THE LAW OF CONTRACT

Definition of Contract
• An agreement which is legally binding on the parties to it,
if broken, may be enforced by civil action in court against
the defaulting party.
Classification of Contracts
• Contract under Seal (Formal Contracts)
• Simple Contract 
• Express Contract
•  Implied Contract 
• Bilateral Contract / Multilateral Contract
• Severable Contract
 REQUIREMENTS FOR THE FORMATION OF A
VALID CONTRACT
• The essential requirements for the formation
of a legally binding contract are as follows:
• firm unequivocal offer;
• definite, unqualified acceptance,
• valuable consideration,
• intention to create legal relations,
• contractual capacity
• lawful object.
 OFFER
• a proposition made by one party, called the offeror, to
another party, called the offeree, clearly & precisely indicating
the terms under which the offeror is willing to enter into a
contract with the offeree.
• A valid offer must satisfy three conditions:
• must be definite, certain & unequivocal
• must emanate from the person liable to be bound if the
terms are accepted
• must be communicated to the offeree
• may take many forms. E.g, orally, by telephone, letter,
telegram, telex or some act or conduct of a person.
Offer distinguished from Invitation to Treat

• true offer binds the person making it unlike invitation to

treat
• An offer must be a definite, certain and unequivocal
proposition or promise to be bound provided that certain
specified terms are accepted.
• invitation to treat is preliminary to an offer. It is an “offer
to negotiate”, an “offer to receive offers,” The negotiation
crystallizes into an offer, when one of the parties finally
assumes a definite and unshifting position of
preparedness to be bound if the other party accepts.
 Examples of Invitation to Treat
 
• Display of goods for sale
• Advertisement of sales in catalogue
• Announcement of a competitive scholarship exam
• scholarship to the candidate who obtains the highest
mark
• Invitation to interview for a job.
• Request for Tenders
• Advertisement of auction sale and request for bids.
• Negotiations for sale of land and for other complicated
contracts.
• Communication of Offer
• An offer may be made to a person, group of persons, or to the public. Carlill V. Carbolic
Smoke Ball Co.
• Termination of Offer.
•  1. Revocation before it is accepted. Routledge V. Grant.
• Revocation must be communicated to the offeree
• 2. Rejection. Occurs in two ways: (i) direct intentional refusal of the offer(ii) counter-
offer. occurs when the offeree accepts the offer on new terms, not contained in the
offer.
• Effects: Destroys the original offer and the offeree cannot later accept it. Hyde v.
Wrench
• Replaces the original offer & becomes a new offer capable of acceptance
• 3. Lapse of time
• 4. Occurrence or non-occurrence of condition
• 5. Death before Acceptance
 ACCEPTANCE
• Final expression of assent to the terms of an offer without
variation, qualification or addition.
• Attempt to accept an offer with qualification or addition is a
counter-offer .
• conditional assent to the terms of an offer is not an
acceptance. Odufundade v. Ososami . held that an
acceptance expressed as “a tentative agreement without
engagement” could not result in a contract.
• An offer can only be accepted by the person to whom it is
made or his authorized agent.
• Communication of Acceptance
 CONSIDERATION
• Def in Currie v Misa as “some right, interest, profit, or
benefit accruing to one party, or some forbearance,
detriment, loss or responsibility given, suffered or
undertaken by the other.”
• Rules Governing Consideration
• 1. Be sufficient but need not be adequate.
• But will be insufficient in d ffing circumstance
• A) merely performing a public duty,is insufficient to
constitute enough consideration to sue. Collins v
Godfrey
• B) Where the plaintiff promises to do something he is already
bound by contract or law to do for the defendant
• 2. Move from the promisee, though not necessarily to the
promisor
• The rule is that the person who furnishes consideration is the
one who can sue on it. Tweddle v. Atkinson. the ptiff and the
daughter of William Guy, were to marry. To provide them with
advancement, a contract was made btw William Guy & John
Tweddle, the father of the ptiff, where each promised to pay
the ptiff a sum of money. William Guy failed to do so & the
ptiff sued. Action failed as he was “a stranger to the
consideration.
• 3. May be executed or executory, but not past
• Past when it consists of a price paid or an act prior to &
independent of the promise that the ptiff seeks to enforce.
Roscorla v. Thomas. pltiff bought a horse from the def.
After the sale, def promised ptiff the horse was “sound
and free from vice.” The horse turned out not to be so.
ptiff’s action for breach of the promise failed because
although the ptiff furnished consideration in the form of
payment at the time of the sale, that consideration was
“past” and he had furnished no new consideration for the
defendant’s subsequent promise.
• Must not be illegal, immoral or contrary to public
policy
• Public welfare means public safety, public morality,
public order and public health.
• George Okonkwo v Pius Nwoga.ptiff gave the def
£7,500 and a car to assist him in defeating fellow
contractors in a competition for contracts. He got no
contract and he brought an action to recover his
money. Held, no court would assist a ptiff whose
cause of action is based on an immoral or illegal act.
 INTENTION TO CREATE LEGAL RELATIONS

