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APRIL 18, 2018 LEGALGREENGOODNESS

ORIENT BANK OF
NIGERIA PLC V.
BILANTE
INTERNATIONAL
LIMITED (1997) 8
N.W.L.R. (PT 515) 37.

LAW OF CONTRACT

PRINCIPLE: ACCEPTANCE

The respondent as plainti! had sued the appellant

as defendant at the high court, Enugu claiming the
sum of N75, 684,741.52 as special and general
damages for breach of contract.

The respondent had been a customer of the

appellant bank. In 1990, the Anambra State
Government awarded to the respondent a contract
for road construction. In order to raise funds
necessary for the execution of the contract, the
respondent wrote a letter dated 28th November,
1990 requesting for a facility of N18 million. The
following day the appellant replied the letter
making counter proposals to the terms suggested
in the respondents’ letter. It also requested that the
respondent should send a copy of the contract
between it and the Anambra state government.

On 30th November, the respondent wrote exhibit 3

in reply to exhibit 2. in exhibit 3 the respondents
did not accept the terms put forward in exhibit 2
but made further proposals.

In another letter, exhibit 4, by which the

respondent responded to exhibit 3, it made a
definite o!er to the respondent in clearly stated
terms. The letter was concluded as follows: “kindly
confirm the above agreement reached at today’s
meeting by signing and returning the duplicate
copy of this letter”.

The respondent in response to exhibit 4 wrote

exhibit 5 which still contained proposals di!erent
from the contents of exhibit 4. in addition there
was no evidence that the respondent signed and
returned to the appellant a duplicate copy of
exhibit 4 as required. In addition to the above,
series of other correspondence were exchanged by
the parties wherein the respondent made various
other requests for loans of N6 million, N18.5
million, N20 million among others.

Based on a disagreement arising among the

parties, the respondent then sued as aforesaid.
The appellant counter-claimed for the sum of N13,
050, 002 as loan granted to the respondent.
Although the learned trial judge observed on the
record that parties agreed not to call oral evidence,
the record also shows that the respondent called a
witness through whom a total of 47 documents
were tendered as exhibit for the respondent as
against 1 document tendered by the appellant. The
witness gave oral evidence and was cross-
examined by the appellants counsel. However, no
oral evidence was given on behalf of the appellant.

In the determination of the appeal, the court of

appeal considered the provisions of the following
statutes; Contract Law cap 30, Law of Anambra
state, 1986, S. 109(1): “where an o!eror
prescribed a method by which acceptance of his
o!er is to be communicated to him, that method
shall be adopted by the o!eree, and acceptance
which fails to comply with such requirement
shall be ine!ective”.

HELD (unanimously allowing the appeal in

part):

1. On ingredient of contract

There are five ingredients that must be in a valid

contract. They are;

1. o!er
2. acceptance
3. consideration
4. intention to create legal relationship and
5. capacity to contract

All these five ingredients are autonomous units in

the sense that a contract cannot be formed if any
of them is absent. In other words, for a contract to
exist in law, all the five ingredients must be
present. The instant appeal raises only two of the
ingredients. They are o!er and acceptance. The
appeal has nothing to do with the other three
ingredients.

2. On what constitutes a contract

A contract is an agreement between two or more

parties which creates reciprocal legal obligation(s)
to do or not to do a particular thing. For a valid
contract to be formed, there must be mutuality of
purpose and intention. The two or more minds
must meet at the same point, event or incidents.
They must be saying the same thing at the same
time. Where or when they say di!erent things at
di!erent times, they are not ad idem and therefore
no valid contract is formed. The meeting of the
minds of the contracting parties is the most crucial
and overriding factor or determinant in the law of
contract.

3. On what constitutes a contract

It is traditionally said that in order to bring a

contract into being, that is, a situation where the
parties to a contract confer rights and impose
liabilities on themselves – there must be mutual
assent. The mutual assent of the parties to it is
must be capable of being broken down into o!er
and acceptance. An o!er is an expression of
readiness to contract on the terms specified by the
o!eror which if accepted by the o!eree gives rise to
a binding contract.

Clearly, an o!er therefore, is not itself a contract, it

may mature to a contract where the parties
become ad idem where the o!eree signifies a clear
and unequivocal intention to accept the o!er.

