DEFINITIONS, NATURE, ELEMENTS OF A VALID CONTRACT & CLASSIFICATION OF

CONTRACTS
Definitions:
Guideline definitions provided by authors include the following:
•Chitty:
–‘A contract is a promise or set of promises which the law will enforce’
–‘A contract is an agreement giving rise to obligations which are enforced or recognized by law’
•Koffman & Macdonald:
–‘A contract is a legally enforceable agreement giving rise to obligations for the parties involved.’
•Sagay:
–‘A contract is an agreement which the law will enforce or recognise as affecting the legal rights and duties
of the parties.’
Tobi JCA:
–‘A contract is an agreement between two or more parties which creates reciprocal legal obligations to do or
not to do particular things.’
•From the above definitions, a contract can be conceptualised as an agreement voluntarily entered into by
the parties within the confine of the law which imposes reciprocal obligations on each of the parties there-to.
Practice Question:
•‘Even though several definitions of contract law have been proffered by revered scholars, it is not in dispute
that there is no definition to end all definitions.’ Discuss

The following points should be noted about nature of contract:

•The nature of contract is such that contracts are binding once concluded by parties. Note that conclusion
can be oral or written;
•Obligations under contract are voluntarily assumed by parties. Thus, even though no legal duty is imposed
on parties to enter into a contract, once they have elected to enter into one, binding legal obligations will
arise therefrom;

Why are contract binding?

Authors have offered different reasons for the bindindness of contract. These include:
•‘The consensus theory’, ‘will-theory’, ‘intention of the parties’, and ‘promise principle’.
•The ‘consensus theory’ and the ‘will theory’ both contend that contract should be binding because parties’
minds agree that they should be binding. The same line of argument is tolled by ‘intention of parties’ while
‘promise principle’ expect parties to keep their promises. See Mckendrick p 3, Sagay p 2.
Concept of Freedom of Contract
•Parties are at liberty to enter into agreements with little or no state regulation. The concept works better
where there is equality of bargaining power. But is this concept not absurd in today’s world where
bargaining powers are not equal?
•There are so many contracts where one of the parties make no input, e.g., standard form contracts such as
employer-employees, contract of loan, contract of guarantee, contract of carriage, aviation contract,
compulsory contracts (insurance), PHCN, etc. Thus, FoC in today world is more of a sham than reality. See
Koffman & Macdonald pp 4-6

Practice Questions
1.What are the justification for the enforcement of contracts?
2.‘It is trite that parties to a contract have equal say in the conclusion of the contract because of the concept
of freedom of contract.’ How through is this assertion in today’s commercial world?
Element
Validity of any contract is determined by the presence of the following elements:
•Offer and Acceptance (An agreement);
•Consideration;
•Intention to create legal relations;
•Consent (absence will vitiate the contract);
•Capacity; and
•Legality/Illegality.

All the above will be extensively discussed in the appropriate parts of this course guide.

Classification
Our focus here is to understand the different classifications of contracts.
•Classification can be according to subject-matter or the parties to the contract or the form of the contract or
the effect of the contract. Emphasis here will be on classifications by form and effect.
•Classifications by form include: formal or simple contracts, and express or implied, while classifications by
effect include: bilateral/unilateral contracts, executory/executed contracts, void/voidable/unenforceable
contracts.
•Each of the classification is discussed below

Formal Contract:
•it is also known as contract by deed or contract under seal.
•It must be in writing; must be signed, sealed & delivered. Students should note:
–the transformation in the requirements of signature and sealing. See section 97 of the PCL 1959 & section
108(2) of the Registered Land Act
–the change in the interpretation of ‘delivery’. See Xenos v. Wickham
•It takes validity from its form (no need for consideration); the beneficiary need not be aware of its
existence: see Xenos v. Wickham (supra) & no need for agreement.
•It is often used for gratuitous gift & where required by the law. But note that it is also used in other
contracts where not required by law. why this?

Simple Contract: Unlike formal contract, it can be written or oral and it requires consideration for its
validity. Students should note that the law requires some contracts to be evidenced in writing; that doesn’t
make them formal contract.
Express/Implied Contract: the former clearly states the terms of parties’ agreement while in the latter, the
existence of contract is often implied from the surrounding circumstances (e.g. conduct of the parties). See
Brodgen v. Metropolitan Railway Co.; AG Kaduna v. Victor Bassey.
Bilateral/Unilateral Contract: the first deals with exchange of promise for a promise while the second
deals with exchange of a promise for an act. See Carlill v. Carbolic Smoke Ball
Executory/Executed Contract: contract is executory if both parties still have outstanding obligations under
the contract (promises still outstanding) while it is executed if all promises/obligations have been performed
(acts exchanged for acts).

