PRINCE NGENE VS CHIKE IGBO & ANOR.
June 26, 2025OBA AMOS BABATUNDE & ANOR V SIMON OLATUNJI & ANOR
June 26, 2025Legalpedia Citation: (2000) Legalpedia (SC) 57931
In the Supreme Court of Nigeria
Fri Feb 11, 2000
Suit Number: SC.174/98
CORAM
SALIHU MODIBBO ALFA BELGORE JUSTICE, SUPREME COURT
IDRIS LEGBO KUTIGI JUSTICE, SUPREME COURT
ALOYSIUS IYORGYER KATSINA–ALU JUSTICE, SUPREME COURT
AKINTOLA OLUFEMI EJIWUNMI JUSTICE, SUPREME COURT
EMMANUEL OLAYINKA AYOOLA JUSTICE, SUPREME COURT.
PARTIES
AFRICAN INSURANCE DEVELOPMENT CORPORATION APPELLANTS
RESPONDENTS
AREA(S) OF LAW
SUMMARY OF FACTS
The defendant entered into a performance bond with the plaintiff under which it stood as surety to a 3rd party’s (contractor) performance of a building contract. When the respondent instituted action to enforce the bond, the appellant applied that the matter be referred to arbitration provided for in the building contract between the plaintiff and the contractor.
HELD
The court dismissed the appeal and held that the performance bond was a guarantee and that the appellant was not a party to the building contract and such could not be granted stay of proceedings.
ISSUES
Whether the defendant, who is neither a party to the arbitration agreement nor a derivative party, is entitled to a stay of proceedings in an action brought on the guarantee.
RATIONES DECIDENDI
THE DOCTRINE OF PRIVITY OF CONTRACT
“Privity of contract is still very much a part of our law of contractual liability. A third party who was not privy to a contract cannot ordinarily be held responsible for the damages incurred by default of one of the parties.”- Belgore J.S.C
WHEN THE RIGHT OF ACTION ARISES AGAINST A GUARANTOR
” The right of action against a guarantor arises on a default by the principal debtor and not on a finding of liability against such debtor .”- Ayoola J.S.C.
CASES CITED
Trafalgar House Construction (Regions) Ltd v. General Surety and Guarantee Co Ltd (1995)3 All ER 737 Ikpeazu v. African Continental Bank Ltd (1965) N.M.L.R 374; Dunlop Pneumatic & Company Ltd v. Selfridge & Co. Ltd (1914 – 15) ALL E.R Rep. 333.
STATUTES REFERRED TO
The Arbitration And Conciliation Decree (1988)?
