A GROUP WORK BY

GROUP WORK ON

CONTRACT LAW:

THE RULES OF A VALID CONTRACT

WRITTEN BY;

GROUP 6

FACULTY OF LAW,

UNIVERSITY OF UYO, UYO.

SUBMITTED TO;

DR. EYAKNDUE NTEKIM

TUTORIAL LECTURER,

PILL 211: LAW OF CONTRACT

FACULTY OF LAW

UNIVERSITY OF UYO

GROUP MEMBERS

1.Anietie Emmanuel Otu

20/LA/2923

2. Offiong, Victor Godwin

21/LA/3059

3.Nsima, Edidiong Udo.

17/LA/2274

4. Uboh,Akan Aniefiok
20/LA/3010

5. Obot, Ubongabasi Charles

20/LA/2880

6. Inyang, Samuel Samuel

20/LA/2963

7.Yellow Samuel

20/LA/2895

8.Osita Godsfavour Chisom

19/LA/2699

9. Udo, Abasikponke Monday

20/LA/2976

10. Akpan, Happiness Boniface

20/LA/2993

11. Bassey Abasiame Emmanuel

19/LA/2700

12. Dickson, Edidiong Francis

20/LA/2987

13.UbongAbasi Aniekan Okpokpo 20/LA/3005

QUESTION;

In Johnson wax Nigeria limited v. Sanni (2010) 3 NWLR (PT. 1181) 235, the court stated that the
formation of a contract is premised on flexible rules, highlight these roles with a view to establishing
their Nexus in the validity of a contract

ABSTRACT

A contract is an agreement between two or more parties that creates an obligation to perform (or not
perform) a particular duty.
It is a legally binding agreement between two or more parties.

Contract provides assurance that the parties will perform the roles and responsibilities as intended, and
provides some protection in the event where things go wrong.

For a contract to be valid, there are some elements that must be in place.

This paper seeks to highlight this elements with respect to the case of Johnson wax Nigeria limited v.
sanni (2010) 3 NWLR (pt 1181) 235. This paper also elaborately explains these flexible elements while
also giving a brief summary of the case and the dictum.

The court in a plethora of cases has in more than one instance made references to the ingredients that
make a valid contract. This was also the position of the Court In Johnson wax (Nig)Ltd vs Sanni1

Summarily the case in question had the respondent at the high Court of Lagos, claiming against the
appellant, the sum of 5 million naira being special damages suffered by the respondents when the
appellants breached a contract.

here there was an agreement that the respondents should supply the appellant's 2 million pieces of
mosquito coil stand at 0.25k amounting to 500,000 naira.

After the agreement was reached, the appellant issued to the respondent a local purchase order
number O060839 dated 12 November which contained the quantity unit and total prices for the unit to
be supplied.

Prior to this, a sample coil stand was sent to the appellant for quality test of which he confirmed the
quality of the products.

however,in subsequent occasion, the appellant refused to accept the supply of the mosquito coils and
the trial Court in its judgement found the appellants guilty of breach of contract. the appellant,
unsatisfied by this judgement, appealed to the court of appeal.

The court of appeal in dismissing the case held that the formation of the contract is government by
flexible rules which include that there must be a definite offer by the offeror which is communicated to
the other party and in which the other party accepts fully.

the court also held that this offer and acceptance constituted an agreement provided that the two
parties reached a consensus ad idem, that is the intention of both parties on what is agreed.
1
2010)3NWLR Pt.2010 p235 @245
Therefore for a contract to exist there must be a mutuality of purpose and intention among the two
contracting parties who must agree.

The court, per DONG-BAN-MENSEM,J.C.A;had this to say, "it is trite law that the formation of contract is
not governed by rigid or flexible rules, namely that there must be definite offer by the offeree and has
been communicated to the other party called the offeror who accepts the offer unless the offeror,the
first party,dispenses with such communication. In other words a contract is formed once there is an
offer by the offeror to the offeree which is accepted by the offeree backed by consideration. At this
point in time, the parties to the contract are said to be ad idem or in agreement and that agreement or
contract is binding on both parties and is enforceable by action. Thus, for a contract to exist, there must
be an offer, an unqualified acceptance of the offer a a legal consideration. Indeed there must be
mutuality of purpose and intention and the both parties must agree. An acceptance of the offer may be
demonstrated by the conduct of the party as well as by their words or documents that have passed
between them.

The following rules are discussed below;

OFFER

An offer is a promise to enter into a contract on certain terms. It must be specific, complete, capable of
acceptance, and intended to be bound by acceptance. It can be express or implied by conduct. It can be
made to an individual or a group or persons. It can even be made to the world (such as in the famous
case of Carlill v Carbolic Smoke Ball Co2 where an advertisement in the Pall Mall Gazette was held to be
an offer).

The key is that, for there to be an offer there must be a display of contractual incense which means that
an offer must be precise clear and specific. Also the terms of the offer must be fixed and it must be
certain and not leave room for speculation or conjecture.

