PROPOSAL TITLE: THE LEGAL IMPLICATION OF ILLEGALITY AND PUBLIC

POLICY CONSIDERATIONS IN NIGERIAN LAW OF CONTRACT

INTRODUCTION

The aim of this proposal is to examine the legal implications of illegality and public policy

considerations in the Nigerian law of contract. It seeks to analyze how illegal contracts are

treated under Nigerian law, exploring the legal implications of their invalidity, as well as the role

of public policy in shaping contractual obligations and enforcing contracts in Nigeria. The law of

contract is a fundamental and essential concept that in business transactions. It serves as a

cornerstone, providing a legal framework for parties to engage in mutually beneficial exchanges.

A contract is a legally recognized agreement that establishes the rights and obligations of the

parties involved and enforceable by law1. It can be characterized as an agreement that the law

will uphold. Therefore, the legal framework surrounding contracts establishes the relationship

between the parties involved, allowing either party or both parties to enforce promises made,

such as the provision of money, goods, services, or other benefits, or seek legal remedies in case

of breach. The enforceability of contracts by law enhances the credibility of business

transactions. Parties can rely on legal remedies and protections if one party fails to fulfill its

contractual obligations. This assurance encourages parties to enter into agreements, knowing

they have recourse in case of breach.

However, the concept of illegality and public policy considerations has a significant impact on

contract formation and enforcement. The courts may, on occasion, decline to enforce certain

contracts due to their involvement in a legal wrong or contravention of public policy. The term

"illegality" in relation to contracts is broad and lacks precision. According to Anson as cited in

1
Akinyemi v. Odu’a Investment Co. Ltd (2012) 1SC pt. IV

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Akatugba2, an agreement that is invalidated explicitly or implicitly by a statute or common law

rules is deemed illegal. Consequently, if the contract a person seeks to enforce has been

expressly or implicitly forbidden by statute, no court will provide assistance to give it legal

effect. The relative culpability of the parties is immaterial, and all parties to the contract would

be barred from pursuing a lawsuit based on the contract. The legal maxim ex turpi causa, non-

oritur actio meaning that a cause of action in law does not arise from a base cause succinctly

explains the position of the law in such circumstance. This principle was applied in the case of

Sodipo v Lemmikainen3, wherein the plaintiffs, two foreign companies, initiated legal

proceedings against the defendant, Sodipo, seeking repayment of loans in foreign currency

amounting to a total sum of $1,169,817.41 and 17,000 pounds. Notably, there was no indication

of authorization from the minister regarding the transaction. The Supreme Court held that a

contract expressly or implicitly prohibited by statute is illegal and the courts cannot enforce

illegality4.

In addition to the concept of illegality, the common law has introduced the requirement of

conformity to public policy as a basis for declaring a contract void ab initio. The doctrine of

public policy encompasses the fundamental principles and values that underpin a society,

including considerations of morality, social welfare, and economic stability. As established

through judicial pronouncements, contracts that contravene or run counter to these public policy

considerations are deemed unenforceable. This judicially imposed limitation ensures that the law

upholds and protects the broader interests and well-being of society, preventing agreements that

2
Akatugba AM. Contemporary judicial attitudes of the Nigerian courts toward contracts tainted with illegality.
Madonna Univ Nigeria Fac Law Law J. 2021;7:p.10.

3
(1985, 2 N.S.C.C., 1102 at 1114., 1115)
4
Ibid.

2
would be detrimental to the public good from being given legal effect. The Supreme Court of

Nigeria has given judicial impetus to the above rationale stating the meaning of public policy in

the case of Okonkwo v Okagbue5, the court described public policy as:

…public policy holds that, no subject can lawfully do that which has a tendency to be injurious

to the public, or against public good, which may be termed, as it sometimes has been, the policy

of the law, or policy in relation to the administration of law.

