**1.
0 INTRODUCTION TO CONTRACT LAW** PAGE 2
A legally binding agreement that is enforced by law between two or more parties is called a
contract. It is the cornerstone of social and business interactions, giving parties the assurance
and predictability to rely on their commitments. The guidelines for drafting, carrying out, and
upholding these agreements are established by contract law.
These regulations are developed from the fundamental foundations of contract law. They
create a complex, intertwined tapestry rather than being mutually exclusive. The law of contracts
in the majority of contemporary jurisdictions is a combination of legislative enactments (statutes)
and judge-made rules (common law and equity), with an increasingly significant layer of
international frameworks for cross-border transactions.
1. Using illustrative examples, this book will examine the four main sources of contract law:
common law, statutes, equity, and international law.
2. Compare the ways in which these sources operate in the Civil Law tradition (with an emphasis
on Germany) and the Common Law tradition (with an emphasis on Nigeria and the United
Kingdom).
3. Offer a thorough taxonomic categorization of contracts according to their creation,
performance, and validity.
--- **PAGE 3** **1.1 OUTLINE THE LAW'S SOURCES**
It is essential to comprehend what is meant by a "source of law" before diving into contract law
in particular:
* **Reliable Sources: ** These are the final, authoritative sources that give the law its
legitimacy and force. They are the processes by which laws are made and implemented.
(For instance, a superior court setting a legally binding precedent or a parliament passing
legislation).
* **Sources of Materials:** These give the law its substance—its guiding ideas, regulations, and
doctrines. They serve as the repositories of the law (e.g., scholarly publications, written court
judgments, and statutory text).
Both formal and material sources are included in the sources of contract law, and the relative
importance of each varies greatly throughout legal families.
--- **PAGE 4** **2.0 CONTRACT LAW'S FOUR PRIMARY SOURCES**
Four interrelated wells serve as the foundation for contemporary contract law:
The historical basis, which consists of concepts gradually established by judges via rulings in
specific cases, is known as **Common Law (Case Law). Its foundation is the *stare decisis*
doctrine. * (to stick by things decided), which gives court precedents legally binding force.
2. **Statutory Law (Legislation):** Laws passed by a legislative body, such as the National
Assembly, Parliament, or Congress. Statutes have the power to codify common law principles,
alter them, or establish completely new legal frameworks for particular kinds of contracts.
3. Equity: In order to lessen the strictness and occasionally severe outcomes of the early
common law, a parallel legal system evolved. In situations where the common law is inadequate,
equity offers additional principles and remedies.
4. **International Law:** Frameworks developed by international organizations to standardize
contract law across national boundaries in order to promote global trade and business, including
conventions and model laws.
Each source will be thoroughly examined in the sections that follow.
**PAGE 5** **2.1 COMMON LAW AS A SOURCE (CASE LAW)
In countries like Nigeria and the UK, common law forms the foundation of contract law. Its
practicality, which comes from resolving problems in the actual world, is its strongest point.
**Key Features:** * **Precedent (*Stare Decisis*): ** Lower courts in the same hierarchy are
bound by decisions made by higher courts. This guarantees the law's predictability and
uniformity.
* **Inductive Reasoning:** Using the particular facts of the cases they hear, judges develop
broad legal principles. * **Remedy Focus:** Damages (monetary compensation) are the main
remedy for violation of contract under common law.
The following are the main ideas and examples: **Carlill v. Carbolic Smoke Ball Co. [1893] 1 QB
256:*** **Offer & Acceptance:** The method of agreement established that anyone who
complies with the specified requirements can accept a unilateral offer (to the world), creating a
legally enforceable agreement.
* **Think about:** The cost of purchasing the promise. It doesn't have to be adequate, but it
must be sufficient.
The definition of consideration in Currie v. Misa (1875) LR 10 Ex 153:*** was "some right,
interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or
responsibility given, suffered, or undertaken by the other."
In the case of Silk v. Myrick (1809) 170 ER 1168:***, it was decided that fulfilling an existing
contractual obligation is not a legitimate way to get payment for a new commitment.
--- **PAGE 6** **2.1 AS A SOURCE OF COMMON LAW (CASE LAW) (CONTINUED)**
* **Intention to Create Legal Relations:** For an agreement to be enforceable, the parties must
have meant for it to be so.
A rebuttable presumption that social and domestic agreements *do* not have legal intention was
established in ***Balfour v. Balfour [1919] 2 KB 571:***. ***Edwards v. Skyways Ltd [1964] 1
WLR 349:*** Presumption that commercial agreements *do* have legal intention.
* **Privity of Contract:** A contract can only be sued or be sued by one of its parties.
