Legalpedia Citation: (2025-01) Legalpedia 68032 (SC)

In the Supreme Court of Nigeria

Holden at Abuja

Fri Jan 7, 2005

Suit Number: SC.77/2002

CORAM

Idris Legbo Kutigi -Justice of the Supreme Court of Nigeria

Samson Odemwingie Uwaifo -Justice of the Supreme Court of Nigeria

Niki Tobi -Justice of the Supreme Court of Nigeria

Dahiru Musdapher Justice of the Supreme Court of Nigeria

Dennis Onyejife Edozie -Justice of the Supreme Court of Nigeria

PARTIES

OMEGA BANK NIGERIA PLC APPELANT(S)

APPELLANTS

O.B.C. LIMITED RESPONDENT(S)

RESPONDENTS

AREA(S) OF LAW

CONTRACT LAW, BANKING LAW, COMMERCIAL LAW, EVIDENCE, PRACTICE AND PROCEDURE, DOCUMENTARY EVIDENCE, APPELLATE JURISDICTION

SUMMARY OF FACTS

This case involves a dispute over a loan agreement between Omega Bank Nigeria Plc (appellant) and O.B.C. Limited (respondent). The respondent, a cocoa exporter, applied to the appellant in September 1991 for a Nigerian Export and Import Bank (NEXIM) revolving loan facility of N5 million for three years to purchase and export cocoa to its foreign customer, Minstrel Limited of the United Kingdom.

The NEXIM credit facility is designed to promote trade in the non-oil sector and offered at a lower interest rate than standard commercial bank rates. Such facilities require application through a commercial bank, which processes and forwards the application to NEXIM for approval. The commercial bank remains primarily responsible for repaying the loan to NEXIM and must ensure the applicant will not default.

The appellant processed and secured a N6 million NEXIM loan for the respondent’s use. There was disagreement over which document constituted the actual offer and acceptance of the loan agreement. The respondent claimed that an unsigned internal memorandum (Exhibit P6) from the appellant’s head office to its Akure branch, dated December 2, 1991, formed the basis of the agreement. The appellant maintained that its letter dated January 10, 1992 (Exhibit P7), which contained the terms and conditions for the loan, was the actual offer, which the respondent rejected.

The relationship between the parties deteriorated, resulting in correspondence exchanges and interventions by both NEXIM and the Central Bank of Nigeria. The respondent sued the appellant for breach of contract, claiming damages for lost profits, wrongful detention of securities, and other related claims.

The High Court of Ondo State ruled in favor of the respondent, finding that there was a concluded NEXIM loan agreement for three years in the sum of N6 million for each cocoa season, which the appellant had breached. The Court of Appeal affirmed this decision, dismissing the appellant’s appeal and partially allowing the respondent’s cross-appeal by reducing the counterclaim awarded to the appellant. The appellant then appealed to the Supreme Court.

HELD

1. The appeal was allowed.
2. The Supreme Court held that there was no valid and enforceable NEXIM loan agreement between the parties. The respondent had rejected the appellant’s offer in Exhibit P7, and Exhibit P6 was an unsigned internal memo that could not constitute a valid offer or acceptance.
3. The judgment and orders of the Court of Appeal in respect of the respondent’s claims were set aside, and the respondent’s claims were dismissed.

4.The Court of Appeal’s decision relating to the counterclaim was set aside, and the trial court’s decision awarding N640,593.53 to the appellant was restored.

5. The appellant was awarded costs in the trial court, Court of Appeal, and Supreme Court, assessed at N7,500.00, N7,500.00, and N10,000.00 respectively.

ISSUES

1. Whether the Court of Appeal correctly admitted and relied on Exhibit P6, which is an unsigned internal memo of the appellant, whose alleged makers/authors were not called as witnesses.?
2. Whether the Court of Appeal was correct in holding that there was a concluded NEXIM loan agreement between the appellant and the respondent which was breached by the appellant.?
3. Whether the Court of Appeal was right in holding that the issue of parol evidence not being used to contradict written document was a new issue requiring leave of the court.
4. Whether, on the state of the pleadings, the Court of Appeal correctly held that the appellant admitted the existence of a NEXIM loan agreement between the parties and that there was an agreement to delete objectionable parts of Exhibit P6.?
5. Assuming the appellant was rightly held liable for breach of the NEXIM loan agreement, whether the Court of Appeal correctly assessed/awarded special damages of N47 million in favor of the respondent as loss of anticipated profits for the 1991/1992, 1992/1993, and 1993/1994 cocoa seasons.?
6. Whether the Court of Appeal correctly held the appellant liable for detinue in respect of the title deeds of properties which the respondent had submitted to the appellant.?
7. Whether the Court of Appeal was correct in confirming the award of damages of N24 million against the appellant on account of the alleged detinue.?
8. Whether the Court of Appeal was correct in awarding £114,100.00 and US $38,250.00 in favor of the respondent on account of damages allegedly suffered by its overseas buyers, Messrs. Minstrel Limited, in procuring cocoa beans from alternative sources.?
9. Whether the Court of Appeal was correct in rejecting Exhibit P29 in evidence on the ground that it is a privileged document.?
10. Whether the Court of Appeal was correct in confirming interest of 7½% per annum made by the trial Judge on the judgment debt.?