The Supreme Court's emphasis on public policy in contractual transactions highlights the

fundamental principle that individuals should not be allowed to engage in actions that are

detrimental to the public or contrary to the common good. By prioritizing the protection of public

interest and welfare, the court emphasized the importance of considering broader societal

implications when making legal decisions. This principle serves as a safeguard against contracts

that may have negative consequences for the public or go against societal norms. It reinforces the

notion that contractual transactions should align with and promote the welfare of the general

public, ensuring fairness and the overall well-being of society.

However, the legal implications of illegality and public policy considerations in the Nigerian

law of contract require further examination. There is a need for a comprehensive understanding

of how illegality is defined, the scope of public policy considerations, and their impact on

contract formation and enforcement. Moreover, the role of the judiciary in determining the

legality and public policy aspects of contracts needs to be explored in greater detail. By

conducting research on these topics, this study aims to contribute to the existing body of

knowledge on the Nigerian law of contract. It seeks to provide clarity on the legal consequences

5
(1994) 9 NWLR (Pt. 368) 301. Supra. See also Anekwe v Nweke (2014) 9 NWLR (Pt. 1412) 393 at pages 421-422,
423, 425, 426-427, Nzekwu v Nzekwu (1989) SCNJ page 167, (1989) 2 NWLR (Pt. 104) 373.

3
of illegality and public policy considerations, helping legal practitioners, judges, and

policymakers make informed decisions. Furthermore, the research will identify any gaps or

ambiguities in the current legal framework, suggesting potential reforms or improvements to

enhance legal certainty and promote fair and equitable outcomes in commercial transactions in

Nigeria.

STATEMENT OF THE PROBLEM

Contractual transactions form the backbone of commercial activities in Nigeria, facilitating

economic growth and fostering business relationships. However, several problems arise in the

process of contract formation, which can lead to disputes and hinder the smooth functioning of

transactions. These problems include the lack of clarity in contract terms, the absence of proper

documentation, and the inadequate understanding of the legal implications and requirements of

contracting parties. These issues can result in misunderstandings, breaches of contract, and

difficulties in enforcement.

The topic of the legal implications of illegality and public policy considerations in the Nigerian

law of contract aims to address these problems by providing guidance and clarity to contracting

parties. Illegality acts as a deterrent against entering into contracts with unlawful elements,

ensuring the protection of public interest and preventing parties from engaging in transactions

that are harmful or against societal norms. Public policy considerations, on the other hand, help

safeguard the welfare and interests of the public by invalidating contracts that are immoral or

contrary to public interest. By understanding the legal implications of illegality and public

policy, contracting parties can ensure compliance with the law and make informed decisions,

thereby reducing the risk of entering into problematic contracts.

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RESEARCH QUESTIONS

The following research questions are formulated to help guide the propose research:

1. What is the scope and extent of illegality in contract formation and enforcement under the

Nigerian law of contract?

2. What is the scope and application of public policy considerations in contract formation

and enforcement in Nigeria?

3. What are the legal implications of illegality and public policy considerations on contract

validity and enforceability in Nigerian contract law?

4. What recommendations can be made to enhance the understanding and effective

application of illegality and public policy principles in contract formation and

enforcement in Nigeria?

AIMS AND OBJECTIVES

The aim of the proposed research is to analyze the legal implications of illegality and public

policy considerations in the Nigerian law of contract.

To achieve the research aim, the following specific objectives will be pursued:

1. To examine the scope and extent of illegality in contract formation and enforcement

under the Nigerian law of contract.

2. To explore the scope and application of public policy considerations in contract

formation and enforcement in Nigeria.

3. To analyze the legal implications of illegality and public policy considerations on

contract validity and enforceability in Nigerian contract law.

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 4. To suggest measures to promote legal clarity, fair outcomes, and the protection of public

interest in contractual transactions.

