The Place and Nature Of Agreements In Property Acquisition And Development (3) -By Ebun-Olu Adegboruwa, SAN

Adegboruwa SAN



Generally, contracts are legally enforceable agreements, with the implication that where one party to a contract is of the opinion that the other party is not fulfilling his obligations created under the contract, the offended party can approach the Court to seek enforcement of the contract or receive monetary compensation in the form of damages. There are however several exceptions to the rule that contracts are enforceable agreements, which include where there were vitiating elements during the formulation of the contract, such as where one of the parties lacks capacity, there is no valuable consideration, there was no intention to enter into legal relationship, one of the parties was coerced or unduly influenced into entering the relationship, and so on. See: ORIENT BANK (NIG) PLC v. BILANTE LTD (1997) 8 NWLR (PT.515) 37 @ 76 paragraphs C- E; HYUNDAI HEAVY INDUSTRIES CO. (NIG) LTD v. ASECHEMIE & ORS (2020) LPELR-50584(CA); and ADEWUYI & ANOR v. MRS OIL (NIG) PLC (2019) LPELR-48210(CA).

In UMARU v. PARIS & ANOR (2021) LPELR-56309(CA), one major exception, which the appellant hinged his appeal on is the trite principle of law to the effect that where a contract is illegal in nature, because it violates a specific statute or provision of law, which not only prohibits but also prescribes sanctions for making such contract, it cannot be enforced as the Courts are creations of law saddled with the duty of upholding the law not aiding its breach. Similarly, in SADIQ v. BALARABE (2020) LPELR-52114(CA), it is stated that: “it is correct that an agreement entered into under duress and coercion is not binding and enforceable and it is voidable” – OMMAN V. EKPE (2000) NWLR (Pt 641) 365.

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A court cannot enforce an agreement that is fraudulent/tainted with deceit or against public policy. In NKECHI & ANOR v. ANYALEWECHI (2021) LPELR-55611(CA), a document was declared unenforceable as there was no foundation of ownership or cognizable interest under the law proved in respect of both appellant and respondent. It was also held to be against public policy because all the buildings and works to be done and already done were devoid of requisite prior approval of regulatory authorities or grant, which parties to the suit have carved out amongst themselves, without lawful authority. More so, in the case of BABATUNDE v. BANK OF THE NORTH LTD. & ORS. (2011) LPELR – 8249 (SC), the apex Court warned that: “A Court will not however enforce an agreement between parties which is fraudulent or tainted with deceit or against public policy.” This is reinforced in ACB LTD v. ALAO, by the apex Court.

The foregoing is akin to the settled legal principle that a party should not be allowed to benefit from his own wrong or mala fide. It is an inveterate principle of equity that ex mala dolo non oritur actio. The Nigerian Supreme Court in Green v. Green (1987) 3 NWLR (Pt.61) 480 at pages 516 – 517 restated this principle thus: “a Court would not allow a person to profit by his own wrong. A person may not create a crisis situation and turn around to plead the crisis in support of his interest.”

Furthermore, a party who is seeking to enforce his rights under an agreement must show that he has fulfilled all the conditions precedent. Any default on his part would be fatal to his case. In TALABI v. FCDA & ORS (2018) LPELR-45969(CA), the appellant was estopped from denying that she was given a right of first refusal. It was further held that the appellant cannot be allowed to blow hot and cold in the same transaction, after having failed to meet up with the stipulated conditions, as to do so would amount to a travesty of justice.

It is also noteworthy that a contract is not binding on a person who knows nothing or anything about it. This principle is predicated on the concept of privity of contract which postulates in the main that only parties to a contract can be entitled to the rights and liabilities arising from the contract. Indeed, on the doctrine of privity of contract, only a party to a contract can sue and be sued on it.

