CHAPTERTHREE

LAW OFCONTRACT
INTRODUCTI ON
Acont racti sanagr eementwhi chi senf orceabl eatl aw.Thi s
shor tdef i
ni tionsuggest sthatnotal lagreement sar er efer able
to cour tsofl aw forenf orcementoradj udicati
on.Not ably,
agreement sbet weenf ri
ends,f ami lymember s,etcar eusual ly
noti ntendedt obel egall
yenf or ceable,ev enwhent herei sa
stronglyf el tmor aldutytocompl y
.Busi nessagr eement smay
alsocont ai ni ndicati
onst hant hepar ti
esdonotcont empl ate
cour tpr ocessesi nt heev entofdef ault.Fort hisr eason,a
plainti
ffsui nguponacont ractmustber eadyt oshow,among
othert hings, thatthecontractwasi ntendedt ohav elegal ef fect.
Sev eral commonl awandequi tableprinciplesar eempl oy ed
i
nt he pr ocess of ascer taining t he enf orceabili
ty of an
agreementandt hesepr i
nciplesar eof tencompl ement edby
statutor ypr ov isi
ons.Oncet hel egalr equirement sar esat isf ied,
theagr eementi ssai
dt obebindi ngonal l
par tiestoit,t
hati s, t
he
l
egalr ightsandobl i
gati
onswhi char iset her efrom mustbe
obser vedandapar tyindef aultcanei therbecompel ledt o
perform asagr eed,orbemadet opaydamagest othei nnocent
party .

HistoricalOri
ginoft heLawofCont ract
TheNi ger
ian Law ofCont racthasi t
sr ootsi ntheEngl i
sh
commonl awandmanyoft her ulesapplicablet odayderi
vefr
om
1
hist
oricaldevel
opmenti nEngl and. Ir
onically,thecommonl aw,
which had subst ant i
all
yt aken shape as f arback as the
twentieth centur
y,pai dl i
ttl
e or no at tenti
on to priv
ate
agreement s att he begi nni ng.Concer ned mor e wit
ht he
protecti
onofpr opertyr i
ght spuni shmentofcr i
me,theEngli
sh
courtswoul drecognizewr itt
enpr omi sesonl ywhent heywere
affi
xedwi ththesealoft hepr omi sor.Thesealsy mboli
zedthe
seri
ousnessandsol emni tyoft heunder takingandj usti
fi
edthe
enforcement.Howev er,t
his

1
Forhi
stor
icaldet
ail
soncommonl awcontr
act
sseeCheshi
re.
l
h
Fif
oot&Furmston’
sLaw,1l Edi
ti
on.But
ter
owrt
h,chapt
er1&2

97
attachmentt of or mal ityleftagr eatmanycont ract ualparties
withoutr emedy .
Thel awl ateral lowedapl aint i
fftobasehi sact ionondebt
eveni nt heabsenceofadeed( thati s,aseal eddocument )t o
evidencet het ransact i
on. Thisbecameausef ulcour seofact ion
wher et hedef endant ’
sobl i
gati
onwast opayaspeci ficsum of
money .Thescopeoft henewr emedywashowev ert oonar row.
Manyr out ineunder t
aki ngswer est i
llmadewi t
houtt heparties
execut i
ngadeedandt herewasnof ormalwayt ocompel
per formance.Ev ent ually,t he need f or fl
exibility became
appar entandt heso- call
edsi mpl eagr eements( thati s,or al
agr eementandwr itt
enagr eement swi thoutseal )gai nedwi der
recogni ti
on.
Byanadapt ationoft hecommonl awact i
onoft respass, a
plaint i
ffsui nguponabr eachofcont r actcoul dal leget hatt he
def endanthad under taken (assumpsi tin Lat in)a cer tain
obligat ion and t hen by negl igentmi sconductcaused hi m
damage.Ont hisbasi s,hewasabl et oobt ai
nredr ess.Modem
rulesofcont r actl aw canbet racedbackt ot hisr emedyof
assumpsi t.
When,ev ent ually,pr omisesmadei nsimpl ef orm gained
recogni ti
onatcommonl aw,thei deaofconsi der at i
onar ose;
actionabi lity ofsuch si mple pr omi ses depended upon an
exami nationoft her easonwhyt hepr omi seewasmade.Hence,
thepr omi seewasr equi r
edt oshowt hathehadgi vensomet hing
i
nr et urnf ort hepr omi sewhi chhesoughtt oenforce.

19thCent uryInf
luencesont heDev elopmentofCont ract
Law
Thedev elopmentsnot edabov etookpl acer oundt he16t hand
17thcent uri
esandr emai nedsubst anti
allyunal t
eredunt ilthe
19thcent urywhent hef ocusshi f
tedf r
om t heuni l
ateralnot i
on
ofpr omiset oabi l
at eralconceptwhi chv iewscont ractasa
productofconsentingmi nds.
This shiftwas i nfl
uenced si gnif
icant l
y by two maj or
development s.Fi
rstwast het rend oft houghtsi n civ
ill aw
j
urisprudence.Theci vill
aw ideabecamepopul arinEngl and
whenat reati
seonthel awofobl igati
onswr it
tenbyt heFrench

98
 I

j
urist
,Ponthi
er,was t
ransl
ated i
nto Engl
ish i
n 1806.I
nit,
contr
act was concei
ved as somet hing based upon “
a
concurr
ence

99
ofint ent ionint wopar ties, oneofwhom pr omi sessomet hingt o
theot her ,whoonhi spar taccept ssuchpr omi se.”Thi sgav erise
tot hei deat hatanagr eementi snecessar i
lyt heout comeof
consent ingmi nds: theremustbeconsensusadi dem bef orean
2
agreementcanbesai dt oex ist.
Theconceptofconsensusadi dem r emai nspopul arev enR
tithasgr avelimi t
at i
onsandmustnotbet akent oof ar.Notal l
cont ract s ar e out comes of consent i
ng mi nds.I ndeed,a
cont ractmaybesai dt oex istnot withstandi ngt hement alst at e
3
ofthepar ti
estoi t.Asst at edbyCheshi re&Fi foot.
“Agreementi snotament alstat ebutanact ,
and,asanact ,isamat terofi nf erencef rom
conduct .Thepar t
iesar et obej udged,notby
whati si nt heirmi nds,butbywhatt heyhav e
said,written, ordone. ”
Thi si sreferredt oast heobj ectivetestofagr eement . Much
earli
er ,Lor dEldonhadasser tedt hatt het askofaj udgewasnot
“toseet hatbot hpar tiesr eal lymeantt hesamet hing,butonl y
thatbot hgav ethei rassentt ot hatpr oposi tionwhi ch, bei twhat
i
t may , de f act o ar ises out of t he t erms of t hei r
4
correspondence. ” The cour ts now show a r eadiness t o
discov eranagr eementev enf rom t heconductoft hepar t
ies5
and t her e ar e cases i n whi ch t he cour t
s go bey ond t he
i
mmedi atei nferencest obedr awnf rom wor dsandact st o
const ructacont ractbet weenper sonswhowoul dseem, asf irst
6
sight, nott obei ncont ract ual relationshipatal l.
Thesecondmaj ori nfluenceoncont ractl aw i nthe19th
cent ury was t he i ndi vidual i
st i
c t heor y of cont empor ar y
economi st s.Int heaf t
er mat hofchal l
engesposedt ot heol d
feudal isticor derbyt her ev olutionar ywar swhi chsweptov er
Europe,t heseeconomi cphi losopher sembr acedcont ractas
2
SeeCundyv.Li ndsay(1878)3App.Cas459i t465
3
Op.citatp.27
4
Kennedyv .Lee(1817)3Mer .Mer.441.C.154
5
SeeBr odgenv.Memt ropoli
tanRail
wayCompany[ 1877]2
A.C.686,Counci lofYaba Col l
ege ofTechnol ogy v.
Nigerl
ecCont ractorsLtd.[
1989]1N.W. L.
R.pt.99.p.
99
6
SeeClerkev.Dunr aven[1987]A.C.59:NewZeal and
ShippingCoy .Ltdv.A.M.Sat t
ert
hwaite&Co.( The
Eurymedon)[ 1975]A.C.154

100
 I

t
hei
nev
itabl
eandi
mmor
tal
symbol
ofaci
vi
li
sedsoci
ety
.Thei
r

101
beliefwaswel lrepr esent edbyt hef amousdi ctum ofSi rGeor ge
Jesseli nt hecaseofPr i
nt ingandNumer icalRegi steringCoy
7
Sampson:
“ Ifther eisonet hingmor et hananot herwhi chpubl i
cpol i
cy
r equi res i ti st hatmen of f ullage and compet ent
under standi ngshal lhav et heut mostl iber tyofcont ract i
ng
and t hatt hei rcont ractwhen ent ered i ntof r
eel y and
v ol untarily,shal lbehel dsacr edandshal lbeenf orcedby
cour t
sofj ust ice.”
Ther ei s ofcour se no gai nsay i
ng t he i mpor tance of
cont ract sinmoder nci vil
iz ation.Sundr yarrangement s,bot hi n
thepr ivateandpubl i
csect orsoft heeconomy ,assumet he
sanct ity and enf orceabi lity of cont ract s. Howev er,t he
suggest iont hati ndi vi
dual sbel eftf reet ocommi tt hemsel ves
ast heywi shhaspr ov edt obeanunaccept ableone.I tiscl ear
thatev enSi rJessel ’
sdi ct um i mpl i
esThatcer tainper sonsi n
soci et ywhoar enotoff ullageandcompet entunder standi ng
shoul d notal way s hav ef ullcont ractualcapaci t y.St ill
,t he
boundar i
esofcompet entunder standi ngr emai nuncl earandi t
i
sr at herdi ffi
cul tt oseewhet heracont r
acthasbeenf r
eel yand
volunt arilymade.
The r eal i
tyt oday i st hatev en men off ul lage and
undoubt edly compet entunder standi ng of ten need speci al
protect ionf rom unf airtermswhi chmaybei mposedont hem i n
8
thenameofacont ract . Thef reedom ofani ndi vi
dualbecomes
i
llust or ywhenhenegot i
at eswi t
hanot herofsuper iorbar gaining
power .
Thephenomenonofone, par tyv irtuall
ydet ermi ni
ngal lthe
termsofhi scont ractwi thot her sismor eandmor ev i
siblewi th
i
ndust ri
aldev el opment as monopol i
es and combi nat ions
becomet hev ogue. Thepr obl emi st ypi fi
ednowaday sbyt heuse
ofst andar df orm cont ract s.I tisal sowel lrecogni zednowt hat
thest at ehasadut yt ocont rolt het ermsofcer t aint ypesof
cont ract ,usuallybecausebyt hev er ynat ureofsuchcont r
act s,
9
theymaybeunj ust ifi
abl ywei ght edi nf avorofonepar ty.
7
(1875)1.r
.19Eq.462at465
8
See.Forexample,theUnfai
rCont
ractAct1977(U.K)
9
E.g.,t
heHirePurchaseActof1995.TheRecoveryof
Pr emi
sesLawsandt heSal
ebyAucti
onLawsoft hevar
ious

102
 I

St
atesoft
heFeder
ati
on

103
 CLASSI
FI ONOFCONTRACT
CATI

Simpl eCont ractsandCont ract sunderSeal

Simpl e( orinformal)cont ractsmaybeei theri nor alorwr it
ten
form, whi l
econt ractsundersealar etypif
iedbyt hef ormal ityof
signing,seal ing and del i
v eryoft he cont ract ualdocument .
Cont ractsunderseal aregener allyreferr
edt oasdeeds.
Al lsimplecont ractsmustbesuppor tedbyconsi der ation,
butapr omi semadeundersealmaybeenf or cedev ent hough
thepr omi segav enot hingi nretur n.Thel att
eri s,therefor e,not
alway sdependentont henot i
onofagr eement .Toenf orcea
promi semadeunderseal ,thepr omi seneedsnothav eagr eedt o
i
torknownofi tatt het imei twasmade.Ther ulest obe
consi dered i n t hi
s sect ion ar e those r equi r
ed f or t he
enforceabi l
ity of si mple agr eement s ev en t hough many
agreement sundersealal socompl ywitht heser ul
es.I tisal so
i
mpor tanttonot et hatsomest atutesmakei tcompul sor yf or
certain agreement st o be made underseal .These i ncl ude
agreement smade bycor poratebodi esand agr eement st o
effectaconv eyanceofl and.

ExpressandI mpl i
edCont racts
Anexpresscont r
acti smadewhent hepar t
iesspeci f
icall
yagr ee
tothetermst hereofor all
y,inwrit
ingorunderseal .Howev er, i
n
theabsenceofanex pressagr eement ,thecour t
smayst il
l
deducefrom t heconductoft hepar t
iesthatacont ractexist s
betweenthem. Thisiscalledanimpliedcont r
act.Forinstancei n
10
DejiOyenugavI nternationalComput er
s( Ni
g) . t
heappel lant
didarchi
tecturaldr awingsf orther espondent,butt hepar ties
hadnoex pressagr eementont heamountt obepai dtot he
appell
antHELD: t
hati sincircumstance,anagr eementwoul dbe
i
mpl i
edwher ebyt heappel l
antwasent i
tl
edt ochar gehi sfees
11
accordi
ngt othescal eoff eesusedbyAr chitectsinNi geri
a.
Wemust

10
[1991]1N.W.L.R415
11
Seeal soBrogdenv.Met r
opolitanRailways,Cop.Cit
:and
Counci lof Yaba Col lege of Technol ogy v. Ni
geri
ec
Cont r
actors[
1989]1N. W. L.R(Pt.95)p.99wherethecour
t
heldt hatthe Respondent s’counterofferwas impli
edl
y
accept edbyt
heappellants.104
note,
though,thatinspit
eoft
herul
estat
edabov
e,acourtwoul
dbe
rel
uctanttohol dt hatt
heexpr
esstermsofacontracthavebe
1213
i
mpl i
edlyvar
ied.

Unilater al andBi lateral Cont r acts

A bilateralcont ractar i
seswhent hepar ti
esexchangepr omi se
Event houghnonehasper formedasagr eed, t
hepar t
iesar ebound
becauset hepr omiseofonei sconsi der ationf ort hepr omi seoft he
other.
Ont heot herhand,auni lateralcont racti sonei nwhi chone
party( thepr omi sor )bindshi msel ft oper form ast atedpr omi se
uponper formanceofast atedcondi tionbyt hepr omi see.The
promi seehowev ergi vesnocommi tmentt oper for mt hecondi t
ion:
Hei sl eftf reet ochoosewhet hert oper form ornot .Oncehe
performsasst i
pulatedbyt heof fer, t
hel at terbecomesboundand
3
mustf ulfi
lhispr omi se.InCar l
lillv.Car bolicSmokebal l Company ,
'
forex ampl e,t hedef endant spl acedanadv ertisementi nwhi ch
theypr omi sedt opayonehundr edpoundst oany bodywhoused
theSmokebal l(apat entmedi cine)aspr escr i
bedandst i
llcaught
i
nfluenza. Thepl aintif
fpur chasedandusedt heSmokebal l,yetshe
contract edt hedi sease.I nheract ionf ort heenf orcementoft he
paymentpr omi sed,thedef endant scont ended, i
nt eral ia,thatev en
i
ft he adv er ti
sement was an of fer,t he pl ainti
ff had not
communi cat ed heraccept ance;t heref ore a cont racthad not
ari
senbet weent hepar t
ies.I twashel dt hatabi ndi ngcont racthad
comei ntoef f ect.Itcanbei nfer redf romt ransact ionsoft hisnat ure
thataper soni snott onot i
fyhi saccept anceoft heof ferbef orehe
performst hecondi ti
on,butt hati fheper formst hecondi ti
ona
contractensuesandnot ifi
cat i
oni sdi spensedwi t h.

ThePr ocessofAgr
eement
Ingeneral
,par
ti
esar
esai
dtobei
nagreementwhenonemakesor
i
spr esumedtohavemadeafi
rm of
ferandtheot
herappar
ent
ly
acceptstheof
fer
.

12
SeeN.B.N.Ltdv.PB.Ol
atunde&Co.Ni
g.Lt
d.[
1994]3
N.W.L.
R(pt.334)
512
13
[1983]I
Q.B.256

105
Offer
Anof feri sanex pressi
onofwi ll
ingnesst ocontractmadewi th
theintent i
onthatitshallbecomebi ndingont heofferorassoon
14
ast heof fer
eeaccept s. Onlyf ir
m of f
er smaybeaccept ed
without f ur
ther negot iati
on, hence i ti s an i mpor t
ant
requir
ementofl aw t hatan of fermustbe def inite and
unambi guous, full
andf inal.Oncei tisproperl
yframed, anoffer
canbemadet oapar ti
cularper son,agr oupofper sonsor ,
i
ndeed,t hewhol ewor l
d.I nCar l
illv.Carbolii
cSmokebal lcoy .
,
oneoft hear gumentoft hedef endantwast hatt hepr omise
embodi edi ntheadv ert
isement ,ifheldtobeenf orceabl e,woul d
amountt oacont ractmadewi thal lthewor l
dwhi chwasan
i
mpossi blethings.Itwashel dthati twasnotacont ractmade
withall t
hewor l
dbutanof fermadet oalltheworld.Suchwasa
vali
dof ferandi tcouldr ipenintoacont r
actwi t
hany bodywho
15
camef orwardandper f
or medt hest ipul
atedconditi
on.

Offerdi stingui shedf rom I nv it

at i
ont oTr eat
Preli
mi narynegot iationsof tenpr ecedet hemaki ngofanof fer.
Fori nstance,Amayof fert onegot i
atewi thB;al t
er natively.A
mayi nform Bt hathe( A)i sr eadyt or eceiveof fers.I nbot h
cases,t her esponseofBdoesnothav elegalef fectasAhas
onlymadeani nv i
tationt otreat .
Gener all
y ,an i nvit
ation t ot reati s notmade wi th an
i
ntent i
ont obeboundi ncont ractt oany onet hatresponds. Once
thecour tscandet ectori mpl yt hislackofi ntention,t heywi ll
holdt hatanof ferhasnotbeenmade.I tisi r
rel
ev antt hatt he
all
egedof f
erappear sdef i
nit e.Asaconcessi ont obusi ness
conv enience,cer tain st atement st hat bear t he or dinary
charact eri
sticsofav alidof ferhav ebeenhel dtobei nvit
at i
ons
totreat. Theuseoft hewor d“ offer”isal sonotconcl usiveoft he
mat ter.Thisi sper hapsani ndicationt hatt her elevantcases
havet o best udi ed car efullyI ll
ust r
ationsoft hedi sti
nct i
on

14
Wakamav .Kal
io[1991]8N.W.L.R.( Pt.207)p.133
15
Not ehoweverthatanof fercanbeaccept edonl ybyt he
persont owhom i twasaddr essed:Mar garetAgamav.
GuinnessNigeri
aLtd.[1995]2N.W.L.R.( pt.380)p.672.i
t
hasbeenheldthatanoffercannotbemadet oanonex i
sti
ng
i
nt olegal
rel
aton:Ni
i geri
aNat ionalShi
ppingLinev .Agri
cor
Inc.[199413N.W.L.R( Pt.332)p.329.

106
bet
weenof
ferandi
nvi
tat
iont
otr
eatar
easf
oll
ows:

Auct ions
Anadv ertisementt hatanauct ionsal ewi llbehel donacer t
dayatacer t
ainv enuedoesnotamountt oanof fert ohol di t.It
i
samer ei nvitationt ot reat .Ther ef ore, i
fawoul d-bepar ticipant
i
ncur st r
av elli
ngexpensesonl ytof i
nd,onr eachi ngt hev enue
thatt hepr oposedauct i
onhadbeencancel led,t heauct ioneer
cannotbemadel iabl e.Thi spr i
nci plewasuphel dint heol dcase
ofHar ri
s v.Ni cker son16 wher e Quai n J.poi nt ed outt he
absur di t
yt hatwoul dr esul tifsuchadv ert
isementwer et obe
seenasr esul ti
ngi nacont ractwi thev erybodyat tendi ngt he
sale.
Al so, anauct ioneer ’
sr equestf orbi dsismer elyanat tempt
tosett hebal lr olli
ng.Eachbi dconst itutesanof f erwhi cht he
auct i
oneermayacceptorr eject.Accept anceoccur sonl ywhen
theauct ioneer ’shammerf all
s.Bef oret hen,anybi ddermay
17
retracthi sbi d.
Howev er,wher et heauct ioneeri ssuesanadv ertt ot he
effectt hatanauct ionsal ewi l
lbewi thoutr eser ve, hei mpl i
citl
y
pledgeshi msel ft osel ltot hehi ghestbi dder .Ift heauct i
on
takespl ace,t hent hehi ghestbi dderwhomakeshi sbi di n
reli
anceupont hatpl edgemayenf or cet hesal eev ent hought he
auct i
oneerr efusest oknockdownhi shammerort osi gni f
y
1819
accept ancei nanyot hermanner . Whenanauct i
onsal eis
expr essedt obewi thoutr eserv e,i tmeanst hatnei thert he
vendornoranyper soni nhi sbehal fshal lbidatt heauct ionand
thatt hepr oper tyshal lbesol dt ot hehi ghestbi dderwhet hert he
sum bi dbeequi valentt ot her ealv al
ueornot .I tt her efore
const itutesabi ndi ngpr omi set osel ltot hehi ghestbi dderat
theauct ion.
9
InAdebaj ev.Conde,' t
hedef endant sr ef usedt osel lland
tothepl aint i
ffwhowast hehi ghestbi dderf ort hel andatan

16
(1873)L.
R.8Q.B286
17
Paynev.Cave(1789)3Term Rep.148;sect
ion58Sal
eof
GoodsAct
18
War l
owv.Har
ri
son(1958)1E&E309
19
(
1938)14N.L.
R.57

107
auction.I twashel dt hatsi ncet heauct i
oneerdi dnoti ndi cate
thattheauct i
onsal ewassubj ectt oar eser vedpr ice, hehadan
i
mpl iedaut hor ityt osel lwi thoutr eser v e.Sal et othepl ai ntif
fas
the hi ghestbi dder ,was t her efor e enf orced.Thi s col lateral
promi sei saccept edonl ybyt heper sonwhomakest hel astbi d
attheauct i
on,hencei ft heauct i
oni snothel dt heauct ioneer
20
suffersnol iabi l
ity.
Ther ehasbeenst at ut oryi nt erv ent i
oni nt hi sar eaoft hel aw
asauct ionsal esar enowgov er nedbyt heSal ebyAuct i
onLaw
21
ofthev ariousst atesofNi ger ia. Undert heLagosSt ateLaw,
thesel lerr equi r
edt oi ndi cat ei nt hepar t
icular sorcondi tionsof
salewhet hersuchwi llbe( i
)wi thoutr eser v e;or( i
i
)subj ectt oa
22
reserv edpr i
ce, or( iii
)ar ightt obi di sr eser ved.
Wher et hesal ei sst at edt obewi t
houtr eser ve,itshal lnotbe
l
awf ulf ort hesel leroranyper soni nhi sbehal forempl oy edby
himt obi datsuchsal eorf ort heauct ioneert ot ake, knowi ngl y
23
anysuchbi d. Sect ion22( 3)pr ov i
dest hatwher et hesal eis
subjectt oar eser vedpr ice, itshal l bel awf ul fort hesel lerorany
personempl oy edbyhi mt ogi v eonebi df oreachl otandno
mor e.Thebi di st obedecl ar edopenl yupont hel otbei ngputup
forsal ebef oreanyot herbi di sr ecei ved.Howev er ,wher et he
ri
ghtt obi di sr eser ved,i tshal lbel awf ulf ort hesel lerorany
personi nhi sbehal f(oneper sononl y)tobi di nsuchmanneras
24
heshal lthinkpr oper .
Wher ebi ddi ngi sdonecont r aryt oanyoft hef or egoi ng
provisions,anypur chasermayr ef uset of ulfi
lhi spr omi se,but
thehi ghestbonaf idebi ddershal lbeent it
led, ifheshal lsoel ect,
tobuyt hel andorgoodsatt hepr iceheof fers.

Advert
isementofGoodsf orSal
einNewspaper s,Cir
cul
ar,
TradeCatalogues,
etc.
Inthe absence ofa clearindi
cat
ion t
ot he cont
rar
y,an
adver
ti
sementofgoodsforsalewoul
dberegardedasamere

20
Harr
isv.Nicker
sonop.cit
21
SeeforexampleCap.S.1.(
VOL.7)2003ofLagosSt
ate
22
Sect
ion22(1)
23
Sect
ion22(2)
24
Sect
ion22(4)

105
 25
attempttoinduceof fers. Theadv erti
serisnott herebybound
tosuppl ygoodsoft hest ateddescr i
ptiont oal lwhodemand
them.InPat r
idgev .Cri
ttenden26t heappellantadv ertisedsome
wildli
vebirdsforsale.Hewaschar gedwi thunl awfullyof f
ering
them forsalecont rarytot hepr ovi
si
onsoft hePr ot ecti
onof
BirdsAct,1954.I twashel dt hattheadv ert
isementwasnotan
offer
],aninvi
tati
ont otreat.Thi srul
eisf oundeduponbusi ness
convenience.Iftheadv erti
serwer etobehel dboundt oallthat
respond,hemi ghtbeunabl et of ul
fi
lhisobli
gat i
onsashi sstock
27
ofgoodsoft hatdescr i
ptionmi ghtbel i
mi t
ed.

DisplayofGoodsi nShel ves,inaShop, Super mar ket,etc.

Wher egoodsar edisplay
edi nshopwi ndowsori nsideashop
withthepr i
cesattached,thedisplayisamer einvitat
iontot reat
Itisthecustomerwhomakesanof f
erbypi cki
ngupt heobj ects
orcol l
ecti
ngthei t
emsi nabasketandt akingt hem tot hesal es
clerk.Thesalesclerkthenacceptsonbehal fofthepr opri
etorby
takingmoneyf rom thecustomer .Beforemoneyi ssoaccept ed,
anyoft hepar t
iescanr ef
uset ocompl etethet ransacti
onasno
2829
cont r
actualr
elati
onshiphasy etarisen.

PublicTr anspor tati

on
Doesaper sonmakeanof f
erofcarri
agebyr unningavehicleof
publi
ct ranspor tati
on?Lor d Greensgav ea posi ti
ve answer ,
obit
er,i
nWi l
kiev .LondonPassengerTr anspor tBoard26 when
hedeclar edt hatt hecont racti
smadewhenapassenger ,by
conduct,accept st heof f
erofcarri
agebyput ti
nghi mselfeit
her
ontheplat form orinsidethebus.
Howev er
,t hispr opositi
onmaynotal way sbet hemost
conveni
ent .Thet ermsoft hecont r
actsofcar r
iageareusual l
y
contai
nedi nt hereceiptissuedtothepassengerwhenhepay sin
thecourseoft hej ourney.Itist
heref
oreratherawkwar dtosay

25
Spencerv .Har dl
il
ng(1870)L.R.561.Seealsolnnihv.
FreadoAgr oConsor tium Lt
d.[1990]5N.W.L.
R( pt152)p.
605
26
[
1968]2Al l
E. R.42
27
.
S eGr
e ainger&sonv Gough[1896]A.C.325at334perLor
. d
Herschell
28
Pharmaceut icalSoci
etyofGreatBritai
nv.BootsCash
Chemi sts[1961]1Q. B.394
29
[1947]1Al lE.R.258

106
thatcontractexistedbef orethatmoment .Also,t
hepassenger
maydi scoverafterboar ding,thathehast akenawr ongv ehi
cle.
Ifhethendisembar ks,
shoul dt hecarr
ieri
nsistonhisfare?Also,
cantheconduct ornotl egi t
imat el
yendapassengeroutbef ore
theendoft hejour ney?Ther ei syetnocl earaut
horityonthis
i
ssueandt hecircumst ancesofeachcaseshoul dgui dethe
courtinreachinginappr opr i
atedecisi
on.

Tender s
Somet imesaper soni nv i
tesot her st omaket ender s,thati sto
stat ethel owestpr iceatwhi cht heycanexecut eaj oborsuppl y
somegoods.Al so, tender ersmaybei nv i
tedt ost atethehi ghest
priceatwhi cht heyar ewi l
li
ngt opur chasegoods. Suchr equest s
fort ender sar eclassi fi
edasi nv i
tationst ot reatbutev eryt ender
const itutesanof f erwhi chmayormaynotbeaccept edi nt he
end.Thet enderert her eforeunder takest heex penseandt rouble
athi sownr iskandt heposi t
ionr emai nst hesameev enwher ehe
accompani eshi st enderwi thanonr efundabl edeposi tatt he
requestoft he i nv itor.I n Spencerv .Har ding30 wher et he
def endant ssentoutaci rcularof feringsomet r
adingst ocksf or
salebyt ender ,thepl ainti
ffsubmi ttedt hehi ghestt enderwhi ch
thedef endant sdidnotaccept .Thepl ai ntiffthereforebr oughtan
action al leging thatt he ci rcularamount ed to an of ferand
under takingt osel lt ot hehi ghestt ender er .Thecour thel dt hat
theci rcularwasonl yani nv i
tationofof fers.
Howev er,wher et hei nvitati
oni scoupl edwi thast at ement
thatt hel owestorhi ghestt enderwi l
lbeaccept ed,theni tisan
offerandwhi chisaccept edbyt hel owestorhi ghestt ender eras
31
thecasemaybe.

Sal
eofShares
Whenacompany‘off
ers’
it
ssharesf
orsubscri
pti
onbymember s
oft
hepubl
ic,
itdoesnotamounttoanoff
erinthelegal
sense.I
t
i
sonlyani
nvi
tati
ontothepubl
ictomakeoffer
s.Whent hose

30
(
1870)L.R.5C.P.561
31
Harv
elaI
nvestmentLt
d.V.Roy
alTr
ustCo.ofCanadaLt
d.
[
1986]A.C207.

107
offerscome,t herefore,t hecompanywi l
lhaveadi scretion
whet hert o acceptornot ,and t i
ef actt hatan appl icant
accompani edhi sappl i
cationwi thevidenceofpay mentf ort he
sharesdoesnotal terhi spositon32Thi
i sruleenablescompany
to r eject some appl icati
on i f t he i ssue i s
eventual l
y-over-
subscr i
bed.
Howev er,whenacompanyr esolvestomakear i
ghti ssue
sharest oi t
sexi sting member s,thecommuni cati
onoft he,
resolution to member si s an of f
er.The company t her eby
signifi
esi tsint
entiont obeboundi famemberaccept s.Int hi s
caset her eisnol i
kelihoodofov ersubscripti
onhence, theof fer
l
et t
erisr egardedasav ali
danddef i
nit
eof fer
.

Suppl yofI nformat i

on
I
nt ransacti
onswhi chmayi nvolv
ef ul
lnegoti
ati
onsonmany
mat tersofdet ailbeforeacont r
actresul
ts,e.
g.,r
ealproper ty
transact i
ons,thecour t
swouldrequir
ev er
yobviousindi
cat i
ons
ofani ntent
iont obeboundbef orethydecidethataparticular
proposalori nformat i
onisonethatdiscl
osesanof f
ertosellat
33
thatpr i nHar
ce.I veyv.Facey, t
heparti
escommuni catedby
telegram asf oll
ows:

Pl
aint
if
fs:
Wi lly
ousellusBumperHal lPen?Telegraph
l
owestcashpr ice.
Def
endants:Lowestpri
ceforBumperHal lPen,
900pounds.
Pl
aint
if
fs:
Weagr eetobuyBumperHal lPenfor900pounds
askedbyy ou.Pleasesendusyourtit
le-
deeds.

Thedef endantsr efusedt ogoi nwi ththesal eandt he

plai
ntif
fs sued.The i ssue was t hen whet herornott he
Defendantshadmadeanof fert
osellf
or900pounds. Held:That
therewasnosuchof f
er, hencenocont r
actresult
ed,inspit
eof
thepur por
tedaccept ance.Mer esupplyofinformati
onatt he
requestoftheot herpartydoesnotconst it
uteanof f
erunlessit
i
scl ear
lyportray
edassuch.

Hebb’sCase(1987)1.r
.4Eq.
9
[1893]A.C.552
33

108
 34
Also,inCl i
ftonv.Palumbo t heplai
ntif
f’
sstatementt
hat
“I
..
.am pr eparedt ooff
ery ou..
.myLy tham Estat
ef or600,
000
pounds”washel dt
obeapr el
i
mi narystat
ementast opri
ce,
not
anof f
er.Howev erwherethepricestatementwasclearl
ymeant
35
tobeanof fer
, t
heotherpartymayv ali
dlyaccepti
t.

Accept ance
Accept anceisanabsol uteandunqual ifi
edex pressionofassent
36
toAcceptanof f
er . Theof fer
eemusti ndicat ebysomeposi ti
v e
action,t hathet otallyagr eest ot het ermsoft heof fer.His
i
ntent iont oacceptwi llnotdo;nei t
herwoul dast at ementby
whi chhemer elyacknowl edgesr eceiptoft heoft heof fer.
Nor mal ly,accept ancewoul dbebyanex pr essdecl aration,or al
or wr i
tten,comi ng f rom t he of f
er ee.But i n appr opri
ate
37
cir
cumst ancesi tmaybei nf er
redf r
om hi sconduct .
Wher e t he of fer st ipulates t he r equired manner of
accept ance,t heof f
er eemustcompl ybef or ehecanasser tthe
existenceofacont ract .InAf olabiv .Pol ymer aIndust ri
esLt d38
wher etheof ferletterr ead, i
nteral i
a, “
wi l
ly oupl easer ead, study
caref ull
yandsi gnt hedupl icatecopyat tachedsi gni fyingy our
agreement stoal lthepoi ntsasl i
stedabov eandr et ur naty our
earliestconv eniencef orr ecords? ”thepl aintifffai
ledi nhi sbi dto
asser ttheexi stenceofacont ractast herewasnoev idenceofa
writtenaccept ancesentbyhi m.

CounterOf f
er
Acceptance,howev
ermade,mustbeunqual i
fi
ed.Theof fer
ee,
in
accepti
ng,isnotatli
ber
tytov ar
yt hetermsoft heof ferorto
i
ntroducesomenew t er
ms.Ifhedoest hesethings,thenhis
repl
ycannotbeanaccept anceint hepr operlegalsense.He
wouldonlybemakingacounterofferwhichthefir
stofferermay

34
[1944]2Al lE.
R.497
35
Biggv. BoydGibbinsLtd.[1971]2Al lE.R.183AT185.“ Fora
quick
sal
e.Iwoul daccept26,000...
”heldtobeanof f
er.
36
Maj.Gen.I nni
h( r
td)v.FeradoAgr oConsorti
um Ltd.[1990]
5NWLR( Pt
.152)p.605
37
Carli
llv.CarbolicSmokebal lCoy.;Brogdenv.Met r
opoli
tan
Rail
way s;Counci lofYaba Col l
ege ofTech.v.Ni gerl
ec
ContractorsLtd.[
1989]1N. W. L.
Rat112.
38
[1967]1Al lN.L.R144

109
 39
thenorr eject nI
:I nnihv.Fer ado t hepl ai nti
ffsr eplyt oanof f
er
wasasf oll
ows:“ Thanky ouf ort heof ferbutwewi llki
ndly
requestt hatper i
odofpay mentbeex tended. ”HELD:Thatt he
40
statementamount edtoacount erof f
er.
Acount erofferdest r
oyst heor igi
nal offer.Henceanof f
eree
whof i
rstmakesacount erof fercannotl ateri nsistonaccept ing
theor i
ginalof f
er.InHy dev.Wr ench41't hedef endantwr ot
et o
thepl ainti
ffof f
eringt osel lhi sf armf or1, 000pounds.The
plainti
ffinhi srepl y
,indicat edt hathewasr eadyt opay950
poundsandt hedef endantev ent uall
yr eject edt hisl owersum.
Thepl ainti
ffthenwr ote“accept i
ng”t heof ferof1, 000pounds.
Whent hedef endantst il
lrefusedt osell,thepl aintif
fbroughtan
actionf orspecificper formance.Butt hecour theldt hatthere
wasnobi ndingcont ract.Becauseaf t
ert hepl ainti
ffscounter
offer,i
twasnol ongercompet entforhimt or evivet heproposal
oftiedef endantbyt ender i
nganaccept anceofi t.
Howev er,acount erof ferisav alidof ferwhi cht heother
partymayacceptei t
herexpr essl yorbyconduct .

Requestf orFur t
herInf or mat i
on
Anof f er
eemayr equestf orf urtherinformat i
onconcer ningt he
offer.Suchr equestsar enotcount erof f
ersandt heof feree
remai ns f ree t o acceptt he of f
eras pr evi
ousl y st
at ed.I n
Stevensonv .Mcl ean42t hepl ainti
ff,whohadear l
ierrecei vedan
offerof3, 800t onsofi ron“ at40snetcashpert on,opent i
ll
Monday ”,tel egraphedt hef ol l
owi ngr eplyonMonday :“Pl ease
wirewhet hery ouwoul daccept40f ordel i
veryovert womont hs,
ori fnotl ongestl i
mity ouwoul dgive.”Hegotnor epl y.He
thereforesentanot hertelegr am, onthesameday , accept i
ngt he
offertosel lat40scash. Meanwhi le,t
hedef endanthaddi sposed
oft hei r
on.Thepl aint
iffal l
egedabr eachofcont ractandsued
fordamages.I twashel dt hatt hepl ainti
ff’
srepl ywasnota
count erof f er,buta mer ei nquirywhi ch should hav e been
39
[1990]5N.W.L.R(pt.152)p.605
40
SeealsoOkuhul eVOy agbola[1990]4N.W.L.R,p.723.I n
thatcase,duringthenegot iati
onforal ease,t
heappell
ant
demanded25y ear
sr entat( 6,
500,00p.a)inadvance.The
respondent
sagr eedtot hesameN6, 500.00buyaskedtopay
only5y ear
sr entinadv ance.Held:Thatthiswasacounter
offer
.
41
49ER.132( 1840)3Beav .334
42
(1880)5Q.B.D.346

110
answer edbyt hedef endant .Int heci rcumst ance,t hepl ainti
ff'
s
accept ancewasv al
idbecauset heor i
gi nalof f
err emai nedopen
43
atthet ime.
Wher et heof fereeaccept s,subj ectt ot hecondi ti
on,or
wheret heci rcumst ancesi ndicat et hatt hepar tiesneedt owor k
outfur therdet ail
sbef oret heyar ef inallybound, anyagr eement
reachedwoul dnotenf orceableunt ilthecondi t
ioni smetort he
44
detai
lsar ewor kedout .IniOdunf undadev .Ososami wher ethe
parti
esr eacheda“ t
ent ativeagr eementwasnotenf or ceabl e,as
thewor dsusedhadt heef fectofpost poningl iabili
tyorl egal
45 46
rel
ationshi pbet weent hepar ti
es. Al soi nWi nnv.Bul l wher e
accept ancewassai dt obe“ subj ecti ncont ract”t hecour theld
thatitwasmer el
yapr oposalt oent eri ntoacont ract.Bot h
parti
esenj oy edal ocuspoeni tenitiaeandmaypul loutatwi l
l
.
Howev er,muchdependsont hepecul i
arfact sofeachcase
and wher et hepar ti
esar eseen t o hav eagr eed on al lthe
necessar yt erms,acont r
actwoul dbehel dt oexi stbet ween
them, ev ent hought hepar ti
esst i
llant icipatedt heser v i
cesofa
47
soli
citori nput tingtheagr eementi nal egal f
ormat .

Accept anceofTender s
Ifat enderi sanof f
er,t henonemayassumet hatoncei tis
accept ed, acont ractensues.Thi sassumpt i
onwoul dindeedbe
correctwher et het ermsoft het enderand t heaccept ance
thereofar edef initeandunambi guous.
Howev er,thel anguageofani nvit
at i
onf ort enderi snot
alway ssodef inite,andt hismayr eflectitselfi
nt hepr oposi tion
oft het ender er.Fori nst ance,t endersmaybei nv i
tedf ort he
suppl yofani ndef i
nit
equant ityofmat erialsoveragi venper i
od,
andi nr esponse,t hetender ermayof fert osuppl ymat er
ialsi n
suchquant it
iesnotex ceedi ngast atedamount“ asy oumay
order”ov er,thesai dper iod.I nt hiscase,accept ancebyt he
person who i nvited the t enderdoes notconst ituteal egal
accept ancesoamakehi mort het ender erincuranyl egal l
i
abi lit
y.
Hei snott her ebyobl igedt or eceiveandpayf orani ndefinite

43
(a)AtP.350
44
(b)(1972)2U.
I.
L.R.101.Seeful
lfact
sp.253inf
ra
45
SeealsoObasekiv.A.C.B.11966]N.M.
L.R.35
46
47
(1977)7Ch.D.29
Brancav.Cobar
ro[1947]K.B.854

111
quantit
yofsuppl ies.Ontheot herhand,thetendereri
ssai dto
havemadst andingof f
er,
whichmaybeaccept edifandwhena
specif
icorderi spl acedbyt heotherpar ty
.Eachsuchor der
consti
tutes indivi
dualactofaccept ance which creates a
48
separate contract However,ift he tender
err evokes his
standi
ngof fer,hecannotbemadel i
ableforfurt
herdeliv
eries,
al
thoughhei sboundbyr equi
siti
onsalreadymade.

