CHAPTER TWO SUMMARY

LAW OF CONTRACT

CONTRACT: I.E .Sagay defines a contract as an agreement which the law will enforce or re cognize as
affecting the rights and duties of partners.

The basis of contract is an agreement, a consensus ad idem(I.e a meeting of the mind with a common
intention)

IMPORTANCE AND BINDING EFFECTS OF CONTRACT LAW

The law of contract is one of the most important legal devices ever developed in mankind's quest for
economic security and a stable society. The commercial and economic life of modern societies consist
very largely of contracts. In fact, trade and commerce world will be chaotic without contract law. Thus,
to ensure peace and security and the smooth running and efficient operation of commerce and the
economy the law recognizes the need for the satisfaction and well founded expectations created by
promise and agreement.

CLASSIFICATION OF CONTRACT

Contract are classified into the following:

1.formal and informal contract

2.Express and Implied Contract

3. Unilateral and bilateral contract

4. Executory and Executed contract

FORMAL AND INFORMAL CONTRACT

Formal contract is one in which the law gives special effects because of the form used in creating it,
while informal contract are so called because the law doesn't prescribe a particular set of formalities to
which they must adhere to in order to be enforceable.

EXPRESS AND IMPLIED CONTRACT

An Express contact is one in which the terms of the contract are stated in words, either written or
spoken while an implied contract the terms of the contract are wholly or partly inferred from conduct
or circumstances.

UNILATERAL AND E BILATERAL CONTRACT

In a unilateral contract an offeror makes the offer in a way as to invite acceptance by actual
performance rather than by promise.In bilateral contract the offeror is inviting an immediate acceptance
not consisting of performance.
EXECUTORY AND EXECUTED CONTRACT

Executory contract are contract whereby unperformed obligations remain on both sides, while executed
contract is one in which obligation on both sides had been performed or executed.

FORMATION OF CONTRACT

For a contract to be valid and enforceable in law the following requirements are required.

1.there must be an offer

2.there must be an acceptance of an offer.

3.there must be consideration supporting contract

4.intention to create legal relationship.

OFFER: An offer is a proposal made by one party called the offeror whose acceptance by the other party
called the "offeree".brings into being the contract.it can be terminated through: Revocation, lapse of
time, rejection, death of either of the parties.

ACCEPTANCE: Is the signification of an intention to enter into it and be bound by the contract on the
terms proposed by the offeror.

CONSIDERATION: this can be defined as an inducement given to enter into a contract that is sufficient to
render the promise enforceable in Court.There are some certain rules laid down which governs the
application of the doctrines of consideration which includes

a) Consideration must move from the promise

b) Consideration need not be adequate but must have a legal value

c) Consideration must not be past.

INTENTION TO CREATE LEGAL RELATIONSHIP

It is a general rule that an agreement will not constitute a binding contract unless it is intended by the
parties to it that it should give rise to legal relations.

THE CONTRACTUAL CAPACITY OF THE PARTIES

Another requirement for a valid contract is that there must be two or more parties having legal capacity
to contract. Legal capacity means the ability to incur legal liability or to acquire legal rights. The law
doesn't give capacity to every person since some persons have no legal capacity to contract while some
have full contractual capacity.Examples of individuals having limited capacity to contract
includes:infants,which constitute the largest ,insane or mentally incompetent, individuals under the
influence of alcohol or other drugs.
CHAPTER 5 SUMMARY

LAW OF AGENCY

AGENCY: this is a special contract in which one part called the agent is expressly or impliedly employed
by another Called the principal to bring the principal into contractual relationship with third parties.