Again, it has been stated that an offer is different from an invitation to treat. Whereas the former is
capable of becoming a binding contract on acceptance, the latter is just a preliminary move of
negotiation which may or may not lead to a definite offer. Also an offer must be straight forward precise
on equivocal leaving no room for speculation or conjecture. This was clearly stated in the case of Orient
bank Nigeria limited vs.Bilante international3

Offers may be terminated prior to acceptance: by lapse, withdrawal, rejection, death of the offeror, or
failure of a condition precedent.

2
[1893] 1 QB 25

3
1997)8 NWLR (PT 515) pg. 37
In this case, the court held that there was a valid offer between the appellant and the defendant when
the former"s representative was sent to check the mosquito coils or to test it.

ACCEPTANCE

An offer must be accepted to create a contract.

an acceptance of an offer is reciprocal act or action of the offeree to the offer in which he declared his
agreement to the terms of the offer as conveyed to him by the offeror It must be final and unqualified
with no variation to the proposed terms. It must be communicated by the accepting party to the offeror
through words of mouth in document form or in some cases, conduct will constitute acceptance (for
example, where goods are delivered and payment taken).

Where an offeree purports to accept an offer but raises new terms, this is not acceptance, but a
counter-offer. This is effectively a rejection of the original offer (meaning no contract exists) and the
making of a new offer which, if accepted, will form the contractual terms.

also conditional acceptance is not a valid or binding acceptance.this is because any acceptance which is
made subject to a condition cannot create a binding contract on to that condition has been made or
fulfilled for example if in negotiations for a list or the sale of land is made subject to contract the
incidence of liability is postponed until a formal document is drawn up and signed.

Furthermore, where there is a prescription of the method or mode of acceptance or a mode that is
faster can be used to send acceptance. for instance where acceptance was sent via telegram it is
assumed that acceptance can be in another mode as fast as telegram this was visible in the case of Tinn
v Hoffman and co. (1873) 29 pg. 271.at common law, unless the overall prescribes the mode of
acceptance in mandatory terms anyone that mode faster or at least equally as fast as the prescribed
mode could be valid.

Also in discussing acceptance it will be pertinent to refer to the Adams v. Lyndsell case which holds
thatwhich holds that when once a letter of acceptance is posted, acceptance is believed to have taken
place.

in the instant case the court held that the issuance of exhibits PE14 by the appellant was a clear sign of
acceptance of the respondents offer.

CONSIDERATION

Consideration essentially means that a person cannot enforce a promise unless he has given or
promised something in return. Consideration is a vital ingredient of a valid contract and it is exclusively
within the domain of the parties in their search for a contractual relationship.When an offer and an
acceptance are supported by legal consideration,it needs not be substantial to create a binding contract.
Once consideration is of some value in the eyes of the law,however infinitesimal it may be and flows
from the promise to the mutual equilibrium ,it is enforceable in law.{Royal Exchange Assurance(Nig) Ltd
v Aswani Textile Industries Ltd.4 referred to}(P.246, paras E-G.

A contract without consideration will only be enforceable if made by deed.

A court will not look behind the value of consideration even if it is inadequate (i.e. a peppercorn rent).
However, it must move from the promisee and not a third party. A third party cannot enforce a contract,
unless the contract falls within the Contracts (Rights of Third Parties) Act 1999 which permits this where
the contract expressly states that the party may do so or where the contract purports to give a benefit
on him.

Consideration must not be historic, i.e. performance of a pre-existing obligation cannot be good
consideration, unless the party does more than what was originally contracted. However, where the
performance of a pre-existing duty provides a practical commercial benefit to the promisor, such as a
saving of time or inconvenience in securing replacement performance, it can be valid consideration
(although this principle has been judicially criticised).

Performance of (or the promise to perform) an existing contractual duty owed to a third party is good
consideration. For example, where a party is contractually bound to deliver goods to A but is ordered to
deliver to B instead, that delivery (an existing contractual duty to A) would be consideration to enforce
B’s promise to unload the goods in return (Scotson v Pegg (1861) 3 L.T. 753).

The court of Appeal in Johnson Wax (Nig) Ltd. v Sanni(SUPRA) held that " consideration is a vital
ingredient of a valid contract and it is exclusive within the domain of the parties in their search for a
contractual relationship. When an offer and acceptance are accepted by legal consideration, it needs not
be substantial to create a binding contract. Once consideration is of some value in the eyes of the law,
however infinite it may be,and flows from the promise to their mutual equilibrium, it is enforceable in
law.

INTENTION;

For there to be a valid contract, it must be proven that parties involved intended to enter into a legal
contract in the instant case it is often assumed that business relationships are intended to hold a binding
contract in the instant case for the appellant and respondent to have met and agreed on terms as used
that it was intended to be a contract.

CONCLUSION

The courts in this case after releasing the flexible rules of a valued contract to be offer acceptance
consideration and intention stated that for a contract to exist there must be more charlety of purpose
and that an acceptance of the offer may be demonstrated by the conduct of the parties as well as by
their words or documents that have passed between them the courts finally held that in the instant case
the issuance of exhibit "p14" which was the local purchase order formalize their agreements already
4
(1991)2 NWLR(Pt.176)639
reached as evidenced by the manifestation of the acceptance of the respondents over by the appellants
representative. Therefore the presence of the rules listed above brought about a valid offer.