By Sun Natha-Alade & Partners (SNATHAP)
Introduction
Contracts are the backbone of commercial and personal transactions. Whether it involves the sale of goods, employment, construction projects, tenancy arrangements, partnerships, or service agreements, contracts provide certainty and legal protection to the parties involved.
The law recognizes the principle that agreements freely entered into should be honoured. This is reflected in the ancient Latin maxim Pacta Sunt Servanda, meaning "agreements must be kept." Once parties have entered into a valid contract, each party is expected to perform their obligations according to the agreed terms.
However, disputes often arise when one party fails, refuses, or neglects to fulfil their obligations. Such conduct may amount to a breach of contract and may entitle the innocent party to legal remedies.
What Is a Breach of Contract?
A breach of contract occurs when a party fails to perform an obligation imposed by the contract without lawful justification. A breach may arise where a party:
- Refuses to perform the contract altogether;
- Performs only part of the agreed obligations;
- Performs the contract improperly or negligently;
- Delays performance beyond the agreed timeframe; or
- Expressly indicates an intention not to perform the contract.
The Nigerian Court of Appeal has described breach of contract as conduct that is contrary to the terms of the contract, whether by non-performance, defective performance, or wrongful repudiation of the agreement.
It is important to note that not every disagreement or disappointment amounts to a breach. The courts will examine the actual terms of the contract, the obligations created, and the conduct of the parties before determining whether a breach has occurred.
Why Contracts Matter
Contracts do more than create obligations; they create enforceable rights. The courts generally respect the freedom of parties to determine the terms of their agreement and will not ordinarily rewrite a contract for them.
This position reflects another legal principle:
Consensus ad idem — "meeting of the minds."
Where parties have freely agreed to specific terms, the law expects those terms to be respected and performed.
For this reason, businesses and individuals are encouraged to reduce important agreements into writing, clearly define obligations, and seek legal review before execution.
What Should You Do When a Breach Occurs?
If you believe another party has breached a contract, the following steps are advisable:
1. Review the Contract
Carefully examine the agreement to understand the obligations of each party, any notice requirements, dispute resolution clauses, and remedies available under the contract.
2. Gather Evidence
Keep copies of all relevant documents, including:
- The contract itself;
- Receipts and invoices;
- Correspondence;
- Emails and text messages;
- Payment records; and
- Any evidence demonstrating the breach.
3. Communicate the Issue
In many cases, disputes can be resolved through negotiation, mediation, or a formal demand letter before litigation becomes necessary.
4. Assess Your Losses
Determine the financial and non-financial consequences arising from the breach. This will be relevant in calculating any damages that may be claimed.
5. Seek Legal Advice Promptly
Early legal intervention can help preserve evidence, protect your rights, and identify the most effective course of action.
Remedies Available for Breach of Contract
Where a breach is established, the law provides several remedies depending on the circumstances of the case.
Damages
Damages are the most common remedy. They are intended to place the innocent party, as much as money can, in the position they would have occupied had the contract been properly performed.
Nigerian courts have consistently awarded damages where breach has been established and proven. Cases such as Union Bank of Nigeria Plc v. Ajabule and Onyekwelu v. Elf Petroleum Nigeria Ltd illustrate the courts' willingness to compensate parties who suffer loss as a result of contractual breaches.
Specific Performance
In certain situations, monetary compensation may not be adequate. The court may order the defaulting party to perform the contract as agreed.
This equitable remedy, known as specific performance, is particularly common in transactions involving land and unique property where damages alone cannot adequately compensate the innocent party. Nigerian courts have recognized this remedy in numerous cases, including Kida v. Ogunmola.
Rescission
The court may cancel or set aside the contract, thereby releasing the parties from further obligations under it.
Injunctions
An injunction may be granted to prevent a party from taking actions that would worsen the breach or cause further damage to the innocent party.
Lessons for Businesses and Individuals
Many contractual disputes arise not because parties intended to breach their agreements, but because contracts were poorly drafted, ambiguous, or entered into without proper legal guidance.
To minimize risk:
- Ensure contracts are drafted professionally;
- Clearly define obligations and timelines;
- Maintain proper records of communications and payments;
- Include dispute resolution mechanisms; and
- Seek legal advice before signing significant agreements.
The cost of prevention is often far less than the cost of litigation.
Conclusion
A contract is more than a promise—it is a legally enforceable commitment. When one party fails to honour their obligations, the law provides mechanisms through which the injured party may seek redress.
Whether the appropriate remedy is damages, specific performance, rescission, or another equitable relief, the key is to act promptly and obtain sound legal guidance.
At Sun Natha-Alade & Partners (SNATHAP), we assist individuals, entrepreneurs, businesses, and organisations with contract drafting, contract review, dispute resolution, negotiations, and the enforcement of contractual rights. If you are facing a contractual dispute or wish to strengthen your agreements before problems arise, our team is available to provide professional legal support tailored to your circumstances.
Disclaimer
This article is provided for general informational and educational purposes only and does not constitute legal advice.
Readers are encouraged to seek independent legal advice before taking or refraining from any action based on the contents of this article.
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