THE PURPOSE OF AGENCY

The role of agents is vital to the conduct of commerce for a variety of reasons which are:

 An agent may sometimes be needed for his specialist knowledge or special connections which
are not possessed by the principal
 Where the identity of the principal need to be kept secret an agent may be employed who may
not reveal the identity of the principal.
 Language and cultural barriers
 Distance and transport communication problems
CREATION OF AGENCY
Agency can be created by:
 EXPRESS AGREEMENT: An agent may be expressly appointed either verbally or in writing
 ESTOPPEL (I.e by conduct or by implication): this kind of agency arises largely as a result of
conduct of the parties.
 RATIFICATION: This is the endorsement or adoption of an act which was done without
authority. Agency by ratification may occur where the agent has no authority to contract for
his principal, or has authority to do so but exceeds such authority; the contract entered into
by the agent in such circumstance may not be binding on the principal.
Certain conditions which must exist before the principal can be said in law go have
effectively ratified an agent's acts are:
1. The agent must have expressly have contracted as an agent
2. The principal must have been in existence and ascertainable at the time the agent
purported to act on his behalf.
3.The principal cannot ratify a void or illegal contract
4. Ratification must be done within a reasonable time
5.the principal must have knowledge of all material fact relating to the transaction.
AGENT'S AUTHORITY
An agent's authority can basically be deduced from the mode of creation of the agency.
Authority is the most central key element in agency and it takes various forms namely:
A. ACTUAL AUTHORITY: This is the authority conferred on an agent expressly (I.e written or
oral) or by implication or by conduct. Actual authority therefore consists of: Express
Authority, implied authority and usual authority.
B. APPARENT AUTHORITY
This is an authority arising from estoppel. By this it is meant that the agent derives it's
authority as a result of the conduct of the principal which conduct is said to prelude the
principal from denying the agents authority to act for the principal.
TYPES OF AGENTS
An agent may either be a general agent or a special agent. A general agent is one with
authority to perform a series of transactions, usually of a continuing nature, in the ordinary
course of his business. A special agent is an agent with authority to do a specific act.
1. AN AUCTIONEER
An auctioneer is an agent who has received goods from his principal for the purpose of
selling them by public auction.
2. FACTOR ( MERCANTILE AGENT)
A factor ( or mercantile agent) is an agent who in the customary course of his business as
agent has authority to sell or buy goods or to raise money on the security of goods on behalf
of others.
3. BROKERS
A broker is a person employed to negotiate contracts on behalf of another, for the sale or
purchase of property or goods for a commission called brokerage
4. DEL CREDERE AGENT
A del credere agent is one who for an extra renumeration, promises to indemnify his
principal against any loss which may arise as a result of the buyer's inability or refusal to pay
the price of the goods supplied to him.
5. CONFIRMING HOUSES
The confirming house adds confirmation or assurance to the bargain which has been
entered into by the buyer.
DUTIES OF AN AGENT
1.To follow instruction:the primary duty of an agent is to follow his principal's instruction
whether written or verbal.
2. Duty of performance:Determination of an agent's duty depends on if the agent is a
contractual or gratuitous agent.
3. Duty of care and skill: An agent must exercise the requisite skill and diligence in the
performance of his duties.
4. Duty of non delegation: Every agent is required to act in person not to delegate his duties
to another.
5. Duty to respect the principal's title
6. Duty not to make secret profits and not to take bribes.
7. Duty not to disclose confidential information: it is a breach of an agent's duty if he uses
information acquired while acting as an agent for his own personal advantage or for the
advantage of a third party.
DUTIES OF THE PRINCIPAL TO THE AGENT
1. Duty to pay remuneration or commission
2. Duty to indemnify the agent: the principal is obliged to indemnify the agent where he
incurs any expenses or liabilities.
 3. Duty to permit lien: A lien is the right to hold the property of another as security for the
performance of an obligation.
THE RELATIONSHIP OF PRINCIPAL AND AGENT WITH THIRD PARTIES
Under the principal, agency and third party relations the principal who is not a party to the
contract entered into by his agent with the third party is nevertheless allowed to sue or be
sued on such contracts.

A.WHERE THE AGENTS CONTRACTS FOR A DISCLOSED PRINCIPAL

A disclosed principal could be one whose name or whose name has been revealed to the third party or
one whose name or identity has not been revealed to the third party but the fact that the principal
exists has been revealed to the third party.

B. WHERE THE AGENT CONTRACT FOR AN UNDISCLOSED PRINCIPAL.

An undisclosed principal is one whose existence, the third party is unaware so that the third party does
not know that the person with whom he is dealing is anybody's agent.