Void, Voidable & Unenforceable

•A contract is void if it is of no effect at all. None of the parties can sue on it.
•A voidable contract is one where one of the parties has the power to either avoid or validate the contract
within a certain period of time. Time is usually of the essence and the contract remains valid prior to
avoidance. Third party right?
•Unenforceable contracts are valid in all respects except that one or both parties cannot be sued on the
contract because of failure to comply with certain requirements of the law. E.g. contracts requiring evidence
of writing; contracts caught by limitation statutes; etc.
See: Sagay pp. 2-7; Chitty on Contract pp. 21-24; the online material on ‘Introduction to Contract’ sent to
your mails.

Practice Questions:
•‘While all formal contracts are in writing, not all written contracts are former.’ Do you agree?
•Highlight and explain the differences between a simple and a formal contract.
•Contracts have been variously classified on the basis of form and their effect. Enumerate and discuss the
different types of contract that fall under each classification.
Assignment:
•Explain the major differences between an offer and an invitation to treat.
•Enumerate and discuss the different types of invitation to treat.
•An offer can be terminated in several ways. Discuss the ways by which an offer can be terminated.

Offer
•Definition: An offer is ‘a proposal or promise by one party (the offeror) to enter into a contract, on a
particular set of terms, with the intention of being bound as soon as the party to whom the promise is made
(the offeree) signifies his acceptance.’ see Koffman & Macdonald, p. 11.
•Students should note the following points about an offer:
–It must be precise, definite & unequivocal, leaving no room for speculation. E.g. ‘I might be prepared to
sell my dog to you for N10,000’ is a bad offer;
–There is no limit to the number of people an offer can be made to: individual, groups, the whole world
(Carlill’s case); but a valid contract only come to being with the person who accepts the offer;
–It can be expressed or implied (by conduct), it can be written or oral. It is however problematic in most
cases where it is implied. In such cases, courts apply the objective test. See Alfotrin v. AGF
–An offer must be distinguished from negotiation process, even though this is often difficult to do in practice
in some cases. See Olaopa v. OAU; Bigg v. Boyd Gibbins Ltd; Gibson v. Manchester City Council (cf.
Storer v. Manchester City Council). *A role play should be staged in class to demonstrate this difficulty*
Invitation to treat
•It refers to all negotiations preliminary to the formation of a contract… offers to negotiate, offers to receive
offers, or offer to chaffer (Carlill v. Carbolic).
•The following instances of I2T shall be considered: auction sales, display of goods, advertisement of goods
in catalogues, mere statement of price, tender, & buses, taxis and train
Auction Sales
Students should know the following about auctions sales:
–Invitation/advert for auction sale at a certain venue is not an offer to hold the auction: Harris v. Nickerson
–Offer is made by the bidder and it is only accepted upon the fall of the auctioneer’s hammer: Payne v.
Cave; s 58(2) SOGA
–The importance of ‘reserve price’, notice of such, and the need to sell to the highest bidder should be noted:
Adebaje v. Conde
–‘Referential bids’ are not valid: Harvela Investments Ltd v. Royal Trust Company of Canada
–Advertisement that sale will be without reserve constitute a definite offer to sell to the highest bidder:
Barry v. Davies

Display of Goods: see

•PSGB v. BCC (drug with poison),
•Fisher v. Bell (flick knife),
•Laskey v. Economic Grocery Stores (exploded bottle of tonic).
Advertisement of Goods in Catalogue: see
•Grainger & Son v. Gough (list of French wine advertised in catalogue)
•Partridge v. Crittenden (unlawfully offer for sale a wild live bird). But note adverts relating to unilateral
Mere Statement of Price (in response to request for info): see
•Harvey v. Facey: ‘Lowest price for Bumper Hall Pen, E900’
•Gibson v. MCC: ‘The corporation may be prepared to sell the house to you at … E2,180’
Tender: see
•Spencer v. Harding (sale of certain business stocks by tender),
Buses/Trains&Taxis
See generally: Sagay at pp. 8-20; Koffman & Macdonald at pp. 11-19; & Chitty on Contract at pp. 89-100
Practice Questions:
•Differentiate between a valid offer and a mere invitation to treat.
•Ade, Ope and Temitayo are all roommates staying at the Lagos Hostel in University of Ilorin. Ade decided
to buy a car; Ope decided to buy some items from Shoprite; while Temitayo decided to buy a tri-cycle. The
customs office in Ilorin advertised in the Herald Newspaper that there would be auction sale of some
impounded cars on the 27th December, 2013. Ade saw this and he attended the auction sale. This however
did not take place. At Shoprite in Ilorin, Ope took some items of interest to the cashier but the cashier
refused to check him out. The cashier insisted that those items, though displayed, were not for sale.
Temitayo, who was already riding a tricycle which he hired from the University, wrote a letter to the Dean
of Students’ Affairs inquiring whether the school would sell the tricycle to him. In response, the Dean’s
office wrote: ‘we may be inclined to sell the tricycle to you for N45,000.’ Temitayo wrote the Dean’s office
stating that he had accepted the offer and he enclosed a N45,000 cheque. Eventually, the Dean’s office did
not sell the tricycle to him. Ade, Ope and Temitayo have decided to sue. Advise the three of them
accordingly.