* ***Tweedle v. Atkinson (1861) 1 B&S 393:*** A famous assertion of the theory, which states
that a person who was not a party to a marriage contract but was the intended beneficiary could
not execute a commitment made within it.
A misleading statement of fact used to persuade a party to sign a contract is known as
misrepresentation.
* ***Derry v. Peek (1889) 14 App Cas 337:*** formulated the criteria for fraud and defined
fraudulent misrepresentation.
**2.2 STATUTORY LAW AS A SOURCE** *PAGE 7**
The role of statutes in amending and enhancing common law is becoming more and more
significant. They reform antiquated regulations, give vulnerable parties protection, and bring
clarity.
* **Supremacy:** In cases where common law and statutes clash, the statute takes
precedence.
* **Codification:** Common law ideas can be compiled and organized into a single, easily
readable document by statutes.
* **Consumer Protection:** Current laws frequently seek to address power disparities,
especially in contracts with consumers.
The Sale of products Act 1979 codifies and incorporates essential phrases into contracts for the
sale of products (such as the seller's right to sell, the goods must match the description, be of
sufficient quality, and be fit for purpose; S.12-14). Here are some examples from the UK.
* The 1977 Unfair Contract Terms Act: Limits the * the ability to restrict or eliminate liability for
carelessness or contract violations, especially through standard terms and notices. * The
Consumer Rights Act of 2015: A comprehensive law that strengthens and unifies consumer
protection and establishes a strict standard for the fairness of consumer contract terms.
--- **STATUTORY LAW AS A SOURCE (CONTINUED)** **PAGE 8**
Nigerian contract law is a combination of local statutes and received English law, including
equity and common law. **Nigerian examples:** Received English law: Various Laws Reception
Acts make the English common law, equity doctrines, and universal applicability legislation that
were in effect in England on January 1, 1900, applicable in Nigeria. The Sale of Goods Act 1893:
The foundation of the legislation is this English statute, which is a statute of universal application.
The Lagos State Contract Law, Cap. C27, 2015, is an example of a contemporary local legislation
that offers a legislative framework for contract formation, capacity, and vitiating circumstances
within the state. It deals with the sale of products in numerous Nigerian states.
Contracts involving corporations, their creation, and their capacity are governed by the
corporations and Allied Matters Act (CAMA) 2020.
--- **PAGE 9** **2.3 A SOURCE OF EQUITY**
When a rigorous application of common law principles would result in an unfair decision, equity
acts as a "gloss" over the common law, smoothing its edges and bringing about justice.
The following are its main features: **Supplementary:** It supports common law rather than
superseding it.
* **Discretionary:** Due to the actions of the parties, the court may decide to grant equitable
remedies.
The maxims are based on the idea that "he who comes to equity must come with clean hands."
**Main Points and Illustrations:** * **Solutions:** * **Specific Performance:** A directive
requiring a party to fulfill their contractual duties. given when damages are insufficient (for
instance, when a rare picture or a piece of land is being sold).
* **Injunction:** A court order that forbids a party from carrying out a certain action (such as
breaking a contract's negative covenant).
* **Doctrines:** * **Promissory Estoppel:**, which forbids a party from breaking a promise
when doing so would be unfair.
* The seminal case in which Lord Denning developed the contemporary theory was ***Central
London Property Trust Ltd v. High Trees House Ltd [1947] KB 130:***.
Because the renter had depended on the landlord's pledge to take a lower sum during the war,
the landlord was barred from collecting the entire amount owed.
EQUITY AS A SOURCE (CONTINUED) --- **PAGE 10**
* **Undue Influence:** Equity acknowledges that if one party used a relationship of confidence
and trust to get the agreement, it may be voidable.
The present guidelines for proving undue influence were laid out in ***Royal Bank of Scotland
plc v. Etridge (No 2) [2001] UKHL 44:***, especially when a wife serves as a surety for her
husband's debts.
A contract that is so unjust and biased that it "shocks the conscience," frequently including the
exploitation of a handicap or disability, may be refused enforcement by a court under equity.
The Fallacy of Fusion: It is important to remember that although the Judicature legislation (in the
UK and comparable legislation in Nigeria) combined the *administration* of common law and
equity, the *principles themselves* are still separate. In order to pursue an equitable remedy, a
claimant must first prove a common law entitlement.
A SOURCE OF INTERNATIONAL LAW --- **PAGE 11** **2.4
International instruments reduce the legal uncertainty of cross-border transactions by providing
essential regularity for international commercial contracts in an increasingly globalized
environment.
The following are some of its main features: **Voluntary Adoption:** Countries decide to sign
conventions. **Gap-Filling:** Frequently used to regulate contracts in which the parties have not
selected a particular national law.