Ret r
oacti
veAccept ance
Wher e agreementi s pr eceded by pr ol
onged negot i
ati
ons
acceptance and,t herefore,t he ensuing contractmayhav e
retr
ospecti
v eef f
ectsot hatt heagreedtermsbecomeappl icable,
notonlytoact sdoneaf terthedat eofaccept ance,butalsot o
actsdonebef or ethatdate. Thishappenswher et heparti
eshav e
beenconduct ingt hei
rt ransactionswi thoneanot heront he
assumpt i
ont hatacont r
actwoul dulti
matelybeagr eedonl ines
knownt obot hpar ti
es,t houghwi t
ht hefinalform ofv ari
ous
constit
uent t erms of t he proposed cont ract st i
l
l under
49
discussi
on.

CrossOf fers
Supposet wopar ti
essendt oeachother,ataboutt hesamet ime,
offerswhi charei dent
icalint er
msandt heseof fer
scr ossen
route.Isanyoft hepar t
iesent i
tl
edtoassumet hatacont ract
thereby ar i
ses? This situati
on presented itselfi n Tinn v.
Hof fman & Co50 wher et he defendants wrotet he plai
nti
ff
offeri
ngt osellhi
m 800t onsofi ronat69spert on.Ont hesame
date,thewr otetotheDsof f
eri
ngt obuy800t onsat69spert on.
Thel ett
ers

48
SeeGr eatNort
hernRail
wayv.Wi
tham (
1973)L.
R.9C.
P.16
49
Troll
ope&Col l
sLtd.V.Atomi
cPowerConstr
uct
ionLt
d.
[1962]3Al lEr
.1035at1040
50
(1873)29L.T.271

112
cr
ossed i
nt hepost .Byamaj or
it
ydecisi
on,theExchequer
Chamberdecidedthatnocont
racthadbeenconcl
uded.
Accor
dingt
oBl ackburn,
J:
“Whenacont ractismadebet weent wopar ti
es,
ther
eisapr omisebyonei nconsiderationof
thepromi semadebyt heot her,t
her ear etwo
assenti
ng mi nds..
. But I do not t hink
exchangingof f
erswoul d,uponprinciple,beat
allt
hesamet hi
ng...Thepr omiseorof f
erbei ng
madeoneachsi de,neitheroft hem canbe
51a
constr
uedasanaccept anceoft heot her”.
Thereare,howev er,possibl
ear gumentsagai nstthisvi
ew.
Eachpartycl
earlycontempl ateslegalrel
ati
onsuponani dent
ical
basi
s,and each i s pr epared to offerhis own pr omise as
consider
ati
onf orthepr omiseoft heother
.Ther eisnotonlya
coi
ncidenceofact s,butal so aunani mi
tyofmi nds.These
51
shouldtoget
herconst it
uteabi ndingagreement.

Accept ancei nI gnoranceofOf fer

Thei ssueher ecanbei l
lustrat edasf oll
ows:
Thepol iceof f
erstopayt hesum ofN10, 000t oanyonewho
givesi nformat i
onl eadingt ot hear restofMr .Cr ook.Alex,who
hear d nothing oft hisof f
er ,gi vest he requi r
ed informat ion.
Ther eafter,
hel earnsoft heof f er.Canhecl aimt herewar d?
Anaf f
irmat i
veanswerwasi ndicated in bot h Nev i
ll
ev.
52 53
Kelly andGi bbonsv.Pr oct or. Butthi
shasbeensubj ectedt o
crit
icism Al though,anagr eementmaybei nferr
edf rom t he
conductoft hepar t
ies,thei nf erenceshoul dnotbedr awnf r
om
themer ecoi ncidenceoft woi ndependentact s.Howcant her e
54
beassentt ot hatofwhi cht hepar t
yhasnev erhear d? The
plaintif
f,whenheact ed,intendednott osel lhisi nf
ormat i
onbut
togi veit,andt herewasnot hingt ojusti
fyanyr easonablet hird
55
partyi ni nferri
ngt hecont r ary . Thesecr it
icismshav ebeen

Atp.279
SeeCheshi r
e&FifootLawofCont r
act
,op.ci
tp.55
(1862)12CBNS,
740(1981)64L.T.
594
PerWoodr uf
fJ.inFi
tchv.Snedaker38NY248(1868)
SeeCheshir
eFifoot&Funist
on’sLawofContactop.ci
r t.p.
53

113
uphel
dint
he

114
 56
Uni
tedStates,Aust
ral
i
aandSouthAf ri
car espect
ivel
y.I ti
s
howeverclearthatwher
eaper sonknew oft heof f
er,hi
s
57
moti
ve'sf
oraccepti
ngwouldbei
rrel
evant.

Communi cat ionofAccept ance

Asear l
i
erst ated,t heof f
er ee’ si ntentiont oacceptmustbe
givensomeext ernalmani fest at i
onbef orei tcanbel egal l
y
58
effect i
ve. Thi smaybebywayofsomewor dsspoken,oract
donebyt heof fereeorbyhi saut horisedagentwhi chmaybe
regar ded amount ing t o a communi cat ion ofaccept ance.
Wher etheof fereechoosesnott oaccept , hesuf fersnol iabil
it
y
byknowi ngoft heof ferandr emai ningsi lent .
Butwhati fanof fererpr ocl aimst hatsi lenceoft heof f
eree
shallbedeemedt omeanconsentsoast oi mposeupont he
59
offereeanobl igationt or eact ?I nFel thousev .Bindl ey the
Engl i
shCour tofCommonPl eashel dt hatt heof fererhadno
ri
ghtt odoso. Givi
nghi mt hatr ightwoul dmeanal lowi nghi mt o
putupont heof fereet het roubl eandex penseofr ejectingt he
offeri fi
tt urnsoutt hatt heof fer eei snoti nterested.
Howev er,not hing st ops t he of ferorf rom wai ving t he
communi cat i
onofaccept ancet ohi msel f.Hemayhi msel frun
ther i
skofi ncur ri
nganobl igat ion, thoughhemaynoti mposei t
uponanot her .Asst atedbyBowenL.J.i nCar lil
lv.Car boli
c
Smokebal l
60a
Coy
“Ift he per son maki ng t he of ferexpr essly or
impl iedlyi ntimat es in hi s of fert hati twi llbe
suff i
cient t o act on t he pr oposal wi thout
communi cating accept ance of i tt o hi msel f,
perf ormance of t he condi t
ion i s suf f
icient
accept ancewi t
houtnot ificat i
on. ”
Hence,had i tbeen t he nephew t hatwant ed the cont r
act

56
Fitchv.Sneadaker38NY( 1868);R.v.Clarke(1927)40CLR
221; andBl oom v.AmericanSwi ssWat chCo.1915App.D.
100
57
Wi ll
i
amsv .Carwardine(
1833) 5C&P.566.
58
Powel lv.Lee(1908)99LT284.Aj ayiObev .Execut
ive
Secr et
ary,FamilyPlanni
ngCounci l ofNigeri
a[1975]3S.C.
l
60
(1862)11CBNS869.
60
11
[1893]IQB256atpp269- 70

115
 enf orcedi n Fel t
housev. Bindl ey ,theuncl ecoul d nothav
e
successf ull
ydeniedl iabil
ity.
I
nanycasewher eper f
ormanceconst itutesaccept ance, i
t
i
scl eart hatonl ycompl eteper f
or mancei naccor dancewi th
thet ermsoft heof ferwoul dsuf fice.Bef or et hat,therei sno
cont ractualr el ationshipbet weent hepar ti
es.Thi sr ulemay
cont racthowev ergi veri
set oper plex ingconcl usions,i nv i
ew
ofanot herr ulewhi chsay sthatt heof f ermyber ev okedatany
ti
mebef or eaccept ance.Apr omi sormaydeci det owi thdraw
hispr omi sebef orecompl etionoft heact ,ev ent houghhe
knows t hatt he pr omise has al ready ent ered upon t he
perfor manceandhasnear lycompl et edi t.
Toav oidi njust i
cet otheof fereei ncasesoft hisnat ure,t
he
cour tsmaybewi lli
ngt oimpl yasecondpr omi sebyt heofferor
to dieef fectt hatoncet heof fer eebegi nst o per f
orm,as
60
required,t heof fershal lbekeptopen. Thi ssol uti
onmay
howev er,tiltthebal ancet oof arint heof feree’sf avour.Whi le
theof feror ’
sf reedomt orevokei st her ebycur t
ai l
ed, t
heof feree
retainst he f reedom t ot er minat e hi s per for mance atwi l
l
withouti ncur ringanyl egal l
iabili
ty.

TheMet hodofCommuni cati

on
Generally
, acont r
actresul t
sonlywhent heof f
erorreceivesor
61
i
sdeemedt ohav ereceivedcommuni cat i
onofaccept ance. It
i
sexpect ed,t heref
ore,t hatcommuni cati
on ofaccept ance
shouldbebr oughttotheact ualnoti
ceoft heof fer
or.
Wher et heof f
erorprescribedthemodeofaccept ance,itis
deart hatt hatshoul d nor mall
ybecompl ied wit
h.Butt he
fol
lowingquest i
onsmayst il
lari
se:I
sst rictcompl i
anceal way s
ofacont ract?Iftheof f
er eerespondsbyaf astermet hod,can
theofferorwhonow knowsoft heaccept ancest il
ldenyt he
exi
stenceTi nnv.Hof fman&Co. ,itwassuggest edt hatthe
momentt hef astermessagei sgot ,thereappear edt obe
consensusadi tem sot hatacont r
actr esulted.
Howev er,i
tmayal ldependupont heof ferer’
sobjectiveina
parti
cularmode.I fhewasmer elytr
yingt oensur e

60
Err
ingt
onV.Woods[1952]1KB290.
61
AnonLodgeHot
elsLtd.Mercant
il
eBank[1993]
3N.W.L.R.pt
.284

116
aspeedyr eact i
on,thenaccept ancebyaf astermeanswoul d
62
haveser vedthepur pose.
Ont heot herhand,i fhecl earl
yi nsistedonapar ti
cular
met hod,forex ampl e, awr itt
enr eplytoenabl ehi m updat ehi s
recordsandobt ainpr oofoft heaccept ance, af ast erresponse
aphone,f ori nstance)maybedi scount enanced.I tappear s
thought hattheof f
er erwhopr escribesapar t
icularmet hodof
acceptancemaywai vehi spr escr i
ption.I f,fori nst ance,he
decidest ogi v eef f
ectt oanor alaccept ancei nsteadofa
writ
ten one, whi ch he, demanded, t he accept ance i s
63
neverthelessef fect
ive.
Wher etheof f
erdoesnotex presslyst ipulateamet hodof
acceptance,t heof fer eei sex pect edtor espondaccor dingt o
thenat ureoft heof fer .Anof fermadeor allyisexpect edt obe
acceptedor ally.Inthi sandot hercaseswher ei nst ant aneous
means ofcommuni cat i
on ar e empl oy ed,a qui ck r eplyi s
expectedandt heof f ereemustf urtherensur et hatt her eply
64
getstoandi sunder st oodbyt heof f
erer.

Accept ancebyPost
Therear emanysi tuati
onsi nwhi chanof fereemi ghtr i
ght l
y
consideritpropert ocommuni catehisacceptancebypost :For
exampl e,wher et heof ferreachedhi m bypostorwher et he
offer
orst ipulatedt hathe( theof feree)shouldcommuni cate
hisaccept ancebypost .
I
nt heseci rcumst ances,itmaybequi t
edi f
ficul
tt of inda
solut
ioni fadi sput eari
seswhi chr equi
resadet ermi nationof
theex actmomentofaccept ance.Isitwhent hel etterwas
posted?Orwheni twasdel i
v eredt otheoffer
or’saddr ess?Or
whent heof feroroughtnor mal l
yt ohavereceivedi t
?Orwhen
6566
heact uallyreadi t?Int hecaseofAdamsvLi ndsel l
, the
fi
rstalternati
v ewasadopt edandt hi
shasr emainedt hel egal
posit
ionatcommonl aw.I nt hel atercaseofHent hornv .
7
Fraser* Lor dHer schell
62
Manchest erDiocesanCouncilofEducationv.Commercial
&Gener alInvestmentsLt
d.[1969]3AER1593.
63
Manchest erDiocesanCouncilofEducati
onv.Commercial
&Gener alInvest
mentLtd.
64
Entoresv.Mi l
esFarEastCor porat
ion[1955]QB327.
65
[1818]1B&A681
66
[1892]2Ch.27at33.

117
formul atedt her uleasf oll
ows:“ Wher et heci rcumst ancesar e
sucht hati tmusthav ebeenwi thint hecont empl ati
onoft he
parti
est hataccor dingt ot heor dinar yusageofmanki nd,the
postmi ghtbeusedasameansofcommuni cat ingaccept ance
ofanof f
er ,t heaccept ancei scompl et edassoonasi ti s
67
posted.
Thisr uleappl iesev enwhent hel etterofaccept ancenev er
68
reached i ts dest inat i
on. Since a cont r
actr esul ts att he
momentaccept ancewaspost ed,al etterofr ev ocat i
onmust
69
reachedt heof f
er eebef or et heycant akeef fect.
Themaj orar gument sadv ancedi nf av ouroft hepost alrule
areasf ollows:
(a)Post ingoft hel etterofaccept ancei st hef inalact
requiredoft heof fereeandatt hatpoi ntt hepar ti
esshoul dbe
takent ohav er eachedanagr eement .
(b)Thepostof fi
cei st hecommonagentofbot hpar ties.
Inthiscase,i trecei vest hel et t
erofaccept anceonbehal fof
theof feror .
(c)I ft hedef endant swer enotboundbyt heirof f
erwhen
accept edbyt hepl aint i
ffs, unt iltheanswerwasr ecei ved,then
the plai ntiffsoughtnott o bebound unt ilaf tert heyhad
receivedt henot ifi
cat iont hatt hedef endant shadr eceiv edtheir
answerand assent ed t oi t.And so i tmi ghtgo on ad
70
i
nf i
nitum.
Howev er,t hese ar gument s ar e notal way s compl etely
71
accept able. Eveni fthepostof ficeist akent obeanagentof
bothpar ti
es, itismor eappr opr iatet osayt hatt hedut yoft he
agenther ei st ot ransmi taccept ance, nott or ecei veitonbehal f
oftheof feror .
Condi t i
onsf ort heAppl icat i
onoft heRul e
Itappear sf rom t hecasest hatt heneedt obr i
ngaccept ancet
o
theact ualnot iceoft heof fer ori snotonet hati seasil
y
67
SeealsoKukuv .Per maroofConstruct
orsLtd.91971)1U.I
.L.
R.101
68
HouseholdFi reandCar ri
ageAccidentInsur
anceCo.v .
Grant(1879)4Ec.D.216
69
Brnev.VanTi enhoven(1880)5CPD344
70
Adamsv .Lindsellsupr
a.
71
Seethedi ssentingopini
onofBr anwellJ.i
nHouseholdFir
e
andCar r
iageAcci dentInsurancecasesupra.

118
 abandoned.Fort he post alr ulet o appl y,t he f ollowi ng
condi t
ionsmustmet :
1.Thesi tuat ionmustbesuchi nwhi chiti sr easonabl eto
uset hepostasameansofcommuni catingaccept ance.
2.The l et terofaccept ance musthav e been pr oper l
y
72
addr essed, stampedandpost ed.
I
tf oll
owsf rom t hef i
rstcondi tionabov et hatt her ulewi ll
notbeappl i
edwher eitwoul dpr oducemani festinconv eni ence
andabsur dit
y .Simi larly,wher et het ermsoft heof ferex pressly
Ori mpl iedlyindi cat et hataccept ancemustr eacht heof ferer,
mer e post age wi l
lnotdo.I n Hol ewel lSecur iti
es Lt d.v .
Hughes73t heof fereewasr equi redt oindi cat eaccept anceby
notice i n wr iti
ng t ot he of feror.He post ed t he l et terof
accept anceandsoughtt orelyont hepost alr ule.I twashel d
thatnocont ractr esul tedatt hemomentofpost age,si nce
actualnot if
icat ion ofaccept ance was whatt he of fer
or
requi red.
Wher et hepost alr uleappl i
es,t hatquest i
onmayar i
se
whet hera post ed accept ance may be r ecal l
ed bef or ei t
reachest heof fer or. Sincet hecont ractismadeassoonast he
l
etterofaccept ancei spost ed,accept ancemayber ecal l
ed
befor ei treachest heof fer
er.Si ncet hecont racti smadeas
soonast hel etterofaccept ancei spost ed,itappear st hatt he
offer eeisnotatl i
ber t
yt owi t
hdr awhi saccept ancebyget ti
ng
i
nt ouchwi t
ht heof f
er erthr oughaf ast ermeanswhi let he
l
etteri sst i
llenr out e.Toal l
owhi mt hislibertywoul dbet ogi ve
himt hebestofbot hwor lds.Howev er ,itcanpossi bl ybe
arguedt hatiti st heof ferorwhopr escr ibedori st akent ohav e
prescr i
bedaccept ancebypost .Heonl yshoul dt her efor ebear
ther isksi nherenti nt hatpr ocess, thatbet hecase, hecannot
i
nsi stt hatacont ractex ist
si f
,bef oreact uallyr eceivingt he
post edl etterofaccept ance,heget smessager ejectingt he
offer .

Termi
nat
ionofOffer
Anoff
ermay bet
erminat
edbef
oreaccept
ancei
nanyoft
he
fol
l
owi
ngcir
cumstances:

ReLondon&Nort
her
nBankex.P.j
ones[
1900]1Ch.
220
[
1974]W.L.
R155

119
 1.Whent heof ferisrejectedbytheof f
ereeoutri
ghtorby
wayofacount erof fer.
2.When t he condi t
ions at t
ached t
ot he of
ferremain
unful
fi
ll
ed.
3.Whent heof ferisr evokedbyt heof fer
orbeforethe
off
ereeindi
catesaccept ance.
4.Whent hedeat hofei thertheofferorortheof fer
ee
makesaccept ancei mpossi ble
5.Whensuf fi
cientt i
mehasel apsedsincethedateofthe
off
ertojust
ifyt heinterferencet hatt
heoffereedidnotwishto
accept

Rev ocat ion

Ther ul esgov erningr evocationofanof fermaybesummar ised
asf ollows:( a)Accept ancemakest heof ferirrevocable,(b)An
offermayber ev okedatanyt i
mebef or eaccept ance;and( c)
Rev ocat i
onofanof ferisnoteffect i
veunt i
litisbr oughttot he
noticeoft heof f
er ee.
Oft hese, t
her ulethatanof ferormayr evokehi sof f
erhas
beent hemostcont entious.Whati fhepr omi sedt okeept he
offeropenf oragi venper i
od?Thecasessuggestt hatsucha
promi sei spar tandpar celoft heor iginalof ferwhi chmust
standorf al
lasawhol e,unlesst heof fereecanshow t hathe
offeredconsi derationf orthepromi setokeept heof feropen. In
74
Rout ledgev.Gr ant t
hedef endantof fer edt ot akeal easeof
thepl ainti
ffspremi ses,adefinit
iveanswert obegi venwi t
hinsi x
weeksf r
om Mar ch18, 1825.”OnApr il
9t hedef endantwi t
hdr ew
hisof fer,andonApr i
l
l29t hepl ainti
ffpur port edt oaccepti t
.
HELD:Thatt herenocont r
actast heof ferhadbeenv alidly
withdr awn.

Communi cat
ionofRev ocation
Therulet
hatrequiresactualcommuni cati
onofr ev
ocat i
onis
cl
earl
ymor estr
ingentthant hepost
alruleoncommuni cati
on
ofaccept
ance.Iftheofferorhadpostedal et
terofrev
ocat i
on

74
(
1828)4Bing653.Becauseofcri
tici
sm agai
nsti
tsoper
ati
on,
thi
srulehasbeenstatut
ori
l
yalteredi
nGhana.Seesecti
on
8(1)Contr
actActofGhana1960.

120
 beforet heof fereedr opst hel et terofaccept ancei nt hepost ,
thataccept ancewoul dst i
llsuper sedepr ov i
dedt heof fer
eehad
notact uall
yknownoft her evocat ionwhenheaccept edby
75
post .
Whatt heni sthemomentofr ev ocation?I tmaybeunf airon
theof ferort osayt hatunt ilthel et terofr evocat i
oni sr ead,it
doesnott akeef f
ect.Ithast her efor ebeensuggest edthat ,at
l
easti nt hecaseofabusi ness,al et
terwhi char r
ivesona
normalwor kingdayshoul dbet reat edascommuni cationof
i
nfor mat ionont herev ocati
onf r om ar el
iablet hir
dpar ty,
hecan
76
nol ongerpr oceedt oaccept . Int hatci r
cumst ance,bef ore
attempt ingt oaccept ,thepl aintiffknewt hatt hedefendantwas
nol ongermi ndedt osel lthepr oper tyaspl ai
nlyandcl earl
yasi f
thedef endanthadt oldhimi nsomanywor ds. Hencewher ethe
offeredgoodsar esol dtoot herper sonsandt heof f
ereegott he
i
nfor mat ion,itcanbear guedt hatt heof f
erorhas,byconduct
broughtt ot henot i
ceoft heof f eree,ef fecti
vel ywithdrawnt he
offerbef oreaccept ance.

Deat hoft heOf f

er or
Clearly
,anof fer eewhohasnot i
ceoft heoff
er or
’sdeathcanno
77
longeraccept . I
nt heabsenceofsuchnot ice,deathdoesnot
ingener aloper ateasr evocation,buti tdoesi nex cepti
onal
cases.I ftheof feri sapr omisewhi chisindependentoft he
offeror’
sper sonal i
tyandwhi chcanbesat isfi
edoutofhi s
80
estate,deathdoesnot ,untilnot i
fi
ed,pr ev
entaccept ance. *
Howev er, wher et hepersonalityoft heofferorisinissue,asin
cases ofagency orof ferofper sonalser v
ice,his death
automat ical
lyt ermi nat
est heoff er
.
Deat
hoft heOf feree
Anoffermadet oapar ticularoffereet erminatedwhent hat
of
fer
eedies.Sincet heof ferisnotmadet oadeadper sonort o
hi
sexecut
or ,
itceases,thatt hatpoint,t
obeanof f
ercapabl eof

75
Byr
nev.VanTi enhoven( 1880)5PD344.
76
Di
ckinsonv.Dodds[1876]2ChD.463.
77
Coult
hartv.Clementson( 1879)3
QBD4280aBr oadburyv
.Mor gan( 1862)1
H&C249.

121
 78
accept
ance.

LapseofTi me
Wher etheof f
erorhasfi
xedt hedurationofhisoff
er,theof f
er
l
apsesatt heendoft hestat edperiod.Where,asisusual ,no
ti
me l i
mitwas gi v
en,t hen t he offeris open onlyf ora
79
reasonabl
el engthoft i
me. Whatamount st oar easonable
ti
mewoul d,ofcoursedependont heci r
cumstancesofeach
case.

CONTENTSOFCONTRACT
Intr
oduct ion
Contentsort er msofcont ractref ertot hescopeofobl i
gat i
ons
assumed by t he cont racti
ng par ties.Thi si nv olves t he
consider ationofv ar i
ousf actorsbyt hecour tswitht heai m of
ascertainingt hei ntent i
onoft hecont racti
ngpar t
ies.Thus
apartf rom t he ex pr esst er
ms,wr itten oror al,i tmaybe
necessar yt oi mpl yt ermsi ntothecont ractsoast ogi v eita
businessef ficacy .
I
naddi tionaf urtherst epist akent odet erminet her elative
i
mpor tanceoft hev ar i
oust er
ms.Somet ermsar er egar dedas
fundament al ter ms, somear emi nort ermswhi l
esomemaybe
seenasl yingbet weent het wo.I nascr ibi
ngt hesedi fferent
quali
tiest ot hev arioust erms,t heext entofpar ty’sobl i
gat ion
aswel last heconsequencesoft hebr eachofapar ticulart er m
comet obedet ermi nednotonl ybyr eferencet ot heef fectof
thebr eachont hef ut ureoft hecont ractbutal soandmor e
commonl ybyt ot henat ureoft het erm br oken.Her et heef fect
ofclausesont her ightoft hei nnocentpar t
ytorecei vebecome
amat terf orcl osescr uti
ny .
Insomecasesal so,adi stincti
onismadebet weenatt he
cont r actandamer er epr esent ati
on.Ther emedyorr emedies
av ailabl et ot heinnocentpar tymaydependont hisdisti
nct
'the
fi
nal anal ysist hequest iont hatt ermsofcont ractseuansweri s:

78
Kennedyv.Thomassen[1929]1Ch.426andRey nol
ds.V.
Ather
ton(1921)125L.
T.690at695-696
79
RamsgateVictori
aHotelv.Mont
efi
ore(1866)L.R.1Et eh
109; Manchester Di
ocesan Council of Educati
on v.
Commer ci
al&Gen.Inv
.Ltd.[
1969]3AllE.R.1593

122
 whatdi
dthepar
ti
esagr
ee?

ExpressTer msandt hePar olEvidenceRul e

Expresstermsmaybewr it
tenoror al.Ifthecontractisoral
,it
s
ter
msorcont entsmustbe est abl ished byev i
dence as a
questi
onoff act.
Ifitiswhol l
yinwr it
ing, t
heruleisthatextri
nsi
c
evi
dencewi llnotbeadmi t
tedtocont radict
,orv ary,oraddto
thewrit
tendocument .Thisr ul
eisknownast hepar olevi
dence
rul
e.Iti
sagener alruleasr eit
eratedbyt heCour tofAppealin
80
Shetti
mar iv.Nwokoy e .Howev eri tissubj ecttonumer ous
excepti
ons.

TheExcept ions
Par ol evidencemaybeadmi tt
edinthef ollowingsi t
uations:
(1)Toest abli
shal ackofconsensusadi dem,
Par olev i
dencemaybeadmi ttedt orebutanal l
egationofa
bindi ngcont r
act .Her et hear gumenti sthatbyv i
r tueofmi stake
ori ncapaci tyormi srepr esentati
onornon- per
f ormanceofa
condi ti
onpr ecedent ,amongot hers,thereisnov ali
dorbi nding
cont ractasi l
lustratedbyt heOl dEngl shcaseofRaf
i flesv .
81
Wi chel haus .I nt hatcaset hepar t
iesent eredint oacont r
act
tort hesal eof125bal esofcot t
ont oar r
iveonboar dPeer l
ess
from Bombayt oEngl and.Pay mentwast obemadewi thinan
agr eedt imeupont hear ri
valoft hecot t
on.Cot t
onar ri
ved
expr essl yfromBombayi nDecemberbutt hedef endantr ef used
topaywhenaskedt odoso.I nanact i
onbyt hepl aintifffor
breachofcont ract,t hedef endantwasal l
owedt oi ntroduce
par ol evidencet osai ledt hathemeantcot tononboar dt heshi p
Peer lesswhi chsai ledf rom Bombayi nOct ober.
Thepl aintiffon
theot herhandhadi nmi ndtheshi pwi ththesamenamewhi ch
sailedf rom Bombayi n
December .
Ther ewast husnoconsensusadi dem bet weent he
82
par
ties.

80
[1991]9NWLR60; SeeUdogwuv .Oki[1990]
5NWLR721at736cit
ing
DenmanC. J.i
nGrossv.LordNugent2L. J.
K.B.127(si
c)
81
(1864)2H&C.906
82
Seeal so Pym v.Campbell(1856)E&B.785wher ethe
non-occurrence ofa conditi
on precedentprecluded a
contractfrom comingi
ntooperat
ion.

123
(2)Toest abl ishCust om orUsage
Par olev idencemayal sobeadmi ttedf ort hepur poseof
prov i
ngacust om ort radeusage.I nOy enugav.I nt ernati
onal
83
Comput ers( Ni geria)Lt d. I
ti sar guabl et hatt heSupr eme
Cour taccept ed3% ast heper cent ageofawar dduet ot he
plaintif
font hebasi sofi mpl iedt er m oft radeusage.I niHut t
on
v.War en84 t
r he Engl ish cour tacknowl edge a l ong set tled
pract i
ce i n commer cial t ransact i
ons admi t
ti
ng ex t
rinsic
evidenceofcust om andusaget oannexi ncident st owr itten
cont ractsinmat t
erswi thr espectt owhi cht heyar esi l
entont he
basi cassumpt iont hati nsucht r ansact i
ont hepar tiesdidnot
meant oexpr essi nwr iti
ngt hewhol eoft hecont ractbywhi ch
85
theyi ntendt obebound. ” Howev er,
,parol evidenceofcust om
orusagewi l
lnotbeadmi ttedwher etheef fecti stocont radict
86
theexpr essi nt entionoft hepar ties.
(3)Or alandWr i
tt
enCont ract
Par olev i
dencei sal soadmi ssi bl
et oshowt hatt hecont ract
87
wasi ntendedt obepar t
lywr itt
enandpar tlyor al. Theuseof
this except i
on has cont r
ibut ed t ot he doubtcaston t he
cont i
nuedusef ulnessoft hepar olev idencer uleasagener al
rule.
(4)Col lateralAgr eement
Awr i
tt
enagr eementmaybecont radi ctedoraddedt oby
extrinsicev idencewhi chpur portedl ynei therv ari
esnoraddst o
orcont radictsawr i
ttenagr eement ,butmer elyest abl i
shesan
oralagr eementcol l
ater alt o,nonet helessi ndependentof ,t he
wr i
ttencont ractasi nCi tyandWest mi nist erPr oper ties(1934)
Ltd.v.

83
[
1991]1NWLR415SC
84
(1836)IM&W.466, 150E.R517
85
See( 1992)Vol.No.2JNL
86
Palgrave,Brown&SonsLt d.V.S.S.Tur i
d[Owner s][
1922]
A.C.397; Gottchal
kv.ElderDempst er&Co.Lt d.[1917].
13NLR16.
87
Wal kerPr oper
t yInvest
ment s( Br
ight
on)Lt d.V.Wal ker
(1947)MI L.T.204:SS Ar dennes( Cargo Owner s)v.
Ardennes( Owners)(1951)1K/B.55[ 1950]2AllE.R.517

124
 9
Mudd, 'wher eanor alagr eementwasadmi tt
edt oshow t he
defendanthadnotcommi t
tedabr eachoft hel easeagr eement
bycont inui ngt ouset hel easedpr emisesassl eepi ngquar ters
79.
92
Trei tel hasar guedt hatt hedeci sionint hatcase, i
fcor r
ect
l
argel ydest roy st heusef ulnessoft hepar olev idencer ul
e.Itis
submi ttedt hatt hati snotnecessar i
lysosi ncet heout comeof
i
fcaser epr esent sagenui neat t
emptt oprev entt her ulefrom
beingusedasani nstr
umentoff raud.
(5)ToResol vePat entAmbi guity
Par olev idence i s also admi ssiblet or esol ve a pat ent
ambi gui tyi nt he cont ract ualdocumentas i llust r
at ed in
Shet t
imar iv.Nwokoy e93.Int hatcaset heappel l
antl easedhi s
houset ot her espondentf oraper iodof7y ear s.Ef fect i
vedat e
ofagr eemenl wasst atedt obe1stOct ober1982.I twasat erm
ofthecont ractt hatt her espondentshoul dpayN20. 000. 00for
thef i
r stt woy ear s,N13, 000. 00waspai dont heexecut i
onof
theagr eementwhi lethebal anceofN7, 000wast obepai daf t
er
ther espondenthadst ay edont hepr emi sesf oroneandhal f
years“ thati saboutt he30th June,1984. ”I nMar ch1984t he
appel l
antdemandedt hepay mentoft hebal anceofN7, 000;the
respondentar guedt hati twasnotdueunt il3rdJune1984as
statedi nt heagr eement .Or alev idencewasadmi t
tedt oshow
thatt heef fect iveper iodwasoneandhal fy earsf rom 1st
October1982whi chmeantabout30thMar ch1984.Theef fect
ofthisex cept i
oni stor ectifyadocumentwhi chwi llot herwise
failf oruncer t
aint y eitherbecause i ti s so v ague orso
94
contradi ct oryast obei ncur able.

ImpliedTer ms
Apartfrom theexpr
essterms,ot
herter
msmaybei mpliedinto
thecont racttogiv
ei tthebusi
nessef fi
cacyrequir
edf ora
properdischargeofthecont
ract
ualexpectati
ons.Suchterms
maybei mpli
edbycustomorusage,bystatut
eorbythecour t
s.

[
1959]Ch.129 See Al so Weddebum K.W.Col
l
ater
al
92
Cont
ract
s[1959]C.L.
I79
TheLawofContract
,Sweetand
92
Maxwell
[1991]9NWLR60I bi
dat
94

125
p.
69

126
Ter msI mpl iedbyCust om
InHut tonv .War eb88 al
r easeagr eementmadebet weent he
partieswashel dt obesubj ectt oacust om whi chmadei t
compul sor yf orat enantt oaf ar mi napar ti
cul armanageri n
returnf oraf ai ral l
owancef orseedandl abouront hef arml and
onhi sv acat i
ngt het enancy . Par ke, B. tookj udicial not iceoft he
l
ong set tl
ed pr actice i n commer cialt r
ansact i
ons t o al low
extrinsicev idenceofcust om andusageaspar tofwr i
tten
cont ract si nmat terst owhi cht heyar esi lentont hepr emi se
thatt hepar tiesdi dnoti nt endt obeboundbutt ocont ractwi th
referencet ot hoseknownusages.Tr adecust om andusage
mustt her efor ebet akeni ntoconsi der at i
oni ndeci di ngont he
89
totalityoft heagr eementbet weent hecont ract i
ngpar t i
es.
Thusi n Oy enuga v .I nt ernat ionalComput er s( Niger ia)
90
Ltd. t he appel l
antpr esent ed a bi l
lofN90, 000. 00 t ot he
respondent sr epr esent ingt hev alueofser vicer ender edt ot he
respondent .Thatf i
gur eincl udedasum ofN45, 000. 00or3%of
thet otalest i
mat edcostofdev elopmentbasedont hescal eof
feesusedbyt heNi gerianI nst it
ut eofChar teredAr chitect s
(NIA) .Thi scl aim wasr eject edbyt her espondent .TheCour tof
Appealsubst it
ut ed 1% of t he t otalest imat ed cost of
dev elopmentont heNI Ascal eoff eesont hegr oundt hatt hat
waswhatbot hsi desagr eed. TheSupr emeCour tsett hatawar d
aside.Ol atawur aJSCnot edt hat“ ther ewasnoagr eementon
bothsi dest hatt heper cent ageof1%shal lbet heawar dduet o
9192
theappel lant ” Although3%wasadopt ed. Kar ibi-Why teJSC
noted t hatnei therPar tywas abl et o est abl i
sh t he exact
percent ageoft het otalcostofdev elopmentduet oanar chitect
proper lyi nst ruct ed and act ing wi thin t he l i
mi t of hi s
i
nst ruct ion. "Nonet helessi tseemsf airlyobv ioust hatcust om
orusaget hr oughnotspeci ficallyment ioned

88
(836)I M &W.466
89
Pr oduceBr okers.Co.Lt dV.Ol y
mpi aOi l&CakeCo.Lt d.
[1916]1 A.C.314;Br iti
sh Crane Hire Corporati
on v.
Ipswi chPl antHi r
eLtd.,[
1974]1Al lE.R.1059;[1975]Q.B.
303;Fer gusonv.JohnDawson&Par tners(contract
ors)
Lt d.[1976]3Al lE.R.817
90
[
1997]1NWLR415
91
I
bi d,atp.422
92
Ibidatp. 425

127
wasthebasi
softheawar
dof3% totheappel
l
ant
.Indeed
Ol
atawur
aJSCsai
dsoint
hesewor
ds:

"
..
.Itwasani mpliedter
m oft hecontr
actthatthe
respondent woul d set t
le the appel lant’
s
professi
onalf eesinaccordancewit
ht hescaleof
feesoftheNi geri
anInsti
tuteofChart
ered
93
Arcit
ects.
..
”
Custom wi l
l
,howev er,notbei mpli
edwher eithasbeen
94
excludedbyt heparti
esexpresslyori
mpliedl
y. Ther ewil
lalso
notbesuchi mpl i
cati
onbycust om orusagewheret hecustom
i
n quest i
on cannotbesai dt o havebecomean est ablish
practi
ce.Mor eover,
custom cannotbeadmi t
tedtodest r
oyt he
95
expressintenti
onoft heparti
es,buti
tcanaddt oit
.

Ter msI mpl iedbySt atut e

Termsi mpliedbyst atutear etobef oundmai nlyi
nt heSal eof
GoodsAct .1893sect i
ons12t o15.Therearef i
vemai ni mpl i
ed
96
condi t
ionsnamel y:(
1)ani mpliedcondi
tionast oti
tl
e. Asel ler
ofgoodsi mpl iesbytheactofsal ethathehast herightt osel l
thegoodsei therast heownerorasanaut hori
zedagent .A
breachoft hisi mpli
edcondi tiongivesthebuy erther i
ghtt oa
97
refundongr oundsoft ot alfail
ureofconsiderati
on. Lackof
98
ti
tl
ei ncludesi nfri
ngement sofsomeoneel se’scopyright .
Impl i
ed condi ti
on t hatgoods sol d bydescr iption wi l
l
correspondwi ththesampl easwel laswiththedescr i
pt i
onwi l
l
99
correspondwi ththesampl easwel laswiththedescription, is
containedi nS. 13oft heSal eofGoodsAct .Thisi mpl i
ed

93
94
Ibidatp.26
LesAf fr
et eursReunisSoci
eteAnony mev .Walford(1919)A.C.
80
95
1
Got tchalkv .ElderDempst er&Co.( 1917)3N. L.
R16.The
expr esst erm ofthecontractstipul atedt hatthel i
abi
li
tyof
thecar r
iersceasedupont hedi schar geoft hegoods.The
plaintif
f’sat t
emptt oestabli
shev idenceofcust om ofthe
por tthatthel i
abil
it
yofthedef endant scont inuedev enaft
er
96
thedi schar geofthegoods, wasr eject edbyt hecour t
.
S. 12(1).Seesal eofGoodsLaw. Cap. S. 2(vol.7)2003Lawsof
97
LagosSt at e
98
Akosi lev.Ogi dan(1950)19N. L.R.87
99
Nibletv .Conf ect
ionersMateri
als[ 1921]3K.B.387
Boshal liv.Al l
iedCommer cialEx por t
er sLtd.[19611Al lN.L.
R.
917
128
condi
ti
onappl
i
eswhet
herornott
hebuy
erhasseent
hegoods

129
 100
prov idedher eliedont hesel ler’
sdescr iption. I nBoshal liv.
101
Alli
edCommer cialExpor tersLt d. ,
' thecont r actwasf ort he
saleofmat er i
alsdescr i
bedas“ 36i nchdy edcr epequal i
tyas
100gr eycl ot hfor eignor i
gin”.Thisdescr i
pt ionwasf ollowedby
sampl e l abel ed and i dentifi
ed i n accor dance wi th t he
descr i
pt i
on. Itashel dtobeabr eachoft hei mpl iedcondi tionas
asal ebydescr i
pt i
on.
102
Sect ion14oft heSal eofGoodsActcont ai nst woi mpl i
edcondi
ti
ons,
103
and i mpl ied condi tion as t o mer chant abl e qual ity, namelyimpli
ed
104
condi tion ast of it
nessf orpur pose. Theset wo i mpl ied
condi tionpr ovideex cept ionst ot hegener alr uleexpr essedi n
theLat inmax i
m Cav eatEmpt or( Lett hebuy erbewar e) ,whi ch
statest hatt herei snoi mpl i
edwar rant yorcondi t
ionast ot he
qual i
t yorf it
nessf oranypar t
icularpur poseofgoodssuppl ied
underacont ractofsal e.
Fort heex cept ionst oappl y ,cer tainpr econdi tionsmust
exist.I nt hecaseoff i
tnessf orpur pose,t hebuy ermusthav e
madeknownt ot hesel lerthepar ti
cul arpur posef orwhi cht he
goodsar er equi redsoast oshowt hather el i
edont hesel ler’
s
skil
lorj udgment .Howev er,no ex pressi ntent ion need be
expr essed, wher et hegoodshav eonl yonepur poseoruseasi n
105
Grantv.Aust ralianKni tti
ngMi l
ls. I
twi l
lnotappl ywher et he
goodshav emor et hanoneuse106orwher et hegoodsar esuch
thatar enotnor mal l
ysol dbyt hesel lerint heor dinarycour seof
busi ness.
Int hecaseofi mpl i
edcondi ti
onast omer chant abl equal it
y
thebuy erneednotmakeknownt ot hesel l
ert hepur posef or
whi chher equi rest hegoods, nonet hel ess, thecondi ti
onwi llnot
appl ywher et hebuy erexami nedt hegoodsandt hegoodswer e
notdet ect edev ent houghsuchex ami nat i
onoughtt ohav e
reveal edsuchdef ect s.Inor dertodet er minet hemer chant able

100
Seeal soOgwuv.Levent i
si nfra
101
[1961| 1Al
lNLR917; seealso,S.15oni mpli
edcondi
ti
onsas
tosampl e
102
SeealsoOgwuv .Leventi
s[ 1963]N.R.N.
L.R.115
1,
0
S.14(2)
104
S.14(1)
105
[1936]A.C.85Seeal soPriestv.Last[1903]2K.B.148Cf
lj
iomav .MidMot orCo.Ltd.[1974](CCHCJ)1325.
106
D.I.
C.Industr
iesv.Ji
nfat(Nig.)Ltd.[
1975]2CCHCJ)175

130
qual
i
tyofgoods,
thegener
alcondi
ti
onoft
hegoodsi
nrel
ati
on
to

131
i
tspr i
ceandt hepricewhichgoodsofcompar abl
edescri
pti
on
4
willf
etcharetakenintoconsideraton.Khal
i il&Mastr
onikoli
s"
i
llust
rates t
hatgoods maynotnecessar il
ybe consider
ed
unmat chabl
ej ustbecauset heyarenotsuitabl
efpurposei f
theycanbeusedf oranotherpurpose.

