The Invalidity Of Contracts Or Agreement Requesting Access To Party’s Financial Account.

By Stanley Maduabuchi Ofoegbu Esq

Life is a business and the more we live, the more we transact. Daily, everyone tries as much as possible to earn a living either by engaging in meaningful employment or attempting to acquire certain skills in other to be a producer of labour. While many prefer the white-collar jobs, which is usually a bit tough to get, others on their own prefer being their own bosses and as a result, takes steps into actualizing their ambition.

In our present economic realities, it is not a fiction to say that starting or owning a business is indeed not an easy venture especially, considering the huge capital outlay involved which is affected mostly by the fact that the Nigerian currency is losing it economic and purchasing potency on daily basis. As a result of these, many on their own resort to borrowing and taking of loans to meet up with the required financial demands. To these end, banks and other financial institutions including licensed money lenders have assembled themselves to render help while making their own profit.

Consequent upon the above, individuals can now access some of these financial institutions including licensed money lenders for financial assistance. To make transaction easy and meeting up with digital economy, members of the public may not necessarily need to have a physical interaction with money providers before loan are disbursed. The mobile apps among others has now made everything look easy such that all a party now needs to do is only but to download the app from play store, register and provide necessary details.

While this innovation is said to be a good and welcome development, most financial institution and money providers are now in the business of taking an illegal and undue advantage of their customers. Virtually all financial mobile apps now demand for access to customers financial account. In other words, they make the provisions for customers to provide their secret financial pin such as ATM card numbers and debit pin among others before sealing the agreement. The essence, no doubt is to enable them debit directly the customer’s account should there be a default in payment procedure and plan. No doubt, most customers or members of the public who apply for loan from these loan companies clearly understood the effect of providing their financial access pin. They knew that in default of payment, their account will be debited directly to offset their debt. As a result of this, finding shows that many who take loan from these loan companies now resort to using another bank account that has a different access pin as a way of reducing access to their finance by the money lenders and loan companies a practice that has now left the money lenders and loan companies helpless with their money.

While we condemn the attitude of borrowing and not paying, the pertinent question to be asked is whether the contract of borrowing that was founded on the basis that customers must provide their Bank verification Numbers(BVN), ATM card numbers and pin in the first instance was a valid and enforceable contract for which the court can enforce should any of the parties approach the court?

The law is now firmly settled that parties are bound by the terms of their contract see KWARA INVESTMENT AND PROPERTY DEVELOPMENT COMPANY LTD. AND ORS V OXYGEN HEALTH CARE LTD. AND ANOR. (2020) LCN/14174 (CA), UNION BANK OF NIGERIA LTD. V. OZIGI (1994) LPELR-3389(SC). It is also the law that a litigant should not approbate and reprobate. It is unconscionable to do so see ISENSEE K.G V UBA PLC (2012) LPELR-8028 (CA). Under section 6 of the Constitution of Nigeria as amended, the court possess an inherent power to do justice to every case that comes before it. This justice can either crop out from the application of the law as it is written or by the invocation of the doctrines of equity. However, the law is firmly settled that where parties willfully go into an illegal contract, that is, contract prohibited by the law expressly or impliedly, the court cannot lend a helping hand to them. This is in line with the principle expressed in the Latin maxim ex turpi causa non oritur action, meaning that a party does not have the right to enforce the performance of an agreement founded on the consideration that is contrary to public policy. The supreme court in PAN BISBILDER (NIG) LTD V FBN LTD (2000) LPELR-2900(SC) held inter alia

“Generally, the consequence of illegality in relation to the party’s contract is that the court will not come to the assistance of any of the party to an illegal contract who wishes to enforce it. The position of the law is founded on the principle of public policy and is expressed in the maxim ex turpi causa non oritur action, meaning that an action does not rise from a base cause”.

See also MARAFA AND ANOR V UMAR (2013) LPELR-22821(CA), SOYINKA V ONI AND ORS (2011) LPELR 4096 (CA), CORPORATE IDEAL INSURANCE LTD. V AJAOKUTA STEEL COMPANY LTD AND ORS (2014) LPELR 22255 (SC), ALAO V ACB LTD (1998),3 NWLR (PT.542) 339 AT 370 SC and host of others.