• where valuable consideration is present, an

agreement will not be binding unless the
parties intend it to give rise to legal relations.
This need not be expressly stated.
• Cases in relation to the existence or otherwise
of an intention fall into three categories:
1. Where the parties expressly exclude an
intention to create legal relations.
• E.g an honour clause. Atu v. Face-to-Face Pools Ltd. ptiff
sued claiming N3,000 as winnings on the def football
coupon.Def denied liability and relied on the following
clause in the document: “… any coupon and any
agreement or transaction entered into or payment made
by, or under it, shall not be attended by, or give rise to any
legal relationship, rights, duties or consequences
whatever or be legally enforceable, or the subject of
litigation, but shall be binding in honour only”. Held the
transaction did not intend to create any interest, rights or
obligation enforceable at law.
• 2. Where the agreement relates to a business
transaction.
• Here the courts presume that an intention to create
legal relations exists, unless and until the contrary is
proved. Carlill v. Carbolic Smoke Ball Co. defs advertised
their anti-influenza capsule by offering to pay £100 to
any purchaser who bought and used it and still
succumbed to influenza within a given period. They
declared that they had deposited £1,000 with their
bankers ‘to show our sincerity in the matter’.
• The defs argued that no legal relations
were contemplated as the advertisement
was “a mere puff,” “a promise in honour.”
The court rejected this plea and held that
the defendants were contractually bound
because they intended legal relations
when they declared the bank deposit of
£1000. 
• 3. Where the agreement relates to domestic, family
or social affairs
• the courts presume that there is no intention to
create legal relations unless the circumstances is
proved. In Balfour v. Balfour. def, was on leave in
England with his wife. At the end of the leave, he
went back to Ceylon alone, leaving his wife in
England on her doctor’s advice. Before leaving , he
promised to pay his wife £30 a month as
maintenance during the period they lived apart,
• provided that she would look after
herself without calling on him for further
assistance. He defaulted, the wife sued
him for a breach of the agreement. Held
the agreement was a mere domestic
arrangement between husband and wife
and no legal relations was been
contemplated
 LAWFUL OBJECT: ILLEGALITY
 

• A contract is totally void and unactionable

if its object is illegal. A contract is illegal if
one of the following happens:
• (a) violates the law of the land; e.g a
contract expressly or impliedly forbidden
by statute, a contract to commit a crime or
a tort or to defraud a third party or the
government;
• B) if it is contrary to public policy
• the contract is void ab initio and no action can lie on it. The
maxim is, ex turpi causa non oritur action (“there can be no
cause of action upon a base ground”).
• Money paid or property transferred by one guilty party to
the other under the contract is irrecoverable. The maxim
which expresses this principle is stated thus: in pari delicto
potior est conditio defendentis (“where the parties are
equally at fault the position of the defendant is stronger”).
• 
 CONTRACTUAL CAPACITY
 

• For a contract to have any validity in law, the

parties making it must have full capacity to do
so. Capacity is the legal ability to enter into
contracts that are binding at law. In Nigeria,
the requirement of contractual capacity is
important in relation to infants, persons of
unsound mind, drunken persons, illiterates
and corporations. All other persons have full
contractual capacity.
 Infants
• Infant is a person under 21 years of age. The law governing the
contractual capacity of infants is d Infants Relief Act 1874 .it
introduces d following:
• An infant has full capacity to enter into contracts for the supply of
necessaries for himself and members of his family. Such a
contract is valid and mutually enforceable by the infant and the
other party.
• Necessaries are defined in section 2 of the Sale of Goods Act
1893 as “goods suitable to the condition in life of such infant and
to his actual requirements at the time of sale and delivery.”
• A contract for education has been classified as a contract for
necessaries: Roberts v. Gray.
• An infant has a limited or qualified capacity to enter into:
– Contracts of service or of apprenticeship. But such a contract is valid only
if, viewed as a whole, if it is for the substantial benefit of the infant,;
– Contracts in which the infant acquires an interest in some subject-matter
of a permanent nature, such as land or shares in a company. Such a
contract is valid and binds the infant, but it is voidable by him during
minority or within a reasonable time after attaining majority
– Trading Contracts and promises of marriage. A trading contract is not
binding . Thus, in Cowern v. Nield, [1912] 2 K. B. 419, it was held that an
infant a hay and straw dealer was not liable to repay the price of a
consignment of hay that he had failed to deliver. But the contract is valid
against the adult with whom the infant has contracted. Accordingly, the
infant may choose to enforce the contract. The same rules apply to a
promise of marriage. The infant is not bound by it but the adult is bound.
• An infant has no contractual capacity
whatsoever in respect of the following: (a)
contracts for the repayment of money lent or
to be lent; (b) contracts for goods supplied or
to be supplied (other than necessaries); and
(c) all accounts stated, i.e., all admissions of
financial indebtedness. Any such contract or
transaction entered into by the infant is
absolutely void. Infants Relief Act 1874
 Persons of unsound mind
 

