NOTES FROM

LIVE TUTORIAL SESSIONS

LAW OF CONTRACT

GUEST TUTOR
BOLUWATIFE

ONIPEDE , Esq.

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LSWK WORLD & LAW STUDENTS ASSOCIATION OF NIGERIA (LAWSAN NATIONAL
 LAW OF CONTRACT

IN THIS NOTE...

Nature of Contract
Sources of Law,
Concept of Bargain,
Classification.

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 LAW OF CONTRACT
First, we have to understand that Law of Contract is
a very major aspect of law. Even in the practice of
law, you come across a lot of cases on breach of
contract, etc. Hence, the need to understand the
course in depth.
NATURE OF CONTRACT
Contract is defined as an agreement between two
or more parties creating obligations that are
enforceable or otherwise recognizable at law.
A contract is a promise, or a set of promises for
breach of which the law gives a remedy, or the
performance of which the law in some way
recognizes as a duty.
The importance of enforcing agreements cannot
be over-emphasized. The reason is just simple,
trade and commerce would be impossible if the law
permitted a promisor to break his promise without
at least placing him under an obligation to pay
compensation for the loss occasioned by his
default.
Take a moment to imagine if everyone easily get
away with breaking agreements, and there's no
sanction, there would be chaos. Trust the specie of
humans these days, they'll take advantage.
Hence, the importance of the law of contract.
SOURCES OF LAW
I will not dwell too much on this. I trust we're all
students of the Nigerian Legal System and one of
the first topics we all were taught in NLS is Sources
of Law.
The sources are the same across the courses,
although with little additions here and there.
Primary Sources:
The 1999 Constitution,
Legislation,
English law,
Customary law,
Islamic law, and.
Judicial precedents.
Secondary Sources:
Law Reports.
Text Books and Treatises.
Periodicals, Journals, and Legal Digests.
Casebooks.
Legal Dictionaries.
CONCEPT OF BARGAIN:
Bargain is an agreement between parties for the
exchange of promises or performances. A bargain
is not necessarily a contract because the
consideration may be sufficient or the transaction
may be illegal (remember that illegality vitiates a
contract, it's as if there was no contract in the first
place. The maxim Ex Turpi Causa Non Oritur Actio -
"Out of an illegal Contract, no action can arise" is
instructive).
Bargain is narrower than an agreement as it is not
applicable to all agreements and broader that
'Contract' since it includes a promise given in
exchange for insufficient consideration. It also
covers transactions which the law refuses to
recognize as contracts because of illegality.
CLASSIFICATION OF CONTRACTS
1. Formal and simple contracts:
You should simply know that a formal contract is a
contract made by deed.
All other contracts are simple contracts, whether
they're in writing or by word of mouth (parol).
For ease of understanding, see it this way, when
you want to buy a land for 18million naira, you know
you need more than words of mouth to effect that
agreement. Imagine the seller or anybody else now
comes up tomorrow to say the land is not for you,
war, right?
So those types of agreements MUST be by deed. A
deed is very serious. It is a document under seal.
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 LAW OF CONTRACT
It must be executed, I.e. completed and given full
effect by signing, sealing and delivering of it by the
party executing, to the other party.
A simple contract can be oral or written.
If I draw up a simple note between me and Miss
Gloria, just to create evidence of the transaction
between us, and we both sign, it's a simple
contract, albeit written. It's not as technical as you
have with deeds.
And if we just talk about it and agree, in the
presence of witnesses, that's also a simple oral
contract.
It is also valid if I can prove the essential
ingredients.
2. Express and implied contracts:
A contract is said to be express when the terms of
the contract are clearly stated.
For instance, Miss Gloria puts up an advertisement
offering her house for sale, and I signify my interest,
thereafter a contract of sale (which would
metamorphose into a deed) is executed between
us. All material terms are usually spelt out in the
agreement.
For implied contracts, the terms are not expressly
stated. The courts in such circumstances will
normally construe the existence of a contract from
the conduct of the parties rather than their words or
correspondences. Please see the case of
B R O D G E N V. M E T R O P O L I TA N R A I LWAY
COMPANY (1877) 2 A.C 666.
3. Bilateral and Unilateral Contracts:
A bilateral contract consists of an exchange of
promises; both parties promising to do something
for themselves. There is yet no performance by
either party. This is a Bilateral contract (executory
consideration)