Ter msi mpl i

edbyCour ts
At erm maysomet imesbei mpl i
edbyt hecour tsont he
groundt hati ti sat erm whi cht hepar t
ieswoul dhav eex pr essly
107108109
includedi nt heircont r
acti ft heyhadt houghtabouti t.
110
Howev er,itmustbeunder stood, thatt hepr imar yf unct ionof
the cour ti st oi nterpr ett he intent i
on oft he par ties as
expr essed i nt he cont ractand nott o wr itei tf ort hem.
Nev er theless,at erm maybei mpl i
edt ogi vet hecont racti ts
busi nessef fi
cacyunderci rcumst anceswher et heex press
termsdonotr ev eal thetr uei ntentionoft hepar ties.InOy enuga
16
v.Int ernat ionalComput er s( Niger i
a)Lt d.' theSupr emeCour t
arguabl yappl iedt her ecommendat i
onofLor dWi lber for cei n
1,7
Liver poolCi t
yCounci lv .Ir
wi nandAnor , t
hati nsuchcases,
“thef irstst epmustbet oascer tainwhatt hecont r
acti s. ”Thi s
involv esl ooki ngatt hecont ractualdocument ,takingaccount
oft heact ionsoft hepar ti
esandt heci rcumst ances,wi tht he
aim ofsuppl yingbyi mpl icationt hatwhi cht hecont ractf ai l
st o
111
expr ess.
Gl anv il
leWi ll
iams112 i dent if
iedt hr eeki ndsoft er mst hat
maybei mpl i
edbyt hecour ts.Theyar e, i
nt eral ia:
1.Ter mst hatt hepar tiespr obabl yhadi nmi ndbutdi dnot
113
expr ess. Not ehowev erthatat erm woul dnotbei mpl ied

107
108
(1949)12W.A.C.A
Thisi sknown ast heof fi
ciousby standert est,seee. g.
Shirl
awv.Sout hernFoundar i
es( 1926)Lt d.[1939]2K. B206
at227.perMacki nnonL. J.-“at erm wi l
lbei mpl i
edifitis“so
obvioust hatitgoeswi thoutsay i
ngsot hati fwhi l
et he
parti
eswer emakingt heirbargai nanof ficiousby standerwe
tosuw
ggest somee xpressp rovisionf orit i
nt hea greement,
109
they test
ilysupp r
ess him wit
ha co mmo n,‘oh,ofc our
s e!
’
110
[1991]1NWLR415( SC)
111
[1997]A C2 39
112
SEEJUDGEMENTOFWal iJSC.atp.426.
113
Lang uage andthe Law6 1 ,L.Q.R.401
Thisaccor dswiththeof fici
ousby standert est:Shirl
awv .
SouthernFoundar iesSupr a:Rei gatev .UnionManuf act
uri
ng
Co.(Ramsbot t
o)

132
mer elybecausei twoul dhav ebeenadopt edbyt hepar t
iesas
reasonabl emeni fithadbeensuggest edt ot hem; itmusthav e
beenat er mt hatwentwi thoutsav ing, at eamnecessar ytogi ve
114
business sense t ot he cont ract . In Benson Okoebor
(Tradi ngundert henameandst yleBensonOkebor&Co. )v.
115
EyoboEngi neer i
ngSer vice( Ni ger i
a)Lt d.andAnor ; ” Sal ami ,
JCA, reject edani nv itationbycounselt oi mpl yat ermi ntot he
contr actbyt hepar t
ieswhi chwoul dhav egi vent heappel lantt o
thebenef itoft het er msofanot hercont ractbet weent he
Respondentandat hi rdpar ty.Thel ear nedj usticesai d:
“Iti st ri
tel aw t hatpar tiesoughtnott oi mplyat erm merel
y
becausei t
woul dbear easonabl et ermt oi ncl ude, ”
2.At erm maybei mpl i
ed,r egar dlessofwhatt hepar ties
hadi nmi nd,toachi ev ef airnessorasamat terofpol icy.Ther e
i
snopr et ensionaboutt heunex pr essedbuti mpl i
edi ntent i
on
ofthepar ti
es.Thecour tmer elyt akesadi spassi onat ev iewof
116
themat ter.Lor dDenni ngM. R. wast hechi efadv ocateof
thi
s appr oach117 whi ch t he House ofLor ds decl i
ned t o
118
foll
ow. Accor di ngt oLor dDenni ng,t ermsar ei mpl i
edby
coursebecauset heyar ej ustandr easonabl enotbecauset he
119
partieshadagr eedt ot hem ei therex pr esslyori mpliedl y.
TheSupr emeCour tdeci sioni nNi gerI nsur anceCo.Lt d.v.
120
AbedBr osLt d. isillust rativeoft hi sappr oach.Thequest ion
thatar osei nthatcasewaswhet herat erm coul dbei mpl ied
i
nto a cont ractofi nsur ance whi ch was notspeci fical l
y
providedf orbyt hepar ties.Af terci ti
ngsomeEngl ishcasesi n

[1918]1K13592at605;butseel ordPearsoninTrollope
and Col ls.Lt d.v.Nor t
h WestMet ropoli
tan Regional
Hospi talBoar d[1973]2All E.
R.260at268.
114
PerLor dPear sonsupra.
115
[1991]4N.W.L.R.533
116
TheDi scipli
neofLaw( 1979)But t
erworth
117
Liverpool CityCouncilv.Ir
wi n[
1976]IQB319TheDi scipli
ne
ofLawI bidpp/37- 40
118
Liverpool Ci
tyCouncilvIrwin[1977]A.C.239seeparti
cul ar
Lor dWi lberforceatp.253
119
Compar e:Uni on Bank ofNi geri
a Limited v.Professor
Al bertOj oOzigi[1991]2NWLR; wit
hUnionBankofNi geria
andAnorv.Penny-Mar tLtd.[
1992]5NWLR228( CA)
120
[
1976]7SC35atp.44

133
f
avourof

134
 i
mpl i
edt erm,Bel l
oJSC wentont oholdt hatat erm must
i
mpl i
edwher enot imeisspecifi
edinthecont r
act,t
hatitbe
perf
or medwi thi
nar easonabletime.Thei ssueofi mpli
ed
ter
ms may be v iewed,along wi t
h Lord Wi l
berf
orce,as
consisti
ng di f
ferentshadeson a cont inuous spect r
um of
matterstobe, impliedi
nt oacontr
actinordertoestabli
shwhat
thecontracti sthepartiesnothavingthemsel vesful
lystat
ed
121
theterms.

Ter msandMer eRepr esent at i

ons
Inthecour seofnegot iationsl eadi ngupt ot heconcl usionofa
cont ractv ariousst atement sar emadewhi chmayornotbe
i
ncl udedi nt hecont r
act ual document .I
ntheev entofadi sput e
oranal l
egedbr eachofcont ract ,itmaybecomei mper ati
v eto
establ i
shwhet herapar ticul arst at ementwasat er m oft he
cont ractoramer erepresent at i
on. Thedi stinct i
oni si mpor t
ant
fort hepur poseofascer tai ningwhet herabr eachofcont r
act
has been commi t
ted and i fso,t he appr opriater emedy
122
availablet ot hepl ai
ntiffori nnocentpar t
y.
Text -
wr i
t ers hav e enunci ated v ari
ous y ardst i
cks f or
deter miningwhet herapr e- cont ract ualstat ementi sat erm of
thecont ractoramer er epr esent ation. Someoft heset estswi l
l
123
nowbeconsi der edbr i
ef l
y.
1.Atwhatst age oft he t ransact i
on was t he cr ucial
statementmade?Theor et ically,a st atementmade att he
preliminaryst ageoft henegot iationi samer erepresent ation
andnotat er m oft hecont ract .Inpr acti
cehowev ert hisisnot
124 125
alway sso. InShawelv .Reade, t
herewasat ime- l
agof
threeweeksbet weent hemaki ngoft hest atementandt he
concl usionoft hecont ract ,i twashel dt obeat er m oft he
cont ract,whi le

121
LiverpoolCit
yCounci lv
.IrwinSupra:seealsoJohnst
onev.
Bloomsbur y Heal th Authorit
y[ 19911 2 AllE.R.293
discussedinAl lE.R.Annual Revi
ew1991pp.84- 85
122
Seeundermi srespresentati
oninfr
a:seealsoSagay
NigerianLawofCont ractp,92-97
123 th
Seee. g.Cheshire,Fi
footandFur mston’sLawofcontr
act1I ed.
124
Seee.gBanner manvWhi te(1861)IOC.B.(N.S)844
125
[1913]2I .
R.81

11. -
p

33
nRout
i lagev .Mckay ' ast atementmadesev enday spr i
ort o
theconcl usi onoft hecont ractwashel dt obeamer e
represent at i
on.
2.Wast heagr eementl aterr educedt owr iti
ng?I fanor al
agreement was l ater r educed t o wr i
ting,t he r ebut table
presumpt ioni st hatanor alst atementnoti ncluded i nt he
writ
t enagr eementi snotat erm oft hecont ractbutamer e
represent at i
on.Li ket hef irstt est ,i
thaspr ovedt obeunr el
iable
cont ract because t her e ar e mor e cases f avour ing or al
pre-cont r
act ualst atementast er msofcont ract ,thant her ear e
126127
regar dingt hem asmer erepr esent ation.
3.Super i
orknowl edgeoft hepar ty:Undert hi st estt he
knowl edgeoft hemakeroft hest atementv is-a-vist heot her
partiesdet er mi nest henat ureoft hest atement ; casesdeci ded
undert hisheadshowt hatt hisi st hemostusef uloft het hree
tests.Shawel v .Reade, Esso.
Pet roleum v.Mar danandOscarChessLt d.v.Wi llams128
i
canbeexpl ainedont hisgr ound.I n Shawelv .Reade,t he
statementwasmadebyt hest ableowner .I nEssoPet roleum
Co.Lt d.v.Mar dont hest at ementaboutt hecapaci t
yoft he
petrol stat i
onwassai dbyLor dDenni ng, tobe“ af orecastmade
byapar ty.Esso,whohadspeci alknowl edgeandski ll
”.Andi n
OscarChess v .Wi lli
ams,wher e a cont rarydeci sion was
reachedi twast hepl aint i
ff-buy erwhoascar -deal erpossessed
super iorknowl edge.Agai nasDenni ng,L.J.opi ned“ Theyar e
exper ts”, t
heywoul dhav ei ft heywi shed, verifiedt heageoft he
car.Thesamer easoni ngwasal soadopt edi nDi ckBent l
ey
129
Product ionsLt dandAnorv.Har oldSmi th( Mot or s)Lt d.
Collater
al Contr
acts
Thisissomet i
mesusedtoov
ercomediff
icul
ti
esthatmaybe
encounteredinatt
emptst
odist
ingui
shbetweenaterm of
contract

126
[1954]Al
lE.R.855.
127
Seee.g.Bir
chv .ParamountEstatesLtd.[
1959]16Estates
Gazete396;EssoPet
t rol
uem v.Mar don[1976]1AllE.R.
325;Routl
edgev .Mckay[1954)1Al lE.R.855;4.Heihut
,
Symons%Co.v .Buckl
eton[1913]A.
/C.30
128
[19547]1AllE.R.325
129
[1965]2AllE.R.65

131
andamer erepresentation.Acol l
at er
alcont r
acti sawar ranta
contractexi
sti
ngal ongsi det hemai ncont ractbuti ndependent
ofit,whichmaybet heconsi derat i
onf orthemai ncont ract.I
t
al
someansanunder takingorpr omisef ormi ngpar toft he
contractthoughnoti ncl udedi nt hewr i
ttendocument .The
130
l
attersensei sappl i
cabl eher e. Howev er,thecour t
shav e
cautionedontheuseofcol lateral contractstogi vecont racti
ng
131
eff
ectwhati sreall
yani nnocentmi srepresentation.

Natur eandEf fectofCont ractualTerms

Themor ecommonappr oachi stoclassif
ycontr
actual t
erms
i
ntocondi tionsandwar ranti
esr epresenti
ngmajortermsand
minort erms.
Howev er,t
her earesomet ermswhi chdonotf i
teasilyi
nto
eit
heroft het wot radit
ionaldivi
sions,whosetruenat uremay
dependupont hequalit
yoft het er
m broken.Theseareknown
asI nnomi nateori ntermediatet erms.Natureandef fectof
contractualtermswi llthusbeexami nedundert heforegoing
thr
eecat egor i
es.

Conditions
Theterm“ condit
ion”popul ar
lyreferstoamaj orter
m oft he
contr
act ,breachofwhi chwi l
lent i
tletheinnocentpar tyto
132
damages as wel las t oar epudiati
on oft he contract.
Condit
ionmayal sor efertoanex t
ernalf
actortheex i
stenceor
occurr
enceofwhi ch, t
hel i
feofthecont r
actorobl i
gat
ionunder
133
thecont ractdepend. A conditi
onoft hi
st y pemaybea
134
condi
tionpr ecedent orcondi t
ionsubsequent.

130
See e. g.Esso Pet rol
eum v.Mar don supra;Andrew v.
Hoki nson[195613 A1 E. R.422;Ci t
yand West minister
Proper t
ies(1934)Lt dV.Muddsupr a.
131
LordMoul toninHei butv.Buckletonsupra,seealsoK.W.
Wedder bum.Col l
ateralContract
s( 1959)C.I
.J.79
132
SeeS. 1l(l
)(a)SaleofGoodsAct ,
1893. Seefurt
herp.275et
seq.
133
InI nsurancecont ractconditi
onsar eusual l
yoft hi
st ype.
Maj orfundament altermsar eknownaswar rant
iese.g.49
InsuranceDecr ee1991
134
Pym v.Campbel l(1856)

132
Condi ti
onPr ecedent
Acondi ti
onpr ecedenti sat er mt hatmustbef ulfil
ledbef or ea
contractualobl i
gat i
ont akesef fect .Ther emaybenocont ractat
alluntilorunl esst hecondi tioni sf ulf
il
led.Forex ampl e,i
ncases
i
nv olv
ingdi sposi tionofl andori nterestinl and,t hereisal way s
thephr ase“ thisagr eementi ssubj ecttocont ract ”or“subj ectt o
planningper mi ssion”orsuchot herr elev
antcondi ti
ons.The
effectofsuchacl ausei st hatt her eisnotbi ndingagr eement
135
untilt
hecondi t
ioni sfulfil
led.
Insomecases,t heoper ationoft hecont racti ssuspended
untilt
hehappeni ngoft hespeci fiedev ent nPy
.I mv .Campbel li
t
wast heappr ov alofthei nv ent ionbyat hir
dpar ty.Theagr eement
l
apsedbecauseofnon- fulfil
lmentoft hei nvent ionbyat hird
136
party.InAber foylePl ant ationsLt d.v.Cheng, ' thecont ract
dependedf ori tsv alidit
yupont hecondi ti
ont hatt hev endor
shouldobt ainar enewaloft hel easesandt hati fhepr ov ed
“unablet oful fi
lthiscondi tiont hisagr eementshal lbecomenul l
andv oid”.Hewasunabl et oobt ai
nt her enewalandsot he
agreement sbecomenul landv oid.

Condit
ionSubsequent
Aconditi
onsubsequenti
sacondit
ionoreventthatdestr
oysan
exi
sti
ngobl igat
ionbyi
tsoccur
enceornon-occurrence.Ther
e
arehardl
yanycasest oil
l
ustr
atetheoper
ationoft hi
st y
peof
137
condi
ti
on.

Warr
anti
es
Awarr
ant
yisast
ipulat
ionort
erm oft
hecont
ractbr
eachofmay
gi
ver
iset
oaclai
mf ordamagesbutnott
oarightto

135
InU.B.A.v .Tejumola&SonsLt d.[ 1986]NWLR8176,t he
CourtofAppealhel dthatthephr ase“ subjecttocontr
act”as
used inthatcasewasmeani nglesssi ncet hedocument
contai
nedadet ail
edofferwhi chhadbeenv al
idl
yaccepted
leavi
ngnot hingt onegotiat
eupon.Not ehowev erthatthe
Supreme Cour thas since r uled ot herwise inthe same
report
ed[1988]2N.W.L.R.( Pt .76)662.
136
(I
960)A.C.115
137
InHeadv .Tet t
ersal
ltheopti
ont oreturnthehor seoperat
ed
ascondit
ionsubsequentt ot ermi natet hecont r
act
prematur
ely
133
 145
rejectt he goods and t reatt he cont ractas r epudi ated.
146
war rantyisnotamaj ort erm oft hecont ract.
Thedi sti
nctionbet weenacondi t i
onand awar rant ym
i
llustratedbyPoussar dv.Spi er s&Pond147;andBet
’ tiGy e.,
4>t
In
theear l
iercase,t hepl aint i
ffanact resswasengagedt opl aya
l
eadi ngpar ti naFr enchoper ett
af rom t heopeni ngday .She
couldnott akeupherr oleowi ngt oi l
lnessunt iloneweekaf ter
thecommencementoft heshow.Thedef endant s,whohadt o
engageasubst i
tut efort her oler efusedt oreengageher .Her
act i
onf orbr eachofcont ractfai l
edont hegr oundt hatherf ailur e
to appearf ort he f inalr ehearsal s and ear ly per for mance
amount edt oabr eachofacondi tionwhi chgav et hedef endant s
ther ighttot reatthecont ractasr epudi at ed.
Buti nt helat tercase,Bet ti
niv .Gy e,thepl aintiffagr eedt o
arriveforr ehearsal satl eastsi xday sbef or ethecommencement
oft heshow.Hear r
ivedt woday st ot heshow.Thedef endant
repudi atedt hecont r
act .Itwashel dt hatt het erm ast orehear sal
wasa war ranty,t her efor ethe def endantcoul d notl awf ully
repudi atethecont ract.

Intermedi ateorI nnomi nateTer ms

Somet i
mes, itmaynotsuf fi
cetorestri
cttermsofacont ractint o
condi ti
onsand war r
anties.The law r ecognizest he unequal
i
mpor tanceofcont ractualterms,thuswhi lesomear eregarded
asf undament alandsomeasmer elycol l
ater
alt othemai nor
fundament alobligati
ons,ot herswhi chdo notf itinto either
categor y,arecharacterizedbyanex ami nati
onoft heef f
ectofa
breachofsuchat er
mr atherthanont hequal i
tyoft het er m
“broken.Theset ermsar eknownasi ntermediateori nnominat e
terms.
InHongKongFi rShippingCo.v.KawasakiKi senKai sha
49
Ltd' thedef endantschar t
eredashipf r
om t heplai
ntiff
st oear n'
138
Car goofcoal f
oraper iodof24mont hsfrom U.S.A.toJapan.

13811( 1)(b)SaleofGoodsAct
1893Excepti ninsurance
148
contract
s.
149 (1876)1Q.B.D.410( 1876)1Q.B.
D.
183.
[1962]2Q.B.26: (1962)1All
E.R.474.
134
Owi ngt ool dengi neandi ncompet entstaf f,t
heshi pbr okedown
forf ive weeks on t he j our neyt o Osaka.On ar riv ali twas
discov er edt hati twoul dtakeanot her15weekst oputt heshi pi n
aseawor thycondi tion.Thedef endantr epudi atedt hecont r
act
forabr eachofsewor thinesscl ausei nt hecont r
act .
Thecour tuphel danact i
onbyt hepl aint i
ffsf orwr ongf ul
repudiat ion Di pl ock,L.J.not ed t he di stinct i
on bet ween
condi t
ionsandwar rant iesandt hei rrespect i
veef fect s, andwent
ont oindi catet hatt her ear emanycont r
act ual under taki ngsofa
mor echar acterwhi chcannotbecat egor i
zedasbei ng“ condi ti
on”
or“war r ant y”,thel egal consequencesofabr eachgi vesr iseand
donotf ollow aut omat i
cal lyfrom apr iorcl assi ficat ionoft he
under t
aki ngasa“ condi ti
on”ora“ war ranty ”.
HongKongFi rshi ppi ngCo.v.KawasakiKi shenKai shai s
probabl yt hef i
r stcasei nwhi cht hecour tex pr essl yr ecogni zed
existenceofani nter medi ateori nnomi nat et er m whoseef fect
dependsupont heef fectoft hebr eachont her estoft hecont r
act .
50
Howev er ,inAer ialAdver tisingCo.v.Bachel or ’
sPeasLt d. ' t he
existenceofani nomi nat et erm wasi mpl icitl
yr ecogni zed.
Despi teat aci tdi sappr oval oft hedeci sioni nHongKong, in
139140
TheMi hal isAngel os, t
heCour tofAppealendor sedt he
existenceofat hirdt ypeoft erm,t hei nter medi at et erm,i n
141142
Cehavev .Bremer( TheHansaNor d) . nBungeCor
i por at i
on,
5
New Yor kv.Tr adexExpor t,SA Panama, ''t hecour toff irst
i
nst ancehel dt hatat ermr equiring15day s,not iceofpr obabl e
readinessofv esselt ol oadwasani nnomi natet er mt hebr each
ofwhi chdi dnotgot ot her ootoft hecont ract. Thedeci si onwas,
howev err ev ersedonappeal .
Megaw L. J.whowasamemberoft heMi hal isAngel os
bench, quest i
onedt hecor rectnessoft hev i
ewofDi plockL.J.i n
theHongKongFi rShi ppi ngCo.case.Ci ti
ngt hedeci si onoft he

139
[1938]2Al lE.R.788
140
IntheMi hal i
sAngelo[1979J3Al lE.R.125,anot herChar t
er
party,
theCour tofAppeal heldthatthe“expect
edr eadi
ness”
cl
ausei nt hecontractwasacondi t
ion.Ital
sof eltthatlong
establ
ishedst andardshadt obemai nt
ainedinthei nter
estof
certai
nty.
141
(1976)Q. B.44: (
1957)3All E.R.739
142
(1976)Q.B.44; (1975)3AllE.R.513.
135
 143
ofLordsinthe Uni
ted Sci
ent
if
icv.Bur
nleyCounci
l
, t
he
Lear
nedJust
icesai
d.
Ithinkitcanf airl
ybesai dt hatinmercant ile
contract
sstipulati
onsast ot i
menotonl ymay
be,butusuall
yar etobetreatedasbeing“ ofthe
essenceofthecont ract
”ev enthoughthi
si snot
144
expressl
ystatedinthewor dsofthecontract”
Thedecisionoft heCour tofAppealwasaf fi
rmedbyt he
145
House ofLor ds. Lor d Wi ber f
or ce ter
med t he appel l
ant’
s
argument( which waspur por tedlybased on Hong Kong Fi r
Shippi
ng Co.case)as “ commer cialmostundesi rable”and
wonderedwhet herDi plockL.J.’sjudgmentr eallysuppor tedthe
proposit
ionthatwasbei ngatt ri
but edt oit
,ifhisj udgmentwas
mor ethan clar i
fication,his Lor dship opined he woul d be
146
discr
edit
ingalonganduni for
m ser iesofcases.
Theposi t
ionappear stof av ort het r
adit
ionaldi st
incti
on
betweenconditionsandwar r
ant iesespeci al
lyint hosecont ract
s
147
wheret ime is oft he essence oft he cont r
act . Although
recogni
zingtheexi stenceoft ermswhi chmaynotf itintothe
tradi
ti
onmode.

ExclusionandLi mi tati
onClauses
Anexcl usionclausei sat erm ofcont
ractwhichpur port
st o
exclude orexempta par t
ywho has commi t
ted breach of
contractfrom liabili
tyforhisconductther
ebydepr ivi
ng the
i
nnocentpar tyoft heremedyhewoul dotherwisebeent it
led
148
to. Alimit
ioncl ause,ontheotherhand,isacl ausewhi ch
purportsto

143
[1978]A.C.904
144
Megaw L.J.cr i
ti
cizedDi pl
ockL. Jy ardsti
ckf ormeasur ing
t
ermsofcont r
acti
ng,andar guedt hatiffoll
owed,“ condi
ti
on
wouldnol ongerex i
stintheEngl i
shLawofcont r
act.”
145
[1981]2Al lE.R.513
146
Notet hatLor dScarman’sJudgmentr evealedcont i
nued
sympat hyf orconditi
ons,innominat eandwar ranty
classi
f i
cat
ion
147
At ypi
calexampl eiscontractforthecar r
iageofgoodsbysea.
148
See e. g. Phot o Product i
on Lt d. v. Securior Transport
exclusioncl ause,seealsoAki nsanyav.U. S. A.Ltd.[1986]
NWLRat273;Nat ural& SonsLt d.V.NBTC Lt d.[1989]2
NWLRat753. 136
-

l
imi tthel i
abi li
tyoft heguiltypartyandsodoi ngshiftsthebur den
149150
forthegr eat erpartoft hedamaget ot heinnocentpar ty.
Exclusionandl i
mi t
ationcl ausesar ecommonl yf oundi n
standar df orm cont r
acts,t hati s,cont ract swhoset er msar e
cont inuedi npr i
ntedf ormsandappl yt ocont ractsoft hesame
kind, e. g. empl oyment cont r
act s, i nsurance cont r
act s,
commer cial sal es, equi pment l easing and hi re-pur chase
cont racts,hot elser vi
ces,laundr yser v i
ces, ai
rtranspor tet c.
Theuseofsucht ermshav er aisedf undament alquest ions
onconst ruct i
onofcont racts,and ont hewhol econceptof
freedom ofcont r
act .TheEngl i
shcour t
shav ehadt odealwi t
h
thehar dshipcausedt othei nnocentpar tyi nsuchsi tuationsi na
pragmat ic manner ,by dev i
si
ng r ules f ordet er mini ng t he
appl i
cabi l
ityofsucht er
mst ocont ractsi ngener al.Ther ules
appl yaccor dingori nanunsi gneddocumentorot herwi se.

RulesGov erningAppl i
cabi l
ityofExcl usi on
ClausesasTer msofCont ract
Apar tywhoseekst orelyonanexcl usioncl ausemustpr ov et hat
theclausewasat er
m oft hecont ractinquest i
on.Hecandoso
byshowi ngt hatt hecont r
actwaswr i
ttenandt hatt heinnocent
61
partysignedt hedocument .I n L’Estrangev.Gr aucob' The
plai
ntiff
,buyerofav endi ngmachi nesi gnedapr intedsal esf orm
preparedbyt hesel leroft hemachi ne,t hedef endant s.The
contractcont ainedanexcl usioncl ausewhi chst atedt hat“ any
expressori mpl i
edcondi tion; stat
ement , orwar r
ant y,statutoryor
otherwisenotst at
edher eini sher ebyex cluded. Themachi nedi d
notwor k.Wet hebuy ersbr oughtanact ionf orbreachofcont ract
thesel l
erspleadedt heexcl usioncl ause;t hebuy err epli
edt hat
shedi dnotr eadt hef orm andsowasunawar eoft hecont ent s
beforesigningi t.
TheCour tofAppealhel dt hat,intheabsenceoff raudora
partywho si gnsa documenti sbound ornothe r ead t he
document .Hisorhersi gnat ur econcur rencewi t
ht hecont entsof
theform.

149
150
Scrutt
onsLt
dv.Mi
dlandSi
l
icones
[193412KB394

137
 Ther uleappl iesev enwher et heexcl usioncl ausei si n
anot herdocumenti ncor porat edbyr eference.Aswasst atedby
151
Tay lor C. J. i n Chagour y v. Adebay o, “
it makes l i
ttl
e
differencest hatt heagr eementi st obespel toutoft woort hree
document spr ovidedt hepl ai ntiffasi nt hiscasehassi gnedt he
princi paldocumentandcer tifiedashehasdonet hattheot her
documentconst itutingt heagr eementhav ebeenbr oughtt ohi s
152
not i
ce”
Ther ulei nL.’ Est rangev.Gr aucobwi llnotappl ywher et he
signat ur e was pr ocur ed by mi sr epresent ation.I n Cur tis v.
153
Chemi calCl eani ngandDy ei ngCo. , thepl aint i
fft ookher
weddi ngdr esst ot hedef endant ’
sshopf orcl eani ng;sheasked
tosi gnaf or m.Thef or m cont ainedanexcl usioncl anwhi ch
exempt ed t he def endant sf rom al ll i
abi l
it
yf ordamage t he
articlescl eaned.Bef oresi gni ng,t hepl aintiffsoughtt oknow
reasonf ort hesi gnat ur eandwast oldbyt heassi stantwhowas
attendi ng t o hert hatt hecompanywoul d notbel i
abl ef or
damaget ot hebeadsandsequi nsont hedr ess. Shesi gned. The
dresswasbadl yst ai nedwhenshecamet ocol lecti t
.Heract ion
fornegl igencesucceeded.Denni ngL.J.( ashet henwas)sai d
that“ anybehav iour ,bywor ds,orconducti ssuf fi
cientt obe
mi srepr esent ationi fi tissuchast omi sl eadt heot herpar tyast o
theexi stenceorex t entoft heex empt i
on.I fi tconv eysaf alse
154
i
mpr essi ont hati senough.
Int hecaseofanunsi gneddocument ,itist hedut yoft he
par tyseeki ngt or el
yont heexcl usi oncl auset oshowt hati twas
broughtt ot henot i
ceoft hei nnocentpar tybef oreoratt het i
me
oft hecont ract .Whatamount st onot icewi l
ldependupont he
par ti
cul arci rcumst ancesofeachcase. Howev er,adi sti
nct ionis
usual ly made bet ween cont r
act ualdocument s and mer e
155
recei pt sorv oucher s. I
fadocumentcanonl yr easonabl ybe
151
(1973)3U. I.
L.R532
152
Seeal soYor kshir
eIns.Co.v.Haway[1969]N. C.L.
464(SC);
Nor t
her nAss.CO.v.Wur ola[
1969]N. C.L.R.4(SC)
153
(1951)1K.B.805
154
Ibi
dtp.808
155 pcf ffefv South EasternRy .Co.( 1977)2 C.
P.O 416;
Chapeltonv.Ber ryUrbanDistri
ctCounci l[194011K.B.532;
Thornton v.Shoe Lame Par king Co.11971]2QB.163;
Odeniyiv.Zar d&Co.[
1972]U. T.L.R.34

138
expect ed t o cont ain ev idence ofpay mentonl y ,anycl ause
seekingt oex cludet hel i
abi lityofonepar tywi llnotbi ndt heot her
party as i llust r
at ed by Chapel ton v.Bar ry Ur ban Di strict
156
Counci l wher et hepl ai nt i
ffwasgi venar eceiptaf t
erhi r i
ngt wo
deckchai r
sf oruseont hebeachandi twashel dt hatt het erm
whichex empt edt hedef endant sf rom l iabi li
tyf oranyi njuryor
damagear i
singf rom t het heiroft hechai r
swast heof fer.
Accept ance consi sted of hi ring t he chai rs. The r eceipt
containing t he ex clusi on cl ause t her efor e came af tert he
contracthadbeenconcl uded.
157 158
Si mi l
ar lyi nOdeni y iv .Zar d&Co. thepl aint i
ffwas
i
ssuedar ecei ptandadel i
v erynot eaf terpay ingf ort hegoods,
whichcont ainedacl ause( pr i
ntedont her eceipt)ex cludingt he
l
iabili
tyoft hedef endant s.I twashel dt hatt hecondi ti
onhadnot
beenbr oughtt obenot i
ceoft hepl aintiff.Thecour tsai dt hata
personwhoi sissuedar ecei ptf ort hepay mentofmoneycoul d
notber easonabl yexpect edt olookf oranycondi tionsi ni t.
Howev erift hedocumenti si nr espectofcont r
act sr elating
totransact ionsl ikecar riageofgoods, whet herbyai r,landorsea,
thepr esumpt ioni st hatt heot herpar tywi l
l expectabi llofl ading
orai rticketorot herconsi gnmentnot et ocont aincondi ti
ons
gover ningt hecont ractofcar r
iageofgoods.Thi sassumpt ion
probabl yex tendst odr ycl eani ngt icket s,al t
houghi tmaybea
quest i
onoff acti neachcase.
Thei ssueofnot icei sal so r elev anti ncasesi nv olving
69
provisionofser vi
ces.I nOl leyv .Mar lbor oughCour t' amar ried
couplebooked a r oom i n a hot el.Af tergoi ng t hr ough t he
formal i
tiesatt her ecept iondesk, theywer egi vent hekeyt ot hei r
onthewal lint hei rroom st at edt hatt hehot elwi l
l notbef orl i
abl e
foranyl ossofar t i
clesnotsubmi ttedt ot hekeepi ng.Thewi fe’ s
furcoatwasst ol enf rom t her oom whi let heywer eout .The
defendant sr eliedont henot icei nt her oom.Buti twashel dt hat
thenot icecamet ool atebecauset hecont ractwasconcl udedat
therecept iondeskbef or et henot i
cewasseen.Thedef endant s

156
Supra
157
Supra: soOt
seeal egbeyev
.Li
tt
le(
1906)NLR70ont heeff
ect
oftheplai
nti
ff
’si
l
li
ter
acyont
hereasonabl
enessofnot
ice.
158
[1946]1K.B.532.

139
weretheref
oreheldli
able.
I
nsomeci rcumstances,howev er,asuccessf uldefcourse
ofdeali
ngsmayber aised,wher ethepar tieshaveahistoryof
159
pastdeal
ingswitheachot her
. Fort hedef encet
oapply,t
here
mustbeanest abli
shedandr egularcour seofdeafonsame
160
ter
msandcondi ti
onsoneachoccasi on.

Const r
uct ionofTer msandExcl usi onCl auses
Anexempt i
onorex clusioncl ausewhi chi sat erm ofacont ract
stil
lsubj ectt o be const rued al ong wi th ot hercont r
act ual
clausesi nor dertodet ermi newhet hert hel osscompl ai
nedof
com, wi thint hescopeoft heex clusi oncl ause.
Thepr imar yrul eist hatex cl usi oncl ausesar econst rued
strictlyagai nstthepar t
yseeki ngt or elyonsuchcl auses.Thi si s
161
knownast hecont rapr ofer entemr ule. I tall
owsanyambi gui t
y
oruncer taint ytober esol vedi nf av ouroft hei nnocentpar t
y
162
Limi tationcl ausesar ehowev er,lessst ringent lyconst r
ued.
Unl essv er
yclearwor dsar eused, thecour t
sar eincli
nedt o
thev iew t hati tisunl i
kelyt hatonepar t yt oacont ractshoul d
i
nt endt oabsol vet heot herpar tyf rom t heconsequencesofhi s
163
own negl igence. Use of such phr ases as “ al
ll iabi lit
y
what soev er ”maybesuf f
icienttoex cludenegl igence.InNor mal
164
&SonsLt d.v.N. B.T.C.Lt d' thephr ase“ acceptsnol i
abilityor
responsi bilityforanydamageorl osshowev ercausedt ogoods’
washel dt obesowi deast obei ntendedt ogr antex empt ionf or
l
ooserdamagecausedbecauseoft heseaunwor thi
nessoft he
165
vehi cle.
Gener al l
yspeaki ng, theout comemaydependont heext ent

17(
1
Thedef enceofcourseofdeal ingssucceededi nJ.Spur ti
ng
Ltd.v.Bmndshaw[ 1956]W. L.
R.461; butnoti nMcCut cheon
v.MucBr ayne(1964)1W. L.R.125.
160
McCut cheonv.MacBr ayne[1964]1W. L.R.125;Burnettv.
West minsterBankLtd.[1966]1Q. B.742.
161
Andrewsv.Si nger\1934]1K. B.17;Wal l
is,Son&Wel lsv.
PrattandHayness[ 1991]A.C.394
162
Al
isaCr ai
gFi shing Co.Lt d.V.Mal vernFishing Co.
[1983]2A. C
163
GeorgeMi t
chel
l(Chesterhall
)Lt d.V.Fi
nneyLockSeed, Ltd.
[1983] 2A.C.803
164
[
1989|2NWLRat753
165
I
bidat754

140
ofliabili
tyofthe def endant
.The exclusion cl
ause maybe
construedtoincludeliabi
li
tyfornegl
igence,butnotwherehi
s
l
iabi
lit
yi sf ornegligence only
,unless cleargeneralwor
ds
excl
udi ngli
abi
li
tyareusedasi nNarumal&SonosLt d.
Excl usi onCl ausesandFundament al Breach
Excl usioncl auseandl imi tat
ioncl ausesar emor ecommoni n
standar df r
om cont ract s wher et he suppl i
erofgoods and
ser vices hav e super iorbar gaining powerwhi ch makes t he
ex i
st enceornot i
onoft heexi stenceofaconsensusadi tem
i
llusor y.Theneedt opr ot ectthei nnocentorweakerpar tyf rom
theunpl easantandunconsci onabl eef fectofsuchl op- sided
agr eementl edt othei ntroduct ionoft her ulethataper sonwho
commi tsaf undament albr eechofcont ractcoul dnotrelyonany
ex clusionorl i
mit
at i
oncl ausei nt hecont ractev enifex pressl y
166
madef ort hebenef i
toft hepar ty. Thiswast heposi ti
onbot hi n
Engl andandi nNiger ia.I nbot hcount ri
es,i twasar ul
eofl aw
167
usedasaconsumerpr otect i
ondev ice.
In1966anat temptwasmadet or etur ntot hefreedom of
168
cont ractconcepti nt heSui sseAt l
ant ique' case.Howev ert hat
case, i
nst eadofl eadi ngawayf rom t her uleofl awappr oach, led
toaf airl
yl ongper i
odofr elativeconf usion169whi chwascl ear ed
n1980170andhasr
i emai nedso.

166
Seee. g.Kar sales( Har row)Lt d.V.Wal li
s[ 19561!WLR936;
AdelBoshal l
iv .Alli
edCommer cialExportersLtd.[196111
AllNLR( Partiv)917;YeomanCr editLtd.V.Apps[ 1962]2
2QB.508.
167
SeeAgomoC.K.Excl usionCl ausesandconsumer
ProtectioninNi geri
ai nObiladef ed)BlueprintforNigeri
a
Law.
168
SuisseAt l
antiquesoci eted’Aar mementMar it
ime,S.A.v .
Rot t
erdamscheKol enCent rale[1967]1A.C.361;[ 1966]2
AllE.R61
169
Har butt
’sPast icineLt d.v.Way neTankCo.Lt d[1970]1Q. B.
477;Chat t
erhouseCr editCo.Lt dV.Tol l
ey[ 1963]2Q.B.
683;Wat hes( West ern)Lt d.v .Aust i
n’s( Menswear )Ltd.
[1976] 1 l lloydsRep. 14 ( thee t hree cases wer e
subsequent lyov errul ed).
170
Phot oProduct i
onLt d.v.Secur it
yorTr anspor tLtd.[
1980]2
WLR283; [
1980]1Al lE.R.556. SeeAgomoC. K.TheEffect
ofTheDemi seoft heDoct rineofFundament alBreachof

141
 The r ul e now i st hata par ty who has commi tted a
fundament al br eachofcont ract( thatisabr eacht hatgoest ot he
rootoft hecont ract )canr elyonanexcl usioncl ausei nt he
cont racti nser tedf orhi sbenef i
t,ifupont heconst ruct ionoft he
term oft hecont ractt hecl ausecov er st hebr each.
82
In Phot o Pr oduct ion Lt d v.Secur icorTr anspor tLt d'
plaintiffs,f act ory owner s,ent ered i nto a cont ract wi th
defendant s,a secur ity company ,wher eby t he def endant s
agreedt opr ov i
desecur ityser vi
cesatt hef act or yi ncludi ngni ght
patrol s.Whi leononeofsuchpat rols,an empl oy eeoft he
defendant sdel iber at elyl i
tasmal lfirewhi chspr ead, andcause
damaget ot hef act or yandst ocki nsidet ot hev alueof* 615, 000.
Thepl aint i
ffssuedt hedef endant sfordamages. Thedef endant s
pleadedt heexcl usi oncl ausei nt hecont r
act .
The ex clusion cl ause excl uded t he l i
abi l
ity of t he
defendant sf ort heact sordef aultofanyoft hei rempl oy ees
underanyci rcumst ancesunl esssuchactordef aul tcoul dhav e
beenf or eseenandav oi dedbyt heexer ciseofduedi li
genceon
thepar toft hedef endant sast heempl oy erl iabi l
ityf orl ossby
fi
rewasal soex cludedunl esssuchl osswassol el yat tribut abl e
tot henegl i
gence oft he def endant s’empl oyeeswi t
hi nt he
cour seoft hei rempl oy ment .
Thet rial judgehel dt hatt hedef endant swer eent i
tledt or ely
ont heexcl usi oncl ause.TheCour tofAppealr ev ersedt hat
decisi onont hegr oundt hatt hebr eachwasaf undament al
breachoft hecont ractwhi cht her efor epr ecl udedt hem f rom
relyi
ngont heex clusi oncl ause. TheHouseofLor dsr est or edt he
j
udgmentoft het ri
alcour t.Theyhel dt hatt her ewasnor uleof
l
aw bywhi chanex clusi oncl ausecoul dbedepr ivedofef fect
regar dlessoft het er msoft hecont r
actbecauset hepar ti
eswer e
freet oagr eet owhat everex clusionormodi f
icat ionoft hei r
obligat i
ont heychose. Thequest ionwhet heranex clusi oncl ause
appl i
edwhent her ewasaf undament albr eachorbr eachofa
fundament alobl igat ion,oranyot herbr each t ur ned on t he
const ruct ionofwhol eoft hecont racti ncludi nganyexcl usi on
clauses.
The deci sion ended y ears ofuncer taint yov ert he r ul e

Contr
actontheNi
geri
anLawofCont
ract(
1981-
83)
,13Ni
g.
J.Contemp.Law69-77.