Termination of Offer
An offer can be terminated by any of the following:
•Acceptance:
–an acceptance of an offer terminates the offer.
–Note: this is the only termination of offer that results in a valid contract.
•Rejection:
–a rejection of an offer by the offeree terminates the offer
–notice of rejection must however be communicated to the offeror
–offeree can still accept if he changes his mind, but this is before his notice of rejection gets to the offeror
–a counter-offer is a rejection of the original offer: Hyde v. Wrench
•Revocation/Withdrawal:
–an offer can be withdrawn/revoked anytime before acceptance: Payne v. Cave
–rule applies even where the offeror promises to keep the offer open for a certain period. But note the effect
of presence or absence of some consideration for the promise to leave open: see Routledge v. Grant and
compare it with Mountford v. Scott
–revocation must be communicated to offeree before he accepts. In case of revocation by post, the letter
must actually reach the offeree before it can have effect: see Bryne v. Van Tien Hoven
–However, even though communication by offeror is desirable, communication by a reliable 3rd party will
also do: Dickinson v. Dodds

•Lapse of time
–depends on whether time is stated or not
–where time is stated, an offer terminates at the expiration of the stated time while for unstated time, the
offer expires at the lapse of a reasonable time. But note: what amounts to a reasonable time depends on the
circumstances of each case such as the subject-matter of the offer, etc.
–see: Ramsgate Victoria Hotel Co. v. Montefiore and compare it with Loring v. City of Boston
•Failure of conditions: see Financings Ltd v. Stimson
•Death
–effect of death on offer depends on 2 things: whether offeree has notice of offeror’s death or not; and
whether the contract requires personal performance or can be performed from offeror’s estate.
–where there is notice of offeror’s death and performance requires personal service of deceased offeror, then
the offer is terminated
–where there is no notice, offer can be accepted if the contract doesn’t require personal performance (see
Bradbury v. Morgan) but if it requires offeror’s personal service, any acceptance will be invalid
–The death of the offeree terminates the offer: Reynolds v. Atherton & Kennedy v. Thomassen
See generally: Sagay at pp. 51-58, Koffman & Macdonald at pp. 38-42, and Mckendrick at 51-53
Practice Question:
*A valid contract depends on the existence of a valid offer and an equally valid acceptance, but where an
offer is no longer on the table, then the parties can no longer be said to be ad idem* In light of this
statement, discuss the various ways by which an offer can be ‘taken away’.
Assignment:
1.Define a valid acceptance
2.List the various types of invalid acceptance
3.Prepare a well-researched brief on invalid types of acceptance

