BUL 507(Law for Engineers)

Barr. Adefemi Yekinni

Lecture: C19-1
Law of Contract
 Course outline(Law of contract)
1 Formation of Contract
• Offer
• Acceptance
• Consideration
• Intention to create legal relations
2 Capacity to Contract
• Contract made by Infant
• Contract made by Illiterate Persons
• The capacity of Corporations
• Contract made by Mentally disturbed persons and Drunken persons
3 Terms of Contracts
• Terms: conditions and Warranties
• Conditions Warranties & other items
• Exclusion (Exception) Claims
• Fundamental breach of items
 Objectives of the law of contract course.
When you have studied this course, you should be able to:
• Understand, identify and explain the meaning of a contract.
• Outline the underlying presumptions of contract as distinct from social
agreements.
• Outline the elements, which constitute a valid contract: offer, acceptance,
consideration, capacity, and intention to create legal relations.
• Explain the distinction between contracts which are void, voidable and
unenforceable.
• Describe and explain the restrictive covenants of a contract.
• Examine the terms of a contract – implied and express – and their relevance to
conditions, warranties and innominate terms.
• Explain the significance of exclusion or exemption clauses in a contract.
 Formation of a contract
• As I stated in our first class, for there to be a valid contract, the
following elements must be present;
• Offer
• Acceptance
• Consideration
• Capacity to contract
• Intention to create legal relations.
In this first presentation we shall be discussing the number one
element of a valid contract; which is “Offer.”
 1. Offer
• An offer is a definite statement or proposition by one party called the
offeror to another party called the offeree, clearly and precisely indicating
the terms under which the offeror is willing to enter into a contract with
the offeree.
• Prof. Itse Sagay, defined an offer as a definite undertaking or promise
made by one party with the intention that it shall become binding on the
party making it as soon as it is accepted by the party to whom it is
addressed:
• An Offer can be made orally, in writing or by conduct. It may take any form
between an elaborate document with numerous clauses and sub-clauses
and an ordinary everyday act or conduct such as our daily routine
activities.
 Characteristics of a valid offer
• An offer must be a precise, definite, and clear statement or undertaking.
i.e. it must be an unambiguous statement.
• An offer must be communicated from the offeror(The person making the
offer) to the offeree (The person to whom the offer is directed.)
• An offeror must have the intention to be bound by the contract once it is
accepted.
• An offer can be made orally, in writing, and by conduct.
In the case of Union Bank of Nigeria Limited v. Sax Nigeria Limited (1994) 8
NWLR (p 346) 150 S.C, the court held that, “an offer capable of being
converted into an agreement by acceptance must consist of a definite
promise to bound provided that certain specified terms are accepted”.
 More details of an offer
• An offer can be made to one particular person. For example where John
offers to sell his 2011 BMW X series to Wale for N2million. Here the offer is
definite and precise and directed from John to Wale. If Wale accepts the
offer there’s a binding contract between them.

