OLABISI ONABANJO UNIVERSITY, AGO-IWOYE

FACULTY OF LAW
DEPARTMENT OF BUSINESS & INDUSTRIAL LAW
COURSE TITLE: LAW OF CONTRACT I
COURSE CODE: BIL 201
4 Units
Course Information and Outline
FACILITATORS
MRS. O. A. AYANLEYE
MR. B.Y. OSIFESO
MR. KOLA OYEKAN

GROUND RULES

 Switch off /put in silence mode all mobile phones.

 No side talking/no conversations.
 No loitering in the auditorium.
 Talk only when the lecturer approves it.
 No strolling into the auditorium during lectures i.e. lateness to lectures is not allowed.
 No form of disturbance during lectures.
COURSE DESCRIPTION
Law of Contract is one of the compulsory courses offered by the Faculty in the Department of Business
Law and Industrial Law. It is taught in two semesters, the first part which is taught in the Harmattan
semester, to which this courseware relates. The course is expected to take the students through the
essential ingredients of a valid contract. To this end, BIL 201 introduces Part II law students to the
nature of the course with particular attention on the reasons why contracts are binding, the definitions of
contract, the classification of contract as well as the various consequences that attend such classification.
The course also examines the formation of contract, addressing especially such pivotal issues as what
constitutes an offer, acceptance, consideration, intention to create legal relations, and capacity to
contract of different categories of persons. Lastly, the course examines the various terms of a contract
including fundamental terms and mere warranties.

Course Justification
Agreement is a universal phenomenon among the human race. It is as a result of this that early Men
devised the idea of transacting business with one another to satisfy their numerous but unsophisticated
wants. This first took the form of trade by barter and later, with the advent of a legal tender, evolved into
the concept of contract as it is understood today. With civilization comes more commercial activities and
more needs for a better appreciation of the law of contract which governs these commercial activities. It
is against the above background that it is very essential that students are taught the fundamentals of the
law of contract as contained in the applicable laws viz. common law, doctrine of equity, statute of
general application, Nigerian legislation and case laws. Also, since the law of contract now pervades
virtually all spheres of human activities namely sales of goods, agency, hire-purchase, insurance,
industrial or labour relations, company law, partnerships, etc it is reasonably expected that students of
law who are being trained as practitioners in this all important area are prepared for the task ahead.

Lastly, the law of contract being one of the core courses required to be passed by all law students before
graduation at the University level, and being one of the prerequisites for admission into the Nigerian
Law School, it is only expected that students will be taught the course to fulfil this requirement.
Course Objectives
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At the end of the Harmattan semester, students should be able to understand and explain the
fundamentals of the law of contract as follows:
 Definitions of contract;
 Reasons why contract must be binding;
 Classification of contract into formal/informal, unilateral/bilateral, express/implied and the
consequences that follow each classification;
 Formation of contract, especially offer and acceptance with an ability to distinguish between a
valid offer and an invitation to treat;
 The constituents of a valid acceptance,
 The reciprocal nature of consideration;
 Intention to create legal relations, with an understanding of when a social agreement will and will
not be binding on family members and friends;
 Capacity to contract generally, as well as capacity of an infant, persons of unsound mind, a
bankrupt, etc to contract in law; and
 Terms of a contract, including fundamental terms and warranties, and the effect of breach of the
two.

DELIVERY METHOD
This course will be delivered in a clinical way as conforms to the standard laid down by the Council of
Legal Education (CLE) and the National Universities Commission (NUC). Students are therefore
expected to be well prepared for class as participation in discussions and interaction with facilitators and
students are part of the Continuous Assessment (CA).

Course Delivery Strategies: the following delivery strategies shall be adopted:

 Class lectures
 Course materials
 Group discussion/seminar presentations
PRE-REQUISITES
Students are expected to come to class with the following:
 Writing materials.
 An open mind and a warm interest in the course.
 A prepared brain ready to assimilate.

ASSESSMENT

Passing grade in the course is 40% in the final exam.

The total grade will be determined on the following basis:

Assignments and Class Presentations: 10%

Written Test: 10%

Attendance and Participation in Class Quiz: 10%

Examination: 70%

Total : 100%

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COMPLETION OF SEMESTER
The course will be taught and completed within Fourteen (14) weeks broken down as follows:
LECTURES
WEEK 1:
a) Definitions and Nature of Law of Contract
b) Classifications and Enforcement of Contract

Objective: At the end of this week, students are expected to be able to:
 have an understanding of the various definitions of contract;
 understand the concept of ‘agreement’ and its importance to formation of contract;
 appreciate the importance of ‘freedom of contract’ as an essential prelude to any valid contract;
 Explain the reasons why contract should be binding.
 distinguish between simple and formal contracts, unilateral and bilateral contracts,
 express and implied contracts, and executed and executory contracts; and
 appreciate the meaning and effects of void, voidable, valid, illegal and unenforceable contracts.

Description: This topic will examine the various definitions of contract as proffered by authors and
scholars. It will also dwell on the nature of contract vis-à-vis the importance of agreement; the need for
there to be ‘freedom of contract’ as between contracting parties; and the need for contracts freely entered
into to be binding. Classification of contract considers the various types of contract, bringing out their
peculiar features and emphasizing the major differences existing between them. It also looks at the
enforceability or otherwise of void, voidable, valid and illegal contracts.

