NIGERIAN LAW OF CONTRACT 1

BY DIEKOLOLA DANIELS
HEAD LECTURER,
DIEKO DANIELS SCHOOL OF LAW
TERMS OF A CONTRACT
Given that a valid contract has been concluded, the next matter of importance, is to
determine the extent of the obligations undertaken by the parties to the contract. This
will itself involve a consideration of various other factors. For example, apart from
the express terms contained in a contract, the parties' responsibilities may be further
amplified by other terms known as implied terms. Thus terms may be implied by the
usage, or custom of a particular trade, and unless these are expressly or implicitly
excluded, they will be regarded as forming part and parcel of the contract.
Again, the full extent of the parties' obligations in a contract cannot be accurately
determined until the terms are classified and evaluated.
Terms are not all of equal importance. They range from fundamental terms (the most
important), to warranties, (the least important). In between these, we have conditions,
and the subsequently identified innominate or intermediate terms. Thus, the extent of
a party's obligations, and the consequences of a breach of contract, can only be
correctly assessed after determining the nature of the terms of the contract.
Finally, it may on occasions be necessary for an aggrieved party to be advised
whether a term for whose breach he wants to sue was a "term of contract" or a "mere
representation." Thus, in the process of negotiating an agreement which leads to the
conclusion of a contract the parties may have said or written many things. When the
contract is finally concluded, it is a question of construction whether some of the
things said during negotiation became a part of the contract or were mere
representations. This will determine what the cause of action will be in case of a
breach of the contract. This is a preliminary issue which deserves to be considered
first.

A TERM OF THE CONTRACT AND A MERE REPRESENTATION

I. THE SIGNIFICANCE OF THE DISTINCTION
The importance of the distinction between a term of the contract and a mere
representation, lies in the type of remedy available to an aggrieved party when a
breach of a contract is alleged. If the breach is of a term of the contract, then the
aggrieved party can sue for a breach of that term and obtain a rernedy in damages or
in both damages and repudiation, depending on the importance of the term breached.
If, however, the tern breached is not a term of the contract, but a mere representation
not only is the remedy available to the plaintiff less valuable, there may, in fact be no
real remedies at all. In such a situation, i.e. where the term breached is a mere
representation, the plaintiff's action will be based on misrepresentation. If the
misrepresentation was fraudulent, i.e. if the defendant deliberately told a falsehood
which induced the plaintiff to enter into the contract, the remedy will be one in
damages for misrepresentation.
Previously, if the misrepresentation was not fraudulent, it was regarded as an innocent
misrepresentation. There is no remedy for innocent misrepresentation at common law.
There is some remedy in equity, but it is so qualified, as to be almost illusory in most
cases.
In 1963, in

.
The English Misrepresentation Act, 1967, has somewhat increased the scope for
 NIGERIAN LAW OF CONTRACT 1
BY DIEKOLOLA DANIELS
HEAD LECTURER,
DIEKO DANIELS SCHOOL OF LAW
obtaining damages for misrepresentation, but this Act does not apply anywhere in
Nigeria.
From the brief discussion above, it is clear that the plaintiff who complains of a
breach of a term of the contract is far more likely to obtain a satisiactory remedy than
a plaintiff who brings an action tor breach of a "mere representation."

DISTINGUISHING BETWEEN A TERM OF THE CONTRACT AND A

MERE REPRESENTATION
In the light of what has so far been stated, it is therefore essential distinguish between
a term of the contract and a mere representation
Chesire and Fifoot have designed three independent tests for this purpose.

1. At what stage of the transaction was the crucial statement made?

The idea here is that statements made at the preliminary stages of the negotiations
would not be regarded as terms of the contract, but mere representations. Thus,
theoretically, the longer the time lag between the time the statement was made, and
the time the contract was concluded, the more likely would it be regarded as a mere
representation and vice versa as stated in

However, this test is not consistent with some decisions. In

whereas
in

(b) Was the oral statement later followed by a reduction of the terms to writing?
The basic point here is that, if there was an oral agreement, which was subsequently
reduced into writing, any term contained in the oral agreement, not contained in the
later document, will be treated as a mere representation. This is probably the least
useful of the three tests, because it is much easier to cite cases in which the test has
been ignored (it has been ignored in
) than those in which it has been applied. (It was
applied in the case of )
(c) One party's superior knowledge.
In this case, if the person who made the statement had special knowledge or skill as
compared to the other party, then the statement is taken to be a term of the contract as
was held in
.
If, however, the statement is made by the person who is less knowledgeable about the
subject matter of the contract, it is regarded as a mere representation as state d in

This test is by far the most successful of the three and some of the cases that
contradicted the other two tests, can be explained by this third one.
Thus in
although, the time lag (three weeks) was much in the one case, and there was
a later document not containing the statement in the other, the statement in
each case was made by an "expert" and relied on by a "layman" and in both cases the
statements were held to be terms of the contract, the case of
 NIGERIAN LAW OF CONTRACT 1
BY DIEKOLOLA DANIELS
HEAD LECTURER,
DIEKO DANIELS SCHOOL OF LAW

Treitel, relying on virtually the same cases, has devised two additional tests.
The first is VERIFICATION. According to this test, a statement will be regarded as
a term of the contract if the person making it express asks the other to verify the truth
of it. This is illustrated by the case of

On the other hand, a statement is likely to be a term of the contract if it is intended to

prevent the other party from finding out the truth and induce him to contract in
reliance on it.
In

 It will be recalled that this decision has been considered as being based on the
superior knowledge of the defendant.
Treitel's second test is the DEGRCE OF IMPORTANCE attached to the statement
by the representee, Thus, if the representee can demonstrate that to the knowledge of
the representor he would not have entered into the contract if the statement of
assurance had not been made, such a statement would be regarded as a term of the
contract. Thus

COLLATERAL CONTRACTS
Even where due to its failure to satisfy any of the above tests, a statement cannot be
regarded as a term of the contract, the courts can still give the representee an effective
remedy by resort to the device of collateral contracts. According to this doctrine, if the
representor makes a statement or promise, which is intended to induce the representee
to enter into a contract, then if the representee enters into that contract in reliance on
that promise, the representor will be held bound by his promise. The promise is
treated as part of a preliminary or collateral contract (usually oral) which takes the
following form: "If you agree to buy my horse, I promise you it will be good for
breeding purposes." This collateral contract now induces the representee to enter into
the main contract which is the actual buying of the horse.
Thus in
 NIGERIAN LAW OF CONTRACT 1
BY DIEKOLOLA DANIELS
HEAD LECTURER,
DIEKO DANIELS SCHOOL OF LAW