* **Soft Law:** Although not legally enforceable, some documents that reiterate best practices
have a significant impact.
The United Nations Convention on Contracts for the International Sale of Goods (CISG) is one of
the main tools. Its purpose is to give businesses in various signatory nations a modern, standard
legal framework for international sales contracts; it does not apply to consumer purchases.
* **Scope:** Regulates the creation of contracts, buyer and seller rights and obligations, and
breach remedies.
* **Importance:** More than 95 nations have adopted it, including the US, China, and the
majority of Europe (though not the UK, Nigeria, or India, to be exact). Contracts between parties
in signatory states are automatically covered unless they specifically "opt-out."
--- **PAGE 12** **2.4 AS A SOURCE OF INTERNATIONAL LAW (CONTINUED)**
A non-binding "restatement" of broad principles for international commercial contracts is what
the **UNIDROIT Principles of International Commercial Contracts:** serve as.
It is a model law rather than a treaty.
* **Use:** The parties may decide to use the UNIDROIT Principles to regulate their contract.
They are used by courts and arbitrators to interpret or add to local law or international uniform
law agreements like the CISG.
* **Features:** Contains ideas that are more common in civil law systems, such as the need to
behave in good faith and the notion of hardship.
* **European Contract Law (PECL) Principles: ** Like UNIDROIT, but with the goal of offering a
possible foundation for a European Civil Code.
A *lex mercatoria* (law merchant) for the global age is being created by these worldwide
sources, which reflect a tendency toward the harmonization of commercial law.
A COMPARATIVE ANALYSIS OF COMMON LAW AND CIVIL LAW --- **PAGE 13** **3.0
This analysis compares and contrasts how source in two main legal families: the Civil Law
(Germany as an example) and the Common Law (Nigeria and the UK as examples).
**Common Law Systems (Nigeria, UK)** | **Civil Law Systems (Germany)** | | :--- | :--- | :--- |
| **Historical Roots** | Developed in England through royal courts following the Norman
Conquest. Founded on precedent and tradition, Roman law was honed in universities across
continental Europe. after the French Revolution, codified. • **Main Source** | **Case Law
(Precedent)** is supreme. Case law is taken into consideration while interpreting statutes. The
BGB (Comprehensive Civil Code) is crucial. It is intended to serve as the main, comprehensive
source. The function of judges is to serve as active, law-making referees. By rendering well-
reasoned decisions, they interpret laws and establish enforceable precedent.
*Skilled investigators and code applicators.** Their job is to gather information and implement
the applicable code provision. Previous rulings are not legally binding. || **Legal Reasoning** |
**Inductive:** Drawing general conclusions from particular instances. Applying the code's broad
principles to a particular situation is known as deductive reasoning. || **Rule Style** |
**Procedural, fact-specific, and pragmatic.** Concentrate on resolving the current conflict.
**Systematic, abstract, and doctrinal.** The code is a comprehensive, logical system.
**PAGE 14** --- **3.1 COMPARATIVE ANALYSIS: CONTRACT FORMATION**
| **Aspect** | **Common Law (Nigeria/UK)** | **Civil Law (Germany - BGB)** | | :--- | :---
| :--- | | **Basis of Agreement** | **Offer + Acceptance + Consideration.** A deal for trade. |
**Declaration of **Offer (§ 145 BGB) and Acceptance (§ 147 BGB) are the intentions
(*Willenserklärungen*). A gathering of the wills. || **Think About** | **Necessary.** Unless
established by deed, a gratuitous promise—such as a pledge to offer a gift—is not legally
enforceable. **Not Necessary.** A simple offer and acceptance can result in a legally binding
agreement. If a gift pledge (*Schenkungsversprechen*) is notarized, it becomes legally binding (§
518 BGB). **Formalities** | | Contracts are typically **informal**. Only certain types (such as
property and promises under the Statute of Frauds) require writing. | Usually **informal**,
however more transactions than under common law (such as property transfers and gift
commitments) need notarization. || **Good Faith** | No **general** need to act in good faith
during performance or negotiation
* (albeit still in its infancy in UK consumer law). There is an obligation to be truthful. Every
contractual transaction is based on the **General Principle of Good Faith (*Treu und Glauben*, §
