LAW OF CONTRACT 1.....

LAW 203

The nature and Definition Contract

There is no agreed definition for the word contract.
However, people purpose CONTRACT can be defined as an
agreement between two or more parties with the....... that such
agreement would be enforced by law incase of breach by either
of the parties.
Contract can also be defined as an agreement which is legally
binding and if breached may be enforced by the Court of law,
agasit the defaulting party see Ezejiofor Okonkwu and Ekegbume
NBL Pg 1.
It can also be defined as an agreement which would be
enforced by the Court See G.M Schmitthoff and DAG Surre
Charlas worth's mat marcartine law. In addition, It can be defined
as a promise which the law would enforced in case of breach.
From the above definition, above a prior agreement is
important between the parties, therefore, it is often said that
there must be _Consensus ad idem. In the word there must be
coming together of two minds with a common intention.
Therefore, if the agreement is vague there would be no contract.
And for purpose of validity there must be intention to create legal
relationship. In this regard enforceability and contemplating of law
to be binding is important so that trade and commercial activities
would flourish well. Therefore, if people are left to brench contract
without enforceability , there would be chaos and fraud and
Contract would not flourished as it ought to be. In this regard one
of the functions of law of contract is to regulate the conduct and
activities of Mankind with the sole aim of determining what
contract is when it's enforceable and when it's not enforced, when
it's void and when it's not voidable.

Meanwhile, there must be two or more parties to contract one

make an offer (offeror) and the other person indicate his
acceptance and this is known as offere. In additions, there must
be rights and roligations to be reserved under the terms of the
contract.
From the above discussion, we can now look at what is known as
the Element of Contract or what is often known as basic
requirement of Contrast or still Formation of contract And these
are by way of passing are regarded as.
1. Offer
2. Acceptance
3. Consideration
4. Parties.
5. Intention to create legal relationship.

At this Stage, a discussion would be to what is known as

"Intention to treat & offer and acceptance in the other hand.

GRATUITOUS PROMISE: A promise that is not backed by

Consideration.
*A gentle man agreements

Significantory, not all agreements are enforceable because an

enforceable agreement may not have been contemplated by
either of the parties. Ex. of this, is Social or domestically ..... or a
gratuitous promise which is not actionable i.e, the failure of a
father to keep to his promise of
giving his son pocket money. Therefore, while every "Contract is
an agreement, not - agreement is Contract" To Constitute
agreement, the parties must have intended a legally enforceable
rights and obligations.
Meanwhile, a Contract Could be oral or in a written form, and to
be enforceable it must be supported by consideration. And if you
Can pove for a moment you can ask for the following questions,
namely,
1. What is the scope of an agreement?
2. What is the Significance of a breach of an agreement?
3. What remedies. if any is available to the affected parties?
At this Stage, it is apt to say that a contract is based on
agreement and acceptance. This can therefore be illustrated as
follows:-

Mr. A makes an offer, while Mr B accepts the offer with these two
in existence and followed by considerations, intentions to create a
legal relations, then a Contract is said to exist.

Classification of Contract.
A Contract Could be formal and Simple. It is formal, if it is made
by a deed or under Seal. Apart from this all others are Simple
Contract
A formal contract must be is written It must be signed sealed.
delivered by the party executing the contract. In the modern, seal
must not be necessary but a signature must be attached. A
simple Contract may be oral or in a written form.

EXPRESS AND IMPLIED CONTRACT

A Contract is expressed when the terms are clearly stated. This

includes price, Duration, mode of delivery, made of payment e.t.c.
It is implied, when the terms are not expressly stated, and in this
case, inferences can be made. Therefore the Court may construe
the existence of a contract from the conduct of the parties as
against their words or correspondences. For Example; A
passenger enters a transport vehicle, without any dialogue with
the vehicle owner in this situation it is implied that he pays the
transport fee while the driver takes him to his destination. In the
case of Brodanen v. metropolitan railway Company (1877) 2AC66.
The plaintiff made an offer in written to the defendant, with an
instruction that the latter should sign and return a form that
contains the terms of contact on the terms specified in the . The
court held that they are bonds by the by the terms of the contract
because the offer was deemed accepted through their conducts.
The Court further the Conduct of the conduct of parties was the
assumption that they've mutually acceptable the term of the
unsigned document.