Where parties have entered into an agreement or contract voluntarily and there is nothing to show that the same was obtained by fraud, mistake or deception or misrepresentation, they are bound by the provision or terms of the contract or agreement. This is because a party cannot ordinarily resile from a contract or agreement just because he later found out that the conditions of the contract or agreement are not favourable to him. This is the whole essence of the doctrine of sanctity of contract or agreement. The court is bound to construe the terms of the contract or agreement and the terms only, in the event of an action arising therefrom. See NORTHERN ASSURANCE CO. LTD. v. WURAOLA (1969) 1 NMLR 1; (1969) NSCC 22. In A.G. RIVERS STATE v. A.G. AKWA IBOM STATE & ANOR. 2011 LPELR (Pt. 633) (SC) the Apex Court held thus:

“Both parties, especially the 1st defendant, must accept the implications and consequences of the contents of exhibit AMB1 and it is not the business of this court to rewrite the agreement for the parties or venture into or consider other sharing methods, since the agreement for sharing the wells still subsists. Our task as judges is simply to find out the intention of each party, when agreeing to the contents of exhibit AMB1. The clear intention is that each party is satisfied with 86 oil wells each. Section 151 of the Evidence Act creates Estoppel.”

From the foregoing, where the terms of an agreement are written in clear, simple and straight forward language that it requires no interpretation, it is only to be accorded its grammatical meaning. It is the law that where the words employed by the maker(s) of a document are simple, plain and clear the only duty the Court has is to give the plain words their ordinary meaning without more. The Court does not possess the jurisdiction to construe a contractual document in a manner that will be more favorable to a party than what the document has strictly stated. The parties are bound by the documents that they have freely and voluntarily subscribed to. The following words of Tobi JSC in ODUTOLA v. PAPERSACK NIG. LTD. (2007) All FWLR (Pt. 350) 1214 at page 1235 are instructive on this issue: “Parties to an agreement may mutually but wrongly come to an understanding as to the legal content of it. That notwithstanding, a Court of law can only interpret the agreement strictly in its legal content and arrive at a conclusion on the law and the law alone in respect of it. A Court of law cannot construe the agreement to convey the meaning as understood by the parties, if it is different from the real meaning of the agreement.”

Again in IDONIBOYE-OBU v. NNPC (2003) FWLR (pt.146) 959 at 1007, the same Tobi JSC said: “A party who has opened his heart, mind and eye to enter into an agreement is clearly bound by the terms of the agreement and he cannot seek for better terms midstream or when the agreement is a subject of litigation, when things are no longer at ease. Although a party may seek for better terms, the Court is bound by the original terms of the agreement and will interpret them in the interest of justice.”

It is equally important to mention the concept of novation of contract and what it entails. It is not a strange occurrence in law for parties to an agreement to vary the terms thereof by executing another one. Novation is one of the ways in which parties can vary the terms of their agreement. The Court in the case of ONEGBEDAN v. UNITY BANK PLC (2014) LPELR-22186 (CA) Pp. 23-24, paras. C-C, gave a wholesome definition of novation, where it held thus: “Contract by novation is a form of assignment in which by consent of all parties thereto, a new contract is made and substituted for an existing contract. Hence one of the essentials of the new contract, that is, novation, is that the consent of all the parties must be obtained. However, such consent need not be in writing; it may be inferred from the conduct of the parties, without express words.’’

The learned authorts of Black’s Law Dictionary, 8th Edition at page 1094, defined Novation as: “(1) The act of substituting for an old obligation, a new one that either replaces an existing obligation with a new obligation or replaces an original party with a new party. A novation may substitute (1) a new obligation between the same parties, (2) a new debtor, or (3) a new creditor.”

Further, the distinguished and learned authors of G.C. Cheshire and C.H.S. Fifoot, 8th Edition, at page 504 thereof, said: “Novation is a transaction by which, with the consent of all the parties concerned, a new contract is substituted for the one already made. The new contract may be between the original parties e.g. where a written agreement is later incorporated in a deed, or between different parties, e.g. where a new person is substituted for the original debtor or creditor.”

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