242 BGB)**. It is an active, core duty.
--- **PAGE 15** **3.2 COMPARATIVE ANALYSIS: SOLUTIONS & REASONING**
**Common Law (Nigeria/UK)** | **Civil Law (Germany - BGB)** | **Aspect** | **Primary
Remedy** | ** Damages: **Cash to restore the claimant to the status they would have had if the
contract had been fulfilled. The main cure is **Specific Performance (*Erfüllung*). Performance
of the pledge is due to the creditor (§ 241 BGB). || **Specific Performance** | **Exceptional
remedy.** Allotted only in cases when damages are insufficient (e.g., land, unique goods). The
"standard remedy" is accessible as a matter of of right, even when in reality it might not be
enforceable (personal service, for example). The objective criteria for contract interpretation is
"What would a reasonable person understand the parties to have meant?" Pay attention to the
literal meaning. Although taken into account, context is secondary. The Good Faith/Subjective
test: looks for the parties' actual shared intent (*gemeinsamer Wille*). The interpretation is
based on what a reasonable person would have intended **in good faith** (§ 157 BGB) if this
cannot be ascertained. || **Liability Before Contract] | In general, there is **no liability** for
ending talks (*culpa in contrahendo* is not commonly acknowledged). **Culpa in
contrahendo** liability (§ 311(2) BGB). There is a need to negotiate in good faith, and a party
who improperly ends talks could face reliance damages.
Page 16** **3.3 Nigeria: A Locally Flavored Common Law Jurisdiction
Despite being a traditional common law country, Nigeria's legal system is a reflection of its
distinct past.
* **Foundation:** Through colonial rule, English law was introduced into Nigeria. In England,
the fundamental concepts of offer, acceptance, consideration, and privity are the same.
* **Statutes:** English laws, such as the Sale of Goods Act, frequently serve as models or
inspiration for Nigerian laws. But there are other laws that are specific to Nigeria, such as the
**Lagos State Contract Law**, which modify the main ideas for the local setting.
* **Judicial Precedent:** The *stare decisis* doctrine and the judicial hierarchy are rigorously
adhered to. All subordinate courts must abide by the rulings of the Nigerian Supreme Court.
Although compelling, English rulings are not legally binding.
A significant secondary source that occasionally interacts with basic contract concepts is
customary law, especially when it comes to family and land law issues.
**4.0 THE CONCEPT OF "MIXED" SYSTEMS** --- **PAGE 17**
Common law and civil law are not mutually exclusive. A large number of jurisdictions are
"mixed," often referencing both traditions.
* **Scotland:** Because of its union with England, its public law and process are Common Law,
but its private law is founded on Roman law (Civilian).
* **South Africa:** English Common Law had a strong influence on Roman-Dutch law (Civilian),
which serves as the foundation.
* **Quebec (Canada) & Louisiana (USA):** Despite functioning under a much expansive
Common Law federal framework, these states and provinces maintain private law Civil Codes.
This illustrates how legal traditions continue to merge and influence one another, particularly in
the field of of international business law, where ideas from both families are combined in
documents such as the CISG and UNIDROIT Principles.
***
### **Volume II: Contract Classification**
**PAGE 18** **5.0 CONTRACT CLASSIFICATION: INTRODUCTION**
Contracts can be grouped according to several standards. This classification influences the rules
that apply to the contract, the parties' rights, and the remedies available in the event of a
violation; it is not merely academic.
According to the assignment, the three main categorization grounds are:
1. **Based on Validity:** The agreement's enforceability under the law.
2. **Based on Performance:** The degree to which the terms of the contract have been met.
3. **Based on Formation:** How the contract is made.
Under each heading, a thorough taxonomy will be provided in this section.
*
---
**PAGE 19**
**5.1 CLASSIFICATION BASED ON VALIDITY**
This is the most crucial classification, as it goes to the very heart of whether an agreement is
legally binding.
**1. Valid Contract**
An agreement that satisfies all the essential elements of a contract and is therefore fully
enforceable by law.
* **Elements:** Offer, Acceptance, Consideration, Legal Capacity of parties, Lawful Object,
Certainty of terms, and Intention to create legal relations.
* **Example:** A buys a car from B for a agreed sum. Both are adults, the car exists, and the
terms are clear.
**2. Void Contract (*Ab Initio*)**
* **Not a contract at all.** It is an agreement that has no legal effect from the very moment it is
formed. It cannot be enforced by any party.
* **Causes:**
* **Illegality:** Agreement to commit a crime or a tort (e.g., contract for murder, contract to
defraud the government).
* **Agreement without consideration.** (In Common Law)
* **An agreement with a mistaken fundamental fact** (e.g., *res extincta* - contract about
something that never existed).
* **Example:** A agrees to pay B £10,000 to burn down C's warehouse. This is illegal and
therefore void.
---
**PAGE 20**
**5.1 CLASSIFICATION BASED ON VALIDITY (CONTINUED)**
**3. Voidable Contract**
An agreement that is initially valid and binding but can be set aside (avoided) at the option of one
of the parties who has been wronged. It remains valid until it is avoided.
* **Causes:**
* **Misrepresentation** (false statement inducing the contract).
* **Mistake** (of identity in some cases).
