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CLL307 - COMMERCIAL LAW EXAM PAST QUESTIONS SUMMARY

Q. Define the term” source of law”

The term “source of law” is used in various senses. In the first place, it
means the ultimate origin of the whole body of a legal system, the origin
from which the system derives its validity: from the electorate or voters, a
special body the general will or the will of a dictator. Secondly, the term
source of law is used to name the historical origin of a rule of law.

Q. Identify various sources of law

Primary Source

The primary source of law is the Nigerian Legislation and Statutes. This
consists of other statutes and subsidiary legislations. Statutes are laws
made by the legislator or a body so duly constituted and authorized to enact
laws; while subsidiary legislations are also known as delegated legislations
or statutory instruments and are usually entrusted to Ministers or
Commissioners.

The primary source of law consists of Ordinances, Acts, Laws, Decrees and
Edicts, depending on the status of the issuing authority or the
circumstances of the prevailing political situation.

Q. Critically examine the implication of the principle of “Nemo dat quod non
habeat” under the Law of Sale of Goods and the possible exceptional
situations which the law has attached to its operations.

It is the general rule that good title would not pass, unless the buyer gets a
good title free from any encumbrance by buying from the owner or his
authorized agent but there are circumstances in which the law will deemed
a proper transfer when there is a transfer by a person who has either no
property or whose rights are defective disposes of goods. The general rule is
built on the legal principle of the Latin Maxim “Nemo dat quod non habeat”
which means that no one can give what he or she does not have. The
purpose of this rule is to protect the interest of the property owners. This
principle is established in Section 21 of the Rule 1 of the Act.

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A bill of lading is not a negotiable instrument under the Bill of Exchange
Act, because unlike a bill of exchange, the bona fide holder of a bill of lading
and for value cannot acquire a better title than the transferor possesses. A
negotiable instrument is therefore an exception to the general rule of law
that nemo dat quod non habeat. International commercial contracts, the bill
of lading is the pivot upon which other contractual relationships are
dependent. The important point, however, in the context of negotiability of
the bill of lading is that the fact that a party is an indorsee of the documents
does not by itself permit right of suit under the terms of the documents per
se. The extent of the negotiability of the bill of lading as it pertains to right
enforcement in contract is contigent upon the particular enforcement regime
in the particular country.

Q. Discuss bills of lading as a negotiable instrument

A bill of lading is an assignable document of title to the goods. If a bill is

transferred or assigned by one person to another, either by a mere delivery
(as in the case of a bearer of bill of lading) or by an indorsement of the bill of
lading followed by its delivery (as in an order bill of lading), the bill of lading
is said to have been negotiated, and the party to whom the bill is transferred
is referred to as the transferee of the bill of lading. A bill of lading is not a
negotiable instrument under the Bill of Exchange Act, because unlike a bill
of exchange, the bona fide holder of a bill of lading and for value cannot
acquire a better title than the transferor possesses.

Q. Define arbitration

Arbitration is a process controlled by one or more arbitrators. It provides a

forum for the parties to present disputes to a neutral third party who is/are
chosen by them to make a binding decision called an Award. Arbitration is a
process for the settlement of disputes under which the parties agree to
appoint their own judge or judges (arbitrator or arbitrators) who will decide
according to their agreement and the law and the parties agree to be bound
by their decision. Arbitration provides a forum for the parties to present
disputes to a neutral third party who is/are chosen by them to make a
binding decision called an Award. It is seen as an alternative means of
access to justice in the sense that the parties do not need to refer their
disputes to the court of law. It is an aspect of alternative dispute resolution
mechanism.

Q. Define and explain Commercial Arbitration and also enumerate the

advantages of Arbitration.

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 Commercial Arbitration

Commercial arbitration relates to arbitration of relationship of a commercial

nature. The question is what is “commercial”? It is generally agreed that
arbitration is a particularly suitable approach for the resolution of disputes
arising out of business relationships (as opposed, for instance, to domestic
relationships). Contracts entered into by merchants and traders in their
ordinary course of business are regarded as a commercial contract. The level
of importance that is placed on the concept of commercial contract is very
high in the civil law countries as regards arbitration. This is so because in
some countries only disputes arising out of commercial contracts may be
submitted to arbitration. Thus it would be permissible to hold arbitration
over a contractual matter between two merchants but not for a contract
based on the determination of inheritance of the property of the deceased.

Q. Identify the advantages of arbitration

The Advantages Of Arbitration

The advantages of arbitration include:

(a) Speed/Flexibility: Arbitration puts the parties in the driving seat of the
proceedings. Businessmen would not want to sit in a court for weeks or
months in the name of settling a dispute when they could actually spend
such time making money for their firms. They cannot force the court or
judge to speed up things for them but this is possible in an arbitration
proceedings. The freedom or “autonomy” of the parties gives them the
opportunity to request for an accelerated or fast-track procedure.

(b) Confidentiality: Confidentiality is an essential matter for major firms who

are involved in hi-tech, production, investment and research contracts.
Whenever there is a dispute between them, they would not want to appear
before the national court due to the issue of publicity. For this reason, they
opt for a private dispute mechanism like an International Commercial
Arbitration.

(c) Neutrality of Parties: Parties to a commercial contract and subsequently

participants in the arbitration proceedings are usually from different
countries or the nature of the dispute may be said to be a transnational
contract. For this reason, they would need a neutral jurisdiction to arbitrate
their dispute.

(d) Choice of Expert: When a matter is before a court, the judicial system
would nominate, and by so doing, impose a judge on the parties but with
arbitration, parties are free to choose who they believe has the required

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expertise to marshal their disputes to a convincing end. Parties are more
relaxed with this choice.

(e) Enforcement of Award: This is by far the most important part of the
arbitral proceedings because it will be a futile task if, after all the money,
time and brains that have been put into the whole arbitration process an
award is set aside or annulled on the grounds provided for under Article V of
the New York Convention 1958.

Q. \Name various arbitral institution

There are quite a number of arbitration institutions around the world today
and these institutions are saddled with the responsibility of overseeing the
proceedings of the arbitration process. Examples of such institutions are:

1. International Chamber of Commerce (ICC) Paris

2. London Court of International Arbitration
3. World Intellectual Property Organization (WIPO) Arbitration Center
4. International Centre for the Settlement of Investment Disputes (ICSID)

Highlight the advantages of arbitral institution

 Automatic incorporation of the rule book of an arbitral institution is

one of the principal advantages of institutional arbitration. A good
example of this is the issue concerning number of arbitrators. Article
10 of the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on International Commercial Arbitration
provides a way out for parties where such have failed to determine the
number of arbitrators. It provides thus;
o The parties are free to determine the number of arbitrators.
o Failing such determination, the number of arbitrators shall be
three.
 Another advantage of institutional arbitration is the provision of
trained personnel by the arbitral institution that the parties have
chosen to oversee their dispute. The trained personnel bring with
them their wealth of experience. They are well equipped to carry out
secretarial and administrative duties for the parties.
 Furthermore, the trained personnel can also review the draft form of
the award rendered by the arbitral tribunal before sending the final
copy to the parties.

Q. Explain, using decided cases, the rules of consideration under the

following headings

a. Consideration must not be past

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A past consideration is a promise given after the act is completed and is
independent of it that is the act is wholly executed and finished before the
promise is made. Consideration is said to be past when it consists of a
promise or an act prior to, and independent of, the promise which the
plaintiff seeks to enforce. See the case of Roscoria V Thomas (1842)3 Q.B
234, the plaintiff bought a horse from the defendant. Sometime after the
sale, the defendant promised the plaintiff that the horse was sound and free
from vice when in fact the horse was vicious. Whereupon, the plaintiff sued
the defendant for breach of warranty on discovering that the horse was
vicious. It was held that, since the warranty that the horse was sound was
subsequently to the transaction, and independent of the sale, the promise
amounted to past consideration which was not capable of supporting an
action in contract.

b. Consideration must not be adequate

In the absence of fraud, duress or misrepresentation the courts will not

question the adequacy of consideration. This means that they do not
measure the values of the consideration furnished by the plaintiff and the
defendant respectively. This means that a contract will not be declared
invalid simply because one party has got a much better bargain than the
other. No consideration is too small or too much or unfair. See the case of
Thomas V Thomas (1842)2 Q.B. 851. A testator, before his death, expressed
the desire that his wife should continue to live in his house for the rest of
her life. After he died, his executor wrote to the wife confirming her late
husband‟ s wish and stated that the widow could have the use of the house
for the rest of her life, on payment of £1 a year. When subsequently the
executor tried to rescind his consent, he was held bound by the undertaking
not because of the husband‟ s wishes, but because of the widow‟ s own
undertaking to pay £1 a year, which was regarded as good consideration.

c. Consideration must be real and for value

Since consideration is a „price‟ it must be something real, something of

value. Therefore, if the price of which the plaintiff bought the defendant‟ s
promise is worthless or unreal, that price, whether it be in the form of an
act, or a promise to do an act, will not be sufficient consideration and
therefore incapable of supporting a contract. But once it is real and of some
value, the act or promise will be sufficient, and it is immaterial that it is not
adequate for, or commensurate to, the defendants promise.

d. Consideration must be Legal

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A consideration will not be deemed proper until it has a legal value. It most
important that consideration must possess some legal value. Any contract
where the consideration involved is contrary to the expectation or provision
of the law will not be given effect to by the law. For example, the payment
involved in an act of prostitution will not be given effect to by the law as it is
an illegal contract.