142
l
aw/ r ule of const ruct ion appr oaches t ot he doct rine 171
fundament albr eachandr ei ntroducedt henot i
ont hatpar t
iest o
a cont ractar ef ree t o appor t
ion t hei rl osses t hemsel ves
whenev ert hisispossi ble.
The r ul e ofconst ruct ion i s appl icabl et o Ni ger ia.I n
Akinsany av.U. B.AJKar ibi-Why teJSCacknowl edgedt hatt he
2
l
awi sasst atedi nPhot oPr oduct ionv.Secur i
cor . InNar umal&
3
Sons Lt d.V.N. B. T. C.Lt d. The Supr eme Cour tf urther
conf i
r med t he r ul
e ofconst ructi
on appr oach t o excl usi on
clauses.I nt hatcase,t he pl aint
iffs/respondent s hi red out
bargesandt ugt ot hedef endant /appel l
antf orachar terf eeof
N89,356. 45.Theappel lantal l
eged t hathesuf f ered l osses
totali
ngN407, 911. 20asar esul toft heunseawor thi nessoft he
vesselusedt ot ranspor thi sgoodsf r
om War r
it oLagos.The
i
ssuesf ordet ermi nat ioni nt heSupr emeCour twer ef ramedby
ther espondent s’ counsel interal i
athus:
(ii
i)Whati st he r ule gov erning excl usion cl auses i n
standar df orm cont ract s; and
(iv)Towhatext entcant heseawor thinessorot her wi seofa
vesselaf f
ectt hev alidityofex clusi
oncl ausesi nacont ractof
carri
agebysea?
Accor dingt olear nedcounself orappel lant,t hei ssuewas
“whet herapar tyi nf undament albr eachofat erm ofwar ranty
canr el yuponanex cl usioncl ausei nacont ract ”.Thecl ausesi n
quest ionr ead:
(4)Ni gerBenueTr anspor tCo.accept snor esponsi bilit
yor
l
iabilityf oranydamageorl osshowev ercausedt ogoodscar r
ied
ont hei rcraf tsorl osshowev ercausedt ogoodscar riedont heir
craftsorv essel st owed,byt hei rtugswhet herdur ingt r ansi tor
whenl oadi ngorof floadi ng.
Hirer s ar er esponsi blef ori nsur ance ofgoods ort heir
vessel sandcostofr einsur ancei sforaccountofhi rer s:
(5)Ni ger Benue Tr anspor t Company Lt d.Cr af ts ar e
l
icensedandar esui tabl ef oroper ati
oni ni nlandwat ersandmust
notbeempl oyedout sidet hesel imits.172173174

171
[
1980]AC827
172
(
1986)4NWLR273
173
I
bid;atpp.343-
345.Kay
odeEsoJSCatpp.313-314al so
applied t
he rul
e of cont
ract
ion ex n Phot
pounded i o

143
 175
Aftert reatingt hei ssueofseawor thiness, Nnamani , JSC,
thent urnedt ot hei ssueofex empt i
oncl auses.Het racedt he
hist
or yoft hedoct r
ineoff undament albr eachf rom t her uleof
l
aw appr oacht ot her uleofconst ruct i
onasst atedi nPhot o
Product ion, andconcl uded:
“Ther esul toft heaut horit
iesappear st omet obe
that, whileear l
iercasesaf undament al br eachofan
expr essori mpl iedwar r
ant ywoul dhav el edt oan
exclusi onofanexempt i
oncl ause,t hel at tercases
appeart o hol dt hatsuch an i ntent i
on mustbe
deducedf rom t heconst ructionoft het er msoft he
cont ractbet weent hepar t
ies.I nor derwor ds, having
regar dt ot he t er ms and ci rcumst ances oft he
cont ractwasi tthei ntent i
onoft hepar t
iedt hatev en
ifaf undament alt erm oft hecont racthadbeen
breached, theex clusi onorexempt i
oncl ausewoul d
nev erthel essappl y ?”
Ther e can be no doubtt hatt he r ule ofconst r uction
appr oachi st hel aw, ev ent hought hecour tst at edt hatther ewas
i
nf actnobr eachofanyf undament alterm oft hecont ractsi nce
the bar ge was f ound t o be seawor t
hy ,and t herefor et he
statement concem- ing ex cl
usion cl auses st ri
ctl
y obi ter.
Nonet heless, thedi rect ionandpr efer enceoft hecour thasbeen
i
ndicat edi natl eastt hr eecases.I nt heNar umalcase,t he
l
earnedChi efJust iceoft heSupr emeCour tal somadei tcl ear
thatev eni fthebar gehadbeenf oundt ohav ebeenunseawor thy,
theconst r uctionoft het ermsoft hecont ractasawhol er ev ealed
anint entiont ogr antr espondent sescapef rom l iabil
ityf orl oss
176
ordamagecausedbyt heunsea- wor thinessoft hev essel .
Thef undament aldi fferencebet weent heNi ger i
anandt he
Englishposi t
ions,l iesi nt heex i
st encei nEngl andofst at utor y
provisions177r egul atinguseofexcl usioncl ausesi ncer t
aint ypes
ofconsumercont ract s,andagl aringabsenceofanysuch
provisionsi nNi ger ia.Ar etur ntor uleofconst ruction,wi thout

Producti
on.Seeal soTheA.G.BendelSt
ateandOrs.V.U.
m
B.A .[
1986]4NWLR547
[1989J2NWLR
175
176
Seepp.751-753
Ibi
d,atpp.753,754,seealsoOput
aJSCatp. 769appl
yi
ngthe
177
same r
uleofconstruct
ion.
Unfai
rContr
actTer msAct1977

144
anychecksandbal ances,isnotahappynewst ocontracti
ng
parti
eswi thinfer
iorbargainingstr
engt
ht heli
kesofwhom t he
English UnfairCont r
act s Ter
ms Actexi s178 unl
st ess strict
const r
ucti
on is expect ed as itmustbe not ed thatstrict
const r
ucti
on is usefulonl yin cases ofambi guit
y .Careful
drafti
ng shoul d disperse wi t
ht he need f or such strict
const r
ucti
on,thusleavingtheweakerpar t
yatthemer cyofthe
strongerparty.

CONSI DERATI ON
Nat ureandDef i
ni t
ion
TheLawcont r
acti sconcer nedwit hbargai ns;t hatis, onepar t
y
or pr omises somet hi ng i n exchange f or a pr omi se or
cont ri
but i
onbyt heot herpar t
y.IfAf orex ampl e,pr omi sest o
copyB’ sl ecturenot es,t helaw wi l
lnotal low anyr emedyi fA
beakshi spr omi se.Buti fBpr omisesi nr etur ntogiv eAameal
ti
cketso t hatA’ s pr omi se is dependenton B’ s,t hen t he
exchangeofpr omi sesmayt urntheagr eementi ntoacont r
act .
Incont r
actLawA’ spr omi seissaidt obet heconsi der ationf or
B’spr omi seandv i
ce-ver sa.
Whatt heni sconsi der ati
on?Awi del
yaccept eddef i
nitionof
m
consi derationi st hatf oundi nCur ri
ev.Mi sa. Int hatcasea
valuabl econsi derati
onwassai dt o“ consi sti nsomer i
ght s,
i
nt erest,pr ofit,orbenef i
taccruing t o one par t
y ,orsome
forbear ance, detriment ,loss,orresponsi bil
itygi ven,suf fered, or
under takenbyt heot her” .Inamor eeasi l
yunder standabl eterms,
consi derationmaybedescr i
bedast hebasi sofbar gai ns;t he
qui dpr oquooft het r
ansact i
on.Thi sneednotbei nmoney ;an
act ,forbear anceorev enacount er-
promi sei ssuf ficient .The
plaintiffatal lt i
meshast oshow t hathegav esomet hi ngi n
returnf ort he pr omi se whi ch was made t o him,and t hat
somet hingmaybeei t
heranactorapr omi se.

Rul
esGover
ningConsi
der
ati
on
i
. Consi
der
ati
on musthave some val
ue butneed notbe
adequat
e
Thegeneralr
ulei
sthatt
heactorpr
omi
sepr
ovi
dedbyt
he

178
See.AgomoC.K.Supr
a

145
parti
esmustbeofsomer eal oreconomi cv al
uei nt heey eoft he
l
aw.I nkeepingwi ththepr incipleoff reedom ofcont ract,the
parti
esmustbeal l
owedt of reelyst r i
ket heirbar gain.Oncet hat
sdone179 t
i hecour tswi l
lnoti nterf erewi tht hebar gai
nev enif
thepromisesexchangedar eunequal .Iti snott hepar toft he
court’
s dutyt o assess t he r elativev alue ofeach par t
y ’
s
contri
buti
ont othebar gai
n.Abagofr icei nex changef oracar
forexample,mayseem anunequalandunusualar rangement ,
butift he parti
esar e content ,t hecour twi llr ecogni ze the
exist
enceconsi derati
on,asav al uecanbepl aced on bot h
art
icl
es.
Simil
arl
y,ifApr omisestosel lhi scart oBf ort heN1, 000is
adequatevalueforthecar.Itist heref orenodef encet oanact ion
i
ncont ractfort hepr omisort opl eadt hatt heconsi der at
ion
fur
nishedbyt hepromi sewast oosmal lori nadequat e(Thomas
180
v.Thomas. )
ii
. Consi derati
onmustmovef rom t
hepromi see
Thisissi mplyanal ternati
vewayofst at
ingt hatonl ya
personwhohasf urnishedconsi der
ati
oninr eturnforapr omise
181
canbringanact i
ont oenf orcethepromise. I nthenor malrun
ofcont r
actcases,t hepl ainti
ffisthepromi see:hehasbeen
givenapromisebyt hedef endantandhei snowsui ngtoenf orce
thatpromise.Hewi l
lf ailinhi sacti
onifconsi derati
ondi dnot
mov ef r
om hi m accor ding tot he deci
sion oft he courti n
l93a
Gbadamosiv .Mbadi we.
i
ii.Consi derationmaybeexecut oryorexecutedbutnotpast
Considerationisexecut orywhenapr omiseismadei n
returnforacount er-
promise;e.g.Apr omisestodeli
vertenbags
ofr i
cetoBi nr eturnforB’
spr omi setopayacer t
ainprice.Thi
sa
bindingagr eementev ent houghper formancer emainsforthe
future.Execut oryconsiderati
ont her
eforetakesthef orm ofa

179
(1875) ,
L.R.lOExch.153
180
(1842)2QB851.Seeal soChappel&Co.Lt
dv.Newstl
eCo.
Ltd[1959]2AllE.R.701
181
SeeTweddl ev.Atkinson(1861)1B&S393: Dunl
op
Pneumatic:Tyr
eCo.Lt d.V.Sel
fr
idge&Co
193a
[1964]2Al l
N.C.R.19.

146
promi set oper form somet hi ngi nthef utur e.
Ex ecut edconsi derationi swher eapr omi sei smadei n
returnf ort heper f
or manceofanact ;e. g.Apr omi sest opay
N100t oanyper sonwhof indshi slostbag. B’sactoff i
ndi ngand
returni ngt hebagi sex ecut edconsi der ation.Her et houghB
makesnopr omi set of indt hebag, hei nf actgoest ol ookf ori t
andf indsi t.B’sactconst itutebot haccept anceofA’ Sof ferand
theconsi derationnecessar yt osuppor tanact ionbyB. Situat ion
ofexecut ed consi der ation i s commonl yf ound i n uni later al
cont ract sasseenear li
er.
Wher eonepar typer for msanactbef oret heot herpar ty ’
s
promi sei smadet heconsi der ati
oni ssai dt obe“ past”andi tis
treatedasnoconsi der ation.Forexampl e,Aof ferstodr iveB
from Yabat oIkoy iinhi s( A' s)car .Onar ri
v alatI koy iBpr omi ses
topayN10t oAt owar dst hecostoff uel ,B’ sPr omi sei snot
bindingbecauset hepr omi secameaf terAhaddr i
venBt oI koy i
.
Theconsi der ationf orwhi cht hepr omiseswasgi venwaspastI n
93
Roscor l
av.Thomas' ,Rboughtahor sef rom T.Af t
ert hesal e
wascompl etedTt ol dRt hatt hehor sewassoundandf r
eef rom
vice.Thehor sepr ov edt obev ici
ousandR suedT ont he
statement .Itwashel dthat :Ther ewasnoconsi der ati
onf orT’ s
statementandsohewasnotbound.Thesal ehadal r
eadyt aken
placewhent hest atementwasmade.
Ani nterest ingi ll
ustrat i
onoft herul eisf oundi nAkenz. uaI I
182183
ObaofBeni nv.Beni nDi visi onalCounci l .Int hatcase, the
plaintiffusedhi si nf l
uenceasanObat oper suadeat i
mber
companyt or eleasesomef or estar east hatwer eexcl usi vel y
undert he company ’s cont rolt ot he def endant s,the Beni n
Div i
sion Counsel( BDC) .TheObasuccessf ull
yobt ained t he
release. BDCt henr esol vedt ogi v epartoft hef or estareast ot he
Obaf orhi sex cl usiveex ploi tat i
on.Subsequent l
y,BDCchanged
i
tsmi ndont hemat ter .
Inanact i
onbyTheoba( Plainti
ff)f orbr eachofcont ract ,it
washel dt hathecoul dnotsucceedashi sser vi
cest ookpl ace
bef ore t he r esolut ion gr ant i
ng hi m excl usi ve use. The
consi der ationwas“ past ”.

182
(
1842)3QB234
183
[
1959]W.R.N.L.I

147
 Simil
arl
y,in A.G.Bendelstatev.Akwumanbua184 t
he
defendantwasrecrui
tedf
rom t
heU.S.
Aasanaccount
antbythe
BendelStateGover
nment(BDSG).Asaresul
toft
he

184
Beni
nHighCourt1980,report
edinSagayIO.E.Niger
ian
LawofConst
ract(London)Sweet&Max well1985p[.51

148
 appoi ntmenthi spassagewaspai dbyt heBDSG.Onar r
iv alhe
signedanunder t
akingt or efundt hepassagei fhel eftt he
serv i
cesofBDSGwi thinacet ainper i
od.Def endantr esigned
andt hepl ainti
ffsuedf ort her efund.I twashel dt hatast he
promi se t or efund t he passage ex penses came af t
ert he
cont ractofempl oyment ,itwasunenf orceable.
Ev ent houghapastacti sgener all
ypastconsi der ation,
cour ts,somet i
messhowsomer elaxationinthenot ionofpast
consi der ation,andwher et hepr omi seandt hepr ev iousact
subst ant iallyonet ransact i
on,t hepastacti ssav edf rom t his
rule.Butt hiscanhappenonl yi ft wocondi t
ionsar esat isfied:
fi
rstt hatt heactwasdoneatt her equestoft hepr omi sor ;and
secondl y, thatitwast heunder standi ngoft hepar ti
est hatt he
185
actwast obepai dfor .InLampl eignv .Brathwai t
Bcommi t
tedmur der .HeaskedL, t
opleadwi tht heki ngf or
par don.L,i ncurredt ravell
ing ex pensesi nt hepr ocess.He
event ual l
yobt ai
nedt hepar don.Bpr omisedhi m 100pounds,
butB br oke hi s pr omi se and L,sued B ar gued t hatt he
consi der ation was pastand t her eforet he agreementwas
unenf or ceabl e.Held:Thatsi nceL,hadunder takent het askat
B’sr equest ,Apr omi set opayf ort heser vi
ceswasi mpl i
edand
theagr eementcoul dbeenf orced.

Except i
ons
Apartfrom casesofthej udi
cialrelaxat
iont her earet woclear
stat
utoryexcepti
onstot hepastconsi derationr ul
e.Theyar e:
1.Adebtbar redbyst atutecoul dber ev i
vedbyawr it
ten
186
acknowledgementoft hedebtbyt hedebt or.
187
2.Sect ion27(1)oft heBi l
lofExchangeAct , pr
ov i
des
thatan“ ant
ecedentdebtorl iabil
i
ty”isv aluabl econsi derat
ion
forabill
.
iv
.Consi derati
onmustnotbei ll
egal:
considerati
ont hatiseithercont rar
yt ot her uleofl aw or
i
mmor altheey eofthelaw.Ther eforethecour tswillusually

185
(1915)Hob.105;SeealsoReCaseysPat
ents(1982)ICh.
104
186
Secti
on37-Limitat
ionActCap88LFN1990.Notavai
labl
e
inthe2004
198b
Cap138( Vol
.2)2004L.F.N

149
notal
l
owonacont
ractbasedoni
tsucceed.

v
.A pr
omi
se t
o per
for
m an exi
sti
ng obl
i
gat
ion i
s not
consider ati
on:
Can a per son pr ovi
de consi derati
on by per for
mi ng,or
promi singt oper for
m apr e-ex i
stinglegal duty?Forexampl e, i
f
Apr omi sesBt hathe( A)wi l
ldosomet hingwhi chhei sal r
eady
bound t o do,can i tbe-saidt hathi spr omisemakesany
cont r
ibut i
ont oabar gainwi thB?Thegener al
ruleisthatwher e
apar t
yper formsanactwhi chi smer elyadi schargeofa
pre-existingobl igat
ion,thereisnoconsi derat
ionf orapr omi se
madet ohi m.Suchapar t
yi sal readyboundt or endert he
obligationi nquest ionandsoheof fersnot hingnew f ort he
furtherpr omi se.Howev er,i
fapar t
ydoesmor ethanhewas
alr
eadyboundt odo,t heremaybeconsi derati
on.Ther ear e
threeci r
cumst ancesi n whi ch thepr oblem ofpr e-existi
ng
obligationmayar i
se;ineachcase, thet estquestioniswhet her
thepar tycl aimingt ohav egi venconsi der ati
ondi dmor et han
hewasboundt odo.Theci r
cumst ancesar e:

Dutyimposedbyl aw:Aper sonwhobyhi soff

ici
alstatusor
thr
ought heoper at
ionoflawi sunderapubl i
cdutytoactm a
parti
cul
arway ,isnotregardedasf urnishingconsider
ati
onby
188
merelydischargingthatpubl i
cdut y
. However,ifsuchan
off
icerisinducedbyt hepr omisetodomor ethanhispublic
duty,t
henhecanenf or
cet hepromise189

Dutyi mposedbycont ractwi ththepromi sor:Apersonwho

i
sunderacont ract
ualobl i
gat i
on cannotbesai dto hav e
fur
nished any considerati
on by mer el
y dischargi
ng t hat
contract
ualduty.Thisi sthecasewher ef orexampl e,A is
seekingtoenf
orceapr omisemadet ohimbyB, andisreply
ing,
as
consi
derat
ion,onhi spromi setodosomet hi
ngwhi chalready
boundbyacont ractwi t
hBt odo.A’ spr omiseisnotv al
id
consi
derat
ion.Bytheear l
iercontr
acthe( A)wasalreadybound

188
Colli
nsv.Godefr
oy(1831)IB&Ad950
189
Glassbr
ookBros.Lt
dv .Gl
amorganCountyCounci
l(1925)A.
C.270seealsoWardv .By
ham f1959]I
W.L.R496

150
tor endert heper for mance.Het heref
oredoesnotcont ri
bute
any thingnewt ot henewbar gainwi thB.
InSl il
kv.Myr ick190Saseamanagr eedt osai lashiptoa
certaindest inationf or5poundsamont h.Dur i
ngt hev oyage
twoseamandeser ted. Unablet of i
ndreplacement sthecapt ai
n
promi sedt oshar et hewagesoft hetwodeser tersbetweent he
rest,ift heywoul dwor kt heshi pback.Thecr ew agreedt he
capt ainrefusedt opay .Ssuedf orhisshare.Itwashel dthatthe
crew hadgi vennoconsi derationf orthecapt ain’spromi se,
sincet heywer eal readyboundt owor kt heshi punderan
existingcont ract.Thedeci sioni nthiscasemaybecont rasted
191
witht hatfHar t
leyv .Ponsoby . '

Dutyi mposedbycont ractwi tht hir

dpar t
y
Thisiswher et hepl aint
iffper formsorpr omi sestoper f
orm an
obli
gat i
onal readyi mposeduponhi m byacont ractmadenot
betweenhi m andt hedef endantbutbet weenhi m andat hird
party.Forinst ance, AandBhav emadeacont ractunderwhi ch
anobl igati
onr emai nstobeper formedbyA.Cnow makesa
promi setoAi fhe( A)woul dper form hisoutstandingobli
gation
to B.The wei ghtofj udicialopi ni
on ist ot he eff
ectthat
performanceoft hecont r
act ualdut ybyAmaybesuf fi
cient
considerationf ort hepromi semadebyCt oA. Theargumenti s
thattheper for manceoft hedut ymusti nfactbeofbenef i
ttoC.
Theseex actlywer et hefact sofaNewZeal andcasecal l
edt he
192
Eurymedon.

190
(1809)2Camp317
191
(1857)7EL&BL872.
192
Known fuly as New Zeal
l and Shipping & Co.v.A.
M
Satter
vai
t&Co.(TheEurymedon)[1974]1AUER1015See
alsotheear
lerScot
i sonvPegg(1861)611&N295.3L.T.
753.

151
Wai v erofACont r
act ual Ri ght
Ther ulet hatper formanceofadut yal readyowedt oapr omi sor
i
snotsuf f i
cientconsi derat i
onappl i
est owai verofcont ractual
ri
ght saswel l.Thuswher eacont ractingpar tywai veshi sr ight s
underacont ract ,whol l
yori npar t,thewai veri snotbi ndi ng
unless consi der at i
on i s gi v
en f ori t.Thi s par ti s bet t er
under stoodwhendi scussedi nr elationt oobl i
gationscr eat ed
bydebt st hati spar tpay mentofadebt . Thequest ioni swhet her
thepay mentofal essersum canbesat i
sfactionofanex i
sting
obligationt opayagr eat er?Letust akeahy pot heticalcase:A
owes B N100.B t el l
sA t hathe wi l
lacceptN75 i nf ull
satisfaction.Adul ypay s.CanBgobackont hepr omi seand
demandt hebal anceoft hedebt ?Ear lier,wehadt r
iedt oshow
thatAcoul dnotsucceedasapl ainti
ffi f,hisper f
or mancewas
onlywhathewasunderadut yt odo.Butnowourconcer ni s
howAwi l
l f
ar easadef endanti fhei ssuedbyBf ort hebal ance
ofadebt .
Followi ngt hest rictlegalpr i
ncipl e,ift her eisal r
eadyan
existingobl igat iont opayacer t
ainsum ofmoneyandt he
partiest henagr eet hatal esseramountshoul dbepai d,ther ei s
noconsi derat ionf ort henew agr eement .Ift herei snonew
consi derat i
on,t her ei snot hing inl aw t o st op t hecr edit or
subsequent lysui ngf ort hebal ance,despi tet heagr eementt o
forgoi t.Comi ngbackt oourhy pot hetical case, i
tmeanst hatA
hasnotgi venconsi der ationf orB’ spr omi seandsoBi snot
boundbyhi spr omi se.Ahasonl ydoneorpr omi set odopar tof
whathewasal readycont ractual l
yboundt odo.Thus“ pay ment
ofal essersum ont hedayi nsat i
sf act i
onofagr eatersum
cannotbeanysat i
sf act i
onf ort hewhol e”Thi si swhati sof ten
referred t o as t he r ulei n Pi nnel’s193 case.The r ule was
194
appr ovedbyt heEngl ishHouseofLor dsi nFoakesv .Beer .
Ther ear ehowev ersomequal ifi
cationst ot hisr ule,someof
whi chappear edi nt hePi nnel ’
scasei tself.Thesear e:
a)pay mentoft hel essersum atanear lierdat et hant he
duedat eatt hecr edi tor ’
sr equesti sv alidconsi derat i
on.
b)Pay mentoft hel esseramountatadi fferentpl aceatt he

(
1602)5CoRep.117a
204
(
1884)9App.Cas605

152
cr
edi
tor
’sr
equestisvali
dconsi deration.
c) Paymentoft hel essersum accompani ed,(attheofthe
credit
or)bythetransfert ot hecreditorofsomechat tel
:e.
g.A
owesBN100andBagr eest oacceptN50pl usanex er
cise
book.Thisi ssuffici
entsi ncet het hinggivenmaybeWor th
mor ethanthebalanceoft hedebt .
d) Paymentofal essersum byat hi
rdpart
y:ifpaymentis
acceptedbythecr edit
ori nfullset
tlement ,
thepaymentisgood
defencetoal at
eract i
onbyt hecreditoragai
nstthedebtorfor
thebalance.

Composi ti
onwi thCr editors:Thisqual ifi
cationtotheruleis
Pinnel’
scasear i
seswher eadebt orentersi ntoacomposi t
ion
agreementwi t
hsev eralcredit
orsbywhi cheachcr edit
oragr ees
withtheot hersandwi ththedebt ort oacceptpar tpay menti n
ful
lset t
lement .A cr edit
orwhoaccept ssuchpar tpay ment
cannotl at
ersuet hedebt orforthebal anceoft hedebt .The
simpleex planati
onf orthisist hatacr editorwhosuesf ort he
balance is breaking hi s contractwi tht he ot
hercr editors
parti
cipati
ngi nthecomposi ti
onagr eement .Thecour twillnot
assisthimi nsuchanat tempt.

Promi ssor y Est oppel :The r ulei n Pi nnel’s case can be

cir
cumv entedbyt hedoct rineofpr omi ssor yest oppel.Thati s
wher eapar tyei therbywor dsorconductmakesacl earand
unequi vocal promi seorr epr esent ationwhi chisi ntendedt obe
acteduponbyt heper sont owhomi tismade, andi tisinf actso
acted upon t hen t he per son maki ng t he pr omi se or
represent ationwi llnotbeal lowedt ogobackoni t.Appl iedt o
cont ract,thissi mpl ymeanst hat“ wher eapar t
yhaswai v edor
promi sedt owai vehi scont ract ualr ightsagai nstanot herand
thatot herpar t
y’haschangedhi sposi tioni nr eli
anceont he
waiv erorpr omi se, i
twoul dbeunj ustt oallowanact i
onagai nst
him ont heor iginal contractt osucceed. ”Equityi sfair
nessand
soi tdoesnotl ookwi thfavouratamanwhopr omi sesr elieft o
anot herandt hengoesbackont hepr omi se.
195
InCent ralLondonPr oper tyTr ustLt dv.Hi ghTr eesLt d.
Ci nSept ember1939l etabl ockoff latst oH.Duet owar

195
[
1947]1K.B.130

153
condi tionsonl yaf ewoft hef latswer elet.Cagr eedt or educe
ther entt ohal ft heamountpay abl e.In1945al lthef l
atswer e
l
etagai nandCdemandedf ort hef ullrent .Denni ngJ.( ashe
thenwas)hel dt hatHwasl iablefrom 1945t opayt hef ullrent;
butt hati fChadcl aimedf orthebackr entt heywoul dhav e
fai
led.Becauset hedoct ri
neofpr omi ssor yest oppel swoul d
estopt hem f rom goi ngbackont heirpromi se.
Anot heri l
lust rat ionispr ovided byt hedeci sion oft he
Lagosi nOf fiongv.Af ri
canDevel opmentCor porat ion196[1964]
2Al lN. L.R75.Owasempl oyedbyA&Co.Lt d.asasecr etary.
Onappoi ntmenthewasgi venacarwhi chhewast opayabout
N1. 292byi nst allment s.Her esignedhi sempl oy mentaf ew
year sl aterandt hecompanyagr eedt owai v ethebal anceof
the i nstallment s.Subsequent ly,t he company br oughtan
actionf ort hebal ance.Theyar gued t hatO had gi venno
consi der ationf ort hewai v
eroft hebal ance. Buti twashel dthat
thecompanywoul df ail
.Theymustbeest oppedf r
om goi ng
backont hei rpr omi se.
Ther ulepr otect sadebt oragai nstacr edi t
orwhobl owshot
orcol dint hemat t erTi kaTor ePr essv .Abi na197 Tdel ivered
goodst oAoncr edi t .Paymentwast obemadeaf t
ersal e.A
coul dnotset tlehi sdebtbecauseofsomedi ffi
cul t
iesi nsel li
ng
thegoods.Taccept edal essersum i nf ullsettlementoft he
total-sum Tl aterbr oughtanact ionf ort hebal anceont he
groundt hatAf ur nishednoconsi der ati
onf ort hepr omi set o
writeof ft hebal ance.I twashel dt hatTwasboundbyt he
promi set owr iteof ft hebal ance.

SomeLi mitati
onstot hedoct r
ineofpr omissoryestoppel:
Thedecisi
onint heHighTreesCasegav eaf i
rm nottothe
pri
ncipl
eofpromissoryestoppelsbutsubsequentcaseshav e
i
ntroducedthefol
l
owi ngli
mitati
onst oit
sappli
cati
on:
Thedoctri
nemaybeusedas“ shiel
dnotasaswor d;
”meaning
that,
iti
sonlyavai
lableasadef encet oanyacti
on, i
tcannoti
n

196
[
1962]2AllN.L.
R.75
197
11974]U.I
.L.R.145

154
 198
i
tsel
fbeagr oundf orbringingandact ion.
b)Thedoct ri
neonl yappl i
eswher ei twoul dbei nforthe
creditortogobackonhi spr omi se;f orexampl e,wher ethe
debtori ntimidateorusesunduepr essuret oext ortfrom the
199
creditorapr omiset oacceptpar tpay menti nf ullsett
lement .
c) Wher ethelegalr i
ghtswai ved, variedorsuspendedar e
ofcont inuousnat ur e,t
hecr editormayl at eri nsistonhi sfull
200
ri
ghtsagai nbygivingar easonabl enot i
ce
d)Thedoct ri
newi llapplyonl yi fthedebt oract edont he
promi se.Itisnotessentialthatheshoul dhav eact edoni tt
ohi s
detri
ment .I nfactiti senoughi fr eli
edont hepr omisei nany
201
way .

THEI ON TOCREATEL
NTENTI EGALRELATI
ONS

Sof arwehav eest abl

ishedt wor equirement sf orabi ndi
ng
contractnamel y,agreement( thatis,offerandaccept ance)and
consi derati
on.Howev erthel awwi l
lnotnecessar i
lyr ecogni ze
the ex istence ofa cont r
actmer ely because t her ei sa
concl udedagr eementsuppor tedbyconsent .
Thel awdemands,
i
naddi ti
on, t
hatt her
emustbet heintentiont ocont ract. I
not her
words, itisnecessar ytohav eev i
denceofani ntentiont oent er
i
ntol egalr elati
onssot hatift heagr eementwer ebr okent he
otherpar t
ywoul dbeabl etosuef orr emedi es.I ndet er mini
ng
whet herornotsuchani nt
ent ionex i
sts,thecour tshav eof ten
conv enientlyclassif
iedagreement sintot wocat egor iesnamel y
socialor domest i
c agr eement s on t he one hand and
commer ci
alagr eementsont heot her.Howev er,inei t
hercase
thei ntentioni st obeobj ect ivel
yascer tai
ned.I fr easonabl e
persons woul d assume t hat f r
om t he wor dings or t he
cir
cumst ances,apr omisegi vesr iset ol egalobl igations,t he
promi sorwoul dbeboundbyi twhet herornotheant icipated
suchar esult.

198
Combvcomb[ 1951]AllE.R.767
199
D&CBui l
dersLtdv.Rees[1965]3AllE.R.837;
(1966)2Q.
B.617
200
Ajayiv.
R.T.Bri
scoe(Nig)Ltd.
[1964]
Q.B.467,2AllE.
R. 753
201
Brikom i
nvestmentLtdv .Carr[
1979]Q.B.467;2Al lE.R.
753

155
SocialorDomesti
cAgr eement s
Agreementsofapurel
ydomest i
cnaturei
snotint
endedtobe
bi
nding.Withi
nthi
scategor y,agreement
sbetweenhusband
andwi f
earethemostl ikel
yt obedev oi
dofanycontract
ual
i
ntenti
on.

156
Forex ampl e,ahusbandwhopr omi sest obuyhi swi f eacarf or
herbi r
thdaybutf ailst odosocannotbecompel l
edbyl aw.It
coul d nev erhav e been i ntended t hathi s non- perfor mance
202
shoul dbet hesubj ectofsanct ionsi nanycour t
. Butev enin
arrangement soft hiski ndofci rcumst ancesmaybesuchast o
l
eadacour ttohol dt hatlegalr elationsar ei ntended;i ffor
i
nst ance, thehusbandandwi fear elivingapar t
,theycanmakea
203
bindingsepar ati
onagr eement . Thepr i
nciplei nt heBal f
our
casehasbeenappl i
edt oar r
angementbet weenpar entand
204205
child. Similarl
y,soci alar r
angement sbet weenf riendsdo
notusual l
yamountt ocont ractsbecausepar tiesnev eri ntend
theiragr eement st obebi nding.Forex ampl e,i fy oui nv it
ea
fri
endf oramealaty ourhouseandt her eisnomeali tisnot
expect edt hathewoul dseekj udi cial r
emedi esagai nsty ou.But ,
i
fi tcanbeshownt hatt het r
ansact ionhadacommer cialflavor,
thecour tmaybepr epar edt of i
ndt henecessar yi ntent ion.Thus
n Si
i mpki ns vPay s2'5
thedef endantl ivedt oget herwi tht he
plaintiffandhergr anddaught er.Eachweekal lthr eet ookpar t
j
oint l
yi nacompet i
tion. Theent ri
eswer emadeandpost edi nthe
def endant ’sname.Oneent rywonapr izeandt hedef endant
refusedt oshar ewi tht hepl ai
ntif f
.I twashel dt hatt hepar ti
es
hadembar kedonaj ointent erprise, ex pect i
ngt oshar eanypr i
ze
money .Ther ewasani ntentiont oent erint oal egalr elationship
andt hepl ainti
ffwasent i
tl
edt oone- thirdoft hewi nnings.

Commer cial Agreement s

Incommer ci
alagr eement s,ther eisapr esumpt i
ont hatt he
partiesdoi ntendt omakeal egallyenforceablecont r
act.Itis
therefor
e notnecessar yint heor di
naryr un ofcommer cial
transact
ions,f orthepl aint
if
ft ogi v
eaf f
irmativeevidencet hat
such an i ntenti
on.I ti s possi bl
e,howev er
,t or emov et he
presumpt i
on ofi ntention by t he incl
usion ofan ex press
statementt othatef fectint heagr eement .Forexampl e,the
partymayex pressl
ydecl arethatanagr eementev ent houghi tis
onamat terofbusi nessi snott obebinding.Suchadecl arati
on
wi l
lbeaccept edbyt hecour t
s. Thecommonpr act
iceistoi nsert

202
Balfi
rurv
.Balfour[1919]2K.B.571
203
Mer i
tv.Merr
it[1970]2AllE.R.760
204
Jonesv.POanadvat i
on[1969]2AllE.R.616
205
[1965]3All
E.R.10

157
honourcl ausei ntot hecont ractualdocument .Honourcl auses
areexpr essdecl arati
ont hattheagr eementshoul dnothav ethe
206
forcesofal egal l
ybindingcont r
acts.
Thisdev icei sfrequent l
yusedi nf oot ballpoolcouponsi n
whi cht heagr eementi ssai dtobebi ndi ngi nhonouronl y.Ithas
consi stently been hel d by t he cour tst hathonourcl auses
oper atet o excl udeanycont ractuall iabi li
tyand di ssatisf
ied
staker scannotsueonacouponcont ainingsuchwor ds.In
At nadiv.PoolHouse Gr oup (Ni g)Lt d207 f orexampl e,A
demanded pay mentfdef endantal legi ng t hathi s coupon
qual ifiedf orapr i
ze.Def endant sdeni edr eceiptoft hecoupon
andi nt heirdef encepoi ntedt oacl ausei nt hedupl i
catewhi ch
stat ed t hat.
.. al l such ar rangement s, agr eements and
transact ionsar ebi ndingi nhonouronl y.I twashel dthatt he
agr eementwasnotenf orceableagai nstt hedef endant.

CollectiveAgr eement s
Agreement sbetweencor por ati
onsandt r
adeuni onshav eal so
rai
sedt hequest ionofi ntent i
ont ocr eatelegalr elati
ons.I ti
sa
commonf eatureofindust rialli
fef ortradeuni onst oenterinto
agreement swi thempl oyersaboutr atesofpay ,condi t
ionsof
empl oymentet c.forthegener ali
tyoft heirmember s.Wher ethe
agreementspeci fi
est het ermsofeachempl oy ee’scont r
act
thoset ermsar e,nodoubt ,bi ndingont hepar ties,namel y,the
empl oyerand t heempl oyees.Butt hatleav est hequest ion
whet herthecol l
ecti
vebar gainitselfisanenf orceabl econt r
act
betweent het r
adeuni onandt heempl oyer.Atcommonl aw
therewasapr esumpt i
ont hatcol lecti
vebar gainswer enot
i
ntendedt obel egallybinding.
This believe was gi ven judicialbacking i n Ford Mot or
Company v . Amal gamat ed Uni on of Engi neer i
ng and
208
Foundr y” wher e an Engl i
sh Cour theldt hata col lect
ive
agreementwasnoti ntendedt obel egall
yenf orceable,and
accor di
nglythecour twoul dnotgr antr el
ieff orbr eachsuch
agreement .
Thiscommonl awposi ti
onhashowev erbeenmodi f
iedby

206
RoseandFr ankvCrompton[
1932]2k.
b261.Rev er
sed
(1925)AC445
207
(1996)2A.L.R.Comm.SeealsoAtuv.Face-
to-
facePool
s
208
Ltd.(1974)4U.L.
L.R.131
[1969]2AllER481.

158
statute.The Wages Boar d and I nsti
tuti
on Counci lActf or
exampl e makes pr ovisi
on f or giving bi nding ef fect t o
recommendat ionsoft heWagesBoar ds.Itspecif i
cal
lypr ovides
i
n ef f
ectt hatr ecommendat ions on wages and any ot her
condi t
ionsofempl oymentshal lbesentt ot hemi ni
sterofl abour
andt hemi nstershal lbyorderfixthewagesandcondi t
ions.
Theeffectoff ixi
ngsuchanor deristhatt heagreedwages
andcondi ti
onsshal lbecomebi ndingont hepar t
iesasf rom t he
datespeci f
iedi ntheor der.
Simil
arl
y,sect i
on2( 3)ofthet radedi sputenotempower s
themi nist
erofl abourt omakeandor dergiv i
ngal egall
ybi nding
effectt oacol l
ectiveagr eement.Themaki ngofanor deri s
howev ernotmandat or yandt her
ef orewhennosuchor deris
madeacol lecti
v eagreementcannotbebi nding.

VI
TIATI
NGELEMENTSI
NACONTRACTGener
al

Introduct i
on
A cont ract
,whi ch has t he essential feat
ures of of fer
,
accept ance.Consi deration,et
cmayst i
llbedeniedl egaleffect
due t ot he presence ofa v i
ti
ating element.Such v it
iating
element sasar er ecogni zedbylawandequi t yi
ncludemi stake,
mi srepresent
ation, duress,undueinfl
uenceandi l
legali
ty.

Mi st ake
Int he cont extofcont ractlaw,t he wor d,‘ mistake'has a
restr i
ctedmeani ng.Of ten,acont ractwoul dhav ebeensi gned
bef ore one ofpar ties r eal
ises thathe had an i ncorr
ect
i
mpr essi onofcer tain.Thatdoesnotbyi t
self,enablehi mt o
avoi dhi sobl i
gati
onsundercont ract.Accordingt oBaggal ayL.J.
Int hecaseofTampl inv .Jameswher et herehasbeenno
mi srepresent ati
onandwher etherei snom t het ermsoft he
cont ract,t he def endant cannot be al lowed t o ev ade
per formanceofi tbyt hesi mplest atementt hathasmadea
mi stake.Wer esucht obet helawt heper f
ormanceofa
cont ractcouldsel dom beenf orceduponanunwi ll
ingwas
also
209
unscr upulous.

209
Tampl
inv
.Hames(
1880)15Ch.D.215at
217-218

159
 I
ti st herefore notal lthatwe descr i
be as mi st
ake i n
parl
ancet hatar erelevantinl aw.Ourpur posei nthissect ion
ascert
aint hoseev entst hatamountt ooper ativemistakeandt o
deter
mi net heirt r
uelegal effects.
Wemustal sonot efrom theonsett hatthemi st
akeswear e
concernedwi thher ear emi stakesoffact,notofl aw.Asar ule,
i
gnoranceoft hel aw isnotanaccept abler easonf orev ading
contr
act ual obli
gat i
ons. Furt
hermor e,
tohav eanyef fectatall,an
al
legedmi stakemusthav eoccurredatt het i
meofcont racting
210
notaft
er war ds.

Cat egor iesofmi st ake

Basedonf act ual situat i
ons, mi st
akecoul dbecat egor i
zedinto
three:
(a)Common mi stake:t his occurs wher e bot h parti
es
maket hesamemi st ake. Thepr oposal oft heof fereriscl earand
accept ablet ot heof fereewhohasi ndeedaccept ed. Buteachof
them hasmadeaf undament al mistakeoff act;e.g.,Unknownt o
bot hbuy erandsel ler ,t
hegoodst heyintendedt ot radewer e,
at
thet imeoft hecont ract,nol ongeri nex i
stence.
(b)Mut ualmi stake:her e,t he par ti
es ar er eal l
ynoti n
agr eementev en t hough t hey t hink t hey ar e.The of f
eree
mi sunder standst heof fererandv icever sa.Theyr eachwhat
theybot hbel iev et obeaconsensus,buti nr eal i
tyt heyar eat
cross- pur poses;e. g.,Aof fershi sPeugeot504f orsal eandb
accept sthinki ngt hatt hesubj ectmat t
eri saPeugeot505.
(c)Uni l
ater almi stake:assuggest edbyt het i
tle,onlyone
par tyismi staken.Theot herpar t
yknowsori sdeemedt oknow
oft hemi stake; e.g., Acomesi nt oaj ewelleryshopandasksf or’
diamondr i
ng.B,t heshopkeeperpr esent st oA,af aker ingand
event uallyget si tsol dt ohim.

