Understand the Nigerian Legal System

WEEK 10 LECTURE NOTE

7.1 Explain the nature of law.
7.2 Analyse the sources of Nigerian laws.
7.3 Evaluate the characteristics of Nigerian Legal System.

NATURE OF LAW

The law affects every aspect of our lives; it governs our conduct from the cradle to
the grave and its influence even extends from before our birth to after our death.
We live in a society which has developed a complex body of rules to control the
activities of its members. There are laws which govern working conditions (e.g. by
laying down minimum standards of health and safety),laws which regulate leisure
pursuits (e.g. by banning alcohol on coaches and trains travelling to football
matches), and laws which control personal relationships (e.g. by prohibiting
marriage between close relatives). So, what is ‘law’ and how is it different from
other kinds of rules? The law is a set of rules, enforceable by the courts, which
regulate the government of the state and governs the relationship between the
state and its citizens and between one citizen and another. As individuals we
encounter many ‘rules’. The rules of a particular sport, such as the off-side rule in
football, or the rules of a club are designed to bring order to a particular activity.
Other kinds of rule may really be social conventions, such as not speaking ill of the
dead. In this case, the ‘rule’ is merely a reflection of what a community regards to
be appropriate behaviour. In neither situation would we expect the rule to have the
force of law and to be enforced by the courts.

For the purpose of this class, we are concerned with one specific area of law: the
rules which affect the business world. We shall consider such matters as the
requirements that must be observed to start a business venture, the rights and duties
which arise from business transactions and the consequences of business failure. In
order to understand the legal implications of business activities, it is first necessary
to examine some basic features of our Nigerian legal system. It is important to
remember that nigeria law refers to the law as it applies to Nigerian as a country.
 SOURCES OF NIGERIAN LAWS

Sources of Nigerian law denote where Nigerian law came from. The major
question is that where did we get the present laws that we now call our own? Did
they fall from heaven? Where did we get them from? We generally have six
sources of Nigerian law they include:

1. The Received English law: This consists of the common law, doctrines of
equity and statutes of general application which were applicable in Britain by 1st
January 1900. These were laws that we used when we were colonised by Britain.
The laws applicable in Britain were also applicable in Nigeria.

2. Nigerian Legislation: This is the most important of the sources of Nigerian law.
This is because it is Nigerian legislation that gives life to other sources of law. It is
the pillar upon which the Nigerian legal system rests. It consists of the exclusive
list, concurrent list and residual list.

3. Case Laws: Summarily, these are laws that are developed by the courts and
become binding according to the principle of stare decisis/judicial precedent.

4. Customary law: These are the laws of the indigenous peoples of Nigeria prior
to the advent of the colonialists. However, they are only applicable in civil
circumstances. The Customary Criminal law has been abolished by various statutes
like the Penal Code and Criminal Code.

5. Delegated Legislation: This is legislation made by other bodies that are not the
legislature. However, before this can be valid, the power to make these laws has to
be vested in such person/body by the legislature.

The following sources above will be briefly explained for better understanding and
for the purpose of this class

THE RECEIVED ENGLISH LAW

These are laws that were in operation in England and due to the reception of
English law, they become applicable in Nigeria. The reception of English law deals
with the way the received English law was accepted into the Nigerian legal system.
The major reception act in Nigeria is the Interpretation Act. The Interpretation Act
receives English law in S.32(1) which provides that the rules of common law, the
doctrines of equity and statutes of general application which are within the
competence of the federal legislature in existence before 1900 shall be in force in
Nigeria.

However, S.32(2) provides that their application is limited subject to Nigerian

jurisdiction or when there is a Nigerian federal law or court decision available.
This was seen in the case of Labinjoh vs Abake where the application of the Infant
Relief Act was rejected because there was already a local legislation that covered
that area. S.32(3) allows for the alteration of the imperial laws in order to make it
applicable to the Nigerian situation. For example, where England is used, it would
be replaced with Nigeria, when the British currency is used it would be replaced
with the Nigerian currency and so on.

NIGERIAN LEGISLATION AS SOURCE OF LAW

To use a simple definition, we can say that legislation is the law made by the
legislature. This definition is very simple and is quite easy to remember and
comprehend. This is the most important source of Nigerian law. It is usually made
by the legislature which consists of the House of Representatives and the Senate.
They are referred to as the National Assembly by S.4(1) of the Constitution.
Legislation is classified into statute or subsidiary legislation. Statutes are laws that
originate from any chamber of the National Assembly. Subsidiary legislation are
those that emanate from a body that is not the legislature. They can also be called
delegated legislation. These bodies are usually empowered to make law by an
enabling statute of the National Assembly. Subsidiary legislation can be called
rules, legislation, by-laws, instruments, orders etc. Also, a subsidiary legislation
must not exceed the limit of the power delegated to it by the enabling statute. Thus,
subsidiary legislation is inferior to statutes. This means that a statute can repeal or
amend the power of a subsidiary legislation.

FORMS OF LEGISLATION

Legislation can be in form of ordinances, acts, laws, decrees or edicts. Ordinances

are laws made by the federal legislature before 1st October 1954. Acts are laws
made by the National Assembly which is made up of the House of Reps and the
Senate. Laws are legislation made by a State House of Assembly. Decrees are laws
made by the federal military government while edicts are legislation made by state
military governments.

It should be noted that for any legislation to be valid, it should originate from the
appropriate authority. During the civilian regime, it is the National Assembly or
State House of Assembly. In the military regime, it is the Federal Military
Government and State Military Government.

DIVISION OF LEGISLATIVE POWER.

These are divisions of legislation during a civilian regime. They are divided into:

• Exclusive List: These are laws which can be made only by the federal
legislature. S4.(2) & (3) CFRN 1999(as amended). It is located in pt 1 2nd
schedule.