* **Undue Influence.**
* **Coercion/Duress.**
* **Example:** A sells a painting to B, falsely claiming it is an original Picasso. B, relying on this
statement, buys it. This is a misrepresentation. The contract is **voidable at B's option**. B can
choose to **affirm** the contract (keep the painting) or **rescind** it (cancel the contract and
get their money back).
**4. Unenforceable Contract**
A contract that is valid in substance but cannot be enforced in a court of law because of a
technical defect. The contract exists, but the court will not help the parties.
* **Causes:**
* **Lack of a required written form** (e.g., contracts for the sale of land falling foul of the
**Law of Property (Miscellaneous Provisions) Act 1989** in the UK or similar state laws in
Nigeria).
* **Expiration of the limitation period** (e.g., a claim in contract is "statute-barred" after 6
years in many jurisdictions).
* **Example:** An oral agreement for the sale of a piece of land. The agreement i
---
**PAGE 21**
**5.1 CLASSIFICATION BASED ON VALIDITY (CONTINUED)**
**5. Illegal Contract**
A subset of void contracts. An agreement whose object or consideration is forbidden by law.
* **Effects:** Not only is it void and unenforceable, but courts will generally refuse to help
parties to an illegal contract in any way (*in pari delicto potior est conditio defendentis* - in equal
fault, the defendant's position is stronger). Money or property transferred under it is often not
recoverable.
* **Types:**
* **Statutory Illegality:** Expressly prohibited by statute (e.g., price-fixing agreements).
* **Common Law Illegality:** Contrary to public policy (e.g., contracts to oust the jurisdiction
of the courts, contracts promoting corruption).
* **Example:** A loan agreement with an interest rate that exceeds the legally permissible
usury limit.
This classification is vital for a lawyer to determine the first question in any dispute: *Is there an
enforceable contract at all?*
---
**PAGE 22**
**5.2 CLASSIFICATION BASED ON PERFORMANCE**
This classification looks at the execution of the contractual obligations.
**1. Executed Contract**
A contract in which **both parties have fully performed** their respective obligations. The
contract has been completely carried out by all parties.
* **Example:** You walk into a shop, pick up a loaf of bread, pay the cashier, and leave. The
contract for the sale of the bread is executed the moment the payment and goods are
exchanged.
**2. Executory Contract**
A contract in which **one or both parties have yet to perform** their obligations. The contract is
still in the process of being fulfilled. Most business contracts are executory at the point of
formation.
* **Example:** On January 1st, A agrees to deliver 1000 books to B on February 1st, and B
agrees to pay upon delivery. On January 2nd, the contract is entirely executory. If A delivers on
February 1st but B hasn't paid yet, the contract is partially executed (A's duty is done) and
partially executory (B's duty remains).
This distinction is crucial for determining when a breach occurs and what remedies are available.
It is also important in insolvency law, where executory contracts can be adopted or rejected.
---
**PAGE 23**
**5.3 CLASSIFICATION BASED ON FORMATION**
This classification focuses on how the contract was brought into existence.
**1. Express Contract**
The terms of the agreement are **explicitly stated**, either **orally** or in **writing**.
* **Example:**
* *Written:* A signed employment agreement.
* *Oral:* A phone call where you order a pizza for delivery.
**2. Implied Contract**
The agreement is **inferred from the conduct, actions, or circumstances** of the parties. The
law implies a promise to pay.
* **Example:**
* You get on a bus. By your conduct, you imply a promise to pay the fare. By accepting you as
a passenger, the bus company implies a promise to transport you to your destination.
* You take your car to a mechanic for a service. Even if you don't discuss price, a contract is
implied that you will pay a reasonable fee for the work done.
---
**PAGE 24**
**5.3 CLASSIFICATION BASED ON FORMATION (CONTINUED)**
**3. Quasi-Contract (Contract Implied in Law)**
***This is not a true contract.*** It is a legal **fiction** created by courts to prevent **unjust
enrichment**. The court imposes an *obligation* as if a contract existed to ensure that one party
is not unfairly benefited at the expense of another.
* **Requirements:** (1) A benefit is conferred upon the defendant; (2) the defendant
appreciates the benefit; and (3) it would be unjust for the defendant to retain the benefit without
paying for it.
* **Example:**
* A doctor finds an unconscious person on the street and provides emergency medical care.
The unconscious person cannot consent (no offer/acceptance), but the court will imply a quasi-
contract to oblige them to pay a reasonable fee for the necessary service.
* A homeowner pays overdue property taxes to prevent a tax sale on their neighbour's house.
The court may require the neighbour to reimburse the homeowner to prevent the neighbour's
unjust enrichment.