Q. Define taxation and explain the components of a good tax.

Meaning of Taxation

In a plain language, the Oxford English Dictionary (1973) has defined tax as
„a compulsory contribution to the support of government levied on persons
property, income, commodities, transactions, etc, now at a fixed rate
proportionate to the amount on which the contributions is levied‟ . However,
to further simplify this definition, the Oxford Advanced Learner‟ s Dictionary
(2006) defined tax as „money that you have to pay to the government so that
it can pay for public services.‟ It further concluded that „people pay tax
according to their income and businesses pay tax according to their profits.
Tax is also often paid on goods and services.‟

The Component of a Good Tax

There are various essential components of a good tax and these have been
highlighted in the works of Kath Nightingale (2001) “Theory and Practice of
Taxation” which states that a good tax must possess the following:

1. Simplicity: A good tax system must be straightforward, simple and

coherent. The concept and principles of the tax must be understood by
majority of the citizens and also must be simple to operate. There must also
be consistency in administration of the tax among the different strata of
government.

2. Equity: An ideal tax must be administered on the principles of equity.

There are two types of equitable principles in the taxing system – horizontal
equity and vertical equity. What we mean by horizontal equity is that those
in equal circumstances should pay an equal amount of tax. And when we
say vertical equity, it means that those in unequal circumstances should
pay different amount of tax. The importance of this criterion is to install
confidence in the tax payer who will be more willing to pay their taxes if they
believe that the system is fair and equal.

3. Ability to pay: By this, we mean that the tax must not be unbearable for
the tax payers. It must be within their financial capability.

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4. Administrative Efficiency: The administrative costs should not be higher
than the revenue yielded. Also the tax must take into account certain factors
such as, the effects on economic incentives, and whether it is compatible
with desirable international economic relations.

5. Certainty: The scope of the tax should be clear. This criteria also means
the certainty that the tax can and will be enforced, because a tax that is
easily evaded usually causes resentment and often a decline in tax payer
morality. Also the tax which every person is bound to pay ought to be
certain and not arbitrary.

6. Flexibility and Stability: The tax system should be flexible especially in a

federal and democratic country such as Nigeria where there are always
changes in government.

7. Neutrality: A tax must be neutral thus it must avoid distortions of the

market. For instance, a selective tax, such as the sales tax, is not neutral,
because it encourages the consumer to spend his money on another item
rather than a taxable one.

Q. State the importance of taxation

The subject of tax is important and material to any proactive and effective
nation. A country that will embrace development must initiate a good and
laudable tax system that will help in generating income for its operations.
Thus, taxation is very important for all of the following reasons:

a. Income tax raises revenue to meet government expenditures. Such

expenditures include the running of day to day activities of the Government.

b. Tax system can be an instrument to discourage the promotion of certain

businesses that are found to be detrimental to societal values; such as sales
and usage of alcohol or purchase of cigarettes. Such gods can be marked
with high tariff thus, making them expensive.

c. Tax system helps the Government to take care of the needs of her citizens
which includes the provision of social amenities and essential reliefs such as
, light, water, scholarships and grants, and e.t.c.

d. Taxation has been described to be useful in assisting in the redistribution

of wealth in the society. Taxes paid are used to bridge the gap between the
rich and the poor.

e. Taxation has also been seen to help in determining population growth,

e.g. A state with a low income tax rate will find that more people are moving

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into that state, while traders will leave states with high income tax rates or
engaged in various schemes of tax avoidance and tax evasions.

Q. Give the classifications of taxes

Tax can be classified into two major classes namely; Direct/Indirect Tax
There are two major categories of taxation depending on the object of the
taxation. The different categories of taxes include the following:

1. Direct/Indirect Taxation

Taxes can be classified into either direct or indirect. The distinguishing

factor between these two is that whether the taxpayer is aware of the
incidence of the particular tax paid.

a. Direct Tax: This is the tax levied directly on the person who is expected to
pay the tax. With this type of taxation, the taxpayer will be duly advised
through a notification known as „assessment notice‟ and he will also be
given receipt for he tax paid. Examples of direct taxation include personal
income tax, Pay As You Earn (PAYE), capital gain tax, capital transfer tax,
company‟ s income tax, etc.

b. Indirect Tax: This is a tax demanded from one person in the expectation
and intention that he shall indemnify himself at the expense of another.
Indirect tax is borne by a person other than the one from whom the tax is
collected. Such tax is usually levied on the manufacturer but paid by
consumer. The taxpayer of indirect tax s never notified nor have actual
knowledge of such levy. Examples of indirect tax include value added tax
(VAT), stamp duty, custom‟ s duty, excise tax, etc.

2. Proportional, Progressive and Regressive Taxation

a. Proportional Tax: This is the kind of tax in which the amount paid as tax
is directly proportionate (equal) to the amount raised (calculated) as the
value of the property taxed (also known as tax base). For this, the
percentage of the tax rate remains the same as the tax base increases. It is
also referred to as neutral tax.

b. Progressive Tax: This is the form of tax in which the percentage of the tax
rate increases as the tax base of a person increases. Therefore a person with
higher income would pay a greater percentage of tax than a person who
earns a lower income. The progressive tax system preaches fairness and
equity by asking the richer to pay more tax than the poor.

c. Regressive Tax: This is a tax whose structure is such that the percentage
of tax rate paid becomes smaller as the value of the property taxed (tax base)

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increases. Thus a person earning higher income pays lesser tax than a
person earning lower income.

Q. Briefly explain the historical development of the concept of Hire Purchase

and suggest your own definition of the term.

Definition of Hire Purchase

A Hire Purchase transaction is a bailment of goods but with a provision for

the option of sale or transfer of the property in the goods bailed from the
bailor to the bailee. The contract of hire purchase is mostly governed by the
Hire Purchase Act, Law of the Federation, 1990 and common law.

Halsbury‟ s Laws of England Vol. 1st Edition, defined a contract of hire

purchase as “a contract of hire with option to purchase under which the
owner of the chattel undertakes to sell it to, or that it shall become the
property of the hirer conditionally on his making a certain number of
payments. Until the making of the last payment, however, no property in the
chattel passes.”

The Historical Development Of The Concept Of Hire

Purchase

The concept of Hire Purchase is an important aspect of commercial

transactions developed in the United Kingdom and can now be found in
existence all over the world now. It is also called closed-end leasing. In the
true Hire Purchase Act did not come to being until the Factors Act, 1889,
introduced the rule that a buyer in possession of the goods could pass a
good title to a bonafide purchaser or pledgee.

In Nigeria as well, the contract of hire purchase is also of recent origin.

Indeed, the first Act passed on this matter was in 1965, Its practice however
dates back to scores of years ago when local traders sold on credit while
dealers sold to people on local and informal.

Q. Distinguish between the contract of Hire Purchase and other Legal

Transactions.

Hire Purchase Distinguished From Hire

Hire is a kind of contract that does not pass title of the goods at a future
date. The definition of Hire Purchase as seen above is different from the
concept of hire. Hire only enables a person to use the goods for his
immediate use and does not want to own the property. The hirer will return
the chattel to the owner after its use.

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 Hire Purchase Distinguished From Loan and Mortgage

Loans and Mortgages is a kind of arrangement where one person who desire
some finance borrows money from a person or a financial institution for his
use in order to satisfy some needs.

Hire Purchase Distinguished From Sale on Credit Terms

This is a situation where a person wants to make an outright purchase of

goods but may find out that he does not have sufficient money to make full
payment for them. In this instance, the person may pay in installment, while
the goods pass to the buyer on credit. In this instance, the seller loses his
seller‟ s right of lien on the property and where the buyer resells the goods;
the third party will be an innocent purchaser for value without notice and
will have a good title.

Q. State the reasons for the adoption of the hire purchase system

There are mainly three reasons for the Hire Purchase system of commercial
transactions

1) One of the most important reasons and the first is that it enables credit to
someone, who is unable to pay cash for the goods he wants and who would
be happy to pay some deposit and therefore pay the balance in instalments
at a stipulated rate of interest.

