Latest Supreme Court Cases: Whether Extraneous Evidence Can Be Allowed To Vary The Terms Of Contract

Mr. P. T. Adedeji V Dr. Moses Obajimi

APPEAL NO: SC.154/2009

Areas Of Law:

Appeal, Court, Interpretation Of Statute, Law Of Contract, Practice And Procedure

Summary Of Fact

The Respondent, the Chairman of a business concern- International Insurance Group Nigeria Limited intended to sell the business and the Appellant was willing to buy.

A Memorandum of Understanding was therefore entered by the parties and it was agreed that the purchase price of the Business shall be 5,000,000.00 (Five Million Naira Only). It was also agreed that the Appellant shall pay the purchase price on or before 30th April, 1999 and that the Appellant shall bear some sundry expenses one of which included 15% statutory deposit with the Central Bank of Nigeria.  The Appellant, went ahead to pay the sum of N500, 000.00 (Five Hundred Thousand Naira only) as statutory deposit to the Central Bank of Nigeria but was unable to pay the purchase price on the agreed date and wrote to the Respondent on the 26^th October, 1999 demanding for the refund of the sum of 500,000.00 (Five Hundred Thousand Naira Only), which had earlier been paid to the Central Bank of Nigeria. The Respondent displeased by the Appellant’s demands instituted an action at the High Court of Oyo State, Ibadan Judicial Division claiming declarative reliefs; that by virtue of the terms of the Memorandum of Understanding dated 4/2/99 the Plaintiff is neither indebted to the Defendant in the sum of N500, 000.00 or indeed any other sum at all, nor liable to refund the sum of N500, 000.00 to the Defendant nor indeed any sum at all, amongst others. The Defendant/Appellant counter-claimed seeking for the sum of 500,000.00 paid by the Defendant to the Central Bank of Nigeria as part of the Statutory Deposit and 21% interest rate on the amount. Upon consideration of the cases of the parties, the trial Court, in its judgment delivered, found that the Appellant was in breach of a fundamental term of the Memorandum of Understanding which stipulated that the full purchase price of N5,000,000.00 (Five Million Naira) only be fully paid on or before 30^th April, 1999. The trial Court, in the interest of justice and on the principle of equity also ordered the refund of the sum of 500,000.00 (Five Hundred Thousand Naira Only), i.e. 15% statutory deposit paid by the Appellant to the Central Bank of Nigeria. The Respondent displeased with the decision of the trial court, appealed to the Court of Appeal. The Appellant on the other hand also cross appealed against part of the judgment especially on the failure of the court to award the 15% interest. The Court of Appeal, found for the Respondent while setting aside the judgment of the trial Court and dismissed the counter-claim of the Appellant. The Appellant has therefore appealed to this court.

Held

Appeal Dismissed

Issue For Determination Whether the learned Justices of the Court of Appeal were right to hold that the Appellant who is in breach of contract (Exhibit 7)ought not to be reimbursed for the payment of ^500,000.00 (Five Hundred Thousand Naira only) in view of his breach.

Rationes

ISSUES FOR DETERMINATION – POWER OF THE COURT TO REFRAME ISSUES FOR DETERMINATION RAISED BY PARTIES BEFORE IT

“It is now trite that a Court has the authority to reframe issues for determination before it in a bid to better appreciate and address the issues of the parties. Please see: Biarika Vs Edeh Ogwuinule (2001) 12 NWLR (Pt.726) 235 at 265; Obiuweubi Vs Central Bank  Of Nigeria (2011) 7 NWLR (Pt.1247) 465; (2011) LPELR-2185(SC)” PER S.D. BAGE, J.S.C

CONSTRUCTION OF TERMS OF A CONTRACTUAL AGREEMENT – DUTY OF COURTS IN CONSTRUING THE TERMS OF A CONTRACTUAL AGREEMENT

“It is trite that courts are imbued with the judicial authority and jurisdiction to give life to contractual agreements made between parties, provided that, such contracts are rooted within the law. The law is that once the terms of contractual agreements between parties are clear and unambiguous, it is the duty of courts to construe such agreements/contracts in line with the clear intention of the contracting parties. See: Gabriel Olatunde Vs Obafemi Awolowo University & Anor (1998) 4SCNJ 59.” PER S.D. BAGE, J.S.C