RATIONES DECIDENDI

UNSIGNED DOCUMENT – EFFICACY OF AN UNSIGNED DOCUMENT:

“It is well settled that an unsigned document is worthless and void.” – Per Niki Tobi, J.S.C.

OFFER AND ACCEPTANCE – ESSENTIAL ELEMENTS FOR A VALID CONTRACT:

“It is trite law that there are three essential ingredients of valid contract viz:- an offer, an unqualified acceptance of that offer and a consideration.” – Per Dennis Onyejife Edozie, J.S.C.

IDENTIFYING THE OFFER IN A CONTRACT – WHETHER AN APPLICATION CAN CONSTITUTE AN OFFER:

“I entirely agree with the submission of Learned Senior Advocate for the appellant that Exhibit P5 cannot be an offer but at best an invitation to treat. I say so because the application is a mere declaration of willingness to enter into negotiation with a view to entering into a contract.” – Per Niki Tobi, J.S.C.

INTERNAL MEMORANDUM – WHETHER AN INTERNAL MEMO CAN CONSTITUTE A VALID OFFER:

“Since Exhibit 6 was not a final copy and not addressed to the respondent by the Akure branch of the appellant bank, it could not rely on it as an offer of the loan agreement.” – Per Dennis Onyejife Edozie, J.S.C.

REJECTION OF OFFER – EFFECT OF REJECTING AN OFFER ON CONTRACT FORMATION:

“When negotiations are in progress between the parties intending to enter into a contract, the whole of those negotiations must be considered as to determine, whether, if at all, the contract came into being. The parties here intended to have a written contract and by their rejection of Exhibit P7, the respondents must be taken to have refused to enter into the contract with the appellant. Accordingly, there was no contract entered between the parties.” – Per Dahiru Musdapher, J.S.C.

COURT’S APPROACH TO COMMERCIAL AGREEMENTS – DUTY OF COURTS IN INTERPRETING COMMERCIAL AGREEMENTS:

“Although courts may not make contract for the parties where none exists, the courts will seek to uphold bargains made commercially, wherever possible, recognising that they often record the most important agreements in crude and summary fashion and will seek to construe any documents fairly and broadly without being too astute or subtle in finding defects.” – Per Dahiru Musdapher, J.S.C.

COURT’S INTERPRETATION OF CONTRACTS – IMPORTANCE OF INTENTION IN CONTRACT FORMATION:

“After due consideration of all the circumstances and if satisfied that there was an ascertainable and determinate intention to contract, the courts will strive to give effect to that intention looking at the intent and not the mere form.” – Per Dahiru Musdapher, J.S.C.

DAMAGES FOR BREACH OF CONTRACT – REQUIREMENT FOR ESTABLISHING A CONTRACT BEFORE CLAIMING DAMAGES:

“Damages for breach of contract are a compensation to the plaintiff for the damage, loss or injury suffered through that breach. It is meant, as far as money can do it, for the plaintiff to be placed in the same position as if the contract has been performed. But there must be a contract and its breach before the issues of damages can arise.” – Per Dahiru Musdapher, J.S.C.

ADMISSION OF DOCUMENTARY EVIDENCE – DISTINCTION BETWEEN ADMISSIBILITY AND PROBATIVE VALUE:

“Basically, admissibility and weight to be attached to the document admitted are two different things.” – Per Niki Tobi, J.S.C.

HEARSAY EVIDENCE – WHEN A DOCUMENT CONSTITUTES HEARSAY:

“As a matter of law, I regard Exhibit P6 as hearsay as it relates or affects PW1 who tendered it. It could not have been hearsay if it was tendered by either of the two makers or writers.” – Per Niki Tobi, J.S.C.

PRIVILEGED DOCUMENTS – ADMISSIBILITY OF DOCUMENTS DESPITE PRIVILEGED STATUS:

“The law is settled that a court can only act upon evidence that is legally admissible. It cannot, and it has no discretion to admit and act upon evidence which is legally inadmissible, even with the consent of the parties.” – Per Dahiru Musdapher, J.S.C.

FAILURE TO OBJECT TO ADMISSIBILITY – EFFECT OF NOT OBJECTING TO ADMISSION OF EVIDENCE:

“Where no objection is raised when a document is offered in evidence, the document will be admitted and acted upon and the opposing party cannot later complain on its admissibility unless the document is inadmissible by law.” – Per Dahiru Musdapher, J.S.C.

RAISING NEW ISSUES ON APPEAL – REQUIREMENT FOR LEAVE WHEN RAISING FRESH ISSUES:

“In any event the inadmissibility of the Exhibit P29 was a fresh issue in the Court of Appeal for which no leave was sought and obtained. It was therefore incompetent.” – Per Dahiru Musdapher, J.S.C.

CASES CITED

STATUTES REFERRED TO

• Evidence Act
• Constitution of the Federal Republic of Nigeria, 1999

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