The Legal Implications Of Unilateral Revocation Of Record Label Contract Between DMW AND LIL FROSH BY DMW

By Ekuma, Chinonso G

Whether a single party can validly revoke a contract mutually entered by two or more parties.

Introduction

Wrongful termination of a valid contract ordinarily renders the party in breach to numerous liabilities and the law allows the innocent party to claim adversely against the party who wrongfully terminated a legal agreement. The idea is that parties are bound by their contract as loosely encapsulated in the Latin maxim, “pacta sunta servanda”. Generally, the law recognised four ways the life of a contract can be determined thus: either by performance, by agreement, by frustration or by breach. The later therefore forms the crux of this article.

About the 8th day of October, 2020, the news that  Davido Music Worldwide (DMW) issued a notice purportedly terminating the record label contract entered into by the DMW and Mr. Sanmi Goriola Wasiu (Lil frosh) filtered into the social media. This purported revocation would give rise to so many legal issues bulk of which revolve around whether the revocation is valid in law. Our opinion on the legal implications thereof will be contained in this analysis.

Every valid Record label contract is like every other forms of contract with the same ingredients generally accepted of other kinds of contract to wit: offer, acceptance, consideration, capacity to contract and intention to create legal relationship. See WENDE v. GOVERNOR OF BENUE STATE & ORS (2019) LPELR-CA/MK/298/2013, where Per OTISI, J.C.A. in (P. 15, Paras. A-E) where the court held, “I will only emphasize that there are settled essentials of a binding contract, which are: offer, acceptance, consideration, capacity to contract and an intention to create legal relations.” The court referred to Akinyemi v. Odu’a Investment co. Ltd (2012) LPELR-8270(SC) and BPS Construction Engineering Co. Ltd v. FCDA (2017) LPELR42516(SC). The court further stated that, “The parties must be in consensus ad idem with regard to the essential terms and conditions thereof. There must therefore be a concluded bargain which has settled all essential conditions that are necessary to be settled and leaves no vital term or condition unsettled; Atiba Iyalamu Savings & Loans Ltd v. Suberu & Anor (2018) LPELR-44069(SC); Best (Nig) Ltd v. Blackwood Hodge Nig Ltd Anor (2011) LPELR-776(SC). It is a question of fact whether the parties have agreed on the essential elements of a contract. Alfotrin Limited v. The Attorney General of the Federation & Anor (1996) LPELR-414(SC), (1996) 9 NWLR (PL475) 634.”

It must be noted that once a contract contains the above ingredients it is valid, and the courts will recognize and enforce the promise or set of promises contained in them. So, it suffice to say that there must be something which the law will hold on to when called upon to enforce an agreement made by parties.

When contracts are made, parties acquire duties, obligations and rights. And until such contract is legally determined, it cannot otherwise be said to have come to an end without liability, except by other overriding circumstances.

Specifically, the law recognizes that a lawful contract can be determined by performance, agreement, frustration or by breach. See  NWABUFO v. UBA PLC & ANOR (2019) LPELR-CA/L/942/15. In this case, the learned justice, Per ABUBAKAR, J.C.A. in (Pp. 80-83, Paras. B-E) captured the position of the law as follows: “In AHMED & ORS Vs. CBN (2012) LPELR-SC.34/2005 relied upon by both parties and the trial Court; the Supreme Court per ADEKEYE, JSC held as follows: “A contract generally may be discharged through the following, namely – a. By performance – if both parties have done all that is required of them, b. By agreement – if both parties have mutually agreed to put an end to their contractual relationship, c. By frustration – if some event outside the control of the parties take place, making performance impossible, d. By breach – where the innocent party is relieved and the party in default may be liable for damages…” The learned jurist further held that: “A contract will be discharged by breach when the party in breach had acted contrary to the terms of the contract either 1. By nonperformance or 2. By performing the contract not in accordance with its terms or 3. By wrongful repudiation of the contract. A party who has performed the contract in consonance with its terms cannot be said to have been in breach thereof…”

Each of these modes of termination otherwise known as discharge has legal implications. For instance, the effect of discharge by performance, frustration and agreement is almost the same in law, save that when a contract is discharged by frustration and the parties have made monetary commitments all sums paid or payable to a party in accordance with the provisions of the contract before the contract became frustrated will in the case of sums so paid, be recoverable by the person who paid the sums, and sums payable shall no longer be paid. See for instance, Section 8 (2) of the Law Reform (Contracts) Law of Lagos State. Under Section 8 (3) of the Law, the court may not order the recovery or refund of any portion of the contract sum that had been expended for the purpose of performance of the contract before the contract became frustrated.  But in law, discharge by frustration, agreement and performance relieves the parties forever of further obligations, liabilities and responsibilities in such contract. Meanwhile, discharge by breach does not give rise to the same result. In BIMBA AGRO LIVESTOCK CO. LTD v. LANDMARK UNIVERSITY (2019) LPELR-CA/IL/144/2017, the court held that, “…the term breach of contract denotes a violation of a contractual obligation, either by failing to perform one’s own promise or by wantonly interfering with another party’s performance of the contract. A breach of contract may be occasioned by non-performance, or by repudiation or both. It is aptly postulated that- Every breach [of contract] gives rise to a claim for damages, and may give rise to other remedies. Even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for nominal damages. If a Court chooses to ignore a trifling departure, there is no breach and no claim arises. See RESTATEMENT (SECOND) OF CONTRACTS (1981) @ 236; BLACK’S LAW DICTIONARY, 7th Edition 1999 @ 182.” Per SAULAWA, J.C.A. (Pp.36-37, Paras. F-C).