By contrast, if one of the parties actually fulfills his
own part of the promise, it is called a Unilateral
contract and the performance is referred to as
executed consideration. This was the ratio in the
celebrated case of CARLIL V. CARBOLIC SMOKE
BALL COMPANY (1893) 1 Q.B 256. (Please read
the case).
FORMATION OF CONTRACT
The next question to ask then is:
When does a contract come into being?
A contract comes into existence when an offer
made by one party is accepted by the other party
unconditionally. In essence, offer, acceptance,
consideration and intention to create legal relations
are the
ELEMENTS OF A VALID CONTRACT
1. Offer
2. Acceptance
3. Consideration
4. Intention to create Legal Relations.
We'll take them one after the other.
OFFER
An offer is a statement or declaration of an intention
made by a person known as the OFFEROR to
another party known as the OFFEREE, with the
intention to be bound of the terms are accepted
unconditionally.
The acceptance must be unconditionally.
For an offer to be valid, the following elements must
be present:
1. Offer must come from the right quarter to the
right person.
(I will not be able to explain in depth because of
time but it is as literal as ever)
See the case of EXECUTIVE SECRETARY FAMILY
PLANNING SOCIETY OF NIGERIAN COUNCIL V.
AJAYI OBEY (1975) 3 N.C, pg. 256.
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 LAW OF CONTRACT
2. Offer must be definite: it must leave no room for
doubt or ambiguity, the wordings of the offer must
be clear.
3. Offer must be capable of acceptance.
DIFFERENCES BETWEEN AN OFFER AND AN INVITATION TO
TREAT
This distinction must be made. An invitation to treat
is an invitation to do business, simply put.
The important point to note is that an invitation to
treat not bring an offer but being a phenomenon
preliminary to the offer is not capable of an
acceptance which will result in a contract.
(Let me quickly make an illustration, if I am
hawking my bread and calling out people to buy
"come and buy my bread ooooo", I am not making
an "offer" for you to buy my bread. It is an invitation
for you to come and make the offer.
If Miss Joy stops me to ask how much I'm selling
and I tell her, she will then make the offer to buy)
More often than not, people misconstrue invitation
to treat for offer. The difference between both can
be examined in the following:
1. Advertisement of an auction:
An auctioneer's request for a bid is not an offer, but
an invitation to treat. The bid itself is the offer, and
acceptance occurs when the auctioneer's hammer
falls.
Please see the case of PAYNE V. CAVE.
Flowing from the above, whichever travels to a
place of auction only to find out that the auction
would not take place or the particular item he came
for has been withdrawn, cannot sue for breach of
contract.
See HARRIS V. NICKERSON; SECTION 58(2)
SALE OF GOODS ACT, 1893.
2. Display of Goods
Goods displayed in bookshops, warehouses,
departmental stores, super markets, even with
their price tags is not an offer but an invitation to
treat. See PHARMACEUTICAL SOCIETY OF
GREAT BRITAIN V. BOOTS CASH CHEMISTS.
3. Advertisement of tender.
See SPENCER V. HARDING
4. Train, Buses and Transport
This one is a bit controversial.
Who makes the offer? Passenger or driver and his
company?
The answer depends on the facts and
circumstances of each case.
But the majority view is that, the offer is made when
the driver stops at the bus stop, acceptance occurs
when the passenger enters.
For a contract to come into being in law, there must
have been a DEFINITE OFFER BY THR OFFEROR
AND A DEFINITE ACCEPTANCE BY THE
OFFEREE.
There are other points to note on Offer, but we don't
have time.
Please note your questions
We'll move to ACCEPTANCE now
ACCEPTANCE
An acceptance is the conclusive manifestation of
an intention to accept the terms of the offer. It's as
simple as that!
RULES governing Acceptance:
1. Silence does not constitute an acceptance.
See FELTHOUSE V. BINDLEY
2. Acceptance may be by conduct.
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 LAW OF CONTRACT
See YABA COLLEGE OF TECHNOLOGY V.
NIGERLEC CONTRACTORS; BRODGEN V.
METROPOLITAN RAILWAY COMPANY.
Don't mix counteroffer for acceptance.
A counter offer is a rejection if the original offer and
a proposition of a new one. Let me illustrate:
Assuming I want to see my Nokia 3310 to Miss
Sarah, and the price I set is 5,000. If Miss Sarah
agrees, she'll give me my 5k and take the phone
away.
But if Miss Sarah says "Let me take it for 4,000",
this is a counteroffer. She has rejected the original
offer.
Even if I agree, that's not a valid acceptance.
The offeree must UNRESERVEDLY accept the
EXACT terms of the offer proposed by the offeror. If
he introduces a new term, he is making a counter
offer. See the case of HYDEN V. WRENCH
Now let me quickly add that there's another phrase
known as "Request for further information" and we