JUSTIFICATION OF THE RESEARCH

The proposed research on the legal implications of illegality and public policy considerations in

the Nigerian law of contract holds significant importance. Firstly, the research will benefit

contracting parties by enhancing their understanding of the legal implications of illegality and

public policy considerations by providing clear guidelines into the scope and application of these

principles which will enable parties to make informed decisions and ensure compliance with the

law. By avoiding contracts with illegal elements, parties can mitigate the risk of disputes,

breaches, and potential legal consequences. This understanding will promote fair and equitable

contractual transactions in Nigeria.

Secondly, the research will assist legal practitioners by providing them with in-depth analysis

and interpretation of illegality and public policy principles. By analyzing the legal framework

and relevant precedents, the research will equip lawyers with the knowledge necessary to advise

their clients accurately. This will enhance the quality of legal representation and enable

practitioners to navigate complex contractual matters, ultimately contributing to the efficient

resolution of contract disputes.

Furthermore, the proposed research holds great significance for students studying contract law

and related disciplines. The propose research will help students gain a deep understanding of

these principles, their scope, and their application in contract formation and enforcement. This

research will contribute to their academic knowledge, enabling them to develop a clear

understanding of contractual transactions and the legal implications involved.

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Lastly, the proposed research topic addresses a significant gap in the existing legal literature by

examining the specific legal implications of illegality and public policy considerations in the

Nigerian law of contract. The propose research will add to existing knowledge in the field of

contract law. This research will stimulate further academic inquiry and discussions as well as

future research aimed at enhancing the understanding and effective application of these

principles in the Nigerian law of contract.

RESEARCH METHODOLOGY

The methodology adopted in this study is the doctrinal method. This method involves an in-

depth examination of various primary legal sources, including statutes, and case laws, to gather

relevant information and insights.6 In addition to primary legal sources, the doctrinal method also

involves consulting secondary legal sources including: internet, textbooks, seminars, journals,

and articles related to the topic under discussion. These secondary sources provide valuable

insights, interpretations, and analyses of legal principles and cases related to the topic, further

enriching the research.

EXPECTED OUTCOMES

The expected outcomes of the proposed research on the legal implications of illegality and public

policy considerations in the Nigerian law of contract can include:

Apologies for the confusion. Here are the expected findings of the proposed research on the legal

implications of illegality and public policy considerations in the Nigerian law of contract:

1. Scope and Application: The research is expected to identify and clarify the scope and

application of the principles of illegality and public policy in Nigerian contract law. It

6
Aboki, Y. (2009) Introduction to Legal Research Methodology, Tamaza Publishing Company Limited, 4 Zaria,
Kaduna State, Second Edition, p.3

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 will explore the circumstances under which contracts are deemed illegal and the factors

that courts consider in determining the public policy implications of contractual

agreements. This will provide a comprehensive understanding of the boundaries and

limitations of these principles in the Nigerian legal context.

2. Legal Implications: The research will uncover the legal implications of illegality and

public policy considerations in Nigerian contract law. It will examine the consequences

of illegal contracts, such as their invalidity and unenforceability, as well as the potential

remedies available to parties involved. Additionally, the study will shed light on how

public policy considerations can affect the interpretation, enforcement, or voidability of

contracts in Nigeria, providing insights into the legal consequences and ramifications for

contractual parties.

3. Judicial Interpretation: The research will analyze and highlight judicial interpretations of

illegality and public policy principles in Nigerian contract law. It will examine relevant

case law and court decisions to identify patterns, trends, and potential inconsistencies in

the application of these principles by Nigerian courts. This analysis will provide a

comprehensive overview of how the judiciary has interpreted and applied illegality and

public policy considerations in contract disputes, thereby contributing to a more nuanced

understanding of their legal implications.

