A Deeper Look Into The Law of Contracts in Nigeria

A Deeper Look Into The Law of Contracts in Nigeria

Contracts are by far the most common legal instruments in use and demand, serving as a means of establishing business relationships or individual/corporate interactions across all levels of human endeavour.

Whether as professional retainer agreements, agreements of terms and conditions, supply contracts, SLAs, employment contracts, Joint Venture agreements or syndicated Loan documentations, contracts are the basis of relationships giving rise to causes of action under Nigerian law.

While almost everyone presumably knows what contracts are to the point of making the topic look simplistic, many people still do not know about the factors that make a contract voidable, void or enforceable. Many people also do not understand the conditions under which contractual obligations can no longer become binding, and that constitutes the focus of this article which will be looking deepest into the topics of :-

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– What contracts are.

– The conditions for a valid contract.

– The factors that invalidate a contract.

– When contracts can no longer be binding.

What is a contract?

A contract is an agreement that is either written, spoken of or implied between 2 or more parties that is enforceable under the law.

What is the Regulatory Framework governing contracts in Nigeria?

Contracts are governed by the Contracts and Torts laws and Stare High Courts of various component states in Nigeria.

What are the ingredients of a valid and enforceable contract under law?

For a contract to be valid,the following must be present :-

– an offer made by a contracting party;

– an acceptance of this offer made by another contracting party, leading to a consensus ad idem or “meeting of minds”;

– the possession of contracting capability by the parties to a contract;

– the passing of consideration,or each party to a contract doing what they said they will do under the contract terms;

– the agreement not conflicting with law or public policy.

What are the elements or factors that can invalidate a contract?

A contract can be invalidated, or vitiated and rendered unenforceable, by the following factors :-

Undue Influence :- This is the wrongful use of a position of influence or power to pressure (not just persuasion) an unwilling party into a contract. 

Misrepresentation:- This is a false assertion of fact (which can be fraudulent, negligent or innocent)  made by a party which convinces another party into consenting to a contract.

A Mistake of facts :- Mistakes of this nature can either be common, mutual or unilateral and occur when the subject matter of a contract ceases to exist e.g. entering into an agreement to sell land that has been acquired by a state government.

Duress :- This is where the consent of a contracting party to a contract as evidenced by their signature for example is obtained through the use of wrongful force nullifying free will, exemplified by the Latin phrase “Non est factum” or “Not my will”.

Duress can only be claimed by an individual and not a corporation or company. It should also be noted that a party who enters into a contract under duress must move quickly to nullifying the contract afterwards by stating that his consent to the agreement was forced.

Legal Incapacity :- This is where a party is barred by law from entering into a contract by virtue of mental instability, being a minor below the age of 18, or death.

Conflict with the law :- This is where a contract goes contrary to public policy, law or government regulations e.g. Entering into a contract to supply banned narcotics or documenting a land sale in a manner contrary to the Land Use Act.

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