Aug 2, 2016

What you should know before signing a contract (Part 2)

This is the 2nd post in a series of articles on contract. The first article defined contracts while this post will be examining the terms and contents of contracts

Terms of contracts can be described as the rights and obligations of parties under the contract. For instance, under a tenancy agreement, a term of the contract is for the tenant to pay rent, another term is for the landlord to deliver the premises in tenable condition. 

A term of contract may be express. i.e. written out expressly in the contract while others may be implied. i.e. it can be read into a contract though it is not expressly written out in the contract. For instance under a contract to supply frozen chicken, it is usually an express term to state the number of cartons of chicken the buyer requires, however it may be implied into the contract that the seller must deliver them in good condition, probably in a cooling van in other to keep them in good condition and not with the cartons dripping with murky defrosted water and chicken pieces falling out of the cartons. 

No matter what the contract is for, either a contract to merge companies, buy a property, a recording contract or a contract of employment. Understanding what terms are express and those that can be implied into a contract is essential for all parties. As everyone must know and understand their respective duties and obligations under the contract. Failure to do this may result in conflict later on, if a party is seeking to enforce a perceived right under the contract but the other party claims being not obligated for that right. This may help save you and/or your company from unwarranted liability. 

With regard to liability, it is also important to identify if the alleged obligation is an actual term of the contract or a mere representation. Also,  if it can be implied into the contract. 

The fact that parties must fully understand the terms of their contract is further expressed by the Nigerian Supreme Court in Best (Nigeria) Limited v. Blackwood Hodge (Nigeria) Limited & 2 Ors (2011) 1 -2 SC (Pt I) 55, where the court held that –
“A contract ought to be strictly construed in the light of the essential and material terms agreed by parties. The court should not allow a party to dribble the other party”.  
It is recommended that before you sign an agreement, you evaluate if the terms constitute a valid contract and all parties are clear of their respective duties and obligations under the contract. Also, do not hesitate to seek counsel from a legal practitioner if you need to.

Dunmade Onibokun Esq.
Principal Partner
Adedunmade Onibokun & Co.

Dunmade’s legal practice focuses on corporate and commercial law, regulatory compliance, due diligence, corporate advice and commercial transactions.  He is the Principal partner of Adedunmade Onibokun & Co. Dunmade is also a blogger and publishes the Legalnaija Blawg via