in Crickle-Wood Property & Investment Trust Ltd. v. Leightons Investment Trust Ltd. (1945) 1 All E.R. 252 at 255, which contained the following proposition: Frustration of contract is the premature determination of an agreement between parties lawfully entered into and in course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstance so fundamental as to be regarded by law both as striking at the root of the agreement, and as entirely beyond what was contemplated by the parties when they entered into the agreement.

The court further held that there would be no frustration in the following circumstances:

i. Where the intervening circumstances is one which the law would not regard as so fundamental as to destroy the basis of the agreement.

ii. Where the terms of the agreement show that the parties contemplated the possibility of such an intervening circumstance arising.

iii. Where one of the parties had deliberately brought about the supervening event by his own choice.

According to the learned Justice of the Supreme Court, where a contract is frustrated, it operates to bring the contract to an end and further performance by the parties is excused, provided the frustrating event occurs before a breach of the contract by either party and is not brought about by the fault of either of them.

In this case the court, Viscount Simon, L.C., referred to the various theories on the basis of frustration and declared that the implied term theory was the most satisfactory basis, "upon which the doctrine can be put". And that:

"It has the advantage of bringing out the distinction that there may be no discharge by supervening impossibility if the express terms of the contract bind the parties to the performance notwithstanding that the supervening event may occur."

The doctrine of implied term was used to introduce the doctrine of frustration into the common law. According to the doctrine of implied term, if the performance of a contract depends on the continued existence of a thing or things, then the destruction of that thing or things will discharge the parties from the contract, provided none of them was responsible for the change that had taken place.

In this case the court, Lord Goddard, considered the true basis for determining the occurrence of frustration in a contract:

"If the foundation of the contract goes, either by destruction of the subject matter or by reason of such a long interruption or delay that the performance is really in effect a different contract, and the parties have not provided what in that event is to happen, the performance of the contract in that event is to be regarded as frustrated". See also Araka v. Monier Construction Co. Ltd. (1978) 2 L.R.N. 59.

It should be noted that mere hardship, inconvenience, increased cost and material loss, originally unexpected in the performance of a contract, cannot constitute frustration. There must be such a change of circumstances that if the contract were not brought to an end, the parties would in effect be performing obligations different from what they had contracted for. See Davis Contractors Ltd. v. Fareham U.D.C. (supra).

A subsequent change in the law or in the legal position affecting a contract is a well-recognised frustrating event. This could come about by the passage of a new law (Act, Decree Edict or even Ministerial Regulations, Bye-Law of Local Council) which renders the contract illegal. In this case the court, Harren, J., in delivering the judgment stated that the:

"...Legislature by compelling him to part with his land to a Railway Company, whom he could not bind by any stipulation, as he could am assign chosen by himself, has created a new kind of assign, such as was not in the contemplation of the parties when the contract was entered into. To hold the defendant responsible for the acts of such an assignee is to make an entirely new contract for the parties."

As suggested by the court in this case, an outbreak of war renders illegal all contractual transaction between citizens of the States at war with each other. For instance, a Nigeria citizen cannot engage in contractual transactions with an alien enemy. An alien enemy is the subject of a foreign State with which this country is at war, or one who is voluntarily resident or carries on business in enemy territory including enemy occupied territory. A company is an alien enemy if it is controlled by persons who are alien enemies.

In Ajuna Uche Johnson v. U.A.C. Nigeria Ltd. (Unreported) Suit No. CO/1443/72 the court observed that the outbreak of war (the Civil war between Nigeria and Biafra) operates to frustrate a contract.

A contract will be brought to an end by the destruction of the subject matter of the contract. Thus, if a contractor is engage to build a house, the contract will be terminated by frustration if before completion and handing over the building is destroyed by fire earthquake, etc., or any cause not due to either party's default.

In Bentworth Finance (Nig.) Ltd. v. Alhaji Sani Bakari (Unreported) Suit No. NCH/46/71, the court stated that it was a rule of the common law that if parties are unable to perform the contract on account of forces beyond their control, or if the further fulfillment of the contract is brought to an abrupt end by some irresistible or extraneous cause for which neither party is responsible, the contract shall terminate forthwith and the parties discharged. "Physical destruction of the subject-matter of the contract before performance falls due has always been accepted as a frustrating event."