• A person of unsound mind (i.e. an insane person) has

a full capacity to contract during a lucid interval.
Such contract is valid and mutually enforceable by
the parties.
• A contract made by an insane person while in a state
of insanity is voidable at his option if he can prove
that at the time of contracting, he was suffering from
such a degree of mental disability that he was
incapable of understanding the nature of the
contract, and this was known to the other party.
 Drunken persons
• If a person, when he contracts, is in such a state of
drunkenness as not to know what he is doing, and
if this is know by the other party, the contract is
voidable at his option. The burden is on the
drunken person to prove both requirements.
• In relation to necessaries, section 2 of the Sale of
Goods Act applies to drunken persons in the same
way as it does to persons with mental incapacity.
 Illiterates
• Illiterate is defined as “a person ignorant of letters or
literature; without education; unlearned or
uneducated person
• Section 3 of the Act provides that any person who
writes a letter or document (e.g. a contract) at the
request or on behalf of an illiterate person shall also
append his name and address on the letter or
document as the writer
• Non-compliance with section 3 renders the document
voidable at the instance of the illiterate.
 Corporations
• The general rule is that the contractual powers
of a corporation registered under CAMA is
limited to those expressly or impliedly
authorized by its memorandum of association.
Any contract made by or with a corporation
outside or beyond such powers is ultra vires
and void. This is the principle of Law laid down
in the case of Ashbury Railway Carriage Co. v.
Riche (1875) E.R. 7 H. L. 653.
 Formalities

• As a general rule, no special formalities are required

for the creation of a contract. But there are certain
major exceptions to the general rule:
• (1)Contracts which must be under seal
• The principal examples which apply throughout
Nigeria are conveyances of land and leases exceeding
three years. This is the provision of the Real Property
Act 1845, s.3 (an English statute of general application
in Nigeria); Property and Conveyancing Law 1959, Cap.
100 (W.N).
• (2)Contracts required to be in writing
• There are a few contracts which are required
by statute to be not under seal but in writing.
Among these are bills of exchange. The effect
of failure to use the proper form renders the
contract or transaction void or, in the case of a
contract of marine insurance, inadmissible in
evidence.
3) Contracts which must be evidenced in writing
• may not themselves be in writing but are required
to be evidenced in writing.
• Meaning that there must be written evidence of
their terms otherwise it will be unenforceable.
• Such contracts are: contracts of guarantee by
virtue of S.4 of the Statute of Fraud 1677.
• Contracts for the sale or other disposition of land,
e.g. to buy land or take a mortgage of land.
 TERMS OF CONTRACT

• In the formation of contracts. Three things are

essential for determining the terms:
• 1. What are the terms which the parties have
expressly agreed on?
• 2. What is the relative importance of those
terms?
• 3. Any other term implied by statute, the courts
and custom?
• These terms are called Express terms,
Conditions/Warranties or Implied terms.
 EXPRESS TERMS

• Express terms are terms expressly set out by

the parties.
• Where contract is oral, express terms is a
matter of evidence.
• But where written, the written terms are the
express terms of the contract.
• The general rule is that parol evidence cannot
be adduced to add to, vary or contradict the
written instrument. “parol” in this context
meaning any “extrinsic evidence”
 EXCEPTIONS TO THE RULE:

• Parol evidence is adduced to prove a

custom or trade usage whose implications
the parties have or deemed to have
tacitly assumed.
• Allowed to show that the operation of the
written contract was subject to an agreed
antecedent condition – a condition
precedent – which had not occurred.
• Parol evidence is adduced to prove that
the written agreement was not the
whole contract, e.g. where the allegation
is that the agreement is partly written
and partly oral.
• Is also given to prove some invalidating
or vitiating cause(s) outside the written
contract itself, e.g. fraud.
 CONDITIONS AND WARRANTIES
• Parties set their own value on the
terms they impose upon each other
but when they fail to do so, the task
of evaluating the various terms falls
on the courts.
• The words the courts usually employ
in the evaluation task are called
‘conditions and warranties’.
• A “condition” is a term of major
importance. Forms the basis of the
contract. The breach gives the aggrieved
party a right to repudiate the contract.
• The aggrieved party is not bound to treat
the contract as at an end; he may instead
affirm the contract and sue for damages.
• Warranty is a term of minor importance, the
breach gives the aggrieved party a right to
damages only.
• POUSSARD V. SPIERS AND POND, actress
was to play leading part in a French opera
due to illness was unable to do until a week
later. Producers engage a substitute &refused
her services. Held breach was a condition
which entitled the producers to repudiate
the contract.
• BETTINI V. GYE a singer, engaged for the
whole of the season undertook to appear
six days in advance for the purpose of
rehearsals. But arrived 3 days in advance,
Court held that the rehearsals clause was
a term of minor importance; its breach
amounted to a breach of warranty, and
not a condition.
 Condition Precedent.
  is one which
• Condition precedent
must occur or be fulfilled before
an obligation or right created by
the contract can be enforced.
• PYM V. CAMPBELL. under a written
contract, the def’s promise to buy a
share in the ptiff’s invention was by an
unwritten understanding made subject
to the approval of a third party. It was
held that until the approval was given,
the def was under no obligation to buy.
 Condition Subsequent
• Condition subsequent : occurs
after a contract has come into
effect, but terminates if the
condition occurs.
• HEAD V. TATTERSAL ptiff bought a horse from
the def, with the understanding that he could
return it up to the following Wednesday if it
did not comply with the description. The
description failed and the ptiff returned the
horse within time. Held that although a
contract had come into existence, the option
to return was a condition subsequent and the
ptiff was entitled to cancel the contract and
return the horse.
 IMPLIED TERMS

• Contracts not always constituted by express

terms. There are other terms which may be
implied into it, and like express terms assume
the character of conditions or of warranties.
• Implied terms are terms which an ordinary
man would reasonably assume to be part of
the terms of the contract. It maybe by
implication by the Courts, Custom of the
particular trade or business or by Statutes.
 Terms Implied By the Court