There are numerous remedies available to an innocent party who alleges breach of contract, one of which is claim for damages. The court in STEPHENSON STANDARD COMPANY LTD v. YIFA NIGERIA LTD (2012) LPELR-CA/L/297/2007, on the remedies available for breach of contract has this to say, “There are a number of remedies available for breach of contract; the most common being the award of damages. The essence of damages in breach of contract cases is based in restitutio in integrum, that is the amount of damages to be paid to the party wronged by the breach is the amount of damages necessary to put the party wronged and aggrieved in the position he would have been had there been no breach.” Per OGUNWUMIJU, J.C.A (Pp. 16-17, paras. F-A).

Similarly, a breach can give rise to an action for specific performance. In IBEKWE V. NWOSU (2011) LPELR-SC.108/2006 the supreme Court on what constitutes specific performance held that, “Specific performance is the remedy of requiring exact performance of a contract in the specific form in which it was made or according to the precise terms agreed upon. It is the actual accomplishment of a contract by a party bound to fulfill it.” Per FABIYI, J.S.C. (P. 13, paras. D-E), see also AISHA & ORS v. AHMED (2019) LPELR-CA/K/454/2017.

The legal implications of unilateral revocation of record label contract between DMW and Lil frosh by DMW.

There is no doubt as to whether or not there is a valid contract between DMW and Lil Frosh. What is in issue is as to whether or not there is a valid termination of the said contract by DMW. In determining this, we have to look at the position of the law in respect to written contracts. The law is settled that only the terms of a written contract is binding on the parties to an agreement without more. It is trite however, that parties are bound by their contracts in absence of misrepresentation, fraud and other vitiating elements. See MEKWUNYE v. IMOUKHUEDE (2019) LPELR-SC.851/2014; LIVING FAITH CHURCH WORLDWIDE INC & ORS v. SUPERIOR CHOICE (NIG) LTD & ANOR (2019) LPELR-CA/J/266/2016. Anything not contained in a written contract is not binding on the parties, no matter how disdainful. It suffice to say that if the contract between DMW and Lil Frosh has a particular clause which states that the agreement will be terminated upon doing an act which is condemnable by reasonable members of the public, such as battery or assault on a third party, as the case may be, then, the termination will be said to be valid. However, assuming there was no such clause, such a termination will be invalid, null and void and the DMW would have rendered itself to gross liability for breach of a valid contract between it and Lil Frosh.

It is submitted that domestic transactions of parties to a contract cannot adversely affect their valid agreement, unless it is specifically provided that such transactions would be considered at the subsistence of the contract as condition subsequent, etc. When a party terminates a contract wrongfully, it amounts to breach in law and the innocent party is entitled to claim for damages. The quantum of damages therefore is to restore the innocent party to the position he would have been assuming the breach had not occurred.

The law is settled in CAMEROON AIRLINES V. OTUTUIZU (2011) LPELR-SC.217/2004, on the the rule applicable in awarding damages for breach of contract that, “…Awarding damages in an action founded on breach of contract, the rule to be applied is restitutio in intergnum, that is, in so far as the damages are not too remote, the plaintiff shall be restored as far as money can do it, to the position in which he would have been if the breach had not occurred. Okongwu v. N.N.P.C. (1989) 4 NWLR pt.115 pg. 296. Osin & Oshin Ltd v. Livestock Feed Ltd. (1992) 2 NWLR pt.486 pg.162. Udeagu v. Benue cement co. Plc. (2006) 2NWLR pt.965 pg.600.” Per ADEKEYE, J.S.C(Pp. 46-47, paras. G-D).

It is to be noted that the act purportedly carried out by Lil Frosh is on the face of it condemnable. In fact, such an act only exist among the beasts. Domestic violence even among unmarried individuals must be condemned without reservation by every right thinking man.  

Meanwhile, it is safer to act in law and not outside the law no matter what. Hence, no amount of wrong action, howbeit, anchored on emotion can right a wrong act. Assuming but not conceding to the fact that DMW did not include the said clause entitling them to repudiate the record label contract when the artist behaves beastly, it is submitted that there action in absence of any other thing is reckless, and uncalled for. The purported act by Lil Frosh would have made a very good criminal case in the relevant provisions of the extant criminal legislations in Nigeria. Similarly, such would also entitle the victim to proceed against Lil Frosh in Tort.

Conclusion

Contract is a promise or set of promises which the law will enforce its outcome as affecting the rights, duties and responsibilities of parties. Unguided actions of parties to contract may have far reaching significance and legal implications when such actions directly affect the basis of the contract and may give rise to multiple legal claims, even when such action is morally justifiable. Hence, the need for parties  to warn themselves in order to avert unnecessary breach.

This article was written by Ekuma, Chinonso G., 500l Student of law, EBSU and Life Intern @St. Sen Solicitors

Comments: 08143576372;chinonsogeorge@gmail.com