WHAT IS THE MEANING OF SUBJECT TO CONTRACT IN NIGERIA?
Subject to Contract is principles of law of Contract. The phrase “subject to contract” simply means none of us (that is the Contracting parties) is to bound by this contract until the happening of an event or a contingency.
The phrase “subject to contract” is one which makes it clear that the intention of the parties is that neither of them is to be contractually bound until a contract is signed in the usual way. SEE ACMEL NIGERIA LTD & ANOR v. FBN PLC & ORS (2014) LPELR-22444(CA)
WHAT IS THE EFFECT OF USING THE PHRASE “SUBJECT TO CONTRACT” IN A CONTRACT?
To answer the above question, we shall also visit judicial authority. In BEST (NIGERIA) LTD V. BLACKWOOD HODGE (NIGERIA) LTD & ORS (2011) LPELR – 776 (SC), the Supreme Court held that “Where a contract is made subject to the fulfillment of certain specific terms and conditions, the contract is not formed and not binding unless and until those terms and conditions complied with or fulfilled.” SEE ALSO TSOKWA OIL MARKETING CO. v B.O.N. LIMITED (2002) 11 NWLR (PT. 777) 163.
Thus, the effect of the phrase in a contract is that such a contract cannot become binding on both parties until condition happens.
Like you may already know, contractual relationship often imposes on each contracting parties certain obligations. Sometimes, it may even provide that until a particular thing happens, the contract does not create legal relation. For instance, X enters into a contract with B for the supply of 20 kegs of Palm wine. X informed Y that until he drinks a glass of the palm wine, the contract shall not become binding.
To put it differently, where the Phrase “Subject to Contract” is used in a contract as a reference to the happening of a contingency which is uncertain on point of time, until the contingency happens, there is no enforceable contract.
CONCLUSION
Finally, the position of the Law remains that any acceptance made conditional or subject to contract creates no binding contract because the incidence of liability is postponed until a formal contract is drawn up and signed. SEE NATIONELE COMPUTER SERVICES LTD v. OYO STATE GOVERNMENT & ORS (2019) LPELR-48077(CA). Therefore, the Contract only becomes binding and enforceable, if the condition is fulfilled.
SEE ALSO: VALIDITY OF CONTRACT – Essential Elements of a Valid Contract
Thank you for reading this article on the meaning and effect of the use of the phrase Subject to Contract. We sincerely hope it was helpful to you. We also believe that by reading this article, the Meaning of Subject to Contract in Nigeria is well understood.
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