shouldn't mistake this for counter offer.
In a request for further information, the offeree is
merely seeking for further clarification on some
matters concerning the offer.
However, whether a statement is an offer request
for further information is a matter of construction.
For instance, using the illustration of my Nokia
3310, if Miss Sarah only asks me if she can pay the
5,000 naira in instalments, then she's only
requesting for further information, she's not
making a counter offer. See the case of
STEVENSON V. MCLEAN
Let me quickly add this on OFFER.
Offer may be determined in various forms which
includes:
a. Rejection
b. Revocation
c. Lapse of time
d. Death
We'll move to CONSIDERATION now
CONSIDERATION
Consideration would be defined in terms of benefits
or profits derived from something of value.
In the case of CURRIE V. MISA, it was said that
consideration valued and recognized in the eyes of
law could be said to be detriment, profit, benefit or
other forbearance moving from one person to
another in exchange for something of value.
PAST CONSIDERATION
Past consideration in law is no consideration at all;
consideration may be Executory (a promise made
in exchange for another... e.g, a promise to buy and
a promise to sell) or Executed (where one side has
fulfilled his own part of the obligation, as we have in
unilateral contracts) but not Past.
See RE MC ADDLE (1959) 1 Chancery.
(Simply put, if I am a carpenter for instance, and
ON MY OWN I decide to go and repair the doors of
my church, and the Pastor seeing this gets happy
and says he'll give me some money. I cannot sue
him for it. I wasn’t requested in the first place to do
anything)
Note that we have Adequacy of consideration and
Sufficiency of Consideration.
I might be constrained to skip the remaining parts
of this module and move to the next part.
1. Vitiating Elements of Contract
2. Privity of contract
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 LAW OF CONTRACT
VITIATING ELEMENTS OF CONTRACT
Remember we mentioned elements of a valid
contract, the things that must be present for a
contract to be valid (Offer, etc.)
You should also know that there are some elements
that are capable of "destroying" "spoiling"
"rendering ineffective" the contract.
They are:
1. Mistake
2. Misrepresentation
3. Duress
4. Illegality
5. Unenforceable Contracts
MISTAKE
It renders a contract void or voidable (what
determines this? Were both parties mistaken? Was
one party deceiving the other? Is a third party
involved?)
Where the contract is void ab initio, there is no right
or obligation accrued because the contract is a
nullity. If however, the contract is voidable, some
form of rights is acquired which under certain
circumstances can be transferred to the other
party.
CLASSIFICATION OF MISTAKE
1. Common mistake:
This means that both parties concluded the
contract under the same mistake or apprehension
about some facts which lies at the basis of the
agreement. They were about mistaken, and
mistaken about the same things. One party wasn't
trying to deceive the other.
Categories of Common Mistake:
a. Res extincta: non-existenceof the subject-matter
of the contract. See COUTURIER V. HASTIE
b. Res sua: absence of title in seller of subject-
matter. See COOPER V. PHIBBS.
2. Mutual Mistake:
When the two parties are mistaken about each
other's terms in the sense that one party makes to
thr other an offer which the other party "accepts" in
a fundamentally different sense from that intended
by the offeror.
For instance, if Miss Sarah offers to buy my car for
500,000 naira and I accept the offer, the contract
will be vitiated by mutual mistake if I own 2 cars, a
Toyota Camry and a BMW, and while accepting the
offer, I accepted in belief that Miss Sarah wanted to
buy thr BMW, whereas Miss Sarah was making the
offer for my Toyota Camry.
3. Unilateral Mistake
The mistake is Unilateral where only one party is
mistaken or is presumed to be mistaken.
MISTAKE IN EQUITY
Forms of equitable relief are recession, refusal of
specific performance and rectification.
DOCUMENTS MISTAKENLY SIGNED: NON EST FACTUM (It is not
my deed)
As a general rule, a person is bound by the
contents of a document signed by him, whether he
reads it or not (be careful when signing anything,
read and understand it well), unless it is procured
by fruad or Misrepresentation.
Where a person is induced (misled) to sign a
document containing a contract so different from
what he thought he was signing, he is allowed to
deny the validity of the contract by pleading NON
EST FACTUM in any action brought against him to
enforce the contract. See FOSTER V. MACKINON
For a successful plea of NON EST factum, the
following conditions must exist:
a. The document he actually signed must be of a
different class or nature from the one he had
intended to sign tb.
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 LAW OF CONTRACT