210
SeeAmal
gamat
edInvest
ment&Proper
ti
esCoy.Lt
d.V.
JohnWal
ker&SonsLtd[
1976]3Al
lE.R.509

160
 Event houghanagr eement ,intheset hreeev ents,woul dnot
hav ebeenent eredi ntohadt het r
uef actbeenknown, oper ative
mist akehasonl ytwopossi bl elegal ef f
ect s,nott hree.Asst at ed
byLor d Atkini n Bel lv.Leverbr os.Li mi ted211 “ifmi stake
oper atesatal l
, i
toper atessoast onegat iveori nsomecasest o
nulli
fyconsent .
I
nt hecaseofcommonmi stake, thepar tiesar eundoubt edl y
i
nagr eementast her ei sconsensusadi tem.Howev er ,t he
consenti snul li
fi
edwheni ti sdi scov eredt hat,owi ngt ot he
commong mi stake,ot he agr eementcannotbe car ri
ed i nto
effectatal l.Ont heot herhand,wher eacaseofmut ualor
unilateralmi st akeismadeout ,consenti snegat ive.Int hel ight
ofemer gi
ngf acts,thepar t
iesdi sdov ert hatt heynev err eached
anagr eementatal l.
Howev er,inspi t
eoft hi
sl inkbet weenmut ualanduni lat er al
mist ake,t he cour tst reatt hem di ffer ent l
y .Wher e unilat er al
mist akei spl eaded,t hecour tst akeasubj ect iveappr oach.I tis
forthei nnocentpar t
yt oshowt heef fectoft hemi stakeuponhi s
mindwi thav iew toav oidingt heobl igat ionshehast akenon
undert hecont ract.Buti ncasesofmut ualmi stake,thecour ts
rever tt ot hei rusualobj ect i
v e appr oach.The ev idence i s
anal yzedf r
omt hepointofv iewofar easonabl et hir
dpar tyanda
concl usion i s dr awn as t o whet herany ,and i fso what ,
agreementt hepar t
iesar edeemedt ohav er eached.

Thelegal eff
ectofcommonmi st
ake
Wheret hepar ti
esreachanagr eementonl ytofindi trobbedof
all
content sandef f
ectsbecauseofacommonmi stake, bot hthe
commonl awandequi tyt r
eatthatagr eementasanul lit
y .This
maybei l
lustr
atedbyt he resext inctcases.I n cout ur ierv.
212
Hastle, acargoofcor nwasshi ppedf rom aMedi terranean
porttoEngl and.Atat i
mewhent hecar goownerbel iev edt he
corntobei ntr
ansit,t
hecar gowassol dbyhi minLondont othe
buyer.Itlateremer gedthatt hedet er
iorati
onoft hecar gohad
causedt hemast eroft heshipt odisposeoft hecar goi nNor th
Afri
cabef ore
theLondoncont ractwasent er
edi nto.Thesel lercont endt he
buyershoul dpayt heagr eedcont r
actpr iceont hegr oundt hat
thebuyerhadpur chasedt hecargoandal linherentDi sallowi ng

[
1932]A.C.161at217
(
1856)5H.L.Cas.673
222

161
thesel ler'
scl aim,t hecour thel dt hatt hecont ractwasf ora
speci f
iccar goandwasv oidbecauset hepur por t
edsel lerno
longerhadanycor nt osel latthet imewhent hecont ractwas
213
made. In equi ty,t his appr oach has been ext ended t o
cont ract swhi chaper sonpur chasesort akesal easeofpr oper ty
whennei t
herhenort hesel lerknew t hatt hepr oper tyal ready
belongedt ot hepur chaser .Thesear er ef erredt oascasesofr es
214
sua.Forexampl e,incooperv .Phi bbs, cooperagr eedt ol ease
asal monf isher yf rom phi bbs,bot hbel ievingt hef isher yt o
belong t o phi bbs.I nf actcooperwas al ready ent itl
ed t o
enjoy mentoft hef isher yasal i
fet enant .Bei ngt heef f
ect iv e
owner ,hehadnoneedt ot aket hel easeandphi bbshadno
powert ogr anti t.Thecour tthereforer uledt hatt hecont ractbe
215
setasi de.Asst atedbykni ghtbr cueI .J.I nCochr anev .Wi llis,
216
“itwoul dbecont rar yt oal lt
her ul esofequi t
yandcommon
law t o giveef fectt o suchan agr eement .”Si milar l
y ,int he
226
Niger an case ofAbr
i aham v.Chi efOl uwa, the pl ai ntiff
mi stakenl ypur chasedapi eceofl andwhi chal readybel ongedt o
him.Thecour tsetasi det heagr eementandor deredt hatt he
pur chasemoneyber ef unded.
Ifhowev ert hef actofr essuadoesnotaf fectsomepar tof
thepr oper t
ysol dorl et ,i
tmaybepossi bl etogi veef f
ectt ot he
cont ractasi taf fect st hatpar t.
Inbot hcasesofr esext i
nct aandr essua, itiscl eart hatt he
affect edcont ract sar edecl arednul landv oidbecauset heyar e
totallydev oidoft hesubj ectmat terwhi chwast houghtatf irstt o
exist .Butshoul dadi stinctionbedr awnbet weencasesi nwhi ch
thegoodst obesol dper i
shedbef oret hecont ractofsal ean
thosei nwhi cht heywer enev erinex ist enceatal l?I nt hel at er
case;i ft hef act ssuggestt hatt hesel l
eri mpl i
ci t
lywar rant st he
exist enceoft hesubj ectmat ter,hemaybel iablei ndamagest o
thebuy erf ort hebr eachofwar rant yandt hecont ractwoul d
ther eforenotbet r
eat edasanul li
tyabi niti
o.

213
Seeal soStr
ickl
andv .Turner(185207Exch.208;Scottv.
Coulson11903]2Ch.249;Pr i
nchar
dv .Merchants’and
Tradesman’sMut ualLif
eAssuranceSoci
ety(1858)3CBNS
622; Gal
lowayv.Galloway(1914)30T.L.R.531
214
(1867)L.R.2.H.1.149
215
(1865)1Ch.App.Atp.63
216( 1944)17N.L.R123.

162
 217
nMcr
I aev.Commonweal thdi sposal scommi ssion, the
commi ssioninvitedt enders“ f
ort hepur chaseofanoi lt anker
l
y i
ngonj ourmaundr eef .
’Thepl aintif
f’
st enderof£285was
accept ed.Thepl aintiffspentmoneyi nf i
tti
ngoutasal vage
expedi tionbuti tt urnedoutt hatt herewasnot ankeratt he
l
ocat ion.Thehi ghcour tofAust raliaheldt hatt hecommi ssi on
wasi nbr eachofcont ractsi ncet heyhadpr omi sedt hatt her e
wasanoi l t
ankeratt hel ocationgi v en.
Clearly,thedeci si
on oft heAust r
ali
an cour tmeet st he
demandofj usti
cei nt hatcase.I ti sdoubt f
ulhowev ert hatan
Engl i
shcour twoul duphol dthecont ractsincei tisf oundt obe
dev oid ofasubj ectmat t
er.To r each thesamer esul t,t he
conceptofcol l
ater alcont ractcoul dhowev erbeempl oy ed.The
def endant s,by i nv it
ing t ender sf ori ts purchase,i mpl i
edl y
promi sed t hatt heshi pwasi nexi stence.Hence,whent he
plainti
ffof f
eredt obuyt heshi p,hedi dsoi nr eli
anceont hat
promi se. Thatist osayt hatapar tfromt hecont ractofsal e, t
her e
wasanot hercont ractwher ebyi nconsi derati
onf orent eringi nto
thesal eagr eement ,thesel lerwar rantedt heav ail
abi lit
yoft he
ship.Ev enifthecont ractofsal ef ailsont hegr oundofcommon
218
mi stake, t
hecol lateral contractcoul dbesuedupon.

Wher et hemi stakerelatest ot hechar acteroft hesubj ect -

mat ter
Itremai nsuncl earwhether ,apartf rom thecaseofr esext inct
andr essua,i tispossiblet odi scov eranotherbasisf orsay ing
thatacont racti snul
landv oidasar esul
tofcommonmi stake.
Fori nstance, ther ear
esuggest ionst otheeffectthatwhenev er
thepar tiesar ebot hmi stakenaboutsomef undament alfact s,
219
theirmi stakewi l
lbefataltot heex i
stenceoft hecont r
act. I
n
Bellv .
220
Leverbr os. t heparti
est houghtt heywer ebargaini
ngabouta
service cont ract whi ch coul d onl y be t erminated wi th
compensat i on.Based on t his mi staken assumpt i
on,t hey
reachedanagr eementwher ebyt hepl ai
nti
ff
swoul dtermi nate
the def endant ’s empl oyment as managi ng di r
ector of a

217
(1951)84CLR377
218
StrongmanLtd.V.Sincock[1995]Q.B.525
219
Seef orexampleLordWri nNor
ghti wichUni
onFir
e
InsuranceSociet
yLtd.V.Price[
1934]A.C.455at463
220
[1932]A.C.161

163
companyandi nr et urnpayt ohi m compensat ionof30, 000
pounds. Howev er , thet ruef actswer et hatt hecont r
actmi ghtbe
ter
mi nat ed wi thout compensat i
on. Wi th t he under l
y ing
assumpt iont urni ngoutt obeunt rue, thequest ionwaswhet her
thecompensat ionagr eementt her ebybecamev oi dforcommon
mistake.
Someoft hel aw l ordscl earlysuggest edt hatacont ract
wasv oidi ft hepar ti
espr oceededonaf alseandf undament al
assumpt ion, irrespect i
v eoft hechar act erofthef actassumedt o
221
betrue. Accor di ngt olordatki n,“mi stakeast oqual it
yoft he
thi
ngcont ract edf orr aisesmor edi fficultquest i
ons.I nsucha
case, ami stakewi llnotaf fectassentunl essi ti
st hemi stakeof
bothpar ties,andi sast ot heex i
stenceofsomequal itywhi ch
makest het hingwi t
houtt hequal ityessent iall
ydi fferentf rom
222
thethi ngasi twasbel ievedt obe. ’
’ Howev er,somepar tsof
thespeechesoft hel awl ordsal sosuggestt hatt heonl ycaseof
operat i
v emi stakei st hatinwhi chthesubj ectmat t
erpr ovest o
223 224
be non ex i
st ent . Accor ding t o Cheshi r
e & Fi foot, t he
decisioni nbel lv .Lev erBr osl td.Isnoaut hor i
tyf oranycener al
doctrine ofcommon mi st ake,and t he second oft he t wo
possibl eint erpr et ationsi st obepr ef er r
ed.Af t
eral l
,thehouse
fi
nally deci ded on a maj ority of t hree t ot wo t hat t he
cir
cumst ancesofbel lv.Leverbr os di sclosedno oper at ive
225
mistake.

221
LordWar r
ingt onatp.206, LordThanker tonat215andLor d
Atkinat218
222
Seeal soSt rickl
andv.Tur ner(1852)7Exch.208: Scot tv.
Coul son[ 1903]2Ch.249.
223
ThesameLor d Atkinev ent
uall
yputt het estsi mpl yas
follows: “
doest hest at
eoft henewf act
sdest roythei dent
it
y
oft hesubj ectmat erasitwasi nt heor i
ginalstateoft he
fact s.”[1932]A. Cat235.
224
Op.Ci t.P.225
225
See al so Sol lev .Butcher[ 1950]1 K.B 671] ;Leafv .
Internat i
onalGal leri
es[1950]2K.B.86;Har rison&Jones
Ltd.V.Bunt ers&Lancast erLtd.[1953]1Q. B646; Frederi
ck
Rose( London)l t
d.V. Wil
li
am hrimj nr&co. Ltd. [
19853]2Q.
B.450

164
 Itappear st her eforet hatcommonmi stakewoul dmakea
cont ractv oidonl yi fitt ur nsoutt hatt her ewasnot hi ngt o
mi stakei suphel d,acour tex er cisingi tsequi tablej urisdi cti
on,
mayi mposet ermsupont hepar tieswhenset ti
ngasi det he
cont ract .Forexampl eincooperv .Phi bbs, thehouseofl or dsset
asidet hel easeagr eementont het ermst hatt hedef endant
shoul dhav eal ienont hef isher yf orsuchmoneyashehad
expendedoni tsi mpr ov ement .
Ift hemi st akeonl yr elat est ot hequal ityoft hesubj ect
mat ter,i tdoes notnul lifyt he cont r
act ,no mat terhow
fundament allydi ff
er enti ti sf rom whatt hepar ti
esbel i
eved.
226
Accor dingt oLor dAt kini nbel lv.Leverbr os.
“Itisofpar amounti mpor t ancet hatcont ractsshoul d
beobser ved,andt hati fpar ti
eshonest l
ycompl ywi th
theessent ial soft hef ormat ionofcont racts,thati s,
Agr eei nt hesamet er msont hesamesubj ect-mat ter ,
theyar ebound, andmustr el yont hest ipulationsoft he
cont ractf orpr otect ion f rom t he ef fectof f act s
unknownt ot hem. ”
Thecommonl awwoul dt reatsuchagr eementasbi ndi ngon
thepar t
iesbuti nappr opr iat eci r cumst ancesequi tymaydenyi t
s
enf or cement .Asst atedbyKay ,L.J.I nHudder sfi
eldbanki ng
227
companyl t d.V.Henr yLi st er&sonl td.
“Itseemst omet hatbot honpr i
ncipl eandonaut hority,
whenoncet hecour tf indst hatanagr eementhasbeen
come t o bet ween par ties who wer e undera common
mi stakeofamat erialf act ,thecour tmayseti tasi de,and
thecour thasampl ej ur isdi ctiont o setasi det heor der
foundedupont hatagr eement .Ofcour se,i f.
..Thi rd
par ti
es’ i
nt erest shadi nt er venedandsoon, diffi
cul ti
es
228
mi ghtar ise.”
Asar ule, whent hirdpar tieshav eacqui r
edr i
ghtsbonaf ide
andf orv alueundert hecont ractbef oret hei nterferenceof
equi tyi ssought .Suchr ight swoul dnor mal lybepr otect edwi t
h
thepossi bl er esul tt hatt hecont racti shel dt obev al i
dand
bindi ngont hepar ties.I nt hiscase,equi tywi l
lnoti nter v enet o

226
ContrastSherwoodv.Walker66Mi ch.568(1887)33NW
919
227
[1895]2Ch.273
228
Emphasismi so,Wi
ne.Seeal l
dingv .Schanderson[1897]2
Ch.534andScot tv.Coul
son[ 1903]2Ch.249;Sol l
ev
Butcher[
1950]1K.B.671:Gri
stv .Bail
ey[1967]Ch.532.
165

4
denyi
tof

166
ef
fect
,as to do so woul
d adv
ersel
yaf
fectt
he i
nter
estof
i
nnocentoft
hir
dparti
es.

Rect i
ficat ionofwr i
t tenagr eement s
Asar ule, oralev i
dencei snotadmi ssi bletov aryorcont radicta
writt
enagr eement .Howev er ,wher et hedocumentdoesnot
representt het ruei nt ent ionoft hepar t
iesbecauseofami stake
madei nt hepr ocessoff ormal isingt heagr eement ,thecour thas
j
ur i
sdictiont oor dert her ect ifi
cat ionoft heaf fect edt erm or der
specificper formanceofi tasr ect ified.
Theessenceofr ect ificat ioni s“ to br ing t hedocument
whichwasex pressedandi nt endedt obei npur suanceofapr i
or
229
agreementi ntohar monywi tht hatpr ioragr eement . Ofcour se
thealternat i
vewoul dbe“ toal lowanactor iginatingi ninnocence
to oper at e ul ti
mat el yas a”f raud,byenabl ing t he par tyM
receivest hebenef itoft hemi staket or esistt hecl aimsofj usti
ce
230
undert heshel terofar ulef ramedt opr omot eit.
”
Rect ificat i
onmaybeal l
owedev eni fnobi ndingagr eement
precededt hewr itt
encont r
act . Itisenought hatthepar ti
eshada
common and cont inui ng i nt ent i
on whi ch was meantt o be
231
refl
ectedi nt hewr i
ttendocument . Thebur denofpr ov i
ngsuch
i
ntentionandt heer r orwhi chat tendedi tsdocument ationl i
es
232
upont hepar tywhoseeksr ect ificationoft hewr i
ttencont ract.
Apar ty’ssubj ect i
vebel i
efast ot hemeani ngoref fectoft he
terms negot i
at ed i s howev er i rrelevant .Al so,wher et he
antecedentnegot i
ationswer ev agueandi nconcl usi ve,thecour t
cannotbutt reatt hewr ittendocumentasconcl usiv epr oofoft he
parti
es’ agr eement .

Eff
ectofMut ual MistakeatCommonLaw
Asalreadyindicated,wheremut ualmi
stakeisall
eged,the
cour
tstakeanobj ecti
veviewoft
hecontr
act.I
tist
heoutwar
d

229
Lovell&Char i
smasLt d.VWal l(
1911)104L.T.85per
Coz enshardym.r;UnitedStat
esv.Mot orTracksLt
d[ 1924]
A.C.196.
230
Story,Equi
tyjuri
sprudencep.155
231
SeeCr anev.Heger man-Har ri
sco.Inc.[1971]1W.L.R.
1390; Josely
nv .Nissen[1970J2Q.B.86
232
Earlv.HectorWhal i
ngLt d.[
1961]1LloydsRep.459at464

167
appear ancest hatmat ter ,nott hemer eint ent i
onofonepar tyor
theot her.I fwhat ev eraman’ sr eali ntent ionmay be,heso
conduct s hi msel ft hatanot hermay r easonabl yi nf ert he
existenceofanagr eement ,whet hert hepar tyintendst hathe
shoul ddosoornot ,ithast heef fectt hatt hepar tyusi ngt hat
l
anguageorwhohassoconduct edhi msel f,cannotaf ter wards
gainsayt her easonabl ei nter ferencet obedr awnf rom hi swor ds
233
orconduct . Hence,i far easonabl et hirdpar t
ywoul dsuppor t
thedef endant ’sunder standi ngoft hecont ract ualterms, thereis
nor oom f ort hepl aint i
ff,whohasadi fferentunder standi ngof
234
theter ms, toseekr ect i
ficat i
onorr escission.
235
Forex ampl e, inwoodv .Scar th, t hedef endantof feredin
writi
ngt oletapubl ichouset othepl aintifff or£63ay ear ,and
the pl ai
nt i
ff,af t
eran i nt erv i
ew wi tht he def endant ’
s cl erk,
accept edt heof ferbyl et ter.Thedef endanti ntendedt hatt he
premi um of£500shoul dbepay abl einaddi t
iont ot her entand
hebel ievedt hatt hecl er khadmadet hiscl eart ot hepl ainti
ff.
Thel at t
er,howev er,bel i
ev edt hathi sonl yf i
nanci alobl i
gat i
on
wast hepay mentoft her ent.I twashel dt hatt heappar ent
236
contractmustst and.
Howev er , wher e t he par t
ies ar e so appar ent ly at
cross-pur posest hatnoagr eementcoul dbedeci pher edf r
om
theirconduct ,t hecour tswi l
lconcl udet hatno enf or ceable
237
contracthadbeencr eated.

EffectofMut ualMi stakei nEquity

Wher eapl eaofmut ualmi stakeisrej
ected,acour t,exerci
sing
i
ts equi tabl
e juri
sdicti
on,may r ef
use t o or der speci fi
c
performance.Thiswoul d,f orinst
ance,bet hecasewher ethe
l
iteraleff
ectofthecont ractandt hespecifi
cper f
ormanceofi t
woul dbet oimposeabur dennotcont emplated,andwhi chit
woul dbeagainstallreasonandJust i
cetof ixupont heper son
who,wi thout t
he i mput ati
on of fraud,has i nadv ert
entl
y
commi t
tedanaccidental

233
Cornishv .Abi
ngton(1959)4H&N549at556
234
Tampl inv.James(1880)15Ch.D.215;vanPraghv.
Everdige[1902]2Ch.266
235
(1858)1F&FaF293.
236
Seeal soScottv.Li
tt
edale(1858)
8E&B815
237
Scriv
enbr os&Co.V.Hi ndl
ey&Co.[1913]3K.B.564

168
mistake;andal sowher enott ocor rectthemi stakewoul dbeto
238239
anunconsci onableadv antaget oeitherpart
y.
Howev er,equi t
ydoesnotai dt heindolent ,andhewho
comest oequi tymustcomewi t
hcl eanhands.I ft hereappears
onthepar t
icul arsnogr oundf orthemi st
ake,ifnomanwi t
hhiss
abouthi m coul dhav emi sappr ehendedt hechar act erofthe
contract
,theni tisnotsufficientforanyoft hepar tiestoswear
thathemadeami stakeort hathedi dnotunder st andwhathe
2411
wasdoi ng. Thecont ractwi l
lremai nvali
d.

EFFECTOFUNI
LATERALMISTAKEATCOMMON
LAW

Inducedmi sconcept ionbyonepar tyaboutt hei dent it

yof
theot her
Thepr oblem ofuni lateralmi stakeusual l
yr evolvesr oundan
i
nduced mi sconcept ion byone cont r
acting par t
yaboutt he
i
dent i
tyoft heot her.Forexampl e, Aappr oachesBandpr etends
thathe( A)i sx .At henmakesanof fertoBwhoaccept sunder
thebelieft hatt heof fercamef rom x .Subsequent ly,Bf indsout
thereal f
act sandseekst oav oidthecont r
actont hegr oundt hat
hewoul dnothav eaccept edt heof feri fheknew t hati tcame
from A.Hei ntendedt odealwi hxandnotA.Muchast
t hi
s
scenarioappear st oj ustifyani nfer encet hatnoagr eement
result
edbet weenAandB, thecour tsar ereluct
antt oadoptany
suchconcl usi on.
Usual ly ,thef r
audul entpar t
ywoul dhav edisposedofgoods
obtainedt hrought hist ransact iont ot hir
dpar t
ieswhobuyi n
goodf aithandf orv alue.Inor dernott odef eatthei nterest sof
suchi nnocentt hir
dpar ti
es,t hecour twi lmakeapr
l imaf acie
presumpt i
ont hatdespi t
et hemi stake,acont racthasbeen
concludedbet weent hepar t
ies.Af teral l
,theof f
erwasaccept s
bytheper sont owhom i twasaddr essed.
Tor ebutt hispr esumpt ion,thepar tywhowant st oav oid
contractmustpr ove:
a)Thathei nt
endedt odeal withsomeper sonot hert han
240
theaccept or.

238
239
Burrowv .Scammellf1881)19ChD.175
Swaislandv .Dear
’ sley(
1861)29Bev.420at433-434
240
King’sNortonMetalcoy.Lt
dV.Edri
dge,Merr
ett&Co.Lt
d.

169
 b)Thatt heaccept orwasawar eoft hemi st ake.Thi s
usual lyeasyt opr ov east hemi stakewoul dhav ebeeni nduced
241
byt hef raudoft hatpar ty .
c)Thatatt het i
meofcont ract i
ng, t
heof fer orr egar dedt he
i
dent i
tyoft heof fer eeasamat terofcr uci alimpor tance; and
d)Thatt heof fer orhast akenr easonabl est epst oest abli
sh
thei dent ityoft heaccept or
Howt hendoest heof ferordemonst r atet hef actt hathe
regar dedt hei dent i
tyoft heof fer eeasamat terofcr ucial
i
mpor t
ance?
242
InCundyv .Lindsay , af raudul entper sonnamedbl enkar n,
wr i
ting.Fr om “ 37woodSt .,Cheapsi de” ,of feredt obuygoods
fromt hepl ainti
ffs,andhesi gnedhi sletteri nsuchawayt hathi s
name appear ed t o be “ blenki ron & co. ”The l at terwer ea
respect abl ef ir
m car ryi
ng on busi nessat123 wood st reet.
Blenkar noccupi edar oom, whi chhecal l
ed37woodst reet,but
i
nf acti tsent r
ancewasf rom anadj oi
ni ngst reet .Thepl ainti
ffs,
who wer eawar eoft hehi ghr eput at i
onofbl enki ron& co. .
Thought heynei therknewnort roubl edt oascer taint henumber
ort hest reetwher et heydi dbusi ness,pur por tedt oacceptt he
offeranddi spatchedt hegoodst o“ Messr sBl enki ron&Co. ,37,
woodst reet ,cheapsi de. ”Thesewer er ecei v edbyt her ogue,
blenkar n, andhei nt ur nsol dt hem t ot hedef endant s, whot ook
them al lingoodf aith.Thepl aint i
ffnowsuedt hedef endant sf or
conv er sion.
TheEngl ishHouseofLor dshel dt hatnocont r
actensuedas
therewasno concensusadi dem bet weent hepar t
ies.The
plaintiffi ntended t o sel lt o Bl enkiron & co. ,ButBl enkar n
Companycoul d notbev alidlyaccept ed byt her ogue.The
defendant swer et her efor el i
abl easBl enkar nnev erpossessed
anyv alidt it
lewhi chhecoul dhav epassedt ot hem.

(1897)14T.L.R.98atr99; Gal
l
iev.Lee[
1969]2Ch.17at
33
241
Hardmanv.Boot h(1863)1H&C803
242
(
1878)3App.Cas.459[ Raf
1913]3K.B.564; fl
esv.
Wichelhaus(
1864)2H&C906

170
 Howev er ,i
nsubsequentcaseswher et hepar tiesact edi nter
praesent es,t hecour tst endt ot aket hev i
ew t hatacont ract
“resulted,ev ent hough oneoft hepar tieswasdecei tful.I n
Philipsv .Br ooks243t hef raudul entpar tycl aimedf alselyt hathe
wasSi r.Geor geBul loughandgav eanaddr essi nSt .James
squar e.Thepl aint iff,aJewel ler,hadhear dofaBul l
oughbef ore
buthedi dnotknowst hathewasdeal i
ngwi thani mpost or.He
checkedadi rect or y,howev er,toconf irmt hatBul loughl ivedat
theaddr essgi ven.I nt hatcase,t hecour tconcl udedf rom t he
factst hatt heJewel l
eri nt endedt osel ltot heper sonpr esenti n
theshop.Heassumedt hest orytobet rueandt ooknost ept o
verifyit.
nI
I ngr am v .Li tte244 wher
l et hepl aintiffsappear edt ob
unwi ll
ingt osel lt ot hecust omerunt iltheywer eabl et ochecko
hisnameandaddr ess, thecour tofappeal heldthatnocont ract
resulted.Theof ferf orsal eofacarwasmadet ooneP. GM
Hut chinsonandt hef raudul enti mpost orcoul dnothav ev alidly
accept edi t.Int heci rcumst ance, ther ewasnocont ractandt he
plaintiffscoul dr ecov ert hei rcarback.
245
Howev eri nLewi sv.Aver ay whichcameupsubsequent l
y,
theEngl ishcour tofappeal depar tedf romt hedeci sioni nI ngr am
v.Little,pr ef erringi nst eadt of olowPhi
l l
lipsv.Br ooksl td.
nLewi
I sv .Av er ay ,ar ogueposi ngasRi char dGr een, awel l
knownact or ,cal ledont hepl ainti
ffwhohadadv er t
isedhi scar
forsal eandof fer edt obuyi tf ort headv er t
isedpr i
ce.Het hen
signedacheque“ r.A.Gr een”andwasal l
owedt ot aket hecar
awayaf terpr oduci ngaf al sei dent itycard, showi ngt hathewas
i
ndeedRi char dGr een. Hesol dt hecart oAv eray,whoboughti tin
goodf aith. Whent hepl ai ntiffbr oughtanact i
onf orconv er sion, i
t
washel dt hat ,despi tehi smi stake, thepl aintiffhadconcl udeda
cont ractwi tht her ogue.Al thought hecont ractwasv oidabl ef or
fraudul entmi srepr esent at i
on, i
tcoul dnotnowbeav oidedsi nce
thecarhadcomei ntot hehandsofani nnocentpur chaserf or
value.
The cont rov ersy woul d seem t o cent r
e on t he f our th
condi tionst atedabov e, thati s, whet hert heof fer
orhast aken

243
[
1919]2KB243
244
[
1961]1Q.
B.31
[
1972]1Q.B.198
255

171
reasonabl est epst oest ablisht hei dent ityoft heaccept or.In
whi choft hesecaseshadt hepl ai ntiffr eallydemonst rat edt hat
hedi dnotmeant odeal wi tht hei mpost or ?Iti shar dtocont end
thatanypr operv erif
icat i
onpr ocesswasf ollowedt hroughi nany
oft hecases. Thepl aintiff
smor eorl essbel i
ev edwhatt heywer e
toldandt hest epst heyt ookt of i
ndoutt het rut hwer equi te
i
nadequat e.
Thi si nadequacyshowsshar plyagai nstt hebackgr oundof
thirdpar t
yi nt erests,whi cht hecour tsar eusual lyr eluct antt o
trampl eupon.I fthecont ractbet weent hepl aint i
ffandt he
i
mpost ori snul li
fi
ed,t het hi rdpar tyl osesout .I nspi teofhi s
i
nnocencehecoul dnothav eacqui redagoodt it
lef rom t he
rogue.Howev er,ift hecont racti shel dv oidabl ef orf r
audul ent
mi srepr esent ation, thei nnocentt hirdpar tywoul dhav eacqui red
agoodt i
t l
ebef or
et hef act semer geandbef or et hepl aint i
ff
coul d hav e an oppor tuni t
yt o av oidi t.The i ssue t her efor e
i
nv ol vesadet er minat i
onast owhoshoul dbeart hel oss:t he
mi sledpl aint iffort hei nnocentt hi rdpar ty?
Consi st ent lywi thhi si ncl inat iont o pr otectt hel atter ,it
seems now t hatt he cour ts make an al mosti rrebut abl e
presumpt i
ont hatwher ebot hpar tiest oacont ractar ephy sically
presentt oget herwhent hecont racti smade,suchacont ract
cannotber ender edv oidf ormi st ake.I ngr am v .Li t
tle must
ther efor e be,and has act ual lybeen,r eject ed as unr el i
abl e
246
aut hor it
y . Theat temptt oj ust ifyt hedeci sionbycat egor i
sing
themi st aket her einast hatofi dent i
tywhi leot hercasesr elatet o
247
mi stakeofat t ri
but eshav eal sobeendi scr edited.
Howev er,wher egoodsar eor der edf rom adi stancebya
roguei nt henameofanot herper son,i tmaybeeasi ert oav oid
248
thecont ractbecauseoft hemi stakeoft hei nnocentsuppl i
er .
InChel larams&SonsLt d.V.Const ai( W.A)Lt d.Wher ean
empl oy eeoft hedef endant s, itwashel dt hatt heagr eementwas
render edv oidbyt hepl aintiff’smi stakeast ot hei dentityoft he
per sonhedeal twith.

246
SeeLewisv.Averay,op.ci
t.
247
SeeLor
dDenningM.R.I nLewi
sv.Averay[1971]3W.L.R.
603at609.CheshireFif
oot&Furmston.Op.ci
tatp.244
248
SeeCundyv.Lindsayop.cit

172
Ot hercasesofuni l
at er
almi stake
I
n ot hercases,once i ti s pr ov ed thatone oft he par ti
es
i
nt entionallyinducedt heot hert ocont ractor( intheabsence
posi t
ivei nducement )wher et hebehav iouroft hef irstpar t
y
j
ust if
iesapr esumpt ionthathei sawar eoft heot herpar ty’
s
mi stake,t her esulti
ngagr eementwoul dbedecl arednul land
249
void.I nHar togv .Colin&shi el ds. Thedef endant scont racted
to sel ltot he pl ai
nt i
ff
s 3, 000 Ar gentinian har e ski ns,but
mi stakenlyof feredthem atapr iceperpoundi nsteadofanper
piece.I twasest abli
shedatt het ri
althatapr iceperpi ecewas
roughl y1/ 3oft hatperpoundandt hatthenegot i
ateleadi ngup
tot hesalehadpr oceededt hroughoutonapr i
ceperpi ecebasi s
whi chwasal sot heusualpr act i
ceoft het r
ade.I nanact ion
broughtt oenf orcet hesalei twashel dt hatthepl aintiffmust
hav eknownwhenheaccept edt hedef endant ’sof f
ert hatt hey
250
wer eunderami stake.Thecont ractwast hereforesetasi de.

Effectofuni l
at eralmi stakei nequity
Wher eacont ractwasi nducedbydecei t,
thatis,wher eonepar ty
wenti ntoi tunderami stakeintenti
onal l
yengi neeredbyt he
other,theresul t
ingagr eementi sanul lit
y,bothinl awandequi ty.
Inspiteoft hef actthatt heagr eementhasnoef fect,themisled
partymayf indi tnecessar yt omov et hecourtt of or
mal l
yseti t
aside.Thi st he cour tmaydo i n exerci
se ofi ts equit
able
j
ur i
sdicti
on.Ofcour set hecour twi llalsor efuset ogr anta
251
decreeofspeci ficper f
ormancei nrel
at i
ont osuchcont r
act.
Wher eter mswhi char ebenefici
al totheplaintif
fareomi t
ted
duet ot hepl aintiff
smi stake,whichi showev erknownt ot he
defendant ,t he pl ainti
ff can seek t he equi tabler el
ief of
252
recti
fi
cation.

249
[
1939]3AllE.R.566
250
soAbdulYusf
Seeal uv.N.T.C.; [
1924]5W.S.C.A.II
251
Websterv.Ceci
l(1861)30Beav .62
252
ARoberts&Co.Ltdv.Leicest
ershir
eCountyCounci
l11961)
Ch.555.

173
Document sMi st akenl ySi gned
Ifaper sonwasmi st akenast ot henat ur eoft hecont ractual
documentwhi chhehassi gned, hemaybeper mit t
edt oav oidall
obli
gat ionsundert hecont r acti fhesuccessf ullypl eadst he
defenceofnonestf act um ( thati s,Iti snotmydeed) .Such
mistaker elat eei thert ot hegener alchar act erort hecont entsof
thecont ract .Thei ssuebecomescompl i
cat edi fthef raudul ent
partythent ransf erst hecont ractt oani nnocentt hirdpar tywho
l
atersuesf ori tsenf orcement .
Asi tsi ncept i
on,t hepl eaofnonestf act um wasav ailable
onlywher eani ll
iterat eorv isual lyimpai reddef endanthasbeen
253 254
misledi ntosi gni ngadeed. Thescopeoft hepl eahas
howev erbeenconsi der ableext ended.I tisnow appl icabl et o
simplecont ract sandi ti snol ongernecessar yt hatt hemi sled
partybebl i
ndori ll
iterat e.Thedef endantonl yhadt oshowt hat
hedidnotgi vehi sconsent .Ifi tisso, t
hesi gnat urehasnoef fect
264
andt heent iredocumenti sanul lity.
Howev er ,ithasbecomecl eart hatunduel axityint hi sar ea
canonl yer odet heconf idencewi thwhi chpeopl eacceptsi gned
document s. Asar esul t, thecour tshav emadenot iceableef forts
tocur tailt heappl i
cat ionoft henonestf actum pl ea.I nt he
presentst at eoft hel aw,t hemi sledpar tywi llescapel iabil
ity
onlyifhei sabl et oshow:
(i)t hathewasdel iber atel ymi sledi ntosi gningadocument
whichdi ffersf undament all
yi nnat uref rom t heonehei ntended
tosign; and
(ii
)t hathe t ook r easonabl e car e bef ore si gni ng t he
documentt hati s, t
hathewasnotnegl igent .
255
Fori nst ance, nLewi
i sv .Cl ay fori nst ance, thedef endant
waspr esent edwi thadocumentcov eredwi thblot ti
ngpaperby
thelordNev i
ll
e.Hewasi nfor medbyt hel ordt hatt hedocument
rel
atedt osomesecr etf ami lymat t
ers,andt hedef endantwas
expect edt osi gnasamer ewi t
ness.I ttur nedoutt obeanot ein
thedef endantpr omi sedt opaycer taindebt swhi chLor d

253
SeeThor oughgood’
scase( 1582)2CoRep9a
254
Fosterv.Mackinnon(1869)2Co.Rep.9a:
Saunder
sv.
Angli
aBuildi
ngSociety[
1897]67LJQB224
255
(1897)67LJQB224

174
Nevi
ll
eowedt hepl
aint
if
f.Hel
d:t eaofnonestf
hepl act
um wi
l
l
avai
lthedef
endant
.

Mi srepr esent ation

Ar epr esent at ion i s a st at ementmade by one par ty( the
represent or)t oanot her( ther epr esent ee)bef oreoratt het ime
ofcont ractingwi thr egar dt osomeexi st ingf act sorsomepast
event swhi chi soneoft hecausest hati nducest her epr esent
enteri nt ot hecont ract .Wher et hest at ementt ur nsoutt obe
fal
se, i
ti sref er redt oasami srepr esent ation-e. g., Ast atement
thatt hel andt obesol dwasabout50acr eswheni nact ual factit
256
wasonl y22. 2acr es. Ar epr esent at i
onneednotbeexpr essl y
made.I tcanal sobei nferredf rom conduct .
Ar epresent ati
oni nor dert ogi vegr oundf oract ionmust
rel
at et of act sandnotl awori nt ent i
onoropi ni on.Wemaybe
guidedbyt hef ol l
owi ngr ulesi nascer taini ngt het r uenat ur eof
misr epr esent at ion:
(1)Al thoughi ti sof tendi f
ficul ttodi st ingui shst atement sof
factf r
om t hoseofl aw,t her ulei swel lest abl i
shed t hata
represent ationofl awcannotf or mt hebasi sforanact ionmer ely
becausei thappenst obewr ongofmi sleadi ngt heot herpar ty
,
257
thatmaygi v egr oundsf orequi tabl er el
ief .
Howev er ,si nceNi ger iancust omar yl aw andt hel aw of
foreigncount riesar ebot ht r
eat edasmat ter soff actt obe
prov edbyev i
dencei nourcour ts, ami srepr esent ationast ot he
posit i
onoft hesel awsi sor di nar i
lyact i
onabl e, ftisof tendi ffi
cult
todi stinguishast at ementoff actf r
om oneofl aw.
(2)Anex pr essi onofi nt ent ioni snotact i
onabl e,t hati s.A
represent ationt hat“ thet hingi s”i sfundament allydi ffer entf rom
a pr omi se t hat“ at i
l
ing shal lbe” .A r epr esent ation t hat
somet hingwoul dbedonei nt hef ut urecannotei therbet rueor
fal
seatt hemomenti tismade.Suchst at ement sar ebet ter
descr ibedapr omi ses,notr epr esent ati
ons.Andt hedi st i
nct ion
i
sofpr act i
cali mpor tance.I faper sonal ter shi sposi t
ionont he
fai
t hofaf al ser epr esent ation,t hemer ef actofi tsf alsehood
entitleshi mt ocer tainr emedi es.I font heot herhand,hesues
uponwhati s,i nr eal it
y,apr omi se,hemustshow t hatt his

256
Sodipov.Coker(1932)11NLR138
257
Edgingt
on v .Fit
zmaurice (
1885)29 Ch.D 459;Soll
ev.
Butcher[1950]1K.B.671;WestLondoncommercial
Bankv
.
Kit
son(1884)13QBD360at362- 363

175
promi sef ormspar tofav alidcont ract ,inwhi chcasehemaybe
metbyanyoft hedef encesav ai lablei nanor di naryact i
onf or
258
breachofcont r
act . Ast at ementast ot hest at eofaman’ s
259
mind, ifpr ov edt obef alse, i
sami sr epr esent ationoff act .
(3)Ast atementoff actmustbedi stingui shedf rom t hatof
opinion.Thel at teri sast at ementofabel iefbasedongr ounds
i
ncapabl eofact ualpr oofaswher et hev endorofpr oper t
ysay s
thatitiswor thsomuchasdi stinctf rom “ Igav esomuchf ori t”
260
woul dnotdo. Butanex pr essi onofopi nionmayconst itutea
represent at ionoff act si ncer t
ai nci rcumst ances,e. g. ,ifi tis
provedt hatt heopi nionwasnotact uallyhel dort hati twas
expresseduponamat teraboutwhi cht hespeakerwasent ir
ely
i
gnor ant .Thesamer esul ti sr eachedi fwhati sr eallyanopi nion
i
spr esent edasaf act .BowenL. J. present edagui dei nSmi thv.
261
LandandhousePr oper tyCor por at i
on.
“Inacasewher et hef act sar eequal lywel lknownt o
bot hpar ties,whatoneoft hem say st ot heot heri s
frequent l
ynot hingbutanex pr essi onofopi ni on.Buti f
thef act sar enotequal lywel l knownt obot hsi des, then
ast at ementofopi nionbyt heonewhoknowst hef acts
besti nv olv esv eryof tenast at ementofamat erialfact
forhei mpl iedl yst at est hatheknowsf act swhi ch
justifyhi sopi nion. ”
Thi sr aisest hequest ion-whet hersi lencecanconst itute
misrepr esent at i
on?Nor mal l
yar epr esent at i
ont akesanact ive
262
form andmer esi lencei snoti mpl icat i
ng.
Howev er,i ncer tainci rcumst ances,t her ei sadut yona
contract i
ngpar tyt odi scl osef act swhi char ewi t
hi nhi sown
knowl edge.Then,nondi scl osur emakest hecont ractv oidabl e,
263
not v oid. Sil
ence const itutes mi srepr esent ation i nt he
foll
owi ngcases.
a)Wher e si lence i stor ts a posi tiver epr esent at i
on -a
contract i
ngpar tyi sl egal lyent itledt okeepmut eaboutsome
mat erialfactandnol iabilityat t
achesbuti fhev ent uret omakea
represent at ionupont hemat ter,i tmustbeaf ullandf rankone

258
Maddi sonv
.Al derson( 1883)A.C.467
259
Edgingtonv.Fitzmdur i
ce(1927)A.C.177
260
Bisselv.Wi
lkinson[ 1927]A.C.177
261
(1884)28Ch.D.7at15
262
Smi t
hv.Hughes( 1871)L.R.6Q.B.597
263
Mackenderv .FeldiaAG[ 1967]2QB590

176
andnotapar t
ialorf r
agment aryaccountwher ebywi thhel d
makest hatwhi chi ssai dabsol ut elyf al
se.
(b)Apar tywhomakesaf alsest atementi nt hebel iev ethat
i
ti st ruecomesunderanobl igationt odi scloset het ruthshoul d
he subsequent l
y di scov er t hat he was mi st aken.I ft he
statementwast rueatt het imei twasmadebutf oundt obe
unt ruesubsequent l
yi nt hecour seofnegot i
at ion,hei sequal ly
264
boundt odi sclosechangeci rcumst ances.
(c)Cont ractwhi ch requi re uber ri
ma f ide ( utmostgood
faith). Byt hev er ynecessi tyoft hecase, onepar tydoespossess
fullknowl edge ofal lt he mat er ialf act s,t he l aw t her efor e
requi res hi m t o show uber r
ima f ide.He mustmake f ull
discl osur eofal lmat erialfactsknownt ohi mort hecont ractmay
ber esci nded.
Thr ee cont ractsf allundert hi s gr oup -cont r acts of
i
nsur ance: cont ractst otakeshar esi nCompani esandcont ract s
deal ingwi thfami lyarrangement s-t hemul titudeofagr eement s
madebet weenr elativesanddesi gnedt opr eser vet hehar mony ,
265
topr otectt hepr oper tyandt osav et hehonouroft hef ami l
y.
Althoughequi t
yi sanx ioust osust ainf ami lyar rangement s,i t
doesi nsistt hatt her eshoul dbet hef ullestdi sclosur eofal l
mat erialf actsknownt oeachpar tyev ent houghnoenqui ry
aboutt hem mayhav ebeenmade-t hepar tiesmustbeonan
266
equal foot i
ng.
(4)Thest at ementmusti nducet her epr esent eet oent er
i
nt ot hecont ract ,therefor eacont racti snotv oidabl eongr ounds
ofr epr esent ationunl esssuchwasi ntendedt ocauseandhasi n
acausedt her epr esent eet omaket hecont ract .Itpr oducesa
mi sunder standi ngi nhi smi ndwhi chwasoneoft her eason
i
nduci nghi mt omaket hecont ract .Ther efor e, af alsest at ement
whet heri nnocentorf r
audul entdoesnotpersegi ver iset oa
cause ofact ion and t herefor e mi srepr esent ation isl egal ly
har ml essi ft hepl aintif
fnev erknewofi t sexi stenceordi dnot
all
owi ttoaf fecthi sjudgmentei therbecauseher egar dedi tas

264
Daviesv.London&Pr ovinci
alMarineInsur
anceCompany
(1878)8Ch.Di v.469.
265
Examplesi ncl
udeanagr eementt oabidebytheter
msofa
willwhichhasnotbeenpr operl
yexecutedoranagr
eement
tov ar
yt hetermsofav ali
dwi l
l
.
266
Gordonv.Gor don( 1821)3SWAN400.Gr eenwoodv.
Greenwood( 1863)3DGJ28

177
unimpor tantorher el
iedonhi sownbusi nessacumenorwher e
thepl aintiffwasawar eofi t
sunt r
ut h.Pl aint i
ffmustpr ov et hat
misrepr esent ationhadanef fectuponhi smi nd.Ther ef ore,he
267
cannotsucceedi fhewasnev erawar et hati thadbeenmade.
The r epr esent ee also has no r el i
efwher e he has not
all
owedt hemi srepresent ati
ont oaf fecthi sj udgmentaswher e
268
her egar dedi tasuni mpor t
ant orwher ehehasr eliedonhi s
269
ownbusi nesssenseori ndependentr epor tspeci al
lyobt ained.
Butitmustbenot edthatt her epr esent at i
onneednotbet hesol e
i
nducement .Fori nstance,inEdgi ngt onv.Fi t
zmaur i
ce,t her e
weret woi nducement s-onet hef al ser epr esentationandt he
other,themi stakenbel iefbyt hepl aint iffthatdebent urehol der s
woul d hav e a char ge ov ert he pr oper ty oft he company .
Nev ertheless, thedef endant 'scont ent iont hatpl ai
ntiffcoul dnot
rescindt hecont r
actwasr eject ed.
Further mor e,t her epresent ati
onmustbemat er i
alt ot he
contract-t hati s,itmusthav ebeenonewhi chwoul dinducea
270
reasonabl emant oent erintot hecont ract .
Knowl edgeoft heunt ruthoft hest atementi sabart or elief.
Eveni fi twasf raudulentlymade,apl ai ntiffwhowasnev eri n
doubtast ot heunt r
uthoft her epr esent at i
oncannotcl aimt o
have been i nfluenced byi t
.Howev er,i ti s actualand not
const ructiveknowl edget hati sr equi redher e. Consequent l
y, i
ti s
notadef encet osayt hatther epresent eehasbeenof feredan
271
oppor tunityt oinv esti
gat eandv eri
fyt her epresentation.