Generally, government requisition of the subject-matter of a contract will bring the contract to an end by frustration, if the requisition is of a permanent nature, or if the period during which it is likely to remain under government control is extensive in relation to the duration of the contract. Thus, if a ship which is the subject-matter of a charterparty is requisitioned by government, whether or not the act of requisition is a frustrating event depends on the expected duration of the requisition order, as compared with the remaining period of the charterparty. See also Sylvanus v. Shell B.P. Petroleum Co. Ltd. (Unreported) Suit No. LD/868/74.

In this case the court observed that the cancellation of an expected event may lead to the invalidation of a contract on the ground of frustration. It doesn't matter if such an event was not expressly entered in the agreement. A typical instance was the cancellation of the coronation of King Edward VII of Great Britain. See also Chandler v. Webster (1904) 1 K.B. 493; Blakely v. Muller (1902) 88 L.T. 90.

In this case the Court of Appeal observed that where a party to a contract is convicted of an offence and sent to prison for a long period of time, such would constitute a frustrating event that will invalidate the contract.

All contracts for personal service which can be performed only during the lifetime of the party contracting are subject to the implied conditions that he shall be alive to perform them. His death or a serious and incapacitating illness, therefore, discharges him from the contract on the grounds of frustration. In Stubbs v. Holywell Ry. Co. (1867) L.R. 2 Ex. 311, it was held that a contract for personal service was terminated by the death of the party by whom the service was to have been rendered on grounds of frustration.

The doctrine of frustration has frequently been applied to disputes arising from charter parties. In deciding whether an event like requisitioning or seizure of a vessel under a charter party constitutes a frustrating event, the court takes into consideration the unexpired period of the charter party, and the likely duration of the intervening event. Thus, if the charter party still has some years to run, and the requisition is likely to last for only a few months, it will not constitute a frustrating event because it still leaves the contract substantially intact. See Tamplin SS. Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd. (1916) 2 A.C. 397.

However, where the period of requisitioning is indefinites of extensive, when compared to the unexpired period of the charter, the contract would be frustrated, otherwise the hirer would in effect be paying freight for the monetary compensation obtained from the requisitioning authority, rather than for the charter and use of the ship which was the basis of the contract.

The doctrine of frustration will apply to sale of goods contracts where the goods are destroyed by the faults of the parties before the risk passes to the buyer. However, the fact that a contract for the sale of goods has for one reason or the other become commercially unprofitable, does not bring about frustration. This common law position was codified in section 7 of the Sale of Goods Act 1893 and section 8 of the Sale of Goods Law of Western Nigeria. These laws provide that:

"Where there is agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer perish before the risk passes to the buyer, the agreement is thereby avoided."

It was observed by the court in this case that if a contractor is engaged to put up a building or perform some other types of construction, should the building or construction be destroyed during the process of work, without either party's default, the contract is frustrated.

By contrast, mere hardship suffered by the contractor in completing the work, increased costs, scarcity of labour and material, do not of themselves constitute frustrating events, unless the delay is of such an abnormal and extreme nature that to go on with the contract would result in a radical change in the obligations of the parties as envisaged when the contract was concluded.

In this case the Supreme Court held that the Doctrine of frustration is applicable to leases and other land transaction. Nevertheless, it is important to note that the applicability of this doctrine to leases depends on the circumstances of each case. In the Canadian case of Victoria Wood Development Inc. v. Ondrey (1978) 22 O.R. (2nd) (C.A.), it was held that frustration was applicable, not merely to leases, but also to sales of land.

A common feature of frustration is that the frustrating event must have occurred without the default of either party to the contract. Thus, if the event rendering the contractual obligation incapable of being performed is brought about by the act of one of the parties, the contract is not frustrated, but discharged by the breach of that party. Such a breach is "self-induced frustration". The party concerned is not permitted to invoke frustration, but will be liable for a breach of the contract. See also Western Nigeria Finance Corporation v. West Coast Builders Ltd. (1971) 1 U.I.L.R. 93.

At common law, each party must fulfill his contractual obligations in so far as they have fallen due before the frustration event, but each is excused from performing those obligations that were due for performance after the frustrating event. Thus, all legal rights already accrued or money already paid which has become payable before the frustrating event occurred remain intact, while obligations falling due for performance after the event are discharged.