ACCEPTANCE I
At the end of Week 3, students are expected to be able to do the following:
•comprehend the definition and the general conceptualisation of a valid acceptance;
•differentiate between a valid acceptance and other invalid types of acceptance; and
•Explain at length each of the invalid types of acceptance, to wit: counter-offer, cross-offer, conditional
acceptance, acceptance in ignorance of offer, and acceptance of tender
Conceptualising Acceptance
•Definition: ‘acceptance is a final and unqualified expression of assent to the terms of the offer.’ A more
comprehensive definition is provided by Tobi JCA in Orient Bank (Nig.) Plc. v. Bilante Int’l Ltd
•The following general points should be noted about acceptance:
–Acceptance may be express, implied (by conduct), written or oral: see NNSC Ltd v. Agricor Incorporation
of US & Carlill’s case (acceptance by conduct). But it must be clear that the offeree did the act in question
with the intention of accepting the offer
–The law requires an external manifestation of assent which must be notified to the offeror and not a mental
or internal intention to accept. Thus, silence or a mere intention to accept cannot constitute acceptance: see
Felthouse v. Bindley
Invalid Types of Acceptance
Counter-Offer: the following essential points should be noted:
Any qualification or amendment of original offer is a counter-offer & not an acceptance. See the following
cases:
Hyde v. Wrench
Major Gen. George Innih v. Ferado Agro & Consortium Ltd where the CA held that for an acceptance to
be valid it must be plain, unequivocal, unconditional, & without variance of any sort between it and the offer
A contract can contain series of counter-offers without a valid acceptance. See Okubule v. Oyagbola
Once accepted, a counter-offer creates a binding obligations. See Oni v. Communication Associate (Nig.)
Ltd; Benson v. Nigerian AGIP Oil Co.
A counter-offer can be accepted expressly or by conduct: Council of Yaba College of Technology v.
Nigerlec Contractors
A mere request for information is not a counter-offer: Stevenson, Jacques & Co. v. McLean (sale of
quantity of iron)
Conditional Acceptance/Acceptance Subject to Contract: the following essential points should be noted:
When an agreement is made subject to contract, it means that incidence of liability under the agreement is
postponed until a formal document is drawn up and signed. See: Winn v. Bull; Tiverton Estate Ltd v.
Wearwell Ltd
This rule still applies even when the whole or part of the purchase price has been paid: Cohen v. Nessdale;
Maja Junior v. UAC
See particularly the decision of the SC in UBA v. Tejumola &Sons Ltd. What do you think of that
decision?
Other terms with similar meaning have been held to have same effect. See Odufunade v. Ososami where
the words ‘tentative agreement without engagement’ was given same meaning
For ‘provisional agreement’, see Branca v. Cobarro & compare it with the court’s decision in AGF v.
Awojoodu. What do you think?
Cross-offer: see Tinn v. Hofman & Co
Acceptance in Ignorance of Offer:
oNo valid acceptance without being aware of the offer; & this is common in reward cases. See below cases:
oGibbons v. Proctor (do you think this case is wrongly decided? Why?)
oR v. Clarke (what is your view about this judgment?)
oWilliams v. Carwardine (motive is irrelevant once there is knowledge of offer)
Acceptance of Tender
oAs already pointed out, tenders for the supply of certain goods or services are invitation to treat.
Acceptance of such tenders will therefore be invalid.

See: Sagay pp. 20-39; Koffman & Macdonald pp. 22-25, 36-37; and Mckendrick pp. 43-45

Practice Questions:
I.On the 6th November Unilorin FM announced that rewards of N50,000 would be given to any person who
found and brought to the station a Rolex wristwatch and N30,000 to any person who found and brought to
the station a Sony Camera both of which belonged to Mr Omoniyi and were lost on his way from Challenge.
Mr Demz found the Rolex watch and took it to the Police Station (‘F’ Division) because he did not hear the
announcement on Unilorin FM. Skuki, a 400level law student found the Sony Camera and called the number
on it to hand it over to the owner. He too was not given any reward. Both Demz and Skuki have approached
you. Demz told you he didn’t hear the announcement while Skuki told you that though he faintly heard the
announcement, he had forgot about it as at the time he delivered the camera to its owner. Advise the two of
them.
II.‘All modifications to the original offer by the offeree or all return-comments from him amount to counter-
offers and cannot be enforced in law under any circumstances.’ Do you agree?
Assignment
1. Are there rules governing the method of communicating acceptance of an offer? If there are, discuss them
with the aid of decided cases.
2. With the aid of case law, discuss the general rule of acceptance by post
3. Explain the exceptions to the general rule in (2) above, if any

ACCEPTANCE II
At the end of Week 4, students are expected to be able to do the following:
Understand the rules governing communication of acceptance where the mode of acceptance is prescribed
and where it is not prescribed;
Know the peculiar rule governing communication of acceptance through the post;
Highlight the rationale or justifications for the rule of acceptance by post; and
Recognise and comprehend the exceptions that the courts have developed to the general rule of acceptance
by post.
Communication of Acceptance
It is important that acceptance is communicated as the law will not impose contractual obligations on an
offeror who is unaware that his offer has been accepted. Silence, thus, cannot constitute acceptance:
Felthouse v. Bindley
The mode/method to be adopted will depend on whether the offeror prescribes a particular mode or not
Where a method/mode is prescribed, what is the legal implication? Does it mean that acceptance must
mandatorily be communicated through that method only?
Mode of Communication of Acceptance Prescribed
If an offeror prefers that a certain mode of acceptance be used he must state that in clear and mandatory
terms. Failure to do this, the court will hold any other method as fast as or faster than the one prescribed
valid to bring about a contract: see the following cases:
 Tinn v. Hofmann & Co. where acceptance was requested by post. However, according to the court in that
case ‘that doesn’t mean exclusively a reply by letter by return post, but that you may reply by telegram or by
verbal message or by any means not later than a letter written by return post’
Manchester Diocesan Council of Education v. Commercial & General Inv. Ltd where it was held that an
offeree can use a different mode of communication from that stipulated by the offeror; and further that only
the party who prescribes a method can reject same and not vice versa
 Orient Bank v. Bilante Int’l (prescribed mode must be used where there is an express provision of the law
to that effect)
But if the selected mode gets to the offeror later than the prescribed mode would have done, the offeree
will bear the risk as the offeror is permitted to reject the acceptance in such instance: Eliason v. Henshaw
where a replied was sent by post instead of by wagon.