• Concurrent list: These contain items that are within the legislative competence
of the State House of Assembly and federal legislature. S.4(4)(a) & S.4(7)(b)
CFRN 1999 as amended

• Residual list: These are items that are left solely for the states to legislate upon.
It should be noted that there is not an item designated ‘Residual List’ in the
constitution. However, it is implied from the constitutional provisions. This is due
to the fact that S.4(7) CFRN 1999 provides that the State House of Assembly can
legislate on matters that are not contained in the exclusive list and but they can
legislate on matters in the concurrent list. Thus, by implication they can also
legislate on matters that are not in any of the lists..

Case Law as a Primary Source of Nigerian Law

Lawyers and Judges contribute their fair share to the development of Nigerian law
through case law, which is also a primary source of Nigerian law. In cases where
the parties disagree on what the law is, a common law court looks to past
precedential decisions of relevant courts, and synthesizes the principles of those
past cases as applicable to the current fact

To the uninitiated, case law might sound a bit ambiguous. But to speak simply,
case law is simply law derived from cases that the court decides. In essence, they
are the judgments’ of the court. Case law is a set of past rulings by tribunals that
meet their respective jurisdictions' rules to be cited as precedent.You should note
that Judicial precedent needs to validate a case law before it can be called a
primary source of Nigerian law.
How is Case Law a Primary Source of Nigerian Law?

It is a general proposition that judges do not have the power to legislate. So, if
judges cannot legislate, how is case law a primary source of Nigerian Law?

The reason why case law is a primary source of Nigerian law is that the law is what
the judge says it is. Legislation can have conflicting interpretations in the law
courts. In fact, legislations have different interpretations in the law court. If they
don’t, what then are lawyers haggling about in court? The only interpretation that
becomes applied is the interpretation that the court accepts.

There are also instances where legislation is not clear. In these instances, the court
uses the rules of interpretation to clarify the provision of the legislation.

In essence, case law is a very important primary source of Nigerian law. The other
primary sources of Nigerian law can only operate through case law. Whatever
interpretation any lawyer might spring up, the law is what the court says it is.

Customary Law as a Primary Source of Nigerian Law

The local laws that were operative in Nigeria before the advent of the British are
still in operation in Nigeria, and they shape our laws. However, not all customary
law is applicable in Nigeria. Before native law can be applicable in Nigeria, it has
to pass the validity tests. When it passes this test, it becomes a primary source of
Nigerian Law.

What is Customary Law?

Customary law is a general term that includes all laws that were in operation in
Nigeria before the colonial rule. In the pre-colonial period, there were numerous
autonomous entities in Nigeria. The Sokoto Caliphate, which comprised most parts
of northern Nigeria, used Islamic law. In other parts of Nigeria, the native laws of
the indigenous peoples operated as the law of the land.

When the British colonized the territory known as Nigeria, in typical colonial
fashion, they classified all indigenous laws as customary law and subjected them to
English law.
From this definition, the courts would recognise all laws that are neither common
law nor enacted by the legislature as customary law.

The Validity Test

Nigerian customary law has its fair share of laws that we would out rightly
consider abhorrent. A very popular instance is the killing of twins that Mary
Slessor stopped in pre-colonial Calabar. There are also numerous other gory
instances like human sacrifice.

It was due to instances like this that the colonialists created the validity tests.
Before the court can apply a custom in Nigerian jurisdiction, it has to pass these
validity tests.

The validity tests have remained in Nigerian legislation since the colonial times. In
the present dispensation, you can find them in the High Court Laws of the various
states and the FCT. According to S. 44 of the High Court Law of Oyo State (1978),
Customary Law would be applicable in the court if it is not:

 Repugnant to natural justice, equity and good conscience.

 Contrary to public policy
 Incompatible directly or by implication with any law for the time being in
force.

The Evidence Act 2011 also provides in S. 18 (3) that a custom would not be
applicable as a law if it is contrary to public policy or is repugnant to natural
justice, equity and good conscience.

International Law as a primary source of Law

In the days before the United Nations, there wasn’t much unity among the
countries of the world. The only unity between countries occurred through
alliances. During this tine period, the major laws between countries were treaties
between two to three countries. Luckily for us, this is not the case today. Today,
there are international treaties that bind hundreds of countries all over the world.

These treaties are called International Law, and they are also a crucial primary
source of Nigerian Law.
How is International Law a Primary Source of Nigerian Law?

As I have stated, a source of law would be a considered a primary source of

Nigerian law if it is binding on the law courts. Does this mean that Nigerian courts
have to enforce every treaty signed by Nigeria? The answer to this is a resounding
no.

When it comes to the abidingness of international law, countries have two options.
In some countries, the moment the country’s representative signs the treaty, it
becomes binding in the country’s law courts. In other countries, a treaty does not
become binding unless the legislature domesticates it. Domestication means that
the country’s legislature would have to pass the treaty as a law.

Conclusion

It is very important for you to understand primary sources of Nigerian law. They
are most important when you want to determine the weight of an authority in the
law court. If you are armed with a primary source of Nigerian law, you can be sure
that your argument would have more weight before the court of law.

CHARACTERISTICS OF NIGERIAN LEGAL SYSTEM.

The Nigerian legal system means the laws, courts, personnel of the law and the
administration of the justice system in Nigeria. Therefore the legal system of
Nigeria must contain the above four elements. The Nigerian legal system consist of
the combination the common law doctrine, equity, statutes of general application,
customary law and Islamic law etc.

The legal development of all former British colonies, which Nigeria is one, cannot
be separated from the reflection of colonialism. Hence, Nigeria like many other
African countries can be classified under the Common law system. However, it has
 not lost touch with the indigenous African character as evidence by the strong
impact of the rules of customary law in the system.

The features are as follow:

1. Duality: as a result of the colonial influence and the subsequent imposition of

the English law in Nigeria, the Nigerian legal system has acquired a dual structure
which comprises of the English law, Islamic law and customary law. The influence
of Islamic law in the Nigerian legal system can be viewed in Northern part of
Nigeria where the Sharia law applies. On the other hand, the applicability of
customary law depends wholly on circumstance when it is proven in fact not to be
against the rules of natural justice and must be judicially noticed.

