Department of Business Law, Faculty of Law, University of Ilorin, Ilorin, Nigeria

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1 Course Title: Law of Contract I; BUL 201; (4 Credits; Compulsory) Lecturers: ABDUL-HAMID, Oba Yusuf* ADEKILEKUN, Mubarak Tijani** OLATUNJI, Olugbenga Ajani*** Qualification and Title *Lecturer 1; LL.B (Ife), BL (Lagos), LL.M (Ife), M. Phil (Ife) **Lecturer II; LL.B (Ilorin), BL (Abuja), LL.M (Ife), Dip in Law (CAILS) ***Lecturer II; LL.B (Ibadan), BL (Abuja), LL.M (Cambridge) Department of Business Law, Faculty of Law, University of Ilorin, Ilorin, Nigeria * Office Location: * Room 214, Wing 1 (Old Complex), Faculty of Law ** Room 214, Wing 1 (Old Complex), Faculty of Law *** Room 214, Wing 1 (Old Complex), Faculty of Law Consultation Hours: 2-4 pm Mondays 1-3 pm Thursdays Course Contents Nature of Contract, Formation, and Capacity to Contract Course Description The Law of Contract is one of the compulsory courses offered by the Faculty in the Department of Business Law and is taught in two semesters. The first part which is taught in the Harmattan semester, and to which this courseware relates, is expected to take the students through the essential ingredients of a valid contract. To this end, BUL 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 1

2 course examines the various terms of a contract including fundamental terms and mere warranties and considers the effect(s) of breach of any of the terms. 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 backcloth that it is very essential that students are thought 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 allimportant area are prepared for the task ahead. Hence, the need for them to be taught the rudiments of the course. 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 fulfill this requirement. Course Objectives At the end of the Harmattan semester, students should be able to understand and explain the fundamentals of the law of contract as follows: various 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 need for an acceptance to be communicated, and the rule applicable in Adams v. Lindsell; 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. Course Requirements 2

3 the course is compulsory for ALL 200 level students; a minimum of 75% attendance is REQUIRED to sit for the final examination. Method of Grading: No. 1. Item Class attendance 2 Class Participation 5 2. Continuous Assessment Comprehensive final examination 70 Total 100 Score % 5 Course Delivery Strategies: the following delivery strategies shall be adopted: Class lectures Course materials Group discussion/seminar presentations Internet materials LECTURES WEEK 1: Definitions and Nature of Law 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; and explain the reasons why contract should be binding. Description: This topic will examine the various definitions of contract as proffered by authors such as Sagay, Chitty, Treitel, Yerokun, Aje, etc. It will also dwell on the nature of contract visà-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. Study Questions 1. Using the various definitions of contract by authors as a step-stool, attempt a working definition of 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. Do you think contract freely and validly entered into should be binding? If yes, give reasons. WEEK 2: Classifications and Enforcement of Contract Objective: At the end of this week, it is expected that students will be able to: distinguish between simple and formal contracts, unilateral and bilateral contracts, express and implied contracts, and executed and executory contracts; and 3

4 appreciate the meaning and effects of void, voidable, valid, illegal and unenforceable contracts. Description: 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. Compare and contrast formal and simple contracts. 2. Explain, with practical examples and case law, unilateral and bilateral contracts. 3. 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 Statutes ss. 77 & 97, Property and Conveyancing Law 1959 s. 108(2), Registered Land Act 1965 s. 3, Real Property Act 1845 ss. 32 & 34, Companies Act 1978 WEEK 3: Offer Objective: At the end of week 3, 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. 4

5 Study Question 1. In the morning of Tuesday the 24 th of September, 2010, Mr. Alekuwodo boarded a BRT from his Alagbado Bus-Stop to Idumota. After he alighted at Idumota, he discovered that he was no longer with his wallet. Immediately he noticed this loss, he headed to Ido 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, (Twenty Thousand Naira Only). On the 28 th of September 2010, Mr. Swagger found the lost wallet and took the same to Ido Fm radio station. Mr. Swagger then asked for the reward of N20,000 promised by Mr. Alekuwodo 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. Alekuwodo 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. 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 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 5

6 Kennedy v. Thomassen (1929)1 Ch. 426 Reynolds v. Atherton (1921)125 LT 690 Statutes Sales by Auction Act Cap 187, LFN 1958 Auctioneer Law 1959 WEEK 4: Acceptance Objective: following: At the end of this week, it is expected that students will be able to achieve the 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. Mr. Boost offered to sell his three bedroom flat to Mr. Lucozade for N5 million. On the receipt of the offer notice, Mr. Lucozade replied that he accepted the offer but would only pay N4.5 million for the flat. Mr. Boost did not reply to the last correspondence. Mr. Lucozade sought to take over the flat and asked for the title documents to the building claiming that a valid contract had ensued between them following his acceptance of Mr Boost s offer. 6

7 Mr Big Mouth wrote a letter to Mr Small Nose offering to buy his Peugeot 405 car for N2 million. Mr Small Nose, oblivious of Mr Big Mouth s letter, wrote a separate letter to Mr Big Mouth offering to sell his Peugeot 405 car for N2 million. The two letters crossed in the post. Mr Small Nose thereafter changed his mind and wrote another letter to Mr Big Mouth informing him that he was not interested in selling his car again. Mr Big Mouth insisted that a contract existed between the two of them. With the aid of decided cases, advice both Mr Boost and Mr Lucozade on the one hand, and Mr Big Mouth and Mr Small Nose on the other, on their rights under the alleged contracts. Would it have made any difference in your answer in the first scenario if Mr Boost had written Mr Lucozade to confirm that he was okay with the N4.5 million? 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 4. Explain the principles enunciated in the case of Adams v Lindsell (1818)B & Ald. 681 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 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 Odufunade 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 7

