NATIONELE COMPUTER SERVICES LIMITED v. OYO STATE GOVERNMENT & ORS
(2019)LCN/13569(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 25th day of June, 2019
CA/IB/423/2013
JUSTICES
NONYEREM OKORONKWO Justice of The Court of Appeal of Nigeria
ABUBAKAR MAHMUD TALBA Justice of The Court of Appeal of Nigeria
FOLASADE AYODEJI OJO Justice of The Court of Appeal of Nigeria
Between
NATIONELE COMPUTER SERVICES LTD Appellant(s)
AND
1. OYO STATE GOVERNMENT
2. THE GOVERNOR OYO STATE
3. THE HON. COMM. FOR LAND, HOUSING & SURVEY Respondent(s)
RATIO
WHETHER OR NOT ANY ACCEPTANCE MADE CONDITIONAL OR SUBJECT TO CONTRACT CREATES A BINDING CONTRACT
The position of the parties in this appeal has, as in some previous cases, thrown up the fluid nature of the law of contract in relation to those concepts ? (i) conditional acceptance (ii) acceptance ?subject to contract and provisional acceptance”.
Any acceptance made conditional or subject to contract creates no binding contract because the incidence of liability is postponed until a formal contract is drawn up and signed. This is an ancient rule in the law of contract dating back to Winn v. Bull (1877) 7 Ch. D 29. So where parties have made their contract expressly dependent upon the execution of a formal agreement or subject to contract, the law has always denied the contract or negotiation any efficacy as it is a non-binding agreement. See Tiverton Estates Ltd. v. Wearwell Ltd (1975) Ch 1 All ER 209; Cohen v. Nessdate 1981 All ER 118 and U.B.A. v. Tejumola & Sons Ltd (1988) 2 NWLR pt. 79 at 662. PER OKORONKWO, J.C.A.
NONYEREM OKORONKWO, J.C.A.(Delivering the Leading Judgment): By judgment of the High Court of Oyo State delivered on March 19 2013, the case of the appellant who was claimant therein was dismissed. The trial Judge in dismissing the suit which was for breach of contract concluded the judgment thus:
?The Claimant having not fulfilled all the terms/conditions stated in Exhibit ?D? there is no valid contract in existence to entitle her to the general damages claimed in leg 2 (a) and (b) of her claim.
In sum total the claimant?s claims fail in its entirety.
Case dismissed?.
Background and Facts
The background of the case was that the appellant company being engaged in the rendering of Information Technology and Computer Services received an invitation from the Oyo State Government (i.e. respondent) to submit both technical and financial proposal for the establishment and management of (Land Related Information Service (LRIS) and Geographic Information System (GIS) for the Ministry of Lands, Housing and Surveys at Secretariat Ibadan which could form the basis for future negotiation and
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ultimately a contract. This invitation was vide a letter dated August 31, 2004. See letter at page 19 of the record, Exhibit A in the trial.
Pursuant to the invitation, the appellant compiled and forwarded a Technical and Financial Proposal for the Establishment and Maintenance of Land Related Information Systems (LRIS) and Geographic Information System (GIS) by appellant?s letter of 10th December 2004. The appellant?s report spanning 52 pages and containing technical and financial details of the Land Related Information Service (LRIS) and Geographic Information Service (GIS is at pages 21-73 of the record and received in evidence as Exhibit B.
Upon the submission of Exhibit B, the respondent by letter of June 9th 2005 invited the appellant to a meeting for the purpose of ?shedding more light? on the proposal which was scheduled for 9th June 2005. The letter at page 74 of the record was in evidence as Exhibit C.
?After Exhibit C, by letter dated 14th March the appellant was again invited by letter dated 14th March 2007 for further update on the project proposal. The letter is at page 75 of the record and received in evidence.<br< p=””
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On the 8th of May 2007, by letter of the same date, headed ?Award of Contract for the Establishment and Maintenance of Land Related/Geographic Information in Oyo State? the respondent awarded the contract referred to above to the appellant and in paragraph 6 thereof, congratulated the appellant on the award. The letter is at page 77 of the record and received in evidence as Exhibit D.
Reacting and responding to the award, the appellant by its letter of 12th May 2007 accepted ?the terms of the contract? as contained in the letter of award Exhibit D. See page 81 of the record and Exhibit E2.