Innocentmi sr epresentati
on
Misrepresent ationisinnocentwher et herespresentorbeli
ev e
hisasser ti
ont obet r
ueandsohasnoi nt
enti
ont odeceivebut
neverthelesst heassertionhasi nducedt herepresenteetoenter
i
ntot hecont ract .
Theef fectofi nnocentmi srepresentati
onatcommonl aw
dependson whet hert hefalsest atementi sa t erm ofthe
contract.Ifitis, t
heeffectdependsonwhet heritisaconditi
on
orwar ranty.Ifi ti
sawar r
anty,i
t ssoler emedyisdamagesi sa

267
SeethecasesofRe: Nort
humber
land185828L.J.Ch.50
andHorsfal
lv.Thomas186218621H&C90
268
Smithv.Chadwick18849Ap.Cas187
269
Att
ewoodv .Small18386C&F232
270
Smithv.Chadwick18849Ap.Cas.187
271
Sodipov.Coker(1932)11NLR138

178
condit
iontheinj
uredpar
tycanelecttoresci
ndt hecontractto
suefordamages.Whereiti
snotatermofacont r
act,i
tisamer e
repr
esentati
onandther
efor
enoobl i
gati
onistherebycreated.

Theef fecti
nequi ty
Theinnocentpar t
ycanei therbr inganact i
onforrescissi
on
pl
eadst hemi sr
epresent ati
onasadef enceinasuitf
orspecifi
c
per
formance.Si ncet hej udicatureactof1873,t heeffectof
i
nnocentmi srepresent ationf or
mi ngnopar tofthecontractb
whichformspar toft hei nducementt oenterintot
hecontracti
s
a ground f orresci ssion butgi ves no rightto damages.
Howev er.
ltmayobt ain an indemni t
yagai nstanyobligati
on
272
whichar i
sesundert hecont r
act.

Fr audul entmi sr epr esentat i

on
Fraudul entmi sr epr esentationisaf al
sest atementwhi cht he
repr esent ordidnothonest l
ybel i
evet obet rue.Ast heHouseof
Lor dsputi tinDer ryv .Peek273itisast atementmadeknowi ngl y
orwi thoutbel i
ev ei ni t
struthorr ecklessl
ycar elesswhet heritbe
trueorf alse.
Fraudul ent mi srepresentati
on has t wo essent ial
i
ngr edi ents-( 1)t heremustbeaf alsest at
ementand( 2)there
mustbeabsenceofbel i
evei ni
tst r
uth.Therefor e,themot i
vefor
maki ngt hef alsest atementi sirrel
ev ant.Thepl aintiffneednot
prov et hatdef endanti ntendedt ocheatort oi njurehim or
274
any body . Al so, adef endantwhomadeaf alser epr esent
ation
cannot escape i ts consequences by showi ng t hat the
repr esent eecoul dhi mselfhav e

272
Whit
ti
ngtonv.ScaleHayne(1900)82LT49.
273
(
1889)14Ap.Cas.337.
274
Abbav.Mandil
as[1964]2A.L.R.Comm.241

179
di
scoveredthef
alsi
tyoft
her
epr
esent
ati
oni
fhehadbeenmor
e
275
di
l
igent.

TheeffectofFraudul
entMisrepresentat
ion
Thecontractisnotv oi
d butv oi
dableattheopti
on oft
he
decei
vedparty.Consequent
ly,contr
actremainsbi
ndi
ngand
val
idunti
li
tissetasi
de.

Remedi es
(1)Fraud bei ng a t ort,t hei nnocentpar tymayr ecov er
damagesi nanact ionofdecei t.
(2)Ont hedi scov er yoft hef raud,t hei nnocentpar tymay
electeithert oaf f i
rm ordi saf fi
r mt hecont ractbutanel ect ione
Temadei sbi ndi ngf orev er.I fhedi saf firms,t hef ollowi ng
causesar eopent ohi m-
(a)Hemayr epudi at ewi thoutmor ethati s, nor esor ttol egal
proceedi ngsor
(b)Hemaybr inganact i
onf orr esci ssi onespeci all
yi fthe
fraudulentpar t
yi gnor esr epudi at
ionbecauseher et herei sa
dangerofa3r dpar tyacqui ringr i
ghtsundert hecont ract.
I
nei theraorb. hecancl aimt her etur nofpr oper tyobt ained
from him byt hef raudul entpar typr ov i
dedhei swi lli
ngt orest ore
whathehasobt ained.
Wher e he el ectst or esci nd,t he i nnocentpar ty must
communi cate hi s deci sion t o t he r epr esent or wi thi n a
reasonabl et i
mebecauset her epresent ori sent i
tl
edt ot r
eatt he
cont r
actualnexusascont inui ngunt ilhei si nformedofi ts
termination.
Butt hisgener al rulei ssubj ectt ot woexcept ions:
1.Itt her esul tofmi srepr esent ationi st hatt hepossessi on
ofpr opertyi sdel iveredt ot her epresent or , recept ionofi tbyt he
represent eei sitsel facommuni cationofr esci ssion.
2.Ift her epr esent ordi sappear ssoef fect i
v el
yt hati tis
i
mpossi blet of ind hi m,t he r equirementofcommuni cat ion
woul dbesat isfiedi ft her epr esent eer epor t
shi si ntent i
ont o
rescindt hecont ractbysomeov ertactt hati sr easonabl ei nt he
276
circumst ances.

275
Redgr
avev.Hurd(1881)
29Ch.D1:Sidev
.Aromire(
1951)20
NLR20
276
Car&UniversalFi
nanceCoyLtd.V.Cal
dwell[
1965]1Q.B.
525

180
 Limi tstot her i
ghtofr esci ssion
1.I fther ehadbeenaf firmation, therecanbenor escission.
Theaf fi
rmat ioncanbeanex pressdecl arati
onori tcanbe
i
mpl iedaf firmat ionisl apseoft imeaf terknowl edgeoft het rue
fact.Lapseoft imedoesnotconst ituteaf fir
mat ionbutl apseof
ti
meaf terknowl edgeoft het ruef actsi sast r
ongev i
denceof
affi
rmat ion.
2.Wher er estituti
oni snol ongerpossi ble.Ift hepar ties
cannotber est or edt ot heiror i
ginalposi ti
on,t herecanbeno
rescission.I tmustber esci ssioni nt otoornot hing.Thati st he
represent eemustbenotonl ybewi l
l
ingbutal soabl etomake
full
rest i
tution-r esti
tutioi ni ntegrum.
3.I njuryt ot hi
rdpar ti
es-wher et hirdpar ti
eshav eacqui red
i
nterest si nt he cont racti n good f aith and f orv alue,no
rescissioncant akepl aceandsal eunderav oi
dabl et i
tl
ee. g.A
contracti nducedbyf r
audi ll
ustrat est her ule.Thef r
audul ent
person obt ains t i
tl
e unt i
lav oided so t hatany t ransfert o
i
nnocentt hi rd-par tyforv aluabl econsi derationbef oreav oidance
i
s good.Butt he 3r d par ty mustbe bonaf i
de and gi ve
287
consi deration.
88
4.Ther ul ei nseddonv .Nor theast ernsal tcoy .Ltd? the
ri
ght t or esci nd f or i nnocent as opposed t of r
audul ent
misrepr esent ationi ssai dt obel osti ft hecont racthasbeet
foll
owedbyacompl etedconv ey anceorl easeort hef ormal
289
assignmentofachat t
el.

Negl i
gentMi srepresent ation
Thisisar epresentationmadecar elesslyorwi t
houtreasonabl e
groundsf orbeli
evingi tt
obet rue.Event hought herepresentor
was notbei ng fr audulent,he becomes bl amewor thy stil
l
because he owes t he representee a dut y ofcar e;e.g.,a
290
statementmadebyal awy ertohisclient. Al
so,i
tisnowwel l
recognisedthataper sonwhomakesanegl igentmisstatement
toanotherar esult
287
Whi
tev
.Gar
den( OC.B.919&Schol
1851)I efi
eldv
.Templ
er(
1859)John155.
ofwhi cht hatotherismi sledorsuf ferslossmaybehel dliabl ein
damages.TheEngl ishhouseofl ordi nlieclleybr yne&co.Lt d.
Hel dt hat ,incertai
ni nst ances,anauct ioni nt or
tf ornegl i
gent
mi sst atementmi ghtbepossi bleint hatsi t
uat ion.
Int he hedleybr yne case,t hepl aintiffwer eadv ertising
agent sact ingforanewcl i
ente.i fedef ault edonpay ment , the
plaint i
ffswoul dt hemsel vesbel iabl e.Theyt her
eforechecked
e’
sf inanci alpositi
onbyaski ngt hei rbankt omakeenqui resof
e’
sbank.Rel yi
ngont her epl i
esf rom t hedef endant ,theypl aced
order s and suf fered subst antiall osses when e wenti nto
l
iqui dat i
on.Al t
hought hepl aintiff’sact i
onf ailedbecauset hed
def endant s were abl et or ely on a di scl ai
mer ,the cour t
acknowl edgedthef actt hat ,hadi tnotbeenf ort hi
s,anact ionf or
negl i
gencewoul dhav esucceeded.Howev er ,iti
si mpor t
antt o
not et hatl iabi
li
tyf ornegl igentst atement sdependsupont he
existenceof‘ aspeci al;r elationshi p’,thati s,thedef endant s
knewt hatt hei
nformat ionwast obeusedf or .

I
LLEGALCONTRACTS

Il
legality
Ingener alt er
ms, il
l
egalitymaybecat egor izedi ntot wo.Fi rst,a
contractmaybe i l
legalbecause i tdi r
ect l
yi nfringes some
statutor y pr ovisions.An exampl e of t his occur red i nr e
29
mahmoud&i spahani 'wher east atut epr ohibit
edunl icensed
dealingi nl i
nseedoi l
.Thedef endantor der edt heoi lf rom t he
plai
nt i
ffandmi srepresent edtot hepl aintif
ft hathehadal i
cence.
Howev er ,thedef endantsubsequent lyrefusedt oacceptdel iver y
.
Despi t
et hePl aintif
fsi nnocence,t hecont r
actcoul d notbe
enforcedbecausei tcont ravenedt hepr ovisionsofast atute.
Thesecondcat egor yist hatofcont ractsbecomi ngi l
legal
becauset heirprov i
sionsar econt r
aryi nsomeway st ocommon
l
awpr incipl esort opubl icpolicyandwel fare.Inbot hsi tuations,
thecont ractmaybev oidmer ely,ori tmaygi ver i
set ocr i
mi nal
277278
l
iabili
tyorpay mentofpenal tiesbyt hegui ltypar ti
es.
I
ll
egal it
ymayoccuratdi ff
erentst agesofcont racting.For
i
nstance, acont ractmaybeaf fectedbyi l
legalityrightf rom t he
beginni ng, inwhi chcaset hecont racti ssai dtobev oidabi nitio.

277
[
1921]2K.
B716
278
Thi
rwel
lv.Oy
ewunmi[
1990]4NWLR(
pt.144)384.

179
Secondly ,a cont ract,whi ch was v al
idl
y entered into may
becomev oi
df oril
legal
ity
,ifitisperf
ormedi nanill
egalmanner .
Furthermor e,i fthe consider at
ion off
ered by eitheroft he
contractualpar ti
esi stai
ntedwi thill
egali
ty,t
hecont ractitsel
f
mayber egarded asan i l
legalone.I nthesameway .,the
unlawfuli ntenti
onoft hepar t
iesmayaf f
ectthecont ractthat
theymake.I fforinstance,amanhi r
esagunwi ththeobj ectof
commi t
tinganar medr obber ,t
hehi ri
ngwi l
lbet aintedwi th
i
llegali
ty.

(a)Cont ract saf f

ect edbyst atutes
A cont ractt hati sex presslyori mpl iedlypr ohi bited by
279
statuteisillegal. Ex amplesofexpr esspr ohi bi ti
onar efoundi n
280281
themoney lender s’actandt heauct i
oneer slaw. Asr egards
i
mpl iedpr ohi bi
tion, i
fonepar tyinper f
ormi ngacont r
actdoesan
actpr ohibi ted byst at
ute,i tis possi blet hatonl yt hatact
becomesi ll
egal .Al t
ernati
v ely ,t
hewhol econt ractmayt hereby
becomei ll
egal .I nsuchcases,ar elevantf actori swhet herthe
objectoft hest atutei nimposi ngapenal tyf ort hef or biddenact
wast oincr easet her evenueasi nsmi thv .Mawhood295 ort o
282
protectt hepubl icasi n cope v .Rowl ands. I
nt hef or
mer
sit
uat i
on, thecont ractremai nsv ali
d, event houghduepenal ti
es
mustbepai d. I
nt hel att
er,thecont ractisinv alidat ed, whet heror
notpar ti
eshav ebeenot her wi sepuni shedf ort hei nfringement .
Howev er
,t hemostdeci si
v equest ioni swhet hert hest atutein
quest i
onwasi nt endedt opr ohibitthecont ract ,whi chquest i
on
canonl ybeanswer edbyapr operconst ruct i
onoft hest atute,

(b)Cont r
actsIllegalatCommonLawonGr oundsofPubl ic
Poli
cy
Il
legali
tyi
nt hissensedoesnotnecessar
il
yimportcri
minal
l
iabi
l
ityorgiveanycauseofact i
ontoathir
dpersoninjur
edby
t
heoper ati
onoft hecontract
.Iti
smerel
yunlawfulinthesense
t
hatcour t
swillnotenforceit
.Asregar
dstheapplicat
ionofthe
279
Sodi
pov
.Lemi
nkai
nem [
1986]11NWLR(
pt.15)220
280
Seeal
sosect i
on13oft heAgr
icul
turalCr
edi
tFundGuar
anteeSchemeAct,
Cap.All(Vol.1)2004L.F.
N.andt hecaseof1“Bankv .Bi
sbi
lder[
1990]
2NWLR( Pt.134)p.647
281
(
1845)14M&W452
282
(
1836)2M &W 149.Butt
hisshouldbecont
rast
edwi
th
Archbol
dsv
.Spangl
ettLt
d.[1961]1KB374.

180
doct rine ofpubl ic pol icy ,t her e ar et wo basi c conf licti
ng
princi pleswhi cht hecour tswi l
l consi der .
Fi rstt hepr i
nci pleofsanct i
tyofcont ractsandsecondi sthe
princi plet hatt hecour tswi llnotuphol d a cont ractt hati s
mani fest lycont rar ytopubl i
cpol icy .Thi smeanst hatcour t
s
woul dnor mallybei nclinedt ouphol d,r athert hanst ri
kedown
agr eement s;but ,att he same t ime,t heywi l
lr ef rainf r
om
enf orci ngagr eement st hatf lagr ant l
yf lyint hef aceofpubl i
c
policy .
Thecour tshav et riedt ost rikeabal ancebet weent hese
conf lict i
ngendsbyput ti
ngar ei nont hewhol eideaofpubl i
c
283
policy . Basi cal l
y ,theynowagr eet hati tshouldbet hepr ov i
nce
oft hel egi slat
ur et odet ermi newhatpubl icpolicyis.Hencet he
cour tswi llnol ongercr eat enew headsofpubl i
cpol icy .The
cont inui tyoft hist rendwashowev eropenedt odoubtf ollowi ng
284
thedeci sioni nnagl ev.Fei l
den. Wher eitwassuspect edt hat
existingheadsmaybeex pandedt ot akei nnewdev elopment .
Howev er,itappear scl eart hatacont ractwi llnotbeconsi dered
i
llegalunl esst her ei sadef init
et endencyt odowr ong.Fori tto
becondemned, asi ll
egal ,thehar mf uleffectsofacont ractmust
bebey onddi sput e.Fur thermor e,i ft herei sanydoubtast o
whet heracont racti sl egalornot ,thecont ractwoul dnor mal l
y
begi vent hebenef itoft hedoubt .
Exampl esofcont ract sill
egal atcommonl awi ncl ude:
a)acont r
actt ocommi tacr ime, at ort,oraf r
audonat hir
d
par ty;
b)acont r
actwhi chi ssex ual l
yi mmor al,e.
g..anagr eement
285
Payt orf utureill
icitcohabi tati
on:
c)acont ractPr ejudi cialt opubl icsaf ety,e.g.,acont r
act
wi t
hanal i
enenemydur i
ngt hewar :
d)a cont ractpr ejudi cialt ot he due admi nist ration of
286
j
ust ice.

283
284
SeeFenderv.St .JohnMi l
dMay[ 1938]A.C.1
[1966]2Q.B.633
285
An agreementt o payf orpastcohabi t
ati
on no furt
her
immoralit
ybeingintendedi snotill
egal ,butunl
essmade
underseal,i
tisvoi
df orlackofconsideration.
286
Acont racttosti
fl
eapr osecut
ionisv oi
di fiti
sforapublic
off
ensebutv ali
difitisforapr i
vat
eof fence:ContastKei
r r
v.Leeman( 1846)9Q.B.371wi thFisher&Co.Appol inari
s
Coy(1875)10Ch.Appeal 287.

181
 e)acont
ractt
hatt
endst
opr
omot
ecor
rupt
ioni
npubl
i
cli
fe
and
f
) acont
ractt
hati
sdesi
gnedt
odef
raudt
her
evenue

CONSEQUENCESOFI
LLEGALI
TY

Theef fect sofi llegalityof tendependont heser i

ousnessoft he
i
llegal acti nv olv ed. Asadef encef ornon- per f
or manceorbr each
ofcont r
act ,ill
egal i
tyisnotaccept edmer elyf orthebenef itoft he
defendant ,butf ort hebenef itofsoci etyasawhol e.Itbot h
partiest ot hecont r
actar egui l
tyoft hei l
legal i
ty ,thennei therof
them canseekt heai doft hecour tinenf orcingt hecont ractor
recov eringmoneyorpr oper tyt hathav epassedorar eduet o
passunderi t.Howev er ,wher eanyoft hepar tiesi snoti nvol ved
i
nt hei ll
egal ity, hemayst illbeal lowedt ocl aimr ight sundert he
cont ract,ev ent hought hecont racti t
sel fcannotbeenf or ced
Suchi nnocentpar tymayr ecov ermoneypai dorpr oper ties,
whi chwer ehandedov eri npur suantt ot hecont ract .
Ifanagr eementi snott otallyi l
legal,t hecour tsmayev en
sev erthel awf ulpar t
yf r
om t heunl awf ulandenf or ceonl yt hat
l
awf ulpar t.Whati si mpor t
anti st hatwhat ev err emedi est he
i
nnocentpar tyobt ains, itmustnotamountt oanenf orcementof
thei l
legal cont ract .
Itf ollows f rom t he abov e st ated pr emi se t hat ,i n
consi der ingt heconsequencesofi llegality,adi stinct ionmustbe
drawnbet weenacont ractt hatisi llegal asf ormedandonet hat
i
si llegalasper formed.A cont ractmaybei ll
egalasf or med
wher ethepar t
ieshav eagr eedt odosomet hingt hati sexpr essl y
ori mpl iedf or bi ddenbyst atuteandi nt hecasesofcont racts
i
llegal asf or medorunl awf ulinitsi ncept ion, t
hest at eofmi ndof
thepar tiesatt het imeofcont ract ingi si mmat er ial.Ther efor e,
thef actt hatt hepar tiesoroneoft hem di dnotknowt hel awi s
i
mmat er i
al .Ev eni fill
egal ityisnotpl eaded, thecour tmustt ake
287288
j
udi cialnot iceofi t.

287
Acontracttost i
fl
eapr osecut
ioni svoidifi
tisforapubl i
c
off
encebutv al
i
difiti
sforaprivateoffence.
ContrastKeirv.
Leeman( 1846)9Q. B.371wi hFi
t sher&Coy .Appolinari
s
Coy(1875)10Ch.Appeal 297
288
Snellv.UnityFi
nanceCoy .[1964]2Q.B.23

182
 Howev er,wher ethecont racti sexfacielawful,t
hei ll
egalit
y
concernst hecour tonlyi fitisspeci fi
cal
lypleaded289 orifitis
perf
or medbyoneoft hepar ti
esi nawayf orbi
ddenbyst atuteor
undert hecommonl awheadsal r
eadyout l
ined.Inthatcase, the
contractissaidtobei l
legalasper formed,especiall
ywher ethe
contraventi
onconcer nsanactessent i
altot hecont empl ated
perf
or manceoft hecont ract.Tobei nissue,theill
egalitymust
290
aff
ectt hecoreoft hecont ract.
Thepar ti
cularef f
ectsofi llegalit
yoncont racti
ngpar tiesin
thediffer
entcircumst ancesar ef urtherexplai
nedbel ow:

Wher et heagr eementi si llegal asf or med

Inthiscase, thecont racti st otall
yv oidandnoact ionl iesoni t.
Themaxi m,ext urpicausaor it
urnonact ion,appl es291 and
i
292
neit
herpar tycanenf orcet hecont ract . Consequent ly,money
paidpr oper lyt ransfer r
edt her eunderi sgener allyirr
econci lable.
The maxi m i n par idel icto pot iorestcondi tio def endent i
s
293
applies.
Ther esul tt hereforei st hatgai nsandl ossesr emai nwher e
294
theyhav eaccr uedorf allen.
Howev er,pr oper t
yt ransf err
edmayber ecover edi nt he
foll
owi ngsi tuat ions:
(a)ifdi sclosur eofi llegal it
yisnotessent ialtot hecauseof
acti
on,t hati s,apar tycanest abli
shhi sr ightort it
lewi thout
rel
yingont hecont ractori tsi l
legali
ty.
(b)itthepar ti
esar enoti npar ideli
clot het ransferori snotin
paridel ictowi tht het ransf ereewher et heobj ectoft he
statutewhi chpr ohibitst hecont racti stopr otectacl assof
295
personsofwhom t hepl aintiffisone.

289
George&or sv.Domi nionFl ourMillsLt
d.[‘1963]1ANLR71
290
SeeAnder sonLtdv .,Dani el[1924]1KB138andcont r
ast
wit
hSt .JohnShi ppingCor por
ationv .JosephRankLt d.
[
1957] 1QB267. Seeal soAbgakobav .
Meka[ 1962] NRNLR
1:Lavabrev.Hot elLt d.[1967]L.L.R.141andChi ver
sv
SaviesofAmericaLt d.[ 1972]31/CCHCJ/ 121
291
Noact i
oncanariseoutofi l
legalact
292
Shawv .Shaw[1965]1AELR638
3°6Hol manv .Johnson( 1775)1Cowp.at343
294
Taylorv.Chest
er( 1869)LR4QB309
295
Lodgev.Nat i
onalUni onI nvestmentCoyLt d.[1907]1Ch.
313

183
 (c)wher ethecont ractisst ill
ex ecutory,apar tyt oani llegal
contractisal lowedal ocuspoeni tentiaehecanr ecov erbef ore
the cont r
acti s subst ant i
all
yper f
ormed butwhatamount s
296
performancei sst il
lnotcl ear.
Twof actorshel pt oi ndicat ewhent hecour twi llcomet ot he
aidoft heper sonwhoi sseeki ngr ecovery.Thef i
rstf actori she
mustshow t hathehasr epudi atedint ime.Ther eforebef ore
anythingisdonei nper for manceoft hecont racti saccept abl e,
butnotr epudi ationaf t
ert hecont racthasbeenf ullycar r
iedout .
Thesecondf actori s,theremustbeav ol
unt aryr epudi ation
bythepar t y
. Ther efore, i
fr epudi ati
onhadbeenf or ceduponhi m
bythei nt
er ventionofat hirdpar ty,e.g.
,thepolice, orbyt heot her
party’
sbr each, hecannotr ecov er.
Itisimpor t
antt onot eal sot hatasubsequentt ransact ion
betweent hepar ti
eswhi chspr i
ngsf r
om t hei l
legalcont racti s
297
alsoill
egal andv oid.

Wher et heagr eementi sill

egal onlyasper formed
Inthis case,t he cont racti sl awf uli ni ncepti
on butt o be
exploitedinanunl awf ulwayorf oranunl awf ulpur pose.Clear l
y,
298
thegui lt
ypar tyhasnor emedy . I
ft hei nnocentpar tydidnot
know, andcoul dnothav eknown, thatt hecont r
actcoul donl ybe
performedi ll
egal l
yort hatt hepar tyr esponsi bl
ei nt
endedt o
performi ti
llegal l
y,hehast henor mal cont r
act ualremedi es. This
meanst hathecanr ecov erdamagesf orbr eachofcont ractand.
notbei ngi npar idel ict
owi t
ht hegui ltypar t
y,hecanr ecov er
proper t
ytransf erredundert hecont ract.Fur thermor e,hemaym
except i
onalcases,beabl etosueonasepar atepr omi set hat
299
performanceoft hecont ractshoul dbef reef rom ill
egality.
Howev er,theser emedi esar enotopent ohi mi nrespectt o
anythingdonebyhi m afterhel ear ntoft hei ll
egal purpose.
Cont ractsinr est raintoft rade
Cont r
actsi nr est r
aintoft radeconst i
tuteamaj orex ampl eof

296
Keerlyv.Thompson( 1890)24QBD742; Taylorv
.Bower38
(1876)1QBD291andBy osv.Bousted[1951]1AER92.
297
ContrastFisherv.Bri
dges3918543E&B642wi thCannan
v.Br y
ce( 1819)3B&A179
298
AndersonLt dv.Daniel[1924]1KB138andCowonv .
299
Milbou r
ne (1867)L.R2Ex chequerEFCH230
StrongmanLt dv .Si
ncock[1955]2QB525.

184
cont ractswhi chcont ravenepubl icpol icy .Rest raintoft r
ade
ariseswhenoneorbot hpar ti
esagr eet ol imi tt hei rindividual
freedom t ocont ract,especi allyt hei rf utur ef reedom t of reel y
pract ise t heirski l
l,t rade or pr ofessi on.For exampl e,i n
300
nor denf eltv .Maxi m Nor denf elt, amanuf act ureroff irearms
sol dhi sbusi nessandent er edi ntoacont ractnott osetupa
simi larbusi nessany wher ei nt hewor ldf ort went yf ivey ear s.
Thecommonl awwi llnott oler atesuchl i
mi tat ionsi ft hepubl ic
i
nt eresti nf r
ee compet i
ti
on i sadv erselyaf fected ori ft he
l
imi tat i
on i s unf airbet ween t he par ties.Hence,t herei sa
presumpt i
ont hatal lsuchcont ract sar ev oi d.
Thepr esumpt i
onmayhowev erber ebut tedi fi tisshown
thatt her est raintisr easonabl e,bot hi nt hei nter estsoft he
301
par ti
esandi nt hepubl icint erest . InLeont ar it
isv .Ni gerian
3025
text i
lemi ll
sl i
mi ted, 'r est raintonaseni orempl oyeeofa
tex t
ilemi llbasedi nLagos,pr ohi biti
nghi mf oraper iodoft wo
year saf terl eav i
ngt heempl oy mentoft hemi ll,from t akingany
i
nt erestei therdi rect l
yori ndi rect l
y ,orf rom ent eringi ntoany
busi nesssi mi l
art oorcompet ingany wher ei nNi ger iawi tht he
empl oyers’ busi ness, wasuphel d.Thi swasmai nlybecauset he
plaint i
ff,as sal es manager ,had access t o conf i
dent ial
i
nf ormat i
ononmanuf acturingpr ocessesandt r
adesecr etsof
hisempl oy er ,i
ncludi ngal i
stofhi sempl oy er ’
scust omer s.
Howev er ,itisthepar t
ywhowant st oenf or cet hecont ract
303
thatmustj ust if
yi t.I nHer ber tMor r i
sLt d.v.Saxel by , the
def endantwasempl oy edasanengi neerbyt hepl aintif
fs,a
l
eadi ngmanuf acturerofhoi stingmachi ner y .Hi scont ractof
empl oymentcont ainedasev en- yearr est raintoncar ryi
ngona
wi der angeofr el
at edt radesany wher ei nt heUni tedKi ngdom
shoul dhel eav ethepl ainti
ffsempl oy ment .Thecour thel dt hat
ther est r
aintwasunr easonabl eandt her efor eunenf or ceable.
Whet herar estr aintoft radei sr easonabl eornoti sf ort he
cour tt odeci de, buti tappear sf rom t hecasest hatf orar est raint
tobeenf or ceablet her emustbeal egi timat ei nt erestt obe
prot ected.I tmustal so be shown t hatt he dur at i
on and
300
[1894]A.C.532
301
SeeEssoPet r
oleum Co.Ltd.V.Har
per
s’sGar
age
(Stourpor
t)Lt
d.[1968]A.C.269
302
303
[1967]NCLR114
[
1916]A.C.688

185
geogr aphi calext
entoft her estr
aintarenotoutofpr oporti
onto
the int erestidentifi
ed.Hence,i n a sale ofbusi ness,itis
l
egiti
mat et oseekt opresentt hev al
ueoft hegoodwillofthe
business by pr eventi
ng t he v endor from sett
ing up i n
compet it
ionwi tht hepur chaser.I ncontract
sofempl oyment,
rest
rai ntst opreventthelossoft radesecretsorthepoachingof
customer st o whom t he empl oy ee had access ar e al
so
permit ted.

Dur ess
Clearly,aper soncannotbesai dt ohav econsent edt oapr oposal
i
fsuchconsentwasobt ainedbyt hreat sorundueper suasi on.
Duressandunduei nf l
uencear et herefor er ecogni sedatbyl aw
andequi tyrespect ivelyasf actorswhi chmayv i
tiateacont ract.
Ifei t
heroft hesef actorsi spr oved,t he cont ractbecomes
304
voidableatt heopt ionoft heoppr essedpar ty.
Duressatcommonl aw i sconf i
nedt ocasesofact ual
viol
enceort hr eatsofv i
olencet ot heper son,t hatis,t hr eat s
calculatedt opr oducef earofdeat horbodi lyhar m.Hence,i fa
partyispushedi ntoanagr eementbyt hr eatsofphy si
cal assaul t
onhi sper son, oronhi sspouseornearr elatives, theagr eement
becomes v oi dable.For ex ampl e,i n Fr iedeber g-seel ey v.
305
Klass, thedef endant sf orcedt hepl aint i
fftosi gnar eceiptf or
herjewel caseandi tscont ents, l
eft90poundsonhert abl e, and
tookt hecaseaway .Itwashel dt hatt hedur essv i
tiatedt he
agreement .
Wher ethedef endantal legest hathewasi nducedbyt hreat
ofv iolencer athert hanact ualv iol
ence,hewi llnotsucceed
unlessi tisev identt hatthet hreatwoul dbei l
legal,ifcarriedout .
Whi l
eat hreatt ocommi tat ortoracr i
mef allswi thint he
recogni sed

304
Thereare:however
,wri
terswhocontendthatacontr
act
whichisbroughtaboutbyduressi
sv oi
d;seeLant
ham 29
MLR615
305
(1957)Times19February101SolJo275

186
 306
categor y,at hreattocar ryoutal awf ulactdoesnot , even
whent heper formanceoft hethreat enedactwoul dhav ebeen
3071
detri
ment alt ot he per son so t hr eat ened. ' Wher e onei s
i
nduced by unl awfult hreatt o ent eri nto a cont r
act ,such
contractr emai nsv i
ti
at eddespi tepr ooft hatt heaf fectedpar ty
308
hasot herr easonsf orcont racti
ng. Thet hreatdoesnotev en
havet obet hemai nr easons.Howev er, wher et het hreati snota
reasonatal lforcont racting,thecour tswoul dr efuset odef eat
theeff ectoft hecont ract.
Commonl awdur essdev el
opedasav er ynar rowconcept
sot hatdur essofgoods,t hatis,at hr eatt osei zeaper son’s
goodsunl esshepai dasum ofmoneyorconf erredsomeot her
benefitont heper soni ssui ngthet hreat ,wasnotr egar dedas
309310
beingenought ojustifytheset ti
ngasi deofacont ract. but
321
i
twashel di nT. D.Keeganl td.V.Pal mer t
hatmoneypai d
311
underdur essofgoodsmayber ecov er ed. Recentaut horiti
es
i
ndicat eadepar tur
ef rom t hisnarrowper cept i
on.I tseemsnow
thatacont ractmayi ndeedbeav oidedongr oundsofdur essof
goods.Thepossi bil
it
yoft hateventwasbr oachedi nocci dent al
wor l
dwi dei nvest mentcor nv.Ski bsa/ savant i
,thesi boenand
thesi botre312 buti thassi ncebeenconf irmedi natl eastt wo
313
l
atercases.

Undueinf l
uence
Undueinfluenceisanequi tabl
edoct r
ineandi thasawi der
appl
icat
iont hant
hecommonl awdoctri
neofdur ess.“I
nacourt
ofequit
y,ifaobtainsanybenefi
tfrom bwhichintheopi ni
onof
thecourtprevent
sbf r
om exerci
singanindependentjudgement

306
Smi t
hv .Mont ei
th(1844)13M &W 427
307
Seewar e&deFr ev
ill
eLtdv.MotorTradeAssociat
ion[1921
]3K.B.40
308
SeeEdgi ni
gtonvFi t
zmaur i
ce(1885)29ChD459: Bart
onv .
Ar mstrong[1975]
309
Skeatev .Beale91840)11Ad&El983.
310
[1961]2Ll ol
ydsRep293
311
SeealsoAst leyv.Reynolds(1731)2Str
a.915
312
[1976]1Ll oy
d’sRep293
313
DinnskalShii
ppingCoSav .I
nter
nati
onalTranspor
tWorkers’
Feder ati
on,TheEv i
aLuck[1991]4E. R.871ANDThe‘ Alev’
[1989]1Ll oyd’sRep.138

187
i
n

188
themat teri nquest i
on,bcansetasi det hecont r
actorr ecov er
thegi ft.Mor eov er ,i
ncer taincasest her elat i
onbet weenaandb
maybesucht hatahaspecul iaroppor tunitiesofex er cising
i
nf l
uenceov erb.I fundersuchci rcumst ances,aent ersi ntoa
cont ractwi thb,orr ecei vesagi f
tf rom b,acour tofequi t
y
i
mposesupon a t he bur den,i fhe wi shes t o mai nt aint he
cont ractorgi ft,ofpr ovingt hati nf actheexer tednoi nfluence,
314
fort hepur poseofobt ai
ningi t.” Theper sonundul yinfluenced
cansucceedi nset tingasi det hecont ractev eni fi
tisnotpr ov ed
thatt heot herpar tyint endedt oorbenef ittedhi msel fpersonal ly.
Itisenoughi ft heci rcumst ancesshowt hatot herper sonswer e
benef it
edatt heexpenseoft hei nt i
mi dat edpar tyort hatt he
i
nt erests of t hat par ty wer e not accor ded par amount
315
consi der at i
on.
Wher et hepar ti
esar ei naspeci al posi tionoft rustinr elat i
on
toeachot her ,e. g.,Lawy er /
client ;par ent/ child;doct or /pat ient;
priest/di sci ple,t heiragr eementi spr esumedt obev iti
at edby
unduei nf luenceoncet heweakerpar t
ymakest hatal legat i
on.
Thepr esumpt i onmayhowev erber ebut tedbyev idencet ot he
cont rary.I ft he par ties ar e notso speci allyr elated,undue
i
nf l
uencewi llnotbepr esumedandi tisupt ot hepar tyt hat
all
egesi tt oshowpr oof .
I
ti scl eart her ef oret hatunduei nfl
uenceext endsbey ond
threat st ot heper sonort ohi sf reedom Whenev erex cessi ve
pressur eoraut hor ityi sbroughtt obearonapar tytosuchext ent
thathi sf ree¬wi lliscompl etelyov er come,t heagr eementt hat
resul t
swoul dbev itiated.I ndeed,v ar i
ouscasesnow i ndi cate
thati tcov ersal lunconsci onabl ebar gai nsbr oughtaboutbyt he
abuseofposi tion,ort heoppr essi onofaweakercont ract i
ng
par tner.Ital socov ert heemer gi ngcl assofeconomi cdur ess.
Thesenew dev elopment swer eher al dedi n1966byLor d
Denni ngM. R.I nd&cbui ldersv.Rees316wher ehehel dt hatt he
plaintif
f s’consentt o accept ance ofpar tpay menti nf ull
sat i
sfact ionofadebtwasnot rueaccor d.I nthatcase, debt or’
s
wifehel dt hecr editort or ansom.Thecr edi torwasi nneedof
314
AshburneranEqui y2ndEdn.P.292.Seeal
t soAl
lcar
dv.
Skinner(1887)236Ch.D.145
315
Bull
ockv .LloydBankLtd.
,[1955]Ch.317
316
[1966J2Q. B.617

189
moneyt
omeethi
sowncommi
tment
sandsheknewi
t.