• A term will be implied where it is necessary to

reinforce the language of the parties and
realize their intention, and second, to give
business efficacy to the contract.
• IN THE MOORCOCK. pltiff’s ship was berthed
at the def’s wharf under a contract. At low
tide she settled on some rock which lay under
the river bed and was badly damaged.
Though nothing in the contract about the
safety of the berth. Held, assumed as a
business proposition that the berth would be
 Terms Implied By Custom

• Contract may be subject to terms that are

sanctioned by custom, whether commercial or
otherwise. HUTTON V. WARREN it was proved
that, by a local custom, a tenant was bound to
farm according to certain course of husbandry
and that, on quitting his tenancy, was entitled
to a fair allowance for seed and labour
expended on the arable land. The court held
that the lease made by the parties must be
construed in the light of this custom.
 Terms Implied By Statute

• Contractual terms may be implied by statute.

E.g are implied terms contained in S.4 of the
Hire-Purchase Act 1965, and in S.12-15 Sale of
Goods Act 1893 which, applies as a Statute of
General Application. For States in former
Western Nigeria where the English Act does
not apply, provisions corresponding to
sections 12-15 above are contained in sections
13-16 of the Sale of Goods Law 1959.
 DEVICES TO EASE CONTRACTUAL OBLIGATIONS

• Some terms of contracts are legal devices

employed by a party to ease his obligations
under the contract. E.g Exemption clauses and
Limiting Clauses.
• An Exemption Clause (also called an Exclusion
Clause) is a term in a contract which seeks to
exempt one of the parties from liability in
certain events. Where the term merely limits
liability, it is called a Limiting Clause.
• An exemption clause is recognized as a
legitimate device in contracts but may
cause injustice sometimes especially in
ready-made, printed contracts called
“Standard Form Contracts” prepared by
large business organizations and given to
persons who deal with them to accede
to.
 Principles Governing Exemption Clauses