TERMINATION OF AGENCY

The ways which a contract of agency can be terminated fall into two broad categories namely:

A. By act of the parties: This may occur in the following circumstances.

a. By consensual or performance of the agent's authority

b. By execution or performance of the agent's authority

c. By Revocation.

B.By operation of law

a.A contract of agency can be terminated by frustration

b.A contract of agency can be terminated by the death of either the principal or the agent

c. Insanity of the principal or agent

d. The bankruptcy of the principal or agent would terminate the relationship.

e. By subsequent illegality.

CHAPTER 6 SUMMARY

SALE OF GOODS LAW

A contract of sale of goods has been defined as a contract whereby the seller transfers the property or
agrees to transfer the property in the goods to the buyer for a money Consideration called the price.

THE PRICE IN A CONTRACT OF SALE OF GOODS

According to S.8(1) of the Act, the price in a contractual of sale may be fixed by the contract, or may be
left to be fixed in a manner thereby agreed, or may be determined by the course of dealings between
the parties .

S.8(2) provides that where the price is not determined as stated 9(1) above the buyer must pay a
reasonable price. Therefore, it is provided that the price in a contract of sale is a money Consideration.

FORMALITIES FOR CONTRACT OF SALE

No special formality is required for the making of a contract of sale of goods. sec.3 of the sale of goods
Act. 1893, provides that a contract of sale may be made in writing (either with or without seal) by word
of mouth, or partly in writing and partly by word of mouth.

STIPULATIONS IN THE CONTRACT

A contract for the sale of goods is Indeed any other contract consists of an exchange of promises
between the parties. These promises or terms of the terms of the contract are known as stipulations

Contractual stipulations may be either conditions and warranties.

A breach of conditions entitles the innocent party to treat the contract as discharged while a breach of
warranty is looked upon partially merely as a partial breach if contract for your which damages can be
claimed.

Conditions or warranty may be either expressly agreed by the parties or impliedl by an act.

EFFECTS OF SALE OF GOODS CONTRACT

1.Passing of property and risk: when the property in the goods passes to the buyer, the buyer beard the
risk thereof.

2. Transfer of property

The property in sale of goods is transferred to the buyer when the parties intend it to be transferred.S.8
provides rules 1-4 for ascertaining the intention of the parties, where the parties themselves have not
expressly declared their intention

UNASCERTAINED GOODS

Rule 5 which deals with unascertained goods state that "where there is a contract for the sale of
unascertained or future goods by description, and goods of that description and in a deliverable state
passes to the buyer.
TRANSFER OF TITLE(sale by someone who is not the owner of the goods). It occurs where persons who
have no propety in goods can sell the goods and have good title such cases are exceptions to the" nemo
dat quod non habet" or simply nemo dat" meaning no one can give what he doesn't have.

The following are exceptions to nemo dat rule

1. Sale by agent.(Authorized or apparent). 2. Sale by an apparent owner

3.sale by a mercantile agent. 4.sale by a seller in possession

5.sale under a voidable title. 6. Sale under a court order.

THE PERFORMANCE OF THE CONTRACT

The contract is performed by the seller delivering the goods to the buyer and the buyer paying for them.

REMEDIES OF THE UNPAID SELLER.

It is common for goods to be sold on credit but to ensure that the seller obtain payment for his goods
the Act has provided means by which the seller can recover the purchase price.

1. A lien on the goods or right to retain them for the price while he is in possession

2. The right of stopping the goods in transit in case of insolvency of the buyer

3. Rights of resale.

REMEDIES OF THE BUYER

Where the seller had failed to deliver the goods altogether the buyer has a right if action of damages for
non delivery.

The buyer can claim specific performance if the seller's promise to deliver only where in the opinion of
the court monetary damages would not be sufficient.

CHAPTER 8 SUMMARY

HIRE PURCHASE LAW

A contract of hire purchase is one under which an owner of goods let's them out to another person ( the
hirer on condition) that the hirer makes stipulated periodic or install mental payments called rent,
usually with the provision that the hirer becomes the owner when he completes installment.