TERMS OF A CONTRACT – WHETHER EXTRANEOUS EVIDENCE CAN BE ALLOWED TO VARY THE TERMS OF A CONTRACT

“It is trite that where parties have embodied the terms of their contract in a written document, extraneous evidence is not required, whether to add, subtract from, vary or contradict the terms of the written document. Please see Solicitor General Western Nig. Vs Dr. Festus O. Adebonjo & Ors (1971) 1 ALL NLR 181; Olatunde Vs OAU & Anor (1998) LPELR-2575 (SC).” PER S.D. BAGE, J.S.C

LAW OF CONTRACT- FUNDAMENTAL PRINCIPLE OF THE LAW OF CONTRACT

“A fundamental principle of the law of contract is that for a contract to be regarded as legally binding and enforceable, parties must reach a consensus ad idem in respect of terms of same.PER S.D. BAGE, J.S.C

BURDEN OF PROVING THE TERMS OF AN AGREEMENT – ON WHO LIES THE BURDEN OF PROVING THE TERMS OF AN AGREEMENT

“The burden of proof of the existence of terms of an agreement rests squarely on the party asserting such terms since it is a matter of evidence.” PER S.D. BAGE, J.S.C

VALID CONTRACT- METHODS OF DISCHARGING A VALID CONTRACT

“It is now trite law, that a valid contract may be discharged by one of four ways. See Tsokwa Oil Marketing Company Vs B.O.N. Ltd (2002) 11NWLR (Pt.777) page 163 at 200 where this Court held as follows:

“A valid  contract between  parties  may be discharged in one of four ways known to law, namely:

1. a)    by performance
2. b)    by express agreement
3. c)    by the doctrine of frustration; or
4. d)    by breach.”

– PER S.D. BAGE, J.S.C

BREACH OF CONTRACT – WHAT CONSTITUTES A BREACH OF CONTRACT?

“Suffice to say, that when a party to a contract fails, neglects, or refuses without a lawful reason or excuse to perform the obligation he undertook under the contract, or when such a party performs the obligation defectively or makes it impossible for himself to perform the contract, a contract has been breached. Please see: Best Nigeria Ltd Vs Blackwood Hodge (Nigeria) Ltd. & Ors (2011) 5 NWLR (Pt. 1239) 95 where this Court held per Fabiyi JSC (as he then was) that:-

“There is no gain-saying the point that a breach of contract is committed when a party to the contract without lawful excuse fails, neglects or refuses to perform an obligation he undertook in the contract or incapacitates himself from performing same or in a way back down from carrying out a material term.”

See also Adeoti & Anor V Ayofinde & Anor (2001) 6 NWLR (Pt.703) 336 in this Appeal, I find also that the Appellant is in breach of Exhibit 7.” PER S.D. BAGE, J.S.C

CONCURRENT FINDINGS OF FACTS- ATTITUDE OF THE SUPREME COURT TO CONCURRENT FINDINGS OF LOWER COURTS

“Furthermore, it is now well known that this Court refrains from disturbing concurrent findings of facts where there is sufficient evidence to support the findings.   See: Ogoejiofor Vs Ogoejiofor (2006) All FWLR (Pt.301) page 1792 at 1807 where this Court held that:

“The attitude of the Supreme Court to concurrent findings of lower courts is that it will not interfere with such findings where the findings are reasonably justified and supported by evidence and where no special circumstances why the Supreme court should interfere with the findings is shown by the substantial error apparent in the record of proceedings, such as miscarriage of justice or violation of some principles of law or procedure.”

PER S.D. BAGE, J.S.C

EQUITABLE PRINCIPLE- A PARTY SHOULD NOT BENEFIT FROM HIS WRONG

“It is trite that a party should not benefit from his own wrong and I am of the firm view that the decision of the trial court amounts to allowing a party reap benefits from his wrong. See: Enekwe Vs I.M.B (Nig) Ltd (2007) All FWLR (Pt.349) page 1053 at 1081.“ PER. S.D. BAGE, J.S.C

]]>