Implied Contract: Meaning, Form

THOMAS ISHAYA DASPAN

V.

MANGU LOCAL GOVERNMENT COUNCIL

COURT OF APPEAL

(JOS DIVISION)

CAIJ/ /42/2011

CLARA BATA OGUNBIYI, J.CA (Presided) JUMMAI HANNATU SANKEY, J.C.A. PHILOMENA MBUA EKPE, J.C.A. (Read the Leading Judgment)

FRIDAY, 29TH JUNE, 2012 CONTRACT – Contract between parties – Function of court with respect thereto – Need to give effect thereto – Duty on court not to make contract for parties. CONTRACT – Elements of contract – Offer – Acceptance of – Modes of. CONTRACT – Formation of contract – Whether can be done through correspondence – Principles governing. CONTRACT – Implied contract – Meaning of – How it arises.

COURT

– Contract between parties – Function of court with respect thereto – Need to give effect thereto – Duty on court not to make contract for parties. WORDS AND PHRASES – Implied contract – Meaning of – How it arises.

Issues:

W

hether the judgment
of the trial court was against the weight of evidence.

Whether the appellant could cancel the contract agreement for the design of the proposed Guest House in Abuja as allowed by the agreement and thereafter charge the full professional fees as he did following default by the respondent on full payment firmly conditionally demanded by him.

Whether there was a contract between the appellant and the respondent on the design of the Palace of Mishkaham Mwaghavul.

Facts:

The appellant instituted this action against the respondent before the High Court of Plateau State, claiming N28,656,775.l2k and N14,428,817.72k respectively for breach of contract and interest on the said sums.

The background facts of the case were that contracts to prepare architectural, structural, electrical and mechanical designs and bill of quantities were claimed to have been awarded to the appellant’s firm orally at various times for a proposed Guest House in Abuja and the Palace of Mishkaham Mwaghavul in Mangu by the respondent, for which he claimed a total sum of N28 ,656,775 .l2k (Twenty Eight million, Six hundred and Fifty Six thousand, Seven hundred and Seventy Five naira Twelve kobo) only with interest being claimed on the various sums and cost of the action.

It was common ground that the officials of the respondent at various times in the year 2008 orally engaged the appellant’s consultancy firm to render consultancy services to it by producing pre-contract designs for its proposed Guest House at Abuja and Palace at Mangu. In both cases, as could be gleaned from the facts placed before the trial court, the designs comprised of fi ve components, namely architectural, electrical, mechanical, structural designs and a bill of quantities.

With regard to the Guest House at Abuja, the appellant was asked orally by the respondent’s Chairman sometime in August 2008, at a meeting which took place in Jos between the appellant and officials of the respondent, to produce the designs for the Guest House. The appellant subsequently obtained the site plan from officials of the respondent, produced an architectural design of the Guest House and also submitted a bill of N4,013 ,896.23.

The gravamen of the dispute between the parties was that the said bill which the appellant insisted was only for the architectural design was regarded by the respondent’s officials to represent a bill for the entire structural, mechanical and electrical designs as well as the bill of quantities. A similar dispute arose when the appellant upon being commissioned for the project, received an oral briefing from the Mishkaham Mwaghavul himself and then produced and submitted the designs to the respondent inclusive of the bill of quantities as required. However, the respondent contended that there was no formal agreement between the parties.

The appellant claimed that the respondent engaged him sometime in September, 2008 to produce the designs and bill of quantities for the palace and that having submitted same to the respondent, he had performed his own side of the bargain and therefore entitled to his professional fees.

The respondent on the other hand contended that the appellant merely submitted a sketch plan which it forwarded to the Ministry of Local Government and Chieftaincy Affairs, and that no formal agreement was entered into between the parties.

At the conclusion of hearing, the trial court in its judgment of 16

th December 2010 dismissed the appellant’s claim.

Dissatisfied, with the decision, the appellant appealed to the Court of Appeal.

Held (Unanimously allowing the appeal)

1. On meaning of implied contract and how it arises – An implied contract is one that is inferred from the act and conduct of the parties and which arises where a party, without being requested to do so, renders services under circumstances indicating that he expects to be paid; and the other party, knowing such circumstances, avails himself of the benefit of those services. In the instant case, the respondent had availed himself of the services of the architectural/mechanical drawings and made no move to stop the appellant from producing them. In the circumstance, there was indeed a contract implied in fact between the appellant and the respondent on the design of the palace in issue.

(Pp.

232, para. E-F; 233, para. D)

On modes of acceptance of an offer – An acceptance of an offer can be demonstrated by the conduct of the parties as well as by words and documents. In the instant case, the trial court failed to construe, deduce or infer a consultancy agreement from the correspondence exchanged between the parties and their conduct. (P. 232, para. G-H)

On whether a contract can be formed from series of correspondence between parties – 7. It is possible for a contract to emerge from series of correspondence between two persons. But it must be apparent when the correspondences exchanged are read together that parties have come to an agreement. In the instant case, the correspondences exchanged between the appellant and the respondent culminated into the contract between them and the subject matter or cause of action in the suit. [Nneji v. Zakhem Construction (Nig.) Ltd (2006) 12 NWLR (Pt. 994) 297 referred to.] (Pp. 232-233, paras. H-B)

On function of court in relation to contract entered into by parties –

It is not the function of the court to make contracts between the parties, but it is the court’s duty to construe the surrounding circumstances, including written and oral statements, so as to effectuate the intention of the parties. [Omega Bank v. OB.C. Ltd.