• Also, an offer can be made to the whole world. In this case whoever fulfils
the conditions of the offer, has accepted the offer, and there’s a binding
contract. For example, where the police declares a person wanted and
offers a particular amount to whosoever provides the information that
leads to the arrest of that wanted person, here the police makes an offer to
the whole world, and whoever provides the information that leads to the
arrest of that wanted person, has accepted the offer, and will receive the
amount promised.
 Further details of an offer
• In the landmark case of Carlil v. Carbolic Smoke Ball Co. (CC) (1892) 2
qb 484; affd (1893) 1 QB 256, the proprietors of a medical company
offered to pay €100 to any person who contacted influenza after
using one of their smoke balls in the specified manner for certain
period. The plaintiff contacted influenza after fulfilling these
conditions. The court held that she was entitled to recover the €100
deposited in the Bank.
• Also, the Law may imply an offer from the conduct of the parties. This
implication is a question of fact, depending on the circumstances of
the particular case.
 Difference between an offer and an
“invitation to treat”
• An “invitation to treat” is not an offer. It can be defined as a preliminary move in
negotiations that may lead to a contract. Basically, an invitation to treat is an
invitation to negotiate. An invitation to treat is not capable of being accepted.
Only a valid offer can be accepted. Examples of invitation to treat includes;
• Auctions
• Display of goods in shelves, supermarkets, stores, and open markets
• Invitation to Tender.
• Advertisement in catalogues
• Negotiation for the sale of land
• In essence, in an invitation to treat, the seller only invites the buyers or customers
to come and negotiate for a particular good or service. At the point the buyer
tenders the money for the good or service, that is when the buyer makes a valid
offer which the seller can decide to accept or reject.
 Termination of an offer
• An offer becomes effective when it is accepted. If an offer is not
accepted, it has no legal effect. However, an offer may be terminated
by the following means;
• Revocation
• Death
• Lapse of time
• rejection
 Termination of offer
1. Revocation
• An offer can be revoked or withdrawn at anytime by the offeror before an
acceptance is made by the offeree. Note, once the offeree accepts an offer
there’s a contract and the offer can not be revoked.
• For an offer to be validly revoked, the revocation must be communicated to the
offeree. I.e. the offeree must be aware that the offer has been revoked.
• Even when the offeror promises to leave the offer open for a particular time,
he/she can revoke the offer before the expiration of the time given, as long as
he/she communicates the revocation to the offeree.
• In Dickinson v. Dodd (1876) 2 Ch. D. Defendant offered a house for sale, and
said that the offer was to remain until June 12. On June 11 plaintiff heard that
the offer had been revoked, and the house had been sold to another person.
Plaintiff accepted the offer by June 12. It was held that the revocation was
effective and that no contract existed.
Termination of offer by Revocation Cont’d
• Where an offer is revoked by post, the revocation only takes effect when
the offeree actually receives the post, and not when the letter of
revocation is posted. In Byrne v. Tienhoven (1880) 5C.P.D. 344. It was held
that the offeror’s letter of revocation posted three clear days before the
offeree posted his acceptance letter, was ineffective because the
revocation letter was not actually received by the offeree.
• A counter offer is also a form of revocation of an offer. A counter offer can
simply be explained as a situation where an offeree responds to an offer
made by the offeror by making a new offer. So for example, if Wale offers
to sell his 2012 Range rover Evoque to Amina for N12million, and Amina
responds to Wale saying that she can only pay N11million. Amina’s
response is a counter offer, which revokes the first offer made by wale.
Amina is now the offeror, while Wale becomes the offeree. Wale may
decide to accept or reject the new offer made by Amina.
 Termination of offer
2. Death
• The death of the offeror or offeree before an acceptance is made
terminates the offer. Therefore, if the offeror makes an offer, and dies
before the offeree accepts the offer, the offer is terminated. Also, if
the offeror makes an offer, and the offeree dies before accepting the
offer, the offer is terminated by death. Please note once there is an
acceptance to the offer before either of the party dies, then there is a
valid contract, and the estate of the deceased will respect and carry
out the contract.
• In Duff’s Executive’s case (1886)32 Ch. D. 301, where the company
offered shares to D, D died before accepting. However, D’s executor
claimed acceptance. It was held that the offer was terminated upon
Duff’s death.
 Termination of offer
3. Lapse of time
• An offer must be accepted within the time frame given. So, if an
offeror makes an offer and says that the offer is open for only five
days, the offeree must accept the offer within the five days given. In
Ramsgate Victoria Hotel v. Monteffiore (1866) L.R. 1 Exch. 109, the
court held that an offer stated for a fixed time must be accepted
within that time.
• An offer made without a fixed time will lapse after a reasonable time.
Offer of perishable goods lapses within short time. In the above case,
the shares of a company were offered in June but was accepted in
November. It was held that the offer had lapsed because the interval
was unreasonable.
 Termination of offer
4. Rejection.
• An offer can also be terminated by an offeree rejecting the offer, or
modifying the terms of the offer(Counter offer.) Where an offeree
rejects an offer, it becomes terminated.
• Rejection can also come in an indirect form where an acceptance
involves a variation or modification of the original offer.
• A rejection however, does not terminate an offer until it is
communicated to the offeror. For instance, if Ade makes an offer to
Dada and Dada by post rejects the offer, if Dada changes his mind, he
can still telephone or telegram acceptance to Ade before the initial
rejection, actually reaches Ade.
 Self-Assessment
• Read the following hypothetical scenerios and tell me if there’s a valid offer and contract.
Email your answers to victorperial@gmail.com.
• Remember what I told you guys about plagiarism. Analyze your answers individually and
explain to me using all what we have discussed here why there is or there is not a valid
offer/contract.
• 1 Musa, an antiques dealer in Wuse, Abuja, displays a Portrait of Queen Amina in his
window, marked N20,000. Jennifer walks in and places N20,000 on the counter and asks
for the portrait. Musa says, “sorry, Display purposes only, Not for sale”. Advise Jennifer if
there’s a valid offer by musa which she has accepted.
• 2. Segun is a pet lover and owns a German shepherd dog. He loves his dog dearly.
Unfortunately one day Segun’s dog wandered away and got lost. Segun was devastated,
he then published a picture of his dog with a caption that “whosoever finds the dog will
receive N50,000.” He posted the picture and the caption everywhere around his house.
One day Bola saw the poster and found the dog sleeping in the nearby bakery. Bola
returned the dog to Segun and requested for the N50, 000. Segun refused to give
Bolanle the money claiming that his post and caption was not a valid offer. Advise Bola.
 Self assessment
• 3. Jideofor is a car dealer, and imports cars from the US. One day he calls his friend
Mohammed and offers to sell him his latest 2020 Toyota Prado Jeep for N20 million.
Jideofor promised Muhammed that he will leave the offer open for five days and not sell
the car. Mohammed who loves Toyota cars a lot quickly sold his current car and tried to
raise the N20million. However, on the third day, Jideofor calls Mohamed to inform him
that he was revoking the offer because he has seen a buyer with a higher price.
Mohammed was very devasted because now he has no car. Advise Mohammed.

• 4 Salam and peter are friends. Salam called and informed peter that he is offering to sell
him his old house in ikeja for N50million. However the next day Salam found a buyer who
was ready to pay N70million for the house. He then posted a letter to his friend peter
who was in Abuja telling him that he was revoking the offer. However, on the third day,
peter who had not received the posted letter of revocation, called Salam to inform him
that he has accepted the offer and transferred N50million to Salam’s GTB account. Salam
then informed Peter that he had already posted a letter of revocation to him, and that he
had sold the house to another buyer. Advise Peter.