2) The other reason for this system is that the dealer or the manufacturer of
the goods cannot always provide credit and yet the goods must be bought to
enable the dealer in business.

3) The third option for the adoption of the hire purchase system is the
possible evasion of the Money Lenders Act 1939 Cap 124 LFN, 1958, which
regulates the conduct of the business of money lending.

Q. Discuss the elements of hire purchase transaction

1. Offer and Acceptance

This is the first essential requirement of the hire-purchase agreement, which

will give a party the right to enforce or sue for a breach of the agreement, in
order to enforce a contract. If the number of the parties in agreement is two
then, the offer in respect of the hire-purchase in writing is constituted by
the hirer signing the hire purchase agreement, while the owner signifies
acceptance by executing the agreement already signed by the hirer. The
acceptance must be communicated to the hirer in order for it to be valid.

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An oral agreement between the hirer and the owner is also possible. If the
hire-purchase agreement involves three parties, i.e the owner, the dealer
and the hirer, then the offer is made by the hirer. Generally the dealer is not
an agent of the owner, but for the purpose of receiving the offer, he may be
construed as the agent of the owner for that particular moment. Mere
delivery of the goods is not sufficient as acceptance. It is important and
compulsory to communicate such to the hirer.

2. Capacity of the Parties

The liability of infants under the general law of contract is the same under
the hire-purchase agreements. Prima facie, infants are not liable under the
hire-purchase agreement except those relating to necessaries and beneficial
contract.

Q. Write brief notes on the obligation of the owner, hirer and dealer

1. Obligation of the Owner

The first obligation of the owner under the common law is to deliver the
goods which are the subject matter of the hire purchase agreement to the
hirer. It is therefore a fundamental duty and its breach will entitle the hirer
to repudiate the contract. Delivery in this sense might not be physical
transfer but voluntary transfer of possession from one person to another.

2. Obligation of the Hirer

This is the fundamental obligation of the hirer to accept delivery of the

goods, the subject matter of the hire purchase. Such Hirer will be liable in
damages if he fails to take delivery within a reasonable time after he had
been requested to do so. It is also the primary duty of the hirer to pay,
punctually the various sums provided for in the agreement in accordance
with the provisions of the agreement. The payment of installments as
specified in the hire-purchase agreement is mandatory and must be strictly
complied with. There are certain circumstances where the installment
payment may be suspended or waived. See the case of Offodile and Sons
Enterprises v. S.C.O.A (Nig.) Ltd (1969) CCHCJ 1333. The court held that
the owners were entitled to the rentals, and that the hirer‟ s strict liability to
pay rentals during the war period was only waived or suspended during the
civil unrest that should not be regarded as destroying the right to recover
the rentals.

3. Obligation of the Dealer

In practice generally, the hirer is allowed to face with the dealer in the
transaction to enforce certain rights under an independent contract entered

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into between them despite the fact that the finance company is the owner of
the goods. However the dealer is closer to the hirer as stated by the Supreme
Court in Amusan and Thomas v. Bentworth Finance Co. Ltd (1966) N.M.L.R
276, that in law, the dealer (S.C.O.A) could be treated as agents of the
finance company for the purpose of delivery of the vehicles but not for all
purposes.

Q. Give a brief Discussion on the following concepts of Law:

a) Distinction between Agent and Bailee

A bailment arises where personal property is delivered or transferred by the

owner (bailer) to another person (bailee) under an agreement that the
property can be returned to the owner (bailor) or transferred to a third party
or dealt with in any other way indicated by the owner (bailor).

The distinction between the two are in their features which are the fact
that:The agent is the representative of his principal but the bailee does not
thereby become the representative of the bailor. Also, the agent has
authority to contract for and on behalf of his principal and can make him
liable in tort. A bailee essentially has no authority to bind the bailor in
contract except perhaps to preserve the property the subject of the bailment,
and can rarely make the bailor liable in tort.

b) Distinction between Agent and Trustee

For certain purposes, an agent may be treated as a trustee of his principal.

An example of this in cases of money had and received on behalf of the
principal. Equally, a trustee may for certain purposes be treated as an agent
of the beneficiary (cestui que trust). This notwithstanding, both
functionaries are nonetheless distinguishable on the following grounds:

I. The relationship of principal and agent is generally consensual in origin,

whereas and except in minor cases, a trust is created without the consent of
the beneficiary (cestui que trust) or the trustee.

II. When an agent is appointed, this is invariably done by the principal

himself, whereas, in a trust situation, the trustee is never appointed by the
beneficiary (cestui que trust).

III. The agent is for all purposes, the representative of his principal in
dealing with third parties whereas, the trustee is not in anyway the
representative of the beneficiary (cestui que trust).

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IV. Actions between the principal and the agent may be barred by lapse of
time under the limitation Acts whereas, no such limitation is imposed on
actions between the beneficiary (cestui que trust) and the trustee.

c) Distinction between Agent and Servant and Independent Contractor

Basically, an agent is distinguishable from both a servant and an

independent contract. The essential feature of the master servant
relationship is that the master always has the right to control the diligent
performance by the servant of the terms of his employment while a servant
merely works for his master, an agent acts for and in place of his principal
to effect legal relations of his principal with third parties.

An independent contractor on the other hand renders services to his

employer in the course of an independent occupation or calling. He
contracts with his employer only as to the results to be achieved, but not as
to the means whereby the work is done. Accordingly, he employs his own
means and skill and is entirely independent of control and supervision of his
employer.

d) The Concept of the Law of Agency

The Law of agency is a very important part of commercial law as companies

can only carry out their daily business activities through agents. The
essence of the law of agency is to ensure proper and legal dealings when it
comes to actions carried out in a representative capacity. Thus the interest
of the parties to an Agency relationship, third party inclusive is duly
protected by the law.

Q. What is Agency?

Agency relationship is created in a situation where one called “the Agent”

acts for and on behalf of another called “the Principal” under the authourity
conferred by “the Principal” on “the Agent”, thus, establishing an Agency
relationship.

This term has been defined by the Oxford Companion Law to mean:

“The relationship between one person, the agent, having authority to act,
and having consented to act on behalf of another, the principal, in
contractual relations with a third party. The term is also used more widely
as one acting in the interest of another”.

Q. Discuss the theories of agency

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There are three main theories that seek to define and explain the role of the
agent. These are:

a. The power-liability theory.

b. The consent theory.

c. The qualified consent theory.

a) The Power-Liability Theory

The concept of agency exists when a person (the agent) acquires the power
to alter the principal‟ s legal relations with a third party in such a way that it
is only the principal who can sue, and be sued by that third party. This
focuses on the external relationship with the third party and ignores the
internal relationship between the principal and the agent. Nevertheless, they
are subject to fiduciary duties in the same way as agents narrowly defined.

b) The Consent Theory

This arises in a situation where the Agent, is acting on behalf and for the
Principal with the consent of the principal thus establishing a direct
relationship with the duo. In other words, the agent must have been
invested with a degree of discretion that shows the principal has placed
trust and confidence in the agent. It is this which gives rise to a fiduciary
duty. Here both the Agent and the principal can be liable for a breach or
misconduct.

c) Qualified Consent Theory

This can happen in a situation where the actual authourity of the Principal
was not given initially but the action of the Agent became acceptable and
approved by the Principal. This theory combines the consent theory with the
protection of „misplaced reliance‟ to account for actual and apparent
authority. This is more clearly defined in agency by ratification to reflect
commercial reality since authorization may not always be neatly
contemporaneous with the initial transaction.

Q. Define a Bill of Lading and state its functions

The bill of lading is an important aspect of the carriage of goods by sea. A

bill of lading is a document signed by the ship owner, or by the master or
other agent of the ship owner, which states that certain goods have been
shipped on a particular ship and sets out the terms on which these goods
have been delivered to and received by the ship owner. It is usually in
standard form, which in some cases governs the contract of carriage of

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goods by sea. It is divided into two parts: one is blank, on which the names
of the party‟ s freight and the particulars voyage will be reproduced, and one
printed containing clauses inserted unilaterally in advance by the carrier.

Bill of lading is a major part of the contract of freight, but it serves a dual
purpose either as a contract between the ship owner and the third party or
as merely an evidence of goods between the ship owner and the charter
party. The bill of lading is in the category of contract referred to as contract
of adhesion. A contract of affreightment is normally evidenced by a bill of
lading when the goods to be shipped form only part of the cargo which the
ship is to carry.

It has been argued that the bill of lading falls into the category of contract
referred to as contracts of adhesion, that is, contracts on take it or leave it
basis. This view is particularly prominent in the United States of America.
The bill of lading is issued to the shipper in sets of three. One is retained by
the master or broker, while two copies are dispatched; one by express mail
to the buyer or the consignee. It is a document of title, possession of which,
in legal sense, is possession of the goods which it represents.