Study Questions
1. Distinguish between “agreement” and “contract”.
2. What do you understand by the concept of “freedom of contract” and what is the effect of this
concept on the validity of contract?
3. What are the essentials of a valid contract?
4. Compare and contrast formal and simple contracts.
5. Explain, with practical examples and case law, unilateral and bilateral contracts.
6. What is the effect of the following agreements in terms of enforceability?
a) ‘A’ promises to supply ‘B’ with 10 tons of Indian hemp.
b) ‘C’, a 45 year old man agrees to sell his 3 bedroom bungalow to ‘D’ an eight year old
boy.
c) ‘E’ orally agrees with ‘F’ for the sale of ‘E’s’ 2 plots of land.
Cases
 Xenos v. Wickham (1867) L.R. 2 H.L. 296
 Rann v. Hughes (1778)7 Term Rep. 350
 Brodgen v. Metropolitan Railway Co. (1877)2 AC 666
 Carlill v. Carbolic Smoke Ball Co. (1893)1 QB 256
 Arjay v. Airline Management Support Ltd (2003) FWLR (Pt.156)943 at 990
 Obmiani Brick & Stone Nig. Ltd v. AIB Ltd. (1992) 3 NWLR (Pt 229) 260
 Orient Bank (Nig.) Plc V Bilante Int’l Ltd (1997) 8 NWLR (Pt 515) 37 at 76 Tobi JCA
 Societe General Bank (Nigeria) v. Safa Steel and Chemical Manufacturing Limited (1998) 5
NWLR (Pt. 548). 168.
 B.F.I.G V B.P.E (2008) ALL FWLR (Pt.416) 1915 at 1937 paras. E-H (CA)
 Okubule v Oyagbola (1990) 4 NWLR (Pt.14) 729.
 Alfotrin Ltd. v. A.-G., of the Federation & Ors. (1996) 9 NWLR (Pt. 475) 634 at 656
 Brogden v. Metropolitan Railway Co (1877)2 A.C 666,
 Attorney General of Kaduna State & Ors v. Victor Bassey Atta & Ors (1986) 4 NWLR (pt. 380)
785, CA.
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  Diamond Bank Ltd. v. Ugochukwu (2008) 1 NWLR (Pt. 1067) 1
 Macfoy v. UAC (2000) 15 WRNN 185
 Conoil Plc v Ogbonna Nwike (2017) 4 NWLR (pt 1555) 294
 Odutola v Paper Sack Nigeria Ltd (2006) 18 NWLR (pt 1012) 470.

WEEK 2
Elements of a Contract I - Offer
Objective: At the end of week 2, students should be able to:
 define offer;
 understand the basic principles of offer;
 distinguish between a valid offer, negotiation process and a mere invitation to treat;
 highlight and comprehend the various invitation to treat scenarios; and
 list and explain the methods by which an offer can be validly terminated.

Description: An offer is an expression of willingness to contract made with the intention that it shall
become binding on the offeror as soon as it is accepted by the offeree. The topic will distinguish
between offer and negotiations preliminary to the making of a valid offer on the one hand, and offer and
what is referred to as ‘invitation to treat’ on the other hand. It will ascertain the particular point where a
valid offer can be said to have been made. Different examples of invitation to treat, such as auctions,
display of goods, advertisements, mere statement of price, tenders, etc will also be examined. The topic
will conclude with the consideration of the different methods by which an offer can be legitimately
terminated.

Study Question
1. In the morning of Tuesday the 24th of January, 2015, Mr. Alekuwole boarded a BRT from his Abule
Egba Bus-Stop to CMS. At CMS, he discovered that he was no longer with his wallet upon which
he proceeded to Hot Fm radio station to place an advert that any person who helped him find the lost
wallet and returned same would be rewarded with the sum of N20,000.00 (Twenty Thousand Naira
Only). On the 28th of January 2015, Mr. Swagger found the lost wallet and took the same to Hot Fm
radio station. Mr. Swagger then asked for the reward of N20,000 promised by Mr. Alekuwole only
to be told that the advertisement was a mere puff; that it was not possible to contract with the whole
world; and that Mr. Swagger did not communicate his acceptance of his (Mr. Alekuwole’s) offer to
him. Mr. Swagger has approached you for an advice. With the aid of decided cases, advise him on
the legal issue(s) involved (if any).