2. External Influence: The Nigerian law has borrowed heavily from diverse
external sources, beginning with the influence of Islamic law as a bi-influence of
the 19th century Fulani Jihad. Islamic law has supplemented many indigenous
customary laws in Northern part of Nigeria. English law also remains a major law
of the Nigeria law and an attempt to reform the latter, either ends up following the
English pattern or deliberately made rules from English practices and procedures.
See for example: the matrimonial causes Act and Criminal Code modelled after
those of the Queen’s land.

3. Geo-cultural diversity: this is very much a part of the Nigerian legal system.
This diversity can easily be traced to the heterogeneous nature of the Country’s
units. It is widely believed that there are more than 250 ethnic groups in Nigeria
with each of these ethnic groups having peculiar customs and norms. The situation
has further compounded on the task of proving customary law and the attainment
of harmonized Nigerian common law.
4. The System of Precedent: Nigeria has received the tradition of working with
decided cases which enjoins that their earlier decisions with similar facts to the one
which is looked at be followed. The court in which the decision is given may
depart from earlier decisions in only special cases. This system has been justified
on the grounds that it enhances certainty, predictability and minimises the
influence of personal bias against settled principles of law.

5 Training and Practice of Lawyers in Nigeria: Generally speaking, a legal

practitioner in Nigeria is trained as a barrister but he practices as both a barrister
and a solicitor whereas in England a legal practitioner after training and being
called to the Bar, practices either as a solicitor or a barrister

6 Complexity: Another characteristic feature of the legal system is its complexity.

Nigeria consists of a federal capital and 36 states. Each State has a legal system
and the Federal Capital Territory too. In addition there is also a general federal
legal system applicable throughout the country. The complexity of legal system is
further revealed by the application of local customs as law in each state. A small
town in a state may have a system of customary law different in some respect from
the customary law system of a neighboring town even if all the indigenous
inhabitant of both towns belong to the same tribal group. Thus within the legal
system of a state, there may be a multiplicity of legal systems.
WEEK 11 LECTURE NOTE
NATURE OF CONTRACT AND TORT
8.1 Define contract.
8.2 Explain types of contracts
8.3 State the basic requirements for a
valid contract.
8.4 Analyze contractual terms.

WHAT IS A CONTRACT
Once the businessman has decided on the particular form of business organisation
that suits his needs, he can concentrate on his main purpose: establishing and
building up the business. This will involve acquiring premises and equipment,
taking on employees, buying raw materials and stock, marketing the product or
service and meeting orders. Underpinning all these business transactions is the
presence of a contract.

Most people think that a contract is a formal written document which has been
signed by the parties in the presence of independent witnesses. If all contracts took
this form, there would be little room for argument about whether the parties had
entered into a legally binding agreement, the obligations they had undertaken or
the consequences of failing to carry out the terms of the agreement. In practice,
however, few contracts are like this. The vast majority of contracts are entered into
without formalities. The parties may even be unaware of the legal significance of
their actions. Think about the agreements you have made over the past week:
■ buying a newspaper;
■ taking the bus or train into work or college;
■ agreeing to complete an assignment by a particular
■ getting a cup of coffee at breaktime;
■ arranging to meet a friend for lunch.

Can all these transactions be classed as contracts? You probably feel that some of
them were never intended to have legal consequences. So, what then is a contract?
When is a contract formed? What are the obligations of the parties to a contract?
What happens if either party breaks the agreement? The answers to these questions
are provided by the law of contract.

A contract has been defined as a legally binding agreement or, in the words of Sir
Frederick Pollock: ‘A promise or set of promises which the law will enforce.’
However, not all promises or agreements give rise to contracts. If you agreed to
keep the house tidy while your parents were away on holiday, you would not
expect to find yourself in the county court being sued for breach of contract if you
failed to do so. So what kinds of agreements does the law recognise as creating
enforceable rights and duties?

TYPES OF CONTRACT
The following are the types of contract that exist in the business world

Contracts under Seal

Traditionally, a contract was an enforceable legal document only if it was stamped

with a seal. The seal represented that the parties intended the agreement to entail
legal consequences. No legal benefit or detriment to any party was required, as the
seal was a symbol of the solemn acceptance of the legal effect and consequences of
the agreement. In the past, all contracts were required to be under seal in order to
be valid, but the seal has lost some or all of its effect by statute in many
jurisdictions. Recognition by the courts of informal contracts, such as implied
contracts, has also diminished the importance and employment of formal contracts
under seal.

Express Contracts

In an express contract, the parties state the terms, either orally or in writing, at the
time of its formation. There is a definite written or oral offer that is accepted by the
offeree (i.e., the person to whom the offer is made) in a manner that explicitly
demonstrates consent to its terms.

Implied Contracts

A contract that is not written or spoken, but which is assumed to exist based on the
words and actions of the parties involved. An implied contract is a contract that
exists based on the actions of those involved. Though it is not a written or spoken
contract, it is just as legal. A contract is assumed to exist based on the behaviors of
the parties to it. An example of an implied contract is an implied warranty that
goes into effect upon the purchase of a product. The product is guaranteed to work
as expected when purchased, meaning a washing machine must be able to wash
clothes the moment it is plugged in and turned on.
Implied in Fact

Implied-in-fact contracts are contracts that create an obligation between the parties,
based on the circumstances of their situation. If the parties behave in such a way as
to suggest that they have agreed to some sort of obligation, then the law will find
them to have participated in an implied-in-fact contract. The name itself sums up
the situation: the facts at issue create an implied contract. An example of an
implied contract that is an implied-in-fact contract is presented below:

TEJIRI, who has a snow blade attachment on his 4-wheel ATV, heads over to his
neighbor’s house to dig out his driveway. TOBI, the neighbor, is grateful that the
young man came over to help out, so when Jake is finished, TOBI hands him a
5000 bill. TEJIRI says he should be able to come back periodically to keep the
snow at bay for his neighbors, and the two wish each other a good day before
TEJIRI heads to the next neighbor’s yard.