Functions of the Bill of Lading

A bill of lading in its classical legal terms has three main functions:

1. It is the contract of carriage of goods or at least evidences the contract of

carriage.

2. It acts as a receipt for goods put on board the vessel.

3. It acts as a document of title.

Q. Define the following concepts

i. The Bill of Lading as a Contract

The bill of lading is merely evidence of the contract between the shipowner
and the shipper and a contract between the shipowner and third parties, An
assignee who acquires rights in a bill of lading by way of negotiation of the
bill of lading is bound by the terms of the contract as contained in the bill of
lading or other documents in which the terms of the contract may be
contained.

In Crooks v. Allan (1879) 5 Q.B.D, 38, it was held that a bill of lading is not
the contract but only an evidence of the contract. But in The Ardennes, it
was settled that a bill of lading is not, in itself, the contract between the

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shipowner and the shipper of goods, though it has been said to be excellent
evidence of its terms.

ii. The Bill of Lading as a Receipt

This was originally the traditional or original role of the bill of lading. It
served as receipt for the goods to which it related that the goods have been
taken on board. In its original role, it itemized the goods shipped and gave
further particulars of the goods such as the description, quality and
shipping mark. In Cox v. Bruce (1886) 18 QBD 147, it was held that it was
no part of the master‟ s duty to insert these quality marks. A document which
is not signed by or on behalf of the carrier is not a bill of lading in the legal
sense.

iii. The Bill of Lading as a Document of Title

The third function of a bill of lading is that it serves as a document of title to

the goods it represents, and its transfer is equal to the physical transfer of
the goods. The holder of a bill of lading in respect of goods that had been
shipped may effect a transfer of ownership in respect of the goods by
transferring the bill of lading to anybody who has given him value for the
goods.

iv. The Bill of Lading as a Negotiable Instrument

A bill of lading is an assignable document of title to the goods. If a bill is

transferred or assigned by one person to another, either by a mere delivery
(as in the case of a bearer of bill of lading) or by an endorsement of the bill of
lading followed by its delivery (as in an order bill of lading), the bill of lading
is said to have been negotiated, and the party to whom the bill is transferred
is referred to as the transferee of the bill of lading.

A bill of lading is not a negotiable instrument under the Bill of Exchange

Act, because unlike a bill of exchange, the bona fide holder of a bill of lading
and for value cannot acquire a better title than the transferor possesses. A
negotiable instrument is therefore an exception to the general rule of law
that nemo dat quod non habeat. International commercial contracts, the bill
of lading is the pivot upon which other contractual relationships are
dependent. The important point, however, in the context of negotiability of
the bill of lading is that the fact that a party is an indorsee of the documents
does not by itself permit right of suit under the terms of the documents per
se.

Q. Write short notes on any three of the following

(a) Pre-colonial judicial system in Nigeria (5 marks)

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Before the introduction of the British system of government and its courts in
Nigeria, each tribe had developed their separate Customary Law that binds
the people. In the northern States, the Emir as the Supreme Ruler with his
advisers constitutes the Supreme Court of the land. They resolve land,
family and inheritance disputes. In most cases, these cases are referred to
the Alkalis, who are teachers on Islamic law. In the west, the Oba in council
adjudicates on all issues brought before them, and they applied strict
Customary Law in resolving the disputes. While in the East, the Elders in
Council and the age grades help very much in settling disputes and in the
application of Customary Law. All the tribes in Nigeria also have a set of
Customary laws regulating criminal conducts in the society, known as
customary criminal law which covers all known crimes in the society, like
theft, rape, murder, manslaughter etc. and they all have powers within their
communities to impose fines, imprisonment, banishment from the
community, death etc; they also impose punishments like, public caning,
public apology, offering of sacrifices or appeasing the gods. The Customary
System of both civil and criminal adjudication are very well known to the
whole community and observed.

(b) Elements of unfair competition (5 marks)

Unfair competition in commercial law refers to a number of areas of law

involving acts by one competitor or group of competitors which harm
another in the field, and which may give rise to criminal offenses and civil
causes of action. The most common actions falling under the banner of
unfair competition include:

Matters pertaining to antitrust law, known in the European Union as

competition law. Antitrust violations constituting unfair competition occur
when one competitor attempts to force others out of the market (or prevent
others from entering the market) through tactics such as predatory pricing
or obtaining exclusive purchase rights to raw materials needed to make a
competing product.

Trademark infringement and passing off, which occur when the maker of a
product uses a name, logo, or other identifying characteristics to deceive
consumers into thinking that they are buying the product of a competitor. In
the United States, this form of unfair competition is prohibited under the
common law and by state statutes, and governed at the federal level by the
Lanham Act.

Misappropriation of trade secrets, which occurs when one competitor uses

espionage, bribery, or outright theft to obtain economically advantageous
information in the possession of another. In the United States, this type of

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activity is forbidden by the Uniform Trade Secrets Act and the Economic
Espionage Act of 1996.

Trade libel, the spreading of false information about the quality or

characteristics of a competitor's products, is prohibited at common law.

Tortious interference, which occurs when one competitor convinces a party

having a relationship with another competitor to breach a contract with, or
duty to, the other competitor is also prohibited at common law.

(c) Trade libel (5 marks)

Trade libel is a tort that is related to passing off and is sometimes referred to
as malicious falsehood. It could occur where someone publishes information
that could be damaging to a trader‟ s position or reputation. The idea behind
malicious falsehood is a tort that is related to passing off, and this could
also be referred to as trade libel. It is a tort that originated from slander of
title, most especially slander of goods and any false disparagement about a
business.

(d) Constituents of an efficient tax system (5 marks)

Q. Explain what trade libel means

Trade libel is a tort that is related to passing off and is sometimes referred to
as malicious falsehood. It could occur where someone publishes information
that could be damaging to a trader‟ s position or reputation. The tort is wide
ranging, having originated from slander of title to land and developed to
include slander of goods and any false disparagement about a business. It
could include a false and malicious statement for instance, that a dismissed
company director had broken into the company premises and stolen a cash
box, was setting up a business of his own and was in breach of his fiduciary
duty as accompany director.

Q. Identify the element of trade libel

The essential elements that must be proved by the claimant in an action for
trade libel are:

1. A false statement of fact

2. Malice

3. Damage

False Statement

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The defendant must have made a false statement of fact to another person
than the claimant. The statement stated must be of fact not a statement of
opinion. In trade puff the advert is substantially devoted to the merit of the
product while impliedly denigrating the quality of rival products. Even
saying that they have the superior product does not amount to false
statement provide that no false reason is advanced for lack of quality in
another‟ s product.

Malice

Another essential ingredient is that the statement must have been made
with malice. Malice means without just cause or with improper motive.
Where the statement is made recklessly or knowing it to be truth, there is
malice.

Damage

This tort is not actionable per se but upon proves of actual damage. This is
done by proving general loss of business.

Q. What is Unfair Competition?

Unfair Competition means all dishonest or fraudulent rivalry in trade and

commerce, but is particularly applied to the practise of endeavouring to
substitute one‟ s own goods or products in the markets for those of another,
having an established reputation and extensive sale by means of imitating or
counterfeiting the name, title, size, shape, or distinctive peculiarities of the
article, or the shape, colour, label, wrapper, or general appearance of the
package, or other such simulations, the imitation being carried far enough
to mislead the general public or deceive an unwary purchaser, and yet not
amounting to an absolute counterfeit or to the infringement of a trade-mark
or trade –name.

Q. Identify and explain the fiduciary duties of a director of a Nigerian

company. (10 marks)

Fiduciary duties of Directors (loyalty and good faith)

(a) The directors must observe utmost good faith towards the company in
any transaction with or for the company S. 279 (1).

(b) They must act at all times in what they honestly believe to be in the best
interest of the company. S. 279 (3) and (4).

(c) They must exercise company powers for the purpose specified and not for
personal benefit. S. 279(5).

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(d) They must not compromise their discretion to vote in a particular way in
any Board resolution S. 279 (6)

(e) They must not delegate their powers in circumstances that amount to
abdication of duties S. 279(7).

Q. Explain using relevant authorities, the factors which must be proved by a

defendant as a defence for the action for passing off.

The main defences will normally be that the claimant has failed to establish
the element of the tort, that is, one of the classic trinity is missing. Defences
to passing off are straight forward, and will be highlighted in this unit for
easy understanding.

The defences to passing off action include but are not limited to the
following;

a. the claimant does not have locus standi. b. the defendant‟ s activities have
not harmed and are not likely to harm the claimant‟ s goodwill associated
with the name, mark or get up.

c. the defendant is not using the name in the course of trade d. the claimant
has not established the existence of goodwill associated with the name,
mark or get-up in the course of trade.

e. the defendant is making honest use of his name or company name.

f. the claimant has acquiesced in the defendant‟ s use of the name, mark
expressly or impliedly granted the defendant permission to use the name or
mark.

g. the claimant is estopped from enforcing his rights under passing off
because he has encouraged the defendant‟ s act.

h. the defence of no common field of activity, that is, the claimant and
defendant are not in the same line of business.