Paragraph 2 of Exhibit 2 list of requirements that the appellant was to satisfy to become eligible to payment of 60% of the mobilization fee to ?facilitate a speedy execution of the contract?. The requirements are:
i. Performance Bond from Trans Nigeria Assurance Company Ltd.
ii. Recent Tax Clearance Certificate and
iii. Certificate of Registration of business Premises issued by the State Ministry of Commerce and Cooperatives.
?Of these requirements, Exhibit E is a duly authenticated performance Bond Policy
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No. FG (APB)/2003272/07/L between the appellant and Great Nigeria Insurance Plc as required by the respondent.
Concerning (iii) the Certificate of Registration of business names, appellant testified that they submitted receipt of payment for the Certificate to the Ministry of Lands. See the judgment of the trial Court at page 252.
Another crucial document in the transaction is Exhibit G being a letter by the respondent to the General Manager of Trans Nigeria Assurance wherein the respondent admitted that appellant could not be mobilized following the award of the contract as ?the present administration was not interested in the project hence it was not revalidated?.
The Appeal
Upon a consideration of the whole case, the trial court held that the conditions precedent to the contract were not fully satisfied and that as a result there was no contract and in consequence dismissed the claimant?s claim hence the appellant lodged this appeal upon the following grounds:
Ground One
The trial Court erred in law in holding that the appellant having not fulfilled all the terms/conditions stated in Exhibit D there is no
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valid contract in existence to entitle her to the general damages claimed.
Ground Two
The trial court erred in law and misdirected itself in holding that ?by the tone of paragraph 2 of Exhibit D the contract was to take off with the payment of 60% mobilization fees after the claimant must have fulfilled all the terms stated therein i.e. in Exhibit D. In additiona contract agreement is to be executed?..payment of 2% of the contract sum as solicitors? fee?..?
Ground Three
The trial Court erred in law when it failed to consider and make a finding on the unlawful detention of the appellant?s original Certificate of Incorporation and other vital documents for over a year.
Ground Four
The trial Court misdirected itself when it held that the appellant ?did not sign any agreement on the contract with the defendants as requested for in paragraph 4 of Exhibit D?.
From these grounds of appeal, appellant distilled issue one and issue two in the appellant?s brief as follows:
Issue One
Whether the learned trial Judge was right in holding that there was
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no valid contract in existence between the parties when it was established without contradiction that the appellant performed all the Conditions of the Contract and non-performance of clause 4 in Exhibit D, a Term of the contract, and basis for the judgment, was the respondent?s flaw rather than the appellant?s?
Issue Two
Whether in the face of the evidence before the Court the learned trial Judge was right to have omitted to pronounce on the detention of the appellant?s Original Certificate of Incorporation and other vital documents without lawful justification for over a year?
Contentions of Parties
The respondent formulated three issues vis:
1. Whether the learned trial Judge was right by holding that there is no enforceable contract between the appellant and the respondents.
2. Whether the learned trial judge was right by refusing to grant the appellant?s prayers for both Special and General Damages.
3. Whether the learned trial Judge erred in law by failing to pronounce on the retention of the appellant?s original Certificate of incorporation.
?The central issue in the briefs of the
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parties is whether there was a valid and subsisting contract and if there was a contract, whether any liability has ensued.
The appellant argues that there was a valid contract showing a well defined offer which was accepted citing Majekodunmi & Anor v. National Bank of Nig. Ltd. (1978) 3 SC 119 & F.G.N. v. Zebra Energy (2003) 3 WRN 1 at 8. Appellants in their brief at para 5.12, 14, argue that all conditions precedent to payment of 60% mobilization were fulfilled. The submission ran thus:
?The Appellant led evidence to show that it performed the conditions stipulated in clause 2 of Exhibit D which reads:
?Government has also approved that 60% of the contract sum be paid to your Company, as advance payment in order to facilitate a speedy execution of the contract, ON THE SUBMISSION OF THE FOLLOWING DOCUMENTS:
(I) Performance Bond from Trans Nigeria Assurance Co. Ltd;
(II) Recent Tax Clearance Certificate, and
(III) Certificate of Registration of Business Premises.
?The appellant led evidence to show that in the performance of Clause, it paid N90,000.00 as per Exhibit E ? the Advance payment bond;
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deposited its original Certificate of Incorporation, submitted its tax clearance certificate as per Exhibit E1. With respect to the third requirement, the appellant upon cross examination admitted non submission of a Certificate of Registration of Business Premises at page 166-167 of the Record, but did say on Re-examination that it submitted the receipt of N20,000.00 paid in lieu of the Certificate of Registration of Business Premises, an allowable exception for non-resident contractors and a fact not contradicted by the defence.