In Fibrosa Spolka Akcyjna v. Fairbairn, Lawson, Combe, Barbour Ltd. (1943) A.C. 32 (1942) 2 All E.R. 122, the court pointed out that an action for the recovery of money paid was not an action on the contract which had ceased to exist, but an action in quasi-contract to recover money paid on a consideration which had totally failed. The term consideration was to be understood not in the sense of consideration which is necessary to the formation of a contract, but rather in the sense of the performance of the contractual obligation. The claim, therefore, was one to recover the money to which the defendant had no further right because there had been no performance on his part at all. In the circumstances, the law gives a remedy in quasi-contract to the party who has not got that for which he bargained.

In this case the court, Parke B., observed that the underlying basis for the common law remedy of damages was thus:

"The rule of the common law is that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed."

However, this rule was considered harsh, until it was mitigated by the modern rule in Hadley v. Baxendale (1854) 9 Ex. 341; (1843-60) All E.R. 461 at p. 465. In that case, Alderson, B., held thus:

"Where two parties have made a contract which one of them has broken the damages which the other party ought to receive in respect of such a breach of contract should be such as may fairly and reasonably be considered as either arising naturally, i.e., according to the natural course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it. If special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract which they would reasonably contemplate would be the amount of injury which would ordinarily follow from a breach of contract under the special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract."

In this case the court, Asquith, L.J., stated the applicable principle which had emerged from "the authorities as a whole" including in particular Hadley v. Baxendale:

"a. It is well settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do so, as if his rights had been observed (Wertheim v. Chicoutimi Pulp Co. (1911) A.C. 301). This purpose, if relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable. This, in contract at least, is recognized as too harsh a rule. Hence.

b. In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach.

c. What was at that time reasonably so foreseeable depends on the knowledge, then possessed by the parties or, at all events, by the part who later commits the breach.

d. For this purpose, knowledge 'possessed' is of two kinds; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the 'ordinary course of things' and consequently what loss is liable to result from a breach of contract in that ordinary course. This is the subject-matter of the 'first rule' in Hadley v. Baxendale. But to this knowledge, which a contract-breaker is assumed to possess whether he actually possesses it or not there may have to be added in a particular case, knowledge, which of special circumstances outside the 'ordinary course of things,' of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the 'second rule' so as to make additional loss also recoverable.

e. In order to make the contract-breaker liable under either rule it is not necessary that he should actually have asked himself what loss is liable to result from a breach. As has often been pointed out, parties at the time contracting contemplate not the breach of the contract, but its performance. It suffices that, if he had considered the question, he would as a reasonable man have concluded that the loss in question was liable to result (see certain observation of Lord du Parcq in the case of Monarch SS. Co., Limited v. A/B Karlshamns Oljefabricker (1949) A.C. 196.)

f. Nor, finally, to make a particular loss recoverable, need it be proved that upon a given state of knowledge the defendant could, as a reasonable man, foresee that a breach must necessarily result in that loss. It is enough if he could foresee it as likely so to result. It is indeed enough to borrow from the language of Lord du Parcq in the same case, at page 233, if the loss (or some factor without which it would not have occurred) is a 'serious possibility' or a 'real danger'. For short we have used the word 'liable' to result. Possibly the colloquialism 'on the cards' indicates the shade of meaning with some approach to accuracy."

In this case the Supreme Court, KaribiWhyte, J.S.C., held that in cases of breach of contract, assessment of damages is calculated on the loss sustained by the injured party which loss was either in contemplation of the contract or is an unavoidable consequence of the breach. For instance, in this case, the evidence of the plaintiff and his witnesses showed that he was expecting nothing less than 20% of the contract sum as profit, if the contract had not been breached by the appellant.

In this case the court observed that whenever a court is to consider a claim for damages, it must first resolve the issue whether the defendant is liable for any damage at all, and if so the nature and extent of such damages or losses. His Lordship, McNair, J., stated thus:

"In those circumstances, it seems to me almost impossible to say that the ship owner must have known that the delay in prosecuting the voyage would probably result or be likely to result, in this kind of loss."

In this case the court held that the general rule with regard to the time of assessment is that damages should be assessed as at time when the cause of action arose, namely, the date of breach. The court, however, suggested that this rule is not an absolute rule, and the court will fix any other appropriate day if the date of breach will work injustice.