Q. Explain the remedies to passing off.

There are numerous remedies available to the claimant in an action for

passing off and they range from injunctions (especially interim injunctions),
damages or alternatively an account of profit. Additionally, an order may be
granted for the delivery up or destruction of the article to which the name or
mark has been applied.

Damages will usually be based upon the actual loss attributable to the
passing off that may result from the loss of sales experienced by the

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claimant. Damages may also be calculated on a royalty basis, that is, based
on the amount that would have been payable by the defendant if he had
sought a licence to use the name or mark from the claimant.

A royalty basis could be applicable if it would yield a greater amount than

that attributable to loss of sales. It will always be difficult to calculate
damages resulting from a loss of sales and each sale by the defendant does
not necessarily represent a sale lost by the claimant. Passing off resulting
from a false impression that a celebrity has endorsed a product may be
determined on the basis of what that celebrity would normally charge as a
fee for such endorsement. See Irvine v. Talksport Ltd (2003) FSR 619. If the
defendant‟ s action infringes a trade or services mark as well as constituting
passing off, the damages that may be awarded will not cumulative.

Q. What is an offer?

An offer may be defined as a definite undertaking or promise, made by one

party with the intention that it shall become binding on the party making it
as soon as it is accepted by the party to whom it is addressed. The person
making the offer is known as the offeror, and the person to whom it is
addressed, the offeree. Thus all commercial transactions must involve an
offer and an acceptance. By its very nature, there is no limit to the number
of people to whom an offer can be made. It is however noteworthy that a
contact comes into existence only between the parties, that is, the offeror
and the offeree.

Q. Discuss briefly on legislation and statutes as the primary source of law.

Statutory Materials as a Source of Law

Statutory materials as source of laws include statutes like Sale of Goods Act
1893, Infants Relief Act 1874, Partnership Act 1890, Fatal Ancient Act 1846,
Wills Act 1873, Statutes of Fraud 1877, Criminal Code Cap 77, The Nigerian
Constitution 1999 [as amended] etc.

Judicial Materials as a Source of Law

Judicial precedent is a source of law. Judicial precedent or case law consists

of laws found in judicial decisions. A judicial precedent is the principle of
law on which a judicial decision is based. It is the ratio decidendi or the
reason for the decision. Other judicial material includes the Nigerian Law
Reports. Nigerian law reports are reports of cases, wherever published or
edited, decided by Nigerian courts. They include English law reports
containing decisions of the Judicial Committee of the Privy Council given on

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appeal from Nigeria, a number of Local and foreign periodicals containing
case reports and various reports including loose-sheet (unbound) series.

Reasons for Studying Sources of Law

 It affords an understanding of the various means by which the law

governing the society is made or through which it comes into
existence, e.g. through formal Legislative processes in parliament or
through judicial precedents
 It affords the means by which authoritative written materials are
derived.
 The study of the sources of law facilitates an understanding of the
process by which law derives its validity.
 A mastery of the sources of law of a given society also enhances an
understanding of the historical factors that have influenced the
evolution of the laws to such a direction as it had taken.

Secondary Sources of Law

Legal journals are the most current sources of law because of their
frequency of publications, some being monthly, quarterly, half-yearly or bi-
annual. They contain scholarly articles, commentaries, notes and comments
on current legal problems.

In most cases, some of the contents of legal textbooks might have been
published or serialized in journals earlier on. Legal journals that are of(iii)
Conduct a research on secondary source of general nature may contain
articles reflecting various subject background and topical issues in law. Like
the law reports, legal periodicals may be broadly categorized into foreign and
local titles.

Foreign Materials

Foreign materials as secondary source of law are those materials published

outside the jurisdiction of Nigeria. They include treaties and conventions.
These treaties and conventions consist of the various International
agreements and understandings concluded by countries amongst
themselves. Where the law-making bodies of the subscribing nations have
ratified such treaties and conventions, they become binding. They serve as
useful source of law especially in the areas of international law.

THE USE OF SOURCE MATERIALS

Source materials are those major items or institutions used in carrying out
legal research. These source institutions include the law libraries, the

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Nigerian Institute of Advanced Legal Studies and the Nigerian Institute of
International Affairs.

Law Library

Law libraries are very essential to the proper study of law. You should be
familiar with the cataloguing and shelving systems used in the library to
which you have access. Usually, university law libraries classify books by
subject and shelve them in accordance with that classification. In order to
enable you find easily books required by you, a law library usually has at
least one general card catalogue.

A general card catalogue lists all the books in the library. There is at least
one card in the catalogue for each book. If only one card catalogue is
available it may be arranged by author or by author and title or by subject.

Functions of the Catalogue

(1) The catalogue allows access to the collection and provides service to its
users

(2) It enables you to find a book or other library material if you know any of
the following: (a) Author‟ s name;

(b) Title of the work;

(c ) The subject;

(3) It enables you to know the following:

(a) All the works of a given author held in the library

(b) The editions of any work

Organization of Library

Acquisition Department

In the Acquisitions department books and other materials are acquired and
processed. Books, pamphlet, government publications and audio- visual
materials are received in the Acquisition Department. These materials may
be acquired by purchase, gift and by legal deposit especially if the library
has been made a depository by the government.

Reference Services

The Reference Department of the library is very important in the library. It is

in this section that the library staff answers reference questions and also

Page 23
provides bibliographic services to the library patrons. Books in this part of
the library cannot be borrowed like books in the open shelves; they can only
be used or consulted in the library.

Judicial System before Colonization

Before the introduction of the British system of government and its courts in
Nigeria, each tribe had developed their separate Customary Law that binds
the people. In the northern States, the Emir as the Supreme Ruler with his
advisers constitutes the Supreme Court of the land.

In most cases, these cases are referred to the Alkalis, who are teachers on
Islamic law. In the west, the Oba in council adjudicates on all issues
brought before them, and they applied strict Customary Law in resolving the
disputes. While in the East, the Elders in Council and the age grades help
very much in settling disputes and in the application of Customary Law.

Customary Law

Before the advent of colonization there is what we call customary law. (As we
learnt above).Customary law has been described as body of law that evolved
from the custom of the native people.

Customary law has a distinctive characteristic of being totally unwritten and

only known to its subjects. It is not all the practices and customs that have
the force of law, many practices are merely complied with without any fear
of being sanctioned when there is a breach, while some that touches the life
and well being of the community or affects the well being of the community
is normally backed with sanctions.

British Courts

In Southern Nigeria before the amalgamation of the country, a single court

named Supreme Court served the region. The Supreme Court consisted of
the Chief Justice and a small number of pursne judges. The court operated
as a court of law and it sometimes apply the doctrines of equity. As a court
of law, its powers are unlimited. It operates as 3 organs:

1. Full Court
2. Divisional Court
3. District Courts

Inferior Courts

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There are four types of courts that could be regarded in Nigeria as inferior
courts, while two, though strictly could not be regarded as a court but play
important role in the administration of Justice in Nigeria.

Native (Area) and Customary Courts

The Native and Customary Courts in respective states are established under the Customary Courts
Law for the respective States. Each Court is established not directly by the enabling Statute but by
Warrants issued by the enabling authority. In the Eastern States the Commissioner for Justice and in
Lagos State the Attorney-General and Commissioner for Justice and in the Northern States by
Warrant by the Chief Judge of the State. The warrant defines the jurisdiction, powers, and quorum
of the court, it established, and its provisions in that behalf are conclusive. Area and Customary
Courts are the responsibility of the Local Government Council. Customary courts members including
the Presidents are appointed by the Customary Courts Judicial Service Committee for the State.

Qualifications for appointment are as follows:

i. He is literate in English Language

ii. He possess at least the Primary School Leaving Certificate or its. Equivalent and suitable
experience

iii. He is a native of the area of jurisdiction of the Customary Court.

Area Courts/Customary Courts

Closely related to this is the issue of service of processes the Federal

Legislature has enacted a uniform regulations on service of processes. The
Sheriffs and Civil Process Act allows the Order of judgment of High Court of
a state to be registered in the High Court of another State and so executed
by the bailiffs of that state.

Jurisdiction

Every Magistrate shall have jurisdiction throughout Lagos State. A

magistrate‟ s civil and criminal jurisdiction shall extend over any territorial
water adjacent to the district in which for the time being he is exercising
jurisdiction as well as over inland waters whether within or adjacent to such
district.