When the respondents? witness was cross examined with respect to the payment of N20,000.00 paid in lieu of the Certificate of Registration of Business Premises as shown on page 183 of the Record, he never denied the averment but rather stated:
?I don?t know what happens in the Ministry of Commerce, it is not my Ministry.?
?For the respondent it was argued that there was yet no enforceable contract as essential conditions of the contract were yet to be fulfilled. At paragraph 4.08 of the respondents? brief it was argued thus:
?Furthermore my lords, I submit with greatest respect
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that for there to be a binding contract between parties, there must be an evidence of consensus ad idem between them, and if there is a stipulated mode for acceptance of the offer as stated in this instance in Exhibit D, the offeree has a duty to comply with same.
See Afolabi v. Polymera Industries (1967) 1 All NLR 144 failure of which, there will be no binding contract between parties.
I most humbly urge my Lords to so hold.?
Resolutions
The position of the parties in this appeal has, as in some previous cases, thrown up the fluid nature of the law of contract in relation to those concepts ? (i) conditional acceptance (ii) acceptance ?subject to contract and provisional acceptance”.
Any acceptance made conditional or subject to contract creates no binding contract because the incidence of liability is postponed until a formal contract is drawn up and signed. This is an ancient rule in the law of contract dating back to Winn v. Bull (1877) 7 Ch. D 29. So where parties have made their contract expressly dependent upon the execution of a formal agreement or subject to contract, the law has always denied the contract or
9
negotiation any efficacy as it is a non-binding agreement. See Tiverton Estates Ltd. v. Wearwell Ltd (1975) Ch 1 All ER 209; Cohen v. Nessdate 1981 All ER 118 and U.B.A. v. Tejumola & Sons Ltd (1988) 2 NWLR pt. 79 at 662.
However, in this case under appeal, there does not appear to be a conditional contract nor was the magic phrase subject to contract used in Exhibit D, the letter of award dated 8 May 2007. Exhibit D left nothing undecided about the job to be done. Exhibit D opens with ?with reference to your bid, I am pleased to inform you that Government has approved to your company contract for——?.
?The bid referred to is Exhibit B, Technical and financial proposal for the establishment of Land Information System (LRIS) and Geographic Information System (GIS). The requirements specifies in paragraph 2 of Exhibit D are not part of the contract but are merely documentations that relate to the suitability of the parties for the works and form part of the documents of the transaction. They do not form part of the contract already agreed on. The same is true of paragraph 4 of Exhibit D. These are also administrative requirement and
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came after paragraph 3 thereof wherein the respondent congratulated the appellant on the award. In my view, Exhibit D evinces a clear intention by the parties to be bound from the beginning. See Branca v. Cobarro (1947) LB 857. 1947 2 All ER 101.
Exhibit D was without equivocation accepted by the respondent in Exhibit E2 thus grounding a definite contract.
There is a document Exhibit G that seems to explain why the contract was not realized or mobilized after it was awarded. Exhibit G shows that political consideration came to play and a succeeding political administration ?lost interest in the project”. To buttress the point that the non-performance of the contract was political, I reproduce Exhibit G which reads:
?DPRS.86/Vol.III/T/3
The General Manager
Trans Nigeria Assurance
Jericho
Ibadan.
Re-Award of Contract for the Establishment of Land Related/Geographic Information
I have the directive to inform you that Messrs Nationele Computer Consultancy Services (Nig) Ltd., who was given the letter of award to do the above contract on 8th May, 2007, was unable to be mobilized before the inception of
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the new Administration. However, the present Administration was not interested in this project, hence it was not re-validated.
2. You are therefore requested to release all the Nationele Computer?s documents which was used as co-lateral for the Performance Bond, please.
3. Thank you.
M.O. Adeniji,
For Honourable Commissioner?.
Exhibit G by the respondent shows the reason for the non-mobilization of the appellant for performance of the works specified in the bid Exhibit B and in my view occasioned a breach of the contract.
It was therefore erroneous for the trial Judge to have regarded the contract of the parties as conditional contract and reasoning therefrom, to deny the appellant any remedy as a result of the breach or repudiation of the contract.
If the 60% mobilization was paid to mobilise the appellant, appellant would have carried out the jobs described in Exhibit B and would have earned and recouped his profits under the contract. But alas, the contract was aborted for political consideration.
As the trial Judge found and declared upon the evidence before her, she said:
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?I am aware that there were five commissioners and four executives between 2004 and 2007 and that with each change the Claimant was invited to make fresh presentation.?