2. “For an offer to be capable of becoming binding on acceptance, it must be definitely clear and final.
If it is merely a preliminary move in negotiations which may lead to a contract, it is not an offer, but
an invitation to treat…” In the light of this statement, explain the concept of invitation to treat.
3. Enumerate and discuss four (4) methods by which an offer can be terminated.
4. With the aid of decided cases, distinguish an offer from an invitation to treat.
Cases
 Balonwu v. Odunuko (1971)2 ALR 388
 Carlill v. Carbolic Smoke Ball Co. (1893)1 QB 256
 Brogden v. Metropolitan Railway Co. (1877)2 AC 666
 Major Oni v. Communications Associates (Unreported) High Court of Lagos, Lambo J. Suit No.
LD/625/71 delivered on January 8, 1973
 Payne v. Cave (1789)3 Term Rep. 148
 Adebaje v. Conde (1938)19 NLR 57
 Harris v. Nickerson (1873)28 LT 410
 Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953)1 QB 401
 Lasky v. Economy Grocery Stores (1946)163 ALR 235
 Fisher v. Bell (1961)1 QB 394
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  Pattridge v. Crittenden (1968)2 All ER 421
 Grainger & Son v. Gough (1896) AC 332
 Spencer v. Harding (1870)5 CP 561
 Routledge v. Grant (1828)4 Bing 653
 Mountford v. Scott (1975)1 All ER 198
 Bryne v. Van Tien Hoven (1880)5 CPD 344
 Dickinson v. Dodds (1876)2 Ch. D. 463
 Ramsgate Victoria Hotel v. Montifiore (1866)LR 1 Exch. 109
 Loring v. City of Boston (1844)7 Metcalf 409
 Bradbury v. Morgan (1862)1 H & C 249
 Kennedy v. Thomassen (1929)1 Ch. 426
 Reynolds v. Atherton (1921)125 LT 690
 Harvey v. Facey (1893) AC 552

WEEK 3
Elements of a Contract II - Acceptance

Objective: At the end of this week, it is expected that students will be able to achieve the following:
 understand the meaning of acceptance;
 know the requisite conditions of a valid acceptance;
 be familiar with acts of offeror/offeree that amount to invalid acceptance, such as counter-offer,
conditional acceptance, cross offers, acceptance in ignorance of offer, and acceptance of tenders;
 understand and appreciate the legal effects of the different types of invalid acceptance;
 understand the basic rules governing communication of acceptance and the applicable exceptions;
and
 know how acceptance can be terminated under varied circumstances.

Description: Acceptance is another vital requirement of a valid contract. The topic will look at the
meaning of acceptance and discuss the conditions which a valid acceptance must possess. It will also
consider invalid types of acceptance and their effects. The importance of the need to communicate
acceptance will equally be explored together with the exception(s) to the rule that acceptance must be
communicated. Just like offer, acceptance can also be terminated. The various methods of termination
will therefore be considered.
Study Questions
1. Itemize and explain the requisite conditions that a valid acceptance must meet.
2. Koledowo offered to sell his house at Victoria Island to Ajisafe for N20Million. He promised to keep
the offer open till 20th November. Ajisafe replied that he was willing to pay N18 Million on 5th
November. On 10th November, Koledowo sold the house to Bankole. Ajisafe sent a cheque of
N20Million the same day which Koledowo rejected. Ajisafe wants to sue for specific performance.
Advise him.

3. Write short note on any three (3) of the following:

a) Acceptance in ignorance of offer
b) Acceptance of Tender
c) Communication of Acceptance
d) Acceptance by Post
e) Conditional acceptance

Cases
 Felthouse v. Bindley (1862)7 LT 835
 Orient Bank v. Bilante Int’l (1997)8 NWLR (pt. 515) 37
 Hyde v. Wrench (1840)3 Beav. 334
 Major-Gen George Innih & Ors v. Ferado Agro & Consortium Ltd (1990)5 NWLR (pt. 152) 604
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 Okubule & Anor. v. Oyagbola & Ors (1990)4 NWLR (pt. 147) 723
 Oni v. Communications Associates (Nig) Ltd (Unreported)
 Benson v. Nigerian Agip Oil Co. Ltd (Unreported)
 Council of Yaba College of Technology v. Nigerlec Contractors (1989)1 NWLR (pt. 95) 99
 Winn v. Bull (1877)7 Ch. D 29
 Law v. Jones (1974) Ch 112
 Tiverton Estates Ltd v. Wearwell Ltd (1975) Ch 146
 Maja Junior v. UAC (Unreported)
 UBA v. Tejumola & Sons Ltd (1988)2 NWLR (pt. 79) 662
 Nicolene v. Simmonds (1953)1 All ER 822
 Odufunlade v. Ososami (1972) UILR 101
 Branca v. Cobarro (1947) KB 854
 AGF v. Awojoodu (1973)3 UILR 4
 Tinn v. Hofman & Co. (1873) 29 LT 271
 Gibbons v. Proctor (1891) LT 594
 Fitch v. Snedaker 38 NY 248 (1868)
 R v. Clarke (1927)40 CLR 227
 Williams v. Carwardine (1833)5 C & P 566
 Carlill v. Carbolic Smoke Ball Co. (supra)
 Entores v. Miles Far East Corporation (1955)2 QB 327
 Anon Lodge Ltd v. Mercantile Bank (1993)3 NWLR (pt. 284) 721
 Manchester Diocesan Council of Education v. Commercial & General Inv. Ltd (1969)3 All E.R.
1593
 Adams v. Lindsell (1818)1 B & A 681
 Byrne v. Van Tien Hoven (1880)5 CPD 344
 Household Fire Insurance Co. v. Grant (1879)4 Ex. D 216
 Island Tool Co. v. US F. Supp. 417 (1955)
 Dick v. US F. Supp. 326 (1949)
 Holwell Securities Ltd v. Hughes (1974)1 WLR 155
 Afolabi v. Polymera Industries (1967)1 All NLR 144
 Re London & Northern Bank, ex. P. Jones (1900)1 Ch. 220

WEEK 4
Consideration 1: The General Rule
Objective: At the end of the week, students should be able to:
 define consideration;
 demonstrate a good knowledge of the constituent elements of the concept and significance of
consideration;
 state and understand the types/classes of consideration: executory and executed; and
 distinguish past consideration.