Situations in which the court will not apply the date of breach include:

i. Where the innocent party refuses to treat the breach as terminating the contract. See White & Carter (Council) Ltd. v. McGregor (1962) A.C. 413.

ii. Where the plaintiff did not know until later that a breach had occurred. See Solomon v. Pickering (1926) 6 N.L.R. 39.

In this case the court observed that the aim of awarding damages is to place the injured party, so far as money can do it, in the same situation as if the contract had been performed. Thus, in a contract for sale of goods, if it is the seller who fails to perform, the buyer's damages will be equivalent to the difference between the price the buyer had to pay for the goods elsewhere and the contract price with the seller. The buyer must be placed in a position that he would have occupied had he received the goods at the time and place of delivery. He will be entitled to damages that will enable him buy the same quantity.

In this case the defendants terminated a contract of employment with the plaintiff without giving the agreed thirty days' notice. The Supreme Court held that it was manifest from the agreement that either party could terminate the contract for no cause whatsoever on giving thirty days' notice.

"That being the case, it seems to us that the damages which could be considered to be natural or probable consequence of a breach of the agreement is that resulting from the failure to give the required thirty days' notice. We are in agreement ...that cannot be more that what the plaintiff/respondent could have earned in those thirty days".

Although section 50(3) provides that the seller's damages will be that difference between the market price and the contract price, that does not constitute the limit of the seller's remedies. When the occasion warrants it, the courts will go outside these statutory provisions in order to arrive at damages which they consider just and appropriate in the circumstances. Moreover, the section merely provided a prima facie rule. If on investigation of the facts one finds that it is unjust to apply that rule, then it is not to be applied. The fact that assessment may be a matter of great difficulty and that it cannot be made with mathematical accuracy, is no reason for depriving the plaintiff of compensation. See Chaplin v. Hicks (1911) 2 K.AB. 786.

In this case the court observed that legal costs paid by the plaintiff in legal proceedings with a third party which were caused by the defendants' breach are recoverable from the defendant.

In this case the court observed that although damages for breach of contract are based on financial loss, in certain circumstances, damages may be recovered from the defendant for non-pecuniary losses if they were within the contemplation of the parties as not unlikely to result from the breach. Thus, here, the plaintiff was held entitled to damages where the defendant's breach of contract led to pain and suffering. Also in the case of Burton v. Pinkerton (1867) L.R. 2 Ex. 340, the court held the defendant liable in damages for causing substantial physical inconvenience on the plaintiff.

In contrast to the above position, in Hamlin v. Great Northern Railways (1856) 1 H. & N. 408, the court held that damages could not be awarded for mental distress and vexation suffered by a plaintiff on account of a breach of contract. However, the modern trend as was upheld in the case of Jarvis v. Swans Tours Ltd. (1973) 1 Q.B. 233; (1972) 3 W.L.R. 954 indicates very clearly that a plaintiff who has suffered a non-pecuniary loss as a result of a breach of contract would be entitled to damages if it can be shown that the distress or unhappiness was the natural and probable consequence of the breach complained of. The court stated that:

"When a man has paid for and properly expects an invigourating and amusing holiday, and through no fault of his, returns home dejected because his expectations have been largely unfulfilled, in my judgment it would be quite wrong to say that his disappointment must find no reflection in the damages to be awarded." See also Prince Edison Eweka v. Midwest Newspaper Corporation (1976) 6 E.C.S.L.R. 280.

The law imposes an obligation on all parties to take reasonable steps to mitigate the losses caused by a breach of contract. The plaintiff cannot therefore recover loss which he could have avoided by taking reasonable steps. The position of the plaintiff who fails to take reasonable steps to mitigate his losses is similar to that of a plaintiff whose damages are reduced because of contributory negligence. As Lord Haldane put it in this case:

"...the fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach, but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach and debars him from claiming any part of the damages which is due to his neglect to take such steps."