No Method Prescribed
Where no method/mode is prescribed for the communication of acceptance, the method of acceptance will
depend on the nature of the offer and the surrounding circumstances
Acceptance By Post
The General Rule
Acceptance communicated through the post becomes binding on the offeror upon posting and not when it
actually reaches the offeror: see Adam v. Lindsell (which lay down the general rule); and Household Fire
Insurance Co. v. Grant
Justifications
Post office is the agent of the offeror
Without this rule, posting will go on ad infinitum
The offeror has chosen to start negotiations through the post and must therefore be responsible for any
delay or loss of the letter
What do you think of all these justifications? Students should read the arguments for and against in Sagay
(45-48), and Mckendrick (47-48).
Exceptions: because of the realisation that this rule can cause hardship and bring manifest injustice to the
offeror, the following exceptions have been recognised by the courts:
-The rule won’t apply where the offeror expressly or impliedly excludes it: Howell Securities Ltd v. Hughes
(offer to sell a house by way of an option ‘exercisable by notice in writing to the intending vendor at any
time within within 6 months’)
-It will apply only where it is reasonable to use the post: Henthorn v. Fraser
-It won’t apply where application will produce manifest inconvenience and absurdity: Howell Securities Ltd
(supra)
-It won’t apply where letter of acceptance was wrongly addressed or inadequately stamped
-It won’t apply where letter of acceptance was not properly posted: Re London & Northern Bank
See: Sagay pp. 39-51; Mckendrick pp. 43-50; & Koffman & Macdonald pp. 27-32

Practice Questions:
1.‘It is trite that an acceptance must be communicated to the offeror before a valid contract can emerge.
Such communication must however always be in conformity with the particular mode prescribed by the
offeror, failing which the offeror will be justified to reject such an acceptance.’ Discuss
2. (a) Gobe, by post, offered to sell his ‘End of Discussion’ car to Dreg at N1.5 million, stating in his letter
that acceptance should be communicated to him not later than 28th December. Dreg accepted the offer and
posted a letter to that effect on the 21st December. By 29th December, Gobe had not received any
acceptance letter. He therefore sold the car to his interested neighbour, Gbooz on the morning of December
3. Dreg’s letter arrived on the 3rd of January. After being told that the car had been sold, Dreg approached
you for advice on whether he should sue Gobe or not. Advise him.

(b) Are there instances where the above rule will not apply? Discuss

Assignment:
1.Attempt a working definition of consideration as one of the essential requirements of a valid contract.
2.‘It is often said that consideration must move from the promisee’ What do you understand by this
statement?
3.Explain the following concepts:
a)Executory and Executed Consideration
b)Adequacy of consideration
c)‘Something of value in the eye of the law’
d)Sufficiency of Consideration
 CONSIDERATION I
At the end of Week 5, students are expected to be able to:
Conceptualize ‘consideration’ as an essential requirement of a valid contract;
Know that consideration must move from the promisee;
Understand the difference between an executed and executory consideration;
Recognise when consideration is past and will be unenforceable as well as when past consideration will be
regarded as good consideration;
Understand the link between ‘adequacy of consideration’ and ‘sufficiency of consideration’; and
Explain what is meant by the phrase ‘something of value in the eye of the law’.

Conceptualization
-Consideration is one of the essential ingredients of a valid contract. It emphasizes the importance of
reciprocity in contract, i.e., something of value must move from one party to another while something of
value must also move from the other party to the first party
-Consideration can be in form of benefit (e.g. buying and selling) or detriment (e.g. contract of guarantee)
-Even though consideration need not be adequate; it must be sufficient, and to be sufficient, it must be
something of value in the eye of the law
-It is however important to note that performance of mere moral obligation cannot pass as consideration (see
Eastwood v. Kenyon) just as natural love and affection cannot (see Faloughi v. Faloughi)
-For fuller conceptualisation, see Curie v. Misa

Consideration Moving from the Promisee

-This simply means that the party who seeks to enforce a contract must have forgone some benefits… he
must have given something
-In other words, for the offeree to enforce the offeror’s promise to sell to him, the offeree himself must have
offered some consideration
-For instance, if Olamiposi promised to sell her Sagay Contract Textbook to Apalando for N5,000, for
Apalando to enforce Olamiposi’s promise, he would have to show that consideration has moved from him.
In other words, he must have paid or promised to pay N5,000, the price of the book. In this scenario,
Olamiposi is the promissor while Apalando is the promisee. But note that the role can change: the offeree
can become the promisor and vice versa
-See Tweddle v. Atkinson where it was held that consideration for the promise did not move from the
promisee.