---
**PAGE 25**
**5.3 CLASSIFICATION BASED ON FORMATION (CONTINUED)**
**4. Standard Form Contracts**
Contracts not negotiated between the parties. One party (usually with greater bargaining power)
sets the terms, and the other party can only "adhere" to them on a "take-it-or-leave-it" basis.
* **Examples:** Insurance policies, software license agreements (EULAs), airline tickets, utility
contracts.
* **Legal Scrutiny:** These contracts are subject to special scrutiny by courts and statutes (like
the Unfair Contract Terms Act 1977) to prevent the inclusion of unfair and unreasonable terms.
**5. E-Contracts (Electronic Contracts)**
Contracts formed online through digital processes (clickwrap, browsewrap, etc.). They are
fundamentally express contracts but raise unique issues regarding acceptance, timing (the "postal
rule" vs. "instantaneous communication"), and electronic signatures, which are now validated by
statutes like the **Electronic Communications Act 2000** in the UK and similar **Cybercrime
Acts** in Nigeria.
---
**PAGE 26**
**6.0 OTHER CLASSIFICATIONS**
For a complete picture, other common classifications include:
* **Based on Obligations:**
* **Bilateral Contract:** A promise for a promise. Both parties make a promise to the other.
This is the most common type (e.g., A promises to deliver a car on Friday, B promises to pay on
Friday).
* **Unilateral Contract:** A promise for an act. One party makes a promise in exchange for
the performance of an act by another. The contract is only formed upon complete performance
of the act (e.g., "I will pay £100 to anyone who returns my lost dog." The offer is accepted by the
act of finding and returning the dog, not by a promise to look for it).
* **Based on Form:**
* **Formal Contracts:** Contracts that require a special form or method of creation to be
enforceable. The most common is a **Contract by Deed** (a written document signed,
witnessed, and delivered). Used for certain transfers of land and gratuitous promises.
* **Simple Contracts:** All other contracts, whether oral or written. They require
consideration to be binding.
---
**PAGE 27**
**7.0 CONCLUSION**
The law of contract is a dynamic and multifaceted field. Its rules are drawn from a rich tapestry of
sources: the pragmatic precedents of common law, the reforming power of statute, the
conscience of equity, and the harmonizing force of international law. The weight and interaction
of these sources define a jurisdiction's legal character, as seen in the stark contrast between the
common law approach of Nigeria and the UK and the civil code system of Germany.
Furthermore, understanding the taxonomy of contracts—whether a contract is void or merely
voidable, executory or executed, express or implied—is the essential first step in any legal
analysis. It provides the map that guides lawyers and judges in determining the rights, duties, and
remedies available to the parties of an agreement, ensuring that the architecture of agreement
remains strong and functional in a complex world.
---
**PAGE 28**
**BIBLIOGRAPHY**
* **Case Authorities:**
* *Carlill v. Carbolic Smoke Ball Co. [1893]*
* *Currie v. Misa (1875)*
* *Central London Property Trust Ltd v. High Trees House Ltd [1947]*
* *Balfour v. Balfour [1919]*
* **Statutory Materials (UK):**
* Sale of Goods Act 1979
* Unfair Contract Terms Act 1977
* Consumer Rights Act 2015
* **Statutory Materials (Nigeria):**
* Sale of Goods Act 1893 (Applicable)
* Contract Law of Lagos State, 2015
* Companies and Allied Matters Act (CAMA) 2020
* **International Instruments:**
* United Nations Convention on Contracts for the International Sale of Goods (CISG), 1980.
* UNIDROIT Principles of International Commercial Contracts, 2016.
* **Textbooks & Secondary Sources:**
* Treitel, G.H. *The Law of Contract.* (A leading UK authority).
* Chitty on Contracts. (A definitive practitioner work).
* Anson, W.R., et al. *Anson's Law of Contract.*
* Sagay, I.E. *Nigerian Law of Contract.* (A leading Nigerian authority).
* Zweigert, K. & Kötz, H. *An Introduction to Comparative Law.* (For the comparative
analysis).
*
---
**PAGE 19**
**5.1 CLASSIFICATION BASED ON VALIDITY**
This is the most crucial classification, as it goes to the very heart of whether an agreement is
legally binding.
**1. Valid Contract**
An agreement that satisfies all the essential elements of a contract and is therefore fully
enforceable by law.
* **Elements:** Offer, Acceptance, Consideration, Legal Capacity of parties, Lawful Object,
Certainty of terms, and Intention to create legal relations.
* **Example:** A buys a car from B for a agreed sum. Both are adults, the car exists, and the
terms are clear.
**2. Void Contract (*Ab Initio*)**
* **Not a contract at all.** It is an agreement that has no legal effect from the very moment it is
formed. It cannot be enforced by any party.