4. On meaning of an o!er

An o!er is a proposal which originates or emanates

from the o!eror to the o!eree to enter into an
agreement to do or not to do a particular thing.

Since the whole essence of o!er is reciprocal

acceptance, the o!eror anticipates the expected
acceptance and this he makes clearly in the o!er. A
valid o!er must be precise and unequivocal, giving
no room for speculation or conjucture as to its real
content in the mind of the o!eree. The o!eror must
place at the doorsteps of the o!eree a clear
intention and desire to enter into a contract with
the o!eree on clearly defined terms with an
expectation of acceptance on the terms so defined
or a possible counter-o!er which could be a basis
for further negotiation. The o!eree also has the
option of outright rejection of the o!er. An o!er
capable of being converted into an agreement by
acceptance, must consist of a definite promise to
be bound provided that certain specific terms are
accepted. The o!eror must have completed his
own share in the formation of a contract by finally
declining his own readiness to undertake an
obligation upon certain conditions, leaving to the
o!eree the option of acceptance or refusal.

5. On what constitutes a invitation to treat

An invitation to treat is a mere declaration of

willingness to enter into negotiations. The mere
fact that a document, such as exhibit 1 in the
instant case, uses the expression o!er does not
ipso facto make it an o!er. It is an invitation to
treat, it cannot be accepted so as to form a binding
contract. In the construction of a document in an
alleged contract or contractual relationship, a
court of law may determine the legal status of a
document in the context of the five ingredients of a
valid contract. A request does not tantamount to
an o!er.

6. On what constitutes an acceptance of an

o!er

An acceptance is the reciprocal act or action of the

o!eree to an o!er in which he indicates his
agreement to the terms of the o!er as conveyed to
him by the o!eror. In other words, acceptance is
the act of compliance on the part of the o!eree
with the terms of the o!er. It is the element of
acceptance that underscores the bilateral nature of
a contract. An acceptance of an o!er may be
demonstrated:

1. by conduct of the parties or

2. by their words or
3. by documents that have passed between them.

The conduct of the parties must be unequivocally

traceable to the transaction to constitute
acceptance. Where there is a missing link between
the conduct of the parties and the transaction, a
court of law will not be prepared to hold that a
valid contract exists between them. An acceptance
of o!er by conduct will amount to proper
acceptance only if it is clear that the o!eree did the
act with the intention of accepting the o!er.

Per Achike JCA: It is true to state that the

signification of acceptance may be verbal, inferable
from conduct or in writing, clearly therefore, mere
mental assent or mere silence will on no account
constitute su!icient legal acceptance. The reason
for this stipulation is that if acceptance were to be
based on silence or mental assent then its
ascertainment is bound to be illusory and at best a
guesswork, unless the judge was a superhuman
who would be obliged to unfold the inner most
recesses of the party making the mental assent.
That, obviously, is an invidious exercise;
consequently, mental assent is inoperative. Thus,
Lord Denning has cautiously warned in Mair Head
and Turnbill v. Dickson (1905) 7F 68 at 694 that:

“Commercial contracts cannot be arranged by

what people think in their innermost hearts.
Commercial contracts are made by what people
say”.

Since, as earlier noted, the o!eree is obliged to

ensure that the acceptance corresponds with the
terms specified in the o!er, it follows that a
purported acceptance which is at variance with the
o!er is ine!ective and must be discountenanced. If
a special mode of acceptance is prescribed it ought
of necessity, to be followed, otherwise the
acceptance is vitiated. The reason is obvious: the
hazards inherent in the prescribed mode of
acceptance become the responsibility of the
o!eror once the o!eree has complied with the
prescribed mode.

7. On what constitutes an acceptance of an

o!er

There must be a positive evidence from which the

court may infer on acceptance. This may consist in
words, in writing or in conduct. The acceptance
must be communicated to the o!eror. This is
however, subject to certain exceptions the most
important of which concerns communications sent
through the post in which case the general rule is
that the acceptance is completed as soon as it is
posted. For there to be an acceptance of an o!er
there must be external manifestation of assent,
some word or act done by the o!eree or his
authorised agent which the law can regard as the
communication by the o!eree to the o!eror. This is
because in order to make a binding contract, it is
necessary not only that it should be
communicated. Mental or internal acceptance is
not enough.