Executory and Executed Consideration

-Consideration is executory when offer and acceptance are consisted of promises from both parties. In this
case, payment and delivery of goods are to be made in the future. E.g. Margaret promises to buy Seun’s
Phone for N10,000. Seun agrees to this. A valid contract has come into being despite the fact that the phone
has not been delivered and the money has not been paid. The promises on both sides constitute an executory
consideration
-On the other hand, consideration is executed when an act is performed in return for a promise. This is very
common in the offer of reward cases: see Carlill v. Carbolic Smokeball
-In the case of executed consideration, liability is outstanding only on one side
Past Consideration (general rule)
-PC refers to a promise made after an act has been done. Such a subsequent promise is only gratuitous and
unenforceable because it is in the past and it is not supported by any consideration
-It can come about in 2 instances:
-Where a person subsequently promises to remunerate an act which was carried out pro bono; and
-Where a person relies on a single consideration to support two acts. For instance, Ayo agrees to sell his
wristwatch to Kazee for N15,000 and Kazee agrees to buy for that amount. After Kazee is in possession, he
finds out that the watch is worth more than that and promises Ayo additional N5,000. If Kazee fails to give
Ay the N5,000, the latter cannot sue the former because he has not given any consideration for Kazee’s
subsequent promise. He cannot rely on his earlier consideration to support Kazee’s second promise.

Past Consideration (general rule) Cont’d

-See the following cases:
-Eastwood v. Kenyon (subsequent promise to remunerate guardian)
-Re McArdle. In this case, despite the fact that the word ‘consideration’ was used, the court held that the
wife could not rely on her past consideration. In that case, all the children of the deceased testator promised
to remunerate the wife ‘in consideration of her carrying out certain alterations and improvements to the
property’
-Akenzua II, Oba of Benin v. Benin Divisional Council (the Oba obtained some forests for the Council)
-AG Bendel v. Okwumabua (defendant signed an undertaking to refund air fare if he quit plaintiff’s job
within 6 months. The undertaking however came after the conclusion of the original contract of service)
Past Consideration (Exceptions) Cont’d
-To create an exception, the court looks at the whole transaction between the parties and not rely simply on
whether the promise was made after a particular act or service was performed by the promisee
-In coming to this conclusion the court is guided by the presence of ALL the following:
a)Prior request from the defendant: see Lampleigh v. Brathwait (request by defendant that plaintiff help him
obtain a pardon)
b)Understanding that the act will be remunerated. Here, the court will more readily infer understanding as to
remuneration in commercial dealings than in domestic arrangement (Akenzua II’s case can be explained on
this ground). See Re Casey’s Patents; Pau On v. Lau Yiu Long
c)The promised payment or benefit must have been enforceable had it been promised in advance: Pau On’s
case
-The above are cases where the court has avoided the past consideration rule through judicial ingenuity.
Must Consideration be Adequate?
-As already pointed out, consideration need not be adequate, but it must be sufficient
-Thus, the court will not probe into the adequacy of consideration by both or either of the parties. This is
because it is not the business of the court to see that one of the parties gets a fair or good bargain
-In the absence of any of the vitiating elements of contract, the court will respect the doctrine of freedom of
contract and will not probe into the adequacy of the given consideration
-See: Mountford v. Scott (1 pound held to be valid consideration for leaving an offer open); Chappel v.
Nestle (wraps of chocolates held to be adequate consideration); the court’s statement in Faloughi v.
Faloughi; AP Ltd v. Owodunni (N400 held adequate consideration for an apartment worth N65,000);
Thomas v. Thomas (court held 1 pound good consideration)
Sufficiency of Consideration
-While consideration need not be adequate, it must be sufficient and to be sufficient, it must be something of
value in the eyes of the law

What is something of value in the eyes of the Law?