As this is a particularly snowy winter, TEJIRI stops by TOBI’s house every

weekend to shovel TOBI out. The first three times, TOBI paid TEJIRI 5000, even
though there was no agreement for payment. However, on the fourth day, TOBI
stays indoors, not coming out to pay TEJIRI. A few days later, after TEJIRI plows
again, he asks TOBI for payment for the two days he received no money. TOBI
claims he never entered into an agreement to pay Jake for his services; rather, he
thought TEJIRI was just being a nice neighbor.

If TEJIRI was to sue TOBI for lack of payment, the law would likely be on
TEJIRI’s side. The courts would infer that an implied in-fact contract existed
between TEJIRI and TOBI , even though the two never reduced the terms of the
contract to writing. This implied contract was created when TOBI paid TEJIRI for
his services, not once, but three times, and continued to accept TEJIRI’s services.

Implied in Law

For implied-in-law-contracts, the law imposes upon a person a responsibility to

uphold his end of the contract, and will even enforce the contract against that
person’s will. Implied-in-law-contracts are enforced when circumstances dictate
that, without the courts stepping in to enforce the contract, one party would be
unfairly enriched by another’s behavior. Here, one party would be entitled to
restitution for the services he received, even if there was never any intention on the
part of either party to enter into a contract. Consider the following example of an
implied-in-law-contract:
Nkiru is traveling on an airplane when he suffers a heart attack. Gloria, a doctor, is
seated close to Gloria and observes Gloria clutching his chest and falling to the
floor. Gloria rushes over with his medical bag and manages to stabilize Nkiru until
the plane can perform an emergency landing.

GLORIA later sends a bill to Nkiru for medical services rendered. Nkiru is, in fact,
legally responsible for paying that bill, even though he never intended to enter into
a “contract” with Gloria. This is because otherwise, NKIRU would have been
unjustly enriched by Gloria’s services to save her life. Here, the law would likely
find for the existence of an implied-in-law contract, and would order Nkiru to pay
Gloria for the services he received.

Executed and Executory Contracts

An executed contract is one in which nothing remains to be done by either party.

The phrase is, to a certain extent, a misnomer because the completion of
performances by the parties signifies that a contract no longer exists. An executory
contract is one in which some future act or obligation remains to be performed
according to its terms.

Bilateral and Unilateral Contracts

The exchange of mutual, reciprocal promises between entities that entails the
performance of an act, or forbearance from the performance of an act, with respect
to each party, is a Bilateral Contract. A bilateral contract is sometimes called a
two-sided contract because of the two promises that constitute it. The promise that
one party makes constitutes sufficient consideration for the promise made by the
other.

A unilateral contract involves a promise that is made by only one party. The
offeror (i.e., a person who makes a proposal) promises to do a certain thing if the
offeree performs a requested act that he or she knows is the basis of a legally
enforceable contract. The performance constitutes an acceptance of the offer, and
the contract then becomes executed. Acceptance of the offer may be revoked,
however, until the performance has been completed. This is a one-sided type of
contract because only the offeror, who makes the promise, will be legally bound.
The offeree may act as requested, or may refrain from acting, but may not be sued
for failing to perform, or even for abandoning performance once it has begun,
because he or she did not make any promises.
Unconscionable Contracts

An unconscionable contract is one that is unjust or unduly one-sided in favor of

the party who has the superior bargaining power

Unconscionability is a term in contract law that is used to describe the terms of a

contract that are so severely unfair or one-sided that no reasonable person would
enter into such a contract. Because of how unreasonable an unconscionable
contract is, the contract is considered by law to be unenforceable. This is because it
would not be fair for the person who drafted the contract to benefit from his
deliberate deception. It would also be equally unfair not to let the other party out of
a contract that was drafted for the purpose of deceiving him.

For example, unconscionable language consists of terms or phrases that the

average person would not understand. This lack of understanding would then be
glossed over by the perpetrator in his attempt to have the other party sign a contract
that he would not have agreed to, had he more fully understood what he was
signing

A contract of sale to purchase a home wherein the real estate agent inserted hidden
fees or other shady terms that are written in “legalese” would be an example of
unconscionable conduct. Without seeking the assistance of an attorney, the average
person may not understand what he is agreeing to, but may agree to it anyway due
to a lack of education on the subject, or the belief that he will not find a better deal
elsewhere.

Adhesion Contracts

A standardized contract offered to consumers on a “take it or leave it” basis

without giving the consumer an opportunity to bargain for terms that are more
favorable. Adhesion contracts are the standard form contracts commonly offered
for a consumer’s signature for such activities as buying a car, leasing a house,
taking out a mortgage, and getting insurance coverage. Also known as
“adhesionary contracts,” or “”take-it-or-leave-it contracts,” the makers of these
contracts always have the upper hand, and no need to allow the consumer to
bargain regarding the terms. Other common uses for adhesion contracts include
home contractor or repair services, auto repair services, services for medical or
dental care, and veterinary care.

Adhesion contracts are those that are drafted by the party who has the greater
bargaining advantage, providing the weaker party with only the opportunity to
adhere to (i.e., to accept) the contract or to reject it. (These types of contract are
often described by the saying "Take it or leave it.") They are frequently employed
because most businesses could not transact business if it were necessary to
negotiate all of the terms of every contract. Not all adhesion contracts are
unconscionable, as the terms of such contracts do not necessarily exploit the party
who assents to the contract. Courts, however, often refuse to enforce contracts of
adhesion on the grounds that a true meeting of the minds never existed, or that
there was no acceptance of the offer because the purchaser actually had no choice
in the bargain.

Aleatory Contracts

An aleatory contract is a contract between two parties with agreements contingent

on a specific event or occurrence. Or simply put an aleatory contract is a mutual
agreement the effects of which are triggered by the occurrence of an uncertain
event. In this type of contract, one or both parties assume risk. A fire insurance
policy is a form of aleatory contract, as an insured will not receive the proceeds of
the policy unless a fire occurs, an event that is uncertain to occur.