* **Causes:**
* **Illegality:** Agreement to commit a crime or a tort (e.g., contract for murder, contract to
defraud the government).
* **Agreement without consideration.** (In Common Law)
* **An agreement with a mistaken fundamental fact** (e.g., *res extincta* - contract about
something that never existed).
* **Example:** A agrees to pay B £10,000 to burn down C's warehouse. This is illegal and
therefore void.
---
**PAGE 20**
**5.1 CLASSIFICATION BASED ON VALIDITY (CONTINUED)**
**3. Voidable Contract**
An agreement that is initially valid and binding but can be set aside (avoided) at the option of one
of the parties who has been wronged. It remains valid until it is avoided.
* **Causes:**
* **Misrepresentation** (false statement inducing the contract).
* **Mistake** (of identity in some cases).
* **Undue Influence.**
* **Coercion/Duress.**
* **Example:** A sells a painting to B, falsely claiming it is an original Picasso. B, relying on this
statement, buys it. This is a misrepresentation. The contract is **voidable at B's option**. B can
choose to **affirm** the contract (keep the painting) or **rescind** it (cancel the contract and
get their money back).
**4. Unenforceable Contract**
A contract that is valid in substance but cannot be enforced in a court of law because of a
technical defect. The contract exists, but the court will not help the parties.
* **Causes:**
* **Lack of a required written form** (e.g., contracts for the sale of land falling foul of the
**Law of Property (Miscellaneous Provisions) Act 1989** in the UK or similar state laws in
Nigeria).
* **Expiration of the limitation period** (e.g., a claim in contract is "statute-barred" after 6
years in many jurisdictions).
* **Example:** An oral agreement for the sale of a piece of land. The agreement i
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**5.1 CLASSIFICATION BASED ON VALIDITY (CONTINUED)**
**5. Illegal Contract**
A subset of void contracts. An agreement whose object or consideration is forbidden by law.
* **Effects:** Not only is it void and unenforceable, but courts will generally refuse to help
parties to an illegal contract in any way (*in pari delicto potior est conditio defendentis* - in equal
fault, the defendant's position is stronger). Money or property transferred under it is often not
recoverable.
* **Types:**
* **Statutory Illegality:** Expressly prohibited by statute (e.g., price-fixing agreements).
* **Common Law Illegality:** Contrary to public policy (e.g., contracts to oust the jurisdiction
of the courts, contracts promoting corruption).
* **Example:** A loan agreement with an interest rate that exceeds the legally permissible
usury limit.
This classification is vital for a lawyer to determine the first question in any dispute: *Is there an
enforceable contract at all?*
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**5.2 CLASSIFICATION BASED ON PERFORMANCE**
This classification looks at the execution of the contractual obligations.
**1. Executed Contract**
A contract in which **both parties have fully performed** their respective obligations. The
contract has been completely carried out by all parties.
* **Example:** You walk into a shop, pick up a loaf of bread, pay the cashier, and leave. The
contract for the sale of the bread is executed the moment the payment and goods are
exchanged.
**2. Executory Contract**
A contract in which **one or both parties have yet to perform** their obligations. The contract is
still in the process of being fulfilled. Most business contracts are executory at the point of
formation.
* **Example:** On January 1st, A agrees to deliver 1000 books to B on February 1st, and B
agrees to pay upon delivery. On January 2nd, the contract is entirely executory. If A delivers on
February 1st but B hasn't paid yet, the contract is partially executed (A's duty is done) and
partially executory (B's duty remains).
This distinction is crucial for determining when a breach occurs and what remedies are available.
It is also important in insolvency law, where executory contracts can be adopted or rejected.
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**5.3 CLASSIFICATION BASED ON FORMATION**
This classification focuses on how the contract was brought into existence.
**1. Express Contract**
The terms of the agreement are **explicitly stated**, either **orally** or in **writing**.
* **Example:**
* *Written:* A signed employment agreement.
* *Oral:* A phone call where you order a pizza for delivery.
**2. Implied Contract**
The agreement is **inferred from the conduct, actions, or circumstances** of the parties. The
law implies a promise to pay.
* **Example:**
* You get on a bus. By your conduct, you imply a promise to pay the fare. By accepting you as
a passenger, the bus company implies a promise to transport you to your destination.
* You take your car to a mechanic for a service. Even if you don't discuss price, a contract is
implied that you will pay a reasonable fee for the work done.
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**PAGE 24**
**5.3 CLASSIFICATION BASED ON FORMATION (CONTINUED)**
**3. Quasi-Contract (Contract Implied in Law)**
***This is not a true contract.*** It is a legal **fiction** created by courts to prevent **unjust
enrichment**. The court imposes an *obligation* as if a contract existed to ensure that one party
is not unfairly benefited at the expense of another.