• 1. The document containing the exemption

clause must be an integral part of the contract
between the parties. I.e the document in
which the exemption clause is written must
be a contractual document; otherwise it does
not bind the other party against whom it is
inserted. The document may become a
contractual document in either of two ways:
• By Signature. A person is bound by the contents of a
document he signs including any exemption clause it
may contain, whether he read the document or not.
L’ESTRANGE V. GRAUCOB the pltiff, the proprietress of
a restaurant, bought an automatic cigarette vending
machine from the defendants. She signed, without
reading, a “Sales Agreement” which contained a
number of clauses in legible but small print. The
machine did not work properly. Held the defs were
protected by a clause which excluded their liability.
• By Notice: If the document containing the
exemption clause is not signed, the exemption
clause will only be incorporated into the contract
so as to become a term of it, if (a) the party
affected is given a reasonable notice of the
clause before or at the time of contracting, or (b)
the party affected already knows of the clause
e.g. by reason of his having had a consistent
course of previous dealings with the other party.
• OLLEY V. MARLBOROUGH COURT LTD . Couple booked in at
the reception desk of a hotel and paid for a week’s stay.On the
bedroom wall was a notice stating that the hotel would not be
liable for articles lost or stolen unless handed in for safe
custody. The wife left her fur coat in the bedroom, closed the
self-locking door, and hung the key on a board in the reception
office. In her absence the key was taken by a third party, who
opened the bedroom and stole the fur coat. held that the
exemption clause could not avail the defs, because the
contract was made at the reception desk and the pltiff did not
see, and could not have seen the exemption clause until later.
That subsequent notice could not affect her rights,not part of
the contract
• 2. Any ambiguity, or other doubt, in an exemption clause must be
resolved “contra proferentem”
• i.e. against the person who is seeking to rely on it/ against the
person who is proffering it. BALDRY V. MARSHALL, pltiff in writing
contracted with the def for the sale to the pltiff of a car “suitable
for touring purposes.” The contract included a guarantee for twelve
months against mechanical defects, but expressly excluded “any
other guarantee or warranty, statutory or otherwise.” After
delivery, the car was found to be unsuitable for the purpose. Court
of Appeal held that the stipulation requiring the car to be “suitable
for touring purposes” was not a “guarantee or warranty,” but a
condition, therefore not affected by the exemption clause.
• 3. If the pltiff signed the document containing an exemption
clause by reason of fraud or misrepresentation by the def or
his agent, the pltiff is not bound 
• Curtis v. Chemical Cleaning and Dyeing Co. PLTIFF TOOK TO
THE DEFS’ SHOP A WHITE SATIN WEDDING DRESS FOR
CLEANING. DRESS WAS TRIMMED WITH BEADS AND SEQUINS.
THE SHOP ASSISTANT GAVE HER A FORM TO SIGN. THE PLIFF
ASKED WHAT IT WAS ALL ABOUT. THE ASSISTANT REPLIED
THAT IT EXEMPTED THE COY FROM THE RISK OF DAMAGE TO
THE BEADS AND SEQUINS. PLIFF SIGNED THE FORM, WHICH
CONTAINED A CLAUSE THAT THE COY WAS NOT LIABLE FOR
ANY DAMAGE CAUSED. WHEN THE DRESS WAS RETURNED IT
WAS FOUND TO BE STAINED. PLTIFF SUED FOR DAMAGES AND
DEFS SOUGHT TO RELY ON THE CLAUSE. HELD DEFS COULD
NOT RELY ON THE CLAUSE. SHOP ASST, WHO WAS THE DEFS’
• 4 THIRD PARTIES ARE NOT PROTECTED BY THE EXEMPTION CLAUSE.
•  IT IS AN ESTABLISHED RULE THAT A PERSON WHO IS NOT A PARTY TO
A CONTRACT CANNOT BENEFIT FROM THE CONTRACT OR SUFFER
FROM IT. THIS IS THE RULE OF PRIVITY OF CONTRACT. THIS RULE
APPLIES TO AN EXEMPTION CLAUSE. SCRUTTONS LTD V. MIDLAND
SILICONES LTD. STEVEDORES EMPLOYED BY SHIP OWNERS TO
UNLOAD CARGO FOR THEM FROM THEIR SHIP DAMAGED THE
CARGO. WHEN STEVEDORES WERE SUED BY THE CARGO OWNERS
THEY SOUGHT TO RELY ON A CLAUSE IN THE CONTRACT OF CARRIAGE
BETWEEN THE CARGO OWNERS AND THE CARRIERS (THE SHIP
OWNERS) WHICH LIMITED THE LIABILITY OF THE CARRIERS TO £179.
IT WAS HELD THAT THE STEVEDORES WERE STRANGERS TO THE
CONTRACT AND COULD NOT RELY ON THE LIMITING CLAUSE.
• 5. NO EXEMPTION CLAUSE, HOWEVER WIDE, CAN OPERATE IF
IT IS CONTRARY TO STATUTE
• IN SOME FIELDS THE LEGISLATURE HAD INTERVENED TO
CONTROL EXEMPTION CLAUSES BY STATUTES. TWO NIGERIAN
EXAMPLES MAY BE CITED. BY VIRTUE OF S.4(1) OF THE HIRE-
PURCHASE ACT 1965 THERE ARE SOME STATUTORILY IMPLIED
TERMS PROTECTING THE HIRER (WHERE THE ACT APPLIES)
WHICH THE GOODS OWNER CANNOT EXCLUDE BY AGREEMENT.
• ALSO THE CARRIAGE OF GOODS BY SEA ACT 1926 FORBIDS THE
SEA CARRIER OF GOODS TO EXCLUDE LIABILITY FOR
NEGLIGENCE UNDER A CONTRACT TO WHICH THE ACT APPLIES.
• 6. A PARTY WHO IS GUILTY OF A FUNDAMENTAL BREACH OF
CONTRACT MAY BE DISQUALIFIED FROM RELYING ON AN EXEMPTION
CLAUSE. OGWU V. LEVENTIS LTD IN A HIRE-PURCHASE CONTRACT
FOR A LORRY DEFENDANT SELLER DELIVERED A MERE SCRAP OF A
LORRY. IT WAS HELD THAT BY DELIVERING A LORRY FUNDAMENTALLY
DIFFERENT FROM THAT CONTRACTED FOR, THE MOTOR COMPANY
HAD COMMITTED A BREACH OF THE FUNDAMENTAL TERM OF THE
CONTRACT. SO THEY COULD NOT RELY ON THE EXEMPTION CLAUSE
IN THE CONTRACT.
• IF HOWEVER AFTER A BREACH OF A FUNDAMENTAL TERM OR A
FUNDAMENTAL BREACH, THE INNOCENT PARTY ELECTS TO AFFIRM
THE CONTRACT AND CONTINUE WITH IT, HE IS BOUND BY ALL ITS
CLAUSES, INCLUDING AN EXEMPTION CLAUSE.
 VITIATING ELEMENTS OF A CONTRACT
• refers to factors which found in a
contract, will lead to the contract
being either void or set aside. vitiate
means to invalidate, make imperfect
or mar.
• vitiating factors are:misrepresentation
duress & undue influence and
mistake.
 Misrepresentation.

• A representation is a statement made by one party to the

other before or at the time of contract, with regard to some
existing fact or to some past event, which is one of the
causes that induced the making of the contract.
• a statement is not a representation if it is one of law,
opinion, intention or future event.
• A representation is not material if it does not induce a
contract
• A rep does not induce a contract if the representee makes
his own investigation to test the truth of the statement.
Attwood v. Small.
• Rep will be held to induced a contract if the representee
given an opportunity to test the accuracy, does not take that
opportunity as was held in Sule v. Aromire
• A Misrepresentation is an untrue or false representation
• mere silence is not necessarily misrepresentation.in
Fletcher v. Krell a woman applied for the post of
governess without revealing that she was divorced. Held
that her silence did not amount to misrepresentation
• Silence, however, constitutes misrepresentation in four
cases:
• Where the representation is a half truth so that what is
withheld makes what is said false
• Where changed circumstances affecting the accuracy of
the representation are not disclosed
• Where the contract requires utmost good faith.
• Where there is a fiduciary relationship
 Types of Misrepresentation
• Fraudulent Misrepresentation: a false statement which,
when made, the maker did not honestly believe to be true.
In Derry V. Peek , it was described as false statements “made
(1) Knowingly, or (2) Without belief in its truth, or (3)
Recklessly, i.e. careless whether it be true or false.”
• Innocent Misrepresentation: if the representor honestly
believes his statements to be true and consequently has no
intention to deceive: Derry v Peek
• Negligent Misrepresentation: where a special relationship
exists between the representor and the representee and the
representor made the statement carelessly and in breach of
a duty imposed on him by that special relationship to take
reasonable care that the representation is true.
 DURESS AND UNDUE INFLUENCE