For example, in a contract of insurance, an insured pays a premium in exchange

for an insurance company's promise to pay damages up to the face amount of the
policy in the event of a person’s house being destroyed by fire. The insurance
company must perform its obligation only after the fortuitous event, the fire,
occurs.

Void contracts.
The term ‘void contract’ is a contradiction in terms since the whole transaction is
regarded as a nullity. It means that at no time has there been a contract between the
parties. Any goods or money obtained under the agreement must be returned.
Where items have been resold to a third party, they may be recovered by the
original owner. A contract may be rendered
void, for example, by some forms of mistake. For example A promises B to sell his horse
after one month to B for 50,000. Before the completion of one month, the horse died. Now, the
contract becomes void as the contract cannot be performed, i.e. the object on which the parties agreed
is no more, so there is an impossibility of performance of the contract. This type of Contract is known as
Void Contract.

Voidable contracts.

Voidable Contract is the contract which can be enforceable only at the option of
one of the two parties to the contract. In this type of contract, one party is legally
authorized to make a decision to perform or not to perform his part. The aggrieved
party is independent to choose the action. The right may arise because the consent
of the concerned party is influenced by coercion, undue influence, fraud or
misrepresentation, etc.
Contracts founded on a misrepresentation and some agreements made by minors
fall into this category. The contract may operate in every respect as a valid contract
unless and until one of the parties takes steps to avoid it. Anything obtained under
the contract must be returned, insofar as this is possible. If goods have been resold
before the contract was avoided, the original owner will not be able to reclaim
them .Many people unlawfully induce or persuade the will of another person to
enter into a contract, which becomes voidable at the option of the party whose
consent was so induced.
Also for example if X says to Y, that he should sell his new bungalow to him at a
nominal price otherwise, he will damage his property and Y enters into a contract
due to fear. In this situation, the contract voidable as the consent of Y is not free,
so he has the right to avoid the performance of his part. As well as he can claim for
any damages caused to him.

BASIC REQUIREMENTS FOR A VALID CONTRACT.

The essential ingredients of a contract are:

1 Agreement. An agreement is formed when one party accepts the offer of
another.
2 Considerations.
The parties must show that their agreement is part of a bargain; each side must
promise to give or do something for the other.
3 Intention.
The law will not concern itself with purely domestic or social arrangements. The
parties must have intended their agreement to have legal consequences.
4 Form.
In some cases, certain formalities must be observed.
5 Capacity. The parties must be legally capable of
entering into a contract.
6 Genuineness of consent.
The agreement must have been entered into freely and involve a ‘meeting of
minds’.
7 Legality.
The purpose of the agreement must not be illegal or contrary to public policy.
A contract which possesses all these requirements is said to be valid. If one of the
parties fails to live up to his or her promises, that party may be sued for a breach of
contract. The absence of an essential element will render the contract either void,
voidable or unenforceable.

AGREEMENT

The first requisite of any contract is an agreement. At least two parties are
required; one of them, the offeror, makes an offer which the other, the offeree,
accepts.
An offer is a proposal made on certain terms by the offeror together with a promise
to be bound by that proposal if the offeree accepts the stated terms. An offer may
be made expressly – for example, when an employer writes to a prospective
employee to offer that person a job – or impliedly, by conduct – for example,
bidding at an auction.
The offer may be made to a specific person, in which case it can only be accepted
by that person. If an offer is made to a group of people, it may be accepted by any
member of the group. An offer can even be made to the whole world, such as
where someone offers a reward for the return of a lost dog. The offer can be
accepted by anyone who knows about it, and finds the dog.
See case below
Carlill v Carbolic Smoke Ball Co (1893)
The company inserted advertisements in a number of newspapers stating that it would pay £100
to anyone who caught ’flu after using its smoke balls as directed for 14 days. The company
further stated that to show its sincerity in the matter it had deposited £1,000 at the
Alliance Bank to meet possible claims. Mrs Carlill bought one of the smoke balls,
used it as directed but still caught’flu. She claimed the £100 reward but was
refused, so she sued the company in contract. The company put forward a number
of arguments in its defence: (a) It claimed that it had attempted to contract with the
whole world, which was clearly impossible. The Court of Appeal held that the
company had made an offer to the whole world and it would be liable to anyone
who came forward and performed the required conditions. (b) The company
further submitted that the advertisement was in the nature of a trade ‘puff’ and too
vague to be a contract. The court dealt with this argument by asking what ordinary
members of the public would understand by the advertisement. The court took the
view that the details of use were sufficiently definite to constitute the terms of a
contract and that the reference to the £1,000 deposited at a bank was evidence of
an intention to be bound. (c) The company also argued that the claimant had not
provided any consideration in return for its promise. The court held that the
inconvenience of using the smoke ball as directed was sufficient consideration. (d)
Finally,the company submitted that there was no notification of acceptance in
accordance with the general rule. The court held that in this kind of contract, which
is known as a unilateral contract, acceptance consists of performing the requested
act and notification of acceptance is not necessary.
The court concluded that Mrs Carlill was entitled to recover the £100 reward.

It is important to identify when a true offer has been made because once it is
accepted the parties are bound. If the words and actions of one party do not amount
to an offer, however, the other person cannot, by saying ‘I accept’, create a
contract. A genuine offer must, therefore, be distinguished from what is known as
an ‘invitation to treat’..
Termination of the offer
An offer can end in a number of ways:
1 By acceptance. An offer which has been accepted
constitutes a contract. That offer is no longer available
for acceptance.

2 By rejection. An offer is rejected if:

■ the offeree notifies the offeror that he does not wish
to accept the offer;
■ the offeree attempts to accept subject to certain
conditions;
■ the offeree makes a counter-offer.