The duty to mitigate losses arising from the breach of a contract equally applies to building contracts. Where a contractor abandons building before completion, it is the duty of the employer to complete the house in conformity with the contract specifications at the earliest moment possible. Any increase in the cost of the building brought about his delay, cannot be passed on the defaulting contractor by way of damages. See Martens v. Home Freeholds Co. (1921) 2 K.B. 526. In Victor Oladapo Taiwo v. F.B.A. Princewell (1961) All N.L.R. 240, the Supreme Court held that:

"...an employer cannot be heard to claim a larger sum at a later date if he did not mitigate his damages by completing the building within a reasonable time. In my view damages in this case, must be based on the loss the employer would have sustained if he had completed the building in 1954, and it is clear from the evidence that this sum can be ascertained."

In this case the court observed that whilst a plaintiff is under duty to take all reasonable steps to mitigate the loss caused by breach of contract, it is for the defendant to prove that the plaintiff has failed in his duty of mitigation and he will not discharge this burden of proof merely by showing that there were possible but hazardous steps which the plaintiff might have taken.

It should be noted that the plaintiff is only required to take reasonable steps to mitigate his damages. He is not under obligation to take unreasonable steps. See Okongwu v. NNPC (1989) 4 NWLR (Pt. 115) 296, where Karibi-Whyte, JSC., stated thus:

"I do not think the duty to mitigate losses has as its correlative the right of the other party to impose any conditions as alternative to his breach of contract. The duty to mitigate loss is that of a reasonable man acting reasonably in the circumstances of the case. The plaintiff is clearly not an under-dog. He is not obliged to accept conditions which are both onerous and demonstrably intolerable in the name of mitigation of his loss."

Where the provision in advance of sum payable in case of breach is in the nature of a threat held over the other party in terrorem to ensure that the promise is not broken, such a sum is a penalty and courts of equity have always refused to enforce it on the ground that it is mere security for the performance of the contract, usually out of proportion to the plaintiff's actual loss whereas the plaintiff can be sufficiently compensated by claiming for his actual loss. The refusal to sanction legal proceedings for penalties is a rule of court produced and maintained for purposes of public policy.

In this case, the court, Lord Dunedin laid out the differences between a penalty clause and a limited damages clause:

I. Though the parties to a contract who use the words "penalty" or "liquidated damages" may prima facie be supposed to mean what they say, yet the expression used is not conclusive. The Court must find out whether the payment stipulated is in truth a penalty or liquidated damages. This doctrine may be said to be found passim in nearly every case.

II. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage (Clydebank Engineering and Shipbuilding Co. v. Don Jose Ramos Yzquierdo y Castaneda (1905) A.C. 6.

III. The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach (Public Works Commissioner v. Hills and *Webster v. Bosanquet (*1912) A.C. 394.

IV. To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are:

a.  It will be held to be penalty if the sum stipulated for is
    extravagant and unconscionable in amount in comparison with the
    greatest loss that could conceivably be proved to have followed
    from the breach. (Illustration given by Lord Halsbury in
    Clydebank Case.

b.  It will be held to be a penalty if the breach consists only in
    not paying a sum of money, and the sum stipulated is a sum
    greater than the sum which ought to have been paid (Kemble v.
    Farren (1896) 6. This though one of the most ancient instances
    is truly a corollary to the last test. Whether it had its
    historical origin in the doctrine of the common law that when A.
    promised to pay B. a sum of money on a certain day and did not
    do so, B. could only recover the sum with, in certain cases,
    interest, but could never recover further damages for
    non-timeous payment, or whether it was a survival of the time
    when equity reformed unconscionable bargains merely because they
    were unconscionable,---a subject which much exercised Jessel
    M.R. in Wallis v. Smith (1882) 21 Ch. D. 243---is probably more
    interesting than material.

c.  There is a presumption (but no more) that it is penalty when "a
    single lump sum is made payable by way of compensation, on the
    occurrence of one or more or all of several events, some of
    which may occasion serious and others but trifling damage" (Lord
    Watson in Lord Elphinstone v. Monkland Iron and Coal Co.
    Ltd. (1886) 11 App. Cas. 332).

On the other hand:

d. It is no obstacle to the sum stipulated being a genuine pre-estimate of damage, that the consequences of the breach are such as to make precise pre-estimation almost an impossibility. On the contrary, that is just the situation when it is probable that pre-estimated damage was the true bargain between the parties (Clydebank Case, Lord Halsbury ; Webster v. Bosanquet Lord Mersey).

In this case the court held that where a penalty does not compensate for the actual loss suffered, the plaintiff is entitled to choose between suing on the penalty clause, in which case he cannot recover more than the stipulated sum, and suing for breach of contract to recover damages in full for his loss.