• Common Law doctrine and means actual violence or

threat of violence to the person, i.e. threats calculated
to produce fear of loss of life or bodily harm.
• A threat to the goods of a person is not duress. in
Skeate v. Beale it was held that a landlord’s threat to
sell the goods of his tenant was not duress.
• In FRIEDEBEG-SEELEY V. KLASS ; defs entered pltiff flat
and forced her to sign a receipt for a jewel case and its
contents which they took away. Whereupon she later
found on the table a cheque for £90. It was held that
the receipt was obtained by duress.
• The effect of duress is to make the contract voidable.
• Undue influence: arose because courts of
equity regarded the common law doctrine of
duress as too narrow.
• Where there is no special fiduciary relationship
between the parties, undue influence must be
proved as a fact.
• Where, on the other hand, a special fiduciary
relationship exists between the parties, the
application of pressure is presumed and need
not be proved as a fact
 MISTAKE
 

• Mistake in law is a misunderstanding as to

fundamental or material facts in the contract
• Kinds of mistake
• Common Mistake: occurs where both parties
make same mistake. e.g., that the thing which
is the subject matter of their contract does not
exist or has ceased to exist (a case of res
extincta; the thing is extinct); or that the thing
which A is contracting to sell to B belongs to B
(a case of res sua).
• Mutual Mistake: Mutual mistake and
common mistake are similar. whereas
both parties make the same mistake in
common mistake, in mutual mistake
they make different mistakes.
• Unlike common mistake, parties are
not ad idem at all
• Unilateral mistake: only one party is
mistaken.
• In Abdul Yusuf v. Nigerian Tobacco Company ltd, def
engaged several lorry drivers to transport tobacco
from various points to its factory in Ibadan at an
agreed freight rateA typographical error in the
agreement put the freight at a much higher rate than
agreed. This was later discovered by def who sought
to amend it. All drivers except pltiff agreed to have
their agreements amended. Court held that there was
a unilateral mistake that rendered the contract void.
• Where a successful plea of mistaken identity is made
there is an operative mistake, and the effect is to
render the contract void ab initio.
 Documents mistakenly signed: Non est factum

• The general rule is, in the absence of fraud, misrep

and mistake, a person is bound by a doc he signs
whether he read it or not and understood it or not.
• Exceptions were at first restricted to blind persons and
illiterate persons and to documents under seal
• But now extended to all types of written doc where,
“the mind of the signer does not accompany the
signature”. This is called the plea of non est factum
meaning “this is not my deed”.
• Effect is to render the document absolutely void.
• Two conditions must be satisfied
before the plea can succeed:
• Signer must have signed a doc
different in substance or in kind from
that which he intended to sign.
• The signer must have signed without
negligence.
• Negligence precludes a party from
pleading non est factum.
• in UNITED DOMINION TRUST LTD.V WESTRN , def
agreed to buy a car from car dealers on hire-
purchase with finance to be provided by the pltiff.
Agreed price was £550. Def paid a deposit of £34. He
signed the pltiff’s standard form in blank and left the
dealer to fill in the details. The dealer falsely inserted
another figure. The pliff company, accepted the
standard form as a true record and acted on it. When
def got his copy he saw it was different and refused
to pay the installments. pltiff sued for £750.
• Court held that def could not rely on the plea of non
est factum for three reasons.
• First, no distinction could be drawn between
the situation where a man signs a completed
document without reading it and the situation
where a man signs an uncompleted document.
• Second, the defendant had failed to show that
he acted without negligence in signing.
• Third, the document actually signed was not, in
effect, essentially different in substance or in
kind from the transaction he had intended
when he signed the document
 PRIVITY OF CONTRACT

• A person who is not party to a contract cannot enjoy the

benefits or suffer the burdens of the contract.
• DUNLOP V. SELFRIDGE. Plaintiffs, sold tyres to Dew & Co.,
on the terms that Dew & Co, would not re-sell them below
certain prices and in the event of a sale to their customers,
they would extract from the latter a similar undertaking.
Dew & Co. sold the tyres to a firm called Selfridge, who
agreed to the terms to pay Dunlop £5 for each tyre sold in
breach of this agreement. Selfridge supplied tyres to two
of their own customers below the listed price. Dunlop
sued Selfridge to recover the sum and for an injunction to
restrain further breaches of the agreement. Held that
Dunlop was a stranger to the contract
 Exceptions to the Rule

• Agency
• Privity of Estate. TULK V. MOXHAY
• Trust
• Statutory exceptions
• Under S. 2(1) of 3rd Parties (Right Against Insurers) Act ; the
right of an insured car owner against the insurance company is
automatically transferred to the injured 3rd party if the car
owner becomes insolvent.
• Under S. 11 of the Married Women’s Property Act, a policy of
life insurance effected by a man for the benefit of his wife, or
by a woman for the benefit of her husband or children, will
create a trust in favour of the beneficiaries named in the
policy, who may therefore enforce the policy.
 DISCHARGE OF CONTRACTS
 