190
 317 318
Again,i n Ll oy d’sBankl td.v.Bundy , lor d Denni ng
rev i
ewedal lther elatedcat egor iesof‘ duress’ ,‘ unconsci onable
transact i
on’ ,‘underi nf l
uence’ ,et candconcl udedt hatasi ngle
threadr unst hr ought hem al l:inequal it
yofbar gai ningpower ,by
virtueofwhi chEngl ishl aw gi vesr elieft oonewhowi thout
i
ndependentadv ice,ent ersi ntoacont ractont ermswhi char e
ver yunf airort ransf erspr oper tyf oraconsi der ationwhi chi s
grossl yi nadequat e,whenhi sbar gainingpoweri sgr ievously
i
mpai redbyr easonofhi sownneedsordesi r
es,orbyhi sown
i
gnor ance or i nf ir
mi ty coupl ed wi t
h undue i nf l
uences or
pressur ebr oughtt obearonhi mbyorf ort hebenef i
toft heot her.
Ot herjust icesoft hecour t,er i
csachsandcai r ns,L. JJdi dnot
howev erex pr essanyopi niononhi ssubmi ssi on,pr eferri
ngt o
restt heirdeci si
onont het rustconcept .
Whi l
et het rueef f
ectsofi nequal i
tyofbar gaini ngpower
remai nuncer tain,t hei deaofeconomi cdur essappear st obe
takingadef initeshape.Thel atterconceptr ecei vedt hesuppor t
m
oft hePr ivyCounci linpaoonv .Lauy iu. Iti scl ear lyaf actor
whi chmaymakeacont ractv oidabl epr ovidedt hatt hedur ess
trulyamount st o acoer cionofwi l
lwhi chv iti
at esconsent .
Howev er, sincet hef actsoft hatcasedi dnotj ust ifyaconcl usion
thatt hecont ractwasi nducedbydur ess, abet teraut horitycould
bef oundi nt hecaseofnor ther noceanshi ppi ngcompany
319
l
imi tedv .Hy undaiconst ruct i
oncoy .Ltd.
Recentcl arifi
cat i
onsoft hedoct r
ineofeconomi cdur ess
showt hati tisnotenought hatsomepr essur ewasex erted.In
order t ov i
tiate a cont ract ,t he pr essur e must al so be
320
i
llegitimat e.

317
[
1975]Q.B.326
318
11973]3Al lE.R.65at79
319
[
1979]Q. B.705
320
AlecLord(garages)Lt
d.V.Tot
alGbLtd.[19851IAll
ER303;
Wi l
l
iamsRof feybros&Nichol
ls(cont
ractor
s)Ltd.[
1990]1
AllE.R.512

191
 CONTRACTUALCAPACI
TY

Capacityt ocont ractgoest ot hei ssueofenf orceabil

ityof
contracts.Wher eaper sonisnotr ecogni zedi nLawascapabl e
ofent ering i
nt o a cont r
act,such a cont ractmay notbe
enforceableagai nsthi m ortheot hercont ractingpar ty.Certai
n
classesofper sonsenj oyspecialstat usi ncont r
actualmat ters.
The most pr omi nent among t he v arious gr oups ar e
corporationsandi nfants.Nigeri
anLaw al soconf ersspeci al
status on ill
iterates f orcont r
act ualpur poses.Cont ractual
capacityofcor por ati
onsi sregulatedbyt hest atutecr eati
ng
321
suchcor poration, whil
ethatofi nfant sisgov ernedpar t
lyby
thecommonl awandpar tl
ybyt heInf ants’ ReliefAct1874.The
specialposi t
ion ofan i l
li
ter
ate ent er
ing i nto a cont racti s
322
regulat
edbyt heI lliter
ateProtecti
onAct .

Whoi sanI nfant?

Atcommonl aw anyper sonbelow theageof21y earsi san
i
nfantforcontractualpur
poses.Suchaper sonhasnocapaci t
y
toenterint
ocont r
actexceptcont
ractsfornecessari
es.Under
323
cust
omar ylaw, pubert
ymar kst
hebeginningofadult
hood.

Rational efortheRule
Thedesi retoprotectani nfantfrom hisorherowni nexperi
ence
by st ri
ki
ng down cer tai
n cont racts with adult
sf orms t he
rati
onalef ort
heRul ethatani nfanthasnocapaci t
ytoenterinto
contract.Thisi sachi eved bydi scouragi
ng t heinf
antf rom
runningi ntodebtbybor rowingorbuy ingthingsoncr edit
.I n
practicehowev erthel aw t i
lt
sheav i
lyinfav ouroftheinfant ,
i
nfant scont r
actsareoft hreet ypesnamel y:-Vali
dcont r
act s,

321
Seealsoexampl ei
nt hecaseofJointSt
ockCor por
ation.
Compani esandAll
iedMat t
ersAct,
Capt.C.20(Vol.3)2004
L.F.N.
322
FormerlyCap881958LawofNi ger
iabuthassincebecome
aSt at
eMat t
er,andseeNow, CapI.3(Vol.3)2003Lawsof
LagosSt at
e.
323
Labinj
ohv.Abake( 1924)5NLR33.

192
voidabl econt ract sandv oidcont racts.
Val i
dCont ract s
Asi nf anthascapaci tytoent eri nt ocont ractfornecessar i
esat
commonl aw.TheI nfant s’Rel iefAct1874di dnotal tert he
position.
The t er m “ necessar ies’i sr elat i
ve and notabsol ut e.
“Necessar ies”i ncl ude f ood,cl othi
ng,shel terand medi cal
services.Theyhav eatv arioust imesbeenhel dt oi ncludeal so,
l
egal andeducat ional serv i
ces, engagementr ing, hireofahouse
racing bi cy cle and cont ractofappr ent i
ceshi p pr emi um.I n
Wal terv .Ev er ard324i twashel dt hatani nfantwasl iablet opay
thebal anceofappr ent i
ceshi ppr emi um t hreeandhal fy ear s
aftert heduedat e, becauset hecont r
actwasf orhi sbenef i
tand
thatf oror dinar ynecessar ies suppl ied t o hi m.Si mi l
arlyi n
325
Rober tsv.Gr ay, ani nfantbi lliardspl ay erwashel dboundbya
cont ractwhi chr equi redhi mt ounder takeapl ayingt ourasa
professi onal play er.
Sect i
on2oft heSal eofGoodsAct1893def inesgoodsas
“goods”sui tablet ot hecondi ti
oni nlifeoft hei nf antatt i
meof
saleanddel ivery .Thequest ionofwhatgoodsar ecapabl eof
beingnecessar iesi saquest i
onofl aw
Whatgoodsar ecapabl eofbei ngnecessar iesi saquest i
on
oflawandi thasbeenst at utorilydef inedbysect ionoft hesal e
ofGoodsAct ,1895as“ goods”sui t
ablet othecondi t
ioni nlifeof
theinf antatt het i
meofsal eanddel i
ver y.Howev erwhet hert he
goods suppl i
ed ar e act uallynecessar i
es inr elation t ot he
particul arinf antatt hepar ti
cul art imei saquest i
onoff act .
Thegoodsmustbenecessar ynotonl yatt het i
meofsal e
butatt het i
meofdel ivery.Ift heyceasedt obenecessar iesand
deliver ye. g.becauset hei nf anthasbeenanot hersour ce,t hen
hei snotl i
abl et opayf ort hegoods.Thegoodsar eal so
i
rrecov erabl e ev en t hough t he suppl iert hatt he i nfanthas
enoughoft hegoodsi nquest i
on.

324
18912Q.B369.
325
19131K.B.520.

193
 InNasl iv.Ininan326aSav il
l
eRowt ailori nLondonsuppl i
ed
clot
hest ot hedef endant,aCambr idgeUni ver si
tyunder graduate
whowasani nfantatt hetimeofsal eanddel iv
er yoft hegoods.
Thecl ot hesi ncludedel evenf ancywai stcoat s.Theywer eheld
nott o be necessar i
es because t he inf antwas adequat el
y
suppli
edwi t
hpr operclothingaccor dingt ohi spositioni nlif
e.
The pl ai
ntiffbear st he bur den ofshowi ng t hatgoods
suppli
edar enecessar i
es.Andi tisaquest ionofmi xedl awand
fact whet her the goods or ser v i
ces can be t reated as
necessar iesi nt hemsel v
es.Asabr adgui de,Bar onAl derson
327
saidinChapl ev .Cooper t hat“ arti
clesofmer el uxuryar e
alwaysexcl udedt houghl ux uri
esofut i
l
ityar ei nsomecases
328
all
owed. Theposi ti
onwi lldependupont hei ndi
v i
duali nfant,
hissoci al stainandhi sact ual r
equirement satt hemat eri
al t
ime.
Changi ng soci etalv alues wi l
lal so af fectt he conceptof
necessar ies.Whatwas a l uxuryy esterdaymaybecome a
necessi tyt oday.

InfantsandTr adi ngCont racts

Ani nfantisnotboundbyhi stradingcont racts.InCowem v .
Nield329 thedef endant ,ani nfantwhocar r
iedonbusi nessasa
hayandst rawmer chantcol l
ect edmoneyf rom t hepl ainti
ffbut
fai
led t o suppl ypar toft he goods or der ed whi let he one
deliveredwasr ejected. Phil
limor eJ. onappeal fr
om t hecount ry
courtsai d:
“I
ti snodoubtcor rectt osay ,inagener alsense,t hat
contractsofacer tainchar act erar eenf orceableagai nstan
i
nfanti ft heyar ef orhi sbenef it,butani nfanti snotnecessar i
ly
l
iableonacont ractmer el
ybecausei ti
sforhi sbenef it
...theonly
contractswhi ch,i ff ort hei nfant’
sbenef i
t ,areenf orceable
againsthi m ar econt ract srelatingtot heinfantsper son, suchas
contractofmar riage,and cont racts ofappr enticeship and
service . ... tr
adi ng cont racts does notcome wi thint hat
330
categor y.”

326
19082K.B.1
327
(
1844)13M&W.252
328
I
bid,atP.258.
329
1912K. B.419.
330
I
bidatp.422.SeealsoMercanti
l
eUni onCorpor
ati
onv .Bal
l
(1937)2 K.B.49;At iy
ah.Introduct
ion t
ot he Law of
Contract, quest
ion the logi
c behi nd thi
s obv i
ous

194
 Theonl ywayt hatsuchacont r
actcoul dbebi ndingont he
i
nf antwoul dbebywayofact i
oni ntor t.Thecasewast her efor e
remi ttedt ot heCount ryCour tf oraf reshhear ingont het ort
i
ssue.
A cont ractf ornecessar i
esmaynot ebebi ndingont he
i
nf antunl essi ti
sgener allyf orhi sbenef it.Thecont ractmustbe
viewed as a whol et o ascer t
ain whet heri ti s oner ous or
331
reasonabl e.InDoy lev.Whi t
eCi tySt adium Lt d, ani nfant
boxerwashel dboundbyt her ulesoft heBr i
ti
shBox i
ngBoar dof
Cont r
ol whichst atedt hataboxerwhobr eachedoneoft her ul es
332
woul df or
feitthi
spur se.
Thebasi soft hel iabi li
tyoft heinf anti nr espectofcont ract
fornecessar i
eshasf oral ongt i
mer emai nedacont rov ersial
i
ssue.Sect i
on2oft heSal eofGoodsAct1893pr ov i
dest hatan
i
nf anti stopayar easonabl epr i
cef orgoodsact ual l
ydel ivered.
Ift hebasi sofl i
abi l
ityi scont ractualt hent hei nfantwi l
lbe
requi redt opayt hecont ractpr i
ce,andl i
abili
t ytopayneednot
depend upon del iverysi nce cont ractmaybe execut or yor
execut ed.Howev eri fhei sl i
abl eonl ywhensuppl i
edi tmeans
thatt hebasi sofl i
abi l
ityi snotcont ract ual butquasi -
cont ract ual
(i
.e.hei sli
abl enotbecausehehasagr eedt obeboundbut
becausehehasact ual l
yr ecei vedav aluabl ebenef i
tf orwhi ch
333
equi tydemandspay ment s).
334
InNashv.I nman( 1908) 2K. B. FletcherMoul t
on,L.J. ;
expl ained the under lying r eason f ordi sti
ngui shing bet ween
ex ecut oryandexecut edcont ract sindet ermini ngt heliabi l
it
yt o

discriminat i
onast owhyani nf antwhohascapaci t
ytoenter
i
nt o cont ractas a t r
ader whi ch isaf orm of sel f
-
empl oyment ?
**( 1935)K.B.110
332
Seeal soRober tv.Grey( 1913)K.B520
333
Not ethatt hi
sar gumenti slimi tedtocont ractsforsupplyof
goodsandnott ocont ractf orservi
cer sl i
keeducat i
on.
Medi calcar e,l egalser v
ices orcont ractofser v
ice -
empl oyment .
334
Supr aatP.8.I nWal terv .Ev erard(1891)2Q.B.369Lor d
EstherM.R.expr essedt hev iewt hatani nfantcanbesai d
onlyi fthecont r
acthasbeenexecut ed.Buti nRober tv.
Gray,supr a,Hami lt
on L.J.f ail
ed t o appr eci
atet he
disti
nction,betweenex ecutorandex ecut edcontract
sonce
i
ti sdealingwi thcontractsf ornecessar ies.

195
t
hei
nfant
.Hesai
d:

196
 “Aninfant,l
ikealunatic,i
sincapableofmaki ngof
purchasei nthestrictsenseoft hewor d;butifa
mansat i
sfi
edtheneedoft heinfantorl unat
icby
supplyingtohimnecessar i
es,thelawwi l
l i
mplyan
obli
gation tor epay hi m fort he serv i
ces so
rendered,andwi l
lenf or
cethatobligati
onagai nst
the est ate of t he i nf
ant or l unat i
c. The
consequencesi sthatt hebasi soft heact i
oni s
hardl
ycont ract
.

Voidabl eCont ract s

At common l aw,cont ract sf or suppl y of goods ot her
necessar i
es,ar ev oidabl eagai nstt hei nfant si nthesenset hat
theyar enotbi ndi ngonhi m.Apar tfrom suppl yofgoods,ot her
cont r
act ssuchascont ract sofl oanandmar ri
agecont ract sas
wellasaccount sst atedar eal soi ncluded.Bef ore1874t heonl y
wavt hatani nfantcoul dbeboundbyanyoft hesecont ract swas
byr atif
icationonr eachi ngt heageof21y ears.
The i nfantRel iefAct1874,al t
ered t he common l aw
positionbydecl aringcont ractsf al
li
ngwi t
hi nthiscat egor yof
voidablecont ractabsol utelyv oid:-“ allcont racts,whet herby
speciallyorbysampl econt ract,hencef ort hent eredi ntoby
i
nfant sf ort her epay mentofmoneyl entort obel ent ,orf or
goodssuppl iedort obesuppl ied,( othert hancont ract sf or
ed335 wi
336
necessar i
es)andal laccount sst at thi nfants” ar eno
l
ongerr atif
iablebyt hei nfant .
The actdi d notef fectanot hercat egory ofv oidabl e
cont r
act s,namel yt hosecont ractswhi char epr imaf aciebi ndi ng
ont heinf antunl essr epudi at edbyt hei nfantwhi lststil
lani nfant
337
orwi thinar easonabl et imeaf terbecomi nganadul t. Such
cont r
act sconf eront hei nfanti nterestofacont inuousnat ure
Exampl es ar e cont r
act s ofl ease,ofpar tnership and f or
acqui si
tionofshar esi nacompany .I nNor thWest er nRyv.
338
McMi chael , ani nfantwassuedf oracal lonr ail
wayshar es.It

335
Thisstatut
ewasr epeat
edi nEngl
andi n1987bytheMinors
Cont r
actActoft hatyear.
336
S.21R.A.1874
337
Edwar dsv.Carter[1893]repudi
ati
onnear l
yfi
veyear
saf t
er
infantcameofagehel dt obei nvald.Cor
i pev.Overton
(1833)10Bi ng252r epudiat
ionduringinf
ancyandbefore
par t
nershi
pcamei ntobei
ngheldtobev al
i
d.
338
(1850)6Ex ch.114.

197
washel dt hatt hewasboundt opay ,Par kBl i
kenedt heposi tion
oft hei nfantint hesi tuat i
ont ot hatofani nfantpur chaserofr eal
estat ewhohast akenpossessi onandt her ebybecomesl iabl eto
alltheobl igationsat t achedt ot heest ate,e.g.pay mentofr ent .
Theconsequencesofr epudi ationdependupont hest at eof
agr eementandnat ur eofobl igat i
onassumedbyt hei nfant .
Wher et hecont racti sst illexecut or ,thei nfanti sent i
tledt oa
339340
totalf ailureofconsi der ationasi nCor pev.Over ton. I
t
doesnotmat tert heconsi der at ionwasi nducedbyt hei nfant ’
s
repudi ationoft hecont ract.Howev er,ani nfanti snotent itledt o
ar efundofmoneypai dunderanexecut edcont ractsi ncet here
i
snof ailureofconsi der at i
oni nsuchasi tuation.I nVal ent iniv .
353
Candi itwashel dt hatani nf antwasnotent itl
edt oar ef undof
£68pai dunderahi reagr eementont hegr oundt hathehad
der i
vedsomebenef itf rom t hecont ractbef orether epudi at i
on.
Simi l
ar lyi n Sl einber g v.Scal a( Leeds) Lt d341 an i nfant
shar ehol derwashel dnotent i
tledt oar efundf ort heshar es
alr
eady acqui red bef or er epudi at i
on ev en t hough she had
receiv ednodi v idendsont hem.
Thei ssueofr ecov erabi li
tyofbenef it
sorpr icespai dunder
voidabl econt ractal soar isesi nr espectofv oidcont ract sunder
sect i
on1oft heI nfant s’Rel iefAct .Itwoul dseem t hati nt he
l
att ercase, ani nf antcanr ecov ert hepr icepai donl ywher et here
hasbeenat ot alf ailur eofconsi derat i
on.Thi sonl yhappensi n
veryr arecases.Theuseoft hephr ase“ absol utelyv oi d”t o
descr ibesuchcont ract si st her ef oremi sleading.
Ther elatedi ssuesofenf or ceabi li
tyofsuchcont ract sand
passi ngofpr oper tyal sosuppor tt hev iewt hatther ei snot hing
“absol utelyv oi d”aboutsuchcont ract si nthet radi ti
onalsense
ofcont ract smaybeenf or cedby ,butnotagai nstt heexecut ion
ofsuchacont actwhi chgi v et hei nfantt hel egalr ightt opassa
goodt i
tl
et othi rdPar tycont rar yt owhatobt ai
ni nt hecaseof
342
voidcont ractbet weenadul ts.I nJenni ngsv.Rundal l

339
Supranote16
340
(1889)24QBD160
341
(1923)2Ch.452
342
(1979)8Term Rep.335

198
thepl aintiffbr oughtanact ioni nt ortagai nstt Iefendant,as
hed
i
nf ant;fort hei njurycausedt oahor sehi redbyhi m.I tthatthe
actioncoul dnotsucceed. Lor dKeny onsai dthat“ i
fitwer eint he
powerofapl aint i
fftoconv er tthatwhi char isesoutofacont ract
i
nt oat ort,ther ewoul dbeanendoft hatpr otectionwhi chthe
l
awaf f
ordst oi nfants.”
SimilarlyinFawcet tv .Sinethur st,343
anact ionbagai nstt he
def endanti nbot hcont ractandt ortf orgoi ngbt heagr eed
distance,dur ingwhi cht hev ehiclegotdamagedbyf i
re,fail
ed
becauset het or twasnoti ndependentoft hecont r
act .,
344
ButinBumandv .Haggi s, theact ionsucceededbecause
thei nfantwashel dt ohav egoneout sidet hef ourwal l
soft he
cont ract.Thei nf antwentagai nstt heexpr essi nstructionsthat
thehor sewasnott obej umped. Besi des, theinfantal solentt he
hor set ohi sf riendaf t
erhi ri
ngi tfrom t hepl ainti
ff,anact ion
whi chWi l
lesJ.descr ibedasbar et respassnotwi t
hint heobj ect
andpur poseoft hehiring.

InfantandMi srepr esentation

Ther ul ethatani nfantcannotbesuedi nt ortforabr eachof
contractappl i
esev enwher et heinfantdel iberatelydeceivedt he
adultby mi srepresent i
ng hi s age.Howev er,t he equi table
doctrineofr esti
tutionmaybeappl iedt ocompelt heinfantt o
restoret hegoodsorbenef i
tf raudulent l
yobt ainedt othepl aintif
f.
Inpract icehowev er ,t
heusef ulnessofr est
itutionasar emedyi s
l
imi t
edbyt her equirementt hatr est i
tuti
onappl i
esonl ywher e
theinf antst i
llhast hev erygoodsobt ainedi nhi spossessi on.
Tracingasacor ollaryofthepr i
ncipleofr est i
tuti
oni sther efore
i
nappl icableal t
hought hecaseofSt ocksv .Wi lson345suggest s
otherwi se.Thegener alprincipleofl awasappl i
cabletoNi geria
346
i
sasst atedi nLesl i
eLt d.v .Shei l
l t
hat“ Rest i
tuti
onst opped
wher er epaymentbegan” .
Il
li
terat e
Il
li
terate bel ongst ot he class ofpeol e who can be easi l
y

343
[
1914]84L.
J.K.B473
344
14C.B.(N.S)45;143E.R.360
345
[
1913]2K.B.235
346
[
1914]3K.B.607
199
 347
expl
oit
edordef raudedi nt hemakingofbargains; t
herefor
e
notallcontract
s ent ered int
o byi l
li
ter
ate are enforceabl
e
agai
nstthem.Howev er,theprotect
ionaccordedtoi l
li
terat
eis
rest
ri
ctedtowrit
tencont ractsordocuments.

Il
lustrat
esPr ot ectionAct
Section3oft heI ll
i
teratePr otecti
onAct,providest hatawr iter
documentatt her equest,onbehal forinthenameofani l
l
iterate
personmustal sowr i
teonsuchl ett
erorotherownnameast he
writ
esonsuchl etterorot herdocument ;bysodoi ngthewr iter
affi
rmst wot hings.Fi rstl
y,thathewasi nst
ructedt owrit
et he
l
etterordocumentbyt heper sonfrom whom itpur port
stohav e
been wr it
ten and t hatt he documentf ull
y and cor rect l
y
representshisinst r
uction.Secondl y,
thatwheret hesignatureor
workoft heil
lit
er ateisont hedocument ,t
hathesi gnedormade
themar kafterthedocumenthadbeenr eadov erandexpl ained
tohim.
361a
LandInstrument sRegi str
ationLaw Sect i
on8oft heabove
l
aw providest hatnoinstrumentex ecut
edinNi geri
aaf t
erthe
commencementoft hel aw,wher et hegrant
ororoneoft he
grant
orsisani l
li
ter
ate,shallber egist
eredunl
essi thasbeen
execut
ed by such i ll
it
erate grantorsint he presence ofa
Magistr
ate orJust ice oft he Peace as a wi t
ness tot he
348
tr
ansacti
on.

Whoi sanI l
li
terat
es?
Ani l
l
iteratei
snotdef i
nedbyanyr elev
antstat utes.Thecour ts
al
sohav enotadopt edauni form approacht ot hedef i
nit
ion
“l
i
teratef ort
hepurposesoft heseprovisi
ons.
349
InPZ&Co.Lt d.v.GusauandKant ama, theHi ghCourt
•i
nterpreted the word“ il
l
iter
ate”to mean,i l
li
t erateint he
l
anguageused i nt hedocumentunderconsi der ati
oni.
e.“ a

347
Sagay,op.ci
t.p.385.
361a
SeeLandInstrumentsRegi
str
ati
onLawCap.L.(
Vol
.4)2003
LawsofLagosSt ate.
348
VincentO.Awosi l
ev.Chi
efF.O.Sot
unbo(
1992)NWLR514
349
(1961)NR.N.
L. R.I

200
per sonwhoi sunabl et or eadt hedocumenti nquest ioni nthe
l
anguagei nwhi chi twaswr itten”,aswel las“ aper sonwho,
thoughnott otall
yil
li
t erate, isnotsuf fi
cientl
yliteratet or eadand
undercont entsofthedocument ”.
350
I
nanot hercase, Oput aJ. ,ashet henwasdescr ibedas
i
lli
terateper sonasaper sonwhoi sunabl etounder standi ng,t he
documentmadeorpr epar edonhandnot edt hati l
li
ter acyi s
pur elyrelative.Thesamev iewhasear l
ierbeenex pressedbyt he
Supr emeCour tofNi ger a351 andt
i heWest ernSt ateCour tof
352
Appeal . Howev er,theSupr emeCour tofNi ger iainP. Z.&Co.
Ltd.v .GusauKant oma adopt edt hedi ct
ionar ydef i
ni ti
onof
“i
ll
iterat e”whi chconnot est ot alinabili
tyt oread,unl ear nedor
353
uneducat edi nanyl anguage. I
tissubmi tted,i nagr eement
withSagay ,thataf unct ionalappr oachi stobepr eferredsi nce
theobj ectiveoft hesel awsi st o“ protectil
li
ter atesf r
om bei ng
takenadv antageofbybei ngmadet osi gnoracknowl edgea
writing ordocumentwhi ch does notbearoutt hei rr eal
354
i
nt ention”

ScopeofPr otection
Thepr otectiongiventoani l
li
terateisnotabl anketone. Thel aw
aimsatst ri
kingabal ancebet weent hei nterestoft heilli
terate
andt heinterestofal i
terat
epersonwhohasdeal tequitablywi th
theill
it
erate. Henceitisnottobeusedasani nstrumentoff r
aud
byt hei l
li
teratetoescapet heconsequencesofhi sact i
on.I n
Lawal v.G. B.Oll
ivant(Nigeri
a)Lt d.
,thecour tputt hepri
nci plein
cleart erms when i tdeclared:“ whilet he law i s aimed at
preventingani ll
it
eratefrom bei
ngcheat ed,itdoesnot. ..provide
355
him wit haweapont ocheatot hers”. Ther elevanceoft his
commenti snotdi minishedbyacont raryviewt akenoft hef acts

350
Osef ov .Uwania[1971]IAL.R.421( Sagay,op.ci
t.p.390).
351
S.C.O.A.Zur aV.Okon[ 1960]N.R. N.L.R.34
352
Lawalv.G. B.Otti
vanr(Nigeri
a)Ltd.11970]A.L.R.208
353
Sagay ,descr ibes the courts approach as har sh and
unfortunate which ifappl i
ed withoutmodi fi
cation wil
l
under minethemai nobjectoftheIll
it
eratesProt
ectionAct,
andsi milarl
aws-I bi
dp.391.392
354
Per.Tay l
orF.G.P.Z.Co.Lt dv.GusauandKanomaSupr a
355
Cont rast:Osif
ov.Uwani aSupra,U.A.C.v.Edems&Aj ayi
Supr a.

201
ofthecasebyt heSupremeCour t,si
ncet hei
robject
ionwas
based on a t
echnicalrequi
rement-t he executi
on ofthe
documentbyorbeforeamagistr
ateorjust
iceofthepeace.

EffectofNon-compl i
ance
Itwoul dappeart hatt omaket hel egalconsequencesofnon-
compl iance isto make t he contractunenf orceable att he
i
nst anceoft hewriterofthedocument .Tot hisext entt heef fect
i
st hesameaswi thcont r
actenter
edi ntobyi nf ants.Ani lli
terate
can enf orceagai nsthi m.Howev er,wher ebot h par t
iesar e
i
lli
terate,eit
heroft hem canadduceev i
dencet oshowt hatt he
356
document sisatruer ef
lecti
onofthepar ties’intention. At hird
partmayal soenf orcethecontractagai nstt hei ll
it
erat ewher e
headducesev i
denceofot herwitnessest oest abli
sht hef act
thatthedocumentwasr eadoverandexpl ainedt othei ll
iter
at e
357
personbef orehesi gnedort humb-pr intedit.

PRI
VITYOFCONTRACT

Ev er
yper sonwhosuest oenf orceasi mpl epr omi semustshow
thathehasgi ven consi derati
on f ori t
,hencet her ul
et hat
consider ation must mov ef rom t he pr omi see.Thi s also
suggest st hatonl ythepar t
iestoacont ractcansueoni t.Wher e,
forinstance, twopar ti
esagr eet oconf erabenef i
tort oimpose
anobl i
gat i
ononat hir
dpar ty,thatthirdpar tycannotenj oyt he
358
benefitbybr inginganact i
onont hecont ract. Neit
hercanhe
becompel ledbyl egalact i
ont odi schar get heobl i
gation.I n
effectthet hi
rdpar ty,whoi snotpr i
vyot hecont ract,cannotbe
l
egal l
yaf fectedbyi t.InDunl opPneumat icTy reCoyLt d.V.Sel f
359
ridgeLt d. thePssol danumberoft y r
et oDew&Co.ont he
term thatDew & Co.woul d notr esel lt hem bel ow cer tain
schedul ed pr ice and t hat,int he ev entofa sal et ot rade
customer s,t hey woul d ex t
ractf r
om t he l attera si milar
undertaki ng. Dew&Co. sol dthetirest oSel fri
dge, whoagr eedt o
observet her estri
ctionsandt opayMessr sDunl opt hesum of

356
U.A.
C.v.Edems&Aj ay
iSupra;Ezrav.Ndikwe[1961]ALL
NLR564
357
ukpanv
Uj .Orovuyovbe[1967]NMLR287.
358
Dutt
onv.Poole,(
1677)2Lev.210;Pri
cev.East
o( 1933)4B
&D433.
359
Supr
a

202
£5f oreacht yresol dinbr eachoft hisagr eement .Sel fr
idgei n
factsuppl i
edt i
rest ot wooft heircust omer sbel ow t helisted
priceandDunl opsuedt hem f ort hel iqui dateddamages.The
cour thel dthatDunl opcoul dnotsucceed, asi twasnotapar t
y
tot hecont ractbet weenDew&Co.andSel fri
dge.Accor dingt o
Lor dHal dane, onl yaper sonwhoi sapar tyt oacont r
actcansue
oni t.Itdidnotmat t
ert hatt hatcont ractwasmadef ort he
360
benef i
tofDunl op.
Itseemsal sot hatev eni fDew &Co.hadcl aimedt obe
actingasagent sofDunl opi ni mposi ngt hepr i
cer estri
ctions
gener al l
yonal lret ai
lers, Dunlopwoul dst i
ll nothav esucceeded.
361
InTaddy&Co.v .St erious&Co. , suchanar rangementwas
362
dismi ssedasanat t
emptt ocr eatecont ractbyul ti
mat um.
Howev er,f r
om t he v iewpoi ntofcommer ci almen,t he
doct rineofpr i
v i
tyofcont racti squi t
eani nconv eni entone.I n
moder ncommer cialtransact ions, therear emanyoccasi onson
whi chacont r
acti smadef orthebenef itofat hirdpar t
ywi t
ht he
expect ati
ont hatt hebenef i
ciaryshoul dhav et hef ullri
ghtst o
enf orcet hecont r
act .Int hissi t
uat ion,t heappl i
cat i
onoft he
363
privitydoct ri
nebr i
ngsaboutunj ustr esul ts. Inmostcasest he
doct rine mer ely compl i
cates t he j udi cial pr ocess by
necessi t
atingdoubl elitigation.Asar esul t
,manyexcept ions
hav ebeenper mi ttedbypar li
amentandaf ewot her shav eal so
evol vedatcommonl aw. Someoft her ecogni sedexcept i
onsar e
asf ollows:

1.Cov enant srunningwithl and

364
Undert her ulei n Tul
kv.Moxhay , ar estr
ictiv
ecov enant,
bindi
ngapur chasernottoper form certainactsofowner shipup
thelandbought ,maybeenf orced,notonl yagai nsthim ast he
contracti
ng par ty
,butal so agai nstt hi
rd parties who l ater
acquirelandwi ththeknowl edgeoft hecov enant .Inthatcase,
theplainti
ffownedsev eralplotsofl andi nLeicesterSquar e.He
soldthegar den

360
SeealsoChubaI kpeazav.A.C.B.[1965]N.M.L.
R.374
361
|
1904]1Ch.354
362
SeealsoUni onBankofNigeri
aPicv .Spar
kli
ngBrewer
ies
Ltd.&or s.[
1997]5NWLR( pt.505)344.
363
SeeforinstanceBeswickV.Beswick[1968]A.C.58
364
(1848)2Ph774.

203
i
nt hecent ret ooneEl ms, whoagr eednott obui l
duponi tbutt o
preservei ti ni ts ex isting condi tion.Af t
er a numberof
convey ances,t hegar denwassol dt ot hedef endant,Mox hay,
whot houghheknewoft her estri
ct i
on,pr oposedt obui l
d.The
plai
ntiffreali
zedt hathecoul dnotcl aim damagesf rom Moxhay
forbreachofcont ractundert hecommonl aw,ashehadno
contractwi th Moxhay ..Howev er ,he soughtan i njunct i
on
againstt he er ection oft he proposed bui ldi
ngs.The cour t
grantedt heinjunct i
on.Ast hedef endantknewoft heex ist
ence
ofthecov enant ,acour tofequi ty,bei ngacour tofconsci ence,
365
couldnotal l
owhi mt odi sregardit.
Althoughnot iceoft hecov enantwast hecr ucialf
act orin
Tulkv.Moxhay ,anaddi t i
onalr equi rementi snowi mposedon
thecov enant ee:inor dert obr ingasuccessf ulaction,hemust
haver etainedsomel andi nt henei ghbor hoodf orthebenef i
tof
366
whicht her estri
cti
v ecov enanti ssoughtt obeenf orced.

2.Cont ractsf orthehi r

eofachat tel
Asagener alr ul
e,wher eaman,bygi ftorpur chase,acqui res
proper tyf r
om anot her ,wi t
hknowl edgeofapr ev iouscont r
act,
l
awf ull
yandf orv al
uabl econsi der ati
onmadebyhi m wi t
hat hird
per son,touset hepr opertyinaspeci fiedmanner ,theacqui rer
shal lnot,tothedet rimentoft het hi
rdper sonandi nconsistent l
y
wi ththecont r act,useandempl oyt hepr opertyi namannernot
allowabl et ot hegi v erorsel ler.InDeMat t
osv .Gi bson367 for
ex ampl eA, char ter
edashi pfrom X. Whi lethechar tersubsisted,
Xmor t
gagedt heshi pt oBwhowaswel lawar eoft hecharter.B
nowt hreatensasmor t
gagee, tosel ltheshi pindi sr egardofAs
cont ractualrights.Itwashel dthatBcoul dbel egal lyrestr
ained
from doi ng so.Al so,i n Lor d St rathcona St eamshi p C.v .
368
Domi nionCoalCo. thecour tissuedani njunct i
ont orestrain
the appel l
ant ,who boughta sl i
p subj ectt o an exi sti
ng
char terpl
ay ,from usi ngi tinanymanneri nconsi stentwi t
ht he
char terparty.
365
SeealsoSmi t
hv .RiverDougl
asCatchmentBoar
d[1949]2
K.B.500
366
Formby v
.Barker[1903]2Ch.539
367
(1858)4DG&J276
368
[1926]A.C.108.Seeal soSwi
ssBankCoprav.Ll
oyd’
sBank
Ltd[1979]2AllER.853

204
3. I nsurance
Agoodex ampl eofthei nsur anceexcept ionmaybef oundin
section6( 3)oftheMot orVehi cles( Thir
dPar t
y)Insur anceAct ,
whichpr ov i
dest hatai nsur ershal lbel i
ablet oi ndemni fythe
personsorcl assesofper sonsspeci fi
edint hepol icyinrespect
ofanyl i
abi l
it
ywhi cht hepol icypur port
st ocov er.Thus,at hi
rd
partymi ghtquali
f yasbenef ici
arynot wit
hstandingt hefactthat
hewasnotapar t
yt ot hecont ractofi nsurance.I n Sulev.
Nonwi chI ns.SocietyLtd.,itwashel dthatthepl aintif
f,dri
verof
ani nsuredv ehi
cle,coul dcl aimi ndemni t
yf rom t hedef endant
369
companyagai nstlossesi ncur r
edasar esultofanacci dent. It
didnott hatthedr i
verwasnotapar tytothei nsurancecont ract,
whichwasbet weent hedef endantandhi sempl oy er.

4. Tr ust
Empl oy i
ng t het r
ustconcept ,at hir d par t
ymaysuet o
enfor cer i
ght sunderacont ractbycl aimi ngt hatthedef endant
was const it
uted as t rust ee oft he r ightf ort he pl aintiffs
370
benef it. Howev er,thecour tsar enev ert woeagert oper mi t
thi
sdev iceandt heyhav ehel dt hatanyt rustwhi chisintendedt o
371
benef itathi r
dpar tymustbeanex pressoneornoneatal l. For
i
nst ance,i n Re Schebsi nan,Of ficial Recei ver v. Car go
372
Super i
ntendent s ( London) Li mi ted and Schebsman.
Schebsmanwasempl oy edbyt wocompani es.Byacont ract
betweenhi m andt hem, oneoft iecompani esagr eedi ncer tain
event ualit
ies, t
opayasum ofmoneyt ohi swi dowanddaught er.
Thear gumentt hatt hiscont ractcr eat edat rustinf avouroft he
widowanddaught erwasr ejected. Accor di ngt oDuPar cqLJ, “..
.
unlessani ntentiont ocr eat eat rusti sclear ly!
”becol l
ectedf rom
thel anguageusedandt heci r
cumst ancesoft hecase,...t he
cour toughtnott obeast ut et odi scov eri ndicationssuchan
373
i
ntent ion.”

369
Sagay’sCasebookp. .419.ContrastUnit
yLife&Fire
I
nsuranceCoy.V. Ladega[1996] 1NWLR( Pt.423)192(
CA)
370
Lloydsv.Harper(1880-81)16Ch.D290
371
Akerev.BAICO, Sagay ’
sCasebook,p.417.
372
[1944]Ch.83
373
Atp.104.Seeal soGr eenv.Russell[1959]2AllER525

205
5. Banker s’Commer cialCredit
I
ninternationaltrade,iti
susualforabuy ert oaskhi sbank
toopenani rrevocablecr editi
nt heseller
’sfav our.Thi sstep
assuagestheanx iet
yoft heforei
gnsellerswho, beingunabl eto
assessthecr editworthi
nessoft hebuyer,mightot her wisehave
ref
usedt odi spatcht hegoods.Oncet hesellerpr esentsthe
necessarydocument st oshow t hathehascompl iedwi ththe
contr
actofsal e,thebanki sboundt oreleasemoneyt ohim.
Wheret hebankdef aultst hesell
ermaysuet hebankwi t
hout
j
oini
ngt hebuy er.

6. AssignmentofChosesi nAct ion

Chosesi nacti
onarepersonalri
ghtsofpr opertywhichcan
onlybeclaimedorenf or
cedbyactionandnotbyt akingphy sical
possession,e.g.debt
s,shares,i
nsurancepolici
es.Suchr ights
maybeassi gnedort r
ansferr
edtoat hi
rdparty(assignee)soas
to conferupon t he assi
gnee the rightto sue f ort heir
enforcementinhi sownname.Forexampl e,contractualr
ights
areassignableundersecti
on25(6)oftheJudicatureAct1873.

7. Agency
Thisi sper hapst hecommonestexcept i
ont ot hepr i
v i
ty
doctri
ne.Whenaper sonactsthroughanagent ,hei sr egar ded
bylawasi fheact sallbyhimself
.Hence, acont r
actent eredint o
byanagentandat hirdpartyisenf orceabl
ebyt hepr incipal.
Evenwher ethepr i
ncipalwasundi sclosed,andt het hir
dpar ty
neverknewt hatewascont r
acti
ngwi thanagent ,thepr incipal
mayst i
l
li nt
erveneandst epintotheagent ’sshoes.Undert he
doctri
ne ofundi scl
osed princi
pal,ei t
hert he agent ,ort he
pri
ncipalwhendi scovered,maybesued; andeithertheagentor
374
theprincipalmaysuet heotherpartytot hecontract.

RECENTCHANGESTOTHEPRI
VITYRULEI
NENGLAND

In spit
e ofitsr ecognized except
ions,some ofwhi ch ar
e
discussedabove,thedoct r
ineofprivi
tyofcont
ractshasbeen
subjectedt
omuchcr i
ti
ci
sm. Manybel i
evet
hatpart
iesshoul
dbe
abletocreat
e

374
Cheshi
reFif
oot&Fur
mst
on’
sLawofCont
ract
,But
ter
wor
ths,
11thed.P.473

206
enforceabl et hirdpar tyrightsi ncont ractswi thoutrel yingont he
except ionsdi scussedabov e.I nEngl and,suchcr iticismshav e
recentlyl ed t o a par t
ialabol i
ti
on oft he doct r
ine,wi tht he
passageoft heCont r
acts( RightofThi rdPar ti
esAct )of1999.
Byv i
rtueoft henewl awappl i
cabl einEngl and, at hirdpar t
y
hast her i
ghtt oenf orcet het er
m ofacont ractift hecont ract
expressl ypr ov i
dest hathemaydoso; orifthereisacont r
actual
termt hatpur portst oconf erabenef itonhi m.Tobeabl et o
enforcesuchr i
ght s, t
het hi r
dpar tymustbeexpr essl yidenti
fied
i
nt hecont ractbyname, asamemberofacl assorasanswer ing
apar t
iculardescr iption.Howev er ,heneednothav ebeeni n
existencewhent hecont ractwasent eredi nto.
Whenenf orcinghi sr ight,at hirdpart ywi l
lbeabl et oseek
anyr emedyt hatwoul dhav ebeenav ail
ablet ohi mi nanact ion
forbr eachofcont r actifhehadbeenapar tytot hecont r
act .
Howev er,theActdoesnotal l
owpar t
iestoconf eranybur denon
thi
rdpar ti
es.Tot hatext ent,thedoct ri
neofpr ivi
tyofcont racts
sti
llsur vi
vespar tially,eveni nEngl and.

