Download Law_of_Contract-Part_1

Contracts: Nature
and Terminology
‘Níyì Àbe©
Learning objectives
At the end of this class you should understand:
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how to define contracts according to validity, performance and
formation
how contracts can be classified
how to distinguish formal contracts from simple contracts
the essential elements required to make a valid contract.
what is meant by an intention to create a legal relationship and
how this is determined by the law
the distinction between an offer and an invitation to treat
Learning objectives (contd)
• rules with respect to offer and acceptance including the
postal acceptance rule
 the meaning of ‘consideration’ and the consequence for a
contract lacking consideration
 the rules regarding consideration
 how a contract lacking consideration may be enforceable if
placed in a particular form
 the requirements of contracts required to be in writing and those
required to be evidenced in writing.
Instructors
 Níyì Àbe
(08036288636, [email protected])
 Ngozi Odiaka
(07060583934, [email protected])
 Tina Clark
(07061648378, [email protected])
What is a Promise?
What is a contract?
Introduction
 Promise is a declaration that something
will or will not happen in the future.
 What is a Contract?
 Contract is an agreement (based on a
promise) that can be enforced in court.
1: Function of Contract Law
 Designed to provide stability and
predictability, as well as certainty, for
both, buyers and sellers in the
marketplace.
 Necessary to ensure compliance with a
promise or to entitle the innocent party
to some form of relief.
2: Definition of a Contract
 A contract is a:
 promise or set of promises,
 for breach of which,
 the law provides a remedy, or
 the performance of which the law in some way
recognizes as a duty.
What are elements
of a contract?
3: Elements of a Contract
 Agreement (Offer and Acceptance).
 Consideration.
 Contractual Capacity.
 Defense:
 Legality.
 Genuineness of assent.
 Form.
4: Types of Contracts
 Bilateral v. Unilateral.
 Bilateral - Offeree must only promise to perform
(“promise for a promise”). Thus it is an exchange of
mutual promises.
 Unilateral - Offeree can accept the offer only by
completing the contract performance (“promise for
an act”).

Irrevocable: Offer cannot be revoked once
performance has begun.

Carbolic Smoke Ball Co., [1893] 1 Q.B, 256
Other cases??

Types of Contracts
 Express v. Implied In Fact.
 Express: Words (oral or written). terms of the
contract are clearly stated.
 Implied: Conduct creates and defines the terms of the contract.
Courts will look at the conduct of the parties rather than their words or
correspondence. (See Brogden v. Metropolitan Railway Co., (1877) 2 A.C.
666)
 Requirements:
Plt furnished good or service
 Plt. expected to be paid
 Def. had chance to reject and did not.
 Attn. Gen. Kaduna State & ors v. Victor Bassey Atta & ors [1986] 4
NWLR, (Pt. 38), 785. CA.