• DISCHARGE BY PERFORMANCE
• When both parties have performed their obligations, the
contract is completely extinguished.
• In general, performance must be precise and complete.
Partial completion of a contract does not entitle a party to
payment.
• In CUTTER V. POWELL, Powell agreed to pay Cutter 30
guineas provided he did his duty as second mate in a ship
sailing from Jamaica to Liverpool. Cutter did the job for 50
days and died 19 days before the ship was due to land at
Liverpool. Cutter’s widow sued for a proportion of the
agreed sum and failed. The contract was said to be “entire”.
Nothing was to be paid until Cutter had performed his entire
duty under the contract.
 EXCEPTIONS TO THE GENERAL RULE
• The general rule exemplified by CUTTER V. POWELL is
subject to some exceptions
• Severable contracts
• Where contract is severable, payment can be claimed for
parts that have been completed. VLIERBOOM V. CHAPMAN,
ship-owner agreed to carry a cargo of rice from Batavia to
Rotterdam. He carried it only to Mauritius. Held that the
contract was ‘entire’ and the ship-owner was not entitled to
any freight.
• But in RITCHIE V. ATKINSON a ship-owner agreed to carry a
cargo of hemp, with freight to be at the rate of $5 a ton. He
carried only part of the cargo. Held that the contract was
severable and that he could recover freight proportional to
the quantity carried.
• Prevention of Performance
• If complete performance is prevented by the other
party, an action for damages for a breach of contract,
or payment on a quantum meruit basis for work done,
can be claimed.
• In PLANCHE V. COLBURN, plaintiff agreed to write a
book on “costume and ancient armour”, to be
published by the defendants in a series called “The
Juvenile Library.” He was to be paid £100 on
completion of the book. He collected material and
wrote part of the book. Defendants abandoned the
series. Held the plaintiff was entitled to payment on a
quantum meruit basis assessed at £50.
• Acceptance of Partial Performance
• Where a party partially performs his obligation and the other party
accepts the work, having had a choice to reject it, plaintiff can
claim payment on a quantum meruit basis.
• In CHRISTY V ROW, plaintiff’s ship was carrying the defendant’s
coal from Shields to Hamburg. The ship could not reach Hamburg
and the Master, at the request of the cargo owner, delivered some
of the coal at a port before Hamburg. Held the plaintiff was
entitled to freight.
• Substantial Performance
• A party who performs his obligation defectively but substantially,
can sue for the contract price, less a deduction for the deficiencies.
In DAKIN V. LEE there was a contract for repairs to be done on a
house. The work did not accord with the contract in certain
respects. Court gave judgment for the plaintiff repairer to be paid,
less a deduction equal to the cost of correcting the defects.
• DISCHARGE BY EXPRESS AGREEMENT
• Since the contractual bond is created by the
agreement of the parties, the parties may equally, by
agreement, discharge the bond.
• Discharge by Frustration
• Parties to a contract are excused from further
performance of their obligation if some unexpected
event occurs during the currency of the contract,
without the fault of either party, which makes
further performance impossible or illegal, or which
makes it something radically different from what
was originally undertaken.
 Situations where frustration can be said to occur
• If performance of a contract becomes illegal.
• In Uzomah V. Uzomah, a contract to erect a building on a
designated site was held to be frustrated when the Lagos
Executive Devt Board, acting under its statutory powers,
prohibited the erection of any building in the locality.
• If the subject-matter of the contract is destroyed.
• In Taylor V. Caldwell, the defendant agreed to give the
plaintiff the use of a certain hall and its adjoining gardens
on 4 named days for purposes of holding concerts. Just
before the first of the days, the hall was destroyed by
fire. Plaintiff sued for damages for breach of the
agreement. Held that the contract was frustrated.
• If either party to a contract for personal service
dies, or becomes ill or is imprisoned as was the
case in Robinson v Davies, these will be held to
have frustrated the contract.
• If the whole basis of a contract is the
occurrence of an event which does not occur
• Outbreak of war
• In Stevenson & Sons Ltd v Aktfur Cartonnage
Ind, it was held that the outbreak of war
between England and Germany automatically
ended the agency contract.
 Effect of Frustration at Common Law

• At common law, frustration brings the contract to an end

and automatically the contract is terminated as to the future
only.
• A frustrated contract does not become void ab initio. It
becomes void only from the time of frustration.
• Chandler V. Webster, plaintiff let a room to the def. to view
the coronation procession of King Edward VII. Rent was
£141.15s. Payable immediately. The def. paid £100, but
owed £41.15s. When the contract was frustrated owing to
the abandonment of the procession due to the sudden
illness of the King the def. sued to recover his £100. Held he
had no right to recover, but was also liable to pay the
balance as right to the contractual sum had become vested
before the frustrating event occurred.
 Implication of the rule