In this case the Supreme Court observed that in the law of contract, damages should not be classified into special and general as is done in tort cases. Rather, there should be a reference to damages simpliciter. The court further observed:

"We would point out that the term 'special' and 'general' damages are misleading and are likely to create confusion in the assessment of damages, especially when these terms are employed in connection with cases in which no such distinction is either necessary or desirable." See also Balog v. Hutchinson (1905) A.C. 515 at p. 525.

In Maiden Electronics Ltd. v. Attorney General of the Federation (unreported) Suit No. 12172, the Supreme Court criticized the use of the term 'general' damages, stating that it was improper in cases of breach of contract to categorize damage by the use of the word 'general' and 'special', but allowed the award in that case to stand simply as "damages".

However, the Supreme Court has not always been consistent. It has occasionally adopted the 'general' and 'special' classification with regard to damages for breach of contract. Thus, in Ijebu-Ode L.G. v. Adedeji-Balogun & Co. (1991) 1 NWLR (Pt. 166) 136 at p. 158, Karibi-Whyte, J.S.C., stated the distinction between these terms, though misleading and likely to confuse is still made to determine the nature of the loss following the breach.

In this case the Supreme Court, Karibi-Whyte, J.S.C., stated the distinction between general and special damages thus: General damages are such as the law will presume to be the direct, natural or probable consequence of the act complained of while special damages are such as the law will not infer from the nature of the act, and which do not follow in the ordinary course but are exceptional in character.

In this case the court suggested that whenever a party has committed a breach of contract, the injured party is entitled to nominal damages, even though he has suffered no actual damage. The violation of his right per se will entitle the plaintiff to nominal damages without proof of any loss incurred by him as a consequence of the breach. Nominal damage is often awarded when the defendant's breach has caused no loss to the plaintiff, or although he has suffered a loss, he fails to prove any loss flowing from the breach of contract. See Columbia Co. v. Clowes (1903) 1 K.B. 244.

In this case the court considered the meaning of nominal damage and held that at common law, nominal damage was a technical phrase, meaning that the plaintiff had negative anything like a real damage. "It means that he is affirming by his nominal damages there is an infraction of 'legal right which though it gives him no right to any real damages at all, yet gives him a right to the verdict or judgment because his legal right has been infringed'."

Exemplary damages are damages awarded against the defendant as a punishment, so that the assessment goes beyond mere compensation to the plaintiff. According to the court, Ige, J.C.A., exemplary damages are damages which are in nature awards made with a secondary object of punishing the defendant for his conduct in inflicting harm on the plaintiff. They should be awarded only in the following cases, viz;

i. In cases of provocative arbitrary and unconstitutional acts by government servants.

ii. Where the defendant's conduct has been calculated by him to make a profit for himself which might well exceed the compensation payable to the plaintiff.

iii. Where expressly authorized by statute.

In conclusion, the learned Justice of the Court of Appeal held that once there is credible evidence before the court to justify an award of exemplary damages, the court should do so after identifying the existence of one or more of the considerations laid down in Rookes v. Bernard (1964) A.C. 1129, i.e., any of the three listed above.

In the law of contract, the right to receive exemplary damages is confined to cases of damages for breach of promise to marry. Thus, exemplary damages may be awarded where the defendant (in this case the man) may have acted wrongly towards the plaintiff (the woman) as, for example, by seducing her, causing her to contract a venereal disease, making her pregnant or slandering her character. See Millington v. Loring (1880) 6 Q.B.D. 190; Uso v. Iketubosin (1957) W.R.N.L.R. 187.

In this case the court observed that a claim for damages and breach of contract must be filed in the same suit. It is impermissible to bring an action separately for breach of a contract, and after succeeding, to then bring another action for damages based on the same breach. Such second suit will be dismissed in accordance with the doctrine of Res Judicata.

A decree of specific performances is one by which the court directs the defendant to perform the contract which he has made in accordance with its terms. The inadequacies of damages in certain cases gave rise to the principle of specific performance. For instance in a contract to convey land or sell an antique or a famous painting, the remedy of damages proved inadequate. The court, Kay, L.J., declared:

"This remedy by specific performance was invented, and has been cautiously applied, in order to meet cases where the ordinary remedy by action in damages is not an adequate compensation for breach of contract. The jurisdiction to compel specific performance has always been treated as discretionary, and confined within well-known rules."