8 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 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 Statutes s. 109(1) Contract Law, Chapter 30, Laws of Anambra State WEEK 5: Consideration 1: The General Rule Objective: At the end of week 5, 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 Question 8

9 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 very impressed, promised to pay Jahbless a sum of N500,000. He however failed to fulfill 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. Brathwait (1615) Hob. 105 Re Casey s Patent (1892) Pau On v. Lau Yiu Long (1980) AC 614 Statutes s. 27(1) Bills of Exchange Act 1882 WEEK 6: Consideration: Sufficiency of Consideration and Promissory Estoppel Objective: At the end of week 6, it is expected that students will be able to achieve the following objectives: distinguish between adequacy and sufficiency of consideration; and 9

10 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. Explain the fact and principles enunciated in the case of Central London Trust Properties Ltd vs Hightrees House Ltd (1947) KB 130? 4. Highlight and discuss the three qualifications to the operation of equitable/promissory estoppel? Cases 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

11 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 Huges 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 WEEK 7: 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. 11

12 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. 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. Nign 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 Statutes ss. 13 & 15, Wages Boards & Industrial Council Act 1973 s. 2(3) Trade Disputes Act 1976 WEEK 8: Tutorial, Group Discussion and Test Objectives: to do a review of topics taught in the previous weeks; and to examine the students on aspects of the course taught so far. WEEK 9: Capacity to Contract Objective: At the end of week 9, the students are expected to be able to do the following: 12

13 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 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. Jane left school last year at the age of 16. She took a job as an office assistant in an insurance firm. Her wages are N10,000 per month, and she is required to give three months notice to terminate her employment. She recently agreed to buy a Suzuki motorcycle so that she could spend more time with her boyfriend, John, who is mad about motorcycles. She also signed a written agreement to buy a one quarter share in AIICO insurance company. Jane has now been offered a job as a receptionist at N15,000 per month, provided she can start immediately. She has failed to pay for the motorcycle or the shares in AIICO insurance company. Advise Jane. 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 13

14 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 Burnard v. Haggis (1863)14 CBNS) 45 Leslie Ltd v. Sheil (1914)3 KB 607 Stocks v. Wilson (1913)2 KB 235 Statutes s. 2 Illiterate Protection Law Cap 67 Laws of Lagos State 1994 s. 3, 4 Illiterate Protection Act Infant Relief Act

15 s. 14 Supreme Court Ordinance 1914 s.2, 3 Sale of Goods Act 1914 Mental Health Act, UK 1959 s. 8 Land Instruments Registration Law Cap 56, Laws of Western Nigeria (1959) ss. 7(2) and 109(2) 1979 Constitution s. 1 Family Law Reform Act 1969 WEEKS 10 & 11: 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

16 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 Grant v. Australian Knitting Mills Ltd (1936) AC 85 Ijoma 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 Statutes English Misrepresentation Act 1967 s , Sales of Goods Act 1893 WEEK 12: Terms of a Contract II: Exclusion Clauses and Limiting Terms 16

17 Objective: following: At the end of week 11, students must be able to appreciate and understand the 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. Mr Ade has taken 4 pair of suits to Agbonmagbe Laundry Centre (ALC) for dry cleaning. He was issued with a receipt after payment and he was asked by the manager of ALC to sign some terms and conditions. Before signing Mr Ade asked the manager what the terms and conditions were all about and the manager told him that they were nothing serious as they only dealt with native attires but that all their customers must sign them. Mr Ade signed the paper there and then. However, one of the conditions on the paper signed by Mr Ade read: ALC will not be liable for any loss or destruction to clothes deposited for dry cleaning with us. When Mr Ade came to collect his suits, one of them could not be found. He therefore sued ALC. ALC seeks to rely on the above condition to exclude liability for the loss claiming that Mr Ade had earlier signed the document containing the condition. As counsel to Mr Ade, highlight and discuss the legal issues involved and advise him on the likely success of ALC suit. 17

18 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 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 Statutes Sale of Goods Act s. 4 Supply of Goods (Implied Terms) Act 1973 ss. 1(3), 6(1) & (2), 7 Unfair Contract Terms Act 1977 WEEK 13: 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 18

19 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 Cases 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. 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 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 WEEK 14: Tutorial, Group Discussion 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 15: Examination 19

20 Description: Students will be examined on any of the topics treated in the course of the semester. SIX questions will be set out of which students will be expected to answer any FOUR, with a particular instruction that students must attempt ALL four questions. 20

21 Suggested Reading Lists: 1. Sagay, I.E.; Nigerian Law of Contract (Spectrum Law Publishing, Nigeria, 1985) 2. Denis Keenan & Sarah Riches; Business Law (Pearson Education Limited, England) 3. Cheshire & Fifoot; Law of Contract (Butterworth, London, 1996) 4. Stannard J.E.; Delay in the Performance of Contractual Obligations (Oxford University Press, London) 5. Chitty on contracts, General Principles (Sweet & Maxwell) 6. Olusegun Yerokun; The Law of Contract (Nigeria Revenue Projects Publication, Yaba, Lagos, 1999) 7. See generally the following simplified online resources on the law of contract: (Elements of Contract) ct_guides/law_contract/contract_chs1-4.pdf (Elements of Contract) (Elements of Contract) (Contract Law generally) (Contract Law generally) PrePared by: olugbenga ajani olatunji llb, bl, llm. 21

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