• Only rights that have become vested or money due

and payable at the time of the frustration are
enforceable.
• Money which is payable in advance ceases to be so if
frustrating event occurs before it is due for payment.
• In Krell V. Henry, plaintiff agreed to let a room to the
defendant for the purpose of viewing the coronation
procession of King Edward VII on June 25. Rent was
due for payment on June 24, but before that date the
procession was cancelled owing to the sudden illness
of the King. It was held that the plaintiff could not
recover the rent as it did not fall due until after the
frustration.
• The hardship of the rule in Chandler v.
Webster led the House of Lords to modify it in
the FIBROSA’S CASE.
• This was a contract for the sale and delivery of
machines. Contract price was £4,800 of which
£1,600 was payable in advance. Purchaser paid
£1,000 towards advance payment. Contract
then got frustrated due to war. No machinery
had yet been delivered to the purchaser, but
the makers had done some considerable work
already toward its manufacture.
• The purchaser requested for the return of
the £1,000 already paid, the
manufacturers refused on the ground that
they had done a considerable work on the
machinery. Whereupon the purchaser
sued in quasi-contract for the refund of
his £1,000
• House of Lords held that he was entitled
to recover the money because there had
been a total failure of consideration.
• Under the rule in Chandler v. Webster the purchaser
would not only have lost the £1,000 but would have paid
an additional £600 being the balance of the total amount
due and payable before the frustration occurred.
• Two serious injustices, however, remained unresolved
even under the rule in Fibrosa’s case:
• First, the def. who has done some work or spent some
money in execution of the contract, gets nothing for his
work or expenses so long as the benefit of his work or
expenses has not actually passed to the plaintiff.
• Second, once the plaintiff gets any benefit, however small,
he can no longer recover because there will then be no
total failure of consideration.
Statutory Modification in Former Western
Nigeria States
• The position in Fibrosa’s case
represents the law in the former
Northern and Eastern Nigeria with a
modification in the former Western
Nigeria States
• Money paid before the frustrating
event is recoverable.
• Money due for payment before the
frustrating event ceases to be so payable,
but if the party to whom such money was
paid or payable had incurred expenses
before the time of the frustrating event,
the court may allow him to retain the
money not exceeding the amount of the
expenses. But if nothing was paid or
payable before the frustrating event, he
will not be able to get any expenses at all.
• If one party has, by reason of anything done by
the other in performance of the contract,
obtained a valuable benefit (other than money)
before the time of frustration, he can be
ordered to pay such a sum as the court thinks
just, not exceeding the amount of the benefits
• Finally, it is provided that where parties to a
contract have stipulated their own position in
the event of the frustration of a contract then
the provisions of the statutes will not apply.
• Discharge by Breach
• Occurs where a party fails to perform, or shows an intention
not to perform, one or more of the obligations laid upon him
by the contract.
• Where a party fails to perform one of his obligations on the
date fixed for performance, the breach is called actual breach.
• Where a party before the date fixed for performance shows an
intention not to perform; the breach is called anticipatory
breach.
• In FROST V. KNIGHT. Knight promised Miss Frost that he would
marry her when his father dies. While his father was still alive,
Mr. Knight broke off the engagement. Miss Frost sued him and
won, even though the time fixed for the actual fulfillment of
the promise had not come
 REMEDIES FOR BREACH OF CONTRACT.

• Damages
• The object of awarding damages for breach of contract is
to put the injured party, so far as money can do it, in the
same position as if the contract had been performed.
• A claim for damages raises two principal questions:
• (a)Question of remoteness of damages: which means for
what kind of damage should the plaintiff be
compensated?
• (b) Question of measure of damages: which means
how much monetary compensation should the plaintiff
receive in respect of the damage which is not too
remote?
• Rescission
• It should be noted that the right to
rescission, will be lost if the innocent
party has affirmed the contract, and also
if rescission would in the circumstances
deprive a third party of a right in respect
of the subject-matter of the contract
which he has acquired in good faith and
for value
• . Specific Performance
• An equitable remedy issued by the court ordering a defendant to
perform a promise that he has made.
• Specific performance is particular appropriate in the case of
contracts for the sale or leasing of land. But it will not normally
be granted
• (a) If damages would be an appropriate remedy;
• (b) In respect of contracts for personal service, as this will
amount to compelling the defendant to work for the plaintiff or
starve;
• (c) In respect of contracts the performance of which would
require constant supervision by the court; and
• (d) In respect of obligations which lack mutuality in the sense
that the decree could be available to either party, if the facts so
required.
• Injunction
• An equitable remedy issued by the court ordering a
person to do or not to do a certain act.
• In the law of contract an injunction can be used to
restrain a party from committing a breach of contract. It
will not be granted if its effect would be to compel the
defendant to do something which he could not have
been ordered to do by a decree of specific performance.
• Thus, in LUMLEY V. WAGNER AND WARNER BROTHERS
PICTURES INC. V. NELSON it was granted to restrain
breach of an undertaking by a singer and a film actress
respectively not to act for a third party during the period
of their engagement by the plaintiffs.
• Quantum Meruit
• A party can claim on a quantum meruit:
• Where work is done in partial performance of a
contract which is severable or divisible.
• Where work is done under a contract by the default
of the defendant.
• Where work is done under a void contract.
• Where a contract has been made for the supply of
goods or services, and no precise sum has been fixed
by the agreement.
• Where the defendant accepts partial performance by
the plaintiff.
 EXTINCTION OF REMEDIES.
• The right of an injured party to sue on a
breach of contract may be extinguished in two
main ways:
• By a discharge or release agreement between
the parties. This may be achieved through
accord and satisfaction as already discussed.
• By lapse of time. Either under equitable
doctrine of laches or by Statute of Limitation.