ESSENTIAL FEATURES OF A HIRE PURCHASE CONTRACT

1. It is a contract of bailment under which the hirer obtains possession of the goods and is enabled to
use them before they're fully paid for, although ownership is with owner.
2. It must contain an option in favor of the hirer enabling him after payment of the periodical
installments to purchase the goods for a Normal consideration.

3. There will be a contract of sale making the hirer the owner of the goods already in his possession
when the hirer opts to purchase the goods.

THE PURPOSE OF THE HIRE PURCHASE ACT

The hire purchase act is graciously referred to by the Messiah of consumers. Apparently because the
hire purchase system of doing business before the passage of the Act was characterised with numerous
problems. The law is therefore clearly intended to attack and put to an end the many hardship and
injustices which includes;

1. The right of the owner to seize it take possession of the goods and sell them where the hirer defaults
as to the payment of the last installment.

2. The owner's right to repossess the goods at the slightest breach using thugs and force

3. The installmental payments and interest rates were very high and oppressive due to lack of control or
regulation.

4. Owners usually induce or entice hirers into hire purchase transactions without clearly explaining to
them the full financial implications and charges of the transaction

5. The hirer purchase agreement usually prepared by the owner favoured the owner.

6.The absence of the hirer to return the goods if he is ready to pay

7. The absence of any legislation or regulation made matters worse.

FORM OF CONTRACT

Ordinarily at common law there's no prescribed form for a contract of hire purchase as in the law of
contract generally.

Section 2 if the partnership Act made the following provisions that must be complied with in every
contract of hirer purchase

1. Before any contract of hire purchase us entered into for any goods the owner shakk state in writing to
the prospective hirer in the note or memorandum a price at which the goods may be purchased by the
hirer for cash.

2. A note memorandum had to be prepared and signed by the hirer on behalf of other parties to the
agreement.

3. A list of the goods to which the agreement relates sufficient to identify them.

4
4. A notice in the prescribed form as to the hirers legal rights under the Act.

EFFECTS OF NON COMPLIANCE

Where an owner fails to comply with section 2 of the Act he is disentitled to enforce the agreement. Sec.
3 of the Act voids any provision in a hire purchase agreement which:

1. Empowers owner or his agent to enter into hirers premises and remove goods

2. Excludes or restricts hirers rights to terminate the agreement

3. Makes anyone acting on behalf of owner or seller in connection with the hire purchase

.4. Imposes on the hirer the services of an issuer or repairer or any such person.

TERMS OF THE CONTRACT: CONDITIONS AND WARRANTIES

a. An implied condition that the goods are of merchantable quality

b. An implied condition on the part of the owner that he shall have a right to sell the goods at the time
when the property passes.

c. An implied condition of fitness for purpose where the hirer expressly or by implication make known
the particular purpose for which the goods are required.

d. An implied warranty that the hirer shall have and enjoy quiet possession of the goods.

TERMINATION OF THE AGREEMENT BY THE HIRER.

The most important of the rights of the hirer is that of termination of the hire purchase at any time., the
hirer may put to an end to this agreement by giving notice of termination in writing to any person who is
entitled to collect or receive the hire rent.

Like any contract hire purchase may be terminated by:

1. Performance. 2. Subsequent agreement. 3. Notice independent of the agreement.

3. Repudiation. 4. Release. 5. Waiver

6. Merger. 7. Effluxion of time.

RECOVERY OF GOODS

Important protection for the hirer is that the owner may not recover possession of the goods other
than by court action. Once the hirer has paid the relevant proportion of the hire purchase price. Section
9(6) of the Act Explains the phrase relevant proportion of hire purchase as meaning:

a). For motor vehicles 3/5 (three fifths) of the hire purchase price
b) . For other goods half of the hire purchase price.

OTHER RELEVANT TERMS INCLUDES:

a) minimum payment clause

b) payment for option to purchase

c) instalment

d) Custody and maintenance

e) Assignment or pledge

f) insurance. etc.