3 By revocation before acceptance. An offer may be revoked (withdrawn) at any

time before acceptance but it will only be effective when the offeree learns about
it.
4 If the offer lapses. The offeror may stipulate that theoffer is only open for a
limited period of time. Once the time limit has passed, any acceptance will be
invalid.Even if no time limit is mentioned, the offer will not remain open
indefinitely. It must be accepted within a reasonable time.
5 Death. If the offeror dies after having made an offer and the offeree is notified of
the death, any acceptance will be invalid. However, where the offeree accepts in
ignorance of what has happened, the fate of the offer seems to depend on the
nature of the contract. An offer which involves the personal service of the offeror
clearly cannot be enforced, but other offers may survive, be accepted and carried
out by the deceased’s personal representatives.If the offeree dies, there can be no
acceptance.The offer was made to that person and no one else can accept.
6 Failure of a condition attached to the offer. An offer may be made subject to
conditions. Such a condition may be stated expressly by the offeror or implied by
the courts from the circumstances. If the condition is not satisfied, the offer is not
capable of being accepted.

Acceptance
Once the presence of a valid offer has been established ,the next stage in the
formation of an agreement is to find an acceptance of that offer. The acceptance
must be made while the offer is still open. It must be absolute and unqualified. An
acceptance may take any form. It can be given orally or in writing but silence
cannot normally amount to an acceptance.

CONSIDERATION
On the previous pages we have seen how an agreement is formed – the
requirements of offer and acceptance –but the mere fact of an agreement
alone does not make a contract. The law concerns itself with bargains.
This means that each side must promise to give or do something for the
other, although it does not appear to be a requirement that the parties
must be conscious that they are providing a benefit or suffering a
detriment .The element of exchange is known as ‘consideration’ and is
an essential element of every valid simple contract. A promise of a gift
will not be binding unless made in the form of a deed. Consideration can
take two forms: executed or executory. What is the difference between
them?
1 Executed consideration is where one party promises to do something
in return for the act of another, e.g. reward cases.

Promise ACT

2000 naira offer for the return of bingo David sees the advert in the local paper.
and puffy. Ring mr TEJIRI at He finds the dogs returned it to Mr
070666419911 Tejiri and claims the reward

‘Cash with order’ terms are an example of executed consideration.

2 Executory consideration is where the parties exchange promises to perform acts
in the future, e.g. ‘cash
on delivery’ terms.

INTENTION
So far we have established two requirements for a binding contract: agreement and
consideration. The law demands, in addition, that the parties intended to enter into
a legal relationship. After all, if you invite a friend round for a social evening at
your house, you would not expect legal action to follow if the occasion has to be
cancelled. So how does the law decide what the parties intended? For the purpose
of establishing the intention of the parties, agreements are divided into two
categories: business/commercial and social/domestic agreements.
business/commercial agreements.

In the case of a business agreement, it is automatically presumed that the parties

intended to make a legally enforceable contract. It is possible, however, to remove
the intention by the inclusion of an express statement to that effect in the
agreement.When the parties enter into an agreement subject to contract, they are
expressly stating that they will not be bound unless and until a formal contract is
drawn up

FORMS

If you ask someone what a contract is, you will probably be told that it is a written
document. Some contracts are indeed in writing but the majority is created much
more informally either orally or implied from conduct. Generally, the law does not
require complex formalities to be observed to form a contract. There are, however,
some types of contract which are exceptions to this rule.

1 Contracts which must be in the form of a deed.

Certain transactions involving land require the execution of a deed, i.e.
conveyances, legal mortgages and leases for more than three years. A promise of a
gift is not binding unless in this form.

2 Contracts which must be in writing. The Law of Property (Miscellaneous

Provisions) Act 1989 provides that a contract for the sale or other disposition of
land can only be made in writing and by incorporating all the terms which the
parties have expressly agreed in one document, or, where the contracts are
exchanged, in each. The document must be signed by or on behalf of each party to
the contract.

3 Contracts which must be evidenced in writing. There is only one type of

contract which must be evidenced in writing: s 4 of the Statute of Frauds 1677
requires a contract of guarantee to be evidenced in writing. If you borrow money or
buy goods on credit, you may be asked to find someone who will guarantee the
debt. This means that if you do not or cannot repay the money, the
guarantor will pay your debt for you. The requirement of written evidence does not
affect the formation of such contracts. The absence of writing does not make the
agreement void, so, if any money or property has changed hands, it can be kept.
However, if one of the parties wishes to enforce the contract in the courts, the
necessary note or memorandum must be produced.

CAPACITY
It is assumed that everyone is capable of entering into a contract. There are,
however, some groups of people who are in need of the law’s protection either
because of their age or inability to appreciate their own actions. The groups which
are covered by special rules are those under the age of 18 (minors), mental patients
and drunks.
Minors
Before 1970 anyone under the age of 21 was known asan infant. The age of
majority was lowered to 18 on1 January 1970 and ‘infants’ were renamed
‘minors’. The rules relating to contractual capacity are designed to
protect the minor from exploitation by adults. A minor is free to enter into
contracts and enforce his rights against an adult. The adult’s rights will depend on
the way in which the contract is classified.
1 Valid contracts. There are two types of contract which will bind a minor:
contracts for necessary goods and services and beneficial contracts of service. A
minor must pay a reasonable price for ‘necessaries’ sold and delivered to him or
her. Section 3 of the Sale of Goods Act 1979 defines ‘necessaries’ as ‘goods
suitable to the condition in life of the minor and to his actual requirements at the
time of sale and delivery’. Clearly, luxury goods are excluded. Expensive but
useful items may be necessaries if they are appropriate to the social background
and financial circumstances of the minor. If the minor is already adequately
supplied, the goods will not be classed as necessaries.
A minor is also bound by contracts of employment, apprenticeship and education,
which, taken as a whole, are for his or her benefit.
Roberts v Gray (1913)

The infant defendant had agreed to go on a world tour with the claimant, a
professional billiards player. After the claimant had spent much time and some
money organizing the tour, the infant changed his mind and refused to
go. The claimant sued for breach of contract. The Court of Appeal held that this
was essentially a contract to receive instruction. Since this was for the infant’s
benefit,the contract was valid. The claimant was awarded £1,500 damages.

If the minor sets himself up in business, he will not be bound by his trading
contracts, even though they are for his benefit. The minor can, none the less, sue on
these contracts.
Cowern v Nield (1912)
Nield was an infant hay and straw dealer. He refused to deliver a quantity of hay
which had been paid for by Cowern. It was held that, provided the infant had not
acted fraudulently, he was not liable to repay Cowern.