Description: ‘Quid pro quo’ (something for something) is the Latin term upon which the requirement
of consideration is based. The teaching of this important topic will see us discuss such sub-topics as
definition of consideration, executory and executed consideration, and past consideration. In all this,
emphasis will be laid on the expectations of law in respect of the different types of consideration.

Study Questions

1. With the aid of decided cases, explain whether past consideration is a valid consideration.
2. ‘Consideration must not only move from the promisee, it must also be lawful’ Discuss with the aid of
decided cases.
3. Mr Jahbless performed his popular number ‘Jo ooo’ at the naming ceremony of Ruggedman’s son.
The performance was generally adjudged by people at the ceremony as superb. And Mr Onlooker, being
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very impressed, promised to pay Jahbless a sum of N500,000. He however failed to fulfil the promise as
a result of which Jahbless filed a suit before the court to claim the said sum. Advise Jahbless on the
success or otherwise of his suit.

Cases
 Currie v. Misa (1875) LR 10 Exch 153
 Eastwood v. Kenyon (1840)11 A & E 438
 Barclays Bank DCO v. Sulaiman (1970)1 ALR 415
 LA Cardozo v. The Executors of the Late J.A. Doherty 4 WACA 78
 Miles v. New Zealand Alford Estate Co. (1886)32 Ch D 267
 Bank of West Africa v. Fagboyegun (1961) WNLR 227
 Barclays Bank of Nigeria Ltd v. Okotie-Eboh (unreported)
 Ikomi v. Bank of West Africa (1965) ALR Comm. 25
 Johnson v. Nicholls (1845)1 CB 251
 Gbadamosi v. Mbadiwe (1964)2 All NLR 19
 Egware v. Shell BP (Unreported)
 UTC v. Hauri 6 WACA 148
 Re McArdle (1951) Ch. 669
 Akenzua II Oba of Benin v. Benin Divisional Council (1959) WRNLR 1
 AG Bendel v. Okwumabua (Unreported)
 Lampleigh v. Brathwaite (1615) Hob. 105
 Re Casey’s Patent (1892)
 Pau On v. Lau Yiu Long (1980) AC 614

WEEK 5
Consideration: Sufficiency of Consideration and Promissory Estoppel
Objective: At the end of the week, it is expected that students will be able to achieve the following
objectives:
 distinguish between adequacy and sufficiency of consideration; and
 understand the practical operation of the equitable doctrine of promissory estoppel and its
applicability.

Description: The topic looks at the nexus between adequacy and sufficiency of consideration, and
particularly addresses the issue of whether consideration must be adequate, or whether it suffices if it is
sufficient. It also examines the equitable doctrine of promissory estoppel which operates to bar a
promissor from rescinding an earlier promise made by him to a promisee upon which the latter not only
relies but also acts.

Study Questions
1. ‘Consideration need not be adequate but must be sufficient.’ Discuss the validity of this assertion.
2. Mrs Alajeju is the landlady of No 12, Tikatore Street, Ayobo. Mr Kolejeun is the sole tenant of No
12 which is a 3-bedroom flat. At the beginning of his tenancy, the rent was fixed by the tenancy
agreement at N150,000 per annum and he paid for 2 years upfront. Before the expiration of the 2
years’ rent, there was a heavy rain which destroyed some of Mr Kolejeun’s property. As a result of
this loss, Mrs Alajeju the landlady promised to collect N100,000 per annum for 2 years from her
tenant. However when it was time to pay for new tenancy term Mrs Alajeju insisted that Mr
Kolejeun must pay the full rent of N150,000 for the 2 years. Mr Kolejeun reminded his landlady to
her promise, to which the latter responded that there was no written agreement to that effect. Mrs
Alajeju has approached you for your service. Using judicial authorities, advise Mrs Alajeju on the
legal issue(s) involved and the position of the law with regards to those issues.
3. Highlight and discuss the three qualifications to the operation of equitable/promissory estoppel?