With each new administration, the appellant had to embark on new round of presentation and perhaps inducement and expenses on appellant?s side. This continued until ?a Pharaoh who did not know Joseph came? and threw the contract overboard and hapless civil servant had to find a way to cover a shameful breach of contract.
It is my view that the learned trial Judge misdirected himself on the elements that go to the formation of a contract as opposed to ancillary matters of administration and so came to a wrong conclusion.
As it is, the appeal has merit and succeeds; the judgment of the trial Court is hereby set aside.
On damages, the letter of invitation Exhibit A dated 31st August 2004 shows the enormity of things the appellant was required to put in place in preparation for the project of establishing a Land Related Geographic System and Geographic Information System which included all manner of technical detail and the assemblage of a competent engineering and other
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technical staff such as was assembled and detailed in Exhibit B with therein varied experience and dispositions. As has been indicated, appellant had responsibility for training of staff which was undertaken severally until an administration that had no interest in the Project came in and discarded it. Those professionals assembled and those technical presentations must have been procured of huge cost and this must have been in the contemplation of the parties.
There was no breakdown of loss of earning by the appellant but expected earning must have been incorporated in the entire contract sum of N15,170,300. The fact of this contract passing through successive political administration of which appellant made detailed presentations also show the enormity of cost or expenses borne by the appellant. It seems to me that the contract sum of N15,170,300 would hardly be enough to cover the expenses including damages incurred by the appellant. See Ijebu Ode Local Govt. v Adedeji Balogun & 10 Ors (1991) 1 NWLR (pt. 166) 136 at 158-9; Ogundeji v. IBWA (1993) 2 NWLR (pt. 278) 690 and Hadley v. Baxendale (1843-60) All ER 461 at 465 (1854) 9 EX 341.
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Having set aside the judgment, I substitute judgment in favour of the appellant and award the cost of N15,170,300 being the contract sum as damages in favour of the plaintiff/appellant.
There shall be cost of N100,000.00 in favour of appellant.
ABUBAKAR MAHMUD TALBA, J.C.A.: I have read before now the Judgment of my learned brother Nonyerem Okoronkwo JCA, just delivered in this appeal. I entirely agree with his treatment of the issues which arose for consideration in this appeal. I adopt the reasoning and conclusions reached in the said Judgment as mine. I find that there is merit in the appeal and I accordingly allow it. I abide by the consequential orders made therein including the order as to damages, and cost.
FOLASADE AYODEJI OJO, J.C.A.: I have had the opportunity to read before now the lead judgment just delivered by my learned brother NONYEREM OKORONKWO, JCA. I agree with the reasoning and conclusion reached therein.
?His Lordship gave the full background facts leading to the action at the lower Court. It is clear from the facts that there was a legally binding and enforceable contract between
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the Appellant and the 1st Respondent. All the essential ingredients of a valid contract were in existence. Exhibit D, the letter of Award dated 8th May, 2007 was the offer. The Appellant by a letter dated 12th May, 2007 unequivocally accepted the offer. From the pleadings and evidence adduced on record, there is no doubt that there was mutuality of purpose between the parties and intent to create a legal relationship. There was therefore a legally binding and enforceable contract.
The law is settled that a breach of contract occurs where one of the parties to a contract refuse and/or neglect to perform an obligation under the contract without lawful excuse. In the instant case, the Respondents wrote Exhibit G wherein they gave reasons for not proceeding with the contract as agreed. The reason given is that a new administration was not interested in the contract. This to my mind cannot be a valid reason to terminate the contract and I so hold. There is no evidence that the Appellant breached any of the terms of the contract. From the facts on record, it is the Respondent that breached the contract.
?The consequence of a breach of contract is
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award of damages. Damages for breach of contract are compensation to the Plaintiff for the damage, loss or injury suffered through that damage. The Appellant is therefore entitled to damages for the breach of contract by the Respondents. He is entitled to be placed in the same position as if the contract had been performed.
?It is for the above and the fuller reasons given in the lead judgment that I also find merit in this appeal and allow it. I abide by the orders in the lead judgment including the order as to costs.
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Appearances:
Yomi Ogunlola, Esq.For Appellant(s)
Seun Ademola-Salami, Esq. (Asst. Director Public Prosecution, Min. of Justice Oyo State)For Respondent(s)
Appearances
Yomi Ogunlola, Esq.For Appellant
AND
Seun Ademola-Salami, Esq. (Asst. Director Public Prosecution, Min. of Justice Oyo State)For Respondent