8. On what qualifies as an acceptance of an

o!er

In order to constitute acceptance, the assent to the

terms of an o!er must be absolute and unqualified.
If the acceptance is conditional, or any fresh term is
introduced but the person to whom the o!er was
made, his expression of assent amounts to a
COUNTER-OFFER which in turn requires to be
accepted by the person who made the original
o!er. For an acceptance to be operative, it must be
plain, unequivocal, unconditional and without
variance of any sort between it and the o!er. The
o!eree must unreservedly assent to the exact
terms proposed by the o!eror. A counter-o!er or a
qualified acceptance of an o!er cannot give rise to
a binding agreement between parties.

While a letter of acceptance may not necessarily

be. And is usually word for word, paragraph for
paragraph, punctuation for punctuation with a
letter of o!er, it must agree with the subject matter
of the o!er to the extent that a court of law will find
no di!iculty in identifying the point of the
agreement, that is where the o!eror and the
o!eree are ad idem, per Tobi JCA.

9. On distinction between an acceptance and

counter-o!er

There is a distinction between an acceptance and a

counter-o!er. While acceptance consolidates the
o!er and therefore the contract, counter-o!er
speaks a di!erent language from the o!er and
moves away from the contract as it is in a totally
di!erent camp. Counter-o!er as the name implies,
counters the o!er of the o!eror, which may convey
the e!ect of rejecting the o!er and making new
proposals by way of fresh o!er. In a counter-o!er,
the o!eree seems to play the role of an o!eror and
that of an o!eree. In his status of an o!eree, he
receives an o!er. Technically, in his status of an
o!eror he makes new or additional proposals to
the original o!eror who has the liberty and option
of to accept or reject the new or additional
proposals. At this stage, the original o!eror
technically becomes an o!eree and so the
positions technically change at the counter-o!er
stage. In the law of contract, once there is a change
in the o!er made by the o!eror, the parties are not
ad idem and no contract is formed. A counter-o!er
apart from failing to be an acceptance, amounts to
a rejection of the original o!er which cannot be
accepted subsequently.

10. On e!ect where an o!er prescribes a

particular mode of acceptance

By virtue of setion 109(1) of the contract law cap

30, Laws of Anambra state, 1986, when an o!eror
prescribes a method by which acceptance of his
o!er is to be communicated to him, that method
shall be accepted by the o!eree and acceptance
which fails to comply with such requirements shall
be ine!ective. Similarly, under the common law, an
o!er which requires the acceptance to be
expressed or communicated in a certain way can
generally be accepted only in that way

11. On onus on party who alleges evidence of

contract

The burden that a contract exists is on the party

alleging it. In this case, it is the respondent that so
alleges. Consequently, the appellant has no duty to
prove existence of a contract.

12. On construction of terms of a contract

In the construction of a contract, the meaning to be

placed on it is that which is plain, clear and
obvious results of the term used. A contract or
document is to be construed in its ordinary
meaning as questions of fact. The words are to be
construed according to the ordinary meaning.
Where a contract is reduced to writing, the terms of
such contract are to be deduced from the written
agreement.

13. On duty on parties where time is of essence

of contract

If time is of the essence of a contract, the parties

must spell out unequivocally to the minutest detail
the year, the month and the date that the contract
will come into operation and its duration. That is
the only way a court of law can determine breach
and award damages.

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PUBLISHED BY
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6 thoughts on “ORIENT
BANK OF NIGERIA PLC
V. BILANTE
INTERNATIONAL
LIMITED (1997) 8
N.W.L.R. (PT 515) 37.”

lizzyrights
SEPTEMBER 2, 2021 AT 3:27 PM

This is very detailed. Well done. But I was

not able to see what the court held in the
case

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Precious Ujunwa
FEBRUARY 10, 2022 AT 6:24 AM

Good! But I didn’t actually see what the

court held.
Thank you

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legalgreengoodness
FEBRUARY 23, 2022 AT 4:01 PM

Hello. Thanks for visiting legal

goodness. If you scroll down, you’ll
see what the court held or the ratios
of the court on various points of law.
They are very much highlighted.

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FARAN FIDELIA
FEBRUARY 17, 2022 AT 3:22 AM

But I was not able to see what the court

held on the case
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