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PROPOSED TABLE OF CONTENTS

TITLE PAGE .................................................................................... i

CERTIFICATION ................................................................................ ii

DEDICATION ..................................................................................... iii

ACKNOWLEDGEMENTS ................................................................... iv

TABLE OF STATUTES AND REGULATIONS ................................................ v

TABLE OF CASES .............................................................................. vi

LIST OF ABBREVIATIONS .................................................................. vii

CHAPTER ONE: GENERAL INTRODUCTION

1.1 Background of Study

1.2 Statement of the Problem

1.3 Research Questions

1.4 Aim and Objectives of the Study

1.5 Significance of Study

1.6 Scope of Study

1.7 Research Methodology

CHAPTER TWO: CONCEPTUAL AND HISTORICAL BACKGROUND

2.1 Conceptual Clarification

2.2 Historical Background and Development of Illegality of Contract and Public Policy in

Contractual Enforcement

2.3 Literature Review

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CHAPTER THREE: SCOPE AND APPLICABILITY OF ILLEGALITY AND PUBLIC

POLICY PRINCIPLES

3.1 Scope of Illegality Principle

3.2 Applicability of Illegality Principle

3.3 Scope of Public Policy Principle

3.4 Applicability of Public Policy Principle

CHAPTER FOUR: LEGAL IMPLICATIONS OF ILLEGALITY AND PUBLIC POLICY

PRINCIPLES

4.1 Legal Implications of Illegality Principle

4.1.1 Voidability of Contracts Involving Illegality

4.1.2 Restitution and Recovery of Benefits

4.1.3 Criminal Liability for Illegal Contracts

4.2 Legal Implications of Public Policy Principle

4.2.1 Unenforceability of Contracts Contrary to Public Policy

4.2.2 Restraint of Trade and Competition

4.2.3 Contracts Against Public Morality and Decency

CHAPTER FIVE: SUMMARY, CONCLUSION, AND RECOMMENDATIONS

5.1 Summary of Findings

5.2 Conclusion

5.3 Recommendations

BIBLIOGRAPHY

PRELIMINARY LIST OF REFERENCES

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Akatugba, A. M. (2021). CONTEMPORARY JUDICIAL ATTITUDES OF THE NIGERIAN

COURTS TOWARD CONTRACTS TAINTED WITH ILLEGALITY. Madonna

University, Nigeria Faculty OF Law Law Journal, 7.

Akinkugbe, O. D. (2019). To Recognize or Not? Good Faith Under Nigerian Law of

Contract. Journal of Commonwealth Law, 1(1), 363-402.

Alewo, A. J. M. (2012). The Principle and Nature of Law of Contract in Nigeria: Formation of

Binding Contract. J. Pol. & L., 5, 123.

Botha, F. M. (2022). Determining the consequences of illegal contracts (Doctoral dissertation,

Stellenbosch: Stellenbosch University).

Davies, P. S. (2018). JC Smith's the Law of Contract. Oxford University Press.

Duru, O. (2012). Vitiating Elements of Contract as a Source of Contractual Validity. Available at

SSRN 2156749.

Ordor, A., & Odiaka, N. O. (2019). Engaging with Qualifying Principles in Nigerian Contract

Law. More Constitutional Dimensions of Contract Law: A Comparative Perspective,

111-128.

Ozekhome, M. A. (2021). Commercial and Economic Law in Nigeria. Commercial and

Economic Law in Nigeria, 1-200.

Poole, J. (2016). Textbook on contract law. Oxford University Press.

Sagay, I. E. (1985). Nigerian law of contract. (No Title).

Sodipo, B. (2021). Enforceability of Awards Vitiated by Illegality and Fair Hearing: A Review

from a Nigerian Law Perspective of PID v. FRN. Journal of International

Arbitration, 38(1).

Stone, R., & Devenney, J. (2022). The modern law of contract. Routledge.

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Tan, Z. X. (2015). The anatomy of contractual illegality. Common Law World Review, 44(2), 99-

122.

Toluwanimi Festus, O. (2023). Nigerian Law of Contract: Void and Voidable

Contracts. Nigerian Law of Contract: Void and Voidable Contracts (March 12, 2023).

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