Section 129 (1) (e) (i and ii) and sub 2 of the Federal Competition and Consumer Protection Commission Act 2019 an act of the National Assembly, prohibits the requirement of a party supplying his financial secret pin before entering into any contract. The said section, renders any contract with such requirement illegal and void and hence, unenforceable by the court as explained above for being illegal and prohibited by the law. For clarity, the said provisions provide as follows;

Section 129(1) An undertaking shall not make a transaction or agreement subject to any term or condition if-

(e) it expresses an agreement by the consumer to

(i) deposit with the undertaking, or with any other person at the direction of the undertaking, an identity document, credit or debit card, bank account or automatic teller machine access card, or similar identifying document or device, and

(ii) provide a personal identification code or number to be used to access an account.

Sub 2 A purported transaction or agreement, provision or term or condition of a transaction or agreement, or notice to which a transaction or agreement is purported to be subject, is void to the extent that it contravenes the provisions of this section

From the above provisions of the law, it is crystal clear that any contract or agreements that requires the other party to provide either his ATM PIN, BVN or financial access card or number is illegal and invalid and no court can help such party enforce such a contract.

Question

Since no legality can crop out of illegality, can there be a remedy for a party who has fallen a victim of the above illegal contract explanation? Will such a party go empty handed especially when he is innocent and unaware of the said illegality?

No doubt, he who comes to equity must do equity and approach equity with a clean hand to enable the hallowed principle of Ubi jus ibi remedium to be activated. Equity is a sweet lover who will not suffer a wrong without a remedy. The law is that no two cases are same.  Each must be decided on merit and depending upon the circumstances available. Where parties willfully go into an illegal contract which occasioned a disagreement, the court will be handicapped from helping them. they must go home empty handed and lie on their bed the way they prepared it because, they have not approached the temple of justice with a clean hand. However, the case will be slightly different if the illegality in the contract was unknown to the other innocent party who was also never a party to the said illegality. Equity will come in to help the innocent party who was unaware of such illegality even though the principle of ignorance of the law is no defense may pick offence see PAN BISBILDER (NIG) LTD V FBN LTD SUPRA, COWAN V MILBOURN (1867) L.R 2 EX 23O. This is because, it is unfair in equity for the guilty party to hold the innocent party bound by an act of illegality that he is wholly unaware of. On this, depending on the facts of the case, a party to an illegal contract may still be saved by equity. But then, can money lenders and loan companies derive benefit from this equitable salvation knowing fully that the law prohibits them from demanding access to customers secret pin and cards?

The law is like a two-edged sword. Sometimes, it changes in a direction one may not see easily. The law is that a party who has benefited from a contract cannot turn around and claim that the contract said to be enforced against him is illegal even when the illegalities existed when he benefitted from the contract in the first place. See B.J EXPORT AND CHEMICAL PROCESSING CO.LTD AND ANOR V UBN (2019) 7 CLRN OR (2019) LCN 12869 (CA) where the court stated that it is reprehensible for parties after benefitting from a contract to turn around and say the same contract is illegal. According to the court, the law is not an ass and even if it was, it is not blind or otherwise a disabled one. The court will in special circumstances, provide a remedy under the doctrine of equity unless where remedy cannot be provided base on the level of illegality or other factors as considered by the court.

In summary, it is submitted here that while the above provisions of the law do not apply to other statutory organization that requires a person to submit his financial access code or pin for the purpose of carrying out their statutory functions such as the EFCC, POLICE, NDLEA, CBN. SEC and host of others, money lenders, loan companies and other financial institution including members of the public should be careful in entering into contracts that requires the deposition of secret pin and codes or access cards. Money lenders and loan company should abide by the provisions of the law. They should have good and functional legal unit for good and effective legal advice. They should avoid debiting directly the account of a customers simply because he gave them access as that alone is illegal and amount to being a judge in one’s case. Where loan is advanced to a person and he defaults in payment, the court should be approached for redress if arbitration and other lawful means cannot solve the case. A party may have a good cause of action but still sustain damages in law if he fails to activate the law appropriately. Just like the scripture says, he who comes to God Almighty must believe in his heart that he does exist and that he is a rewarder of them that diligently seek him. In the same vein, he who has a good cause of action must come to equity with a clean hand invoking the law following due process. Just as a bank cannot debit a customer’s account for default in payment of loan simply because the customer has sufficient credit in his account as maintained by the bank, the bank is bound to follow due process or risk being sued. So also, loan companies cannot lawfully debit their customers account simply because they defaulted in making payment. Aside courts and arbitral tribunals, no other person has the power to lawfully enforce the terms of a contract when they are breached. Accordingly, loan companies and others are hereby advised to strategize on lawful means of enforcing payments from their customers when they default.

Merry Christmas.

The writer is a legal practitioner based in Abuja and can be reached via

08068515340, stanleyofoegbu72@gmail.com.