CCONDITION FOR A VALID CONTRACT/FORMATION OF

CONTRACT/BASIC ELEMENTS

1. OFFER AND ACCEPTANCE

The importance of these the concepts can be seen in situations

where there is a controvasy as to whether or not their is a
meeting of the minds of the parties. In this case, the Court seized
with th case it to first of all brake down the agreement of the
parties into offer and acceptance. This is very crucial so as to
know what the parties have said. Against this background, the
two concepts Can be defined as follows:

1. Offer; This is a proposition put forward by Mr A to the B Mr B

accept to be bound by the proportion. In this regard, for Mr. A "the
offeror" and Mr. B is the "Offeree". Therefore, "offer" is a
Statement made by person (offeror) of the terms specified by him
and which it accepted by the other party (offerer) will create a
valid agreement between the two of them. Offer may be in
written, spoken words or by conducts. If the offer is put is a
written form, it may be put in to be in paragraphs, clauses and
Sub clauses. And if it is by Conducts, we can see that on a daily
basis, we entered into Contract. For example, a bus driver Stops
at a bus stop with a view of Carrying some passengers. In another
respect, an offer may be to a person, or group of Pecten on to a
whole world.

As a matter of fact, it is important to know that, a statement

before said to amount to an offer must satisfy three Conditions.
A. It must be definite, certain and unaquivocal. In other word it
must be a definite promise to be fufilled provided that certain
specified.

B. Such statement must be from a person who is liable to be bou

in the terms. Eg, it must be form the offeror himself or his lawful
agent.

C. The Statement must be made to the offeres-

In another respect, offer may be made orally, by telephone, telex,

or telegraphic messages or by way of written or even conduct. It
would also be made to a specific individuals or to members of the
general public in this situation. See the Case of Carlil v Carbolic
Smokeball Company. (1813) 1 QB 256. In this Case, the
defendants are makers of some medicion Known as Carbolic
Smokeball ball. They made an advertisement promising to pay
100 pounds to any person who caught influenza after having
Sniffed at the Smokeball for a period is a prescribed.
And that the sum of 100 pounds, had been deposited with their
bank so as to show their commitment. Seeing the advert, Carlil
bought a Smoke ball, Suiffed it as prescribed and the caught flu.
He Sued for the amount and succeded, the defendant argued
that the advert was not a true offer but the C.A. held otherwise.
However, offer should be distinguished from invitation to treat.
Invitation to treat is a mere expression of intention which is never
contemplated to lead into contractual agreement. For Ex, issue of
Catalogge Containing description of goods for sale at specified
prices, displaying different types of goods in a shop with price
tags in them, advents of the timetable for operation of railways,
buses, aeroplanes etc. or holden of an auction sale, invitation to
give quotation of process goods to be supplied for execution of
certain works.
From the above, Communication for offer must be made by they
offerer to the offeree before it becomes effective. Therefor a
person cannot accept an offer, the existence which he has no
knowledge of.

OFFER DISTINGUISHED FROM SIMILAR CONCEPT

A. INVITATON TO TREAT:

As noted earlier, offer can be differentiated from invitation to treat

and for propose of this discussions, Invitation to treat is
prelimmary to an offer. Its essence is that by it, the Supposed
offerer is merely initiating negotiations from which agreement
might/might not ...... results.
The negotiation leads to an offer if the offeror finally assumes a
definite and unshifting positions of preparedness to be bound by
the offer if the other party accepts it. The difference between
offer and invitation to treat can be seen is the Case of Fisher v.
Bell (1961) 1QB 394. In that case, the restriction offensive
weapon Act of 1959, made it an offence to offer for Sale a flick
knife a Shop Keeper exhibited Such knife in the shop window and
was prosecuted the Court held that the exhibition was merely an
invitation to treat but not an offer for sale. He was therefore
acquitted.

21st Jan, 2025

As Similarly, in an auction for sale, the auctionner's request for
bids is not an offer but an attempt to "set the ball rolling". In this
situation the bid is the offer and the acceptance will only take
place when auctionner's hammer falls Therefore, unless the
hammer falls, a bid be withdrawn.
In additions, a request for information is not an offer. Therefore if
a prospective buyer asked whether a piece of land could be for
12K, it is not an offer.