b. He must not have been negligent in signing the
document
MISREPRESENTATION
It is an untrue statement made by one party (to a
contract) to the other before or at the point of
entering the contract, with regard to some existing
facts which is what induced the contract.
The point is, if the offeree would not have accepted
the offer if he had known about those "hidden
facts" or he had known that the statements made
by the offeror were untrue, then there is
Misrepresentation.
Misrepresentation could come in different forms. It
could be a form of mistake, non-disclosure etc.
See DUNLOP PNEUMATIC TYRE CO. V.
SELFRIDGE LTD.
There are EXCEPTIONS to this doctrine and they
include:
1. Covenants running with land
2. Contracts for hire (e.g ships)
3. Insurance contracts
4. Assignment of choses in action
I'm sorry I had to rush up, they're quite very broad
topics. I enjoin everyone to look at read these topics
more extensively.
And for areas I couldn't deal with thoroughly, you
can ask questions from there, I will expatiate.

DURESS AND UNDUE INFLUENCE Please ask your questions.

Both concepts connotes a form of coercion,
domination, pressure, general bargains in an
unfair manner to induce a contract.
The most noticeable distinction between both is
that for Duress, the pressure tends to be more
direct, while for undue influence, the pressure is
indirect or subtle. Such pressure is presumed to
exist when the parties stand in certain relationships
to each other.

ILLEGAL AND VOID CONTRACTS

Where an agreement is invalidated either by
Express statutory enactment or by rules of common
law or public policy, it is illegal.

And there are consequences

I'll touch very quickly on privity of contract

PRIVITY OF CONTRACTS
A contract cannot confer enforceable rights or
impose obligations arising under it in any person,
except parties to it. In essence, only parties to a
contract can sue on it. And by implication too, only
those who have furnished consideration towards
the formation of the contract can sue on it.

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 LAW OF CONTRACT
QUESTIONS
Joy Johnny,
Question
In an instance where I'm a pharmacist with some
drugs in my handbag , then while walking I saw a
young lady who fainted mainly because of the
poison she took, then I went ahead to help revive
her, giving her some drugs that helped stabilize her.
After that I requested for payment but was
denied... What are my chances if I sue the other
party? Is it past consideration?
Boluwatife Onipede, Esq.
Answer
In that instance, you were only performing a duty of
care. Your chances are slim. The consideration is
past.
Joy Johnny
Question
Ma, can you please help with a definite and precise
definition of "mistake”?
Boluwatife Onipede, Esq.
Answer
"Mistake" at law is different from mistake in
ordinary usage.
Defining it might be a little difficult because it is a
very broad concept capable of accommodating
different circumstances.
But let's say "mistake" is an erroneous belief by one
or both parties to a contract at the point of entering
the contract, that certain facts (material to the
contract) are true.
Omayone Oritsejolomisan
Question
A contract with or without intention to create legal
relations remains a contract. Pls discuss citing
decided cases.
Boluwatife Onipede, Esq.
Answer
You should know first that much academic
controversy has been on ground as to whether
"intention to create Legal Relations" is essential to
the formation of a contract.
In practice, it is very clear that this ingredient is
essential.
The court in deciding any contractual matter would
consider whether or not there was an intention to
enter legal relations. Where the intention is present,
then the agreement will be actionable, and where
it's not present it will not be actionable.
However, there are some notorious arrangements
under which the contractual presumption is
absent(it's more like it is automatically ruled out,
subject to exceptions depending on the
circumstances of each case) e.g. Domestic and
social engagements (E.g, agreements between
spouses) See Balfour v. Balfour.
For commercial agreements now, there is
presumption of contractual agreements (subject to
exceptions again)
Joy Johnny
Question
Based on privity of contract, meaning in a situation
where by a party to the contract dies before the
actually completion of the contract, his family
member cannot sue.
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 LAW OF CONTRACT

Boluwatife Onipede, Esq. knowing, but I knew, there's a mistake, but it is

Answer Unilateral. Do you get? So we cannot fully draw a
distinction between both.
It depends on the circumstances of each case.
Generally, an action in personam dies with the
party. E.g in an action for defamation. Muhammed Abdullah Toyin
It depends on the nature of contract. Question

Remember their are exceptions to the doctrine of Please, is any different between invitation to treat
privity. and bargain?

Life assurance for instance. If a man assures his Boluwatife Onipede, Esq.
life, and he dies, definitely, his beneficiary will reap Answer
the benefits of the insurance contract.
Remember we said Bargain is wide in scope.
Abasianyanga Ndioho Invitation to treat could come as part of the
Question bargaining process.

Pls having said that mistake involves a party
deceiving the other party and misrepresentation is
and untrue statement made by one party which
also could be said to b a party deceiving the other
party, what then is the difference between mistake
and misrepresentation?
Boluwatife Onipede, Esq.
Answer
But bargain is not limited to invitation to treat.
We use "bargain" in a very generic sense, you have
to distinguish it.
If I'm haggling price/negotiating with a meat seller
for instance, you will say I am "bargaining", that's
not the bargain we mean here.

Mistake is very wide in scope, and

Misrepresentation could come under it. For
instance, if I lie to you that my Toyota Camry can
travel for 7 straight days without stopping, and I
knew very well that it cannot go more than 3 days,
and you RELIED on this information to buy the car.
Note from this illustration that:
1. If you had known that the car couldn't do what I
said, you would not have purchased it (I
misrepresented a major fact to you, hence
Misrepresentation comes to play)
2. On the other hand, remember me talked on
common, mutual and Unilateral mistake.
Now, because I was the only one aware of the bad
state of the car, you entered the contract without

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