The court considers in each case whether damages would in fact be an adequate compensation, and if not, whether specific performance will do more and complete justice that an award of damages. See Tito v. Waddell (No. 2) (1977) Ch. 106 at p.322.

In this case the court observed that the remedy of specific performance is a discretionary one and the plaintiff is not entitled to it as a matter of right. This discretion, however, is one exercised judiciously by the courts. In all cases, the courts will consider if the granting of the decree will be just and equitable under all the circumstances of the case. It will therefore not be granted where it will be impossible to carry out, or where it will create hardship.

In this case the court observed that a person seeking to enforce a contract must show that all conditions precedent have been fulfilled and that he has either performed or is ready and willing to perform all the terms which ought to have been performed by him. Thus, a plaintiff in an action for specific performance of an agreement cannot succeed if there is failure on his part to discharge his obligations under the said agreement. As Lord Radcliffe put it:

"A plaintiff who asks the court to enforce by mandatory order in his favour some stipulation of an agreement which itself consists of interdependent undertakings between the plaintiff and the defendant cannot succeed in obtaining such relief if he is at the time in breach of his own obligations."

In Coker v. Ajewole (unreported) Suit No. SC 373/74, the Supreme Court observed that where a plaintiff in such an action has been guilty of delay in performing his own part of the agreement, the delay may also bar his claim to specific performance in three circumstances:

i. Where time was in equity of the essence of the agreement;

ii. If although time was not originally of the essence of the contract it was subsequently made so by agreement, express or implied;

iii. If by his conduct, the delay on the part of the plaintiff was such as may be regarded as evidence of the abandonment of the contract.

The type of contract in which the remedy of specific performance is most readily granted by courts is a contract in which a vendor refuses to convey land sold. A mere award of damages in such case will defeat the just and reasonable expectation of the parties, or at lease of the purchaser. Even where the purchaser has bought the land in order to resell it, specific performance may be available to him. A vendor is also entitled to specific performance. On the basis of applying the remedy to land cases, the Supreme Court held thus:

"In principle, the basis of the remedy of specific performance is not the conversion of an equitable interest into legal interest, but the enforcement of a contract where damages would not afford a complete remedy, and although specific performance is more frequently granted where the contract is for the sale of land than other case, this is not because of any distinction between the jural nature of a right to purchase land and other contractual rights but because damages are less often a complete remedy for the breach of the sale of land then for the breach of other contracts."

In Swiss Bank Corp. v. Lloyd's Bank Ltd. (1980) 2 All E.R. 419 at p. 426, the court observed that specific performance will also be more readily granted in cases where damages are considered to be an inadequate remedy because of the difficulty of quantifying them, or because the plaintiff's loss is difficult to prove. A good example as seen in this case is contracts to sell or buy an annuity. See also Kennedy v. Wexham (1871) L.R. Ex. 76.

In this case the court observed that a contract of personal service will not be specifically enforced at the suit of either party. It would be undesirable and indeed impossible in most cases to compel an unwilling party to remain in close personal relations with another. See also Ondo State University v. Folayan (1994) 7 NWLR (Pt. 354) 1 at p. 10 where Orah, J.CA., held that the traditional common law rule which is applicable to this country is that the courts will not grant specific performance in respect of a breach of a contract of service.

In this case the court observed that the courts will not specifically enforce a contract that will require the constant supervision of the court. Thus, the courts have generally refused to order the specific performance of a contract to build or to keep a building in repair. Thus, as a general rule, a contract to erect a building cannot be specifically enforced against the builder.

In this case the court suggested that an injunction is another way by which a court can order specific performance. Where a party to a contract undertakes not to do something (restrictive or prohibitory injunction), a court order prohibiting him from doing that thing is a negative way of enforcing the contract.

It is trite law that courts will not grant specific performance to compel an unwilling party to remain in a contract for personal service. However, the court will be prepared to grant an injunction restraining the servant from performing a similar service for anyone else, provided that this does not force him into a position where he will either have to remain in his master's service unwillingly or remain idle or starve. See also Rely-a-Bell Burger & Fire Alarm Co. Ltd. v. Eisler (1926) Ch. 609.