Types of Contracts [3]
Quasi Contracts - Implied in law.
 Fictional contracts created by courts.
 Imposed on parties for the interest of fairness
and justice.
 Equitable remedies.
 Quantum Meruit.
Types of Contracts [4]
Formal v. Informal.
 Executed v. Executory.
 Executed - A contract that has been fully
performed on both sides.
 Executory - A contract that has not been
fully performed on either side.
Types of Contracts [5]
 Formal
Contract made by deed(contract under
seal).
• Simple Contracts
May be in writing or by parole.
Only a party who has furnished
consideration can bring an action to
enforce simple contract.
Format
Format
SIMPLE
Verbal, written, implied
FORMAL
Written
Consideration must pass in
both directions
Does not require
consideration passing in
both directions.
Contract of record
Contracts under seal
(deeds)
Valid contract (cont.)
Intention to create
legal relations
Legality
of object
Terms: express/implied
Offer
Acceptance
Conditions
Warranties
Exclusionary clauses
Reality of
consent
Capacity of
parties
Form
Consideration
Classifications of contracts
Classifications
Validity
Performance
Formation
Validity
Validity
Valid
All essential
elements present,
therefore law will
enforce on behalf
of either party
Void
Voidable
Unenforceable Illegal
No legal effect
Entitled to be
rescinded
by innocent party
Essential elements
present but
technicality
prevented from being
enforced
Purpose or object of
contract is illegal
voidable
 An agreement which is enforceable by law at the option of one
party but not at the option of the other or others is a voidable
contract. The party whose consent is not free may either
rescind (avoid or repudiate) the contract, if he so
desires, or elect to be bound by it. A voidable contract
continues to be valid till it is avoided by the party entitled to
do so. For example: A promises to sell his car to B for
N3million. A’s consent is obtained by use of force. The contract is
voidable at the option of A .
 He may avoid the contract or elect to be bound by it.
Void
An agreement not enforceable by law is said to
be void. Such include an agreement with a
minor or an agreement without consideration.
A contract which ceases to be enforceable by
law is a void contract. E.g., A contract to
import goods becomes void, when war breaks
out between the countries.
Illegal
An illegal agreement is one which transgresses the public
policy or which is criminal in nature or which is immoral.
 E g.,An agreement to import prohibited goods.
All illegal agreements are void but all void agreements are not
necessarily illegal.
 An illegal agreement is not only void as between the parties
but has this further effect that even the collateral
transactions to it become tainted with illegality.
 A collateral transaction is one which is subsidiary, incidental
or auxiliary to the principal or original contract.
Unenforceable
 An unenforceable Contract is one which
cannot be enforced in a Court of law
because of some technical defect such as
absence of writing or where the remedy
has been barred by lapse of time.
 The contract may be carried out by the
parties concerned; but in the event of
breach or repudiation of such a contract,
the aggrieved party will not be entitled to
the legal remedies.
Performance
Executed
Both parties have
Performed their respective
Obligations.
Bilateral vs. Unilateral
Executory
Both parties have
obligations to perform
Formation
Express
Written
Implied
Spoken
Dependentwon
associated
conduct
Quasi
By operation
of law
Cases!!!
Over a cup of coffee at ABUAD Int’l Restaurant,
Uzor invites Pelumi for dinner at his self-contained
apartment inside ABUAD hostel on Sunday as a
way of happily ending the matriculation
ceremonies. To look nice, Pelumi hires a very
expensive gown and hires a taxi/friends car. Pelumi
gets to Uzor’s apartment at the appointed time,
however, for reasons best known to him, Uzor fails
to perform his promise.
Can Pelumi recover any damage …???
See: Nwankwo v. Nwankwo
Balfour V. Balfour [1919]
a husband on leaving England for Ceylon agreed to give his
wife in England, some ₤30 per month but defaulted. The wife
sued unsuccessfully because such agreement was social in
nature and not legally enforceable.
Held, agreement such as these were outside
the realm of contract altogether.
Case 2
(a)John engages Queen for a certain work and
promises to pay such remuneration as shall be
fixed by David. Queen does the work.
(b) Joshua and Mary promise to marry each other.
(c)Joshua takes a seat in public vehicle.
(a)
There is a contract between John and
Queen and John is bound to pay the
remuneration as shall be fixed by David.
If David does not fix , or refuses to fix the
remuneration, John is bound to pay a
reasonable remuneration.
(b) There is a contract between Joshua and
Mary.
(c)There is a contract.
Case 3
Tofunmi forced Maryjane to enter in to
a contract with a pistol aimed at her
head.
What remedy is available to Maryjane,
if she does not want to be bound by the
contract ..??
Maryjane can
repudiate the
contract as her
consent is not free.
Joshua orally offered to pay Gbenga, an auto
mechanic, N3,000 for testing a used car which
Joshua was about to purchase from Wisdom.
Gbenga agreed and tested the car. Joshua paid
Gbenga N3, 000 in cash for his services.
Is the agreement between ‘Joshua’ and
‘Gbenga’,
(a) express or implied,…..???
(b) executed or executory, …???
(c) Valid,void, voidable or unenforceable…???
The agreement is,
(a) express,
(b)executed, and
(c) valid.
Dotun promises to pay Onyinye
N50,000, if Onyinye beats
Austin.
Onyinye actually beats Austin
but Dotun refuses to pay.
Can Onyinye recover the amount..
???
No as the agreement is illegal.