Meanwhile, see Sec 58(2) of the sale of Goods Act 1893,

applicable in all the Northern and Southern State as a pre- 1900
English Statute of General Application.
As a matter of fact, the distinction between offer and invitation to
treat is that, if offer has been truly made and the offeree accept
it, the offerer is bound by the terms of the contrat. In this regard,
where tender has been made and there are many offeree's that
accepts the offer, the offerer is not bound to accept the lowest or
any other tender. Therefore offer for a tender is ut a call for offer.

B. OFFER AND DISPLAY OF GOODS FOR SALE

The display of goods at a Shelf is not an offer but an invitations to

treat. See Pharcotecal Society of Great Britain v. Boots Cash
Chemists (Southern Limited) (1953) CA. And in the case of Fisher
v Bell (Supra), Lord Parker said," It is perfectly clear that
according to the ordinary law of Contract, the display of an article
with a price on it in a shop's window is merely invitations to treat.
It is in no sense, an offer for sale, the acceptance of which
constitutes a Contract". Meanwhile the law is still the same if
there is no price tag in the article

C. OFFER AND ADVERTISE MENT.

The Same rules applied just like in the previous example. In this
regards, advertisement of a goods is not an offer for sale.
In another respect, adverts for the reward of a return of boss
property, it is not an offer. However, if the finder of the goods
returns the property knowing of the reward then he is entitled to
the reward. In this Case, there is offer and acceptance but not
invitation to treat. This is becaus the owner cannot claim that he
was not making an offer. This type situation regarded as unilateral
Contract (A one sided Contrat) in the sense that, by a conditional
promise given to the other party the choice to perform the
conditions or not. Although most Contracts are either Bilateral or
Multi-lateral.
In a unilateral Contract , the offeror would not know if the offer
still open for acceptance until the other party of the Contract has
perfumed his own part of the contract see Carley v Carbohic
Smoke Company (Supra).

TERMINATION OF OFFER

An offer once made, remains open for an acceptance, until any of

the following events happens.

1. REVOCATION.
An offer could be withdrawn anytime before it is accepted. It
makes no difference if the offeror says that he's leaving the offer
for a period of time and before this time, he's still at liberty.
However, revocation must be Communicated to the offeree. But
it is Sufficient if the oferee act leams of the revocation form a
reliable person.

2. REJECTION
A rejection of an offer makes the offer incapable of acceptance.
For example, Mr A makes an ofer to Mr B. and Mr B answered in a
negative way, and this can take place in two situations.
(i) A direct intentional refusal
(ii) A counter offer
For Example, this is where the offeree makes an attempt to
accept on new terms that are not contained in the offer. For
example, Mr A has offered #12,000 and Mr B is accepting Says
#7,000. This situation would not however make genuine request
for information to accertains some aspects of the offer. But if the
offeree accepts subjects to conditions, then this will amount to a
rejecting the offer.

3. LAPSE OF TIME
If the offer is opened for a limited, then acceptance after the
expiration of this period is invalid. And if there is no time fixed,
then it must be accepted within a reasonable time.

4. OCCURENCE OR NON-OCCURENCE OF A CONDITION.

If this happens, it seize to exist and become so incapable of
acceptance after the conditions has occured. An offer to insure
the life of a person terimates, if the person leasses to exist
because it canot be accepted after the person is dead. The same
thing applies if it is subjected to occurence of an act, and this act
dich not take place.

5. LOSS OF CONTRACTUAL CAPACITY

If either of the parties becomes ingame before the offer is
accepted, then the offer lapses.

6. DEATH OF THE PARTIES

Death of either parties before acceptance termmates the offer.

ACCEPTANCE

This is regards as the final expression of assent to the terms of

the offer I.e. it is an indication of intention and willingness to be
bound by the terms of the offer. And once it is acapted it becomes
a legal promise, a breach of which leads to redress is a law Court.
But acceptance has to be Communicated to the offeror, otherwise
acceptance without Communication is in effective.
Acceptance is also regarded as a final and unqualified expressins
of assent to the terms of the Contract.
See Orient Bank PLC v Bilante Internatinal Ltd (1997) 8 NWLR
P515, Pg. 37 where acceptance was defined as follows;
"Acceptance of an offer is the reciprocal act of action of the
offeree as to the offer in which he indicates his agreement the the
terms of the offer as convened to him by the offerer". From this,
acceptance is the act of compliance on the part of offeree with
the terms of the offer.