The Chief Magistrate Grade 1 shall have and exercise jurisdiction in civil
causes or matters in all personal actions whether arising from contract or
from tort, or from both where the Debt or Damage claimed is not more than
N25, 000.00. The Magistrate has until the Recovery of Residential Premises
Edict, power over landlord and tenant matters

Page 25
A magistrate is vested with powers to try criminal and civil cases summarily.
Summary trial means with dispatch with minimum of formalities. Apart
from capital offences, the magistrate may try any criminal matter provided
the accused is properly given the option to choose summary trial before the
magistrate or prefer his matter before the High Court.

THE ROLE OF MAGISTRATES IN THE JUDICIAL SYSTEM

They act as the bridge between the Customary Courts and the High Court;
the Customary Courts are concerned essentially with the administration of
customary law and local enactments. Their personnel are untrained, and are
generally non suitable for the enforcement or interpretation of serious laws
but inconsequential enactments.

The High Courts on the other hand are manned by lawyers and the
procedure very elaborate, strict and formal. The personnel are highly trained
individuals both in law and procedure. Thus, there is an obvious gap that
must be filled by an intermediate court having a personnel neither
completely untrained nor over-exalted, and a procedure which would be
both simple and fast.

District Courts

The District Courts are magistrate courts exercising only civil jurisdiction in
the Northern Nigeria. They are graded Senior District judge, District Judges
grade I, II and III corresponding to the grades of magistrates. They have the
same organization, and the magisterial districts serve as he districts for the
district courts. The jurisdiction of the district courts is the same as the civil
jurisdiction of magistrates in the rest of the country.

Justice of The Peace

The justice of the peace need not be a magistrate in the first instance, he
may be appointed as justice of the peace by publication in the state Gazette
by the Attorney-General of the state. No qualification is legally required for
appointment, but in practice a person to be appointed must reside in the
area to which he is to be appointed and be worthy.

Their main concern is with conservation of peace. Remand to a magistrate‟ s

court persons who are accused, but not convicted to crime, or to admit them
to bail. Issue search warrants. Take solemn affirmations and statutory
declarations. Administer any oath, which may be required to be taken before
him in the exercise of any of the jurisdiction and power confirmed upon him
by law.

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The justices of the peace are mostly Chiefs, retired top administrative
officers and police officers considered capable enough to be entrusted with
some of the judicial powers of a magistrate. A justice of the peace has the
powers, rights and duties of a magistrate to:

 Issue summons and warrants for the purpose of compelling the

attendance
 Issue writs of summons and summonses in civil cases

Juvenile Courts

The first enactment of Juvenile Courts in Nigeria is the Children and Young
Persons Ordinance 1943. This has been re-enacted and modified by the
different States. A Juvenile court is established in every magisterial district
in each state. The court is constituted by a magistrate sitting with such
other persons as the Chief Judge of the state may appoint.

A Juvenile Court has jurisdiction to try all types of offences committed by

the child i.e. children under the age of 14 and young persons i.e. persons
between the age of 14 and 18 years of age. The Magistrate is the Chairman
of the panel, with at least two other persons selected by the magistrate from
time to time.

A juvenile court has power to commit a juvenile, by means of a corrective

order, to approved institution, or a remand home, or to the care of any fit
person who is willing to undertake his care, or to the supervision of a
probation officer for a period not exceeding 3 years, or order his parents or
guardian to pay a fine or enter into recognizance to exercise proper care and
guardianship, or to order the juvenile to be caned.

SUPREME COURT OF NIGERIA

The law governing the Supreme Court derives from the following sources:
The Constitution of the Federal Republic of Nigeria 1999. Which establishes
the court, and prescribes the bulk of its jurisdiction and the method for the
appointment and dismissal of judges.

 The Supreme Court Act

 The Supreme Court rules made by the court

COMPOSITION AND ORGANIZATION OF THE COURT

The constitution of the Federal Republic of Nigeria provided for a Court

consisting of the Chief Justices of Nigeria, and such number of justices of
the Supreme Court not exceeding twenty- one as may be prescribed by an
Act of the National Assembly.

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The number of Justices of the Supreme Court had been increased from the
former limit of 10 to 19 the Chief Justice of Nigeria shall be appointed by the
President on the recommendation of the national Judicial Service
Commission subject to confirmation by the Senate. The appointment to the
office of Chief Justice of Nigeria is therefore not at the discretion of the

President, but is based on the recommendation of the National Judicial

Service Commission subject to the confirmatory power of the Senate.

The minimum qualification of the Justice of the Supreme Court is fifteen-

year post call as a legal practitioner.

JURISDICTION

The Supreme Court is the final court of Appeal in Nigeria and the decision of
the court is final and is binding on all parties. In effect, there is no appeal
from the decision of the court. The court has both original and appellate
jurisdiction.

The Supreme Court has original jurisdiction over any dispute between the
Federation and a state, or between the federation and a state, or between
states if and in so far as that dispute involves any question (whether law or
fact) on which the existence or extent of a legal right depends.

COMPOSITION AND ORGANIZATION OF THE COURT

The Court of Appeal consists of the:

President of the Court of Appeal and Such number of Justices of Court of

Appeal not less than forty

At the level of the Court of Appeal, the Justices of the Court of Appeal must
include at least three Justices learned in Islamic law and three in
Customary Law

The President of the Court of Appeal is appointed by the President of Nigeria

on the recommendation of the National Judicial Council subject to the
confirmation of such appointment by the Senate while appointment of the
Justice of the Court of Appeal is made by the President on the
recommendation of the National Judicial Council.

The qualification of the President of the Court is not started in the

Constitution though it may be argued that the same qualification as applies
to the Justice of the Supreme Court should apply to the President of the
Court of Appeal, as they are rated in most cases equal.

Q. Discuss the structure of the Customary Court of Appeal.

Page 28
APPEALS

Appeals to the Court of Appeal may be classified into two, Appeals as of right
and Appeals by leave of the court or the lower court.

a. Final decisions in any civil or criminal proceedings before the Federal

High Court or a High Court sitting at first instance.

b. Where the ground of appeal involves questions of law alone, decision in

any civil or criminal proceedings.

c. Decisions in any civil a criminal proceedings on questions as to the

interpretation or application of this Constitution.

d. Decisions in any civil or criminal proceedings on questions as to whether

any of the provisions of chapter IV of this Constitution has been, is being or
is likely to be contravened in relation to any person.

e. Decisions in any criminal proceedings in which the Federal High Court or

a High Court has imposed a sentence of death.

Appeals with Leave

Like the Supreme Court, appeals lie to the Court of Appeal from the High
Courts, with the leave of either the High Court or the Court of Appeal, in all
other cases. The practice is to first seek the leave of the High Court, to
appeal, and when such is refused, the appellate may then apply to the Court
of Appeal for leave to Appeal. It is important to state that only parties to suit
may appeal or in cases where there are interested parties, then they must
first apply for leave to appeal to the High Court or the Court of Appeal.

IMPORTANCE OF THE COURT OF APPEAL

The Court of Appeal is a very important Court in the machinery of justice in

Nigeria, unlike the Supreme Court that sits only in Abuja, the Court of
Appeal has its divisions closer to the states and thus affords more citizens
the opportunity to appeal when aggrieved against any decision of the High
Courts.

Being a Federal Court, and or an appellate one at that, the allegations of

corruption is non- existent there, and many litigants are satisfied with the
decisions. It also helps to limit the number of cases going to the Supreme
Court, as majority of the cases terminate at the Court of Appeal.

That unlike the Supreme Court, the Court of Appeal has experts in both
Sharia and Customary law for proper adjudication on matter arising from

Page 29
the Sharia Court of Appeal of state and Customary Court of Appeal of the
states.

The High Courts

The High court is a Superior Court of Record with unlimited jurisdiction. It

has original jurisdiction and also appellate jurisdiction over the decisions of
the magistrate Courts, Juvenile courts and any other jurisdiction assigned
under any other law. The Federal High courts and the State High Courts are
of coordinate jurisdiction but having different spores of responsibility, both
recognized under the constitution.

The Federal High Court

The Federal High Court took it‟ s origin from the then Federal Revenue Court
Established by Federal Revenue Court Act, 1973, in order to simplify the
machinery of Justice in Nigeria, the Constitution Drafting Committee of the
1979 Constitution simply renamed the Federal Revenue Court as Federal
High Court with its jurisdiction and powers unaltered. It was thus a court of
limited jurisdiction.

The Federal High Court also has exclusive jurisdiction and powers in respect
of treason, treasonable felony and allied offences.

A complication was introduced by Decree 107 of 1993 which seems to

enlarge the jurisdiction of the Federal High Court and also stated that all
„Matters involving the Federal Government and it‟ s agencies must to the
exclusion of any other court be determined by the Federal High Court.
However, under the 1999 constitution which we shall examine the position
seems to have been corrected and streamlined.