2 Voidable contracts. There are three kinds of contract which are voidable: leases
of land, partnerships and the purchase of shares. Voidable means that the contract
is binding on the minor until he decides to reject it. He must repudiate the contract
before becoming 18 or within a reasonable time of reaching 18. The main effect
of repudiation is to relieve the minor of all future liabilities, but he can be sued for
liabilities which have already accrued, such as arrears of rent.

A minor may be liable to restore certain benefits which he has received under a
contract which does not bind him. Section 3(1) of the MCA 1987 provides that
where a contract has been made with a minor which is unenforceable
against him, or he has repudiated it, because he was a minor, the court may, if it
thinks it just and equitable to do so, require him to return the property or
any property representing that which he has acquired.The scope of the statutory
remedy is as follows:

(a) The minor can be made to return the goods and money which he still has in his
possession. So if Sebastian, age 17, acquires a case of champagne on credit
and fails to pay he can be required to return the goods to the seller.

(b) If the minor has exchanged the original goods for other property, the court may
require him to hand over the goods received in exchange. So if Sebastian, in the
example above, has bartered a bottle of champagne for a dozen quail’s eggs, the
seller of the champagne may be able to recover the quail’s eggs.
(c) If the minor has sold the original goods for cash, he can be ordered to hand over
the sale proceeds. So if Sebastian sold the case of champagne for cash, he could be
required to hand over the money to the seller.

(d) If the minor has consumed or disposed of the goods, or the proceeds of any sale
of the goods, he cannot be made to compensate the other party. So if Sebastian
drank the champagne or used the proceeds of any sale of the champagne to pay for
an evening at a night-club, he could not be required to compensate the unpaid
seller.

Drunks and mental patients

Section 3 of the Sale of Goods Act 1979 provides that they are required to pay a
reasonable price for necessaries in the same way as minors. Other kinds of contract
are governed by common law. If a person is suffering from mental disability or
drunkenness at the time of making the contract, he will be able to avoid his
liabilities if he can show that he did not understand what the agreement was about
and the other person was aware of his disability. The judges of the Court of
Protection may exercise wide powers over the property and affairs of mental
patients placed in their care under the Mental Health Act 1983. They can make
contracts on behalf of the patient and carry out contracts already made by him.The
Mental Capacity Act 2005 establishes a new statutory framework to protect adults
who lack mental capacity and are unable to make their own decisions.
Section 7 of the 2005 Act provides that a person lacking capacity must pay for
necessary goods and services. The Act came into force on 1 April 2007 capacity
must pay for necessary goods and services. The Act came into force on 1 April
2007.

GENUINENESS OF CONSENT
The most basic requirement of a contract is the presence of an agreement. It must
have been entered into voluntarily and involved ‘a genuine meeting of minds’.
The agreement may be invalidated by a number of factors – mistake,
misrepresentation, duress and undue influence.
Mistake
The general rule of common law is that a mistake does not affect the validity of a
contract. The guiding principle is caveat emptor, which means ‘let the buyer
beware’.
So if a person agrees to pay £1,000 for a car, when in reality it is worth only £500,
the contract is valid and he or she must stand the loss. A mistake as to the quality
of the thing contracted for will not enable a party to escape from the contract.
Misrepresentation
The formation of a contract is often preceded by a series of negotiations between
the parties .A false statement, which is not incorporated into the contract, is known
as a misrepresentation. A misrepresentation is a false statement made by one party
which induces the other to enter into a contract. As a general rule, a positive
statement must be made; keeping quiet about something does not normally amount
to misrepresentation.
In a recent case the seller of a house failed to disclose that it been the scene of a
gruesome murder of a young girl, with the possibility that parts of the
victim’s body might still be hidden in the house. The silence of the seller was held
not to amount to a misrepresentation (Sykes v Taylor-Rose (2004)).
Gestures, smiles and nods can amount to a statement. A course of conduct can also
amount to a representation.

Duress and Undue influence

The general rule of law is that a contract will be valid only if the parties entered
into it freely and voluntarily. At common law, where a party to a contract or his or
her family is subjected to violence or threats of violence, the contract may be
avoided on the grounds of duress.

Barton v Armstrong (1975)

Armstrong was the chairman and Barton the managing director of an Australian
company. Armstrong threatened to have Barton killed if he did not sign an
agreement to buy out Armstrong’s interest in the company on very favourable
terms. The Privy Council held that the agreement was signed under duress and
could be avoided by Barton
Traditionally, the common law doctrine of duress was limited to violence and
threats of violence to the person. However, in recent years the courts have
recognized economic duress as a factor which may invalidate consent
and render a contract voidable.

North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (1978)

The defendant shipbuilders agreed to build a tanker for the claimant ship owners.
The price was payable in US dollars in five installments. After the first installment
had been paid, there was a sharp fall in the value of the US dollar and the
defendants threatened to break the contract unless the claimants paid an extra 10
per cent on each of the remaining installments. The claimants had already entered
into a lucrative contract to charter the tanker on its completion and, anxious to take
delivery, they reluctantly paid the increased installments. Eight months later they
brought an action to recover the excess over the original contract price. It was held
that the contract was voidable on the grounds of economic duress, but that the
claimants could not recover the excess because they had affirmed the contract by
failing to protest before they did.

LEGALITY
The principle of freedom of contract is subject to a basic rule that the courts will
not uphold an agreement which is illegal or contrary to public policy. Where the
contract involves some kind of moral wrongdoing, it will be illegal.If, however, the
conduct is neither immoral nor blameworthy, but simply undesirable, the contract
will be void. A court may object to an agreement either because of a rule of
common law or because it is contrary to statute.
Contracts illegal at common law
The following agreements come into this category:
1 Contracts to commit crimes or civil wrongs, e.g. a contract to assassinate
someone or to defraud HM Revenue & Customs.
2 Contracts involving sexual immorality, e.g. an agreement to pay an allowance
to a mistress or any contract with an immoral purpose.
3 Contracts tending to promote corruption in public life, e.g. a contract to bribe
an official or to procure a title.
4 Contracts of trading with an enemy in wartime.
5 Contracts directed against the welfare of a friendly foreign state, e.g. a
partnership intending to import
whisky into America during Prohibition (Foster v Driscoll (1929)).
6 Contracts prejudicial to the administration of justice, e.g. a contract not to
prosecute a person for an offence concerning the public.