-Following have been identified as attributes of something of value in the eye of the law:
It need not be of economic value (on this, see the argument between Smith and Treitel in Sagay)
It must be what the promisor wanted
It must be owned by the party giving it out
It may be useless to either of the parties
-See: Bainbridge v. Firmstone; Chappel v. Nestle; Younis v. Chidiak;
-See generally: Sagay pp. 59-79; Koffman & Macdonald pp. 56-68; Mckendrick pp. 85-87,88-92

Practice Questions:
1) Mr Limpopo is a friend to Mr Turn-up and is known to be very hardworking. In November, there was an
informal discussion between the two that Mr Turn-up had bought paints to repaint his house. To surprise his
friend, Mr Limpopo came in on a Saturday and repainted the whole building. Turn-up came back to see his
house glowing with new paint. After he was told that the house was painted by Limpopo, he called him to
thank him and promised to pay him N100,000 for his service. 3 months after the promise however, Turn-up
had not paid the money. Limpopo has approached you to sue Turn-up for him for the recovery of the
promised sum. Advise him. If there had been a prior request from Turn-up will your answer be different?
2)‘While it is a legal truism that consideration need not be adequate, it is also legally correct that
consideration must be sufficient.’ Do you agree with this assertion?
3)With the aid of decided cases and practical examples, differentiate between executed and executory
consideration.

Assignment:
1)Explain the relationship between consideration and performance of existing duty
2)Is part-payment of debt sufficient consideration?
3)Discuss the historical antecedent of the doctrine of promissory estoppel.

CONSIDERATION II
At the end of Week 6, students are expected to be able to:
Understand the position of the law on performance of existing duties and sufficiency of such performance
as valid consideration;
State and explain the general rule where a part-payment is relied upon for the satisfaction of the whole
debt because of an earlier promise from the creditor;
Highlight and discuss the exception to the above general rule;
Know the general position of the law of contract about promissory estoppel; and
Comprehend the scope of the doctrine, vis-à-vis cause of action, effect, clarity/unambiguity of promise,
need for detriment, and when it will be applied.

Performance of Existing Duties as Consideration:

The purpose of this section is to examine whether the law will view the performance of some existing
duties which the claimant is obligated to perform either by law or under a contract with the promisor or
owed to a 3rd party as valid consideration
As you will see below, while the performance of the first 2 duties (imposed by law and owed to the
promisor) will be insufficient consideration, the performance of a duty already owed to a 3rd party is good
consideration
It is also important to note that the law recognises exceptions in the case of the 1st 2 duties
This, and several others are discussed below:
1.Public Duty Imposed by Law
•Generally, this cannot be relied upon as valid consideration because the promisee is already bound by law
to perform the duty in question (e.g. police, fire-fighters, NEMA officials, etc.). He has therefore offered no
consideration for the promisor’s subsequent promise: see Collins v. Godefroy (promise payment for
testifying)
•Exception: it will be good consideration if the promisee does more than the law requires him to do. See:
Glassbrook Bro. Ltd v. Glamorgan County Council; Ward v. Byham where it was held that even though the
plaintiff was already under a statutory duty to look after her illegitimate daughter, she was not bound to
promise the defendant that the girl would be well looked after and happy. This extra undertaking is good
consideration because she was doing more than the law requires of her.
2. Duty Imposed by Contract with Promisor
Generally: the promisee is already obligated to perform the task in question by a contract between him and
the promisor. See: Stilk v. Myrick where two sailors deserted the ship as a result of which the captain
promised the remaining sailors extra money if they sailed the ship to shore. It was held that the remaining
sailors could not rely on the latter promise because they’re already bound by their contract with the promisor
to sail the ship in such a circumstance of desertion.
Exception: (as in 1 above). See: Hartley v. Ponsonby (16 sailors out of 36 deserted the ship. It was held
that the promise made to the remaining 19 was enforceable because of the dangerous nature of the situation)
3. Duty Imposed by Contract with 3rd Party
The outcome is different here. Where A is already under a contractual obligation to deliver some goods to
B who will then transfer same to C, if C approached A and promised him extra money if A could deliver
directly to him, C’s promise to A will be enforceable despite the fact that A is already bound by contract to
deliver the goods to B.
Different justifications have been given for this rule: once he has delivered to C, A is denied the option of
not delivering to B, and 2ndly, A is now open to actions from the 2 parties (both B and C)
See: Scotson v. Pegg; Shadwell v. Shadwell (court enforced an uncle’s promise to pay his nephew £150
yearly if he married one Ellen despite the fact that the nephew was already engaged to the said Ellen); New
Zealand Shipping Co. Ltd (the Eurymedon) where the defendant stevedores were allowed to enforce a
promise made to them by the plaintiff despite the fact that they were already under a duty to a third party
(the carrier) to offload the ship for the plaintiff.
Is Part-payment of Debt Sufficient Consideration for the discharge of the whole Debt?
-Generally: the answer is NO! the general rule is laid down in Pinnel’s case. It has been reaffirmed in D&C
Builders v. Rees; Foakes v. Beer; Re Selectmove Ltd; Ferguson v. Davis
-Exception: 3 exceptions are recognised to the above general rule
1.Introduction of new element: this exception is recognised in Pinnel’s case itself. It was applied in Sibree v.
Tripp and Godard v. O’brien (payment by negotiable instrument: promissory note)
2.Acceptance of an offer to pay lesser from a 3rd party: Hirachand Punamchand v. Temple
3.Composition with creditors

