CAN A PARTY ENFORCE A CONTRACT HE FAILED TO SIGN IN NIGERIA? - Welcome to Lumenar's blog

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Wednesday, 27 May 2020

CAN A PARTY ENFORCE A CONTRACT HE FAILED TO SIGN IN NIGERIA?

What happens in the event that a party seeks to enforce a contract he did not sign and is consequently not a party to? 

Chinecherem Ubaka

It is natural and logical that only parties who have signed a contractual agreement should take steps to enforce such a contract. By signing the said agreement, they have proclaimed themselves to be the recognized parties to the contract.  

The execution of a contract by the parties to such contract renders the contract enforceable by the parties. The principles of law are very strict in this regard especially when a 3rd  party who was never a party seeks to enforce the contract. This is reason for one of the hallowed principles of the Law of Contract. i.e.  the principle of “privity of contract”, a party who fails to sign an agreement cannot rely on such an agreement neither can he enforce it because he will be regarded as a stranger to that agreement.In the case of Coast Oil Limited v. Tuboscope Vetco International & anor (2019) LPELR -46450 (CA), the court noted  that “It is an elementary principle of law that the doctrine of privity of contract is to the effect that a person who intends to enforce a contract must show, not only that he gave consideration but also that he is a party to that contract. In law, a contract exists only between parties to it.” Furthermore, in the case of Reichie v. NBCI (2016) LPELR (40051) 1 at 25, it was noted that a stranger cannot acquire rights or incur obligations arising from a contract to which he is not a party.

What happens in the event that a party seeks to enforce a contract unsigned by the other party?

Generally, an unsigned document has no judicial value. In fact, it has been described as a worthless piece of paper which cannot benefit anybody that seeks to rely on such documents as explained in the case of Lawrence v. Olugbemi & ors (2018) LPELR 45966 (CA). An unsigned document cannot generate or initiate an action. In law, an unsigned document has no weight attached evidentially.  Thus, it is incapable of being used by a court to resolve facts that are disputed in an action between the parties. The cases of Mbang v. Guardian Newspapers Limited & anor 2010 LPELR-CA/C/100/2008; Garuba v. Kwara Investment Co. (2005) 5 NWLR (Pt. 917) are explanatory.

On whether a party who did not sign a contract can go ahead to enforce such a contract, this largely depends on the circumstances of the case. 

If after due consideration of the surrounding circumstances, there is in existence, the basic elements of a contract, i.e. offer, acceptance and consideration, then an implied contract can be said to be in place. In Street v. Fantastic Holdings Ltd. 2011 NSWC(New South Wales Supreme Court) 1097; the respondents sought to enforce an agreement for a lease it had signed and returned to the landlord even though the landlord had not signed. The respondents had misplaced their copy of the said agreement. The tenant continued to occupy the premises after the expiration of the previous tenancy and paid rent in accordance with the new lease agreement. The landlord subsequently sought to rely on the fact that the agreement was only intended to come into force after a formal execution by both parties. The Court noted that

"...having completed the negotiation stage, the parties were of "one mind" to the terms of the lease with nothing remaining outstanding other than a formal execution... Therefore, signing the agreement would objectively be regarded as a mere formality".


The forgoing case reminds us that for every general rule; there must be an exception. 

Recently, the Supreme Court applied equitable principles in deciding the case of MTN v. Corporate Communication Investment Ltd (2019) 9 NWLR (pt. 1678) 427; (2019) LPELR-47042(SC). The parties have been trade partner's since 2005 and have executed various agreements. In 2011, the appellant issued fresh terms of agreements and it was specifically stated that the 2011 agreement supercedes previous agreements. One of the main issues in this case was whether the Court of Appeal was right in holding that the document which was admitted in evidence at trial as "Exhibit A" i.e. the 2011 agreement created an implied, binding and enforceable contract between the appellant and the respondent?

Counsel for the appellant contended that the 2011 agreement has a major clause contained therein to the extent that it would take effect from the date the last person signs and that since it did not sign the document after it was signed by the respondent, the documents was inadmissible and could not be relied upon as a valid contract between the parties. He further relied on Omega Bank (Nig.) Plc v. O.B.C Ltd.

Counsel to the respondent contended that the courts should strive to look at the intention of the parties by looking at intent and not the mere form.

The court made reference to Sec. 169 of the Evidence Act, 2011
" When one person has either by virtue of an existing court judgement, deed or agreement or by his declaration, act or omission caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representatives in interest shall be allowed in any proceeding between himself and such person or such person's representative in interest to deny the truth of that thing"

The could ruled in favour of the respondents and upheld "Exhibit A" as a valid and enforceable contract irrespective of the fact that the Appellant refused to sign.


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