Pearce v Brooks (1866)

Pearce let a coach out on hire to a prostitute (Brooks)knowing that it would be used
by her to ply her trade.The coach was returned in a damaged state. Pearce was
unable to recover the hire charges or for the damage, as the court refused to help
him to enforce a contract for an immoral purpose.
 CONTRACTUAL TERMS

What is a term and what are the different kinds of terms in a contract? What is their
importance and impact if these terms are broken? This are some of the question we
will be treating in this heading.

A contractual term can be defined as ‘Any provision forming part of a contract’.

Each term gives rise to a contractual obligation and breach of which can give rise
to litigation. All terms are not stated expressly but some terms carry less legal
gravity as because they are peripheral to the objectives of a contract.

There are two basic types of Terms which are defined as under.

Implied Terms.

Express Terms.

What is an implied term?

Implied terms are terms of the employment contract that are not necessarily set out
in writing or were agreed orally, but will nevertheless form part of the agreement
between the employer and employee. No matter how well drafted the contract of
employment is, there will still be implied terms and it is important to know what
obligations and duties these impose.

Legal tests for implied terms

As implied terms are not clearly written anywhere, implied contractual terms will
only be implied if they meet certain criteria. These are:

 'Business efficacy' test - This is where a term is implied in order to make the
contract workable. An example of this is the 'duty of mutual trust and
confidence', as without this implied term, the contract of employment can't
work.
 'Officious bystander' test - If a term is so obvious or assumed it will be
implied into the contract. For example an implied term that the employee
will not steal from the employer is an obvious term that it doesn't need to be
expressly written down.
 Custom and practice - A term can be implied into the contract by virtue of
the custom and practice at the workplace or within the industry. An example
 of this could be where a business closes for a trade holiday and gives staff
paid holiday.
 Terms implied by statute - Some legislation will automatically give
employees minimum rights that the employer can't negotiate. If the contract
of employment attempts to lower or doesn't expressly give these rights,
legislation will automatically imply them into the contract. An example of
this is the employee's right to a statutory minimum notice period or equal
pay clauses.

Some important implied terms

The duty to maintain mutual trust and confidence

This is the most commonly relied upon implied term and is often cited by
employees who claim to have been constructively dismissed. The employer must
not conduct themselves in a way that is likely to destroy or damage the relationship
with the employee. Examples of this include physical or verbal abuse, sexual
harassment and/or imposing unfair conditions. Although it applies to the employee
as well, it is typically relied upon by the employee as employers are more likely to
rely on express terms in the contract.

The duty of fidelity

This term requires the employee to faithfully serve the employer and must not act
against the interests of the employer. This only applies during employment and
does not carry on after termination of the employment contract. Examples of this
include carrying on a business in direct competition with the employer or misuse of
the employer's customer database. Post-employment restrictions must be expressly
written down in the contract of employment to be binding on the employee after
they have left.

The duty to pay

This implied term is usually set out as an express term. However if the contract
does not expressly say or it doesn't give the correct pay, then legislation will imply
a term that the worker is entitled to reasonable remuneration or minimum wage for
the work they provide.
The duty to take reasonable care for the employee's health and safety

This duty states that the employer must ensure that the employee's physical and
mental health is taken care of during employment. This also includes a duty to
provide a safe and reasonable working environment.

The duty to take reasonable care in giving references

An employer is not obliged to provide a reference. However if a reference is given,

there is an implied term stating that the employer will exercise reasonable care in
providing the reference. An individual who loses out on a job because of a careless
reference from a current or former employer can recover damages for a breach of
this implied term.

Express Terms:

Express terms can be defined as the terms that have been specifically mentioned
and agreed upon by both parties at the time of making that contract and they can be
either in oral or in written. The express terms of a contract of employment are
those specifically agreed between the parties, whether verbally or in writing. In
many cases these are few (the wage, the hours, the type of work that has to be done
and where), but there are always other terms that are implied (that is, they exist
without being stated or written down). An express term - if not fulfilled the
innocent party may bring an action for breach of contract. All employees have an
employment contract, which can be verbal, written or a combination of both .
Many contracts of employment are purely verbal. While this does not reduce any
contractual rights, it may be difficult to prove the existence of a particular term. A
verbal contract may be later put into writing, for example, by a letter of
confirmation sent after the verbal contract has been made.

If an employee is covered by a workplace agreement or an award, it is normal to

rely on a verbal contract with a letter of confirmation, because the workplace
agreement or award usually provides details of most of the conditions of
employment. However, if the employee is not covered by a workplace agreement
or award, it is a good idea to have a written contract of employment so that the
conditions of employment are recorded. The contract should cover issues such as:

 the main duties of the employee,

 the location of the employment site,
 whether the employee is casual, part-time or full-time, see casual employees,
  the normal hours of work and whether the employee is entitled to payment
for overtime, or time off in lieu of overtime (usually there are limits on the
amount of time that can be accumulated and overtime must be agreed to in
advance),
 the level of salary or wages including whether the employee is entitled to
pay rises upon certain occurrences, including cost of living increases,
national wage increases, increments for age or years of service,
 whether the job is for a fixed period or is ongoing,
 whether there is a probationary period and the period of probation, and
 where there is a probationary period, or where the position is for a fixed
period but is renewable, the form of the review process.

The importance of a term can be clearly understood by explaining the contract. So,
If an agreement is eventually put into writing form, then the statement is more
likely to be a term of the contract. The general rule is that the party is bound by all
the terms set out in a contractual document once they have signed it. This applies
whether they have read the terms and understood them or not.