In this case the court observed that it is only in a situation in which the type of loss alleged by the plaintiff cannot be adequately compensated for by the award of damages, that the court will grant an injunction. See also 7-up Bottling Co. Ltd. v. Abiola (1995) 4 NWLR (Pt. 389) 287.

In this case the court observed that where one person has expressly or impliedly requested another to render him a service without specifying any remuneration, but the circumstances of the request imply that the service is to be paid for, there is implied a promise to pay quantum meruit, i.e., so much as the party doing the services deserves. The term itself literally means "as much as he has earned". Further, if a person by the terms of a contract is to do a certain piece of work for a lump sum, and he does only part of the work, or something different, he cannot claim under the contract, but he may be able to claim on a quantum meruit, as, e.g., if completion has been prevented by the act of the other person to the contract.

In this case the court, Alderson, B., declared that where one party has absolutely refused to perform, or has rendered himself incapable of performing his part of the contract, he puts it in the power of the other party either to sue for breach of it, or rescind the contract and sue on a quantum meruit for the work actually done.

It is thus clear that court cannot grant or even contemplate granting quantum meruit if there were no contract between the two parties in the first place. See Olaopa v. Obafemi Awolowo University (1997) 7 NWLR (Pt. 512) 204.

In this case the court held that where work has actually been done by one party under a void contract the party who did the work can sue on a quantum meruit to recover his remuneration for the work done, provided he did the work in good faith and without knowledge of the voidness.

In this case the court observed that a right of action in contract is extinguished six years from the date on which the cause of action accrued. A cause of action becomes statute barred if in respect of it proceedings cannot be brought because the period laid down by the Limitation Law or Act has elapsed. Oputa, J.S.C., put the matter thus:

"How does one determine the period of limitation? The answer is simple -- by looking at the Writ of Summons and Statement of Claim alleging when the wrong was committed which gave the plaintiff a cause of action and by comparing that date with the date on which the Writ of Summons was filed... if the time in which the Writ is filed is beyond the period allowed by the Limitations Law, then the action is statute barred."

In this case the court held that the basis of Limitation laws is the public policy that there should be an end to litigation and that stale demands should be suppressed. For it would be unjust to a person to allow claims to be made upon him after a long period during which he may have lost the evidence formally available to him, necessary to rebut the claim. See also Elias v. Akinrimisi (1987) 2 NWLR (Pt. 57) 487.

The court in this case defined period of limitation as the period of time after the accrual of a cause of action during which legal proceedings could be brought by a competent party because the period laid down by the limitation law had not lapsed.

On how the period of limitation could be determined, the court held that it determined by looking at the Writ of Summons and Statement of Claim alleging when the wrong was committed which gave the plaintiff a cause of action, and by calculating the period which had elapsed between that date, the date on which the Writ of Summons was filed, the period of limitation could be determined. The period of limitation of any particular action begins to run from the date on which the cause of action accrues. See also Shell Pet. Dev. Co. v. Parah (1995) 3 NWLR (Pt. 382) 148.

In this case the court held that for the law of limitations to be applied to bar a plaintiff's action, it should be pleaded by the defendant. In the absence of such plea, the court may go ahead, hear the case and deliver judgment.

The court further explained that in general, the operation of the statute of limitation does not extinguish the debt or other causes of action but merely bars the remedy of bringing the action after the lapse of the specified time from the date when the cause of action arose. The statute of limitation does not confer a right on the defendant. It only imposes a time lime on the plaintiff. Thus, the statute does not affect the title to personal property mortgaged to secure a debt, and creditor may apply a payment to a statute barred debt.

On the basis of the principle, a fresh acknowledgement of the statute barred debt by the debtor re-institutes the creditor's cause of action for another six years. Hence, it is essential that the defence of limitation of action must be specifically pleaded before it can be applied and the correct way of doing so is to raise, distinctly, the particular statutory provision relied on.

As a general rule, where the plaintiff fails to discover the cause of action until the expiration of the statutory period, either because of his own carelessness or in a situation where he ought reasonably to have discovered it, the right of action will lapse. This does not, however, apply to cases of fraud. The period of limitation shall not begin to run until the plaintiff had discovered the fraud, or could with reasonable diligence have discovered it. The court will not allow the fraudulent party to take advantage of his dubious conduct towards the other party.