SCHARGEOFCONTRACT
DI
Incer t
ainci rcumst ances,acont ractissai dtobedi schar ged.
Thi smeanst hatthecont ract
ualbondi sbr okenandal lpar t
ies
ther eto ar er eleased f rom t heir mut ualobl i
gations.Thi s
ev entualit
ymayar iseinanyoff ourway s,i.e.(
i)whent hepar t
ies
hav eper f
or medasagr eed;( i
i)whent hepar t
iesent erint oa
fresh agr eement ,t he effectofwhi ch i stot ermi natet he
pre- exi
stingone; (
ii
i)Whenapar tytot hecont r
acthasbr eached
i
t; and( iv)whent hecont ractfrustrated.
Primar i
lyt he ef fect of t hese f our ev ents must be
det erminedbyr eferencet othet erms( ex pressorimpl ied)oft he
cont ract.Thei ssueofwhet heracont racthasbeendi scharged
ornotof t
enoneofconst ructi
onoft het ermsoft hecont ract.
Somer ulehav ehowev eremer gedt ogui desuchi nterpretation
oft erms.

Di
schargebyPer formance
Acontr
actisdischargedwhenthepar
tieshaveper
for
medt
hei
r
r
espect
iveobli
gationsunderi
t.Asageneralr
uleapar
ty

207
i
sdi schar gedi nt hiswayonl ywhenhehasper for
medt he
contractcompl etelyand exact l
y.Fori nstance,in Cutt
erv .
375
Fowel l
, asai l
orwashi redf orav oyagef rom Jamaicat o
England.Hewast obepai dal umpsum uponcompl eti
onoft he
vogage,buthedi edbef oretheshi pgott oEngland.Hiswidow
senttor ecov erthev al
ueofwor kdonebyt hesail
orpri
ortot hi
s
death.Itwashel dthatthedef endant’spr
omi setopaydepended
uponacondi ti
onpr ecedentbef orethesailor
,oranybodyonhi s
behalfcoul dbecomeent i
tl
edt oreceiveany t
hing.
Ast hef actsoft heforegoingcaseshow, astri
ctadherence
tothisr ulemaycausei nj
ust i
ce.Thecour tshavet her
efore
developedsomeex cepti
onst oit.

(a)Subst anti
alPerf
ormance
Wher et hereisnoexpr essi ndicati
ont ot hecont raryi nt he
agreement ,thepar
tywhohassubst anti
allyperformedcancl ai
m
thev alueofwor kdone.I n Hoeni g v.I saac376,thepl ai
ntif
f
compl etedwor kstot
ali
ng695poundsoutofacont ractwor th
750.Ter msofpay mentwer e“ netcash,ast hewor kpr oceeds;
and bal ance on compl et
ion”.Upon t he pl ai
ntiff
s sui tfor
paymentoft hebal
ance,thedef endantcont endedt hatt hiswas
anent i
recont r
actwhi
chwi l
lbesetasi detor ectif
yt heremai ning
minordef ects.

(b)Accept anceofPar ti
al Per formance
Wher eapar t
yhasonl ypar t
iallyper f
ormedt hecont ractina
sit
uat i
onwher etheotherpar t
ycoul deitherr
ejectoracceptt he
partper formance,anyaccept anceoft hepar tper f
ormance
woul dbr i
ngupont heaccept edpor t
ion.Howev er,ifapar t
y
abandonsacont r
actt herebycompel li
ng theot herpar t
yt o
compl eteithimsel
f,t
hef ormerpar tyhasnor ightt osuef orthe
valueoft heworkdonebef oreabandonment .Hence, nSumpt
i er
v.Hedges377wher ethepl ai
ntiffagr eedt oundertakeabui l
ding
projectbutabandoned t he pr oj
ecthal fway ,f orcing the

(
1795)6T.R.320
388 (
1952)1T.L.R.1360
389
(
1898)Iq.b.673
390

208
def
endantt
ofi
nishi
tonhi
sown

393

209
account.Thecourthel
dthatt
hepl
aint
if
fcoul
dnotsucceedi
na
cl
aimf ortheval
ueofworkdone.

(c)Sev erableCont ract

Therearecasesi nwhi chtheexecuti
onofacont ractorpr
ojectis
plannedtobeachi evedinphases.Eachphaset henconsti
tutea
severablepor t
ionoft hewholeprojectsot hatapar tywhohas
executeditcancl aim paymentev enthoughhef ail
stoexecut e
theentireproject.Theot herpart
ymayhowev erbeent it
ledt o
damagesf orthewor kstoppageiftheex pectationofbothwas
thattheent i
reprojectwouldbecompl etedbyt hesameper son.

(d)Prev ent
ionofPer formance
Apar t
ywhopr eventstheot herf
rom complet
elyexecut
ingthe
contr
actmaynev er t
helessbesuedf orthecostofthepartial
executi
on.Also,wher eti
mei soft
heessenceofthecontr
act,
the
contr
actwi l
lbedi schargedifitisnotperfor
medwi t
hinthe
stat
edtimeorwi thinar easonabl
eti
me.

DischargebyAgr eement
Thepar tiesaref reet odecide,byconsensus,totreattheir
contr
actasdi schar ged.Thust heymaycancelt hecontract
completelyorpar tiall
y,changet heter
msoft hecontract
,or
repl
acethatcont r
actwi t
hanotherone.Anewpart
ymayal sobe
substi
tutedforanyoft heori
ginalpar
ti
es.

DischargebyBr each
Wher eei
t heroft
hepar t
ieshavefai
ledt operf
orm amaj ormap
obli
gati
onundert hecont r
act
,theotherpartyisentit
ledtot r
eat
thecontractasdi
schargedandt ocl
aimdamagescov erhisl
oss.
Howev er,iftheinnocentpart
yaf f
irmst hecontractaf terthe
breachhasoccur red,
thecontr
actcontinuesinforce.

210
 DI NEOFF
SCHARGEUNDERTHEDOCTRI ON B
RUSTRATI asi
s
oft heDoct rine
Thegener alr ulei sthati faper soncont r
act sabsol utelyt odoa
thi
ng,acont racti snotdi schar gedandhei sl i
ableindamages
eveni fper formancepr ov est obei mpossi ble. Thisissomet imes
referredt oast her ul einPar adi nev.Jane378 wher et hecour t
statedi tasf ollows:
“.
..whenapar tybyhi sowncont ractcr atesa
dut yorchar geuponhi msel f,hei sboundt o
makei tgood,i fhemay ,not wit
hst andi ngany
accidentbyi nev it
ablenecessi t
ybecausehe
mi ghthav epr ovidedagai nsti
tbycont ract.
”
I
npr act icalt erms,t hiswoul dmeant hatnoev entual i
ty
woul ddi schar geanobl igationunl essi thadbeenant icipated
andpr ov idedf ori nt hecont ract .Thesev erityoft hisr ulei s
howev ermi t
igat edbyt hedoct rineoff rustration.Ifthedoct ri
ne
appl i
es, thecont ractwoul dbeaut omat i
callydi scharged.
Upt ill1981, i
tusedt obesai dthatther ewer etwot heor ies
formi ngt hebasi soft hedoct rine:Thei mpl i
edt er
mt heor yand
thet heor yandt hatt hecour timposest hej ustsol uti
on.But ,in
thaty ear,t he House ofLor ds i n Nat i
onalCar eers Lt d.v.
379
Panal pina Li d. anal ysed t he pr i
nciples under lining t he
doct r
ineoff rust r
ati
onandi dent ifi
edf i
vepossi bl
et heor i
esas
foll
ows:
(i
)Ani mpl iedter m ori mpl iedcondi tion;
(i
i)Tot al fai l
ureofconsi der ati
on;
(i
ii
)Adev isebywhi cht her ulesast oabsol utecont ractar e
reconci l
edwi thaspeci alex cept ionwhi chj usticedemands
(i
v) Ther emov aloft hef oundat i
onoft hecont r
act ;and
(v) Const r ucti
onoft hecont ract.

Thef i
ft
htheorywontheappr ovalandsupportofthreeof
theLawLor ds,i
.
e.Hail
sham, Roski
llandSimon.LordHail
sham
sighted wi th approv
al Lord Radcl i
ff
e’s v i
ew in Dav i
es
380
Cont ractor
s Ltd. V. Farehan U. D.C.
S. However
, Lord
Wi l
ber f
orcetooktheposi
ti
ont hattherewasnoneedt osel
ect

391
392 [
1647]Al
eyn26at27
[
1981]Al
lE.R.161.
393
[
1958]AC.696at729

211
anyoft
heset
hreeanddecl
ared.

212
 “Myownv iewwoul dbethatthey( t
hetheori
es)shade
i
ntooneanot herandthatachoi cebet
weent hem isa
choi
ceofwhati smostappr opri
atetot hecontr
act
underconsider
ati
on.Thedoct ri
neoughttobef l
exibl
e
andcapableofnewappl i
cati
ons. ”

However ,i
tiscl
eart
hatther
ei snof
rust
rat
ionjustbecause
per
formanceofacont r
actbecomesmoreexpensiv
eforone
381
par
ty.

Whendoest heDoct r
ineappl y?
Frust rati
on has been hel d t o occur i n t he f ol lowi ng
circumst ances:
(i)I ft he whol e basi s ofa cont ractist he cont inued
existenceofaspeci fi
ct il
i
ngwhi chi sdestroyed.I nTay l
orv.
382
Cal dwel l Cl etamusi chal ltoTt obeusedf orconcer tson
speci fiedday s. Thehal lwasbur ntdownacci dentall
ybef or eany
oft heappoi nt eddat es.Held:Thecont ractwasf rustratedandC
wasdi schar gedf rom hisobl i
gations383.
(ii
)I fthewhol ebasi soft hecont r
actistheoccur renceof
384
anev entwhi chdoesnotoccur nKr
.I ellv.Henry ,acont ractt o
hiret hepl aint i
ffsbal conytov iewt hecor onati
onpr ocessi onof
theKi ngwashel dtobef rustratedwhent hecor onationwas
cancel led.
Thesef irstt woci rcumst ancesar esomet i
mesr ef er redt o
asf r
ust rat i
onoft hecommonv enture,i.
e.subsequentev ents
dest roy“ somebasi ct hought acitassumpt i
ononwhi cht he
par ti
eshav econt racted.”Butt hedeci sioninHer neBaySt eam
Boat ‘Hut ton385 illustrat
es t he limitati
on oft he i dea of
frustrat i
on.

TheCommonVent ur
e
(i
i
i) The cont
ractforper
sonalser
vices i
s di
schar
ge by

381
Tsakroglou&Companyv.Nobl
es[1962]A.C.93
382
Tsakirogl
ou&Companyv.Noble[1962]A.C.93
383
Seeal soTat
em Lt
dv.Gamboa[1939]1KB.132
384
1903]2K.B.740
38
35
93
[1903]2K.B.683

213
superveni
ngincapacit
yaswhereeit
herpart
ytothecont
racti
s
i
nterned.Suchwast nCr
hecausei usaderI
nsur
ancev.

214
 386387
Anuni ke. ,whent heNi gerianci vilwarledt ot het
erminat
ion
4110
ofacont ractofempl oyment ;
(iv)I ft he Gov ernment pr ohibi
ts per formance of t he
contractf orsol ongt hatt omai ntaint hecont ractwouldbet o
i
mposeont hepar t
iesacont ractf undament allydiff
erentfr
om
388
thatmade.
(v )I fper formance oft he cont ractbecomes i ll
egal
.A
contracti sdi schargedi ff urtherper f
or mancehasbeenmade
i
llegalbygov ernment alinterf
er ence. Wher eper formanceintoto,
i
snotmadei l
legal
,thecont racti snotdi schar gedunlessthe
parti
ali l
legalitydefeatst herealpur poset hatt hepartieshadin
389
view.

Limitsupont heDoct rine

(i)Wher e t he par ti
es hav e ex pressly pr ovided f or t he
conti
ngencywhi chhasoccur red, i
tisaquest ionofconst r
uction
whethert heex presspr ovisionwasi ntendedt ogov ernanyf or m
thatthecont ingencymi ghtt ake.I fitwasi ntended, thent herei s
nof r
ustrat i
on;i fnot,ther ecanbef rustr
ation.I nthewor dsof
LordSi mon,i nJosephConst antineSSLi nesLt d,v.I mper ial
390
Smel ti
ngOper ationLt d.
“there can be no di schar ge by super vening
i
mpossi bili
tyi
ft heex pr esst ermsoft hecont r
act
bindt hepar ti
esi nper formancenot withstanding
thatthesuper veningev entmayoccur ”
.
Twocasest onoteher ear eCr usaderI nsuranceNi g.Ltd.V.
Anunike391 andJacksonv .Uni onMar i
neI nsuranceCompany
392
Ltd.
(ii
) A par tycannotr elyuponasel fi nducedf rustr
ation
393
defi
nedi nBankLi neLt d.V.Ar thurCapel&Co. asf rustr
ation
duetohi sownconductort otheconductoft hosef orwhom he

[1975]3SC
387
SeealsoMet r
opol
it
anhid.Nig.Lt
dvObi|1975]9/CCHCJ/l
andJohnsonv .UAC[1975]5/CCHCJ/75
388
Met r
opoli
tanWaterBoardv.Dick,Kerr&Co.[1918]A.C.
119.
389
Eyrev.Johnson1946KB481
[1942]AC154at183
^ [ 2975]3SC71
[1874]L.R10CB125
^[1919]A.C.435at452

215
 394
hisresponsi
ble. Buttheonusofprovi
ngthatfr
ustrationwas
395396
selfi
nducedrestsuponthepar
tyr
aisi
ngtheall
egati
on.

(ii
i)Leasesandt heDoct ri
ne
Bot ht heHouseofLor dsinEngl andandt heSupr emeCour tin
Niger iahav er ecent l
yhad t heoppor tunit yto consi dert heir
atti
tudet ot hecommonl yhel dv iewt hatl easesar eout sidet he
doct ri
neoff rust rat ionont hegr oundt hatal easecr eat emer elya
cont ractbutal so an est atei nl and.Thus,i n London and
409
Nor ther nEst at eCoyv.Schl esinger ,itwashel dthatt hel ease
ofaf latwasnott er minatedbyt hef actt hatt het enanthad
becomeanal i
enenemyandwast her eforepr ohi bitedr esiding
ont hepr emi ses.
397
Buti n1945, nCr
i i
cklewoodTr ustLt d. v.Leight onsTr ust
therewasadi visionofopi ni onamongt hej udgesoft heHouse
ofLor dsont hemat ter.Thiswast hest ateoft hel awwhent he
Supr emeCour twascal l
eduponi n1978i n Ar aka v .Moni a
398
Const ruction Lt d. "t o pr onounce upon t he mat ter.The
Supr emeCour tr ev iewedt heaut hor i
tiesi nEngl andandot her
commonweal thcount ri
est ohol dt hatt hedoct rineoff rust rati
on
may , incer tainci r cumst ances, appl yt oal easeofl andandt hat
suchci rcumst anceswer epr esenther e.Consequent lyt hel ease
wasdet ermi nedbyf rustration; thesuper veni ngev entbei ngt he
civi
lwarwhi chf or cedt heex patriat etenantt ovacat et hehouse
onor der soft het hengov ernmentoft heEast ernPr ov i
nce
Accor dinglyt he l andl ord was notent i
tled t or ecov err ent
399
thereaf ter.Butt heear lercaseofNwaj
i idev.Osai wasnot
referredt obyt heCour t.
The House ofLor ds i n 1981 i n Nat i
onalCar rier s Lt d.V.
Panal pi na400bymaj ori
tyoff ourt oonehel dt hatt hedoct ri
neof

394
Seeal soOlunloyov.ThePolyt
echnic[
1974]NMLR142and
Marit
imeNat ionalFi
shLt
dv .OceanTrawl
ersLtd.[
1935]A.
C.154.
395
JosephConst anti
neSSLinev.Imperi
alSmelt
ingCorpn.
[
1942]A.C.154
396
f1916]1K.B.20
397
[
1945]A.C.221
4)1
[1978]Vol.9-10S.C.9
399
[
1972]ECSLR576
400
[
1981]2WLR45.

216
fr
ustr
ati
onwas,i
npr
inci
ple,appl
i
cabl
etol
easest
hought
he
case

217
i
nwhi chitcoul
dpr operl
ybeappl iedwereli
kel
ytober ar
eand
excepti
onalandappl yi
ngt hef or
mulati
ontothefactsbefore
them,themajorl
yheldthatthelossofuseforamaxi
mumoft wo
yearsoutoft eny earsleasedi dnotamountt ooneoft he
excepti
onalcasesinwhi cht hedoctri
neoff r
ustr
ati
onwoul d
apply.

Effectwhent heDoct r
ineappl i
es •
#,i
*
(i
)The f rustrati
ng ev ent di scharges t he cont ract
i
mmedi ately.Thecont racti st ermi natedast ot hef utureonl y
andunl i
keacont ractv i
tiat edbymi stake,itisnotv oidabi ni
tio.
(i
i)Atcommonl aw,t hel ossl ieswher ei ff allsi.e.money
paidbef oret hef r
ustrationcoul dnotber ecov eredandmoney
payabl e bef or et he f r
ust ration remai ned pay able.Butt his
commonl aw pr inciplemaywel lcausehar dshi pt ooneoft he
401
parties as shown i n Chandl erv .Webst er. Chandl erv.
Webst erwasov err
uledi n1942byt heHouseofLor dsi nThe
4025
Fibrosacase. '
Despi t
et hedeci si
oni nt heFi brosacase,howev er,two
diff
icultiesar ey ett ober esol v ed-( a)Ther ul ei nFi brosacase
beingonef oundedonat ot alf ail
ureofconsi der at i
ondoesnot
permi tt he r ecov ery of an adv anced pay ment i ft he
consi derationhasonl ypar t l
yf ail
edi .e.,i
fthepay erhadr ecei
v ed
somebenef i
t, thoughper hapsasl enderone, forhi smoneyand
(b)thepay eewhi lehemaybecompel l
edt or epayt hemoney
becauset hepay erhasr ecei vednobenef it,hemayhi msel fina
partialper formanceoft hecont r
acthav eincur redexpensesf or
whichhehasnor edress.Theset wodi f
f i
cul tieshav ebeen
remov edbyl egi slativeint ervent i
on.ForLagosSt ate,thel awi s
tobef oundi nt heLawRef orm( Cont ract)Law403, sect i
ons2- 4404.
Thisl awandsi mi l
aronesSt at esoft heFeder ationar ebasedon
the( FrustratedCont r
acts)Actof1943whi ch

401
[1904]1KB493
402
[1943]AC.32
403
Cap.L.63( Vol
.5)2003Lawso
21fLagosSt
8 ate.
404
Forthef or
merWesternRegi
on,seeSect
ions6-12ofthe
ContractLaw.Cap25oftheLawsofWest er
nNigeri
a.
1959.
wasconsi
der
edindetailbytheCourtofAppealinEngl
andfor
405
t
hefi
rstt
imeinB.P.Explor
ationCo.Li
byaLtd.V.Hunt.
Mai nFeat uresoft hel aw
(i)Thel aw i sconf inedt ocaseswher et hecont r acthi s
becomei mpossi bl
eofper for manceorhasbeen ot her wise
frustrat edandt hepar tiest her etohav e,fort hatr eason,been
406
dischar ged f rom f ur ther per formance of t he cont ract.
Ther ef ore, forthest at ut etoappl y, i
mpossi bili
tyofper f
or mance
orf rust rat i
onmustf irstbeest ablished.
(ii)( a)Moneypr e-pai di sr ecov erableev ent hought her e
hadbeennot ot alfai lureofconsi der ati
on.Thi sconst itutesa
reaffirmat ionofTheFi brosadeci sionwhi chov err edChandl
ul er
v.Webst erbuti tgoesf urthert hant heFi brosacase.
(b)Moneypay abl ebef oret hef rustrati
ngev entceasest o
bepay abl e.
(c)Butwher et hepay eehasi ncur redexpensesbef oret he
ti
meofdi schargei nper for manceoft hecont r
actt hecour tmay ,
i
fi tconsi dersi tj ustt o do so hav i
ng r egar dt o al lt he
circumst ancesoft hecase, (thepay ee)t or etainorast hecase
maybe, tor ecov er,thewhol eoranypar toft hesum sopai dor
pay abl eno!bei nganamounti nex cessoft heexpensesso
i
ncur red.
(d)Ther efor e,apar tycanr ecei venoal lowancef orhi s
expendi tur e unl ess money has been pai d orhas become
pay abl et ohi m andhehasi ncur redt heexpendi t
urebef oret he
407
occur renceoft hef rust rat i
ngev ent .
Inconsi deringt heor i
ginalEngl ishpr ov i
sion,sect ion1( 2),
Just ice Gof fi n B. P.Expl or ation v . Hunt sai dt hat t he
fundament alpr incipl eunder li
ningt heActi st hepr event ionof
theunj ustenr ichmentofei therpar tyt ot hecont ractatt he
ex penseoft heot herandt hatt hismustal way sbebor nei nmi nd.
(iii
)I fonepar t
ybyr easonofany thingdonebyt heor deri n
per f
or manceoft hecont ractobt ainedv aluabl ebenef itot her

405
See[1979]1WLR783f ort
hejudgementofMr.Just
iceGof
f;
[198111WLR232f ort
hejudgmentoft
heC.A.and[1982]
2
WLR253f orthej
udgmentoftheHouseofLords.
406
Secti
on4( 1)
407
Secti
on4( 2)
422

219
thanmoneybef oret het i
meofdi schar ge, hecanbeor der edt o
paysuchasum ast hecour tthinksj ustnotexceedi ngt he
amountoft hebenef it.Thepr ovision,sect ion4( 3) ,abrogat es
thecommonl aw r equi rementofcompl eteper formance.But
408
whereas,Cut terv .Powel l woul dnowbedeci deddi ff
er ent l
y,
409
Applebyv.My er s woul dnotsi ncet hedef endanti nt hel at ter
couldnotbeshownt ohav eobt ainedav aluabl ebenef itby
reasonbywor kdonebyt hepl aintiff.Butast hepl ai
nt if
fi n
Applebyv .My ershadi ncur redex pensesi ntheper f
or manceof
thecont ractbef oret hef r
ust rati
ngev ent ,providedmoneyhad
beenpai dorhadbecomepay ablebef oret het i
meofdi schar ge,
i
twoul dbepossi bl ef ort hecour tundert hepr ov i
sionofsect i
on
4(2)toawar dt hem t hewhol eorpar toft heirexpenses.
(iv)Wher esev er ancei spossi bl e-sect i
on4( 3)
Wher eacont racti sdi visiblei ntopar tsandt hepar tshav e
beenwhol lyper for medorsoper formedexceptf orpay menti n
respectoft hatpar t,ofsumsascer tainabl eundert hecont ract,
thecour tsshal ltreatt hatpar toft hecont ractasi fi twer ea
separatecont ractandhadnotbeenf rustratedandshal ltreat
secti
on4oft hisl awasonl yappl icabl et ot her emai nderoft he
contract.
(v)I facont r
actcont ainsapr ov isionwhi chi sintendedt o
operatei nt heev entoff r ust rat
ion,t hecont r
act ualpr ov ision
appli
est ot heex clusi onoft heLaw-sect i
on3( 3).
(vi)Byv i
rtueofsect i
on3( 2)t heLawbi ndst heSt ate.
(vii
)TheLaw appl iest o al lcont ractsgov erned byl aw
wherev ermadepr ov i
dedt het imeofdi schar geoccur sonadat e
notear l
ierthant womont hsbef or et hecommencementoft he
Law.
(vii
i) TheLawdoesnotappl yt ot hef oll
owi ngcont ract s:
a)Any char ter par ty except a t i
me char terpar ty or
charterpartybywayofdemi seort oanyot hercont ractf ort he
carri
ageofgoodsbysea;
b)Anycont r
actofi nsur ance;
Anycont r
actt owhi chsect i
on7oft hisSal eofGoodsAct
appli
es.
d)Toanyot hercont ractf ort hesal eofspeci f
icgoods

(
1795)6Term Rep.320.
(
1867)L.R.2C.P.651

220
wher
ethecont
racti
sfr
ust
rat
edbyt
hegoodsper
ishi
ng.

REMEDI
ESFORBREACH OFCONTRACT

Whereabr eachdi schargesthecont ract,oneoft wocourses

maybeopent ot hei nnocentparty.Thedef aul
ti
ngpar t
ymaybe
heldtohi spr omi sei nwhichcaseher emainsl iabl
eont he
contr
actandt hei nnocentpartycanr ecoverdamagesf orl
ossor
theinnocentpar tymayacceptt hebr eachasdi schargi
ngt he
contr
actinwhi chcasehei sreli
evedf r
om f ur
therliabil
i
tyandhe
mayf ort
if
yt hi
sbyaski ngforrescission.Hemayal sosuef or
damagesorhemaysueuponaquant um mer uitclaimforvalue
ofthewor kal readydonebyhi m.Thi sisaquasicont r
actual
remedy.

Damages
Acl aimf ordamagesr aisest woquest ions: Remot enessof
damagei .e.,forwhat‘ kindofdamageshoul dt hepl aintif
fbe
compensat ed?Andmeasur eofdamages,i .
e. ,whatmonet ary
compensat ionshoul dt hepl ainti
ffr eceivei nr espectoft he
damage whi ch is nott oo r emot e? Her e,t he pr inciple of
restituti
oni ni ntegr
um appl ies.
Remot enessofdamagei sgov er nedbyt her uleinHadl ey
410
Baxendal e. Damagei snott oor emot eifi ti s“ suchasmay
fair
lyandr easonabl ybeconsi deredasei therar isingnat ure,i.
e.,
accor dingt ot heusualcour seoft hingsf rom suchbr eachof
cont ractitselforsuchasmayr easonabl ybesupposedt oha
-beeni nthecont empl ationofbot hpar ti
esatt het imet heymade
thecont r
actast hepr obabl er esultoft hebr eachofi t.
”
411
n Vi
I ctor i
aLaundr yr .Newi nanI nd.Lt d. , t
heEngl ish
Cour tofAppealr estat edt her ulesand,i nef fect,sai dt hat
damagei snott oo r emot ei fi twaswi thint her easonabl e
anticipati
onoft hedef endanti nt hel ightoft heci rcumst ances
knownt ohi m.Thet estunderbot hbr anchesoft her ul
ei s
theref or
e sai dt o be t he same,i .e..r ecov ery depends on
foreseeabi lit
y. Thefi
rstbr anchoft her uledeal swi thnor malloss
andt het esti sanobj ectiveone, theseconddeal swi thabnor mal

410
411
(
1854)9Exch.341
[
1949]2K.B.528
422

221
l
ossandt
het
esti
ssubj
ect
ivei
n

222
 sof arasi trequi resact ualandnotmer elyconst ruct ive
412
knowl edge.Butt heHouseofLor dsi nt heHer onI I rev i
ewed
theear l
ierdeci sionsand hel dt hati n cont ractt het estof
recov eryi snotonef orf or seeabi lityfort odosoi st opl acei tat
parwi thr ecov eryint or twhi chi squi t
edi ff
er entandi mposesa
muchwi derl iabi l
i
ty .I
ncont ract ,thecr uci alquest i
oni swhet her ,
ont hei nf ormat ionav ailabl et othedef endantwhent hecont r
act
wasmade,heshoul dort her easonabl emani nhi sposi t
ion
woul dhav er eal i
zedt hatsuchl osswassuf ficient lyl i
kelyt o
resultf rom t hebr eachofcont ractt omakei tpr opert ohol dthat
thel ossf lowednat ur allyf rom t hebr eachort hatl ossoft hat
kindshoul dhav ebeenwi thinhi scont empl ation,i tdoesnot
theref orecr eat eal andmar kasi thasbeent houghtandi fi tdi d,
then, tot hatex tent,itiswr ong.Ther efor e,ther ei sonl yoner ule
andt wodi ffer entst andar dsorbasi sar enott obeappl i
ed.
Notev eryt ypeofdamagewhi chi sr easonabl yf or eseeabl e
bydi epar tieswhent hecont ractwasmadeshoul dei therbe
consi der edasar i
singnat urallyi.e.,intheusual cour seoft hings
orbesupposedt ohav ebeeni nt hecont empl ationoft hepar ties.
Adamagepl ainlyf oreseeabl easar ealpossi bi l
it
y ,butwhi ch
woul d onl yoccuri n a smal lmi norityofcasescannotbe
regar ded as ar i
sing i nt he usualcour se oft hings orbe
supposedt ohav ebeeni nt hecont empl ationoft hepar ties. The
parties ar e notsupposed t o cont empl at e as gr ounds f or
recov eryofdamageanyt ypeofl ossordamagewhi chont he
knowl edgeav ail
abl et ot hedef endantwoul dappeart ohi m as
onlyl i
kel yt ooccuri nasmal lmi nor i
tyofcases.
Thust heEngl ishCour tofAppealr etur nedt ot hequest ion
i
n1978i npar sons( Livest ock)Lt d.v.Ut tl
eyI ngham &Co.
413
Ltd. andaunani mouscour tcomposedofLor dDenni ng,
Scar manandOr rL. JJ.wer ehi ghl ycr iti
caloft hedi stinction
madebyt heHouseofLor dsi nHer onI I.Lor dDenni ngf oundi t
diff
icul ttoappl ythosepr inci plesasf ormul atedbyt heHouseof
Lordsi nHer onI Iuni v ersal l
yt oal lcasesofcont ractort oal l
casesoft or t.Heal sof oundi tdifficult,andt heot her sagr eed, to
drawa
di stinct ionbet weenwhatamancont empl at esandwhathe
foresees.

11965]3Al lE.R.866
[
1 9
42276]1Al
lE.L.
R.525

223
 Lor dDenni ngwaspr epar edt oassi mi lat eandr est at et he
principl esofr emot enessi ncont ractandt or tandt ohol dt hat
thesamepr i
nci plesappl yt obot h.Theonl ydi sti
nct iont obe
drawn was bet ween phy sicali nj ury and economi cl oss
i
rrespect iveofwhet hert heact ionwasi ncont r
actort ort.
Theoper at i
onoft her ulecanbei l
lustr at edbycont ractf or
thesal eofgoods( i)wher ethesel lerhasf ai l
edt odel i
v ert he
goodsand( i
i)wher et hebuy erhasf ai l
edt oacceptt hegoodsI n
(i
), t
heef fectofnondel i
ver yist hatt hebuy erhasbeendepr ived
fv alueoft hegoodsatt het i
meandpl aceofdel i
ver yl esst he
pricepay abl ebyhi m undert hecont ract .Thel ossofv aluei st he
onl ynat ur alresul toft hebr each,t heonl yki ndofdamaget hat
eni nt heusualcour seoft hings.Thel awconsi der sev eryot her
kindofl oss, thoughact ualanddi rect lyf oreseeabl e, asunl ikel y
i
nt heor di nar yci rcumst ancesandsot oor emot e.Thusasub
cont ract i s usual ly t oo r emot e unl ess t he speci al
circumst anceswer ebr oughtt ot heat tent i
onoft heot herpar ty
414
att het imeofcont ract .
Asr egar dst hemeasur eofdamages,t hepr i
nci pl
ei st o
effectar est i
tut i
oni ni ntegr um sot hather e,suf fi
ci entmoney
mustbeputi nt hehandsoft hebuy ert oenabl ehi mt obuy
simi l
argoodsi nt heopenmar ket.Ther efor et hedamagesf or
nondel iver ywi l
lbet hedi fferencebet weent hemar ketandt he
cont ractpr i
ce upon t he day appoi nted f ordel iv ery.Thi s
415
commonl awposi tionhasnowbeenconf irmedbyst at ute.
In( i
i),thel ossr esul tingf rom t her ef usaloft hebuy ert oaccept
the goods v aries wi tht he par ticul ar ci rcumst ances an
especi ally wi tht he char act eroft he sel lerand t he l ocal
demandsf orgoodsoft heki ndi nquest ion.Her e,t henor mal
416
rulei st hat ,a- prov idedbysect i
on50( 2) ,t hemeasur eof
damagesi st heest imat edl ossdi rect l
yandnat urall
yr esul ti
ngi n
the or dinar ycour se ofev ent sf rom t he buy er ’
sbr each of
promi seanwher et her ei sanav ailabl emar ketf ort hegoodsi n
quest ion,t he measur e ofdamages i s pr ima f aci et o be
ascer tai nedbyt hedi fferencebet weent hecont r
actpr i
ceand
themar ketcur r
entt imeswhent hegoodsoughtt ohav ebeen

414
Piki
ngton v.Wood [1953]Ch 770 and Di
amond v.
Campbel lJones
[1961]Ch.22
415
Secti
on51SaleofGoodsAct1893.
416
SaleofGoodsAct

224
accept edor ,ifnot i
mewasf i
xedf oraccept ance,t henatt he
417
ti
meorr ef
usal toaccept .
Butwher et he plai
nt i
f fsel leri s a deal er,a di fferent
considerationmayappl yf or, usual l
y ,ther etailpri
cei sfi
xedby
themanuf act urerssot hatt her ei snodi f ferencebet weent he
contractandmar ketpr i
ce.I ssuchadeal erwhenent itledt o
recoverhisl ossorpr of
itont hesal e?Fr om t hedeci dedcases-
418
Thompson v .Robi nson Lt d., 'Char t
erv .Sul l
ivan419 and
420
Facili
tiesLt d.v.Bl ank, t heconcl usionappear stoapl aintif
f
dealercan r ecov erhisl ossofpr ofitwher e suppl yequal s
exceedsdemandbutnotot her wiseaswher esuppl ydemand
exceedssuppl y.
Inassessi ngdamages,t hecour t
shav esai dt hatt hef act
thatdamagesmaybedi f fi
cul tt oassessi snor easonf ornot
clai
mi ngthem andcour tsar enowpr epar edt oawar ddamages
forment aldi stressincont racti nt hesamewayt hatdamages
421
areawar dedf orshcoki nt ort.

Classifi
cat i
onofMeasur eofDamages
TheSupr emeCour thasconsi stentl
yhel dt hati ncasesof
contract
,itisnotapposi t
et odi videdamagesi ntospeci aland
422
generaldamages.I nMai denEl ect r
onicsLt d.v.A. G.(Fedn),
FataiWi ll
iams JSC quot ing on ear l
ierobser vati
on oft he
423
SupremeCour t said:
“I
tisundesi rabl
et or eferincont racttogener alor
specialdamagesheonl ydamagesot hert hant hose
ari
sing nat urall
y ar e t hose f oll
owing f r
om
consequencesspeci fi
callyprov i
dedf orbythe
par t
ieswhi chwoul dnotot her
wi senaturally

417
Section50( 3)
418
11951]Ch177
419
[1975]2Q.B.177
420
[1968]3Al lE.
R128.
421
Chapl inv.Hi ck|1911]2K.B.786;Jar visv.SwanTour s
Ltd.19731Q.B.233;Eweka v .MidwestNewspaper
Cor por ati
on( 1978)6E.C.S.
L.R.280rel
yingonJarvescase
amongot hers.
422
[1974]1Sc.53atp.98
435a
Agbaj ev .
Nat i
onal Motor
sLtd.[1971]1U.I.
L.R119MobilOi
l
N4i
g
22.Ltdv .Akinfosi
le[1969]NMLR217

225
 ari
sef rom abr eachofcontract”.
Mi t
igat i
on
The f oregoing rules are subjecttot he l i
mitati
on t
hatt he
plai
ntiffmustdowhati sreasonabletomi ti
gatethelossandhe
cannotr ecov eranypar tofitwhichthedef endantcanpr oveto
424
haver esul
tedf r
om f ail
uretomi t
igate. I
tmustbenot ed
howev ert ot hebur denofpr ovi
ngt hatt hepl ainti
fff
ailedto
mi t
igatehislossl i
esont hedefendant.

Mi t
igationandAnt ici
pat or yBr each
425
Oput aJ. S.C.i nAj ayiv.TexacoNi g.Lt d. definesant i
cipatory
breachasf ollows: “
Anant icipator ybr eachofacont ractoccur s
i
fbef oret het imear riv
esatwhi chapar tyi sboundt operf orma
contract ,heexpr essesani ntent i
ont obr eaki toract sinsuch
wayast ol eadar easonabl eper sont ot heconcl usiont hathe
doesnoti nt endt of ulfi
lhi spar tordi sabl eshi msel ffrom doi ng
so.I tist hen t hati tcan besai dt hatt her ehasbeen an
anti
cipat orybr eachofcont ract”.
Wher et hi sscenar i
ooccur s,t hepl aintiffhast wochoi ces
opent ohi m.Hemayei theracceptr epudi ationandsueatonce
forbreachofcont r
actorhemayr efuset her epudi ation,hol dthe
defendantt ot hecont ractandawai tthedat eofper formance.I f
hechoosest hef or mercour se, thati s, accept sther epudi ati
on,
hewi llbeundert heor dinar ydut yt omi tigatebuti fhechooses
thel atter,t hati s,refusesr epudi ation,ast hecont r
actst i
l
l
remai nsv alid, noquest ionofdamagesorofmi tigationhasy et
ari
sen. Butt hismayl eadt oast ar tli
ngr esul tasseeni nthecase
426
ofWhi t
eCar t
erCounci lLtd.v.McGr egor .
Liquidat edDamagesandPenal ti
es
Wher et heparti
eshaveagr eedi
nthecont r
actwhatsum i stobe
payableonabr each,thissum i
srecoverabl
ei fiti
sliquidated
damages, i
.e.agenuinepr e-
est
imateorlimit
ationoft helosbut
notifitisapenalty,
i.
e. anamountfixedatrandomt opr ev
entor
penalizeabr eachinwhi chcasetheplai
ntif
fcanonl yr ecover
427
hi
sact uall
ossinrespectofdamagenott oor emote. Whet her

424
Bracev.Calder18952Q.B.253andPay zuLtd.V.
Sounders19192K. B581
425
[198713N.W.L.R.577( pt.62)577(SC)atpp.598-
599.
426
[1962]A.C.413
427
Bridgev.CampbellDiscountCoy.[19621A.C.668at822

226
aconv enti
onalsum i
sliquidat
eddamagesorpenaltydepends
upont heparti
esint
enti
on.Theexpressionsusedbythepart
ies
notinclusi
ve.Therul
esf orthegui
danceofthecourt
swerelaid
downi n1915i nDunlopPneumat i
cTy r
eCoy .Lt
dv.New
Garage&Mot orCoy.Ltd428
Speci f
icPer formance
Specifi
cper formancei sanor derofcourti ssuedtocompela
partytoacont r
actt operfor
m asagr eed.Ifthepar t
yrefusesto
obeyt heor derandper sistsinbreachingt hecont r
act,hemay
be impr isoned f orcont emptofcour t
.Gener al
ly,specifi
c
performancewi llnotbeor deredwher eanawar dofdamages
woul dsuf fi
ce.Itwas,f orinstance,grantedbyt heHouseof
LordsinEngl andi nBeswi ckv.Beswick429byt hefiveLawl or
ds
i
nsepar ateopi nionsbecauseawar dofdamageswoul dnot
suffi
ce.

Inj
unction
Inj
uncti
onisanor derofcour tcompelli
ngapar tytodoornott o
do cert
aint hingsin accordance wi tht he contracthe has
enter
ed into.I ti
s generall
yempl oyed t o enforce negat
ive
sti
pulat
ionsinacont ract
,thatis,toprohibitapar t
yfrom doing
whathehascont racted nott o do.Wher eani nj
uncti
oni s
temporaryi ti s call
ed an i nteri
m i njuncti
on.Per manent
i
njuncti
onsar esai
dt obePer petual.

Rescission
Wher etherehasbeenabr eachofaconditi
onorabr eachofa
fundament alt
erm,theinnocentpartyhasanopt iontoresci
nd
the cont r
act,thatis,tot er
minatet he enti
re agreement.
Rescissi
oni s
alsoav ai
lablei
ncertai
ncircumstancestoapar t
ywhowasi nduced
toenterintoacontractbymi st
akeormi sr
epresentat
ion.

Quantum Meruit
Where,f
orinstance,apersonhasr ender
edservi
cesunderam agr
eement
whichdidnotspeci fythepricetobeai dfort
hoseservi
ces,a
cl
aim couldbemadef orquantum meruit(
asmuchashehas
ear
ned).Thecour tassessedthesituat
ionandawardsasum

andAr chi
bongv.Duke(
1923)A.
C.79
428
[
1915]A.C.79.
429
[
19
4 68]A.C.58
22

227
thatispropor
tionatetotheserv
icesrender
edsupplied.
Also,wheret her
ehasbeenpar tper
formanceonl yand
plai
ntif
fisnotabletoclai
mthefullsumduet ohi
mundcont ract,
hecanmakeacl aimforquantummer uit
,whichwouldthenbea
proporti
onoft heagreedpaywhi chiscommensur atewit
hhi s
partperfor
mance.

228
426

229