Cases
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  Chappel v. Nestle (1960) AC 87
 Thomas v. Thomas (1842)2 QB 851
 Bainbridge v. Firmstone (1838)8 A & E 743
 Haigh v. Brooks (1839)10 A & E 309
 De la Bere v. Pearson (1908)1 KB 280
 White v. Bluet (1853)23 LJ Ex. 36
 Younis v. Chidiak (1970) All NLR 188
 Dunton v. Dunton (1892)18 VLR 114
 Collins v. Godefroy (1831)1 B & Ad 950
 Glassbrook Bro Ltd v. Glamorgan County Council (1925) AC 270
 Ward v. Byham (1956)1 WLR 496
 Stilk v. Myrick (1809)2 Camp 317
 Hartley v. Ponsonby (1857)7 E & B 872
 North Ocean Shipping Co. v. Hyundai Construction Co. (1979) QB 705
 Scotson v. Pegg (1861)6 H & N 295
 Shadwell v. Shadwell (1860)9 CB (NS) 159
 New Zealand Shipping Co. v. A.M. Satterthwaite & Co. (1975) AC 154
 Pinnel’s case (1602) 5 Co. Rep. 117a
 Cumber v. Wane (1721) 1 Stra. 426
 D & C Builders v. Rees (1966)2 QB 617
 Foakes v. Beer (1884)9 App. Cas. 605
 Jorden v. Money (1854)5 HLC 185
 Hughes v. Metropolitan Railway Co. (1877)2 App. Cas. 439
 Central London Property Trust Ltd v. High Trees House Ltd (1947) KB 130
 Offiong v. African Development Corporation Ltd (1964)2 All NLR 75
 Tika Tore Press v. Abina (1974)4 UILR 145
 Ajayi v. RT Briscoe (1964) WLR 1326
 W.J. Alan & Co. Ltd v. El Nasr Export & Import Co. (1972)2 QB 189
 Tool Metal Manufacturing Co. v. Tungsten Electric Co. Ltd (1955)1 WLR 761
 Societe Italo-Belge Pour Le Commerce et L’Industries S.A. v. Palm & Vegetable Oil (Malaysia)
(1982)1 All ER 19
 Hirachand Punamchand v. Temple (1911)2 KB 330
 Ude v. Osuji (1998) 10 SCNJ 75
 Buhari v. lNEC (2009) All FWLR (Part 459) 419 at 517

WEEK 6
Intention to enter into Legal Relations
Objective: At the end of this week, students should be able to:
 understand the underlying factors of the requirement of intention to create legal relations as one of
the essential requirements of a valid contract;
 recognize social cum domestic agreements on the one hand, and commercial agreements on the
other; and
 distinguish between social/domestic agreements and commercial agreement.

Description: Why all contracts are made up of agreements, not all agreements end up being contracts. It
is as a result of this that the law distinguishes between those agreements that are binding and result in
contracts, and those agreements that are non-binding because parties do not intend them to create legal
obligations as between them. This topic therefore, apart from examining the meaning of social/domestic
agreements and commercial agreements, explains the general rule with regards to social/domestic
agreements as well as the exceptions. It also examines commercial agreements, stating the general rule
and the exceptions. Lastly, the intermediate situations are equally considered.

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Study Questions
1. Explain whether or not an intention to create legal relations is an essential element in a binding
contract.
2. ‘Social/Domestic agreements are always not binding.’ Do you agree with this statement? Support
your answer with legal authorities.
3. As a general rule commercial agreements are binding. Are there exceptions to this general rule? If
your answer is yes, discuss these exceptions with the aid of decided cases.
4. Robert and Theresa are planning to divorce. They have spent their married life in a house which they
bought in their joint names, with the help of a mortgage which has six years to run. Robert and
Theresa agree that Robert would move out of the house and if Theresa meets the mortgage repayment
for the next six years, Robert will at the end of that time transfer the sole ownership of the house to
her. Theresa pays the mortgage for a year, at which point Robert says he has changed his mind and
does not intend to transfer his share of the house to her. Advise Theresa. How, if at all, would your
advice be different if Robert changed his mind before Theresa had started paying the mortgage.

Cases
 Balfour v. Balfour (1919)2 KB 571
 Spellman v. Spellman (1961)1 WLR 921
 Jones v. Padavatton (1969)2 All E.R. 616
 McGregor v. McGregor (1888)21 QBD 424
 Merritt v. Merritt (1970)1 WLR 1211
 Parker v. Clark (1960)1 WLR 286
 Weekes v. Tybald (1605) Noy 11
 Carllil v. Carbolic Smoke Ball (supra)
 Amadi v. Pool House Group and Nign Pools Co. (1966)2 All NLR 254
 Lee v. Sherman’s Pools (1951) WN 70
 Jones v. Vernon’s Pools Ltd (1938)2 All ER 626
 Buko v. Niger Pools Co. (1968) NMLR 196
 Denemu v. Mak-Bob (Fixed Odds) Pool Ltd & Tijani (1973) ECSLR 307
 Rose & Frank Co. v. Compton Bros (1925) AC 445
 Coward v. Motor Insurers Bureau (1963)1 QB 259
 Albert v. Motor Insurers Bureau (1972) AC 301

WEEK 7:
Capacity to Contract
Objective: At the end of week 7, the students are expected to be able to do the following:

 understand the rules governing the capacity of an adult to contract generally;

 know the category of people who by law lack the capacity to contract as a general rule;
 understand and appreciate the instances where people in the second category above can enter into
contract; and
 have a full understanding of the effects of such contracts.

Description: Capacity is another important requirement of a valid contract. It is the requisite ability of
contracting parties to enter into contract. It involves two categories: the first dealing with adults who are
recognized as having the ability to contract as a general rule, even though there are some exceptions to
such capacity; and the second category dealing with infants or persons below the age of majority who
are generally regarded by the law as lacking the capacity to contract. Like the first, this category also has
exceptions. This topic will against this background examine the general rules and exceptions for the two
categories above identified, with particular attention on the capacity of adults generally, and some
disadvantaged adults such as married women, persons of unsound mind, drunken persons, aliens, foreign

9
head of government and their representatives, etc. It will also consider the capacity of infant to contract
in respect of contract of necessaries, beneficial contract of service, etc.