JURISDICTION

 Relating to the revenue of the Federal Government

 Taxation of companies and persons subject to Federal Taxation
 Customs and excise duties, claims against customs service
 Bankruptcy and insolvency
 Aviation and safety of aircraft
 Arms, ammunition and explosive
 Drugs and poisons
 Heights and measures
 The administration or the management and control of the Federal
Government or any of its agencies
 Matters arising from the operation of Companies and Allied Matters
Act and other Allied Issues

Page 30
CONSTITUTION

The High Court consists of the Chief Judge of the State and each number of
Judges as may be prescribed by the House of Assembly of the State. The
Chief Judge is the head of the State Judiciary and he exercises
administrative control over the entire system, though his judicial powers is
not greater than those of other Judges of the High Court; all of whom enjoy
equal judicial power and authority.

ORGANIZATION

High Court of a State is organized on a territorial basis, the State is divided

into Judicial Division of the State High Court. There is only one High Court
of a State, the Judicial Division are merely created for administrative
purposes. The Courts are numbered serially, while in most States, the
number 1 is preserved for the Chief Judge in terms of judicial duties and
functions, the judge of the High Court in Nigeria is a special person, he is an
expert in all areas of law, and must adjudicate on all matters signed to him.

CIVIL AND CRIMINAL JURISDICTION

The high Court thus have original and appellate jurisdiction in both criminal
and civil proceedings.

S 272 (1) of the Constitution states „subject to the provisions of this

constitution, the High Court of a State shall have jurisdiction to hear and
determine only civil proceedings in which the existence or extent of a legal
right, power, duty, liability, privilege, interest, obligation or claim is in use or
to hear and determine only criminal proceedings involving or relating to any
penalty, punishment or other liability in respect of an offence committed by
any person.

SUPERVISORY JURISDICTION OF THE HIGH COURT

The High Court exercise supervisory jurisdiction over the lower courts to
ensure not only that justice is done but is seen manifestly to have been
done. A mistake as to facts or law committed by a lower court or failure to
observe a fundamental rule of evidence, corruption, obvious bias, or failure
to observe rule of national justice could lead to miscarriage of justice. The
High Court supervises the lower courts in various ways, these are:

1. Appeal

2. Case Stated

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3. Review by means of mandamus, prohibition, certiorari and habeas corpus
proceedings

4. Revision through monthly returns submitted by inferior courts

5. Transfer of cases from one court to another

The Sharia Court Of Appeal

The Constitution made provisions for Sharia Court of Appeal for the Federal
Capital Territory and the State, the Constitution and jurisdiction are
virtually the same.

CONSTITUTION

The court is constituted by the Grand Khadi of the court and such number
of khadis of the court as may be prescribed by the House of Assembly in the
case of a State and National Assembly in cases of Federal Capital Territory
(F.C.T).

JURISDICTION

It is essentially an appellate court, and sits over appeals from inferior

courts in civil proceedings involving questions of Islamic personal law, these
include:

a. Marriage concluded under Islamic Law, validity, dissolution of the

Marriage, family relationship or guardianship of an infant.

b. Succession inheritance where the deceased person is a Muslim

c. Where all the parties to a dispute are all Muslims and have requested the
lower court to determine their case according to Islamic Personal Law

OFFER

An offer may be defined as a definite undertaking or promise, made by one

party with the intention that it shall become binding on the party making it
as soon as it is accepted by the party to whom it is addressed. The person
making the offer is known as the offeror, and the person to whom it is
addressed, the offeree. Thus all commercial transactions must involve an
offer and an acceptance.

Communication of an Offer

An offer is only subject to acceptance if it is duly communicated by the

Offeror to the offeree. No person can accept an offer of which he has no
knowledge.

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Offer Distinguished from Invitation to Treat

It is necessary to distinguish a true offer from what is called an “Invitation to

treat”, because very often an invitation to make an offer (i.e an invitation to
treat) is confused with an offer. The major distinctive feature between an
offer and an invitation to treat is that for an offer to be a true offer, the
offeror must have completed his part in the formation of a contract by finally
declaring his readiness to undertake an obligation upon certain conditions,
leaving to the offeree the option of acceptance or refusal.

An invitation to treat, on the other hand, is a preliminary to an offer such

expressions or acts of a person to which no legal consequence are intended
to attach but may only be regarded as preliminaries to the making of a
contract are generally referred to as “invitation to treat”.

Termination of an Offer

It is the general rule that once an offer is made it remains open for
acceptance until it becomes terminated by certain factors which includes:

REVOCATION: Revocation simply means withdrawal. An offer can be

revoked any time before acceptance notwithstanding the expected or
stipulated time of expiration.

REJECTION: This happens when the Offeree decline the offer. Rejection of
an offer terminates the offer. Whenever an offer is rejected, it can no longer
be accepted, except where a fresh offer is made. Rejection of an offer may
either be by a direct intentional refusal of the offer or by a counter offer.

LAPSE OF TIME: If an offer is stated to be open for a fixed time, it clearly

cannot be accepted after that time.

OCCURRENCE OR NON-OCCURRENCE OF CONDITION: - If an offer is

expressly or impliedly made to terminate on the occurrence of some
condition, it ceases to exist and becomes incapable of acceptance after that
condition has occurred.

DEATH BEFORE ACCEPTANCE: - The death of both the offeror and the
offeree before acceptance terminates the offer.

MEANING AND CONDITIONS OF ACCEPTANCE

Acceptance occurs when the offeree indicates his intention and willingness
to take up the offer and decides to be bound by the terms of the offer and
once accepted it is complete and the offer becomes irrevocable. For an
acceptance to be valid, it must fulfil the following conditions. The acceptance

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must be unqualified. An acceptance must not be conditional. An offer can
only be accepted by the person to whom it is made or by his agent duly
authorized. An acceptance must be made not only with full knowledge of the
offer but also in reliance on it

Modes of Communicating Acceptance

The general rule is that acceptance of an offer is not complete until it has
been communicated to the offeror either by the offeree himself or by his duly
authorized agent. Therefore, acceptance becomes operative only when it has
been communicated to the offeror. The acceptance of an offer can be
communicated in any of the following modes.

 Where a particular mode is prescribed

 Where no particular mode is prescribed
 Where acceptance is by post

Rules of Consideration

Consideration must not be past: A past consideration is a promise given

after the act is completed and is independent of it that is the act is wholly
executed and finished before the promise is made.

Consideration need not be adequate: In the absence of fraud, duress or

misrepresentation the courts will not question the adequacy of
consideration. This means that they do not measure the values of the
consideration furnished by the plaintiff and the defendant respectively

Consideration must be real and for value: Since consideration is a „price‟ it

must be something real, something of value. Therefore, if the price of which
the plaintiff bought the defendant‟ s promise is worthless or unreal, that
price, whether it be in the form of an act, or a promise to do an act, will not
be sufficient consideration and therefore incapable of supporting a contract.

Consideration must be legal

CONDITIONS

The word condition is used in two senses. In the first sense it means a term
or a stipulation in a contract which is absolutely essential to its existence,
the breach of which entitles the injure party to repudiate the contract and to
treat it as discharged.

WARRANTIES

Warranty ordinarily denotes a binding promise, but when it is used in a

narrower and technical sense, it means a subsidiary term in a contract (i.e a

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term of minor impotence) a breach of which gives no right to repudiate the
contract, but only a right to an action for damages for the loss sustained.

The main difference between a condition and a warranty is that a breach of

the former entitles the other party to treat the whole contract as discharged,
while a breach of the latter merely entitles the other party to claim damages,
but does not absolve in from performing his duties under the contract.

Q. What is Agency?

Agency

Agency relationship is created in a situation where one called “the Agent”

acts for and on behalf of another called “the Principal” under the authourity
conferred by “the Principal” on “the Agent”, thus, establishing an Agency
relationship.

Theories of Agency

There are three main theories that seek to define and explain the role of the
agent. These are:

a. The power-liability theory

b. The consent theory

c. The qualified consent theory

The Power-Liability

Theory The concept of agency exists when a person (the agent) acquires the
power to alter the principal‟ s legal relations with a third party in such a way
that it is only the principal who can sue, and be sued by that third party.

The Consent Theory

This arises in a situation where the Agent, is acting on behalf and for the
Principal with the consent of the principal thus establishing a direct
relationship with the duo. In other words, the agent must have been
invested with a degree of discretion that shows the principal has placed
trust and confidence in the agent.

Qualified Consent Theory

This can happen in a situation where the actual authourity of the Principal
was not given initially but the action of the Agent became acceptable and
approved by the Principal. This theory combines the consent theory with the

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protection of „misplaced reliance‟ to account for actual and apparent
authority.

Agent and Trustee

For certain purposes, an agent may be treated as a trustee of his principal.

An example of this in cases of money had and received on behalf of the
principal.