In the case at hand, the respondent who is the customers of the

appellant bank applied for a loan of 18 millions. The appellant
responded and make a formal offer, Spelling out the terms of
granting the loan and part of the offer concluded as follows, -
Kindly confirms the above agreement reached at today's meeting
by signing and returning the duplicated as instructed-.

The respondent wrote another letter, which, while accepting the

offer, contained some requests outside the terms of the applicant
Letter. The Court held that apart from constituting a Counter offer,
the respondent's letter did not comply with the prescribed mode
for acceptance and to in effective under the appropriate Anambra
State Contract Law.

The Court further held that; The reason for this Stipulation in that
if acceptance were to be based on silence or mental assent, then
its acertainment is bound to be illusory and it be guess work,
unless the judge Was a Super human who would be bound to
unfold the inner most recesses of the act of the pan making the
mental assent is in operative
27th Jan, 2025.
Therefore, for it to be operatrice, acceptance must be
Communicated
Acceptance can be seen as follows:

A. Through the conduct of the parties

B. By words of the parties
C. Through the document that have passed between them.

As a matter of fact, acceptance must be an external manifestation

assent, words Spoken or act done by the offeree or his agent. This
must however be notified to the owner.
Acceptance must be unequivocal,. In other words it must tally
with the offer. Therefore, any variations or modifications while
accepting will be invalid. This is because such addition amount to
a counter offer but not acceptance. Acceptance must also be
made by the person to whom the offer was made or his agent.
But if the offer is made to the general public then any member of
the public is of liable to accept. However, a mere intention to
accept or silence can not constitute acceptance.

Invalid Ways of Acceptance.

1. Counter offer

Acceptance must tally with the offer. Qualifications ammendment

to the offer means Counter offers and so it means an invalid
communication of the offer See Orient Bank (Supra) where it was
held as follows; In other to Constitute an acceptance, the assent
to the terms of an offer must be absolute and unqualified. If the
aceptance is conditionally or any fresh term is introduced by the
person to whom the offer made his expression of an assent
amount counter offer, which in turn required to be accepted by
the person who made the original offer.

2. Conditional Acceptance.
Acceptance Subject to contract and provisional acceptance is
inalid because Such conditions can not create binding contrat
until the conditions has been met.

3. A Conditional assent to an offer does not constitute acceptance

and so invalid in law.

4. Aceptance in ignorance of the offers is invalid in law. This is

because, the offer can not be accepted by a party who is not
aware the of the offer.

Communication of Acceptance.
For an aceptance to be valid, there must be a Communication and
this must be seen by way of words, conduct, writing or by telex,
telegram, fax or mail. But in certains cases, Communication may
be waived, For example, in cases of unilateral Contract for a
promise of reward.

3 CONSIDERATION.

Before a person Could be held bound under a Contract, it must be

Shown that the transaction is supputed by Considerations.
What is Considerations?
In the case of Donlop v. Selfridge (1915) AC 847, Consideration
was defined as an act of forebearance of one party or promise
them of.
Is the price for which the promise of the order is bought and the
promise this given for valid is enforceable. In other words, it
described as the price paid by the offeree for the offeror's promise
or it's something given or accepted in return of promise.
Example of Considerations is money or other property or a
proomise to Pay or transfer. Therefore, if Mr A pays a
considerations then he is becomes entitled to sue for breach of
Contract And to succeed, Mr A must sure that he had paid a price.
However, A gratuitous promise is not a good Considerations
capable of clothing the Contract with the force of
enforceability.
Meanwhile, note that consideration may not be adequate but
must have a legal value. And that Consideration may not be
equivalent to the promise provided that it has value is the eyes of
law. This is because the Court Can contract for a person whohas
made bad bargain. As a matter of fact, its inadequacy is irrelevant
in law. It is therefore the duties of the parties to make their
contract so once there is no fraud, mistake or undue influence the
Court will not invalidate a contract on the grounds that is not
favourable.
Consideration must have value in law, but it cannot be illegal or
immoral or contrary to public policy. Therefore, an illegal
consideration would not be enforceable in law. Meanwhile, four
rules governs consideration, and they include;