Study Questions
1. Johnson, a 17 year old undergraduate of the University of Abuja bought from CSS Bookshop on
credit two copies of Sagay’s Nigerian Law of Contract for N2,000. He borrowed the sum of N20,000
from Dr. Showboy, his lecturer for the purchase of what he called “necessaries”. Out of the money,
he spent N2,000 to pay for his lodging in the students’ hostel, bought a N3,000 engagement ring for
his fiancée, spent N5,000 on a small birthday party which organised for himself and kept the
remaining amount in his savings account at Isara Community Bank. Johnson who already owned a
small radio bought a second hand stereo set from Wenger Radio Ltd for N1,500 and made an
immediate payment of N750. He wants to return the stereo set and get his money back. However,
Dr. Showboy is equally anxious to get his N20,000.00 back. The seller of the books is demanding
payment as well. Examine the rights and liabilities of the parties.
2. Referring to infants’ contracts it has been said that ‘The law on this topic is based on two principles.
The first, and most important, is that the law must protect the infant against his own inexperience,…
the second principle is that the law should not cause unnecessary hardship to adults who deal fairly
with infants.’ (Treitel) Explain how the law gives effect to these principles and consider how, if
necessary, the law might usefully be reformed.
3. Write short note on the capacity of the following persons:
a) A Drunkard
b) An illiterate
c) Companies
d) Married women
e) Infant

Cases
 P.Z. & Co Ltd v. Gusau & Kantoma (1961) NRNLR 1
 UAC v. Edems & Ajayi (1958) NRLR
 Igbadume v. Benworth Finance (Nig) Ltd (1965/66) MWNLR 122
 Djukpan v. Orovuyovbe (1961) NMLR 287
 Osefor v. Uwania (1971)1 ALR 421
 SCOA Zaria v. Okon (1960) NRNLR 34
 Lawal v. GB Olivant (Nig) Ltd (1970)2 ALR 208
 Otitoju v. Gov of Ondo State (1994)4 NWLR (pt. 340) 518
 Salami v. Savannah Bank (1990)2 NWLR (pt. 130) 106
 Labinjoh v. Abike (1924)5 NLR 33
 Roberts v. Gray (1913)1 KB 520
 Nash v. Inman (1908)2 KB 1
 Chapple v. Cooper (1844)13 M & W 253
 Peters v. Flemming (1840)6 M & W 42
 Mercantile Union Guarantee Corp. Ltd v. Ball (1937)2 KB 498
 Cowern v. Nield (1912)2 KB 419
 Edward v. Carter (1893) AC 360
 North Western Railway v. M’Micheal (1850)5 Exch. 114
 Steinberg v. Scala (Leeds) Ltd (1923)2 Ch. 451
 Ugbomah v. Morah (1940)15 NLR 78
 Re Jones (1881)18 Ch. D 109
 Coutts & Co. v. Browne-Lecky (1947) KB 104
 R v. Wilson (1879)5 QBD 28
 Jennings v. Rundall (1799)8 TR 335
 Johnson v. Pye (1665)1 Sid. 258
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  Burnard v. Haggis (1863)14 CBNS) 45
 Leslie Ltd v. Sheil (1914)3 KB 607
 Stocks v. Wilson (1913)2 KB 235

WEEK 8
Terms of a Contract I: Express, Implied Terms and Collateral Contract
Objective: At the end of this week students should be able to:
 understand the importance of terms in a contract as a determinant of the extent of parties’
obligations under such contract;
 distinguish between a valid term of a contract and a mere representation;
 distinguish between express and implied terms; and
 understand what is meant by ‘collateral contract’ and when the court will rule that one exists

Description: The importance of terms of contract cannot be over-emphasized as they are what
determine the rights and obligations of parties under any given contract. It is as a result of this that the
topic will consider the two major terms of contract, namely express terms and implied terms. It will
reiterates the fact that while some terms are agreed upon by parties intentionally and are therefore
included in the contract, some are so included because they are implied by trade usage, statutes and/or
custom. The scope of the topic will also include a mid-way term which the court has often referred to as
‘collateral contract.’
Study Questions
1. ‘Whether a breach of contract discharges the contract or not depends upon the nature of the term
broken.’ Discuss.
2. ‘As between A (a potential seller of goods) and B (a potential buyer), two ingredients and two only
are in my judgment required in order to bring about a collateral contract containing a warranty; (1) a
promise or assertion by A as to the nature, quality or quantity of the goods which B may reasonably
regard as being made animo contrahendi and (2) acquisition of the goods by B on reliance on that
promise or assertion.’ McNair J., in Shanklin Pier Ltd v. Detel Products Ltd (1951)2 KB 854. In
light of the above observations of his Lordship, discuss collateral contract.
3. With the aid of legal authorities, distinguish between express and implied terms of a contract.

