Academic journal article Journal of Politics and Law

The Principle and Nature of Law of Contract in Nigeria: Formation of Binding Contract

Academic journal article Journal of Politics and Law

The Principle and Nature of Law of Contract in Nigeria: Formation of Binding Contract

Article excerpt


The article considered the importance of a truly and legally binding agreement in mostly commercial transactions in Nigeria that would ultimately translate into such that the law would enforce. It sought to revisit case laws and statutes on the various commercial transactions in Nigeria. In writing the article secondary data drawn from books, case laws, statutes, unpublished materials and the internet were relied upon. The articles position is that actions do not arise from a base cause. A contract tainted with illegality or contrary to public policy cannot be enforced by the law courts in Nigeria. The illegality may be borne out of sheer ignorance or mere mischief. The law here guides against the misuse or misapplication of the formation of the various steps or stages obviously involved in the formation of a truly binding contract which the law can enforce giving the peculiarity of the Nigerian terrain.

Keywords: contract, commercial transaction, secondary data, stages, enforce, binding agreement

1. Introduction

A trend runs through the entire gamut of the law of contract, the central purpose been to impose a duty on parties to carry out their respective obligations under it, failing which a party who defaults or refuses to discharge his obligations under the contract will be liable for a breach of contract. What distinguishes a contract from a mere agreement' is the fact that if one of the parties fails to honour or discharge his promises the other party may take legal action. On the basis of the principle of law encapsulated in the maxim ex turpi causa non-oritur action, that is, an action does not arise from a base cause; a court does not generally enforce a contract or transaction tainted with illegality or contrary to public policy. It is apposite therefore to lay in vivid terms the principal and nature of law of contract especially as it affects the Nigerian business climate.

2. Defining Contract

A contract may be defined as an agreement enforceable by the law between two or more persons to do or abstain from doing some act or acts, their intention being to create legal relations and not merely to exchange mutual promises (Keenan, 1997). Abiola Sees contract as simple an agreement made between two or more competent parties which the law will enforce. (Abiola, 2005)

Generally, at common law only a party to a contract or persons who are privy to a contract can sue and be sued on it. In other words, a stranger to a contract cannot sue or be sued on a contract even if it was made for his benefit or purported to give him a right to sue. In Anuruba V. E.C.B Ltd (2005,10NWLR, pt.933). On 24th July 1995 one Nicholas Osuji entered in to a written agreement with the 1st respondent for the sale of a motor vehicle to the respondent for the sum of N100, 000 and the 1st respondent paid the sum of N70 00 to the seller. It was agreed between the seller and the 1st respondent that the letter would give possession of the motor vehicle to the appellant who would use same as a taxi in trust for the 1st respondent.

Simultaneously, the appellant took an overdraftof N100, 000 from the 1st respondent and it was agreed that the appellant would repay the overdraftand interest from the proceeds of his use of the motor vehicle as a taxi, and that upon full payment of the overdraftand accrued interest on or before January 31st 1996, the 1st respondent would pay the balance purchase of N30, 00000 for the motor vehicle and the appellant would acquire ownership of the motor vehicle. In furtherance to the agreements before the said Nicholas Osuji and the 1st respondent and the agreement between the motor vehicle and the 1st respondent, the motor vehicle and its documents were handed over to the appellant who stared using the motor vehicle as a taxi. But after operating for about 41/3 months, the appellant was only able to pay only sum of N14, 200 into his account with the 1st respondent. Consequently, the 1st respondent took possession of the motor vehicle. …

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