(a) It must move from the promisee to Succed, the plaintif must
show that he has furnished Considerations. Therefore, "he will fail
if a third party furnished the consideration"
(b) It may be executed, executory but not passed. It is executed
when the plaintiff who pays the consideration can show that he
has done his own part of the bargains Therefore the performance
of the promise which is the consideration constituted an executed
considerations.
(c) It is executory when the two parties exchange promises, for
example, A agrees to sell his house for #5,000 and B also agreed
to buy A's car for the same amount. In this situation, the
transaction is to be carry out at a future date.
(d) And it is passed to consideration when a party to a contract
makes another promise which is after an independent of the
transaction between him and the other party, The Subsequent
promise is said not to attached to the transachriss nor can it
affects the legal position between the parties. The subrequent
promise is called Post Considerations for ex; Mr A lost #10
because it fell into a well, and out of pity, B enters the well and
recover the money, if later on, an act of gratitude, A promises a
reward B cannot reley on his act as consideration because it's
past consideration

4. INTENTION TO CREATE LEGAL RELATIONSHIP.

Apart from offer and acceptane, Consideration, the parties must
have the intention of creating a legal relationship. Although, it
need is not to be stated yet the test is an objective one. In other
words, the test is that of a reasonable man, on whether such
anticipation of intention is created or not. However note the
following:

A. Where the parties expressely or impliedly exclude an int legal

relationship. For example, a clause in football pools which states
that the sending in and acceptance of coupon and everything
done in connection there which Shall not give rise to any legal
relationship or legally responsible or pool promotion agreement
which are binding in honor only. Again, a gentle man agreements
does not create a legal relationship.

B. Where the agreement relates to commercial on business

transaction.
- In this case the Court would presume that there's an intention to
create legal relationship until the contrary is proved to fee Carley
v. Carbolic Smoke Ball (Supra). Using the objective test, the Court
held that a reasonable third party, working at the advert, par-
Hanlarly, the parts Starting that the £100 has been deposited of a
bank acount as a guarantee of their good faith would conclude
that an - intention to Create legal relationship had been
anticipated.
See where the agreements relate to purely domestic family or
social matters, Here the Court would presume that there's no
such intention. But if the promise is followed with consideration
then the Court may presume it to be in existence.

D. Using a reasonable main test, if a reasonable man would

presume that there was no intentions of practices to be bound by
th promises, then there is no contract.

Above all in finding out whether such intention is Contemplated

with that legal liabilities can be see it the situations;

i- Commercial Agreements.
In this case, the intention is presumed and so the onus is on the
person who's denying such existence to prove it.

ii- Social, Family or other Domestic Agreement.

In this case, intentions may depend on the inference to be draw
by the Court form the language use by the parties and the
circumstances under which they use it.

iii. Domestic Agreement

Agrements between husband and wife or agreement that are
made doing family life and if breached litigation is not
contemplated. For Example A monthly allowance by husband to
his wife or a birthday gift etc, but beyond these, there could be
situations where intention to be bound is contemplated see MeriH
v. MeriH (1970)2 AER 760.1 In this case, the discussion between
husband and wife was put is a written form and Signed by the
husband in the insistence of the wife i.e ".. you will pay all
charges. in connection with the house... until such time as the
mortgage repayment has been completed. I will agree to transfer
the property on to your Sole ownership.
Upon payment of the mortgage money, the husband refuse to
transfer the money to her. The CA. held that the parties have
intended to perfect their legal relations and that an actions for
breach of contract could be retained. This Can be see in Balfour
v. Balfour (1911) 2KB 571, In that Case, the couple were on leave
in England. On ground of held the wife was unable to follow the
husband to abroad. The husband promise to pay £30 a month as
maintenence during the time of his temporary separation. The
wife Sued to besach of agreement, the Court of Appeal held that
there's no legal relationship has been contemplated and that the
action must fail. The Court further held that, it is necessary to
remember that there are agreement between parties which do
not results in contracts within the meaning of thal team in law.
The ordinary ex, is colagus two parties agreed to take a walk
togethers or there's an offer & acceptance of hospitality. The body
would Suggest in ordinary Circumstances that those agreements
should in what we know as a Contract, and one of most usual
forms of agreement which dost not constitute Contract appears to
me to be the arrangements made between husband and wife to
my mind these agreements or many of them do not results in
contact at all. Even though they may be what as between other
parties constitute consideration because the parties didn't intend
they should be offered by legal consequences.