Promissory Estoppel
Historical Antecedent
→Because of the failure by the court to recognise promise to accept lesser sum in full satisfaction of the
whole debt, litigants began to look for ways to circumvent the full wrath of the common law in this area
→In 1854, an attempt was made in Jorden v. Money to rely on the doctrine of estoppel but the majority of
the court ruled that the doctrine only applied to statement of facts and not statement of mere intention which
was in play here
→In 1877, the plaintiff successfully relied on promissory estoppel in Hughes v. Metropolitan Ry. Co. but the
court failed to apply this precedent in 1884 in Foakes v. Beer where the rule laid down in the Pinnel’s case
was resorted to
→However, in 1947, the radical Lord Denning revisited the doctrine of promissory/equitable estoppel and
applied it in the famous High Trees’ case.
→He stated the rule thus: ‘where a promise is made which was intended to create legal relations and which
to the knowledge of the person making the promise was going to be acted upon by the person to whom it
was made, and which was in fact acted upon, the promisor will be held bound by his promise’
→Note: Lord Denning was heavily criticized for this decision. Many people believed that he circumvented a
House of Lord decision in Foakes v. Beer. Denning however distinguished High Trees from Foakes on the
ground that the doctrine was not considered in the latter case.
→The doctrine has now come to stay as it has been applied in many cases including Nigerian cases such as
Offiong v. ADC Ltd; Tika Tore Press v. Abina; Prospect Textile Mills v. ICI Plc England

Promissory Estoppel
The Ambit of the Doctrine
It is pertinent to note the following points about the doctrine:
Cause of Action: the doctrine doesn’t create a cause of action. It can only be used as a defence or a support
cause of action: Combe v. Combe at the CA, Foster v. Robinson, and Baird Textile Holdings Ltd v. M&S
Plc.
Effect: PE can be suspensory or abrogatory in its effect. Where it is suspensory, a reasonable notice will be
sufficient to revive the promisor’s rights. The notice may be given expressly or where it was agreed that
parties resume their rights after a specified period, at the expiration of that period, the right will resume:
Hughes, High Trees, Ajayi v. R.T. Briscoe, TM Manufacturing Co. Ltd. The effect will be abrogatory where
it is no longer possible for the promisor to resume his rights: Offiong, WJ Alan & Co. Ltd, Tika Tore Press
The promise relied upon must not be vague or equivocal and must pass the test of reasonableness: Temco
Engr. & Co Ltd v. Savannah Bank Ltd; Re Selectmove (where the official who made the agreement had no
power to make it); Northstar Land Ltd v. Maitland Brooks where it was held that such promise must be
‘clear, unequivocal, unanimous promise or assurance which was intended to affect the legal relations
between them or was reasonably understood by the other to have that effect’.
It will only apply where it will be inequitable to allow the promisor to go back on his promise: D&C
Builders v. Rees
Detriment: must the promisee suffer detriment to rely on PE? While some cases imply there must be
detriment (Temco Engineering; Ajayi v. R.T. Briscoe where the court held that the defendant had not altered
his position), others suggest that the party seeking to rely on PE need not suffer any detriment (WJ Alan &
Co; Hughes, High Trees, etc.)
According to Lord Denning, all that is required is that ‘one should have acted on the belief induced by the
other’
See: Sagay pp. 86-112, Koffman & Macdonald pp. 70-95, Mckendrick pp. 93-98, 103-106, 117-119
Practice Questions:
•Explore the relationship between consideration and performance of existing duties
•Is it in all cases that part-payment cannot serve as sufficient consideration? Support your answer with
decided cases.
•‘The doctrine of promissory estoppel is a doctrine with controversial origin’ Discuss
•Mr Gbam has requested you to help him prepare a brief of the issues he should take cognizance of when
relying on the doctrine of promissory estoppel. Prepare your brief

Assignment: all students should read ‘intention to create legal relations’.