The purpose of this article is to examine the Essential Elements of a Valid Contract. We shall achieve this by offering Judicial authorities on how the court have interpreted all the five elements of a valid court in Nigeria.
MEANING OF CONTRACT | Essential Elements of a Valid Contract
In the case of AMADI v. OBIAJUNWA (2016) LPELR-40461(CA), the Nigerian Court of Appeal defined contract to mean “An agreement between two or more persons which creates an obligation to do or not to do a particular thing” Per IGNATIUS IGWE AGUBE, JCA (Pp 81 – 81 Paras C – E)
WHAT ARE THE ESSENTIAL ELEMENTS OF A VALID CONTRACT?
Generally, for any contract to be enforceable in law, it must have certain elements. If these elements are missing, they court will refuse to enforce them.
In the case of ALFA SYSTEM CO LTD & ORS v. ORISAJIMI & ORS (2016) LPELR-40295(CA) the Court of Appeal held thus:
“First, to be able to establish a valid contract, five ingredients must be present. They are offer, acceptance, consideration, intention to create legal relationship and capacity to contract. All the five ingredients must be present before a valid contract can exist in law. A contract cannot be formed if any of the ingredients is absent.” SEE: OKUBULE V. OYAGBOLA (1990) 4 NWLR (PT. 147) 723; ORIENT BANK (NIG.) PLC, V. BILANTE INT’L LTD. (1997) 8 NWLR (PT. 515) 37.
A carefully study of the judgment above will show that a contract must have the following to become enforceable.
- Offer:
- Acceptance
- Consideration
- Intention to create legal relationship
- Capacity to contract.
MEANING OF OFFER; WHAT CONSTITUTES A VALID OFFER
In the case of MIKANO INTL LTD v. EHUMADU (2013) LPELR-20282, the Court of Appeal offered a meaning to offer and what constitutes a valid offer and he as follows:
“For a contract or an agreement to exist, there has to be an offer by one party to another and an acceptance by the person to whom the offer is addressed. An offer, therefore, may be defined as “a definite undertaking or promise made by one party with the intention that it shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed – See Sagay: Law of Contract. 2nd Ed. In effect, where there is an offer there has to be an acceptance before an agreement is said to exist between the parties.” Per AMINA ADAMU AUGIE, JCA (Pp 64 – 65 Paras E – B)
MEANING OF AN ACCEPTANCE OF OFFER IN A CONTRACT
Acceptance generally means the offeree agreeing to the offer made by the offeror. In KEENLINE INVESTMENT LTD & ANOR v. PATERSON ZOCHONIS INDUSTRIES PLC & ORS (2021) LPELR-54933(CA), the Court held thus:
“An acceptance is the reciprocal act or action of the offeree to an offer in which he indicates his agreement to the terms of the offer as conveyed to him by the offeror. In other words, acceptance is the act of compliance on the part of the offeree with the terms of the offer.
Generally, for an acceptance to be operative it must be plain, unequivocal, unconditional and without variance of any sort between it and the offer. The offeree must unreservedly assent to the exact terms proposed by the offeror. ” Per ABUBAKAR SADIQ UMAR, JCA (Pp 57 – 58 Paras F – B). This position of the law is that offeree must agree wholly to the terms offered by the offeror before it could be seen as a valid Acceptance.
Furthermore, acceptance must be communicated to the offeror. The acceptance is validly communicated when it is actually brought to the attention of the offeror.
Not further that acceptance need not be in writing. This is because acceptance can flow from the conduct of the parties. Thus, it is not in all cases that acceptance must be in writing. See SUSANNIGER & CO. LTD v. MINISTER, FCT ADMINISTRATION & ORS (2020) LPELR-51190(CA)
WHAT IS CONSIDERATION IN CONTRACT
Consideration has been defined in BLACKS LAW DICTIONARY, Eight Edn at page 325, to mean: “Something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which motivates a person to do something, esp. to engage in a legal act. Consideration is necessary for an agreement to be enforceable. SEE SPERA IN DEO LTD v. PECCUNO MINERAL INDUSTRY (NIG) LTD & ANOR (2016) LPELR-41044(CA)Per TOM SHAIBU YAKUBU, JCA (Pp 10 – 10 Paras A – C)
Consideration simply means anything that the offeree gives to the offeror in exchange for whatever it is that the offeror has to offer. For instance, A decides to sell his Cap for N500 and B pays him the said amount and you took the Cap. The consideration here is the N500.
Another important thing to note here is that Consideration does not need to be sufficient or adequate to amount to consideration. Where the offeree has committed a reasonable thing, the Court will hold it to amount to Consideration.
MEANING OF INTENTION TO CREATE LEGAL RELATION IN CONTRACT
Generally, for a contract to exist there must be a mutuality of purpose and an intention; the two contracting parties must agree. One of the fundamental principles of the law of contract is that the parties must reach a consensus ad idem in respect of the terms thereof for the contract to be regarded as legally binding and enforceable.
Intention to create legal relation simply means that both parties must intend to enter into an arrangement that legally binding. This means that both parties have decided to recognize the right of the other in the agreement or contract. Therefore, where a party feels his right is being infringed upon, he can takes legal steps in court to redress his wrong. Intention to create a legal relation is a a major Essential Elements of a Valid Contract. This because, it provides the basics of enforceability.
In commercial transactions, the position of the law is that there is a rebuttable presumption that parties intend to create legal relations. In the case of JACOB v. ETON (2020) LPELR-49577(CA) the Court held thus:
“Generally in commercial agreements, it will be presumed that the parties intended to create legal relationship and make a contract. However, the presumption may be rebutted but the burden is very heavy. The appellant first alleges that the agreement was influenced by the police. But a careful perusal of the document shows that both parties duly executed the agreement in the presence of witnesses which include a legal practitioner and thus it was not made under duress. The appellant in the instant case has not been able to rebut the presumption that they intended to create legal relationship through Exhibit F.” Per MUHAMMED LAWAL SHUAIBU, JCA (Pp 15 – 16 Paras E – D)
MEANING OF CAPACITY TO CONTRACT
Generally, before a contract can be enforced by the Court, it must be one in which all the contacting parties has legal capacity to enter into. Legal capacity are defined by law. For instance, persons within certain age bracket (e.g) 18 and persons under certain mental disability may loss their capacity to enter into a contract.
All you would all know, once there is a general rule, there is also exception. This means that there are circumstances in which minors and mentally disabled persons may still enter into enforceable contract. Read this article on “Capacity to Contract Means: Everything You Need to Know” to learn more.
CONCLUSION
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