Agent, Servant and Independent Contractor

Basically, an agent is distinguishable from both a servant and an

independent contract. The essential feature of the master servant
relationship is that the master always has the right to control the diligent
performance by the servant of the terms of his employment while a servant
merely works for his master, an agent acts for and in place of his principal
to effect legal relations of his principal with third parties.

Agent and Bailee

A bailment arises where personal property is delivered or transferred by the

owner (bailer) to another person (bailee) under an agreement that the
property can be returned to the owner (bailor) or transferred to a third party
or dealt with in any other way indicated by the owner (bailor).

The distinction between the two are in their features which are the fact
that:The agent is the representative of his principal but the bailee does not
thereby become the representative of the bailor.

General and Special Agents

A General Agent is one who is authorized to act for and on behalf of his
principal in all his affairs in connection with a particular kind of business,
trade or profession or who represents him in the ordinary course of his own
trade, business or profession, as agent. While A special agent on the other
hand is one authorized to act for and on behalf of his principal on or for
special occasion.

Commission Agents

A commissioned agent is the one to whom certain goods have been

consigned for a foreign principal. A commissioned agent is therefore saddled
with dual responsibility, firstly as an agent to his principal with equal rights
and obligation of any other agent and secondly as an agent who does not
bind his principal contractually to third parties.

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Mercantile Agents

A mercantile agent is an agent having authority to sell or to consign goods

for the purpose of sale, or to buy goods or to raise money on the security of
goods.

There are three types of mercantile agents. These are Factors, Brokers and
Del Credere Agents.

Factors Agent: A person to whom goods are consigned for sale by a

merchant residing abroad or at a distance away from the place of sale and
who normally sells in his own name without disclosing that of his principal.

Brokers: A broker is a mercantile agent who, in the ordinary course of his

business is employed to make contact with third parties for the purchase of
goods, or property or for the sale of his principal‟ s goods or property of
which he is not entrusted with possession or document of title thereto.

Del Credere: Agent A del credere agent is one who, in consideration of extra
remuneration called a del credere commission, guarantees to his principal
that third parties with whom he enters into contract for and on behalf of the
principal shall duly pay any sums becoming due under those contracts.

THE TYPES OF AGENCY

1. Agency by Agreement or Contract

This occurs in a situation where the Agency agreement is formalised by the

express intention of both parties. The Principal appoints and the Agent
consent.

2. Agency by Estoppel

The general position of the law in this area is to the effect that where a
supposed principal intentionally or otherwise causes a third party to believe
that another person is his agent and the third party so relies in dealing with
the supposed agent, the principal will be estopped from denying the
existence of an agency relationship between him and supposed agent.

3. Agency By Ratification

This occurs in a situation where a supposed agent portrays himself to be

representing a supposed principal whose consent he might not have secured
and the principal on becoming aware of this assented to the transaction.

4. Agency by Necessity

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This occurs in a situation where a person acts in good faith as regards the
property of another with the intention of protecting the interest of the owner
or that of the general good, such an agent will be regarded as an agent of
necessity.

Conditions for Necessity of Agency

The existence or otherwise of an agency of authority is dependant on the

fulfilment of certain conditions and these are:

I. That there is an emergency situation necessitating instantaneous action

II. That it was impossible for the claimed agent to communicate with the
presumed principal at the material time

III. That the action taken was reasonably necessary having regard to the
circumstances in the case. IV. That the claimed agent acted bona fide and in
the interest of the presumed principal

Disclosed Principal and Third Party

The general rule is that where a person contracts as agent for a principal the
contract is the contract of the principal and not that of the agent, and
prima-facie, at common law the only person who may sue is the principal,
and the only person who can be sued is the principal.

The Doctrine of Undisclosed Principal

An undisclosed principal is one whose existence and identity are unknown

to the third party at the time of entering into a contract with an agent.
Under the doctrine of undisclosed principal, it is permissible, in appropriate
circumstances for such principal on whose behalf a contract has been
entered into by an agent to sue and be sued on the contract.

THE DUTY OF AGENT

□ Duty to Perform Duty of Obedience or Loyalty Duty of Care and Skil

□ Duty of Personal Performance

□ Duty to Act in Good Faith

□ Duty to Account

THE DUTY OF PRINCIPAL

□ Duty to Remunerate Duty of Re-Imbursement and Indemnity

REMEDIES AVAILABLE TO THE PRINCIPAL PARTIES

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Dismissal: The principal may determine or bring the agency relationship to
an end or otherwise dismiss the agent from his employment without notice.

Rescission and Damages: The principal may also rescind any contract made
on his behalf by the agent without authority or in breach of his duty and
this may include claims for damages.

Action for Account: The principal may take an action to compel the agent to
render an account for all his dealings on his behalf, in respect of their
agency relationship.

Action in Tort: The principal may in addition sue the agent for conversion
where the latter has received property on his behalf and has
misappropriated or misused it.

Private Prosecution: The principal may be entitled to and may take out
private summons against the agent where the latter‟ s conduct, act or
omission is criminal.

REMEDIES AVAILABLE TO THE AGENT

Damages: The agent may sue the principal to recover any loss or injury he
may have suffered as a result of the principal‟ s failure to perform any of his
duties under the agency arrangement.

Right of Set-Off: Whenever the principal institutes an action in a court of law

against the agent, the latter may claim a right of set- off or counter-claim of
engagement due to him from the principal by way of remuneration,
indemnity or re-imbursement.

Right of Lien: The agent also has a right of lien on the property, goods or
chattels of his principal in his lawful possession or custody in respect of and
up to the amount of his claim for remuneration, losses, liabilities and
expanses incurred lawfully and for advances made in favour of the principal.

Right of Stoppage in Transit: Where the agent stands towards his principal
in the position of an unpaid seller of goods, he may exercise this right
against the goods of his principal.

TERMINATION OF AGENCY RELATIONSHIP

Termination of Agency by Acts of the Parties: the parties can on their own
accord agree to bring the relationship to an end.

Termination of Agency by Operation of Law: this happens in a situation

where the law will presume certain operations in such a relationship and it
will be deemed to have occurred.

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WHAT IS SALE OF GOODS?

Sale of Goods is defined in section 1(1) of the Sale of Goods Act, 1893 as “A
contract whereby the seller transfers or agrees to transfer the property in
goods to the buyer for a money consideration called the price”.

A contract of sale, in which the property in the goods is transferred from the
seller to the buyer

An agreement to sell, in which the transfer of the property takes place „in
future‟ (at a future time), or a fulfillment of certain conditions

SALE GOODS AND OTHER TRANSACTIONS

Sale of Goods is distinguishable from other commercial transactions but

similar to them in context. Some of these transactions are:

SALE AND EXCHANGE

A contract of exchange simply means the giving of goods to the person in

exchange for the other persons goods-barter. In other words, money, which
is a prerequisite for a contract of sale is not involved in a contract of
exchange. When there is an exchange the property in the goods passes.

SALE AND BAILMENT

A bailment is a transaction under which goods are delivered by one party

(the bailor) to another (the bailee), on certain specified terms, which
generally provide that the bailee is to have possession of the goods and
subsequently redeliver then to the bailor in accordance with his instruction.

SALE AND HIRE PURCHASE

Generally, contracts of hire purchase resemble contract of sale very closely,

and indeed in practically all cases of hire-purchase, the ultimate sale of the
goods is the real object of the transaction.

SALE AND GIFT

A gift is an immediate, voluntary and gratuitous transfer of any property

from one person to another. In other words, it is a transfer of property
without any consideration. It is, not binding.

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 TERMS OF CONTRACT OF SALE OF GOODS

THE PRICE

In a sale of goods contract there must be a money consideration called “the

price”. This usually includes any form of payment except trading by barter
which is exchange of goods for good without money.

CATEGORIES OF GOODS

There are different categories of goods and they are provided for by the
virtue of Section 5 of the Act. Goods may be categorized as:

(a) Existing Goods

(b) Specific (or ascertained) goods

(c) Goods sold by description

(d) Future Goods

EXISTING GOODS

These are goods that are owned and possessed by the seller at the time of
contract. This can be meant to be that they are goods actually in existence
when the contract is made. Such existing goods may either the specific or
unascertained.

SPECIFIC (OR ASCERTAINED) GOODS

These are goods identified and agreed upon at the time the contract of sale
was made. For example, “a 2009 Rhumba Motor Boat with Engine number
10465 and chassis number AB60421”.

GOODS SOLD BY DESCRIPTION

These are goods sold by description, but which were not identified or agreed
upon at the time of the contract but are included in a particular class of
goods, for example “10” “18 kilogrammes mahogany wood”

FUTURE GOODS

These are goods not yet in existence, and goods in existence but not yet
acquired by the seller. That is to say, goods yet to be acquired or
manufactured by the seller after the contract has been made.

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