Cases
 Bannerman v. White (1861)10 CB (NS) 844
 Routledge v. McKay (1954)1 WLR 615
 Shawel v. Reade (1913)2 I.R. 81
 Birth v. Paramount Estates (1956)16 EG 396
 Heilbut v. Buckleton (1913) AC 30
 Oscar Chess Ltd v. Williams (1957)1 WLR 370
 Ecay v. Godfrey (1947)80 L1.L.Rep. 286
 City & Westminster Properties Ltd v. Mudd (1959) Ch 129
 Wells (Mersham) Ltd v. Buckland Sand & Silica Co. Ltd (1965)2 QB 170
 Shanklin Pier Ltd v. Detel Products Ltd (1951)2 All 471
 Hutton v. Warren (1836)1 M&W 466
 The Moorcock (1889)14 PD 64
 Shirlaw v. Southern Foundries (1940) AC 704
 Wilson v. Best Travel (1993)1 All ER 353
 Liverpool City Council v. Irwin (1976)2 All ER 39
 Akoshile v. Ogidan (1950)19 NLR 87
 Varley v. Whipp (1900)1 QB 513
 Ogwu v. Leventis Motors (1963) NRNLR 115
 Boshalli v. Allied Commercial Exporters Ltd (1961)1 All NLR 917
 Preist v. Last (1903)2 KB 148
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  Grant v. Australian Knitting Mills Ltd (1936) AC 85
 Ijeoma v. Mid Motors Co. Ltd (1974)9 CCHCJ 1325
 DIC Industries v. Jimfat (Nig) Ltd (1975)2 CCHCJ 175
 Khalil & Dibbo v. Mastronikolis (1949)12 WACA 462
 Okotete v. Electricity Corporation of Nigeria (Unreported)
 Ghandi v. Pfizer (Unreported)
 West African Automobile & Engineering Co. Ltd v. Saba Balogun (Unreported)
 Reigate v. Union Manufacturing Co. (1918)1 KB 592
 Spring v. National Amalgamated Stevedores & Dockers Society (1956)1 WLR 585

MID SEMESTER TEST

WEEK 9
Terms of a Contract II: Exclusion Clauses and Limiting Terms
Objective: At the end of week 9, students must be able to appreciate and understand the following:
 what exclusion clauses and limiting terms are; and
 the applicable rules where the documents containing such exemption/exclusion are signed and
where they are not signed; and
 understand the effect of fundamental breach on exclusion clause.

Description: Since parties enjoy the freedom to contract, they are at liberty to include, as part of their
contract, exclusion and limiting terms. This topic will consider the extent of the freedom given to the
party to include such terms in their contracts. It will also examine the propriety of the inclusion of
exclusion clauses in standard form contracts and the rules that the court will apply in determining
whether a limiting clause can stand or not. It will look at the various applicable rules where the
documents which seek protection or enjoyment are signed and where they are not signed, and finally, it
will examine the effects of fundamental breach on exclusion clauses and limiting terms.

Study Questions
1. ‘Now the reason why the person receiving the bill of lading would be bound seems to me to be that in
the great majority of cases persons shipping goods do know that the bill of lading contains the terms of
the contract of carriage; and the ship owner or the master delivering the bill of lading is entitled to
assume that the person shipping the goods has that knowledge’ Mellish L.J. in Parker v. South Eastern
Railway Co. (1877)2 CPD 416. From the above observations of his lordship, explain the applicable rules
for exclusion and limiting clauses with respect to unsigned documents.

2. Jimoh was a guest at the Starlight Hotel in Abuja. On arrival at the hotel he made the appropriate
payment for which he was given a bill which on its face contained the words “For conditions see Back”.
At the back of the bill the following words were written “properties left in room at owner’s risk”. On
reaching his room, Jimoh similarly found a notice to this effect on the wall of the room. Jimoh, put the
bill into his pocket without reading it. Whilst Jimoh was away for lunch thieves broke into his room and
stole his brief case which contained the sum N50,000.00 along with other important documents. Advise
Jimoh, who intends to brings an action for the recovery of the said N50,000.00 from Starlight Hotel,
Abuja.

3. Discuss the role(s) of fundamental breach on exclusion clauses and limiting terms.

Cases
 Parker v. South Eastern Railway Co. (1877)2 CPD 416
 Odeniyi v. Zard & Co. (1972)2 UILR 34
 Chapelton v. Barry UDC (1940)1 KB 532
 Thornton v. Shoe Lane Parking (1971)2 QB 163
 Olley v. Marlborough Court (1949)1 KB 532
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  McCutcheon v. MacBrayne (1964)1 WLR 125
 Otegbeye v. Little (1906)1 NLR 70
 Richardson, Spence & Co. v. Rowntree (1894) AC 217
 L’Estrange v. Graucob (1934)2 KB 394
 Chagoury v. Adebayo (1973)3 UILR 532
 Chike Atu v. Face to Face Million Dollar Fixed Odd Pools Ltd (Unreported)
 Curtis Chemical & Dyeing Co. (1951)1 KB 805
 Houghton v. Trafalgar Insurance (1954)1 QB 247
 White v. Warrick (1953)2 All ER 1021
 Hollier v. Rambler Motors (AMC) Ltd (1972)2 QB 71
 Adler v. Dickson (1955)1 QB 158
 Cosgrove v. Horsfall (1945)62 TLR 140
 Scruttons v. Midland Silicones Ltd (1962) AC 446
 New Zealand Shipping Co. v. Satterthwaite (1975) AC 154
 Suisse Atlantique case (1967)1 AC 827
 Photo Productions Ltd v. Securicor Transport Ltd (1980) AC 827
 Karsales (Harrow) Ltd v. Wallis (1956)2 All ER 866
 Adel Boshalli v. Allied Commercial Exporters Ltd (1961)1 All NLR 917
 Shotayo & Arunkegbe v. Nigerian Technical Co. (1970)2 ALR 159
 Thorley v. Orchis SS. Co. Ltd (1907)1 KB 660
 Hain SS. Co. Ltd v. Tate & Lyle (1936)2 All ER 597
 Farnworth Finance v. Attryde (1970)1 WLR 1053
 Harbutts ‘Plasticine’ Ltd v. Wayne Tank & Pump Co. (1970)1 All ER 225