* **Requirements:** (1) A benefit is conferred upon the defendant; (2) the defendant
appreciates the benefit; and (3) it would be unjust for the defendant to retain the benefit without
paying for it.
* **Example:**
* A doctor finds an unconscious person on the street and provides emergency medical care.
The unconscious person cannot consent (no offer/acceptance), but the court will imply a quasi-
contract to oblige them to pay a reasonable fee for the necessary service.
* A homeowner pays overdue property taxes to prevent a tax sale on their neighbour's house.
The court may require the neighbour to reimburse the homeowner to prevent the neighbour's
unjust enrichment.
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**5.3 CLASSIFICATION BASED ON FORMATION (CONTINUED)**
**4. Standard Form Contracts**
Contracts not negotiated between the parties. One party (usually with greater bargaining power)
sets the terms, and the other party can only "adhere" to them on a "take-it-or-leave-it" basis.
* **Examples:** Insurance policies, software license agreements (EULAs), airline tickets, utility
contracts.
* **Legal Scrutiny:** These contracts are subject to special scrutiny by courts and statutes (like
the Unfair Contract Terms Act 1977) to prevent the inclusion of unfair and unreasonable terms.
**5. E-Contracts (Electronic Contracts)**
Contracts formed online through digital processes (clickwrap, browsewrap, etc.). They are
fundamentally express contracts but raise unique issues regarding acceptance, timing (the "postal
rule" vs. "instantaneous communication"), and electronic signatures, which are now validated by
statutes like the **Electronic Communications Act 2000** in the UK and similar **Cybercrime
Acts** in Nigeria.
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**PAGE 26**
**6.0 OTHER CLASSIFICATIONS**
For a complete picture, other common classifications include:
* **Based on Obligations:**
* **Bilateral Contract:** A promise for a promise. Both parties make a promise to the other.
This is the most common type (e.g., A promises to deliver a car on Friday, B promises to pay on
Friday).
* **Unilateral Contract:** A promise for an act. One party makes a promise in exchange for
the performance of an act by another. The contract is only formed upon complete performance
of the act (e.g., "I will pay £100 to anyone who returns my lost dog." The offer is accepted by the
act of finding and returning the dog, not by a promise to look for it).
* **Based on Form:**
* **Formal Contracts:** Contracts that require a special form or method of creation to be
enforceable. The most common is a **Contract by Deed** (a written document signed,
witnessed, and delivered). Used for certain transfers of land and gratuitous promises.
* **Simple Contracts:** All other contracts, whether oral or written. They require
consideration to be binding.
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**7.0 CONCLUSION**
The law of contract is a dynamic and multifaceted field. Its rules are drawn from a rich tapestry of
sources: the pragmatic precedents of common law, the reforming power of statute, the
conscience of equity, and the harmonizing force of international law. The weight and interaction
of these sources define a jurisdiction's legal character, as seen in the stark contrast between the
common law approach of Nigeria and the UK and the civil code system of Germany.
Furthermore, understanding the taxonomy of contracts—whether a contract is void or merely
voidable, executory or executed, express or implied—is the essential first step in any legal
analysis. It provides the map that guides lawyers and judges in determining the rights, duties, and
remedies available to the parties of an agreement, ensuring that the architecture of agreement
remains strong and functional in a complex world.
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**PAGE 28**
**BIBLIOGRAPHY**
* **Case Authorities:**
* *Carlill v. Carbolic Smoke Ball Co. [1893]*
* *Currie v. Misa (1875)*
* *Central London Property Trust Ltd v. High Trees House Ltd [1947]*
* *Balfour v. Balfour [1919]*
* **Statutory Materials (UK):**
* Sale of Goods Act 1979
* Unfair Contract Terms Act 1977
* Consumer Rights Act 2015
* **Statutory Materials (Nigeria):**
* Sale of Goods Act 1893 (Applicable)
* Contract Law of Lagos State, 2015
* Companies and Allied Matters Act (CAMA) 2020
* **International Instruments:**
* United Nations Convention on Contracts for the International Sale of Goods (CISG), 1980.
* UNIDROIT Principles of International Commercial Contracts, 2016.
* **Textbooks & Secondary Sources:**
* Treitel, G.H. *The Law of Contract.* (A leading UK authority).
* Chitty on Contracts. (A definitive practitioner work).
* Anson, W.R., et al. *Anson's Law of Contract.*
* Sagay, I.E. *Nigerian Law of Contract.* (A leading Nigerian authority).
* Zweigert, K. & Kötz, H. *An Introduction to Comparative Law.* (For the comparative
analysis).