In the world of agreements and promises, a breach of contract can feel like a jarring disruption or a shattered trust and unmet expectations.
When one party fails to deliver on their commitments, the consequences can ripple through personal relationships and business dealings alike.
However, understanding the nuances of breach of contract is crucial for both individuals and businesses, as it can lead to legal disputes and financial repercussions.
A U.S. court ordered Floyd Mayweather Jr. to pay $2.4 million to Nigerian firm Zinni Media Concept for breaching a 2017 contract. The agreement required Mayweather to make several appearances in Africa, but he terminated it without cause and did not refund an advance payment. A California court initially awarded Zinni $1.6 million in damages, plus interest and fees, totaling $2.4 million. Despite Mayweather’s appeal, the ruling was upheld, and the court instructed U.S. attorneys to enforce the judgment by targeting his assets, including luxury cars.
Similarly at the beginning of this year, The case of Amaju Pinnick, former President of the Nigeria Football Federation (NFF), against Davido. Pinnick’s firm sued Davido for a breach of contract after he failed to perform at the “Warri Again Concert” despite receiving a substantial fee.
This article will explore the different types of breaches, the legal remedies available, and the implications for the parties involved.
What is a Contract?
A contract in Nigerian law is a legally binding agreement between two or more parties, governed by common law principles and statutory provisions.
Key Elements of a Contract
Offer and Acceptance: A valid contract begins with a clear and unequivocal offer by one party and an equally unambiguous acceptance by the other party. The acceptance must be unconditional and in accordance with the terms outlined in the offer.
Intention to Create Legal Relations: Both parties must intend for the agreement to be legally binding. This intention is presumed in commercial agreements but may need to be expressly stated in certain social or domestic agreements.
Consideration: There must be something of value exchanged between the parties, such as money, goods, or services. This is known as consideration and is essential for the formation of a valid contract.
Legal Capacity: All parties involved in the contract must possess the legal capacity to enter into such an agreement. This means they should not be minors, of unsound mind, or under the influence of substances that impair their judgment.
Legality of Purpose: The contract’s purpose must be in conformity with the law. Agreements to engage in illegal activities or actions that contravene public policy are not enforceable.
Certainty and Possibility of Performance: The terms of the contract should be clear and capable of being performed. Vagueness, ambiguity, or impossible terms may render the contract void.
Formalities (where applicable): Certain contracts in Nigeria may require specific formalities, such as writing or registration, to be considered valid. These formalities depend on the nature of the contract and the governing laws.
Key Terms of a Contract
Conditions: Essential terms that, if unmet, can void the contract. Clearly outlining these, is crucial to avoid disputes.
Warranties: Promises about the quality or performance of goods/services. Breaching a warranty may lead to damages but does not void the contract.
Implied Terms: These are not explicitly stated but are assumed based on law or custom, such as those from the Sale of Goods Act.
Types of Contracts
Oral Contracts: Agreements made verbally, enforceable but harder to prove.These are agreements made through spoken words. In Chukwu (2018) LPELR – 45990 (CA), the Court held that a contract can be oral and can also be inferred from the conduct of the parties thereto.
- Written Contracts: Documented agreements, preferred for clarity and enforceability.
- Express Contracts: Clearly stated terms, either orally or in writing. In these agreements, all parties explicitly agree to specific conditions, leaving little room for misinterpretation
- Implied Contracts: Terms inferred from actions or conduct, even without formal agreement.
- Bilateral Contracts: Mutual promises between two parties.
- Unilateral Contracts: One party makes a promise in exchange for an act by another.
These classifications are primarily governed by the Contracts Act of 1961.
Statutory Provisions Governing Contract
In Nigeria, statutory provisions governing contracts include: sales of goods act, contract act, arbitration and conciliation act, companies and allied matters act and the 1999 constitution.
- Sale of Goods Act: Regulates sales, including conditions and warranties related to goods.
- Contracts Act: Outlines the formation, interpretation, and enforcement of contracts.
- Arbitration and Conciliation Act: Facilitates dispute resolution through arbitration.
- Companies and Allied Matters Act: Governs company formation and contracts entered by companies.
- Nigerian Constitution: Protects contractual rights, ensuring the right to property is upheld.
Voidable Contract
Voidable contract in Nigeria is a valid agreement that one party can choose to affirm or rescind due to certain defects.These defects may include misrepresentation, duress, undue influence, or the inability of one party to legally enter into the contract, such as minors.
While initially binding, the party affected by these issues have the option to void the contract, making it unenforceable against them if they choose to do so. If ratified, the contract remains valid and enforceable
Examples of voidable contracts in Nigeria include:
Contracts Induced by Fraud: If a seller conceals critical defects in a property, the buyer may void the contract upon discovering the deception. For instance, if a seller fails to disclose a house’s structural issues, the buyer can rescind the agreement due to misrepresentation.
Contracts with Minors: Agreements made with individuals under 18 years of age are generally voidable. A minor can choose to affirm or void such contracts, especially if they involve non-necessities.
Contracts Under Duress: If one party is coerced into signing a contract through threats or undue pressure, that contract is voidable at the option of the pressured party.
Breach of Contract
A breach of contract occurs when one party fails to fulfill their obligations under a legally binding agreement. This can happen through anticipatory breach, where a party indicates they will not perform, or through actual non-performance.
The innocent party may seek remedies such as damages, specific performance, or rescission of the contract. Nigerian law allows for claims if the contract is valid, and the injured party must demonstrate loss due to the breach.
Types of Breach of Contract
- 1. Anticipatory Breach: This occurs before the actual performance of the contract is due. One party communicates, either through words or actions, that they will not fulfill their contractual obligations. The other party can then choose to terminate the contract and potentially seek damages.
- 2. Fundamental Breach: Also known as a material breach, this is the most serious type.It involves a failure to perform a crucial part of the contract. The breach is so significant that it essentially defeats the purpose of entering into the contract. It deprives the other party of the main benefit they expected to receive. This type of breach often gives the injured party the right to terminate the contract and seek damages.
- 3. Minor Breach: Also called a partial breach or immaterial breach.Involves small or insignificant failures in performing the contract. While there is technically a breach, it does not substantially impact the overall purpose or outcome of the contract.The contract remains in force, and the breaching party is still obligated to perform. The non-breaching party typically cannot terminate the contract but may be entitled to damages for any losses caused by the minor breach.
Remedies for Breaches of Contract
- Damages: Monetary compensation to cover losses incurred due to the breach, including compensatory, consequential, and nominal damages.
- Specific Performance: A court order compelling the breaching party to fulfill their contractual obligations, typically used when monetary damages are inadequate.
- Rescission: Termination of the contract, allowing the innocent party to seek restitution for losses suffered.
- Injunctions: Court orders preventing the breaching party from continuing or repeating the breach.
Recent Cases in Breach of Contract
Nkechi Catherine Ogbonnah v. Mikano International: The claimant alleged wrongful termination of employment, seeking ₦50 million for breach of contract.
Dr. Taofeekat Taiwo Ali v. Avastone Global Services Ltd: The court awarded damages for breach of contract, including ₦10 million in general damages.
Thomas Edun v. Afrik Delta Marine Ltd: The claimant argued salary adjustments breached their employment contract, seeking a declaration and payment.
Sabru Motors Nigeria Ltd v. Rajab Enterprises: The court found a breach regarding vehicle delivery, awarding damages based on market price differences.
Best Nigeria Ltd v. Blackwood Hodge: The trial Court dismissed the Appellant’s claims but awarded the sum of N75,000.00 to the Appellant as general damages for breach of contract.