WEEK 10
Terms of a Contract III: Conditions, Warranties, Innominate/Intermediate Terms &
Fundamental Terms

Objective: At the end of this week, students should be able to:

 understand what is meant by conditions, warranties, innominate/intermediate terms and
fundamental terms;
 differentiate one term from the other; and
 appreciate the effect of breach of any of the said terms

Description: This topic will examine other terms of a contract. It will look at conditions and warranties
as well as the mid-way terms, that is, the innominate or intermediate terms. It will finally examine
fundamental terms. The legal effects of the breach of each of these terms will also be considered.
Study Questions
1. ‘Whether a breach of contract discharges the contract or not depends upon the nature of the term
broken.’ Discuss.
2. ‘The remedies open to the innocent party for breach of a contractual stipulation no longer depend
upon the classification of the stipulation as a ‘condition’ or a ‘warranty’.’ Explain and comment.
3. ‘Not all contractual terms are treated as conditions or warranties. In the past few decades it has been
recognized that the classification of terms into conditions and warranties is somewhat unsatisfactory.’
Discuss.
Cases
 Re Lees, ex p. Collin (1875)10 Ch. App. 367
 Pym v. Campbell (1856)6 E & B 370
 Pickard v. Innes Gold Coast F.Ct. (1919) 2.
 Head v. Tattersall (1871) LR 7 Ex. 7
 African Continental Bank Ltd v. Okonkwo (Unreported)
 Poussard v. Spiers & Pond (1876)1 QBD 410
 Bettini v. Gye (1876) QBD 183
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  Hong Kong Fir Shipping Co. v. Kawasaki Kisen Kaisha (1962)2 QB 26
 Cehave v. Bremer (1976) QB 44
 The Mihalis Angelos (1971)1 QB 164
 Bunge Corporation, New York v. Tradax Export S.A., Panama (1981)1 WLR 711
 Smeaton Hanscomb & Co. Ltd v. Sassoon I. Setty Son & Co. (No.1) (1953)1 WLR 1468
 Chanter v. Hopkins (1838)4 M&W 399

WEEKS 11 and 12
Tutorials, Group Discussions and Revision
Objectives:
 to do a review of topics taught in the previous weeks; and
 to test students’ practical understanding of all topics taught in the course of the first semester.

WEEK 13:
Revision

WEEK 14: Examinations

Description: Students will be examined on any of the topics treated in the course for the semester.
SEVEN questions will be set out of which students will be expected to answer any FOUR.
STUDENTS MUST HAVE REGISTERED FOR THE COURSE AND HAVE 75%
ATTENDANCE IN CLASS TO BE ELIGIBLE TO WRITE THE EXAMINATIONS AT THE
END OF THE SEMESTER.

RECOMMENDED TEXTBOOKS

1. Sagay I.E (2007,) Reprint, Nigerian Law of Contract, 2nd ed., Spectrum Bks Ltd; Ibadan.
2. Awolowo, O., (2010) Law of Contract, Marchstar Law Publications Ltd, Lagos.
3. Koffman and Macdonald: The Law of Contract 7th Ed. Oxford University Press, 2010
4. Cheshire, Fifoot and Furmston’s, Law of Contract, 13th ed., Butterworths, London.

FURTHER REFERENCES
1. Catherine Elliott and Frances Quinn, Contract Law 8th Ed. Pearson Education Limited, Harlow,
2011.
2. Akanki E.O. (ed) (2005), Commercial Law in Nigeria, University of Lagos Press, Lagos.
3. Niki-Tobi: (1991) Justice Niki-Tobi’s Student Companion: No.1, Cases and Materials on the
Law of Contract, Cynako International Press Limited, Aba, Nigeria.
4. Okany, M. C. Nigerian Commercial Law,
5. Achike: The Nigerian Law of Contract
6. Atiyah: Introduction to the Law Contract, 5th Edn, 1995
7. Pollock: The Law of Contract
8. Chitty: The Law of Contract
9. Treitel: The Law of Contract
10. George Etomi: An Introduction to Commercial Law in Nigeria, Text, Cases & Materials

Grading System
Continous Assessment (C.A.)
Attendance - 5% (at least 80% attendance)
Assignments - 10%
Mid- Semester Test - 15%
Total C.A. - 30%
Final Exam - 70%
TOTAL - 100%

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